S-4

As Filed with the Securities and Exchange Commission on November 23, 2005

Registration No. 333-            

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form S-4

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

Ashton Woods USA L.L.C.

and

Ashton Woods Finance Co.

(Exact Name of Registrants as Specified in their Charter)

Nevada Delaware	1531 1531	75-2721881 20-3548058
(State or Other Jurisdiction of Incorporation or Organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification Number)

1080 Holcomb Bridge Road

Building 200, Suite 350

Roswell, GA 30076

(770) 998-9663

(Address, Including Zip Code, and Telephone Number,

Including Area Code, of Registrant’s Principal Executive Offices)

SEE TABLE OF ADDITIONAL REGISTRANTS

ROBERT SALOMON

Chief Financial Officer

1080 Holcomb Bridge Road

Roswell, GA 30076

(770) 998-9663

(Name, Address, Including Zip Code, and Telephone Number,

Including Area Code, of Agent For Service)

Copies to:

ELIZABETH NOE, ESQ.

Paul, Hastings, Janofsky & Walker LLP

600 Peachtree Street, N.E., Suite 2400

Atlanta, GA 30308

(404) 815-2400

     Approximate date of commencement of proposed sale to the public: From time to time after the effective date of this Registration Statement.

     If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box.    o

     If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

     If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier registration statement for the same offering.    o

CALCULATION OF REGISTRATION FEE

		Proposed Maximum	Proposed Maximum	Amount of
Title of Each Class of	Amount	Offering	Aggregate	Registration
Securities to be Registered	to be Registered	Price per Security(1)	Offering Price	Fee
9.5% Senior Subordinated Notes due 2015	$125,000,000	100%	$125,000,000	$14,712.50
Guarantees(2)	—	—	—	—

(1)	Determined pursuant to Rule 457(i) under the Securities Act solely for purposes of calculating the registration fee.
(2)	The 9.5% Senior Notes due 2015 (the “notes”) are guaranteed by the Additional Registrants on a senior subordinated basis. No separate consideration will be paid in respect of the guarantees. Pursuant to Rule 457(n) under the Securities Act, no filing fee is required.

     The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date, as the Commission, acting pursuant to said Section 8(a), may determine.

ASHTON WOODS USA L.L.C.

TABLE OF ADDITIONAL REGISTRANTS

			Primary Standard
	State of		Industrial
	Incorporation/		Classification		IRS Employer
Name	Formation		Code Number		Identification No.
Ashton Woods Construction LLC		AZ		1531		48-1257791
Ashton Woods Corporate, LLC		NV		1531		74-3134115
Ashton Orlando Residential L.L.C.		NV		1531		75-2721878
Ashton Woods Arizona L.L.C.		NV		1531		75-2721889
Ashton Tampa Residential, LLC		NV		1531		90-0193359
Ashton Denver Residential, LLC		NV		1531		74-3134117
Ashton Woods Florida L.L.C.		NV		1531		75-2721876
Ashton Woods Butler L.L.C.		NV		1531		65-0868570
Ashton Woods Lakeside L.L.C.		NV		1531		65-0868572
Canyon Realty L.L.C.		TX		1531		82-0588409
Ashton Dallas Residential L.L.C.		TX		1531		75-2549598
Ashton Houston Residential L.L.C.		TX		1531		76-0439587
Ashton Houston Development LLC		TX		1531		76-0510751
Ashton Brookstone, Inc.		TX		1531		43-2008656
Black Amber Florida, Inc.		FL		1531		98-0230804
Ashton Burden, LLC		FL		1531		35-2232436
Ashton Woods Orlando Limited Partnership		FL		1531		65-0806305
Isleworth West Limited Partnership		FL		1531		65-0822745
Pinery Joint Venture		CO		1531		84-1243958
Ashton Atlanta Residential, L.L.C.		GA		1531		58-2139774
EX-3.1(A) CERTIFICATE OF ORGANIZATION OF ASHTON WOODS USA L.L.C.
EX-3.1(B) CERTIFICATE OF INCORPORATION OF ASHTON WOODS FINANCE CO.
EX-3.1(C) ARTICLES OF ORGANIZATION OF ASHTON WOODS CONSTRUCTION LLC
EX-3.1(D) ARTICLES OF ORGANIZATION OF ASHTON WOODS CORPORATE LLC
EX-3.1(E) ARTICLES OF ORGANIZATION OF ASHTON WOODS CALIFORNIA LLC
EX-3.1(F) CERTIFICATE OF AMENDMENT TO ARTICLES OF ORGANIZATION
EX-3.1(G) ARTICLES OF ORGANIZATION OF ASHTON WOODS ARIZONA LLC
EX-3.1(H) CERTIFICATE OF AMENDMENT TO ARTICLES OF ORGANIZATION
EX-3.1(I) ARTICLES OF ORGANIZATION OF ASHTON TAMPA RESIDENTIAL LLC
EX-3.1(J) ARTICLES OF ORGANIZATION OF ASHTON DENVER RESIDENTIAL LLC
EX-3.1(K) ARTICLES OF ORGANIZATION OF ASHTON WOODS FLORIDA L.L.C.
EX-3.1(L) ARTICLES OF ORGANIZATION OF ASHTON WOODS BUTLER L.L.C.
EX-3.1(M) ARTICLES OF ORGANIZATION OF ASHTON WOODS LAKESIDE L.L.C.
EX-3.1(N) ARTICLES OF ORGANIZATION OF CANYON REALTY L.L.C.
EX-3.1(O) ARTICLES OF ORGANIZATION OF ASHTON DALLAS RESIDENTIAL L.L.C.
EX-3.1(P) ARTICLES OF ORGANIZATION OF ASHTON HOUSTON RESIDENTIAL L.L.C.
EX-3.1(Q) ARTICLES OF ORGANIZATION OF ASHTON HOUSTON DEVELOPMENT L.L.C.
EX-3.1(R) ARTICLES OF INCORPORATION OF ASHTON BROOKSTONE, INC.
EX-3.1(S) ARTICLES OF INCORPORATION OF BLACK AMBER FLORIDA, INC.
EX-3.1(T) ARTICLES OF ORGANIZATION OF ASHTON BURDEN, LLC.
EX-3.1(U) CERTIFICATE OF LIMITED PARTNERSHIP OF ASHTON WOODS ORLANDO LIMITED PARTNERSHIP.
EX-3.1(V) CERTIFICATE OF AMENDMENT TO CERTIFICATE OF LIMITED PARTNERSHIP
EX-3.1(W) CERTIFICATE OF LIMITED PARTNERSHIP OF LAKE LOUISE
EX-3.1(X) CERTIFICATE OF AMENDMENT TO CERTIFICATE OF LIMITED PARTNERSHIP
EX-3.1(Y) ARTICLES OF ORGANIZATION OF ASHTON ATLANTA RESIDENTIAL, L.L.C.
EX-3.2(A) AMENDED AND RESTATED REGULATION OF ASHTON WOODS USA L.L.C.
EX-3.2(B) BYLAWS OF ASHTON WOODS FINANCE CO.
EX-3.2(C) REGULATIONS OF ASHTON WOODS CORPORATE, LLC.
EX-3.2(D) REGULATIONS OF ASHTON WOODS CALIFORNIA L.L.C.
EX-3.2(E) FIRST AMENDMENT TO REGULATIONS OF ASHTON WOODS CALIFORNIA L.L.C.
EX-3.2(F) REGULATIONS OF ASHTON WOODS ARIZONA L.L.C.
EX-3.2(G) FIRST AMENDMENT TO REGULATIONS OF ASHTON WOODS ARIZONA L.L.C.
EX-3.2(H) REGULATIONS OF ASHTON TAMPA RESIDENTIAL L.L.C.
EX-3.2(I) REGULATIONS OF ASHTON DENVER RESIDENTIAL LLC.
EX-3.2(J) AMENDED AND RESTATED REGULATIONS OF ASHTON WOODS FLORIDA L.L.C.
EX-3.2(K) FIRST AMENDMENT TO REGULATION OF ASHTON WOODS FLORIDA L.L.C.
EX-3.2(L) REGULATIONS OF ASHTON WOODS BUTLER L.L.C.
EX-3.2(M) FIRST AMENDMENT TO REGULATIONS OF ASHTON WOODS BUTLER L.L.C.
EX-3.2(N) REGULATIONS OF ASHTON WOODS LAKESIDE L.L.C.
EX-3.2(O) FIRST AMENDMENT TO REGULATIONS OF ASHTON WOODS LAKESIDE L.L.C.
EX-3.2(P) REGULATIONS OF CANYON REALTY L.L.C.
EX-3.2(Q) REGULATIONS OF ASHTON DALLAS RESIDENTIAL L.L.C.
EX-3.2(R) FIRST AMENDMENT TO REGULATIONS OF ASHTON DALLAS RESIDENTIAL L.L.C.
EX-3.2(S) REGULATIONS OF ASHTON HOUSTON RESIDENTIAL L.L.C.
EX-3.2(T) FIRST AMENDMENT TO REGULATION OF ASHTON HOUSTON RESIDENTIAL L.L.C.
EX-3.2(U) REGULATIONS OF ASHTON HOUSTON DEVELOPMENT L.L.C.
EX-3.2(V) FIRST AMENDMENT TO REGULATIONS OF ASHTON HOUSTON DEVELOPMENT L.L.C.
EX-3.2(W) SECOND AMENDMENT TO REGULATIONS OF ASHTON HOUSTON DEVELOPMENT L.L.C.
EX-3.2(X) BYLAWS OF ASHTON BROOKSTONE, INC.
EX-3.2(Y) REGULATIONS OF ASHTON BURDEN, LLC.
EX-3.2(Z) FORM OF AGREEMENT OF LIMITED PARTNERSHIP
EX-3.2(AA) FIRST AMENDMENT TO AGREEMENT OF LIMITED PARTNERSHIP
EX-3.2(AB) FORM OF AGREEMENT OF LIMITED PARTNERSHIP
EX-3.2(AC) FORM OF FIRST AMENDMENT TO AGREEMENT OF LIMITED PARTNERSHIP
EX-3.2(AD) SECOND AMENDMENT TO AGREEMENT OF LIMITED PARTNERSHIP
EX-3.2(AE) JOINT VENTURE AGREEMENT OF PINERY JOINT VENTURE.
EX-3.2(AF) FIRST AMENDMENT TO JOINT VENTURE AGREEMENT OF PINERY JOINT VENTURE
EX-3.2(AG) AGREEMENT PINERY JOINT VENTURE.
EX-3.2(AH) SECOND AMENDMENT TO THE JOINT VENTURE AGREEMENT
EX-3.2(AI) OPERATING AGREEMENT OF ASHTON ATLANTA RESIDENTIAL, L.L.C.
EX-3.2(AJ) FIRST AMENDMENT TO OPERATION AGREEMENT
EX-4.1 FORM OF INDENTURE DATED AS OF SEPTEMBER 21, 2005
EX-4.2 FORM OF 9.5% SENIOR SUBORDINATED NOTE DUE 2015
EX-4.3 FORM OF REGISTRATION RIGHTS AGREEMENT
EX-5.1 OPINION OF PAUL, HASTINGS, JANOFSKY & WALKER LLP
EX-5.2 OPINION OF LIONEL SAWYER & COLLINS
EX-5.3 OPINION OF HAGEN & PARSONS, P.C.
EX-5.4 OPINION OF AKERMAN SENTERFITT.
EX-5.5 OPINION OF HOLLEY, ALBERTSON & POLK P.C..
EX-5.6 OPINION OF FENNEMORE CRAIG.
EX-10.1 FORM OF CREDIT AGREEMENT
EX-10.2 FORM OF AMENDMENT TO CREDIT AGREEMENT
EX-10.3 FORM OF SECOND AMENDMENT TO CREDIT AGREEMENT
EX-10.4 LIMITED PARTNERSHIP AGREEMENT OF NAVO SOUTH DEVELOPMENT PARTNERS, LTD.
EX-10.5 AGREEMENT OF LIMITED PARTNERSHIP
EX-10.6 LIMITED LIABILITY COMPANY AGREEMENT OF PALM COVE DEVELOPERS, LLC
EX-10.7 SERVICES AND SOFTWARE LICENSE AGREEMENT
EX-10.8 FORM OF ASHTON WOODS USA, LLC
EX-12.1 STATEMENT re COMPUATION OF RATIOS
EX-21 LIST OF SUBSIDIARIES OF ASHTON WOODS USA L.L.C.
EX-23.7 CONSENT OF KPMG LLP
EX-25.1 STATEMENT OF ELIGIBILITY OF U.S. BANK NATIONAL ASSOCIATION
EX-99.1 FORM OF LETTER OF TRANSMITTAL.
EX-99.2 FORM OF LETTER TO CLIENTS.
EX-99.3 FORM OF LETTER TO REGISTERED HOLDERS.
EX-99.4 FORM OF NOTICE OF GUARANTEED DELIVERY.

      The address, including zip code and telephone number, including area code, of the principal offices of the additional registrants listed above is: 1080 Holcomb Bridge Road Roswell, GA 30076 at the telephone number at that address is (770) 998-9663.

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED NOVEMBER 22, 2005

PROSPECTUS

$125,000,000

Offer to Exchange

9.5% Senior Subordinated Notes due 2015,

which have been registered under the Securities Act of 1933,

for any and all outstanding

9.5% Senior Subordinated Notes due 2015,

which have not been registered under the Securities Act of 1933,

of

Ashton Woods USA L.L.C.

and

Ashton Woods Finance Co.

•  We will exchange all original notes that are validly tendered and not withdrawn before the end of the exchange offer for an equal principal amount of new notes that we have registered under the Securities Act of 1933 (the “Securities Act”).

•  This exchange offer expires at 5:00 p.m., New York City time, on                     , 2006, unless extended.

•  No public market exists for the original notes or the new notes. We do not intend to list the new notes on any securities exchange or to seek approval for quotation through any automated quotation system.

      The new notes will be our general, unsecured obligations and will be subordinated in right of payment to our existing and future senior debt, including borrowings under our senior unsecured credit facility. Our existing and future restricted subsidiaries will guarantee the new notes. These guarantees will be unsecured and will be subordinated in right of payment to all existing and future senior debt of the guarantors, including their guarantees of our senior unsecured credit facility. The new notes will be effectively subordinated to all of our and our subsidiary guarantors’ secured debt to the extent of the value of the assets securing that debt.

       See “Risk Factors” beginning on page 13 for a discussion of the risks that holders should consider prior to making a decision to exchange original notes for new notes.

       Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

The date of this prospectus is                     , 2005.

TABLE OF CONTENTS

Prospectus summary	1
Risk factors	13
Cautionary statements regarding forward-looking information	22
The exchange offer	23
Use of proceeds	32
Capitalization	33
Selected historical consolidated financial and operating data	34
Management’s discussion an analysis of financial condition and results of operations	37
Business	52
Management	62
Security ownership	64
Certain relationships and related transactions	66
Description of other indebtedness	68
Description of the notes	70
Material United States federal income tax considerations	115
Plan of distribution	119
Legal matters	120
Experts	120
Where you can find more information	120
Index to financial statements	F-1

Prospectus summary

       This summary highlights selected information contained elsewhere in this prospectus and does not contain all of the information you need to consider in making your investment decision. This summary is qualified in its entirety by the more detailed information and consolidated financial statements and notes thereto appearing elsewhere in this prospectus. You should read carefully this entire prospectus and should consider, among other things, the matters set forth in the section entitled “Risk factors” before deciding to exchange original notes for new notes. Unless otherwise indicated, the terms “we,” “our,” “us,” or “the Company” refer to Ashton Woods USA L.L.C. and its subsidiaries.

      Information regarding the J.D. Power and Associates 2005 New Home Builder Customer Satisfaction Study^sm was based on responses from 73,353 buyers of newly constructed homes in 30 of the largest U.S. markets, who were surveyed between March-July 2005. With respect to the 2005 survey, the Atlanta market covers Barrow, Cherokee, Clayton, Cobb, Coweta, Dawson, Dekalb, Douglas, Fayette, Forsyth, Fulton, Gwinnett, Hall, Henry, Newton, Paulding, Rockdale, Spalding and Walton counties. Information regarding the J.D. Power 2004 New Home Builder Customer Satisfaction Study^sm was based on responses from 64,502 buyers of newly constructed homes, respectively, in 25 of the largest U.S. markets. With respect to the 2004 survey, the Atlanta market covers Barrow, Bartow, Carroll, Cherokee, Clayton, Cobb, Coweta, Dawson, DeKalb, Douglas, Fayette, Forsyth, Fulton, Gwinnett, Hall, Henry, Newton, Paulding, Rockdale, Spalding and Walton counties.

THE COMPANY

      We are one of the largest private homebuilders in the United States. We design, build and market high-quality single-family detached homes, townhomes and stacked-flat condominiums under the Ashton Woods Homes brand name. We operate in Atlanta, Dallas, Houston, Orlando and Phoenix and are establishing homebuilding operations in Tampa and Denver. These cities represent seven of the 20 largest new residential housing markets in the United States. We have been in operation for over 15 years and serve a broad customer base including first-time buyers and first- and second-time move-up buyers. We focus on achieving the highest standards in design, quality and customer satisfaction. We have received numerous awards, including the 2005 and 2004 J.D. Power Award for Highest in Customer Satisfaction with New Homebuilders in Atlanta, and we were ranked in the top 10% of all homebuilders nationally in customer satisfaction in 2005 and 2004 by a nationally recognized survey company

BUSINESS STRATEGY

      Provide Our Customers with Superior Value, Quality and Customer Service. We are recognized for building homes that offer superior design, excellent quality and outstanding value. We believe that our rigorous focus on value, quality and customer service provides us with an important competitive advantage and enables us to increase our sales and enhance our profitability. We perform comprehensive research of homebuyer preferences and utilize the services of award-winning outside architectural firms to provide our customers with attractive, well designed homes, consistent with the tastes and trends in each of our markets. We offer our homebuyers the opportunity to customize their new homes in our state-of-the-art Ashton Woods Homes Design Centers in Atlanta, Dallas, Houston and Orlando, or in our fully decorated model homes in each of our communities. We instill in all our employees the importance of high quality and superior customer service through extensive in-house training, as well as through a compensation structure directly tied to our J.D. Power customer satisfaction results.

      Our reputation for outstanding quality, superior designs and excellent customer service is evidenced by the numerous awards and accolades we have received over the past several years. These awards include the 2005 Best Model Park in Houston (HBA), the 2004 Small Volume Builder of the Year (MAME) in Phoenix, the 2004 Best Detached Floor Plan Design for Homes from $226,000 to $350,000 (MAME) in Phoenix, the 2004 Best Interior Merchandising for Homes from $226,000 to $350,000 (MAME) in Phoenix, first place in 2004 for Production Detached Homes from $296,000 to $307,000 (HBA) in

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Orlando, first place in 2003 for Production Attached Homes from $152,000 to $170,000 (HBA) in Orlando and the 2003 Grand Award for Attached Homes (HBA) in Orlando. Additionally, we were the only homebuilder to receive a five-star rating for home design in Atlanta, where we were also awarded Highest in Customer Satisfaction with New Homebuilders by J.D. Power in 2005 and 2004. Our commitment to customer service has been further recognized in a nationwide survey, where we ranked in the top 10% of homebuilders nationally in 2005 and 2004. We intend to continue to increase sales and profitability by continuing to provide superior value, quality and customer service.

      Leverage Our Product, Customer and Geographic Diversification. We offer a broad portfolio of products including single-family detached homes, townhomes and stacked-flat condominiums, designed for and marketed to first-time buyers and first- and second-time move-up buyers. We operate in seven geographically diverse markets. Our product, customer and geographic diversification enables us to balance dynamic market conditions, enhance financial stability and reduce our exposure to any specific market or homebuyer segment. Single-family detached homes, townhomes and stacked-flat condominiums accounted for 73%, 14% and 13%, respectively, of our net new home orders for the quarter ended August 31, 2005 and 70%, 20% and 10%, respectively, of our net new home orders for the fiscal year ended May 31, 2005. We capitalize on our broad product portfolio by targeting a diversified customer base. We estimate that first-time buyers, and first- and second-time move-up buyers accounted for 34%, 46% and 20%, respectively, of our net new home orders during the quarter ended August 31, 2005 and 40%, 34% and 26%, respectively, of our net new home orders during the fiscal year ended May 31, 2005.

      We believe that we are able to successfully leverage our market presence in our existing markets and enhance our product offerings. We believe we are able to appeal to a broader group of homebuyers and enhance our growth without a significant increase of overhead costs. This strategy has proven successful as we continue to introduce new product lines in each of our markets including stacked-flat condominiums in Atlanta and Orlando, townhome product line in Dallas and an active adult line targeted to buyers over 55 years of age in Atlanta. We intend to continue to leverage our product, customer and geographic diversification to enhance our growth prospects and profitability while maintaining a conservative financial profile.

      Pursue Disciplined Expansion in Large, High Growth Markets. We currently operate in Atlanta, Dallas, Houston, Orlando and Phoenix, five of the ten largest new residential housing markets in the United States by single-family housing starts. We are initiating operations in Tampa and Denver, the eleventh and fourteenth largest new residential housing markets in the United States. Our seven markets are also some of the fastest growing in the nation, achieving a compounded annual growth rate in single-family housing starts of 5.8% between 1999 and 2004, compared to the national average of 3.7%, according to Global Insight’s estimates. Enhancing our product and price point portfolio in each of our existing markets is central to our growth strategy. We perform extensive research, including customer focus groups, to determine demand for additional product offerings in each of our markets. We target the homebuyer segments with the most attractive demand and supply characteristics, which we identify with the help of proprietary market studies analyzing economic and demographic trends and the competitive environment. We believe our existing markets offer attractive long-term growth opportunities. We further believe we have demonstrated our ability to effectively compete and succeed in our markets through our expansion into townhomes, stacked-flat condominiums and an active adult line in certain of our markets.

      We will also continue to evaluate prudent expansion opportunities into select new markets. Our strategy for growth in new markets is driven by identifying large homebuilding markets with attractive long-term growth prospects and favorable supply and demand characteristics. We typically hire experienced local managers to manage each new market and initially focus on providing homes for the first- and second-time move-up buyer segments. While we consider acquisitions where attractive opportunities are identified, we have historically pursued a strategy of developing start-up operations to drive our expansion in select new markets.

      Acquire and Develop Strong Land Positions. We maintain a rigorous focus on only acquiring land in premier locations, which we believe provides us with superior competitive positioning and enhanced

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operational performance. We target land opportunities in each of our markets largely through the use of an in-depth analysis of supply and demand fundamentals, combined with site-specific financial feasibility studies, which we prepare with the help of our local operational managers. We utilize strict financial hurdles to evaluate each land acquisition opportunity. This process enables us to optimize our financial returns while minimizing our land and inventory risk. Additionally, we develop a significant portion of the land we use in our homebuilding operations. We believe that our considerable expertise in land development enables us to maintain attractive land positions, create desirable communities and optimize our financial returns. We intend to continue to utilize our disciplined land selection process and land development expertise to maintain and enhance our strong land positions.

      Manage Inventory Risk and Maintain Conservative Financial Profile. We operate with a conservative approach to financial and inventory management, maintaining prudent leverage and substantial liquidity. We have a disciplined land acquisition process with strict financial hurdles. All land purchases must be approved by our Chief Executive Officer and our Chief Financial Officer. We target a four-year supply of land, achieving a balance of land owned and developed for our own use, and additional lots controlled through option contracts. As of August 31, 2005, our supply of land controlled for use in our homebuilding operations was 3.6 years, consisting of a 2.3 year supply of owned land and a 1.3 year supply of land controlled through option contracts. Additionally, we actively manage our housing inventory by pre-selling substantially all of our homes prior to starting construction, limiting our inventory risk and minimizing our construction cycles. Limitations on the number of speculative units are approved at the corporate level. As of August 31, 2005, we had only 28 completed but unsold homes among our 48 active communities. Our disciplined strategy enables us to maintain a conservative leverage and liquidity profile. As of August 31, 2005, after giving effect to the issuance and sale of the original notes and the use of the proceeds therefrom, our total debt to total capitalization would have been 53.4%, and we would have had $201.3 million available for borrowing under our senior unsecured credit facility. We intend to continue to deploy our capital prudently and efficiently and to maintain a conservative inventory and financial profile.

      Leverage Our Highly Experienced Management Team. We benefit from a strong and experienced senior management team, with our executive officers averaging more than 15 years of experience in the homebuilding industry. Thomas Krobot, our Chief Executive Officer, has 34 years of industry experience and has been with our company since 1995. Robert Salomon, our Chief Financial Officer, has 13 years of industry experience and has been with us since 1998. In addition to our seasoned senior management team, we have an outstanding group of division presidents who manage our individual markets. Each division president brings substantial industry knowledge and deep local market expertise, with an average of 16 years of experience in new residential construction.

      Our executive offices are located at 1080 Holcomb Bridge Road, Building 200, Suite 350, Roswell, Georgia 30076. Our telephone number is (770) 998-9663. Our corporate website is www.ashtonwoods.com. The information on our website does not constitute part of this prospectus.

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The exchange offer

The Exchange Offer	We are offering to exchange up to $125,000,000 aggregate principal amount of our new 9.5% Senior Subordinated Notes due 2015 for up to $125,000,000 aggregate principal amount of our original 9.5% Senior Subordinated Notes due 2015, which are currently outstanding. Original notes may only be exchanged in $1,000 principal increments. In order to be exchanged, an original note must be properly tendered and accepted. All original notes that are validly tendered and not validly withdrawn prior to the expiration of the exchange offer will be exchanged.
Resales Without Further Registration	We believe that the new notes issued pursuant to the exchange offer may be offered for resale, resold or otherwise transferred by you without compliance with the registration and prospectus delivery provisions of the Securities Act provided that:
	• you are acquiring the new notes issued in the exchange offer in the ordinary course of your business;
	• you have not engaged in, do not intend to engage in, and have no arrangement or understanding with any person to participate in, the distribution of the new notes issued to you in the exchange offer in violation of the provisions of the Securities Act; and
	• you are not our “affiliate,” as defined under Rule 405 of the Securities Act.
	Each broker-dealer that receives new notes for its own account in exchange for original notes, where such original notes were acquired by such broker-dealer as a result of market-making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of such new notes.
	The letter of transmittal states that, by so acknowledging that it will deliver and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act. This prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of new notes received in exchange for original notes where such original notes were acquired by such broker-dealer as a result of market-making activities or other trading activities. We have agreed to use our reasonable best efforts to make this prospectus, as amended or supplemented, available to any broker-dealer for a period of 180 days after the date of this prospectus for use in connection with any such resale. See “Plan of distribution.”
Expiration Date	5:00 p.m., New York City time, on                     , 2006, unless we extend the exchange offer.
Accrued Interest on the New Notes and Original Notes	The new notes will bear interest from September 21, 2005 or the last interest payment date on which interest was paid on the original notes surrendered in exchange therefor. Holders of

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	original notes that are accepted for exchange will be deemed to have waived the right to receive any payment in respect of interest on such original notes accrued to the date of issuance of the new notes.
Conditions to the Exchange Offer	The exchange offer is subject to certain customary conditions which we may waive. See “The exchange offer — Conditions.”
Procedures for Tendering Original Notes	Each holder of original notes wishing to accept the exchange offer must complete, sign and date the letter of transmittal, or a facsimile of the letter of transmittal; or if the original notes are tendered in accordance with the book-entry procedures described in this prospectus, the tendering holder must transmit an agent’s message to the exchange agent at the address listed in this prospectus. You must mail or otherwise deliver the required documentation together with the original notes to the exchange agent.
Special Procedures for Beneficial Holders	If you beneficially own original notes registered in the name of a broker, dealer, commercial bank, trust company or other nominee and you wish to tender your original notes in the exchange offer, you should contact such registered holder promptly and instruct them to tender on your behalf. If you wish to tender on your own behalf, you must, before completing and executing the letter of transmittal for the exchange offer and delivering your original notes, either arrange to have your original notes registered in your name or obtain a properly completed bond power from the registered holder. The transfer of registered ownership may take considerable time.
Guaranteed Delivery Procedures	You must comply with the applicable guaranteed delivery procedures for tendering if you wish to tender your original notes and:
	• your original notes are not immediately available; or
	• time will not permit your required documents to reach the exchange agent prior to 5:00 p.m., New York City time, on the expiration date of the exchange offer; or
	• you cannot complete the procedures for delivery by book-entry transfer prior to 5:00 p.m., New York City time, on the expiration date of the exchange offer.
Withdrawal Rights	You may withdraw your tender of original notes at any time prior to 5:00 p.m., New York City time, on the date the exchange offer expires.
Failure to Exchange Will Affect You Adversely	If you are eligible to participate in the exchange offer and you do not tender your original notes, you will not have further exchange or registration rights and your original notes will continue to be subject to restrictions on transfer under the Securities Act. Accordingly, the liquidity of the original notes will be adversely affected.

5

Material United States Federal Income Tax Consequences	The exchange of original notes for new notes pursuant to the exchange offer will not result in a taxable event. Accordingly, we believe that:
	• no gain or loss will be realized by a United States holder upon receipt of a new note;
	• holder’s holding period for the new notes will include the holding period of the original notes; and
	• the adjusted tax basis of the new notes will be the same as the adjusted tax basis of the original notes exchanged at the time of such exchange.
	See “Material United States federal income tax considerations.”
Exchange Agent	U.S. Bank National Association is serving as exchange agent in connection with the Exchange Offer. Deliveries by hand, registered, certified, first class or overnight mail should be addressed to U.S. Bank National Association, 60 Livingston Avenue, EP-MN-WS2N, St. Paul, MN 55107, Attention: Specialized Finance Department, Reference: Ashton Woods USA L.L.C. Exchange. For information with respect to the Exchange Offer, contact the Exchange Agent at telephone number (800) 934-6802 or facsimile number (651) 495-8158.
Use of Proceeds	We will not receive any proceeds from the exchange offer. See “Use of proceeds.”

6

Terms of the new notes

       The exchange offer constitutes an offer to exchange up to $125,000,000 aggregate principal amount of the new notes for up to an equal aggregate principal amount of the original notes. The new notes will be obligations of the Company and Ashton Woods Finance Co. (the “Co-Issuer”) evidencing the same indebtedness as the original notes, and will be entitled to the benefit of the same indenture. The form and terms of the new notes are substantially the same as the form and terms of the original notes except that the new notes have been registered under the Securities Act. See “Description of notes.”

Issuers	Ashton Woods USA L.L.C. and Ashton Woods Finance Co.
Notes Offered	The form and terms of the new notes will be the same as the form and terms of the original notes except that:
	• the new notes will bear a different CUSIP number from the original notes;
	• the new notes have been registered under the Securities Act and, therefore, will not bear legends restricting their transfer; and
	• you will not be entitled to any exchange or registration rights with respect to the new notes.
	The new notes will evidence the same debt as the original notes. They will be entitled to the benefits of the indenture governing the original notes and will be treated under the indenture as a single class with the original notes. We refer to the new notes and the original notes collectively as the notes in this prospectus.
Interest	The notes accrue interest from September 21, 2005 at the rate of 9.5% per year. Interest on the notes will be payable semi-annually in arrears, from the last date on which interest was paid, on each April 1 and October 1, commencing on April 1, 2006.
Maturity Date	October 1, 2015.
Optional Redemption	We may redeem the notes, in whole or part, at any time on or after October 1, 2010, at a redemption price equal to 100% of the principal amount, plus a premium declining ratably to par, plus accrued and unpaid interest.
	In addition, at any time prior to October 1, 2008, we may redeem up to 35% of the aggregate principal amount of the notes with the proceeds of qualified equity offerings at a redemption price equal to 109.5% of the principal amount, plus accrued and unpaid interest.
Change of Control	If we experience a change of control, we may be required to offer to purchase the notes at a purchase price equal to 101% of the principal amount, plus accrued and unpaid interest. We might not be able to pay you the required price for notes you present us at the time of a change of control because our senior unsecured credit facility or other indebtedness may prohibit payment or we might not have enough funds at that time.

7

Ranking; Guarantees	The notes are unsecured and are subordinated in right of payment to all of our existing and future senior debt, including borrowings under our senior unsecured credit facility.
	Our existing restricted subsidiaries jointly and severally guarantee the notes on a senior subordinated basis. Future direct and indirect U.S. subsidiaries, excluding subsidiaries that are designated unrestricted subsidiaries in accordance with the indenture, will be required to guarantee the notes.
	The guarantees are general unsecured obligations of the guarantors and will be subordinated in right of payment to all existing and future senior debt of the guarantors, which includes their guarantees of our senior unsecured credit facility.
	As of August 31, 2005, after giving effect to the issuance and sale of the original notes and the application of the net proceeds therefrom, the notes would have been subordinated to $28.4 million of senior debt and $201.3 million would have been available for borrowing as additional senior debt under our senior unsecured credit facility (net of $10.7 million of outstanding undrawn letters of credit). See “Capitalization.”
Certain Covenants	The indenture governing the notes contains covenants that limit our ability and the ability of our subsidiaries to, among other things:
	• incur additional indebtedness;
	• pay dividends or make other distributions or repurchase or redeem our stock;
	• make investments;
	• sell assets;
	• incur liens;
	• enter into agreements restricting our subsidiaries’ ability to pay dividends;
	• enter into transactions with affiliates; and
	• consolidate, merge or sell all or substantially all of our assets.
	These covenants are subject to important exceptions and qualifications, which are described under the heading “Description of the notes.”
No Listing on any Securities Exchange	We do not intend to list the new notes on any securities exchange or to seek approval for quotation through any automated quotation system.
Risk Factors	You should carefully consider the information under “Risk factors” beginning on page 13 of this prospectus and all other information included in this prospectus prior to making a decision to exchange original notes for new notes.

8

Comparison With The Original Notes

Freely Transferable

The new notes will be freely transferable under the Securities Act by holders who are not restricted holders. Restricted holders are restricted from transferring the new notes without compliance with the registration and prospectus delivery requirements of the Securities Act. The new notes will be identical in all material respects (including interest rate, maturity and restrictive covenants) to the original notes, with the exception that the new notes will be registered under the Securities Act. See “The exchange offer — Terms of the exchange offer.”

Registration Rights

The holders of the original notes currently are entitled to certain registration rights pursuant to a registration rights agreement entered into on the issue date of the original notes by and among the Company, the Co-Issuer, the subsidiary guarantors named therein and the initial purchasers named therein, including the right to cause the Company and the Co-Issuer to register the original notes for resale under the Securities Act if the Exchange Offer is not consummated prior to the applicable exchange offer termination date. However, pursuant to the registration rights agreement, certain registration rights will expire upon consummation of the exchange offer. Holders of original notes who do not exchange their original notes for new notes in the exchange offer will not be able to reoffer, resell or otherwise dispose of their original notes unless such original notes are subsequently registered under the Securities Act or unless an exemption from the registration requirements of the Securities Act is available.

      For additional information regarding the notes, see the “Description of notes” section of this prospectus.

9

Summary consolidated financial information and operating data

       The annual consolidated financial data presented below is derived from our audited consolidated financial statements as of May 31, 2004 and 2005 and for each of the years in the three-year period ended May 31, 2005, which are included elsewhere in this prospectus. The quarterly financial data presented below is derived from our unaudited consolidated financial statements as of, and for each of the three-month periods ended August 31, 2004 and August 31, 2005. The unaudited consolidated financial statements include all adjustments, consisting of normal recurring accruals, which we consider necessary for a fair presentation of our financial position and the results for those periods. You should read this information together with the consolidated financial statements and accompanying notes included elsewhere in this prospectus and “Selected historical consolidated financial and operating data” and “Management’s discussion and analysis of financial condition and results of operations” before deciding to exchange the original notes for new notes.

											Three Months Ended
		Fiscal Years Ended May 31,
											August 31,			August 31,
		2005			2004			2003			2005			2004
											(Unaudited)
		(Dollars in thousands)
Statement of Earnings Data:
Revenues
	Home sales	$	461,322		$	377,265		$	287,178		$	106,454		$	106,277
	Land sales		37,005			34,561			19,705			69			23,838
	Other		1,279			974			703			345			447
			499,606			412,800			307,586			106,868			130,562
Cost of sales
	Home sales		364,469			299,940			237,427			84,427			83,869
	Land sales		17,183			23,249			15,920			186			10,199
			381,652			323,189			253,347			84,613			94,068
Gross profit
	Home sales		96,853			77,325			49,751			22,027			22,408
	Land sales		19,822			11,312			3,785			(117	)		13,639
	Other		1,279			974			703			345			447
			117,954			89,611			54,239			22,255			36,494
Expenses
	Sales and marketing		26,503			23,809			18,730			7,238			6,942
	General and administrative		28,861			20,246			16,560			8,299			6,346
	Franchise taxes		439			361			389			89			88
	Depreciation and amortization		3,870			3,915			3,574			1,107			898
			59,673			48,331			39,253			16,733			14,274
Earnings in unconsolidated entities			1,571			1,259			1,523			555			339
Minority interest in earnings			(398	)		(112	)		(12	)		—			(398	)
Net income(1)		$	59,454		$	42,427		$	16,497		$	6,077		$	22,161

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										Three Months Ended
	Fiscal Years Ended May 31,
										August 31,			August 31,
	2005			2004			2003			2005			2004
										(Unaudited)
	(Dollars in thousands)
Balance Sheet Data (end of period):
Cash and cash equivalents	$	105		$	625		$	1,426		$	128		$	197
Inventory		255,993			205,684			196,920			303,662			209,915
Total assets		309,443			240,599			213,638			353,117			245,835
Total debt		110,535			89,568			108,718			149,679			67,432
Members’ equity		129,598			103,811			78,414			133,625			123,039
Supplemental Financial Data:
EBITDA(2)	$	68,553		$	52,525		$	27,920		$	8,165			24,605
EBITDA margin(2)(3)		13.72	%		12.72	%		9.08	%		7.64	%		18.85	%
Interest incurred(4)	$	4,840		$	4,932		$	5,796			1,669			1,106
Ratio of earnings to fixed charges(5)		12.53	x		9.35	x		4.00	x		3.94	x		20.27	x
Total debt to EBITDA		1.61	x		1.71	x		3.89	x		nm			nm
Total debt to total capitalization		46.0	%		46.3	%		58.1	%		52.8	%		35.4	%
Operating Data:
Net new home orders (units)		2,230			2,135			1,331			653			481
Homes closed (units)(6)		1,894			1,697			1,241			414			466
Average sales price per home closed	$	244		$	222		$	231		$	257		$	228
Backlog (units) at end of period		1,334			998			560			1,573			1,013
Sales value of backlog at end of period	$	369,949		$	240,346		$	122,627		$	461,238		$	256,912

(1)

Because we are structured as a limited liability company, income tax obligations are paid by our members and are not borne by us. Therefore, our net income is higher than it would be if we were structured as a subchapter C corporation. However, historically we have made distributions to our members in amounts necessary for them to pay income taxes attributable to them.

(2)

EBITDA (earnings before interest, taxes, depreciation and amortization) is calculated by adding previously capitalized interest amortized to costs of sales, franchise taxes, depreciation and amortization to net income. EBITDA is not a financial measure under generally accepted accounting principles in the United States, or GAAP. EBITDA should not be considered an alternative to net income determined in accordance with GAAP as an indicator of operating performance, nor an alternative to cash flows from operating activities determined in accordance with GAAP as a measure of liquidity. Because some analysts and companies may not calculate EBITDA in the same manner as us, the EBITDA information in this prospectus may not be comparable to similar presentations by others.

EBITDA is a measure commonly used in the homebuilding industry and is presented as a useful adjunct to net income and other measurements under GAAP because it is a meaningful measure of a company’s performance, as interest, taxes, depreciation and amortization can vary significantly between companies due in part to differences in structure, accounting policies, tax strategies, levels of indebtedness, capital purchasing practices and interest rates. EBITDA also assists management in evaluating operating performance, and we believe that it is a useful measure for investors to compare us with our competitors.

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The following is a reconciliation of EBITDA to net income, the most directly comparable GAAP measure:

							Three Months Ended
	Fiscal Years Ended May 31,
							August 31,		August 31,
	2005		2004		2003		2005		2004
							(Unaudited)
	(Dollars in thousands)
Net income	$	59,454	$	42,427	$	16,497	$	6,077	$	22,161
Franchise taxes		439		361		389		89		88
Depreciation and amortization		3,870		3,915		3,574		1,107		898
Interest expense in cost of sales		4,790		5,822		7,460		892		1,458
EBITDA	$	68,553	$	52,525	$	27,920	$	8,165	$	24,605

(3)	EBITDA margin is calculated by dividing EBITDA by total revenues.
(4)	Interest incurred for any period is the aggregate amount of interest which is capitalized during such period.
(5)	Computed by dividing earnings by fixed charges. Earnings consist of (i) income from operations before taxes, (ii) amortization of previously capitalized interest and (iii) fixed charges, exclusive of capitalized interest cost. Fixed charges consist of (i) interest incurred, (ii) amortization of deferred loan costs and (iii) an estimate of the interest within rental expense.
(6)	A home is included in “homes closed” when title is transferred to the buyer. Revenues and cost of sales for a home are recognized at the date of closing.

Ratio of Earnings to Fixed Charges

       Computed by dividing earnings by fixed charges. Earnings consist of (i) income from operations before taxes, (ii) amortization of previously capitalized interest and (iii) fixed charges, exclusive of capitalized interest cost. Fixed charges consist of (i) interest incurred, (ii) amortization of deferred loan costs and (iii) an estimate of the interest within rental expense.

																Three Months
																Ended
	Fiscal Years Ended May 31,
																August 31,
	2005			2004			2003			2002			2001			2005
Ratio of earnings to fixed charges		12.53	x		9.35	x		4.00	x		2.83	x		2.49	x		3.94	x

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Risk factors

RISKS RELATED TO OUR BUSINESS

Our home sales and operating revenues could decline due to macroeconomic and other factors outside of our control, such as changes in consumer confidence and declines in employment levels.

      The housing industry historically has been cyclical and has been affected significantly by adverse changes in consumer confidence levels and prevailing general and local economic conditions, including interest rate levels. These changes in economic conditions may result in more caution on the part of potential homebuyers and consequently fewer home purchases. Significant drivers of these economic conditions involve, among other things, conditions of supply and demand in local markets as well as changes in consumer confidence and income, employment levels, interest rate levels, and government regulations. These risks and uncertainties could periodically have an adverse effect on consumer demand for and the pricing of our homes, which could impact our operating performance and cause our operating revenues to decline.

Our operating results are variable, which may cause the value of the notes to decline.

      We have historically experienced, and in the future expect to continue to experience, variability in our operating results on a quarterly and an annual basis. Factors expected to contribute to this variability include, among other things:

•  the timing of land acquisitions and zoning and other regulatory approvals;

•  the timing of home closings, land sales and level of home sales;

•  our product mix;

•  our ability to continue to acquire additional land or options thereon on acceptable terms;

•  the condition of the real estate market and the general economy;

•  delays in construction due to acts of God, adverse weather, reduced subcontractor availability and strikes;

•  changes in prevailing interests rates and the availability of mortgage financing; and

•  employment levels.

An increase in mortgage interest rates or unavailability of mortgage financing may reduce consumer demand for our homes.

      Virtually all purchasers of our homes finance their acquisitions through lenders providing mortgage financing. A substantial increase in mortgage interest rates or unavailability of mortgage financing would adversely affect the ability of prospective homebuyers to obtain the financing they would need in order to purchase our homes, as well as adversely affect the ability of prospective move-up homebuyers to sell their current homes. As a result, our margins, revenues and cash flows may also be adversely affected.

We intend to continue to consider growth or expansion of our operations which could have a material adverse effect on our cash flows or profitability.

      We intend to continue to consider growth or expansion of our operations in our current markets or in other areas which will require substantial capital expenditures. The magnitude, timing and nature of any future expansion will depend on a number of factors, including the identification of suitable markets, our financial capabilities, the availability of qualified personnel in the target market and general economic and business conditions. Our expansion into new or existing markets could have a material adverse effect on our cash flows or profitability.

13

      Historically, our strategy has been to enter new markets through the start-up of company-developed divisions, rather than the acquisition of existing homebuilding companies. Because we typically do not acquire existing homebuilders when entering a new market, we do not have the advantage of the experience and goodwill of an established homebuilding company. As a result, we incur substantial start-up costs in establishing our operations in new markets, and we may not be successful in taking operations in new markets from the start-up phase to profitability. If we are not successful in making operations in new markets profitable, we may not be able to recover our investment, and our financial results could suffer.

      Furthermore, in the future we may choose to enter new markets or expand operations in existing markets through acquisitions, and these acquisitions may result in the incurrence of additional debt, some of which could be secured or unsecured senior debt and therefore senior to the notes. Acquisitions also involve numerous risks, including difficulties in the assimilation of the acquired company’s operations, the incurrence of unanticipated liabilities or expenses, the diversion of management’s attention from other business concerns, risks of entering markets in which we have limited or no direct experience, and the potential loss of key employees of the acquired company.

Lack of greater geographic diversification could expose our business to increased risks if there are economic downturns in our markets.

      We have homebuilding operations in Atlanta, Dallas, Houston, Orlando, and Phoenix and are establishing homebuilding operations in Tampa and Denver. We also have land operations in Denver and Orlando. Our operations in Dallas and Atlanta together provided 48.5% and 47.5% of our home building revenues for the fiscal year ended May 31, 2005 and the three-month period ended August 31, 2005, respectively. Failure to be more geographically diversified could adversely impact us if the homebuilding business in our current markets, especially Dallas and Atlanta, should decline.

We could experience a reduction in home sales and revenues or reduced cash flows if we are unable to obtain reasonably priced financing to support our homebuilding and land development activities.

      The homebuilding industry is capital intensive, and homebuilding requires significant up-front expenditures to acquire land and begin development. Accordingly, we incur substantial indebtedness to finance our homebuilding and land development activities. Although we believe that internally generated funds and borrowing capacity under our senior unsecured credit facility will be sufficient to fund our capital and other expenditures (including land acquisition, development and construction activities), the amounts available from such sources may not be adequate to meet our needs. If such sources are not sufficient, we would seek additional capital in the form of debt or equity financing from a variety of potential sources, including additional bank financing and/or securities offerings. The amount and types of indebtedness which we may incur are limited by the terms of the agreements governing our existing debt and are limited by the terms of the indenture governing the notes. In addition, the availability of borrowed funds, to be utilized for land acquisition, development and construction, may be greatly reduced, and the lending community may require increased amounts of equity to be invested in a project by borrowers in connection with both new loans and the extension of existing loans. The failure to obtain sufficient capital to fund our planned capital and other expenditures could have a material adverse effect on our business.

Changes in government regulations could restrict our business activities, increase our operating expenses and cause our revenues to decline.

      Regulatory requirements could cause us to incur significant liabilities and operating expenses and could restrict our business activities. We are subject to local, state and federal statutes and rules regulating, among other things certain developmental matters, building and site design, and matters concerning the protection of health and the environment. Our operating expenses may be increased by governmental regulations, such as building permit allocation ordinances, impact and other fees and taxes, which may be imposed to defray the cost of providing certain governmental services and improvements. Other governmental regulations, such as building moratoriums and “no growth” or “slow growth” initiatives, which may be adopted in communities which have developed rapidly, may cause delays in

14

home projects or otherwise restrict our business activities resulting in reductions in our revenues. Any delay or refusal to grant us necessary licenses, permits or approvals from government agencies could have an adverse effect on our operations.

We may incur additional operating expenses due to compliance requirements or fines, penalties and remediation costs pertaining to environmental regulations within our markets.

      We are subject to a variety of local, state and federal statutes, ordinances, rules and regulations concerning the protection of health and the environment. The particular environmental laws which apply to any given community vary greatly according to the community site, the site’s environmental conditions and the present and former use of the site. We expect that increasingly stringent requirements will be imposed on homebuilders in the future. Environmental laws may result in delays, cause us to implement time consuming and expensive compliance programs, and prohibit or severely restrict development in certain environmentally sensitive regions or areas. Environmental regulations can also have an adverse impact on the availability and price of certain raw materials, such as lumber. Furthermore, our failure to comply with all applicable environmental laws and regulations may result in the imposition of fines and penalties or remediation obligations that may require us to pay substantial amounts of money.

We are subject to warranty claims arising in the ordinary course of our business that could adversely affect our results of operations.

      We are subject in the ordinary course of our business to home warranty claims. We provide our homebuyers with a one year warranty covering workmanship and materials, a two year warranty covering construction defects and certain defects in plumbing, electrical, heating, cooling and ventilation systems and a ten year warranty covering construction defects. Warranty claims are common in the homebuilding industry and can be costly, and the terms and limitations of the limited warranties provided to homebuyers may not be effective against claims made by the homebuyers. We maintain homebuilder protective policy insurance coverage with Residential Warranty Corporation for construction defects. However, we may not be able to renew our insurance coverage or renew it at reasonable rates. As a result, we may be liable for damages, the cost of repairs and/or the expense of litigation surrounding possible construction defects, soil subsidence or building-related claims. Furthermore, claims may arise out of uninsurable events or circumstances not covered by insurance and not subject to effective indemnification agreements with our subcontractors.

Our operating expenses could increase if we are required to pay higher insurance premiums or incur substantial litigation costs for claims involving construction and product defect liability claims, including claims related to mold, which could cause our net income to decline.

      The costs of insuring against construction defect and product liability claims are high, and the amount and scope of coverage offered by insurance companies is currently limited. The scope of coverage may continue to be limited or be further restricted and may become more costly.

      Increasingly in recent years, lawsuits (including class action lawsuits) have been filed against builders asserting claims of personal injury and property damage caused by the presence of mold in residential dwellings. Our insurance may not cover all of the claims, including personal injury claims, arising from the presence of mold, or such coverage may become prohibitively expensive. If we are not able to obtain adequate insurance against these claims, we may experience litigation costs and losses that could reduce our net income.

      Historically, builders have recovered from subcontractors and their insurance carriers a significant portion of the construction and product defect liabilities and costs of defense that the builders have incurred. Insurance coverage available to subcontractors for construction and product defects is becoming increasingly expensive and the scope of coverage is restricted. If we cannot effectively recover from our subcontractors or their carriers, we may suffer greater losses which could decrease our net income.

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      A builder’s ability to recover against any available insurance policy depends upon the continued solvency and financial strength of the insurance carrier that issued the policy. Many of the states in which we build homes have lengthy statutes of limitations applicable to claims for construction defects. To the extent that any carrier providing insurance coverage to us or our subcontractors becomes insolvent or experiences financial difficulty in the future, we may be unable to recover on those policies and our net income may decline.

We are dependent on the services of certain key employees, and the loss of their services could hurt our business.

      Our future success depends upon our ability to attract, train, assimilate and retain skilled personnel. If we are unable to retain our key employees, particularly Thomas Krobot and Robert Salomon, or attract, train, assimilate or retain other skilled personnel in the future, it could hinder the execution of our business strategy. Competition for qualified personnel in all of our operating markets is intense, and it could be difficult for us to find experienced personnel to replace our current employees, many of whom have significant homebuilding experience. Furthermore, a significant increase in the number of our active communities would necessitate the hiring of a significant number of additional personnel, who are in short supply in our markets.

We are dependent on the continued availability and satisfactory performance of our subcontractors, which, if unavailable, could have a material adverse effect on our business.

      We conduct our construction operations only as a general contractor. Virtually all construction work is performed by unaffiliated third party subcontractors. As a consequence, we depend on the continued availability of and satisfactory performance by these subcontractors for the construction of our homes. There may not be sufficient availability of and satisfactory performance by these unaffiliated third party subcontractors. In addition, inadequate subcontractor resources could have a material adverse effect on our business.

Supply risks and shortages relating to labor and materials can harm our business by delaying construction and increasing costs.

      The homebuilding industry from time to time has experienced significant difficulties with respect to:

•  shortages of qualified trades people and other labor;

•  shortages of materials; and

•  volatile increases in the cost of certain materials, including lumber, framing and cement, which are significant components of home construction costs.

      These difficulties can, and often do, cause unexpected short-term increases in construction costs and cause construction delays. We are generally unable to pass on any unexpected increases in construction costs to those customers who have already entered into sales contracts, as those contracts generally fix the price of the house at the time the contract is signed, which may be up to one year in advance of the delivery of the home. Furthermore, sustained increases in construction costs may, over time, erode our profit margins. In the future, pricing competition may restrict our ability to pass on any additional costs, and we may not be able to achieve sufficient operating efficiencies to maintain our current profit margins.

Our financial condition and results of operations may be adversely affected by any decrease in the value of our land inventory, as well as by the associated carrying costs.

      We must continuously acquire land for replacement and expansion of land inventory within our existing and new markets. The risks inherent in purchasing and developing land increase as consumer demand for housing decreases. Thus, we may have bought and developed land which we cannot profitably sell or on which we cannot profitably build and sell homes. The market value of land, building lots and

16

housing inventories can fluctuate significantly as a result of changing market conditions. It is possible that the measures we employ to manage inventory risks will not be successful.

      In addition, inventory carrying costs can be significant and can result in losses in a poorly performing project or market. In the event of significant changes in economic or market conditions, we may have to sell homes at significantly lower margins or at a loss.

Our business and operating results could be adversely affected by adverse weather conditions and natural disasters.

      Adverse weather conditions, such as extended periods of rain, snow or cold temperatures, and natural disasters, such as hurricanes, tornadoes, floods and fires, can delay completion and sale of homes, damage partially complete or other unsold homes in our inventory and/or decrease the demand for homes or increase the cost of building homes. As a result of a series of hurricanes, we experienced significant delays in land development and home construction during fiscal year 2005. Several communities in both Atlanta and Orlando have been delayed several months causing expected net new home orders and homes closed to be deferred into fiscal year 2006. To the extent that natural disasters or adverse weather events occur, our business and results may be adversely affected. To the extent our insurance is not adequate to cover business interruption losses or repair costs resulting from these events, our revenues and earnings may be adversely affected.

If we are unsuccessful in competing against our competitors, our market share could decline or our growth could be impaired and, as a result, our financial results could suffer.

      The homebuilding industry is highly competitive. Homebuilders compete for, among other things, desirable land, financing, raw materials, skilled labor and purchasers. We compete for residential sales on the basis of a number of interrelated factors, including location, reputation, amenities, design, quality and price, with numerous large and small homebuilders, including some homebuilders with nationwide operations and greater financial resources and/or lower costs than us. The consolidation of some homebuilding companies may create competitors that have greater financial, marketing and sales resources than we do and thus are able to compete more effectively against us. In addition, there may be new entrants in the markets in which we currently conduct business. We also compete for sales with the resale market for existing homes and with available rental housing. If we are unable to successfully compete, our financial results could suffer and the value of, or our ability to service, our debt, including the notes could be adversely affected.

Future terrorist attacks against the United States or increased domestic or international instability could have an adverse effect on our operations.

      Adverse developments in the war on terrorism, future terrorist attacks against the United States, or any outbreak or escalation of hostilities between the United States and any foreign power, including the armed conflict in Iraq, may cause disruption to the economy, our company, our employees and our customers, which could adversely affect our revenues, operating expenses and financial condition.

RISKS ASSOCIATED WITH THE NOTES AND THIS OFFERING

Our indebtedness could adversely affect our financial condition, limit our growth and make it more difficult for us to satisfy our debt obligations.

      As of August 31, 2005, after giving effect to the issuance and sale of the original notes and the application of the net proceeds therefrom, we had $153.4 million of indebtedness outstanding and $201.3 million (net of $10.7 million of outstanding undrawn letters of credit) available for borrowing under our senior unsecured credit facility. Our indebtedness could have important consequences to us and the holders of the notes, including among other things,

•  cause us to be unable to satisfy our obligations under our existing or new debt agreements, including the notes;

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•  make us more vulnerable to adverse general economic and industry conditions;

•  make it difficult to fund future working capital, land acquisition and development, home construction, acquisitions and general corporate needs;

•  cause us to be limited in our flexibility in planning for, or reacting to, changes in our business; and

•  cause us to be less competitive to other companies with less indebtedness.

      In addition, subject to restrictions in our existing debt instruments, we may incur additional indebtedness. If new debt is added to our current debt levels, the related risks that we now face could intensify.

We may be unable to generate sufficient cash to service our debt obligations and make payments on the notes.

      Our ability to pay our expenses and to pay the principal of and interest on the notes and our other debt depends on our ability to generate positive cash flows in the future. Our operations may not generate cash flows in an amount sufficient to enable us to pay the principal of and interest on our debt, including the notes, or to fund our other liquidity needs.

      If we do not have sufficient cash flows from operations, we may be required to incur additional indebtedness, refinance all or part of our existing debt, including the notes, or sell assets. Our ability to borrow funds under our senior unsecured credit facility in the future will depend on our meeting the financial covenants in such senior unsecured credit facility, and sufficient borrowings may not be available to us. In addition, the terms of existing or future debt agreements may restrict us from effecting any of these alternatives. Any inability to generate sufficient cash flows or refinance our debt on favorable terms could significantly adversely affect our financial condition, the value of the notes and our ability to pay the principal of and interest on our debt, including the notes.

The families and family trusts that own our equity interests have the right to select our board members, can influence our business operations, including all matters subject to membership approval, and may have interests that conflict with the interests of our note holders.

      Entities directly or indirectly owned by seven families or family trusts beneficially own all of the equity interests in us. By virtue of such equity ownership, our members have the sole power to:

•  elect the entire membership of our board of directors;

•  control all of our management policies, including as to the making of payments to our members or other affiliates, whether by way of dividend, compensation or otherwise or entering into other transactions with entities affiliated with the families and trusts comprising the ownership group; and

•  subject to compliance with our obligations under our senior unsecured credit facility and the notes, determine the outcome of any corporate matter or transaction, including mergers, joint ventures, consolidations and asset sales, equity issuances or debt incurrences.

      All of our directors are affiliates of our ownership group. We have been advised that our members do not currently plan to appoint any nonaffiliated or independent directors. As creditors, holders of the notes do not have the right to elect any directors.

      Other affiliates of our ownership group operate businesses that derive revenue from homebuilding and land development. Various of such affiliated entities have engaged, and will in the future continue to engage, in transactions with us. In particular, we are a party to a services and software license agreement with Paramount Development Corporation Limited, an affiliate of this group, pursuant to which we are provided a license to use software critical to our business, as well as assistance with land development matters. The initial term of the services and software license agreement is two years and will automatically renew for successive one-year terms unless either party gives notice that the agreement will not be renewed. We are also a party to agreements whereby we purchase finished and unfinished building lots

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from affiliates of our ownership group. See “Certain relationships and related transactions” for a description of such transactions. In addition, we may enter into other agreements for the purchase of finished and unfinished building lots with affiliates of this group in the future. The families and family trusts comprising our ownership group are not restricted from engaging in homebuilding or land development activities in the United States through entities unrelated to us.

Any guarantees of the notes by our subsidiaries may be voidable, subordinated or limited in scope under laws governing fraudulent transfers and insolvency.

      Under federal bankruptcy laws and comparable provisions of state fraudulent transfer laws, a guarantee of the notes by any subsidiary guarantor could be voided, subordinated, or limited in scope if, among other things, at the time the guarantor issued its guarantee, the applicable guarantor:

•  intended to hinder, delay or defraud any present or future creditor; or

•  received less than reasonably equivalent value or fair consideration for the incurrence of such guarantee; and

•  was insolvent or rendered insolvent by reason of such incurrence;

•  was engaged in a business or transaction for which such guarantor’s remaining assets constituted unreasonably small capital; or

•  intended to incur, or believed that it would incur, debts beyond its ability to pay such debts as they mature.

      The measures of insolvency for purposes of the foregoing considerations will vary depending upon the law applied in any proceeding with respect to the foregoing. Generally, however, a guarantor in the United States would be considered insolvent if:

•  the sum of its debts, including contingent liabilities, was greater than the saleable value of all of its assets;

•  the present fair saleable value of its assets was less than the amount that would be required to pay its probable liabilities on its existing debts, including contingent liabilities, as they become absolute and mature; or

•  it could not pay its debts as they become due.

      We cannot be sure what standard a court would use to determine whether or not a guarantor was solvent at the relevant time, or, regardless of the standard that the court uses, that the issuance of the guarantee would not be avoided or the guarantee would not be subordinated to the guarantors’ other debt. If such a case were to occur, the guarantee could also be subject to the claim that, since the guarantee was incurred for the benefit of the issuer of the notes, and only indirectly for the benefit of the guarantor, the obligations of the applicable guarantor were incurred for less than fair consideration.

Your right to receive payments on the notes is subordinated to our and the guarantors’ senior debt.

      Payment on the notes is subordinated in right of payment to all of our and the guarantors’ senior debt, including that with respect to the senior unsecured credit facility. As a result, upon any distribution to our creditors in a bankruptcy, liquidation or reorganization or similar proceeding relating to us or our property, the holders of senior debt will be entitled to be paid in full in cash before any payment may be made on the notes or the guarantees. In these cases, we may not have sufficient funds to pay all of our creditors, and holders of notes may receive less, ratably, than the holders of senior debt and, due to the subordination provisions in the indenture, less, ratably, than the holders of unsubordinated obligations, including trade payables. In addition, holders of senior indebtedness may, under certain circumstances, restrict or prohibit us from making payments on the notes.

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      As of August 31, 2005, after giving effect to the issuance and sale of the original notes and the application of the net proceeds therefrom, the notes would have been subordinated to $28.4 million of our and the guarantors’ senior debt, and $201.3 million (net of $10.7 million in outstanding undrawn letters of credit) would have been available for borrowing as additional senior debt under our senior unsecured credit facility. We and the guarantors are permitted to incur additional indebtedness, including senior debt, in the future under the terms of the indenture.

The notes are unsecured and effectively subordinated to any secured indebtedness that we or the subsidiary guarantors may incur, which means note holders may recover less than the lenders of the secured debt in the event of our bankruptcy or liquidation.

      The notes are unsecured obligations. While we and the subsidiary guarantors currently do not have any material secured debt, under the terms of the indenture governing the notes, we and the subsidiary guarantors may be able to incur significant additional secured indebtedness without equally and ratably securing the notes. If we become insolvent or are liquidated, or if payment under any secured debt obligations is accelerated, our secured lenders would be entitled to exercise the remedies available to a secured lender under collateral before the holders of the notes. As a result, the notes are effectively subordinated to any secured indebtedness we may incur in the future, and the holders of the notes may recover ratably less than the lenders of our secured debt in the event of our bankruptcy or liquidation. In addition, guarantees of the subsidiary guarantors will also be unsecured. Any secured indebtedness that these subsidiaries may incur will similarly be senior to such guarantee obligations.

Our senior unsecured credit facility and the indenture governing the notes contain a variety of covenants imposing significant operating and financial restrictions which may limit our ability to operate our business. Our failure to comply with these covenants could result in an event of default under the indenture relating to the notes.

      Our senior unsecured credit facility requires us to maintain specified financial ratios and tests, among other obligations, including a minimum tangible net worth test and a maximum leverage ratio. In addition, our senior unsecured credit facility and the indenture governing the notes have affirmative and negative covenants customary for financings of that type, which will limit our ability to, among other things, borrow money, make investments and extend credit, engage in transactions with our affiliates, consummate certain asset sales, consolidate or merge with another entity or sell, transfer, lease or otherwise dispose of all or substantially all of our assets, and create liens on our assets. It is possible that these covenants may adversely impact our ability to finance our future operations or capital needs to pursue available business opportunities. Additionally, a failure to comply with any of these covenants could lead to an event of default under our senior unsecured credit facility, which could result in an acceleration of the indebtedness under the senior unsecured credit facility. Acceleration of the indebtedness under our senior unsecured credit facility or other senior indebtedness would constitute an event of default under the indenture. If an event of default exists on our senior indebtedness designated in the indenture, subordination provisions in the indenture may restrict payments to holders of the notes until holders of senior indebtedness are paid in full or the default is cured or waived or has ceased to exist. For additional information regarding our senior unsecured credit facility see the description under “Description of other indebtedness” and “Description of the notes — Certain Covenants.”

There is no established trading market for the new notes, and you may not be able to sell them quickly or at the price that you paid.

      The new notes are a new issue of securities, and there is no established trading market for the new notes. We do not intend to apply for the new notes to be listed on any securities exchange or to arrange for quotation on any automated dealer quotation systems. Each initial purchaser of the original notes advised us that they intend to make a market in the new notes, but no initial purchaser is obligated to do so. The initial purchasers may discontinue any market making in the new notes at any time, in their sole discretion. As a result, an active trading market for the new notes may not develop.

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Note holders may not be entitled to require us to repurchase the notes in connection with certain transactions because the term “all or substantially all” in the context of a change of control has no clearly established meaning under the relevant law.

      One of the ways a change of control can occur under the indenture governing the notes is upon a sale of all or substantially all of our assets. The meaning of the phrase “all or substantially all” as used in that definition varies according to the facts and circumstances of the subject transaction, has no clearly established meaning under applicable law and is subject to judicial interpretation. Accordingly, in certain circumstances there may be a degree of uncertainty in ascertaining whether a particular transaction would involve a disposition of “all or substantially all” of the assets of a person and therefore it may be unclear whether a change of control has occurred and whether you have the right to require us to repurchase the notes.

We may not be able to satisfy our obligations to holders of the notes upon a change of control.

      Upon the occurrence of a “change of control,” as defined in the indenture, each holder of the notes will have the right to require us to purchase the notes at a price equal to 101% of the principal amount, together with any accrued and unpaid interest. Our failure to purchase, or give notice of purchase of, the notes would be a default under the indenture, which would in turn be a default under our senior unsecured credit facility. In addition, a change of control may constitute an event of default under our senior unsecured credit facility. A default under our senior unsecured credit facility would result in an event of default under the indenture if the lenders accelerate the debt under our senior unsecured credit facility.

      If a change of control occurs, we may not have enough assets to satisfy all obligations under our senior unsecured credit facility and the indenture related to the notes. Upon the occurrence of a change of control we could seek to refinance the indebtedness under our senior unsecured credit facility and the notes or obtain a waiver from the lenders or you as a holder of the notes. It is possible, however, that we will not be able to obtain a waiver or refinance our indebtedness on commercially reasonable terms, if at all.

Ashton Woods Finance Co. has only nominal assets from which to make payments on the notes.

      Ashton Woods Finance Co. is a co-obligor on the notes. Ashton Woods Finance Co. is a wholly-owned subsidiary of Ashton Woods USA L.L.C., with no operations and only nominal assets from which to make payments on the notes.

If you fail to exchange your original notes, you will face restrictions that will make the sale or transfer of your original notes more difficult.

      If you do not exchange your original notes for new notes in the exchange offer, you will continue to be subject to the restrictions on transfer of your original notes described in the legend on your original notes. In general, you may only offer or sell the original notes if they are registered under the Securities Act and applicable state securities laws, or offered and sold under an exemption from those requirements. We do not intend to register the original notes under the Securities Act. To the extent other original notes are tendered and accepted in the exchange offer and you elect not to exchange your original notes, the trading market, if any, for your original notes would be adversely affected because your original notes will be less liquid than the new notes. See “The exchange offer-Consequences of failure to exchange.”

Some holders that exchange their original notes may be required to comply with registration and prospectus delivery requirements in connection with the sale or transfer of their new notes.

      If you exchange your original notes in the exchange offer for the purpose of participating in a distribution of the new notes, you may be deemed to have received restricted securities and, if so, will be required to comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale transaction. If you are required to comply with the registration and prospectus delivery requirements, then you may face additional burdens on the transfer of your notes and could incur liability for failure to comply with applicable requirements.

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Cautionary statements regarding forward-looking information

       This prospectus contains forward-looking statements which represent our expectations or beliefs concerning future events, and no assurance can be given that the results described in this prospectus will be achieved. These forward-looking statements can generally be identified by the use of statements that include words such as “estimate,” “project,” “believe,” “expect,” “anticipate,” “intend,” “plan,” “foresee,” “likely,” “will,” “goal,” “target” or other similar words or phrases. All forward-looking statements are based upon information available to us on the date of this prospectus.

      These forward-looking statements are subject to risks, uncertainties and other factors, many of which are outside of our control, that could cause actual results to differ materially from the results discussed in the forward-looking statements, including, among other things, the matters discussed in this prospectus in the sections captioned: “Prospectus summary” and “Risk factors.” Other factors, risks and uncertainties that could cause actual results to differ materially from the results discussed in the forward-looking statements include but are not limited to:

•  economic changes nationally or in our local markets;

•  volatility of mortgage interest rates and inflation;

•  increased competition;

•  shortages of skilled labor or raw materials used in the production of houses;

•  increased prices for labor, land and raw materials used in the production of houses;

•  increased land development costs on projects under development;

•  the cost and availability of insurance, including the availability of insurance for the presence of mold;

•  the impact of construction defect and home warranty claims;

•  any delays in reacting to changing consumer preferences in home design;

•  changes in consumer confidence;

•  delays in land development or home construction resulting from adverse weather conditions;

•  potential delays or increased costs in obtaining necessary permits as a result of changes to, or complying with, laws, regulations or governmental policies, including environmental laws, regulations and policies; or

•  terrorist acts and other acts of war.

      Any forward-looking statement speaks only as of the date on which such statement is made, and, except as required by law, we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events. New factors emerge from time to time and it is not possible for management to predict all such factors.

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The exchange offer

TERMS OF THE EXCHANGE OFFER

Purpose of the exchange offer

      We sold $125.0 million in principal amount of the original notes on September 21, 2005 in a transaction exempt from the registration requirements of the Securities Act. The initial purchasers of the original notes subsequently resold the original notes to qualified institutional buyers in reliance on Rule 144A under the Securities Act.

      In connection with the sale of original notes to the initial purchasers pursuant to a purchase agreement, dated September 21, 2005, among us, the Co-Issuer, the guarantors named therein and the initial purchasers, the holders of the original notes became entitled to the benefits of registration rights agreement, dated September 21, 2005, among us, the Co-Issuer, the guarantors named therein and the initial purchasers.

      The registration rights agreement provides that we, the Co-Issuer and the guarantors will, at our cost:

•  file an exchange offer registration statement with the Securities and Exchange Commission (the “SEC”) with respect to a registered exchange offer to exchange the original notes for the new notes;

•  use our reasonable best efforts to cause the exchange offer registration statement to be declared effective under the Securities Act;

•  use our reasonable best efforts to consummate the exchange offer within 210 days after September 21, 2005; and

•  keep the exchange offer open for not less than 30 days (or longer if required by applicable law) after the date notice of the exchange offer is mailed to the holders of the original notes.

      The exchange offer being made by this prospectus, if consummated within the required time periods, will satisfy our obligations under the registration rights agreement. This prospectus, together with the letter of transmittal, is being sent to all beneficial holders of original notes known to us.

      Upon the terms and subject to the conditions set forth in this prospectus and in the accompanying letter of transmittal, we will accept all original notes properly tendered and not withdrawn prior to the expiration date. We will issue $1,000 principal amount of new notes in exchange for each $1,000 principal amount of outstanding original notes accepted in the exchange offer. Holders may tender some or all of their original notes pursuant to the exchange offer.

      Based on no-action letters issued by the staff of the SEC to third parties, we believe that holders of the new notes issued in exchange for original notes may offer for resale, resell and otherwise transfer the new notes, other than any holder that is an affiliate of ours within the meaning of Rule 405 under the Securities Act, without compliance with the registration and prospectus delivery provisions of the Securities Act. This is true as long as the new notes are acquired in the ordinary course of the holder’s business, the holder has no arrangement or understanding with any person to participate in the distribution of the new notes and neither the holder nor any other person is engaging in or intends to engage in a distribution of the new notes. A broker-dealer that acquired original notes directly from us cannot exchange the original notes in the exchange offer. Any holder who tenders in the exchange offer for the purpose of participating in a distribution of the new notes cannot rely on the no-action letters of the staff of the SEC and must comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale transaction.

      Each broker-dealer that receives new notes for its own account in exchange for original notes, where such original notes were acquired by such broker-dealer as a result of market-making or other trading

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activities, must acknowledge that it will deliver a prospectus in connection with any resale of such new notes. See “Plan of distribution” for additional information.

      We will accept validly tendered original notes promptly following the expiration of the tender offer by giving oral or written notice of the acceptance of such notes to the exchange agent. The exchange agent will act as agent for the tendering holders of original notes for the purposes of receiving the new notes from the issuer and delivering new notes to such holders.

      If any tendered original notes are not accepted for exchange because of an invalid tender or the occurrence of the conditions set forth under “Conditions” without waiver by us, certificates for any such unaccepted original notes will be returned, without expense, to the tendering holder of any such original notes promptly after the expiration date.

      Holders of original notes who tender in the exchange offer will not be required to pay brokerage commissions or fees or, subject to the instructions in the letter of transmittal, transfer taxes with respect to the exchange of original notes, pursuant to the exchange offer. We will pay all charges and expenses, other than certain applicable taxes in connection with the exchange offer. See “Fees and Expenses.”

Shelf registration statement

      Pursuant to the registration rights agreement, we have agreed to file a shelf registration statement if:

•  we are not permitted to file the exchange offer registration statement or consummate the exchange offer because the exchange offer is not permitted by applicable law or SEC policy;

•  the exchange offer is not consummated within 210 days after the issue date of the original notes;

•  any holder notifies us prior to the 20th day following the consummation of the exchange offer that it is prohibited by law or the applicable interpretations of the SEC from participating in the exchange offer;

•  in the case of any holder that participates in the exchange offer, such holder does not receive new 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 ours); or

•  an initial purchaser so requests with respect to original notes that have, or that are reasonably likely to be determined to have, the status of unsold allotments in an initial distribution.

      A holder that sells original notes pursuant to the shelf registration statement generally must be named as a selling securityholder in the related prospectus and must deliver a prospectus to purchasers, because a seller will be subject to civil liability provisions under the Securities Act in connection with these sales. A seller of the original notes also will be bound by applicable provisions of the applicable registration rights agreement, including indemnification obligations. In addition, each holder of original notes must deliver information to be used in connection with the shelf registration statement and provide comments on the shelf registration statement in order to have its original notes included in the shelf registration statement and benefit from the provisions regarding any liquidated damages in the registration rights agreement.

      We have agreed to use our reasonable best efforts to cause the shelf registration statement to be declared effective under the Securities Act on or prior to the later of (i) 210 days after the issuance of the original notes and (ii) 120 days after being required to file the shelf registration statement. In addition, we agreed to use our reasonable best efforts to keep the shelf registration statement continually effective, supplemented and amended for a period of two years following the date the shelf registration statement is declared effective, or:

•  such shorter period which terminates when all notes covered by that shelf registration statement have been sold under it; or

•  such shorter period provided by the SEC as a result of the applicable provisions of Rule 144(k) being amended or revised to reduce the two-year holding period provided therein.

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Additional interest in certain circumstances

      If any of the following, each a “registration default,” occurs:

•  the exchange offer is not completed on or before the 210th calendar day following the issue date of the original notes or, if that day is not a business day, then the next succeeding day that is a business day; or

•  the shelf registration statement is required to be filed but is not filed or declared effective within the time periods required by the registration rights agreement or is declared effective but thereafter ceases to be effective or usable (subject to certain exceptions),

the interest rate borne by the notes as to which the registration default has occurred will be increased by 0.25% per annum upon the occurrence of a registration default. This rate will continue to increase by 0.25% each 90-day period that the additional interest (as defined below) continues to accrue under any such circumstance. However, the maximum total increase in the interest rate will in no event exceed one percent (1.0%) per year. We refer to this increase in the interest rate on the notes as “additional interest.” Such interest is payable in addition to any other interest payable from time to time with respect to the notes in cash on each interest payment date to the holders of record for such interest payment date. After the cure of registration defaults, the accrual of additional interest will stop and the interest rate will revert to the original rate.

      Under certain circumstances, we may delay the filing or the effectiveness of the exchange offer or the shelf registration and shall not be required to maintain its effectiveness or amend or supplement it for a period of up to 60 days during any 12-month period. Any delay period will not alter our obligation to pay liquidated damages with respect to a registration default.

      The sole remedy available to the holders of the original notes will be the immediate increase in the interest rate on the original notes as described above. Any amounts of additional interest due as described above will be payable in cash on the same interest payment dates as the original notes.

Expiration date; extensions; amendment

      We will keep the exchange offer open for not less than 30 days, or longer if required by applicable law, after the date on which notice of the exchange offer is mailed to the holders of the original notes. The term “expiration date” means the expiration date set forth on the cover page of this prospectus, unless we extend the exchange offer, in which case the term “expiration date” means the latest date to which the exchange offer is extended.

      In order to extend the expiration date, we will notify the exchange agent of any extension by oral or written notice and will issue a public announcement of the extension, each prior to 5:00 p.m., New York City time, on the next business day after the previously scheduled expiration date.

      We reserve the right

•  to delay accepting any original notes, to extend the exchange offer or to terminate the exchange offer and not accept original notes not previously accepted if any of the conditions set forth under “Conditions” shall have occurred and shall not have been waived by us, if permitted to be waived by us, by giving oral or written notice of such delay, extension or termination to the exchange agent; or

•  to amend the terms of the exchange offer in any manner deemed by us to be advantageous to the holders of the original notes. (We are required to extend the offering period for certain types of changes in the terms of the exchange offer, for example, a change in the consideration offered or percentage of original notes sought for tender.)

      All conditions set forth under “Conditions,” except such conditions that involve regulatory approvals, must be satisfied or waived prior to the expiration date.

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      Any delay in acceptance, extension, termination or amendment will be followed as promptly as practicable by oral or written notice. If the exchange offer is amended in a manner determined by us to constitute a material change, we will promptly disclose such amendment in a manner reasonably calculated to inform the holders of the original notes of such amendment. Depending upon the significance of the amendment, we may extend the exchange offer if it otherwise would expire during such extension period.

      Without limiting the manner in which we may choose to make a public announcement of any extension, amendment or termination of the exchange offer, we will not be obligated to publish, advertise, or otherwise communicate any such announcement, other than by making a timely release to an appropriate news agency.

EXCHANGE OFFER PROCEDURES

      To tender in the exchange offer, a holder must complete, sign and date the letter of transmittal, or a facsimile thereof, have the signatures on the letter of transmittal guaranteed if required by instruction 2 of the letter of transmittal, and mail or otherwise deliver the letter of transmittal or such facsimile or an agent’s message in connection with a book entry transfer, together with the original notes and any other required documents. To be validly tendered, such documents must reach the exchange agent before 5:00 p.m., New York City time, on the expiration date. Delivery of the original notes may be made by book-entry transfer in accordance with the procedures described below. Confirmation of such book-entry transfer must be received by the exchange agent prior to the expiration date.

      The term “agent’s message” means a message, transmitted by a book-entry transfer facility to, and received by, the exchange agent, forming a part of a confirmation of a book-entry transfer, which states that such book-entry transfer facility has received an express acknowledgment from the participant in such book-entry transfer facility tendering the original notes that such participant has received and agrees to be bound by the terms of the letter of transmittal and that we may enforce such agreement against such participant.

      The tender by a holder of original notes will constitute an agreement between such holder and us in accordance with the terms and subject to the conditions set forth in this prospectus and in the letter of transmittal.

      Delivery of all documents must be made to the exchange agent at its address set forth below. Holders may also request their respective brokers, dealers, commercial banks, trust companies or nominees to effect such tender for such holders.

      Each broker-dealer that receives new notes for its own account in exchange for original notes, where such original notes were acquired by such broker-dealer as a result of market-making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of such new notes. See “Plan of distribution.”

      The method of delivery of original notes and the letter of transmittal and all other required documents to the exchange agent is at the election and risk of the holders. Instead of delivery by mail, it is recommended that holders use an overnight or hand delivery service. In all cases, sufficient time should be allowed to assure timely delivery to the exchange agent before 5:00 p.m., New York City time, on the expiration date. No letter of transmittal or original notes should be sent to us.

      Only a holder of original notes may tender original notes in the exchange offer. The term “holder” with respect to the exchange offer means any person in whose name original notes are registered on our books or any other person who has obtained a properly completed bond power from the registered holder.

      Any beneficial holder whose original notes are registered in the name of its broker, dealer, commercial bank, trust company or other nominee and who wishes to tender should contact such registered holder promptly and instruct such registered holder to tender on its behalf. If such beneficial holder wishes to tender on its own behalf, such registered holder must, prior to completing and executing the letter of transmittal and delivering its original notes, either make appropriate arrangements to register ownership of

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the original notes in such holder’s name or obtain a properly completed bond power from the registered holder. The transfer of record ownership may take considerable time.

      Signatures on a letter of transmittal or a notice of withdrawal, must be guaranteed by an “eligible guarantor institution” within the meaning of Rule 17Ad-15 under the Securities Exchange Act of 1934, unless the original notes are tendered:

•  by a registered holder who has not completed the box entitled “Special Issuance Instructions” or “Special Delivery Instructions” on the letter of transmittal or

•  for the account of an eligible guarantor institution.

      In the event that signatures on a letter of transmittal or a notice of withdrawal are required to be guaranteed, such guarantee must be by an eligible guarantor institution.

      If a letter of transmittal is signed by a person other than the registered holder of any original notes listed therein, such original notes must be endorsed or accompanied by appropriate bond powers and a proxy which authorizes such person to tender the original notes on behalf of the registered holder, in each case signed as the name of the registered holder or holders appears on the original notes.

      If a letter of transmittal or any original notes or bond powers are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, such persons should so indicate when signing, and unless waived by us, evidence satisfactory to us of their authority so to act must be submitted with such letter of transmittal.

      All questions as to the validity, form, eligibility, including time of receipt, and withdrawal of the tendered original notes will be determined by us in our sole discretion, which determination will be final and binding. We reserve the absolute right to reject any and all original notes not properly tendered or any original notes our acceptance of which, in the opinion of our counsel, would be unlawful. We also reserve the absolute right to waive any irregularities or defects as to the original notes. If we waive any condition of the notes for any note holder, we will waive such condition for all note holders. Our interpretation of the terms and conditions of the exchange offer, including the instructions in the letter of transmittal, will be final and binding on all parties. Unless waived, any defects or irregularities in connection with tenders of original notes must be cured within such time as we shall determine. None of us, the exchange agent or any other person shall be under any duty to give notification of defects or irregularities with respect to tenders of original notes, nor shall any of them incur any liability for failure to give such notification. Tenders of original notes will not be deemed to have been made until such irregularities have been cured or waived. Any original notes received by the exchange agent that are not properly tendered and as to which the defects or irregularities have not been cured or waived will be returned by the exchange agent to the tendering holders of original notes without cost to such holder, unless otherwise provided in the relevant letter of transmittal, as soon as practicable following the expiration date.

      In addition, we reserve the absolute right in our sole discretion to:

•  purchase or make offers for any original notes that remain outstanding subsequent to the expiration date or, as set forth under “Conditions,” to terminate the exchange offer in accordance with the terms of the registration rights agreement; and

•  to the extent permitted by applicable law, purchase original notes in the open market, in privately negotiated transactions or otherwise.

      The terms of any such purchases or offers may differ from the terms of the exchange offer.

      By tendering, each holder will represent to us that, among other things:

•  such holder or other person is not our “affiliate,” as defined under Rule 405 of the Securities Act, or, if such holder or other person is such an affiliate, will comply with the registration and prospectus delivery requirements of the Securities Act to the extent applicable;

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•  the new notes acquired pursuant to the exchange offer are being obtained in the ordinary course of business of such holder or other person;

•  neither such holder or other person has any arrangement or understanding with any person to participate in the distribution of such new notes in violation of the Securities Act; and

•  if such holder is not a broker-dealer, neither such holder nor such other person is engaged in or intends to engage in a distribution of the new notes.

      We understand that the exchange agent will make a request promptly after the date of this prospectus to establish accounts with respect to the original notes at The Depository Trust Company for the purpose of facilitating the exchange offer, and subject to the establishment of such accounts, any financial institution that is a participant in The Depository Trust Company’s system may make book-entry delivery of original notes by causing The Depository Trust Company to transfer such original notes into the exchange agent’s account with respect to the original notes in accordance with The Depository Trust Company’s procedures for such transfer. Although delivery of the original notes may be effected through book-entry transfer into the exchange agent’s account at The Depository Trust Company, a letter of transmittal properly completed and duly executed with any required signature guarantee, or an agent’s message in lieu of a letter of transmittal, and all other required documents must in each case be transmitted to and received or confirmed by the exchange agent at its address set forth below on or prior to the expiration date, or, if the guaranteed delivery procedures described below are complied with, within the time period provided under such procedures. Delivery of documents to The Depository Trust Company does not constitute delivery to the exchange agent.

GUARANTEED DELIVERY PROCEDURES

      Holders who wish to tender their original notes and

•  whose original notes are not immediately available; or

•  who cannot deliver their original notes, the letter of transmittal or any other required documents to the exchange agent prior to 5:00 p.m., New York City time, on the expiration date of the exchange offer; or

•  who cannot complete the procedures for delivery by book-entry transfer prior to 5:00 p.m., New York City time, on the expiration date of the exchange offer, may effect a tender if:

•  the tender is made by or through an “eligible guarantor institution”;

•  prior to 5:00 p.m., New York City time, on the expiration date of the exchange offer, the exchange agent receives from such “eligible guarantor institution” a properly completed and duly executed Notice of Guaranteed Delivery, by facsimile transmission, mail or hand delivery, setting forth the name and address of the holder of the original notes, the certificate number or numbers of such original notes and the principal amount of original notes tendered, stating that the tender is being made thereby, and guaranteeing that, within three business days after the expiration date, a letter of transmittal, or facsimile thereof or agent’s message in lieu of such letter of transmittal, together with the certificate(s) representing the original notes to be tendered in proper form for transfer and any other documents required by the letter of transmittal will be deposited by the eligible guarantor institution with the exchange agent; and

•  a properly completed and duly executed letter of transmittal (or facsimile thereof) together with the certificate(s) representing all tendered original notes in proper form for transfer or an agent’s message in the case of delivery by book-entry transfer and all other documents required by the letter of transmittal are received by the exchange agent within three business days after the expiration date.

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WITHDRAWAL OF TENDERS

      Except as otherwise provided in this prospectus, tenders of original notes may be withdrawn at any time prior to 5:00 p.m., New York City time, on the expiration date.

      To withdraw a tender of original notes in the exchange offer, a written or facsimile transmission notice of withdrawal must be received by the exchange agent at its address set forth in this prospectus prior to 5:00 p.m., New York City time, on the expiration date. Any such notice of withdrawal must:

•  specify the name of the depositor, who is the person having deposited the original notes to be withdrawn;

•  identify the original notes to be withdrawn, including the certificate number or numbers and principal amount of such original notes or, in the case of original notes transferred by book-entry transfer, the name and number of the account at The Depository Trust Company to be credited;

•  be signed by the depositor in the same manner as the original signature on the letter of transmittal by which such original notes were tendered, including any required signature guarantees, or be accompanied by documents of transfer sufficient to have the trustee with respect to the original notes register the transfer of such original notes into the name of the depositor withdrawing the tender; and

•  specify the name in which any such original notes are to be registered, if different from that of the depositor.

      All questions as to the validity, form and eligibility, including time of receipt, of such withdrawal notices will be determined by us, and our determination shall be final and binding on all parties. Any original notes so withdrawn will be deemed not to have been validly tendered for purposes of the exchange offer and no new notes will be issued with respect to the original notes withdrawn unless the original notes so withdrawn are validly retendered. Any original notes which have been tendered but which are not accepted for exchange will be returned to its holder without cost to such holder promptly after withdrawal, rejection of tender or termination of the exchange offer. Properly withdrawn original notes may be retendered by following one of the procedures described above under “Exchange Offer Procedures” at any time prior to the expiration date.

CONDITIONS

      Notwithstanding any other term of the exchange offer, we will not be required to accept for exchange, or exchange, any new notes for any original notes, and may terminate or amend the exchange offer before the expiration date, if:

•  in the opinion of our counsel, the exchange offer or any part thereof contemplated herein violates any applicable law or interpretation of the staff of the SEC;

•  any action or proceeding shall have been instituted or threatened in any court or by any governmental agency which might materially impair our ability to proceed with the exchange offer or any material adverse development shall have occurred in any such action or proceeding with respect to us; or

•  any governmental approval has not been obtained, which approval we shall deem necessary for the consummation of the exchange offer as contemplated hereby.

      If we determine in our reasonable discretion that any of the foregoing conditions exist, we may:

•  refuse to accept any original notes and return all tendered original notes to the tendering holders;

•  extend the exchange offer and retain all original notes tendered prior to the expiration of the exchange offer, subject, however, to the rights of holders who tendered such original notes to withdraw their tendered original notes; or

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•  waive such condition, if permissible, with respect to the exchange offer and accept all properly tendered original notes which have not been withdrawn. If such waiver constitutes a material change to the exchange offer, we will promptly disclose such waiver by means of a prospectus supplement that will be distributed to the holders, and we will extend the exchange offer as required by applicable law.

EXCHANGE AGENT

      We have appointed U.S. Bank National Association as exchange agent for the exchange offer. Please direct questions and requests for assistance, requests for additional copies of this prospectus or of the letter of transmittal and requests for the notice of guaranteed delivery to U.S. Bank National Association addressed as follows:

By Mail, Overnight Courier or Hand Delivery:

U.S. Bank National Association

60 Livingston Avenue

EP-MN-WS2N

St. Paul, MN 55107

Attention: Specialized Finance Department

Reference: Ashton Woods USA L.L.C. Exchange

By Facsimile:

(651) 495-8158

Attention: Specialized Finance Department

Reference: Ashton Woods USA L.L.C. Exchange

To Confirm by Telephone or for Information:

(800) 934-6802

Reference: Ashton Woods USA L.L.C. Exchange

      U.S. Bank National Association is the trustee under the indenture governing the original notes and the new notes.

FEES AND EXPENSES

      We will pay the expenses of soliciting original notes for exchange. The principal solicitation is being made by mail by U.S. Bank National Association as exchange agent. However, additional solicitations may be made by telephone, facsimile or in person by our officers and regular employees and our affiliates and by persons so engaged by the exchange agent.

      We will pay U.S. Bank National Association as exchange agent reasonable and customary fees for its services and will reimburse it for its reasonable out-of-pocket expenses in connection therewith and pay other registration expenses, including fees and expenses of the trustee under the indenture, filing fees, blue sky fees and printing and distribution expenses.

      We will pay all transfer taxes, if any, applicable to the exchange of the original notes in connection with the exchange offer. If, however, certificates representing the new notes or the original notes for principal amounts not tendered or accepted for exchange are to be delivered to, or are to be issued in the name of, any person other than the registered holder of the original notes tendered, or if tendered original notes are registered in the name of any person other than the person signing the letter of transmittal, or if a transfer tax is imposed for any reason other than the exchange of the original notes in this exchange offer, then the amount of any such transfer taxes, whether imposed on the registered holder or any other person, will be payable by the tendering holder.

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ACCOUNTING TREATMENT

      The new notes will be recorded at the same carrying value as the original notes as reflected in our accounting records on the date of exchange. Accordingly, no gain or loss for accounting purposes will be recognized by us. The expenses of the exchange offer and the unamortized expenses related to the issuance of the original notes will be amortized over the term of the new notes.

CONSEQUENCES OF FAILURE TO EXCHANGE

      Holders of original notes who are eligible to participate in the exchange offer but who do not tender their original notes will not have any further registration rights, and their original notes will continue to be subject to restrictions on transfer of the original notes as described in the legend on the original notes as a consequence of the issuance of the original notes under exemptions from, or in transactions not subject to, the registration requirements of the Securities Act and applicable state securities laws. In general, the original notes may not be offered or sold, unless registered under the Securities Act, except under an exemption from, or in a transaction not subject to, the Securities Act and applicable state securities laws.

REGULATORY APPROVALS

      We do not believe that the receipt of any material federal or state regulatory approval will be necessary in connection with the exchange offer, other than the effectiveness of the exchange offer registration statement under the Securities Act.

OTHER

      Participation in the exchange offer is voluntary and holders of original notes should carefully consider whether to accept the terms and condition of this exchange offer. Holders of the original notes are urged to consult their financial and tax advisors in making their own decisions on what action to take with respect to the exchange offer.

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Use of proceeds

       This exchange offer is intended to satisfy our obligations to register an exchange offer of the new notes for the original notes required by the registration rights agreement entered into in connection with the issuance and sale of the original notes. We will not receive any cash proceeds from the issuance of the new notes. In consideration for issuing the new notes, we will receive the outstanding original notes in like principal amount, the terms of which are identical in all material respects to the terms of the new notes, except as otherwise described herein. The original notes surrendered in exchange for the new notes will be retired and cancelled and cannot be reissued.

      The net proceeds from the sale of the original notes after deducting the discounts and commissions to the initial purchasers and estimated offering expenses were approximately $121.2 million. The net proceeds that we received from the sale of the original notes was used to repay $108.3 million outstanding under our senior unsecured credit facility and $12.9 million were used to repay related party debt.

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Capitalization

       The following table sets forth our cash and cash equivalents and our capitalization as of August 31, 2005 on an actual and as-adjusted basis to give effect to the issuance and sale of the original notes and the use of the net proceeds therefrom. This table should be read in conjunction with our historical financial statements and related notes and “Selected historical consolidated financial and operating data” and “Management’s discussion and analysis of financial condition and results of operations” included elsewhere in this prospectus.

			As of August 31, 2005
						As
			Actual			Adjusted
			(In thousands)
Cash and cash equivalents			$	128		$	128	(2)
Debt (including current portion):
	Senior unsecured credit facility		$	132,089	(1)	$	23,729	(2)
	Secured promissory note			4,700			4,700
	Related party note			12,890			—
	Original notes			—			125,000
Total debt				149,679			153,429
Members’ equity				133,625			133,625
		Total capitalization	$	283,304		$	287,054

(1)	We had availability of $92.9 million under our senior unsecured credit facility as of August 31, 2005 (net of $10.7 million in outstanding undrawn letters of credit).
(2)	On an as-adjusted basis we would have had availability of $201.3 million under our senior unsecured credit facility as of August 31, 2005 (net of $10.7 million in outstanding undrawn letters of credit).

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Selected historical consolidated financial and operating data

       The selected consolidated financial data presented below is derived from our audited consolidated financial statements as of May 31, 2004, and 2005 and for each of the years in the three-year period ended May 31, 2005, which are included elsewhere in this prospectus. The selected consolidated financial data as of May 31, 2001, 2002 and 2003 and for each of the years in the two-year period ended May 31, 2002 is derived from our audited financial statements which are not included in this prospectus. The quarterly financial data presented below is derived from our unaudited consolidated financial statements as of, and for each of the three-month periods ended August 31, 2004 and August 31, 2005. The unaudited consolidated financial statements include all adjustments, consisting of normal recurring accruals, which we consider necessary for a fair presentation of our financial position and the results for those periods.

      The data set forth below should be read in conjunction with the consolidated financial statements and accompanying notes included elsewhere in this prospectus and “Management’s discussion and analysis of financial condition and results of operations” included elsewhere in this prospectus.

															Three Months Ended
		Fiscal Years Ended May 31,
															August 31,			August 31,
		2005			2004			2003			2002		2001		2005			2004
															(Unaudited)
		(Dollars in thousands)
Statement of Earnings Data:
Revenues
	Home sales	$	461,322		$	377,265		$	287,178		$	288,111	$	301,644	$	106,454		$	106,277
	Land sales		37,005			34,561			19,705			16,880		13,040		69			23,838
	Other		1,279			974			703			1,173		1,364		345			447
			499,606			412,800			307,586			306,164		316,048		106,868			130,562
Cost of sales
	Home sales		364,469			299,940			237,427			240,820		254,532		84,427			83,869
	Land sales		17,183			23,249			15,920			11,732		9,076		186			10,199
			381,652			323,189			253,347			252,552		263,608		84,613			94,068
Gross profit
	Home sales		96,853			77,325			49,751			47,291		47,112		22,027			22,408
	Land sales		19,822			11,312			3,785			5,148		3,964		(117	)		13,639
	Other		1,279			974			703			1,173		1,364		345			447
			117,954			89,611			54,239			53,612		52,440		22,255			36,494
Expenses
	Sales and marketing		26,503			23,809			18,730			18,663		19,330		7,238			6,942
	General and administrative		28,861			20,246			16,560			16,231		14,322		8,299			6,346
	Franchise taxes		439			361			389			406		551		89			88
	Depreciation and amortization		3,870			3,915			3,574			4,662		5,160		1,107			898
			59,673			48,331			39,253			39,962		39,363		16,733			14,274
Earnings in unconsolidated entities			1,571			1,259			1,523			543		353		555			339
Minority interest in (earnings) losses			(398	)		(112	)		(12	)		—		175		—			(398	)
Net income(1)		$	59,454		$	42,427		$	16,497		$	14,193	$	13,605	$	6,077		$	22,161

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																Three Months Ended
	Fiscal Years Ended May 31,
																August 31,			August 31,
	2005			2004			2003			2002			2001			2005			2004
																(Unaudited)
	(Dollars in thousands)
Balance Sheet Data (end of period):
Cash and cash equivalents	$	105		$	625		$	1,426		$	6,471		$	2,539		$	128		$	197
Inventory		255,993			205,684			196,920			197,891			183,250			303,662			209,915
Total assets		309,443			240,599			213,638			213,230			201,943			353,117			245,835
Total debt		110,535			89,568			108,718			117,511			113,634			149,679			67,432
Members’ equity		129,598			103,811			78,414			68,550			58,631			133,625			123,039
Supplemental Financial Data:
EBITDA(2)	$	68,553		$	52,525		$	27,920		$	27,982		$	31,671		$	8,165			24,605
EBITDA margin(2)(3)		13.72	%		12.72	%		9.08	%		9.14	%		10.02	%		7.64	%		18.85	%
Interest incurred(4)	$	4,840		$	4,932		$	5,796		$	7,960		$	10,243			1,669			1,106
Ratio of earnings to fixed charges(5)		12.53	x		9.35	x		4.00	x		2.83	x		2.49	x		3.94	x		20.27	x
Total debt to EBITDA		1.61	x		1.71	x		3.89	x		4.20	x		3.59	x		nm			nm
Total debt to total capitalization		46.0	%		46.3	%		58.1	%		63.2	%		66.0	%		52.8	%		35.4	%
Operating Data:
Net new home orders (units)		2,230			2,135			1,331			1,150			1,318			653			481
Homes closed (units)(6)		1,894			1,697			1,241			1,227			1,268			414			466
Average sales price per home closed	$	244		$	222		$	231		$	235		$	238		$	257		$	228
Backlog (units) at end of period		1,334			998			560			470			547			1,573			1,013
Sales value of backlog	$	369,949		$	240,346		$	122,627		$	110,968		$	119,758		$	461,238		$	256,912

(1)

Because we are structured as a limited liability company, income tax obligations are paid by our members and are not borne by us. Therefore, our net income is higher than it would be if we were structured as a subchapter C corporation. However, historically we have made distributions to our members in amounts necessary for them to pay income taxes attributable to them.

(2)

EBITDA (earnings before interest, taxes, depreciation and amortization) is calculated by adding previously capitalized interest amortized to costs of sales, franchise taxes, depreciation and amortization to net income. EBITDA is not a financial measure under generally accepted accounting principles in the United States, or GAAP. EBITDA should not be considered an alternative to net income determined in accordance with GAAP as an indicator of operating performance, nor an alternative to cash flows from operating activities determined in accordance with GAAP as a measure of liquidity. Because some analysts and companies may not calculate EBITDA in the same manner as us, the EBITDA information in this prospectus may not be comparable to similar presentations by others.

EBITDA is a measure commonly used in the homebuilding industry and is presented as a useful adjunct to net income and other measurements under GAAP because it is a meaningful measure of a company’s performance, as interest, taxes, depreciation and amortization can vary significantly between companies due in part to differences in structure, accounting policies, tax strategies, levels of indebtedness, capital purchasing practices and interest rates. EBITDA also assists management in evaluating operating performance, and we believe that it is a useful measure for investors to compare us with our competitors.

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The following is a reconciliation of EBITDA to net income, the most directly comparable GAAP measure:

											Three Months Ended
	Fiscal Years Ended May 31,										August 31,		August 31,
	2005		2004		2003		2002		2001		2005		2004
											(Unaudited)
	(Dollars in thousands)
Net income	$	59,454	$	42,427	$	16,497	$	14,193	$	13,605	$	6,077	$	22,161
Franchise taxes		439		361		389		406		551		89		88
Depreciation and amortization		3,870		3,915		3,574		4,662		5,160		1,107		898
Interest expense in cost of sales		4,790		5,822		7,460		8,721		12,355		892		1,458
EBITDA	$	68,553	$	52,525	$	27,920	$	27,982	$	31,671	$	8,165	$	24,605

(3)	EBITDA margin is calculated by dividing EBITDA by total revenues.
(4)	Interest incurred for any period is the aggregate amount of interest which is capitalized during such period.
(5)	Computed by dividing earnings by fixed charges. Earnings consist of (i) income from operations before taxes, (ii) amortization of previously capitalized interest and (iii) fixed charges, exclusive of capitalized interest cost. Fixed charges consist of (i) interest incurred, (ii) amortization of deferred loan costs and (iii) an estimate of the interest within rental expense.
(6)	A home is included in “homes closed” when title is transferred to the buyer. Revenues and cost of sales for a home are recognized at the date of closing.

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Management’s discussion and analysis of financial condition and results of operations

OVERVIEW

      We are one of the largest private homebuilders in the United States. We design, build and market high-quality single-family detached homes, townhomes and stacked-flat condominiums under the Ashton Woods Homes brand name. We currently operate in Atlanta, Dallas, Houston, Orlando and Phoenix and are establishing homebuilding operations in Tampa and Denver. These cities represent seven of the 20 largest new residential housing markets in the United States. We have been in operation for over 15 years and serves a broad customer base including first-time buyers and first- and second-time move-up buyers. We focus on achieving the highest standards in design, quality and customer satisfaction. We have received numerous awards, including the 2005 and 2004 J.D. Power Award for Highest in Customer Satisfaction with New Homebuilders in Atlanta, and are ranked in the top 10% of all homebuilders nationally in customer satisfaction in 2005 and 2004 by a nationally recognized survey company.

      Our revenues are primarily generated from designing, building and marketing single-family detached homes, townhomes, and stacked-flat condominiums in the five states and seven markets we currently serves. We also acquire and develop land for use in its homebuilding operations and for sale to others. Although the sales of land have been a significant part of our revenues in prior years, such sales are not a significant focus of our operations and may fluctuate from quarter to quarter.

      We also conduct mortgage origination and title services for the benefit of our homebuilding operation. These ancillary services do not provide us with significant revenues and are carried out through separate jointly-owned entities, which are operated by our partners in these entities. We have a 49.9% interest in an entity that offers mortgage financing to all of its buyers and in the past has offered refinancing services to others. The mortgage operation’s revenues consist primarily of origination and premium fee income, interest income and the gain on sale of the mortgages. We also offer title services to our homebuyers in Dallas and Houston through 49.0% ownership interests in two title companies. The companies are managed by, and all underwriting risks associated with the title are transferred to, the majority owners.

      Key financial and operating highlights for the three months ended August 31, 2005 are as follows:

•  Strong demand for homes in our markets, due to our strong land positions and competitive product offerings, continued into our first quarter ended August 31, 2005 with a record level of net new home orders of 653 homes representing a 35.8% increase as compared to the same period a year ago. Homes closed during the first quarter of fiscal year 2006 declined 11.2% to 414 homes as compared to the prior year due to delays experienced in fiscal year 2005 in land development and home construction as a result of a series of hurricanes that affected several communities in both Atlanta and Orlando. In addition, market conditions have decreased the availability of subcontractors in Phoenix, which also contributed to the decline in homes closed this fiscal quarter.

•  Due to the record level of net new home orders during the three months ended August 31, 2005, backlog at August 31, 2005 reached the highest level in our history at 1,573 homes with a sales value of $461.2 million, representing a 55.3% increase of homes in backlog and an 79.5% increase in the sales value of backlog as compared to August 31, 2004.

•  Net income for the three months ended August 31, 2005 declined 72.6% to $6.1 million compared to $22.2 million in the prior year period. This decline is due primarily to the significant decline in land sales profits earned in the fiscal quarter ended August 31, 2005 as compared to the same period a year ago. Land sales occurred primarily in Orlando and Denver during the three months ended August 31, 2004.

      Key financial and operating highlights for the fiscal year ended May 31, 2005 were as follows:

•  Net income for the fiscal year ended May 31, 2005 increased 40.1% to $59.5 million compared to $42.4 million in the prior fiscal year.

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•  Continued strong demand for homes in our markets in fiscal year 2005 led to a record level of net new home orders of 2,230 homes, which enabled us to close a record 1,894 homes in fiscal year 2005. Backlog at May 31, 2005 also finished at a record level of 1,334 homes with a sales value of $369.9 million, representing a 33.7% increase of homes in backlog and a 53.9% increase in the sales value of backlog as compared to fiscal year 2004.

•  We continued our geographic expansion with the start-up of homebuilding operations in two new markets, Tampa, Florida and Denver, Colorado. We expect to begin home closings in both markets during the second half of fiscal year 2006.

•  We entered into a new four-year $225.0 million senior unsecured credit facility (subject to borrowing base availability) with the ability to expand to $300.0 million with lender approval.

      As a result of a series of hurricanes, we experienced significant delays in land development and home construction in the first half of fiscal year 2005. Several communities in both Atlanta and Orlando have been delayed several months causing expected net new home orders and homes closed to be deferred into fiscal year 2006. In addition, we have experienced delays in all our existing markets in securing necessary government approvals for the commencement of land development and home construction. These delays have also resulted in the deferral of expected sales and closings into fiscal year 2006.

      Key financial and operating highlights for our fiscal years ended May 31, 2004 and 2003 were as follows:

•  Net income increased 157.2% and 16.2% in fiscal years 2004 and 2003, respectively, due to the improvements in operating margins and the sale of land and lots.

•  Strong demand for homes in our markets in fiscal year 2004, particularly during the first half of the year, led to the highest level of annual net new home orders in our history at that time, totaling 2,135 homes. These strong orders enabled us to end the fiscal year with a then record backlog of 998 homes valued at $240.3 million, as compared to our backlog at May 31, 2003 of 560 homes valued at $122.6 million, representing a year-over-year unit increase of 78.2% and a value increase of 96.0%.

RESULTS OF OPERATIONS

      The environment for first-time and move-up homebuyers has remained stable and generally favorable. Overall strength in consumer confidence, population growth, shifting demographics, immigration and changes in home ownership rates were the primary long-term factors supporting this environment. Low mortgage rates have also been a positive influence on housing demand to date in calendar year 2005, and during 2004 and 2003. This favorable interest rate environment was partially offset by the generally weak employment levels experienced during our fiscal year 2005 and the first quarter of fiscal 2006. In addition, because the homebuilding industry in the United States is highly fragmented, we have been able to capitalize on the benefits of our size, such as our capital strength and access to lower material, labor and capital costs, to generate continued profitable growth in our homebuilding operations on an annual basis.

38

      The following tables set forth the key operating and financial data for our operations as of and for the fiscal years ended May 31, 2003, 2004 and 2005 and as of and for the three-month periods ended August 31, 2004 and August 31, 2005.

											Three Months Ended
		Fiscal Years Ended May 31,
											August 31,			August 31,
		2005			2004			2003			2005			2004
		(Dollars in thousands)
Statement of Earnings Data:
Revenues
	Home sales	$	461,322		$	377,265		$	287,178		$	106,454		$	106,277
	Land sales		37,005			34,561			19,705			69			23,838
	Other		1,279			974			703			345			447
			499,606			412,800			307,586			106,868			130,562
Cost of sales
	Home sales		364,469			299,940			237,427			84,427			83,869
	Land sales		17,183			23,249			15,920			186			10,199
			381,652			323,189			253,347			84,613			94,068
Gross profit
	Home sales		96,853			77,325			49,751			22,027			22,408
	Land sales		19,822			11,312			3,785			(117	)		13,639
	Other		1,279			974			703			345			447
			117,954			89,611			54,239			22,255			36,494
Expenses
	Sales and marketing		26,503			23,809			18,730			7,238			6,942
	General and administrative		28,861			20,246			16,560			8,299			6,346
	Franchise taxes		439			361			389			89			88
	Depreciation and amortization		3,870			3,915			3,574			1,107			898
			59,673			48,331			39,253			16,733			14,274
Earnings in unconsolidated entities			1,571			1,259			1,523			555			339
Minority interest in earnings			(398	)		(112	)		(12	)		—			(398	)
Net income		$	59,454		$	42,427		$	16,497		$	6,077		$	22,161
Other Data:
	Homes closed		1,894			1,697			1,241			414			466
	Average sales price per home closed	$	244		$	222		$	231		$	257		$	228
	Home gross margin(1)		21.0	%		20.5	%		17.3	%		20.7	%		21.1	%
	Ratio of SG&A expenses to revenues		11.1	%		10.7	%		11.5	%		14.5	%		10.2	%
	Ratio of net income to revenues		11.9	%		10.3	%		5.4	%		5.7	%		17.0	%
	Backlog (units) at end of period		1,334			998			560			1,573			1,013
	Sales value of backlog at end of period	$	369,949		$	240,346		$	122,627		$	461,238		$	256,912
	Active communities at end of period		46			44			43			48			42

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(1)  Home gross margins is defined as home sales revenues less cost of home sales, which includes land, house construction costs, indirect costs of construction, capitalized interest, a reserve for warranty expense and closing costs, as a percent of home sales revenue.

							Three Months Ended
	Fiscal Years Ended May 31,
							August 31,		August 31,
	2005		2004		2003		2005		2004
Net new home orders (units):
Atlanta		503		615		283		158		93
Dallas		519		478		453		187		132
Houston		409		364		375		97		80
Orlando		450		246		123		88		59
Phoenix		349		432		97		123		117
Company total		2,230		2,135		1,331		653		481
Homes closed (units):
Atlanta		461		492		297		87		127
Dallas		494		437		446		114		122
Houston		342		372		410		111		95
Orlando		190		209		67		46		40
Phoenix		407		187		21		56		82
Company total		1,894		1,697		1,241		414		466
Average sales price per home closed (dollars in thousands):
Atlanta	$	272	$	271	$	318	$	289	$	272
Dallas		199		189		188		223		193
Houston		211		213		215		230		201
Orlando		242		196		249		257		216
Phoenix		294		220		207		332		249
Company average	$	244	$	222	$	231	$	257	$	228
Backlog (units) at end of period:
Atlanta		260		218		95		331		184
Dallas		231		206		165		304		216
Houston		208		141		149		194		126
Orlando		372		112		75		414		131
Phoenix		263		321		76		330		356
Company total		1,334		998		560		1,573		1,013
Sales value of backlog at end of period (dollars in thousands):
Atlanta	$	57,843	$	59,400	$	28,945	$	73,937	$	51,236
Dallas		50,955		40,990		30,207		64,375		44,452
Houston		47,632		30,006		32,610		43,910		24,749
Orlando		97,274		24,834		14,548		118,476		32,800
Phoenix		116,245		85,116		16,317		160,540		103,675
Company total	$	369,949	$	240,346	$	122,627	$	461,238	$	256,912

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							Three Months Ended
	Fiscal Years Ended May 31,
							August 31,		August 31,
	2005		2004		2003		2005		2004
Active communities at end of period:
Atlanta		8		9		11		9		8
Dallas		14		12		12		13		12
Houston		12		14		15		12		11
Orlando		5		3		3		5		3
Phoenix		7		6		2		9		8
Company total		46		44		43		48		42

Three Months Ended August 31, 2005 Compared to Three Months Ended August 31, 2004

      Revenues. For the three month period ended August 31, 2005, revenues decreased by $23.7 million or 18.1% as compared to the same period from the prior fiscal year as we experienced a 99.7% decline in land sales revenue from $23.9 million to $0.1 million. We closed 414 homes in the three months ended August 31, 2005, compared to 466 home closings in the same period in 2004, a decrease of 11.2%. The decline in home closings resulted from land development delays experienced in Atlanta and Orlando due to the series of hurricanes in fiscal year 2005 and significant subcontractor delays in Phoenix related to the strong homebuilding environment in that city. This decline in home closings was offset by an 12.7% increase in the average sales price of homes closed to $257,000 as compared to $228,000 for the prior year period.

      Gross Margins. Home gross margins were 20.7% for the three months ended August 31, 2005, compared with 21.1% in the same period a year ago. The decrease in our home gross margins was due to the mix of homes closed this fiscal quarter as compared to the same period a year ago. Homes closed in the three months ended August 31, 2005 were more heavily weighted towards homes in Dallas and Houston which have lower home gross margins than homes closed in Atlanta, Orlando and Phoenix.

      Sales & Marketing Expenses. Sales and marketing expenses, which include sales commissions, advertising, model expenses and other costs, totaled $7.2 million during the three month period ended August 31, 2005, compared to $6.9 million in the three month period ended August 31, 2004. The increase of 4.3%, or $0.3 million, was primarily due to start-up expenses incurred in Tampa and Denver. Total sales and marketing expenses increased to 6.8% of total revenues as to compared to 5.3% in the same period a year ago.

      General & Administrative Expenses. General and administrative expenses totaled $8.3 million in the three-month period ended August 31, 2005, compared with $6.3 million in three month period ended August 31, 2004. The increase of $2.0 million represents a 31.7% growth in these costs. These costs were driven primarily by the investment in start-up divisional operations in Tampa and Denver, continued operational growth in Orlando and Phoenix and the commensurate increases in our corporate staff to support these operations.

      Net Income. As compared to the three month period ended August 31, 2004, net income in the three-month period ended August 31, 2005, decreased 72.6% or $16.1 million. The decline resulted primarily from the decrease in land sale income in Denver and Orlando and the decrease in home closings offset somewhat by an increase in average sales price per home of 12.7% from approximately $228,000 per home sale in the prior period to $257,000 in the current period. Total sales and marketing expenses increased $0.3 million due primarily to start-up expenses in Denver and Tampa. General and administrative expenses increased $2.0 million during the period as our new divisions, Denver and Tampa, experienced growth in their operations, and, to a lesser extent, as a result of continued operational growth in Orlando and Phoenix and an increase in our corporate staffing. Total sales and marketing and general and administrative expenses, as a percentage of total revenues increased to 14.5% from 10.2% in the prior period, due to the significant decline in land sales income and the decline in homes closed. Earnings from

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unconsolidated entities, which represent earnings primarily from our mortgage and title joint ventures in which we have a 49% ownership interest, increased $0.2 million.

      Net New Home Orders and Backlog. Net new home orders increased significantly by 35.8%, or 172 orders, during the three-month period ended August 31, 2005 as compared to the three-month period ended August 31, 2004. This increase was the result of our growth in active communities and additional product expansion, with the opening of two townhome communities in Dallas, and an additional stacked flat condominium community and the opening of our first active adult community both in Atlanta.

      Net new home orders in the Atlanta operation increased in the three-month period ended August 31, 2005 to 158 from 93 in the three-month period ended August 31, 2004, representing an increase of 65 orders or 69.9%. This increase reflects the increase in active communities from 8 to 9 with the successful opening of an additional stacked flat condominium community and our continued product expansion with the opening of our first active adult community.

      Total new home orders increased in Dallas to 187 in the three-month period ended August 31, 2005, compared to 132 in the three-month period ended August 31, 2004. This increase of 55 orders, or 41.7%, reflects the increase in active communities in the Dallas market from 12 at August 31, 2004 to 13 at August 31, 2005, with the expansion of our product mix in Dallas with the successful opening of two townhome projects during the current fiscal quarter.

      Net new home orders in Houston increased to 97 in the three-month period ended August 31, 2005, compared to 80 in the three-month period ended August 31, 2004. This increase of 17 orders, or 21.3%, reflects the increase in active communities in the Houston market from 11 at August 31, 2004 to 12 at August 31, 2005.

      Net new home orders in Orlando continued to be strong due to the favorable market conditions and the increase in active communities in the three-month period ended August 31, 2005, with 88 new orders. This represents an increase of 49.2% over the three-month period ended August 31, 2004, of 59 orders.

      Net new home orders in Phoenix increased by six orders to 123 in the three months ended August 31, 2005, as compared to 117 in the three months ended August 31, 2004, as we limited the number of new home orders accepted during the quarter due to our significant backlog and our desire to focus our production capacity on completing the homes in our backlog. In addition, land development in several new communities was delayed in part due to severe wet weather experienced in the winter of fiscal 2005 and the strong demand for subcontractors. We expect land development delays to continue for the next several quarters.

      Backlog as of August 31, 2005, reached the highest level in our history, at 1,573 orders representing approximately $461.2 million and an increase in the sales value backlog of $204.3 million or 80.0% at the end of the current period as compared to August 31, 2004. We expect, assuming no significant change in market conditions or mortgage interest rates, that approximately 80.0% — 85.0% of our backlog will close under existing sales contracts during the remaining months of fiscal year 2006. The remaining 15.0% — 20.0% of the homes in backlog are not expected to close under existing contracts due to cancellations.

Fiscal year 2005 compared to fiscal year 2004

      Revenues. Revenues increased 21.0% or $86.8 million for fiscal year 2005 as compared to fiscal year 2004. We experienced an 11.6% increase in homes closed to 1,894 from 1,697 and an increase in our average sales price per home closed of 9.9% to $244,000 as compared to $222,000 in fiscal year 2004. We increased our revenues from land sales to $37.0 million for fiscal year 2005 as compared to $34.6 million in the prior year, primarily as a result of land sales in Orlando and Denver.

      Homes closed increased significantly in Dallas and Phoenix in fiscal year 2005 as compared to the prior year as a result of increased active communities in both cities. In addition, the Phoenix division’s backlog at the end of fiscal year 2004 was significant which assisted with its closings growth during the year.

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      Gross Margins. Home gross margins were 21.0% for fiscal year 2005 compared to 20.5% in the prior year. The increase in our home gross margins was due to the increased pricing power we experienced as a result of the continued strong demand for our homes in Dallas, Orlando and Phoenix. Our diversification into townhomes in Atlanta and Orlando also favorably impacted our margins. Land gross margins improved to 53.6% for fiscal year 2005 compared to 32.7% in the prior year primarily due to higher prices of undeveloped land in Orlando.

      Sales and Marketing Expenses. Sales and marketing expenses, which include sales commissions, advertising, model expenses and other costs, totaled $26.5 million for fiscal year 2005 or 5.3% of revenues, compared to $23.8 million in fiscal year 2004 or 5.8% of revenues. The increase of $2.7 million or 11.3%, was primarily due to the larger volume of homes available for sale and closed during the current fiscal year. The increase reflects the 11.6% increase in homes closed, the related increase in sales commissions, and the increase in marketing costs experienced by the Orlando and Phoenix divisions as their operations continue to grow and establish brand recognition in their respective markets.

      General and Administrative Expenses. General and administrative expenses totaled $28.9 million in fiscal year 2005 or 5.8% of revenues, compared to $20.2 million in the prior year or 4.9% of revenues. The increase of $8.7 million resulted from continued significant growth in Orlando and Phoenix, the investment in the start-up divisional operations in Tampa and Denver, the commensurate increases in our corporate staff to support these operations and, to a lesser extent, increased compensation costs attributable to the increase in net earnings as all bonuses earned by corporate and division management are partially based on our profitability.

      Net Income. Net income increased $17.0 million or 40.1% in the year ended May 31, 2005 as compared to the year ended May 31, 2004. The increase resulted primarily from the increase in homes closed, an increase in average sales price per home closed of 9.9% and an increase in land sales in Orlando and Denver over the prior year. Total sales and marketing expenses increased $2.7 million due primarily to the increase in homes closed and the related commissions attributable to those homes. General and administrative expenses also increased $8.7 million during the fiscal year due to significant growth in our Orlando and Phoenix operations, the establishment of two new operations in Denver and Tampa, respectively, and, to a lesser extent, to an increase in our corporate staffing. As a result, total sales and marketing and general and administrative expenses increased as a percentage of total revenues by 0.4%.

      Net New Home Orders and Backlog. Net new home orders increased 4.4% or 95 orders, during the year ended May 31, 2005 as compared to the prior fiscal year. The increase was the result of an increase in our active communities and the number of homes available for sale primarily in Houston, Orlando and Dallas offset by a decline in net new home orders in Atlanta and Phoenix.

      Net new home orders in Atlanta declined in fiscal year 2005 to 503 as compared to 615 in the prior fiscal year, representing a decrease of 112 orders, or 18.2%. The decrease reflects the decline in active communities from nine to eight as we experienced significant delays in land development due to weather and governmental permitting issues.

      Net new home orders in Orlando increased to 450 in the fiscal year ended May 31, 2005 compared to 246 in the fiscal year ended May 31, 2004. This increase of 204 orders, or 82.9%, reflects the increase in active communities in the Orlando market from three at May 31, 2004 to five at May 31, 2005 despite the delayed opening of several new communities due to significant weather related delays as a result of the severe hurricane season during the fall of 2004.

      Net new home orders in Phoenix declined to 349 in the fiscal year ended May 31, 2005 as compared to 432 net new home orders in the prior year representing 83 units, or 19.2%. This reduction was primarily due to limits that we placed on the number of new home orders that we accepted during the fiscal year due to our significant backlog and our desire to focus our production capacity on completing the homes in our backlog. In addition, land development in several new communities was delayed due in part to the severe wet weather experienced in the winter and to the strong demand for subcontractors.

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      Backlog as of May 31, 2005 was 1,334, homes representing a sales value of $369.9 million and an increase in the sales value of backlog of $129.6 million or 53.9% at the end of the fiscal year as compared to the sales value of backlog of $240.3 million at the end of fiscal year 2004. We expect, assuming no significant change in market conditions or mortgage interest rates, that approximately 80.0%-85.0% of our backlog will close under existing sales contracts during the first nine months of fiscal year 2006 which is consistent with our historical experience.

Fiscal year 2004 compared to fiscal year 2003

      Revenues. Fiscal year 2004 revenues increased by $105.2 million or 34.2% as compared to fiscal year 2003. This increase was attributable to a 36.7% growth in homes closed to 1,697 from 1,241 in fiscal year 2003. Land sales increased $14.9 million, or 75.6%, from $19.7 million to $34.6 million primarily as a result of an increase in land activity in Denver and Orlando. These increases were partially offset by a decline in our average sales price per home closed to $222,000, which represents a $9,000 or 3.9% decrease.

      Our homes closed were significantly higher in fiscal year 2004 compared to 2003. The growth in homes closed was attributable to the sales achieved in our Atlanta townhome communities. These townhomes sold well ahead of expectations. Orlando and Phoenix also produced 308 additional homes closed during fiscal year 2004, which represents a significant increase over fiscal year 2003. We closed fewer homes in fiscal year 2004 in Dallas and Houston due in part to the difficult economy in Texas and the existence of fewer active communities during fiscal year 2004 as compared to the prior year.

      The average sales price of our homes closed declined by $9,000 or 3.9% to $222,000 in fiscal year 2004 compared to $231,000 in fiscal year 2003. We experienced the most significant decline in average sales price of $53,000 in Orlando as we opened our second active community with a lower-end townhome product that produced significant results during the fiscal year. The Atlanta operation experienced the second largest decline of $47,000 per home closed. The Atlanta operation has purposely diversified its product mix to include a lower priced townhome product to appeal to a wider segment of the public.

      Gross Margins. Home gross margins were 20.5% for the fiscal year ended May 31, 2004, compared to 17.3% in fiscal year 2003. The increase in our home gross margins was due primarily to strong demand for our homes and increases in selling prices in select communities in Dallas, Orlando and Phoenix. Home gross margins were also positively impacted by leveraging our national purchasing power to minimize the impact of material cost increases. Land gross margins were 32.7% for the fiscal year ended May 31, 2004 compared to 19.2% in the prior year due to higher prices for undeveloped land in Orlando and Denver.

      Sales and Marketing Expenses. Sales and marketing expenses totaled $23.8 million during fiscal year 2004, compared to $18.7 million in fiscal year 2003. The increase of $5.1 million or 27.3% was primarily due to an increase in homes closed and the related increase in sales commissions. Another factor was the increase in marketing costs experienced by the new Orlando and Phoenix divisions as their operations continue to grow. Sales and marketing expenses declined as a percentage of total revenues to 5.8% in fiscal year 2004 as compared to 6.1% in fiscal year 2003.

      General and Administrative Expenses. General and administrative expenses totaled $20.2 million in fiscal year 2004, compared to $16.6 million in fiscal year 2003 which represents a $3.6 million or 21.7% increase. The increase in fiscal year 2004 is primarily due to the increased administrative costs of growing the two newest divisions in Orlando and Phoenix, the commensurate increases in our corporate staff to support these operations, and, to a lesser extent, increased compensation costs attributable to the increase in net earnings as all bonuses earned by corporate and division management are partially based on our profitability. General and administrative expenses declined as a percentage of total revenue for fiscal year 2004 to 4.9% as compared to 5.4% for fiscal year 2003.

      Net Income. Net income increased 157.2% or $25.9 million during fiscal year 2004 as compared to fiscal year 2003. The increase resulted primarily from the growth in home sales revenue and a 3.2% improvement in home gross margins. In addition, land sales, primarily in Denver and Orlando, contributed

44

significantly to our profitability. However, total sales and marketing expenses increased $5.1 million or 27.3% due primarily to the increased homes closed and the related commissions and closing costs attributable to those homes. General and administrative expenses also increased $3.6 million or 21.7% during the year as our new divisions, Orlando and Phoenix, experienced significant growth in their operations, and, to a lesser extent, an increase in our corporate staffing.

      Net New Home Orders and Backlog. Net new home orders improved significantly during fiscal year 2004 as compared to fiscal year 2003 for a number of reasons despite the fact that we only had one additional active community during fiscal year 2004. The Atlanta, Orlando, and Phoenix divisions experienced strong sales due to the strong housing market in each city and an increase in net new home orders per active community as compared to fiscal year 2003.

      Net new home orders in Atlanta increased significantly in fiscal year 2004 to 615 from 283 in fiscal year 2003, which represents an increase of 332 orders or 117.3%, despite a reduction in active communities to nine in fiscal year 2004 from 11 in fiscal year 2003. Sales increased in many of the operation’s communities; however, the sales increase was the most significant in its townhome communities due to their design and location.

      Net new home orders in Orlando also increased significantly to 246 in fiscal year 2004 compared to 123 in fiscal year 2003, which represents an increase of 123 orders or 100.0%. We experienced a full year of orders in our third active community — a townhome community introduced toward the end of fiscal year 2003 that experienced very strong net new home orders during fiscal year 2004.

      The Phoenix division experienced an increase in demand for its homes as it continued to increase its active community count by four to six active communities by the end of fiscal year 2004. The division began to raise prices toward the end of fiscal year 2004 in an effort to slow the exceptional demand for its homes to ensure the home production process could keep pace with the new home order volume.

      As a result of the significant increase in net new home orders, backlog as of May 31, 2004 reached 998 homes representing a value of $240.3 million. This also represented an increase in the sales value of backlog of $117.7 million or 96.0% at the end of fiscal year 2004 as compared to the prior year.

LIQUIDITY AND CAPITAL RESOURCES

      Our principal uses of cash are land purchases, lot development and home construction. We fund our operations with cash flows from operating activities and/or borrowings under our senior unsecured credit facility. As we utilize our capital resources and liquidity to fund the growth of our operations, we focus on maintaining conservative balance sheet leverage ratios. We believe that we will be able to continue to fund our operations and our future cash needs (including debt maturities) through a combination of cash flows from operating activities, our existing senior unsecured credit facility and the proceeds of the original notes issued and sold subsequent to the end of the quarter.

      As of August 31, 2005, our ratio of total debt to total capitalization was 52.8%, compared to 46.0% as of May 31, 2005. As of May 31, 2004, our ratio of total debt to total capitalization was 46.3%. Total debt to total capitalization consists of notes payable divided by total capitalization (notes payable plus members’ equity).

      Operating Cash Flow. During the three months ended August 31, 2005, we used approximately $33.8 million in cash from operating activities. We increased our investment in inventory by $47.7 million during the three months ended August 31, 2005, which was offset by net income earned during the period on homes closed, decreases in accounts receivable and increases in customer deposits.

      During the three months ended August 31, 2004, we generated approximately $26.5 million in cash from operating activities, which was due primarily to our profitability. We increased our investment in inventory by $4.2 million during the three months ended August 31, 2004.

      During the fiscal year ended May 31, 2005, cash generated from operating activities was $31.1 million. We increased our investment in inventory by $50.3 million during the fiscal year ended

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May 31, 2005, which was offset by net income earned during the period on homes closed and land sales and increases in accounts payable and customer deposits.

      Investing Cash Flow. Cash used in investing activities totaled $3.3 million for the three months ended August 31, 2005. We increased our investment in unconsolidated entities by $0.8 million and cash used for additions to capital assets of $2.5 million.

      Cash used in investing activities totaled $1.9 million for the three months ended August 31, 2004. We increased our investment in real estate not owned by $0.4 million and cash used for additions to capital assets of $1.5 million.

      For the fiscal year ended May 31, 2005, cash used in investing activities totaled $17.0 million. We increased our investment in unconsolidated entities by $10.4 million in addition to investments in real estate not owned of $0.4 million and additions to capital assets of $6.2 million.

      Financing Cash Flow. During the three months ended August 31, 2005, cash provided by financing activities totaled $37.1 million, which included an increase in our debt outstanding under our senior unsecured credit facility of $47.0 million, repayments of amounts outstanding under our senior unsecured credit facility of $7.0 million, a reduction in related party debt of $0.9 million and a distribution of $2.1 million to our members for the payment of federal and state income taxes and as general distributions of our income.

      During the three months ended August 31, 2004, cash used by financing activities totaled $25.1 million, which included repayments of amounts outstanding under our senior unsecured credit facility of $22.1 and $3.0 million to our members for the payment of federal and state income taxes and as general distributions of our income.

      During fiscal year 2005, cash used in financing activities totaled $14.6 million, which included an increase in our debt outstanding under our senior unsecured credit facility of $12.2 million and an increase in related party notes of $10.3 million. These increases were offset by reductions in secured notes of $1.5 million and distributions totaling $33.7 million to our members for the payment of federal and state income taxes and as general distributions of our income.

      Senior Unsecured Credit Facility. In January 2005, we entered into a senior unsecured credit facility. The senior unsecured credit facility provides for up to $225.0 million of unsecured borrowings, subject to a borrowing base, and includes an accordion feature by which we may request, subject to certain conditions, an increase of the senior unsecured credit facility up to a maximum of $300.0 million. The senior unsecured credit facility provides for the issuance of up to $25.0 million in letters of credit. The maturity date of the senior unsecured credit facility is January 19, 2009. However, once during each fiscal year (i.e., June 1-May 31) we may request that the lenders extend the maturity date by an additional year. Our obligations under the senior unsecured credit facility are guaranteed by certain of our subsidiaries and all the holders of our membership interests. The senior unsecured credit facility contains various operating and financial covenants, and as of August 31, 2005, we were in compliance with all of these covenants.

      Borrowings under the senior unsecured credit facility are limited by the availability of sufficient real estate borrowing base, which is determined regularly throughout the life of the senior unsecured credit facility. At August 31, 2005, we had $132.1 million in outstanding borrowings, and $92.9 million in available borrowings under the senior unsecured credit facility.

      9.5% Senior Subordinated Notes. In September 2005, we issued $125 million aggregate principal amount of 9.5% Senior Subordinated Notes due 2015 in a private placement pursuant to Rule 144A promulgated under the Securities Act of 1933, as amended. Interest on the 9.5% Senior Subordinated Notes due 2015 is payable semiannually. The net proceeds were used to repay amounts outstanding under the Company’s senior unsecured credit facility and to repay certain related party debt.

      Contractual Obligations. Our primary contractual cash obligations for our operations are payments under our debt agreements, lease payments under operating leases and purchase obligations with specific performance requirements under lot option purchase agreements. These lot option purchase agreements

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may require us to purchase land contingent upon the land seller meeting certain obligations. We expect to fund our contractual obligations in the ordinary course of business through our operating cash flows, our senior unsecured credit facility and from the proceeds of the notes issued and sold in September 2005. As of August 31, 2005, our contractual obligations have not changed materially from those reported in audited consolidated financial statements for the fiscal year ended May 31, 2005.

      Our future cash requirements for contractual obligations as of May 31, 2005 are presented below:

	Payments Due by Period(4)
	Less Than		2-3		4-5		More Than
	1 Year		Years		Years		5 Years		Total
	(In thousands)
Senior unsecured credit facility(1)(2)	$	—	$	—	$	92,089	$	—	$	92,089
Secured promissory notes		1,000		2,000		1,700		—		4,700
Operating leases		1,580		2,452		541		—		4,573
Related parties(3)		13,746		—		—		—		13,746
Specific performance lot option purchase agreements		13,927		2,918		—		—		16,845
	$	30,253	$	7,370	$	94,330	$	—	$	131,953

(1)	As of May 31, 2005, after giving effect to the issuance and sale of the original notes and the application of the proceeds therefrom, there would have been no outstanding borrowings under the line of credit.
(2)	At May 31, 2005, our operations had outstanding undrawn letters of credit of $11.0 million. We expect that our performance obligations secured by these letters of credit will generally be completed in the ordinary course of business and in accordance with the applicable contractual terms. When we complete our performance obligations, the related letters of credit are generally released shortly thereafter, leaving us with no continuing obligations.
(3)	After giving effect to prior repayments and the issuance and sale of the notes offered hereby and the application of the proceeds therefrom, there will be no remaining amounts owed to related parties.
(4)	Excludes obligations of certain entities consolidated under FIN 46R.

OFF-BALANCE SHEET ARRANGEMENTS

      In the ordinary course of its business, we enter into land and lot option purchase contracts with unaffiliated entities in order to procure land or lots for the construction of homes. Under such option purchase contracts, we will fund a stated deposit in consideration for the right, but not the obligation, to purchase land or lots at a future point in time with predetermined terms. Under the terms of the option purchase contracts, many of our option deposits are non-refundable. Under FASB Interpretation No. 46, “Consolidation of Variable Interest Entities,” as amended by FIN 46-R issued in December 2003 (“FIN 46R”), certain non-refundable deposits are deemed to create a variable interest in a variable interest entity under the requirements of FIN 46R. As such, certain of our option purchase contracts result in the acquisition of a variable interest in the entity holding the land parcel under option.

      In applying the provisions of FIN 46R, we evaluated those land and lot option purchase contracts with variable interest entities to determine whether we are the primary beneficiary based upon analysis of the variability of the expected gains and losses of the entity. Based on this evaluation, if we are the primary beneficiary of an entity with which we have entered into a land or lot option purchase contract, the variable interest entity is consolidated.

      The consolidation of these variable interest entities added $14.9 million, $12.6 million and $1.9 million in real estate not owned, liabilities related to real estate not owned and minority interests in real estate not owned, respectively, to our balance sheet at August 31, 2005 and added $14.9 million, $12.6 million and

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$2.0 million in real estate not owned, liabilities related to real estate not owned and minority interests in real estate not owned, respectively, to our balance sheet at May 31, 2005.

      We participate in a number of land development entities with equity investments of 50% or less and do not have a controlling interest. These land development entities are typically entered into with developers, other homebuilders and related parties to develop finished lots for sale to the members of the entities and other third parties. We account for our interest in these entities under the equity method. Our share of profits from these entities are deferred and treated as a reduction of the cost basis of land purchased from the entity. The land development entities with unrelated parties typically obtain secured acquisition and development financing. In some instances, the entity partners have provided varying levels of guarantees of debt of the unconsolidated entities. These repayment guarantees require us to repay our share of the debt of unconsolidated entities in the event the entity defaults on its obligations under the borrowings. We had repayment guarantees of $4.5 million and $4.2 million at August 31, 2005 and May 31, 2005, respectively.

LAND AND LOT POSITION AND HOMES IN INVENTORY

      At August 31, 2005, we controlled 6,632 lots, 35.7% of which were lots under option or similar contracts. The following is a summary of our land and lot positions for use in our homebuilding operations:

	As of August 31,			As of August 31,
	2005			2004
Finished lots owned		748			766
Lots under development owned		2,603			1,873
Raw land owned		912			1,699
Total lots owned		4,263			4,338
Lots controlled under lot option and similar contracts		2,369			1,554
Total land/lots controlled		6,632			5,892
Percentage controlled under option		35.7	%		26.4	%

      In addition to the land purchased specifically for our homebuilding operations, we have in the past pursued land development opportunities in which we acquired and developed lots for sale to third party builders in addition to the use in our own homebuilding operations. We still hold some of this land for our use and for sale to third party builders in Denver and Orlando, among other markets. At August 31, 2005, we owned 593 lots of raw land and land under development in Orlando, and 2 finished lots and 280 lots of raw land and land under development land in Denver that are not anticipated to be used in our homebuilding operations. At August 31, 2004, we owned 2 finished lots and 593 lots of raw land in Orlando, and 4 finished lots and 315 lots of raw land and land under development in Denver which were not anticipated to be used in our homebuilding operations.

      At August 31, 2005, we had a total of 108 model homes, 93 unsold homes under construction and 28 completed but unsold homes. At August 31, 2004, we had a total of 100 model homes, 55 unsold homes under construction and 16 completed but unsold homes.

INFLATION

      We and the homebuilding industry in general may be adversely affected during periods of inflation, primarily because of higher land, financing, labor and material construction costs. In addition, higher mortgage interest rates can significantly affect the affordability of permanent mortgage financing to prospective homebuyers. We attempt to pass through to our customers any increases in our costs through increased sales prices and, to date, inflation has not had a material adverse effect on our results of operations. However, there is no assurance that inflation will not have a material adverse impact on our future results of operations.

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SEASONALITY

      Historically, we have received fewer net new home orders in November and December, which fall in our second and third fiscal quarters, respectively, as result of the colder weather during those months. We expect this seasonal trend to continue, though it may vary if our operations expand to new markets.

CRITICAL ACCOUNTING POLICIES

      General. A more comprehensive enumeration of our significant accounting policies is presented in the notes to the accompanying financial statements as of and for the years ended May 31, 2005, 2004 and 2003. Each of our accounting policies has been chosen based upon current authoritative literature that collectively comprises generally accepted accounting principles (“GAAP”) for public companies operating in the United States of America. In instances where alternative methods of accounting are permissible under GAAP, we have chosen the method that most appropriately reflects the nature of our business, the results of our operations and our financial condition, and have consistently applied those methods over each of the periods presented in the financial statements.

      Some of our critical accounting policies require the use of judgment in their application or require estimates of inherently uncertain matters. Although our accounting policies are in compliance with GAAP, a change in the facts and circumstances of the underlying transactions could significantly change the application of the accounting policies and the resulting financial statement impact. Listed below are those policies that we believe are critical and require the use of complex judgment in their application.

      Basis of Presentation. Our financial statements include the accounts of Ashton Woods USA L.L.C. and all of its wholly-owned, majority-owned and controlled subsidiaries. All significant intercompany accounts, transactions and balances have been eliminated in consolidation. We have also consolidated certain variable interest entities from which we are purchasing lots under option purchase contracts, under the requirements of FASB Interpretation No. 46R issued by the Financial Accounting Standards Board (“FASB”).

      Revenue Recognition. We recognize homebuilding revenues when a home closes and title to and possession of the property are transferred to the buyer. Substantially all of our revenues are received in cash within a day or two of closing. We include amounts in transit from title companies at the end of each reporting period in accounts receivable. When we execute sales contracts with our homebuyers, or when we require advance payment from homebuyers for custom changes, upgrades or options related to their homes, we record the cash deposits received as liabilities until the homes are closed or the contracts are canceled. We either retain or refund to the homebuyer deposits on canceled sales contracts, depending upon the applicable provisions of the contract.

      Inventories and Cost of Sales. We state inventories at historical cost unless an impairment loss has been recorded in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 144. In addition to the costs of direct land acquisition, land development and home construction, inventory costs include interest, real estate taxes and indirect overhead costs incurred during development and home construction.

      We use the specific identification method for the purpose of accumulating home construction costs. Cost of sales for homes closed includes the specific construction costs of each home and all applicable land acquisition, land development and related costs (both incurred and estimated to be incurred) based upon the total number of homes expected to be closed in each project. Any changes to the estimated total development costs subsequent to the initial home closings in a project are generally allocated on a pro-rata basis to the remaining homes in the project.

      When a home is closed, we generally have not yet paid and recorded all incurred costs necessary to complete the home. Each month we record as a liability and as a charge to cost of sales the amount we estimate will ultimately be paid related to completed homes that have been closed as of the end of that month. We compare our home construction budgets to actual recorded costs to estimate the additional costs remaining to be paid on each closed home. We monitor the accuracy of each month’s accrual by

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comparing actual costs incurred on closed homes in subsequent months to the amount we accrued. Although actual costs to be paid on closed homes in the future could differ from our current estimate, our method has historically produced consistently accurate estimates of actual costs to complete closed homes.

      Each quarter, we review all components of our inventory for the purpose of determining whether recorded costs and costs required to complete each home or project are recoverable. If our review indicates that an impairment loss is required under the SFAS No. 144 guidelines, we estimate and record such loss to cost of sales in that quarter. To date, such impairment losses have been insignificant in the aggregate. Impairment assessments under SFAS No. 144 involves management estimates of future revenues and costs and, due to uncertainties in the estimation process, actual results could differ from such estimates.

      Consolidation of Variable Interest Entities. In January 2003, FASB issued FASB Interpretation No. 46, “Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51” (“FIN 46”). In December 2003, FIN 46 was replaced by FIN 46R. FIN 46R requires the consolidation of variable interest entities in which an enterprise absorbs a majority of the entity’s expected losses, receives a majority of the entity’s expected residual returns, or both, as a result of ownership, contractual or other financial interests in the entity. Prior to the issuance of FIN 46R, entities were generally consolidated by an enterprise when it had a controlling financial interest through ownership of a majority voting interest in the entity. FIN 46R applied immediately to variable interest entities created after December 31, 2003, and with respect to variable interest entities created before January 1, 2004, FIN 46R was not required to be applied until the first annual period beginning after December 15, 2004.

      In the ordinary course of business, we enter into land and lot option purchase contracts in order to procure land or lots for the construction of homes. Under such option purchase contracts, we will fund a stated deposit in consideration for the right, but not the obligation, to purchase land or lots at a future point in time with predetermined terms. Under the terms of the option purchase contracts, many of our option deposits are non-refundable. Certain non-refundable deposits are deemed to create a variable interest in a variable interest entity under the requirements of FIN 46R. As such, certain of our option purchase contracts result in the acquisition of a variable interest in the entity holding the land parcel under option.

      In applying the provisions of FIN 46R, we evaluate those land and lot option purchase contracts with variable interest entities to determine whether we are the primary beneficiary based upon analysis of the variability of the expected gains and losses of the entity. Based on this evaluation, if we are the primary beneficiary of an entity with which we have entered into a land or lot option purchase contract, the variable interest entity is consolidated.

      Since we own no equity interest in any of the unaffiliated variable interest entities that we must consolidate pursuant to FIN 46R, we generally have little or no control or influence over the operations of these entities or their owners.

      When our requests for financial information are denied by the land sellers, certain estimates about the assets and liabilities of such entities are required. In most cases, the fair value of the assets of the consolidated entities have been estimated to be the remaining contractual purchase price of the land or lots we are purchasing. In these cases, it is estimated that the entities have no significant debt obligations and the only asset recorded is the land or lots we have the option to buy with a related offset to minority interest for the assumed third party investment in the variable interest entity. Creditors, if any, of these variable interest entities have no recourse against us.

      Warranty Liabilities. We establish warranty liabilities by charging cost of sales and crediting a warranty liability for each home closed. Unlike our two-and ten-year warranties which we insure through a third-party insurance company, we self-insure for our obligations under our one-year warranties. Consequently, we estimate the amounts charged to be adequate to cover expected warranty-related costs for materials and labor required under the one-year warranty obligation period. The one-year warranty is comprehensive for all parts and labor. Our warranty liabilities are based upon our historical warranty cost experience in each market in which we operate and are adjusted as appropriate to reflect qualitative risks

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associated with the type of homes we build and the geographic areas in which we build them. Actual future warranty costs could differ significantly from our currently estimated amounts.

      Insurance Claim Costs. We have, and require the majority of our subcontractors to have, general liability and workers compensation insurance. These insurance policies protect us against a portion of our risk of loss from claims, subject to certain deductibles and other coverage limits. We accrue an estimated liability for costs to cover our deductible amounts under those policies and for any estimated costs of claims and lawsuits in excess of our coverage limits or not covered by our policies, based on an analysis of our historical claims, which includes an estimate of construction defect claims incurred but not yet reported. Projection of losses related to these liabilities is subject to a high degree of variability due to uncertainties such as trends in construction defect claims relative to our markets and the types of products we build, claim settlement patterns, insurance industry practices, and legal interpretations, among others. Because of the high degree of judgment required in determining these estimated liabilities, actual future costs could differ significantly from our currently estimated amounts.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

      We are exposed to a number of market risks in the ordinary course of business. Our primary market risk exposure for financial instruments relates to fluctuations in interest rates. We do not believe our exposure in this area is material to cash flows or earnings. From time to time, we have entered into interest rate swap agreements to manage interest costs and hedge against risks associated with fluctuating interest rates with respect to floating rate debt. We do not enter into or hold derivatives for trading or speculative purposes. As of August 31, 2005, we had a total of $132.1 million of floating rate debt outstanding under our senior unsecured credit facility, and borrowings under that facility generally bear interest based on an applicable margin plus LIBOR or an alternate base rate. As of August 31, 2005, we were not a party to any interest rate swap agreements.

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Business

       We are one of the largest private homebuilders in the United States. We design, build and market high-quality single-family detached homes, townhomes and stacked-flat condominiums under the Ashton Woods Homes brand name. We operate in Atlanta, Dallas, Houston, Orlando and Phoenix and are establishing homebuilding operations in Tampa and Denver. These cities represent seven of the 20 largest new residential housing markets in the United States. We have been in operation for over 15 years and serve a broad customer base including first-time buyers and first- and second-time move-up buyers. We focus on achieving the highest standards in design, quality and customer satisfaction. We have received numerous awards, including the 2005 and 2004 J.D. Power Award for Highest in Customer Satisfaction with New Homebuilders in Atlanta, and we were ranked in the top 10% of all homebuilders nationally in customer satisfaction in 2005 and 2004 by a nationally recognized survey company.

BUSINESS STRATEGY

      Provide Our Customers with Superior Value, Quality and Customer Service. We are recognized for building homes that offer superior design, excellent quality and outstanding value. We believe that our rigorous focus on value, quality and customer service provides us with an important competitive advantage and enables us to increase our sales and enhance our profitability. We perform comprehensive research of homebuyer preferences and utilize the services of award-winning outside architectural firms to provide our customers with attractive, well designed homes, consistent with the tastes and trends in each of our markets. We offer our homebuyers the opportunity to customize their new homes in our state-of-the-art Ashton Woods Homes Design Centers in Atlanta, Dallas, Houston and Orlando, or in our fully decorated model homes in each of our communities. We instill in all our employees the importance of high quality and superior customer service through extensive in-house training, as well as through a compensation structure directly tied to our J.D. Power customer satisfaction results.

      Our reputation for outstanding quality, superior designs and excellent customer service is evidenced by the numerous awards and accolades we have received over the past several years. These awards include the 2005 Best Model Park in Houston (HBA), the 2004 Small Volume Builder of the Year (MAME) in Phoenix, the 2004 Best Interior Merchandising for Homes from $226,000 to $350,000 (MAME) in Phoenix, the 2004 Best Detached Floor Plan Design for Homes from $226,000 to $350,000 (MAME) in Phoenix, first place in 2004 for Production Detached Homes from $296,000 to $307,000 (HBA) in Orlando, first place in 2003 for Production Attached Homes from $152,000 to $175,000 (HBA) in Orlando and the 2003 Grand Award for Attached Homes (HBA) in Orlando. Additionally, we were the only homebuilder to receive a five-star rating for home design in Atlanta, where we were also awarded Highest in Customer Satisfaction with New Homebuilders by J.D. Power in 2005 and 2004. Our commitment to customer service has been further recognized in a nationwide survey, where we ranked in the top 10% of homebuilders nationally in 2005 and 2004. We intend to continue to increase sales and profitability by continuing to provide superior values, quality and customer service.

      Leverage Our Product, Customer and Geographic Diversification. We offer a broad portfolio of products including single-family detached homes, townhomes and stacked-flat condominiums, designed for and marketed to first-time buyers and first- and second-time move-up buyers. We operate in seven geographically diverse markets. Our product, customer and geographic diversification enables us to balance dynamic market conditions, enhance financial stability and reduce our exposure to any specific market or homebuyer segment. Single-family detached homes, townhomes and stacked-flat condominiums accounted for 73%, 14% and 13%, respectively, of our net new home orders for the quarter ended August 31, 2005 and 70%, 20% and 10%, respectively, of our net new home orders for the fiscal year ended May 31, 2005 and. We capitalize on our broad product portfolio by targeting a diversified customer base. We estimate that first-time buyers, and first- and second-time move-up buyers accounted for 34%, 46% and 20%, respectively, of our net new home orders during the quarter ended August 31, 2005 and 40%, 34% and 26%, respectively, of our net new home orders during the fiscal year ended May 31, 2005.

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      We believe we are able to successfully leverage our market presence in our existing markets and enhance our product offerings. We believe we are able to appeal to a broader group of homebuyers and enhance our growth without a significant increase of overhead costs. This strategy has proven successful as we continue to introduce new product lines in each of our markets including stacked-flat condominiums in Atlanta and Orlando, a townhome product line in Dallas and an active adult line targeted to buyers over 55 years of age in Atlanta. We intend to continue to leverage our product, customer and geographic diversification to enhance our growth prospects and profitability while maintaining a conservative financial profile.

      Pursue Disciplined Expansion in Large, High Growth Markets. We currently operate in Atlanta, Dallas, Houston, Orlando and Phoenix, five of the ten largest new residential housing markets in the United States by single-family housing starts. We are initiating operations in Tampa and Denver, the eleventh and fourteenth largest new residential housing markets in the United States. Our seven markets are also some of the fastest growing in the nation, achieving a compounded annual growth rate in single-family housing starts of 5.8% between 1999 and 2004, compared to the national average of 3.7%, according to Global Insight’s estimates. Enhancing our product and price point portfolio in each of our existing markets is central to our growth strategy. We perform extensive research, including customer focus groups, to determine demand for additional product offerings in each of our markets. We target the homebuyer segments with the most attractive demand and supply characteristics, which we identify with the help of proprietary market studies analyzing economic and demographic trends and the competitive environment. We believe our existing markets offer attractive long-term growth opportunities. We further believe we have demonstrated our ability to effectively compete and succeed in our markets through our expansion into townhomes, stacked-flat condominiums and an active adult line in certain of our markets.

      We will also continue to evaluate prudent expansion opportunities into select new markets. Our strategy for growth in new markets is driven by identifying large homebuilding markets with attractive long-term growth prospects and favorable supply and demand characteristics. We typically hire experienced local managers to manage each new market and initially focus on providing homes for the first- and second-time move-up buyer segments. While we consider acquisitions where attractive opportunities are identified, we have historically pursued a strategy of developing start-up operations to drive our expansion in select new markets.

      Acquire and Develop Strong Land Positions. We maintain a rigorous focus on only acquiring land in premier locations, which we believe provides us with superior competitive positioning and enhanced operational performance. We target land opportunities in each of our markets largely through the use of an in-depth analysis of supply and demand fundamentals, combined with site-specific financial feasibility studies, which we prepare with the help of our local operational managers. We utilize strict financial hurdles to evaluate each land acquisition opportunity. This process enables us to optimize our financial returns while minimizing our land and inventory risk.

      Additionally, we develop a significant portion of the land we use in our homebuilding operations. We believe that our considerable expertise in land development enables us to maintain attractive land positions, create desirable communities and optimize our financial returns. We intend to continue to utilize our disciplined land selection process and land development expertise to maintain and enhance our strong land positions.

      Manage Inventory Risk and Maintain Conservative Financial Profile. We operate with a conservative approach to financial and inventory management, maintaining prudent leverage and substantial liquidity. We have a disciplined land acquisition process with strict financial hurdles. All land purchases must be approved by our Chief Executive Officer and our Chief Financial Officer. We target a four-year supply of land, achieving a balance of land owned and developed for our own use, and additional lots controlled through option contracts. As of August 31, 2005, our supply of land controlled for use in our homebuilding operations was 3.6 years, consisting of a 2.3-year supply of owned land and a 1.3-year supply of land controlled through option contracts. Additionally, we actively manage our housing inventory by pre-selling substantially all of our homes prior to starting construction, limiting our inventory risk and

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minimizing our construction cycles. Limitations on the number of speculative units are approved at the corporate level. As of August 31, 2005, we had only 28 completed but unsold homes among our 48 active communities. Our disciplined strategy enables us to maintain a conservative leverage and liquidity profile. As of August 31, 2005, after giving effect to the issuance and sale of the original notes and the use of the proceeds therefrom, our total debt to total capitalization would have been 53.4%, and we would have had $201.3 million available for borrowing under our senior unsecured credit facility. We intend to continue to deploy our capital prudently and efficiently and to maintain a conservative inventory and financial profile.

      Leverage Our Highly Experienced Management Team. We benefit from a strong and experienced senior management team, with our executive officers averaging more than 15 years of experience in the homebuilding industry. Thomas Krobot, our Chief Executive Officer, has 34 years of industry experience and has been with our company since 1995. Robert Salomon, our Chief Financial Officer, has 13 years of industry experience and has been with us since 1998. In addition to our seasoned senior management team, we have an outstanding group of division presidents who manage our individual markets. Each division president brings substantial industry knowledge and deep market expertise, with an average of 16 years of experience in new residential construction.

HISTORY

      We are headquartered in Atlanta, Georgia. We were founded in 1989 in Dallas and have expanded into several growing housing markets primarily in the South and Southwest United States. Since our inception, we have grown organically by forming homebuilding and land development operations in select strategic markets with strong housing and employment growth characteristics.

      Our initial homebuilding operations were established in Dallas in 1989, followed by Houston in 1990 and Atlanta in 1992. We formed land development operations in Denver in 1994 and Orlando in 1998. We focused on growing our core markets until 2001 when we entered a second expansion phase through the formation of homebuilding operations in Orlando in 2001 and Phoenix in 2002. We most recently entered Tampa with homebuilding operations and expanded our presence in Denver with homebuilding operations in fiscal year 2005.

OWNERSHIP

      We are owned by seven families or family trusts related to the following individuals: Elly Reisman, Norman Reisman, Bruce Freeman, Seymour Joffe, Haydn Matthews, Larry Robbins and Harry Rosenbaum. The owners control the Company through individual Nevada-based holding companies in which each family or family trust owns all of the equity interests.

      The same families and family trusts or related parties also control the Great Gulf Group of Companies (“Great Gulf Group”), which was formed in Toronto in 1983. Great Gulf Group’s operations, in addition to Ashton Woods, consist of one of Toronto’s largest homebuilders of single-family attached and detached homes and high rise condominiums, a commercial, retail and industrial properties construction and management company, and other operations focused in land and resort development, as well as diversified financial investments.

MARKETS AND PRODUCTS

      We operate in Atlanta, Dallas, Houston, Orlando and Phoenix and are establishing operations in Tampa and Denver. We evaluate a number of factors in determining which geographic markets to enter. We analyze economic and real estate conditions by evaluating such statistical information as the historical and projected population growth, the number of new jobs created and projected to be created, the number of housing starts in previous periods, building lot availability and price, housing inventory, competitive environment, and home sale absorption rates.

      We generally seek to maintain the flexibility to alter our product mix within a given market depending on market conditions. In determining our product mix in each market we consider demographic

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trends, demand for a particular type of product, margins, timing and the economic strength of the market. While remaining responsive to market opportunities within the industry, we have focused, and intend to continue to focus, our business primarily on first-time and first- and second-time move-up buyers offering single-family detached homes, townhomes and stacked-flat condominiums, which are developments with four or fewer stories of condominium units.

      During the fiscal year ended May 31, 2005, our homebuilding revenue was comprised of single-family detached homes (79.4% of revenues) and townhomes (20.6% of revenues). While we develop single-family detached homes in all of our markets, townhomes are currently only offered in Atlanta, Orlando and Dallas. In addition, this year we began developing stacked-flat condominiums in the Atlanta and Orlando markets, which we believe will further diversify our product portfolio and appeal to a broader base of customers. For the quarter ended August 31, 2005, our homebuilding revenue was comprised of single-family detached homes (76% of revenues) and townhomes (24% of revenues).

      Our single-family detached homes range in price from $110,000 to over $650,000, and our townhomes range in price from $140,000 to over $400,000. Stacked-flat condominiums have prices ranging from $120,000 to over $170,000.

      As of August 31, 2005, we had 48 active communities in our existing markets, comprised of 40 communities of single-family detached homes, 5 communities of townhomes and 3 communities of stacked-flat condominiums.

      A summary of our activity by market is as follows:

		Three Months
		Ended
		August 31, 2005
				Average		As of August 31, 2005
				Sales
		Homes		Price per								Number of
		Closed		Home		Backlog		Sales Value of		Home Sites		Active
		(Units)		Closed		(Units)		Backlog		Remaining(1)		Communities
		(Dollars in thousands)
ATLANTA
	Single-family detached homes		15	$	361		77	$	22,236		658		3
	Townhomes		72		275		79		21,754		324		4
	Stacked-flat condominiums		—		—		175		29,947		41		2
	Active adult homes		—		—		—		—		129		—
DALLAS
	Single-family detached homes		114		223		271		57,896		1,274		12
	Townhomes		—		—		33		6,479		473		1
HOUSTON
	Single-family detached homes		111		230		194		43,910		976		12
ORLANDO
	Single-family detached homes		20		323		145		58,957		593		4
	Townhomes		26		206		142		31,695		405		—
	Stacked-flat condominiums		—		—		127		27,824		670		1
PHOENIX
	Single-family detached homes		56	$	332		330	$	160,540		705		9
TAMPA
	Single-family detached homes		—		—		—		—		302		—
DENVER
	Single-family detached homes		—				—		—		82		—

(1)  “Home sites remaining” is our estimate of the number of homes that could be built on the lots available for sale (owned and controlled) and land to be developed into lots by us for use in our homebuilding operations. This excludes land in Denver and Orlando that we do not anticipate using in our homebuilding operations.

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HOME DESIGN AND DESIGN CENTERS

      We are dedicated to providing high-quality, well-designed homes in desirable communities meeting the demands of today’s homebuyers. The product line offered in a particular community depends upon many factors, including the supply of existing housing and the demand for new housing in the general area. In order to ensure we meet the demand in the marketplace, we conduct in-depth qualitative and quantitative market research including consumer focus groups. This research enables us to improve the linkage between the design of our homes and the community development and meet the specific lifestyle demands of our targeted homebuyer.

      Our in-house architectural team manages outside architects to ensure our home designs provide maximum utilization of space for the wide variety of product offerings ranging from single-family detached homes and townhomes for both first-time homebuyers and move-up homebuyers to our stacked-flat condominiums for first-time homebuyers.

      We maintain fully decorated model homes in each of our communities merchandised to provide the homebuyers with the ability to view the completed product as part of their buying decision. In addition, we utilize our Ashton Woods Homes Design Centers to provide homebuyers the ability to personalize their homes. The design centers are staffed with expert in-house designers who can help make selections from an extensive array of products, including carpets, tiles, cabinets, light fixtures and countertops, among others. Our home design centers are organized to fully facilitate the home buying experience for both first-time homebuyers and move-up homebuyers.

LAND ACQUISITION AND DEVELOPMENT

      Our land strategy is to maintain a four-year land supply, based on homes closed during the last twelve months, and we believe that our attractive land positions in our markets will enable us to continue to increase our residential production. As of August 31, 2005, we had a land supply for use in our homebuilding operations of approximately 3.6 years, consisting of a 2.3-year supply of owned land and a 1.3-year supply of land controlled through option contracts.

      We typically purchase land only after necessary entitlements have been obtained so that development or construction may begin as market conditions dictate. The term “entitlements” refers to development agreements, tentative maps or recorded plats, depending on the jurisdiction within which the land is located. Entitlements generally give the developer the right to obtain building permits upon compliance with conditions that are ordinarily within the developer’s control. Even though entitlements are usually obtained before land is purchased, we are still required to secure a variety of other governmental approvals and permits during development. The process of obtaining such approvals and permits can substantially delay the development process. For this reason, we may consider, on a limited basis, purchasing unentitled property in the future when we can do so in a manner consistent with our business strategy.

      We select land for control based upon a variety of factors, including:

•  internal and external demographic and marketing studies;

•  project suitability;

•  suitability for development generally within a one to four-year time period from the beginning of the development process to the delivery of the last home;

•  financial review as to the feasibility of the proposed project, including projected profit margins, return on capital employed and the capital payback period;

•  results of environmental and legal due diligence;

•  proximity to local traffic corridors and amenities; and

•  management’s judgment as to the real estate market and economic trends, and our experience in a particular market.

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      In addition to the land purchased specifically for our homebuilding operations, we have in the past pursued land development opportunities in which we acquired and developed lots for sale to third party builders in addition to use in our own homebuilding operations. We still hold some of this land for our use and for sale to third party builders in Denver and Orlando, among other markets.

      Our land development activities in Denver consist of the development of custom lots for sale to third party custom builders in Parker, Colorado, which is southeast of Denver. As of August 31, 2005, we held two finished lots, nine acres under development, or an anticipated 41 finished lots, and 385 acres of raw land expected to be developed into 239 lots during the coming fiscal years for sale to third parties.

      In Orlando, we maintain a land development portfolio consisting of 179 acres as of August 31, 2005. The land is located in the Horizons West planning area in Orlando and is held for development for our own use and for sale as raw acreage and developed lots to third parties. We expect to retain 48 acres to be developed into 573 finished lots with the remaining 131 acres, or an anticipated 593 finished lots, targeted for sale to unrelated third party builders and developers upon the attainment of all the respective entitlements.

      We believe that we have significant land development expertise which we will continue to leverage in developing land for our own use. However, we do not plan to engage in land development for sale to third parties as a significant aspect of our business in the future.

      We acquire land through purchases, rolling option contracts and joint ventures with other builders or developers. We acquire approximately one-fourth of our land through rolling option contracts, which allow us to control lots and land without incurring the risks of land ownership or financial commitments other than relatively small non-refundable deposits. We enter into option contracts with third parties to purchase finished lots generally as home construction begins. These contracts are generally non-recourse and require non-refundable deposits of 2% to 15% of the sales price. As of August 31, 2005, we had $2.7 million in non-refundable deposits on real estate under option or contract. As of August 31, 2005, we had 6,632 lots under control for use in our homebuilding operations, 4,263 of which are owned by us and 2,369, or 35.7%, of which are available to us through rolling options. As of August 31, 2005, our commitments under option contracts with specific performance obligations were $7.7 million. Once we acquire land, we generally initiate development through contractual agreements with local subcontractors. These activities include site planning, engineering and home construction, as well as constructing road, sewer, water, utilities, drainage, recreation facilities and other refinements.

      The following table presents information regarding land owned and land under option by market as of August 31, 2005:

				Lots Under
	Finished			Development			Raw Land			Total Lots			Lots Under			Total Lots
Market	Lots			(# of Lots)			(# of Lots)			Owned			Option*			Controlled
Atlanta		96			378			439			913			239			1152
Dallas		429			183			110			722			1,025			1747
Houston		179			218			—			397			579			976
Orlando		29			1,026			363			1,418			250			1,668
Phoenix		15			676			—			691			14			705
Tampa		—			—			—			—			82			82
Denver		—			122			—			122			180			302
Total		748			2,603			912			4,263			2,369			6,632
% of total lots controlled		11.3	%		39.3	%		13.7	%		64.3	%		35.7	%		100	%

*  Includes (i) options under agreements with unrelated third parties and related parties, (ii) options under agreements with joint ventures with unrelated third parties and related parties, and (iii) 426 lots in Houston held by a joint venture with an unrelated third party that is managed by us and as to which option agreements do not yet exist. All of the controlled lots held by joint ventures described below under “Joint Ventures” are included in “Lots under option”.

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      Additionally, we own 593 lots of raw land in Orlando, and 2 finished lots and 280 lots of raw land and land under development in Denver that are not anticipated to be used in our homebuilding operations.

JOINT VENTURES

      Occasionally, we use partnerships or joint ventures to purchase and develop land where these arrangements are economically advantageous. As of August 31, 2005, we controlled 1,177 lots for future use by our homebuilding operations through joint ventures with unrelated third parties. We anticipate continuing to form new partnerships or joint ventures in the future where economically advantageous.

MARKETING AND SALES

      We believe that we have established a reputation for developing high quality homes, which helps generate interest in each new project. We market our products through a variety of means ranging from fully decorated model homes at each of our communities to newspaper and magazine advertising as well as internet exposure via our website. We focus on continually improving upon our brand awareness and maintaining consistency across our various markets. To this end, we have implemented a standardized sales office design and have increased national advertising to further these initiatives.

      We normally build, decorate, furnish and landscape between one and four model homes for each project and maintain on-site sales offices. As of August 31, 2005, we maintained 108 model homes, all of which were owned. We believe that model homes play a particularly important role in our marketing efforts. Consequently, we expend a significant effort in creating an attractive atmosphere at our model homes. Interior decorations are undertaken by local third-party design specialists, and vary within our models based upon the lifestyles of targeted homebuyers. Structural changes in design from the model homes are generally permitted within specific guidelines, and homebuyers may select various optional amenities through the Ashton Woods Homes Design Centers which allow our homebuyers to personalize their new home. The design centers are staffed with expert in-house designers that can help make selections from an extensive array of resources. Homebuyers can choose from among hundreds of carpets, tiles, floors, cabinets, light fixtures, countertops and more.

      We generally sell our homes through commissioned employees. Our personnel are available to assist prospective homebuyers by providing them with floor plans, price information, tours of model homes and assisting them with the selection of options. The selection of interior features is a principal component of our marketing and sales efforts. Sales personnel are trained by us and attend periodic meetings to be updated on sales techniques, competitive products in the area, the availability of financing, construction schedules and marketing and advertising plans, which management believes result in a sales force with extensive knowledge of our operating policies and housing products. Our policy also provides that sales personnel be licensed real estate agents where required by law.

      We sometimes use various sales incentives (such as landscaping and certain interior home options and upgrades) in order to attract homebuyers. The use of incentives depends largely on local economic and competitive market conditions.

CUSTOMER FINANCING

      As part of our objective to make the home buying process more convenient and to increase the efficiency of our building cycle, we originate mortgages for our customers through Ashton Woods Mortgage, LLC, which is a joint venture with Wells Fargo Home Mortgage. Ashton Woods Mortgage, LLC provides mortgage origination services only. It has a mortgage capture rate of more than 60.0% and does not retain or service the mortgages that it originates.

CONSTRUCTION

      We act as the general contractor for the construction of our projects. Subcontractors are typically retained on a project-by-project basis to complete construction at a fixed price. Agreements with our subcontractors and material suppliers are generally entered into after competitive bidding. Our divisional project operators supervise the construction of each project, coordinate the activities of subcontractors and

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suppliers, subject their work to quality and cost controls and assure compliance with zoning and building codes.

      We specify that quality, durable materials be used in the construction of our homes. We have numerous suppliers of raw materials and services used in our business, and such materials and services have been and continue to be available. From time to time we enter into regional and national supply contracts with certain of our vendors to leverage our purchasing power and size to control costs. However, we do not have any material long-term contractual commitments with any of our subcontractors or suppliers. We do not maintain inventories of construction materials except for materials being utilized for homes under construction. Material prices may fluctuate due to various factors, including demand or supply shortages, which may be beyond the control of our vendors. We believe that our relationships with our suppliers and subcontractors are good.

      Construction time for our homes depends on the availability of labor, materials and supplies, the type and size of the home, location and weather conditions. Our homes are designed to promote efficient use of space and materials, and to minimize construction costs and time. In all of our markets, construction of a home is typically completed within four to five months following commencement of construction.

WARRANTY PROGRAM

      We offer a standard one, two, ten-year warranty program. The one-year limited warranty covers workmanship and materials and includes home inspection visits with the customer. We subcontract our homebuilding work to subcontractors who provide us with an indemnity and a certificate of insurance prior to receiving payments for their work and, therefore, claims relating to workmanship and materials are generally the primary responsibility of our subcontractors. In addition, the first year of our warranty covers defects in plumbing, electrical, heating, cooling and ventilation systems, and construction defects. The second year of the warranty covers construction defects and certain defects in plumbing, electrical, heating, cooling and ventilation systems of the home (exclusive of defects in appliances, fixtures and equipment). The remaining years of protection cover only construction defects.

      We record a liability of approximately 0.7% to 1.0% of the sales price of a home to cover warranty expenses, although this allowance is subject to adjustment in special circumstances. Our historical experience is that warranty expenses generally fall within the amount established for such allowance.

      In addition, we maintain insurance coverage with Residential Warranty Corporation for construction defects. We believe that our accruals and third party insurance are adequate to cover the ultimate resolution of our potential liabilities associated with known and anticipated warranty and construction defect related claims and litigation.

CORPORATE OPERATIONS

      We perform the following functions at a centralized level:

•  evaluate and select geographic markets;

•  allocate capital resources to particular markets, including final approval of all land acquisitions;

•  regulate the flow of financial resources and maintain relationships with our lenders;

•  maintain centralized information systems; and

•  monitor the decentralized operations of our subsidiaries and divisions.

      We allocate capital resources necessary for new projects in a manner consistent with our overall operating strategy. We utilize return on assets, gross margins, net income margin and inventory turnover as the primary criteria for our allocation of capital resources. We will vary the capital allocation based on market conditions, results of operations and other factors. Capital commitments are determined through consultation among selected executive and operational personnel, who play an important role in ensuring that new projects are consistent with our strategy. Centralized financial controls are also maintained through the standardization of accounting and financial policies and procedures.

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      Structurally, we operate through separate divisions, which are located within the market in which they operate. Each division is managed by executives with substantial experience in the division’s market. In addition, each division is equipped with the skills to complete the functions of land acquisition, land development, construction, marketing, sales, product service and accounting.

COMPETITION AND MARKET FACTORS

      The development and sale of residential properties is highly competitive and fragmented. We compete for sales on the basis of a number of interrelated factors, including location, reputation, amenities, design, quality and price, with numerous large and small homebuilders, including some homebuilders with nationwide operations and greater financial resources and/or lower costs than us. We also compete for sales with individual resales of existing homes, available rental housing and resales of stacked-flat condominiums. We believe that we compare favorably to other builders in the markets in which we operate, due primarily to our experience within our geographic markets and breadth of product line, which allows us to vary our product offerings to reflect changing conditions within a market; our responsiveness to market conditions, enabling us to capitalize on the opportunities for advantageous land acquisitions in desirable locations; and our reputation for quality design, construction and service.

      The demand for new housing is affected by consumer confidence levels and prevailing economic conditions generally, including employment and interest rate levels. A variety of other factors affect the housing industry and demand for new homes, including the availability of labor and materials and increases in the costs thereof, changes in costs associated with home ownership such as increases in property taxes and energy costs, changes in consumer preferences, demographic trends and the availability of and changes in mortgage financing programs.

GOVERNMENT REGULATION AND ENVIRONMENTAL MATTERS

      Substantially all of our land is purchased with entitlements, giving us the right to obtain building permits upon compliance with specified conditions, which generally are within our control. Upon compliance with such conditions, we must obtain building permits. The length of time necessary to obtain such permits and approvals affects the carrying costs of unimproved property acquired for the purpose of development and construction. In addition, the continued effectiveness of permits already granted is subject to factors such as changes in policies, rules and regulations and their interpretation and application. Several governmental authorities have imposed impact fees as a means of defraying the cost of providing certain governmental services to developing areas. To date, the governmental approval processes discussed above have not had a material adverse effect on our development activities, and indeed all homebuilders in a given market face the same fees and restrictions. There can be no assurance, however, that these and other restrictions will not adversely affect us in the future.

      We may also be subject to periodic delays or may be precluded entirely from developing communities due to building moratoriums or “slow-growth” or “no-growth” initiatives or building permit allocation ordinances which could be implemented in the future in the states and markets in which we operate. Substantially all of our land is entitled and, therefore, the moratoriums generally would only adversely affect us if they arose from health, safety and welfare issues such as insufficient water or sewage facilities. Local and state governments also have broad discretion regarding the imposition of development fees for projects in their jurisdiction. These fees are normally established, however, when we receive recorded final maps and building permits. We are also subject to a variety of local, state and federal statutes, ordinances, rules and regulations concerning the protection of health and the environment. These laws may result in delays, cause us to incur substantial compliance and other costs, and prohibit or severely restrict development in certain environmentally sensitive regions or areas.

LETTERS OF CREDIT

      We are frequently required, in connection with the development of our projects, to obtain letters of credit in support of our related obligations with respect to such developments. The amount of such obligations outstanding at any time varies in accordance with our pending development activities. In the event any letters of credit are drawn upon, we would be obligated to reimburse the issuer of such letters of

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credit. As of August 31, 2005, we had outstanding $10.7 million of letters of credit related to our obligations to local governments to construct roads and other improvements in various developments. We do not believe that any such letters of credit will be drawn upon.

      Occasionally, we are required to post surety bonds, however, the amounts of these surety bonds have not been material.

EMPLOYEES AND SUBCONTRACTORS

      As of August 31, 2005, we employed 460 people, of whom 123 were sales and marketing personnel, 163 were executive, management and administrative personnel and 174 were involved in construction. Although none of the our employees are covered by collective bargaining agreements, certain of the subcontractors engaged by us are represented by labor unions or are subject to collective bargaining arrangements. We believe that our relations with our employees and subcontractors are good.

PROPERTIES

      We lease 6,284 square feet of office space in Atlanta, Georgia for our corporate offices. This lease expires in 2008. In addition, we lease 79,674 square feet of space for our operating divisions under leases expiring between 2006 and 2010. The leases have terms ranging from 12 months to 60 months, with various renewal options.

LEGAL PROCEEDINGS

      From time to time we are involved in various routine legal proceedings incidental to our business. We believe that none of these matters, some of which are covered by insurance, will have a material adverse impact upon our financial condition if decided against us.

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Management

       The following table presents information with respect to our executive officers and directors:

Executive Officers and Directors

Name	Age		Position
Thomas Krobot		58	President, Chief Executive Officer and Director
Robert Salomon		45	Chief Financial Officer
Tad Serbin		45	Vice President of Sales and Marketing
Tim Frost		45	Vice President of Architecture
Ralph Farrell		53	Vice President of Construction
Seymour Joffe		53	Director
Bruce Freeman		57	Director
Harry Rosenbaum		56	Director

      Mr. Krobot has served as our President and Chief Executive Officer since 1995 and as a member of our Board since September 2005. Before joining the Company, Mr. Krobot worked for Ryland Homes as a Senior Vice President responsible for seven cities, one lumber yard and over 2,000 units per year in the Southeast Region (Georgia, North Carolina, South Carolina, Florida) and as a Regional Manager of its Midwest Region (Columbus and Cincinnati, Ohio and Indianapolis, Indiana). Mr. Krobot is a graduate of the University of Dayton.

      Mr. Salomon has served as our Chief Financial Officer since 1998. Before joining the Company, Mr. Salomon worked for MDC Holdings, Inc., most recently as the Senior Vice President of Finance of its homebuilding division in California, Richmond American Homes. Mr. Salomon is a graduate of The University of Iowa and a member of the American Institute of Certified Public Accountants.

      Mr. Serbin joined the Company in 2002 as Vice President of Sales and Marketing. Prior to joining the Company, he was Vice President of Sales and Marketing for Pulte Homes in Orlando, Florida. Mr. Serbin is a graduate of the California State College in Hayward, California where he received a degree in Business Administration.

      Mr. Frost joined the Company as Corporate Director of Architecture in 2000. Prior to that, he worked as Director of Architecture for D.R. Horton Homes Southeast Region. Mr. Frost is a graduate of Southern Illinois University where he received a degree in Architecture.

      Mr. Farrell joined the Company in December 2004 as the Vice President of Construction. From July 2000 to November 2004, Mr. Farrell was employed with Centex Homes as the Vice President of Construction in Atlanta, Georgia. From 1989 to 2000, Mr. Farrell was a Construction Manager for Pulte Homes in Atlanta, Georgia and the Washington Metro Area in Maryland.

      Mr. Joffe, a member of our Board or our prior management committee since 1997, is a founder of the Great Gulf Group and is its Chief Financial Officer. Prior to 1983, Mr. Joffe worked in real estate and public accounting. Mr. Joffe qualified as a Chartered Accountant in South Africa and in Canada.

      Mr. Freeman, a member of our Board or our prior management committee since 1997, is a founder of the Great Gulf Group and is its Executive Vice President. Prior to 1983, Mr. Freeman was the Vice President of Sales for Great Gulf Homes. Mr. Freeman has worked in residential real estate marketing since 1969.

      Mr. Rosenbaum, a member of our Board or our prior management committee since 1997, is a founder of the Great Gulf Group and is its Chief Operating Officer. Prior to 1983, Mr. Rosenbaum was a partner

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in a law practice. Mr. Rosenbaum graduated as a lawyer from Osgoode Hall Law School and was called to the bar in 1976.

SUMMARY COMPENSATION TABLE

      The following table sets forth information for the years ended May 31, 2005, 2004 and 2003 with respect to compensation earned by or paid to our Chief Executive Officer and each of our three most highly compensated executive officers other than the Chief Executive Officer.

		Annual Compensation
								Other Annual		All Other
				Salary		Bonus		Compensation		Compensation
Name and Principal Position		Year		($)		($)		($)		($)
Thomas Krobot			2005		225,000		1,306,896
	President and Chief		2004		225,000		1,095,415		—		—
	Executive Officer		2003		225,000		477,673		—		—
Robert Salomon			2005		168,335		364,850
	Chief Financial Officer		2004		160,008		248,854		—		—
			2003		160,024		126,631		—		—
Tad Serbin			2005		159,167		176,000
	VP of Sales and Marketing		2004		150,000		282,034		—		—
			2003		124,553		137,500		—		—
Tim Frost			2005		125,000		62,500
	VP of Architecture		2004		119,000		55,000		—		—
			2003		114,887		40,000		—		—

AUDIT COMMITTEE FINANCIAL EXPERT

      The Company does not have an audit committee. Since our securities are not currently listed on or with a national securities exchange or national securities association, we are not required to have an independent audit committee. Further, given the small size of the Board, the Board believes it appropriate for all members of the Board to be involved in the discussions and decisions typically delegated to an audit committee. Our Board has determined that Mr. Joffe meets the qualifications of an “audit committee financial expert” as defined in the rules and regulations of the SEC.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

      The entire Board of Directors undertakes the duties of the Compensation Committee with respect to the compensation of Messrs. Krobot and Salomon. Mr. Krobot, with input from Mr. Salomon, determines the compensation of the other executive officers.

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Security ownership

       The following table sets forth certain information as of November 18, 2005 regarding the beneficial ownership of the membership interests in the Company. In addition, the footnotes below explain that certain of the persons or entities listed in the table have special membership interests entitling them to allocations of profits and cash distributions in the land development activities in Denver, Colorado and Orlando, Florida of certain of the Company’s subsidiaries. Ashton Woods Finance co. is a wholly-owned subsidiary of the Company.

	Membership
Name and Address of Beneficial Owner	Interest(1)
Seymour Joffe(2),(3)		34.6	%
Bruce Freeman(2),(3)		34.6	%
Harry Rosenbaum(2),(3)		34.6	%
Thomas Krobot		—
Robert Salomon		—
Tad Serbin		—
Tim Frost		—
Ralph Farrell		—
All directors and executive officers as a group		34.6	%
Elly Nevada Inc.(2),(4),(7)		30.2	%
Norman Nevada Inc.(2),(5),(7)		30.2	%
Larry Nevada Inc.(2),(6),(7)		5.0	%
Little Shots Nevada L.L.C.(2),(7)		34.6	%

(1)	Beneficial ownership is determined in accordance with Section 13 of the Exchange Act and the rules promulgated thereunder. Accordingly, if an individual or entity is a member of a “group” which has agreed to act together for the purpose of acquiring, holding, voting or disposing of membership interests, such individual or entity is deemed to be the beneficial owner of the membership interests held by all members of the group. Further, if an individual or entity has or shares the power to vote or dispose of membership interests held by another entity, beneficial ownership of the interests held by such entity may be attributed to such other individuals or entities.
(2)	The address of this beneficial owner is 3751 Victoria Park Ave, Toronto, Ontario M1W 3Z4 Canada.
(3)	Entities and/or family trusts associated with these individuals hold interests (including the special membership interests referred to in footnote 7 below) in the Company through Little Shots Nevada L.L.C. For beneficial ownership purposes, the membership and special membership interests held by Little Shots Nevada L.L.C. are attributable to each such individual. The entities associated with each such individual have, respectively, a 26.4% ownership interest in Little Shots Nevada L.L.C. and are entitled to receive an allocation of 26.9% of any proceeds received by Little Shots Nevada L.L.C. as a result of its 26.0% special membership interest in the Denver, Colorado land development activities and its 26.0% special membership interest in the Orlando, Florida land development activities.
(4)	This entity is owned by entities and/or family trusts associated with Elly Reisman.
(5)	This entity is owned by entities and/or family trusts associated with Norman Reisman.
(6)	This entity is owned by entities and/or family trusts associated with Larry Robbins.

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(7)  These and other related entities also hold special membership interests in allocations of profits and cash distributions in the land development activities in Denver, Colorado and Orlando, Florida of certain of the Company’s subsidiaries as follows:

	Denver			Orlando
Little Shots Nevada L.L.C.		26.0	%		26.0	%
Elly Colorado Inc.		28.0	%		—
Elly Nevada Inc.		—			28.0	%
Norman Colorado Inc.		28.0	%		—
Norman Nevada Inc.		—			28.0	%
Larry Colorado Inc.		18.0	%		—
Larry Nevada Inc.		—			18.0	%

      As noted in footnote 3 above, entities and/or family trusts associated with Seymour Joffe, Bruce Freeman and Harry Rosenbaum are entitled to receive a portion of the proceeds received by Little Shots Nevada L.L.C. through allocations on such special membership interests based on their respective percentage ownership interests in Little Shots Nevada L.L.C. as set forth in footnote 3.

      Special membership interests do not entitle the holders thereof to vote or otherwise participate in the management or operation of the Company or any of its subsidiaries.

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Certain relationships and related transactions

       In August 2005, we entered into a Services and Software License Agreement (the “Services and License Agreement”) with Paramount Development Corporation Limited (“Paramount”), which is an affiliate of the Great Gulf Group. Under the Services and License Agreement, which is effective as of June 1, 2005, Paramount licenses to us and our affiliates certain software which we use in performing the following functions: accounting, job costing, work order, home warranty, home design, scheduling, and purchase orders. Furthermore, pursuant to the Services and License Agreement, Paramount provides us and our affiliates with the services of its employees to assist us with land development matters relating to our land operations in Orlando and Denver. In return for the software license and the land development services, we pay Paramount a fee of $600 for each home closed. The initial term of the Services and License Agreement is two years and will automatically renew for successive one-year terms unless either party gives notice that the agreement will not be renewed.

      Although we did not have a written agreement with Paramount covering the software license and land development services prior to entering into the Services and License Agreement, Paramount provided us with such software and services in return for a payment of $600 for each home closed. During the three-month period ended August 31, 2005, and August 31, 2004, and during fiscal years 2005, 2004 and 2003, we paid Paramount $0.2 million, $0.3 million, $1.1 million and $0.8 million, respectively, for the software license and land development services.

      We, in the ordinary course of our business, from time to time enter into lot option purchase agreements to facilitate the development of land for our use with entities that are owned directly or indirectly by the seven families that indirectly own our membership interests or that are otherwise affiliates of the Great Gulf Group. These entities generally obtain secured acquisition and development financing which is supported by specific performance requirements under our lot option purchase agreements. As of May 31, 2005, we were party to several lot option purchase agreements with such related parties for the acquisition of 386 finished lots, of which 164 finished lots remain to be purchased as of May 31, 2005 for a remaining aggregate purchase price of $14.5 million. As of August 31, 2005, we were party to several lot option purchase agreements with the same related parties for the acquisition of 221 finished lots, of which 94 finished lots remain to be purchased as of August 31, 2005 for a remaining aggregate purchase price of $5.9 million. These option purchase agreements were entered into prior to January 1, 2004 and, while qualifying as variable interest entities are not required to be consolidated under FIN 46R. At August 31, 2005 and May 31, 2005, the Company had $0.7 million and $1.7 million, respectively, of non-refundable deposits securing the lot options and specific performance lot purchase requirements. As of May 31, 2004, we had an additional lot option purchase agreement with a related party to acquire 224 finished lots at an aggregate price of $12.4 million, of which 10 lots remained to be purchased at such date. Such 10 lots were purchased during the first quarter of fiscal 2005 for a purchase price of $0.5 million.

      As of May 31, 2005, we had three lot purchase contracts with such related parties to acquire 611 finished lots at an aggregate price of approximately $33.0 million which have created variable interests and of which 504 finished lots remain to be purchased for an aggregate price of $27.5 million. As of August 31, 2005, we had 3 lot purchase contracts with such related parties to acquire 466 finished lots at an aggregate price of approximately $25.9 million which have created variable interests. In addition, the Company has provided various specific performance guarantees under the option purchase contracts, which have been deemed as providing subordinated financial support to the entities, of which 37 finished lots remain to be purchased under its specific performance obligations for an aggregate purchase price of $1.8 million as of August 31, 2005 and 49 finished lots remained to be purchased under its specific performance obligations for an aggregate purchase price of $2.4 million as of May 31, 2005. As of both August 31, 2005 and May 31, 2005, the Company had $0.7 million of non-refundable deposits securing the remaining lot options. While the Company owns no equity interest in these entities, it must consolidate the entities pursuant to FIN 46R.

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      The Company has an unsecured note with another related party which bears interest at the U.S. prime lending rate plus 0.75% per annum and is payable upon demand. The note is subordinated in favor of the respective secured and unsecured revolving credit facilities. As of August 31, 2005 and May 31, 2005, 2004 and 2003 there was $12.9 million, $13.7 million, $3.4 million and $22.1 million outstanding under such note, respectively. A portion of the proceeds from the issuance and sale of the original notes was used to repay the $12.9 million of related party debt. See “Use of proceeds.”

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Description of other indebtedness

       The following is a summary of the principal terms of the agreements that govern certain of our outstanding debt. The description of the agreements set forth below do not purport to be complete.

SENIOR UNSECURED CREDIT FACILITY

      On January 20, 2005, we entered into a senior unsecured credit facility with a group of lenders and Wachovia Bank, National Association, as agent for the lenders. The senior unsecured credit facility provides for up to $225.0 million of unsecured borrowings, subject to a borrowing base, and includes an uncommitted accordion feature pursuant to which we may request, subject to certain conditions, an increase of the senior unsecured credit facility up to a maximum of $300.0 million. Our obligations under the senior unsecured credit facility are guaranteed by certain of our subsidiaries and our equity owners. The senior unsecured credit facility ranks senior in right of payment to all of our subordinated indebtedness, including the notes.

      The senior unsecured credit facility provides for the issuance of up to $25.0 million in letters of credit outstanding at any one time, and for borrowings of up to $10.0 million on same-day notice, referred to as the swingline loans.

      The maturity date of the senior unsecured credit facility is January 19, 2009. However, once during each fiscal year we may request that the lenders extend the maturity date by an additional year.

      Borrowings under the senior unsecured credit facility are limited by the availability of sufficient real estate borrowing base, which is determined regularly throughout the life of the senior unsecured credit facility. The composition of the borrowing base is limited to certain parameters set forth in the senior unsecured credit facility agreement and each type of real estate (such as unimproved entitled land, lots under development, finished lots, presold housing units, speculative housing units and model housing units) is removed from the borrowing base if held beyond specified maturity dates. As of August 31, 2005, after giving effect to the issuance and sale of the original notes and the use of proceeds therefrom, we would have had no outstanding borrowings under the senior unsecured credit facility and would have had available borrowings of $201.3 million.

      Borrowings under the senior unsecured credit facility generally bear interest based on an applicable margin plus LIBOR or an alternate base rate. Fees for letters of credit under the senior unsecured credit facility are based on an applicable margin plus LIBOR. The applicable margins for both interest and fees for letters of credit range from 1.5% to 2.0%, depending upon our ratio of consolidated debt to consolidated net worth. A commitment fee equal to 0.2% to 0.25% per year, depending on our ratio of consolidated debt to consolidated net worth, accrues on the undrawn portion of the senior unsecured credit facility, and such fee is payable quarterly in arrears.

      The senior unsecured credit facility contains a number of customary financial and operating covenants, including covenants:

•  requiring us to maintain a minimum consolidated tangible net worth of at least $90.3 million plus 50.0% of net income earned in each quarter after November 30, 2004 (excluding quarters where net income is not positive) plus 50.0% of the net proceeds received for any of our capital stock or other equity interests sold after January 20, 2005;

•  requiring us to maintain a ratio of consolidated/total liabilities to adjusted net worth not in excess of 2.25x;

•  requiring us to maintain an interest coverage ratio of at least 2.5x;

•  limiting the principal amount of our secured debt to $25.0 million at any given time;

•  limiting the net book value of our unimproved entitled land to 20.0% of our adjusted tangible net worth;

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•  limiting the net book value of our unimproved entitled land, lots under development and finished lots to 150.0% of our adjusted tangible net worth;

•  requiring us to maintain working capital of at least $35.0 million;

•  limiting the aggregate distributions by us and our subsidiaries in any fiscal year (other than certain distributions made to our members to cover the income taxes due by them as a result of our being a pass- through entity) to any person or entity other than us to no more than (i) 50.0% of our consolidated net income earned between June 1, 2004 and the date of the distribution plus (ii) 100% of the amounts we and our subsidiaries receive from contributions to common equity made after June 1, 2005 or from the issuance and sale of equity interests after June 1, 2005 minus (iii) the amount of any distributions previously made between June 1, 2004 and the date of such distribution;

•  restricting the sale or transfer of more than 20.0% of the ownership interests in us or any subsidiary guarantor;

•  restricting our ability to incur additional indebtedness;

•  restricting the number of speculative housing units as of the end of any fiscal quarter to a maximum of 35.0% of our housing unit closings during the previous 12-month period; and

•  restricting our ability to engage in mergers and consolidations and our ability to sell all or substantially all of our assets.

      The senior unsecured credit facility also contains customary events of default, including but not limited to payment defaults, breaches of representations and warranties, covenant defaults, bankruptcy, the occurrence of certain ERISA events, material judgments and cross-defaults to certain indebtedness. If such an event of default were to occur, the lenders under the senior unsecured credit facility would be entitled to take various actions, including acceleration of all amounts due and termination of their commitments thereunder.

PROMISSORY NOTE

      On April 27, 2004, in connection with the purchase of a parcel of land in Orlando, we entered into a promissory note in the principal amount of $5.7 million payable to an unrelated third party. As of August 31, 2005, $4.7 million was outstanding under the note. The note is due in annual installments of $1.0 million plus interest of 7.0% per year with the remaining balance due April 26, 2010. The note is secured by a mortgage on real property in Florida. If we were to default in payment of the note, the payee under the note would be entitled to take various actions, including acceleration of all amounts due and all actions permitted to be taken by a secured creditor.

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Description of the notes

       As used below in this “Description of the notes” section, the “Issuer” means Ashton Woods USA L.L.C., a Nevada limited liability company, and its successors, but not any of its subsidiaries. The Issuer and Ashton Woods Finance Co., a Delaware corporation and a wholly owned subsidiary of the Issuer (the “Co-Issuer”), issued the original notes and will issue the notes described in this prospectus (the “Notes”) under an Indenture, dated as of September 21, 2005 (the “Indenture”), among the Issuer, the Co-Issuer, the Guarantors and U.S. Bank National Association, as trustee (the “Trustee”). The terms of the Notes include those set forth in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act. You may obtain a copy of the Indenture from the Issuer at its address set forth elsewhere in this prospectus.

      The following is a summary of the material terms and provisions of the Notes. The following summary does not purport to be a complete description of the Notes and is subject to the detailed provisions of, and qualified in its entirety by reference to, the Indenture. You can find definitions of certain terms used in this description under the heading “— Certain Definitions.”

PRINCIPAL, MATURITY AND INTEREST

      The Notes will mature on October 1, 2015. The original notes bear interest, and the new notes will bear interest, at the rate of 9.5% per year from September 21, 2005, or as to the new notes, from the last date on which interest was paid, payable on April 1 and October 1 of each year, commencing on April 1, 2006, to Holders of record at the close of business on March 15 or September 15, as the case may be, immediately preceding the relevant interest payment date. Interest on the Notes will be computed on the basis of a 360-day year of twelve 30-day months.

      The Notes will be issued in registered form, without coupons, and in denominations of $1,000 and integral multiples of $1,000.

      We are offering to exchange up to $125.0 million aggregate principal amount of new notes for a like principal amount of original notes. The Issuer and the Co-Issuer may issue additional Notes having identical terms and conditions to the Notes, except for issue date, issue price and first interest payment date, in an unlimited aggregate principal amount (the “Additional Notes”), subject to compliance with the “Limitations on Additional Indebtedness” covenant described below. Any Additional Notes will be part of the same issue as the Notes being issued in this offering and will be treated as one class with the Notes, including, without limitation, for purposes of voting, redemptions and offers to purchase. For purposes of this “Description of the notes,” except for the covenant described under “— Certain Covenants — Limitations on additional indebtedness,” references to the Notes include Additional Notes, if any.

METHODS OF RECEIVING PAYMENTS ON THE NOTES

      If a Holder has given wire transfer instructions to the Issuer at least ten Business Days prior to the applicable payment date, the Issuer and the Co-Issuer will make all payments on such Holder’s Notes in accordance with those instructions. Otherwise, payments on the Notes will be made at the office or agency of the paying agent (the “Paying Agent”) and registrar (the “Registrar”) for the Notes within the City and State of New York unless the Issuer and the Co-Issuer elect to make interest payments by check mailed to the Holders at their addresses set forth in the register of Holders.

SUBORDINATION OF NOTES

      The payment of all Obligations on or relating to the Notes will be subordinated in right of payment to the prior payment in full in cash or Cash Equivalents of all Obligations due in respect of Senior Debt of the Issuer and the Co-Issuer, including all Obligations with respect to the Credit Facilities, whether outstanding on the Issue Date or incurred after that date.

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      The holders of Senior Debt will be entitled to receive payment in full in cash or Cash Equivalents of all Obligations due in respect of Senior Debt before the Holders of Notes will be entitled to receive any payment or distribution of any kind or character with respect to any Obligations on or relating to the Notes (other than in Permitted Junior Securities) in the event of any distribution to creditors of the Issuer or the Co-Issuer:

•  in a total or partial liquidation, dissolution or winding up of the Issuer or the Co-Issuer;

•  in a bankruptcy, reorganization, insolvency, receivership or similar proceeding relating to the Issuer or the Co-Issuer or their respective assets;

•  in an assignment for the benefit of creditors; or

•  in any marshalling of the assets and liabilities of the Issuer or the Co-Issuer.

      If a payment or distribution is made to the holders of the Notes that, due to the subordination provisions, should not have been made to them, such holders are required to hold it in trust for the holders of the Senior Debt and pay the payment or distribution over to the holders of the Senior Debt, as their interests may appear.

      In addition, neither the Issuer nor the Co-Issuer may make any payment or distribution of any kind or character with respect to any Obligations on or relating to the Notes or acquire any Notes for cash or assets or otherwise (other than, in either case, Permitted Junior Securities), if:

•  a payment default (whether at stated maturity, upon acceleration or otherwise) on any Senior Debt occurs and is continuing beyond any applicable grace period; or

•  any other default occurs and is continuing on any Designated Senior Debt that permits holders of such Designated Senior Debt to accelerate its maturity and the Trustee receives a notice of such default (a “Payment Blockage Notice”) from the Representative of such Designated Senior Debt.

      Payments on and distributions with respect to any Obligations on or with respect to the Notes may and shall be resumed:

•  in the case of a payment default (whether at stated maturity, upon acceleration or otherwise), upon the date on which all payment defaults are cured or waived; and

•  in case of a nonpayment default, the earliest of (1) the date on which all such nonpayment defaults are cured or waived, (2) 179 days after the date on which the applicable Payment Blockage Notice is received or (3) the date on which the Trustee receives notice from the Representative for such Designated Senior Debt rescinding the Payment Blockage Notice, unless the maturity of any Designated Senior Debt has been accelerated.

      No new Payment Blockage Notice may be delivered unless and until 360 days have elapsed since the effectiveness of the immediately prior Payment Blockage Notice.

      No nonpayment default that existed or was continuing on the date of delivery of any Payment Blockage Notice to the Trustee shall be, or be made, the basis for a subsequent Payment Blockage Notice unless such default shall have been cured or waived for a period of not less than 90 consecutive days. Any subsequent action or any breach of any covenants for a period ending after the date of delivery of the initial Payment Blockage Notice that in either case would give rise to a default pursuant to any provisions under which a default previously existed or was continuing will constitute a new default for this purpose.

      Notwithstanding anything to the contrary, payments and distributions made from the trust established pursuant to the provisions described under “— Legal Defeasance and Covenant Defeasance” or “Satisfaction and Discharge” will be permitted and will not be subordinated so long as the payments into the trust were made in accordance with the requirements described under “— Legal Defeasance and Covenant Defeasance” or “Satisfaction and Discharge” and did not violate the subordination provisions when they were made.

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      The Issuer must promptly notify the Representative of the Senior Debt if payment of the Notes is accelerated because of an Event of Default. In such case, no payment or distribution with respect to any Obligations on or with respect to the Notes may be made until five Business Days after the Representative of the Senior Debt receives notice of such acceleration and, after such five Business Day period, payment or distribution with respect to any Obligations on or with respect to the Notes may be made only if the subordination provisions of the Indenture otherwise permit payment at that time.

      As a result of the subordination provisions described above, in the event of a bankruptcy, liquidation or reorganization of the Issuer or the Co-Issuer, Holders of the Notes may recover less ratably than other creditors of the Issuer. See “Risk Factors — Risks Associated with the Notes and this Offering — Your right to receive payments on the notes is subordinated to our and the guarantors’ senior debt.”

      As of August 31, 2005, after giving effect to the issuance and sale of the original notes and the application of the net proceeds therefrom, the Issuer would have had $28.4 million aggregate principal amount of Senior Debt and $201.3 million of undrawn borrowings available under the Credit Facilities (net of $10.7 million in outstanding undrawn letters of credit).

SUBORDINATION OF GUARANTEES

      Each Guarantee will be subordinated to Guarantor Senior Debt on the same basis as the Notes are subordinated to Senior Debt.

NOTE GUARANTEES

      The obligations of the Issuer and the Co-Issuer under the Notes and the Indenture will be jointly and severally guaranteed (the “Note Guarantees”) by each Restricted Subsidiary (other than the Co-Issuer).

      As of the date of the Indenture, all of our Subsidiaries became “Restricted Subsidiaries.” Under the circumstances described below under the subheading “— Certain Covenants — Limitation on designation of unrestricted subsidiaries,” the Issuer will be permitted to designate some of its Subsidiaries (other than the Co-Issuer) as “Unrestricted Subsidiaries.” The effect of designating a Subsidiary as an “Unrestricted Subsidiary” will be that:

•  an Unrestricted Subsidiary will not be subject to many of the restrictive covenants in the Indenture;

•  a Subsidiary that has previously been a Guarantor and that is designated an Unrestricted Subsidiary will be released from its Note Guarantee and its obligations under the Indenture and the Registration Rights Agreement; and

•  the assets, income, cash flow and other financial results of an Unrestricted Subsidiary will not be consolidated with those of the Issuer for purposes of calculating compliance with the restrictive covenants contained in the Indenture.

      The obligations of each Guarantor under its Note Guarantee will be limited to the maximum amount as will, after giving effect to all other contingent and fixed liabilities of such Guarantor and after giving effect to any collections from or payments made by or on behalf of any other Guarantor in respect of the obligations of such other Guarantor under its Note Guarantee or pursuant to its contribution obligations under the Indenture, result in the obligations of such Guarantor under its Note Guarantee not constituting a fraudulent conveyance or fraudulent transfer under federal or state law. Each Guarantor that makes a payment for distribution under its Note Guarantee is entitled to a contribution from each other Guarantor in a pro rata amount based on adjusted net assets of each Guarantor.

      A Guarantor shall be released from its obligations under its Note Guarantee and its obligations under the Indenture and the Registration Rights Agreement:

•  in the event of a sale or other disposition of all or substantially all of the assets of such Guarantor, by way of merger, consolidation or otherwise, or a sale or other disposition of all of the Equity Interests of such Guarantor then held by the Issuer, the Co-Issuer and the Restricted Subsidiaries;

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	provided, however, that the Net Available Proceeds of such sale or other disposition shall be applied in accordance with the applicable provisions of the Indenture, to the extent required thereby; or
•	if such Guarantor is designated as an Unrestricted Subsidiary or otherwise ceases to be a Restricted Subsidiary, in each case in accordance with the provisions of the Indenture, upon effectiveness of such designation or when it first ceases to be a Restricted Subsidiary, respectively.

OPTIONAL REDEMPTION

      Except as set forth below, the Notes may not be redeemed prior to October 1, 2010. At any time or from time to time on or after October 1, 2010, the Issuers, at their option, may redeem the Notes, in whole or in part, at the redemption prices (expressed as percentages of principal amount) set forth below, together with accrued and unpaid interest thereon, if any, to the redemption date, if redeemed during the 12-month period beginning October 1 of the years indicated:

	Optional
Year	Redemption Price
2010		104.750%
2011		103.167%
2012		101.583%
2013 and thereafter		100.000%

      At any time or from time to time prior to October 1, 2008, the Issuer, at its option, may redeem up to 35% of the aggregate principal amount of the Notes with the net cash proceeds of one or more Qualified Equity Offerings at a redemption price equal to 109.5% of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest thereon, if any, to the date of redemption; provided, however, that (1) at least 65% of the aggregate principal amount of Notes issued under the Indenture remains outstanding immediately after the occurrence of such redemption and (2) the redemption occurs within 90 days of the date of the closing of any such Qualified Equity Offering.

      The Issuer may acquire Notes by means other than a redemption, whether pursuant to an issuer tender offer, open market purchase or otherwise, so long as the acquisition does not otherwise violate the terms of the Indenture.

SELECTION AND NOTICE OF REDEMPTION

      In the event that less than all of the Notes are to be redeemed at any time pursuant to an optional redemption, selection of the Notes for redemption will be made by the Trustee in compliance with the requirements of the principal national securities exchange, if any, on which the Notes are listed or, if the Notes are not then listed on a national security exchange, on a pro rata basis, by lot or by such method as the Trustee shall deem fair and appropriate; provided, however, that no Notes of a principal amount of $1,000 or less shall be redeemed in part. In addition, if a partial redemption is made pursuant to the provisions described in the second paragraph under “— Optional Redemption,” selection of the Notes or portions thereof for redemption shall be made by the Trustee only on a pro rata basis or on as nearly a pro rata basis as is practicable (subject to the procedures of The Depository Trust Company), unless that method is otherwise prohibited.

      Notice of redemption will be mailed by first-class mail at least 30 but not more than 60 days before the date of redemption to each Holder of Notes to be redeemed at its registered address, except that redemption notices may be mailed more than 60 days prior to a redemption date if the notice is issued in connection with a satisfaction and discharge of the Indenture. If any Note is to be redeemed in part only, the notice of redemption that relates to that Note will state the portion of the principal amount of the Note to be redeemed. A new Note in a principal amount equal to the unredeemed portion of the Note will be issued in the name of the Holder of the Note upon cancellation of the original Note. On and after the date of redemption, interest will cease to accrue on Notes or portions thereof called for redemption so long

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as the Issuer has deposited with the paying agent for the Notes funds in satisfaction of the redemption price (including accrued and unpaid interest on the Notes to be redeemed) pursuant to the Indenture.

CHANGE OF CONTROL

      Upon the occurrence of any Change of Control, each Holder will have the right to require that the Issuer and the Co-Issuer purchase that Holder’s Notes for a cash price (the “Change of Control Purchase Price”) equal to 101% of the principal amount of the Notes to be purchased, plus accrued and unpaid interest thereon, if any, to the date of purchase.

      Within 30 days following any Change of Control, the Issuer and the Co-Issuer will mail, or cause to be mailed, to the Holders a notice:

      (1) describing the transaction or transactions that constitute the Change of Control;

      (2) offering to purchase, pursuant to the procedures required by the Indenture and described in the notice (a “Change of Control Offer”), on a date specified in the notice (which shall be a Business Day not earlier than 30 days nor later than 60 days from the date the notice is mailed) and for the Change of Control Purchase Price, all Notes properly tendered by such Holder pursuant to such Change of Control Offer; and

      (3) describing the procedures that Holders must follow to accept the Change of Control Offer. The Change of Control Offer is required to remain open for at least 20 Business Days or for such longer period as is required by law.

      The Issuer will publicly announce the results of the Change of Control Offer on or as soon as practicable after the date of purchase.

      The agreements governing our outstanding Senior Debt currently prohibit us in certain circumstances from purchasing any Notes, and also provide that some change of control events with respect to us would constitute a default under these agreements. Any future credit agreements or other agreements relating to Senior Debt to which the Issuer and/or the Co-Issuer becomes a party may contain similar restrictions and provisions. In the event a Change of Control occurs at a time when the Issuer and the Co-Issuer are prohibited from purchasing Notes, the Issuer and/or the Co-Issuer could seek the consent of our lenders under the Senior Debt to the purchase of Notes or could attempt to refinance the borrowings that contain the prohibition. If the Issuer and/or the Co-Issuer do not obtain a consent or refinance the borrowings, the Issuer and the Co-Issuer will remain prohibited from purchasing Notes. In that case, our failure to purchase tendered Notes would constitute an Event of Default under the Indenture which would, in turn, constitute a default under the Senior Debt. In these circumstances, the subordination provisions in the Indenture would likely restrict payments to the Holders of Notes.

      If a Change of Control Offer is made, there can be no assurance that the Issuer and the Co-Issuer will have available funds sufficient to pay for all or any of the Notes that might be delivered by Holders seeking to accept the Change of Control Offer.

      The provisions described above that require us to make a Change of Control Offer following a Change of Control will be applicable regardless of whether any other provisions of the Indenture are applicable. Except as described above with respect to a Change of Control, the Indenture does not contain provisions that permit the Holders of the Notes to require that the Issuer purchase or redeem the Notes in the event of a takeover, recapitalization or similar transaction.

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

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      With respect to any disposition of assets, the phrase “all or substantially all” as used in the Indenture (including as set forth under the definition of “Change of Control” and “— Certain Covenants — Limitations on mergers, consolidations, etc.” below) varies according to the facts and circumstances of the subject transaction, has no clearly established meaning under New York law (which governs the Indenture) and is subject to judicial interpretation. Accordingly, in certain circumstances there may be a degree of uncertainty in ascertaining whether a particular transaction would involve a disposition of “all or substantially all” of the assets of the Issuer, and therefore it may be unclear as to whether a Change of Control has occurred and whether the Holders have the right to require the Issuer to purchase Notes.

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

CERTAIN COVENANTS

      The Indenture will contain, among others, the following covenants:

Limitations on additional indebtedness

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

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

      (1) Indebtedness of the Issuer, the Co-Issuer and any Restricted Subsidiary under the Credit Facilities in an aggregate amount at any time outstanding (whether incurred under the Ratio Exception or as Permitted Indebtedness) not to exceed the greater of (x) $300.0 million and (y) the amount of the Borrowing Base as of the date of such incurrence;

      (2) the Notes and the Note Guarantees issued on the Issue Date and the Exchange Notes and the Note Guarantees in respect thereof to be issued pursuant to the Registration Rights Agreement;

      (3) Indebtedness of the Issuer and the Restricted Subsidiaries to the extent outstanding on the Issue Date (other than Indebtedness referred to in clauses (1), (2) or (5), and after giving effect to the intended use of proceeds of the Notes);

      (4) Indebtedness of the Issuer and the Restricted Subsidiaries under Hedging Obligations entered into for bona fide hedging purposes of the Issuer or any Restricted Subsidiary not for the purpose of speculation; provided, however, that in the case of Hedging Obligations relating to interest rates, (a) such Hedging Obligations relate to payment obligations on Indebtedness otherwise permitted to be incurred by this covenant and (b) the notional principal amount of such Hedging Obligations at the time incurred does not exceed the principal amount of the Indebtedness to which such Hedging Obligations relate;

      (5) Indebtedness of the Issuer owed to a Restricted Subsidiary and Indebtedness of any Restricted Subsidiary owed to the Issuer or any other Restricted Subsidiary; provided, however, that

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(a) any Indebtedness of the Issuer owed to a Restricted Subsidiary is unsecured and subordinated, pursuant to a written agreement, to the Issuer’s Obligations, under the Notes and the Indenture and (b) upon any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or such Indebtedness being owed to any Person other than the Issuer or a Restricted Subsidiary, the Issuer or such Restricted Subsidiary, as applicable, shall be deemed to have incurred Indebtedness not permitted by this clause (5);

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

      (7) Purchase Money Indebtedness incurred by the Issuer or any Restricted Subsidiary, in an aggregate amount not to exceed at any time outstanding $10.0 million;

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

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

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

      (11) Indebtedness owed to a seller of Developed Land under the terms of which the Issuer or such Restricted Subsidiary, as obligor, is required to make a payment upon the future sale of such Developed Land in an amount not to exceed 5% of the gross sales price or, in the case of profit sharing agreements between such seller and the Issuer or such Restricted Subsidiary, an amount that is reasonable and customary in the industry and market;

      (12) Indebtedness owing under Capitalized Lease Obligations;

      (13) Indebtedness arising under a guarantee of Indebtedness of any joint venture (provided that such guarantee shall be deemed to be an investment in such joint venture constituting a Permitted Investment or otherwise permitted by the covenant described under “— Limitations on restricted payments”);

      (14) Indebtedness arising from agreements of the Issuer or a Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or a Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisition; provided, however, that such Indebtedness is not reflected on the balance sheet of the Issuer or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected on such balance sheet for purposes of this clause (14));

      (15) Refinancing Indebtedness with respect to Indebtedness incurred pursuant to the Ratio Exception, clause (2) or (3) above or this clause (15); and

      (16) Indebtedness of the Issuer or any Restricted Subsidiary in an aggregate amount not to exceed $20.0 million at any time outstanding.

      For purposes of determining compliance with this covenant, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness described in clauses (1)

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through (16) above or is entitled to be incurred pursuant to the Ratio Exception, the Issuer shall, in its sole discretion, classify or later reclassify such item of Indebtedness and may divide and classify such Indebtedness in more than one of the types of Indebtedness described, except that Indebtedness outstanding under the Credit Facilities on the Issue Date shall be deemed to have been incurred under clause (1) above. The accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms and the reclassification of preferred equity as Indebtedness due to a change in accounting principles will not be deemed to be an incurrence of Indebtedness for purposes of this covenant. In addition, for purposes of determining any particular amount of Indebtedness under this covenant, guarantees, Liens or letter of credit obligations supporting Indebtedness otherwise included in the determination of such particular amount shall not be included so long as incurred by a Person that could have incurred such Indebtedness.

Limitations on layering indebtedness

      The Issuer and the Co-Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly, incur or suffer to exist any Indebtedness that is or purports to be by its terms (or by the terms of any agreement governing such Indebtedness) senior in right of payment to the Notes or the Note Guarantee of such Restricted Subsidiary and subordinated in right of payment to any other Indebtedness of the Issuer, the Co-Issuer or of such Restricted Subsidiary, as the case may be.

      For purposes of the foregoing, no Indebtedness will be deemed to be subordinated in right of payment to any other Indebtedness of the Issuer, the Co-Issuer or any Restricted Subsidiary solely by virtue of being unsecured or secured by a junior priority lien or by virtue of the fact that the holders of such Indebtedness have entered into intercreditor agreements or other arrangements giving one or more of such holders priority over the other holders in the collateral held by them.

Limitations on restricted payments

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

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

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

      (3) the amount of such Restricted Payment, when added to the aggregate amount of all other Restricted Payments made after the Issue Date (other than Restricted Payments made pursuant to clause (2), (3), (5) or (6) of the next paragraph), exceeds the sum (the “Restricted Payments Basket”) of (without duplication):

      (a) 50% of Consolidated Net Income for the period (taken as one accounting period) from June 1, 2005 to and including the last day of the fiscal quarter ended immediately prior to the date of such calculation for which consolidated financial statements are available (or, if such Consolidated Net Income shall be a deficit, minus 100% of such aggregate deficit), plus

      (b) 100% of the aggregate net cash proceeds or the Fair Market Value of any assets to be used in the business of the Issuer (other than securities) received by the Issuer either (x) as contributions to the common equity of the Issuer after the Issue Date or (y) from the issuance and sale of Qualified Equity Interests after the Issue Date, other than (A) any such proceeds which are used to redeem Notes in accordance with the second paragraph under “— Optional Redemption,” or (B) any such proceeds or assets received from a Subsidiary of the Issuer, plus

      (c) the aggregate amount by which Indebtedness (other than any Subordinated Indebtedness) incurred by the Issuer or any Restricted Subsidiary subsequent to the Issue Date is reduced on the Issuer’s balance sheet upon the conversion or exchange (other than by a Subsidiary of the Issuer) into Qualified Equity Interests (less the amount of any cash, or the fair value of assets, distributed by the Issuer or any Restricted Subsidiary upon such conversion or exchange), plus

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      (d) in the case of the disposition or repayment of or return on any Investment that was treated as a Restricted Payment made after the Issue Date, an amount (to the extent not included in the computation of Consolidated Net Income) equal to the lesser of (i) 100% of the aggregate amount received by the Issuer or any Restricted Subsidiary in cash or other property (valued at the Fair Market Value thereof) as the return of capital with respect to such Investment and (ii) the amount of such Investment that was treated as a Restricted Payment, in either case, less the cost of the disposition of such Investment and net of taxes, plus

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

      (f) $5.0 million.

      The foregoing provisions will not prohibit:

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

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

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

      (4) so long as no Default shall have occurred and be continuing at the time of or as a consequence of such redemption, the redemption of Equity Interests of the Issuer held by officers, directors or employees or former officers, directors or employees (or their transferees, estates or beneficiaries under their estates), upon their death, disability, retirement, severance or termination of employment or service; provided, however, that the aggregate cash consideration paid for all such redemptions shall not exceed $2.0 million during any calendar year;

      (5) the payment of dividends, or distributions or amounts by the Issuer to its direct parents in amounts required to pay the tax obligations of any such direct parent that are solely attributable to the income of the Issuer and its Subsidiaries by virtue of the Issuer being a pass-through entity for Federal or state income tax purposes; provided, however, that (a) the amount of dividends or distributions paid pursuant to this clause (5) to enable any of the Issuer’s direct parents to pay Federal and state income taxes at any time will not exceed the amount of such Federal and state income taxes actually owing by any such direct parent at such time for the respective period (excluding any tax liability of any such direct parent not attributable to the Issuer or its Subsidiaries) (provided that the Issuer may make periodic payments based on an estimate of such tax liability with an annual reconciliation at the end of each tax year) and (b) any refunds received by or on behalf of, or any overpayment based on the annual reconciliation to, any of the Issuer’s direct parents attributable to the Issuer and its Subsidiaries shall promptly be returned by any such direct parent to the Issuer or credited against the Restricted Payments Basket as an additional distribution to the Issuer’s direct parents;

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

      (7) payments made to purchase, redeem, defease or otherwise acquire or retire for value any Subordinated Indebtedness of the Issuer pursuant to provisions requiring the Issuer to offer to purchase, redeem, defease or otherwise acquire or retire for value such Subordinated Indebtedness upon the occurrence of a “change of control” as defined in the agreements or instruments governing such Subordinated Indebtedness; provided, however, that the Issuer and the Co-Issuer have made a Change of Control Offer and have purchased all Notes tendered in connection with such Change of Control Offer;

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

      During the fiscal year ended May 31, 2005, we distributed $33.7 million to our direct parents. Of that amount, $9.9 million exceeded the amounts required to cover our direct parents’ actual and estimated tax liability. In previous periods, distributions to our direct parents were made largely to cover their tax liabilities. Subsequent to May 31, 2005, and prior to the Issue Date, we distributed $2.1 million to our direct parents, of which $1.8 million was intended to cover their tax liabilities.

Maintenance of consolidated tangible net worth

      If the Issuer’s Consolidated Tangible Net Worth declines below $60.0 million (the “Minimum Tangible Net Worth”) at the end of any fiscal quarter, the Issuer must deliver an Officers’ Certificate to the Trustee within 55 days after the end of such fiscal quarter (110 days after the end of any fiscal year) to notify the Trustee of such decline. If, on the last day of each of any two consecutive fiscal quarters (the last day of the second fiscal quarter being referred to as a “Deficiency Date”), the Issuer’s Consolidated Tangible Net Worth is less than the Minimum Tangible Net Worth of the Issuer, then the Issuer and the Co-Issuer must make an offer (a “Net Worth Offer”) to all Holders of Notes to purchase 10% of the aggregate principal amount of the Notes (the “Net Worth Offer Amount”) at a purchase price equal to 100% of the principal amount of the Notes, plus accrued and unpaid interest thereon, if any, to the date of purchase; provided, however, that no such Net Worth Offer shall be required if, after the Deficiency Date but prior to the date the Issuer and the Co-Issuer are required to make the Net Worth Offer, capital in cash or Cash Equivalents is contributed for Qualified Equity Interests of the Issuer sufficient to increase the Issuer’s Consolidated Tangible Net Worth after giving effect to such contribution to an amount equal to or above the Minimum Tangible Net Worth.

      The Issuer and the Co-Issuer must make the Net Worth Offer no later than 65 days after each Deficiency Date (120 days if such Deficiency Date is the last day of the Issuer’s fiscal year). The Net Worth Offer is required to remain open for a period of 20 Business Days following its commencement or for such longer period as required by law. The Issuer and the Co-Issuer are required to purchase the Net Worth Offer Amount of the Notes on a designated date no later than five Business Days after the termination of the Net Worth Offer, or if less than the Net Worth Offer Amount of Notes shall have been tendered, all Notes then tendered.

      If the aggregate principal amount of Notes tendered exceeds the Net Worth Offer Amount, the Issuer and the Co-Issuer are required to purchase the Notes tendered pro rata among the Notes tendered (with such adjustments as may be appropriate so that only Notes in denominations of $1,000 and integral multiples thereof shall be purchased).

      In no event will the failure of the Issuer’s Consolidated Tangible Net Worth to equal or exceed the Minimum Tangible Net Worth at the end of any fiscal quarter be counted toward the requirement to make more than one Net Worth Offer. The Issuer may reduce the principal amount of Notes to be purchased pursuant to the Net Worth Offer by subtracting 100% of the aggregate principal amount (excluding premium) of the Notes redeemed by the Issuer prior to the purchase (otherwise than under

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this provision). The Issuer, however, may not credit Notes that have been previously used as a credit against any obligation to repurchase Notes pursuant to this provision.

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

      The agreements governing our outstanding Senior Debt currently prohibit us in certain circumstances from purchasing any Notes. Any future credit agreements or other agreements relating to Senior Debt to which the Issuer and/or the Co-Issuer becomes a party may contain similar restrictions and provisions. If the Deficiency Date occurs at a time when the Issuer and the Co-Issuer are prohibited from purchasing Notes, the Issuer and/or the Co-Issuer could seek the consent of the lenders under our Senior Debt to the purchase of Notes or could attempt to refinance the borrowings that contain the prohibition. If the Issuer and/or the Co-Issuer do not obtain a consent or refinance the borrowings, the Issuer and the Co-Issuer will remain prohibited from purchasing Notes. In that case, our failure to purchase tendered Notes would constitute an Event of Default under the Indenture which would, in turn, constitute a default under the Senior Debt. In these circumstances, the subordination provisions in the Indenture would likely restrict payments to the Holders of Notes.

      If a Net Worth Offer is made, there can be no assurance that the Issuer and the Co-Issuer will have available funds sufficient to pay for all or any of the Notes that might be delivered by Holders seeking to accept the Net Worth Offer.

      As of August 31, 2005, the Issuer’s Consolidated Tangible Net Worth was $133.6 million.

Limitations on dividend and other restrictions affecting restricted subsidiaries

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

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

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

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

except for:

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

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

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

      (d) encumbrances or restrictions existing under agreements existing on the date of the Indenture (including, without limitation, the Credit Facilities) as in effect on that date;

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

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

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

      (h) any other agreement governing Indebtedness entered into after the Issue Date that contains encumbrances and restrictions that are not materially more restrictive with respect to any Restricted Subsidiary than those in effect on the Issue Date with respect to that Restricted Subsidiary pursuant to agreements in effect on the Issue Date;

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

      (j) Purchase Money Indebtedness or Capitalized Lease Obligations incurred in compliance with the covenant described under “— Limitations on additional indebtedness” that impose restrictions of the nature described in clause (c) above on the assets acquired; and

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

Limitations on transactions with affiliates

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

      (1) such Affiliate Transaction is on terms that are no less favorable to the Issuer or the relevant Restricted Subsidiary than those that may have been obtained in a comparable transaction at such time on an arm’s-length basis by the Issuer or such Restricted Subsidiary from a Person that is not an Affiliate of the Issuer or such Restricted Subsidiary; and

      (2) the Issuer delivers to the Trustee:

      (a) with respect to any Affiliate Transaction involving aggregate value in excess of $5.0 million, an Officers’ Certificate certifying that such Affiliate Transaction complies with clause (1) above and either (x) a Secretary’s Certificate which sets forth and authenticates a resolution that has been adopted by a majority of the disinterested members of the Board of Directors of the Issuer approving such Affiliate Transaction or (y) a Secretary’s Certificate which sets forth and authenticates a resolution that has been adopted by the Board of Directors of the Issuer approving such Affiliate Transaction together with the written opinion or appraisal described in clause (b) below; and

      (b) with respect to any Affiliate Transaction involving aggregate value of $10.0 million or more, the certificates described in the preceding clause (a) and either (x) a written opinion as to the fairness of such Affiliate Transaction to the Issuer or such Restricted Subsidiary from a financial point of view or (y) a written appraisal supporting the value of such Affiliate Transaction, in either case, issued by an Independent Financial Advisor.

      The foregoing restrictions shall not apply to:

      (1) transactions exclusively between or among (a) the Issuer and one or more Restricted Subsidiaries or (b) Restricted Subsidiaries; provided, however, in each case, that no Affiliate of the

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Issuer (other than another Restricted Subsidiary) owns Equity Interests of any such Restricted Subsidiary;

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

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

      (4) Restricted Payments which are made in accordance with the covenant described under “— Limitations on restricted payments”;

      (5) any agreement as in effect as of the Issue Date and disclosed in this prospectus or any extension, amendment or modification thereto (so long as any such extension, amendment or modification satisfies the requirements set forth in clause (1) of the first paragraph of this covenant) or any transaction contemplated by such agreement;

      (6) any transaction with a joint venture or similar entity which would constitute an Affiliate Transaction solely because the Issuer or a Restricted Subsidiary owns an equity interest in or otherwise controls such joint venture or similar entity; provided, however, that no Affiliate of the Issuer or any of its Subsidiaries other than the Issuer or a Restricted Subsidiary shall have a beneficial interest in such joint venture or similar entity; or

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

Limitations on liens

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

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

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

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

Limitations on asset sales

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

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

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

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

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

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

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

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

      If the Issuer or any Restricted Subsidiary engages in an Asset Sale, the Issuer or such Restricted Subsidiary shall, no later than 365 days following the consummation thereof, apply all or any of the Net Available Proceeds therefrom to:

      (1) repay any Senior Indebtedness; and/or

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

      (3) make a Net Proceeds Offer (and redeem Pari Passu Indebtedness) in accordance with the procedures described below and in the Indenture.

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

      When the aggregate amount of Excess Proceeds equals or exceeds $10.0 million, the Issuer and the Co-Issuer will be required to make an offer to purchase from all Holders and, if applicable, redeem (or make an offer to do so) any Pari Passu Indebtedness of the Issuer or the Co-Issuer the provisions of which require the Issuer or the Co-Issuer to redeem such Indebtedness with the proceeds from any Asset Sales (or offer to do so), in an aggregate principal amount of Notes and such Pari Passu Indebtedness equal to the amount of such Excess Proceeds as follows:

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

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

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in accordance with the procedures set forth in the Indenture and the redemption price for such Pari Passu Indebtedness (the “Pari Passu Indebtedness Price”) shall be as set forth in the related documentation governing such Indebtedness;

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

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

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

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

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

Limitations on designation of unrestricted subsidiaries

      The Issuer may designate any Subsidiary (including any newly formed or newly acquired Subsidiary) of the Issuer (other than the Co-Issuer) as an “Unrestricted Subsidiary” under the Indenture (a “Designation”) only if:

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

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

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

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

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

      (3) is a Person with respect to which neither the Issuer nor any Restricted Subsidiary has any direct or indirect obligation (a) to subscribe for additional Equity Interests or (b) to maintain or

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preserve the Person’s financial condition or to cause the Person to achieve any specified levels of operating results; and

      (4) has not guaranteed or otherwise directly or indirectly provided credit support for any Indebtedness of the Issuer or any Restricted Subsidiary, except for any guarantee given solely to support the pledge by the Issuer or any Restricted Subsidiary of the Equity Interests of such Unrestricted Subsidiary, which guarantee is not recourse to the Issuer or any Restricted Subsidiary, and except to the extent the amount thereof constitutes a Restricted Payment permitted pursuant to the covenant described under “— Limitations on restricted payments.”

      If, at any time, any Unrestricted Subsidiary fails to meet the preceding requirements as an Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted Subsidiary for purposes of the Indenture and any Indebtedness of the Subsidiary, Liens on assets and Investments of such Subsidiary shall be deemed to be incurred or made by a Restricted Subsidiary as of the date and, if the Indebtedness is not permitted to be incurred or made under the covenant described under “— Limitations on additional indebtedness” or the Lien is not permitted under the covenant described under “— Limitations on liens” or the Investment is not permitted to be made under the covenant described under “— Limitation on restricted payments” the Issuer shall be in default of the applicable covenant. The Issuer may not designate the Co-Issuer as an Unrestricted Subsidiary.

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

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

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

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

Limitations on mergers, consolidations, etc.

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

      (1) either:

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

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

      (2) immediately prior to and immediately after giving effect to such transaction and the assumption of the obligations as set forth in clause (1)(b) above and the incurrence of any

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Indebtedness to be incurred in connection therewith, and the use of any net proceeds therefrom on a pro forma basis, no Default shall have occurred and be continuing; and

      (3) immediately after giving effect to such transaction and the assumption of the obligations set forth in clause (1)(b) above and the incurrence of any Indebtedness to be incurred in connection therewith, and the use of any net proceeds therefrom on a pro forma basis, the Issuer or the Successor, as the case may be, could incur $1.00 of additional Indebtedness pursuant to the Ratio Exception.

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

      The Co-Issuer will not, directly or indirectly, in a single transaction or a series of related transactions, (a) consolidate or merge with or into another Person, or sell, lease, transfer, convey or otherwise dispose of or assign all or substantially all of the assets of the Co-Issuer or (b) adopt a Plan of Liquidation unless, in either case:

      (1) either:

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

      (b) the Person formed by or surviving such consolidation or merger or to which such sale, lease, conveyance or other disposition shall be made (or, in the case of a Plan of Liquidation, any Person to which assets are transferred) (collectively, the “Co-Issuer Successor”) is a corporation organized and existing under the laws of any State of the United States of America or the District of Columbia, and the Co-Issuer Successor expressly assumes, by supplemental indenture in form and substance satisfactory to the Trustee, all of the obligations of the Co-Issuer under the Notes, the Indenture and the Registration Rights Agreement; and

      (2) immediately prior to and immediately after giving effect to such transaction and the assumption of the obligations as set forth in clause (1)(b) above, no Default shall have occurred and be continuing.

      Except as provided in the fourth paragraph under the caption “— Note Guarantees,” no Guarantor may consolidate with or merge with or into (whether or not such Guarantor is the surviving Person) another Person, whether or not affiliated with such Guarantor, unless:

      (1) either:

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

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

      (2) immediately after giving effect to such transaction and the assumption of the obligations as set forth in clause (1)(b) above, no Default shall have occurred and be continuing.

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

      Upon any consolidation, combination or merger of the Issuer, the Co-Issuer or a Guarantor, or any sale, lease, transfer, conveyance or other disposition of all or substantially all of the assets of the Issuer or the Co-Issuer in accordance with the foregoing, in which the Issuer, the Co-Issuer or such Guarantor is not the continuing obligor under the Notes or its Note Guarantee, as the case may be, the surviving entity formed by such consolidation or into which the Issuer, the Co-Issuer or such Guarantor is merged or the

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Person to which the sale, lease, transfer, conveyance or other disposition is made will succeed to, and be substituted for, and may exercise every right and power of, the Issuer, the Co-Issuer or such Guarantor under the Indenture, the Notes and the Note Guarantees with the same effect as if such surviving entity had been named therein as the Issuer, the Co-Issuer or such Guarantor and, except in the case of a sale, lease, transfer, conveyance or other disposition, the Issuer, the Co-Issuer or such Guarantor, as the case may be, will be released from the obligation to pay the principal of and interest on the Notes or in respect of its Note Guarantee, as the case may be, and all of the Issuer’s, the Co-Issuer’s or such Guarantor’s other obligations and covenants under the Notes, the Indenture and its Note Guarantee, if applicable.

      Notwithstanding the foregoing, any Restricted Subsidiary (other than the Co-Issuer) may merge into the Issuer or another Restricted Subsidiary.

Additional note guarantees

      If, after the Issue Date, (a) the Issuer or any Restricted Subsidiary shall acquire or create another Subsidiary (other than a Subsidiary that has been designated an Unrestricted Subsidiary) or (b) any Unrestricted Subsidiary is redesignated a Restricted Subsidiary, then, in each such case, the Issuer shall cause such Restricted Subsidiary to:

      (1) execute and deliver to the Trustee (a) a supplemental indenture in form and substance satisfactory to the Trustee pursuant to which such Restricted Subsidiary shall unconditionally guarantee all of the Issuer’s obligations under the Notes and the Indenture and (b) a notation of guarantee in respect of its Note Guarantee; and

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

provided that in respect of any newly created Restricted Subsidiary, the Issuer shall deliver the executed documentation set forth in clauses (1) and (2) above with respect to such newly created Restricted Subsidiary(ies) within ten (10) days of the end of the fiscal quarter in which such Restricted Subsidiary was created.

Limitation on activities of the co-issuer

      The Co-Issuer may not hold any material assets, become liable for any material obligations, engage in any trade or business, or conduct any business activity, other than (1) the issuance of its Equity Interests to the Issuer or any Wholly Owned Restricted Subsidiary of the Issuer, (2) the incurrence of Indebtedness as a co-obligor or guarantor, as the case may be, of the Notes, the Credit Facilities and any other Indebtedness that is permitted to be incurred by the Issuer under the covenant described under “— Limitations on additional indebtedness”; provided, however, that the net proceeds of such Indebtedness are not retained by the Co-Issuer, and (3) activities incidental thereto. Neither the Issuer nor any Restricted Subsidiary shall engage in any transactions with the Co-Issuer in violation of the immediately preceding sentence.

Reports

      Whether or not required by the SEC, so long as any Notes are outstanding, the Issuer will furnish to the Holders of Notes, or file electronically with the SEC through the SEC’s Electronic Data Gathering, Analysis and Retrieval System (or any successor system), within the time periods that would be applicable to the Issuer if it were subject to Section 13(a) or 15(d) of the Exchange Act:

      (1) all quarterly and annual financial information that would be required to be contained in a filing with the SEC on Forms 10-Q and 10-K if the Issuer were required to file these Forms, including a “Management’s Discussion and Analysis of Financial Condition and Results of

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Operations” and, with respect to the annual information only, a report on the annual financial statements by the Issuer’s certified independent accountants; and

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

      In addition, whether or not required by the SEC, after the consummation of the exchange offer, the Issuer will file a copy of all of the information and reports referred to in clauses (1) and (2) above with the SEC for public availability within the time periods that would be applicable to the Issuer if it were subject to Section 13(a) or 15(d) of the Exchange Act (unless the SEC will not accept the filing) and make the information available to securities analysts and prospective investors upon request. The Issuer, the Co-Issuer and the Guarantors have agreed that, for so long as any Notes remain outstanding, the Issuer will furnish to the Holders and to securities analysts and prospective investors, upon their request, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act.

Events of default

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

      (1) failure by the Issuer and the Co-Issuer to pay interest on any of the Notes when it becomes due and payable and the continuance of any such failure for 30 days (whether or not such payment is prohibited by the subordination provisions of the Indenture);

      (2) failure by the Issuer and the Co-Issuer to pay the principal on any of the Notes when it becomes due and payable, whether at stated maturity, upon redemption, upon purchase, upon acceleration or otherwise (whether or not such payment is prohibited by the subordination provisions of the Indenture);

      (3) failure by the Issuer to comply with any of its agreements or covenants described above under “— Certain Covenants — Limitations on mergers, consolidations, etc.,” or in respect of its obligations to make a Change of Control Offer as described above under “— Change of Control” (whether or not such payment is prohibited by the subordination provisions of the Indenture);

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

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

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

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

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

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

      (6) one or more judgments or orders that exceed $10.0 million in the aggregate (net of amounts covered by insurance or bonded) for the payment of money have been entered by a court or courts of

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competent jurisdiction against the Issuer or any Restricted Subsidiary and such judgment or judgments have not been satisfied, stayed, annulled or rescinded within 60 days of being entered;

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

      (a) commences a voluntary case,

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

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

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

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

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

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

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

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

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

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

      The Trustee shall, within 30 days after the occurrence of any Default with respect to the Notes, give the Holders notice of all uncured Defaults thereunder known to it; provided, however, that, except in the case of an Event of Default in payment with respect to the Notes or a Default in complying with “— Certain Covenants — Limitations on mergers, consolidations, etc.,” the Trustee shall be protected in withholding such notice if and so long as a committee of its trust officers in good faith determines that the withholding of such notice is in the interest of the Holders.

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

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

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

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

      However, such limitations do not apply to a suit instituted by a Holder of any Note for enforcement of payment of the principal of or interest on such Note on or after the due date therefor (after giving effect to the grace period specified in clause (1) of the first paragraph of this “— Events of default” section).

      The Issuer is required to deliver to the Trustee annually a statement regarding compliance with the Indenture and, within five Business Days of any Officer of the Issuer becoming aware of any Default, a statement specifying such Default and what action the Issuer is taking or proposes to take with respect thereto.

LEGAL DEFEASANCE AND COVENANT DEFEASANCE

      The Issuer may, at its option and at any time, elect to have its obligations and the obligations of the Co-Issuer and the Guarantors discharged with respect to the outstanding Notes (“Legal Defeasance”). Legal Defeasance means that the Issuer, the Co-Issuer and the Guarantors shall be deemed to have paid and discharged the entire indebtedness represented by the Notes and the Note Guarantees, and the Indenture shall cease to be of further effect as to all outstanding Notes and Note Guarantees, except as to

      (1) rights of Holders to receive payments in respect of the principal of and interest on the Notes when such payments are due from the trust funds referred to below,

      (2) the obligations of the Issuer and the Co-Issuer with respect to the Notes concerning issuing temporary Notes, registration of Notes, mutilated, destroyed, lost or stolen Notes, and the maintenance of an office or agency for payment and money for security payments held in trust,

      (3) the rights, powers, trust, duties, and immunities of the Trustee, and the Issuer’s obligation in connection therewith, and

      (4) the Legal Defeasance provisions of the Indenture.

      In addition, the Issuer may, at its option and at any time, elect to have its obligations and the obligations of the Co-Issuer and the Guarantors released with respect to most of the covenants under the Indenture, except as described otherwise in the Indenture (“Covenant Defeasance”), and thereafter any omission to comply with such obligations shall not constitute a Default. In the event Covenant Defeasance occurs, certain Events of Default (not including non-payment and, solely for a period of 91 days following the deposit referred to in clause (1) of the next paragraph, bankruptcy, receivership, rehabilitation and insolvency events) will no longer apply. Covenant Defeasance will not be effective until such bankruptcy, receivership, rehabilitation and insolvency events no longer apply. The Issuer may exercise its Legal Defeasance option regardless of whether it previously exercised Covenant Defeasance.

      In order to exercise either Legal Defeasance or Covenant Defeasance:

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

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

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

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

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

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

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

      (5) the Legal Defeasance or Covenant Defeasance shall not result in a breach or violation of, or constitute a Default under the Indenture or a default under any other material agreement or instrument to which the Issuer or any of its Subsidiaries is a party or by which the Issuer or any of its Subsidiaries is bound (other than any such Default or default resulting solely from the borrowing of funds to be applied to such deposit);

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

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

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

SATISFACTION AND DISCHARGE

      The Indenture will be discharged and will cease to be of further effect (except as to rights of registration of transfer or exchange of Notes which shall survive until all Notes have been canceled) as to all outstanding Notes when either

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

      (2) (a) all Notes not delivered to the Trustee for cancellation otherwise (i) have become due and payable or (ii) have been called for redemption pursuant to the provisions described under “— Optional Redemption,” and, in any case, the Issuer has irrevocably deposited or caused to be deposited with the Trustee trust funds, in trust, solely for the benefit of the Holders, U.S. legal tender, U.S. Government Obligations or a combination thereof, in such amounts as will be sufficient (without consideration of any reinvestment of interest) to pay and discharge the entire Indebtedness (including all principal and accrued interest) on the Notes not theretofore delivered to the Trustee for cancellation, (b) the Issuer and the Co-Issuer have paid all sums payable by them under the Indenture, and (c) the Issuer and the Co-Issuer have delivered irrevocable instructions to the Trustee

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to apply the deposited money toward the payment of the Notes at maturity or on the date of redemption, as the case may be.

      In addition, the Issuer must deliver an Officers’ Certificate and an opinion of counsel stating that all conditions precedent to satisfaction and discharge have been complied with.

TRANSFER AND EXCHANGE

      A Holder will be able to register the transfer of or exchange Notes only in accordance with the provisions of the Indenture. The Registrar may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and to pay any taxes and fees required by law or permitted by the Indenture. Without the prior consent of the Issuer, the Registrar is not required (1) to register the transfer of or exchange any Note selected for redemption, (2) to register the transfer of or exchange any Note for a period of 15 days before a selection of Notes to be redeemed or (3) to register the transfer or exchange of a Note between a record date and the next succeeding interest payment date.

      The Notes will be issued in registered form and the registered Holder will be treated as the owner of such Note for all purposes.

AMENDMENT, SUPPLEMENT AND WAIVER

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

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

      (b) without the consent of each Holder affected, no amendment or waiver may:

      (1) reduce, or change the maturity or the principal of any Note;

      (2) reduce the rate of or extend the time for payment of interest on the Notes;

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

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

      (5) modify or change any provision of the Indenture or the related definitions affecting the subordination of the Notes or any Note Guarantee in a manner that adversely affects the rights of the Holders;

      (6) reduce the principal amount of Notes whose Holders must consent to an amendment or waiver to the Indenture or the Notes;

      (7) waive a Default in the payment of principal of or premium or interest on any Notes (except a rescission of acceleration of the Notes by the Holders thereof as provided in the Indenture and a waiver of the payment default that resulted from such acceleration);

      (8) impair the rights of Holders to receive payments of principal of or interest on the Notes on or after the due date therefor or to institute suit for the enforcement of any payment on the Notes;

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

      (10) make any change in these amendment and waiver provisions.

      Notwithstanding the foregoing, the Issuer, the Co-Issuer and the Trustee may amend the Indenture, the Note Guarantees or the Notes without the consent of any Holder, to cure any ambiguity, defect or inconsistency, to provide for uncertificated Notes in addition to or in place of certificated Notes, to provide for the assumption of the Issuer’s, the Co-Issuer’s or a Guarantor’s obligations to the Holders in the case of a merger or consolidation or sale of all or substantially all of the assets in accordance with “— Certain Covenants — Limitation on mergers, consolidations, etc.,” to release any Guarantor from any of its obligations under its Note Guarantee or the Indenture (to the extent permitted by the Indenture), to make any change that does not materially adversely affect the rights of any Holder or, in the case of the Indenture, to maintain the qualification of the Indenture under the Trust Indenture Act.

NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS

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

CONCERNING THE TRUSTEE

      U.S. Bank National Association is the Trustee under the Indenture and has been appointed by the Issuer as Registrar and Paying Agent with regard to the Notes. The Indenture contains certain limitations on the rights of the Trustee, should it become a creditor of the Issuer, to obtain payment of claims in certain cases, or to realize on certain assets received in respect of any such claim as security or otherwise. The Trustee will be permitted to engage in other transactions; however, if it acquires any conflicting interest (as defined in the Indenture), it must eliminate such conflict within 90 days, apply to the SEC for permission to continue (if the Indenture has been qualified under the Trust Indenture Act) or resign.

      The Holders of a majority in principal amount of the then outstanding Notes will have the right to direct the time, method and place of conducting any proceeding for exercising any remedy available to the Trustee, subject to certain exceptions. The Indenture provides that, in case an Event of Default occurs and is not cured, the Trustee will be required, in the exercise of its power, to use the degree of care of a prudent person in similar circumstances in the conduct of his or her own affairs. Subject to such provisions, the Trustee will be under no obligation to exercise any of its rights or powers under the Indenture at the request of any Holder, unless such Holder shall have offered to the Trustee security and indemnity satisfactory to the Trustee.

GOVERNING LAW

      The Indenture, the Notes and the Note Guarantees are governed by, and construed in accordance with, the laws of the State of New York.

CERTAIN DEFINITIONS

      Set forth below is a summary of certain of the defined terms used in the Indenture. Reference is made to the Indenture for the full definition of all such terms.

      “Acquired Indebtedness” means (1) with respect to any Person that becomes a Restricted Subsidiary after the Issue Date, Indebtedness of such Person and its Subsidiaries existing at the time such Person becomes a Restricted Subsidiary that was not incurred in connection with, or in contemplation of, such Person becoming a Restricted Subsidiary and (2) with respect to the Issuer or any Restricted Subsidiary,

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any Indebtedness of a Person (other than the Issuer or a Restricted Subsidiary) existing at the time such Person is merged with or into the Issuer or a Restricted Subsidiary, or Indebtedness expressly assumed by the Issuer or any Restricted Subsidiary in connection with the acquisition of an asset or assets from another Person, which Indebtedness was not, in any case, incurred by such other Person in connection with, or in contemplation of, such merger or acquisition.

      “Additional Interest” has the meaning set forth in the Registration Rights Agreement.

      “Affiliate” of any Person means any other Person which directly or indirectly controls or is controlled by, or is under direct or indirect common control with, the referent Person. For purposes of the covenant described under “— Certain Covenants — Limitations on Transactions with Affiliates,” Affiliates shall be deemed to include, with respect to any Person, any other Person (1) which beneficially owns or holds, directly or indirectly, 10% or more of any class of the Voting Stock of the referent Person, (2) of which 10% or more of the Voting Stock is beneficially owned or held, directly or indirectly, by the referenced Person or (3) with respect to an individual, any immediate family member of such Person. For purposes of this definition, “control” of a Person shall mean the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise.

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

      “asset” means any asset or property.

      “Asset Acquisition” means:

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

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

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

      (1) transfers of cash or Cash Equivalents;

      (2) transfers of assets (including Equity Interests) that are governed by, and made in accordance with, the covenant described under “— Certain Covenants — Limitations on mergers, consolidations, etc.”;

      (3) Permitted Investments and Restricted Payments permitted under the covenant described under “— Certain Covenants — Limitations on restricted payments”;

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

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

      (6) any transfer or series of related transfers that, but for this clause, would be Asset Sales, if after giving effect to such transfers, the aggregate Fair Market Value of the assets transferred in such transaction or any such series of related transactions does not exceed $2.0 million.

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

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

      “Board of Directors” means, with respect to any Person, (i) in the case of any corporation, the board of directors of such Person, (ii) in the case of any limited liability company, the board of managers or board of directors of such Person, as the case may be, (iii) in the case of any partnership, the board of directors of the general partner of such Person and (iv) in any other case, the functional equivalent of the foregoing or, in each case, other than for purposes of the definition of “Change of Control,” any duly authorized committee of such body.

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

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

      (2) 80% of the book value of Developed Land for which no construction has occurred;

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

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

      (5) 70% of the costs of Entitled Land (other than Developed Land) on which improvements have not commenced, less mortgage Indebtedness (other than under the Credit Facility) applicable to such land.

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

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

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

      “Cash Equivalents” means:

      (1) marketable obligations with a maturity of 360 days or less issued or directly and fully guaranteed or insured by the United States of America or any agency or instrumentality thereof (provided that the full faith and credit of the United States of America is pledged in support thereof);

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

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

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

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

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

      (1) prior to a Public Equity Offering after the Issue Date, the Permitted Holders cease to own, or to have the power to vote or direct the voting of, Voting Stock representing more than 50% of the voting power of the total outstanding Voting Stock of the Issuer;

      (2) following a Public Equity Offering after the Issue Date, any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act), other than one or more Permitted Holders, is or becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that for purposes of this clause that person or group shall be deemed to have “beneficial ownership” of all securities that any such person or group has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of Voting Stock representing more than 35% of the voting power of the total outstanding Voting Stock of the Issuer; provided, however, that such event shall not be deemed to be a Change of Control so long as the Permitted Holders own Voting Stock representing in the aggregate a greater percentage of the total voting power of the Voting Stock of the Issuer than such other person or group;

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

      (4) (a) all or substantially all of the assets of the Issuer and the Restricted Subsidiaries taken as a whole are sold or otherwise transferred to any Person other than a Wholly Owned Restricted Subsidiary or one or more Permitted Holders or their Affiliates or (b) the Issuer consolidates or merges with or into another Person or any Person consolidates or merges with or into the Issuer, in either case under this clause (4), in one transaction or a series of related transactions in which immediately after the consummation thereof Persons beneficially owning (as defined in Rule 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, Voting Stock representing in the aggregate 100% of the total voting power of the Voting Stock of the Issuer immediately prior to such consummation do not beneficially own (as defined in Rule 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, Voting Stock representing a majority of the total voting power of the Voting Stock of the Issuer or the surviving or transferee Person; or

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

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

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

      (1) Consolidated Net Income; plus

      (2) in each case only to the extent (and in the same proportion) deducted in determining Consolidated Net Income and with respect to the portion of Consolidated Net Income attributable to

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any Restricted Subsidiary only if a corresponding amount would be permitted at the date of determination to be distributed to the Issuer by such Restricted Subsidiary without prior approval (that has not been obtained), pursuant to the terms of its charter and all agreements, instruments, judgments, decrees, orders, statutes, rules and governmental regulations applicable to such Restricted Subsidiary or its stockholders,

      (a) Consolidated Income Tax Expense,

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

      (c) Consolidated Depreciation Expense,

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

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

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

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

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

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

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

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

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

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Issuer or such Restricted Subsidiary had directly incurred or otherwise assumed such guaranteed Indebtedness.

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

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

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

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

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

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

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

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

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

      (3) the net costs associated with Hedging Obligations;

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

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

      (6) all other non-cash interest expense;

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

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

      (9) all interest on any Indebtedness described in clause (7) or (8) of the definition of “Indebtedness”.

      “Consolidated Interest Incurred” for any period means the sum, without duplication, of (1) Consolidated Interest Expense and (2) interest capitalized for such period (including interest capitalized with

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respect to discontinued operations but not including interest or other charges amortized to cost of home sales and cost of land sales).

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

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

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

      (3) the net income of any Restricted Subsidiary during such period to the extent that the declaration or payment of dividends or similar distributions by such Restricted Subsidiary of that income is not permitted by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Subsidiary during such period, except that the Issuer’s equity in a net loss of any such Restricted Subsidiary for such period shall be included in determining Consolidated Net Income;

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

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

      (6) unrealized gains and losses with respect to Hedging Obligations;

      (7) the cumulative effect of any change in accounting principle;

      (8) the amount of dividends or distributions paid by the Issuer to any direct parent in reliance on clause (5) of the second paragraph of the covenant entitled “Certain Covenants — Limitations on restricted payments”; and

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

      In addition, any return of capital with respect to an Investment that increased the Restricted Payments Basket pursuant to clause (3)(d) of the first paragraph of the covenant described under “— Certain Covenants — Limitations on restricted payments” or decreased the amount of Investments outstanding pursuant to clause (14) of the definition of “Permitted Investments” shall be excluded from Consolidated Net Income for purposes of calculating the Restricted Payments Basket. Any payment of dividends or distribution of amounts by the Issuer pursuant to clause (5) of the second paragraph of the covenant described under “Certain Covenants — Limitations on restricted payments” shall be deducted for purposes of calculating Consolidated Net Income for purposes of calculating the Restricted Payments Basket.

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

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

      “Consolidated Tangible Net Worth” means, with respect to any Person as of any date, the Consolidated Net Worth of such Person determined on a consolidated basis at the end of the fiscal quarter immediately preceding such date less (without duplication) all Intangible Assets of such Person as of such date.

      “Credit Facilities” means the Credit Agreement dated as of January 20, 2005 by and among the Issuer, as borrower, the lenders party thereto and Wachovia Bank, National Association, as agent for the lenders, including any notes, guarantees, collateral and security documents, instruments and agreements executed in connection therewith (including Hedging Obligations related to the Indebtedness incurred thereunder), and in each case as amended or refinanced from time to time, including any agreement or instrument extending the maturity of, refinancing, replacing or otherwise restructuring (including increasing the amount of borrowings or other Indebtedness outstanding or available to be borrowed thereunder) all or any portion of the Indebtedness under such agreements, and any successor or replacement agreement or agreements with the same or any other agents, creditor, lender or group of creditors or lenders.

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

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

      “Designated Senior Debt” means (1) Senior Debt and Guarantor Senior Debt under or in respect of the Credit Facilities and (2) any other Indebtedness constituting Senior Debt or Guarantor Senior Debt which, at the time of determination, has an aggregate principal amount of at least $25.0 million and is specifically designated in the instrument evidencing such Senior Debt as “Designated Senior Debt.”

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

      “Disqualified Equity Interests” of any Person means any class of Equity Interests of such Person that, by its terms, or by the terms of any related agreement or of any security into which it is convertible, puttable or exchangeable, is, or upon the happening of any event or the passage of time would be, required to be redeemed by such Person, whether or not at the option of the holder thereof, or matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, in whole or in part, on or prior to the date which is 91 days after the final maturity date of the Notes; provided, however, that any class of Equity Interests of such Person that, by its terms, authorizes such Person to satisfy in full its obligations with respect to the payment of dividends or upon maturity, redemption (pursuant to a sinking fund or otherwise) or repurchase thereof or otherwise by the delivery of Equity Interests that are not Disqualified Equity Interests, and that is not convertible, puttable or exchangeable for Disqualified Equity Interests or Indebtedness, will not be deemed to be Disqualified Equity Interests so long as such Person satisfies its obligations with respect thereto solely by the delivery of Equity Interests that are not Disqualified Equity Interests; provided further, however, that any Equity Interests that would not constitute Disqualified Equity

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Interests but for provisions thereof giving holders thereof (or the holders of any security into or for which such Equity Interests are convertible, exchangeable or exercisable) the right to require the Issuer to redeem such Equity Interests upon the occurrence of a change in control occurring prior to the final maturity date of the Notes shall not constitute Disqualified Equity Interests if the change in control provisions applicable to such Equity Interests are no more favorable to such holders than the provisions described under the caption “— Change of Control” and such Equity Interests specifically provide that the Issuer will not redeem any such Equity Interests pursuant to such provisions prior to the Issuer’s purchase of the Notes as required pursuant to the provisions described under the caption “— Change of Control.”

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

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

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

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

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

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

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

      “Guarantor Senior Debt” means, with respect to any Guarantor, the principal of, premium, if any, and interest (including any interest accruing subsequent to the filing of a petition of bankruptcy at the rate provided for in the documentation with respect thereto, whether or not such interest is an allowed claim under applicable law) on any Indebtedness of such Guarantor, whether outstanding on the Issue Date or thereafter created, incurred or assumed, unless, in the case of any particular Indebtedness, the instrument creating or evidencing the same or pursuant to which the same is outstanding expressly provides that such Indebtedness shall not be senior in right of payment to the Notes.

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      Without limiting the generality of the foregoing, “Guarantor Senior Debt” shall also include the principal of, premium, if any, interest (including any interest accruing subsequent to the filing of a petition of bankruptcy at the rate provided for in the documentation with respect thereto, whether or not such interest is an allowed claim under applicable law) on, and all other amounts owing in respect of:

      (1) all monetary obligations of every nature of such Guarantor under, or with respect to, the Credit Facilities, including, without limitation, obligations to pay principal and interest, reimbursement obligations under letters of credit, fees, expenses and indemnities (and guarantees thereof); and

      (2) all Hedging Obligations in respect of the Credit Facilities;

in each case whether outstanding on the Issue Date or thereafter incurred.

      Notwithstanding the foregoing, “Guarantor Senior Debt” shall not include:

      (1) any Indebtedness of such Guarantor to the Issuer or any of its Subsidiaries;

      (2) Indebtedness to, or guaranteed on behalf of, any director, officer or employee of the Issuer or any of its other Subsidiaries (including, without limitation, amounts owed for compensation);

      (3) obligations to trade creditors and other amounts incurred (but not under the Credit Facilities) in connection with obtaining goods, materials or services;

      (4) Indebtedness represented by Disqualified Equity Interests;

      (5) any liability for taxes owed or owing by such Guarantor;

      (6) that portion of any Indebtedness incurred in violation of the covenant described under “— Certain Covenants — Limitations on additional indebtedness” (but, as to any such obligation, no such violation shall be deemed to exist for purposes of this clause (6) if the holder(s) of such obligation or their representative shall have received an officers’ certificate of such Guarantor to the effect that the incurrence of such Indebtedness does not (or, in the case of revolving credit indebtedness, that the incurrence of the entire committed amount thereof at the date on which the initial borrowing thereunder is made would not) violate such provisions of the Indenture);

      (7) Indebtedness which, when incurred and without respect to any election under Section 1111(b) of Title 11, United States Code, is without recourse to such Guarantor; and

      (8) any Indebtedness which is, by its express terms, subordinated in right of payment to any other Indebtedness of such Guarantor.

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

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

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

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

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

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

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

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

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

      (6) all Capitalized Lease Obligations of such Person;

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

      (8) all Indebtedness of others guaranteed by such Person to the extent of such guarantee; provided, however, that Indebtedness of the Issuer or its Subsidiaries that is guaranteed by the Issuer or the Issuer’s Subsidiaries shall be counted only once in the calculation of the amount of Indebtedness of the Issuer and its Subsidiaries on a consolidated basis;

      (9) all Attributable Indebtedness;

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

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

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

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

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

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      “Independent Financial Advisor” means an accounting, appraisal or investment banking firm of nationally recognized standing that is, in the reasonable judgment of the Issuer’s Board of Directors, qualified to perform the task for which it has been engaged and disinterested and independent with respect to the Issuer and its Affiliates or, in the case of an Affiliate Transaction involving the sale, transfer or other disposition or purchase of real property by the Issuer or a Restricted Subsidiary, an appraisal firm reasonably satisfactory to the independent financial institution that provided the financing for the initial acquisition of such real property by the Affiliate of the Issuer or such Restricted Subsidiary.

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

      “interest” means, with respect to the Notes, interest and Additional Interest, if any, on the Notes.

      “Investments” of any Person means:

      (1) all direct or indirect investments by such Person in any other Person in the form of loans, advances or capital contributions or other credit extensions constituting Indebtedness of such other Person, and any guarantee of Indebtedness of any other Person;

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

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

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

      Except as otherwise expressly specified in this definition, the amount of any Investment (other than an Investment made in cash) shall be the Fair Market Value thereof on the date such Investment is made. The amount of Investment pursuant to clause (4) shall be the Designation Amount determined in accordance with the covenant described under “— Certain Covenants — Limitations on designation of unrestricted subsidiaries.” If the Issuer or any Subsidiary sells or otherwise disposes of any Equity Interests of any Subsidiary, or any Subsidiary issues any Equity Interests, in either case such that, after giving effect to any such sale, disposition or other issuance, such Person is no longer a Subsidiary, the Issuer shall be deemed to have made an Investment on the date of any such sale, other disposition or other issuance equal to the Fair Market Value of the Equity Interests of and all other Investments in such Subsidiary not sold, disposed of or issued, which amount shall be determined by the Board of Directors of the Issuer. Notwithstanding the foregoing, redemptions of Equity Interests of the Issuer shall be deemed not to be Investments.

      “Issue Date” means September 21, 2005, the date on which the Notes were originally issued.

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

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

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

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

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

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

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

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

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

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

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

      “Officers’ Certificate” of any Person means a certificate signed by two Officers of such Person.

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

      “Permitted Holders” means (1)(a) Elly Nevada, Inc., (b) Norman Nevada, Inc., (c) Larry Nevada, Inc., (d) Little Shots Nevada, L.L.C., (e) Elly Colorado, Inc., (f) Norman Colorado, Inc. and (g) Larry Colorado, Inc.; (2) any equityholder, general partner or managing member of any of the Persons referenced above in clause (1); (3) any officer, director, employee, member, partner or equityholder of the manager or general partner of any of the Persons referenced above in clauses (1) and (2); (4) the spouses and descendants of the Persons referenced in clause (2); (5) in the event of the incompetence or death of any of the Persons referred to in clause (2) and (3) above, such Person’s estate, executor, administrator, committee or other personal representative, in each case who at a particular date shall be the beneficial owner of or have the right to acquire, directly or indirectly, capital stock of the Issuer (or any other direct or indirect parent company of the Issuer); and (6) any trust created for the benefit of, or any entity or entities wholly-owned by, the Persons referenced above in clauses (1) through (5).

      “Permitted Investment” means:

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

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

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

      (4) Hedging Obligations incurred pursuant to clause (4) of the second paragraph under the covenant described under “— Certain Covenants — Limitations on Additional Indebtedness”;

      (5) cash and Cash Equivalents;

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

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

      (8) Investments made by the Issuer or any Restricted Subsidiary as a result of consideration received in connection with an Asset Sale made in compliance with the covenant described under “— Certain Covenants — Limitations on Asset Sales”;

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

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

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

      (12) Investments in existence on the Issue Date;

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

      (14) other Investments in an aggregate amount not to exceed 5% of the Issuer’s Consolidated Tangible Net Worth at such time (with each Investment being valued as of the date made and without regard to subsequent changes in value).

      The amount of Investments outstanding at any time pursuant to clauses (13) or (14) above shall be deemed to be reduced:

      (a) upon the disposition or repayment of or return on any Investment made pursuant to clauses (13) or (14) above, by an amount equal to the return of capital with respect to such Investment to the Issuer or any Restricted Subsidiary (to the extent not included in the computation of Consolidated Net Income), less the cost of the disposition of such Investment and net of taxes; and

      (b) upon a Redesignation of an Unrestricted Subsidiary as a Restricted Subsidiary, by an amount equal to the lesser of (x) the Fair Market Value of the Issuer’s proportionate interest in such Subsidiary immediately following such Redesignation, and (y) the aggregate amount of Investments in such Subsidiary that increased (and did not previously decrease) the amount of Investments outstanding pursuant to clauses (13) or (14) above.

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      “Permitted Junior Securities” means:

      (1) Equity Interests in the Issuer, the Co-Issuer or any Guarantor; or

      (2) debt securities issued pursuant to a confirmed plan of reorganization that are subordinated in right of payment to (a) all Senior Debt and Guarantor Senior Debt and (b) any debt securities issued in exchange for Senior Debt to substantially the same extent as, or to a greater extent than, the Notes and the Note Guarantees are subordinated to Senior Debt and Guarantor Senior Debt under the Indenture.

      “Permitted Liens” means the following types of Liens:

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

      (2) Liens incurred or deposits made in the ordinary course of business in connection with workers’ compensation, unemployment insurance and other types of social security, or to secure the performance of tenders, statutory obligations, surety and appeal bonds, bids, leases, government contracts, performance and return-of-money bonds and other similar obligations (exclusive of obligations for the payment of borrowed money);

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

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

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

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

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

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

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

      (10) Liens existing on the Issue Date securing Indebtedness outstanding on the Issue Date;

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

      (12) Liens securing Senior Debt or Guarantor Senior Debt, including Indebtedness under the Credit Facilities;

      (13) Liens securing Non-Recourse Indebtedness of the Issuer or any Restricted Subsidiary permitted to be incurred under the Indenture; provided, however, that such Liens apply only to the

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property financed out of the net proceeds of such Non-Recourse Indebtedness within 90 days after the incurrence of such Non-Recourse Indebtedness;

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

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

      (16) Liens on assets of a Person existing at the time such Person is acquired or merged with or into or consolidated with the Issuer or any such Restricted Subsidiary (and not created in anticipation or contemplation thereof); provided, however, that the Liens do not extend to assets of a Person not subject to such Lien at the time of acquisition, merger or consolidation (other than improvements thereon) and are no more favorable to the lienholders than those securing such assets prior to the acquisition or merger with or into or consolidation with the Issuer or a Restricted Subsidiary;

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

      (18) Liens to secure Refinancing Indebtedness which is incurred to refinance any Indebtedness which has been secured by a Lien permitted under the Indenture and which has been incurred in accordance with the provisions of the Indenture;

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

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

      (21) zoning restrictions, licenses, restrictions on the use of real property or minor irregularities in title thereto, which do not materially impair the use of such real property in the ordinary course of business of the Issuer and its Subsidiaries or the value of such real property for the purpose of such business;

      (22) any right of first refusal, right of first offer, option, contract or other agreement to sell an asset; provided, however, such sale is not otherwise prohibited under the Indenture;

      (23) Liens securing Hedging Obligations entered into for bona fide hedging purposes of the Issuer or any Restricted Subsidiary not for the purpose of speculation;

      (24) Liens securing Indebtedness incurred pursuant to clause (11) of the definition of Permitted Indebtedness; provided such Lien relates only to the Developed Land purchased;

      (25) Liens or leases of model home units;

      (26) Liens for homeowner and property owner association developments and assessments;

      (27) Liens incurred in the ordinary course of business as security for the obligations of the Issuer and its Restricted Subsidiaries with respect to indemnification in respect of title insurance providers;

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      (28) Liens of a lessor under any Capitalized Lease Obligation permitted to be incurred under the Indenture; provided that such Liens do not extend to any property or assets which are not leased property subject to such Capitalized Lease Obligation; and

      (29) Liens securing Hedging Obligations permitted to be incurred pursuant to clause (4) of the definition of “Permitted Indebtedness”.

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

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

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

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

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

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

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

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

      “Public Equity Offering” means an underwritten public offering of Qualified Equity Interests of the Issuer pursuant to an effective registration statement filed under the Securities Act.

      “Purchase Money Indebtedness” means Indebtedness of the Issuer or any Restricted Subsidiary incurred for the purpose of financing all or any part of the purchase price of property, plant or equipment used in the business of the Issuer or any Restricted Subsidiary or the cost of installation, construction or improvement thereof; provided, however, that (1) the amount of such Indebtedness shall not exceed such purchase price or cost, (2) such Indebtedness shall not be secured by any asset other than the specified asset being financed or, in the case of real property or fixtures, including additions and improvements, the real property to which such asset is attached and (3) such Indebtedness shall be incurred within 90 days after such acquisition of such asset by the Issuer or such Restricted Subsidiary or such installation, construction or improvement.

      “Qualified Equity Interests” means Equity Interests of such Person other than Disqualified Equity Interests; provided, however, that of any Person such Equity Interests shall not be deemed Qualified Equity Interests to the extent sold or owed to a Subsidiary of any Person or financed, directly or indirectly, using funds (1) borrowed from such Person or any Subsidiary of such Person until and to the extent such borrowing is repaid or (2) contributed, extended, guaranteed or advanced by such Person or any

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Subsidiary of such Person (including, without limitation, in respect of any employee stock ownership or benefit plan). Unless otherwise specified, Qualified Equity Interests refer to Qualified Equity Interests of the Issuer.

      “Qualified Equity Offering” means the issuance and sale of Qualified Equity Interests of the Issuer to any Persons other than in connection with a transaction constituting a Change of Control; provided, however, that cash proceeds therefrom equal to the redemption price of the Notes to be redeemed are received by the Issuer as a capital contribution immediately prior to such redemption.

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

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

      “Refinancing Indebtedness” means Indebtedness of the Issuer or a Restricted Subsidiary incurred in exchange for, or the proceeds of which are used to redeem or refinance in whole or in part, any Indebtedness of the Issuer or any Restricted Subsidiary (the “Refinanced Indebtedness”); provided, however, that:

      (1) the principal amount (and accreted value, in the case of Indebtedness issued at a discount) of the Refinancing Indebtedness does not exceed the principal amount (and accreted value, as the case may be) of the Refinanced Indebtedness plus the amount of accrued and unpaid interest on the Refinanced Indebtedness, any premium paid to the holders of the Refinanced Indebtedness and reasonable expenses incurred in connection with the incurrence of the Refinancing Indebtedness;

      (2) the obligor of Refinancing Indebtedness does not include any Person (other than the Issuer or any Restricted Subsidiary) that is not an obligor of the Refinanced Indebtedness;

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

      (4) the Refinancing Indebtedness has a final stated maturity either (a) no earlier than the Refinanced Indebtedness being repaid or amended or (b) after the maturity date of the Notes;

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

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

      “Registration Rights Agreement” means (i) the Registration Rights Agreement dated as of the Issue Date among the Issuer, the Co-Issuer, the Guarantors and the initial purchasers of the Notes issued on the Issue Date and (ii) any other registration rights agreement entered into in connection with an issuance of Additional Notes in a private offering after the Issue Date.

      “Representative” means any agent or representative in respect of any Designated Senior Debt; provided, however, that if, and for so long as, any Designated Senior Debt lacks such representative, then the Representative for such Designated Senior Debt shall at all times constitute the holders of a majority in outstanding principal amount of such Designated Senior Debt.

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      “Restricted Payment” means any of the following:

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

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

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

      (4) any payment of principal of or redemption prior to the scheduled maturity or prior to any scheduled repayment of principal or sinking fund payment, as the case may be, in respect of Subordinated Indebtedness (other than Subordinated Indebtedness owed to and held by Issuer or any Restricted Subsidiary).

      “Restricted Payments Basket” has the meaning given to such term in the first paragraph of the covenant described under “— Certain Covenants — Limitations on restricted payments.”

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

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

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

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

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

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

      “Senior Debt” means the principal of, premium, if any, and interest (including any interest accruing subsequent to the filing of a petition of bankruptcy at the rate provided for in the documentation with respect thereto, whether or not such interest is an allowed claim under applicable law) on any Indebtedness of the Issuer or the Co-Issuer, whether outstanding on the Issue Date or thereafter created, incurred or assumed, unless, in the case of any particular Indebtedness, the instrument creating or evidencing the same or pursuant to which the same is outstanding expressly provides that such Indebtedness shall not be senior in right of payment to the Notes.

      Without limiting the generality of the foregoing, “Senior Debt” shall include the principal of, premium, if any, interest (including any interest accruing subsequent to the filing of a petition of bankruptcy at the rate provided for in the documentation with respect thereto, whether or not such interest is an allowed claim under applicable law) on, and all other amounts owing in respect of:

      (1) all monetary obligations of every nature under, or with respect to, the Credit Facilities, including, without limitation, obligations to pay principal and interest, reimbursement obligations under letters of credit, fees, expenses and indemnities (and guarantees thereof); and

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      (2) all Hedging Obligations in respect of the Credit Facilities;

in each case whether outstanding on the Issue Date or thereafter incurred.

      Notwithstanding the foregoing, “Senior Debt” shall not include:

      (1) any Indebtedness of the Issuer or the Co-Issuer to any of their respective Subsidiaries;

      (2) Indebtedness to, or guaranteed on behalf of, any director, officer or employee of the Issuer or any of its Subsidiaries (including, without limitation, amounts owed for compensation);

      (3) obligations to trade creditors and other amounts incurred (but not under the Credit Facilities) in connection with obtaining goods, materials or services;

      (4) Indebtedness represented by Disqualified Equity Interests;

      (5) any liability for taxes owed or owing by the Issuer or the Co-Issuer;

      (6) that portion of any Indebtedness incurred in violation of the “Limitations on Additional Indebtedness” covenant (but, as to any such obligation, no such violation shall be deemed to exist for purposes of this clause (6) if the holder(s) of such obligation or their representative shall have received an Officers’ Certificate of the Issuer to the effect that the incurrence of such Indebtedness does not (or, in the case of revolving credit indebtedness, that the incurrence of the entire committed amount thereof at the date on which the initial borrowing thereunder is made would not) violate such provisions of the Indenture);

      (7) Indebtedness which, when incurred and without respect to any election under Section 1111(b) of Title 11, United States Code, is without recourse to the Issuer; and

      (8) any Indebtedness which is, by its express terms, subordinated in right of payment to any other Indebtedness of the Issuer or the Co-Issuer, as the case may be.

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

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

      “Subsidiary” means, with respect to any Person, any corporation, limited liability company, partnership, association or other business entity of which (a) more than 50% of the total voting power of the Equity Interests entitled (without regard to the occurrence of any contingency) to vote in the election of the Board of Directors thereof is at the time owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of such Person (or a combination thereof) or (b) that is or is required to be included in the consolidated financial statements of such Person in accordance with GAAP. Unless otherwise specified, “Subsidiary” refers to a Subsidiary of the parent.

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

      “Unit” means a residence, whether single or part of a multifamily building, whether completed or under construction, held by the Issuer or any Restricted Subsidiary for sale in the ordinary course of business.

      “Unrestricted Subsidiary” means (1) any Subsidiary that at the time of determination shall be designated an Unrestricted Subsidiary by the Board of Directors of the Issuer in accordance with the covenant described under “— Certain Covenants — Limitations on designation of unrestricted subsidiaries” and (2) any Subsidiary of an Unrestricted Subsidiary.

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

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

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

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

BOOK-ENTRY, DELIVERY AND FORM OF NOTES

      The new notes will be represented by one or more global notes (the “Global Notes”) in definitive form. The Global Notes will be deposited with, or on behalf of, the Depository Trust Company (“DTC”) and registered in the name of Cede & Co., as nominee of DTC (such nominee being referred to herein as the “Global Note Holder”). DTC will maintain the Notes in denominations of $1,000 and integral multiples thereof through its book-entry facilities.

      DTC has advised the Issuer as follows:

      DTC is a limited-purpose trust company that was created to hold securities for its participating organizations, including the Euroclear System and Clearstream Banking, Société Anonyme, Luxembourg (collectively, the “Participants” or the “Depositary’s Participants”), and to facilitate the clearance and settlement of transactions in these securities between Participants through electronic book-entry changes in accounts of its Participants. The Depositary’s Participants include securities brokers and dealers (including the Initial Purchasers), banks and trust companies, clearing corporations and certain other organizations. Access to DTC’s system is also available to other entities such as banks, brokers, dealers and trust companies (collectively, the “Indirect Participants” or the “Depositary’s Indirect Participants”) that clear through or maintain a custodial relationship with a Participant, either directly or indirectly. Persons who are not Participants may beneficially own securities held by or on behalf of DTC only through the Depositary’s Participants or the Depositary’s Indirect Participants. Pursuant to procedures established by DTC, ownership of the Notes will be shown on, and the transfer of ownership thereof will be effected only through, records maintained by DTC (with respect to the interests of the Depositary’s Participants) and the records of the Depositary’s Participants (with respect to the interests of the Depositary’s Indirect Participants).

      The laws of some states require that certain persons take physical delivery in definitive form of securities that they own. Consequently, the ability to transfer the Notes will be limited to such extent.

      So long as the Global Note Holder is the registered owner of any Notes, the Global Note Holder will be considered the sole holder of outstanding Notes represented by such Global Notes under the Indenture. Except as provided below, owners of Notes will not be entitled to have Notes registered in their names and will not be considered the owners or holders thereof under the Indenture for any purpose, including with respect to the giving of any directions, instructions, or approvals to the Trustee thereunder. None of the Issuer, the Co-Issuer, the Guarantors or the Trustee will have any

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responsibility or liability for any aspect of the records relating to or payments made on account of Notes by DTC, or for maintaining, supervising or reviewing any records of DTC relating to such Notes.

      Payments in respect of the principal of, premium, if any, and interest on any Notes registered in the name of a Global Note Holder on the applicable record date will be payable by the Trustee to or at the direction of such Global Note Holder in its capacity as the registered holder under the Indenture. Under the terms of the Indenture, the Issuer and the Co-Issuer and the Trustee may treat the persons in whose names any Notes, including the Global Notes, are registered as the owners thereof for the purpose of receiving such payments and for any and all other purposes whatsoever. Consequently, none of the Issuer, the Co-Issuer or the Trustee has or will have any responsibility or liability for the payment of such amounts to beneficial owners of Notes (including principal, premium, if any, and interest). The Issuer believes, however, that it is currently the policy of DTC to immediately credit the accounts of the relevant Participants with such payments, in amounts proportionate to their respective beneficial interests in the relevant security as shown on the records of DTC. Payments by the Depositary’s Participants and the Depositary’s Indirect Participants to the beneficial owners of Notes will be governed by standing instructions and customary practice and will be the responsibility of the Depositary’s Participants or the Depositary’s Indirect Participants.

      If an Event of Default occurs, any person having a beneficial interest in the Global Notes may, through the Depositary’s Participants or the Depositary’s Indirect Participants upon request to the Trustee and confirmation of such beneficial interest by the Depositary or its Participants or Indirect Participants, exchange such beneficial interest for Notes in definitive form. Upon any such issuance, the Trustee is required to register such Notes in the name of and cause the same to be delivered to, such person or persons (or the nominee of any thereof). Such Notes would be issued in fully registered form and would be subject to the legal requirements described in this prospectus under the caption “Notice to Investor.”

      None of the Issuer, the Co-Issuer or the Trustee will be liable for any delay by the Global Note Holder or DTC in identifying the beneficial owners of Notes and the Issuer, the Co-Issuer and the Trustee may conclusively rely on, and will be protected in relying on, instructions from the Global Note Holder or DTC for all purposes.

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Material United States federal income tax considerations

GENERAL

      The following is a general discussion of the material United States federal income tax consequences of the exchange of original notes for new notes and the purchase, ownership and disposition of the new notes to United States holders and, in certain circumstances, non-United States holders.

      This summary deals only with notes held as capital assets within the meaning of section 1221 of the Internal Revenue Code of 1986, as amended, hereafter referred to as the Code, and does not deal with special situations, such as those of broker dealers, tax-exempt organizations, partnerships or other pass through entities or investors in such entities, individual retirement accounts and other tax deferred accounts, financial institutions, insurance companies, or persons holding the notes as part of a hedging or conversion transaction or straddle, or a constructive sale, or persons who have ceased to be United States citizens or to be taxed as resident aliens or persons whose functional currency is not the U.S. dollar. Furthermore, the discussion below is based upon the provisions of the Code, and regulations, rulings and judicial decisions thereunder as of the date hereof, and such authorities may be subject to change, possibly with retroactive effect, so as to result in United States federal income tax consequences different from those discussed below. In addition, except as otherwise indicated, the following does not consider the effect of any applicable foreign, state, local or other tax laws or estate or gift tax considerations.

      As used herein, a “United States holder” is a beneficial owner of a note that is, for United States federal income tax purposes,

•  an individual who is a citizen or resident of the United States,

•  a corporation or other entity treated as a corporation created or organized in or under the laws of the United States or any political subdivision thereof,

•  an estate the income of which is subject to United States federal income taxation regardless of its source,

•  a trust if a United States court is able to exercise primary supervision over the administration of the trust and one or more United States persons have the authority to control all substantial decisions of the trust, and

•  a certain type of trust in existence on August 20, 1996, which was treated as a United States person under the Code in effect immediately prior to such date and which has made a valid election to be treated as a United States person under the Code.

      A “non-United States holder” is a beneficial owner of a note who is not a United States holder.

      If a partnership holds notes, the tax treatment of a partner generally will depend upon the status of the partner and upon the activities of the partnership. If you are a partner in a partnership holding outstanding notes, we suggest that you consult your tax advisor.

      Persons considering participating in the exchange offer, or considering the purchase, ownership or disposition of notes should consult their own tax advisors concerning the United States federal income tax consequences in light of their particular situations as well as any consequences arising under the laws of any other taxing jurisdiction.

EXCHANGE OFFER

      Pursuant to this exchange offer, holders are entitled to exchange the original notes for new notes that will be substantially identical in all material respects to the original notes, except that the new notes will be registered and therefore generally will not be subject to transfer restrictions. Participation in the exchange offer should not result in a taxable exchange to the Company or you. Accordingly,

•  no gain or loss will be realized by you upon receipt of a new note,

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•  the holding period of a new note will include the holding period of the original note exchanged therefor, and

•  the adjusted tax basis of the new notes will be the same as the adjusted tax basis of the original notes exchanged at the time of the exchange.

UNITED STATES HOLDERS

Payments of Interest on Notes

      Interest on the notes will be taxable to a United States holder as ordinary income at the time it is paid or accrued in accordance with the United States holder’s regular method of accounting for tax purposes. The original notes were not, and the new notes will not be issued with original issue discount and the remainder of this section so assumes.

Sale, Exchange, Redemption or Retirement of the Notes

      Upon the sale, exchange, redemption, retirement or other taxable disposition of a note, a United States holder will generally recognize gain or loss in an amount equal to the difference between:

•  the amount of cash and the fair market value of other property received in exchange therefor and

•  the holder’s adjusted tax basis in such note.

      Amounts attributable to accrued but unpaid interest on the notes will be treated as ordinary interest income as described above. A United States holder’s adjusted tax basis in a note generally will equal the purchase price paid by the holder for the note.

      Gain or loss realized on the sale, exchange, retirement or other taxable disposition of a note will be capital gain or loss and will be long-term capital gain or loss if at the time of sale, exchange, redemption, retirement or other taxable disposition, the note has been held by a United States holder for more than twelve months. The current maximum rate of tax on long-term capital gains with respect to notes held by an individual is 15%. The deductibility of capital losses is subject to certain limitations.

Information Reporting and Backup Withholding

      Backup withholding and information reporting requirements may apply to certain payments of interest on a note and to the proceeds of the sale, redemption or other disposition of a note. We, our agent, a broker, the trustee or the paying agent, as the case may be, will be required to withhold from any payment that is subject to backup withholding a backup withholding tax if a United States holder, other than an exempt recipient such as a corporation, fails to furnish its taxpayer identification number, certify that such number is correct, certify that such holder is not subject to withholding or otherwise comply with the applicable backup withholding rules. Pursuant to legislation enacted in 2003, the backup withholding rate is 28%. This legislation is scheduled to expire and the backup withholding rate will be 31% for amounts paid after December 31, 2010 unless Congress enacts legislation providing otherwise. A United States holder will generally be eligible for an exemption from backup withholding by providing a properly completed Internal Revenue Service Form W-9 to the applicable payor. Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules from a payment to a holder of the notes will be allowed as a refund or a credit against such holder’s United States federal income tax liability, provided the required information is furnished to the Internal Revenue Service.

NON-UNITED STATES HOLDERS

United States Federal Withholding Tax

      The payment to a non-United States holder of interest on a note that is not effectively connected with such holder’s conduct of a United States trade or business generally will not be subject to United States federal withholding tax, pursuant to the “portfolio interest exception,” provided that

•  the non-United States holder does not directly, indirectly or constructively own 10% or more of the total combined voting power of all of our classes of corporate stock,

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•  the non-United States holder is not a controlled foreign corporation that is related to us through stock ownership within the meaning of the Code, and

•  the non-United States holder is not a bank whose receipt of interest on a note is described in section 881(c)(3)(A) of the Code;

and provided that either:

•  the beneficial owner of the note certifies to us or our paying agent, under penalties of perjury, that it is not a United States holder and provides its name and address on an Internal Revenue Service Form W-8BEN, or a suitable substitute form, or

•  a securities clearing organization, bank or other financial institution that holds the notes on behalf of such non-United States holder in the ordinary course of its trade or business certifies to us or our paying agent, under penalties of perjury, that such a Form W-8BEN or suitable substitute form, has been received from the beneficial owner by it or by a financial institution between it and the beneficial owner and furnishes the payor with a copy thereof.

      Alternative methods may be applicable for satisfying the certification requirement described above.

      If a non-United States holder cannot satisfy the requirements of the portfolio interest exception described above, payments of interest made to such non-United States holder will be subject to a 30% withholding tax, unless the beneficial owner of the note provides us or our paying agent with a properly executed:

•  Form W-8BEN or successor form (or a suitable substitute form), claiming an exemption from or reduction in the rate of withholding under the benefit of an applicable income tax treaty, or

•  Form W-8ECI, or successor form (or a suitable substitute form), stating that interest paid on the note is not subject to withholding tax because it is effectively connected with the beneficial owner’s conduct of a trade or business in the United States.

      In addition, the non-United States holder may under certain circumstances be required to obtain a United States taxpayer identification number and make certain certifications to us. Non-United States holders should consult their tax advisors regarding the effect, if any, of the withholding regulations.

United States Federal Income Tax

      Except for the possible application of United States federal withholding tax discussed above, or backup withholding tax discussed below, a non-United States holder generally will not be subject to United States federal income tax on payments of interest and principal on the notes, or on any gain realized upon the sale, exchange, redemption or retirement of a note, unless:

•  such payments and gain are effectively connected with the conduct by such holder of a trade or business in the United States, and, if required by an applicable income tax treaty as a condition for subjecting the non- United States holder to United States taxation on a net income basis, the gain is attributable to a permanent establishment maintained in the United States, or

•  in the case of gains derived by an individual, such individual is present in the United States for 183 days or more in the taxable year of disposition and certain other conditions are met.

      If a non-United States holder is engaged in a trade or business in the United States and interest on the note or gain realized upon disposition of a note is effectively connected with the conduct of such trade or business, such non-United States holder will be subject to United States federal income tax, in the same manner as if it were a United States holder. In addition, if such non-United States holder is a foreign corporation, it may be subject to a branch profits tax equal to 30% of its effectively connected earnings and profits (which may include both any interest on a note and any gain on a disposition of a note), subject to adjustment, for that taxable year unless it qualifies for a lower rate under an applicable income tax treaty. If a non United States holder is subject to the 183 day rule described above, such

117

holder generally will be subject to United States federal income tax at a rate of 30% (or the lower applicable treaty rate) on the amount by which capital gains allocable to United States sources exceed capital losses allocable to United States sources.

      Special rules may apply to certain non-United States holders, such as “controlled foreign corporations,” “passive foreign investment companies” and “foreign personal holding companies,” that are subject to special treatment under the Code. Such entities should consult their own tax advisors to determine the United States federal, state, local and other tax consequences that may be relevant to them or to their shareholders.

INFORMATION REPORTING AND BACKUP WITHHOLDING

      We must report annually to the Internal Revenue Service and to each non-United States holder any interest that is subject to withholding, or that is exempt from United States withholding tax pursuant to a tax treaty, or interest that is exempt from United States withholding tax under the portfolio interest exception. Copies of these information returns may also be made available under the provisions of a specific tax treaty or agreement with the tax authorities of the country in which the non-United States holder resides.

      Non-United States holders may be subject to backup withholding and additional information reporting requirements. However, backup withholding and additional information reporting requirements generally do not apply to payments of interest made by us or a paying agent to non-United States holders if the certification described above under “United States Federal Withholding Tax” is received.

      If the foreign office of a foreign “broker,” as defined in the applicable Treasury regulations, pays the proceeds of a sale, redemption or other disposition of a note to the seller thereof outside the United States, backup withholding and information reporting requirements will generally not apply. However, information reporting requirements, but not backup withholding, will generally apply to a payment by a foreign office of a broker that is a United States person or a “United States related person,” unless the broker has documentary evidence in its records that the holder is a non-United States holder and certain other conditions are met or the holder otherwise establishes an exemption. For this purpose, a “United States related person” is:

•  a foreign person that derives 50% or more of its gross income from all sources in specified periods from activities that are effectively connected with the conduct of a trade or business in the United States,

•  a “controlled foreign corporation” (a foreign corporation controlled by certain United States shareholders), or

•  a foreign partnership, if at any time during its tax year, one or more of its partners are United States persons, as defined in the applicable Treasury regulations, who in the aggregate hold more than 50% of the income or capital interest in the partnership, or if at any time during its taxable year, such foreign partnership is engaged in a trade or business in the United States.

      Payment by a United States office of any United States or foreign broker is generally subject to both backup withholding and information reporting unless the holder certifies under penalties of perjury that it is a non-United States holder or otherwise establishes an exemption.

      Pursuant to legislation enacted in 2003, the backup withholding rate is 28%. This legislation is scheduled to expire and the backup withholding rate will be 31% for amounts paid after December 31, 2010 unless Congress enacts legislation providing otherwise.

      Any amounts withheld under the backup withholding rules from a payment to a holder of the notes may be allowed as a refund or a credit against such holder’s United States federal income tax liability, provided that the required information is timely furnished to the Internal Revenue Service.

      Non-United States holders should consult their tax advisers concerning the possible application of Treasury regulations and income tax treaties to any payments made on or with respect to the notes.

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Plan of distribution

       If you wish to exchange your original notes in the exchange offer, you will be required to make representations to us as described in “The exchange offer — Exchange Offer Procedures” in this prospectus and in the letter of transmittal. In addition, each broker-dealer that receives new notes for its own account pursuant to the exchange offer must acknowledge that it will deliver a prospectus in connection with any resale of such new notes. This prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of new notes received in exchange for original notes where such original notes were acquired as a result of market-making activities or other trading activities. We have agreed to use our reasonable best efforts to make this prospectus, as amended or supplemented, available to any broker-dealer for a period of 180 days after the date of this prospectus for use in connection with any such resale.

      We will not receive any proceeds from any sale of new notes by broker-dealers. New notes received by broker-dealers for their own account pursuant to the exchange offer may be sold from time to time in one or more transactions in the over-the-counter market, in negotiated transactions, through the writing of options on the new notes or a combination of such methods of resale, at market prices prevailing at the time of resale, at prices related to such prevailing market prices or negotiated prices. Any such resale may be made directly to purchasers or to or through brokers or dealers who may receive compensation in the form of commissions or concessions from any such broker-dealer or the purchasers of any such new notes. Any broker-dealer that resells new notes that were received by it for its own account pursuant to the exchange offer and any broker or dealer that participates in a distribution of such new notes may be deemed to be an “underwriter” within the meaning of the Securities Act and any profit on any such resale of new notes and any commission or concessions received by any such persons may be deemed to be underwriting compensation under the Securities Act. The letter of transmittal states that, by acknowledging that it will deliver and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act.

      A broker-dealer that acquired original notes directly from us cannot exchange the original notes in the exchange offer. Any holder who tenders in the exchange offer for the purpose of participating in a distribution of the new notes cannot rely on the no-action letters of the staff of the SEC and must comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale transaction.

      For a period of 180 days after the date of this prospectus, we will promptly send additional copies of this prospectus and any amendment or supplement to this prospectus to any broker-dealer that requests such documents in the letter of transmittal. We have agreed to pay all expenses incident to the exchange offer, including the expenses of one counsel for the holders of the original notes, other than commissions or concessions of any brokers or dealers, and will indemnify the holders of the original notes, including any broker-dealers, against certain liabilities, including liabilities under the Securities Act.

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Legal matters

       The enforceability of the new notes and the guarantees offered in this prospectus, the binding obligations of the Company, the Co-Issuer and the Subsidiary Guarantors pursuant to such notes and guarantees and other matters will be passed upon for us by Paul, Hastings, Janofsky & Walker LLP. Certain legal matters as to the Company and the guarantees given by the Subsidiary Guarantors will be passed upon by the following law firms: Lionel, Sawyer & Collins; Hagen & Parsons, P.C.; Akerman Senterfitt; Holley, Albertson & Polk P.C.; and Fennemore Craig, P.C.

Experts

       The consolidated financial statements of Ashton Woods USA L.L.C. and subsidiaries as of May 31, 2005 and 2004, and for each of the years in the three-year period ended May 31, 2005 have been included herein and in the registration statement in reliance upon the report of KPMG LLP, independent registered public accounting firm, appearing elsewhere herein, and upon the authority of said firm as experts in accounting and auditing.

Where you can find more information

       We have filed with the Securities and Exchange Commission, or SEC, a registration statement on Form S-4 (SEC File No. 333-                    ). This prospectus, which forms part of the registration statement, does not contain all the information included in the registration statement. For further information about us and the securities offered in this prospectus, you should refer to the registration statement and exhibits. Statements contained in this prospectus regarding the contents of any contract or any other document that is filed as an exhibit to the registration statement are not necessarily complete, and each such statement is qualified in all respects by reference to the full text of such contract or other document filed as an exhibit to the registration statement. A copy of the registration statement and the exhibits and schedules filed therewith may be inspected without charge at the public reference room maintained by the SEC, located at 100 F Street, N.E., Washington, D.C. 20549, and copies of all or any part of the registration statement may be obtained from such offices upon the payment of the fees prescribed by the SEC. Please call the SEC at 1-800-SEC-0330 for further information about the public reference room. The SEC also maintains an Internet web site that contains reports, proxy and information statements and other information regarding registrants that file electronically with the SEC. The address of the site is http://www.sec.gov.

      Upon completion of this offering, we will file periodic and current reports and other information with the SEC. Such periodic and current reports and other information will be available for inspection and copying at the public reference room and web site of the SEC referred to above.

      We maintain an internet site at www.ashtonwoods.com which contains information concerning us and our subsidiaries. The information contained on our internet site and those of our subsidiaries is not incorporated by reference in this prospectus and should not be considered a part of this prospectus.

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Index to financial statements

Consolidated Financial Statements
	Report of Independent Registered Public Accounting Firm	F-2
	Consolidated Balance Sheets as of May 31, 2005 and May 31, 2004	F-3
	Consolidated Statements of Earnings for the years ended May 31, 2005, 2004 and 2003	F-4
	Consolidated Statements of Members’ Equity for the years ended May 31, 2005, 2004 and 2003	F-5
	Consolidated Statements of Cash Flows for the years ended May 31, 2005, 2004 and 2003	F-6
	Notes to Consolidated Financial Statements	F-7
Unaudited Condensed Consolidated Financial Statements
	Condensed Consolidated Balance Sheets as of August 31, 2005 and May 31, 2005	F-15
	Condensed Consolidated Statements of Earnings for the three-month periods ended August 31, 2005 and 2004	F-16
	Condensed Consolidated Statements of Cash Flows for three-month periods ended August 31, 2005 and 2004	F-17
	Notes to Condensed Consolidated Financial Statements	F-18

F-1

Report of Independent Registered Public Accounting Firm

The Members

Ashton Woods USA L.L.C.:

      We have audited the accompanying consolidated balance sheets of Ashton Woods USA L.L.C. and subsidiaries as of May 31, 2005 and 2004, and the related consolidated statements of earnings, members’ equity, and cash flows for each of the years in the three-year period ended May 31, 2005. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

      We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

      In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Ashton Woods USA L.L.C., and subsidiaries as of May 31, 2005 and 2004, and the results of their operations and their cash flows for each of the years in the three-year period ended May 31, 2005, in conformity with U.S. generally accepted accounting principles.

KPMG LLP

July 20, 2005

F-2

Ashton Woods USA L.L.C.

CONSOLIDATED BALANCE SHEETS

		May 31,
		2005		2004
		(In thousands)
ASSETS
Cash and cash equivalents		$	105	$	625
Inventory
	Construction in progress and finished homes		126,010		106,651
	Land and land under development		129,983		99,033
Real estate not owned			14,945		8,226
Property and equipment, net			5,620		3,340
Accounts receivable			10,649		5,854
Restricted cash			104		1,846
Other assets			9,998		6,694
Investments in unconsolidated entities			12,029		8,330
		$	309,443	$	240,599
LIABILITIES AND MEMBERS’ EQUITY
Liabilities
	Notes payable	$	96,789	$	86,159
	Related party note		13,746		3,409
	Customer deposits		12,290		6,596
	Liabilities related to real estate not owned		12,551		6,840
	Accounts payable and accruals		42,476		32,156
Total liabilities			177,852		135,160
Minority interests in consolidated limited partnerships			—		242
Minority interests in real estate not owned			1,993		1,386
Members’ equity			129,598		103,811
		$	309,443	$	240,599

See Accompanying Notes to Consolidated Financial Statements.

F-3

Ashton Woods USA L.L.C.

CONSOLIDATED STATEMENTS OF EARNINGS

		Years Ended May 31,
		2005			2004			2003
		(In thousands)
Revenues
	Home sales	$	461,322		$	377,265		$	287,178
	Land sales		37,005			34,561			19,705
	Other		1,279			974			703
			499,606			412,800			307,586
Cost of sales
	Home sales		364,469			299,940			237,427
	Land sales		17,183			23,249			15,920
			381,652			323,189			253,347
Gross profit
	Home sales		96,853			77,325			49,751
	Land sales		19,822			11,312			3,785
	Other		1,279			974			703
			117,954			89,611			54,239
Expenses
	Sales and marketing		26,503			23,809			18,730
	General and administrative		27,725			19,184			15,766
	Related party expense		1,136			1,062			794
	Franchise taxes		439			361			389
	Depreciation and amortization		3,870			3,915			3,574
			59,673			48,331			39,253
Earnings in unconsolidated entities			1,571			1,259			1,523
Minority interest in earnings			(398	)		(112	)		(12	)
Net income		$	59,454		$	42,427		$	16,497

See Accompanying Notes to Consolidated Financial Statements.

F-4

Ashton Woods USA L.L.C.

CONSOLIDATED STATEMENTS OF MEMBERS’ EQUITY

	(In thousands)
BALANCE at May 31, 2002	$	68,550
Distributions		(6,633	)
Net income		16,497
BALANCE at May 31, 2003		78,414
Distributions		(17,030	)
Net income		42,427
BALANCE at May 31, 2004		103,811
Distributions		(33,667	)
Net income		59,454
BALANCE at May 31, 2005	$	129,598

See Accompanying Notes to Consolidated Financial Statements.

F-5

Ashton Woods USA L.L.C.

CONSOLIDATED STATEMENTS OF CASH FLOWS

			Years Ended May 31,
			2005			2004			2003
			(In thousands)
Cash flow from operating activities:
	Net income		$	59,454		$	42,427		$	16,497
	Adjustments to reconcile net income to net cash provided by operating activities:
		Earnings in unconsolidated entities		(1,571	)		(1,259	)		(1,523	)
		Investment with related party in land held for resale		6,111			(6,111	)		—
		Distributions from unconsolidated entities		2,206			1,468			1,463
		Depreciation and amortization		3,870			3,915			3,574
		Minority interest in earnings of consolidated limited partnership		398			112			12
	Changes in operating assets and liabilities:
		Inventory		(50,309	)		(8,763	)		970
		Accounts receivable		(4,795	)		1,560			(4,739	)
		Restricted cash		1,742			(631	)		(350	)
		Other assets		(2,009	)		(3,764	)		(1,440	)
		Accounts payable and accruals		10,320			10,240			(1,939	)
		Customer deposits		5,694			2,136			1,264
Net cash provided by operating activities				31,111			41,330			13,789
Cash flows from investing activities:
	Investments in unconsolidated entities			(10,445	)		(1,610	)		(166	)
	Investments in real estate not owned			(401	)		—			—
	Additions to property and equipment			(6,150	)		(4,341	)		(3,242	)
Net cash used in investing activities				(16,996	)		(5,951	)		(3,408	)
Cash flows from financing activities:
	Proceeds from notes payable			75,936			63,834			31,039
	Repayments of notes payable			(65,307	)		(64,299	)		(34,323	)
	Proceeds from related party note			35,004			14,410			7,384
	Repayments of related party note			(24,666	)		(33,095	)		(12,893	)
	Debt issuance costs			(1,295	)		—			—
	Minority interest distributions			(640	)		—			—
	Members’ distributions			(33,667	)		(17,030	)		(6,633	)
Net cash used in financing activities				(14,635	)		(36,180	)		(15,426	)
(Decrease)/increase in cash				(520	)		(801	)		(5,045	)
Cash and cash equivalents, beginning of year				625			1,426			6,471
Cash and cash equivalents, end of year			$	105		$	625		$	1,426
Supplemental cash flow information:
	Cash paid for franchise taxes		$	397		$	379		$	391

See Accompanying Notes to Consolidated Financial Statements.

F-6

Ashton Woods USA L.L.C.

Notes to consolidated financial statements

Note 1 — Summary of Significant Accounting Policies

Organization

      Ashton Woods USA L.L.C. (the “Company”), operating as Ashton Woods Homes, is a limited liability company formed on February 6, 1997 for a period of duration ending no later than February 1, 2037. The Company acquires and develops land for residential purposes and designs, sells and builds residential homes on such land in five markets located in Georgia, Texas, Florida and Arizona. The Company also holds an investment in an unconsolidated entity that provides mortgage origination for homebuyers through Ashton Woods Mortgage, LLC (“Ashton Woods Mortgage”). In addition, the Company provides title services to its buyers in Texas through two unconsolidated entities.

Presentation

      The consolidated financial statements include the accounts of the Company, and its wholly-owned, majority-owned and controlled subsidiaries, as well as certain variable interest entities required to be consolidated pursuant to Financial Interpretation No. 46R (“FIN 46R”) issued by the Financial Accounting Standards Board (FASB). All intercompany balances and transactions have been eliminated in consolidation.

      The Company’s homebuilding operations are conducted across several markets in the United States have similar characteristics; therefore, they have been reported as one segment — the homebuilding segment.

      The Company’s balance sheet presentation is unclassified due to the fact that certain assets and liabilities have both short and long-term characteristics.

Cash and Cash Equivalents

      The Company considers all highly liquid investments with an initial maturity of three months or less when purchased to be cash equivalents.

Restricted Cash

      Restricted cash represents funds related to the sale of certain of the Company’s land and lots, which are held in escrow until land development is complete, at which time the funds are released to the Company.

Inventory

      Inventory consists of completed homes and homes under construction, finished lots, land under development and land held for development. Costs are capitalized to inventory during land development and home construction, including direct home construction costs, indirect overhead costs of construction associated with the construction of homes, interest and real estate taxes related to property under development and construction. Cost of sales of homes closed consists of the direct construction costs of each home, indirect overhead costs of construction associated with the construction of homes, land acquisition and land development costs allocated to each home, related interest and real estate taxes, and an estimate of future warranty and related closing costs for the homes closed.

      Development and construction inventories are carried at cost unless facts and circumstances indicate that the carrying value of the underlying projects may be impaired, in accordance with Statement of Financial Accounting Standard (“SFAS”) No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, (“SFAS No. 144”). Impairment is determined by comparing the estimated future cash flows (undiscounted and without interest charges) from an individual project to its carrying value. If such

F-7

Ashton Woods USA L.L.C.

Notes to consolidated financial statements — (Continued)

cash flows are less than the project’s carrying value, the carrying value of the project is written down to its estimated fair value. Each quarter, the Company reviews all components of its inventory for the purpose of determining whether recorded costs and costs required to complete each home or project are recoverable. If the review indicates that an impairment loss is required under the SFAS No. 144 guidelines, the Company estimates and records such loss to cost of sales in that quarter. To date, such impairment losses have been insignificant in the aggregate.

      Deposits paid related to land option purchase agreements and contracts to purchase land are capitalized when paid and classified as other assets until the related land is acquired. The deposits are then transferred to inventory at the time the land is acquired. Deposits are charged to expense if the land acquisition is no longer considered probable.

Real Estate Not Owned

      Consolidated real estate not owned represents the fair value of land under option purchase agreements when consolidated pursuant to FIN 46R.

Investments in Unconsolidated Entities

      The Company participates in a number of land development entities in which it has less than a controlling interest. These land development entities are typically entered into with developers, other homebuilders and related parties to develop finished lots for sale to the members of the entities and other third parties. The Company accounts for its interest in these entities under the equity method. The Company’s share of profits from these entities are deferred and treated as a reduction of the cost basis of land purchased from the entity.

      The Company’s investments in Ashton Woods Mortgage and the title services entities are also accounted for under the equity method, as the Company does not have a controlling interest. Under the equity method, the Company’s share of the unconsolidated entities’ earnings or loss is recognized as earned.

Property and Equipment

      Property and equipment at May 31, 2005 and 2004, consists of approximately $1.0 million and $0.3 million, respectively of computer, office equipment and leasehold improvements and approximately $4.6 million and $3.0 million, respectively of sales office and model home furnishings, and is stated at cost less accumulated depreciation and amortization. Accumulated depreciation and amortization related to these assets amounted to approximately $23.6 million and $19.7 million at May 31, 2005 and 2004, respectively. Depreciation and amortization generally is recorded using the straight-line method over the estimated useful lives of the assets, which range from 2 years to 5 years, and depreciable lives for leasehold improvements typically reflect the life of the lease. Depreciation expense was $3.9 million, $3.9 million and $3.6 million in fiscal 2005, 2004 and 2003, respectively. Repairs and maintenance costs are expensed as incurred.

Revenue Recognition

      Homebuilding and lot sale revenue are recognized at the time of the closing of a sale, when title to and possession of the property are transferred to the buyer. Sales commissions are included in sales and marketing expenses. Virtually all homebuilding, land and lot sales revenues are received in cash within two days of closing.

F-8

Ashton Woods USA L.L.C.

Notes to consolidated financial statements — (Continued)

Warranty Costs

      The Company provides its homebuyers with limited warranties that generally provide for ten years of structural coverage, two years of coverage for plumbing, electrical and heating, ventilation and air conditioning systems and one year of coverage for workmanship and materials. Warranty liabilities are initially established on a per home basis by charging cost of sales and establishing a warranty liability for each home delivered to cover expected costs of materials and labor during the warranty period. The amounts accrued are based on management’s estimate of expected warranty-related costs under all unexpired warranty obligation periods. The Company’s warranty liability is based upon historical warranty cost experience in each market in which it operates and is adjusted as appropriate to reflect qualitative risks associated with the types of homes built and the geographic areas in which they are built. The following table sets forth the Company’s warranty liability, which is included in accounts payable and accruals on the consolidated balance sheets:

      Years ended May 31, (in thousands)

	2005			2004			2003
Warranty liability, beginning of period	$	2,670		$	1,768		$	1,400
Costs accrued during year		4,526			3,177			3,067
Incurred costs during year		(4,121	)		(2,275	)		(2,699	)
Warranty liability, end of period	$	3,075		$	2,670		$	1,768

Advertising Costs

      The Company expenses advertising costs as they are incurred. Advertising expense was approximately $2.8 million, $2.4 million and $2.2 million in fiscal 2005, 2004 and 2003, respectively.

Minority Interest

      The Company had a controlling interest in a limited partnership for land acquisition and development in Orlando, Florida. Accordingly, the financial position of this partnership and results of operations are consolidated in the Company’s consolidated financial statements and the other partner’s share of earnings of the limited partnership is recorded as minority interest. During fiscal year 2005, the Company acquired the minority share in this limited partnership.

Provision for Income Taxes

      The Company operates as a limited liability company. Accordingly, the Company incurs no liability for federal or state income taxes, other than franchise taxes, as these taxes are passed through to the members.

Use of Estimates

      The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

F-9

Ashton Woods USA L.L.C.

Notes to consolidated financial statements — (Continued)

Reclassifications

      Certain prior year balances have been reclassified to conform to the current year presentation.

Note 2 — Inventory

      Inventory consists of the following as of May 31 (in thousands):

	2005		2004
Homes under construction	$	126,010	$	106,651
Finished lots		40,216		47,740
Land under development		70,104		23,367
Land held for development		19,663		27,926
	$	255,993	$	205,684

      The Company capitalizes interest costs to inventory during development and construction. Capitalized interest is charged to cost of sales as the related inventory is delivered to the homebuyer. The following table summarizes the Company’s interest costs incurred, capitalized and charged to cost of sales during the years ended May 31, (in thousands):

	2005			2004			2003
Capitalized interest, beginning of year	$	3,123		$	4,013		$	5,677
Interest incurred		4,840			4,932			5,796
Interest amortized to cost of sales		(4,790	)		(5,822	)		(7,460	)
Capitalized interest, end of year	$	3,173		$	3,123		$	4,013

Note 3 — Consolidated Land Inventory Not Owned

      FIN 46R requires the consolidation of variable interest entities in which an enterprise absorbs a majority of the entity’s expected losses, receives a majority of the entity’s expected residual returns, or both, as a result of ownership, contractual or other financial interests in the entity. Prior to the issuance of FIN 46R, entities were generally consolidated by an enterprise when it had a controlling financial interest through ownership of a majority voting interest in the entity. FIN 46R applied immediately to variable interest entities created after December 31, 2003, and with respect to variable interest entities created before January 1, 2004, FIN 46R application was deferred and not required to be applied until the first annual period beginning after December 15, 2004.

      In the ordinary course of its business, the Company enters into land and lot option purchase contracts with unaffiliated entities in order to procure land or lots for the construction of homes. Under such option purchase contracts, the Company will fund a stated deposit in consideration for the right, but not the obligation, to purchase land or lots at a future point in time with predetermined terms. Under the terms of the option purchase contracts, many of the Company’s option deposits are non-refundable. Certain non-refundable deposits are deemed to create a variable interest in a variable interest entity under the requirements of FIN 46R. As such, certain of the Company’s option purchase contracts result in the acquisition of a variable interest in the entity holding the land parcel under option.

      In applying the provisions of FIN 46R, the Company evaluates those land and lot option purchase contracts with variable interest entities to determine whether the Company is the primary beneficiary based upon analysis of the variability of the expected gains and losses of the entity. Based on this

F-10

Ashton Woods USA L.L.C.

Notes to consolidated financial statements — (Continued)

evaluation, if the Company is the primary beneficiary of an entity with which the Company has entered into a land or lot option purchase contract, the variable interest entity is consolidated.

      The Company had the right to acquire 717 lots at an aggregate purchase price of approximately $25.5 million from unaffiliated third parties of which 367 lots remain to be purchased at an aggregate purchase price of $15.2 million. Deposits relating to these option purchase agreements totaled $0.6 million and $2.8 million at May 31, 2005 and 2004, respectively; these amounts are capitalized in other assets. The Company has determined, based on its evaluation of the provisions of FIN 46R, all lot option purchase contracts with unaffiliated third parties outstanding as of May 31, 2005, do not require consolidation as the Company’s interests do not qualify it as the primary beneficiary.

      The Company has entered into several lot option purchase agreements with certain related parties for the acquisition of 386 finished lots, of which 164 finished lots remain to be purchased as of May 31, 2005 for a remaining aggregate purchase price of approximately $14.5 million which is pursuant to specific performance requirements. These option purchase agreements were entered into prior to January 1, 2004 and, while qualifying as variable interest entities are not required to be consolidated under FIN 46R. These entities have obtained secured acquisition and development financing which is supported by specific performance requirements under the lot option purchase agreements. The Company had $1.7 million and $0.4 million at May 31, 2005 and 2004, respectively, of non-refundable deposits securing these lot options.

      The Company has three lot purchase contracts with certain related parties to acquire 611 finished lots at an aggregate price of approximately $33.0 million, which have created variable interests and of which 504 finished lots remain to be acquired for an aggregate price of $27.5 million. In addition, the Company has provided various specific performance guarantees under one of the option purchase contracts, which has been deemed as providing subordinated financial support to the entity. The Company has 49 finished lots remaining to be purchased under its specific performance obligations for an aggregate purchase price of $2.4 million. While the Company owns no equity interest in the entities, it must consolidate pursuant to FIN 46R. The consolidation of these variable interest entities added $14.9 million, $12.6 million and $2.0 million in real estate not owned, liabilities related to real estate not owned and minority interests in real estate not owned, respectively, to the Company’s balance sheet at May 31, 2005 and added $8.2 million, $6.9 million, and $1.4 million in real estate not owned, liabilities related to real estate not owned and minority interests in real estate not owned, respectively, to the Company’s balance sheet at May 31, 2004.

Note 4 — Investments in Unconsolidated Entities

      The Company enters into land development joint ventures from time to time as a means of accessing larger parcels of land and lot positions, managing its risk profile and leveraging its capital base. At May 31, 2005 and 2004, the Company had equity investments of 50% or less and did not have a controlling interest in these unconsolidated entities. The Company’s partners are generally unrelated homebuilders, land developers or other real estate entities. These unconsolidated entities follow accounting principles generally accepted in the United States of America and the partners share in their profits and losses generally in accordance with their ownership interests.

      The Company and/or its entity partners enter into option purchase agreements under which they can purchase finished lots held by the unconsolidated entity. Option prices are generally negotiated prices that approximate fair value when the option contract is signed. The Company’s share of the entity’s earnings is deferred until homes related to the lots purchased are delivered and title passes to a homebuyer.

      The land development entities with unrelated parties typically obtain secured acquisition and development financing. As of May 31, 2005, the Company has entered into lot option purchase agreements with four unconsolidated entities for the purchase of 941 lots, of which 797 remain to be purchased with

F-11

Ashton Woods USA L.L.C.

Notes to consolidated financial statements — (Continued)

an aggregate remaining purchase price of $29.5 million. These unconsolidated entities had borrowings outstanding totaling $11.3 million and $10.5 million at May 31, 2005 and 2004, respectively. In some instances, the entity partners have provided varying levels of guarantees of debt of the unconsolidated entities. These repayment guarantees require the Company to repay its share of the debt of unconsolidated entities in the event the entity defaults on its obligations under the borrowings. The Company had repayment guarantees of $4.2 million and $2.6 million at May 31, 2005 and 2004, respectively.

      Summarized condensed financial information related to unconsolidated entities that are accounted for using the equity method at May 31 was as follows (in thousands):

	2005		2004
Assets:
Real estate	$	52,686	$	25,788
Cash		1,668		770
Mortgage loans held for sale		6,870		4,009
Note receivable		—		720
Other		470		224
	$	61,694	$	31,511
Liabilities and Equity:
Notes payable and accrued liabilities	$	22,230	$	12,730
Equity		39,464		18,781
	$	61,694	$	31,511
Revenues	$	13,648	$	8,815
Expenses		9,672		6,086
Net earnings	$	3,976	$	2,729

Note 5 — Notes Payable

      The Company’s notes payable at May 31, consist of the following (in thousands):

	2005		2004
Unsecured revolving credit facility	$	92,089	$	79,936
Secured notes		4,700		6,223
Total notes payable	$	96,789	$	86,159

      In January 2005, the Company entered into a new four-year $225 million unsecured revolving credit facility. This facility included an additional $75 million accordion feature that permits, under certain conditions, an increase in the facility. Borrowing capacity of this facility is reduced by the amount of letters of credit outstanding. At May 31, 2005, the Company had available borrowing capacity from this facility of $101.5 million as determined by borrowing base limitations defined by the agreement. The facility is guaranteed by all of the Company’s wholly-owned subsidiaries and all the holders of our membership interests and contains covenants which requires the maintenance of certain levels of tangible net worth and compliance with certain minimum financial ratios, places limitations on the payment of dividends and redemptions of equity, and limits the incurrence of additional indebtedness, asset dispositions, mergers, certain investments and the creation of liens, among other items. As of May 31, 2005, the borrowings under the facility bear daily interest at rates based upon the London Interbank

F-12

Ashton Woods USA L.L.C.

Notes to consolidated financial statements — (Continued)

Offered Rate (LIBOR) plus a spread based on the Company’s ratio of debt to tangible net worth. In addition to the stated interest rates, the revolving credit facility requires the Company to pay certain fees. The effective interest rate of the unsecured bank debt at May 31, 2005 was 4.58%. As of and for the fiscal year ended May 31, 2005, the Company was in compliance with the covenants of this facility.

      Prior to January 2005, the Company had an unsecured revolving credit facility. This facility’s aggregate commitment was $200 million with a maturity of November 2006 with an option to extend for one additional year. The facility contained certain covenants, which required maintenance of certain levels of adjusted net worth, compliance with certain minimum financial ratios, placed limitations on the distribution of net income and limited certain investments, the incurrence of additional indebtedness, and asset dispositions, among other things. The borrowings under the facility were limited by the availability of sufficient real estate borrowing base, which was reduced by the amount of letters of credit outstanding. Borrowings bore daily interest at rates ranging from U.S. prime or the LIBOR plus a spread based upon the Company’s ratio of debt to tangible net worth. In addition to the stated interest rates, the revolving credit facility required the Company to pay certain fees. The interest rate of this unsecured credit facility at May 31, 2004 was 2.99%. The Company was in compliance with the covenants of this facility during its existence.

      Secured notes represent two promissory notes secured by real estate, one with a principal balance of $0 million and $0.5 million at May 31, 2005 and 2004, respectively bearing interest at the 30-day LIBOR rate (1.1% as of May 31, 2004) plus 2.75% and the other with a principal balance of $4.7 million and $5.7 million at May 31, 2005 and 2004, respectively bearing interest at 7% per annum which is due April, 2010, respectively.

      Scheduled maturities of notes payable and other borrowings as of May 31, 2005 follow (in thousands):

2006	$	1,000
2007		1,000
2008		1,000
2009		93,089
2010		700
Thereafter		—
	$	96,789

Note 6 — Transactions With Related Parties

      The Company has an unsecured note with a related party totaling $13.7 million and $3.4 million at May 31, 2005 and 2004, respectively, which bears interest at the U.S. prime lending rate plus 0.75% per annum and is payable upon demand. The note is subordinated in favor of the respective secured and unsecured revolving credit facilities.

      A services agreement with a related party provides the Company with the license, development and support for the Company’s computer systems and the provision of certain administrative services. The Company pays $600 per home closing quarterly, in arrears, in payment for these services. During the fiscal years ended May 31, 2005, 2004 and 2003, $1.1 million, $1.1 million and $0.8 million was incurred related to these services, respectively.

F-13

Ashton Woods USA L.L.C.

Notes to consolidated financial statements — (Continued)

      As noted in Notes 3 and 4, the Company has entered into option purchase agreements for the purchase of finished lots for use in its homebuilding operations and into joint ventures for the acquisition and development of land and lots for use in its homebuilding operations and for sale to others. These arrangements, represent 386 finished lots, of which 164 remain to be purchased by the Company under its option purchase agreements representing $14.5 million in lot purchase price under specific performance obligations. The Company expects to exercise all of its option agreements with specific performance obligations. The Company also has consolidated variable interest entities pursuant to FIN 46R where the Company has entered into lot purchase agreements of which 504 finished lots representing $27.5 million in purchase price, remain to be purchased.

Note 7 — Employee Benefit Plans

      The Company has a 401(k) plan for all Company employees who have been with the Company for a period of three months or more. The Company matches portions of employee’s voluntary contributions up to 4% of an employee’s compensation up to the maximum allowed under federal guidelines. Expenses for the plan were $0.7 million, $0.5 million and $0.4 million in fiscal 2005, 2004 and 2003, respectively.

Note 8 — Financial Instruments

      The fair values of the Company’s financial instruments are based on quoted market prices, where available, or are estimated. Fair value estimates are made at a specific point in time based on relevant market information and information about the financial instrument. These estimates are subjective in nature, involve matters of judgment and therefore, cannot be determined with precision. Estimated fair values are significantly affected by the assumptions used.

      The carrying amounts of cash and cash equivalents and notes payable, as reported in the Company’s balance sheets approximate their fair values due to their short maturity or floating interest rate terms, as applicable.

Note 9 — Commitments and Contingencies

      The Company is involved in lawsuits and other contingencies in the ordinary course of business. Management believes that, while the ultimate outcome of the contingencies cannot be predicted with certainty, the ultimate liability, if any, will not have a material adverse effect on the Company’s consolidated financial statements.

      In the normal course of business, the Company provides standby letters of credit issued to third parties to secure performance under various contracts. As of May 31, 2005, 2004 and 2003, the Company had letters of credit outstanding of $11.0 million, $3.7 million and $4.9 million, respectively.

      The Company leases office space and equipment under various operating leases. Minimum annual lease payments under these leases at May 31, 2005 were (in thousands):

2006	$	1,580
2007		1,342
2008		1,110
2009		299
2010		242

      Rent expense approximated $1.0 million, $0.9 million and $0.8 million for fiscal 2005, 2004 and 2003, respectively and is included within general and administrative expense on the consolidated statements of earnings.

F-14

Ashton Woods USA L.L.C.

CONDENSED CONSOLIDATED BALANCE SHEETS

		August 31,		May 31,
		2005		2005
		(In thousands)
		(Unaudited)
ASSETS
Cash and cash equivalents		$	128	$	105
Inventory
	Construction in progress and finished homes		162,842		126,010
	Land and land under development		140,820		129,983
Real estate not owned			14,925		14,945
Property and equipment, net			7,061		5,620
Accounts receivable			3,301		10,649
Restricted cash			105		104
Other assets			11,251		9,998
Investments in unconsolidated entities			12,684		12,029
		$	353,117	$	309,443
LIABILITIES AND MEMBERS’ EQUITY
Liabilities
	Notes payable	$	136,789	$	96,789
	Related party note		12,890		13,746
	Customer deposits		15,378		12,290
	Liabilities related to real estate not owned		12,592		12,551
	Accounts payable and accruals		39,910		42,476
Total liabilities			217,559		177,852
Minority interests in real estate not owned			1,933		1,993
Members’ equity			133,625		129,598
		$	353,117	$	309,443

See accompanying notes to condensed consolidated financial statements

F-15

Ashton Woods USA L.L.C.

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

		Three Months Ended
		August 31,
		2005			2004
		(In thousands)
		(Unaudited)
Revenues
	Home sales	$	106,454		$	106,277
	Land sales		69			23,838
	Other		345			447
			106,868			130,562
Cost of sales
	Home sales		84,427			83,869
	Land sales		186			10,199
			84,613			94,068
Gross profit
	Home sales		22,027			22,408
	Land sales		(117	)		13,639
	Other		345			447
			22,255			36,494
Expenses
	Sales and marketing		7,238			6,942
	General and administrative		8,051			6,066
	Related party		248			280
	Franchise taxes		89			88
	Depreciation and amortization		1,107			898
			16,733			14,274
Earnings from unconsolidated entities			555			339
Minority interest in earnings			—			(398	)
Net income		$	6,077		$	22,161

See accompanying notes to condensed consolidated financial statements

F-16

Ashton Woods USA L.L.C.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

			Three Months Ended
			August 31,
			2005			2004
			(In thousands)
			(Unaudited)
Cash flows from operating activities:
	Net income		$	6,077		$	22,161
	Adjustments to reconcile net income to net cash (used for) provided by operating activities:
		Earnings in unconsolidated entities		(555	)		(339	)
		Distributions from unconsolidated entities		673			808
		Depreciation and amortization		1,107			898
		Minority interest in earnings of consolidated limited partnership		—			398
Changes in operating assets and liabilities:
		Inventory		(47,669	)		(4,231	)
		Accounts receivable		7,348			2,418
		Restricted cash		—			546
		Other assets		(1,254	)		352
		Accounts payable and accruals		(2,566	)		2,933
		Customer deposits		3,088			574
Net cash (used for) provided by operating activities				(33,751	)		26,518
Cash flows from investing activities:
	Investments in unconsolidated entities			(774	)		—
	Investments in real estate not owned			—			(400	)
	Additions to property and equipment			(2,547	)		(1,477	)
Net cash used in investing activities				(3,321	)		(1,877	)
Cash flows from financing activities:
	Proceeds from notes payable			47,000			—
	Repayments of notes payable			(7,000	)		(22,136	)
	Proceeds from related party note			—			—
	Repayments of related party note			(855	)		—
	Member distributions			(2,050	)		(2,933	)
Net cash provided by (used in) financing activities				37,095			(25,069	)
Increase (decrease) in cash				23			(428	)
Cash and cash equivalents, beginning of period				105			625
Cash and cash equivalents, end of period			$	128		$	197

See accompanying notes to condensed consolidated financial statements

F-17

Ashton Woods USA L.L.C.

Notes to condensed consolidated financial statements (unaudited)

Note 1 — Organization and Basis of Presentation

      The accompanying unaudited condensed consolidated financial statements of Ashton Woods USA L.L.C. (“Ashton Woods” or the “Company”), a limited liability company, operating as Ashton Woods Homes have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information. Such condensed consolidated financial statements do not include all of the information and disclosures required by accounting principles generally accepted in the United States of America for a complete set of consolidated financial statements. In the Company’s opinion, all adjustments (consisting solely of normal recurring accruals) necessary for a fair presentation have been included in the accompanying condensed consolidated financial statements. Certain items in prior period consolidated financial statements have been reclassified to conform to the current presentation. For further information, refer to our audited consolidated financial statements for the fiscal year ended May 31, 2005.

Note 2 — Inventory

      Inventory consists of the following (in thousands):

	August 31,		May 31,
	2005		2005
Homes under construction	$	162,842	$	126,010
Finished lots		37,988		40,216
Land under development		80,992		70,104
Land held for development		21,840		19,663
	$	303,662	$	255,993

      The Company capitalizes interest costs to inventory during development and construction. Capitalized interest is charged to cost of sales as the related inventory is delivered to the buyer. The following table summarizes the Company’s interest costs incurred, capitalized and charged to cost of sales during periods indicated, (in thousands):

	Three Months Ended
	August 31,
	2005			2004
Capitalized interest, beginning of period	$	3,173		$	3,123
Interest incurred		1,669			1,106
Interest amortized to cost of sales		(892	)		(1,458	)
Capitalized interest, end of period	$	3,950		$	2,771

Note 3 — Consolidated Land Inventory Not Owned

      In the ordinary course of its business, the Company enters into land and lot option purchase contracts with unaffiliated entities in order to procure land or lots for the construction of homes. Under such option purchase contracts, the Company will fund a stated deposit in consideration for the right, but not the obligation, to purchase land or lots at a future point in time with predetermined terms. Under the terms of the option purchase contracts, many of the Company’s option deposits are non-refundable. Under FASB Interpretation No. 46, “Consolidation of Variable Interest Entities,” as amended by FIN 46-R issued in December 2003 (“FIN 46R”), certain non-refundable deposits are deemed to create a variable interest in a variable interest entity under the requirements of FIN 46R. As such, certain of the Company’s option

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Ashton Woods USA L.L.C.

Notes to condensed consolidated financial statements (unaudited) — (Continued)

purchase contracts result in the acquisition of a variable interest in the entity holding the land parcel under option.

      In applying the provisions of FIN 46R, the Company evaluated those land and lot option purchase contracts with variable interest entities to determine whether the Company is the primary beneficiary based upon analysis of the variability of the expected gains and losses of the entity. Based on this evaluation, if the Company is the primary beneficiary of an entity with which the Company has entered into a land or lot option purchase contract, the variable interest entity is consolidated.

      The consolidation of these variable interest entities added $14.9 million, $12.6 million and $1.9 million in real estate not owned, liabilities related to real estate not owned and minority interests in real estate not owned, respectively, to the Company’s balance sheet at August 31, 2005 and added $14.9 million, $12.6 million and $2.0 million in real estate not owned, liabilities related to real estate not owned and minority interests in real estate not owned, respectively, to the Company’s balance sheet at May 31, 2005.

Note 4 — Investments in Unconsolidated Entities

      The Company participates in a number of land development entities with equity investments of 50% or less and does not have a controlling interest. These land development entities are typically entered into with developers, other homebuilders and related parties to develop finished lots for sale to the members of the entities and other third parties. The Company accounts for its interest in these entities under the equity method. The Company’s share of the entity’s earnings is deferred until homes related to the lots purchased are delivered and title passes to a homebuyer. The land development entities with unrelated parties typically obtain secured acquisition and development financing. In some instances, the entity partners have provided varying levels of guarantees of debt of the unconsolidated entities. These repayment guarantees require the Company to repay its share of the debt of unconsolidated entities in the event the entity defaults on its obligations under the borrowings. The Company had repayment guarantees of $4.5 million and $4.2 million at August 31, 2005 and May 31, 2005, respectively.

      The Company’s investments in Ashton Woods Mortgage and certain title services entities are also accounted for under the equity method, as the Company does not have a controlling interest. Under the equity method, the Company’s share of the unconsolidated entities’ earnings or loss is recognized as earned.

Note 5 — Warranty Costs

      The Company provides its homebuyers with limited warranties that generally provide for ten years of structural coverage, two years of coverage for plumbing, electrical and heating, ventilation and air conditioning systems and one year of coverage for workmanship and materials. Warranty liabilities are initially established on a per home basis by charging cost of sales and crediting a warranty liability for each home delivered to cover expected costs of materials and labor during the warranty period. The following table sets forth the Company’s warranty liability, which is included in accounts payable and accruals on the consolidated balance sheets (in thousands):

	Three Months Ended
	August 31,
	2005			2004
Warranty liability, beginning of period	$	3,075		$	2,670
Costs accrued during period		1,303			815
Incurred costs during period		(1,248	)		(768	)
Warranty liability, end of period	$	3,130		$	2,717

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Ashton Woods USA L.L.C.

Notes to condensed consolidated financial statements (unaudited) — (Continued)

Note 6 — Notes Payable

      The Company’s notes payable at August 31, 2005 and May 31, 2005, consist of the following (in thousands):

	August 31,		May 31,
	2005		2005
Unsecured revolving credit facility	$	132,089	$	92,089
Secured note		4,700		4,700
	$	136,789	$	96,789

      In January 2005, the Company entered into a four-year $225 million unsecured revolving credit facility. This facility includes an additional $75 million accordion feature that permits, under certain conditions, an increase in the facility. Borrowing capacity of this facility is reduced by the amount of letters of credit outstanding. At August 31, 2005, the Company had available borrowing capacity from this facility of $92.9 million (net of $10.7 million in outstanding letters of credit) as determined by borrowing base limitations defined by the agreement with the lending banks. The facility is guaranteed by all of the Company’s wholly-owned subsidiaries and all the holders of our membership interests and contains covenants which requires the maintenance of certain levels of tangible net worth and compliance with certain minimum financial ratios, places limitations on the payment of dividends and redemptions of equity, and limits the incurrence of additional indebtedness, asset dispositions, mergers, certain investments and the creation of liens, among other items. As of August 31, 2005, the borrowings under the facility bear daily interest at rates based upon the London Interbank Offered Rate (LIBOR) plus a spread based upon the Company’s ratio of debt to tangible net worth. In addition to the stated interest rates, the revolving credit facility requires the Company to pay certain fees. The effective interest rate of the unsecured bank debt at August 31, 2005 was approximately 5.0%. As of and for the three months ended August 31, 2005, the Company was in compliance with the covenants of this facility.

      The Company also has a promissory note secured by real estate bearing interest at 7% per annum and is due April 2010.

Note 7 — Transactions With Related Parties

      The Company has an unsecured note with a related party in the principal amount of $12.9 million and $13.7 million at August 31, 2005 and May 31, 2005, respectively, which bears interest at the U.S. prime lending rate plus ..75% per annum and is payable upon demand. The note is subordinated in favor of the unsecured revolving credit facilities.

      The Company has entered into a services agreement with a related party for the license, development and support of its computer systems and for the provision of certain administrative services. The Company pays $600 per home closing quarterly, in arrears, in payment for these services. During the three months ended August 31, 2005 and 2004, the Company incurred fees of $0.2 million and $0.3 million related to these services, respectively.

      The Company has entered into option purchase agreements for the purchase of finished lots for use in its homebuilding operations and into joint ventures for the acquisition and development of land and lots for use in its homebuilding operations. These arrangements represent 386 finished lots, of which 98 remain to be purchased by the Company representing $5.9 million in lot purchase price under specific performance obligations. The Company expects to exercise all of its option agreements with specific performance obligations. The Company also has consolidated variable interest entities pursuant to FIN 46R where the Company has entered into lot purchase agreements. As of August 31, 2005, the Company has 473 finished

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Ashton Woods USA L.L.C.

Notes to condensed consolidated financial statements (unaudited) — (Continued)

lots, under contract to be purchased, representing $25.9 million in purchase price, of which 37 lots representing $1.8 million remain to be purchased under specific performance obligations.

Note 8 — Contingencies

      The Company is involved in lawsuits and other contingencies in the ordinary course of business. Management believes that, while the ultimate outcome of the contingencies cannot be predicted with certainty, the ultimate liability, if any, will not have a material adverse effect on the Company’s financial position.

Note 9 — Provision for income taxes

      The Company operates as a limited liability company. Accordingly, the Company incurs no liability for federal or state income taxes, other than franchise taxes, as these taxes are passed through to the members.

Note 10 — Subsequent Event

      In September 2005, the Company issued $125 million aggregate principal amount of 9.5% Senior Subordinated Notes due 2015 in a private placement pursuant to Rule 144A promulgated under the Securities Act of 1933, as amended. Interest on the 9.5% Senior Subordinated Notes due 2015 is payable semiannually. The net proceeds were used to repay amounts outstanding under the Company’s senior unsecured credit facility and to repay certain related party debt. All obligations under the 9.5% Senior Subordinated Notes due 2015 are fully and unconditionally guaranteed, jointly and severally, by all of the Company’s subsidiaries other than Ashton Woods Finance Co. Ashton Woods Finance Co. is a co-issuer of the 9.5% Senior Subordinated Notes due 2015. The Company does not have any significant operations or assets apart from its investments in its subsidiaries.

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          No dealer, salesperson or other person has been authorized to give any information or to make any representation not contained in this prospectus and, if given or made, such information or representations must not be relied upon as having been authorized by the Company or the Initial Purchaser. This prospectus does not constitute an offer to sell, or a solicitation of an offer to buy any of the securities offered hereby in any jurisdiction to any person to whom it is unlawful to make such offer or solicitation in such jurisdiction. Neither the delivery of this prospectus nor any sale made hereunder shall under any circumstances create any implication that the information herein is correct as of any time after the date hereof or that there has not been a change in the affairs of the Company since the date hereof.

Ashton Woods USA L.L.C.

and

Ashton Woods Finance Co.

Offer to Exchange

9.5% Senior Subordinated Notes due 2015,

which have been registered under

the Securities Act of 1933,

for any and all outstanding

9.5% Senior Subordinated Notes due 2015,

which have not

been registered under

the Securities Act of 1933

PROSPECTUS

       Until                     , 2006 (90 days after the date of this prospectus), all dealers that effect transactions in the exchange notes, whether or not participating in this distribution, may be required to deliver a prospectus. This is in addition to dealers’ obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

                    , 2005

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 20. Indemnification of Directors and Officers.

      Indemnification of the Officers, Managers and Directors of Ashton Woods USA L.L.C., Ashton Woods Corporate, LLC, Ashton Orlando Residential L.L.C., Ashton Woods Arizona L.L.C., Ashton Tampa Residential, LLC, Ashton Denver Residential, LLC, Ashton Woods Florida L.L.C., Ashton Woods Butler L.L.C. and Ashton Woods Lakeside L.L.C.

      Ashton Woods USA, L.L.C., Ashton Woods Corporate, LLC, Ashton Orlando Residential L.L.C., Ashton Woods Arizona L.L.C., Ashton Tampa Residential, LLC, Ashton Denver Residential, LLC, Ashton Woods Florida L.L.C., Ashton Woods Butler L.L.C. and Ashton Woods Lakeside L.L.C. (collectively, the “Nevada Entities”) are each a limited liability company organized under the laws of the State of Nevada.

      Section 86.411 of the Nevada Revised Statutes (the “NRS”) provides that in proceedings by third parties, a limited liability company may indemnify any person made a party (or who is threatened to be made a party) to a proceeding (including any pending, completed or threatened action, suit or proceeding, whether civil, criminal, administrative or investigative) because such person is or was a manager, member, employee or agent of the company (or was serving in a similar capacity for another entity at the request of the company). Such indemnification may be for expenses, including attorney’s fees, judgments, fines and amounts paid in settlement by such person in connection with the proceeding, so long as such person acted in good faith and in a manner which he or she reasonably believed to be in or not opposed to the best interests of the company (and with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful). Pursuant to Section 86.421 of the NRS, the company may indemnify a manager, member, employee or agent of the company (or a person serving in a similar capacity for another entity at the request of the company) in an action by or in the right of the company under the same conditions as a third-party action, except that no indemnification is permitted without judicial approval if such person is adjudged to be liable to the corporation.

      Pursuant to Section 86.431 of the NRS, to the extent that a manager, member, employee or agent of a limited liability company has been successful on the merits or otherwise in defense of any proceeding under Sections 86.411 or 86.421 of the NRS, or in defense of any related matter, the company must indemnify such person against expenses, including attorney’s fees, actually and reasonably incurred by him or her in connection with the defense. Any indemnification under Section 86.411 and 86.421 of the NRS, unless ordered by a court or advanced pursuant to Section 86.441 of the NRS, may be made by the limited-liability company only as authorized in the specific case upon a determination that indemnification of the manager, member, employee or agent is proper in the circumstances.

      Section 86.441 of the Nevada Revised Statutes allows a company to provide that the expenses of members and managers incurred in defending a proceeding must be paid by the company as they are incurred and in advance of the final disposition of the proceeding upon receipt of an undertaking by or on behalf of the manager or member to repay the amount if it is ultimately determined by a court of competent jurisdiction that such person is not entitled to be indemnified by the company.

      Section 86.461 of the NRS allows a company to maintain insurance on behalf of its managers, members, employees and agents for losses by or claims made against such persons as a result of their service to the company.

      The regulations of the Nevada Entities provide that the limited liability company shall indemnify to the fullest extent permitted by the NRS and the laws of the State of Nevada, each person who was or is made a party or is threatened to be made a party to or is involved in any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative, arbitrative or investigative (a “Proceeding”), or any appeal in such a Proceeding or any inquiry or investigation that could lead to such a Proceeding, by reason of the fact that he or she, or a person of whom he or she is the legal representative,

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is or was a director or manager, as the case may be, of the limited liability company or while a director or manager, as the case may be, of the limited liability company is or was serving at the request of the limited liability company as a manager, director, officer, partner, venturer, proprietor, trustee, employee, agent, or similar functionary of another foreign or domestic limited liability company, corporation, partnership, joint venture, sole proprietorship, trust, employee benefit plan or other enterprise against judgments, penalties (including excise and similar taxes and punitive damages), fines, settlements and reasonable expenses (including, without limitation, attorneys’ fees) actually incurred by such person in connection with such Proceeding. The foregoing indemnification shall continue as to a person who has ceased to serve in the capacity which initially entitled such Person to the foregoing indemnification rights.

      Pursuant to the regulations of the Nevada Entities, a director or manager who was, is or is threatened to be made a named defendant or respondent in a Proceeding is entitled to payment or reimbursement for reasonable expenses incurred by him or her in advance of the final disposition of the Proceeding and without any determination as to the director’s or manager’s ultimate entitlement to indemnification; provided, however, that the payment of such expenses incurred by any such person in advance of the final disposition of a Proceeding, shall be made only upon delivery to the limited liability company of a written affirmation by such director or manager of his or her good faith belief that he has met the appropriate standard of conduct for indemnification pursuant to the regulations and a written undertaking, by or on behalf of such person, to repay all amounts so advanced if it shall ultimately be determined that such director or manager is not entitled to be indemnified.

      In addition, the Nevada Entities, by adoption of a resolution of the board of directors or the managers, as the case may be, may indemnify and advance expenses to an officer, employee or agent of the limited liability company to the same extent and subject to the same conditions under which it may indemnify and advance expenses to directors and managers, as described above; and, the limited liability company may indemnify and advance expenses to persons who are not or were not managers, directors, officers, employees or agents of the limited liability company but who are or were serving at the request of the limited liability company as a manager, director, officer, partner, venturer, proprietor, trustee, employee, agent or similar functionary of another foreign or domestic limited liability company, corporation, partnership, joint venture, sole proprietorship, trust, employee benefit plan or other enterprise against any liability asserted against him and incurred by him in such a capacity or arising out of his status as such a person to the same extent that it may indemnity and advance expenses to directors as described above.

      Pursuant to their respective regulations, each of the Nevada Entities may purchase and maintain insurance, at its expense, to protect itself and any person who is or was serving as a manager, director, officer, employee or agent of the limited liability company or is or was serving at the request of the limited liability company as a manager, director, officer, partner, venturer, proprietor, trustee, employee, agent or similar functionary of another foreign or domestic limited liability company, corporation, partnership, joint venture, sole proprietorship, trust, employee benefit plan or other enterprise against any expense, liability or loss, whether or not the limited liability company would have the power to indemnify such person against such expense, liability or loss under the indemnification provisions set forth in its regulations.

Indemnification of the Officers and Directors of Ashton Woods Finance Co.

      Ashton Woods Finance Co. is a corporation organized under the laws of the State of Delaware. Section 102(b)(7) of the Delaware General Corporation Law, the DGCL, enables a corporation incorporated in the State of Delaware to eliminate or limit, through provisions in its original or amended certificate of incorporation, the personal liability of a director for violations of the director’s fiduciary duties, except (i) for any breach of the director’s duty of loyalty to the corporation or its shareholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) any liability imposed pursuant to Section 174 of the DGCL (providing for liability of directors for unlawful payment of dividends or unlawful stock purchases or redemptions) or (iv) for any transaction from which a director derived an improper personal benefit.

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      Section 145 of the DGCL provides that a corporation incorporated in the State of Delaware may indemnify any person or persons, including officers and directors, who are, or are threatened to be made, parties to any threatened, pending or completed legal action, suit or proceeding, whether civil, criminal, administrative, or investigative (other than an action by or in the right of such corporation), by reason of the fact that such person is or was an officer, director, employee or agent of such corporation, or is or was serving at the request of such corporation as a director, officer, employee or agent of another corporation or enterprise. The indemnity may include expenses (including attorneys’ fees), judgments, fines, and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding, provided such officer, director, employee, or agent acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the corporation’s best interests and, for criminal proceedings, had no reasonable cause to believe that the challenged conduct was unlawful. A corporation incorporated in the State of Delaware may indemnify officers and directors in an action by or in the right of the corporation under the same conditions, except that no indemnification is permitted without judicial approval if the officer or director is adjudged to be liable to the corporation. Where an officer or director is successful on the merits or otherwise in the defense of any action referred to above, the corporation must provide indemnification against the expenses that such officer or director actually and reasonably incurred.

      Section 145(g) of the DGCL authorizes a corporation incorporated in the State of Delaware to provide liability insurance for directors and officers for certain losses arising from claims or charges made against them while acting in their capacities as directors or officers of the corporation.

      The bylaws of Ashton Woods Finance Co. provide that the corporation shall indemnify each person who is or was a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that such person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise (an “Indemnitee”), against expenses (including attorneys’ and other professionals’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by the Indemnitee in connection with such action, suit or proceeding, if the Indemnitee acted in good faith and in a manner reasonably believed to be in or not opposed to the best interests of the corporation, and with respect to any criminal action or proceeding, had no reasonable cause to believe the conduct was unlawful. The corporation shall indemnify an Indemnitee in an action by or in the right of the corporation under the same conditions, except that no indemnification shall be made in respect of any claim, issue or matter as to which the Indemnitee shall have been adjudged liable to the corporation unless and only to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine upon application, that despite the adjudication of liability, but in view of all the circumstances of the case, the Indemnitee is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper.

      The bylaws of Ashton Woods Finance Co. provide that any indemnification pursuant to the bylaws (except indemnification ordered by a court) shall be made by the corporation only as authorized in the specific case upon a determination the indemnification of the Indemnitee is proper in the circumstances because the Indemnitee has met the applicable standard of conduct described above. However, to the extent that an Indemnitee is successful on the merits or otherwise in the defense of any action, suit or proceeding described above, or in the defense of any claim, issue or matter therein, the Indemnitee shall be indemnified against reasonable expenses (including attorneys’ and other professionals’ fees) actually and reasonably incurred by the Indemnitee in connection therewith, without the necessity of authorization in the specific case.

      Furthermore, the bylaws of Ashton Woods Finance Co. provide that the expenses (including attorney’s and other professionals’ fees) incurred by an officer or director in defending any threatened or pending civil, criminal, administrative or investigative action, suit or proceeding may, but shall not be required to, be paid by the corporation in advance of the final disposition of the suit, action or proceeding

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upon receipt of an undertaking by or on behalf of such officer or director to repay such amount if it shall ultimately be determined that such person is not entitled to indemnification by the corporation pursuant to the bylaws.

      The bylaws of Ashton Woods Finance Co. also provide that the indemnification and advancement of expenses provided in the bylaws shall not be deemed to be exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under any other provision of the bylaws, agreement or contract, by vote of the stockholders or of the disinterested directors or pursuant to the direction of any court of competent jurisdiction.

      In addition, the bylaws of Ashton Woods Finance Co. provide that the corporation may purchase and maintain liability insurance for directors, officers, employees or agents of the corporation or of another entity (if serving in such capacity at the request of Ashton Woods Finance Co.) against liability asserted against such person and incurred by such person in any such capacity, or arising out of such person’s status as such, whether or not the corporation would have the power or obligation to indemnify such person pursuant to its bylaws.

Indemnification of the Managers of Ashton Woods Construction LLC

      Ashton Woods Construction LLC is a limited liability company organized under the laws of the State of Arizona. Section 29-610 of the Arizona Limited Liability Company Act provides that, unless otherwise limited in a company’s articles of organization, a limited liability company may indemnify a member, manager, employee, officer or agent or any other person. The articles of organization of Ashton Woods Construction LLC do not specifically address indemnification.

Indemnification of the Managers and Officers of Canyon Realty L.L.C., Ashton Dallas Residential L.L.C., Ashton Houston Residential L.L.C. and Ashton Houston Development L.L.C.

      Canyon Realty L.L.C., Ashton Dallas Residential L.L.C., Ashton Houston Residential L.L.C. and Ashton Houston Development L.L.C. (collectively, the “Texas LLCs”) are each a limited liability company organized under the laws of the State of Texas.

      Section 101.402 of the Texas Business Organizations Code (the “TBOC”) provides that a limited liability company may indemnify a person, pay in advance or reimburse expenses incurred by a person; and purchase or procure or establish and maintain insurance or another arrangement to indemnify or hold harmless a person. For the purposes of Section 101.402 of the TBOC, a person includes a member, manager, or officer of a limited liability company or an assignee of a membership interest in the company. Article 2.20(A) of the Texas Limited Liability Company Act (the “TLLCA”) provides that subject to such standards and restrictions, if any, as are set forth in its articles of organization or in its regulations, a limited liability company shall have power to indemnify members and managers, officers, and other persons and purchase and maintain liability insurance for such persons.

      The regulations of the Texas LLCs provide that the limited liability company shall indemnify to the fullest extent permitted by the TLLCA and the Texas Business Corporation Act (the “TBCA”), each person who was or is made a party or is threatened to be made a party to or is involved in any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative, arbitrative or investigative (a “Proceeding”), or any appeal in such a Proceeding or any inquiry or investigation that could lead to such a Proceeding, by reason of the fact that he or she, or a person of whom he or she is the legal representative, is or was a manager of the limited liability company or while a manager of the limited liability company is or was serving at the request of the limited liability company as a manager, director, officer, partner, venturer, proprietor, trustee, employee, agent, or similar functionary of another foreign or domestic limited liability company, corporation, partnership, joint venture, sole proprietorship, trust, employee benefit plan or other enterprise against judgments, penalties (including excise and similar taxes and punitive damages), fines, settlements and reasonable expenses (including, without limitation, attorneys’ fees) actually incurred by such person in connection with such Proceeding. The foregoing indemnification

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shall continue as to a person who has ceased to serve in the capacity which initially entitled such Person to the foregoing indemnification rights.

      Pursuant to the regulations of the Texas LLCs, a manager who was, is or is threatened to be made a named defendant or respondent in a Proceeding is entitled to payment or reimbursement for reasonable expenses incurred by him or her in advance of the final disposition of the Proceeding and without any determination as to the person’s ultimate entitlement to indemnification; provided, however, that the payment of such expenses incurred by any such person in advance of the final disposition of a Proceeding, shall be made only upon delivery to the limited liability company of a written affirmation by such manager of his or her good faith belief that he has met the appropriate standard of conduct for indemnification pursuant to the regulations and a written undertaking, by or on behalf of such person, to repay all amounts so advanced if it shall ultimately be determined that such manager is not entitled to be indemnified.

      In addition, the Texas LLCs, by adoption of a resolution of the managers, may indemnify and advance expenses to an officer, employee or agent of the limited liability company to the same extent and subject to the same conditions under which it may indemnify and advance expenses to managers, as described above; and, the limited liability company may indemnify and advance expenses to persons who are not or were not managers, officers, employees or agents of the limited liability company but who are or were serving at the request of the limited liability company as a manager, director, officer, partner, venturer, proprietor, trustee, employee, agent or similar functionary of another foreign or domestic limited liability company, corporation, partnership, joint venture, sole proprietorship, trust, employee benefit plan or other enterprise against any liability asserted against him and incurred by him in such a capacity or arising out of his status as such a person to the same extent that it may indemnity and advance expenses to managers as described above.

      Pursuant to their respective regulations, each of the Texas LLCs may purchase and maintain insurance, at its expense, to protect itself and any person who is or was serving as a manager, officer, employee or agent of the limited liability company or is or was serving at the request of the limited liability company as a manager, director, officer, partner, venturer, proprietor, trustee, employee, agent or similar functionary of another foreign or domestic limited liability company, corporation, partnership, joint venture, sole proprietorship, trust, employee benefit plan or other enterprise against any expense, liability or loss, whether or not the limited liability company would have the power to indemnify such person against such expense, liability or loss under the indemnification provisions set forth in its regulations.

Indemnification of the Officers and Directors of Ashton Brookstone, Inc.

      Ashton Brookstone, Inc. is a corporation organized under the laws of the State of Texas. Section 2.02-1 of the TBCA provides that a corporation may indemnify a person who was, is, or is threatened to be made a named defendant or respondent in a proceeding because the person is or was a director, officer, employee or agent and only if such person acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful. The TBCA precludes indemnification where the person was adjudged liable on the basis that a personal benefit was improperly received by him or her or the person is found liable to the corporation. The TBCA also provides that a corporation shall indemnify a director against reasonable expenses incurred by him or her in connection with a proceeding in which he or she is named a defendant or respondent because he or she is or was a director if he or she has been wholly successful, on the merits or otherwise, in the defense of the proceeding.

      The bylaws of Ashton Brookstone, Inc. provide that the corporation shall indemnify its directors and officers against reasonable expenses incurred in connection with a proceeding in which the director or officer is named as a defendant or respondent because he is or was a director or officer of the corporation if he has been wholly successful, on the merits or otherwise, in the defense of the proceeding. The corporation may, at the direction of and in the sole discretion of the board of directors, pay for or reimburse the director or officer for the payment of the director’s or officer’s reasonable expenses in

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advance of the final disposition of the proceeding, provided that the corporation receives in writing (i) an affirmation by the director or officer of his or her good faith belief that he or she has met the standards of conduct necessary for indemnification under Section 2.02-1 of the TBCA and (ii) an undertaking by or on behalf of the director or officer to repay the amount paid or reimbursed if it is ultimately determined such standards of conduct have not been met.

      In addition, the bylaws of Ashton Brookstone, Inc. provide that the corporation, at the direction of and in the sole discretion of the board of directors, shall have the right, to such further extent as permitted by law, but not the obligation to indemnify any person who (i) is or was a director, officer, employee or agent of the corporation or (ii) while a director, officer, employee or agent of the corporation, is or was serving at the request as a director, officer, partner, venturer, proprietor, trustee, employee, agent or similar functionary of another foreign or domestic corporation, partnership, joint venture, sole proprietorship, trust, employee benefit plan or other enterprise.

      Pursuant to Ashton Brookstone, Inc.’s bylaws, the corporation may purchase and maintain insurance or another arrangement on behalf of any person who is or was a director, officers, employee or agent of the corporation or who is or was serving at its request as a director, officer, partner, venturer, proprietor, trustee, employee, agent or similar functionary of another foreign or domestic corporation, partnership, joint venture, sole proprietorship, trust, employee benefit plan or other enterprise against any liability asserted against him and incurred by him in such a capacity or arising out of his status as such person, whether or not the corporation would have the power to indemnify him against that liability pursuant to the provisions of the TCBA. Furthermore, the corporation may, for the benefit of persons indemnified by the corporation, (i) create a trust fund, (ii) establish any form of self-insurance, (iii) secure its indemnity obligation by grant of a security interest or other lien on the assets of the corporation or (iv) establish a letter of credit, guaranty or surety arrangement.

Indemnification of the Officers and Directors of Black Amber Florida, Inc.

      Black Amber Florida, Inc. is a corporation organized under the laws of the State of Florida. Section 607.0850 of the Florida Business Corporation Act authorizes a corporation to provide for the indemnification of a person who was or is a party to any proceeding, by reason of the fact that he or she is or was a director, officer, employee or agent of the corporation or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise (1) against the liability incurred in connection with such proceeding, if he or she acted in good faith and in a manner reasonably believed to be in, or not opposed to, the best interests of the corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful and (2) against expenses and amounts paid in settlement not exceeding, in the judgment of the board of directors, the estimated expense of litigating the proceeding to conclusion, actually and reasonably incurred in connection with the defense or settlement of such proceeding, if such person acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to, the best interests of the corporation, except that no indemnification shall be made in respect of any claim, issue, or matter as to which such person shall have been adjudged liable unless a court determines that such person is fairly and reasonably entitled to indemnity for such expenses the court shall deem proper. If a director, officer, employee or agent of a corporation is successful in defense of a proceeding described above, he or she shall be indemnified against expenses actually and reasonably incurred in connection therewith. Expenses incurred by an officer or director in defending a civil or criminal proceeding may be paid by the corporation in advance of the final disposition upon receipt of an undertaking by or on behalf of such director or officer to repay such amount if he or she is ultimately found not to be entitled to indemnity. In addition to the foregoing, unless a corporation’s articles of incorporation provide otherwise, notwithstanding the failure of a corporation to provide indemnification, a director, officer, employee or agent of the corporation who is or was a party to a proceeding may apply for indemnification or advancement of expenses to a court, and the court may order indemnification and advancement of expenses.

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      Section 607.0850 also provides that a corporation shall have power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against the person whether or not the corporation would have the power to indemnify the person against such liability.

      The articles of incorporation of Black Amber Florida, Inc. provide that the corporation shall to the fullest extent permitted by law, indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he or she is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise. In addition, the corporation may pay in advance any expenses (including attorneys’ fees) that may become subject to indemnification as described above if the person receiving the advance payment undertakes in writing to repay such payment if it is ultimately determined that such person is not entitled to indemnification by the corporation. The articles of incorporation of Black Amber Florida, Inc. provide that the corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation, or who serves or served at the corporation’s request as a director, officer, employee, agent, partner, or trustee of another corporation or of a partnership, joint venture, trust or other enterprise, against any liability asserted against such person and incurred by such person in any such capacity, or arising out of such person’s status as such, whether or not the corporation would have power to indemnify such person against such liability.

Indemnification of the Managers and Officers of Ashton Burden, LLC

      Ashton Burden, LLC is a limited liability company organized under the laws of the State of Florida. Section 608.4229 of the Florida Limited Liability Company Act (the “FLLCA”) provides that, subject to such standards and restrictions, if any, as are set forth in its articles of organization or operating agreement, a limited liability company shall have the power to indemnify and hold harmless any member or manager or other person from and against any and all claims and demands whatsoever. Notwithstanding the foregoing, indemnification or advancement of expenses shall not be made to or on behalf of any member, manager, managing member, officer, employee, or agent if a judgment or other final adjudication establishes that the actions, or omissions to the act, of such person were material to the cause of action so adjudicated and certain additional requirements are met.

      The regulations of Ashton Burden, LLC provide that the limited liability company shall indemnify to the fullest extent permitted by the FLLCA and the laws of the State of Florida, each person who was or is made a party or is threatened to be made a party to or is involved in any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative, arbitrative or investigative (a “Proceeding”), or any appeal in such a Proceeding or any inquiry or investigation that could lead to such a Proceeding, by reason of the fact that he or she, or a person of whom he or she is the legal representative, is or was a manager of the limited liability company or while a manager of the limited liability company is or was serving at the request of the limited liability company as a manager, director, officer, partner, venturer, proprietor, trustee, employee, agent, or similar functionary of another foreign or domestic limited liability company, corporation, partnership, joint venture, sole proprietorship, trust, employee benefit plan or other enterprise against judgments, penalties (including excise and similar taxes and punitive damages), fines, settlements and reasonable expenses (including, without limitation, attorneys’ fees) actually incurred by such person in connection with such Proceeding. The foregoing indemnification shall continue as to a person who has ceased to serve in the capacity which initially entitled such Person to the foregoing indemnification rights.

      Pursuant to the regulations of Ashton Burden, LLC, a manager who was, is or is threatened to be made a named defendant or respondent in a Proceeding is entitled to payment or reimbursement for reasonable expenses incurred by him or her in advance of the final disposition of the Proceeding and without any determination as to the person’s ultimate entitlement to indemnification; provided, however,

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that the payment of such expenses incurred by any such person in advance of the final disposition of a Proceeding, shall be made only upon delivery to the limited liability company of a written affirmation by such manager of his or her good faith belief that he has met the appropriate standard of conduct for indemnification pursuant to the regulations and a written undertaking, by or on behalf of such person, to repay all amounts so advanced if it shall ultimately be determined that such manager is not entitled to be indemnified.

      In addition, Ashton Burden, LLC, by adoption of a resolution of the managers may indemnify and advance expenses to an officer, employee or agent of the limited liability company to the same extent and subject to the same conditions under which it may indemnify and advance expenses to managers, as described above; and, the limited liability company may indemnify and advance expenses to persons who are not or were not managers, officers, employees or agents of the limited liability company but who are or were serving at the request of the limited liability company as a manager, director, officer, partner, venturer, proprietor, trustee, employee, agent or similar functionary of another foreign or domestic limited liability company, corporation, partnership, joint venture, sole proprietorship, trust, employee benefit plan or other enterprise against any liability asserted against him and incurred by him in such a capacity or arising out of his status as such a person to the same extent that it may indemnity and advance expenses to managers as described above.

      Pursuant to the regulations of Ashton Burden, LLC, the limited liability company may purchase and maintain insurance, at its expense, to protect itself and any person who is or was serving as a manager, officer, employee or agent of the limited liability company or is or was serving at the request of the limited liability company as a manager, director, officer, partner, venturer, proprietor, trustee, employee, agent or similar functionary of another foreign or domestic limited liability company, corporation, partnership, joint venture, sole proprietorship, trust, employee benefit plan or other enterprise against any expense, liability or loss, whether or not the limited liability company would have the power to indemnify such person against such expense, liability or loss under the indemnification provisions set forth in its regulations.

Indemnification of the Partners of Ashton Woods Orlando Limited Partnership and Isleworth West Limited Partnership

      Ashton Woods Orlando Limited Partnership and Isleworth West Limited Partnership are each a limited partnership organized under the laws of the State of Florida. Section 620.1406(6) of the Florida Revised Uniform Limited Partnership Act of 2005 provides that a limited partnership shall reimburse a general partner for payments made and indemnify a general partner for liabilities incurred by the general partner in the ordinary course of the activities of the partnership or for the preservation of its activities or property if such payments were made or such liabilities were incurred in good faith and either in the furtherance of the limited partnership’s purposes or the ordinary scope of its activities.

      The limited partnership agreements of Ashton Woods Orlando Limited Partnership and Isleworth West Limited Partnership provide that the general partner shall be entitled to be reimbursed for all reasonable expenses incurred by it in connection with the partnership property and the conduct of the partnership business. In addition, the limited partnership agreement provides that the partnership will indemnify and hold harmless the general partner (including prior general partners) and their affiliates from and against any claim, loss, expense, liability, action or demand incurred by any of the general partners and their affiliates in respect of any omission to act or for any act performed by any of them, in the good faith belief that such person was acting or refraining from acting within the scope of its authority under the limited partnership agreement on behalf of the partnership or in furtherance of the partnership’s interests, including, without limitation, reasonable fees and expenses of litigation and appeal (including, without limitation, reasonable fees and expenses of attorneys engaged in defense of any act or omission), except that the foregoing indemnity shall not extend to claims, losses, expenses, liabilities, actions or demands incurred by reason of the gross negligence, fraud or willful misconduct of the general partner or any of its affiliates.

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      The limited partnership agreements of Ashton Woods Orlando Limited Partnership and Isleworth West Limited Partnership also provide that if the limited partners are jointly, or jointly and severally liable for any obligations, or deemed statutorily, by common law, or by judgment of a court or other tribunal or board having jurisdiction to be jointly or jointly and severally liable for any obligations, in each case where such obligations relate to the partnership or the partnership property, the respective liability of each of the limited partners, as between themselves, shall be limited in accordance with their respective percentage ownership interests. In addition, if a limited partner makes a payment pursuant to any demand from any third party under any liability in any amount in excess of its percentage ownership interest, each of the other limited partners shall pay on demand to the such limited partner its an amount in proportion to its percentage ownership interest, together with accrued interest. Further, each of the limited partners shall indemnify each other limited partner to the extent of that portion of all moneys which such limited partner has paid or may be required to pay or liability to which it is or may become subject by reason of any such joint or joint and several liability or by reason of any actions, proceedings, liability, claims, damages, costs and expenses in relation thereto or arising therefrom, which is in excess of such limited partner’s portion (based on the percentage ownership interest of such limited partner) of such moneys or liability and which has been paid or incurred.

      For a description of the provisions addressing the indemnification of directors and officers of Ashton Woods Florida, L.L.C., the General Partner of Ashton Woods Orlando Limited Partnership and Isleworth West Limited Partnership, see the discussion in “Indemnification of the Officers, Managers and Directors of Ashton Woods USA L.L.C., Ashton Woods Corporate, LLC, Ashton Orlando Residential L.L.C., Ashton Woods Arizona L.L.C., Ashton Tampa Residential, LLC, Ashton Denver Residential, LLC, Ashton Woods Florida L.L.C., Ashton Woods Butler L.L.C. and Ashton Woods Lakeside L.L.C.”

Indemnification of the Partners of Pinery Joint Venture

      Pinery Joint Venture is a general partnership organized under the laws of the State of Colorado. Pinery Joint Venture does not have any officers nor directors. Ashton Woods USA L.L.C., a Nevada limited liability company, and Ashton Denver Residential L.L.C., a Nevada limited liability company, are the sole partners of Pinery Joint Venture. For a description of the provisions addressing the indemnification of directors and officers of Ashton Woods USA L.L.C. and the managers and officers of Ashton Denver Residential L.L.C., see the discussion in “Indemnification of the Officers, Managers and Directors of Ashton Woods USA L.L.C., Ashton Woods Corporate, LLC, Ashton Orlando Residential L.L.C., Ashton Woods Arizona L.L.C., Ashton Tampa Residential, LLC, Ashton Denver Residential, LLC, Ashton Woods Florida L.L.C., Ashton Woods Butler L.L.C. and Ashton Woods Lakeside L.L.C.”

Indemnification of the Managers and Officers of Ashton Atlanta Residential, L.L.C.

      Section 14-11-306 of the Georgia Limited Liability Company Act (the “GLLCA”) provides that subject to the standards and restrictions, if any, set forth in the article of organization or written operating agreement, a limited liability company may indemnify and hold harmless any member or manager or other person from and against any and all claims and demands whatsoever arising in connection with the limited liability company; provided that a limited liability company shall not have the power to indemnify any member or manager for (i) for his or her intentional misconduct or knowing violation of the law or (ii) for any transaction for which the person received a personal benefit in violation of any provision of a written operating agreement.

      The operating agreement of Ashton Atlanta Residential, L.L.C., as amended, provides that the limited liability company shall indemnify to the fullest extent permitted by the GLLCA and the laws of the State of Georgia, each person who was or is made a party or is threatened to be made a party to or is involved in any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative, arbitrative or investigative (a “Proceeding”), or any appeal in such a Proceeding or any inquiry or investigation that could lead to such a Proceeding, by reason of the fact that he or she, or a person of whom he or she is the legal representative, is or was a manager of the limited liability company or while a manager of the limited liability company is or was serving at the request of the limited liability company

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as a manager, director, officer, partner, venturer, proprietor, trustee, employee, agent, or similar functionary of another foreign or domestic limited liability company, corporation, partnership, joint venture, sole proprietorship, trust, employee benefit plan or other enterprise against judgments, penalties (including excise and similar taxes and punitive damages), fines, settlements and reasonable expenses (including, without limitation, attorneys’ fees) actually incurred by such person in connection with such Proceeding. The foregoing indemnification shall continue as to a person who has ceased to serve in the capacity which initially entitled such Person to the foregoing indemnification rights.

      The rights to indemnification conferred pursuant to the operating agreement of Ashton Atlanta Residential, L.L.C., as amended, include the right to be paid or reimbursed for reasonable expenses incurred by a person who was, is or is threatened to be made a named defendant or respondent in a Proceeding in advance of the final disposition of the Proceeding and without any determination as to the person’s ultimate entitlement to indemnification; provided, however, that the payment of such expenses incurred by any such person in advance of the final disposition of a Proceeding, shall be made only upon delivery to the limited liability company of a written affirmation by such manager of his or her good faith belief that he has met the appropriate standard of conduct for indemnification pursuant to the regulations and a written undertaking, by or on behalf of such person, to repay all amounts so advanced if it shall ultimately be determined that such manager is not entitled to be indemnified.

      In addition, Ashton Atlanta Residential, L.L.C., by adoption of a resolution of the managers may indemnify and advance expenses to an officer, employee or agent of the limited liability company to the same extent and subject to the same conditions under which it may indemnify and advance expenses to managers, as described above; and, the limited liability company may indemnify and advance expenses to persons who are not or were not managers, officers, employees or agents of the limited liability company but who are or were serving at the request of the limited liability company as a manager, director, officer, partner, venturer, proprietor, trustee, employee, agent or similar functionary of another foreign or domestic limited liability company, corporation, partnership, joint venture, sole proprietorship, trust, employee benefit plan or other enterprise against any liability asserted against him and incurred by him in such a capacity or arising out of his status as such a person to the same extent that it may indemnity and advance expenses to managers as described above.

      Pursuant to the operating agreement, as amended, of Ashton Atlanta Residential, L.L.C., the limited liability company may purchase and maintain insurance, at its expense, to protect itself and any person who is or was serving as a manager, officer, employee or agent of the limited liability company or is or was serving at the request of the limited liability company as a manager, director, officer, partner, venturer, proprietor, trustee, employee, agent or similar functionary of another foreign or domestic limited liability company, corporation, partnership, joint venture, sole proprietorship, trust, employee benefit plan or other enterprise against any expense, liability or loss, whether or not the limited liability company would have the power to indemnify such person against such expense, liability or loss under the indemnification provisions set forth in its regulations.

Item 21. Exhibits and Financial Statement Schedules

Exhibit
Number			Title
	3	.1(a)	Articles of Organization of Ashton Woods USA L.L.C.
	3	.1(b)	Certificate of Incorporation of Ashton Woods Finance Co.
	3	.1(c)	Articles of Organization of Ashton Woods Construction LLC.
	3	.1(d)	Articles of Organization of Ashton Woods Corporate, LLC.
	3	.1(e)	Articles of Organization of Ashton Woods California L.L.C.
	3	.1(f)	Certificate of Amendment to Articles of Organization of Ashton Woods California L.L.C. (changing its name to Ashton Orlando Residential L.L.C.).
	3	.1(g)	Articles of Organization of Ashton Woods Arizona L.L.C.
	3	.1(h)	Certificate of Amendment to Articles of Organization of Ashton Woods Arizona L.L.C.

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Exhibit
Number			Title
	3	.1(i)	Articles of Organization of Ashton Tampa Residential L.L.C.
	3	.1(j)	Articles of Organization of Ashton Denver Residential LLC.
	3	.1(k)	Articles of Organization of Ashton Woods Florida L.L.C.
	3	.1(l)	Articles of Organization of Ashton Woods Butler L.L.C.
	3	.1(m)	Articles of Organization of Ashton Woods Lakeside L.L.C.
	3	.1(n)	Articles of Organization of Canyon Realty L.L.C.
	3	.1(o)	Articles of Organization of Ashton Dallas Residential L.L.C.
	3	.1(p)	Articles of Organization of Ashton Houston Residential L.L.C.
	3	.1(q)	Articles of Organization of Ashton Houston Development L.L.C.
	3	.1(r)	Articles of Incorporation of Ashton Brookstone, Inc.
	3	.1(s)	Articles of Incorporation of Black Amber Florida, Inc.
	3	.1(t)	Articles of Organization of Ashton Burden, LLC.
	3	.1(u)	Certificate of Limited Partnership of Ashton Woods Orlando Limited Partnership.
	3	.1(v)	Certificate of Amendment to Certificate of Limited Partnership of Ashton Woods Orlando Limited Partnership.
	3	.1(w)	Certificate of Limited Partnership of Lake Louise Coves Limited Partnership.
	3	.1(x)	Certificate of Amendment to Certificate of Limited Partnership of Lake Louise Coves Limited Partnership (changing the name to Isleworth West Limited Partnership).
	3	.1(y)	Articles of Organization of Ashton Atlanta Residential, L.L.C.
	3	.2(a)	Amended and Restated Regulations of Ashton Woods USA L.L.C.
	3	.2(b)	Bylaws of Ashton Woods Finance Co.
	3	.2(c)	Regulations of Ashton Woods Corporate, LLC.
	3	.2(d)	Regulations of Ashton Woods California L.L.C. (now know as Ashton Orlando Residential L.L.C.).
	3	.2(e)	First Amendment to Regulations of Ashton Woods California L.L.C. (now know as Ashton Orlando Residential L.L.C.).
	3	.2(f)	Regulations of Ashton Woods Arizona L.L.C.
	3	.2(g)	First Amendment to Regulations of Ashton Woods Arizona L.L.C.
	3	.2(h)	Regulations of Ashton Tampa Residential L.L.C.
	3	.2(i)	Regulations of Ashton Denver Residential LLC.
	3	.2(j)	Amended and Restated Regulations of Ashton Woods Florida L.L.C.
	3	.2(k)	First Amendment to Regulations of Ashton Woods Florida L.L.C.
	3	.2(l)	Regulations of Ashton Woods Butler L.L.C.
	3	.2(m)	First Amendment to Regulations of Ashton Woods Butler L.L.C.
	3	.2(n)	Regulations of Ashton Woods Lakeside L.L.C.
	3	.2(o)	First Amendment to Regulations of Ashton Woods Lakeside L.L.C.
	3	.2(p)	Regulations of Canyon Realty L.L.C.
	3	.2(q)	Regulations of Ashton Dallas Residential L.L.C.
	3	.2(r)	First Amendment to Regulations of Ashton Dallas Residential L.L.C.
	3	.2(s)	Regulations of Ashton Houston Residential L.L.C.
	3	.2(t)	First Amendment to Regulations of Ashton Houston Residential L.L.C.
	3	.2(u)	Regulations of Ashton Houston Development L.L.C.
	3	.2(v)	First Amendment to Regulations of Ashton Houston Development L.L.C.
	3	.2(w)	Second Amendment to Regulations of Ashton Houston Development L.L.C.

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Exhibit
Number			Title
	3	.2(x)	Bylaws of Ashton Brookstone, Inc.
	3	.2(y)	Regulations of Ashton Burden, LLC.
	3	.2(z)	Form of Agreement of Limited Partnership of Ashton Woods Orlando Limited Partnership.
	3	.2(aa)	First Amendment to Agreement of Limited Partnership of Ashton Woods Orlando Limited Partnership
	3	.2(ab)	Form of Agreement of Limited Partnership of Lake Louise Coves Limited Partnership (now known as Isleworth West Limited Partnership).
	3	.2(ac)	Form of First Amendment to Agreement of Limited Partnership of Lake Louise Coves Limited Partnership (now known as Isleworth West Limited Partnership).
	3	.2(ad)	Second Amendment to Agreement of Limited Partnership of Lake Louise Coves Limited Partnership (now known as Isleworth West Limited Partnership).
	3	.2(ae)	Joint Venture Agreement of Pinery Joint Venture.
	3	.2(af)	First Amendment to Joint Venture Agreement of Pinery Joint Venture.
	3	.2(ag)	Agreement Pinery Joint Venture.
	3	.2(ah)	Second Amendment to the Joint Venture Agreement of Pinery Joint Venture.
	3	.2(ai)	Operating Agreement of Ashton Atlanta Residential, L.L.C.
	3	.2(aj)	First Amendment to Operating Agreement of Ashton Atlanta Residential, L.L.C.
	4	.1	Form of Indenture dated as of September 21, 2005 among Ashton Woods USA L.L.C., Ashton Woods Finance Co., the guarantors named therein and U.S. Bank Trust National Association, as trustee.
	4	.2	Form of 9.5% Senior Subordinated Note due 2015.
	4	.3	Form of Registration Rights Agreement dated as of September 21, 2005, by and among Ashton Woods USA L.L.C., Ashton Woods Finance Co., the guarantors named therein and the initial purchasers named therein.
	5	.1	Opinion of Paul, Hastings, Janofsky & Walker LLP
	5	.2	Opinion of Lionel Sawyer & Collins
	5	.3	Opinion of Hagen & Parsons, P.C.
	5	.4	Opinion of Akerman Senterfitt.
	5	.5	Opinion of Holley, Albertson & Polk P.C.
	5	.6	Opinion of Fennemore Craig.
	10	.1	Form of Credit Agreement, dated as of January 20, 2005, by and among Ashton Woods USA L.L.C., the Lenders party thereto, Wachovia Bank, National Association, as Agent for the Lenders, and Wachovia Capital Markets, LLC, as Lead Arranger and Sole Bookrunner, Bank of America, N.A., as Syndication Agent, and Key Bank, National Association, as Documentation Agent.
	10	.2	Form of Amendment to Credit Agreement, dated as of April 27, 2005.
	10	.3	Form of Second Amendment to Credit Agreement, dated as of September 21, 2005.
	10	.4	Limited Partnership Agreement of Navo South Development Partners, Ltd., dated as of December 18, 2003, by and among G.P. Navo South, L.L.C., Ashton Dallas Residential, L.L.C., Horizon Homes Ltd., and Priority Development, L.P.
	10	.5	Agreement of Limited Partnership for CL Ashton Woods, L.P., dated as of March 10, 2005, by and among CL Texas I, GP, LLC, CL Texas, L.P., AW Southern Trails, Inc., and Ashton Houston Residential L.L.C.
	10	.6	Limited Liability Company Agreement of Palm Cove Developers, LLC, dated as of January 19, 2005, by and between Ashton Tampa Residential, LLC and M/I Homes of Tampa, LLC
	10	.7	Form of Services and Software License Agreement, dated as of June 1, 2005, by and between Ashton Woods USA L.L.C. and Paramount Development Corporation Limited.

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Exhibit
Number			Title
	10	.8	Form of Ashton Woods USA, L.L.C. Nonqualified Deferred Compensation Plan, effective June 1, 2005
	12	.1	Statement re Computation of Ratios.
	21		List of Subsidiaries of Ashton Woods U SA L.L.C.
	23	.1	Consent of Paul, Hastings, Janofsky & Walker LLP (included in Exhibit 5.1).
	23	.2	Consent of Lionel Sawyer & Collins (included in Exhibit 5.2).
	23	.3	Consent of Hagen & Parsons, P.C. (included in Exhibit 5.3).
	23	.4	Consent of Akerman Senterfitt (included in Exhibit 5.4).
	23	.5	Consent of Holley, Albertson & Polk P.C. (included in Exhibit 5.5).
	23	.6	Consent of Fennemore Craig (included in Exhibit 5.6).
	23	.7	Consent of KPMG LLP, Independent Registered Public Accounting Firm.
	24	.1	Power of Attorney (included in Part II of the registration statement).
	25	.1	Statement of Eligibility of U.S. Bank National Association, as Trustee, on Form T-1.
	99	.1	Form of Letter of Transmittal.
	99	.2	Form of Letter to Clients.
	99	.3	Form of Letter to Registered Holders.
	99	.4	Form of Notice of Guaranteed Delivery.

Item 22. Undertakings

      The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant’s annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

      Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to provisions pursuant to which the directors, officers or controlling persons may be indemnified by the registrant or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

      The undersigned registrant hereby undertakes to respond to requests for information that is incorporated by reference into the prospectus pursuant to Items 4, 10(b), 11 or 13 of Form S-4 within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of the registration statement through the date of responding to the request.

      The undersigned registrant hereby undertakes to supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the registration statement when it became effective.

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SIGNATURES

      Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Atlanta, State of Georgia, on the 22nd day of November, 2005.

ASHTON WOODS USA L.L.C.

ASHTON WOODS FINANCE CO.

By:  /s/ Robert Salomon

Robert Salomon

Chief Financial Officer

POWER OF ATTORNEY

      KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Thomas Krobot and Robert Salomon, or any of them, as his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution and revocation, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement, and to file or cause to be filed the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the foregoing, as fully to all intents and purposes as he might or could do in person, lawfully do or cause to be done by virtue hereof.

      Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/ Harry Rosenbaum Harry Rosenbaum	Director	November 22, 2005
/s/ Bruce Freeman Bruce Freeman	Director	November 22, 2005
/s/ Seymour Joffe Seymour Joffe	Director	November 22, 2005
/s/ Thomas Krobot Thomas Krobot	Director, President and Chief Executive Officer (Principal Executive Officer)	November 15, 2005
/s/ Robert Salomon Robert Salomon	Chief Financial Officer (Principal Financial and Accounting Officer)	November 22, 2005

II-14

SIGNATURES

      Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Atlanta, State of Georgia, on the 22nd day of November, 2005.

ASHTON ATLANTA RESIDENTIAL, L.L.C.

ASHTON DALLAS RESIDENTIAL L.L.C.

ASHTON HOUSTON RESIDENTIAL L.L.C.

ASHTON WOODS CORPORATE, LLC

ASHTON ORLANDO RESIDENTIAL L.L.C.

ASHTON WOODS ARIZONA L.L.C.

ASHTON TAMPA RESIDENTIAL L.L.C.

ASHTON DENVER RESIDENTIAL LLC

ASHTON WOODS FLORIDA L.L.C.

ASHTON WOODS BUTLER L.L.C.

ASHTON WOODS LAKESIDE L.L.C.

CANYON REALTY L.L.C.

ASHTON HOUSTON RESIDENTIAL L.L.C.

ASHTON BURDEN, LLC

By:  /s/ Robert Salomon

Robert Salomon

Manager

POWER OF ATTORNEY

      KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Thomas Krobot and Robert Salomon, or any of them, as his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution and revocation, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement, and to file or cause to be filed the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the foregoing, as fully to all intents and purposes as he might or could do in person, lawfully do or cause to be done by virtue hereof.

      Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/ Harry Rosenbaum Harry Rosenbaum	Manager	November 22, 2005
/s/ Bruce Freeman Bruce Freeman	Manager	November 22, 2005

II-15

Signature	Title	Date
/s/ Seymour Joffe Seymour Joffe	Manager	November 22, 2005
/s/ Thomas Krobot Thomas Krobot	Manager (Principal Executive Officer)	November 15, 2005
/s/ Robert Salomon Robert Salomon	Manager (Principal Financial and Accounting Officer)	November 22, 2005

II-16

SIGNATURES

      Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Atlanta, State of Georgia, on the 22nd day of November, 2005.

ASHTON CONSTRUCTION, LLC

By:	ASHTON WOODS USA L.L.C., its sole member
By:	/s/ Robert Salomon

Robert Salomon

Chief Financial Officer

      KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Thomas Krobot and Robert Salomon, or any of them, as his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution and revocation, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement, and to file or cause to be filed the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the foregoing, as fully to all intents and purposes as he might or could do in person, lawfully do or cause to be done by virtue hereof.

      Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/ Harry Rosenbaum Harry Rosenbaum	Director of Ashton Woods USA L.L.C., the sole member of Ashton Construction, LLC	November 22, 2005
/s/ Bruce Freeman Bruce Freeman	Director of Ashton Woods USA L.L.C., the sole member of Ashton Construction, LLC	November 22, 2005
/s/ Seymour Joffe Seymour Joffe	Director of Ashton Woods USA L.L.C., the sole member of Ashton Construction, LLC	November 22, 2005

II-17

Signature	Title	Date
/s/ Thomas Krobot Thomas Krobot	Director, President and Chief Executive Officer (Principal Executive Officer) of Ashton Woods USA L.L.C., the sole member of Ashton Construction, LLC	November 15, 2005
/s/ Robert Salomon Robert Salomon	Chief Financial Officer (Principal Financial and Accounting Officer) of Ashton Woods USA L.L.C., the sole member of Ashton Construction, LLC	November 22, 2005

II-18

SIGNATURES

      Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Atlanta, State of Georgia, on the 22nd day of November, 2005.

ASHTON WOODS ORLANDO LIMITED PARTNERSHIP

By:	ASHTON WOODS LAKESIDE L.L.C., its general partner
By:	/s/ Robert Salomon

Robert Salomon

Manager

      KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Thomas Krobot and Robert Salomon, or any of them, as his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution and revocation, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement, and to file or cause to be filed the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the foregoing, as fully to all intents and purposes as he might or could do in person, lawfully do or cause to be done by virtue hereof.

      Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/ Harry Rosenbaum Harry Rosenbaum	Manager of Ashton Woods Lakeside L.L.C., the general partner of Ashton Woods Orlando Limited Partnership	November 22, 2005
/s/ Bruce Freeman Bruce Freeman	Manager of Ashton Woods Lakeside L.L.C., the general partner of Ashton Woods Orlando Limited Partnership	November 22, 2005
/s/ Seymour Joffe Seymour Joffe	Manager of Ashton Woods Lakeside L.L.C., the general partner of Ashton Woods Orlando Limited Partnership	November 22, 2005

II-19

Signature	Title	Date
/s/ Thomas Krobot Thomas Krobot	Manager (Principal Executive Officer) of Ashton Woods Lakeside L.L.C., the general partner of Ashton Woods Orlando Limited Partnership	November 15, 2005
/s/ Robert Salomon Robert Salomon	Manager (Principal Financial and Accounting Officer) of Ashton Woods Lakeside L.L.C., the general partner of Ashton Woods Orlando Limited Partnership	November 22, 2005

II-20

SIGNATURES

      Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Atlanta, State of Georgia, on the 22nd day of November, 2005.

ASHTON BROOKSTONE, INC.

By:  /s/ Robert Salomon

Robert Salomon

Chief Financial Officer

POWER OF ATTORNEY

      KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Thomas Krobot and Robert Salomon, or any of them, as his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution and revocation, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement, and to file or cause to be filed the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the foregoing, as fully to all intents and purposes as he might or could do in person, lawfully do or cause to be done by virtue hereof.

      Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/ Harry Rosenbaum Harry Rosenbaum	Director	November 22, 2005
/s/ Bruce Freeman Bruce Freeman	Director	November 22, 2005
/s/ Seymour Joffe Seymour Joffe	Director	November 22, 2005
/s/ Thomas Krobot Thomas Krobot	President and Chief Executive Officer (Principal Executive Officer)	November 15, 2005
/s/ Robert Salomon Robert Salomon	Chief Financial Officer (Principal Financial and Accounting Officer)	November 22, 2005

II-21

SIGNATURES

      Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Atlanta, State of Georgia, on the 22nd day of November, 2005.

BLACK AMBER FLORIDA, INC.

By:  /s/ Robert Salomon

Robert Salomon

Chief Financial Officer

POWER OF ATTORNEY

      KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Thomas Krobot and Robert Salomon, or any of them, as his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution and revocation, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement, and to file or cause to be filed the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the foregoing, as fully to all intents and purposes as he might or could do in person, lawfully do or cause to be done by virtue hereof.

      Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/ Harry Rosenbaum Harry Rosenbaum	Sole Director and President (Principal Executive Officer)	November 22, 2005
/s/ Thomas Krobot Thomas Krobot	Vice President	November 15, 2005
/s/ Robert Salomon Robert Salomon	Chief Financial Officer (Principal Financial and Accounting Officer)	November 22, 2005

II-22

SIGNATURES

      Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Atlanta, State of Georgia, on the 22nd day of November, 2005.

ISLEWORTH WEST LIMITED PARTNERSHIP

By:	ASHTON WOODS FLORIDA L.L.C., its general partner
By:	/s/ Robert Salomon

Robert Salomon

Manager

      KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Thomas Krobot and Robert Salomon, or any of them, as his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution and revocation, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement, and to file or cause to be filed the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the foregoing, as fully to all intents and purposes as he might or could do in person, lawfully do or cause to be done by virtue hereof.

      Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/ Harry Rosenbaum Harry Rosenbaum	Manager of Ashton Woods Florida L.L.C., the general partner of Isleworth West Limited Partnership	November 22, 2005
/s/ Bruce Freeman Bruce Freeman	Manager of Ashton Woods Florida L.L.C., the general partner of Isleworth West Limited Partnership	November 22, 2005
/s/ Seymour Joffe Seymour Joffe	Manager of Ashton Woods Florida L.L.C., the general partner of Isleworth West Limited Partnership	November 22, 2005

II-23

Signature	Title	Date
/s/ Thomas Krobot Thomas Krobot	Manager (Principal Executive Officer) of Ashton Woods Florida L.L.C., the general partner of Isleworth West Limited Partnership	November 15, 2005
/s/ Robert Salomon Robert Salomon	Manager (Principal Financial and Accounting Officer) of Ashton Woods Florida L.L.C., the general partner of Isleworth West Limited Partnership	November 22, 2005

II-24

SIGNATURES

      Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Atlanta, State of Georgia, on the 22nd day of November, 2005.

PINERY JOINT VENTURE

By:	ASHTON WOODS USA L.L.C., its managing partner
By:	/s/ Robert Salomon

Robert Salomon

Chief Financial Officer

      KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Thomas Krobot and Robert Salomon, or any of them, as his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution and revocation, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement, and to file or cause to be filed the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the foregoing, as fully to all intents and purposes as he might or could do in person, lawfully do or cause to be done by virtue hereof.

      Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/ Harry Rosenbaum Harry Rosenbaum	Director of Ashton Woods USA L.L.C., the managing partner of Pinery Joint Venture	November 22, 2005
/s/ Bruce Freeman Bruce Freeman	Director of Ashton Woods USA L.L.C., the managing partner of Pinery Joint Venture	November 22, 2005
/s/ Seymour Joffe Seymour Joffe	Director of Ashton Woods USA L.L.C., the managing partner of Pinery Joint Venture	November 22, 2005

II-25

Signature	Title	Date
/s/ Thomas Krobot Thomas Krobot	Director, President and Chief Executive Officer (Principal Executive Officer) of Ashton Woods USA L.L.C., the managing partner of Pinery Joint Venture	November 15, 2005
/s/ Robert Salomon Robert Salomon	Chief Financial Officer (Principal Financial and Accounting Officer) of Ashton Woods USA L.L.C., the managing partner of Pinery Joint Venture	November 22, 2005

II-26

EXHIBIT INDEX

Exhibit
Number			Title
	3	.1(a)	Articles of Organization of Ashton Woods USA L.L.C.
	3	.1(b)	Certificate of Incorporation of Ashton Woods Finance Co.
	3	.1(c)	Articles of Organization of Ashton Woods Construction LLC.
	3	.1(d)	Articles of Organization of Ashton Woods Corporate, LLC.
	3	.1(e)	Articles of Organization of Ashton Woods California L.L.C.
	3	.1(f)	Certificate of Amendment to Articles of Organization of Ashton Woods California L.L.C. (changing its name to Ashton Orlando Residential L.L.C.).
	3	.1(g)	Articles of Organization of Ashton Woods Arizona L.L.C.
	3	.1(h)	Certificate of Amendment to Articles of Organization of Ashton Woods Arizona L.L.C.
	3	.1(i)	Articles of Organization of Ashton Tampa Residential L.L.C.
	3	.1(j)	Articles of Organization of Ashton Denver Residential LLC.
	3	.1(k)	Articles of Organization of Ashton Woods Florida L.L.C.
	3	.1(l)	Articles of Organization of Ashton Woods Butler L.L.C.
	3	.1(m)	Articles of Organization of Ashton Woods Lakeside L.L.C.
	3	.1(n)	Articles of Organization of Canyon Realty L.L.C.
	3	.1(o)	Articles of Organization of Ashton Dallas Residential L.L.C.
	3	.1(p)	Articles of Organization of Ashton Houston Residential L.L.C.
	3	.1(q)	Articles of Organization of Ashton Houston Development L.L.C.
	3	.1(r)	Articles of Incorporation of Ashton Brookstone, Inc.
	3	.1(s)	Articles of Incorporation of Black Amber Florida, Inc.
	3	.1(t)	Articles of Organization of Ashton Burden, LLC.
	3	.1(u)	Certificate of Limited Partnership of Ashton Woods Orlando Limited Partnership.
	3	.1(v)	Certificate of Amendment to Certificate of Limited Partnership of Ashton Woods Orlando Limited Partnership.
	3	.1(w)	Certificate of Limited Partnership of Lake Louise Coves Limited Partnership.
	3	.1(x)	Certificate of Amendment to Certificate of Limited Partnership of Lake Louise Coves Limited Partnership (changing the name to Isleworth West Limited Partnership).
	3	.1(y)	Articles of Organization of Ashton Atlanta Residential, L.L.C.
	3	.2(a)	Amended and Restated Regulations of Ashton Woods USA L.L.C.
	3	.2(b)	Bylaws of Ashton Woods Finance Co.
	3	.2(c)	Regulations of Ashton Woods Corporate, LLC.
	3	.2(d)	Regulations of Ashton Woods California L.L.C. (now know as Ashton Orlando Residential L.L.C.).
	3	.2(e)	First Amendment to Regulations of Ashton Woods California L.L.C. (now know as Ashton Orlando Residential L.L.C.).
	3	.2(f)	Regulations of Ashton Woods Arizona L.L.C.
	3	.2(g)	First Amendment to Regulations of Ashton Woods Arizona L.L.C.
	3	.2(h)	Regulations of Ashton Tampa Residential L.L.C.
	3	.2(i)	Regulations of Ashton Denver Residential LLC.
	3	.2(j)	Amended and Restated Regulations of Ashton Woods Florida L.L.C.
	3	.2(k)	First Amendment to Regulations of Ashton Woods Florida L.L.C.
	3	.2(l)	Regulations of Ashton Woods Butler L.L.C.
	3	.2(m)	First Amendment to Regulations of Ashton Woods Butler L.L.C.
	3	.2(n)	Regulations of Ashton Woods Lakeside L.L.C.
	3	.2(o)	First Amendment to Regulations of Ashton Woods Lakeside L.L.C.

Exhibit
Number			Title
	3	.2(p)	Regulations of Canyon Realty L.L.C.
	3	.2(q)	Regulations of Ashton Dallas Residential L.L.C.
	3	.2(r)	First Amendment to Regulations of Ashton Dallas Residential L.L.C.
	3	.2(s)	Regulations of Ashton Houston Residential L.L.C.
	3	.2(t)	First Amendment to Regulations of Ashton Houston Residential L.L.C.
	3	.2(u)	Regulations of Ashton Houston Development L.L.C.
	3	.2(v)	First Amendment to Regulations of Ashton Houston Development L.L.C.
	3	.2(w)	Second Amendment to Regulations of Ashton Houston Development L.L.C.
	3	.2(x)	Bylaws of Ashton Brookstone, Inc.
	3	.2(y)	Regulations of Ashton Burden, LLC.
	3	.2(z)	Form of Agreement of Limited Partnership of Ashton Woods Orlando Limited Partnership.
	3	.2(aa)	First Amendment to Agreement of Limited Partnership of Ashton Woods Orlando Limited Partnership
	3	.2(ab)	Form of Agreement of Limited Partnership of Lake Louise Coves Limited Partnership (now known as Isleworth West Limited Partnership).
	3	.2(ac)	Form of First Amendment to Agreement of Limited Partnership of Lake Louise Coves Limited Partnership (now known as Isleworth West Limited Partnership).
	3	.2(ad)	Second Amendment to Agreement of Limited Partnership of Lake Louise Coves Limited Partnership (now known as Isleworth West Limited Partnership).
	3	.2(ae)	Joint Venture Agreement of Pinery Joint Venture.
	3	.2(af)	First Amendment to Joint Venture Agreement of Pinery Joint Venture.
	3	.2(ag)	Agreement Pinery Joint Venture.
	3	.2(ah)	Second Amendment to the Joint Venture Agreement of Pinery Joint Venture.
	3	.2(ai)	Operating Agreement of Ashton Atlanta Residential, L.L.C.
	3	.2(aj)	First Amendment to Operating Agreement of Ashton Atlanta Residential, L.L.C.
	4	.1	Form of Indenture dated as of September 21, 2005 among Ashton Woods USA L.L.C., Ashton Woods Finance Co., the guarantors named therein and the and U.S. Bank Trust National Association, as trustee.
	4	.2	Form of 9.5% Senior Subordinated Note due 2015.
	4	.3	Form of Registration Rights Agreement dated as of September 21, 2005, by and among Ashton Woods USA L.L.C., Ashton Woods Finance Co., the guarantors named therein and the initial purchasers named therein.
	5	.1	Opinion of Paul, Hastings, Janofsky & Walker LLP
	5	.2	Opinion of Lionel Sawyer & Collins
	5	.3	Opinion of Hagen & Parsons, P.C.
	5	.4	Opinion of Akerman Senterfitt.
	5	.5	Opinion of Holley, Albertson & Polk P.C..
	5	.6	Opinion of Fennemore Craig.
	10	.1	Form of Credit Agreement, dated as of January 20, 2005, by and among Ashton Woods USA L.L.C., the Lenders party thereto, Wachovia Bank, National Association, as Agent for the Lenders, and Wachovia Capital Markets, LLC, as Lead Arranger and Sole Bookrunner, Bank of America, as Syndication Agent, and Key Bank, National Association, as Documentation Agent.
	10	.2	Form of Amendment to Credit Agreement, dated as of April 27, 2005.
	10	.3	Form of Second Amendment to Credit Agreement, dated as of September 21, 2005.
	10	.4	Limited Partnership Agreement of Navo South Development Partners, Ltd., dated as of December 18, 2003, by and among G.P. Navo South, L.L.C., Ashton Dallas Residential, L.L.C., Horizon Homes Ltd., and Priority Development, L.P.

Exhibit
Number			Title
	10	.5	Agreement of Limited Partnership for CL Ashton Woods, L.P., dated as of March 10, 2005, by and among CL Texas I, GP, LLC, CL Texas, L.P., AW Southern Trails, Inc., and Ashton Houston Residential L.L.C.
	10	.6	Limited Liability Company Agreement of Palm Cove Developers, LLC, dated as of January 19, 2005, by and between Ashton Tampa Residential, LLC and M/I Homes of Tampa, LLC
	10	.7	Form of Services and Software License Agreement, dated as of June 1, 2005, by and between Ashton Woods USA L.L.C. and Paramount Development Corporation Limited.
	10	.8	Form of Ashton Woods USA, L.L.C. Nonqualified Deferred Compensation Plan, effective June 1, 2005
	12	.1	Statement re Computation of Ratios.
	21		List of Subsidiaries of Ashton Woods USA L.L.C.
	23	.1	Consent of Paul, Hastings, Janofsky & Walker LLP (included in Exhibit 5.1).
	23	.2	Consent of Lionel Sawyer & Collins (included in Exhibit 5.2).
	23	.3	Consent of Hagen & Parsons, P.C. (included in Exhibit 5.3).
	23	.4	Consent of Akerman Senterfitt (included in Exhibit 5.4).
	23	.5	Consent of Holley, Albertson & Polk P.C. (included in Exhibit 5.5).
	23	.6	Consent of Fennemore Craig (included in Exhibit 5.6).
	23	.7	Consent of KPMG LLP, Independent Registered Public Accounting Firm.
	24	.1	Power of Attorney (included in Part II of the registration statement).
	25	.1	Statement of Eligibility of U.S. Bank National Association, as Trustee, on Form T-1.
	99	.1	Form of Letter of Transmittal.
	99	.2	Form of Letter to Clients.
	99	.3	Form of Letter to Registered Holders.
	99	.4	Form of Notice of Guaranteed Delivery.

EX-3.1(A)

                                                                  Exhibit 3.1(a)

                                                                         (STAMP)

                            ARTICLES OF ORGANIZATION

                                       OF

                             ASHTON WOODS USA L.L.C.

     The undersigned, a natural person of the age of 18 years or older, acting
as the sole organizer, adopts the following Articles of Organization for a
limited liability company under the NRS 86 ("ACT"):

                                   ARTICLE ONE

                                      Name

     The name of the limited liability company referred to in these Articles as
the "Company," is ASHTON WOODS USA L.L.C.

                                   ARTICLE TWO

                                    Duration

     The period of duration of the Company is until the close of business on
February 1, 2037, unless earlier dissolved in accordance with the regulations of
the Company as adopted and amended from time to time ("Regulations") or the Act.

                                  ARTICLE THREE

                                     Purpose

     The purpose for which the Company is organized is to transact any or all
lawful business for which limited liability companies may be organized under the
Act.

                                  ARTICLE FOUR

                           Right to Continue Business

     The remaining members of the Company have the right to continue the
business of the Company on the death, retirement, resignation, expulsion,
bankruptcy or dissolution of a member or the occurrence of any other event which
terminates the continued membership of a member of the Company.

                                  ARTICLE FIVE

                                    Managers

     The Company is to be managed by one or more managers, as that term is used
in the Act. The number, and the classes and qualifications of, Managers shall be
fixed from time to time by or in accordance with the Regulations. The number of
initial managers of the Company is three (3). The initial managers shall serve
until the first annual meeting of members of the Company or until any such
manager's successor is duly elected. The initial managers are:



Name:             Address:
- -----             --------
               
Bruce Freeman     250 Lesmill Road
                  Don Mills, Ontario M3B 2T5 Canada

Harry Rosenbaum   250 Lesmill Road
                  Don Mills, Ontario M3B 2T5 Canada

Seymour Joffe     250 Lesmill Road
                  Don Mills, Ontario M3B 2T5 Canada


                                   ARTICLE SIX

                     Registered Office and Registered Agent

     The street address and mailing address of the Company's initial registered
office is:

                              One East First Street
                        Reno, Washoe County, Nevada 89501

     The name of the Company's initial resident agent in Nevada at such address
is:

                     The Corporation Trust Company of Nevada

                                  ARTICLE SEVEN

                             Non-Unanimous Consents

     Any action required by the Act to be taken at any annual or special
meeting of members, or any action which may be taken at any annual or special
meeting of members, may be taken without a meeting, without prior notice, and
without a vote, if a consent or consents in writing, setting forth the action so
taken, shall be signed by the holder or holders of membership interests having
not less than the minimum number of votes that would be necessary to take such
action at a meeting at which the holders of all membership interests entitled to
vote on the action were


                                        2

present and voted. Prompt notice of the taking of any action by the members
without a meeting by less than unanimous written consent shall be given to those
members who did not consent in writing to the action.

                                  ARTICLE EIGHT

                              No Preemptive Rights

     No member shall have a preemptive right to acquire any membership interests
or securities of any class that may at any time be issued, sold or offered for
sale by the Company.

                                  ARTICLE NINE

                              No Cumulative Voting

     The right of members to cumulative voting in the election of managers is
expressly prohibited.

                                   ARTICLE TEN

                                Manager Liability

     A manager of the Company shall not be liable to the Company or its members
for monetary damages for an act or omission in the manager's capacity as a
manager, except that this Article does not eliminate or limit the liability of a
manager to the extent the manager is found liable for (i) a breach of the
manager's duty of loyalty to the Company or its members; (ii) an act or omission
not in good faith that constitutes a breach of duty of the manager of the
Company or an act or omission that involves intentional misconduct or a knowing
violation of the law; (iii) a transaction from which the manager received an
improper benefit, whether or not the benefit resulted from an action taken
within the scope of the manager's office; or (iv) an act or omission for which
the liability of a manager is expressly provided by an applicable statue. Any
repeal or amendment of this Article by the members of the Company shall be
prospective only and shall not adversely affect any limitation on the liability
of a manager of the Company existing at the time of such repeal or amendment. In
addition to the circumstances in which the manager of the Company is not liable
as set forth in the preceding sentences, the manager shall not be liable to the
fullest extent permitted by any provision of the statutes of Nevada hereafter
enacted that further limits the liability of a manager or of a director of a
corporation.


                                        3

                                 ARTICLE ELEVEN

                                    Organizer

     The name and address of the organizer of the Company is:



Name:              Address:
- -----              --------
                
Timothy D. Hagen   12801 North Central Expressway, Suite 370
                   Dallas, Texas 75243


     IN WITNESS WHEREOF, these Articles of Organization have been executed on
February 4, 1997, by the undersigned.

                                        SOLE ORGANIZER


                                        /s/ Timothy D. Hagen
                                        ----------------------------------------
                                        Timothy D. Hagen

STATE OF TEXAS     Section
                   Section
COUNTY OF DALLAS   Section

     This instrument was acknowledged before me on February 4, 1997, by
TIMOTHY D. HAGEN, as organizer of ASHTON WOODS USA L.L.C.


                                        /s/ Cherie L. Watson
                                        ----------------------------------------
                                        Notary Public, State of Texas

My Commission Expires:
July 9, 2000

                                        Cherie L. Watson
                                        (Typed Name of Notary)

(SEAL)


                                        4

EX-3.1(B)

                                                                  Exhibit 3.1(b)

                          CERTIFICATE OF INCORPORATION
                                       OF
                            ASHTON WOODS FINANCE CO.

     FIRST. The name of the corporation is Ashton Woods Finance Co.

     SECOND. The address of the corporation's registered office in the State of
Delaware is 2711 Centerville Road, Suite 400, in the City of Wilmington, County
of New Castle, 19808. The name of the corporation's registered agent at such
address is Corporation Service Company.

     THIRD. The purpose of the corporation is to engage in any lawful act or
activity for which corporations may be organized under the Delaware General
Corporation Law.

     FOURTH. The total number of shares of stock which the corporation is
authorized to issue is one thousand (1,000) shares of common stock, having a par
value $0.001 per share.

     FIFTH. The business and affairs of the corporation shall be managed by or
under the direction of the board of directors, and the directors need not be
elected by ballot unless required by the by-laws of the corporation.

     SIXTH. In furtherance and not in limitation of the powers conferred by the
laws of the State of Delaware, the board of directors is expressly authorized to
make, amend and repeal by-laws.

     SEVENTH. A director of the corporation shall not be personally liable to
the corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director; except for liability (i) for any breach of the director's
duty of loyalty to the corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the Delaware General Corporation
Law, or (iv) for any transaction from which the director derived an improper
personal benefit. If the Delaware General Corporation Law is amended to
authorize corporate action further eliminating or limiting the personal
liability of directors, then the liability of a director of the corporation
shall be eliminated or limited to the fullest extent permitted by the Delaware
General Corporation Law, as so amended. Any repeal or modification of this
provision shall not adversely affect any right or protection of a director of
the corporation existing at the time of such repeal or modification.

     EIGHTH. The corporation reserves the right to amend and repeal any
provision contained in this Certificate of Incorporation in the manner from time
to time prescribed by the laws of the State of Delaware. All rights herein
conferred are granted subject to this reservation.

     NINTH. The incorporator is Martha B. Kelley whose mailing address is c/o
Paul, Hastings, Janofsky & Walker LLP, 600 Peachtree St., NE, Suite 2400,
Atlanta, Georgia 30308, County of Fulton.

                                                                         (STAMP)


    I, the Undersigned, being the incorporator, for the purpose of forming a
corporation under the laws of the State of Delaware, do make, file and record
this Certificate of Incorporation and, accordingly, have hereto set my hand this
5th day of August, 2005.


                                        /s/ Martha B. Kelley
                                        ----------------------------------------
                                        Martha B. Kelley, Incorporator


                                        2

EX-3.1(C)

                                                                  EXHIBIT 3.1(c)

(STAMP)

                           ARTICLES OF ORGANIZATION OF
                         ASHTON WOODS CONSTRUCTION, LLC

     Pursuant to A.R.S. Section 29-632, the undersigned states as follows:

     1. NAME. The name of the limited liability company formed by this
instrument is Ashton Woods Construction, LLC.

     2. OFFICE; AGENT. The address of the limited liability company's registered
office in Arizona is 9176 East Mountain Springs Road, Scottsdale, Arizona 85255.
The name and business address of the statutory agent of the limited liability
company are David Kitnick, 9176 East Mountain Springs Road, Scottsdale, Arizona
85255.

     3. MANAGEMENT. Management of the limited liability company is vested in the
members.

     4. MEMBERS. The name and address of the sole member are as follows:

          Ashton Woods Arizona, L.L.C.
          250 Lesmill Road
          Don Mills, Ontario
          CANADA M3B2T5

     5. ADDITIONAL MATTERS. The Company is authorized to engage in any and all
business authorized by law. Any person dealing with the Company may rely,
without further inquiry, on the identity of the sole member set forth in these
Articles of Organization, until such time as they are amended in accordance with
applicable law to reflect a change in the identity of the member or members. The
sole member, acting alone and without the requirement for further resolutions or
agreements evidencing such authority, shall have the authority to execute and
deliver documents and instruments on behalf of the Company, all of which shall
be binding on the Company. Without limiting the generality of the foregoing, the
sole member is specifically authorized on behalf of the Company to buy and sell
property, enter into contracts, record instruments affecting title to property,
borrow money, issue evidences of indebtedness, encumber the Company's assets (by
deed of trust, mortgage, security interest or otherwise), settle disputes,
obtain licenses and permits, make applications for governmental approvals, and
otherwise deal with the assets of the Company in the same manner in which the
member could deal with its own assets.

     Dated as of January 22, 2002.


                                        /s/ Harry Rosenbaum
                                        ----------------------------------------
                                        Harry Rosenbaum

EX-3.1(D)

                                                                  Exhibit 3.1(d)

(LOGO)   DEAN HELLER
         Secretary of State
         206 North Carson Street
         Carson City, Nevada 89701-4299
         (775) 684 5708
         Website: secretaryofstate.biz

                            Articles Of Organization
                            Limited-Liability Company
                              (PURSUANT TO NRS 86)

                                                                         (STAMP)

Important: Read attached instructions before     ABOVE SPACE IS FOR OFFICE USE
           completing form.                      ONLY

                    
1. NAME OF LIMITED-
   LIABILITY COMPANY   ASHTON WOODS CORPORATE, LLC

2. RESIDENT AGENT      The Corporation Trust Company of Nevada
   NAME AND STREET     Name
   ADDRESS:
   (must be a Nevada   6100 Neil Road, Suite 500         Reno      NEVADA    89511
   address where       Physical Street Address           City                Zip Code
   process may be
   served)             _______________________________   _______   _______   ________
                       Additional Mailing Address        City      State     Zip Code

3. DISSOLUTION DATE:   Latest date upon which the company is to
   (OPTIONAL - see     dissolve (If existence is not perpetual): ____________________
   instructions)

4. MANAGEMENT          Company shall be managed by 3  [X] Manager(s)  OR  [ ] Members
   (check one)

5. NAMES ADDRESSES,    Bruce Freeman
   OF MANAGER(S) OR    Name                                             CANADA
   MEMBERS:
   (attach             3751 Victoria Park Avenue         Toronto   Ontario   M1W 3Z4
   additional pages    Address                           City      State     Zip Code
   as necessary)
                       Harry Rosenbaum
                       Name                                             CANADA

                       3751 Victoria Park Avenue         Toronto   Ontario   M1W 3Z4
                       Address                           City      State     Zip Code

                       Seymour Joffe
                       Name                                             CANADA

                       3751 Victoria Park Avenue         Toronto   Ontario   M1W 3Z4
                       Address                           City      State     Zip Code

6. NAMES, ADDRESSES    Tim Hagen
   AND SIGNATURES OF   Name
   ORGANIZERS
   (if more than one
   organizer attach                                      /s/ Tim Hagen
   additional pagers)                                    ----------------------------
                                                         Signature

                       14643 Dallas Parkway, Suite 570   Dallas    Texas     75254
                       Address                           City      State     Zip Code

7. CERTIFICATE OF      I hereby accept appointment as Resident Agent for the above
   ACCEPTANCE OF       named limited-liability company.
   APPOINTMENT OF
   RESIDENT AGENT:
                       /s/
                       -------------------------------
                       Authorized Signature of R.A. or   Date 11/17/04
                       On Behalf of R.A. Company



This form must be accompanied by appropriate fees. See attached fee schedule.



                                 PAGE TWO (2) TO
                           ARTICLES OF ORGANIZATION OF
                   ASHTON WOODS CORPORATE, LLC (THE "COMPANY")

8.   PURPOSE: The purpose for which the Company is organized is to transact any
     or all lawful business for which limited liability companies may be
     organized under the Act.

9.   RIGHT TO CONTINUE BUSINESS: The remaining members of the Company have the
     right to continue the business of the Company on the death, retirement,
     resignation, expulsion, bankruptcy or dissolution of a member or the
     occurrence of any other event which terminates the continued membership of
     a member of the Company.

10.  NON-UNANIMOUS CONSENTS: Any action required by the Act to be taken at any
     annual or special meeting of members, or any action which may be taken at
     any annual or special meeting of members, may be taken without a meeting,
     without prior notice, and without a vote, if a consent or consents in
     writing, setting forth the action so taken, shall be signed by the holder
     or holders of membership interests having not less than the minimum number
     of votes that would be necessary to take such action at a meeting at which
     the holders of all membership interests entitled to vote on the action were
     present and voted. Prompt notice of the taking of any action by the members
     without a meeting by less than unanimous written consent shall be given to
     those members who did not consent in writing to the action.

11.  NO PREEMPTIVE RIGHTS: No member shall have a preemptive right to acquire
     any membership interests or securities of any class that may at any time be
     issued, sold or offered for sale by the Company.

12.  NO CUMULATIVE VOTING: The right of members to cumulative voting in the
     election of managers is expressly prohibited.

13.  MANAGER LIABILITY: A manager of the Company shall not be liable to the
     Company or its members for monetary damages for an act or omission in the
     manager's capacity as a manager, except that this Article does not
     eliminate or limit the liability of a manager to the extent the manager is
     found liable for (i) a breach of the manager's duty of loyalty to the
     Company or its members; (ii) an act or omission not in good faith that
     constitutes a breach of duty of the manager of the Company or an act or
     omission that involves intentional misconduct or a knowing violation of the
     law; (iii) a transaction from which the manager received an improper
     benefit, whether or not the benefit resulted from an action taken within
     the scope of the manager's office; or (iv) an act or omission for which the
     liability of a manager is expressly provided by an applicable statute. Any
     repeal or amendment of this Article by the members of the Company shall be
     prospective only and shall not adversely affect any limitation on the
     liability of a manager of the Company existing at the time of such repeal
     or amendment. In addition to the circumstances in which the manager of the
     Company is not liable as set forth in the preceding sentences, the manager
     shall not be liable to the fullest extent permitted by any provision of the
     statutes of Nevada hereafter enacted that further limits the liability of a
     manager or of a director of a corporation.

EX-3.1(E)

                                                                  Exhibit 3.1(e)

                                                                         (STAMP)

                            ARTICLES OF ORGANIZATION

                                       OF

                          ASHTON WOODS CALIFORNIA L.L.C.

     The undersigned, a natural person of the age of 18 years or older, acting
as the sole organizer, adopts the following Articles of Organization for a
limited liability company under the NRS 86 ("Act"):

                                   ARTICLE ONE

                                      Name

     The name of the limited liability company referred to in these Articles as
the "Company," is ASHTON WOODS CALIFORNIA L.L.C.

                                   ARTICLE TWO

                                    Duration

     The period of duration of the Company is until the close of business on
February 1, 2037, unless earlier dissolved in accordance with the regulations of
the Company as adopted and amended from time to time ("Regulations") or the Act.

                                  ARTICLE THREE

                                     Purpose

     The purpose for which the Company is organized is to transact any or all
lawful business for which limited liability companies may be organized under the
Act.

                                  ARTICLE FOUR

                           Right to Continue Business

     The remaining members of the Company have the right to continue the
business of the Company on the death, retirement, resignation, expulsion,
bankruptcy or dissolution of a member or the occurrence of any other event which
terminates the continued membership of a member of the Company.

                                  ARTICLE FIVE

                                    Managers

     The Company is to be managed by one or more managers, as that term is used
in the Act. The number, and the classes and qualifications of, Managers shall be
fixed from time to time by or in accordance with the Regulations. The number of
initial managers of the Company is three (3). The initial managers shall serve
until the first annual meeting of members of the Company or until any such
manager's successor is duly elected. The initial managers are:



Name:             Address:
- -----             --------
               
Bruce Freeman     250 Lesmill Road
                  Don Mills, Ontario M3B 2T5 Canada

Harry Rosenbaum   250 Lesmill Road
                  Don Mills, Ontario M3B 2T5 Canada

Seymour Joffe     250 Lesmill Road
                  Don Mills, Ontario M3B 2T5 Canada


                                   ARTICLE SIX

                     Registered Office and Registered Agent

                  The street address and mailing address of the
                     Company's initial registered office is:

                              One East First Street
                        Reno, Washoe County, Nevada 89501

The name of the Company's initial registered agent in Nevada at such address is:

                     The Corporation Trust Company of Nevada

                                  ARTICLE SEVEN

                             Non-Unanimous Consents

     Any action required by the Act to be taken at any annual or special meeting
of members, or any action which may be taken at any annual or special meeting of
members, may be taken without a meeting, without prior notice, and without a
vote, if a consent or consents in writing, setting forth the action so taken,
shall be signed by the holder or holders of membership interests having not less
than the minimum number of votes that would be necessary to take such action at
a meeting at which the holders of all membership interests entitled to vote on
the action were


                                        2

present and voted. Prompt notice of the taking of any action by the members
without a meeting by less than unanimous written consent shall be given to those
members who did not consent in writing to the action.

                                  ARTICLE EIGHT

                              No Preemptive Rights

     No member shall have a preemptive right to acquire any membership interests
or securities of any class that may at any time be issued, sold or offered for
sale by the Company.

                                  ARTICLE NINE

                              No Cumulative Voting

     The right of members to cumulative voting in the election of managers is
expressly prohibited.

                                   ARTICLE TEN

                                Manager Liability

     A manager of the Company shall not be liable to the Company or its members
for monetary damages for an act or omission in the manager's capacity as a
manager, except that this Article does not eliminate or limit the liability of a
manager to the extent the manager is found liable for (i) a breach of the
manager's duty of loyalty to the Company or its members; (ii) an act or omission
not in good faith that constitutes a breach of duty of the manager of the
Company or an act or omission that involves intentional misconduct or a knowing
violation of the law; (iii) a transaction from which the manager received an
improper benefit, whether or not the benefit resulted from an action taken
within the scope of the manager's office; or (iv) an act or omission for which
the liability of a manager is expressly provided by an applicable statute. Any
repeal or amendment of this Article by the members of the Company shall be
prospective only and shall not adversely affect any limitation on the liability
of a manager of the Company existing at the time of such repeal or amendment. In
addition to the circumstances in which the manager of the Company is not liable
as set forth in the preceding sentences, the manager shall not be liable to the
fullest extent permitted by any provision of the statutes of Nevada hereafter
enacted that further limits the liability of a manager or of a director of a
corporation.


                                        3

                                 ARTICLE ELEVEN

                                    Organizer

     The name and address of the organizer of the Company is:



Name:              Address:
- -----              --------
                
Timothy D. Hagen   12801 North Central Expressway, Suite 370
                   Dallas, Texas 75243


     IN WITNESS WHEREOF, these Articles of Organization have been executed on
February 4, 1997, by the undersigned.

                                        SOLE ORGANIZER


                                        /s/ Timothy D. Hagen
                                        ----------------------------------------
                                        Timothy D. Hagen

STATE OF TEXAS     Section
                   Section
COUNTY OF DALLAS   Section

     This instrument was acknowledged before me on February 4, 1997, by
TIMOTHY D. HAGEN, as organizer of ASHTON WOODS CALIFORNIA L.L.C.


                                        /s/ Cherie L. Watson
                                        ----------------------------------------
                                        Notary Public, State of Texas

My Commission Expires:
July 9, 2000

                                        Cherie L. Watson
                                        (Typed Name of Notary)

(SEAL)


                                        4

EX-3.1(F)

                                                                  Exhibit 3.1(f)

                                                                         (STAMP)

                            CERTIFICATE OF AMENDMENT
                         TO ARTICLES OF ORGANIZATION OF
                         ASHTON WOODS CALIFORNIA L.L.C.

                            (PURSUANT TO NRS 86.221)

     1. Name of Limited Liability Company: Ashton Woods California L.L.C.

     2. Date of Filing of Articles of Organization: February 6, 1997.

     3. Amendment to Articles of Organization: The Articles of Organization have
been amended to change the name of the limited liability company to "Ashton
Orlando Residential L.L.C." and Articles One of the Articles of Organization is
amended to read as follows:

          The name of the limited liability company referred to in these
          Articles as the "Company" is Ashton Orlando Residential L.L.C.

     4. Signature: The undersigned being a manager of the limited liability
company hereby executes this Certificate the 23rd day of January, 2001.


                                        /s/ Harry Rosenbaum
                                        ----------------------------------------
                                        Harry Rosenbaum, Manager

EX-3.1(G)

                                                                  Exhibit 3.1(g)

                                                                         (STAMP)

                            ARTICLES OF ORGANIZATION

                                       OF

                             ASHTON WOODS USA L.L.C.

     The undersigned, a natural person of the age of 18 years or older, acting
as the sole organizer, adopts the following Articles of Organization for a
limited liability company under the NRS 86 ("Act"):

                                   ARTICLE ONE

                                      Name

     The name of the limited liability company referred to in these Articles as
the "Company," is ASHTON WOODS USA L.L.C.

                                   ARTICLE TWO

                                    Duration

     The period of duration of the Company is until the close of business on
February 1, 2037, unless earlier dissolved in accordance with the regulations of
the Company as adopted and amended from time to time ("Regulations") or the Act.

                                  ARTICLE THREE

                                     Purpose

     The purpose for which the Company is organized is to transact any or all
lawful business for which limited liability companies may be organized under the
Act.

                                  ARTICLE FOUR

                           Right to Continue Business

     The remaining members of the Company have the right to continue the
business of the Company on the death, retirement, resignation, expulsion,
bankruptcy or dissolution of a member or the occurrence of any other event which
terminates the continued membership of a member of the Company.

                                  ARTICLE FIVE

                                    Managers

     The Company is to be managed by one or more managers, as that term is used
in the Act. The number, and the classes and qualifications of, Managers shall be
fixed from time to time by or in accordance with the Regulations. The number of
initial managers of the Company is three (3). The initial managers shall serve
until the first annual meeting of members of the Company or until any such
manager's successor is duly elected. The initial managers are:



Name:             Address:
- -----             --------
               
Bruce Freeman     250 Lesmill Road
                  Don Mills, Ontario M3B 2T5 Canada

Harry Rosenbaum   250 Lesmill Road
                  Don Mills, Ontario M3B 2T5 Canada

Seymour Joffe     250 Lesmill Road
                  Don Mills, Ontario M3B 2T5 Canada


                                   ARTICLE SIX

                     Registered Office and Registered Agent

     The street address and mailing address of the Company's initial registered
office is:

                              One East First Street
                        Reno, Washoe County, Nevada 89501

     The name of the Company's initial resident agent in Nevada at such address
is:

                     The Corporation Trust Company of Nevada

                                  ARTICLE SEVEN

                             Non-Unanimous Consents

     Any action required by the Act to be taken at any annual or special meeting
of members, or any action which may be taken at any annual or special meeting of
members, may be taken without a meeting, without prior notice, and without a
vote, if a consent or consents in writing, setting forth the action so taken,
shall be signed by the holder or holders of membership interests having not less
than the minimum number of votes that would be necessary to take such action at
a meeting at which the holders of all membership interests entitled to vote on
the action were


                                        2

present and voted. Prompt notice of the taking of any action by the members
without a meeting by less than unanimous written consent shall be given to those
members who did not consent in writing to the action.

                                  ARTICLE EIGHT

                              No Preemptive Rights

     No member shall have a preemptive right to acquire any membership interests
or securities of any class that may at any time be issued, sold or offered for
sale by the Company.

                                  ARTICLE NINE

                              No Cumulative Voting

     The right of members to cumulative voting in the election of managers is
expressly prohibited.

                                   ARTICLE TEN

                                Manager Liability

     A manager of the Company shall not be liable to the Company or its members
for monetary damages for an act or omission in the manager's capacity as a
manager, except that this Article does not eliminate or limit the liability of a
manager to the extent the manager is found liable for (i) a breach of the
manager's duty of loyalty to the Company or its members; (ii) an act or omission
not in good faith that constitutes a breach of duty of the manager of the
Company or an act or omission that involves intentional misconduct or a knowing
violation of the law; (iii) a transaction from which the manager received an
improper benefit, whether or not the benefit resulted from an action taken
within the scope of the manager's office; or (iv) an act or omission for which
the liability of a manager is expressly provided by an applicable statute. Any
repeal or amendment of this Article by the members of the Company shall be
prospective only and shall not adversely affect any limitation on the liability
of a manager of the Company existing at the time of such repeal or amendment. In
addition to the circumstances in which the manager of the Company is not liable
as set forth in the preceding sentences, the manager shall not be liable to the
fullest extent permitted by any provision of the statutes of Nevada hereafter
enacted that further limits the liability of a manager or of a director of a
corporation.


                                        3

                                 ARTICLE ELEVEN

                                    Organizer

     The name and address of the organizer of the Company is:



Name:              Address:
- -----              --------
                
Timothy D. Hagen   12801 North Central Expressway, Suite 370
                   Dallas, Texas 75243


     IN WITNESS WHEREOF, these Articles of Organization have been executed on
February 4, 1997, by the undersigned.

                                        SOLE ORGANIZER


                                        /s/ Timothy D. Hagen
                                        ----------------------------------------
                                        Timothy D. Hagen

STATE OF TEXAS     Section
                   Section
COUNTY OF DALLAS   Section

     This instrument was acknowledged before me on February 4, 1997, by TIMOTHY
D. HAGEN, as organizer of ASHTON WOODS USA L.L.C.


                                        /s/ Cherie L. Watson
                                        ----------------------------------------
                                        Notary Public, State of Texas

My Commission Expires:
July 9, 2000

                                        Cherie L. Watson
                                        ----------------------------------------
                                        (Typed Name of Notary)

(SEAL)


                                        4

EX-3.1(H)

                                                                  Exhibit 3.1(h)

                                                                         (STAMP)

                         CERTIFICATE OF AMENDMENT OF THE
                            ARTICLES OF ORGANIZATION
                                       OF
                           ASHTON WOODS ARIZONA L.L.C.

     Pursuant to Nevada Revised Statutes Section 86.221, the undersigned does
hereby declare and certify that:

     1. The name of the limited liability company is Ashton Woods Arizona L.L.C.
(the "Company").

     2. The Company is managed by its managers.

     3. The Articles of Organization of the Company are hereby amended to add to
Article Five of the Articles of Organization the foliowing paragraph:

          The Company may designate or authorize, by provision in the
     Regulations or in a resolution or other writing of a manager or managers as
     permitted by the Regulations, one or more persons, officers,
     representatives or employees of the Company who may, in the name and on
     behalf of the Company, and in lieu of or in addition to the manager(s),
     contract debts or incur liabilities, and sign contracts or agreements
     including, without limitation, instruments and documents providing for the
     acquisition, mortgage or disposition of any property of the Company, real,
     personal, or intangible, and may authorize the use of facsimile signatures
     of any such persons, officers, representatives or employees.

     IN WITNESS WHEREOF, the undersigned manager of the Company has executed
this Certificate of Amendment of Articles of Organization of the 9th day of
January, 2003.


                                        /s/ Harry Rosenbaum
                                        ----------------------------------------
                                        Name: Harry Rosenbaum
                                        Its: Manager


                                        1

EX-3.1(I)

                                                                  Exhibit 3.1(i)

(LOGO)   DEAN HELLER
         Secretary of State
         206 North Carson Street
         Carson City, Nevada 89701-4299
         (775) 684 5708
         Website: secretaryofstate.biz

                            Articles Of Organization
                            Limited-Liability Company
                              (PURSUANT TO NRS 86)

                                                                         (STAMP)

Important: Read attached instructions before     ABOVE SPACE IS FOR OFFICE USE
           completing form.                      ONLY

                    
1. NAME OF LIMITED-
   LIABILITY COMPANY   ASHTON TAMPA RESIDENTIAL, LLC

2. RESIDENT AGENT      The Corporation Trust Company of Nevada
   NAME AND STREET     Name
   ADDRESS:
   (must be a Nevada   6100 Neil Road                    Reno      NEVADA    89511
   address where       Physical Street Address           City                Zip Code
   process may be
   served)             _______________________________   _______   _______   ________
                       Additional Mailing Address        City      State     Zip Code

3. DISSOLUTION DATE:   Latest date upon which the company is to
   (OPTIONAL - see     dissolve (If existence is not perpetual): ____________________
   instructions)

4. MANAGEMENT          Company shall be managed by 3  [X] Manager(s)  OR  [ ] Members
   (check one)

5. NAMES ADDRESSES,    Bruce Freeman
   OF MANAGER(S) OR    Name                                             CANADA
   MEMBERS:
   (attach             3751 Victoria Park Avenue         Toronto   Ontario   M1W 3Z4
   additional pages    Address                           City      State     Zip Code
   as necessary)
                       Harry Rosenbaum
                       Name                                             CANADA

                       3751 Victoria Park Avenue         Toronto   Ontario   M1W 3Z4
                       Address                           City      State     Zip Code

                       Seymour Joffe
                       Name                                             CANADA

                       3751 Victoria Park Avenue         Toronto   Ontario   M1W 3Z4
                       Address                           City      State     Zip Code

6. NAMES, ADDRESSES    Tim Hagen
   AND SIGNATURES OF   Name
   ORGANIZERS
   (if more than one
   organizer attach                                      /s/ Tim Hagen
   additional page)                                      ----------------------------
                                                         Signature

                       14643 Dallas Parkway, Suite 570   Dallas    Texas     75254
                       Address                           City      State     Zip Code

7. CERTIFICATE OF      I hereby accept appointment as Resident Agent for the above
   ACCEPTANCE OF       named limited-liability company.
   APPOINTMENT OF
   RESIDENT AGENT:
                       /s/ Maria Ozaeta                  Maria Ozaeta
                       -------------------------------
                       Authorized Signature of R.A. or   Date 8/20/04
                       On Behalf of R.A. Company



This form must be accompanied by appropriate fees. See attached fee schedule.



                                 PAGE TWO (2) TO
                           ARTICLES OF ORGANIZATION OF
                  ASHTON TAMPA RESIDENTIAL, LLC (THE "COMPANY")

8.   PURPOSE: The purpose for which the Company is organized is to transact any
     or all lawful business for which limited liability companies may be
     organized under the Act.

9.   RIGHT TO CONTINUE BUSINESS: The remaining members of the Company have the
     right to continue the business of the Company on the death, retirement,
     resignation, expulsion, bankruptcy or dissolution of a member or the
     occurrence of any other event which terminates the continued membership of
     a member of the Company.

10.  NON-UNANIMOUS CONSENTS: Any action required by the Act to be taken at any
     annual or special meeting of members, or any action which may be taken at
     any annual or special meeting of members, may be taken without a meeting,
     without prior notice, and without a vote, if a consent or consents in
     writing, setting forth the action so taken, shall be signed by the holder
     or holders of membership interests having not less than the minimum number
     of votes that would be necessary to take such action at a meeting at which
     the holders of all membership interests entitled to vote on the action were
     present and voted. Prompt notice of the taking of any action by the members
     without a meeting by less than unanimous written consent shall be given to
     those members who did not consent in writing to the action.

11.  NO PREEMPTIVE RIGHTS: No member shall have a preemptive right to acquire
     any membership interests or securities of any class that may at any time be
     issued, sold or offered for sale by the Company.

12.  NO CUMULATIVE VOTING: The right of members to cumulative voting in the
     election of managers is expressly prohibited.

13.  MANAGER LIABILITY: A manager of the Company shall not be liable to the
     Company or its members for monetary damages for an act or omission in the
     manager's capacity as a manager, except that this Article does not
     eliminate or limit the liability of a manager to the extent the manager is
     found liable for (i) a breach of the manager's duty of loyalty to the
     Company or its members; (ii) an act or omission not in good faith that
     constitutes a breach of duty of the manager of the Company or an act or
     omission that involves intentional misconduct or a knowing violation of the
     law; (iii) a transaction from which the manager received an improper
     benefit, whether or not the benefit resulted from an action taken within
     the scope of the manager's office; or (iv) an act or omission for which the
     liability of a manager is expressly provided by an applicable statute. Any
     repeal or amendment of this Article by the members of the Company shall be
     prospective only and shall not adversely affect any limitation on the
     liability of a manager of the Company existing at the time of such repeal
     or amendment. In addition to the circumstances in which the manager of the
     Company is not liable as set forth in the preceding sentences, the manager
     shall not be liable to the fullest extent permitted by any provision of the
     statutes of Nevada hereafter enacted that further limits the liability of a
     manager or of a director of a corporation.

EX-3.1(J)

                                                                  Exhibit 3.1(j)

(LOGO)   DEAN HELLER
         Secretary of State
         206 North Carson Street
         Carson City, Nevada 89701-4299
         (775) 684 5708
         Website: secretaryofstate.biz

                            Articles Of Organization
                            Limited-Liability Company
                              (PURSUANT TO NRS 86)

                                                                         (STAMP)

Important: Read attached instructions before     ABOVE SPACE IS FOR OFFICE USE
           completing form.                      ONLY

                    
1. NAME OF LIMITED-
   LIABILITY COMPANY   ASHTON DENVER RESIDENTIAL, LLC

2. RESIDENT AGENT      The Corporation Trust Company of Nevada
   NAME AND STREET     Name
   ADDRESS:
   (must be a Nevada   6100 Neil Road, Suite 500         Reno      NEVADA    89511
   address where       Physical Street Address           City                Zip Code
   process may be
   served)             _______________________________   _______   _______   ________
                       Additional Mailing Address        City      State     Zip Code

3. DISSOLUTION DATE:   Latest date upon which the company is to
   (OPTIONAL - see     dissolve (If existence is not perpetual): ____________________
   instructions)

4. MANAGEMENT          Company shall be managed by 3  [X] Manager(s)  OR  [ ] Members
   (check one)

5. NAMES ADDRESSES,    Bruce Freeman
   OF MANAGER(S) OR    Name                                             CANADA
   MEMBERS:
   (attach             3751 Victoria Park Avenue         Toronto   Ontario   M1W 3Z4
   additional pages    Address                           City      State     Zip Code
   as necessary)
                       Harry Rosenbaum
                       Name                                             CANADA

                       3751 Victoria Park Avenue         Toronto   Ontario   M1W 3Z4
                       Address                           City      State     Zip Code

                       Seymour Joffe
                       Name                                             CANADA

                       3751 Victoria Park Avenue         Toronto   Ontario   M1W 3Z4
                       Address                           City      State     Zip Code

6. NAMES, ADDRESSES    Tim Hagen
   AND SIGNATURES OF   Name
   ORGANIZERS
   (if more than one
   organizer attach                                      /s/ Tim Hagen
   additional page)                                      ----------------------------
                                                         Signature

                       14643 Dallas Parkway, Suite 570   Dallas    Texas     75254
                       Address                           City      State     Zip Code

7. CERTIFICATE OF      I hereby accept appointment as Resident Agent for the above
   ACCEPTANCE OF       named limited-liability company.
   APPOINTMENT OF
   RESIDENT AGENT:
                       /s/
                       -------------------------------
                       Authorized Signature of R.A. or   Date 11/17/04
                       On Behalf of R.A. Company



This form must be accompanied by appropriate fees. See attached fee schedule.


                                 PAGE TWO (2) TO
                           ARTICLES OF ORGANIZATION OF
                 ASHTON DENVER RESIDENTIAL, LLC (THE "COMPANY")

8.   PURPOSE: The purpose for which the Company is organized is to transact any
     or all lawful business for which limited liability companies may be
     organized under the Act.

9.   RIGHT TO CONTINUE BUSINESS: The remaining members of the Company have the
     right to continue the business of the Company on the death, retirement,
     resignation, expulsion, bankruptcy or dissolution of a member or the
     occurrence of any other event which terminates the continued membership of
     a member of the Company.

10.  NON-UNANIMOUS CONSENTS: Any action required by the Act to be taken at any
     annual or special meeting of members, or any action which may be taken at
     any annual or special meeting of members, may be taken without a meeting,
     without prior notice, and without a vote, if a consent or consents in
     writing, setting forth the action so taken, shall be signed by the holder
     or holders of membership interests having not less than the minimum number
     of votes that would be necessary to take such action at a meeting at which
     the holders of all membership interests entitled to vote on the action were
     present and voted. Prompt notice of the taking of any action by the members
     without a meeting by less than unanimous written consent shall be given to
     those members who did not consent in writing to the action.

11.  NO PREEMPTIVE RIGHTS: No member shall have a preemptive right to acquire
     any membership interests or securities of any class that may at any time be
     issued, sold or offered for sale by the Company.

12.  NO CUMULATIVE VOTING: The right of members to cumulative voting in the
     election of managers is expressly prohibited.

13.  MANAGER LIABILITY: A manager of the Company shall not be liable to the
     Company or its members for monetary damages for an act or omission in the
     manager's capacity as a manager, except that this Article does not
     eliminate or limit the liability of a manager to the extent the manager is
     found liable for (i) a breach of the manager's duty of loyalty to the
     Company or its members; (ii) an act or omission not in good faith that
     constitutes a breach of duty of the manager of the Company or an act or
     omission that involves intentional misconduct or a knowing violation of the
     law; (iii) a transaction from which the manager received an improper
     benefit, whether or not the benefit resulted from an action taken within
     the scope of the manager's office; or (iv) an act or omission for which the
     liability of a manager is expressly provided by an applicable statute. Any
     repeal or amendment of this Article by the members of the Company shall be
     prospective only and shall not adversely affect any limitation on the
     liability of a manager of the Company existing at the time of such repeal
     or amendment. In addition to the circumstances in which the manager of the
     Company is not liable as set forth in the preceding sentences, the manager
     shall not be liable to the fullest extent permitted by any provision of the
     statutes of Nevada hereafter enacted that further limits the liability of a
     manager or of a director of a corporation.

EX-3.1(K)

                                                                  Exhibit 3.1(K)

                                                                         (STAMP)

                            ARTICLES OF ORGANIZATION

                                       OF

                           ASHTON WOODS FLORIDA L.L.C.

     The undersigned, a natural person of the age of 18 years or older, acting
as the sole organizer, adopts the following Articles of Organization for a
limited liability company under the NRS 86 ("Act"):

                                   ARTICLE ONE

                                      Name

     The name of the limited liability company referred to in these Articles as
the "Company," is ASHTON WOODS FLORIDA L.L.C.

                                   ARTICLE TWO

                                    Duration

     The period of duration of the Company is until the close of business on
February 1, 2037, unless earlier dissolved in accordance with the regulations of
the Company as adopted and amended from time to time ("Regulations") or the Act.

                                  ARTICLE THREE

                                     Purpose

     The purpose for which the Company is organized is to transact any or all
lawful business for which limited liability companies may be organized under the
Act.

                                  ARTICLE FOUR

                           Right to Continue Business

     The remaining members of the Company have the right to continue the
business of the Company on the death, retirement, resignation, expulsion,
bankruptcy or dissolution of a member or the occurrence of any other event which
terminates the continued membership of a member of the Company.

                                  ARTICLE FIVE

                                    Managers

     The Company is to be managed by one or more managers, as that term is used
in the Act. The number, and the classes and qualifications of, Managers shall be
fixed from time to time by or in accordance with the Regulations. The number of
initial managers of the Company is three (3). The initial managers shall serve
until the first annual meeting of members of the Company or until any such
manager's successor is duly elected. The initial managers are:



Name:             Address:
- -----             --------
               
Bruce Freeman     250 Lesmill Road
                  Don Mills, Ontario M3B 2T5 Canada

Harry Rosenbaum   250 Lesmill Road
                  Don Mills, Ontario M3B 2T5 Canada

Seymour Joffe     250 Lesmill Road
                  Don Mills, Ontario M3B 2T5 Canada


                                   ARTICLE SIX

                     Registered Office and Registered Agent

     The street address and mailing address of the Company's initial registered
office is:

                              One East First Street
                        Reno, Washoe County, Nevada 89501

     The name of the Company's initial registered agent in Nevada at such
address is:

                     The Corporation Trust Company of Nevada

                                  ARTICLE SEVEN

                             Non-Unanimous Consents

     Any action required by the Act to be taken at any annual or special meeting
of members, or any action which may be taken at any annual or special meeting of
members, may be taken without a meeting, without prior notice, and without a
vote, if a consent or consents in writing, setting forth the action so taken,
shall be signed by the holder or holders of membership interests having not less
than the minimum number of votes that would be necessary to take such action at
a meeting at which the holders of all membership interests entitled to vote on
the action were


                                       2

present and voted. Prompt notice of the taking of any action by the members
without a meeting by less than unanimous written consent shall be given to those
members who did not consent in writing to the action.

                                  ARTICLE EIGHT

                              No Preemptive Rights

     No member shall have a preemptive right to acquire any membership interests
or securities of any class that may at any time be issued, sold or offered for
sale by the Company.

                                  ARTICLE NINE

                              No Cumulative Voting

     The right of members to cumulative voting in the election of managers is
expressly prohibited.

                                   ARTICLE TEN

                                Manager Liability

     A manager of the Company shall not be liable to the Company or its members
for monetary damages for an act or omission in the manager's capacity as a
manager, except that this Article does not eliminate or limit the liability of a
manager to the extent the manager is found liable for (i) a breach of the
manager's duty of loyalty to the Company or its members; (ii) an act or omission
not in good faith that constitutes a breach of duty of the manager of the
Company or an act or omission that involves intentional misconduct or a knowing
violation of the law; (iii) a transaction from which the manager received an
improper benefit, whether or not the benefit resulted from an action taken
within the scope of the manager's office; or (iv) an act or omission for which
the liability of a manager is expressly provided by an applicable statute. Any
repeal or amendment of this Article by the members of the Company shall be
prospective only and shall not adversely affect any limitation on the liability
of a manager of the Company existing at the time of such repeal or amendment. In
addition to the circumstances in which the manager of the Company is not liable
as set forth in the preceding sentences, the manager shall not be liable to the
fullest extent permitted by any provision of the statutes of Nevada hereafter
enacted that further limits the liability of a manager or of a director of a
corporation.


                                       3

                                 ARTICLE ELEVEN

                                   Organizer

     The name and address of the organizer of the Company is:



Name:              Address:
- -----              --------
                
Timothy D. Hagen   12801 North Central Expressway, Suite 370
                   Dallas, Texas 75243


     IN WITNESS WHEREOF, these Articles of Organization have been executed on
February 4, 1997, by the undersigned.

                                        SOLE ORGANIZER


                                        /s/ Timothy D. Hagen
                                        ----------------------------------------
                                        Timothy D. Hagen

STATE OF TEXAS     Section
                   Section
COUNTY OF DALLAS   Section

     This instrument was acknowledged before me on February 4, 1997, by TIMOTHY
D. HAGEN, as organizer of ASHTON WOODS FLORIDA L.L.C.


                                        /s/ Cherie L. Watson
                                        ----------------------------------------
                                        Notary Public, State of Texas

My Commission Expires:
July 9, 2000

                                        Cherie L. Watson
                                        (Typed Name of Notary)

(SEAL)


                                       4

EX-3.1(L)

                                                                  Exhibit 3.1(l)

(STAMP)

                            ARTICLES OF ORGANIZATION

                                       OF

                           ASHTON WOODS BUTLER L.L.C.

     The undersigned, a natural person of the age of 18 years or older, acting
as the sole organizer, adopts the following Articles of Organization for a
limited liability company under the NRS 86 ("Act"):

                                   ARTICLE ONE

                                      Name

     The name of the limited liability company referred to in these Articles as
the "Company," is ASHTON WOODS BUTLER L.L.C.

                                   ARTICLE TWO

                                    Duration

     The period of duration of the Company is until the close of business on
November 1, 2038, unless earlier dissolved in accordance with the regulations of
the Company as adopted and amended from time to time ("Regulations") or the Act.

                                  ARTICLE THREE

                                    Purpose

     The purpose for which the Company is organized is to transact any or all
lawful business for which limited liability companies may be organized under the
Act.

                                  ARTICLE FOUR

                           Right to Continue Business

     The remaining members of the Company have the right to continue the
business of the Company on the death, retirement, resignation, expulsion,
bankruptcy or dissolution of a member or the occurrence of any other event which
terminates the continued membership of a member of the Company.

                                  ARTICLE FIVE

                                    Managers

     The Company is to be managed by one or more managers, as that term is used
in the Act. The number, and the classes and qualifications of, Managers shall be
fixed from time to time by or in accordance with the Regulations. The number of
initial managers of the Company is three (3). The initial managers shall serve
until the first annual meeting of members of the Company or until any such
manager's successor is duly elected. The initial managers are:



Name:             Address:
- -----             --------
               
Bruce Freeman     250 Lesmill Road
                  Don Mills, Ontario M3B 2T5 Canada

Harry Rosenbaum   250 Lesmill Road
                  Don Mills, Ontario M3B 2T5 Canada

Seymour Joffe     250 Lesmill Road
                  Don Mills, Ontario M3B 2T5 Canada


                                   ARTICLE SIX

                     Registered Office and Registered Agent

     The street address and mailing address of the Company's initial registered
office is:

                              One East First Street
                        Reno, Washoe County, Nevada 89501

     The name of the Company's initial registered agent in Nevada at such
address is:

                     The Corporation Trust Company of Nevada

                                  ARTICLE SEVEN

                             Non-Unanimous Consents

     Any action required by the Act to be taken at any annual or special meeting
of members, or any action which may be taken at any annual or special meeting of
members, may be taken without a meeting, without prior notice, and without a
vote, if a consent or consents in writing, setting forth the action so taken,
shall be signed by the holder or holders of membership interests having not less
than the minimum number of votes that would be necessary to take such action at
a meeting at which the holders of all membership interests entitled to vote on
the action were


                                        2

present and voted. Prompt notice of the taking of any action by the members
without a meeting by less than unanimous written consent shall be given to the
members who did not consent in writing to the action.

                                  ARTICLE EIGHT

                              No Preemptive Rights

     No member shall have a preemptive right to acquire any membership interests
or securities of any class that may at any time be issued, sold or offered for
sale by the Company.

                                  ARTICLE NINE

                              No Cumulative Voting

     The right of members to cumulative voting in the election of managers is
expressly prohibited.

                                   ARTICLE TEN

                                Manager Liability

     A manager of the Company shall not be liable to the Company or its members
for monetary damages for an act or omission in the manager's capacity as a
manager, except that this Article does not eliminate or limit the liability of a
manager to the extent the manager is found liable for (i) a breach of the
manager's duty of loyalty to the Company or its members; (ii) an act or omission
not in good faith that constitutes a breach of duty of the manager of the
Company or an act or omission that involves intentional misconduct or a knowing
violation of the law; (iii) a transaction from which the manager received an
improper benefit, whether or not the benefit resulted from an action taken
within the scope of the manager's office; or (iv) an act or omission for which
the liability of a manager is expressly provided by an applicable statute. Any
repeal or amendment of this Article by the members of the Company shall be
prospective only and shall not adversely affect any limitation on the liability
of a manager of the Company existing at the time of such repeal or amendment. In
addition to the circumstances in which the manager of the Company is not liable
as set forth in the preceding sentences, the manager shall not be liable to the
fullest extent permitted by any provision of the statutes of Nevada hereafter
enacted that further limits the liability of a manager or of a director of a
corporation.


                                        3

                                 ARTICLE ELEVEN

                                    Organizer

     The name and address of the organizer of the Company is:



Name:              Address:
- -----              --------
                
Timothy D. Hagen   12801 North Central Expressway, Suite 370
                   Dallas, Texas 75243


     IN WITNESS WHEREOF, these Articles of Organization have been executed on
October 7, 1998, by the undersigned.

                                        SOLE ORGANIZER


                                        /s/ Timothy D. Hagen
                                        ----------------------------------------
                                        Timothy D. Hagen

STATE OF TEXAS     Section
                   Section
COUNTY OF DALLAS   Section

     This instrument was acknowledged before me on October 7th, 1998, by TIMOTHY
D. HAGEN, as organizer of ASHTON WOODS BUTLER L.L.C.


                                        /s/ Cherie L. Watson
                                        ----------------------------------------
                                        Notary Public, State of Texas

My Commission Expires:
July 9, 2000

                                        Cherie L. Watson
                                        (Typed Name of Notary)

(SEAL)


                                        4

EX-3.1(M)

                                                                  Exhibit 3.1(m)

(STAMP)

                            ARTICLES OF ORGANIZATION

                                       OF

                          ASHTON WOODS LAKESIDE L.L.C.

     The undersigned, a natural person of the age of 18 years or older, acting
as the sole organizer, adopts the following Articles of Organization for a
limited liability company under the NRS 86 ("Act"):

                                   ARTICLE ONE

                                      Name

     The name of the limited liability company referred to in these Articles as
the "Company," is ASHTON WOODS LAKESIDE L.L.C.

                                   ARTICLE TWO

                                    Duration

     The period of duration of the Company is until the close of business on
November 1, 2038, unless earlier dissolved in accordance with the regulations of
the Company as adopted and amended from time to time ("Regulations") or the Act.

                                  ARTICLE THREE

                                     Purpose

     The purpose for which the Company is organized is to transact any or all
lawful business for which limited liability companies may be organized under the
Act.

                                  ARTICLE FOUR

                           Right to Continue Business

     The remaining members of the Company have the right to continue the
business of the Company on the death, retirement, resignation, expulsion,
bankruptcy or dissolution of a member or the occurrence of any other event which
terminates the continued membership of a member of the Company.

                                  ARTICLE FIVE

                                    Managers

     The Company is to be managed by one or more managers, as that term is used
in the Act. The number, and the classes and qualifications of, Managers shall be
fixed from time to time by or in accordance with the Regulations. The number of
initial managers of the Company is three (3). The initial managers shall serve
until the first annual meeting of members of the Company or until any such
manager's successor is duly elected. The initial managers are:



Name:             Address:
- -----             --------
               
Bruce Freeman     250 Lesmill Road
                  Don Mills, Ontario M3B 2T5 Canada

Harry Rosenbaum   250 Lesmill Road
                  Don Mills, Ontario M3B 2T5 Canada

Seymour Joffe     250 Lesmill Road
                  Don Mills, Ontario M3B 2T5 Canada


                                   ARTICLE SIX

                     Registered Office and Registered Agent

     The street address and mailing address of the Company's initial registered
office is:

                              One East First Street
                        Reno, Washoe County, Nevada 89501

     The name of the Company's initial registered agent in Nevada at such
address is:

                     The Corporation Trust Company of Nevada

                                  ARTICLE SEVEN

                             Non-Unanimous Consents

     Any action required by the Act to be taken at any annual or special meeting
of members, or any action which may be taken at any annual or special meeting of
members, may be taken without a meeting, without prior notice, and without a
vote, if a consent or consents in writing, setting forth, the action so taken,
shall be signed by the holder or holders of membership interests having not less
than the minimum number of votes that would be necessary to take such action at
a meeting at which the holders of all membership interests entitled to vote on
the action were


                                        2

present and voted. Prompt notice of the taking of any action by the members
without a meeting by less than unanimous written consent shall be given to the
members who did not consent in writing to the action.

                                  ARTICLE EIGHT

                              No Preemptive Rights

     No member shall have a preemptive right to acquire any membership interests
or securities of any class that may at any time be issued, sold or offered for
sale by the Company.

                                  ARTICLE NINE

                              No Cumulative Voting

     The right of members to cumulative voting in the election of managers is
expressly prohibited.

                                   ARTICLE TEN

                                Manager Liability

     A manager of the Company shall not be liable to the Company or its members
for monetary damages for an act or omission in the manager's capacity as a
manager, except that this Article does not eliminate or limit the liability of a
manager to the extent the manager is found liable for (i) a breach of the
manager's duty of loyalty to the Company or its members; (ii) an act or omission
not in good faith that constitutes a breach of duty of the manager of the
Company or an act or omission that involves intentional misconduct or a knowing
violation of the law; (iii) a transaction from which the manager received an
improper benefit, whether or not the benefit resulted from an action taken
within the scope of the manager's office; or (iv) an act or omission for which
the liability of a manager is expressly provided by an applicable statute. Any
repeal or amendment of this Article by the members of the Company shall be
prospective only and shall not adversely affect any limitation on the liability
of a manager of the Company existing at the time of such repeal or amendment. In
addition to the circumstances in which the manager of the Company is not liable
as set forth in the preceding sentences, the manager shall not be liable to the
fullest extent permitted by any provision of the statutes of Nevada hereafter
enacted that further limits the liability of a manager or of a director of a
corporation.


                                        3

                                 ARTICLE ELEVEN

                                    Organizer

     The name and address of the organizer of the Company is:



Name:              Address:
- -----              --------
                
Timothy D. Hagen   12801 North Central Expressway, Suite 370
                   Dallas, Texas 75243


     IN WITNESS WHEREOF, these Articles of Organization have been executed on
October 7, 1998, by the undersigned.

                                        SOLE ORGANIZER


                                        /s/ Timothy D. Hagen
                                        ----------------------------------------
                                        Timothy D. Hagen

STATE OF TEXAS     Section
                   Section
COUNTY OF DALLAS   Section

     This instrument was acknowledged before me on October 7th 1998, by
TIMOTHY D. HAGEN, as organizer of ASHTON WOODS LAKESIDE L.L.C.


                                        /s/ Cherie L. Watson
                                        ----------------------------------------
                                        Notary Public, State of Texas

My Commission Expires:
July 9, 2000

                                        Cherie L. Watson
                                        (Typed Name of Notary)

(SEAL)


                                        4

EX-3.1(N)

                                                                  Exhibit 3.1(n)

                                                                         (STAMP)

                            ARTICLES OF ORGANIZATION
                                       OF
                              CANYON REALTY L.L.C.

     The undersigned corporation, acting as organizer of a limited liability
company under the Texas Limited Liability Company Act (the "Act"), does hereby
adopt the following Articles of Organization for such limited liability company:

     1. NAME. The name of the limited liability company, referred to in these
Articles as the "Company," is Canyon Realty L.L.C.

     2. DURATION. The period of duration of the Company is until the close of
business on January 1, 2037, unless earlier dissolved in accordance with the
regulations of the Company as adopted and amended from time to time
("Regulations") or the Act.

     3. PURPOSE. The purpose for which the Company is organized is to transact
any or all lawful business for which limited liability companies may be
organized under the Act.

     4. PRINCIPAL PLACE OF BUSINESS IN TEXAS. The address of the Company's
principal place of business in Texas is:

               13800 Montfort Drive, Suite 100
               Dallas, Texas 75240

     5. MANAGERS. The Company is to be managed by one or more managers, as that
term is used in the Act. The number, and the classes and qualification of,
Managers shall be fixed from time to time by or in accordance with the
Regulations. The number of initial managers of the Company is three (3). The
initial managers shall serve until the first annual meeting of the members of
the Company or until any such manager's successor is duly elected. The initial
managers are:



Name              Address
- ----              -------
               
Bruce Freeman     13800 Montfort Drive, Suite 100 Dallas, Texas 75240

Harry Rosenbaum   13800 Montfort Drive, Suite 100 Dallas, Texas 75240

Seymour Joffe     13800 Montfort Drive, Suite 100 Dallas, Texas 75240


     6. REGISTERED OFFICE AND REGISTERED AGENT. The post office address of the
Company's initial registered office is:

               14643 Dallas Parkway, Suite 570 Dallas,
               Texas 75254

     The name of the Company's initial registered agent in Texas at such address
is:

               Tim Hagen

     7. NON-UNANIMOUS CONSENTS. Any action required by the Act or the Texas
Business Corporation Act to be taken at any annual or special meeting of the
members, or any action which may be taken at any annual or special meeting of
the members, may be taken without a meeting, without prior notice, and without a
vote, if a consent or consents in writing, setting forth the action so taken,
shall be signed by the holder or holders of membership interests having not less
than the minimum number of votes that would be necessary to take such action at
a meeting at which the holders of all membership interests entitled to vote on
the action were present and voted. Prompt notice of the taking of any action by
the members without a meeting by less than unanimous written consent shall be
given to those members who did not consent in writing to the action.

     8. NO PREEMPTIVE RIGHTS. No member shall have a preemptive right to acquire
any membership interests or securities of any class that may at any time be
issued, sold, or offered for sale by the Company.

     9. NO CUMULATIVE VOTING. The right of members to cumulative voting in the
election of managers is expressly prohibited.

     10. MANAGER LIABILITY. A manager of the Company shall not be liable to the
Company or its members for monetary damages or for an act or omission in the
manager's capacity as a manager, except that this Section 10 does not eliminate
or limit the liability of a manager to the extent the manager is found liable
for (i) a breach of the manager's duty of loyalty to the Company or its members;
(ii) an act or omission not in good faith that constitutes a breach of duty of
the manager of the Company or an act or omission that involves intentional
misconduct or a knowing violation of the law; (iii) a transaction from which the
manager received an improper benefit, whether or not the benefit resulted from
an action taken within the scope of the manager's office; or (iv) an act or
omission for which the liability of a manager is expressly provided by an
applicable statute. Any repeal or amendment of this Article by the members of
the Company shall be prospective only and shall not adversely affect any
limitation on the liability of a manager of the Company existing at the time of
such repeal or amendment. In addition to the circumstances in which the manager
of the Company is not liable as set forth in the preceding sentences, the
manager shall not be liable to the fullest extent permitted by and provision of
the statutes of Texas hereafter enacted that further limits the liability of a
manager or of a director of a corporation.


                                        2

     11. ORGANIZER. The name and address of the organizer of the Company is:



Name                         Address
- ----                         -------
                          
Hagen & Parsons,             14643 Dallas Parkway, Suite 570
A PROFESSIONAL CORPORATION   Dallas, Texas 75254


     IN WITNESS WHEREOF, these Articles of Organization have been executed on
May 20, 2002, by the undersigned.

                                        HAGEN & PARSONS,
                                        A PROFESSIONAL CORPORATION


                                        BY: /s/ Tim Hagen
                                            ------------------------------------
                                            Tim Hagen, president


                                        3

EX-3.1(O)

                                                                  Exhibit 3.1(o)

                                                                         (STAMP)

                            ARTICLES OF ORGANIZATION

                                       OF

                        ASHTON DALLAS RESIDENTIAL L.L.C.

     The undersigned, a natural person of the age of 18 years or older, acting
as the sole organizer, adopts the following Articles of Organization for a
limited liability company under the Texas Limited Liability Company Act ("Act"):

                                   ARTICLE ONE

                                      Name

     The name of the limited liability company referred to in these Articles as
the "Company," is ASHTON DALLAS RESIDENTIAL L.L.C.

                                   ARTICLE TWO

                                    Duration

     The period of duration of the Company is until the close of business on
June 1, 2024, unless earlier dissolved in accordance with the regulations of the
Company as adopted and amended from time to time ("Regulations") or the Act.

                                  ARTICLE THREE

                                     Purpose

     The purpose for which the Company is organized is to transact any or all
lawful business for which limited liability companies may be organized under the
Act.

                                  ARTICLE FOUR

                      Principal Place of Business in Texas

     The address of the Company's principal place of business in Texas is:

                         15851 Dallas Parkway, Suite 100
                              Dallas, Texas 75248

                                  ARTICLE FIVE

                                    Managers

     The Company is to be managed by one or more managers, as that term is used
in the Act. The number, and the classes and qualifications of, Managers shall be
fixed from time to time by or in accordance with the Regulations. The number of
initial managers of the Company is three (3). The initial managers shall serve
until the first annual meeting of members of the Company or until any such
manager's successor is duly elected. The initial managers are:



Name:             Address:
- -----             --------
               
Bruce Freeman     15851 Dallas Parkway, Suite 100
                  Dallas, Texas 75248

Harry Rosenbaum   15851 Dallas Parkway, Suite 100
                  Dallas, Texas 75248

Seymour Joffe     15851 Dallas Parkway, Suite 100
                  Dallas, Texas 75248


                                   ARTICLE SIX

                     Registered Office and Registered Agent

     The post office address of the Company's initial registered office is:

                     12801 N. Central Expressway, Suite 370
                               Dallas, Texas 75243

     The name of the Company's initial registered agent in Texas at such address
is:

                                Timothy D. Hagen

                                  ARTICLE SEVEN

                             Non-Unanimous Consents

     Any action required by the Act or the Texas Business Corporation Act to be
taken at any annual or special meeting of members, or any action which may be
taken at any annual or special meeting of members, may be taken without a
meeting, without prior notice, and without a vote, if a consent or consents in
writing, setting forth the action so taken, shall be signed by the holder or
holders of membership interests having not less than the minimum number of votes
that would be necessary to take such action at a meeting at which the holders of
all membership


                                        2

interests entitled to vote on the action were present and voted. Prompt notice
of the taking of any action by the members without a meeting by less than
unanimous written consent shall be given to those members who did not consent in
writing to the action.

                                  ARTICLE EIGHT

                              No Preemptive Rights

     No member shall have a preemptive right to acquire any membership interests
or securities of any class that may at any time be issued, sold or offered for
sale by the Company.

                                  ARTICLE NINE

                              No Cumulative Voting

     The right of members to cumulative voting in the election of managers is
expressly prohibited.

                                   ARTICLE TEN

                                Manager Liability

     A manager of the Company shall not be liable to the Company or its members
for monetary damages for an act or omission in the manager's capacity as a
manager, except that this Article Ten does not eliminate or limit the liability
of a manager to the extent the manager is found liable for (i) a breach of the
manager's duty of loyalty to the Company or its members; (ii) an act or omission
not in good faith that constitutes a breach of duty of the manager of the
Company or an act or omission that involves intentional misconduct or a knowing
violation of the law; (iii) a transaction from which the manager received an
improper benefit, whether or not the benefit resulted from an action taken
within the scope of the manager's office; or (iv) an act or omission for which
the liability of a manager is expressly provided by an applicable statute. Any
repeal or amendment of this Article by the members of the Company shall be
prospective only and shall not adversely affect any limitation on the liability
of a manager of the Company existing at the time of such repeal or amendment. In
addition to the circumstances in which the manager of the Company is not liable
as set forth in the preceding sentences, the manager shall not be liable to the
fullest extent permitted by any provision of the statutes of Texas hereafter
enacted that further limits the liability of a manager or of a director of a
corporation.


                                        3

                                 ARTICLE ELEVEN

                                    Organizer

The name and address of the organizer of the Company is:



Name:              Address:
- -----              --------
                
Timothy D. Hagen   12801 North Central Expressway, Suite 370
                   Dallas, Texas 75243


     IN WITNESS WHEREOF, these Articles of Organization have been executed on
May 24, 1994, by the undersigned.

                                        SOLE ORGANIZER


                                        /s/ Timothy D. Hagen
                                        ----------------------------------------
                                        Timothy D. Hagen


                                        4

EX-3.1(P)

                                                                  Exhibit 3.1(p)

                                                                         (STAMP)

                            ARTICLES OF ORGANIZATION

                                       OF

                        ASHTON HOUSTON RESIDENTIAL L.L.C.

     The undersigned, a natural person of the age of 18 years or older, acting
as the sole organizer, adopts the following Articles of Organization for a
limited liability company under the Texas Limited Liability Company Act ("Act"):

                                   ARTICLE ONE

                                      Name

     The name of the limited liability company referred to in these Articles as
the "Company," is ASHTON HOUSTON RESIDENTIAL L.L.C.

                                   ARTICLE TWO

                                    Duration

     The period of duration of the Company is until the close of business on
June 1, 2024, unless earlier dissolved in accordance with the regulations of the
Company as adopted and amended from time to time ("Regulations") or the Act.

                                  ARTICLE THREE

                                     Purpose

     The purpose for which the Company is organized is to transact any or all
lawful business for which limited liability companies may be organized under the
Act.

                                  ARTICLE FOUR

                      Principal Place of Business in Texas

     The address of the Company's principal place of business in Texas is:

                        4800 Sugar Grove Blvd., Suite 150
                              Stafford, Texas 77477

                                  ARTICLE FIVE

                                    Managers

     The Company is to be managed by one or more managers, as that term is used
in the Act. The number, and the classes and qualifications of, Managers shall be
fixed from time to time by or in accordance with the Regulations. The number of
initial managers of the Company is three (3). The initial managers shall serve
until the first annual meeting of members of the Company or until any such
manager's successor is duly elected. The initial managers are:



Name:             Address:
- -----             --------
               
Bruce Freeman     4800 Sugar Grove Blvd., Suite 150
                  Stafford, Texas 77477

Harry Rosenbaum   4800 Sugar Grove Blvd., Suite 150
                  Stafford, Texas 77477

Seymour Joffe     4800 Sugar Grove Blvd., Suite 150
                  Stafford, Texas 77477


                                   ARTICLE SIX

                     Registered Office and Registered Agent

     The post office address of the Company's initial registered office is:

                     12801 N. Central Expressway, Suite 370
                               Dallas, Texas 75243

     The name of the Company's initial registered agent in Texas at such address
is:

                                Timothy D. Hagen

                                  ARTICLE SEVEN

                             Non-Unanimous Consents

     Any action required by the Act or the Texas Business Corporation Act to be
taken at any annual or special meeting of members, or any action which may be
taken at any annual or special meeting of members, may be taken without a
meeting, without prior notice, and without a vote, if a consent or consents in
writing, setting forth the action so taken, shall be signed by the holder or
holders of membership interests having not less than the minimum number of votes


                                       2

that would be necessary to take such action at a meeting at which the holders
of all membership interests entitled to vote on the action were present and
voted. Prompt notice of the taking of any action by the members without a
meeting by less than unanimous written consent shall be given to those members
who did not consent in writing to the action.

                                  ARTICLE EIGHT

                              No Preemptive Rights

     No member shall have a preemptive right to acquire any membership interests
or securities of any class that may at any time be issued, sold or offered for
sale by the Company.

                                  ARTICLE NINE

                              No Cumulative Voting

     The right of members to cumulative voting in the election of managers is
expressly prohibited.

                                   ARTICLE TEN

                                Manager Liability

     A manager of the Company shall not be liable to the Company or its members
for monetary damages for an act or omission in the manager's capacity as a
manager, except that this Article Ten does not eliminate or limit the liability
of a manager to the extent the manager is found liable for (i) a breach of the
manager's duly of loyalty to the Company or its members; (ii) an act or omission
not in good faith that constitutes a breach of duty of the manager of the
Company or an act or omission that involves intentional misconduct or a knowing
violation of the law; (iii) a transaction from which the manager received an
improper benefit, whether or not the benefit resulted from an action taken
within the scope of the manager's office; or (iv) an act or omission for which
the liability of a manager is expressly provided by an applicable statute. Any
repeal or amendment of this Article by the members of the Company shall be
prospective only and shall not adversely affect any limitation on the liability
of a manager of the Company existing at the time of such repeal or amendment. In
addition to the circumstances in which the manager of the Company is not liable
as set forth in the preceding sentences, the manager shall not be liable to the
fullest extent permitted by any provision of the statutes of Texas hereafter
enacted that further limits the liability of a manager or of a director of a
corporation.


                                       3

                                 ARTICLE ELEVEN

                                    Organizer

     The name and address of the organizer of the Company is:



Name:              Address:
- -----              --------
                
Timothy D. Hagen   12801 North Central Expressway, Suite 370
                   Dallas, Texas 75243


     IN WITNESS WHEREOF, these Articles of Organization have been executed on
May 24, 1994, by the undersigned.

                                        SOLE ORGANIZER


                                        /s/ Timothy D. Hagen
                                        ----------------------------------------
                                        Timothy D. Hagen


                                       4

EX-3.1(Q)

                                                                  Exhibit 3.1(q)

                                                                         (STAMP)

                            ARTICLES OF ORGANIZATION

                                       OF

                        ASHTON HOUSTON DEVELOPMENT L.L.C.

     The undersigned, a natural person of the age of 18 years or older, acting
as the sole organizer, adopts the following Articles of Organization for a
limited liability company under the Texas Limited Liability Company Act ("Act"):

                                   ARTICLE ONE

                                      Name

     The name of the limited liability company referred to in these Articles as
the "Company," is ASHTON HOUSTON DEVELOPMENT L.L.C.

                                   ARTICLE TWO

                                    Duration

     The period of duration of the Company is until the close of business on
June 1, 2026, unless earlier dissolved in accordance with the regulations of the
Company as adopted and amended from time to time ("Regulations") or the Act.

                                  ARTICLE THREE

                                     Purpose

     The purpose for which the Company is organized is to transact any or all
lawful business for which limited liability companies may be organized under the
Act.

                                  ARTICLE FOUR

                      Principal Place of Business in Texas

     The address of the Company's principal place of business in Texas is:

                        8313 Southwest Freeway, Suite 101
                              Houston, Texas 77074

                                  ARTICLE FIVE

                                    Managers

     The Company is to be managed by one or more managers, as that term is used
in the Act. The number, and the classes and qualifications of, Managers shall be
fixed from time to time by or in accordance with the Regulations. The number of
initial managers of the Company is three (3). The initial managers shall serve
until the first annual meeting of members of the Company or until any such
manager's successor is duly elected. The initial managers are:



Name:             Address:
- -----             --------
               
Bruce Freeman     8313 Southwest Freeway, Suite 101
                  Houston, Texas 77074

Harry Rosenbaum   8313 Southwest Freeway, Suite 101
                  Houston, Texas 77074

Seymour Joffe     8313 Southwest Freeway, Suite 101
                  Houston, Texas 77074


                                   ARTICLE SIX

                     Registered Office and Registered Agent

     The post office address of the Company's initial registered office is:

                     12801 N. Central Expressway, Suite 370
                               Dallas, Texas 75243

     The name of the Company's initial registered agent in Texas at such address
is:

                                Timothy D. Hagen

                                  ARTICLE SEVEN

                             Non-Unanimous Consents

     Any action required by the Act or the Texas Business Corporation Act to be
taken at any annual or special meeting of members, or any action which may be
taken at any annual or special meeting of members, may be taken without a
meeting, without prior notice, and without a vote, if a consent or consents in
writing, setting forth the action so taken, shall be signed by the holder or
holders of membership interests having not less than the minimum number of votes


                                       2

that would be necessary to take such action at a meeting at which the holders of
all membership interests entitled to vote on the action were present and voted.
Prompt notice of the taking of any action by the members without a meeting by
less than unanimous written consent shall be given to those members who did not
consent in writing to the action.

                                  ARTICLE EIGHT

                              No Preemptive Rights

     No member shall have a preemptive right to acquire any membership interests
or securities of any class that may at any time be issued, sold or offered for
sale by the Company.

                                  ARTICLE NINE

                              No Cumulative Voting

     The right of members to cumulative voting in the election of managers is
expressly prohibited.

                                   ARTICLE TEN

                                Manager Liability

     A manager of the Company shall not be liable to the Company or its members
for monetary damages for an act or omission in the manager's capacity as a
manager, except that this Article Ten does not eliminate or limit the liability
of a manager to the extent the manager is found liable for (i) a breach of the
manager's duty of loyalty to the Company or its members; (ii) an act or omission
not in good faith that constitutes a breach of duty of the manager of the
Company or an act or omission that involves intentional misconduct or a knowing
violation of the law; (iii) a transaction from which the manager received an
improper benefit, whether or not the benefit resulted from an action taken
within the scope of the manager's office; or (iv) an act or omission for which
the liability of a manager is expressly provided by an applicable statute. Any
repeal or amendment of this Article by the members of the Company shall be
prospective only and shall not adversely affect any limitation on the liability
of a manager of the Company existing at the time of such repeal or amendment. In
addition to the circumstances in which the manager of the Company is not liable
as set forth in the preceding sentences, the manager shall not be liable to the
fullest extent permitted by any provision of the statutes of Texas hereafter
enacted that further limits the liability of a manager or of a director of a
corporation.


                                       3

                                 ARTICLE ELEVEN

                                    Organizer

     The name and address of the organizer of the Company is:



Name:              Address:
- -----              --------
                
Timothy D. Hagen   12801 North Central Expressway, Suite 370
                   Dallas, Texas 75243


     IN WITNESS WHEREOF, these Articles of Organization have been executed on
May 14, 1996, by the undersigned.

                                        SOLE ORGANIZER


                                        /s/ Timothy D. Hagen
                                        ----------------------------------------
                                        Timothy D. Hagen


                                       4

EX-3.1(R)

                                                                  Exhibit 3.1(r)

                                                                         (STAMP)

                            ARTICLES OF INCORPORATION
                                       OF
                             ASHTON BROOKSTONE, INC.

     The undersigned corporation, acting as incorporator of a corporation under
the Texas Business Corporation Act (the "Act"), does hereby adopt the following
articles of incorporation for such corporation:

     1. NAME. The name of the corporation is ASHTON BROOKSTONE, INC.

     2. DURATION. The period of its duration is perpetual.

     3. PURPOSE. The purpose for which the corporation is organized is the
transaction of any or all lawful business for which corporations may be
incorporated under the Act and the exercise of any and all powers which are or
may be permitted by law, and to do any and all things hereinbefore set forth to
the same extent as a natural person might or could do.

     4. REGISTERED OFFICE AND AGENT. The post office address of its initial
registered office is 14643 Dallas Parkway, Suite 570, Dallas, Texas 75254, and
the name of its initial registered agent at such address is Tim Hagen.

     5. COMMENCEMENT OF BUSINESS. The corporation will not commence business
until it has received for the issuance of its shares consideration of the value
of at least One Thousand Dollars ($1,000.00), consisting of money, labor done or
property actually received.

     6. SHARES. The aggregate number of shares which the corporation shall have
authority to issue is one hundred thousand (100,000) Common Shares of the par
value of Ten Cents ($.10) each.

     7. PRE-EMPTIVE RIGHTS. No shareholder shall have any pre-emptive right to
purchase shares of the corporation.

     8. WRITTEN CONSENT BY SHAREHOLDERS. Any action which must be taken at any
annual or special meeting of shareholders, or any action which may be taken at
any annual or special meeting of shareholders, may be taken without a meeting,
without notice and without a vote, if a consent or consents in writing, setting
forth the action taken, is signed by the holder or holders of shares having not
less than the minimum number of votes that would be necessary to take such
action at a meeting at which the holders of all shares entitled to vote on the
action were present and voted.

     9. NON-CUMULATIVE VOTING. Cumulative voting is expressly prohibited.
Directors shall be elected by majority vote of the shares represented at any
meeting at which a quorum is present.

     10. BYLAWS. The power to alter, amend or repeal the Bylaws, or to adopt new
Bylaws, shall be vested in either the shareholders or the Board of Directors of
the corporation.

     11. INITIAL DIRECTORS. The number of directors constituting the initial
Board of Directors is three; thereafter, the number of directors of the
corporation shall be fixed in accordance with the Bylaws. The name and address
of the person or persons who are to serve as directors until the first annual
meeting of the shareholders or until their successors are elected and qualified
are:



Name              Address
- ----              -------
               
Harry Rosenbaum   13800 Montfort Drive, Suite 100
                  Dallas, Texas 75240

Bruce Freeman     13800 Montfort Drive, Suite 100
                  Dallas, Texas 75240

Seymour Joffe     13800 Montfort Drive, Suite 100
                  Dallas, Texas 75240


     12. LIMITATION OF LIABILITY OF DIRECTORS. Directors of the corporation
shall not be liable to the corporation or its shareholders for monetary damages
for an act or omission in the director's capacity as a director, except that
this provision shall not eliminate or limit the liability of a director for:

          (1) a breach of a director's duty of loyalty to the corporation or its
     shareholders;

          (2) an act or omission not in good faith that constitutes a breach of
     the director's duty to the Corporation or an act or omission that involves
     intentional misconduct or a knowing violation of the law;

          (3) a transaction from which a director received an improper benefit,
     whether or not the benefit resulted from an action taken within the scope
     of the director's office;

          (4) an act or omission for which the liability of a director is
     expressly provided by statute; or

          (5) an act related to an unlawful stock repurchase or payment of a
     dividend.


                                        2

     13. INCORPORATOR. The name and address of the incorporator is:

                          
Hagen & Parsons,             14643 Dallas Parkway, Suite 570
A PROFESSIONAL CORPORATION   Dallas, Texas 75254



     IN WITNESS WHEREOF, I have hereunto set my hand April 10, 2002.

                                        HAGEN & PARSONS,
                                        A PROFESSIONAL CORPORATION


                                        By: /s/ Tim Hagen
                                            ------------------------------------
                                            Tim Hagen, President


                                        3

EX-3.1(S)

                                                                  Exhibit 3.1(s)

                                                                         (STAMP)

                            ARTICLES OF INCORPORATION

                                       OF

                            BLACK AMBER FLORIDA, INC.

     The undersigned subscriber to these Articles of Incorporation, a natural
person competent to contract, hereby forms a corporation under the laws of the
State of Florida.

                                 ARTICLE I. NAME

     The name of the corporation shall be Black Amber Florida, Inc.

                         ARTICLE II. NATURE OF BUSINESS

     This corporation may engage or transact in any or all lawful activities or
business permitted under the laws of the United States, the State of Florida or
any other state, country, territory or nation.

                           ARTICLE III. CAPITAL STOCK

     The total number of shares of all classes which the corporation shall be
authorized to issue is Ten Thousand (10,000) shares of common stock, $.01 par
value per share.

                               ARTICLE IV. ADDRESS

     The principal address of the corporation is c/o Edwards & Angell, LLP, 250
Royal Palm Way, Suite 300, Palm Beach, Florida 33480 and the mailing address is
the same.

     The street address of the initial registered office of the corporation is
250 Royal Palm Way, Suite 300, Palm Beach, Florida 33480 and the name of the
initial registered agent of the corporation at that address is Angell Corporate
Services, Inc.

                          ARTICLE V. TERM OF EXISTENCE

     This corporation is to exist perpetually.

                              ARTICLE VI. DIRECTORS

     This corporation shall have one (1) director initially. The name and street
address of the initial member of the Board of Directors are:

                                  Russell Allan
                            c/o Edwards & Angell, LLP
                          250 Royal Palm Way, Suite 300
                              Palm Beach, FL 33480

                          ARTICLE VII. INDEMNIFICATION

     A. The Corporation shall to the fullest extent permitted by law indemnify
any person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, "whether civil,
criminal, administrative or investigative, by reason of the fact that he or she
is or was a director, officer, employee or agent of the Corporation, or is or
was serving at the request of the Corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise.

     B. The Corporation may pay in advance any expenses (including attorneys'
fees) that may become subject to indemnification under paragraph A above if the
person receiving the advance payment of expenses undertakes in writing to repay
such payment if it is ultimately determined that such person is not entitled to
Indemnification by the Corporation under paragraph A above.

     C. The indemnification provided by paragraph A above shall not be exclusive
of any other rights to which a person may be entitled by Law, bylaw, agreement,
vote or consent of stockholders or directors, or otherwise.

     D. The indemnification and advance payment provided by paragraphs A and B
above shall continue as to a person who has ceased to hold a position named in
paragraph A above and shall inure to such person's heirs, executors, and
administrators.

     E. The Corporation may purchase and maintain insurance on behalf of any
person who is or was a director, officer, employee or agent of the Corporation,
or who serves or served at the Corporation's request as a director, officer,
employee, agent, partner, or trustee of another corporation or of a partnership,
joint venture, trust, or other enterprise, against any liability asserted
against such person and incurred by such person in any such capacity, or arising
out of such person's status as such, whether or not the Corporation would have
power to indemnify such person against such liability under paragraph A above.

     F. If any provision in this Article shall be invalid, illegal, or
unenforceable, the validity, legality, and unenforceability of the remaining
provisions shall not in any way be affected or impaired thereby, and, to the
extent possible, effect shall be given to the intent manifested by the provision
held invalid, illegal, or unenforceable.

           ARTICLE VIII. CERTAIN LIMITATIONS ON LIABILITY OF DIRECTORS

     Except to the extent that the Business Corporation Act of the State of
Florida prohibits the elimination or limitation of liability of directors for
breach of the duties of a director, no director of the Corporation shall have
any personal liability for monetary damages for any statement, vote, decision,
or failure to act, regarding corporate management or policy. No amendment to or
repeal of this provision shall apply to or have any effect on the liability or
alleged liability of any director of the Corporation for or with respect to any
acts or omissions of such director occurring prior to such amendment.


                                       -2-

                            ARTICLE IX. INCORPORATOR

     The name and address of the incorporator to these Articles of Incorporation
is:

                            Michael E. Botos, Esquire
                            c/o Edwards & Angell, LLP
                         250 Royal Palm Way, Suite. 300
                            Palm Beach, Florida 33480

                    ARTICLE X. SHAREHOLDER QUORUM AND VOTING

     The shareholders may adapt or amend a bylaw that fixes a greater quorum or
voting requirement for shareholders than is required by the Florida Business
Corporation Act, provided, however, that the adoption or amendment of a bylaw
that adds, changes, or deletes a greater quorum or voting requirement for
shareholders must meet the same quorum requirement and be adopted by the same
vote and voting groups required to take action under the quorum and voting
requirement then in effect or proposed to be adopted, whichever is greater.

                           ARTICLE XI. EFFECTIVE DATE

     The Effective Date of these Articles of Incorporation shall be August 17,
2000.

     IN WITNESS WHEREOF, the undersigned has hereunto set her hand and seal on
this 16th day of August, 2000.


                                        /s/ Michael E. Botos
                                        ----------------------------------------
                                        Michael E. Botos, Incorporator


                                       -3-

EX-3.1(T)

                                                                  Exhibit 3.1(t)

                                                                         (STAMP)

                            ARTICLES OF ORGANIZATION
                                       OF
                               ASHTON BURDEN, LLC

                                   ARTICLE ONE

                                Name and Address

     The name of the limited liability company referred to in these Articles as
the "Company," is Ashton Burden, LLC, having a street and mailing address of
341 N. Maitland Avenue, Suite 100, Maitland, Florida 32751.

                                   ARTICLE TWO

                                    Duration

     The period of duration of the Company is until the close of business on
February 1, 2037, unless earlier dissolved in accordance with the regulations of
the Company as adopted and amended from time to time ("Regulations") or the Act.

                                  ARTICLE THREE

                                     Purpose

     The purpose for which the Company is organized is to transact any or all
lawful business for which limited liability companies may be organized under the
Act.

                                  ARTICLE FOUR

                           Right to Continue Business

     The remaining members of the Company have the right to continue the
business of the Company on the death, retirement, resignation, expulsion,
bankruptcy or dissolution of a member or the occurrence of any other event which
terminates the continued membership of a member of the Company.

                                  ARTICLE FIVE

                                     Managers

     The Company is to be managed by one or more managers. The number, and the
classes and qualifications, of Managers shall be fixed from time to time by or
in accordance with the Regulations. The number of initial managers of the
Company is three (3). The initial managers shall serve until the first annual
meeting of members of the Company or until any such manager's successor is duly
elected. The initial managers are:

                                                                         (STAMP)



Name              Address
- ----              -------
               
Bruce Freeman     3751 Victoria Park Avenue
                  Toronto, Ontario M1W 3Z4 Canada
Harry Rosenbaum   3751 Victoria Park Avenue
                  Toronto, Ontario M1W 3Z4 Canada
Seymour Joffe     3751 Victoria Park Avenue
                  Toronto, Ontario M1W 3Z4 Canada


                                   ARTICLE SIX

                     Registered Office and Registered Agent

     The street address and mailing address of the Company's initial registered
Office is:

                        255 S. Orange Avenue, 17th Floor
                             Orlando, Florida 32801

     The name of the Company's initial registered agent in Florida at such
address is:

                       American Information Services, Inc.

                                  ARTICLE SEVEN

                             Non-Unanimous Consents

     Any action required by to be taken at any annual or special meeting of
members, or any action which may be taken at any annual or special meeting of
members, may be takes without a meeting, without prior notice and without a
vote, if a consent or consents in writing, setting forth the action so taken,
shall be signed by the holder or holders of membership interests having not less
than the minimum number of votes that would be necessary to take such action at
a meeting at which the holders of all membership interests entitled to vote on
the action-were present and voted. Prompt notice of the taking of any action by
the members without a meeting by less than unanimous written consent shall be
given to those members who did not consent in writing to the action.

                                  ARTICLE EIGHT

                              No Preemptive Rights

     No member shall have a preemptive right to acquire any membership interests
of securities of any class, that may at any time be issued, sold or offered for
sale by the Company.


                                        2

                                                                         (STAMP)

                                  ARTICLE NINE

                              No Cumulative Voting

     The right of members to cumulative voting in the election of managers is
expressly prohibited.

                                   ARTICLE TEN

                               Manager Liability

     A manager of the Company shall not be liable to the Company or its members
for monetary damages for an act or omission in the manager's capacity as a
manager, except that this Article does not eliminate or limit the liability of a
manager to the extent the manager is found liable for (i) a breach of the
manager's duty of loyalty to the Company or its members; (ii) an act or omission
not in good faith that constitutes a breach of duty of the manager of the
Company or an act or omission that involves intentional misconduct or a knowing
violation-of the law; (iii) a transaction from which the manager received an
improper benefit, whether or not the benefit resulted from an action taken
within the scope of the manager's office; or (iv) an act or omission for which
the liability of a manager is expressly provided by an applicable statute. Any
repeal or amendment of this Article by the members of the Company shall be
prospective only and shall not adversely affect any limitation on the liability
of a manager of the Company existing at the time of such repeal or amendment. In
addition to the circumstances in which the manager of the Company is not liable
as set forth in the preceding sentences, the manager shall not be liable to the
fullest extent permitted by any provision of the statutes of Florida hereafter
enacted that further limits the liability of a manager or of a director of a
corporation.

                                 ARTICLE ELEVEN

                                    Organizer

     The name and address of the organizer of the Company is:



Name                 Address
- ----                 -------
                  
Robert M. Poppell    255 S. Orange Avenue, 17th Floor
                     Orlando, Florida 32801



                                        3

                                                                         (STAMP)

     IN WITNESS WHEREOF, these Articles of Organization have been executed on
June 9, 2004, by the undersigned.

                                        SOLE ORGANIZER


                                        /s/ Robert M. Poppell
                                        ----------------------------------------
                                        Robert M. Poppell

STATE OF FLORIDA   Section
                   Section
COUNTY OF ORANGE   Section

     This instrument was acknowledged before me on June 9, 2004, by Robert M.
Poppell, as organizer of ASHTON BURDEN, LLC, who is personally known to me


                                        /s/ Christina M. Lee
                                        ----------------------------------------
                                        Notary Public, State of Florida

                                        Christina M. Lee
                                        ----------------------------------------
                                        (Typed Name of Notary)

My Commission Expires:

                                                                          (SEAL)


                                        4

EX-3.1(U)

                                                                  Exhibit 3.1(u)

                                                                         (STAMP)

                      CERTIFICATE OF LIMITED PARTNERSHIP OF
                    ASHTON WOODS ORLANDO LIMITED PARTNERSHIP

     The undersigned general partner of Ashton Woods Orlando Limited
Partnership, a Florida limited partnership (the "Partnership"), desiring to
adopt a certificate of limited partnership of the Partnership (the
"Certificate") pursuant to Section 620.108 of the Florida Revised Uniform
Limited Partnership Act, hereby states the following:

          1. The name of the Partnership is Ashton Woods Orlando Limited
Partnership.

          2. The mailing and business address of the Partnership is c/o Michael
E. Botos, Steel Hector & Davis LLP, 1900 Phillips Point West, 777 South Flagler
Drive, West Palm Beach, FL 33401.

          3. The name and address of the agent for service of process on the
Partnership is Michael E. Botos, Steel Hector & Davis LLP, 1900 Phillips Point
West, 777 South Flagler Drive, West Palm Beach, FL 33401.

          4. The name and business address of the general partner of the
Partnership is Ashton Woods Florida LLC, c/o Michael E. Botos, Steel Hector &
Davis LLP, 1900 Phillips Point West, 777 South Flagler Drive, West Palm Beach,
FL 33401.

          5. The latest date upon which the Partnership shall dissolve is
December 31, 2019.

          6. This Certificate shall be effective upon the date of filing with
the Secretary of State of Florida.

     The execution of this Certificate by the undersigned general partner
constitutes an affirmation under the penalties of perjury that the facts stated
herein are true.

     IN WITNESS WHEREOF, this Certificate has been executed by the General
Partner of the Partnership this 11th day of December, 1997.

                                        Ashton Woods Florida LLC, as General
                                        Partner


                                        By: /s/ Harry Rosenbaum
                                            ------------------------------------
                                            Harry Rosenbaum

EX-3.1(V)

                                                                  Exhibit 3.1(v)

                                                                         (STAMP)

                            CERTIFICATE OF AMENDMENT
                                       TO
                       CERTIFICATE OF LIMITED PARTNERSHIP
                                       OF
                    ASHTON WOODS ORLANDO LIMITED PARTNERSHIP

     1. The name of the partnership is Ashton Wood Orlando Limited Partnership
(the "Partnership").

     2. The Certificate of Limited Partnership of the Partnership was filed on
December 29, 1997.

     3. The Certificate of Limited Partnership is amended to reflect the
admission of Ashton Woods Lakeside L.L.C. as a General Partner of the
Partnership and the withdrawal of Ashton Woods Florida L.L.C. as a General
Partner of the Partnership.

     4. The partners of the Partnership have elected to continue the business of
the Partnership under Section 620.157, Florida Statutes.

     5. This Certificate of Amendment shall be effective upon the date of filing
with the Secretary of State of Florida.

     IN WITNESS WHEREOF, this Certificate of Amendment has been executed by the
General Partner of the Partnership this 12th day of November, 1998.

                                       Ashton Woods Lakeside, L.L.C., as General
                                       Partner


                                       By: /s/ Harry Rosenbaum
                                           -------------------------------------
                                       Name: Harry Rosenbaum
                                       Title: Manager

EX-3.1(W)

                                                                  Exhibit 3.1(w)

                                                                         (STAMP)

                      CERTIFICATE OF LIMITED PARTNERSHIP OF
                      LAKE LOUISE COVES LIMITED PARTNERSHIP

     The undersigned general partner of Lake Louise Coves Limited Partnership, a
Florida limited partnership (the "Partnership"), desiring to adopt a certificate
of limited partnership of the Partnership (the "Certificate") pursuant to
Section 620.108 of the Florida Revised Uniform Limited Partnership Act, hereby
states the following:

          1. The name of the Partnership is Lake Louise Coves Limited
Partnership.

          2. The mailing and business address of the Partnership is c/o Michael
E. Botos, Steel Hector & Davis LLP, 1900 Phillips Point West, 777 South Flagler
Drive, West Palm Beach, FL 33401.

          3. The name and address of the agent for service of process on the
Partnership is Michael E. Botos, Steel Hector & Davis LLP, 1900 Phillips Point
West, 777 South Flagler Drive, West Palm Beach, FL 33401.

          4. The name and business address of the general partner of the
Partnership is Ashton Woods Florida L.L.C., c/o Michael E. Botos, Steel Hector &
Davis LLP, 1900 Phillips Point West, 777 South Flagler Drive, West Palm Beach,
FL 33401.

          5. The latest date upon which the Partnership shall dissolve is
December 31, 2019.

          6. This Certificate shall be effective upon the date of filing with
the Secretary of State of Florida.

     The execution of this Certificate by the undersigned general partner
constitutes an affirmation under the penalties of perjury that the facts stated
herein are true.

     IN WITNESS WHEREOF, this Certificate has been executed by the General
Partner of the Partnership this 27th day of March, 1998.

                                        Ashton Woods Florida L.L.C., as General
                                        Partner


                                        By: /s/ Harry Rosenbaum
                                            ------------------------------------
                                            Harry Rosenbaum, Manager

EX-3.1(X)

                                                                  Exhibit 3.1(x)

                                                                         (STAMP)

                            CERTIFICATE OF AMENDMENT
                                       TO
                       CERTIFICATE OF LIMITED PARTNERSHIP
                                       OF
                      LAKE LOUISE COVES LIMITED PARTNERSHIP

     1. The name of the partnership is Lake Louise Coves Limited Partnership
(the "Partnership").

     2. The Certificate of Limited Partnership of the Partnership was filed on
March 30, 1998.

     3. The Certificate of Limited Partnership is amended to change the name of
the Partnership to Isleworth West Limited Partnership.

     4. This Certificate of Amendment shall be effective upon the date of filing
with the Secretary of State of Florida.

     IN WITNESS WHEREOF, this Certificate of Amendment has been executed by the
General Partner of the Partnership this 6th day of May, 1998.

                                        Ashton Woods Florida, L.L.C., as General
                                        Partner


                                        By: /s/ Bruce Freeman
                                            ------------------------------------
                                            Bruce Freeman, Manager

EX-3.1(Y)

                                                                  Exhibit 3.1(y)

                            ARTICLES OF ORGANIZATION
                      OF ASHTON ATLANTA RESIDENTIAL, L.L.C.

                                Article I. Name

     The name of this Limited Liability Company is "ASHTON ATLANTA RESIDENTIAL,
L.L.C." It is referred to in these Articles of Organization as the "Company." It
is organized under the Georgia Limited Liability Company Act, O.C.G.A. Section
14-11-100 et seq.

                             Article II. Management

     Management of the Company is vested in one or more managers, selected in
accordance with the operating agreement of the Company agreed to by the members
of the Company and the Georgia Limited Liability Company Act.

     IN WITNESS WHEREOF, the Organizer of the Company has executed these
Articles of Organization on July 7, 1994 at Atlanta, Georgia.


                                        /s/ David N. Dorough, Jr.
                                        ----------------------------------------
                                        David N. Dorough, Jr. Organizer

DODSON, FELDMAN & DOROUGH
6000 Lake Forrest Drive, N.W.
Suite 300
Atlanta, Georgia 30328

                                                                         (STAMP)

EX-3.2(A)

                                                                  Exhibit 3.2(a)

                              AMENDED AND RESTATED

                                  REGULATIONS

                                       OF

                             ASHTON WOODS USA L.L.C.

                       A NEVADA LIMITED LIABILITY COMPANY

                          Dated as of September 1, 2005

                        AMENDED AND RESTATED REGULATIONS
                                       OF
                             ASHTON WOODS USA L.L.C.
                       A NEVADA LIMITED LIABILITY COMPANY

                                                                          
ARTICLE I. DEFINITIONS...................................................     1
   1.01    Definitions...................................................     1
   1.02    Construction..................................................     4

ARTICLE II. ORGANIZATION.................................................     4
   2.01    Formation.....................................................     4
   2.02    Name..........................................................     4
   2.03    Registered Office; Registered Agent; Principal Office in the
           United States; Other Offices..................................     4
   2.04    Purposes......................................................     4
   2.05    Foreign Qualification.........................................     4
   2.06    Term..........................................................     4
   2.07    Mergers and Exchanges.........................................     5
   2.08    No State-Law Partnership......................................     5

ARTICLE III. MEMBERSHIP; DISPOSITIONS OF INTERESTS.......................     5
   3.01    Initial Members...............................................     5
   3.02    Representations and Warranties................................     5
   3.03    Restrictions on the Disposition of an Interest................     5
   3.04    Additional Members............................................     7
   3.05    Interests in a Member.........................................     8
   3.06    Information...................................................     8
   3.07    Liability to Third Parties....................................     8
   3.08    Withdrawal....................................................     8
   3.09    Lack of Authority.............................................     9

ARTICLE IV. CAPITAL CONTRIBUTIONS........................................     9
   4.01    Contributions.................................................     9
   4.02    Failure to Contribute.........................................     9
   4.03    Return of Contributions.......................................    11
   4.04    Advances by Members...........................................    11
   4.05    Capital Accounts..............................................    11




                                       -i-

                                TABLE OF CONTENTS
                                   (CONTINUED)



                                                                            PAGE
                                                                            ----
                                                                         
ARTICLE V. ALLOCATIONS AND DISTRIBUTIONS.................................    12
   5.01    Allocations...................................................    12
   5.02    Distributions.................................................    12

ARTICLE VI. BOARD OF DIRECTORS...........................................    13
   6.01    Management....................................................    13
   6.02    Number; Election; Voting......................................    13
   6.03    Vacancies; Removal............................................    13
   6.04    Actions by Board of Directors; Committees; Delegation of
           Authority and Duties..........................................    14
   6.05    Vacancies; Removal; Resignation...............................    14
   6.06    Meetings......................................................    14
   6.07    Action by Written Consent or Telephone Conference.............    15
   6.08    Compensation..................................................    15
   6.09    Conflicts of Interest.........................................    15

ARTICLE VII. OFFICERS....................................................    16
   7.01    General Provisions............................................    16
   7.02    President.....................................................    16
   7.03    Treasurer.....................................................    16
   7.04    Secretary.....................................................    16
   7.05    Assistant Officers............................................    16
   7.06    Vice Presidents...............................................    17

ARTICLE VIII. MEETINGS OF MEMBERS........................................    17
   8.01    Meetings......................................................    17
   8.02    Voting List...................................................    18
   8.03    Proxies.......................................................    18
   8.04    Conduct of Meetings...........................................    18
   8.05    Action by Written Consent or Telephone Conference.............    19

ARTICLE IX. INDEMNIFICATION..............................................    20
   9.01    Right to Indemnification......................................    20
   9.02    Advance Payment...............................................    20
   9.03    Indemnification of Officers, Employees, and Agents............    20



                                      -ii-

                                TABLE OF CONTENTS
                                   (CONTINUED)



                                                                            PAGE
                                                                            ----
                                                                         
   9.04    Appearance as a Witness.......................................    21
   9.05    Nonexclusivity of Rights......................................    21
   9.06    Insurance.....................................................    21
   9.07    Savings Clause................................................    21

ARTICLE X. TAXES.........................................................    21
   10.01   Tax Returns...................................................    21
   10.02   Tax Elections.................................................    21
   10.03   Tax Matters Partner...........................................    22

ARTICLE XI. BOOKS, RECORDS, REPORTS, AND BANK ACCOUNTS...................    22
   11.01   Maintenance of Books..........................................    22
   11.02   Reports.......................................................    23
   11.03   Accounts......................................................    23

ARTICLE XII. BANKRUPTCY OF A MEMBER......................................    23

ARTICLE XIII. DISSOLUTION, LIQUIDATION, AND TERMINATION..................    24
   13.01   Dissolution...................................................    24
   13.02   Liquidation and Termination...................................    24
   13.03   Deficit Capital Accounts......................................    26
   13.04   Articles of Dissolution.......................................    26

ARTICLE XIV. GENERAL PROVISIONS..........................................    26
   14.01   Offset........................................................    26
   14.02   Notices.......................................................    26
   14.03   Entire Agreement; Supersedure.................................    27
   14.04   Effect of Waiver or Consent...................................    27
   14.05   Amendment or Modification.....................................    27
   14.06   Binding Effect................................................    27
   14.07   Governing Law; Severability...................................    27
   14.08   Further Assurances............................................    27
   14.09   Waiver of Certain Rights......................................    28
   14.10   Indemnification...............................................    28
   14.11   Notice to Members of Provisions of this Agreement.............    28
   14.12   Counterparts..................................................    28
   14.13   Arbitration...................................................    28



                                      -iii-

                        AMENDED AND RESTATED REGULATIONS
                                       OF
                             ASHTON WOODS USA L.L.C.
                       A NEVADA LIMITED LIABILITY COMPANY

     These AMENDED AND RESTATED REGULATIONS OF ASHTON WOODS USA L.L.C. (these
"Regulations"), dated as of September 1, 2005, are (a) executed and agreed to,
for good and valuable consideration, by the Members and Special Members (as
defined below) and (b) replace and supersede any previous regulations of the
Company (as defined below), including but not limited to the Regulations of
Ashton Woods USA L.L.C., dated as of February 6, 1997, as amended by the First
Amendment to Regulations of Ashton Woods USA L.L.C., dated as of May 31, 1999,
and the Second Amendment to Regulations of Ashton Woods USA L.L.C., dated as of
May 31, 1999.

                                   ARTICLE I.
                                   DEFINITIONS

     1.01 DEFINITIONS. As used in these Regulations, the following terms have
the following meanings:

     "Act" means the Nevada Limited Liability Company Act, Nevada Revised
Statutes ("NRS") Chapter 86, and any successor statute, as amended from time to
time.

     "Amount Due to Withdrawing Member" has the meaning given that term in
Section 3.08.

     "Articles" has the meaning given that term in Section 2.01.

     "Bankrupt Member" means (except to the extent a Required Interest consents
otherwise) any Member or Special Member (a) that (i) makes a general assignment
for the benefit of creditors; (ii) files a voluntary bankruptcy petition; (iii)
becomes the subject of an order for relief or is declared insolvent in any
federal or state bankruptcy or insolvency proceedings; (iv) files a petition or
answer seeking for the Member or the Special Member a reorganization,
arrangement, composition, readjustment, liquidation, dissolution, or similar
relief under any law; (v) files an answer or other pleading admitting or failing
to contest the material allegations of a petition filed against the Member or
the Special Member in a proceeding of the type described in subclauses (i)
through (iv) of this clause (a); or (vi) seeks, consents to, or acquiesces in
the appointment of a trustee, receiver, or liquidator of the Member or the
Special Member or of all or any substantial part of the Member's or Special
Member's properties; or (b) against which, a proceeding seeking reorganization,
arrangement, composition, readjustment, liquidation, dissolution, or similar
relief under any law has been commenced and 120 days have expired without
dismissal thereof or with respect to which, without the Member's or the Special
Member's consent or acquiescence, a trustee, receiver, or liquidator of the
Member or the Special Member or of all or any substantial part of the Member's
or the Special Member's properties has been appointed and 90 days have expired
without the appointment's having been vacated or stayed, or 90 days have expired
after the date of expiration of a stay, if the appointment has not previously
been vacated.

     "Board of Directors" has the meaning given that term in Section 6.01.

     "Business Day" means any day other than a Saturday, a Sunday, or a holiday
on which national banking associations in the State of Nevada are closed.

     "Capital Contribution" means any contribution by a Member or a Special
Member to the capital of the Company.

     "Code" means the Internal Revenue Code of 1986 and any successor statute,
as amended from time to time

     "Company" means Ashton Woods USA L.L.C., a Nevada limited liability
company.

     "Default Interest Rate" means a rate per annum equal to the lesser of (a)
four percent (4%) plus a varying rate per annum that is equal to the interest
rate published as the prime rate by The Bank of Nova Scotia from time to time,
with adjustments in that varying rate to be made on the same date as any change
in that rate, and (b) the maximum rate permitted by applicable law.

     "Designated Entities" means Isleworth West Limited Partnership, a Florida
limited partnership; Ashton Woods Florida L.L.C., a Nevada limited liability
company; Butler Coves Limited Partnership, a Florida limited partnership; Ashton
Woods Orlando Limited Partnership, a Florida limited partnership; Ashton Woods
Orlando II Limited Partnership, a Nevada limited partnership; Ashton Woods
Lakeside L.L.C., a Florida limited liability company; and Ashton Woods Butler
L.L.C., a Nevada limited liability company.

     "Delinquent Member" has the meaning given that term in Section 4.02(a).

     "Director" shall mean any member of the Board of Directors, but does not
include any Person who has ceased to be a member of the Board of Directors.

     "Dispose," "Disposing," or "Disposition" means a sale, assignment,
transfer, exchange, mortgage, pledge, grant of a security interest, or other
disposition or encumbrance (including, without limitation, by operation of law),
or the acts thereof.

     "Excess Contributions" means, as to any Member whose Unrefunded
Contribution Ratio exceeds its Sharing Ratio, the amount by which such Member's
unreturned Capital Contributions exceed the unreturned Capital Contributions by
all of the Members multiplied by such Member's Sharing Ratio.

     "General Interest Rate" means a rate per annum equal to the lesser of (a) a
varying rate per annum that is equal to the interest rate published as the prime
rate by The Bank of Nova Scotia from time to time, with adjustments in that
varying rate to be made on the same date as any change in that rate, and (b) the
maximum rate permitted by applicable law.

     "Lending Member" has the meaning given that term in Section 4.02(a)(ii).


                                        2

     "Member" means any Person executing these Regulations as of the date of
these Regulations as a member or hereafter admitted to the Company as a member
as provided in these Regulations, but does not include any Person who has ceased
to be a member in the Company.

     "Membership Interest" means the share of the economic interests in the
Company, including, without limitation, profits, losses, distributions of
assets, rights to distributions (liquidating or other), allocations and
information, and rights to consent or approve.

     "Permitted Transferee" has the meaning given that term in Section 3.03(b).

     "Person" has the meaning given that term in the Act.

     "Proceeding" has the meaning given that term in Section 9.01.

     "Regulations" has the meaning given that term in the introductory paragraph

     "Required Interest" means one or more Members having among them more than
80% of the Sharing Ratios of all Members.

     "Sharing Ratio" with respect to any Member means the percentage set forth
in the column "Sharing Ratios" on Exhibit A, subject to change as herein
provided. However, in determining any capital contribution, allocation or
distribution with respect to the Designated Entities, "Sharing Ratio" shall mean
the percentage set forth in the column "Designated Entity Sharing Ratio" on
Exhibit A.

     "Special Member" means any Person executing these Regulations as of the
date of these Regulations as a special member or hereafter admitted to the
Company as a special member as provided in these Regulations, but does not
include any Person who has ceased to be a special member in the Company.

     "Special Membership Interest" means the interest of a Special Member in the
Company, which shall be limited to the special allocations of the profits and
cash distributions from the Pinery Joint Venture, a Colorado joint venture, in
the proportions set forth next to each Special Member's name on Exhibit B and
which, except are otherwise expressly provided herein, shall not confer any
rights to participate in the management or operation of the Company.

     "Unreturned Contribution Ratio" means the ratio (expressed as a percentage)
of a Member's unreturned Capital Contributions to the unreturned Capital
Contributions of all of the Members.

     "Withdraw Date" has the meaning given that term in Section 3.08.

     "Withdrawing Member" has the meaning given that term in Section 3.08.

     Other terms defined herein have the meanings so given them.

     1.02 CONSTRUCTION. Whenever the context requires, the gender of all words
used in these Regulations includes the masculine, feminine, and neuter. All
references to Articles and Sections


                                        3

refer to articles and sections of these Regulations, and all references to
Exhibits are to Exhibits attached hereto, each of which is made a part hereof
for all purposes.

                                   ARTICLE II.
                                  ORGANIZATION

     2.01 FORMATION. The Company has been organized as a Nevada limited
liability company by the filing of Articles of Organization (the "Articles")
under and pursuant to the Act and the issuance of a certificate of organization
for the Company by the Secretary of State of Nevada.

     2.02 NAME. The name of the Company is "Ashton Woods USA L.L.C." and all
Company business must be conducted in that name or such other names that comply
with applicable law as the Managers may select from time to time.

     2.03 REGISTERED OFFICE; REGISTERED AGENT; PRINCIPAL OFFICE IN THE UNITED
STATES; OTHER OFFICES. The registered office of the Company required by the Act
to be maintained in the State of Nevada shall be the office of the initial
registered agent named in the Articles or such other office (which need not be a
place of business of the Company) as the Board of Directors may designate from
time to time in the manner provided by law. The registered agent of the Company
in the State of Nevada shall be the initial registered agent named in the
Articles or such other Person or Persons as the Board of Directors may designate
from time to time in the manner provided by law. The principal office of the
Company in the United States shall be at such place as the Board of Directors
may designate from time to time, which need not be in the State of Nevada. The
Company shall maintain records at the office of the registered agent as required
by the Act and shall keep the street address of the registered office of the
Company in the State of Nevada. The Company may have such other offices as the
Board of Directors may designate from time to time.

     2.04 PURPOSES. The purposes of the Company are those set forth in the
Articles.

     2.05 FOREIGN QUALIFICATION. Prior to the Company's conducting business in
any jurisdiction other than Nevada, the Board of Directors shall cause the
Company to comply, to the extent procedures are available and those matters are
reasonably within the control of the Board of Directors, with all requirements
necessary to qualify the Company as a foreign limited liability company in that
jurisdiction. At the request of the Board of Directors, each Member shall
execute, acknowledge, swear to, and deliver all certificates and other
instruments conforming with these Regulations that are necessary or appropriate
to qualify, continue, and terminate the Company as a foreign limited liability
company in all such jurisdictions in which the Company may conduct business.

     2.06 TERM. The Company commenced on the date the Secretary of State of
Nevada issued a certificate of organization for the Company and shall continue
in existence for the period fixed in the Articles for the duration of the
Company, or such earlier time as these Regulations may specify.

     2.07 MERGERS AND EXCHANGES. The Company may be a party to (a) a merger or
(b) an exchange or acquisition.


                                        4

     2.08 NO STATE-LAW PARTNERSHIP. The Members and Special Members intend that
the Company not be a partnership (including, without limitation, a limited
partnership) or joint venture, and that no Member, Special Member or Director be
a partner or joint venturer of any other Member, Special Member or Director, for
any purposes other than federal and state tax purposes, and these Regulations
may not be construed to suggest otherwise.

                                  ARTICLE III.
                     MEMBERSHIP; DISPOSITIONS OF INTERESTS

     3.1 INITIAL MEMBERS. The initial members of the Company are the Persons
executing these Regulations as of the date of these Regulations as Members or
Special Members.

     3.2 REPRESENTATIONS AND WARRANTIES. Each Member or Special Member, as
applicable, hereby represents and warrants to the Company and each other Member
and Special Member that (a) if that Member or Special Member is a corporation,
it is duly organized, validly existing and in good standing under the law of the
state of its incorporation and is duly qualified and in good standing as a
foreign corporation in the jurisdiction of its principal place of business (if
not incorporated therein); (b) if that Member or Special Member is a limited
liability company, it is duly organized, validly existing, and (if applicable)
in good standing under the law of the state of its organization and is duly
qualified and (if applicable) in good standing as a foreign limited liability
company in the jurisdiction of its principal place of business (if not organized
therein); (c) if that Member or Special Member is a partnership, trust, or other
entity, it is duly formed, validly existing, and (if applicable) in good
standing under the law of the state of its formation, and if required by law is
duly qualified to do business and (if applicable) in good standing in the
jurisdiction of its principal place of business (if not formed therein), and the
representations and warranties in clause (a), (b) or (c), as applicable, are
true and correct with respect to each partner (other than limited partners),
trustee, or other member thereof; (d) that Member or Special Member has full
corporate, limited liability company, partnership, trust, or other applicable
power and authority to execute and agree to these Regulations and to perform its
obligations hereunder and all necessary actions by the board of directors,
shareholders, managers, members, partners, trustees, beneficiaries, or other
Persons necessary for the due authorization, execution, delivery, and
performance of these Regulations by that Member or Special Member have been duly
taken; (e) that Member or Special Member has duly executed and delivered these
Regulations; and (f) that Member's or Special Member's authorization, execution,
delivery, and performance of these Regulations do not conflict with any other
agreement or arrangement to which that Member or Special Member is a party or by
which it is bound.

     3.3 RESTRICTIONS ON THE DISPOSITION OF AN INTEREST. (a) Except as
specifically provided in this Section 3.03, a Disposition of an interest in the
Company may not be effected without the consent the Members constituting a
Required Interest. Any attempted Disposition by a Person of an interest or
right, or any part thereof, in or in respect of the Company other than in
accordance with this Section 3.03 shall be, and is hereby declared, null and
void ab initio.

          (b) Notwithstanding the provisions of Section 3.03(a), the interest of
any Member or Special Member in the Company may be transferred without the
consent of the Members constituting a Required Interest if (i) the transfer
occurs by reason of or incident to the death, dissolution, divorce, liquidation,
merger or termination of the transferor Member or Special Member,


                                       5

and (ii) the transferee is a Permitted Transferee. A "Permitted Transferee" is
any member of such Member's or Special Member's immediate family, or a trust,
corporation, limited liability company, or partnership controlled by such
Member, Special Member or members of such Member's or Special Member's immediate
family, or another Person controlling, controlled by, or under common control
with such Member or Special Member.

          (c) Subject to the provisions of Section 3.03(d),(e), and (f),(i) a
Person to whom an interest in the Company is transferred has the right to be
admitted to the Company as a (x) Member with the Sharing Ratio or (y) Special
Member with the profit allocation and cash distribution percentage so
transferred to such Person, if (A) the Member or Special Member making such
transfer grants the transferee the right to be so admitted, and (B) such
transfer is consented to in accordance with Section 3.03(a); (ii) a Permitted
Transferee under the circumstances described in Section 3.03(b) has the right to
be admitted to the Company as a (x) Member with the Sharing Ratio or (y) Special
Member with the profit allocation and cash distribution percentage so
transferred to the Permitted Transferee; and (iii) the Company or (with the
permission of the Company, which may be withheld in its sole discretion) a
Lending Member may grant the purchaser of a Delinquent Member's interest in the
Company at a foreclosure of the security interest therein granted pursuant to
Section 4.02(b) the right to be admitted to the Company as a Member with such
Sharing Ratio (no greater than the Sharing Ratio of the Member effecting such
Disposition prior thereto) as they may agree.

          (d) The Company may not recognize for any purpose any purported
Disposition of all or part of a Membership Interest or Special Membership
Interest unless and until the other applicable provisions of this Section 3.03
have been satisfied and the Directors have received, on behalf of the Company, a
document (i) executed by both the Member or Special Member effecting the
Disposition (or if the transfer is on account of the death, incapacity, or
liquidation of the transferor, its representative) and the Person to which the
Membership Interest, Special Membership Interest or part thereof is Disposed,
(ii) including the notice address of any Person to be admitted to the Company as
a Member or Special Member and its agreement to be bound by these Regulations
with respect to the Membership Interest, Special Membership Interest or part
thereof being obtained, (iii) setting forth (x) the Sharing Ratios after the
Disposition of the Member effecting the Disposition or (y) the profit allocation
and cash distribution percentage of the Special Member effecting the Disposition
and the Person to which the Membership Interest, Special Membership Interest or
part thereof is Disposed (which together must total either (a) the Sharing Ratio
of the Member effecting the Disposition before the Disposition, or (b) the
profit allocation and cash distribution percentage of the Special Member
effecting the Disposition before the Disposition, as applicable), and (iv)
containing a representation and warranty that the Disposition was made in
accordance with all applicable laws and regulations (including securities laws)
and, if the Person to which the Membership Interest, Special Membership Interest
or part thereof is Disposed is to be admitted to the Company, its representation
and warranty that the representations and warranties in Section 3.02 are true
and correct with respect to that Person. Each Disposition and, if applicable,
admission complying with the provisions of this Section 3.03(d) is effective as
of the first day of the calendar month immediately succeeding the month in which
the Board of Directors receive the notification of Disposition and the other
requirements of this Section 3.03 have been met.


                                       6

          (e) For the right of a Member or a Special Member to Dispose of a
Membership Interest, a Special Membership Interest or any part thereof or of any
Person to be admitted to the Company in connection therewith to exist or be
exercised, (i) either (A) the Membership Interest, Special Membership Interest
or part thereof subject to the Disposition or admission must be registered under
the Securities Act of 1933, as amended, and any applicable state securities laws
or (B) the Company must receive a favorable opinion of the Company's legal
counsel or of other legal counsel acceptable to the Board of Directors to the
effect that the Disposition or admission is exempt from registration under those
laws and (ii) the Company must receive a favorable opinion of the Company's
legal counsel or of other legal counsel acceptable to the Board of Directors to
the effect that the Disposition or admission, when added to the total of all
other sales, assignments, or other Dispositions within the preceding 12 months,
would not result in the Company being considered to have terminated within the
meaning of the Code. The Board of Directors, however, may waive the requirements
of this Section 3.03(e).

          (f) The Member or Special Member effecting a Disposition and any
Person admitted to the Company in connection therewith shall pay, or reimburse
the Company for, all costs incurred by the Company in connection with the
Disposition or admission (including, without limitation, the legal fees incurred
in connection with the legal opinions referred to in Section 3.03(e) on or
before the tenth day after the receipt by that Person of the Company's invoice
for the amount due. If payment is not made by the date due, the Person owing
that amount shall pay interest on the unpaid amount from the date due until paid
at a rate per annum equal to the Default Interest Rate.

     3.04 ADDITIONAL MEMBERS. Additional Persons may be admitted to the Company
as Members or Special Members and Membership Interests or Special Membership
Interests may be created and issued to those Persons and to existing Members or
Special Members at the direction of the Members constituting a Required
Interest, on such terms and conditions as such Members may determine at the time
of admission. The terms of admission or issuance must specify (i) the Sharing
Ratios in the case of Membership Interests or (ii) the profit allocation and
cash distribution percentages in the case of Special Membership Interests
applicable thereto and may provide for the creation of different classes or
groups of Members and Special Members and having different rights, powers, and
duties. The Members constituting a Required Interest shall reflect the creation
of any new class or group in an amendment to these Regulations indicating the
different rights, powers, and duties, and such an amendment need be executed
only by the Members constituting a Required Interest. Any such admission also
must comply with the provisions of Section 3.03(d)(i) and (ii) and is effective
only after the new Member or Special Member has executed and delivered to the
Board of Directors a document including the new Member's or Special Member's
notice address, its agreement to be bound by these Regulations, and its
representation and warranty that the representation and warranties in Section
3.02 are true and correct with respect to the new Member or Special Member. The
provisions of this Section 3.04 shall not apply to Dispositions of Membership
Interests or Special Membership Interests.

     3.05 INTERESTS IN A MEMBER. A Member or Special Member that is not a
natural person may not cause or permit an interest, direct or indirect, in
itself to be Disposed of such that, after the Disposition, (a) the Company would
be considered to have terminated within the meaning of section 708 of the Code
or (b) without the consent of the Board of Directors and a Required Interest,
that


                                       7

Member or Special Member shall cease to be controlled by substantially the same
Persons who control it as of the date of its admission to the Company. On any
breach of the provisions of clause (b) of the immediately preceding sentence,
the Company shall have the option to buy, and on exercise of that option the
breaching Member shall sell, the breaching Member's Membership Interest or
Special Member's Special Membership Interest, all in accordance with Section
12.01 as if the breaching Member or Special Member were a Bankrupt Member.

     3.06 INFORMATION. (a) In addition to the other rights specifically set
forth in these Regulations, each Member is entitled to all information to which
that Member or Special Member is entitled to have access pursuant to the Act
under the circumstances and subject to the conditions therein stated. The
Members and Special Members agree, however, that the Board of Directors from
time to time may determine, due to contractual obligations, business concerns,
or other considerations, that certain information regarding the business,
affairs, properties, and financial condition of the Company should be kept
confidential and not provided to some or all other Members and Special Members,
and that it is not just or reasonable for those Members, Special Members or
assignees or representatives thereof to examine or copy that information.

          (b) The Members and Special Members acknowledge that, from time to
time, they may receive information from or regarding the Company in the nature
of trade secrets or that otherwise is confidential, the release of which may be
damaging to the Company or Persons with which it does business. Each Member and
Special Member shall hold in strict confidence any information it receives
regarding the Company that is identified as being confidential (and if that
information is provided in writing, that is so marked) and may not disclose it
to any Person other than another Member, Special Member or a Director, except
for disclosures (i) compelled by law (but the Member or Special Member must
notify the Board of Directors promptly of any request for that information,
before disclosing it if practicable), (ii) to advisers or representatives of the
Member, Special Member or Persons to which that Member's Membership Interest or
Special Member's Membership Interest may be Disposed as permitted by these
Regulations, but only if the recipients have agreed to be bound by the
provisions of this Section 3.06(b), or (iii) of information that Member or
Special Member also has received from a source independent of the Company that
the Member or Special Member reasonably believes obtained that information
without breach of any obligation of confidentiality. The Members and Special
Members acknowledge that breach of the provisions of this Section 3.06(b) may
cause irreparable injury to the Company for which monetary damages are
inadequate, difficult to compute, or both. Accordingly, the Members and Special
Members agree that the provisions of this Section 3.06(b) may be enforced by
specific performance.

     3.07 LIABILITY TO THIRD PARTIES. No Member, Special Member or Director
shall be liable for the debts, obligations or liabilities of the Company,
including under a judgment, decree or order of a court.

     3.08 WITHDRAWAL. Special Members do not have the right or power to withdraw
from the Company as a Special Member. Any Member (the "Withdrawing Member") may
withdraw from the Company by giving written notice thereof to the Company. The
date the Company receives such written notice shall be referred to as the
"Withdraw Date." Upon the receipt of any such notice, the Company shall use its
reasonable efforts to distribute to the Withdrawing Member an amount equal to
the value of the Withdrawing Member's Membership Interest, as reflected on the
books of the


                                        8

Company as of the Withdraw Date, taking into account all of the debts and
assets of the Company as of the Withdraw Date (the "Amount Due to the
Withdrawing Member"). In no event shall the Company have any obligation to
borrow funds to pay the Amount Due to the Withdrawing Member. As assets owned by
the Company are sold or converted into cash in the normal course of the
Company's business, the Company shall pay the Withdrawing Member all or a
portion of the Amount Due to the Withdrawing Member, and the Amount Due to the
Withdrawing Member shall not fluctuate after the Withdraw Date if the value of
the assets of the Company increase or decrease after the Withdraw Date. The
Withdrawing Member, after delivery of such Written Notice to the Company, shall
not be entitled to participate in any of the decisions, management or operations
of the Company. Upon receipt of the Amount Due to the Withdrawing Member, the
Withdrawing Member shall execute such documents as may be necessary to reflect
that the Withdrawing Member no longer has an interest in the Company or a right
to participate in the profits of the Company.

     3.09 LACK OF AUTHORITY. No Member or Special Member has the authority or
power to act for or on behalf of the Company, to do any act that would be
binding on the Company, or to incur any expenditures on behalf of the Company.

                                   ARTICLE IV.
                              CAPITAL CONTRIBUTIONS

     4.01 CONTRIBUTIONS. Without creating any rights in favor of any third
party, each Member shall contribute to the Company, in cash, that Member's
Sharing Ratio of all monies that the Members constituting a Required Interest
determine should be contributed to the Company on or before the date determined
by the Members; provided, however, that a Member is not obligated to contribute
a total amount that exceeds that Member's Sharing Ratio of the required amount;
provided, further, that once a Member pays in full a Capital Contribution
required pursuant to this Section 4.01, such Member shall be deemed to have
fully satisfied such Member's required Capital Contribution and shall have no
further obligation with respect thereto to the Company or any third party,
including in any case where such Member has received a distribution or
distributions from the Company under Section 5.02 hereof.

     4.02 FAILURE TO CONTRIBUTE. (a) If a Member does not contribute by the time
required all or any portion of a Capital Contribution that Member is required to
make as provided in these Regulations, the Company may exercise, on notice to
that Member (the "Delinquent Member"), one or more of the following remedies:

               (i) taking such action (including, without limitation, court
     proceedings) as the Board of Directors may deem appropriate to obtain
     payment by the Delinquent Member of the portion of the Delinquent Member's
     Capital Contribution that is in default, together with interest thereon at
     the Default Interest Rate from the date that the Capital Contribution was
     due until the date that it is made, all at the cost and expense of the
     Delinquent Member;

               (ii) permitting the other Members in proportion to their Sharing
     Ratios or in such other percentages as they may agree (the "Lending Member"
     whether one or more), to advance the portion of the Delinquent Member's
     Capital Contribution that is in default, with the following results:


                                        9

                    (A) the sum advanced constitutes a loan from the Lending
          Member to the Delinquent Member and a Capital Contribution of that sum
          to the Company by the Delinquent Member pursuant to the applicable
          provisions of these Regulations,

                    (B) the principal balance of the loan and all accrued unpaid
          interest thereon is due and payable in whole on the tenth day after
          written demand therefor by the Lending Member to the Delinquent
          Member,

                    (C) the amount lent bears interest at the Default Interest
          Rate from the day that the advance is deemed made until the date that
          the loan, together with all interest accrued on it, is repaid to the
          Lending Member,

                    (D) all distributions from the Company that otherwise would
          be made to the Delinquent Member (whether before or after dissolution
          of the Company) instead shall be paid to the Lending Member until the
          loan and all interest accrued on it have been paid in full to the
          lending Member (with payments being applied first to accrued and
          unpaid interest and then to principal),

                    (E) the payment of the loan and interest accrued on it is
          secured by a security interest in the Delinquent Member's Membership
          Interest, as more fully set forth in Section 4.02(b), and

                    (F) the Lending Member has the right, in addition to the
          other rights and remedies granted to it pursuant to these Regulations
          or available to it at law or in equity, to take any action (including,
          without limitation, court proceedings) that the Lending Member may
          deem appropriate to obtain payment by the Delinquent Member of the
          loan and all accrued and unpaid interest on it, at the cost and
          expense of the Delinquent Member;

               (iii) exercising the rights of a secured party under the Uniform
     Commercial Code of the State of Nevada, as more fully set forth in Section
     4.02(b): or

               (iv) exercising any other rights and remedies available at law or
     in equity.

          (b) Each Member grants to the Company, and to each Lending Member with
respect to any loans made by the Lending Member to that Member as a Delinquent
Member pursuant to Section 4.02(a)(ii), as security, equally and ratably, for
the payment of all Capital Contributions that Member has agreed to make and the
payment of all loans and interest accrued on them made by Lending Members to
that Member as a Delinquent Member pursuant to Section 4.02(a)(ii), a security
interest in and a general lien on its Membership Interest and the proceeds
thereof, all under the Uniform Commercial Code of the State of Nevada. On any
default in the payment of a Capital Contribution or in the payment of such a
loan or interest accrued on it, the Company or the Lending Member, as
applicable, is entitled to all the rights and remedies of a secured party under
the Uniform Commercial Code of the State of Nevada with respect to the security
interest granted in this Section 4.02(b). Each Member shall execute and deliver
to the Company and the other Members all financing statements and other
instruments that the Managers or the Lending Member, as applicable, may


                                       10

request to effectuate and carry out the preceding provisions of this Section
4.02(b). At the option of the Managers or a Lending Member, these Regulations or
a carbon, photographic, or other copy hereof may serve as a financing statement.

     4.03 RETURN OF CONTRIBUTIONS. Other than as expressly provided in these
Regulations, neither a Member nor a Special Member is entitled to the return of
any part of its Capital Contributions or to be paid interest in respect of
either its capital account or its Capital Contributions. An unrepaid Capital
Contribution is not a liability of the Company or of any Member or Special
Member. Neither a Member nor a Special Member is required to contribute or to
lend any cash or property to the Company to enable the Company to return any
Member's or Special Member's Capital Contributions.

     4.04 ADVANCES BY MEMBERS. If the Company does not have sufficient cash to
pay its obligations, any Member(s) that may agree to do so with the Board of
Directors' consent may advance all or part of the needed funds to or on behalf
of the Company. An advance described in this Section 4.05 constitutes a loan
from the Member to the Company, bears interest at the General Interest Rate from
the date of the advance until the date of payment, and is not a Capital
Contribution.

     4.05 CAPITAL ACCOUNTS. A capital account shall be established and
maintained for each Member and Special Member. Each Member's or Special Member's
capital account (a) shall be increased by (i) the amount of money contributed by
that Member or Special Member to the Company, (ii) the fair market value of
property contributed by that Member or Special Member to the Company (net of
liabilities secured by the contributed property that the Company is considered
to assume or take subject to under section 752 of the Code), and (iii)
allocations to that Member or Special Member of Company income and gain (or
items thereof), including income and gain exempt from tax and income and gain
described in Treas. Reg. Section 1.704-l(b)(2)(iv)(g), but excluding income and
gain described in Treas. Reg. Section 1.704-1(b)(4)(i), and (b) shall be
decreased by (i) the amount of money distributed to that Member or Special
Member by the Company, (ii) the fair market value of property distributed to
that Member or Special Member by the Company (net of liabilities secured by the
distributed property that the Member or the or Special Member is considered to
assume or take subject to under section 752 of the Code), (iii) allocations to
that Member or Special Member of expenditures of the Company described in
section 705(a)(2)(B) of the Code, and (iv) allocations of Company loss and
deduction (or items thereof), including loss and deduction described in Treas.
Reg. Section 1.704-1(b)(2)(iv)(g), but excluding items described in clause
(b)(iii) above and loss or deduction described in Treas. Reg. Section
1.704-l(b)(4)(i) or Section 1.704-1 (b)(4)(iii). The Members' and the Special
Members' capital accounts also shall be maintained and adjusted as permitted by
the provisions of Treas. Reg. Section 1.704-l(b)(2)(iv)(f) and as required by
the other provisions of Treas. Reg. Sections 1.704- l(b)(2)(iv) and
1.704-1(b)(4), including adjustments to reflect the allocations to the Members
and the Special Members of depreciation, depletion, amortization, and gain or
loss as computed for book purposes rather than the allocation of the
corresponding items as computed for tax purposes, as required by Treas. Reg.
Section 1.704-l(b)(2)(iv)(g). A Member or Special Member that has more than one
Membership Interest or Special Membership Interest shall have a single capital
account that reflects all its Membership Interests or Special Membership
Interests, regardless of the class of Membership Interests or Special Membership
Interests owned by that Member or Special Member and regardless of the time or
manner in which those Membership Interests or Special Membership


                                       11

Interests were acquired. On the transfer of all or part of a Membership Interest
or a Special Membership Interest, the capital account of the transferor that is
attributable to the transferred Membership Interest, Special Membership Interest
or part thereof shall carry over to the transferee Member or Special Member in
accordance with the provisions of Treas. Reg. Section 1.704-1(b)(2)(iv)(l).

                                   ARTICLE V.
                          ALLOCATIONS AND DISTRIBUTIONS

     5.01 ALLOCATIONS. (a) Except as may be required by section 701(c) of the
Code and Treas. Reg. Section 1.701-l(b)(2)(iv)(f)(4), all items of income, gain,
loss, deduction, and credit of the Company shall be allocated among the Members
in accordance with their Sharing Ratios and among the Special Members in
accordance with their allocation of profits. Notwithstanding the previous
sentence, in the event that one or more Members has an Unreturned Contribution
Ratio that is greater than its Sharing Ratio, prior to any allocation of profits
being made to the Members pursuant to the previous sentence, such Member or
Members shall receive an allocation of profits equal to an annual rate of
interest equal to three quarters of one percent (3/4%) above the "prime" rate of
interest quoted by the Wall Street Journal from time to time on such Excess
Contributions during the existence of any such Excess Contributions.

          (b) All items of income, gain, loss, deduction, and credit allocable
to any Membership Interest or Special Membership Interest that may have been
transferred shall be allocated between the transferor and the transferee based
on the portion of the calendar year during which each was recognized as owning
that Membership Interest or Special Membership Interest, without regard to the
results of Company operations during any particular portion of that calendar
year and without regard to whether cash distributions were made to the
transferor or the transferee during that calendar year; provided, however, that
this allocation must be made in accordance with a method permissible under
section 706 of the Code and the regulations thereunder.

     5.02 DISTRIBUTIONS. All receipts and revenues of the Company from any
source shall be applied and distributed in the following order of priority with
no distribution being made in any category set forth below unless and until the
preceding category has been satisfied in full either by payment or by setting
aside of a reserve for payment of same.

          (a) in payment of all debts, obligations, liabilities, costs and
expenses incurred in connection with or on account of the Company;

          (b) in payment of Amounts Due to the Withdrawing Member pursuant to
Section 3.08;

          (c) in repayment of any loans and accrued interest thereon made by a
Lending Member pursuant to Section 4.03(a)(ii);

          (d) in repayment of Contributions by the Member in accordance with
their Sharing Ratios, subject to the provisions of Section 4.03 or Contributions
by a Special Member in accordance with their profit allocation percentages.


                                       12

          (e) after having satisfied (a), (b), (c) and (d) above, receipts and
revenues of the Company shall represent the profits of the Company and shall be
distributed to the Members pro rata and pari passu in accordance with their
Sharing Ratios and any receipts and revenues of the Company allocable to the
Pinery Joint Venture shall be distributed to the Special Members pro rata and
pari passu in accordance with their profit allocation percentages.

However, no distribution of profits shall be made until after completion of any
development and/or construction activities undertaken by the Company, without
the agreement of the Members constituting a Required Interest. Furthermore,
notwithstanding the foregoing provisions of this Section 5.02, any Member with
Excess Contributions may request, in writing, that the Company distribute to
such Member an amount equal to such Member's Excess Contributions, and the
Company shall distribute such amount to the Member within one hundred twenty
(120) days after the receipt of such request.

                                   ARTICLE VI.
                               BOARD OF DIRECTORS

     6.01 MANAGEMENT. All Company powers shall be exercised by or under the
authority of, and the business and affairs of the Company managed under the
direction of, its board of directors ("Board of Directors"), subject to any
limitation set forth in these Regulations. The Directors shall be the "managers"
of the Company as that term is used in the Act.

     6.02 NUMBER; ELECTION; VOTING. The Board of Directors shall from time to
time fix the number of members of the Board of Directors by resolution which
shall consist initially of three members. Except with respect to Directors
elected to fill a vacancy, Directors shall be elected by the Members
constituting a Required Interest and shall serve for a term of one (1) year and
until their successors are elected. All resolutions adopted and all business
transacted by the Board of Directors shall require the affirmative vote of a
majority of the Directors present at the meeting. The Board of Directors may
elect from its membership a chairman to preside at meetings of the Board of
Directors.

     6.03 VACANCIES; REMOVAL. If a vacancy occurs on the Board of Directors,
including a vacancy resulting from an increase in the number of Directors:

          (a) the Required Interest may fill the vacancy;

          (b) The Board of Directors may fill the vacancy; or

          (c) If the Directors remaining in office constitute fewer than a
quorum of the board, they may fill the vacancy by the affirmative vote of a
majority of all the Directors remaining in office.

     6.04 ACTIONS BY BOARD OF DIRECTORS; COMMITTEES; DELEGATION OF AUTHORITY AND
DUTIES. (a) In managing the business and affairs of the Company and exercising
its powers, the Board of Directors shall act (i) collectively through meetings
and written consents pursuant to Sections 6.06 and 6.07; and (ii) through
committees pursuant to Section 6.04(b).


                                       13

          (b) The Board of Directors may, from time to time, designate one or
more committees, each of which shall be comprised of one or more Directors. Any
such committee, to the extent provided in such resolution or in the Articles or
these Regulations, shall have and may exercise all of the authority of the Board
of Directors, subject to the limitations set forth in the Act. At every meeting
of any such committee, the presence of a majority of all the members thereof
shall constitute a quorum, and the affirmative vote of a majority of the members
present shall be necessary for the adoption of any resolution. The Board of
Directors may dissolve any committee at any time, unless otherwise provided in
the Articles or these Regulations.

     6.05 VACANCIES; REMOVAL; RESIGNATION. Any Director position to be filled by
reason of an increase in the number of Directors may be filled by election at an
annual or special meeting of Members called for that purpose. Any vacancy
occurring in the Board of Directors other than by reason of an increase in the
number of Directors may be filled (a) by election at an annual or special
meeting of the Members called for that purpose or (b) pursuant to Section 6.03.
A Director elected to fill a vacancy occurring other than by reason of an
increase in the number of Directors shall be elected for the unexpired term of
his predecessor in office. At any meeting of Members at which a quorum of
Members is present called expressly for that purpose, or pursuant to a written
consent adopted pursuant to these Regulations, any Director may be removed, with
or without cause, by a Required Interest. Any Director may resign at any time.
Such resignation shall be made in writing and shall take effect at the time
specified therein, or if no time be specified, at the time of its receipt by the
remaining Directors. The acceptance of a resignation shall not be necessary to
make it effective, unless expressly so provided in the resignation.

     6.06 MEETINGS. (a) Unless otherwise required by law or provided in the
Articles or these Regulations, a majority of the total number of Directors fixed
by, or in the manner provided in, the Articles or these Regulations shall
constitute a quorum for the transaction of business of the Directors, and the
act of a majority of the Directors present at a meeting at which a quorum is
present shall he the act of the Directors. A Director who is present at a
meeting of the Board of Directors at which action on any Company matter is taken
shall be presumed to have assented to the action unless his dissent shall be
entered in the minutes of the meeting or unless he shall file his written
dissent to such action with the Person acting as secretary of the meeting before
the adjournment thereof or shall deliver such dissent to the Company immediately
after the adjournment of the meeting. Such right to dissent shall not apply to a
Director who voted in favor of such action.

          (b) Meetings of the Board of Directors may be held at such place or
places as shall be determined from time to time by resolution of the Board of
Directors. At all meetings of the Board of Directors, business shall be
transacted in such order as shall from time to time be determined by resolution
of the Board of Directors. Attendance of a Director at a meeting shall
constitute a waiver of notice of such meeting, except where a Director attends a
meeting for the express purpose of objecting to the transaction of any business
on the ground that the meeting is not lawfully called or convened.

          (c) In connection with any annual meeting of Members at which
Directors were elected, the Directors may, if a quorum is present, hold its
first meeting for the transaction of business immediately after and at the same
place as such annual meeting of the Members. Notice of such meeting at such time
and place shall not be required.


                                       14

          (d) Regular meetings of the Board of Directors shall be held at such
times and places as shall be designated from time to time by resolution of the
Directors. Notice of such regular meetings shall not be required.

          (e) Special meetings of the Board of Directors may be called by any
Director on at least 24 hours notice to each other Director. Such notice need
not state the purpose or purposes of, nor the business to be transacted at, such
meeting, except as may otherwise be required by law or provided for by the
Articles or these Regulations,

     6.07 ACTION BY WRITTEN CONSENT OR TELEPHONE CONFERENCE. Any action
permitted or required by the Act, the Articles or these Regulations to be taken
at a meeting of the Board of Directors or any committee designated by the Board
of Directors may be taken without a meeting if a consent in writing, setting
forth the action to be taken, is signed by all the Directors or members of such
committee, as the case may be. Such consent shall have the same force and effect
as a unanimous vote at a meeting and may be stated as such in any document or
instrument filed with the Secretary of State of Nevada, and the execution of
such consent shall constitute attendance or presence in person at a meeting of
the Board of Directors or any such committee, as the case may be. Subject to the
requirements of the Act, the Articles or these Regulations for notice of
meetings, unless otherwise restricted by the Articles, Directors, or members of
any committee designated by the Board of Directors, may participate in and hold
a meeting of the Board of Directors or any committee of Board of Directors, as
the case may be, by means of a conference telephone or similar communications
equipment by means of which all Persons participating in the meeting can hear
each other, and participation in such meeting shall constitute attendance and
presence in person at such meeting, except where a Person participates in the
meeting for the express purpose of objecting to the transaction of any business
on the ground that the meeting is not lawfully called or convened.

     6.08 COMPENSATION. The Directors shall receive such compensation, if any,
for their services as may be designated from time to time by the Board of
Directors. In addition, the Managers shall be entitled to be reimbursed for
out-of-pocket costs and expenses incurred in the course of their service
hereunder, including the portion of their overhead reasonably allocable to
Company activities.

     6.09 CONFLICTS OF INTEREST. Subject to the other express provisions of
these Regulations, each Director, Member, Special Member and officer of the
Company at any time and from time to time may engage in and possess interests in
other business ventures of any and every type and description, independently or
with others, including ones in competition with the Company, with no obligation
to offer to the Company or any other Member, Special Member, Director or officer
the right to participate therein. The Company may transact business with any
Director, Member, Special Member, officer or affiliate thereof, provided the
terms of those transactions are no less favorable than those the Company could
obtain from unrelated third parties.

                                  ARTICLE VII.
                                    OFFICERS

     7.01 GENERAL PROVISIONS. The officers of the Company shall consist of a
President, a Treasurer and a Secretary who shall be elected by the Board of
Directors, and such other officers as may be elected by the Board of Directors
or appointed as provided in these Regulations. The officers


                                       15

shall perform such duties as shall be delegated by the Board of Directors. Any
two or more offices may be held by the same person. Unless otherwise provided in
the resolutions electing or appointing them, each officer shall serve until the
earlier of his resignation, removal from office, death, or election of his
successor.

     7.02 PRESIDENT. Unless another person is elected as the Chief Executive
Officer, the President shall also be the Chief Executive Officer of the Company
and shall hold such title. The President shall have general and active
management of the operations of the Company. He or she shall be responsible for
the administration of the Company, including general supervision of the policies
of the Company and general and active management of the financial affairs of the
Company, and shall execute bonds, mortgages or other contracts in the name and
on behalf of the Company, and shall have such duties as may be delegated by the
Board of Directors. The President may vote, endorse for transfer, or take any
other action necessary with respect to interests and securities issued by any
other entity and owned by this Company, and may make, execute, and deliver any
proxy, waiver, or consent with respect thereto.

     7.03 TREASURER. Unless another person is elected as the Chief Financial
Officer, the Treasurer shall also be the Chief Financial Officer of the Company
and shall hold such title. The Treasurer shall be charged with the management of
the financial affairs of the Company, shall have the power to recommend action
concerning the Company's affairs to the President, and shall perform such other
duties and have such other powers as may from time to time be delegated to him
or her by the President or the Board of Directors.

     7.04 SECRETARY. The Secretary shall keep minutes of all meetings of the
Members and Directors, shall have charge of the minute books, shall be
responsible for authenticating records of the Company, and shall perform such
other duties and have other powers as may from time to time be delegated to him
or her by the President or the Board of Directors.

     7.05 ASSISTANT OFFICERS. Assistants to the Secretary and Treasurer may be
appointed by the President or by the Board of Directors and shall have such
duties as shall be delegated to them by the President or the Board of Directors.

     7.06 VICE PRESIDENTS. The Company may have one or more Vice President,
elected by the Board of Directors, who shall perform such duties as may be
delegated by the President or the Board of Directors.

                                  ARTICLE VIII.
                               MEETINGS OF MEMBERS

     8.01 MEETINGS. (a) A quorum shall be present at a meeting of Members if the
holders of a Required Interest are represented at the meeting in person or by
proxy. With respect to any matter, other than a matter for which the affirmative
vote of the holders of a specified portion of the Sharing Ratios of all Members
entitled to vote is required by the Act, the affirmative vote of a Required
Interest at a meeting of Members at which a quorum is present shall be the act
of the Members.


                                       16

          (b) All meetings of the Members shall be held at the principal place
of business of the Company or at such other place within or without the State of
Nevada as shall be specified or fixed in the notices or waivers of notice
thereof; provided that any or all Members may participate in any such meeting by
means of conference telephone or similar communications equipment pursuant to
Section 8.05.

          (c) Notwithstanding the other provisions of the Articles or these
Regulations, the chairman of the meeting or the holders of a Required Interest
shall have the power to adjourn such meeting from time to time, without any
notice other than announcement at the meeting of the time and place of the
holding of the adjourned meeting. If such meeting is adjourned by the Members,
such time and place shall be determined by a vote of the holders of a Required
Interest. Upon the resumption of such adjourned meeting, any business may be
transacted that might have been transacted at the meeting as originally called.

          (d) An annual meeting of the Members, for the election of the
Directors and for the transaction of such other business as may properly come
before the meeting, shall be held at such place, within or without the State of
Nevada, on such date and at such time as the Board of Directors shall fix and
set forth in the notice of the meeting, which date shall be within 13 months
subsequent to the date of organization of the Company or the last annual meeting
of Members, whichever most recently occurred.

          (e) Special meetings of the Members for any proper purpose or purposes
may be called at any time by the Board of Directors or the holders of at least
ten percent of the Sharing Ratios of all Members. If not otherwise stated in or
fixed in accordance with the remaining provisions hereof, the record date for
determining Members entitled to call a special meeting is the date any Member
first signs the notice of that meeting. Only business within the purpose or
purposes described in the notice (or waiver thereof) required by these
Regulations may be conducted at a special meeting of the Members.

          (f) Written or printed notice stating the place, day and hour of the
meeting and, in the case of a special meeting, the purpose or purposes for which
the meeting is called, shall be delivered not less than ten nor more than 60
days before the date of the meeting, either personally or by mail, by or at the
direction of the Board of Directors or Person calling the meeting, to each
Member entitled to vote at such meeting. If mailed, any such notice shall be
deemed to be delivered when deposited in the United States mail, addressed to
the Member at his address provided for on Exhibit A, with postage thereon
prepaid.

          (g) The date on which notice of a meeting of Members is mailed or the
date on which the resolution of the Board of Directors declaring a distribution
is adopted, as the case may be, shall be the record date for the determination
of the Members entitled to notice of or to vote at such meeting, including any
adjournment thereof, or the Members entitled to receive such distribution.

          (h) The right of Members to cumulative voting in the election of
Directors is expressly prohibited.


                                       17

     8.02 VOTING LIST. An officer shall make, at least ten days before each
meeting of Members, a complete list of the Members entitled to vote at such
meeting or any adjournment thereof, arranged in alphabetical order, with the
address of and the Sharing Ratios held by each, which list, for a period of ten
days prior to such meeting, shall be kept on file at the registered office or
principal place of business of the Company and shall be subject to inspection by
any Member at any time during usual business hours. Such list shall also be
produced and kept open at the time and place of the meeting and shall be subject
to the inspection of any Member during the whole time of the meeting. The
original membership records shall be prima-facie evidence as to who are the
Members entitled to examine such list or transfer records or to vote at any
meeting of Members. Failure to comply with the requirements of this Section
shall not affect the validity of any action taken at the meeting.

     8.03 PROXIES. A Member may vote either in person or by proxy executed in
writing by the Member. A telegram, telex, cablegram or similar transmission by
the Member, or a photographic, photostatic, facsimile or similar reproduction of
a writing executed by the Member shall be treated as an execution in writing for
purposes of this Section. Proxies for use at any meeting of Members or in
connection with the taking of any action by written consent shall be filed with
the Board of Directors, before or at the time of the meeting or execution of the
written consent, as the case may be. All proxies shall be received and taken
charge of and all ballots shall be received and canvassed by the Board of
Directors, who shall decide all questions touching upon the qualification of
voters, the validity of the proxies, and the acceptance or rejection of votes,
unless an inspector or inspectors shall have been appointed by the chairman of
the meeting, in which event such inspector or inspectors shall decide all such
questions. No proxy shall be valid after 11 months from the date of its
execution unless otherwise provided in the proxy. A proxy shall be revocable
unless the proxy form conspicuously states that the proxy is irrevocable and the
proxy is coupled with an interest. Should a proxy designate two or more Persons
to act as proxies, unless that instrument shall provide to the contrary, a
majority of such Persons present at any meeting at which their powers thereunder
are to be exercised shall have and may exercise all the powers of voting or
giving consents thereby conferred, or if only one be present, then such powers
may be exercised by that one; or, if an even number attend and a majority do not
agree on any particular issue, the Company shall not be required to recognize
such proxy with respect to such issue if such proxy does not specify how the
Sharing Ratios that are the subject of such proxy are to be voted with respect
to such issue.

     8.04 CONDUCT OF MEETINGS. All meetings of the Members shall be presided
over by the chairman of the meeting, who shall be a Director designated by the
Board of Directors. The chairman of any meeting of Members shall determine the
order of business and the procedure at the meeting, including such regulation of
the manner of voting and the conduct of discussion as seem to him in order.

     8.05 ACTION BY WRITTEN CONSENT OR TELEPHONE CONFERENCE, (a) Any action
required or permitted to be taken at any annual or special meeting of Members
may be taken without a meeting, without prior notice, and without a vote, if a
consent or consents in writing, setting forth the action so taken, shall be
signed by the holder or holders of not less than the minimum Sharing Ratios that
would be necessary to take such action at a meeting at which the holders of all
Sharing Ratios entitled to vote on the action were present and voted. Every
written consent shall bear the date of signature of each Member who signs the
consent. No written consent shall be effective to take the action that is the


                                       18

subject to the consent unless, within 60 days after the date of the earliest
dated consent delivered to the Company in the manner required by this Section, a
consent or consents signed by the holder or holders of not less than the minimum
Sharing Ratios that would be necessary to take the action that is the subject of
the consent are delivered to the Company by delivery to its registered office,
its principal place of business. Delivery shall be by hand or certified or
registered mail, return receipt requested. Delivery to the Company's principal
place of business shall be addressed to the Board of Directors. A telegram,
telex, cablegram or similar transmission by a Member, or a photographic,
photostatic, facsimile or similar reproduction of a writing signed by a Member,
shall be regarded as signed by the Member for purposes of this Section. Prompt
notice of the taking of any action by Members without a meeting by less than
unanimous written consent shall be given to those Members who did not consent in
writing to the action.

          (b) The record date for determining Members entitled to consent to
action in writing without a meeting shall be the first date on which a signed
written consent setting forth the action taken or proposed to be taken is
delivered to the Company by delivery to its registered office or its principal
place of business. Delivery shall be by hand or by certified or registered mail,
return receipt requested. Delivery to the Company's principal place of business
shall be addressed to the Board of Directors.

          (c) If any action by Members is taken by written consent, any articles
or documents filed with the Secretary of State of Nevada as a result of the
taking of the action shall state, in lieu of any statement required by the Act
concerning any vote of Members, that written consent has been given in
accordance with the provisions of the Act and that any written notice required
by the Act has been given.

          (d) Members may participate in and hold a meeting by means of
conference telephone or similar communications equipment by means of which all
Persons participating in the meeting can hear each other, and participation in
such meeting shall constitute attendance and presence in person at such meeting,
except where a Person participates in the meeting for the express purpose of
objecting to the transaction of any business on the ground that the meeting is
not lawfully called or convened.

                                   ARTICLE IX.
                                 INDEMNIFICATION

     9.01 RIGHT TO INDEMNIFICATION. Subject to the limitations and conditions as
provided in this Article IX, each Person who was or is made a party or is
threatened to be made a party to or is involved in any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative,
arbitrative or investigative (hereinafter a "Proceeding"), or any appeal in such
a Proceeding or any inquiry or investigation that could lead to such a
Proceeding, by reason of the fact that he or she, or a Person of whom he or she
is the legal representative, is or was a Director of the Company or while a
Director of the Company is or was serving at the request of the Company as a
Director, officer, partner, venturer, proprietor, trustee, employee, agent, or
similar functionary of another foreign or domestic limited liability company,
corporation, partnership, joint venture, sole proprietorship, trust, employee
benefit plan or other enterprise shall be indemnified by the Company to the
fullest extent permitted by the Act and the laws of the State of Nevada, as the
same exist or may


                                       19

hereafter be amended (but, in the case of any such amendment, only to the extent
that such amendment permits the Company to provide broader indemnification
rights than said law permitted the Company to provide prior to such amendment)
against judgments, penalties (including excise and similar taxes and punitive
damages), fines, settlements and reasonable expenses (including, without
limitation, attorneys' fees) actually incurred by such Person in connection with
such Proceeding, and indemnification under this Article IX shall continue as to
a Person who has ceased to serve in the capacity which initially entitled such
Person to indemnify hereunder. The rights granted pursuant to this Article IX
shall be deemed contract rights, and no amendment, modification or repeal of
this Article IX shall have the effect of limiting or denying any such rights
with respect to actions taken or Proceedings arising prior to any such
amendment, modification or repeal. It is expressly acknowledged that the
indemnification provided in this Article IX could involve indemnification for
negligence or under theories of strict liability.

     9.02 ADVANCE PAYMENT. The right to indemnification conferred in this
Article IX shall include the right to be paid or reimbursed by the Company the
reasonable expenses incurred by a Person of the type entitled to be indemnified
under Section 9.01 who was, is or is threatened to be made a named defendant or
respondent in a Proceeding in advance of the final disposition of the Proceeding
and without any determination as to the Person's ultimate entitlement to
indemnification; provided, however, that the payment of such expenses incurred
by any such Person in advance of the final disposition of a Proceeding, shall be
made only upon delivery to the Company of a written affirmation by such Director
of his or her good faith belief that he has met the standard of conduct for
indemnification under this Article IX and a written undertaking, by or on behalf
of such Person, to repay all amounts so advanced if it shall ultimately be
determined that such indemnified Person is not entitled to be indemnified under
this Article IX or otherwise.

     9.03 INDEMNIFICATION OF OFFICERS, EMPLOYEES, AND AGENTS. The Company, by
adoption of a resolution of the Board of Directors, may indemnity and advance
expenses to an officer, employee or agent of the Company to the same extent and
subject to the same conditions under which it may indemnify and advance expenses
to Directors under this Article IX; and, the Company may indemnify and advance
expenses to Persons who are not or were not Directors, officers, employees or
agents of the Company but who are or were serving at the request of the Company
as a director, officer, partner, venturer, proprietor, trustee, employee, agent
or similar functionary of another foreign or domestic limited liability company,
corporation, partnership, joint venture, sole proprietorship, trust, employee
benefit plan or other enterprise against any liability asserted against him and
incurred by him in such a capacity or arising out of his status as such a Person
to the same extent that it may indemnity and advance expenses to Directors under
this Article IX.

     9.04 APPEARANCE AS A WITNESS. Notwithstanding any other provision of this
Article IX, the Company may pay or reimburse expenses incurred by a Director in
connection with his appearance as a witness or other participation in a
Proceeding at a time when he is not a named defendant or respondent in the
Proceeding.

     9.05 NONEXCLUSIVITY OF RIGHTS. The right to indemnification and the
advancement and payment of expenses conferred in this Article IX shall not be
exclusive of any other right which a Director or other Person indemnified
pursuant to Section 9.03 may have or hereafter acquire under


                                       20

any law (common or statutory), provision of the Articles or these Regulations,
agreement, vote of Members or disinterested Directors or otherwise.

     9.06 INSURANCE. The Company may purchase and maintain insurance, at its
expense, to protect itself and any Person who is or was serving as a Director,
officer, employee or agent of the Company or is or was serving at the request of
the Company as a director, officer, partner, venturer, proprietor, trustee,
employee, agent or similar functionary of another foreign or domestic limited
liability company, corporation, partnership, joint venture, sole proprietorship,
trust, employee benefit plan or other enterprise against any expense, liability
or loss, whether or not the Company would have the power to indemnify such
Person against such expense, liability or loss under this Article IX.

     9.07 SAVINGS CLAUSE. If this Article IX or any portion hereof shall be
invalidated on any ground by any court of competent jurisdiction, then the
Company shall nevertheless indemnify and hold harmless each Director or any
other Person indemnified pursuant to this Article IX as to costs, charges and
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement with respect to any action, suit or proceeding, whether civil,
criminal, administrative or investigative to the full extent permitted by any
applicable portion of this Article IX that shall not have been invalidated and
to the fullest extent permitted by applicable law.

                                   ARTICLE X.
                                      TAXES

     10.01 TAX RETURNS. The Directors shall cause to be prepared and filed all
necessary federal and state income tax returns for the Company, including making
the elections described in Section 10.02. Each Member shall furnish to the
Directors all pertinent information in its possession relating to Company
operations that is necessary to enable the Company's income tax returns to be
prepared and filed.

     10.02 TAX ELECTIONS. The Company shall make the following elections on the
appropriate tax returns:

          (a) to adopt the year ending on May 31 as the Company's fiscal year;

          (b) to adopt a method of accounting as the Board of Directors may
determine from time to time;

          (c) if a distribution of Company property as described in section 734
of the Code occurs or if a transfer of a Membership Interest or a Special
Membership Interest as described in section 743 of the Code occurs, on written
request of any Member or Special Member, to elect, pursuant to section 754 of
the Code, to adjust the basis of Company properties;

          (d) to elect to amortize the organizational expenses of the Company
and the startup expenditures of the Company under Section 195 of the Code
ratably over a period of 60 months as permitted by section 709(b) of the Code;
and


                                       21

          (e) any other election the Board of Directors may deem appropriate and
in the best interests of the Members and the Special Members.

Neither the Company nor any Director, Member or Special Member may make an
election for the Company to be excluded from the application of the provisions
of subchapter K of chapter 1 of subtitle A of the Code or any similar provisions
of applicable state law, and no provision of these Regulations (including,
without limitation, Section 2.06) shall be construed to sanction or approve such
an election.

     10.03 "TAX MATTERS PARTNER." The Board of Directors shall designate one
Director that is affiliated with a Member to be the "tax matters partner" of the
Company pursuant to section 623l(a)(7) of the Code; or, if there is no Director
that is affiliated with a Member, the "tax matters partner" shall be a Member
that is designated as such by a Required Interest. Any Member who is designated
"tax matters partner" shall take such action as may be necessary to cause each
other Member to become a "notice partner" within the meaning of section 6223 of
the Code. Any Member who is designated "tax matters partner" shall inform each
other Member and the Special Members of all significant matters that may come to
its attention in its capacity as "tax matters partner" by giving notice thereof
on or before the fifth Business Day after becoming aware thereof and, within
that time, shall forward to each other Member and the Special Members copies of
all significant written communications it may receive in that capacity. Any
Member who is designated "tax matters partner" may not take any action
contemplated by sections 6222 through 6232 of the Code without the consent of a
Required Interest, but this sentence does not authorize such Member (or any
other Member or Special Member) to take any action left to the determination of
an individual Member or Special Member under sections 6222 through 6232 of the
Code.

                                   ARTICLE XI.
                   BOOKS, RECORDS, REPORTS, AND BANK ACCOUNTS

     11.01 MAINTENANCE OF BOOKS. The Company shall keep books and records of
accounts and shall keep minutes of the proceedings of its Members, its Board of
Directors and each committee of the Board of Directors. The books of account for
the Company shall be maintained on an accrual basis in accordance with the terms
of these Regulations, except that the capital accounts of the Members and the
Special Members shall be maintained in accordance with Section 4.05. The
accounting year of the Company shall be a period beginning on June 1 and ending
on May 31 of the following year or such other period determined by the Board of
Directors.

     11.02 REPORTS. On or before the 120th day following the end of each fiscal
year during the term of the Company, the Board of Directors shall cause each
Member and Special Member to be furnished with a balance sheet, an income
statement, and a statement of changes in Members' and Special Members' capital
of the Company for, or as of the end of, that year certified by a recognized
firm of certified public accountants. These financial statements must be
prepared in accordance with generally accepted accounting principles generally
employed for accrual-basis records consistently applied (except as therein
noted) and must be accompanied by a report of the certified public accountants
certifying the statements and stating that (a) their examination was made in
accordance with generally accepted auditing standards and, in their opinion, the
financial statements fairly present the financial position, financial results of
operations, and changes in Members' and Special Members'


                                       22

capital in accordance with accounting principles generally employed for
accrual-basis records consistently applied (except as therein noted) and (b) in
making the examination and reporting on the financial statements described
above, nothing came to their attention that caused them to believe that (i) the
income and revenues were not paid or credited in accordance with the financial
and accounting provisions of these Regulations, (ii) the costs and expenses were
not charged in accordance with the financial and accounting provisions of these
Regulations, or (iii) the Board of Directors, any Member or any Special Member
failed to comply in any material respect with the financial and accounting
provisions of these Regulations, or if they do conclude that the Board of
Directors, Member or a Special Member so failed, specifying the nature and
period of existence of the failure. The Board of Directors also may cause to be
prepared or delivered such other reports as they may deem appropriate. The
Company shall bear the costs of all these reports.

     11.03 ACCOUNTS. The Board of Directors shall establish and maintain one or
more separate bank and investment accounts and arrangements for Company funds in
the Company name with financial institutions and firms that the Board of
Directors determine. The Board of Directors may not commingle the Company's
funds with the funds of any Member; however, Company funds may be invested in a
manner the same as or similar to the Board of Directors' investment of their own
funds or investments by their affiliates.

                                  ARTICLE XII.
                             BANKRUPTCY OF A MEMBER

     BANKRUPT MEMBERS. Subject to Section 12.01(c), if any Member or Special
Member becomes a Bankrupt Member, the Company shall have the option, exercisable
by notice from the Board of Directors to the Bankrupt Member (or its
representative) at any time prior to the 180th day after receipt of notice of
the occurrence of the event causing it to become a Bankrupt Member, to buy, and
on the exercise of this option the Bankrupt Member or its representative shall
sell, its Membership Interest. The purchase price shall be an amount equal to
the fair market value thereof determined by agreement of the Bankrupt Member (or
its representative) and the Board of Directors; however, if those Persons do not
agree on the fair market value on or before the 30th day following the exercise
of the option, either such Person, by notice to the other, may require the
determination of fair market value to be made by an independent appraiser
specified in that notice. If the Person receiving that notice objects on or
before the tenth day following receipt to the independent appraiser designated
in that notice, and those Persons otherwise fail to agree on an independent
appraiser, either such Person may petition the Judge with jurisdiction over the
Bankrupt Member under the federal statutes codified as Title 11 of the United
States Code to designate an independent appraiser. The determination of the
independent appraiser, however designated, is final and binding on all parties.
The Bankrupt Member and the Company each shall pay one-half of the costs of the
appraisal. The purchaser shall pay the fair market value as so determined in
four equal cash installments, the first due on closing and the remainder
(together with accumulated interest on the amount unpaid at the General Interest
Rate) due on each of the first three anniversaries thereof. The payment to be
made to the Bankrupt Member or its representative pursuant to this Section 11.01
is in complete liquidation and satisfaction of all the rights and interest of
the Bankrupt Member and its representative (and of all Persons claiming by,
through, or under the Bankrupt Member and its representative) in and in respect
of the Company, including, without limitation, any Membership Interest or
Special Membership


                                       23

Interest, any rights in specific Company property, and any rights against the
Company and (insofar as the affairs of the Company are concerned) against the
Members and the Special Members, and constitutes a compromise to which all
Members and Special Members have agreed pursuant to the Act.

                                  ARTICLE XIII.
                   DISSOLUTION, LIQUIDATION, AND TERMINATION

     13.01 DISSOLUTION. The Company shall dissolve and its affairs shall be
wound up on the first to occur of the following:

          (a) the written consent of a Required Interest;

          (b) the expiration of the period fixed for the duration of the Company
set forth in the Articles;

          (c) any Member or Special Member shall become a Bankrupt Member (with
or without the consent of a Required Interest); provided, however, that if the
event described in this Section 12.01(c) shall occur and there shall be at least
one other Member remaining, the Company shall not be dissolved, and the business
of the Company shall be continued, if all Members so agree; and

          (d) entry of a decree of judicial dissolution of the Company under
article 6.02 of the Act.

Except as provided in Section 13.01(c), the death, retirement, resignation,
expulsion, bankruptcy or dissolution of a Member or Special Member, or the
occurrence of any other event that terminates the continued membership of a
Member or Special Member in the Company, shall not cause a dissolution of the
Company.

          13.02 LIQUIDATION AND TERMINATION. On dissolution of the Company, the
Board of Directors shall act as liquidator or may appoint one or more Members as
liquidator. The liquidator shall proceed diligently to wind up the affairs of
the Company and make final distributions as provided herein and in the Act. The
costs of liquidation shall be borne as a Company expense. Until final
distribution, the liquidator shall continue to operate the Company properties
with all of the power and authority of the Board of Directors. The steps to be
accomplished by the liquidator are as follows:

          (a) as promptly as possible after dissolution and again after final
liquidation, the liquidator shall cause a proper accounting to be made by a
recognized firm of certified public accountants of the Company's assets,
liabilities, and operations through the last day of the calendar month in which
the dissolution occurs or the final liquidation is completed, as applicable;

          (b) the liquidator shall cause the notice described in article
6.05(A)(2) of the Act to be mailed to each known creditor of and claimant
against the Company in the manner described in such article 6.05(A)(2) of the
Act;


                                       24

          (c) the liquidator shall pay, satisfy or discharge from Company funds
all of the debts, liabilities and obligations of the Company (including, without
limitation, all expenses incurred in liquidation and any advances described in
Section 4.04) or otherwise make adequate provision for payment and discharge
thereof (including, without limitation, the establishment of a cash escrow fund
for contingent liabilities in such amount and for such term as the liquidator
may reasonably determine); and

          (d) all remaining assets of the Company shall be distributed to the
Members and the Special Members as follows:

               (i) the liquidator may sell any or all Company property,
     including to Members and Special Members, and any resulting gain or loss
     from each sale shall be computed and allocated to the capital accounts of
     the Members and the Special Members;

               (ii) with respect to all Company property that has not been sold,
     the fair market value of that property shall be determined and the capital
     accounts of the Members and the Special Members shall be adjusted to
     reflect the manner in which the unrealized income, gain, loss, and
     deduction inherent in property that has not been reflected in the capital
     accounts previously would be allocated among the Members and the Special
     Members if there were a taxable disposition of that property for the fair
     market value of that property on the date of distribution; and

               (iii) Company property shall be distributed among the Members and
     the Special Members in accordance with the positive capital account
     balances of the Members and the Special Members, as determined after taking
     into account all capital account adjustments for the taxable year of the
     Company during which the liquidation of the partnership occurs (other than
     those made by reason of this clause (iii)); and those distributions shall
     be made by the end of the taxable year of the Company during which the
     liquidation of the Company Occurs (or, if later, 90 days after the date of
     the liquidation).

All distributions in kind to the Members and the Special Members shall be made
subject to the liability of each distributee for costs, expenses, and
liabilities theretofore incurred or for which the Company has committed prior to
the date of termination and those costs, expenses, and liabilities shall be
allocated to the distributee pursuant to this Section 13.02. The distribution of
cash and/or property to a Member or a Special Member in accordance with the
provisions of this Section 13.02 constitutes a complete return to the Member or
the Special Member of its Capital Contributions and a complete distribution to
the Member of its Membership Interest or the Special Member of its Special
Membership Interest, as the case may be, and all the Company's property and
constitutes a compromise to which all Members and Special Members have consented
within the meaning of the Act. To the extent that a Member or a Special Member
returns funds to the Company, it has no claim against any other Member or
Special Member for those funds.

     13.03 DEFICIT CAPITAL ACCOUNTS. Notwithstanding anything to the contrary
contained in these Regulations, and notwithstanding any custom or rule of law to
the contrary, to the extent that the deficit, if any, in the capital account of
any Member or Special Member results from or is attributable to deductions and
losses of the Company (including non-cash items such as depreciation), or


                                       25

distributions of money pursuant to these Regulations to all Members in
proportion to their respective Sharing Ratios and Special Members in proportion
to their respective profit distribution percentages, as the case may be, upon
dissolution of the Company such deficit shall not be an asset of the Company and
such Member or Special Member shall not be obligated to contribute such amount
to the Company to bring the balance of such Member's or Special Member's capital
account to zero.

     13.04 ARTICLES OF DISSOLUTION. On completion of the distribution of Company
assets as provided herein, the Company is terminated, and the Board of Directors
(or such other Person or Persons as the Act may require or permit) shall file
Articles of Dissolution with the Secretary of State of Nevada, cancel any other
filings made pursuant to Section 2.05, and take such other actions as may be
necessary to terminate the Company.

                                  ARTICLE XIV.
                               GENERAL PROVISIONS

     14.01 OFFSET. Whenever the Company is to pay any sum to any Member or
Special Member, any amounts that the Member or Special Member owes the Company
may be deducted from that sum before payment.

     14.02 NOTICES. Except as expressly set forth to the contrary in these
Regulations, all notices, requests, or consents provided for or permitted to be
given under these Regulations must be in writing and must be given either by
depositing that writing in the United States mail, addressed to the recipient,
postage paid, and registered or certified with return receipt requested or by
delivering that writing to the recipient in person, by courier, or by facsimile
transmission; and a notice, request, or consent given under these Regulations is
effective on receipt by the Person to receive it. All notices, requests, and
consents to be sent to a Member or Special Member must be sent to or made at the
addresses given for that Member or Special Member on Exhibit A or in the
instrument described in Section 3.03(d) or 3.04, or such other address as that
Member or Special Member may specify by notice to the other Members and Special
Member. Any notice, request, or consent to the Company or the Board of Directors
must be given to the Board of Directors at the following address: 3751 Victoria
Park Ave., Toronto, Ontario MlW 3Z4 Canada. Whenever any notice is required to
be given by law, the Articles or these Regulations, a written waiver thereof,
signed by the Person entitled to notice, whether before or after the time stated
therein, shall be deemed equivalent to the giving of such notice.

     14.03 ENTIRE AGREEMENT; SUPERSEDURE. These Regulations constitute the
entire agreement of the Members, Special Members and their affiliates relating
to the Company and supersedes all prior contracts or agreements with respect to
the Company, whether oral or written.

     14.04 EFFECT OF WAIVER OR CONSENT. A waiver or consent, express or implied,
to or of any breach or default by any Person in the performance by that Person
of its obligations with respect to the Company is not a consent or waiver to or
of any other breach or default in the performance by that Person of the same or
any other obligations of that Person with respect to the Company. Failure on the
part of a Person to complain of any act of any Person or to declare any Person
in default with respect to the Company, irrespective of how long that failure
continues, does not constitute a waiver by that


                                       26

Person of its rights with respect to that default until the applicable
statute-of-limitations period has run.

     14.05 AMENDMENT OR MODIFICATION. These Regulations may be amended or
modified from time to time only by a written instrument adopted by the Board of
Directors and executed and agreed to by a Required Interest; provided, however,
that (a) an amendment or modification changing a Member's Sharing Ratio or a
Special Member's profit allocation or cash distribution percentage (other than
to reflect changes otherwise provided by these Regulations) is effective only
with that Member's consent, (b) an amendment or modification reducing a Special
Member's profit allocation or cash distribution percentage (other than to
reflect changes otherwise provided by these Regulations) is effective only with
that Special Member's consent (c) an amendment or modification reducing the
required Sharing Ratio or other measure for any consent or vote in these
Regulations is effective only with the consent or vote of Members having the
Sharing Ratio or other measure theretofore required, and (c) amendments of the
type described in Section 3.04 may be adopted as therein provided.

     14.06 BINDING EFFECT. Subject to the restrictions on Dispositions set forth
in these Regulations, these Regulations are binding on and inure to the benefit
of the Members and their respective heirs, legal representatives, successors,
and assigns.

     14.07 GOVERNING LAW; SEVERABILITY. THESE REGULATIONS ARE GOVERNED BY AND
SHALL BE CONSTRUED IN ACCORDANCE WITH LAW OF THE STATE OF NEVADA, EXCLUDING ANY
CONFLICT-OF-LAWS RULE OR PRINCIPLE THAT MIGHT REFER THE GOVERNANCE OR THE
CONSTRUCTION OF THESE REGULATIONS TO THE LAW OF ANOTHER JURISDICTION. In the
event of a direct conflict between the provisions of these Regulations and (a)
any provision of the Articles, or (b) any mandatory provision of the Act, the
application provision of the Articles or the Act shall control. If any provision
of these Regulations or the application thereof to any Person or circumstance is
held invalid or unenforceable to any extent, the remainder of these Regulations
and the application of that provision to other Persons or circumstances is not
affected thereby and that provision shall be enforced to the greatest extent
permitted by law.

     14.08 FURTHER ASSURANCES. In connection with these Regulations and the
transactions contemplated hereby, each Member and Special Member shall execute
and deliver any additional documents and instruments and perform any additional
acts that may be necessary or appropriate to effectuate and perform the
provisions of these Regulations and those transactions.

     14.09 WAIVER OF CERTAIN RIGHTS. Each Member and Special Member irrevocably
waives any right it may have to maintain any action for dissolution of the
Company or for partition of the property of the Company.

     14.10 INDEMNIFICATION. To the fullest extent permitted by law, each Member
and Special Member shall indemnify the Company, each Director and each other
Member and Special Member and hold them harmless from and against all losses,
costs, liabilities, damages, and expenses (including, without limitation, costs
of suit and attorney's fees) they may incur on account of any breach by that
Member or Special Member of these Regulations.


                                       27

     14.11 NOTICE TO MEMBERS OF PROVISIONS OF THIS AGREEMENT. By executing these
Regulations, each Member and Special Member acknowledges that it has actual
notice of (a) all of the provisions of this Agreement, including, without
limitation, the restrictions on the transfer of Membership Interests and Special
Membership Interests set forth in Article III, and (b) all of the provisions of
the Articles, including, without limitation, the fact that the Articles provide
that no Member or Special Member shall have the preemptive right to acquire any
Membership Interests or Special Membership Interests or securities of any class
that may at any time be issued, sold or offered for sale by the Company. Each
Member and Special Member hereby agrees that these Regulations constitute
adequate notice of all such provisions.

     14.12 COUNTERPARTS. These Regulations may be executed in any number of
counterparts with the same effect as if all signing parties had signed the same
document. All counterparts shall be construed together and constitute the same
instrument.

     14.13 ARBITRATION. If, at any time or from time to time during the
continuance of the Company or after the dissolution or other termination
thereof, any dispute, difference or question shall arise between or among any of
the parties hereto, or their successors, assigns or nominees, touching or
concerning the Company of the property, assets, rights or transactions thereof,
or the dissolution or other termination thereof, or the property of the Company
or the construction, meaning or effect of these Regulations, or any provision
hereof, or the rights of obligations of the Members or the Special Members, or
their successors, assigns or nominees, under these Regulations or otherwise,
with respect thereto, then every such dispute, difference or question shall be
submitted to and settled by arbitration and the decision of the arbitrator
appointed as hereinafter provided to deal with such matter shall be accepted by
all the Members and the Special Members to such dispute, difference or question.
The arbitration shall be conducted by a single arbitrator agreed upon by the
Members and Special Members to the matter. The decision of the arbitrator shall
be final and binding upon all the Members and Special Members to such dispute,
difference or question and their nominees, and there shall be no appeal
therefrom. Arbitration shall be administered by the American Arbitration
Association in accordance with its Commercial Arbitration Rules. The arbitration
will be conducted in Atlanta, Georgia. The arbitrator shall apply Nevada
substantive law and Nevada evidentiary law to the proceeding. The arbitrator
shall have the power to grant all legal and equitable remedies and award
compensatory damages provided by Nevada law. Punitive or exemplary damages shall
not be awarded for any breach or alleged breach of this Agreement. The
arbitrator shall be bound by the terms of this Agreement. The arbitrator shall
not be empowered or authorized to add to, subtract from, delete or in any other
way modify the terms of this Agreement. The arbitrator shall prepare in writing
and provide to the parties an award including factual findings and the reasons
on which the decision is based.


                                       28

     IN WITNESS WHEREOF, following the adoption of these Regulations by the
Board of Directors, the Members have executed these Regulations as of the date
first set forth above.

                                        MEMBERS:

                                        ELLY NEVADA, INC.,
                                        a Nevada corporation


                                        By: /s/ Elly Reisman
                                            ------------------------------------
                                            Elly Reisman, President


                                        NORMAN NEVADA, INC.,
                                        a Nevada corporation


                                        BY: /s/ Norman Reisman
                                            ------------------------------------
                                            Norman Reisman, President


                                        LARRY NEVADA, INC.,
                                        a Nevada corporation


                                        BY: /s/ Larry Robbins
                                            ------------------------------------
                                            Larry Robbins, President


                                        LITTLE SHOTS NEVADA L.L.C.,
                                        a Nevada limited liability company


                                        By: /s/ Bruce Freeman
                                            ------------------------------------
                                            Bruce Freeman, Managing Member


                                        By: /s/ Seymour Joffe
                                            ------------------------------------
                                            Seymour Joffe, Managing Member


                                        By: /s/ Harry Rosenbaum
                                            ------------------------------------
                                            Harry Rosenbaum, Managing Member


                                       29

                                        SPECIAL MEMBERS:

                                        ELLY COLORADO, INC.,
                                        a Colorado corporation


                                        BY: /s/ Elly Reisman
                                            ------------------------------------
                                            Elly Reisman, President


                                        NORMAN COLORADO, INC.,
                                        a Colorado corporation


                                        BY: /s/ Norman Reisman
                                            ------------------------------------
                                            Norman Reisman, President


                                        LARRY COLORADO, INC.,
                                        a Colorado corporation


                                        By: /s/ Larry Robbins
                                            ------------------------------------
                                            Larry Robbins, President


                                        LITTLE SHOTS NEVADA L.L.C.,
                                        a Nevada limited liability company


                                        By: /s/ Bruce Freeman
                                            ------------------------------------
                                            Bruce Freeman, Managing Member


                                        By: /s/ Seymour Joffe
                                            ------------------------------------
                                            Seymour Joffe, Managing Member


                                        By: /s/ Harry Rosenbaum
                                            ------------------------------------
                                            Harry Rosenbaum, Managing Member


                                       30

EX-3.2(B)

                                                                  Exhibit 3.2(b)

                                     BY-LAWS

                                       OF

                            ASHTON WOODS FINANCE CO.

                            (a Delaware Corporation)

                        (Effective as of August 5, 2005)

                                    ARTICLE I

                                     OFFICES

     SECTION 1. REGISTERED OFFICE. The registered office of Ashton Woods Finance
Co. (the "Corporation") in the State of Delaware is located at 2711 Centerville
Road, Suite 400, in the City of Wilmington, County of New Castle. The name and
address of the Corporation's registered agent at such address is the Corporation
Trust Company.

     SECTION 2. OTHER OFFICES. The Corporation may also have offices at such
other places, within or without the State of Delaware, as the Board of Directors
of the Corporation (the "Board") may from time to time appoint or the business
of the Corporation may require.

                                   ARTICLE II

                             MEETING OF STOCKHOLDERS

     SECTION 1. PLACE OF MEETING. Meetings of the stockholders shall be held
either within or without the State of Delaware at such place as the Board may
fix and in such manner as the Board may determine.

     Alternatively, the Board, in its sole discretion, may determine that such
meetings be held solely by means of remote communication. For any meeting of
stockholders to be held by remote communication, the Corporation shall (a)
implement reasonable measures to verify that each person deemed present and
permitted to vote at the meeting by remote communication is a stockholder or
proxyholder, (b) implement reasonable measures to provide such stockholders and
proxyholders a reasonable opportunity to participate in the meeting and to vote
on matters submitted to the stockholders, including an opportunity to read or
hear the proceedings of the meeting substantially concurrently with such
proceedings, and (c) if any stockholder or proxyholder votes or takes other

action at the meeting by means of remote communication, a record of such vote or
other action shall be maintained by the corporation.

     SECTION 2. ANNUAL MEETING. The annual meeting of stockholders shall be held
in each year on the date specified by the Board for the election of directors
and for such other business as may properly be conducted at such meeting.

     SECTION 3. SPECIAL MEETINGS. Special meetings of the stockholders may be
called at any time by the President, a majority of the Board or by the holders
of at least a majority of the issued and outstanding shares of stock entitled to
vote generally in the election of directors, voting together as a single class,
to be held at such date, time and place, either within or without the State of
Delaware as may be stated in the notice of meeting.

     SECTION 4. NOTICE. Notice of every meeting of stockholders shall state the
hour, means of remote communication, if any, date and place, if any, thereof,
and, in the case of a special meeting, the purpose or purposes for which the
meeting is called, and shall, not less than ten (10) and not more than sixty
(60) days before such meeting, be served upon, mailed, or transmitted
electronically to each stockholder of record entitled to vote thereat, at such
stockholder's address as it appears upon the stock records of the Corporation.

     Notice of the hour, means of remote communication, if any, by which
stockholders or proxyholders may be deemed to be present and vote at such
meeting, date, place, if any, and purpose of any meeting of stockholders may be
dispensed with if every stockholder entitled to vote thereat shall attend in
person, by proxy, or by remote communication and shall not object to the holding
of such meeting for lack of proper notice, or if every absent stockholder
entitled to such notice shall in writing or by electronic transmission, filed
with the records of the meeting, either before or after the holding thereof,
waive such notice.

     SECTION 5. QUORUM. Except as otherwise provided by law or by the
Certificate of Incorporation of the Corporation (the "Charter"), the holders of
a majority of the issued and outstanding stock of the Corporation entitled to
vote thereat, present in person or by means of remote communication, or
represented by proxy shall constitute a quorum for the transaction of business
at all meetings of stockholders.

     SECTION 6. VOTING. At each meeting of stockholders, every stockholder of
record at the closing of the transfer books, if closed, or on the date set by
the Board for the determination of stockholders entitled to vote at such
meeting, shall have one vote for each share of stock entitled to vote which is
registered in such stockholder's name on the books of the Corporation. At each
such meeting every stockholder shall be entitled to vote in person or by means
of remote communication, or by proxy appointed by an instrument in writing
subscribed by such stockholder and bearing a date not more than


                                        2

three (3) years prior to the meeting in question, unless said instrument
provides for a longer period during which it is to remain in force.

     All elections of directors shall be held by written ballot, unless
otherwise provided in the Charter or prescribed by the Board; if authorized by
the Board, such requirement of a written ballot shall be satisfied by a ballot
submitted by electronic transmission, provided that any such electronic
transmission must either set forth or be submitted with information from which
it can be determined that the electronic transmission was authorized by the
stockholder or proxy holder.

     At any meeting at which a quorum is present, a plurality of votes properly
cast for election to fill any vacancy on the Board shall be sufficient to elect
a candidate to fill such vacancy, and a majority of the votes properly cast upon
any other question shall decide the question, except in any case where a larger
vote is required by law, the Charter, these By-Laws, or otherwise.

     SECTION 7. ORGANIZATION. The President, shall call meetings of the
stockholders to order and shall act as the presiding officer thereof. The
Secretary of the Corporation, if present, shall act as secretary of all meetings
of stockholders, and, in such person's absence, the presiding officer may
appoint a secretary.

     SECTIONS8. INSPECTORS OF ELECTION. The Board, in advance of any
stockholders' meeting, may appoint one or more inspectors to act at the meeting
or any adjournment thereof. If any of the inspectors so appointed shall fail to
appear or act or if inspectors shall not have been so appointed, the person
presiding at a stockholders' meeting may, and on the request of any stockholder
entitled to vote thereat shall, appoint one or more inspectors. Each inspector,
before entering upon the discharge of his or her duties, shall take and sign an
oath faithfully to execute the duties of inspector at such meeting with strict
impartiality and according to the best of his or her ability.

     The inspectors, if so appointed, shall determine the number of shares of
capital stock outstanding and the voting power of each, the shares represented
at the meeting, the existence of a quorum, and the validity and effect of
proxies, and shall receive votes, ballots or consents, hear and determine all
challenges and questions arising in connection with the right to vote, count and
tabulate all votes, ballots or consents, determine the result, and do such acts
as are proper to conduct the election or vote with fairness to all stockholders.
On request of the person presiding at the meeting or any stockholder entitled to
vote thereat, the inspectors shall make a report in writing of any challenge,
question or matter determined by them and execute a certificate of any fact
found by them. No director or candidate for office shall act as an inspector of
an election of directors.

     SECTION 9. LISTS OF STOCKHOLDERS. The officer who has charge of the stock
ledger of the Corporation shall prepare and make, at least ten (10) days before
every meeting of stockholders, a complete list of the stockholders entitled to
vote at the


                                        3

meeting, arranged in alphabetical order, showing the address of each stockholder
and the number and class of shares held by each. Nothing contained in this
Section 9 shall require the Corporation to include electronic mail addresses or
other electronic contact information on such list. Such list shall be open to
the examination of any stockholder, for any purpose germane to the meeting for a
period of at least ten (10) days prior to the meeting during ordinary business
hours, at the principal place of business of the Corporation. The list shall be
produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present.

     SECTION 10. ADJOURNMENT. At any meeting of stockholders of the Corporation,
if less than a quorum shall be present, a majority of the stockholders entitled
to vote thereat, present in person or by means of remote communication, or
represented by proxy, shall have the power to adjourn the meeting from time to
time without notice other than announcement at the meeting until a quorum shall
be present. Any business may be transacted at the adjourned meeting which might
have been transacted at the meeting originally noticed. If the adjournment is
for more than thirty (30) days, or if after the adjournment a new record date is
fixed for the adjourned meeting, a notice of the adjourned meeting shall be
given to each stockholder of record entitled to vote at the meeting.

     SECTION 11. ACTION BY WRITTEN CONSENT. Any action required or permitted to
be taken at any meeting of stockholders may, except as otherwise required by law
or the Charter, be taken without a meeting, without prior notice and without a
vote, if a consent in writing, setting forth the action so taken shall be signed
by the holders of not less than the minimum number of votes that would be
necessary to authorize or take such action at which all shares entitled to vote
thereon were present and voted, and the writing or writings are filed with the
permanent records of the Corporation. Prompt notice, or notice within the time
prescribed by state law, of the taking of corporate action without a meeting by
less than unanimous written consent will be given to those stockholders who have
not consented in writing.

                                   ARTICLE III

                                    DIRECTORS

     SECTION 1. GENERAL POWERS. The management of the business and the conduct
of the affairs of the Corporation shall be vested in the Board. The Board shall
exercise all of the powers and duties conferred by law except as provided by the
Charter or these By-Laws.

     SECTION 2. NUMBER AND TERM. A director need not be a stockholder, a citizen
of the United States, or a resident of the State of Delaware. The number of
directors constituting the whole Board shall be at least one. Subject to the
foregoing limitation, the number of directors may be fixed from time to time by
action of the directors, or if the number is not fixed, the number shall be two.
The number of directors


                                       4

may be increased or decreased only by action of the directors. At each annual
meeting of the stockholders of the Corporation, the directors shall be elected
to hold office for a term expiring at the next annual meeting of the
stockholders and/or until their respective successors are duly elected and
qualified or until their earlier resignation or removal. The persons receiving
the votes of a majority of the stock represented at the meeting shall be
directors for the term prescribed by these By-Laws or until their successors
shall be elected.

     SECTION 3. RESIGNATIONS. Any director of the Corporation may resign at any
time by giving notice in writing or by electronic transmission to the Board or
to the President or the Secretary of the Corporation. Such resignation shall
take effect at the time specified therein or, if the time is not specified, it
shall take effect immediately upon its receipt; and unless otherwise specified
therein, the acceptance of such resignation shall not be necessary to make it
effective.

     SECTION 4. REMOVAL BY STOCKHOLDERS. Any director may be removed from
office, with or without cause, by the affirmative vote of the holders of a
majority of the then outstanding shares of stock entitled to vote generally in
the election of directors, voting together as a single class.

     SECTION 5. VACANCIES. Newly created directorships resulting from any
increase in the number of directors and any vacancies on the Board resulting
from death, resignation, disqualification, removal or other cause shall be
filled by the affirmative vote of a majority of the remaining directors then in
office, even though less than a quorum, or by the sole remaining director. Any
director elected in accordance with the preceding sentence shall hold office
until the next annual meeting of the stockholders and until his or her successor
is elected and qualified or until his or her earlier resignation or removal. No
decrease in the number of directors constituting the Board shall shorten the
term of any incumbent director.

     SECTION 6. MEETINGS. Regular meetings of the Board may be held without
notice by means of remote communication, if any, or at such places, within or
without the State of Delaware, and times as shall be determined from time to
time by resolution of the directors.

     Special meetings of the Board shall be called by the Chairman of the Board,
President or Secretary of the Corporation or by any of them on the request in
writing or by means of electronic communication of any director with at least
two (2) days' oral, electronic or written notice to each director and shall be
held by remote communication, or at such place, within or without the State of
Delaware, as may be determined by the directors or as shall be stated in the
notice of meeting.

     Meetings may be held at any time and place, if any, or without notice if
all the directors are present and do not object to the holding of such meeting
for lack of proper


                                        5

notice or if those not present shall, in writing or by electronic transmission,
waive notice thereof.

     SECTION 7. QUORUM, VOTING AND ADJOURNMENT. A majority of the total number
of directors or any committee thereof shall constitute a quorum for the
transaction of business. The vote of a majority of the directors present in
person or by remote communication at a meeting at which a quorum is present
shall be the act of the Board. In the absence of a quorum, a majority of the
directors present thereat in person or by remote communication may adjourn such
meeting to another time and place, if any. Notice of the next meeting need not
be given to the directors present in person or by remote communication at the
adjourned meeting if the time and place, if any, of the next meeting are
announced at the meeting so adjourned.

     SECTION 8. COMMITTEES. The Board may, by resolution passed by a majority of
the Board, designate one or more committees, each such committee to consist of
one or more of the directors of the Corporation. Any such committee, to the
extent provided in the resolution of the Board, shall have and may exercise all
the powers and authority of the Board in the management of the business and
affairs of the Corporation and may authorize the seal of the Corporation to be
affixed to all papers which may require it; but no such committee shall have the
power or authority to amend the Charter, adopt an agreement of merger or
consolidation, recommend to the stockholders the sale, lease, or exchange of all
or substantially all of the Corporation's properties and assets, recommend to
the stockholders a dissolution of the Corporation or a revocation of a
dissolution or to amend, or recommend to the stockholders the amendment of,
these By-Laws. Unless a resolution of the Board expressly provides, no such
committee shall have the power or authority to declare a dividend or to
authorize the issuance of stock of the Corporation. All committees of the Board
shall report their proceedings to the Board when required.

     SECTION 9. ACTION WITHOUT A MEETING. Unless otherwise restricted by the
Charter or these By-Laws, any action required or permitted to be taken at any
meeting of the Board or of any committee thereof may be taken without a meeting
if all members of the Board or committee, as the case may be, consent thereto in
writing or by electronic transmission, and the writing or writings or electronic
transmission or transmissions are filed with the minutes of the proceedings of
the Board, or committee. Such filings shall be in paper form if the minutes are
maintained in paper form and shall be in electronic form if the minutes are
maintained in electronic form.

     SECTION 10. COMPENSATION. The Board shall have the authority to fix the
compensation of directors for their services. A director may also serve the
Corporation in other capacities and receive compensation therefor.

     SECTION 11. TELEPHONIC OR ELECTRONIC MEETINGS. Unless otherwise restricted
by the Charter, members of the Board, or any committee designated by the Board,
may participate in a meeting by means of conference telephone, remote


                                        6

communication or similar communications equipment in which all persons
participating in the meeting can hear, speak and/or communicate with each other.
Participation in any such meeting shall constitute presence in person at such
meeting.

                                   ARTICLE IV

                                    OFFICERS

     SECTION 1. OFFICERS. The Board shall elect a President and a Secretary and,
in its discretion, may, or may delegate to the President the authority to, elect
one or more Vice Presidents, a Treasurer, Assistant Secretaries, Assistant
Treasurers and other officers and agents as deemed necessary or appropriate.
Such officers shall be elected initially at the first meeting of the Board, and
each shall hold office until their successors are elected and qualified or until
his or her earlier death, resignation or removal. The powers and duties of more
than one office may be exercised and performed by the same person.

     SECTION 2. PRESIDENT. The President shall have such powers and perform such
other duties as prescribed from time to time by the Board.

     The President shall preside at all meetings of the stockholders and of the
Board. Except as the Board shall otherwise provide with respect to a given
transaction or act, the President shall, and may delegate to any officer of the
Corporation, by execution of a power of attorney or otherwise, the authority to
execute bonds, deeds, mortgages and other contracts on behalf of the
Corporation, and shall cause the seal of the Corporation to be affixed to any
instrument requiring it and, when so affixed, the seal shall be attested by the
signature of the Secretary or the Treasurer or an Assistant Secretary or an
Assistant Treasurer.

     SECTION 3. VICE PRESIDENTS. Each Vice President, of whom one or more may be
designated a Senior Vice President, or an Executive Vice President, shall have
and exercise such powers and shall perform such duties as from time to time may
be assigned to him or her by the President or the Board.

     SECTION 4. SECRETARY. The Secretary shall (i) keep the minutes of all
meetings of the stockholders and of the Board in books provided for that
purpose; (ii) see that all notices are duly given in accordance with the
provisions of law and these By-Laws; (iii) maintain custody of the records and
of the corporate seal or seals of the Corporation; (iv) if required see that the
corporate seal is affixed to all documents the execution of which, on behalf of
the Corporation under its seal, is duly authorized, and, when the seal is so
affixed, may attest the same; and (v) perform all duties incident to the office
of secretary of a corporation, and such other duties as from time to time may be
assigned by the President or the Board. In addition, the Secretary may sign,
with the President, certificates of stock of the Corporation.


                                        7

     SECTION 5. TREASURER. The Treasurer shall have charge of and be responsible
for all funds, securities, receipts and disbursements of the Corporation, and
shall keep full and accurate accounts of receipts and disbursements in books
belonging to the Corporation. He or she shall deposit, or cause to be deposited,
in the name of the Corporation, all monies or other valuable effects in such
banks, trust companies or other depositaries as shall, from time to time, be
selected by the Board; he or she may endorse for collection on behalf of the
Corporation checks, notes and other obligations; he or she may sign receipts and
vouchers for payments made to the Corporation; he or she may sign checks of the
Corporation, singly or jointly with another person as the Board may authorize,
and pay out and dispose of the proceeds under the direction of the Board; he or
she shall render to the President and to the Board, whenever requested, an
account of the financial condition of the Corporation and; he or she shall
perform all the duties incident as from time to time may be assigned by the
President or the Board.

     SECTION 6. ASSISTANT TREASURER AND ASSISTANT SECRETARY. Each Assistant
Treasurer and each Assistant Secretary shall, in the absence or disability of
the Secretary, perform the duties and exercise the powers of the Treasurer and
Secretary respectively, and shall perform such other duties as the President or
the Board shall prescribe.

     SECTION 7. DELEGATION. In the absence, disability or refusal of any officer
to exercise and perform his or her duties, the President or the Board may
delegate all or any of the powers and duties of any officer to any other
officer.

     SECTION 8. RESIGNATION AND REMOVAL. Any officer of the Corporation may be
removed, with or without cause, by action of the Board. An officer may resign at
any time in the same manner prescribed under Section 3 of Article III of these
By-Laws for the resignation of a director.

     SECTION 9. VACANCIES. The Board shall have the power to fill vacancies
occurring in any office.

                                    ARTICLE V

                              CERTIFICATES OF STOCK

     SECTION 1. FORM AND EXECUTION OF CERTIFICATES. The interest of each
stockholder of the Corporation shall be evidenced by a certificate or
certificates for shares of stock in such form as the Board may from time to time
prescribe. The certificates of stock of each class shall be consecutively
numbered and signed by the President and by the Treasurer or an Assistant
Treasurer or the Secretary or an Assistant Secretary, and shall bear the
corporate seal or a printed or engraved facsimile thereof. Any or all of the
signatures on the certificate may be a facsimile. The Board shall have the power
to appoint one or more transfer agents and/or registrars for the transfer or


                                        8

registration of certificates of stock of any class, and may require stock
certificates to be countersigned or registered by one or more of such transfer
agents and/or registrars.

     SECTION 2. TRANSFER OF SHARES. The shares of the stock of the Corporation
shall be transferable on the books of the Corporation by the holder thereof in
person or by his or her attorney lawfully constituted, upon surrender for
cancellation of certificates for the same number of shares, with an assignment
and power of transfer endorsed thereon or attached thereto, duly executed, with
such proof or guaranty of the authenticity of the signature as the Corporation
or its agents may reasonably require. A record shall be made of each transfer.
Whenever any transfer of shares shall be made for collateral security, and not
absolutely, it shall be so expressed in the entry of the transfer if, when the
certificates are presented, both the transferor and transferee request the
Corporation to do so. The Board shall have the power and authority to make such
rules and regulations as it may deem necessary or proper concerning the issue,
transfer and registration of certificates for shares of stock of the
Corporation.

     SECTION 3. CLOSING OF TRANSFER BOOKS. The stock transfer books of the
Corporation may, if deemed appropriate by the Board, be closed for such length
of time not exceeding fifty (50) days as the Board may determine, preceding the
date of any meeting of stockholders or the date for the payment of any dividend
or the date for the allotment of rights or the date when the issuance, change,
conversion or exchange of capital stock shall go into effect, during which time
no transfer of stock on the books of the Corporation may be made.

     SECTION 4. DATES OF RECORD. If deemed appropriate, the Board may fix in
advance a date for such length of time not exceeding sixty (60) days (and, in
the case of any meeting of stockholders, not less than ten (10) days) as the
Board may determine, preceding the date of any meeting of stockholders, or the
date for the payment of any dividend, or the date for the allotment of rights or
the date when any issuance, change, conversion or exchange of capital stock
shall go into effect, as a record date for the determination of stockholders
entitled to notice of, and to vote at, any such meeting or entitled to receive
payment of any such dividend or to any allotment of rights, or to exercise the
rights in respect of any such issuance, change, conversion or exchange of
capital stock, as the case may be, and in such case only such stockholders as
shall be stockholders of record on the date so fixed shall be entitled to such
notice of, and to vote at, such meeting, or to receive payment of such dividend,
or to receive such allotment of rights, or to exercise such rights, as the case
may be, notwithstanding any transfer of any stock on the books of the
Corporation after any record date fixed as aforesaid. If no such record date is
so fixed, the record date shall be determined by applicable law.

     SECTION 5. LOST OR DESTROYED CERTIFICATES. A new certificate of stock may
be issued in the place of any certificate previously issued by the Corporation,
alleged to have been lost, stolen, destroyed, improperly issued or mutilated,
and the Board may, in its discretion, require the owner of such lost, stolen,
destroyed, improperly


                                        9

issued or mutilated certificate, or his or her legal representative, to give the
Corporation a bond, in such sum as the Board may direct, in order to indemnify
the Corporation against any claims that may be made against it in connection
therewith.

     SECTION 6. DIVIDENDS. Subject to the provisions of the Charter, the Board
may at any regular or special meeting, out of funds legally available therefor,
declare dividends upon the stock of the Corporation. Before the declaration of
any dividend, the Board may set apart, out of any funds of the Corporation
available for dividends, such sum or sums as from time to time in its discretion
may be deemed proper for working capital or as a reserve fund to meet
contingencies or for such other purposes as shall be deemed conducive to the
interests of the Corporation.

                                   ARTICLE VI

                         INDEMNIFICATION AND INSURANCE

     SECTION 1. POWER TO INDEMNIFY IN ACTION, SUITS OR PROCEEDINGS OTHER THAN
THOSE BY OR IN THE RIGHT OF THE CORPORATION. Subject to Section 3 of this
Article VI, the Corporation shall indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the Corporation) by reason of the
fact that such person is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys' and
other professionals' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by such person in connection with such action,
suit or proceeding if such person acted in good faith and in a manner reasonably
believed to be in or not opposed to the best interests of the Corporation, and,
with respect to any criminal action or proceeding, had no reasonable cause to
believe the conduct was unlawful. The termination of any action, suit or
proceeding by judgment, order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a presumption that
the person did not act in good faith and in a manner reasonably believed to be
in or not opposed to the best interests of the Corporation, and, with respect to
any criminal action or proceeding, had reasonable cause to believe that the
conduct was unlawful.

     SECTION 2. POWER TO INDEMNIFY IN ACTIONS, SUITS OR PROCEEDINGS BY OR IN THE
RIGHT OF THE CORPORATION. Subject to Section 3 of this Article VI, the
Corporation shall indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action or suit by or in
the right of the Corporation to procure a judgment in its favor by reason of the
fact that he is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses (including


                                       10

attorneys' and other professionals' fees) actually and reasonably incurred by
such person in connection with the defense or settlement of such action or suit
if such person acted in good faith and in a manner reasonably believed to be in
or not opposed to the best interests of the Corporation, except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the Corporation
unless and only to the extent that the Court of Chancery or the court in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
which the Court of Chancery or such other court shall deem proper.

     SECTIONS 3. AUTHORIZATION OF INDEMNIFICATION. Any indemnification under
this Article VI (unless ordered by a court) shall be made by the Corporation
only as authorized in the specific case upon a determination that
indemnification of the director, officer, employee or agent is proper in the
circumstances because such person has been the applicable standard of conduct
set forth in Section 1 or Section 2 of this Article VI, as the case may be. Such
determination shall be made (i) by the Board by a majority vote of a quorum
consisting of directors who were not parties to such action, suit or proceeding
(i.e., disinterested directors), (ii) by a committee of such disinterested
directors designated by majority vote of such directors, even though less than a
quorum, (iii) if there are no such disinterested directors, or, if such
directors so direct, by independent legal counsel in a written opinion, or (iv)
if the Board so directs, by the stockholders. To the extent, however, that a
director, officer, employee or agent of the Corporation has been successful on
the merits or otherwise in defense of any action, suit, or proceeding described
above, or in defense of any claim, issue or matter therein, such person shall be
indemnified against expenses (including attorneys' and other professionals'
fees) actually and reasonably incurred by such person in connection therewith,
without the necessity of authorization in the specific case.

     SECTION 4. GOOD FAITH DEFINED. For purposes of any determination under
Section 3 of this Article VI, a person shall be deemed to have acted in good
faith and in a manner reasonably believed to be in or not opposed to the best
interests of the Corporation, or, with respect to any criminal action or
proceeding, to have had no reasonable cause to believe the conduct was unlawful,
if the action is based on (a) the records or books of account of the Corporation
or another enterprise (as defined below in this Section 4), or on information
supplied to such person by the officers of the Corporation or another enterprise
in the course of their duties, unless such person had reasonable cause to
believe that reliance thereon would not be justifiable, or on (b) the advice of
legal counsel for the Corporation or another enterprise, or on information or
records given or reports made to the Corporation or another enterprise by an
independent certified public accountant, independent financial adviser,
appraiser or other expert, as to matters reasonably believed to be within such
other person's professional or expert competence. The term "another enterprise,"
as used in this Section 4, shall mean any other corporation or any partnership,
joint venture, trust or other enterprise of which such


                                       11

person is or was serving at the request of the Corporation as a director,
officer, employee or agent. The provisions of this Section 4 shall not be deemed
to be exclusive or to limit in any way the circumstances in which a person may
be deemed to have met the applicable standard of conduct set forth in Sections 1
or 2 of this Article VI, as the case may be.

     SECTION 5. INDEMNIFICATION BY A COURT. Notwithstanding any contrary
determination in the specific case under Section 3 of this Article VI, and
notwithstanding the absence of any determination thereunder, any director,
officer, employee or agent may apply to any court of competent jurisdiction in
the State of Delaware for indemnification to the extent otherwise permissible
under Sections 1 and 2 of this Article VI. The basis of such indemnification by
a court shall be a determination by such court that indemnification of the
director, officer, employee or agent is proper in the circumstances because he
has met the applicable standards of conduct set forth in Sections 1 or 2 of this
Article VI, as the case may be. Notice of any application for indemnification
pursuant to this Section 5 shall be given to the Corporation promptly upon the
filing of such application.

     SECTION 6. EXPENSES PAYABLE IN ADVANCE. Expenses (including attorneys' and
other professionals' fees) incurred by an officer or director in defending any
threatened or pending civil, criminal, administrative or investigative action,
suit or proceeding, shall be paid by the Corporation in advance of the final
disposition of such action, suit or proceeding upon receipt of an undertaking by
or on behalf of such director or officer, to repay such amount if it shall
ultimately be determined that such person is not entitled to be indemnified by
the Corporation as authorized in this Article VI. Such expenses (including
attorneys' and other professionals' fees) incurred by other employees and agents
may be so paid upon such terms and conditions, if any, as the Board deems
appropriate.

     SECTION 7. NON-EXCLUSIVITY AND SURVIVAL OF INDEMNIFICATION. The
Indemnification and advancement of expenses provided by or granted pursuant to
this Article VI shall not be deemed exclusive of any other rights to which those
seeking indemnification or advancement of expenses may be entitled under any
By-Law, agreement, contract, vote of stockholders or of disinterested directors,
or pursuant to the direction (howsoever embodied) of any court of competent
jurisdiction or otherwise, it being the policy of the Corporation that
indemnification of the persons specified in Sections 1 and 2 of this Article VI
shall be made to the fullest extent permitted by law, including as a result of
any amendment of the General Corporation Law of the State of Delaware expanding
the right of corporations to indemnify directors, officers, employees or agents.
The provisions of this Article VI shall not be deemed to preclude the
indemnification of any person who is not specified in Sections 1 and 2 of this
Article VI, but whom the Corporation has the power or obligation to indemnify
under the provisions of the General Corporation Law of the State of Delaware, or
otherwise. The indemnification provided by this Article VI shall continue as to
a person who has


                                       12

ceased to be a director, officer, employee or agent and shall inure to the
benefit of the heirs, executors, administrators and other comparable legal
representatives of such person. The rights conferred in this Article VI shall be
enforceable as contract rights, and shall continue to exists after any
rescission or restrictive modification hereof with respect to events occurring
prior thereto.

     SECTION 8. MEANING OF "OTHER ENTERPRISES" IN CONNECTION WITH EMPLOYEE
BENEFIT PLANS, ETC. For purposes of this Article VI (including Sections 1,2,4
and 9 hereof), references to "other enterprises" shall include employee benefit
plans; references to "fines" shall include any excise taxes assessed on a person
with respect to an employee benefit plan; references to "serving at the request
of the Corporation" shall include any service as a director, officer, employee
or agent of the Corporation which imposes duties on, or involves services by,
such director, officer, employee, or agent with respect to an employee benefit
plan, its participants or beneficiaries; and a person who has acted in good
faith and in a manner such person reasonably believed to be in the interest of
the participants and beneficiaries of an employee benefit plan shall be deemed
to have acted in a manner "not opposed to the best interests of the Corporation"
as referred to in this Article VI.

     SECTION 9. INSURANCE. The Corporation may, but shall not be required to,
purchase and maintain insurance on behalf of any person who is or was a
director, officer, employee or agent of the Corporation, or is or was serving at
the request of the Corporation as a director, officer, employee or agent of
another Corporation, partnership, joint venture, trust or other enterprise
against any liability asserted against such person and incurred by such person
in any such capacity, or arising out of such person's status as such, whether or
not the Corporation would have the power or the obligation to indemnify such
person against such liability under the provisions of this Article VI.

                                   ARTICLE VII

                                  MISCELLANEOUS

     SECTION 1. AMENDMENTS. These By-Laws may be amended or repealed or new
By-Laws may be adopted by the affirmative vote of a majority of the Board at any
regular or special meeting of the Board, provided that the By-Laws adopted by
the Board may be amended or repealed by the stockholders.

     SECTION 2. FISCAL YEAR. The fiscal year of the Corporation shall be fixed
by resolution of the Board.


                                       13

                                  ARTICLE VIII

                          NOTICE AND WAIVER OF NOTICE

     SECTION 1. NOTICE. Whenever notice is required to be given by law, the
Charter or these By-Laws, such notice may be mailed or given by a form of
electronic transmission consented to by the person to whom the notice is given.
Any such consent shall be revocable by such person by written notice to the
Corporation. Any such consent shall be deemed revoked if (a) the Corporation is
unable to deliver by electronic transmission two consecutive notices in
accordance with such consent and (b) such inability becomes known to the
Secretary or an Assistant Secretary of the Corporation or to the transfer agent
or other person responsible for the giving of notice; provided, however, the
inadvertent failure to treat such inability as a revocation shall not invalidate
any meeting or other action.

     Notice given pursuant to these By-Laws shall be deemed given: (a) if
mailed, when deposited in the United States mail, postage pre-paid, addressed to
the person entitled to such notice at his or her address as it appears on the
books and records of the Corporation, (b) if by facsimile telecommunication,
when directed to a number at which such person has consented to receive notice;
(c) if by electronic mail, when directed to an electronic mail address at which
such person has consented to receive notice; (d) if by a posting on an
electronic network together with separate notice to such person of such specific
posting, upon the later of (1) such posting and (2) the giving of such separate
notice; and (e) if by any other form of electronic transmission, when directed
to such person. An affidavit of the Secretary or an Assistant Secretary or of
the transfer agent or other agent of the Corporation that the notice has been
given by a form of electronic transmission shall, in the absence of fraud, be
prima facie evidence of the facts stated herein.

     For purposes of these By-Laws, "electronic transmission" means any form of
communication, not directly involving the physical transmission of paper, that
creates a record that may be retained, retrieved, and reviewed by a recipient
thereof, and that may be directly reproduced in paper form by such a recipient
through an automated process.

     SECTION 2. WAIVER OF NOTICE. Whenever notice is required to be given by
law, the Charter or these By-Laws, a waiver thereof submitted by electronic
transmission or in writing signed by the person entitled to notice, whether
before or after the time stated therein, shall be deemed equivalent to notice.
Attendance of an individual at a meeting, in person or by means of remote
communication, shall constitute a waiver of notice of such meeting, except when
the person attends a meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business because the meeting
is not lawfully called or convened, and the execution by a person of a consent
in writing or by electronic transmission in lieu of meeting shall constitute a
waiver of notice of the action taken by such consent. Neither the business to be
transacted


                                       14

at, nor the purpose of, any meeting of the stockholders, directors, or members
of a committee of the Board need be specified in any such waiver of notice.


                                       15

EX-3.2(C)

                                                                  Exhibit 3.2(c)

                                   REGULATIONS

                                       OF

                           ASHTON WOODS CORPORATE, LLC

                       A NEVADA LIMITED LIABILITY COMPANY

                          Dated as of November 19, 2004

                                   REGULATIONS
                                       OF
                           ASHTON WOODS CORPORATE, LLC
                       A NEVADA LIMITED LIABILITY COMPANY

                                TABLE OF CONTENTS

                                                                           
ARTICLE I
DEFINITIONS ...............................................................    1

1.01    Definitions .......................................................    1
1.02    Construction ......................................................    3

ARTICLE II
ORGANIZATION ..............................................................    3

2.01    Formation .........................................................    3
2.02    Name ..............................................................    3
2.03    Resident Office; Resident Agent; Principal Office in the United
        States; Other Offices .............................................    3
2.04    Purposes ..........................................................    4
2.05    Foreign Qualification .............................................    4
2.06    Term ..............................................................    4
2.07    Mergers and Exchanges .............................................    4
2.08    No State-Law Partnership ..........................................    4

ARTICLE III
MEMBERSHIP; DISPOSITIONS OF INTERESTS .....................................    4

3.01    Initial Members ...................................................    4
3.02    Representations and Warranties ....................................    4
3.03    Restrictions on the Disposition of an Interest ....................    5
3.04    Additional Members ................................................    6
3.05    Interests in a Member .............................................    7
3.06    Information .......................................................    7
3.07    Liability to Third Parties ........................................    7
3.08    Withdrawal ........................................................    8
3.09    Lack of Authority .................................................    8

ARTICLE IV
CAPITAL CONTRIBUTIONS .....................................................    8

4.01    Initial Contributions .............................................    8
4.02    Subsequent Contributions ..........................................    8
4.03    Failure to Contribute .............................................    8




                                       -i-

                                                                           
4.04    Return of Contributions ...........................................   10
4.05    Advances by Members ...............................................   10
4.06    Capital Accounts ..................................................   10

ARTICLE V
ALLOCATIONS AND DISTRIBUTIONS .............................................   11

5.01    Allocations .......................................................   11
5.02    Distributions .....................................................   11

ARTICLE VI
MANAGERS ..................................................................   12

6.01    Management by Managers ............................................   12
6.02    Actions by Managers; Committees; Delegation of Authority and
        Duties ............................................................   13
6.03    Number and Term of Office .........................................   14
6.04    Vacancies; Removal; Resignation ...................................   14
6.05    Meetings ..........................................................   14
6.06    Approval or Ratification of Acts or Contracts by Members ..........   15
6.07    Action by Written Consent or Telephone Conference .................   15
6.08    Compensation ......................................................   15
6.09    Conflicts of Interest .............................................   16
6.10    Officers ..........................................................   16

ARTICLE VII
MEETINGS OF MEMBERS .......................................................   16

7.01    Meetings ..........................................................   16
7.02    Voting List .......................................................   17
7 03    Proxies ...........................................................   18
7.04    Conduct of Meetings ...............................................   18
7.05    Action by Written Consent or Telephone Conference .................   18

ARTICLE VIII
INDEMNIFICATION ...........................................................   19

8.01    Right to Indemnification ..........................................   19
8.02    Advance Payment ...................................................   20
8.03    Indemnification of Officers, Employees, and Agents ................   20
8.04    Appearance as a Witness ...........................................   20
8.05    Nonexclusivity of Rights ..........................................   20
8.06    Insurance .........................................................   21
8.07    Member Notification ...............................................   21
8.08    Savings Clause ....................................................   21




                                      -ii-

                                                                           
ARTICLE IX
TAXES .....................................................................   21

9.01    Tax Returns .......................................................   22
9.02    Tax Elections .....................................................   22
9.03    "Tax Matters Partner" .............................................   22

ARTICLE X
BOOKS, RECORDS, REPORTS, AND BANK ACCOUNTS ................................   22

10.01   Maintenance of Books ..............................................   22
10.02   Reports ...........................................................   22
10.03   Accounts ..........................................................   23

ARTICLE XI
BANKRUPTCY OF A MEMBER ....................................................   23

11.01   Bankrupt Members ..................................................   23

ARTICLE XII
DISSOLUTION, LIQUIDATION, AND TERMINATION .................................   24

12.01   Dissolution .......................................................   24
12.02   Liquidation and Termination .......................................   24
12.03   Deficit Capital Accounts ..........................................   25
12.04   Articles of Dissolution ...........................................   26

ARTICLE XIII
GENERAL PROVISIONS ........................................................   26

13.01   Offset ............................................................   26
13.02   Notices ...........................................................   26
13.03   Entire Agreement; Supersedure .....................................   26
13.04   Effect of Waiver or Consent .......................................   26
13.05   Amendment or Modification .........................................   27
13.06   Binding Effect ....................................................   27
13.07   Governing Law; Severability .......................................   27
13.08   Further Assurances ................................................   27
13.09   Waiver of Certain Rights ..........................................   27
13.10   Indemnification ...................................................   27
13.11   Notice to Members of Provisions of this Agreement .................   27
13.12   Counterparts ......................................................   28
13.13   Arbitration .......................................................   28




                                      -iii-

                                   REGULATIONS

                                       OF

                           ASHTON WOODS CORPORATE, LLC

                       A NEVADA LIMITED LIABILITY COMPANY

     These REGULATIONS OF ASHTON WOODS CORPORATE, LLC (these "Regulations"),
dated as of November 19, 2004, are (a) adopted by the Managers (as defined
below) and (b) executed and agreed to, for good and valuable consideration, by
the Members (as defined below).

                                    ARTICLE I
                                   DEFINITIONS

     1.01 DEFINITIONS. As used in these Regulations, the following terms have
the following meanings:

          "Act" means the Nevada Limited Liability Company Act and any successor
     statute, as amended from time to time.

          "Articles" has the meaning given that term in Section 2.01.

          "Bankrupt Member" means (except to the extent a Required Interest
     consents otherwise) any Member (a) that (i) makes a general assignment for
     the benefit of creditors; (ii) files a voluntary bankruptcy petition; (iii)
     becomes the subject of an order for relief or is declared insolvent in any
     federal or state bankruptcy or insolvency proceedings; (iv) files a
     petition or answer seeking for the Member a reorganization, arrangement,
     composition, readjustment, liquidation, dissolution, or similar relief
     under any law; (v) files an answer or other pleading admitting or failing
     to contest the material allegations of a petition filed against the Member
     in a proceeding of the type described in subclauses (i) through (iv) of
     this clause (a); or (vi) seeks, consents to, or acquiesces in the
     appointment of a trustee, receiver, or liquidator of the Member or of all
     or any substantial part of the Member's properties; or (b) against which, a
     proceeding seeking reorganization, arrangement, composition, readjustment,
     liquidation, dissolution, or similar relief under any law has been
     commenced and 120 days have expired without dismissal thereof or with
     respect to which, without the Member's consent or acquiescence, a trustee,
     receiver, or liquidator of the Member or of all or any substantial part of
     the Member's properties has been appointed and 90 days have expired without
     the appointment's having been vacated or stayed, or 90 days have expired
     after the date of expiration of a stay, if the appointment has not
     previously been vacated.

          "Business Day" means any day other than a Saturday, a Sunday, or a
     holiday on which national banking associations in the State of Nevada are
     closed.


                                       -1-

          "Capital Contribution" means any contribution by a Member to the
     capital of the Company.

          "Code" means the Internal Revenue Code of 1986 and any successor
     statute, as amended from time to time.

          "Commitment" means, subject in each case to adjustments on account of
     Dispositions of Membership Interests permitted by these Regulations, (a) in
     the case of a Member executing these Regulations as of the date of these
     Regulations or a Person acquiring that Membership Interest, the amount
     specified for that Member as its Commitment on Exhibit A, and (b) in the
     case of a Membership Interest issued pursuant to Section 3.04, the
     Commitment established pursuant thereto.

          "Company" means Ashton Woods Corporate, LLC, a Nevada limited
     liability company.

          "Default Interest Rate" means a rate per annum equal to the lesser of
     (a) four percent (4%) plus a varying rate per annum that is equal to the
     interest rate published as the prime rate by The Bank of Nova Scotia from
     time to time, with adjustments in that varying rate to be made on the same
     date as any change in that rate, and (b) the maximum rate permitted by
     applicable law.

          "Delinquent Member" has the meaning given that term in Section
     4.03(a).

          "Dispose," "Disposing," or "Disposition" means a sale, assignment,
     transfer, exchange, mortgage, pledge, grant of a security interest, or
     other disposition or encumbrance (including, without limitation, by
     operation of law), or the acts thereof.

          "General Interest Rate" means a rate per annum equal to the lesser of
     (a) a varying rate per annum that is equal to the interest rate published
     as the prime rate by The Bank of Nova Scotia from time to time, with
     adjustments in that varying rate to be made on the same date as any change
     in that rate, and (b) the maximum rate permitted by applicable law.

          "Lending Member" has the meaning given that term in Section
     4.03(a)(ii).

          "Manager" means Bruce Freeman, Harry Rosenbaum and Seymour Joffe and
     any Person hereafter elected as a manager of the Company as provided in
     these Regulations, but does not include any Person who has ceased to be a
     manager of the Company.

          "Member" means any Person executing these Regulations as of the date
     of these Regulations as a member or hereafter admitted to the Company as a
     member as provided in these Regulations, but does not include any Person
     who has ceased to be a member in the Company.


                                       -2-

          "Membership Interest" means the interest of a Member in the Company,
     including, without limitation, rights to distributions (liquidating or
     other), allocations, information, and to consent or approve.

          "Permitted Transferee" has the meaning given that term in Section
     3.03(b).

          "Person" has the meaning given that term in the Act.

          "Proceeding" has the meaning given that term in Section 8.01.

          "Regulations" has the meaning given that term in the introductory
     paragraph.

          "Required Interest" means one or more Members having among them more
     than 51% of the Sharing Ratios of all Members.

          "Sharing Ratio" with respect to any Member means the percentage set
     forth on Exhibit A, subject to change as herein provided.

Other terms defined herein have the meanings so given them.

     1.02 CONSTRUCTION. Whenever the context requires, the gender of al] words
used in these Regulations includes the masculine, feminine, and neuter. All
references to Articles and Section refer to articles and sections of these
Regulations, and all references to Exhibits are to Exhibits attached hereto,
each of which is made a part hereof for all purposes.

                                   ARTICLE II
                                  ORGANIZATION

     2.01 FORMATION. The Company has been organized as a Nevada limited
liability company by the filing of Articles of Organization (the "Articles")
under and pursuant to the Act and the issuance of a certificate of organization
for the Company by the Secretary of State of Nevada.

     2.02 NAME. The name of the Company is "Ashton Woods Corporate, LLC" and all
Company business must be conducted in that name or such other names that comply
with applicable law as the Managers may select from time to time.

     2.03 RESIDENT OFFICE; RESIDENT AGENT; PRINCIPAL OFFICE IN THE UNITED
STATES; OTHER OFFICES. The resident office of the Company required by the Act to
be maintained in the State of Nevada shall be the office of the initial resident
agent named in the Articles or such other office (which need not be a place of
business of the Company) as the Managers may designate from time to time in the
manner provided by law. The resident agent of the Company in the State of Nevada
shall be the initial resident agent named in the Articles or such other Person
or Persons as the Managers may designate from time to time in the manner
provided by law. The principal office of the Company in the United States shall
be at such place as the Managers may designate from time


                                       -3-

to time, which need not be in the State of Nevada. The Company shall maintain
records at the office of the resident agent as required by the Act and shall
keep the street address of the resident office of the Company in the State of
Nevada. The Company may have such other offices as the Managers may designate
from time to time.

     2.04 PURPOSES. The purposes of the Company are those set forth in the
Articles.

     2.05 FOREIGN QUALIFICATION. Prior to the Company's conducting business in
any jurisdiction other than Nevada, the Managers shall cause the Company to
comply, to the extent procedures are available and those matters are reasonably
within the control of the Managers, with all requirements necessary to qualify
the Company as a foreign limited liability company in that jurisdiction. At the
request of the Managers, each Member shall execute, acknowledge, swear to, and
deliver all certificates and other instruments conforming with these Regulations
that are necessary or appropriate to qualify, continue, and terminate the
Company as a foreign limited liability company in all such jurisdictions in
which the Company may conduct business.

     2.06 TERM. The Company commenced on the date the Secretary of State of
Nevada issued a certificate of organization for the Company and shall continue
in existence for the period fixed in the Articles for the duration of the
Company, or such earlier time as these Regulations may specify.

     2.07 MERGERS AND EXCHANGES. The Company may be a party to (a) a merger or
(b) an exchange or acquisition.

     2.08 NO STATE-LAW PARTNERSHIP. The Members intend that the Company not be a
partnership (including, without limitation, a limited - partnership) or joint
venture, and that no Member or Manager be a partner or joint venturer of any
other Member or Manager, for any purposes other than federal and state tax
purposes, and these Regulations may not be construed to suggest otherwise.

                                   ARTICLE III
                      MEMBERSHIP; DISPOSITIONS OF INTERESTS

     3.01 INITIAL MEMBERS. The initial members of the Company are the Persons
executing these Regulations as of the date of these Regulations as members, each
of which is admitted to the Company as a Member effective contemporaneously with
the execution by such Person of these Regulations.

     3.02 REPRESENTATIONS AND WARRANTIES. Each Member hereby represents and
warrants to the Company and each other Member that (a) if that Member is a
corporation, it is duly organized, validly existing and in good standing under
the law of the state of its incorporation and is duly qualified and in good
standing as a foreign corporation in the jurisdiction of its principal place of
business (if not incorporated therein); (b) if that Member is a limited
liability company, it is duly organized, validly existing, and (if applicable)
in good standing under the law of the state of its organization and is duly
qualified and (if applicable) in good standing as a foreign limited liability
company in the jurisdiction of its principal place of business (if not organized
therein); (c) if that Member is a partnership, trust, or other entity, it is
duly formed, validly existing, and (if applicable)


                                       -4-

in good standing under the law of the state of its formation, and if required by
law is duly qualified to do business and (if applicable) in good standing in the
jurisdiction of its principal place of business (if not formed therein), and the
representations and warranties in clause (a), (b) or (c), as applicable, are
true and correct with respect to each partner (other than limited partners),
trustee, or other member thereof; (d) that Member has full corporate, limited
liability company, partnership, trust, or other applicable power and authority
to execute and agree to these Regulations and to perform its obligations
hereunder and all necessary actions by the board of directors, shareholders,
managers, members, partners, trustees, beneficiaries, or other Persons necessary
for the due authorization, execution, delivery, and performance of these
Regulations by that Member have been duly taken; (e) that Member has duly
executed and delivered these Regulations; and (f) that Member's authorization,
execution, delivery, and performance of these Regulations do not conflict with
any other agreement or arrangement to which that Member is a party or which it
is bound.

     3.03 RESTRICTIONS ON THE DISPOSITION OF AN INTEREST. (a) Except as
specifically provided in this Section 3.03, a Disposition of an interest in the
Company may not be effected without the consent of (i) a majority of the
Managers who are Members (excluding any Manager who is making such Disposition),
or (ii) if there are no Managers of the type described in clause (i), a Required
Interest. Any attempted Disposition by a Person of an interest or right, or any
part thereof, in or in respect of the Company other than in accordance with this
Section 3.03 shall be, and is hereby declared, null and void ab initio.

     (b) Notwithstanding the provisions of Section 3.03(a), the interest of any
Member in the Company may be transferred without the consent of the Managers or
any of the Members if (i) the transfer occurs by reason of or incident to the
death, dissolution, divorce, liquidation, merger or termination of the
transferor Member, and (ii) the transferee is a Permitted Transferee. A
"Permitted Transferee" is any member of such Member's immediate family, or a
trust, corporation, limited liability company, or partnership controlled by such
Member or members of such Member's immediate family, or another Person
controlling, controlled by, or under common control with such Member.

     (c) Subject to the provisions of Section 3.03(d), (e), and (f), (i) a
Person to whom an interest in the Company is transferred has the right to be
admitted to the Company as a Member with the Sharing Ratio and the Commitment so
transferred to such Person, if (A) the Member making such transfer grants the
transferee the right to be so admitted, and (B) such transfer is consented to in
accordance with Section 3.03(a); (ii) a Permitted Transferee under the
circumstances described in Section 3.03(b) has the right to be admitted to the
Company as a Member with the Sharing Ratio and the Commitment so transferred to
the Permitted Transferee; and (iii) the Company or (with the permission of the
Company, which may be withheld in its sole discretion) a Lending Member may
grant the purchaser of a Delinquent Member's interest in the Company at a
foreclosure of the security interest therein granted pursuant to Section 4.03(b)
the right to be admitted to the Company as a Member with such Sharing Ratio and
such Commitment (no greater than the Sharing Ratio and the Commitment of the
Member effecting such Disposition prior thereto) as they may agree.

     (d) The Company may not recognize for any purpose any purported Disposition
of all or part of a Membership Interest unless and until the other applicable
provisions of this Section 3.03 have been satisfied and the Managers have
received, on behalf of the Company, a document (i)


                                       -5-

executed by both the Member effecting the Disposition (or if the transfer is on
account of the death, incapacity, or liquidation of the transferor, its
representative) and the Person to which the Membership Interest or part thereof
is Disposed, (ii) including the notice address of any Person to be admitted to
the Company as a Member and its agreement to be bound by these Regulations with
respect to the Membership Interest or part thereof being obtained, (iii) setting
forth the Sharing Ratios and the Commitments after the Disposition of the Member
effecting the Disposition and the Person to which the Membership Interest or
part thereof is Disposed (which together must total the Sharing Ratio and the
Commitment of the Member effecting the Disposition before the Disposition), and
(iv) containing a representation and warranty that the Disposition was made in
accordance with all applicable laws and regulations (including securities laws)
and, if the Person to which the Membership Interest or part thereof is Disposed
is to be admitted to the Company, its representation and warranty that the
representations and warranties in Section 3.02 are true and correct with respect
to that Person. Each Disposition and, if applicable, admission complying with
the provisions of this Section 3.03(d) is effective as of the first day of the
calendar month immediately succeeding the month in which the Managers receive
the notification of Disposition and the other requirements of this Section 3.03
have been met.

     (e) For the right of a Member to Dispose of a Membership Interest or any
part thereof or of any Person to be admitted to the Company in connection
therewith to exist or be exercised, (i) either (A) the Membership Interest or
part thereof subject to the Disposition or admission must be registered under
the Securities Act of 1933, as amended, and any applicable state securities laws
or (B) the Company must receive a favorable opinion of the Company's legal
counsel or of other legal counsel acceptable to the Managers to the effect that
the Disposition or admission is exempt from registration under those laws and
(ii) the Company must receive a favorable opinion of the Company's legal counsel
or of other legal counsel acceptable to the Managers to the effect that the
Disposition or admission, when added to the total of all other sales,
assignments, or other Dispositions within the preceding 12 months, would not
result in the Company's being considered to have terminated within the meaning
of the Code. The Managers, however, may waive the requirements of this Section
3.03(e).

     (f) The Member effecting a Disposition and any Person admitted to the
Company in connection therewith shall pay, or reimburse the Company for, all
costs incurred by the Company in connection with the Disposition or admission
(including, without limitation, the legal fees incurred in connection with the
legal opinions referred to in Section 3.03(e)) on or before the tenth day after
the receipt by that Person of the Company's invoice for the amount due. If
payment is not made by the date due, the Person owing that amount shall pay
interest on the unpaid amount from the date due until paid at a rate per annum
equal to the Default Interest Rate.

     3.04 ADDITIONAL MEMBERS. Additional Persons may be admitted to the Company
as Members and Membership Interests may be created and issued to those Persons
and to existing Members at the direction of (a) a majority of the Managers who
are Members, or (b) if there are no Managers who are Members, a Required
Interest, on such terms and conditions as the Managers may determine at the time
of admission. The terms of admission or issuance must specify the Sharing Ratios
and the Commitments applicable thereto and may provide for the creation of
different classes or groups of Members and having different rights, powers, and
duties. The Managers shall reflect the creation of any new class or group in an
amendment to these Regulations indicating the different


                                       -6-

rights, powers, and duties, and such an amendment need be executed only by the
Managers. Any such admission also must comply with the provisions of Section
3.03(d)(i) and (ii) and is effective only after the new Member has executed and
delivered to the Managers a document including the new Member's notice address,
its agreement to be bound by these Regulations, and its representation and
warranty that the representation and warranties in Section 3.02 are true and
correct with respect to the new Member. The provisions of this Section 3.04
shall not apply to Dispositions of Membership Interests.

     3.05 INTERESTS IN A MEMBER. A Member that is not a natural person may not
cause or permit an interest, direct or indirect, in itself to be Disposed of
such that, after the Disposition, (a) the Company would be considered to have
terminated within the meaning of section 708 of the Code or (b) without the
consent of the Managers and a Required Interest, that Member shall cease to be
controlled by substantially the same Persons who control it as of the date of
its admission to the Company. On any breach of the provisions of clause (b) of
the immediately preceding sentence, the Company shall have the option to buy,
and on exercise of that option the breaching Member shall sell, the breaching
Member's Membership Interest, all in accordance with Section 11.01 as if the
breaching Member were a Bankrupt Member.

     3.06 INFORMATION. (a) In addition to the other rights specifically set
forth in these Regulations, each Member is entitled to all information to which
that Member is entitled to have access pursuant to the Act under the
circumstances and subject to the conditions therein stated. The Members agree,
however, that the Managers from time to time may determine, due to contractual
obligations, business concerns, or other considerations, that certain
information regarding the business, affairs, properties, and financial condition
of the Company should be kept confidential and not provided to some or all other
Members, and that it is not just or reasonable for those Members or assignees or
representatives thereof to examine or copy that information.

     (b) The Members acknowledge that, from time to time, they may receive
information from or regarding the Company in the nature of trade secrets or that
otherwise is confidential, the release of which may be damaging to the Company
or Persons with which it does business. Each Member shall hold in strict
confidence any information it receives regarding the Company that is identified
as being confidential (and if that information is provided in writing, that is
so marked) and may not disclose it to any Person other than another Member or a
Manger, except for disclosures (i) compelled by law (but the Member must notify
the Managers promptly of any request for that information, before disclosing it
if practicable), (ii) to advisers or representatives of the Member or Persons to
which that Member's Membership Interest may be Disposed as permitted by these
Regulations, but only if the recipients have agreed to be bound by the
provisions of this Section 3.06(b), or (iii) of information that Member also has
received from a source independent of the Company that the Member reasonably
believes obtained that information without breach of any obligation of
confidentiality. The Members acknowledge that breach of the provisions of this
Section 3.06(b) may cause irreparable injury to the Company for which monetary
damages are inadequate, difficult to compute, or both. Accordingly, the Members
agree that the provisions of this Section 3.06(b) may be enforced by specific
performance.

     3.07 LIABILITY TO THIRD PARTIES. No Member or Manager shall be liable for
the debts, obligations or liabilities of the Company, including under a
judgment, decree or order of a court.


                                       -7-

     3.08 WITHDRAWAL. A Member does not have the right or power to withdraw from
the Company as a member.

     3.09 LACK OF AUTHORITY. No Member (other than a Manager or an officer) has
the authority or power to act for or on behalf of the Company, to do any act
that would be binding on the Company, or to incur any expenditures on behalf of
the Company.

                                   ARTICLE IV
                              CAPITAL CONTRIBUTIONS

     4.01 INITIAL CONTRIBUTIONS. Contemporaneously with the execution by such
Member of these Regulations, each Member shall make the Capital Contributions
described for that Member in Exhibit A.

     4.02 SUBSEQUENT CONTRIBUTIONS. Without creating any rights in favor of any
third party, each Member shall contribute to the Company, in cash, on or before
the date specified as hereinafter described, that Member's Sharing Ratio of all
monies that in the judgement of the Managers are necessary to enable the Company
to cause the assets of the Company to be properly operated and maintained and to
discharge its costs, expenses, obligations, and liabilities; provided, however,
that a Member is not obligated to contribute a total amount that, when added to
all Capital Contributions that Member previously has made pursuant to Section
4.01 or this Section 4.02. exceeds that Member's Commitment. The Managers shall
notify each Member of the need for Capital Contributions pursuant to this
Section 4.02 when appropriate, which notice must include a statement in
reasonable detail of the proposed uses of the Capital Contributions and a date
(which date may be no earlier than the fifth Business Day following each
Member's receipt of its notice) before which the Capital Contributions must be
made. Notices for Capital Contributions must be made to all Members in
accordance with their Sharing Ratios.

     4.03 FAILURE TO CONTRIBUTE, (a) If a Member does not contribute by the time
required all or any portion of a Capital Contribution that Member is required to
make as provided in these Regulations, the Company may exercise, on notice to
that Member (the "Delinquent Member"), one or more of the following remedies:

          (i) taking such action (including, without limitation, court
     proceedings) as the Managers may deem appropriate to obtain payment by the
     Delinquent Member of the portion of the Delinquent Member's Capital
     Contribution that is in default, together with interest thereon at the
     Default Interest Rate from the date that the Capital Contribution was due
     until the date that it is made, all at the cost and expense of the
     Delinquent Member;

          (ii) permitting the other Members in proportion to their Sharing
     Ratios or in such other percentages as they may agree (the "Lending Member"
     whether one or more), to advance the portion of the Delinquent Member's
     Capital Contribution that is in default, with the following results:


                                       -8-

               (A) the sum advanced constitutes a loan from the Lending Member
          to the Delinquent Member and a Capital Contribution of that sum to the
          Company by the Delinquent Member pursuant to the applicable provisions
          of these Regulations,

               (B) the principal balance of the loan and all accrued unpaid
          interest thereon is due and payable in whole on the tenth day after
          written demand therefor by the Lending Member to the Delinquent
          Member,

               (C) the amount lent bears interest at the Default Interest Rate
          from the day that the advance is deemed made until the date that the
          loan, together with all interest accrued on it, is repaid to the
          Lending Member,

               (D) all distributions from the Company that otherwise would be
          made to the Delinquent Member (whether before or after dissolution of
          the Company) instead shall be paid to the Lending Member until the
          loan and all interest accrued on it have been paid in full to the
          lending Member (with payments being applied first to accrued and
          unpaid interest and then to principal),

               (E) the payment of the loan and interest accrued on it is secured
          by a security interest in the Delinquent Member's Membership Interest,
          as more fully set forth in Section 4.03(b), and

               (F) the Lending Member has the right, in addition to the other
          rights and remedies granted to it pursuant to these Regulations or
          available to it at law or in equity, to take any action (including,
          without limitation, court proceedings) that the Lending Member may
          deem appropriate to obtain payment by the Delinquent Member of the
          loan and all accrued and unpaid interest on it, at the cost and
          expense of the Delinquent Member;

          (iii) exercising the rights of a secured party under the Uniform
     Commercial Code of the State of Nevada, as more fully set forth in Section
     4.03(b); or

          (iv) exercising any other rights and remedies available at law or in
     equity.

     (b) Each Member grants to the Company, and to each Lending Member with
respect to any loans made by the Lending Member to that Member as a Delinquent
Member pursuant to Section 4.03(a)(ii), as security, equally and ratably, for
the payment of all Capital Contributions that Member has agreed to make and the
payment of all loans and interest accrued on them made by Lending Members to
that Member as a Delinquent Member pursuant to Section 4.03(a)(ii), a security
interest in and a general lien on its Membership Interest and the proceeds
thereof, all under the Uniform Commercial Code of the State of Nevada. On any
default in the payment of a Capital Contribution or in the payment of such a
loan or interest accrued on it, the Company or the Lending Member, as


                                       -9-

applicable, is entitled to all the rights and remedies of a secured party under
the Uniform Commercial Code of the State of Nevada with respect to the security
interest granted in this Section 4.03(b). Each Member shall execute and deliver
to the Company and the other Members all financing statements and other
instruments that the Managers or the Lending Member, as applicable, may request
to effectuate and carry out the preceding provisions of this Section 4.03(b). At
the option of the Managers or a Lending Member, these Regulations or a carbon,
photographic, or other copy hereof may serve as a financing statement.

     4.04 RETURN OF CONTRIBUTIONS. Other than as expressly provided in these
Regulations, Member is not entitled to the return of any part of its Capital
Contributions or to be paid interest in respect of either its capital account or
its Capital Contributions. An unrepaid Capital Contribution is not a liability
of the Company or of any Member. A Member is not required to contribute or to
lend any cash or property to the Company to enable the Company to return any
Member's Capital Contributions.

     4.05 ADVANCES BY MEMBERS. If the Company does not have sufficient cash to
pay its obligations, any Member(s) that may agree to do so with the Managers'
consent may advance all or part of the needed funds to or on behalf of the
Company. An advance described in this Section 4.05 constitutes a loan from the
Member to the Company, bears interest at the General Interest Rate from the date
of the advance until the date of payment, and is not a Capital Contribution.

     4.06 CAPITAL ACCOUNTS. A capital account shall be established and
maintained for each Member. Each Member's capital account (a) shall be increased
by (i) the amount of money contributed by that Member to the Company, (ii) the
fair market value of property contributed by that Member to the Company (net of
liabilities secured by the contributed property that the Company is considered
to assume or take subject to under section 752 of the Code), and (iii)
allocations to that Member of Company income and gain (or items thereof),
including income and gain exempt from tax and income and gain described in
Treas. Reg. Section 1.704-1(b)(2)(iv)(g), but excluding income and gain
described in Treas. Reg. Section 1.704-l(b)(4)(i), and (b) shall be decreased by
(i) the amount of money distributed to that Member by the Company, (ii) the fair
market value of property distributed to that Member by the Company (net of
liabilities secured by the distributed property that the Member is considered to
assume or take subject to under section 752 of the Code), (iii) allocations to
that Member of expenditures of the Company described in section 705(a)(2)(B) of
the Code, and (iv) allocations of Company loss and deduction (or items thereof),
including loss and deduction described in Treas. Reg. Section
1.704-1(b)(2)(iv)(g), but excluding items described in clause (b)(iii) above and
loss or deduction described in Treas. Reg. Section 1.704-1(b)(4)(i) or Section
1.704-l(b)(4)(iii). The Members' capital accounts also shall be maintained and
adjusted as permitted by the provisions of Treas. Reg. Section
1.704-1(b)(2)(iv)(f) and as required by the other provisions of Treas. Reg.
Sections 1.704-1(b)(2)(iv) and 1.704-l(b)(4), including adjustments to reflect
the allocations to the Members of depreciation, depletion, amortization, and
gain or loss as computed for book purposes rather than the allocation of the
corresponding items as computed for tax purposes, as required by Treas. Reg.
Section 1.704-1(b)(2)(iv)(g). A Member that has more than one Membership
Interest shall have a single capital account that reflects all its Membership
Interests, regardless of the class of Membership Interests owned by that Member
and regardless of the time or manner in which those Membership Interests were
acquired. On the transfer of all or part of a Membership Interest, the capital
account


                                      -10-

of the transferor that is attributable to the transferred Membership Interest or
part thereof shall carry over to the transferee Member in accordance with the
provisions of Treas. Reg. Section 1.704-1(b)(2)(iv)(I).

                                    ARTICLE V
                          ALLOCATIONS AND DISTRIBUTIONS

     5.01 ALLOCATIONS. (a) Except as may be required by section 70l(c) of the
Code and Treas. Reg. Section 1.701-1(b)(2)(iv)(f)(4), all items of income,
gain, loss, deduction, and credit of the Company shall be allocated among the
Members in accordance with their Sharing Ratios.

     (b) All items of income, gain, loss, deduction, and credit allocable to any
Membership Interest that may have been transferred shall be allocated between
the transferor and the transferee based on the portion of the calendar year
during which each was recognized as owning that Membership Interest, without
regard to the results of Company operations during any particular portion of
that calendar year and without regard to whether cash distributions were made to
the transferor or the transferee during that calendar year; provided, however,
that this allocation must be made in accordance with a method permissible under
section 706 of the Code and the regulations thereunder.

     5.02 DISTRIBUTIONS. All receipts and revenues of the Company from any
source shall be applied and distributed in the following order of priority with
no distribution being made in any category set forth below unless and until the
preceding category has been satisfied in full either by payment or by setting
aside of a cash reserve for payment of same.

     (a) in payment of all debts, obligations, liabilities, costs and expenses
incurred in connection with or on account of the Company;

     (b) in repayment of any loans and accrued interest thereon made by a
Lending Member pursuant to Section 4.03(a)(ii);

     (c) in repayment of Contributions by the Member in accordance with their
Sharing Ratios, subject to the provisions of Section 4.03.

     (d) after having satisfied (a), (b) and (c) above, receipts and revenues of
the Company shall represent the profits of the Company and shall be distributed
in the following order of priority:

          (i) the Contributions made by the Members to the Company pursuant to
     Sections 4.01 arid 4.02 herein shall bear interest at a rate which is two
     percent (2%) per annum greater than the prime rate charged by the Bank of
     Nova Scotia to its most creditworthy customers of U.S. Dollar demand loans,
     but in no event shall the rate of interest exceed the maximum rate
     permitted by laws, from the date of such advance until repaid to such
     Member in accordance with (c) above.


                                      -11-

          (ii) after having satisfied (a), (b), (d) and (d)(i) above, the
     receipts and revenues of the Company shall be distributed to the Members
     pro rate and pari passu in accordance with their Sharing Ratios.

However, no distribution of profits shall be made until after completion of any
development and/or construction activities undertaken by the Company, without
the agreement of the Members.

                                   ARTICLE VI
                                    MANAGERS

     6.01 MANAGEMENT BY MANAGERS. (a) Except for situations in which the
approval of the Members is required by these Regulations or by nonwaivable
provisions of applicable law, and subject to the provisions of Section 6.02, (i)
the powers of the Company shall be exercised by or under the authority of, and
the business and affairs of the Company shall be managed under the direction of,
the Managers; and (ii) the Managers may make all decisions and take all actions
for the Company not otherwise provided for in these Regulations, including,
without limitation, the following:

          (i) entering into, making, and performing contracts, agreements, and
     other undertakings binding the Company that may be necessary, appropriate,
     or advisable in furtherance of the purposes of the Company and making all
     decisions and waivers thereunder;

          (ii) opening and maintaining bank and investment accounts and
     arrangements, drawing checks and other orders for the payment of money, and
     designating individuals with authority to sign or give instructions with
     respect to those accounts and arrangements;

          (iii) maintaining the assets of the Company in good order;

          (iv) collecting sums due the Company;

          (v) to the extent that funds of the Company are available therefor,
     paying debts and obligations of the Company;

          (vi) acquiring, utilizing for Company purposes, and Disposing of any
     asset of the Company;

          (vii) borrowing money or otherwise committing the credit of the
     Company for Company activities and voluntary prepayments or extensions of
     debt;

          (viii) selecting, removing, and changing the authority and
     responsibility of lawyers, accountants, and other advisers and consultants;

          (ix) obtaining insurance for the Company;


                                      -12-

          (x) determining distribution's of Company cash and other property as
     provided in Section 5.02;

          (xi) establishing a seal for the Company;

          (xii) selling, leasing, exchanging or otherwise disposing of
     (including by way of a pledge, mortgage, deed of trust or trust indenture)
     all or any portion of the Company's property and assets (with or without
     good will); and

          (xiii) being a party to (i) a merger, or (ii) an exchange or
     acquisition,

     (b) Notwithstanding the provisions of Section 6.01(a), the Managers may not
cause the Company to do any of the following without complying with the
applicable requirements set forth below:

          (i) amend or restate the Articles, without complying with the
     applicable procedures set forth in the Act.

     6.02 ACTIONS BY MANAGERS; COMMITTEES; DELEGATION OF AUTHORITY AND DUTIES.
(a) In managing the business and affairs of the Company and exercising its
powers, the Managers shall act (i) collectively through meetings and written
consents pursuant to Sections 6.05 and 6.07; (ii) through committees pursuant to
Section 6,02(b); or (iii) through Managers to whom authority and duties have
been delegated pursuant to Section 6.02(c).

     (b) The Managers may, from time to time, designate one or more committees,
each of which shall be comprised of one or more Managers. Any such committee, to
the extent provided in such resolution or in the Articles or these Regulations,
shall have and may exercise all of the authority of the Managers, subject to the
limitations set forth in the Act. At every meeting of any such committee, the
presence of a majority of all the members thereof shall constitute a quorum, and
the affirmative vote of a majority of the members present shall be necessary for
the adoption of any resolution. The Managers may dissolve any committee at any
time, unless otherwise provided in the Articles or these Regulations.

     (c) The Members and the Managers hereby delegate to each of the Managers
(acting by themselves and without the necessity of any other approval or
authorization) or to an authorized representative of the Company, designated by
one or more of the Managers, the authority to take any of the actions authorized
in Section 6.0(a) hereof. In addition, the Managers may assign titles
(including, without limitation, president, vice president, secretary, assistant
secretary, treasurer and assistant treasurer) to any such Manager. Unless the
Managers decide otherwise, if the title is one commonly used for officers of a
business corporation formed under the laws of the State of Nevada, the
assignment of such title shall constitute the delegation to such Manager of the
authority and duties that are normally associated with that office, subject to
any specific delegation of authority and duties made pursuant to the first
sentence of this Section 6.02(c). Any number of titles may be held by the same
Manager. Any delegation pursuant to this Section 6.02(c) may be revoked at any
time by the Managers.


                                      -13-

     (d) Any Person dealing with the Company, other than a Member, may rely on
the authority of any Manager, authorized representative or officer in taking any
action in the name of the Company without inquiry into the provisions of these
Regulations or compliance herewith, regardless of whether that action actually
is taken in accordance with the provisions of these Regulations.

     6.03 NUMBER AND TERM OF OFFICE. The number of Managers of the Company shall
be determined from time to time by resolution of the Managers; provided,
however, that no decrease in the number of Managers that would have the effect
of shortening the term of an incumbent Manager may be made by the Managers. If
the Managers make no such determination, the number of Managers shall be the
number set forth in the Articles as the number of Managers constituting the
initial Managers. Each Manager shall hold office for the term for which he is
elected and thereafter until his successor shall have been elected and
qualified, or until his earlier death, resignation or removal. Unless otherwise
provided in the Articles, Managers need not be Members or residents of the State
of Nevada.

     6.04 VACANCIES; REMOVAL; RESIGNATION. Any Manager position to be filled by
reason of an increase in the number of Managers may be filled by election at an
annual or special meeting of Members called for that purpose. Any vacancy
occurring in the Managers other than by reason of an increase in the number of
Managers may be filled (a) by election at an annual or special meeting of the
Members called for that purpose or (b) by the affirmative vote of a majority of
the remaining Managers though less than a quorum of the Managers. A Manager
elected to fill a vacancy occurring other than by reason of an increase in the
number of Managers shall be elected for the unexpired term of his predecessor in
office. At any meeting of Members at which a quorum of Members is present called
expressly for that purpose, or pursuant to a written consent adopted pursuant to
these Regulations, any Manager may be removed, with or without cause, by a
Required Interest. Any Manager may resign at anytime. Such resignation shall be
made in writing and shall take effect at the time specified therein, or if no
time be specified, at the time of its receipt by the remaining Managers. The
acceptance of a resignation shall not be necessary to make it effective, unless
expressly so provided in the resignation.

     6.05 MEETINGS. (a) Unless otherwise required by law or provided in the
Articles or these Regulations, a majority of the total number of Managers fixed
by, or in the manner provided in, the Articles or these Regulations shall
constitute a quorum for the transaction of business of the Managers, and the act
of a majority of the Managers present at a meeting at which a quorum is present
shall be the act of the Managers. A Manager who is present at a meeting of the
Managers at which action on any Company matter is taken shall be presumed to
have assented to the action unless his dissent shall be entered in the minutes
of the meeting or unless he shall file his written dissent to such action with
the Person acting as secretary of the meeting before the adjournment thereof or
shall deliver such dissent to the Company immediately after the adjournment of
the meeting. Such right to dissent shall not apply to a Manager who voted in
favor of such action.

     (b) Meetings of the Managers may be held at such place or places as shall
be determined from time to time by resolution of the Managers. At all meetings
of the Managers, business shall be transacted in such order as shall from time
to time be determined by resolution of the Managers.


                                      -14-

Attendance of a Manager at a meeting shall constitute a waiver of notice of such
meeting, except where a Manager attends a meeting for the express purpose of
objecting to the transaction of any business on the ground that the meeting is
not lawfully called or convened.

     (c) In connection with any annual meeting of Members at which Managers were
elected, the Managers may, if a quorum is present, hold its first meeting for
the transaction of business immediately after and at the same place as such
annual meeting of the Members. Notice of such meeting at such time and place
shall not be required.

     (d) Regular meetings of the Managers shall be held at such times and places
as shall be designated from time to time by resolution of the Managers. Notice
of such regular meetings shall not be required.

     (e) Special meetings of the Managers may be called by any Manager on at
least 24 hours notice to each other Manager. Such notice need not state the
purpose or purposes of, nor the business to be transacted at, such meeting,
except as may otherwise be required by law or provided for by the Articles or
these Regulations.

     6.06 APPROVAL OR RATIFICATION OF ACTS OR CONTRACTS BY MEMBERS. The Managers
in their discretion may submit any act or contract for approval or ratification
at any annual meeting of the Members, or at any special meeting of the Members
called for the purpose of considering any such act or contract, and any act or
contract that shall be approved or be ratified by a Required Interest shall be
as valid and as binding upon the Company and upon all the Members as if it shall
have been approved or ratified by every Member of the Company.

     6.07 ACTION BY WRITTEN CONSENT OR TELEPHONE CONFERENCE. Any action
permitted or required by the Act, the Articles or these Regulations to be taken
at a meeting of the Managers or any committee designated by the Managers may be
taken without a meeting if a consent in writing, setting forth the action to be
taken, is signed by all the Managers or members of such committee, as the case
may be. Such consent shall have the same force and effect as a unanimous vote at
a meeting and may be stated as such in any document or instrument filed with the
Secretary of State of Nevada, and the execution of such consent shall constitute
attendance or presence in person at a meeting of the Managers or any such
committee, as the case may be. Subject to the requirements of the Act, the
Articles or these Regulations for notice of meetings, unless otherwise
restricted by the Articles, Managers, or members of any committee designated by
the Managers, may participate in and hold a meeting of the Managers or any
committee of Managers, as the case may be, by means of a conference telephone or
similar communications equipment by means of which all Persons participating in
the meeting can hear each other, and participation in such meeting shall
constitute attendance and presence in person at such meeting, except where a
Person participates in the meeting for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully
called or convened.

     6.08 COMPENSATION. The Managers shall reserve such compensation, if any,
for their services as may be designated from time to time by all of the
Managers. In addition, the Managers shall be entitled to be reimbursed for
out-of-pocket costs and expenses incurred in the course of their service
hereunder, including the portion of their overhead reasonably allocable to
Company activities.


                                      -15-

     6.09 CONFLICTS OF INTEREST. Subject to the other express provisions of
these Regulations, each Manager, Member and officer of the Company at any time
and from time to time may engage in and possess interests in other business
ventures of any and every type and description, independently or with others,
including ones in competition with the Company, with no obligation to offer to
the Company or any other Member, Manager or officer the right to participate
therein. The Company may transact business with any Manager, Member, officer or
Affiliate thereof, provided the terms of those transactions are no less
favorable than those the Company could obtain from unrelated third parties.

     6.10 OFFICERS. (a) The Managers may, from time to time, designate one or
more Persons to be officers of the Company. No officer need be a resident of the
State of Nevada, a Member or a Manager. Any officers so designated shall have
such authority and perform such duties as the Managers may, from time to time,
delegate to them. The Managers may assign titles to particular officers. Unless
the Managers decide otherwise, if the title is one commonly used for officers of
a business corporation formed under the laws of the State of Nevada, the
assignment of such title shall constitute the delegation to such officer of the
authority and duties that are normally associated with that office, subject to
(i) any specific delegation of authority and duties made to such officer by the
Managers pursuant to the third sentence of this Section 6.10(b), or (ii) any
delegation of authority and duties made to one or more Mangers pursuant to
Section 6.02(a). Each officer shall hold office until his successor shall be
duly designated and shall quality or until his death or until he shall resign or
shall have been removed in the manner hereinafter provided. Any number of
offices may be held by the same Person. The salaries or other compensation, if
any, of the officers and agents of the Company shall be fixed from time to time
by the Managers.

     (b) Any officer may resign as such at anytime. Such resignation shall be
made in writing and shall take effect at the time specified therein, or if no
time be specified, at the time of its receipt by the Managers. The acceptance of
a resignation shall not be necessary to make it effective, unless expressly so
provided in the resignation. Any officer may be removed as such, either with or
without cause, by the Managers whenever in their judgment the best interests of
the Company will be served thereby; provided, however, that such removal shall
be without prejudice to the contract rights, if any, of the Person so removed.
Designation of an officer shall not of itself create contract rights. Any
vacancy occurring in any office of the Company (other than Manager) may be
filled by the Managers.

                                   ARTICLE VII
                               MEETINGS OF MEMBERS

     7.01 MEETINGS. (a) A quorum shall be present at a meeting of Members if the
holders of a Required Interest are represented at the meeting in person or by
proxy. With respect to any matter, other than a matter for which the affirmative
vote of the holders of a specified portion of the Sharing Ratios of all Members
entitled to vote is required by the Act, the affirmative vote of a Required
Interest at a meeting of Members at which a quorum is present shall be the act
of the Members.

     (b) All meetings of the Members shall be held at the principal place of
business of the Company or at such other place within or without the State of
Nevada as shall be specified or fixed


                                      -16-

in the notices or waivers of notice thereof; provided that any or all Members
may participate in any such meeting by means of conference telephone or similar
communications equipment pursuant to Section 7.05.

     (c) Notwithstanding the other provisions of the Articles or these
Regulations, the chairman of the meeting or the holders of a Required Interest
shall have the power to adjourn such meeting from time to time, without any
notice other than announcement at the meeting of the time and place of the
holding of the adjourned meeting. If such meeting is adjourned by the Members,
such time and place shall be determined by a vote of the holders of a Required
Interest. Upon the resumption of such adjourned meeting, any business may be
transacted that might have been transacted at the meeting as originally called.

     (d) An annual meeting of the Members, for the election of the Managers and
for the transaction of such other business as may properly come before the
meeting, shall be held at such place, within or without the State of Nevada, on
such date and at such time as the Managers shall fix and set forth in the notice
of the meeting, which date shall be within 13 months subsequent to the date of
organization of the Company or the last annual meeting of Members, whichever
most recently occurred.

     (e) Special meetings of the Members for any proper purpose or purposes may
be called at any time by the Managers or the holders of at least ten percent of
the Sharing Ratios of all Members. If not otherwise stated in or fixed in
accordance with the remaining provisions hereof, the record date for determining
Members entitled to call a special meeting is the date any Member first signs
the notice of that meeting. Only business within the purpose or purposes
described in the notice (or waiver thereof) required by these Regulations may be
conducted at a special meeting of the Members.

     (f) Written or printed notice stating the place, day and hour of the
meeting and, in the case of a special meeting, the purpose or purposes for which
the meeting is called, shall be delivered not less than ten nor more than 60
days before the date of the meeting, either personally or by mail, by or at the
direction of the Managers or Person calling the meeting, to each Member entitled
to vote at such meeting. If mailed, any such notice shall be deemed to be
delivered when deposited in the United States mail, addressed to the Member at
his address provided for on Exhibit A, with postage thereon prepaid.

     (g) The date on which notice of a meeting of Members is mailed or the date
on which the resolution of the Managers declaring a distribution is adopted, as
the case may be, shall be the record date for the determination of the Members
entitled to notice of or to vote at such meeting, including any adjournment
thereof, or the Members entitled to receive such distribution.

     (h) The right of Members to cumulative voting in the election of Managers
is expressly prohibited.

     7.02 VOTING LIST. The Managers shall make, at least ten days before each
meeting of Members, a complete list of the Members entitled to vote at such
meeting or any adjournment thereof, arranged in alphabetical order, with the
address of and the Sharing Ratios held by each,


                                      -17-

which list, for a period of ten days prior to such meeting, shall be kept on
file at the resident office or principal place of business of the Company and
shall be subject to inspection by any Member at any time during usual business
hours. Such list shall also be produced and kept open at the time and place of
the meeting and shall be subject to the inspection of any Member during the
whole time of the meeting. The original membership records shall be prima-facie
evidence as to who are the Members entitled to examine such list or transfer
records or to vote at any meeting of Members. Failure to comply with the
requirements of this Section shall not affect the validity of any action taken
at the meeting.

     7.03 PROXIES. A Member may vote either in person or by proxy executed in
writing by the Member. A telegram, telex, cablegram or similar transmission by
the Member, or a photographic, photostatic, facsimile or similar reproduction of
a writing executed by the Member shall be treated as an execution in writing for
purposes of this Section. Proxies for use at any meeting of Members or in
connection with the taking of any action by written consent shall be filed with
the Managers, before or at the time of the meeting or execution of the written
consent, as the case may be. All proxies shall be received and taken charge of
and all ballots shall be received and canvassed by the Managers, who shall
decide all questions touching upon the qualification of voters, the validity of
the proxies, and the acceptance or rejection of votes, unless an inspector or
inspectors shall have been appointed by the chairman of the meeting, in which
event such inspector or inspectors shall decide all such questions. No proxy
shall be valid after 11 months from the date of its execution unless otherwise
provided in the proxy. A proxy shall be revocable unless the proxy form
conspicuously states that the proxy is irrevocable and the proxy is coupled with
an interest. Should a proxy designate two or more Persons to act as proxies,
unless that instrument shall provide to the contrary, a majority of such Persons
present at any meeting at which their powers thereunder are to be exercised
shall have and may exercise all the powers of voting or giving consents thereby
conferred, or if only one be present, then such powers may be exercised by that
one; or, if an even number attend and a majority do not agree on any particular
issue, the Company shall not be required to recognize such proxy with respect to
such issue if such proxy does not specify how the Sharing Ratios that are the
subject of such proxy are to be voted with respect to such issue.

     7.04 CONDUCT OF MEETINGS. All meetings of the Members shall be presided
over by the chairman of the meeting, who shall be a Manager (or representative
thereof) designated by a majority of the Managers. The chairman of any meeting
of Members shall determine the order of business and the procedure at the
meeting, including such regulation of the manner of voting and the conduct of
discussion as seem to him in order.

     7.05 ACTION BY WRITTEN CONSENT OR TELEPHONE CONFERENCE. (a) Any action
required or permitted to be taken at any annual or special meeting of Members
may be taken without a meeting, without prior notice, and without a vote, if a
consent or consents in writing, setting forth the action so taken, shall be
signed by the holder or holders of not less than the minimum Sharing Ratios that
would be necessary to take such action at a meeting at which the holders of all
Sharing Ratios entitled to vote on the action were present and voted. Every
written consent shall bear the date of signature of each Member who signs the
consent. No written consent shall be effective to take the action that is the
subject to the consent unless, within 60 days after the date of the earliest
dated consent delivered to the Company in the manner required by this Section, a
consent or consents signed by the holder or holders of not less than the minimum
Sharing Ratios that would be necessary


                                      -18-

to take the action that is the subject of the consent are delivered to the
Company by delivery to its resident office, its principal place of business, or
the Managers. Delivery shall be by hand or certified or registered mail, return
receipt requested. Delivery to the Company's principal place of business shall
be addressed to the Managers. A telegram, telex, cablegram or similar
transmission by a Member, or a photographic, photostatic, facsimile or similar
reproduction of a writing signed by a Member, shall be regarded as signed by the
Member for purposes of this Section. Prompt notice of the taking of any action
by Members without a meeting by less than unanimous written consent shall be
given to those Members who did not consent in writing to the action.

     (b) The record date for determining Members entitled to consent to action
in writing without a meeting shall be the first date on which a signed written
consent setting forth the action taken or proposed to be taken is delivered to
the Company by delivery to its resident office, its principal place of business,
or the Managers. Delivery shall be by hand or by certified or registered mail,
return receipt requested. Delivery to the Company's principal place of business
shall be addressed to the Managers.

     (c) If any action by Members is taken by written consent, any articles or
documents filed with the Secretary of State of Nevada as a result of the taking
of the action shall state, in lieu of any statement required by the Act
concerning any vote of Members, that written consent has been given in
accordance with the provisions of the Act and that any written notice required
by the Act has been given.

     (d) Members may participate in and hold a meeting by means of conference
telephone or similar communications equipment by means of which all Persons
participating in the meeting can hear each other, and participation in such
meeting shall constitute attendance and presence in person at such meeting,
except where a Person participates in the meeting for the express purpose of
objecting to the transaction of any business on the ground that the meeting is
not lawfully called or convened.

                                  ARTICLE VIII
                                INDEMNIFICATION

     8.01 RIGHT TO INDEMNIFICATION. Subject to the limitations and conditions as
provided in this Article VIII, each Person who was or is made a party or is
threatened to be made a party to or is involved in any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative,
arbitrative or investigative (hereinafter a "Proceeding"), or any appeal in such
a Proceeding or any inquiry or investigation that could lead to such a
Proceeding, by reason of the fact that he or she, or a Person of whom he or she
is the legal representative, is or was a Manager of the Company or while a
Manager of the Company is or was serving at the request of the Company as a
Manager, director, officer, partner, venturer, proprietor, trustee, employee,
agent, or similar functionary of another foreign or domestic limited liability
company, corporation, partnership, joint venture, sole proprietorship, trust,
employee benefit plan or other enterprise shall be indemnified by the Company to
the fullest extent permitted by the Act and the laws of the State of Nevada, as
the same exist or may hereafter be amended (but, in the case of any such
amendment, only to the extent that such amendment permits the Company to provide
broader indemnification rights than said law permitted the Company to provide
prior to such amendment) against judgments, penalties (including


                                      -19-

excise and similar taxes and punitive damages), fines, settlements and
reasonable expenses (including, without limitation, attorneys' fees) actually
incurred by such Person in connection with such Proceeding, and indemnification
under this Article VIII shall continue as to a Person who has ceased to serve in
the capacity which initially entitled such Person to indemnify hereunder. The
rights granted pursuant to this Article VIII shall be deemed contract rights,
and no amendment, modification or repeal of this Article VIII shall have the
effect of limiting or denying any such rights with respect to actions taken or
Proceedings arising prior to any such amendment, modification or repeal. It is
expressly acknowledged that the indemnification provided in this Article VIII
could involve indemnification for negligence or under theories of strict
liability.

     8.02 ADVANCE PAYMENT. The right to indemnification conferred in this
Article VIII shall include the right to be paid or reimbursed by the Company the
reasonable expenses incurred by a Person of the type entitled to be indemnified
under Section 8.01 who was, is or is threatened to be made a named defendant or
respondent in a Proceeding in advance of the final disposition of the Proceeding
and without any determination as to the Person's ultimate entitlement to
indemnification; provided, however, that the payment of such expenses incurred
by any such Person in advance of the final disposition of a Proceeding, shall be
made only upon delivery to the Company of a written affirmation by such Manager
of his or her good faith belief that he has met the standard of conduct for
indemnification under this Article VIII and a written undertaking, by or on
behalf of such Person, to repay all amounts so advanced if it shall ultimately
be determined that such indemnified Person is not entitled to be indemnified
under this Article VIII or otherwise.

     8.03 INDEMNIFICATION OF OFFICERS, EMPLOYEES, AND AGENTS. The Company, by
adoption of a resolution of the Managers, may indemnity and advance expenses to
an officer, employee or agent of the Company to the same extent and subject to
the same conditions under which it may indemnify and advance expenses to
Managers under this Article VIII; and, the Company may indemnify and advance
expenses to Persons who are not or were not Managers, officers, employees or
agents of the Company but who are or were serving at the request of the Company
as a Manager, director, officer, partner, venturer, proprietor, trustee,
employee, agent or similar functionary of another foreign or domestic limited
liability company, corporation, partnership, joint venture, sole proprietorship,
trust, employee benefit plan or other enterprise against any liability asserted
against him and incurred by him in such a capacity or arising out of his status
as such a Person to the same extent that it may indemnity and advance expenses
to Managers under this Article VIII.

     8.04 APPEARANCE AS A WITNESS. Notwithstanding any other provision of this
Article VIII the Company may pay or reimburse expenses incurred by a Manager in
connection with his appearance as a witness or other participation in a
Proceeding at a time when he is not a named defendant or respondent in the
Proceeding.

     8.05 NONEXCLUSIVITY OF RIGHTS. The right to indemnification and the
advancement and payment of expenses conferred in this Article VIII shall not be
exclusive of any other right which a Manager or other Person indemnified
pursuant to Section 8.03 may have or hereafter acquire under any law (common or
statutory), provision of the Articles or these Regulations, agreement, vote of
Members or disinterested Managers or otherwise.


                                      -20-

     8.06 INSURANCE. The Company may purchase and maintain insurance, at its
expense, to protect itself and any Person who is or was serving as a Manager,
officer, employee or agent of the Company or is or was serving at the request of
the Company as a Manager, director, officer, partner, venturer, proprietor,
trustee, employee, agent or similar functionary of another foreign or domestic
limited liability company, corporation, partnership, joint venture, sole
proprietorship, trust, employee benefit plan or other enterprise against any
expense, liability or loss, whether or not the Company would have the power to
indemnify such Person against such expense, liability or loss under this Article
VIII,

     8.07 MEMBER NOTIFICATION. To the extent required by law, any
indemnification of or advance of expenses to a Manager in accordance with this
Article VIII shall be reported in writing to the Members with or before the
notice or waiver of notice of the next Members' meeting or with or before the
next submission to Members of a consent to action without a meeting and, in any
case, within the 12-month period immediately following the date of the
indemnification or advance.

     8.08 SAVINGS CLAUSE. If this Article VIII or any portion hereof shall be
invalidated on any ground by any court of competent jurisdiction, then the
Company shall nevertheless indemnify and hold harmless each Manager or any other
Person indemnified pursuant to this Article VIII as to costs, charges and
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement with respect to any action, suit or proceeding, whether civil,
criminal, administrative or investigative to the full extent permitted by any
applicable portion of this Article VIII that shall not have been invalidated and
to the fullest extent permitted by applicable law.

                                   ARTICLE IX
                                      TAXES

     9.01 TAX RETURNS. The Managers shall cause to be prepared and filed all
necessary federal and state income tax returns for the Company, including making
the elections described in Section 9.02. Each Member shall furnish to the
Managers all pertinent information in its possession relating to Company
operations that is necessary to enable the Company's income tax returns to be
prepared and filed.

     9.02 TAX Elections. The Company shall make the following elections on the
appropriate tax returns:

          (a) to adopt the year ending on May 31 as the Company's fiscal year;

          (b) to adopt a method of accounting as the Managers may determine from
     time to time;

          (c) if a distribution of Company property as described in section 734
     of the Code occurs or if a transfer of a Membership Interest as described
     in section 743 of the Code occurs, on written request of any Member, to
     elect, pursuant to section 754 of the Code, to adjust the basis of Company
     properties;


                                      -21-

          (d) to elect to amortize the organizational expenses of the Company
     and the startup expenditures of the Company under Section 195 of the Code
     ratably over a period of 60 months as permitted by section 709(b) of the
     Code; and

          (e) any other election the Managers may deem appropriate and in the
     best interests of the Members.

Neither the Company nor any Manager or Member may make an election for the
Company to be excluded from the application of the provisions of subchapter K
of chapter 1 of subtitle A of the Code or any similar provisions of applicable
state law, and no provision of these Regulations (including, without limitation,
Section 2.06) shall be construed to sanction or approve such an election.

     9.03 "TAX MATTERS PARTNER." A majority of the Managers who are Members
shall designate one Manager that is a Member to be the "tax matters partner" of
the Company pursuant to section 6231(a)(7) of the Code; or, if there is no
Manager that is a Member, the "tax matters partner" shall be a Member that is
designated as such by a Required Interest. Any Member who is designated "tax
matters partner" shall take such action as may be necessary to cause each other
Member to become a "notice partner" within the meaning of section 6223 of the
Code. Any Member who is designated "tax matters partner" shall inform each other
Member of all significant matters that may come to its attention in its capacity
as "tax matters partner" by giving notice thereof on or before the fifth
Business Day after becoming aware thereof and, within that time, shall forward
to each other Member copies of all significant written communications it may
receive in that capacity. Any Member who is designated "tax matters partner" may
not take any action contemplated by sections 6222 through 6232 of the Code
without the consent of a Required Interest, but this sentence does not authorize
such Manager (or any other Manager) to take any action left to the determination
of an individual Member under sections 6222 through 6232 of the Code.

                                    ARTICLE X
                   BOOKS, RECORDS, REPORTS, AND BANK ACCOUNTS

     10.01 MAINTENANCE OF BOOKS. The Company shall keep books and records of
accounts and shall keep minutes of the proceedings of its Members, its Managers
and each committee of the Managers. The books of account for the Company shall
be maintained on a cash basis in accordance with the terms of these Regulations,
except that the capital accounts of the Members shall be maintained in
accordance with Section 4.06. The calendar year shall be the accounting year of
the Company.

     10.02 REPORTS. On or before the 120th day following the end of each fiscal
year during the term of the Company, the Managers shall cause each Member to be
furnished with a balance sheet, an income statement, and a statement of changes
in Members' capital of the Company for, or as of the end of, that year certified
by a recognized firm of certified public accountants. These financial statements
must be prepared in accordance with accounting principles generally employed for
cash basis records consistently applied (except as therein noted) and must be
accompanied by a report of the certified public accountants certifying the
statements and stating that (a) their examination was made in accordance with
generally accepted auditing standards and, in their opinion, the financial


                                      -22-

statements fairly present the financial position, financial results of
operations, and changes in Members' capital in accordance with accounting
principles generally employed for cash-basis records consistently applied
(except as therein noted) and (b) in making the examination and reporting on the
financial statements described above, nothing came to their attention that
caused them to believe that (i) the income and revenues were not paid or
credited in accordance with the financial and accounting provisions of these
Regulations, (ii) the costs and expenses were not charged in accordance with the
financial and accounting provisions of these Regulations, or (iii) the Managers
or any Member failed to comply in any material respect with the financial and
accounting provisions of these Regulations, or if they do conclude that the
Managers or a Member so failed, specifying the nature and period of existence of
the failure. The Managers also may cause to be prepared or delivered such other
reports as they may deem appropriate. The Company shall bear the costs of all
these reports.

     10.03 ACCOUNTS. The Managers shall establish and maintain one or more
separate bank and investment accounts and arrangements for Company funds in the
Company name with financial institutions and firms that the Managers determine.
The Managers may not commingle the Company's funds with the funds of any Member;
however, Company funds may be invested in a manner the same as or similar to the
Managers' investment of their own funds or investments by their Affiliates.

                                   ARTICLE XI
                             BANKRUPTCY OF A MEMBER

     11.01 BANKRUPT MEMBERS. Subject to Section 12.01(c), if any Member becomes
a Bankrupt Member, the Company shall have the option, exercisable by notice from
the Managers to the Bankrupt Member (or its representative) at any time prior to
the 180th day after receipt of notice of the occurrence of the event causing it
to become a Bankrupt Member, to buy, and on the exercise of this option the
Bankrupt Member or its representative shall sell, its Membership Interest. The
purchase price shall be an amount equal to the fair market value thereof
determined by agreement of the Bankrupt Member (or its representative) and the
Managers; however, if those Persons do not agree on the fair market value on or
before the 30th day following the exercise of the option, either such Person, by
notice to the other, may require the determination of fair market value to be
made by an independent appraiser specified in that notice. If the Person
receiving that notice objects on or before the tenth day following receipt to
the independent appraiser designated in that notice, and those Persons otherwise
fail to agree on an independent appraiser, either such Person may petition the
United States District Judge for the State of Nevada then senior in service to
designate an independent appraiser. The determination of the independent
appraiser, however designated, is final and binding on all parties. The Bankrupt
Member and the Company each shall pay one-half of the costs of the appraisal.
The purchaser shall pay the fair market value as so determined in four equal
cash installments, the first due on closing and the remainder (together with
accumulated interest on the amount unpaid at the General Interest Rate) due on
each of the first three anniversaries thereof. The payment to be made to the
Bankrupt Member or its representative pursuant to this Section 11.01 is in
complete liquidation and satisfaction of all the rights and interest of the
Bankrupt Member and its representative (and of all Persons claiming by, through,
or under the Bankrupt Member and its representative) in and in respect of the
Company, including, without limitation, any Membership Interest, any rights in
specific Company property, and any rights against the Company and (insofar as
the affairs of the Company are concerned) against the Members, and constitutes a
compromise to which all Members have agreed pursuant to the Act.


                                      -23-

                                   ARTICLE XII
                    DISSOLUTION, LIQUIDATION, AND TERMINATION

     12.01 DISSOLUTION. The Company shall dissolve and its affairs shall be
wound up on the first to occur of the following:

          (a) the written consent of a Required Interest;

          (b) the expiration of the period fixed for the duration of the Company
     set forth in the Articles;

          (c) any Manager who is a Member (or, if there is no Manager who is a
     Member, any Member) shall become a Bankrupt Member (with or without the
     consent of a Required Interest); provided, however, that if the event
     described in this Section 12.01(c) shall occur and there shall be at least
     one other Member remaining, the Company shall not be dissolved, and the
     business of the Company shall be continued, if all Members so agree; and

          (d) entry of a decree of judicial dissolution of the Company under
     article 6.02 of the Act.

Except as provided in Section 12.0l(c), the death, retirement, resignation,
expulsion, bankruptcy or dissolution of a Member, or the occurrence of any other
event that terminates the continued membership of a Member in the Company, shall
not cause a dissolution of the Company.

     12.02 LIQUIDATION AND TERMINATION. On dissolution of the Company, the
Managers shall act as liquidator or may appoint one or more Members as
liquidator. The liquidator shall proceed diligently to wind up the affairs of
the Company and make final distributions as provided herein and in the Act. The
costs of liquidation shall be borne as a Company expense. Until final
distribution, the liquidator shall continue to operate the Company properties
with all of the power and authority of the Managers. The steps to be
accomplished by the liquidator are as follows:

          (a) as promptly as possible after dissolution and again after final
     liquidation, the liquidator shall cause a proper accounting to be made by a
     recognized firm of certified public accountants of the Company's assets,
     liabilities, and operations through the last day of the calendar month in
     which the dissolution occurs or the final liquidation is completed, as
     applicable;

          (b) the liquidator shall cause the notice described in article
     6.05(A)(2) of the Act to be mailed to each known creditor of and claimant
     against the Company in the manner described in such article 6.05(A)(2) of
     the Act;

          (c) the liquidator shall pay, satisfy or discharge from Company funds
     all of the debts, liabilities and obligations of the Company (including,
     without limitation, all expenses incurred in liquidation and any advances
     described in Section 4.05) or otherwise make adequate provision for payment
     and discharge thereof (including,


                                      -24-

     without limitation, the establishment of a cash escrow fund for contingent
     liabilities in such amount and for such term as the liquidator may
     reasonably determine); and

          (d) all remaining assets of the Company shall be distributed to the
     Members as follows:

               (i) the liquidator may sell any or all Company property,
          including to Members, and any resulting gain or loss from each sale
          shall be computed and allocated to the capital accounts of the
          Members;

               (ii) with respect to all Company property that has not been sold,
          the fair market value of that property shall be determined and the
          capital accounts of the Members shall be adjusted to reflect the
          manner in which the unrealized income, gain, loss, and deduction
          inherent in property that has not been reflected in the capital
          accounts previously would be allocated among the Members if there were
          a taxable disposition of that property for the fair market value of
          that property on the date of distribution; and

               (iii) Company property shall be distributed among the Members in
          accordance with the positive capital account balances of the Members,
          as determined after taking into account all capital account
          adjustments for the taxable year of the Company during which the
          liquidation of the partnership occurs (other than those made by reason
          of this clause (iii)); and those distributions shall be made by the
          end of the taxable year of the Company during which the liquidation of
          the Company Occurs (or, if later, 90 days after the date of the
          liquidation).

All distributions in kind to the Members shall be made subject to the liability
of each distributee for costs, expenses, and liabilities theretofore incurred or
for which the Company has committed prior to the date of termination and those
costs, expenses, and liabilities shall be allocated to the distributee pursuant
to this Section 12.02. The distribution of cash and/or property to a Member in
accordance with the provisions of this Section 12.02 constitutes a complete
return to the Member of its Capital Contributions and a complete distribution to
the Member of its Membership Interest and all the Company's property and
constitutes a compromise to which all Members have consented within the meaning
of the Act. To the extent that a Member returns funds to the Company, it has no
claim against any other Member for those funds.

     12.03 DEFICIT CAPITAL ACCOUNTS. Notwithstanding anything to the contrary
contained in these Regulations, and notwithstanding any custom or rule of law to
the contrary, to the extent that the deficit, if any, in the capital account of
any Member results from or is attributable to deductions and losses of the
Company (including non-cash items such as depreciation), or distributions of
money pursuant to these Regulations to all Members in proportion to their
respective Sharing Ratios,


                                      -25-

upon dissolution of the Company such deficit shall not be an asset of the
Company and such Members shall not be obligated to contribute such amount to the
Company to bring the balance of such Member's capital account to zero.

     12.04 ARTICLES OF DISSOLUTION. On completion of the distribution of Company
assets as provided herein, the Company is terminated, and the Managers (or such
other Person or Persons as the Act may require or permit) shall file Articles of
Dissolution with the Secretary of State of Nevada, cancel any other filings made
pursuant to Section 2.05, and take such other actions as may be necessary to
terminate the Company.

                                  ARTICLE XIII
                               GENERAL PROVISIONS

     13.01 OFFSET. Whenever the Company is to pay any sum to any Member, any
amounts that Member owes the Company may be deducted from that sum before
payment.

     13.02 NOTICES. Except as expressly set forth to the contrary in these
Regulations, all notices, requests, or consents provided for or permitted to be
given under these Regulations must be in writing and must be given either by
depositing that writing in the United States mail, addressed to the recipient,
postage paid, and registered or certified with return receipt requested or by
delivering that writing to the recipient in person, by courier, or by facsimile
transmission; and a notice, request, or consent given under these Regulations is
effective on receipt by the Person to receive it. All notices, requests, and
consents to be sent to a Member must be sent to or made at the addresses given
for that Member on Exhibit A or in the instrument described in Section 3.03(d)
or 3.04, or such other address as that Member may specify by notice to the other
Members. Any notice, request, or consent to the Company or the Managers must be
given to the Managers at the following address: 3751 Victoria Park Avenue,
Toronto, Ontario M1W 3Z4 Canada. Whenever any notice is required to be given by
law, the Articles or these Regulations, a written waiver thereof, signed by the
Person entitled to notice, whether before or after the time stated therein,
shall be deemed equivalent to the giving of such notice.

     13.03 ENTIRE AGREEMENT; SUPERSEDURE. These Regulations constitute the
entire agreement of the Members and their Affiliates relating to the Company and
supersedes all prior contracts or agreements with respect to the Company,
whether oral or written.

     13.04 EFFECT OF WAIVER OR CONSENT. A waiver or consent, express or implied,
to or of any breach or default by any Person in the performance by that Person
of its obligations with respect to the Company is not a consent or waiver to or
of any other breach or default in the performance by that Person of the same or
any other obligations of that Person with respect to the Company. Failure on the
part of a Person to complain of any act of any Person or to declare any Person
in default with respect to the Company, irrespective of how long that failure
continues, does not constitute a waiver by that Person of its rights with
respect to that default until the applicable statute-of-limitations period has
run.


                                      -26-

     13.05 AMENDMENT OR MODIFICATION. These Regulations may be amended or
modified from time to time only by a written instrument adopted by the Managers
and executed and agreed to by a Required Interest; provided, however, that (a)
an amendment or modification reducing a Member's Sharing Ratio or increasing its
Commitment (other than to reflect changes otherwise provided by these
Regulations) is effective only with that Member's consent, (b) an amendment or
modification reducing the required Sharing Ratio or other measure for any
consent or vote in these Regulations is effective only with the consent or vote
of Members having the Sharing Ratio or other measure theretofore required, and
(c) amendments of the type described in Section 3.04 may be adopted as therein
provided.

     13.06 BINDING EFFECT. Subject to the restrictions on Dispositions set forth
in these Regulations, these Regulations are binding on and inure to the benefit
of the Members and their respective heirs, legal representatives, successors,
and assigns.

     13.07 GOVERNING LAW; SEVERABILITY. THESE REGULATIONS ARE GOVERNED BY AND
SHALL BE CONSTRUED IN ACCORDANCE WITH LAW OF THE STATE OF NEVADA, EXCLUDING ANY
CONFLICT-OF-LAWS RULE OR PRINCIPLE THAT MIGHT REFER THE GOVERNANCE OR THE
CONSTRUCTION OF THESE REGULATIONS TO THE LAW OF ANOTHER JURISDICTION. In the
event of a direct conflict between the provisions of these Regulations and (a)
any provision of the Articles, or (b) any mandatory provision of the Act, the
application provision of the Articles or the Act shall control. If any provision
of these Regulations or the application thereof to any Person or circumstance is
held invalid or unenforceable to any extent, the remainder of these Regulations
and the application of that provision to other Persons or circumstances is not
affected thereby and that provision shall be enforced to the greatest extent
permitted by law.

     13.8 FURTHER ASSURANCES. In connection with these Regulations and the
transactions contemplated hereby, each Member shall execute and deliver any
additional documents and instruments and perform any additional acts that may be
necessary or appropriate to effectuate and perform the provisions of these
Regulations and those transactions.

     13.9 WAIVER OF CERTAIN RIGHTS. Each Member irrevocably waives any right it
may have to maintain any action for dissolution of the Company or for partition
of the property of the Company.

     13.10 INDEMNIFICATION. To the fullest extent permitted by law, each Member
shall indemnify the Company, each Manager and each other Member and hold them
harmless from and against all losses, costs, liabilities, damages, and expenses
(including, without limitation, costs of suit and attorney's fees) they may
incur on account of any breach by that Member of these Regulations.

     13.11 NOTICE TO MEMBERS OF PROVISIONS OF THIS AGREEMENT. By executing these
Regulations, each Member acknowledges that it has actual notice of (a) all of
the provisions of this Agreement, including, without limitation, the
restrictions on the transfer of Membership Interests set forth in Article III
and (b) all of the provisions of the Articles, including, without limitation,
the


                                      -27-

fact that the Articles provide that no Member shall have the preemptive right to
acquire any Membership Interests or securities of any class that may at any time
be issued, sold or offered for sale by the Company. Each Member hereby agrees
that these Regulations constitute adequate notice of all such provisions.

     13.12 COUNTERPARTS. These Regulations may be executed in any number of
counterparts with the same effect as if all signing parties had signed the same
document. All counterparts shall be construed together and constitute the same
instrument.

     13.13 ARBITRATION. If, at any time or from time to time during the
continuance of the Company or after the dissolution or other termination
thereof, any dispute, difference or question shall arise between any of the
Members, or their successors, assigns or nominees, touching or concerning the
Company of the property, assets, rights or transactions thereof, or the
dissolution or other termination thereof, or the property of the Company or the
construction, meaning or effect of these Regulations, or any provision hereof,
or the rights of obligations of the Members, or their successors, assigns or
nominees, under these Regulations or otherwise, with respect thereto, then every
such dispute, difference or question shall be submitted to and settled by
arbitration and the decision of the arbitrator appointed as hereinafter provided
to deal with such matter shall be accepted by all the Members to such dispute,
difference or question. The arbitration shall be conducted by a single
arbitrator agreed upon by the Members to the matter. The decision of the
arbitrator shall be final and binding upon all the Members to such dispute,
difference or question and their nominees, and there shall be no appeal
therefrom.

     IN WITNESS WHEREOF, following adoption of these Regulations by the
Managers, the Members have executed these Regulations as of the date first set
forth above.

                                        MEMBERS:

                                        ASHTON WOODS USA L.L.C.,
                                        a Nevada limited liability company


                                        By: /s/ Bruce Freeman
                                            ------------------------------------
                                            Bruce Freeman, Managing Member


                                        By: /s/ Seymour Joffe
                                            ------------------------------------
                                            Seymour Joffe, Managing Member


                                        By: /s/ Harry Rosenbaum
                                            ------------------------------------
                                            Harry Rosenbaum, Managing Member


                                      -28-

EX-3.2(D)

                                                                  EXHIBIT 3.2(d)

                                   REGULATIONS

                                       OF

                         ASHTON WOODS CALIFORNIA L.L.C.

                       A NEVADA LIMITED LIABILITY COMPANY

                         Dated as of February 6, 1997


                                   REGULATIONS
                                       OF
                         ASHTON WOODS CALIFORNIA L.L.C.
                       A NEVADA LIMITED LIABILITY COMPANY

                                TABLE OF CONTENTS

                                                                           
ARTICLE I
DEFINITIONS................................................................    1

1.01    Definitions........................................................    1
1.02    Construction.......................................................    3

ARTICLE II
ORGANIZATION...............................................................    3

2.01    Formation..........................................................    3
2.02    Name...............................................................    3
2.03    Resident Office; Resident Agent; Principal Office in the United
        States; Other Offices..............................................    3
2.04    Purposes...........................................................    3
2.05    Foreign Qualification..............................................    3
2.06    Term...............................................................    4
2.07    Mergers and Exchanges..............................................    4
2.08    No State-Law Partnership...........................................    4

ARTICLE III
MEMBERSHIP; DISPOSITIONS OF INTERESTS......................................    4

3.01    Initial Members....................................................    4
3.02    Representations and Warranties.....................................    4
3.03    Restrictions on the Disposition of an Interest.....................    4
3.04    Additional Members.................................................    6
3.05    Interests in a Member..............................................    6
3.06    Information........................................................    6
3.07    Liability to Third Parties.........................................    7
3.08    Withdrawal.........................................................    7
3.09    Lack of Authority..................................................    7

ARTICLE IV
CAPITAL CONTRIBUTIONS......................................................    7

4.01    Initial Contributions..............................................    7
4.02    Subsequent Contributions...........................................    7
4.03    Failure to Contribute..............................................    7
4.04    Return of Contributions............................................    9
4.05    Advances by Members................................................    9
4.06    Capital Accounts...................................................    9




                                       -i-

                                                                           
ARTICLE V
ALLOCATIONS AND DISTRIBUTIONS..............................................   10

5.01    Allocations........................................................   10
5.02    Distributions......................................................   10

ARTICLE VI
MANAGERS...................................................................   11

6.01    Management by Managers.............................................   11
6.02    Actions by Managers; Committees; Delegation of Authority and
        Duties.............................................................   12
6.03    Number and Term of Office..........................................   12
6.04    Vacancies; Removal; Resignation....................................   13
6.05    Meetings...........................................................   13
6.06    Approval or Ratification of Acts or Contracts by Members...........   13
6.07    Action by Written Consent or Telephone Conference..................   14
6.08    Compensation.......................................................   14
6.09    Conflicts of Interest..............................................   14
6.10    Officers...........................................................   14

ARTICLE VII
MEETINGS OF MEMBERS........................................................   15

7.01    Meetings...........................................................   15
7.02    Voting List........................................................   16
7 03    Proxies............................................................   16
7.04    Conduct of Meetings................................................   16
7.05    Action by Written Consent or Telephone Conference..................   17

ARTICLE VIII
INDEMNIFICATION............................................................   17

8.01    Right to Indemnification...........................................   17
8.02    Advance Payment....................................................   18
8.03    Indemnification of Officers, Employees, and Agents.................   18
8.04    Appearance as a Witness............................................   18
8.05    Nonexclusivity of Rights...........................................   18
8.06    Insurance..........................................................   19
8.07    Member Notification................................................   19
8.08    Savings Clause.....................................................   19

ARTICLE IX
TAXES......................................................................   19

9.01    Tax Returns........................................................   19
9.02    Tax Elections......................................................   19
9.03    "Tax Matters Partner...............................................   20




                                      -ii-

                                                                           
ARTICLE X
BOOKS RECORDS, REPORTS, AND BANK ACCOUNTS..................................   20

10.01   Maintenance of Books...............................................   20
10.02   Reports............................................................   20
10.03   Accounts...........................................................   21

ARTICLE XI
BANKRUPTCY OF A MEMBER.....................................................   21

11.01   Bankrupt Members...................................................   21

ARTICLE XII
DISSOLUTION, LIQUIDATION, AND TERMINATION..................................   21

12.01   Dissolution........................................................   21
12.02   Liquidation and Termination........................................   22
12.03   Deficit Capital Accounts...........................................   23
12.04   Articles of Dissolution............................................   23

ARTICLE XIII
GENERAL PROVISIONS.........................................................   23

13.01   Offset.............................................................   23
13.02   Notices............................................................   23
13.03   Entire Agreement; Supersedure......................................   24
13.04   Effect of Waiver or Consent........................................   24
13.05   Amendment or Modification..........................................   24
13.06   Binding Effect.....................................................   24
13.07   Governing Law; Severability........................................   24
13.08   Further Assurances.................................................   24
13.09   Waiver of Certain Rights...........................................   24
13.10   Indemnification....................................................   24
13.11   Notice to Members of Provisions of this Agreement..................   25
13.12   Counterparts.......................................................   25




                                      -iii-

                                   REGULATIONS

                                       OF

                         ASHTON WOODS CALIFORNIA L.L.C.

                       A NEVADA LIMITED LIABILITY COMPANY

     These REGULATIONS OF ASHTON WOODS CALIFORNIA L.L.C. (these "Regulations"),
dated as of February 6, 1997, are (a) adopted by the Managers (as defined below)
and (b) executed and agreed to, for good and valuable consideration, by the
Members (as defined below).

                                    ARTICLE I
                                   DEFINITIONS

     1.01 DEFINITIONS. As used in these Regulations, the following terms have
the following meanings:

          "Act" means the Nevada Limited Liability Company Act and any successor
     statute, as amended from time to time.

          "Articles" has the meaning given that term in Section 2.01.

          "Bankrupt Member" means (except to the extent a Required Interest
     consents otherwise) any Member (a) that (i) makes a general assignment for
     the benefit of creditors; (ii) files a voluntary bankruptcy petition; (iii)
     becomes the subject of an order for relief or is declared insolvent in any
     federal or state bankruptcy or insolvency proceedings; (iv) files a
     petition or answer seeking for the Member a reorganization, arrangement,
     composition, readjustment, liquidation, dissolution, or similar relief
     under any law; (v) files an answer or other pleading admitting or failing
     to contest the material allegations of a petition filed against the Member
     in a proceeding of the type described in subclauses (i) through (iv) of
     this clause (a); or (vi) seeks, consents to, or acquiesces in the
     appointment of a trustee, receiver, or liquidator of the Member or of all
     or any substantial part of the Member's properties; or (b) against which, a
     proceeding seeking reorganization, arrangement, composition, readjustment,
     liquidation, dissolution, or similar relief under any law has been
     commenced and 120 days have expired without dismissal thereof or with
     respect to which, without the Member's consent or acquiescence, a trustee,
     receiver, or liquidator of the Member or of all or any substantial part of
     the Member's properties has been appointed and 90 days have expired without
     the appointment's having been vacated or stayed, or 90 days have expired
     after the date of expiration of a stay, if the appointment has not
     previously been vacated.

          "Business Day" means any day other than a Saturday, a Sunday, or a
     holiday on which national banking associations in the State of Nevada are
     closed.

          "Capital Contribution" means any contribution by a Member to the
     capital of the Company.

          "Code" means the Internal Revenue Code of 1986 and any successor
     statute, as amended from time to time.


                                       -1-

          "Commitment" means, subject in each case to adjustments on account of
     Dispositions of Membership Interests permitted by these Regulations, (a) in
     the case of a Member executing these Regulations as of the date of these
     Regulations or a Person acquiring that Membership Interest, the amount
     specified for that Member as its Commitment on Exhibit A, and (b) in the
     case of a Membership Interest issued pursuant to Section 3.04, the
     Commitment established pursuant thereto.

          "Company" means Ashton Woods California L.L.C., a Nevada limited
     liability company.

          "Default Interest Rate" means a rate per annum equal to the lesser of
     (a) four percent (4%) plus a varying rate per annum that is equal to the
     interest rate published as the prime rate by The Bank of Nova Scotia from
     time to time, with adjustments in that varying rate to be made on the same
     date as any change in that rate, and (b) the maximum rate permitted by
     applicable law.

          "Delinquent Member" has the meaning given that term in Section
     4.03(a).

          "Dispose," "Disposing," or "Disposition" means a sale, assignment,
     transfer, exchange, mortgage, pledge, grant of a security interest, or
     other disposition or encumbrance (including, without limitation, by
     operation of law), or the acts thereof.

          "General Interest Rate" means a rate per annum equal to the lesser of
     (a) a varying rate per annum that is equal to the interest rate published
     as the prime rate by The Bank of Nova Scotia from time to time, with
     adjustments in that varying rate to be made on the same date as any change
     in that rate, and (b) the maximum rate permitted by applicable law.

          "Lending Member" has the meaning given that term in Section
     4.03(a)(ii).

          "Manager" means Bruce Freeman, Harry Rosenbaum and Seymour Joffe and
     any Person hereafter elected as a manager of the Company as provided in
     these Regulations, but does not include any Person who has ceased to be a
     manager of the Company.

          "Member" means any Person executing these Regulations as of the date
     of these Regulations as a member or hereafter admitted to the Company as a
     member as provided in these Regulations, but does not include any Person
     who has ceased to be a member in the Company.

          "Membership Interest" means the interest of a Member in the Company,
     including, without limitation, rights to distributions (liquidating or
     other), allocations, information, and to consent or approve.

          "Permitted Transferee" has the meaning given that term in Section
     3.03(b).

          "Person" has the meaning given that term in the Act.

          "Proceeding" has the meaning given that term in Section 8.01.


                                       -2-

          "Regulations" has the meaning given that term in the introductory
     paragraph.

          "Required Interest" means one or more Members having among them more
     than 51% of the Sharing Ratios of all Members.

          "Sharing Ratio" with respect to any Member means the percentage set
     forth on Exhibit A, subject to change as herein provided.

Other terms defined herein have the meanings so given them.

     1.02 CONSTRUCTION. Whenever the context requires, the gender of all words
used in these Regulations includes the masculine, feminine, and neuter. All
references to Articles and Section refer to articles and sections of these
Regulations, and all references to Exhibits are to Exhibits attached hereto,
each of which is made a part hereof for all purposes.

                                   ARTICLE II
                                  ORGANIZATION

     2.01 FORMATION. The Company has been organized as a Nevada limited
liability company by the filing of Articles of Organization (the "Articles")
under and pursuant to the Act and the issuance of a certificate of organization
for the Company by the Secretary of State of Nevada.

     2.02 NAME. The name of the Company is "Ashton Woods California L.L.C." and
all Company business must be conducted in that name or such other names that
comply with applicable law as the Managers may select from time to time.

     2.03 RESIDENT OFFICE; RESIDENT AGENT; PRINCIPAL OFFICE IN THE UNITED
STATES; OTHER OFFICES. The resident office of the Company required by the Act to
be maintained in the State of Nevada shall be the office of the initial resident
agent named in the Articles or such other office (which need not be a place of
business of the Company) as the Managers may designate from time to time in the
manner provided by law. The resident agent of the Company in the State of Nevada
shall be the initial resident agent named in the Articles or such other Person
or Persons as the Managers may designate from time to time in the manner
provided by law. The principal office of the Company in the United States shall
be at such place as the Managers may designate from time to time, which need not
be in the State of Nevada. The Company shall maintain records at the office of
the resident agent as required by the Act and shall keep the street address of
the resident office of the Company in the State of Nevada. The Company may have
such other offices as the Managers may designate from time to time.

     2.04 PURPOSES. The purposes of the Company are those set forth in the
Articles.

     2.05 FOREIGN QUALIFICATION. Prior to the Company's conducting business in
any jurisdiction other than Nevada, the Managers shall cause the Company to
comply, to the extent procedures are available and those matters are reasonably
within the control of the Managers, with all requirements necessary to qualify
the Company as a foreign limited liability company in that jurisdiction. At the
request of the Managers, each Member shall execute, acknowledge, swear to, and
deliver all certificates and other instruments conforming with these Regulations
that are necessary or appropriate to qualify, continue, and terminate the
Company as a foreign limited liability company in all such jurisdictions in
which the Company may conduct business.


                                       -3-

     2.06 TERM. The Company commenced on the date the Secretary of State of
Nevada issued a certificate of organization for the Company and shall continue
in existence for the period fixed in the Articles for the duration of the
Company, or such earlier time as these Regulations may specify.

     2.07 MERGERS AND EXCHANGES. The Company may be a party to (a) a merger or
(b) an exchange or acquisition.

     2.08 NO STATE-LAW PARTNERSHIP. The Members intend that the Company not be a
partnership (including, without limitation, a limited - partnership) or joint
venture, and that no Member or Manager be a partner or joint venturer of any
other Member or Manager, for any purposes other than federal and state tax
purposes, and these Regulations may not be construed to suggest otherwise.

                                   ARTICLE III
                      MEMBERSHIP; DISPOSITIONS OF INTERESTS

     3.01 INITIAL MEMBERS. The initial members of the Company are the Persons
executing these Regulations as of the date of these Regulations as members, each
of which is admitted to the Company as a Member effective contemporaneously with
the execution by such Person of these Regulations.

     3.02 REPRESENTATIONS AND WARRANTIES. Each Member hereby represents and
warrants to the Company and each other Member that (a) if that Member is a
corporation, it is duly organized, validly existing and in good standing under
the law of the state of its incorporation and is duly qualified and in good
standing as a foreign corporation in the jurisdiction of its principal place of
business (if not incorporated therein); (b) if that Member is a limited
liability company, it is duly organized, validly existing, and (if applicable)
in good standing under the law of the state of its organization and is duly
qualified and (if applicable) in good standing as a foreign limited liability
company in the jurisdiction of its principal place of business (if not organized
therein); (c) if that Member is a partnership, trust, or other entity, it is
duly formed, validly existing, and (inapplicable) in good standing under the law
of the state of its formation, and if required by law is duly qualified to do
business and (if applicable) in good standing in the jurisdiction of its
principal place of business (if not formed therein), and the representations and
warranties in clause (a), (b) or (c), as applicable, are true and correct with
respect to each partner (other than limited partners), trustee, or other member
thereof; (d) that Member has full corporate, limited liability company,
partnership, trust, or other applicable power and authority to execute and agree
to these Regulations and to perform its obligations hereunder and all necessary
actions by the board of directors, shareholders, managers, members, partners,
trustees, beneficiaries, or other Persons necessary for the due authorization,
execution, delivery, and performance of these Regulations by that Member have
been duly taken; (e) that Member has duly executed and delivered these
Regulations; and (f) that Member's authorization, execution, delivery, and
performance of these Regulations do not conflict with any other agreement or
arrangement to which that Member is a party or which it is bound.

     3.03 RESTRICTIONS ON THE DISPOSITION OF AN INTEREST. (a) Except as
specifically provided in this Section 3.03, a Disposition of an interest in the
Company may not be effected without the consent of (i) a majority of the
Managers who are Members (excluding any Manager who is making such Disposition),
or (ii) if there are no Managers of the type described in clause (i), a Required
Interest. Any attempted Disposition by a Person of an interest or right, or any
part thereof, in or in respect of the Company other than in accordance with this
Section 3.03 shall be, and is hereby declared, null and void ab initio.


                                       -4-

     (b) Notwithstanding the provisions of Section 3.03(a), the interest of any
Member in the Company may be transferred without the consent of the Managers or
any of the Members if (i) the transfer occurs by reason of or incident to the
death, dissolution, divorce, liquidation, merger or termination of the
transferor Member, and (ii) the transferee is a Permitted Transferee. A
"Permitted Transferee" is any member of such Member's immediate family, or a
trust, corporation, limited liability company, or partnership controlled by such
Member or members of such Member's immediate family, or another Person
controlling, controlled by, or under common control with such Member.

     (c) Subject to the provisions of Section 3.03(d), (e), and (f), (i) a
Person to whom an interest in the Company is transferred has the right to be
admitted to the Company as a Member with the Sharing Ratio and the Commitment so
transferred to such Person, if (A) the Member making such transfer grants the
transferee the right to be so admitted, and (B) such transfer is consented to in
accordance with Section 3.03(a); (ii) a Permitted Transferee under the
circumstances described in Section 3.03(b) has the right to be admitted to the
Company as a Member with the Sharing Ratio and the Commitment so transferred to
the Permitted Transferee; and (iii) the Company or (with the permission of the
Company, which may be withheld in its sole discretion) a Lending Member may
grant the purchaser of a Delinquent Member's interest in the Company at a
foreclosure of the security interest therein granted pursuant to Section 4.03(b)
the right to be admitted to the Company as a Member with such Sharing Ratio and
such Commitment (no greater than the Sharing Ratio and the Commitment of the
Member effecting such Disposition prior thereto) as they may agree.

     (d) The Company may not recognize for any purpose any purported Disposition
of all or part of a Membership Interest unless and until the other applicable
provisions of this Section 3.03 have been satisfied and the Managers have
received, on behalf of the Company, a document (i) executed by both the Member
effecting the Disposition (or if the transfer is on account of the death,
incapacity, or liquidation of the transferor, its representative) and the Person
to which the Membership Interest or part thereof is Disposed, (ii) including the
notice address of any Person to be admitted to the Company as a Member and its
agreement to be bound by these Regulations with respect to the Membership
Interest or part thereof being obtained, (iii) setting forth the Sharing Ratios
and the Commitments after the Disposition of the Member effecting the
Disposition and the Person to which the Membership Interest or part thereof is
Disposed (which together must total the Sharing Ratio and the Commitment of the
Member effecting the Disposition before the Disposition), and (iv) containing a
representation and warranty that the Disposition was made in accordance with all
applicable laws and regulations (including securities laws) and, if the Person
to which the Membership Interest or part thereof is Disposed is to be admitted
to the Company, its representation and warranty that the representations and
warranties in Section 3.02 are true and correct with respect to that Person.
Each Disposition and, if applicable, admission complying with the provisions of
this Section 3.03(d) is effective as of the first day of the calendar month
immediately succeeding the month in which the Managers receive the notification
of Disposition and the other requirements of this Section 3.03 have been met.

     (e) For the right of a Member to Dispose of a Membership Interest or any
part thereof or of any Person to be admitted to the Company in connection
therewith to exist or be exercised, (i) either (A) the Membership Interest or
part thereof subject to the Disposition or admission must be registered under
the Securities Act of 1933, as amended, and any applicable state securities laws
or (B) the Company must receive a favorable opinion of the Company's legal
counsel or of other legal counsel acceptable to the Managers to the effect that
the Disposition or admission is exempt from registration under those laws and
(ii) the Company must receive a favorable opinion of the Company's legal counsel
or of other legal counsel acceptable to the Managers to the effect that the
Disposition or admission, when added to the


                                       -5-

total of all other sales, assignments, or other Dispositions within the
preceding 12 months, would not result in the Company's being considered to have
terminated within the meaning of the Code. The Managers, however, may waive the
requirements of this Section 3.03(e).

     (f) The Member effecting a Disposition and any Person admitted to the
Company in connection therewith shall pay, or reimburse the Company for, all
costs incurred by the Company in connection with the Disposition or admission
(including, without limitation, the legal fees incurred in connection with the
legal opinions referred to in Section 3.03(e)) on or before the tenth day after
the receipt by that Person of the Company's invoice for the amount due. If
payment is not made by the date due, the Person owing that amount shall pay
interest on the unpaid amount from the date due until paid at a rate per annum
equal to the Default Interest Rate.

     3.04 ADDITIONAL MEMBERS. Additional Persons may be admitted to the Company
as Members and Membership Interests may be created and issued to those Persons
and to existing Members at the direction of (a) a majority of the Managers who
are Members, or (b) if there are no Managers who are Members, a Required
Interest, on such terms and conditions as the Managers may determine at the time
of admission. The terms of admission or issuance must specify the Sharing Ratios
and the Commitments applicable thereto and may provide for the creation of
different classes or groups of Members and having different rights, powers, and
duties. The Managers shall reflect the creation of any new class or group in an
amendment to these Regulations indicating the different rights, powers, and
duties, and such an amendment need be executed only by the Managers. Any such
admission also must comply with the provisions of Section 3.03(d)(i) and (ii)
and is effective only after the new Member has executed and delivered to the
Managers a document including the new Member's notice address, its agreement to
be bound by these Regulations, and its representation and warranty that the
representation and warranties in Section 3.02 are true and correct with respect
to the new Member. The provisions of this Section 3.04 shall not apply to
Dispositions of Membership Interests.

     3.05 INTERESTS IN A MEMBER. A Member that is not a natural person may not
cause or permit an interest, direct or indirect, in itself to be Disposed of
such that, after the Disposition, (a) the Company would be considered to have
terminated within the meaning of section 708 of the Code or (b) without the
consent of the Managers and a Required Interest, that Member shall cease to be
controlled by substantially the same Persons who control it as of the date of
its admission to the Company. On any breach of the provisions of clause (b) of
the immediately preceding sentence, the Company shall have the option to buy,
and on exercise of that option the breaching Member shall sell, the breaching
Member's Membership Interest, all in accordance with Section 11.01 as if the
breaching Member were a Bankrupt Member.

     3.06 INFORMATION. (a) In addition to the other rights specifically set
forth in these Regulations, each Member is entitled to all information to which
that Member is entitled to have access pursuant to the Act under the
circumstances and subject to the conditions therein stated. The Members agree,
however, that the Managers from time to time may determine, due to contractual
obligations, business concerns, or other considerations, that certain
information regarding the business, affairs, properties, and financial condition
of the Company should be kept confidential and not provided to some or all other
Members, and that it is not just or reasonable for those Members or assignees or
representatives thereof to examine or copy that information.

     (b) The Members acknowledge that, from time to time, they may receive
information from or regarding the Company in the nature of trade secrets or that
otherwise is confidential, the release of which may be damaging to the Company
or Persons with which it does business.


                                       -6-

Each Member shall hold in strict confidence any information it receives
regarding the Company that is identified as being confidential (and if that
information is provided in writing, that is so marked) and may not disclose it
to any Person other than another Member or a Manger, except for disclosures (i)
compelled by law (but the Member must notify the Managers promptly of any
request for that information, before disclosing it if practicable), (ii) to
advisers or representatives of the Member or Persons to which that Member's
Membership Interest may be Disposed as permitted by these Regulations, but only
if the recipients have agreed to be bound by the provisions of this Section
3.06(b), or (iii) of information that Member also has received from a source
independent of the Company that the Member reasonably believes obtained that
information without breach of any obligation of confidentiality. The Members
acknowledge that breach of the provisions of this Section 3.06(b) may cause
irreparable injury to the Company for which monetary damages are inadequate,
difficult to compute, or both. Accordingly, the Members agree that the
provisions or this Section 3.06(b) may be enforced by specific performance.

     3.07 LIABILITY TO THIRD PARTIES. No Member or Manager shall be liable for
the debts, obligations or liabilities of the Company, including under a
judgment, decree or order of a court.

     3.08 WITHDRAWAL. A Member does not have the right or power to withdraw from
the Company as a member.

     3.09 LACK OF AUTHORITY. No Member (other than a Manager or an officer) has
the authority or power to act for or on behalf of the Company, to do any act
that would be binding on the Company, or to incur any expenditures on behalf of
the Company.

                                   ARTICLE IV
                              CAPITAL CONTRIBUTIONS

     4.01 INITIAL CONTRIBUTIONS. Contemporaneously with the execution by such
Member of these Regulations, each Member shall make the Capital Contributions
described for that Member in Exhibit A.

     4.02 SUBSEQUENT CONTRIBUTIONS. Without creating any rights in favor of any
third party, each Member shall contribute to the Company, in cash, on or before
the date specified as hereinafter described, that Member's Sharing Ratio of all
monies that in the judgement of the Managers are necessary to enable the Company
to cause the assets of the Company to be properly operated and maintained and to
discharge its costs, expenses, obligations, and liabilities; provided, however,
that a Member is not obligated to contribute a total amount that, when added to
all Capital Contributions that Member previously has made pursuant to Section
4.01 or this Section 4.02. exceeds that Member's Commitment. The Managers shall
notify each Member of the need for Capital Contributions pursuant to this
Section 4.02 when appropriate, which notice must include a statement in
reasonable detail of the proposed uses of the Capital Contributions and a date
(which date may be no earlier than the fifth Business Day following each
Member's receipt of its notice) before which the Capital Contributions must be
made. Notices for Capital Contributions must be made to all Members in
accordance with their Sharing Ratios.

     4.03 FAILURE TO CONTRIBUTE. (a) If a Member does not contribute by the time
required all or any portion of a Capital Contribution that Member is required to
make as provided in these Regulations, the Company may exercise, on notice to
that Member (the "Delinquent Member"), one or more of the following remedies:


                                       -7-

          (i) taking such action (including, without limitation, court
     proceedings) as the Managers may deem appropriate to obtain payment by the
     Delinquent Member of the portion of the Delinquent Member's Capital
     Contribution that is in default, together with interest thereon at the
     Default Interest Rate from the date that the Capital Contribution was due
     until the date that it is made, all at the cost and expense of the
     Delinquent Member;

          (ii) permitting the other Members in proportion to their Sharing
     Ratios or in such other percentages as they may agree (the "Lending Member"
     whether one or more), to advance the portion of the Delinquent Member's
     Capital Contribution that is in default, with the following results:

               (A) the sum advanced constitutes a loan from the Lending Member
          to the Delinquent Member and a Capital Contribution of that sum to the
          Company by the Delinquent Member pursuant to the applicable provisions
          of these Regulations,

               (B) the principal balance of the loan and all accrued unpaid
          interest thereon is due and payable in whole on the tenth day after
          written demand therefor by the Lending Member to the Delinquent
          Member,

               (C) the amount lent bears interest at the Default Interest Rate
          from the day that the advance is deemed made until the date that the
          loan, together with all interest accrued on it, is repaid to the
          Lending Member,

               (D) all distributions from the Company that otherwise would be
          made to the Delinquent Member (whether before or after dissolution of
          the Company) instead shall be paid to the Lending Member until the
          loan and all interest accrued on it have been paid in full to the
          lending Member (with payments being applied first to accrued and
          unpaid interest and then to principal),

               (E) the payment of the loan and interest accrued on it is secured
          by a security interest in the Delinquent Member's Membership Interest,
          as more fully set forth in Section 4.03(b), and

               (F) the Lending Member has the right, in addition to the other
          rights and remedies granted to it pursuant to these Regulations or
          available to it at law or in equity, to take any action (including,
          without limitation, court proceedings) that the Lending Member may
          deem appropriate to obtain payment by the Delinquent Member of the
          loan and all accrued and unpaid interest on it, at the cost and
          expense of the Delinquent Member;

          (iii) exercising the rights of a secured party under the Uniform
     Commercial Code of the State of Nevada, as more fully set forth in Section
     4.03(b): or

          (iv) exercising any other rights and remedies available at law or in
     equity.


                                       -8-

     (b) Each Member grants to the Company, and to each Lending Member with
respect to any loans made by the Lending Member to that Member as a Delinquent
Member pursuant to Section 4.03(a)(ii), as security, equally and ratably, for
the payment of all Capital Contributions that Member has agreed to make and the
payment of all loans and interest accrued on them made by Lending Members to
that Member as a Delinquent Member pursuant to Section 4.03(a)(ii), a security
interest in and a general lien on its Membership Interest and the proceeds
thereof, all under the Uniform Commercial Code of the State of Nevada. On any
default in the payment of a Capital Contribution or in the payment of such a
loan or interest accrued on it, the Company or the Lending Member, as
applicable, is entitled to all the rights and remedies of a secured party under
the Uniform Commercial Code of the State of Nevada with respect to the security
interest granted in this Section 4.03(b). Each Member shall execute and deliver
to the Company and the other Members all financing statements and other
instruments that the Managers or the Lending Member, as applicable, may request
to effectuate and carry out the preceding provisions of this Section 4.03(b). At
the option of the Managers or a Lending Member, these Regulations or a carbon,
photographic, or other copy hereof may serve as a financing statement.

     4.04 RETURN OF CONTRIBUTIONS. Other than as expressly provided in these
Regulations, Member is not entitled to the return of any part of its Capital
Contributions or to be paid interest in respect of either its capital account or
its Capital Contributions. An unrepaid Capital Contribution is not a liability
of the Company or of any Member. A Member is not required to contribute or to
lend any cash or property to the Company to enable the Company to return any
Member's Capital Contributions.

     4.05 ADVANCES BY MEMBERS. If the Company does not have sufficient cash to
pay its obligations, any Member(s) that may agree to do so with the Managers'
consent may advance all or part of the needed funds to or on behalf of the
Company. An advance described in this Section 4.05 constitutes a loan from the
Member to the Company, bears interest at the General Interest Rate from the date
of the advance until the date of payment, and is not a Capital Contribution.

     4.06 CAPITAL ACCOUNTS. A capital account shall be established and
maintained for each Member. Each Member's capital account (a) shall be increased
by (i) the amount of money contributed by that Member to the Company, (ii) the
fair market value of property contributed by that Member to the Company (net of
liabilities secured by the contributed property that the Company is considered
to assume or take subject to under section 752 of the Code), and (iii)
allocations to that Member of Company income and gain (or items thereof),
including income and gain exempt from tax and income and gain described in
Treas. Reg. Section 1.704-l(b)(2)(iv)(g), but excluding income and gain
described in Treas. Reg. Section 1.704-l(b)(4)(i), and (b) shall be decreased by
(i) the amount of money distributed to that Member by the Company, (ii) the fair
market value of property distributed to that Member by the Company (net of
liabilities secured by the distributed property that the Member is considered to
assume or take subject to under section 752 of the Code), (iii) allocations to
that Member of expenditures of the Company described in section 705(a)(2)(B) of
the Code, and (iv) allocations of Company loss and deduction (or items thereof),
including loss and deduction described in Treas. Reg. Section 1.704-
l(b)(2)(iv)(g), but excluding items described in clause (b)(iii) above and loss
or deduction described in Treas. Reg. Section 1.704-l(b)(4)(i) or Section
1.704-1 (b)(4)(iii). The Members' capital accounts also shall be maintained and
adjusted as permitted by the provisions of Treas. Reg. Section 1.704-1
(b)(2)(iv)(f) and as required by the other provisions of Treas. Reg. Sections
1.704-1 (b)(2)(iv) and 1.704-l(b)(4), including adjustments to reflect the
allocations to the Members of depreciation, depletion, amortization, and gain or
loss as computed for book purposes rather than the allocation of the
corresponding items as computed for tax purposes, as required by Treas. Reg.
Section 1.704-l(b)(2)(iv)(g). A Member that has more than one Membership
Interest shall have


                                       -9-

a single capital account that reflects all its Membership Interests, regardless
of the class of Membership Interests owned by that Member and regardless of the
time or manner in which those Membership Interests were acquired. On the
transfer of all or part of a Membership Interest, the capital account of the
transferor that is attributable to the transferred Membership Interest or part
thereof shall carry over to the transferee Member in accordance with the
provisions of Treas. Reg. Section 1.704-l(b)(2)(iv)(l).

                                    ARTICLE V
                          ALLOCATIONS AND DISTRIBUTIONS

     5.01 ALLOCATIONS. (a) Except as may be required by section 701(c) of the
Code and Treas. Reg. Section 1.701-l(b)(2)(iv)(f)(4), all items of income, gain,
loss, deduction, and credit of the Company shall be allocated among the Members
in accordance with their Sharing Ratios.

     (b) All items of income, gain, loss, deduction, and credit allocable to any
Membership Interest that may have been transferred shall be allocated between
the transferor and the transferee based on the portion of the calendar year
during which each was recognized as owning that Membership Interest, without
regard to the results of Company operations during any particular portion of
that calendar year and without regard to whether cash distributions were made to
the transferor or the transferee during that calendar year; provided, however,
that this allocation must be made in accordance with a method permissible under
section 706 of the Code and the regulations thereunder.

     5.02 DISTRIBUTIONS. All receipts and revenues of the Company from any
source shall be applied and distributed in the following order of priority with
no distribution being made in any category set forth below unless and until the
preceding category has been satisfied in full either by payment or by setting
aside of a cash reserve for payment of same.

     (a) in payment of all debts, obligations, liabilities, costs and expenses
incurred in connection with or on account of the Company;

     (b) in repayment of any loans and accrued interest thereon made by a
Lending Member pursuant to Section 4,03(a)(ii);

     (c) in repayment of Contributions by the Member in accordance with their
Sharing Ratios, subject to the provisions of Section 4.03.

     (d) after having satisfied (a), (b) and (c) above, receipts and revenues of
the Company shall represent the profits of the Company and shall be distributed
in the following order of priority:

          (i) the Contributions made by the Members to the Company pursuant to
     Sections 4.01 and 4.02 herein shall bear interest at a rate which is two
     percent (2%) per annum greater than the prime rate charged by the Bank of
     Nova Scotia to its most creditworthy customers of U.S. Dollar demand loans,
     but in no event shall the rate of interest exceed the maximum rate
     permitted by laws, from the date of such advance until repaid to such
     Member in accordance with (c) above.

          (ii) after having satisfied (a), (b), (d) and (d)(i) above, the
     receipts and revenues of the Company shall be distributed to the Members
     pro rate and pari passu in accordance with their Sharing Ratios.


                                      -10-

However, no distribution of profits shall be made until after completion of any
development and/or construction activities undertaken by the Company, without
the agreement of the Members.

                                   ARTICLE VI
                                    MANAGERS

     6.01 MANAGEMENT BY MANAGERS. (a) Except for situations in which the
approval of the Members is required by these Regulations or by nonwaivable
provisions of applicable law, and subject to the provisions of Section 6.02, (i)
the powers of the Company shall be exercised by or under the authority of, and
the business and affairs of the Company shall be managed under the direction of,
the Managers; and (ii) the Managers may make all decisions and take all actions
for the Company not otherwise provided for in these Regulations, including,
without limitation, the following:

          (i) entering into, making, and performing contracts, agreements, and
     other undertakings binding the Company that may be necessary, appropriate,
     or advisable in furtherance of the purposes of the Company and making all
     decisions and waivers thereunder;

          (ii) opening and maintaining bank and investment accounts and
     arrangements, drawing checks and other orders for the payment of money, and
     designating individuals with authority to sign or give instructions with
     respect to those accounts and arrangements;

          (iii) maintaining the assets of the Company in good order;

          (iv) collecting sums due the Company;

          (v) to the extent that funds of the Company are available therefor,
     paying debts and obligations of the Company;

          (vi) acquiring, utilizing for Company purposes, and Disposing of any
     asset of the Company;

          (vii) borrowing money or otherwise committing the credit of the
     Company for Company activities and voluntary prepayments or extensions of
     debt;

          (viii) selecting, removing, and changing the authority and
     responsibility of lawyers, accountants, and other advisers and consultants;

          (ix) obtaining insurance for the Company;

          (x) determining distributions of Company cash and other property as
     provided in Section 5.02;

          (xi) establishing a seal for the Company;

          (xii) selling, leasing, exchanging or otherwise disposing of
     (including by way of a pledge, mortgage, deed of trust or trust indenture)
     all or any portion of the Company's property and assets (with or without
     good will); and

          (xiii) being a party to (i) a merger, or (ii) an exchange or
     acquisition.


                                      -11-

     (b) Notwithstanding the provisions of Section 6.01(a), the Managers may not
cause the Company to do any of the following without complying with the
applicable requirements set forth below:

          (i) amend or restate the Articles, without complying with the
     applicable procedures set forth in the Act.

     6.02 ACTIONS BY MANAGERS; COMMITTEES; DELEGATION OF AUTHORITY AND DUTIES.
(a) In managing the business and affairs of the Company and exercising its
powers, the Managers shall act (i) collectively through meetings and written
consents pursuant to Sections 6.05 and 6.07; (ii) through committees pursuant to
Section 6.02(b); or (iii) through Managers to whom authority and duties have
been delegated pursuant to Section 6.02(c).

     (b) The Managers may, from time to time, designate one or more committees,
each of which shall be comprised of one or more Managers. Any such committee, to
the extent provided in such resolution or in the Articles or these Regulations,
shall have and may exercise all of the authority of the Managers, subject to the
limitations set forth in the Act. At every meeting of any such committee, the
presence of a majority of all the members thereof shall constitute a quorum, and
the affirmative vote of a majority of the members present shall be necessary for
the adoption of any resolution. The Managers may dissolve any committee at any
time, unless otherwise provided in the Articles or these Regulations.

     (c) The Members and the Managers hereby delegate to each of the Managers
(acting by themself and without the necessity of any other approval or
authorization) or to an authorized representative of the Company, designated by
one or more of the Managers, the authority to take any of the actions authorized
in Section 6.01(a) hereof. In addition, the Managers may assign titles
(including, without limitation, president, vice president, secretary, assistant
secretary, treasurer and assistant treasurer) to any such Manager. Unless the
Managers decide otherwise, if the title is one commonly used for officers of a
business corporation formed under the laws of the State of Nevada, the
assignment of such title shall constitute the delegation to such Manager of the
authority and duties that are normally associated with that office, subject to
any specific delegation of authority and duties made pursuant to the first
sentence of this Section 6.02(c). Any number of titles may be held by the same
Manager. Any delegation pursuant to this Section 6.02(c) may be revoked at any
time by the Managers.

     (d) Any Person dealing with the Company, other than a Member, may rely on
the authority of any Manager, authorized representative or officer in taking any
action in the name of the Company without inquiry into the provisions of these
Regulations or compliance herewith, regardless of whether that action actually
is taken in accordance with the provisions of these Regulations.

     6.03 NUMBER AND TERM OF OFFICE. The number of Managers of the Company shall
be determined from time to time by resolution of the Managers; provided,
however, that no decrease in the number of Managers that would have the effect
of shortening the term of an incumbent Manager may be made by the Managers. If
the Managers make no such determination, the number of Managers shall be the
number set forth in the Articles as the number of Managers constituting the
initial Managers. Each Manager shall hold office for the term for which he is
elected and thereafter until his successor shall have been elected and
qualified, or until his earlier death, resignation or removal. Unless otherwise
provided in the Articles, Managers need not be Members or residents of the State
of Nevada.


                                      -12-

     6.04 VACANCIES; REMOVAL; RESIGNATION. Any Manager position to be filled by
reason of an increase in the number of Managers may be filled by election at an
annual or special meeting of Members called for that purpose. Any vacancy
occurring in the Managers other than by reason of an increase in the number of
Managers may be filled (a) by election at an annual or special meeting of the
Members called for that purpose or (b) by the affirmative vote of a majority of
the remaining Managers though less than a quorum of the Managers. A Manager
elected to fill a vacancy occurring other than by reason of an increase in the
number of Managers shall be elected for the unexpired term of his predecessor in
office. At any meeting of Members at which a quorum of Members is present called
expressly for that purpose, or pursuant to a written consent adopted pursuant to
these Regulations, any Manager may be removed, with or without cause, by a
Required Interest. Any Manager may resign at any time. Such resignation shall be
made in writing and shall take effect at the time specified therein, or if no
time be specified, at the time of its receipt by the remaining Managers. The
acceptance of a resignation shall not be necessary to make it effective, unless
expressly so provided in the resignation.

     6.05 MEETINGS. (a) Unless otherwise required by law or provided in the
Articles or these Regulations, a majority of the total number of Managers fixed
by, or in the manner provided in, the Articles or these Regulations shall
constitute a quorum for the transaction of business of the Managers, and the act
of a majority of the Managers present at a meeting at which a quorum is present
shall he the act of the Managers. A Manager who is present at a meeting of the
Managers at which action on any Company matter is taken shall be presumed to
have assented to the action unless his dissent shall be entered in the minutes
of the meeting or unless he shall file his written dissent to such action with
the Person acting as secretary of the meeting before the adjournment thereof or
shall deliver such dissent to the Company immediately after the adjournment of
the meeting. Such right to dissent shall not apply to a Manager who voted in
favor of such action.

     (b) Meetings of the Managers may be held at such place or places as shall
be determined from time to time by resolution of the Managers. At all meetings
of the Managers, business shall be transacted in such order as shall from time
to time be determined by resolution of the Managers. Attendance of a Manager at
a meeting shall constitute a waiver of notice of such meeting, except where a
Manager attends a meeting for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully
called or convened.

     (c) In connection with any annual meeting of Members at which Managers were
elected, the Managers may, if a quorum is present, hold its first meeting for
the transaction of business immediately after and at the same place as such
annual meeting of the Members. Notice of such meeting at such time and place
shall not be required.

     (d) Regular meetings of the Managers shall be held at such times and places
as shall be designated from time to time by resolution of the Managers. Notice
of such regular meetings shall not be required.

     (e) Special meetings of the Managers may be called by any Manager on at
least 24 hours notice to each other Manager. Such notice need not state the
purpose or purposes of, nor the business to be transacted at, such meeting,
except as may otherwise be required by law or provided for by the Articles or
these Regulations.

     6.06 APPROVAL OR RATIFICATION OF ACTS OR CONTRACTS BY MEMBERS. The Managers
in their discretion may submit any act or contract for approval or ratification
at any annual meeting of the Members, or at any special meeting of the Members
called for the purpose of


                                      -13-

considering any such act or contract, and any act or contract that shall be
approved or be ratified by a Required Interest shall be as valid and as binding
upon the Company and upon all the Members as if it shall have been approved or
ratified by every Member of the Company.

     6.07 ACTION BY WRITTEN CONSENT OR TELEPHONE CONFERENCE. Any action
permitted or required by the Act, the Articles or these Regulations to be taken
at a meeting of the Managers or any committee designated by the Managers may be
taken without a meeting if a consent in writing, setting forth the action to be
taken, is signed by all the Managers or members of such committee, as the case
may be. Such consent shall have the same force and effect as a unanimous vote at
a meeting and may be stated as such in any document or instrument filed with the
Secretary of State of Nevada, and the execution or such consent shall constitute
attendance or presence in person at a meeting of the Managers or any such
committee, as the case may be. Subject to the requirements of the Act, the
Articles or these Regulations for notice of meetings, unless otherwise
restricted by the Articles, Managers, or members of any committee designated by
the Managers, may participate in and hold a meeting of the Managers or any
committee of Managers, as the case may be, by means of a conference telephone or
similar communications equipment by means of which all Persons participating in
the meeting can hear each other, and participation in such meeting shall
constitute attendance and presence in person at such meeting, except where a
Person participates in the meeting for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully
called or convened.

     6.08 COMPENSATION. The Managers shall reserve such compensation, if any,
for their services as may be designated from time to time by all of the
Managers. In addition, the Managers shall be entitled to be reimbursed for
out-of-pocket costs and expenses incurred in the course of their service
hereunder, including the portion of their overhead reasonably allocable to
Company activities.

     6.09 CONFLICTS OF INTEREST. Subject to the other express provisions of
these Regulations, each Manager, Member and officer of the Company at any time
and from time to time may engage in and possess interests in other business
ventures of any and every type and description, independently or with others,
including ones in competition with the Company, with no obligation to offer to
the Company or any other Member, Manager or officer the right to participate
therein. The Company may transact business with any Manager, Member, officer or
Affiliate thereof, provided the terms of those transactions are no less
favorable than those the Company could obtain from unrelated third parties.

     6.10 OFFICERS. (a) The Managers may, from time to time, designate one or
more Persons to be officers of the Company. No officer need be a resident of the
State of Nevada, a Member or a Manager. Any officers so designated shall have
such authority and perform such duties as the Managers may, from time to time,
delegate to them. The Managers may assign titles to particular officers. Unless
the Managers decide otherwise, if the title is one commonly used for officers of
a business corporation formed under the laws of the State of Nevada, the
assignment of such title shall constitute the delegation to such officer of the
authority and duties that are normally associated with that office, subject to
(i) any specific delegation of authority and duties made to such officer by the
Managers pursuant to the third sentence of this Section 6.10(b), or (ii) any
delegation of authority and duties made to one or more Mangers pursuant to
Section 6.02(a). Each officer shall hold office until his successor shall be
duly designated and shall quality or until his death or until he shall resign or
shall have been removed in the manner hereinafter provided. Any number of
offices may be held by the same Person. The salaries or other compensation, if
any, of the officers and agents of the Company shall be fixed from time to time
by the Managers.


                                      -14-

     (b) Any officer may resign as such at any time, Such resignation shall be
made in writing and shall take effect at the time specified therein, or if no
time be specified, at the time of its receipt by the Managers. The acceptance of
a resignation shall not be necessary to make it effective, unless expressly so
provided in the resignation. Any officer may be removed as such, either with or
without cause, by the Managers whenever in their judgment the best interests of
the Company will be served thereby; provided, however, that such removal shall
be without prejudice to the contract rights, if any, of the Person so removed.
Designation of an officer shall not of itself create contract rights. Any
vacancy occurring in any office of the Company (other than Manager) may be
filled by the Managers.

                                   ARTICLE VII
                               MEETINGS OF MEMBERS

     7.01 MEETINGS. (a) A quorum shall be present at a meeting of Members if the
holders of a Required Interest are represented at the meeting in person or by
proxy. With respect to any matter, other than a matter for which the affirmative
vote of the holders of a specified portion of the Sharing Ratios of all Members
entitled to vote is required by the Act, the affirmative vote of a Required
Interest at a meeting of Members at which a quorum is present shall be the act
of the Members.

     (b) All meetings of the Members shall be held at the principal place of
business of the Company or at such other place within or without the State of
Nevada as shall be specified or fixed in the notices or waivers of notice
thereof; provided that any or all Members may participate in any such meeting by
means of conference telephone or similar communications equipment pursuant to
Section 7.05.

     (c) Notwithstanding the other provisions of the Articles or these
Regulations, the chairman of the meeting or the holders of a Required Interest
shall have the power to adjourn such meeting from time to time, without any
notice other than announcement at the meeting of the time and place of the
holding of the adjourned meeting. If such meeting is adjourned by the Members,
such time and place shall be determined by a vote of the holders of a Required
Interest. Upon the resumption of such adjourned meeting, any business may be
transacted that might have been transacted at the meeting as originally called.

     (d) An annual meeting of the Members, for the election of the Managers and
for the transaction of such other business as may properly come before the
meeting, shall be held at such place, within or without the State of Nevada, on
such date and at such time as the Managers shall fix and set forth in the notice
of the meeting, which date shall be within 13 months subsequent to the date of
organization of the Company or the last annual meeting of Members, whichever
most recently occurred.

     (e) Special meetings of the Members for any proper purpose or purposes may
be called at any time by the Managers or the holders of at least ten percent of
the Sharing Ratios of all Members, If not otherwise stated in or fixed in
accordance with the remaining provisions hereof, the record date for determining
Members entitled to call a special meeting is the date any Member first signs
the notice of that meeting. Only business within the purpose or purposes
described in the notice (or waiver thereof) required by these Regulations may be
conducted at a special meeting of the Members.

     (f) Written or printed notice stating the place, day and hour of the
meeting and, in the case of a special meeting, the purpose or purposes for which
the meeting is called, shall be delivered not less than ten nor more than 60
days before the date of the meeting, either personally or by mail, by or at the
direction of the Managers or Person calling the meeting, to


                                      -15-

each Member entitled to vote at such meeting. If mailed, any such notice shall
be deemed to be delivered when deposited in the United States mail, addressed to
the Member at his address provided for on Exhibit A, with postage thereon
prepaid.

     (g) The date on which notice of a meeting of Members is mailed or the date
on which the resolution of the Managers declaring a distribution is adopted, as
the case may be, shall be the record date for the determination of the Members
entitled to notice of or to vote at such meeting, including any adjournment
thereof, or the Members entitled to receive such distribution.

     (h) The right of Members to cumulative voting in the election of Managers
is expressly prohibited.

     7.02 VOTING LIST. The Managers shall make, at least ten days before each
meeting of Members, a complete list of the Members entitled to vote at such
meeting or any adjournment thereof, arranged in alphabetical order, with the
address of and the Sharing Ratios held by each, which list, for a period of ten
days prior to such meeting, shall be kept on file at the resident office or
principal place of business of the Company and shall be subject to inspection by
any Member at any time during usual business hours. Such list shall also be
produced and kept open at the time and place of the meeting and shall be subject
to the inspection of any Member during the whole time of the meeting. The
original membership records shall be prima-facie evidence as to who are the
Members entitled to examine such list or transfer records or to vote at any
meeting of Members. Failure to comply with the requirements of this Section
shall not affect the validity of any action taken at the meeting.

     7.03 PROXIES. A Member may vote either in person or by proxy executed in
writing by the Member. A telegram, telex, cablegram or similar transmission by
the Member, or a photographic, photostatic, facsimile or similar reproduction of
a writing executed by the Member shall be treated as an execution in writing for
purposes of this Section. Proxies for use at any meeting of Members or in
connection with the taking of any action by written consent shall be filed with
the Managers, before or at the time of the meeting or execution of the written
consent, as the case may be. All proxies shall be received and taken charge of
and all ballots shall be received and canvassed by the Managers, who shall
decide all questions touching upon the qualification of voters, the validity of
the proxies, and the acceptance or rejection of votes, unless an inspector or
inspectors shall have been appointed by the chairman of the meeting, in which
event such inspector or inspectors shall decide all such questions. No proxy
shall be valid after 11 months from the date of its execution unless otherwise
provided in the proxy. A proxy shall be revocable unless the proxy form
conspicuously states that the proxy is irrevocable and the proxy is coupled with
an interest. Should a proxy designate two or more Persons to act as proxies,
unless that instrument shall provide to the contrary, a majority of such Persons
present at any meeting at which their powers thereunder are to be exercised
shall have and may exercise all the powers of voting or giving consents thereby
conferred, or if only one be present, then such powers may be exercised by that
one; or, if an even number attend and a majority do not agree on any particular
issue, the Company shall not be required to recognize such proxy with respect to
such issue if such proxy does not specify how the Sharing Ratios that are the
subject of such proxy are to be voted with respect to such issue.

     7.04 CONDUCT OF MEETINGS. All meetings of the Members shall be presided
over by the chairman of the meeting, who shall be a Manager (or representative
thereof) designated by a majority of the Managers. The chairman of any meeting
of Members shall determine the order of business and the procedure at the
meeting, including such regulation of the manner of voting and the conduct of
discussion as seem to him in order.


                                      -16-

     7.05 ACTION BY WRITTEN CONSENT OR TELEPHONE CONFERENCE. (a) Any action
required or permitted to be taken at any annual or special meeting of Members
may be taken without a meeting, without prior notice, and without a vote, if a
consent or consents in writing, setting forth the action so taken, shall be
signed by the holder or holders of not less than the minimum Sharing Ratios that
would be necessary to take such action at a meeting at which the holders of all
Sharing Ratios entitled to vote on the action were present and voted. Every
written consent shall bear the date of signature of each Member who signs the
consent. No written consent shall be effective to take the action that is the
subject to the consent unless, within 60 days after the date of the earliest
dated consent delivered to the Company in the manner required by this Section, a
consent or consents signed by the holder or holders of not less than the minimum
Sharing Ratios that would be necessary to take the action that is the subject of
the consent are delivered to the Company by delivery to its resident office, its
principal place of business, or the Managers. Delivery shall be by hand or
certified or registered mail, return receipt requested. Delivery to the
Company's principal place of business shall be addressed to the Managers. A
telegram, telex, cablegram or similar transmission by a Member, or a
photographic, photostatic, facsimile or similar reproduction of a writing signed
by a Member, shall be regarded as signed by the Member for purposes of this
Section. Prompt notice of the taking of any action by Members without a meeting
by less than unanimous written consent shall be given to those Members who did
not consent in writing to the action.

     (b) The record date for determining Members entitled to consent to action
in writing without a meeting shall be the first date on which a signed written
consent setting forth the action taken or proposed to be taken is delivered to
the Company by delivery to its resident office, its principal place of business,
or the Managers. Delivery shall be by hand or by certified or registered mail,
return receipt requested. Delivery to the Company's principal place of business
shall be addressed to the Managers.

     (c) If any action by Members is taken by written consent, any articles or
documents filed with the Secretary of State of Nevada as a result of the taking
of the action shall state, in lieu of any statement required by the Act
concerning any vote of Members, that written consent has been given in
accordance with the provisions of the Act and that any written notice required
by the Act has been given.

     (d) Members may participate in and hold a meeting by means of conference
telephone or similar communications equipment by means of which all Persons
participating in the meeting can hear each other, and participation in such
meeting shall constitute attendance and presence in person at such meeting,
except where a Person participates in the meeting for the express purpose of
objecting to the transaction of any business on the ground that the meeting is
not lawfully called or convened.

                                  ARTICLE VIII
                                 INDEMNIFICATION

     8.01 RIGHT TO INDEMNIFICATION. Subject to the limitations and conditions as
provided in this Article VIII, each Person who was or is made a party or is
threatened to be made a party to or is involved in any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative,
arbitrative or investigative (hereinafter a "Proceeding"), or any appeal in such
a Proceeding or any inquiry or investigation that could lead to such a
Proceeding, by reason of the fact that he or she, or a Person of whom he or she
is the legal representative, is or was a Manager of the Company or while a
Manager of the Company is or was serving at the request of the Company as a
Manager, director, officer, partner, venturer, proprietor, trustee, employee,
agent, or similar functionary of another foreign or domestic limited liability
company, corporation, partnership, joint venture, sole proprietorship, trust,
employee benefit


                                      -17-

plan or other enterprise shall be indemnified by the Company to the fullest
extent permitted by the Act and the laws of the State of Nevada, as the same
exist or may hereafter be amended (but, in the case of any such amendment, only
to the extent that such amendment permits the Company to provide broader
indemnification rights than said law permitted the Company to provide prior to
such amendment) against judgments, penalties (including excise and similar taxes
and punitive damages), fines, settlements and reasonable expenses (including,
without limitation, attorneys' fees) actually incurred by such Person in
connection with such Proceeding, and indemnification under this Article VIII
shall continue as to a Person who has ceased to serve in the capacity which
initially entitled such Person to indemnify hereunder. The rights granted
pursuant to this Article VIII shall be deemed contract rights, and no amendment,
modification or repeal of this Article VIII shall have the effect of limiting or
denying any such rights with respect to actions taken or Proceedings arising
prior to any such amendment, modification or repeal. It is expressly
acknowledged that the indemnification provided in this Article VIII could
involve indemnification for negligence or under theories of strict liability.

     8.02 ADVANCE PAYMENT. The right to indemnification conferred in this
Article VIII shall include the right to be paid or reimbursed by the Company the
reasonable expenses incurred by a Person of the type entitled to be indemnified
under Section 8.01 who was, is or is threatened to be made a named defendant or
respondent in a Proceeding in advance of the final disposition of the Proceeding
and without any determination as to the Person's ultimate entitlement to
indemnification; provided, however, that the payment of such expenses incurred
by any such Person in advance of the final disposition of a Proceeding, shall be
made only upon delivery to the Company of a written affirmation by such Manager
of his or her good faith belief that he has met the standard of conduct for
indemnification under this Article VIII and a written undertaking, by or on
behalf of such Person, to repay all amounts so advanced if it shall ultimately
be determined that such indemnified Person is not entitled to be indemnified
under this Article VIII or otherwise.

     8.03 INDEMNIFICATION OF OFFICERS, EMPLOYEES, AND AGENTS. The Company, by
adoption of a resolution of the Managers, may indemnity and advance expenses to
an officer, employee or agent of the Company to the same extent and subject to
the same conditions under which it may indemnify and advance expenses to
Managers under this Article VIII; and, the Company may indemnify and advance
expenses to Persons who are not or were not Managers, officers, employees or
agents of the Company but who are or were serving at the request of the Company
as a Manager, director, officer, partner, venturer, proprietor, trustee,
employee, agent or similar functionary of another foreign or domestic limited
liability company, corporation, partnership, joint venture, sole proprietorship,
trust, employee benefit plan or other enterprise against any liability asserted
against him and incurred by him in such a capacity or arising out of his status
as such a Person to the same extent that it may indemnity and advance expenses
to Managers under this Article VIII.

     8.04 APPEARANCE AS A WITNESS. Notwithstanding any other provision of this
Article VIII, the Company may pay or reimburse expenses incurred by a Manager in
connection with his appearance as a witness or other participation in a
Proceeding at a time when he is not a named defendant or respondent in the
Proceeding.

     8.05 NONEXCLUSIVITY OF RIGHTS. The right to indemnification and the
advancement and payment of expenses conferred in this Article VIII shall not be
exclusive of any other right which a Manager or other Person indemnified
pursuant to Section 8.03 may have or hereafter acquire under any law (common or
statutory), provision of the Articles or these Regulations, agreement, vote of
Members or disinterested Managers or otherwise.


                                      -18-

     8.06 INSURANCE. The Company may purchase and maintain insurance, at its
expense, to protect itself and any Person who is or was serving as a Manager,
officer, employee or agent of the Company or is or was serving at the request of
the Company as a Manager, director, officer, partner, venturer, proprietor,
trustee, employee, agent or similar functionary of another foreign or domestic
limited liability company, corporation, partnership, joint venture, sole
proprietorship, trust, employee benefit plan or other enterprise against any
expense, liability or loss, whether or not the Company would have the power to
indemnify such Person against such expense, liability or loss under this Article
VIII.

     8.07 MEMBER NOTIFICATION. To the extent required by law, any
indemnification of or advance of expenses to a Manager in accordance with this
Article VIII shall be reported in writing to the Members with or before the
notice or waiver of notice of the next Members' meeting or with or before the
next submission to Members of a consent to action without a meeting and, in any
case, within the 12-month period immediately following the date of the
indemnification or advance.

     8.08 SAVINGS CLAUSE. If this Article VIII or any portion hereof shall be
invalidated on any ground by any court of competent jurisdiction, then the
Company shall nevertheless indemnify and hold harmless each Manager or any
other Person indemnified pursuant to this Article VIII as to costs, charges and
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement with respect to any action, suit or proceeding, whether civil,
criminal, administrative or investigative to the full extent permitted by any
applicable portion of this Article VIII that shall not have been invalidated and
to the fullest extent permitted by applicable law.

                                   ARTICLE IX
                                      TAXES

     9.01 TAX RETURNS. The Managers shall cause to be prepared and filed all
necessary federal and state income tax returns for the Company, including making
the elections described in Section 9.02. Each Member shall furnish to the
Managers all pertinent information in its possession relating to Company
operations that is necessary to enable the Company's income tax returns to be
prepared and filed.

     9.02 TAX ELECTIONS. The Company shall make the following elections on the
appropriate tax returns:

          (a) to adopt the year ending on May 31 as the Company's fiscal year;

          (b) to adopt a method of accounting as the Managers may determine from
     time to time;

          (c) if a distribution of Company property as described in section 734
     of the Code occurs or if a transfer of a Membership Interest as described
     in section 743 of the Code occurs, on written request of any Member, to
     elect, pursuant to section 754 of the Code, to adjust the basis of Company
     properties;

          (d) to elect to amortize the organizational expenses of the Company
     and the startup expenditures of the Company under Section 195 of the Code
     ratably over a period of 60 months as permitted by section 709(b) of the
     Code; and

          (e) any other election the Managers may deem appropriate and in the
     best interests of the Members.


                                      -19-

Neither the Company nor any Manager or Member may make an election for the
Company to be excluded from the application of the provisions of subchapter K of
chapter 1 of subtitle A of the Code or any similar provisions of applicable
state law, and no provision of these Regulations (including, without limitation,
Section 2.06) shall be construed to sanction or approve such an election.

     9.03 "TAX MATTERS PARTNER." A majority of the Managers who are Members
shall designate one Manager that is a Member to be the "tax matters partner" of
the Company pursuant to section 6231(a)(7) of the Code; or, if there is no
Manager that is a Member, the "tax matters partner" shall be a Member that is
designated as such by a Required Interest. Any Member who is designated "tax
matters partner" shall take such action as may be necessary to cause each other
Member to become a "notice partner" within the meaning of section 6223 of the
Code. Any Member who is designated "tax matters partner" shall inform each other
Member of all significant matters that may come to its attention in its capacity
as "tax matters partner" by giving notice thereof on or before the fifth
Business Day after becoming aware thereof and, within that time, shall forward
to each other Member copies of all significant written communications it may
receive in that capacity. Any Member who is designated "tax matters partner" may
not take any action contemplated by sections 6222 through 6232 of the Code
without the consent of a Required Interest, but this sentence does not authorize
such Manager (or any other Manager) to take any action left to the determination
of an individual Member under sections 6222 through 6232 of the Code.

                                    ARTICLE X
                   BOOKS, RECORDS, REPORTS, AND BANK ACCOUNTS

     10.01 MAINTENANCE OF BOOKS. The Company shall keep books and records of
accounts and shall keep minutes of the proceedings of its Members, its Managers
and each committee of the Managers. The books of account for the Company shall
be maintained on a cash basis in accordance with the terms of these Regulations,
except that the capital accounts of the Members shall be maintained in
accordance with Section 4.06. The calendar year shall be the accounting year of
the Company.

     10.02 REPORTS. On or before the 120th day following the end of each fiscal
year during the term of the Company, the Managers shall cause each Member to be
furnished with a balance sheet, an income statement, and a statement of changes
in Members' capital of the Company for, or as of the end of, that year certified
by a recognized firm of certified public accountants. These financial statements
must be prepared in accordance with accounting principles generally employed for
cash basis records consistently applied (except as therein noted) and must be
accompanied by a report of the certified public accountants certifying the
statements and stating that (a) their examination was made in accordance with
generally accepted auditing standards and, in their opinion, the financial
statements fairly present the financial position, financial results of
operations, and changes in Members' capital in accordance with accounting
principles generally employed for cash-basis records consistently applied
(except as therein noted) and (b) in making the examination and reporting on the
financial statements described above, nothing came to their attention that
caused them to believe that (i) the income and revenues were not paid or
credited in accordance with the financial and accounting provisions of these
Regulations, (ii) the costs and expenses were not charged in accordance with the
financial and accounting provisions of these Regulations, or (iii) the Managers
or any Member failed to comply in any material respect with the financial and
accounting provisions of these Regulations, or if they do conclude that the
Managers or a Member so failed, specifying the nature and period of existence of
the failure. The Managers also may cause to be prepared or delivered such other
reports as they may deem appropriate. The Company shall bear the costs of all
these reports.


                                      -20-

     10.03 ACCOUNTS. The Managers shall establish and maintain one or more
separate bank and investment accounts and arrangements for Company funds in the
Company name with financial institutions and firms that the Managers determine.
The Managers may not commingle the Company's funds with the funds of any Member;
however, Company funds may be invested in a manner the same as or similar to the
Managers' investment of their own funds or investments by their Affiliates.

                                   ARTICLE XI
                             BANKRUPTCY OF A MEMBER

     11.01 BANKRUPT MEMBERS. Subject to Section 12.01(c), if any Member becomes
a Bankrupt Member, the Company shall have the option, exercisable by notice from
the Managers to the Bankrupt Member (or its representative) at any time prior to
the 180th day after receipt of notice of the occurrence of the event causing it
to become a Bankrupt Member, to buy, and on the exercise of this option the
Bankrupt Member or its representative shall sell, its Membership Interest. The
purchase price shall be an amount equal to the fair market value thereof
determined by agreement of the Bankrupt Member (or its representative) and the
Managers; however, if those Persons do not agree on the fair market value on or
before the 30th day following the exercise of the option, either such Person, by
notice to the other, may require the determination of fair market value to be
made by an independent appraiser specified in that notice. If the Person
receiving that notice objects on or before the tenth day following receipt to
the independent appraiser designated in that notice, and those Persons otherwise
fail to agree on an independent appraiser, either such Person may petition the
United States District Judge for the State of Nevada then senior in service to
designate an independent appraiser. The determination of the independent
appraiser, however designated, is final and binding on all parties. The Bankrupt
Member and the Company each shall pay one-half of the costs of the appraisal.
The purchaser shall pay the fair market value as so determined in four equal
cash installments, the first due on closing and the remainder (together with
accumulated interest on the amount unpaid at the General Interest Rate) due on
each of the first three anniversaries thereof. The payment to be made to the
Bankrupt Member or its representative pursuant to this Section 11.01 is in
complete liquidation and satisfaction of all the rights and interest of the
Bankrupt Member and its representative (and of all Persons claiming by, through,
or under the Bankrupt Member and its representative) in and in respect of the
Company, including, without limitation, any Membership Interest, any rights in
specific Company property, and any rights against the Company and (insofar as
the affairs of the Company are concerned) against the Members, and constitutes a
compromise to which all Members have agreed pursuant to the Act.

                                   ARTICLE XII
                    DISSOLUTION, LIQUIDATION, AND TERMINATION

     12.01 DISSOLUTION. The Company shall dissolve and its affairs shall be
wound up on the first to occur of the following:

          (a) the written consent of a Required Interest;

          (b) the expiration of the period fixed for the duration of the Company
     set forth in the Articles;

          (c) any Manager who is a Member (or, if there is no Manager who is a
     Member, any Member) shall become a Bankrupt Member (with or without the
     consent of a Required Interest); provided, however, that if the event
     described in this Section 12.0l(c) shall occur and there shall be at least
     one other Member remaining, the Company shall not be dissolved, and the
     business of the Company shall be continued, if all Members so agree; and


                                      -21-

          (d) entry of a decree of judicial dissolution of the Company under
     article 6.02 of the Act.

Except as provided in Section 12.01(c), the death, retirement, resignation,
expulsion, bankruptcy or dissolution of a Member, or the occurrence of any other
event that terminates the continued membership of a Member in the Company, shall
not cause a dissolution of the Company.

     12.02 LIQUIDATION AND TERMINATION. On dissolution of the Company, the
Managers shall act as liquidator or may appoint one or more Members as
liquidator. The liquidator shall proceed diligently to wind up the affairs of
the Company and make final distributions as provided herein and in the Act. The
costs of liquidation shall be borne as a Company expense. Until final
distribution, the liquidator shall continue to operate the Company properties
with all of the power and authority of the Managers. The steps to be
accomplished by the liquidator are as follows:

          (a) as promptly as possible after dissolution and again after final
     liquidation, the liquidator shall cause a proper accounting to be made by a
     recognized firm of certified public accountants of the Company's assets,
     liabilities, and operations through the last day of the calendar month in
     which the dissolution occurs or the final liquidation is completed, as
     applicable;

          (b) the liquidator shall cause the notice described in article
     6.05(A)(2) of the Act to be mailed to each known creditor of and claimant
     against the Company in the manner described in such article 6.05(A)(2) of
     the Act;

          (c) the liquidator shall pay, satisfy or discharge from Company funds
     all of the debts, liabilities and obligations of the Company (including,
     without limitation, all expenses incurred in liquidation and any advances
     described in Section 4.05) or otherwise make adequate provision for payment
     and discharge thereof (including, without limitation, the establishment of
     a cash escrow fund for contingent liabilities in such amount and for such
     term as the liquidator may reasonably determine); and

          (d) all remaining assets of the Company shall be distributed to the
     Members as follows:

               (i) the liquidator may sell any or all Company property,
          including to Members, and any resulting gain or loss from each sale
          shall be computed and allocated to the capital accounts of the
          Members;

               (ii) with respect to all Company property that has not been sold,
          the fair market value of that property shall be determined and the
          capital accounts of the Members shall be adjusted to reflect the
          manner in which the unrealized income, gain, loss, and deduction
          inherent in property that has not been reflected in the capital
          accounts previously would be allocated among the Members if there were
          a taxable disposition of that property for the fair market value of
          that property on the date of distribution; and

               (iii) Company property shall be distributed among the Members in
          accordance with the positive capital account balances


                                      -22-

          of the Members, as determined after taking into account all capital
          account adjustments for the taxable year of the Company during which
          the liquidation of the partnership occurs (other than those made by
          reason of this clause (iii)); and those distributions shall be made by
          the end of the taxable year of the Company during which the
          liquidation of the Company Occurs (or, if later, 90 days after the
          date of the liquidation).

All distributions in kind to the Members shall be made subject to the liability
of each distributee for costs, expenses, and liabilities theretofore incurred or
for which the Company has committed prior to the date of termination and those
costs, expenses, and liabilities shall be allocated to the distributee pursuant
to this Section 12.02. The distribution of cash and/or property to a Member in
accordance with the provisions of this Section 12.02 constitutes a complete
return to the Member of its Capital Contributions and a complete distribution to
the Member of its Membership Interest and all the Company's property and
constitutes a compromise to which all Members have consented within the meaning
of the Act. To the extent that a Member returns funds to the Company, it has no
claim against any other Member for those funds.

     12.03 DEFICIT CAPITAL ACCOUNTS. Notwithstanding anything to the contrary
contained in these Regulations, and notwithstanding any custom or rule of law to
the contrary, to the extent that the deficit, if any, in the capital account of
any Member results from or is attributable to deductions and losses of the
Company (including non-cash items such as depreciation), or distributions of
money pursuant to these Regulations to all Members in proportion to their
respective Sharing Ratios, upon dissolution of the Company such deficit shall
not be an asset of the Company and such Members shall not be obligated to
contribute such amount to the Company to bring the balance of such Member's
capital account to zero.

     12.04 ARTICLES OF DISSOLUTION. On completion of the distribution of Company
assets as provided herein, the Company is terminated, and the Managers (or such
other Person or Persons as the Act may require or permit) shall file Articles of
Dissolution with the Secretary of State of Nevada, cancel any other filings made
pursuant to Section 2.05, and take such other actions as may be necessary to
terminate the Company.

                                  ARTICLE XIII
                               GENERAL PROVISIONS

     13.01 OFFSET. Whenever the Company is to pay any sum to any Member, any
amounts that Member owes the Company may be deducted from that sum before
payment.

     13.02 NOTICES. Except as expressly set forth to the contrary in these
Regulations, all notices, requests, or consents provided for or permitted to be
given under these Regulations must be in writing and must be given either by
depositing that writing in the United States mail, addressed to the recipient,
postage paid, and registered or certified with return receipt requested or by
delivering that writing to the recipient in person, by courier, or by facsimile
transmission; and a notice, request, or consent given under these Regulations is
effective on receipt by the Person to receive it. All notices, requests, and
consents to be sent to a Member must be sent to or made at the addresses given
for that Member on Exhibit A or in the instrument described in Section 3.03(d)
or 3.04. or such other address as that Member may specify by notice to the other
Members. Any notice, request, or consent to the Company or the Managers must be
given to the Managers at the following address: 250 Lesmill Road, Don Mills,
Ontario M3B 2T5 Canada. Whenever any notice is required to be given by law, the
Articles or these Regulations, a written waiver thereof, signed by the Person
entitled to notice, whether before or after the time stated therein, shall be
deemed equivalent to the giving of such notice.


                                      -23-

     13.03 ENTIRE AGREEMENT; SUPERSEDURE. These Regulations constitute the
entire agreement of the Members and their Affiliates relating to the Company and
supersedes all prior contracts or agreements with respect to the Company,
whether oral or written.

     13.04 EFFECT OF WAIVER OR CONSENT. A waiver or consent, express or implied,
to or of any breach or default by any Person in the performance by that Person
of its obligations with respect to the Company is not a consent or waiver to or
of any other breach or default in the performance by that Person of the same or
any other obligations of that Person with respect to the Company. Failure on the
part of a Person to complain of any act of any Person or to declare any Person
in default with respect to the Company, irrespective of how long that failure
continues, does not constitute a waiver by that Person of its rights with
respect to that default until the applicable statute-of-limitations period has
run.

     13.05 AMENDMENT OR MODIFICATION. These Regulations may be amended or
modified from time to time only by a written instrument adopted by the Managers
and executed and agreed to by a Required Interest; provided, however, that (a)
an amendment or modification reducing a Member's Sharing Ratio or increasing its
Commitment (other than to reflect changes otherwise provided by these
Regulations) is effective only with that Member's consent, (b) an amendment or
modification reducing the required Sharing Ratio or other measure for any
consent or vote in these Regulations is effective only with the consent or vote
of Members having the Sharing Ratio or other measure theretofore required, and
(c) amendments of the type described in Section 3.04 may be adopted as therein
provided.

     13.06 BINDING EFFECT. Subject to the restrictions on Dispositions set forth
in these Regulations, these Regulations are binding on and inure to the benefit
of the Members and their respective heirs, legal representatives, successors,
and assigns.

     13.07 GOVERNING LAW; SEVERABILITY. THESE REGULATIONS ARE GOVERNED BY AND
SHALL BE CONSTRUED IN ACCORDANCE WITH LAW OF THE STATE OF NEVADA, EXCLUDING ANY
CONFLICT-OF-LAWS RULE OR PRINCIPLE THAT MIGHT REFER THE GOVERNANCE OR THE
CONSTRUCTION OF THESE REGULATIONS TO THE LAW OF ANOTHER JURISDICTION. In the
event of a direct conflict between the provisions of these Regulations and (a)
any provision of the Articles, or (b) any mandatory provision of the Act, the
application provision of the Articles or the Act shall control. If any provision
of these Regulations or the application thereof to any Person or circumstance is
held invalid or unenforceable to any extent, the remainder of these Regulations
and the application of that provision to other Persons or circumstances is not
affected thereby and that provision shall be enforced to the greatest extent
permitted by law.

     13.08 FURTHER ASSURANCES. In connection with these Regulations and the
transactions contemplated hereby, each Member shall execute and deliver any
additional documents and instruments and perform any additional acts that may be
necessary or appropriate to effectuate and perform the provisions of these
Regulations and those transactions.

     13.09 WAIVER OF CERTAIN RIGHTS. Each Member irrevocably waives any right it
may have to maintain any action for dissolution of the Company or for partition
of the property of the Company.

     13.10 INDEMNIFICATION. To the fullest extent permitted by law, each Member
shall indemnify the Company, each Manager and each other Member and hold them
harmless from and against all losses, costs, liabilities, damages, and expenses
(including, without limitation, costs of suit and attorney's fees) they may
incur on account of any breach by that Member of these Regulations.


                                      -24-

     13.11 NOTICE TO MEMBERS OF PROVISIONS OF THIS AGREEMENT. By executing these
Regulations, each Member acknowledges that it has actual notice of (a) all of
the provisions of this Agreement, including, without limitation, the
restrictions on the transfer of Membership Interests set forth in Article III,
and (b) all of the provisions of the Articles, including, without limitation,
the fact that the Articles provide that no Member shall have the preemptive
right to acquire any Membership Interests or securities of any class that may at
any time be issued, sold or offered for sale by the Company. Each Member hereby
agrees that these Regulations constitute adequate notice of all such provisions.

     13.12 COUNTERPARTS. These Regulations may be executed in any number of
counterparts with the same effect as if all signing parties had signed the same
document. All counterparts shall be construed together and constitute the same
instrument.

     13.13 ARBITRATION. If, at any time or from time to time during the
continuance of the Company or after the dissolution or other termination
thereof, any dispute, difference or question shall arise between any of the
Members, or their successors, assigns or nominees, touching or concerning the
Company of the property, assets, rights or transactions thereof, or the
dissolution or other termination thereof, or the property of the Company or the
construction, meaning or effect of these Regulations, or any provision hereof,
or the rights of obligations of the Members, or their successors, assigns or
nominees, under these Regulations or otherwise, with respect thereto, then every
such dispute, difference or question shall be submitted to and settled by
arbitration and the decision of the arbitrator appointed as hereinafter provided
to deal with such matter shall be accepted by all the Members to such dispute,
difference or question. The arbitration shall be conducted by a single
arbitrator agreed upon by the Members to the matter. The decision of the
arbitrator shall be final and binding upon all the Members to such dispute,
difference or question and their nominees, and there shall be no appeal
therefrom.

     IN WITNESS WHEREOF, following adoption of these Regulations by the
Managers, the Members have executed these Regulations as of the date first set
forth above.

                                        MEMBERS:

                                        ELLY NEVADA, INC.,
                                        a Nevada corporation


                                        By: /s/ Harry Rosenbaum
                                            ------------------------------------
                                            Harry Rosenbaum, Vice President


                                        NORMAN NEVADA, INC.,
                                        a Nevada corporation


                                        By: /s/ Harry Rosenbaum
                                            ------------------------------------
                                            Harry Rosenbaum, Vice President


                                        LARRY NEVADA, INC.,
                                        a Nevada corporation


                                        By: /s/ Harry Rosenbaum
                                            ------------------------------------
                                            Harry Rosenbaum, Vice President


                                      -25-

                                        BRUCE NEVADA, INC.,
                                        a Nevada corporation


                                        By: /s/ Harry Rosenbaum
                                            ------------------------------------
                                            Harry Rosenbaum, Vice President


                                        HARRY NEVADA, INC.,
                                        a Nevada corporation


                                        By: /s/ Harry Rosenbaum
                                            ------------------------------------
                                            Harry Rosenbaum, President


                                        SEYMOUR NEVADA, INC.,
                                        a Nevada corporation


                                        By: /s/ Harry Rosenbaum
                                            ------------------------------------
                                            Harry Rosenbaum, Vice President


                                        HAYDN NEVADA, INC.,
                                        a Nevada corporation


                                        By: /s/ Harry Rosenbaum
                                            ------------------------------------
                                            Harry Rosenbaum, Vice President


                                      -26-

EX-3.2(E)

                                                                  Exhibit 3.2(e)

                        FIRST AMENDMENT TO REGULATIONS OF
                         ASHTON WOODS CALIFORNIA L.L.C.

     THIS FIRST AMENDMENT TO REGULATIONS OF ASHTON WOODS CALIFORNIA L.L.C. (this
"Amendment") is made and entered into by and among ELLY NEVADA, INC., a Nevada
corporation ("Elly NV"), NORMAN NEVADA, INC., a Nevada corporation ("Norman
NV"), LARRY NEVADA, INC., a Nevada corporation ("Larry NV"), BRUCE NEVADA, INC.,
a Nevada corporation ("Bruce NV"), HARRY NEVADA, INC., a Nevada corporation
("Harry NV"), SEYMOUR NEVADA, INC., a Nevada corporation ("Seymour NV"), HAYDN
NEVADA, INC., a Nevada corporation ("Haydn NV"), LITTLE SHOTS NEVADA L.L.C., a
Nevada limited liability company ("Little Shots"), and ASHTON WOODS USA L.L.C.,
a Nevada limited liability company ("Ashton USA").

                                    RECITALS:

     A. Elly NV, Norman NV, Larry NV, Bruce NV, Harry NV, Seymour NV, and Haydn
NV have heretofore entered into Regulations of Ashton Woods California L.L.C.
(the "Regulations") dated as of February 6, 1997, creating Ashton Woods
California L.L.C., a Nevada limited liability company (the "Company").

     B. As permitted by the Regulations, Bruce NV, Harry NV, Seymour NV, and
Haydn NV transferred all of their right, title, and interest in and to the
Company to Little Shots.

     C. As permitted by the Regulations, Elly NV, Norman NV, Larry NV, and
Little Shots transferred all of their right, title, and interest in and to the
Company to Ashton USA.

     D. The parties hereto desire to amend the Regulations to reflect the
transfers described above and provide for the admission of Ashton USA as the
sole member of the Company.

     E. Capitalized terms, not specifically defined in this Amendment, shall
have the meanings given such terms in the Regulations.

     NOW, THEREFORE, for and in consideration of the premises and the respective
agreements set forth herein, the parties hereto agree as follows:

     1. The transfers described in Recitals B and C above are hereby approved.

     2. Ashton USA is hereby admitted as a Member of the Company and the parties
hereto recognize that Elly NV, Norman NV, Larry NV, Bruce NV, Harry NV, Seymour
NV, Haydn NV, and Little Shots have withdrawn as Members of the Company. The
only Member of the Company is Ashton USA.

     3. The Sharing Ratios and funding commitments of the Members set forth on
Exhibit "A" to the Regulations shall be as follows:



         Member           Sharing Ratio and Funding Commitment
         ------           ------------------------------------
                       
Ashton Woods USA L.L.C.                   100%


     4. Any and all notices, demands, requests, or other communications
permitted or required to be given to Ashton USA pursuant to the Regulations
shall be delivered to Ashton USA in the manner provided in the Regulations, at
the following address:

          250 Lesmill Road
          Don Mills, Ontario M3B 2T5 Canada

     5. By execution of this Amendment, Ashton USA agrees to be bound by the
terms and provisions of the Regulations, as amended hereby.

     6. Except as amended hereby, the terms and provisions of the Regulations
shall remain unchanged and shall continue in full force and effect.

     EXECUTED as of May 31, 1999.

                                        MEMBER:

                                        ASHTON WOODS USA L.L.C.,
                                        a Nevada limited liability company


                                        By: /s/ Bruce Freeman
                                            ------------------------------------
                                            Bruce Freeman - Managing Member


                                        By: /s/ Seymour Joffe
                                            ------------------------------------
                                            Seymour Joffe - Managing Member


                                        By: /s/ Harry Rosenbaum
                                            ------------------------------------
                                            Harry Rosenbaum - Managing Member


                                        2

                                        WITHDRAWING MEMBERS:

                                        ELLY NEVADA, INC.,
                                        a Nevada corporation


                                        By: /s/ Elly Reisman
                                            ------------------------------------
                                            Elly Reisman, President


                                        NORMAN NEVADA, INC.,
                                        a Nevada corporation


                                        By: /s/ Norman Reisman
                                            ------------------------------------
                                            Norman Reisman, President


                                        LARRY NEVADA, INC.,
                                        a Nevada corporation


                                        By: /s/ Larry Robbins
                                            ------------------------------------
                                            Larry Robbins, President


                                        BRUCE NEVADA, INC.,
                                        a Nevada corporation


                                        By: /s/ Bruce Freeman
                                            ------------------------------------
                                            Bruce Freeman, President


                                        HARRY NEVADA, INC.,
                                        a Nevada corporation


                                        By: /s/ Harry Rosenbaum
                                            ------------------------------------
                                            Harry Rosenbaum, President


                                        SEYMOUR NEVADA, INC.,
                                        a Nevada corporation


                                        By: /s/ Seymour Joffe
                                            ------------------------------------
                                            Seymour Joffe, President


                                        3

                                        HAYDN NEVADA, INC.,
                                        a Nevada corporation


                                        By: /s/ Haydn Matthews
                                            ------------------------------------
                                            Haydn Matthews, President


                                        LITTLE SHOTS NEVADA L.L.C.,
                                        a Nevada limited liability company


                                        By: /s/ Bruce Freeman
                                            ------------------------------------
                                            Bruce Freeman - Managing Member


                                        By: /s/ Seymour Joffe
                                            ------------------------------------
                                            Seymour Joffe - Managing Member


                                        By: /s/ Harry Rosenbaum
                                            ------------------------------------
                                            Harry Rosenbaum - Managing Member


                                        4

EX-3.2(F)

                                                       EXHIBIT 3.2(f)

                                   REGULATIONS

                                       OF

                          ASHTON WOODS ARIZONA L.L.C.

                       A NEVADA LIMITED LIABILITY COMPANY

                          Dated as of February 6, 1997


                                   REGULATIONS
                                       OF
                           ASHTON WOODS ARIZONA L.L.C.
                       A Nevada Limited Liability Company

                                TABLE OF CONTENTS

                                                                           
ARTICLE I
DEFINITIONS................................................................    1

1.01    Definitions........................................................    1
1.02    Construction.......................................................    3

ARTICLE II
ORGANIZATION...............................................................    3

2.01    Formation..........................................................    3
2.02    Name...............................................................    3
2.03    Resident Office; Resident Agent; Principal Office in the United
        States; Other Offices..............................................    3
2.04    Purposes...........................................................    3
2.05    Foreign Qualification..............................................    3
2.06    Term...............................................................    4
2.07    Mergers and Exchanges..............................................    4
2.08    No State-Law Partnership...........................................    4

ARTICLE III
MEMBERSHIP; DISPOSITIONS OF INTERESTS......................................    4

3.01    Initial Members....................................................    4
3.02    Representations and Warranties.....................................    4
3.03    Restrictions on the Disposition of an Interest.....................    4
3.04    Additional Members.................................................    6
3.05    Interests in a Member..............................................    6
3.06    Information........................................................    6
3.07    Liability to Third Parties.........................................    7
3.08    Withdrawal.........................................................    7
3.09    Lack of Authority..................................................    7

ARTICLE IV
CAPITAL CONTRIBUTIONS......................................................    7

4.01    Initial Contributions..............................................    7
4.02    Subsequent Contributions...........................................    7
4.03    Failure to Contribute..............................................    7
4.04    Return of Contributions............................................    9
4.05    Advances by Members................................................    9
4.06    Capital Accounts...................................................    9




                                       -i-



                                                                           
ARTICLE V
ALLOCATIONS AND DISTRIBUTIONS..............................................   10

5.01    Allocations........................................................   10
5.02    Distributions......................................................   10

ARTICLE VI
MANAGERS...................................................................   11

6.01    Management by Managers.............................................   11
6.02    Actions by Managers; Committees; Delegation of Authority and
        Duties.............................................................   12
6.03    Number and Term of Office..........................................   12
6.04    Vacancies; Removal; Resignation....................................   13
6.05    Meetings...........................................................   13
6.06    Approval or Ratification of Acts or Contracts by Members...........   13
6 07    Action by Written Consent or Telephone Conference..................   14
6.08    Compensation.......................................................   14
6.09    Conflicts of Interest..............................................   14
6.10    Officers...........................................................   14

ARTICLE VII
MEETINGS OF MEMBERS........................................................   15

7.01    Meetings...........................................................   15
7.02    Voting List........................................................   16
7.03    Proxies............................................................   16
7.04    Conduct of Meetings................................................   16
7.05    Action by Written Consent or Telephone Conference..................   17

ARTICLE VIII
IDENTIFICATION.............................................................   17

8.01    Right to Indemnification...........................................   17
8.02    Advance Payment....................................................   18
8.03    Indemnification of Officers, Employees, and Agents.................   18
8.04    Appearance as a Witness............................................   18
8.05    Nonexclusivity of Rights...........................................   18
8.06    Insurance..........................................................   19
8.07    Member Notification................................................   19
8.08    Savings Clause.....................................................   19

ARTICLE IX
TAXES......................................................................   19

9.01    Tax Returns........................................................   19
9.02    Tax Elections......................................................   19
9.03    "Tax Matters Partner...............................................   20




                                      -ii-



                                                                           
ARTICLE X
BOOKS, RECORDS, REPORTS, AND BANK ACCOUNTS.................................   20

10.01   Maintenance of Books...............................................   20
10.02   Reports............................................................   20
10.03   Accounts...........................................................   21

ARTICLE XI
BANKRUPTCY OF A MEMBER.....................................................   21

11.01   Bankrupt Members...................................................   21

ARTICLE XII
DISSOLUTION, LIQUIDATION, AND TERMINATION..................................   21

12.01   Dissolution........................................................   21
12.02   Liquidation and Termination........................................   22
12.03   Deficit Capital Accounts...........................................   23
12.04   Articles of Dissolution............................................   23

ARTICLE XIII
GENERAL PROVISIONS.........................................................   23

13.01   Offset.............................................................   23
13.02   Notices............................................................   23
13.03   Entire Agreement; Supersedure......................................   24
13.04   Effect of Waiver or Consent........................................   24
13.05   Amendment or Modification..........................................   24
13.06   Binding Effect.....................................................   24
13.07   Governing Law; Severability........................................   24
13.08   Further Assurances.................................................   24
13.09   Waiver of Certain Rights...........................................   24
13.10   Indemnification....................................................   24
13.11   Notice to Members of Provisions of this Agreement..................   25
13.12   Counterparts.......................................................   25




                                      -iii-



                                   REGULATIONS

                                       OF

                           ASHTON WOODS ARIZONA L.L.C.

                       A NEVADA LIMITED LIABILITY COMPANY

     These REGULATIONS OF ASHTON WOODS ARIZONA L.L.C. (these "Regulations"),
dated as of February 6, 1997, are (a) adopted by the Managers (as defined below)
and (b) executed and agreed to, for good and valuable consideration, by the
Members (as defined below).

                                    ARTICLE I
                                   DEFINITIONS

     1.01 DEFINITIONS. As used in these Regulations, the following terms have
the following meanings:

          "Act" means the Nevada Limited Liability Company Act and any successor
     statute, as amended from time to time.

          "Articles" has the meaning given that term in Section 2.01.

          "Bankrupt Member" means (except to the extent a Required Interest
     consents otherwise) any Member (a) that (i) makes a general assignment for
     the benefit of creditors; (ii) files a voluntary bankruptcy petition; (iii)
     becomes the subject of an order for relief or is declared insolvent in any
     federal or state bankruptcy or insolvency proceedings; (iv) files a
     petition or answer seeking for the Member a reorganization, arrangement,
     composition, readjustment, liquidation, dissolution, or similar relief
     under any law; (v) files an answer or other pleading admitting or failing
     to contest the material allegations of a petition filed against the Member
     in a proceeding of the type described in subclauses (i) through (iv) of
     this clause (a); or (vi) seeks, consents to, or acquiesces in the
     appointment of a trustee, receiver, or liquidator of the Member or of all
     or any substantial part of the Member's properties; or (b) against which, a
     proceeding seeking reorganization, arrangement, composition, readjustment,
     liquidation, dissolution, or similar relief under any law has been
     commenced and 120 days have expired without dismissal thereof or with
     respect to which, without the Member's consent or acquiescence, a trustee,
     receiver, or liquidator of the Member or of all or any substantial part of
     the Member's properties has been appointed and 90 days have expired without
     the appointment's having been vacated or stayed, or 90 days have expired
     after the date of expiration of a stay, if the appointment has not
     previously been vacated.

          "Business Day" means any day other than a Saturday, a Sunday, or a
     holiday on which national banking associations in the State of Nevada are
     closed.

          "Capital Contribution" means any contribution by a Member to the
     capital of the Company.

          "Code" means the Internal Revenue Code of 1986 and any successor
     statute, as amended from time to time.


                                       -1-



          "Commitment" means, subject in each case to adjustments on account of
     Dispositions of Membership Interests permitted by these Regulations, (a) in
     the case of a Member executing these Regulations as of the date of these
     Regulations or a Person acquiring that Membership Interest, the amount
     specified for that Member as its Commitment on Exhibit A, and (b) in the
     case of a Membership Interest issued pursuant to Section 3.04 the
     Commitment established pursuant thereto.

          "Company" means Ashton Woods Arizona L.L.C., a Nevada limited
     liability company.

          "Default Interest Rate" means a rate per annum equal to the lesser of
     (a) four percent (4%) plus a varying rate per annum that is equal to the
     interest rate published as the prime rate by The Bank of Nova Scotia from
     time to time, with adjustments in that varying rate to be made on the same
     date as any change in that rate, and (b) the maximum rate permitted by
     applicable law.

          "Delinquent Member" has the meaning given that term in Section
     4.03(a).

          "Dispose," "Disposing," or "Disposition" means a sale, assignment,
     transfer, exchange, mortgage, pledge, grant of a security interest, or
     other disposition or encumbrance (including, without limitation, by
     operation of law), or the acts thereof.

          "General Interest Rate" means a rate per annum equal to the lesser of
     (a) a varying rate per annum that is equal to the interest rate published
     as the prime rate by The Bank of Nova Scotia from time to time, with
     adjustments in that varying rate to be made on the same date as any change
     in that rate, and (b) the maximum rate permitted by applicable law.

          "Lending Member" has the meaning given that term in Section
     4.03(a)(ii).

          "Manager" means Bruce Freeman, Harry Rosenbaum and Seymour Joffe and
     any Person hereafter elected as a manager of the Company as provided in
     these Regulations, but does not include any Person who has ceased to be a
     manager of the Company.

          "Member" means any Person executing these Regulations as of the date
     of these Regulations as a member or hereafter admitted to the Company as a
     member as provided in these Regulations, but does not include any Person
     who has ceased to be a member in the Company.

          "Membership Interest" means the interest of a Member in the Company,
     including, without limitation, rights to distributions (liquidating or
     other), allocations, information, and to consent or approve.

          "Permitted Transferee" has the meaning given that term in Section
     3.03(b).

          "Person" has the meaning given that term in the Act.

          "Proceeding" has the meaning given that term in Section 8.01.


                                       -2-



          "Regulations" has the meaning given that term in the introductory
     paragraph.

          "Required Interest" means one or more Members having among them more
     than 51% of the Sharing Ratios of all Members.

          "Sharing Ratio" with respect to any Member means the percentage set
     forth on Exhibit A, subject to change as herein provided.

Other terms defined herein have the meanings so given them.

     1.02 CONSTRUCTION. Whenever the context requires, the gender of all words
used in these Regulations includes the masculine, feminine, and neuter. All
references to Articles and Section refer to articles and sections of these
Regulations, and all references to Exhibits are to Exhibits attached hereto,
each of which is made a part hereof for all purposes.

                                   ARTICLE II
                                  ORGANIZATION

     2.01 FORMATION. The Company has been organized as a Nevada limited
liability company by the filing of Articles of Organization (the "Articles")
under and pursuant to the Act and the issuance of a certificate of organization
for the Company by the Secretary of State of Nevada.

     2.02 NAME. The name of the Company is "Ashton Woods Arizona L.L.C." and all
Company business must be conducted in that name or such other names that comply
with applicable law as the Managers may select from time to time.

     2.03 RESIDENT OFFICE; RESIDENT AGENT; PRINCIPAL OFFICE IN THE UNITED
STATES; OTHER OFFICES. The resident office of the Company required by the Act to
be maintained in the State of Nevada shall be the office of the initial resident
agent named in the Articles or such other office (which need not be a place of
business of the Company) as the Managers may designate from time to time in the
manner provided by law. The resident agent of the Company in the State of Nevada
shall be the initial resident agent named in the Articles or such other Person
or Persons as the Managers may designate from time to time in the manner
provided by law. The principal office of the Company in the United States shall
be at such place as the Managers may designate from time to time, which need not
be in the State of Nevada. The Company shall maintain records at the office of
the resident agent as required by the Act and shall keep the street address of
the resident office of the Company in the State of Nevada. The Company may have
such other offices as the Managers may designate from time to time.

     2.04 PURPOSES. The purposes of the Company are those set forth in the
Articles.

     2.05 FOREIGN QUALIFICATION. Prior to the Company's conducting business in
any jurisdiction other than Nevada, the Managers shall cause the Company to
comply, to the extent procedures are available and those matters are reasonably
within the control of the Managers, with all requirements necessary to qualify
the Company as a foreign limited liability company in that jurisdiction. At the
request of the Managers, each Member shall execute, acknowledge, swear to, and
deliver all certificates and other instruments conforming with these Regulations
that are necessary or appropriate to qualify, continue, and terminate the
Company as a foreign limited liability company in all such jurisdictions in
which the Company may conduct business.


                                       -3-



     2.06 TERM. The Company commenced on the date the Secretary of State of
Nevada issued a certificate of organization for the Company and shall continue
in existence for the period fixed in the Articles for the duration of the
Company, or such earlier time as these Regulations may specify.

     2.07 MERGERS AND EXCHANGES. The Company may be a party to (a) a merger or
(b) an exchange or acquisition.

     2.08 NO STATE-LAW PARTNERSHIP. The Members intend that the Company not be a
partnership (including, without limitation, a limited - partnership) or joint
venture, and that no Member or Manager be a partner or joint venturer of any
other Member or Manager, for any purposes other than federal and state tax
purposes, and these Regulations may not be construed to suggest otherwise.

                                   ARTICLE III
                      MEMBERSHIP; DISPOSITIONS OF INTERESTS

     3.01 INITIAL MEMBERS. The initial members of the Company are the Persons
executing these Regulations as of the date of these Regulations as members, each
of which is admitted to the Company as a Member effective contemporaneously with
the execution by such Person of these Regulations.

     3.02 REPRESENTATIONS AND WARRANTIES. Each Member hereby represents and
warrants to the Company and each other Member that (a) if that Member is a
corporation, it is duly organized, validly existing and in good standing under
the law of the state of its incorporation and is duly qualified and in good
standing as a foreign corporation in the jurisdiction of its principal place of
business (if not incorporated therein); (b) if that Member is a limited
liability company, it is duly organized, validly existing, and (if applicable)
in good standing under the law of the state of its organization and is duly
qualified and (if applicable) in good standing as a foreign limited liability
company in the jurisdiction of its principal place of business (if not organized
therein); (c) if that Member is a partnership, trust, or other entity, it is
duly formed, validly existing, and (if applicable) in good standing under the
law of the state of its formation, and if required by law is duly qualified to
do business and (if applicable) in good standing in the jurisdiction of its
principal place of business (if not formed therein), and the representations and
warranties in clause (a), (b) or (c), as applicable, are true and correct with
respect to each partner (other than limited partners), trustee, or other member
thereof; (d) that Member has full corporate, limited liability company,
partnership, trust, or other applicable power and authority to execute and agree
to these Regulations and to perform its obligations hereunder and all necessary
actions by the board of directors, shareholders, managers, members, partners,
trustees, beneficiaries, or other Persons necessary for the due authorization,
execution, delivery, and performance of these Regulations by that Member have
been duly taken; (e) that Member has duly executed and delivered these
Regulations; and (f) that Member's authorization, execution, delivery, and
performance of these Regulations do not conflict with any other agreement or
arrangement to which that Member is a party or which it is bound.

     3.03 RESTRICTIONS ON THE DISPOSITION OF AN INTEREST. (a) Except as
specifically provided in this Section 3.03, a Disposition of an interest in the
Company may not be effected without the consent of (i) a majority of the
Managers who are Members (excluding any Manager who is making such Disposition),
or (ii) if there are no Managers of the type described in clause (i), a Required
Interest. Any attempted Disposition by a Person of an interest or right, or any
part thereof, in or in respect of the Company other than in accordance with this
Section 3.03 shall be, and is hereby declared, null and void ab initio.


                                       -4-



     (b) Notwithstanding the provisions of Section 3.03(a), the interest of any
Member in the Company may be transferred without the consent of the Managers or
any of the Members if (i) the transfer occurs by reason of or incident to the
death, dissolution, divorce, liquidation, merger or termination of the
transferor Member, and (ii) the transferee is a Permitted Transferee. A
"Permitted Transferee" is any member of such Member's immediate family, or a
trust, corporation, limited liability company, or partnership controlled by such
Member or members of such Member's immediate family, or another Person
controlling, controlled by, or under common control with such Member.

     (c) Subject to the provisions of Section 3.03(d), (e), and (f), (i) a
Person to whom an interest in the Company is transferred has the right to be
admitted to the Company as a Member with the Sharing Ratio and the Commitment so
transferred to such Person, if (A) the Member making such transfer grants the
transferee the right to be so admitted, and (B) such transfer is consented to in
accordance with Section 3.03(a); (ii) a Permitted Transferee under the
circumstances described in Section 3.03(b) has the right to be admitted to the
Company as a Member with the Sharing Ratio and the Commitment so transferred to
the Permitted Transferee; and (iii) the Company or (with the permission of the
Company, which may be withheld in its sole discretion) a Lending Member may
grant the purchaser of a Delinquent Member's interest in the Company at a
foreclosure of the security interest therein granted pursuant to Section
4.03(b) the right to be admitted to the Company as a Member with such Sharing
Ratio and such Commitment (no greater than the Sharing Ratio and the Commitment
of the Member effecting such Disposition prior thereto) as they may agree.

     (d) The Company may not recognize for any purpose any purported Disposition
of all or part of a Membership Interest unless and until the other applicable
provisions of this Section 3.03 have been satisfied and the Managers have
received, on behalf of the Company, a document (i) executed by both the Member
effecting the Disposition (or if the transfer is on account of the death,
incapacity, or liquidation of the transferor, its representative) and the Person
to which the Membership Interest or part thereof is Disposed, (ii) including the
notice address of any Person to be admitted to the Company as a Member and its
agreement to be bound by these Regulations with respect to the Membership
Interest or part thereof being obtained, (iii) setting forth the Sharing Ratios
and the Commitments after the Disposition of the Member effecting the
Disposition and the Person to which the Membership Interest or part thereof is
Disposed (which together must total the Sharing Ratio and the Commitment of the
Member effecting the Disposition before the Disposition), and (iv) containing a
representation and warranty that the Disposition was made in accordance with all
applicable laws and regulations (including securities laws) and, if the Person
to which the Membership Interest or part thereof is Disposed is to be admitted
to the Company, its representation and warranty that the representations and
warranties in Section 3.02 are true and correct with respect to that Person.
Each Disposition and, if applicable, admission complying with the provisions of
this Section 3.03(d) is effective as of the first day of the calendar month
immediately succeeding the month in which the Managers receive the notification
of Disposition and the other requirements of this Section 3.03 have been met.

     (e) For the right of a Member to Dispose of a Membership Interest or any
part thereof or of any Person to be admitted to the Company in connection
therewith to exist or be exercised, (i) either (A) the Membership Interest or
part thereof subject to the Disposition or admission must be registered under
the Securities Act of 1933, as amended, and any applicable state securities laws
or (B) the Company must receive a favorable opinion of the Company's legal
counsel or of other legal counsel acceptable to the Managers to the effect that
the Disposition or admission is exempt from registration under those laws and
(ii) the Company must receive a favorable opinion of the Company's legal counsel
or of other legal counsel acceptable to the Managers to the effect that the
Disposition or admission, when added to the


                                       -5-



total of all other sales, assignments, or other Dispositions within the
preceding 12 months, would not result in the Company's being considered to have
terminated within the meaning of the Code. The Managers, however, may waive the
requirements of this Section 3.03(e).

     (f) The Member effecting a Disposition and any Person admitted to the
Company in connection therewith shall pay, or reimburse the Company for, all
costs incurred by the Company in connection with the Disposition or admission
(including, without limitation, the legal fees incurred in connection with the
legal opinions referred to in Section 3.03(e)) on or before the tenth day after
the receipt by that Person of the Company's invoice for the amount due. If
payment is not made by the date due, the Person owing that amount shall pay
interest on the unpaid amount from the date due until paid at a rate per annum
equal to the Default Interest Rate.

     3.04 ADDITIONAL MEMBERS. Additional Persons may be admitted to the Company
as Members and Membership Interests may be created and issued to those Persons
and to existing Members at the direction of (a) a majority of the Managers who
are Members, or (b) if there are no Managers who are Members, a Required
Interest, on such terms and conditions as the Managers may determine at the time
of admission. The terms of admission or issuance must specify the Sharing Ratios
and the Commitments applicable thereto and may provide for the creation of
different classes or groups of Members and having different rights, powers, and
duties. The Managers shall reflect the creation of any new class or group in an
amendment to these Regulations indicating the different rights, powers, and
duties, and such an amendment need be executed only by the Managers. Any such
admission also must comply with the provisions of Section 3.03(d)(i) and (ii)
and is effective only after the new Member has executed and delivered to the
Managers a document including the new Member's notice address, its agreement to
be bound by these Regulations, and its representation and warranty that the
representation and warranties in Section 3.02 are true and correct with respect
to the new Member. The provisions of this Section 3.04 shall not apply to
Dispositions of Membership Interests.

     3.05 INTERESTS IN A MEMBER. A Member that is not a natural person may not
cause or permit an interest, direct or indirect, in itself to be Disposed of
such that, after the Disposition, (a) the Company would be considered to have
terminated within the meaning of section 708 of the Code or (b) without the
consent of the Managers and a Required Interest, that Member shall cease to be
controlled by substantially the same Persons who control it as of the date of
its admission to the Company. On any breach of the provisions of clause (b) of
the immediately preceding sentence, the Company shall have the option to buy,
and on exercise of that option the breaching Member shall sell, the breaching
Member's Membership Interest, all in accordance with Section 11.01 as if the
breaching Member were a Bankrupt Member.

     3.06 INFORMATION. (a) In addition to the other rights specifically set
forth in these Regulations, each Member is entitled to all information to which
that Member is entitled to have access pursuant to the Act under the
circumstances and subject to the conditions therein stated. The Members agree,
however, that the Managers from time to time may determine, due to contractual
obligations, business concerns, or other considerations, that certain
information regarding the business, affairs, properties, and financial condition
of the Company should be kept confidential and not provided to some or all other
Members, and that it is not just or reasonable for those Members or assignees or
representatives thereof to examine or copy that information.

     (b) The Members acknowledge that, from time to time, they may receive
information from or regarding the Company in the nature of trade secrets or that
otherwise is confidential, the release of which may be damaging to the Company
or Persons with which it does business.


                                       -6-



Each Member shall hold in strict confidence any information it receives
regarding the Company that is identified as being confidential (and if that
information is provided in writing, that is so marked) and may not disclose it
to any Person other than another Member or a Manger, except for disclosures (i)
compelled by law (but the Member must notify the Managers promptly of any
request for that information, before disclosing it if practicable), (ii) to
advisers or representatives of the Member or Persons to which that Member's
Membership Interest may be Disposed as permitted by these Regulations, but only
if the recipients have agreed to be bound by the provisions of this Section
3.06(b), or (iii) of information that Member also has received from a source
independent of the Company that the Member reasonably believes obtained that
information without breach of any obligation of confidentiality. The Members
acknowledge that breach of the provisions of this Section 3.06(b) may cause
irreparable injury to the Company for which monetary damages are inadequate,
difficult to compute, or both. Accordingly, the Members agree that the
provisions of this Section 3.06(b) may be enforced by specific performance.

     3.07 LIABILITY TO THIRD PARTIES. No Member or Manager shall be liable for
the debts, obligations or liabilities of the Company, including under a
judgment, decree or order of a court.

     3.08 WITHDRAWAL. A Member does not have the right or power to withdraw from
the Company as a member.

     3.09 LACK OF AUTHORITY. No Member (other than a Manager or an officer) has
the authority or power to act for or on behalf of the Company, to do any act
that would be binding on the Company, or to incur any expenditures on behalf of
the Company.

                                   ARTICLE IV
                              CAPITAL CONTRIBUTIONS

     4.01 INITIAL CONTRIBUTIONS. Contemporaneously with the execution by such
Member of these Regulations, each Member shall make the Capital Contributions
described for that Member in Exhibit A.

     4.02 SUBSEQUENT CONTRIBUTIONS. Without creating any rights in favor of any
third party, each Member shall contribute to the Company, in cash, on or before
the date specified as hereinafter described, that Member's Sharing Ratio of all
monies that in the judgement of the Managers are necessary to enable the Company
to cause the assets of the Company to be properly operated and maintained and to
discharge its costs, expenses, obligations, and liabilities; provided, however,
that a Member is not obligated to contribute a total amount that, when added to
all Capital Contributions that Member previously has made pursuant to Section
4.01 or this Section 4.02, exceeds that Member's Commitment. The Managers shall
notify each Member of the need for Capital Contributions pursuant to this
Section 4.02 when appropriate, which notice must include a statement in
reasonable detail of the proposed uses of the Capital Contributions and a date
(which date may be no earlier than the fifth Business Day following each
Member's receipt of its notice) before which the Capital Contributions must be
made. Notices for Capital Contributions must be made to all Members in
accordance with their Sharing Ratios.

     4.03 FAILURE TO CONTRIBUTE. (a) If a Member does not contribute by the time
required all or any portion of a Capital Contribution that Member is required to
make as provided in these Regulations, the Company may exercise, on notice to
that Member (the "Delinquent Member"), one or more of the following remedies:


                                       -7-



          (i) taking such action (including, without limitation, court
     proceedings) as the Managers may deem appropriate to obtain payment by the
     Delinquent Member of the portion of the Delinquent Member's Capital
     Contribution that is in default, together with interest thereon at the
     Default Interest Rate from the date that the Capital Contribution was due
     until the date that it is made, all at the cost and expense of the
     Delinquent Member;

          (ii) permitting the other Members in proportion to their Sharing
     Ratios or in such other percentages as they may agree (the "Lending Member"
     whether one or more), to advance the portion of the Delinquent Member's
     Capital Contribution that is in default, with the following results:

               (A) the sum advanced constitutes a loan from the Lending Member
          to the Delinquent Member and a Capital Contribution of that sum to the
          Company by the Delinquent Member pursuant to the applicable provisions
          of these Regulations,

               (B) the principal balance of the loan and all accrued unpaid
          interest thereon is due and payable in whole on the tenth day after
          written demand therefor by the Lending Member to the Delinquent
          Member,

               (C) the amount lent bears interest at the Default Interest Rate
          from the day that the advance is deemed made until the date that the
          loan, together with all interest accrued on it, is repaid to the
          Lending Member,

               (D) all distributions from the Company that otherwise would be
          made to the Delinquent Member (whether before or after dissolution of
          the Company) instead shall be paid to the Lending Member until the
          loan and all interest accrued on it have been paid in full to the
          lending Member (with payments being applied first to accrued and
          unpaid interest and then to principal),

               (E) the payment of the loan and interest accrued on it is secured
          by a security interest in the Delinquent Member's Membership Interest,
          as more fully set forth in Section 4.03(b), and

               (F) the Lending Member has the right, in addition to the other
          rights and remedies granted to it pursuant to these Regulations or
          available to it at law or in equity, to take any action (including,
          without limitation, court proceedings) that the Lending Member may
          deem appropriate to obtain payment by the Delinquent Member of the
          loan and all accrued and unpaid interest on it, at the cost and
          expense of the Delinquent Member;

          (iii) exercising the rights of a secured party under the Uniform
     Commercial Code of the State of Nevada, as more fully set forth in Section
     4.03(b); or

          (iv) exercising any other rights and remedies available at law or in
     equity.


                                      -8-



     (b) Each Member grants to the Company, and to each Lending Member with
respect to any loans made by the Lending Member to that Member as a Delinquent
Member pursuant to Section 4.03(a)(ii), as security, equally and ratably, for
the payment of all Capital Contributions that Member has agreed to make and the
payment of all loans and interest accrued on them made by Lending Members to
that Member as a Delinquent Member pursuant to Section 4.03(a)(ii), a security
interest in and a general lien on its Membership Interest and the proceeds
thereof, all under the Uniform Commercial Code of the State of Nevada. On any
default in the payment of a Capital Contribution or in the payment of such a
loan or interest accrued on it, the Company or the Lending Member, as
applicable, is entitled to all the rights and remedies of a secured party under
the Uniform Commercial Code of the State of Nevada with respect to the security
interest granted in this Section 4.03(b). Each Member shall execute and deliver
to the Company and the other Members all financing statements and other
instruments that the Managers or the Lending Member, as applicable, may request
to effectuate and carry out the preceding provisions of this Section 4.03(b). At
the option of the Managers or a Lending Member, these Regulations or a carbon,
photographic, or other copy hereof may serve as a financing statement.

     4.04 RETURN OF CONTRIBUTIONS. Other than as expressly provided in these
Regulations, Member is not entitled to the return of any part of its Capital
Contributions or to be paid interest in respect of either its capital account or
its Capital Contributions. An unrepaid Capital Contribution is not a liability
of the Company or of any Member. A Member is not required to contribute or to
lend any cash or property to the Company to enable the Company to return any
Member's Capital Contributions.

     4.05 ADVANCES BY MEMBERS. If the Company does not have sufficient cash to
pay its obligations, any Member(s) that may agree to do so with the Managers'
consent may advance all or part of the needed funds to or on behalf of the
Company. An advance described in this Section 4.05 constitutes a loan from the
Member to the Company, bears interest at the General Interest Rate from the date
of the advance until the date of payment, and is not a Capital Contribution.

     4.06 CAPITAL ACCOUNTS. A capital account shall be established and
maintained for each Member. Each Member's capital account (a) shall be increased
by (i) the amount of money contributed by that Member to the Company, (ii) the
fair market value of property contributed by that Member to the Company (net of
liabilities secured by the contributed property that the Company is considered
to assume or take subject to under section 752 of the Code), and (iii)
allocations to that Member of Company income and gain (or items thereof),
including income and gain exempt from tax and income and gain described in
Treas. Reg. Section 1.704-l(b)(2)(iv)(g), but excluding income and gain
described in Treas. Reg. Section 1.704-1(b)(4)(i), and (b) shall be decreased by
(i) the amount of money distributed to that Member by the Company, (ii) the fair
market value of property distributed to that Member by the Company (net of
liabilities secured by the distributed property that the Member is considered to
assume or take subject to under section 752 of the Code), (iii) allocations to
that Member of expenditures of the Company described in section 705(a)(2)(B) of
the Code, and (iv) allocations of Company loss and deduction (or items thereof),
including loss and deduction described in Treas. Reg. Section 1.704-
l(b)(2)(iv)(g), but excluding items described in clause (b)(iii) above and loss
or deduction described in Treas. Reg. Section 1.704-1(b)(4)(i) or Section
1.704-l(b)(4)(iii). The Members' capital accounts also shall be maintained and
adjusted as permitted by the provisions of Treas. Reg. Section
1.704-l(b)(2)(iv)(f) and as required by the other provisions of Treas. Reg.
Sections 1.704-l(b)(2)(iv) and 1.704-l(b)(4), including adjustments to reflect
the allocations to the Members of depreciation, depletion, amortization, and
gain or loss as computed for book purposes rather than the allocation of the
corresponding items as computed for tax purposes, as required by Treas. Reg.
Section 1.704-l(b)(2)(iv)(g). A Member that has more than one Membership
Interest shall have


                                       -9-



a single capital account that reflects all its Membership Interests, regardless
of the class of Membership Interests owned by that Member and regardless of the
time or manner in which those Membership Interests were acquired. On the
transfer of all or part of a Membership Interest, the capital account of the
transferor that is attributable to the transferred Membership Interest or part
thereof shall carry over to the transferee Member in accordance with the
provisions of Treas. Reg. Section 1.704-l(b)(2)(iv)(l).

                                    ARTICLE V
                          ALLOCATIONS AND DISTRIBUTIONS

     5.01 ALLOCATIONS. (a) Except as may be required by section 701(c) of the
Code and Treas. Reg. Section 1.701-l(b)(2)(iv)(f)(4), all items of income, gain,
loss, deduction, and credit of the Company shall be allocated among the Members
in accordance with their Sharing Ratios.

     (b) All items of income, gain, loss, deduction, and credit allocable to any
Membership Interest that may have been transferred shall be allocated between
the transferor and the transferee based on the portion of the calendar year
during which each was recognized as owning that Membership Interest, without
regard to the results of Company operations during any particular portion of
that calendar year and without regard to whether cash distributions were made to
the transferor or the transferee during that calendar year; provided, however,
that this allocation must be made in accordance with a method permissible under
section 706 of the Code and the regulations thereunder.

     5.02 DISTRIBUTIONS. All receipts and revenues of the Company from any
source shall be applied and distributed in the following order of priority with
no distribution being made in any category set forth below unless and until the
preceding category has been satisfied in full either by payment or by setting
aside of a cash reserve for payment of same.

     (a) in payment of all debts, obligations, liabilities, costs and expenses
incurred in connection with or on account of the Company;

     (b) in repayment of any loans and accrued interest thereon made by a
Lending Member pursuant to Section 4.03(a)(ii);

     (c) in repayment of Contributions by the Member in accordance with their
Sharing Ratios, subject to the provisions of Section 4.03.

     (d) after having satisfied (a), (b) and (c) above, receipts and revenues of
the Company shall represent the profits of the Company and shall be distributed
in the following order of priority:

          (i) the Contributions made by the Members to the Company pursuant to
     Sections 4.01 and 4.02 herein shall bear interest at a rate which is two
     percent (2%) per annum greater than the prime rate charged by the Bank of
     Nova Scotia to its most creditworthy customers of U.S. Dollar demand loans,
     but in no event shall the rate of interest exceed the maximum rate
     permitted by laws, from the date of such advance until repaid to such
     Member in accordance with (c) above.

          (ii) after having satisfied (a), (b), (d) and (d)(i) above, the
     receipts and revenues of the Company shall be distributed to the Members
     pro rate and pari passu in accordance with their Sharing Ratios.


                                      -10-




However, no distribution of profits shall be made until after completion of any
development and/or construction activities undertaken by the Company, without
the agreement of the Members.

                                   ARTICLE VI
                                    MANAGERS

     6.01 MANAGEMENT BY MANAGERS. (a) Except for situations in which the
approval of the Members is required by these Regulations or by nonwaivable
provisions of applicable law, and subject to the provisions of Section 6.02, (i)
the powers of the Company shall be exercised by or under the authority of, and
the business and affairs of the Company shall be managed under the direction of,
the Managers; and (ii) the Managers may make all decisions and take all actions
for the Company not otherwise provided for in these Regulations, including,
without limitation, the following:

          (i) entering into, making, and performing contracts, agreements, and
     other undertakings binding the Company that may be necessary, appropriate,
     or advisable in furtherance of the purposes of the Company and making all
     decisions and waivers thereunder;

          (ii) opening and maintaining bank and investment accounts and
     arrangements, drawing checks and other orders for the payment of money, and
     designating individuals with authority to sign or give instructions with
     respect to those accounts and arrangements;

          (iii) maintaining the assets of the Company in good order;

          (iv) collecting sums due the Company;

          (v) to the extent that funds of the Company are available therefor,
     paying debts and obligations of the Company;

          (vi) acquiring, utilizing for Company purposes, and Disposing of any
     asset of the Company;

          (vii) borrowing money or otherwise committing the credit of the
     Company for Company activities and voluntary prepayments or extensions of
     debt;

          (viii) selecting, removing, and changing the authority and
     responsibility of lawyers, accountants, and other advisers and consultants;

          (ix) obtaining insurance for the Company;

          (x) determining distributions of Company cash and other property as
     provided in Section 5.02;

          (xi) establishing a seal for the Company;

          (xii) selling, leasing, exchanging or otherwise disposing of
     (including by way of a pledge, mortgage, deed of trust or trust indenture)
     all or any portion of the Company's property and assets (with or without
     good will); and

          (xiii) being a party to (i) a merger, or (ii) an exchange or
     acquisition.


                                      -11-



     (b) Notwithstanding the provisions of Section 6.01(a), the Managers may not
cause the Company to do any of the following without complying with the
applicable requirements set forth below:

          (i) amend or restate the Articles, without complying with the
     applicable procedures set forth in the Act.

     6.02 ACTIONS BY MANAGERS; COMMITTEES; DELEGATION OF AUTHORITY AND DUTIES.
(a) In managing the business and affairs of the Company and exercising its
powers, the Managers shall act (i) collectively through meetings and written
consents pursuant to Sections 6.05 and 6.07; (ii) through committees pursuant to
Section 6.02(b); or (iii) through Managers to whom authority and duties have
been delegated pursuant to Section 6.02(c).

     (b) The Managers may, from time to time, designate one or more committees,
each of which shall be comprised of one or more Managers. Any such committee, to
the extent provided in such resolution or in the Articles or these Regulations,
shall have and may exercise all of the authority of the Managers, subject to the
limitations set forth in the Act. At every meeting of any such committee, the
presence of a majority of all the members thereof shall constitute a quorum, and
the affirmative vote of a majority of the members present shall be necessary for
the adoption of any resolution. The Managers may dissolve any committee at any
time, unless otherwise provided in the Articles or these Regulations.

     (c) The Members and the Managers hereby delegate to each of the Managers
(acting by themself and without the necessity of any other approval or
authorization) or to an authorized representative of the Company, designated by
one or more of the Managers, the authority to take any of the actions authorized
in Section 6.01(a) hereof. In addition, the Managers may assign titles
(including, without limitation, president, vice president, secretary, assistant
secretary, treasurer and assistant treasurer) to any such Manager. Unless the
Managers decide otherwise, if the title is one commonly used for officers of a
business corporation formed under the laws of the State of Nevada, the
assignment of such title shall constitute the delegation to such Manager of the
authority and duties that are normally associated with that office, subject to
any specific delegation of authority and duties made pursuant to the first
sentence of this Section 6.02(c). Any number of titles may be held by the same
Manager. Any delegation pursuant to this Section 6.02(c) may be revoked at any
time by the Managers.

     (d) Any Person dealing with the Company, other than a Member, may rely on
the authority of any Manager, authorized representative or officer in taking any
action in the name of the Company without inquiry into the provisions of these
Regulations or compliance herewith, regardless of whether that action actually
is taken in accordance with the provisions of these Regulations.

     6.03 NUMBER AND TERM OF OFFICE. The number of Managers of the Company shall
be determined from time to time by resolution of the Managers; provided,
however, that no decrease in the number of Managers that would have the effect
of shortening the term of an incumbent Manager may be made by the Managers. If
the Managers make no such determination, the number of Managers shall be the
number set forth in the Articles as the number of Managers constituting the
initial Managers. Each Manager shall hold office for the term for which he is
elected and thereafter until his successor shall have been elected and
qualified, or until his earlier death, resignation or removal. Unless otherwise
provided in the Articles, Managers need not be Members or residents of the State
of Nevada.


                                      -12-



     6.04 VACANCIES; REMOVAL; RESIGNATION. Any Manager position to be filled by
reason of an increase in the number of Managers may be filled by election at an
annual or special meeting of Members called for that purpose. Any vacancy
occurring in the Managers other than by reason of an increase in the number of
Managers may be filled (a) by election at an annual or special meeting of the
Members called for that purpose or (b) by the affirmative vote of a majority of
the remaining Managers though less than a quorum of the Managers. A Manager
elected to fill a vacancy occurring other than by reason of an increase in the
number of Managers shall be elected for the unexpired term of his predecessor in
office. At any meeting of Members at which a quorum of Members is present called
expressly for that purpose, or pursuant to a written consent adopted pursuant to
these Regulations, any Manager may be removed, with or without cause, by a
Required Interest. Any Manager may resign at any time. Such resignation shall be
made in writing and shall take effect at the time specified therein, or if no
time be specified, at the time of its receipt by the remaining Managers. The
acceptance of a resignation shall not be necessary to make it effective, unless
expressly so provided in the resignation.

     6.05 MEETINGS. (a) Unless otherwise required by law or provided in the
Articles or these Regulations, a majority of the total number of Managers fixed
by, or in the manner provided in, the Articles or these Regulations shall
constitute a quorum for the transaction of business of the Managers, and the act
of a majority of the Managers present at a meeting at which a quorum is present
shall he the act of the Managers. A Manager who is present at a meeting of the
Managers at which action on any Company matter is taken shall be presumed to
have assented to the action unless his dissent shall be entered in the minutes
of the meeting or unless he shall file his written dissent to such action with
the Person acting as secretary of the meeting before the adjournment thereof or
shall deliver such dissent to the Company immediately after the adjournment of
the meeting. Such right to dissent shall not apply to a Manager who voted in
favor of such action.

     (b) Meetings of the Managers may be held at such place or places as shall
be determined from time to time by resolution of the Managers. At all meetings
of the Managers, business shall be transacted in such order as shall from time
to time be determined by resolution of the Managers. Attendance of a Manager at
a meeting shall constitute a waiver of notice of such meeting, except where a
Manager attends a meeting for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully
called or convened.

     (c) In connection with any annual meeting of Members at which Managers were
elected, the Managers may, if a quorum is present, hold its first meeting for
the transaction of business immediately after and at the same place as such
annual meeting of the Members. Notice of such meeting at such time and place
shall not be required.

     (d) Regular meetings of the Managers shall be held at such times and places
as shall be designated from time to time by resolution of the Managers. Notice
of such regular meetings shall not be required.

     (e) Special meetings of the Managers may be called by any Manager on at
least 24 hours notice to each other Manager. Such notice need not state the
purpose or purposes of, nor the business to be transacted at, such meeting,
except as may otherwise be required by law or provided for by the Articles or
these Regulations.

     6.06 APPROVAL OR RATIFICATION OF ACTS OR CONTRACTS BY MEMBERS. The Managers
in their discretion may submit any act or contract for approval or ratification
at any annual meeting of the Members, or at any special meeting of the Members
called for the purpose of


                                      -13-



considering any such act or contract, and any act or contract that shall be
approved or be ratified by a Required Interest shall be as valid and as binding
upon the Company and upon all the Members as if it shall have been approved or
ratified by every Member of the Company.

     6.07 ACTION BY WRITTEN CONSENT OR TELEPHONE CONFERENCE. Any action
permitted or required by the Act, the Articles or these Regulations to be taken
at a meeting of the Managers or any committee designated by the Managers may be
taken without a meeting if a consent in writing, setting forth the action to be
taken, is signed by all the Managers or members of such committee, as the case
may be. Such consent shall have the same force and effect as a unanimous vote at
a meeting and may be stated as such in any document or instrument filed with the
Secretary of State of Nevada, and the execution of such consent shall constitute
attendance or presence in person at a meeting of the Managers or any such
committee, as the case may be. Subject to the requirements of the Act, the
Articles or these Regulations for notice of meetings, unless otherwise
restricted by the Articles, Managers, or members of any committee designated by
the Managers, may participate in and hold a meeting of the Managers or any
committee of Managers, as the case may be, by means of a conference telephone or
similar communications equipment by means of which all Persons participating in
the meeting can hear each other, and participation in such meeting shall
constitute attendance and presence in person at such meeting, except where a
Person participates in the meeting for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully
called or convened.

     6.08 COMPENSATION. The Managers shall reserve such compensation, if any,
for their services as may be designated from time to time by all of the
Managers. In addition, the Managers shall be entitled to be reimbursed for
out-of-pocket costs and expenses incurred in the course of their service
hereunder, including the portion of their overhead reasonably allocable to
Company activities.

     6.09 CONFLICTS OF INTEREST. Subject to the other express provisions of
these Regulations, each Manager, Member and officer of the Company at any time
and from time to time may engage in and possess interests in other business
ventures of any and every type and description, independently or with others,
including ones in competition with the Company, with no obligation to offer to
the Company or any other Member, Manager or officer the right to participate
therein. The Company may transact business with any Manager, Member, officer or
Affiliate thereof, provided the terms of those transactions are no less
favorable than those the Company could obtain from unrelated third parties.

     6.10 OFFICERS. (a) The Managers may, from time to time, designate one or
more Persons to be officers of the Company. No officer need be a resident of the
State of Nevada, a Member or a Manager. Any officers so designated shall have
such authority and perform such duties as the Managers may, from time to time,
delegate to them. The Managers may assign titles to particular officers. Unless
the Managers decide otherwise, if the title is one commonly used for officers of
a business corporation formed under the laws of the State of Nevada, the
assignment of such title shall constitute the delegation to such officer of the
authority and duties that are normally associated with that office, subject to
(i) any specific delegation of authority and duties made to such officer by the
Managers pursuant to the third sentence of this Section 6.10(b), or (ii) any
delegation of authority and duties made to one or more Mangers pursuant to
Section 6.02(a). Each officer shall hold office until his successor shall be
duly designated and shall quality or until his death or until he shall resign or
shall have been removed in the manner hereinafter provided. Any number of
offices may be held by the same Person. The salaries or other compensation, if
any, of the officers and agents of the Company shall be fixed from time to time
by the Managers.


                                      -14-



     (b) Any officer may resign as such at any time. Such resignation shall be
made in writing and shall take effect at the time specified therein, or if no
time be specified, at the time of its receipt by the Managers. The acceptance of
a resignation shall not be necessary to make it effective, unless expressly so
provided in the resignation. Any officer may be removed as such, either with or
without cause, by the Managers whenever in their judgment the best interests of
the Company will be served thereby; provided, however, that such removal shall
be without prejudice to the contract rights, if any, of the Person so removed.
Designation of an officer shall not of itself create contract rights. Any
vacancy occurring in any office of the Company (other than Manager) may be
filled by the Managers.

                                   ARTICLE VII
                               MEETINGS OF MEMBERS

     7.01 MEETINGS. (a) A quorum shall be present at a meeting of Members if the
holders of a Required Interest are represented at the meeting in person or by
proxy. With respect to any matter, other than a matter for which the affirmative
vote of the holders of a specified portion of the Sharing Ratios of all Members
entitled to vote is required by the Act, the affirmative vote of a Required
Interest at a meeting of Members at which a quorum is present shall be the act
of the Members.

     (b) All meetings of the Members shall be held at the principal place of
business of the Company or at such other place within or without the State of
Nevada as shall be specified or fixed in the notices or waivers of notice
thereof; provided that any or all Members may participate in any such meeting by
means of conference telephone or similar communications equipment pursuant to
Section 7.05.

     (c) Notwithstanding the other provisions of the Articles or these
Regulations, the chairman of the meeting or the holders of a Required Interest
shall have the power to adjourn such meeting from time to time, without any
notice other than announcement at the meeting of the time and place of the
holding of the adjourned meeting. If such meeting is adjourned by the Members,
such time and place shall be determined by a vote of the holders of a Required
Interest. Upon the resumption of such adjourned meeting, any business may be
transacted that might have been transacted at the meeting as originally called.

     (d) An annual meeting of the Members, for the election of the Managers and
for the transaction of such other business as may properly come before the
meeting, shall be held at such place, within or without the State of Nevada, on
such date and at such time as the Managers shall fix and set forth in the notice
of the meeting, which date shall be within 13 months subsequent to the date of
organization of the Company or the last annual meeting of Members, whichever
most recently occurred.

     (e) Special meetings of the Members for any proper purpose or purposes may
be called at any time by the Managers or the holders of at least ten percent of
the Sharing Ratios of all Members. If not otherwise stated in or fixed in
accordance with the remaining provisions hereof, the record date for determining
Members entitled to call a special meeting is the date any Member first signs
the notice of that meeting. Only business within the purpose or purposes
described in the notice (or waiver thereof) required by these Regulations may be
conducted at a special meeting of the Members.

     (f) Written or printed notice stating the place, day and hour of the
meeting and, in the case of a special meeting, the purpose or purposes for which
the meeting is called, shall be delivered not less than ten nor more than 60
days before the date of the meeting, either personally or by mail, by or at the
direction of the Managers or Person calling the meeting, to


                                      -15-



each Member entitled to vote at such meeting. If mailed, any such notice shall
be deemed to be delivered when deposited in the United States mail, addressed to
the Member at his address provided for on Exhibit A, with postage thereon
prepaid.

     (g) The date on which notice of a meeting of Members is mailed or the date
on which the resolution of the Managers declaring a distribution is adopted, as
the case may be, shall be the record date for the determination of the Members
entitled to notice of or to vote at such meeting, including any adjournment
thereof, or the Members entitled to receive such distribution.

     (h) The right of Members to cumulative voting in the election of Managers
is expressly prohibited.

     7.02 VOTING LIST. The Managers shall make, at least ten days before each
meeting of Members, a complete list of the Members entitled to vote at such
meeting or any adjournment thereof, arranged in alphabetical order, with the
address of and the Sharing Ratios held by each, which list, for a period of ten
days prior to such meeting, shall be kept on file at the resident office or
principal place of business of the Company and shall be subject to inspection by
any Member at any time during usual business hours. Such list shall also be
produced and kept open at the time and place of the meeting and shall be subject
to the inspection of any Member during the whole time of the meeting. The
original membership records shall be prima-facie evidence as to who are the
Members entitled to examine such list or transfer records or to vote at any
meeting of Members. Failure to comply with the requirements of this Section
shall not affect the validity of any action taken at the meeting.

     7.03 PROXIES. A Member may vote either in person or by proxy executed in
writing by the Member. A telegram, telex, cablegram or similar transmission by
the Member, or a photographic, photostatic, facsimile or similar reproduction of
a writing executed by the Member shall be treated as an execution in writing for
purposes of this Section. Proxies for use at any meeting of Members or in
connection with the taking of any action by written consent shall be filed with
the Managers, before or at the time of the meeting or execution of the written
consent, as the case may be. All proxies shall be received and taken charge of
and all ballots shall be received and canvassed by the Managers, who shall
decide all questions touching upon the qualification of voters, the validity of
the proxies, and the acceptance or rejection of votes, unless an inspector or
inspectors shall have been appointed by the chairman of the meeting, in which
event such inspector or inspectors shall decide all such questions. No proxy
shall be valid after 11 months from the date of its execution unless otherwise
provided in the proxy. A proxy shall be revocable unless the proxy form
conspicuously states that the proxy is irrevocable and the proxy is coupled with
an interest. Should a proxy designate two or more Persons to act as proxies,
unless that instrument shall provide to the contrary, a majority of such Persons
present at any meeting at which their powers thereunder are to be exercised
shall have and may exercise all the powers of voting or giving consents thereby
conferred, or if only one be present, then such powers may be exercised by that
one; or, if an even number attend and a majority do not agree on any particular
issue, the Company shall not be required to recognize such proxy with respect to
such issue if such proxy does not specify how the Sharing Ratios that are the
subject of such proxy are to be voted with respect to such issue.

     7.04 CONDUCT OF MEETINGS. All meetings of the Members shall be presided
over by the chairman of the meeting, who shall be a Manager (or representative
thereof) designated by a majority of the Managers. The chairman of any meeting
of Members shall determine the order of business and the procedure at the
meeting, including such regulation of the manner of voting and the conduct of
discussion as seem to him in order.


                                      -16-



     7.05 ACTION BY WRITTEN CONSENT OR TELEPHONE CONFERENCE. (a) Any action
required or permitted to be taken at any annual or special meeting of Members
may be taken without a meeting, without prior notice, and without a vote, if a
consent or consents in writing, setting forth the action so taken, shall be
signed by the holder or holders of not less than the minimum Sharing Ratios that
would be necessary to take such action at a meeting at which the holders of all
Sharing Ratios entitled to vote on the action were present and voted. Every
written consent shall bear the date of signature of each Member who signs the
consent. No written consent shall be effective to take the action that is the
subject to the consent unless, within 60 days after the date of the earliest
dated consent delivered to the Company in the manner required by this Section, a
consent or consents signed by the holder or holders of not less than the minimum
Sharing Ratios that would be necessary to take the action that is the subject of
the consent are delivered to the Company by delivery to its resident office, its
principal place of business, or the Managers. Delivery shall be by hand or
certified or registered mail, return receipt requested. Delivery to the
Company's principal place of business shall be addressed to the Managers. A
telegram, telex, cablegram or similar transmission by a Member, or a
photographic, photostatic, facsimile or similar reproduction of a writing signed
by a Member, shall be regarded as signed by the Member for purposes of this
Section. Prompt notice of the taking of any action by Members without a meeting
by less than unanimous written consent shall be given to those Members who did
not consent in writing to the action.

     (b) The record date for determining Members entitled to consent to action
in writing without a meeting shall be the first date on which a signed written
consent setting forth the action taken or proposed to be taken is delivered to
the Company by delivery to its resident office, its principal place of business,
or the Managers. Delivery shall be by hand or by certified or registered mail,
return receipt requested. Delivery to the Company's principal place of business
shall be addressed to the Managers.

     (c) If any action by Members is taken by written consent, any articles or
documents filed with the Secretary of State of Nevada as a result of the taking
of the action shall state, in lieu of any statement required by the Act
concerning any vote of Members, that written consent has been given in
accordance with the provisions of the Act and that any written notice required
by the Act has been given.

     (d) Members may participate in and hold a meeting by means of conference
telephone or similar communications equipment by means of which all Persons
participating in the meeting can hear each other, and participation in such
meeting shall constitute attendance and presence in person at such meeting,
except where a Person participates in the meeting for the express purpose of
objecting to the transaction of any business on the ground that the meeting is
not lawfully called or convened.

                                   ARTICLE VIII
                                INDEMNIFICATION

     8.01 RIGHT TO INDEMNIFICATION. Subject to the limitations and conditions as
provided in this Article VIII, each Person who was or is made a party or is
threatened to be made a party to or is involved in any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative,
arbitrative or investigative (hereinafter a "Proceeding"), or any appeal in such
a Proceeding or any inquiry or investigation that could lead to such a
Proceeding, by reason of the fact that he or she, or a Person of whom he or she
is the legal representative, is or was a Manager of the Company or while a
Manager of the Company is or was serving at the request of the Company as a
Manager, director, officer, partner, venturer, proprietor, trustee, employee,
agent, or similar functionary of another foreign or domestic limited liability
company, corporation, partnership, joint venture, sole proprietorship, trust,
employee benefit


                                      -17-



plan or other enterprise shall be indemnified by the Company to the fullest
extent permitted by the Act and the laws of the State of Nevada, as the same
exist or may hereafter be amended (but, in the case of any such amendment, only
to the extent that such amendment permits the Company to provide broader
indemnification rights than said law permitted the Company to provide prior to
such amendment) against judgments, penalties (including excise and similar taxes
and punitive damages), fines, settlements and reasonable expenses (including,
without limitation, attorneys' fees) actually incurred by such Person in
connection with such Proceeding, and indemnification under this Article VIII
shall continue as to a Person who has ceased to serve in the capacity which
initially entitled such Person to indemnify hereunder. The rights granted
pursuant to this Article VIII shall be deemed contract rights, and no amendment,
modification or repeal of this Article VIII shall have the effect of limiting or
denying any such rights with respect to actions taken or Proceedings arising
prior to any such amendment, modification or repeal. It is expressly
acknowledged that the indemnification provided in this Article VIII could
involve indemnification for negligence or under theories of strict liability.

     8.02 ADVANCE PAYMENT. The right to indemnification conferred in this
Article VIII shall include the right to be paid or reimbursed by the Company the
reasonable expenses incurred by a Person of the type entitled to be indemnified
under Section 8.01 who was, is or is threatened to be made a named defendant or
respondent in a Proceeding in advance of the final disposition of the Proceeding
and without any determination as to the Person's ultimate entitlement to
indemnification; provided, however, that the payment of such expenses incurred
by any such Person in advance of the final disposition of a Proceeding, shall be
made only upon delivery to the Company of a written affirmation by such Manager
of his or her good faith belief that he has met the standard of conduct for
indemnification under this Article VIII and a written undertaking, by or on
behalf of such Person, to repay all amounts so advanced if it shall ultimately
be determined that such indemnified Person is not entitled to be indemnified
under this Article VIII or otherwise.

     8.03 INDEMNIFICATION OF OFFICERS, EMPLOYEES, AND AGENTS. The Company, by
adoption of a resolution of the Managers, may indemnity and advance expenses to
an officer, employee or agent of the Company to the same extent and subject to
the same conditions under which it may indemnify and advance expenses to
Managers under this Article VIII; and, the Company may indemnify and advance
expenses to Persons who are not or were not Managers, officers, employees or
agents of the Company but who are or were serving at the request of the Company
as a Manager, director, officer, partner, venturer, proprietor, trustee,
employee, agent or similar functionary of another foreign or domestic limited
liability company, corporation, partnership, joint venture, sole proprietorship,
trust, employee benefit plan or other enterprise against any liability asserted
against him and incurred by him in such a capacity or arising out of his status
as such a Person to the same extent that it may indemnity and advance expenses
to Managers under this Article VIII.

     8.04 APPEARANCE AS A WITNESS. Notwithstanding any other provision of this
Article VIII, the Company may pay or reimburse expenses incurred by a Manager in
connection with his appearance as a witness or other participation in a
Proceeding at a time when he is not a named defendant or respondent in the
Proceeding.

     8.05 NONEXCLUSIVITY OF RIGHTS. The right to indemnification and the
advancement and payment of expenses conferred in this Article VIII shall not be
exclusive of any other right which a Manager or other Person indemnified
pursuant to Section 8.03 may have or hereafter acquire under any law (common or
statutory), provision of the Articles or these Regulations, agreement, vote of
Members or disinterested Managers or otherwise.


                                      -18-



     8.06 INSURANCE. The Company may purchase and maintain insurance, at its
expense, to protect itself and any Person who is or was serving as a Manager,
officer, employee or agent of the Company or is or was serving at the request of
the Company as a Manager, director, officer, partner, venturer, proprietor,
trustee, employee, agent or similar functionary of another foreign or domestic
limited liability company, corporation, partnership, joint venture, sole
proprietorship, trust, employee benefit plan or other enterprise against any
expense, liability or loss, whether or not the Company would have the power to
indemnify such Person against such expense, liability or loss under this Article
VIII.

     8.07 MEMBER NOTIFICATION. To the extent required by law, any
indemnification of or advance of expenses to a Manager in accordance with this
Article VIII shall be reported in writing to the Members with or before the
notice or waiver of notice of the next Members' meeting or with or before the
next submission to Members of a consent to action without a meeting and, in any
case, within the 12-month period immediately following the date of the
indemnification or advance.

     8.08 SAVINGS CLAUSE. If this Article VIII or any portion hereof shall be
invalidated on any ground by any court of competent jurisdiction, then the
Company shall nevertheless indemnify and hold harmless each Manager or any other
Person indemnified pursuant to this Article VIII as to costs, charges and
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement with respect to any action, suit or proceeding, whether civil,
criminal, administrative or investigative to the full extent permitted by any
applicable portion of this Article VII that shall not have been invalidated and
to the fullest extent permitted by applicable law.

                                   ARTICLE IX
                                     TAXES

     9.01 TAX RETURNS. The Managers shall cause to be prepared and filed all
necessary federal and state income tax returns for the Company, including making
the elections described in Section 9.02. Each Member shall furnish to the
Managers all pertinent information in its possession relating to Company
operations that is necessary to enable the Company's income tax returns to be
prepared and filed.

     9.02 TAX ELECTIONS. The Company shall make the following elections on the
appropriate tax returns:

          (a) to adopt the year ending on May 31 as the Company's fiscal year;

          (b) to adopt a method of accounting as the Managers may determine from
     time to time;

          (c) if a distribution of Company property as described in section 734
     of the Code occurs or if a transfer of a Membership Interest as described
     in section 743 of the Code occurs, on written request of any Member, to
     elect, pursuant to section 754 of the Code, to adjust the basis of Company
     properties;

          (d) to elect to amortize the organizational expenses of the Company
     and the startup expenditures of the Company under Section 195 of the Code
     ratably over a period of 60 months as permitted by section 709(b) of the
     Code; and

          (e) any other election the Managers may deem appropriate and in the
     best interests of the Members.


                                      -19-



Neither the Company nor any Manager or Member may make an election for the
Company to be excluded from the application of the provisions of subchapter K of
chapter 1 of subtitle A of the Code or any similar provisions of applicable
state law, and no provision of these Regulations (including, without limitation,
Section 2.06) shall be construed to sanction or approve such an election.

     9.03 "TAX MATTERS PARTNER." A majority of the Managers who are Members
shall designate one Manager that is a Member to be the "tax matters partner" of
the Company pursuant to section 6231(a)(7) of the Code; or, if there is no
Manager that is a Member, the "tax matters partner" shall be a Member that is
designated as such by a Required Interest. Any Member who is designated "tax
matters partner" shall take such action as may be necessary to cause each other
Member to become a "notice partner" within the meaning of section 6223 of the
Code. Any Member who is designated "tax matters partner" shall inform each other
Member of all significant matters that may come to its attention in its capacity
as "tax matters partner" by giving notice thereof on or before the fifth
Business Day after becoming aware thereof and, within that time, shall forward
to each other Member copies of all significant written communications it may
receive in that capacity. Any Member who is designated "tax matters partner" may
not take any action contemplated by sections 6222 through 6232 of the Code
without the consent of a Required Interest, but this sentence does not authorize
such Manager (or any other Manager) to take any action left to the determination
of an individual Member under sections 6222 through 6232 of the Code.

                                    ARTICLE X
                   BOOKS, RECORDS, REPORTS, AND BANK ACCOUNTS

     10.01 MAINTENANCE OF BOOKS. The Company shall keep books and records of
accounts and shall keep minutes of the proceedings of its Members, its Managers
and each committee of the Managers. The books of account for the Company shall
be maintained on a cash basis in accordance with the terms of these Regulations,
except that the capital accounts of the Members shall be maintained in
accordance with Section 4.06. The calendar year shall be the accounting year of
the Company.

     10.02 REPORTS. On or before the 120th day following the end of each fiscal
year during the term of the Company, the Managers shall cause each Member to be
furnished with a balance sheet, an income statement, and a statement of changes
in Members' capital of the Company for, or as of the end of, that year certified
by a recognized firm of certified public accountants. These financial statements
must be prepared in accordance with accounting principles generally employed for
cash basis records consistently applied (except as therein noted) and must be
accompanied by a report of the certified public accountants certifying the
statements and stating that (a) their examination was made in accordance with
generally accepted auditing standards and, in their opinion, the financial
statements fairly present the financial position, financial results of
operations, and changes in Members' capital in accordance with accounting
principles generally employed for cash-basis records consistently applied
(except as therein noted) and (b) in making the examination and reporting on the
financial statements described above, nothing came to their attention that
caused them to believe that (i) the income and revenues were not paid or
credited in accordance with the financial and accounting provisions of these
Regulations, (ii) the costs and expenses were not charged in accordance with the
financial and accounting provisions of these Regulations, or (iii) the Managers
or any Member failed to comply in any material respect with the financial and
accounting provisions of these Regulations, or if they do conclude that the
Managers or a Member so failed, specifying the nature and period of existence of
the failure. The Managers also may cause to be prepared or delivered such other
reports as they may deem appropriate. The Company shall bear the costs of all
these reports.


                                      -20-



     10.03 ACCOUNTS. The Managers shall establish and maintain one or more
separate bank and investment accounts and arrangements for Company funds in the
Company name with financial institutions and firms that the Managers determine.
The Managers may not commingle the Company's funds with the funds of any Member;
however, Company funds may be invested in a manner the same as or similar to the
Managers' investment of their own funds or investments by their Affiliates.

                                   ARTICLE XI
                             BANKRUPTCY OF A MEMBER

     11.01 BANKRUPT MEMBERS. Subject to Section 12.01(c), if any Member becomes
a Bankrupt Member, the Company shall have the option, exercisable by notice from
the Managers to the Bankrupt Member (or its representative) at any time prior to
the 180th day after receipt of notice of the occurrence of the event causing it
to become a Bankrupt Member, to buy, and on the exercise of this option the
Bankrupt Member or its representative shall sell, its Membership Interest. The
purchase price shall be an amount equal to the fair market value thereof
determined by agreement of the Bankrupt Member (or its representative) and the
Managers; however, if those Persons do not agree on the fair market value on or
before the 30th day following the exercise of the option, either such Person, by
notice to the other, may require the determination of fair market value to be
made by an independent appraiser specified in that notice. If the Person
receiving that notice objects on or before the tenth day following receipt to
the independent appraiser designated in that notice, and those Persons otherwise
fail to agree on an independent appraiser, either such Person may petition the
United States District Judge for the State of Nevada then senior in service to
designate an independent appraiser. The determination of the independent
appraiser, however designated, is final and binding on all parties. The Bankrupt
Member and the Company each shall pay one-half of the costs of the appraisal.
The purchaser shall pay the fair market value as so determined in four equal
cash installments, the first due on closing and the remainder (together with
accumulated interest on the amount unpaid at the General Interest Rate) due on
each of the first three anniversaries thereof. The payment to be made to the
Bankrupt Member or its representative pursuant to this Section 11.01 is in
complete liquidation and satisfaction of all the rights and interest of the
Bankrupt Member and its representative (and of all Persons claiming by, through,
or under the Bankrupt Member and its representative) in and in respect of the
Company, including, without limitation, any Membership Interest, any rights in
specific Company property, and any rights against the Company and (insofar as
the affairs of the Company are concerned) against the Members, and constitutes a
compromise to which all Members have agreed pursuant to the Act.

                                   ARTICLE XII
                    DISSOLUTION, LIQUIDATION, AND TERMINATION

     12.01 DISSOLUTION. The Company shall dissolve and its affairs shall be
wound up on the first to occur of the following:

          (a) the written consent of a Required Interest;

          (b) the expiration of the period fixed for the duration of the Company
     set forth in the Articles;

          (c) any Manager who is a Member (or, if there is no Manager who is a
     Member, any Member) shall become a Bankrupt Member (with or without the
     consent of a Required Interest); provided, however, that if the event
     described in this Section 12.01(c) shall occur and there shall be at least
     one other Member remaining, the Company shall not be dissolved, and the
     business of the Company shall be continued, if all Members so agree; and


                                      -21-



          (d) entry of a decree of judicial dissolution of the Company under
     article 6.02 of the Act.

Except as provided in Section 12.01(c), the death, retirement, resignation,
expulsion, bankruptcy or dissolution of a Member, or the occurrence of any other
event that terminates the continued membership of a Member in the Company, shall
not cause a dissolution of the Company.

     12.02 LIQUIDATION AND TERMINATION. On dissolution of the Company, the
Managers shall act as liquidator or may appoint one or more Members as
liquidator. The liquidator shall proceed diligently to wind up the affairs of
the Company and make final distributions as provided herein and in the Act. The
costs of liquidation shall be borne as a Company expense. Until final
distribution, the liquidator shall continue to operate the Company properties
with all of the power and authority of the Managers. The steps to be
accomplished by the liquidator are as follows:

          (a) as promptly as possible after dissolution and again after final
     liquidation, the liquidator shall cause a proper accounting to be made by a
     recognized firm of certified public accountants of the Company's assets,
     liabilities, and operations through the last day of the calendar month in
     which the dissolution occurs or the final liquidation is completed, as
     applicable;

          (b) the liquidator shall cause the notice described in article
     6.05(A)(2) of the Act to be mailed to each known creditor of and claimant
     against the Company in the manner described in such article 6.05(A)(2) of
     the Act;

          (c) the liquidator shall pay, satisfy or discharge from Company funds
     all of the debts, liabilities and obligations of the Company (including,
     without limitation, all expenses incurred in liquidation and any advances
     described in Section 4.05) or otherwise make adequate provision for payment
     and discharge thereof (including, without limitation, the establishment of
     a cash escrow fund for contingent liabilities in such amount and for such
     term as the liquidator may reasonably determine); and

          (d) all remaining assets of the Company shall be distributed to the
     Members as follows:

               (i) the liquidator may sell any or all Company property,
          including to Members, and any resulting gain or loss from each sale
          shall be computed and allocated to the capital accounts of the
          Members;

               (ii) with respect to all Company property that has not been sold,
          the fair market value of that property shall be determined and the
          capital accounts of the Members shall be adjusted to reflect the
          manner in which the unrealized income, gain, loss, and deduction
          inherent in property that has not been reflected in the capital
          accounts previously would be allocated among the Members if there were
          a taxable disposition of that property for the fair market value of
          that property on the date of distribution; and

               (iii) Company property shall be distributed among the Members in
          accordance with the positive capital account balances


                                      -22-



          of the Members, as determined after taking into account all capital
          account adjustments for the taxable year of the Company during which
          the liquidation of the partnership occurs (other than those made by
          reason of this clause (iii)); and those distributions shall be made by
          the end of the taxable year of the Company during which the
          liquidation of the Company Occurs (or, if later, 90 days after the
          date of the liquidation).

All distributions in kind to the Members shall be made subject to the liability
of each distributee for costs, expenses, and liabilities theretofore incurred or
for which the Company has committed prior to the date of termination and those
costs, expenses, and liabilities shall be allocated to the distributee pursuant
to this Section 12.02. The distribution of cash and/or property to a Member in
accordance with the provisions of this Section 12.02 constitutes a complete
return to the Member of its Capital Contributions and a complete distribution to
the Member of its Membership Interest and all the Company's property and
constitutes a compromise to which all Members have consented within the meaning
of the Act. To the extent that a Member returns funds to the Company, it has no
claim against any other Member for those funds.

     12.03 DEFICIT CAPITAL ACCOUNTS. Notwithstanding anything to the contrary
contained in these Regulations, and notwithstanding any custom or rule of law to
the contrary, to the extent that the deficit, if any, in the capital account of
any Member results from or is attributable to deductions and losses of the
Company (including non-cash items such as depreciation), or distributions of
money pursuant to these Regulations to all Members in proportion to their
respective Sharing Ratios, upon dissolution of the Company such deficit shall
not be an asset of the Company and such Members shall not be obligated to
contribute such amount to the Company to bring the balance of such Member's
capital account to zero.

     12.04 ARTICLES OF DISSOLUTION. On completion of the distribution of Company
assets as provided herein, the Company is terminated, and the Managers (or such
other Person or Persons as the Act may require or permit) shall file Articles of
Dissolution with the Secretary of State of Nevada, cancel any other filings made
pursuant to Section 2.05, and take such other actions as may be necessary to
terminate the Company.

                                  ARTICLE XIII
                               GENERAL PROVISIONS

     13.01 OFFSET. Whenever the Company is to pay any sum to any Member, any
amounts that Member owes the Company may be deducted from that sum before
payment.

     13.02 NOTICES. Except as expressly set forth to the contrary in these
Regulations, all notices, requests, or consents provided for or permitted to be
given under these Regulations must be in writing and must be given either by
depositing that writing in the United States mail, addressed to the recipient,
postage paid, and registered or certified with return receipt requested or by
delivering that writing to the recipient in person, by courier, or by facsimile
transmission; and a notice, request, or consent given under these Regulations is
effective on receipt by the Person to receive it. All notices, requests, and
consents to be sent to a Member must be sent to or made at the addresses given
for that Member on Exhibit A or in the instrument described in Section 3.03(d)
or 3.04, or such other address as that Member may specify by notice to the other
Members. Any notice, request, or consent to the Company or the Managers must be
given to the Managers at the following address: 250 Lesmill Road, Don Mills,
Ontario M3B 2T5 Canada. Whenever any notice is required to be given by law, the
Articles or these Regulations, a written waiver thereof, signed by the Person
entitled to notice, whether before or after the time stated therein, shall be
deemed equivalent to the giving of such notice.


                                      -23-



     13.03 ENTIRE AGREEMENT; SUPERSEDURE. These Regulations constitute the
entire agreement of the Members and their Affiliates relating to the Company and
supersedes all prior contracts or agreements with respect to the Company,
whether oral or written.

     13.04 EFFECT OF WAIVER OR CONSENT. A waiver or consent, express or implied,
to or of any breach or default by any Person in the performance by that Person
of its obligations with respect to the Company is not a consent or waiver to or
of any other breach or default in the performance by that Person of the same or
any other obligations of that Person with respect to the Company. Failure on the
part of a Person to complain of any act of any Person or to declare any Person
in default with respect to the Company, irrespective of how long that failure
continues, does not constitute a waiver by that Person of its rights with
respect to that default until the applicable statute-of-limitations period has
run.

     13.05 AMENDMENT OR MODIFICATION. These Regulations may be amended or
modified from time to time only by a written instrument adopted by the Managers
and executed and agreed to by a Required Interest; provided, however, that (a)
an amendment or modification reducing a Member's Sharing Ratio or increasing its
Commitment (other than to reflect changes otherwise provided by these
Regulations) is effective only with that Member's consent, (b) an amendment or
modification reducing the required Sharing Ratio or other measure for any
consent or vote in these Regulations is effective only with the consent or vote
of Members having the Sharing Ratio or other measure theretofore required, and
(c) amendments of the type described in Section 3.04 may be adopted as therein
provided.

     13.06 BINDING EFFECT. Subject to the restrictions on Dispositions set forth
in these Regulations, these Regulations are binding on and inure to the benefit
of the Members and their respective heirs, legal representatives, successors,
and assigns.

     13.07 GOVERNING LAW; SEVERABILITY. THESE REGULATIONS ARE GOVERNED BY AND
SHALL BE CONSTRUED IN ACCORDANCE WITH LAW OF THE STATE OF NEVADA, EXCLUDING ANY
CONFLICT-OF-LAWS RULE OR PRINCIPLE THAT MIGHT REFER THE GOVERNANCE OR THE
CONSTRUCTION OF THESE REGULATIONS TO THE LAW OF ANOTHER JURISDICTION. In the
event of a direct conflict between the provisions of these Regulations and (a)
any provision of the Articles, or (b) any mandatory provision of the Act, the
application provision of the Articles or the Act shall control. If any provision
of these Regulations or the application thereof to any Person or circumstance is
held invalid or unenforceable to any extent, the remainder of these Regulations
and the application of that provision to other Persons or circumstances is not
affected thereby and that provision shall be enforced to the greatest extent
permitted by law.

     13.08 FURTHER ASSURANCES. In connection with these Regulations and the
transactions contemplated hereby, each Member shall execute and deliver any
additional documents and instruments and perform any additional acts that may be
necessary or appropriate to effectuate and perform the provisions of these
Regulations and those transactions.

     13.09 WAIVER OF CERTAIN RIGHTS. Each Member irrevocably waives any right it
may have to maintain any action for dissolution of the Company or for partition
of the property of the Company.

     13.10 INDEMNIFICATION. To the fullest extent permitted by law, each Member
shall indemnify the Company, each Manager and each other Member and hold them
harmless from and against all losses, costs, liabilities, damages, and expenses
(including, without limitation, costs of suit and attorney's fees) they may
incur on account of any breach by that Member of these Regulations.


                                      -24-



     13.11 NOTICE TO MEMBERS OF PROVISIONS OF THIS AGREEMENT. By executing these
Regulations, each Member acknowledges that it has actual notice of (a) all of
the provisions of this Agreement, including, without limitation, the
restrictions on the transfer of Membership Interests set forth in Article III,
and (b) all of the provisions of the Articles, including, without limitation,
the fact that the Articles provide that no Member shall have the preemptive
right to acquire any Membership Interests or securities of any class that may at
any time be issued, sold or offered for sale by the Company. Each Member hereby
agrees that these Regulations constitute adequate notice of all such provisions.

     13.12 COUNTERPARTS. These Regulations may be executed in any number of
counterparts with the same effect as if all signing parties had signed the same
document. All counterparts shall be construed together and constitute the same
instrument.

     13.13 ARBITRATION. If, at any time or from time to time during the
continuance of the Company or after the dissolution or other termination
thereof, any dispute, difference or question shall arise between any of the
Members, or their successors, assigns or nominees, touching or concerning the
Company of the property, assets, rights or transactions thereof, or the
dissolution or other termination thereof, or the property of the Company or the
construction, meaning or effect of these Regulations, or any provision hereof,
or the rights of obligations of the Members, or their successors, assigns or
nominees, under these Regulations or otherwise, with respect thereto, then every
such dispute, difference or question shall be submitted to and settled by
arbitration and the decision of the arbitrator appointed as hereinafter provided
to deal with such matter shall be accepted by all the Members to such dispute,
difference or question. The arbitration shall be conducted by a single
arbitrator agreed upon by the Members to the matter. The decision of the
arbitrator shall be final and binding upon all the Members to such dispute,
difference or question and their nominees, and there shall be no appeal
therefrom.

     IN WITNESS WHEREOF, following adoption of these Regulations by the
Managers, the Members have executed these Regulations as of the date first set
forth above.

                                        MEMBERS:

                                        ELLY NEVADA, INC.,
                                        a Nevada corporation


                                        By: /s/ Harry Rosenbaum
                                            ------------------------------------
                                            Harry Rosenbaum, Vice President


                                        NORMAN NEVADA, INC.,
                                        a Nevada corporation


                                        By: /s/ Harry Rosenbaum
                                            ------------------------------------
                                            Harry Rosenbaum, Vice President


                                        LARRY NEVADA, INC.,
                                        a Nevada corporation


                                        By: /s/ Harry Rosenbaum
                                            ------------------------------------
                                            Harry Rosenbaum, Vice President


                                      -25-



                                        BRUCE NEVADA, INC.,
                                        a Nevada corporation


                                        By: /s/ Harry Rosenbaum
                                            ------------------------------------
                                            Harry Rosenbaum, Vice President


                                        HARRY NEVADA, INC.,
                                        a Nevada corporation


                                        By: /s/ Harry Rosenbaum
                                            ------------------------------------
                                            Harry Rosenbaum, President


                                        SEYMOUR NEVADA, INC.,
                                        a Nevada corporation


                                        By: /s/ Harry Rosenbaum
                                            ------------------------------------
                                            Harry Rosenbaum, Vice President


                                        HAYDN NEVADA, INC.,
                                        a Nevada corporation


                                        By: /s/ Harry Rosenbaum
                                            ------------------------------------
                                            Harry Rosenbaum, Vice President


                                      -26-

EX-3.2(G)

                                                                  Exhibit 3.2(g)

                        FIRST AMENDMENT TO REGULATIONS OF
                          ASHTON WOODS ARIZONA L.L.C.

     THIS FIRST AMENDMENT TO REGULATIONS OF ASHTON WOODS ARIZONA L.L.C. (this
"Amendment") is made and entered into by and among ELLY NEVADA, INC., a Nevada
corporation ("Elly NV"). NORMAN NEVADA, INC., a Nevada corporation ("Norman
NV"), LARRY NEVADA, INC., a Nevada corporation ("Larry NV"), BRUCE NEVADA, INC.,
a Nevada corporation ("Bruce NV"). HARRY NEVADA, INC., a Nevada corporation
("Harry NV"). SEYMOUR NEVADA, INC., a Nevada corporation ("Seymour NV"). HAYDN
NEVADA, INC., a Nevada corporation ("Haydn NV"). LITTLE SHOTS NEVADA L.L.C., a
Nevada limited liability company ("Little Shots"), and ASHTON WOODS USA L.L.C.,
a Nevada limited liability company ("Ashton USA").

                                    RECITALS:

     A. Elly NV, Norman NV, Larry NV, Bruce NV, Harry NV, Seymour NV, and Haydn
NV have heretofore entered into Regulations of Ashton Woods Arizona L.L.C. (the
"Regulations") dated as of February 6, 1997, creating Ashton Woods Arizona
L.L.C., a Nevada limited liability company (the "Company").

     B. As permitted by the Regulations, Bruce NV, Harry NV, Seymour NV, and
Haydn NV transferred all of their right, title, and interest in and to the
Company to Little Shots.

     C. As permitted by the Regulations, Elly NV, Norman NV, Larry NV, and
Little Shots transferred all of their right, title, and interest in and to the
Company to Ashton USA.

     D. The parties hereto desire to amend the Regulations to reflect the
transfers described above and provide for the admission of Ashton USA as the
sole member of the Company.

     E. Capitalized terms, not specifically defined in this Amendment, shall
have the meanings given such terms in the Regulations.

     NOW, THEREFORE, for and in consideration of the premises and the respective
agreements set forth herein, the parties hereto agree as follows:

     1. The transfers described in Recitals B and C above are hereby approved.

     2. Ashton USA is hereby admitted as a Member of the Company and the parties
hereto recognize that Elly NV, Norman NV, Larry NV, Bruce NV, Harry NV, Seymour
NV, Haydn NV, and Little Shots have withdrawn as Members of the Company. The
only Member of the Company is Ashton USA.

     3. The Sharing Ratios and funding commitments of the Members set forth on
Exhibit "A" to the Regulations shall be as follows;



                           Sharing Ratio and
         Member           Funding Commitment
         ------           ------------------
                       
Ashton Woods USA L.L.C.          100%


     4. Any and all notices, demands, requests, or other communications
permitted or required to be given to Ashton USA pursuant to the Regulations
shall be delivered to Ashton USA in the manner provided in the Regulations, at
the following address:

          250 Lesmill Road
          Don Mills, Ontario M3B 2T5 Canada

     5. By execution of this Amendment, Ashton USA agrees to be bound by the
terms and provisions of the Regulations, as amended hereby.

     6. Except as amended hereby, the terms and provisions of the Regulations
shall remain unchanged and shall continue in full force and effect.

     EXECUTED as of May 31, 1999.

                                        MEMBER:

                                        ASHTON WOODS USA L.L.C.,
                                        a Nevada limited liability company


                                        By: /s/ Bruce Freeman
                                            ------------------------------------
                                            Bruce Freeman - Managing Member


                                        By: /s/ Seymour Joffe
                                            ------------------------------------
                                            Seymour Joffe - Managing Member


                                        By: /s/ Harry Rosenbaum
                                            ------------------------------------
                                            Harry Rosenbaum - Managing Member


                                       2

                                        WITHDRAWING MEMBERS:

                                        ELLY NEVADA, INC.,
                                        a Nevada corporation


                                        By: /s/ Elly Reisman
                                            ------------------------------------
                                            Elly Reisman, President


                                        NORMAN NEVADA, INC.,
                                        a Nevada corporation


                                        By: /s/ Norman Reisman
                                            ------------------------------------
                                            Norman Reisman, President


                                        LARRY NEVADA, INC.,
                                        a Nevada corporation


                                        By: /s/ Larry Robbins
                                            ------------------------------------
                                            Larry Robbins, President


                                        BRUCE NEVADA, INC.,
                                        a Nevada corporation


                                        By: /s/ Bruce Freeman
                                            ------------------------------------
                                            Bruce Freeman, President


                                        HARRY NEVADA, INC.,
                                        a Nevada corporation


                                        By: /s/ Harry Rosenbaum
                                            ------------------------------------
                                            Harry Rosenbaum, President


                                        SEYMOUR NEVADA, INC.,
                                        a Nevada corporation


                                        By: /s/ Seymour Joffe
                                            ------------------------------------
                                            Seymour Joffe, President


                                        3

                                        HAYDN NEVADA, INC.,
                                        a Nevada corporation


                                        By: /s/ Haydn Matthews
                                            ------------------------------------
                                            Haydn Matthews, President


                                        LITTLE SHOTS NEVADA L.L.C.,
                                        a Nevada limited liability company


                                        By: /s/ Bruce Freeman
                                            ------------------------------------
                                            Bruce Freeman - Managing Member


                                        By: /s/ Seymour Joffe
                                            ------------------------------------
                                            Seymour Joffe - Managing Member


                                        By: /s/ Harry Rosenbaum
                                            ------------------------------------
                                            Harry Rosenbaum-Managing Member


                                        4

EX-3.2(H)

                                                                 EXHIBIT 3.2(h)

                                   REGULATIONS

                                       OF

                        ASHTON DENVER RESIDENTIAL, LLC

                       A NEVADA LIMITED LIABILITY COMPANY

                          Dated as of November 19, 2004



                                   REGULATIONS
                                       OF
                         ASHTON DENVER RESIDENTIAL, LLC
                       A NEVADA LIMITED LIABILITY COMPANY

                                TABLE OF CONTENTS

                                                                                                           
ARTICLE I
DEFINITIONS ..............................................................................................    1

1.01    Definitions ......................................................................................    1
1.02    Construction .....................................................................................    3

ARTICLE II                                                                                                    3
ORGANIZATION .............................................................................................

2.01    Formation ........................................................................................    3
2.02    Name .............................................................................................    3
2.03    Resident Office; Resident Agent; Principal Office in the United States; Other Offices ............    3
2.04    Purposes .........................................................................................    4
2.05    Foreign Qualification ............................................................................    4
2.06    Term .............................................................................................    4
2.07    Mergers and Exchanges ............................................................................    4
2.08    No State-Law Partnership .........................................................................    4

ARTICLE III
MEMBERSHIP; DISPOSITIONS OF INTERESTS ....................................................................    4

3.01    Initial Members ..................................................................................    4
3.02    Representations and Warranties ...................................................................    4
3.03    Restrictions on the Disposition of an Interest ...................................................    5
3.04    Additional Members  ..............................................................................    6
3.05    Interests in a Member ............................................................................    7
3.06    Information ......................................................................................    7
3.07    Liability to Third Parties .......................................................................    7
3.08    Withdrawal .......................................................................................    8
3.09    Lack of Authority ................................................................................    8

ARTICLE IV
CAPITAL CONTRIBUTIONS ....................................................................................    8

4.01    Initial Contributions.............................................................................    8
4.02    Subsequent Contributions..........................................................................    8
4.03    Failure to Contribute ............................................................................    8



                                     -i-



                                                                                                          
4.04    Return of Contributions ..........................................................................   10
4.05    Advances by Members ..............................................................................   10
4.06    Capital Accounts .................................................................................   10

ARTICLE V
ALLOCATIONS AND DISTRIBUTIONS ............................................................................   11

5.01    Allocations ......................................................................................   11
5.02    Distributions ....................................................................................   11

ARTICLE VI
MANAGERS .................................................................................................   12

6.01    Management by Managers ...........................................................................   12
6.02    Actions by Managers; Committees; Delegation of Authority and Duties ..............................   13
6.03    Number and Term of Office ........................................................................   14
6.04    Vacancies; Removal; Resignation ..................................................................   14
6.05    Meetings .........................................................................................   14
6.06    Approval or Ratification of Acts or Contracts by Members .........................................   15
6.07    Action by Written Consent or Telephone Conference ................................................   15
6.08    Compensation .....................................................................................   15
6.09    Conflicts of Interest ............................................................................   16
6.10    Officers .........................................................................................   16

ARTICLE VII
MEETINGS OF MEMBERS ......................................................................................   16

7.01    Meetings .........................................................................................   16
7.02    Voting List ......................................................................................   17
7.03    Proxies .........................................................................................    18
7.04    Conduct of Meetings ..............................................................................   18
7.05    Action by Written Consent or Telephone Conference ................................................   18

ARTICLE VIII
INDEMNIFICATION ..........................................................................................   19

8.01    Right to Indemnification .........................................................................   19
8.02    Advance Payment  .................................................................................   20
8.03    Indemnification of Officers, Employees, and Agents ...............................................   20
8.04    Appearance as a Witness ..........................................................................   20
8.05    Nonexclusivity of Rights .........................................................................   20
8.06    Insurance ........................................................................................   21
8.07    Member Notification ..............................................................................   21
8.08    Savings Clause ..................................................................................    21



                                     -ii-



                                                                                                          
ARTICLE IX
TAXES ....................................................................................................   21

9.01    Tax Returns ......................................................................................   22
9.02    Tax Elections ....................................................................................   22
9.03    "Tax Matters Partner" ............................................................................   22

ARTICLE X
BOOKS, RECORDS, REPORTS, AND BANK ACCOUNTS ...............................................................   22

10.01   Maintenance of Books .............................................................................   22
10.02   Reports ..........................................................................................   22
10.03   Accounts  ........................................................................................   23

ARTICLE XI
BANKRUPTCY OF A MEMBER ...................................................................................   23

11.01   Bankrupt Members .................................................................................   23

ARTICLE XII
DISSOLUTION, LIQUIDATION, AND TERMINATION ................................................................   24

12.01   Dissolution ......................................................................................   24
12.02   Liquidation and Termination ......................................................................   24
12.03   Deficit Capital Accounts .........................................................................   25
12.04   Articles of Dissolution ..........................................................................   26

ARTICLE XIII
GENERAL PROVISIONS .......................................................................................   26

13.01   Offset ...........................................................................................   26
13.02   Notices ..........................................................................................   26
13.03   Entire Agreement; Supersedure ....................................................................   26
13.04   Effect of Waiver or Consent ......................................................................   26
13.05   Amendment or Modification ........................................................................   27
13.06   Binding Effect ...................................................................................   27
13.07   Governing Law; Severability ......................................................................   27
13.08   Further Assurances ...............................................................................   27
13.09   Waiver of Certain Rights .........................................................................   27
13.10   Indemnification ................... . ............................................................   27
13.11   Notice to Members of Provisions of this Agreement ................................................   27
13.12   Counterparts .....................................................................................   28
13.13   Arbitration ......................................................................................   28



                                    -iii-



                                   REGULATIONS

                                       OF

                          ASHTON TAMPA RESIDENTIAL, LLC

                       A NEVADA LIMITED LIABILITY COMPANY

     These REGULATIONS OF ASHTON TAMPA RESIDENTIAL, LLC (these "Regulations"),
dated as of August 23, 2004, are (a) adopted by the Managers (as defined below)
and (b) executed and agreed to, for good and valuable consideration, by the
Members (as defined below).

                                    ARTICLE I
                                   DEFINITIONS

     1.01 DEFINITIONS. As used in these Regulations, the following terms have
the following meanings:

          "Act" means the Nevada Limited Liability Company Act and any successor
     statute, as amended from time to time.

          "Articles" has the meaning given that term in Section 2.01.

          "Bankrupt Member" means (except to the extent a Required Interest
     consents otherwise) any Member (a) that (i) makes a general assignment for
     the benefit of creditors; (ii) files a voluntary bankruptcy petition; (iii)
     becomes the subject of an order for relief or is declared insolvent in any
     federal or state bankruptcy or insolvency proceedings; (iv) files a
     petition or answer seeking for the Member a reorganization, arrangement,
     composition, readjustment, liquidation, dissolution, or similar relief
     under any law; (v) files an answer or other pleading admitting or failing
     to contest the material allegations of a petition filed against the Member
     in a proceeding of the type described in subclauses (i) through (iv) of
     this clause (a); or (vi) seeks, consents to, or acquiesces in the
     appointment of a trustee, receiver, or liquidator of the Member or of all
     or any substantial part of the Member's properties; or (b) against which, a
     proceeding seeking reorganization, arrangement, composition, readjustment,
     liquidation, dissolution, or similar relief under any law has been
     commenced and 120 days have expired without dismissal thereof or with
     respect to which, without the Member's consent or acquiescence, a trustee,
     receiver, or liquidator of the Member or of all or any substantial part of
     the Member's properties has been appointed and 90 days have expired without
     the appointment's having been vacated or stayed, or 90 days have expired
     after the date of expiration of a stay, if the appointment has not
     previously been vacated.

          "Business Day" means any day other than a Saturday, a Sunday, or a
     holiday on which national banking associations in the State of Nevada are
     closed.


                                       -1-

          "Capital Contribution" means any contribution by a Member to the
     capital of the Company.

          "Code" means the Internal Revenue Code of 1986 and any successor
     statute, as amended from time to time.

          "Commitment" means, subject in each case to adjustments on account of
     Dispositions of Membership Interests permitted by these Regulations, (a) in
     the case of a Member executing these Regulations as of the date of these
     Regulations or a Person acquiring that Membership Interest, the amount
     specified for that Member as its Commitment on Exhibit A, and (b) in the
     case of a Membership Interest issued pursuant to Section 3.04, the
     Commitment established pursuant thereto.

          "Company" means Ashton Tampa Residential, LLC, a Nevada limited
     liability company.

          "Default Interest Rate" means a rate per annum equal to the lesser of
     (a) four percent (4%) plus a varying rate per annum that is equal to the
     interest rate published as the prime rate by The Bank of Nova Scotia from
     time to time, with adjustments in that varying rate to be made on the same
     date as any change in that rate, and (b) the maximum rate permitted by
     applicable law.

          "Delinquent Member" has the meaning given that term in Section
     4.03(a).

          "Dispose," "Disposing," or "Disposition" means a sale, assignment,
     transfer, exchange, mortgage, pledge, grant of a security interest, or
     other disposition or encumbrance (including, without limitation, by
     operation of law), or the acts thereof.

          "General Interest Rate" means a rate per annum equal to the lesser of
     (a) a varying rate per annum that is equal to the interest rate published
     as the prime rate by The Bank of Nova Scotia from time to time, with
     adjustments in that varying rate to be made on the same date as any change
     in that rate, and (b) the maximum rate permitted by applicable law.

          "Lending Member" has the meaning given that term in Section
     4.03(a)(ii).

          "Manager" means Bruce Freeman, Harry Rosenbaum and Seymour Joffe and
     any Person hereafter elected as a manager of the Company as provided in
     these Regulations, but does not include any Person who has ceased to be a
     manager of the Company.

          "Member" means any Person executing these Regulations as of the date
     of these Regulations as a member or hereafter admitted to the Company as a
     member as provided in these Regulations, but does not include any Person
     who has ceased to be a member in the Company.


                                       -2-

          "Membership Interest" means the interest of a Member in the Company,
     including, without limitation, rights to distributions (liquidating or
     other), allocations, information, and to consent or approve.

          "Permitted Transferee" has the meaning given that term in Section
     3.03(b).

          "Person" has the meaning given that term in the Act.

          "Proceeding" has the meaning given that term in Section 8.01.

          "Regulations" has the meaning given that term in the introductory
     paragraph.

          "Required Interest" means one or more Members having among them more
     than 51% of the Sharing Ratios of all Members.

          "Sharing Ratio" with respect to any Member means the percentage set
     forth on Exhibit A, subject to change as herein provided.

Other terms defined herein have the meanings so given them.

     1.02 CONSTRUCTION. Whenever the context requires, the gender of all words
used in these Regulations includes the masculine, feminine, and neuter. All
references to Articles and Section refer to articles and sections of these
Regulations, and all references to Exhibits are to Exhibits attached hereto,
each of which is made a part hereof for all purposes.

                                   ARTICLE II
                                  ORGANIZATION

     2.01 FORMATION. The Company has been organized as a Nevada limited
liability company by the filing of Articles of Organization (the "Articles")
under and pursuant to the Act and the issuance of a certificate of organization
for the Company by the Secretary of State of Nevada.

     2.02 NAME. The name of the Company is "Ashton Tampa Residential, LLC" and
all Company business must be conducted in that name or such other names that
comply with applicable law as the Managers may select from time to time.

     2.03 RESIDENT OFFICE; RESIDENT AGENT; PRINCIPAL OFFICE IN THE UNITED
STATES; OTHER OFFICES. The resident office of the Company required by the Act to
be maintained in the State of Nevada shall be the office of the initial resident
agent named in the Articles or such other office (which need not be a place of
business of the Company) as the Managers may designate from time to time in the
manner provided by law. The resident agent of the Company in the State of Nevada
shall be the initial resident agent named in the Articles or such other Person
or Persons as the Managers may designate from time to time in the manner
provided by law. The principal office of the Company in the United States shall
be at such place as the Managers may designate from time


                                       -3-

to time, which need not be in the State of Nevada. The Company shall maintain
records at the office of the resident agent as required by the Act and shall
keep the street address of the resident office of the Company in the State of
Nevada. The Company may have such other offices as the Managers may designate
from time to time.

     2.04 PURPOSES. The purposes of the Company are those set forth in the
Articles.

     2.05 FOREIGN QUALIFICATION. Prior to the Company's conducting business in
any jurisdiction other than Nevada, the Managers shall cause the Company to
comply, to the extent procedures are available and those matters are reasonably
within the control of the Managers, with all requirements necessary to qualify
the Company as a foreign limited liability company in that jurisdiction. At the
request of the Managers, each Member shall execute, acknowledge, swear to, and
deliver all certificates and other instruments conforming with these Regulations
that are necessary or appropriate to qualify, continue, and terminate the
Company as a foreign limited liability company in all such jurisdictions in
which the Company may conduct business.

     2.06 TERM. The Company commenced on the date the Secretary of State of
Nevada issued a certificate of organization for the Company and shall continue
in existence for the period fixed in the Articles for the duration of the
Company, or such earlier time as these Regulations may specify.

     2.07 MERGERS AND EXCHANGES. The Company may be a party to (a) a merger or
(b) an exchange or acquisition.

     2.08 NO STATE-LAW PARTNERSHIP. The Members intend that the Company not be a
partnership (including, without limitation, a limited - partnership) or joint
venture, and that no Member or Manager be a partner or joint venturer of any
other Member or Manager, for any purposes other than federal and state tax
purposes, and these Regulations may not be construed to suggest otherwise.

                                   ARTICLE III
                      MEMBERSHIP; DISPOSITIONS OF INTERESTS

     3.01 INITIAL MEMBERS. The initial members of the Company are the Persons
executing these Regulations as of the date of these Regulations as members, each
of which is admitted to the Company as a Member effective contemporaneously with
the execution by such Person of these Regulations.

     3.02 REPRESENTATIONS AND WARRANTIES. Each Member hereby represents and
warrants to the Company and each other Member that (a) if that Member is a
corporation, it is duly organized, validly existing and in good standing under
the law of the state of its incorporation and is duly qualified and in good
standing as a foreign corporation in the jurisdiction of its principal place of
business (if not incorporated therein); (b) if that Member is a limited
liability company, it is duly organized, validly existing, and (if applicable)
in good standing under the law of the state of its organization and is duly
qualified and (if applicable) in good standing as a foreign limited liability
company in the jurisdiction of its principal place of business (if not organized
therein); (c) if that Member is a partnership, trust, or other entity, it is
duly formed, validly existing, and (if applicable)


                                       -4-

in good standing under the law of the state of its formation, and if required by
law is duly qualified to do business and (if applicable) in good standing in the
jurisdiction of its principal place of business (if not formed therein), and the
representations and warranties in clause (a), (b) or (c), as applicable, are
true and correct with respect to each partner (other than limited partners),
trustee, or other member thereof; (d) that Member has full corporate, limited
liability company, partnership, trust, or other applicable power and authority
to execute and agree to these Regulations and to perform its obligations
hereunder and all necessary actions by the board of directors, shareholders,
managers, members, partners, trustees, beneficiaries, or other Persons necessary
for the due authorization, execution, delivery, and performance of these
Regulations by that Member have been duly taken; (e) that Member has duly
executed and delivered these Regulations; and (f) that Member's authorization,
execution, delivery, and performance of these Regulations do not conflict with
any other agreement or arrangement to which that Member is a party or which it
is bound.

     3.03 RESTRICTIONS ON THE DISPOSITION OF AN INTEREST. (a) Except as
specifically provided in this Section 3.03, a Disposition of an interest in the
Company may not be effected without the consent of (i) a majority of the
Managers who are Members (excluding any Manager who is making such Disposition),
or (ii) if there are no Managers of the type described in clause (i), a Required
Interest. Any attempted Disposition by a Person of an interest or right, or any
part thereof, in or in respect of the Company other than in accordance with this
Section 3.03 shall be, and is hereby declared, null and void ab initio.

     (b) Notwithstanding the provisions of Section 3.03 (a), the interest of any
Member in the Company may be transferred without the consent of the Managers or
any of the Members if (i) the transfer occurs by reason of or incident to the
death, dissolution, divorce, liquidation, merger or termination of the
transferor Member, and (ii) the transferee is a Permitted Transferee. A
"Permitted Transferee" is any member of such Member's immediate family, or a
trust, corporation, limited liability company, or partnership controlled by such
Member or members of such Member's immediate family, or another Person
controlling, controlled by, or under common control with such Member.

     (c) Subject to the provisions of Section 3.03(d), (e), and (f), (i) a
Person to whom an interest in the Company is transferred has the right to be
admitted to the Company as a Member with the Sharing Ratio and the Commitment so
transferred to such Person, if (A) the Member making such transfer grants the
transferee the right to be so admitted, and (B) such transfer is consented to in
accordance with Section 3.03(a); (ii) a Permitted Transferee under the
circumstances described in Section 3.03 (b) has the right to be admitted to the
Company as a Member with the Sharing Ratio and the Commitment so transferred to
the Permitted Transferee; and (iii) the Company or (with the permission of the
Company, which may be withheld in its sole discretion) a Lending Member may
grant the purchaser of a Delinquent Member's interest in the Company at a
foreclosure of the security interest therein granted pursuant to Section 4.03(b)
the right to be admitted to the Company as a Member with such Sharing Ratio and
such Commitment (no greater than the Sharing Ratio and the Commitment of the
Member effecting such Disposition prior thereto) as they may agree.

     (d) The Company may not recognize for any purpose any purported Disposition
of all or part of a Membership Interest unless and until the other applicable
provisions of this Section 3.03 have been satisfied and the Managers have
received, on behalf of the Company, a document (i)


                                       -5-

executed by both the Member effecting the Disposition (or if the transfer is on
account of the death, incapacity, or liquidation of the transferor, its
representative) and the Person to which the Membership Interest or part thereof
is Disposed, (ii) including the notice address of any Person to be admitted to
the Company as a Member and its agreement to be bound by these Regulations with
respect to the Membership Interest or part thereof being obtained, (iii) setting
forth the Sharing Ratios and the Commitments after the Disposition of the Member
effecting the Disposition and the Person to which the Membership Interest or
part thereof is Disposed (which together must total the Sharing Ratio and the
Commitment of the Member effecting the Disposition before the Disposition), and
(iv) containing a representation and warranty that the Disposition was made in
accordance with all applicable laws and regulations (including securities laws)
and, if the Person to which the Membership Interest or part thereof is Disposed
is to be admitted to the Company, its representation and warranty that the
representations and warranties in Section 3.02 are true and correct with respect
to that Person. Each Disposition and, if applicable, admission complying with
the provisions of this Section 3.03(d) is effective as of the first day of the
calendar month immediately succeeding the month in which the Managers receive
the notification of Disposition and the other requirements of this Section 3.03
have been met.

     (e) For the right of a Member to Dispose of a Membership Interest or any
part thereof or of any Person to be admitted to the Company in connection
therewith to exist or be exercised, (i) either (A) the Membership Interest or
part thereof subject to the Disposition or admission must be registered under
the Securities Act of 1933, as amended, and any applicable state securities laws
or (B) the Company must receive a favorable opinion of the Company's legal
counsel or of other legal counsel acceptable to the Managers to the effect that
the Disposition or admission is exempt from registration under those laws and
(ii) the Company must receive a favorable opinion of the Company's legal counsel
or of other legal counsel acceptable to the Managers to the effect that the
Disposition or admission, when added to the total of all other sales,
assignments, or other Dispositions within the preceding 12 months, would not
result in the Company's being considered to have terminated within the meaning
of the Code. The Managers, however, may waive the requirements of this Section
3.03(e).

     (f) The Member effecting a Disposition and any Person admitted to the
Company in connection therewith shall pay, or reimburse the Company for, all
costs incurred by the Company in connection with the Disposition or admission
(including, without limitation, the legal fees incurred in connection with the
legal opinions referred to in Section 3.03(e)) on or before the tenth day after
the receipt by that Person of the Company's invoice for the amount due. If
payment is not made by the date due, the Person owing that amount shall pay
interest on the unpaid amount from the date due until paid at a rate per annum
equal to the Default Interest Rate.

     3.04 ADDITIONAL MEMBERS. Additional Persons may be admitted to the Company
as Members and Membership Interests may be created and issued to those Persons
and to existing Members at the direction of (a) a majority of the Managers who
are Members, or (b) if there are no Managers who are Members, a Required
Interest, on such terms and conditions as the Managers may determine at the time
of admission. The terms of admission or issuance must specify the Sharing Ratios
and the Commitments applicable thereto and may provide for the creation of
different classes or groups of Members and having different rights, powers, and
duties. The Managers shall reflect the creation of any new class or group in an
amendment to these Regulations indicating the different


                                       -6-

rights, powers, and duties, and such an amendment need be executed only by the
Managers. Any such admission also must comply with the provisions of Section
3.03(d)(i) and (ii) and is effective only after the new Member has executed and
delivered to the Managers a document including the new Member's notice address,
its agreement to be bound by these Regulations, and its representation and
warranty that the representation and warranties in Section 3.02 are true and
correct with respect to the new Member. The provisions of this Section 3.04
shall not apply to Dispositions of Membership Interests.

     3.05 INTERESTS IN A MEMBER. A Member that is not a natural person may not
cause or permit an interest, direct or indirect, in itself to be Disposed of
such that, after the Disposition, (a) the Company would be considered to have
terminated within the meaning of section 708 of the Code or (b) without the
consent of the Managers and a Required Interest, that Member shall cease to be
controlled by substantially the same Persons who control it as of the date of
its admission to the Company. On any breach of the provisions of clause (b) of
the immediately preceding sentence, the Company shall have the option to buy,
and on exercise of that option the breaching Member shall sell, the breaching
Member's Membership Interest, all in accordance with Section 11.01 as if the
breaching Member were a Bankrupt Member.

     3.06 INFORMATION. (a) In addition to the other rights specifically set
forth in these Regulations, each Member is entitled to all information to which
that Member is entitled to have access pursuant to the Act under the
circumstances and subject to the conditions therein stated. The Members agree,
however, that the Managers from time to time may determine, due to contractual
obligations, business concerns, or other considerations, that certain
information regarding the business, affairs, properties, and financial condition
of the Company should be kept confidential and not provided to some or all other
Members, and that it is not just or reasonable for those Members or assignees or
representatives thereof to examine or copy that information.

     (b) The Members acknowledge that, from time to time, they may receive
information from or regarding the Company in the nature of trade secrets or that
otherwise is confidential, the release of which may be damaging to the Company
or Persons with which it does business. Each Member shall hold in strict
confidence any information it receives regarding the Company that is identified
as being confidential (and if that information is provided in writing, that is
so marked) and may not disclose it to any Person other than another Member or a
Manger, except for disclosures (i) compelled by law (but the Member must notify
the Managers promptly of any request for that information, before disclosing it
if practicable), (ii) to advisers or representatives of the Member or Persons to
which that Member's Membership Interest may be Disposed as permitted by these
Regulations, but only if the recipients have agreed to be bound by the
provisions of this Section 3.06(b) or (iii) of information that Member also has
received from a source independent of the Company that the Member reasonably
believes obtained that information without breach of any obligation of
confidentiality. The Members acknowledge that breach of the provisions of this
Section 3.06(b) may cause irreparable injury to the Company for which monetary
damages are inadequate, difficult to compute, or both. Accordingly, the Members
agree that the provisions of this Section 3.06(b) may be enforced by specific
performance.

     3.07 LIABILITY TO THIRD PARTIES. No Member or Manager shall be liable for
the debts, obligations or liabilities of the Company, including under a
judgment, decree or order of a court.


                                      -7-

     3.08 WITHDRAWAL. A Member does not have the right or power to withdraw from
the Company as a member.

     3.09 LACK OF AUTHORITY. No Member (other than a Manager or an officer) has
the authority or power to act for or on behalf of the Company, to do any act
that would be binding on the Company, or to incur any expenditures on behalf of
the Company.

                                   ARTICLE IV
                              CAPITAL CONTRIBUTIONS

     4.01 INITIAL CONTRIBUTIONS. Contemporaneously with the execution by such
Member of these Regulations, each Member shall make the Capital Contributions
described for that Member in Exhibit A.

     4.02 SUBSEQUENT CONTRIBUTIONS. Without creating any rights in favor of any
third party, each Member shall contribute to the Company, in cash, on or before
the date specified as hereinafter described, that Member's Sharing Ratio of all
monies that in the judgement of the Managers are necessary to enable the Company
to cause the assets of the Company to be properly operated and maintained and to
discharge its costs, expenses, obligations, and liabilities; provided, however,
that a Member is not obligated to contribute a total amount that, when added to
all Capital Contributions that Member previously has made pursuant to Section
4.01 or this Section 4.02, exceeds that Member's Commitment. The Managers shall
notify each Member of the need for Capital Contributions pursuant to this
Section 4.02 when appropriate, which notice must include a statement in
reasonable detail of the proposed uses of the Capital Contributions and a date
(which date may be no earlier than the fifth Business Day following each
Member's receipt of its notice) before which the Capital Contributions must be
made. Notices for Capital Contributions must be made to all Members in
accordance with their Sharing Ratios.

     4.03 FAILURE TO CONTRIBUTE. (a) If a Member does not contribute by the time
required all or any portion of a Capital Contribution that Member is required to
make as provided in these Regulations, the Company may exercise, on notice to
that Member (the "Delinquent Member"), one or more of the following remedies:

          (i) taking such action (including, without limitation, court
     proceedings) as the Managers may deem appropriate to obtain payment by the
     Delinquent Member of the portion of the Delinquent Member's Capital
     Contribution that is in default, together with interest thereon at the
     Default Interest Rate from the date that the Capital Contribution was due
     until the date that it is made, all at the cost and expense of the
     Delinquent Member;

          (ii) permitting the other Members in proportion to their Sharing
     Ratios or in such other percentages as they may agree (the "Lending Member"
     whether one or more), to advance the portion of the Delinquent Member's
     Capital Contribution that is in default, with the following results:


                                      -8-

               (A) the sum advanced constitutes a loan from the Lending Member
          to the Delinquent Member and a Capital Contribution of that sum to the
          Company by the Delinquent Member pursuant to the applicable provisions
          of these Regulations,

               (B) the principal balance of the loan and all accrued unpaid
          interest thereon is due and payable in whole on the tenth day after
          written demand therefor by the Lending Member to the Delinquent
          Member,

               (C) the amount lent bears interest at the Default Interest Rate
          from the day that the advance is deemed made until the date that the
          loan, together with all interest accrued on it, is repaid to the
          Lending Member,

               (D) all distributions from the Company that otherwise would be
          made to the Delinquent Member (whether before or after dissolution of
          the Company) instead shall be paid to the Lending Member until the
          loan and all interest accrued on it have been paid in full to the
          lending Member (with payments being applied first to accrued and
          unpaid interest and then to principal),

               (E) the payment of the loan and interest accrued on it is secured
          by a security interest in the Delinquent Member's Membership Interest,
          as more fully set forth in Section 4.03(b), and

               (F) the Lending Member has the right, in addition to the other
          rights and remedies granted to it pursuant to these Regulations or
          available to it at law or in equity, to take any action (including,
          without limitation, court proceedings) that the Lending Member may
          deem appropriate to obtain payment by the Delinquent Member of the
          loan and all accrued and unpaid interest on it, at the cost and
          expense of the Delinquent Member;

          (iii) exercising the rights of a secured party under the Uniform
     Commercial Code of the State of Nevada, as more fully set forth in Section
     4.03(b); or

          (iv) exercising any other rights and remedies available at law or in
     equity.

     (b) Each Member grants to the Company, and to each Lending Member with
respect to any loans made by the Lending Member to that Member as a Delinquent
Member pursuant to Section 4.03(a)(ii), as security, equally and ratably, for
the payment of all Capital Contributions that Member has agreed to make and the
payment of all loans and interest accrued on them made by Lending Members to
that Member as a Delinquent Member pursuant to Section 4.03(a)(ii), a security
interest in and a general lien on its Membership Interest and the proceeds
thereof, all under the Uniform Commercial Code of the State of Nevada, On any
default in the payment of a Capital Contribution or in the payment of such a
loan or interest accrued on it, the Company or the Lending Member, as


                                      -9-

applicable, is entitled to all the rights and remedies of a secured party under
the Uniform Commercial Code of the State of Nevada with respect to the security
interest granted in this Section 4.03(b). Each Member shall execute and deliver
to the Company and the other Members all financing statements and other
instruments that the Managers or the Lending Member, as applicable, may request
to effectuate and carry out the preceding provisions of this Section 4.03(b). At
the option of the Managers or a Lending Member, these Regulations or a carbon,
photographic, or other copy hereof may serve as a financing statement.

     4.04 RETURN OF CONTRIBUTIONS. Other than as expressly provided in these
Regulations, Member is not entitled to the return of any part of its Capital
Contributions or to be paid interest in respect of either its capital account or
its Capital Contributions. An unrepaid Capital Contribution is not a liability
of the Company or of any Member. A Member is not required to contribute or to
lend any cash or property to the Company to enable the Company to return any
Member's Capital Contributions.

     4.05 ADVANCES BY MEMBERS. If the Company does not have sufficient cash to
pay its obligations, any Member(s) that may agree to do so with the Managers'
consent may advance all or part of the needed funds to or on behalf of the
Company. An advance described in this Section 4.05 constitutes a loan from the
Member to the Company, bears interest at the General Interest Rate from the date
of the advance until the date of payment, and is not a Capital Contribution.

     4.06 CAPITAL ACCOUNTS. A capital account shall be established and
maintained for each Member. Each Member's capital account (a) shall be increased
by (i) the amount of money contributed by that Member to the Company, (ii) the
fair market value of property contributed by that Member to the Company (net of
liabilities secured by the contributed property that the Company is considered
to assume or take subject to under section 752 of the Code), and (iii)
allocations to that Member of Company income and gain (or items thereof),
including income and gain exempt from tax and income and gain described in
Treas. Reg. Section 1.704-1 (b)(2)(iv)(g), but excluding income and gain
described in Treas. Reg. Section 1.704-l(b)(4)(i), and (b) shall be decreased by
(i) the amount of money distributed to that Member by the Company, (ii) the fair
market value of property distributed to that Member by the Company (net of
liabilities secured by the distributed property that the Member is considered to
assume or take subject to under section 752 of the Code), (iii) allocations to
that Member of expenditures of the Company described in section 705(a)(2)(B) of
the Code, and (iv) allocations of Company loss and deduction (or items thereof),
including loss and deduction described in Treas. Reg. Section
1.704-l(b)(2)(iv)(g), but excluding items described in clause (b)(iii) above and
loss or deduction described in Treas. Reg. Section 1.704-l(b)(4)(i) or Section
1.704-l(b)(4)(iii). The Members' capital accounts also shall be maintained and
adjusted as permitted by the provisions of Treas. Reg, Section
1.704-l(b)(2)(iv)(f) and as required by the other provisions of Treas. Reg.
Sections 1.704-l(b)(2)(iv) and 1.704-l(b)(4), including adjustments to reflect
the allocations to the Members of depreciation, depletion, amortization, and
gain or loss as computed for book purposes rather than the allocation of the
corresponding items as computed for tax purposes, as required by Treas. Reg.
Section 1.704-l(b)(2)(iv)(g). A Member that has more than one Membership
Interest shall have a single capital account that reflects all its Membership
Interests, regardless of the class of Membership Interests owned by that Member
and regardless of the time or manner in which those Membership Interests were
acquired. On the transfer of all or part of a Membership Interest, the capital
account


                                      -10-

of the transferor that is attributable to the transferred Membership Interest or
part thereof shall carry over to the transferee Member in accordance with the
provisions of Treas. Reg, Section 1.704-1(b)(2)(iv)(l).

                                    ARTICLE V
                          ALLOCATIONS AND DISTRIBUTIONS

     5.01 ALLOCATIONS, (a) Except as may be required by section 701 (c) of the
Code and Treas. Reg. Section 1.701-l(b)(2)(iv)(f)(4), all items of income, gain,
loss, deduction, and credit of the Company shall be allocated among the Members
in accordance with their Sharing Ratios.

     (b) All items of income, gain, loss, deduction, and credit allocable to any
Membership Interest that may have been transferred shall be allocated between
the transferor and the transferee based on the portion of the calendar year
during which each was recognized as owning that Membership Interest, without
regard to the results of Company operations during any particular portion of
that calendar year and without regard to whether cash distributions were made to
the transferor or the transferee during that calendar year; provided, however,
that this allocation must be made in accordance with a method permissible under
section 706 of the Code and the regulations thereunder.

     5.02 DISTRIBUTIONS. All receipts and revenues of the Company from any
source shall be applied and distributed in the following order of priority with
no distribution being made in any category set forth below unless and until the
preceding category has been satisfied in full either by payment or by setting
aside of a cash reserve for payment of same.

     (a) in payment of all debts, obligations, liabilities, costs and expenses
incurred in connection with or on account of the Company;

     (b) in repayment of any loans and accrued interest thereon made by a
Lending Member pursuant to Section 4.03(a)(ii);

     (c) in repayment of Contributions by the Member in accordance with their
Sharing Ratios, subject to the provisions of Section 4.03.

     (d) after having satisfied (a), (b) and (c) above, receipts and revenues of
the Company shall represent the profits of the Company and shall be distributed
in the following order of priority:

          (i) the Contributions made by the Members to the Company pursuant to
     Sections 4.01 and 4.02 herein shall bear interest at a rate which is two
     percent (2%) per annum greater than the prime rate charged by the Bank of
     Nova Scotia to its most creditworthy customers of U.S. Dollar demand loans,
     but in no event shall the rate of interest exceed the maximum rate
     permitted by laws, from the date of such advance until repaid to such
     Member in accordance with (c) above.


                                      -11-

          (ii) after having satisfied (a), (b), (d) and (d)(i) above, the
     receipts and revenues of the Company shall be distributed to the Members
     pro rate and pari passu in accordance with their Sharing Ratios.

However, no distribution of profits shall be made until after completion of any
development and/or construction activities undertaken by the Company, without
the agreement of the Members.

                                   ARTICLE VI
                                    MANAGERS

     6.01 MANAGEMENT BY MANAGERS. (a) Except for situations in which the
approval of the Members is required by these Regulations or by nonwaivable
provisions of applicable law, and subject to the provisions of Section 6.02, (i)
the powers of the Company shall be exercised by or under the authority of, and
the business and affairs of the Company shall be managed under the direction of,
the Managers; and (ii) the Managers may make all decisions and take all actions
for the Company not otherwise provided for in these Regulations, including,
without limitation, the following:

          (i) entering into, making, and performing contracts, agreements, and
     other undertakings binding the Company that may be necessary, appropriate,
     or advisable in furtherance of the purposes of the Company and making all
     decisions and waivers thereunder;

          (ii) opening and maintaining bank and investment accounts and
     arrangements, drawing checks and other orders for the payment of money, and
     designating individuals with authority to sign or give instructions with
     respect to those accounts and arrangements;

          (iii) maintaining the assets of the Company in good order;

          (iv) collecting sums due the Company;

          (v) to the extent that funds of the Company are available therefor,
     paying debts and obligations of the Company;

          (vi) acquiring, utilizing for Company purposes, and Disposing of any
     asset of the Company;

          (vii) borrowing money or otherwise committing the credit of the
     Company for Company activities and voluntary prepayments or extensions of
     debt;

          (viii) selecting, removing, and changing the authority and
     responsibility of lawyers, accountants, and other advisers and consultants;

          (ix) obtaining insurance for the Company;


                                      -12-

          (x) determining distributions of Company cash and other property as
     provided in Section 5.02;

          (xi) establishing a seal for the Company;

          (xii) selling, leasing, exchanging or otherwise disposing of
     (including by way of a pledge, mortgage, deed of trust or trust indenture)
     all or any portion of the Company's property and assets (with or without
     good will); and

          (xiii) being a party to (i) a merger, or (ii) an exchange or
     acquisition.

     (b) Notwithstanding the provisions of Section 6.01(a), the Managers may not
cause the Company to do any of the following without complying with the
applicable requirements set forth below:

          (i) amend or restate the Articles, without complying with the
     applicable procedures set forth in the Act.

     6.02 ACTIONS BY MANAGERS; COMMITTEES; DELEGATION OF AUTHORITY AND DUTIES.
(a) In managing the business and affairs of the Company and exercising its
powers, the Managers shall act (i) collectively through meetings and written
consents pursuant to Sections 6.05 and 6.07; (ii) through committees pursuant to
Section 6.02(b); or (iii) through Managers to whom authority and duties have
been delegated pursuant to Section 6.02(c).

     (b) The Managers may, from time to time, designate one or more committees,
each of which shall be comprised of one or more Managers. Any such committee, to
the extent provided in such resolution or in the Articles or these Regulations,
shall have and may exercise all of the authority of the Managers, subject to the
limitations set forth in the Act. At every meeting of any such committee, the
presence of a majority of all the members thereof shall constitute a quorum, and
the affirmative vote of a majority of the members present shall be necessary for
the adoption of any resolution. The Managers may dissolve any committee at any
time, unless otherwise provided in the Articles or these Regulations.

     (c) The Members and the Managers hereby delegate to each of the Managers
(acting by themselves and without the necessity of any other approval or
authorization) or to an authorized representative of the Company, designated by
one or more of the Managers, the authority to take any of the actions authorized
in Section 6.01(a) hereof. In addition, the Managers may assign titles
(including, without limitation, president, vice president, secretary, assistant
secretary, treasurer and assistant treasurer) to any such Manager. Unless the
Managers decide otherwise, if the title is one commonly used for officers of a
business corporation formed under the laws of the State of Nevada, the
assignment of such title shall constitute the delegation to such Manager of the
authority and duties that are normally associated with that office, subject to
any specific delegation of authority and duties made pursuant to the first
sentence of this Section 6.02(c). Any number of titles may be held by the same
Manager. Any delegation pursuant to this Section 6.02(c) may be revoked at any
time by the Managers.


                                      -13-

     (d) Any Person dealing with the Company, other than a Member, may rely on
the authority of any Manager, authorized representative or officer in taking any
action in the name of the Company without inquiry into the provisions of these
Regulations or compliance herewith, regardless of whether that action actually
is taken in accordance with the provisions of these Regulations.

     6.03 NUMBER AND TERM OF OFFICE. The number of Managers of the Company shall
be determined from time to time by resolution of the Managers; provided,
however, that no decrease in the number of Managers that would have the effect
of shortening the term of an incumbent Manager may be made by the Managers. If
the Managers make no such determination, the number of Managers shall be the
number set forth in the Articles as the number of Managers constituting the
initial Managers. Each Manager shall hold office for the term for which he is
elected and thereafter until his successor shall have been elected and
qualified, or until his earlier death, resignation or removal. Unless otherwise
provided in the Articles, Managers need not be Members or residents of the State
of Nevada.

     6.04 VACANCIES; REMOVAL; RESIGNATION. Any Manager position to be filled by
reason of an increase in the number of Managers may be filled by election at an
annual or special meeting of Members called for that purpose. Any vacancy
occurring in the Managers other than by reason of an increase in the number of
Managers may be filled (a) by election at an annual or special meeting of the
Members called for that purpose or (b) by the affirmative vote of a majority of
the remaining Managers though less than a quorum of the Managers. A Manager
elected to fill a vacancy occurring other than by reason of an increase in the
number of Managers shall be elected for the unexpired term of his predecessor in
office. At any meeting of Members at which a quorum of Members is present called
expressly for that purpose, or pursuant to a written consent adopted pursuant to
these Regulations, any Manager may be removed, with or without cause, by a
Required Interest. Any Manager may resign at any time. Such resignation shall be
made in writing and shall take effect at the time specified therein, or if no
time be specified, at the time of its receipt by the remaining Managers. The
acceptance of a resignation shall not be necessary to make it effective, unless
expressly so provided in the resignation.

     6.05 MEETINGS. (a) Unless otherwise required by law or provided in the
Articles or these Regulations, a majority of the total number of Managers fixed
by, or in the manner provided in, the Articles or these Regulations shall
constitute a quorum for the transaction of business of the Managers, and the act
of a majority of the Managers present at a meeting at which a quorum is present
shall he the act of the Managers. A Manager who is present at a meeting of the
Managers at which action on any Company matter is taken shall be presumed to
have assented to the action unless his dissent shall be entered in the minutes
of the meeting or unless he shall file his written dissent to such action with
the Person acting as secretary of the meeting before the adjournment thereof or
shall deliver such dissent to the Company immediately after the adjournment of
the meeting. Such right to dissent shall not apply to a Manager who voted in
favor of such action.

     (b) Meetings of the Managers may be held at such place or places as shall
be determined from time to time by resolution of the Managers. At all meetings
of the Managers, business shall be transacted in such order as shall from time
to time be determined by resolution of the Managers.


                                      -14-

Attendance of a Manager at a meeting shall constitute a waiver of notice of such
meeting, except where a Manager attends a meeting for the express purpose of
objecting to the transaction of any business on the ground that the meeting is
not lawfully called or convened.

     (c) In connection with any annual meeting of Members at which Managers were
elected, the Managers may, if a quorum is present, hold its first meeting for
the transaction of business immediately after and at the same place as such
annual meeting of the Members. Notice of such meeting at such time and place
shall not be required.

     (d) Regular meetings of the Managers shall be held at such times and places
as shall be designated from time to time by resolution of the Managers. Notice
of such regular meetings shall not be required.

     (e) Special meetings of the Managers may be called by any Manager on at
least 24 hours notice to each other Manager. Such notice need not state the
purpose or purposes of, nor the business to be transacted at, such meeting,
except as may otherwise be required by law or provided for by the Articles or
these Regulations.

     6.06 APPROVAL OR RATIFICATION OF ACTS OR CONTRACTS BY MEMBERS. The Managers
in their discretion may submit any act or contract for approval or ratification
at any annual meeting of the Members, or at any special meeting of the Members
called for the purpose of considering any such act or contract, and any act or
contract that shall be approved or be ratified by a Required Interest shall be
as valid and as binding upon the Company and upon all the Members as if it shall
have been approved or ratified by every Member of the Company.

     6.07 ACTION BY WRITTEN CONSENT OR TELEPHONE CONFERENCE. Any action
permitted or required by the Act, the Articles or these Regulations to be taken
at a meeting of the Managers or any committee designated by the Managers may be
taken without a meeting if a consent in writing, setting forth the action to be
taken, is signed by all the Managers or members of such committee, as the case
may be. Such consent shall have the same force and effect as a unanimous vote at
a meeting and may be stated as such in any document or instrument filed with the
Secretary of State of Nevada, and the execution of such consent shall constitute
attendance or presence in person at a meeting of the Managers or any such
committee, as the case may be. Subject to the requirements of the Act, the
Articles or these Regulations for notice of meetings, unless otherwise
restricted by the Articles, Managers, or members of any committee designated by
the Managers, may participate in and hold a meeting of the Managers or any
committee of Managers, as the case may be, by means of a conference telephone or
similar communications equipment by means of which all Persons participating in
the meeting can hear each other, and participation in such meeting shall
constitute attendance and presence in person at such meeting, except where a
Person participates in the meeting for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully
called or convened.

     6.08 COMPENSATION. The Managers shall reserve such compensation, if any,
for their services as may be designated from time to time by all of the
Managers. In addition, the Managers shall be entitled to be reimbursed for
out-of-pocket costs and expenses incurred in the course of their service
hereunder, including the portion of their overhead reasonably allocable to
Company activities.


                                      -15-

     6.09 CONFLICTS OF INTEREST. Subject to the other express provisions of
these Regulations, each Manager, Member and officer of the Company at any time
and from time to time may engage in and possess interests in other business
ventures of any and every type and description, independently or with others,
including ones in competition with the Company, with no obligation to offer to
the Company or any other Member, Manager or officer the right to participate
therein. The Company may transact business with any Manager, Member, officer or
Affiliate thereof, provided the terms of those transactions are no less
favorable than those the Company could obtain from unrelated third parties.

     6.10 OFFICERS. (a) The Managers may, from time to time, designate one or
more Persons to be officers of the Company. No officer need be a resident of the
State of Nevada, a Member or a Manager. Any officers so designated shall have
such authority and perform such duties as the Managers may, from time to time,
delegate to them. The Managers may assign titles to particular officers. Unless
the Managers decide otherwise, if the title is one commonly used for officers of
a business corporation formed under the laws of the State of Nevada, the
assignment of such title shall constitute the delegation to such officer of the
authority and duties that are normally associated with that office, subject to
(i) any specific delegation of authority and duties made to such officer by the
Managers pursuant to the third sentence of this Section 6.10(b), or (ii) any
delegation of authority and duties made to one or more Mangers pursuant to
Section 6.02(a). Each officer shall hold office until his successor shall be
duly designated and shall quality or until his death or until he shall resign or
shall have been removed in the manner hereinafter provided. Any number of
offices may be held by the same Person. The salaries or other compensation, if
any, of the officers and agents of the Company shall be fixed from time to time
by the Managers.

     (b) Any officer may resign as such at any time. Such resignation shall be
made in writing and shall take effect at the time specified therein, or if no
time be specified, at the time of its receipt by the Managers. The acceptance of
a resignation shall not be necessary to make it effective, unless expressly so
provided in the resignation. Any officer may be removed as such, either with or
without cause, by the Managers whenever in their judgment the best interests of
the Company will be served thereby; provided, however, that such removal shall
be without prejudice to the contract rights, if any, of the Person so removed.
Designation of an officer shall not of itself create contract rights. Any
vacancy occurring in any office of the Company (other than Manager) may be
filled by the Managers.

                                   ARTICLE VII
                               MEETINGS OF MEMBERS

     7.01 MEETINGS. (a) A quorum shall be present at a meeting of Members if the
holders of a Required Interest are represented at the meeting in person or by
proxy. With respect to any matter, other than a matter for which the affirmative
vote of the holders of a specified portion of the Sharing Ratios of all Members
entitled to vote is required by the Act, the affirmative vote of a Required
Interest at a meeting of Members at which a quorum is present shall be the act
of the Members.

     (b) All meetings of the Members shall be held at the principal place of
business of the Company or at such other place within or without the State of
Nevada as shall be specified or fixed


                                      -16-

in the notices or waivers of notice thereof; provided that any or all Members
may participate in any such meeting by means of conference telephone or similar
communications equipment pursuant to Section 7.05.

     (c) Notwithstanding the other provisions of the Articles or these
Regulations, the chairman of the meeting or the holders of a Required Interest
shall have the power to adjourn such meeting from time to time, without any
notice other than announcement at the meeting of the time and place of the
holding of the adjourned meeting. If such meeting is adjourned by the Members,
such time and place shall be determined by a vote of the holders of a Required
Interest. Upon the resumption of such adjourned meeting, any business may be
transacted that might have been transacted at the meeting as originally called.

     (d) An annual meeting of the Members, for the election of the Managers and
for the transaction of such other business as may properly come before the
meeting, shall be held at such place, within or without the State of Nevada, on
such date and at such time as the Managers shall fix and set forth in the notice
of the meeting, which date shall be within 13 months subsequent to the date of
organization of the Company or the last annual meeting of Members, whichever
most recently occurred.

     (e) Special meetings of the Members for any proper purpose or purposes may
be called at any time by the Managers or the holders of at least ten percent of
the Sharing Ratios of all Members. If not otherwise stated in or fixed in
accordance with the remaining provisions hereof, the record date for determining
Members entitled to call a special meeting is the date any Member first signs
the notice of that meeting. Only business within the purpose or purposes
described in the notice (or waiver thereof) required by these Regulations may be
conducted at a special meeting of the Members.

     (f) Written or printed notice stating the place, day and hour of the
meeting and, in the case of a special meeting, the purpose or purposes for which
the meeting is called, shall be delivered not less than ten nor more than 60
days before the date of the meeting, either personally or by mail, by or at the
direction of the Managers or Person calling the meeting, to each Member entitled
to vote at such meeting. If mailed, any such notice shall be deemed to be
delivered when deposited in the United States mail, addressed to the Member at
his address provided for on Exhibit A, with postage thereon prepaid.

     (g) The date on which notice of a meeting of Members is mailed or the date
on which the resolution of the Managers declaring a distribution is adopted, as
the case may be, shall be the record date for the determination of the Members
entitled to notice of or to vote at such meeting, including any adjournment
thereof, or the Members entitled to receive such distribution.

     (h) The right of Members to cumulative voting in the election of Managers
is expressly prohibited.

     7.02 VOTING LIST. The Managers shall make, at least ten days before each
meeting of Members, a complete list of the Members entitled to vote at such
meeting or any adjournment thereof, arranged in alphabetical order, with the
address of and the Sharing Ratios held by each,


                                      -17-

which list, for a period of ten days prior to such meeting, shall be kept on
file at the resident office or principal place of business of the Company and
shall be subject to inspection by any Member at any time during usual business
hours. Such list shall also be produced and kept open at the time and place of
the meeting and shall be subject to the inspection of any Member during the
whole time of the meeting. The original membership records shall be prima-facie
evidence as to who are the Members entitled to examine such list or transfer
records or to vote at any meeting of Members. Failure to comply with the
requirements of this Section shall not affect the validity of any action taken
at the meeting.

     7.03 PROXIES. A Member may vote either in person or by proxy executed in
writing by the Member. A telegram, telex, cablegram or similar transmission by
the Member, or a photographic, photostatic, facsimile or similar reproduction of
a writing executed by the Member shall be treated as an execution in writing for
purposes of this Section. Proxies for use at any meeting of Members or in
connection with the taking of any action by written consent shall be filed with
the Managers, before or at the time of the meeting or execution of the written
consent, as the case may be. All proxies shall be received and taken charge of
and all ballots shall be received and canvassed by the Managers, who shall
decide all questions touching upon the qualification of voters, the validity of
the proxies, and the acceptance or rejection of votes, unless an inspector or
inspectors shall have been appointed by the chairman of the meeting, in which
event such inspector or inspectors shall decide all such questions. No proxy
shall be valid after 11 months from the date of its execution unless otherwise
provided in the proxy. A proxy shall be revocable unless the proxy form
conspicuously states that the proxy is irrevocable and the proxy is coupled with
an interest. Should a proxy designate two or more Persons to act as proxies,
unless that instrument shall provide to the contrary, a majority of such Persons
present at any meeting at which their powers thereunder are to be exercised
shall have and may exercise all the powers of voting or giving consents thereby
conferred, or if only one be present, then such powers may be exercised by that
one; or, if an even number attend and a majority do not agree on any particular
issue, the Company shall not be required to recognize such proxy with respect to
such issue if such proxy does not specify how the Sharing Ratios that are the
subject of such proxy are to be voted with respect to such issue.

     7.04 CONDUCT OF MEETINGS. All meetings of the Members shall be presided
over by the chairman of the meeting, who shall be a Manager (or representative
thereof) designated by a majority of the Managers. The chairman of any meeting
of Members shall determine the order of business and the procedure at the
meeting, including such regulation of the manner of voting and the conduct of
discussion as seem to him in order.

     7.05 ACTION BY WRITTEN CONSENT OR TELEPHONE CONFERENCE. (a) Any action
required or permitted to be taken at any annual or special meeting of Members
may be taken without a meeting, without prior notice, and without a vote, if a
consent or consents in writing, setting forth the action so taken, shall be
signed by the holder or holders of not less than the minimum Sharing Ratios that
would be necessary to take such action at a meeting at which the holders of all
Sharing Ratios entitled to vote on the action were present and voted. Every
written consent shall bear the date of signature of each Member who signs the
consent. No written consent shall be effective to take the action that is the
subject to the consent unless, within 60 days after the date of the earliest
dated consent delivered to the Company in the manner required by this Section, a
consent or consents signed by the holder or holders of not less than the minimum
Sharing Ratios that would be necessary


                                      -18-

to take the action that is the subject of the consent are delivered to the
Company by delivery to its resident office, its principal place of business, or
the Managers. Delivery shall be by hand or certified or registered mail, return
receipt requested. Delivery to the Company's principal place of business shall
be addressed to the Managers. A telegram, telex, cablegram or similar
transmission by a Member, or a photographic, photostatic, facsimile or similar
reproduction of a writing signed by a Member, shall be regarded as signed by the
Member for purposes of this Section. Prompt notice of the taking of any action
by Members without a meeting by less than unanimous written consent shall be
given to those Members who did not consent in writing to the action.

     (b) The record date for determining Members entitled to consent to action
in writing without a meeting shall be the first date on which a signed written
consent setting forth the action taken or proposed to be taken is delivered to
the Company by delivery to its resident office, its principal place of business,
or the Managers. Delivery shall be by hand or by certified or registered mail,
return receipt requested. Delivery to the Company's principal place of business
shall be addressed to the Managers.

     (c) If any action by Members is taken by written consent, any articles or
documents filed with the Secretary of State of Nevada as a result of the taking
of the action shall state, in lieu of any statement required by the Act
concerning any vote of Members, that written consent has been given in
accordance with the provisions of the Act and that any written notice required
by the Act has been given.

     (d) Members may participate in and hold a meeting by means of conference
telephone or similar communications equipment by means of which all Persons
participating in the meeting can hear each other, and participation in such
meeting shall constitute attendance and presence in person at such meeting,
except where a Person participates in the meeting for the express purpose of
objecting to the transaction of any business on the ground that the meeting is
not lawfully called or convened.

                                  ARTICLE VIII
                                 INDEMNIFICATION

     8.01 RIGHT TO INDEMNIFICATION. Subject to the limitations and conditions as
provided in this Article VIII, each Person who was or is made a party or is
threatened to be made a party to or is involved in any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative,
arbitrative or investigative (hereinafter a "Proceeding"), or any appeal in such
a Proceeding or any inquiry or investigation that could lead to such a
Proceeding, by reason of the fact that he or she, or a Person of whom he or she
is the legal representative, is or was a Manager of the Company or while a
Manager of the Company is or was serving at the request of the Company as a
Manager, director, officer, partner, venturer, proprietor, trustee, employee,
agent, or similar functionary of another foreign or domestic limited liability
company, corporation, partnership, joint venture, sole proprietorship, trust,
employee benefit plan or other enterprise shall be indemnified by the Company to
the fullest extent permitted by the Act and the laws of the State of Nevada, as
the same exist or may hereafter be amended (but, in the case of any such
amendment, only to the extent that such amendment permits the Company to provide
broader indemnification rights than said law permitted the Company to provide
prior to such amendment) against judgments, penalties (including


                                      -19-

excise and similar taxes and punitive damages), fines, settlements and
reasonable expenses (including, without limitation, attorneys' fees) actually
incurred by such Person in connection with such Proceeding, and indemnification
under this Article VIII shall continue as to a Person who has ceased to serve in
the capacity which initially entitled such Person to indemnify hereunder. The
rights granted pursuant to this Article VIII shall be deemed contract rights,
and no amendment, modification or repeal of this Article VIII shall have the
effect of limiting or denying any such rights with respect to actions taken or
Proceedings arising prior to any such amendment, modification or repeal. It is
expressly acknowledged that the indemnification provided in this Article VIII
could involve indemnification for negligence or under theories of strict
liability.

     8.02 ADVANCE PAYMENT. The right to indemnification conferred in this
Article VIII shall include the right to be paid or reimbursed by the Company the
reasonable expenses incurred by a Person of the type entitled to be indemnified
under Section 8.01 who was, is or is threatened to be made a named defendant or
respondent in a Proceeding in advance of the final disposition of the Proceeding
and without any determination as to the Person's ultimate entitlement to
indemnification; provided, however, that the payment of such expenses incurred
by any such Person in advance of the final disposition of a Proceeding, shall be
made only upon delivery to the Company of a written affirmation by such Manager
of his or her good faith belief that he has met the standard of conduct for
indemnification under this Article VIII and a written undertaking, by or on
behalf of such Person, to repay all amounts so advanced if it shall ultimately
be determined that such indemnified Person is not entitled to be indemnified
under this Article VIII or otherwise.

     8.03 INDEMNIFICATION OF OFFICERS, EMPLOYEES, AND AGENTS. The Company, by
adoption of a resolution of the Managers, may indemnity and advance expenses to
an officer, employee or agent of the Company to the same extent and subject to
the same conditions under which it may indemnify and advance expenses to
Managers under this Article VIII; and, the Company may indemnify and advance
expenses to Persons who are not or were not Managers, officers, employees or
agents of the Company but who are or were serving at the request of the Company
as a Manager, director, officer, partner, venturer, proprietor, trustee,
employee, agent or similar functionary of another foreign or domestic limited
liability company, corporation, partnership, joint venture, sole proprietorship,
trust, employee benefit plan or other enterprise against any liability asserted
against him and incurred by him in such a capacity or arising out of his status
as such a Person to the same extent that it may indemnity and advance expenses
to Managers under this Article VIII.

     8.04 APPEARANCE AS A WITNESS. Notwithstanding any other provision of this
Article VIII, the Company may pay or reimburse expenses incurred by a Manager in
connection with his appearance as a witness or other participation in a
Proceeding at a time when he is not a named defendant or respondent in the
Proceeding.

     8.05 NONEXCLUSIVITY OF RIGHTS. The right to indemnification and the
advancement and payment of expenses conferred in this Article VIII shall not be
exclusive of any other right which a Manager or other Person indemnified
pursuant to Section 8.03 may have or hereafter acquire under any law (common or
statutory), provision of the Articles or these Regulations, agreement, vote of
Members or disinterested Managers or otherwise.


                                      -20-

     8.06 INSURANCE. The Company may purchase and maintain insurance, at its
expense, to protect itself and any Person who is or was serving as a Manager,
officer, employee or agent of the Company or is or was serving at the request of
the Company as a Manager, director, officer, partner, venturer, proprietor,
trustee, employee, agent or similar functionary of another foreign or domestic
limited liability company, corporation, partnership, joint venture, sole
proprietorship, trust, employee benefit plan or other enterprise against any
expense, liability or loss, whether or not the Company would have the power to
indemnify such Person against such expense, liability or loss under this Article
VIII.

     8.07 MEMBER NOTIFICATION. To the extent required by law, any
indemnification of or advance of expenses to a Manager in accordance with this
Article VIII shall be reported in writing to the Members with or before the
notice or waiver of notice of the next Members' meeting or with or before the
next submission to Members of a consent to action without a meeting and, in any
case, within the 12-month period immediately following the date of the
indemnification or advance.

     8.08 SAVINGS CLAUSE. If this Article VIII or any portion hereof shall be
invalidated on any ground by any court of competent jurisdiction, then the
Company shall nevertheless indemnify and hold harmless each Manager or any other
Person indemnified pursuant to this Article VIII as to costs, charges and
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement with respect to any action, suit or proceeding, whether civil,
criminal, administrative or investigative to the full extent permitted by any
applicable portion of this Article VIII that shall not have been invalidated and
to the fullest extent permitted by applicable law.

                                   ARTICLE IX
                                      TAXES

     9.01 TAX RETURNS. The Managers shall cause to be prepared and filed all
necessary federal and state income tax returns for the Company, including making
the elections described in Section 9.02. Each Member shall furnish to the
Managers all pertinent information in its possession relating to Company
operations that is necessary to enable the Company's income tax returns to be
prepared and filed.

     9.02 TAX ELECTIONS. The Company shall make the following elections on the
appropriate tax returns:

          (a) to adopt the year ending on May 31 as the Company's fiscal year;


          (b) to adopt a method of accounting as the Managers may determine from
     time to time;

          (c) if a distribution of Company property as described in section 734
     of the Code occurs or if a transfer of a Membership Interest as described
     in section 743 of the Code occurs, on written request of any Member, to
     elect, pursuant to section 754 of the Code, to adjust the basis of Company
     properties;


                                      -21-

          (d) to elect to amortize the organizational expenses of the Company
     and the startup expenditures of the Company under Section 195 of the Code
     ratably over a period of 60 months as permitted by section 709(b) of the
     Code; and

          (e) any other election the Managers may deem appropriate and in the
     best interests of the Members.

Neither the Company nor any Manager or Member may make an election for the
Company to be excluded from the application of the provisions of subchapter K of
chapter 1 of subtitle A of the Code or any similar provisions of applicable
state law, and no provision of these Regulations (including, without limitation,
Section 2.06) shall be construed to sanction or approve such an election.

     9.03 "TAX MATTERS PARTNER." A majority of the Managers who are Members
shall designate one Manager that is a Member to be the "tax matters partner" of
the Company pursuant to section 6231(a)(7) of the Code; or, if there is no
Manager that is a Member, the "tax matters partner" shall be a Member that is
designated as such by a Required Interest. Any Member who is designated "tax
matters partner" shall take such action as may be necessary to cause each other
Member to become a "notice partner" within the meaning of section 6223 of the
Code. Any Member who is designated "tax matters partner" shall inform each other
Member of all significant matters that may come to its attention in its capacity
as "tax matters partner" by giving notice thereof on or before the fifth
Business Day after becoming aware thereof and, within that time, shall forward
to each other Member copies of all significant written communications it may
receive in that capacity. Any Member who is designated "tax matters partner" may
not take any action contemplated by sections 6222 through 6232 of the Code
without the consent of a Required Interest, but this sentence does not authorize
such Manager (or any other Manager) to take any action left to the determination
of an individual Member under sections 6222 through 6232 of the Code.

                                    ARTICLE X
                   BOOKS, RECORDS, REPORTS, AND BANK ACCOUNTS

     10.01 MAINTENANCE OF BOOKS. The Company shall keep books and records of
accounts and shall keep minutes of the proceedings of its Members, its Managers
and each committee of the Managers. The books of account for the Company shall
be maintained on a cash basis in accordance with the terms of these Regulations,
except that the capital accounts of the Members shall be maintained in
accordance with Section 4.06. The calendar year shall be the accounting year of
the Company.

     10.02 REPORTS. On or before the 120th day following the end of each fiscal
year during the term of the Company, the Managers shall cause each Member to be
furnished with a balance sheet, an income statement, and a statement of changes
in Members' capital of the Company for, or as of the end of, that year certified
by a recognized firm of certified public accountants. These financial statements
must be prepared in accordance with accounting principles generally employed for
cash basis records consistently applied (except as therein noted) and must be
accompanied by a report of the certified public accountants certifying the
statements and stating that (a) their examination was made in accordance with
generally accepted auditing standards and, in their opinion, the financial


                                      -22-

statements fairly present the financial position, financial results of
operations, and changes in Members' capital in accordance with accounting
principles generally employed for cash-basis records consistently applied
(except as therein noted) and (b) in making the examination and reporting on the
financial statements described above, nothing came to their attention that
caused them to believe that (i) the income and revenues were not paid or
credited in accordance with the financial and accounting provisions of these
Regulations, (ii) the costs and expenses were not charged in accordance with the
financial and accounting provisions of these Regulations, or (iii) the Managers
or any Member failed to comply in any material respect with the financial and
accounting provisions of these Regulations, or if they do conclude that the
Managers or a Member so failed, specifying the nature and period of existence of
the failure. The Managers also may cause to be prepared or delivered such other
reports as they may deem appropriate. The Company shall bear the costs of all
these reports.

     10.03 ACCOUNTS. The Managers shall establish and maintain one or more
separate bank and investment accounts and arrangements for Company funds in the
Company name with financial institutions and firms that the Managers determine.
The Managers may not commingle the Company's funds with the funds of any Member;
however, Company funds may be invested in a manner the same as or similar to the
Managers' investment of their own funds or investments by their Affiliates.

                                   ARTICLE XI
                             BANKRUPTCY OF A MEMBER

     11.01 BANKRUPT MEMBERS. Subject to Section 12.01(c). if any Member becomes
a Bankrupt Member, the Company shall have the option, exercisable by notice from
the Managers to the Bankrupt Member (or its representative) at any time prior to
the 180th day after receipt of notice of the occurrence of the event causing it
to become a Bankrupt Member, to buy, and on the exercise of this option the
Bankrupt Member or its representative shall sell, its Membership Interest. The
purchase price shall be an amount equal to the fair market value thereof
determined by agreement of the Bankrupt Member (or its representative) and the
Managers; however, if those Persons do not agree on the fair market value on or
before the 30th day following the exercise of the option, either such Person, by
notice to the other, may require the determination of fair market value to be
made by an independent appraiser specified in that notice. If the Person
receiving that notice objects on or before the tenth day following receipt to
the independent appraiser designated in that notice, and those Persons otherwise
fail to agree on an independent appraiser, either such Person may petition the
United States District Judge for the State of Nevada then senior in service to
designate an independent appraiser. The determination of the independent
appraiser, however designated, is final and binding on all parties. The Bankrupt
Member and the Company each shall pay one-half of the costs of the appraisal.
The purchaser shall pay the fair market value as so determined in four equal
cash installments, the first due on closing and the remainder (together with
accumulated interest on the amount unpaid at the General Interest Rate) due on
each of the first three anniversaries thereof. The payment to be made to the
Bankrupt Member or its representative pursuant to this Section 11.01 is in
complete liquidation and satisfaction of all the rights and interest of the
Bankrupt Member and its representative (and of all Persons claiming by, through,
or under the Bankrupt Member and its representative) in and in respect of the
Company, including, without limitation, any Membership Interest, any rights in
specific Company property, and any rights against the Company and (insofar as
the affairs of the Company are concerned) against the Members, and constitutes a
compromise to which all Members have agreed pursuant to the Act.


                                      -23-

                                   ARTICLE XII
                    DISSOLUTION, LIQUIDATION, AND TERMINATION

     12.01 DISSOLUTION. The Company shall dissolve and its affairs shall be
wound up on the first to occur of the following:

          (a) the written consent of a Required Interest;

          (b) the expiration of the period fixed for the duration of the Company
     set forth in the Articles;

          (c) any Manager who is a Member (or, if there is no Manager who is a
     Member, any Member) shall become a Bankrupt Member (with or without the
     consent of a Required Interest); provided, however, that if the event
     described in this Section 12.01(c) shall occur and there shall be at least
     one other Member remaining, the Company shall not be dissolved, and the
     business of the Company shall be continued, if all Members so agree; and

          (d) entry of a decree of judicial dissolution of the Company under
     article 6.02 of the Act.

Except as provided in Section 12.01(c), the death, retirement, resignation,
expulsion, bankruptcy or dissolution of a Member, or the occurrence of any other
event that terminates the continued membership of a Member in the Company, shall
not cause a dissolution of the Company.

     12.02 LIQUIDATION AND TERMINATION. On dissolution of the Company, the
Managers shall act as liquidator or may appoint one or more Members as
liquidator. The liquidator shall proceed diligently to wind up the affairs of
the Company and make final distributions as provided herein and in the Act. The
costs of liquidation shall be borne as a Company expense. Until final
distribution, the liquidator shall continue to operate the Company properties
with all of the power and authority of the Managers. The steps to be
accomplished by the liquidator are as follows:

          (a) as promptly as possible after dissolution and again after final
     liquidation, the liquidator shall cause a proper accounting to be made by a
     recognized firm of certified public accountants of the Company's assets,
     liabilities, and operations through the last day of the calendar month in
     which the dissolution occurs or the final liquidation is completed, as
     applicable;

          (b) the liquidator shall cause the notice described in article
     6.05(A)(2) of the Act to be mailed to each known creditor of and claimant
     against the Company in the manner described in such article 6.05(A)(2) of
     the Act;

          (c) the liquidator shall pay, satisfy or discharge from Company funds
     all of the debts, liabilities and obligations of the Company (including,
     without limitation, all expenses incurred in liquidation and any advances
     described in Section 4.05) or otherwise make adequate provision for payment
     and discharge thereof (including,


                                      -24-

     without limitation, the establishment of a cash escrow fund for contingent
     liabilities in such amount and for such term as the liquidator may
     reasonably determine); and

          (d) all remaining assets of the Company shall be distributed to the
     Members as follows:

               (i) the liquidator may sell any or all Company property,
          including to Members, and any resulting gain or loss from each sale
          shall be computed and allocated to the capital accounts of the
          Members;

               (ii) with respect to all Company property that has not been sold,
          the fair market value of that property shall be determined and the
          capital accounts of the Members shall be adjusted to reflect the
          manner in which the unrealized income, gain, loss, and deduction
          inherent in property that has not been reflected in the capital
          accounts previously would be allocated among the Members if there were
          a taxable disposition of that property for the fair market value of
          that property on the date of distribution; and

               (iii) Company property shall be distributed among the Members in
          accordance with the positive capital account balances of the Members,
          as determined after taking into account all capital account
          adjustments for the taxable year of the Company during which the
          liquidation of the partnership occurs (other than those made by reason
          of this clause (iii)); and those distributions shall be made by the
          end of the taxable year of the Company during which the liquidation of
          the Company Occurs (or, if later, 90 days after the date of the
          liquidation).

All distributions in kind to the Members shall be made subject to the liability
of each distributee for costs, expenses, and liabilities theretofore incurred or
for which the Company has committed prior to the date of termination and those
costs, expenses, and liabilities shall be allocated to the distributee pursuant
to this Section 12.02. The distribution of cash and/or property to a Member in
accordance with the provisions of this Section 12.02 constitutes a complete
return to the Member of its Capital Contributions and a complete distribution to
the Member of its Membership Interest and all the Company's property and
constitutes a compromise to which all Members have consented within the meaning
of the Act. To the extent that a Member returns funds to the Company, it has no
claim against any other Member for those funds.

     12.03 DEFICIT CAPITAL ACCOUNTS. Notwithstanding anything to the contrary
contained in these Regulations, and notwithstanding any custom or rule of law to
the contrary, to the extent that the deficit, if any, in the capital account of
any Member results from or is attributable to deductions and losses of the
Company (including non-cash items such as depreciation), or distributions of
money pursuant to these Regulations to all Members in proportion to their
respective Sharing Ratios,


                                      -25-

upon dissolution of the Company such deficit shall not be an asset of the
Company and such Members shall not be obligated to contribute such amount to the
Company to bring the balance of such Member's capital account to zero.

     12.04 ARTICLES OF DISSOLUTION. On completion of the distribution of Company
assets as provided herein, the Company is terminated, and the Managers (or such
other Person or Persons as the Act may require or permit) shall file Articles of
Dissolution with the Secretary of State of Nevada, cancel any other filings made
pursuant to Section 2.05, and take such other actions as may be necessary to
terminate the Company.

                                  ARTICLE XIII
                               GENERAL PROVISIONS

     13.01 OFFSET. Whenever the Company is to pay any sum to any Member, any
amounts that Member owes the Company may be deducted from that sum before
payment.

     13.02 NOTICES. Except as expressly set forth to the contrary in these
Regulations, all notices, requests, or consents provided for or permitted to be
given under these Regulations must be in writing and must be given either by
depositing that writing in the United States mail, addressed to the recipient,
postage paid, and registered or certified with return receipt requested or by
delivering that writing to the recipient in person, by courier, or by facsimile
transmission; and a notice, request, or consent given under these Regulations is
effective on receipt by the Person to receive it. All notices, requests, and
consents to be sent to a Member must be sent to or made at the addresses given
for that Member on Exhibit A or in the instrument described in Section 3.03(d)
or 3.04, or such other address as that Member may specify by notice to the other
Members. Any notice, request, or consent to the Company or the Managers must be
given to the Managers at the following address: 3751 Victoria Park Avenue,
Toronto, Ontario M1W 3Z4 Canada. Whenever any notice is required to be given by
law, the Articles or these Regulations, a written waiver thereof, signed by the
Person entitled to notice, whether before or after the time stated therein,
shall be deemed equivalent to the giving of such notice.

     13.03 ENTIRE AGREEMENT; SUPERSEDURE. These Regulations constitute the
entire agreement of the Members and their Affiliates relating to the Company and
supersedes all prior contracts or agreements with respect to the Company,
whether oral or written.

     13.04 EFFECT OF WAIVER OR CONSENT. A waiver or consent, express or implied,
to or of any breach or default by any Person in the performance by that Person
of its obligations with respect to the Company is not a consent or waiver to or
of any other breach or default in the performance by that Person of the same or
any other obligations of that Person with respect to the Company. Failure on the
part of a Person to complain of any act of any Person or to declare any Person
in default with respect to the Company, irrespective of how long that failure
continues, does not constitute a waiver by that Person of its rights with
respect to that default until the applicable statute-of-limitations period has
run.


                                      -26-

     13.05 AMENDMENT OR MODIFICATION. These Regulations may be amended or
modified from time to time only by a written instrument adopted by the Managers
and executed and agreed to by a Required Interest; provided, however, that (a)
an amendment or modification reducing a Member's Sharing Ratio or increasing its
Commitment (other than to reflect changes otherwise provided by these
Regulations) is effective only with that Member's consent, (b) an amendment or
modification reducing the required Sharing Ratio or other measure for any
consent or vote in these Regulations is effective only with the consent or vote
of Members having the Sharing Ratio or other measure theretofore required, and
(c) amendments of the type described in Section 3.04 may be adopted as therein
provided.

     13.06 BINDING EFFECT. Subject to the restrictions on Dispositions set forth
in these Regulations, these Regulations are binding on and inure to the benefit
of the Members and their respective heirs, legal representatives, successors,
and assigns.

     13.07 GOVERNING LAW; SEVERABILITY. THESE REGULATIONS ARE GOVERNED BY AND
SHALL BE CONSTRUED IN ACCORDANCE WITH LAW OF THE STATE OF NEVADA, EXCLUDING ANY
CONFLICT-OF-LAWS RULE OR PRINCIPLE THAT MIGHT REFER THE GOVERNANCE OR THE
CONSTRUCTION OF THESE REGULATIONS TO THE LAW OF ANOTHER JURISDICTION. In the
event of a direct conflict between the provisions of these Regulations and (a)
any provision of the Articles, or (b) any mandatory provision of the Act, the
application provision of the Articles or the Act shall control. If any provision
of these Regulations or the application thereof to any Person or circumstance is
held invalid or unenforceable to any extent, the remainder of these Regulations
and the application of that provision to other Persons or circumstances is not
affected thereby and that provision shall be enforced to the greatest extent
permitted by law.

     13.08 FURTHER ASSURANCES. In connection with these Regulations and the
transactions contemplated hereby, each Member shall execute and deliver any
additional documents and instruments and perform any additional acts that may be
necessary or appropriate to effectuate and perform the provisions of these
Regulations and those transactions.

     13.09 WAIVER OF CERTAIN RIGHTS. Each Member irrevocably waives any right it
may have to maintain any action for dissolution of the Company or for partition
of the property of the Company.

     13.10 INDEMNIFICATION. To the fullest extent permitted by law, each Member
shall indemnify the Company, each Manager and each other Member and hold them
harmless from and against all losses, costs, liabilities, damages, and expenses
(including, without limitation, costs of suit and attorney's fees) they may
incur on account of any breach by that Member of these Regulations.

     13.11 NOTICE TO MEMBERS OF PROVISIONS OF THIS AGREEMENT. By executing these
Regulations, each Member acknowledges that it has actual notice of (a) all of
the provisions of this Agreement, including, without limitation, the
restrictions on the transfer of Membership Interests set forth in Article III,
and (b) all of the provisions of the Articles, including, without limitation,
the


                                      -27-

fact that the Articles provide that no Member shall have the preemptive right to
acquire any Membership Interests or securities of any class that may at any time
be issued, sold or offered for sale by the Company. Each Member hereby agrees
that these Regulations constitute adequate notice of all such provisions.

     13.12 COUNTERPARTS. These Regulations may be executed in any number of
counterparts with the same effect as if all signing parties had signed the same
document. All counterparts shall be construed together and constitute the same
instrument.

     13.13 ARBITRATION. If, at any time or from time to time during the
continuance of the Company or after the dissolution or other termination
thereof, any dispute, difference or question shall arise between any of the
Members, or their successors, assigns or nominees, touching or concerning the
Company of the property, assets, rights or transactions thereof, or the
dissolution or other termination thereof, or the property of the Company or the
construction, meaning or effect of these Regulations, or any provision hereof,
or the rights of obligations of the Members, or their successors, assigns or
nominees, under these Regulations or otherwise, with respect thereto, then every
such dispute, difference or question shall be submitted to and settled by
arbitration and the decision of the arbitrator appointed as hereinafter provided
to deal with such matter shall be accepted by all the Members to such dispute,
difference or question. The arbitration shall be conducted by a single
arbitrator agreed upon by the Members to the matter. The decision of the
arbitrator shall be final and binding upon all the Members to such dispute,
difference or question and their nominees, and there shall be no appeal
therefrom.

     IN WITNESS WHEREOF, following adoption of these Regulations by the
Managers, the Members have executed these Regulations as of the date first set
forth above.

                                        MEMBERS:

                                        ASHTON WOODS USA L.L.C.,
                                        a Nevada limited liability company


                                        By: /s/ Bruce Freeman
                                            ------------------------------------
                                            Bruce Freeman, Managing Member


                                        By: /s/ Seymour Joffe
                                            ------------------------------------
                                            Seymour Joffe, Managing Member


                                        By: /s/ Harry Rosenbaum
                                            ------------------------------------
                                            Harry Rosenbaum, Managing Member


                                      -28-

EX-3.2(I)

                                                                  EXHIBIT 3.2(i)

                                   REGULATIONS

                                       OF

                          ASHTON TAMPA RESIDENTIAL, LLC

                       A NEVADA LIMITED LIABILITY COMPANY

                           Dated as of August 23, 2004

                                   REGULATIONS
                                       OF
                          ASHTON TAMPA RESIDENTIAL, LLC
                       A NEVADA LIMITED LIABILITY Company

                                TABLE OF CONTENTS

                                                                                                           
ARTICLE I
DEFINITIONS ..............................................................................................    1

1.01   Definitions .......................................................................................    1
1.02   Construction ......................................................................................    3

ARTICLE II
ORGANIZATION .............................................................................................    3

2.01    Formation ........................................................................................    3
2.02    Name  ............................................................................................    3
2.03    Resident Office; Resident Agent; Principal Office in the United States; Other Offices ............    3
2.04    Purposes .........................................................................................    4
2.05    Foreign Qualification ............................................................................    4
2.06    Term .............................................................................................    4
2.07    Mergers and Exchanges ............................................................................    4
2.08    No State-Law Partnership .........................................................................    4

ARTICLE III
MEMBERSHIP; DISPOSITIONS OF INTERESTS ....................................................................    4

3.01    Initial Members ..................................................................................    4
3.02    Representations and Warranties ...................................................................    4
3.03    Restrictions on the Disposition of an Interest ...................................................    5
3.04    Additional Members................................................................................    6
3.05    Interests in a Member ............................................................................    7
3.06    Information ......................................................................................    7
3.07    Liability to Third Parties........................................................................    7
3.08    Withdrawal .......................................................................................    8
3.09    Lack of Authority ................................................................................    8

ARTICLE IV
CAPITAL CONTRIBUTIONS.....................................................................................    8

4.01    Initial Contributions.............................................................................    8
4.02    Subsequent Contributions .........................................................................    8
4.03    Failure to Contribute ............................................................................    8


                                      -i-


                                                                                                          
4.04    Return of Contributions ..........................................................................   10
4.05    Advances by Members ..............................................................................   10
4.06    Capital Accounts .................................................................................   10

ARTICLE V
ALLOCATIONS AND DISTRIBUTIONS ............................................................................   11

5.01    Allocations.......................................................................................   11
5.02    Distributions ....................................................................................   11

ARTICLE VI
MANAGERS .................................................................................................   12

6.01    Management by Managers ...........................................................................   12
6.02    Actions by Managers; Committees; Delegation of Authority and Duties ..............................   13
6.03    Number and Term of Office ........................................................................   14
6.04    Vacancies; Removal; Resignation ..................................................................   14
6.05    Meetings ............................................ . ..........................................   14
6.06    Approval or Ratification of Acts or Contracts by Members .........................................   15
6.07    Action by Written Consent or Telephone Conference ................................................   15
6.08    Compensation  ....................................................................................   15
6.09    Conflicts of Interest ............................................................................   16
6.10    Officers .........................................................................................   16

ARTICLE VII
MEETINGS OF MEMBERS ......................................................................................   16

7.01    Meetings .........................................................................................   16
7.02    Voting List ......................................................................................   17
7 03    Proxies ..........................................................................................   18
7.04    Conduct of Meetings ..............................................................................   18
7.05    Action by Written Consent or Telephone Conference ................................................   18

ARTICLE VIII
INDEMNIFICATION ..........................................................................................   19

8.01    Right to Indemnification .........................................................................   19
8.02    Advance Payment ..................................................................................   20
8.03    Indemnification of Officers, Employees, and Agents ...............................................   20
8.04    Appearance as a Witness ..........................................................................   20
8.05    Nonexclusivity of Rights .........................................................................   20
8.06    Insurance  .......................................................................................   21
8.07    Member Notification ..............................................................................   21
8.08    Savings Clause ...................................................................................   21


                                     -ii-



                                                                                                          
ARTICLE IX
TAXES ....................................................................................................   21

9.01    Tax Returns ......................................................................................   22
9.02    Tax Elections ....................................................................................   22
9.03    "Tax Matters Partner" ............................................................................   22

ARTICLE X
BOOKS, RECORDS, REPORTS, AND BANK ACCOUNTS ...............................................................   22

10.01   Maintenance of Books .............................................................................   22
10.02   Reports...........................................................................................   22
10.03   Accounts .........................................................................................   23

ARTICLE XI
BANKRUPTCY OF A MEMBER ...................................................................................   23

11.01   Bankrupt Members .................................................................................   23

ARTICLE XII
DISSOLUTION, LIQUIDATION, AND TERMINATION ................................................................   24

12.01   Dissolution ......................................................................................   24
12.02   Liquidation and Termination ......................................................................   24
12.03   Deficit Capital Accounts .........................................................................   25
12.04   Articles of Dissolution ..........................................................................   26

ARTICLE XIII
GENERAL PROVISIONS .......................................................................................   26

13.01   Offset ...........................................................................................   26
13.02   Notices ..........................................................................................   26
13.03   Entire Agreement; Supersedure ....................................................................   26
13.04   Effect of Waiver or Consent  .....................................................................   26
13.05   Amendment or Modification ........................................................................   27
13.06   Binding Effect ...................................................................................   27
13.07   Governing Law; Severability ......................................................................   27
13.08   Further Assurances ...............................................................................   27
13.09   Waiver of Certain Rights .........................................................................   27
13.10   Indemnification ..................................................................................   27
13.11   Notice to Members of Provisions of this Agreement ................................................   27
13.12   Counterparts .....................................................................................   28
13.13   Arbitration ......................................................................................   28



                                     -iii-


                                   REGULATIONS

                                       OF

                         ASHTON DENVER RESIDENTIAL, LLC

                       A NEVADA LIMITED LIABILITY COMPANY

     These REGULATIONS OF ASHTON DENVER RESIDENTIAL, LLC (these "Regulations"),
dated as of November 19, 2004, are (a) adopted by the Managers (as defined
below) and (b) executed and agreed to, for good and valuable consideration, by
the Members (as defined below).

                                    ARTICLE I
                                   DEFINITIONS

     1.01 DEFINITIONS. As used in these Regulations, the following terms have
the following meanings:

          "Act" means the Nevada Limited Liability Company Act and any successor
     statute, as amended from time to time.

          "Articles" has the meaning given that term in Section 2.01.

          "Bankrupt Member" means (except to the extent a Required Interest
     consents otherwise) any Member (a) that (i) makes a general assignment for
     the benefit of creditors; (ii) files a voluntary bankruptcy petition; (iii)
     becomes the subject of an order for relief or is declared insolvent in any
     federal or state bankruptcy or insolvency proceedings; (iv) files a
     petition or answer seeking for the Member a reorganization, arrangement,
     composition, readjustment, liquidation, dissolution, or similar relief
     under any law; (v) files an answer or other pleading admitting or failing
     to contest the material allegations of a petition filed against the Member
     in a proceeding of the type described in subclauses (i) through (iv) of
     this clause (a); or (vi) seeks, consents to, or acquiesces in the
     appointment of a trustee, receiver, or liquidator of the Member or of all
     or any substantial part of the Member's properties; or (b) against which, a
     proceeding seeking reorganization, arrangement, composition, readjustment,
     liquidation, dissolution, or similar relief under any law has been
     commenced and 120 days have expired without dismissal thereof or with
     respect to which, without the Member's consent or acquiescence, a trustee,
     receiver, or liquidator of the Member or of all or any substantial part of
     the Member's properties has been appointed and 90 days have expired without
     the appointment's having been vacated or stayed, or 90 days have expired
     after the date of expiration of a stay, if the appointment has not
     previously been vacated.

          "Business Day" means any day other than a Saturday, a Sunday, or a
     holiday


                                       -1-



     on which national banking associations in the State of Nevada are closed.

          "Capital Contribution" means any contribution by a Member to the
     capital of the Company.

          "Code" means the Internal Revenue Code of 1986 and any successor
     statute, as amended from time to time.

          "Commitment" means, subject in each case to adjustments on account of
     Dispositions of Membership Interests permitted by these Regulations, (a) in
     the case of a Member executing these Regulations as of the date of these
     Regulations or a Person acquiring that Membership Interest, the amount
     specified for that Member as its Commitment on Exhibit A, and (b) in the
     case of a Membership Interest issued pursuant to Section 3.04, the
     Commitment established pursuant thereto.

          "Company" means Ashton Denver Residential, LLC, a Nevada limited
     liability company.

          "Default Interest Rate" means a rate per annum equal to the lesser of
     (a) four percent (4%) plus a varying rate per annum that is equal to the
     interest rate published as the prime rate by The Bank of Nova Scotia from
     time to time, with adjustments in that varying rate to be made on the same
     date as any change in that rate, and (b) the maximum rate permitted by
     applicable law.

          "Delinquent Member" has the meaning given that term in Section
     4.03(a).

          "Dispose," "Disposing," or "Disposition" means a sale, assignment,
     transfer, exchange, mortgage, pledge, grant of a security interest, or
     other disposition or encumbrance (including, without limitation, by
     operation of law), or the acts thereof.

          "General Interest Rate" means a rate per annum equal to the lesser of
     (a) a varying rate per annum that is equal to the interest rate published
     as the prime rate by The Bank of Nova Scotia from time to time, with
     adjustments in that varying rate to be made on the same date as any change
     in that rate, and (b) the maximum rate permitted by applicable law.

          "Lending Member" has the meaning given that term in Section
     4.03(a)(ii).

          "Manager" means Bruce Freeman, Harry Rosenbaum and Seymour Joffe and
     any Person hereafter elected as a manager of the Company as provided in
     these Regulations, but does not include any Person who has ceased to be a
     manager of the Company.

          "Member" means any Person executing these Regulations as of the date
     of these Regulations as a member or hereafter admitted to the Company as a
     member as provided in these Regulations, but does not include any Person
     who has ceased to


                                       -2-



     be a member in the Company.

          "Membership Interest" means the interest of a Member in the Company,
     including, without limitation, rights to distributions (liquidating or
     other), allocations, information, and to consent or approve.

          "Permitted Transferee" has the meaning given that term in Section
     3.03(b).

          "Person" has the meaning given that term in the Act.

          "Proceeding" has the meaning given that term in Section 8.01.

          "Regulations" has the meaning given that term in the introductory
     paragraph.

          "Required Interest" means one or more Members having among them more
     than 51% of the Sharing Ratios of all Members.

          "Sharing Ratio" with respect to any Member means the percentage set
     forth on Exhibit A, subject to change as herein provided.

Other terms defined herein have the meanings so given them.

     1.02 CONSTRUCTION. Whenever the context requires, the gender of all words
used in these Regulations includes the masculine, feminine, and neuter. All
references to Articles and Section refer to articles and sections of these
Regulations, and all references to Exhibits are to Exhibits attached hereto,
each of which is made a part hereof for all purposes.

                                   ARTICLE II
                                  ORGANIZATION

     2.01 FORMATION. The Company has been organized as a Nevada limited
liability company by the filing of Articles of Organization (the "Articles")
under and pursuant to the Act and the issuance of a certificate of organization
for the Company by the Secretary of State of Nevada.

     2.02 NAME. The name of the Company is "Ashton Denver Residential, LLC" and
all Company business must be conducted in that name or such other names that
comply with applicable law as the Managers may select from time to time.

     2.03 RESIDENT OFFICE; RESIDENT AGENT; PRINCIPAL OFFICE IN THE UNITED
STATES; OTHER OFFICES. The resident office of the Company required by the Act to
be maintained in the State of Nevada shall be the office of the initial resident
agent named in the Articles or such other office (which need not be a place of
business of the Company) as the Managers may designate from time to time in the
manner provided by law. The resident agent of the Company in the State of Nevada
shall be the initial resident agent named in the Articles or such other Person
or Persons as the Managers may designate from time to time in the manner
provided by law. The principal office of the Company in the United States shall
be at such place as the Managers may designate from time


                                       -3-



to time, which need not be in the State of Nevada. The Company shall maintain
records at the office of the resident agent as required by the Act and shall
keep the street address of the resident office of the Company in the State of
Nevada. The Company may have such other offices as the Managers may designate
from time to time.

     2.04 PURPOSES. The purposes of the Company are those set forth in the
Articles.

     2.05 FOREIGN QUALIFICATION. Prior to the Company's conducting business in
any jurisdiction other than Nevada, the Managers shall cause the Company to
comply, to the extent procedures are available and those matters are reasonably
within the control of the Managers, with all requirements necessary to qualify
the Company as a foreign limited liability company in that jurisdiction. At the
request of the Managers, each Member shall execute, acknowledge, swear to, and
deliver all certificates and other instruments conforming with these Regulations
that are necessary or appropriate to qualify, continue, and terminate the
Company as a foreign limited liability company in all such jurisdictions in
which the Company may conduct business.

     2.06 TERM. The Company commenced on the date the Secretary of State of
Nevada issued a certificate of organization for the Company and shall continue
in existence for the period fixed in the Articles for the duration of the
Company, or such earlier time as these Regulations may specify.

     2.07 MERGERS AND EXCHANGES. The Company may be a party to (a) a merger or
(b) an exchange or acquisition.

     2.08 NO STATE-LAW PARTNERSHIP. The Members intend that the Company not be a
partnership (including, without limitation, a limited - partnership) or joint
venture, and that no Member or Manager be a partner or joint venturer of any
other Member or Manager, for any purposes other than federal and state tax
purposes, and these Regulations may not be construed to suggest otherwise.

                                   ARTICLE III
                      MEMBERSHIP; DISPOSITIONS OF INTERESTS

     3.01 INITIAL MEMBERS. The initial members of the Company are the Persons
executing these Regulations as of the date of these Regulations as members, each
of which is admitted to the Company as a Member effective contemporaneously with
the execution by such Person of these Regulations.

     3.02 REPRESENTATIONS AND WARRANTIES. Each Member hereby represents and
warrants to the Company and each other Member that (a) if that Member is a
corporation, it is duly organized, validly existing and in good standing under
the law of the state of its incorporation and is duly qualified and in good
standing as a foreign corporation in the jurisdiction of its principal place of
business (if not incorporated therein); (b) if that Member is a limited
liability company, it is duly organized, validly existing, and (if applicable)
in good standing under the law of the state of its organization and is duly
qualified and (if applicable) in good standing as a foreign limited liability
company in the jurisdiction of its principal place of business (if not organized
therein); (c) if that Member is a partnership, trust, or other entity, it is
duly formed, validly existing, and (if applicable)


                                       -4-



in good standing under the law of the state of its formation, and if required by
law is duly qualified to do business and (if applicable) in good standing in the
jurisdiction of its principal place of business (if not formed therein), and the
representations and warranties in clause (a), (b) or (c), as applicable, are
true and correct with respect to each partner (other than limited partners),
trustee, or other member thereof; (d) that Member has full corporate, limited
liability company, partnership, trust, or other applicable power and authority
to execute and agree to these Regulations and to perform its obligations
hereunder and all necessary actions by the board of directors, shareholders,
managers, members, partners, trustees, beneficiaries, or other Persons necessary
for the due authorization, execution, delivery, and performance of these
Regulations by that Member have been duly taken; (e) that Member has duly
executed and delivered these Regulations; and (f) that Member's authorization,
execution, delivery, and performance of these Regulations do not conflict with
any other agreement or arrangement to which that Member is a party or which it
is bound.

     3.03 RESTRICTIONS ON THE DISPOSITION OF AN INTEREST. (a) Except as
specifically provided in this Section 3.03, a Disposition of an interest in the
Company may not be effected without the consent of (i) a majority of the
Managers who are Members (excluding any Manager who is making such Disposition),
or (ii) if there are no Managers of the type described in clause (i), a Required
Interest. Any attempted Disposition by a Person of an interest or right, or any
part thereof, in or in respect of the Company other than in accordance with this
Section 3.03 shall be, and is hereby declared, null and void ab initio.

     (b) Notwithstanding the provisions of Section 3.03(a), the interest of any
Member in the Company may be transferred without the consent of the Managers or
any of the Members if (i) the transfer occurs by reason of or incident to the
death, dissolution, divorce, liquidation, merger or termination of the
transferor Member, and (ii) the transferee is a Permitted Transferee. A
"Permitted Transferee" is any member of such Member's immediate family, or a
trust, corporation, limited liability company, or partnership controlled by such
Member or members of such Member's immediate family, or another Person
controlling, controlled by, or under common control with such Member.

     (c) Subject to the provisions of Section 3.03(d), (e), and (f), (i) a
Person to whom an interest in the Company is transferred has the right to be
admitted to the Company as a Member with the Sharing Ratio and the Commitment so
transferred to such Person, if (A) the Member making such transfer grants the
transferee the right to be so admitted, and (B) such transfer is consented to in
accordance with Section 3.03(a); (ii) a Permitted Transferee under the
circumstances described in Section 3.03(b) has the right to be admitted to the
Company as a Member with the Sharing Ratio and the Commitment so transferred to
the Permitted Transferee; and (iii) the Company or (with the permission of the
Company, which may be withheld in its sole discretion) a Lending Member may
grant the purchaser of a Delinquent Member's interest in the Company at a
foreclosure of the security interest therein granted pursuant to Section 4.03(b)
the right to be admitted to the Company as a Member with such Sharing Ratio and
such Commitment (no greater than the Sharing Ratio and the Commitment of the
Member effecting such Disposition prior thereto) as they may agree.

     (d) The Company may not recognize for any purpose any purported Disposition
of all or part of a Membership Interest unless and until the other applicable
provisions of this Section 3.03 have been satisfied and the Managers have
received, on behalf of the Company, a document (i)


                                       -5-



executed by both the Member effecting the Disposition (or if the transfer is on
account of the death, incapacity, or liquidation of the transferor, its
representative) and the Person to which the Membership Interest or part thereof
is Disposed, (ii) including the notice address of any Person to be admitted to
the Company as a Member and its agreement to be bound by these Regulations with
respect to the Membership Interest or part thereof being obtained, (iii) setting
forth the Sharing Ratios and the Commitments after the Disposition of the Member
effecting the Disposition and the Person to which the Membership Interest or
part thereof is Disposed (which together must total the Sharing Ratio and the
Commitment of the Member effecting the Disposition before the Disposition), and
(iv) containing a representation and warranty that the Disposition was made in
accordance with all applicable laws and regulations (including securities laws)
and, if the Person to which the Membership Interest or part thereof is Disposed
is to be admitted to the Company, its representation and warranty that the
representations and warranties in Section 3.02 are true and correct with respect
to that Person. Each Disposition and, if applicable, admission complying with
the provisions of this Section 3.03(d) is effective as of the first day of the
calendar month immediately succeeding the month in which the Managers receive
the notification of Disposition and the other requirements of this Section 3.03
have been met.

     (e) For the right of a Member to Dispose of a Membership Interest or any
part thereof or of any Person to be admitted to the Company in connection
therewith to exist or be exercised, (i) either (A) the Membership Interest or
part thereof subject to the Disposition or admission must be registered under
the Securities Act of 1933, as amended, and any applicable state securities laws
or (B) the Company must receive a favorable opinion of the Company's legal
counsel or of other legal counsel acceptable to the Managers to the effect that
the Disposition or admission is exempt from registration under those laws and
(ii) the Company must receive a favorable opinion of the Company's legal counsel
or of other legal counsel acceptable to the Managers to the effect that the
Disposition or admission, when added to the total of all other sales,
assignments, or other Dispositions within the preceding 12 months, would not
result in the Company's being considered to have terminated within the meaning
of the Code. The Managers, however, may waive the requirements of this Section
3.03(e).

     (f) The Member effecting a Disposition and any Person admitted to the
Company in connection therewith shall pay, or reimburse the Company for, all
costs incurred by the Company in connection with the Disposition or admission
(including, without limitation, the legal fees incurred in connection with the
legal opinions referred to in Section 3.03(e)) on or before the tenth day after
the receipt by that Person of the Company's invoice for the amount due. If
payment is not made by the date due, the Person owing that amount shall pay
interest on the unpaid amount from the date due until paid at a rate per annum
equal to the Default Interest Rate.

     3.04 ADDITIONAL MEMBERS. Additional Persons may be admitted to the Company
as Members and Membership Interests may be created and issued to those Persons
and to existing Members at the direction of (a) a majority of the Managers who
are Members, or (b) if there are no Managers who are Members, a Required
Interest, on such terms and conditions as the Managers may determine at the time
of admission. The terms of admission or issuance must specify the Sharing Ratios
and the Commitments applicable thereto and may provide for the creation of
different classes or groups of Members and having different rights, powers, and
duties. The Managers shall reflect the creation of any new class or group in an
amendment to these Regulations indicating the different


                                       -6-



rights, powers, and duties, and such an amendment need be executed only by the
Managers. Any such admission also must comply with the provisions of Section
3.03(d)(i) and (ii) and is effective only after the new Member has executed and
delivered to the Managers a document including the new Member's notice address,
its agreement to be bound by these Regulations, and its representation and
warranty that the representation and warranties in Section 3.02 are true and
correct with respect to the new Member. The provisions of this Section 3.04
shall not apply to Dispositions of Membership Interests.

     3.05 INTERESTS IN A MEMBER. A Member that is not a natural person may not
cause or permit an interest, direct or indirect, in itself to be Disposed of
such that, after the Disposition, (a) the Company would be considered to have
terminated within the meaning of section 708 of the Code or (b) without the
consent of the Managers and a Required Interest, that Member shall cease to be
controlled by substantially the same Persons who control it as of the date of
its admission to the Company. On any breach of the provisions of clause (b) of
the immediately preceding sentence, the Company shall have the option to buy,
and on exercise of that option the breaching Member shall sell, the breaching
Member's Membership Interest, all in accordance with Section 11.01 as if the
breaching Member were a Bankrupt Member.

     3.06 INFORMATION. (a) In addition to the other rights specifically set
forth in these Regulations, each Member is entitled to all information to which
that Member is entitled to have access pursuant to the Act under the
circumstances and subject to the conditions therein stated. The Members agree,
however, that the Managers from time to time may determine, due to contractual
obligations, business concerns, or other considerations, that certain
information regarding the business, affairs, properties, and financial condition
of the Company should be kept confidential and not provided to some or all other
Members, and that it is not just or reasonable for those Members or assignees or
representatives thereof to examine or copy that information.

     (b) The Members acknowledge that, from time to time, they may receive
information from or regarding the Company in the nature of trade secrets or that
otherwise is confidential, the release of which may be damaging to the Company
or Persons with which it does business. Each Member shall hold in strict
confidence any information it receives regarding the Company that is identified
as being confidential (and if that information is provided in writing, that is
so marked) and may not disclose it to any Person other than another Member or a
Manger, except for disclosures (i) compelled by law (but the Member must notify
the Managers promptly of any request for that information, before disclosing it
if practicable), (ii) to advisers or representatives of the Member or Persons to
which that Member's Membership Interest may be Disposed as permitted by these
Regulations, but only if the recipients have agreed to be bound by the
provisions of this Section 3.06(b), or (iii) of information that Member also has
received from a source independent of the Company that the Member reasonably
believes obtained that information without breach of any obligation of
confidentiality. The Members acknowledge that breach of the provisions of this
Section 3.06(b) may cause irreparable injury to the Company for which monetary
damages are inadequate, difficult to compute, or both. Accordingly, the Members
agree that the provisions of this Section 3.06(b) may be enforced by specific
performance.

     3.07 LIABILITY TO THIRD PARTIES. No Member or Manager shall be liable for
the debts, obligations or liabilities of the Company, including under a
judgment, decree or order of a court.


                                       -7-



     3.08 WITHDRAWAL. A Member does not have the right or power to withdraw from
the Company as a member.

     3.09 LACK OF AUTHORITY. No Member (other than a Manager or an officer) has
the authority or power to act for or on behalf of the Company, to do any act
that would be binding on the Company, or to incur any expenditures on behalf of
the Company.

                                   ARTICLE IV
                              CAPITAL CONTRIBUTIONS

     4.01 INITIAL CONTRIBUTIONS. Contemporaneously with the execution by such
Member of these Regulations, each Member shall make the Capital Contributions
described for that Member in Exhibit A.

     4.02 SUBSEQUENT CONTRIBUTIONS. Without creating any rights in favor of any
third party, each Member shall contribute to the Company, in cash, on or before
the date specified as hereinafter described, that Member's Sharing Ratio of all
monies that in the judgement of the Managers are necessary to enable the Company
to cause the assets of the Company to be properly operated and maintained and to
discharge its costs, expenses, obligations, and liabilities; provided, however,
that a Member is not obligated to contribute a total amount that, when added to
all Capital Contributions that Member previously has made pursuant to Section
4.01 or this Section 4.02, exceeds that Member's Commitment. The Managers shall
notify each Member of the need for Capital Contributions pursuant to this
Section 4.02 when appropriate, which notice must include a statement in
reasonable detail of the proposed uses of the Capital Contributions and a date
(which date may be no earlier than the fifth Business Day following each
Member's receipt of its notice) before which the Capital Contributions must be
made. Notices for Capital Contributions must be made to all Members in
accordance with their Sharing Ratios.

     4.03 FAILURE TO CONTRIBUTE. (a) If a Member does not contribute by the time
required all or any portion of a Capital Contribution that Member is required to
make as provided in these Regulations, the Company may exercise, on notice to
that Member (the "Delinquent Member"), one or more of the following remedies:

          (i) taking such action (including, without limitation, court
     proceedings) as the Managers may deem appropriate to obtain payment by the
     Delinquent Member of the portion of the Delinquent Member's Capital
     Contribution that is in default, together with interest thereon at the
     Default Interest Rate from the date that the Capital Contribution was due
     until the date that it is made, all at the cost and expense of the
     Delinquent Member;

          (ii) permitting the other Members in proportion to their Sharing
     Ratios or in such other percentages as they may agree (the "Lending Member"
     whether one or more), to advance the portion of the Delinquent Member's
     Capital Contribution that is in default, with the following results:


                                       -8-



               (A) the sum advanced constitutes a loan from the Lending Member
          to the Delinquent Member and a Capital Contribution of that sum to the
          Company by the Delinquent Member pursuant to the applicable provisions
          of these Regulations,

               (B) the principal balance of the loan and all accrued unpaid
          interest thereon is due and payable in whole on the tenth day after
          written demand therefor by the Lending Member to the Delinquent
          Member,

               (C) the amount lent bears interest at the Default Interest Rate
          from the day that the advance is deemed made until the date that the
          loan, together with all interest accrued on it, is repaid to the
          Lending Member,

               (D) all distributions from the Company that otherwise would be
          made to the Delinquent Member (whether before or after dissolution of
          the Company) instead shall be paid to the Lending Member until the
          loan and all interest accrued on it have been paid in full to the
          lending Member (with payments being applied first to accrued and
          unpaid interest and then to principal),

               (E) the payment of the loan and interest accrued on it is secured
          by a security interest in the Delinquent Member's Membership Interest,
          as more fully set forth in Section 4.03(b), and

               (F) the Lending Member has the right, in addition to the other
          rights and remedies granted to it pursuant to these Regulations or
          available to it at law or in equity, to take any action (including,
          without limitation, court proceedings) that the Lending Member may
          deem appropriate to obtain payment by the Delinquent Member of the
          loan and all accrued and unpaid interest on it, at the cost and
          expense of the Delinquent Member;

          (iii) exercising the rights of a secured party under the Uniform
     Commercial Code of the State of Nevada, as more fully set forth in Section
     4.03(b) or

          (iv) exercising any other rights and remedies available at law or in
     equity.

     (b) Each Member grants to the Company, and to each Lending Member with
respect to any loans made by the Lending Member to that Member as a Delinquent
Member pursuant to Section 4.03(a)(ii), as security, equally and ratably, for
the payment of all Capital Contributions that Member has agreed to make and the
payment of all loans and interest accrued on them made by Lending Members to
that Member as a Delinquent Member pursuant to Section 4.03(a)(ii) a security
interest in and a general lien on its Membership Interest and the proceeds
thereof, all under the Uniform Commercial Code of the State of Nevada. On any
default in the payment of a Capital Contribution or in the payment of such a
loan or interest accrued on it, the Company or the Lending Member, as


                                       -9-



applicable, is entitled to all the rights and remedies of a secured party under
the Uniform Commercial Code of the State of Nevada with respect to the security
interest granted in this Section 4.03(b). Each Member shall execute and deliver
to the Company and the other Members all financing statements and other
instruments that the Managers or the Lending Member, as applicable, may request
to effectuate and carry out the preceding provisions of this Section 4.03(b). At
the option of the Managers or a Lending Member, these Regulations or a carbon,
photographic, or other copy hereof may serve as a financing statement.

     4.04 RETURN OF CONTRIBUTIONS. Other than as expressly provided in these
Regulations, Member is not entitled to the return of any part of its Capital
Contributions or to be paid interest in respect of either its capital account or
its Capital Contributions. An unrepaid Capital Contribution is not a liability
of the Company or of any Member. A Member is not required to contribute or to
lend any cash or property to the Company to enable the Company to return any
Member's Capital Contributions.

     4.05 ADVANCES BY MEMBERS. If the Company does not have sufficient cash to
pay its obligations, any Member(s) that may agree to do so with the Managers'
consent may advance all or part of the needed funds to or on behalf of the
Company. An advance described in this Section 4.05 constitutes a loan from the
Member to the Company, bears interest at the General Interest Rate from the date
of the advance until the date of payment, and is not a Capital Contribution.

     4.06 CAPITAL ACCOUNTS. A capital account shall be established and
maintained for each Member. Each Member's capital account (a) shall be increased
by (i) the amount of money contributed by that Member to the Company, (ii) the
fair market value of property contributed by that Member to the Company (net of
liabilities secured by the contributed property that the Company is considered
to assume or take subject to under section 752 of the Code), and (iii)
allocations to that Member of Company income and gain (or items thereof),
including income and gain exempt from tax and income and gain described in
Treas. Reg. Section 1.704-l(b)(2)(iv)(g), but excluding income and gain
described in Treas. Reg. Section 1.704-l(b)(4)(i), and (b) shall be decreased by
(i) the amount of money distributed to that Member by the Company, (ii) the fair
market value of property distributed to that Member by the Company (net of
liabilities secured by the distributed property that the Member is considered to
assume or take subject to under section 752 of the Code), (iii) allocations to
that Member of expenditures of the Company described in section 705(a)(2)(B) of
the Code, and (iv) allocations of Company loss and deduction (or items thereof),
including loss and deduction described in Treas. Reg. Section
1.704-1(b)(2)(iv)(g), but excluding items described in clause (b)(iii) above and
loss or deduction described in Treas. Reg. Section 1.704-l(b)(4)(i) or Section
1.704-1(b)(4)(iii). The Members' capital accounts also shall be maintained and
adjusted as permitted by the provisions of Treas. Reg. Section
1.704-l(b)(2)(iv)(f) and as required by the other provisions of Treas. Reg.
Sections 1.704-l(b)(2)(iv) and 1.704-1(b)(4), including adjustments to reflect
the allocations to the Members of depreciation, depletion, amortization, and
gain or loss as computed for book purposes rather than the allocation of the
corresponding items as computed for tax purposes, as required by Treas. Reg.
Section 1.704-l(b)(2)(iv)(g). A Member that has more than one Membership
Interest shall have a single capital account that reflects all its Membership
Interests, regardless of the class of Membership Interests owned by that Member
and regardless of the time or manner in which those Membership Interests were
acquired. On the transfer of all or part of a Membership Interest, the capital
account


                                      -10-



of the transferor that is attributable to the transferred Membership Interest or
part thereof shall carry over to the transferee Member in accordance with the
provisions of Treas. Reg. Section 1.704-l(b)(2)(iv)(l).

                                    ARTICLE V
                          ALLOCATIONS AND DISTRIBUTIONS

     5.01 ALLOCATIONS. (a) Except as may be required by section 701(c) of the
Code and Treas. Reg. Section 1.701-l(b)(2)(iv)(f)(4), all items of income, gain,
loss, deduction, and credit of the Company shall be allocated among the Members
in accordance with their Sharing Ratios.

     (b) All items of income, gain, loss, deduction, and credit allocable to any
Membership Interest that may have been transferred shall be allocated between
the transferor and the transferee based on the portion of the calendar year
during which each was recognized as owning that Membership Interest, without
regard to the results of Company operations during any particular portion of
that calendar year and without regard to whether cash distributions were made to
the transferor or the transferee during that calendar year; provided, however,
that this allocation must be made in accordance with a method permissible under
section 706 of the Code and the regulations thereunder.

     5.02 DISTRIBUTIONS. All receipts and revenues of the Company from any
source shall be applied and distributed in the following order of priority with
no distribution being made in any category set forth below unless and until the
preceding category has been satisfied in full either by payment or by setting
aside of a cash reserve for payment of same.

     (a) in payment of all debts, obligations, liabilities, costs and expenses
incurred in connection with or on account of the Company;

     (b) in repayment of any loans and accrued interest thereon made by a
Lending Member pursuant to Section 4.03(a)(ii);

     (c) in repayment of Contributions by the Member in accordance with their
Sharing Ratios, subject to the provisions of Section 4.03.

     (d) after having satisfied (a), (b) and (c) above, receipts and revenues of
the Company shall represent the profits of the Company and shall be distributed
in the following order of priority:

          (i) the Contributions made by the Members to the Company pursuant to
     Sections 4.01 and 4.02 herein shall bear interest at a rate which is two
     percent (2%) per annum greater than the prime rate charged by the Bank of
     Nova Scotia to its most creditworthy customers of U.S. Dollar demand loans,
     but in no event shall the rate of interest exceed the maximum rate
     permitted by laws, from the date of such advance until repaid to such
     Member in accordance with (c) above.


                                     -11-



          (ii) after having satisfied (a), (b), (d) and (d)(i) above, the
     receipts and revenues of the Company shall be distributed to the Members
     pro rate and pari passu in accordance with their Sharing Ratios.

However, no distribution of profits shall be made until after completion of any
development and/or construction activities undertaken by the Company, without
the agreement of the Members.

                                   ARTICLE VI
                                    MANAGERS

     6.01 MANAGEMENT BY MANAGERS. (a) Except for situations in which the
approval of the Members is required by these Regulations or by nonwaivable
provisions of applicable law, and subject to the provisions of Section 6.02, (i)
the powers of the Company shall be exercised by or under the authority of, and
the business and affairs of the Company shall be managed under the direction of,
the Managers; and (ii) the Managers may make all decisions and take all actions
for the Company not otherwise provided for in these Regulations, including,
without limitation, the following:

          (i) entering into, making, and performing contracts, agreements, and
     other undertakings binding the Company that may be necessary, appropriate,
     or advisable in furtherance of the purposes of the Company and making all
     decisions and waivers thereunder;

          (ii) opening and maintaining bank and investment accounts and
     arrangements, drawing checks and other orders for the payment of money, and
     designating individuals with authority to sign or give instructions with
     respect to those accounts and arrangements;

          (iii) maintaining the assets of the Company in good order;

          (iv) collecting sums due the Company;

          (v) to the extent that funds of the Company are available therefor,
     paying debts and obligations of the Company;

          (vi) acquiring, utilizing for Company purposes, and Disposing of any
     asset of the Company;

          (vii) borrowing money or otherwise committing the credit of the
     Company for Company activities and voluntary prepayments or extensions of
     debt;

          (viii) selecting, removing, and changing the authority and
     responsibility of lawyers, accountants, and other advisers and consultants;

          (ix) obtaining insurance for the Company;


                                      -12-



          (x) determining distributions of Company cash and other property as
     provided in Section 5.02;

          (xi) establishing a seal for the Company;

          (xii) selling, leasing, exchanging or otherwise disposing of
     (including by way of a pledge, mortgage, deed of trust or trust indenture)
     all or any portion of the Company's property and assets (with or without
     good will); and

          (xiii) being a party to (i) a merger, or (ii) an exchange or
     acquisition.

     (b) Notwithstanding the provisions of Section 6.01(a) the Managers may not
cause the Company to do any of the following without complying with the
applicable requirements set forth below:

          (i) amend or restate the Articles, without complying with the
     applicable procedures set forth in the Act.

     6.02 ACTIONS BY MANAGERS; COMMITTEES; DELEGATION OF AUTHORITY AND DUTIES.
(a) In managing the business and affairs of the Company and exercising its
powers, the Managers shall act (i) collectively through meetings and written
consents pursuant to Sections 6.05 and 6.07; (ii) through committees pursuant to
Section 6.02(b); or (iii) through Managers to whom authority and duties have
been delegated pursuant to Section 6.02(c).

     (b) The Managers may, from time to time, designate one or more committees,
each of which shall be comprised of one or more Managers. Any such committee, to
the extent provided in such resolution or in the Articles or these Regulations,
shall have and may exercise all of the authority of the Managers, subject to the
limitations set forth in the Act. At every meeting of any such committee, the
presence of a majority of all the members thereof shall constitute a quorum, and
the affirmative vote of a majority of the members present shall be necessary for
the adoption of any resolution. The Managers may dissolve any committee at any
time, unless otherwise provided in the Articles or these Regulations.

     (c) The Members and the Managers hereby delegate to each of the Managers
(acting by themselves and without the necessity of any other approval or
authorization) or to an authorized representative of the Company, designated by
one or more of the Managers, the authority to take any of the actions authorized
in Section 6.01(a) hereof. In addition, the Managers may assign titles
(including, without limitation, president, vice president, secretary, assistant
secretary, treasurer and assistant treasurer) to any such Manager. Unless the
Managers decide otherwise, if the title is one commonly used for officers of a
business corporation formed under the laws of the State of Nevada, the
assignment of such title shall constitute the delegation to such Manager of the
authority and duties that are normally associated with that office, subject to
any specific delegation of authority and duties made pursuant to the first
sentence of this Section 6.02(c). Any number of titles may be held by the same
Manager. Any delegation pursuant to this Section 6.02(c) may be revoked at any
time by the Managers.


                                      -13-



     (d) Any Person dealing with the Company, other than a Member, may rely on
the authority of any Manager, authorized representative or officer in taking any
action in the name of the Company without inquiry into the provisions of these
Regulations or compliance herewith, regardless of whether that action actually
is taken in accordance with the provisions of these Regulations.

     6.03 NUMBER AND TERM OF OFFICE. The number of Managers of the Company shall
be determined from time to time by resolution of the Managers; provided,
however, that no decrease in the number of Managers that would have the effect
of shortening the term of an incumbent Manager may be made by the Managers. If
the Managers make no such determination, the number of Managers shall be the
number set forth in the Articles as the number of Managers constituting the
initial Managers. Each Manager shall hold office for the term for which he is
elected and thereafter until his successor shall have been elected and
qualified, or until his earlier death, resignation or removal. Unless otherwise
provided in the Articles, Managers need not be Members or residents of the State
of Nevada.

     6.04 VACANCIES; REMOVAL; RESIGNATION. Any Manager position to be filled by
reason of an increase in the number of Managers may be filled by election at an
annual or special meeting of Members called for that purpose. Any vacancy
occurring in the Managers other than by reason of an increase in the number of
Managers may be filled (a) by election at an annual or special meeting of the
Members called for that purpose or (b) by the affirmative vote of a majority of
the remaining Managers though less than a quorum of the Managers. A Manager
elected to fill a vacancy occurring other than by reason of an increase in the
number of Managers shall be elected for the unexpired term of his predecessor in
office. At any meeting of Members at which a quorum of Members is present called
expressly for that purpose, or pursuant to a written consent adopted pursuant to
these Regulations, any Manager may be removed, with or without cause, by a
Required Interest. Any Manager may resign at any time. Such resignation shall be
made in writing and shall take effect at the time specified therein, or if no
time be specified, at the time of its receipt by the remaining Managers. The
acceptance of a resignation shall not be necessary to make it effective, unless
expressly so provided in the resignation.

     6.05 MEETINGS. (a) Unless otherwise required by law or provided in the
Articles or these Regulations, a majority of the total number of Managers fixed
by, or in the manner provided in, the Articles or these Regulations shall
constitute a quorum for the transaction of business of the Managers, and the act
of a majority of the Managers present at a meeting at which a quorum is present
shall be the act of the Managers. A Manager who is present at a meeting of the
Managers at which action on any Company matter is taken shall be presumed to
have assented to the action unless his dissent shall be entered in the minutes
of the meeting or unless he shall file his written dissent to such action with
the Person acting as secretary of the meeting before the adjournment thereof or
shall deliver such dissent to the Company immediately after the adjournment of
the meeting. Such right to dissent shall not apply to a Manager who voted in
favor of such action.

     (b) Meetings of the Managers may be held at such place or places as shall
be determined from time to time by resolution of the Managers. At all meetings
of the Managers, business shall be transacted in such order as shall from time
to time be determined by resolution of the Managers.


                                      -14-



Attendance of a Manager at a meeting shall constitute a waiver of notice of such
meeting, except where a Manager attends a meeting for the express purpose of
objecting to the transaction of any business on the ground that the meeting is
not lawfully called or convened.

     (c) In connection with any annual meeting of Members at which Managers were
elected, the Managers may, if a quorum is present, hold its first meeting for
the transaction of business immediately after and at the same place as such
annual meeting of the Members. Notice of such meeting at such time and place
shall not be required.

     (d) Regular meetings of the Managers shall be held at such times and places
as shall be designated from time to time by resolution of the Managers. Notice
of such regular meetings shall not be required.

     (e) Special meetings of the Managers may be called by any Manager on at
least 24 hours notice to each other Manager. Such notice need not state the
purpose or purposes of, nor the business to be transacted at, such meeting,
except as may otherwise be required by law or provided for by the Articles or
these Regulations.

     6.06 APPROVAL OR RATIFICATION OF ACTS OR CONTRACTS BY MEMBERS. The Managers
in their discretion may submit any act or contract for approval or ratification
at any annual meeting of the Members, or at any special meeting of the Members
called for the purpose of considering any such act or contract, and any act or
contract that shall be approved or be ratified by a Required Interest shall be
as valid and as binding upon the Company and upon all the Members as if it shall
have been approved or ratified by every Member of the Company.

     6.07 ACTION BY WRITTEN CONSENT OR TELEPHONE CONFERENCE. Any action
permitted or required by the Act, the Articles or these Regulations to be taken
at a meeting of the Managers or any committee designated by the Managers may be
taken without a meeting if a consent in writing, setting forth the action to be
taken, is signed by all the Managers or members of such committee, as the case
may be. Such consent shall have the same force and effect as a unanimous vote at
a meeting and may be stated as such in any document or instrument filed with the
Secretary of State of Nevada, and the execution of such consent shall constitute
attendance or presence in person at a meeting of the Managers or any such
committee, as the case may be. Subject to the requirements of the Act, the
Articles or these Regulations for notice of meetings, unless otherwise
restricted by the Articles, Managers, or members of any committee designated by
the Managers, may participate in and hold a meeting of the Managers or any
committee of Managers, as the case may be, by means of a conference telephone or
similar communications equipment by means of which all Persons participating in
the meeting can hear each other, and participation in such meeting shall
constitute attendance and presence in person at such meeting, except where a
Person participates in the meeting for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully
called or convened.

     6.08 COMPENSATION. The Managers shall reserve such compensation, if any,
for their services as may be designated from time to time by all of the
Managers. In addition, the Managers shall be entitled to be reimbursed for
out-of-pocket costs and expenses incurred in the course of their service
hereunder, including the portion of their overhead reasonably allocable to
Company activities.


                                      -15-



     6.09 CONFLICTS OF INTEREST. Subject to the other express provisions of
these Regulations, each Manager, Member and officer of the Company at any time
and from time to time may engage in and possess interests in other business
ventures of any and every type and description, independently or with others,
including ones in competition with the Company, with no obligation to offer to
the Company or any other Member, Manager or officer the right to participate
therein. The Company may transact business with any Manager, Member, officer or
Affiliate thereof, provided the terms of those transactions are no less
favorable than those the Company could obtain from unrelated third parties.

     6.10 OFFICERS. (a) The Managers may, from time to time, designate one or
more Persons to be officers of the Company. No officer need be a resident of the
State of Nevada, a Member or a Manager. Any officers so designated shall have
such authority and perform such duties as the Managers may, from time to time,
delegate to them. The Managers may assign titles to particular officers. Unless
the Managers decide otherwise, if the title is one commonly used for officers of
a business corporation formed under the laws of the State of Nevada, the
assignment of such title shall constitute the delegation to such officer of the
authority and duties that are normally associated with that office, subject to
(i) any specific delegation of authority and duties made to such officer by the
Managers pursuant to the third sentence of this Section 6.10(b). or (ii) any
delegation of authority and duties made to one or more Mangers pursuant to
Section 6.02(a). Each officer shall hold office until his successor shall be
duly designated and shall quality or until his death or until he shall resign or
shall have been removed in the manner hereinafter provided. Any number of
offices may be held by the same Person. The salaries or other compensation, if
any, of the officers and agents of the Company shall be fixed from time to time
by the Managers.

     (b) Any officer may resign as such at any time. Such resignation shall be
made in writing and shall take effect at the time specified therein, or if no
time be specified, at the time of its receipt by the Managers. The acceptance of
a resignation shall not be necessary to make it effective, unless expressly so
provided in the resignation. Any officer may be removed as such, either with or
without cause, by the Managers whenever in their judgment the best interests of
the Company will be served thereby; provided, however, that such removal shall
be without prejudice to the contract rights, if any, of the Person so removed.
Designation of an officer shall not of itself create contract rights. Any
vacancy occurring in any office of the Company (other than Manager) may be
filled by the Managers.

                                   ARTICLE VII
                               MEETINGS OF MEMBERS

     7.01 MEETINGS. (a) A quorum shall be present at a meeting of Members if the
holders of a Required Interest are represented at the meeting in person or by
proxy. With respect to any matter, other than a matter for which the affirmative
vote of the holders of a specified portion of the Sharing Ratios of all Members
entitled to vote is required by the Act, the affirmative vote of a Required
Interest at a meeting of Members at which a quorum is present shall be the act
of the Members.

     (b) All meetings of the Members shall be held at the principal place of
business of the Company or at such other place within or without the State of
Nevada as shall be specified or fixed


                                      -16-



in the notices or waivers of notice thereof; provided that any or all Members
may participate in any such meeting by means of conference telephone or similar
communications equipment pursuant to Section 7.05.

     (c) Notwithstanding the other provisions of the Articles or these
Regulations, the chairman of the meeting or the holders of a Required Interest
shall have the power to adjourn such meeting from time to time, without any
notice other than announcement at the meeting of the time and place of the
holding of the adjourned meeting. If such meeting is adjourned by the Members,
such time and place shall be determined by a vote of the holders of a Required
Interest. Upon the resumption of such adjourned meeting, any business may be
transacted that might have been transacted at the meeting as originally called.

     (d) An annual meeting of the Members, for the election of the Managers and
for the transaction of such other business as may properly come before the
meeting, shall be held at such place, within or without the State of Nevada, on
such date and at such time as the Managers shall fix and set forth in the notice
of the meeting, which date shall be within 13 months subsequent to the date of
organization of the Company or the last annual meeting of Members, whichever
most recently occurred.

     (e) Special meetings of the Members for any proper purpose or purposes may
be called at any time by the Managers or the holders of at least ten percent of
the Sharing Ratios of all Members. If not otherwise stated in or fixed in
accordance with the remaining provisions hereof, the record date for determining
Members entitled to call a special meeting is the date any Member first signs
the notice of that meeting. Only business within the purpose or purposes
described in the notice (or waiver thereof) required by these Regulations may be
conducted at a special meeting of the Members.

     (f) Written or printed notice stating the place, day and hour of the
meeting and, in the case of a special meeting, the purpose or purposes for which
the meeting is called, shall be delivered not less than ten nor more than 60
days before the date of the meeting, either personally or by mail, by or at the
direction of the Managers or Person calling the meeting, to each Member entitled
to vote at such meeting. If mailed, any such notice shall be deemed to be
delivered when deposited in the United States mail, addressed to the Member at
his address provided for on Exhibit A, with postage thereon prepaid.

     (g) The date on which notice of a meeting of Members is mailed or the date
on which the resolution of the Managers declaring a distribution is adopted, as
the case may be, shall be the record date for the determination of the Members
entitled to notice of or to vote at such meeting, including any adjournment
thereof, or the Members entitled to receive such distribution.

     (h) The right of Members to cumulative voting in the election of Managers
is expressly prohibited.

     7.02 VOTING LIST. The Managers shall make, at least ten days before each
meeting of Members, a complete list of the Members entitled to vote at such
meeting or any adjournment thereof, arranged in alphabetical order, with the
address of and the Sharing Ratios held by each,


                                      -17-



which list, for a period often days prior to such meeting, shall be kept on file
at the resident office or principal place of business of the Company and shall
be subject to inspection by any Member at any time during usual business hours.
Such list shall also be produced and kept open at the time and place of the
meeting and shall be subject to the inspection of any Member during the whole
time of the meeting. The original membership records shall be prima-facie
evidence as to who are the Members entitled to examine such list or transfer
records or to vote at any meeting of Members. Failure to comply with the
requirements of this Section shall not affect the validity of any action taken
at the meeting.

     7.03 PROXIES. A Member may vote either in person or by proxy executed in
writing by the Member. A telegram, telex, cablegram or similar transmission by
the Member, or a photographic, photostatic, facsimile or similar reproduction of
a writing executed by the Member shall be treated as an execution in writing for
purposes of this Section. Proxies for use at any meeting of Members or in
connection with the taking of any action by written consent shall be filed with
the Managers, before or at the time of the meeting or execution of the written
consent, as the case may be. All proxies shall be received and taken charge of
and all ballots shall be received and canvassed by the Managers, who shall
decide all questions touching upon the qualification of voters, the validity of
the proxies, and the acceptance or rejection of votes, unless an inspector or
inspectors shall have been appointed by the chairman of the meeting, in which
event such inspector or inspectors shall decide all such questions. No proxy
shall be valid after 11 months from the date of its execution unless otherwise
provided in the proxy. A proxy shall be revocable unless the proxy form
conspicuously states that the proxy is irrevocable and the proxy is coupled with
an interest. Should a proxy designate two or more Persons to act as proxies,
unless that instrument shall provide to the contrary, a majority of such Persons
present at any meeting at which their powers thereunder are to be exercised
shall have and may exercise all the powers of voting or giving consents thereby
conferred, or if only one be present, then such powers may be exercised by that
one; or, if an even number attend and a majority do not agree on any particular
issue, the Company shall not be required to recognize such proxy with respect to
such issue if such proxy does not specify how the Sharing Ratios that are the
subject of such proxy are to be voted with respect to such issue.

     7.04 CONDUCT OF MEETINGS. All meetings of the Members shall be presided
over by the chairman of the meeting, who shall be a Manager (or representative
thereof) designated by a majority of the Managers. The chairman of any meeting
of Members shall determine the order of business and the procedure at the
meeting, including such regulation of the manner of voting and the conduct of
discussion as seem to him in order.

     7.05 ACTION BY WRITTEN CONSENT OR TELEPHONE CONFERENCE. (a) Any action
required or permitted to be taken at any annual or special meeting of Members
may be taken without a meeting, without prior notice, and without a vote, if a
consent or consents in writing, setting forth the action so taken, shall be
signed by the holder or holders of not less than the minimum Sharing Ratios that
would be necessary to take such action at a meeting at which the holders of all
Sharing Ratios entitled to vote on the action were present and voted. Every
written consent shall bear the date of signature of each Member who signs the
consent. No written consent shall be effective to take the action that is the
subject to the consent unless, within 60 days after the date of the earliest
dated consent delivered to the Company in the manner required by this Section, a
consent or consents signed by the holder or holders of not less than the minimum
Sharing Ratios that would be necessary


                                      -18-



to take the action that is the subject of the consent are delivered to the
Company by delivery to its resident office, its principal place of business, or
the Managers. Delivery shall be by hand or certified or registered mail, return
receipt requested. Delivery to the Company's principal place of business shall
be addressed to the Managers. A telegram, telex, cablegram or similar
transmission by a Member, or a photographic, photostatic, facsimile or similar
reproduction of a writing signed by a Member, shall be regarded as signed by the
Member for purposes of this Section. Prompt notice of the taking of any action
by Members without a meeting by less than unanimous written consent shall be
given to those Members who did not consent in writing to the action.

     (b) The record date for determining Members entitled to consent to action
in writing without a meeting shall be the first date on which a signed written
consent setting forth the action taken or proposed to be taken is delivered to
the Company by delivery to its resident office, its principal place of business,
or the Managers. Delivery shall be by hand or by certified or registered mail,
return receipt requested. Delivery to the Company's principal place of business
shall be addressed to the Managers.

     (c) If any action by Members is taken by written consent, any articles or
documents filed with the Secretary of State of Nevada as a result of the taking
of the action shall state, in lieu of any statement required by the Act
concerning any vote of Members, that written consent has been given in
accordance with the provisions of the Act and that any written notice required
by the Act has been given.

     (d) Members may participate in and hold a meeting by means of conference
telephone or similar communications equipment by means of which all Persons
participating in the meeting can hear each other, and participation in such
meeting shall constitute attendance and presence in person at such meeting,
except where a Person participates in the meeting for the express purpose of
objecting to the transaction of any business on the ground that the meeting is
not lawfully called or convened.

                                  ARTICLE VIII
                                 INDEMNIFICATION

     8.01 RIGHT TO INDEMNIFICATION. Subject to the limitations and conditions as
provided in this Article VIII, each Person who was or is made a party or is
threatened to be made a party to or is involved in any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative,
arbitrative or investigative (hereinafter a "Proceeding"), or any appeal in such
a Proceeding or any inquiry or investigation that could lead to such a
Proceeding, by reason of the fact that he or she, or a Person of whom he or she
is the legal representative, is or was a Manager of the Company or while a
Manager of the Company is or was serving at the request of the Company as a
Manager, director, officer, partner, venturer, proprietor, trustee, employee,
agent, or similar functionary of another foreign or domestic limited liability
company, corporation, partnership, joint venture, sole proprietorship, trust,
employee benefit plan or other enterprise shall be indemnified by the Company to
the fullest extent permitted by the Act and the laws of the State of Nevada, as
the same exist or may hereafter be amended (but, in the case of any such
amendment, only to the extent that such amendment permits the Company to provide
broader indemnification rights than said law permitted the Company to provide
prior to such amendment) against judgments, penalties (including


                                      -19-



excise and similar taxes and punitive damages), fines, settlements and
reasonable expenses (including, without limitation, attorneys' fees) actually
incurred by such Person in connection with such Proceeding, and indemnification
under this Article VIII shall continue as to a Person who has ceased to serve in
the capacity which initially entitled such Person to indemnify hereunder. The
rights granted pursuant to this Article VIII shall be deemed contract rights,
and no amendment, modification or repeal of this Article VIII shall have the
effect of limiting or denying any such rights with respect to actions taken or
Proceedings arising prior to any such amendment, modification or repeal. It is
expressly acknowledged that the indemnification provided in this Article VIII
could involve indemnification for negligence or under theories of strict
liability.

     8.02 ADVANCE PAYMENT. The right to indemnification conferred in this
Article VIII shall include the right to be paid or reimbursed by the Company the
reasonable expenses incurred by a Person of the type entitled to be indemnified
under Section 8.01 who was, is or is threatened to be made a named defendant or
respondent in a Proceeding in advance of the final disposition of the Proceeding
and without any determination as to the Person's ultimate entitlement to
indemnification; provided, however, that the payment of such expenses incurred
by any such Person in advance of the final disposition of a Proceeding, shall be
made only upon delivery to the Company of a written affirmation by such Manager
of his or her good faith belief that he has met the standard of conduct for
indemnification under this Article VIII and a written undertaking, by or on
behalf of such Person, to repay all amounts so advanced if it shall ultimately
be determined that such indemnified Person is not entitled to be indemnified
under this Article VIII or otherwise.

     8.03 INDEMNIFICATION OF OFFICERS, EMPLOYEES, AND AGENTS. The Company, by
adoption of a resolution of the Managers, may indemnity and advance expenses to
an officer, employee or agent of the Company to the same extent and subject to
the same conditions under which it may indemnify and advance expenses to
Managers under this Article VIII; and, the Company may indemnify and advance
expenses to Persons who are not or were not Managers, officers, employees or
agents of the Company but who are or were serving at the request of the Company
as a Manager, director, officer, partner, venturer, proprietor, trustee,
employee, agent or similar functionary of another foreign or domestic limited
liability company, corporation, partnership, joint venture, sole proprietorship,
trust, employee benefit plan or other enterprise against any liability asserted
against him and incurred by him in such a capacity or arising out of his status
as such a Person to the same extent that it may indemnity and advance expenses
to Managers under this Article VIII.

     8.04 APPEARANCE AS A WITNESS. Notwithstanding any other provision of this
Article VIII, the Company may pay or reimburse expenses incurred by a Manager in
connection with his appearance as a witness or other participation in a
Proceeding at a time when he is not a named defendant or respondent in the
Proceeding.

     8.05 NONEXCLUSIVITY OF RIGHTS. The right to indemnification and the
advancement and payment of expenses conferred in this Article VIII shall not be
exclusive of any other right which a Manager or other Person indemnified
pursuant to Section 8.03 may have or hereafter acquire under any law (common or
statutory), provision of the Articles or these Regulations, agreement, vote of
Members or disinterested Managers or otherwise.


                                      -20-



     8.06 INSURANCE. The Company may purchase and maintain insurance, at its
expense, to protect itself and any Person who is or was serving as a Manager,
officer, employee or agent of the Company or is or was serving at the request of
the Company as a Manager, director, officer, partner, venturer, proprietor,
trustee, employee, agent or similar functionary of another foreign or domestic
limited liability company, corporation, partnership, joint venture, sole
proprietorship, trust, employee benefit plan or other enterprise against any
expense, liability or loss, whether or not the Company would have the power to
indemnify such Person against such expense, liability or loss under this Article
VIII.

     8.07 MEMBER NOTIFICATION. To the extent required by law, any
indemnification of or advance of expenses to a Manager in accordance with this
Article VIII shall be reported in writing to the Members with or before the
notice or waiver of notice of the next Members' meeting or with or before the
next submission to Members of a consent to action without a meeting and, in any
case, within the 12-month period immediately following the date of the
indemnification or advance.

     8.08 SAVINGS CLAUSE. If this Article VIII or any portion hereof shall be
invalidated on any ground by any court of competent jurisdiction, then the
Company shall nevertheless indemnify and hold harmless each Manager or any other
Person indemnified pursuant to this Article VIII as to costs, charges and
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement with respect to any action, suit or proceeding, whether civil,
criminal, administrative or investigative to the full extent permitted by any
applicable portion of this Article VIII that shall not have been invalidated and
to the fullest extent permitted by applicable law.

                                   ARTICLE IX
                                      TAXES

     9.01 TAX RETURNS. The Managers shall cause to be prepared and filed all
necessary federal and state income tax returns for the Company, including making
the elections described in Section 9.02. Each Member shall furnish to the
Managers all pertinent information in its possession relating to Company
operations that is necessary to enable the Company's income tax returns to be
prepared and filed.

     9.02 TAX ELECTIONS. The Company shall make the following elections on the
appropriate tax returns:

          (a) to adopt the year ending on May 31 as the Company's fiscal year;

          (b) to adopt a method of accounting as the Managers may determine from
     time to time;

          (c) if a distribution of Company property as described in section 734
     of the Code occurs or if a transfer of a Membership Interest as described
     in section 743 of the Code occurs, on written request of any Member, to
     elect, pursuant to section 754 of the Code, to adjust the basis of Company
     properties;


                                      -21-



          (d) to elect to amortize the organizational expenses of the Company
     and the startup expenditures of the Company under Section 195 of the Code
     ratably over a period of 60 months as permitted by section 709(b) of the
     Code; and

          (e) any other election the Managers may deem appropriate and in the
     best interests of the Members.

Neither the Company nor any Manager or Member may make an election for the
Company to be excluded from the application of the provisions of subchapter K of
chapter 1 of subtitle A of the Code or any similar provisions of applicable
state law, and no provision of these Regulations (including, without limitation,
Section 2.06) shall be construed to sanction or approve such an election.

     9.03 "TAX MATTERS PARTNER." A majority of the Managers who are Members
shall designate one Manager that is a Member to be the "tax matters partner" of
the Company pursuant to section 6231(a)(7) of the Code; or, if there is no
Manager that is a Member, the "tax matters partner" shall be a Member that is
designated as such by a Required Interest. Any Member who is designated "tax
matters partner" shall take such action as may be necessary to cause each other
Member to become a "notice partner" within the meaning of section 6223 of the
Code. Any Member who is designated "tax matters partner" shall inform each other
Member of all significant matters that may come to its attention in its capacity
as "tax matters partner" by giving notice thereof on or before the fifth
Business Day after becoming aware thereof and, within that time, shall forward
to each other Member copies of all significant written communications it may
receive in that capacity. Any Member who is designated "tax matters partner" may
not take any action contemplated by sections 6222 through 6232 of the Code
without the consent of a Required Interest, but this sentence does not authorize
such Manager (or any other Manager) to take any action left to the determination
of an individual Member under sections 6222 through 6232 of the Code.

                                    ARTICLE X
                   BOOKS, RECORDS, REPORTS, AND BANK ACCOUNTS

     10.01 MAINTENANCE OF BOOKS. The Company shall keep books and records of
accounts and shall keep minutes of the proceedings of its Members, its Managers
and each committee of the Managers. The books of account for the Company shall
be maintained on a cash basis in accordance with the terms of these Regulations,
except that the capital accounts of the Members shall be maintained in
accordance with Section 4.06. The calendar year shall be the accounting year of
the Company.

     10.02 REPORTS. On or before the 120th day following the end of each fiscal
year during the term of the Company, the Managers shall cause each Member to be
furnished with a balance sheet, an income statement, and a statement of changes
in Members' capital of the Company for, or as of the end of, that year certified
by a recognized firm of certified public accountants. These financial statements
must be prepared in accordance with accounting principles generally employed for
cash basis records consistently applied (except as therein noted) and must be
accompanied by a report of the certified public accountants certifying the
statements and stating that (a) their examination was made in accordance with
generally accepted auditing standards and, in their opinion, the financial


                                      -22-



statements fairly present the financial position, financial results of
operations, and changes in Members' capital in accordance with accounting
principles generally employed for cash-basis records consistently applied
(except as therein noted) and (b) in making the examination and reporting on the
financial statements described above, nothing came to their attention that
caused them to believe that (i) the income and revenues were not paid or
credited in accordance with the financial and accounting provisions of these
Regulations, (ii) the costs and expenses were not charged in accordance with the
financial and accounting provisions of these Regulations, or (iii) the Managers
or any Member failed to comply in any material respect with the financial and
accounting provisions of these Regulations, or if they do conclude that the
Managers or a Member so failed, specifying the nature and period of existence of
the failure. The Managers also may cause to be prepared or delivered such other
reports as they may deem appropriate. The Company shall bear the costs of all
these reports.

     10.03 ACCOUNTS. The Managers shall establish and maintain one or more
separate bank and investment accounts and arrangements for Company funds in the
Company name with financial institutions and firms that the Managers determine.
The Managers may not commingle the Company's funds with the funds of any Member;
however, Company funds may be invested in a manner the same as or similar to the
Managers' investment of their own funds or investments by their Affiliates.

                                   ARTICLE XI
                             BANKRUPTCY OF A MEMBER

     11.01 BANKRUPT MEMBERS. Subject to Section 12.01(c), if any Member becomes
a Bankrupt Member, the Company shall have the option, exercisable by notice from
the Managers to the Bankrupt Member (or its representative) at any time prior to
the 180th day after receipt of notice of the occurrence of the event causing it
to become a Bankrupt Member, to buy, and on the exercise of this option the
Bankrupt Member or its representative shall sell, its Membership Interest. The
purchase price shall be an amount equal to the fair market value thereof
determined by agreement of the Bankrupt Member (or its representative) and the
Managers; however, if those Persons do not agree on the fair market value on or
before the 30th day following the exercise of the option, either such Person, by
notice to the other, may require the determination of fair market value to be
made by an independent appraiser specified in that notice. If the Person
receiving that notice objects on or before the tenth day following receipt to
the independent appraiser designated in that notice, and those Persons otherwise
fail to agree on an independent appraiser, either such Person may petition the
United States District Judge for the State of Nevada then senior in service to
designate an independent appraiser. The determination of the independent
appraiser, however designated, is final and binding on all parties. The Bankrupt
Member and the Company each shall pay one-half of the costs of the appraisal.
The purchaser shall pay the fair market value as so determined in four equal
cash installments, the first due on closing and the remainder (together with
accumulated interest on the amount unpaid at the General Interest Rate) due on
each of the first three anniversaries thereof. The payment to be made to the
Bankrupt Member or its representative pursuant to this Section 11.01 is in
complete liquidation and satisfaction of all the rights and interest of the
Bankrupt Member and its representative (and of all Persons claiming by, through,
or under the Bankrupt Member and its representative) in and in respect of the
Company, including, without limitation, any Membership Interest, any rights in
specific Company property, and any rights against the Company and (insofar as
the affairs of the Company are concerned) against the Members, and constitutes a
compromise to which all Members have agreed pursuant to the Act.


                                      -23-



                                   ARTICLE XII
                    DISSOLUTION, LIQUIDATION, AND TERMINATION

     12.01 DISSOLUTION. The Company shall dissolve and its affairs shall be
wound up on the first to occur of the following:

          (a) the written consent of a Required Interest;

          (b) the expiration of the period fixed for the duration of the Company
     set forth in the Articles;

          (c) any Manager who is a Member (or, if there is no Manager who is a
     Member, any Member) shall become a Bankrupt Member (with or without the
     consent of a Required Interest); provided, however, that if the event
     described in this Section 12.01(c) shall occur and there shall be at least
     one other Member remaining, the Company shall not be dissolved, and the
     business of the Company shall be continued, if all Members so agree; and

          (d) entry of a decree of judicial dissolution of the Company under
     article 6.02 of the Act.

Except as provided in Section 12.01(c), the death, retirement, resignation,
expulsion, bankruptcy or dissolution of a Member, or the occurrence of any other
event that terminates the continued membership of a Member in the Company, shall
not cause a dissolution of the Company.

     12.02 LIQUIDATION AND TERMINATION. On dissolution of the Company, the
Managers shall act as liquidator or may appoint one or more Members as
liquidator. The liquidator shall proceed diligently to wind up the affairs of
the Company and make final distributions as provided herein and in the Act. The
costs of liquidation shall be borne as a Company expense. Until final
distribution, the liquidator shall continue to operate the Company properties
with all of the power and authority of the Managers. The steps to be
accomplished by the liquidator are as follows:

          (a) as promptly as possible after dissolution and again after final
     liquidation, the liquidator shall cause a proper accounting to be made by a
     recognized firm of certified public accountants of the Company's assets,
     liabilities, and operations through the last day of the calendar month in
     which the dissolution occurs or the final liquidation is completed, as
     applicable;

          (b) the liquidator shall cause the notice described in article
     6.05(A)(2) of the Act to be mailed to each known creditor of and claimant
     against the Company in the manner described in such article 6.05(A)(2) of
     the Act;

          (c) the liquidator shall pay, satisfy or discharge from Company funds
     all of the debts, liabilities and obligations of the Company (including,
     without limitation, all expenses incurred in liquidation and any advances
     described in Section 4.05) or otherwise make adequate provision for payment
     and discharge thereof (including,


                                      -24-



     without limitation, the establishment of a cash escrow fund for contingent
     liabilities in such amount and for such term as the liquidator may
     reasonably determine); and

          (d) all remaining assets of the Company shall be distributed to the
     Members as follows:

               (i) the liquidator may sell any or all Company property,
          including to Members, and any resulting gain or loss from each sale
          shall be computed and allocated to the capital accounts of the
          Members;

               (ii) with respect to all Company property that has not been sold,
          the fair market value of that property shall be determined and the
          capital accounts of the Members shall be adjusted to reflect the
          manner in which the unrealized income, gain, loss, and deduction
          inherent in property that has not been reflected in the capital
          accounts previously would be allocated among the Members if there were
          a taxable disposition of that property for the fair market value of
          that property on the date of distribution; and

               (iii) Company property shall be distributed among the Members in
          accordance with the positive capital account balances of the Members,
          as determined after taking into account all capital account
          adjustments for the taxable year of the Company during which the
          liquidation of the partnership occurs (other than those made by reason
          of this clause (iii)); and those distributions shall be made by the
          end of the taxable year of the Company during which the liquidation of
          the Company Occurs (or, if later, 90 days after the date of the
          liquidation).

All distributions in kind to the Members shall be made subject to the liability
of each distributee for costs, expenses, and liabilities theretofore incurred or
for which the Company has committed prior to the date of termination and those
costs, expenses, and liabilities shall be allocated to the distributee pursuant
to this Section 12.02. The distribution of cash and/or property to a Member in
accordance with the provisions of this Section 12.02 constitutes a complete
return to the Member of its Capital Contributions and a complete distribution to
the Member of its Membership Interest and all the Company's property and
constitutes a compromise to which all Members have consented within the meaning
of the Act. To the extent that a Member returns funds to the Company, it has no
claim against any other Member for those funds.

     12.03 DEFICIT CAPITAL ACCOUNTS. Notwithstanding anything to the contrary
contained in these Regulations, and notwithstanding any custom or rule of law to
the contrary, to the extent that the deficit, if any, in the capital account of
any Member results from or is attributable to deductions and losses of the
Company (including non-cash items such as depreciation), or distributions of
money pursuant to these Regulations to all Members in proportion to their
respective Sharing Ratios,


                                      -25-



upon dissolution of the Company such deficit shall not be an asset of the
Company and such Members shall not be obligated to contribute such amount to the
Company to bring the balance of such Member's capital account to zero.

     12.04 ARTICLES OF DISSOLUTION. On completion of the distribution of Company
assets as provided herein, the Company is terminated, and the Managers (or such
other Person or Persons as the Act may require or permit) shall file Articles of
Dissolution with the Secretary of State of Nevada, cancel any other filings made
pursuant to Section 2.05, and take such other actions as may be necessary to
terminate the Company.

                                  ARTICLE XIII
                               GENERAL PROVISIONS

     13.01 OFFSET. Whenever the Company is to pay any sum to any Member, any
amounts that Member owes the Company may be deducted from that sum before
payment.

     13.02 NOTICES. Except as expressly set forth to the contrary in these
Regulations, all notices, requests, or consents provided for or permitted to be
given under these Regulations must be in writing and must be given either by
depositing that writing in the United States mail, addressed to the recipient,
postage paid, and registered or certified with return receipt requested or by
delivering that writing to the recipient in person, by courier, or by facsimile
transmission; and a notice, request, or consent given under these Regulations is
effective on receipt by the Person to receive it. All notices, requests, and
consents to be sent to a Member must be sent to or made at the addresses given
for that Member on Exhibit A or in the instrument described in Section 3.03(d)
or 3.04, or such other address as that Member may specify by notice to the other
Members. Any notice, request, or consent to the Company or the Managers must be
given to the Managers at the following address: 3751 Victoria Park Avenue,
Toronto, Ontario M1W 3Z4 Canada. Whenever any notice is required to be given by
law, the Articles or these Regulations, a written waiver thereof, signed by the
Person entitled to notice, whether before or after the time stated therein,
shall be deemed equivalent to the giving of such notice.

     13.03 ENTIRE AGREEMENT; SUPERSEDURE. These Regulations constitute the
entire agreement of the Members and their Affiliates relating to the Company and
supersedes all prior contracts or agreements with respect to the Company,
whether oral or written.

     13.04 EFFECT OF WAIVER OR CONSENT. A waiver or consent, express or implied,
to or of any breach or default by any Person in the performance by that Person
of its obligations with respect to the Company is not a consent or waiver to or
of any other breach or default in the performance by that Person of the same or
any other obligations of that Person with respect to the Company. Failure on the
part of a Person to complain of any act of any Person or to declare any Person
in default with respect to the Company, irrespective of how long that failure
continues, does not constitute a waiver by that Person of its rights with
respect to that default until the applicable statute-of-limitations period has
run.


                                      -26-



     13.05 AMENDMENT OR MODIFICATION. These Regulations may be amended or
modified from time to time only by a written instrument adopted by the Managers
and executed and agreed to by a Required Interest; provided, however, that (a)
an amendment or modification reducing a Member's Sharing Ratio or increasing its
Commitment (other than to reflect changes otherwise provided by these
Regulations) is effective only with that Member's consent, (b) an amendment or
modification reducing the required Sharing Ratio or other measure for any
consent or vote in these Regulations is effective only with the consent or vote
of Members having the Sharing Ratio or other measure theretofore required, and
(c) amendments of the type described in Section 3.04 may be adopted as therein
provided.

     13.06 BINDING EFFECT. Subject to the restrictions on Dispositions set forth
in these Regulations, these Regulations are binding on and inure to the benefit
of the Members and their respective heirs, legal representatives, successors,
and assigns.

     13.07 GOVERNING LAW; SEVERABILITY. THESE REGULATIONS ARE GOVERNED BY AND
SHALL BE CONSTRUED IN ACCORDANCE WITH LAW OF THE STATE OF NEVADA, EXCLUDING ANY
CONFLICT-OF-LAWS RULE OR PRINCIPLE THAT MIGHT REFER THE GOVERNANCE OR THE
CONSTRUCTION OF THESE REGULATIONS TO THE LAW OF ANOTHER JURISDICTION. In the
event of a direct conflict between the provisions of these Regulations and (a)
any provision of the Articles, or (b) any mandatory provision of the Act, the
application provision of the Articles or the Act shall control. If any provision
of these Regulations or the application thereof to any Person or circumstance is
held invalid or unenforceable to any extent, the remainder of these Regulations
and the application of that provision to other Persons or circumstances is not
affected thereby and that provision shall be enforced to the greatest extent
permitted by law.

     13.08 FURTHER ASSURANCES. In connection with these Regulations and the
transactions contemplated hereby, each Member shall execute and deliver any
additional documents and instruments and perform any additional acts that may be
necessary or appropriate to effectuate and perform the provisions of these
Regulations and those transactions.

     13.09 WAIVER OF CERTAIN RIGHTS. Each Member irrevocably waives any right it
may have to maintain any action for dissolution of the Company or for partition
of the property of the Company.

     13.10 INDEMNIFICATION. To the fullest extent permitted by law, each Member
shall indemnify the Company, each Manager and each other Member and hold them
harmless from and against all losses, costs, liabilities, damages, and expenses
(including, without limitation, costs of suit and attorney's fees) they may
incur on account of any breach by that Member of these Regulations.

     13.11 NOTICE TO MEMBERS OF PROVISIONS OF THIS AGREEMENT. By executing these
Regulations, each Member acknowledges that it has actual notice of (a) all of
the provisions of this Agreement, including, without limitation, the
restrictions on the transfer of Membership Interests set forth in Article III,
and (b) all of the provisions of the Articles, including, without limitation,
the


                                      -27-



fact that the Articles provide that no Member shall have the preemptive right to
acquire any Membership Interests or securities of any class that may at any time
be issued, sold or offered for sale by the Company. Each Member hereby agrees
that these Regulations constitute adequate notice of all such provisions.

     13.12 COUNTERPARTS. These Regulations may be executed in any number of
counterparts with the same effect as if all signing parties had signed the same
document. All counterparts shall be construed together and constitute the same
instrument.

     13.13 ARBITRATION. If, at any time or from time to time during the
continuance of the Company or after the dissolution or other termination
thereof, any dispute, difference or question shall arise between any of the
Members, or their successors, assigns or nominees, touching or concerning the
Company of the property, assets, rights or transactions thereof, or the
dissolution or other termination thereof, or the property of the Company or the
construction, meaning or effect of these Regulations, or any provision hereof,
or the rights of obligations of the Members, or their successors, assigns or
nominees, under these Regulations or otherwise, with respect thereto, then every
such dispute, difference or question shall be submitted to and settled by
arbitration and the decision of the arbitrator appointed as hereinafter provided
to deal with such matter shall be accepted by all the Members to such dispute,
difference or question. The arbitration shall be conducted by a single
arbitrator agreed upon by the Members to the matter. The decision of the
arbitrator shall be final and binding upon all the Members to such dispute,
difference or question and their nominees, and there shall be no appeal
therefrom.

     IN WITNESS WHEREOF, following adoption of these Regulations by the
Managers, the Members have executed these Regulations as of the date first set
forth above.

                                        MEMBERS:

                                        ASHTON WOODS USA L.L.C.,
                                        a Nevada limited liability company


                                        By:  /s/ Bruce Freeman
                                            ------------------------------------
                                            Bruce Freeman, Managing Member


                                        By:  /s/ Seymour Joffe
                                            ------------------------------------
                                            Seymour Joffe, Managing Member


                                        By:  /s/ Harry Rosenbaum
                                            ------------------------------------
                                            Harry Rosenbaum, Managing Member


                                      -28-

EX-3.2(J)

                                                                  Exhibit 3.2(j)

                              AMENDED AND RESTATED

                                   REGULATIONS

                                       OF

                           ASHTON WOODS FLORIDA L.L.C.

                       A NEVADA LIMITED LIABILITY COMPANY

                          Dated as of February 6, 1997

                              AMENDED AND RESTATED
                                  REGULATIONS
                                       OF
                          ASHTON WOODS FLORIDA L.L.C.
                       A NEVADA LIMITED LIABILITY COMPANY

                                TABLE OF CONTENTS

                                                                           
ARTICLE I
DEFINITIONS ...............................................................    1

1.01  Definitions .........................................................    1
1.02  Construction ........................................................    3

ARTICLE II
ORGANIZATION ..............................................................    3

2.01  Formation ...........................................................    3
2.02  Name ................................................................    3
2.03  Resident Office; Resident Agent; Principal Office in the
      United States; Other Offices ........................................    3
2.04  Purposes ............................................................    4
2.05  Foreign Qualification ...............................................    4
2.06  Term ................................................................    4
2.07  Mergers and Exchanges ...............................................    4
2.08  No State-Law Partnership ............................................    4

ARTICLE III
MEMBERSHIP; DISPOSITIONS OF INTERESTS .....................................    4

3.01  Initial Members .....................................................    4
3.02  Representations and Warranties ......................................    4
3.03  Restrictions on the Disposition of an Interest ......................    5
3.04  Additional Members ..................................................    6
3.05  Interests in a Member ...............................................    6
3.06  Information .........................................................    7
3.07  Liability to Third Parties ..........................................    7
3.08  Withdrawal ..........................................................    7
3.09  Lack of Authority ...................................................    7

ARTICLE IV
CAPITAL CONTRIBUTIONS .....................................................    7

4.01  Initial Contributions ...............................................    7
4.02  Subsequent Contributions ............................................    8
4.03  Failure to Contribute ...............................................    8
4.04  Return of Contributions .............................................    9
4.05  Advances by Members .................................................    9
4.06  Capital Accounts ....................................................    9




                                       -i-

                                                                           
ARTICLE V
ALLOCATIONS AND DISTRIBUTIONS .............................................   10

5.01  Allocations .........................................................   10
5.02  Distributions .......................................................   10

ARTICLE VI
MANAGERS ..................................................................   11

6.01  Management by Managers ..............................................   11
6.02  Actions by Managers; Committees; Delegation of Authority and
      Duties ..............................................................   12
6.03  Number and Term of Office ...........................................   13
6.04  Vacancies; Removal; Resignation .....................................   13
6.05  Meetings ............................................................   13
6.06  Approval or Ratification of Acts or Contracts by Members ............   14
6.07  Action by Written Consent or Telephone Conference ...................   14
6.08  Compensation ........................................................   14
6.09  Conflicts of Interest ...............................................   14
6.10  Officers ............................................................   15

ARTICLE VII
MEETINGS OF MEMBERS .......................................................   15

7.01  Meetings ............................................................   15
7.02  Voting List .........................................................   16
7.03  Proxies .............................................................   16
7.04  Conduct of Meetings .................................................   17
7.05  Action by Written Consent or Telephone Conference ...................   17

ARTICLE VIII
INDEMNIFICATION ...........................................................   18

8.01  Right to Indemnification ............................................   18
8.02  Advance Payment .....................................................   18
8.03  Indemnification of Officers, Employees, and Agents ..................   18
8.04  Appearance as a Witness .............................................   19
8.05  Nonexclusivity of Rights ............................................   19
8.06  Insurance ...........................................................   19
8.07  Member Notification .................................................   19
8.08  Savings Clause ......................................................   19

ARTICLE IX
TAXES .....................................................................   19

9.01  Tax Returns .........................................................   19
9.02  Tax Elections .......................................................   19
9.03  Tax Matters Partner .................................................   20




                                      -ii-

                                                                           
ARTICLE X
BOOKS, RECORDS, REPORTS, AND BANK ACCOUNTS ................................   20

10.01 Maintenance of Books ................................................   20
10.02 Reports .............................................................   20
10.03 Accounts ............................................................   21

ARTICLE XI
BANKRUPTCY OF A MEMBER ....................................................   21

11.01 Bankrupt Members ....................................................   21

ARTICLE XII
DISSOLUTION, LIQUIDATION, AND TERMINATION .................................   22

12.01 Dissolution .........................................................   22
12.02 Liquidation and Termination .........................................   22
12.03 Deficit Capital Accounts ............................................   23
12.04 Articles of Dissolution .............................................   23

ARTICLE XIII
GENERAL PROVISIONS ........................................................   24

13.01 Offset ..............................................................   24
13.02 Notices .............................................................   24
13.03 Entire Agreement; Supersedure .......................................   24
13.04 Effect of Waiver or Consent .........................................   24
13.05 Amendment or Modification ...........................................   24
13.06 Binding Effect ......................................................   24
13.07 Governing Law; Severability .........................................   24
13.08 Further Assurances ..................................................   25
13.09 Waiver of Certain Rights ............................................   25
13.10 Indemnification .....................................................   25
13.11 Notice to Members of Provisions of this Agreement ...................   25
13.12 Counterparts ........................................................   25




                                      -iii-

                              AMENDED AND RESTATED

                                   REGULATIONS

                                       OF

                           ASHTON WOODS FLORIDA L.L.C.

                       A NEVADA LIMITED LIABILITY COMPANY

     These AMENDED AND RESTATED REGULATIONS OF ASHTON WOODS FLORIDA L.L.C.
(these "Regulations"), dated as of February 6, 1997, are (a) adopted by the
Managers (as defined below) and (b) executed and agreed to, for good and
valuable consideration, by the Members (as defined below).

     WHEREAS, by Regulations (the "Original Regulations") dated as of February
6, 1997, Elly Nevada, Inc. ("EN"), Norman Nevada, Inc. ("NN"), Larry Nevada,
Inc. ("LN"), Bruce Nevada, Inc. ("BN"), Harry Nevada, Inc. ("HRN"), Seymour
Nevada, Inc. ("SN"), and Haydn Nevada, Inc. ("HMN"), formed Ashton Woods Florida
L.L.C., a Nevada limited liability company, to be operated pursuant to the
Nevada Limited Liability Company Act; and

     WHEREAS, EN, NN, LN, BN, HRN, SN, and HMN desire to amend and restate the
Original Regulations in their entirety to correct certain mistakes that were
made regarding the Members and the Initial Sharing Ratios.

     NOW, THEREFORE, in consideration of the mutual covenants of the parties and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, it is hereby agreed that the Original Regulations shall be
amended and restated in their entirety, and, as so amended and restated, these
Amended and Restated Regulations of Ashton Woods Florida L.L.C. shall constitute
the entire agreement of the parties.

                                    ARTICLE I
                                   DEFINITIONS

     1.01 DEFINITIONS. As used in these Regulations, the following terms have
the following meanings:

          "Act" means the Nevada Limited Liability Company Act and any successor
     statute, as amended from time to time.

          "Articles" has the meaning given that term in Section 2.01.

          "Bankrupt Member" means (except to the extent a Required Interest
     consents otherwise) any Member (a) that (i) makes a general assignment for
     the benefit of creditors; (ii) files a voluntary bankruptcy petition; (iii)
     becomes the subject of an order for relief or is declared insolvent in any
     federal or state bankruptcy or insolvency proceedings; (iv) files a
     petition or answer seeking for the Member a reorganization, arrangement,
     composition, readjustment, liquidation, dissolution, or similar relief
     under any law; (v) files an answer or other pleading admitting or failing
     to contest the material allegations of a petition filed against the Member
     in a proceeding of the type described in subclauses (i)


                                       -1-

     through (iv) of this clause (a); or (vi) seeks, consents to, or acquiesces
     in the appointment of a trustee, receiver, or liquidator of the Member or
     of all or any substantial part of the Member's properties; or (b) against
     which, a proceeding seeking reorganization, arrangement, composition,
     readjustment, liquidation, dissolution, or similar relief under any law has
     been commenced and 120 days have expired without dismissal thereof or with
     respect to which, without the Member's consent or acquiescence, a trustee,
     receiver, or liquidator of the Member or of all or any substantial part of
     the Member's properties has been appointed and 90 days have expired without
     the appointment's having been vacated or stayed, or 90 days have expired
     after the date of expiration of a stay, if the appointment has not
     previously been vacated.

          "Business Day" means any day other than a Saturday, a Sunday, or a
     holiday on which national banking associations in the State of Nevada are
     closed.

          "Capital Contribution" means any contribution by a Member to the
     capital of the Company.

          "Code" means the Internal Revenue Code of 1986 and any successor
     statute, as amended from time to time.

          "Commitment" means, subject in each case to adjustments on account of
     Dispositions of Membership Interests permitted by these Regulations, (a) in
     the case of a Member executing these Regulations as of the date of these
     Regulations or a Person acquiring that Membership Interest, the amount
     specified for that Member as its Commitment on Exhibit A, and (b) in the
     case of a Membership Interest issued pursuant to Section 3.04, the
     Commitment established pursuant thereto.

          "Company" means Ashton Woods Florida L.L.C., a Nevada limited
     liability company.

          "Default Interest Rate" means a rate per annum equal to the lesser of
     (a) four percent (4%) plus a varying rate per annum that is equal to the
     interest rate published as the prime rate by The Bank of Nova Scotia from
     time to time, with adjustments in that varying rate to be made on the same
     date as any change in that rate, and (b) the maximum rate permitted by
     applicable law.

          "Delinquent Member" has the meaning given that term in Section
     4.03(a).

          "Dispose," "Disposing," or "Disposition" means a sale, assignment,
     transfer, exchange, mortgage, pledge, grant of a security interest, or
     other disposition or encumbrance (including, without limitation, by
     operation of law), or the acts thereof.

          "General Interest Rate" means a rate per annum equal to the lesser of
     (a) a varying rate per annum that is equal to the interest rate published
     as the prime rate by The Bank of Nova Scotia from time to time, with
     adjustments in that varying rate to be made on the same date as any change
     in that rate, and (b) the maximum rate permitted by applicable law.

          "Lending Member" has the meaning given that term in Section
     4.03(a)(ii).


                                       -2-

          "Manager" means Bruce Freeman, Harry Rosenbaum and Seymour Joffe and
     any Person hereafter elected as a manager of the Company as provided in
     these Regulations, but does not include any Person who has ceased to be a
     manager of the Company.

          "Member" means any Person executing these Regulations as of the date
     of these Regulations as a member or hereafter admitted to the Company as a
     member as provided in these Regulations, but does not include any Person
     who has ceased to be a member in the Company.

          "Membership Interest" means the interest of a Member in the Company,
     including, without limitation, rights to distributions (liquidating or
     other), allocations, information, and to consent or approve.

          "Permitted Transferee" has the meaning given that term in Section
     3.03(b).

          "Person" has the meaning given that term in the Act.

          "Proceeding" has the meaning given that term in Section 8.01.

          "Regulations" has the meaning given that term in the introductory
     paragraph.

          "Required Interest" means one or more Members having among them more
     than 51% of the Sharing Ratios of all Members.

          "Sharing Ratio" with respect to any Member means the percentage set
     forth on Exhibit A, subject to change as herein provided.

Other terms defined herein have the meanings so given them.

     1.02 CONSTRUCTION. Whenever the context requires, the gender of all words
used in these Regulations includes the masculine, feminine, and neuter. All
references to Articles and Section refer to articles and sections of these
Regulations, and all references to Exhibits are to Exhibits attached hereto,
each of which is made a part hereof for all purposes.

                                   ARTICLE II
                                  ORGANIZATION

     2.01 FORMATION. The Company has been organized as a Nevada limited
liability company by the filing of Articles of Organization (the "Articles")
under and pursuant to the Act and the issuance of a certificate of organization
for the Company by the Secretary of State of Nevada.

     2.02 NAME. The name of the Company is "Ashton Woods Florida L.L.C." and all
Company business must be conducted in that name or such other names that comply
with applicable law as the Managers may select from time to time.

     2.03 RESIDENT OFFICE; RESIDENT AGENT; PRINCIPAL OFFICE IN THE UNITED
STATES; OTHER OFFICES. The resident office of the Company required by the Act to
be maintained in the State of Nevada shall be the office of the initial resident
agent named in the Articles or such other office (which need not be a place of
business of the Company) as the Managers may designate


                                       -3-

from time to time in the manner provided by law. The resident agent of the
Company in the State of Nevada shall be the initial resident agent named in the
Articles or such other Person or Persons as the Managers may designate from time
to time in the manner provided by law. The principal office of the Company in
the United States shall be at such place as the Managers may designate from time
to time, which need not be in the State of Nevada. The Company shall maintain
records at the office of the resident agent as required by the Act and shall
keep the street address of the resident office of the Company in the State of
Nevada. The Company may have such other offices as the Managers may designate
from time to time.

     2.04 PURPOSES. The purposes of the Company are those set forth in the
Articles.

     2.05 FOREIGN QUALIFICATION. Prior to the Company's conducting business in
any jurisdiction other than Nevada, the Managers shall cause the Company to
comply, to the extent procedures are available and those matters are reasonably
within the control of the Managers, with all requirements necessary to qualify
the Company as a foreign limited liability company in that jurisdiction. At the
request of the Managers, each Member shall execute, acknowledge, swear to, and
deliver all certificates and other instruments conforming with these Regulations
that are necessary or appropriate to qualify, continue, and terminate the
Company as a foreign limited liability company in all such jurisdictions in
which the Company may conduct business.

     2.06 TERM. The Company commenced on the date the Secretary of State of
Nevada issued a certificate of organization for the Company and shall continue
in existence for the period fixed in the Articles for the duration of the
Company, or such earlier time as these Regulations may specify.

     2.07 MERGERS AND EXCHANGES. The Company may be a party to (a) a merger or
(b) an exchange or acquisition.

     2.08 NO STATE-LAW PARTNERSHIP. The Members intend that the Company not be a
partnership (including, without limitation, a limited - partnership) or joint
venture, and that no Member or Manager be a partner or joint venturer of any
other Member or Manager, for any purposes other than federal and state tax
purposes, and these Regulations may not be construed to suggest otherwise.

                                   ARTICLE III
                      MEMBERSHIP; DISPOSITIONS OF INTERESTS

     3.01 INITIAL MEMBERS. The initial members of the Company are the Persons
executing these Regulations as of the date of these Regulations as members, each
of which is admitted to the Company as a Member effective contemporaneously with
the execution by such Person of these Regulations.

     3.02 REPRESENTATIONS AND WARRANTIES. Each Member hereby represents and
warrants to the Company and each other Member that (a) if that Member is a
corporation, it is duly organized, validly existing and in good standing under
the law of the state of its incorporation and is duly qualified and in good
standing as a foreign corporation in the jurisdiction of its principal place of
business (if not incorporated therein); (b) if that Member is a limited
liability company, it is duly organized, validly existing, and (if applicable)
in good standing under the law of the state of its organization and is duly
qualified and (if applicable) in good standing as a foreign limited liability
company in the jurisdiction of its principal place of business (if not organized
therein); (c) if that Member is a partnership, trust, or other entity, it is
duly formed, validly existing, and (if applicable) in good standing under the
law of the state of its formation, and if required by law is duly qualified to
do business and (if applicable) in good standing in the


                                       -4-

jurisdiction of its principal place of business (if not formed therein), and the
representations and warranties in clause (a), (b) or (c), as applicable, are
true and correct with respect to each partner (other than limited partners),
trustee, or other member thereof; (d) that Member has full corporate, limited
liability company, partnership, trust, or other applicable power and authority
to execute and agree to these Regulations and to perform its obligations
hereunder and all necessary actions by the board of directors, shareholders,
managers, members, partners, trustees, beneficiaries, or other Persons necessary
for the due authorization, execution, delivery, and performance of these
Regulations by that Member have been duly taken; (e) that Member has duly
executed and delivered these Regulations; and (f) that Member's authorization,
execution, delivery, and performance of these Regulations do not conflict with
any other agreement or arrangement to which that Member is a party or which it
is bound.

     3.03 RESTRICTIONS ON THE DISPOSITION OF AN INTEREST. (a) Except as
specifically provided in this Section 3.03, a Disposition of an interest in the
Company may not be effected without the consent of (i) a majority of the
Managers who are Members (excluding any Manager who is making such Disposition),
or (ii) if there are no Managers of the type described in clause (i), a Required
Interest. Any attempted Disposition by a Person of an interest or right, or any
part thereof, in or in respect of the Company other than in accordance with this
Section 3.03 shall be, and is hereby declared, null and void ab initio.

     (b) Notwithstanding the provisions of Section 3.03(a), the interest of any
Member in the Company may be transferred without the consent of the Managers or
any of the Members if (i) the transfer occurs by reason of or incident to the
death, dissolution, divorce, liquidation, merger or termination of the
transferor Member, and (ii) the transferee is a Permitted Transferee. A
"Permitted Transferee" is any member of such Member's immediate family, or a
trust, corporation, limited liability company, or partnership controlled by such
Member or members or such Member's immediate family, or another Person
controlling, controlled by, or under common control with such Member.

     (c) Subject to the provisions of Section 3.03(d), (e) and (f), (i) a Person
to whom an interest in the Company is transferred has the right to be admitted
to the Company as a Member with the Sharing Ratio and the Commitment so
transferred to such Person, if (A) the Member making such transfer grants the
transferee the right to be so admitted, and (B) such transfer is consented to in
accordance with Section 3.03(a); (ii) a Permitted Transferee under the
circumstances described in Section 3.03(b) has the right to be admitted to the
Company as a Member with the Sharing Ratio and the Commitment so transferred to
the Permitted Transferee; and (iii) the Company or (with the permission of the
Company, which may be withheld in its sole discretion) a Lending Member may
grant the purchaser of a Delinquent Member's interest in the Company at a
foreclosure of the security interest therein granted pursuant to Section 4.03(b)
the right to be admitted to the Company as a Member with such Sharing Ratio and
such Commitment (no greater than the Sharing Ratio and the Commitment of the
Member effecting such Disposition prior thereto) as they may agree.

     (d) The Company may not recognize for any purpose any purported Disposition
of all or part of a Membership Interest unless and until the other applicable
provisions of this Section 3.03 have been satisfied and the Managers have
received, on behalf of the Company, a document (i) executed by both the Member
effecting the Disposition (or if the transfer is on account of the death,
incapacity, or liquidation of the transferor, its representative) and the Person
to which the Membership Interest or part thereof is Disposed, (ii) including the
notice address of any Person to be admitted to the Company as a Member and its
agreement to be bound by these Regulations with respect to the Membership
Interest or part thereof being obtained, (iii) setting forth the Sharing Ratios
and the Commitments after the Disposition of the Member effecting the
Disposition and the Person to which the Membership Interest or part


                                       -5-

thereof is Disposed (which together must total the Sharing Ratio and the
Commitment of the Member effecting the Disposition before the Disposition), and
(iv) containing a representation and warranty that the Disposition was made in
accordance with all applicable laws and regulations (including securities laws)
and, if the Person to which the Membership Interest or part thereof is Disposed
is to be admitted to the Company, its representation and warranty that the
representations and warranties in Section 3.02 are true and correct with respect
to that Person. Each Disposition and, if applicable, admission complying with
the provisions of this Section 3.03(d) is effective as of the first day of the
calendar month immediately succeeding the month in which the Managers receive
the notification of Disposition and the other requirements of this Section 3.03
have been met.

     (e) For the right of a Member to Dispose of a Membership Interest or any
part thereof or of any Person to be admitted to the Company in connection
therewith to exist or be exercised, (i) either (A) the Membership Interest or
part thereof subject to the Disposition or admission must be registered under
the Securities Act of 1933, as amended, and any applicable state securities laws
or (B) the Company must receive a favorable opinion of the Company's legal
counsel or of other legal counsel acceptable to the Managers to the effect that
the Disposition or admission is exempt from registration under those laws and
(ii) the Company must receive a favorable opinion of the Company's legal counsel
or of other legal counsel acceptable to the Managers to the effect that the
Disposition or admission, when added to the total of all other sales,
assignments, or other Dispositions within the preceding 12 months, would not
result in the Company's being considered to have terminated within the meaning
of the Code. The Managers, however, may waive the requirements of this Section
3.03(e).

     (f) The Member effecting a Disposition and any Person admitted to the
Company in connection therewith shall pay, or reimburse the Company for, all
costs incurred by the Company in connection with the Disposition or admission
(including, without limitation, the legal fees incurred in connection with the
legal opinions referred to in Section 3.03(e)) on or before the tenth day after
the receipt by that Person of the Company's invoice for the amount due. If
payment is not made by the date due, the Person owing that amount shall pay
interest on the unpaid amount from the date due until paid at a rate per annum
equal to the Default Interest Rate.

     3.04 ADDITIONAL MEMBERS. Additional Persons may be admitted to the Company
as Members and Membership Interests may be created and issued to those Persons
and to existing Members at the direction of (a) a majority of the Managers who
are Members, or (b) if there are no Managers who are Members, a Required
Interest, on such terms and conditions as the Managers may determine at the time
of admission. The terms of admission or issuance must specify the Snaring Ratios
and the Commitments applicable thereto and may provide for the creation of
different classes or groups of Members and having different rights, powers, and
duties. The Managers shall reflect the creation of any new class or group in an
amendment to these Regulations indicating the different rights, powers, and
duties, and such an amendment need be executed only by the Managers. Any such
admission also must comply with the provisions of Section 3.03(d)(i) and (ii)
and is effective only after the new Member has executed and delivered to the
Managers a document including the new Member's notice address, its agreement to
be bound by these Regulations, and its representation and warranty that the
representation and warranties in Section 3.02 are true and correct with respect
to the new Member. The provisions of this Section 3.04 shall not apply to
Dispositions of Membership Interests.

     3.05 INTERESTS IN A MEMBER. A Member that is not a natural person may not
cause or permit an interest, direct or indirect, in itself to be Disposed of
such that, after the Disposition, (a) the Company would be considered to have
terminated within the meaning of


                                       -6-

section 708 of the Code or (b) without the consent of the Managers and a
Required Interest, that Member shall cease to be controlled by substantially the
same Persons who control it as of the date of its admission to the Company. On
any breach of the provisions of clause (b) of the immediately preceding
sentence, the Company shall have the option to buy, and on exercise of that
option the breaching Member shall sell, the breaching Member's Membership
Interest, all in accordance with Section 11.01 as if the breaching Member were a
Bankrupt Member.

     3.06 INFORMATION. (a) In addition to the other rights specifically set
forth in these Regulations, each Member is entitled to all information to which
that Member is entitled to have access pursuant to the Act under the
circumstances and subject to the conditions therein stated. The Members agree,
however, that the Managers from time to time may determine, due to contractual
obligations, business concerns, or other considerations, that certain
information regarding the business, affairs, properties, and financial condition
of the Company should be kept confidential and not provided to some or all other
Members, and that it is not just or reasonable for those Members or assignees or
representatives thereof to examine or copy that information.

     (b) The Members acknowledge that, from time to time, they may receive
information from or regarding the Company in the nature of trade secrets or that
otherwise is confidential, the release of which may be damaging to the Company
or Persons with which it does business. Each Member shall hold in strict
confidence any information it receives regarding the Company that is identified
as being confidential (and if that information is provided in writing, that is
so marked) and may not disclose it to any Person other than another Member or a
Manger, except for disclosures (i) compelled by law (but the Member must notify
the Managers promptly of any request for that information, before disclosing it
if practicable), (ii) to advisers or representatives of the Member or Persons to
which that Member's Membership Interest may be Disposed as permitted by these
Regulations, but only if the recipients have agreed to be bound by the
provisions of this Section 3.06(b), or (iii) of information that Member also has
received from a source independent of the Company that the Member reasonably
believes obtained that information without breach of any obligation of
confidentiality. The Members acknowledge that breach of the provisions of this
Section 3.06(b) may cause irreparable injury to the Company for which monetary
damages are inadequate, difficult to compute, or both. Accordingly, the Members
agree that the provisions of this Section 3.06(b) may be enforced by specific
performance.

     3.07 LIABILITY TO THIRD PARTIES. No Member or Manager shall be liable for
the debts, obligations or liabilities of the Company, including under a
judgment, decree or order of a court.

     3.08 WITHDRAWAL. A Member does not have the right or power to withdraw from
the Company as a member.

     3.09 LACK OF AUTHORITY. No Member (other than a Manager or an officer) has
the authority or power to act for or on behalf of the Company, to do any act
that would be binding on the Company, or to incur any expenditures on behalf of
the Company.

                                   ARTICLE IV
                              CAPITAL CONTRIBUTIONS

     4.01 INITIAL CONTRIBUTIONS. Contemporaneously with the execution by such
Member of these Regulations, each Member shall make the Capital Contributions
described for that Member in Exhibit A.


                                       -7-

     4.02 SUBSEQUENT CONTRIBUTIONS. Without creating any rights in favor of any
third party, each Member shall contribute to the Company, in cash, on or before
the date specified as hereinafter described, that Member's Sharing Ratio of all
monies that in the judgement of the Managers are necessary to enable the Company
to cause the assets of the Company to be properly operated and maintained and to
discharge its costs, expenses, obligations, and liabilities; provided, however,
that a Member is not obligated to contribute a total amount that, when added to
all Capital Contributions that Member previously has made pursuant to Section
4.01 or this Section 4.02. exceeds that Member's Commitment. The Managers shall
notify each Member of the need for Capital Contributions pursuant to this
Section 4.02 when appropriate, which notice must include a statement in
reasonable detail of the proposed uses of the Capital Contributions and a date
(which date may be no earlier than the fifth Business Day following each
Member's receipt of its notice) before which the Capital Contributions must be
made. Notices for Capital Contributions must be made to all Members in
accordance with their Sharing Ratios.

     4.03 FAILURE TO CONTRIBUTE. (a) If a Member does not contribute by the time
required all or any portion of a Capital Contribution that Member is required to
make as provided in these Regulations, the Company may exercise, on notice to
that Member (the "Delinquent Member"), one or more of the following remedies:

          (i) taking such action (including, without limitation, court
     proceedings) as the Managers may deem appropriate to obtain payment by the
     Delinquent Member of the portion of the Delinquent Member's Capital
     Contribution that is in default, together with interest thereon at the
     Default Interest Rate from the date that the Capital Contribution was due
     until the date that it is made, all at the cost and expense of the
     Delinquent Member;

          (ii) permitting the other Members in proportion to their Sharing
     Ratios or in such other percentages as they may agree (the "Lending Member"
     whether one or more), to advance the portion of the Delinquent Member's
     Capital Contribution that is in default, with the following results:

               (A) the sum advanced constitutes a loan from the Lending Member
          to the Delinquent Member and a Capital Contribution of that sum to the
          Company by the Delinquent Member pursuant to the applicable provisions
          of these Regulations,

               (B) the principal balance of the loan and all accrued unpaid
          interest thereon is due and payable in whole on the tenth day after
          written demand therefor by the Lending Member to the Delinquent
          Member,

               (C) the amount lent bears interest at the Default Interest Rate
          from the day that the advance is deemed made until the date that the
          loan, together with all interest accrued on it, is repaid to the
          Lending Member,

               (D) all distributions from the Company that otherwise would be
          made to the Delinquent Member (whether before or after dissolution of
          the Company) instead shall be paid to the Lending Member until the
          loan and all interest accrued on it have been paid in full to the
          lending Member (with payments being applied first to accrued and
          unpaid interest and then to principal),


                                       -8-

               (E) the payment of the loan and interest accrued on it is secured
          by a security interest in the Delinquent Member's Membership Interest,
          as more fully set forth in Section 4.03(b), and

               (F) the Lending Member has the right, in addition to the other
          rights and remedies granted to it pursuant to these Regulations or
          available to it at law or in equity, to take any action (including,
          without limitation, court proceedings) that the Lending Member may
          deem appropriate to obtain payment by the Delinquent Member of the
          loan and all accrued and unpaid interest on it, at the cost and
          expense of the Delinquent Member;

          (iii) exercising the rights of a secured party under the Uniform
     Commercial Code of the State of Nevada, as more fully set forth in Section
     4.03(b); or

          (iv) exercising any other rights and remedies available at law or in
     equity,

     (b) Each Member grants to the Company, and to each Lending Member with
respect to any loans made by the Lending Member to that Member as a Delinquent
Member pursuant to Section 4.03(a)(ii), as security, equally and ratably, for
the payment of all Capital Contributions that Member has agreed to make and the
payment of all loans and interest accrued on them made by Lending Members to
that Member as a Delinquent Member pursuant to Section 4.03(a)(ii), a security
interest in and a general lien on its Membership Interest and the proceeds
thereof, all under the Uniform Commercial Code of the State of Nevada. On any
default in the payment of a Capital Contribution or in the payment of such a
loan or interest accrued on it, the Company or the Lending Member, as
applicable, is entitled to all the rights and remedies of a secured party under
the Uniform Commercial Code of the State of Nevada with respect to the security
interest granted in this Section 4.03(b). Each Member shall execute and deliver
to the Company and the other Members all financing statements and other
instruments that the Managers or the Lending Member, as applicable, may request
to effectuate and carry out the preceding provisions of this Section 4.03(b). At
the option of the Managers or a Lending Member, these Regulations or a carbon,
photographic, or other copy hereof may serve as a financing statement.

     4.04 RETURN OF CONTRIBUTIONS. Other than as expressly provided in these
Regulations, Member is not entitled to the return of any part of its Capital
Contributions or to be paid interest in respect of either its capital account or
its Capital Contributions. An unrepaid Capital Contribution is not a liability
of the Company or of any Member. A Member is not required to contribute or to
lend any cash or property to the Company to enable the Company to return any
Member's Capital Contributions.

     4.05 ADVANCES BY MEMBERS. If the Company does not have sufficient cash to
pay its obligations, any Member(s) that may agree to do so with the Managers'
consent may advance all or part of the needed funds to or on behalf of the
Company. An advance described in this Section 4.05 constitutes a loan from the
Member to the Company, bears interest at the General Interest Rate from the date
of the advance until the date of payment, and is not a Capital Contribution.

     4.06 CAPITAL ACCOUNTS. A capital account shall be established and
maintained for each Member. Each Member's capital account (a) shall be increased
by (i) the amount of money


                                       -9-

contributed by that Member to the Company, (ii) the fair market value of
property contributed by that Member to the Company (net of liabilities secured
by the contributed property that the Company is considered to assume or take
subject to under section 752 of the Code), and (iii) allocations to that Member
of Company income and gain (or items thereof), including income and gain exempt
from tax and income and gain described in Treas. Reg. Section
1.704-l(b)(2)(iv)(g), but excluding income and gain described in Treas. Reg.
Section 1.704-l(b)(4)(i), and (b) shall be decreased by (i) the amount of money
distributed to that Member by the Company, (ii) the fair market value of
property distributed to that Member by the Company (net of liabilities secured
by the distributed property that the Member is considered to assume or take
subject to under section 752 of the Code), (iii) allocations to that Member of
expenditures of the Company described in section 705(a)(2)(B) of the Code, and
(iv) allocations of Company loss and deduction (or items thereof), including
loss and deduction described in Treas. Reg. Section 1.704-l(b)(2)(iv)(g), but
excluding items described in clause (b)(iii) above and loss or deduction
described in Treas. Reg. Section 1.704-l(b)(4)(i) or Section 1.704-l(b)(4)(iii).
The Members' capital accounts also shall be maintained and adjusted as permitted
by the provisions of Treas. Reg. Section 1.704-l(b)(2)(iv)(f) and as required by
the other provisions of Treas. Reg. Sections 1.704-l(b)(2)(iv) and
1.704-l(b)(4), including adjustments to reflect the allocations to the Members
of depreciation, depletion, amortization, and gain or loss as computed for book
purposes rather than the allocation of the corresponding items as computed for
tax purposes, as required by Treas. Reg. Section 1.704-l(b)(2)(iv)(g). A Member
that has more than one Membership Interest shall have a single capital account
that reflects all its Membership Interests, regardless of the class of
Membership Interests owned by that Member and regardless of the time or manner
in which those Membership Interests were acquired. On the transfer of all or
part of a Membership Interest, the capital account of the transferor that is
attributable to the transferred Membership Interest or part thereof shall carry
over to the transferee Member in accordance with the provisions of Treas. Reg.
Section 1.704-l(b)(2)(iv)(l).

                                    ARTICLE V
                          ALLOCATIONS AND DISTRIBUTIONS

     5.01 ALLOCATIONS. (a) Except as may be required by section 701(c) of the
Code and Treas. Reg. Section 1.701-l(b)(2)(iv)(f)(4), all items of income, gain,
loss, deduction, and credit of the Company shall be allocated among the Members
in accordance with their Sharing Ratios.

     (b) All items of income, gain, loss, deduction, and credit allocable to any
Membership Interest that may have been transferred shall be allocated between
the transferor and the transferee based on the portion of the calendar year
during which each was recognized as owning that Membership Interest, without
regard to the results of Company operations during any particular portion of
that calendar year and without regard to whether cash distributions were made to
the transferor or the transferee during that calendar year; provided, however,
that this allocation must be made in accordance with a method permissible under
section 706 of the Code and the regulations thereunder.

     5.02 DISTRIBUTIONS. All receipts and revenues of the Company from any
source shall be applied and distributed in the following order of priority with
no distribution being made in any category set forth below unless and until the
preceding category has been satisfied in full either by payment or by setting
aside of a cash reserve for payment of same.

     (a) in payment of all debts, obligations, liabilities, costs and expenses
incurred in connection with or on account of the Company;

     (b) in repayment of any loans and accrued interest thereon made by a
Lending Member pursuant to Section 4.03(a)(ii);


                                      -10-

     (c) in repayment of Contributions by the Member in accordance with their
Sharing Ratios, subject to the provisions of Section 4.03.

     (d) after having satisfied (a), (b) and (c) above, receipts and revenues of
the Company shall represent the profits of the Company and shall be distributed
in the following order of priority:

          (i) the Contributions made by the Members to the Company pursuant to
     Sections 4.01 and 4.02 herein shall bear interest at a rate which is two
     percent (2%) per annum greater than the prime rate charged by the Bank of
     Nova Scotia to its most creditworthy customers of U.S. Dollar demand loans,
     but in no event shall the rate of interest exceed the maximum rate
     permitted by laws, from the date of such advance until repaid to such
     Member in accordance with (c) above.

          (ii) after having satisfied (a), (b), (d) and (d)(i) above, the
     receipts and revenues of the Company shall be distributed to the Members
     pro rate and pari passu in accordance with their Sharing Ratios.

However, no distribution of profits shall be made until after completion of any
development and/or construction activities undertaken by the Company, without
the agreement of the Members.

                                   ARTICLE VI
                                    MANAGERS

     6.01 MANAGEMENT BY MANAGERS. (a) Except for situations in which the
approval of the Members is required by these Regulations or by nonwaivable
provisions of applicable law, and subject to the provisions of Section 6.02, (i)
the powers of the Company shall be exercised by or under the authority of, and
the business and affairs of the Company shall be managed under the direction of,
the Managers; and (ii) the Managers may make all decisions and take all actions
for the Company not otherwise provided for in these Regulations, including,
without limitation, the following:

          (i) entering into, making, and performing contracts, agreements, and
     other undertakings binding the Company that may be necessary, appropriate,
     or advisable in furtherance of the purposes of the Company and making all
     decisions and waivers thereunder;

          (ii) opening and maintaining bank and investment accounts and
     arrangements, drawing checks and other orders for the payment of money, and
     designating individuals with authority to sign or give instructions with
     respect to those accounts and arrangements;

          (iii) maintaining the assets of the Company in good order;

          (iv) collecting sums due the Company;

          (v) to the extent that funds of the Company are available therefor,
     paying debts and obligations of the Company;

          (vi) acquiring, utilizing for Company purposes, and Disposing of any
     asset of the Company;


                                      -11-

          (vii) borrowing money or otherwise committing the credit of the
     Company for Company activities and voluntary prepayments or extensions of
     debt;

          (viii) selecting, removing, and changing the authority and
     responsibility of lawyers, accountants, and other advisers and consultants;

          (ix) obtaining insurance for the Company;

          (x) determining distributions of Company cash and other property as
     provided in Section 5.02;

          (xi) establishing a seal for the Company;

          (xii) selling, leasing, exchanging or otherwise disposing of
     (including by way of a pledge, mortgage, deed of trust or trust indenture)
     all or any portion of the Company's property and assets (with or without
     good will); and

          (xiii) being a party to (i) a merger, or (ii) an exchange or
     acquisition.

     (b) Notwithstanding the provisions of Section 6.01 (a), the Managers may
not cause the Company to do any of the following without complying with the
applicable requirements set forth below:

          (i) amend or restate the Articles, without complying with the
     applicable procedures set forth in the Act.

     6.02 ACTIONS BY MANAGERS; COMMITTEES; DELEGATION OF AUTHORITY AND DUTIES.
(a) In managing the business and affairs of the Company and exercising its
powers, the Managers shall act (i) collectively through meetings and written
consents pursuant to Sections 6.05 and 6.07; (ii) through committees pursuant to
Section 6.02(b); or (iii) through Managers to whom authority and duties have
been delegated pursuant to Section 6.02(c).

     (b) The Managers may, from time to time, designate one or more committees,
each of which shall be comprised of one or more Managers. Any such committee, to
the extent provided in such resolution or in the Articles or these Regulations,
shall have and may exercise all of the authority of the Managers, subject to the
limitations set forth in the Act. At every meeting of any such committee, the
presence of a majority of all the members thereof shall constitute a quorum, and
the affirmative vote of a majority of the members present shall be necessary for
the adoption of any resolution. The Managers may dissolve any committee at any
time, unless otherwise provided in the Articles or these Regulations.

     (c) The Members and the Managers hereby delegate to each of the Managers
(acting by themself and without the necessity of any other approval or
authorization) or to an authorized representative of the Company, designated by
one or more of the Managers, the authority to take any of the actions authorized
in Section 6.01(a) hereof. In addition, the Managers may assign titles
(including, without limitation, president, vice president, secretary, assistant
secretary, treasurer and assistant treasurer) to any such Manager. Unless the
Managers decide otherwise, if the title is one commonly used for officers of a
business corporation formed under the laws of the State of Nevada, the
assignment of such title shall constitute the delegation to such Manager of the
authority and duties that are normally associated with that office, subject to
any specific delegation of authority and duties made pursuant to the first
sentence of this Section 6.02(c). Any number of titles may be held by the same
Manager. Any delegation pursuant to this Section 6.02(c) may be revoked at any
time by the Managers.


                                      -12-

     (d) Any Person dealing with the Company, other than a Member, may rely on
the authority of any Manager, authorized representative or officer in taking any
action in the name of the Company without inquiry into the provisions of these
Regulations or compliance herewith, regardless of whether that action actually
is taken in accordance with the provisions of these Regulations.

     6.03 NUMBER AND TERM OF OFFICE. The number of Managers of the Company shall
be determined from time to time by resolution of the Managers; provided,
however, that no decrease in the number of Managers that would have the effect
of shortening the term of an incumbent Manager may be made by the Managers. If
the Managers make no such determination, the number of Managers shall be the
number set forth in the Articles as the number of Managers constituting the
initial Managers. Each Manager shall hold office for the term for which he is
elected and thereafter until his successor shall have been elected and
qualified, or until his earlier death, resignation or removal. Unless otherwise
provided in the Articles, Managers need not be Members or residents of the State
of Nevada.

     6.04 VACANCIES; REMOVAL; RESIGNATION. Any Manager position to be filled by
reason of an increase in the number of Managers may be filled by election at an
annual or special meeting of Members called for that purpose. Any vacancy
occurring in the Managers other than by reason of an increase in the number of
Managers may be filled (a) by election at an annual or special meeting of the
Members called for that purpose or (b) by the affirmative vote of a majority of
the remaining Managers though less than a quorum of the Managers. A Manager
elected to fill a vacancy occurring other than by reason of an increase in the
number of Managers shall be elected for the unexpired term of his predecessor in
office. At any meeting of Members at which a quorum of Members is present called
expressly for that purpose, or pursuant to a written consent adopted pursuant to
these Regulations, any Manager may be removed, with or without cause, by a
Required Interest. Any Manager may resign at any time. Such resignation shall be
made in writing and shall take effect at the time specified therein, or if no
time be specified, at the time of its receipt by the remaining Managers. The
acceptance of a resignation shall not be necessary to make it effective, unless
expressly so provided in the resignation.

     6.05 MEETINGS. (a) Unless otherwise required by law or provided in the
Articles or these Regulations, a majority of the total number of Managers fixed
by, or in the manner provided in, the Articles or these Regulations shall
constitute a quorum for the transaction of business of the Managers, and the act
of a majority of the Managers present at a meeting at which a quorum is present
shall he the act of the Managers. A Manager who is present at a meeting of the
Managers at which action on any Company matter is taken shall be presumed to
have assented to the action unless his dissent shall be entered in the minutes
of the meeting or unless he shall file his written dissent to such action with
the Person acting as secretary of the meeting before the adjournment thereof or
shall deliver such dissent to the Company immediately after the adjournment of
the meeting. Such right to dissent shall not apply to a Manager who voted in
favor of such action.

     (b) Meetings of the Managers may be held at such place or places as shall
be determined from time to time by resolution of the Managers. At all meetings
of the Managers, business shall be transacted in such order as shall from time
to time be determined by resolution of the Managers. Attendance of a Manager at
a meeting shall constitute a waiver of notice of such meeting, except where a
Manager attends a meeting for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully
called or convened.


                                      -13-

     (c) In connection with any annual meeting of Members at which Managers were
elected, the Managers may, if a quorum is present, hold its first meeting for
the transaction of business immediately after and at the same place as such
annual meeting of the Members. Notice of such meeting at such time and place
shall not be required.

     (d) Regular meetings of the Managers shall be held at such times and places
as shall be designated from time to time by resolution of the Managers. Notice
of such regular meetings shall not be required.

     (e) Special meetings of the Managers may be called by any Manager on at
least 24 hours notice to each other Manager. Such notice need not state the
purpose or purposes of, nor the business to be transacted at, such meeting,
except as may otherwise be required by law or provided for by the Articles or
these Regulations.

     6.06 APPROVAL OR RATIFICATION OF ACTS OR CONTRACTS BY MEMBERS. The Managers
in their discretion may submit any act or contract for approval or ratification
at any annual meeting of the Members, or at any special meeting of the Members
called for the purpose of considering any such act or contract, and any act or
contract that shall be approved or be ratified by a Required Interest shall be
as valid and as binding upon the Company and upon all the Members as if it shall
have been approved or ratified by every Member of the Company.

     6.07 ACTION BY WRITTEN CONSENT OR TELEPHONE CONFERENCE. Any action
permitted or required by the Act, the Articles or these Regulations to be taken
at a meeting of the Managers or any committee designated by the Managers may be
taken without a meeting if a consent in writing, setting forth the action to be
taken, is signed by all the Managers or members of such committee, as the case
may be. Such consent shall have the same force and effect as a unanimous vote at
a meeting and may be stated as such in any document or instrument filed with the
Secretary of State of Nevada, and the execution of such consent shall constitute
attendance or presence in person at a meeting of the Managers or any such
committee, as the case may be. Subject to the requirements of the Act, the
Articles or these Regulations for notice of meetings, unless otherwise
restricted by the Articles, Managers, or members of any committee designated by
the Managers, may participate in and hold a meeting of the Managers or any
committee of Managers, as the case may be, by means of a conference telephone or
similar communications equipment by means of which all Persons participating in
the meeting can hear each other, and participation in such meeting shall
constitute attendance and presence in person at such meeting, except where a
Person participates in the meeting for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully
called or convened.

     6.08 COMPENSATION. The Managers shall reserve such compensation, if any,
for their services as may be designated from time to time by all of the
Managers. In addition, the Managers shall be entitled to be reimbursed for
out-of-pocket costs and expenses incurred in the course of their service
hereunder; including the portion of their overhead reasonably allocable to
Company activities.

     6.09 CONFLICTS OF INTEREST. Subject to the other express provisions of
these Regulations, each Manager, Member and officer of the Company at any time
and from time to time may engage in and possess interests in other business
ventures of any and every type and description, independently or with others,
including ones in competition with the Company, with no obligation to offer to
the Company or any other Member, Manager or officer the right to participate
therein. The Company may transact business with any Manager, Member, officer or
Affiliate thereof, provided the terms of those transactions are no less
favorable than those the Company could obtain from unrelated third parties.


                                      -14-

     6.10 OFFICERS. (a) The Managers may, from time to time, designate one or
more Persons to be officers of the Company. No officer need be a resident of the
State of Nevada, a Member or a Manager. Any officers so designated shall have
such authority and perform such duties as the Managers may, from time to time,
delegate to them. The Managers may assign titles to particular officers. Unless
the Managers decide otherwise, if the title is one commonly used for officers of
a business corporation formed under the laws of the State of Nevada, the
assignment of such title shall constitute the delegation to such officer of the
authority and duties that are normally associated with that office, subject to
(i) any specific delegation of authority and duties made to such officer by the
Managers pursuant to the third sentence of this Section 6.10(b), or (ii) any
delegation of authority and duties made to one or more Mangers pursuant to
Section 6.02(a). Each officer shall hold office until his successor shall be
duly designated and shall quality or until his death or until he shall resign or
shall have been removed in the manner hereinafter provided. Any number of
offices may be held by the same Person. The salaries or other compensation, if
any, of the officers and agents of the Company shall be fixed from time to time
by the Managers.

     (b) Any officer may resign as such at any time. Such resignation shall be
made in writing and shall take effect at the time specified therein, or if no
time be specified, at the time of its receipt by the Managers. The acceptance of
a resignation shall not be necessary to make it effective, unless expressly so
provided in the resignation. Any officer may be removed as such, either with or
without cause, by the Managers whenever in their judgment the best interests of
the Company will be served thereby; provided, however, that such removal shall
be without prejudice to the contract rights, if any, of the Person so removed.
Designation of an officer shall not of itself create contract rights. Any
vacancy occurring in any office of the Company (other than Manager) may be
filled by the Managers.

                                   ARTICLE VII
                               MEETINGS OF MEMBERS

     7.01 MEETINGS. (a) A quorum shall be present at a meeting of Members if the
holders of a Required Interest are represented at the meeting in person or by
proxy. With respect to any matter, other than a matter for which the affirmative
vote of the holders of a specified portion of the Sharing Ratios of all Members
entitled to vote is required by the Act, the affirmative vote of a Required
Interest at a meeting of Members at which a quorum is present shall be the act
of the Members.

     (b) All meetings of the Members shall be held at the principal place of
business of the Company or at such other place within or without the State of
Nevada as shall be specified or fixed in the notices or waivers of notice
thereof; provided that any or all Members may participate in any such meeting by
means of conference telephone or similar communications equipment pursuant to
Section 7.05.

     (c) Notwithstanding the other provisions of the Articles or these
Regulations, the chairman of the meeting or the holders of a Required Interest
shall have the power to adjourn such meeting from time to time, without any
notice other than announcement at the meeting of the time and place of the
holding of the adjourned meeting. If such meeting is adjourned by the Members,
such time and place shall be determined by a vote of the holders of a Required
Interest. Upon the resumption of such adjourned meeting, any business may be
transacted that might have been transacted at the meeting as originally called.

     (d) An annual meeting of the Members, for the election of the Managers and
for the transaction of such other business as may properly come before the
meeting, shall be held at such place, within or without the State of Nevada, on
such date and at such time as the


                                      -15-

Managers shall fix and set forth in the notice of the meeting, which date shall
be within 13 months subsequent to the date of organization of the Company or the
last annual meeting of Members, whichever most recently occurred.

     (e) Special meetings of the Members for any proper purpose or purposes may
be called at any time by the Managers or the holders of at least ten percent of
the Sharing Ratios of all Members. If not otherwise stated in or fixed in
accordance with the remaining provisions hereof, the record date for determining
Members entitled to call a special meeting is the date any Member first signs
the notice of that meeting. Only business within the purpose or purposes
described in the notice (or waiver thereof) required by these Regulations may be
conducted at a special meeting of the Members.

     (f) Written or printed notice stating the place, day and hour of the
meeting and, in the case of a special meeting, the purpose or purposes for which
the meeting is called, shall be delivered not less than ten nor more than 60
days before the date of .the meeting, either personally or by mail, by or at the
direction of the Managers or Person calling the meeting, to each Member entitled
to vote at such meeting. If mailed, any such notice shall be deemed to be
delivered when deposited in the United States mail, addressed to the Member at
his address provided for on Exhibit A, with postage thereon prepaid.

     (g) The date on which notice of a meeting of Members is mailed or the date
on which the resolution of the Managers declaring a distribution is adopted, as
the case may be, shall be the record date for the determination of the Members
entitled to notice of or to vote at such meeting, including any adjournment
thereof, or the Members entitled to receive such distribution.

     (h) The right of Members to cumulative voting in the election of Managers
is expressly prohibited.

     7.02 VOTING LIST. The Managers shall make, at least ten days before each
meeting of Members, a complete list of the Members entitled to vote at such
meeting or any adjournment thereof, arranged in alphabetical order, with the
address of and the Sharing Ratios held by each, which list, for a period of ten
days prior to such meeting, shall be kept on file at the resident office or
principal place of business of the Company and shall be subject to inspection by
any Member at any time during usual business hours. Such list shall also be
produced and kept open at the time and place of the meeting and shall be subject
to the inspection of any Member during the whole time of the meeting. The
original membership records shall be prima-facie evidence as to who are the
Members entitled to examine such list or transfer records or to vote at any
meeting of Members. Failure to comply with the requirements of this Section
shall not affect the validity of any action taken at the meeting.

     7.03 PROXIES. A Member may vote either in person or by proxy executed in
writing by the Member. A telegram, telex, cablegram or similar transmission by
the Member, or a photographic, photostatic, facsimile or similar reproduction of
a writing executed by the Member shall be treated as an execution in writing for
purposes of this Section. Proxies for use at any meeting of Members or in
connection with the taking of any action by written consent shall be filed with
the Managers, before or at the time of the meeting or execution of the written
consent, as the case may be. All proxies shall be received and taken charge of
and all ballots shall be received and canvassed by the Managers, who shall
decide all questions touching upon the qualification of voters, the validity of
the proxies, and the acceptance or rejection of votes, unless an inspector or
inspectors shall have been appointed by the chairman of the meeting, in which
event such inspector or inspectors shall decide all such questions. No proxy
shall be valid after 11 months from the date of its execution unless otherwise
provided in the proxy. A proxy


                                      -16-

shall be revocable unless the proxy form conspicuously states that the proxy is
irrevocable and the proxy is coupled with an interest. Should a proxy designate
two or more Persons to act as proxies, unless that instrument shall provide to
the contrary, a majority of such Persons present at any meeting at which their
powers thereunder are to be exercised shall have and may exercise all the powers
of voting or giving Consents thereby conferred, or if only one be present, then
such powers may be exercised by that one; or, if an even number attend and a
majority do not agree on any particular issue, the Company shall not be required
to recognize such proxy with respect to such issue if such proxy does not
specify how the Sharing Ratios that are the subject of such proxy are to be
voted with respect to such issue.

     7.04 CONDUCT OF MEETINGS. All meetings of the Members shall be presided
over by the chairman of the meeting, who shall be a Manager (or representative
thereof) designated by a majority of the Managers. The chairman of any meeting
of Members shall determine the order of business and the procedure at the
meeting, including such regulation of the manner of voting and the conduct of
discussion as seem to him in order.

     7.05 ACTION BY WRITTEN CONSENT OR TELEPHONE CONFERENCE. (a) Any action
required or permitted to be taken at any annual or special meeting of Members
may be taken without a meeting, without prior notice, and without a vote, if a
consent or consents in writing, setting forth the action so taken, shall be
signed by the holder or holders of not less than the minimum Sharing Ratios that
would be necessary to take such action at a meeting at which the holders of all
Sharing Ratios entitled to vote on the action were present and voted. Every
written consent shall bear the date of signature of each Member who signs the
consent. No written consent shall be effective to take the action that is the
subject to the consent unless, within 60 days after the date of the earliest
dated consent delivered to the Company in the manner required by this Section, a
consent or consents signed by the holder or holders of not less than the minimum
Sharing Ratios that would be necessary to take the action that is the subject of
the consent are delivered to the Company by delivery to its resident office, its
principal place of business, or the Managers. Delivery shall be by hand or
certified or registered mail, return receipt requested. Delivery to the
Company's principal place of business shall be addressed to the Managers. A
telegram, telex, cablegram or similar transmission by a Member, or a
photographic, photostatic, facsimile or similar reproduction of a writing signed
by a Member, shall be regarded as signed by the Member for purposes of this
Section. Prompt notice of the taking of any action by Members without a meeting
by less than unanimous written consent shall be given to those Members who did
not consent in writing to the action.

     (b) The record date for determining Members entitled to consent to action
in writing without a meeting shall be the first date on which a signed written
consent setting forth the action taken or proposed to be taken is delivered to
the Company by delivery to its resident office, its principal place of business,
or the Managers. Delivery shall be by hand or by certified or registered mail,
return receipt requested. Delivery to the Company's principal place of business
shall be addressed to the Managers.

     (c) If any action by Members is taken by written consent, any articles or
documents filed with the Secretary of State of Nevada as a result of the taking
of the action shall state, in lieu of any statement required by the Act
concerning any vote of Members, that written consent has been given in
accordance with the provisions of the Act and that any written notice required
by the Act has been given.

     (d) Members may participate in and hold a meeting by means of conference
telephone or similar communications equipment by means of which all Persons
participating in the meeting


                                      -17-

can hear each other, and participation in such meeting shall constitute
attendance and presence in person at such meeting, except where a Person
participates in the meeting for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully
called or convened.

                                  ARTICLE VIII
                                 INDEMNIFICATION

     8.01 RIGHT TO INDEMNIFICATION. Subject to the limitations and conditions as
provided in this Article VIII, each Person who was or is made a party or is
threatened to be made a party to or is involved in any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative,
arbitrative or investigative (hereinafter a "Proceeding"), or any appeal in such
a Proceeding or any inquiry or investigation that could lead to such a
Proceeding, by reason of the fact that he or she, or a Person of whom he or she
is the legal representative, is or was a Manager of the Company or while a
Manager of the Company is or was serving at the request of the Company as a
Manager, director, officer, partner, venturer, proprietor, trustee, employee,
agent, or similar functionary of another foreign or domestic limited liability
company, corporation, partnership, joint venture, sole proprietorship, trust,
employee benefit plan or other enterprise shall be indemnified by the Company to
the fullest extent permitted by the Act and the laws of the State of Nevada, as
the same exist or may hereafter be amended (but, in the case of any such
amendment, only to the extent that such amendment permits the Company to provide
broader indemnification rights than said law permitted the Company to provide
prior to such amendment) against judgments, penalties (including excise and
similar taxes and punitive damages), fines, settlements and reasonable expenses
(including, without limitation, attorneys' fees) actually incurred by such
Person in connection with such Proceeding, and indemnification under this
Article VIII shall continue as to a Person who has ceased to serve in the
capacity which initially entitled such Person to indemnify hereunder. The rights
granted pursuant to this Article VIII shall be deemed contract rights, and no
amendment, modification or repeal of this Article VIII shall have the effect of
limiting or denying any such rights with respect to actions taken or Proceedings
arising prior to any such amendment, modification or repeal. It is expressly
acknowledged that the indemnification provided in this Article VIII could
involve indemnification for negligence or under theories of strict liability.

     8.02 ADVANCE PAYMENT. The right to indemnification conferred in this
Article VIII shall include the right to be paid or reimbursed by the Company the
reasonable expenses incurred by a Person of the type entitled to be indemnified
under Section 8.01 who was, is or is threatened to be made a named defendant or
respondent in a Proceeding in advance of the final disposition of the Proceeding
and without any determination as to the Person's ultimate entitlement to
indemnification; provided, however, that the payment of such expenses incurred
by any such Person in advance of the final disposition of a Proceeding, shall be
made only upon delivery to the Company of a written affirmation by such Manager
of his or her good faith belief that he has met the standard of conduct for
indemnification under this Article VIII and a written undertaking, by or on
behalf of such Person, to repay all amounts so advanced if it shall ultimately
be determined that such indemnified Person is not entitled to be indemnified
under this Article VIII or otherwise.

     8.03 INDEMNIFICATION OF OFFICERS, EMPLOYEES, AND AGENTS. The Company, by
adoption of a resolution of the Managers, may indemnity and advance expenses to
an officer, employee or agent of the Company to the same extent and subject to
the same conditions under which it may indemnify and advance expenses to
Managers under this Article VIII; and, the Company may indemnify and advance
expenses to Persons who are not or were not Managers, officers, employees or
agents of the Company but who are or were serving at the request of the Company
as a Manager, director, officer, partner, venturer, proprietor, trustee,
employee, agent


                                      -18-

or similar functionary of another foreign or domestic limited liability company,
corporation, partnership, joint venture, sole proprietorship, trust, employee
benefit plan or other enterprise against any liability asserted against him and
incurred by him in such a capacity or arising out of his status as such a Person
to the same extent that it may indemnity and advance expenses to Managers under
this Article VIII.

     8.04 APPEARANCE AS A WITNESS. Notwithstanding any other provision of this
Article VIII, the Company may pay or reimburse expenses incurred by a Manager in
connection with his appearance as a witness or other participation in a
Proceeding at a time when he is not a named defendant or respondent in the
Proceeding.

     8.05 NONEXCLUSIVITY OF RIGHTS. The right to indemnification and the
advancement and payment of expenses conferred in this Article VIII shall not be
exclusive of any other right which a Manager or other Person indemnified
pursuant to Section 8.03 may have or hereafter acquire under any law (common or
statutory), provision of the Articles or these Regulations, agreement, vote of
Members or disinterested Managers or otherwise.

     8.06 INSURANCE. The Company may purchase and maintain insurance, at its
expense, to protect itself and any Person who is or was serving as a Manager,
officer, employee or agent of the Company or is or was serving at the request of
the Company as a Manager, director, officer, partner, venturer, proprietor,
trustee, employee, agent or similar functionary of another foreign or domestic
limited liability company, corporation, partnership, joint venture, sole
proprietorship, trust, employee benefit plan or other enterprise against any
expense, liability or loss, whether or not the Company would have the power to
indemnify such Person against such expense, liability or loss under this Article
VIII.

     8.07 MEMBER NOTIFICATION. To the extent required by law, any
indemnification of or advance of expenses to a Manager in accordance with this
Article VIII shall be reported in writing to the Members with or before the
notice or waiver of notice of the next Members meeting or with or before the
next submission to Members of a consent to action without a meeting and, in any
case, within the 12-month period immediately following the date of the
indemnification or advance.

     8.08 SAVINGS CLAUSE. If this Article VIII or any portion hereof shall be
invalidated on any ground by any court of competent jurisdiction, then the
Company shall nevertheless indemnify and hold harmless each Manager or any other
Person indemnified pursuant to this Article VIII as to costs, charges and
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement with respect to any action, suit or proceeding, whether civil,
criminal, administrative or investigative to the full extent permitted by any
applicable portion of this Article VIII that shall not have been invalidated and
to the fullest extent permitted by applicable law.

                                   ARTICLE IX
                                      TAXES

     9.01 TAX RETURNS. The Managers shall cause to be prepared and filed all
necessary federal and state income tax returns for the Company, including making
the elections described in Section 9.02. Each Member shall furnish to the
Managers all pertinent information in its possession relating to Company
operations that is necessary to enable the Company's income tax returns to be
prepared and filed.

     9.02 TAX ELECTIONS. The Company shall make the following elections on the
appropriate tax returns:


                                      -19-

          (a) to adopt the year ending on May 31 as the Company's fiscal year;

          (b) to adopt a method of accounting as the Managers may determine from
     time to time;

          (c) if a distribution of Company property as described in section 734
     of the Code occurs or if a transfer of a Membership Interest as described
     in section 743 of the Code occurs, on written request of any Member, to
     elect, pursuant to section 754 of the Code, to adjust the basis of Company
     properties;

          (d) to elect to amortize the organizational expenses of the Company
     and the startup expenditures of the Company under Section 195 of the Code
     ratably over a period of 60 months as permitted by section 709(b) of the
     Code; and

          (e) any other election the Managers may deem appropriate and in the
     best interests of the Members.

Neither the Company nor any Manager or Member may make an election for the
Company to be excluded from the application of the provisions of subchapter K of
chapter 1 of subtitle A of the Code or any similar provisions of applicable
state law, and no provision of these Regulations (including, without limitation,
Section 2.06) shall be construed to sanction or approve such an election.

     9.03 "TAX MATTERS PARTNER." A majority of the Managers who are Members
shall designate one Manager that is a Member to be the "tax matters partner" of
the Company pursuant to section 6231(a)(7) of the Code; or, if there is no
Manager that is a Member, the "tax matters partner" shall be a Member that is
designated as such by a Required Interest. Any Member who is designated "tax
matters partner" shall take such action as may be necessary to cause each other
Member to become a "notice partner" within the meaning of section 6223 of the
Code. Any Member who is designated "tax matters partner" shall inform each other
Member of all significant matters that may come to its attention in its capacity
as "tax matters partner" by giving notice thereof on or before the fifth
Business Day after becoming aware thereof and, within that time, shall forward
to each other Member copies of all significant written communications it may
receive in that capacity. Any Member who is designated "tax matters partner" may
not take any action contemplated by sections 6222 through 6232 of the Code
without the consent of a Required Interest, but this sentence does not authorize
such Manager (or any other Manager) to take any action left to the determination
of an individual Member under sections 6222 through 6232 of the Code.

                                    ARTICLE X
                   BOOKS, RECORDS, REPORTS, AND BANK ACCOUNTS

     10.01 MAINTENANCE OF BOOKS. The Company shall keep books and records of
accounts and shall keep minutes of the proceedings of its Members, its Managers
and each committee of the Managers. The books of account for the Company shall
be maintained on a cash basis in accordance with the terms of these Regulations,
except that the capital accounts of the Members shall be maintained in
accordance with Section 4.06. The calendar year shall be the accounting year of
the Company.

     10.02 REPORTS. On or before the 120th day following the end of each fiscal
year during the term of the Company, the Managers shall cause each Member to be
furnished with a balance sheet, an income statement, and a statement of changes
in Members' capital of the Company for,


                                      -20-

or as of the end of, that year certified by a recognized firm of certified
public accountants. These financial statements must be prepared in accordance
with accounting principles generally employed for cash basis records
consistently applied (except as therein noted) and must be accompanied by a
report of the certified public accountants certifying the statements and stating
that (a) their examination was made in accordance with generally accepted
auditing standards and, in their opinion, the financial statements fairly
present the financial position, financial results of operations, and changes in
Members' capital in accordance with accounting principles generally employed for
cash-basis records consistently applied (except as therein noted) and (b) in
making the examination and reporting on the financial statements described
above, nothing came to their attention that caused them to believe that (i) the
income and revenues were not paid or credited in accordance with the financial
and accounting provisions of these Regulations, (ii) the costs and expenses were
not charged in accordance with the financial and accounting provisions of these
Regulations, or (iii) the Managers or any Member failed to comply in any
material respect with the financial and accounting provisions of these
Regulations, or if they do conclude that the Managers or a Member so failed,
specifying the nature and period of existence of the failure. The Managers also
may cause to be prepared or delivered such other reports as they may deem
appropriate. The Company shall bear the costs of all these reports.

     10.03 ACCOUNTS. The Managers shall establish and maintain one or more
separate bank and investment accounts and arrangements for Company funds in the
Company name with financial institutions and firms that the Managers determine.
The Managers may not commingle the Company's funds with the funds of any Member;
however, Company funds may be invested in a manner the same as or similar to the
Managers' investment of their own funds or investments by their Affiliates.

                                   ARTICLE XI
                             BANKRUPTCY OF A MEMBER

     11.01 BANKRUPT MEMBERS. Subject to Section 12.0l(c), if any Member becomes
a Bankrupt Member, the Company shall have the option, exercisable by notice from
the Managers to the Bankrupt Member (or its representative) at any time prior to
the 180th day after receipt of notice of the occurrence of the event causing it
to become a Bankrupt Member, to buy, and on the exercise of this option the
Bankrupt Member or its representative shall sell, its Membership Interest. The
purchase price shall be an amount equal to the fair market value thereof
determined by agreement of the Bankrupt Member (or its representative) and the
Managers; however, if those Persons do not agree on the fair market value on or
before the 30th day following the exercise of the option, either such Person, by
notice to the other, may require the determination of fair market value to be
made by an independent appraiser specified in that notice. If the Person
receiving that notice objects on or before the tenth day following receipt to
the independent appraiser designated in that notice, and those Persons otherwise
fail to agree on an independent appraiser, either such Person may petition the
United States District Judge for the State of Nevada then senior in service to
designate an independent appraiser. The determination of the independent
appraiser, however designated, is final and binding on all parties. The Bankrupt
Member and the Company each shall pay one-half of the costs of the appraisal.
The purchaser shall pay the fair market value as so determined in four equal
cash installments, the first due on closing and the remainder (together with
accumulated interest on the amount unpaid at the General Interest Rate) due on
each of the first three anniversaries thereof. The payment to be made to the
Bankrupt Member or its representative pursuant to this Section 11.01 is in
complete liquidation and satisfaction of all the rights and interest of the
Bankrupt Member and its representative (and of all Persons claiming by, through,
or under the Bankrupt Member and its representative) in and in respect of the
Company, including, without limitation, any Membership Interest, any rights in
specific Company property, and any rights against the Company and (insofar as
the affairs of the Company are concerned) against the Members, and constitutes a
compromise to which all Members have agreed pursuant to the Act.


                                      -21-

                                   ARTICLE XII
                    DISSOLUTION, LIQUIDATION, AND TERMINATION

     12.01 DISSOLUTION. The Company shall dissolve and its affairs shall be
wound up on the first to occur of the following:

          (a) the written consent of a Required Interest;

          (b) the expiration of the period fixed for the duration of the Company
     set forth in the Articles;

          (c) any Manager who is a Member (or, if there is no Manager who is a
     Member, any Member) shall become a Bankrupt Member (with or without the
     consent of a Required Interest); provided, however, that if the event
     described in this Section 12.01(c) shall occur and there shall be at least
     one other Member remaining, the Company shall not be dissolved, and the
     business of the Company shall be continued, if all Members so agree; and

          (d) entry of a decree of judicial dissolution of the Company under
     article 6.02 of the Act.

Except as provided in Section 12.01(c), the death, retirement, resignation,
expulsion, bankruptcy or dissolution of a Member, or the occurrence of any other
event that terminates the continued membership of a Member in the Company, shall
not cause a dissolution of the Company.

     12.02 LIQUIDATION AND TERMINATION. On dissolution of the Company, the
Managers shall act as liquidator or may appoint one or more Members as
liquidator. The liquidator shall proceed diligently to wind up the affairs of
the Company and make final distributions as provided herein and in the Act. The
costs of liquidation shall be borne as a Company expense. Until final
distribution, the liquidator shall continue to operate the Company properties
with all of the power and authority of the Managers. The steps to be
accomplished by the liquidator are as follows:

          (a) as promptly as possible after dissolution and again after final
     liquidation, the liquidator shall cause a proper accounting to be made by a
     recognized firm of certified public accountants of the Company's assets,
     liabilities, and operations through the last day of the calendar month in
     which the dissolution occurs or the final liquidation is completed, as
     applicable;

          (b) the liquidator shall cause the notice described in article
     6.05(A)(2) of the Act to be mailed to each known creditor of and claimant
     against the Company in the manner described in such article 6.05(A)(2) of
     the Act;

          (c) the liquidator shall pay, satisfy or discharge from Company funds
     all of the debts, liabilities and obligations of the Company (including,
     without limitation, all expenses incurred in liquidation and any advances
     described in Section 4.05) or otherwise make adequate provision for payment
     and discharge thereof (including, without limitation, the establishment of
     a cash escrow fund for contingent liabilities in such amount and for such
     term as the liquidator may reasonably determine); and

          (d) all remaining assets of the Company shall be distributed to the
     Members as follows:


                                      -22-

               (i) the liquidator may sell any or all Company property,
          including to Members, and any resulting gain or loss from each sale
          shall be computed and allocated to the capital accounts of the
          Members;

               (ii) with respect to all Company property that has not been sold,
          the fair market value of that property shall be determined and the
          capital accounts of the Members shall be adjusted to reflect the
          manner in which the unrealized income, gain, loss, and deduction
          inherent in property that has not been reflected in the capital
          accounts previously would be allocated among the Members if there were
          a taxable disposition of that property for the fair market value of
          that property on the date of distribution; and

               (iii) Company property shall be distributed among the Members in
          accordance with the positive capital account balances of the Members,
          as determined after taking into account all capital account
          adjustments for the taxable year of the Company during which the
          liquidation of the partnership occurs (other than those made by reason
          of this clause (iii)); and those distributions shall be made by the
          end of the taxable year of the Company during which the liquidation of
          the Company Occurs (or, if later, 90 days after the date of the
          liquidation).

All distributions in kind to the Members shall be made subject to the liability
of each distributee for costs, expenses, and liabilities theretofore incurred or
for which the Company has committed prior to the date of termination and those
costs, expenses, and liabilities shall be allocated to the distributee pursuant
to this Section 12.02. The distribution of cash and/or property to a Member in
accordance with the provisions of this Section 12.02 constitutes a complete
return to the Member of its Capital Contributions and a complete distribution to
the Member of its Membership Interest and all the Company's property and
constitutes a compromise to which all Members have consented within the meaning
of the Act. To the extent that a Member returns funds to the Company, it has no
claim against any other Member for those funds.

     12.03 DEFICIT CAPITAL ACCOUNTS. Notwithstanding anything to the contrary
contained in these Regulations, and notwithstanding any custom or rule of law to
the contrary, to the extent that the deficit, if any, in the capital account of
any Member results from or is attributable to deductions and losses of the
Company (including non-cash items such as depreciation), or distributions of
money pursuant to these Regulations to all Members in proportion to their
respective Sharing Ratios, upon dissolution of the Company such deficit shall
not be an asset of the Company and such Members shall not be obligated to
contribute such amount to the Company to bring the balance of such Member's
capital account to zero.

     12.04 ARTICLES OF DISSOLUTION. On completion of the distribution of Company
assets as provided herein, the Company is terminated, and the Managers (or such
other Person or Persons as the Act may require or permit) shall file Articles of
Dissolution with the Secretary of State of Nevada, cancel any other filings made
pursuant to Section 2.05, and take such other actions as may be necessary to
terminate the Company.


                                      -23-

                                  ARTICLE XIII
                               GENERAL PROVISIONS

     13.01 OFFSET. Whenever the Company is to pay any sum to any Member, any
amounts that Member owes the Company may be deducted from that sum before
payment.

     13.02 NOTICES. Except as expressly set forth to the contrary in these
Regulations, all notices, requests, or consents provided for or permitted to be
given under these Regulations must be in writing and must be given either by
depositing that writing in the United States mail, addressed to the recipient,
postage paid, and registered or certified with return receipt requested or by
delivering that writing to the recipient in person, by courier, or by facsimile
transmission; and a notice, request, or consent given under these Regulations is
effective on receipt by the Person to receive it. All notices, requests, and
consents to be sent to a Member must be sent to or made at the addresses given
for that Member on Exhibit A or in the instrument described in Section 3.03(d)
or 3.04, or such other address as that Member may specify by notice to the other
Members. Any notice, request, or consent to the Company or the Managers must be
given to the Managers at the following address: 250 Lesmill Road, Don Mills,
Ontario M3B 2T5 Canada. Whenever any notice is required to be given by law, the
Articles or these Regulations, a written waiver thereof, signed by the Person
entitled to notice, whether before or after the time stated therein, shall be
deemed equivalent to the giving of such notice.

     13.03 ENTIRE AGREEMENT; SUPERSEDURE. These Regulations constitute the
entire agreement of the Members and their Affiliates relating to the Company and
supersedes all prior contracts or agreements with respect to the Company,
whether oral or written.

     13.04 EFFECT OF WAIVER OR CONSENT. A waiver or consent, express or implied,
to or of any breach or default by any Person in the performance by that Person
of its obligations with respect to the Company is not a consent or waiver to or
of any other breach or default in the performance by that Person of the same or
any other obligations of that Person with respect to the Company. Failure on the
part of a Person to complain of any act of any Person or to declare any Person
in default with respect to the Company, irrespective of how long that failure
continues, does not constitute a waiver by that Person of its rights with
respect to that default until the applicable statute-of-limitations period has
run.

     13.05 AMENDMENT OR MODIFICATION. These Regulations may be amended or
modified from time to time only by a written instrument adopted by the Managers
and executed and agreed to by a Required Interest; provided, however, that (a)
an amendment or modification reducing a Member's Sharing Ratio or increasing its
Commitment (other than to reflect changes otherwise provided by these
Regulations) is effective only with that Member's consent, (b) an amendment or
modification reducing the required Sharing Ratio or other measure for any
consent or vote in these Regulations is effective only with the consent or vote
of Members having the Sharing Ratio or other measure theretofore required, and
(c) amendments of the type described in Section 3.04 may be adopted as therein
provided.

     13.06 BINDING EFFECT. Subject to the restrictions on Dispositions set forth
in these Regulations, these Regulations are binding on and inure to the benefit
of the Members and their respective heirs, legal representatives, successors,
and assigns.

     13.07 GOVERNING LAW; SEVERABILITY. THESE REGULATIONS ARE GOVERNED BY AND
SHALL BE CONSTRUED IN ACCORDANCE WITH LAW OF THE STATE OF NEVADA, EXCLUDING ANY
CONFLICT-OF-LAWS RULE OR PRINCIPLE THAT MIGHT REFER THE GOVERNANCE OR THE
CONSTRUCTION OF THESE REGULATIONS TO THE LAW OF ANOTHER JURISDICTION. In the
event of a direct


                                      -24-

conflict between the provisions of these Regulations and (a) any provision of
the Articles, or (b) any mandatory provision of the Act, the application
provision of the Articles or the Act shall control. If any provision of these
Regulations or the application thereof to any Person or circumstance is held
invalid or unenforceable to any extent, the remainder of these Regulations and
the application of that provision to other Persons or circumstances is not
affected thereby and that provision shall be enforced to the greatest extent
permitted by law.

     13.08 FURTHER ASSURANCES. In connection with these Regulations and the
transactions contemplated hereby, each Member shall execute and deliver any
additional documents and instruments and perform any additional acts that may be
necessary or appropriate to effectuate and perform the provisions of these
Regulations and those transactions.

     13.09 WAIVER OF CERTAIN RIGHTS. Each Member irrevocably waives any right it
may have to maintain any action for dissolution of the Company or for partition
of the property of the Company.

     13.10 INDEMNIFICATION. To the fullest extent permitted by law, each Member
shall indemnify the Company, each Manager and each other Member and hold them
harmless from and against all losses, costs, liabilities, damages, and expenses
(including, without limitation, costs of suit and attorney's fees) they may
incur on account of any breach by that Member of these Regulations.

     13.11 NOTICE TO MEMBERS OF PROVISIONS OF THIS AGREEMENT. By executing these
Regulations, each Member acknowledges that it has actual notice of (a) all of
the provisions of this Agreement, including, without limitation, the
restrictions on the transfer of Membership Interests set forth in Article III,
and (b) all of the provisions of the Articles, including, without limitation,
the fact that the Articles provide that no Member shall have the preemptive
right to acquire any Membership Interests or securities of any class that may at
any time be issued, sold or offered for sale by the Company. Each Member hereby
agrees that these Regulations constitute adequate notice of all such provisions.

     13.12 COUNTERPARTS. These Regulations may be executed in any number of
counterparts with the same effect as if all signing parties had signed the same
document. All counterparts shall be construed together and constitute the same
instrument.

     13.13 ARBITRATION. If, at any time or from time to time during the
continuance of the Company or after the dissolution or other termination
thereof, any dispute, difference or question shall arise between any of the
Members, or their successors, assigns or nominees, touching or concerning the
Company of the property, assets, rights or transactions thereof, or the
dissolution or other termination thereof, or the property of the Company or the
construction, meaning or effect of these Regulations, or any provision hereof,
or the rights of obligations of the Members, or their successors, assigns or
nominees, under these Regulations or otherwise, with respect thereto, then every
such dispute, difference or question shall be submitted to and settled by
arbitration and the decision of the arbitrator appointed as hereinafter provided
to deal with such matter shall be accepted by all the Members to such dispute,
difference or question. The arbitration shall be conducted by a single
arbitrator agreed upon by the Members to the matter. The decision of the
arbitrator shall be final and binding upon all the Members to such dispute,
difference or question and their nominees, and there shall be no appeal
therefrom.


                                      -25-

     IN WITNESS WHEREOF, following adoption of these Regulations by the
Managers, the Members have executed these Regulations as of the date first set
forth above.

                                        MEMBERS:

                                        ELLY NEVADA, INC.,
                                        a Nevada corporation


                                        By: /s/ Harry Rosenbaum
                                            ------------------------------------
                                            Harry Rosenbaum, Vice President


                                        NORMAN NEVADA, INC.,
                                        a Nevada corporation


                                        By: /s/ Harry Rosenbaum
                                            ------------------------------------
                                            Harry Rosenbaum, Vice President

                                        NON-MEMBERS JOINING HEREIN TO EVIDENCE
                                        THEIR CONSENT TO AND APPROVAL OF THESE
                                        AMENDED AND RESTATED REGULATIONS:


                                        LARRY NEVADA, INC.,
                                        a Nevada corporation


                                        By: /s/ Harry Rosenbaum
                                            ------------------------------------
                                            Harry Rosenbaum, Vice President


                                        BRUCE NEVADA, INC.,
                                        a Nevada corporation


                                        By: /s/ Harry Rosenbaum
                                            ------------------------------------
                                            Harry Rosenbaum, Vice President


                                        HARRY NEVADA, INC.,
                                        a Nevada corporation


                                        By: /s/ Harry Rosenbaum
                                            ------------------------------------
                                            Harry Rosenbaum, President


                                        SEYMOUR NEVADA, INC.,
                                        a Nevada corporation


                                        By: /s/ Harry Rosenbaum
                                            ------------------------------------
                                            Harry Rosenbaum, Vice President


                                        HAYDN NEVADA, INC.,
                                        a Nevada corporation


                                        By: /s/ Harry Rosenbaum
                                            ------------------------------------
                                            Harry Rosenbaum, Vice President


                                      -26-

EX-3.2(K)

                                                                  Exhibit 3.2(k)

                        FIRST AMENDMENT TO REGULATIONS OF
                           ASHTON WOODS FLORIDA L.L.C.

     THIS FIRST AMENDMENT TO REGULATIONS OF ASHTON WOODS FLORIDA L.L.C. (this
"Amendment") is made and entered into by and among ELLY NEVADA, INC., a Nevada
corporation ("Elly NV"), NORMAN NEVADA, INC., a Nevada corporation ("Norman
NV"), and ASHTON WOODS USA L.L.C., a Nevada limited lability company ("Ashton
USA").

                                    RECITALS:

     A. Elly NV and Norman NV have heretofore entered into Amended and Restated
Regulations of Ashton Woods Florida L.L.C. (the "Regulations") dated as of
February 6, 1997, creating Ashton Woods Florida L.L.C., a Nevada limited
liability company (the "Company").

     B. As permitted by the Regulations, Elly NV and Norman NV transferred all
of their right, title, and interest in and to the Company to Ashton USA.

     C. The parties hereto desire to amend the Regulations to reflect the
transfers described above and provide for the admission of Ashton USA as the
sole member of the Company.

     D. Capitalized terms, not specifically defined in this Amendment, shall
have the meanings given such terms in the Regulations.

     NOW, THEREFORE, for and in consideration of the premises and the respective
agreements set forth herein, the parties hereto agree as follows:

     1. The transfers described in Recital B above are hereby approved.

     2. Ashton USA is hereby admitted as a Member of the Company and the parties
hereto recognize that Elly NV and Norman NV have withdrawn as Members of the
Company. The only Member of the Company is Ashton USA.

     3. The Sharing Ratios and funding commitments of the Members set forth on
Exhibit "A" to the Regulations shall be as follows:



                           Sharing Ratio and
         Member           Funding Commitment
         ------           ------------------
                       
Ashton Woods USA L.L.C.          100%


     4. Any and all notices, demands, requests, or other communications
permitted or required to be given to Ashton USA pursuant to the Regulations
shall be delivered to Ashton USA in the manner provided in the Regulations, at
the following address:

          250 Lesmill Road
          Don Mills, Ontario M3B 2T5 Canada

     5. By execution of this Amendment, Ashton USA agrees to be bound by the
terms and provisions of the Regulations, as amended hereby.

     6. Except as amended hereby, the terms and provisions of the Regulations
shall remain unchanged and shall continue in full force and effect.

     EXECUTED as of May 31, 1999.

                                        MEMBER:

                                        ASHTON WOOOS USA L.L.C.,
                                        a Nevada limited liability company


                                        By: /s/ Bruce Freeman
                                            ------------------------------------
                                            Bruce Freeman - Managing Member


                                        By: /s/ Seymour Joffe
                                            ------------------------------------
                                            Seymour Joffe - Managing Member


                                        By: /s/ Harry Rosenbaum
                                            ------------------------------------
                                            Harry Rosenbaum-Managing Member


                                        WITHDRAWING MEMBERS:

                                        ELLY NEVADA, INC.,
                                        a Nevada corporation


                                        By: /s/ Elly Reisman
                                            ------------------------------------
                                            Elly Reisman, President


                                        NORMAN NEVADA, INC.,
                                        a Nevada corporation


                                        By: /s/ Norman Reisman
                                            ------------------------------------
                                            Norman Reisman, President


                                       2

EX-3.2(L)

                                                                  Exhibit 3.2(l)

                                   REGULATIONS

                                       OF

                           ASHTON WOODS BUTLER L.L.C.

                       A NEVADA LIMITED LIABILITY COMPANY

                           Dated as of October 9, 1998



                                   REGULATIONS
                                       OF
                           ASHTON WOODS BUTLER L.L.C.
                       A NEVADA LIMITED LIABILITY COMPANY

                                TABLE OF CONTENTS

                                                                           
ARTICLE I
DEFINITIONS ...............................................................    1

1.01  Definitions .........................................................    1
1.02  Construction ........................................................    3

ARTICLE II
ORGANIZATION ..............................................................    3

2.01  Formation ...........................................................    3
2.02  Name ................................................................    3
2.03  Resident Office; Resident Agent; Principal Office in the United
      States; Other Offices ...............................................    3
2.04  Purposes ............................................................    3
2.05  Foreign Qualification ...............................................    3
2.06  Term ................................................................    4
2.07  Mergers and Exchanges ...............................................    4
2.08  No State-Law Partnership ............................................    4

ARTICLE III
MEMBERSHIP; DISPOSITIONS OF INTERESTS .....................................    4

3.01  Initial Members .....................................................    4
3.02  Representations and Warranties ......................................    4
3.03  Restrictions on the Disposition of an Interest ......................    4
3.04  Additional Members ..................................................    6
3.05  Interests in a Member ...............................................    6
3.06  Information .........................................................    6
3.07  Liability to Third Parties ..........................................    7
3.08  Withdrawal ..........................................................    7
3.09  Lack of Authority ...................................................    7

ARTICLE IV
CAPITAL CONTRIBUTIONS .....................................................    7

4.01  Initial Contributions ...............................................    7
4.02  Subsequent Contributions ............................................    7
4.03  Failure to Contribute ...............................................    7
4.04  Return of Contributions .............................................    9
4.05  Advances by Members .................................................    9
4.06  Capital Accounts ....................................................    9




                                       -i-



                                                                           
ARTICLE V
ALLOCATIONS AND Distributions .............................................   10

5.01  Allocations .........................................................   10
5.02  Distributions .......................................................   10

ARTICLE VI
MANAGERS ..................................................................   11

6.01  Management by Managers ..............................................   11
6.02  Actions by Managers; Committees; Delegation of Authority and
      Duties ..............................................................   12
6.03  Number and Term of Office ...........................................   12
6.04  Vacancies; Removal; Resignation .....................................   13
6.05  Meetings ............................................................   13
6.06  Approval or Ratification of Acts or Contracts by Members ............   13
6.07  Action by Written Consent or Telephone Conference ...................   14
6.08  Compensation ........................................................   14
6.09  Conflicts of Interest ...............................................   14
6 10  Officers ............................................................   14

ARTICLE VII
MEETINGS OF MEMBERS .......................................................   15

7.01  Meetings ............................................................   15
7.02  Voting List .........................................................   16
7.03  Proxies .............................................................   16
7.04  Conduct of Meetings .................................................   16
7.05  Action by Written Consent or Telephone Conference ...................   17

ARTICLE VIII
INDEMNIFICATION ...........................................................   17

8.01  Right to Indemnification ............................................   17
8.02  Advance Payment .....................................................   18
8.03  Indemnification of Officers, Employees, and Agents ..................   18
8.04  Appearance as a Witness .............................................   18
8.05  Nonexclusivity of Rights ............................................   18
8.06  Insurance ...........................................................   19
8.07  Member Notification .................................................   19
8.08  Savings Clause ......................................................   19

ARTICLE IX
TAXES .....................................................................   19

9.01  Tax Returns .........................................................   19
9.02  Tax Elections .......................................................   19
9.03  "Tax Matters Partner ................................................   20




                                      -ii-



                                                                           
ARTICLE X
BOOKS, RECORDS, REPORTS, AND BANK ACCOUNTS ................................   20

10.01 Maintenance of Books ................................................   20
10.02 Records .............................................................   20
10.03 Accounts ............................................................   21

ARTICLE XI
BANCRUPTCY OF A MEMBER ....................................................   21

11.01 Bankrupt Members ....................................................   21

ARTICLE XII
DISSOLUTION, LIQUIDATION, AND TERMINATION .................................   21

12.01 Dissolution .........................................................   21
12.02 Liquidation and Termination .........................................   22
12.03 Deficit Capital Accounts ............................................   23
12.04 Articles of Dissolution .............................................   23

ARTICLE XIII
GENERAL PROVISIONS ........................................................   23

13.01 Offset ..............................................................   23
13.02 Notices .............................................................   23
13.03 Entire Agreement; Supersedure .......................................   24
13.04 Effect of Waiver or Consent .........................................   24
13.05 Amendment or Modification ...........................................   24
13.06 Binding Effect ......................................................   24
13.07 Governing Law; Severability .........................................   24
13.08 Further Assurances ..................................................   24
13.09 Waiver of Certain Rights ............................................   24
13.10 Indemnification .....................................................   24
13.11 Notice to Members of Provisions of this Agreement ...................   25
13.12 Counterparts ........................................................   25




                                      -iii-



                                   REGULATIONS

                                       OF

                           ASHTON WOODS BUTLER L.L.C.

                       A NEVADA LIMITED LIABILITY COMPANY

     These REGULATIONS OF ASHTON WOODS BUTLER L.L.C. (these "Regulations"),
dated as of October 9, 1998, are (a) adopted by the Managers (as defined below)
and (b) executed and agreed to, for good and valuable consideration, by the
Members (as defined below).

                                    ARTICLE I
                                   DEFINITIONS

     1.01 DEFINITIONS. As used in these Regulations, the following terms have
the following meanings:

          "Act" means the Nevada Limited Liability Company Act and any successor
     statute, as amended from time to time.

          "Articles" has the meaning given that term in Section 2.01.

          "Bankrupt Member" means (except to the extent a Required Interest
     consents otherwise) any Member (a) that (i) makes a general assignment for
     the benefit of creditors; (ii) files a voluntary bankruptcy petition; (iii)
     becomes the subject of an order for relief or is declared insolvent in any
     federal or state bankruptcy or insolvency proceedings; (iv) files a
     petition or answer seeking for the Member a reorganization, arrangement,
     composition, readjustment, liquidation, dissolution, or similar relief
     under any law; (v) files an answer or other pleading admitting or failing
     to contest the material allegations of a petition filed against the Member
     in a proceeding of the type described in subclauses (i) through (iv) of
     this clause (a); or (vi) seeks, consents to, or acquiesces in the
     appointment of a trustee, receiver, or liquidator of the Member or of all
     or any substantial part of the Member's properties; or (b) against which, a
     proceeding seeking reorganization, arrangement, composition, readjustment,
     liquidation, dissolution, or similar relief under any law has been
     commenced and 120 days have expired without dismissal thereof or with
     respect to which, without the Member's consent or acquiescence, a trustee,
     receiver, or liquidator of the Member or of all or any substantial part of
     the Member's properties has been appointed and 90 days have expired without
     the appointment's having been vacated or stayed, or 90 days have expired
     after the date of expiration of a stay, if the appointment has not
     previously been vacated.

          "Business Day" means any day other than a Saturday, a Sunday, or a
     holiday on which national banking associations in the State of Nevada are
     closed.

          "Capital Contribution" means any contribution by a Member to the
     capital of the Company.


                                       -1-



          "Code" means the Internal Revenue Code of 1986 and any successor
     statute, as amended from time to time.

          "Commitment" means, subject in each case to adjustments on account of
     Dispositions of Membership Interests permitted by these Regulations, (a) in
     the case of a Member executing these Regulations as of the date of these
     Regulations or a Person acquiring that Membership Interest, the amount
     specified for that Member as its Commitment on Exhibit A, and (b) in the
     case of a Membership Interest issued pursuant to Section 3.04, the
     Commitment established pursuant thereto.

          "Company" means Ashton Woods Butler L.L.C., a Nevada limited liability
     company.

          "Default Interest Rate" means a rate per annum equal to the lesser of
     (a) four percent (4%) plus a varying rate per annum that is equal to the
     interest rate published as the prime rate by The Bank of Nova Scotia from
     time to time, with adjustments in that varying rate to be made on the same
     date as any change in that rate, and (b) the maximum rate permitted by
     applicable law.

          "Delinquent Member" has the meaning given that term in Section
     4.03(a).

          "Dispose," "Disposing," or "Disposition" means a sale, assignment,
     transfer, exchange, mortgage, pledge, grant of a security interest, or
     other disposition or encumbrance (including, without limitation, by
     operation of law), or the acts thereof.

          "General Interest Rate" means a rate per annum equal to the lesser of
     (a) a varying rate per annum that is equal to the interest rate published
     as the prime rate by The Bank of Nova Scotia from time to time, with
     adjustments in that varying rate to be made on the same date as any change
     in that rate, and (b) the maximum rate permitted by applicable law.

          "Lending Member" has the meaning given that term in Section
     4.03(a)(ii).

          "Manager" means Bruce Freeman, Harry Rosenbaum and Seymour Joffe and
     any Person hereafter elected as a manager of the Company as provided in
     these Regulations, but does not include any Person who has ceased to be a
     manager of the Company.

          "Member" means any Person executing these Regulations as of the date
     of these Regulations as a member or hereafter admitted to the Company as a
     member as provided in these Regulations, but does not include any Person
     who has ceased to be a member in the Company.

          "Membership Interest" means the interest of a Member in the Company,
     including, without limitation, rights to distributions (liquidating or
     other), allocations, information, and to consent or approve.

          "Permitted Transferee" has the meaning given that term in Section
     3.03(b).

          "Person" has the meaning given that term in the Act.


                                       -2-



          "Proceeding" has the meaning given that term in Section 8.01.

          "Regulations" has the meaning given that term in the introductory
     paragraph.

          "Required Interest" means one or more Members having among them more
     than 51% of the Sharing Ratios of all Members.

          "Sharing Ratio" with respect to any Member means the percentage set
     forth on Exhibit A, subject to change as herein provided.

Other terms defined herein have the meanings so given them.

     1.02 CONSTRUCTION. Whenever the context requires, the gender of all words
used in these Regulations includes the masculine, feminine, and neuter. All
references to Articles and Section refer to articles and sections of these
Regulations, and all references to Exhibits are to Exhibits attached hereto,
each of which is made a part hereof for all purposes.

                                   ARTICLE II
                                  ORGANIZATION

     2.01 FORMATION. The Company has been organized as a Nevada limited
liability company by the filing of Articles of Organization (the "Articles")
under and pursuant to the Act and the issuance of a certificate of organization
for the Company by the Secretary of State of Nevada.

     2.02 NAME. The name of the Company is "Ashton Woods Butler L.L.C." and all
Company business must be conducted in that name or such other names that comply
with applicable law as the Managers may select from time to time.

     2.03 RESIDENT OFFICE; RESIDENT AGENT; PRINCIPAL OFFICE IN THE UNITED
STATES; OTHER OFFICES. The resident office of the Company required by the Act to
be maintained in the State of Nevada shall be the office of the initial resident
agent named in the Articles or such other office (which need not be a place of
business of the Company) as the Managers may designate from time to time in the
manner provided by law. The resident agent of the Company in the State of Nevada
shall be the initial resident agent named in the Articles or such other Person
or Persons as the Managers may designate from time to time in the manner
provided by law. The principal office of the Company in the United States shall
be at such place as the Managers may designate from time to time, which need not
be in the State of Nevada. The Company shall maintain records at the office of
the resident agent as required by the Act and shall keep the street address of
the resident office of the Company in the State of Nevada. The Company may have
such other offices as the Managers may designate from time to time.

     2.04 PURPOSES. The purposes of the Company are those set forth in the
Articles.

     2.05 FOREIGN QUALIFICATION. Prior to the Company's conducting business in
any jurisdiction other than Nevada, the Managers shall cause the Company to
comply, to the extent procedures are available and those matters are reasonably
within the control of the Managers, with all requirements necessary to qualify
the Company as a foreign limited liability company in that jurisdiction. At the
request of the Managers, each Member shall execute, acknowledge, swear to, and
deliver all certificates and other instruments conforming with these Regulations
that are necessary or appropriate to qualify, continue, and terminate the
Company as a foreign limited liability company in all such jurisdictions in
which the Company may conduct business.


                                       -3-



     2.06 TERM. The Company commenced on the date the Secretary of State of
Nevada issued a certificate of organization for the Company and shall continue
in existence for the period fixed in the Articles for the duration of the
Company, or such earlier time as these Regulations may specify.

     2.07 MERGERS AND EXCHANGES. The Company may be a party to (a) a merger or
(b) an exchange or acquisition.

     2.08 NO STATE-LAW PARTNERSHIP. The Members intend that the Company not be a
partnership (including, without limitation, a limited - partnership) or joint
venture, and that no Member or Manager be a partner or joint venture of any
other Member or Manager, for any purposes other than federal and state tax
purposes, and these Regulations may not be construed to suggest otherwise.

                                   ARTICLE III
                      MEMBERSHIP; DISPOSITIONS OF INTERESTS

     3.01 INITIAL MEMBERS. The initial members of the Company are the Persons
executing these Regulations as of the date of these Regulations as members, each
of which is admitted to the Company as a Member effective contemporaneously with
the execution by such Person of these Regulations.

     3.02 REPRESENTATIONS AND WARRANTIES. Each Member hereby represents and
warrants to the Company and each other Member that (a) if that Member is a
corporation, it is duly organized, validly existing and in good standing under
the law of the state of its incorporation and is duly qualified and in good
standing as a foreign corporation in the jurisdiction of its principal place of
business (if not incorporated therein); (b) if that Member is a limited
liability company, it is duly organized, validly existing, and (if applicable)
in good standing under the law of the state of its organization and is duly
qualified and (if applicable) in good standing as a foreign limited liability
company in the jurisdiction of its principal place of business (if not organized
therein); (c) if that Member is a partnership, trust, or other entity, it is
duly formed, validly existing, and (if applicable) in good standing under the
law of the state of its formation, and if required by law is duly qualified to
do business and (if applicable) in good standing in the jurisdiction of its
principal place of business (if not formed therein), and the representations and
warranties in clause (a), (b) or (c), as applicable, are true and correct with
respect to each partner (other than limited partners), trustee, or other member
thereof; (d) that Member has full corporate, limited liability company,
partnership, trust, or other applicable power and authority to execute and agree
to these Regulations and to perform its obligations hereunder and all necessary
actions by the board of directors, shareholders, managers, members, partners,
trustees, beneficiaries, or other Persons necessary for the due authorization,
execution, delivery, and performance of these Regulations by that Member have
been duly taken; (e) that Member has duly executed and delivered these
Regulations; and (f) that Member's authorization, execution, delivery, and
performance of these Regulations do not conflict with any other agreement or
arrangement to which that Member is a party or which it is bound.

     3.03 RESTRICTIONS ON THE DISPOSITION OF AN INTEREST. (a) except as
specifically provided in this Section 3.03, a Disposition of an interest in the
Company may not be effected without the consent of (i) a majority of the
Managers who are Members (excluding any Manager who is making such Disposition),
or (ii) if there are no Managers of the type described in clause (i), a Required
Interest. Any attempted Disposition by a Person of an interest or right, or any
part thereof, in or in respect of the Company other than in accordance with this
Section 3.03 shall be, and is hereby declared, null and void ab initio.


                                       -4-



     (b) Notwithstanding the provisions of Section 3.03(a), the interest of any
Member in the Company may be transferred without the consent of the Managers or
any of the Members if (i) the transfer occurs by reason of or incident to the
death, dissolution, divorce, liquidation, merger or termination of the
transferor Member, and (ii) the transferee is a Permitted Transferee. A
"Permitted Transferee" is any member of such Member's immediate family, or a
trust, corporation, limited liability company, or partnership controlled by such
Member or members of such Member's immediate family, or another Person
controlling, controlled by, or under common control with such Member.

     (c) Subject to the provisions of Section 3.03(d), (e), and (f), (i) a
Person to whom an interest in the Company is transferred has the right to be
admitted to the Company as a Member with the Sharing Ratio and the Commitment so
transferred to such Person, if (A) the Member making such transfer grants the
transferee the right to be so admitted, and (B) such transfer is consented to in
accordance with Section 3.03(a); (ii) a Permitted Transferee under the
circumstances described in Section 3.03(b) has the right to be admitted to the
Company as a Member with the Sharing Ratio and the Commitment so transferred to
the Permitted Transferee; and (iii) the Company or (with the permission of the
Company, which may be withheld in its sole discretion) a Lending Member may
grant the purchaser of a Delinquent Member's interest in the Company at a
foreclosure of the security interest therein granted pursuant to Section 4.03(b)
the right to be admitted to the Company as a Member with such Sharing Ratio and
such Commitment (no greater than the Sharing Ratio and the Commitment of the
Member effecting such Disposition prior thereto) as they may agree.

     (d) The Company may not recognize for any purpose any purported Disposition
of all or part of a Membership Interest unless and until the other applicable
provisions of this Section 3.03 have been satisfied and the Managers have
received, on behalf of the Company, a document (i) executed by both the Member
effecting the Disposition (or if the transfer is on account of the death,
incapacity, or liquidation of the transferor, its representative) and the Person
to which the Membership Interest or part thereof is Disposed, (ii) including the
notice address of any Person to be admitted to the Company as a Member and its
agreement to be bound by these Regulations with respect to the Membership
Interest or part thereof being obtained, (iii) setting forth the Sharing Ratios
and the Commitments after the Disposition of the Member effecting the
Disposition and the Person to which the Membership Interest or part thereof is
Disposed (which together must total the Sharing Ratio and the Commitment of the
Member effecting the Disposition before the Disposition), and (iv) containing a
representation and warranty that the Disposition was made in accordance with all
applicable laws and regulations (including securities laws) and, if the Person
to which the Membership Interest or part thereof is Disposed is to be admitted
to the Company, its representation and warranty that the representations and
warranties in Section 3.02 are true and correct with respect to that Person.
Each Disposition and, if applicable, admission complying with the provisions of
this Section 3.03(d) is effective as of the first day of the calendar month
immediately succeeding the month in which the Managers receive the notification
of Disposition and the other requirements of this Section 3.03 have been met.

     (e) For the right of a Member to Dispose of a Membership Interest or any
part thereof or of any Person to be admitted to the Company in connection
therewith to exist or be exercised, (i) either (A) the Membership Interest or
part thereof subject to the Disposition or admission must be registered under
the Securities Act of 1933, as amended, and any applicable state securities laws
or (B) the Company must receive a favorable opinion of the Company's legal
counsel or of other legal counsel acceptable to the Managers to the effect that
the Disposition or admission is exempt from registration under those laws and
(ii) the Company must receive a favorable opinion of the Company's legal counsel
or of other legal counsel acceptable to the Managers to the effect that the
Disposition or admission, when added to the


                                       -5-



total of all other sales, assignments, or other Dispositions within the
preceding 12 months, would not result in the Company's being considered to have
terminated within the meaning of the Code. The Managers, however, may waive the
requirements of this Section 3.03(e).

     (f) The Member effecting a Disposition and any Person admitted to the
Company in connection therewith shall pay, or reimburse the Company for, all
costs incurred by the Company in connection with the Disposition or admission
(including, without limitation, the legal fees incurred in connection with the
legal opinions referred to in Section 3.03(e)) on or before the tenth day after
the receipt by that Person of the Company's invoice for the amount due. If
payment is not made by the date due, the Person owing that amount shall pay
interest on the unpaid amount from the date due until paid at a rate per annum
equal to the Default Interest Rate.

     3.04 ADDITIONAL MEMBERS. Additional Persons may be admitted to the Company
as Members and Membership Interests may be created and issued to those Persons
and to existing Members at the direction of (a) a majority of the Managers who
are Members, or (b) if there are no Managers who are Members, a Required
Interest, on such terms and conditions as the Managers may determine at the time
of admission. The terms of admission or issuance must specify the Sharing Ratios
and the Commitments applicable thereto and may provide for the creation of
different classes or groups of Members and having different rights, powers, and
duties. The Managers shall reflect the creation of any new class or group in an
amendment to these Regulations indicating the different rights, powers, and
duties, and such an amendment need be executed only by the Managers. Any such
admission also must comply with the provisions of Section 3.03(d)(i) and (ii)
and is effective only after the new Member has executed and delivered to the
Managers a document including the new Member's notice address, its agreement to
be bound by these Regulations, and its representation and warranty that the
representation and warranties in Section 3.02 are true and correct with respect
to the new Member. The provisions of this Section 3.04 shall not apply to
Dispositions of Membership Interests.

     3.05 INTERESTS IN A MEMBER. A Member that is not a natural person may not
cause or permit an interest, direct or indirect, in itself to be Disposed of
such that, after the Disposition, (a) the Company would be considered to have
terminated within the meaning of section 708 of the Code or (b) without the
consent of the Managers and a Required Interest, that Member shall cease to be
controlled by substantially the same Persons who control it as of the date of
its admission to the Company. On any breach of the provisions of clause (b) of
the immediately preceding sentence, the Company shall have the option to buy,
and on exercise of that option the breaching Member shall sell, the breaching
Member's Membership Interest, all in accordance with Section 11.01 as if the
breaching Member were a Bankrupt Member.

     3.06 INFORMATION. (a) In addition to the other rights specifically set
forth in these Regulations, each Member is entitled to all information to which
that Member is entitled to have access pursuant to the Act under the
circumstances and subject to the conditions therein stated. The Members agree,
however, that the Managers from time to time may determine, due to contractual
obligations, business concerns, or other considerations, that certain
information regarding the business, affairs, properties, and financial condition
of the Company should be kept confidential and not provided to some or all other
Members, and that it is not just or reasonable for those Members or assignees or
representatives thereof to examine or copy that information.

     (b) The Members acknowledge that, from time to time, they may receive
information from or regarding the Company in the nature of trade secrets or that
otherwise is confidential, the release of which may be damaging to the Company
or Persons with which it does business.


                                       -6-



Each Member shall hold in strict confidence any information it receives
regarding the Company that is identified as being confidential (and if that
information is provided in writing, that is so marked) and may not disclose it
to any Person other than another Member or a Manger, except for disclosures (i)
compelled by law (but the Member must notify the Managers promptly of any
request for that information, before disclosing it if practicable), (ii) to
advisers or representatives of the Member or Persons to which that Member's
Membership Interest may be Disposed as permitted by these Regulations, but only
if the recipients have agreed to be bound by the provisions of this Section
3.06(b), or (iii) of information that Member also has received from a source
independent of the Company that the Member reasonably believes obtained that
information without breach of any obligation of confidentiality. The Members
acknowledge that breach of the provisions of this Section 3.06(b) may cause
irreparable injury to the Company for which monetary damages are inadequate,
difficult to compute, or both. Accordingly, the Members agree that the
provisions of this Section 3.06(b) may be enforced by specific performance.

     3.07 LIABILITY TO THIRD PARTIES. No Member or Manager shall be liable for
the debts, obligations or liabilities of the Company, including under a
judgment, decree or order of a court.

     3.08 WITHDRAWAL. A Member does not have the right or power to withdraw from
the Company as a member.

     3.09 LACK OF AUTHORITY. No Member (other than a Manager or an officer) has
the authority or power to act for or on behalf of the Company, to do any act
that would be binding on the Company, or to incur any expenditures on behalf of
the Company.

                                   ARTICLE IV
                              CAPITAL CONTRIBUTIONS

     4.01 INITIAL CONTRIBUTIONS. Contemporaneously with the execution by such
Member of these Regulations, each Member shall make the Capital Contributions
described for that Member in Exhibit A.

     4.02 SUBSEQUENT CONTRIBUTIONS. Without creating any rights in favor of any
third party, each Member shall contribute to the Company, in cash, on or before
the date specified as hereinafter described, that Member's Sharing Ratio of all
monies that in the judgement of the Managers are necessary to enable the Company
to cause the assets of the Company to be properly operated and maintained and to
discharge its costs, expenses, obligations, and liabilities; provided, however,
that a Member is not obligated to contribute a total amount that, when added to
all Capital Contributions that Member previously has made pursuant to Section
4.01 or this Section 4.02, exceeds that Member's Commitment. The Managers shall
notify each Member of the need for Capital Contributions pursuant to this
Section 4.02 when appropriate, which notice must include a statement in
reasonable detail of the proposed uses of the Capital Contributions and a date
(which date may be no earlier than the fifth Business Day following each
Member's receipt of its notice) before which the Capital Contributions must be
made. Notices for Capital Contributions must be made to all Members in
accordance with their Sharing Ratios.

     4.03 FAILURE TO CONTRIBUTE. (a) If a Member does not contribute by the time
required all or any portion of a Capital Contribution that Member is required to
make as provided in these Regulations, the Company may exercise, on notice to
that Member (the "Delinquent Member"), one or more of the following remedies:


                                       -7-



          (i) taking such action (including, without limitation, court
     proceedings) as the Managers may deem appropriate to obtain payment by the
     Delinquent Member of the portion of the Delinquent Member's Capital
     Contribution that is in default, together with interest thereon at the
     Default Interest Rate from the date that the Capital Contribution was due
     until the date that it is made, all at the cost and expense of the
     Delinquent Member;

          (ii) permitting the other Members in proportion to their Sharing
     Ratios or in such other percentages as they may agree (the "Lending Member"
     whether one or more), to advance the portion of the Delinquent Member's
     Capital Contribution that is in default, with the following results:

               (A) the sum advanced constitutes a loan from the Lending Member
          to the Delinquent Member and a Capital Contribution of that sum to the
          Company by the Delinquent Member pursuant to the applicable provisions
          of these Regulations,

               (B) the principal balance of the loan and all accrued unpaid
          interest thereon is due and payable in whole on the tenth day after
          written demand therefor by the Lending Member to the Delinquent
          Member,

               (C) the amount lent bears interest at the Default Interest Rate
          from the day that the advance is deemed made until the date that the
          loan, together with all interest accrued on it, is repaid to the
          Lending Member,

               (D) all distributions from the Company that otherwise would be
          made to the Delinquent Member (whether before or after dissolution of
          the Company) instead shall be paid to the Lending Member until the
          loan and all interest accrued on it have been paid in full to the
          lending Member (with payments being applied first to accrued and
          unpaid interest and then to principal),

               (E) the payment of the loan and interest accrued on it is secured
          by a security interest in the Delinquent Member's Membership Interest,
          as more fully set forth in Section 4.03(b), and

               (F) the Lending Member has the right, in addition to the other
          rights and remedies granted to it pursuant to these Regulations or
          available to it at law or in equity, to take any action (including,
          without limitation, court proceedings) that the Lending Member may
          deem appropriate to obtain payment by the Delinquent Member of the
          loan and all accrued and unpaid interest on it, at the cost and
          expense of the Delinquent Member;

          (iii) exercising the rights of a secured party under the Uniform
     Commercial Code of the State of Nevada, as more fully set forth in Section
     4.03(b); or

          (iv) exercising any other rights and remedies available at law or in
     equity.


                                       -8-



     (b) Each Member grants to the Company, and to each Lending Member with
respect to any loans made by the Lending Member to that Member as a Delinquent
Member pursuant to Section 4.03(a)(ii), as security, equally and ratably, for
the payment of all Capital Contributions that Member has agreed to make and the
payment of all loans and interest accrued on them made by Lending Members to
that Member as a Delinquent Member pursuant to Section 4.03(a) (ii), a security
interest in and a general lien on its Membership Interest and the proceeds
thereof, all under the Uniform Commercial Code of the State of Nevada. On any
default in the payment of a Capital Contribution or in the payment of such a
loan or interest accrued on it, the Company or the Lending Member, as
applicable, is entitled to all the rights and remedies of a secured party under
the Uniform Commercial Code of the State of Nevada with respect to the security
interest granted in this Section 4.03(b). Each Member shall execute and deliver
to the Company and the other Members all financing statements and other
instruments that the Managers or the Lending Member, as applicable, may request
to effectuate and carry out the preceding provisions of this Section 4.03(b). At
the option of the Managers or a Lending Member, these Regulations or a carbon,
photographic, or other copy hereof may serve as a financing statement.

     4.04 RETURN OF CONTRIBUTIONS. Other than as expressly provided in these
Regulations, Member is not entitled to the return of any part of its Capital
Contributions or to be paid interest in respect of either its capital account or
its Capital Contributions. An unrepaid Capital Contribution is not a liability
of the Company or of any Member. A Member is not required to contribute or to
lend any cash or property to the Company to enable the Company to return any
Member's Capital Contributions.

     4.05 ADVANCES BY MEMBERS. If the Company does not have sufficient cash to
pay its obligations, any Member(s) that may agree to do so with the Managers'
consent may advance all or part of the needed funds to or on behalf of the
Company. An advance described in this Section 4.05 constitutes a loan from the
Member to the Company, bears interest at the General Interest Rate from the date
of the advance until the date of payment, and is not a Capital Contribution.

     4.06 CAPITAL ACCOUNTS. A capital account shall be established and
maintained for each Member. Each Member's capital account (a) shall be increased
by (i) the amount of money contributed by that Member to the Company, (ii) the
fair market value of property contributed by that Member to the Company (net of
liabilities secured by the contributed property that the Company is considered
to assume or take subject to under section 752 of the Code), and (iii)
allocations to that Member of Company income and gain (or items thereof),
including income and gain exempt from tax and income and gain described in
Treas. Reg. Section 1.704-1(b)(2)(iv)(g), but excluding income and gain
described in Treas. Reg. Section 1.704-1(b)(4)(i), and (b) shall be decreased by
(i) the amount of money distributed to that Member by the Company, (ii) the fair
market value of property distributed to that Member by the Company (net of
liabilities secured by the distributed property that the Member is considered to
assume or take subject to under section 752 of the Code), (iii) allocations to
that Member of expenditures of the Company described in section 705(a)(2)(B) of
the Code, and (iv) allocations of Company loss and deduction (or items thereof),
including loss and deduction described in Treas. Reg. Section 1.704-
1l(b)(2)(iv)(g), but excluding items described in clause (b)(iii) above and loss
or deduction described in Treas. Reg. Section 1.704-1(b)(4)(i) or Section
1.704-1(b)(4)(iii). The Members' capital accounts also shall be maintained and
adjusted as permitted by the provisions of Treas. Reg. Section
1.704-1(b)(2)(iv)(f) and as required by the other provisions of Treas. Reg.
Sections 1.704-1(b)(2)(iv) and 1.704-1(b)(4), including adjustments to reflect
the allocations to the Members of depreciation, depletion, amortization, and
gain or loss as computed for book purposes rather than the allocation of the
corresponding items as computed for tax purposes, as required by Treas. Reg.
Section 1.704-1(b)(2)(iv)(g). A Member that has more than one Membership
Interest shall have


                                       -9-



a single capital account that reflects all its Membership Interests, regardless
of the class of Membership Interests owned by that Member and regardless of the
time or manner in which those Membership Interests were acquired. On the
transfer of all or part of a Membership Interest, the capital account of the
transferor that is attributable to the transferred Membership Interest or part
thereof shall carry over to the transferee Member in accordance with the
provisions of Treas. Reg. Section 1.704-1 (b)(2)(iv)(l).

                                    ARTICLE V
                          ALLOCATIONS AND DISTRIBUTIONS

     5.01 ALLOCATIONS. (a) Except as may be required by section 701(c) of the
Code and Treas. Reg. Section 1.701-l(b)(2)(iv)(f)(4), all items of income, gain,
loss, deduction, and credit of the Company shall be allocated among the Members
in accordance with their Sharing Ratios.

     (b) All items of income, gain, loss, deduction, and credit allocable to any
Membership Interest that may have been transferred shall be allocated between
the transferor and the transferee based on the portion of the calendar year
during which each was recognized as owning that Membership Interest, without
regard to the results of Company operations during any particular portion of
that calendar year and without regard to whether cash distributions were made to
the transferor or the transferee during that calendar year; provided, however,
that this allocation must be made in accordance with a method permissible under
section 706 of the Code and the regulations thereunder.

     5.02 DISTRIBUTIONS. All receipts and revenues of the Company from any
source shall be applied and distributed in the following order of priority with
no distribution being made in any category set forth below unless and until the
preceding category has been satisfied in full either by payment or by setting
aside of a cash reserve for payment of same.

     (a) in payment of all debts, obligations, liabilities, costs and expenses
incurred in connection with or on account of the Company;

     (b) in repayment of any loans and accrued interest thereon made by a
Lending Member pursuant to Section 4.03(a)(ii);

     (c) in repayment of Contributions by the Member in accordance with their
Sharing Ratios, subject to the provisions of Section 4.03.

     (d) after having satisfied (a), (b) and (c) above, receipts and revenues of
the Company shall represent the profits of the Company and shall be distributed
in the following order of priority:

          (i) the Contributions made by the Members to the Company pursuant to
     Sections 4.01 and 4.02 herein shall bear interest at a rate which is two
     percent (2%) per annum greater than the prime rate charged by the Bank of
     Nova Scotia to its most creditworthy customers of U.S. Dollar demand loans,
     but in no event shall the rate of interest exceed the maximum rate
     permitted by laws, from the date of such advance until repaid to such
     Member in accordance with (c) above.

          (ii) after having satisfied (a), (b), (d) and (d)(i) above, the
     receipts and revenues of the Company shall be distributed to the Members
     pro rate and pari passu in accordance with their Sharing Ratios.


                                      -10-



However, no distribution of profits shall be made until after completion of any
development and/or construction activities undertaken by the Company, without
the agreement of Members.

                                   ARTICLE VI
                                    MANAGERS

     6.01 MANAGEMENT BY MANAGERS. (a) Except for situations in which the
approval the Members is required by these Regulations or by nonwaivable
provisions of applicable law, and subject to the provisions of Section 6.02, (i)
the powers of the Company shall be exercised by or under the authority of, and
the business and affairs of the Company shall be managed under the direction of,
the Managers; and (ii) the Managers may make all decisions and take all actions
for the Company not otherwise provided for in these Regulations, including,
without limitation, the following:

          (i) entering into, making, and performing contracts, agreements, and
     other undertakings binding the Company that may be necessary, appropriate,
     or advisable in furtherance of the purposes of the Company and making all
     decisions and waivers thereunder;

          (ii) opening and maintaining bank and investment accounts and
     arrangements, drawing checks and other orders for the payment of money, and
     designating individuals with authority to sign or give instructions with
     respect to those accounts and arrangements;

          (iii) maintaining the assets of the Company in good order;

          (iv) collecting sums due the Company;

          (v) to the extent that funds of the Company are available therefor,
     paying debts and obligations of the Company;

          (vi) acquiring, utilizing for Company purposes, and Disposing of any
     asset of the Company;

          (vii) borrowing money or otherwise committing the credit of the
     Company for Company activities and voluntary prepayments or extensions of
     debt;

          (viii) selecting, removing, and changing the authority and
     responsibility of lawyers, accountants, and other advisers and consultants;

          (ix) obtaining insurance for the Company;

          (x) determining distributions of Company cash and other property as
     provided in Section 5.02;

          (xi) establishing a seal for the Company;

          (xii) selling, leasing, exchanging or otherwise disposing of
     (including by way of a pledge, mortgage, deed of trust or trust indenture)
     all or any portion of the Company's property and assets (with or without
     good will); and

          (xiii) being a party to (i) a merger, or (ii) an exchange or
     acquisition.


                                      -11-



     (b) Notwithstanding the provisions of Section 6.01(a), the Managers may not
cause the Company to do any of the following without complying with the
applicable requirements set forth below:

          (i) amend or restate the Articles, without complying with the
     applicable procedures set forth in the Act.

     6.02 ACTIONS BY MANAGERS; COMMITTEES; DELEGATION OF AUTHORITY AND DUTIES.
(a) In managing the business and affairs of the Company and exercising its
powers, the Managers shall act (i) collectively through meetings and written
consents pursuant to Sections 6.05 and 6.07; (ii) through committees pursuant to
Section 6.02(b); or (iii) through Managers to whom authority and duties have
been delegated pursuant to Section 6.02(c).

     (b) The Managers may, from time to time, designate one or more committees,
each of which shall be comprised of one or more Managers. Any such committee, to
the extent provided in such resolution or in the Articles or these Regulations,
shall have and may exercise all of the authority of the Managers, subject to the
limitations set forth in the Act. At every meeting of any such committee, the
presence of a majority of all the members thereof shall constitute a quorum, and
the affirmative vote of a majority of the members present shall be necessary for
the adoption of any resolution. The Managers may dissolve any committee at any
time, unless otherwise provided in the Articles or these Regulations.

     (c) The Members and the Managers hereby delegate to each of the Managers
(acting by themselves and without the necessity of any other approval or
authorization) or to an authorized representative of the Company, designated by
one or more of the Managers, the authority to take any of the actions authorized
in Section 6.01(a) hereof. In addition, the Managers may assign titles
(including, without limitation, president, vice president, secretary, assistant
secretary, treasurer and assistant treasurer) to any such Manager. Unless the
Managers decide otherwise, if the title is one commonly used for officers of a
business corporation formed under the laws of the State of Nevada, the
assignment of such title shall constitute the delegation to such Manager of the
authority and duties that are normally associated with that office, subject to
any specific delegation of authority and duties made pursuant to the first
sentence of this Section 6.02(c). Any number of titles may be held by the same
Manager. Any delegation pursuant to this Section 6.02(c) may be revoked at any
time by the Managers.

     (d) Any Person dealing with the Company, other than a Member, may rely on
the authority of any Manager, authorized representative or officer in taking any
action in the name of the Company without inquiry into the provisions of these
Regulations or compliance herewith, regardless of whether that action actually
is taken in accordance with the provisions of these Regulations.

     6.03 NUMBER AND TERM OF OFFICE. The number of Managers of the Company shall
be determined from time to time by resolution of the Managers; provided,
however, that no decrease in the number of Managers that would have the effect
of shortening the term of an incumbent Manager may be made by the Managers. If
the Managers make no such determination, the number of Managers shall be the
number set forth in the Articles as the number of Managers constituting the
initial Managers. Each Manager shall hold office for the term for which he is
elected and thereafter until his successor shall have been elected and
qualified, or until his earlier death, resignation or removal. Unless otherwise
provided in the Articles, Managers need not be Members or residents of the State
of Nevada.


                                      -12-



     6.04 VACANCIES; REMOVAL; RESIGNATION. Any Manager position to be filled by
reason of an increase in the number of Managers may be filled by election at an
annual or special meeting of Members called for that purpose. Any vacancy
occurring in the Managers other than by reason of an increase in the number of
Managers may be filled (a) by election at an annual or special meeting of the
Members called for that purpose or (b) by the affirmative vote of a majority of
the remaining Managers though less than a quorum of the Managers. A Manager
elected to fill a vacancy occurring other than by reason of an increase in the
number of Managers shall be elected for the unexpired term of his predecessor in
office. At any meeting of Members at which a quorum of Members is present called
expressly for that purpose, or pursuant to a written consent adopted pursuant to
these Regulations, any Manager may be removed, with or without cause, by a
Required Interest. Any Manager may resign at any time. Such resignation shall be
made in writing and shall take effect at the time specified therein, or if no
time be specified, at the time of its receipt by the remaining Managers. The
acceptance of a resignation shall not be necessary to make it effective, unless
expressly so provided in the resignation.

     6.05 MEETINGS. (a) Unless otherwise required by law or provided in the
Articles or these Regulations, a majority of the total number of Managers fixed
by, or in the manner provided in, the Articles or these Regulations shall
constitute a quorum for the transaction of business of the Managers, and the act
of a majority of the Managers present at a meeting at which a quorum is present
shall be the act of the Managers. A Manager who is present at a meeting of the
Managers at which action on any Company matter is taken shall be presumed to
have assented to the action unless his dissent shall be entered in the minutes
of the meeting or unless he shall file his written dissent to such action with
the Person acting as secretary of the meeting before the adjournment thereof or
shall deliver such dissent to the Company immediately after the adjournment of
the meeting. Such right to dissent shall not apply to a Manager who voted in
favor of such action.

     (b) Meetings of the Managers may be held at such place or places as shall
be determined from time to time by resolution of the Managers. At all meetings
of the Managers, business shall be transacted in such order as shall from time
to time be determined by resolution of the Managers. Attendance of a Manager at
a meeting shall constitute a waiver of notice of such meeting, except where a
Manager attends a meeting for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully
called or convened.

     (c) In connection with any annual meeting of Members at which Managers were
elected, the Managers may, if a quorum is present, hold its first meeting for
the transaction of business immediately after and at the same place as such
annual meeting of the Members. Notice of such meeting at such time and place
shall not be required.

     (d) Regular meetings of the Managers shall be held at such times and places
as shall be designated from time to time by resolution of the Managers. Notice
of such regular meetings shall not be required.

     (e) Special meetings of the Managers may be called by any Manager on at
least 24 hours notice to each other Manager. Such notice need not state the
purpose or purposes of, nor the business to be transacted at, such meeting,
except as may otherwise be required by law or provided for by the Articles or
these Regulations.

     6.06 APPROVAL OR RATIFICATION OF ACTS OR CONTRACTS BY MEMBERS. The Managers
in their discretion may submit any act or contract for approval or ratification
at any annual meeting of the Members, or at any special meeting of the Members
called for the purpose of


                                      -13-



considering any such act or contract, and any act or contract that shall be
approved or be ratified by a Required Interest shall be as valid and as binding
upon the Company and upon all the Members as if it shall have been approved or
ratified by every Member of the Company.

     6.07 ACTION BY WRITTEN CONSENT OR TELEPHONE CONFERENCE. Any action
permitted or required by the Act, the Articles or these Regulations to be taken
at a meeting of the Managers or any committee designated by the Managers may be
taken without a meeting if a consent in writing, setting forth the action to be
taken, is signed by all the Managers or members of such committee, as the case
may be. Such consent shall have the same force and effect as a unanimous vote at
a meeting and may be stated as such in any document or instrument filed with the
Secretary of State of Nevada, and the execution of such consent shall constitute
attendance or presence in person at a meeting of the Managers or any such
committee, as the case may be. Subject to the requirements of the Act, the
Articles or these Regulations for notice of meetings, unless otherwise
restricted by the Articles, Managers, or members of any committee designated by
the Managers, may participate in and hold a meeting of the Managers or any
committee of Managers, as the case may be, by means of a conference telephone or
similar communications equipment by means of which all Persons participating in
the meeting can hear each other, and participation in such meeting shall
constitute attendance and presence in person at such meeting, except where a
Person participates in the meeting for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully
called or convened.

     6.08 COMPENSATION. The Managers shall reserve such compensation, if any,
for their services as may be designated from time to time by all of the
Managers. In addition, the Managers shall be entitled to be reimbursed for
out-of-pocket costs and expenses incurred in the course of their service
hereunder, including the portion of their overhead reasonably allocable to
Company activities.

     6.09 CONFLICTS OF INTEREST. Subject to the other express provisions of
these Regulations, each Manager, Member and officer of the Company at any time
and from time to time may engage in and possess interests in other business
ventures of any and every type and description, independently or with others,
including ones in competition with the Company, with no obligation to offer to
the Company or any other Member, Manager or officer the right to participate
therein. The Company may transact business with any Manager, Member, officer or
Affiliate thereof, provided the terms of those transactions are no less
favorable than those the Company could obtain from unrelated third parties.

     6.10 OFFICERS. (a) The Managers may, from time to time, designate one or
more Persons to be officers of the Company. No officer need be a resident of the
State of Nevada, a Member or a Manager. Any officers so designated shall have
such authority and perform such duties as the Managers may, from time to time,
delegate to them. The Managers may assign titles to particular officers. Unless
the Managers decide otherwise, if the title is one commonly used for officers of
a business corporation formed under the laws of the State of Nevada, the
assignment of such title shall constitute the delegation to such officer of the
authority and duties that are normally associated with that office, subject to
(i) any specific delegation of authority and duties made to such officer by the
Managers pursuant to the third sentence of this Section 6.10(b), or (ii) any
delegation of authority and duties made to one or more Mangers pursuant to
Section 6.02(a). Each officer shall hold office until his successor shall be
duly designated and shall quality or until his death or until he shall resign or
shall have been removed in the manner hereinafter provided. Any number of
offices may be held by the same Person. The salaries or other compensation, if
any, of the officers and agents of the Company shall be fixed from time to time
by the Managers.


                                      -14-



     (b) Any officer may resign as such at any time. Such resignation shall be
made in writing and shall take effect at the time specified therein, or if no
time be specified, at the time of its receipt by the Managers. The acceptance of
a resignation shall not be necessary to make it effective, unless expressly so
provided in the resignation. Any officer may be removed as such, either with or
without cause, by the Managers whenever in their judgment the best interests of
the Company will be served thereby; provided, however, that such removal shall
be without prejudice to the contract rights, if any, of the Person so removed.
Designation of an officer shall not of itself create contract rights. Any
vacancy occurring in any office of the Company (other than Manager) may be
filled by the Managers.

                                   ARTICLE VII
                               MEETINGS OF MEMBERS

     7.01 MEETINGS. (a) A quorum shall be present at a meeting of Members if the
holders of a Required Interest are represented at the meeting in person or by
proxy. With respect to any matter, other than a matter for which the affirmative
vote of the holders of a specified portion of the Sharing Ratios of all Members
entitled to vote is required by the Act, the affirmative vote of a Required
Interest at a meeting of Members at which a quorum is present shall be the act
of the Members.

     (b) All meetings of the Members shall be held at the principal place of
business of the Company or at such other place within or without the State of
Nevada as shall be specified or fixed in the notices or waivers of notice
thereof; provided that any or all Members may participate in any such meeting by
means of conference telephone or similar communications equipment pursuant to
Section 7.05.

     (c) Notwithstanding the other provisions of the Articles or these
Regulations, the chairman of the meeting or the holders of a Required Interest
shall have the power to adjourn such meeting from time to time, without any
notice other than announcement at the meeting of the time and place of the
holding of the adjourned meeting. If such meeting is adjourned by the Members,
such time and place shall be determined by a vote of the holders of a Required
Interest. Upon the resumption of such adjourned meeting, any business may be
transacted that might have been transacted at the meeting as originally called.

     (d) An annual meeting of the Members, for the election of the Managers and
for the transaction of such other business as may properly come before the
meeting, shall be held at such place, within or without the State of Nevada, on
such date and at such time as the Managers shall fix and set forth in the notice
of the meeting, which date shall be within 13 months subsequent to the date of
organization of the Company or the last annual meeting of Members, whichever
most recently occurred.

     (e) Special meetings of the Members for any proper purpose or purposes may
be called at any time by the Managers or the holders of at least ten percent of
the Sharing Ratios of all Members. If not otherwise stated in or fixed in
accordance with the remaining provisions hereof, the record date for determining
Members entitled to call a special meeting is the date any Member first signs
the notice of that meeting. Only business within the purpose or purposes
described in the notice (or waiver thereof) required by these Regulations may be
conducted at a special meeting of the Members.

     (f) Written or printed notice stating the place, day and hour of the
meeting and, in the case of a special meeting, the purpose or purposes for which
the meeting is called, shall be delivered not less than ten nor more than 60
days before the date of the meeting, either personally or by mail, by or at the
direction of the Managers or Person calling the meeting, to


                                      -15-



each Member entitled to vote at such meeting. If mailed, any such notice shall
be deemed to be delivered when deposited in the United States mail, addressed to
the Member at his address provided for on Exhibit A, with postage thereon
prepaid.

     (g) The date on which notice of a meeting of Members is mailed or the date
on which the resolution of the Managers declaring a distribution is adopted, as
the case may be, shall be the record date for the determination of the Members
entitled to notice of or to vote at such meeting, including any adjournment
thereof, or the Members entitled to receive such distribution.

     (h) The right of Members to cumulative voting in the election of Managers
is expressly prohibited.

     7.02 VOTING LIST. The Managers shall make, at least ten days before each
meeting of Members, a complete list of the Members entitled to vote at such
meeting or any adjournment thereof, arranged in alphabetical order, with the
address of and the Sharing Ratios held by each, which list, for a period of ten
days prior to such meeting, shall be kept on file at the resident office or
principal place of business of the Company and shall be subject to inspection by
any Member at any time during usual business hours. Such list shall also be
produced and kept open at the time and place of the meeting and shall be subject
to the inspection of any Member during the whole time of the meeting. The
original membership records shall be prima-facie evidence as to who are the
Members entitled to examine such list or transfer records or to vote at any
meeting of Members. Failure to comply with the requirements of this Section
shall not affect the validity of any action taken at the meeting.

     7.03 PROXIES. A Member may vote either in person or by proxy executed in
writing by the Member. A telegram, telex, cablegram or similar transmission by
the Member, or a photographic, photostatic, facsimile or similar reproduction of
a writing executed by the Member shall be treated as an execution in writing for
purposes of this Section. Proxies for use at any meeting of Members or in
connection with the taking of any action by written consent shall be filed with
the Managers, before or at the time of the meeting or execution of the written
consent, as the case may be. All proxies shall be received and taken charge of
and all ballots shall be received and canvassed by the Managers, who shall
decide all questions touching upon the qualification of voters, the validity of
the proxies, and the acceptance or rejection of votes, unless an inspector or
inspectors shall have been appointed by the chairman of the meeting, in which
event such inspector or inspectors shall decide all such questions. No proxy
shall be valid after 11 months from the date of its execution unless otherwise
provided in the proxy. A proxy shall be revocable unless the proxy form
conspicuously states that the proxy is irrevocable and the proxy is coupled with
an interest. Should a proxy designate two or more Persons to act as proxies,
unless that instrument shall provide to the contrary, a majority of such Persons
present at any meeting at which their powers thereunder are to be exercised
shall have and may exercise all the powers of voting or giving consents thereby
conferred, or if only one be present, then such powers may be exercised by that
one; or, if an even number attend and a majority do not agree on any particular
issue, the Company shall not be required to recognize such proxy with respect to
such issue if such proxy does not specify how the Sharing Ratios that are the
subject of such proxy are to be voted with respect to such issue.

     7.04 CONDUCT OF MEETINGS. All meetings of the Members shall be presided
over by the chairman of the meeting, who shall be a Manager (or representative
thereof) designated by a majority of the Managers. The chairman of any meeting
of Members shall determine the order of business and the procedure at the
meeting, including such regulation of the manner of voting and the conduct of
discussion as seem to him in order.


                                      -16-



     7.05 ACTION BY WRITTEN CONSENT OR TELEPHONE CONFERENCE. (a) Any action
required or permitted to be taken at any annual or special meeting of Members
may be taken without a meeting, without prior notice, and without a vote, if a
consent or consents in writing, setting forth the action so taken, shall be
signed by the holder or holders of not less than the minimum Sharing Ratios that
would be necessary to take such action at a meeting at which the holders of all
Sharing Ratios entitled to vote on the action were present and voted. Every
written consent shall bear the date of signature of each Member who signs the
consent. No written consent shall be effective to take the action that is the
subject to the consent unless, within 60 days after the date of the earliest
dated consent delivered to the Company in the manner required by this Section, a
consent or consents signed by the holder or holders of not less than the minimum
Sharing Ratios that would be necessary to take the action that is the subject of
the consent are delivered to the Company by delivery to its resident office, its
principal place of business, or the Managers. Delivery shall be by hand or
certified or registered mail, return receipt requested. Delivery to the
Company's principal place of business shall be addressed to the Managers. A
telegram, telex, cablegram or similar transmission by a Member, or a
photographic, photostatic, facsimile or similar reproduction of a writing signed
by a Member, shall be regarded as signed by the Member for purposes of this
Section. Prompt notice of the taking of any action by Members without a meeting
by less than unanimous written consent shall be given to those Members who did
not consent in writing to the action.

     (b) The record date for determining Members entitled to consent to action
in writing without a meeting shall be the first date on which a signed written
consent setting forth the action taken or proposed to be taken is delivered to
the Company by delivery to its resident office, its principal place of business,
or the Managers. Delivery shall be by hand or by certified or registered mail,
return receipt requested. Delivery to the Company's principal place of business
shall be addressed to the Managers.

     (c) If any action by Members is taken by written consent, any articles or
documents filed with the Secretary of State of Nevada as a result of the taking
of the action shall state, in lieu of any statement required by the Act
concerning any vote of Members, that written consent has been given in
accordance with the provisions of the Act and that any written notice required
by the Act has been given.

     (d) Members may participate in and hold a meeting by means of conference
telephone or similar communications equipment by means of which all Persons
participating in the meeting can hear each other, and participation in such
meeting shall constitute attendance and presence in person at such meeting,
except where a Person participates in the meeting for the express purpose of
objecting to the transaction of any business on the ground that the meeting is
not lawfully called or convened.

                                  ARTICLE VIII
                                 INDEMNIFICATION

     8.01 RIGHT TO INDEMNIFICATION. Subject to the limitations and conditions as
provided in this Article VIII, each Person who was or is made a party or is
threatened to be made a party to or is involved in any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative,
arbitrative or investigative (hereinafter a "Proceeding"), or any appeal in such
a Proceeding or any inquiry or investigation that could lead to such a
Proceeding, by reason of the fact that he or she, or a Person of whom he or she
is the legal representative' is or was a Manager of the Company or while a
Manager of the Company is or was serving at the request of the Company as a
Manager, director, officer, partner, venturer, proprietor, trustee, employee,
agent, or similar functionary of another foreign or domestic limited liability
company, corporation, partnership, joint venture, sole proprietorship, trust,
employee benefit


                                      -17-



plan or other enterprise shall be indemnified by the Company to the fullest
extent permitted by the Act and the laws of the State of Nevada, as the same
exist or may hereafter be amended (but, in the case of any such amendment, only
to the extent that such amendment permits the Company to provide broader
indemnification rights than said law permitted the Company to provide prior to
such amendment) against judgments, penalties (including excise and similar taxes
and punitive damages), fines, settlements and reasonable expenses (including,
without limitation, attorneys' fees) actually incurred by such Person in
connection with such Proceeding, and indemnification under this Article VIII
shall continue as to a Person who has ceased to serve in the capacity which
initially entitled such Person to indemnify hereunder. The rights granted
pursuant to this Article VIII shall be deemed contract rights, and no amendment,
modification or repeal of this Article VIII shall have the effect of limiting or
denying any such rights with respect to actions taken or Proceedings arising
prior to any such amendment, modification or repeal. It is expressly
acknowledged that the indemnification provided in this Article VIII could
involve indemnification for negligence or under theories of strict liability.

     8.02 ADVANCE PAYMENT. The right to indemnification conferred in this
Article VIII shall include the right to be paid or reimbursed by the Company the
reasonable expenses incurred by a Person of the type entitled to be indemnified
under Section 8.01 who was, is or is threatened to be made a named defendant or
respondent in a Proceeding in advance of the final disposition of the Proceeding
and without any determination as to the Person's ultimate entitlement to
indemnification; provided, however, that the payment of such expenses incurred
by any such Person in advance of the final disposition of a Proceeding, shall be
made only upon delivery to the Company of a written affirmation by such Manager
of his or her good faith belief that he has met the standard of conduct for
indemnification under this Article VIII and a written undertaking, by or on
behalf of such Person, to repay all amounts so advanced if it shall ultimately
be determined that such indemnified Person is not entitled to be indemnified
under this Article VIII or otherwise.

     8.03 INDEMNIFICATION OF OFFICERS, EMPLOYEES, AND AGENTS. The Company, by
adoption of a resolution of the Managers, may indemnity and advance expenses to
an officer, employee or agent of the Company to the same extent and subject to
the same conditions under which it may indemnify and advance expenses to
Managers under this Article VIII; and, the Company may indemnify and advance
expenses to Persons who are not or were not Managers, officers, employees or
agents of the Company but who are or were serving at the request of the Company
as a Manager, director, officer, partner, venturer, proprietor, trustee,
employee, agent or similar functionary of another foreign or domestic limited
liability company, corporation, partnership, joint venture, sole proprietorship,
trust, employee benefit plan or other enterprise against any liability asserted
against him and incurred by him in such a capacity or arising out of his status
as such a Person to the same extent that it may indemnity and advance expenses
to Managers under this Article VIII.

     8.04 APPEARANCE AS A WITNESS. Notwithstanding any other provision of this
Article VIII, the Company may pay or reimburse expenses incurred by a Manager in
connection with his appearance as a witness or other participation in a
Proceeding at a time when he is not a named defendant or respondent in the
Proceeding.

     8.05 NONEXCLUSIVITY OF RIGHTS. The right to indemnification and the
advancement and payment of expenses conferred in this Article VIII shall not be
exclusive of any other right which a Manager or other Person indemnified
pursuant to Section 8.03 may have or hereafter acquire under any law (common or
statutory), provision of the Articles or these Regulations, agreement, vote of
Members or disinterested Managers or otherwise.


                                      -18-



     8.06 INSURANCE. The Company may purchase and maintain insurance, at its
expense, to protect itself and any Person who is or was serving as a Manager,
officer, employee or agent of the Company or is or was serving at the request of
the Company as a Manager, director, officer, partner, venturer, proprietor,
trustee, employee, agent or similar functionary of another foreign or domestic
limited liability company, corporation, partnership, joint venture, sole
proprietorship, trust, employee benefit plan or other enterprise against any
expense, liability or loss, whether or not the Company would have the power to
indemnify such Person against such expense, liability or loss under this Article
VIII.

     8.07 MEMBER NOTIFICATION. To the extent required by law, any
indemnification of or advance of expenses to a Manager in accordance with this
Article VIII shall be reported in writing to the Members with or before the
notice or waiver of notice of the next Members' meeting or with or before the
next submission to Members of a consent to action without a meeting and, in any
case, within the 12-month period immediately following the date of the
indemnification or advance.

     8.08 SAVINGS CLAUSE. If this Article VIII or any portion hereof shall be
invalidated on any ground by any court of competent jurisdiction, then the
Company shall nevertheless indemnify and hold harmless each Manager or any other
Person indemnified pursuant to this Article VIII as to costs, charges and
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement with respect to any action, suit or proceeding, whether civil,
criminal, administrative or investigative to the full extent permitted by any
applicable portion of this Article VIII that shall not have been invalidated and
to the fullest extent permitted by applicable law.

                                   ARTICLE IX
                                      TAXES

     9.01 TAX RETURNS. The Managers shall cause to be prepared and filed all
necessary federal and state income tax returns for the Company, including making
the elections described in Section 9.02. Each Member shall furnish to the
Managers all pertinent information in its possession relating to Company
operations that is necessary to enable the Company's income tax returns to be
prepared and filed.

     9.02 TAX ELECTIONS. The Company shall make the following elections on the
appropriate tax returns:

          (a) to adopt the year ending on May 31 as the Company's fiscal year;

          (b) to adopt a method of accounting as the Managers may determine from
     time to time;

          (c) if a distribution of Company property as described in section 734
     of the Code occurs or if a transfer of a Membership Interest as described
     in section 743 of the Code occurs, on written request of any Member, to
     elect, pursuant to section 754 of the Code, to adjust the basis of Company
     properties;

          (d) to elect to amortize the organizational expenses of the Company
     and the startup expenditures of the Company under Section 195 of the Code
     ratably over a period of 60 months as permitted by section 709(b) of the
     Code; and

          (e) any other election the Managers may deem appropriate and in the
     best interests of the Members.


                                      -19-



Neither the Company nor any Manager or Member may make an election for the
Company to be excluded from the application of the provisions of subchapter K of
chapter 1 of subtitle A of the Code or any similar provisions of applicable
state law, and no provision of these Regulations (including, without limitation,
Section 2.06) shall be construed to sanction or approve such an election.

     9.03 "TAX MATTERS PARTNER." A majority of the Managers who are Members
shall designate one Manager that is a Member to be the "tax matters partner" of
the Company pursuant to section 6231(a)(7) of the Code; or, if there is no
Manager that is a Member, the "tax matters partner" shall be a Member that is
designated as such by a Required Interest. Any Member who is designated "tax
matters partner" shall take such action as may be necessary to cause each other
Member to become a "notice partner" within the meaning of section 6223 of the
Code. Any Member who is designated "tax matters partner" shall inform each other
Member of all significant matters that may come to its attention in its capacity
as "tax matters partner" by giving notice thereof on or before the fifth
Business Day after becoming aware thereof and, within that time, shall forward
to each other Member copies of all significant written communications it may
receive in that capacity. Any Member who is designated "tax matters partner" may
not take any action contemplated by sections 6222 through 6232 of the Code
without the consent of a Required Interest, but this sentence does not authorize
such Manager (or any other Manager) to take any action left to the determination
of an individual Member under sections 6222 through 6232 of the Code.

                                    ARTICLE X
                   BOOKS, RECORDS, REPORTS, AND BANK ACCOUNTS

     10.01 MAINTENANCE OF BOOKS. The Company shall keep books and records of
accounts and shall keep minutes of the proceedings of its Members, its Managers
and each committee of the Managers. The books of account for the Company shall
be maintained on a cash basis in accordance with the terms of these Regulations,
except that the capital accounts of the Members shall be maintained in
accordance with Section 4.06. The calendar year shall be the accounting year of
the Company.

     10.02 REPORTS. On or before the 120th day following the end of each fiscal
year during the term of the Company, the Managers shall cause each Member to be
furnished with a balance sheet, an income statement, and a statement of changes
in Members' capital of the Company for, or as of the end of, that year certified
by a recognized firm of certified public accountants. These financial statements
must be prepared in accordance with accounting principles generally employed for
cash basis records consistently applied (except as therein noted) and must be
accompanied by a report of the certified public accountants certifying the
statements and stating that (a) their examination was made in accordance with
generally accepted auditing standards and, in their opinion, the financial
statements fairly present the financial position, financial results of
operations, and changes in Members' capital in accordance with accounting
principles generally employed for cash-basis records consistently applied
(except as therein noted) and (b) in making the examination and reporting on the
financial statements described above, nothing came to their attention that
caused them to believe that (i) the income and revenues were not paid or
credited in accordance with the financial and accounting provisions of these
Regulations, (ii) the costs and expenses were not charged in accordance with the
financial and accounting provisions of these Regulations, or (iii) the Managers
or any Member failed to comply in any material respect with the financial and
accounting provisions of these Regulations, or if they do conclude that the
Managers or a Member so failed, specifying the nature and period of existence of
the failure. The Managers also may cause to be prepared or delivered such other
reports as they may deem appropriate. The Company shall bear the costs of all
these reports.


                                      -20-



     10.03 ACCOUNTS. The Managers shall establish and maintain one or more
separate bank and investment accounts and arrangements for Company funds in the
Company name with financial institutions and firms that the Managers determine.
The Managers may not commingle the Company's funds with the funds of any Member;
however, Company funds may be invested in a manner the same as or similar to the
Managers' investment of their own funds or investments by their Affiliates.

                                   ARTICLE XI
                             BANKRUPTCY OF A MEMBER

     11.01 BANKRUPT MEMBERS. Subject to Section 12.01(c), if any Member becomes
a Bankrupt Member, the Company shall have the option, exercisable by notice from
the Managers to the Bankrupt Member (or its representative) at any time prior to
the 180th day after receipt of notice of the occurrence of the event causing it
to become a Bankrupt Member, to buy, and on the exercise of this option the
Bankrupt Member or its representative shall sell, its Membership Interest. The
purchase price shall be an amount equal to the fair market value thereof
determined by agreement of the Bankrupt Member (or its representative) and the
Managers; however, if those Persons do not agree on the fair market value on or
before the 30th day following the exercise of the option, either such Person, by
notice to the other, may require the determination of fair market value to be
made by an independent appraiser specified in that notice. If the Person
receiving that notice objects on or before the tenth day following receipt to
the independent appraiser designated in that notice, and those Persons otherwise
fail to agree on an independent appraiser, either such Person may petition the
United States District Judge for the State of Nevada then senior in service to
designate an independent appraiser. The determination of the independent
appraiser, however designated, is final and binding on all parties. The Bankrupt
Member and the Company each shall pay one-half of the costs of the appraisal.
The purchaser shall pay the fair market value as so determined in four equal
cash installments, the first due on closing and the remainder (together with
accumulated interest on the amount unpaid at the General Interest Rate) due on
each of the first three anniversaries thereof. The payment to be made to the
Bankrupt Member or its representative pursuant to this Section 11.01 is in
complete liquidation and satisfaction of all the rights and interest of the
Bankrupt Member and its representative (and of all Persons claiming by, through,
or under the Bankrupt Member and its representative) in and in respect of the
Company, including, without limitation, any Membership Interest, any rights in
specific Company property, and any rights against the Company and (insofar as
the affairs of the Company are concerned) against the Members, and constitutes a
compromise to which all Members have agreed pursuant to the Act.

                                   ARTICLE XII
                    DISSOLUTION, LIQUIDATION, AND TERMINATION

     12.01 DISSOLUTION. The Company shall dissolve and its affairs shall be
wound up on the first to occur of the following:

          (a) the written consent of a Required Interest;

          (b) the expiration of the period fixed for the duration of the Company
     set forth in the Articles;

          (c) any Manager who is a Member (or, if there is no Manager who is a
     Member, any Member) shall become a Bankrupt Member (with or without the
     consent of a Required Interest); provided, however, that if the event
     described in this Section 12.01(c) shall occur and there shall be at least
     one other Member remaining, the Company shall not be dissolved, and the
     business of the Company shall be continued, if all Members so agree; and


                                      -21-



          (d) entry of a decree of judicial dissolution of the Company under
     article 6.02 of the Act.

Except as provided in Section 12.01(c), the death, retirement, resignation,
expulsion, bankruptcy or dissolution of a Member, or the occurrence of any other
event that terminates the continued membership of a Member in the Company, shall
not cause a dissolution of the Company.

     12.02 LIQUIDATION AND TERMINATION. On dissolution of the Company, the
Managers shall act as liquidator or may appoint one or more Members as
liquidator. The liquidator shall proceed diligently to wind up the affairs of
the Company and make final distributions as provided herein and in the Act. The
costs of liquidation shall be borne as a Company expense. Until final
distribution, the liquidator shall continue to operate the Company properties
with all of the power and authority of the Managers. The steps to be
accomplished by the liquidator are as follows:

          (a) as promptly as possible after dissolution and again after final
     liquidation, the liquidator shall cause a proper accounting to be made by a
     recognized firm of certified public accountants of the Company's assets,
     liabilities, and operations through the last day of the calendar month in
     which the dissolution occurs or the final liquidation is completed, as
     applicable;

          (b) the liquidator shall cause the notice described in article
     6.05(A)(2) of the Act to be mailed to each known creditor of and claimant
     against the Company in the manner described in such article 6.05(A)(2) of
     the Act;

          (c) the liquidator shall pay, satisfy or discharge from Company funds
     all of the debts, liabilities and obligations of the Company (including,
     without limitation, all expenses incurred in liquidation and any advances
     described in Section 4.05) or otherwise make adequate provision for payment
     and discharge thereof (including, without limitation, the establishment of
     a cash escrow fund for contingent liabilities in such amount and for such
     term as the liquidator may reasonably determine); and

          (d) all remaining assets of the Company shall be distributed to the
     Members as follows:

               (i) the liquidator may sell any or all Company property,
          including to Members, and any resulting gain or loss from each sale
          shall be computed and allocated to the capital accounts of the
          Members;

               (ii) with respect to all Company property that has not been sold,
          the fair market value of that property shall be determined and the
          capital accounts of the Members shall be adjusted to reflect the
          manner in which the unrealized income, gain, loss, and deduction
          inherent in property that has not been reflected in the capital
          accounts previously would be allocated among the Members if there were
          a taxable disposition of that property for the fair market value of
          that property on the date of distribution; and

               (iii) Company property shall be distributed among the Members in
          accordance with the positive capital account balances


                                      -22-



          of the Members, as determined after taking into account all capital
          account adjustments for the taxable year of the Company during which
          the liquidation of the partnership occurs (other than those made by
          reason of this clause (iii)); and those distributions shall be made by
          the end of the taxable year of the Company during which the
          liquidation of the Company Occurs (or, if later, 90 days after the
          date of the liquidation).

All distributions in kind to the Members shall be made subject to the liability
of each distributee for costs, expenses, and liabilities theretofore incurred or
for which the Company has committed prior to the date of termination and those
costs, expenses, and liabilities shall be allocated to the distributee pursuant
to this Section 12.02. The distribution of cash and/or property to a Member in
accordance with the provisions of this Section 12.02 constitutes a complete
return to the Member of its Capital Contributions and a complete distribution to
the Member of its Membership Interest and all the Company's property and
constitutes a compromise to which all Members have consented within the meaning
of the Act. To the extent that a Member returns funds to the Company, it has no
claim against any other Member for those funds.

     12.03 DEFICIT CAPITAL ACCOUNTS. Notwithstanding anything to the contrary
contained in these Regulations, and notwithstanding any custom or rule of law to
the contrary, to the extent that the deficit, if any, in the capital account of
any Member results from or is attributable to deductions and losses of the
Company (including non-cash items such as depreciation), or distributions of
money pursuant to these Regulations to all Members in proportion to their
respective Sharing Ratios, upon dissolution of the Company such deficit shall
not be an asset of the Company and such Members shall not be obligated to
contribute such amount to the Company to bring the balance of such Member's
capital account to zero.

     12.04 ARTICLES OF DISSOLUTION. On completion of the distribution of Company
assets as provided herein, the Company is terminated, and the Managers (or such
other Person or Persons as the Act may require or permit) shall file Articles of
Dissolution with the Secretary of State of Nevada, cancel any other filings made
pursuant to Section 2.05, and take such other actions as may be necessary to
terminate the Company.

                                   ARTICLE XII
                               GENERAL PROVISIONS

     13.01 OFFSET. Whenever the Company is to pay any sum to any Member, any
amounts that Member owes the Company may be deducted from that sum before
payment.

     13.02 NOTICES. Except as expressly set forth to the contrary in these
Regulations, all notices, requests, or consents provided for or permitted to be
given under these Regulations must be in writing and must be given either by
depositing that writing in the United States mail, addressed to the recipient,
postage paid, and registered or certified with return receipt requested or by
delivering that writing to the recipient in person, by courier, or by facsimile
transmission; and a notice, request, or consent given under these Regulations is
effective on receipt by the Person to receive it. All notices, requests, and
consents to be sent to a Member must be sent to or made at the addresses given
for that Member on Exhibit A or in the instrument described in Section 3.03(d)
or 3.04, or such other address as that Member may specify by notice to the other
Members. Any notice, request, or consent to the Company or the Managers must be
given to the Managers at the following address: 250 Lesmill Road, Don Mills,
Ontario M3B 2T5 Canada. Whenever any notice is required to be given by law, the
Articles or these Regulations, a written waiver thereof, signed by the Person
entitled to notice, whether before or after the time stated therein, shall be
deemed equivalent to the giving of such notice.


                                      -23-



     13.03 ENTIRE AGREEMENT; SUPERSEDURE. These Regulations constitute the
entire agreement of the Members and their Affiliates relating to the Company and
supersedes all prior contracts or agreements with respect to the Company,
whether oral or written.

     13.04 EFFECT OF WAIVER OR CONSENT. A waiver or consent, express or implied,
to or of any breach or default by any Person in the performance by that Person
of its obligations with respect to the Company is not a consent or waiver to or
of any other breach or default in the performance by that Person of the same or
any other obligations of that Person with respect to the Company. Failure on the
part of a Person to complain of any act of any Person or to declare any Person
in default with respect to the Company, irrespective of how long that failure
continues, does not constitute a waiver by that Person of its rights with
respect to that default until the applicable statute-of-limitations period has
run.

     13.05 AMENDMENT OR MODIFICATION. These Regulations may be amended or
modified from time to time only by a written instrument adopted by the Managers
and executed and agreed to by a Required Interest; provided, however, that (a)
an amendment or modification reducing a Member's Sharing Ratio or increasing its
Commitment (other than to reflect changes otherwise provided by these
Regulations) is effective only with that Member's consent, (b) an amendment or
modification reducing the required Sharing Ratio or other measure for any
consent or vote in these Regulations is effective only with the consent or vote
of Members having the Sharing Ratio or other measure theretofore required, and
(c) amendments of the type described in Section 3.04 may be adopted as therein
provided.

     13.06 BINDING EFFECT. Subject to the restrictions on Dispositions set forth
in these Regulations, these Regulations are binding on and inure to the benefit
of the Members and their respective heirs, legal representatives, successors,
and assigns.

     13.07 GOVERNING LAW; SEVERABILITY. THESE REGULATIONS ARE GOVERNED BY AND
SHALL BE CONSTRUED IN ACCORDANCE WITH LAW OF THE STATE OF NEVADA, EXCLUDING ANY
CONFLICT-OF-LAWS RULE OR PRINCIPLE THAT MIGHT REFER THE GOVERNANCE OR THE
CONSTRUCTION OF THESE REGULATIONS TO THE LAW OF ANOTHER JURISDICTION. In the
event of a direct conflict between the provisions of these Regulations and (a)
any provision of the Articles, or (b) any mandatory provision of the Act, the
application provision of the Articles or the Act shall control. If any provision
of these Regulations or the application thereof to any Person or circumstance is
held invalid or unenforceable to any extent, the remainder of these Regulations
and the application of that provision to other Persons or circumstances is not
affected thereby and that provision shall be enforced to the greatest extent
permitted by law.

     13.08 FURTHER ASSURANCES. In connection with these Regulations and the
transactions contemplated hereby, each Member shall execute and deliver any
additional documents and instruments and perform any additional acts that may be
necessary or appropriate to effectuate and perform the provisions of these
Regulations and those transactions.

     13.09 WAIVER OF CERTAIN RIGHTS. Each Member irrevocably waives any right it
may have to maintain any action for dissolution of the Company or for partition
of the property of the Company.

     13.10 INDEMNIFICATION. To the fullest extent permitted by law, each Member
shall indemnify the Company, each Manager and each other Member and hold them
harmless from and against all losses, costs, liabilities, damages, and expenses
(including, without limitation, costs of suit and attorney's fees) they may
incur on account of any breach by that Member of these Regulations.


                                      -24-



     13.11 NOTICE TO MEMBERS OF PROVISIONS OF THIS AGREEMENT. By executing these
Regulations, each Member acknowledges that it has actual notice of (a) all of
the provisions of this Agreement, including, without limitation, the
restrictions on the transfer of Membership Interests set forth in Article III,
and (b) all of the provisions of the Articles, including, without limitation,
the fact that the Articles provide that no Member shall have the preemptive
right to acquire any Membership Interests or securities of any class that may at
any time be issued, sold or offered for sale by the Company. Each Member hereby
agrees that these Regulations constitute adequate notice of all such provisions.

     13.12 COUNTERPARTS. These Regulations may be executed in any number of
counterparts with the same effect as if all signing parties had signed the same
document. All counterparts shall be construed together and constitute the same
instrument.

     13.13 ARBITRATION. If, at any time or from time to time during the
continuance of the Company or after the dissolution or other termination
thereof, any dispute, difference or question shall arise between any of the
Members, or their successors, assigns or nominees, touching or concerning the
Company of the property, assets, rights or transactions thereof, or the
dissolution or other termination thereof, or the property of the Company or the
construction, meaning or effect of these Regulations, or any provision hereof,
or the rights of obligations of the Members, or their successors, assigns or
nominees, under these Regulations or otherwise, with respect thereto, then every
such dispute, difference or question shall be submitted to and settled by
arbitration and the decision of the arbitrator appointed as hereinafter provided
to deal with such matter shall be accepted by all the Members to such dispute,
difference or question. The arbitration shall be conducted by a single
arbitrator agreed upon by the Members to the matter. The decision of the
arbitrator shall be final and binding upon all the Members to such dispute,
difference or question and their nominees, and there shall be no appeal
therefrom.

     IN WITNESS WHEREOF, following adoption of these Regulations by the
Managers, the Members have executed these Regulations as of the date first set
forth above.

                                        MEMBERS:

                                        ELLY NEVADA, INC.,
                                        a Nevada corporation

                                        By: /s/ Harry Rosenbaum
                                            ------------------------------------
                                            Harry Rosenbaum, Vice President


                                        NORMAN NEVADA, INC.,
                                        a Nevada corporation


                                        By: /s/ Harry Rosenbaum
                                            ------------------------------------
                                            Harry Rosenbaum, Vice President


                                      -25-

EX-3.2(M)

                                                                  Exhibit 3.2(m)

                        FIRST AMENDMENT TO REGULATIONS OF
                           ASHTON WOODS BUTLER L.L.C.

     THIS FIRST AMENDMENT TO REGULATIONS OF ASHTON WOODS BUTLER L.L.C. (this
"Amendments") is made and entered into by and among ELLY NEVADA, INC., a Nevada
corporation ("Elly NV"), NORMAN NEVADA, INC., a Nevada corporation ("Norman
NV"), and ASHTON WOODS USA L.L.C., a Nevada limited liability company ("Ashton
USA").

                                    RECITALS:

     A. Elly NV and Norman NV have heretofore entered into Regulations of Ashton
Woods Butler L.L.C. (the "Regulations") dated as of October 9, 1998, creating
Ashton Woods Butler L.L.C., a Nevada limited liability company (the "Company").

     B. As permitted by the Regulations, Elly NV and Norman NV transferred all
of their right, title, and interest in and to the Company to Ashton USA.

     C. The parties hereto desire to amend the Regulations to reflect the
transfers described above and provide for the admission of Ashton USA as the
sole member of the Company.

     D. Capitalized terms, not specifically defined in this Amendment, shall
have the meanings given such terms in the Regulations.

     NOW, THEREFORE, for and in consideration of the premises and the respective
agreements set forth herein, the parties hereto agree as follows:

     1. The transfers described in Recital B above are hereby approved.

     2. Ashton USA is hereby admitted as a Member of the Company and the parties
hereto recognize that Elly NV and Norman NV have withdrawn as Members of the
Company. The only Member of the Company is Ashton USA.

     3. The Sharing Ratios and funding commitments of the Members set forth on
Exhibit "A" to the Regulations shall be as follows:



                           Sharing Ratio and
         Member           Funding Commitment
         ------           ------------------
                       
Ashton Woods USA L.L.C.          100%


     4. Any and all notices, demands, requests, or other communications
permitted or required to be given to Ashton USA pursuant to the Regulations
shall be delivered to Ashton USA in the manner provided in the Regulations, at
the following address:

          250 Lesmill Road
          Don Mills, Ontario M3B 2T5 Canada

     5. By execution of this Amendment, Ashton USA agrees to be bound by the
terms and provisions of the Regulations, as amended hereby.

     6. Except as amended hereby, the terms and provisions of the Regulations
shall remain unchanged and shall continue in full force and effect.

     EXECUTED as of May 31, 1999.

                                        MEMBER:

                                        ASHTON WOODS USA L.L.C.,
                                        A Nevada limited liability company


                                        By: /s/ Bruce Freeman
                                            ------------------------------------
                                            Bruce Freeman - Managing Member


                                        By: /s/ Seymour Joffe
                                            ------------------------------------
                                            Seymour Joffe - Managing Member


                                        By: /s/ Harry Rosenbaum
                                            ------------------------------------
                                            Harry Rosenbaum - Managing Member


                                        WITHDRAWING MEMBERS:

                                        ELLY NEVADA, INC.,
                                        a Nevada corporation


                                        By:  /s/ Elly Reisman
                                            ------------------------------------
                                            Elly Reisman, President


                                        NORMAN NEVADA, INC.,
                                        a Nevada corporation


                                        By:  /s/ Norman Reisman
                                            ------------------------------------
                                            Norman Reisman, President


                                        2

EX-3.2(N)

                                                                  Exhibit 3.2(n)

                                   REGULATIONS

                                       OF

                          ASHTON WOODS LAKESIDE L.L.C.

                       A NEVADA LIMITED LIABILITY COMPANY

                           Dated as of October 9, 1998

                                   REGULATIONS
                                       OF
                          ASHTON WOODS LAKESIDE L.L.C.
                       A NEVADA LIMITED LIABILITY COMPANY

                                TABLE OF CONTENTS

                                                                            
ARTICLE I
DEFINITIONS ................................................................    1

1.01  Definitions ..........................................................    1
1.02  Construction .........................................................    3

ARTICLE II
ORGANIZATION ...............................................................    3

2.01  Formation ............................................................    3
2.02  Name .................................................................    3
2.03  Resident Office; Resident Agent; Principal Office in the United
      States; Other Offices ................................................    3
2.04  Purposes .............................................................    3
2.05  Foreign Qualification ................................................    3
2.06  Term .................................................................    4
2.07  Mergers and Exchanges ................................................    4
2.08  No State-Law Partnership .............................................    4

ARTICLE III
MEMBERSHIP; DISPOSITIONS OF INTERESTS ......................................    4

3.01  Initial Members ......................................................    4
3.02  Representations and Warranties .......................................    4
3.03  Restrictions on the Disposition of an Interest .......................    4
3.04  Additional Members ...................................................    6
3.05  Interests in a Member ................................................    6
3.06  Information ..........................................................    6
3.07  Liability to Third Parties ...........................................    7
3.08  Withdrawal ...........................................................    7
3.09  Lack of Authority ....................................................    7

ARTICLE IV
CAPITAL CONTRIBUTIONS ......................................................    7

4.01  Initial Contributions ................................................    7
4.02  Subsequent Contributions .............................................    7
4.03  Failure to Contribute ................................................    7
4.04  Return of Contributions ..............................................    9
4.05  Advances by Members ..................................................    9
4.06  Capital Accounts .....................................................    9




                                       -i-

                                                                            
ARTICLE V
ALLOCATIONS AND DISTRIBUTIONS ..............................................   10

5.01  Allocations ..........................................................   10
5.02  Distributions ........................................................   10

ARTICLE VI
MANAGERS ...................................................................   11

6.01  Management by Managers ...............................................   11
6.02  Actions by Managers; Committees; Delegation of Authority and Duties ..   12
6.03  Number and Term of Office ............................................   12
6.04  Vacancies; Removal; Resignation ......................................   13
6.05  Meetings .............................................................   13
6.06  Approval or Ratification of Acts or Contracts by Members .............   13
6.07  Action by Written Consent or Telephone Conference ....................   14
6.08  Compensation .........................................................   14
6.09  Conflicts of Interest ................................................   14
6.10  Officers .............................................................   14

ARTICLE VII
MEETINGS OF MEMBERS ........................................................   15

7.01  Meetings .............................................................   15
7.02  Voting List ..........................................................   16
7.03  Proxies ..............................................................   16
7.04  Conduct of Meetings ..................................................   16
7.05  Action by Written Consent or Telephone Conference ....................   17

ARTICLE VIII
INDEMNIFICATION ............................................................   17

8.01  Right to Indemnification .............................................   17
8.02  Advance Payment ......................................................   18
8.03  Indemnification of Officers, Employees, and Agents ...................   18
8.04  Appearance as a Witness ..............................................   18
8.05  Nonexclusivity of Rights .............................................   18
8.06  Insurance ............................................................   19
8.07  Member Notification ..................................................   19
8.08  Savings Clause .......................................................   19

ARTICLE IX
TAXES ......................................................................   19

9.01  Tax Returns ..........................................................   19
9.02  Tax Elections ........................................................   19
9.03  Tax Matters Partner ..................................................   20




                                      -ii-

                                                                            
ARTICLE X
BOOKS, RECORDS, REPORTS, AND BANK ACCOUNTS .................................   20

10.01 Maintenance of Books .................................................   20
10.02 Reports ..............................................................   20
10.03 Accounts .............................................................   21

ARTICLE XI
BANKRUPTCY OF A MEMBER .....................................................   21

11.01 Bankrupt Members .....................................................   21

ARTICLE XII
DISSOLUTION, LIQUIDATION, AND TERMINATION ..................................   21

12.01 Dissolution ..........................................................   21
12.02 Liquidation and Termination ..........................................   22
12.03 Deficit Capital Accounts .............................................   23
12.04 Articles of Dissolution ..............................................   23

ARTICLE XIII
GENERAL PROVISIONS .........................................................   23

13.01 Offset ...............................................................   23
13.02 Notices ..............................................................   23
13.03 Entire Agreement; Supersedure ........................................   24
13.04 Effect of Waiver or Consent ..........................................   24
13.05 Amendment or Modification ............................................   24
13.06 Binding Effect .......................................................   24
13.07 Governing Law: Severability ..........................................   24
13.08 Further Assurances ...................................................   24
13.09 Waiver of Certain Rights .............................................   24
13.10 Indemnification ......................................................   24
13.11 Notice to Members of Provisions of this Agreement ....................   25
13.12 Counterparts .........................................................   25




                                      -iii-

                                   REGULATIONS

                                       OF

                          ASHTON WOODS LAKESIDE L.L.C.

                       A NEVADA LIMITED LIABILITY COMPANY

     These REGULATIONS OF ASHTON WOODS LAKESIDE L.L.C. (these "Regulations"),
dated as of October 9, 1998, are (a) adopted by the Managers (as defined below)
and (b) executed and agreed to, for good and valuable consideration, by the
Members (as defined below).

                                    ARTICLE I
                                   DEFINITIONS

     1.01 DEFINITIONS. As used in these Regulations, the following terms have
the following meanings:

          "Act" means the Nevada Limited Liability Company Act and any successor
     statute, as amended from time to time.

          "Articles" has the meaning given that term in Section 2.01.

          "Bankrupt Member" means (except to the extent a Required Interest
     consents otherwise) any Member (a) that (i) makes a general assignment for
     the benefit of creditors; (ii) files a voluntary bankruptcy petition; (iii)
     becomes the subject of an order for relief or is declared insolvent in any
     federal or state bankruptcy or insolvency proceedings; (iv) files a
     petition or answer seeking for the Member a reorganization, arrangement,
     composition, readjustment, liquidation, dissolution, or similar relief
     under any law; (v) files an answer or other pleading admitting or failing
     to contest the material allegations of a petition filed against the Member
     in a proceeding of the type described in subclauses (i) through (iv) of
     this clause (a); or (vi) seeks, consents to, or acquiesces in the
     appointment of a trustee, receiver, or liquidator of the Member or of all
     or any substantial part of the Member's properties; or (b) against which, a
     proceeding seeking reorganization, arrangement, composition, readjustment,
     liquidation, dissolution, or similar relief under any law has been
     commenced and 120 days have expired without dismissal thereof or with
     respect to which, without the Member's consent or acquiescence, a trustee,
     receiver, or liquidator of the Member or of all or any substantial part of
     the Member's properties has been appointed and 90 days have expired without
     the appointment's having been vacated or stayed, or 90 days have expired
     after the date of expiration of a stay, if the appointment has not
     previously been vacated.

          "Business Day" means any day other than a Saturday, a Sunday, or a
     holiday on which national banking associations in the State of Nevada are
     closed.

          "Capital Contribution" means any contribution by a Member to the
     capital of the Company.


                                       -1-

          "Code" means the Internal Revenue Code of 1986 and any successor
     statute, as amended from time to time.

          "Commitment" means, subject in each case to adjustments on account of
     Dispositions of Membership Interests permitted by these Regulations, (a) in
     the case of a Member executing these Regulations as of the date of these
     Regulations or a Person acquiring that Membership Interest, the amount
     specified for that Member as its Commitment on Exhibit A, and (b) in the
     case of a Membership Interest issued pursuant to Section 3.04, the
     Commitment established pursuant thereto.

          "Company" means Ashton Woods Lakeside L.L.C., a Nevada limited
     liability company.

          "Default Interest Rate" means a rate per annum equal to the lesser of
     (a) four percent (4%) plus a varying rate per annum that is equal to the
     interest rate published as the prime rate by The Bank of Nova Scotia from
     time to time, with adjustments in that varying rate to be made on the same
     date as any change in that rate, and (b) the maximum rate permitted by
     applicable law.

          "Delinquent Member" has the meaning given that term in Section
     4.03(a).

          "Dispose," "Disposing," or "Disposition" means a sale, assignment,
     transfer, exchange, mortgage, pledge, grant of a security interest, or
     other disposition or encumbrance (including, without limitation, by
     operation of law), or the acts thereof.

          "General Interest Rate" means a rate per annum equal to the lesser of
     (a) a varying rate per annum that is equal to the interest rate published
     as the prime rate by The Bank of Nova Scotia from time to time, with
     adjustments in that varying rate to be made on the same date as any change
     in that rate, and (b) the maximum rate permitted by applicable law.

          "Lending Member" has the meaning given that term in Section
     4.03(a)(ii).

          "Manager" means Bruce Freeman, Harry Rosenbaum and Seymour Joffe and
     any Person hereafter elected as a manager of the Company as provided in
     these Regulations, but does not include any Person who has ceased to be a
     manager of the Company.

          "Member" means any Person executing these Regulations as of the date
     of these Regulations as a member or hereafter admitted to the Company as a
     member as provided in these Regulations, but does not include any Person
     who has ceased to be a member in the Company.

          "Membership Interest" means the interest of a Member in the Company,
     including, without limitation, rights to distributions (liquidating or
     other), allocations, information, and to consent or approve.

          "Permitted Transferee" has the meaning given that term in Section
     3.03(b).

          "Person" has the meaning given that term in the Act.


                                       -2-

          "Proceeding" has the meaning given that term in Section 8.01.

          "Regulations" has the meaning given that term in the introductory
     paragraph.

          "Required Interest" means one or more Members having among them more
     than 51 % of the Sharing Ratios of all Members.

          "Sharing Ratio" with respect to any Member means the percentage set
     forth on Exhibit A, subject to change as herein provided.

Other terms defined herein have the meanings so given them.

     1.02 CONSTRUCTION. Whenever the context requires, the gender of all words
used in these Regulations includes the masculine, feminine, and neuter. All
references to Articles and Section refer to articles and sections of these
Regulations, and all references to Exhibits are to Exhibits attached hereto,
each of which is made a part hereof for all purposes.

                                   ARTICLE II
                                  ORGANIZATION

     2.01 FORMATION. The Company has been organized as a Nevada limited
liability company by the filing of Articles of Organization (the "Articles")
under and pursuant to the Act and the issuance of a certificate of organization
for the Company by the Secretary of State of Nevada.

     2.02 NAME. The name of the Company is "Ashton Woods Lakeside L.L.C." and
all Company business must be conducted in that name or such other names that
comply with applicable law as the Managers may select from time to time.

     2.03 RESIDENT OFFICE; RESIDENT AGENT; PRINCIPAL OFFICE IN THE UNITED
STATES; OTHER OFFICES. The resident office of the Company required by the Act to
be maintained in the State of Nevada shall be the office of the initial resident
agent named in the Articles or such other office (which need not be a place of
business of the Company) as the Managers may designate from time to time in the
manner provided by law. The resident agent of the Company in the State of Nevada
shall be the initial resident agent named in the Articles or such other Person
or Persons as the Managers may designate from time to time in the manner
provided by law. The principal office of the Company in the United States shall
be at such place as the Managers may designate from time to time, which need not
be in the State of Nevada. The Company shall maintain records at the office of
the resident agent as required by the Act and shall keep the street address of
the resident office of the Company in the State of Nevada. The Company may have
such other offices as the Managers may designate from time to time.

     2.04 PURPOSES. The purposes of the Company are those set forth in the
Articles.

     2.05 FOREIGN QUALIFICATION. Prior to the Company's conducting business in
any jurisdiction other than Nevada, the Managers shall cause the Company to
comply, to the extent procedures are available and those matters are reasonably
within the control of the Managers, with all requirements necessary to qualify
the Company as a foreign limited liability company in that jurisdiction. At the
request of the Managers, each Member shall execute, acknowledge, swear to, and
deliver all certificates and other instruments conforming with these Regulations
that are necessary or appropriate to qualify, continue, and terminate the
Company as a foreign limited liability company in all such jurisdictions in
which the Company may conduct business.


                                       -3-

     2.06 TERM. The Company commenced on the date the Secretary of State of
Nevada issued a certificate of organization for the Company and shall continue
in existence for the period fixed in the Articles for the duration of the
Company, or such earlier time as these Regulations may specify.

     2.07 MERGERS AND EXCHANGES. The Company may be a party to (a) a merger or
(b) an exchange or acquisition.

     2.08 NO STATE-LAW PARTNERSHIP. The Members intend that the Company not be a
partnership (including, without limitation, a limited - partnership) or joint
venture, and that no Member or Manager be a partner or joint venturer of any
other Member or Manager, for any purposes other than federal and state tax
purposes, and these Regulations may not be construed to suggest otherwise.

                                   ARTICLE III
                      MEMBERSHIP; DISPOSITIONS OF INTERESTS

     3.01 INITIAL MEMBERS. The initial members of the Company are the Persons
executing these Regulations as of the date of these Regulations as members, each
of which is admitted to the Company as a Member effective contemporaneously with
the execution by such Person of these Regulations.

     3.02 REPRESENTATIONS AND WARRANTIES. Each Member hereby represents and
warrants to the Company and each other Member that (a) if that Member is a
corporation, it is duly organized, validly existing and in good standing under
the law of the state of its incorporation and is duly qualified and in good
standing as a foreign corporation in the jurisdiction of its principal place of
business (if not incorporated therein); (b) if that Member is a limited
liability company, it is duly organized, validly existing, and (if applicable)
in good standing under the law of the state of its organization and is duly
qualified and (if applicable) in good standing as a foreign limited liability
company in the jurisdiction of its principal place of business (if not organized
therein); (c) if that Member is a partnership, trust, or other entity, it is
duly formed, validly existing, and (if applicable) in good standing under the
law of the state of its formation, and if required by law is duly qualified to
do business and (if applicable) in good standing in the jurisdiction of its
principal place of business (if not formed therein), and the representations and
warranties in clause (a), (b) or (c), as applicable, are true and correct with
respect to each partner (other than limited partners), trustee, or other member
thereof; (d) that Member has full corporate, limited liability company,
partnership, trust, or other applicable power and authority to execute and agree
to these Regulations and to perform its obligations hereunder and all necessary
actions by the board of directors, shareholders, managers, members, partners,
trustees, beneficiaries, or other Persons necessary for the due authorization,
execution, delivery, and performance of these Regulations by that Member have
been duly taken; (e) that Member has duly executed and delivered these
Regulations; and (f) that Member's authorization, execution, delivery, and
performance of these Regulations do not conflict with any other agreement or
arrangement to which that Member is a party or which it is bound.

     3.03 RESTRICTIONS ON THE DISPOSITION OF AN INTEREST. (a) Except as
specifically provided in this Section 3.03, a Disposition of an interest in the
Company may not be effected without the consent of (i) a majority of the
Managers who are Members (excluding any Manager who is making such Disposition),
or (ii) if there are no Managers of the type described in clause (i), a Required
Interest. Any attempted Disposition by a Person of an interest or right, or any
part thereof, in or in respect of the Company other than in accordance with this
Section 3.03 shall be, and is hereby declared, null and void ab initio.


                                       -4-

     (b) Notwithstanding the provisions of Section 3.03(a), the interest of any
Member in the Company may be transferred without the consent of the Managers or
any of the Members if (i) the transfer occurs by reason of or incident to the
death, dissolution, divorce, liquidation, merger or termination of the
transferor Member, and (ii) the transferee is a Permitted Transferee. A
"Permitted Transferee" is any member of such Member's immediate family, or a
trust, corporation, limited liability company, or partnership controlled by such
Member or members of such Member's immediate family, or another Person
controlling, controlled by, or under common control with such Member.

     (c) Subject to the provisions of Section 3.03(d), (e), and (f), (i) a
Person to whom an interest in the Company is transferred has the right to be
admitted to the Company as a Member with the Sharing Ratio and the Commitment so
transferred to such Person, if (A) the Member making such transfer grants the
transferee the right to be so admitted, and (B) such transfer is consented to in
accordance with Section 3.03(a); (ii) a Permitted Transferee under the
circumstances described in Section 3.03(b) has the right to be admitted to the
Company as a Member with the Sharing Ratio and the Commitment so transferred to
the Permitted Transferee; and (iii) the Company or (with the permission of the
Company, which may be withheld in its sole discretion) a Lending Member may
grant the purchaser of a Delinquent Member's interest in the Company at a
foreclosure of the security interest therein granted pursuant to Section 4.03(b)
the right to be admitted to the Company as a Member with such Sharing Ratio and
such Commitment (no greater than the Sharing Ratio and the Commitment of the
Member effecting such Disposition prior thereto) as they may agree.

     (d) The Company may not recognize for any purpose any purported Disposition
of all or part of a Membership Interest unless and until the other applicable
provisions of this Section 3.03 have been satisfied and the Managers have
received, on behalf of the Company, a document (i) executed by both the Member
effecting the Disposition (or if the transfer is on account of the death,
incapacity, or liquidation of the transferor, its representative) and the Person
to which the Membership Interest or part thereof is Disposed, (ii) including the
notice address of any Person to be admitted to the Company as a Member and its
agreement to be bound by these Regulations with respect to the Membership
Interest or part thereof being obtained, (iii) setting forth the Sharing Ratios
and the Commitments after the Disposition of the Member effecting the
Disposition and the Person to which the Membership Interest or part thereof is
Disposed (which together must total the Sharing Ratio and the Commitment of the
Member effecting the Disposition before the Disposition), and (iv) containing a
representation and warranty that the Disposition was made in accordance with all
applicable laws and regulations (including securities laws) and, if the Person
to which the Membership Interest or part thereof is Disposed is to be admitted
to the Company, its representation and warranty that the representations and
warranties in Section 3.02 are true and correct with respect to that Person.
Each Disposition and, if applicable, admission complying with the provisions of
this Section 3.03(d) is effective as of the first day of the calendar month
immediately succeeding the month in which the Managers receive the notification
of Disposition and the other requirements of this Section 3.03 have been met.

     (e) For the right of a Member to Dispose of a Membership Interest or any
part thereof or of any Person to be admitted to the Company in connection
therewith to exist or be exercised, (i) either (A) the Membership Interest or
part thereof subject to the Disposition or admission must be registered under
the Securities Act of 1933, as amended, and any applicable state securities laws
or (B) the Company must receive a favorable opinion of the Company's legal
counsel or of other legal counsel acceptable to the Managers to the effect that
the Disposition or admission is exempt from registration under those laws and
(ii) the Company must receive a favorable opinion of the Company's legal counsel
or of other legal counsel acceptable to the Managers to the effect that the
Disposition or admission, when added to the


                                       -5-

total of all other sales, assignments, or other Dispositions within the
preceding 12 months, would not result in the Company's being considered to have
terminated within the meaning of the Code. The Managers, however, may waive the
requirements of this Section 3.03(e).

     (f) The Member effecting a Disposition and any Person admitted to the
Company in connection therewith shall pay, or reimburse the Company for, all
costs incurred by the Company in connection with the Disposition or admission
(including, without limitation, the legal fees incurred in connection with the
legal opinions referred to in Section 3.03(e)) on or before the tenth day after
the receipt by that Person of the Company's invoice for the amount due. If
payment is not made by the date due, the Person owing that amount shall pay
interest on the unpaid amount from the date due until paid at a rate per annum
equal to the Default Interest Rate.

     3.04 ADDITIONAL MEMBERS. Additional Persons may be admitted to the Company
as Members and Membership Interests may be created and issued to those Persons
and to existing Members at the direction of (a) a majority of the Managers who
are Members, or (b) if there are no Managers who are Members, a Required
Interest, on such terms and conditions as the Managers may determine at the time
of admission.The terms of admission or issuance must specify the Sharing Ratios
and the Commitments applicable thereto and may provide for the creation of
different classes or groups of Members and having different rights, powers, and
duties. The Managers shall reflect the creation of any new class or group in an
amendment to these Regulations indicating the different rights, powers, and
duties, and such an amendment need be executed only by the Managers. Any such
admission also must comply with the provisions of Section 3.03(d)(i) and (ii)
and is effective only after the new Member has executed and delivered to the
Managers a document including the new Member's notice address, its agreement to
be bound by these Regulations, and its representation and warranty that the
representation and warranties in Section 3.02 are true and correct with respect
to the new Member.The provisions of this Section 3.04 shall not apply to
Dispositions of Membership Interests.

     3.05 INTERESTS IN A MEMBER. A Member that is not a natural person may not
cause or permit an interest, direct or indirect, in itself to be Disposed of
such that, after the Disposition, (a) the Company would be considered to have
terminated within the meaning of section 708 of the Code or (b) without the
consent of the Managers and a Required Interest, that Member shall cease to be
controlled by substantially the same Persons who control it as of the date of
its admission to the Company. On any breach of the provisions of clause (b) of
the immediately preceding sentence, the Company shall have the option to buy,
and on exercise of that option the breaching Member shall sell, the breaching
Member's Membership Interest, all in accordance with Section 11.01 as if the
breaching Member were a Bankrupt Member.

     3.06 INFORMATION. (a) In addition to the other rights specifically set
forth in these Regulations, each Member is entitled to all information to which
that Member is entitled to have access pursuant to the Act under the
circumstances and subject to the conditions therein stated. The Members agree,
however, that the Managers from time to time may determine, due to contractual
obligations, business concerns, or other considerations, that certain
information regarding the business, affairs, properties, and financial condition
of the Company should be kept confidential and not provided to some or all other
Members, and that it is not just or reasonable for those Members or assignees or
representatives thereof to examine or copy that information.

     (b) The Members acknowledge that, from time to time, they may receive
information from or regarding the Company in the nature of trade secrets or that
otherwise is confidential, the release of which may be damaging to the Company
or Persons with which it does business.


                                       -6-

Each Member shall hold in strict confidence any information it receives
regarding the Company that is identified as being confidential (and if that
information is provided in writing, that is so marked) and may not disclose it
to any Person other than another Member or a Manger, except for disclosures (i)
compelled by law (but the Member must notify the Managers promptly of any
request for that information, before disclosing it if practicable), (ii) to
advisers or representatives of the Member or Persons to which that Member's
Membership Interest may be Disposed as permitted by these Regulations, but only
if the recipients have agreed to be bound by the provisions of this Section
3.06(b), or (iii) of information that Member also has received from a source
independent of the Company that the Member reasonably believes obtained that
information without breach of any obligation of confidentiality. The Members
acknowledge that breach of the provisions of this Section 3.06(b) may cause
irreparable injury to the Company for which monetary damages are inadequate,
difficult to compute, or both. Accordingly, the Members agree that the
provisions of this Section 3.06(b) may be enforced by specific performance.

     3.07 LIABILITY TO THIRD PARTIES. No Member or Manager shall be liable for
the debts, obligations or liabilities of the Company, including under a
judgment, decree or order of a court.

     3.08 WITHDRAWAL. A Member does not have the right or power to withdraw from
the Company as a member.

     3.09 LACK OF AUTHORITY. No Member (other than a Manager or an officer) has
the authority or power to act for or on behalf of the Company, to do any act
that would be binding on the Company, or to incur any expenditures on behalf of
the Company.

                                   ARTICLE IV
                              CAPITAL CONTRIBUTIONS

     4.01 INITIAL CONTRIBUTIONS. Contemporaneously with the execution by such
Member of these Regulations, each Member shall make the Capital Contributions
described for that Member in Exhibit A.

     4.02 SUBSEQUENT CONTRIBUTIONS. Without creating any rights in favor of any
third party, each Member shall contribute to the Company, in cash, on or before
the date specified as hereinafter described, that Member's Sharing Ratio of all
monies that in the judgement of the Managers are necessary to enable the Company
to cause the assets of the Company to be properly operated and maintained and to
discharge its costs, expenses, obligations, and liabilities; provided, however,
that a Member is not obligated to contribute a total amount that, when added to
all Capital Contributions that Member previously has made pursuant to Section
4.01 or this Section 4.02, exceeds that Member's Commitment. The Managers shall
notify each Member of the need for Capital Contributions pursuant to this
Section 4.02 when appropriate, which notice must include a statement in
reasonable detail of the proposed uses of the capital Contributions and a date
(which date may be no earlier than the fifth Business Day following each
Member's receipt of its notice) before which the Capital Contributions must be
made. Notices for Capital Contributions must be made to all Members in
accordance with their Sharing Ratios.

     4.03 FAILURE TO CONTRIBUTE. (a) If a Member does not contribute by the time
required all or any portion of a Capital Contribution that Member is required to
make as provided in these Regulations, the Company may exercise, on notice to
that Member (the "Delinquent Member"), one or more of the following remedies:


                                       -7-

          (i) taking such action (including, without limitation, court
     proceedings) as the Managers may deem appropriate to obtain payment by the
     Delinquent Member of the portion of the Delinquent Member's Capital
     Contribution that is in default, together with interest thereon at the
     Default Interest Rate from the date that the Capital Contribution was due
     until the date that it is made, all at the cost and expense of the
     Delinquent Member;

          (ii) permitting the other Members in proportion to their Sharing
     Ratios or in such other percentages as they may agree (the "Lending Member"
     whether one or more), to advance the portion of the Delinquent Member's
     Capital Contribution that is in default, with the following results:

               (A) the sum advanced constitutes a loan from the Lending Member
          to the Delinquent Member and a Capital Contribution of that sum to the
          Company by the Delinquent Member pursuant to the applicable provisions
          of these Regulations,

               (B) the principal balance of the loan and all accrued unpaid
          interest thereon is due and payable in whole on the tenth day after
          written demand therefor by the Lending Member to the Delinquent
          Member,

               (C) the amount lent bears interest at the Default Interest Rate
          from the day that the advance is deemed made until the date that the
          loan, together with all interest accrued on it, is repaid to the
          Lending Member,

               (D) all distributions from the Company that otherwise would be
          made to the Delinquent Member (whether before or after dissolution of
          the Company) instead shall be paid to the Lending Member until the
          loan and all interest accrued on it have been paid in full to the
          lending Member (with payments being applied first to accrued and
          unpaid interest and then to principal),

               (E) the payment of the loan and interest accrued on it is secured
          by a security interest in the Delinquent Member's Membership Interest,
          as more fully set forth in Section 4.03(b), and

               (F) the Lending Member has the right, in addition to the other
          rights and remedies granted to it pursuant to these Regulations or
          available to it at law or in equity, to take any action (including,
          without limitation, court proceedings) that the Lending Member may
          deem appropriate to obtain payment by the Delinquent Member of the
          loan and all accrued and unpaid interest on it, at the cost and
          expense of the Delinquent Member;

          (iii) exercising the rights of a secured party under the Uniform
     Commercial Code of the State of Nevada, as more fully set forth in Section
     4.03(b); or

          (iv) exercising any other rights and remedies available at law or in
     equity.


                                       -8-

     (b) Each Member grants to the Company, and to each Lending Member with
respect to any loans made by the Lending Member to that Member as a Delinquent
Member pursuant to Section 4.03(a)(ii), as security, equally and ratably, for
the payment of all Capital Contributions that Member has agreed to make and the
payment of all loans and interest accrued on them made by Lending Members to
that Member as a Delinquent Member pursuant to Section 4.03(a)(ii), a security
interest in and a general lien on its Membership Interest and the proceeds
thereof, all under the Uniform Commercial Code of the State of Nevada. On any
default in the payment of a Capital Contribution or in the payment of such a
loan or interest accrued on it, the Company or the Lending Member, as
applicable, is entitled to all the rights and remedies of a secured party under
the Uniform Commercial Code of the State of Nevada with respect to the security
interest granted in this Section 4.03(b). Each Member shall execute and deliver
to the Company and the other Members all financing statements and other
instruments that the Managers or the Lending Member, as applicable, may request
to effectuate and carry out the preceding provisions of this Section 4.03(b). At
the option of the Managers or a Lending Member, these Regulations or a carbon,
photographic, or other copy hereof may serve as a financing statement.

     4.04 RETURN OF CONTRIBUTIONS. Other than as expressly provided in these
Regulations, Member is not entitled to the return of any part of its Capital
Contributions or to be paid interest in respect of either its capital account or
its Capital Contributions. An unrepaid Capital Contribution is not a liability
of the Company or of any Member. A Member is not required to contribute or to
lend any cash or property to the Company to enable the Company to return any
Member's Capital Contributions.

     4.05 ADVANCES BY MEMBERS. If the Company does not have sufficient cash to
pay its obligations, any Member(s) that may agree to do so with the Managers'
consent may advance all or part of the needed funds to or on behalf of the
Company. An advance described in this Section 4.05 constitutes a loan from the
Member to the Company, bears interest at the General Interest Rate from the date
of the advance until the date of payment, and is not a Capital Contribution.

     4.06 CAPITAL ACCOUNTS. A capital account shall be established and
maintained for each Member.Each Member's capital account (a) shall be increased
by (i) the amount of money contributed by that Member to the Company, (ii) the
fair market value of property contributed by that Member to the Company (net of
liabilities secured by the contributed property that the Company is considered
to assume or take subject to under section 752 of the Code), and (iii)
allocations to that Member of Company income and gain (or items thereof),
including income and gain exempt from tax and income and gain described in
Treas. Reg. Section 1.704-l(b)(2)(iv)(g), but excluding income and gain
described in Treas. Reg. Section 1.704-l(b)(4)(i), and (b) shall be decreased by
(i) the amount of money distributed to that Member by the Company, (ii) the fair
market value of property distributed to that Member by the Company (net of
liabilities secured by the distributed property that the Member is considered to
assume or take subject to under section 752 of the Code), (iii) allocations to
that Member of expenditures of the Company described in section 705(a)(2)(B) of
the Code, and (iv) allocations of Company loss and deduction (or items thereof),
including loss and deduction described in Treas. Reg. Section 1.704-
l(b)(2)(iv)(g), but excluding items described in clause (b)(iii) above and loss
or deduction described in Treas. Reg. Section 1.704-l(b)(4)(i) or Section
1.704-l(b)(4)(iii). The Members' capital accounts also shall be maintained and
adjusted as permitted by the provisions of Treas. Reg. Section 1.704-
l(b)(2)(iv)(f) and as required by the other provisions of Treas. Reg. Sections
1.704-l(b)(2)(iv) and 1.704-l(b)(4), including adjustments to reflect the
allocations to the Members of depreciation, depletion, amortization, and gain or
loss as computed for book purposes rather than the allocation of the
corresponding items as computed for tax purposes, as required by Treas. Reg.
Section 1.704-l(b)(2)(iv)(g). A Member that has more than one Membership
Interest shall have


                                       -9-

a single capital account that reflects all its Membership Interests, regardless
of the class of Membership Interests owned by that Member and regardless of the
time or manner in which those Membership Interests were acquired. On the
transfer of all or part of a Membership Interest, the capital account of the
transferor that is attributable to the transferred Membership Interest or part
thereof shall carry over to the transferee Member in accordance with the
provisions of Treas. Reg. Section 1.704-1 (b)(2)(iv)(l).

                                    ARTICLE V
                          ALLOCATIONS AND DISTRIBUTIONS

     5.01 ALLOCATIONS. (a) Except as may be required by section 701(c) of the
Code and Treas. Reg. Section 1.701-l(b)(2)(iv)(f)(4), all items of income, gain,
loss, deduction, and credit of the Company shall be allocated among the Members
in accordance with their Sharing Ratios.

     (b) All items of income, gain, loss, deduction, and credit allocable to any
Membership Interest that may have been transferred shall be allocated between
the transferor and the transferee based on the portion of the calendar year
during which each was recognized as owning that Membership Interest, without
regard to the results of Company operations during any particular portion of
that calendar year and without regard to whether cash distributions were made to
the transferor or the transferee during that calendar year; provided, however,
that this allocation must be made in accordance with a method permissible under
section 706 of the Code and the regulations thereunder.

     5.02 DISTRIBUTIONS. All receipts and revenues of the Company from any
source shall be applied and distributed in the following order of priority with
no distribution being made in any category set forth below unless and until the
preceding category has been satisfied in full either by payment or by setting
aside of a cash reserve for payment of same.

     (a) in payment of all debts, obligations, liabilities, costs and expenses
incurred in connection with or on account of the Company;

     (b) in repayment of any loans and accrued interest thereon made by a
Lending Member pursuant to Section 4.03(a)(ii);

     (c) in repayment of Contributions by the Member in accordance with their
Sharing Ratios, subject to the provisions of Section 4.03.

     (d) after having satisfied (a), (b) and (c) above, receipts and revenues of
the Company shall represent the profits of the Company and shall be distributed
in the following order of priority:

          (i) the Contributions made by the Members to the Company pursuant to
     Sections 4.01 and 4.02 herein shall bear interest at a rate which is two
     percent (2%) per annum greater than the prime rate charged by the Bank of
     Nova Scotia to its most creditworthy customers of U.S. Dollar demand loans,
     but in no event shall the rate of interest exceed the maximum rate
     permitted by laws, from the date of such advance until repaid to such
     Member in accordance with (c) above.

          (ii) after having satisfied (a), (b), (d) and (d)(i) above, the
     receipts and revenues of the Company shall be distributed to the Members
     pro rate and pari passu in accordance with their Sharing Ratios.


                                      -10-

However, no distribution of profits shall be made until after completion of any
development and/or construction activities undertaken by the Company, without
the agreement of the Members.

                                   ARTICLE VI
                                    MANAGERS

     6.01 MANAGEMENT BY MANAGERS. (a) Except for situations in which the
approval of the Members is required by these Regulations or by nonwaivable
provisions of applicable law, and subject to the provisions of Section 6.02, (i)
the powers of the Company shall be exercised by or under the authority of, and
the business and affairs of the Company shall be managed under the direction of,
the Managers; and (ii) the Managers may make all decisions and take all actions
for the Company not otherwise provided for in these Regulations, including,
without limitation, the following:

          (i) entering into, making, and performing contracts, agreements, and
     other undertakings binding the Company that may be necessary, appropriate,
     or advisable in furtherance of the purposes of the Company and making all
     decisions and waivers thereunder;

          (ii) opening and maintaining bank and investment accounts and
     arrangements, drawing checks and other orders for the payment of money, and
     designating individuals with authority to sign or give instructions with
     respect to those accounts and arrangements;

          (iii) maintaining the assets of the Company in good order;

          (iv) collecting sums due the Company;

          (v) to the extent that funds of the Company are available therefor,
     paying debts and obligations of the Company;

          (vi) acquiring, utilizing for Company purposes, and Disposing of any
     asset of the Company;

          (vii) borrowing money or otherwise committing the credit of the
     Company for Company activities and voluntary prepayments or extensions of
     debt;

          (viii) selecting, removing, and changing the authority and
     responsibility of lawyers, accountants, and other advisers and consultants;

          (ix) obtaining insurance for the Company;

          (x) determining distributions of Company cash and other property as
     provided in Section 5.02;

          (xi) establishing a seal for the Company;

          (xii) selling, leasing, exchanging or otherwise disposing of
     (including by way of a pledge, mortgage, deed of trust or trust indenture)
     all or any portion of the Company's property and assets (with or without
     good will); and

          (xiii) being a party to (i) a merger, or (ii) an exchange or
     acquisition.


                                      -11-

     (b) Notwithstanding the provisions of Section 6.01(a), the Managers may not
cause the Company to do any of the following without complying with the
applicable requirements set forth below:

          (i) amend or restate the Articles, without complying with the
     applicable procedures set forth in the Act.

     6.02 ACTIONS BY MANAGERS; COMMITTEES; DELEGATION OF AUTHORITY AND DUTIES.
(a) In managing the business and affairs of the Company and exercising its
powers, the Managers shall act (i) collectively through meetings and written
consents pursuant to Sections 6.05 and 6.07; (ii) through committees pursuant to
Section 6.02(b): or (iii) through Managers to whom authority and duties have
been delegated pursuant to Section 6.02(c).

     (b) The Managers may, from time to time, designate one or more committees,
each of which shall be comprised of one or more Managers. Any such committee, to
the extent provided in such resolution or in the Articles or these Regulations,
shall have and may exercise all of the authority of the Managers, subject to the
limitations set forth in the Act. At every meeting of any such committee, the
presence of a majority of all the members thereof shall constitute a quorum, and
the affirmative vote of a majority of the members present shall be necessary for
the adoption of any resolution. The Managers may dissolve any committee at any
time, unless otherwise provided in the Articles or these Regulations.

     (c) The Members and the Managers hereby delegate to each of the Managers
(acting by themselves and without the necessity of any other approval or
authorization) or to an authorized representative of the Company, designated by
one or more of the Managers, the authority to take any of the actions authorized
in Section 6.01(a) hereof. In addition, the Managers may assign titles
(including, without limitation, president, vice president, secretary, assistant
secretary, treasurer and assistant treasurer) to any such Manager. Unless the
Managers decide otherwise, if the title is one commonly used for officers of a
business corporation formed under the laws of the State of Nevada, the
assignment of such title shall constitute the delegation to such Manager of the
authority and duties that are normally associated with that office, subject to
any specific delegation of authority and duties made pursuant to the first
sentence of this Section 6.02(c). Any number of titles may be held by the same
Manager. Any delegation pursuant to this Section 6.02(c) may be revoked at any
time by the Managers.

     (d) Any Person dealing with the Company, other than a Member, may rely on
the authority of any Manager, authorized representative or officer in taking any
action in the name of the Company without inquiry into the provisions of these
Regulations or compliance herewith, regardless of whether that action actually
is taken in accordance with the provisions of these Regulations.

     6.03 NUMBER AND TERM OF OFFICE. The number of Managers of the Company shall
be determined from time to time by resolution of the Managers; provided,
however, that no decrease in the number of Managers that would have the effect
of shortening the term of an incumbent Manager may be made by the Managers. If
the Managers make no such determination, the number of Managers shall be the
number set forth in the Articles as the number of Managers constituting the
initial Managers. Each Manager shall hold office for the term for which he is
elected and thereafter until his successor shall have been elected and
qualified, or until his earlier death, resignation or removal.Unless otherwise
provided in the Articles, Managers need not be Members or residents of the State
of Nevada.


                                      -12-

     6.04 VACANCIES; REMOVAL; RESIGNATION. Any Manager position to be filled by
reason of an increase in the number of Managers may be filled by election at an
annual or special meeting of Members called for that purpose. Any vacancy
occurring in the Managers other than by reason of an increase in the number of
Managers may be filled (a) by election at an annual or special meeting of the
Members called for that purpose or (b) by the affirmative vote of a majority of
the remaining Managers though less than a quorum of the Managers. A Manager
elected to fill a vacancy occurring other than by reason of an increase in the
number of Managers shall be elected for the unexpired term of his predecessor in
office. At any meeting of Members at which a quorum of Members is present called
expressly for that purpose, or pursuant to a written consent adopted pursuant to
these Regulations, any Manager may be removed, with or without cause, by a
Required Interest. Any Manager may resign at any time. Such resignation shall be
made in writing and shall take effect at the time specified therein, or if no
time be specified, at the time of its receipt by the remaining Managers.The
acceptance of a resignation shall not be necessary to make it effective, unless
expressly so provided in the resignation.

     6.05 MEETINGS. (a) Unless otherwise required by law or provided in the
Articles or these Regulations, a majority of the total number of Managers fixed
by, or in the manner provided in, the Articles or these Regulations shall
constitute a quorum for the transaction of business of the Managers, and the act
of a majority of the Managers present at a meeting at which a quorum is present
shall he the act of the Managers. A Manager who is present at a meeting of the
Managers at which action on any Company matter is taken shall be presumed to
have assented to the action unless his dissent shall be entered in the minutes
of the meeting or unless he shall file his written dissent to such action with
the Person acting as secretary of the meeting before the adjournment thereof or
shall deliver such dissent to the Company immediately after the adjournment of
the meeting. Such right to dissent shall not apply to a Manager who voted in
favor of such action.

     (b) Meetings of the Managers may be held at such place or places as shall
be determined from time to time by resolution of the Managers. At all meetings
of the Managers, business shall be transacted in such order as shall from time
to time be determined by resolution of the Managers. Attendance of a Manager at
a meeting shall constitute a waiver of notice of such meeting, except where a
Manager attends a meeting for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully
called or convened.

     (c) In connection with any annual meeting of Members at which Managers were
elected, the Managers may, if a quorum is present, hold its first meeting for
the transaction of business immediately after and at the same place as such
annual meeting of the Members. Notice of such meeting at such time and place
shall not be required.

     (d) Regular meetings of the Managers shall be held at such times and places
as shall be designated from time to time by resolution of the Managers. Notice
of such regular meetings shall not be required. (e) Special meetings of the
Managers may be called by any Manager on at least 24 hours notice to each other
Manager. Such notice need not state the purpose or purposes of, nor the business
to be transacted at, such meeting, except as may otherwise be required by law or
provided for by the Articles or these Regulations.

     6.06 APPROVAL OR RATIFICATION OF ACTS OR CONTRACTS BY MEMBERS. The Managers
in their discretion may submit any act or contract for approval or ratification
at any annual meeting of the Members, or at any special meeting of the Members
called for the purpose of


                                      -13-

considering any such act or contract, and any act or contract that shall be
approved or be ratified by a Required Interest shall be as valid and as binding
upon the Company and upon all the Members as if it shall have been approved or
ratified by every Member of the Company.

     6.07 ACTION BY WRITTEN CONSENT OR TELEPHONE CONFERENCE. Any action
permitted or required by the Act, the Articles or these Regulations to be taken
at a meeting of the Managers or any committee designated by the Managers may be
taken without a meeting if a consent in writing, setting forth the action to be
taken, is signed by all the Managers or members of such committee, as the case
may be. Such consent shall have the same force and effect as a unanimous vote at
a meeting and may be stated as such in any document or instrument filed with the
Secretary of State of Nevada, and the execution of such consent shall constitute
attendance or presence in person at a meeting of the Managers or any such
committee, as the case may be. Subject to the requirements of the Act, the
Articles or these Regulations for notice of meetings, unless otherwise
restricted by the Articles, Managers, or members of any committee designated by
the Managers, may participate in and hold a meeting of the Managers or any
committee of Managers, as the case may be, by means of a conference telephone or
similar communications equipment by means of which all Persons participating in
the meeting can hear each other, and participation in such meeting shall
constitute attendance and presence in person at such meeting, except where a
Person participates in the meeting for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully
called or convened.

     6.08 COMPENSATION. The Managers shall reserve such compensation, if any,
for their services as may be designated from time to time by all of the
Managers. In addition, the Managers shall be entitled to be reimbursed for
out-of-pocket costs and expenses incurred in the course of their service
hereunder, including the portion of their overhead reasonably allocable to
Company activities.

     6.09 CONFLICTS OF INTEREST. Subject to the other express provisions of
these Regulations, each Manager, Member and officer of the Company at any time
and from time to time may engage in and possess interests in other business
ventures of any and every type and description, independently or with others,
including ones in competition with the Company, with no obligation to offer to
the Company or any other Member, Manager or officer the right to participate
therein.The Company may transact business with any Manager, Member, officer or
Affiliate thereof, provided the terms of those transactions are no less
favorable than those the Company could obtain from unrelated third parties.

     6.10 OFFICERS. (a) The Managers may, from time to time, designate one or
more Persons to be officers of the Company. No officer need be a resident of the
State of Nevada, a Member or a Manager. Any officers so designated shall have
such authority and perform such duties as the Managers may, from time to time,
delegate to them.The Managers may assign titles to particular officers. Unless
the Managers decide otherwise, if the title is one commonly used for officers of
a business corporation formed under the laws of the State of Nevada, the
assignment of such title shall constitute the delegation to such officer of the
authority and duties that are normally associated with that office, subject to
(i) any specific delegation of authority and duties made to such officer by the
Managers pursuant to the third sentence of this Section 6.10(b), or (ii) any
delegation of authority and duties made to one or more Mangers pursuant to
Section 6.02(a). Each officer shall hold office until his successor shall be
duly designated and shall quality or until his death or until he shall resign or
shall have been removed in the manner hereinafter provided. Any number of
offices may be held by the same Person. The salaries or other compensation, if
any, of the officers and agents of the Company shall be fixed from time to time
by the Managers.


                                      -14-

     (b) Any officer may resign as such at any time. Such resignation shall be
made in writing and shall take effect at the time specified therein, or if no
time be specified, at the time of its receipt by the Managers. The acceptance of
a resignation shall not be necessary to make it effective, unless expressly so
provided in the resignation. Any officer may be removed as such, either with or
without cause, by the Managers whenever in their judgment the best interests of
the Company will be served thereby; provided, however, that such removal shall
be without prejudice to the contract rights, if any, of the Person so removed.
Designation of an officer shall not of itself create contract rights. Any
vacancy occurring in any office of the Company (other than Manager) may be
filled by the Managers.

                                   ARTICLE VII
                               MEETINGS OF MEMBERS

     7.01 MEETINGS. (a) A quorum shall be present at a meeting of Members if the
holders of a Required Interest are represented at the meeting in person or by
proxy. With respect to any matter, other than a matter for which the affirmative
vote of the holders of a specified portion of the Sharing Ratios of all Members
entitled to vote is required by the Act, the affirmative vote of a Required
Interest at a meeting of Members at which a quorum is present shall be the act
of the Members.

     (b) All meetings of the Members shall be held at the principal place of
business of the Company or at such other place within or without the State of
Nevada as shall be specified or fixed in the notices or waivers of notice
thereof; provided that any or all Members may participate in any such meeting by
means of conference telephone or similar communications equipment pursuant to
Section 7.05.

     (c) Notwithstanding the other provisions of the Articles or these
Regulations, the chairman of the meeting or the holders of a Required Interest
shall have the power to adjourn such meeting from time to time, without any
notice other than announcement at the meeting of the time and place of the
holding of the adjourned meeting. If such meeting is adjourned by the Members,
such time and place shall be determined by a vote of the holders of a Required
Interest. Upon the resumption of such adjourned meeting, any business may be
transacted that might have been transacted at the meeting as originally called.

     (d) An annual meeting of the Members, for the election of the Managers and
for the transaction of such other business as may properly come before the
meeting, shall be held at such place, within or without the State of Nevada, on
such date and at such time as the Managers shall fix and set forth in the notice
of the meeting, which date shall be within 13 months subsequent to the date of
organization of the Company or the last annual meeting of Members, whichever
most recently occurred.

     (e) Special meetings of the Members for any proper purpose or purposes may
be called at any time by the Managers or the holders of at least ten percent of
the Sharing Ratios of all Members. If not otherwise stated in or fixed in
accordance with the remaining provisions hereof, the record date for determining
Members entitled to call a special meeting is the date any Member first signs
the notice of that meeting. Only business within the purpose or purposes
described in the notice (or waiver thereof) required by these Regulations may be
conducted at a special meeting of the Members.

     (f) Written or printed notice stating the place, day and hour of the
meeting and, in the case of a special meeting, the purpose or purposes for which
the meeting is called, shall be delivered not less than ten nor more than 60
days before the date of the meeting, either personally or by mail, by or at the
direction of the Managers or Person calling the meeting, to


                                      -15-

each Member entitled to vote at such meeting. If mailed, any such notice shall
be deemed to be delivered when deposited in the United States mail, addressed to
the Member at his address provided for on Exhibit A, with postage thereon
prepaid.

     (g) The date on which notice of a meeting of Members is mailed or the date
on which the resolution of the Managers declaring a distribution is adopted, as
the case may be, shall be the record date for the determination of the Members
entitled to notice of or to vote at such meeting, including any adjournment
thereof, or the Members entitled to receive such distribution.

     (h) The right of Members to cumulative voting in the election of Managers
is expressly prohibited.

     7.02 VOTING LIST. The Managers shall make, at least ten days before each
meeting of Members, a complete list of the Members entitled to vote at such
meeting or any adjournment thereof, arranged in alphabetical order, with the
address of and the Sharing Ratios held by each, which list, for a period of ten
days prior to such meeting, shall be kept on file at the resident office or
principal place of business of the Company and shall be subject to inspection by
any Member at any time during usual business hours. Such list shall also be
produced and kept open at the time and place of the meeting and shall be subject
to the inspection of any Member during the whole time of the meeting. The
original membership records shall be prima-facie evidence as to who are the
Members entitled to examine such list or transfer records or to vote at any
meeting of Members.Failure to comply with the requirements of this Section shall
not affect the validity of any action taken at the meeting.

     7.03 PROXIES. A Member may vote either in person or by proxy executed in
writing by the Member. A telegram, telex, cablegram or similar transmission by
the Member, or a photographic, photostatic, facsimile or similar reproduction of
a writing executed by the Member shall be treated as an execution in writing for
purposes of this Section. Proxies for use at any meeting of Members or in
connection with the taking of any action by written consent shall be filed with
the Managers, before or at the time of the meeting or execution of the written
consent, as the case may be. All proxies shall be received and taken charge of
and all ballots shall be received and canvassed by the Managers, who shall
decide all questions touching upon the qualification of voters, the validity of
the proxies, and the acceptance or rejection of votes, unless an inspector or
inspectors shall have been appointed by the chairman of the meeting, in which
event such inspector or inspectors shall decide all such questions. No proxy
shall be valid after 11 months from the date of its execution unless otherwise
provided in the proxy. A proxy shall be revocable unless the proxy form
conspicuously states that the proxy is irrevocable and the proxy is coupled with
an interest. Should a proxy designate two or more Persons to act as proxies,
unless that instrument shall provide to the contrary, a majority of such Persons
present at any meeting at which their powers thereunder are to be exercised
shall have and may exercise all the powers of voting or giving consents thereby
conferred, or if only one be present, then such powers may be exercised by that
one; or, if an even number attend and a majority do not agree on any particular
issue, the Company shall not be required to recognize such proxy with respect to
such issue if such proxy does not specify how the Sharing Ratios that are the
subject of such proxy are to be voted with respect to such issue.

     7.04 CONDUCT OF MEETINGS. All meetings of the Members shall be presided
over by the chairman of the meeting, who shall be a Manager (or representative
thereof) designated by a majority of the Managers. The chairman of any meeting
of Members shall determine the order of business and the procedure at the
meeting, including such regulation of the manner of voting and the conduct of
discussion as seem to him in order.


                                      -16-

     7.05 ACTION BY WRITTEN CONSENT OR TELEPHONE CONFERENCE. (a) Any action
required or permitted to be taken at any annual or special meeting of Members
may be taken without a meeting, without prior notice, and without a vote, if a
consent or consents in writing, setting forth the action so taken, shall be
signed by the holder or holders of not less than the minimum Sharing Ratios that
would be necessary to take such action at a meeting at which the holders of all
Sharing Ratios entitled to vote on the action were present and voted. Every
written consent shall bear the date of signature of each Member who signs the
consent. No written consent shall be effective to take the action that is the
subject to the consent unless, within 60 days after the date of the earliest
dated consent delivered to the Company in the manner required by this Section, a
consent or consents signed by the holder or holders of not less than the minimum
Sharing Ratios that would be necessary to take the action that is the subject of
the consent are delivered to the Company by delivery to its resident office, its
principal place of business, or the Managers. Delivery shall be by hand or
certified or registered mail, return receipt requested. Delivery to the
Company's principal place of business shall be addressed to the Managers. A
telegram, telex, cablegram or similar transmission by a Member, or a
photographic, photostatic, facsimile or similar reproduction of a writing signed
by a Member, shall be regarded as signed by the Member for purposes of this
Section. Prompt notice of the taking of any action by Members without a meeting
by less than unanimous written consent shall be given to those Members who did
not consent in writing to the action.

     (b) The record date for determining Members entitled to consent to action
in writing without a meeting shall be the first date on which a signed written
consent setting forth the action taken or proposed to be taken is delivered to
the Company by delivery to its resident office, its principal place of business,
or the Managers. Delivery shall be by hand or by certified or registered mail,
return receipt requested. Delivery to the Company's principal place of business
shall be addressed to the Managers.

     (c) If any action by Members is taken by written consent, any articles or
documents filed with the Secretary of State of Nevada as a result of the taking
of the action shall state, in lieu of any statement required by the Act
concerning any vote of Members, that written consent has been given in
accordance with the provisions of the Act and that any written notice required
by the Act has been given.

     (d) Members may participate in and hold a meeting by means of conference
telephone or similar communications equipment by means of which all Persons
participating in the meeting can hear each other, and participation in such
meeting shall constitute attendance and presence in person at such meeting,
except where a Person participates in the meeting for the express purpose of
objecting to the transaction of any business on the ground that the meeting is
not lawfully called or convened.

                                  ARTICLE VIII
                                 INDEMNIFICATION

     8.01 RIGHT TO INDEMNIFICATION. Subject to the limitations and conditions as
provided in this Article VIII, each Person who was or is made a party or is
threatened to be made a party to or is involved in any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative,
arbitrative or investigative (hereinafter a "Proceeding"), or any appeal in such
a Proceeding or any inquiry or investigation that could lead to such a
Proceeding, by reason of the fact that he or she, or a Person of whom he or she
is the legal representative, is or was a Manager of the Company or while a
Manager of the Company is or was serving at the request of the Company as a
Manager, director, officer, partner, venturer, proprietor, trustee, employee,
agent, or similar functionary of another foreign or domestic limited liability
company, corporation, partnership, joint venture, sole proprietorship, trust,
employee benefit


                                      -17-

plan or other enterprise shall be indemnified by the Company to the fullest
extent permitted by the Act and the laws of the State of Nevada, as the same
exist or may hereafter be amended (but, in the case of any such amendment, only
to the extent that such amendment permits the Company to provide broader
indemnification rights than said law permitted the Company to provide prior to
such amendment) against judgments, penalties (including excise and similar taxes
and punitive damages), fines, settlements and reasonable expenses (including,
without limitation, attorneys' fees) actually incurred by such Person in
connection with such Proceeding, and indemnification under this Article VIII
shall continue as to a Person who has ceased to serve in the capacity which
initially entitled such Person to indemnify hereunder. The rights granted
pursuant to this Article VIII shall be deemed contract rights, and no amendment,
modification or repeal of this Article VIII shall have the effect of limiting or
denying any such rights with respect to actions taken or Proceedings arising
prior to any such amendment, modification or repeal. It is expressly
acknowledged that the indemnification provided in this Article VIII could
involve indemnification for negligence or under theories of strict liability.

     8.02 ADVANCE PAYMENT. The right to indemnification conferred in this
Article VIII shall include the right to be paid or reimbursed by the Company the
reasonable expenses incurred by a Person of the type entitled to be indemnified
under Section 8.01 who was, is or is threatened to be made a named defendant or
respondent in a Proceeding in advance of the final disposition of the Proceeding
and without any determination as to the Person's ultimate entitlement to
indemnification; provided, however, that the payment of such expenses incurred
by any such Person in advance of the final disposition of a Proceeding, shall be
made only upon delivery to the Company of a written affirmation by such Manager
of his or her good faith belief that he has met the standard of conduct for
indemnification under this Article VIII and a written undertaking, by or on
behalf of such Person, to repay all amounts so advanced if it shall ultimately
be determined that such indemnified Person is not entitled to be indemnified
under this Article VIII or otherwise.

     8.03 INDEMNIFICATION OF OFFICERS, EMPLOYEES, AND AGENTS. The Company, by
adoption of a resolution of the Managers, may indemnity and advance expenses to
an officer, employee or agent of the Company to the same extent and subject to
the same conditions under which it may indemnify and advance expenses to
Managers under this Article VIII; and, the Company may indemnify and advance
expenses to Persons who are not or were not Managers, officers, employees or
agents of the Company but who are or were serving at the request of the Company
as a Manager, director, officer, partner, venturer, proprietor, trustee,
employee, agent or similar functionary of another foreign or domestic limited
liability company, corporation, partnership, joint venture, sole proprietorship,
trust, employee benefit plan or other enterprise against any liability asserted
against him and incurred by him in such a capacity or arising out of his status
as such a Person to the same extent that it may indemnity and advance expenses
to Managers under this Article VIII.

     8.04 APPEARANCE AS A WITNESS. Notwithstanding any other provision of this
Article VIII, the Company may pay or reimburse expenses incurred by a Manager in
connection with his appearance as a witness or other participation in a
Proceeding at a time when he is not a named defendant or respondent in the
Proceeding.

     8.05 NONEXCLUSIVITY OF RIGHTS. The right to indemnification and the
advancement and payment of expenses conferred in this Article VIII shall not be
exclusive of any other right which a Manager or other Person indemnified
pursuant to Section 8.03 may have or hereafter acquire under any law (common or
statutory), provision of the Articles or these Regulations, agreement, vote of
Members or disinterested Managers or otherwise.


                                      -18-

     8.06 INSURANCE. The Company may purchase and maintain insurance, at its
expense, to protect itself and any Person who is or was serving as a Manager,
officer, employee or agent of the Company or is or was serving at the request of
the Company as a Manager, director, officer, partner, venturer, proprietor,
trustee, employee, agent or similar functionary of another foreign or domestic
limited liability company, corporation, partnership, joint venture, sole
proprietorship, trust, employee benefit plan or other enterprise against any
expense, liability or loss, whether or not the Company would have the power to
indemnify such Person against such expense, liability or loss under this Article
VIII.

     8.07 MEMBER NOTIFICATION. To the extent required by law, any
indemnification of or advance of expenses to a Manager in accordance with this
Article VIII shall be reported in writing to the Members with or before the
notice or waiver of notice of the next Members' meeting or with or before the
next submission to Members of a consent to action without a meeting and, in any
case, within the 12-month period immediately following the date of the
indemnification or advance.

     8.08 SAVINGS CLAUSE. If this Article VIII or any portion hereof shall be
invalidated on any ground by any court of competent jurisdiction, then the
Company shall nevertheless indemnify and hold harmless each Manager or any other
Person indemnified pursuant to this Article VIII as to costs, charges and
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement with respect to any action, suit or proceeding, whether civil,
criminal, administrative or investigative to the full extent permitted by any
applicable portion of this Article VIII that shall not have been invalidated and
to the fullest extent permitted by applicable law.

                                   ARTICLE IX
                                      TAXES

     9.01 TAX RETURNS. The Managers shall cause to be prepared and filed all
necessary federal and state income tax returns for the Company, including making
the elections described in Section 9.02. Each Member shall furnish to the
Managers all pertinent information in its possession relating to Company
operations that is necessary to enable the Company's income tax returns to be
prepared and filed.

     9.02 TAX ELECTIONS. The Company shall make the following elections on the
appropriate tax returns:

          (a) to adopt the year ending on May 31 as the Company's fiscal year;

          (b) to adopt a method of accounting as the Managers may determine from
     time to time;

          (c) if a distribution of Company property as described in section 734
     of the Code occurs or if a transfer of a Membership Interest as described
     in section 743 of the Code occurs, on written request of any Member, to
     elect, pursuant to section 754 of the Code, to adjust the basis of Company
     properties;

          (d) to elect to amortize the organizational expenses of the Company
     and the startup expenditures of the Company under Section 195 of the Code
     ratably over a period of 60 months as permitted by section 709(b) of the
     Code; and

          (e) any other election the Managers may deem appropriate and in the
     best interests of the Members.


                                      -19-

Neither the Company nor any Manager or Member may make an election for the
Company to be excluded from the application of the provisions of subchapter K of
chapter 1 of subtitle A of the Code or any similar provisions of applicable
state law, and no provision of these Regulations (including, without limitation,
Section 2.06) shall be construed to sanction or approve such an election.

     9.03 "TAX MATTERS PARTNER." A majority of the Managers who are Members
shall designate one Manager that is a Member to be the "tax matters partner" of
the Company pursuant to section 6231 (a)(7) of the Code; or, if there is no
Manager that is a Member, the "tax matters partner" shall be a Member that is
designated as such by a Required Interest. Any Member who is designated "tax
matters partner" shall take such action as may be necessary to cause each other
Member to become a "notice partner" within the meaning of section 6223 of the
Code. Any Member who is designated "tax matters partner" shall inform each other
Member of all significant matters that may come to its attention in its capacity
as "tax matters partner" by giving notice thereof on or before the fifth
Business Day after becoming aware thereof and, within that time, shall forward
to each other Member copies of all significant written communications it may
receive in that capacity. Any Member who is designated "tax matters partner" may
not take any action contemplated by sections 6222 through 6232 of the Code
without the consent of a Required Interest, but this sentence does not authorize
such Manager (or any other Manager) to take any action left to the determination
of an individual Member under sections 6222 through 6232 of the Code.

                                    ARTICLE X
                   BOOKS, RECORDS, REPORTS, AND BANK ACCOUNTS

     10.01 MAINTENANCE OF BOOKS. The Company shall keep books and records of
accounts and shall keep minutes of the proceedings of its Members, its Managers
and each committee of the Managers. The books of account for the Company shall
be maintained on a cash basis in accordance with the terms of these Regulations,
except that the capital accounts of the Members shall be maintained in
accordance with Section 4.06. The calendar year shall be the accounting year of
the Company.

     10.02 REPORTS. On or before the 120th day following the end of each fiscal
year during the term of the Company, the Managers shall cause each Member to be
furnished with a balance sheet, an income statement, and a statement of changes
in Members' capital of the Company for, or as of the end of, that year certified
by a recognized firm of certified public accountants. These financial statements
must be prepared in accordance with accounting principles generally employed for
cash basis records consistently applied (except as therein noted) and must be
accompanied by a report of the certified public accountants certifying the
statements and stating that (a) their examination was made in accordance with
generally accepted auditing standards and, in their opinion, the financial
statements fairly present the financial position, financial results of
operations, and changes in Members' capital in accordance with accounting
principles generally employed for cash-basis records consistently applied
(except as therein noted) and (b) in making the examination and reporting on the
financial statements described above, nothing came to their attention that
caused them to believe that (i) the income and revenues were not paid or
credited in accordance with the financial and accounting provisions of these
Regulations, (ii) the costs and expenses were not charged in accordance with the
financial and accounting provisions of these Regulations, or (iii) the Managers
or any Member failed to comply in any material respect with the financial and
accounting provisions of these Regulations, or if they do conclude that the
Managers or a Member so failed, specifying the nature and period of existence of
the failure. The Managers also may cause to be prepared or delivered such other
reports as they may deem appropriate. The Company shall bear the costs of all
these reports.


                                      -20-

     10.03 ACCOUNTS. The Managers shall establish and maintain one or more
separate bank and investment accounts and arrangements for Company funds in the
Company name with financial institutions and firms that the Managers determine.
The Managers may not commingle the Company's funds with the funds of any Member;
however, Company funds may be invested in a manner the same as or similar to the
Managers' investment of their own funds or investments by their Affiliates.

                                   ARTICLE XI
                             BANKRUPTCY OF A MEMBER

     11.01 BANKRUPT MEMBERS. Subject to Section 12.01(c), if any Member becomes
a Bankrupt Member, the Company shall have the option, exercisable by notice from
the Managers to the Bankrupt Member (or its representative) at any time prior to
the 180th day after receipt of notice of the occurrence of the event causing it
to become a Bankrupt Member, to buy, and on the exercise of this option the
Bankrupt Member or its representative shall sell, its Membership Interest. The
purchase price shall be an amount equal to the fair market value thereof
determined by agreement of the Bankrupt Member (or its representative) and the
Managers; however, if those Persons do not agree on the fair market value on or
before the 30th day following the exercise of the option, either such Person, by
notice to the other, may require the determination of fair market value to be
made by an independent appraiser specified in that notice. If the Person
receiving that notice objects on or before the tenth day following receipt to
the independent appraiser designated in that notice, and those Persons otherwise
fail to agree on an independent appraiser, either such Person may petition the
United States District Judge for the State of Nevada then senior in service to
designate an independent appraiser. The determination of the independent
appraiser, however designated, is final and binding on all parties. The Bankrupt
Member and the Company each shall pay one-half of the costs of the appraisal.
The purchaser shall pay the fair market value as so determined in four equal
cash installments, the first due on closing and the remainder (together with
accumulated interest on the amount unpaid at the General Interest Rate) due on
each of the first three anniversaries thereof. The payment to be made to the
Bankrupt Member or its representative pursuant to this Section 11.01 is in
complete liquidation and satisfaction of all the rights and interest of the
Bankrupt Member and its representative (and of all Persons claiming by, through,
or under the Bankrupt Member and its representative) in and in respect of the
Company, including, without limitation, any Membership Interest, any rights in
specific Company property, and any rights against the Company and (insofar as
the affairs of the Company are concerned) against the Members, and constitutes a
compromise to which all Members have agreed pursuant to the Act.

                                   ARTICLE XII
                    DISSOLUTION, LIQUIDATION, AND TERMINATION

     12.01 DISSOLUTION. The Company shall dissolve and its affairs shall be
wound up on the first to occur of the following:

          (a) the written consent of a Required Interest;

          (b) the expiration of the period fixed for the duration of the Company
     set forth in the Articles;

          (c) any Manager who is a Member (or, if there is no Manager who is a
     Member, any Member) shall become a Bankrupt Member (with or without the
     consent of a Required Interest); provided, however, that if the event
     described in this Section 12.01(c) shall occur and there shall be at least
     one other Member remaining, the Company shall not be dissolved, and the
     business of the Company shall be continued, if all Members so agree; and


                                      -21-

          (d) entry of a decree of judicial dissolution of the Company under
     article 6.02 of the Act.

Except as provided in Section 12.01(c), the death, retirement, resignation,
expulsion, bankruptcy or dissolution of a Member, or the occurrence of any other
event that terminates the continued membership of a Member in the Company, shall
not cause a dissolution of the Company.

     12.02 LIQUIDATION AND TERMINATION. On dissolution of the Company, the
Managers shall act as liquidator or may appoint one or more Members as
liquidator. The liquidator shall proceed diligently to wind up the affairs of
the Company and make final distributions as provided herein and in the Act. The
costs of liquidation shall be borne as a Company expense. Until final
distribution, the liquidator shall continue to operate the Company properties
with all of the power and authority of the Managers. The steps to be
accomplished by the liquidator are as follows:

          (a) as promptly as possible after dissolution and again after final
     liquidation, the liquidator shall cause a proper accounting to be made by a
     recognized firm of certified public accountants of the Company's assets,
     liabilities, and operations through the last day of the calendar month in
     which the dissolution occurs or the final liquidation is completed, as
     applicable;

          (b) the liquidator shall cause the notice described in article
     6.05(A)(2) of the Act to be mailed to each known creditor of and claimant
     against the Company in the manner described in such article 6.05(A)(2) of
     the Act;

          (c) the liquidator shall pay, satisfy or discharge from Company funds
     all of the debts, liabilities and obligations of the Company (including,
     without limitation, all expenses incurred in liquidation and any advances
     described in Section 4.05) or otherwise make adequate provision for payment
     and discharge thereof (including, without limitation, the establishment of
     a cash escrow fund for contingent liabilities in such amount and for such
     term as the liquidator may reasonably determine); and

          (d) all remaining assets of the Company shall be distributed to the
     Members as follows:

               (i) the liquidator may sell any or all Company property,
          including to Members, and any resulting gain or loss from each sale
          shall be computed and allocated to the capital accounts of the
          Members;

               (ii) with respect to all Company property that has not been sold,
          the fair market value of that property shall be determined and the
          capital accounts of the Members shall be adjusted to reflect the
          manner in which the unrealized income, gain, loss, and deduction
          inherent in property that has not been reflected in the capital
          accounts previously would be allocated among the Members if there were
          a taxable disposition of that property for the fair market value of
          that property on the date of distribution; and

               (iii) Company property shall be distributed among the Members in
          accordance with the positive capital account balances


                                      -22-

          of the Members, as determined after taking into account all capital
          account adjustments for the taxable year of the Company during which
          the liquidation of the partnership occurs (other than those made by
          reason of this clause (iii)); and those distributions shall be made by
          the end of the taxable year of the Company during which the
          liquidation of the Company Occurs (or, if later, 90 days after the
          date of the liquidation).

All distributions in kind to the Members shall be made subject to the liability
of each distributee for costs, expenses, and liabilities theretofore incurred or
for which the Company has committed prior to the date of termination and those
costs, expenses, and liabilities shall be allocated to the distributee pursuant
to this Section 12.02. The distribution of cash and/or property to a Member in
accordance with the provisions of this Section 12.02 constitutes a complete
return to the Member of its Capital Contributions and a complete distribution to
the Member of its Membership Interest and all the Company's property and
constitutes a compromise to which all Members have consented within the meaning
of the Act. To the extent that a Member returns funds to the Company, it has no
claim against any other Member for those funds.

     12.03 DEFICIT CAPITAL ACCOUNTS. Notwithstanding anything to the contrary
contained in these Regulations, and notwithstanding any custom or rule of law to
the contrary, to the extent that the deficit, if any, in the capital account of
any Member results from or is attributable to deductions and losses of the
Company (including non-cash items such as depreciation), or distributions of
money pursuant to these Regulations to all Members in proportion to their
respective Sharing Ratios, upon dissolution of the Company such deficit shall
not be an asset of the Company and such Members shall not be obligated to
contribute such amount to the Company to bring the balance of such Member's
capital account to zero.

     12.04 ARTICLES OF DISSOLUTION. On completion of the distribution of Company
assets as provided herein, the Company is terminated, and the Managers (or such
other Person or Persons as the Act may require or permit) shall file Articles of
Dissolution with the Secretary of State of Nevada, cancel any other filings made
pursuant to Section 2.05, and take such other actions as may be necessary to
terminate the Company.

                                  ARTICLE XIII
                               GENERAL PROVISIONS

     13.01 OFFSET. Whenever the Company is to pay any sum to any Member, any
amounts that Member owes the Company may be deducted from that sum before
payment.

     13.02 NOTICES. Except as expressly set forth to the contrary in these
Regulations, all notices, requests, or consents provided for or permitted to be
given under these Regulations must be in writing and must be given either by
depositing that writing in the United States mail, addressed to the recipient,
postage paid, and registered or certified with return receipt requested or by
delivering that writing to the recipient in person, by courier, or by facsimile
transmission; and a notice, request, or consent given under these Regulations is
effective on receipt by the Person to receive it. All notices, requests, and
consents to be sent to a Member must be sent to or made at the addresses given
for that Member on Exhibit A or in the instrument described in Section 3.03(d)
or 3.04, or such other address as that Member may specify by notice to the other
Members. Any notice, request, or consent to the Company or the Managers must be
given to the Managers at the following address: 250 Lesmill Road, Don Mills,
Ontario M3B 2T5 Canada. Whenever any notice is required to be given by law, the
Articles or these Regulations, a written waiver thereof, signed by the Person
entitled to notice, whether before or after the time stated therein, shall be
deemed equivalent to the giving of such notice.


                                      -23-

     13.03 ENTIRE AGREEMENT; SUPERSEDURE. These Regulations constitute the
entire agreement of the Members and their Affiliates relating to the Company and
supersedes all prior contracts or agreements with respect to the Company,
whether oral or written.

     13.04 EFFECT OF WAIVER OR CONSENT. A waiver or consent, express or implied,
to or of any breach or default by any Person in the performance by that Person
of its obligations with respect to the Company is not a consent or waiver to or
of any other breach or default in the performance by that Person of the same or
any other obligations of that Person with respect to the Company. Failure on the
part of a Person to complain of any act of any Person or to declare any Person
in default with respect to the Company, irrespective of how long that failure
continues, does not constitute a waiver by that Person of its rights with
respect to that default until the applicable statute-of-limitations period has
run.

     13.05 AMENDMENT OR MODIFICATION. These Regulations may be amended or
modified from time to time only by a written instrument adopted by the Managers
and executed and agreed to by a Required Interest; provided, however, that (a)
an amendment or modification reducing a Member's Sharing Ratio or increasing its
Commitment (other than to reflect changes otherwise provided by these
Regulations) is effective only with that Member's consent, (b) an amendment or
modification reducing the required Sharing Ratio or other measure for any
consent or vote in these Regulations is effective only with the consent or vote
of Members having the Sharing Ratio or other measure theretofore required, and
(c) amendments of the type described in Section 3.04 may be adopted as therein
provided.

     13.06 BINDING EFFECT. Subject to the restrictions on Dispositions set forth
in these Regulations, these Regulations are binding on and inure to the benefit
of the Members and their respective heirs, legal representatives, successors,
and assigns.

     13.07 GOVERNING LAW; SEVERABILITY. THESE REGULATIONS ARE GOVERNED BY AND
SHALL BE CONSTRUED IN ACCORDANCE WITH LAW OF THE STATE OF NEVADA, EXCLUDING ANY
CONFLICT-OF-LAWS RULE OR PRINCIPLE THAT MIGHT REFER THE GOVERNANCE OR THE
CONSTRUCTION OF THESE REGULATIONS TO THE LAW OF ANOTHER JURISDICTION. In the
event of a direct conflict between the provisions of these Regulations and (a)
any provision of the Articles, or (b) any mandatory provision of the Act, the
application provision of the Articles or the Act shall control. If any provision
of these Regulations or the application thereof to any Person or circumstance is
held invalid or unenforceable to any extent, the remainder of these Regulations
and the application of that provision to other Persons or circumstances is not
affected thereby and that provision shall be enforced to the greatest extent
permitted by law.

     13.08 FURTHER ASSURANCES. In connection with these Regulations and the
transactions contemplated hereby, each Member shall execute and deliver any
additional documents and instruments and perform any additional acts that may be
necessary or appropriate to effectuate and perform the provisions of these
Regulations and those transactions.

     13.09 WAIVER OF CERTAIN RIGHTS. Each Member irrevocably waives any right it
may have to maintain any action for dissolution of the Company or for partition
of the property of the Company.

     13.10 INDEMNIFICATION. To the fullest extent permitted by law, each Member
shall indemnify the Company, each Manager and each other Member and hold them
harmless from and against all losses, costs, liabilities, damages, and expenses
(including, without limitation, costs of suit and attorney's fees) they may
incur on account of any breach by that Member of these Regulations.


                                      -24-

     13.11 NOTICE TO MEMBERS OF PROVISIONS OF THIS AGREEMENT. By executing these
Regulations, each Member acknowledges that it has actual notice of (a) all of
the provisions of this Agreement, including, without limitation, the
restrictions on the transfer of Membership Interests set forth in Article III,
and (b) all of the provisions of the Articles, including, without limitation,
the fact that the Articles provide that no Member shall have the preemptive
right to acquire any Membership Interests or securities of any class that may at
any time be issued, sold or offered for sale by the Company. Each Member hereby
agrees that these Regulations constitute adequate notice of all such provisions.

     13.12 COUNTERPARTS. These Regulations may be executed in any number of
counterparts with the same effect as if all signing parties had signed the same
document. All counterparts shall be construed together and constitute the same
instrument.

     13.13 ARBITRATION. If, at any time or from time to time during the
continuance of the Company or after the dissolution or other termination
thereof, any dispute, difference or question shall arise between any of the
Members, or their successors, assigns or nominees, touching or concerning the
Company of the property, assets, rights or transactions thereof, or the
dissolution or other termination thereof, or the property of the Company or the
construction, meaning or effect of these Regulations, or any provision hereof,
or the rights of obligations of the Members, or their successors, assigns or
nominees, under these Regulations or otherwise, with respect thereto, then every
such dispute, difference or question shall be submitted to and settled by
arbitration and the decision of the arbitrator appointed as hereinafter provided
to deal with such matter shall be accepted by all the Members to such dispute,
difference or question.The arbitration shall be conducted by a single arbitrator
agreed upon by the Members to the matter. The decision of the arbitrator shall
be final and binding upon all the Members to such dispute, difference or
question and their nominees, and there shall be no appeal therefrom.

     IN WITNESS WHEREOF, following adoption of these Regulations by the
Managers, the Members have executed these Regulations as of the date first set
forth above.

                                        MEMBERS:

                                        ELLY NEVADA, INC.,
                                        a Nevada corporation


                                        By: /s/ Harry Rosenbaum
                                            ------------------------------------
                                            Harry Rosenbaum, Vice President


                                        NORMAN NEVADA, INC.,
                                        a Nevada corporation


                                        By: /s/ Harry Rosenbaum
                                            ------------------------------------
                                            Harry Rosenbaum, Vice President


                                      -25-

EX-3.2(O)

                                                                  Exhibit 3.2(o)

                        FIRST AMENDMENT TO REGULATIONS OF
                          ASHTON WOODS LAKESIDE L.L.C.

     THIS FIRST AMENDMENT TO REGULATIONS OF ASHTON WOODS LAKESIDE L.L.C. (this
"Amendment") is made and entered into by and among ELLY NEVADA, INC., a Nevada
corporation ("Elly NV"), NORMAN NEVADA, INC., a Nevada corporation ("Norman
NV"), and ASHTON WOODS USA L.L.C., a Nevada limited liability company ("Ashton
USA").

                                    RECITALS:

     A. Elly NV and Norman NV have heretofore entered into Regulations of Ashton
Woods Lakeside L.L.C. (the "Regulations") dated as of October 9, 1998, creating
Ashton Woods Lakeside L.L.C., a Nevada limited liability company (the
"Company").

     B. As permitted by the Regulations, Elly NV and Norman NV transferred all
of their right, title, and interest in and to the Company to Ashton USA.

     C. The parties hereto desire to amend the Regulations to reflect the
transfers described above and provide for the admission of Ashton USA as the
sole member of the Company.

     D. Capitalized terms, not specifically defined in this Amendment, shall
have the meanings given such terms in the Regulations.

     NOW, THEREFORE, for and in consideration of the premises and the respective
agreements set forth herein, the parties hereto agree as follows:

     1. The transfers described in Recital B above are hereby approved.

     2. Ashton USA is hereby admitted as a Member of the Company and the parties
hereto recognize that Elly NV and Norman NV have withdrawn as Members of the
Company. The only Member of the Company is Ashton USA.

     3. The Sharing Ratios and funding commitments of the Members set forth on
Exhibit "A" to the Regulations shall be as follows:



                           Sharing Ratio and
         Member           Funding Commitment
         ------           ------------------
                       
Ashton Woods USA L.L.C.          100%


     4. Any and all notices, demands, requests, or other communications
permitted or required to be given to Ashton USA pursuant to the Regulations
shall be delivered to Ashton USA in the manner provided in the Regulations, at
the following address:

        250 Lesmill Road
        Don Mills, Ontario M3B 2T5 Canada

     5. By execution of this Amendment, Ashton USA agrees to be bound by the
terms and provisions of the Regulations, as amended hereby.

     6. Except as amended hereby, the terms and provisions of the Regulations
shall remain unchanged and shall continue in full force and effect.

     EXECUTED as of May 31, 1999.

                                        MEMBER:

                                        ASHTON WOODS USA L.L.C.,
                                        a Nevada limited liability company


                                        By: /s/ Bruce Freeman
                                            ------------------------------------
                                            Bruce Freeman - Managing Member


                                        By: /s/ Seymour Joffe
                                            ------------------------------------
                                            Seymour Joffe - Managing Member


                                        By: /s/ Harry Rosembaum
                                            ------------------------------------
                                            Harry Rosembaum - Managing Member

                                        WITHDRAWING MEMBERS:


                                        ELLY NEVADA, INC.,
                                        a Nevada corporation


                                        By: /s/ Elly Reisman
                                            ------------------------------------
                                            Elly Reisman, President


                                        NORMAN NEVADA, INC.,
                                        a Nevada corporation


                                        By: /s/ Norman Reisman
                                            ------------------------------------
                                            Norman Reisman, President


                                       2

EX-3.2(P)

                                                                  EXHIBIT 3.2(p)
                                   REGULATIONS

                                       OF

                              CANYON REALTY L.L.C.

                        A TEXAS LIMITED LIABILITY COMPANY

                            Dated as of May 24, 2002



                                   REGULATIONS

                                       OF

                              CANYON REALTY L.L.C.

                        A TEXAS LIMITED LIABILITY COMPANY

     These REGULATIONS OF CANYON REALTY L.L.C. (these "Regulations"), dated as
of May 24, 2002, are (a) adopted by the Managers (as defined below) and (b)
executed and agreed to, for good and valuable consideration, by the Members (as
defined below).

                                    ARTICLE I
                                   DEFINITIONS

     1.01 DEFINITIONS. As used in these Regulations, the following terms have
the following meanings:

          "Act" means the Texas Limited Liability Company Act and any successor
     statute, as amended from time to time.

          "Articles" has the meaning given that term in Section 2.01.

          "Bankrupt Member" means (except to the extent a Required Interest
     consents otherwise) any Member (a) that (i) makes a general assignment for
     the benefit of creditors; (ii) files a voluntary bankruptcy petition; (iii)
     becomes the subject of an order for relief or is declared insolvent in any
     federal or state bankruptcy or insolvency proceedings; (iv) files a
     petition or answer seeking for the Member a reorganization, arrangement,
     composition, readjustment, liquidation, dissolution, or similar relief
     under any law; (v) files an answer or other pleading admitting or failing
     to contest the material allegations of a petition filed against the Member
     in a proceeding of the type described in subclauses (i) through (iv) of
     this clause (a); or (vi) seeks, consents to, or acquiesces in the
     appointment of a trustee, receiver, or liquidator of the Member or of all
     or any substantial part of the Member's properties; or (b) against which, a
     proceeding seeking reorganization, arrangement, composition, readjustment,
     liquidation, dissolution, or similar relief under any law has been
     commenced and 120 days have expired without dismissal thereof or with
     respect to which, without the Member's consent or acquiescence, a trustee,
     receiver, or liquidator of the Member or of all or any substantial part of
     the Member's properties has been appointed and 90 days have expired without
     the appointment's having been vacated or stayed, or 90 days have expired
     after the date of expiration of a stay, if the appointment has not
     previously been vacated.


                                        1

          "Business Day" means any day other than a Saturday, a Sunday, or a
     holiday on which national banking associations in the State of Texas are
     closed.

          "Capital Contribution" means any contribution by a Member to the
     capital of the Company.

          "Code" means the Internal Revenue Code of 1986 and any successor
     statute, as amended from time to time.

          "Commitment" means, subject in each case to adjustments on account of
     Dispositions of Membership Interests permitted by these Regulations, (a) in
     the case of a Member executing these Regulations as of the date of these
     Regulations or a Person acquiring that Membership Interest, the amount
     specified for that Member as its Commitment on Exhibit A. and (b) in the
     case of a Membership Interest issued pursuant to Section 3.04, the
     Commitment established pursuant thereto.

          "Company" means Canyon Realty L.L.C., a Texas limited liability
     company.

          "Default Interest Rate" means a rate per annum equal to the lesser of
     (a) two percent (2%) plus a varying rate per annum that is equal to the
     interest rate published as the prime rate in the Wall Street Journal from
     time to time, with adjustments in that varying rate to be made on the same
     date as any change in that rate, and (b) the maximum rate permitted by
     applicable law.

          "Delinquent Member" has the meaning given that term in Section
     4.03(a).

          "Dispose," "Disposing," or "Disposition" means a sale, assignment,
     transfer, exchange, mortgage, pledge, grant of a security interest, or
     other disposition or encumbrance (including, without limitation, by
     operation of law), or the acts thereof.

          "General Interest Rate" means a rate per annum equal to the lesser of
     (a) a varying rate per annum that is equal to the interest rate published
     as the prime rate in the Wall Street Journal from time to time, with
     adjustments in that varying rate to be made on the same date as any change
     in that rate, and (b) the maximum rate permitted by applicable law.

          "Lending Member" has the meaning given that term in Section
     4.03(a)(ii).

          "Manager" means Bruce Freeman, Harry Rosenbaum, Seymour Joffe, and any
     Person hereafter elected as a manager of the Company as provided in these
     Regulations, but does not include any Person who has ceased to be a manager
     of the Company.


                                        2

          "Member" means any Person executing these Regulations as of the date
     of these Regulations as a member or hereafter admitted to the Company as a
     member as provided in these Regulations, but does not include any Person
     who has ceased to be a member in the Company.

          "Membership Interest" means the interest of a Member in the Company,
     including, without limitation, rights to distributions (liquidating or
     other), allocations, information, and to consent or approve.

          "Permitted Transferee" has the meaning given that term in Section
     3.03(b).

          "Person" has the meaning given that term in article 1.02(A)(4) of the
     Act.

          "Proceeding" has the meaning given that term in Section 8.01.

          "Regulations" has the meaning given that term in the introductory
     paragraph.

          "Required Interest" means one or more Members having among them more
     than fifty-one percent (51%) of the Sharing Ratios of all Members.

          "Sharing Ratio" with respect to any Member means the percentage set
     forth on Exhibit A, subject to change as herein provided.

          "TBCA" means the Texas Business Corporation Act and any successor
     statute, as amended from time to time.

Other terms defined herein have the meanings so given them.

     1.02 CONSTRUCTION. Whenever the context requires, the gender of all words
used in these Regulations includes the masculine, feminine, and neuter. All
references to Articles and Section refer to articles and sections of these
Regulations, and all references to Exhibits are to Exhibits attached hereto,
each of which is made a part hereof for all purposes.

                                   ARTICLE II
                                  ORGANIZATION

     2.01 FORMATION. The Company has been organized as a Texas limited liability
company by the filing of Articles of Organization (the "Articles") under and
pursuant to the Act and the issuance of a certificate of organization for the
Company by the Secretary of State of Texas.

     2.02 NAME. The name of the Company is "Canyon Realty L.L.C." and all
Company business must be conducted in that name or such other names that comply
with applicable law as the Managers may select from time to time.


                                        3

     2.03 REGISTERED OFFICE; REGISTERED AGENT; PRINCIPAL OFFICE IN THE UNITED
STATES; OTHER OFFICES. The registered office of the Company required by the Act
to be maintained in the State of Texas shall be the office of the initial
registered agent named in the Articles or such other office (which need not be a
place of business of the Company) as the Managers may designate from time to
time in the manner provided by law. The registered agent of the Company in the
State of Texas shall be the initial registered agent named in the Articles or
such other Person or Persons as the Managers may designate from time to time in
the manner provided by law. The principal office of the Company in the United
States shall be at such place as the Managers may designate from time to time,
which need not be in the State of Texas, and the Company shall maintain records
there as required by article 2.22 of the Act and shall keep the street address
of such principal office at the registered office of the Company in the State of
Texas. The Company may have such other offices as the Managers may designate
from time to time.

     2.04 PURPOSES. The purposes of the Company are those set forth in the
Articles.

     2.05 FOREIGN QUALIFICATION. Prior to the Company's conducting business in
any jurisdiction other than Texas, the Managers shall cause the Company to
comply, to the extent procedures are available and those matters are reasonably
within the control of the Managers, with all requirements necessary to qualify
the Company as a foreign limited liability company in that jurisdiction. At the
request of the Managers, each Member shall execute, acknowledge, swear to, and
deliver all certificates and other instruments conforming with these Regulations
that are necessary or appropriate to qualify, continue, and terminate the
Company as a foreign limited liability company in all such jurisdictions in
which the Company may conduct business.

     2.06 TERM. The Company commenced on the date the Secretary of State of
Texas issued a certificate of organization for the Company and shall continue in
existence for the period fixed in the Articles for the duration of the Company,
or such earlier time as these Regulations may specify.

     2.07 MERGERS AND EXCHANGES. The Company may be a party to (a) a merger or
(b) an exchange or acquisition of the type described in article 5.02 of the
TBCA, subject to the requirements of Section 6.01(b)(ii).

     2.08 NO STATE-LAW PARTNERSHIP. The Members intend that the Company not be a
partnership (including, without limitation, a limited - partnership) or joint
venture, and that no Member or Manager be a partner or joint venturer of any
other Member or Manager, for any purposes other than federal and state tax
purposes, and these Regulations may not be construed to suggest otherwise.

                                   ARTICLE III
                      MEMBERSHIP; DISPOSITIONS OF INTERESTS

     3.01 INITIAL MEMBERS. The initial members of the Company are the Persons
executing these Regulations as of the date of these Regulations as members, each
of which is admitted to the Company as a Member effective contemporaneously with
the execution by such Person of these Regulations.


                                        4

     3.02 REPRESENTATIONS AND WARRANTIES. Each Member hereby represents and
warrants to the Company and each other Member that (a) if that Member is a
corporation, it is duly organized, validly existing and in good standing under
the law of the state of its incorporation and is duly qualified and in good
standing as a foreign corporation in the jurisdiction of its principal place of
business (if not incorporated therein); (b) if that Member is a limited
liability company, it is duly organized, validly existing, and (if applicable)
in good standing under the law of the state of its organization and is duly
qualified and (if applicable) in good standing as a foreign limited liability
company in the jurisdiction of its principal place of business (if not organized
therein); (c) if that Member is a partnership, trust, or other entity, it is
duly formed, validly existing, and (if applicable) in good standing under the
law of the state of its formation, and if required by law is duly qualified to
do business and (if applicable) in good standing in the jurisdiction of its
principal place of business (if not formed therein), and the representations and
warranties in clause (a), (b) or (c), as applicable, are true and correct with
respect to each partner (other than limited partners), trustee, or other member
thereof; (d) that Member has full corporate, Limited liability company,
partnership, trust, or other applicable power and authority to execute and agree
to these Regulations and to perform its obligations hereunder and all necessary
actions by the board of directors, shareholders, managers, members, partners,
trustees, beneficiaries, or other Persons necessary for the due authorization,
execution, delivery, and performance of these Regulations by that Member have
been duly taken; (e) that Member has duly executed and delivered these
Regulations; and (f) that Member's authorization, execution, delivery, and
performance of these Regulations do not conflict with any other agreement or
arrangement to which that Member is a party or which it is bound.

     3.03 RESTRICTIONS ON THE DISPOSITION OF AN INTEREST.

     (a) Except as specifically provided in this Section 3.03, a Disposition of
an interest in the Company may not be effected without the consent of (i) a
majority of the Managers who are Members (excluding any Manager who is making
such Disposition), or (ii) if there are no Managers of the type described in
clause (i), a Required Interest. Any attempted Disposition by a Person of an
interest or right, or any part thereof, in or in respect of the Company other
than in accordance with this Section 3.03 shall be, and is hereby declared, null
and void ab initio.

     (b) Notwithstanding the provisions of Section 3.03(a), the interest of any
Member in the Company may be transferred without the consent of the Managers or
any of the Members if (i) the transfer occurs by reason of or incident to the
death, dissolution, divorce, liquidation, merger or termination of the
transferor Member, and (ii) the transferee is a Permitted Transferee. A
"Permitted Transferee" is any member of such Member's immediate family, or a
trust, corporation, limited liability company, or partnership controlled by such
Member or members of such Member's immediate family, or another Person
controlling, controlled by, or under common control with such Member.

     (c) Subject to the provisions of Section 3.03(d), (e), and (f), (i) a
Person to whom an interest in the Company is transferred has the right to be
admitted to the Company as a Member with the Sharing Ratio and the Commitment so
transferred to such Person, if (A) the Member making such transfer grants the
transferee the right to be so admitted, and (B) such transfer is consented to in
accordance with Section 3.03(a); (ii) a Permitted Transferee under the


                                        5

circumstances described in Section 3.03(b) has the right to be admitted to the
Company as a Member with the Sharing Ratio and the Commitment so transferred to
the Permitted Transferee; and (iii) the Company or (with the permission of the
Company, which may be withheld in its sole discretion) a Lending Member may
grant the purchaser of a Delinquent Member's interest in the Company at a
foreclosure of the security interest therein granted pursuant to Section 4.03
(b) the right to be admitted to the Company as a Member with such Sharing Ratio
and such Commitment (no greater than the Sharing Ratio and the Commitment of the
Member effecting such Disposition prior thereto) as they may agree.

     (d) The Company may not recognize for any purpose any purported Disposition
of all or part of a Membership Interest unless and until the other applicable
provisions of this Section 3.03 have been satisfied and the Managers have
received, on behalf of the Company, a document (i) executed by both the Member
effecting the Disposition (or if the transfer is on account of the death,
incapacity, or liquidation of the transferor, its representative) and the Person
to which the Membership Interest or part thereof is Disposed, (ii) including the
notice address of any Person to be admitted to the Company as a Member and its
agreement to be bound by these Regulations with respect to the Membership
Interest or part thereof being obtained, (iii) setting forth the Sharing Ratios
and the Commitments after the Disposition of the Member effecting the
Disposition and the Person to which the Membership Interest or part thereof is
Disposed (which together must total the Sharing Ratio and the Commitment of the
Member effecting the Disposition before the Disposition), and (iv) containing a
representation and warranty that the Disposition was made in accordance with all
applicable laws and regulations (including securities laws) and, if the Person
to which the Membership Interest or part thereof is Disposed is to be admitted
to the Company, its representation and warranty that the representations and
warranties in Section 3.02 are true and correct with respect to that Person.
Each Disposition and, if applicable, admission complying with the provisions of
this Section 3.03(d) is effective as of the first day of the calendar month
immediately succeeding the month in which the Managers receive the notification
of Disposition and the other requirements of this Section 3.03 have been met.

     (e) For the right of a Member to Dispose of a Membership Interest or any
part thereof or of any Person to be admitted to the Company in connection
therewith to exist or be exercised, (i) either (A) the Membership Interest or
part thereof subject to the Disposition or admission must be registered under
the Securities Act of 1933, as amended, and any applicable state securities laws
or (B) the Company must receive a favorable opinion of the Company's legal
counsel or of other legal counsel acceptable to the Managers to the effect that
the Disposition or admission is exempt from registration under those laws and
(ii) the Company must receive a favorable opinion of the Company's legal counsel
or of other legal counsel acceptable to the Managers to the effect that the
Disposition or admission, when added to the total of all other sales,
assignments, or other Dispositions within the preceding 12 months, would not
result in the Company's being considered to have terminated within the meaning
of the Code. The Managers, however, may waive the requirements of this Section
3.03(e).

     (f) The Member effecting a Disposition and any Person admitted to the
Company in connection therewith shall pay, or reimburse the Company for, all
costs incurred by the Company in connection with the Disposition or admission
(including, without limitation, the legal fees incurred in connection with the
legal opinions referred to in Section 3.03(e)) on or before the tenth


                                        6

day after the receipt by that Person of the Company's invoice for the amount
due. If payment is not made by the date due, the Person owing that amount shall
pay interest on the unpaid amount from the date due until paid at a rate per
annum equal to the Default Interest Rate.

     3.04 ADDITIONAL MEMBERS. Additional Persons may be admitted to the Company
as Members and Membership Interests may be created and issued to those Persons
and to existing Members at the direction of (a) a majority of the Managers who
are Members, or (b) if there are no Managers who are Members, a Required
Interest, on such terms and conditions as the Managers may determine at the time
of admission. The terms of admission or issuance must specify the Sharing Ratios
and the Commitments applicable thereto and may provide for the creation of
different classes or groups of Members and having different rights, powers, and
duties. The Managers shall reflect the creation of any new class or group in an
amendment to these Regulations indicating the different rights, powers, and
duties, and such an amendment need be executed only by the Managers. Any such
admission also must comply with the provisions of Section 3.03(d)(i) and (ii)
and is effective only after the new Member has executed and delivered to the
Managers a document including the new Member's notice address, its agreement to
be bound by these Regulations, and its representation and warranty that the
representation and warranties in Section 3.02 are true and correct with respect
to the new Member. The provisions of this Section 3.04 shall not apply to
Dispositions of Membership Interests.

     3.05 INTERESTS IN A MEMBER. A Member that is not a natural person may not
cause or permit an interest, direct or indirect, in itself to be Disposed of
such that, after the Disposition, (a) the Company would be considered to have
terminated within the meaning of section 708 of the Code or (b) without the
consent of the Managers and a Required Interest, that Member shall cease to be
controlled by substantially the same Persons who control it as of the date of
its admission to the Company. On any breach of the provisions of clause (b) of
the immediately preceding sentence, the Company shall have the option to buy,
and on exercise of that option the breaching Member shall sell, the breaching
Member's Membership Interest, all in accordance with Section 11.01 as if the
breaching Member were a Bankrupt Member.

     3.06 INFORMATION.

     (a) In addition to the other rights specifically set forth in these
Regulations, each Member is entitled to all information to which that Member is
entitled to have access pursuant to article 2.22 of the Act under the
circumstances and subject to the conditions therein stated. The Members agree,
however, that the Managers from time to time may determine, due to contractual
obligations, business concerns, or other considerations, that certain
information regarding the business, affairs, properties, and financial condition
of the Company should be kept confidential and not provided to some or all other
Members, and that it is not just or reasonable for those Members or assignees or
representatives thereof to examine or copy that information.

     (b) The Members acknowledge that, from time to time, they may receive
information from or regarding the Company in the nature of trade secrets or that
otherwise is confidential, the release of which may be damaging to the Company
or Persons with which it does business. Each Member shall hold in strict
confidence any information it receives regarding the Company that is identified
as being confidential (and if that information is provided in writing, that is
so marked)


                                        7

and may not disclose it to any Person other than another Member or a Manger,
except for disclosures (i) compelled by law (but the Member must notify the
Managers promptly of any request for that information, before disclosing it if
practicable), (ii) to advisers or representatives of the Member or Persons to
which that Member's Membership Interest may be Disposed as permitted by these
Regulations, but only if the recipients have agreed to be bound by the
provisions of this Section 3.06(b), or (iii) of information that Member also has
received from a source independent of the Company that the Member reasonably
believes obtained that information without breach of any obligation of
confidentiality. The Members acknowledge that breach of the provisions of this
Section 3.06(b) may cause irreparable injury to the Company for which monetary
damages are inadequate, difficult to compute, or both. Accordingly, the Members
agree that the provisions of this Section 3.06(b) may be enforced by specific
performance.

     3.07 LIABILITY TO THIRD PARTIES. No Member or Manager shall be liable for
the debts, obligations or liabilities of the Company, including under a
judgment, decree or order of a court.

     3.08 WITHDRAWAL. A Member does not have the right or power to withdraw from
the Company as a member.

     3.09 LACK OF AUTHORITY. No Member (other than a Manager or an officer) has
the authority or power to act for or on behalf of the Company, to do any act
that would be binding on the Company, or to incur any expenditures on behalf of
the Company.

                                   ARTICLE IV
                              CAPITAL CONTRIBUTIONS

     4.01 INITIAL CONTRIBUTIONS. Contemporaneously with the execution by such
Member of these Regulations, each Member shall make the Capital Contributions
described for that Member in Exhibit A.

     4.02 SUBSEQUENT CONTRIBUTIONS. Without creating any rights in favor of any
third party, each Member shall contribute to the Company, in cash, on or before
the date specified as hereinafter described, that Member's Sharing Ratio of all
monies that in the judgement of the Managers are necessary to enable the Company
to cause the assets of the Company to be properly operated and maintained and to
discharge its costs, expenses, obligations, and liabilities; provided, however,
that a Member is not obligated to contribute a total amount that, when added to
all Capital Contributions that Member previously has made pursuant to Section
4.01 or this Section 4.02, exceeds that Member's Commitment. The Managers shall
notify each Member of the need for Capital Contributions pursuant to this
Section 4.02 when appropriate, which notice must include a statement in
reasonable detail of the proposed uses of the Capital Contributions and a date
(which date may be no earlier than the fifth Business Day following each
Member's receipt of its notice) before which the Capital Contributions must be
made. Notices for Capital Contributions must be made to all Members in
accordance with their Sharing Ratios.


                                        8

     4.03 FAILURE TO CONTRIBUTE.

     (a) If a Member does not contribute by the time required all or any portion
of a Capital Contribution that Member is required to make as provided in these
Regulations, the Company may exercise, on notice to that Member (the "Delinquent
Member"), one or more of the following remedies:

          (i) taking such action (including, without limitation, court
     proceedings) as the Managers may deem appropriate to obtain payment by the
     Delinquent Member of the portion of the Delinquent Member's Capital
     Contribution that is in default, together with interest thereon at the
     Default Interest Rate from the date that the Capital Contribution was due
     until the date that it is made, all at the cost and expense of the
     Delinquent Member;

          (ii) permitting the other Members in proportion to their Sharing
     Ratios or in such other percentages as they may agree (the "Lending Member"
     whether one or more), to advance the portion of the Delinquent Member's
     Capital Contribution that is in default, with the following results:

               (A) the sum advanced constitutes a loan from the Lending Member
          to the Delinquent Member and a Capital Contribution of that sum to the
          Company by the Delinquent Member pursuant to the applicable provisions
          of these Regulations,

               (B) the principal balance of the loan and all accrued unpaid
          interest thereon is due and payable in whole on the tenth day after
          written demand therefor by the Lending Member to the Delinquent
          Member,

               (C) the amount lent bears interest at the Default Interest Rate
          from the day that the advance is deemed made until the date that the
          loan, together with all interest accrued on it, is repaid to the
          Lending Member,

               (D) all distributions from the Company that otherwise would be
          made to the Delinquent Member (whether before or after dissolution of
          the Company) instead shall be paid to the Lending Member until the
          loan and all interest accrued on it have been paid in full to the
          lending Member (with payments being applied first to accrued and
          unpaid interest and then to principal),

               (E) the payment of the loan and interest accrued on it is secured
          by a security interest in the Delinquent Member's Membership Interest,
          as more fully set forth in Section 4.03(b), and


                                        9

               (F) the Lending Member has the right, in addition to the other
          rights and remedies granted to it pursuant to these Regulations or
          available to it at law or in equity, to take any action (including,
          without limitation, court proceedings) that the Lending Member may
          deem appropriate to obtain payment by the Delinquent Member of the
          loan and all accrued and unpaid interest on it, at the cost and
          expense of the Delinquent Member;

          (iii) exercising the rights of a secured party under the Uniform
     Commercial Code of the State of Texas, as more fully set forth in Section
     4.03(b); or

          (iv) exercising any other rights and remedies available at law or in
     equity.

     (b) Each Member grants to the Company, and to each Lending Member with
respect to any loans made by the Lending Member to that Member as a Delinquent
Member pursuant to Section 4.03(a)(ii), as security, equally and ratably, for
the payment of all Capital Contributions that Member has agreed to make and the
payment of all loans and interest accrued on them made by Lending Members to
that Member as a Delinquent Member pursuant to Section 4.03(a)(ii), a security
interest in and a general lien on its Membership Interest and the proceeds
thereof, all under the Uniform Commercial Code of the State of Texas. On any
default in the payment of a Capital Contribution or in the payment of such a
loan or interest accrued on it, the Company or the Lending Member, as
applicable, is entitled to all the rights and remedies of a secured party under
the Uniform Commercial Code of the State of Texas with respect to the security
interest granted in this Section 4.03(b). Each Member shall execute and deliver
to the Company and the other Members all financing statements and other
instruments that the Managers or the Lending Member, as applicable, may request
to effectuate and carry out the preceding provisions of this Section 4.03(b). At
the option of the Managers or a Lending Member, these Regulations or a carbon,
photographic, or other copy hereof may serve as a financing statement.

     4.04 RETURN OF CONTRIBUTIONS. A Member is not entitled to the return of any
part of its Capital Contributions or to be paid interest in respect of either
its capital account or its Capital Contributions. An unrepaid Capital
Contribution is not a liability of the Company or of any Member. A Member is not
required to contribute or to lend any cash or property to the Company to enable
the Company to return any Member's Capital Contributions.

     4.05 ADVANCES BY MEMBERS. If the Company does not have sufficient cash to
pay its obligations, any Member(s) that may agree to do so with the Managers'
consent may advance all or part of the needed funds to or on behalf of the
Company. An advance described in this Section 4.05 constitutes a loan from the
Member to the Company, bears interest at the General Interest Rate from the date
of the advance until the date of payment, and is not a Capital Contribution.


                                       10

     4.06 CAPITAL ACCOUNTS. A capital account shall be established and
maintained for each Member. Each Member's capital account (a) shall be increased
by (i) the amount of money contributed by that Member to the Company, (ii) the
fair market value of property contributed by that Member to the Company (net of
liabilities secured by the contributed property that the Company is considered
to assume or take subject to under section 752 of the Code), and (iii)
allocations to that Member of Company income and gain (or items thereof),
including income and gain exempt from tax and income and gain described in
Treas. Reg. Section 1.704-l(b)(2)(iv)(g), but excluding income and gain
described in Treas. Reg. Section 1.704-l(b)(4)(i), and (b) shall be decreased by
(i) the amount of money distributed to that Member by the Company, (ii) the fair
market value of property distributed to that Member by the Company (net of
liabilities secured by the distributed property that the Member is considered to
assume or take subject to under section 752 of the Code), (iii) allocations to
that Member of expenditures of the Company described in section 705(a)(2)(B) of
the Code, and (iv) allocations of Company loss and deduction (or items thereof),
including loss and deduction described in Treas. Reg. Section
1.704-l(b)(2)(iv)(g), but excluding items described in clause (b)(iii) above and
loss or deduction described in Treas. Reg. Section 1.704-l(b)(4)(i) or Section
1.704-l(b)(4)(iii). The Members' capital accounts also shall be maintained and
adjusted as permitted by the provisions of Treas. Reg. Section
1.704-1(b)(2)(iv)(f) and as required by the other provisions of Treas. Reg.
Sections 1.704-l(b)(2)(iv) and 1.704-1(b)(4), including adjustments to reflect
the allocations to the Members of depreciation, depletion, amortization, and
gain or loss as computed for book purposes rather than the allocation of the
corresponding items as computed for tax purposes, as required by Treas. Reg.
Section 1.704-l(b)(2)(iv)(g). A Member that has more than one Membership
Interest shall have a single capital account that reflects all its Membership
Interests, regardless of the class of Membership Interests owned by that Member
and regardless of the time or manner in which those Membership Interests were
acquired. On the transfer of all or part of a Membership Interest, the capital
account of the transferor that is attributable to the transferred Membership
Interest or part thereof shall carry over to the transferee Member in accordance
with the provisions of Treas. Reg. Section 1.704-l(b)(2)(iv)(l).

                                    ARTICLE V
                          ALLOCATIONS AND DISTRIBUTIONS

     5.01 ALLOCATIONS.

     (a) Except as may be required by section 701 (c) of the Code and Treas.
Reg. Section 1.701- l(b)(2)(iv)(f)(4), all items of income, gain, loss,
deduction, and credit of the Company shall be allocated among the Members in
accordance with their Sharing Ratios.

     (b) All items of income, gain, loss, deduction, and credit allocable to any
Membership Interest that may have been transferred shall be allocated between
the transferor and the transferee based on the portion of the calendar year
during which each was recognized as owning that Membership Interest, without
regard to the results of Company operations during any particular portion of
that calendar year and without regard to whether cash distributions were made to
the transferor or the transferee during that calendar year; provided, however,
that this allocation must be made in accordance with a method permissible under
section 706 of the Code and the regulations thereunder.


                                       11

     5.02 DISTRIBUTIONS.

     (a) From time to time (but at least once each calendar quarter) the
Managers shall determine in their reasonable judgment to what extent (if any)
the Company's cash on hand exceeds its current and anticipated needs, including,
without limitation, for operating expenses, debt service, acquisitions, and a
reasonable contingency reserve. If such an excess exists, the Managers shall
cause the Company to distribute to the Members, in accordance with their Sharing
Ratios, an amount in cash equal to that excess.

     (b) From time to time the Managers also may cause property of the Company
other than cash to be distributed to the Members, which distribution must be
made in accordance with their Sharing Ratios and may be made subject to existing
liabilities and obligations. Immediately prior to such a distribution, the
capital accounts of the Members shall be adjusted as provided in Treas. Reg.
Section 1.704-1(b)(2)(iv)(f).

                                   ARTICLE VI
                                    MANAGERS

     6.01 MANAGEMENT BY MANAGERS.

     (a) Except for situations in which the approval of the Members is required
by these Regulations or by nonwaivable provisions of applicable law, and subject
to the provisions of Section 6.02, (i) the powers of the Company shall be
exercised by or under the authority of, and the business and affairs of the
Company shall be managed under the direction of, the Managers; and (ii) the
Managers may make all decisions and take all actions for the Company not
otherwise provided for in these Regulations, including, without limitation, the
following:

          (i) entering into, making, and performing contracts, agreements, and
     other undertakings binding the Company that may be necessary, appropriate,
     or advisable in furtherance of the purposes of the Company and making all
     decisions and waivers thereunder;

          (ii) opening and maintaining bank and investment accounts and
     arrangements, drawing checks and other orders for the payment of money, and
     designating individuals with authority to sign or give instructions with
     respect to those accounts and arrangements;

          (iii) maintaining the assets of the Company in good order;

          (iv) collecting sums due the Company;

          (v) to the extent that funds of the Company are available therefor,
     paying debts and obligations of the Company;

          (vi) acquiring, utilizing for Company purposes, and Disposing of any
     asset of the Company;


                                       12

          (vii) borrowing money or otherwise committing the credit of the
     Company for Company activities and voluntary prepayments or extensions of
     debt;

          (viii) selecting, removing, and changing the authority and
     responsibility of lawyers, accountants, and other advisers and consultants;

          (ix) obtaining insurance for the Company;

          (x) determining distributions of Company cash and other property as
     provided in Section 5.02;

          (xi) establishing a seal for the Company;

          (xii) selling, leasing, exchanging, or otherwise disposing of
     (including by way of a pledge, mortgage, deed of trust, or trust indenture)
     all or any portion of the Company's property and assets (with or without
     good will); and

          (xiii) being a party to (i) a merger or (ii) an exchange or
     acquisition of the type described in article 5.02 of the TBCA.

     (b) Notwithstanding the provisions of Section 6.01(a), the Managers may not
cause the Company to do any of the following without complying with the
applicable requirements set forth below:

          (i) amend or restate the Articles, without complying with the
     applicable procedures set forth in the Act and the TBCA, including, without
     limitation, the requirement in article 4.02 of the TBCA regarding approval
     by the Members (unless such provision is rendered inapplicable by another
     provision of applicable law).

     6.02 ACTIONS BY MANAGERS; COMMITTEES; DELEGATION OF AUTHORITY AND DUTIES.

     (a) In managing the business and affairs of the Company and exercising its
powers, the Managers shall act (i) collectively through meetings and written
consents pursuant to Sections 6.05 and 6.07; (ii) through committees pursuant to
Section 6.02(b); and (iii) through Managers to whom authority and duties have
been delegated pursuant to Section 6.02(c).

     (b) The Managers may, from time to time, designate one or more committees,
each of which shall be comprised of one or more Managers. Any such committee, to
the extent provided in such resolution or in the Articles or these Regulations,
shall have and may exercise all of the authority of the Managers, subject to the
limitations set forth in the Act and the TBCA. At every meeting of any such
committee, the presence of a majority of all the members thereof shall
constitute a quorum, and the affirmative vote of a majority of the members
present shall be necessary for the adoption of any resolution. The Managers may
dissolve any committee at any time, unless otherwise provided in the Articles or
these Regulations.


                                       13

     (c) The Managers may, from time to time, delegate to one or more Managers
such authority and duties as the Managers may deem advisable. In addition, the
Managers may assign titles (including, without limitation, president, vice
president, secretary, assistant secretary, treasurer and assistant treasurer) to
any such Manager. Unless the Managers decide otherwise, if the title is one
commonly used for officers of a business corporation formed under the TBCA, the
assignment of such title shall constitute the delegation to such Manager of the
authority and duties that are normally associated with that office, subject to
any specific delegation of authority and duties made pursuant to the first
sentence of this Section 6.02(c). Any number of titles may be held by the same
Manager. Any delegation pursuant to this Section 6.02(c) may be revoked at any
time by the Managers.

     (d) Any Person dealing with the Company, other than a Member, may rely on
the authority of any Manager or officer in taking any action in the name of the
Company without inquiry into the provisions of these Regulations or compliance
herewith, regardless of whether that action actually is taken in accordance with
the provisions of these Regulations.

     6.03 NUMBER AND TERM OF OFFICE. The number of Managers of the Company shall
be determined from time to time by resolution of the Managers; provided,
however, that no decrease in the number of Managers that would have the effect
of shortening the term of an incumbent Manager may be made by the Managers. If
the Managers make no such determination, the number of Managers shall be the
number set forth in the Articles as the number of Managers constituting the
initial Managers. Each Manager shall hold office for the term for which he is
elected and thereafter until his successor shall have been elected and
qualified, or until his earlier death, resignation or removal. Unless otherwise
provided in the Articles, Managers need not be Members or residents of the State
of Texas.

     6.04 VACANCIES; REMOVAL; RESIGNATION. Any Manager position to be filled by
reason of an increase in the number of Managers may be filled by election at an
annual or special meeting of Members called for that purpose. Any vacancy
occurring in the Managers other than by reason of an increase in the number of
Managers may be filled (a) by election at an annual or special meeting of the
Members called for that purpose or (b) by the affirmative vote of a majority of
the remaining Managers though less than a quorum of the Managers. A Manager
elected to fill a vacancy occurring other than by reason of an increase in the
number of Managers shall be elected for the unexpired term of his predecessor in
office. At any meeting of Members at which a quorum of Members is present called
expressly for that purpose, or pursuant to a written consent adopted pursuant to
these Regulations, any Manager may be removed, with or without cause, by a
Required Interest. Any Manager may resign at any time. Such resignation shall be
made in writing and shall take effect at the time specified therein, or if no
time be specified, at the time of its receipt by the remaining Managers. The
acceptance of a resignation shall not be necessary to make it effective, unless
expressly so provided in the resignation.

     6.05 MEETINGS.

     (a) Unless otherwise required by law or provided in the Articles or these
Regulations, a majority of the total number of Managers fixed by, or in the
manner provided in, the Articles or these Regulations shall constitute a quorum
for the transaction of business of the Managers, and


                                       14

the act of a majority of the Managers present at a meeting at which a quorum is
present shall he the act of the Managers. A Manager who is present at a meeting
of the Managers at which action on any Company matter is taken shall be presumed
to have assented to the action unless his dissent shall be entered in the
minutes of the meeting or unless he shall file his written dissent to such
action with the Person acting as secretary of the meeting before the adjournment
thereof or shall deliver such dissent to the Company immediately after the
adjournment of the meeting. Such right to dissent shall not apply to a Manager
who voted in favor of such action.

     (b) Meetings of the Managers may be held at such place or places as shall
be determined from time to time by resolution of the Managers. At all meetings
of the Managers, business shall be transacted in such order as shall from time
to time be determined by resolution of the Managers. Attendance of a Manager at
a meeting shall constitute a waiver of notice of such meeting, except where a
Manager attends a meeting for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully
called or convened.

     (c) In connection with any annual meeting of Members at which Managers were
elected, the Managers may, if a quorum is present, hold its first meeting for
the transaction of business immediately after and at the same place as such
annual meeting of the Members. Notice of such meeting at such time and place
shall not be required.

     (d) Regular meetings of the Managers shall be held at such times and places
as shall be designated from time to time by resolution of the Managers. Notice
of such regular meetings shall not be required.

     (e) Special meetings of the Managers may be called by any Manager on at
least 24 hours notice to each other Manager. Such notice need not state the
purpose or purposes of, nor the business to be transacted at, such meeting,
except as may otherwise be required by law or provided for by the Articles or
these Regulations.

     6.06 APPROVAL OR RATIFICATION OF ACTS OR CONTRACTS BY MEMBERS. The Managers
in their discretion may submit any act or contract for approval or ratification
at any annual meeting of the Members, or at any special meeting of the Members
called for the purpose of considering any such act or contract, and any act or
contract that shall be approved or be ratified by a Required Interest shall be
as valid and as binding upon the Company and upon all the Members as if it shall
have been approved or ratified by every Member of the Company.

     6.07 ACTION BY WRITTEN CONSENT OR TELEPHONE CONFERENCE. Any action
permitted or required by the Act, the TBCA, the Articles or these Regulations to
be taken at a meeting of the Managers or any committee designated by the
Managers may be taken without a meeting if a consent in writing, setting forth
the action to be taken, is signed by all the Managers or members of such
committee, as the case may be. Such consent shall have the same force and effect
as a unanimous vote at a meeting and may be stated as such in any document or
instrument filed with the Secretary of State of Texas, and the execution of such
consent shall constitute attendance or presence in person at a meeting of the
Managers or any such committee, as the case may be. Subject to the requirements
of the Act, the TBCA, the Articles or these Regulations for notice of meetings,
unless otherwise restricted by the Articles, Managers, or members of any
committee


                                       15

designated by the Managers, may participate in and hold a meeting of the
Managers or any committee of Managers, as the case may be, by means of a
conference telephone or similar communications equipment by means of which all
Persons participating in the meeting can hear each other, and participation in
such meeting shall constitute attendance and presence in person at such meeting,
except where a Person participates in the meeting for the express purpose of
objecting to the transaction of any business on the ground that the meeting is
not lawfully called or convened.

     6.08 COMPENSATION. The Managers shall reserve such compensation, if any,
for their services as may be designated from time to time by all of the
Managers. In addition, the Managers shall be entitled to be reimbursed for
out-of-pocket costs and expenses incurred in the course of their service
hereunder, including the portion of their overhead reasonably allocable to
Company activities.

     6.09 CONFLICTS OF INTEREST. Subject to the other express provisions of
these Regulations, each Manager, Member and officer of the Company at any time
and from time to time may engage in and possess interests in other business
ventures of any and every type and description, independently or with others,
including ones in competition with the Company, with no obligation to offer to
the Company or any other Member, Manager or officer the right to participate
therein. The Company may transact business with any Manager, Member, officer or
Affiliate thereof, provided the terms of those transactions are no less
favorable than those the Company could obtain from unrelated third parties.

     6.10 OFFICERS.

     (a) The Managers may, from time to time, designate one or more Persons to
be officers of the Company. No officer need be a resident of the State of Texas,
a Member or a Manager. Any officers so designated shall have such authority and
perform such duties as the Managers may, from time to time, delegate to them.
The Managers may assign titles to particular officers. Unless the Managers
decide otherwise, if the title is one commonly used for officers of a business
corporation formed under the TBCA, the assignment of such title shall constitute
the delegation to such officer of the authority and duties that are normally
associated with that office, subject to (i) any specific delegation of authority
and duties made to such officer by the Managers pursuant to the third sentence
of this Section 6.10(b), or (ii) any delegation of authority and duties made to
one or more Mangers pursuant to Section 6.02(a). Each officer shall hold office
until his successor shall be duly designated and shall quality or until his
death or until he shall resign or shall have been removed in the manner
hereinafter provided. Any number of offices may be held by the same Person. The
salaries or other compensation, if any, of the officers and agents of the
Company shall be fixed from time to time by the Managers.

     (b) Any officer may resign as such at any time. Such resignation shall be
made in writing and shall take effect at the time specified therein, or if no
time be specified, at the time of its receipt by the Managers. The acceptance of
a resignation shall not be necessary to make it effective, unless expressly so
provided in the resignation. Any officer may be removed as such, either with or
without cause, by the Managers whenever in their judgment the best interests of
the Company will be served thereby; provided, however, that such removal shall
be without prejudice


                                       16

to the contract rights, if any, of the Person so removed. Designation of an
officer shall not of itself create contract rights. Any vacancy occurring in any
office of the Company (other than Manager) may be filled by the Managers.

                                   ARTICLE VII
                               MEETINGS OF MEMBERS

     7.01 MEETINGS.

     (a) A quorum shall be present at a meeting of Members if the holders of a
Required Interest are represented at the meeting in person or by proxy. With
respect to any matter, other than a matter for which the affirmative vote of the
holders of a specified portion of the Sharing Ratios of all Members entitled to
vote is required by the Act, the affirmative vote of a Required Interest at a
meeting of Members at which a quorum is present shall be the act of the Members.

     (b) All meetings of the Members shall be held at the principal place of
business of the Company or at such other place within or without the State of
Texas as shall be specified or fixed in the notices or waivers of notice
thereof; provided that any or all Members may participate in any such meeting by
means of conference telephone or similar communications equipment pursuant to
Section 7.05.

     (c) Notwithstanding the other provisions of the Articles or these
Regulations, the chairman of the meeting or the holders of a Required Interest
shall have the power to adjourn such meeting from time to time, without any
notice other than announcement at the meeting of the time and place of the
holding of the adjourned meeting. If such meeting is adjourned by the Members,
such time and place shall be determined by a vote of the holders of a Required
Interest. Upon the resumption of such adjourned meeting, any business may be
transacted that might have been transacted at the meeting as originally called.

     (d) An annual meeting of the Members, for the election of the Managers and
for the transaction of such other business as may properly come before the
meeting, shall be held at such place, within or without the State of Texas, on
such date and at such time as the Managers shall fix and set forth in the notice
of the meeting, which date shall be within 13 months subsequent to the date of
organization of the Company or the last annual meeting of Members, whichever
most recently occurred.

     (e) Special meetings of the Members for any proper purpose or purposes may
be called at any time by the Managers or the holders of at least ten percent of
the Sharing Ratios of all Members. If not otherwise stated in or fixed in
accordance with the remaining provisions hereof, the record date for determining
Members entitled to call a special meeting is the date any Member first signs
the notice of that meeting. Only business within the purpose or purposes
described in the notice (or waiver thereof) required by these Regulations may be
conducted at a special meeting of the Members.

     (f) Written or printed notice stating the place, day and hour of the
meeting and, in the case of a special meeting, the purpose or purposes for which
the meeting is called, shall be


                                       17

delivered not less than ten nor more than 60 days before the date of the
meeting, either personally or by mail, by or at the direction of the Managers or
Person calling the meeting, to each Member entitled to vote at such meeting. If
mailed, any such notice shall be deemed to be delivered when deposited in the
United States mail, addressed to the Member at his address provided for on
Exhibit A, with postage thereon prepaid.

     (g) The date on which notice of a meeting of Members is mailed or the date
on which the resolution of the Managers declaring a distribution is adopted, as
the case may be, shall be the record date for the determination of the Members
entitled to notice of or to vote at such meeting, including any adjournment
thereof, or the Members entitled to receive such distribution.

     (h) The right of Members to cumulative voting in the election of Managers
is expressly prohibited.

     7.02 VOTING LIST. The Managers shall make, at least ten days before each
meeting of Members, a complete list of the Members entitled to vote at such
meeting or any adjournment thereof, arranged in alphabetical order, with the
address of and the Sharing Ratios held by each, which list, for a period of ten
days prior to such meeting, shall be kept on file at the registered office or
principal place of business of the Company and shall be subject to inspection by
any Member at any time during usual business hours. Such list shall also be
produced and kept open at the time and place of the meeting and shall be subject
to the inspection of any Member during the whole time of the meeting. The
original membership records shall be prima-facie evidence as to who are the
Members entitled to examine such list or transfer records or to vote at any
meeting of Members. Failure to comply with the requirements of this Section
shall not affect the validity of any action taken at the meeting.

     7.03 PROXIES. A Member may vote either in person or by proxy executed in
writing by the Member. A telegram, telex, cablegram or similar transmission by
the Member, or a photographic, photostatic, facsimile or similar reproduction of
a writing executed by the Member shall be treated as an execution in writing for
purposes of this Section. Proxies for use at any meeting of Members or in
connection with the taking of any action by written consent shall be filed with
the Managers, before or at the time of the meeting or execution of the written
consent, as the case may be. All proxies shall be received and taken charge of
and all ballots shall be received and canvassed by the Managers, who shall
decide all questions touching upon the qualification of voters, the validity of
the proxies, and the acceptance or rejection of votes, unless an inspector or
inspectors shall have been appointed by the chairman of the meeting, in which
event such inspector or inspectors shall decide all such questions. No proxy
shall be valid after 11 months from the date of its execution unless otherwise
provided in the proxy. A proxy shall be revocable unless the proxy form
conspicuously states that the proxy is irrevocable and the proxy is coupled with
an interest. Should a proxy designate two or more Persons to act as proxies,
unless that instrument shall provide to the contrary, a majority of such Persons
present at any meeting at which their powers thereunder are to be exercised
shall have and may exercise all the powers of voting or giving consents thereby
conferred, or if only one be present, then such powers may be exercised by that
one; or, if an even number attend and a majority do not agree on any particular
issue, the Company shall not be required to recognize such proxy with respect to
such issue if such proxy does not specify how the Sharing Ratios that are the
subject of such proxy are to be voted with respect to such issue.


                                       18

     7.04 CONDUCT OF MEETINGS. All meetings of the Members shall be presided
over by the chairman of the meeting, who shall be a Manager (or representative
thereof) designated by a majority of the Managers. The chairman of any meeting
of Members shall determine the order of business and the procedure at the
meeting, including such regulation of the manner of voting and the conduct of
discussion as seem to him in order.

     7.05 ACTION BY WRITTEN CONSENT OR TELEPHONE CONFERENCE.

     (a) Any action required or permitted to be taken at any annual or special
meeting of Members may be taken without a meeting, without prior notice, and
without a vote, if a consent or consents in writing, setting forth the action so
taken, shall be signed by the holder or holders of not less than the minimum
Sharing Ratios that would be necessary to take such action at a meeting at which
the holders of all Sharing Ratios entitled to vote on the action were present
and voted. Every written consent shall bear the date of signature of each Member
who signs the consent. No written consent shall be effective to take the action
that is the subject to the consent unless, within 60 days after the date of the
earliest dated consent delivered to the Company in the manner required by this
Section, a consent or consents signed by the holder or holders of not less than
the minimum Sharing Ratios that would be necessary to take the action that is
the subject of the consent are delivered to the Company by delivery to its
registered office, its principal place of business, or the Managers. Delivery
shall be by hand or certified or registered mail, return receipt requested.
Delivery to the Company's principal place of business shall be addressed to the
Managers. A telegram, telex, cablegram or similar transmission by a Member, or a
photographic, photostatic, facsimile or similar reproduction of a writing signed
by a Member, shall be regarded as signed by the Member for purposes of this
Section. Prompt notice of the taking of any action by Members without a meeting
by less than unanimous written consent shall be given to those Members who did
not consent in writing to the action.

     (b) The record date for determining Members entitled to consent to action
in writing without a meeting shall be the first date on which a signed written
consent setting forth the action taken or proposed to be taken is delivered to
the Company by delivery to its registered office, its principal place of
business, or the Managers. Delivery shall be by hand or by certified or
registered mail, return receipt requested. Delivery to the Company's principal
place of business shall be addressed to the Managers.

     (c) If any action by Members is taken by written consent, any articles or
documents filed with the Secretary of State of Texas as a result of the taking
of the action shall state, in lieu of any statement required by the Act or the
TBCA concerning any vote of Members, that written consent has been given in
accordance with the provisions of the Act and the TBCA and that any written
notice required by the Act and the TBCA has been given.

     (d) Members may participate in and hold a meeting by means of conference
telephone or similar communications equipment by means of which all Persons
participating in the meeting can hear each other, and participation in such
meeting shall constitute attendance and presence in person at such meeting,
except where a Person participates in the meeting for the express purpose of
objecting to the transaction of any business on the ground that the meeting is
not lawfully called or convened.


                                       19

                                  ARTICLE VIII
                                 INDEMNIFICATION

     8.01 RIGHT TO INDEMNIFICATION. Subject to the limitations and conditions as
provided in this Article VIII, each Person who was or is made a party or is
threatened to be made a party to or is involved in any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative,
arbitrative or investigative (hereinafter a "Proceeding"), or any appeal in such
a Proceeding or any inquiry or investigation that could lead to such a
Proceeding, by reason of the fact that he or she, or a Person of whom he or she
is the legal representative, is or was a Manager of the Company or while a
Manager of the Company is or was serving at the request of the Company as a
Manager, director, officer, partner, venturer, proprietor, trustee, employee,
agent, or similar functionary of another foreign or domestic limited liability
company, corporation, partnership, joint venture, sole proprietorship, trust,
employee benefit plan or other enterprise shall be indemnified by the Company to
the fullest extent permitted by the Act and the TBCA, as the same exist or may
hereafter be amended (but, in the case of any such amendment, only to the extent
that such amendment permits the Company to provide broader indemnification
rights than said law permitted the Company to provide prior to such amendment)
against judgments, penalties (including excise and similar taxes and punitive
damages), fines, settlements and reasonable expenses (including, without
limitation, attorneys' fees) actually incurred by such Person in connection with
such Proceeding, and indemnification under this Article VIII shall continue as
to a Person who has ceased to serve in the capacity which initially entitled
such Person to indemnify hereunder. The rights granted pursuant to this Article
VIII shall be deemed contract rights, and no amendment, modification or repeal
of this Article VIII shall have the effect of limiting or denying any such
rights with respect to actions taken or Proceedings arising prior to any such
amendment, modification or repeal. It is expressly acknowledged that the
indemnification provided in this Article VIII could involve indemnification for
negligence or under theories of strict liability.

     8.02 ADVANCE PAYMENT. The right to indemnification conferred in this
Article VIII shall include the right to be paid or reimbursed by the Company the
reasonable expenses incurred by a Person of the type entitled to be indemnified
under Section 8.01 who was, is or is threatened to be made a named defendant or
respondent in a Proceeding in advance of the final disposition of the Proceeding
and without any determination as to the Person's ultimate entitlement to
indemnification; provided, however, that the payment of such expenses incurred
by any such Person in advance of the final disposition of a Proceeding, shall be
made only upon delivery to the Company of a written affirmation by such Manager
of his or her good faith belief that he has met the standard of conduct for
indemnification under this Article VIII and a written undertaking, by or on
behalf of such Person, to repay all amounts so advanced if it shall ultimately
be determined that such indemnified Person is not entitled to be indemnified
under this Article VIII or otherwise.

     8.03 INDEMNIFICATION OF OFFICERS, EMPLOYEES, AND AGENTS. The Company, by
adoption of a resolution of the Managers, may indemnity and advance expenses to
an officer, employee or agent of the Company to the same extent and subject to
the same conditions under which it may indemnify and advance expenses to
Managers under this Article VIII; and, the Company may indemnify and advance
expenses to Persons who are not or were not Managers,


                                       20

officers, employees or agents of the Company but who are or were serving at the
request of the Company as a Manager, director, officer, partner, venturer,
proprietor, trustee, employee, agent or similar functionary of another foreign
or domestic limited liability company, corporation, partnership, joint venture,
sole proprietorship, trust, employee benefit plan or other enterprise against
any liability asserted against him and incurred by him in such a capacity or
arising out of his status as such a Person to the same extent that it may
indemnity and advance expenses to Managers under this Article VIII.

     8.04 APPEARANCE AS A WITNESS. Notwithstanding any other provision of this
Article VIII, the Company may pay or reimburse expenses incurred by a Manager in
connection with his appearance as a witness or other participation in a
Proceeding at a time when he is not a named defendant or respondent in the
Proceeding.

     8.05 NONEXCLUSIVITY OF RIGHTS. The right to indemnification and the
advancement and payment of expenses conferred in this Article VIII shall not be
exclusive of any other right which a Manager or other Person indemnified
pursuant to Section 8.03 may have or hereafter acquire under any law (common or
statutory), provision of the Articles or these Regulations, agreement, vote of
Members or disinterested Managers or otherwise.

     8.06 INSURANCE. The Company may purchase and maintain insurance, at its
expense, to protect itself and any Person who is or was serving as a Manager,
officer, employee or agent of the Company or is or was serving at the request of
the Company as a Manager, director, officer, partner, venturer, proprietor,
trustee, employee, agent or similar functionary of another foreign or domestic
limited liability company, corporation, partnership, joint venture, sole
proprietorship, trust, employee benefit plan or other enterprise against any
expense, liability or loss, whether or not the Company would have the power to
indemnify such Person against such expense, liability or loss under this Article
VIII.

     8.07 MEMBER NOTIFICATION. To the extent required by law, any
indemnification of or advance of expenses to a Manager in accordance with this
Article VIII shall be reported in writing to the Members with or before the
notice or waiver of notice of the next Members' meeting or with or before the
next submission to Members of a consent to action without a meeting and, in any
case, within the 12-month period immediately following the date of the
indemnification or advance.

     8.08 SAVINGS CLAUSE. If this Article VIII or any portion hereof shall be
invalidated on any ground by any court of competent jurisdiction, then the
Company shall nevertheless indemnify and hold harmless each Manager or any other
Person indemnified pursuant to this Article VIII as to costs, charges and
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement with respect to any action, suit or proceeding, whether civil,
criminal, administrative or investigative to the full extent permitted by any
applicable portion of this Article VIII that shall not have been invalidated and
to the fullest extent permitted by applicable law.


                                       21

                                   ARTICLE IX
                                      TAXES

     9.01 TAX RETURNS. The Managers shall cause to be prepared and filed all
necessary federal and state income tax returns for the Company, including making
the elections described in Section 9.02. Each Member shall furnish to the
Managers all pertinent information in its possession relating to Company
operations that is necessary to enable the Company's income tax returns to be
prepared and filed.

     9.02 TAX ELECTIONS. The Company shall make the following elections on the
appropriate tax returns:

     (a) to adopt the calendar year as the Company's fiscal year;

     (b) to adopt a method of accounting as the Managers may determine from time
to time;

     (c) if a distribution of Company property as described in section 734 of
the Code occurs or if a transfer of a Membership Interest as described in
section 743 of the Code occurs, on written request of any Member, to elect,
pursuant to section 754 of the Code, to adjust the basis of Company properties;

     (d) to elect to amortize the organizational expenses of the Company and the
startup expenditures of the Company under Section 195 of the Code ratably over a
period of 60 months as permitted by section 709(b) of the Code; and

     (e) any other election the Managers may deem appropriate and in the best
interests of the Members.

Neither the Company nor any Manager or Member may make an election for the
Company to be excluded from the application of the provisions of subchapter K of
chapter 1 of subtitle A of the Code or any similar provisions of applicable
state law, and no provision of these Regulations (including, without limitation,
Section 2.06) shall be construed to sanction or approve such an election.

     9.03 "TAX MATTERS PARTNER." A majority of the Managers who are Members
shall designate one Manager that is a Member to be the "tax matters partner" of
the Company pursuant to section 6231(a)(7) of the Code; or, if there is no
Manager that is a Member, the "tax matters partner" shall be a Member that is
designated as such by a Required Interest. Any Member who is designated "tax
matters partner" shall take such action as may be necessary to cause each other
Member to become a "notice partner" within the meaning of section 6223 of the
Code. Any Member who is designated "tax matters partner" shall inform each other
Member of all significant matters that may come to its attention in its capacity
as "tax matters partner" by giving notice thereof on or before the fifth
Business Day after becoming aware thereof and, within that time, shall forward
to each other Member copies of all significant written communications it may
receive in that capacity. Any Member who is designated "tax matters partner" may
not take any action contemplated by sections 6222 through 6232 of the Code
without the consent of a Required


                                       22

Interest, but this sentence does not authorize such Manager (or any other
Manager) to take any action left to the determination of an individual Member
under sections 6222 through 6232 of the Code.

                                    ARTICLE X
                   BOOKS, RECORDS, REPORTS, AND BANK ACCOUNTS

     10.01 MAINTENANCE OF BOOKS. The Company shall keep books and records of
accounts and shall keep minutes of the proceedings of its Members, its Managers
and each committee of the Managers. The books of account for the Company shall
be maintained on a cash basis in accordance with the terms of these Regulations,
except that the capital accounts of the Members shall be maintained in
accordance with Section 4.06. The calendar year shall be the accounting year of
the Company.

     10.02 REPORTS. On or before the 120th day following the end of each fiscal
year during the term of the Company, the Managers shall cause each Member to be
furnished with a balance sheet, an income statement, and a statement of changes
in Members' capital of the Company for, or as of the end of, that year certified
by a recognized firm of certified public accountants. These financial statements
must be prepared in accordance with accounting principles generally employed for
cash basis records consistently applied (except as therein noted) and must be
accompanied by a report of the certified public accountants certifying the
statements and stating that (a) their examination was made in accordance with
generally accepted auditing standards and, in their opinion, the financial
statements fairly present the financial position, financial results of
operations, and changes in Members' capital in accordance with accounting
principles generally employed for cash-basis records consistently applied
(except as therein noted) and (b) in making the examination and reporting on the
financial statements described above, nothing came to their attention that
caused them to believe that (i) the income and revenues were not paid or
credited in accordance with the financial and accounting provisions of these
Regulations, (ii) the costs and expenses were not charged in accordance with the
financial and accounting provisions of these Regulations, or (iii) the Managers
or any Member failed to comply in any material respect with the financial and
accounting provisions of these Regulations, or if they do conclude that the
Managers or a Member so failed, specifying the nature and period of existence of
the failure. The Managers also may cause to be prepared or delivered such other
reports as they may deem appropriate. The Company shall bear the costs of all
these reports.

     10.03 ACCOUNTS. The Managers shall establish and maintain one or more
separate bank and investment accounts and arrangements for Company funds in the
Company name with financial institutions and firms that the Managers determine.
The Managers may not commingle the Company's funds with the funds of any Member;
however, Company funds may be invested in a manner the same as or similar to the
Managers' investment of their own funds or investments by their Affiliates.


                                       23

                                   ARTICLE XI
                             BANKRUPTCY OF A MEMBER

     11.01 BANKRUPT MEMBERS. Subject to Section 12.01(c), if any Member becomes
a Bankrupt Member, the Company shall have the option, exercisable by notice from
the Managers to the Bankrupt Member (or its representative) at any time prior to
the 180th day after receipt of notice of the occurrence of the event causing it
to become a Bankrupt Member, to buy, and on the exercise of this option the
Bankrupt Member or its representative shall sell, its Membership Interest. The
purchase price shall be an amount equal to the fair market value thereof
determined by agreement of the Bankrupt Member (or its representative) and the
Managers; however, if those Persons do not agree on the fair market value on or
before the 30th day following the exercise of the option, either such Person, by
notice to the other, may require the determination of fair market value to be
made by an independent appraiser specified in that notice. If the Person
receiving that notice objects on or before the tenth day following receipt to
the independent appraiser designated in that notice, and those Persons otherwise
fail to agree on an independent appraiser, either such Person may petition the
United States District Judge for the Northern District of Texas (Dallas
Division) then senior in service to designate an independent appraiser. The
determination of the independent appraiser, however designated, is final and
binding on all parties. The Bankrupt Member and the Company each shall pay
one-half of the costs of the appraisal. The purchaser shall pay the fair market
value as so determined in four equal cash installments, the first due on closing
and the remainder (together with accumulated interest on the amount unpaid at
the General Interest Rate) due on each of the first three anniversaries thereof.
The payment to be made to the Bankrupt Member or its representative pursuant to
this Section 11.01 is in complete liquidation and satisfaction of all the rights
and interest of the Bankrupt Member and its representative (and of all Persons
claiming by, through, or under the Bankrupt Member and its representative) in
and in respect of the Company, including, without limitation, any Membership
Interest, any rights in specific Company property, and any rights against the
Company and (insofar as the affairs of the Company are concerned) against the
Members, and constitutes a compromise to which all Members have agreed pursuant
to article 5.02(D) of the Act.

                                   ARTICLE XII
                    DISSOLUTION, LIQUIDATION, AND TERMINATION

     12.01 DISSOLUTION. The Company shall dissolve and its affairs shall be
wound up on the first to occur of the following:

     (a) the written consent of a Required Interest;

     (b) the expiration of the period fixed for the duration of the Company set
forth in the Articles;

     (c) any Manager who is a Member (or, if there is no Manager who is a
Member, any Member) shall become a Bankrupt Member (with or without the consent
of a Required Interest); provided, however, that if the event described in this
Section 12.01(c) shall occur and there shall be at least one other Member
remaining, the Company shall not be dissolved, and the business of the Company
shall be continued, if all Members so agree; and


                                       24

     (d) entry of a decree of judicial dissolution of the Company under article
6.02 of the Act.

Except as provided in Section 12.01(c), the death, retirement, resignation,
expulsion, bankruptcy or dissolution of a Member, or the occurrence of any other
event that terminates the continued membership of a Member in the Company, shall
not cause a dissolution of the Company.

     12.02 LIQUIDATION AND TERMINATION. On dissolution of the Company, the
Managers shall act as liquidator or may appoint one or more Members as
liquidator. The liquidator shall proceed diligently to wind up the affairs of
the Company and make final distributions as provided herein and in the Act. The
costs of liquidation shall be borne as a Company expense. Until final
distribution, the liquidator shall continue to operate the Company properties
with all of the power and authority of the Managers. The steps to be
accomplished by the liquidator are as follows:

     (a) as promptly as possible after dissolution and again after final
liquidation, the liquidator shall cause a proper accounting to be made by a
recognized firm of certified public accountants of the Company's assets,
liabilities, and operations through the last day of the calendar month in which
the dissolution occurs or the final liquidation is completed, as applicable;

     (b) the liquidator shall cause the notice described in article 6.05(A)(2)
of the Act to be mailed to each known creditor of and claimant against the
Company in the manner described in such article 6.05(A)(2) of the Act;

     (c) the liquidator shall pay, satisfy or discharge from Company funds all
of the debts, liabilities and obligations of the Company (including, without
limitation, all expenses incurred in liquidation and any advances described in
Section 4.05) or otherwise make adequate provision for payment and discharge
thereof (including, without limitation, the establishment of a cash escrow fund
for contingent liabilities in such amount and for such term as the liquidator
may reasonably determine); and

     (d) all remaining assets of the Company shall be distributed to the Members
as follows:

          (i) the liquidator may sell any or all Company property, including to
     Members, and any resulting gain or loss from each sale shall be computed
     and allocated to the capital accounts of the Members;

          (ii) with respect to all Company property that has not been sold, the
     fair market value of that property shall be determined and the capital
     accounts of the Members shall be adjusted to reflect the manner in which
     the unrealized income, gain, loss, and deduction inherent in property that
     has not been reflected in the capital accounts previously would be
     allocated among the Members if there were a taxable disposition of that
     property for the fair market value of that property on the date of
     distribution; and


                                       25

          (iii) Company property shall be distributed among the Members in
     accordance with the positive capital account balances of the Members, as
     determined after taking into account all capital account adjustments for
     the taxable year of the Company during which the liquidation of the
     partnership occurs (other than those made by reason of this clause (iii));
     and those distributions shall be made by the end of the taxable year of the
     Company during which the liquidation of the Company Occurs (or, if later,
     90 days after the date of the liquidation).

All distributions in kind to the Members shall be made subject to the liability
of each distributee for costs, expenses, and liabilities theretofore incurred or
for which the Company has committed prior to the date of termination and those
costs, expenses, and liabilities shall be allocated to the distributee pursuant
to this Section 12.02. The distribution of cash and/or property to a Member in
accordance with the provisions of this Section 12.02 constitutes a complete
return to the Member of its Capital Contributions and a complete distribution to
the Member of its Membership Interest and all the Company's property and
constitutes a compromise to which all Members have consented within the meaning
of article 5.02(D) of the Act. To the extent that a Member returns funds to the
Company, it has no claim against any other Member for those funds.

     12.03 DEFICIT CAPITAL ACCOUNTS. Notwithstanding anything to the contrary
contained in these Regulations, and notwithstanding any custom or rule of law to
the contrary, to the extent that the deficit, if any, in the capital account of
any Member results from or is attributable to deductions and losses of the
Company (including non-cash items such as depreciation), or distributions of
money pursuant to these Regulations to all Members in proportion to their
respective Sharing Ratios, upon dissolution of the Company such deficit shall
not be an asset of the Company and such Members shall not be obligated to
contribute such amount to the Company to bring the balance of such Member's
capital account to zero.

     12.04 ARTICLES OF DISSOLUTION. On completion of the distribution of Company
assets as provided herein, the Company is terminated, and the Managers (or such
other Person or Persons as the Act may require or permit) shall file Articles of
Dissolution with the Secretary of State of Texas, cancel any other filings made
pursuant to Section 2.05, and take such other actions as may be necessary to
terminate the Company.

                                  ARTICLE XIII
                               GENERAL PROVISIONS

     13.01 OFFSET. Whenever the Company is to pay any sum to any Member, any
amounts that Member owes the Company may be deducted from that sum before
payment.

     13.02 NOTICES. Except as expressly set forth to the contrary in these
Regulations, all notices, requests, or consents provided for or permitted to be
given under these Regulations must be in writing and must be given either by
depositing that writing in the United States mail, addressed to the recipient,
postage paid, and registered or certified with return receipt requested or by
delivering that writing to the recipient in person, by courier, or by facsimile
transmission; and a notice, request, or consent given under these Regulations is
effective on receipt by the Person to receive it. All notices, requests, and
consents to be sent to a Member must be sent to


                                       26

or made at the addresses given for that Member on Exhibit A or in the instrument
described in Section 3.03(d) or 3.04, or such other address as that Member may
specify by notice to the other Members. Any notice, request, or consent to the
Company or the Managers must be given to the Managers at the following address:
13800 Montfort Drive, Suite 100, Dallas, Texas 75240. Whenever any notice is
required to be given by law, the Articles or these Regulations, a written waiver
thereof, signed by the Person entitled to notice, whether before or after the
time stated therein, shall be deemed equivalent to the giving of such notice.

     13.03 ENTIRE AGREEMENT; SUPERSEDURE. These Regulations constitute the
entire agreement of the Members and their Affiliates relating to the Company and
supersedes all prior contracts or agreements with respect to the Company,
whether oral or written.

     13.04 EFFECT OF WAIVER OR CONSENT. A waiver or consent, express or implied,
to or of any breach or default by any Person in the performance by that Person
of its obligations with respect to the Company is not a consent or waiver to or
of any other breach or default in the performance by that Person of the same or
any other obligations of that Person with respect to the Company. Failure on the
part of a Person to complain of any act of any Person or to declare any Person
in default with respect to the Company, irrespective of how long that failure
continues, does not constitute a waiver by that Person of its rights with
respect to that default until the applicable statute-of-limitations period has
run.

     13.05 AMENDMENT OR MODIFICATION. These Regulations may be amended or
modified from time to time only by a written instrument adopted by the Managers
and executed and agreed to by a Required Interest; provided, however, that (a)
an amendment or modification reducing a Member's Sharing Ratio or increasing its
Commitment (other than to reflect changes otherwise provided by these
Regulations) is effective only with that Member's consent, (b) an amendment or
modification reducing the required Sharing Ratio or other measure for any
consent or vote in these Regulations is effective only with the consent or vote
of Members having the Sharing Ratio or other measure theretofore required, and
(c) amendments of the type described in Section 3.04 may be adopted as therein
provided.

     13.06 BINDING EFFECT. Subject to the restrictions on Dispositions set forth
in these Regulations, these Regulations are binding on and inure to the benefit
of the Members and their respective heirs, legal representatives, successors,
and assigns.

     13.07 GOVERNING LAW; SEVERABILITY. THESE REGULATIONS ARE GOVERNED BY AND
SHALL BE CONSTRUED IN ACCORDANCE WITH LAW OF THE STATE OF TEXAS, EXCLUDING ANY
CONFLICT-OF-LAWS RULE OR PRINCIPLE THAT MIGHT REFER THE GOVERNANCE OR THE
CONSTRUCTION OF THESE REGULATIONS TO THE LAW OF ANOTHER JURISDICTION. In the
event of a direct conflict between the provisions of these Regulations and (a)
any provision of the Articles, or (b) any mandatory provision of the Act or (to
the extent such statutes are incorporated into the Act) the TBCA or the Texas
Miscellaneous Corporation laws Act, the application provision of the Articles,
the Act, the TBCA or the Texas Miscellaneous Corporation Laws Act shall control.
If any provision of these Regulations or the application thereof to any Person
or circumstance is held invalid or


                                       27

unenforceable to any extent, the remainder of these Regulations and the
application of that provision to other Persons or circumstances is not affected
thereby and that provision shall be enforced to the greatest extent permitted by
law.

     13.08 FURTHER ASSURANCES. In connection with these Regulations and the
transactions contemplated hereby, each Member shall execute and deliver any
additional documents and instruments and perform any additional acts that may be
necessary or appropriate to effectuate and perform the provisions of these
Regulations and those transactions.

     13.09 WAIVER OF CERTAIN RIGHTS. Each Member irrevocably waives any right it
may have to maintain any action for dissolution of the Company or for partition
of the property of the Company.

     13.10 INDEMNIFICATION. To the fullest extent permitted by law, each Member
shall indemnify the Company, each Manager and each other Member and hold them
harmless from and against all losses, costs, liabilities, damages, and expenses
(including, without limitation, costs of suit and attorney's fees) they may
incur on account of any breach by that Member of these Regulations.

     13.11 NOTICE TO MEMBERS OF PROVISIONS OF THIS AGREEMENT. By executing these
Regulations, each Member acknowledges that it has actual notice of (a) all of
the provisions of this Agreement, including, without limitation, the
restrictions on the transfer of Membership Interests set forth in Article III,
and (b) all of the provisions of the Articles, including, without limitation,
the fact that the Articles provide that no Member shall have the preemptive
right to acquire any Membership Interests or securities of any class that may at
any time be issued, sold or offered for sale by the Company. Each Member hereby
agrees that these Regulations constitute adequate notice of all such provisions,
including, without limitation, any notice requirement under article 2.19(D) of
the TBCA and Chapter 8 of the Texas Uniform Commercial Code, and each Member
hereby waives any requirement that any further notice thereunder be given.

     13.12 COUNTERPARTS. These Regulations may be executed in any number of
counterparts with the same effect as if all signing parties had signed the same
document. All counterparts shall be construed together and constitute the same
instrument.

                         {SEE NEXT PAGE FOR SIGNATURES}


                                       28

     IN WITNESS WHEREOF, following adoption of these Regulations by the
Managers, the Members have executed these Regulations as of the date first set
forth above.

                                        MEMBERS:

                                        ASHTON WOODS USA L.L.C.,
                                        a Nevada limited liability company


                                        By:  /s/ Bruce Freeman
                                            ------------------------------------
                                            Bruce Freeman - Manager


                                        By:  /s/ Seymour Joffe
                                            ------------------------------------
                                            Seymour Joffe - Manager


                                        By:  /s/ Harry Rosenbaum
                                            ------------------------------------
                                            Harry Rosenbaum - Manager


                                       29

EX-3.2(Q)

                                                                  Exhibit 3.2(q)

                                   REGULATIONS

                                       OF

                        ASHTON DALLAS RESIDENTIAL L.L.C.

                        A TEXAS LIMITED LIABILITY COMPANY

                            DATED AS OF MAY 26, 1994



                                   REGULATIONS
                                       OF
                        ASHTON DALLAS RESIDENTIAL L.L.C.
                        A TEXAS LIMITED LIABILITY COMPANY

                                TABLE OF CONTENTS

                                                                           
ARTICLE I
DEFINITIONS ...............................................................    1

1.01  Definitions .........................................................    1
1.02  Construction ........................................................    3

ARTICLE II
ORGANIZATION ..............................................................    3

2.01  Formation ...........................................................    3
2.02  Name ................................................................    3
2.03  Registered Office; Registered Agent; Principal Office in the
      United States; Other Offices ........................................    3
2.04  Purposes ............................................................    4
2.05  Foreign Qualification ...............................................    4
2.06  Term ................................................................    4
2.07  Mergers and Exchanges ...............................................    4
2.08  No State-Law Partnership ............................................    4

ARTICLE III
MEMBERSHIP; DISPOSITIONS OF INTERESTS .....................................    4

3.01  Initial Members .....................................................    4
3.02  Representations and Warranties ......................................    4
3.03  Restrictions on the Disposition of an Interest ......................    5
3.04  Additional Members ..................................................    6
3.05  Interests in a Member ...............................................    7
3.06  Information .........................................................    7
3.07  Liability to Third Parties ..........................................    7
3.08  Withdrawal ..........................................................    7
3.09  Lack of Authority ...................................................    8

ARTICLE IV
CAPITAL CONTRIBUTIONS .....................................................    8

4.01  Initial Contributions ...............................................    8
4.02  Subsequent Contributions ............................................    8
4.03  Failure to Contribute ...............................................    8
4.04  Return of Contributions .............................................   10
4.05  Advances by Members .................................................   10
4.06  Capital Accounts ....................................................   10




                                       -i-



                                                                           
ARTICLE V
ALLOCATIONS AND DISTRIBUTIONS .............................................   11

5.01  Allocations .........................................................   11
5.02  Distributions .......................................................   11

ARTICLE VI
MANAGERS

6.01  Management by Managers ..............................................   12
6.02  Actions by Managers; Committees; Delegation of Authority
      and Duties ..........................................................   13
6.03  Number and Term of Office ...........................................   13
6.04  Vacancies; Removal; Resignation .....................................   14
6.05  Meetings ............................................................   14
6.06  Approval or Ratification of Acts or Contracts by Members ............   15
6.07  Action by Written Consent or Telephone Conference ...................   15
6.08  Compensation ........................................................   15
6.09  Conflicts of Interest ...............................................   15
6.10  Officers ............................................................   15

ARTICLE VII
MEETINGS OF MEMBERS .......................................................   16

7.01  Meetings ............................................................   16
7.02  Voting List .........................................................   17
7.03  Proxies .............................................................   17
7.04  Conduct of Meetings .................................................   18
7.05  Action by Written Consent or Telephone Conference ...................   18

ARTICLE VIII
INDEMNIFICATION ...........................................................   19

8.01  Right to Indemnification ............................................   19
8.02  Advance Payment .....................................................   19
8.03  Indemnification of Officers, Employees, and Agents ..................   20
8.04  Appearance as a Witness .............................................   20
8.05  Nonexclusivity of Rights ............................................   20
8.06  Insurance ...........................................................   20
8.07  Member Notification .................................................   20
8.08  Savings Clause ......................................................   20

ARTICLE IX
TAXES .....................................................................   21

9.01  Tax Returns .........................................................   21
9.02  Tax Elections .......................................................   21
9.03  "Tax Matters Partner ................................................   21




                                      -ii-



                                                                           
ARTICLE X
BOOKS, RECORDS, REPORTS, AND BANK ACCOUNTS ................................   22

10.01 Maintenance of Books ................................................   22
10.02 Reports .............................................................   22
10.03 Accounts ............................................................   22

ARTICLE XI
BANKRUPTCY OF A MEMBER ....................................................   23

11.01 Bankrupt Members ....................................................   23

ARTICLE XII
DISSOLUTION, LIQUIDATION, AND TERMINATION .................................   23

12.01 Dissolution .........................................................   23
12.02 Liquidation and Termination .........................................   24
12.03 Deficit Capital Accounts ............................................   25
12.04 Articles of Dissolution .............................................   25

ARTICLE XIII
GENERAL PROVISIONS ........................................................   25

13.01 Offset ..............................................................   25
13.02 Notices .............................................................   25
13.03 Entire Agreement; Supersedure .......................................   26
13.04 Effect of Waiver or Consent .........................................   26
13.05 Amendment or Modification ...........................................   26
13.06 Binding Effect ......................................................   26
13.07 Governing Law; Severability .........................................   26
13.08 Further Assurances ..................................................   27
13.09 Waiver of Certain Rights ............................................   27
13.10 Indemnification .....................................................   27
13.11 Notice to Members of Provisions of this Agreement ...................   27
13.12 Counterparts ........................................................   27




                                      -iii-



                                   REGULATIONS

                                       OF

                        ASHTON DALLAS RESIDENTIAL L.L.C.

                        A TEXAS LIMITED LIABILITY COMPANY

     These REGULATIONS OF ASHTON DALLAS RESIDENTIAL L.L.C. (these
"Regulations"), dated as of May 26, 1994, are (a) adopted by the Managers (as
defined below) and (b) executed and agreed to, for good and valuable
consideration, by the Members (as defined below).

                                    ARTICLE I
                                   DEFINITIONS

     1.01 DEFINITIONS. As used in these Regulations, the following terms have
the following meanings:

          "Act" means the Texas Limited Liability Company Act and any successor
     statute, as amended from time to time.

          "Articles" has the meaning given that term in Section 2.01.

          "Bankrupt Member" means (except to the extent a Required Interest
     consents otherwise) any Member (a) that (i) makes a general assignment for
     the benefit of creditors; (ii) files a voluntary bankruptcy petition; (iii)
     becomes the subject of an order for relief or is declared insolvent in any
     federal or state bankruptcy or insolvency proceedings; (iv) files a
     petition or answer seeking for the Member a reorganization, arrangement,
     composition, readjustment, liquidation, dissolution, or similar relief
     under any law; (v) files an answer or other pleading admitting or failing
     to contest the material allegations of a petition filed against the Member
     in a proceeding of the type described in subclauses (i) through (iv) of
     this clause (a); or (vi) seeks, consents to, or acquiesces in the
     appointment of a trustee, receiver, or liquidator of the Member or of all
     or any substantial part of the Member's properties; or (b) against which, a
     proceeding seeking reorganization, arrangement, composition, readjustment,
     liquidation, dissolution, or similar relief under any law has been
     commenced and 120 days have expired without dismissal thereof or with
     respect to which, without the Member's consent or acquiescence, a trustee,
     receiver, or liquidator of the Member or of all or any substantial part of
     the Member's properties has been appointed and 90 days have expired without
     the appointment's having been vacated or stayed, or 90 days have expired
     after the date of expiration of a stay, if the appointment has not
     previously been vacated.

          "Business Day" means any day other than a Saturday, a Sunday, or a
     holiday on which national banking associations in the State of Texas are
     closed.


                                      -1-



          "Capital Contribution" means any contribution by a Member to the
     capital of the Company.

          "Code" means the Internal Revenue Code of 1986 and any successor
     statute, as amended from time to time.

          "Commitment" means, subject in each case to adjustments on account of
     Dispositions of Membership Interests permitted by these Regulations, (a) in
     the case of a Member executing these Regulations as of the date of these
     Regulations or a Person acquiring that Membership Interest, the amount
     specified for that Member as its Commitment on Exhibit A, and (b) in the
     case of a Membership Interest issued pursuant to Section 3.04, the
     Commitment established pursuant thereto.

          "Company" means Ashton Dallas Residential L.L.C., a Texas limited
     liability company.

          "Default Interest Rate" means a rate per annum equal to the lesser of
     (a) four percent (4%) plus a varying rate per annum that is equal to the
     interest rate published as the prime rate by The Bank of Nova Scotia from
     time to time, with adjustments in that varying rate to be made on the same
     date as any change in that rate, and (b) the maximum rate permitted by
     applicable law.

          "Delinquent Member" has the meaning given that term in Section
     4.03(a).

          "Dispose," "Disposing," or "Disposition" means a sale, assignment,
     transfer, exchange, mortgage, pledge, grant of a security interest, or
     other disposition or encumbrance (including, without limitation, by
     operation of law), or the acts thereof.

          "General Interest Rate" means a rate per annum equal to the lesser of
     (a) a varying rate per annum that is equal to the interest rate published
     as the prime rate by The Bank of Nova Scotia from time to time, with
     adjustments in that varying rate to be made on the same date as any change
     in that rate, and (b) the maximum rate permitted by applicable law.

          "Lending Member" has the meaning given that term in Section
     4.03(a)(ii).

          "Manager" means Elly Reisman, Bruce Freeman, Harry Rosenbaum and
     Seymour Joffe and any Person hereafter elected as a manager of the Company
     as provided in these Regulations, but does not include any Person who has
     ceased to be a manager of the Company.

          "Member" means any Person executing these Regulations as of the date
     of these Regulations as a member or hereafter admitted to the Company as a
     member as provided in these Regulations, but does not include any Person
     who has ceased to be a member in the Company.


                                      -2-



          "Membership Interest" means the interest of a Member in the Company,
     including, without limitation, rights to distributions (liquidating or
     other), allocations, information, and to consent or approve.

          "Permitted Transferee" has the meaning given that term in Section
     3.03(b).

          "Person" has the meaning given that term in article 1.02(A)(4) of the
     Act.

          "Proceeding" has the meaning given that term in Section 8.01.

          "Regulations" has the meaning given that term in the introductory
     paragraph.

          "Required Interest" means one or more Members having among them more
     than 51% of the Sharing Ratios of all Members.

          "Sharing Ratio" with respect to any Member means the percentage set
     forth on Exhibit A. subject to change as herein provided.

          "TBCA" means the Texas Business Corporation Act and any successor
     statute, as amended from time to time.

Other terms defined herein have the meanings so given them.

     1.02 CONSTRUCTION. Whenever the context requires, the gender of all words
used in these Regulations includes the masculine, feminine, and neuter. All
references to Articles and Section refer to articles and sections of these
Regulations, and all references to Exhibits are to Exhibits attached hereto,
each of which is made a part hereof for all purposes.

                                   ARTICLE II
                                  ORGANIZATION

     2.01 FORMATION. The Company has been organized as a Texas limited liability
company by the filing of Articles of Organization (the "Articles") under and
pursuant to the Act and the issuance of a certificate of organization for the
Company by the Secretary of State of Texas.

     2.02 NAME. The name of the Company is "Ashton Dallas Residential L.L.C."
and all Company business must be conducted in that name or such other names that
comply with applicable law as the Managers may select from time to time.

     2.03 REGISTERED OFFICE; REGISTERED AGENT; PRINCIPAL OFFICE IN THE UNITED
STATES; OTHER OFFICES. The registered office of the Company required by the Act
to be maintained in the State of Texas shall be the office of the initial
registered agent named in the Articles or such other office (which need not be a
place of business of the Company) as the Managers may designate from time to
time in the manner provided by law. The registered agent of the Company in the
State of Texas shall be the initial registered agent named in the Articles or
such other Person or Persons as the Managers may designate from time to time in
the manner


                                      -3-



provided by law. The principal office of the Company in the United States shall
be at such place as the Managers may designate from time to time, which need not
be in the State of Texas, and the Company shall maintain records there as
required by article 2,22 of the Act and shall keep the street address of such
principal office at the registered office of the Company in the State of Texas.
The Company may have such other offices as the Managers may designate from time
to time.

     2.04 PURPOSES. The purposes of the Company are those set forth in the
Articles.

     2.05 FOREIGN QUALIFICATION. Prior to the Company's conducting business in
any jurisdiction other than Texas, the Managers shall cause the Company to
comply, to the extent procedures are available and those matters are reasonably
within the control of the Managers, with all requirements necessary to qualify
the Company as a foreign limited liability company in that jurisdiction. At the
request of the Managers, each Member shall execute, acknowledge, swear to, and
deliver all certificates and other instruments conforming with these Regulations
that are necessary or appropriate to qualify, continue, and terminate the
Company as a foreign limited liability company in all such jurisdictions in
which the Company may conduct business.

     2.06 TERM. The Company commenced on the date the Secretary of State of
Texas issued a certificate of organization for the Company and shall continue in
existence for the period fixed in the Articles for the duration of the Company,
or such earlier time as these Regulations may specify.

     2.07 MERGERS AND EXCHANGES. The Company may be a party to (a) a merger or
(b) an exchange or acquisition of the type described in article 5.02 of the
TBCA, subject to the requirements of Section 6.01(b)(ii).

     2.08 NO STATE-LAW PARTNERSHIP. The Members intend that the Company not be a
partnership (including, without limitation, a limited - partnership) or joint
venture, and that no Member or Manager be a partner or joint venturer of any
other Member or Manager, for any purposes other than federal and state tax
purposes, and these Regulations may not be construed to suggest otherwise.

                                   ARTICLE III
                      MEMBERSHIP; DISPOSITIONS OF INTERESTS

     3.01 INITIAL MEMBERS. The initial members of the Company are the Persons
executing these Regulations as of the date of these Regulations as members, each
of which is admitted to the Company as a Member effective contemporaneously with
the execution by such Person of these Regulations.

     3.02 REPRESENTATIONS AND WARRANTIES. Each Member hereby represents and
warrants to the Company and each other Member that (a) if that Member is a
corporation, it is duly organized, validly existing and in good standing under
the law of the state of its incorporation and is duly qualified and in good
standing as a foreign corporation in the jurisdiction of its principal place of
business (if not incorporated therein); (b) if that Member is a limited
liability company, it is duly organized, validly existing, and (if applicable)
in good standing under the law of the state of its organization and is duly
qualified and (if applicable) in good standing as a foreign limited liability
company in the jurisdiction of its principal place of business (if not organized
therein); (c) if that Member is a partnership, trust, or other entity, it is
duly formed, validly existing, and (if applicable) in good standing under the
law of the state of its formation,


                                      -4-



and if required by law is duly qualified to do business and (if applicable) in
good standing in the jurisdiction of its principal place of business (if not
formed therein), and the representations and warranties in clause (a), (b) or
(c), as applicable, are true and correct with respect to each partner (other
than limited partners), trustee, or other member thereof; (d) that Member has
full corporate, limited liability company, partnership, trust, or other
applicable power and authority to execute and agree to these Regulations and to
perform its obligations hereunder and all necessary actions by the board of
directors, shareholders, managers, members, partners, trustees, beneficiaries,
or other Persons necessary for the due authorization, execution, delivery, and
performance of these Regulations by that Member have been duly taken; (e) that
Member has duly executed and delivered these Regulations; and (f) that Member's
authorization, execution, delivery, and performance of these Regulations do not
conflict with any other agreement or arrangement to which that Member is a party
or which it is bound.

     3.03 RESTRICTIONS ON THE DISPOSITION OF AN INTEREST. (a) Except as
specifically provided in this Section 3.03, a Disposition of an interest in the
Company may not be effected without the consent of (i) a majority of the
Managers who are Members (excluding any Manager who is making such Disposition),
or (ii) if there are no Managers of the type described in clause (i), a Required
Interest. Any attempted Disposition by a Person of an interest or right, or any
part thereof, in or in respect of the Company other than in accordance with this
Section 3.03 shall be, and is hereby declared, null and void ab initio.

     (b) Notwithstanding the provisions of Section 3.03(a), the interest of any
Member in the Company may be transferred without the consent of the Managers or
any of the Members if (i) the transfer occurs by reason of or incident to the
death, dissolution, divorce, liquidation, merger or termination of the
transferor Member, and (ii) the transferee is a Permitted Transferee. A
"Permitted Transferee" is any member of such Member's immediate family, or a
trust, corporation, limited liability company, or partnership controlled by such
Member or members of such Member's immediate family, or another Person
controlling, controlled by, or under common control with such Member.

     (c) Subject to the provisions of Section 3.03(d), (e), and (f), (i) a
Person to whom an interest in the Company is transferred has the right to be
admitted to the Company as a Member with the Sharing Ratio and the Commitment so
transferred to such Person, if (A) the Member making such transfer grants the
transferee the right to be so admitted, and (B) such transfer is consented to in
accordance with Section 3,03(a): (ii) a Permitted Transferee under the
circumstances described in Section 3.03(b) has the right to be admitted to the
Company as a Member with the Sharing Ratio and the Commitment so transferred to
the Permitted Transferee; and (iii) the Company or (with the permission of the
Company, which may be withheld in its sole discretion) a Lending Member may
grant the purchaser of a Delinquent Member's interest in the Company at a
foreclosure of the security interest therein granted pursuant to Section 4.03(b)
the right to be admitted to the Company as a Member with such Sharing Ratio and
such Commitment (no greater than the Sharing Ratio and the Commitment of the
Member effecting such Disposition prior thereto) as they may agree.

     (d) The Company may not recognize for any purpose any purported Disposition
of all or part of a Membership Interest unless and until the other applicable
provisions of this Section 3.03 have been satisfied and the Managers have
received, on behalf of the Company, a document (i) executed by both the Member
effecting the Disposition (or if the transfer is on account of the death,
incapacity, or liquidation of the transferor, its representative) and the Person
to which the Membership Interest or part thereof is Disposed, (ii) including the
notice


                                      -5-



address of any Person to be admitted to the Company as a Member and its
agreement to be bound by these Regulations with respect to the Membership
Interest or part thereof being obtained, (iii) setting forth the Sharing Ratios
and the Commitments after the Disposition of the Member effecting the
Disposition and the Person to which the Membership Interest or part thereof is
Disposed (which together must total the Sharing Ratio and the Commitment of the
Member effecting the Disposition before the Disposition), and (iv) containing a
representation and warranty that the Disposition was made in accordance with all
applicable laws and regulations (including securities laws) and, if the Person
to which the Membership Interest or part thereof is Disposed is to be admitted
to the Company, its representation and warranty that the representations and
warranties in Section 3.02 are true and correct with respect to that Person.
Each Disposition and, if applicable, admission complying with the provisions of
this Section 3.03(d) is effective as of the first day of the calendar month
immediately succeeding the month in which the Managers receive the notification
of Disposition and the other requirements of this Section 3.03 have been met.

     (e) For the right of a Member to Dispose of a Membership Interest or any
part thereof or of any Person to be admitted to the Company in connection
therewith to exist or be exercised, (i) either (A) the Membership Interest or
part thereof subject to the Disposition or admission must be registered under
the Securities Act of 1933, as amended, and any applicable state securities laws
or (B) the Company must receive a favorable opinion of the Company's legal
counsel or of other legal counsel acceptable to the Managers to the effect that
the Disposition or admission is exempt from registration under those laws and
(ii) the Company must receive a favorable opinion of the Company's legal counsel
or of other legal counsel acceptable to the Managers to the effect that the
Disposition or admission, when added to the total of all other sales,
assignments, or other Dispositions within the preceding 12 months, would not
result in the Company's being considered to have terminated within the meaning
of the Code. The Managers, however, may waive the requirements of this Section
3.03(e).

     (f) The Member effecting a Disposition and any Person admitted to the
Company in connection therewith shall pay, or reimburse the Company for, all
costs incurred by the Company in connection with the Disposition or admission
(including, without limitation, the legal fees incurred in connection with the
legal opinions referred to in Section 3.03(e)) on or before the tenth day after
the receipt by that Person of the Company's invoice for the amount due. If
payment is not made by the date due, the Person owing that amount shall pay
interest on the unpaid amount from the date due until paid at a rate per annum
equal to the Default Interest Rate.

     3.04 ADDITIONAL MEMBERS. Additional Persons may be admitted to the Company
as Members and Membership Interests may be created and issued to those Persons
and to existing Members at the direction of (a) a majority of the Managers who
are Members, or (b) if there are no Managers who are Members, a Required
Interest, on such terms and conditions as the Managers may determine at the time
of admission. The terms of admission or issuance must specify the Sharing Ratios
and the Commitments applicable thereto and may provide for the creation of
different classes or groups of Members and having different rights, powers, and
duties. The Managers shall reflect the creation of any new class or group in an
amendment to these Regulations indicating the different rights, powers, and
duties, and such an amendment need be executed only by the Managers. Any such
admission also must comply with the provisions of Section 3.03(d)(i) and (ii)
and is effective only after the new Member has executed and delivered to the
Managers a document including the new Member's notice address, its agreement to
be bound by these Regulations, and its representation and warranty that the


                                      -6-



representation and warranties in Section 3.02 are true and correct with respect
to the new Member. The provisions of this Section 3.04 shall not apply to
Dispositions of Membership Interests.

     3.05 INTERESTS IN A MEMBER. A Member that is not a natural person may not
cause or permit an interest, direct or indirect, in itself to be Disposed of
such that, after the Disposition, (a) the Company would be considered to have
terminated within the meaning of section 708 of the Code or (b) without the
consent of the Managers and a Required Interest, that Member shall cease to be
controlled by substantially the same Persons who control it as of the date of
its admission to the Company. On any breach of the provisions of clause (b) of
the immediately preceding sentence, the Company shall have the option to buy,
and on exercise of that option the breaching Member shall sell, the breaching
Member's Membership Interest, all in accordance with Section 11.01 as if the
breaching Member were a Bankrupt Member.

     3.06 INFORMATION. (a) In addition to the other rights specifically set
forth in these Regulations, each Member is entitled to all information to which
that Member is entitled to have access pursuant to article 2.22 of the Act under
the circumstances and subject to the conditions therein stated. The Members
agree, however, that the Managers from time to time may determine, due to
contractual obligations, business concerns, or other considerations, that
certain information regarding the business, affairs, properties, and financial
condition of the Company should be kept confidential and not provided to some or
all other Members, and that it is not just or reasonable for those Members or
assignees or representatives thereof to examine or copy that information.

     (b) The Members acknowledge that, from time to time, they may receive
information from or regarding the Company in the nature of trade secrets or that
otherwise is confidential, the release of which may be damaging to the Company
or Persons with which it does business. Each Member shall hold in strict
confidence any information it receives regarding the Company that is identified
as being confidential (and if that information is provided in writing, that is
so marked) and may not disclose it to any Person other than another Member or a
Manger, except for disclosures (i) compelled by law (but the Member must notify
the Managers promptly of any request for that information, before disclosing it
if practicable), (ii) to advisers or representatives of the Member or Persons to
which that Member's Membership Interest may be Disposed as permitted by these
Regulations, but only if the recipients have agreed to be bound by the
provisions of this Section 3.06(b), or (iii) of information that Member also has
received from a source independent of the Company that the Member reasonably
believes obtained that information without breach of any obligation of
confidentiality. The Members acknowledge that breach of the provisions of this
Section 3.06(b) may cause irreparable injury to the Company for which monetary
damages are inadequate, difficult to compute, or both. Accordingly, the Members
agree that the provisions of this Section 3.06(b) may be enforced by specific
performance.

     3.07 LIABILITY TO THIRD PARTIES. No Member or Manager shall be liable for
the debts, obligations or liabilities of the Company, including under a
judgment, decree or order of a court.

     3.08 WITHDRAWAL. A Member does not have the right or power to withdraw from
the Company as a member.


                                      -7-



     3.09 LACK OF AUTHORITY. No Member (other than a Manager or an officer) has
the authority or power to act for or on behalf of the Company, to do any act
that would be binding on the Company, or to incur any expenditures on behalf of
the Company.

                                   ARTICLE IV
                              CAPITAL CONTRIBUTIONS

     4.01 INITIAL CONTRIBUTIONS. Contemporaneously with the execution by such
Member of these Regulations, each Member shall make the Capital Contributions
described for that Member in Exhibit A.

     4.02 SUBSEQUENT CONTRIBUTIONS. Without creating any rights in favor of any
third party, each Member shall contribute to the Company, in cash, on or before
the date specified as hereinafter described, that Member's Sharing Ratio of all
monies that in the judgement of the Managers are necessary to enable the Company
to cause the assets of the Company to be properly operated and maintained and to
discharge its costs, expenses, obligations, and liabilities; provided, however,
that a Member is not obligated to contribute a total amount that, when added to
all Capital Contributions that Member previously has made pursuant to Section
4.01 or this Section 4.02, exceeds that Member's Commitment. The Managers shall
notify each Member of the need for Capital Contributions pursuant to this
Section 4.02 when appropriate, which notice must include a statement in
reasonable detail of the proposed uses of the Capital Contributions and a date
(which date may be no earlier than the fifth Business Day following each
Member's receipt of its notice) before which the Capital Contributions must be
made. Notices for Capital Contributions must be made to all Members in
accordance with their Sharing Ratios.

     4.03 FAILURE TO CONTRIBUTE. (a) If a Member does not contribute by the time
required all or any portion of a Capital Contribution that Member is required to
make as provided in these Regulations, the Company may exercise, on notice to
that Member (the "Delinquent Member"), one or more of the following remedies:

          (i) taking such action (including, without limitation, court
     proceedings) as the Managers may deem appropriate to obtain payment by the
     Delinquent Member of the portion of the Delinquent Member's Capital
     Contribution that is in default, together with interest thereon at the
     Default Interest Rate from the date that the Capital Contribution was due
     until the date that it is made, all at the cost and expense of the
     Delinquent Member;

          (ii) permitting the other Members in proportion to their Sharing
     Ratios or in such other percentages as they may agree (the "Lending Member"
     whether one or more), to advance the portion of the Delinquent Member's
     Capital Contribution that is in default, with the following results:

               (A) the sum advanced constitutes a loan from the Lending Member
          to the Delinquent Member and a Capital Contribution of that sum to the
          Company by the Delinquent Member pursuant to the applicable provisions
          of these Regulations,


                                      -8-



               (B) the principal balance of the loan and all accrued unpaid
          interest thereon is due and payable in whole on the tenth day after
          written demand therefor by the Lending Member to the Delinquent
          Member,

               (C) the amount lent bears interest at the Default Interest Rate
          from the day that the advance is deemed made until the date that the
          loan, together with all interest accrued on it, is repaid to the
          Lending Member,

               (D) all distributions from the Company that otherwise would be
          made to the Delinquent Member (whether before or after dissolution of
          the Company) instead shall be paid to the Lending Member until the
          loan and all interest accrued on it have been paid in full to the
          lending Member (with payments being applied first to accrued and
          unpaid interest and then to principal),

               (E) the payment of the loan and interest accrued on it is secured
          by a security interest in the Delinquent Member's Membership Interest,
          as more fully set forth in Section 4.03(b), and

               (F) the Lending Member has the right, in addition to the other
          rights and remedies granted to it pursuant to these Regulations or
          available to it at law or in equity, to take any action (including,
          without limitation, court proceedings) that the Lending Member may
          deem appropriate to obtain payment by the Delinquent Member of the
          loan and all accrued and unpaid interest on it, at the cost and
          expense of the Delinquent Member;

          (iii) exercising the rights of a secured party under the Uniform
     Commercial Code of the State of Texas, as more fully set forth in Section
     4.03(b); or

          (iv) exercising any other rights and remedies available at law or in
     equity.

     (b) Each Member grants to the Company, and to each Lending Member with
respect to any loans made by the Lending Member to that Member as a Delinquent
Member pursuant to Section 4.03(a)(ii), as security, equally and ratably, for
the payment of all Capital Contributions that Member has agreed to make and the
payment of all loans and interest accrued on them made by Lending Members to
that Member as a Delinquent Member pursuant to Section 4.03(a)(ii), a security
interest in and a general lien on its Membership Interest and the proceeds
thereof, all under the Uniform Commercial Code of the State of Texas. On any
default in the payment of a Capital Contribution or in the payment of such a
loan or interest accrued on it, the Company or the Lending Member, as
applicable, is entitled to all the rights and remedies of a secured party under
the Uniform Commercial Code of the State of Texas with respect to the security
interest granted in this Section 4.03(b). Each Member shall execute and deliver
to the Company and the other Members all financing statements and other
instruments that the Managers or the Lending Member, as applicable, may request
to effectuate and carry


                                      -9-



out the preceding provisions of this Section 4.03(b). At the option of the
Managers or a Lending Member, these Regulations or a carbon, photographic, or
other copy hereof may serve as a financing statement.

     4.04 RETURN OF CONTRIBUTIONS. Other than as expressly provided in these
Regulations, Member is not entitled to the return of any part of its Capital
Contributions or to be paid interest in respect of either its capital account or
its Capital Contributions. An unrepaid Capital Contribution is not a liability
of the Company or of any Member. A Member is not required to contribute or to
lend any cash or property to the Company to enable the Company to return any
Member's Capital Contributions.

     4.05 ADVANCES BY MEMBERS. If the Company does not have sufficient cash to
pay its obligations, any Member(s) that may agree to do so with the Managers'
consent may advance all or part of the needed funds to or on behalf of the
Company. An advance described in this Section 4.05 constitutes a loan from the
Member to the Company, bears interest at the General Interest Rate from the date
of the advance until the date of payment, and is not a Capital Contribution.

     4.06 CAPITAL ACCOUNTS. A capital account shall be established and
maintained for each Member. Each Member's capital account (a) shall be increased
by (i) the amount of money contributed by that Member to the Company, (ii) the
fair market value of property contributed by that Member to the Company (net of
liabilities secured by the contributed property that the Company is considered
to assume or take subject to under section 752 of the Code), and (iii)
allocations to that Member of Company income and gain (or items thereof),
including income and gain exempt from tax and income and gain described in
Treas. Reg. Section 1.704-l(b)(2)(iv)(g), but excluding income and gain
described in Treas. Reg. Section 1.704-l(b)(4)(i), and (b) shall be decreased by
(i) the amount of money distributed to that Member by the Company, (ii) the fair
market value of property distributed to that Member by the Company (net of
liabilities secured by the distributed property that the Member is considered to
assume or take subject to under section 752 of the Code), (iii) allocations to
that Member of expenditures of the Company described in section 705(a)(2)(B) of
the Code, and (iv) allocations of Company loss and deduction (or items thereof),
including loss and deduction described in Treas. Reg. Section
1.704-l(b)(2)(iv)(g), but excluding items described in clause (b)(iii) above and
loss or deduction described in Treas. Reg. Section 1.704-l(b)(4)(i) or Section
1704-l(b)(4)(iii). The Members' capital accounts also shall be maintained and
adjusted as permitted by the provisions of Treas. Reg. Section
1.704-l(b)(2)(iv)(f) and as required by the other provisions of Treas. Reg.
Sections 1.704-1 (b)(2)(iv) and 1.704-l(b)(4), including adjustments to reflect
the allocations to the Members of depreciation, depletion, amortization, and
gain or loss as computed for book purposes rather than the allocation of the
corresponding items as computed for tax purposes, as required by Treas. Reg.
Section 1.704-l(b)(2)(iv)(g). A Member that has more than one Membership
Interest shall have a single capital account that reflects all its Membership
Interests, regardless of the class of Membership Interests owned by that Member
and regardless of the time or manner in which those Membership Interests were
acquired. On the transfer of all or part of a Membership Interest, the capital
account of the transferor that is attributable to the transferred Membership
Interest or part thereof shall carry over to the transferee Member in accordance
with the provisions of Treas. Reg. Section 1.704-l(b)(2)(iv)(l).


                                      -10-



                                    ARTICLE V
                          ALLOCATIONS AND DISTRIBUTIONS

     5.01 ALLOCATIONS. (a) Except as may be required by section 701 (c) of the
Code and Treas. Reg. Section 1.701-1 (b)(2)(iv)(f)(4), all items of income,
gain, loss, deduction, and credit of the Company shall be allocated among the
Members in accordance with their Sharing Ratios.

     (b) All items of income, gain, loss, deduction, and credit allocable to any
Membership Interest that may have been transferred shall be allocated between
the transferor and the transferee based on the portion of the calendar year
during which each was recognized as owning that Membership Interest, without
regard to the results of Company operations during any particular portion of
that calendar year and without regard to whether cash distributions were made to
the transferor or the transferee during that calendar year; provided, however,
that this allocation must be made in accordance with a method permissible under
section 706 of the Code and the regulations thereunder.

     5.02 DISTRIBUTIONS. All receipts and revenues of the Company from any
source shall be applied and distributed in the following order of priority with
no distribution being made in any category set forth below unless and until the
preceding category has been satisfied in full either by payment or by setting
aside of a cash reserve for payment of same.

     (a) in payment of all debts, obligations, liabilities, costs and expenses
incurred in connection with or on account of the Company;

     (b) in repayment of any loans and accrued interest thereon made by a
Lending Member pursuant to Section 4.03(a)(ii);

     (c) in repayment of Contributions by the Member in accordance with their
Sharing Ratios, subject to the provisions of Section 4.03.

     (d) after having satisfied (a), (b) and (c) above, receipts and revenues of
the Company shall represent the profits of the Company and shall be distributed
in the following order of priority:

          (i) the Contributions made by the Members to the Company pursuant to
     Sections 4.01 and 4.02 herein shall bear interest at a rate which is two
     percent (2%) per annum greater than the prime rate charged by the Bank of
     Nova Scotia to its most creditworthy customers of U.S. Dollar demand loans,
     but in no event shall the rate of interest exceed the maximum rate
     permitted by laws, from the date of such advance until repaid to such
     Member in accordance with (c) above.

          (ii) after having satisfied (a), (b), (d) and (d)(i) above, the
     receipts and revenues of the Company shall be distributed to the Members
     pro rate and pari passu in accordance with their Sharing Ratios.

However, no distribution of profits shall be made until after completion of any
development and/or construction activities undertaken by the Company, without
the agreement of the Members.


                                      -11-



                                   ARTICLE VI
                                    MANAGERS

     6.01 MANAGEMENT BY MANAGERS. (a) Except for situations in which the
approval of the Members is required by these Regulations or by nonwaivable
provisions of applicable law, and subject to the provisions of Section 6.02, (i)
the powers of the Company shall be exercised by or under the authority of, and
the business and affairs of the Company shall be managed under the direction of,
the Managers; and (ii) the Managers may make all decisions and take all actions
for the Company not otherwise provided for in these Regulations, including,
without limitation, the following:

          (i) entering into, making, and performing contracts, agreements, and
     other undertakings binding the Company that may be necessary, appropriate,
     or advisable in furtherance of the purposes of the Company and making all
     decisions and waivers thereunder;

          (ii) opening and maintaining bank and investment accounts and
     arrangements, drawing checks and other orders for the payment of money, and
     designating individuals with authority to sign or give instructions with
     respect to those accounts and arrangements;

          (iii) maintaining the assets of the Company in good order;

          (iv) collecting sums due the Company;

          (v) to the extent that funds of the Company are available therefor,
     paying debts and obligations of the Company;

          (vi) acquiring, utilizing for Company purposes, and Disposing of any
     asset of the Company;

          (vii) borrowing money or otherwise committing the credit of the
     Company for Company activities and voluntary prepayments or extensions of
     debt;

          (viii) selecting, removing, and changing the authority and
     responsibility of lawyers, accountants, and other advisers and consultants;

          (ix) obtaining insurance for the Company;

          (x) determining distributions of Company cash and other property as
     provided in Section 5.02;

          (xi) establishing a seal for the Company;

          (xii) selling, leasing, exchanging or otherwise disposing of
     (including by way of a pledge, mortgage, deed of trust or trust indenture)
     all or any portion of the Company's property and assets (with or without
     good will); and


                                      -12-



          (xiii) being a party to (i) a merger, or (ii) an exchange or
     acquisition of the type described in article 5.02 of the TBCA.

     (b) Notwithstanding the provisions of Section 6.01(a), the Managers may not
cause the Company to do any of the following without complying with the
applicable requirements set forth below:

          (i) amend or restate the Articles, without complying with the
     applicable procedures set forth in the Act and the TBCA, including, without
     limitation, the requirement in article 4.02 of the TBCA regarding approval
     by the Members (unless such provision is rendered inapplicable by another
     provision of applicable law).

     6.02 ACTIONS BY MANAGERS; COMMITTEES; DELEGATION OF AUTHORITY AND DUTIES.
(a) In managing the business and affairs of the Company and exercising its
powers, the Managers shall act (i) collectively through meetings and written
consents pursuant to Sections 6.05 and 6.07; (ii) through committees pursuant to
Section 6.02(b); and (iii) through Managers to whom authority and duties have
been delegated pursuant to Section 6.02(c).

     (b) The Managers may, from time to time, designate one or more committees,
each of which shall be comprised of one or more Managers. Any such committee, to
the extent provided in such resolution or in the Articles or these Regulations,
shall have and may exercise all of the authority of the Managers, subject to the
limitations set forth in the Act and the TBCA. At every meeting of any such
committee, the presence of a majority of all the members thereof shall
constitute a quorum, and the affirmative vote of a majority of the members
present shall be necessary for the adoption of any resolution. The Managers may
dissolve any committee at any time, unless otherwise provided in the Articles or
these Regulations.

     (c) The Managers hereby delegate to each of the Managers (acting by them
self and without the necessity of any other approval or authorization) or to an
authorized representative of the Company the authority to take any of the
actions authorized in Section 6.01(a) hereof. In addition, the Managers may
assign titles (including, without limitation, president, vice president,
secretary, assistant secretary, treasurer and assistant treasurer) to any such
Manager. Unless the Managers decide otherwise, if the title is one commonly used
for officers of a business corporation formed under the TBCA, the assignment of
such title shall constitute the delegation to such Manager of the authority and
duties that are normally associated with that office, subject to any specific
delegation of authority and duties made pursuant to the first sentence of this
Section 6.02(c). Any number of titles may be held by the same Manager. Any
delegation pursuant to this Section 6.02(c) may be revoked at any time by the
Managers.

     (d) Any Person dealing with the Company, other than a Member, may rely on
the authority of any Manager, authorized representative or officer in taking any
action in the name of the Company without inquiry into the provisions of these
Regulations or compliance herewith, regardless of whether that action actually
is taken in accordance with the provisions of these Regulations.

     6.03 NUMBER AND TERM OF OFFICE. The number of Managers of the Company shall
be determined from time to time by resolution of the Managers; provided,
however, that no decrease in the number of Managers that would have the effect
of shortening the term of an incumbent Manager may be made by the Managers. If
the Managers make no such determination, the number of Managers shall be the
number set forth in the Articles as the number of Managers constituting the
initial Managers. Each Manager shall hold office for the


                                      -13-



term for which he is elected and thereafter until his successor shall have been
elected and qualified, or until his earlier death, resignation or removal.
Unless otherwise provided in the Articles, Managers need not be Members or
residents of the State of Texas.

     6.04 VACANCIES; REMOVAL; RESIGNATION. Any Manager position to be filled by
reason of an increase in the number of Managers may be filled by election at an
annual or special meeting of Members called for that purpose. Any vacancy
occurring in the Managers other than by reason of an increase in the number of
Managers may be filled (a) by election at an annual or special meeting of the
Members called for that purpose or (b) by the affirmative vote of a majority of
the remaining Managers though less than a quorum of the Managers. A Manager
elected to fill a vacancy occurring other than by reason of an increase in the
number of Managers shall be elected for the unexpired term of his predecessor in
office. At any meeting of Members at which a quorum of Members is present called
expressly for that purpose, or pursuant to a written consent adopted pursuant to
these Regulations, any Manager may be removed, with or without cause, by a
Required Interest. Any Manager may resign at any time. Such resignation shall be
made in writing and shall take effect at the time specified therein, or if no
time be specified, at the time of its receipt by the remaining Managers. The
acceptance of a resignation shall not be necessary to make it effective, unless
expressly so provided in the resignation.

     6.05 MEETINGS. (a) Unless otherwise required by law or provided in the
Articles or these Regulations, a majority of the total number of Managers fixed
by, or in the manner provided in, the Articles or these Regulations shall
constitute a quorum for the transaction of business of the Managers, and the act
of a majority of the Managers present at a meeting at which a quorum is present
shall be the act of the Managers. A Manager who is present at a meeting of the
Managers at which action on any Company matter is taken shall be presumed to
have assented to the action unless his dissent shall be entered in the minutes
of the meeting or unless he shall file his written dissent to such action with
the Person acting as secretary of the meeting before the adjournment thereof or
shall deliver such dissent to the Company immediately after the adjournment of
the meeting. Such right to dissent shall not apply to a Manager who voted in
favor of such action.

     (b) Meetings of the Managers may be held at such place or places as shall
be determined from time to time by resolution of the Managers. At all meetings
of the Managers, business shall be transacted in such order as shall from time
to time be determined by resolution of the Managers. Attendance of a Manager at
a meeting shall constitute a waiver of notice of such meeting, except where a
Manager attends a meeting for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully
called or convened.

     (c) In connection with any annual meeting of Members at which Managers were
elected, the Managers may, if a quorum is present, hold its first meeting for
the transaction of business immediately after and at the same place as such
annual meeting of the Members. Notice of such meeting at such time and place
shall not be required.

     (d) Regular meetings of the Managers shall be held at such times and places
as shall be designated from time to time by resolution of the Managers. Notice
of such regular meetings shall not be required.


                                      -14-



     (e) Special meetings of the Managers may be called by any Manager on at
least 24 hours notice to each other Manager. Such notice need not state the
purpose or purposes of, nor the business to be transacted at, such meeting,
except as may otherwise be required by law or provided for by the Articles or
these Regulations.

     6.06 APPROVAL OR RATIFICATION OF ACTS OR CONTRACTS BY MEMBERS. The Managers
in their discretion may submit any act or contract for approval or ratification
at any annual meeting of the Members, or at any special meeting of the Members
called for the purpose of considering any such act or contract, and any act or
contract that shall be approved or be ratified by a Required Interest shall be
as valid and as binding upon the Company and upon all the Members as if it shall
have been approved or ratified by every Member of the Company.

     6.07 ACTION BY WRITTEN CONSENT OR TELEPHONE CONFERENCE. Any action
permitted or required by the Act, the TBCA, the Articles or these Regulations to
be taken at a meeting of the Managers or any committee designated by the
Managers may be taken without a meeting if a consent in writing, setting forth
the action to be taken, is signed by all the Managers or members of such
committee, as the case may be. Such consent shall have the same force and effect
as a unanimous vote at a meeting and may be stated as such in any document or
instrument filed with the Secretary of State of Texas, and the execution of such
consent shall constitute attendance or presence in person at a meeting of the
Managers or any such committee, as the case may be. Subject to the requirements
of the Act, the TBCA, the Articles or these Regulations for notice of meetings,
unless otherwise restricted by the Articles, Managers, or members of any
committee designated by the Managers, may participate in and hold a meeting of
the Managers or any committee of Managers, as the case may be, by means of a
conference telephone or similar communications equipment by means of which all
Persons participating in the meeting can hear each other, and participation in
such meeting shall constitute attendance and presence in person at such meeting,
except where a Person participates in the meeting for the express purpose of
objecting to the transaction of any business on the ground that the meeting is
not lawfully called or convened.

     6.08 COMPENSATION. The Managers shall reserve such compensation, if any,
for their services as may be designated from time to time by all of the
Managers. In addition, the Managers shall be entitled to be reimbursed for
out-of-pocket costs and expenses incurred in the course of their service
hereunder, including the portion of their overhead reasonably allocable to
Company activities.

     6.09 CONFLICTS OF INTEREST. Subject to the other express provisions of
these Regulations, each Manager, Member and officer of the Company at any time
and from time to time may engage in and possess interests in other business
ventures of any and every type and description, independently or with others,
including ones in competition with the Company, with no obligation to offer to
the Company or any other Member, Manager or officer the right to participate
therein. The Company may transact business with any Manager, Member, officer or
Affiliate thereof, provided the terms of those transactions are no less
favorable than those the Company could obtain from unrelated third parties.

     6.10 OFFICERS. (a) The Managers may, from time to time, designate one or
more Persons to be officers of the Company. No officer need be a resident of the
State of Texas, a Member or a Manager. Any officers so designated shall have
such authority and perform such duties as the Managers may, from time to time,
delegate to them. The Managers may assign titles to particular officers. Unless
the Managers decide otherwise, if the title is one commonly


                                      -15-



used for officers of a business corporation formed under the TBCA, the
assignment of such title shall constitute the delegation to such officer of the
authority and duties that are normally associated with that office, subject to
(i) any specific delegation of authority and duties made to such officer by the
Managers pursuant to the third sentence of this Section 6.10(b), or (ii) any
delegation of authority and duties made to one or more Mangers pursuant to
Section 6.02(a). Each officer shall hold office until his successor shall be
duly designated and shall quality or until his death or until he shall resign or
shall have been removed in the manner hereinafter provided. Any number of
offices may be held by the same Person. The salaries or other compensation, if
any, of the officers and agents of the Company shall be fixed from time to time
by the Managers.

     (b) Any officer may resign as such at any time. Such resignation shall be
made in writing and shall take effect at the time specified therein, or if no
time be specified, at the time of its receipt by the Managers. The acceptance of
a resignation shall not be necessary to make it effective, unless expressly so
provided in the resignation. Any officer may be removed as such, either with or
without cause, by the Managers whenever in their judgment the best interests of
the Company will be served thereby; provided, however, that such removal shall
be without prejudice to the contract rights, if any, of the Person so removed.
Designation of an officer shall not of itself create contract rights. Any
vacancy occurring in any office of the Company (other than Manager) may be
filled by the Managers.

                                   ARTICLE VII
                               MEETINGS OF MEMBERS

     7.01 MEETINGS. (a) A quorum shall be present at a meeting of Members if the
holders of a Required Interest are represented at the meeting in person or by
proxy. With respect to any matter, other than a matter for which the affirmative
vote of the holders of a specified portion of the Sharing Ratios of all Members
entitled to vote is required by the Act, the affirmative vote of a Required
Interest at a meeting of Members at which a quorum is present shall be the act
of the Members.

     (b) All meetings of the Members shall be held at the principal place of
business of the Company or at such other place within or without the State of
Texas as shall be specified or fixed in the notices or waivers of notice
thereof; provided that any or all Members may participate in any such meeting by
means of conference telephone or similar communications equipment pursuant to
Section 7.05.

     (c) Notwithstanding the other provisions of the Articles or these
Regulations, the chairman of the meeting or the holders of a Required Interest
shall have the power to adjourn such meeting from time to time, without any
notice other than announcement at the meeting of the time and place of the
holding of the adjourned meeting. If such meeting is adjourned by the Members,
such time and place shall be determined by a vote of the holders of a Required
Interest. Upon the resumption of such adjourned meeting, any business may be
transacted that might have been transacted at the meeting as originally called.

     (d) An annual meeting of the Members, for the election of the Managers and
for the transaction of such other business as may properly come before the
meeting, shall be held at such place, within or without the State of Texas, on
such date and at such time as the Managers


                                      -16-



shall fix and set forth in the notice of the meeting, which date shall be within
13 months subsequent to the date of organization of the Company or the last
annual meeting of Members, whichever most recently occurred.

     (e) Special meetings of the Members for any proper purpose or purposes may
be called at any time by the Managers or the holders of at least ten percent of
the Sharing Ratios of all Members. If not otherwise stated in or fixed in
accordance with the remaining provisions hereof, the record date for determining
Members entitled to call a special meeting is the date any Member first signs
the notice of that meeting. Only business within the purpose or purposes
described in the notice (or waiver thereof) required by these Regulations may be
conducted at a special meeting of the Members.

     (f) Written or printed notice stating the place, day and hour of the
meeting and, in the case of a special meeting, the purpose or purposes for which
the meeting is called, shall be delivered not less than ten nor more than 60
days before the date of the meeting, either personally or by mail, by or at the
direction of the Managers or Person calling the meeting, to each Member entitled
to vote at such meeting. If mailed, any such notice shall be deemed to be
delivered when deposited in the United States mail, addressed to the Member at
his address provided for on Exhibit A, with postage thereon prepaid.

     (g) The date on which notice of a meeting of Members is mailed or the date
on which the resolution of the Managers declaring a distribution is adopted, as
the case may be, shall be the record date for the determination of the Members
entitled to notice of or to vote at such meeting, including any adjournment
thereof, or the Members entitled to receive such distribution.

     (h) The right of Members to cumulative voting in the election of Managers
is expressly prohibited.

     7.02 VOTING LIST. The Managers shall make, at least ten days before each
meeting of Members, a complete list of the Members entitled to vote at such
meeting or any adjournment thereof, arranged in alphabetical order, with the
address of and the Sharing Ratios held by each, which list, for a period of ten
days prior to such meeting, shall be kept on file at the registered office or
principal place of business of the Company and shall be subject to inspection by
any Member at any time during usual business hours. Such list shall also be
produced and kept open at the time and place of the meeting and shall be subject
to the inspection of any Member during the whole time of the meeting. The
original membership records shall be prima-facie evidence as to who are the
Members entitled to examine such list or transfer records or to vote at any
meeting of Members. Failure to comply with the requirements of this Section
shall not affect the validity of any action taken at the meeting.

     7.03 PROXIES. A Member may vote either in person or by proxy executed in
writing by the Member. A telegram, telex, cablegram or similar transmission by
the Member, or a photographic, photostatic, facsimile or similar reproduction of
a writing executed by the Member shall be treated as an execution in writing for
purposes of this Section. Proxies for use at any meeting of Members or in
connection with the taking of any action by written consent shall be filed with
the Managers, before or at the time of the meeting or execution of the written
consent, as the case may be. All proxies shall be received and taken charge of
and all ballots shall be received and canvassed by the Managers, who shall
decide all questions touching upon the qualification of voters, the validity of
the proxies, and the acceptance or rejection of votes,


                                      -17-



unless an inspector or inspectors shall have been appointed by the chairman of
the meeting, in which event such inspector or inspectors shall decide all such
questions. No proxy shall be valid after 11 months from the date of its
execution unless otherwise provided in the proxy. A proxy shall be revocable
unless the proxy form conspicuously states that the proxy is irrevocable and the
proxy is coupled with an interest. Should a proxy designate two or more Persons
to act as proxies, unless that instrument shall provide to the contrary, a
majority of such Persons present at any meeting at which their powers thereunder
are to be exercised shall have and may exercise all the powers of voting or
giving consents thereby conferred, or if only one be present, then such powers
may be exercised by that one; or, if an even number attend and a majority do not
agree on any particular issue, the Company shall not be required to recognize
such proxy with respect to such issue if such proxy does not specify how the
Sharing Ratios that are the subject of such proxy are to be voted with respect
to such issue.

     7.04 CONDUCT OF MEETINGS. All meetings of the Members shall be presided
over by the chairman of the meeting, who shall be a Manager (or representative
thereof) designated by a majority of the Managers. The chairman of any meeting
of Members shall determine the order of business and the procedure at the
meeting, including such regulation of the manner of voting and the conduct of
discussion as seem to him in order.

     7.05 ACTION BY WRITTEN CONSENT OR TELEPHONE CONFERENCE. (a) Any action
required or permitted to be taken at any annual or special meeting of Members
may be taken without a meeting, without prior notice, and without a vote, if a
consent or consents in writing, setting forth the action so taken, shall be
signed by the holder or holders of not less than the minimum Sharing Ratios that
would be necessary to take such action at a meeting at which the holders of all
Sharing Ratios entitled to vote on the action were present and voted. Every
written consent shall bear the date of signature of each Member who signs the
consent. No written consent shall be effective to take the action that is the
subject to the consent unless, within 60 days after the date of the earliest
dated consent delivered to the Company in the manner required by this Section, a
consent or consents signed by the holder or holders of not less than the minimum
Sharing Ratios that would be necessary to take the action that is the subject of
the consent are delivered to the Company by delivery to its registered office,
its principal place of business, or the Managers. Delivery shall be by hand or
certified or registered mail, return receipt requested. Delivery to the
Company's principal place of business shall be addressed to the Managers. A
telegram, telex, cablegram or similar transmission by a Member, or a
photographic, photostatic, facsimile or similar reproduction of a writing signed
by a Member, shall be regarded as signed by the Member for purposes of this
Section. Prompt notice of the taking of any action by Members without a meeting
by less than unanimous written consent shall be given to those Members who did
not consent in writing to the action.

     (b) The record date for determining Members entitled to consent to action
in writing without a meeting shall be the first date on which a signed written
consent setting forth the action taken or proposed to be taken is delivered to
the Company by delivery to its registered office, its principal place of
business, or the Managers. Delivery shall be by hand or by certified or
registered mail, return receipt requested. Delivery to the Company's principal
place of business shall be addressed to the Managers.

     (c) If any action by Members is taken by written consent, any articles or
documents filed with the Secretary of State of Texas as a result of the taking
of the action shall state, in lieu


                                      -18-



of any statement required by the Act or the TBCA concerning any vote of Members,
that written consent has been given in accordance with the provisions of the Act
and the TBCA and that any written notice required by the Act and the TBCA has
been given.

     (d) Members may participate in and hold a meeting by means of conference
telephone or similar communications equipment by means of which all Persons
participating in the meeting can hear each other, and participation in such
meeting shall constitute attendance and presence in person at such meeting,
except where a Person participates in the meeting for the express purpose of
objecting to the transaction of any business on the ground that the meeting is
not lawfully called or convened.

                                  ARTICLE VIII
                                 INDEMNIFICATION

     8.01 RIGHT TO INDEMNIFICATION. Subject to the limitations and conditions as
provided in this Article VIII each Person who was or is made a party or is
threatened to be made a party to or is involved in any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative,
arbitrative or investigative (hereinafter a "Proceeding"), or any appeal in such
a Proceeding or any inquiry or investigation that could lead to such a
Proceeding, by reason of the fact that he or she, or a Person of whom he or she
is the legal representative, is or was a Manager of the Company or while a
Manager of the Company is or was serving at the request of the Company as a
Manager, director, officer, partner, venturer, proprietor, trustee, employee,
agent, or similar functionary of another foreign or domestic limited liability
company, corporation, partnership, joint venture, sole proprietorship, trust,
employee benefit plan or other enterprise shall be indemnified by the Company to
the fullest extent permitted by the Act and the TBCA, as the same exist or may
hereafter be amended (but, in the case of any such amendment, only to the extent
that such amendment permits the Company to provide broader indemnification
rights than said law permitted the Company to provide prior to such amendment)
against judgments, penalties (including excise and similar taxes and punitive
damages), fines, settlements and reasonable expenses (including, without
limitation, attorneys' fees) actually incurred by such Person in connection with
such Proceeding, and indemnification under this Article VIII shall continue as
to a Person who has ceased to serve in the capacity which initially entitled
such Person to indemnify hereunder. The rights granted pursuant to this Article
VIII shall be deemed contract rights, and no amendment, modification or repeal
of this Article VIII shall have the effect of limiting or denying any such
rights with respect to actions taken or Proceedings arising prior to any such
amendment, modification or repeal. It is expressly acknowledged that the
indemnification provided in this Article VIII could involve indemnification for
negligence or under theories of strict liability.

     8.02 ADVANCE PAYMENT. The right to indemnification conferred in this
Article VIII shall include the right to be paid or reimbursed by the Company the
reasonable expenses incurred by a Person of the type entitled to be indemnified
under Section 8.01 who was, is or is threatened to be made a named defendant or
respondent in a Proceeding in advance of the final disposition of the Proceeding
and without any determination as to the Person's ultimate entitlement to
indemnification; provided, however, that the payment of such expenses incurred
by any such Person in advance of the final disposition of a Proceeding, shall be
made only upon delivery to the Company of a written affirmation by such Manager
of his or her good faith belief that he has met the standard of conduct for
indemnification under this Article VIII and a written


                                      -19-



undertaking, by or on behalf of such Person, to repay all amounts so advanced if
it shall ultimately be determined that such indemnified Person is not entitled
to be indemnified under this Article VIII or otherwise.

     8.03 INDEMNIFICATION OF OFFICERS, EMPLOYEES, AND AGENTS. The Company, by
adoption of a resolution of the Managers, may indemnity and advance expenses to
an officer, employee or agent of the Company to the same extent and subject to
the same conditions under which it may indemnify and advance expenses to
Managers under this Article VIII; and, the Company may indemnify and advance
expenses to Persons who are not or were not Managers, officers, employees or
agents of the Company but who are or were serving at the request of the Company
as a Manager, director, officer, partner, venturer, proprietor, trustee,
employee, agent or similar functionary of another foreign or domestic limited
liability company, corporation, partnership, joint venture, sole proprietorship,
trust, employee benefit plan or other enterprise against any liability asserted
against him and incurred by him in such a capacity or arising out of his status
as such a Person to the same extent that it may indemnity and advance expenses
to Managers under this Article VIII.

     8.04 APPEARANCE AS A WITNESS. Notwithstanding any other provision of this
Article VIII, the Company may pay or reimburse expenses incurred by a Manager in
connection with his appearance as a witness or other participation in a
Proceeding at a time when he is not a named defendant or respondent in the
Proceeding.

     8.05 NONEXCLUSIVITY OF RIGHTS. The right to indemnification and the
advancement and payment of expenses conferred in this Article VIII shall not be
exclusive of any other right which a Manager or other Person indemnified
pursuant to Section 8.03 may have or hereafter acquire under any law (common or
statutory), provision of the Articles or these Regulations, agreement, vote of
Members or disinterested Managers or otherwise.

     8.06 INSURANCE. The Company may purchase and maintain insurance, at its
expense, to protect itself and any Person who is or was serving as a Manager,
officer, employee or agent of the Company or is or was serving at the request of
the Company as a Manager, director, officer, partner, venturer, proprietor,
trustee, employee, agent or similar functionary of another foreign or domestic
limited liability company, corporation, partnership, joint venture, sole
proprietorship, trust, employee benefit plan or other enterprise against any
expense, liability or loss, whether or not the Company would have the power to
indemnify such Person against such expense, liability or loss under this Article
VIII.

     8.07 MEMBER NOTIFICATION. To the extent required by law, any
indemnification of or advance of expenses to a Manager in accordance with this
Article VIII shall be reported in writing to the Members with or before the
notice or waiver of notice of the next Members' meeting or with or before the
next submission to Members of a consent to action without a meeting and, in any
case, within the 12-month period immediately following the date of the
indemnification or advance.

     8.08 SAVINGS CLAUSE. If this Article VIII or any portion hereof shall be
invalidated on any ground by any court of competent jurisdiction, then the
Company shall nevertheless indemnify and hold harmless each Manager or any other
Person indemnified pursuant to this Article VIII as to costs, charges and
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement with respect to any action, suit or proceeding, whether civil,


                                      -20-



criminal, administrative or investigative to the full extent permitted by any
applicable portion of this Article VIII that shall not have been invalidated and
to the fullest extent permitted by applicable law.

                                   ARTICLE IX
                                      TAXES

     9.01 TAX RETURNS. The Managers shall cause to be prepared and filed all
necessary federal and state income tax returns for the Company, including making
the elections described in Section 9.02. Each Member shall furnish to the
Managers all pertinent information in its possession relating to Company
operations that is necessary to enable the Company's income tax returns to be
prepared and filed.

     9.02 TAX ELECTIONS. The Company shall make the following elections on the
appropriate tax returns:

          (a) to adopt the year ending on May 31 as the Company's fiscal year;

          (b) to adopt a method of accounting as the Managers may determine from
     time to time;

          (c) if a distribution of Company property as described in section 734
     of the Code occurs or if a transfer of a Membership Interest as described
     in section 743 of the Code occurs, on written request of any Member, to
     elect, pursuant to section 754 of the Code, to adjust the basis of Company
     properties;

          (d) to elect to amortize the organizational expenses of the Company
     and the startup expenditures of the Company under Section 195 of the Code
     ratably over a period of 60 months as permitted by section 709(b) of the
     Code; and

          (e) any other election the Managers may deem appropriate and in the
     best interests of the Members.

Neither the Company nor any Manager or Member may make an election for the
Company to be excluded from the application of the provisions of subchapter K of
chapter 1 of subtitle A of the Code or any similar provisions of applicable
state law, and no provision of these Regulations (including, without limitation,
Section 2.06) shall be construed to sanction or approve such an election.

     9.03 "TAX MATTERS PARTNER." A majority of the Managers who are Members
shall designate one Manager that is a Member to be the "tax matters partner" of
the Company pursuant to section 6231(a)(7) of the Code; or, if there is no
Manager that is a Member, the "tax matters partner" shall be a Member that is
designated as such by a Required Interest. Any Member who is designated "tax
matters partner" shall take such action as may be necessary to cause each other
Member to become a "notice partner" within the meaning of section 6223 of the
Code. Any Member who is designated "tax matters partner" shall inform each other
Member of all significant matters that may come to its attention in its capacity
as "tax matters partner" by giving notice thereof on or before the fifth
Business Day after becoming aware


                                      -21-



thereof and, within that time, shall forward to each other Member copies of all
significant written communications it may receive in that capacity. Any Member
who is designated "tax matters partner" may not take any action contemplated by
sections 6222 through 6232 of the Code without the consent of a Required
Interest, but this sentence does not authorize such Manager (or any other
Manager) to take any action left to the determination of an individual Member
under sections 6222 through 6232 of the Code.

                                    ARTICLE X
                   BOOKS, RECORDS, REPORTS, AND BANK ACCOUNTS

     10.01 MAINTENANCE OF BOOKS. The Company shall keep books and records of
accounts and shall keep minutes of the proceedings of its Members, its Managers
and each committee of the Managers. The books of account for the Company shall
be maintained on a cash basis in accordance with the terms of these Regulations,
except that the capital accounts of the Members shall be maintained in
accordance with Section 4.06. The calendar year shall be the accounting year of
the Company.

     10.02 REPORTS. On or before the 120th day following the end of each fiscal
year during the term of the Company, the Managers shall cause each Member to be
furnished with a balance sheet, an income statement, and a statement of changes
in Members' capital of the Company for, or as of the end of, that year certified
by a recognized firm of certified public accountants. These financial statements
must be prepared in accordance with accounting principles generally employed for
cash basis records consistently applied (except as therein noted) and must be
accompanied by a report of the certified public accountants certifying the
statements and stating that (a) their examination was made in accordance with
generally accepted auditing standards and, in their opinion, the financial
statements fairly present the financial position, financial results of
operations, and changes in Members' capital in accordance with accounting
principles generally employed for cash-basis records consistently applied
(except as therein noted) and (b) in making the examination and reporting on the
financial statements described above, nothing came to their attention that
caused them to believe that (i) the income and revenues were not paid or
credited in accordance with the financial and accounting provisions of these
Regulations, (ii) the costs and expenses were not charged in accordance with the
financial and accounting provisions of these Regulations, or (iii) the Managers
or any Member failed to comply in any material respect with the financial and
accounting provisions of these Regulations, or if they do conclude that the
Managers or a Member so failed, specifying the nature and period of existence of
the failure. The Managers also may cause to be prepared or delivered such other
reports as they may deem appropriate. The Company shall bear the costs of all
these reports.

     10.03 ACCOUNTS. The Managers shall establish and maintain one or more
separate bank and investment accounts and arrangements for Company funds in the
Company name with financial institutions and firms that the Managers determine.
The Managers may not commingle the Company's funds with the funds of any Member;
however, Company funds may be invested in a manner the same as or similar to the
Managers' investment of their own funds or investments by their Affiliates.


                                      -22-



                                   ARTICLE XI
                             BANKRUPTCY OF A MEMBER

     11.01 BANKRUPT MEMBERS. Subject to Section 12.01(c), if any Member becomes
a Bankrupt Member, the Company shall have the option, exercisable by notice from
the Managers to the Bankrupt Member (or its representative) at any time prior to
the 180th day after receipt of notice of the occurrence of the event causing it
to become a Bankrupt Member, to buy, and on the exercise of this option the
Bankrupt Member or its representative shall sell, its Membership Interest. The
purchase price shall be an amount equal to the fair market value thereof
determined by agreement of the Bankrupt Member (or its representative) and the
Managers; however, if those Persons do not agree on the fair market value on or
before the 30th day following the exercise of the option, either such Person, by
notice to the other, may require the determination of fair market value to be
made by an independent appraiser specified in that notice. If the Person
receiving that notice objects on or before the tenth day following receipt to
the independent appraiser designated in that notice, and those Persons otherwise
fail to agree on an independent appraiser, either such Person may petition the
United States District Judge for the Northern District of Texas (Dallas
Division) then senior in service to designate an independent appraiser. The
determination of the independent appraiser, however designated, is final and
binding on all parties. The Bankrupt Member and the Company each shall pay
one-half of the costs of the appraisal. The purchaser shall pay the fair market
value as so determined in four equal cash installments, the first due on closing
and the remainder (together with accumulated interest on the amount unpaid at
the General Interest Rate) due on each of the first three anniversaries thereof.
The payment to be made to the Bankrupt Member or its representative pursuant to
this Section 11.01 is in complete liquidation and satisfaction of all the rights
and interest of the Bankrupt Member and its representative (and of all Persons
claiming by, through, or under the Bankrupt Member and its representative) in
and in respect of the Company, including, without limitation, any Membership
Interest, any rights in specific Company property, and any rights against the
Company and (insofar as the affairs of the Company are concerned) against the
Members, and constitutes a compromise to which all Members have agreed pursuant
to article 5.02(D) of the Act.

                                   ARTICLE XII
                    DISSOLUTION, LIQUIDATION, AND TERMINATION

     12.01 DISSOLUTION. The Company shall dissolve and its affairs shall be
wound up on the first to occur of the following:

          (a) the written consent of a Required Interest;

          (b) the expiration of the period fixed for the duration of the Company
     set forth in the Articles;

          (c) any Manager who is a Member (or, if there is no Manager who is a
     Member, any Member) shall become a Bankrupt Member (with or without the
     consent of a Required Interest); provided, however, that if the event
     described in this Section 12.01(c) shall occur and there shall be at least
     one other Member remaining, the Company shall not be dissolved, and the
     business of the Company shall be continued, if all Members so agree; and


                                      -23-



          (d) entry of a decree of judicial dissolution of the Company under
     article 6.02 of the Act.

Except as provided in Section 12.01(c), the death, retirement, resignation,
expulsion, bankruptcy or dissolution of a Member, or the occurrence of any other
event that terminates the continued membership of a Member in the Company, shall
not cause a dissolution of the Company.

     12.02 LIQUIDATION AND TERMINATION. On dissolution of the Company, the
Managers shall act as liquidator or may appoint one or more Members as
liquidator. The liquidator shall proceed diligently to wind up the affairs of
the Company and make final distributions as provided herein and in the Act. The
costs of liquidation shall be borne as a Company expense. Until final
distribution, the liquidator shall continue to operate the Company properties
with all of the power and authority of the Managers. The steps to be
accomplished by the liquidator are as follows:

          (a) as promptly as possible after dissolution and again after final
     liquidation, the liquidator shall cause a proper accounting to be made by a
     recognized firm of certified public accountants of the Company's assets,
     liabilities, and operations through the last day of the calendar month in
     which the dissolution occurs or the final liquidation is completed, as
     applicable;

          (b) the liquidator shall cause the notice described in article
     6.05(A)(2) of the Act to be mailed to each known creditor of and claimant
     against the Company in the manner described in such article 6.05(A)(2) of
     the Act;

          (c) the liquidator shall pay, satisfy or discharge from Company funds
     all of the debts, liabilities and obligations of the Company (including,
     without limitation, all expenses incurred in liquidation and any advances
     described in Section 4.05) or otherwise make adequate provision for payment
     and discharge thereof (including, without limitation, the establishment of
     a cash escrow fund for contingent liabilities in such amount and for such
     term as the liquidator may reasonably determine); and

          (d) all remaining assets of the Company shall be distributed to the
     Members as follows:

               (i) the liquidator may sell any or all Company property,
          including to Members, and any resulting gain or loss from each sale
          shall be computed and allocated to the capital accounts of the
          Members;

               (ii) with respect to all Company property that has not been sold,
          the fair market value of that property shall be determined and the
          capital accounts of the Members shall be adjusted to reflect the
          manner in which the unrealized income, gain, loss, and deduction
          inherent in property that has not been reflected in the capital
          accounts previously would be allocated among the Members if there were
          a taxable disposition of that property for the fair market value of
          that property on the date of distribution; and


                                      -24-



               (iii) Company property shall be distributed among the Members in
          accordance with the positive capital account balances of the Members,
          as determined after taking into account all capital account
          adjustments for the taxable year of the Company during which the
          liquidation of the partnership occurs (other than those made by reason
          of this clause (iii)); and those distributions shall be made by the
          end of the taxable year of the Company during which the liquidation of
          the Company Occurs (or, if later, 90 days after the date of the
          liquidation).

All distributions in kind to the Members shall be made subject to the liability
of each distributee for costs, expenses, and liabilities theretofore incurred or
for which the Company has committed prior to the date of termination and those
costs, expenses, and liabilities shall be allocated to the distributee pursuant
to this Section 12.02. The distribution of cash and/or property to a Member in
accordance with the provisions of this Section 12.02 constitutes a complete
return to the Member of its Capital Contributions and a complete distribution to
the Member of its Membership Interest and all the Company's property and
constitutes a compromise to which all Members have consented within the meaning
of article 5.02(D) of the Act. To the extent that a Member returns funds to the
Company, it has no claim against any other Member for those funds.

     12.03 DEFICIT CAPITAL ACCOUNTS. Notwithstanding anything to the contrary
contained in these Regulations, and notwithstanding any custom or rule of law to
the contrary, to the extent that the deficit, if any, in the capital account of
any Member results from or is attributable to deductions and losses of the
Company (including non-cash items such as depreciation), or distributions of
money pursuant to these Regulations to all Members in proportion to their
respective Sharing Ratios, upon dissolution of the Company such deficit shall
not be an asset of the Company and such Members shall not be obligated to
contribute such amount to the Company to bring the balance of such Member's
capital account to zero.

     12.04 ARTICLES OF DISSOLUTION. On completion of the distribution of Company
assets as provided herein, the Company is terminated, and the Managers (or such
other Person or Persons as the Act may require or permit) shall file Articles of
Dissolution with the Secretary of State of Texas, cancel any other filings made
pursuant to Section 2.05, and take such other actions as may be necessary to
terminate the Company.

                                  ARTICLE XIII
                               GENERAL PROVISIONS

     13.01 OFFSET. Whenever the Company is to pay any sum to any Member, any
amounts that Member owes the Company may be deducted from that sum before
payment.

     13.02 NOTICES. Except as expressly set forth to the contrary in these
Regulations, all notices, requests, or consents provided for or permitted to be
given under these Regulations must be in writing and must be given either by
depositing that writing in the United States mail, addressed to the recipient,
postage paid, and registered or certified with return receipt requested or by
delivering that writing to the recipient in person, by courier, or by facsimile
transmission; and a notice, request, or consent given under these Regulations is
effective on receipt by the Person to receive it. All notices, requests, and
consents to be sent to a Member must be sent


                                      -25-



to or made at the addresses given for that Member on Exhibit A or in the
instrument described in Section 3.03(d) or 3.04, or such other address as that
Member may specify by notice to the other Members. Any notice, request, or
consent to the Company or the Managers must be given to the Managers at the
following address: 15851 Dallas Parkway, Suite 100, Dallas, Texas 75248.
Whenever any notice is required to be given by law, the Articles or these
Regulations, a written waiver thereof, signed by the Person entitled to notice,
whether before or after the time stated therein, shall be deemed equivalent to
the giving of such notice.

     13.03 ENTIRE AGREEMENT; SUPERSEDURE. These Regulations constitute the
entire agreement of the Members and their Affiliates relating to the Company and
supersedes all prior contracts or agreements with respect to the Company,
whether oral or written.

     13.04 EFFECT OF WAIVER OR CONSENT. A waiver or consent, express or implied,
to or of any breach or default by any Person in the performance by that Person
of its obligations with respect to the Company is not a consent or waiver to or
of any other breach or default in the performance by that Person of the same or
any other obligations of that Person with respect to the Company. Failure on the
part of a Person to complain of any act of any Person or to declare any Person
in default with respect to the Company, irrespective of how long that failure
continues, does not constitute a waiver by that Person of its rights with
respect to that default until the applicable statute-of-limitations period has
run.

     13.05 AMENDMENT OR MODIFICATION. These Regulations may be amended or
modified from time to time only by a written instrument adopted by the Managers
and executed and agreed to by a Required Interest; provided, however, that (a)
an amendment or modification reducing a Member's Sharing Ratio or increasing its
Commitment (other than to reflect changes otherwise provided by these
Regulations) is effective only with that Member's consent, (b) an amendment or
modification reducing the required Sharing Ratio or other measure for any
consent or vote in these Regulations is effective only with the consent or vote
of Members having the Sharing Ratio or other measure theretofore required, and
(c) amendments of the type described in Section 3.04 may be adopted as therein
provided.

     13.06 BINDING EFFECT. Subject to the restrictions on Dispositions set forth
in these Regulations, these Regulations are binding on and inure to the benefit
of the Members and their respective heirs, legal representatives, successors,
and assigns.

     13.07 GOVERNING LAW; SEVERABILITY. THESE REGULATIONS ARE GOVERNED BY AND
SHALL BE CONSTRUED IN ACCORDANCE WITH LAW OF THE STATE OF TEXAS, EXCLUDING ANY
CONFLICT-OF-LAWS RULE OR PRINCIPLE THAT MIGHT REFER THE GOVERNANCE OR THE
CONSTRUCTION OF THESE REGULATIONS TO THE LAW OF ANOTHER JURISDICTION. In the
event of a direct conflict between the provisions of these Regulations and (a)
any provision of the Articles, or (b) any mandatory provision of the Act or (to
the extent such statutes are incorporated into the Act) the TBCA or the Texas
Miscellaneous Corporation laws Act, the application provision of the Articles,
the Act, the TBCA or the Texas Miscellaneous Corporation Laws Act shall control.
If any provision of these Regulations or the application thereof to any Person
or circumstance is held invalid or unenforceable to any extent, the remainder of
these Regulations and the application of that provision to other Persons or
circumstances is not affected thereby and that provision shall be enforced to
the greatest extent permitted by law.


                                      -26-



     13.08 FURTHER ASSURANCES. In connection with these Regulations and the
transactions contemplated hereby, each Member shall execute and deliver any
additional documents and instruments and perform any additional acts that may be
necessary or appropriate to effectuate and perform the provisions of these
Regulations and those transactions.

     13.09 WAIVER OF CERTAIN RIGHTS. Each Member irrevocably waives any right it
may have to maintain any action for dissolution of the Company or for partition
of the property of the Company.

     13.10 INDEMNIFICATION. To the fullest extent permitted by law, each Member
shall indemnify the Company, each Manager and each other Member and hold them
harmless from and against all losses, costs, liabilities, damages, and expenses
(including, without limitation, costs of suit and attorney's fees) they may
incur on account of any breach by that Member of these Regulations.

     13.11 NOTICE TO MEMBERS OF PROVISIONS OF THIS AGREEMENT. By executing these
Regulations, each Member acknowledges that it has actual notice of (a) all of
the provisions of this Agreement, including, without limitation, the
restrictions on the transfer of Membership Interests set forth in Article III,
and (b) all of the provisions of the Articles, including, without limitation,
the fact that the Articles provide that no Member shall have the preemptive
right to acquire any Membership Interests or securities of any class that may at
any time be issued, sold or offered for sale by the Company. Each Member hereby
agrees that these Regulations constitute adequate notice of all such provisions,
including, without limitation, any notice requirement under article 2.19(D) of
the TBCA and Chapter 8 of the Texas Uniform Commercial Code, and each Member
hereby waives any requirement that any further notice thereunder be given.

     13.12 COUNTERPARTS. These Regulations may be executed in any number of
counterparts with the same effect as if all signing parties had signed the same
document. All counterparts shall be construed together and constitute the same
instrument.

     13.13 ARBITRATION. If, at any time or from time to time during the
continuance of the Company or after the dissolution or other termination
thereof, any dispute, difference or question shall arise between any of the
Members, or their successors, assigns or nominees, touching or concerning the
Company of the property, assets, rights or transactions thereof, or the
dissolution or other termination thereof, or the property of the Company or the
construction, meaning or effect of these Regulations, or any provision hereof,
or the rights of obligations of the Members, or their successors, assigns or
nominees, under these Regulations or otherwise, with respect thereto, then every
such dispute, difference or question shall be submitted to and settled by
arbitration and the decision of the arbitrator appointed as hereinafter provided
to deal with such matter shall be accepted by all the Members to such dispute,
difference or question. The arbitration shall be conducted by a single
arbitrator agreed upon by the Members to the matter. The decision of the
arbitrator shall be final and binding upon all the Members to such dispute,
difference or question and their nominees, and there shall be no appeal
therefrom.


                                      -27-



     IN WITNESS WHEREOF, following adoption of these Regulations by the
Managers, the Members have executed these Regulations as of the date first set
forth above.

                                        MEMBERS:

                                        ELLY NEVADA, INC.,
                                        a Nevada corporation


                                        By: /s/ Elly Reisman
                                            ------------------------------------
                                            Elly Reisman, President


                                        NORMAN NEVADA, INC.,
                                        a Nevada corporation


                                        By: /s/ Norman Reisman
                                            ------------------------------------
                                            Norman Reisman, President


                                        LARRY NEVADA, INC.,
                                        a Nevada corporation


                                        By: /s/ Larry Robbins
                                            ------------------------------------
                                            Larry Robbins, President


                                        BRUCE NEVADA, INC.,
                                        a Nevada corporation


                                        By: /s/ Bruce Freeman
                                            ------------------------------------
                                            Bruce Freeman, President


                                        HARRY NEVADA, INC.,
                                        a Nevada corporation


                                        By: /s/ Harry Rosenbaum
                                            ------------------------------------
                                            Harry Rosenbaum, President


                                        SEYMOUR NEVADA, INC.,
                                        a Nevada corporation


                                        By: /s/ Seymour Joffe
                                            ------------------------------------
                                            Seymour Joffe, President


                                        HAYDN NEVADA, INC.,
                                        a Nevada corporation


                                        By: /s/ Haydn Matthews
                                            ------------------------------------
                                            Haydn Matthews, President


                                      -28-

EX-3.2(R)

                                                                  Exhibit 3.2(r)

                        FIRST AMENDMENT TO REGULATIONS OF
                        ASHTON DALLAS RESIDENTIAL L.L.C.

     THIS FIRST AMENDMENT TO REGULATIONS OF ASHTON DALLAS RESIDENTIAL L.L.C.
(this "Amendment") is made and entered into by and among ELLY NEVADA, INC., a
Nevada corporation ("Elly NV"), NORMAN NEVADA, INC., a Nevada corporation
("Norman NV"), LARRY NEVADA, INC., a Nevada corporation ("Larry NV"), BRUCE
NEVADA, INC., a Nevada corporation ("Bruce NV"), HARRY NEVADA, INC., a Nevada
corporation ("Harry NV"), SEYMOUR NEVADA, INC., a Nevada corporation ("Seymour
NV"), HAYDN NEVADA, INC., a Nevada corporation ("Haydn NV"), LITTLE SHOTS NEVADA
L.L.C., a Nevada limited liability company ("Little Shots"), and ASHTON WOODS
USA L.L.C., a Nevada limited liability company ("Ashton USA").

                                    RECITALS:

     A. Elly NV, Norman NV, Larry NV, Bruce NV, Harry NV, Seymour NV, and Haydn
NV have heretofore entered into Regulations of Ashton Dallas Residential L.L.C.
(the "Regulations") dated as of May 26, 1994, creating Ashton Dallas Residential
L.L.C., a Texas limited liability company (the "Company").

     B. As permitted by the Regulations, Bruce NV, Harry NV, Seymour NV, and
Haydn NV transferred all of their right, title, and interest in and to the
Company to Little Shots.

     C. As permitted by the Regulations, Elly NV, Norman NV, Larry NV, and
Little Shots transferred all of their right, title, and interest in and to the
Company to Ashton USA.

     D. The parties hereto desire to amend the Regulations to reflect the
transfers described above and provide for the admission of Ashton USA as the
sole member of the Company.

     E. Capitalized terms, not specifically defined in this Amendment, shall
have the meanings given such terms in the Regulations.

     NOW, THEREFORE, for and in consideration of the premises and the respective
agreements set forth herein, the parties hereto agree as follows:

     1. The transfers described in Recitals B and C above are hereby approved.

     2. Ashton USA is hereby admitted as a Member of the Company and the parties
hereto recognize that Elly NV, Norman NV, Larry NV, Bruce NV, Harry NV, Seymour
NV, Haydn NV, and Little Shots have withdrawn as Members of the Company. The
only Member of the Company is Ashton USA.

     3. The Sharing Ratios and funding commitments of the Members set forth on
Exhibit "A" to the Regulations shall be as follows:



                           Sharing Ratio and
         Member           Funding Commitment
- -----------------------   ------------------
                       
Ashton Woods USA L.L.C.          100%


     4. Any and all notices, demands, requests, or other communications
permitted or required to be given to Ashton USA pursuant to the Regulations
shall be delivered to Ashton USA in the manner provided in the Regulations, at
the following address:

          250 Lesmill Road
          Don Mills, Ontario M3B 2T5 Canada

     5. By execution of this Amendment, Ashton USA agrees to be bound by the
terms and provisions of the Regulations, as amended hereby.

     6. Except as amended hereby, the terms and provisions of the Regulations
shall remain unchanged and shall continue in full force and effect.

     EXECUTED as of May 31, 1999.

                                        MEMBER:

                                        ASHTON WOODS USA L.L.C.,
                                        a Nevada limited liability company


                                        By: /s/ Bruce Freeman
                                            ------------------------------------
                                            Bruce Freeman - Managing Member


                                        By: /s/ Seymour Joffe
                                            ------------------------------------
                                            Seymour Joffe - Managing Member


                                        By: /s/ Harry Rosenbaum
                                            ------------------------------------
                                            Harry Rosenbaum - Managing Member


                                       2

                                        WITHDRAWING MEMBERS:

                                        ELLY NEVADA, INC.,
                                        a Nevada corporation


                                        By: /s/ Elly Reisman
                                            ------------------------------------
                                            Elly Reisman, President


                                        NORMAN NEVADA, INC.,
                                        a Nevada corporation


                                        By: /s/ Norman Reisman
                                            ------------------------------------
                                            Norman Reisman, President


                                        LARRY NEVADA, INC.,
                                        a Nevada corporation


                                        By: /s/ Larry Robbins
                                            ------------------------------------
                                            Larry Robbins, President


                                        BRUCE NEVADA, INC.,
                                        a Nevada corporation


                                        By: /s/ Bruce Freeman
                                            ------------------------------------
                                            Bruce Freeman, President


                                        HARRY NEVADA, INC.,
                                        a Nevada corporation


                                        By: /s/ Harry Rosenbaum
                                            ------------------------------------
                                            Harry Rosenbaum, President


                                        SEYMOUR NEVADA, INC.,
                                        a Nevada corporation


                                        By: /s/ Seymour Joffe
                                            ------------------------------------
                                            Seymour Joffe, President


                                       3

                                        HAYDN NEVADA, INC.,
                                        a Nevada corporation


                                        By: /s/ Haydn Matthews
                                            ------------------------------------
                                            Haydn Matthews, President


                                        LITTLE SHOTS NEVADA L.L.C.,
                                        a Nevada limited liability company


                                        By: /s/ Bruce Freeman
                                            ------------------------------------
                                            Bruce Freeman - Managing Member


                                        By: /s/ Seymour Joffe
                                            ------------------------------------
                                            Seymour Joffe - Managing Member


                                        By: /s/ Harry Rosenbaum
                                            ------------------------------------
                                            Harry Rosenbaum - Managing Member


                                       4

EX-3.2(S)

                                                                  Exhibit 3.2(s)

                                   REGULATIONS

                                       OF

                        ASHTON HOUSTON RESIDENTIAL L.L.C.

                        A TEXAS LIMITED LIABILITY COMPANY

                            Dated as of May 26, 1994

                                   REGULATIONS
                                       OF
                        ASHTON HOUSTON RESIDENTIAL L.L.C.
                        A TEXAS LIMITED LIABILITY COMPANY

                                TABLE OF CONTENTS

                                                                           
ARTICLE I
DEFINITIONS................................................................    1

1.01    Definitions........................................................    1
1.02    Construction.......................................................    3

ARTICLE II
ORGANIZATION...............................................................    3

2.01    Formation..........................................................    3
2.02    Name...............................................................    3
2.03    Registered Office; Registered Agent; Principal Office in the
           United States; Other Offices....................................    3
2.04    Purposes...........................................................    4
2.05    Foreign Qualification..............................................    4
2.06    Term...............................................................    4
2.07    Mergers and Exchanges..............................................    4
2.08    No State-Law Partnership...........................................    4

ARTICLE III
MEMBERSHIP; DISPOSITIONS OF INTERESTS......................................    4

3.01    Initial Members....................................................    4
3.02    Representations and Warranties   ..................................    4
3.03    Restrictions on the Disposition of an Interest.....................    5
3.04    Additional Members.................................................    6
3.05    Interests in a Member..............................................    7
3.06    Information........................................................    7
3.07    Liability to Third Parties.........................................    7
3.08    Withdrawal.........................................................    7
3.09    Lack of Authority..................................................    8

ARTICLE IV
CAPITAL CONTRIBUTIONS......................................................    8

4.01    Initial Contributions..............................................    8
4.02    Subsequent Contributions...........................................    8
4.03    Failure to Contribute..............................................    8
4.04    Return of Contributions............................................   10
4.05    Advances by Members................................................   10
4.06    Capital Accounts...................................................   10




                                       -i-

                                                                           
ARTICLE V
ALLOCATIONS AND DISTRIBUTIONS..............................................   11

5.01    Allocations........................................................   11
5.02    Distributions......................................................   11

ARTICLE VI
MANAGERS

6.01    Management by Managers.............................................   12
6.02    Actions by Managers; Committees; Delegation of Authority
           and Duties......................................................   13
6.03    Number and Term of Office..........................................   13
6.04    Vacancies; Removal; Resignation....................................   14
6.05    Meetings...........................................................   14
6.06    Approval or Ratification of Acts or Contracts by Members...........   15
6.07    Action by Written Consent or Telephone Conference..................   15
6.08    Compensation.......................................................   15
6.09    Conflicts of Interest..............................................   15
6.10    Officers...........................................................   15

ARTICLE VII
MEETINGS OF MEMBERS........................................................   16

7.01    Meetings...........................................................   16
7.02    Voting List........................................................   17
7.03    Proxies............................................................   17
7.04    Conduct of Meetings................................................   18
7.05    Action by Written Consent or Telephone Conference..................   18

ARTICLE VIII
INDEMNIFICATION............................................................   19

8.01    Right to Indemnification...........................................   19
8.02    Advance Payment....................................................   19
8.03    Indemnification of Officers, Employees, and Agents.................   20
8.04    Appearance as a Witness............................................   20
8.05    Nonexclusivity of Rights...........................................   20
8.06    Insurance..........................................................   20
8.07    Member Notification................................................   20
8.08    Savings Clause.....................................................   20

ARTICLE IX
TAXES......................................................................   21

9.01    Tax Returns........................................................   21
9.02    Tax Elections......................................................   21
9.03    "Tax Matters Partner...............................................   21




                                      -ii-

                                                                           
ARTICLE X
BOOKS, RECORDS, REPORTS, AND BANK ACCOUNTS.................................   22

10.01   Maintenance of Books...............................................   22
10.02   Reports............................................................   22
10.03   Accounts...........................................................   22

ARTICLE XI
BANKRUPTCY OF A MEMBER.....................................................   23

11.01   Bankrupt Members...................................................   23

ARTICLE XII
DISSOLUTION, LIQUIDATION, AND TERMINATION..................................   23

12.01   Dissolution........................................................   23
12.02   Liquidation and Termination........................................   24
12.03   Deficit Capital Accounts...........................................   25
12.04   Articles of Dissolution............................................   25

ARTICLE XIII
GENERAL PROVISIONS.........................................................   25

13.01   Offset.............................................................   25
13.02   Notices............................................................   25
13.03   Entire Agreement; Supersedure......................................   26
13.04   Effect of Waiver or Consent........................................   26
13.05   Amendment or Modification..........................................   26
13.06   Binding Effect.....................................................   26
13.07   Governing Law; Severability........................................   26
13.08   Further Assurances.................................................   27
13.09   Waiver of Certain Rights...........................................   27
13.10   Indemnification....................................................   27
13.11   Notice to Members of Provisions of this Agreement..................   27
13.12   Counterparts.......................................................   27




                                      -iii-

                                   REGULATIONS

                                       OF

                        ASHTON HOUSTON RESIDENTIAL L.L.C.

                        A TEXAS LIMITED LIABILITY COMPANY

     These REGULATIONS OF ASHTON HOUSTON RESIDENTIAL L.L.C. (these
"Regulations"), dated as of May ____, 1994, are (a) adopted by the Managers (as
defined below) and (b) executed and agreed to, for good and valuable
consideration, by the Members (as defined below).

                                    ARTICLE I
                                   DEFINITIONS

     1.01 DEFINITIONS. As used in these Regulations, the following terms have
the following meanings:

          "Act" means the Texas Limited Liability Company Act and any successor
     statute, as amended from time to time.

          "Articles" has the meaning given that term in Section 2.01.

          "Bankrupt Member" means (except to the extent a Required Interest
     consents otherwise) any Member (a) that (i) makes a general assignment for
     the benefit of creditors; (ii) files a voluntary bankruptcy petition; (iii)
     becomes the subject of an order for relief or is declared insolvent in any
     federal or state bankruptcy or insolvency proceedings; (iv) files a
     petition or answer seeking for the Member a reorganization, arrangement,
     composition, readjustment, liquidation, dissolution, or similar relief
     under any law; (v) files an answer or other pleading admitting or failing
     to contest the material allegations of a petition filed against the Member
     in a proceeding of the type described in subclauses (i) through (iv) of
     this clause (a); or (vi) seeks, consents to, or acquiesces in the
     appointment of a trustee, receiver, or liquidator of the Member or of all
     or any substantial part of the Member's properties; or (b) against which, a
     proceeding seeking reorganization, arrangement, composition, readjustment,
     liquidation, dissolution, or similar relief under any law has been
     commenced and 120 days have expired without dismissal thereof or with
     respect to which, without the Member's consent or acquiescence, a trustee,
     receiver, or liquidator of the Member or of all or any substantial part of
     the Member's properties has been appointed and 90 days have expired without
     the appointment's having been vacated or stayed, or 90 days have expired
     after the date of expiration of a stay, if the appointment has not
     previously been vacated.

          "Business Day" means any day other than a Saturday, a Sunday, or a
     holiday on which national banking associations in the State of Texas are
     closed.


                                       -1-

          "Capital Contribution" means any contribution by a Member to the
     capital of the Company.

          "Code" means the Internal Revenue Code of 1986 and any successor
     statute, as amended from time to time.

          "Commitment" means, subject in each case to adjustments on account of
     Dispositions of Membership Interests permitted by these Regulations, (a) in
     the case of a Member executing these Regulations as of the date of these
     Regulations or a Person acquiring that Membership Interest, the amount
     specified for that Member as its Commitment on Exhibit A and (b) in the
     case of a Membership Interest issued pursuant to Section 3.04, the
     Commitment established pursuant thereto.

          "Company" means Ashton Houston Residential L.L.C., a Texas limited
     liability company.

          "Default Interest Rate" means a rate per annum equal to the lesser of
     (a) four percent (4%) plus a varying rate per annum that is equal to the
     interest rate published as the prime rate by The Bank of Nova Scotia from
     time to time, with adjustments in that varying rate to be made on the same
     date as any change in that rate, and (b) the maximum rate permitted by
     applicable law.

          "Delinquent Member" has the meaning given that term in Section
     4.03(a).

          "Dispose," "Disposing," or "Disposition" means a sale, assignment,
     transfer, exchange, mortgage, pledge, grant of a security interest, or
     other disposition or encumbrance (including, without limitation, by
     operation of law), or the acts thereof.

          "General Interest Rate" means a rate per annum equal to the lesser of
     (a) a varying rate per annum that is equal to the interest rate published
     as the prime rate by The Bank of Nova Scotia from time to time, with
     adjustments in that varying rate to be made on the same date as any change
     in that rate, and (b) the maximum rate permitted by applicable law.

          "Lending Member" has the meaning given that term in Section
     4.03(a)(ii).

          "Manager" means Elly Reisman, Bruce Freeman, Harry Rosenbaum and
     Seymour Joffe and any Person hereafter elected as a manager of the Company
     as provided in these Regulations, but does not include any Person who has
     ceased to be a manager of the Company.

          "Member" means any Person executing these Regulations as of the date
     of these Regulations as a member or hereafter admitted to the Company as a
     member as provided in these Regulations, but does not include any Person
     who has ceased to be a member in the Company.


                                       -2-

          "Membership Interest" means the interest of a Member in the Company,
     including, without limitation, rights to distributions (liquidating or
     other), allocations, information, and to consent or approve.

          "Permitted Transferee" has the meaning given that term in Section
     3.03(b).

          "Person" has the meaning given that term in article 1.02(A)(4) of the
     Act.

          "Proceeding" has the meaning given that term in Section 8.01.

          "Regulations" has the meaning given that term in the introductory
     paragraph.

          "Required Interest" means one or more Members having among them more
     than 51% of the Sharing Ratios of all Members.

          "Sharing Ratio" with respect to any Member means the percentage set
     forth on Exhibit A, subject to change as herein provided.

          "TBCA" means the Texas Business Corporation Act and any successor
     statute, as amended from time to time.

Other terms defined herein have the meanings so given them.

     1.02 CONSTRUCTION. Whenever the context requires, the gender of all words
used in these Regulations includes the masculine, feminine, and neuter. All
references to Articles and Section refer to articles and sections of these
Regulations, and all references to Exhibits are to Exhibits attached hereto,
each of which is made a part hereof for all purposes.

                                   ARTICLE II
                                  ORGANIZATION

     2.01 FORMATION. The Company has been organized as a Texas limited liability
company by the filing of Articles of Organization (the "Articles") under and
pursuant to the Act and the issuance of a certificate of organization for the
Company by the Secretary of State of Texas.

     2.02 NAME. The name of the Company is "Ashton Houston Residential L.L.C."
and all Company business must be conducted in that name or such other names that
comply with applicable law as the Managers may select from time to time.

     2.03 REGISTERED OFFICE; REGISTERED AGENT; PRINCIPAL OFFICE IN THE UNITED
STATES; OTHER OFFICES. The registered office of the Company required by the Act
to be maintained in the State of Texas shall be the office of the initial
registered agent named in the Articles or such other office (which need not be a
place of business of the Company) as the Managers may designate from time to
time in the manner provided by law. The registered agent of the Company in the
State of Texas shall be the initial registered agent named in the Articles or
such other Person or Persons as the Managers may designate from time to time in
the manner


                                       -3-

provided by law. The principal office of the Company in the United States shall
be at such place as the Managers may designate from time to time, which need not
be in the State of Texas, and the Company shall maintain records there as
required by article 2.22 of the Act and shall keep the street address of such
principal office at the registered office of the Company in the State of Texas.
The Company may have such other offices as the Managers may designate from time
to time.

     2.04 PURPOSES. The purposes of the Company are those set forth in the
Articles.

     2.05 FOREIGN QUALIFICATION. Prior to the Company's conducting business in
any jurisdiction other than Texas, the Managers shall cause the Company to
comply, to the extent procedures are available and those matters are reasonably
within the control of the Managers, with all requirements necessary to qualify
the Company as a foreign limited liability company in that jurisdiction. At the
request of the Managers, each Member shall execute, acknowledge, swear to, and
deliver all certificates and other instruments conforming with these Regulations
that are necessary or appropriate to qualify, continue, and terminate the
Company as a foreign limited liability company in all such jurisdictions in
which the Company may conduct business.

     2.06 TERM. The Company commenced on the date the Secretary of State of
Texas issued a certificate of organization for the Company and shall continue in
existence for the period fixed in the Articles for the duration of the Company,
or such earlier time as these Regulations may specify.

     2.07 MERGERS AND EXCHANGES. The Company may be a party to (a) a merger or
(b) an exchange or acquisition of the type described in article 5.02 of the
TBCA, subject to the requirements of Section 6.01(b)(ii).

     2.08 NO STATE-LAW PARTNERSHIP. The Members intend that the Company not be a
partnership (including, without limitation, a limited - partnership) or joint
venture, and that no Member or Manager be a partner or joint venturer of any
other Member or Manager, for any purposes other than federal and state tax
purposes, and these Regulations may not be construed to suggest otherwise.

                                   ARTICLE III
                      MEMBERSHIP; DISPOSITIONS OF INTERESTS

     3.01 INITIAL MEMBERS. The initial members of the Company are the Persons
executing these Regulations as of the date of these Regulations as members, each
of which is admitted to the Company as a Member effective contemporaneously with
the execution by such Person of these Regulations.

     3.02 REPRESENTATIONS AND WARRANTIES. Each Member hereby represents and
warrants to the Company and each other Member that (a) if that Member is a
corporation, it is duly organized, validly existing and in good standing under
the law of the state of its incorporation and is duly qualified and in good
standing as a foreign corporation in the jurisdiction of its principal place of
business (if not incorporated therein); (b) if that Member is a limited
liability company, it is duly organized, validly existing, and (if applicable)
in good standing under the law of the state of its organization and is duly
qualified and (if applicable) in good standing as a foreign limited liability
company in the jurisdiction of its principal place of business (if not organized
therein); (c) if that Member is a partnership, trust, or other entity, it is
duly formed, validity existing, and (if applicable) in good standing under the
law of the state of its formation,


                                       -4-

and if required by law is duly qualified to do business and (if applicable) in
good standing in the jurisdiction of its principal place of business (if not
formed therein), and the representations and warranties in clause (a), (b) or
(c), as applicable, are true and correct with respect to each partner (other
than limited partners), trustee, or other member thereof; (d) that Member has
full corporate, limited liability company, partnership, trust, or other
applicable power and authority to execute and agree to these Regulations and to
perform its obligations hereunder and all necessary actions by the board of
directors, shareholders, managers, members, partners, trustees, beneficiaries,
or other Persons necessary for the due authorization, execution, delivery, and
performance of these Regulations by that Member have been duly taken; (e) that
Member has duly executed and delivered these Regulations; and (f) that Member's
authorization, execution, delivery, and performance of these Regulations do not
conflict with any other agreement or arrangement to which that Member is a party
or which it is bound.

     3.03 RESTRICTIONS ON THE DISPOSITION OF AN INTEREST. (a) Except as
specifically provided in this Section 3.03, a Disposition of an interest in the
Company may not be effected without the consent of (i) a majority of the
Managers who are Members (excluding any Manager who is making such Disposition),
or (ii) if there are no Managers of the type described in clause (i), a Required
Interest. Any attempted Disposition by a Person of an interest or right, or any
part thereof, in or in respect of the Company other than in accordance with this
Section 3.03 shall be, and is hereby declared, null and void ab initio.

     (b) Notwithstanding the provisions of Section 3.03(a), the interest of any
Member in the Company may be transferred without the consent of the Managers or
any of the Members if (i) the transfer occurs by reason of or incident to the
death, dissolution, divorce, liquidation, merger or termination of the
transferor Member, and (ii) the transferee is a Permitted Transferee. A
"Permitted Transferee" is any member of such Member's immediate family, or a
trust, corporation, limited liability company, or partnership controlled by such
Member or members of such Member's immediate family, or another Person
controlling, controlled by, or under common control with such Member.

     (c) Subject to the provisions of Section 3,03(d), (e), and (f), (i) a
Person to whom an interest in the Company is transferred has the right to be
admitted to the Company as a Member with the Sharing Ratio and the Commitment so
transferred to such Person, if (A) the Member making such transfer grants the
transferee the right to be so admitted, and (B) such transfer is consented to in
accordance with Section 3.03(a); (ii) a Permitted Transferee under the
circumstances described in Section 3.03(b) has the right to be admitted to the
Company as a Member with the Sharing Ratio and the Commitment so transferred to
the Permitted Transferee; and (iii) the Company or (with the permission of the
Company, which may be withheld in its sole discretion) a Lending Member may
grant the purchaser of a Delinquent Member's interest in the Company at a
foreclosure of the security interest therein granted pursuant to Section 4.03(b)
the right to be admitted to the Company as a Member with such Sharing Ratio and
such Commitment (no greater than the Sharing Ratio and the Commitment of the
Member effecting such Disposition prior thereto) as they may agree.

     (d) The Company may not recognize for any purpose any purported Disposition
of all or part of a Membership Interest unless and until the other applicable
provisions of this Section 3.03 have been satisfied and the Managers have
received, on behalf of the Company, a document (i) executed by both the Member
effecting the Disposition (or if the transfer is on account of the death,
incapacity, or liquidation of the transferor, its representative) and the Person
to which the Membership Interest or part thereof is Disposed, (ii) including the
notice


                                       -5-

address of any Person to be admitted to the Company as a Member and its
agreement to be bound by these Regulations with respect to the Membership
Interest or part thereof being obtained, (iii) setting forth the Sharing Ratios
and the Commitments after the Disposition of the Member effecting the
Disposition and the Person to which the Membership Interest or part thereof is
Disposed (which together must total the Sharing Ratio and the Commitment of the
Member effecting the Disposition before the Disposition), and (iv) containing a
representation and warranty that the Disposition was made in accordance with all
applicable laws and regulations (including securities laws) and, if the Person
to which the Membership Interest or part thereof is Disposed is to be admitted
to the Company, its representation and warranty that the representations and
warranties in Section 3.02 are true and correct with respect to that Person.
Each Disposition and, if applicable, admission complying with the provisions of
this Section 3.03(d) is effective as of the first day of the calendar month
immediately succeeding the month in which the Managers receive the notification
of Disposition and the other requirements of this Section 3.03 have been met.

     (e) For the right of a Member to Dispose of a Membership Interest or any
part thereof or of any Person to be admitted to the Company in connection
therewith to exist or be exercised, (i) either (A) the Membership Interest or
part thereof subject to the Disposition or admission must be registered under
the Securities Act of 1933, as amended, and any applicable state securities laws
or (B) the Company must receive a favorable opinion of the Company's legal
counsel or of other legal counsel acceptable to the Managers to the effect that
the Disposition or admission is exempt from registration under those laws and
(ii) the Company must receive a favorable opinion of the Company's legal counsel
or of other legal counsel acceptable to the Managers to the effect that the
Disposition or admission, when added to the total of all other sales,
assignments, or other Dispositions within the preceding 12 months, would not
result in the Company's being considered to have terminated within the meaning
of the Code. The Managers, however, may waive the requirements of this Section
3.03(e).

     (f) The Member effecting a Disposition and any Person admitted to the
Company in connection therewith shall pay, or reimburse the Company for, all
costs incurred by the Company in connection with the Disposition or admission
(including, without limitation, the legal fees incurred in connection with the
legal opinions referred to in Section 3.03(e)) on or before the tenth day after
the receipt by that Person of the Company's invoice for the amount due. If
payment is not made by the date due, the Person owing that amount shall pay
interest on the unpaid amount from the date due until paid at a rate per annum
equal to the Default Interest Rate.

     3.04 ADDITIONAL MEMBERS. Additional Persons may be admitted to the Company
as Members and Membership Interests may be created and issued to those Persons
and to existing Members at the direction of (a) a majority of the Managers who
are Members, or (b) if there are no Managers who are Members, a Required
Interest, on such terms and conditions as the Managers may determine at the time
of admission. The terms of admission or issuance must specify the Sharing Ratios
and the Commitments applicable thereto and may provide for the creation of
different classes or groups of Members and having different rights, powers, and
duties. The Managers shall reflect the creation of any new class or group in an
amendment to these Regulations indicating the different rights, powers, and
duties, and such an amendment need be executed only by the Managers. Any such
admission also must comply with the provisions of Section 3.03(d)(i) and (ii)
and is effective only after the new Member has executed and delivered to the
Managers a document including the new Member's notice address, its agreement to
be bound by these Regulations, and its representation and warranty that the


                                       -6-

representation and warranties in Section 3.02 are true and correct with respect
to the new Member. The provisions of this Section 3.04 shall not apply to
Dispositions of Membership Interests.

     3.05 INTERESTS IN A MEMBER. A Member that is not a natural person may not
cause or permit an interest, direct or indirect, in itself to be Disposed of
such that, after the Disposition, (a) the Company would be considered to have
terminated within the meaning of section 708 of the Code or (b) without the
consent of the Managers and a Required Interest, that Member shall cease to be
controlled by substantially the same Persons who control it as of the date of
its admission to the Company. On any breach of the provisions of clause (b) of
the immediately preceding sentence, the Company shall have the option to buy,
and on exercise of that option the breaching Member shall sell, the breaching
Member's Membership Interest, all in accordance with Section 11.01 as if the
breaching Member were a Bankrupt Member.

     3.06 INFORMATION. (a) In addition to the other rights specifically set
forth in these Regulations, each Member is entitled to all information to which
that Member is entitled to have access pursuant to article 2.22 of the Act under
the circumstances and subject to the conditions therein stated. The Members
agree, however, that the Managers from time to time may determine, due to
contractual obligations, business concerns, or other considerations, that
certain information regarding the business, affairs, properties, and financial
condition of the Company should be kept confidential and not provided to some or
all other Members, and that it is not just or reasonable for those Members or
assignees or representatives thereof to examine or copy that information.

     (b) The Members acknowledge that, from time to time, they may receive
information from or regarding the Company in the nature of trade secrets or that
otherwise is confidential, the release of which may be damaging to the Company
or Persons with which it does business. Each Member shall hold in strict
confidence any information it receives regarding the Company that is identified
as being confidential (and if that information is provided in writing, that is
so marked) and may not disclose it to any Person other than another Member or a
Manger, except for disclosures (i) compelled by law (but the Member must notify
the Managers promptly of any request for that information, before disclosing it
if practicable), (ii) to advisers or representatives of the Member or Persons to
which that Member's Membership Interest may be Disposed as permitted by these
Regulations, but only if the recipients have agreed to be bound by the
provisions of this Section 3.06(b), or (iii) of information that Member also has
received from a source independent of the Company that the Member reasonably
believes obtained that information without breach of any obligation of
confidentiality. The Members acknowledge that breach of the provisions of this
Section 3.06(b) may cause irreparable injury to the Company for which monetary
damages are inadequate, difficult to compute, or both. Accordingly, the Members
agree that the provisions of this Section 3.06(b) may be enforced by specific
performance.

     3.07 LIABILITY TO THIRD PARTIES. No Member or Manager shall be liable for
the debts, obligations or liabilities of the Company, including under a
judgment, decree or order of a court.

     3.08 WITHDRAWAL. A Member does not have the right or power to withdraw from
the Company as a member.


                                       -7-

     3.09 LACK OF AUTHORITY. No Member (other than a Manager or an officer) has
the authority or power to act for or on behalf of the Company, to do any act
that would be binding on the Company, or to incur any expenditures on behalf of
the Company.

                                   ARTICLE IV
                              CAPITAL CONTRIBUTIONS

     4.01 INITIAL CONTRIBUTIONS. Contemporaneously with the execution by such
Member of these Regulations, each Member shall make the Capital Contributions
described for that Member in Exhibit A.

     4.02 SUBSEQUENT CONTRIBUTIONS. Without creating any rights in favor of any
third party, each Member shall contribute to the Company, in cash, on or before
the date specified as hereinafter described, that Member's Sharing Ratio of all
monies that in the judgement of the Managers are necessary to enable the Company
to cause the assets of the Company to be properly operated and maintained and to
discharge its costs, expenses, obligations, and liabilities; provided, however,
that a Member is not obligated to contribute a total amount that, when added to
all Capital Contributions that Member previously has made pursuant to Section
4.01 or this Section 4.02, exceeds that Member's Commitment. The Managers shall
notify each Member of the need for Capital Contributions pursuant to this
Section 4.02 when appropriate, which notice must include a statement in
reasonable detail of the proposed uses of the Capital Contributions and a date
(which date may be no earlier than the fifth Business Day following each
Member's receipt of its notice) before which the Capital Contributions must be
made. Notices for Capital Contributions must be made to all Members in
accordance with their Sharing Ratios.

     4.03 FAILURE TO CONTRIBUTE. (a) If a Member does not contribute by the time
required all or any portion of a Capital Contribution that Member is required to
make as provided in these Regulations, the Company may exercise, on notice to
that Member (the "Delinquent Member"), one or more of the following remedies:

          (i) taking such action (including, without limitation, court
     proceedings) as the Managers may deem appropriate to obtain payment by the
     Delinquent Member of the portion of the Delinquent Member's Capital
     Contribution that is in default, together with interest thereon at the
     Default Interest Rate from the date that the Capital Contribution was due
     until the date that it is made, all at the cost and expense of the
     Delinquent Member;

          (ii) permitting the other Members in proportion to their Sharing
     Ratios or in such other percentages as they may agree (the "Lending Member"
     whether one or more), to advance the portion of the Delinquent Member's
     Capital Contribution that is in default, with the following results:

               (A) the sum advanced constitutes a loan from the Lending Member
          to the Delinquent Member and a Capital Contribution of that sum to the
          Company by the Delinquent Member pursuant to the applicable provisions
          of these Regulations,


                                       -8-

               (B) the principal balance of the loan and all accrued unpaid
          interest thereon is due and payable in whole on the tenth day after
          written demand therefor by the Lending Member to the Delinquent
          Member,

               (C) the amount lent bears interest at the Default Interest Rate
          from the day that the advance is deemed made until the date that the
          loan, together with all interest accrued on it, is repaid to the
          Lending Member,

               (D) all distributions from the Company that otherwise would be
          made to the Delinquent Member (whether before or after dissolution of
          the Company) instead shall be paid to the Lending Member until the
          loan and all interest accrued on it have been paid in full to the
          lending Member (with payments being applied first to accrued and
          unpaid interest and then to principal),

               (E) the payment of the loan and interest accrued on it is secured
          by a security interest in the Delinquent Member's Membership Interest,
          as more fully set forth in Section 4.03(b), and

               (F) the Lending Member has the right, in addition to the other
          rights and remedies granted to it pursuant to these Regulations or
          available to it at law or in equity, to take any action (including,
          without limitation, court proceedings) that the Lending Member may
          deem appropriate to obtain payment by the Delinquent Member of the
          loan and all accrued and unpaid interest on it, at the cost and
          expense of the Delinquent Member;

          (iii) exercising the rights of a secured party under the Uniform
     Commercial Code of the State of Texas, as more fully set forth in Section
     4.03(b); or

          (iv) exercising any other rights and remedies available at law or in
     equity.

     (b) Each Member grants to the Company, and to each Lending Member with
respect to any loans made by the Lending Member to that Member as a Delinquent
Member pursuant to Section 4.03(a)(ii), as security, equally and ratably, for
the payment of all Capital Contributions that Member has agreed to make and the
payment of all loans and interest accrued on them made by Lending Members to
that Member as a Delinquent Member pursuant to Section 4.03(a)(ii), a security
interest in and a general lien on its Membership Interest and the proceeds
thereof, all under the Uniform Commercial Code of the State of Texas. On any
default in the payment of a Capital Contribution or in the payment of such a
loan or interest accrued on it, the Company or the Lending Member, as
applicable, is entitled to all the rights and remedies of a secured party under
the Uniform Commercial Code of the State of Texas with respect to the security
interest granted in this Section 4.03(b). Each Member shall execute and deliver
to the Company and the other Members all financing statements and other
instruments that the Managers or the Lending Member, as applicable, may request
to effectuate and carry


                                       -9-

out the preceding provisions of this Section 4.03(b). At the option of the
Managers or a Lending Member, these Regulations or a carbon, photographic, or
other copy hereof may serve as a financing statement.

     4.4 RETURN OF CONTRIBUTIONS. Other than as expressly provided in these
Regulations, Member is not entitled to the return of any part of its Capital
Contributions or to be paid interest in respect of either its capital account or
its Capital Contributions. An unrepaid Capital Contribution is not a liability
of the Company or of any Member. A Member is not required to contribute or to
lend any cash or property to the Company to enable the Company to return any
Member's Capital Contributions.

     4.5 ADVANCES BY MEMBERS. If the Company does not have sufficient cash to
pay its obligations, any Member(s) that may agree to do so with the Managers'
consent may advance all or part of the needed funds to or on behalf of the
Company. An advance described in this Section 4.05 constitutes a loan from the
Member to the Company, bears interest at the General Interest Rate from the date
of the advance until the date of payment, and is not a Capital Contribution.

     4.6 CAPITAL ACCOUNTS. A capital account shall be established and maintained
for each Member. Each Member's capital account (a) shall be increased by (i) the
amount of money contributed by that Member to the Company, (ii) the fair market
value of property contributed by that Member to the Company (net of liabilities
secured by the contributed property that the Company is considered to assume or
take subject to under section 752 of the Code), and (iii) allocations to that
Member of Company income and gain (or items thereof), including income and gain
exempt from tax and income and gain described in Treas. Reg. Section
1.704-1(b)(2)(iv)(g), but excluding income and gain described in Treas. Reg.
Section 1.704-1(b)(4)(i), and (b) shall be decreased by (i) the amount of money
distributed to that Member by the Company, (ii) the fair market value of
property distributed to that Member by the Company (net of liabilities secured
by the distributed property that the Member is considered to assume or take
subject to under section 752 of the Code), (iii) allocations to that Member of
expenditures of the Company described in section 705(a)(2)(B) of the Code, and
(iv) allocations of Company loss and deduction (or items thereof), including
loss and deduction described in Treas. Reg. Section 1.704-1(b)(2)(iv)(g), but
excluding items described in clause (b)(iii) above and loss or deduction
described in Treas. Reg. Section 1.704-1(b)(4)(i) or Section 1.704-1(b)(4)(iii).
The Members' capital accounts also shall be maintained and adjusted as permitted
by the provisions of Treas. Reg. Section 1.704-1(b)(2)(iv)(f) and as required by
the other provisions of Treas. Reg. Sections 1.704-1(b)(2)(iv) and
1.704-1(b)(4), including adjustments to reflect the allocations to the Members
of depreciation, depletion, amortization, and gain or loss as computed for book
purposes rather than the allocation of the corresponding items as computed for
tax purposes, as required by Treas. Reg. Section 1.704-1(b)(2)(iv)(g). A Member
that has more than one Membership Interest shall have a single capital account
that reflects all its Membership Interests, regardless of the class of
Membership Interests owned by that Member and regardless of the time or manner
in which those Membership Interests were acquired. On the transfer of all or
part of a Membership Interest, the capital account of the transferor that is
attributable to the transferred Membership Interest or part thereof shall carry
over to the transferee Member in accordance with the provisions of Treas. Reg.
Section 1.704-1(b)(2)(iv)(1).


                                      -10-

                                    ARTICLE V
                          ALLOCATIONS AND DISTRIBUTIONS

     5.01 ALLOCATIONS. (a) Except as may be required by section 701(c) of the
Code and Treas. Reg. Section 1.701-1(b)(2)(iv)(f)(4), all items of income, gain,
loss, deduction, and credit of the Company shall be allocated among the Members
in accordance with their Sharing Ratios.

     (b) All items of income, gain, loss, deduction, and credit allocable to any
Membership Interest that may have been transferred shall be allocated between
the transferor and the transferee based on the portion of the calendar year
during which each was recognized as owning that Membership Interest, without
regard to the results of Company operations during any particular portion of
that calendar year and without regard to whether cash distributions were made to
the transferor or the transferee during that calendar year; provided, however,
that this allocation must be made in accordance with a method permissible under
section 706 of the Code and the regulations thereunder.

     5.02 DISTRIBUTIONS. All receipts and revenues of the Company from any
source shall be applied and distributed in the following order of priority with
no distribution being made in any category set forth below unless and until the
preceding category has been satisfied in full either by payment or by setting
aside of a cash reserve for payment of same.

     (a) in payment of all debts, obligations, liabilities, costs and expenses
incurred in connection with or on account of the Company;

     (b) in repayment of any loans and accrued interest thereon made by a
Lending Member pursuant to Section 4.03(a)(ii);

     (c) in repayment of Contributions by the Member in accordance with their
Sharing Ratios, subject to the provisions of Section 4.03.

     (d) after having satisfied (a), (b) and (c) above, receipts and revenues of
the Company shall represent the profits of the Company and shall be distributed
in the following order of priority:

          (i) the Contributions made by the Members to the Company pursuant to
     Sections 4.01 and 4.02 herein shall bear interest at a rate which is two
     percent (2%) per annum greater than the prime rate charged by the Bank of
     Nova Scotia to its most creditworthy customers of U.S. Dollar demand loans,
     but in no event shall the rate of interest exceed the maximum rate
     permitted by laws, from the date of such advance until repaid to such
     Member in accordance with (c) above.

          (ii) after having satisfied (a), (b), (d) and (d)(i) above, the
     receipts and revenues of the Company shall be distributed to the Members
     pro rate and pari passu in accordance with their Sharing Ratios.

However, no distribution of profits shall be made until after completion of any
development and/or construction activities undertaken by the Company, without
the agreement of the Members.


                                      -11-

                                   ARTICLE VI
                                    MANAGERS

     6.01 MANAGEMENT BY MANAGERS. (a) Except for situations in which the
approval of the Members is required by these Regulations or by nonwaivable
provisions of applicable law, and subject to the provisions of Section 6.02, (i)
the powers of the Company shall be exercised by or under the authority of, and
the business and affairs of the Company shall be managed under the direction of,
the Managers; and (ii) the Managers may make all decisions and take all actions
for the Company not otherwise provided for in these Regulations, including,
without limitation, the following:

          (i) entering into, making, and performing contracts, agreements, and
     other undertakings binding the Company that may be necessary, appropriate,
     or advisable in furtherance of the purposes of the Company and making all
     decisions and waivers thereunder;

          (ii) opening and maintaining bank and investment accounts and
     arrangements, drawing checks and other orders for the payment of money, and
     designating individuals with authority to sign or give instructions with
     respect to those accounts and arrangements;

          (iii) maintaining the assets of the Company in good order;

          (iv) collecting sums due the Company;

          (v) to the extent that funds of the Company are available therefor,
     paying debts and obligations of the Company;

          (vi) acquiring, utilizing for Company purposes, and Disposing of any
     asset of the Company;

          (vii) borrowing money or otherwise committing the credit of the
     Company for Company activities and voluntary prepayments or extensions of
     debt;

          (viii) selecting, removing, and changing the authority and
     responsibility of lawyers, accountants, and other advisers and consultants;

          (ix) obtaining insurance for the Company;

          (x) determining distributions of Company cash and other property as
     provided in Section 5.02;

          (xi) establishing a seal for the Company;

          (xii) selling, leasing, exchanging or otherwise disposing of
     (including by way of a pledge, mortgage, deed of trust or trust indenture)
     all or any portion of the Company's property and assets (with or without
     good will); and


                                      -12-

          (xiii) being a party to (i) a merger, or (ii) an exchange or
     acquisition of the type described in article 5.02 of the TBCA.

     (b) Notwithstanding the provisions of Section 6.01(a), the Managers may not
cause the Company to do any of the following without complying with the
applicable requirements set forth below:

          (i) amend or restate the Articles, without complying with the
     applicable procedures set forth in the Act and the TBCA, including, without
     limitation, the requirement in article 4.02 of the TBCA regarding approval
     by the Members (unless such provision is rendered inapplicable by another
     provision of applicable law).

     6.02 ACTIONS BY MANAGERS; COMMITTEES; DELEGATION OF AUTHORITY AND DUTIES.
(a) In managing the business and affairs of the Company and exercising its
powers, the Managers shall act (i) collectively through meetings and written
consents pursuant to Sections 6.05 and 6.07; (ii) through committees pursuant to
Section 6.02(b); and (iii) through Managers to whom authority and duties have
been delegated pursuant to Section 6.02(c).

     (b) The Managers may, from time to time, designate one or more committees,
each of which shall be comprised of one or more Managers. Any such committee, to
the extent provided in such resolution or in the Articles or these Regulations,
shall have and may exercise all of the authority of the Managers, subject to the
limitations set forth in the Act and the TBCA. At every meeting of any such
committee, the presence of a majority of all the members thereof shall
constitute a quorum, and the affirmative vote of a majority of the members
present shall be necessary for the adoption of any resolution. The Managers may
dissolve any committee at any time, unless otherwise provided in the Articles or
these Regulations.

     (c) The Managers hereby delegate to each of the Managers (acting by
themself and without the necessity of any other approval or authorization) or to
an authorized representative of the Company the authority to take any of the
actions authorized in Section 6.01(a) hereof. In addition, the Managers may
assign titles (including, without limitation, president, vice president,
secretary, assistant secretary, treasurer and assistant treasurer) to any such
Manager. Unless the Managers decide otherwise, if the title is one commonly used
for officers of a business corporation formed under the TBCA, the assignment of
such title shall constitute the delegation to such Manager of the authority and
duties that are normally associated with that office, subject to any specific
delegation of authority and duties made pursuant to the first sentence of this
Section 6.02(c). Any number of titles may be held by the same Manager. Any
delegation pursuant to this Section 6.02(c) may be revoked at any time by the
Managers.

     (d) Any Person dealing with the Company, other than a Member, may rely on
the authority of any Manager, authorized representative or officer in taking any
action in the name of the Company without inquiry into the provisions of these
Regulations or compliance herewith, regardless of whether that action actually
is taken in accordance with the provisions of these Regulations.

     6.03 NUMBER AND TERM OF OFFICE. The number of Managers of the Company shall
be determined from time to time by resolution of the Managers; provided,
however, that no decrease in the number of Managers that would have the effect
of shortening the term of an incumbent Manager may be made by the Managers. If
the Managers make no such determination, the number of Managers shall be the
number set forth in the Articles as the number of Managers constituting the
initial Managers. Each Manager shall hold office for the


                                      -13-

term for which he is elected and thereafter until his successor shall have been
elected and qualified, or until his earlier death, resignation or removal.
Unless otherwise provided in the Articles, Managers need not be Members or
residents of the State of Texas.

     6.04 VACANCIES; REMOVAL; RESIGNATION. Any Manager position to be filled by
reason of an increase in the number of Managers may be filled by election at an
annual or special meeting of Members called for that purpose. Any vacancy
occurring in the Managers other than by reason of an increase in the number of
Managers may be filled (a) by election at an annual or special meeting of the
Members called for that purpose or (b) by the affirmative vote of a majority of
the remaining Managers though less than a quorum of the Managers. A Manager
elected to fill a vacancy occurring other than by reason of an increase in the
number of Managers shall be elected for the unexpired term of his predecessor in
office. At any meeting of Members at which a quorum of Members is present called
expressly for that purpose, or pursuant to a written consent adopted pursuant to
these Regulations, any Manager may be removed, with or without cause, by a
Required Interest. Any Manager may resign at any time. Such resignation shall be
made in writing and shall take effect at the time specified therein, or if no
time be specified, at the time of its receipt by the remaining Managers. The
acceptance of a resignation shall not be necessary to make it effective, unless
expressly so provided in the resignation.

     6.05 MEETINGS. (a) Unless otherwise required by law or provided in the
Articles or these Regulations, a majority of the total number of Managers fixed
by, or in the manner provided in, the Articles or these Regulations shall
constitute a quorum for the transaction of business of the Managers, and the act
of a majority of the Managers present at a meeting at which a quorum is present
shall he the act of the Managers. A Manager who is present at a meeting of the
Managers at which action on any Company matter is taken shall be presumed to
have assented to the action unless his dissent shall be entered in the minutes
of the meeting or unless he shall file his written dissent to such action with
the Person acting as secretary of the meeting before the adjournment thereof or
shall deliver such dissent to the Company immediately after the adjournment of
the meeting. Such right to dissent shall not apply to a Manager who voted in
favor of such action.

     (b) Meetings of the Managers may be held at such place or places as shall
be determined from time to time by resolution of the Managers. At all meetings
of the Managers, business shall be transacted in such order as shall from time
to time be determined by resolution of the Managers. Attendance of a Manager at
a meeting shall constitute a waiver of notice of such meeting, except where a
Manager attends a meeting for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully
called or convened.

     (c) In connection with any annual meeting of Members at which Managers were
elected, the Managers may, if a quorum is present, hold its first meeting for
the transaction of business immediately after and at the same place as such
annual meeting of the Members. Notice of such meeting at such time and place
shall not be required.

     (d) Regular meetings of the Managers shall be held at such times and places
as shall be designated from time to time by resolution of the Managers. Notice
of such regular meetings shall not be required.


                                      -14-

     (e) Special meetings of the Managers may be called by any Manager on at
least 24 hours notice to each other Manager. Such notice need not state the
purpose or purposes of, nor the business to be transacted at, such meeting,
except as may otherwise be required by law or provided for by the Articles or
these Regulations.

     6.06 APPROVAL OR RATIFICATION OF ACTS OR CONTRACTS BY MEMBERS. The Managers
in their discretion may submit any act or contract for approval or ratification
at any annual meeting of the Members, or at any special meeting of the Members
called for the purpose of considering any such act or contract, and any act or
contract that shall be approved or be ratified by a Required Interest shall be
as valid and as binding upon the Company and upon all the Members as if it shall
have been approved or ratified by every Member of the Company.

     6.07 ACTION BY WRITTEN CONSENT OR TELEPHONE CONFERENCE. Any action
permitted or required by the Act, the TBCA, the Articles or these Regulations to
be taken at a meeting of the Managers or any committee designated by the
Managers may be taken without a meeting if a consent in writing, setting forth
the action to be taken, is signed by all the Managers or members of such
committee, as the case may be. Such consent shall have the same force and effect
as a unanimous vote at a meeting and may be stated as such in any document or
instrument filed with the Secretary of State of Texas, and the execution of such
consent shall constitute attendance or presence in person at a meeting of the
Managers or any such committee, as the case may be. Subject to the requirements
of the Act, the TBCA, the Articles or these Regulations for notice of meetings,
unless otherwise restricted by the Articles, Managers, or members of any
committee designated by the Managers, may participate in and hold a meeting of
the Managers or any committee of Managers, as the case may be, by means of a
conference telephone or similar communications equipment by means of which all
Persons participating in the meeting can hear each other, and participation in
such meeting shall constitute attendance and presence in person at such meeting,
except where a Person participates in the meeting for the express purpose of
objecting to the transaction of any business on the ground that the meeting is
not lawfully called or convened.

     6.08 COMPENSATION. The Managers shall reserve such compensation, if any,
for their services as may be designated from time to time by all of the
Managers. In addition, the Managers shall be entitled to be reimbursed for
out-of-pocket costs and expenses incurred in the course of their service
hereunder, including the portion of their overhead reasonably allocable to
Company activities.

     6.09 CONFLICTS OF INTEREST. Subject to the other express provisions of
these Regulations, each Manager, Member and officer of the Company at any time
and from time to time may engage in and possess interests in other business
ventures of any and every type and description, independently or with others,
including ones in competition with the Company, with no obligation to offer to
the Company or any other Member, Manager or officer the right to participate
therein. The Company may transact business with any Manager, Member, officer or
Affiliate thereof, provided the terms of those transactions are no less
favorable than those the Company could obtain from unrelated third parties.

     6.10 OFFICERS. (a) The Managers may, from time to time, designate one or
more Persons to be officers of the Company. No officer need be a resident of the
State of Texas, a Member or a Manager. Any officers so designated shall have
such authority and perform such duties as the Managers may, from time to time,
delegate to them. The Managers may assign titles to particular officers. Unless
the Managers decide otherwise, if the title is one commonly


                                      -15-

used for officers of a business corporation formed under the TBCA, the
assignment of such title shall constitute the delegation to such officer of the
authority and duties that are normally associated with that office, subject to
(i) any specific delegation of authority and duties made to such officer by the
Managers pursuant to the third sentence of this Section 6.10(b), or (ii) any
delegation of authority and duties made to one or more Mangers pursuant to
Section 6.02(a). Each officer shall hold office until his successor shall be
duly designated and shall quality or until his death or until he shall resign or
shall have been removed in the manner hereinafter provided. Any number of
offices may be held by the same Person. The salaries or other compensation, if
any, of the officers and agents of the Company shall be fixed from time to time
by the Managers.

     (b) Any officer may resign as such at any time. Such resignation shall be
made in writing and shall take effect at the time specified therein, or if no
time be specified, at the time of its receipt by the Managers. The acceptance of
a resignation shall not be necessary to make it effective, unless expressly so
provided in the resignation. Any officer may be removed as such, either with or
without cause, by the Managers whenever in their judgment the best interests of
the Company will be served thereby; provided, however, that such removal shall
be without prejudice to the contract rights, if any, of the Person so removed.
Designation of an officer shall not of itself create contract rights. Any
vacancy occurring in any office of the Company (other than Manager) may be
filled by the Managers.

                                   ARTICLE VII
                               MEETINGS OF MEMBERS

     7.01 MEETINGS. (a) A quorum shall be present at a meeting of Members if the
holders of a Required Interest are represented at the meeting in person or by
proxy. With respect to any matter, other than a matter for which the affirmative
vote of the holders of a specified portion of the Sharing Ratios of all Members
entitled to vote is required by the Act, the affirmative vote of a Required
Interest at a meeting of Members at which a quorum is present shall be the act
of the Members.

     (b) All meetings of the Members shall be held at the principal place of
business of the Company or at such other place within or without the State of
Texas as shall be specified or fixed in the notices or waivers of notice
thereof; provided that any or all Members may participate in any such meeting by
means of conference telephone or similar communications equipment pursuant to
Section 7.05.

     (c) Notwithstanding the other provisions of the Articles or these
Regulations, the chairman of the meeting or the holders of a Required Interest
shall have the power to adjourn such meeting from time to time, without any
notice other than announcement at the meeting of the time and place of the
holding of the adjourned meeting. If such meeting is adjourned by the Members,
such time and place shall be determined by a vote of the holders of a Required
Interest. Upon the resumption of such adjourned meeting, any business may be
transacted that might have been transacted at the meeting as originally called.

     (d) An annual meeting of the Members, for the election of the Managers and
for the transaction of such other business as may properly come before the
meeting, shall be held at such place, within or without the State of Texas, on
such date and at such time as the Managers


                                      -16-

shall fix and set forth in the notice of the meeting, which date shall be within
13 months subsequent to the date of organization of the Company or the last
annual meeting of Members, whichever most recently occurred.

     (e) Special meetings of the Members for any proper purpose or purposes may
be called at any time by the Managers or the holders of at least ten percent of
the Sharing Ratios of all Members. If not otherwise stated in or fixed in
accordance with the remaining provisions hereof, the record date for determining
Members entitled to call a special meeting is the date any Member first signs
the notice of that meeting. Only business within the purpose or purposes
described in the notice (or waiver thereof) required by these Regulations may be
conducted at a special meeting of the Members.

     (f) Written or printed notice stating the place, day and hour of the
meeting and, in the case of a special meeting, the purpose or purposes for which
the meeting is called, shall be delivered not less than ten nor more than 60
days before the date of the meeting, either personally or by mail, by or at the
direction of the Managers or Person calling the meeting, to each Member entitled
to vote at such meeting. If mailed, any such notice shall be deemed to be
delivered when deposited in the United States mail, addressed to the Member at
his address provided for on Exhibit A, with postage thereon prepaid.

     (g) The date on which notice of a meeting of Members is mailed or the date
on which the resolution of the Managers declaring a distribution is adopted, as
the case may be, shall be the record date for the determination of the Members
entitled to notice of or to vote at such meeting, including any adjournment
thereof, or the Members entitled to receive such distribution.

     (h) The right of Members to cumulative voting in the election of Managers
is expressly prohibited.

     7.02 VOTING LIST. The Managers shall make, at least ten days before each
meeting of Members, a complete list of the Members entitled to vote at such
meeting or any adjournment thereof, arranged in alphabetical order, with the
address of and the Sharing Ratios held by each, which list, for a period of ten
days prior to such meeting, shall be kept on file at the registered office or
principal place of business of the Company and shall be subject to inspection by
any Member at any time during usual business hours. Such list shall also be
produced and kept open at the time and place of the meeting and shall be subject
to the inspection of any Member during the whole time of the meeting. The
original membership records shall be prima-facie evidence as to who are the
Members entitled to examine such list or transfer records or to vote at any
meeting of Members. Failure to comply with the requirements of this Section
shall not affect the validity of any action taken at the meeting.

     7.03 PROXIES. A Member may vote either in person or by proxy executed in
writing by the Member. A telegram, telex, cablegram or similar transmission by
the Member, or a photographic, photostatic, facsimile or similar reproduction of
a writing executed by the Member shall be treated as an execution in writing for
purposes of this Section. Proxies for use at any meeting of Members or in
connection with the taking of any action by written consent shall be filed with
the Managers, before or at the time of the meeting or execution of the written
consent, as the case may be. All proxies shall be received and taken charge of
and all ballots shall be received and canvassed by the Managers, who shall
decide all questions touching upon the qualification of voters, the validity of
the proxies, and the acceptance or rejection of votes,


                                      -17-

unless an inspector or inspectors shall have been appointed by the chairman of
the meeting, in which event such inspector or inspectors shall decide all such
questions. No proxy shall be valid after 11 months from the date of its
execution unless otherwise provided in the proxy. A proxy shall be revocable
unless the proxy form conspicuously states that the proxy is irrevocable and the
proxy is coupled with an interest. Should a proxy designate two or more Persons
to act as proxies, unless that instrument shall provide to the contrary, a
majority of such Persons present at any meeting at which their powers thereunder
are to be exercised shall have and may exercise all the powers of voting or
giving consents thereby conferred, or if only one be present, then such powers
may be exercised by that one; or, if an even number attend and a majority do not
agree on any particular issue, the Company shall not be required to recognize
such proxy with respect to such issue if such proxy does not specify how the
Sharing Ratios that are the subject of such proxy are to be voted with respect
to such issue.

     7.04 CONDUCT OF MEETINGS. All meetings of the Members shall be presided
over by the chairman of the meeting, who shall be a Manager (or representative
thereof) designated by a majority of the Managers. The chairman of any meeting
of Members shall determine the order of business and the procedure at the
meeting, including such regulation of the manner of voting and the conduct of
discussion as seem to him in order.

     7.05 ACTION BY WRITTEN CONSENT OR TELEPHONE CONFERENCE. (a) Any action
required or permitted to be taken at any annual or special meeting of Members
may be taken without a meeting, without prior notice, and without a vote, if a
consent or consents in writing, setting forth the action so taken, shall be
signed by the holder or holders of not less than the minimum Sharing Ratios that
would be necessary to take such action at a meeting at which the holders of all
Sharing Ratios entitled to vote on the action were present and voted. Every
written consent shall bear the date of signature of each Member who signs the
consent. No written consent shall be effective to take the action that is the
subject to the consent unless, within 60 days after the date of the earliest
dated consent delivered to the Company in the manner required by this Section, a
consent or consents signed by the holder or holders of not less than the minimum
Sharing Ratios that would be necessary to take the action that is the subject of
the consent are delivered to the Company by delivery to its registered office,
its principal place of business, or the Managers. Delivery shall be by hand or
certified or registered mail, return receipt requested. Delivery to the
Company's principal place of business shall be addressed to the Managers. A
telegram, telex, cablegram or similar transmission by a Member, or a
photographic, photostatic, facsimile or similar reproduction of a writing signed
by a Member, shall be regarded as signed by the Member for purposes of this
Section. Prompt notice of the taking of any action by Members without a meeting
by less than unanimous written consent shall be given to those Members who did
not consent in writing to the action.

     (b) The record date for determining Members entitled to consent to action
in writing without a meeting shall be the first date on which a signed written
consent setting forth the action taken or proposed to be taken is delivered to
the Company by delivery to its registered office, its principal place of
business, or the Managers. Delivery shall be by hand or by certified or
registered mail, return receipt requested. Delivery to the Company's principal
place of business shall be addressed to the Managers.

     (c) If any action by Members is taken by written consent, any articles or
documents filed with the Secretary of State of Texas as a result of the taking
of the action shall state, in lieu


                                      -18-

of any statement required by the Act or the TBCA concerning any vote of Members,
that written consent has been given in accordance with the provisions of the Act
and the TBCA and that any written notice required by the Act and the TBCA has
been given.

     (d) Members may participate in and hold a meeting by means of conference
telephone or similar communications equipment by means of which all Persons
participating in the meeting can hear each other, and participation in such
meeting shall constitute attendance and presence in person at such meeting,
except where a Person participates in the meeting for the express purpose of
objecting to the transaction of any business on the ground that the meeting is
not lawfully called or convened.

                                  ARTICLE VIII
                                 INDEMNIFICATION

     8.01 RIGHT TO INDEMNIFICATION. Subject to the limitations and conditions as
provided in this Article VIII, each Person who was or is made a party or is
threatened to be made a party to or is involved in any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative,
arbitrative or investigative (hereinafter a "Proceeding"), or any appeal in
such a Proceeding or any inquiry or investigation that could lead to such a
Proceeding, by reason of the fact that he or she, or a Person of whom he or she
is the legal representative, is or was a Manager of the Company or while a
Manager of the Company is or was serving at the request of the Company as a
Manager, director, officer, partner, venturer, proprietor, trustee, employee,
agent, or similar functionary of another foreign or domestic limited liability
company, corporation, partnership, joint venture, sole proprietorship, trust,
employee benefit plan or other enterprise shall be indemnified by the Company to
the fullest extent permitted by the Act and the TBCA, as the same exist or may
hereafter be amended (but, in the case of any such amendment, only to the extent
that such amendment permits the Company to provide broader indemnification
rights than said law permitted the Company to provide prior to such amendment)
against judgments, penalties (including excise and similar taxes and punitive
damages), fines, settlements and reasonable expenses (including, without
limitation, attorneys' fees) actually incurred by such Person in connection with
such Proceeding, and indemnification under this Article VIII shall continue as
to a Person who has ceased to serve in the capacity which initially entitled
such Person to indemnify hereunder. The rights granted pursuant to this Article
VIII shall be deemed contract rights, and no amendment, modification or repeal
of this Article VIII shall have the effect of limiting or denying any such
rights with respect to actions taken or Proceedings arising prior to any such
amendment, modification or repeal. It is expressly acknowledged that the
indemnification provided in this Article VIII could involve indemnification for
negligence or under theories of strict liability.

     8.02 ADVANCE PAYMENT. The right to indemnification conferred in this
Article VIII shall include the right to be paid or reimbursed by the Company the
reasonable expenses incurred by a Person of the type entitled to be indemnified
under Section 8.01 who was, is or is threatened to be made a named defendant or
respondent in a Proceeding in advance of the final disposition of the Proceeding
and without any determination as to the Person's ultimate entitlement to
indemnification; provided, however, that the payment of such expenses incurred
by any such Person in advance of the final disposition of a Proceeding, shall be
made only upon delivery to the Company of a written affirmation by such Manager
of his or her good faith belief that he has met the standard of conduct for
indemnification under this Article VIII and a written


                                      -19-

undertaking, by or on behalf of such Person, to repay all amounts so advanced if
it shall ultimately be determined that such indemnified Person is not entitled
to be indemnified under this Article VIII or otherwise.

     8.03 INDEMNIFICATION OF OFFICERS, EMPLOYEES, AND AGENTS. The Company, by
adoption of a resolution of the Managers, may indemnity and advance expenses to
an officer, employee or agent of the Company to the same extent and subject to
the same conditions under which it may indemnify and advance expenses to
Managers under this Article VIII; and, the Company may indemnify and advance
expenses to Persons who are not or were not Managers, officers, employees or
agents of the Company but who are or were serving at the request of the Company
as a Manager, director, officer, partner, venturer, proprietor, trustee,
employee, agent or similar functionary of another foreign or domestic limited
liability company, corporation, partnership, joint venture, sole proprietorship,
trust, employee benefit plan or other enterprise against any liability asserted
against him and incurred by him in such a capacity or arising out of his status
as such a Person to the same extent that it may indemnity and advance expenses
to Managers under this Article VIII.

     8.04 APPEARANCE AS A WITNESS. Notwithstanding any other provision of this
Article VIII, the Company may pay or reimburse expenses incurred by a Manager in
connection with his appearance as a witness or other participation in a
Proceeding at a time when he is not a named defendant or respondent in the
Proceeding.

     8.05 NONEXCLUSIVITY OF RIGHTS. The right to indemnification and the
advancement and payment of expenses conferred in this Article VIII shall not be
exclusive of any other right which a Manager or other Person indemnified
pursuant to Section 8.03 may have or hereafter acquire under any law (common or
statutory), provision of the Articles or these Regulations, agreement, vote of
Members or disinterested Managers or otherwise.

     8.06 INSURANCE. The Company may purchase and maintain insurance, at its
expense, to protect itself and any Person who is or was serving as a Manager,
officer, employee or agent of the Company or is or was serving at the request of
the Company as a Manager, director, officer, partner, venturer, proprietor,
trustee, employee, agent or similar functionary of another foreign or domestic
limited liability company, corporation, partnership, joint venture, sole
proprietorship, trust, employee benefit plan or other enterprise against any
expense, liability or loss, whether or not the Company would have the power to
indemnify such Person against such expense, liability or loss under this Article
VIII.

     8.07 MEMBER NOTIFICATION. To the extent required by law, any
indemnification of or advance of expenses to a Manager in accordance with this
Article VIII shall be reported in writing to the Members with or before the
notice or waiver of notice of the next Members' meeting or with or before the
next submission to Members of a consent to action without a meeting and, in any
case, within the 12-month period immediately following the date of the
indemnification or advance.

     8.08 SAVINGS CLAUSE. If this Article VIII or any portion hereof shall be
invalidated on any ground by any court of competent jurisdiction, then the
Company shall nevertheless indemnify and hold harmless each Manager or any other
Person indemnified pursuant to this Article VIII as to costs, charges and
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement with respect to any action, suit or proceeding, whether civil,


                                      -20-

criminal, administrative or investigative to the full extent permitted by any
applicable portion of this Article VIII that shall not have been invalidated and
to the fullest extent permitted by applicable law.

                                   ARTICLE IX
                                      TAXES

     9.01 TAX RETURNS. The Managers shall cause to be prepared and filed all
necessary federal and state income tax returns for the Company, including making
the elections described in Section 9.02. Each Member shall furnish to the
Managers all pertinent information in its possession relating to Company
operations that is necessary to enable the Company's income tax returns to be
prepared and filed.

     9.02 TAX ELECTIONS. The Company shall make the following elections on the
appropriate tax returns:

          (a) to adopt the year ending on May 31 as the Company's fiscal year;

          (b) to adopt a method of accounting as the Managers may determine from
     time to time;

          (c) if a distribution of Company property as described in section 734
     of the Code occurs or if a transfer of a Membership Interest as described
     in section 743 of the Code occurs, on written request of any Member, to
     elect, pursuant to section 754 of the Code, to adjust the basis of Company
     properties;

          (d) to elect to amortize the organizational expenses of the Company
     and the startup expenditures of the Company under Section 195 of the Code
     ratably over a period of 60 months as permitted by section 709(b) of the
     Code; and

          (e) any other election the Managers may deem appropriate and in the
     best interests of the Members.

Neither the Company nor any Manager or Member may make an election for the
Company to be excluded from the application of the provisions of subchapter K of
chapter 1 of subtitle A of the Code or any similar provisions of applicable
state law, and no provision of these Regulations (including, without limitation,
Section 2.06) shall be construed to sanction or approve such an election.

     9.03 "TAX MATTERS PARTNER." A majority of the Managers who are Members
shall designate one Manager that is a Member to be the "tax matters partner" of
the Company pursuant to section 6231(a)(7) of the Code; or, if there is no
Manager that is a Member, the "tax matters partner" shall be a Member that is
designated as such by a Required Interest. Any Member who is designated "tax
matters partner" shall take such action as may be necessary to cause each other
Member to become a "notice partner" within the meaning of section 6223 of the
Code. Any Member who is designated "tax matters partner" shall inform each other
Member of all significant matters that may come to its attention in its capacity
as "tax matters partner" by giving notice thereof on or before the fifth
Business Day after becoming aware


                                      -21-

thereof and, within that time, shall forward to each other Member copies of all
significant written communications it may receive in that capacity. Any Member
who is designated "tax matters partner" may not take any action contemplated by
sections 6222 through 6232 of the Code without the consent of a Required
Interest, but this sentence does not authorize such Manager (or any other
Manager) to take any action left to the determination of an individual Member
under sections 6222 through 6232 of the Code.

                                    ARTICLE X
                   BOOKS, RECORDS, REPORTS, AND BANK ACCOUNTS

     10.01 MAINTENANCE OF BOOKS. The Company shall keep books and records of
accounts and shall keep minutes of the proceedings of its Members, its Managers
and each committee of the Managers. The books of account for the Company shall
be maintained on a cash basis in accordance with the terms of these Regulations,
except that the capital accounts of the Members shall be maintained in
accordance with Section 4.06. The calendar year shall be the accounting year of
the Company.

     10.02 REPORTS. On or before the 120th day following the end of each fiscal
year during the term of the Company, the Managers shall cause each Member to be
furnished with a balance sheet, an income statement, and a statement of changes
in Members' capital of the Company for, or as of the end of, that year certified
by a recognized firm of certified public accountants. These financial statements
must be prepared in accordance with accounting principles generally employed for
cash basis records consistently applied (except as therein noted) and must be
accompanied by a report of the certified public accountants certifying the
statements and stating that (a) their examination was made in accordance with
generally accepted auditing standards and, in their opinion, the financial
statements fairly present the financial position, financial results of
operations, and changes in Members' capital in accordance with accounting
principles generally employed for cash-basis records consistently applied
(except as therein noted) and (b) in making the examination and reporting on the
financial statements described above, nothing came to their attention that
caused them to believe that (i) the income and revenues were not paid or
credited in accordance with the financial and accounting provisions of these
Regulations, (ii) the costs and expenses were not charged in accordance with the
financial and accounting provisions of these Regulations, or (iii) the Managers
or any Member failed to comply in any material respect with the financial and
accounting provisions of these Regulations, or if they do conclude that the
Managers or a Member so failed, specifying the nature and period of existence of
the failure. The Managers also may cause to be prepared or delivered such other
reports as they may deem appropriate. The Company shall bear the costs of all
these reports.

     10.03 ACCOUNTS. The Managers shall establish and maintain one or more
separate bank and investment accounts and arrangements for Company funds in the
Company name with financial institutions and firms that the Managers determine.
The Managers may not commingle the Company's funds with the funds of any Member;
however, Company funds may be invested in a manner the same as or similar to the
Managers' investment of their own funds or investments by their Affiliates.


                                      -22-

                                   ARTICLE XI
                             BANKRUPTCY OF A MEMBER

     11.01 BANKRUPT MEMBERS. Subject to Section 12.01(c), if any Member becomes
a Bankrupt Member, the Company shall have the option, exercisable by notice from
the Managers to the Bankrupt Member (or its representative) at any time prior to
the 180th day after receipt of notice of the occurrence of the event causing it
to become a Bankrupt Member, to buy, and on the exercise of this option the
Bankrupt Member or its representative shall sell, its Membership Interest. The
purchase price shall be an amount equal to the fair market value thereof
determined by agreement of the Bankrupt Member (or its representative) and the
Managers; however, if those Persons do not agree on the fair market value on or
before the 30th day following the exercise of the option, either such Person, by
notice to the other, may require the determination of fair market value to be
made by an independent appraiser specified in that notice. If the Person
receiving that notice objects on or before the tenth day following receipt to
the independent appraiser designated in that notice, and those Persons otherwise
fail to agree on an independent appraiser, either such Person may petition the
United States District Judge for the State of Texas (Houston Division) then
senior in service to designate an independent appraiser. The determination of
the independent appraiser, however designated, is final and binding on all
parties. The Bankrupt Member and the Company each shall pay one-half of the
costs of the appraisal. The purchaser shall pay the fair market value as so
determined in four equal cash installments, the first due on closing and the
remainder (together with accumulated interest on the amount unpaid at the
General Interest Rate) due on each of the first three anniversaries thereof. The
payment to be made to the Bankrupt Member or its representative pursuant to this
Section 11.01 is in complete liquidation and satisfaction of all the rights and
interest of the Bankrupt Member and its representative (and of all Persons
claiming by, through, or under the Bankrupt Member and its representative) in
and in respect of the Company, including, without limitation, any Membership
Interest, any rights in specific Company property, and any rights against the
Company and (insofar as the affairs of the Company are concerned) against the
Members, and constitutes a compromise to which all Members have agreed pursuant
to article 5.02(D) of the Act.

                                   ARTICLE XII
                    DISSOLUTION, LIQUIDATION, AND TERMINATION

     12.01 DISSOLUTION. The Company shall dissolve and its affairs shall be
wound up on the first to occur of the following:

          (a) the written consent of a Required Interest;

          (b) the expiration of the period fixed for the duration of the Company
     set forth in the Articles;

          (c) any Manager who is a Member (or, if there is no Manager who is a
     Member, any Member) shall become a Bankrupt Member (with or without the
     consent of a Required Interest); provided, however, that if the event
     described in this Section 12.01(c) shall occur and there shall be at least
     one other Member remaining, the Company shall not be dissolved, and the
     business of the Company shall be continued, if all Members so agree; and


                                      -23-

          (d) entry of a decree of judicial dissolution of the Company under
     article 6.02 of the Act.

Except as provided in Section 12.01(c), the death, retirement, resignation,
expulsion, bankruptcy or dissolution of a Member, or the occurrence of any other
event that terminates the continued membership of a Member in the Company, shall
not cause a dissolution of the Company.

     12.02 LIQUIDATION AND TERMINATION. On dissolution of the Company, the
Managers shall act as liquidator or may appoint one or more Members as
liquidator. The liquidator shall proceed diligently to wind up the affairs of
the Company and make final distributions as provided herein and in the Act. The
costs of liquidation shall be borne as a Company expense. Until final
distribution, the liquidator shall continue to operate the Company properties
with all of the power and authority of the Managers. The steps to be
accomplished by the liquidator are as follows:

          (a) as promptly as possible after dissolution and again after final
     liquidation, the liquidator shall cause a proper accounting to be made by a
     recognized firm of certified public accountants of the Company's assets,
     liabilities, and operations through the last day of the calendar month in
     which the dissolution occurs or the final liquidation is completed, as
     applicable;

          (b) the liquidator shall cause the notice described in article
     6.05(A)(2) of the Act to be mailed to each known creditor of and claimant
     against the Company in the manner described in such article 6.05(A)(2) of
     the Act;

          (c) the liquidator shall pay, satisfy or discharge from Company funds
     all of the debts, liabilities and obligations of the Company (including,
     without limitation, all expenses incurred in liquidation and any advances
     described in Section 4.05) or otherwise make adequate provision for payment
     and discharge thereof (including, without limitation, the establishment of
     a cash escrow fund for contingent liabilities in such amount and for such
     term as the liquidator may reasonably determine); and

          (d) all remaining assets of the Company shall be distributed to the
     Members as follows:

               (i) the liquidator may sell any or all Company property,
          including to Members, and any resulting gain or loss from each sale
          shall be computed and allocated to the capital accounts of the
          Members;

               (ii) with respect to all Company property that has not been sold,
          the fair market value of that property shall be determined and the
          capital accounts of the Members shall be adjusted to reflect the
          manner in which the unrealized income, gain, loss, and deduction
          inherent in property that has not been reflected in the capital
          accounts previously would be allocated among the Members if there were
          a taxable disposition of that property for the fair market value of
          that property on the date of distribution; and


                                      -24-

               (iii) Company property shall be distributed among the Members in
          accordance with the positive capital account balances of the Members,
          as determined after taking into account all capital account
          adjustments for the taxable year of the Company during which the
          liquidation of the partnership occurs (other than those made by reason
          of this clause (iii)); and those distributions shall be made by the
          end of the taxable year of the Company during which the liquidation of
          the Company Occurs (or, if later, 90 days after the date of the
          liquidation).

All distributions in kind to the Members shall be made subject to the liability
of each distributee for costs, expenses, and liabilities theretofore incurred or
for which the Company has committed prior to the date of termination and those
costs, expenses, and liabilities shall be allocated to the distributee pursuant
to this Section 12.02. The distribution of cash and/or property to a Member in
accordance with the provisions of this Section 12.02 constitutes a complete
return to the Member of its Capital Contributions and a complete distribution to
the Member of its Membership Interest and all the Company's property and
constitutes a compromise to which all Members have consented within the meaning
of article 5.02(D) of the Act. To the extent that a Member returns funds to the
Company, it has no claim against any other Member for those funds.

     12.03 DEFICIT CAPITAL ACCOUNTS. Notwithstanding anything to the contrary
contained in these Regulations, and notwithstanding any custom or rule of law to
the contrary, to the extent that the deficit, if any, in the capital account of
any Member results from or is attributable to deductions and losses of the
Company (including non-cash items such as depreciation), or distributions of
money pursuant to these Regulations to all Members in proportion to their
respective Sharing Ratios, upon dissolution of the Company such deficit shall
not be an asset of the Company and such Members shall not be obligated to
contribute such amount to the Company to bring the balance of such Member's
capital account to zero.

     12.04 ARTICLES OF DISSOLUTION. On completion of the distribution of Company
assets as provided herein, the Company is terminated, and the Managers (or such
other Person or Persons as the Act may require or permit) shall file Articles of
Dissolution with the Secretary of State of Texas, cancel any other filings made
pursuant to Section 2.05, and take such other actions as may be necessary to
terminate the Company.

                                  ARTICLE XIII
                               GENERAL PROVISIONS

     13.01 OFFSET. Whenever the Company is to pay any sum to any Member, any
amounts that Member owes the Company may be deducted from that sum before
payment.

     13.02 NOTICES. Except as expressly set forth to the contrary in these
Regulations, all notices, requests, or consents provided for or permitted to be
given under these Regulations must be in writing and must be given either by
depositing that writing in the United States mail, addressed to the recipient,
postage paid, and registered or certified with return receipt requested or by
delivering that writing to the recipient in person, by courier, or by facsimile
transmission; and a notice, request, or consent given under these Regulations is
effective on receipt by the Person to receive it. All notices, requests, and
consents to be sent to a Member must be sent


                                      -25-

to or made at the addresses given for that Member on Exhibit A or in the
instrument described in Section 3.03(d) or 3.04, or such other address as that
Member may specify by notice to the other Members. Any notice, request, or
consent to the Company or the Managers must be given to the Managers at the
following address: 4800 Sugar Grove Boulevard, Suite 150, Stafford, Texas 77477.
Whenever any notice is required to be given by law, the Articles or these
Regulations, a written waiver thereof, signed by the Person entitled to notice,
whether before or after the time stated therein, shall be deemed equivalent to
the giving of such notice.

     13.03 ENTIRE AGREEMENT; SUPERSEDURE. These Regulations constitute the
entire agreement of the Members and their Affiliates relating to the Company and
supersedes all prior contracts or agreements with respect to the Company,
whether oral or written.

     13.04 EFFECT OF WAIVER OR CONSENT. A waiver or consent, express or implied,
to or of any breach or default by any Person in the performance by that Person
of its obligations with respect to the Company is not a consent or waiver to or
of any other breach or default in the performance by that Person of the same or
any other obligations of that Person with respect to the Company. Failure on the
part of a Person to complain of any act of any Person or to declare any Person
in default with respect to the Company, irrespective of how long that failure
continues, does not constitute a waiver by that Person of its rights with
respect to that default until the applicable statute-of-limitations period has
run.

     13.05 AMENDMENT OR MODIFICATION. These Regulations may be amended or
modified from time to time only by a written instrument adopted by the Managers
and executed and agreed to by a Required Interest; provided, however, that (a)
an amendment or modification reducing a Member's Sharing Ratio or increasing its
Commitment (other than to reflect changes otherwise provided by these
Regulations) is effective only with that Member's consent, (b) an amendment or
modification reducing the required Sharing Ratio or other measure for any
consent or vote in these Regulations is effective only with the consent or vote
of Members having the Sharing Ratio or other measure theretofore required, and
(c) amendments of the type described in Section 3.04 may be adopted as therein
provided.

     13.06 BINDING EFFECT. Subject to the restrictions on Dispositions set forth
in these Regulations, these Regulations are binding on and inure to the benefit
of the Members and their respective heirs, legal representatives, successors,
and assigns.

     13.07 GOVERNING LAW; SEVERABILITY. THESE REGULATIONS ARE GOVERNED BY AND
SHALL BE CONSTRUED IN ACCORDANCE WITH LAW OF THE STATE OF TEXAS, EXCLUDING ANY
CONFLICT-OF-LAWS RULE OR PRINCIPLE THAT MIGHT REFER THE GOVERNANCE OR THE
CONSTRUCTION OF THESE REGULATIONS TO THE LAW OF ANOTHER JURISDICTION. In the
event of a direct conflict between the provisions of these Regulations and (a)
any provision of the Articles, or (b) any mandatory provision of the Act or (to
the extent such statutes are incorporated into the Act) the TBCA or the Texas
Miscellaneous Corporation laws Act, the application provision of the Articles,
the Act, the TBCA or the Texas Miscellaneous Corporation Laws Act shall control.
If any provision of these Regulations or the application thereof to any Person
or circumstance is held invalid or unenforceable to any extent, the remainder of
these Regulations and the application of that provision to other Persons or
circumstances is not affected thereby and that provision shall be enforced to
the greatest extent permitted by law.


                                      -26-

     13.08 FURTHER ASSURANCES. In connection with these Regulations and the
transactions contemplated hereby, each Member shall execute and deliver any
additional documents and instruments and perform any additional acts that may be
necessary or appropriate to effectuate and perform the provisions of these
Regulations and those transactions.

     13.09 WAIVER OF CERTAIN RIGHTS. Each Member irrevocably waives any right it
may have to maintain any action for dissolution of the Company or for partition
of the property of the Company.

     13.10 INDEMNIFICATION. To the fullest extent permitted by law, each Member
shall indemnify the Company, each Manager and each other Member and hold them
harmless from and against all losses, costs, liabilities, damages, and expenses
(including, without limitation, costs of suit and attorney's fees) they may
incur on account of any breach by that Member of these Regulations.

     13.11 NOTICE TO MEMBERS OF PROVISIONS OF THIS AGREEMENT. By executing these
Regulations, each Member acknowledges that it has actual notice of (a) all of
the provisions of this Agreement, including, without limitation, the
restrictions on the transfer of Membership Interests set forth in Article III,
and (b) all of the provisions of the Articles, including, without limitation,
the fact that the Articles provide that no Member shall have the preemptive
right to acquire any Membership Interests or securities of any class that may at
any time be issued, sold or offered for sale by the Company. Each Member hereby
agrees that these Regulations constitute adequate notice of all such provisions,
including, without limitation, any notice requirement under article 2.19(D) of
the TBCA and Chapter 8 of the Texas Uniform Commercial Code, and each Member
hereby waives any requirement that any further notice thereunder be given.

     13.12 COUNTERPARTS. These Regulations may be executed in any number of
counterparts with the same effect as if all signing parties had signed the same
document. All counterparts shall be construed together and constitute the same
instrument.

     13.13 ARBITRATION. If, at any time or from time to time during the
continuance of the Company or after the dissolution or other termination
thereof, any dispute, difference or question shall arise between any of the
Members, or their successors, assigns or nominees, touching or concerning the
Company of the property, assets, rights or transactions thereof, or the
dissolution or other termination thereof, or the property of the Company or the
construction, meaning or effect of these Regulations, or any provision hereof,
or the rights of obligations of the Members, or their successors, assigns or
nominees, under these Regulations or otherwise, with respect thereto, then every
such dispute, difference or question shall be submitted to and settled by
arbitration and the decision of the arbitrator appointed as hereinafter provided
to deal with such matter shall be accepted by all the Members to such dispute,
difference or question. The arbitration shall be conducted by a single
arbitrator agreed upon by the Members to the matter. The decision of the
arbitrator shall be final and binding upon all the Members to such dispute,
difference or question and their nominees, and there shall be no appeal
therefrom.


                                      -27-

     IN WITNESS WHEREOF, following adoption of these Regulations by the
Managers, the Members have executed these Regulations as of the date first set
forth above.

                                       MEMBERS:

                                       ELLY NEVADA, INC.,
                                       a Nevada corporation


                                       By: /s/ Elly Reisman
                                           -------------------------------------
                                           Elly Reisman, President


                                       NORMAN NEVADA, INC.,
                                       a Nevada corporation


                                       By: /s/ Norman Reisman
                                           -------------------------------------
                                           Norman Reisman, President


                                       LARRY NEVADA, INC.,
                                       a Nevada corporation


                                       By: /s/ Larry Robbins
                                           -------------------------------------
                                           Larry Robbins, President


                                       BRUCE NEVADA, INC.,
                                       a Nevada corporation


                                       By: /s/ Bruce Freeman
                                           -------------------------------------
                                           Bruce Freeman, President


                                       HARRY NEVADA, INC.,
                                       a Nevada corporation


                                       By: /s/ Harry Rosenbaum
                                           -------------------------------------
                                           Harry Rosenbaum, President


                                       SEYMOUR NEVADA, INC.,
                                       a Nevada corporation


                                       By: /s/ Seymour Joffe
                                           -------------------------------------
                                           Seymour Joffe, President


                                       HAYDN NEVADA, INC.,
                                       a Nevada corporation


                                       By: /s/ Haydn Matthews
                                           -------------------------------------
                                           Haydn Matthews, President


                                      -28-

EX-3.2(T)

                                                                  Exhibit 3.2(t)

                        FIRST AMENDMENT TO REGULATIONS OF
                        ASHTON HOUSTON RESIDENTIAL L.L.C.

     THIS FIRST AMENDMENT TO REGULATIONS OF ASHTON HOUSTON RESIDENTIAL L.L.C.
(this "Amendment") is made and entered into by and among ELLY NEVADA, INC., a
Nevada corporation ("Elly NV"), NORMAN NEVADA, INC., a Nevada corporation
("Norman NV"), LARRY NEVADA, INC., a Nevada corporation ("Larry NV"),
BRUCENEVADA, INC., a Nevada corporation ("Bruce NV"), HARRY NEVADA, INC., a
Nevada corporation ("Harry NV"), SEYMOUR NEVADA, INC., a Nevada corporation
("Seymour NV"), HAYDN NEVADA, INC., a Nevada corporation ("Haydn NV"), LITTLE
SHOTS NEVADA L.L.C., a Nevada limited liability company ("Little Shots"), and
ASHTON WOODS USA L.L.C., a Nevada limited liability company ("Ashton USA").

                                    RECITALS:

     A. Elly NV, Norman NV, Larry NV, Bruce NV, Harry NV, Seymour NV, and Haydn
NV have heretofore entered into Regulations of Ashton Houston Residential L.L.C.
(the "Regulations") dated as of May 26, 1994, creating Ashton Houston
Residential L.L.C., a Texas limited liability company (the "Company").

     B. As permitted by the Regulations, Bruce NV, Harry NV, Seymour NV, and
Haydn NV transferred all of their right, title, and interest in and to the
Company to Little Shots.

     C. As permitted by the Regulations, Elly NV, Norman NV, Larry NV, and
Little Shots transferred all of their right, title, and interest in and to the
Company to Ashton USA.

     D. The parties hereto desire to amend the Regulations to reflect the
transfers described above and provide for the admission of Ashton USA as the
sole member of the Company.

     E. Capitalized terms, not specifically defined in this Amendment, shall
have the meanings given such terms in the Regulations.

     NOW, THEREFORE, for and in consideration of the premises and the respective
agreements set forth herein, the parties hereto agree as follows:

     1. The transfers described in Recitals B and C above are hereby approved.

     2. Ashton USA is hereby admitted as a Member of the Company and the parties
hereto recognize that Elly NV, Norman NV, Larry NV, Bruce NV, Harry NV, Seymour
NV, Haydn NV, and Little Shots have withdrawn as Members of the Company. The
only Member of the Company is Ashton USA.

     3. The Sharing Ratios and funding commitments of the Members set forth on
Exhibit "A" to the Regulations shall be as follows:



                           Sharing Ratio and
         Member           Funding Commitment
- -----------------------   ------------------
                       
Ashton Woods USA L.L.C.          100%


     4. Any and all notices, demands, requests, or other communications
permitted or required to be given to Ashton USA pursuant to the Regulations
shall be delivered to Ashton USA in the manner provided in the Regulations, at
the following address:

          250 Lesmill Road
          Don Mills, Ontario M3B 2T5 Canada

     5. By execution of this Amendment, Ashton USA agrees to be bound by the
terms and provisions of the Regulations, as amended hereby.

     6. Except as amended hereby, the terms and provisions of the Regulations
shall remain unchanged and shall continue in full force and effect.

     EXECUTED as of May 31, 1999.

                                        MEMBER:

                                        ASHTON WOODS USA L.L.C.,
                                        a Nevada limited liability company


                                        By: /s/ Bruce Freeman
                                            ------------------------------------
                                            Bruce Freeman - Managing Member


                                        By: /s/ Seymour Joffe
                                            ------------------------------------
                                            Seymour Joffe - Managing Member


                                        By: /s/ Harry Rosenbaum
                                            ------------------------------------
                                            Harry Rosenbaum - Managing Member


                                       2

                                        WITHDRAWING MEMBERS:

                                        ELLY NEVADA, INC.,
                                        a Nevada corporation


                                        By: /s/ Elly Reisman
                                            ------------------------------------
                                            Elly Reisman, President


                                        NORMAN NEVADA, INC.,
                                        a Nevada Corporation


                                        By: /s/ Norman Reisman
                                            ------------------------------------
                                            Norman Reisman, President


                                        LARRY NEVADA, INC.,
                                        a Nevada corporation


                                        By: /s/ Larry Robbins
                                            ------------------------------------
                                            Larry Robbins, President


                                        BRUCE NEVADA, INC.,
                                        a Nevada corporation


                                        By: /s/ Bruce Freeman
                                            ------------------------------------
                                            Bruce Freeman, President


                                        HARRY NEVADA, INC.,
                                        a Nevada corporation


                                        By: /s/ Harry Rosenbaum
                                            ------------------------------------
                                            Harry Rosenbaum, President


                                        SEYMOUR NEVADA, INC.,
                                        a Nevada corporation


                                        By: /s/ Seymour Joffe
                                            ------------------------------------
                                            Seymour Joffe, President


                                       3

                                        HAYDN NEVADA, INC.,
                                        a Nevada corporation


                                        By: /s/ Haydn Matthews
                                            ------------------------------------
                                            Haydn Matthews, President


                                        LITTLE SHOTS NEVADA L.L.C.,
                                        a Nevada limited liability company


                                        By: /s/ Bruce Freeman
                                            ------------------------------------
                                            Bruce Freeman - Managing Member


                                        By: /s/ Seymour Joffe
                                            ------------------------------------
                                            Seymour Joffe - Managing Member


                                        By: /s/ Harry Rosenbaum
                                            ------------------------------------
                                            Harry Rosenbaum - Managing Member


                                       4

EX-3.2(U)

                                                                  Exhibit 3.2(u)

                                   REGULATIONS

                                       OF

                        ASHTON HOUSTON DEVELOPMENT L.L.C.

                        A TEXAS LIMITED LIABILITY COMPANY

                            Dated as of May 16, 1996

                                   REGULATIONS
                                       OF
                        ASHTON HOUSTON DEVELOPMENT L.L.C.
                        A TEXAS LIMITED LIABILITY COMPANY

                                TABLE OF CONTENTS

                                                                           
ARTICLE I
DEFINITIONS...............................................................     1

1.01    Definitions.......................................................     1
1.02    Construction......................................................     3

ARTICLE II
ORGANIZATION..............................................................     3

2.01    Formation.........................................................     3
2.02    Name..............................................................     3
2.03    Registered Office; Registered Agent; Principal Office in the
        United States; Other Offices......................................     3
2.04    Purposes..........................................................     4
2.05    Foreign Qualification.............................................     4
2.06    Term..............................................................     4
2.07    Mergers and Exchanges.............................................     4
2.08    No State-Law Partnership..........................................     4

ARTICLE III
MEMBERSHIP; DISPOSITIONS OF INTERESTS.....................................     4

3.01    Initial Members...................................................     4
3.02    Representations and Warranties....................................     4
3.03    Restrictions on the Disposition of an Interest....................     5
3.04    Additional Members................................................     6
3.05    Interests in a Member.............................................     7
3.06    Information.......................................................     7
3.07    Liability to Third Parties........................................     7
3.08    Withdrawal........................................................     7
3.09    Lack of Authority.................................................     8

ARTICLE IV
CAPITAL CONTRIBUTIONS.....................................................     8

4.01    Initial Contributions.............................................     8
4.02    Subsequent Contributions..........................................     8
4.03    Failure to Contribute.............................................     8
4.04    Return of Contributions...........................................    10
4.05    Advances by Members...............................................    10
4.06    Capital Accounts..................................................    10




                                       -i-

                                                                           
ARTICLE V
ALLOCATIONS AND DISTRIBUTIONS.............................................    11

5.01    Allocations.......................................................    11
5.02    Distributions.....................................................    11

ARTICLE VI
MANAGERS

6.01    Management by Managers............................................    12
6.02    Actions by Managers; Committees; Delegation of Authority and
        Duties............................................................    13
6.03    Number and Term of Office.........................................    13
6.04    Vacancies; Removal; Resignation...................................    14
6.05    Meetings..........................................................    14
6.06    Approval or Ratification of Acts or Contracts by Members..........    15
6.07    Action by Written Consent or Telephone Conference.................    15
6.08    Compensation......................................................    15
6.09    Conflicts of Interest.............................................    15
6.10    Officers..........................................................    15

ARTICLE VII
MEETINGS OF MEMBERS.......................................................    16

7.01    Meetings..........................................................    16
7.02    Voting List.......................................................    17
7.03    Proxies...........................................................    17
7.04    Conduct of Meetings...............................................    18
7.05    Action by Written Consent or Telephone Conference.................    18

ARTICLE VIII
INDEMNIFICATION...........................................................    19

8.01    Right to Indemnification..........................................    19
8.02    Advance Payment...................................................    19
8.03    Indemnification of Officers, Employees, and Agents................    20
8.04    Appearance as a Witness...........................................    20
8.05    Nonexclusivity of Rights..........................................    20
8.06    Insurance.........................................................    20
8.07    Member Notification...............................................    20
8.08    Savings Clause....................................................    20

ARTICLE IX
TAXES.....................................................................    21

9.01    Tax Returns.......................................................    21
9.02    Tax Elections.....................................................    21
9.03    "Tax Matters Partner..............................................    21




                                      -ii-

                                                                           
ARTICLE X
BOOKS, RECORDS, REPORTS, AND BANK ACCOUNTS................................    22

10.01   Maintenance of Books..............................................    22
10.02   Reports...........................................................    22
10.03   Accounts..........................................................    22

ARTICLE XI
BANKRUPTCY OF A MEMBER....................................................    23

11.01   Bankrupt Members..................................................    23

ARTICLE XII
DISSOLUTION, LIQUIDATION, AND TERMINATION.................................    23

12.01   Dissolution.......................................................    23
12.02   Liquidation and Termination.......................................    24
12.03   Deficit Capital Accounts..........................................    25
12.04   Articles of Dissolution...........................................    25

ARTICLE XIII
GENERAL PROVISIONS........................................................    25

13.01   Offset............................................................    25
13.02   Notices...........................................................    25
13.03   Entire Agreement; Supersedure.....................................    26
13.04   Effect of Waiver or Consent.......................................    26
13.05   Amendment or Modification.........................................    26
13.06   Binding Effect....................................................    26
13.07   Governing Law; Severability.......................................    26
13.08   Further Assurances................................................    27
13.09   Waiver of Certain Rights..........................................    27
13.10   Indemnification...................................................    27
13.11   Notice to Members of Provisions of this Agreement.................    27
13.12   Counterparts......................................................    27




                                      -iii-

                                   REGULATIONS

                                       OF

                        ASHTON HOUSTON DEVELOPMENT L.L.C.

                        A TEXAS LIMITED LIABILITY COMPANY

     These REGULATIONS OF ASHTON HOUSTON DEVELOPMENT L.L.C. (these
"Regulations"), dated as of May 16, 1996, are (a) adopted by the Managers (as
defined below) and (b) executed and agreed to, for good and valuable
consideration, by the Members (as defined below).

                                    ARTICLE I
                                   DEFINITIONS

     1.01 DEFINITIONS. As used in these Regulations, the following terms have
the following meanings:

          "Act" means the Texas Limited Liability Company Act and any successor
     statute, as amended from time to time.

          "Articles" has the meaning given that term in Section 2.01.

          "Bankrupt Member" means (except to the extent a Required Interest
     consents otherwise) any Member (a) that (i) makes a general assignment for
     the benefit of creditors; (ii) files a voluntary bankruptcy petition; (iii)
     becomes the subject of an order for relief or is declared insolvent in any
     federal or state bankruptcy or insolvency proceedings; (iv) files a
     petition or answer seeking for the Member a reorganization, arrangement,
     composition, readjustment, liquidation, dissolution, or similar relief
     under any law; (v) files an answer or other pleading admitting or failing
     to contest the material allegations of a petition filed against the Member
     in a proceeding of the type described in subclauses (i) through (iv) of
     this clause (a); or (vi) seeks, consents to, or acquiesces in the
     appointment of a trustee, receiver, or liquidator of the Member or of all
     or any substantial part of the Member's properties; or (b) against which, a
     proceeding seeking reorganization, arrangement, composition, readjustment,
     liquidation, dissolution, or similar relief under any law has been
     commenced and 120 days have expired without dismissal thereof or with
     respect to which, without the Member's consent or acquiescence, a trustee,
     receiver, or liquidator of the Member or of all or any substantial part of
     the Member's properties has been appointed and 90 days have expired without
     the appointment's having been vacated or stayed, or 90 days have expired
     after the date of expiration of a stay, if the appointment has not
     previously been vacated.

          "Business Day" means any day other than a Saturday, a Sunday, or a
     holiday on which national banking associations in the State of Texas are
     closed.


                                       -1-

          "Capital Contribution" means any contribution by a Member to the
     capital of the Company.

          "Code" means the Internal Revenue Code of 1986 and any successor
     statute, as amended from time to time.

          "Commitment" means, subject in each case to adjustments on account of
     Dispositions of Membership Interests permitted by these Regulations, (a) in
     the case of a Member executing these Regulations as of the date of these
     Regulations or a Person acquiring that Membership Interest, the amount
     specified for that Member as its Commitment on Exhibit A, and (b) in the
     case of a Membership Interest issued pursuant to Section 3.04, the
     Commitment established pursuant thereto.

          "Company" means Ashton Houston Development L.L.C., a Texas limited
     liability company.

          "Default Interest Rate" means a rate per annum equal to the lesser of
     (a) four percent (4%) plus a varying rate per annum that is equal to the
     interest rate published as the prime rate by The Bank of Nova Scotia from
     time to time, with adjustments in that varying rate to be made on the same
     date as any change in that rate, and (b) the maximum rate permitted by
     applicable law.

          "Delinquent Member" has the meaning given that term in Section
     4.03(a).

          "Dispose," "Disposing," or "Disposition" means a sale, assignment,
     transfer, exchange, mortgage, pledge, grant of a security interest, or
     other disposition or encumbrance (including, without limitation, by
     operation of law), or the acts thereof.

          "General Interest Rate" means a rate per annum equal to the lesser of
     (a) a varying rate per annum that is equal to the interest rate published
     as the prime rate by The Bank of Nova Scotia from time to time, with
     adjustments in that varying rate to be made on the same date as any change
     in that rate, and (b) the maximum rate permitted by applicable law.

          "Lending Member" has the meaning given that term in Section
     4.03(a)(ii).

          "Manager" means Elly Reisman, Bruce Freeman, Harry Rosenbaum and
     Seymour Joffe and any Person hereafter elected as a manager of the Company
     as provided in these Regulations, but does not include any Person who has
     ceased to be a manager of the Company.

          "Member" means any Person executing these Regulations as of the date
     of these Regulations as a member or hereafter admitted to the Company as a
     member as provided in these Regulations, but does not include any Person
     who has ceased to be a member in the Company.


                                       -2-

          "Membership Interest" means the interest of a Member in the Company,
     including, without limitation, rights to distributions (liquidating or
     other), allocations, information, and to consent or approve.

          "Permitted Transferee" has the meaning given that term in Section
     3.03(b).

          "Person" has the meaning given that term in article 1.02(A)(4) of the
     Act.

          "Proceeding" has the meaning given that term in Section 8.01.

          "Regulations" has the meaning given that term in the introductory
     paragraph.

          "Required Interest" means one or more Members having among them more
     than 51% of the Sharing Ratios of all Members.

          "Sharing Ratio" with respect to any Member means the percentage set
     forth on Exhibit A, subject to change as herein provided.

          "TBCA" means the Texas Business Corporation Act and any successor
     statute, as amended from time to time.

Other terms defined herein have the meanings so given them.

     1.02 CONSTRUCTION. Whenever the context requires, the gender of all words
used in these Regulations includes the masculine, feminine, and neuter. All
references to Articles and Section refer to articles and sections of these
Regulations, and all references to Exhibits are to Exhibits attached hereto,
each of which is made a part hereof for all purposes.

                                   ARTICLE II
                                  ORGANIZATION

     2.01 FORMATION. The Company has been organized as a Texas limited liability
company by the filing of Articles of Organization (the "Articles") under and
pursuant to the Act and the issuance of a certificate of organization for the
Company by the Secretary of State of Texas.

     2.02 NAME. The name of the Company is "Ashton Houston Development L.L.C."
and all Company business must be conducted in that name or such other names that
comply with applicable law as the Managers may select from time to time.

     2.03 REGISTERED OFFICE; REGISTERED AGENT; PRINCIPAL OFFICE IN THE UNITED
STATES; OTHER OFFICES. The registered office of the Company required by the Act
to be maintained in the State of Texas shall be the office of the initial
registered agent named in the Articles or such other office (which need not be a
place of business of the Company) as the Managers may designate from time to
time in the manner provided by law. The registered agent of the Company in the
State of Texas shall be the initial registered agent named in the Articles or
such other Person or Persons as the Managers may designate from time to time in
the manner


                                       -3-

provided by law. The principal office of the Company in the United States shall
be at such place as the Managers may designate from time to time, which need not
be in the State of Texas, and the Company shall maintain records there as
required by article 2.22 of the Act and shall keep the street address of such
principal office at the registered office of the Company in the State of Texas.
The Company may have such other offices as the Managers may designate from time
to time.

     2.04 PURPOSES. The purposes of the Company are those set forth in the
Articles.

     2.05 FOREIGN QUALIFICATION. Prior to the Company's conducting business in
any jurisdiction other than Texas, the Managers shall cause the Company to
comply, to the extent procedures are available and those matters are reasonably
within the control of the Managers, with all requirements necessary to qualify
the Company as a foreign limited liability company in that jurisdiction. At the
request of the Managers, each Member shall execute, acknowledge, swear to, and
deliver all certificates and other instruments conforming with these Regulations
that are necessary or appropriate to qualify, continue, and terminate the
Company as a foreign limited liability company in all such jurisdictions in
which the Company may conduct business.

     2.06 TERM. The Company commenced on the date the Secretary of State of
Texas issued a certificate of organization for the Company and shall continue in
existence for the period fixed in the Articles for the duration of the Company,
or such earlier time as these Regulations may specify.

     2.07 MERGERS AND EXCHANGES. The Company may be a party to (a) a merger or
(b) an exchange or acquisition of the type described in article 5.02 of the
TBCA, subject to the requirements of Section 6.01(b)(ii).

     2.08 NO STATE-LAW PARTNERSHIP. The Members intend that the Company not be a
partnership (including, without limitation, a limited - partnership) or joint
venture, and that no Member or Manager be a partner or joint venturer of any
other Member or Manager, for any purposes other than federal and state tax
purposes, and these Regulations may not be construed to suggest otherwise.

                                   ARTICLE III
                      MEMBERSHIP; DISPOSITIONS OF INTERESTS

     3.01 INITIAL MEMBERS. The initial members of the Company are the Persons
executing these Regulations as of the date of these Regulations as members, each
of which is admitted to the Company as a Member effective contemporaneously with
the execution by such Person of these Regulations.

     3.02 REPRESENTATIONS AND WARRANTIES. Each Member hereby represents and
warrants to the Company and each other Member that (a) if that Member is a
corporation, it is duly organized, validly existing and in good standing under
the law of the state of its incorporation and is duly qualified and in good
standing as a foreign corporation in the jurisdiction of its principal place of
business (if not incorporated therein); (b) if that Member is a limited
liability company, it is duly organized, validly existing, and (if applicable)
in good standing under the law of the state of its organization and is duly
qualified and (if applicable) in good standing as a foreign limited liability
company in the jurisdiction of its principal place of business (if not organized
therein); (c) if that Member is a partnership, trust, or other entity, it is
duly formed, validly existing, and (if applicable) in good standing under the
law of the state of its formation,


                                       -4-

and if required by law is duly qualified to do business and (if applicable) in
good standing in the jurisdiction of its principal place of business (if not
formed therein), and the representations and warranties in clause (a), (b) or
(c), as applicable, are true and correct with respect to each partner (other
than limited partners), trustee, or other member thereof; (d) that Member has
full corporate, limited liability company, partnership, trust, or other
applicable power and authority to execute and agree to these Regulations and to
perform its obligations hereunder and all necessary actions by the board of
directors, shareholders, managers, members, partners, trustees, beneficiaries,
or other Persons necessary for the due authorization, execution, delivery, and
performance of these Regulations by that Member have been duly taken; (e) that
Member has duly executed and delivered these Regulations; and (f) that Member's
authorization, execution, delivery, and performance of these Regulations do not
conflict with any other agreement or arrangement to which that Member is a party
or which it is bound.

     3.03 RESTRICTIONS ON THE DISPOSITION OF AN INTEREST. (a) Except as
specifically provided in this Section 3.03, a Disposition of an interest in the
Company may not be effected without the consent of (i) a majority of the
Managers who are Members (excluding any Manager who is making such Disposition),
or (ii) if there are no Managers of the type described in clause (i), a Required
Interest. Any attempted Disposition by a Person of an interest or right, or any
part thereof, in or in respect of the Company other than in accordance with this
Section 3.03 shall be, and is hereby declared, null and void ab initio.

     (b) Notwithstanding the provisions of Section 3.03(a), the interest of any
Member in the Company may be transferred without the consent of the Managers or
any of the Members if (i) the transfer occurs by reason of or incident to the
death, dissolution, divorce, liquidation, merger or termination of the
transferor Member, and (ii) the transferee is a Permitted Transferee. A
"Permitted Transferee" is any member of such Member's immediate family, or a
trust, corporation, limited liability company, or partnership controlled by such
Member or members of such Member's immediate family, or another Person
controlling, controlled by, or under common control with such Member.

     (c) Subject to the provisions of Section 3.03(d), (e), and (f), (i) a
Person to whom an interest in the Company is transferred has the right to be
admitted to the Company as a Member with the Sharing Ratio and the Commitment so
transferred to such Person, if (A) the Member making such transfer grants the
transferee the right to be so admitted, and (B) such transfer is consented to in
accordance with Section 3.03(a); (ii) a Permitted Transferee under the
circumstances described in Section 3.03(b) has the right to be admitted to the
Company as a Member with the Sharing Ratio and the Commitment so transferred to
the Permitted Transferee; and (iii) the Company or (with the permission of the
Company, which may be withheld in its sole discretion) a Lending Member may
grant the purchaser of a Delinquent Member's interest in the Company at a
foreclosure of the security interest therein granted pursuant to Section 4.03(b)
the right to be admitted to the Company as a Member with such Sharing Ratio and
such Commitment (no greater than the Sharing Ratio and the Commitment of the
Member effecting such Disposition prior thereto) as they may agree.

     (d) The Company may not recognize for any purpose any purported Disposition
of all or part of a Membership Interest unless and until the other applicable
provisions of this Section 3.03 have been satisfied and the Managers have
received, on behalf of the Company, a document (i) executed by both the Member
effecting the Disposition (or if the transfer is on account of the death,
incapacity, or liquidation of the transferor, its representative) and the Person
to which the Membership Interest or part thereof is Disposed, (ii) including the
notice


                                       -5-

address of any Person to be admitted to the Company as a Member and its
agreement to be bound by these Regulations with respect to the Membership
Interest or part thereof being obtained, (iii) setting forth the Sharing Ratios
and the Commitments after the Disposition of the Member effecting the
Disposition and the Person to which the Membership Interest or part thereof is
Disposed (which together must total the Sharing Ratio and the Commitment of the
Member effecting the Disposition before the Disposition), and (iv) containing a
representation and warranty that the Disposition was made in accordance with all
applicable laws and regulations (including securities laws) and, if the Person
to which the Membership Interest or part thereof is Disposed is to be admitted
to the Company, its representation and warranty that the representations and
warranties in Section 3.02 are true and correct with respect to that Person.
Each Disposition and, if applicable, admission complying with the provisions of
this Section 3.03(d) is effective as of the first day of the calendar month
immediately succeeding the month in which the Managers receive the notification
of Disposition and the other requirements of this Section 3.03 have been met.

     (e) For the right of a Member to Dispose of a Membership Interest or any
part thereof or of any Person to be admitted to the Company in connection
therewith to exist or be exercised, (i) either (A) the Membership Interest or
part thereof subject to the Disposition or admission must be registered under
the Securities Act of 1933, as amended, and any applicable state securities laws
or (B) the Company must receive a favorable opinion of the Company's legal
counsel or of other legal counsel acceptable to the Managers to the effect that
the Disposition or admission is exempt from registration under those laws and
(ii) the Company must receive a favorable opinion of the Company's legal counsel
or of other legal counsel acceptable to the Managers to the effect that the
Disposition or admission, when added to the total of all other sales,
assignments, or other Dispositions within the preceding 12 months, would not
result in the Company's being considered to have terminated within the meaning
of the Code. The Managers, however, may waive the requirements of this Section
3.03(e).

     (f) The Member effecting a Disposition and any Person admitted to the
Company in connection therewith shall pay, or reimburse the Company for, all
costs incurred by the Company in connection with the Disposition or admission
(including, without limitation, the legal fees incurred in connection with the
legal opinions referred to in Section 3.03(e)) on or before the tenth day after
the receipt by that Person of the Company's invoice for the amount due. If
payment is not made by the date due, the Person owing that amount shall pay
interest on the unpaid amount from the date due until paid at a rate per annum
equal to the Default Interest Rate.

     3.04 ADDITIONAL MEMBERS. Additional Persons may be admitted to the Company
as Members and Membership Interests may be created and issued to those Persons
and to existing Members at the direction of (a) a majority of the Managers who
are Members, or (b) if there are no Managers who are Members, a Required
Interest, on such terms and conditions as the Managers may determine at the time
of admission. The terms of admission or issuance must specify the Sharing Ratios
and the Commitments applicable thereto and may provide for the creation of
different classes or groups of Members and having different rights, powers, and
duties. The Managers shall reflect the creation of any new class or group in an
amendment to these Regulations indicating the different rights, powers, and
duties, and such an amendment need be executed only by the Managers. Any such
admission also must comply with the provisions of Section 3.03(d)(i) and (ii)
and is effective only after the new Member has executed and delivered to the
Managers a document including the new Member's notice address, its agreement to
be bound by these Regulations, and its representation and warranty that the


                                       -6-

representation and warranties in Section 3.02 are true and correct with respect
to the new Member. The provisions of this Section 3.04 shall not apply to
Dispositions of Membership Interests.

     3.05 INTERESTS IN A MEMBER. A Member that is not a natural person may not
cause or permit an interest, direct or indirect, in itself to be Disposed of
such that, after the Disposition, (a) the Company would be considered to have
terminated within the meaning of section 708 of the Code or (b) without the
consent of the Managers and a Required Interest, that Member shall cease to be
controlled by substantially the same Persons who control it as of the date of
its admission to the Company. On any breach of the provisions of clause (b) of
the immediately preceding sentence, the Company shall have the option to buy,
and on exercise of that option the breaching Member shall sell, the breaching
Member's Membership Interest, all in accordance with Section 11.01 as if the
breaching Member were a Bankrupt Member.

     3.06 INFORMATION. (a) In addition to the other rights specifically set
forth in these Regulations, each Member is entitled to all information to which
that Member is entitled to have access pursuant to article 2.22 of the Act under
the circumstances and subject to the conditions therein stated. The Members
agree, however, that the Managers from time to time may determine, due to
contractual obligations, business concerns, or other considerations, that
certain information regarding the business, affairs, properties, and financial
condition of the Company should be kept confidential and not provided to some or
all other Members, and that it is not just or reasonable for those Members or
assignees or representatives thereof to examine or copy that information.

     (b) The Members acknowledge that, from time to time, they may receive
information from or regarding the Company in the nature of trade secrets or that
otherwise is confidential, the release of which may be damaging to the Company
or Persons with which it does business. Each Member shall hold in strict
confidence any information it receives regarding the Company that is identified
as being confidential (and if that information is provided in writing, that is
so marked) and may not disclose it to any Person other than another Member or a
Manger, except for disclosures (i) compelled by law (but the Member must notify
the Managers promptly of any request for that information, before disclosing it
if practicable), (ii) to advisers or representatives of the Member or Persons to
which that Member's Membership Interest may be Disposed as permitted by these
Regulations, but only if the recipients have agreed to be bound by the
provisions of this Section 3.06(b), or (iii) of information that Member also has
received from a source independent of the Company that the Member reasonably
believes obtained that information without breach of any obligation of
confidentiality. The Members acknowledge that breach of the provisions of this
Section 3.06(b) may cause irreparable injury to the Company for which monetary
damages are inadequate, difficult to compute, or both. Accordingly, the Members
agree that the provisions of this Section 3.06(b) may be enforced by specific
performance.

     3.07 LIABILITY TO THIRD PARTIES. No Member or Manager shall be liable for
the debts, obligations or liabilities of the Company, including under a
judgment, decree or order of a court.

     3.08 WITHDRAWAL. A Member does not have the right or power to withdraw from
the Company as a member.


                                       -7-

     3.09 LACK OF AUTHORITY. No Member (other than a Manager or an officer) has
the authority or power to act for or on behalf of the Company, to do any act
that would be binding on the Company, or to incur any expenditures on behalf of
the Company.

                                   ARTICLE IV
                              CAPITAL CONTRIBUTIONS

     4.01 INITIAL CONTRIBUTIONS. Contemporaneously with the execution by such
Member of these Regulations, each Member shall make the Capital Contributions
described for that Member in Exhibit A.

     4.02 SUBSEQUENT CONTRIBUTIONS. Without creating any rights in favor of any
third party, each Member shall contribute to the Company, in cash, on or before
the date specified as hereinafter described, that Member's Sharing Ratio of all
monies that in the judgement of the Managers are necessary to enable the Company
to cause the assets of the Company to be properly operated and maintained and to
discharge its costs, expenses, obligations, and liabilities; provided, however,
that a Member is not obligated to contribute a total amount that, when added to
all Capital Contributions that Member previously has made pursuant to Section
4.01 or this Section 4.02, exceeds that Member's Commitment. The Managers shall
notify each Member of the need for Capital Contributions pursuant to this
Section 4.02 when appropriate, which notice must include a statement in
reasonable detail of the proposed uses of the Capital Contributions and a date
(which date may be no earlier than the fifth Business Day following each
Member's receipt of its notice) before which the Capital Contributions must be
made. Notices for Capital Contributions must be made to all Members in
accordance with their Sharing Ratios.

     4.03 FAILURE TO CONTRIBUTE. (a) If a Member does not contribute by the time
required all or any portion of a Capital Contribution that Member is required to
make as provided in these Regulations, the Company may exercise, on notice to
that Member (the "Delinquent Member"), one or more of the following remedies:

          (i) taking such action (including, without limitation, court
     proceedings) as the Managers may deem appropriate to obtain payment by the
     Delinquent Member of the portion of the Delinquent Member's Capital
     Contribution that is in default, together with interest thereon at the
     Default Interest Rate from the date that the Capital Contribution was due
     until the date that it is made, all at the cost and expense of the
     Delinquent Member;

          (ii) permitting the other Members in proportion to their Sharing
     Ratios or in such other percentages as they may agree (the "Lending Member"
     whether one or more), to advance the portion of the Delinquent Member's
     Capital Contribution that is in default, with the following results:

               (A) the sum advanced constitutes a loan from the Lending Member
          to the Delinquent Member and a Capital Contribution of that sum to the
          Company by the Delinquent Member pursuant to the applicable provisions
          of these Regulations,


                                       -8-

               (B) the principal balance of the loan and all accrued unpaid
          interest thereon is due and payable in whole on the tenth day after
          written demand therefor by the Lending Member to the Delinquent
          Member,

               (C) the amount lent bears interest at the Default Interest Rate
          from the day that the advance is deemed made until the date that the
          loan, together with all interest accrued on it, is repaid to the
          Lending Member,

               (D) all distributions from the Company that otherwise would be
          made to the Delinquent Member (whether before or after dissolution of
          the Company) instead shall be paid to the Lending Member until the
          loan and all interest accrued on it have been paid in full to the
          lending Member (with payments being applied first to accrued and
          unpaid interest and then to principal),

               (E) the payment of the loan and interest accrued on it is secured
          by a security interest in the Delinquent Member's Membership Interest,
          as more fully set forth in Section 4.03(b), and

               (F) the Lending Member has the right, in addition to the other
          rights and remedies granted to it pursuant to these Regulations or
          available to it at law or in equity, to take any action (including,
          without limitation, court proceedings) that the Lending Member may
          deem appropriate to obtain payment by the Delinquent Member of the
          loan and all accrued and unpaid interest on it, at the cost and
          expense of the Delinquent Member;

          (iii) exercising the rights of a secured party under the Uniform
     Commercial Code of the State of Texas, as more fully set forth in Section
     4.03(b); or

          (iv) exercising any other rights and remedies available at law or in
     equity.

     (b) Each Member grants to the Company, and to each Lending Member with
respect to any loans made by the Lending Member to that Member as a Delinquent
Member pursuant to Section 4.03(a)(ii), as security, equally and ratably, for
the payment of all Capital Contributions that Member has agreed to make and the
payment of all loans and interest accrued on them made by Lending Members to
that Member as a Delinquent Member pursuant to Section 4.03(a)(ii), a security
interest in and a general lien on its Membership Interest and the proceeds
thereof, all under the Uniform Commercial Code of the State of Texas. On any
default in the payment of a Capital Contribution or in the payment of such a
loan or interest accrued on it, the Company or the Lending Member, as
applicable, is entitled to all the rights and remedies of a secured party under
the Uniform Commercial Code of the State of Texas with respect to the security
interest granted in this Section 4.03(b). Each Member shall execute and
deliver to the Company and the other Members all financing statements and other
instruments that the Managers or the Lending Member, as applicable, may request
to effectuate and carry


                                       -9-

out the preceding provisions of this Section 4.03(b). At the option of the
Managers or a Lending Member, these Regulations or a carbon, photographic, or
other copy hereof may serve as a financing statement.

     4.04 RETURN OF CONTRIBUTIONS. Other than as expressly provided in these
Regulations, Member is not entitled to the return of any part of its Capital
Contributions or to be paid interest in respect of either its capital account or
its Capital Contributions. An unrepaid Capital Contribution is not a liability
of the Company or of any Member. A Member is not required to contribute or to
lend any cash or property to the Company to enable the Company to return any
Member's Capital Contributions.

     4.05 ADVANCES BY MEMBERS. If the Company does not have sufficient cash to
pay its obligations, any Member(s) that may agree to do so with the Managers'
consent may advance all or part of the needed funds to or on behalf of the
Company. An advance described in this Section 4.05 constitutes a loan from the
Member to the Company, bears interest at the General Interest Rate from the date
of the advance until the date of payment, and is not a Capital Contribution.

     4.06 CAPITAL ACCOUNTS. A capital account shall be established and
maintained for each Member. Each Member's capital account (a) shall be increased
by (i) the amount of money contributed by that Member to the Company, (ii) the
fair market value of property contributed by that Member to the Company (net of
liabilities secured by the contributed property that the Company is considered
to assume or take subject to under section 752 of the Code), and (iii)
allocations to that Member of Company income and gain (or items thereof),
including income and gain exempt from tax and income and gain described in
Treas. Reg. Section 1.704-1(b)(2)(iv)(g), but excluding income and gain
described in Treas. Reg. Section 1.704-1(b)(4)(i), and (b) shall be decreased by
(i) the amount of money distributed to that Member by the Company, (ii) the fair
market value of property distributed to that Member by the Company (net of
liabilities secured by the distributed property that the Member is considered to
assume or take subject to under section 752 of the Code), (iii) allocations to
that Member of expenditures of the Company described in section 705(a)(2)(B) of
the Code, and (iv) allocations of Company loss and deduction (or items thereof),
including loss and deduction described in Treas. Reg. Section 1.704-
1(b)(2)(iv)(g), but excluding items described in clause (b)(iii) above and loss
or deduction described in Treas. Reg. Section 1.704-1(b)(4)(i) or Section
1.704-1(b)(4)(iii). The Members' capital accounts also shall be maintained and
adjusted as permitted by the provisions of Treas. Reg. Section
1.704-1(b)(2)(iv)(f) and as required by the other provisions of Treas. Reg.
Sections 1.704-1(b)(2)(iv) and 1.704-1(b)(4), including adjustments to reflect
the allocations to the Members of depreciation, depletion, amortization, and
gain or loss as computed for book purposes rather than the allocation of the
corresponding items as computed for tax purposes, as required by Treas. Reg.
Section 1.704-1(b)(2)(iv)(g). A Member that has more than one Membership
Interest shall have a single capital account that reflects all its Membership
Interests, regardless of the class of Membership Interests owned by that Member
and regardless of the time or manner in which those Membership Interests were
acquired. On the transfer of all or part of a Membership Interest, the capital
account of the transferor that is attributable to the transferred Membership
Interest or part thereof shall carry over to the transferee Member in accordance
with the provisions of Treas. Reg. Section 1.704-1(b)(2)(iv)(1).


                                      -10-

                                    ARTICLE V
                          ALLOCATIONS AND DISTRIBUTIONS

     5.01 ALLOCATIONS. (a) Except as may be required by section 701(c) of the
Code and Treas. Reg. Section 1.701-1 (b)(2)(iv)(f)(4), all items of income,
gain, loss, deduction, and credit of the Company shall be allocated among the
Members in accordance with their Sharing Ratios.

     (b) All items of income, gain, loss, deduction, and credit allocable to any
Membership Interest that may have been transferred shall be allocated between
the transferor and the transferee based on the portion of the calendar year
during which each was recognized as owning that Membership Interest, without
regard to the results of Company operations during any particular portion of
that calendar year and without regard to whether cash distributions were made to
the transferor or the transferee during that calendar year; provided, however,
that this allocation must be made in accordance with a method permissible under
section 706 of the Code and the regulations thereunder.

     5.02 DISTRIBUTIONS. All receipts and revenues of the Company from any
source shall be applied and distributed in the following order of priority with
no distribution being made in any category set forth below unless and until the
preceding category has been satisfied in full either by payment or by setting
aside of a cash reserve for payment of same.

     (a) in payment of all debts, obligations, liabilities, costs and expenses
incurred in connection with or on account of the Company;

     (b) in repayment of any loans and accrued interest thereon made by a
Lending Member pursuant to Section 4.03(a)(ii);

     (c) in repayment of Contributions by the Member in accordance with their
Sharing Ratios, subject to the provisions of Section 4.03.

     (d) after having satisfied (a), (b) and (c) above, receipts and revenues of
the Company shall represent the profits of the Company and shall be distributed
in the following order of priority:

          (i) the Contributions made by the Members to the Company pursuant to
     Sections 4.01 and 4.02 herein shall bear interest at a rate which is two
     percent (2%) per annum greater than the prime rate charged by the Bank of
     Nova Scotia to its most creditworthy customers of U.S. Dollar demand loans,
     but in no event shall the rate of interest exceed the maximum rate
     permitted by laws, from the date of such advance until repaid to such
     Member in accordance with (c) above.

          (ii) after having satisfied (a), (b), (d) and (d)(i) above, the
     receipts and revenues of the Company shall be distributed to the Members
     pro rate and pari passu in accordance with their Sharing Ratios.

However, no distribution of profits shall be made until after completion of any
development and/or construction activities undertaken by the Company, without
the agreement of the Members.


                                      -11-

                                   ARTICLE VI
                                    MANAGERS

     6.01 MANAGEMENT BY MANAGERS. (a) Except for situations in which the
approval of the Members is required by these Regulations or by nonwaivable
provisions of applicable law, and subject to the provisions of Section 6.02, (i)
the powers of the Company shall be exercised by or under the authority of, and
the business and affairs of the Company shall be managed under the direction of,
the Managers; and (ii) the Managers may make all decisions and take all actions
for the Company not otherwise provided for in these Regulations, including,
without limitation, the following:

          (i) entering into, making, and performing contracts, agreements, and
     other undertakings binding the Company that may be necessary, appropriate,
     or advisable in furtherance of the purposes of the Company and making all
     decisions and waivers thereunder;

          (ii) opening and maintaining bank and investment accounts and
     arrangements, drawing checks and other orders for the payment of money, and
     designating individuals with authority to sign or give instructions with
     respect to those accounts and arrangements;

          (iii) maintaining the assets of the Company in good order;

          (iv) collecting sums due the Company;

          (v) to the extent that funds of the Company are available therefor,
     paying debts and obligations of the Company;

          (vi) acquiring, utilizing for Company purposes, and Disposing of any
     asset of the Company;

          (vii) borrowing money or otherwise committing the credit of the
     Company for Company activities and voluntary prepayments or extensions of
     debt;

          (viii) selecting, removing, and changing the authority and
     responsibility of lawyers, accountants, and other advisers and consultants;

          (ix) obtaining insurance for the Company;

          (x) determining distributions of Company cash and other property as
     provided in Section 5.02;

          (xi) establishing a seal for the Company;

          (xii) selling, leasing, exchanging or otherwise disposing of
     (including by way of a pledge, mortgage, deed of trust or trust indenture)
     all or any portion of the Company's property and assets (with or without
     good will); and


                                      -12-

          (xiii) being a party to (i) a merger, or (ii) an exchange or
     acquisition of the type described in article 5.02 of the TBCA.

     (b) Notwithstanding the provisions of Section 6.01(a), the Managers may
not cause the Company to do any of the following without complying with the
applicable requirements set forth below:

          (i) amend or restate the Articles, without complying with the
     applicable procedures set forth in the Act and the TBCA, including, without
     limitation, the requirement in article 4.02 of the TBCA regarding approval
     by the Members (unless such provision is rendered inapplicable by another
     provision of applicable law).

     6.02 ACTIONS BY MANAGERS; COMMITTEES; DELEGATION OF AUTHORITY AND DUTIES,
(a) In managing the business and affairs of the Company and exercising its
powers, the Managers shall act (i) collectively through meetings and written
consents pursuant to Sections 6.05 and 6.07; (ii) through committees pursuant to
Section 6.02(b); and (iii) through Managers to whom authority and duties have
been delegated pursuant to Section 6.02(c).

     (b) The Managers may, from time to time, designate one or more committees,
each of which shall be comprised of one or more Managers. Any such committee, to
the extent provided in such resolution or in the Articles or these Regulations,
shall have and may exercise all of the authority of the Managers, subject to the
limitations set forth in the Act and the TBCA. At every meeting of any such
committee, the presence of a majority of all the members thereof shall
constitute a quorum, and the affirmative vote of a majority of the members
present shall be necessary for the adoption of any resolution. The Managers may
dissolve any committee at any time, unless otherwise provided in the Articles or
these Regulations.

     (c) The Managers hereby delegate to each of the Managers (acting by
themselves) and without the necessity of any other approval or authorization) or
to an authorized representative of the Company the authority to take any of the
actions authorized in Section 6.01(a) hereof. In addition, the Managers may
assign titles (including, without limitation, president, vice president,
secretary, assistant secretary, treasurer and assistant treasurer) to any such
Manager. Unless the Managers decide otherwise, if the title is one commonly used
for officers of a business corporation formed under the TBCA, the assignment of
such title shall constitute the delegation to such Manager of the authority and
duties that are normally associated with that office, subject to any specific
delegation of authority and duties made pursuant to the first sentence of this
Section 6.02(c). Any number of titles may be held by the same Manager. Any
delegation pursuant to this Section 6.02(c) may be revoked at any time by the
Managers.

     (d) Any Person dealing with the Company, other than a Member, may rely on
the authority of any Manager, authorized representative or officer in taking any
action in the name of the Company without inquiry into the provisions of these
Regulations or compliance herewith, regardless of whether that action actually
is taken in accordance with the provisions of these Regulations.

     6.03 NUMBER AND TERM OF OFFICE. The number of Managers of the Company shall
be determined from time to time by resolution of the Managers; provided,
however, that no decrease in the number of Managers that would have the effect
of shortening the term of an incumbent Manager may be made by the Managers. If
the Managers make no such determination, the number of Managers shall be the
number set forth in the Articles as the number of Managers constituting the
initial Managers. Each Manager shall hold office for the


                                      -13-

term for which he is elected and thereafter until his successor shall have been
elected and qualified, or until his earlier death, resignation or removal.
Unless otherwise provided in the Articles, Managers need not be Members or
residents of the State of Texas.

     6.04 VACANCIES; REMOVAL; RESIGNATION. Any Manager position to be filled by
reason of an increase in the number of Managers may be filled by election at an
annual or special meeting of Members called for that purpose. Any vacancy
occurring in the Managers other than by reason of an increase in the number of
Managers may be filled (a) by election at an annual or special meeting of the
Members called for that purpose or (b) by the affirmative vote of a majority of
the remaining Managers though less than a quorum of the Managers. A Manager
elected to fill a vacancy occurring other than by reason of an increase in the
number of Managers shall be elected for the unexpired term of his predecessor in
office. At any meeting of Members at which a quorum of Members is present called
expressly for that purpose, or pursuant to a written consent adopted pursuant to
these Regulations, any Manager may be removed, with or without cause, by a
Required Interest. Any Manager may resign at any time. Such resignation shall be
made in writing and shall take effect at the time specified therein, or if no
time be specified, at the time of its receipt by the remaining Managers. The
acceptance of a resignation shall not be necessary to make it effective, unless
expressly so provided in the resignation.

     6.05 MEETINGS. (a) Unless otherwise required by law or provided in the
Articles or these Regulations, a majority of the total number of Managers fixed
by, or in the manner provided in, the Articles or these Regulations shall
constitute a quorum for the transaction of business of the Managers, and the act
of a majority of the Managers present at a meeting at which a quorum is present
shall he the act of the Managers. A Manager who is present at a meeting of the
Managers at which action on any Company matter is taken shall be presumed to
have assented to the action unless his dissent shall be entered in the minutes
of the meeting or unless he shall file his written dissent to such action with
the Person acting as secretary of the meeting before the adjournment thereof or
shall deliver such dissent to the Company immediately after the adjournment of
the meeting. Such right to dissent shall not apply to a Manager who voted in
favor of such action.

     (b) Meetings of the Managers may be held at such place or places as shall
be determined from time to time by resolution of the Managers. At all meetings
of the Managers, business shall be transacted in such order as shall from time
to time be determined by resolution of the Managers. Attendance of a Manager at
a meeting shall constitute a waiver of notice of such meeting, except where a
Manager attends a meeting for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully
called or convened.

     (c) In connection with any annual meeting of Members at which Managers were
elected, the Managers may, if a quorum is present, hold its first meeting for
the transaction of business immediately after and at the same place as such
annual meeting of the Members. Notice of such meeting at such time and place
shall not be required.

     (d) Regular meetings of the Managers shall be held at such times and places
as shall be designated from time to time by resolution of the Managers. Notice
of such regular meetings shall not be required.


                                      -14-

     (e) Special meetings of the Managers may be called by any Manager on at
least 24 hours notice to each other Manager. Such notice need not state the
purpose or purposes of, nor the business to be transacted at, such meeting,
except as may otherwise be required by law or provided for by the Articles or
these Regulations.

     6.06 APPROVAL OR RATIFICATION OF ACTS OR CONTRACTS BY MEMBERS. The Managers
in their discretion may submit any act or contract for approval or ratification
at any annual meeting of the Members, or at any special meeting of the Members
called for the purpose of considering any such act or contract, and any act or
contract that shall be approved or be ratified by a Required Interest shall be
as valid and as binding upon the Company and upon all the Members as if it shall
have been approved or ratified by every Member of the Company.

     6.07 ACTION BY WRITTEN CONSENT OR TELEPHONE CONFERENCE. Any action
permitted or required by the Act, the TBCA, the Articles or these Regulations to
be taken at a meeting of the Managers or any committee designated by the
Managers may be taken without a meeting if a consent in writing, setting forth
the action to be taken, is signed by all the Managers or members of such
committee, as the case may be. Such consent shall have the same force and effect
as a unanimous vote at a meeting and may be stated as such in any document or
instrument filed with the Secretary of State of Texas, and the execution of such
consent shall constitute attendance or presence in person at a meeting of the
Managers or any such committee, as the case may be. Subject to the requirements
of the Act, the TBCA, the Articles or these Regulations for notice of meetings,
unless otherwise restricted by the Articles, Managers, or members of any
committee designated by the Managers, may participate in and hold a meeting of
the Managers or any committee of Managers, as the case may be, by means of a
conference telephone or similar communications equipment by means of which all
Persons participating in the meeting can hear each other, and participation in
such meeting shall constitute attendance and presence in person at such meeting,
except where a Person participates in the meeting for the express purpose of
objecting to the transaction of any business on the ground that the meeting is
not lawfully called or convened.

     6.08 COMPENSATION. The Managers shall reserve such compensation, if any,
for their services as may be designated from time to time by all of the
Managers. In addition, the Managers shall be entitled to be reimbursed for
out-of-pocket costs and expenses incurred in the course of their service
hereunder, including the portion of their overhead reasonably allocable to
Company activities.

     6.09 CONFLICTS OF INTEREST. Subject to the other express provisions of
these Regulations, each Manager, Member and officer of the Company at any time
and from time to time may engage in and possess interests in other business
ventures of any and every type and description, independently or with others,
including ones in competition with the Company, with no obligation to offer to
the Company or any other Member, Manager or officer the right to participate
therein. The Company may transact business with any Manager, Member, officer or
Affiliate thereof, provided the terms of those transactions are no less
favorable than those the Company could obtain from unrelated third parties.

     6.10 OFFICERS. (a) The Managers may, from time to time, designate one or
more Persons to be officers of the Company. No officer need be a resident of the
State of Texas, a Member or a Manager. Any officers so designated shall have
such authority and perform such duties as the Managers may, from time to time,
delegate to them. The Managers may assign titles to particular officers. Unless
the Managers decide otherwise, if the title is one commonly


                                      -15-

used for officers of a business corporation formed under the TBCA, the
assignment of such title shall constitute the delegation to such officer of the
authority and duties that are normally associated with that office, subject to
(i) any specific delegation of authority and duties made to such officer by the
Managers pursuant to the third sentence of this Section 6.10(b), or (ii) any
delegation of authority and duties made to one or more Mangers pursuant to
Section 6.02(a). Each officer shall hold office until his successor shall be
duly designated and shall quality or until his death or until he shall resign or
shall have been removed in the manner hereinafter provided. Any number of
offices may be held by the same Person. The salaries or other compensation, if
any, of the officers and agents of the Company shall be fixed from time to time
by the Managers.

     (b) Any officer may resign as such at any time. Such resignation shall be
made in writing and shall take effect at the time specified therein, or if no
time be specified, at the time of its receipt by the Managers. The acceptance of
a resignation shall not be necessary to make it effective, unless expressly so
provided in the resignation. Any officer may be removed as such, either with or
without cause, by the Managers whenever in their judgment the best interests of
the Company will be served thereby; provided, however, that such removal shall
be without prejudice to the contract rights, if any, of the Person so removed.
Designation of an officer shall not of itself create contract rights. Any
vacancy occurring in any office of the Company (other than Manager) may be
filled by the Managers.

                                   ARTICLE VII
                              MEETINGS OF MEMBERS

     7.01 MEETINGS. (a) A quorum shall be present at a meeting of Members if the
holders of a Required Interest are represented at the meeting in person or by
proxy. With respect to any matter, other than a matter for which the affirmative
vote of the holders of a specified portion of the Sharing Ratios of all Members
entitled to vote is required by the Act, the affirmative vote of a Required
Interest at a meeting of Members at which a quorum is present shall be the act
of the Members.

     (b) All meetings of the Members shall be held at the principal place of
business of the Company or at such other place within or without the State of
Texas as shall be specified or fixed in the notices or waivers of notice
thereof; provided that any or all Members may participate in any such meeting by
means of conference telephone or similar communications equipment pursuant to
Section 7.05.

     (c) Notwithstanding the other provisions of the Articles or these
Regulations, the chairman of the meeting or the holders of a Required Interest
shall have the power to adjourn such meeting from time to time, without any
notice other than announcement at the meeting of the time and place of the
holding of the adjourned meeting. If such meeting is adjourned by the Members,
such time and place shall be determined by a vote of the holders of a Required
Interest. Upon the resumption of such adjourned meeting, any business may be
transacted that might have been transacted at the meeting as originally called.

     (d) An annual meeting of the Members, for the election of the Managers and
for the transaction of such other business as may properly come before the
meeting, shall be held at such place, within or without the State of Texas, on
such date and at such time as the Managers


                                      -16-

shall fix and set forth in the notice of the meeting, which date shall be within
13 months subsequent to the date of organization of the Company or the last
annual meeting of Members, whichever most recently occurred.

     (e) Special meetings of the Members for any proper purpose or purposes may
be called at any time by the Managers or the holders of at least ten percent of
the Sharing Ratios of all Members. If not otherwise stated in or fixed in
accordance with the remaining provisions hereof, the record date for determining
Members entitled to call a special meeting is the date any Member first signs
the notice of that meeting. Only business within the purpose or purposes
described in the notice (or waiver thereof) required by these Regulations may be
conducted at a special meeting of the Members.

     (f) Written or printed notice stating the place, day and hour of the
meeting and, in the case of a special meeting, the purpose or purposes for which
the meeting is called, shall be delivered not less than ten nor more than 60
days before the date of the meeting, either personally or by mail, by or at the
direction of the Managers or Person calling the meeting, to each Member entitled
to vote at such meeting. If mailed, any such notice shall be deemed to be
delivered when deposited in the United States mail, addressed to the Member at
his address provided for on Exhibit A, with postage thereon prepaid.

     (g) The date on which notice of a meeting of Members is mailed or the date
on which the resolution of the Managers declaring a distribution is adopted, as
the case may be, shall be the record date for the determination of the Members
entitled to notice of or to vote at such meeting, including any adjournment
thereof, or the Members entitled to receive such distribution.

     (h) The right of Members to cumulative voting in the election of Managers
is expressly prohibited.

     7.02 VOTING LIST. The Managers shall make, at least ten days before each
meeting of Members, a complete list of the Members entitled to vote at such
meeting or any adjournment thereof, arranged in alphabetical order, with the
address of and the Sharing Ratios held by each, which list, for a period of ten
days prior to such meeting, shall be kept on file at the registered office or
principal place of business of the Company and shall be subject to inspection by
any Member at any time during usual business hours. Such list shall also be
produced and kept open at the time and place of the meeting and shall be subject
to the inspection of any Member during the whole time of the meeting. The
original membership records shall be prima-facie evidence as to who are the
Members entitled to examine such list or transfer records or to vote at any
meeting of Members. Failure to comply with the requirements of this Section
shall not affect the validity of any action taken at the meeting.

     7.03 PROXIES. A Member may vote either in person or by proxy executed in
writing by the Member. A telegram, telex, cablegram or similar transmission by
the Member, or a photographic, photostatic, facsimile or similar reproduction of
a writing executed by the Member shall be treated as an execution in writing for
purposes of this Section. Proxies for use at any meeting of Members or in
connection with the taking of any action by written consent shall be filed with
the Managers, before or at the time of the meeting or execution of the written
consent, as the case may be. All proxies shall be received and taken charge of
and all ballots shall be received and canvassed by the Managers, who shall
decide all questions touching upon the qualification of voters, the validity of
the proxies, and the acceptance or rejection of votes,


                                      -17-

unless an inspector or inspectors shall have been appointed by the chairman of
the meeting, in which event such inspector or inspectors shall decide all such
questions. No proxy shall be valid after 11 months from the date of its
execution unless otherwise provided in the proxy. A proxy shall be revocable
unless the proxy form conspicuously states that the proxy is irrevocable and the
proxy is coupled with an interest. Should a proxy designate two or more Persons
to act as proxies, unless that instrument shall provide to the contrary, a
majority of such Persons present at any meeting at which their powers thereunder
are to be exercised shall have and may exercise all the powers of voting or
giving consents thereby conferred, or if only one be present, then such powers
may be exercised by that one; or, if an even number attend and a majority do not
agree on any particular issue, the Company shall not be required to recognize
such proxy with respect to such issue if such proxy does not specify how the
Sharing Ratios that are the subject of such proxy are to be voted with respect
to such issue.

     7.04 CONDUCT OF MEETINGS. All meetings of the Members shall be presided
over by the chairman of the meeting, who shall be a Manager (or representative
thereof) designated by a majority of the Managers. The chairman of any meeting
of Members shall determine the order of business and the procedure at the
meeting, including such regulation of the manner of voting and the conduct of
discussion as seem to him in order.

     7.05 ACTION BY WRITTEN CONSENT OR TELEPHONE CONFERENCE. (a) Any action
required or permitted to be taken at any annual or special meeting of Members
may be taken without a meeting, without prior notice, and without a vote, if a
consent or consents in writing, setting forth the action so taken, shall be
signed by the holder or holders of not less than the minimum Sharing Ratios that
would be necessary to take such action at a meeting at which the holders of all
Sharing Ratios entitled to vote on the action were present and voted. Every
written consent shall bear the date of signature of each Member who signs the
consent. No written consent shall be effective to take the action that is the
subject to the consent unless, within 60 days after the date of the earliest
dated consent delivered to the Company in the manner required by this Section, a
consent or consents signed by the holder or holders of not less than the minimum
Sharing Ratios that would be necessary to take the action that is the subject of
the consent are delivered to the Company by delivery to its registered office,
its principal place of business, or the Managers. Delivery shall be by hand or
certified or registered mail, return receipt requested. Delivery to the
Company's principal place of business shall be addressed to the Managers. A
telegram, telex, cablegram or similar transmission by a Member, or a
photographic, photostatic, facsimile or similar reproduction of a writing signed
by a Member, shall be regarded as signed by the Member for purposes of this
Section. Prompt notice of the taking of any action by Members without a meeting
by less than unanimous written consent shall be given to those Members who did
not consent in writing to the action.

     (b) The record date for determining Members entitled to consent to action
in writing without a meeting shall be the first date on which a signed written
consent setting forth the action taken or proposed to be taken is delivered to
the Company by delivery to its registered office, its principal place of
business, or the Managers. Delivery shall be by hand or by certified or
registered mail, return receipt requested. Delivery to the Company's principal
place of business shall be addressed to the Managers.

     (c) If any action by Members is taken by written consent, any articles or
documents filed with the Secretary of State of Texas as a result of the taking
of the action shall state, in lieu


                                      -18-

of any statement required by the Act or the TBCA concerning any vote of Members,
that written consent has been given in accordance with the provisions of the Act
and the TBCA and that any written notice required by the Act and the TBCA has
been given.

     (d) Members may participate in and hold a meeting by means of conference
telephone or similar communications equipment by means of which all Persons
participating in the meeting can hear each other, and participation in such
meeting shall constitute attendance and presence in person at such meeting,
except where a Person participates in the meeting for the express purpose of
objecting to the transaction of any business on the ground that the meeting is
not lawfully called or convened.

                                  ARTICLE VIII
                                INDEMNIFICATION

     8.01 RIGHT TO INDEMNIFICATION. Subject to the limitations and conditions as
provided in this Article VIII; each Person who was or is made a party or is
threatened to be made a party to or is involved in any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative,
arbitrative or investigative (hereinafter a "Proceeding"), or any appeal in such
a Proceeding or any inquiry or investigation that could lead to such a
Proceeding, by reason of the fact that he or she, or a Person of whom he or she
is the legal representative, is or was a Manager of the Company or while a
Manager of the Company is or was serving at the request of the Company as a
Manager, director, officer, partner, venturer, proprietor, trustee, employee,
agent, or similar functionary of another foreign or domestic limited liability
company, corporation, partnership, joint venture, sole proprietorship, trust,
employee benefit plan or other enterprise shall be indemnified by the Company to
the fullest extent permitted by the Act and the TBCA, as the same exist or may
hereafter be amended (but, in the case of any such amendment, only to the extent
that such amendment permits the Company to provide broader indemnification
rights than said law permitted the Company to provide prior to such amendment)
against judgments, penalties (including excise and similar taxes and punitive
damages), fines, settlements and reasonable expenses (including, without
limitation, attorneys' fees) actually incurred by such Person in connection with
such Proceeding, and indemnification under this Article VIII shall continue as
to a Person who has ceased to serve in the capacity which initially entitled
such Person to indemnify hereunder. The rights granted pursuant to this Article
VIII shall be deemed contract rights, and no amendment, modification or repeal
of this Article VIII shall have the effect of limiting or denying any such
rights with respect to actions taken or Proceedings arising prior to any such
amendment, modification or repeal. It is expressly acknowledged that the
indemnification provided in this Article VIII could involve indemnification for
negligence or under theories of strict liability.

     8.02 ADVANCE PAYMENT. The right to indemnification conferred in this
Article VIII shall include the right to be paid or reimbursed by the Company the
reasonable expenses incurred by a Person of the type entitled to be indemnified
under Section 8.01 who was, is or is threatened to be made a named defendant or
respondent in a Proceeding in advance of the final disposition of the Proceeding
and without any determination as to the Person's ultimate entitlement to
indemnification; provided, however, that the payment of such expenses incurred
by any such Person in advance of the final disposition of a Proceeding, shall be
made only upon delivery to the Company of a written affirmation by such Manager
of his or her good faith belief that he has met the standard of conduct for
indemnification under this Article VIII and a written


                                      -19-

undertaking, by or on behalf of such Person, to repay all amounts so advanced if
it shall ultimately be determined that such indemnified Person is not entitled
to be indemnified under this Article VIII or otherwise.

     8.03 INDEMNIFICATION OF OFFICERS, EMPLOYEES, AND AGENTS. The Company, by
adoption of a resolution of the Managers, may indemnity and advance expenses to
an officer, employee or agent of the Company to the same extent and subject to
the same conditions under which it may indemnify and advance expenses to
Managers under this Article VIII: and, the Company may indemnify and advance
expenses to Persons who are not or were not Managers, officers, employees or
agents of the Company but who are or were serving at the request of the Company
as a Manager, director, officer, partner, venturer, proprietor, trustee,
employee, agent or similar functionary of another foreign or domestic limited
liability company, corporation, partnership, joint venture, sole proprietorship,
trust, employee benefit plan or other enterprise against any liability asserted
against him and incurred by him in such a capacity or arising out of his status
as such a Person to the same extent that it may indemnity and advance expenses
to Managers under this Article VIII.

     8.04 APPEARANCE AS A WITNESS. Notwithstanding any other provision of this
Article VIII, the Company may pay or reimburse expenses incurred by a Manager in
connection with his appearance as a witness or other participation in a
Proceeding at a time when he is not a named defendant or respondent in the
Proceeding.

     8.05 NONEXCLUSIVITY OF RIGHTS. The right to indemnification and the
advancement and payment of expenses conferred in this Article VIII shall not be
exclusive of any other right which a Manager or other Person indemnified
pursuant to Section 8.03 may have or hereafter acquire under any law (common or
statutory), provision of the Articles or these Regulations, agreement, vote of
Members or disinterested Managers or otherwise.

     8.06 INSURANCE. The Company may purchase and maintain insurance, at its
expense, to protect itself and any Person who is or was serving as a Manager,
officer, employee or agent of the Company or is or was serving at the request of
the Company as a Manager, director, officer, partner, venturer, proprietor,
trustee, employee, agent or similar functionary of another foreign or domestic
limited liability company, corporation, partnership, joint venture, sole
proprietorship, trust, employee benefit plan or other enterprise against any
expense, liability or loss, whether or not the Company would have the power to
indemnify such Person against such expense, liability or loss under this Article
VIII.

     8.07 MEMBER NOTIFICATION. To the extent required by law, any
indemnification of or advance of expenses to a Manager in accordance with this
Article VIII shall be reported in writing to the Members with or before the
notice or waiver of notice of the next Members' meeting or with or before the
next submission to Members of a consent to action without a meeting and, in any
case, within the 12-month period immediately following the date of the
indemnification or advance.

     8.08 SAVINGS CLAUSE. If this Article VIII or any portion hereof shall be
invalidated on any ground by any court of competent jurisdiction, then the
Company shall nevertheless indemnify and hold harmless each Manager or any other
Person indemnified pursuant to this Article VIII as to costs, charges and
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement with respect to any action, suit or proceeding, whether civil,


                                      -20-

criminal, administrative or investigative to the full extent permitted by any
applicable portion of this Article VIII that shall not have been invalidated and
to the fullest extent permitted by applicable law.

                                   ARTICLE IX
                                      TAXES

     9.01 TAX RETURNS. The Managers shall cause to be prepared and filed all
necessary federal and state income tax returns for the Company, including making
the elections described in Section 9.02. Each Member shall furnish to the
Managers all pertinent information in its possession relating to Company
operations that is necessary to enable the Company's income tax returns to be
prepared and filed.

     9.02 TAX ELECTIONS. The Company shall make the following elections on the
appropriate tax returns:

          (a) to adopt the year ending on May 31 as the Company's fiscal year;

          (b) to adopt a method of accounting as the Managers may determine from
     time to time;

          (c) if a distribution of Company property as described in section 734
     of the Code occurs or if a transfer of a Membership Interest as described
     in section 743 of the Code occurs, on written request of any Member, to
     elect, pursuant to section 754 of the Code, to adjust the basis of Company
     properties;

          (d) to elect to amortize the organizational expenses of the Company
     and the startup expenditures of the Company under Section 195 of the Code
     ratably over a period of 60 months as permitted by section 709(b) of the
     Code; and

          (e) any other election the Managers may deem appropriate and in the
     best interests of the Members.

Neither the Company nor any Manager or Member may make an election for the
Company to be excluded from the application of the provisions of subchapter K of
chapter 1 of subtitle A of the Code or any similar provisions of applicable
state law, and no provision of these Regulations (including, without limitation,
Section 2.06) shall be construed to sanction or approve such an election.

     9.03 "TAX MATTERS PARTNER." A majority of the Managers who are Members
shall designate one Manager that is a Member to be the "tax matters partner" of
the Company pursuant to section 6231(a)(7) of the Code; or, if there is no
Manager that is a Member, the "tax matters partner" shall be a Member that is
designated as such by a Required Interest. Any Member who is designated "tax
matters partner" shall take such action as may be necessary to cause each other
Member to become a "notice partner" within the meaning of section 6223 of the
Code. Any Member who is designated "tax matters partner" shall inform each other
Member of all significant matters that may come to its attention in its capacity
as "tax matters partner" by giving notice thereof on or before the fifth
Business Day after becoming aware


                                      -21-

thereof and, within that time, shall forward to each other Member copies of all
significant written communications it may receive in that capacity. Any Member
who is designated "tax matters partner" may not take any action contemplated by
sections 6222 through 6232 of the Code without the consent of a Required
Interest, but this sentence does not authorize such Manager (or any other
Manager) to take any action left to the determination of an individual Member
under sections 6222 through 6232 of the Code.

                                    ARTICLE X
                   BOOKS, RECORDS, REPORTS, AND BANK ACCOUNTS

     10.01 MAINTENANCE OF BOOKS. The Company shall keep books and records of
accounts and shall keep minutes of the proceedings of its Members, its Managers
and each committee of the Managers. The books of account for the Company shall
be maintained on a cash basis in accordance with the terms of these Regulations,
except that the capital accounts of the Members shall be maintained in
accordance with Section 4.06. The calendar year shall be the accounting year of
the Company.

     10.02 REPORTS. On or before the 120th day following the end of each fiscal
year during the term of the Company, the Managers shall cause each Member to be
furnished with a balance sheet, an income statement, and a statement of changes
in Members' capital of the Company for, or as of the end of, that year certified
by a recognized firm of certified public accountants. These financial statements
must be prepared in accordance with accounting principles generally employed for
cash basis records consistently applied (except as therein noted) and must be
accompanied by a report of the certified public accountants certifying the
statements and stating that (a) their examination was made in accordance with
generally accepted auditing standards and, in their opinion, the financial
statements fairly present the financial position, financial results of
operations, and changes in Members' capital in accordance with accounting
principles generally employed for cash-basis records consistently applied
(except as therein noted) and (b) in making the examination and reporting on the
financial statements described above, nothing came to their attention that
caused them to believe that (i) the income and revenues were not paid or
credited in accordance with the financial and accounting provisions of these
Regulations, (ii) the costs and expenses were not charged in accordance with the
financial and accounting provisions of these Regulations, or (iii) the Managers
or any Member failed to comply in any material respect with the financial and
accounting provisions of these Regulations, or if they do conclude that the
Managers or a Member so failed, specifying the nature and period of existence of
the failure. The Managers also may cause to be prepared or delivered such other
reports as they may deem appropriate. The Company shall bear the costs of all
these reports.

     10.03 ACCOUNTS. The Managers shall establish and maintain one or more
separate bank and investment accounts and arrangements for Company funds in the
Company name with financial institutions and firms that the Managers determine.
The Managers may not commingle the Company's funds with the funds of any Member;
however, Company funds may be invested in a manner the same as or similar to the
Managers' investment of their own funds or investments by their Affiliates.


                                      -22-

                                   ARTICLE XI
                             BANKRUPTCY OF A MEMBER

     11.01 BANKRUPT MEMBERS. Subject to Section 12.01(c), if any Member becomes
a Bankrupt Member, the Company shall have the option, exercisable by notice from
the Managers to the Bankrupt Member (or its representative) at any time prior to
the 180th day after receipt of notice of the occurrence of the event causing it
to become a Bankrupt Member, to buy, and on the exercise of this option the
Bankrupt Member or its representative shall sell, its Membership Interest. The
purchase price shall be an amount equal to the fair market value thereof
determined by agreement of the Bankrupt Member (or its representative) and the
Managers; however, if those Persons do not agree on the fair market value on or
before the 30th day following the exercise of the option, either such Person, by
notice to the other, may require the determination of fair market value to be
made by an independent appraiser specified in that notice. If the Person
receiving that notice objects on or before the tenth day following receipt to
the independent appraiser designated in that notice, and those Persons otherwise
fail to agree on an independent appraiser, either such Person may petition the
United States District Judge for the State of Texas (Houston Division) then
senior in service to designate an independent appraiser. The determination of
the independent appraiser, however designated, is final and binding on all
parties. The Bankrupt Member and the Company each shall pay one-half of the
costs of the appraisal. The purchaser shall pay the fair market value as so
determined in four equal cash installments, the first due on closing and the
remainder (together with accumulated interest on the amount unpaid at the
General Interest Rate) due on each of the first three anniversaries thereof. The
payment to be made to the Bankrupt Member or its representative pursuant to this
Section 11.01 is in complete liquidation and satisfaction of all the rights and
interest of the Bankrupt Member and its representative (and of all Persons
claiming by, through, or under the Bankrupt Member and its representative) in
and in respect of the Company, including, without limitation, any Membership
Interest, any rights in specific Company property, and any rights against the
Company and (insofar as the affairs of the Company are concerned) against the
Members, and constitutes a compromise to which all Members have agreed pursuant
to article 5.02(D) of the Act.

                                   ARTICLE XII
                    DISSOLUTION, LIQUIDATION, AND TERMINATION

     12.01 DISSOLUTION. The Company shall dissolve and its affairs shall be
wound up on the first to occur of the following:

          (a) the written consent of a Required Interest;

          (b) the expiration of the period fixed for the duration of the Company
     set forth in the Articles;

          (c) any Manager who is a Member (or, if there is no Manager who is a
     Member, any Member) shall become a Bankrupt Member (with or without the
     consent of a Required Interest); provided, however, that if the event
     described in this Section 12.01(c) shall occur and there shall be at least
     one other Member remaining, the Company shall not be dissolved, and the
     business of the Company shall be continued, if all Members so agree; and


                                      -23-

          (d) entry of a decree of judicial dissolution of the Company under
     article 6.02 of the Act.

Except as provided in Section 12.01(c). the death, retirement, resignation,
expulsion, bankruptcy or dissolution of a Member, or the occurrence of any other
event that terminates the continued membership of a Member in the Company, shall
not cause a dissolution of the Company.

     12.02 LIQUIDATION AND TERMINATION. On dissolution of the Company, the
Managers shall act as liquidator or may appoint one or more Members as
liquidator. The liquidator shall proceed diligently to wind up the affairs of
the Company and make final distributions as provided herein and in the Act. The
costs of liquidation shall be borne as a Company expense. Until final
distribution, the liquidator shall continue to operate the Company properties
with all of the power and authority of the Managers. The steps to be
accomplished by the liquidator are as follows:

          (a) as promptly as possible after dissolution and again after final
     liquidation, the liquidator shall cause a proper accounting to be made by a
     recognized firm of certified public accountants of the Company's assets,
     liabilities, and operations through the last day of the calendar month in
     which the dissolution occurs or the final liquidation is completed, as
     applicable;

          (b) the liquidator shall cause the notice described in article
     6.05(A)(2) of the Act to be mailed to each known creditor of and claimant
     against the Company in the manner described in such article 6.05(A)(2) of
     the Act;

          (c) the liquidator shall pay, satisfy or discharge from Company funds
     all of the debts, liabilities and obligations of the Company (including,
     without limitation, all expenses incurred in liquidation and any advances
     described in Section 4.05) or otherwise make adequate provision for payment
     and discharge thereof (including, without limitation, the establishment of
     a cash escrow fund for contingent liabilities in such amount and for such
     term as the liquidator may reasonably determine); and

          (d) all remaining assets of the Company shall be distributed to the
     Members as follows:

               (i) the liquidator may sell any or all Company property,
          including to Members, and any resulting gain or loss from each sale
          shall be computed and allocated to the capital accounts of the
          Members;

               (ii) with respect to all Company property that has not been sold,
          the fair market value of that property shall be determined and the
          capital accounts of the Members shall be adjusted to reflect the
          manner in which the unrealized income, gain, loss, and deduction
          inherent in property that has not been reflected in the capital
          accounts previously would be allocated among the Members if there were
          a taxable disposition of that property for the fair market value of
          that property on the date of distribution; and


                                      -24-

               (iii) Company property shall be distributed among the Members in
          accordance with the positive capital account balances of the Members,
          as determined after taking into account all capital account
          adjustments for the taxable year of the Company during which the
          liquidation of the partnership occurs (other than those made by reason
          of this clause (iii)); and those distributions shall be made by the
          end of the taxable year of the Company during which the liquidation of
          the Company Occurs (or, if later, 90 days after the date of the
          liquidation).

All distributions in kind to the Members shall be made subject to the liability
of each distributee for costs, expenses, and liabilities theretofore incurred or
for which the Company has committed prior to the date of termination and those
costs, expenses, and liabilities shall be allocated to the distributee pursuant
to this Section 12.02. The distribution of cash and/or property to a Member in
accordance with the provisions of this Section 12.02 constitutes a complete
return to the Member of its Capital Contributions and a complete distribution to
the Member of its Membership Interest and all the Company's property and
constitutes a compromise to which all Members have consented within the meaning
of article 5.02(D) of the Act. To the extent that a Member returns funds to the
Company, it has no claim against any other Member for those funds.

     12.03 DEFICIT CAPITAL ACCOUNTS. Notwithstanding anything to the contrary
contained in these Regulations, and notwithstanding any custom or rule of law to
the contrary, to the extent that the deficit, if any, in the capital account of
any Member results from or is attributable to deductions and losses of the
Company (including non-cash items such as depreciation), or distributions of
money pursuant to these Regulations to all Members in proportion to their
respective Sharing Ratios, upon dissolution of the Company such deficit shall
not be an asset of the Company and such Members shall not be obligated to
contribute such amount to the Company to bring the balance of such Member's
capital account to zero.

     12.04 ARTICLES OF DISSOLUTION. On completion of the distribution of Company
assets as provided herein, the Company is terminated, and the Managers (or such
other Person or Persons as the Act may require or permit) shall file Articles of
Dissolution with the Secretary of State of Texas, cancel any other filings made
pursuant to Section 2.05. and take such other actions as may be necessary to
terminate the Company.

                                  ARTICLE XIII
                               GENERAL PROVISIONS

     13.01 OFFSET. Whenever the Company is to pay any sum to any Member, any
amounts that Member owes the Company may be deducted from that sum before
payment.

     13.02 NOTICES. Except as expressly set forth to the contrary in these
Regulations, all notices, requests, or consents provided for or permitted to be
given under these Regulations must be in writing and must be given either by
depositing that writing in the United States mail, addressed to the recipient,
postage paid, and registered or certified with return receipt requested or by
delivering that writing to the recipient in person, by courier, or by facsimile
transmission; and a notice, request, or consent given under these Regulations is
effective on receipt by the Person to receive it. All notices, requests, and
consents to be sent to a Member must be sent


                                      -25-

to or made at the addresses given for that Member on Exhibit A or in the
instrument described in Section 3.03(d) or 3.04, or such other address as that
Member may specify by notice to the other Members. Any notice, request, or
consent to the Company or the Managers must be given to the Managers at the
following address: 4800 Sugar Grove Boulevard, Suite 150, Stafford, Texas 77477.
Whenever any notice is required to be given by law, the Articles or these
Regulations, a written waiver thereof, signed by the Person entitled to notice,
whether before or after the time stated therein, shall be deemed equivalent to
the giving of such notice.

     13.03 ENTIRE AGREEMENT; SUPERSEDURE. These Regulations constitute the
entire agreement of the Members and their Affiliates relating to the Company and
supersedes all prior contracts or agreements with respect to the Company,
whether oral or written.

     13.04 EFFECT OF WAIVER OR CONSENT. A waiver or consent, express or implied,
to or of any breach or default by any Person in the performance by that Person
of its obligations with respect to the Company is not a consent or waiver to or
of any other breach or default in the performance by that Person of the same or
any other obligations of that Person with respect to the Company. Failure on the
part of a Person to complain of any act of any Person or to declare any Person
in default with respect to the Company, irrespective of how long that failure
continues, does not constitute a waiver by that Person of its rights with
respect to that default until the applicable statute-of-limitations period has
run.

     13.05 AMENDMENT OR MODIFICATION. These Regulations may be amended or
modified from time to time only by a written instrument adopted by the Managers
and executed and agreed to by a Required Interest; provided, however, that (a)
an amendment or modification reducing a Member's Sharing Ratio or increasing its
Commitment (other than to reflect changes otherwise provided by these
Regulations) is effective only with that Member's consent, (b) an amendment or
modification reducing the required Sharing Ratio or other measure for any
consent or vote in these Regulations is effective only with the consent or vote
of Members having the Sharing Ratio or other measure theretofore required, and
(c) amendments of the type described in Section 3.04 may be adopted as therein
provided.

     13.06 BINDING EFFECT. Subject to the restrictions on Dispositions set forth
in these Regulations, these Regulations are binding on and inure to the benefit
of the Members and their respective heirs, legal representatives, successors,
and assigns.

     13.07 GOVERNING LAW; SEVERABILITY. THESE REGULATIONS ARE GOVERNED BY AND
SHALL BE CONSTRUED IN ACCORDANCE WITH LAW OF THE STATE OF TEXAS, EXCLUDING ANY
CONFLICT-OF-LAWS RULE OR PRINCIPLE THAT MIGHT REFER THE GOVERNANCE OR THE
CONSTRUCTION OF THESE REGULATIONS TO THE LAW OF ANOTHER JURISDICTION. In the
event of a direct conflict between the provisions of these Regulations and (a)
any provision of the Articles, or (b) any mandatory provision of the Act or (to
the extent such statutes are incorporated into the Act) the TBCA or the Texas
Miscellaneous Corporation laws Act, the application provision of the Articles,
the Act, the TBCA or the Texas Miscellaneous Corporation Laws Act shall control.
If any provision of these Regulations or the application thereof to any Person
or circumstance is held invalid or unenforceable to any extent, the remainder of
these Regulations and the application of that provision to other Persons or
circumstances is not affected thereby and that provision shall be enforced to
the greatest extent permitted by law.


                                      -26-

     13.08 FURTHER ASSURANCES. In connection with these Regulations and the
transactions contemplated hereby, each Member shall execute and deliver any
additional documents and instruments and perform any additional acts that may be
necessary or appropriate to effectuate and perform the provisions of these
Regulations and those transactions.

     13.09 WAIVER OF CERTAIN RIGHTS. Each Member irrevocably waives any right it
may have to maintain any action for dissolution of the Company or for partition
of the property of the Company.

     13.10 INDEMNIFICATION. To the fullest extent permitted by law, each Member
shall indemnify the Company, each Manager and each other Member and hold them
harmless from and against all losses, costs, liabilities, damages, and expenses
(including, without limitation, costs of suit and attorney's fees) they may
incur on account of any breach by that Member of these Regulations.

     13.11 NOTICE TO MEMBERS OF PROVISIONS OF THIS AGREEMENT. By executing these
Regulations, each Member acknowledges that it has actual notice of (a) all of
the provisions of this Agreement, including, without limitation, the
restrictions on the transfer of Membership Interests set forth in Article III,
and (b) all of the provisions of the Articles, including, without limitation,
the fact that the Articles provide that no Member shall have the preemptive
right to acquire any Membership Interests or securities of any class that may at
any time be issued, sold or offered for sale by the Company. Each Member hereby
agrees that these Regulations constitute adequate notice of all such provisions,
including, without limitation, any notice requirement under article 2.19(D) of
the TBCA and Chapter 8 of the Texas Uniform Commercial Code, and each Member
hereby waives any requirement that any further notice thereunder be given.

     13.12 COUNTERPARTS. These Regulations may be executed in any number of
counterparts with the same effect as if all signing parties had signed the same
document. All counterparts shall be construed together and constitute the same
instrument.

     13.13 ARBITRATION. If, at any time or from time to time during the
continuance of the Company or after the dissolution or other termination
thereof, any dispute, difference or question shall arise between any of the
Members, or their successors, assigns or nominees, touching or concerning the
Company of the property, assets, rights or transactions thereof, or the
dissolution or other termination thereof, or the property of the Company or the
construction, meaning or effect of these Regulations, or any provision hereof,
or the rights of obligations of the Members, or their successors, assigns or
nominees, under these Regulations or otherwise, with respect thereto, then every
such dispute, difference or question shall be submitted to and settled by
arbitration and the decision of the arbitrator appointed as hereinafter provided
to deal with such matter shall be accepted by all the Members to such dispute,
difference or question. The arbitration shall be conducted by a single
arbitrator agreed upon by the Members to the matter. The decision of the
arbitrator shall be final and binding upon all the Members to such dispute,
difference or question and their nominees, and there shall be no appeal
therefrom.


                                      -27-

     IN WITNESS WHEREOF, following adoption of these Regulations by the
Managers, the Members have executed these Regulations as of the date first set
forth above.

                                         MEMBERS:

                                         ELLY NEVADA, INC.,
                                         a Nevada corporation


                                         By: /s/ Elly Reisman
                                             -----------------------------------
                                             Elly Reisman, President


                                         NORMAN NEVADA, INC.,
                                         a Nevada corporation


                                         By: /s/ Norman Reisman
                                             -----------------------------------
                                             Norman Reisman, President


                                         LARRY NEVADA, INC.,
                                         a Nevada corporation


                                         By: /s/ Larry Robbins
                                             -----------------------------------
                                             Larry Robbins, President


                                         BRUCE NEVADA, INC.,
                                         a Nevada corporation


                                         By: /s/ Bruce Freeman
                                             -----------------------------------
                                             Bruce Freeman, President


                                         HARRY NEVADA, INC.,
                                         a Nevada corporation


                                         By: /s/ Harry Rosenbaum
                                             -----------------------------------
                                             Harry Rosenbaum, President


                                         SEYMOUR NEVADA, INC.,
                                         a Nevada corporation


                                         By: /s/ Seymour Joffe
                                             -----------------------------------
                                             Seymour Joffe, President


                                         HAYDN NEVADA, INC.,
                                         a Nevada corporation


                                         By: /s/ Haydn Matthews
                                             -----------------------------------
                                             Haydn Matthews, President


                                      -28-

EX-3.2(V)

                                                                  Exhibit 3.2(v)

                        FIRST AMENDMENT TO REGULATIONS OF
                        ASHTON HOUSTON DEVELOPMENT L.L.C.

     THIS FIRST AMENDMENT TO REGULATIONS OF ASHTON HOUSTON DEVELOPMENT L.L.C.
(this "Amendment") is made and entered into by and among ELLY NEVADA, INC., a
Nevada corporation ("Elly NV"), NORMAN NEVADA, INC., a Nevada corporation
("Norman NV"), LARRY NEVADA, INC., a Nevada corporation ("Larry NV"), BRUCE
NEVADA, INC., a Nevada corporation ("Bruce NV"), HARRY NEVADA, INC., a Nevada
corporation ("Harry NV"), SEYMOUR NEVADA, INC., a Nevada corporation ("Seymour
NV"), HAYDN NEVADA, INC., a Nevada corporation ("Haydn NV"), LITTLE SHOTS NEVADA
L.L.C., a Nevada limited liability company ("Little Shots"), and ASHTON WOODS
USA L.L.C., a Nevada limited liability company ("Ashton USA").

                                    RECITALS:

     A. Elly NV, Norman NV, Larry NV, Bruce NV, Harry NV, Seymour NV, and Haydn
NV have heretofore entered into Regulations of Ashton Houston Development L.L.C.
(the "Regulations") dated as of May 16, 1996, creating Ashton Houston
Development L.L.C., a Texas limited liability company (the "Company").

     B. As permitted by the Regulations, Bruce NV, Harry NV, Seymour NV, and
Haydn NV transferred all of their right, title, and interest in and to the
Company to Little Shots.

     C. As permitted by the Regulations, Elly NV, Norman NV, Larry NV, and
Little Shots transferred all of their right, title, and interest in and to the
Company to Ashton USA.

     D. The parties hereto desire to amend the Regulations to reflect the
transfers described above and provide for the admission of Ashton USA as the
sole member of the Company.

     E. Capitalized terms, not specifically defined in this Amendment, shall
have the meanings given such terms in the Regulations.

     NOW, THEREFORE, for and in consideration of the premises and the respective
agreements set forth herein, the parties hereto agree as follows:

     1. The transfers described in Recitals B and C above are hereby approved.

     2. Ashton USA is hereby admitted as a Member of the Company and the parties
hereto recognize that Elly NV, Norman NV, Larry NV, Bruce NV, Harry NV, Seymour
NV, Haydn NV, and Little Shots have withdrawn as Members of the Company. The
only Member of the Company is Ashton USA.

     3. The Sharing Ratios and funding commitments of the Members set forth on
Exhibit "A" to the Regulations shall be as follows:



                           Sharing Ratio and
         Member           Funding Commitment
- -----------------------   ------------------
                       
Ashton Woods USA L.L.C.           100%


     4. Any and all notices, demands, requests, or other communications
permitted or required to be given to Ashton USA pursuant to the Regulations
shall be delivered to Ashton USA in the manner provided in the Regulations, at
the following address:

          250 Lesmill Road
          Don Mills, Ontario M3B 2T5 Canada

     5. By execution of this Amendment, Ashton USA agrees to be bound by the
terms and provisions of the Regulations, as amended hereby.

     6. Except as amended hereby, the terms and provisions of the Regulations
shall remain unchanged and shall continue in full force and effect.

     EXECUTED as of May 31, 1999.

                                        MEMBER:

                                        ASHTON WOODS USA L.L.C.,
                                        a Nevada limited liability company


                                        By: /s/ Bruce Freeman
                                            ------------------------------------
                                            Bruce Freeman - Managing Member


                                        By: /s/ Seymour Joffe
                                            ------------------------------------
                                            Seymour Joffe - Managing Member


                                        By: /s/ Harry Rosenbaum
                                            ------------------------------------
                                            Harry Rosenbaum - Managing Member


                                       2

                                        WITHDRAWING MEMBERS:

                                        ELLY NEVADA, INC.,
                                        a Nevada corporation


                                        By: /s/ Elly Reisman
                                            ------------------------------------
                                            Elly Reisman, President


                                        NORMAN NEVADA, INC.,
                                        a Nevada Corporation


                                        By: /s/ Norman Reisman
                                            ------------------------------------
                                            Norman Reisman, President


                                        LARRY NEVADA, INC.,
                                        a Nevada corporation


                                        By: /s/ Larry Robbins
                                            ------------------------------------
                                            Larry Robbins, President


                                        BRUCE NEVADA, INC.,
                                        a Nevada corporation


                                        By: /s/ Bruce Freeman
                                            ------------------------------------
                                            Bruce Freeman, President


                                        HARRY NEVADA, INC.,
                                        a Nevada corporation


                                        By: /s/ Harry Rosenbaum
                                            ------------------------------------
                                            Harry Rosenbaum, President


                                        SEYMOUR NEVADA, INC.,
                                        a Nevada corporation


                                        By: /s/ Seymour Joffe
                                            ------------------------------------
                                            Seymour Joffe, President


                                       3

                                        HAYDN NEVADA, INC.,
                                        a Nevada corporation


                                        By: /s/ Haydn Matthews
                                            ------------------------------------
                                            Haydn Matthews, President


                                        LITTLE SHOTS NEVADA L.L.C.,
                                        a Nevada limited liability company


                                        By: /s/ Bruce Freeman
                                            ------------------------------------
                                            Bruce Freeman - Managing Member


                                        By: /s/ Seymour Joffe
                                            ------------------------------------
                                            Seymour Joffe - Managing Member


                                        By: /s/ Harry Rosenbaum
                                            ------------------------------------
                                            Harry Rosenbaum - Managing Member


                                       4

EX-3.2(W)

                                                                  Exhibit 3.2(w)

                       SECOND AMENDMENT TO REGULATIONS OF
                        ASHTON HOUSTON DEVELOPMENT L.L.C.

     THIS SECOND AMENDMENT TO REGULATIONS OF ASHTON HOUSTON DEVELOPMENT L.L.C.
(this "Amendment") is made and entered into by and among ASHTON WOODS USA
L.L.C., a Nevada limited liability company ("Ashton USA"), ASHTON HOUSTON
RESIDENTIAL L.L.C., a Texas limited liability company ("AHR"), ELLY NEVADA,
INC., a Nevada corporation ("Elly NV"), NORMAN NEVADA, INC., a Nevada
corporation ("Norman NV"), LARRY NEVADA, INC., a Nevada corporation ("Larry
NV"), BRUCE NEVADA, INC., a Nevada corporation ("Bruce NV"), HARRY NEVADA, INC.,
a Nevada corporation ("Harry NV"), SEYMOUR NEVADA, INC., a Nevada corporation
("Seymour NV"), and HAYDN NEVADA, INC., a Nevada corporation ("Haydn NV").

                                    RECITALS:

     A. Elly NV, Norman NV, Larry NV, Bruce NV, Harry NV, Seymour NV, and
Haydn NV have heretofore entered into Regulations of Ashton Houston Development
L.L.C. (the "Original Regulations") dated as of May 26, 1994, creating Ashton
Houston Development L.L.C., a Texas limited liability company (the "Company").

     B. As permitted by the Original Regulations, Bruce NV, Harry NV, Seymour
NV, and Haydn NV transferred all of their right, title, and interest in and to
the Company to Little Shots Nevada L.L.C., a Nevada limited liability company
("Little Shots").

     C. As permitted by the Original Regulations, Elly NV, Norman NV, Larry NV,
and Little Shots transferred all of their right, title, and interest in and to
the Company to Ashton USA.

     D. The Original Regulations were amended by First Amendment to Regulations
of Ashton Houston Development L.L.C. dated May 31, 1999 (collectively, the
"Regulations").

     E. As permitted by the Regulations, Ashton USA transferred all of its
right, title, and interest in and to the Company to AHR.

     F. AHR, for good and valuable consideration, has made Elly NV, Norman NV,
Larry NV, Bruce NV, Harry NV, Seymour NV, and Haydn NV special members of the
Company.

     G. The parties hereto desire to amend the Regulations to (i) reflect the
transfers described above, (ii) provide for the admission of AHR as a member of
the Company, (iii) provide for the admission of Elly NV, Norman NV, Larry NV,
Bruce NV, Harry NV, Seymour NV, and Haydn NV as special members of the Company,
and (iv) provide for a special allocation of the profits and cash distributions
attributable to Ashton Southern Trails Joint Venture, a Texas joint venture
("Ashton Trails"), to the special members of the Company.

     H. Capitalized terms, not specifically defined in this Amendment, shall
have the meanings given such terms in the Regulations.

     NOW, THEREFORE, for and in consideration of the premises and the respective
agreements set forth herein, the parties hereto agree as follows:

     1. The transfers described in Recitals E and F above are hereby approved.

     2. AHR is hereby admitted as a Member of the Company and the parties hereto
recognize that Ashton USA has withdrawn as a Member of the Company.

     3. Elly NV, Norman NV, Larry NV, Bruce NV, Harry NV, Seymour NV, and Haydn
NV (hereinafter referred to collectively as the "Special Members" and
individually as a "Special Member") shall be admitted as special members of the
Company.

     4. The Special Members shall in no way participate in the management and
operation of the business of the Company nor, except as set forth below, shall
the Special Members share in the allocations and/or distributions of the Company
pursuant to Article V of the Regulations. The only rights that the Special
Members shall be entitled are to a special allocation of fifty percent (50%) of
the profits and cash distributions of the Company attributable to the Company's
"Class B Venture Interest," as such term is defined in the Amended and Restated
Joint Venture Agreement of Ashton Southern Trails Joint Venture (the "Ashton
Trails Agreement") dated as of January 7, 2004, which fifty percent (50%) of the
allocation of profit and distribution of cash shall be divided among the Special
Members, as set forth below:



Special Member   Allocation of Profit   Distribution of Cash
- --------------   --------------------   --------------------
                                  
Elly NV                 30-1/6                 30-1/6
Norman NV               30-1/6                 30-1/6
Larry NV                 5                      5
Bruce NV                 9-1/6                  9-1/6
Harry NV                 9-1/6                  9-1/6
Seymour NV               9-1/6                  9-1/6
Haydn NV                 7-1/6                  7-1/6


In no event shall the Special Members participate in the allocations and/or
distributions of the Company attributable to the Company's "Class A Venture
Interest" (as such term is defined in the Ashton Trails Agreement) in Ashton
Trails or attributable to the Company's remaining undivided fifty percent (50%)
interest in the Company's "Class B Venture Interest" in Ashton Trails.

     5. The Sharing Ratios and funding commitments of the Members set forth on
Exhibit "A" to the Regulations shall be as follows:



          Sharing Ratio and
Member   Funding Commitment
- ------   ------------------
      
AHR             100%



                                       2

     6. Any and all notices, demands, requests, or other communications
permitted or required to be given to AHR or any of the Special Members pursuant
to the Regulations shall be delivered to AHR or any of the Special Members in
the manner provided in the Regulations, at the following address:

          3751 Victoria Park Avenue
          Toronto, Ontario M1W 3Z4
          Canada

     7. By execution of this Amendment, AHR and the Special Members agree to be
bound by the terms and provisions of the Regulations, as amended hereby.

     8. Except as amended hereby, the terms and provisions of the Regulations
shall remain unchanged and shall continue in full force and effect.

     EXECUTED as of January 7, 2004.

                                             MEMBER:

                                             ASHTON HOUSTON RESIDENTIAL L.L.C.,
                                             a Texas limited liability company


                                             By: /s/ Elly Reisman
                                                 -------------------------------
                                                 Elly Reisman, Manager


                                             By: /s/ Bruce Freeman
                                                 -------------------------------
                                                  Bruce Freeman, Manager


                                             By: /s/ Seymour Joffe
                                                 -------------------------------
                                                 Seymour Joffe, Manager


                                             By: /s/ Harry Rosenbaum
                                                 -------------------------------
                                                 Harry Rosenbaum, Manager


                                        3

                                             WITHDRAWING MEMBER:

                                             ASHTON WOODS USA L.L.C.,
                                             a Nevada limited liability company


                                             By: /s/ Bruce Freeman
                                                 -------------------------------
                                                 Bruce Freeman, Manager


                                             By: /s/ Seymour Joffe
                                                 -------------------------------
                                                 Seymour Joffe - Manager


                                             By: /s/ Harry Rosenbaum
                                                 -------------------------------
                                                 Harry Rosenbaum - Manager


                                       4

                                             SPECIAL MEMBERS:

                                             ELLY NEVADA, INC.,
                                             a Nevada corporation


                                             By: /s/ Harry Rosenbaum
                                                 -------------------------------
                                                 Harry Rosenbaum, Vice President


                                             NORMAN NEVADA, INC.,
                                             a Nevada corporation


                                             By: /s/ Harry Rosenbaum
                                                 -------------------------------
                                                 Harry Rosenbaum, Vice President


                                             LARRY NEVADA, INC.,
                                             a Nevada corporation


                                             By: /s/ Harry Rosenbaum
                                                 -------------------------------
                                                 Harry Rosenbaum, Vice President


                                             BRUCE NEVADA, INC.,
                                             a Nevada corporation


                                             By: /s/ Harry Rosenbaum
                                                 -------------------------------
                                                 Harry Rosenbaum, Vice President


                                             HARRY NEVADA, INC.,
                                             a Nevada corporation


                                             By: /s/ Harry Rosenbaum
                                                 -------------------------------
                                                 Harry Rosenbaum, President


                                             SEYMOUR NEVADA, INC.,
                                             a Nevada corporation


                                             By: /s/ Harry Rosenbaum
                                                 -------------------------------
                                                 Harry Rosenbaum, Vice President


                                             HAYDN NEVADA, INC.,
                                             a Nevada corporation


                                             By: /s/ Harry Rosenbaum
                                                 -------------------------------
                                                 Harry Rosenbaum, Vice President


                                        5

EX-3.2(X)

                                                                  Exhibit 3.2(x)

                                     BYLAWS
                                       OF
                             ASHTON BROOKSTONE, INC.
                               a Texas corporation

                                                                  Organized:

                                                                  April 11, 2002

                                     BYLAWS
                                       OF
                             ASHTON BROOKSTONE, INC.

                                      INDEX



Article                                                                        Page
- -------                                                                        ----
                                                                            
I      OFFICES
       1.01  Registered Office..............................................      1
       1.02  Other Offices..................................................      1

II     SHAREHOLDERS
       2.01  Location of Meetings...........................................      1
       2.02  Annual Meetings................................................      1
       2.03  List of Shareholders...........................................      1
       2.04  Special Meetings...............................................      2
       2.05  Notice of Meetings.............................................      2
       2.06  Quorum.........................................................      2
       2.07  Conduct of Business............................................      2
       2.08  Voting of Shares in Matters other than Election of Directors...      2
       2.09  Voting in the Election of Directors............................      3
       2.10  Proxies........................................................      3
       2.11  Action Without Meeting.........................................      3
       2.12  Voting of Shares of Certain Holders............................      4
       2.13  Record Dates for Actions other than by Consent.................      4
       2.14  Record Dates for Consents to Action............................      5

III    DIRECTORS
       3.01  Powers.........................................................      5
       3.02  Number and Election............................................      5
       3.03  Removal........................................................      6
       3.04  Elections to Fill Vacancies....................................      6
       3.05  Location of Meetings...........................................      6
       3.06  First Meeting of Newly Elected Board...........................      6
       3.07  Regular Meetings...............................................      6
       3.08  Special Meetings...............................................      6
       3.09  Quorum of and Action by Directors..............................      7
       3.10  Committees of the Board........................................      7
       3.11  Action Without Meeting.........................................      7
       3.12  Compensation...................................................      7

IV     NOTICES
       4.01  Content and Method.............................................      7
       4.02  Waiver of Notice...............................................      8
       4.03  Attendance Construed as Waiver of Notice.......................      8



                                       -i-

                                                                              
V      OFFICERS
       5.01  Titles.........................................................      8
       5.02  Election.......................................................      8
       5.03  Other Officers.................................................      8
       5.04  Compensation...................................................      8
       5.05  Term of Office.................................................      8
       5.06  Chairman of the Board..........................................      9
       5.07  President......................................................      9
       5.08  Added Powers of the Chairman of the Board and the President....      9
       5.09  Vice Presidents................................................      9
       5.10  Secretary......................................................      9
       5.11  Assistant Secretaries..........................................     10
       5.12  Treasurer......................................................     10
       5.13  Treasurer's Bond...............................................     10
       5.14  Assistant Treasurers...........................................     10

VI     CERTIFICATES REPRESENTING SHARES
       6.01  Description....................................................     11
       6.02  Facsimile Signatures...........................................     11
       6.03  Lost Certificates..............................................     11
       6.04  Transfer of Shares.............................................     11
       6.05  Registered Owner...............................................     11

VII    GENERAL PROVISIONS
       7.01  Distributions..................................................     12
       7.02  Contracts......................................................     12
       7.03  Loans..........................................................     12
       7.04  Reserves.......................................................     12
       7.05  Financial Reports..............................................     12
       7.06  Signatures.....................................................     12
       7.07  Fiscal Year....................................................     12
       7.08  Books and Records..............................................     12
       7.09  Inspection of Records by Shareholders..........................     13
       7.10  Corporate Seal.................................................     13

VIII   INDEMNIFICATION
       8.01  Extent.........................................................     13
       8.02  Insurance......................................................     14

IX     AMENDMENTS
       9.01  Amendment by Shareholders or Directors.........................     14
       9.02  Power to Amend.................................................     14

       CERTIFICATION........................................................     15




                                      -ii-

                                     BYLAWS
                                       OF
                             ASHTON BROOKSTONE, INC.

                                    ARTICLE I
                                     OFFICES

     1.01 REGISTERED OFFICE. The registered office shall be located in Dallas,
Texas.

     1.02 OTHER OFFICES. The corporation may also have offices, including its
principal place of business, at such other places located within or without the
State of Texas as the Board of Directors (the "Board") may from time to time
determine, or as the business of the corporation may require.

                                   ARTICLE II
                                  SHAREHOLDERS

     2.01 LOCATION OF MEETINGS. Meetings of shareholders shall be held in the
County of Dallas, State of Texas, or at any other location within or without the
State which may be specified in the notice of the meeting or in a duly executed
waiver thereof. Meetings of shareholders may be held by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and such participation shall
constitute presence in person at such meeting, except where a person
participates in the meeting for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully
called or convened.

     2.02 ANNUAL MEETINGS. Commencing in the year 2003, an annual meeting of
shareholders shall be held at a date and time determined by appropriate
resolution of the Board. The date and time of the annual meeting of shareholders
may be changed by appropriate resolutions of the Board to a time within sixty
(60) days before or following the date first determined by the Board. At this
meeting, the shareholders shall elect a Board, and may transact other business
properly brought before the meeting.

     2.03 LIST OF SHAREHOLDERS. At least ten (10) days before each meeting of
shareholders, a complete list of the shareholders entitled to vote at said
meeting arranged in alphabetical order, with the address of each and the number
of voting shares held by each, shall be prepared by the officer or agent having
charge of the share transfer records. This list shall be kept on file at the
registered office or principal place of business of the corporation and shall be
subject to inspection by any shareholder at any time during usual business hours
for a period of ten (10) days prior to such meeting. This list shall be produced
and kept open at the time and place of the meeting and shall be subject to the
inspection of any shareholder during the whole time of the meeting.


                                       -1-

     2.04 SPECIAL MEETINGS. Special meetings of the shareholders may be called
by the President, the Board, the Chairman of the Board, if one is appointed, or
the holders of not less than one-tenth (l/10th) of all shares entitled to vote
at such meetings.

     2.05 NOTICE OF MEETINGS. A written or printed notice stating the place, day
and hour of any meeting and, in the case of a special meeting, the purpose or
purposes for which the meeting is called, shall be delivered not less than ten
(10) nor more than sixty (60) days before the date of the meeting, either
personally or by mail, by or at the direction of the President, the Secretary or
the officer or person calling the meeting, to each shareholder of record
entitled to vote at the meeting. If mailed, notice shall be deemed to be
delivered when deposited, postage prepaid, in the United States mail, addressed
to the shareholder at his address as it appears on the share transfer records of
the corporation.

     2.06 QUORUM. The holders of a majority of the shares entitled to vote,
represented in person or by proxy, shall constitute a quorum at meetings of
shareholders except as otherwise provided by statute or by the Articles of
Incorporation. If, however, a quorum shall not be present or represented at any
meeting of the shareholders, the shareholders present in person or represented
by proxy shall have the power to adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be
represented. At any adjourned meeting at which a quorum shall be present or
represented, any business may be transacted which might have been transacted at
the meeting as originally notified.

     2.07 CONDUCT OF BUSINESS. If a quorum is present at a meeting of
shareholders, the shareholders represented in person or by proxy at the meeting
may conduct such business as may be properly brought before the meeting until it
is adjourned, and the subsequent withdrawal from the meeting of any shareholder
or the refusal of any shareholder represented in person or by proxy to vote
shall not affect the presence of a quorum at the meeting. Unless otherwise
provided in the Articles of Incorporation or elsewhere in these Bylaws, the
shareholders represented in person or by proxy at a meeting of shareholders at
which a quorum is not present may adjourn the meeting until such time and to
such place as may be determined by a vote of the holders of a majority of the
shares represented in person or by proxy at that meeting.

     2.08 VOTING OF SHARES IN MATTERS OTHER THAN ELECTION OF DIRECTORS. Each
outstanding share, regardless of class, shall be entitled to one vote on each
matter submitted to a vote at a meeting of the shareholders, except to the
extent that the voting rights of the shares of any class shall be limited or
denied by the Articles of Incorporation and except as otherwise provided by
statute. With respect to any matter, other than the election of directors or a
matter for which the affirmative vote of the holders of a specified portion of
the shares entitled to vote is required by law, the affirmative vote of the
holders of a majority of the shares entitled to vote on that matter and
represented in person or by proxy at a meeting of shareholders at which a quorum
is present shall be the act of the shareholders, unless otherwise provided in
the Articles of Incorporation or these Bylaws.


                                       -2-

     2.09 VOTING IN THE ELECTION OF DIRECTORS. At each election for directors,
every shareholder entitled to vote at such election shall have the right to
vote, in person or by proxy, the number of shares owned by him for as many
persons as there are directors to be elected, and for whose election he has a
right to vote.

     2.10 PROXIES. A shareholder may vote either in person or by proxy executed
in writing by the shareholder or by his duly authorized attorney-in-fact. A
telegram, telex, cablegram or other similar transmission by a shareholder, or a
photographic, photostatic, facsimile, or similar reproduction of a writing
executed by a shareholder shall be treated as an execution in writing for the
purposes of this paragraph. No proxy shall be valid after eleven (11) months
from the date of its execution, unless otherwise provided in the proxy. Each
proxy shall be revocable unless expressly provided therein to be irrevocable and
unless otherwise made irrevocable by law. Each proxy shall be filed with the
Secretary of the corporation prior to, or at the time of, the meeting.

     2.11 ACTION WITHOUT MEETING. If permitted by the Articles of Incorporation,
any action required by statute to be taken at any annual or special meeting of
shareholders, or any action which may be taken at any annual or special meeting
of shareholders, may be taken without a meeting, without prior notice, and
without a vote, if a consent or consents in writing, setting forth the action so
taken, shall be signed by the holder or holders or shares having not less than
the minimum number of votes that would be necessary to take such action at a
meeting at which the holders of all shares entitled to vote on the action were
present and voted. If this manner of consent is not permitted by the Articles of
Incorporation, the Consent of all shareholders is required.

     Every written consent shall bear the date of signature of each shareholder
who signs the consent. No written consent shall be effective to take the action
that is the subject of the consent unless, within sixty (60) days after the date
of the earliest dated consent delivered to the corporation, a consent or
consents signed by the holder or holders of shares having not less than the
minimum number of votes that would be necessary to take the action that is the
subject of the consent are delivered to the corporation by delivery to its
registered office, its principal place of business, or an officer or agent of
the corporation having custody of the books in which proceedings of meetings of
shareholders are recorded. Delivery shall be by hand or certified or registered
mail, return receipt requested. Delivery to the corporation's principal place of
business shall be addressed to the president or principal executive office of
the corporation. A telegram, telex, cablegram, or similar transmission by a
shareholder, or a photographic, photostatic, facsimile, or similar reproduction
of a writing signed by a shareholder, shall be regarded as signed by the
shareholder and delivered by hand.

     Prompt notice of the taking of any action by shareholders without a meeting
by less than unanimous written consent shall be given to those shareholders who
did not consent in writing to the action.


                                       -3-

     2.12 VOTING OF SHARES OF CERTAIN HOLDERS.

          (a) Shares standing in the name of another corporation may be voted by
     such officer, agent or proxy as the bylaws of such corporation may
     authorize, or in the absence of such authorization, as the board of
     directors of such corporation may determine.

          (b) Shares held by an administrator, executor, guardian or conservator
     may be voted by him so long as such shares are in the possession and
     forming a part of the estate being served by him, either in person or by
     proxy, without a transfer of the shares into his name. Shares standing in
     the name of a trustee may be voted by him, either in person or by proxy,
     but no trustee shall be entitled to vote shares held by him without a
     transfer of the shares into his name as trustee.

          (c) Shares standing in the name of a receiver may be voted by the
     receiver, and shares held by or under the control of a receiver may be
     voted by him without the transfer thereof into his name if authority to do
     so is contained in an appropriate order of the court by which he was
     appointed.

          (d) A shareholder whose shares are pledged shall be entitled to vote
     such shares until they have been transferred into the name of the pledgee,
     and thereafter the pledgee shall be entitled to vote the transferred
     shares.

          (e) Treasury shares, shares of its own stock owned by another
     corporation, the majority of the voting stock of which is owned or
     controlled by it, and shares of its own stock held by the corporation in a
     fiduciary capacity shall not be voted, directly or indirectly, at any
     meeting, and shall not be counted in determining the total number of
     outstanding shares at any given time.

     2.13 RECORD DATES FOR ACTIONS OTHER THAN BY CONSENT. For the purpose of
determining shareholders entitled to notice of, or to vote at, any meeting of
shareholders or any adjournment thereof, or entitled to receive payment of any
dividend, or in order to make a determination of shareholders for any other
proper purpose (other than determining shareholders entitled to consent to any
action by shareholders proposed to be taken without a meeting), the Board may
provide that the share transfer records shall be closed for a stated period not
to exceed sixty (60) days. If the share transfer records are closed for the
purpose of determining shareholders entitled to notice of, or to vote at, a
meeting of shareholders, the records shall be closed for at least ten (10) days
immediately preceding the meeting.

     In lieu of closing the share transfer records, the Board may fix in advance
as the record date for determination of shareholders, a date in any case to be
not more than sixty (60) days and, in the case of a meeting of shareholders, not
less than ten (10) days prior to the date on which the particular action
requiring the determination of shareholders is to be taken.


                                       -4-

     If the share transfer records are not closed and no record date is fixed
for the determination of shareholders entitled to notice of, or to vote at, a
meeting of shareholders, or entitled to receive a distribution (other than a
distribution involving a purchase or redemption by the corporation of any of its
own shares) or a share dividend, the date on which notice of the meeting is
mailed and the date on which the resolution of the Board declaring such
distribution or share dividend is adopted, as the case may be, shall be the
record date for determination of shareholders.

     When a determination of shareholders entitled to vote at any meeting of
shareholders has been made, as provided in this section, such determination
shall apply to any adjournment thereof, except where the determination has been
made through the closing of the share transfer records and the stated period of
closing has expired.

     2.14 RECORD DATES FOR CONSENTS TO ACTION. Unless a record date shall have
previously been fixed or determined pursuant to this Article II, whenever any
action by shareholders is proposed to be taken by consent in writing without a
meeting of shareholders, the Board may fix a record date for the purpose of
determining shareholders entitled to consent to that action, which record date
shall not precede, and shall not be more than ten (10) days after, the date upon
which the resolution fixing the record date is adopted by the Board. If no
record date has been fixed by the Board and the prior action of the Board is not
required by this Act, the record date for determining shareholders entitled to
consent to an action in writing without a meeting shall be the first date on
which a signed written consent setting forth the action taken or proposed to be
taken is delivered to the corporation by delivery to its registered office, its
principal place of business, or an officer or agent of the corporation having
custody of the books in which proceedings of meetings of shareholders are
recorded. Delivery shall be by hand or by certified or registered mail, return
receipt requested. Delivery to the corporation's principal place of business
shall be addressed to the president or the principal executive officer of the
corporation. If no record date shall have been fixed by the Board and prior
action of the Board is required by this Act, the record date for determining
shareholders entitled to consent to action in writing without a meeting shall be
at the close of business on the date on which the Board adopts a resolution
taking such prior action.

                                   ARTICLE III
                                    DIRECTORS

     3.01 POWERS. The powers of the corporation shall be exercised by or under
the authority of, and the business and affairs of the corporation shall be
managed under, the direction of its Board, except that the Board may not do any
acts or things which are required by statute, the Articles of Incorporation or
these Bylaws to be exercised or done by the shareholders.

     3.02 NUMBER AND ELECTION. The number of directors constituting the initial
Board of the corporation shall be as set forth in the Articles of Incorporation.
However, such number may be changed by the Board from time to time by
appropriate resolution of the Board. In no event shall there ever be less than
one member of the Board. The directors shall be elected at the annual meeting of
the shareholders, except as provided in Section 3.04, and each director elected


                                       -5-

shall hold office until the next annual election of directors and until his
successor shall have been elected or appointed and qualified. Directors need not
be residents of the State of Texas or shareholders of the corporation.

     3.03 REMOVAL. Any director may be removed, with or without cause, by the
affirmative vote of the holders of a majority of the shares represented at any
shareholders' meeting at which a quorum is present, provided that the proposed
removal is stated in the notice of the meeting.

     3.04 ELECTIONS TO FILL VACANCIES. Any vacancy occurring on the Board may be
filled by the affirmative vote of a majority of the remaining directors though
less than a quorum of the Board, or by a sole remaining director. A director
elected to fill a vacancy shall be elected for the unexpired term of his
predecessor in office. Any directorship to be filled by reason of an increase in
the number of directors may be filled by election at an annual or special
meeting of shareholders called for that purpose, or may be filled by the Board
for a term of office continuing only until the election of one or more directors
by the shareholders; provided, however, that the Board may not fill more than
two (2) such directorships during the period between any two successive annual
meetings of the shareholders.

     3.05 LOCATION OF MEETINGS. Regular or special meetings of the Board may be
held either within or without the County of Dallas or the State of Texas.
Members of the Board or of committees thereof may participate in and hold a
meeting of the Board or committee thereof by means of conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other, and participation in such a meeting shall
constitute presence in person at such meeting, except where a person
participates in the meeting for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully
called or convened.

     3.06 FIRST MEETING OF NEWLY ELECTED BOARD. The first meeting of each newly
elected Board shall be held at such time and place directly following the annual
meeting of the shareholders or as shall be fixed by the vote of the shareholders
at their annual meeting, and no notice of such meeting shall be necessary to the
newly elected directors in order legally to constitute the meeting, provided
that a quorum shall be present. In the event such meeting is not held after the
annual meeting of the shareholders or in the event of a failure of the
shareholders to fix the time and place of the first meeting of the newly elected
Board; or in the event the meeting is not held at the time and place so fixed by
the shareholders, such meeting maybe held at the time and place specified in a
notice given as provided for special meetings of the Board, or as specified in a
written waiver signed by all of the directors.

     3.07 REGULAR MEETINGS. Regular meetings of the Board may be held without
notice at such times and places as shall, from time to time, be determined by
the Board.

     3.08 SPECIAL Meetings. Special meetings of the Board may be called by the
Chairman of the Board or the President, and shall be called by the Secretary on
the written request of any two (2) directors. Notice of special meetings of the
Board may be given personally, in writing or by telegram, and shall be given to
each director at least three (3) days before the date


                                       -6-

of the meeting. Notice shall be given by the person calling the meeting or by
the Secretary. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the Board need be specified in any notice or
waiver of notice, except as may otherwise be expressly provided by statute, the
Articles of Incorporation, or these Bylaws.

     3.09 QUORUM OF AND ACTION BY DIRECTORS. A majority of the directors shall
constitute a quorum for the transaction of business, and the act of a majority
of the directors present at a meeting at which a quorum is present shall be the
act of the Board, unless a greater number is required by statute, the Articles
of Incorporation or these Bylaws. If a quorum shall not be present at any
meeting of the Board, the directors present thereat may adjourn the meeting from
time to time, without notice other than announcement thereof at the meeting,
until a quorum shall be present.

     3.10 COMMITTEES OF THE BOARD. The Board, by resolution adopted by a
majority of the full Board, may designate from among its members one or more
committees, each of which shall be comprised of one or more of its members, and
may designate one or more of its members as alternate members of any committee,
who may, subject to any limitation imposed by the Board, replace absent or
disqualified members at any meeting of that committee. Any such committee, to
the extent provided in such resolution, the Articles of Incorporation or these
Bylaws, and as otherwise limited by statute, shall have and may exercise all of
the authority of the Board; PROVIDED, HOWEVER, that unless the resolution
designating a particular committee expressly so provides, no committee of the
Board shall have the authority to authorize a distribution or to authorize the
issuance of shares of the corporation. The designation of a committee of the
Board and the delegation thereto of authority shall not operate to relieve the
Board, or any member thereof, of any responsibility imposed by law.

     3.11 ACTION WITHOUT MEETING. Any action that may be taken by the executive
committee, if any, or the Board at a meeting may be taken without a meeting if a
consent in writing setting forth the actions so taken shall be signed by all of
the members of the executive committee or all of the directors.

     3.12 COMPENSATION. Directors, as such, shall not receive any salary for
their services, but, by resolution of the Board may receive a fixed sum and
necessary expenses of attendance of each regular or special meeting of the
Board. Members of the executive committee, by resolution of the Board, may be
allowed like compensation for attending committee meetings. Nothing herein
contained shall be construed to preclude any director from serving the
corporation in any other capacity and receiving compensation therefor.

                                   ARTICLE IV
                                     NOTICES

     4.01 CONTENT AND METHOD. Notices to directors and shareholders shall be in
writing unless otherwise provided in these Bylaws, shall specify the time and
place of the meeting, and shall be delivered personally or mailed to the
directors or shareholders at their addresses


                                       -7-

appearing on the books of the corporation. Notice by mail shall be deemed given
at the time when the notice is placed in the United States mail, postage
prepaid. Notice to directors may also be given by telegram.

     4.02 WAIVER OF NOTICE. Whenever any notice is required to be given to any
shareholder or director under the provisions of applicable statutes, the
Articles of Incorporation or these Bylaws, a waiver thereof in writing, signed
by the person or persons entitled to such notice, whether before or after the
time stated therein, shall be equivalent to the giving of notice.

     4.03 ATTENDANCE CONSTRUED AS WAIVER OF NOTICE. Attendance of a director at
a meeting shall constitute a waiver of notice of such meeting, except where a
director attends a meeting for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully
called or convened.

                                    ARTICLE V
                                    OFFICERS

     5.01 TITLES. The officers of the corporation shall consist of a President
and a Secretary and, in the discretion of the Board, such other officers as are
contemplated by Section 5.03 hereof, each of whom shall be elected by the Board.
Any two or more offices may be held by the same person.

     5.02 ELECTION. The Board, at its first meeting after each annual meeting of
shareholders, shall elect a President and a Secretary, and may elect one or more
Vice Presidents and a Treasurer, none of whom needs to be a member of the Board,
and may appoint a member of the Board as its Chairman.

     5.03 OTHER OFFICERS. Such other officers and assistant officers and agents
as may be deemed necessary may be elected or appointed by the Board.

     5.04 COMPENSATION. The compensation of the President, any Vice Presidents,
the Secretary and the Treasurer shall be fixed by the Board, but the
compensation of all minor officers and all other agents and employees of the
corporation may be fixed by the President, unless by resolution the Board shall
determine otherwise; PROVIDED, HOWEVER, that without the express approval of the
Board, the President may not enter into any employment agreement on behalf of
the corporation with any person which may not be terminated by the corporation,
either at will or upon thirty (30) days written notice.

     5.05 TERM OF OFFICE. Each officer shall hold office until his successor is
chosen and qualifies, or until his death or removal or resignation from office.
Any officer, agent or member of any committee of the Board elected or appointed
by the Board may be removed by a majority vote of the entire Board whenever in
its judgment the best interests of the corporation will be served thereby, but
such removal shall be without prejudice to the contract rights, if any, of the
person so removed. Any vacancy occurring in an office for any reason may be
filled by the Board.


                                       -8-

     5.06 CHAIRMAN OF THE BOARD. In the event that a Chairman of the Board is
appointed, the Chairman shall be the chief executive officer of the corporation,
and preside over all meetings of the shareholders and of the Board. He shall see
that all orders and resolutions of the Board are carried into effect. The
Chairman shall have such other powers and duties as usually pertain to such
office or as may be assigned to him from time to time by the Board.

     5.07 PRESIDENT. If a Chairman of the Board is not designated as provided in
Section 5.06 hereof, the President shall be the chief executive officer of the
corporation and shall have such powers and duties as usually pertain to that
office, except as the same may be modified by the Board. In the absence of the
Chairman of the Board, the President shall preside at all meetings of the
shareholders and, if the President is also a member of the Board, at all
meetings of the directors. Unless the Board shall otherwise direct, the
President shall have general and active management responsibility for the
business of the corporation.

     5.08 ADDED POWERS OF THE CHAIRMAN OF THE BOARD AND THE PRESIDENT. The
President, and the Chairman of the Board, shall execute, with the Secretary or
any other officer so authorized by the Board, certificates for shares of the
corporation, and any deeds, mortgages, bonds, contracts or other instruments
that the Board has authorized for execution, except when the signing and
execution thereof shall be expressly delegated by the Board or by these Bylaws
to some other officer or agent or shall be required by law to be otherwise
signed or executed.

     5.09 VICE PRESIDENTS. In the event that the Board shall provide for one or
more Vice Presidents, then each of the Vice Presidents, in the order of his
seniority, unless otherwise determined by the Board, shall in the absence or
disability of the President, serve in the capacity of the President and perform
the duties and exercise the powers of the President. Each Vice President shall
perform such other duties and have such other powers as the Board shall from
time to time prescribe.

     5.10 SECRETARY. The Secretary shall:

          (a) attend all meetings of the Board and of the shareholders, and
     shall record all votes and keep the minutes of all such proceedings in one
     or more books kept for that purpose;

          (b) perform like services for the committees of the Board, if any;

          (c) give, or cause to be given, notice of all meetings of the
     shareholders and special meetings of the Board;

          (d) keep in safe custody the seal of the corporation, and when
     authorized by the Board, affix the same to any instrument requiring it and
     when so affixed, it shall be attested by the Secretary's signature, or by
     the signature of the Treasurer, if any, or any Assistant Secretary or
     Assistant Treasurer; and


                                      -9-

          (e) perform all duties incidental to the office of Secretary and such
     other duties as, from time to time, may be assigned to the Secretary by the
     President or Board, under whose supervision the Secretary shall function.

     5.11 ASSISTANT SECRETARIES. Each Assistant Secretary, if any, in the order
of his seniority, unless otherwise determined by the Board, in the absence or
disability of the Secretary, shall perform the duties and exercise the powers of
the Secretary, and shall perform such other duties and have such other powers as
the Board may, from time to time, prescribe.

     5.12 TREASURER. The Treasurer or such other officer as designated by the
Board shall:

          (a) have custody of the corporate funds and securities;

          (b) keep full and accurate accounts of receipts and disbursements in
     books belonging to the corporation;

          (c) deposit all money and other valuable effects in the name and to
     the credit of the corporation in such depositories as may be designated by
     the Board;

          (d) disburse such funds of the corporation as may be ordered by the
     Board, taking proper vouchers for all disbursements;

          (e) render to the Board at the regular meetings of the Board, or
     whenever the Board may require, an account of all transactions entered into
     under this Section 5.12 and of the financial condition of the corporation;
     and

          (f) perform all such other duties as, from time to time, may be
     assigned to him by the Board.

     5.13 TREASURER'S BOND. If required by the Board, the Treasurer or such
other officer as designated by the Board to perform the duties enumerated in
Section 5.12 above shall give the corporation a bond in such sum and with such
surety or sureties as shall be satisfactory to the Board for the faithful
performance of the duties of his office, and for the restoration to the
corporation, in case of his death, resignation, retirement or removal from
office, of all books, papers, vouchers, money and other property of whatever
kind in his possession or under his control belonging to the corporation.

     5.14 ASSISTANT TREASURERS. Each Assistant Treasurer, if any, in the order
of his seniority unless otherwise determined by the Board, in the absence or
disability of the Treasurer, shall perform the duties and exercise the powers of
the Treasurer, and shall perform such other duties and have such other powers as
the Board may, from time to time, prescribe.


                                      -10-

                                   ARTICLE VI
                        CERTIFICATES REPRESENTING SHARES

     6.01 DESCRIPTION. The corporation shall deliver certificates representing
all shares to which shareholders are entitled. Certificates shall be signed by
the President and the Secretary, or in the absence of the President and/or
Secretary, a Vice President and/or Assistant Secretary if such offices have been
appointed or elected by the Board and may be sealed with the seal of the
corporation or a facsimile thereof if a corporate seal is adopted. Failure to
affix the corporate seal, if one is adopted, shall not invalidate a share
certificate. No certificate shall be issued for any share until the
consideration therefor has been fully paid. Each certificate shall be
consecutively numbered and shall be entered in the books of the corporation as
issued. Each certificate representing shares shall state upon the face thereof
that the corporation is organized under the laws of the State of Texas, the name
of the person to whom issued, the number and class of shares and the designation
of the series, if any, which such certificate represents, and the par value of
each share or a statement that the shares are without par value, and shall
further contain on the face or back of the certificate a statement of all
additional information required by statute to be set forth.

     6.02 FACSIMILE SIGNATURES. The signatures of the President and the
Secretary upon a certificate may be facsimiles. In the event that an officer who
has signed or whose facsimile signature has been placed upon a certificate shall
cease to be such officer before the certificate is issued, the certificate may
be issued with the same effect as if he were such officer at the date of the
issuance.

     6.03 LOST CERTIFICATES. The Board may direct new certificate(s) to be
issued in place of any certificate(s) previously issued alleged to have been
lost or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate(s) to be lost or destroyed. When authorizing such
issuance of new certificate(s), the Board may, in its discretion and as a
condition precedent to the issuance thereof, require the owner of the lost or
destroyed certificate(s), or his legal representative, to advertise the same in
such manner as it shall require and/or to give the corporation a bond in such
sum and form and with such sureties as it may direct as an indemnity against any
claim that may be made against the corporation with respect to the
certificate(s) alleged to have been lost or destroyed.

     6.04 TRANSFER OF SHARES. Shares shall be transferable only on the share
transfer records of the corporation by the holder thereof in person or by his
duly authorized attorney-in-fact. Upon surrender to the corporation or the
transfer agent of the corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, it shall be the duty of the corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate and record the
transaction upon its books.

     6.05 REGISTERED OWNER. The corporation may regard the person in whose name
any shares issued are registered in the share transfer records of the
corporation at any particular time as the owner of those shares at that time for
purposes of (1) voting those shares, (2) receiving distributions thereon or
notices in respect thereof, (3) transferring those shares, (4) exercising rights
of dissent with respect to those shares, (5) exercising or waiving any
preemptive right with


                                      -11-

respect to those shares, (6) entering into agreements with respect to those
shares in accordance with Article 2.22 or 2.30 of the Texas Business Corporation
Act, or (7) giving proxies with respect to those shares. Neither the corporation
nor any of its officers, directors, employees, or agents shall be liable for
regarding that person as the owner of those shares at that time for these
purposes, regardless of whether that person does not possess a certificate for
those shares.

                                   ARTICLE VII
                               GENERAL PROVISIONS

     7.01 DISTRIBUTIONS. Subject to any restrictions imposed by law or by the
Articles of Incorporation, the Board may declare and the corporation may make
distributions on its outstanding shares in cash, property or its own shares.

     7.02 CONTRACTS. The Board may authorize any officer or officers, agent or
agents, to enter into any contract or to execute and deliver any instrument in
the name, and on behalf of, the corporation. This authority may be general or
confined to specific instances.

     7.03 LOANS. No loans shall be contracted on behalf of the corporation and
no evidence of indebtedness shall be issued in its name unless authorized by a
resolution of the Board or any executive committee. This authority may be
general or confined to specific instances.

     7.04 RESERVES. The Board by resolution may create a reserve or reserves out
of earned surplus for any purpose or purposes, and may abolish any such reserve
in the same manner.

     7.05 FINANCIAL REPORTS. When requested by the holders of at least one-third
of the outstanding shares of the corporation, the Board must present written
reports concerning the condition and business of the corporation.

     7.06 SIGNATURES. All checks or demands for money and notes of the
corporation shall be signed by such officer or officers or other person or
persons as the Board may, from time to time, designate.

     7.07 FISCAL YEAR. The fiscal year of the corporation shall be fixed by
resolution of the Board.

     7.08 BOOKS AND RECORDS. The corporation shall keep books and records of
account and shall keep minutes of the proceedings of the shareholders, the
Board, and each committee of the Board. A record of the original issuance of
shares issued by the corporation and a record of each transfer of those shares
that have been presented to the corporation for registration of transfer shall
be kept at the registered office or principal place of business, or at the
office of the transfer agent or registrar, as appropriate. Such records shall
contain the names and addresses of all past and current shareholders and the
number and class of shares issued by the corporation held by each of them. The
books, records, minutes, and share transfer records


                                      -12-

may be in written form or in any other form capable of being converted into
written form within a reasonable time. The office of the corporation's transfer
agent or registrar may be located outside the State of Texas.

     7.09 INSPECTION OF RECORDS BY SHAREHOLDERS. Any person who shall have been
a shareholder for at least six (6) months immediately preceding his demand, or
shall be the holder of at least five percent (5%) of all the outstanding shares
of a corporation, upon written demand stating the purpose thereof, shall have
the right to examine, in person or by agent, accountant, or attorney, at any
reasonable time or times, for any proper purpose, its relevant books and records
of account, minutes, and share transfer records, and to make extracts therefrom.
A holder a beneficial interest in a voting trust entered into pursuant to
Article 2.30 of the Texas Business Corporation Act shall be regarded as a holder
of the shares represented by such beneficial interest for the purposes of this
Section 7.09.

     7.10 CORPORATE SEAL. If a corporate seal is adopted, it shall have
inscribed thereon the name of the corporation and shall be in the form
determined by the Board. The seal may be used by causing it, or a facsimile
thereof, to be impressed, affixed or in any other manner reproduced.

                                  ARTICLE VIII
                                 INDEMNIFICATION

     Subject to the provisions of Article 2.02-1 of the Texas Business
Corporation Act, the corporation may indemnify directors, officers, agents and
employees as follows:

     8.01 EXTENT.

          (a) Statutorily Required Indemnification. The corporation shall
     indemnify its directors and officers against reasonable expenses incurred
     in connection with a proceeding in which the director or officer is named
     as a defendant or respondent because he is or was a director or officer of
     the corporation if he has been wholly successful, on the merits or
     otherwise, in the defense of the proceeding. The corporation may, at the
     direction of and in the sole discretion of the Board, pay for or reimburse
     the director or officer for the payment of his reasonable expenses in
     advance of the final disposition of the proceeding, provided that the
     corporation receives in writing (i) an affirmation by the director or
     officer of his good faith belief that he has met the standards of conduct
     necessary for indemnification under Article 2.02-1 of the Texas Business
     Corporation Act, and (ii) an undertaking by or on behalf of the director or
     officer to repay the amount paid or reimbursed if it is ultimately
     determined such standards of conduct have not been met.

          (b) Permitted Indemnification. The corporation, at the direction of
     and in the sole discretion of the Board, shall have the right, to such
     further extent as permitted by law, but not the obligation to indemnify


                                      -13-

     any person who (i) is or was a director, officer, employee, or agent of the
     corporation, or (ii) while a director, officer, employee, or agent of the
     corporation, is or was serving at its request as a director, officer,
     partner, venturer, proprietor, trustee, employee, agent, or similar
     functionary of another foreign or domestic corporation, partnership, joint
     venture, sole proprietorship, trust, employee benefit plan, or other
     enterprise.

     8.02 INSURANCE. The corporation may purchase and maintain insurance or
another arrangement on behalf of any person who is or was a director, officer,
employee, or agent of the corporation or who is or was serving at its request as
a director, officer, partner, venturer, proprietor, trustee, employee, agent, or
similar functionary of another foreign or domestic corporation, partnership,
joint venture, sole proprietorship, trust, employee benefit plan, or other
enterprise against any liability asserted against him and incurred by him in
such a capacity or arising out of his status as such a person, whether or not
the corporation would have the power to indemnify him against that liability
pursuant to the provisions of the Texas Business Corporation Act. Furthermore,
the corporation may, for the benefit of persons indemnified by the corporation,
(i) create a trust fund; (ii) establish any form of self-insurance; (iii) secure
its indemnity obligation by grant of a security interest or other lien on the
assets of the corporation; or (iv) establish a letter of credit, guaranty, or
surety arrangement.

                                   ARTICLE IX
                                   AMENDMENTS

     9.01 AMENDMENT BY SHAREHOLDERS OR DIRECTORS. Unless otherwise provided in
the Articles of Incorporation, these Bylaws may be altered, amended or repealed,
and new Bylaws may be adopted by the affirmative vote of a majority of either
the Board or the holders of a majority of the shares entitled to vote, present
at any meeting at which a quorum of each respective body is present, provided
that notice of the proposed alteration, amendment, repeal or adoption shall be
contained in the notice of the meeting.

     9.02 POWER TO AMEND. This power to alter, amend or repeal the Bylaws, and
to adopt new Bylaws, may be modified or divested by action of the holders of a
majority of the shares entitled to vote taken at any regular or special meeting
of the shareholders.


                                      -14-

EX-3.2(Y)

                                                                  Exhibit 3.2(y)

                                   REGULATIONS

                                       OF

                               ASHTON BURDEN, LLC

                       A FLORIDA LIMITED LIABILITY COMPANY

                             DATED AS OF JUNE 9, 2004



                                   REGULATIONS
                                       OF
                               ASHTON BURDEN, LLC

                       A FLORIDA LIMITED LIABILITY COMPANY

                                TABLE OF CONTENTS

                                                                           
ARTICLE I
DEFINITIONS................................................................    1

   1.01   Definitions......................................................    1
   1.02   Construction.....................................................    3

ARTICLE II
ORGANIZATION...............................................................    3

   2.01   Formation........................................................    3
   2.02   Name.............................................................    3
   2.03   Resident Office; Resident Agent; Principal Office in the United
          States; Other Offices............................................    3
   2.04   Purposes.........................................................    4
   2.05   Foreign Qualification............................................    4
   2.06   Term.............................................................    4
   2.07   Mergers and Exchanges............................................    4
   2.08   No State-Law Partnership.........................................    4

ARTICLE III
MEMBERSHIP; DISPOSITIONS OF INTERESTS......................................    4

   3.01   Initial Members..................................................    4
   3.02   Representations and Warranties...................................    4
   3.03   Restrictions on the Disposition of an Interest...................    5
   3.04   Additional Members...............................................    6
   3.05   Interests in a Member............................................    7
   3.06   Information......................................................    7
   3.07   Liability to Third Parties.......................................    7
   3.08   Withdrawal.......................................................    8
   3.09   Lack of Authority................................................    8

ARTICLE IV
CAPITAL CONTRIBUTIONS......................................................    8

   4.01   Initial Contributions............................................    8
   4.02   Subsequent Contributions.........................................    8
   4.03   Failure to Contribute............................................    8
   4.04   Return of Contributions..........................................   10
   4.05   Advances by Members..............................................   10




                                       -i-



                                                                           
   4.06   Capital Accounts.................................................   10

ARTICLE V
ALLOCATIONS AND DISTRIBUTIONS..............................................   11

   5.01   Allocations......................................................   11
   5.02   Distributions....................................................   11

ARTICLE VI
MANAGERS...................................................................   12

   6.01   Management by Managers...........................................   12
   6.02   Actions by Managers; Committees; Delegation of Authority and
          Duties...........................................................   13
   6.03   Number and Term of Office........................................   14
   6.04   Vacancies; Removal; Resignation..................................   14
   6.05   Meetings.........................................................   14
   6.06   Approval or Ratification of Acts or Contracts by Members.........   15
   6.07   Action by Written Consent or Telephone Conference................   15
   6.08   Compensation.....................................................   15
   6.09   Conflicts of Interest............................................   15
   6.10   Officers.........................................................   16

ARTICLE VII
MEETINGS OF MEMBERS........................................................   16

   7.01   Meetings.........................................................   16
   7.02   Voting List......................................................   17
   7.03   Proxies..........................................................   18
   7.04   Conduct of Meetings..............................................   18
   7.05   Action by Written Consent or Telephone Conference................   18

ARTICLE VIII
INDEMNIFICATION............................................................   19

   8.01   Right to Indemnification.........................................   19
   8.02   Advance Payment..................................................   20
   8.03   Indemnification of Officers, Employees, and Agents...............   20
   8.04   Appearance as a Witness..........................................   20
   8.05   Nonexclusivity of Rights.........................................   20
   8.06   Insurance........................................................   20
   8.07   Member Notification..............................................   21
   8.08   Savings Clause...................................................   21

ARTICLE IX
TAXES......................................................................   21

   9.01   Tax Returns......................................................   21
   9.02   Tax Elections....................................................   21




                                      -ii-



                                                                           
   9.03   "Tax Matters Partner"............................................   22

ARTICLE X
BOOKS, RECORDS, REPORTS, AND BANK ACCOUNTS.................................   22

   10.01  Maintenance of Books.............................................   22
   10.02  Reports..........................................................   22
   10.03  Accounts.........................................................   23

ARTICLE XI
BANKRUPTCY OF A MEMBER.....................................................   23

   11.01  Bankrupt Members.................................................   23

ARTICLE XII
DISSOLUTION, LIQUIDATION, AND TERMINATION..................................   24

   12.01  Dissolution......................................................   24
   12.02  Liquidation and Termination......................................   24
   12.03  Deficit Capital Accounts.........................................   25
   12.04  Articles of Dissolution..........................................   25

ARTICLE XIII
GENERAL PROVISIONS.........................................................   26

   13.01  Offset...........................................................   26
   13.02  Notices..........................................................   26
   13.03  Entire Agreement; Supersedure....................................   26
   13.04  Effect of Waiver or Consent......................................   26
   13.05  Amendment or Modification........................................   26
   13.06  Binding Effect...................................................   27
   13.07  Governing Law; Severability......................................   27
   13.08  Further Assurances...............................................   27
   13.09  Waiver of Certain Rights.........................................   27
   13.10 Indemnification...................................................   27
   13.11 Notice to Members of Provisions of this Agreement.................   27
   13.12 Counterparts......................................................   27
   13.13 Arbitration.......................................................   27




                                      -iii-



                                   REGULATIONS

                                       OF

                               ASHTON BURDEN, LLC

                       A FLORIDA LIMITED LIABILITY COMPANY

     These REGULATIONS OF ASHTON BURDEN, LLC (these "Regulations"), dated as of
     June 9, 2004, are (a) adopted by the Managers (as defined below) and (b)
     executed an agreed to, for good and valuable consideration, by the Sole
     Member (as defined below).

                                    ARTICLE I
                                   DEFINITIONS

     1.01 DEFINITIONS. As used in these Regulations, the following terms have
the following meanings:

          "Act" means the Florida Limited Liability Company Act and any
     successor statute, as amended from time to time.

          "Articles" has the meaning given that term in Section 2.01.

          "Bankrupt Member" means (except to the extent a Required Interest
     consents otherwise) any Member (a) that (i) makes a general assignment for
     the benefit of creditors; (ii) files a voluntary bankruptcy petition; (iii)
     becomes the subject of an order for relief or is declared insolvent in any
     federal or state bankruptcy or insolvency proceedings; (iv) files a
     petition or answer seeking for the Member a reorganization, arrangement,
     composition, readjustment, liquidation, dissolution, or similar relief
     under any law; (v) files an answer or other pleading admitting or failing
     to contest the material allegations of a petition filed against the Member
     in a proceeding of the type described in subclauses (i) through (iv) of
     this clause (a); or (vi) seeks, consents to, or acquiesces in the
     appointment of a trustee, receiver, or liquidator of the Member or of all
     or any substantial part of the Member's properties; or (b) against which, a
     proceeding seeking reorganization, arrangement, composition, readjustment,
     liquidation, dissolution, or similar relief under any law has been
     commenced and 120 days have expired without dismissal thereof or with
     respect to which, without the Member's consent or acquiescence, a trustee,
     receiver, or liquidator of the Member or of all or any substantial art of
     the Member's properties has been appointed and 90 days have expire without
     the appointment's having been vacated or stayed, or 90 days have expired
     after the date of expiration of a "stay, if the appointment has not
     previously been vacated.

          "Business Day" means any day other than a Saturday, a Sunday, or a
     holiday on which national banking associations in the State of Florida are
     closed.


                                      -1-



          "Capital Contribution" means any contribution by a Member to the
     capital of the Company.

          "Code" means the Internal Revenue Code of 1986 and any successor
     statute, as amended from time to time.

          "Commitment" means, subject in each case to adjustments on account _
     Dispositions of Membership Interests permitted by these Regulations, (a) in
     the case of a Member executing these Regulations as of the date of these
     Regulations or a Person acquiring that Membership Interest, the amount
     specified for that Member as its Commitment on Exhibit A, and (b) in the
     case of a Membership Interest issued pursuant to Section 3.04, the
     Commitment established pursuant thereto.

          "Company" means Ashton Burden, LLC, a Florida limited liability
     company.

          "Default Interest Rate" means a rate per annum equal to the lesser of
     (a) four percent (4%) plus a varying rate per annum that is equal to the
     interest rate published as the prime rate by The Bank of Nova Scotia from
     time to time, with adjustments in that varying rate to be made on the same
     date as any change in that rate, and (b) the maximum rate permitted by
     applicable law.

          "Delinquent Member" has the meaning given that term in Section
     4.03(a).

          "Dispose," "Disposing," or "Disposition" means a sale, assignment;
     transfer, exchange, mortgage, pledge, grant of a security interest, or
     other disposition or encumbrance (including, without limitation, by
     operation of law), or the acts thereof.

          "General Interest Rate" means a rate per annum equal to the lesser of
     (a) a varying rate per annum that is equal to the interest rate published
     as the prime rate by The Bank of Nova Scotia from time to time, with
     adjustments in that varying rate to be made on the same date as any change
     in that rate, and (b) the maximum rate permitted by applicable law.

          "Lending Member" has the meaning given that term in Section
     4.03(a)(ii).

          "Manager" means Bruce Freeman, Harry Rosenbaum and Seymour Joffe and
     any Person hereafter elected as a manager of the Company as provided in
     these Regulations, but does not include any Person who has ceased to be a
     manager of the Company.

          "Member" means any Person executing these Regulations as of the date
     of these Regulations as a member or hereafter admitted to the Company as a
     member as provided in these Regulations, but does not include any Person
     who has ceased to be a member in the Company.


                                       -2-



          "Membership Interest" means the interest of a Member in the Company,
     including, without limitation, rights to distributions (liquidating or
     other), allocations, information, and to consent or approve.

          "Permitted Transferee" has the meaning given that term in Section
     3.03(b).

          "Person" has the meaning given that term in the Act.

          "Proceeding" has the meaning given that term in Section 8.01.

          "Regulations" has the meaning given that term in the introductory
     paragraph.

          "Required Interest" means one or more Members having among them more
     than 51% of the Sharing Ratios of all Members.

          "Sharing Ratio" with respect to any Member means the percentage set
     forth on Exhibit A, subject to change as herein provided.

Other terms defined herein have the meanings so given them.

     1.02 CONSTRUCTION. Whenever the context requires, the gender of all words
used in these Regulations includes the masculine, feminine, and neuter. All
references to Articles an Section refer to articles and sections of these
Regulations, and all references to Exhibits are _ Exhibits attached hereto, each
of which is made a part hereof for all purposes.

                                   ARTICLE II
                                  ORGANIZATION

     2.01 FORMATION. The Company has been organized as a Florida limited
liability company by the filing of Articles of Organization (the "Articles")
under and pursuant to the Act and the issuance of a certificate of organization
for the Company by the Secretary of State of Florida.

     2.02 NAME. The name of the Company is "Ashton Burden, LLC" and all Company
business must be conducted in that name or such other names that comply wit
applicable law as the Managers may select from time to time.

     2.03 RESIDENT OFFICE; RESIDENT AGENT; PRINCIPAL OFFICE IN THE UNITED
STATES; OTHER OFFICES. The resident office of the Company required by the Act to
be maintained in the State of Florida shall be the office of the initial
resident agent named in the Articles or such other office (which need not be a
place of business of the Company) as the Managers may designate from time to
time in the manner provided by law. The resident agent of the Company in the
State of Florida shall be the initial resident agent named in the Articles or
such other Person or Persons as the Managers may designate from time to time in
the manner provided by law. This principal office of the Company in the United
States shall be at such place as the Managers may designate from time to time,
which need not be in the State of Florida. The Company shall maintain records at
the office of the resident agent as required by the Act and shall keep the
street address


                                       -3-



of the resident office of the Company in the State of Florida. The Company may
have such other offices as the Managers may designate from time to time.

     2.04 PURPOSES. The purposes of the Company are those set forth in the
Articles.

     2.05 FOREIGN QUALIFICATION. Prior to the Company's conducting business in
any jurisdiction other than Florida, the Managers shall cause the Company to
comply, to the extent procedures are available and those matters are reasonably
within the control of the Managers, with all requirements necessary to qualify
the Company as a foreign limited liability company in that jurisdiction. At the
request of the Managers, each Member shall execute, acknowledge, swear to, and
deliver all certificates and other instruments conforming with these Regulations
that are necessary or appropriate to qualify, continue, and terminate the
Company as a foreign limited liability company in all such jurisdictions in
which the Company may conduct business.

     2.06 TERM. The Company commenced on the date the Secretary of State of
Florida issued a certificate of organization for the Company and shall continue
in existence for the period fixed in the Articles for the duration of the
Company, or such earlier time as these Regulations may specify.

     2.07 MERGERS AND EXCHANGES. The Company may be a party to (a) a merger or
(b) an exchange or acquisition.

     2.08 NO STATE-LAW PARTNERSHIP. The Members intend that the Company not be
a partnership (including, without limitation, a limited - partnership) or joint
venture, and that no Member or Manager be a partner or joint venturer of any
other Member or Manager, for any purposes other than federal and state tax
purposes, and these Regulations may not be construed to suggest otherwise.

                                   ARTICLE III
                     MEMBERSHIP; DISPOSITIONS OF INTERESTS

     3.01 INITIAL MEMBERS. The initial members of the Company are the Persons
executing these Regulations as of the date of these Regulations as members, each
of which is admitted to the Company as a Member effective contemporaneously with
the execution by such Person of these Regulations.

     3.02 REPRESENTATIONS AND WARRANTIES. Each Member hereby represents and
warrants to the Company and each other Member that (a) if that Member is a
corporation, it is duly organized, validly existing and in good standing under
the law of the state of its incorporation and is duly qualified and in good
standing as a foreign corporation in the jurisdiction of its principal place of
business (if not incorporated therein); (b) if that Member is a limited
liability company, it is duly organized, validly existing, and (if applicable)
in good standing under the law of the state of its organization and is duly
qualified and (if applicable) in good standing as a foreign limited liability
company in the jurisdiction of its principal place of business (if not organized
therein); (c) if that Member is a partnership, trust, or other entity, it is
duly formed, validly existing, and (if applicable) in good standing under the
law of the state of its formation, and if required by law is duly qualified to
do business and (if applicable) in good standing in the jurisdiction of its
principal place of business (if not formed therein), and the representations and


                                      -4-



warranties in clause (a), (b) or (c), as applicable, are true and correct with
respect to each partner (other than limited partners), trustee, or other member
thereof; (d) that Member has full corporate, limited liability company,
partnership, trust, or other applicable power and authority to execute and agree
to these Regulations and to perform its obligations hereunder and all necessary
actions by the board of directors, shareholders, managers, members, partners,
trustees, beneficiaries, or other Persons necessary for the due authorization,
execution, delivery, and performance of these Regulations by that Member have
been duly taken; (e) that Member has duly executed and delivered these
Regulations; and (f) that Member's authorization, execution, delivery, and
performance of these Regulations do not conflict with any other agreement or
arrangement to which that Member is a party or which it is bound.

     3.03 RESTRICTIONS ON THE DISPOSITION OF AN INTEREST. (a) Except as
specifically provided in this Section 3.03, a Disposition of an interest in the
Company may not be effected without the consent of (i) a majority of the
Managers who are Members (excluding any Manager who is making such Disposition),
or (ii) if there are no Managers of the type described in clause (i), a Required
Interest. Any attempted Disposition by a Person of an interest or right, or any
part thereof, in or in respect of the Company other than in accordance with this
Section 3.03 shall be, and is hereby declared, null and void ab initio.

     (b) Notwithstanding the provisions of Section 3.03(a), the interest of any
Member in the Company may be transferred without the consent of the Managers or
any of the Members if (i) the transfer occurs by reason of or incident to the
death, dissolution, divorce, liquidation, merger or termination of the
transferor Member, and (ii) the transferee is a Permitted Transferee. A
"Permitted Transferee" is any member of such Member's immediate family, or a
trust, corporation, limited liability company, or partnership controlled by such
Member or members ouch Member's immediate family, or another Person controlling,
controlled by, or under common control with such Member.

     (c) Subject to the provisions of Section 3.03(d), (e), and (f), (i) a
Person to whom an interest in the Company is transferred has the right to be
admitted to the Company as a Member with the Sharing Ratio and the Commitment so
transferred to such Person, if (A) the Member making such transfer grants the
transferee the right to be so admitted, and (B) such transfer is consented to in
accordance with Section 3.03(a); (ii) a Permitted Transferee under the
circumstances described in Section 3.03(b) has the right to be admitted to the
Company as a Member with the Sharing Ratio and the Commitment so transferred to
the Permitted Transferee; and (iii) the Company or (with the permission of the
Company, which may be withheld in its sole discretion) a Lending Member may
grant the purchaser of a Delinquent Member's interest in the Company at a
foreclosure of the security interest therein granted pursuant to Section
4.03(b), the right to be admitted to the Company as a Member with such Sharing
Ratio and such Commitment (no greater than the Sharing Ratio and the Commitment
of the Member effecting such Disposition prior thereto) as they may agree.

     (d) The Company may not recognize for any purpose any purported Disposition
of all or part of a Membership Interest unless and until the other applicable
provisions of this Section 3.03 have been satisfied and the Managers have
received, on behalf of the Company, a document (i) executed by both the Member
effecting the Disposition (or if the transfer is on account of the death,
incapacity, or liquidation of the transferor, its representative) and the


                                       -5-



Person to which the Membership Interest or part thereof is Disposed, (ii)
including the notice address of any Person to be admitted to the Company as a
Member and its agreement to be bound by these Regulations with respect to the
Membership Interest or part thereof being obtained, (iii) setting forth the
Sharing Ratios and the Commitments after the Disposition of the Member effecting
the Disposition and the Person to which the Membership Interest or part thereof
is Disposed (which together must total the Sharing Ratio and the Commitment
of-the Member effecting the Disposition before the Disposition), and (iv)
containing a representation and warranty that the Disposition was made in
accordance with all applicable laws and regulations (including securities laws)
and, if the Person to which the Membership Interest or part thereof is Disposed
is to be admitted to the Company, its representation and warranty that the
representations and warranties in Section 3.02 are true and correct with respect
to that Person. Each Disposition and, if applicable, admission complying with
the provisions of this Section 3.03(d) is effective as of the first day of the
calendar month immediately succeeding the month in which the Managers receive
the notification of Disposition and the other requirements of this Section 3.03
have been met.

     (e) For the right of a Member to Dispose of a Membership Interest or any
part thereof or of any Person to be admitted to the Company in connection
therewith to exist or be exercised, (i) either (A) the Membership Interest or
part thereof subject to the Disposition or admission must be registered under
the Securities Act of 1933, as amended, and any applicable state securities laws
or (B) the Company must receive a favorable opinion of the Company's legal
counsel or of other legal counsel acceptable to the Managers to the effect that
the Disposition or admission is exempt from registration under those laws and
(ii) the Company must receive a favorable opinion of the Company's legal counsel
or of other legal counsel acceptable to the Managers to the effect that the
Disposition or admission, when added to the, total of all other sales,
assignments, or other Dispositions within the preceding 12 months, would
not result in the Company's being considered to have terminated within the
meaning of the Code. The Managers, however, may waive the requirements of this
Section 3.03(e).

     (f) The Member effecting a Disposition and any Person admitted to the
Company in connection therewith shall pay, or reimburse the Company for, all
costs incurred by the Company in connection with the Disposition or admission
(including, without limitation, the legal fees incurred in connection with the
legal opinions referred to in Section 3.03(e)) on or before the tenth day after
the receipt by that Person of the Company's invoice for the amount due. If
payment is not made by the date due, the Person owing that amount shall pay
interest on the unpaid amount from the date due until paid at a rate per annum
equal to the Default Interest Rate.

     3.04 ADDITIONAL MEMBERS. Additional Persons may be admitted to the Company
as Members and Membership Interests may be created and issued to those Persons
and to existing Members at the direction of (a) a majority of the Managers who
are Members, or (b) if there are no Managers who are Members, a Required
Interest, on such terms and conditions as the Managers may determine at the time
of admission. The terms of admission or issuance must specify the Sharing Ratios
and the Commitments applicable thereto and may provide for the creation of
different classes or groups of Members and having different rights, powers, and
duties. The Managers shall reflect the creation of any new class or group in an
amendment to these Regulations indicating the different rights, powers, and
duties, and such an amendment


                                       -6-



need be executed only by the Managers. Any such admission also must comply with
the provisions of Section 3.03(d)(i) and (ii) and is effective only after the
new Member has execute and delivered to the Managers a document including, the
new Member's notice address, it agreement to be bound by these Regulations, and
its representation and warranty that the representation and warranties in
Section 3.02, are true and correct with respect to the new Member. The
provisions of this Section 3.04 shall not apply to Dispositions of Membership
Interests.

     3.05 INTERESTS IN A MEMBER. A Member that is not a natural person may not
cause or permit an interest, direct or indirect, in itself to be Disposed of
such that, after the Disposition, (a) the Company would be considered to have
terminated within the meaning of section 708 of the Code or (b) without the
consent of the Managers and a Required Interest, that Member shall cease to be
controlled by substantially the same Persons who control it as of the date of
its admission to the Company. On any breach of the provisions of clause (b) of
the immediately preceding sentence, the Company shall have the option to buy,
and on exercise of that option the breaching Member shall sell, the breaching
Member's Membership Interest, all in accordance with Section 11.01 as if the
breaching Member were a Bankrupt Member.

     3.06 INFORMATION. (a) In addition to the other rights specifically set
forth in these Regulations, each Member is entitled to all information to which
that Member is entitled to have access pursuant to the Act under the
circumstances and subject to the conditions therein stated. The Members agree,
however, that the Managers from time to time may determine, due to contractual
obligations, business concerns, or other considerations, that certain
information regarding the business, affairs, properties, and financial condition
of the Company should be kept confidential and not provided to some or all other
Members, and that it is not just of reasonable for those Members or assignees or
representatives thereof to examine or copy that information.

     (b) The Members acknowledge that, from time to time, they may receive
information from or regarding the Company in the nature of trade secrets or that
otherwise is confidential, the release of which may be damaging to the Company
or Persons with which it does business. Each Member shall hold in strict
confidence any information it receives regarding the Company that is identified
as being confidential (and if that information is provided in writing, that is
so marked) and may not disclose it to any Person other than another Member or a
Manger, except for disclosures (i) compelled by law (but the Member must notify
the Managers promptly of any request for that information, before disclosing it
if practicable), (ii) to advisers or representatives of the Member or Persons to
which that Member's Membership Interest may be Disposed as permitted by these
Regulations, but only if the recipients have agreed to be bound by the
provisions of this Section 3.06(b), or (iii) of information that Member also has
received from a source independent of the Company that the Member reasonably
believes obtained that information without breach of any obligation of
confidentiality. The Members acknowledge that breach of the provisions of this
Section 3.06(b) may cause irreparable injury to the Company for which monetary
damages are inadequate, difficult to compute, or both. Accordingly, the Members
agree that the provisions of this Section 3.06(b) may be enforced by specific
performance.

     3.07 LIABILITY TO THIRD PARTIES. No Member or Manager shall be liable for
the debts, obligations or liabilities of the Company, including under a
judgment, decree or order of a court.


                                       -7-



     3.08 WITHDRAWAL. A Member does not have the right or power to withdraw from
the Company as a member.

     3.09 LACK OF AUTHORITY. No Member (other than a Manager or an officer) has
the authority or power to act for or on behalf of the Company, to do any act
that would be binding on the Company, or to incur any expenditures on behalf of
the Company.

                                   ARTICLE IV
                              CAPITAL CONTRIBUTIONS

     4.01 INITIAL CONTRIBUTIONS. Contemporaneously with the execution by such
Member of these Regulations, each Member shall make the Capital Contributions
described for that Member in Exhibit A.

     4.02 SUBSEQUENT CONTRIBUTIONS. Without creating any rights in favor of any
third party, each Member shall contribute to the Company, in cash, on or before
the date specified as hereinafter described, that Member's Sharing Ratio of all
monies that in the judgement of the Managers are necessary to enable the Company
to cause the assets of the Company to be properly operated and maintained and to
discharge its costs, expenses, obligations, and liabilities; provided, however,
that a Member is not obligated to contribute a total amount that, when added to
all Capital Contributions that Member previously has made pursuant to Section
4.01, or this Section 4.02, exceeds that Member's Commitment. The Managers shall
notify each Member of the need for Capital Contributions pursuant to this
Section 4.02, when appropriate, which notice must include a statement in
reasonable detail of the proposed uses of the Capital Contributions and a date
(which date may be no earlier than the fifth Business Day following each
Member's receipt" of its notice) before which the Capital Contributions must be
made. Notices for Capital Contributions must be made to all Members in
accordance with their Sharing Ratios.

     4.03 FAILURE TO CONTRIBUTE. (a) If a Member does not contribute by the time
required all or any portion of a Capital Contribution that Member is required to
make as proved in these Regulations, the Company may exercise, on notice to that
Member (the "Delinquent Member"), one or more of the following remedies:

          (i) taking such action (including, without limitation, court
     proceedings) as the Managers may deem appropriate to obtain payment by the
     Delinquent Member of the portion of the Delinquent Member's Capital
     Contribution that is in default, together with interest thereon at the
     Default Interest Rate from the date that the Capital Contribution was due
     until the date that it is made, all at the cost and expense of the
     Delinquent Member;

          (ii) permitting the other Members in proportion to their Sharing
     Ratios or in such other percentages as they may agree (the "Lending Member"
     whether one or more), to advance the portion of the Delinquent Member's
     Capital Contribution that is in default, with the following results:

               (A) the sum advanced constitutes a loan from the Lending Member
          to the Delinquent Member and a Capital Contribution of that sum to the
          Company by the Delinquent


                                       -8-



          Member pursuant to the applicable provisions of these Regulations,

               (B) the principal balance of the loan and all accrued unpaid
          interest thereon is due and payable in whole on the tenth day after
          written demand therefor by the Lending Member to the Delinquent
          Member,

               (C) the amount lent bears interest at the Default Interest Rate
          from the day that the advance is deemed made until the date that the
          loan, together with all interest accrued on it, is repaid to the
          Lending Member,

               (D) all distributions from the Company that otherwise would be
          made to the Delinquent Member (whether before or after dissolution of
          the Company) instead shall be paid to the Lending Member until the
          loan and all interest accrued on it have been paid in full to the
          lending Member (with payments being applied first to accrued and
          unpaid interest and then to principal),

               (E) the payment of the loan and interest accrued on it is secured
          by a security interest in the Delinquent Member's Membership Interest,
          as more fully set forth in Section 4.03(b), and

               (F) the Lending Member has the right, in addition to the other
          rights and remedies granted to it pursuant to these Regulations or
          available to it at law or in equity, to take any action (including,
          without limitation, court proceedings) that the Lending Member may
          deem appropriate to obtain payment by the Delinquent Member of the
          loan and all accrued and unpaid interest on it, at the cost and
          expense of the Delinquent Member;

          (iii) exercising the rights of a secured party under the Uniform
     Commercial Code of the State of Florida, as more fully set forth in Section
     4.03(b); or

          (iv) exercising any other rights and remedies available at law or in
     equity.

     (b) Each Member grants to the Company, and to each Lending Member with
respect to any loans made by the Lending Member to that Member as a Delinquent
Member pursuant to Section 4.03(a)(ii), as security, equally and ratably, for
the payment of all Capital Contributions that Member has agreed to make and the
payment of all loans and interest accrued on them made by Lending Members to
that Member as a Delinquent Member pursuant to Section 4.03(a)(ii), a security
interest in and a general lien on its Membership Interest and the proceeds
thereof, all under the Uniform Commercial Code of the State of Florida. On any
default in the payment of a Capital Contribution or in the payment of such a
loan or interest accrued on it, the Company or


                                       -9-



the Lending Member, as applicable, is entitled to all the rights and remedies of
a secured party under the Uniform Commercial Code of the State of Florida with
respect to the security interest granted in this Section 4.03(b). Each Member
shall execute and deliver to the Company and the other Members all financing
statements and other instruments that the Managers or the Lending Member, as
applicable, may request to effectuate and carry out the preceding provisions of
this Section 4.03(b). At the option of the Managers or a Lending Member, these
Regulations or a carbon, photographic, or other copy hereof may serve as a
financing statement.

     4.04 RETURN OF CONTRIBUTIONS. Other than as expressly provided in these
Regulations, Member is not entitled to the return of any part of its Capital
Contributions or to be paid interest in respect of either its capital account or
its Capital Contributions. An unrepaid Capital Contribution is not a liability
of the Company or of any Member. A Member is not required to contribute or to
lend any cash or property to the Company to enable the Company to return any
Member's Capital Contributions.

     4.05 ADVANCES BY MEMBERS. If the Company does not have sufficient cash to
pay its obligations, any Member(s) that may agree to do so with the Managers'
consent may advance all or part of the needed funds to or on behalf of the
Company. An advance described in this Section 4.05 constitutes a loan from the
Member to the Company, bears interest at the General Interest Rate from the date
of the advance until the date of payment, and is not a Capital Contribution.

     4.06 CAPITAL ACCOUNTS. A capital account shall be established and
maintained for each Member. Each Member's capital account (a) shall be increased
by (i) the amount of money contributed by that Member to the Company, (ii) the
fair market value of property contributed by that Member to the Company (net of
liabilities secured by the contributed property that the Company is considered
to assume or take subject to under section 752 of the Code), and (iii)
allocations to that Member of Company income and gain (or items thereof),
including income and gain exempt from tax and income and gain described in
Treas. Reg. Section 1.704-1(b)(2)(iv)(g), but excluding income and gain
described in Treas. Reg. Section 1.704-1(b)(4)(i), and (b) shall be decreased by
(i) the amount of money distributed to that Member by the Company, (ii) the fair
market value of property distributed to that Member by the Company (net of
liabilities secured by the distributed property that the Member is considered to
assume or take subject to under section 752 of the Code), (iii) allocations to
that Member of expenditures of the Company described in section 705(a)(2)(B) of
the Code, and (iv) allocations of Company loss and deduction (or items thereof),
including loss and deduction described in Treas. Reg. Section
1.704-l(b)(2)(iv)(g), but excluding items described in clause (b)(iii) above and
loss or deduction described in Treas. Reg. Section 1.704-1(b)(4)(i) or Section
1.704-1(b)(4)(iii). The Members' capital accounts also shall be maintained and
adjusted as permitted by the provisions of Treas. Reg. Section
1.704-l(b)(2)(iv)(f) and as required by the other provisions of Treas. Reg.
Sections 1.704-1(b)(2)(iv) and 1.704-l(b)(4), including adjustments to reflect
the allocations to the Members of depreciation, depletion, amortization, and
gain or loss as computed for book purposes rather than the allocation of the
corresponding items as computed for tax purposes, as required by Treas. Reg.
Section 1.704-l(b)(2)(iv)(g). A Member that has more than one Membership
Interest shall have a single capital account that reflects all its Membership
Interests, regardless of the class of Membership Interests owned by that Member
and regardless of the time or manner in which those Membership Interests were
acquired. On the transfer of all or part of a Membership


                                      -10-



Interest, the capital account of the transferor that is attributable to the
transferred Membership Interest or part thereof shall carry over to the
transferee Member in accordance with the provisions of Treas. Reg. Section
1.704-1(b)(2)(iv)(l).

                                    ARTICLE V
                          ALLOCATIONS AND DISTRIBUTIONS

     5.01 ALLOCATIONS. (a) Except as may be required by section 701(c) of the
Code and Treas. Reg. Section 1.701-l(b)(2)(iv)(f)(4), all items of income, gain,
loss, deduction, and credit of the Company shall be allocated among the Members
in accordance with their Sharing Ratios.

     (b) All items of income, gain, loss, deduction, and credit allocable to any
Membership Interest that may have been transferred shall be allocated between
the transferor and the transferee based on the portion of the calendar year
during which each was recognized as owning that Membership Interest, without
regard to the results of Company operations during any particular portion of
that calendar year and without regard to whether cash distributions were made to
the transferor or the transferee during that calendar year; provided, however,
that this allocation must be made in accordance with a method permissible under
section 706 of the Code and the regulations thereunder.

     5.02 DISTRIBUTIONS. All receipts and revenues of the Company from any
source shall be applied and distributed in the following order of priority with
no distribution being made in any category set forth below unless and until the
preceding category has been satisfied in full either by payment or by setting
aside of a cash reserve for payment of same.

     (a) in payment of all debts, obligations, liabilities, costs and expenses
incurred in connection with or on account of the Company;

     (b) in repayment of any loans and accrued interest thereon made by a
Lending Member pursuant to Section 4.03(a)(ii);

     (c) in repayment of Contributions by the Member in accordance with their
Sharing Ratios, subject to the provisions of Section 4.03.

     (d) after having satisfied (a), (b) and (c) above, receipts and revenues of
the Company shall represent the profits of the Company and shall be distributed
in the following order of priority:

          (i) the Contributions made by the Members to the Company pursuant to
     Sections 4.01 and 4.02 herein shall bear interest at a rate which is two
     percent (2%) per annum greater than the prime rate charged by the Bank of
     Nova Scotia to its most creditworthy customers of U.S. Dollar demand loans,
     but in no event shall the rate of interest exceed the maximum rate
     permitted by laws, from the date of such advance until repaid to such
     Member in accordance with (c) above.

          (ii) after having satisfied (a), (b), (d) and (d)(i) above, the
     receipts and revenues of the Company shall be distributed to the Members
     pro rate and pari passu in accordance with their Sharing Ratios.


                                      -11-



However, no distribution of profits shall be made until after completion of any
development and/or construction activities undertaken by the Company, without
the agreement of the Members.

                                   ARTICLE VI
                                    MANAGERS

     6.01 MANAGEMENT BY MANAGERS. (a) Except for situations in which the
approval of the Members is required by these Regulations or by nonwaivable
provisions of applicable law, and subject to the provisions of Section 6.02, (i)
the powers of the Company shall be exercised by or under the authority of, and
the business and affairs of the Company shall be managed under the direction of,
the Managers; and (ii) the Managers may make all decisions and take all actions
for the Company not otherwise provided for in these Regulations, including,
without limitation, the following:

          (i) entering into, making, and performing contracts, agreements, and
     other undertakings binding the Company that may be necessary, appropriate,
     or advisable in furtherance of the purposes of the Company and making all
     decisions and waivers thereunder;

          (ii) opening and maintaining bank and investment accounts and
     arrangements, drawing checks and other orders for the payment of money, and
     designating individuals with authority to sign or give instructions with
     respect to those accounts and arrangements;

          (iii) maintaining the assets of the Company in good order;

          (iv) collecting sums due the Company;

          (v) to the extent that funds of the Company are available therefor,
     paying debts and obligations of the Company;

          (vi) acquiring, utilizing for Company purposes, and Disposing of any
     asset of the Company;

          (vii) borrowing money or otherwise committing the credit of the
     Company for Company activities and voluntary prepayments or extensions of
     debt;

          (viii) selecting, removing, and changing the authority and
     responsibility of lawyers, accountants, and other advisers and consultants;

          (ix) obtaining insurance for the Company;

          (x) determining distributions of Company cash and other property as
     provided in Section 5.02;

          (xi) establishing a seal for the Company;


                                      -12-



          (xii) selling, leasing, exchanging or otherwise disposing of
     (including by way of a pledge, mortgage, deed of trust or trust indenture)
     all or any portion of the Company's property and assets (with or without
     good will); and

          (xiii) being a party to (i) a merger, or (ii) an exchange or
     acquisition.

     (b) Notwithstanding the provisions of Section 6.01(a), the Managers may
not cause the Company to do any of the following without complying with the
applicable requirements set forth below:

          (i) amend or restate the Articles, without complying with the
     applicable procedures set forth in the Act.

     6.02 ACTIONS BY MANAGERS; COMMITTEES; DELEGATION OF AUTHORITY AND DUTIES.
(a) In managing the business and affairs of the Company and exercising its
powers, the Manager: shall act (i) collectively through meetings and written
consents pursuant to Sections 6.05 and 607; (ii) through committees pursuant to
Section 6.02(b); or (iii) through Managers to whom authority and duties have
been delegated pursuant to Section 6.02(c).

     (b) The Managers may, from time to time, designate one or more committees,
each of which shall be comprised of one or more Managers. Any such committee, to
the extent provided in such resolution or in the Articles or these Regulations,
shall have and may exercise all of the authority of the Managers, subject to the
limitations set forth in the Act. At every meeting of any such committee, the
presence of a majority of all the members thereof shall constitute a quorum, and
the affirmative vote of a majority of the members present shall be necessary for
the adoption of any resolution. The Managers may dissolve any committee at any
time, unless otherwise provided in the Articles or these Regulations.

     (c) The Members and the Managers hereby delegate to each of the Managers
(acting by themself and without the necessity of an other approval or
authorization) or to an authorized representative of the Company, designated by
one or more of the Managers, the authority to take any of the actions authorized
in Section 6.01 (a) hereof. In addition, the Managers may assign titles
(including, without limitation, president; vice president, secretary, assistant
secretary, treasurer and assistant treasurer) to any such Manager. Unless the
Managers decide otherwise, if the title is one commonly used for officers of a
business corporation formed under the laws of the State of Florida, the
assignment of such title shall constitute the delegation to such Manager of the
authority and duties that are normally associated with that office, subject to
any specific delegation of authority and duties made pursuant to the first
sentence of this Section 6.02(c). Any number of titles maybe held by the same
Manager. Any delegation pursuant to this Section 6.02(c) may be revoked at any
time by the Managers.

     (d) Any Person dealing with the Company, other than a Member, may rely on
the authority of an Manager authorized representative or officer in taking any
action in the name of the Company without inquiry into the provisions of these
Regulations or compliance herewith, regardless of whether that action actually
is taken in accordance with the provisions of these Regulations.


                                      -13-




     6.03 NUMBER AND TERM OF OFFICE. The number of Managers of the Company shall
be determined from time to time by resolution of the Managers; provided,
however, that no decrease in the number of Managers that would have the effect
of shortening the term of an incumbent Manager may be made by the Managers. If
the Managers make no such determination, the number of Managers shall be the
number set forth in the Articles as the number of Managers constituting the
initial Managers. Each Manager shall hold office for the term for which he is
elected and thereafter until his successor shall have been elected and
qualified, or until his earlier death, resignation or removal. Unless otherwise
provided in the Articles, Managers need not be Members or residents of the State
of Florida.

     6.04 VACANCIES; REMOVAL; RESIGNATION. Any Manager position to be filled by
reason of an increase in the number of Managers may be filled by election at an
annual or special meeting of Members called for that purpose. Any vacancy
occurring in the Managers other than by reason of an increase in the number of
Managers may be filled (a) by election at an annual or special meeting of the
Members called for that purpose or (b) by the affirmative vote of a majority of
the remaining Managers though less than a quorum of the Managers. A Manager
elected to fill a vacancy occurring other than by reason of an increase in the
number of Managers shall be elected for the unexpired term of his predecessor in
office. At any meeting of Members at which a quorum of Members is present called
expressly for that purpose, or pursuant to a written consent adopted pursuant to
these Regulations, any Manager may be removed, with or without cause, by a
Required Interest. Any Manager may resign at any time. Such resignation shall be
made in writing and shall take effect at the time specified therein, or if no
time be specified, at the time of its receipt by the remaining Managers. The
acceptance of a resignation shall not be necessary to make it effective, unless
expressly so provided in the resignation.

     6.05 MEETINGS. (a) Unless otherwise required by law or provided in the
Articles or these Regulations, a majority of the total number of Managers fixed
by, or in the manner provided in, the Articles or these Regulations shall
constitute a quorum for the transaction of business of the Managers, and the act
of a majority of the Managers present at a meeting at which a quorum is present
shall he the act of the Managers. A Manager who is present at a meeting of the
Managers at which action on any Company matter is taken shall be presumed to
have assented to the action unless his dissent shall be entered in the minutes
of the meeting or unless he shall file his written dissent to such action with
the Person acting as secretary of the meeting before the adjournment thereof or
shall deliver such dissent to the Company immediately after the adjournment of
the meeting. Such right to dissent shall not apply to a Manager who voted in
favor of such action.

     (b) Meetings of the Managers may be held at such place or places as shall
be determined from time to time by resolution of the Managers. At all meetings
of the Managers, business shall be transacted in such order as shall from time
to time be determined by resolution of the Managers. Attendance of a Manager at
a meeting shall constitute a waiver of notice of such meeting, except where a
Manager attends a meeting for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully
called or convened.

     (c) In connection with any annual meeting of Members at which Managers were
elected, the Managers may, if a quorum is present, hold its first meeting for
the transaction of


                                      -14-



business immediately after and at the same place as such annual meeting of the
Members. Notice of such meeting at such time and place shall not be required.

     (d) Regular meetings of the Managers shall, be held at such times and
places as shall be designated from time to time by resolution of the Managers.
Notice of such regular meetings shall not be required.

     (e) Special meetings of the Managers may be called by any Manager on at
least 24 hours notice to each other Manager. Such notice need not state the
purpose or purposes of, nor the business to be transacted at, such meeting,
except as may otherwise be required by law or provided for by the Articles or
these Regulations.

     6.06 APPROVAL OR RATIFICATION OF ACTS OR CONTRACTS BY MEMBERS. The Managers
in their discretion, may submit any act or contract for approval or ratification
at any annual meeting of the Members, or at any special meeting of the Members
called for the purpose of considering any such act or contract, and any act or
contract that shall be approved or be ratified by a Required Interest shall be
as valid and as binding upon the Company and upon all the Members as if it shall
have been approved or ratified by every Member of the Company.

     6.07 ACTION BY WRITTEN CONSENT OR TELEPHONE CONFERENCE. Any action
permitted or required by the Act, the Articles or these Regulations to be taken
at a meeting, of the Managers or any committee designated by the Managers may be
taken without a meeting if a consent in writing, setting forth the action to be
taken, is signed by all the Managers or members of such committee, as the case
may be. Such consent shall have the same force and effect as a unanimous vote at
a meeting and may be stated as such in any document or instrument filed with the
Secretary of State of Florida, and the execution of such consent shall
constitute attendance or presence in person at a meeting of the Managers or any
such committee, as the case may be. Subject to the requirements of the Act, the
Articles or these Regulations for notice of meetings, unless otherwise
restricted by the Articles, Managers, or members of any committee designated by
the Managers, may participate in and hold a meeting of the Managers or any
committee of Managers, as the case may be, by means of a conference telephone or
similar communications equipment by means of which all Persons participating in
the meeting can hear each other, and participation in such meeting shall
constitute attendance and presence in person at such meeting, except where a
Person participates in the meeting for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully
called or convened.

     6.08 COMPENSATION. The Managers shall reserve such compensation, if any,
for their services as may be designated from time to time by all of the
Managers. In addition, the Managers shall be entitled to be reimbursed for
out-of-pocket costs and expenses incurred in the course of their service
hereunder, including the portion of their overhead reasonably allocable to
Company activities.

     6.09 CONFLICTS OF INTEREST. Subject to the other express provisions of
these Regulations, each Manager, Member and officer of the Company at any time
and from time to time may engage in and possess interests in other business
ventures of any and every type and description, independently or with others,
including ones in competition with the Company, with no obligation to offer to
the Company or any other Member, manager or officer the fight to


                                      -15-



participate therein. The Company may transact business with any Manager, Member,
officer or Affiliate thereof, provided the terms of those transactions are no
less favorable than those the Company could obtain from unrelated third parties.

     6.10 OFFICERS. (a) The Managers may, from time to time, designate one or
more Persons to be officers of the Company. No officer need be a resident of the
State of Florida, a Member or a Manager. Any officers so designated shall have
such authority and perform such duties as the Managers may, from time to time,
delegate to them. The Managers may assign titles to particular officers. Unless
the Managers decide otherwise, if the title is one commonly used for officers of
a business corporation formed under the laws of the State of Florida, the
assignment of such title shall constitute the delegation to such officer of the
authority and duties that are normally associated with that office, subject to
(i) any specific delegation of authority and duties made to such officer by the
Managers pursuant to the third sentence of this Section 6-10(b), or (ii) any
delegation of authority and duties made to one or more Mangers pursuant to
Section 6.02(a). Each officer shall hold office until his successor shall be
duly designated and shall quality or until his death or until he shall resign or
shall have been removed in the manner hereinafter provided. Any number of
offices may be held by the same Person. The salaries or other compensation, if
any, of the officers and agents of the Company shall be fixed from time to time
by the Managers.

     (b) Any officer may resign as such at any time. Such resignation shall be
made in writing and shall take effect at the time specified therein, or if no
time be specified, at the time of its receipt by the Managers. The acceptance of
a resignation shall not be necessary to make it effective, unless expressly so
provided in the resignation. Any officer may be removed as such, either with or
without cause, by the Managers whenever in their judgment the best interests of
the Company will be served thereby; provided, however, that such removal shall
be without prejudice to the contract rights, if any, of the Person so removed.
Designation of an officer shall not of itself create contract rights. Any
vacancy occurring in any office of the Company (other than Manager) may be
filled by the Managers.

                                   ARTICLE VII
                               MEETINGS OF MEMBERS

     7.01 MEETINGS. (a) A quorum shall be present at a meeting of Members if the
holders of a Required Interest are represented at the meeting in person or by
proxy. With respect to any matter, other than a matter for which the affirmative
vote of the holders of a specified portion of the Sharing Ratios of all Members
entitled to vote is required by the Act, the affirmative vote of a Required
Interest at a meeting of Members at which a quorum is present shall be the act
of the Members.

     (b) All meetings of the Members shall be held at the principal place of
business of the Company or at such other place within or without the State of
Florida as shall be specified or fixed in the notices or waivers of notice
thereof; provided that any or all Members may participate in any such meeting by
means of conference telephone or similar communications equipment pursuant to
Section 7.05.


                                      -16-



     (c) Notwithstanding the other provisions of the Articles or these
Regulations, the chairman of the meeting or the holders of a Required Interest
shall have the power to adjourn such meeting from time to time, without any
notice other than announcement at the meeting of the time and place of the
holding of the adjourned meeting. If such meeting is adjourned by the Members,
such time and place shall be determined by a vote of the holders of a Required
Interest. Upon the resumption of such adjourned meeting, any business may be
transacted that might have been transacted at the meeting as originally called.

     (d) An annual meeting of the Members, for the election of the Managers and
for the transaction of such other business as may properly come before the
meeting, shall be held at such place, within or without the State of Florida, on
such date and at such time as the Managers shall fix and set forth in the notice
of the meeting, which date shall be within 13 months subsequent to the date of
organization of the Company or the last annual meeting of Members, whichever
most recently occurred.

     (e) Special meetings of the Members for any proper purpose or purposes may
be called at any time by the Managers or the holders of at least ten percent of
the Sharing Ratios of all Members. If not otherwise stated in or fixed in
accordance with the remaining provisions hereof, the record date for determining
Members entitled to call a special meeting is the date any Member first signs
the notice of that meeting. Only business within the purpose or purposes
described in the notice (or waiver thereof) required by these Regulations may be
conducted at a special meeting of the Members.

     (f) Written or printed notice stating the place, day and hour of the
meeting and, in the case of a special meeting, the purpose or purposes for which
the meeting is called, shall be delivered not less than ten nor more than 60
days before the date of the meeting, either personally or by mail, by or at the
direction of the Managers or Person calling the meeting to each Member entitled
to vote at such meeting. If mailed, any such notice shall be deemed to be
delivered when deposited in the United States mail, addressed to the Member at
his address provided for on Exhibit A, with postage thereon prepaid.

     (g) The date on which notice of a meeting of Members is mailed or the date
on which the resolution of the Managers declaring a distribution is adopted, as
the case may be, shall be the record date for the determination of the Members
entitled to notice of or to vote at such meeting, including any adjournment
thereof, or the Members entitled to receive such distribution.

     (h) The right of Members to cumulative voting in the election of Managers
is expressly prohibited.

     7.02 VOTING LIST. The Managers shall make, at least ten days before each
meeting of Members, a complete list of the Members entitled to vote at such
meeting or any adjournment thereof, arranged in alphabetical order, with the
address of and the Sharing Ratios held by each, which list, for a period of ten
days prior to such meeting, shall be kept on file at the resident office or
principal place of business of the Company and shall be subject to inspection by
any Member at any time during usual business hours. Such list shall also be
produced and kept open at the time and place of the meeting and shall be subject
to the inspection of any Member during


                                      -17-



the whole time of the meeting. The original membership records shall be
prima-facie evidence as to who are the Members entitled to examine such list or
transfer records or to vote at any meeting of Members. Failure to comply with
the requirements of this Section shall not affect the validity of any action
taken at the meeting.

     7.03 PROXIES. A Member may vote either in person or by proxy executed in
writing by the Member. A telegram, telex, cablegram or similar transmission by
the Member, or a photographic, photostatic, facsimile or similar reproduction of
a writing executed by the Member shall be treated as an execution in writing for
purposes of this Section. Proxies for use at any meeting of Members or in
connection with the taking of any action by written consent shall be filed with
the Managers, before or at the time of the meeting or execution of the written
consent, as the case may be. All proxies shall be received and taken charge of
and all ballots shall be received and canvassed by the Managers, who shall
decide all questions touching upon the qualification of voters the validity of
the proxies, and the acceptance or rejection of votes, unless an inspector or
inspectors shall have been appointed by the chairman of the meeting, in which
event such inspector or inspectors shall decide all such questions. No proxy
shall be valid after 11 months from the date of its execution unless otherwise
provided in the proxy. A proxy shall be revocable unless the proxy form
conspicuously states that the proxy is irrevocable and the proxy is coupled with
an interest. Should a proxy designate two or more Persons to act as proxies,
unless that instrument shall provide to the contrary, a majority of such Persons
present at any meeting at which their powers thereunder are to be exercised
shall have and may exercise all the powers of voting or giving consents thereby
conferred, or if only one be present, then such powers may be exercised by that
one; or, if an even number attend and a majority do not agree on any particular
issue, the Company shall not be required to recognize such proxy with respect to
such issue if such proxy does not specify how the Sharing Ratios that are the
subject of such proxy are to be voted with respect to such issue.

     7.04 CONDUCT OF MEETINGS. All meetings of the Members shall be presided
over by the chairman of the meeting, who shall be a Manager (or representative
thereof) designated by a majority of the Managers. The chairman of any meeting
of Members shall determine the order of business and the procedure at the
meeting, including such regulation of the manner of voting and the conduct of
discussion as seem to him in order.

     7.05 ACTION BY WRITTEN CONSENT OR TELEPHONE CONFERENCE. (a) Any action
required or permitted to be taken at any annual or special meeting of Members
may be taken without a meeting, without prior notice, and without a vote, if a
consent or consents in writing, setting forth the action so taken, shall be
signed by the holder or holders of not less than the minimum Sharing Ratios that
would be necessary to take such action at a meeting at which the holders of all
Sharing Ratios entitled to vote on the action were present and voted. Every
written consent shall bear the date of signature of each Member who signs the
consent. No written consent shall be effective to take the action that is the
subject to the consent unless, within 60 days after the date of the earliest
dated consent delivered to the Company in the manner required by this Section, a
consent or consents signed by the holder or holders of not less than the minimum
Sharing Ratios that would be necessary to take the action that is the subject of
the consent are delivered to the Company by delivery to its resident office, its
principal place of business, or the Managers. Delivery shall be by hand or
certified or registered mail, return receipt requested. Delivery to the
Company's principal place of business shall be addressed to the Managers. A


                                      -18-



telegram, telex, cablegram or similar transmission by a Member, or a
photographic, photostatic, facsimile or similar reproduction of a writing signed
by a Member, shall be regarded as signed by the Member for purposes of this
Section. Prompt notice of the taking of any action by Members without a meeting
by less than unanimous written consent shall be given to those Members who did
not consent in writing to the action.

     (b) The record date for determining Members entitled to consent to action
in writing without a meeting shall be the first date on which a signed written
consent setting forth the action taken or proposed to be taken is delivered to
the Company by delivery to its resident office, its principal place of business,
or the Managers. Delivery shall be by hand or by certified or registered mail,
return receipt requested. Delivery to the Company's principal place of business
shall be addressed to the Managers.

     (c) If any action by Members is taken by written consent, any articles or
documents filed with the Secretary of State of Florida as a result of the taking
of the action shall state, in lieu of any statement required by the Act
concerning any vote of Members, that written consent has been given in
accordance with the provisions of the Act and that any written notice required
by the Act has been given.

     (d) Members may participate in and hold a meeting by means of conference
telephone or similar communications equipment by means of which all Persons
participating in the meeting can hear each other, and participation in such
meeting shall constitute attendance and presence in person at such meeting,
except where a Person participates in the meeting for the express purpose of
objecting to the transaction of any business on the ground that the meeting is
not lawfully called or convened.

                                  ARTICLE VIII
                                INDEMNIFICATION

     8.01 RIGHT TO INDEMNIFICATION. Subject to the limitations and conditions as
provided in this Article VIII, each Person who was or is made a party or is
threatened to be made a party to or is involved in any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative,
arbitrative or investigative (hereinafter a "Proceeding"), or any appeal in such
a Proceeding or an inquiry or investigation that could lead to such a
Proceeding, by reason of the fact that he or she, or a Person of whom he or she
is the legal representative, is or was a Manager of the Company or while a
Manager of the Company is or was serving at the request of the Company as a
Manager, director, officer, partner, venturer, proprietor, trustee, employee,
agent, or similar functionary of another foreign or domestic limited liability
company, corporation, partnership, joint venture, sole proprietorship, trust,
employee benefit plan or other enterprise shall be indemnified by the Company to
the fullest extent permitted by the Act and the laws of the State of Florida, as
the same exist or may hereafter be amended (but, in the case of any such
amendment, only to the extent that such amendment permits the Company to provide
broader indemnification rights than said law permitted the Company to provide
prior to such amendment) against judgments, penalties (including excise and
similar taxes and punitive damages), fines, settlements and reasonable expenses
(including, without limitation, attorneys' fees) actually incurred by such
Person in connection with such Proceeding and indemnification under this Article
VIII shall continue as to a Person who has ceased to serve in the capacity


                                      -19-



which initially entitled such Person to indemnify hereunder. The rights granted
pursuant to this Article VIII shall be deemed contract rights, and no amendment,
modification or repeal of this Article VIII shall have the effect of limiting or
denying any such rights with respect to actions taken or Proceedings arising
prior to any such amendment, modification or repeal. It is expressly
acknowledged that the indemnification provided in this Article VIII could
involve indemnification for negligence or under theories of strict liability.

     8.02 ADVANCE PAYMENT. The right to indemnification conferred in this
Article VII shall include the right to be paid or reimbursed by the Company the
reasonable expense incurred by a Person of the type entitled to be indemnified
under Section 8.01 who was, is or is threatened to be made a named defendant or
respondent in a Proceeding in advance of the final disposition of the Proceeding
and without any determination as to the Person's ultimate entitlement to
indemnification; provided, however, that the payment of such expenses incurred
by any such Person in advance of the final disposition of a Proceeding, shall be
made only upon delivery to the Company of a written affirmation by such Manager
of his or her good faith belief that he has met the standard of conduct for
indemnification under this Article VIII and a written undertaking, by or on
behalf of such Person, to repay all amounts so advanced if it shall ultimately
be determined that such indemnified Person is not entitled to be indemnified
under this Article VIII or otherwise.

     8.03 INDEMNIFICATION OF OFFICERS, EMPLOYEES, AND AGENTS. The Company, by
adoption of a resolution of the Managers, may indemnity and advance expenses to
an officer, employee or agent of the Company to the same extent and subject to
the same conditions under which it may indemnify and advance expenses to
Managers under this Article VIII; and, the Company may indemnify and advance
expenses to Persons who are not or were not Managers, officers, employees or
agents of the Company but who are or were serving at the request of the Company
as a Manager, director, officer, partner, venturer, proprietor, trustee,
employee, agent or similar functionary of another foreign or domestic limited
liability company, corporation, partnership, joint venture, sole proprietorship,
trust, employee benefit plan or other enterprise against any liability asserted
against him and incurred by him in such a capacity or arising out of his status
as such a Person to the same extent that it may indemnity and advance expenses
to Managers under this Article VIII.

     8.04 APPEARANCE AS A WITNESS. Notwithstanding any other provision of this
Article VIII, the Company may pay or reimburse expenses incurred by a Manager in
connection with his appearance as a witness or other participation in a
Proceeding at a time when he is not a named defendant or respondent in the
Proceeding.

     8.05 NONEXCLUSIVITY OF RIGHTS. The right to indemnification and the
advancement and payment of expenses conferred in this Article VIII shall not be
exclusive of any other right which a Manager or other Person indemnified
pursuant to Section 8.03 may have or hereafter acquire under any law (common or
statutory), provision of the Articles or these Regulations, agreement, vote of
Members or disinterested Managers or otherwise.

     8.06 INSURANCE, The Company may purchase and maintain insurance, at its
expense, to protect itself and any Person who is or was serving as a Manager,
officer, employee or agent of the Company or is or was serving at the request of
the Company as a Manager, director,


                                      -20-



officer, partner, venturer, proprietor, trustee, employee, agent or similar
functionary of another foreign or domestic limited liability company,
corporation, partnership, joint venture, sole proprietorship, trust, employee
benefit plan or other enterprise against any expense, liability or loss, whether
or not the Company would have the power to indemnify such Person against such
expense, liability or loss under this Article VIII.

     8.07 MEMBER NOTIFICATION. To the extent required by law, any
indemnification of or advance of expenses to a Manager in accordance with this
Article VIII shall be reported in writing to the Members with or before the
notice or waiver of notice of the next Members' meeting or with or before the
next submission to Members of a consent to action without a meeting and, in any
case, within the 12-month period immediately following the date of the
indemnification or advance.

     8.08 SAVINGS CLAUSE. If this Article VIII or any portion hereof shall be
invalidated on any ground by any court of competent jurisdiction, then the
Company shall nevertheless indemnify and hold harmless each Manager or any other
Person indemnified pursuant to this Article VIII as to costs, charges and
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement with respect to any action, suit or proceeding, whether civil,
criminal, administrative or investigative to the full extent permitted by any
applicable portion of this Article VIII that shall not have been invalidated and
to the fullest extent permitted by applicable law.

                                   ARTICLE IX
                                      TAXES

     9.01 TAX RETURNS. The Managers shall cause to be prepared and filed all
necessary federal and state income tax returns for the Company, including making
the elections described in Section 9.02. Each Member shall furnish to the
Managers all pertinent information in its possession relating to Company
operations that is necessary to enable the Company's income tax returns to be
prepared and filed.

     9.02 TAX ELECTIONS. The Company shall make the following elections on the
appropriate tax returns:

     (a) to adopt the year ending on May 31 as the Company's fiscal year;

     (b) to adopt a method of accounting as the Managers may determine from time
to time;

     (c) if a distribution of Company property as described in section 734 of
the Code occurs or if a transfer of a Membership Interest as described in
section 743 of the Code occurs, on written request of any Member, to elect,
pursuant to section 754 of the Code, to adjust the basis of Company properties;

     (d) to elect to amortize the organizational expenses of the Company and the
startup expenditures of the Company under Section 195 of the Code ably over a
period of 60 months as permitted by section 709(b) of the Code;


                                      -21-



     (e) any other election the Managers may deem appropriate and in the best
interests of the Members.

Neither the Company nor any Manager or Member may make an election for the
Company to be excluded from the application of the provisions of subchapter K of
chapter 1 of subtitle A of the Code or any similar provisions of applicable
state law, and no provision of these Regulations (including, without limitation,
Section 2.06) shall be construed to sanction or approve such an election.

     9.03 "TAX MATTERS PARTNER". A majority of the Managers who are Members
shall designate one Manager that is a Member to be the "tax matters partner" of
the Company pursuant to section 6231(a)(7) of the Code; or, if there is no
Manager that is a Member, the "tax matters partner" shall be a Member that is
designated as such by a Required Interest. Any Member who is designated "tax
matters partner" shall take such action as may be necessary to cause each other
Member to become a "notice partner" within the meaning of section 622 of the
Code. Any Member who is designated tax matters partner" shall inform each other
Member of all significant matters that may come to its attention in its capacity
as "tax matters partner" by giving notice thereof on or before the fifth
Business Day after becoming aware thereof and, within that time, shall forward
to each other Member copies of all significant written communications it may
receive in that capacity. Any Member who is designated "tax matters partner" may
not take any action contemplated by sections 6222 through 6232 of the Code
without the consent of a Required Interest, but this sentence does not authorize
such Manager (or any other Manager) to take any action left to the determination
of an individual Member under sections 6222 through 6232 of the Code.

                                    ARTICLE X
                   BOOKS, RECORDS, REPORTS, AND BANK ACCOUNTS

     10.01 MAINTENANCE OF BOOKS. The Company shall keep books and records of
accounts and shall keep minutes of the proceedings of its Members, its Managers
and each committee of the Managers. The books of account for the Company shall
be maintained on a cash basis in accordance with the terms of these Regulations,
except that the capital accounts of the Members shall be maintained in
accordance with Section 4.06. The calendar year shall be the accounting year of
the Company.

     10.02 REPORTS. On or before the 120th day following the end of each fiscal
year during the term of the Company, the Managers shall cause each Member to be
furnished with a balance sheet, an income statement, and a statement of changes
in Members' capital of the Company for, or as of the end of, that year certified
by a recognized firm of certified public accountants. These financial statements
must be prepared in accordance with accounting principles generally employed for
cash basis records consistently applied (except as therein noted) and must be
accompanied by a report of the certified public accountants certifying the
statements and stating that (a) their examination was made in accordance with
generally accepted auditing standards and, in their opinion, the financial
statements fairly present the financial position, financial results of
operations, and changes in Members' capital in accordance with accounting
principles generally employed for: cash-basis records consistently applied
(except as therein noted) and (b) in making the examination and reporting on the
financial statements described above, nothing


                                      -22-




came to their attention that caused them to believe that (i) the income and
revenues were not paid or credited in accordance with the financial and
accounting provisions of these Regulations, (ii) the costs and expenses were not
charged in accordance with the financial and accounting provisions of these
Regulations, or (iii) the Managers or any Member failed to comply in any
material respect with the financial and accounting provisions of these
Regulations, or if they do conclude that the Managers or a Member so failed,
specifying the nature and period of existence of the failure. The Managers also
may cause to be prepare or delivered such other reports as they may deem
appropriate. The Company shall bear the costs of all these reports.

     10.03 ACCOUNTS. The Managers shall establish and maintain one or more
separate bank and investment accounts and arrangements for Company funds in the
Company name with financial institutions and firms that the Managers determine.
The Managers may not commingle the Company's funds with the funds of any Member;
however, Company funds may be invested in a manner the same as or similar to
the Managers' investment of their own funds or investments by their Affiliates.

                                   ARTICLE XI
                             BANKRUPTCY OF A MEMBER

     11.01 BANKRUPT MEMBERS. Subject to Section 12.01(c), if any Member becomes
a Bankrupt Member, the Company shall have the option, exercisable by notice from
the Managers to the Bankrupt Member (or its representative) at any time prior to
the 180th day after receipt of notice of the occurrence of the event causing it
to become a Bankrupt Member, to buy, and on the exercise of this option the
Bankrupt Member or its representative shall, sell, its Membership Interest. The
purchase price shall be an amount equal to the fair market value thereof
determined b agreement of the Bankrupt Member (or its representative) and the
Managers; however, those Persons do not agree on the fair market value on or
before the 30th day following the exercise of the option, either such Person, by
notice to the other, may require the determination of fair market value to be
made by an independent appraiser specified in that notice. If the Person
receiving that notice objects on or before the tenth day following receipt to
the independent appraiser designated in that notice, and those Persons otherwise
fail to agree on an independent appraiser, either such Person may petition the
United States District Judge for the State of Florida then senior in service to
designate an independent appraiser. The determination of the independent
appraiser, however designated, is final and binding on all parties. The Bankrupt
Member and the Company each shall pay one-half of the costs of the appraisal.
The purchaser shall pay the fair market value as so determined in four equal
cash installments, the first due on closing and the remainder (together with
accumulated interest on the amount unpaid at the General Interest Rate) due on
each of the first three anniversaries thereof. The payment to be made to the
Bankrupt Member or its representative pursuant to this Section 11.01 is in
complete liquidation and satisfaction of all the rights and interest of the
Bankrupt Member and its representative (and of all Persons claiming by, through,
or under the Bankrupt Member and its representative) in and in respect of the
Company, including, without limitation, any Membership Interest, any rights in
specific Company property, and any rights against the Company and (insofar as
the affairs of the Company are concerned) against the Members, and constitutes a
compromise to which all Members have agreed pursuant to the Act.


                                      -23-



                                   ARTICLE XII
                    DISSOLUTION, LIQUIDATION, AND TERMINATION

     12.01 DISSOLUTION. The Company shall dissolve and its affairs shall be
wound up on the first to occur of the following:

     (a) the written consent of a Required Interest;

     (b) the expiration of the period fixed for the duration of the Company set
forth in the Articles;

     (c) any Manager who is a Member (or, if there is no Manager who is a
Member, any Member) shall become a Bankrupt Member (with or without the consent
of a Required Interest); provided, however, that if the event described in this
Section 12.01(c) shall occur and there shall be at least one other Member
remaining, the Company shall not be dissolved, and the business of the Company
shall be continued, if all Members so agree; and

     (d) entry of a decree of judicial dissolution of the Company under article
6.02 of the Act.

Except as provided in Section 12.01(c), the death, retirement, resignation,
expulsion, bankruptcy or dissolution of a Member, or the occurrence of any other
event that terminates the continued membership of a Member in the Company, shall
not cause a dissolution of the Company.

     12.02 LIQUIDATION AND TERMINATION. On dissolution of the Company, the
Managers shall act as liquidator or may appoint one or more Members as
liquidator. The liquidator shall proceed diligently to wind up the affairs of
the Company and make final distributions as provided herein and in the Act. The
costs of liquidation shall be borne as a Company expense. Until final
distribution, the liquidator shall continue to operate the Company properties
with all of the power and authority of the Managers. The steps to be
accomplished by the liquidator are as follows:

     (a) as promptly as possible after dissolution and again after final
liquidation, the liquidator shall cause a proper accounting to be made by a
recognized firm of certified public accountants of the Company's assets,
liabilities, and operations through the last day of the calendar month in which
the dissolution occurs or the final liquidation is completed, as applicable;

     (b) the liquidator shall cause the notice described in article 6.05(A)(2)
of the Act to be mailed to each known creditor of and claimant against the
Company in the manner described in such article 6.05(A)(2) of the Act;

     (c) the liquidator shall pay, satisfy or discharge from Company funds all
of the debts, liabilities and obligations of the Company (including, without
limitation, all expenses incurred in liquidation and any advances described in
Section 4.05) or otherwise make adequate provision for payment and discharge
thereof (including, without limitation, the establishment of a cash escrow fund
for contingent liabilities in such amount and for such term as the liquidator
may reasonably determine); and


                                      -24-



     (d) all remaining assets of the Company shall be distributed to the Members
as follows:

          (i) the liquidator may sell any or all Company property, including to
     Members, and any resulting gain or loss from each sale shall be computed
     and allocated to the capital accounts of the Members;

          (ii) with respect to all Company property that has not been sold, the
     fair market value of that property shall be determined and the capital
     accounts of the Members shall be adjusted to reflect the manner in which
     the unrealized income, gain, loss, and deduction inherent in property that
     has not been reflected in the capital accounts, previously would be
     allocated among the Members if there were a taxable disposition of that
     property for the fair market value of that property on the date of
     distribution; and

          (iii) Company property shall be distributed among the Members in
     accordance with the positive capital account balances of the Members, as
     determined after taking into account all capital account adjustments for
     the taxable year of the Company during which the liquidation of the
     partnership occurs (other than those made by reason of this clause (iii));
     and those distributions shall be made by the end of the taxable year of the
     Company during which the liquidation of the Company Occurs (or, if later,
     90 days after the date of the liquidation).

All distributions in kind to the Members shall be made subject to the liability
of each distributee for costs, expenses, and liabilities theretofore incurred or
for which the Company has committed prior to the date of termination and those
costs, expenses, and liabilities shall be allocated to the distributee pursuant
to this Section 12.02. The distribution of cash and/or property to a Member in
accordance with the provisions of this Section 12.02 constitutes a complete
return to the Member of its Capital Contributions and a complete distribution to
the Member of its Membership Interest and all the Company's property and
constitutes a compromise to which all Members have consented within the meaning
of the Act. To the extent that a Member returns funds to the Company, it has no
claim against any other Member for those funds.

     12.03 DEFICIT CAPITAL ACCOUNTS. Notwithstanding anything to the contrary
contained in these Regulations, and notwithstanding any custom or rule of law to
the contrary, to the extent that the deficit, if any, in the capital account of
any Member results from or is attributable to deductions and losses of the
Company (including non-cash items such as depreciation), or distributions of
money pursuant to these Regulations to all Members in proportion to their
respective Sharing Ratios, upon dissolution of the Company such deficit shall
not be an asset of the Company and such Members shall not be obligated to
contribute such amount to the Company to bring the balance of such Member's
capital account to zero.

     12.04 ARTICLES OF DISSOLUTION. On completion of the distribution of Company
assets as provided herein, the Company is terminated, and the Managers (or such
other Person or Persons as the Act may require or permit) shall file Articles of
Dissolution with the Secretary of State of


                                      -25-



Florida, cancel any other filings made pursuant to Section 2.05, and take such
other actions as may be necessary to terminate the Company.

                                  ARTICLE XIII
                               GENERAL PROVISIONS

     13.01 OFFSET. Whenever the Company is to pay any sum to any Member, any
amounts that Member owes the Company may be deducted from that sum before
payment.

     13.02 NOTICES. Except as expressly set forth to the contrary in these
Regulations, all notices, requests, or consents provided for or permitted to be
given under these Regulations must be in writing and must be given either by
depositing that writing in the United States mail, addressed to the recipient,
postage paid, and registered or certified with return receipt requested or by
delivering that writing to the recipient in person, by courier, or by facsimile
transmission; and a notice, request, or consent given under these Regulations is
effective on receipt by the Person to receive it. All notices, requests, and
consents to be sent to a Member must be sent to or made at the addresses given
for that Member on Exhibit A or in the instrument described in Section 3.03(d)
or 3.04, or such other address as that Member may specify by notice to the other
Members. Any notice, request, or consent to the Company or the Managers must be
given to the Managers at the following address: 250 Lesmill Road, Don Mills,
Ontario M3B 2T5 Canada. Whenever any notice is required to be given by law, the
Articles or these Regulations, a written waiver thereof, signed by the Person
entitled to notice, whether before or after the time stated therein, shall be
deemed equivalent to the giving of such notice.

     13.03 ENTIRE AGREEMENT; SUPERSEDURE. These Regulations constitute the
entire agreement of the Members and their Affiliates relating to the Company and
supersedes all prior contracts or agreements with respect to the Company,
whether oral or written.

     13.04 EFFECT OF WAIVER OR CONSENT. A waiver or consent, express or implied,
to or of any breach or default by any Person in the performance by that Person
of its obligations with respect to the Company is not a consent or waiver to or
of any other breach or default in the performance by that Person of the same or
any other obligations of that Person with respect to the Company. Failure on the
part of a Person to complain of any act of any Person or to declare any Person
in default with respect to the Company, irrespective of how long that failure
continues, does not constitute a waiver by that Person of its rights with
respect to that default until the applicable statute-of-limitations period has
run.

     13.05 AMENDMENT OR MODIFICATION. These Regulations may be amended or
modified from time to time only by a written instrument adopted by the Managers
and executed and agreed to by a Required Interest; provided, however, that (a)
an amendment or modification reducing a Member's Sharing Ratio or increasing its
Commitment (other than to reflect change; otherwise provided by these
Regulations) is effective only with that Member's consent, (b) an amendment or
modification reducing the required Sharing Ratio or other measure for any
consent or vote in these Regulations is effective only with the consent or vote
of Member, having the Sharing Ratio or other measure theretofore required, and
(c) amendments of the type described in Section 3.04 may be adopted as therein
provided.


                                      -26-



     13.06 BINDING EFFECT. Subject to the restrictions on Dispositions set forth
in these Regulations, these Regulations are binding on and inure to the benefit
of the Members and their respective heirs, legal representatives, successors,
and assigns.

     13.07 GOVERNING LAW; SEVERABILITY. THESE REGULATIONS ARE GOVERNED BY AND
SHALL BE CONSTRUED IN ACCORDANCE WITH LAW OF THE STATE OF FLORIDA, EXCLUDING ANY
CONFLICT-OF-LAWS RULE OR PRINCIPLE THAT MIGHT REFER THE GOVERNANCE OR THE
CONSTRUCTION OF THESE REGULATIONS TO THE LAW OF ANOTHER JURISDICTION. In the
event of a direct conflict between the provisions of these Regulations and (a)
any provision of the Articles, or (b) any mandatory provision of the Act, the
application provision of the Articles or the Act shall control. If any provision
of these Regulations or the application thereof to any Person or circumstance is
held invalid or unenforceable to any extent, the remainder of these Regulations
and the application of that provision to other Persons or circumstances is not
affected thereby and that provision shall be enforced to the greatest extent
permitted by law.

     13.08 FURTHER ASSURANCES. In connection with these Regulations and the
transactions contemplated hereby, each Member shall execute and deliver any
additional documents and instruments and perform any additional acts that may be
necessary or appropriate to effectuate and perform the provisions of these
Regulations and those transactions.

     13.9 WAIVER OF CERTAIN RIGHTS. Each Member irrevocably waives any right it
may have to maintain any action for dissolution of the Company or for partition
of the property of the Company.

     13.10 INDEMNIFICATION. To the fullest extent permitted by law, each Member
shall indemnify the Company, each Manager and each other Member and hold them
harmless from and against all losses, costs, liabilities, damages, and expenses
(including, without limitation, costs of suit and attorney's fees) they may
incur on account of any breach by that Member of these Regulations.

     13.11 NOTICE TO MEMBERS OF PROVISIONS OF THIS AGREEMENT. By executing these
Regulations, each Member acknowledges that it has actual notice of (a) all of
the provisions of this Agreement, including, without limitation, the
restrictions on the transfer of Membership Interests set forth in Article III,
and (b) all of the provisions of the Articles, including, without limitation,
the fact that the Articles provide that no Member shall have the preemptive
right to acquire any Membership Interests or securities of any class that may at
any time be issued, sold or offered for sale by the Company. Each Member hereby
agrees that these Regulations constitute adequate notice of all such provisions.

     13.12 COUNTERPARTS. These Regulations may be executed in any number of
counterparts with the same effect as if all signing parties had signed the same
document. All counterparts shall be construed together and constitute the same
instrument.

     13.13 ARBITRATION. If, at any time or from time to time during the
continuance of the Company or after the dissolution or other termination
thereof, any dispute, difference or question shall arise between any of the
Members, or their successors, assigns or nominees, touching or


                                      -27-



concerning the Company of the property, assets, rights or transactions thereof,
or the dissolution or other termination thereof, or the property of the Company
or the construction, meaning or effect of these Regulations, or any provision
hereof, or the rights of obligations of the Members, or their successors,
assigns or nominees, under these Regulations or otherwise, with respect thereto,
then every such dispute, difference or question shall be submitted to and
settled by arbitration and the decision of the arbitrator appointed as
hereinafter provided to deal with such matter shall be accepted by all the
Members to such dispute, difference or question. The arbitration shall be
conducted by a single arbitrator agreed upon by the Members to the matter. The
decision of the arbitrator shall be final and binding upon all the Members to
such dispute, difference or question and their nominees, and there shall be no
appeal therefrom.

     IN WITNESS WHEREOF, following adoption of these Regulations by the
Managers, the Members have executed these Regulations as of the date first set
forth above.

                                         MEMBER:

                                         ASHTON ORLANDO RESIDENTIAL, L.L.C.,
                                         a Nevada limited liability company


                                         BY: ASHTON WOODS U.S.A., L.L.C.,
                                             a Nevada limited liability company,
                                             Its Sole Member


                                             BY: /s/ Harry Rosenbaum
                                                 -------------------------------
                                                 Harry Rosenbaum, Manager


                                             BY: /s/ Bruce Freeman
                                                 -------------------------------
                                                 Bruce Freeman, Manager


                                             BY: /s/ Seymour Joffe
                                                 -------------------------------
                                                 Seymour Joffe, Manager


                                      -28-

EX-3.2(Z)

                                                                  Exhibit 3.2(z)

                     FORM OF LIMITED PARTNERSHIP AGREEMENT
                    ASHTON WOODS ORLANDO LIMITED PARTNERSHIP

                                                                          Page 2


                        AGREEMENT OF LIMITED PARTNERSHIP

                    ASHTON WOODS ORLANDO LIMITED PARTNERSHIP

THIS AGREEMENT OF LIMITED PARTNERSHIP is made and entered into with effect on
and as of the Effective Date (defined below), by and among each of the General
Partner and the Limited Partners, all as defined below, and who have executed
and delivered this Agreement to be bound thereby with effect on and as of the
Effective Date;

NOW THEREFORE, in consideration of the mutual promises made herein, the parties
hereto agree as follows;

                         ARTICLE 1 - CERTAIN DEFINITIONS

Unless otherwise expressly provided or unless the context otherwise requires,
the following terms used in this Agreement shall have the following respective
meanings:

1.01 "ACCOUNTANT" means the firm of KPMG or such other firm of independent
certified public accountants selected in accordance with Section 16.02 (b).

1.02 "ACT" means the Revised Uniform Limited Partnership Act as in effect from
time to time in the State of Florida.

1.03 "ADJUSTED CAPITAL ACCOUNT DEFICIT" means with respect to any Partner, the
deficit balance, if any, in such Partner's Capital Account as of the end of the
relevant fiscal year, after giving effect to the following adjustments:

     (a)  Credit to such Capital Account any amounts which such Partner is
          obligated to restore to the Partnership pursuant to Section 1.704-1
          (b)(2)(ii)(C) of the Treasury Regulations or is deemed to be obligated
          to restore pursuant to the penultimate sentence of Section
          1.704-2(g)(ii) of the Treasury Regulations or the penultimate sentence
          of Section 1.704-2(i)(5) of the Treasury Regulations; and

     (b)  Debit to such Capital Account the items described in Section
          1.7041(b)(2)(ii)(d)(4), (5) and (6) of the Treasury Regulations.

1.04 "AFFILIATE" means, when used with reference to a specified person, (1) any
person that directly, or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with, the specified
person, (2) a Relative of a specified person who is an individual; (3) any
person that is an officer, director, shareholder, partner, employee or trustee
of, or serves in a similar capacity with respect to, the specified person and
includes a Relative of any such officer, director, shareholder partner, employee
or trustee or the like who is an individual, and (4) any person controlled by
any person designated above. For purposes of the foregoing, "Relative" of an
individual means such individual's ancestors, spouse, lineal descendants,
siblings and the spouses of each ancestor, lineal descendant or sibling, and any
member of the immediate household of such individual.

1.05 "AGREEMENT" or "PARTNERSHIP AGREEMENT" means this Agreement of Limited
Partnership, as amended, modified, supplemented or restated from time to time.

1.06 "ALLAN GROUP" means, collectively, at the Effective Date, each of the
Partners whose name is set forth on the attached Exhibit A under the heading
"Allan Group" and thereafter any Affiliate of any such Partner to whom the whole
or any part of the Partnership Interest held by such Partner on the Effective
Date is transferred or assigned in accordance with the provisions of this
Agreement.

                                                                          Page 3


1.07 "BASE CAPITAL" means, with respect to a Partner, the Base Capital
Contributions of such Partner as adjusted from time to time by:

     (a)  adding thereto all Profits allocated to such Partner in accordance
          with Section 6.04(a)(v) to the extent that the allocation of such
          Profits relates to Losses previously allocated in accordance with
          Sections 6.04(b)(i) and (ii), and Section 6.04(a)(viii); and

     (b)  deducting therefrom all Losses allocated to such Partner in accordance
          with Sections 6.04(b)(ii) and 6.04(b)(ii) and all distributions to
          such Partner in accordance with Section 9.01(i).

The foregoing is intended to comply with the definition of "unreturned capital"
set forth in Treasury Regulation Section 1.514(c)-2, and is to be interpreted
consistently therewith.

1.08 "BASE CAPITAL CONTRIBUTION" means, with respect to a Partner, the amount of
cash set opposite its name on the attached Exhibit A and contributed to the
Partnership in accordance with Section 5.01 (a) (herein collectively referred to
as the "BASE CAPITAL CONTRIBUTIONS").

1.09 "BASE LOAN ADVANCES" means, with respect to a Partner, the outstanding
principal balance from time to time of Loan Advances made to the Partnership by
such Partner from time to time which constitute Base Loans.

1.10 "BASE LOAN INTEREST" means interest at the rate of 12% per annum computed
on a daily basis on the Base Loan Advances of a Partner for the actual number of
days elapsed, divided by 365, and payable both before and after default and
judgement. The yearly rate of interest to which the rate calculated in
accordance with the foregoing provisions of this paragraph is equivalent, is the
rate so determined multiplied by the actual number of days in the calendar year
and divided by 365.

1.11 "BASE LOANS" means with respect to:

     (a)  the Partners of the Majority Partner Group, the amounts advanced from
          time to time by any one or more of such Partners by way of loan to the
          Partnership, where the aggregate principal amount of such advances
          remaining outstanding and the Unrecovered Priority Capital
          Contributions by the Partners of such Partner Group is equal to or
          less than $1,200,000.00;

     (b)  the Partners of the Minority Partner Group, the amounts advanced from
          time to time by any one or more of such Partners by way of loan to the
          Partnership, where the aggregate principal amount of such advances
          remaining outstanding and the Unrecovered Priority Capital
          Contributions by the Partners of such Partner Group is equal to or
          less than the aggregate of their Percentage Interests of the Base
          Loans of the Majority Partner Group; and

     (c)  where the total of the Percentage Interests held by the Limited
          Partners comprising a Partner Group is equal to the total of the
          Percentage Interests held by the Limited Partners comprising each of
          the other Partner Groups, the amounts advanced from time to time by
          any one or more of the Partners by way of loan to the Partnership,
          where the aggregate principal amount of such advances remaining
          outstanding and the Unrecovered Priority Capital Contributions by such
          Partner is equal to or less than the amount that its Percentage
          Interest is of $1,200,000.00.

1.12 "BUSINESS DAY" means a day other than a Saturday, Sunday or any day which
is a legal holiday in the State of Florida.

1.13 "CAPITAL ACCOUNT" means, with respect to a Partner, the account of such
Partner to be maintained as described in Article 5 and, for greater certainty,
includes the Base Capital, Priority Capital Contributions and Preferred Capital
Contributions, as from lime to time adjusted in accordance with Article 5 and
otherwise as provided in or contemplated by this Agreement.

1.14 "CAPITAL CONTRIBUTIONS" means the total amount of Base Capital
Contributions, Priority Capital Contributions and Preferred Capital
Contributions.

1.15 "Capital Proceeds" means the net cash proceeds received by the Partnership
from or as a result of a Capital Transaction, after deducting: (i) any expenses
paid in connection therewith; (ii) any amounts applied by the General Partner in
its sole and absolute discretion toward the payment of any indebtedness
(including indebtedness owed to the General Partner) and other obligations of
the Partnership, including payments of principal and interest on mortgages;
(iii) the payment of any other bona fide expenses; and (iv) the establishment of
any reserves by the General Partner in its sole and absolute discretion. If the
proceeds of any Capital Transaction are paid in more than one instalment, each
such instalment shall be treated as a separate Capital Transaction for purposes
of this definition.

                                                                          Page 4


1.16 "CAPITAL TRANSACTION" means any (i) sale or other disposition of the assets
of the Partnership (other than sales in the ordinary course of business); (ii)
financing or refinancing with respect to the assets of the Partnership; and
(iii) casualty insurance proceeds (other than business interruption insurance)
or condemnation awards with respect to the Partnership's assets in excess of
amounts required to be applied to payment of any indebtedness of the Partnership
or expended in repair or restoration.

1.17 "CODE" means the Internal Revenue Code of 1986, as amended from time to
time, or corresponding provisions of subsequent laws.

1.18 "CONTROL" OR "CONTROLLED" where used in this Agreement to indicate a
relationship to a person, means the possession, direct or indirect, of the power
to direct or cause the direction of the management and policies of such person,
whether through the ownership of voting securities, by contract, or otherwise.
For purposes of the foregoing, a person shall be deemed to hold voting
securities beneficially owned by another person controlled by such first
mentioned person or by an Affiliate of such other person.

1.19 "CUMULATIVE BASE LOAN INTEREST" means the total of the Base Loan Interest
accrued from the date on which each Base Loan Advance was made by the applicable
Partner to the date at which such total is being determined.

1.20 "CUMULATIVE PREFERRED CAPITAL RETURN" means the total of the Preferred
Capital Returns from the date on which each Preferred Capital Contribution was
made by the applicable Partner to the date at which such total is being
determined.

1.21 "CUMULATIVE PREFERRED LOAN INTEREST" means the total of the accrued
Preferred Loan Interest from the date on which each Preferred Loan Advance was
made by the applicable Partner to the date at which such total is being
determined.

1.22 "CUMULATIVE PRIORITY CAPITAL RETURN" means the total of the Priority
Capital Returns from the date on which each Priority Capital Contribution was
made by the applicable Partner to the date at which such total is being
determined.

1.23 "EFFECTIVE DATE" means December 28th, 1997, notwithstanding the actual date
of execution and delivery of this Agreement.

1.24 "FISCAL YEAR" means, for both reporting and federal income tax purposes,
the period from the Effective Date and ending on the immediately following May
31st, and thereafter the 12 month period commencing on June 1st and ending on
May 31st in each calendar year, or such other financial year as may be
determined by the General Partner.

1.25 "FUNDING PARTNER" means a Partner of any of the Other Partnerships that has
any "Loan Advances", "Unrecovered Priority Capital Contributions" and/or
"Unrecovered Preferred Capital Contributions", as provided for in or
contemplated by the Other Partnership Agreements.

1.26 "GENERAL PARTNER" means Ashton Woods Florida L.L.C. (a Nevada limited
liability company) and any person who after the Effective Date becomes a
substitute or additional General Partner in accordance with the provisions of
this Agreement.

1.27 "GREAT GULF GROUP" means, collectively, at the Effective Date, each of the
Partners whose name is set forth on the attached Exhibit A under the heading
"Great Gulf Group" and thereafter any Affiliate of any such Partner to whom the
whole or any part of the Partnership Interest held by such Partner on the
Effective Date is transferred or assigned in accordance with the provisions of
this Agreement.

                                                                          Page 5


1.28 "GROSS ASSET VALUE" means, with respect to any asset, the asset's adjusted
basis for federal income tax purposes, except as follows:

     (a)  The initial Gross Asset Value of any asset contributed by a Partner to
          the Partnership shall be the gross fair market value of such asset, as
          determined by the contributing Partner and the Partnership;

     (b)  The Gross Asset Values of all Partnership assets shall be adjusted to
          equal their respective gross fair market values, as determined by the
          General Partner, as of the following times: (i) the acquisition of an
          additional interest in the Partnership by any new or existing Partner
          in exchange for more than a de minimis Capital Contribution; (ii) the
          distribution by the Partnership to a Partner (or an assignee of a
          Partner with respect to such Partner's Partnership Interest or any
          part thereof) of more than a de minimis amount of Partnership Property
          as consideration for an interest in the Partnership; and (iii) upon
          the liquidation of the Partnership within the meaning of Section
          1.7041(b)(2)(ii)(g) of the Treasury Regulations; provided, however
          that the adjustments pursuant to the immediately preceding items (i)
          and (ii) shall be made only if the General Partner reasonably
          determines that such adjustments are necessary or appropriate to
          reflect the relative economic interests of the Partners and any of
          their assignees in the Partnership;

     (c)  The Gross Asset Value of any Partnership asset distributed to any
          Partner shall be the gross fair market value of such asset on the date
          of distribution; and

     (d)  The Gross Asset Values of the assets included in the Partnership
          Property shall be increased (or decreased) to reflect any adjustments
          to the adjusted basis of such assets pursuant to Code Section 732(d),
          Code Section 734(b) or Code Section 743(b), but only to the extent
          that such adjustments are taken into account in determining Capital
          Accounts pursuant to Section 1.704-1(b)(3)(iv)(m) of the Treasury
          Regulations. If the Gross Asset Value of any such asset has been
          determined or adjusted pursuant to Clause (a), (b) or (c) of this
          definition, such Gross Asset Value shall thereafter be adjusted by the
          depreciation or amortization taken into account with respect to such
          asset for purposes of computing profits and losses.

1.29 "LIMITED PARTNERS" means, on and as of the Effective Date, those persons
whose names and addresses are set forth on the attached Exhibit A, and such
other persons who subsequent to the Effective Date are admitted to the
Partnership as additional or substitute Limited Partners in accordance with the
provisions of this Agreement.

1.30 "LOAN ADVANCES" means, with respect to a Partner, the amount advanced by
way of loan to the Partnership by such Partner from time to time, being the
aggregate amount of the Base Loan Advances and the Preferred Loan Advances of
such Partner.

1.31 "LOSSES" means the aggregate of Net Non-operating Losses and the losses
referred to in and resulting from the calculation of Operating Profits and
Losses.

1.32 "MAJORITY PARTNER GROUP" means, at any time, the Partner Group whose
Partners collectively are entitled to be allocated more than 50% of the Profits
or Losses, as the case may be, pursuant to Section 6.04.

1.33 "METHOD OF ACCOUNTING" means the accrual method of accounting or any other
method of accounting acceptable to the Accountant that the General Partner may
select from time to time which shall be in accordance with generally accepted
accounting principles now or hereafter in effect. All accounting terms not
specifically defined herein shall be construed in accordance with the Method of
Accounting.

1.34 "MINORITY PARTNER GROUP" means, at any time, the Partner Group whose
Partners collectively are entitled to be allocated less than 50% of the Profits
or Losses, as the case may be, pursuant to Section 6.04.

1.35 "NET CASH FLOW" means Net Operating Cash less amounts payable to reduce
Loan Advances and to pay interest thereon as provided for in Article 8 and to
reduce indebtedness of the Partnership ranking subsequent to the Loan Advances.

                                                                          Page 6


1.36 "NET NON-OPERATING LOSSES" means the sum of taxable loss of the Partnership
arising from or as a result of a Capital Transaction.

1.37 "NET NON-OPERATING PROFITS" means the sum of taxable income of the
Partnership arising from or as a result of a Capital Transaction.

1.38 "NET OPERATING CASH" means for any given fiscal year or other accounting
period of the Partnership, all cash received by the Partnership in such fiscal
year or period (including Capital Proceeds), less all disbursements of cash
including, without limitation, disbursements made to the General Partner to
reimburse it for expenses as contemplated in Section 10.09, to pay operating
expenses, reduce the indebtedness of the Partnership ranking in priority to or
pari passu with the Loan Advances and to pay interest on such indebtedness and
amounts used to establish reasonable reserve accounts but excluding any payments
to reduce Loan Advances and to pay interest thereon as provided for in Article 8
and further excluding distributions made pursuant to Section 9.01. The General
Partner acting reasonably shall determine at least semi-annually whether the
reserves of the Partnership are in excess of the amount it reasonably deems
sufficient for the continuing conduct of the business of the Partnership,
including its working capital requirements, and such reserves shall be reduced
by the amount of any such excess and such excess amount shall be added to Net
Operating Cash.

1.39 "NONRECOURSE DEDUCTIONS" has the meaning set forth in Section 1.704-2(c) of
the Treasury Regulations. The amount of Nonrecourse Deductions for a Partnership
fiscal year equals the excess, if any, of the net increase, if any, in the
amount of Partnership Minimum Gain during the fiscal year over the aggregate
amount of any distributions during that fiscal year of proceeds of a Nonrecourse
Liability that are allocable to an increase in Partnership Minimum Gain,
determined according to the provisions of Section 1.704-2(c) of the Treasury
Regulations. If the amount of Nonrecourse Deductions during the Partnership
taxable year exceeds the total amount of items of Partnership loss, deduction
and Code Section 705(a)(2)(B) expenditures for the year, then the excess shall
carry forward and shall be treated as an increase in Partnership Minimum Gain
for the immediately succeeding taxable year for the purpose of determining
whether there is a net increase or decrease in Partnership Minimum Gain (and
Nonrecourse Deductions) during that succeeding Partnership taxable year. For
this purpose, the items of Partnership loss, deduction and Section 705(a)(2)(B)
expenditures for the year are determined without any regard to any item that is
treated as a Partnership Nonrecourse Deduction.

1.40 "NONRECOURSE LIABILITIES" means liabilities of the Partnership treated as
"nonrecourse liabilities" under Section 1.704-2(b)(3) of the Treasury
Regulations.

1.41 "OPERATING PROFITS AND LOSSES" means for each fiscal year of the
Partnership, an amount equal to the Partnership's taxable income or loss for
such year or other period, determined in accordance with Section 703(a) of the
Code (for this purpose, all items of income, gain, loss or deduction required to
be separately stated pursuant to Section 703(a)(1) of the Code shall be included
in taxable income or loss), with the following adjustments:

     (a)  Any income of the Partnership that is exempt from federal income tax
          or otherwise described in Section 705(a)(1)(B) of the Code and not
          otherwise taken into account shall be added to such taxable income or
          loss;

     (b)  Any expenditure of the Partnership described in Section 705(a)(2)(B)
          of the Code and non-deductible syndication costs described in Section
          709 of the Code and not otherwise taken into account shall be
          subtracted from such taxable income or loss; and

     (c)  If the Gross Asset Value of any asset differs from its adjusted basis
          for federal income tax purposes at the beginning of such year, in lieu
          of depreciation, amortization and other cost recovery deductions,
          there shall be taken into account depreciation for such fiscal year or
          other period equal to the amount that bears the same ratio to the
          Gross Asset Value as the federal income tax depreciation, amortization
          or other cost recovery deduction bears to the beginning adjusted tax
          basis, and in lieu of a gain or loss resulting from disposition of
          Partnership property and taken into account in computing taxable
          income or loss, there shall be taken into account gain or loss
          computed by reference to the Gross Asset Value of such Partnership
          property rather than its adjusted basis for federal income tax
          purposes.

     (d)  In the event the Gross Asset Value of any Partnership asset is
          adjusted pursuant to clause (b) or (c) of the definition of Gross
          Asset Value, the amount of such adjustment shall be taken into account
          as gain or loss from disposition of such asset for purposes of
          computing Operating Profits and Losses.

                                                                          Page 7


1.42 "OTHER PARTNERSHIP AGREEMENTS" means, collectively, the Limited Partnership
Agreements entered or to be entered into in respect of the Other Partnerships,
respectively, as amended, modified, supplemented or restated from time to time.

1.43 "OTHER PARTNERSHIPS" means, collectively, Lake Louise Coves Limited
Partnership (to be renamed Isleworth West Limited Partnership) and Butler Coves
Limited Partnership, each formed and registered or to be formed and registered
under the laws of the State of Florida.

1.44 "PARTNER GROUP" means each of the Allan Group, the Great Gulf Group and
each other group of Partners who after the Effective Date is designated in
writing as a Partner Group for purposes of this Agreement.

1.45 "PARTNER MINIMUM GAIN" shall mean an amount, with respect to each Partner
Nonrecourse Debt, equal to the Partnership Minimum Gain that would result if
such Partner Nonrecourse Debt were treated as a Nonrecourse Liability,
determined in accordance with Section 1.704-2(i)(3) of the Treasury Regulations.

1.46 "PARTNER NONRECOURSE DEBT" shall have the meaning set forth in Section
1.704-2(b)(4) of the Treasury Regulations.

1.47 "PARTNER NONRECOURSE DEDUCTIONS" shall have the meaning set forth in
Section 1704-2(i)(2) of the Treasury Regulations. The amount of Partner
Nonrecourse Deductions with respect to a Partner Nonrecourse Debt for a
Partnership fiscal year equals the excess, if any, of the net increase, if any,
in the amount of Partner Minimum Gain attributable to such Partner Nonrecourse
Debt during that fiscal year over the aggregate amount of any distributions
during that fiscal year to the Partner that bears the economic risk of loss for
such Partner Nonrecourse Debt to the extent such distributions are from the
proceeds of such Partner Nonrecourse Debt and are allocable to an increase in
Partner Minimum Gain attributed to such Partner Nonrecourse Debt, determined in
accordance with Section 1.704-2(i)(2) of the Treasury Regulations.

1.48 "PARTNERS" means, collectively, the General Partner and the Limited
Partners. Individually each of them is referred to as a "PARTNER."

1.49 "PARTNERSHIP" means the limited partnership formed and named as provided
for in this Agreement including Sections 2.01 and 2.02 hereof.

1.50 "PARTNERSHIP CAPITAL" means the total amount of all Capital Contributions.

1.51 "PARTNERSHIP INTEREST" means, with respect a Partner, the beneficial
interest owned by such Partner in the Partnership including the Capital Account
and Loan Advances of such Partner and its other rights and entitlements as
provided for in and subject to the provisions of this Agreement, in each case as
the same may from time to time be adjusted or changed as provided for in this
Agreement.

1.52 "PARTNERSHIP MINIMUM GAIN" has the meaning set forth in Sections
1.704-2(b)(2) and (d) of the Treasury Regulations.

1.53 "PARTNERSHIP PROPERTY" means the real property more particularly described
in the attached Exhibit B and any real property which may, subject to the
provisions of this Agreement, from time to time be purchased or otherwise
acquired by the Partnership including, without limitation, all fixtures,
improvements, structures, buildings and the like now or at any time hereafter
located in or on such real property together with all personal property (both
tangible and intangible) which may at any time and from time to time be held,
received or acquired in connection with the said real property and the business
carried on by the Partnership.

1.54 "PERCENTAGE INTEREST" means for a Partner, the percentage that such
Partner's Base Capital Contribution is of the total Base Capital Contributions
of all Partners, which as at the Effective Date is the percentage set forth
opposite such Partner's name in the attached Exhibit A.

1.55 "PERMITTED ENCUMBRANCES" means any mortgages, pledges, charges, security
interests, liens, restrictions, or other encumbrances and interests affecting
any of the Partnership Property and the collective interests of the Partners
therein or affecting the Partnership Interest of a Partner or any part thereof,
in each case where the same is created in connection with any financing
contemplated in Section 7.01.

                                                                          Page 8


1.56 "PERSON" means and includes individuals and the heirs, executors,
administrators, or other legal or personal representatives of an individual,
sole proprietorships, corporations, limited partnerships, general partnerships,
joint stock companies, joint ventures, co-ownerships, co-tenancies,
associations, companies, trusts, trustees, banks, trust companies, pension
funds, land trusts, business trusts, any unincorporated organizations or other
organizations or entities, whether or not legal entities and governments and
agencies and political subdivisions thereof.

1.57 "PREFERRED CAPITAL" means the amounts contributed from time to time by any
one or more of the Partners of a Partner Group to the capital of the Partnership
to the extent that the amounts so contributed by the Partners of such Partner
Group in the aggregate exceed the sum of the Base Capital, the Unrecovered
Priority Capital Contributions and the Base Loan Advances.

1.58 "PREFERRED CAPITAL CONTRIBUTIONS" means, with respect to a Partner, the
amount contributed as capital to the Capital Account of such Partner from time
to time which constitutes Preferred Capital.

1.59 "PREFERRED CAPITAL RETURN" means an amount equal to 25% per annum computed
on a daily basis on the Unrecovered Preferred Capital Contributions of a Partner
for the actual number of days elapsed, divided by 365, compounded annually.

1.60 "PREFERRED LOAN ADVANCES" means, with respect to a Partner, the outstanding
principal balance from time to time of Loan Advances made to the Partnership by
such Partner from time to time which constitute Preferred Loans.

1.61 "PREFERRED LOAN INTEREST" means for each Preferred Loan Advance of a
Partner:

     (a)  that is equal to or less than $500,000, interest at the rate of 18%
          per annum computed on a daily basis on each such Preferred Loan
          Advance;

     (b)  that is greater than $500,000, interest at the rate of 25% per annum
          computed on a daily basis on each such Preferred Loan Advance;

     in each case, for the actual number of days elapsed, divided by 365, and
     payable both before and after default and judgement. The yearly rate of
     interest to which the rate calculated in accordance with the foregoing
     provisions of this Section 1.61 is equivalent, is the rate so determined
     multiplied by the actual number of days in the calendar year and divided by
     365.

1.62 "PREFERRED LOANS" means the amounts advanced from time to time by any one
or more of the Partners of a Partner Group by way of loan to the Partnership to
the extent that the outstanding principal balance from time to time of such
advances by the Partners of such Partner Group in the aggregate exceeds the sum
of the Base Capital, the Unrecovered Priority Capital Contributions and the Base
Loan Advances.

1.63 "PRINCIPAL PLACE OF BUSINESS" means 20 North Orange Avenue, Suite 1400,
Orlando, Florida 32801.

1.64 "PRIORITY CAPITAL" means with respect to:

     (a)  the Partners of the Majority Partner Group, the amounts contributed
          from time to time by any one or more of such Partners to the capital
          of the Partnership other than to Base Capital, where the aggregate
          amount of such contributions remaining outstanding and the Loan
          Advances made by the Partners of such Partner Group is equal to or
          less than $1,200,000.00;

     (b)  the Partners of the Minority Partner Group, the amounts contributed
          from time to time by any one or more of such Partners to the capital
          of the Partnership other than to Base Capital, where the aggregate
          amount of such contributions remaining outstanding and the Loan
          Advances made by the Partners of such Partner Group is equal to or
          less than the aggregate of their Percentage Interests of the
          Unrecovered Priority Capital of the Majority Partner Group; and

     (c)  where the aggregate Percentage Interests held by each of the Partner
          Groups is equal to those of each of the other Partner Groups, the
          amounts contributed from time to time by any one or more of the
          Partners to the capital of the Partnership other than to Base Capital,
          where the aggregate amount of such contributions remaining outstanding
          and the Loan Advances made by such Partner is equal to or less than
          the amount that its Percentage Interest is of $1,200,000.00.

                                                                          Page 9


1.65 "PRIORITY CAPITAL CONTRIBUTIONS" means, with respect to a Partner, the
amounts contributed as capital to the Capital Account of such Partner from time
to time which constitutes Priority Capital.

1.66 "PRIORITY CAPITAL RETURN" means an amount equal to 12% per annum computed
on a daily basis on the Unrecovered Priority Capital Contributions of a Partner
for the actual number of days elapsed, divided by 365, compounded annually.

1.67 "PROFITS" means the aggregate of Net Non-operating Profits and the income
referred to in and resulting from the calculation of Operating Profits and
Losses.

1.68 "SECURITIES ACT OF 1933" means the Securities Act of 1933, as amended from
time to time.

1.69 "TAX MATTERS PARTNER" or "TMP" means the General Partner acting as such in
accordance with the provisions of this Agreement.

1.70 "TRANSFER" means any sale (including, without any limitations, a judicial
sale), assignment, exchange, transfer, gift, devise or bequest, or the mortgage,
pledge, grant of a security interest or lien in, or other encumbrance, whether
voluntary or by operation of law, or any other disposition or type of conveyance
or any agreement(s) to do any of the foregoing, in each case whether by the
Partnership with respect to the Partnership Property, or by a Partner, of the
whole or any part of such Partner's Partnership Interest (which for greater
certainty includes any of such Partner's rights under this Agreement). In
addition to the foregoing, a Transfer shall be deemed to occur or be effected on
a change of control of a Partner, whether such change of control occurs as a
result of such Partner issuing voting securities, amalgamating, merging,
consolidating or in any other manner combining with another person, or effecting
any other procedure, a result of which is to achieve indirectly that which is
not permitted to be effected directly under this Agreement, or such change in
control occurs as a result of a transfer of voting securities by any
shareholder(s) of a Partner, all except and to the extent any change of control
is to any one or more of the Partners comprising the Great Gulf Group or the
Allan Group.

1.71 "TREASURY REGULATIONS" means the Income Tax Regulations, including
Temporary Regulations, promulgated under the Code, as they may be amended from
time to time.

1.72 "UNPAID BASE LOAN INTEREST" means an amount equal to the Cumulative Base
Loan Interest with respect to a Partner accrued for all periods to the date as
at which the amount is being determined, less the aggregate amount of all
distributions made to such Partner pursuant to Sections 8.05(c) and (g).

1.73 "UNPAID PREFERRED CAPITAL RETURN" means an amount equal to the Cumulative
Preferred Capital Return with respect to a Partner accrued for all periods to
the date as at which the amount is being determined, less the aggregate amount
of all distributions made to such Partner pursuant to Sections 9.01(i) and (v).

1.74 "UNPAID PREFERRED LOAN INTEREST" means an amount equal to the Cumulative
Preferred Loan Interest with respect to a Partner accrued for all periods to the
date as at which the amount is being determined, less the aggregate amount of
all distributions made to such Partner pursuant to Sections 8.05(a) and (e).

1.75 "UNPAID PRIORITY CAPITAL RETURN" means an amount equal to the Cumulative
Priority Capital Return with respect to a Partner accrued for all periods to the
date as at which the amount is being determined, less the aggregate amount of
all distributions made to such Partner pursuant to Sections 9.01(iii) and
(vii).

1.76 "UNRECOVERED PREFERRED CAPITAL CONTRIBUTIONS" means, with respect to a
Partner, an amount which at the date of determination is equal to the aggregate
amount of all Preferred Capital Contributions made by such Partner reduced by
the aggregate amount of distributions to such Partner pursuant to Sections
9.01(ii) and (vi). The foregoing is intended to comply with the definition of
"unreturned capital" set forth in Treasury Regulation Section 1.514(c)-2, and is
to be interpreted consistently therewith.

1.76 "UNRECOVERED PRIORITY CAPITAL CONTRIBUTIONS" means, with respect to a
Partner, an amount which at the date of determination is equal to the aggregate
amount of all Priority Capital Contributions made by such Partner reduced by the
aggregate amount of distributions to such Partner pursuant to Sections 9.01(iv)
and (viii). The foregoing is intended to comply with the definition of
"unreturned capital" set forth in Treasury Regulation Section 1.514(c)-2, and is
to be interpreted consistently therewith.

                                                                         Page 10


            ARTICLE 2 - FORMATION, NAME, AFFIDAVIT AND ANNUAL REPORT

2.01 FORMATION: The General Partner and the Limited Partners hereby form the
Partnership as a Florida limited partnership pursuant to the provisions of the
Act effective on the Effective Date.

2.02 NAME: The name of the Partnership is "Ashton Woods Orlando Limited
Partnership". The General Partner may change the name of the Partnership and
adopt such trade and fictitious names as it may deem appropriate. Upon such
change, the General Partner shall provide the Limited Partners with notice of
such change.

2.3 AFFIDAVIT OF CONTRIBUTIONS: An affidavit declaring the actual and
anticipated amount contributed to the Partnership by the Limited Partners will
accompany the Certificate of Limited Partnership and amendments thereto to be
filed, as and when applicable, with the Florida Secretary of State.

2.4 ANNUAL REPORT: The General Partner shall cause the Partnership to file an
annual report with the Florida Secretary of State on or before January 1st of
each calendar year, on the form provided from time to time by the Florida
Secretary of State.

                                ARTICLE 3 - TERM

3.01 The Partnership shall continue until terminated as provided in Article 17.

               ARTICLE 4 - CHARACTER & PRINCIPAL PLACE OF BUSINESS

4.01 CHARACTER OF THE BUSINESS: The Partnership is being organized solely for
the purposes of purchasing for investment, or engaging in the business of
development, promotion and sale of, the real properly included in the
Partnership Property and to engage in such other activities related either
directly or indirectly to such business as the General Partner may hereafter
from time to time reasonably determine to be necessary, advisable or convenient
to the promotion or conduct of the said business of the Partnership.

4.02 PRINCIPAL PLACE OF BUSINESS: The Principal Place of Business shall be
maintained as the principal place from which the Partnership conducts its
business until it is changed by the General Partner. The General Partner shall
deliver written notice of a change in the Principal Place of Business to the
Limited Partners substantially contemporaneously with effecting any such change.
The General Partner may establish additional places of business of the
Partnership when and where required by, or desirable for, the Partnership's
business, as the General Partner from time to time determines in its sole
discretion.

                        ARTICLE 5 - CAPITAL CONTRIBUTIONS

5.01 CONTRIBUTIONS OF PARTNERS:

     (A) BASE CAPITAL CONTRIBUTIONS: The General Partner and each of the Limited
Partners have or shall contemporaneously with its execution and delivery of this
Agreement contribute to the Partnership cash in the amount set opposite its name
on the attached Exhibit A, representing its Base Capital Contribution.

     (B) PRIORITY CAPITAL CONTRIBUTIONS BY GREAT GULF GROUP: The Limited
Partners comprising the Great Gulf Group have or shall contribute to the
Partnership $1,200,000 as and representing Priority Capital Contributions by
such Limited Partners, each in the proportion which their respective Percentage
Interests are to the total Percentage Interests of the Limited Partners
comprising the Great Gulf Group.

     (C) OTHER CAPITAL CONTRIBUTIONS: No Partner has any obligation to make any
Capital Contributions (whether as Priority Capital Contributions, Preferred
Capital Contributions or otherwise) in addition to those provided for in the
foregoing subparagraphs (a) and (b) except as such Partner may, in its sole
discretion, agree to in writing and except as may be provided for pursuant to
the Other Partnership Agreements.

                                                                         Page 11


5.02 ORDER OF CAPITAL CONTRIBUTIONS: Any amounts being paid to the Partnership
by or on behalf of a Partner as a contribution to the capital of the
Partnership:

(a)  in accordance with Section 7.02(b); or

(b)  in accordance with a requirement to do so pursuant to any of the Other
     Partnership Agreements; or

(c)  otherwise;

shall, at the time of such payment, constitute a Priority Capital Contribution
by such Partner unless and until such Partner's Unrecovered Priority Capital
Contributions equal its Percentage Interest of the total Unrecovered Priority
Capital Contributions of the Partners or, if no other Partners then have
Unrecovered Priority Capital, until such payment constitutes a Preferred Capital
Contribution as defined in this Agreement, and the amount of such payment in
excess of the foregoing shall constitute a Preferred Capital Contribution of
such Partner.

5.03 PERCENTAGE INTERESTS: Each Partner's Percentage Interest is set opposite
the name of such Partner in the attached Exhibit A. Such percentage shall be
amended to reflect changes in Percentage Interests as a result of Transfers
permitted by and made in accordance with the provisions of this Agreement. The
General Partner shall amend the Partnership's certificate of registration to
reflect any such changes, as and when required by the Act or otherwise required
by law.

5.04 CAPITAL ACCOUNTS:

(a) Each Partner shall have a capital account which shall be maintained in
accordance with the rules set forth in Section 1.704-1 (b)(2)(iv) of the
Treasury Regulations, which generally require that each capital account be
increased by (i) the amount of money contributed by the Partner to the
Partnership, (ii) the fair market value of property contributed by the Partner
to the Partnership (net of liabilities securing such contributed property that
the Partnership is considered to assume or take subject to under Section 752 of
the Code), and (iii) allocations to the Partner of Partnership income and gain
(or items thereof), including income and gain exempt from tax, and be decreased
by (x) the amount of money distributed to the Partner by the Partnership, (y)
the fair market value of the property distributed to the Partner by the
Partnership (net of liabilities securing such distributed property that the
Partner is considered to assume or take subject to under Section 752 of the
Code), (ii) allocations to the Partner of expenditures of the Partnership
described in Section 705(a)(2)(B) of the Code, and (z) allocations of
Partnership loss and deduction (or items thereof).

(b) Upon a distribution in kind of Partnership property, the Capital Account of
each Partner will be debited or credited with such Partner's allocable share of
gain or loss which would have been recognized by the Partnership had the
property been sold for an amount equal to the fair market value immediately
prior to such distribution.

5.05 WITHDRAWAL FROM CAPITAL ACCOUNTS: Prior to the dissolution and liquidation
of the Partnership, no Partner shall be entitled to withdraw any part of the
Capital Account of such Partner or to receive any distribution from the
Partnership, except as provided in this Agreement.

5.06 LIMITED LIABILITY OF LIMITED PARTNERS: The liability of each of the Limited
Partners shall be limited to the Capital Contribution made or required to be
made by such Limited Partner in accordance with Section 5.01. Save only as
provided in the immediately preceding sentence, the Limited Partners and each of
them shall not have any other liability to contribute money to, or in respect of
the liabilities or obligations of, the Partnership, nor shall the Limited
Partners or any of them be personally liable for any obligations of the
Partnership other than as required by the Act. The Limited Partners and each of
them shall not, unless otherwise agreed in writing and as specifically required
by the provisions of any of the Other Partnership Agreements, be obligated to
make loans to the Partnership.

5.07 NO INTEREST ON CAPITAL CONTRIBUTIONS: No interest or additional share of
Net Cash Flow shall be paid or credited to any of the Partners on their Capital
Accounts or on any undistributed Net Cash Flow or funds left on deposit with the
Partnership, all except as otherwise specifically provided for in and subject to
the provisions of this Agreement.

5.08 GENERAL PROVISIONS: Any person succeeding to the Partnership Interest of
any Limited Partner or a portion thereof shall, upon becoming a substitute
Limited Partner, succeed to the Capital Account of the predecessor Limited
Partner at the date the Transfer became effective to the extent the Transfer
relates to the Partnership Interest or portion thereof transferred to such
substitute Limited Partner.

                                                                         Page 12


                   ARTICLE 6 - ALLOCATION OF PROFITS & LOSSES

6.01 MINIMUM GAIN CHARGEBACK: If there is a net decrease in Partnership Minimum
Gain during any fiscal year, each Partner shall be allocated items of income and
gain for such year (and, if necessary, for subsequent years) equal to such
Partner's share of the net decrease in Partnership Minimum Gain during such
year. This Section 6.01 is intended to constitute a "minimum gain chargeback"
within the meaning of Section 1.704-2(f) of the Treasury Regulations and shall
be interpreted consistently therewith.

6.02 PARTNER MINIMUM GAIN CHARGEBACK: Notwithstanding anything to the contrary,
if there is a net decrease in Partner Minimum Gain attributable to a Partner
Nonrecourse Debt during any fiscal year, each Partner who has a share of the
Partner Minimum Gain attributable to such Partner Nonrecourse Debt, determined
in accordance with Section 1.704-2(i)(4) of the Treasury Regulations, shall be
specially allocated items of Partnership income and gain for such year (and if
necessary for subsequent years) in an amount equal to such Partner's share of
the net decrease in partner Minimum Gain attributable to such Partner Recourse
Debt, determined in accordance with Section 1.704-2(i)(5) of the Treasury
Regulations, that is allocable to the disposition of Partnership Property
subject to such Partner Nonrecourse Debt determined in accordance with Section
1.7042(i)(4) of the Treasury Regulations. Allocations pursuant to the previous
sentence shall be made in proportion to the respective amounts required to be
allocated to each Partner pursuant thereto. This Section 6.02 is intended to
comply with the Partner Minimum Gain Chargeback requirement of the Treasury
Regulations and shall be interpreted consistent therewith.

6.03 OTHER ALLOCATION RULES: No allocation deduction or loss shall be made to a
Partner, if it would result in such Partner having an Adjusted Capital Account
Deficit. Notwithstanding any other provisions of this Article, in the event that
any Partner unexpectedly receives an adjustment, allocation or distribution
described in Sections 1.704-1(b)(2)(ii)(d)(4), (5) or (6) of the Treasury
Regulations that results in such Partner having a negative balance in its
Capital Account in excess of the amount that it is required to restore on the
liquidation of the Partnership, then, to the extent required by Section 1.704-
1(b) of the Treasury Regulations, the Partner shall be allocated items of income
and gain in an amount and manner sufficient to eliminate the deficit balance as
quickly as possible. This Section 6.03 is intended to comply with Section
1.704-1(b)(2)(ii)(d) of the Treasury Regulations and shall be interpreted
consistently therewith.

6.04 PROFITS & LOSSES: Except as otherwise provided in this Agreement including,
without limitation, this Article 6, Profits and Losses shall be determined as at
the end of each fiscal year in accordance with the accounting method followed
for federal income tax purposes, and shall be allocated to the Partners in the
order of priority as follows:

                                                                         Page 13


     (A)  PROFITS:

          (i)  First, to the applicable Partners, to recover in the order of the
               following subparagraphs any Losses previously allocated pursuant
               to the following subparagraphs, namely (b) (xi), (x) and (ix), in
               each case pro rata in the proportion such Partners were,
               respectively, previously allocated the Losses being offset. To
               the extent any previous allocations of Losses are recovered
               pursuant to this subparagraph (a)(i), those previous allocations
               of Losses shall be disregarded for purposes of computing
               subsequent allocations of such Losses pursuant to this Article 6;

          (ii) Second, to the Partners, on account of their respective
               Cumulative Preferred Capital Returns on their respective
               Preferred Capital Contributions which are in excess of their
               respective Percentage Interests of the total Unrecovered
               Preferred Capital Contributions, in respect of which Profits have
               not been previously allocated, pro rata among such Partners in
               the proportions that their respective Preferred Capital
               Contributions are in excess of their respective Percentage
               Interests of the total Unrecovered Preferred Capital
               Contributions, until the cumulative Profits allocated to the
               Partners pursuant to this subparagraph (a)(ii) is equal to the
               total of the Cumulative Preferred Capital Returns of the Partners
               on such excess in respect of which Profits have not been
               previously allocated;

          (iii) Third, to the applicable Partners, to recover in the order of
               the following subparagraphs any Losses previously allocated
               pursuant to the following subparagraphs, namely (b)(viii) and
               (vii), in each case pro rata in the proportion such Partners
               were, respectively, previously allocated the Losses being offset.
               To the extent any previous allocations of Losses are recovered
               pursuant to this subparagraph (a)(iii), those previous
               allocations of Losses shall be disregarded for purposes of
               computing subsequent allocations of such Losses pursuant to this
               Article 6;

          (iv) Fourth, to the Partners, on account of their respective
               Cumulative Priority Capital Returns on their respective Priority
               Capital Contributions which are in excess of their respective
               Percentage Interests of the total Unrecovered Priority Capital
               Contributions, in respect of which Profits have not been
               previously allocated, pro rata among such Partners in the
               proportions that their respective Priority Capital Contributions
               are in excess of their respective Percentage Interests of the
               total Unrecovered Priority Capital Contributions, until the
               cumulative Profits allocated to the Partners pursuant to this
               subparagraph (a)(iv) is equal to the total of the Cumulative
               Priority Capital Returns of the Partners on such excess in
               respect of which Profits have not been previously allocated;

          (v)  Fifth, to the applicable Partners, to recover in the order of the
               following subparagraphs any Losses previously allocated pursuant
               to the following subparagraphs, namely (b)(vi), (v), (iv), (iii),
               (ii) and (i), in each case pro rata in the proportion such
               Partners were, respectively, previously allocated the Losses
               being offset. To the extent any previous allocations of Losses
               are recovered pursuant to this subparagraph (a)(v), those
               previous allocations of Losses shall be disregarded for purposes
               of computing subsequent allocations of such Losses pursuant to
               this Article 6;

          (vi) Sixth, to the Partners, pro rata in the proportion that their
               respective Cumulative Preferred Capital Returns in respect of
               which Profits have not been previously allocated is to the total
               Unrecovered Preferred Capital Contributions of the Partners,
               until the cumulative Profits allocated to the Partners pursuant
               to this subparagraph (a)(vi) is equal to the total of the
               Cumulative Preferred Capital Returns of the Partners in respect
               of which Profits have not been previously allocated;

          (vii) Seventh, to the Partners, pro rata in the proportion that their
               respective Cumulative Priority Capital Returns in respect of
               which Profits have not been previously allocated is to the total
               Unrecovered Priority Capital Contributions of the Partners, until
               the cumulative Profits allocated to the Partners pursuant to this
               subparagraph (a)(vii) is equal to the total of the Cumulative
               Priority Capital Returns of the Partners in respect of which
               Profits have not been previously allocated; and

          (viii) Thereafter, to the Partners pro rata in accordance with their
               respective Percentage Interests.

                                                                         Page 14


     (B)  LOSSES:

          (i)  First, to the Partners to offset any Profits previously allocated
               pursuant to subparagraph (a)(viii) above, pro rata among the
               Partners each pro rata in the proportion that it was allocated
               its share of the Profits being offset;

          (ii) Second, to the Partners pro rata in proportion to their
               respective Percentage Interests of the total Base Capital up to
               the amount of same;

          (iii) Third, to the Partners to offset any Profits previously
               allocated pursuant to subparagraph (a)(vii) above, pro rata among
               the Partners each in the proportion that it was allocated its
               share of the Profits being offset;

          (iv) Fourth, to the Partners pro rata in proportion to their
               respective Percentage Interests of the Unrecovered Priority
               Capital Contributions which are not in excess of their respective
               Percentage Interests of the total Unrecovered Priority Capital
               Contributions, up to the amount of such pro rata portion;

          (v)  Fifth, to the Partners to offset any Profits previously allocated
               pursuant to subparagraph (a)(vi) above, pro rata among the
               Partners each in the proportion that it was allocated its share
               of the Profits being offset;

          (vi) Sixth, to the Partners pro rata in proportion to their respective
               Percentage Interests of the Unrecovered Preferred Capital
               Contributions which are not in excess of their respective
               Percentage Interests of the total Unrecovered Preferred Capital
               Contributions, up to the amount of such pro rata portion;

          (vii) Seventh, to the Partners to offset any Profits previously
               allocated pursuant to subparagraph (a)(iv) above, pro rata among
               the Partners each in the proportion that it was allocated its
               share of the Profits being offset;

          (viii) Eighth, to the Partners to reduce their respective Priority
               Capital Contributions which are in excess of their respective
               Percentage Interests of the total Unrecovered Priority Capital
               Contributions, pro rata among such Partners in the proportions
               that their respective Unrecovered Priority Capital Contributions
               are in excess of their respective Percentage Interests of the
               total Unrecovered Priority Capital Contributions, up to the
               amount of such excess;

          (ix) Ninth, to the Partners to offset any Profits previously allocated
               pursuant to subparagraph (a)(ii) above, pro rata among the
               Partners each in the proportion that it was allocated its share
               of the Profits being offset;

          (x)  Tenth, to the Partners to reduce their respective Preferred
               Capital Contributions which are in excess of their respective
               Percentage Interests of the total Unrecovered Preferred Capital
               Contributions, pro rata among such Partners in the proportions
               that their respective Unrecovered Preferred Capital Contributions
               are in excess of their respective Percentage Interests of the
               total Unrecovered Preferred Capital Contributions, up to the
               amount of such excess;

          (xi) Thereafter, all remaining Losses shall be allocated to the
               General Partner.

To the extent any previous allocations of Profits have been offset pursuant to
subparagraphs (b)(i) through (b)(x), those previous allocations of Profits shall
be disregarded for purposes of computing subsequent allocations pursuant to this
Article 6.

6.05 NONRECOURSE DEDUCTIONS:

     (a) Nonrecourse Deductions shall be allocated among the Partners consistent
with Section 704(b) of the Code.

     (b) Any Partner Nonrecourse Deductions for any fiscal year or other period
shall be allocated to the Partner who bears the economic risk of loss with
respect to the Partner Nonrecourse Debt as determined in accordance with Section
1.704-2(i) of the Treasury Regulations.

6.06 GENERAL PROVISIONS: Whenever a proportionate part of Profits or Losses is
credited or charged to a Partner's Capital Account, every item of income, gain,
loss, deduction or credit entering into the computation of the Profits or
Losses, or applicable to the period during which the Profits or Losses are
realized, shall be considered credited or charged, as the case may be, to the
applicable component of such Partner's Capital Account in the same proportion
and in the order of priority and as otherwise provided for in this Article 6.

                                                                         Page 15


As between a Limited Partner and a transferee of such Limited Partner, unless
otherwise agreed by them and the Management Committee, or with respect to the
Partners upon the admission of a Limited Partner, Profits and Losses for any
fiscal year (or portion thereof, as the case may be) shall be determined by the
Management Committee which determination shall take into consideration but not
be required to made in accordance with the desires of the Limited Partner and
the transferee of such Limited Partner or the Limited Partner being admitted.

6.07 CURATIVE ALLOCATION: The allocations set forth in Sections 6.01, 6.02 and
6.03 (the "REGULATORY ALLOCATIONS") comply with certain requirements of Section
1.704-1 and -2 of the Treasury Regulations. The Regulatory Allocations may not
be consistent with the manner in which the Partners intend to allocate Profits
or Losses or divide Partnership distributions. Accordingly, notwithstanding the
other provisions of this Article 6, but subject to the Regulatory Allocations,
the Profits and Losses and items of income, gain, deduction and losses of the
Partnership may be allocated among the Partners so as to eliminate the effect of
the Regulatory Allocations, and thereby to cause the respective Capital Accounts
of the Partners to be in the amounts in which they would have been if Profits or
Losses and such other amounts of income, gain, deduction and loss had been
allocated without reference to the Regulatory Allocations. The General Partner
shall have discretion to accomplish the result in any reasonable manner.

6.08 TAX ALLOCATIONS: All items of Partnership income, gain, loss and deduction,
including Nonrecourse Deductions, shall be allocated for federal, state and
local income tax purposes by the General Partner, acting reasonably, to and
among the Partners in the same manner that the corresponding items of
Partnership income, gain, loss and deduction are allocated for book purposes,
except as otherwise provided in this Article 6.

6.09 CHARACTER OF GAIN: If the net gain from any disposition of an asset
included in the Partnership Property is capital gain in part and, as the result
of depreciation recapture or otherwise, ordinary income in part, the ordinary
income portion of such gain shall first be allocated to each Partner in the same
proportion as the depreciation allocated to such Partner (or its predecessor)
which gave rise to such ordinary income bears to such deductions allocated to
all Partners (and their predecessor-partners), provided that any allocation
pursuant to this Section shall not exceed the total amount of gain allocated to
such Partner with respect to such disposition. Any ordinary income not allocated
to a Partner because of the proviso clause in the preceding sentence shall be
allocated to the other Partners in the ratio in which each of them generally
share in profits and losses in connection with the event giving rise to the
gain.

6.10 ALLOCATION OF NONRECOURSE DEBT: Solely for purposes of determining a
Partner's proportionate share of excess Nonrecourse Liabilities of the
Partnership within the meaning of Section 1.752-3 of the Treasury Regulations,
the Partner's interest in Partnership profits shall be the Partner's Percentage
Interest.

6.11 ALLOCATION OF INHERENT GAIN IN PROPERTY:

     (a) Pursuant to Section 704(c) of the Code, income, gain, loss and
deduction with respect to property contributed by the Partners (or property
whose basis is determined by reference solely to the Partner who contributed
such property) shall be allocated in a manner to take account of the variation
between the tax basis of the property and initial Gross Asset Value in
accordance with the method described in Section 1.704-3 selected by the General
Partner. This Section is intended to comply with Section 704(c) of the Code and
shall be interpreted consistent therewith. Allocations made pursuant to this
Section shall not increase or decrease or otherwise affect the respective
Capital Accounts of the Partners.

     (b) In the event the Gross Asset Value of any asset included in the
Partnership Property is adjusted pursuant to Clause (b)(ii) of the definition of
Gross Asset Value, subsequent allocations of income, gain, loss and deduction
with respect to such asset shall take account of any variation between the
adjusted basis of such asset for federal income tax purposes and its Gross Asset
Value in the same manner as under Section 704(c) of the Code and the Treasury
Regulation thereunder. Allocations made pursuant to this Section shall not
increase or decrease or otherwise affect the respective Capital Accounts of the
Partners.

                                                                         Page 16

                     ARTICLE 7 - ADDITIONAL FINANCING, ETC.

7.01 EXTERNAL FINANCING: Financing as required by the Business Plan (provided
for in Section 10.03) is to be obtained by the Partnership from external sources
to the fullest extent it is available on commercially reasonable terms, as
approved by the Management Committee.

Any such external financing will, if required by a lender and approved by
Limited Partners who hold in the aggregate at least 51% of the total Percentage
Interests of the Partners, be secured upon the Partnership Interests, will be
without recourse to each Limited Partner except as to their respective
Partnership interests and shall be several and not joint or joint and several
(except as to realization on the Partnership Interests in the event of a
realization by the secured party). However, if such financing is required by a
lender to be with recourse and on a several or joint and several basis among the
Limited Partners and Limited Partners who hold in the aggregate at least 51% of
the total Percentage Interests of the Partners approve such requirement of the
lender, each of the Limited Partners shall enter into such guarantees or
indemnities as the lender may require and be responsible for such portion of
such financing as is equal to the proportion which it's Percentage Interest is
to the total Percentage Interests of the Limited Partners. If the obligations of
the Limited Partners are on a joint and several basis, such obligations will be
subject to mutual indemnification in accordance with Section 18.05 to the end
that the liabilities of each of them as between and amongst themselves will
always be limited as provided in Section 18.05.

Each Limited Partner shall comply, at all times, with all of its obligations
under any external financing and shall provide any information concerning such
Limited Partner which may be required by a lender in connection with any such
financing.

7.02 ADDITIONAL FINANCING BY LIMITED PARTNERS: If external financing
contemplated in Section 7.01 is not available to the Partnership then, subject
to the approval of the Management Committee, Limited Partners may, at their
option, but will not be obligated to, provide the requisite financing to the
Partnership each pro rata in the proportion that their Percentage Interest is to
the total amount of such financing being sought by the Partnership, adjusted to
account for Limited Partners who do not exercise their option to provide such
financing. A Limited Partner shall exercise its said option by delivery to the
Partnership of the funds in the amount of financing it desires to provide to the
Partnership together with its written designation electing to provide such
financing either:

     (a)  subject to Sections 8.01 and 8.02, by way of a loan to the Partnership
          as either a Base Loan Advance or a Preferred Loan Advance, as
          applicable, the respective terms of which Loan Advances are provided
          for in Article 8; or

     (b)  subject to Section 5.02, by way of a Capital Contribution as either a
          Priority Capital Contribution or a Preferred Capital Contribution, as
          applicable.

If any of the Partners provide financing as contemplated in this Section 7.02
and the Limited Partners comprising the Allan Group subsequently determine that
replacement financing from an external source is available from a reputable
financial institution or other reputable person, the terms and conditions of
which are commercially reasonable, do not contain any greater restrictions and
are more favourable than the financing provided by such Partners, then any
nominee of the Allan Group on the Management Committee may cause a meeting of
the Management Committee to be held at which such nominee of the Allan Group
will table the written terms and conditions of such replacement financing. If
such replacement financing is available from a reputable financial institution
or other reputable person and the terms and conditions thereof are commercially
reasonable, do not contain any greater restrictions and are more favourable than
the financing provided by the said Partners, then the Management Committee shall
confirm and approve such replacement financing. On the Management Committee
giving such approval, the General Partner shall use commercially reasonable
efforts to obtain and implement the said replacement financing. Upon obtaining
the said replacement financing, the proceeds will be applied by the Partnership
to repay the outstanding balances of the financing obtained by the Partnership
from the relevant Partners and all other amounts then owing to such Partners in
connection therewith.

                                                                         Page 17

                            ARTICLE B - LOAN ADVANCES

8.01 LIMITATIONS RE LOAN ADVANCES: Funds may not be advanced by or on behalf of
a Partner (a "LENDING PARTNER") to the Partnership by way of loan unless and
until:

     (a)  where any of the other Partners have Unrecovered Priority Capital
          Contributions, such Lending Partner's Unrecovered Priority Capital
          Contributions are at least equal to such Lending Partner's Percentage
          Interest of the total Unrecovered Priority Capital Contributions of
          the Partners; and

     (b)  where any of the other Partners have Unrecovered Preferred Capital
          Contributions, such Lending Partner's Unrecovered Preferred Capital
          Contributions are at least equal to such Lending Partner's Percentage
          Interest of the total Unrecovered Preferred Capital Contributions of
          the Partners.

8.02 ORDER OF LOAN ADVANCES: Any funds being advanced to the Partnership by or
on behalf of a Partner to the Partnership by way of loan:

     (a)  in accordance with Section 7.02(a); or

     (b)  in accordance with a requirement to do so pursuant to any of the Other
          Partnership Agreements;

shall, at the time of such advance, constitute a Base Loan Advance by such
Partner unless and until such Partner's Base Loan Advances equal its Percentage
interest of the total Base Loan Advances of the Partners or, if no other
Partners then have Base Loan Advances, until such advance constitutes a
Preferred Loan Advance as defined in this Agreement, and the amount of such
advance in excess of the foregoing shall constitute a Preferred Loan Advance.

8.03 PAYMENTS RE LOAN ADVANCES: The following are the terms applicable to Loan
Advances:

     (a)  PREFERRED LOANS - INTEREST & REPAYMENT: The Partnership shall pay
          Preferred Loan interest on the Preferred Loan Advances of a Partner
          and repay the Preferred Loan Advances, all out of Net Operating Cash
          in the priority and as otherwise provided for in Section 8.05, but in
          any event on or before the earlier of December 31, 2019 and the date
          immediately preceding the date on which the Partnership is dissolved.

     (b)  BASE LOANS - INTEREST & REPAYMENT: The Partnership shall pay Base Loan
          Interest in arrears on the Base Loan Advances of a Partner and repay
          the Base Loan Advances, all out of Net Operating Cash in the priority
          and otherwise as provided for in Section 8.05, but in any event and
          subject to the prior payment of Preferred Loan Advances and Unpaid
          Preferred Loan Interest, on or before the earlier of December 31, 2019
          and the date immediately preceding the date on which the Partnership
          is dissolved.

The obligation to pay interest provided for in each of the immediately preceding
subparagraphs (a) and (b) is subject to the provisions of Section 8.07.

8.04 PROMISSORY NOTES: The General Partner will cause the Partnership to make
and deliver a promissory note to and in the name of a Partner with respect to
each Loan Advance made by such Partner to evidence same, which note shall
contain the terms of the relevant Loan Advance as provided for in this
Agreement. Each such promissory note will be:

     (a)  delivered to the Partner substantially contemporaneously with the
          receipt by the Partnership of the relevant Loan Advance; and

     (b)  shall be in the form set out in the attached Exhibit C.

At all times while any of the said promissory notes are outstanding, a register
shall be kept by, or on behalf and under the direction of, the General Partner
in which shall be entered the names and addresses of the noteholders and
particulars of the promissory notes held by them respectively and a register of
transfers in which shall be kept particulars of all transfers of the said notes.

                                                                         Page 18

8.05 PAYMENTS RE LOAN ADVANCES: Distributions of Net Operating Cash may only be
made by the General Partner to the Partners, and each of the Partners shall only
be entitled to receive its share (as determined in accordance with the
provisions of this Agreement) of amounts to be distributed out of Net Operating
Cash, after deduction from such amounts for amounts, if any, owing by such
Partner to the Partnership and as provided for in Article 21, but in priority to
any distributions of Net Cash Flow provided for in Article 9, in payment of Loan
Advances and interest thereon in the following order of priority:

(a) first, on account and in payment of Unpaid Preferred Loan Interest, to the
Partners pro rata in the proportion that their respective Unpaid Preferred Loan
Interest on their Preferred Loan Advances in excess of their respective
Percentage Interests of the total Preferred Loan Advances are of all such Unpaid
Preferred Loan Interest of the Partners, in an amount equal thereto;

(b) second, on account and in repayment of the Preferred Loan Advances, to the
Partners pro rata in the proportion that their respective Preferred Loan
Advances in excess of their respective Percentage Interests of the total
Preferred Loan Advances are of all such excess Preferred Loan Advances of the
Partners, in an amount equal thereto;

(c) third, on account and in payment of Unpaid Base Loan Interest, to the
Partners pro rata in the proportion that their respective Unpaid Base Loan
Interest on their Base Loan Advances in excess of their respective Percentage
Interests of the total Base Loan Advances are of all such Unpaid Base Loan
Interest of the Partners, in an amount equal thereto;

(d) fourth, on account and in repayment of the Base Loan Advances, to the
Partners pro rata in the proportion that their respective Base Loan Advances in
excess of their respective Percentage Interests of the total Base Loan Advances
are of all such excess Base Loan Advances of the Partners, in an amount equal
thereto;

(e) fifth, on account and in payment of Unpaid Preferred Loan Interest, to the
Partners pro rata in the proportion that their respective Unpaid Preferred Loan
Interest on their Preferred Loan Advances that are in proportion to their
respective Percentage Interests of the total Preferred Loan Advances of the
Partners, are of all such Unpaid Preferred Loan Interest, in an amount equal
thereto;

(f) sixth, on account and in repayment of the Preferred Loan Advances, to the
Partners pro rata in the proportion that their respective Preferred Loan
Advances that are in proportion to their respective Percentage Interests of the
total Preferred Loan Advances of the Partners, are of all such Preferred Loan
Advances, in an amount equal thereto;

(g) seventh, on account and in payment of Unpaid Base Loan Interest, to the
Partners pro rata in the proportion that their respective Unpaid Base Loan
Interest on their Base Loan Advances that are in proportion to their respective
Percentage Interests of the total Base Loan Advances of the Partners, are of all
such Unpaid Base Loan Interest, in an amount equal thereto;

(h) eighth, on account and in repayment of the Base Loan Advances, to the
Partners pro rata in the proportion that their respective Base Loan Advances
that are in proportion to their respective Percentage Interests of the total
Base Loan Advances of the Partners, are of all such Base Loan Advances, in an
amount equal thereto;

and shall, subject to Section 9.05, be directed to the applicable Partners at
their respective addresses in accordance with Section 23.01.

8.06 LIMITATION: Notwithstanding the foregoing, no distribution of Net Operating
Cash will be made pursuant to this Article 8 except to the extent and out of
unencumbered cash funds of the Partnership sufficient for the distribution after
taking into account (except in the case of dissolution of the Partnership) the
amounts which should be set aside to provide a reasonable reserve for the
continuing conduct of the business of the Partnership, including its working
capital requirements.

                                                                         Page 19

8.07 LIMITATION RE INTEREST: Each of the obligations to pay interest provided
for in this Agreement including, without limitation, as provided for in this
Article 8 with respect to Loan Advances is subject to the limitation that
payments of such interest shall not be required to the extent that receipt of
any such payment by the payee would be contrary to provisions of law applicable
to such payee (if any) which limit the maximum rate of interest which may be
charged or collected by the payee; provided, however, that nothing herein shall
be construed to limit the payee to presently existing maximum rates of interest
if an increased interest rate is hereafter permitted by reason of applicable
federal or state legislation. In the event that a payor makes any payment of
interest, fees or other charges, however denominated, in respect of a Loan
Advance or other amount or obligation which payment results in the interest paid
to the payee exceeding the maximum rate of interest permitted by applicable law,
any excess over such maximum shall be applied in reduction of the principal
balance owed to the payee as at the date of such payment, or if such excess
exceeds the amount of principal owed to the payee as at the date of such
payment, the difference shall be paid by the payee to the payor.

                                                                         Page 20


                   ARTICLE 9 - DISTRIBUTIONS OF NET CASH FLOW

9.01 NET CASH FLOW: Net Cash Flow may only be distributed by the General
Partner. Distributions of Net Cash Flow will be made by the General Partner in
such amounts and at such times as the General Partner in its sole discretion
determines acting reasonably, provided that no distributions of Net Cash Flow
may be made until the Loan Advances and the Unpaid Preferred Loan Interest and
Unpaid Base Loan Interest have been paid pursuant to Article 8.

Subject to the foregoing, distributions of Net Cash Flow may only be made by the
General Partner to the Partners, and each of the Partners shall only be entitled
to receive its share (as determined in accordance with the provisions of this
Agreement) of amounts to be distributed out of Net Cash Flow, after deduction
from such amounts for amounts, if any, owing by such Partner to the Partnership
and as provided for in Article 21, in payment of the following matters and in
the following order of priority:

(i)  first, to the Partners, on account of their respective Unpaid Preferred
     Capital Returns on their respective Preferred Capital Contributions which
     are in excess of their respective Percentage Interests of the total
     Unrecovered Preferred Capital Contributions, pro rata among such Partners
     in the proportions that their respective Preferred Capital Contributions
     are in excess of their respective Percentage Interests of the total
     Unrecovered Preferred Capital Contributions, until the amounts distributed
     to the Partners pursuant to this subparagraph (i) is equal to the total of
     the Unpaid Preferred Capital Returns of the Partners on such excess;

(ii) second, to the Partners to reduce their respective Preferred Capital
     Contributions which are in excess of their respective Percentage Interests
     of the total Unrecovered Preferred Capital Contributions, pro rata among
     such Partners in the proportions that their respective Preferred Capital
     Contributions are in excess of their respective Percentage Interests of the
     total Unrecovered Preferred Capital Contributions, up to the amount of such
     excess;

(iii) third, to the Partners, on account of their respective Unpaid Priority
     Capital Returns on their respective Priority Capital Contributions which
     are in excess of their respective Percentage Interests of the total
     Unrecovered Priority Capital Contributions, pro rata among such Partners in
     the proportions that their respective Priority Capital Contributions are in
     excess of their respective Percentage Interests of the total Unrecovered
     Priority Capital Contributions, until the amounts distributed to the
     Partners pursuant to this subparagraph (iii) is equal to the total of the
     Unpaid Priority Capital Returns of the Partners on such excess;

(iv) fourth, to the Partners to reduce their respective Priority Capital
     Contributions which are in excess of their respective Percentage Interests
     of the total Unrecovered Priority Capital Contributions, pro rata among
     such Partners in the proportions that their respective Priority Capital
     Contributions are in excess of their respective Percentage Interests of the
     total Unrecovered Priority Capital Contributions, up to the amount of such
     excess;

(v)  fifth, to the Partners, pro rata in proportion to their respective
     Percentage Interests of the aggregate balance of their Unpaid Preferred
     Capital Returns, up to the amount of such balance;

(vi) sixth, to the Partners pro rata in proportion to their respective
     Percentage Interests of the aggregate balance of the Unrecovered Preferred
     Capital Contributions, up to the amount of such balance;

(vii) seventh, to the Partners, pro rata in proportion to their respective
     Percentage Interests of the aggregate balance of their Unpaid Priority
     Capital Returns, up to the amount of such balance;

(viii) eighth, to the Partners pro rata in proportion to their respective
     Percentage Interests of the balance of the Unrecovered Priority Capital
     Contributions, up to the amount of such balance;

(ix) ninth, an amount equal to the balance, if any, of Net Cash Flow remaining
     after the foregoing, to the Partners pro rata in proportion to their
     respective Percentage Interests;

and shall, subject to Section 9.05, be directed to the applicable Partners at
their respective addresses in accordance with Section 23.01.

                                                                         Page 21


9.02 LIMITATION: Notwithstanding the foregoing, no distribution of Net Cash Flow
will be made except to the extent and out of unencumbered cash funds of the
Partnership sufficient for the distribution after taking into account (except in
the case of dissolution of the Partnership) the amounts which should be set
aside to provide a reasonable reserve for the continuing conduct of the business
of the Partnership, including its working capital requirements.

9.03 DISTRIBUTION OF ASSETS IN KIND: Any assets included in the Partnership
Property may be distributed to any of the Partners in kind, as the Management
Committee may determine pursuant to Section 10.04(b)(v). Any such asset so
distributed shall be valued by the Management Committee to determine the gain or
loss which would have resulted if such asset were sold for cash, and the Capital
Account of the Partner to whom such asset is so distributed shall be adjusted to
reflect how the gain or loss would have been allocated in accordance with the
provisions of this Agreement as such Partner would have been entitled to cash
distributions had such asset been sold at such assigned value.

9.04 DEMAND FOR DISTRIBUTION: No Partner shall be entitled to demand and receive
a distribution of Partnership Property in return for its Capital Contributions.

9.05 DIRECTION RE DISTRIBUTIONS - OTHER PARTNERSHIPS: A Funding Partner may, in
its sole discretion, require by written notice (provided for further below) that
a Partner who:

     (a)  is not a Funding Partner, or

     (b)  is a Funding Partner who in respect of any of the Other Partnerships
          has "Loan Advances", "Unrecovered Priority Capital Contributions"
          and/or "Unrecovered Preferred Capital Contributions" (all as provided
          for in the applicable Other Partnership Agreements) in an amount which
          is less than its Percentage interest in such Other Partnership of the
          total amount of the "Loan Advances", "Unrecovered Priority Capital
          Contributions" and/or "Unrecovered Preferred Capital Contributions",
          of and as applicable to such Other Partnership and the partners
          thereof;

pay all or any part of any payment to be made to such Partner pursuant to
Article 8 and/or any distribution to be made to such Partner (the "UNDERFUNDED
PARTNER") pursuant to either Section 9.01 or Section 17.04 in each case after
the date of delivery of such notice, to such Other Partnership by way of a loan
advance or capital contribution, as applicable in accordance with the provisions
of the Other Partnership Agreement for such Other Partnership and as specified
in such notice accordingly, until the aggregate amount so paid by the
Underfunded Partner to such Other Partnership equals the amount that its
Percentage Interest in such Other Partnership is of the total amount of "Loan
Advances", "Unrecovered Priority Capital Contributions", "Unrecovered Preferred
Capital Contributions", "Unpaid Base Loan Interest" "Unpaid Preferred Loan
Interest", "Unpaid Priority Capital Return" and "Unpaid Preferred Capital
Return" of and as applicable to such Other Partnership and the partners thereof
as provided for in it's Other Partnership Agreement.

The said notice shall be signed by the Funding Partner, addressed and delivered
by it to the Underfunded Partner and the General Partner of each of the
Partnership and the Other Partnership and shall on such delivery, without
further formality, constitute an irrevocable direction by such Underfunded
Partner to the General Partner and the Partnership to pay the said distributions
to the Other Partnership in accordance with such notice and on behalf of such
Underfunded Partner, and the General Partner and the Partnership will comply
with the said notice and direction.

Notwithstanding the foregoing, a Funding Partner may not deliver the notice
provided for above requiring the Underfunded Partner to pay distributions to any
of the Other Partnerships unless the amount of such Funding Partner's "Loan
Advances", "Unrecovered Priority Capital Contributions" or " Unrecovered
Preferred Capital Contributions" is equal to or greater than such Funding
Partner's Percentage Interest of the total amount of "Loan Advances",
"Unrecovered Priority Capital Contributions" or "Unrecovered Preferred Capital
Contributions", all with respect to the applicable Other Partnership and the
partners thereof.

                                                                         Page 22


                        ARTICLE 10 - CONTROL & MANAGEMENT

10.01 RIGHTS AND POWERS: The General Partner shall have, except as specifically
limited in this Agreement, full and exclusive authority in the management and
control of the Partnership for the purposes set forth in Section 4.01, and shall
have all the rights and powers which are otherwise conferred by law or are
necessary or advisable for the discharge of its duties to and the management of
the business and affairs of the Partnership. The General Partner shall devote so
much of its time and effort as is appropriate for the effective management and
conduct of the business of the Partnership.

The General Partner agrees to act honestly, in good faith and in accordance with
good business practices in the discharge of its duties to and in its management
of the business and affairs of the Partnership and to exercise the degree of
care, diligence and skill that a reasonably prudent person would exercise in
comparable circumstances.

10.02 EXPRESSLY AUTHORIZED RIGHTS AND POWERS: Without limiting the generality of
Section 10.01, but subject to the provisions of Sections 10.04 and 10.08 and the
Business Plan in effect from time to time, the General Partner is expressly
authorized on behalf of the Partnership to:

     (i)  procure and maintain with responsible companies such insurance as may
          be advisable in such amounts and covering such risks as are deemed
          appropriate by the General Partner;

     (ii) take and hold any assets included in the Partnership Properly in the
          Partnership name, or in the name of a nominee of the Partnership;

     (iii) execute and deliver on behalf of and in the name of the Partnership,
          or in the name of a nominee of the Partnership, all instruments,
          contracts and other documents necessary or incidental to the conduct
          of the Partnership's business;

     (iv) protect and preserve the Partnership Property and incur indebtedness
          in the ordinary course of business;

     (v)  sell, dispose of, trade, exchange, convey, quit, claim, surrender,
          release or abandon, in the ordinary course of carrying on the business
          of the Partnership and upon terms and conditions which the General
          Partner may negotiate and deem appropriate, personal property included
          in the Partnership Property;

     (vi) execute and deliver documents and instruments on behalf of the
          Partnership in connection with the acquisition and disposition of its
          assets, and to execute, terminate, modify, enforce, continue or
          otherwise deal with any Partnership indebtedness and security
          interests, to sell assets included in the Partnership Property, and to
          take any other action with respect to agreements made between the
          Partnership and a lender or any Affiliate thereof, all subject to the
          limitations of Section 10.08;

     (vii) open Partnership bank accounts in which all Partnership funds shall
          be deposited and from which all payments by the Partnership shall be
          made;

     (viii) invest Partnership funds and working capital reserves; and

     (ix) possess and exercise any and all rights, powers and privileges of a
          general partner under the laws of the State of Florida.

10.03 MANAGEMENT COMMITTEE: A Management Committee of the General Partner having
5 members shall be formed by the General Partner who shall appoint the members
thereof in accordance with the following requirements (the "MANAGEMENT
COMMITTEE"). Three of the members so appointed shall be nominees of the Great
Gulf Group which nominees shall initially be Elly Reisman, Seymour Joffe and
Harry Rosenbaum. The Great Gulf Group may from time to time nominate such other
individuals to be members of the Committee in substitution for any one or more
of the of the members previously nominated by the Great Gulf Group. Two of the
members so appointed shall be a nominees of the Allan Group which nominees shall
initially be William Allan and Russell Allan. The Allan Group may from time to
time nominate such other individuals to be members of the Committee in
substitution for any one or both of the member previously nominated by the Allan
Group.

                                                                         Page 23


Any vacancy in the Management Committee shall be filled by a nominee of the
Group which nominated the former member of the Committee whose loss of office
created the vacancy within 15 days of the creation of the vacancy. The General
Partner shall fill the vacancy by appointing the said nominee on receipt from
the said Group of its notice stating the name and address of the person who it
nominates to the Committee to fill the vacancy. Copies of such notice shall be
given by the General Partner to the other members of the Committee and to the
person then so appointed a member of the Committee. If a vacancy is not filled
within the said 15 day period, the right to nominate a person to fill such
vacancy shall be deemed to have been waived and the other member(s) of the
Committee appointed on nomination by such Group shall be deemed then to have all
rights, powers and obligations of the former member, in addition to his own such
rights, powers and obligations.

The General Partner shall prepare a Business Plan for each fiscal year of the
Partnership following its second fiscal year, and deliver such Plan to each
member of the Management Committee not later than the 3Oth day following the
start of the fiscal year to which it relates. Each such Business Plan shall
contain in reasonable detail such information (including financial matters such
as cash flow projections, operating and capital budgets) as would be
commercially reasonable in the circumstances relating to the business carried on
by the Partnership. Each Business Plan is subject to the approval of the
Management Committee, as the same may from time to time be amended by variations
approved by the Management Committee.

The General Partner shall make all decisions necessary to implement, and which
are within, the provisions of such Business Plan to the extent that the
decisions so made are within the rights, powers and authority of the General
Partner provided for in this Agreement.

All decisions of the Management Committee, being a committee of the General
Partner, shall be the decisions of and be binding on the General Partner and
each of the Limited Partners. The General Partner will be responsible for the
conduct of and all decisions made by the Management Committee. Each of the Great
Gulf Group and the Allan Group will be responsible to each of the Partners for
the conduct of the member(s) of the Management Committee nominated by such
Group.

A quorum for meetings will be at least 3 members present, at least one of whom
is the nominee of the Allan Group and at least 2 of whom are nominees of the
Great Gulf Group; provided that, and notwithstanding any other provisions of
this Agreement, if no nominee of the Allan Group is present within 30 minutes
following the scheduled time for commencment of a properly called meeting of the
Management Committee then the meeting may with the consent of the other nominees
present (provided that at least 2 of the nominees of the Great Gulf Group are
then present) adjourn the meeting to a date not less than 2 Business Days from
the date for which the meeting was originally called and deliver such notice as
is reasonably practicable in the circumstances of such adjournment to the
nominees of the Allan Group and if no nominee of the Allan Group is present at
the time and date so fixed for the adjourned meeting then the quorum for all
purposes of such adjourned meeting will be any 2 members of the Management
Committee present and who are nominees of the Great Gulf Group.

Meetings of the Management Committee shall be held not less than once in each
quarter of each fiscal year at such times and place as a majority of the members
of the Committee agree to from time to time. Any one member of the Management
Committee may, in addition to meetings held as aforesaid, call a meeting of the
Committee not more than once each calendar month.

All meetings of the Management Committee shall be held at the Principal Place of
Business unless the place for any such meeting is otherwise agreed to as
aforesaid. Any member of the Management Committee may participate in a meeting
of the Committee by means of conference telephone or similar communication
equipment by means of which all persons participating in the meeting can hear
each other, and participation in a meeting by means of such communication
equipment shall constitute attendance and presence at such meeting.

                                                                         Page 24


Notice of a meeting of the Management Committee shall be given not less than 5
Business Days prior thereto provided that no notice of a meeting shall be
necessary if a meeting is held at which a quorum is present and notice may be
less than 5 Business Days if such meeting is held in furtherance of a meeting
adjourned as a result of no quorum being present as provided for above. Any such
notice may given, if to a member of the Committee nominated by the Great Gulf
Group, to such member at the address for the Great Gulf Group provided for in
Section 23.01, and if to the member nominated by the Allan Group, to such member
at the address for the Allan Group provided for in the said Section.

The powers of the Management Committee may only be exercised either by
resolution at a meeting at which a quorum is present or by resolution in writing
consented to by the signatures of all the members of the Committee. Copies of
all notices of meetings of the Committee and of all minutes of the Committee and
of all resolutions passed by it in accordance with the terms hereof shall be
provided to each member of the Committee.

Subject to the requirements of section 10.04(b), any resolution to be passed or
action to be taken by the Management Committee at a meeting must have the
approval of a majority of the members of the Management Committee present at
such meeting as evidenced either by the affirmative vote, or the prior approval
in writing, of the requisite members of the Committee.

A chairperson and a secretary of the Management Committee shall be elected by
the Committee from amongst its members for such term as the Committee determines
at the time of such election. The chairperson shall chair the meetings of the
Committee at which he is present. In the absence of the chairperson, the members
of the Committee shall choose one of their members to be chair of a meeting. The
secretary shall prepare and distribute the minutes of the meetings of the
Committee to all members of the Committee as soon as practicable after each
meeting. The chairperson shall not have a casting vote.

10.04 MANAGEMENT COMMITTEE SPECIFIC APPROVALS:

     (a) ORDINARY APPROVALS: The prior approval of the Management Committee
shall be required for each of the following matters related to the Partnership
to the extent the same is not provided for in the Business Plan as approved by
the Management Committee:

          (i)  the Transfer of any Partnership Property having a value of more
               than $100,000 to any person who is not an Affiliate of any of the
               Limited Partners comprising the Great Gulf Group;

          (ii) incurring of indebtedness for borrowed money or refinancing of
               existing borrowings;

          (iii) granting of security against the Partnership Property;

          (iv) entering into any agreement providing for the guarantee by the
               Partnership of the obligations of any other person;

          (v)  entering into any agreement with or commitment to any person who
               is not a Partner involving the expenditure of more than $100,000
               by the Partnership in any fiscal year;

          (vi) the settlement of any claim or legal proceeding involving the
               payment by the Partnership of more than $100,000;

          (vii) the acquisition of any real property from either of the Other
               Partnerships;

          (viii) change the name of the Partnership;

                                                                         Page 25


     (b) SPECIAL APPROVALS: The prior approval of the Management Committee shall
be required for each of the following matters related to the Partnership whether
or not the same is provided for in the Business Plan as approved by the
Management Committee, such approval to be evidenced either by the affirmative
vote of at least 4 of the 5 members of the Management Committee present at a
meeting of the Committee, or the prior approval in writing of 4 of the 5 members
of the Committee:

          (i)  the acquisition by the Partnership, or the entering into of any
               agreement binding on the Partnership, for the acquisition of any
               real property at any time after October 1, 1998, other than from
               either of the Other Partnerships or as may be required in the
               reasonable opinion of the General Partner for purposes of
               development of the then existing Partnership Property,

          (ii) the sale, assignment, exchange, transfer, or any other
               disposition or type of conveyance of any real property included
               in the Partnership Properly, by the Partnership to or with any
               person who is an Affiliate of any of the Limited Partners
               comprising the Great Gulf Group, or any agreement(s) to do any of
               the foregoing, in each case other than with either of the Other
               Partnerships;

          (iii) the payment of any fee to the General Partner or any of the
               Limited Partners comprising the Great Gulf Group which has not
               been previously agreed to by the Allan Group;

          (iv) the purchase or redemption by the Partnership of any Partnership
               Interest. For greater certainty distributions of Net Operating
               Cash or Net Cash Flow to the Partners provided for elsewhere in
               this Agreement, including Articles 8 and 9 do not constitute a
               purchase or redemption of a Partnership Interest;

          (v)  the distribution in kind to the Partners of any assets included
               in the Partnership Property;

          (vi) the dissolution of the Partnership and termination of its
               business;

          (vii) the termination of the Partnership within the meaning of Section
               708(b) of the Code;

          (viii) the change or reorganization of the Partnership into any other
               legal form.

10.05 APPROVALS, CONSENTS, ETC.: Wherever the provisions of this Agreement
provide for an approval by a Partner or a member of the Management Committee of
or consent or agreement to or for any action or document, this Agreement shall
(unless the text hereof expressly states that such approval may be unreasonably
or arbitrarily withheld) be deemed to provide that:

     (a)  such approval, consent or agreement shall be in writing and shall not
          be unreasonably withheld or delayed; and

     (b)  the Partner or Management Committee Member whose approval, consent or
          agreement is requested shall, as soon as reasonably possible after the
          receipt of a notice requesting such approval, consent or agreement
          give notice to each of the Partners or other Management Committee
          Members requesting the same, either that it is giving its approval,
          consent or agreement or that it withholds or refuses the same in which
          case it shall set forth, in reasonable detail, its reasons for such
          withholding or refusal.

10.06 TAX MATTERS PARTNER: The TMP shall act as a liaison between the
Partnership and the Internal Revenue Service in connection with all
administrative and judicial proceedings involving tax controversies of the
Partnership, and shall assume all the rights and duties of a TMP as set forth in
the Code and Treasury Regulations promulgated under the Code. These rights and
duties include, but are not limited to:

     (a)  the duty to notify and keep all other Partners informed of all
          administrative and judicial proceedings, as required by Section
          6223(g) of the Code, and to furnish to each Partner, upon written
          request, a copy of each notice or other communication received by the
          TMP from the Internal Revenue Service;

     (b)  the obligation to furnish the Internal Revenue Service the names,
          addresses, and taxpayer identification numbers of each person who was
          a Partner at any time during the taxable year;

     (c)  the right to settle any claims by the Internal Revenue Service against
          the Partnership;

     (d)  the right to initiate judicial proceedings contesting adverse
          determinations by the Internal Revenue Service against the
          Partnership;

     (e)  the right to enter into an agreement to extend the statute of
          limitations;

                                                                         Page 26


     (f)  the right to employ experienced tax counsel to represent the
          Partnership in connection with an audit or investigation of the
          Partnership by the Internal Revenue Service, and in connection with
          all subsequent administrative and judicial proceedings arising out of
          the audit. The fees and expenses of tax counsel shall be a Partnership
          expense and shall be paid by the Partnership. The General Partner and
          the Limited Partners may, at their expense, employ tax counsel to
          represent their respective separate interests; and

     (g)  the duty to arrange for the preparation and delivery of Partnership
          information returns and Schedule K-I's to the Limited Partners.

10.07 NO MANAGEMENT & CONTROL BY LIMITED PARTNERS: None of the Limited Partners
shall participate in the conduct, management or control of the Partnership
business. None of the Limited Partners shall have any right or authority to act
for or bind the Partnership. These powers shall be vested solely and exclusively
in the General Partner.

10.08 CERTAIN LIMITATIONS: Notwithstanding the generality of the foregoing, and
in addition to other acts expressly prohibited by this Agreement or by law, the
General Partner shall not have the authority to:

     (a)  do any act in contravention of this Agreement;

     (b)  do any act which would make it impossible for the Partnership to carry
          on the business of the Partnership in the ordinary course, except as
          expressly provided in this Agreement;

     (c)  confess a judgement against the Partnership;

     (d)  execute or deliver any general assignment for the benefit of the
          creditors of the Partnership;

     (e)  possess any of the Partnership Property or assign the Partnership's
          rights in specific Partnership Property for other than a Partnership
          purpose; and

     (f)  knowingly or willingly do any act (except an act expressly required by
          this Agreement) which would cause the Partnership to become an
          association taxable as a corporation.

10.09 REIMBURSEMENT FOR EXPENSES: The General Partner shall be entitled to be
reimbursed for all reasonable expenses incurred by it in connection with the
Partnership Property and the conduct of the Partnership business, including, but
not limited to, all reasonable expenses incurred when acting in the capacity of
TMP and all reasonable expenses related to the organization and start-up of the
Partnership's business.

           ARTICLE 11 - ADMISSION & TRANSFER OF PARTNERSHIP INTERESTS

11.01 GENERAL PROVISION: None of the Partners may effect a Transfer of all or
any part of its Partnership Interest and no person shall become an assignee of a
Partner or be admitted to the Partnership as a Partner, in each case except as
permitted in this Article 11 and in Articles 12, 13, 14, 15, 20 and 21. Any
Transfer made in contravention of any of the foregoing specified Articles shall
be null and void.

11.02 ADMISSION OF NEW PARTNERS: The General Partner may from time to time admit
such person(s) to the Partnership to be Limited Partners on such terms as the
Management Committee approves, without requirement for the consent of the then
existing Limited Partners, provided that the terms of such admission affect the
Partnership Interests held by the then existing Limited Partners in all material
respects in the same manner and to the same extent proportionately to the
Percentage Interests then held by such existing Limited Partners and provided
further that immediately following the admission of such person(s) as Limited
Partners the Percentage Interests, Capital Accounts and Loan Advances of the
Partners comprising the Great Gulf Group and the Allan Group represent in the
aggregate at least 51% of the total Percentage interests, Capital Accounts and
Loan Advances of all the Partners. No person may be so admitted as a Limited
Partner unless and until such person executes and delivers to the then existing
Limited Partners and the General Partner this Agreement or a counterpart thereof
agreeing to be bound by all the terms of this Agreement with effect on the date
such person is to become a Limited Partner.

                                                                         Page 27


11.03 TRANSFER OF PARTNERSHIP INTEREST BY GENERAL PARTNER: The General Partner
may not effect a Transfer of its Partnership Interest or any portion thereof
without the prior approval of the Management Committee. In the event any such
Transfer is consented to, the person acquiring or succeeding to the General
Partner's Partnership Interest shall not have any of the rights of the General
Partner and shall not become or have a right to become a substitute General
Partner unless the said approval of the Management Committee includes such
Committee's approval of such transferee becoming a substitute General Partner.

The Management Committee may, and upon the Withdrawal (defined below) of the
General Partner the Management Committee shall, appoint such person as it
determines to be the General Partner in substitution for the person then acting
as the General Partner. On receipt by a General Partner of notice that the
Management Committee has appointed a substitute General Partner the first
mentioned General Partner shall be deemed to have resigned as such effective on
the date specified in such notice and to have made a Transfer of its Partnership
Interest to the substitute General Partner.

For the purposes of this Section, "WITHDRAWAL" means the dissolution or
liquidation of the General Partner, either voluntary or under a final order of a
court of competent jurisdiction or the death, incapacity, incompetency,
insolvency or bankruptcy of a General Partner. For purposes of this definition,
the insolvency or bankruptcy of a General Partner shall be deemed to occur when
the General Partner files a petition in bankruptcy or voluntarily takes
advantage of any bankruptcy or insolvency laws, or is adjudicated a bankrupt, or
a petition or answer is filed proposing the adjudication of the General Partner
as a bankrupt and the General Partner consents to the filing or otherwise
acknowledge its insolvency.

11.04 TRANSFER OF PARTNERSHIP INTERESTS BY LIMITED PARTNERS: None of the Limited
Partners may effect a Transfer of its Partnership Interest or any portion
thereof and no person may become a substitute Limited Partner, whether pursuant
to a Transfer or otherwise, except with the prior approval of the Management
Committee or as otherwise specifically permitted in accordance with and subject
to the provisions of this Agreement including, without limitation, the
provisions of Section 11.05. Any purported Transfer made contrary to the
provisions of this Agreement will for all purposes relating to the Partnership
and each Partner be wholly ineffective. No Partner may have its Partnership
Interest purchased or redeemed by the Partnership unless the prior approval
thereto of the Management Committee is obtained as required by Section
10.04(b)(iv).

For greater certainty but without limiting the foregoing, no transferee or
assignee who is a transferee or assignee pursuant to a Transfer made contrary to
the provisions of this Agreement shall be constituted as a transferee or as an
assignee of the transferor or assignor Limited Partner's right to receive its
share of distributions out of Net Operating Cash or Net Cash Flow and shall have
no other rights as a Limited Partner, unless the Transfer is specifically
permitted by and made in accordance with the provisions of this Agreement and
unless the transferee or assignee executes and delivers an agreement with the
continuing Partners (satisfactory to them, acting reasonably) pursuant to which
such person is, if applicable, designated as a member of a Partner Group,
becomes bound by and entitled to the benefits of the provisions of this
Agreement to the extent it relates to the Partnership Interest which is the
subject of such Transfer, and all other obligations of the Partner making such
Transfer in connection with the Partnership and this Agreement.

Further, no Transfer of a Partnership Interest may be made unless (i) the
transferee, if an individual, is at least 21 years of age; and (ii) in the
opinion of counsel satisfactory to the General Partner, the Transfer (A) would
not result in the close of the Partnership's taxable year with respect to all
Partners or the termination of the Partnership within the meaning of Section
708(b) of the Code, unless otherwise approved by the Management Committee
pursuant to Section 10.04(b)(vii), (B) would comply with the Securities Act of
1933 and applicable securities laws of all other jurisdictions, and (C) would
not violate any other applicable laws.

                                                                         Page 28


11.05 LIMITATION RE GREAT GULF GROUP: Notwithstanding the provisions of Section
11.04, the Partners comprising the Great Gulf Group may not effect a Transfer by
way of the sale, assignment, exchange, transfer or any other disposition or type
of conveyance of the whole or any part of their respective Partnership Interests
unless:

     (a)  immediately following completion of any such Transfer the aggregate
          Percentage Interests and the aggregate amount of the Capital Accounts
          and Loan Advances of the Partners comprising the Great Gulf Group
          represent at least 51% of the total Percentage Interests and at least
          51% of the aggregate amount of the Capital Accounts and Loan Advances,
          of all the Partners;

     (b)  such Transfer is to one or more of the Partners comprising the Allan
          Group; or

     (c)  such Transfer is effected in accordance with the provisions of Article
          13.

11.06 PERMITTED TRANSFERS: The provisions of Article 11, other than this
Section, are not applicable to any of the following Transfers made in accordance
with the provisions of this Section, such that no approval by the Management
Committee is required to effect any of the following Transfers:

     (a)  BETWEEN PARTNERS: Transfers made by any one or more of the Partners to
          any one or more of the other Partners;

     (b)  TO AFFILIATES: Transfers made by a Partner to an Affiliate of such
          Partner.

Each of the Transfers permitted pursuant and subject to the provisions of this
Section are further subject to the requirement that on or before such Transfer
becoming effective the person to whom such Transfer is made executes and
delivers an agreement with the continuing Partners (satisfactory to them, acting
reasonably) pursuant to which such person becomes bound by and entitled to the
benefits of the provisions of this Agreement to the extent it relates to the
Partnership Interest which is the subject of such Transfer and all other
obligations of the Partner making such Transfer in connection with the
Partnership and this Agreement.

In addition to the foregoing, each Transfer to an Affiliate permitted by this
Section is subject to the following:

     (i) the Partner effecting such Transfer shall not be released from any of
     its obligations hereunder; and

     (ii) the agreement with the continuing Partners required to be executed and
     delivered on or before such Transfer becoming effective as provided for
     above shall include an obligation by the transferee Affiliate and the
     transferor Partner that the transferee Affiliate will remain an Affiliate
     of the transferor Partner so long as such transferee is a Partner and that
     the transferee will not effect a Transfer of its Partnership Interest to
     any person which is not an Affiliate of the transferor Partner without
     complying with the applicable provisions of this Agreement including this
     Article 11.

Further, no Transfer of a Partnership Interest may be made pursuant to this
Section unless (i) the transferee, if an individual, is at least 21 years of
age; and (ii) in the opinion of counsel satisfactory to the General Partner, the
Transfer (A) would not result in the close of the Partnership's taxable year
with respect to all Partners or the termination of the Partnership within the
meaning of Section 708(b) of the Code unless otherwise approved by the
Management Committee pursuant to Section 10.04(b)(vii), (B) would comply with
the Securities Act of 1933 and applicable securities laws of all other
jurisdictions, and (C) would not violate any other applicable laws.

11.07 CONDITIONS TO CERTAIN TRANSFERS: If any Transfer provided for in Sections
11.05(a) or 11.06(b) is made of a part but not all of the Parntership Interest
held by the transferring Partner (in this Section, the "TRANSFEROR"), it shall
be a condition precedent to such Transfer that the transferee or assignee (in
this Section, the "TRANSFEREE"), agrees in writing with the Transferor and the
other Partners that:

     (i)  in all matters in which a Partner, by the terms of this Agreement, has
          a right, such right will be exercised by the Transferor on behalf of
          itself and the Transferee and the other Partners will be entitled to
          rely on the actions of the Transferor in that regard as binding on the
          Transferee and the Transferor will obtain a power of attorney from the
          Transferee to such effect;

     (ii) in all matters in which a Partner, by the terms of this Agreement, is
          subject to an obligation, prohibition or restriction, such obligation,
          prohibition or restriction will be binding upon the Transferee to the
          same extent as the Transferor; and the Transferor remains responsible
          to the other Partners for the fulfillment of any obligation hereunder
          by the Transferee; and

     (iii) any notices required to be given hereunder to the Transferee shall be
          given to the Transferor and the Transferee.

                                                                         Page 29


Notwithstanding the foregoing, the Transferor and the Transferee may enter into
a separate agreement governing the manner in which matters between them,
including matters arising from the operation of this Agreement, are to be dealt
with, which agreement may contain provisions by which the Transferee's
Partnership Interest may be re-acquired by the Transferor without such
re-acquisition being subject to the provisions of subparagraphs (i), (ii) and
(iii) of this Section.

If a Transfer by the Transferor relates to all of its Partnership Interest and
the Transferor had previously disposed of a part of its Partnership Interest,
then it shall be a condition precedent to the Transfer that the Transferor
assign to another Partner who is a member of the Group which the Transferor is a
member of immediately prior to such Transfer, all rights and obligations
accruing to the Transferor by virtue of the operation of this Section.

If a Transfer by the Transferor, other than to an Affiliate of such Transferor,
relates to all of its Partnership Interest and the Transferor did not previously
dispose of any part of its Partnership Interest, then it shall be a condition
precedent to the Transfer that the Transferee enter into the written agreement
provided for above to be entered into with the Transferor and the other Partners
with another member of the Group which the Transferor is a member of
immediately prior to such Transfer, and for such purpose all of the foregoing
references to the Transferor shall be considered as a reference to such other
member of such Group.

Unless otherwise agreed to by the Partners comprising the Allan Group, each
person admitted as a Limited Partner in accordance with the provisions of
Section 11.02 shall for the purposes of this Section be deemed to be a
Transferee in connection with a Transfer from a Transferor who is a member of
the Great Gulf Group of all of such Transferor's Partnership Interest on the
basis that such deemed Transferor did not previously dispose of any part of its
Partnership Interest and the provisions of this Section shall apply, mutatis
mutandis, to such person, including as contemplated by and provided for in the
immediately preceding paragraph.

11.08 EFFECTIVENESS OF TRANSFER:

     (a) The Transfer in accordance with the provisions of this Agreement by a
Limited Partner or by a transferee of a Limited Partner of all or any part of
its Partnership Interest shall become effective on the first day of the month
following receipt by the General Partner of evidence of completion of the
Transfer in form and substance reasonably satisfactory to the General Partner
and a Transfer fee sufficient to cover all reasonable expenses of the
Partnership connected with the Transfer. The General Partner may, in its sole
discretion, establish an earlier effective date for the Transfer if requested to
do so by the transferor and transferee.

     (b) No Transfer of a Partnership Interest which is in violation of this
Article 11 shall be valid or effective, and the Partnership shall not recognize
the same for the purposes of making the allocations required to be made in
accordance with the provisions of Article 6 or the making of distributions in
accordance with the provisions of Articles 8 and 9. The Partnership may enforce
the provisions of this Article 11 either directly or indirectly or through its
agents by entering an appropriate stop transfer order on its books or otherwise
refusing to register or transfer or permit the registration or transfer on its
books of any proposed Transfer(s) not in accordance with this Article 11.

     (c) The Partnership shall, from the time Partnership Interests are
registered in the name of the transferee on the Partnership's books in
accordance with the above provisions, pay to the transferee on account of the
Partnership Interests transferred all further distributions, other compensation
or payments, on and subject to the provisions of this Agreement. Until
registration of a Transfer on the Partnership's books, the General Partner may
proceed as if no Transfer has occurred.

                                                                         Page 30


                        ARTICLE 12 - BUY/SELL PROVISIONS

12.01 DEFINED TERMS:

For purposes of this Article, the following terms shall have the following
meanings, respectively:

     (a)  "GROSS SALE PRICE" means the total amount of cash that the Offerors,
          in their sole discretion, determine would be received by the
          Partnership if all the Partnership Property was sold for cash at its
          fair market value.

     (b)  "OFFEREES SALE PRICE" means the aggregate amount that the Offerees
          would receive on a liquidation of the Partnership pursuant to Article
          17 if all the Partnership Property was sold for the Gross Sale Price.

     (c)  "OFFERORS SALE PRICE" means aggregate amount that the Offerors would
          receive on a liquidation of the Partnership pursuant to Article 17 if
          all the Partnership Property was sold for the Gross Sale Price.

12.02 OFFER: Subject to the provisions of Sections 13.2, 14.08, 15.05 and 21.07,
the Partners of a Partner Group, in each case provided such Partners are acting
together (collectively, the "OFFERORS") shall, subject to the provisions of the
next following paragraph, have the right at any time when no Default has
occurred with respect to any of the Offerors, to deliver to all but not less
than all the Partners of each other Partner Group (the "OFFEREES") the notice
provided for below (the "OFFERING NOTICE"). Upon delivery of an Offering Notice
no further Offering Notices may be delivered until the transaction of purchase
and sale relating to the Offering Notice and provided for in this Article 12 are
completed or otherwise at an end, whereupon the right to deliver an Offering
Notice shall revive.

The Offering Notice shall be signed by the Offerors and shall contain the
following:

     (a)  the Gross Sale Price, the Offerors Sale Price and the Offerees Sale
          Price;

     (b)  an irrevocable and unconditional offer to purchase from the Offerees
          all, but not less than all, of the Partnership Interests owned by each
          of the Offerees, for a cash consideration equal to the Offerees Sale
          Price allocated proportionately to the Partnership Interests of the
          Offerees, respectively; and

     (c)  an irrevocable and unconditional offer to sell to the Offerees all,
          but not less than all, of the Partnership Interests owned by each of
          the Offerors, for a cash consideration equal to the Offerors Sale
          Price allocated proportionately to the Partnership Interests of the
          Offerors, respectively.

Simultaneously with the delivery of the Offering Notice to the Offerees, the
Offerors shall deliver to the Accountant a certified cheque or a bank draft
payable to the Accountant, in trust and in an amount equal to 10% of the
Offerees Sale Price, representing a deposit on account thereof. The Offerors
shall direct the Accountant to place the deposit in an interest bearing account
maintained with, or in a term deposit issued by, a branch or office of Nations
Bank or other bank of comparable size, in either case which is located in
Orlando, Florida. Subject to the terms hereinafter provided, at the Closing
(provided for below) the Accountant shall disburse the said deposit or such
portion thereof to which each of the Offerees is entitled together with all
interest accrued thereon, to the Offerees, proportionately.

12.03 ACCEPTANCE: The Offerees shall have the exclusive and irrevocable option
for 90 clear days from the receipt of the Offering Notice to deliver to each of
the Offerors a written notice, signed by each of the Offerees (the "ACCEPTANCE
NOTICE") stating that the Offerees either:

     (a)  unconditionally accept the offer to purchase as set forth in Section
          12.02(b) and the particulars of the Offerors Interests owned by each
          of the Offerees; or

     (b)  unconditionally accepts the offer to sell as set forth in Section
          12.02(c).

                                                                         Page 32


12.07 FAILURE TO CLOSE: If the purchasing Limited Partners fail to complete the
Closing in accordance with this Agreement and through no default or breach on
the part of the selling Limited Partners (the "FAILED CLOSING") then the
purchasing Limited Partners shall have 7 clear days to cure that breach and
complete the transaction contemplated by this Article and if the purchasing
Limited Partners fail to do so then the selling Limited Partners may by
delivering a written notice to the purchasing Limited Partners and the
Accountant within 10 clear days from the date which is 7 clear days after the
Failed Closing, elect to:

     (a)  retain the deposit together with all interest accrued thereon, in
          which event the Accountant shall forthwith deliver the deposit and
          interest to the selling Limited Partners and the agreement of purchase
          and sale shall be of no further force and effect and all parties
          thereto shall be relieved and forever absolutely discharged from any
          further obligations to perform and liability thereunder or by virtue
          thereof; or

     (b)  purchase the Partnership Interests owned by the purchasing Limited
          Partners at 85% of the purchase price agreed to be paid by the
          purchasing Limited Partners and the provisions of this Agreement
          respecting such transaction of purchase and sale shall govern, mutatis
          mutandis, on the basis the purchasing Limited Partners have become
          bound to sell the Partnership Interests owned by them and the selling
          Limited Partners have become bound to purchase the same on the date of
          delivery of the notice of election (provided for above).

If no such notice of election is delivered by the selling Limited Partners prior
to the expiry of the said period of 10 clear days then the selling Limited
Partners shall be deemed to have elected to retain the deposit and interest
pursuant to Section 12.07(a).

If the election described in Section 12.07(a) is made or deemed to be made then
the Accountant shall, if it has not already, forthwith disburse the deposit
received by it from the purchasing Limited Partners together with all interest
accrued thereon, to the selling Limited Partners, accordingly.

Each of the Limited Partners acknowledges that the Accountant is bound to comply
with any order, judgement or other directive of a court of competent
jurisdiction affecting the deposits. The Limited Partners agree to jointly and
severally indemnify and save harmless the Accountant against and to forthwith
upon demand pay to the Accountant the amount of any and all liabilities,
damages, claims, costs and expenses (including, without limitation, legal fees
and disbursements) suffered or incurred by the Accountant by reason of its
compliance with such court order, judgement or other directive. It is expressly
agreed by the Limited Partners that the Accountant shall be entitled to the
benefits of this Agreement and to enforce the same in the same manner and to the
same extent as would be applicable if the Accountant was a party to and executed
this Agreement.

12.08 SUSPENSION OF OTHER RIGHTS: On the delivery of an Offering Notice provided
for in Section 12.02, the Transfers permitted by Sections 11.04 and 11.06 and
the provisions contained in Articles 13, 14 and 15 and the right to deliver a
Purchase Notice pursuant to Section 21.03(d) shall be suspended to and until the
Closing or the rights of the Offerors and the Offerees to effect a purchase and
sale as a result of an Offering Notice having been delivered are terminated
whereupon the provisions contained in the said Sections 11.04 and 11.06,
Articles 13, 14 and 15 and Section 21.03(d) shall revive.

                                                                         Page 33


                     ARTICLE 13 - MANDATORY SALE PROVISIONS

13.01 MANDATORY SALE: Subject to the provisions of Sections 12.08,15.05 and
21.07, this Article and the provisions of Article 14, the Limited Partners
comprising the Great Gulf Group have the right to require the sale by the
Partners of all the Partnership Interests to any person who is not an Affiliate
of any of the Partners comprising the Great Gulf Group (the "THIRD PARTY
PURCHASER"), which right is exercisable only by the Partners comprising the
Great Gulf Group giving a written notice signed by them to the other Partners
which requires such a sale and is accompanied by a true and complete copy of any
offer or agreement entered into with or delivered by the Third Party Purchaser
(the "SALE AGREEMENT").

The Limited Partners comprising the Great Gulf Group will give or cause to be
given to the Limited Partners comprising the Allan Group a written summary
containing reasonable particulars of the material terms of any proposed sale to
a Third Party Purchaser (which summary may be in the form of a draft letter of
intent or draft Sale Agreement) as soon as reasonably practicable following such
material terms being known by the Limited Partners comprising the Great Gulf
Group, but in any event prior to the Limited Partners comprising the Great Gulf
Group entering into any letter of intent or Sale Agreement (the "TRANSACTION
SUMMARY"). If the Limited Partners comprising the Allan Group desire to meet
with the Limited Partners comprising the Great Gulf Group for the purpose of
discussing such proposed sale they may cause any member of the Management
Committee nominated by them to give written notice requesting such a meeting to
the members of the Management Committee who are the nominees of the Limited
Partners comprising the Great Gulf Group, provided that the said notice for such
a meeting shall set out the date on which it is to be held and shall be given,
if at all, not less than 5 Business Days and not more than 10 Business Days,
before the date of the meeting. Any such meeting will otherwise be held and
conducted as if it were a meeting of the Management Committee but without any
matter being required for its approval or resolution, and the provisions of
Section 10.03 will otherwise apply thereto, mutatis mutandis. The Limited
Partners comprising the Great Gulf Group will cause at least 2 members of the
Committee nominated by the Great Gulf Group to be present at the said meeting.
If the Limited Partners comprising the Allan Group do not cause the said notice
of such a meeting to be given on or before the 5th Business Day following
delivery to them of the Transaction Summary or if no member of the Management
Committee nominated by the Allan Group is present at the time and place
appointed for such meeting, then in either case the Limited Partners comprising
the Allan Group shall be deemed to have and do hereby waive their rights to any
such meeting being held with respect to the proposed sale to which the
Transaction Summary relates.

The Limited Partners comprising the Allan Group will not be bound to comply with
the provisions of this Section unless: (a) the Limited Partners comprising the
Great Gulf Group comply with their obligations contained in the immediately
preceding paragraph; and (b) the terms of the Sale Agreement apply to them in
all material respects the same as such terms apply to the Limited Partners
comprising the Great Gulf Group. Without limiting the foregoing, the purchase
price payable for the Partnership interests owned by the Limited Partners is to
be determined on the same basis for all Limited Partners.

Provided the above requirements of this Section 13.01 are fulfilled, the
Partners will execute and deliver the Sale Agreement and otherwise diligently
proceed in good faith to complete the required sale to the Purchaser in
accordance with the provisions thereof.

13.02 SUSPENSION OF OTHER RIGHTS: On the delivery of a notice provided for in
Section 13.01, the Transfers permitted by Sections 11.04 and 11.06 and the
provisions contained in Articles 12 and 15 and the right to deliver a Purchase
Notice pursuant to Section 21.03(d) shall be suspended unless and until the sale
pursuant to the Sale Agreement is terminated whereupon the provisions contained
in the said Sections 11.04 and 11.06, Articles 12 and 15 and Section 21.03(d)
shall revive.

                                                                         Page 34


                     ARTICLE 14 - RIGHT OF FIRST OPPORTUNITY

14.01 SALE OF GREAT GULF GROUP INTERESTS: The Partners comprising the Great Gulf
Group (in this Article 14, collectively called the "VENDORS") may, subject to
the provisions of this Article, enter into a Sale Agreement providing for the
sale of all but not less than all of the Partnership Interests.

The Partnership Interests held by the Vendors intended to be sold pursuant to a
Sale Agreement as contemplated in the immediately preceding paragraph are in
this Article 14 collectively called the "OFFERED INTERESTS".

14.02 OFFER NOTICE: Except as permitted by the provisions of Section 11.06,
prior to the Vendors entering into a Sale Agreement binding them to effect the
sale of the Offered Interests, the Vendors shall first notify each of the
Partners comprising the Allan Group (in this Article 14 collectively called the
"PURCHASERS") of the Vendors' intention to so sell the Offered Interests and
simultaneously offer to sell the Offered Interests to each of the Purchasers in
equal proportions at the price (expressed in money) and on such other terms as
the Vendors would accept with respect to such a sale to any Third Party
Purchaser, provided such terms contain no trade or exchange of property as part
or all of the consideration and contain no term or condition which is so unique
or unusual as to render it incapable of being accepted or performed on a
commercially reasonable basis (other than for monetary reasons) by anyone (the
"OFFER NOTICE").

The Vendors shall not deliver an Offer Notice more than once in any 180 day
period.

14.03 ELECTION TO ACCEPT: Each of the Purchasers shall have the exclusive and
irrevocable option for 15 Business Days from the date of delivery to it of the
Offer Notice to deliver simultaneously to both the Vendors and the other
Purchaser a notice that it unconditionally accepts the offer to sell as set
forth in the Offer Notice and further stating whether or not it agrees to
purchase from the Vendors all of the Offered Interests, if the other Purchaser
does not accept the similar offer set forth in the Offer Notice delivered to
such other Purchaser (the "ACCEPTANCE NOTICE").

The Offered Interests with respect to which a Purchaser does not deliver an
Acceptance Notice accepting the Vendors' offer to sell shall be sold by the
Vendors to the other Purchaser if such other Purchaser agreed in its Acceptance
Notice to purchase all of the Offered Interests.

14.04 BINDING SALE: If the Purchasers or either of them deliver Acceptance
Notice(s) which in the aggregate accept the Vendors' offer to sell all but not
less than all of the Offered interests as set forth in the Offer Notice then the
Vendors' receipt of the same shall effective on the date of such receipt
constitute a binding agreement in accordance with the terms of the Offer Notice
between the Purchaser(s) and the Vendors for the sale of the Offered Interests
at the Closing to such Purchaser(s). in accordance with their respective
proportionate rights.

14.05 PERMITTED SALE TO THIRD PARTY: Subject to the provisions of Section 14.06,
if the Vendors do not receive Acceptance Notice(s) which in the aggregate accept
the offer to sell all but not less than all of the Offered Interests in
accordance with the Offer Notice, or if the Purchasers fail to complete the
Closing (provided for in Section 14.07) of the Offered Interests, then the
Vendors shall, subject to the provisions of this Section, have the right to sell
the Offered Interests and all other Partnership Interests to any Third Party
Purchaser for a period of 180 days after the expiration of the period for
delivery of an Acceptance Notice or the date for completion of such Closing, as
applicable (the "Free Sale Period"), on terms and conditions no less favourable
to the Vendors than the terms and conditions contained in the Offer Notice and
the Purchasers shall be unconditionally bound to comply with the provisions of
Article 13; provided that a binding Sale Agreement for such sale is entered into
by the Vendors with the Third Party Purchaser prior to the expiration of the
Free Sale Period.

14.06 FAILURE TO SELL: If the Vendors do not enter into a binding Sale Agreement
for the sale of all but not less than all of the Partnership Interests on terms
and conditions no less favourable than the terms and conditions contained in the
Offer Notice within the period and as otherwise provided for in Section 14.05,
then the obligations of the Vendors to deliver an Offer Notice in accordance
with this Article shall be reinstated.

                                                                         Page 35


14.07 CLOSING ARRANGEMENTS:

     (a) Any transaction of purchase and sale required to be completed in
accordance with the provisions of Section 14.04 shall be completed at noon on
the day 30 clear days subsequent to the latest date upon which the Vendors and
the Purchaser(s) have become bound to the purchase and sale of the Offered
interests (or on the Business Day next following if the day of completion is not
a Business Day) and such completion (called the "CLOSING") shall take place at
the Principal Place of Business or at such other place or date as the Vendors
and the Purchaser(s) may in writing agree upon.

     (b) The provisions contained in Article 22 shall apply mutatis mutandis to
this Article 14.

14.08 SUSPENSION OF OTHER RIGHTS: On the Vendors delivering a notice provided
for in Section 13.01 to the Purchasers, the Transfers permitted by Sections
11.04 and 11.06 and the provisions contained in Articles 12 and 15 and the right
to deliver a Purchase Notice pursuant to Section 2103(d) shall be suspended to
and until the sale of the Offered Interests set out in the Offer Notice is
completed or the rights of the Vendors to effect a sale in accordance with the
provisions of Section 14.05 are terminated whereupon the provisions contained in
the said Sections 11.04 and 11.06, Articles 12 and 15 and Section 21.03(d) shall
revive.

14.09 CONTINUED RIGHTS OF PURCHASERS: If any of the Purchasers fail to complete
a Closing provided for in Section 14.04 then at the sole option of the Vendors,
exercisable by delivery of written notice to the Purchasers, any binding
agreement provided for in Section 14.04 may be terminated by the Vendors. On
delivery by the Vendors of the said notice the Purchasers shall cease to be
entitled to the benefits of this Article and the Vendors shall cease to be bound
by their respective obligations under such provisions as they relate to the
Purchasers whereupon the provisions of Section 14.05 shall apply and for such
purpose the Vendors will be deemed not to have received Acceptance Notice(s)
which in the aggregate accept the offer to sell all but not less than all of the
Offered Interests in accordance with the Offer Notice.

                 ARTICLE 15 - MANDATORY PURCHASE RE DISSOLUTION

15.01 OFFERING NOTICE: If the Partners comprising the Great Gulf Group (in this
Article 15, collectively called the "OFFERORS") desire to effect the dissolution
of the Partnership or to change or reorganize the Partnership into any other
legal form (such dissolution, change or reorganization is in this Article 15
called the "TRIGGER EVENT"), then not less than 90 days prior to such proposed
Trigger Event being presented for the approval of the Management Committee as
contemplated in Sections 10.04(b)(v) and (vi) the Offerors may deliver a notice
to each of the Partners comprising the Allan Group (in this Article 15,
collectively called the "OFFEREES") the contents of which notice shall include
the same information as an Offering Notice given pursuant to Section 12.02
together with a statement of the Offerors' desire to implement the Trigger Event
and of the Offerors' requirement that if the members of the Management Committee
nominated by the Offerees do not approve of such Trigger Event on it being
presented for approval by the Management Committee as aforesaid, then the
aforesaid notice is to constitute an Offering Notice as if delivered pursuant to
Section 12.02.

15.02 APPLICATION OF ARTICLE 12: If the members of the Management Committee
nominated by the Offerees do not approve of the said Trigger Event on it being
presented for approval by the Management Committee as aforesaid, then the notice
delivered by the Offerors in accordance with Section 15.01 shall constitute and
be deemed to be an Offering Notice as if the same was delivered pursuant to
Section 12.02 by the Partners comprising the Great Gulf Group as the Offerors to
the Partners comprising the Allan Group as the Offerees, and the provisions of
Article 12 shall apply with respect thereto, mutatis mutandis except as
otherwise provided for in this Article 15. For the purposes of this Article 15,
the Offerors shall not be required to deliver and pay the deposit provided for
in Section 12.02.

                                                                         Page 36


15.03 ACCEPTANCE: For purposes of this Article 15, the provisions of Section
12.03 shall apply on the basis that the Offerees received the Offering Notice on
day the Trigger Event is approved by the Management Committee and the Offerees
shall have the exclusive and irrevocable option for 10 clear days from such
deemed date of receipt of the Offering Notice to deliver an Acceptance Notice to
each of the Offerors, all otherwise on and subject to the provisions of Section
12.03. Accordingly, all references in Article 12 to the period of 90 clear days
provided for in Section 12.03 shall, for purposes of this Article 15, be read as
meaning the period of 10 clear days provided for in this Section 15.03.

15.04 PAYMENT OF PURCHASE PRICE: If one or more of the Offerees are the
purchasing Limited Partners, then such purchaser shall pay the purchase price to
the Offerors (as the selling Limited Partners) by way of bank draft or certified
cheque (inclusive of the deposit provided for in Section 12.03 and all interest,
if any, accrued thereon) at the Closing (provided for in Section 12.06).

If the Offerors are the purchasing Limited Partners, then such purchasers shall
pay the purchase price, without interest, to the Offerees (as the selling
Limited Partners) by way of bank draft or certified cheque immediately on
receipt by the Offerors of the proceeds of liquidation to be distributed to the
Offerors, respectively, in accordance with the provisions of Section 17.04 to
and until the purchase price is paid in full. If the said proceeds of
liquidation are not sufficient to pay the purchase price in full to the Offerees
then the Offerors will pay the outstanding balance of the purchase price to the
Offerees immediately upon the proceeds of liquidation to which the Offerees are
entitled being distributed to the Offerees, respectively, in accordance with the
provisions of Section 17.04 and in any event prior to the filing by the General
Partner of the Certificate of Cancellation with the Secretary of State required
to be filed by it pursuant to Section 17.03. The statement provided for in
Section 17.05 will be delivered to the Offerees substantially contemporaneously
with the delivery of such statement to the Limited Partners.

15.05 SUSPENSION OF OTHER RIGHTS: On the delivery by the Offerors of a notice
provided for in Section 15.01, the Transfers permitted by Sections 11.04 and
11.06 and the provisions contained in Articles 12 (otherwise than by virtue of
Section 15.02), 13 and 14 and the right to deliver a Purchase Notice pursuant to
Section 21.03(d) shall be suspended to and until the Closing or the rights of
the Offerors and the Offerees to effect a purchase and sale as a result of an
Offering Notice having been delivered are terminated, whereupon the provisions
contained in the said Sections 11.04 and 11.06, Articles 12, 13 and 14 and
Section 21.03(d) shall revive.

           ARTICLE 16 - BOOKS OF ACCOUNT, FINANCIAL REPORTS, RECORDS,
                         BANKING & ACCOUNTING DECISIONS

16.01 BOOKS OF ACCOUNT: The General Partner shall keep or cause to be kept
adequate books of account of the Partnership according to its Method of
Accounting in which shall be recorded and reflected all of the contributions to
the capital of the Partnership and all of the expenses and transactions of the
Partnership. These books of account shall be kept at 250 Lesmill Road, Don
Mills, Ontario, Canada but shall as and when required by law or by any
governmental agency or lender be made available at the Principal Place of
Business. The Limited Partners and their authorized representatives shall have
at all times during normal business hours, free access to and the right to
inspect and copy, at their expense, the books of account of the Partnership.

16.02 FINANCIAL REPORTS:

     (a) As soon as practicable after the close of each fiscal year, but in no
event later than 120 days after the close of any fiscal year, the General
Partner shall deliver to each Partner (i) an unaudited annual financial
statements of the Partnership for that fiscal year, including a balance sheet, a
profit and loss statement, a statement showing distributions and allocations to
the Partners and such other information as the General Partner deems necessary
or advisable to deliver, accompanied by a report of the Partnership's
independent certified public accountants, and (ii) all information and documents
as may be necessary, in the opinion of the General Partner, for the preparation
by each Partner of his federal and state income or other tax returns, including
a Schedule K-1. All annual statements shall be prepared in accordance with the
Partnership's Method of Accounting. The annual statements shall also be provided
to any person who was a Partner at any time during the year covered by the
annual statements.

                                                                         Page 37


     (b) The Partnership's accountants shall be KPMG or such other firm of
independent certified public accountants as may be selected by the General
Partner from time to time (the "ACCOUNTANT").

     (c) The General Partner shall cause the Accountant to prepare or review the
federal, state and local tax returns of the Partnership for each fiscal year
and shall timely file these returns, completed in accordance with the Method of
Accounting.

     (d) In the case of a Transfer of a Partnership Interest by sale or
exchange, the death of a Partner or the distribution of Partnership Property, on
receipt by the Partnership of the written request of the transferee Partner and
subject to the approval of the Management Committee, which approval shall not be
unreasonably withheld, the Partnership will make an election under Section 754
of the Code to adjust the basis of the Partnership Property with respect to a
transferee who acquires a Partnership Interest from an existing Partner. On such
an occurrence the Capital Accounts shall be adjusted in accordance with Section
1.704-1(b)(2)(iv)(m) of the Treasury Regulations. Because of the significant
accounting difficulties and extra expense to the Partnership which may be
involved if this election is made, the transferee Partner who requests the
election will be required to pay all administrative and accounting expenses
incurred in connection with the election.

16.03 RECORDS: The General Partner shall keep or cause to be made available at
the Principal Place of Business when required by a Limited Partner or other
person entitled to inspect, the following Partnership documents:

     (a)  a current list of the full name and last known business or residence
          address of each Partner, separately identifying in alphabetical order
          the General Partner and the Limited Partners;

     (b)  copies of the Certificate of Limited Partnership and all amendments
          thereto, and executed copies of any powers of attorney pursuant to
          which any such amendment to the Certificate was executed;

     (c)  copies of the Partnership's federal, state and local income tax
          returns and reports for the three most recent taxation years.

     (d)  copies of the Partnership Agreement and all powers of attorney
          pursuant to which any amendment to this Agreement may be executed, the
          Partnership's financial reports described in Section 16.02 and all
          financial statements for the three most recent fiscal years.

16.04 BANKING: The funds of the Partnership shall be deposited into the
account(s) maintained for the Partnership with such bank(s) as the General
Partner deems appropriate. Only the General Partner or its duly authorized
agents shall withdraw any of the said funds from any of the said accounts. All
amounts generated by or otherwise derived from the Partnership Property or
otherwise for the account of the Partnership shall be deposited (in the form
received) into the said bank accounts and the payment of all costs, expenses and
other amounts relating to the Property shall be paid by way cheque drawn on such
accounts. The General Partner shall transact all of the banking business
necessary or desirable for the rendering of the accounting and administrative
functions which shall include the responsibility of the General Partner for
management of cash balances from time to time in the bank accounts of the
Partnership.

16.05 ACCOUNTING DECISIONS: All decisions as to accounting matters, except as
specifically provided to the contrary herein, shall be made by the General
Partner in accordance with the Method of Accounting. These decisions must be
acceptable to the Accountant, and the General Partner may rely upon the advice
of the Accountant as to whether such decisions are in accordance with the Method
of Accounting.

                                                                         Page 38


                     ARTICLE 17 - DISSOLUTION & TERMINATION

17.01 DISSOLUTION OF PARTNERSHIP: The term of the Partnership commenced on the
date of filing of the Certificate of Limited Partnership and shall be dissolved
and its business shall terminate on the date of the earliest occurrence of any
of the following events:

     (a)  the close of business on December 31, 2019;

     (b)  the date which the Management Committee approves in accordance with
          Sections 10.04(b)(vi) or 10.04(b)(vii) as the effective date of the
          dissolution of the Partnership and to terminate the Partnership's
          business;

     (c)  the date which the Partners unanimously approve as the effective date
          of the dissolution of the Partnership and to terminate the
          Partnership's business;

     (d)  the Partnership becomes insolvent or bankrupt. For the purposes of
          this subparagraph (d), the insolvency or bankruptcy of the Partnership
          shall be deemed to occur when (i) the Partnership: (A) files a
          petition in bankruptcy, or (B) voluntarily takes advantage of any
          bankruptcy or insolvency laws, or (C) is adjudicated a bankrupt, or
          (D) makes an assignment for the benefit of creditors; (ii) within 90
          days after commencement of any proceeding against the Partnership
          seeking reorganization, liquidation or similar relief, the proceeding
          has not been dismissed; (iii) the Partnership appoints a receiver or
          trustee for all or a part of its assets, business or property, or (iv)
          a petition or answer is filed proposing the adjudication of the
          Partnership as a bankrupt and the Partnership or the General Partner
          on its behalf, acting reasonably, consents to such filing or otherwise
          acknowledges its insolvency; or

     (e)  the occurrence of any event which, under the Act, causes the
          dissolution of a Florida limited partnership, and the Management
          Committee does not approve of the continuation of the Partnership in
          accordance with Section 17.02.

The Partnership shall continue to exist following the happening of any of the
foregoing events solely for the purpose of winding up its affairs in accordance
with the Act and any other applicable laws.

17.02 SUCCESSOR PARTNERSHIP: If the Partnership is dissolved or to be dissolved,
the Management Committee may approve the continuation of the business of the
Partnership and reconstitute the Partnership as a successor limited partnership
with one or more new General Partner(s) having the capacity to serve and who are
able to meet any requirements then imposed by the Code or any rulings or
regulations under the Code with respect to general partners of limited
partnerships in order that the Partnership not become an association taxable as
a corporation. If the Management Committee exercises the right to continue the
business of the Partnership, the person(s) appointed by them as the new General
Partner(s) and the Limited Partners shall execute and acknowledge an Agreement
of Limited Partnership on substantially the same provisions as those contained
in this Agreement, and the General Partner(s) shall execute, acknowledge and
file a Certificate of Limited Partnership. The new General Partner(s) shall
indicate acceptance of the appointment by the execution of the Agreement of
Limited Partnership and the Certificate of Limited Partnership.

17.03 PROCEDURE ON LIQUIDATION: Unless the business of the Partnership is
continued pursuant to the provisions of this Agreement, upon the dissolution of
the Partnership, the General Partner or the person or persons required by law to
wind up the Partnership's affairs shall cause the cancellation of the
Certificate of Limited Partnership pursuant to Section 620.113 of the Act and
shall liquidate the assets of the Partnership and apply the proceeds of
liquidation in the order of priority provided in Section 17.04 for the fiscal
year of liquidation. A reasonable time shall be allowed for the orderly
liquidation of the assets of the Partnership and the discharge of its
liabilities to enable the General Partner to minimize any losses that might
otherwise occur in connection with the liquidation. The General Partner may
continue to operate and maintain the business and the Partnership Property after
the occurrence of an event requiring dissolution of the Partnership for so long
as is reasonably required in the circumstances in order to wind up the affairs
of the Partnership in an orderly fashion. Upon liquidation and winding up of the
Partnership, unsold Partnership Property shall be valued to determine the gain
or loss which would have resulted if the Partnership Property were sold, and the
Capital Accounts of the Partners which have been maintained in accordance with
this Agreement shall be adjusted to reflect how the gain or loss would have been
allocated if such Partnership Property had been sold at its assigned values. In
all events the liquidation shall be conducted in accordance with Section 1.704-1
(b)(2)(ii)(b)(2) of the Treasury Regulations.

                                                                         Page 39


Upon completion of the liquidation of the Partnership and distribution of the
proceeds, the General Partner shall file a Certificate of Cancellation with the
Secretary of State.

All books and records of the Partnership shall be delivered to the General
Partner upon liquidation, which shall retain the books and records for a period
of not less than 7 years and shall make the books and records available to the
Limited Partners for inspection and copying at its principal business office
during reasonable business hours.

17.04 LIQUIDATION PROCEEDS: The proceeds from the liquidation of the assets of
the Partnership and the collection of the receivables of the Partnership
together with the assets distributed in kind shall be distributed in payment or
satisfaction of the following matters and in the following order of priority:

     (a)  first, and in priority to payment of Loan Advances and interest
          thereon pursuant to Article 8, to payment of debts and liabilities of
          the Partnership which are due and owing, except any expenses or debts
          which may be deferred in accordance with any agreement providing for
          their deferral to the extent the Partnership expects to subsequently
          receive proceeds which can be used to satisfy the expenses and debts;

     (b)  second, to the setting up of reserves as determined by the General
          Partner for the purpose of disbursing the reserves in payment of any
          contingent liabilities or obligations of the Partnership, and, at the
          expiration of the reserve period, the balance of the reserves, if any,
          shall be distributed as liquidating proceeds received at the end of
          the reserve period;

     (c)  third, to the Partners in payment of Loan Advances and interest
          thereon in accordance with the provisions of Article 8;

     (d)  fourth, to the Partners in accordance with the provisions of Section
          9.01;

17.05 LIQUIDATION STATEMENT: Each Partner shall be furnished with a statement
prepared by the General Partner or the Accountant setting forth the assets and
liabilities of the Partnership as at the date of liquidation.

              ARTICLE 18 - LIABILITY & INDEMNIFICATION OF PARTNERS,
                   OUTSIDE ACTIVITIES & WARRANTIES OF PARTNERS

18.01 RETURN OF CAPITAL CONTRIBUTION: The General Partner shall not be
personally liable for the return of all or any part of the Capital Contributions
of the Limited Partners. Any such return shall be made solely from Partnership
Property.

18.02 GP LIABILITY FOR ACTS OR OMISSION: From and after the Effective Date, the
performance or omission of any act by the General Partner or its Affiliates,
including any act in its capacity as TMP, in the good faith belief that such
person was acting within the scope of its authority under this Agreement on
behalf of the Partnership or in furtherance of the Partnership's interests,
shall not subject the General Partner or its Affiliates to any liability to the
Partnership or the Partners. The foregoing shall not relieve the General Partner
or any of its Affiliates from liability for gross negligence, fraud or wilful
misconduct.

18.03 INDEMNIFICATION OF GENERAL PARTNER: From and after the Effective Date, the
Partnership shall indemnify and hold harmless the General Partner (including any
person who has served as General Partner) and its Affiliates from and against
any claim, loss, expense, liability, action or demand incurred by any of the
General Partner and its Affiliates in respect of any omission to act or for any
act performed by any of them, including any act or omission performed in the
General Partner's capacity as TMP, in the good faith belief that such person was
acting or refraining from acting within the scope of its authority under this
Agreement on behalf of the Partnership or in furtherance of the Partnership's
interests, including, without limitation, reasonable fees and expenses of
litigation and appeal (including, without limitation, reasonable fees and
expenses of attorneys engaged in defence of any act or omission), except that
the foregoing indemnity shall not extend to claims, losses, expenses,
liabilities, actions or demands incurred by reason of the gross negligence,
fraud or wilful misconduct of the General Partner or any of its Affiliates.

                                                                         Page 40


18.04 LIMITED PARTNERS' "INTERNAL" LIABILITY: Unless otherwise specifically
provided in this Agreement, the Limited Partners shall be liable to each other
for their respective obligations and liabilities under this Agreement, as
follows:

     (a)  each of the Partners comprising the Great Gulf Group will be jointly
          and severally liable, as between and amongst themselves, for an amount
          which is equal to the aggregate of their Percentage Interests of the
          liability of any one or more of the Partners comprising the Great Gulf
          Group to any one or more of the Partners comprising the Allan Group;
          and

     (b)  each of the Partners comprising the Allan Group will be jointly and
          severally liable, as between and amongst themselves, for an amount
          which is equal to the aggregate of their Percentage Interests of the
          liability of any one or more of the Partners comprising the Allan
          Group to any one or more of the Partners comprising the Great Gulf
          Group.

18.05 MUTUAL INDEMNIFICATION: If the Limited Partners are jointly, or jointly
and severally liable for any obligations (including under any guarantee), or
deemed statutorily, by common law, or by judgement of a court or other tribunal
or board having jurisdiction to be jointly or jointly and severally liable for
any obligations, in each case where such obligations relate to the Partnership
or the Partnership Property, the respective liability of each of the Limited
Partners, as between themselves, shall be limited in accordance with their
respective Percentage Interests and be as more particularly provided in Section
18.04.

In the event that, notwithstanding the foregoing provisions of this Section, any
Limited Partner (hereinafter in this Section called the "NON-DEFAULTING PARTY")
shall in fact pay moneys pursuant to any demand from any third party under any
liability in any amount(s) in excess of its Percentage Interest thereof as
aforesaid (the others of the Limited Partners which shall have paid no money or
shall not have paid its Percentage Interest thereof as aforesaid, being referred
to in this Section as the "DEFAULTING PARTIES"), each of the Defaulting Parties
shall pay to the Non-Defaulting Party its Percentage Interest of the excess
amount of money so paid by the Non-Defaulting Party on demand as aforesaid,
together with accrued interest thereon from the date the Non-Defaulting Party
paid such money to the date that such Defaulting Party repays such money to the
Non-Defaulting Party at the rate of 5% per annum in excess of the Prime Rate as
published from time to time by the Wall Street Journal, provided that the
obligation to pay such interest shall be subject to the provisions of Section
8.07.

Each of the Limited Partners (herein called the "INDEMNIFYING PARTNER") hereby
indemnifies and shall forever save harmless each other Limited Partner (herein
called the "INDEMNIFIED PARTNER") within 10 days of written demand being made
therefor by an Indemnified Partner, to the extent of that portion of all moneys
which the Indemnified Partner has paid or may be required to pay or liability to
which it is or may become subject by reason of any such joint or joint and
several liability or by reason of any actions, proceedings, liability, claims,
damages, costs and expenses in relation thereto or arising therefrom, which is
in excess of such Indemnified Partner's Percentage Interest of such moneys or
liability and which has been paid or incurred by such Indemnified Partner.

18.06 OUTSIDE ACTIVITIES OF PARTNERS: Save and except only as provided in
Section 18.07, nothing restricts or shall be deemed to restrict in any way the
right of any Partner or any of its Affiliates to engage in any activity or
possess any interest in any business, venture or other person, in each case of
any nature, whether independently or with any other person (including any other
Partner) including, without limitation, the acquisition, ownership, development,
management, operation, brokerage and sale of real property, whether or not
adjacent to or competitive with the real property included in the Partnership
Property. Subject only to the provisions of Section 18.07, no Partner will have
any liability or obligation to account to the Partnership or any other Partner
in any way for such other activities or interests or for the profits, proceeds,
benefits or other advantages derived from such other activities or interests. A
Partner shall not by reason of owning its Partnership Interest have any interest
in any other property owned by any other Partner or any business or venture
engaged in by any other Partner, whether or not similar to the business of the
Partnership.

                                                                         Page 41


18.07 OTHER PROPERTIES: For purposes of this Section 18.07, "TARGET PROPERTY"
means any real property or any interest in any real property which is located
within the area designated as Lakeside Villages (also designated as Villages of
Lakeside) in the vicinity of Orlando, Florida. If any one or more Partners or
any of their respective Affiliates, acquire or receive any Target Properly
(whether by way of beneficial ownership, an interest in the revenues to be
derived therefrom or any other interest directly or indirectly in any other
manner whatsoever) such acquisition or receipt shall be and is hereby deemed to
be made on behalf of the Partnership and the Target Property shall constitute
Partnership Property which the said Partner(s) or applicable Affiliates are
holding in trust exclusively for the Partnership. Each Partner whose Affiliate
so acquires or receives any Target Property shall ensure that such Affiliate
holds the same on and subject to the provisions of this Agreement For greater
certainty, the receipt of commercially reasonable brokerage commissions for the
sale of a Target Property shall not constitute an interest in the revenues to be
derived from a Target Property nor shall such receipt constitute any other
interest directly or Indirectly in any other manner whatsoever in a Target
Property.

The Partner(s) who or whose Affiliate(s) acquire or receive any Target Property
shall give written notice of the proposed acquisition or receipt by it or its
Affiliate(s), as applicable (including reasonable particulars thereof), to the
Management Committee prior to completion of the proposed acquisition or receipt
thereof.

The Management Committee shall have the right in its sole discretion to
determine within 45 days of receipt of the written notice provided for above,
that the Partnership does not desire the proposed acquisition or receipt of the
Target Property to be made on behalf and at the cost of the Partnership and:

     (a)  if the Management Committee does so determine, then the said Partner
          may or, if applicable, may permit its Affiliate to, proceed to
          complete the proposed acquisition for its own account and not in trust
          for the Partnership or otherwise as Partnership Property and the
          Partnership shall cease to have any rights with respect to the said
          Target Property; and

     (b)  if the Management Committee does not so determine, then each Partner
          or, if applicable, its Affiliate(s), who proceeds to acquire the said
          Target Property will hold the same as Partnership Property in trust
          for, and fully account to the Partnership in respect of, such Target
          Property.

     Any determination to be made by the Management Committee as contemplated in
     this Section shall:

     (i)  if the Partner giving the notice of the proposed acquisition to the
          Management Committee is a member of the Great Gulf Group, be either by
          the affirmative vote of at least 4 of the 5 members of the Management
          Committee present at a meeting of the Committee, or the written
          approval of at least 4 of the 5 members of the Committee; and

     (ii) if the Partner giving the notice of the proposed acquisition to the
          Management Committee is a member of the Allan Group, be either by the
          affirmative vote of at least 3 of the 5 members of the Management
          Committee present at a meeting of the Committee, or the written
          approval of at least 3 of the 5 members of the Committee.

18.08 WARRANTIES OF PARTNERS: Each of the Partners represents and warrants to
each of the other Partners that other than as provided for in this Agreement:

     (a)  it is the absolute and beneficial owner of it's Partnership interest,
          with a good and marketable title thereto, free and clear of all
          mortgages, liens, charges, security interests, adverse claims, pledges
          and other encumbrances or rights of others whatsoever; and

     (b)  no person has any agreement or option or any right or privilege
          (whether by law, pre-emptive or contractual) capable of becoming an
          agreement or option for the purchase of or to otherwise acquire from
          such Partner it's Partnership Interest or any part thereof or interest
          therein.

                                                                         Page 42


                     ARTICLE 19 - SPECIAL POWER OF ATTORNEY

19.01 APPOINTMENT: Subject to the restrictions of Sections 10.04 and 10.08, each
of the Limited Partners, by its execution of this Agreement hereby irrevocably
makes, constitutes and appoints the General Partner and any successor or
substituted General Partner or agent(s) duly appointed in accordance with the
provisions of this Agreement, its true and lawful attorney-in-fact for it and in
its name, place and stead and for its use and benefit, from time to time:

     (a)  to make, file and record all agreements amending this Agreement, as
          now or hereafter amended, that may be appropriate to reflect or
          effect, as the case may be:

          (i)  a change of the name or the location of the Principal Place of
               Business;

          (ii) the Transfer or acquisition of any Partnership Interest by a
               Partner in any manner permitted by this Agreement;

          (iii) a person becoming a substituted or additional Limited Partner as
               permitted by this Agreement;

          (iv) a change in any provision of this Agreement effected by the
               exercise by any person of any right or rights hereunder;

          (v)  a correction of a scrivener's error; and

          (vi) the dissolution and termination of the Partnership pursuant to
               this Agreement;

     (b)  to make certificates, affidavits, instruments and documents required
          by, or appropriate under, the laws of Florida in connection with the
          use of the name of the Partnership by the Partnership; and

     (c)  to make certificates, instruments, and documents which the Limited
          Partners are required to make, or which are appropriate for the
          Limited Partner to make, under the laws of Florida to reflect:

          (i)  any changes in or amendments to this Agreement, or pertaining to
               the Partnership, of any kind referred to in this Section 19.01;
               and

          (ii) any other changes in or amendments to this Agreement, but only if
               and when the consent thereto has been obtained from the Limited
               Partners as required by Section 23.11.

Each of the agreements, certificates, affidavits, instruments and documents made
pursuant to paragraph (a) through (c) of this Section shall be in the form that
the General Partner and counsel for the Partnership deem appropriate. The powers
conferred by this Section to make agreements, certificates, affidavits,
instruments and documents shall be deemed to include without limitation the
powers to sign, execute, acknowledge, swear to, verify, deliver, file, record or
publish them.

19.02 IRREVOCABILITY/EXERCISE: The power of attorney granted pursuant to Section
19.01:

     (a)  is a special power of attorney coupled with an interest and is
          irrevocable;

     (b)  may be exercised by the General Partner as attorney-in-fact; and

     (c)  shall survive the Transfer by a Limited Partner of its Partnership
          Interest or any part thereof, except that where the purchaser,
          transferee or assignee of such Partnership Interest with the consent
          of the General Partner is admitted as a substituted Limited Partner,
          the power of attorney shall survive the Transfer for the sole purpose
          of enabling the attorney-in-fact to execute, acknowledge and file any
          agreement, certificate, instrument or document necessary to effect the
          substitution.

                                                                         Page 43


                              ARTICLE 20 - SECURITY

20.01 CROSS CHARGE: To secure the due payment of all monies and interest thereon
(including interest on overdue amounts) being from time to time owing by a
Limited Partner to the others and the performance of its obligations contained
in this Agreement, each Limited Partner (hereinafter called the "MORTGAGOR
PARTNER") hereby mortgages and charges as and by way of a fixed and specific
mortgage and charge and grants a security interest to and in favour of the
others (each of which is hereinafter called the "MORTGAGEE PARTNER"), their
respective successors, and permitted assigns, in and against all the right,
title and interest of the Mortgagor Partner, both present and future, in and to
the Partnership Interest owned by such Mortgagor Partner, including
distributions to which such Partnership Interest may become entitled pursuant to
this Agreement (collectively, the "COLLATERAL"); TO HAVE AND TO HOLD the
Collateral and all rights and revenues hereby assigned and all rights hereby
conferred to the Mortgagee Partner, its successors and permitted assigns
forever, but in trust nevertheless for the uses and purposes and with the powers
and authorities and subject to the terms and conditions mentioned and set forth
in this Article (the mortgages, charges and security interest hereby constituted
being collectively called the "SECURITY"), provided that prior to the occurrence
of a Default by a Mortgagor Partner hereunder, the Mortgagor Partner shall have
quiet possession of the Collateral, subject to all provisions of this Agreement,
but on and after the occurrence of such Default the Mortgagee Partner shall have
quiet possession of the Collateral. The Security shall cease to have any force
or effect on the Mortgagor Partner ceasing to own a Partnership Interest, the
dissolution of the Partnership or on termination of this Agreement, whichever
shall first occur and provided always that such occurrence is in accordance with
the provisions of this Agreement and applicable law.

20.02 PERSON ENTITLED TO ENFORCE: The Mortgagee Partner for the time being is
the person entitled to the benefit of, and to enforce, and to give a discharge
of the Security.

20.03 SUBORDINATION: The Security is subject and subordinate to, and is hereby
postponed in priority to, all Permitted Encumbrances but only to the extent
required by the terms of such Permitted Encumbrances, and the Mortgagee Partner
will execute and deliver such acknowledgements, subordinations and postponements
as may from time to time be required to confirm the priority of any such
Permitted Encumbrances.

20.04 FURTHER ASSURANCES: The Mortgagor Partner, at the request and expense of
the Mortgagee Partner, will execute, deliver, and register in the appropriate
offices of public record, in the appropriate registrable form such documents or
instruments appropriate to subject the Collateral to the Security and for the
due protection of the Security against claims by all subsequent transferees or
encumbrancers other than under Permitted Encumbrances. Each Security shall,
notwithstanding its date of execution or delivery, priority of registration or
otherwise, be deemed to rank pari passu with each other Security if more than
one Mortgagee Partner is proceeding to realize on the Partnership Interest of a
Partner. For purposes hereof one or more Mortgagee Partners may appoint a
trustee and/or agent to hold and effect the registration of the Security on its
or their behalf against any one or more Mortgagor Partners, provided that such
appointment shall be wholly subject to the provisions of this Agreement
including, without limitation, this Article 20.

20.05 ENFORCEMENT: Whenever the Mortgagee Partner becomes entitled to exercise
any of its remedies under the Security, the Mortgagee Partner may realize upon
the Security and enforce its rights by any or all of the remedies herein
expressly provided, and any additional remedies available to a mortgagee and
secured party at law or in equity, including without limitation the following:

     (a)  take possession of the Collateral, including the right to have,
          receive, demand, collect, and sue for all amounts which are from time
          to time owing in respect of the Collateral;

     (b)  sale of the Collateral (including the right of such Mortgagee Partner
          to bid at and become the purchaser at such sale) subject to the
          purchaser entering into an agreement with the continuing Partners
          assuming the obligations of the Mortgagor Partner under this
          Agreement, in form satisfactory to the continuing Partners, acting
          reasonably;

     (c)  filing of proofs of claim and other documents to establish its claims
          in any proceedings relating to the Mortgagor Partner; and

     (d)  all rights and remedies of a secured party under the Uniform
          Commercial Code, as in effect from time to time in the State of
          Florida.

Such remedies may be exercised from time to time separately or in combination
and are in addition to and not in substitution for any rights of the Mortgagee
Partner, however created.

                                                                         Page 44


                              ARTICLE 21 - DEFAULT

21.01 EVENTS OF DEFAULT: For the purposes of this Article 21, any of the
following circumstances is a default under this Agreement (hereinafter called a
"DEFAULT") with respect to a Partner:

     (a)  if it shall be in default in the payment of any moneys required to be
          paid by it under this Agreement and such default continues for a
          period of 10 days after written notice thereof has been given by any
          other Partner; or

     (b)  if it is in default under any of the provisions of this Agreement
          (other than provisions requiring the payment of monies) and such
          default shall continue for a period of 30 days after written notice
          thereof has been given by any other Partner, or such longer period
          (not to exceed 90 days) as may be required to cure such default
          provided that reasonable steps are taken with all due diligence to
          cure such default; or

     (c)  if any Default has occurred with respect to such Partner under any of
          the Other Partnership Agreements; or

     (d)  if any Partner dissolves or goes into liquidation, either voluntary or
          under a final order of a court of competent jurisdiction or becomes
          insolvent or bankrupt. For the purposes of this subparagraph (d), the
          insolvency or bankruptcy of a Partner shall be deemed to occur when
          (i) such Partner: (A) files a petition in bankruptcy, or (B)
          voluntarily takes advantage of any bankruptcy or insolvency laws, or
          (C) is adjudicated a bankrupt, or (D) makes an assignment for the
          benefit of creditors; (ii) within 90 days after commencement of any
          proceeding against the Partner seeking reorganization, liquidation or
          similar relief, the proceeding has not been dismissed; (iii) the
          Partner appoints a receiver or trustee for all or a part of its
          assets, business or property, or (iv) a petition or answer is filed
          proposing the adjudication of the Partner as a bankrupt and the
          Partner consents to the filing or otherwise acknowledges its
          insolvency; or

     (e)  if a liquidator, receiver, receiver and manager, or trustee in
          bankruptcy be appointed to or of the Partnership Interest of any
          Partner or any part thereof with the consent or acquiescence of such
          Partner, or if appointed without the consent or acquiescence of such
          Partner, if such appointment shall remain unvacated and unstayed for
          60 days after the date of any such appointment or such longer period
          as is reasonable (but not in any event exceeding 120 days) provided
          that throughout such period the Partner is acting with all due
          diligence to cure such default; or

     (f)  if, except pursuant to Article 20, an encumbrancer takes possession of
          a Partner's Partnership Interest or any substantial part thereof, or
          if a distress or execution or any similar process be levied or
          enforced on or against such Partnership Interest and the same remains
          unsatisfied for the shorter of a period of 30 days or such period as
          would permit the same to be sold; provided that such process is not in
          good faith being diligently disputed by the Partner and, in that
          event, provided further that non-payment shall not in the reasonable
          opinion of any other Partner jeopardize the title to the said
          Partnership Interest or the Security or in any way impair the
          Security, and provided further that, if the Partner shall desire to
          contest the same, it shall also give security which, in the absolute
          discretion of the other Partners shall be deemed sufficient to pay in
          full the amount claimed in the event it shall be held to be a valid
          claim; or

     (g)  if any financing required to be obtained pursuant to this Agreement is
          not obtainable as a result of the financial condition of such Partner;
          or

     (h)  if such Partner defaults in any covenant or representation made by it
          with respect only to itself under any financing of the Partnership
          and/or the Partnership Property and all cure periods have elapsed
          without such default being cured by such Partner or waived by the
          creditor.

In this Article 21, the Partner which has defaulted is called the "DEFAULTING
PARTY" and each other Partner which is not in default is called the
"NON-DEFAULTING PARTY". In the event of the occurrence of more than one of the
circumstances set forth in Subsections 21.01 (a) to (h), inclusive, with respect
to the applicable Partner each such circumstance shall be deemed to be a
separate Default.

                                                                         Page 45


21.02 GROUP DEFAULT: Notwithstanding the provisions set out in Section 21.01, if
any Partner which is a member of one of the Great Gulf Group or the Allan Group
(in either case, the "SUBJECT GROUP") is the Defaulting Party, then:

     (a)  if the Default is a non-monetary default or an event of default under
          Section 21.01(b), (c), (e) or (f), the other Partners comprising the
          Subject Group, upon the expiry of the grace period provided for in
          Section 21.01 shall have a further period of 10 days to cure such
          default and upon the expiry of said 10 day period, the provisions of
          Section 21.03 shall apply with respect to all of the Partners
          comprising such Group if no cure has been effected, it being
          acknowledged and agreed that the purchase of all the Partnership
          interest of the Defaulting Party by the other Partners comprising such
          Group and the curing by them of such Default shall be considered to be
          a cure; and

     (d)  if the Default is a monetary default, the Subject Group as a whole
          shall be deemed to be in default upon the expiry of the time limit to
          cure such Default set out in subsection 21.01 (a).

21.03 REMEDIES OF A NON-DEFAULTING PARTY: If a Default in respect of any Partner
shall have occurred, until such Default is cured, any Non-Defaulting Party shall
have the right to:

     (a)  bring any proceedings in the nature of specific performance,
          injunction, or other equitable remedy, it being acknowledged by the
          parties hereto that damages at law may be an inadequate remedy for a
          default or breach of this Agreement; and/or

     (b)  remedy such Default and any other default of the Defaulting Party
          under this Agreement or under any other agreements entered into by or
          on behalf of the Partnership, and shall be entitled on demand to be
          reimbursed by the Defaulting Party for any monies expended to remedy
          any such Default and any other expenses incurred by the Non-Defaulting
          Party, together with interest at 5% above the Prime Rate as published
          from time to time by the Wall Street Journal (which obligation to pay
          interest is subject to the provisions of Section 8.07); and in
          addition the Defaulting Party hereby irrevocably directs that all
          amounts payable by the Partnership to it pursuant to this Agreement
          shall be paid to the Non-Defaulting Party to the extent necessary to
          reimburse the Non-Defaulting Party for such moneys with interest as
          aforesaid; and/or

     (c)  bring any action at law as may be necessary or advisable in order to
          recover damages; and/or

     (d)  arrange, upon written notice to the Defaulting Party and the other
          Partners for a determination as provided in Section 21.05 hereof of
          the Fair Market Value of the Defaulting Party's Partnership Interest
          as at the month end prior to the giving of the notice requiring the
          determination, and either contemporaneously therewith or after such
          determination if it so desires, give written notice (the "PURCHASE
          NOTICE") to the Defaulting Party and the other Non-Defaulting
          Party(ies) that the Non-Defaulting Party elects to purchase the
          Defaulting Party's Partnership Interest at a price equal to 85% of the
          Fair Market Value of such Interest as so determined; and to purchase
          such Interest at such price, in which event the Defaulting Party shall
          sell and the Non-Defaulting Party shall purchase such Partnership
          Interest on the terms set out in Sections 21.05 and 21.06 hereof.
          There shall be credited against such purchase price (i) the amounts
          necessary to reimburse the Non-Defaulting Party for remedying the
          said Default together with interest at 5% above the Prime Rate as
          published from time to time by the Wall Street Journal (which
          obligation to pay interest is subject to the provisions of Section
          8.07) and (ii) all costs incurred in determining the Fair Market Value
          of the Partnership Interest being purchased.

Any such purchase is intended as an absolute purchase and is not a transaction
by way of security and does not constitute foreclosure or retention of the
Interest or give rise to any equitable rights of redemption in favour of the
Defaulting Party.

Upon receiving a Purchase Notice, the other Partners shall not be entitled to
dispute the determination of Fair Market Value, but shall have the right, within
10 Business Days of the initial delivery of a Purchase Notice, to give a
Purchase Notice to the Defaulting Party and the Non-Defaulting Party who gave
the Purchase Notice, in which event each such Non-Defaulting Party who gave a
Purchase Notice shall be entitled to purchase such proportion of the Defaulting
Party's Partnership Interest as that Non-Defaulting Party's Percentage Interest
bears to the aggregate Percentage Interests of all Non-Defaulting Parties which
have given a Purchase Notice or as they may otherwise agree.

                                                                         Page 46


Notwithstanding anything to the contrary herein contained, if the Defaulting
Party is a member of either the Great Gulf Group or the Allan Group then the
other members of such Group, as applicable, shall have first rights to purchase
the Partnership Interest of such Defaulting Party by so indicating in its
Purchase Notice. If one or more of such other members of the relevant Group give
a Purchase Notice in which it/they indicate(s) that it is exercising its first
rights in accordance with this Section, then the other Partners shall be deemed
not to have delivered a Purchase Notice.

A Non-Defaulting Party may exercise the option provided for in subsection
21.03(d) at any time after a Default has occurred and so long as such Default is
continuing.

21.04 DISTRIBUTIONS: If a Default shall have occurred and be continuing, then
until such Default has been cured, all distributions to which the Defaulting
Party would otherwise be entitled shall first be paid to Non-Defaulting Parties
in accordance with the provisions of Section 21.03(b) to the extent amounts have
been advanced (including interest accrued thereon) on behalf of the Defaulting
Party and the balance if any shall be deposited by the Partnership or the
General Partner on its behalf in an interest-bearing trust account at a
chartered bank pending the curing of the Default and be applied in payment of
the Defaulting Party's liabilities to the Partnership or the Non-Defaulting
Parties.

21.05 DETERMINATION OF FAIR MARKET VALUE: The Defaulting Party and a
Non-Defaulting Party or Parties which has sent a Purchase Notice will negotiate
in good faith for a period of 10 days after the Defaulting Party's receipt of
the Purchase Notice in an attempt to agree upon the Fair Market Value of the
Defaulting Party's Partnership Interest. If the Defaulting Party and the
Non-Defaulting Party or Parties are unable to so agree within such 10 day period
then each of them shall, within 10 days of the date by which they were to have
agreed on the Fair Market Value of the Defaulting Party's Partnership Interest,
appoint a qualified appraiser who is not an Affiliate of any of them, with not
less than 10 years experience in the practice of residential and commercial real
property valuation. Each of the Defaulting Party(ies) and the Non-Defaulting
Party(ies) shall then, within 10 days of the appointment of such appraisers
submit to both of them in writing its estimate of the Fair Market Value of the
Defaulting Party's Partnership Interest. The appraisers shall be instructed to
select the estimate which in their opinion is closest to the actual Fair Market
Value of the Defaulting Party's Partnership Interest (determined by the
appraisers acting as experts and not as arbitrators) and to advise the
Defaulting Party and the Non-Defaulting Party(ies) of their selection within 30
days of the later of their receipt of the Defaulting Party's and the
Non-Defaulting Party's estimate. The estimate selected by the appraisers shall
be deemed to be the Fair Market Value of the Defaulting Party's Partnership
Interest. If the two appraisers are unable to agree on the estimate of Fair
Market Value of the Defaulting Party's Partnership Interest which they are to
select within the 30 day period, then they shall, within 10 days of the
expiration of such 30 day period, appoint a third appraiser who is not an
Affiliate of any of the Defaulting Party and the Non-Defaulting Party(ies) and
the other two appraisers and who shall, acting alone, select the estimate of
Fair Market Value of the Defaulting Party's Partnership Interest which in his
opinion is closest to the actual Fair Market Value of the Defaulting Party's
Partnership Interest within 15 days of his appointment.

In the event that one party fails to select an appraiser or fails to submit an
estimate of Fair Market Value in accordance with the foregoing, the other
party's estimate of the Fair Market Value of the Defaulting Party's Partnership
Interest shall be final and binding on all parties.

The appraisers shall have access to the Partnership's books and records and the
Defaulting Party and the Non-Defaulting Party will co-operate with the
appraisers and provide all information and documents requested by them.

                                                                         Page 47


21.06 CLOSING ARRANGEMENTS:

(a) Any transaction of purchase and sale required to be completed in accordance
with the foregoing provisions of this Article 21 shall be completed at noon on
the day 90th clear day after the first delivery by a Non-Defaulting Party of a
Purchase Notice pursuant to Section 21.03(d) or, if the Fair Market Value of the
Defaulting Party's Partnership interest has not been determined, 90 clear days
after determination of the Fair Market Value of the Defaulting Party's
Partnership Interest pursuant to Section 21.05 (or on the Business Day next
following if the day of completion is not a Business Day) and such completion
(called the "CLOSING") shall take place at the Principal Place of Business or at
such other place or date as the Defaulting Party and the Non-Defaulting Party
may in writing agree upon. The Non-Defaulting Party may, subject to compliance
with subsection 21.05, advance the date for the Closing determined in accordance
with the foregoing, to any earlier date on not less than 10 Business Days prior
notice to the Defaulting Party.

(b) The provisions contained in Article 22 shall apply mutatis mutandis to the
sale of a Defaulting Party's Partnership Interest pursuant to this Article 21.

21.07 SUSPENSION OF OTHER RIGHTS: On the delivery by a Non-Defaulting Party of a
Purchase Notice provided for in Section 21.03(d), the Transfers permitted by
Sections 11.04 and 11.06 and the provisions contained in Articles 12,13,14 and
15 shall be suspended to and until the Closing or the rights of the Non-
Defaulting Parties and the Defaulting Party to effect a purchase and sale as a
result of a Purchase Notice having been delivered are terminated, whereupon the
provisions contained in the said Sections 11.04 and 11.06, Articles 12,13,14 and
15 shall revive.

21.08 LOSS OF PARTICIPATION: Upon a Partner becoming a Defaulting Party and
notwithstanding any other provisions of this Agreement, it shall have no right
to participate in any decision-making with respect to the Partnership, provided,
however, that no such approval, action, step, decision or proceeding may be
made, given or taken unless the Defaulting Party is given notice of such
proposed approval, action, step, decision or proceeding, and the Defaulting
Party is given the right to attend any meeting, solely for information purposes,
but with no right to participate in the deliberations or decision with respect
thereto.

                     ARTICLE 22 - GENERAL CLOSING PROVISIONS

22.01 APPLICATION TO OTHER SECTIONS: Except as otherwise expressly provided for
in this Agreement, the provisions of this Article 22 shall apply, mutatis
mutandis, to any Transfer pursuant to Articles 12,14, 15 and 21.

22.02 VENDOR'S DEBT TO PARTNERSHIP: If, at the Closing the vendor is indebted to
the Partnership in an amount recorded in the books of the Partnership and
verified by the Accountant then the indebtedness shall, at the exclusive option
of the purchaser, either be fully repaid and discharged on or before the Closing
by the vendor or the purchaser shall, out of the purchase price, pay, satisfy
and discharge all or any portion of such indebtedness, and receive and take
credit against the purchase price for the amount so paid on account of the
indebtedness and the vendor hereby agrees to same. The amount so deducted, if
any, shall reduce payments on account of the purchase price required to be made
(as provided for elsewhere in this Agreement) in inverse order of maturity.

22.03 RELEASE OF GUARANTEES, ETC:

(a) If, at the Closing the vendor or any person for or on behalf of the vendor,
has any guarantees, securities or covenants lodged with any person or bank to
secure an indebtedness, liability or obligation of the Partnership, then the
purchaser shall use its best efforts to deliver-up, or cause to be delivered-up,
to the vendor, and cancel or cause to be cancelled, such guarantees, securities
and/or covenants upon the Closing and to the extent applicable, the Partnership
shall co-operate with respect thereto.;

(b) If, notwithstanding the exercise of "best efforts" the release of any such
guarantees, securities or covenants is not obtained, then the purchaser shall
deliver to the vendor and/or the person(s) which shall have provided such
guarantee, security or covenant, an indemnity in writing in form reasonably
satisfactory to the vendor indemnifying each of them and their respective heirs,
executors, administrators, successors and assigns from any and all claims,
demands, expenses, damages, liabilities and suits, paid, suffered or incurred by
them with respect to and as a result of the terms of such guarantee, security or
covenant.

                                                                         Page 48


22.04 PAYMENT, DOCUMENTS, ETC. FOR CLOSING: At the Closing:

(a) each purchaser shall assume, from and after the Closing, all obligations and
liabilities of the vendor in connection with the Partnership Interest or portion
thereof being acquired which have arisen pursuant to the provisions of this
Agreement and shall indemnify the vendor in connection therewith. At the
Closing, all amounts due by the vendor to a purchaser (including, without
limitation, any amount referred to in Sections 18.05 and/or 21.03 and any amount
necessary to reimburse the purchaser for remedying any Default of the vendor)
shall be settled and set-off or paid in full.

(b) each purchaser shall pay to the vendor the required amount of the purchase
price payable on Closing in cash, bank draft or by certified cheque, and as
evidence of the unpaid balance, if any, of the purchase price, deliver to the
vendor a promissory note for such unpaid balance which note shall be drawn in
accordance with the provisions of this Agreement relating to the payment of the
said unpaid balance of the purchase price.

There shall be deducted from the purchase price payable by a purchaser to a
vendor as otherwise determined in accordance with the provisions of this
Agreement, all amounts owing by the vendor to such purchaser together with the
amount of any liabilities of a vendor assumed by the purchaser at Closing
(provided that the appropriate release for such liability is received by the
vendor) and/or which are subject to a right of set-off as provided for in
Section 22.02(a). The vendor shall, on request of a purchaser, effect the
discharge of any security then outstanding (other than security constituting
Permitted Encumbrances) to the extent the Partnership Interest of the vendor
constitutes collateral under such security.

(c) the vendor shall deliver an assignment from the vendor to the purchaser(s)
of the vendor's Partnership Interest, together with such instruments and
documents, consents and acknowledgements (in each case to be reasonably
satisfactory to the purchaser(s)) as may be necessary or reasonably desirable to
give effect to the sale and transfer of such Partnership Interest (collectively,
the "TRANSFER DOCUMENTS").

The Transfer Documents shall be legally sufficient to convey the Partnership
Interest of the vendor to the purchaser(s).

(d) do all other things required in order to effectively convey and deliver
title to the Partnership Interest to the purchaser free and clear of any and all
liens, claims, security interests and any other encumbrances of others
whatsoever and to fully comply with the intent of this Agreement; however, if
contrary to the provisions hereof the Partnership Interest is not free and clear
of all encumbrances of others, the purchaser (without prejudice to any other
right which it may have) may at its sole option complete the purchase of the
Partnership Interest subject to such encumbrances, in which case the purchaser
shall assume all obligations and liabilities with respect to such encumbrances.
The purchaser shall receive and take credit against the purchase price for the
amount so assumed and the vendor hereby agrees to same. The amount so deducted,
if any, shall reduce payments on account of the purchase price required to be
made (as may be provided for elsewhere in this Agreement) in order of maturity.

22.05 PURCHASER AS VENDOR'S ATTORNEY: If, at the Closing, the vendor shall fail
to deliver the Transfer Documents to the purchaser, the purchaser shall be and
is hereby irrevocably constituted as the duty appointed agent and lawful
attorney of the vendor with full power to prepare, execute, complete and deliver
in the name and on behalf of such vendor, all such assignments and other
documents as may be necessary to effectively transfer and assign the vendor's
Partnership Interest or part thereof being sold to the purchaser, and upon
delivery to the Partnership of such Transfer Documents, the Partnership may
receive the said purchase price and shall thereupon cause the name of the
purchaser to be entered in the register as holder of the said Partnership
Interest and shall hold the said purchase price in trust for the vendor. The
receipt of the Partnership for the said purchase price shall be good discharge
to the purchaser and after its name has been entered in the register in
purported exercise of the aforesaid power, the validity of the proceedings shall
not be questioned by any person. Such appointment and power of attorney shall
not be revoked by the dissolution, winding-up, bankruptcy or insolvency of the
vendor and the vendor hereby ratifies and confirms and agrees to ratify and
confirm all that the purchaser may lawfully do or cause to be done by virtue of
the provisions hereof. The vendor hereby irrevocably consents to the assignment
and transfer of its Partnership Interest or part thereof made pursuant to the
provisions of this Section.

22.06 APPROVAL OF TRANSFER: Effective as at the Closing and provided the
transfer or assignment of the Partnership Interest is permitted pursuant to the
provisions of this Agreement, the General Partner shall effect registration of
the required transfer of the Partnership Interest.

                                                                         Page 49

                      ARTICLE 23 - MISCELLANEOUS PROVISIONS

23.01 NOTICES: Any notice, payment, demand or other communication required or
permitted to be given by any provision of this Agreement shall be in writing and
shall be effectively given if delivered, sent by facsimile or, if postal
services are then operating regularly, sent by prepaid registered or certified
mail, to the respective addresses and facsimile numbers of a Partner as set
forth opposite its name in the attached Exhibit A or to such other address or
facsimile number as any Partner may from time to time specify by written notice
to the Partnership. Any notice may at any time be waived by the person entitled
to receive the notice.

Notwithstanding the foregoing, all payments to be made by the Partnership to a
Partner shall be sent to such address or deposited directly into such bank
account maintained by such Partner, in the United States as such Partner
requests and failing such request shall be sent to the address of such Partner
as set forth opposite its name in the attached Exhibit A.

Any such notice or other communication shall be deemed to have been given and
received for all purposes: (a) when delivered, on the day the notice or other
communication is delivered personally to the party or to an officer of the party
to whom the same is directed; (b) if sent by facsimile, on the day transmitted
provided such transmission occurs prior to 4:00 p.m. on a Business Day and
otherwise it will be deemed to have been given and received on the next Business
Day after transmission; and (c) if mailed as aforesaid, 5 Business Days
following the day on which it is post marked; provided, however, that in the
event of an interruption of normal mail service it shall be deemed to have been
given and received on the 5th Business Day following the day on which normal
mail service is restored.

23.02 NOTICE OF CLAIMS: Each of the Partners shall notify the others of any
notice, document, claim, demand, right or cause of action asserted, threatened
or instituted against it (other than by a Partner or the Partnership) which
could adversely affect the Partnership Interest of any other Partner or which
involves the performance of this Agreement or the Partnership (including any of
the Partnership Property). Any such notification to the other Partners shall
include delivery of a copy the relevant notice, claim or other document.

23.03 CERTIFICATES OF COMPLIANCE: Each Partner shall, within 10 days of written
demand signed by the Partnership or any other Partner, execute and deliver to a
third party designated by the Partnership or such other Partner a certificate
addressed to such third party stating whether such Partner is aware of any
defaults on the part of the Partnership or the other Partner who requested the
certificate, or of the initiation of any of the purchase and sale procedures
described in Articles 11, 12, 13, 14, 15, 20 or 21 by any Partner, and any other
information as to compliance herewith as may reasonably be requested.

23.04 RIGHTS OF PARTNERS INDEPENDENT: The rights available to the Partnership
and the Partners under this Agreement and at law shall be deemed to be several
and not dependent on each other, and each such right shall be accordingly
construed as complete in itself and not by reference to any other such right.
Any one or more of such rights may be exercised separately or in any combination
by the Partnership or by a Partner, as applicable, from time to time, and no
such exercise shall exhaust the rights or preclude any other Partner from
exercising any one or more of such rights or combination thereof from time to
time thereafter or simultaneously.

23.05 CONFIDENTIALITY: Each of the Partners shall keep in strict confidence and
shall not disclose to any person who is not a party hereto, any and all
information obtained with respect to the Partnership, the Partnership Property
and the Partners unless and until the written consent of the Partners is
obtained or such disclosure is required for purposes of enforcement of the
provisions of this Agreement or the exercise of the rights of a Partner
hereunder.

All reports and other information referable to the Partnership or the
Partnership Property received by the Partners or any officers, directors,
shareholders or other representative of a Partner shall be considered to have
been received on an absolutely confidential basis and accordingly shall not be
disclosed to any other person whatsoever, save and except only as permitted in
the immediately preceding paragraph.

                                                                         Page 50


23.06 SECTION AND OTHER CAPTIONS: Section and other captions contained in this
Agreement are for reference purposes only and are in no way intended to
describe, interpret, define or limit the scope, extent or intent of any part of
this Agreement. The division of this Agreement into Articles, Sections,
subsections, paragraphs and subparagraphs and the insertion of headings and an
index is for the convenience of reference only and shall not affect the
construction or interpretation of this Agreement. All references in this
Agreement to Articles or Sections are to the relevant Articles or Sections of
this Agreement, unless otherwise stated.

23.07 "IN THIS AGREEMENT", "HEREOF", "HEREIN", ETC.: The terms "in this
Agreement", "hereof", "herein", "hereto" "hereunder" and similar expressions
refer to this Agreement in its entirety (as the same may be amended or restated
from time to time) and not to any particular Article, Section or other portion
hereof, unless the context clearly indicates the contrary.

23.08 SEVERABILITY: Every provision of this Agreement is intended to be
severable. If one or more of the provisions of this Agreement or the application
thereof to any person or circumstance is determined to any extent to be invalid,
illegal or unenforceable in any respect under any applicable law, the validity,
legality or enforceability of the remaining provisions hereof or the application
thereof to persons or circumstances other than those as to which it is held to
be invalid, illegal or unenforceable, shall not be affected or impaired thereby.
All paragraphs and subparagraphs hereof are declared to be separate and distinct
provisions of this Agreement.

23.09 BUSINESS DAYS: Whenever any payment to be made hereunder shall be stated
to be due or any action to be taken hereunder shall be stated to be required to
be taken on a day other than a Business Day, such payment shall be made or such
action shall be taken on the next following Business Day, and in the case of
payment of a monetary amount, the extension of time shall be included for the
purposes of computation of interest, if any, to be paid thereon.

23.10 CALCULATION OF INTEREST & FEES: In calculating the amount of any interest
payable hereunder, any period for which such amounts are to be calculated shall
include the first day thereof and exclude the last day thereof, provided payment
is made on such day.

23.11 AMENDMENTS: The General Partner may submit to the Partners in writing by
registered or certified mail the text of any proposed amendment to this
Agreement and a statement by the proposer of the purpose of the amendment. Any
amendment shall be adopted if, within 90 days after the mailing of the amendment
to all Partners, the General Partner shall have received written approval of the
amendment from Partners having in the aggregate Percentage Interests: (i) of
more than 50% of all the Percentage Interests held by the Partners comprising
the Great Gulf Group, and (ii) of more than 50% of all the Percentage Interests
held by the Partners comprising the Allan Group. A written approval may not be
withdrawn or voided once it is filed with the General Partner. A Partner filing
a written objection may thereafter file a valid written approval. The date of
adoption of an amendment to this Agreement made pursuant to this Section shall
be the date on which the General Partner shall have received the requisite
written approvals.

A proposed amendment which is not adopted may be resubmitted. If a proposed
amendment is not adopted, a written approval received with respect to the
amendment shall become void and shall not be effective with respect to any
resubmission of the proposed amendment.

Notwithstanding the foregoing provisions of this Section, no amendment may,
without the prior written approval of all Partners, (i) enlarge the obligations
of any Partner under this Agreement, (ii) enlarge the liability of the General
Partner to the Limited Partners, (iii) amend this Section, (iv) alter the
Partnership in a manner that will result in the Partnership no longer being
classified as a "partnership" for federal income tax purposes or (v) reduce any
requirements for the prior approval of the Limited Partners set forth in this
Agreement.

                                                                         Page 51


23.12 GOVERNING LAW: This Agreement and the rights of the Partners shall be
governed by and performed, interpreted and enforced exclusively in accordance
with the laws of the State of Florida including the federal laws of the United
States applicable therein, and the Act as now in effect shall govern and
supersede any provision of this Agreement which would otherwise be in violation
of the Act

23.13 WAIVER OF ACTION FOR PARTITION: Each of the Partners irrevocably waives,
during the term of the Partnership and during the period of its liquidation
following any dissolution, any right which the Partner may have to maintain an
action for partition with respect to any assets of the Partnership.

23.14 COUNTERPART EXECUTION: This Agreement may be executed in any number of
counterparts with the same effect as if all parties had signed the same
document. All counterparts shall be construed together and shall constitute one
Agreement.

23.15 PARTIES IN INTEREST:, Every provision contained in this Agreement shall be
binding upon and, subject to the provisions contained in Article 11, inure to
the benefit of and be enforceable by the successors and assigns of the parties
but only to the extent that they are permitted successors and assigns pursuant
to the terms hereof.

23.16 INTEGRATED AGREEMENT: This Agreement (including the Schedules hereto) and
all other agreements, instruments and documents delivered pursuant to, or
provided for in, this Agreement constitute the whole and entire agreement and
understanding of the parties hereto with respect to the matters contemplated or
provided herein and supersedes and replaces all prior agreements and
understandings, whether written or oral, governing the rights and obligations
between and amongst the Partners or any of them in connection with the
Partnership. There are no restrictions, promises, covenants, representations,
warranties, undertakings or agreements, whether written, oral, collateral or
otherwise, with respect to the matters contemplated or provided for herein other
than those expressly set forth or otherwise expressly provided for herein.

23.17 NO ORAL MODIFICATION: No consent, modification or waiver of this Agreement
or any part of it shall be valid or effective unless in writing and signed by
the party or parties sought to be charged; and no waiver of any condition,
breach of or default in the performance by a party or parties of its or their
obligations under this Agreement shall be deemed or construed to be a waiver of
any other condition, breach of or default in the performance by such party or
parties of its or their obligations under this Agreement. For greater certainty,
failure on the part of a party hereto to complain of any breach or default by,
or of any act or failure to act of, any one or more of the other parties hereto
or to declare the other party or parties hereto in default, irrespective of how
long such failure continues, shall not constitute a waiver by such party of its
rights hereunder. The giving of a consent or waiver by a party hereto in any one
instance shall not limit or waive the necessity to obtain such party's consent
or waiver in any future instance.

23.18 FURTHER ASSURANCES: Each of the parties shall at all times and from time
to time, forthwith upon every reasonable request to do so by any other party,
make, do, execute and deliver, further and other acts, deeds, things, documents,
Instruments, conveyances and assurances whatsoever for more effectually
implementing and carrying out the true intent and meaning of this Agreement

23.19 TIME OF THE ESSENCE: Time shall be deemed to be of the essence with
respect to all time limits provided for in this Agreement.

23.20 NUMBER AND GENDER: In construing this Agreement, where the context so
requires or indicates, words in the singular shall include the plural and
vice-versa, and words importing the feminine shall include the masculine and the
neuter and vice-versa, and the rest of the sentence shall be construed as if the
grammatical and terminological changes thereby rendered necessary had been made.

                                                                         Page 52


IN WITNESS WHEREOF each of the undersigned has duly executed and delivered this
Agreement of Limited Partnership and, notwithstanding the actual date of such
execution and delivery agrees to be bound by this Agreement with effect on and
as of the Effective Date.

ASHTON WOODS FLORIDA L.L.C.             ELLY NEVADA, INC.
Per:                                    Per:



- -------------------------------------   ----------------------------------------
      Authorized Signing Officer                Authorized Signing Officer


NORMAN NEVADA, INC.                     LARRY NEVADA, INC.
Per:                                    Per:



- -------------------------------------   ----------------------------------------
      Authorized Signing Officer                Authorized Signing Officer


BRUCE NEVADA, INC.                      HARRY NEVADA, INC.
Per:                                    Per:



- -------------------------------------   ----------------------------------------
      Authorized Signing Officer                Authorized Signing Officer


SEYMOUR NEVADA, INC.                    HAYDN NEVADA, INC.
Per:                                    Per:



- -------------------------------------   ----------------------------------------
      Authorized Signing Officer                Authorized Signing Officer


GRANT-ALLAN ENTERPRISES INC.            R.A. INVESTMENT HOLDINGS INC.
Per:                                    Per:



- -------------------------------------   ----------------------------------------
      Authorized Signing Officer                Authorized Signing Officer

EX-3.2(AA)

                                                                 Exhibit 3.2(aa)

                                 FIRST AMENDMENT
                     TO AGREEMENT OF LIMITED PARTNERSHIP OF
                    ASHTON WOODS ORLANDO LIMITED PARTNERSHIP

     THIS FIRST AMENDMENT TO AGREEMENT OF LIMITED PARTNERSHIP OF ASHTON WOODS
ORLANDO LIMITED PARTNERSHIP (this "Amendment") is made and entered into by and
among ASHTON WOODS FLORIDA L.L.C., a Nevada limited liability company "Ashton
FL"), ELLY NEVADA, INC., a Nevada corporation ("Elly NV"), NORMAN NEVADA, INC.,
a Nevada corporation ("Norman NV"), LARRY NEVADA, INC., a Nevada corporation
Larry NV"), BRUCE NEVADA, INC., a Nevada corporation ("Bruce NV"), HARRY NEVADA,
INC., a Nevada corporation ("Harry NV"), SEYMOUR NEVADA, INC., a Nevada
corporation ("Seymour NV"), HAYDN NEVADA, INC., a Nevada corporation ("Haydn
NV"), GRANT-ALLAN ENTERPRISES, INC., a Florida corporation ("Grant"), R. A.
INVESTMENT HOLDINGS, INC., a Florida corporation ("RA"), and ASHTON WOODS USA
L.L.C, a Nevada limited liability company ("Ashton USA").

                                    RECITALS:

     A. Ashton FL, Elly NV, Norman NV, Larry NV, Bruce NV, Harry NV, Seymour NV,
Haydn NV, Grant, and RA have heretofore entered into a Limited Partnership
Agreement of Ashton Woods Orlando Limited Partnership (the "Agreement") dated as
of December 28, 1997, creating Ashton Woods Orlando Limited Partnership, a
Florida limited partnership (the "Company").

     B. As permitted by the Agreement, Elly NV, Norman NV, Larry NV, Bruce NV,
Harry NV, Seymour NV, and Haydn NV transferred all of their right, title, and
interest in and to the Company to Ashton USA.

     C. The parties hereto desire to amend the Agreement to reflect the
transfers described above and provide for the admission of Ashton USA as a
limited partner of the Company.

     D. Capitalized terms, not specifically defined in this Amendment, shall
have the meanings given such terms in the Agreement.

     NOW, THEREFORE, for and in consideration of the premises and the respective
agreements set forth herein, the parties hereto agree as follows:

     1. The transfers described in Recital B above are hereby approved.

     2. Ashton USA is hereby admitted as a limited partner of the Company and
the parties hereto recognize that Elly NV, Norman NV, Larry NV, Bruce NV, Harry
NV, Seymour NV, and Haydn NV, have withdrawn as limited partners of the Company.
The only limited partners of the Company are Grant, RA, and Ashton USA.

     3. The Partnership Interests of the Partners set forth on Exhibit "A" to
the Agreement shall be as follows:



                   Partners                      Partnership Interest
                   --------                      --------------------
                                              
Ashton Woods Florida L.L.C./General Partner                 1%
Ashton Woods USA L.L.C./Limited Partner                    74%
Grant-Allan Enterprises, Inc./Limited Partner            12.5%
R.A. Investment Holdings, Inc./Limited Partner           12.5%


     4. Any and all notices, demands, requests, or other communications
permitted or required to be given to Ashton USA pursuant to the Agreement shall
be delivered to Ashton USA in the manner provided in the Agreement, at the
following address:

          250 Lesmill Road
          Don Mills, Ontario M3B 2T5 Canada

     5. By execution of this Amendment, Ashton USA agrees to be bound by the
terms and provisions of the Agreement, as amended hereby.

     6. Except as amended hereby, the terms and provisions of the Agreement
shall remain unchanged and shall continue in full force and effect.

     EXECUTED as of May 31, 1999.

                                        GENERAL PARTNER:

                                        ASHTON WOODS FLORIDA L.L.C.,
                                        a Nevada limited liability company


                                        By: /s/ Bruce Freeman
                                            ------------------------------------
                                            Bruce Freeman - Managing Member


                                        By: /s/ Seymour Joffe
                                            ------------------------------------
                                            Seymour Joffe - Managing Member


                                        By: /s/ Harry Rosenbaum
                                            ------------------------------------
                                            Harry Rosenbaum - Managing Member


                                        2

                                        LIMITED PARTNERS:

                                        ASHTON WOODS USA L.L.C.,
                                        a Nevada limited liability company


                                        By: /s/ Bruce Freeman
                                            ------------------------------------
                                            Bruce Freeman - Managing Member


                                        By: /s/ Seymour Joffe
                                            ------------------------------------
                                            Seymour Joffe - Managing Member


                                        By: /s/ Harry Rosenbaum
                                            ------------------------------------
                                            Harry Rosenbaum - Managing Member


                                        GRANT-ALLAN ENTERPRISES, INC.,
                                        a Florida corporation


                                        By: /s/ WILLIAMS D. ALLAN
                                            ------------------------------------
                                            Name: WILLIAMS D. ALLAN
                                            Title: Director


                                        R.A. INVESTMENT HOLDINGS, INC.,
                                        a Florida corporation


                                        By: /s/ Russell Allan
                                            ------------------------------------
                                            Name: Russell Allan
                                            Title: President


                                        WITHDRAWING LIMITED PARTNERS:

                                        ELLY NEVADA, INC.,
                                        a Nevada corporation


                                        By: /s/ Elly Reisman
                                            ------------------------------------
                                            Elly Reisman - President


                                        3

                                        NORMAN NEVADA, INC.,
                                        a Nevada corporation


                                        By: /s/ Norman Reisman
                                            ------------------------------------
                                            Norman Reisman, President


                                        LARRY NEVADA, INC.,
                                        a Nevada corporation


                                        By: /s/ Larry Robbins
                                            ------------------------------------
                                            Larry Robbins, President


                                        BRUCE NEVADA, INC.,
                                        a Nevada corporation


                                        By: /s/ Bruce Freeman
                                            ------------------------------------
                                            Bruce Freeman, President


                                        HARRY NEVADA, INC.,
                                        a Nevada corporation


                                        By: /s/ Harry Rosenbaum
                                            ------------------------------------
                                            Harry Rosenbaum, President


                                        SEYMOUR NEVADA, INC.,
                                        a Nevada corporation


                                        By: /s/ Seymour Joffe
                                            ------------------------------------
                                            Seymour Joffe, President


                                        HAYDN NEVADA, INC.,
                                        a Nevada corporation


                                        By: /s/ Haydn Matthews
                                            ------------------------------------
                                            Haydn Matthews, President


                                        4

EX-3.2(AB)

                                                                 Exhibit 3.2(ab)

                     FORM OF LIMITED PARTNERSHIP AGREEMENT
                      LAKE LOUISE COVES LIMITED PARTNERSHIP
               [TO BE RENAMED ISLEWORTH WEST LIMITED PARTNERSHIP]

                                                                          Page 2


                        AGREEMENT OF LIMITED PARTNERSHIP
                      LAKE LOUISE COVES LIMITED PARTNERSHIP
               [TO BE RENAMED ISLEWORTH WEST LIMITED PARTNERSHIP]

THIS AGREEMENT OF LIMITED PARTNERSHIP is made and entered into with effect on
and as of the Effective Date (defined below), by and among each of the General
Partner and the Limited Partners, all as defined below, and who have executed
and delivered this Agreement to be bound thereby with effect on and as of the
Effective Date.

NOW THEREFORE, in consideration of the mutual promises made herein, the parties
hereto agree as follows:

                         ARTICLE 1 - CERTAIN DEFINITIONS

Unless otherwise expressly provided or unless the context otherwise requires,
the following terms used in this Agreement shall have the following respective
meanings:

1.01 "ACCOUNTANT" means the firm of KPMG or such other firm of independent
certified public accountants selected in accordance with Section 16.02(b).

1.02 "ACT" means the Revised Uniform Limited Partnership Act as in effect from
time to time in the State of Florida.

1.03 "ADJUSTED CAPITAL ACCOUNT DEFICIT" means with respect to any Partner, the
deficit balance, if any, in such Partner's Capital Account as of the end of the
relevant fiscal year, after giving effect to the following adjustments:

     (a)  Credit to such Capital Account any amounts which such Partner is
          obligated to restore to the Partnership pursuant to Section 1.704-1
          (b)(2)(ii)(C) of the Treasury Regulations or is deemed to be obligated
          to restore pursuant to the penultimate sentence of Section
          1.704-2(g)(ii) of the Treasury Regulations or the penultimate sentence
          of Section 1.704-2(i)(5) of the Treasury Regulations; and

     (b)  Debit to such Capital Account the items described in Section
          1.7041(b)(2)(ii)(d)(4), (5) and (6) of the Treasury Regulations.

1.04 "AFFILIATE" means, when used with reference to a specified person, (1) any
person that directly, or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with, the specified
person, (2) a Relative of a specified person who is an individual; (3) any
person that is an officer, director, shareholder, partner, employee or trustee
of, or serves in a similar capacity with respect to, the specified person and
includes a Relative of any such officer, director, shareholder partner, employee
or trustee or the like who is an individual, and (4) any person controlled by
any person designated above. For purposes of the foregoing, "Relative" of an
individual means such individual's ancestors, spouse, lineal descendants,
siblings and the spouses of each ancestor, lineal descendant or sibling, and any
member of the immediate household of such individual.

1.05 "AGREEMENT" or "PARTNERSHIP AGREEMENT" means this Agreement of Limited
Partnership, as amended, modified, supplemented or restated from time to time.

1.06 "ALLAN GROUP" means, collectively, at the Effective Date, each of the
Partners whose name is set forth on the attached Exhibit A under the heading
"Allan Group" and thereafter any Affiliate of any such Partner to whom the whole
or any part of the Partnership Interest held by such Partner on the Effective
Date is transferred or assigned in accordance with the provisions of this
Agreement.

                                                                          Page 3


1.07 "BASE CAPITAL" means, with respect to a Partner, the Base Capital
Contributions of such Partner as adjusted from time to time by:

     (a)  adding thereto all Profits allocated to such Partner in accordance
          with Section 6.04(a)(iv) to the extent that the allocation of such
          Profits relates to Losses previously allocated in accordance with
          Sections 6.04(b)(i) and (ii), and Section 6.04(a)(vi); and

     (b)  deducting therefrom all Losses allocated to such Partner in accordance
          with Sections 6.04(b)(i) and 6.04(b)(ii).

The foregoing is intended to comply with the definition of "unreturned capital"
set forth in Treasury Regulation Section 1.514(c)-2, and is to be interpreted
consistently therewith.

1.08 "BASE CAPITAL CONTRIBUTION" means, with respect to a Partner, the amount of
cash set opposite its name on the attached Exhibit A and contributed to the
Partnership in accordance with Section 5.01(a) (herein collectively referred to
as the "BASE CAPITAL CONTRIBUTIONS").

1.09 "BASE LOAN ADVANCES" means, with respect to a Partner, the outstanding
principal balance from time to time of Loan Advances made to the Partnership by
such Partner from time to time which constitute Base Loans.

1.10 "BASE LOAN INTEREST" means interest at the rate of 12% per annum computed
on a daily basis on the Base Loan Advances of a Partner for the actual number of
days elapsed, divided by 365, and payable both before and after default and
judgement. The yearly rate of interest to which the rate calculated in
accordance with the foregoing provisions of this paragraph is equivalent, is the
rate so determined multiplied by the actual number of days in the calendar year
and divided by 365.

1.11 "BASE LOANS" means the amounts advanced from time to time by any one or
more of such Partners by way of loan to the Partnership.

1.12 "BUSINESS DAY" means a day other than a Saturday, Sunday or any day which
is a legal holiday in the State of Florida.

1.13 "CAPITAL ACCOUNT" means, with respect to a Partner, the account of such
Partner to be maintained as described in Article 5 and, for greater certainty,
includes the Base Capital and Priority Capital Contributions, as from time to
time adjusted in accordance with Article 5 and otherwise as provided in or
contemplated by this Agreement.

1.14 "CAPITAL CONTRIBUTIONS" means the total amount of Base Capital
Contributions and Priority Capital Contributions.

1.15 "CAPITAL PROCEEDS" means the net cash proceeds received by the Partnership
from or as a result of a Capital Transaction, after deducting: (i) any expenses
paid in connection therewith; (ii) any amounts applied by the General Partner in
its sole and absolute discretion toward the payment of any indebtedness
(including indebtedness owed to the General Partner) and other obligations of
the Partnership, including payments of principal and interest on mortgages;
(iii) the payment of any other bona fide expenses; and (iv) the establishment of
any reserves by the General Partner in its sole and absolute discretion. If the
proceeds of any Capital Transaction are paid in more than one instalment, each
such instalment shall be treated as a separate Capital Transaction for purposes
of this definition.

1.16 "CAPITAL TRANSACTION" means any (i) sale or other disposition of the assets
of the Partnership (other than sales in the ordinary course of business); (ii)
financing or refinancing with respect to the assets of the Partnership; and
(iii) casualty insurance proceeds (other than business interruption insurance)
or condemnation awards with respect to the Partnership's assets in excess of
amounts required to be applied to payment of any indebtedness of the Partnership
or expended in repair or restoration.

1.17 "CODE" means the Internal Revenue Code of 1986, as amended from time to
time, or corresponding provisions of subsequent laws.

1.18 "CONTROL" or "CONTROLLED" where used in this Agreement to indicate a
relationship to a person, means the possession, direct or indirect, of the power
to direct or cause the direction of the management and policies of such person,
whether through the ownership of voting securities, by contract, or otherwise.
For purposes of the foregoing, a person shall be deemed to hold voting
securities beneficially owned by another person controlled by such first
mentioned person or by an Affiliate of such other person.

                                                                          Page 4


1.19 "CUMULATIVE BASE LOAN INTEREST" means the total of the Base Loan Interest
accrued from the date on which each Base Loan Advance was made by the applicable
Partner to the date at which such total is being determined.

1.20 "CUMULATIVE PRIORITY CAPITAL RETURN" means the total of the Priority
Capital Returns from the date on which each Priority Capital Contribution was
made by the applicable Partner to the date at which such total is being
determined.

1.21 "EFFECTIVE DATE" means March 27, 1998, notwithstanding the actual date of
execution and delivery of this Agreement.

1.22 "FISCAL YEAR" means, for both reporting and federal income tax purposes,
the period from the Effective Date and ending on the immediately following May
31st, and thereafter the 12 month period commencing on June 1st and ending on
May 31st in each calendar year, or such other financial year as may be
determined by the General Partner.

1.23 "FUNDING PARTNER" means a Partner of any of the Other Partnerships that has
any "Loan Advances", "Unrecovered Priority Capital Contributions" and/or
"Unrecovered Preferred Capital Contributions", as provided for in or
contemplated by the Other Partnership Agreements.

1.24 "GENERAL PARTNER" means Ashton Woods Florida L.L.C. (a Nevada limited
liability company) and any person who after the Effective Date becomes a
substitute or additional General Partner in accordance with the provisions of
this Agreement.

1.25 "GREAT GULF GROUP" means, collectively, at the Effective Date, each of the
Partners whose name is set forth on the attached Exhibit A under the heading
"Great Gulf Group" and thereafter any Affiliate of any such Partner to whom the
whole or any part of the Partnership Interest held by such Partner on the
Effective Date is transferred or assigned in accordance with the provisions of
this Agreement.

1.26 "GROSS ASSET VALUE" means, with respect to any asset, the asset's adjusted
basis for federal income tax purposes, except as follows:

     (a)  The initial Gross Asset Value of any asset contributed by a Partner to
          the Partnership shall be the gross fair market value of such asset, as
          determined by the contributing Partner and the Partnership;

     (b)  The Gross Asset Values of all Partnership assets shall be adjusted to
          equal their respective gross fair market values, as determined by the
          General Partner, as of the following times: (i) the acquisition of an
          additional interest in the Partnership by any new or existing Partner
          in exchange for more than a de minimis Capital Contribution; (ii) the
          distribution by the Partnership to a Partner (or an assignee of a
          Partner with respect to such Partner's Partnership Interest or any
          part thereof) of more than a de minimis amount of Partnership Property
          as consideration for an interest in the Partnership; and (iii) upon
          the liquidation of the Partnership within the meaning of Section
          1.7041 (b)(2)(ii)(g) of the Treasury Regulations; provided, however
          that the adjustments pursuant to the immediately preceding items (i)
          and (ii) shall be made only if the General Partner reasonably
          determines that such adjustments are necessary or appropriate to
          reflect the relative economic interests of the Partners and any of
          their assignees in the Partnership;

     (c)  The Gross Asset Value of any Partnership asset distributed to any
          Partner shall be the gross fair market value of such asset on the date
          of distribution; and

     (d)  The Gross Asset Values of the assets included in the Partnership
          Property shall be increased (or decreased) to reflect any adjustments
          to the adjusted basis of such assets pursuant to Code Section 732(d),
          Code Section 734(b) or Code Section 743(b), but only to the extent
          that such adjustments are taken into account in determining Capital
          Accounts pursuant to Section 1.704-1 (b)(3)(iv)(m) of the Treasury
          Regulations. If the Gross Asset Value of any such asset has been
          determined or adjusted pursuant to Clause (a), (b) or (c) of this
          definition, such Gross Asset Value shall thereafter be adjusted by the
          depreciation or amortization taken into account with respect to such
          asset for purposes of computing profits and losses.

                                                                          Page 5


1.27 "LIMITED PARTNERS" means, on and as of the Effective Date, those persons
whose names and addresses are set forth on the attached Exhibit A, and such
other persons who subsequent to the Effective Date are admitted to the
Partnership as additional or substitute Limited Partners in accordance with the
provisions of this Agreement.

1.28 "LOAN ADVANCES" means, with respect to a Partner, the amount advanced by
way of loan to the Partnership by such Partner from time to time, being the
aggregate amount of the Base Loan Advances of such Partner.

1.29 "LOSSES" means the aggregate of Net Non-operating Losses and the losses
referred to in and resulting from the calculation of Operating Profits and
Losses.

1.30 "METHOD OF ACCOUNTING" means the accrual method of accounting or any other
method of accounting acceptable to the Accountant that the General Partner may
select from time to time which shall be in accordance with generally accepted
accounting principles now or hereafter in effect. All accounting terms not
specifically defined herein shall be construed in accordance with the Method of
Accounting.

1.31 "NET CASH FLOW" means Net Operating Cash less amounts payable to reduce
Loan Advances and to pay interest thereon as provided for in Article 8 and to
reduce indebtedness of the Partnership ranking subsequent to the Loan Advances.

1.32 "NET NON-OPERATING LOSSES" means the sum of taxable loss of the Partnership
arising from or as a result of a Capital Transaction.

1.33 "NET NON-OPERATING PROFITS" means the sum of taxable income of the
Partnership arising from or as a result of a Capital Transaction.

1.34 "NET OPERATING CASH" means for any given fiscal year or other accounting
period of the Partnership, all cash received by the Partnership in such fiscal
year or period (including Capital Proceeds), less all disbursements of cash
including, without limitation, disbursements made to the General Partner to
reimburse it for expenses as contemplated in Section 10.09, to pay operating
expenses, reduce the indebtedness of the Partnership ranking in priority to or
pari passu with the Loan Advances and to pay interest on such indebtedness and
amounts used to establish reasonable reserve accounts but excluding any payments
to reduce Loan Advances and to pay interest thereon as provided for in Article 8
and further excluding distributions made pursuant to Section 9.01. The General
Partner acting reasonably shall determine at least semi-annually whether the
reserves of the Partnership are in excess of the amount it reasonably deems
sufficient for the continuing conduct of the business of the Partnership,
including its working capital requirements, and such reserves shall be reduced
by the amount of any such excess and such excess amount shall be added to Net
Operating Cash.

1.35 "NONRECOURSE DEDUCTIONS" has the meaning set forth in Section 1.704-2(c) of
the Treasury Regulations. The amount of Nonrecourse Deductions for a Partnership
fiscal year equals the excess, if any, of the net increase, if any, in the
amount of Partnership Minimum Gain during the fiscal year over the aggregate
amount of any distributions during that fiscal year of proceeds of a Nonrecourse
Liability that are allocable to an increase in Partnership Minimum Gain,
determined according to the provisions of Section 1.704-2(c) of the Treasury
Regulations. If the amount of Nonrecourse Deductions during the Partnership
taxable year exceeds the total amount of items of Partnership loss, deduction
and Code Section 705(a)(2)(B) expenditures for the year, then the excess shall
carry forward and shall be treated as an increase in Partnership Minimum Gain
for the immediately succeeding taxable year for the purpose of determining
whether there is a net increase or decrease in Partnership Minimum Gain (and
Nonrecourse Deductions) during that succeeding Partnership taxable year. For
this purpose, the items of Partnership loss, deduction and Section 705(a)(2)(B)
expenditures for the year are determined without any regard to any item that is
treated as a Partnership Nonrecourse Deduction.

1.36 "NONRECOURSE LIABILITIES" means liabilities of the Partnership treated as
"nonrecourse liabilities" under Section 1.704-2(b)(3) of the Treasury
Regulations.

                                                                          Page 6


1.37 "OPERATING PROFITS AND LOSSES" means for each fiscal year of the
Partnership, an amount equal to the Partnership's taxable income or loss for
such year or other period, determined in accordance with Section 703(a) of the
Code (for this purpose, all items of income, gain, loss or deduction required to
be separately stated pursuant to Section 703(a)(1) of the Code shall be included
in taxable income or loss), with the following adjustments:

     (a)  Any income of the Partnership that is exempt from federal income tax
          or otherwise described in Section 705(a)(1)(B) of the Code and not
          otherwise taken into account shall be added to such taxable income or
          loss;

     (b)  Any expenditure of the Partnership described in Section 705(a)(2)(B)
          of the Code and non-deductible syndication costs described in Section
          709 of the Code and not otherwise taken into account shall be
          subtracted from such taxable income or loss; and

     (c)  If the Gross Asset Value of any asset differs from its adjusted basis
          for federal income tax purposes at the beginning of such year, in lieu
          of depreciation, amortization and other cost recovery deductions,
          there shall be taken into account depreciation for such fiscal year or
          other period equal to the amount that bears the same ratio to the
          Gross Asset Value as the federal income tax depreciation, amortization
          or other cost recovery deduction bears to the beginning adjusted tax
          basis, and in lieu of a gain or loss resulting from disposition of
          Partnership property and taken into account in computing taxable
          income or loss, there shall be taken into account gain or loss
          computed by reference to the Gross Asset Value of such Partnership
          property rather than its adjusted basis for federal income tax
          purposes.

     (d)  In the event the Gross Asset Value of any Partnership asset is
          adjusted pursuant to clause (b) or (c) of the definition of Gross
          Asset Value, the amount of such adjustment shall be taken into account
          as gain or loss from disposition of such asset for purposes of
          computing Operating Profits and Losses.

1.38 "OTHER PARTNERSHIP AGREEMENTS" means, collectively, the Limited Partnership
Agreements entered or to be entered into in respect of the Other Partnerships,
respectively, as amended, modified, supplemented or restated from time to time.

1.39 "OTHER PARTNERSHIPS" means, collectively, Ashton Woods Orlando Limited
Partnership and Butler Coves Limited Partnership, each formed and registered or
to be formed and registered under the laws of the State of Florida.

1.40 "PARTNER GROUP" means each of the Allan Group, the Great Gulf Group and
each other group of Partners who after the Effective Date is designated in
writing as a Partner Group for purposes of this Agreement.

1.41 "PARTNER MINIMUM GAIN" shall mean an amount, with respect to each Partner
Nonrecourse Debt, equal to the Partnership Minimum Gain that would result if
such Partner Nonrecourse Debt were treated as a Nonrecourse Liability,
determined in accordance with Section 1.704-2(i)(3) of the Treasury Regulations.

1.42 "PARTNER NONRECOURSE DEBT" shall have the meaning set forth in Section
1.704-2(b)(4) of the Treasury Regulations.

1.43 "PARTNER NONRECOURSE DEDUCTIONS" shall have the meaning set forth in
Section 1.704-2(i)(2) of the Treasury Regulations. The amount of Partner
Nonrecourse Deductions with respect to a Partner Nonrecourse Debt for a
Partnership fiscal year equals the excess, if any, of the net increase, if any,
in the amount of Partner Minimum Gain attributable to such Partner Nonrecourse
Debt during that fiscal year over the aggregate amount of any distributions
during that fiscal year to the Partner that bears the economic risk of loss for
such Partner Nonrecourse Debt to the extent such distributions are from the
proceeds of such Partner Nonrecourse Debt and are allocable to an increase in
Partner Minimum Gain attributed to such Partner Nonrecourse Debt, determined in
accordance with Section 1.704-2(i)(2) of the Treasury Regulations.

1.44 "PARTNERS" means, collectively, the General Partner and the Limited
Partners. Individually each of them is referred to as a "PARTNER."

1.45 "PARTNERSHIP" means the limited partnership formed and named as provided
for in this Agreement including Sections 2.01 and 2.02 hereof.

1.46 "PARTNERSHIP CAPITAL" means the total amount of all Capital Contributions.

                                                                          Page 7


1.47 "PARTNERSHIP INTEREST" means, with respect a Partner, the beneficial
interest owned by such Partner in the Partnership including the Capital Account
and Loan Advances of such Partner and its other rights and entitlements as
provided for in and subject to the provisions of this Agreement, in each case as
the same may from time to time be adjusted or changed as provided for in this
Agreement.

1.48 "PARTNERSHIP MINIMUM GAIN" has the meaning set forth in Sections
1.704-2(b)(2) and (d) of the Treasury Regulations.

1.49 "PARTNERSHIP PROPERTY" means the real property more particularly described
in the attached Exhibit B and any real property which may, subject to the
provisions of this Agreement, from time to time be purchased or otherwise
acquired by the Partnership including, without limitation, all fixtures,
improvements, structures, buildings and the like now or at any time hereafter
located in or on such real property together with all personal property (both
tangible and intangible) which may at any time and from time to time be held,
received or acquired in connection with the said real property and the business
carried on by the Partnership.

1.50 "PERCENTAGE INTEREST" means for a Partner, the percentage that such
Partner's Base Capital Contribution is of the total Base Capital Contributions
of all Partners, which as at the Effective Date is the percentage set forth
opposite such Partner's name in the attached Exhibit A.

1.51 "PERMITTED ENCUMBRANCES" means any mortgages, pledges, charges, security
interests, liens, restrictions, or other encumbrances and interests affecting
any of the Partnership Property and the collective interests of the Partners
therein or affecting the Partnership Interest of a Partner or any part thereof,
in each case where the same is created in connection with any financing
contemplated in Section 7.01.

1.52 "PERSON" means and includes individuals and the heirs, executors,
administrators, or other legal or personal representatives of an individual,
sole proprietorships, corporations, limited partnerships, general partnerships,
joint stock companies, joint ventures, co-ownerships, co-tenancies,
associations, companies, trusts, trustees, banks, trust companies, pension
funds, land trusts, business trusts, any unincorporated organizations or other
organizations or entities, whether or not legal entities and governments and
agencies and political subdivisions thereof.

1.53 "PRINCIPAL PLACE OF BUSINESS" means 20 North Orange Avenue, Suite 1400,
Orlando, Florida 32801.

1.54 "PRIORITY CAPITAL" means the amounts contributed from time to time by any
one or more of the Partners to the capital of the Partnership, other than to
Base Capital.

1.55 "PRIORITY CAPITAL CONTRIBUTIONS" means, with respect to a Partner, the
amounts contributed as capital to the Capital Account of such Partner from time
to time which constitutes Priority Capital.

1.56 "PRIORITY CAPITAL RETURN" means an amount equal to 12% per annum computed
on a daily basis on the Unrecovered Priority Capital Contributions of a Partner
for the actual number of days elapsed, divided by 365, compounded annually.

1.57 "PROFITS" means the aggregate of Net Non-operating Profits and the income
referred to in and resulting from the calculation of Operating Profits and
Losses.

1.58 "SECURITIES ACT OF 1933" means the Securities Act of 1933, as amended from
time to time.

1.59 "TAX MATTERS PARTNER" or "TMP" means the General Partner acting as such in
accordance with the provisions of this Agreement.

1.60 "TRANSFER" means any sale (including, without any limitations, a judicial
sale), assignment, exchange, transfer, gift, devise or bequest, or the mortgage,
pledge, grant of a security interest or lien in, or other encumbrance, whether
voluntary or by operation of law, or any other disposition or type of conveyance
or any agreement(s) to do any of the foregoing, in each case whether by the
Partnership with respect to the Partnership Property, or by a Partner, of the
whole or any part of such Partner's Partnership Interest (which for greater
certainty includes any of such Partner's rights under this Agreement). In
addition to the foregoing, a Transfer shall be deemed to occur or be effected on
a change of control of a Partner, whether such change of control occurs as a
result of such Partner issuing voting securities, amalgamating, merging,
consolidating or in any other manner combining with another person, or effecting
any other procedure, a result of which is to achieve indirectly that which is
not permitted to be

                                                                          Page 8

effected directly under this Agreement, or such change in control occurs as a
result of a transfer of voting securities by any shareholder(s) of a Partner,
all except and to the extent any change of control is to any one or more of the
Partners comprising the Great Gulf Group or the Allan Group.

1.61 "TREASURY REGULATIONS" means the Income Tax Regulations, including
Temporary Regulations, promulgated under the Code, as they may be amended from
time to time.

1.62 "UNPAID BASE LOAN INTEREST" means an amount equal to the Cumulative Base
Loan Interest with respect to a Partner accrued for all periods to the date as
at which the amount is being determined, less the aggregate amount of all
distributions made to such Partner pursuant to Sections 8.05(a) and (d).

1.63 "UNPAID PRIORITY CAPITAL RETURN" means an amount equal to the Cumulative
Priority Capital Return with respect to a Partner accrued for all periods to the
date as at which the amount is being determined, less the aggregate amount of
all distributions made to such Partner pursuant to Sections 9.01(i) and (iii).

1.76 "UNRECOVERED PRIORITY CAPITAL CONTRIBUTIONS" means, with respect to a
Partner, an amount which at the date of determination is equal to the aggregate
amount of all Priority Capital Contributions made by such Partner reduced by the
aggregate amount of distributions to such Partner pursuant to Sections 9.01(ii)
and (iv). The foregoing is intended to comply with the definition of "unreturned
capital" set forth in Treasury Regulation Section 1.514(c)-2, and is to be
interpreted consistently therewith.

            ARTICLE 2 - FORMATION, NAME, AFFIDAVIT AND ANNUAL REPORT

2.01 FORMATION: The General Partner and the Limited Partners hereby form the
Partnership as a Florida limited partnership pursuant to the provisions of the
Act effective on the Effective Date.

2.02 NAME: The name of the Partnership is "Lake Louise Coves Limited
Partnership" which name is to be changed as soon as practicable to "Isleworth
West Limited Partnership". The General Partner may change the name of the
Partnership and adopt such trade and fictitious names as it may deem
appropriate. Upon such change, the General Partner shall provide the Limited
Partners with notice of such change.

2.03 AFFIDAVIT OF CONTRIBUTIONS: An affidavit declaring the actual and
anticipated amount contributed to the Partnership by the Limited Partners will
accompany the Certificate of Limited Partnership and amendments thereto to be
filed, as and when applicable, with the Florida Secretary of State.

2.04 ANNUAL REPORT: The General Partner shall cause the Partnership to file an
annual report with the Florida Secretary of State on or before January 1st of
each calendar year, on the form provided from time to time by the Florida
Secretary of State.

                                ARTICLE 3 - TERM

3.01 The Partnership shall continue until terminated as provided in Article 17.

               ARTICLE 4 - CHARACTER & PRINCIPAL PLACE OF BUSINESS

4.01 CHARACTER OF THE BUSINESS: The Partnership is being organized solely for
the purposes of purchasing for investment, or engaging in the business of
development, promotion and sale of, the real property included in the
Partnership Property and to engage in such other activities related either
directly or indirectly to such business as the General Partner may hereafter
from time to time reasonably determine to be necessary, advisable or convenient
to the promotion or conduct of the said business of the Partnership.

                                                                          Page 9

4.02 PRINCIPAL PLACE OF BUSINESS: The Principal Place of Business shall be
maintained as the principal place from which the Partnership conducts its
business until it is changed by the General Partner. The General Partner shall
deliver written notice of a change in the Principal Place of Business to the
Limited Partners substantially contemporaneously with effecting any such change.
The General Partner may establish additional places of business of the
Partnership when and where required by, or desirable for, the Partnership's
business, as the General Partner from time to time determines in its sole
discretion.

                        ARTICLE 5 - CAPITAL CONTRIBUTIONS

5.01 CONTRIBUTIONS OF PARTNERS:

     (A) BASE CAPITAL CONTRIBUTIONS: The General Partner and each of the Limited
Partners have or shall contemporaneously with its execution and delivery of this
Agreement contribute to the Partnership cash in the amount set opposite its name
on the attached Exhibit A, representing its Base Capital Contribution.

     (B) PRIORITY CAPITAL CONTRIBUTIONS BY GREAT GULF GROUP: The Limited
Partners comprising the Great Gulf Group have or shall contribute to the
Partnership $1,200,000 as and representing Priority Capital Contributions by
such Limited Partners, each in the proportion which their respective Percentage
Interests are to the total Percentage Interests of the Limited Partners
comprising the Great Gulf Group.

     (C) OTHER CAPITAL CONTRIBUTIONS: No Partner has any obligation to make any
Capital Contributions (whether as Priority Capital Contributions or otherwise)
in addition to those provided for in the foregoing subparagraphs (a) and (b)
except as such Partner may, in its sole discretion, agree to in writing and
except as may be provided for pursuant to the Other Partnership Agreements.

5.02 ORDER OF CAPITAL CONTRIBUTIONS: Any amounts being paid to the Partnership
by or on behalf of a Partner as a contribution to the capital of the
Partnership:

     (a)  in accordance with Section 7.02(b); or

     (b)  in accordance with a requirement to do so pursuant to any of the Other
          Partnership Agreements; or

     (c)  otherwise;

shall, at the time of such payment, constitute a Priority Capital Contribution
by such Partner.

5.03 PERCENTAGE INTERESTS: Each Partner's Percentage Interest is set opposite
the name of such Partner in the attached Exhibit A. Such percentage shall be
amended to reflect changes in Percentage Interests as a result of Transfers
permitted by and made in accordance with the provisions of this Agreement. The
General Partner shall amend the Partnership's certificate of registration to
reflect any such changes, as and when required by the Act or otherwise required
by law.

5.04 CAPITAL ACCOUNTS:

(a) Each Partner shall have a capital account which shall be maintained in
accordance with the rules set forth in Section 1.704-1(b)(2)(iv) of the Treasury
Regulations, which generally require that each capital account be increased by
(i) the amount of money contributed by the Partner to the Partnership, (ii) the
fair market value of property contributed by the Partner to the Partnership (net
of liabilities securing such contributed property that the Partnership is
considered to assume or take subject to under Section 752 of the Code), and
(iii) allocations to the Partner of Partnership income and gain (or items
thereof), including income and gain exempt from tax, and be decreased by (x) the
amount of money distributed to the Partner by the Partnership, (y) the fair
market value of the property distributed to the Partner by the Partnership (net
of liabilities securing such distributed property that the Partner is considered
to assume or take subject to under Section 752 of the Code), (ii) allocations to
the Partner of expenditures of the Partnership described in Section 705(a)(2)(B)
of the Code, and (z) allocations of Partnership loss and deduction (or items
thereof).

(b) Upon a distribution in kind of Partnership property, the Capital Account of
each Partner will be debited or credited with such Partner's allocable share of
gain or loss which would have been recognized by the Partnership had the
property been sold for an amount equal to the fair market value immediately
prior to such distribution.

                                                                         Page 10


5.05 WITHDRAWAL FROM CAPITAL ACCOUNTS: Prior to the dissolution and liquidation
of the Partnership, no Partner shall be entitled to withdraw any part of the
Capital Account of such Partner or to receive any distribution from the
Partnership, except as provided in this Agreement.

5.06 LIMITED LIABILITY OF LIMITED PARTNERS: The liability of each of the Limited
Partners shall be limited to the Capital Contribution made or required to be
made by such Limited Partner in accordance with Section 5.01. Save only as
provided in the immediately preceding sentence, the Limited Partners and each of
them shall not have any other liability to contribute money to, or in respect of
the liabilities or obligations of, the Partnership, nor shall the Limited
Partners or any of them be personally liable for any obligations of the
Partnership other than as required by the Act. The Limited Partners and each of
them shall not, unless otherwise agreed in writing and as specifically required
by the provisions of any of the Other Partnership Agreements, be obligated to
make loans to the Partnership.

5.07 NO INTEREST ON CAPITAL CONTRIBUTIONS: No interest or additional share of
Net Cash Flow shall be paid or credited to any of the Partners on their Capital
Accounts or on any undistributed Net Cash Flow or funds left on deposit with the
Partnership, all except as otherwise specifically provided for in and subject to
the provisions of this Agreement.

5.08 GENERAL PROVISIONS: Any person succeeding to the Partnership Interest of
any Limited Partner or a portion thereof shall, upon becoming a substitute
Limited Partner, succeed to the Capital Account of the predecessor Limited
Partner at the date the Transfer became effective to the extent the Transfer
relates to the Partnership Interest or portion thereof transferred to such
substitute Limited Partner.

                   ARTICLE 6 - ALLOCATION OF PROFITS & LOSSES

6.01 MINIMUM GAIN CHARGEBACK: IF there is a net decrease in Partnership Minimum
Gain during any fiscal year, each Partner shall be allocated items of income and
gain for such year (and, if necessary, for subsequent years) equal to such
Partner's share of the net decrease in Partnership Minimum Gain during such
year. This Section 6.01 is intended to constitute a "minimum gain chargeback"
within the meaning of Section 1.704-2(f) of the Treasury Regulations and shall
be interpreted consistently therewith.

6.02 PARTNER MINIMUM GAIN CHARGEBACK: Notwithstanding anything to the contrary,
if there is a net decrease in Partner Minimum Gain attributable to a Partner
Nonrecourse Debt during any fiscal year, each Partner who has a share of the
Partner Minimum Gain attributable to such Partner Nonrecourse Debt, determined
in accordance with Section 1.704-2(i)(4) of the Treasury Regulations, shall be
specially allocated items of Partnership income and gain for such year (and if
necessary for subsequent years) in an amount equal to such Partner's share of
the net decrease in partner Minimum Gain attributable to such Partner Recourse
Debt, determined in accordance with Section 1.704-2(i)(5) of the Treasury
Regulations, that is allocable to the disposition of Partnership Property
subject to such Partner Nonrecourse Debt determined in accordance with Section
1.7042(i)(4) of the Treasury Regulations. Allocations pursuant to the previous
sentence shall be made in proportion to the respective amounts required to be
allocated to each Partner pursuant thereto. This Section 6.02 is intended to
comply with the Partner Minimum Gain Chargeback requirement of the Treasury
Regulations and shall be interpreted consistent therewith.

6.03 OTHER ALLOCATION RULES: No allocation deduction or loss shall be made to a
Partner, if it would result in such Partner having an Adjusted Capital Account
Deficit. Notwithstanding any other provisions of this Article, in the event that
any Partner unexpectedly receives an adjustment, allocation or distribution
described in Sections 1.704-1(b)(2)(ii)(d)(4), (5) or (6) of the Treasury
Regulations that results in such Partner having a negative balance in its
Capital Account in excess of the amount that it is required to restore on the
liquidation of the Partnership, then, to the extent required by Section 1.704-1
(b)of the Treasury Regulations, the Partner shall be allocated items of income
and gain in an amount and manner sufficient to eliminate the deficit balance as
quickly as possible. This Section 6.03 is intended to comply with Section
1.704-1(b)(2)(ii)(d) of the Treasury Regulations and shall be interpreted
consistently therewith.

                                                                         Page 11


6.04 PROFITS & LOSSES: Except as otherwise provided in this Agreement including,
without limitation, this Article 6, Profits and Losses shall be determined as at
the end of each fiscal year in accordance with the accounting method followed
for federal income tax purposes, and shall be allocated to the Partners in the
order of priority as follows:

     (a)  PROFITS:

          (i)  First, to the applicable Partners, to recover in the order of the
               following subparagraphs any Losses previously allocated pursuant
               to subparagraphs (b)(vii) and (viii), in each case pro rata in
               the proportion such Partners were, respectively, previously
               allocated the Losses being offset. To the extent any previous
               allocations of Losses are recovered pursuant to this subparagraph
               (a)(i), those previous allocations of Losses shall be disregarded
               for purposes of computing subsequent allocations of such Losses
               pursuant to this Article 6;

          (ii) Second, to the applicable Partners, to recover in the order of
               the following subparagraphs any Losses previously allocated
               pursuant to the following subparagraphs, namely (b)(vi) and (v),
               in each case pro rata in the proportion such Partners were,
               respectively, previously allocated the Losses being offset. To
               the extent any previous allocations of Losses are recovered
               pursuant to this subparagraph (a)(ii), those previous allocations
               of Losses shall be disregarded for purposes of computing
               subsequent allocations of such Losses pursuant to this Article 6;

          (iii) Third, to the Partners, on account of their respective
               Cumulative Priority Capital Returns on their respective Priority
               Capital Contributions which are in excess of their respective
               Percentage Interests of the total Unrecovered Priority Capital
               Contributions, in respect of which Profits have not been
               previously allocated, pro rata among such Partners in the
               proportions that their respective Priority Capital Contributions
               are in excess of their respective Percentage Interests of the
               total Unrecovered Priority Capital Contributions, until the
               cumulative Profits allocated to the Partners pursuant to this
               subparagraph (a)(iii) is equal to the total of the Cumulative
               Priority Capital Returns of the Partners on such excess in
               respect of which Profits have not been previously allocated;

          (iv) Fourth, to the applicable Partners, to recover in the order of
               the following subparagraphs any Losses previously allocated
               pursuant to the following subparagraphs, namely (b)(iv), (iii),
               (ii) and (i), in each case pro rata in the proportion such
               Partners were, respectively, previously allocated the Losses
               being offset. To the extent any previous allocations of Losses
               are recovered pursuant to this subparagraph (a)(iv), those
               previous allocations of Losses shall be disregarded for purposes
               of computing subsequent allocations of such Losses pursuant to
               this Article 6;

          (v)  Fifth, to the Partners, pro rata in the proportion that their
               respective Cumulative Priority Capital Returns in respect of
               which Profits have not been previously allocated is to the total
               Unrecovered Priority Capital Contributions of the Partners, until
               the cumulative Profits allocated to the Partners pursuant to this
               subparagraph (a)(v) is equal to the total of the Cumulative
               Priority Capital Returns of the Partners in respect of which
               Profits have not been previously allocated; and

          (vi) Thereafter, to the Partners pro rata in accordance with their
               respective Percentage Interests.

                                                                         Page 12


     (B)  LOSSES:

          (i)  First, to the Partners to offset any Profits previously allocated
               pursuant to subparagraph (a)(vi) above, pro rata among the
               Partners each pro rata in the proportion that it was allocated
               its share of the Profits being offset;

          (ii) Second, to the Partners pro rata in proportion to their
               respective Percentage Interests of the total Base Capital up to
               the amount of same;

          (iii) Third, to the Partners to offset any Profits previously
               allocated pursuant to subparagraph (a)(v) above, pro rata among
               the Partners each in the proportion that it was allocated its
               share of the Profits being offset;

          (iv) Fourth, to the Partners pro rata in proportion to their
               respective Percentage Interests of the Unrecovered Priority
               Capital Contributions which are not in excess of their respective
               Percentage Interests of the total Unrecovered Priority Capital
               Contributions, up to the amount of such pro rata portion;

          (v)  Fifth, to the Partners to offset any Profits previously allocated
               pursuant to subparagraph (a)(iii) above, pro rata among the
               Partners each in the proportion that it was allocated its share
               of the Profits being offset;

          (vi) Sixth, to the Partners to reduce their respective Priority
               Capital Contributions which are in excess of their respective
               Percentage Interests of the total Unrecovered Priority Capital
               Contributions, pro rata among such Partners in the proportions
               that their respective Unrecovered Priority Capital Contributions
               are in excess of their respective Percentage Interests of the
               total Unrecovered Priority Capital Contributions, up to the
               amount of such excess;

          (vii) Seventh, to the Partners pro rata in proportion to their
               respective Percentage Interests of the outstanding amounts owing
               for the AmSouth Loan, up to the amount of such pro rata portion.

          (viii) Thereafter, all remaining Losses shall be allocated to the
               General Partner.

To the extent any previous allocations of Profits have been offset pursuant to
subparagraphs (b)(i) through (b)(vii), those previous allocations of Profits
shall be disregarded for purposes of computing subsequent allocations pursuant
to this Article 6.

6.05 NONRECOURSE DEDUCTIONS:

     (a) Nonrecourse Deductions shall be allocated among the Partners consistent
with Section 704(b) of the Code.

     (b) Any Partner Nonrecourse Deductions for any fiscal year or other period
shall be allocated to the Partner who bears the economic risk of loss with
respect to the Partner Nonrecourse Debt as determined in accordance with Section
1.704-2(i) of the Treasury Regulations.

6.06 GENERAL PROVISIONS: Whenever a proportionate part of Profits or Losses is
credited or charged to a Partner's Capital Account, every item of income, gain,
loss, deduction or credit entering into the computation of the Profits or
Losses, or applicable to the period during which the Profits or Losses are
realized, shall be considered credited or charged, as the case may be, to the
applicable component of such Partner's Capital Account in the same proportion
and in the order of priority and as otherwise provided for in this Article 6.

As between a Limited Partner and a transferee of such Limited Partner, unless
otherwise agreed by them and the Management Committee, or with respect to the
Partners upon the admission of a Limited Partner, Profits and Losses for any
fiscal year (or portion thereof, as the case may be) shall be determined by the
Management Committee which determination shall take into consideration but not
be required to made in accordance with the desires of the Limited Partner and
the transferee of such Limited Partner or the Limited Partner being admitted.

                                                                         Page 13


6.07 CURATIVE ALLOCATION: The allocations set forth in Sections 6.01, 6.02 and
6.03 (the "REGULATORY ALLOCATIONS") comply with certain requirements of Section
1.704-1 and -2 of the Treasury Regulations. The Regulatory Allocations may not
be consistent with the manner in which the Partners intend to allocate Profits
or Losses or divide Partnership distributions. Accordingly, notwithstanding the
other provisions of this Article 6, but subject to the Regulatory Allocations,
the Profits and Losses and items of income, gain, deduction and losses of the
Partnership may be allocated among the Partners so as to eliminate the effect of
the Regulatory Allocations, and thereby to cause the respective Capital Accounts
of the Partners to be in the amounts in which they would have been if Profits or
Losses and such other amounts of income, gain, deduction and loss had been
allocated without reference to the Regulatory Allocations. The General Partner
shall have discretion to accomplish the result in any reasonable manner.

6.08 TAX ALLOCATIONS: All items of Partnership income, gain, loss and deduction,
including Nonrecourse Deductions, shall be allocated for federal, state and
local income tax purposes by the General Partner, acting reasonably, to and
among the Partners in the same manner that the corresponding items of
Partnership income, gain, loss and deduction are allocated for book purposes,
except as otherwise provided in this Article 6.

6.09 CHARACTER OF GAIN: If the net gain from any disposition of an asset
included in the Partnership Property is capital gain in part and, as the result
of depreciation recapture or otherwise, ordinary income in part, the ordinary
income portion of such gain shall first be allocated to each Partner in the same
proportion as the depreciation allocated to such Partner (or its predecessor)
which gave rise to such ordinary income bears to such deductions allocated to
all Partners (and their predecessor-partners), provided that any allocation
pursuant to this Section shall not exceed the total amount of gain allocated to
such Partner with respect to such disposition. Any ordinary income not allocated
to a Partner because of the proviso clause in the preceding sentence shall be
allocated to the other Partners in the ratio in which each of them generally
share in profits and losses in connection with the event giving rise to the
gain.

6.10 ALLOCATION OF NONRECOURSE DEBT: Solely for purposes of determining a
Partner's proportionate share of excess Nonrecourse Liabilities of the
Partnership within the meaning of Section 1.752-3 of the Treasury Regulations,
the Partner's interest in Partnership profits shall be the Partner's Percentage
Interest.

6.11 ALLOCATION OF INHERENT GAIN IN PROPERTY:

     (a) Pursuant to Section 704(c) of the Code, income, gain, loss and
deduction with respect to property contributed by the Partners (or property
whose basis is determined by reference solely to the Partner who contributed
such property) shall be allocated in a manner to take account of the variation
between the tax basis of the property and initial Gross Asset Value in
accordance with the method described in Section 1.704-3 selected by the General
Partner. This Section is intended to comply with Section 704(c) of the Code and
shall be interpreted consistent therewith. Allocations made pursuant to this
Section shall not increase or decrease or otherwise affect the respective
Capital Accounts of the Partners.

     (b) In the event the Gross Asset Value of any asset included in the
Partnership Property is adjusted pursuant to Clause (b)(ii) of the definition of
Gross Asset Value, subsequent allocations of income, gain, loss and deduction
with respect to such asset shall take account of any variation between the
adjusted basis of such asset for federal income tax purposes and its Gross Asset
Value in the same manner as under Section 704(c) of the Code and the Treasury
Regulation thereunder. Allocations made pursuant to this Section shall not
increase or decrease or otherwise affect the respective Capital Accounts of the
Partners.

                                                                         Page 14


                     ARTICLE 7 - ADDITIONAL FINANCING, ETC.

7.01 EXTERNAL FINANCING: Financing as required by the Business Plan (provided
for in Section 10.03) is to be obtained by the Partnership from external sources
to the fullest extent it is available on commercially reasonable terms, as
approved by the Management Committee.

Any such external financing will, if required by a lender and approved by
Limited Partners who hold in the aggregate at least 51% of the total Percentage
Interests of the Partners, be secured upon the Partnership Interests, will be
without recourse to each Limited Partner except as to their respective
Partnership Interests and shall be several and not joint or joint and several
(except as to realization on the Partnership Interests in the event of a
realization by the secured party). However, if such financing is required by a
lender to be with recourse and on a several or joint and several basis among the
Limited Partners and Limited Partners who hold in the aggregate at least 51% of
the total Percentage Interests of the Partners approve such requirement of the
lender, each of the Limited Partners shall enter into such guarantees or
indemnities as the lender may require and be responsible for such portion of
such financing as is equal to the proportion which it's Percentage Interest is
to the total Percentage Interests of the Limited Partners. If the obligations of
the Limited Partners are on a joint and several basis, such obligations will be
subject to mutual indemnification in accordance with Section 18.05 to the end
that the liabilities of each of them as between and amongst themselves will
always be limited as provided in Section 18.05.

Each Limited Partner shall comply, at all times, with all of its obligations
under any external financing and shall provide any information concerning such
Limited Partner which may be required by a lender in connection with any such
financing.

7.02 ADDITIONAL FINANCING BY LIMITED PARTNERS: If external financing
contemplated in Section 7.01 is not available to the Partnership then, subject
to the approval of the Management Committee, Limited Partners may, at their
option, but will not be obligated to, provide the requisite financing to the
Partnership, each pro rata in the proportion that their Percentage Interest is
to the total amount of such financing being sought by the Partnership, adjusted
to account for Limited Partners who do not exercise their option to provide such
financing. A Limited Partner shall exercise its said option by delivery to the
Partnership of the funds in the amount of financing it desires to provide to the
Partnership together with its written designation electing to provide such
financing either:

     (a)  subject to Sections 8.01 and 8.02, by way of a loan to the Partnership
          as a Base Loan Advance the terms of which Loan Advances are provided
          for in Article 8; or

     (b)  subject to Section 5.02, by way of a Capital Contribution as a
          Priority Capital Contribution.

If any of the Partners provide financing as contemplated in this Section 7.02
and the Limited Partners comprising the Allan Group subsequently determine that
replacement financing from an external source is available from a reputable
financial institution or other reputable person, the terms and conditions of
which are commercially reasonable, do not contain any greater restrictions and
are more favourable than the financing provided by such Partners, then any
nominee of the Allan Group on the Management Committee may cause a meeting of
the Management Committee to be held at which such nominee of the Allan Group
will table the written terms and conditions of such replacement financing. If
such replacement financing is available from a reputable financial institution
or other reputable person and the terms and conditions thereof are commercially
reasonable, do not contain any greater restrictions and are more favourable than
the financing provided by the said Partners, then the Management Committee shall
confirm and approve such replacement financing. On the Management Committee
giving such approval, the General Partner shall use commercially reasonable
efforts to obtain and implement the said replacement financing. Upon obtaining
the said replacement financing, the proceeds will be applied by the Partnership
to repay the outstanding balances of the financing obtained by the Partnership
from the relevant Partners and all other amounts then owing to such Partners in
connection therewith.

                                                                         Page 15


7.03 A&D LOAN : The Partnership has arranged a mortgage facility with AmSouth
Bank in the maximum principal amount of $7,500,000 (the "AMSOUTH LOAN"). The
AmSouth Loan is to be advanced in stages to assist in the financing of
development costs of the Partnership Property.

The Limited Partners comprising the Great Gulf Group together with certain of
their respective affiliated corporations (collectively, the "GREAT GULF
AFFILIATES") delivered their guarantees (including postponements of claim) of
the AmSouth Loan to AmSouth, true copies of which guarantees have been delivered
to the Limited Partners comprising the Allan Group (which guarantees as the same
may be amended, modified, supplemented or restated from time to time are herein
collectively referred to as the "AMSOUTH GUARANTEES").

Each of the Allan Group and the Great Gulf Group will use their best efforts to
cause AmSouth to "sever" the AmSouth Loan including the existing security
granted in connection therewith and to replace the existing guarantees (referred
to above), with guarantees on a several basis as between the Great Gulf Group
and the Allan Group on the basis that the Great Gulf Group and the Allan Group
will each provide guarantees acceptable to AmSouth of the requisite guaranteed
amount of the AmSouth Loan, in the proportion which the total of the Percentage
Interests held by the Limited Partners comprising such Group is of the total
Percentage Interests of the Limited Partners.

Until such time as AmSouth agrees to restructure the AmSouth Loan and the
AmSouth Guarantees, as contemplated above, each of the Limited Partners shall:

     (a)  as between and amongst each other, be liable for the obligations and
          liabilities arising under any of the AmSouth Guarantees entered into
          by the Limited Partners comprising the Great Gulf Group, in accordance
          with the provisions of Section 18.05 as if each of the Limited
          Partners were jointly and severally liable with each other under each
          of the said AmSouth Guarantees; and

     (b)  indemnify each of the Great Gulf Affiliates for the obligations and
          liabilities arising under any of the AmSouth Guarantees entered into
          by the Great Gulf Affiliates on the same basis as provided for in
          Section 18.05, as if each of the Limited Partners were jointly and
          severally liable with each other under each of the said AmSouth
          Guarantees and each of the Limited Partners will, substantially
          contemporaneously with its execution and delivery of this Agreement,
          execute and deliver a written indemnity in favour of the Great Gulf
          Affiliates, accordingly.

                            ARTICLE 8 - LOAN ADVANCES

8.01 LIMITATIONS RE LOAN ADVANCES: Funds may not be advanced by or on behalf of
a Partner (a "LENDING PARTNER") to the Partnership by way of loan where any of
the other Partners have Unrecovered Priority Capital Contributions, unless and
until such Lending Partner's Unrecovered Priority Capital Contributions are at
least equal to such Lending Partner's Percentage Interest of the total
Unrecovered Priority Capital Contributions of the Partners.

8.02 ORDER OF LOAN ADVANCES: Any funds being advanced to the Partnership by or
on behalf of a Partner to the Partnership by way of loan:

     (a)  in accordance with Section 7.02(a); or

     (b)  in accordance with a requirement to do so pursuant to any of the Other
          Partnership Agreements;

shall, at the time of such advance, constitute a Base Loan Advance by such
Partner.

                                                                         Page 16


8.03 PAYMENTS RE LOAN ADVANCES: The Partnership shall pay Base Loan Interest in
arrears on the Base Loan Advances of a Partner and repay the Base Loan Advances,
all out of Net Operating Cash in the priority and otherwise as provided for in
Section 8.05, but in any event on or before the earlier of December 31, 2019 and
the date immediately preceding the date on which the Partnership is dissolved.

The obligation to pay interest provided for in the immediately preceding
paragraph is subject to the provisions of Section 8.07.

8.04 PROMISSORY NOTES: The General Partner will cause the Partnership to make
and deliver a promissory note to and in the name of a Partner with respect to
each Loan Advance made by such Partner to evidence same, which note shall
contain the terms of the relevant Loan Advance as provided for in this
Agreement. Each such promissory note will be:

     (a)  delivered to the Partner substantially contemporaneously with the
          receipt by the Partnership of the relevant Loan Advance; and

     (b)  shall be in the form set out in the attached Exhibit C.

At all times while any of the said promissory notes are outstanding, a register
shall be kept by, or on behalf and under the direction of, the General Partner
in which shall be entered the names and addresses of the noteholders and
particulars of the promissory notes held by them respectively and a register of
transfers in which shall be kept particulars of all transfers of the said notes.

8.05 PAYMENTS RE LOAN ADVANCES: Distributions of Net Operating Cash may only be
made by the General Partner to the Partners, and each of the Partners shall only
be entitled to receive its share (as determined in accordance with the
provisions of this Agreement) of amounts to be distributed out of Net Operating
Cash, after deduction from such amounts for amounts, if any, owing by such
Partner to the Partnership and as provided for in Article 21, but in priority to
any distributions of Net Cash Flow provided for in Article 9, in payment of Loan
Advances and interest thereon in the following order of priority:

(a) first, on account and in payment of Unpaid Base Loan Interest, to the
Partners pro rata in the proportion that their respective Unpaid Base Loan
Interest on their Base Loan Advances in excess of their respective Percentage
Interests of the total Base Loan Advances are of all such Unpaid Base Loan
Interest of the Partners, in an amount equal thereto;

(b) second, on account and in repayment of the Base Loan Advances, to the
Partners pro rata in the proportion that their respective Base Loan Advances in
excess of their respective Percentage Interests of the total Base Loan Advances
are of all such excess Base Loan Advances of the Partners, in an amount equal
thereto;

(c) third, on account and in payment of Unpaid Base Loan Interest, to the
Partners pro rata in the proportion that their respective Unpaid Base Loan
Interest on their Base Loan Advances that are in proportion to their respective
Percentage Interests of the total Base Loan Advances of the Partners, are of all
such Unpaid Base Loan Interest, in an amount equal thereto;

(d) fourth, on account and in repayment of the Base Loan Advances, to the
Partners pro rata in the proportion that their respective Base Loan Advances
that are in proportion to their respective Percentage Interests of the total
Base Loan Advances of the Partners, are of all such Base Loan Advances, in an
amount equal thereto;

and shall, subject to Section 9.05, be directed to the applicable Partners at
their respective addresses in accordance with Section 23.01.

8.06 LIMITATION: Notwithstanding the foregoing, no distribution of Net Operating
Cash will be made pursuant to this Article 8 except to the extent and out of
unencumbered cash funds of the Partnership sufficient for the distribution after
taking into account (except in the case of dissolution of the Partnership) the
amounts which should be set aside to provide a reasonable reserve for the
continuing conduct of the business of the Partnership, including its working
capital requirements.

                                                                         Page 17


8.07 LIMITATION RE INTEREST: Each of the obligations to pay interest provided
for in this Agreement including, without limitation, as provided for in this
Article 8 with respect to Loan Advances is subject to the limitation that
payments of such interest shall not be required to the extent that receipt of
any such payment by the payee would be contrary to provisions of law applicable
to such payee (if any) which limit the maximum rate of interest which may be
charged or collected by the payee; provided, however, that nothing herein shall
be construed to limit the payee to presently existing maximum rates of interest
if an increased interest rate is hereafter permitted by reason of applicable
federal or state legislation. In the event that a payor makes any payment of
interest, fees or other charges, however denominated, in respect of a Loan
Advance or other amount or obligation which payment results in the interest paid
to the payee exceeding the maximum rate of interest permitted by applicable law,
any excess over such maximum shall be applied in reduction of the principal
balance owed to the payee as at the date of such payment, or if such excess
exceeds the amount of principal owed to the payee as at the date of such
payment, the difference shall be paid by the payee to the payor.

                   ARTICLE 9 - DISTRIBUTIONS OF NET CASH FLOW

9.01 NET CASH FLOW: Net Cash Flow may only be distributed by the General
Partner. Distributions of Net Cash Flow will be made by the General Partner in
such amounts and at such times as the General Partner in its sole discretion
determines acting reasonably, provided that no distributions of Net Cash Flow
may be made until the Loan Advances and the Unpaid Base Loan Interest have been
paid pursuant to Article 8.

Subject to the foregoing, distributions of Net Cash Flow may only be made by the
General Partner to the Partners, and each of the Partners shall only be entitled
to receive its share (as determined in accordance with the provisions of this
Agreement) of amounts to be-distributed out of Net Cash Flow, after deduction
from such amounts for amounts, if any, owing by such Partner to the Partnership
and as provided for in Article 21, in payment of the following matters and in
the following order of priority:

(i)  first, to the Partners, on account of their respective Unpaid Priority
     Capital Returns on their respective Priority Capital Contributions which
     are in excess of their respective Percentage Interests of the total
     Unrecovered Priority Capital Contributions, pro rata among such Partners in
     the proportions that their respective Priority Capital Contributions are in
     excess of their respective Percentage Interests of the total Unrecovered
     Priority Capital Contributions, until the amounts distributed to the
     Partners pursuant to this subparagraph (i) is equal to the total of the
     Unpaid Priority Capital Returns of the Partners on such excess;

(ii) second, to the Partners to reduce their respective Priority Capital
     Contributions which are in excess of their respective Percentage Interests
     of the total Unrecovered Priority Capital Contributions, pro rata among
     such Partners in the proportions that their respective Priority Capital
     Contributions are in excess of their respective Percentage Interests of the
     total Unrecovered Priority Capital Contributions, up to the amount of such
     excess;

(iii) third, to the Partners, pro rata in proportion to their respective
     Percentage Interests of the aggregate balance of their Unpaid Priority
     Capital Returns, up to the amount of such balance;

(iv) fourth, to the Partners pro rata in proportion to their respective
     Percentage Interests of the balance of the Unrecovered Priority Capital
     Contributions, up to the amount of such balance;

(v)  fifth, an amount equal to the balance, if any, of Net Cash Flow remaining
     after the foregoing, to the Partners pro rata in proportion to their
     respective Percentage Interests;

and shall, subject to Section 9.05, be directed to the applicable Partners at
their respective addresses in accordance with Section 23.01.

9.02 LIMITATION: Notwithstanding the foregoing, no distribution of Net Cash Flow
will be made except to the extent and out of unencumbered cash funds of the
Partnership sufficient for the distribution after taking into account (except in
the case of dissolution of the Partnership) the amounts which should be set
aside to provide a reasonable reserve for the continuing conduct of the business
of the Partnership, including its working capital requirements.

                                                                         Page 18


9.03 DISTRIBUTION OF ASSETS IN KIND: Any assets included in the Partnership
Property may be distributed to any of the Partners in kind, as the Management
Committee may determine pursuant to Section 10.04(b)(v). Any such asset so
distributed shall be valued by the Management Committee to determine the gain or
loss which would have resulted if such asset were sold for cash, and the Capital
Account of the Partner to whom such asset is so distributed shall be adjusted to
reflect how the gain or loss would have been allocated in accordance with the
provisions of this Agreement as such Partner would have been entitled to cash
distributions had such asset been sold at such assigned value.

9.04 DEMAND FOR DISTRIBUTION: No Partner shall be entitled to demand and receive
a distribution of Partnership Property in return for its Capital Contributions.

9.05 DIRECTION RE DISTRIBUTIONS - OTHER PARTNERSHIPS: A Funding Partner may, in
its sole discretion, require by written notice (provided for further below) that
a Partner who:

     (a)  is not a Funding Partner, or

     (b)  is a Funding Partner who in respect of any of the Other Partnerships
          has "Loan Advances", "Unrecovered Priority Capital Contributions"
          and/or "Unrecovered Preferred Capital Contributions" (all as provided
          for in the applicable Other Partnership Agreements) in an amount which
          is less than its Percentage Interest in such Other Partnership of the
          total amount of the "Loan Advances", "Unrecovered Priority Capital
          Contributions" and/or "Unrecovered Preferred Capital Contributions",
          of and as applicable to such Other Partnership and the partners
          thereof;

pay all or any part of any payment to be made to such Partner pursuant to
Article 8 and/or any distribution to be made to such Partner (the "UNDERFUNDED
PARTNER") pursuant to either Section 9.01 or Section 17.04, in each case after
the date of delivery of such notice, to such Other Partnership by way of a loan
advance or capital contribution, as applicable in accordance with the provisions
of the Other Partnership Agreement for such Other Partnership and as specified
in such notice accordingly, until the aggregate amount so paid by the
Underfunded Partner to such Other Partnership equals the amount that its
Percentage Interest in such Other Partnership is of the total amount of "Loan
Advances", "Unrecovered Priority Capital Contributions", "Unrecovered Preferred
Capital Contributions", "Unpaid Base Loan Interest", "Unpaid Preferred Loan
Interest", "Unpaid Priority Capital Return" and "Unpaid Preferred Capital
Return" of and as applicable to such Other Partnership and the partners thereof
as provided for in it's Other Partnership Agreement.

The said notice shall be signed by the Funding Partner, addressed and delivered
by it to the Underfunded Partner and the General Partner of each of the
Partnership and the Other Partnership and shall on such delivery, without
further formality, constitute an irrevocable direction by such Underfunded
Partner to the General Partner and the Partnership to pay the said distributions
to the Other Partnership in accordance with such notice and on behalf of such
Underfunded Partner, and the General Partner and the Partnership will comply
with the said notice and direction.

Notwithstanding the foregoing, a Funding Partner may not deliver the notice
provided for above requiring the Underfunded Partner to pay distributions to any
of the Other Partnerships unless the amount of such Funding Partner's "Loan
Advances", "Unrecovered Priority Capital Contributions" or "Unrecovered
Preferred Capital Contributions" is equal to or greater than such Funding
Partner's Percentage Interest of the total amount of "Loan Advances",
"Unrecovered Priority Capital Contributions" or "Unrecovered Preferred Capital
Contributions", all with respect to the applicable Other Partnership and the
partners thereof.

                                                                         Page 19


                        ARTICLE 10 - CONTROL & MANAGEMENT

10.01 RIGHTS AND POWERS: The General Partner shall have, except as specifically
limited in this Agreement, full and exclusive authority in the management and
control of the Partnership for the purposes set forth in Section 4.01, and shall
have all the rights and powers which are otherwise conferred by law or are
necessary or advisable for the discharge of its duties to and the management of
the business and affairs of the Partnership. The General Partner shall devote so
much of its time and effort as is appropriate for the effective management and
conduct of the business of the Partnership.

The General Partner agrees to act honestly, in good faith and in accordance with
good business practices in the discharge of its duties to and in its management
of the business and affairs of the Partnership and to exercise the degree of
care, diligence and skill that a reasonably prudent person would exercise in
comparable circumstances.

10.02 EXPRESSLY AUTHORIZED RIGHTS AND POWERS: Without limiting the generality of
Section 10.01, but subject to the provisions of Sections 10.04 and 10.08 and the
Business Plan in effect from time to time, the General Partner is expressly
authorized on behalf of the Partnership to:

     (i)  procure and maintain with responsible companies such insurance as may
          be advisable in such amounts and covering such risks as are deemed
          appropriate by the General Partner;

     (ii) take and hold any assets included in the Partnership Property in the
          Partnership name, or in the name of a nominee of the Partnership;

     (iii) execute and deliver on behalf of and in the name of the Partnership,
          or in the name of a nominee of the Partnership, all instruments,
          contracts and other documents necessary or incidental to the conduct
          of the Partnership's business;

     (iv) protect and preserve the Partnership Property and incur indebtedness
          in the ordinary course of business;

     (v)  sell, dispose of, trade, exchange, convey, quit, claim, surrender,
          release or abandon, in the ordinary course of carrying on the business
          of the Partnership and upon terms and conditions which the General
          Partner may negotiate and deem appropriate, personal property included
          in the Partnership Property;

     (vi) execute and deliver documents and instruments on behalf of the
          Partnership in connection with the acquisition and disposition of its
          assets, and to execute, terminate, modify, enforce, continue or
          otherwise deal with any Partnership indebtedness and security
          interests, to sell assets included in the Partnership Property, and to
          take any other action with respect to agreements made between the
          Partnership and a lender or any Affiliate thereof, all subject to the
          limitations of Section 10.08;

     (vii)open Partnership bank accounts in which all Partnership funds shall be
          deposited and from which all payments by the Partnership shall be
          made;

     (viii) invest Partnership funds and working capital reserves; and

     (ix) possess and exercise any and all rights, powers and privileges of a
          general partner under the laws of the State of Florida.

10.03 MANAGEMENT COMMITTEE: A Management Committee of the General Partner having
5 members shall be formed by the General Partner who shall appoint the members
thereof in accordance with the following requirements (the "MANAGEMENT
COMMITTEE"). Three of the members so appointed shall be nominees of the Great
Gulf Group which nominees shall initially be Elly Reisman, Seymour Joffe and
Harry Rosenbaum. The Great Gulf Group may from time to time nominate such other
individuals to be members of the Committee in substitution for any one or more
of the of the members previously nominated by the Great Gulf Group. Two of the
members so appointed shall be a nominees of the Allan Group which nominees shall
initially be William Allan and Russell Allan. The Allan Group may from time to
time nominate such other individuals to be members of the Committee in
substitution for any one or both of the member previously nominated by the Allan
Group.

                                                                         Page 20


Any vacancy in the Management Committee shall be filled by a nominee of the
Group which nominated the former member of the Committee whose loss of office
created the vacancy within 15 days of the creation of the vacancy. The General
Partner shall fill the vacancy by appointing the said nominee on receipt from
the said Group of its notice stating the name and address of the person who it
nominates to the Committee to fill the vacancy. Copies of such notice shall be
given by the General Partner to the other members of the Committee and to the
person then so appointed a member of the Committee. If a vacancy is not filled
within the said 15 day period, the right to nominate a person to fill such
vacancy shall be deemed to have been waived and the other member(s) of the
Committee appointed on nomination by such Group shall be deemed then to have all
rights, powers and obligations of the former member, in addition to his own such
rights, powers and obligations.

The General Partner shall prepare a Business Plan for each fiscal year of the
Partnership following its second fiscal year, and deliver such Plan to each
member of the Management Committee not later than the 3Oth day following the
start of the fiscal year to which it relates. Each such Business Plan shall
contain in reasonable detail such information (including financial matters such
as cash flow projections, operating and capital budgets) as would be
commercially reasonable in the circumstances relating to the business carried on
by the Partnership. Each Business Plan is subject to the approval of the
Management Committee, as the same may from time to time be amended by variations
approved by the Management Committee.

The General Partner shall  make all decisions necessary to implement, and which
are within, the provisions of such Business Plan to the extent that the
decisions so made are within the rights, powers and authority of the General
Partner provided for in this Agreement.

All decisions of the Management Committee, being a committee of the General
Partner, shall be the decisions of and be binding on the General Partner and
each of the Limited Partners. The General Partner will be responsible for the
conduct of and all decisions made by the Management Committee. Each of the Great
Gulf Group and the Allan Group will be responsible to each of the Partners for
the conduct of the member(s) of the Management Committee nominated by such
Group.

A quorum for meetings will be at least 3 members present, at least one of whom
is the nominee of the Allan Group and at least 2 of whom are nominees of the
Great Gulf Group; provided that, and notwithstanding any other provisions of
this Agreement, if no nominee of the Allan Group is present within 30 minutes
following the scheduled time for commencment of a properly called meeting of the
Management Committee then the meeting may with the consent of the other nominees
present (provided that at least 2 of the nominees of the Great Gulf Group are
then present) adjourn the meeting to a date not less than 2 Business Days from
the date for which the meeting was originally called and deliver such notice as
is reasonably practicable in the circumstances of such adjournment to the
nominees of the Allan Group and if no nominee of the Allan Group is present at
the time and date so fixed for the adjourned meeting then the quorum for all
purposes of such adjourned meeting will be any 2 members of the Management
Committee present and who are nominees of the Great Gulf Group.

Meetings of the Management Committee shall be held not less than once in each
quarter of each fiscal year at such times and place as a majority of the members
of the Committee agree to from time to time. Any one member of the Management
Committee may, in addition to meetings held as aforesaid, call a meeting of the
Committee not more than once each calendar month.

All meetings of the Management Committee shall be held at the Principal Place of
Business unless the place for any such meeting is otherwise agreed to as
aforesaid. Any member of the Management Committee may participate in a meeting
of the Committee by means of conference telephone or similar communication
equipment by means of which all persons participating in the meeting can hear
each other, and participation in a meeting by means of such communication
equipment shall constitute attendance and presence at such meeting.

                                                                         Page 21


Notice of a meeting of the Management Committee shall be given not less than 5
Business Days prior thereto provided that no notice of a meeting shall be
necessary if a meeting is held at which a quorum is present and notice may be
less than 5 Business Days if such meeting is held in furtherance of a meeting
adjourned as a result of no quorum being present as provided for above. Any such
notice may given, if to a member of the Committee nominated by the Great Gulf
Group, to such member at the address for the Great Gulf Group provided for in
Section 23.01, and if to the member nominated by the Allan Group, to such member
at the address for the Allan Group provided for in the said Section.

The powers of the Management Committee may only be exercised either by
resolution at a meeting at which a quorum is present or by resolution in writing
consented to by the signatures of all the members of the Committee. Copies of
all notices of meetings of the Committee and of all minutes of the Committee and
of all resolutions passed by it in accordance with the terms hereof shall be
provided to each member of the Committee.

Subject to the requirements of section 10.04(b), any resolution to be passed or
action to be taken by the Management Committee at a meeting must have the
approval of a majority of the members of the Management Committee present at
such meeting as evidenced either by the affirmative vote, or the prior approval
in writing, of the requisite members of the Committee.

A chairperson and a secretary of the Management Committee shall be elected by
the Committee from amongst its members for such term as the Committee determines
at the time of such election. The chairperson shall chair the meetings of the
Committee at which he is present. In the absence of the chairperson, the members
of the Committee shall choose one of their members to be chair of a meeting. The
secretary shall prepare and distribute the minutes of the meetings of the
Committee to all members of the Committee as soon as practicable after each
meeting. The chairperson shall not have a casting vote.

10.04 MANAGEMENT COMMITTEE SPECIFIC APPROVALS:

     (a) ORDINARY APPROVALS: The prior approval of the Management Committee
shall be required for each of the following matters related to the Partnership
to the extent the same is not provided for in the Business Plan as approved by
the Management Committee:

          (i)  the Transfer of any Partnership Property having a value of more
               than $100,000 to any person who is not an Affiliate of any of the
               Limited Partners comprising the Great Gulf Group;

          (ii) incurring of indebtedness for borrowed money or refinancing of
               existing borrowings;

          (iii) granting of security against the Partnership Property;

          (iv) entering into any agreement providing for the guarantee by the
               Partnership of the obligations of any other person;

          (v)  entering into any agreement with or commitment to any person who
               is not a Partner involving the expenditure of more than $100,000
               by the Partnership in any fiscal year;

          (vi) the settlement of any claim or legal proceeding involving the
               payment by the Partnership of more than $100,000;

          (vii) the acquisition of any real property from either of the Other
               Partnerships;

          (viii) change the name of the Partnership;

                                                                         Page 22


     (b) SPECIAL APPROVALS: The prior approval of the Management Committee shall
be required for each of the following matters related to the Partnership whether
or not the same is provided for in the Business Plan as approved by the
Management Committee, such approval to be evidenced either by the affirmative
vote of at least 4 of the 5 members of the Management Committee present at a
meeting of the Committee, or the prior approval in writing of 4 of the 5 members
of the Committee:

          (i)  the acquisition by the Partnership, or the entering into of any
               agreement binding on the Partnership, for the acquisition of any
               real property at any time after October 1, 1998, other than from
               either of the Other Partnerships or as may be required in the
               reasonable opinion of the General Partner for purposes of
               development of the then existing Partnership Property,

          (ii) the sale, assignment, exchange, transfer, or any other
               disposition or type of conveyance of any real property included
               in the Partnership Property, by the Partnership to or with any
               person who is an Affiliate of any of the Limited Partners
               comprising the Great Gulf Group, or any agreement(s) to do any of
               the foregoing, in each case other than with either of the Other
               Partnerships;

          (iii) the payment of any fee to the General Partner or any of the
               Limited Partners comprising the Great Gulf Group which has not
               been previously agreed to by the Allan Group;

          (iv) the purchase or redemption by the Partnership of any Partnership
               Interest. For greater certainty distributions of Net Operating
               Cash or Net Cash Flow to the Partners provided for elsewhere in
               this Agreement, including Articles 8 and 9 do not constitute a
               purchase or redemption of a Partnership Interest;

          (v)  the distribution in kind to the Partners of any assets included
               in the Partnership Property;

          (vi) the dissolution of the Partnership and termination of its
               business;

          (vii) the termination of the Partnership within the meaning of Section
               708(b) of the Code;

          (viii) the change or reorganization of the Partnership into any other
               legal form.

10.05 APPROVALS, CONSENTS, ETC.: Wherever the provisions of this Agreement
provide for an approval by a Partner or a member of the Management Committee of
or consent or agreement to or for any action or document, this Agreement shall
(unless the text hereof expressly states that such approval may be unreasonably
or arbitrarily withheld) be deemed to provide that:

     (a)  such approval, consent or agreement shall be in writing and shall not
          be unreasonably withheld or delayed; and

     (b)  the Partner or Management Committee Member whose approval, consent or
          agreement is requested shall, as soon as reasonably possible after the
          receipt of a notice requesting such approval, consent or agreement
          give notice to each of the Partners or other Management Committee
          Members requesting the same, either that it is giving its approval,
          consent or agreement or that it withholds or refuses the same in which
          case it shall set forth, in reasonable detail, its reasons for such
          withholding or refusal.

10.06 TAX MATTERS PARTNER: The TMP shall act as a liaison between the
Partnership and the Internal Revenue Service in connection with all
administrative and judicial proceedings involving tax controversies of the
Partnership, and shall assume all the rights and duties of a TMP as set forth in
the Code and Treasury Regulations promulgated under the Code. These rights and
duties include, but are not limited to:

     (a)  the duty to notify and keep all other Partners informed of all
          administrative and judicial proceedings, as required by Section
          6223(g) of the Code, and to furnish to each Partner, upon written
          request, a copy of each notice or other communication received by the
          TMP from the Internal Revenue Service;

     (b)  the obligation to furnish the Internal Revenue Service the names,
          addresses, and taxpayer identification numbers of each person who was
          a Partner at any time during the taxable year;

     (c)  the right to settle any claims by the Internal Revenue Service against
          the Partnership;

     (d)  the right to initiate judicial proceedings contesting adverse
          determinations by the Internal Revenue Service against the
          Partnership;

     (e)  the right to enter into an agreement to extend the statute of
          limitations;

                                                                         Page 23


     (f)  the right to employ experienced tax counsel to represent the
          Partnership in connection with an audit or investigation of the
          Partnership by the Internal Revenue Service, and in connection with
          all subsequent administrative and judicial proceedings arising out of
          the audit. The fees and expenses of tax counsel shall be a Partnership
          expense and shall be paid by the Partnership. The General Partner and
          the Limited Partners may, at their expense, employ tax counsel to
          represent their respective separate interests; and

     (g)  the duty to arrange for the preparation and delivery of Partnership
          information returns and Schedule K-I's to the Limited Partners.

10.07 NO MANAGEMENT & CONTROL BY LIMITED PARTNERS: None of the Limited Partners
shall participate in the conduct, management or control of the Partnership
business. None of the Limited Partners shall have any right or authority to act
for or bind the Partnership. These powers shall be vested solely and exclusively
in the General Partner.

10.08 CERTAIN LIMITATIONS: Notwithstanding the generality of the foregoing, and
in addition to other acts expressly prohibited by this Agreement or by law, the
General Partner shall not have the authority to:

     (a)  do any act in contravention of this Agreement;

     (b)  do any act which would make it impossible for the Partnership to carry
          on the business of the Partnership in the ordinary course, except as
          expressly provided in this Agreement;

     (c)  confess a judgement against the Partnership;

     (d)  execute or deliver any general assignment for the benefit of the
          creditors of the Partnership;

     (e)  possess any of the Partnership Property or assign the Partnership's
          rights in specific Partnership Property for other than a Partnership
          purpose; and

     (f)  knowingly or willingly do any act (except an act expressly required by
          this Agreement) which would cause the Partnership to become an
          association taxable as a corporation.

10.09 REIMBURSEMENT FOR EXPENSES: The General Partner shall be entitled to be
reimbursed for all reasonable expenses incurred by it in connection with the
Partnership Property and the conduct of the Partnership business, including, but
not limited to, all reasonable expenses incurred when acting in the capacity of
TMP and all reasonable expenses related to the organization and start-up of the
Partnership's business.

           ARTICLE 11 - ADMISSION & TRANSFER OF PARTNERSHIP INTERESTS

11.01 GENERAL PROVISION: None of the Partners may effect a Transfer of all or
any part of its Partnership Interest and no person shall become an assignee of a
Partner or be admitted to the Partnership as a Partner, in each case except as
permitted in this Article 11 and in Articles 12, 13, 14, 15, 20 and 21. Any
Transfer made in contravention of any of the foregoing specified Articles shall
be null and void.

11.02 ADMISSION OF NEW PARTNERS: The General Partner may from time to time admit
such person(s) to the Partnership to be Limited Partners on such terms as the
Management Committee approves, without requirement for the consent of the then
existing Limited Partners, provided that the terms of such admission affect the
Partnership Interests held by the then existing Limited Partners in all material
respects in the same manner and to the same extent proportionately to the
Percentage Interests then held by such existing Limited Partners and provided
further that immediately following the admission of such person(s) as Limited
Partners the Percentage Interests, Capital Accounts and Loan Advances of the
Partners comprising the Great Gulf Group and the Allan Group represent in the
aggregate at least 51% of the total Percentage Interests, Capital Accounts and
Loan Advances of all the Partners. No person may be so admitted as a Limited
Partner unless and until such person executes and delivers to the then existing
Limited Partners and the General Partner this Agreement or a counterpart thereof
agreeing to be bound by all the terms of this Agreement with effect on the date
such person is to become a Limited Partner.

                                                                         Page 24


11.03 TRANSFER OF PARTNERSHIP INTEREST BY GENERAL PARTNER: The General Partner
may not effect a Transfer of its Partnership Interest or any portion thereof
without the prior approval of the Management Committee. In the event any such
Transfer is consented to, the person acquiring or succeeding to the General
Partner's Partnership Interest shall not have any of the rights of the General
Partner and shall not become or have a right to become a substitute General
Partner unless the said approval of the Management Committee includes such
Committee's approval of such transferee becoming a substitute General Partner.

The Management Committee may, and upon the Withdrawal (defined below) of the
General Partner the Management Committee shall, appoint such person as it
determines to be the General Partner in substitution for the person then acting
as the General Partner. On receipt by a General Partner of notice that the
Management Committee has appointed a substitute General Partner the first
mentioned General Partner shall be deemed to have resigned as such effective on
the date specified in such notice and to have made a Transfer of its Partnership
Interest to the substitute General Partner.

For the purposes of this Section, "WITHDRAWAL" means the dissolution or
liquidation of the General Partner, either voluntary or under a final order of a
court of competent jurisdiction or the death, incapacity, incompetency,
insolvency or bankruptcy of a General Partner. For purposes of this definition,
the insolvency or bankruptcy of a General Partner shall be deemed to occur when
the General Partner files a petition in bankruptcy or voluntarily takes
advantage of any bankruptcy or insolvency laws, or is adjudicated a bankrupt, or
a petition or answer is filed proposing the adjudication of the General Partner
as a bankrupt and the General Partner consents to the filing or otherwise
acknowledge its insolvency.

11.04 TRANSFER OF PARTNERSHIP INTERESTS BY LIMITED PARTNERS: None of the Limited
Partners may effect a Transfer of its Partnership Interest or any portion
thereof and no person may become a substitute Limited Partner, whether pursuant
to a Transfer or otherwise, except with the prior approval of the Management
Committee or as otherwise specifically permitted in accordance with and subject
to the provisions of this Agreement including, without limitation, the
provisions of Section 11.05. Any purported Transfer made contrary to the
provisions of this Agreement will for all purposes relating to the Partnership
and each Partner be wholly ineffective. No Partner may have its Partnership
Interest purchased or redeemed by the Partnership unless the prior approval
thereto of the Management Committee is obtained as required by Section
10.04(b)(iv).

For greater certainty but without limiting the foregoing, no transferee or
assignee who is a transferee or assignee pursuant to a Transfer made contrary to
the provisions of this Agreement shall be constituted as a transferee or as an
assignee of the transferor or assignor Limited Partner's right to receive its
share of distributions out of Net Operating Cash or Net Cash Flow and shall have
no other rights as a Limited Partner, unless the Transfer is specifically
permitted by and made in accordance with the provisions of this Agreement and
unless the transferee or assignee executes and delivers an agreement with the
continuing Partners (satisfactory to them, acting reasonably) pursuant to which
such person is, if applicable, designated as a member of a Partner Group,
becomes bound by and entitled to the benefits of the provisions of this
Agreement to the extent it relates to the Partnership interest which is the
subject of such Transfer, and all other obligations of the Partner making such
Transfer in connection with the Partnership and this Agreement.

Further, no Transfer of a Partnership Interest may be made unless (i) the
transferee, if an individual, is at least 21 years of age; and (ii) in the
opinion of counsel satisfactory to the General Partner, the Transfer (A) would
not result in the close of the Partnership's taxable year with respect to all
Partners or the termination of the Partnership within the meaning of Section
708(b) of the Code, unless otherwise approved by the Management Committee
pursuant to Section 10.04(b)(vii), (B) would comply with the Securities Act of
1933 and applicable securities laws of all other jurisdictions, and (C) would
not violate any other applicable laws.

                                                                         Page 25


11.05 LIMITATION RE GREAT GULF GROUP: Notwithstanding the provisions of Section
11.04, the Partners comprising the Great Gulf Group may not effect a Transfer by
way of the sale, assignment, exchange, transfer or any other disposition or type
of conveyance of the whole or any part of their respective Partnership Interests
unless:

     (a)  immediately following completion of any such Transfer the aggregate
          Percentage Interests and the aggregate amount of the Capital Accounts
          and Loan Advances of the Partners comprising the Great Gulf Group
          represent at least 51% of the total Percentage Interests and at least
          51% of the aggregate amount of the Capital Accounts and Loan Advances,
          of all the Partners;

     (b)  such Transfer is to one or more of the Partners comprising the Allan
          Group; or

     (c)  such Transfer is effected in accordance with the provisions of Article
          13.

11.06 PERMITTED TRANSFERS: The provisions of Article 11, other than this
Section, are not applicable to any of the following Transfers made in accordance
with the provisions of this Section, such that no approval by the Management
Committee is required to effect any of the following Transfers:

     (A)  BETWEEN PARTNERS: Transfers made by any one or more of the Partners to
          any one or more of the other Partners;

     (B)  TO AFFILIATES: Transfers made by a Partner to an Affiliate of such
          Partner.

Each of the Transfers permitted pursuant and subject to the provisions of this
Section are further subject to the requirement that on or before such Transfer
becoming effective the person to whom such Transfer is made executes and
delivers an agreement with the continuing Partners (satisfactory to them, acting
reasonably) pursuant to which such person becomes bound by and entitled to the
benefits of the provisions of this Agreement to the extent it relates to the
Partnership Interest which is the subject of such Transfer and all other
obligations of the Partner making such Transfer in connection with the
Partnership and this Agreement.

In addition to the foregoing, each Transfer to an Affiliate permitted by this
Section is subject to the following:

     (i) the Partner effecting such Transfer shall not be released from any of
     its obligations hereunder; and

     (ii) the agreement with the continuing Partners required to be executed and
     delivered on or before such Transfer becoming effective as provided for
     above shall include an obligation by the transferee Affiliate and the
     transferor Partner that the transferee Affiliate will remain an Affiliate
     of the transferor Partner so long as such transferee is a Partner and that
     the transferee will not effect a Transfer of its Partnership Interest to
     any person which is not an Affiliate of the transferor Partner without
     complying with the applicable provisions of this Agreement including this
     Article 11.

Further, no Transfer of a Partnership Interest may be made pursuant to this
Section unless (i) the transferee, if an individual, is at least 21 years of
age; and (ii) in the opinion of counsel satisfactory to the General Partner, the
Transfer (A) would not result in the close of the Partnership's taxable year
with respect to all Partners or the termination of the Partnership within the
meaning of Section 708(b) of the Code unless otherwise approved by the
Management Committee pursuant to Section 10.04(b)(vii), (B) would comply with
the Securities Act of 1933 and applicable securities laws of all other
jurisdictions, and (C) would not violate any other applicable laws.

11.07 CONDITIONS TO CERTAIN TRANSFERS: If any Transfer provided for in Sections
11.05(a) or 11.06(b) is made of a part but not all of the Patnership Interest
held by the transferring Partner (in this Section, the "TRANSFEROR"), it shall
be a condition precedent to such Transfer that the transferee or assignee (in
this Section, the "TRANSFEREE"), agrees in writing with the Transferor and the
other Partners that:

     (i)  in all matters in which a Partner, by the terms of this Agreement, has
          a right, such right will be exercised by the Transferor on behalf of
          itself and the Transferee and the other Partners will be entitled to
          rely on the actions of the Transferor in that regard as binding on the
          Transferee and the Transferor will obtain a power of attorney from the
          Transferee to such effect;

     (ii) in all matters in which a Partner, by the terms of this Agreement, is
          subject to an obligation, prohibition or restriction, such obligation,
          prohibition or restriction will be binding upon the Transferee to the
          same extent as the Transferor; and the Transferor remains responsible
          to the other Partners for the fulfillment of any obligation hereunder
          by the Transferee; and

     (iii) any notices required to be given hereunder to the Transferee shall be
          given to the Transferor and the Transferee.

                                                                         Page 26


Notwithstanding the foregoing, the Transferor and the Transferee may enter into
a separate agreement governing the manner in which matters between them,
including matters arising from the operation of this Agreement, are to be dealt
with, which agreement may contain provisions by which the Transferee's
Partnership Interest may be re-acquired by the Transferor without such
re-acquisition being subject to the provisions of subparagraphs (i), (ii) and
(iii) of this Section.

If a Transfer by the Transferor relates to all of its Partnership Interest and
the Transferor had previously disposed of a part of its Partnership Interest,
then it shall be a condition precedent to the Transfer that the Transferor
assign to another Partner who is a member of the Group which the Transferor is a
member of immediately prior to such Transfer, all rights and obligations
accruing to the Transferor by virtue of the operation of this Section.

If a Transfer by the Transferor, other than to an Affiliate of such Transferor,
relates to all of its Partnership Interest and the Transferor did not previously
dispose of any part of its Partnership Interest, then it shall be a condition
precedent to the Transfer that the Transferee enter into the written agreement
provided for above to be entered into with the Transferor and the other Partners
with another member of the Group which the Transferor is a member of immediately
prior to such Transfer, and for such purpose all of the foregoing references to
the Transferor shall be considered as a reference to such other member of such
Group.

Unless otherwise agreed to by the Partners comprising the Allan Group, each
person admitted as a Limited Partner in accordance with the provisions of
Section 11.02 shall for the purposes of this Section be deemed to be a
Transferee in connection with a Transfer from a Transferor who is a member of
the Great Gulf Group of all of such Transferor's Partnership Interest on the
basis that such deemed Transferor did not previously dispose of any part of its
Partnership Interest and the provisions of this Section shall apply, mutatis
mutandis, to such person, including as contemplated by and provided for in the
immediately preceding paragraph.

11.08 EFFECTIVENESS OF TRANSFER:

     (a) The Transfer in accordance with the provisions of this Agreement by a
Limited Partner or by a transferee of a Limited Partner of all or any part of
its Partnership Interest shall become effective on the first day of the month
following receipt by the General Partner of evidence of completion of the
Transfer in form and substance reasonably satisfactory to the General Partner
and a Transfer fee sufficient to cover all reasonable expenses of the
Partnership connected with the Transfer. The General Partner may, in its sole
discretion, establish an earlier effective date for the Transfer if requested to
do so by the transferor and transferee.

     (b) No Transfer of a Partnership Interest which is in violation of this
Article 11 shall be valid or effective, and the Partnership shall not recognize
the same for the purposes of making the allocations required to be made in
accordance with the provisions of Article 6 or the making of distributions in
accordance with the provisions of Articles 8 and 9. The Partnership may enforce
the provisions of this Article 11 either directly or indirectly or through its
agents by entering an appropriate stop transfer order on its books or otherwise
refusing to register or transfer or permit the registration or transfer on its
books of any proposed Transfer(s) not in accordance with this Article 11.

     (c) The Partnership shall, from the time Partnership Interests are
registered in the name of the transferee on the Partnership's books in
accordance with the above provisions, pay to the transferee on account of the
Partnership Interests transferred all further distributions, other compensation
or payments, on and subject to the provisions of this Agreement. Until
registration of a Transfer on the Partnership's books, the General Partner may
proceed as if no Transfer has occurred.

                                                                         Page 27


                        ARTICLE 12 - BUY/SELL PROVISIONS

12.01 DEFINED TERMS:

For purposes of this Article, the following terms shall have the following
meanings, respectively:

     (a)  "GROSS SALE PRICE" means the total amount of cash that the Offerors,
          in their sole discretion, determine would be received by the
          Partnership if all the Partnership Property was sold for cash at its
          fair market value.

     (b)  "OFFEREES SALE PRICE" means the aggregate amount that the Offerees
          would receive on a liquidation of the Partnership pursuant to Article
          17 if all the Partnership Property was sold for the Gross Sale Price.

     (c)  "OFFERORS SALE PRICE" means aggregate amount that the Offerors would
          receive on a liquidation of the Partnership pursuant to Article 17 if
          all the Partnership Property was sold for the Gross Sale Price.

12.02 OFFER: Subject to the provisions of Sections 13.2, 14.08, 15.05 and 21.07,
the Partners of a Partner Group, in each case provided such Partners are acting
together (collectively, the "OFFERORS") shall, subject to the provisions of the
next following paragraph, have the right at any time when no Default has
occurred with respect to any of the Offerors, to deliver to all but not less
than all the Partners of each other Partner Group (the "OFFEREES") the notice
provided for below (the "OFFERING NOTICE"). Upon delivery of an Offering Notice
no further Offering Notices may be delivered until the transaction of purchase
and sale relating to the Offering Notice and provided for in this Article 12 are
completed or otherwise at an end, whereupon the right to deliver an Offering
Notice shall revive.

The Offering Notice shall be signed by the Offerors and shall contain the
following:

     (a)  the Gross Sale Price, the Offerors Sale Price and the Offerees Sale
          Price;

     (b)  an irrevocable and unconditional offer to purchase from the Offerees
          all, but not less than all, of the Partnership Interests owned by each
          of the Offerees, for a cash consideration equal to the Offerees Sale
          Price allocated proportionately to the Partnership Interests of the
          Offerees, respectively; and

     (c)  an irrevocable and unconditional offer to sell to the Offerees all,
          but not less than all, of the Partnership Interests owned by each of
          the Offerors, for a cash consideration equal to the Offerors Sale
          Price allocated proportionately to the Partnership Interests of the
          Offerors, respectively.

Simultaneously with the delivery of the Offering Notice to the Offerees, the
Offerors shall deliver to the Accountant a certified cheque or a bank draft
payable to the Accountant, in trust and in an amount equal to 10% of the
Offerees Sale Price, representing a deposit on account thereof. The Offerors
shall direct the Accountant to place the deposit in an interest bearing account
maintained with, or in a term deposit issued by, a branch or office of Nations
Bank or other bank of comparable size, in either case which is located in
Orlando, Florida. Subject to the terms hereinafter provided, at the Closing
(provided for below) the Accountant shall disburse the said deposit or such
portion thereof to which each of the Offerees is entitled together with all
interest accrued thereon, to the Offerees, proportionately.

12.03 ACCEPTANCE: The Offerees shall have the exclusive and irrevocable option
for 90 clear days from the receipt of the Offering Notice to deliver to each of
the Offerors a written notice, signed by each of the Offerees (the "ACCEPTANCE
NOTICE") stating that the Offerees either:

     (a)  unconditionally accept the offer to purchase as set forth in Section
          12.02(b) and the particulars of the Offerors Interests owned by each
          of the Offerees; or

     (b)  unconditionally accepts the offer to sell as set forth in Section
          12.02(c).

                                                                         Page 28


Simultaneously with the delivery of an Acceptance Notice stating as provided for
in Section 12.03(b), the Offerees shall deliver to the Accountant a certified
cheque or a bank draft payable to the Accountant, in trust and in an amount
equal to 10% of the Offerors Sale Price, representing a deposit on account
thereof. The Offerees shall direct the Accountant to place the deposit in an
interest bearing account maintained with or in a term deposit issued by a branch
or office of Nations Bank or other bank of comparable size, in either case which
is located in Orlando, Florida. Upon each of the Offerees becoming a Purchasing
Offeree (defined below), the Accountant shall forthwith return the Offerors'
deposit together with all interest accrued thereon, to the Offerors. Subject to
the terms hereinafter provided, at the Closing (provided for below) the
Accountant shall disburse the deposit of the Purchasing Offerees or such portion
thereof to which the Offeree is entitled together with all interest accrued
thereon, to the Offerors, proportionately.

12.04 BINDING AGREEMENT:

     (a) On the Offerees (the "PURCHASING OFFEREES") delivery of an Acceptance
Notice which accepts the Offerors' offer to sell all but not less than all of
the Partnership Interests owned by the Offerors as set forth in the Offering
Notice then the Offerors' receipt of the same shall constitute a binding
agreement to sell such Partnership Interests to the Purchasing Offerees.

     (b) in the event that either:

          (i)  the Offerees deliver an Acceptance Notice accepting the Offerors'
               offer to purchase as set forth in Section 12.02(b); or

          (ii) within the said 90 clear day period, an Acceptance Notice which
               accepts the Offerors' offer to sell all but not less than all of
               the Partnership Interests owned by the Offerors as set forth in
               Section 12.02(c) has not been delivered by the Offerees;

then the Offerees shall be deemed to have irrevocably accepted the Offerors'
offer to purchase the Partnership Interests owned by the Offerees, as set forth
in the Offering Notice, on the day which is 90 clear days from the delivery of
the Offering Notice and on the occurrence of such event, the Accountant shall
forthwith return the deposit, if any, delivered by the Offerees in accordance
with Section 12.03 hereof together with all interest accrued thereon, to the
Offerees, proportionately.

It is the express intention of the Limited Partners that only the members of
either the Great Gulf Group or the Allan Group acting together shall be entitled
to act as Offerors and exercise the rights of the Offerors as contemplated by
Section 12.02. The Limited Partners therefore agree that any purported sale of
any Partnership Interest initiated pursuant to this Article 12 by one or more
Limited Partners contrary to the intention herein expressed shall be null and
void and without legal effect.

12.05 PAYMENT OF PURCHASE PRICE: At the Closing (provided for below) the
purchasing Limited Partners shall pay the purchase price to the selling Limited
Partners by way of bank draft or certified cheque (inclusive of the deposits
provided for above and all interest, if any, accrued thereon).

12.06 CLOSING ARRANGEMENTS:

     (a) Any transaction of purchase and sale required to be completed in
accordance with the foregoing provisions of this Article 12 shall be completed
at noon on the day 45 clear days subsequent to the latest date upon which the
Offerors or the Offerees, have become bound to sell their Partnership Interests,
as the case may be (or on the Business Day next following if the day of
completion is not a Business Day) and such completion (called the "CLOSING")
shall take place at the Principal Place of Business or at such other place or
date as the Offerors and Offerees may in writing agree upon.

     (b) The provisions contained in Article 22 shall apply mutatis mutandis to
this Article 12.

                                                                         Page 29


12.07 FAILURE TO CLOSE: If the purchasing Limited Partners fail to complete the
Closing in accordance with this Agreement and through no default or breach on
the part of the selling Limited Partners (the "FAILED CLOSING") then the
purchasing Limited Partners shall have 7 clear days to cure that breach and
complete the transaction contemplated by this Article and if the purchasing
Limited Partners fail to do so then the selling Limited Partners may by
delivering a written notice to the purchasing Limited Partners and the
Accountant within 10 clear days from the date which is 7 clear days after the
Failed Closing, elect to:

     (a)  retain the deposit together with all interest accrued thereon, in
          which event the Accountant shall forthwith deliver the deposit and
          interest to the selling Limited Partners and the agreement of purchase
          and sale shall be of no further force and effect and all parties
          thereto shall be relieved and forever absolutely discharged from any
          further obligations to perform and liability thereunder or by virtue
          thereof; or

     (b)  purchase the Partnership Interests owned by the purchasing Limited
          Partners at 85% of the purchase price agreed to be paid by the
          purchasing Limited Partners and the provisions of this Agreement
          respecting such transaction of purchase and sale shall govern, mutatis
          mutandis, on the basis the purchasing Limited Partners have become
          bound to sell the Partnership Interests owned by them and the selling
          Limited Partners have become bound to purchase the same on the date of
          delivery of the notice of election (provided for above).

If no such notice of election is delivered by the selling Limited Partners prior
to the expiry of the said period of 10 clear days then the selling Limited
Partners shall be deemed to have elected to retain the deposit and interest
pursuant to Section 12.07(a).

If the election described in Section 12.07(a) is made or deemed to be made then
the Accountant shall, if it has not already, forthwith disburse the deposit
received by it from the purchasing Limited Partners together with all interest
accrued thereon, to the selling Limited Partners, accordingly.

Each of the Limited Partners acknowledges that the Accountant is bound to comply
with any order, judgement or other directive of a court of competent
jurisdiction affecting the deposits. The Limited Partners agree to jointly and
severally indemnify and save harmless the Accountant against and to forthwith
upon demand pay to the Accountant the amount of any and all liabilities,
damages, claims, costs and expenses (including, without limitation, legal fees
and disbursements) suffered or incurred by the Accountant by reason of its
compliance with such court order, judgement or other directive. It is expressly
agreed by the Limited Partners that the Accountant shall be entitled to the
benefits of this Agreement and to enforce the same in the same manner and to the
same extent as would be applicable if the Accountant was a party to and executed
this Agreement.

12.08 SUSPENSION OF OTHER RIGHTS: On the delivery of an Offering Notice provided
for in Section 12.02, the Transfers permitted by Sections 11.04 and 11.06 and
the provisions contained in Articles 13, 14 and 15 and the right to deliver a
Purchase Notice pursuant to Section 21.03(d) shall be suspended to and until the
Closing or the rights of the Offerors and the Offerees to effect a purchase and
sale as a result of an Offering Notice having been delivered are terminated
whereupon the provisions contained in the said Sections 11.04 and 11.06,
Articles 13, 14 and 15 and Section 21.03(d) shall revive.

                                                                         Page 30


                     ARTICLE 13 - MANDATORY SALE PROVISIONS

13.01 MANDATORY SALE: Subject to the provisions of Sections 12.08, 15.05 and
21.07, this Article and the provisions of Article 14, the Limited Partners
comprising the Great Gulf Group have the right to require the sale by the
Partners of all the Partnership Interests to any person who is not an Affiliate
of any of the Partners comprising the Great Gulf Group (the "THIRD PARTY
PURCHASER"), which right is exercisable only by the Partners comprising the
Great Gulf Group giving a written notice signed by them to the other Partners
which requires such a sale and is accompanied by a true and complete copy of any
offer or agreement entered into with or delivered by the Third Party Purchaser
(the "SALE AGREEMENT").

The Limited Partners comprising the Great Gulf Group will give or cause to be
given to the Limited Partners comprising the Allan Group a written summary
containing reasonable particulars of the material terms of any proposed sale to
a Third Party Purchaser (which summary may be in the form of a draft letter of
intent or draft Sale Agreement) as soon as reasonably practicable following such
material terms being known by the Limited Partners comprising the Great Gulf
Group, but in any event prior to the Limited Partners comprising the Great Gulf
Group entering into any letter of intent or Sale Agreement (the "TRANSACTION
SUMMARY"). If the Limited Partners comprising the Allan Group desire to meet
with the Limited Partners comprising the Great Gulf Group for the purpose of
discussing such proposed sale they may cause any member of the Management
Committee nominated by them to give written notice requesting such a meeting to
the members of the Management Committee who are the nominees of the Limited
Partners comprising the Great Gulf Group, provided that the said notice for such
a meeting shall set out the date on which it is to be held and shall be given,
if at all, not less than 5 Business Days and not more than 10 Business Days,
before the date of the meeting. Any such meeting will otherwise be held and
conducted as if it were a meeting of the Management Committee but without any
matter being required for its approval or resolution, and the provisions of
Section 10.03 will otherwise apply thereto, mutatis mutandis. The Limited
Partners comprising the Great Gulf Group will cause at least 2 members of the
Committee nominated by the Great Gulf Group to be present at the said meeting.
If the Limited Partners comprising the Allan Group do not cause the said notice
of such a meeting to be given on or before the 5th Business Day following
delivery to them of the Transaction Summary or if no member of the Management
Committee nominated by the Allan Group is present at the time and place
appointed for such meeting, then in either case the Limited Partners comprising
the Allan Group shall be deemed to have and do hereby waive their rights to any
such meeting being held with respect to the proposed sale to which the
Transaction Summary relates.

The Limited Partners comprising the Allan Group will not be bound to comply with
the provisions of this Section unless: (a) the Limited Partners comprising the
Great Gulf Group comply with their obligations contained in the immediately
preceding paragraph; and (b) the terms of the Sale Agreement apply to them in
all material respects the same as such terms apply to the Limited Partners
comprising the Great Gulf Group. Without limiting the foregoing, the purchase
price payable for the Partnership Interests owned by the Limited Partners is to
be determined on the same basis for all Limited Partners.

Provided the above requirements of this Section 13.01 are fulfilled, the
Partners will execute and deliver the Sale Agreement and otherwise diligently
proceed in good faith to complete the required sale to the Purchaser in
accordance with the provisions thereof.

13.02 SUSPENSION OF OTHER RIGHTS: On the delivery of a notice provided for in
Section 13.01, the Transfers permitted by Sections 11.04 and 11.06 and the
provisions contained in Articles 12 and 15 and the right to deliver a Purchase
Notice pursuant to Section 21.03(d) shall be suspended unless and until the sale
pursuant to the Sale Agreement is terminated whereupon the provisions contained
in the said Sections 11.04 and 11.06, Articles 12 and 15 and Section 21.03(d)
shall revive.

                                                                         Page 31


                     ARTICLE 14.-.RIGHT OF FIRST OPPORTUNITY

14.01 SALE OF GREAT GULF GROUP INTERESTS: The Partners comprising the Great Gulf
Group (in this Article 14, collectively called the "VENDORS") may, subject to
the provisions of this Article, enter into a Sale Agreement providing for the
sale of all but not less than all of the Partnership Interests.

The Partnership Interests held by the Vendors intended to be sold pursuant to a
Sale Agreement as contemplated in the immediately preceding paragraph are in
this Article 14 collectively called the "OFFERED INTERESTS".

14.02 OFFER NOTICE: Except as permitted by the provisions of Section 11.06,
prior to the Vendors entering into a Sale Agreement binding them to effect the
sale of the Offered Interests, the Vendors shall first notify each of the
Partners comprising the Allan Group (in this Article 14 collectively called the
"PURCHASERS") of the Vendors' intention to so sell the Offered Interests and
simultaneously offer to sell the Offered Interests to each of the Purchasers in
equal proportions at the price (expressed in money) and on such other terms as
the Vendors would accept with respect to such a sale to any Third Party
Purchaser, provided such terms contain no trade or exchange of property as part
or all of the consideration and contain no term or condition which is so unique
or unusual as to render it incapable of being accepted or performed on a
commercially reasonable basis (other than for monetary reasons) by anyone (the
"OFFER NOTICE").

The Vendors shall not deliver an Offer Notice more than once in any 180 day
period.

14.03 ELECTION TO ACCEPT: Each of the Purchasers shall have the exclusive and
irrevocable option for 15 Business Days from the date of delivery to it of the
Offer Notice to deliver simultaneously to both the Vendors and the other
Purchaser a notice that it unconditionally accepts the offer to sell as set
forth in the Offer Notice and further stating whether or not it agrees to
purchase from the Vendors all of the Offered Interests, if the other Purchaser
does not accept the similar offer set forth in the Offer Notice delivered to
such other Purchaser (the "ACCEPTANCE NOTICE").

The Offered Interests with respect to which a Purchaser does not deliver an
Acceptance Notice accepting the Vendors' offer to sell shall be sold by the
Vendors to the other Purchaser if such other Purchaser agreed in its Acceptance
Notice to purchase all of the Offered Interests.

14.04 BINDING SALE: If the Purchasers or either of them deliver Acceptance
Notice(s) which in the aggregate accept the Vendors' offer to sell all but not
less than all of the Offered Interests as set forth in the Offer Notice then the
Vendors' receipt of the same shall effective on the date of such receipt
constitute a binding agreement in accordance with the terms of the Offer Notice
between the Purchaser(s) and the Vendors for the sale of the Offered Interests
at the Closing to such Purchaser(s). in accordance with their respective
proportionate rights.

14.05 PERMITTED SALE TO THIRD PARTY: Subject to the provisions of Section 14.06,
if the Vendors do not receive Acceptance Notice(s) which in the aggregate accept
the offer to sell all but not less than all of the Offered Interests in
accordance with the Offer Notice, or if the Purchasers fail to complete the
Closing (provided for in Section 14.07) of the Offered Interests, then the
Vendors shall, subject to the provisions of this Section, have the right to sell
the Offered Interests and all other Partnership Interests to any Third Party
Purchaser for a period of 180 days after the expiration of the period for
delivery of an Acceptance Notice or the date for completion of such Closing, as
applicable (the "FREE SALE PERIOD"), on terms and conditions no less favourable
to the Vendors than the terms and conditions contained in the Offer Notice and
the Purchasers shall be unconditionally bound to comply with the provisions of
Article 13, provided that a binding Sale Agreement for such sale is entered into
by the Vendors with the Third Party Purchaser prior to the expiration of the
Free Sale Period.

14.06 FAILURE TO SELL: If the Vendors do not enter into a binding Sale Agreement
for the sale of all but not less than all of the Partnership interests on terms
and conditions no less favourable than the terms and conditions contained in the
Offer Notice within the period and as otherwise provided for in Section 14.05,
then the obligations of the Vendors to deliver an Offer Notice in accordance
with this Article shall be reinstated.

                                                                         Page 32


14.07 CLOSING ARRANGEMENTS:

     (a) Any transaction of purchase and sale required to be completed in
accordance with the provisions of Section 14.04 shall be completed at noon on
the day 30 clear days subsequent to the latest date upon which the Vendors and
the Purchaser(s) have become bound to the purchase and sale of the Offered
Interests (or on the Business Day next following if the day of completion is not
a Business Day) and such completion (called the "CLOSING") shall take place at
the Principal Place of Business or at such other place or date as the Vendors
and the Purchaser(s) may in writing agree upon.

     (b) The provisions contained in Article 22 shall apply mutatis mutandis to
this Article 14.

14.08 SUSPENSION OF OTHER RIGHTS: On the Vendors delivering a notice provided
for in Section 13.01 to the Purchasers, the Transfers permitted by Sections
11.04 and 11.06 and the provisions contained in Articles 12 and 15 and the right
to deliver a Purchase Notice pursuant to Section 21.03(d) shall be suspended to
and until the sale of the Offered Interests set out in the Offer Notice is
completed or the rights of the Vendors to effect a sale in accordance with the
provisions of Section 14.05 are terminated whereupon the provisions contained in
the said Sections 11.04 and 11.06, Articles 12 and 15 and Section 21.03(d) shall
revive.

14.09 CONTINUED RIGHTS OF PURCHASERS: If any of the Purchasers fail to complete
a Closing provided for in Section 14.04 then at the sole option of the Vendors,
exercisable by delivery of written notice to the Purchasers, any binding
agreement provided for in Section 14.04 may be terminated by the Vendors. On
delivery by the Vendors of the said notice the Purchasers shall cease to be
entitled to the benefits of this Article and the Vendors shall cease to be bound
by their respective obligations under such provisions as they relate to the
Purchasers whereupon the provisions of Section 14.05 shall apply and for such
purpose the Vendors will be deemed not to have received Acceptance Notice(s)
which in the aggregate accept the offer to sell all but not less than all of the
Offered Interests in accordance with the Offer Notice.

                 ARTICLE 15 - MANDATORY PURCHASE RE DISSOLUTION

15.01 OFFERING NOTICE: If the Partners comprising the Great Gulf Group (in this
Article 15, collectively called the "OFFERORS") desire to effect the dissolution
of the Partnership or to change or reorganize the Partnership into any other
legal form (such dissolution, change or reorganization is in this Article 15
called the "TRIGGER EVENT"), then not less than 90 days prior to such proposed
Trigger Event being presented for the approval of the Management Committee as
contemplated in Sections 10.04(b)(v) and (vi) the Offerors may deliver a notice
to each of the Partners comprising the Allan Group (in this Article 15,
collectively called the "OFFEREES") the contents of which notice shall include
the same information as an Offering Notice given pursuant to Section 12.02
together with a statement of the Offerors' desire to implement the Trigger Event
and of the Offerors' requirement that if the members of the Management Committee
nominated by the Offerees do not approve of such Trigger Event on it being
presented for approval by the Management Committee as aforesaid, then the
aforesaid notice is to constitute an Offering Notice as if delivered pursuant to
Section 12.02.

15.02 APPLICATION OF ARTICLE 12: If the members of the Management Committee
nominated by the Offerees do not approve of the said Trigger Event on it being
presented for approval by the Management Committee as aforesaid, then the notice
delivered by the Offerors in accordance with Section 15.01 shall constitute and
be deemed to be an Offering Notice as if the same was delivered pursuant to
Section 12.02 by the Partners comprising the Great Gulf Group as the Offerors to
the Partners comprising the Allan Group as the Offerees, and the provisions of
Article 12 shall apply with respect thereto, mutatis mutandis except as
otherwise provided for in this Article 15. For the purposes of this Article 15,
the Offerors shall not be required to deliver and pay the deposit provided for
in Section 12.02.

                                                                         Page 33


15.03 ACCEPTANCE: For purposes of this Article 15, the provisions of Section
12.03 shall apply on the basis that the Offerees received the Offering Notice on
day the Trigger Event is approved by the Management Committee and the Offerees
shall have the exclusive and irrevocable option for 10 clear days from such
deemed date of receipt of the Offering Notice to deliver an Acceptance Notice to
each of the Offerors, all otherwise on and subject to the provisions of Section
12.03. Accordingly, all references in Article 12 to the period of 90 clear days
provided for in Section 12.03 shall, for purposes of this Article 15, be read as
meaning the period of 10 clear days provided for in this Section 15.03.

15.04 PAYMENT OF PURCHASE PRICE: If one or more of the Offerees are the
purchasing Limited Partners, then such purchaser shall pay the purchase price to
the Offerors (as the selling Limited Partners) by way of bank draft or certified
cheque (inclusive of the deposit provided for in Section 12.03 and all interest,
if any, accrued thereon) at the Closing (provided for in Section 12.06).

If the Offerors are the purchasing Limited Partners, then such purchasers shall
pay the purchase price, without interest, to the Offerees (as the selling
Limited Partners) by way of bank draft or certified cheque immediately on
receipt by the Offerors of the proceeds of liquidation to be distributed to the
Offerors, respectively, in accordance with the provisions of Section 17.04 to
and until the purchase price is paid in full. If the said proceeds of
liquidation are not sufficient to pay the purchase price in full to the Offerees
then the Offerors will pay the outstanding balance of the purchase price to the
Offerees immediately upon the proceeds of liquidation to which the Offerees are
entitled being distributed to the Offerees, respectively, in accordance with the
provisions of Section 17.04 and in any event prior to the filing by the General
Partner of the Certificate of Cancellation with the Secretary of State required
to be filed by it pursuant to Section 17.03. The statement provided for in
Section 17.05 will be delivered to the Offerees substantially contemporaneously
with the delivery of such statement to the Limited Partners.

15.05 SUSPENSION OF OTHER RIGHTS: On the delivery by the Offerors of a notice
provided for in Section 15.01, the Transfers permitted by Sections 11.04 and
11.06 and the provisions contained in Articles 12 (otherwise than by virtue of
Section 15.02), 13 and 14 and the right to deliver a Purchase Notice pursuant to
Section 21.03(d) shall be suspended to and until the Closing or the rights of
the Offerors and the Offerees to effect a purchase and sale as a result of an
Offering Notice having been delivered are terminated, whereupon the provisions
contained in the said Sections 11.04 and 11.06, Articles 12, 13 and 14 and
Section 21.03(d) shall revive.

           ARTICLE 16 - BOOKS OF ACCOUNT, FINANCIAL REPORTS, RECORDS,
                         BANKING & ACCOUNTING DECISIONS

16.01 BOOKS OF ACCOUNT: The General Partner shall keep or cause to be kept
adequate books of account of the Partnership according to its Method of
Accounting in which shall be recorded and reflected all of the contributions to
the capital of the Partnership and all of the expenses and transactions of the
Partnership. These books of account shall be kept at 250 Lesmill Road, Don
Mills, Ontario, Canada but shall as and when required by law or by any
governmental agency or lender be made available at the Principal Place of
Business. The Limited Partners and their authorized representatives shall have
at all times during normal business hours, free access to and the right to
inspect and copy, at their expense, the books of account of the Partnership.

16.02 FINANCIAL REPORTS:

     (a) As soon as practicable after the close of each fiscal year, but in no
event later than 120 days after the close of any fiscal year, the General
Partner shall deliver to each Partner (i) an unaudited annual financial
statements of the Partnership for that fiscal year, including a balance sheet. a
profit and loss statement, a statement showing distributions and allocations to
the Partners and such other information as the General Partner deems necessary
or advisable to deliver, accompanied by a report of the Partnership's
independent certified public accountants. and (ii) all information and documents
as may be necessary, in the opinion of the General Partner, for the preparation
by each Partner of his federal and state income or other tax returns, including
a Schedule K-1. All annual statements shall be prepared in accordance with the
Partnership's Method of Accounting. The annual statements shall also be provided
to any person who was a Partner at any time during the year covered by the
annual statements.

                                                                         Page 34


     (b) The Partnership's accountants shall be KPMG or such other firm of
independent certified public accountants as may be selected by the General
Partner from time to time (the "ACCOUNTANT").

     (c) The General Partner shall cause the Accountant to prepare or review the
federal, state and local tax returns of the Partnership for each fiscal year and
shall timely file these returns, completed in accordance with the Method of
Accounting.

     (d) In the case of a Transfer of a Partnership Interest by sale or
exchange, the death of a Partner or the distribution of Partnership Property, on
receipt by the Partnership of the written request of the transferee Partner and
subject to the approval of the Management Committee, which approval shall not be
unreasonably withheld, the Partnership will make an election under Section 754
of the Code to adjust the basis of the Partnership Property with respect to a
transferee who acquires a Partnership Interest from an existing Partner. On such
an occurrence the Capital Accounts shall be adjusted in accordance with Section
1.704-1(b)(2)(iv)(m) of the Treasury Regulations. Because of the significant
accounting difficulties and extra expense to the Partnership which may be
involved if this election is made, the transferee Partner who requests the
election will be required to pay all administrative and accounting expenses
incurred in connection with the election.

16.03 RECORDS: The General Partner shall keep or cause to be made available at
the Principal Place of Business when required by a Limited Partner or other
person entitled to inspect, the following Partnership documents:

     (a)  a current list of the full name and last known business or residence
          address of each Partner, separately identifying in alphabetical order
          the General Partner and the Limited Partners;

     (b)  copies of the Certificate of Limited Partnership and all amendments
          thereto, and executed copies of any powers of attorney pursuant to
          which any such amendment to the Certificate was executed;

     (c)  copies of the Partnership's federal, state and local income tax
          returns and reports for the three most recent taxation years.

     (d)  copies of the Partnership Agreement and all powers of attorney
          pursuant to which any amendment to this Agreement may be executed, the
          Partnership's financial reports described in Section 16.02 and all
          financial statements for the three most recent fiscal years.

16.04 BANKING: The funds of the Partnership shall be deposited into the
account(s) maintained for the Partnership with such bank(s) as the General
Partner deems appropriate. Only the General Partner or its duly authorized
agents shall withdraw any of the said funds from any of the said accounts. All
amounts generated by or otherwise derived from the Partnership Property or
otherwise for the account of the Partnership shall be deposited (in the form
received) into the said bank accounts and the payment of all costs, expenses and
other amounts relating to the Property shall be paid by way cheque drawn on such
accounts. The General Partner shall transact all of the banking business
necessary or desirable for the rendering of the accounting and administrative
functions which shall include the responsibility of the General Partner for
management of cash balances from time to time in the bank accounts of the
Partnership.

16.05 ACCOUNTING DECISIONS: All decisions as to accounting matters, except as
specifically provided to the contrary herein, shall be made by the General
Partner in accordance with the Method of Accounting. These decisions must be
acceptable to the Accountant, and the General Partner may rely upon the advice
of the Accountant as to whether such decisions are in accordance with the Method
of Accounting.

                                                                         Page 35


                     ARTICLE 17 - DISSOLUTION & TERMINATION

17.01 DISSOLUTION OF PARTNERSHIP: The term of the Partnership commenced on the
date of filing of the Certificate of Limited Partnership and shall be dissolved
and its business shall terminate on the date of the earliest occurrence of any
of the following events:

     (a)  the close of business on December 31, 2019;

     (b)  the date which the Management Committee approves in accordance with
          Sections 10.04(b)(vi) or 10.04(b)(vii) as the effective date of the
          dissolution of the Partnership and to terminate the Partnership's
          business;

     (c)  the date which the Partners unanimously approve as the effective date
          of the dissolution of the Partnership and to terminate the
          Partnership's business;

     (d)  the Partnership becomes insolvent or bankrupt. For the purposes of
          this subparagraph (d), the insolvency or bankruptcy of the Partnership
          shall be deemed to occur when (i) the Partnership: (A) files a
          petition in bankruptcy, or (B) voluntarily takes advantage of any
          bankruptcy or insolvency laws, or (C) is adjudicated a bankrupt, or
          (D) makes an assignment for the benefit of creditors; (ii) within 90
          days after commencement of any proceeding against the Partnership
          seeking reorganization, liquidation or similar relief, the proceeding
          has not been dismissed; (iii) the Partnership appoints a receiver or
          trustee for all or a part of its assets, business or property, or (iv)
          a petition or answer is filed proposing the adjudication of the
          Partnership as a bankrupt and the Partnership or the General Partner
          on its behalf, acting reasonably, consents to such filing or otherwise
          acknowledges its insolvency; or

     (e)  the occurrence of any event which, under the Act, causes the
          dissolution of a Florida limited partnership, and the Management
          Committee does not approve of the continuation of the Partnership in
          accordance with Section 17.02.

The Partnership shall continue to exist following the happening of any of the
foregoing events solely for the purpose of winding up its affairs in accordance
with the Act and any other applicable laws.

17.02 SUCCESSOR PARTNERSHIP: If the Partnership is dissolved or to be dissolved,
the Management Committee may approve the continuation of the business of the
Partnership and reconstitute the Partnership as a successor limited partnership
with one or more new General Partner(s) having the capacity to serve and who are
able to meet any requirements then imposed by the Code or any rulings or
regulations under the Code with respect to general partners of limited
partnerships in order that the Partnership not become an association taxable as
a corporation. If the Management Committee exercises the right to continue the
business of the Partnership, the person(s) appointed by them as the new General
Partner(s) and the Limited Partners shall execute and acknowledge an Agreement
of Limited Partnership on substantially the same provisions as those contained
in this Agreement, and the General Partner(s) shall execute, acknowledge and
file a Certificate of Limited Partnership. The new General Partner(s) shall
indicate acceptance of the appointment by the execution of the Agreement of
Limited Partnership and the Certificate of Limited Partnership.

17.03 PROCEDURE ON LIQUIDATION: Unless the business of the Partnership is
continued pursuant to the provisions of this Agreement, upon the dissolution of
the Partnership, the General Partner or the person or persons required by law to
wind up the Partnership's affairs shall cause the cancellation of the
Certificate of Limited Partnership pursuant to Section 620.113 of the Act and
shall liquidate the assets of the Partnership and apply the proceeds of
liquidation in the order of priority provided in Section 17.04 for the fiscal
year of liquidation. A reasonable time shall be allowed for the orderly
liquidation of the assets of the Partnership and the discharge of its
liabilities to enable the General Partner to minimize any losses that might
otherwise occur in connection with the liquidation. The General Partner may
continue to operate and maintain the business and the Partnership Property after
the occurrence of an event requiring dissolution of the Partnership for so long
as is reasonably required in the circumstances in order to wind up the affairs
of the Partnership in an orderly fashion. Upon liquidation and winding up of the
Partnership, unsold Partnership Property shall be valued to determine the gain
or loss which would have resulted if the Partnership Property were sold, and the
Capital Accounts of the Partners which have been maintained in accordance with
this Agreement shall be adjusted to reflect how the gain or loss would have been
allocated if such Partnership Property had

                                                                         Page 36


been sold at its assigned values. In all events the liquidation shall be
conducted in accordance with Section 1.704-1(b)(2)(ii)(b)(2) of the Treasury
Regulations.

Upon completion of the liquidation of the Partnership and distribution of the
proceeds, the General Partner shall file a Certificate of Cancellation with the
Secretary of State.

All books and records of the Partnership shall be delivered to the General
Partner upon liquidation, which shall retain the books and records for a period
of not less than 7 years and shall make the books and records available to the
Limited Partners for inspection and copying at its principal business office
during reasonable business hours.

17.04 LIQUIDATION PROCEEDS: The proceeds from the liquidation of the assets of
the Partnership and the collection of the receivables of the Partnership
together with the assets distributed in kind shall be distributed in payment or
satisfaction of the following matters and in the following order of priority:

     (a)  first, and in priority to payment of Loan Advances and interest
          thereon pursuant to Article 8, to payment of debts and liabilities of
          the Partnership which are due and owing, except any expenses or debts
          which may be deferred in accordance with any agreement providing for
          their deferral to the extent the Partnership expects to subsequently
          receive proceeds which can be used to satisfy the expenses and debts;

     (b)  second, to the setting up of reserves as determined by the General
          Partner for the purpose of disbursing the reserves in payment of any
          contingent liabilities or obligations of the Partnership, and, at the
          expiration of the reserve period, the balance of the reserves, if any,
          shall be distributed as liquidating proceeds received at the end of
          the reserve period;

     (c)  third, to the Partners in payment of Loan Advances and interest
          thereon in accordance with the provisions of Article 8;

     (d)  fourth, to the Partners in accordance with the provisions of Section
          9.01;

17.05 LIQUIDATION STATEMENT: Each Partner shall be furnished with a statement
prepared by the General Partner or the Accountant setting forth the assets and
liabilities of the Partnership as at the date of liquidation.

              ARTICLE 18 - LIABILITY & INDEMNIFICATION OF PARTNERS,
                   OUTSIDE ACTIVITIES & WARRANTIES OF PARTNERS

18.01 RETURN OF CAPITAL CONTRIBUTION: The General Partner shall not be
personally liable for the return of all or any part of the Capital Contributions
of the Limited Partners. Any such return shall be made solely from Partnership
Property.

18.02 GP LIABILITY FOR ACTS OR OMISSION: From and after the Effective Date, the
performance or omission of any act by the General Partner or its Affiliates,
including any act in its capacity as TMP, in the good faith belief that such
person was acting within the scope of its authority under this Agreement on
behalf of the Partnership or in furtherance of the Partnership's interests,
shall not subject the General Partner or its Affiliates to any liability to the
Partnership or the Partners. The foregoing shall not relieve the General Partner
or any of its Affiliates from liability for gross negligence, fraud or wilful
misconduct.

18.03 INDEMNIFICATION OF GENERAL PARTNER: From and after the Effective Date, the
Partnership shall indemnify and hold harmless the General Partner (including any
person who has served as General Partner) and its Affiliates from and against
any claim, loss, expense, liability, action or demand incurred by any of the
General Partner and its Affiliates in respect of any omission to act or for any
act performed by any of them, including any act or omission performed in the
General Partner's capacity as TMP, in the good faith belief that such person was
acting or refraining from acting within the scope of its authority under this
Agreement on behalf of the Partnership or in furtherance of the Partnership's
interests, including, without limitation, reasonable fees and expenses of
litigation and appeal (including, without limitation, reasonable fees and
expenses of attorneys engaged in defence of any act or omission), except that
the foregoing indemnity shall not extend to claims, losses, expenses,
liabilities, actions or demands incurred by reason of the gross negligence,
fraud or wilful misconduct of the General Partner or any of its Affiliates.

                                                                         Page 37


18.04 LIMITED PARTNERS' "INTERNAL" LIABILITY: Unless otherwise specifically
provided in this Agreement, the Limited Partners shall be liable to each other
for their respective obligations and liabilities under this Agreement, as
follows:

     (a)  each of the Partners comprising the Great Gulf Group will be jointly
          and severally liable, as between and amongst themselves, for an amount
          which is equal to the aggregate of their Percentage Interests of the
          liability of any one or more of the Partners comprising the Great Gulf
          Group to any one or more of the Partners comprising the Allan Group;
          and

     (b)  each of the Partners comprising the Allan Group will be jointly and
          severally liable, as between and amongst themselves, for an amount
          which is equal to the aggregate of their Percentage Interests of the
          liability of any one or more of the Partners comprising the Allan
          Group to any one or more of the Partners comprising the Great Gulf
          Group.

18.05 MUTUAL INDEMNIFICATION: If the Limited Partners are jointly, or jointly
and severally liable for any obligations (including under any guarantee), or
deemed statutorily, by common law, or by judgement of a court or other tribunal
or board having jurisdiction to be jointly or jointly and severally liable for
any obligations, in each case where such obligations relate to the Partnership
or the Partnership Property, the respective liability of each of the Limited
Partners, as between themselves, shall be limited in accordance with their
respective Percentage Interests and be as more particularly provided in Section
18.04. For all purposes of this Section 18.05 the obligations and liabilities of
each of the Limited Partners comprising the Great Gulf Group under the AmSouth
Guarantees shall be considered and be deemed to be obligations for which the
Limited Partners are jointly and severally liable.

In the event that, notwithstanding the foregoing provisions of this Section, any
Limited Partner (hereinafter in this Section called the "NON-DEFAULTING PARTY")
shall in fact pay moneys pursuant to any demand from any third party under any
liability in any amount(s) in excess of its Percentage Interest thereof as
aforesaid (the others of the Limited Partners which shall have paid no money or
shall not have paid its Percentage Interest thereof as aforesaid, being referred
to in this Section as the "DEFAULTING PARTIES"), each of the Defaulting Parties
shall pay to the Non-Defaulting Party its Percentage Interest of the excess
amount of money so paid by the Non-Defaulting Party on demand as aforesaid,
together with accrued interest thereon from the date the Non-Defaulting Party
paid such money to the date that such Defaulting Party repays such money to the
Non-Defaulting Party at the rate of 5% per annum in excess of the Prime Rate as
published from time to time by the Wall Street Journal, provided that the
obligation to pay such interest shall be subject to the provisions of Section
8.07.

Each of the Limited Partners (herein called the "INDEMNIFYING PARTNER") hereby
indemnifies and shall forever save harmless each other Limited Partner (herein
called the "INDEMNIFIED PARTNER") within 10 days of written demand being made
therefor by an Indemnified Partner, to the extent of that portion of all moneys
which the Indemnified Partner has paid or may be required to pay or liability to
which it is or may become subject by reason of any such joint or joint and
several liability (for greater certainty, including without limitation under the
AmSouth Guarantees) or by reason of any actions, proceedings, liability, claims,
damages, costs and expenses in relation thereto or arising therefrom, which is
in excess of such Indemnified Partner's Percentage Interest of such moneys or
liability and which has been paid or incurred by such indemnified Partner.

Each of the General Partner and the Partnership hereby indemnifies and shall
forever save harmless each of the Limited Partners comprising the Great Gulf
Group (herein called the "INDEMNIFIED PARTY") within 10 days of written demand
being made therefor by an Indemnified Party, to the extent of that portion of
all moneys which the Indemnified Party has paid or may be required to pay or
liability to which it is or may become subject by reason of the AmSouth
Guarantees or by reason of any actions, proceedings, liability, claims, damages,
costs and expenses in relation thereto or arising therefrom.

                                                                         Page 38


18.06 OUTSIDE ACTIVITIES OF PARTNERS: Save and except only as provided in
Section 18.07, nothing restricts or shall be deemed to restrict in any way the
right of any Partner or any of its Affiliates to engage in any activity or
possess any interest in any business, venture or other person, in each case of
any nature, whether independently or with any other person (including any other
Partner) including, without limitation, the acquisition, ownership, development,
management, operation, brokerage and sale of real property, whether or not
adjacent to or competitive with the real property included in the Partnership
Property. Subject only to the provisions of Section 18.07, no Partner will have
any liability or obligation to account to the Partnership or any other Partner
in any way for such other activities or interests or for the profits, proceeds,
benefits or other advantages derived from such other activities or interests. A
Partner shall not by reason of owning its Partnership Interest have any interest
in any other property owned by any other Partner or any business or venture
engaged in by any other Partner, whether or not similar to the business of the
Partnership.

18.07 OTHER PROPERTIES: For purposes of this Section 18.07, "TARGET PROPERTY"
means any real property or any interest in any real property which is located
within the area designated as Lakeside Villages (also designated as Villages of
Lakeside) in the vicinity of Orlando, Florida. If any one or more Partners or
any of their respective Affiliates, acquire or receive any Target Property
(whether by way of beneficial ownership, an interest in the revenues to be
derived therefrom or any other interest directly or indirectly in any other
manner whatsoever) such acquisition or receipt shall be and is hereby deemed to
be made on behalf of the Partnership and the Target Property shall constitute
Partnership Property which the said Partner(s) or applicable Affiliates are
holding in trust exclusively for the Partnership. Each Partner whose Affiliate
so acquires or receives any Target Property shall ensure that such Affiliate
holds the same on and subject to the provisions of this Agreement. For greater
certainty, the receipt of commercially reasonable brokerage commissions for the
sale of a Target Property shall not constitute an interest in the revenues to be
derived from a Target Property nor shall such receipt constitute any other
interest directly or indirectly in any other manner whatsoever in a Target
Property.

The Partner(s) who or whose Affiiiate(s) acquire or receive any Target Property
shall give written notice of the proposed acquisition or receipt by it or its
Affiliate(s), as applicable (including reasonable particulars thereof), to the
Management Committee prior to completion of the proposed acquisition or receipt
thereof.

The Management Committee shall have the right in its sole discretion to
determine within 45 days of receipt of the written notice provided for above,
that the Partnership does not desire the proposed acquisition or receipt of the
Target Property to be made on behalf and at the cost of the Partnership and:

     (a)  if the Management Committee does so determine, then the said Partner
          may or, if applicable, may permit its Affiliate to, proceed to
          complete the proposed acquisition for its own account and not in trust
          for the Partnership or otherwise as Partnership Property and the
          Partnership shall cease to have any rights with respect to the said
          Target Property; and

     (b)  if the Management Committee does not so determine, then each Partner
          or, if applicable, its Affiliate(s), who proceeds to acquire the said
          Target Property will hold the same as Partnership Property in trust
          for, and fully account to the Partnership in respect of, such Target
          Property.

     Any determination to be made by the Management Committee as contemplated in
     this Section shall:

     (i)  if the Partner giving the notice of the proposed acquisition to the
          Management Committee is a member of the Great Gulf Group, be either by
          the affirmative vote of at least 4 of the 5 members of the Management
          Committee present at a meeting of the Committee, or the written
          approval of at least 4 of the 5 members of the Committee; and

     (ii) if the Partner giving the notice of the proposed acquisition to the
          Management Committee is a member of the Allan Group, be either by the
          affirmative vote of at least 3 of the 5 members of the Management
          Committee present at a meeting of the Committee, or the written
          approval of at least 3 of the 5 members of the Committee.

                                                                         Page 39


18.08 WARRANTIES OF PARTNERS: Each of the Partners represents and warrants to
each of the other Partners that other than as provided for in this Agreement:

     (a)  it is the absolute and beneficial owner of it's Partnership Interest,
          with a good and marketable title thereto, free and clear of all
          mortgages, liens, charges, security interests, adverse claims, pledges
          and other encumbrances or rights of others whatsoever; and

     (b)  no person has any agreement or option or any right or privilege
          (whether by law, pre-emptive or contractual) capable of becoming an
          agreement or option for the purchase of or to otherwise acquire from
          such Partner it's Partnership Interest or any part thereof or interest
          therein.

                     ARTICLE 19 - SPECIAL POWER OF ATTORNEY

19.01 APPOINTMENT: Subject to the restrictions of Sections 10.04 and 10.08, each
of the Limited Partners, by its execution of this Agreement hereby irrevocably
makes, constitutes and appoints the General Partner and any successor or
substituted General Partner or agent(s) duly appointed in accordance with the
provisions of this Agreement, its true and lawful attorney-in-fact for it and in
its name, place and stead and for its use and benefit, from time to time:

     (a)  to make, file and record all agreements amending this Agreement, as
          now or hereafter amended, that may be appropriate to reflect or
          effect, as the case may be:

          (i)  a change of the name or the location of the Principal Place of
               Business;

          (ii) the Transfer or acquisition of any Partnership Interest by a
               Partner in any manner permitted by this Agreement;

          (iii) a person becoming a substituted or additional Limited Partner as
               permitted by this Agreement;

          (iv) a change in any provision of this Agreement effected by the
               exercise by any person of any right or rights hereunder;

          (v)  a correction of a scrivener's error; and

          (vi) the dissolution and termination of the Partnership pursuant to
               this Agreement;

     (b)  to make certificates, affidavits, instruments and documents required
          by, or appropriate under, the laws of Florida in connection with the
          use of the name of the Partnership by the Partnership; and

     (c)  to make certificates, instruments, and documents which the Limited
          Partners are required to make, or which are appropriate for the
          Limited Partner to make, under the laws of Florida to reflect:

          (i)  any changes in or amendments to this Agreement, or pertaining to
               the Partnership, of any kind referred to in this Section 19.01;
               and

          (ii) any other changes in or amendments to this Agreement, but only if
               and when the consent thereto has been obtained from the Limited
               Partners as required by Section 23.11.

Each of the agreements, certificates, affidavits, instruments and documents made
pursuant to paragraph (a) through (c) of this Section shall be in the form that
the General Partner and counsel for the Partnership deem appropriate. The powers
conferred by this Section to make agreements, certificates, affidavits,
instruments and documents shall be deemed to include without limitation the
powers to sign, execute, acknowledge, swear to, verify, deliver, file, record or
publish them.

19.02 IRREVOCABILITY/EXERCISE: The power of attorney granted pursuant to Section
19.01:

     (a)  is a special power of attorney coupled with an interest and is
          irrevocable;

     (b)  may be exercised by the General Partner as attorney-in-fact; and

     (c)  shall survive the Transfer by a Limited Partner of its Partnership
          Interest or any part thereof, except that where the purchaser,
          transferee or assignee of such Partnership Interest with the consent
          of the General Partner is admitted as a substituted Limited Partner,
          the power of attorney shall survive the Transfer for the sole purpose
          of enabling the attorney-in-fact to execute, acknowledge and file any
          agreement, certificate, instrument or document necessary to effect the
          substitution.

                                                                         Page 40


                              ARTICLE 20 - SECURITY

20.01 CROSS CHARGE: To secure the due payment of all monies and interest thereon
(including interest on overdue amounts) being from time to time owing by a
Limited Partner to the others and the performance of its obligations contained
in this Agreement, each Limited Partner (hereinafter called the "MORTGAGOR
PARTNER") hereby mortgages and charges as and by way of a fixed and specific
mortgage and charge and grants a security interest to and in favour of the
others (each of which is hereinafter called the "MORTGAGEE PARTNER"), their
respective successors, and permitted assigns, in and against all the right,
title and interest of the Mortgagor Partner, both present and future, in and to
the Partnership Interest owned by such Mortgagor Partner, including
distributions to which such Partnership Interest may become entitled pursuant to
this Agreement (collectively, the "COLLATERAL"); TO HAVE AND TO HOLD the
Collateral and all rights and revenues hereby assigned and all rights hereby
conferred to the Mortgagee Partner, its successors and permitted assigns
forever, but in trust nevertheless for the uses and purposes and with the powers
and authorities and subject to the terms and conditions mentioned and set forth
in this Article (the mortgages, charges and security interest hereby constituted
being collectively called the "SECURITY"), provided that prior to the occurrence
of a Default by a Mortgagor Partner hereunder, the Mortgagor Partner shall have
quiet possession of the Collateral, subject to all provisions of this Agreement,
but on and after the occurrence of such Default the Mortgagee Partner shall have
quiet possession of the Collateral. The Security shall cease to have any force
or effect on the Mortgagor Partner ceasing to own a Partnership Interest, the
dissolution of the Partnership or on termination of this Agreement, whichever
shall first occur and provided always that such occurrence is in accordance with
the provisions of this Agreement and applicable law.

20.02 PERSON ENTITLED TO ENFORCE: The Mortgagee Partner for the time being is
the person entitled to the benefit of, and to enforce, and to give a discharge
of the Security.

20.03 SUBORDINATION: The Security is subject and subordinate to, and is hereby
postponed in priority to, all Permitted Encumbrances but only to the extent
required by the terms of such Permitted Encumbrances, and the Mortgagee Partner
will execute and deliver such acknowledgements, subordinations and postponements
as may from time to time be required to confirm the priority of any such
Permitted Encumbrances.

20.04 FURTHER ASSURANCES: The Mortgagor Partner, at the request and expense of
the Mortgagee Partner, will execute, deliver, and register in the appropriate
offices of public record, in the appropriate registrable form such documents or
instruments appropriate to subject the Collateral to the Security and for the
due protection of the Security against claims by all subsequent transferees or
encumbrancers other than under Permitted Encumbrances. Each Security shall,
notwithstanding its date of execution or delivery, priority of registration or
otherwise, be deemed to rank pari passu with each other Security if more than
one Mortgagee Partner is proceeding to realize on the Partnership Interest of a
Partner. For purposes hereof one or more Mortgagee Partners may appoint a
trustee and/or agent to hold and effect the registration of the Security on its
or their behalf against any one or more Mortgagor Partners, provided that such
appointment shall be wholly subject to the provisions of this Agreement
including, without limitation, this Article 20.

20.05 ENFORCEMENT: Whenever the Mortgagee Partner becomes entitled to exercise
any of its remedies under the Security, the Mortgagee Partner may realize upon
the Security and enforce its rights by any or all of the remedies herein
expressly provided, and any additional remedies available to a mortgagee and
secured party at law or in equity, including without limitation the following:

     (a)  take possession of the Collateral, including the right to have,
          receive, demand, collect, and sue for all amounts which are from time
          to time owing in respect of the Collateral;

     (b)  sale of the Collateral (including the right of such Mortgagee Partner
          to bid at and become the purchaser at such sale) subject to the
          purchaser entering into an agreement with the continuing Partners
          assuming the obligations of the Mortgagor Partner under this
          Agreement, in form satisfactory to the continuing Partners, acting
          reasonably;

     (c)  filing of proofs of claim and other documents to establish its claims
          in any proceedings relating to the Mortgagor Partner; and

     (d)  all rights and remedies of a secured party under the Uniform
          Commercial Code, as in effect from time to time in the State of
          Florida.

                                                                         Page 41


Such remedies may be exercised from time to time separately or in combination
and are in addition to and not in substitution for any rights of the Mortgagee
Partner, however created.

                              ARTICLE 21 - DEFAULT

21.01 EVENTS OF DEFAULT: For the purposes of this Article 21, any of the
following circumstances is a default under this Agreement (hereinafter called a
"DEFAULT") with respect to a Partner:

     (a)  if it shall be in default in the payment of any moneys required to be
          paid by it under this Agreement and such default continues for a
          period of 10 days after written notice thereof has been given by any
          other Partner; or

     (b)  if it is in default under any of the provisions of this Agreement
          (other than provisions requiring the payment of monies) and such
          default shall continue for a period of 30 days after written notice
          thereof has been given by any other Partner, or such longer period
          (not to exceed 90 days) as may be required to cure such default
          provided that reasonable steps are taken with all due diligence to
          cure such default; or

     (c)  if any Default has occurred with respect to such Partner under any of
          the Other Partnership Agreements; or

     (d)  if any Partner dissolves or goes into liquidation, either voluntary or
          under a final order of a court of competent jurisdiction or becomes
          insolvent or bankrupt. For the purposes of this subparagraph (d), the
          insolvency or bankruptcy of a Partner shall be deemed to occur when
          (i) such Partner: (A) files a petition in bankruptcy, or (B)
          voluntarily takes advantage of any bankruptcy or insolvency laws, or
          (C) is adjudicated a bankrupt, or (D) makes an assignment for the
          benefit of creditors; (ii) within 90 days after commencement of any
          proceeding against the Partner seeking reorganization, liquidation or
          similar relief, the proceeding has not been dismissed; (iii) the
          Partner appoints a receiver or trustee for all or a part of its
          assets, business or property, or (iv) a petition or answer is filed
          proposing the adjudication of the Partner as a bankrupt and the
          Partner consents to the filing or otherwise acknowledges its
          insolvency; or

     (e)  if a liquidator, receiver, receiver and manager, or trustee in
          bankruptcy be appointed to or of the Partnership Interest of any
          Partner or any part thereof with the consent or acquiescence of such
          Partner, or if appointed without the consent or acquiescence of such
          Partner, if such appointment shall remain unvacated and unstayed for
          60 days after the date of any such appointment or such longer period
          as is reasonable (but not in any event exceeding 120 days) provided
          that throughout such period the Partner is acting with all due
          diligence to cure such default; or

     (f)  if, except pursuant to Article 20, an encumbrancer takes possession of
          a Partner's Partnership Interest or any substantial part thereof, or
          if a distress or execution or any similar process be levied or
          enforced on or against such Partnership Interest and the same remains
          unsatisfied for the shorter of a period of 30 days or such period as
          would permit the same to be sold; provided that such process is not in
          good faith being diligently disputed by the Partner and, in that
          event, provided further that non-payment shall not in the reasonable
          opinion of any other Partner jeopardize the title to the said
          Partnership Interest or the Security or in any way impair the
          Security, and provided further that, if the Partner shall desire to
          contest the same, it shall also give security which, in the absolute
          discretion of the other Partners shall be deemed sufficient to pay in
          full the amount claimed in the event it shall be held to be a valid
          claim; or

     (g)  if any financing required to be obtained pursuant to this Agreement is
          not obtainable as a result of the financial condition of such Partner;
          or

     (h)  if such Partner defaults in any covenant or representation made by it
          with respect only to itself under any financing of the Partnership
          and/or the Partnership Property and all cure periods have elapsed
          without such default being cured by such Partner or waived by the
          creditor.

In this Article 21, the Partner which has defaulted is called the "DEFAULTING
PARTY" and each other Partner which is not in default is called the
"NON-DEFAULTING PARTY". In the event of the occurrence of more than one of the
circumstances set forth in Subsections 21.01(a) to (h), inclusive, with respect
to the applicable Partner each such circumstance shall be deemed to be a
separate Default.

                                                                         Page 42


21.02 GROUP DEFAULT: Notwithstanding the provisions set out in Section 21.01, if
any Partner which is a member of one of the Great Gulf Group or the Allan Group
(in either case, the "SUBJECT GROUP") is the Defaulting Party, then:

     (a)  if the Default is a non-monetary default or an event of default under
          Section 21.01(b), (c), (e) or (f), the other Partners comprising the
          Subject Group, upon the expiry of the grace period provided for in
          Section 21.01 shall have a further period of 10 days to cure such
          default and upon the expiry of said 10 day period, the provisions of
          Section 21.03 shall apply with respect to all of the Partners
          comprising such Group if no cure has been effected, it being
          acknowledged and agreed that the purchase of all the Partnership
          Interest of the Defaulting Party by the other Partners comprising such
          Group and the curing by them of such Default shall be considered to be
          a cure; and

     (d)  if the Default is a monetary default, the Subject Group as a whole
          shall be deemed to be in default upon the expiry of the time limit to
          cure such Default set out in subsection 21.01(a).

21.03 REMEDIES OF A NON-DEFAULTING PARTY: If a Default in respect of any Partner
shall have occurred, until such Default is cured, any Non-Defaulting Party shall
have the right to:

     (a)  bring any proceedings in the nature of specific performance,
          injunction, or other equitable remedy, it being acknowledged by the
          parties hereto that damages at law may be an inadequate remedy for a
          default or breach of this Agreement; and/or

     (b)  remedy such Default and any other default of the Defaulting Party
          under this Agreement or under any other agreements entered into by or
          on behalf of the Partnership, and shall be entitled on demand to be
          reimbursed by the Defaulting Party for any monies expended to remedy
          any such Default and any other expenses incurred by the Non-Defaulting
          Party, together with interest at 5% above the Prime Rate as published
          from time to time by the Wall Street Journal (which obligation to pay
          interest is subject to the provisions of Section 8.07); and in
          addition the Defaulting Party hereby irrevocably directs that all
          amounts payable by the Partnership to it pursuant to this Agreement
          shall be paid to the Non-Defaulting Party to the extent necessary to
          reimburse the Non-Defaulting Party for such moneys with interest as
          aforesaid; and/or

     (c)  bring any action at law as may be necessary or advisable in order to
          recover damages; and/or

     (d)  arrange, upon written notice to the Defaulting Party and the other
          Partners for a determination as provided in Section 21.05 hereof of
          the Fair Market Value of the Defaulting Party's Partnership Interest
          as at the month end prior to the giving of the notice requiring the
          determination, and either contemporaneously therewith or after such
          determination if it so desires, give written notice (the "PURCHASE
          NOTICE") to the Defaulting Party and the other Non-Defaulting
          Party(ies) that the Non-Defaulting Party elects to purchase the
          Defaulting Party's Partnership Interest at a price equal to 85% of the
          Fair Market Value of such Interest as so determined; and to purchase
          such Interest at such price, in which event the Defaulting Party shall
          sell and the Non-Defaulting Party shall purchase such Partnership
          Interest on the terms set out in Sections 21.05 and 21.06 hereof.
          There shall be credited against such purchase price (i) the amounts
          necessary to reimburse the Non-Defaulting Party for remedying the said
          Default together with interest at 5% above the Prime Rate as published
          from time to time by the Wall Street Journal (which obligation to pay
          interest is subject to the provisions of Section 8.07) and (ii) all
          costs incurred in determining the Fair Market Value of the Partnership
          Interest being purchased.

Any such purchase is intended as an absolute purchase and is not a transaction
by way of security and does not constitute foreclosure or retention of the
Interest or give rise to any equitable rights of redemption in favour of the
Defaulting Party.

Upon receiving a Purchase Notice, the other Partners shall not be entitled to
dispute the determination of Fair Market Value, but shall have the right, within
10 Business Days of the initial delivery of a Purchase Notice, to give a
Purchase Notice to the Defaulting Party and the Non-Defaulting Party who gave
the Purchase Notice, in which event each such Non-Defaulting Party who gave a
Purchase Notice shall be entitled to purchase such proportion of the Defaulting
Party's Partnership Interest as that Non-Defaulting Party's Percentage Interest
bears to the aggregate Percentage Interests of all Non-Defaulting Parties which
have given a Purchase Notice or as they may otherwise agree.

                                                                         Page 43


Notwithstanding anything to the contrary herein contained, if the Defaulting
Party is a member of either the Great Gulf Group or the Allan Group then the
other members of such Group, as applicable, shall have first rights to purchase
the Partnership Interest of such Defaulting Party by so indicating in its
Purchase Notice. If one or more of such other members of the relevant Group give
a Purchase Notice in which it/they indicate(s) that it is exercising its first
rights in accordance with this Section, then the other Partners shall be deemed
not to have delivered a Purchase Notice.

A Non-Defaulting Party may exercise the option provided for in subsection
21.03(d) at any time after a Default has occurred and so long as such Default is
continuing.

21.04 DISTRIBUTIONS: If a Default shall have occurred and be continuing, then
until such Default has been cured, all distributions to which the Defaulting
Party would otherwise be entitled shall first be paid to Non-Defaulting Parties
in accordance with the provisions of Section 21.03(b) to the extent amounts have
been advanced (including interest accrued thereon) on behalf of the Defaulting
Party, and the balance, if any, shall be deposited by the Partnership or the
General Partner on its behalf in an interest-bearing trust account at a
chartered bank pending the curing of the Default and be applied in payment of
the Defaulting Party's liabilities to the Partnership or the Non-Defaulting
Parties.

21.05 DETERMINATION OF FAIR MARKET VALUE: The Defaulting Party and a
Non-Defaulting Party or Parties which has sent a Purchase Notice will negotiate
in good faith for a period of 10 days after the Defaulting Party's receipt of
the Purchase Notice in an attempt to agree upon the Fair Market Value of the
Defaulting Party's Partnership Interest. If the Defaulting Party and the
Non-Defaulting Party or Parties are unable to so agree within such 10 day period
then each of them shall, within 10 days of the date by which they were to have
agreed on the Fair Market Value of the Defaulting Party's Partnership Interest,
appoint a qualified appraiser who is not an Affiliate of any of them, with not
less than 10 years experience in the practice of residential and commercial real
property valuation. Each of the Defaulting Party(ies) and the Non-Defaulting
Party(ies) shall then, within 10 days of the appointment of such appraisers
submit to both of them in writing its estimate of the Fair Market Value of the
Defaulting Party's Partnership Interest. The appraisers shall be instructed to
select the estimate which in their opinion is closest to the actual Fair Market
Value of the Defaulting Party's Partnership Interest (determined by the
appraisers acting as experts and not as arbitrators) and to advise the
Defaulting Party and the Non-Defaulting Party(ies) of their selection within 30
days of the later of their receipt of the Defaulting Party's and the
Non-Defaulting Party's estimate. The estimate selected by the appraisers shall
be deemed to be the Fair Market Value of the Defaulting Party's Partnership
Interest. If the two appraisers are unable to agree on the estimate of Fair
Market Value of the Defaulting Party's Partnership Interest which they are to
select within the 30 day period, then they shall, within 10 days of the
expiration of such 30 day period, appoint a third appraiser who is not an
Affiliate of any of the Defaulting Party and the Non-Defaulting Party(ies) and
the other two appraisers and who shall, acting alone, select the estimate of
Fair Market Value of the Defaulting Party's Partnership Interest which in his
opinion is closest to the actual Fair Market Value of the Defaulting Party's
Partnership Interest within 15 days of his appointment.

In the event that one party fails to select an appraiser or fails to submit an
estimate of Fair Market Value in accordance with the foregoing, the other
party's estimate of the Fair Market Value of the Defaulting Party's Partnership
Interest shall be final and binding on all parties.

The appraisers shall have access to the Partnership's books and records and the
Defaulting Party and the Non-Defaulting Party will co-operate with the
appraisers and provide all information and documents requested by them.

21.06 CLOSING ARRANGEMENTS:

(a) Any transaction of purchase and sale required to be completed in accordance
with the foregoing provisions of this Article 21 shall be completed at noon on
the day 90th clear day after the first delivery by a Non-Defaulting Party of a
Purchase Notice pursuant to Section 21.03(d) or, if the Fair Market Value of the
Defaulting Party's Partnership Interest has not been determined, 90 clear days
after determination of the Fair Market Value of the Defaulting Party's
Partnership Interest pursuant to Section 21.05 (or on the Business Day next
following if the day of completion is not a Business Day) and such completion
(called the "CLOSING") shall take place at the Principal Place of Business or at
such other place or date as the Defaulting Party and the Non-Defaulting Party
may in writing agree upon.

                                                                         Page 44


The Non-Defaulting Party may, subject to compliance with subsection 21.05,
advance the date for the Closing determined in accordance with the foregoing, to
any earlier date on not less than 10 Business Days prior notice to the
Defaulting Party.

(b) The provisions contained in Article 22 shall apply mutatis mutandis to the
sale of a Defaulting Party's Partnership Interest pursuant to this Article 21.

21.07 SUSPENSION OF OTHER RIGHTS: On the delivery by a Non-Defaulting Party of a
Purchase Notice provided for in Section 21.03(d), the Transfers permitted by
Sections 11.04 and 11.06 and the provisions contained in Articles 12, 13, 14 and
15 shall be suspended to and until the Closing or the rights of the
Non-Defaulting Parties and the Defaulting Party to effect a purchase and sale as
a result of a Purchase Notice having been delivered are terminated, whereupon
the provisions contained in the said Sections 11.04 and 11.06, Articles 12,13,14
and 15 shall revive.

21.08 LOSS OF PARTICIPATION: Upon a Partner becoming a Defaulting Party and
notwithstanding any other provisions of this Agreement, it shall have no right
to participate in any decision-making with respect to the Partnership, provided,
however, that no such approval, action, step, decision or proceeding may be
made, given or taken unless the Defaulting Party is given notice of such
proposed approval, action, step, decision or proceeding, and the Defaulting
Party is given the right to attend any meeting, solely for information purposes,
but with no right to participate in the deliberations or decision with respect
thereto.

                     ARTICLE 22 - GENERAL CLOSING PROVISIONS

22.01 APPLICATION TO OTHER SECTIONS: Except as otherwise expressly provided for
in this Agreement, the provisions of this Article 22 shall apply, mutatis
mutandis, to any Transfer pursuant to Articles 12, 14,15 and 21.

22.02 VENDOR'S DEBT TO PARTNERSHIP: If, at the Closing the vendor is indebted to
the Partnership in an amount recorded in the books of the Partnership and
verified by the Accountant then the indebtedness shall, at the exclusive option
of the purchaser, either be fully repaid and discharged on or before the Closing
by the vendor or the purchaser shall, out of the purchase price, pay, satisfy
and discharge all or any portion of such indebtedness, and receive and take
credit against the purchase price for the amount so paid on account of the
indebtedness and the vendor hereby agrees to same. The amount so deducted, if
any, shall reduce payments on account of the purchase price required to be made
(as provided for elsewhere in this Agreement) in inverse order of maturity.

22.03 RELEASE OF GUARANTEES, ETC:

(a) If, at the Closing the vendor or any person for or on behalf of the vendor,
has any guarantees, securities or covenants lodged with any person or bank to
secure an indebtedness, liability or obligation of the Partnership, then the
purchaser shall use its best efforts to deliver-up, or cause to be delivered-up,
to the vendor, and cancel or cause to be cancelled, such guarantees, securities
and/or covenants upon the Closing and to the extent applicable, the Partnership
shall co-operate with respect thereto.;

(b) If, notwithstanding the exercise of "best efforts" the release of any such
guarantees, securities or covenants is not obtained, then the purchaser shall
deliver to the vendor and/or the person(s) which shall have provided such
guarantee, security or covenant, an indemnity in writing in form reasonably
satisfactory to the vendor indemnifying each of them and their respective heirs,
executors, administrators, successors and assigns from any and all claims,
demands, expenses, damages, liabilities and suits, paid, suffered or incurred by
them with respect to and as a result of the terms of such guarantee, security or
covenant.

22.04 PAYMENT, DOCUMENTS, ETC. FOR CLOSING: At the Closing:

(a) each purchaser shall assume, from and after the Closing, all obligations and
liabilities of the vendor in connection with the Partnership Interest or portion
thereof being acquired which have arisen pursuant to the provisions of this
Agreement and shall indemnify the vendor in connection therewith. At the
Closing, all amounts due by the vendor to a purchaser (including, without
limitation, any amount referred to in Sections 18.05 and/or 21.03 and any amount
necessary to reimburse the purchaser for remedying any Default of the vendor)
shall be settled and set-off or paid in full.

                                                                         Page 45


(b) each purchaser shall pay to the vendor the required amount of the purchase
price payable on Closing in cash, bank draft or by certified cheque, and as
evidence of the unpaid balance, if any, of the purchase price, deliver to the
vendor a promissory note for such unpaid balance which note shall be drawn in
accordance with the provisions of this Agreement relating to the payment of the
said unpaid balance of the purchase price.

There shall be deducted from the purchase price payable by a purchaser to a
vendor as otherwise determined in accordance with the provisions of this
Agreement, all amounts owing by the vendor to such purchaser together with the
amount of any liabilities of a vendor assumed by the purchaser at Closing
(provided that the appropriate release for such liability is received by the
vendor) and/or which are subject to a right of set-off as provided for in
Section 22.02(a). The vendor shall, on request of a purchaser, effect the
discharge of any security then outstanding (other than security constituting
Permitted Encumbrances) to the extent the Partnership Interest of the vendor
constitutes collateral under such security.

(c) the vendor shall deliver an assignment from the vendor to the purchaser(s)
of the vendor's Partnership Interest, together with such instruments and
documents, consents and acknowledgements (in each case to be reasonably
satisfactory to the purchaser(s) as may be necessary or reasonably desirable to
give effect to the sale and transfer of such Partnership Interest (collectively,
the "TRANSFER DOCUMENTS").

The Transfer Documents shall be legally sufficient to convey the Partnership
Interest of the vendor to the purchaser(s).

(d) do all other things required in order to effectively convey and deliver
title to the Partnership Interest to the purchaser free and clear of any and all
liens, claims, security interests and any other encumbrances of others
whatsoever and to fully comply with the intent of this Agreement; however, if
contrary to the provisions hereof the Partnership Interest is not free and clear
of all encumbrances of others, the purchaser (without prejudice to any other
right which it may have) may at its sole option complete the purchase of the
Partnership interest subject to such encumbrances, in which case the purchaser
shall assume all obligations and liabilities with respect to such encumbrances.
The purchaser shall receive and take credit against the purchase price for the
amount so assumed and the vendor hereby agrees to same. The amount so deducted,
if any, shall reduce payments on account of the purchase price required to be
made (as may be provided for elsewhere in this Agreement) in order of maturity.

22.05 PURCHASER AS VENDOR'S ATTORNEY: If, at the Closing, the vendor shall fail
to deliver the Transfer Documents to the purchaser, the purchaser shall be and
is hereby irrevocably constituted as the duly appointed agent and lawful
attorney of the vendor with full power to prepare, execute, complete and deliver
in the name and on behalf of such vendor, all such assignments and other
documents as may be necessary to effectively transfer and assign the vendor's
Partnership Interest or part thereof being sold to the purchaser, and upon
delivery to the Partnership of such Transfer Documents, the Partnership may
receive the said purchase price and shall thereupon cause the name of the
purchaser to be entered in the register as holder of the said Partnership
Interest and shall hold the said purchase price in trust for the vendor. The
receipt of the Partnership for the said purchase price shall be good discharge
to the purchaser and after its name has been entered in the register in
purported exercise of the aforesaid power, the validity of the proceedings shall
not be questioned by any person. Such appointment and power of attorney shall
not be revoked by the dissolution, winding-up, bankruptcy or insolvency of the
vendor and the vendor hereby ratifies and confirms and agrees to ratify and
confirm all that the purchaser may lawfully do or cause to be done by virtue of
the provisions hereof. The vendor hereby irrevocably consents to the assignment
and transfer of its Partnership Interest or part thereof made pursuant to the
provisions of this Section.

22.06 APPROVAL OF TRANSFER: Effective as at the Closing and provided the
transfer or assignment of the Partnership Interest is permitted pursuant to the
provisions of this Agreement, the General Partner shall effect registration of
the required transfer of the Partnership Interest.

                                                                         Page 46


                      ARTICLE 23 - MISCELLANEOUS PROVISIONS

23.01 NOTICES: Any notice, payment, demand or other communication required or
permitted to be given by any provision of this Agreement shall be in writing and
shall be effectively given if delivered, sent by facsimile or, if postal
services are then operating regularly, sent by prepaid registered or certified
mail, to the respective addresses and facsimile numbers of a Partner as set
forth opposite its name in the attached Exhibit A or to such other address or
facsimile number as any Partner may from time to time specify by written notice
to the Partnership. Any notice may at any time be waived by the person entitled
to receive the notice.

Notwithstanding the foregoing, all payments to be made by the Partnership to a
Partner shall be sent to such address or deposited directly into such bank
account maintained by such Partner, in the United States as such Partner
requests and failing such request shall be sent to the address of such Partner
as set forth opposite its name in the attached Exhibit A.

Any such notice or other communication shall be deemed to have been given and
received for all purposes: (a) when delivered, on the day the notice or other
communication is delivered personally to the party or to an officer of the party
to whom the same is directed; (b) if sent by facsimile, on the day transmitted
provided such transmission occurs prior to 4:00 p.m. on a Business Day and
otherwise it will be deemed to have been given and received on the next Business
Day after transmission; and (c) if mailed as aforesaid, 5 Business Days
following the day on which it is post marked; provided, however, that in the
event of an interruption of normal mail service it shall be deemed to have been
given and received on the 5th Business Day following the day on which normal
mail service is restored.

23.02 NOTICE OF CLAIMS: Each of the Partners shall notify the others of any
notice, document, claim, demand, right or cause of action asserted, threatened
or instituted against it (other than by a Partner or the Partnership) which
could adversely affect the Partnership Interest of any other Partner or which
involves the performance of this Agreement or the Partnership (including any of
the Partnership Property). Any such notification to the other Partners shall
include delivery of a copy the relevant notice, claim or other document.

23.03 CERTIFICATES OF COMPLIANCE: Each Partner shall, within 10 days of written
demand signed by the Partnership or any other Partner, execute and deliver to a
third party designated by the Partnership or such other Partner a certificate
addressed to such third party stating whether such Partner is aware of any
defaults on the part of the Partnership or the other Partner who requested the
certificate, or of the initiation of any of the purchase and sale procedures
described in Articles 11, 12, 13, 14, 15, 20 or 21 by any Partner, and any other
information as to compliance herewith as may reasonably be requested.

23.04 RIGHTS OF PARTNERS INDEPENDENT: The rights available to the Partnership
and the Partners under this Agreement and at law shall be deemed to be several
and not dependent on each other, and each such right shall be accordingly
construed as complete in itself and not by reference to any other such right.
Any one or more of such rights may be exercised separately or in any combination
by the Partnership or by a Partner, as applicable, from time to time, and no
such exercise shall exhaust the rights or preclude any other Partner from
exercising any one or more of such rights or combination thereof from time to
time thereafter or simultaneously.

23.05 CONFIDENTIALITY: Each of the Partners shall keep in strict confidence and
shall not disclose to any person who is not a party hereto, any and all
information obtained with respect to the Partnership, the Partnership Property
and the Partners unless and until the written consent of the Partners is
obtained or such disclosure is required for purposes of enforcement of the
provisions of this Agreement or the exercise of the rights of a Partner
hereunder.

All reports and other information referable to the Partnership or the
Partnership Property received by the Partners or any officers, directors,
shareholders or other representative of a Partner shall be considered to have
been received on an absolutely confidential basis and accordingly shall not be
disclosed to any other person whatsoever, save and except only as permitted in
the immediately preceding paragraph.

                                                                         Page 47


23.06 SECTION AND OTHER CAPTIONS: Section and other captions contained in this
Agreement are for reference purposes only and are in no way intended to
describe, interpret, define or limit the scope, extent or intent of any part of
this Agreement. The division of this Agreement into Articles, Sections,
subsections, paragraphs and subparagraphs and the insertion of headings and an
index is for the convenience of reference only and shall not affect the
construction or interpretation of this Agreement. All references in this
Agreement to Articles or Sections are to the relevant Articles or Sections of
this Agreement, unless otherwise stated.

23.07 "IN THIS AGREEMENT", "HEREOF", "HEREIN", ETC.: The terms "in this
Agreement", "hereof", "herein", "hereto" "hereunder" and similar expressions
refer to this Agreement in its entirety (as the same may be amended or restated
from time to time) and not to any particular Article, Section or other portion
hereof, unless the context clearly indicates the contrary.

23.08 SEVERABILITY: Every provision of this Agreement is intended to be
severable. If one or more of the provisions of this Agreement or the application
thereof to any person or circumstance is determined to any extent to be invalid,
illegal or unenforceable in any respect under any applicable law, the validity,
legality or enforceability of the remaining provisions hereof or the application
thereof to persons or circumstances other than those as to which it is held to
be invalid, illegal or unenforceable, shall not be affected or impaired thereby.
All paragraphs and subparagraphs hereof are declared to be separate and distinct
provisions of this Agreement.

23.09 BUSINESS DAYS: Whenever any payment to be made hereunder shall be stated
to be due or any action to be taken hereunder shall be stated to be required to
be taken on a day other than a Business Day, such payment shall be made or such
action shall be taken on the next following Business Day, and in the case of
payment of a monetary amount, the extension of time shall be included for the
purposes of computation of interest, if any, to be paid thereon.

23.10 CALCULATION OF INTEREST & FEES: In calculating the amount of any interest
payable hereunder, any period for which such amounts are to be calculated shall
include the first day thereof and exclude the last day thereof, provided payment
is made on such day.

23.11 AMENDMENTS: The General Partner may submit to the Partners in writing by
registered or certified mail the text of any proposed amendment to this
Agreement and a statement by the proposer of the purpose of the amendment. Any
amendment shall be adopted if, within 90 days after the mailing of the amendment
to all Partners, the General Partner shall have received written approval of the
amendment from Partners having in the aggregate Percentage Interests: (i) of
more than 50% of all the Percentage interests held by the Partners comprising
the Great Gulf Group, and (ii) of more than 50% of all the Percentage Interests
held by the Partners comprising the Allan Group. A written approval may not be
withdrawn or voided once it is filed with the General Partner. A Partner filing
a written objection may thereafter file a valid written approval. The date of
adoption of an amendment to this Agreement made pursuant to this Section shall
be the date on which the General Partner shall have received the requisite
written approvals.

A proposed amendment which is not adopted may be resubmitted. If a proposed
amendment is not adopted, a written approval received with respect to the
amendment shall become void and shall not be effective with respect to any
resubmission of the proposed amendment.

Notwithstanding the foregoing provisions of this Section, no amendment may,
without the prior written approval of all Partners, (i) enlarge the obligations
of any Partner under this Agreement, (ii) enlarge the liability of the General
Partner to the Limited Partners, (iii) amend this Section, (iv) alter the
Partnership in a manner that will result in the Partnership no longer being
classified as a "partnership" for federal income tax purposes or (v) reduce any
requirements for the prior approval of the Limited Partners set forth in this
Agreement.

                                                                         Page 48


23.12 GOVERNING LAW: This Agreement and the rights of the Partners shall be
governed by and performed, interpreted and enforced exclusively in accordance
with the laws of the State of Florida including the federal laws of the United
States applicable therein, and the Act as now in effect shall govern and
supersede any provision of this Agreement which would otherwise be in violation
of the Act.

23.13 WAIVER OF ACTION FOR PARTITION: Each of the Partners irrevocably waives,
during the term of the Partnership and during the period of its liquidation
following any dissolution, any right which the Partner may have to maintain an
action for partition with respect to any assets of the Partnership.

23.14 COUNTERPART EXECUTION: This Agreement may be executed in any number of
counterparts with the same effect as if all parties had signed the same
document. All counterparts shall be construed together and shall constitute one
Agreement.

23.15 PARTIES IN INTEREST:, Every provision contained in this Agreement shall be
binding upon and, subject to the provisions contained in Article 11, inure to
the benefit of and be enforceable by the successors and assigns of the parties
but only to the extent that they are permitted successors and assigns pursuant
to the terms hereof.

23.16 INTEGRATED AGREEMENT: This Agreement (including the Schedules hereto) and
all other agreements, instruments and documents delivered pursuant to, or
provided for in, this Agreement constitute the whole and entire agreement and
understanding of the parties hereto with respect to the matters contemplated or
provided herein and supersedes and replaces all prior agreements and
understandings, whether written or oral, governing the rights and obligations
between and amongst the Partners or any of them in connection with the
Partnership. There are no restrictions, promises, covenants, representations,
warranties, undertakings or agreements, whether written, oral, collateral or
otherwise, with respect to the matters contemplated or provided for herein other
than those expressly set forth or otherwise expressly provided for herein.

23.17 NO ORAL MODIFICATION: No consent, modification or waiver of this Agreement
or any part of it shall be valid or effective unless in writing and signed by
the party or parties sought to be charged; and no waiver of any condition,
breach of or default in the performance by a party or parties of its or their
obligations under this Agreement shall be deemed or construed to be a waiver of
any other condition, breach of or default in the performance by such party or
parties of its or their obligations under this Agreement. For greater certainty,
failure on the part of a party hereto to complain of any breach or default by,
or of any act or failure to act of, any one or more of the other parties hereto
or to declare the other party or parties hereto in default, irrespective of how
long such failure continues, shall not constitute a waiver by such party of its
rights hereunder. The giving of a consent or waiver by a party hereto in any one
instance shall not limit or waive the necessity to obtain such party's consent
or waiver in any future instance.

23.18 FURTHER ASSURANCES: Each of the parties shall at all times and from time
to time, forthwith upon every reasonable request to do so by any other party,
make, do, execute and deliver, further and other acts, deeds, things, documents,
instruments, conveyances and assurances whatsoever for more effectually
implementing and carrying out the true intent and meaning of this Agreement.

23.19 TIME OF THE ESSENCE: Time shall be deemed to be of the essence with
respect to all time limits provided for in this Agreement.

23.20 NUMBER AND GENDER: In construing this Agreement, where the context so
requires or indicates, words in the singular shall include the plural and
vice-versa, and words importing the feminine shall include the masculine and the
neuter and vice-versa, and the rest of the sentence shall be construed as if the
grammatical and terminological changes thereby rendered necessary had been made.

                                                                         Page 49


IN WITNESS WHEREOF each of the undersigned has duly executed and delivered this
Agreement of Limited Partnership and, notwithstanding the actual date of such
execution and delivery agrees to be bound by this Agreement with effect on and
as of the Effective Date.

ASHTON WOODS FLORlDA L.L.C.             ELLY NEVADA, INC.
Per:                                    Per:



- -------------------------------------   ----------------------------------------
    Authorized Signing Officer              Authorized Signing Officer


NORMAN NEVADA, INC.                     LARRY NEVADA, INC.
Per:                                    Per:



- -------------------------------------   ----------------------------------------
    Authorized Signing Officer              Authorized Signing Officer


BRUCE NEVADA, INC.                      HARRY NEVADA, INC.
Per:                                    Per:



- -------------------------------------   ----------------------------------------
    Authorized Signing Officer              Authorized Signing Officer


SEYMOUR NEVADA, INC.                    HAYDN NEVADA, INC.
Per:                                    Per:



- -------------------------------------   ----------------------------------------
    Authorized Signing Officer              Authorized Signing Officer


GRANT-ALLAN ENTERPRISES INC.            R.A.INVESTMENT HOLDINGS INC.
Per:                                    Per:



- -------------------------------------   ----------------------------------------
    Authorized Signing Officer              Authorized Signing Officer

EX-3.2(AC)

                                                                 Exhibit 3.2(ac)

          FORM OF AMENDMENT NO. 1 TO AGREEMENT OF LIMITED PARTNERSHIP
                                       OF
                      LAKE LOUISE COVES LIMITED PARTNERSHIP

     Amendment No. 1 ("Amendment") to Agreement of Limited Partnership of Lake
Louise Coves Limited Partnership dated May 6, 1998.

                                    RECITALS

     A. Ashton Woods, L.L.C., as General Partner, and Bruce Nevada, Inc., Elly
Nevada, Inc., Harry Nevada, Inc., Haydn Nevada, Inc., Larry Nevada, Inc., Norman
Nevada, Inc. and Seymour Nevada, Inc., as Limited Partners (collectively, the
"Partners"), entered into an Agreement of Limited Partnership (the "Partnership
Agreement") dated as of March __, 1998.

     B. The Partners desire to amend the Partnership Agreement to change the
name of the partnership to Isleworth West Limited Partnership.

                                    AGREEMENT

     1. The definition of "Agreement" or "Partnership Agreement" in Article 1 of
the Partnership Agreement is deleted in its entirety and replaced with the
following language:

          "Agreement" or "Partnership Agreement" means this Agreement of Limited
          Partnership of Isleworth West Limited Partnership, as amended from
          time to time.

     2. The definition of "Partnership" in Article 1 of the Partnership
Agreement is deleted in its entirety and replaced with the following language:

          "Partnership" means Isleworth West Limited Partnership, a Florida
          limited partnership.

     3. The first sentence of Section 2.02 of the Partnership is deleted in its
entirety and replaced with the following language:

          2.02 Name. The name of the Partnership shall be Isleworth West Limited
          Partnership.

     4. In all other respects, the Partnership Agreement remains in full force
and effect.

     5. This Amendment may be executed in any number of counterparts with the
same effect as if all parties had signed the same document. All counterparts
shall be construed together and shall constitute one Amendment.

     IN WITNESS WHEREOF the parties have executed this Amendment effective as of
the date first written above.

                                        GENERAL PARTNER

                                        Ashton Woods Florida L.L.C.


                                        By:
                                            ------------------------------------
                                            Bruce Freeman, Manager


                                        LIMITED PARTNERS

                                        Bruce Nevada, Inc.


                                        By:
                                            ------------------------------------
                                        Its:
                                             -----------------------------------


                                        Elly Neveda, Inc.


                                        By:
                                            ------------------------------------
                                        Its:
                                             -----------------------------------


                                        Harry Neveda, Inc.


                                        By:
                                            ------------------------------------
                                        Its:
                                             -----------------------------------


                                        Haydn Nevada, Inc.


                                        By:
                                            ------------------------------------
                                        Its:
                                             -----------------------------------


                                        Larry Neveda, Inc.


                                        By:
                                            ------------------------------------
                                        Its:
                                             -----------------------------------


                                        2

                                        Norman Nevada, Inc.


                                        By:
                                            ------------------------------------
                                        Its:
                                             -----------------------------------


                                        Seymour Nevada, Inc.


                                        By:
                                            ------------------------------------
                                        Its:
                                             -----------------------------------


                                        3

EX-3.2(AD)

                                                                 Exhibit 3.2(ad)

                                SECOND AMENDMENT
                     TO AGREEMENT OF LIMITED PARTNERSHIP OF
                       ISLEWORTH WEST LIMITED PARTNERSHIP

     THIS SECOND AMENDMENT TO AGREEMENT OF LIMITED PARTNERSHIP OF ISLEWORTH WEST
LIMITED PARTNERSHIP (this "Amendment") is made and entered into by and among
ASHTON WOODS FLORIDA L.L.C., a Nevada limited liability company ("Ashton FL"),
ELLY NEVADA, INC., a Nevada corporation ("Elly NV"). NORMAN NEVADA, INC., a
Nevada corporation ("Norman NV"), LARRY NEVADA, INC., a Nevada corporation
("Larry NV"), BRUCE NEVADA, INC., a Nevada corporation ("Bruce NV"), HARRY
NEVADA, INC., a Nevada corporation ("Harry NV"), SEYMOUR NEVADA, INC., a Nevada
corporation ("Seymour NV"), HAYDN NEVADA, INC., a Nevada corporation ("Haydn
NV"), GRANT-ALLAN ENTERPRISES, INC., a Florida corporation ("Grant"), R.A.
INVESTMENT HOLDINGS, INC., a Florida corporation ("RA"), and ASHTON WOODS USA
L.L.C., a Nevada limited liability company ("Ashton USA").

                                    RECITALS:

     A. Ashton FL, Elly NV, Norman NV, Larry NV, Bruce NV, Harry NV, Seymour NV,
Haydn NV, Grant, and RA have heretofore entered into (i) a Limited Partnership
Agreement of Lake Louise Coves Limited Partnership dated as of March 27, 1998,
creating Lake Louise Coves Limited Partnership, a Florida limited partnership
(the "Company"), and (ii) an Amendment No. 1 to Agreement of Limited Partnership
of Lake Louise Coves Limited Partnership dated May 6, 1998, changing the name of
the Company to Isleworth West Limited Partnership (collectively, the
"Agreement").

     B. As permitted by the Agreement, Elly NV, Norman NV, Larry NV, Bruce NV,
Harry NV, Seymour NV, and Haydn NV transferred all of their right, title, and
interest in and to the Company to Ashton USA.

     C. The parties hereto desire to amend the Agreement to reflect the
transfers described above and provide for the admission of Ashton USA as a
limited partner of the Company.

     D. Capitalized terms, not specifically defined in this Amendment, shall
have the meanings given such terms in the Agreement.

     NOW, THEREFORE, for and in consideration of the premises and the respective
agreements set forth herein, the parties hereto agree as follows:

     1. The transfers described in Recital B above are hereby approved.

     2. Ashton USA is hereby admitted as a limited partner of the Company and
the parties hereto recognize that Elly NV, Norman NV, Larry NV, Bruce NV, Harry
NV, Seymour NV, and Haydn NV, have withdrawn as limited partners of the Company.
The only limited partners of the Company are Grant, RA, and Ashton USA.

     3. The Partnership Interests of the Partners set forth on Exhibit "A" to
the Agreement shall be as follows:



Partners                                         Partnership Interest
- --------                                         --------------------
                                              
Ashton Woods Florida L.L.C./General Partner                  1%
Ashton Woods USA L.L.C./Limited Partner                 82.334%
Grant-Allan Enterprises, Inc./Limited Partner            8.333%
R.A. Investment Holdings, Inc./Limited Partner           8.333%


     4. Any and all notices, demands, requests, or other communications
permitted or required to be given to Ashton USA pursuant to the Agreement shall
be delivered to Ashton USA in the manner provided in the Agreement, at the
following address:

          250 Lesmill Road
          Don Mills, Ontario M3B 2T5 Canada

     5. By execution of this Amendment, Ashton USA agrees to be bound by the
terms and provisions of the Agreement, as amended hereby.

     6. Except as amended hereby, the terms and provisions of the Agreement
shall remain unchanged and shall continue in full force and effect.

     EXECUTED as of May 31, 1999.

                                        GENERAL PARTNER:

                                        ASHTON WOODS FLORIDA L.L.C.,
                                        a Nevada limited liablity company


                                        By: /s/ Bruce Freeman
                                            ------------------------------------
                                            Bruce Freeman - Managing Member


                                        By: /s/ Seymour Joffe
                                            ------------------------------------
                                            Seymour Joffe - Managing Member


                                        By: /s/ Harry Rosenbaum
                                            ------------------------------------
                                            Harry Rosenbaum - Managing Member


                                        2

                                        LIMITED  PARTNERS:

                                        ASHTON WOODS USA L.L.C.,
                                        a Nevada limited liability company


                                        By: /s/ Bruce Freeman
                                            ------------------------------------
                                            Bruce Freeman - Managing Member


                                        By: /s/ Seymour Joffe
                                            ------------------------------------
                                            Seymour Joffe - Managing Member


                                        By: /s/ Harry Rosenbaum
                                            ------------------------------------
                                            Harry Rosenbaum - Managing Member


                                        GRANT-ALLAN ENTERPRISES, INC.,
                                        a Florida corporation


                                        By: /s/ William D Allan
                                            ------------------------------------
                                        Name: William D Allan
                                        Title: Director


                                        R. A. INVESTMENT HOLDINGS, INC.,
                                        a Florida corporation


                                        By: /s/ Russell Allan
                                            ------------------------------------
                                        Name: Russell Allan
                                        Title: President


                                        WITHDRAWING LIMITED PARTNERS:

                                        ELLY NEVADA, INC.,
                                        a Nevada corporation


                                        By: /s/ Elly Reisman
                                            ------------------------------------
                                            Elly Reisman, President


                                        3

                                        NORMAN NEVADA, INC.,
                                        a Nevada corporation


                                        By: /s/ Norman Reisman
                                            ------------------------------------
                                            Norman Reisman, President


                                        LARRY NEVADA, INC.,
                                        a Nevada corporation


                                        By: /s/ Larry Robbins
                                            ------------------------------------
                                            Larry Robbins, President


                                        BRUCE NEVADA, INC.,
                                        a Nevada corporation


                                        By: /s/ Bruce Freeman
                                            ------------------------------------
                                            Bruce Freeman, President


                                        HARRY NEVADA, INC.,
                                        a Nevada corporation


                                        By: /s/ Harry Rosenbaum
                                            ------------------------------------
                                            Harry Rosenbaum, President


                                        SEYMOUR NEVADA, INC.,
                                        a Nevada corporation


                                        By: /s/ Seymour Joffe
                                            ------------------------------------
                                            Seymour Joffe, President


                                        HAYDN NEVADA, INC.,
                                        a Nevada corporation


                                        By: /s/ Haydn Matthews
                                            ------------------------------------
                                            Haydn Matthews, President


                                        4

EX-3.2(AE)

                                                                 Exhibit 3.2(ae)

                             JOINT VENTURE AGREEMENT

                                       OF

                              PINERY JOINT VENTURE

THIS AGREEMENT made as of the 29th day of September, 1993.

BETWEEN:

ELLY COLORADO, INC.
a corporation incorporated under
the laws of the state of Colorado;

(hereinafter called "ER");

- -and-

NORMAN COLORADO, INC.
a corporation incorporated under
the laws of the state of Colorado;

(hereinafter called "NR");

- -and-

LARRY COLORADO, INC.
a corporation incorporated under
the laws of the state of Colorado;

(hereinafter called "LR");

- -and-

BRUCE COLORADO, INC.
a corporation incorporated under
the laws of the state of Colorado;

(hereinafter called "BF");

- -and-

HARRY COLORADO, INC.
a corporation incorporated under
the laws of the state of Colorado;

(hereinafter called "HR")

- -and-

SEYMOUR COLORADO, INC.
a corporation incorporated under
the laws of the state of Colorado;

(hereinafter called "SJ")

- -and-

HAYDN COLORADO, INC.
a corporation incorporated under
the laws of the state of Colorado;

(hereinafter called "HM")


                                        1

     WHEREAS ER, NR, LR, BF, HR, SJ, and HM (herein collectively called the
"Venturers") desire to form a Colorado joint venture to own lands, to construct
homes and to market them, such lands to be designated from time to time.

          AND WHEREAS the Venturers wish to enter into this Agreement for the
purpose of setting forth the various terms, provisions, and conditions governing
their respective interests in the Venture;

          NOW THEREFORE, in consideration of the mutual covenants of the parties
hereinafter contained and for other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledge, it is hereby agreed this Joint
Venture Agreement of Pinery Joint Venture shall constitute the entire agreement
of the parties, as follows:

                                   FORMATION

     1. ER, NR, LR, BF, HR, SJ, and HM hereby form and constitute a Colorado
joint venture (the "Venture") for the purpose hereinafter set forth. The affairs
of the Venture shall be conducted in accordance with the provision of this
Agreement.

     2. The purpose of the Venture is the acquisition of the Property, the
development thereof into serviced building lots (if needed), and the
construction of houses thereon, the sale thereof, and such other related
activities as the parties may agree upon.

     3. The undivided interest of each Venturer in the Venture (hereinafter
referred to as "Proportionate Interest") shall be as follows:

                                   ER - 28.00%
                                   NR - 28.00%
                                   LR - 18.00%
                                   BF -  7.00%
                                   HR -  7.00%
                                   SJ -  7.00%
                                   HM -  5.00%

                                     FUNDING

     4. The Venturers shall advance funds to the Venture from time to time as
required. These advances may be made in stages as the activities of the Venture
may reasonably require. The advances shall be made by each of the Venturers in
the following proportions. ER - 28.00%, NR - 28.00%, LR - 18.00%, BF - 7.00%, HR
- - 7.00%, SJ - 7.00% and HM - 5.00%. The advances shall be repaid pro rata and
pari passu and on no other basis.

     In the event that any Veturer advances to the Venture an amount in excess
of its required proportionate share of advances as noted above, this amount
shall be referred to as a deficit loan. The Venturer making such advance shall
be entitled to repayment of the said deficit loan on demand and shall be
entitled to charge and be paid interest on the deficit loan at a rate which is
four (4%) per cent per annum greater than the prime rate charged by the bank of
Nova Scotia to its most credit worthy customers on U.S. Dollar demand loans, but
in no event shall the rate of interest exceed the


                                        2

maximum permitted by law. These repayments shall be made in priority to any
other amounts advanced pursuant to Section 4 herein.

                                 BORROWED MONEYS

     5. The Venturers shall have the authority to borrow money in the name of
and on behalf of the Joint Venture, for the purpose of the Venture, upon
approval of Venturers owning Proportionate Interests of not less than fifty-one
(51%) per cent.

                          SECURITY FOR BORROWED MONEYS

     6. The Venturers hereby covenant and agree to pledge the assets of the
Venture and to give such guarantees and other security in such form as may be
required by any lender in order to obtain the financing contemplated in Section
5 hereof.

                                   FISCAL YEAR

     7. The fiscal year of the Venture shall end on the 31st day of May of each
year.

                      APPOINTMENT OF AUDITOR, OR ACCOUNTANT

     8. The Venture appoints Messrs. Peat Harwick Thorne its accountants or
auditors. That firm shall be engaged to, at the end of each fiscal year of the
tenure and at such other times as may be reasonably required by one of the
Venturers, make an audit, if requested by any Venturer, at such Venturer's
expense, of the books and accounts of the Venture and for such purpose shall
have access to all books of account, records, and all vouchers, cheques, papers
and documents of or which may relate to the Venture. The Venture shall cause its
accountants to furnish copies of all financial statements prepared for or on
behalf of or in connection with the Venture to each of the Venturers forthwith
after their preparation.

                           MAINTENANCE OF BANK ACCOUNT

     9. The Venturers shall maintain for and on behalf of the Venture, a bank
account (herein called the "Venture Bank Account") to which shall be deposited
all receipts of every nature and kind whatsoever from the Venture.

                        RECEIPT AND DISBURSEMENT OF FUNDS

     10. The Venture Bank Account shall be used solely for the purpose of the
receipt and disbursement of funds as aforesaid and for no other purpose, it
being the express intention of the Venturers that under no circumstances shall
the funds to be received or disbursed as required herein be co-mingled with any
other funds of the Venturers.


                                        3

                          RECORDS AND BOOKS OF ACCOUNT

     11. Proper books of account, bank records and reconciliations for all bank
accounts referred to in this Agreement, such financial records as are reasonably
required by the accountant appointed from time to time pursuant to Section 8
hereof and copies of all contracts, agreements, correspondence and similar
material shall be kept by the Venture, and entries shall be made therein of all
such matters, terms, transactions and things as are usually written and entered
in books of account kept by others engaged in an enterprise of a similar
nature. Euch of the Venturers and their representatives, agents or nominees
shall have free access at all reasonable times to inspect, examine, audit and
copy all records and documents at its own expense. Each Venturer shall at all
times furnish to the others, correct information, accounts and statements of and
concerning all such transactions without concealment or suppression.

          The Venture shall cause to be prepared and furnished to each of the
Venturers promptly after the close of each fiscal year of the Venture an
unaudited annual statement showing the operations of the Venture for such
period, the balance of each Venturer's capital account, the unpaid balance due
under all obligations of the Venture, a balance sheet of the Venture dated as at
the end of the fiscal year, a related statement of income or loss for the
Venture for such fiscal year and such other information as may be reasonably
requested by the Venturers.

                    APPLICATION AND DISTRIBUTION OF REVENUES

     12. All receipts and revenues of the Venture from any source shall be
applied and distributed in the following order of priority with no distribution
being made in any category set forth below unless and until the preceding
category has been satisfied in full either by payment or by setting aside of a
cash reserve for payment of same.

     a)   in payment of all debts, obligations, liabilities, costs and expenses
          incurred in connection with or on account of the Venture;

     b)   in repayment of deficit loans and accrued interest thereon as set
          forth in Section 4 herein;

     c)   in repayment of advances by the Venturers subject to the provisions of
          Section 4 herein;

     d)   after having satisfied (a), (b) and (c) above, receipts and revenues
          of the Venture shall represent the profits of the venture and shall be
          distributed in the following order of priority;

          i) the advances made by the venturers to the venture pursuant to
     Section 4 herein shall hear interest at a rate which is two (2%) per cent
     per annum greater than the prime rate charged by the Bank of Nova Scotia to
     its most credit worthy customers on U.S. Dollar demand loans, but in no
     event shall the rate of interest exceed the maximum rate permitted by law,
     from the date of such advance until repaid to such Venturer in accordance
     with Section 12(c) above.

          (ii) after having satisfied (a), (b), (c) and (d)(i) above, the
     receipts and revenues of the Venture shall be distributed to the Venturers
     pro rata and pari passu in accordance with their proportionate Interests.


                                        4

However, no distribution of profits shall be made until after completion of any
development and/or construction activities undertaken by the venture, without
the agreement of the venturers owning proportionate Interests of not less than
fifty-one (51%) percent.

                                    INDEMNITY

     13. All liabilities of the venture shall be borne by the Venturers in
accordance with their respective Proportionate Interest in the Venture. If any
of the Venturers or any principal of any of the Venturers shall become a surety
or guarantor of the Venture or otherwise become indebted or liable for any
monies borrowed by or on behalf of the Venture or for any obligation entered
into by or on behalf of the Venture each Venturer shall indemnify the other, or
the principal aforementioned, with the intent and purpose that all such
liabilities and obligations shall be borne by the Venturers in the proportions
aforementioned.

                            MANAGEMENT OF VENTURE AND
                             EXECUTION OF DOCUMENTS

     14 (a) The management of the Venture shall be vested with Venturers owning
Proportionate Interests of not less than fifty-one (51%) per cent.

     (b) All deeds, transfers, contracts, agreements and other documents
required to be executed by or on behalf of the Venture, from time to time,
including but not limited to checks and documents to open and/or close checking
accounts for the Venture, shall be executed on the Venture's behalf by an
authorized signing officer of either Seymour Colorado, Inc. or Harry Colorado
Inc. as authorized representative of the Venture. The signed statement of Harry
Rosenbaum or Seymour Joffe as an officer of either of those entities reciting
that such entity has authority to undertake any such act, when delivered to any
third party, shall be all the evidence such third party shall need concerning
the capacity of such person and such third party shall be entitled to rely upon
such statement and shall not be required to inquire further as to any of the
facts contained in such statement, said facts being deemed to be true insofar as
such third party is concerned after delivering such statement, the individual by
his signature alone, may sign any investment and bind the Venture.

                                  RESTRICTION

     15. Except with the prior written consent of the Venturers the respective
undivided interest of each Venturer in the Venture, (collectively referred to as
the Venture Interest) shall not be transferred, assigned, sold, mortgaged,
charged or in any other way encumbered, disposed of, or dealt with, without the
consent in writing of all the other Venturers. No Venturer shall have the right
to partition any venture assets, no shall any Venturer make any application to
any Court or other authority having jurisdiction over the matter, nor commence
nor prosecute any proceeding for the partition of Property or any part thereof.

                            NON ARMS-LENGTH TRANSFER

     16. Notwithstanding the provisions of Section 15 hereof, any venturer shall
be free to transfer, sell or assign in whole or in part its interest in the
Venture, to any corporation which is a related corporation as determined under
the appropriate taxing legislation including any amendments thereto, in which
event the


                                        5

following provisions shall apply thereto;

     a)   No transfer sale or assignment pursuant to this Section, shall be made
          unless at the time of such transfer, sale or assignment, the
          transferee agrees to be bound by the terms of this Agreement and
          become a party hereto by executing a counterpart of this Agreement.

     b)   In the event of a transfer, sale or assignment pursuant to this
          section, the transferor shall not be relieved of its liability or
          obligations hereunder and shall continue to be bound by all of the
          terms and conditions of the Agreement.

                                  BUSINESS NAME

     17. The parties agree that the Venture may register as a proprietorship
name, the name "PINERY JOINT VENTURE". The affairs of the Venture may be
publicized under that name.

                                   ARBITRATION

     18. If, at any time or from time to time during the continuance of the
Venture or after the dissolution or other termination thereof, any dispute,
difference or question shall arise between any of the parties hereto, or their
successors, assigns or nominees, touching or concerning the venture or the
property, assets, rights or transactions thereof, or the dissolution or other
termination thereof, or the Property or the construction, meaning or effect of
this Agreement, or any provision hereof, or the rights of obligations of the
parties hereto, or their successors, assigns or nominees, under this Agreement
or otherwise, with respect thereto, then every such dispute, difference or
question shall be submitted to and settled by arbitration and the decision of
the arbitrator appointed as hereinafter provided to deal with such matter shall
be accepted by all the parties to such dispute, difference or question. The
arbitration shall be conducted by a single arbitrator agreed upon by the parties
to the matter. The decision of the Arbitrator shall be final and binding upon
all the parties to such dispute, difference or question and their nominees, and
there shall be no appeal therefrom.

                              AMENDMENTS IN WRITING

     19. No amendment, alterations, addition, change or deletion to this
Agreement shall be binding on the parties hereto unless made in writing and
signed by all the parties hereto.

                               AGREEMENT PREVAILS

     20. This agreement supersedes, and shall be deemed conclusively to
supersede, for all purposes, any agreement, whether evidenced in writing or
otherwise, heretofore entered into by the parties hereto governing or purporting
to govern the rights and obligations of the parties hereto with respect to the
Venture, and the Property; and this Agreement is hereby confirmed to contain all
terms and provisions agreed upon by the parties, there being no other agreement
between the parties with respect to the Property, or otherwise excepting only as
is specifically contained herein.


                                        6

                               TIME OF THE ESSENCE

     21. Time shall be of the essence of this Agreement and of every part
hereof.

                                  TERMINATION

     22. This Agreement shall terminate upon the earlier of the agreement in
writing to terminate executed by the parties hereto or the full completion of
the purpose of the Venture as defined in Section 2 hereof and the disbursement
of all receipts of the Venture in accordance with Section 12 hereof and the
completion of each and every financial statement or reporting requirement
herein.

                              TAX MATTERS PARTNER

     23. The Venturers hereby designate ER as the Tax Matters Partner for the
Venture as defined in Section 6.23 (a)(7) of the Internal Revenue Code of 1986
and the regulations promulgated thereunder.

                                    MOTIONS

     24. Any notice, statement, document or any other communication required or
desired to be given to any party hereto in connection with this Agreement or
arising out of it shall be in writing and shall be deemed to have been given
five (5) days after being posted to the party to whom addressed at the following
address or at such other address as the Venturer may advise in writing:

               
ER                15851 Dallas Parkway
                  Suite 100
                  Dallas, Texas 75248
                  Attention: Elly Reisman

NR                15851 Dallas Parkway
                  Suite 100
                  Dallas, Texas 75248
                  Attention: Norman Reisman

LR                15851 Dallas Parkway
                  Suite 100
                  Dallas, Texas 75248
                  Attention: Larry Robbins

BT                15851 Dallas Parkway
                  Suite 100
                  Dallas, Texas 75248
                  Attention: Bruce Freeman

MR                15851 Dallas Parkway
                  Suite 100
                  Dallas, Texas 75248
                  Attention: Harry Rosenbaum

SJ                15851 Dallas Parkway
                  Suite 100
                  Dallas, Texas 75248
                  Attention: Seymour Joffe




                                        7

               
HM                15851 Dallas Parkway
                  Suite 100
                  Dallas, Texas 75248
                  Attention: Haydn Matthews

With a copy to:   250 Lesmill Road
                  Don Mills, Ontario
                  Canada M3B 2T5
                  Attention: Harry Rosenbaum



                               FREEDOM OF ACTION

     25. Each Venturer shall have the right to engage in other businesses or
ventures for its own individiual profit without any accountability to the other
Venturer, even if such other businesses or ventures are similar to or compete
with the Property. A Venturer shall not, by reason of this Agreement, have any
interest in any other business or venture if similar to or competes with the
Property.

                                   INSOLVENCY

     26. In the event that any party thereto shall, during the term hereof, make
an assignment for the benefit of creditors or a trustee or receiver of the
assets or any party shall commit an act of bankruptcy which is not cured within
thirty (30) days of the giving of a written notice thereof by any other party
hereto, the remaining parties hereto shall thereupon have the first option to
purchase in proportion to their respective interests the beneficial interest of
such party in the Venture, from the party or its trustee or receiver, or failing
any such beneficial interest. The said fair market value shall be final and
binding upon the parties. The option provided for herein shall be for a period
of thirty (30) days after the happening of an event referred to herein, and the
resulting agreement of purchase and sale shall be completed within thirty (30)
days thereafter.

                                 GOVERNING LAW

     27. This Agreement is entered into and is to be performed under the laws of
the State of Colorado.

          IN WITNESS WHEREOF the parties hereto have duly executed this
Agreement by their respective officers in that regard.

                                        ELLY COLORADO, INC.
                                        a Colorado corporation


                                        Per: /s/ Harry Rosenbaum
                                             -----------------------------------
                                        Name: Harry Rosenbaum
                                        Title: Vice President


                                        8

                                        NORMAN COLORADO, INC.
                                        a Colorado corporation


                                        Per: /s/ Harry Rosenbaum
                                             -----------------------------------
                                        Name: Harry Rosenbaum
                                        Title: Vice President


                                        LARRY COLORADO, INC.
                                        a Colorado corporation


                                        Per: /s/ Harry Rosenbaum
                                             -----------------------------------
                                        Name: Harry Rosenbaum
                                        Title: Vice President


                                        BRUCE COLORADO, INC.
                                        a Colorado corporation


                                        Per: /s/ Harry Rosenbaum
                                             -----------------------------------
                                        Name: Harry Rosenbaum
                                        Title: Vice President


                                        HARRY COLORANDO, INC.
                                        a Colorado corporation


                                        Per: /s/ Harry Rosenbaum
                                             -----------------------------------
                                        Name: Harry Rosenbaum
                                        Title: Vice President


                                        SEYMOUR COLORADO, INC.
                                        a Colorado corporation


                                        Per: /s/ Harry Rosenbaum
                                             -----------------------------------
                                        Name: Harry Rosenbaum
                                        Title: Vice President


                                        HAYDN COLORADO, INC.
                                        a Colorado corporation


                                        Per: /s/ Harry Rosenbaum
                                             -----------------------------------
                                        Name: Harry Rosenbaum
                                        Title: Vice President


                                        9

EX-3.2(AF)

                                                                 Exhibit 3.2(af)

                                 FIRST AMENDMENT
                          TO JOINT VENTURE AGREEMENT OF
                              PINERY JOINT VENTURE

     THIS FIRST AMENDMENT TO JOINT VENTURE AGREEMENT OF PINERY JOINT VENTURE
(this "Amendment") is made and entered into by and among ELLY COLORADO, INC., a
Colorado corporation ("Elly CO"), NORMAN COLORADO, INC., a Colorado corporation
("Norman CO"), LARRY COLORADO, INC., a Colorado corporation ("Larry CO"), BRUCE
COLORADO, INC., a Colorado corporation ("Bruce CO"), HARRY COLORADO, INC., a
Colorado corporation ("Harry CO"), SEYMOUR COLORADO, INC., a Colorado
corporation ("Seymour CO"), HAYDN COLORADO, INC., a Colorado corporation ("Haydn
CO"), and ASHTON WOODS USA L.L.C., a Nevada limited liability company ("Ashton
USA").

                                    RECITALS:

     A. Elly CO, Norman CO, Larry CO, Bruce CO, Harry CO, Seymour CO, and Haydn
CO have heretofore entered into a Joint Venture Agreement of Pinery Joint
Venture (the "Agreement") dated as of September 29, 1993, creating Pinery Joint
Venture, a Colorado joint venture (the "Company").

     B. As permitted by the Agreement, Elly CO, Norman CO, Larry CO, Bruce CO,
Harry CO, Seymour CO, and Haydn CO transferred all of their right, title, and
interest in and to the Company to Ashton USA.

     C. The parties hereto desire to amend the Agreement to reflect the
transfers described above and provide for the admission of Ashton USA as the
sole venturer of the Company.

     D. Capitalized terms, not specifically defined in this Amendment, shall
have the meanings given such terms in the Agreement.

     NOW, THEREFORE, for and in consideration of the premises and the respective
agreements set forth herein, the parties hereto agree as follows:

     1. The transfers described in Recital B above are hereby approved.

     2. Ashton USA is hereby admitted as a venturer of the Company and the
parties hereto recognize that Elly CO, Norman CO, Larry CO, Bruce CO, Harry CO,
Seymour CO, and Haydn CO have withdrawn as venturers of the Company. The only
venturer of the Company is Ashton USA.

     3. The Proportionate Interests of the venturers set forth in Section 3 of
the Agreement shall be as follows:



        Venturer          Proportionate Interest
        --------          ----------------------
                       
Ashton Woods USA L.L.C.             100%


     4. Any and all notices, demands, requests, or other communications
permitted or required to be given to Ashton USA pursuant to the Agreement shall
be delivered to Ashton USA in the manner provided in the Agreement, at the
following address;

          250 Lesmill Road
          Don Mills, Ontario M3B 2T5 Canada

     5. By execution of this Amendment, Ashton USA agrees to be bound by the
terms and provisions of the Agreement, as amended hereby.

     6. Except as amended hereby, the terms and provisions of the Agreement
shall remain unchanged and shall continue in full force and effect.

     EXECUTED as of May 31, 1999.

                                        VENTURER:

                                        ASHTON WOODS USA L.L.C.,
                                        a Nevada limited liability company


                                        By: /s/ Bruce Freeman
                                            ------------------------------------
                                            Bruce Freeman - Managing Member


                                        By: /s/ Seymour Joffe
                                            ------------------------------------
                                            Seymour Joffe - Managing Member


                                        By: /s/ Harry Rosenbaum
                                            ------------------------------------
                                            Harry Rosenbaum - Managing Member


                                        WITHDRAWING VENTURERS:

                                        ELLY COLORADO, INC.,
                                        a Colorado corporation


                                        By: /s/ Elly Reisman
                                            ------------------------------------
                                            Elly Reisman, President


                                        2

                                        NORMAN COLORADO, INC.,
                                        a Colorado corporation


                                        By: /s/ Norman Reisman
                                            ------------------------------------
                                            Norman Reisman, President


                                        LARRY COLORADO, INC.,
                                        a Colorado corporation


                                        By: /s/ Larry Robbins
                                            ------------------------------------
                                            Larry Robbins, President


                                        BRUCE COLORADO, INC.,
                                        a Colorado corporation


                                        By: /s/ Bruce Freeman
                                            ------------------------------------
                                            Bruce Freeman, President


                                        HARRY COLORADO, INC.,
                                        a Colorado corporation


                                        By: /s/ Harry Rosenbaum
                                            ------------------------------------
                                            Harry Rosenbaum, President


                                        SEYMOUR COLORADO, INC.,
                                        a Colorado corporation


                                        By: /s/ Seymour Joffe
                                            ------------------------------------
                                            Seymour Joffe, President


                                        HAYDN COLORADO, INC.,
                                        a Colorado corporation


                                        By: /s/ Haydn Matthews
                                            ------------------------------------
                                            Haydn Matthews, President


                                        3

EX-3.2(AG)

                                                                Exhibit 3.2 (ag)

                                    AGREEMENT
                             (PINERY JOINT VENTURE)

     THIS AGREEMENT (this "Agreement") is made and entered into by and among
ELLY COLORADO, INC., a Colorado corporation ("Elly CO"), NORMAN COLORADO, INC.,
a Colorado corporation ("Norman CO") LARRY COLORADO, INC., a Colorado
corporation ("Larry CO"), BRUCE COLORADO, INC., a Colorado corporation ("Bruce
CO"), HARRY COLORADO, INC., a Colorado corporation ("Harry CO"), SEYMOUR
COLORADO, INC., a Colorado corporation ("Seymour CO"), HAYDN COLORADO, INC., a
Colorado corporation ("Haydn CO"), and ASHTON WOODS USA L.L.C., a Nevada limited
liability company ("Ashton USA").

                                    RECITALS:

     A. Elly CO, Norman CO, Larry CO, Bruce CO, Harry CO, Seymour CO, and Haydn
CO (the "Colorado Companies") entered into the Joint Venture Agreement of Pinery
Joint Venture (the "Original Agreement") dated as of September 29, 1993,
creating Pinery Joint Venture, a Colorado joint venture (the "Venture").

     B. As permitted by the Original Agreement, the Colorado Companies
transferred all of their right, title, and interest in and to the Venture to
Ashton USA, and the Original Agreement was amended by a First Amendment to Joint
Venture Agreement of Pinery Joint Venture (the "First Amendment") dated May 31,
1999, executed by the parties hereto. The Original Agreement, as amended by the
First Amendment, is herein referred to as the "Joint Venture Agreement."

     C. The parties hereto desire to provide for the operation of the Venture
from and after the date hereof.

     NOW, THEREFORE, for and in consideration of the premises and the respective
agreements set forth herein, the parties hereto agree as follows:

     1. Notwithstanding that Ashton Woods USA is the sole venturer of the
Venture, the real and personal property of the Venture currently held in the
name of the Venture shall continue to be held in the name of the Venture. In
addition, any real or personal property acquired by the Venture after the date
of this Agreement may be held in the name of the Venture or in the name of
Ashton USA.

     2. Ashton USA, acting as the sole venturer of the Venture, hereby
designates the Colorado Companies as, and the Colorado Companies agree that they
will act as, the duly authorized agents and authorized representatives of the
Venture for any and all legal purposes, including, but not limited to,
acquiring, owning, developing, improving, leasing, and selling real and/or
personal property in the State of Colorado. As such agents and authorized
representatives, the Colorado Companies are authorized to enter into any and all
covenants, agreements, instruments, deeds, notes, deeds of trust, mortgages,
affidavits, certificates, closing statements, and other documents on behalf of
the Venture.

     3. This Agreement shall terminate, at the election of Ashton USA, upon
written notice to the Colorado Companies.

     EXECUTED as of May 31, 1999.

                                        ELLY COLORADO, INC.,
                                        a Colorado corporation


                                        By: /s/ Harry Rosenbaum
                                            ------------------------------------
                                            Harry Rosenbaum, Vice President


                                        NORMAH COLORADO, INC.,
                                        a Colorado corporation


                                        By: /s/ Harry Rosenbaum
                                            ------------------------------------
                                            Harry Rosenbaum, Vice President


                                        LARRY COLORADO, INC.,
                                        a Colorado corporation


                                        By: /s/ Harry Rosenbaum
                                            ------------------------------------
                                            Harry Rosenbaum, Vice President


                                        BRUCE COLORADO, INC.,
                                        a Colorado corporation.


                                        By: /s/ Harry Rosenbaum
                                            ------------------------------------
                                            Harry Rosenbaum, Vice President


                                        HARRY COLORADO, INC.,
                                        a Colorado corporation


                                        By: /s/ Harry Rosenbaum
                                            ------------------------------------
                                            Harry Rosenbaum, President


                                        2

                                        SEYMOUR COLORADO, INC.,
                                        a Colorado corporation


                                        By: /s/ Harry Rosenbaum
                                            ------------------------------------
                                            Harry Rosenbaum, Vice President


                                        HAYDN COLORADO, INC.,
                                        a Colorado corporation


                                        By: /s/ Harry Rosenbaum
                                            ------------------------------------
                                            Harry Rosenbaum, Vice President


                                        ASHTON WOODS USA L.L.C.,
                                        a Nevada limited 1iability company


                                        By: /s/ Bruce Freeman
                                            ------------------------------------
                                            Bruce Freeman, Managing Member


                                        By: /s/ Seymour Joffe
                                            ------------------------------------
                                            Seymour Joffe, Managing Member


                                        By: /s/ Harry Rosenbaum
                                            ------------------------------------
                                            Harry Rosenbaum, Managing Member


                                        3

EX-3.2(AH)

                                                                Exhibit 3.2 (ah)

                                SECOND AMENDMENT
                        TO THE JOINT VENTURE AGREEMENT OF
                              PINERY JOINT VENTURE

     THIS SECOND AMENDMENT TO THE JOINT VENTURE AGREEMENT OF PINERY JOINT
VENTURE (this "Second Amendment") is made and entered into as of the 6th day of
September 2005 by and among Ashton Woods USA L.L.C., a Nevada limited liability
company ("Ashton USA"), and Ashton Denver Residential L.L.C., a Nevada limited
liability company ("Ashton Denver").

                                    RECITALS

     A. Pursuant to the Joint Venture Agreement (the "JV Agreement), dated as of
September 29, 1993, by and among Elly Colorado, Inc., Norman Colorado, Inc.,
Larry Colorado, Inc., Bruce Colorado, Inc., Seymour Colorado, Inc. and Hayden
Colorado, Inc. (collectively, the "Colorado Entities"), as amended by the First
Amendment to Joint Venture Agreement of Pinery Joint Venture (the "First
Amendment" and the JV Agreement as amended by the First Amendment, the "Amended
JV Agreement"), dated as of May 31, 1999, by and among Ashton USA and the
Colorado Entities, Ashton USA is sole Venturer (as defined in the Amended JV
Agreement) in the Pinery Joint Venture (the "Venture").

     B. Ashton USA wishes to admit Ashton Denver as a Venturer in the Venture.

     C. Ashton USA and Ashton Denver wish to amend the Amended JV Agreement in
order to admit Ashton Denver as a Venturer and to make certain conforming
changes to reflect that the Colorado Entities are no longer Venturers.

     NOW, THEREFORE, for and in consideration of the premises and the respective
agreements set forth herein, the parties agree as follows:

     1.   Capitalized terms not defined herein shall have the meanings ascribed
          to them in the Amended JV Agreement.

     2.   Ashton Denver is hereby admitted as a Venturer.

     3.   Section 3 of the Amended JV Agreement is deleted in its entirety and
          replaced with the following:

          "The undivided interest of each Venturer in the Venture (hereinafter
          referred to as "Proportionate Interest") shall be as follows:

               Ashton USA - 99.999%
               Ashton Denver - 0.001%"

     4.   A Venturer's funding obligations pursuant to Section 4 of the Amended
          JV Agreement shall be equal to such Venturer's Proportionate Interest.

     5.   Section 5 of the Amended JV Agreement is deleted in its entirety and
          replaced with the following:

          "Ashton USA shall have the authority to borrow money in the name of
          and on behalf of the Venture and to cause the Venture to guarantee the
          indebtedness of another person or entity."

     6.   Section 8 of the Amended JV Agreement is deleted in its entirety and
          replaced with the following:

          "Ashton USA may engage an accounting firm of its choosing to audit the
          Venture's books and accounts."

     7.   Section 14(a) of the Amended JV Agreement is deleted in its entirety
          and replaced with the following:

          "The management of the Venture shall be vested in Ashton USA."

     8.   Section 14(b) of the Amended JV Agreement is deleted in its entirety
          and replaced with the following:

          "All deeds, transfers, contracts, agreements and other documents
          required to be executed by or on behalf of the Venture, from time to
          time, including but not limited to checks and documents to open and/or
          close checking accounts for the Venture, shall be executed on the
          Venture's behalf by Ashton USA, as the authorized representative of
          the Venture."

     9.   Section 23 of the Amended JV Agreement is deleted in its entirety and
          replaced with the following:

          "The Venturers hereby designate Ashton USA as the Venture's "Tax
          Matters Partner", as defined in the Internal Revenue Code of 1986, as
          amended, and the regulations promulgated thereunder."

     10.  The address of both of the Venturers for the purposes of giving
          notices and other written communications pursuant to Section 24 of the
          Amended JV Agreement is: 1080 Holcomb Bridge Road, Building 200, Suite
          350, Roswell, Georgia 30076.

     11.  This Agreement may be executed by facsimile or Adobe PDF and in
          various counterparts that together shall constitute one and the same
          instrument.

                         SIGNATURES APPEAR ON NEXT PAGE


                                                                               2

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

                                        ASHTON WOODS HOMES USA L.L.C.


                                        By: /s/ Robert Salomon
                                            ------------------------------------
                                        Name: Robert Salomon
                                        Title: Chief Financial Officer


                                        ASHTON DENVER RESIDENTIAL L.L.C.


                                        By: /s/ Robert Salomon
                                            ------------------------------------
                                        Name: Robert Salomon
                                        Title: Manager


                                                                               3

EX-3.2(AI)

                                                                 Exhibit 3.2(ai)

                               OPERATING AGREEMENT

                                       OF

                       ASHTON ATLANTA RESIDENTIAL, L.L.C.

                       A GEORGIA LIMITED LIABILITY COMPANY

                                  July 7, 1994

THE MEMBERSHIP INTERESTS IN ASHTON ATLANTA RESIDENTIAL, L.L.C. ARE SUBJECT TO
THE RESTRICTIONS ON TRANSFER AND OTHER TERMS AND CONDITIONS SET FORTH IN ARTICLE
III OF THIS AGREEMENT. THE INTERESTS HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE
NOT BEEN REGISTERED UNDER ANY STATE SECURITIES LAWS OR UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "FEDERAL ACT"). THE INTERESTS MAY NOT BE
OFFERED FOR SALE, PLEDGED, HYPOTHECATED, SOLD, ASSIGNED OR TRANSFERRED EXCEPT IN
COMPLIANCE WTTH THE TERMS AND CONDITIONS OF ARTICLE III OF THIS AGREEMENT AND IN
A TRANSACTION WHICH IS EXEMPT FROM REGISTRATION UNDER ANY APPLICABLE STATE
SECURITIES LAWS AND WHICH IS EXEMPT FROM REGISTRATION UNDER THE FEDERAL ACT OR
WHICH IS OTHERWISE IN COMPLIANCE WITH THE FEDERAL ACT AND ANY APPLICABLE STATE
SECURITIES ACTS.

                               OPERATING AGREEMENT
                                       OF
                       ASHTON ATLANTA RESIDENTIAL, L.L.C.
                       A GEORGIA LIMITED LIABILITY COMPANY

                                TABLE OF CONTENTS

                                                                           
ARTICLE I
DEFINITIONS ...............................................................    1

1.01  Definitions .........................................................    1
1.02  Construction ........................................................    3

ARTICLE II
ORGANIZATION ..............................................................    3

2.01  Formation ...........................................................    3
2.02  Name                                                                     3
2.03  Registered Office; Registered Agent; Principal Office in the United
      States; Other Offices ...............................................    3
2.04  Purposes ............................................................    4
2.05  Foreign Qualification ...............................................    4
2.06  Term ................................................................    4
2.07  No State-Law Partnership ............................................    4

ARTICLE III
MEMBERSHIP; DISPOSITIONS OF INTERESTS .....................................    4

3.01  Initial Members .....................................................    4
3.02  Representations and Warranties ......................................    4
3.03  Restrictions on the Discosition of an Interest ......................    5
3.04  Additional Members ..................................................    6
3.05  Interests in a Member ...............................................    7
3.06  Information .........................................................    7
3.07  Liability to Third Parties ..........................................    7




                                       -i-

                                                                           
3.08  Withdrawal ..........................................................    7
3.09  Lack of Authority ...................................................    8

ARTICLE IV
CAPITAL CONTRIBUTIONS .....................................................    8

4.01  Initial Contributions ...............................................    8
4.02  Subsequent Contributions ............................................    8
4.03  Failure to Contribute ...............................................    8
4.04  Return of Contributions .............................................   10
4.05  Advances bv Members .................................................   10
4.06  Capital Accounts ....................................................   10

ARTICLE V
ALLOCATIONS AND DISTRIBUTIONS .............................................   11

5.01  Allocations .........................................................   11
5.02  Distributions .......................................................   11

ARTICLE VI
MANAGERS ..................................................................   12

6.01  Management by Managers ..............................................   12
6.02  Actions by Managers; Committees; Delegation of Authority and
      Duties ..............................................................   13
6.03  Number and Term of Office ...........................................   14
6.04  Vacancies; Removal; Resignation .....................................   14
6.05  Meetings ............................................................   15
6.06  Approval or Ratification of Acts or Contracts by Members ............   15
6.07  Action by Written Consent or Telephone Conference ...................   15
6.08  Compensation ........................................................   16
6.09  Conflicts of Interest ...............................................   16
6.10  Officers ............................................................   16
6.11  Attorney-In-Fact ....................................................   17




                                      -ii-

                                                                           
ARTICLE VII
MEETINGS OF MEMBERS .......................................................   17

7.01  Meetings ............................................................   17
7.02  Voting List .........................................................   18
7.03  Proxies .............................................................   18
7.04  Conduct of Meetings .................................................   19
7.05  Action by Written Consent or Telephone Conference ...................   19

ARTICLE VIII
INDEMNIFICATION ...........................................................   20

8.01  Right to Indemnification ............................................   20
8.02  Advance Payment .....................................................   20
8.03  Indemnification of Officers, Employees, and Agents ..................   20
8.04  Appearance as a Witness .............................................   21
8.05  Nonexclusivity of Rights ............................................   21
8.06  Insurance ...........................................................   21
8.07  Member Notification .................................................   21
8.08  Savings Clause ......................................................   21

ARTICLE IX
TAXES .....................................................................   22

9.01  Tax Returns .........................................................   22
9.02  Tax Elections .......................................................   22
9.03  "Tax Matters Partner ................................................   22

ARTICLE X
BOOKS, RECORDS, REPORTS, AND BANK ACCOUNTS ................................   23

10.01 Maintenance of Books ................................................   23
10.02 Reports .............................................................   23
10.03 Accounts ............................................................   23




                                      -iii-

                                                                           
ARTCILE XI
BANKRUPTCY OF A MEMBER ....................................................   23

11.01 Bankrupt Members ....................................................   23

ARTCILE XII
DISSOLUTION, LIQUIDATION, AND TERMINATION .................................   24

12.01 Dissolution .........................................................   24
12.02 Liquidation and Termination .........................................   25
12.03 Deficit Capital Accounts ............................................   26
12.04 Articles of Dissolution .............................................   26

ARTCILE XIII
GENERAL PROVISIONS ........................................................   26

13.01 Offset ..............................................................   26
13.02 Notices .............................................................   26
13.03 Entire Agreement; Supersedure .......................................   27
13.04 Effect of Waiver or Consent .........................................   27
13.05 Amendment or Modification ...........................................   27
13.06 Binding Effect ......................................................   27
13.07 Governing Law; Severability .........................................   27
13.08 Further Assurances ..................................................   28
13.09 Waiver of Certain Rights ............................................   28
13.10 Indemnification .....................................................   28
13.11 Notice to Members of Provisions of this Agreement ...................   28
13.12 Counterparts ........................................................   28




                                      -iv-

                               OPERATING AGREEMENT

                                       OF

                       ASHTON ATLANTA RESIDENTIAL, L.L.C.

                       A GEORGIA LIMITED LIABILITY COMPANY

     This OPERATING AGREEMENT OF ASHTON ATLANTA RESIDENTIAL, L.L.C. (the
"Operating Agreement"), dated as of July 7, 1994, has been adopted by the
Managers (as defined below) and is hereby executed and agreed to, for good and
valuable consideration, by the Members (as defined below).

                                    ARTICLE I
                                   DEFINITIONS

     1.01 DEFINITIONS. As used in this Operating Agreement, the following terms
have the following meanings:

          "Act" means the Georgia Limited Liability Company Act and any
     successor statute, as amended from time to time.

          "Articles" has the meaning given that term in Section 2.01.

          "Bankrupt Member" means (except to the extent a Required Interest
     consents otherwise) any Member (a) that (i) makes a general assignment for
     the benefit of creditors; (ii) files a voluntary bankruptcy petition; (iii)
     becomes the subject of an order for relief or is declared insolvent in any
     federal or state bankruptcy or insolvency proceedings; (iv) files a
     petition or answer seeking for the Member a reorganization, arrangement,
     composition, readjustment, liquidation, dissolution, or similar relief
     under any law; (v) files an answer or other pleading admitting or failing
     to contest the material allegations of a petition filed against the Member
     in a proceeding of the type described in subclauses (i) through (iv) of
     this clause (a); or (vi) seeks, consents to, or acquiesces in the
     appointment of a trustee, receiver, or liquidator of the Member or of all
     or any substantial part of the Member's properties; or (b) against which, a
     proceeding seeking reorganization, arrangement, composition, readjustment,
     liquidation, dissolution, or similar relief under any law has been
     commenced and 120 days have expired without dismissal thereof or with
     respect to which, without the Member's consent or acquiescence, a trustee,
     receiver, or liquidator of the Member or of all or any substantial part of
     the Member's properties has been appointed and 90 days have expired without
     the appointment's having been vacated or stayed, or 90 days have expired
     after the date of expiration of a stay, if the appointment has not
     previously been vacated.

          "Business Day" means any day other than a Saturday, a Sunday, or a
     holiday on which national banking associations in the State of Georgia are
     closed.

          "Capital Contribution" means any contribution by a Member to the
     capital of the Company.


                                       -1-

          "Code" means the Internal Revenue Code of 1986 and any successor
     statute, as amended from time to time.

          "Commitment" means, subject in each case to adjustments on account of
     Dispositions of Membership Interests permitted by this Operating Agreement,
     (a) in the case of a Member executing this Operating Agreement as of the
     date of this Operating Agreement or a Person acquiring that Membership
     Interest, the amount specified for that Member as its Commitment on Exhibit
     A, and (b) in the case of a Membership Interest issued pursuant to Section
     3.04, the Commitment established pursuant thereto.

          "Company" means Ashton Atlanta Residential, L.L.C., a Georgia Limited
     liability company.

          "Default Interest Rate" means a rate per annum equal to the lesser of
     (a) four percent (4%) plus a varying rate per annum that is equal to the
     interest rate published as the prime rate by The Bank of Nova Scotia from
     time to time, with adjustments in that varying rate to be made on the same
     date as any change in that rate, and (b) the maximum rate permitted by
     applicable law.

          "Delinquent Member" has the meaning given that term in Section
     4.03(a).

          "Dispose," "Disposing," or "Disposition" means a sale, assignment,
     transfer, exchange, mortgage, pledge, grant of a security interest, or
     other disposition or encumbrance (including, without limitation, by
     operation of law), or the acts thereof.

          "General Interest Rate" means a rate per annum equal to the lesser of
     (a) a varying rate per annum that is equal to the interest rate published
     as the prime rate by The Bank of Nova Scotia from time to time, with
     adjustments in that varying rate to be made on the same date as any change
     in that rate, and (b) the maximum rate permitted by applicable law.

          "Lending Member" has the meaning given that term in Section
     4.03(a)(ii).

          "Manager" means Bruce Freeman, Harry Rosenbaum and Seymour Joffe and
     any Person hereafter elected as a manager of the Company as provided in
     this Operating Agreement, but does not include any Person who has ceased to
     be a manager of the Company.

          "Member" means any Person executing this Operating Agreement as of the
     date of this Operating Agreement as a member or hereafter admitted to the
     Company as a member as provided in this Operating Agreement, but does not
     include any Person who has ceased to be a member in the Company.

          "Membership Interest" means the interest of a Member in the Company,
     including, without limitation, rights to distributions (liquidating or
     other), allocations, information, and to consent or approve.


                                       -2-

          "Permitted Transferee" has the meaning given that term in Section
     3.03(b)

          "Person" includes individuals, individuals acting in a fiduciary
     capacity, corporations, limited partnerships, limited liability companies,
     general partnerships, joint stock companies, joint ventures, associations,
     companies, trusts or other organizations, whether or not they are
     recognized as separate legal entities.

          "Proceeding" has the meaning given that term in Section 8.01.

          "Operating Agreement" means this instrument as it may be amended from
     time to time.

          "Required Interest" means one or more Members having among them more
     than 51% of the Sharing Ratios of ail Members.

          "Sharing Ratio" with respect to any Member means the percentage set
     forth on Exhibit A, subject to change as herein provided.

Other terms defined herein have the meanings so given them.

     1.02 CONSTRUCTION. Whenever the context requires, the gender of all words
used in this Operating Agreement includes the masculine, feminine, and neuter.
All references to Articles and Sections refer to articles and sections of this
Operating Agreement, and all references to Exhibits are to Exhibits attached
hereto, each of which is by reference made a part hereof for all purposes.

                                   ARTICLE II
                                  ORGANIZATION

     2.01 FORMATION. The Company has been organized as a Georgia limited
liability company by the filing of Articles of Organization (the "Articles")
under and pursuant to the Act and the issuance of a Certificate of Organization
for the Company by the Secretary of State of Georgia.

     2.02 NAME. The name of the Company is "Ashton Atlanta Residential, L.L.C."
and all Company business must be conducted in that name or such other names that
comply with applicable law as the Managers may select from time to time.

     2.03 REGISTERED OFFICE; REGISTERED AGENT; PRINCIPAL OFFICE IN THE UNITED
STATES; OTHER OFFICES. The registered office of the Company required by the Act
to be maintained in the State of Georgia shall be the office of the initial
registered agent filed with the Secretary of State with the Articles or such
other office (which need not be a place of business of the Company) as the
Managers may designate from time to time in the manner provided by law. The
registered agent of the Company in the State of Georgia shall be the initial
registered agent or such other Person or Persons as the Managers may designate
from time to time in the manner provided by law. The principal office of the
Company in the United States shall be at such place as the Managers may
designate from time to time, which need not be in the State of Georgia, and the
Company shall maintain records there as required by Section 14-11-313 of the Act
and shall keep the mailing address of such principal


                                       -3-

office on file with the Secretary of State in the State of Georgia. The Company
may have such other offices as the Managers may designate from time to time.

     2.04 PURPOSES. The purposes of the Company are those set forth in Section
14-11-201(b) of the Act.

     2.05 FOREIGN QUALIFICATION. Prior to the Company's conducting business in
any jurisdiction other than Georgia, the Managers shall cause the Company to
comply, to the extent procedures are available and those matters are reasonably
within the control of the Managers, with all requirements necessary to qualify
the Company as a foreign limited liability company in that jurisdiction. At the
request of the Managers, each Member shall execute, acknowledge, swear to, and
deliver all certificates and other instruments conforming with this Operating
Agreement that are necessary or appropriate to qualify, continue, and terminate
the Company as a foreign limited liability company in all such jurisdictions in
which the Company may conduct business.

     2.06 TERM. The Company commenced on July 7, 1994, the date the Secretary of
State of Georgia issued a certificate of organization for the Company, and shall
continue in existence until December 31, 2035 or such earlier time as this
Operating Agreement may specify.

     2.07 No STATE-LAW PARTNERSHIP. The Members intend that the Company not be a
partnership (including, without limitation, a Limited partnership) or joint
venture, and that no Member or Manager be a partner or joint venturer of any
other Member or Manager, for any purposes other than federal and state tax
purposes, and this Operating Agreement may not be construed to suggest
otherwise.

                                   ARTICLE III
                      MEMBERSHIP; DISPOSITIONS OF INTERESTS

     3.01 INITIAL MEMBERS. The initial members of the Company are the Persons
executing this Operating Agreement as of the date of this Operating Agreement as
members, each of which is admitted to the Company as a Member effective
contemporaneously with the execution by such Person of this Operating Agreement.

     3.02 REPRESENTATIONS AND WARRANTIES. Each Member hereby represents and
warrants to the Company and each other Member that (a) if that Member is a
corporation, it is duly organized, validly existing and in good standing under
the law of the state of its incorporation and is duly qualified and in good
standing as a foreign corporation in the jurisdiction of its principal place of
business (if not incorporated therein); (b) if that Member is a limited
liability company, it is duly organized, validly existing, and (if applicable)
in good standing under the law of the state of its organization and is duly
qualified and (if applicable) in good standing as a foreign limited liability
company in the jurisdiction of its principal place of business (if not organized
therein); (c) if that Member is a partnership, trust, or other entity, it is
duly formed, validly existing, and (if applicable) in good standing under the
law of the state of its formation, and if required by law is duly qualified to
do business and (if applicable) in good standing in the jurisdiction of its
principal place of business (if not formed therein), and the representations and
warranties in clause (a), (b) or (c), as applicable, are true and correct with
respect to each partner (other than limited partners), trustee, or other member
thereof; (d) that Member has full corporate, limited liability company,
partnership, trust, or other applicable power and authority to execute and


                                       -4-

agree to this Operating Agreement and to perform its obligations hereunder and
all necessary actions by the board of directors, shareholders, managers,
members, partners, trustees, beneficiaries, or other Persons necessary for the
due authorization, execution, delivery, and performance of this Operating
Agreement by that Member have been duly taken; (e) that Member has duly executed
and delivered this Operating Agreement; (f) that Member's authorization,
execution, delivery, and performance of this Operating Agreement does not
conflict with any other agreement or arrangement to which that Member is a party
or which it is bound; and (g) that Member's interest in the Company has been
purchased by that Member and is held by that Member only for investment, and
that the Member does not have any intention to distribute, divide, or resell
that interest in the Company.

     3.03 RESTRICTIONS ON THE DISPOSITION OF AN INTEREST. (a) Except as
specifically provided in this Section 3.03, a Disposition of an interest in the
Company may not be effected without the consent of (i) a majority of the
Managers who are Members (excluding any Manager who is making such Disposition),
or (ii) if there are no Managers of the type described in clause (i), a Required
Interest. Any attempted Disposition by a Person of an interest or right, or any
part thereof, in or in respect of the Company other than in accordance with this
Section 3.03 shall be, and is hereby declared, null and void ab initio.

     (b) Notwithstanding the provisions of Section 3.03(a), the interest of any
Member in the Company may be transferred without the consent of the Managers or
any of the Members if (i) the transfer occurs by reason of or incident to the
death, dissolution, divorce, liquidation, merger or termination of the
transferor Member, and (ii) the transferee is a Permitted Transferee. A
"Permitted Transferee" is any member of such Member's immediate family, or a
trust, corporation, limited liability company, or partnership controlled by such
Member or members of such Member's immediate family, or another Person
controlling, controlled by, or under common control with such Member.

     (c) Subject to the provisions of Section 3.03(d), (e) and (f), (i) a Person
to whom an interest in the Company is transferred has the right to be admitted
to the Company as a Member with the Sharing Ratio and the Commitment so
transferred to such Person, if (A) the Member making such transfer grants the
transferee the right to be so admitted, and (B) such transfer is consented to in
accordance with Section 3.03(a); (ii) a Permitted Transferee under the
circumstances described in Section 3.03 (b)has the right to be admitted to the
Company as a Member with the Sharing Ratio and the Commitment so transferred to
the Permitted Transferee; and (iii) the Company or (with the permission of the
Company, which may be withheld in its sole discretion) a Lending Member may
grant the purchaser of a Delinquent Member's interest in the Company at a
foreclosure of the security interest therein granted pursuant to Section 4.03(b)
the right to be admitted to the Company as a Member with such Sharing Ratio and
such Commitment (no greater than the Sharing Ratio and the Commitment of the
Member effecting such Disposition prior thereto) as they may agree.

     (d) The Company may not recognize for any purpose any purported Disposition
of all or part of a Membership Interest unless and until the other applicable
provisions of this Section 3.03 have been satisfied and the Managers have
received, on behalf of the Company, a document (i) executed by both the Member
effecting the Disposition (or if the transfer is on account of the death,
incapacity, or liquidation of the transferor, its representative) and the Person
to which the Membership Interest or part thereof is Disposed, (ii) including the
notice address of any Person to be admitted to the Company as


                                       -5-

a Member and its agreement to be bound by this Operating Agreement with respect
to the Membership Interest or part thereof being obtained, (iii) setting forth
the Sharing Ratios and the Commitments after the Disposition of the Member
effecting the Disposition and the Person to which the Membership Interest or
part thereof is Disposed (which together must total the Sharing Ratio and the
Commitment of the Member effecting the Disposition before the Disposition), and
(iv) containing a representation and warranty that the Disposition was made in
accordance with all applicable laws and regulations (including securities laws)
and, if the Person to which the Membership Interest or part thereof is Disposed
is to be admitted to the Company, its representation and warranty that the
representations and warranties in Section 3.02 are true and correct with respect
to that Person. Each Disposition and, if applicable, admission complying with
the provisions of this Section 3.03(d) is effective as of the day in which the
Managers receive the notification of Disposition and the other requirements of
this Section 3.03 have been met.

     (e) For the right of a Member to Dispose of a Membership Interest or any
part thereof or of any Person to be admitted to the Company in connection
therewith to exist or be exercised, (i) either (A) the Membership Interest or
part thereof subject to the Disposition or admission must be registered under
the Securities Act of 1933, as amended, and any applicable state securities laws
or (B) the Company must receive a favorable opinion of the Company's legal
counsel or of other legal counsel acceptable to the Managers to the effect that
the Disposition or admission is exempt from registration under those laws and
(ii) the Company must receive a favorable opinion of the Company's legal counsel
or of other legal counsel acceptable to the Managers to the effect that the
Disposition or admission, when added to the total of all other sales,
assignments, or other Dispositions within the preceding 12 months, would not
result in the Company's being considered to have terminated within the meaning
of the Code. The Managers, however, may waive the requirements of this Section
3.03(e).

     (f) The Member effecting a Disposition and any Person admitted to the
Company in connection therewith shall pay, or reimburse the Company for, all
costs incurred by the Company in connection with the Disposition or admission
(including, without limitation, the legal fees incurred in connection with the
legal opinions referred to in Section 3.03(e)) on or before the tenth day after
the receipt by that Person of the Company's invoice for the amount due. If
payment is not made by the date due, the Person owing that amount shall pay
interest on the unpaid amount from the date due until paid at a rate per annum
equal to the Default Interest Rate.

     3.04 ADDITIONAL MEMBERS. Additional Persons may be admitted to the Company
as Members and Membership Interests may be created and issued to those Persons
and to existing Members at the direction of (a) a majority of the Managers who
are Members, or (b) if there are no Managers who are Members, a Required
Interest, on such terms and conditions as the Managers may determine at the time
of admission. The terms of admission or issuance must specify the Sharing Ratios
and the Commitments applicable thereto and may provide for the creation of
different classes or groups of Members and having different rights, powers, and
duties. The Managers shall reflect the creation of any new class or group in an
amendment to this Operating Agreement indicating the different rights, powers,
and duties, and such an amendment need be executed only by the Managers. Any
such admission also must comply with the provisions of Section 3.03(d)(i) and
(ii) and is effective only after the new Member has executed and delivered to
the Managers a document including the new Member's notice address, its agreement
to be bound by this


                                       -6-

Operating Agreement, and its representation and warranty that the representation
and warranties in Section 3.02 are true and correct with respect to the new
Member. The provisions of this Section 3.04 shall not apply to Dispositions of
Membership Interests.

     3.05 INTERESTS IN A MEMBER. A Member that is not a natural person may not
cause or permit an interest, direct or indirect, in itself to be Disposed of
such that, after the Disposition, (a) the Company would be considered to have
terminated within the meaning of section 708 of the Code or (b) without the
consent of the Managers and a Required Interest, that Member shall cease to be
controlled by substantially the same Persons who control it as of the date of
its admission to the Company. On any breach of the provisions of clause (b) of
the immediately preceding sentence, the Company shall have the option to buy,
and on exercise of that option the breaching Member shall sell, the breaching
Member's Membership Interest, all in accordance with Section 11.01 as if the
breaching Member were a Bankrupt Member.

     3.06 INFORMATION. (a) In addition to the other rights specifically set
forth in this Operating Agreement, each Member is entitled to all information to
which that Member is entitled to have access pursuant to Section 14-11-313 of
the Act under the circumstances and subject to the conditions therein stated.
The Members agree, however, that the Managers from time to time may determine,
due to contractual obligations, business concerns, or other considerations, that
certain information regarding the business, affairs, properties, and financial
condition of the Company should be kept confidential and not provided to some or
all other Members, and that it is not just or reasonable for those Members or
assignees or representatives thereof to examine or copy that information.

     (b) The Members acknowledge that, from time to time, they may receive
information from or regarding the Company in the nature of trade secrets or that
otherwise is confidential, the release of which may be damaging to the Company
or Persons with which it does business. Each Member shall hold in strict
confidence any information it receives regarding the Company that is identified
as being confidential (and if that information is provided in writing, that is
so marked) and may not disclose it to any Person other than another Member or a
Manger, except for disclosures (i) compelled by law (but the Member must notify
the Managers promptly of any request for that information, before disclosing it
if practicable), (ii) to advisers or representatives of the Member or Persons to
which that Member's Membership Interest may be Disposed as permitted by this
Operating Agreement, but only if the recipients have agreed to be bound by the
provisions of this Section 3.06(b), or (iii) of information that Member also has
received from a source independent of the Company that the Member reasonably
believes obtained that information without breach of any obligation of
confidentiality. The Members acknowledge that breach of the provisions of this
Section 3.06(b) may cause irreparable injury to the Company for which monetary
damages are inadequate, difficult to compute, or both. Accordingly, the Members
agree that the provisions of this Section 3.06(b) may be enforced by specific
performance.

     3.07 LIABILITY TO THIRD PARTIES. No Member or Manager shall be liable for
the debts, obligations or liabilities of the Company, including under a
judgment, decree or order of a court.

     3.08 WITHDRAWAL. A Member does not have the right or power to withdraw from
the Company as a member.


                                       -7-

     3.09 LACK OF AUTHORITY. No Member (other than a Manager or an officer) has
the authority or power to act for or on behalf of the Company, to do any act
that would be binding on the Company, or to incur any expenditures on behalf of
the Company.

                                   ARTICLE IV
                              CAPITAL CONTRIBUTIONS

     4.01 INITIAL CONTRIBUTIONS. Contemporaneously with the execution by such
Member of this Operating Agreement, each Member shall make the Capital
Contributions described for that Member in Exhibit A.

     4.02 SUBSEQUENT CONTRIBUTIONS. Without creating any rights in favor of any
third party, each Member shall contribute to the Company, in cash, on or before
the date specified as hereinafter described, that Member's Sharing Ratio of all
monies that in the judgement of the Managers are necessary to enable the Company
to cause the assets of the Company to be properly operated and maintained and to
discharge its costs, expenses, obligations, and liabilities; provided, however,
that a Member is not obligated to contribute a total amount that, when added to
all Capital Contributions that Member previously has made pursuant to Section
4.01 or this Section 4.02, exceeds that Member's Commitment. The Managers shall
notify each Member of the need for Capital Contributions pursuant to this
Section 4.02 when appropriate, which notice must include a statement in
reasonable detail of the proposed uses of the Capital Contributions and a date
(which date may be no earlier than the fifth Business Day following each
Member's receipt of its notice) before which the Capital Contributions must be
made. Notices for Capital Contributions must be made to all Members in
accordance with their Sharing Ratios.

     4.03 FAILURE TO CONTRIBUTE. (a) If a Member does not contribute by the time
required all or any portion of a Capital Contribution that Member is required to
make as provided in this Operating Agreement, the Company may exercise, on
notice to that Member (the "Delinquent Member"), one or more of the following
remedies:

          (i) taking such action (including, without limitation, court
     proceedings) as the Managers may deem appropriate to obtain payment by the
     Delinquent Member of the portion of the Delinquent Member's Capital
     Contribution that is in default, together with interest thereon at the
     Default Interest Rate from the date that the Capital Contribution was due
     until the date that it is made, all at the cost and expense of the
     Delinquent Member;

          (ii) permitting the other Members in proportion to their Sharing
     Ratios or in such other percentages as they may agree (the "Lending Member"
     whether one or more), to advance the portion of the Delinquent Member's
     Capital Contribution that is in default, with the following results:

               (A) the sum advanced constitutes a loan from the Lending Member
          to the Delinquent Member and a Capital Contribution of that sum to the
          Company by the Delinquent Member pursuant to the applicable provisions
          of this Operating Agreement,


                                       -8-

               (B) the principal balance of the loan and all accrued unpaid
          interest thereon is due and payable in whole on the tenth day after
          written demand therefor by the Lending Member to the Delinquent
          Member,

               (C) the amount lent bears interest at the Default Interest Rate
          from the day that the advance is deemed made until the date that the
          loan, together with all interest accrued on it, is repaid to the
          Lending Member,

               (D) all distributions from the Company that otherwise would be
          made to the Delinquent Member (whether before or after dissolution of
          the Company) instead shall be paid to the Lending Member until the
          loan and all interest accrued thereon have been paid in full to the
          lending Member (with payments being applied first to accrued and
          unpaid interest and then to principal),

               (E) the payment of the loan and interest accrued thereon is
          secured by a security interest in the Delinquent Member's Membership
          Interest, as more fully set forth in Section 4.03(b), and

               (F) the Lending Member has the right, in addition to the other
          rights and remedies granted to it pursuant to this Operating Agreement
          or available to it at law or in equity, to take any action (including,
          without Limitation, court proceedings) that the Lending Member may
          deem appropriate to obtain payment by the Delinquent Member of the
          loan and all accrued and unpaid interest thereon, at the cost and
          expense of the Delinquent Member;

          (iii) exercising the rights of a secured party under the Uniform
     Commercial Code of the State of Georgia, as more fully set forth in Section
     4.03(b): or

          (iv) exercising any other rights and remedies available at law or in
     equity.

     (b) Each Member giants to the Company, and to each Lending Member with
respect to any loans made by the Lending Member to that Member as a Delinquent
Member pursuant to Section 4.03(a)(ii), as security, equally and ratably, for
the payment of all Capital Contributions that Member has agreed to make and the
payment of all loans and interest accrued thereon made by Lending Members to
that Member as a Delinquent Member pursuant to Section 4.03(a)(ii), a security
interest in and a lien on its Membership Interest and the proceeds thereof, all
under the Uniform Commercial Code of the State of Georgia. On any default in the
payment of a Capital Contribution or in the payment of such a loan or interest
accrued thereon, the Company or the Lending Member, as applicable, is entitled
to all the rights and remedies of a secured party under the Uniform Commercial
Code of the State of Georgia with respect to the security interest granted in
this Section


                                       -9-

4.03(b). Each Member shall execute and deliver to the Company and the other
Members all financing statements and other instruments that the Managers or the
Lending Member, as applicable, may request to effectuate and carry out the
preceding provisions of this Section 4.03(b). At the option of the Managers or a
Lending Member, this Operating Agreement or a copy hereof may serve as a
financing statement.

     4.04 RETURN OF CONTRIBUTIONS. Other than as expressly provided in this
Operating Agreement, a Member is not entitled to the return of any part of its
Capital Contributions or to be paid interest in respect of either its capital
account or its Capital Contributions. An unrepaid Capital Contribution is not a
liability of the Company or of any Member. A Member is not required to
contribute or to lend any cash or property to the Company to enable the Company
to return any Member's Capital Contributions.

     4.05 ADVANCES BY MEMBERS. If the Company does not have sufficient cash to
pay its obligations, any Member(s) that may agree to do so with the Managers'
consent may advance all or part of the needed funds to or on behalf of the
Company. An advance described in this Section 4.05 constitutes a loan from the
Member to the Company, bears interest at the General Interest Rate from the date
of the advance until the date of payment, and is not a Capital Contribution.

     4.06 CAPITAL ACCOUNTS. A capital account shall be established and
maintained for each Member. Each Member's capital account (a) shall be increased
by (i) the amount of money contributed by that Member to the Company, (ii) the
fair market value of property contributed by that Member to the Company (net of
liabilities secured by the contributed property that the Company is considered
to assume or take subject to under section 752 of the Code), and (iii)
allocations to that Member of Company income and gain (or items thereof),
including income and gain exempt from tax and income and gain described in
Treas. Reg. Section 1.704-1(b)(2)(iv)(g), but excluding income and gain
described in Treas. Reg. Section 1.704-1(b)(4)(i), and (b) shall be decreased by
(i) the amount of money distributed to that Member by the Company, (ii) the fair
market value of property distributed to that Member by the Company (net of
liabilities secured by the distributed property that the Member is considered to
assume or take subject to under section 752 of the Code), (iii) allocations to
that Member of expenditures of the Company described in section 705(a)(2)(B) of
the Code, and (iv) allocations of Company loss and deduction (or items thereof),
including loss and deduction described in Treas. Reg. Section
1.704-1(b)(2)(iv)(g), but excluding items described in clause (b)(iii) above and
loss or deduction described in Treas. Reg. Section 1.704-1(b)(4)(i) or Section
1.704-1(b)(4)(iii). The Members' capital accounts also shall be maintained and
adjusted as permitted by the provisions of Treas. Reg. Section
1.704-1(b)(2)(iv)(f) and as required by the other provisions of Treas. Reg.
Sections 1.704-1(b)(2)(iv) and 1.704-1 (b)(4), including adjustments to reflect
the allocations to the Members of depreciation, depletion, amortization, and
gain or loss as computed for book purposes rather than the allocation of the
corresponding items as computed for tax purposes, as required by Treas. Reg.
Section 1.704-1(b)(2)(iv)(g). A Member that has more than one Membership
Interest shall have a single capital account that reflects all its Membership
Interests, regardless of the class of Membership Interests owned by that Member
and regardless of the time or manner in which those Membership Interests were
acquired. On the transfer of all or part of a Membership Interest, the capital
account of the transferor that is attributable to the transferred Membership
Interest or part thereof shall carry over to the transferee Member in accordance
with the provisions of Treas. Reg. Section 1.704-1(b)(2)(iv)(l)


                                      -10-

                                    ARTICLE V
                         ALLOCATIONS AND DISTRIBUTIONS

     5.01 ALLOCATIONS. (a) Except as may be required by section 701(c) of the
Code and Treas. Reg. Section 1.701-1(b)(2)(iv)(f)(4), all items of income, gain,
loss, deduction, and credit of the Company shall be allocated among the Members
in accordance with their Sharing Ratios.

     (b) All items of income, gain, loss, deduction, and credit allocable to any
Membership Interest that may have been transferred shall be allocated between
the transferor and the transferee based on the portion of the calendar year
during which each was recognized as owning that Membership Interest, without
regard to the results of Company operations during any particular portion of
that calendar year and without regard to whether cash distributions were made to
the transferor or the transferee during that calendar year; provided, however,
that this allocation must be made in accordance with a method permissible under
section 706 of the Code and the regulations thereunder.

     5.02 DISTRIBUTIONS. All receipts and revenues of the Company from any
source shall be applied and distributed in the following order of priority with
no distribution being made in any category set forth below unless and until the
preceding category has been satisfied in full either by payment or by setting
aside of a cash reserve for payment of same.

     (a) in payment of all debts, obligations, liabilities, costs and expenses
incurred in connection with or on account of the Company;

     (b) in repayment of any loans and accrued interest thereon made by a
Lending Member pursuant to Section 4.03(a)(ii);

     (c) in repayment of Contributions by the Member in accordance with their
Sharing Ratios, subject to the provisions of Section 4.03.

     (d) after having satisfied (a), (b) and (c) above, receipts and revenues of
the Company shall represent the profits of the Company and shall be distributed
in the following order of priority:

          (i) the Contributions made by the Members to the Company pursuant to
     Sections 4.01 and 4.02 herein shall bear interest at a rate which is two
     percent (2%) per annum greater than the prime rate charged by the Bank of
     Nova Scotia to its most credit worthy customers of U.S. Dollar demand
     loans, but in no event shall the rate of interest exceed the maximum rate
     permitted by laws, from the date of such advance until repaid to such
     Member in accordance with (c) above.

          (ii) after having satisfied (a), (b), (c) and (d)(i) above, the
     receipts and revenues of the Company shall be distributed to the Members
     pro rate and pari passu in accordance with their Sharing Ratios.

However, no distribution of profits shall be made until after completion of any
development and/or construction activities undertaken by the Company, without
the agreement of the Members.


                                      -11-

                                   ARTICLE VI
                                    MANAGERS

     6.01 MANAGEMENT BY MANAGERS. (a) Except for situations in which the
approval of the Members is required by this Operating Agreement or by
nonwaivable provisions of applicable law, and subject to the provisions of
Section 6.02, (i) the powers of the Company shall be exercised by or under the
authority of, and the business and affairs of the Company shall be managed under
the direction of, the Managers; and (ii) the Managers may make all decisions and
take all actions for the Company not otherwise provided for in this Operating
Agreement, including, without limitation, the following:

          (i) entering into, making, and performing contracts, agreements, and
     other undertakings binding the Company that may be necessary, appropriate,
     or advisable in furtherance of the purposes of the Company and making all
     decisions and waivers thereunder;

          (ii) opening and maintaining bank and investment accounts and
     arrangements, drawing checks and other orders for the payment of money, and
     designating individuals with authority to sign or give instructions with
     respect to those accounts and arrangements;

          (iii) maintaining the assets of the Company in good order;

          (iv) collecting sums due the Company;

          (v) to the extent that funds of the Company are available therefor,
     paying debts and obligations of the Company;

          (vi) acquiring, utilizing for Company purposes, and Disposing of any
     asset of the Company;

          (vii) borrowing money or otherwise committing the credit of the
     Company for Company activities and voluntary prepayments or extensions of
     debt;

          (viii) selecting, removing, and changing the authority and
     responsibility of lawyers, accountants, and other advisers and consultants;

          (ix) obtaining insurance for the Company;

          (x) determining distributions of Company cash and other property as
     provided in Section 5.02;

          (xi) establishing a seal for the Company;

          (xii) selling, leasing, exchanging or otherwise disposing of
     (including by way of a pledge, mortgage, deed of trust or trust indenture)
     all or any portion of the Company's property and assets (with or without
     good will); and


                                      -12-

          (xiii) being a party to a merger of the type described in Section
14-11-903 of the Act.

     (b) Notwithstanding the provisions of Section 6.01(a), the Managers may not
cause the Company to do any of the following without complying with the
applicable requirements set forth below:

          (i) Dissolve the Company under paragraph (3) of Code Section
     14-11-602, except upon the written consent of all Members;

          (ii) Enter into an agreement of merger of the Company of the type
     described in subsection (a) of Code Section 14-11-903, except upon the
     written consent of a Required Interest;

          (iii) Authorize the sale, exchange, lease or other transfer of all or
     substantially all of the assets of the Company, except upon the written
     consent of a Required Interest. For the purposes of this paragraph, assets
     shall be deemed to be less than all or substantially all of the Company's
     assets if the value of the assets does not exceed two-thirds of the value
     of all of the assets of the Company and the revenues represented or
     produced by such assets do not exceed two-thirds of the total revenues of
     the Company; provided, however, that this paragraph shall not create any
     inference that the sale, exchange, lease or other transfer of assets
     exceeding the amounts described in this paragraph is the sale of all or
     substantially all of the assets of the Company;

          (iv) Admit any new member except as provided herein and in the Act;

          (v) Amend the articles of organization under the Act or this Operating
     Agreement, without the written consent of each Member;

          (vi) Take any action under subsection (b) of Act Section 14-11-402 to
     reduce or eliminate an obligation to make a contribution to the capital of
     the Company;

          (vii) Take action to continue the Company under paragraph (4) of Act
     Section 14-11-602, except upon the agreement of a Required Interest or
     greater interest as may be provided herein.

     6.02 ACTIONS BY MANAGERS; COMMITTEES; DELEGATION OF AUTHORITY AND DUTIES.
(a) In managing the business and affairs of the Company and exercising its
powers, the Managers shall act (i) collectively through meetings and written
consents pursuant to Sections 6.05 and 6.07; (ii) through committees pursuant to
Section 6.02(b); (iii) through Managers and authorized representatives to whom
authority and duties have been delegated pursuant to Section 6.02(c).

     (b) The Managers may, from time to time, designate one or more committees,
each of which shall be comprised of one or more Managers. Any such committee, to
the extent provided in such resolution or in the Articles or this Operating
Agreement, shall have and may exercise all of the authority of the Managers,
subject to the limitations set forth in


                                      -13-

the Act. At every meeting of any such committee, the presence of a majority of
all the members thereof shall constitute a quorum, and the affirmative vote of a
majority of the members present shall be necessary for the adoption of any
resolution. The Managers may dissolve any committee at any time, unless
otherwise provided in the Articles or this Operating Agreement.

     (c) The Managers hereby delegate to each of the Managers (acting by
themself and without the necessity of any other approval or authorization) and
may delegate to an authorized representative of the Company, including without
limitation, any Attorney-In-Fact pursuant to a Power of Attorney executed by all
of the Managers, the authority to take any of the actions authorized in Section
6.0l(a) hereof. In addition, the Managers may assign titles (including, without
limitation, president, vice president, secretary, assistant secretary, treasurer
and assistant treasurer) to any such Manager or authorized representative.
Unless the Managers decide otherwise, if the title is one commonly used for
officers of a business corporation, the assignment of such title shall
constitute the delegation to such Manager of the authority and duties that are
normally associated with that office, subject to any specific delegation of
authority and duties made pursuant to the first sentence of this Section
6.02(c). Any number of titles may be held by the same Manager or authorized
representative. Any delegation pursuant to this Section 6.02(c) may be revoked
at any time by the Managers.

     (d) Any Person dealing with the Company, other than a Member, may rely on
the authority of any Manager, authorized representative or officer in taking any
action in the name of the Company without inquiry into the provisions of this
Operating Agreement or compliance herewith, regardless of whether that action
actually is taken in accordance with the provisions of this Operating Agreement.

     6.03 NUMBER AND TERM OF OFFICE. The number of Managers of the Company shall
be determined from time to time by resolution of the Managers; provided,
however, that no decrease in the number of Managers that would have the effect
of shortening the term of an incumbent Manager may be made by the Managers. If
the Managers make no such determination, there shall be three managers. Each
Manager shall hold office for the term for which he is elected and thereafter
until his successor shall have been elected and qualified, or until his earlier
death, resignation or removal. Unless otherwise provided in the Articles,
Managers need not be Members or residents of the State of Georgia.

     6.04 VACANCIES; REMOVAL; RESIGNATION. Any Manager position to be filled by
reason of an increase in the number of Managers may be filled by election at an
annual or special meeting of Members called for that purpose. Any vacancy
occurring in the Managers other than by reason of an increase in the number of
Managers may be filled (a) by election at an annual or special meeting of the
Members called for that purpose or (b) by the affirmative vote of a majority of
the remaining Managers though less than a quorum of the Managers. A Manager
elected to fill a vacancy occurring other than by reason of an increase in the
number of Managers shall be elected for the unexpired term of his predecessor in
office. At any meeting of Members at which a quorum of Members is present called
expressly for that purpose, or pursuant to a written consent adopted pursuant to
this Operating Agreement, any Manager may be removed, with or without cause, by
a Required Interest. Any Manager may resign at any time. Such resignation shall
be made in writing and shall take effect at the time specified therein, or if no
time be specified, at the time of its receipt by the remaining Managers. The
acceptance of a resignation shall not be necessary to make it effective, unless
expressly so provided in the resignation.


                                      -14-

     6.05 MEETINGS. (a) Unless otherwise required by law or provided in the
Articles or this Operating Agreement, a majority of the total number of Managers
fixed by, or in the manner provided in, the Articles or this Operating
Agreement shall constitute a quorum for the transaction of business of the
Managers, and the act of a majority of the Managers present at a meeting at
which a quorum is present shall he the act of the Managers. A Manager who is
present at a meeting of the Managers at which action on any Company matter is
taken shall be presumed to have assented to the action unless his dissent shall
be entered in the minutes of the meeting or unless he shall file his written
dissent to such action with the Person acting as secretary of the meeting before
the adjournment thereof or shall deliver such dissent to the Company immediately
after the adjournment of the meeting. Such right to dissent shall not apply to a
Manager who voted in favor of such action.

     (b) Meetings of the Managers may be held at such place or places as shall
be determined from time to time by resolution of the Managers. At all meetings
of the Managers, business shall be transacted in such order as shall from time
to time be determined by resolution of the Managers. Attendance of a Manager at
a meeting shall constitute a waiver of notice of such meeting, except where a
Manager attends a meeting for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully
called or convened.

     (c) In connection with any annual meeting of Members at which Managers were
elected, the Managers may, if a quorum is present, hold its first meeting for
the transaction of business immediately after and at the same place as such
annual meeting of the Members. Notice of such meeting at such time and place
shall not be required.

     (d) Regular meetings of the Managers shall be held at such times and places
as shall be designated from time to time by resolution of the Managers. Notice
of such regular meetings shall not be required.

     (e) Special meetings of the Managers may be called by any Manager on at
least 24 hours notice to each other Manager. Such notice need not state the
purpose or purposes of, nor the business to be transacted at, such meeting,
except as may otherwise be required by law or provided for by the Articles or
this Operating Agreement.

     6.06 APPROVAL OR RATIFICATION OF ACTS OR CONTRACTS BY MEMBERS. The Managers
in their discretion may submit any act or contract for approval or ratification
at any annual meeting of the Members, or at any special meeting of the Members
called for the purpose of considering any such act or contract, and any act or
contract that shall be approved or be ratified by a Required Interest shall be
as valid and as binding upon the Company and upon all the Members as if it shall
have been approved or ratified by every Member of the Company.

     6.07 ACTION by WRITTEN CONSENT OR TELEPHONE CONFERENCE. Any action
permitted or required by the Act, the Articles or this Operating Agreement to be
taken at a meeting of the Managers or any committee designated by the Managers
may be taken without a meeting if a consent in writing, setting forth the action
to be taken, is signed by all the Managers or members of such committee, as the
case may be. Such consent shall have the same force and effect as a unanimous
vote at a meeting and may be stated as such in any document or instrument filed
with the Secretary of State of Georgia, and the execution of


                                      -15-

such consent shall constitute attendance or presence in person at a meeting of
the Managers or any such committee, as the case may be. Subject to the
requirements of the Act, the Articles or this Operating Agreement for notice of
meetings, unless otherwise restricted by the Articles, Managers, or members of
any committee designated by the Managers, may participate in and hold a meeting
of the Managers or any committee of Managers, as the case may be, by means of a
conference telephone or similar communications equipment by means of which all
Persons participating in the meeting can hear each other, and participation in
such meeting shall constitute attendance and presence in person at such meeting,
except where a Person participates in the meeting for the express purpose of
objecting to the transaction of any business on the ground that the meeting is
not lawfully called or convened.

     6.08 COMPENSATION. The Managers shall reserve such compensation, if any,
for their services as may be designated from time to time by all of the
Managers. In addition, the Managers shall be entitled to be reimbursed for
out-of-pocket costs and expenses incurred in the course of their service
hereunder, including the portion of their overhead reasonably allocable to
Company activities.

     6.09 CONFLICTS OF INTEREST. Subject to the other express provisions of this
Operating Agreement, each Manager, Member and officer of the Company at any time
and from time to time may engage in and possess interests in other business
ventures of any and every type and description, independently or with others,
including ones in competition with the Company, with no obligation to offer to
the Company or any other Member, Manager or officer the right to participate
therein. The Company may transact business with any Manager, Member, officer or
Affiliate thereof, provided the terms of those transactions are no less
favorable than those the Company could obtain from unrelated third parties.

     6.10 OFFICERS. (a) The Managers may, from time to time, designate one or
more Persons to be officers of the Company. No officer need be a resident of the
State of Georgia, a Member or a Manager. Any officers so designated shall have
such authority and perform such duties as the Managers may, from time to time,
delegate to them. The Managers may assign titles to particular officers. Unless
the Managers decide otherwise, if the title is one commonly used for officers of
a business corporation, the assignment of such title shall constitute the
delegation to such officer of the authority and duties that are normally
associated with that office, subject to (i) any specific delegation of authority
and duties made to such officer by the Managers pursuant to the third sentence
of this Section 6.10(b), or (ii) any delegation of authority and duties made to
one or more Managers or authorized representatives pursuant to Section 6.02(a).
Each officer shall hold office until his successor shall be duly designated and
shall quality or until his death or until he shall resign or shall have been
removed in the manner hereinafter provided. Any number of offices may be held by
the same Person. The salaries or other compensation, if any, of the officers and
agents of the Company shall be fixed from time to time by the Managers.

     (b) Any officer may resign as such at any time. Such resignation shall be
made in writing and shall take effect at the time specified therein, or if no
time be specified, at the time of its receipt by the Managers. The acceptance of
a resignation shall not be necessary to make it effective, unless expressly so
provided in the resignation. Any officer may be removed as such, either with or
without cause, by the Managers whenever in their judgment the best interests of
the Company will be served thereby; provided, however, that such removal shall
be without prejudice to the contract rights, if any, of the Person so removed.


                                      -16-

Designation of an officer shall not of itself create contract rights. Any
vacancy occurring in any office of the Company (other than Manager) may be
filled by the Managers.

     6.11 ATTORNEY-IN-FACT. (a) One or more of the Managers and/or the
President, if any, may, from time to time, designate one or more Persons to be
an Attorney-In-Fact of the Company. No Attorney-In-Fact need be a resident of
the State of Georgia, a Member or a Manager. Any Attorney-In-Fact so designated
shall have such authority and perform such duties as the Managers or President
may, from time to time, delegate to such Person a written instrument
constituting a Power of Attorney. Each Attorney-In-Fact shall hold office until
his death or until he shall resign or shall have been removed in the manner
hereinafter provided. The salaries or other compensation, if any, of any
Attorney-In-Fact of the Company shall be fixed from time to time by the
Managers.

     (b) Any Attorney-In-Fact may resign as such at any time. Such resignation
shall be made in writing and shall take effect at the time specified therein, or
if no time be specified, at the time of its receipt by the Managers. The
acceptance of a resignation shall not be necessary to make it effective, unless
expressly so provided in the resignation. Any Attorney-In-Fact may be removed as
such, either with or without cause, by the Managers whenever in their judgment
the best interests of the Company will be served thereby; provided, however,
that such removal shall be without prejudice to the contract rights, if any, of
the Person so removed. Designation of an Attorney-In-Fact shall not of itself
create contract rights.

                                   ARTICLE VII
                               MEETINGS OF MEMBERS

     7.01 MEETINGS. (a) A quorum shall be present at a meeting of Members if the
holders of a Required Interest are represented at the meeting in person or by
proxy. With respect to any matter, other than a matter for which the affirmative
vote of the holders of a specified portion of the Sharing Ratios of all Members
entitled to vote is required by the Act, the affirmative vote of a Required
Interest at a meeting of Members at which a quorum is present shall be the act
of the Members.

     (b) All meetings of the Members shall be held at the principal place of
business of the Company or at such other place within or without the State of
Georgia as shall be specified or fixed in the notices or waivers of notice
thereof; provided that any or all Members may participate in any such meeting by
means of conference telephone or similar communications equipment pursuant to
Section 7.05.

     (c) Notwithstanding the other provisions of the Articles or this Operating
Agreement, the chairman of the meeting or the holders of a Required Interest
shall have the power to adjourn such meeting from time to time, without any
notice other than announcement at the meeting of the time and place of the
holding of the adjourned meeting. If such meeting is adjourned by the Members,
such time and place shall be determined by a vote of the holders of a Required
Interest. Upon the resumption of such adjourned meeting, any business may be
transacted that might have been transacted at the meeting as originally called.

     (d) An annual meeting of the Members, for the election of the Managers and
for the transaction of such other business as may properly come before the
meeting, shall be


                                      -17-

held at such place, within or without the State of Georgia, on such date and at
such time as the Managers shall fix and set forth in the notice of the meeting.

     (e) Special meetings of the Members for any proper purpose or purposes may
be called at any time by the Managers or the holders of at least ten percent of
the Sharing Ratios of all Members. If not otherwise stated in or fixed in
accordance with the remaining provisions hereof, the record date for determining
Members entitled to call a special meeting is the date any Member first signs
the notice of that meeting. Only business within the purpose or purposes
described in the notice (or waiver thereof) required by this Operating Agreement
may be conducted at a special meeting of the Members.

     (f) Written or printed notice stating the place, day and hour of the
meeting and, in the case of a special meeting, the purpose or purposes for which
the meeting is called, shall be delivered not less than ten nor more than 60
days before the date of the meeting, either personally or by mail, by or at the
direction of the Managers or Person calling the meeting, to each Member entitled
to vote at such meeting. If mailed, any such notice shall be deemed to be
delivered when deposited in the United States mail, addressed to the Member at
his address provided for on Exhibit A, with postage thereon prepaid.

     (g) The date on which notice of a meeting of Members is mailed or the date
on which the resolution of the Managers declaring a distribution is adopted, as
the case may be, shall be the record date for the determination of the Members
entitled to notice of or to vote at such meeting, including any adjournment
thereof, or the Members entitled to receive such distribution.

     (h) The right of Members to cumulative voting in the election of Managers
is expressly prohibited.

     7.02 VOTING LIST. The Managers shall make, at least ten days before each
meeting of Members, a complete list of the Members entitled to vote at such
meeting or any adjournment thereof, arranged in alphabetical order, with the
address of and the Sharing Ratios held by each, which list, for a period of ten
days prior to such meeting, shall be kept on file at the registered office or
principal place of business of the Company and shall be subject to inspection by
any Member at any time during usual business hours. Such list shall also be
produced and kept open at the time and place of the meeting and shall be subject
to the inspection of any Member during the whole time of the meeting. The
original membership records shall be prima-facie evidence as to who are the
Members entitled to examine such list or transfer records or to vote at any
meeting of Members. Failure to comply with the requirements of this Section
shall not affect the validity of any action taken at the meeting.

     7.03 PROXIES. A Member may vote either in person or by proxy executed in
writing by the Member. A telegram, telex, cablegram or similar transmission by
the Member, or a photographic, photostatic, facsimile or similar reproduction of
a writing executed by the Member shall be treated as an execution in writing for
purposes of this Section. Proxies for use at any meeting of Members or in
connection with the taking of any action by written consent shall be filed with
the Managers, before or at the time of the meeting or execution of the written
consent, as the case may be. All proxies shall be received and taken charge of
and all ballots shall be received and canvassed by the Managers, who shall
decide all questions touching upon the qualification of voters, the validity of
the proxies, and the


                                      -18-

acceptance or rejection of votes, unless an inspector or inspectors shall have
been appointed by the chairman of the meeting, in which event such inspector or
inspectors shall decide all such questions. No proxy shall be valid after 11
months from the date of its execution unless otherwise provided in the proxy. A
proxy shall be revocable unless the proxy form conspicuously states that the
proxy is irrevocable and the proxy is coupled with an interest. Should a proxy
designate two or more Persons to act as proxies, unless that instrument shall
provide to the contrary, a majority of such Persons present at any meeting at
which their powers thereunder are to be exercised shall have and may exercise
all the powers of voting or giving consents thereby conferred, or if only one be
present, then such powers may be exercised by that one; or, if an even number
attend and a majority do not agree on any particular issue, the Company shall
not be required to recognize such proxy with respect to such issue if such proxy
does not specify how the Sharing Ratios that are the subject of such proxy are
to be voted with respect to such issue.

     7.04 CONDUCT OF MEETINGS. All meetings of the Members shall be presided
over by the chairman of the meeting, who shall be a Manager (or representative
thereof) designated by a majority of the Managers. The chairman of any meeting
of Members shall determine the order of business and the procedure at the
meeting, including such regulation of the manner of voting and the conduct of
discussion as seem to him in order.

     7.05 ACTION BY WRITTEN CONSENT OR TELEPHONE CONFERENCE. (a) Any action
required or permitted to be taken at any annual or special meeting of Members
may be taken without a meeting, without prior notice, and without a vote, if a
consent or consents in writing, setting forth the action so taken, shall be
signed by the holder or holders of not less than the minimum Sharing Ratios that
would be necessary to take such action at a meeting at which the holders of all
Sharing Ratios entitled to vote on the action were present and voted. Every
written consent shall bear the date of signature of each Member who signs the
consent. No written consent shall be effective to take the action that is the
subject to the consent unless, within 60 days after the date of the earliest
dated consent delivered to the Company in the manner required by this Section, a
consent or consents signed by the holder or holders of not less than the minimum
Sharing Ratios that would be necessary to take the action that is the subject of
the consent are delivered to the Company by delivery to its registered office,
its principal place of business, or the Managers. Delivery shall be by hand or
certified or registered mail, return receipt requested. Delivery to the
Company's principal place of business shall be addressed to the Managers. A
telegram, telex, cablegram or similar transmission by a Member, or a
photographic, photostatic, facsimile or similar reproduction of a writing signed
by a Member, shall be regarded as signed by the Member for purposes of this
Section. Notice of the taking of any action by Members without a meeting by less
than unanimous written consent shall be given to those Members who did not
consent in writing to the action within ten days following such action.

     (b) The record date for determining Members entitled to consent to action
in writing without a meeting shall be the first date on which a signed written
consent setting forth the action taken or proposed to be taken is delivered to
the Company by delivery to its registered office, its principal place of
business, or the Managers. Delivery shall be by hand or by certified or
registered mail, return receipt requested. Delivery to the Company's principal
place of business shall be addressed to the Managers.

     (c) Members may participate in and hold a meeting by means of conference
telephone or similar communications equipment by means of which all Persons
participating


                                      -19-

in the meeting can hear each other, and participation in such meeting shall
constitute attendance and presence in person at such meeting, except where a
Person participates in the meeting for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully
called or convened.

                                  ARTICLE VIII
                                INDEMNIFICATION

     8.01 RIGHT TO INDEMNIFICATION. Subject to the limitations and conditions as
provided in the Act and this Article VIII, each Person who was or is made a
party or is threatened to be made a party to or is involved in any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative, arbitrative or investigative (hereinafter a "Proceeding"), or
any appeal in such a Proceeding or any inquiry or investigation that could lead
to such a Proceeding, by reason of the fact that he or she, or a Person of whom
he or she is the legal representative, is or was a Manager, officer, or
Attorney-In-Fact of the Company, or while a Manager, officer or Attorney-In-Fact
of the Company is or was serving at the request of the Company as a Manager,
director, officer, partner, venturer, proprietor, trustee, employee, agent,
Attorney-In-Fact or similar functionary of another foreign or domestic limited
liability company, corporation, partnership, joint venture, sole proprietorship,
trust, employee benefit plan or other enterprise shall be indemnified by the
Company to the fullest extent permitted by the Act, as the same exists or may
hereafter be amended (but, in the case of any such amendment, only to the extent
that such amendment permits the Company to provide broader indemnification
rights than said law permitted the Company to provide prior to such amendment)
against judgments, penalties (including excise and similar taxes and punitive
damages), fines, settlements and reasonable expenses (including, without
limitation, attorneys' fees) actually incurred by such Person in connection with
such Proceeding, and indemnification under this Article VIII shall continue as
to a Person who has ceased to serve in the capacity which initially entitled
such Person to indemnify hereunder. The rights granted pursuant to this Article
VIII shall be deemed contract rights, and no amendment, modification or repeal
of this Article VIII shall have the effect of limiting or denying any such
rights with respect to actions taken or Proceedings arising prior to any such
amendment, modification or repeal. It is expressly acknowledged that the
indemnification provided in this Article VIII could involve indemnification for
negligence or under theories of strict liability.

     8.02 ADVANCE PAYMENT. The right to indemnification conferred in this
Article VIII shall include the right to be paid or reimbursed by the Company the
reasonable expenses incurred by a Person of the type entitled to be indemnified
under Section 8.01 who was, is or is threatened to be made a named defendant or
respondent in a Proceeding in advance of the final disposition of the Proceeding
and without any determination as to the Person's ultimate entitlement to
indemnification; provided, however, that the payment of such expenses incurred
by any such Person in advance of the final disposition of a Proceeding, shall be
made only upon delivery to the Company of a written affirmation by such Manager
of his or her good faith belief that he has met the standard of conduct for
indemnification under this Article VIII and a written undertaking, by or on
behalf of such Person, to repay all amounts so advanced if it shall ultimately
be determined that such indemnified Person is not entitled to be indemnified
under this Article VIII or otherwise.

     8.03 INDEMNIFICATION OF OFFICERS, EMPLOYEES, AND AGENTS. The Company, by
adoption of a resolution of the Managers, may indemnity and advance expenses to
an


                                      -20-

officer, employee or agent of the Company to the same extent and subject to the
same conditions under which it may indemnify and advance expenses to Managers
under this Article VIII; and, the Company may indemnify and advance expenses to
Persons who are not or were not Managers, officers, employees or agents of the
Company but who are or were serving at the request of the Company as a Manager,
director, officer, partner, venturer, proprietor, trustee, employee, agent or
similar functionary of another foreign or domestic limited liability company,
corporation, partnership, joint venture, sole proprietorship, trust, employee
benefit plan or other enterprise against any liability asserted against him and
incurred by him in such a capacity or arising out of his status as such a Person
to the same extent that it may indemnity and advance expenses to Managers under
this Article VIII.

     8.04 APPEARANCE AS A WITNESS. Notwithstanding any other provision of this
Article VIII. the Company may pay or reimburse expenses incurred by a Manager in
connection with his appearance as a witness or other participation in a
Proceeding at a time when he is not a named defendant or respondent in the
Proceeding.

     8.05 NONEXCLUSIVITY OF RIGHTS. The right to indemnification and the
advancement and payment of expenses conferred in this Article VIII shall not be
exclusive of any other right which a Manager or other Person indemnified
pursuant to Section 8.03 may have or hereafter acquire under any law (common or
statutory), provision of the Articles or this Operating Agreement, agreement,
vote of Members or disinterested Managers or otherwise.

     8.06 INSURANCE. The Company may purchase and maintain insurance, at its
expense, to protect itself and any Person who is or was serving as a Manager,
officer, employee or agent of the Company or is or was serving at the request of
the Company as a Manager, director, officer, partner, venturer, proprietor,
trustee, employee, agent or similar functionary of another foreign or domestic
limited liability company, corporation, partnership, joint venture, sole
proprietorship, trust, employee benefit plan or other enterprise against any
expense, liability or loss, whether or not the Company would have the power to
indemnify such Person against such expense, liability or loss under this Article
VIII.

     8.07 MEMBER NOTIFICATION. To the extent required by law, any
indemnification of or advance of expenses to a Manager in accordance with this
Article VIII shall be reported in writing to the Members with or before the
notice or waiver of notice of the next Members' meeting or with or before the
next submission to Members of a consent to action without a meeting and, in any
case, within the 12-month period immediately following the date of the
indemnification or advance.

     8.08 SAVINGS CLAUSE. If this Article VIII or any portion hereof shall be
invalidated on any ground by any court of competent jurisdiction, then the
Company shall nevertheless indemnify and hold harmless each Manager or any other
Person indemnified pursuant to this Article VIII as to costs, charges and
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement with respect to any action, suit or proceeding, whether civil,
criminal, administrative or investigative to the full extent permitted by any
applicable portion of this Article VIII that shall not have been invalidated and
to the fullest extent permitted by applicable law.


                                      -21-

                                   ARTICLE IX
                                     TAXES

     9.01 TAX RETURNS. The Managers shall cause to be prepared and filed all
necessary federal and state income tax returns for the Company, including making
the elections described in Section 9.02. Each Member shall furnish to the
Managers all pertinent information in its possession relating to Company
operations that is necessary to enable the Company's income tax returns to be
prepared and filed.

     9.02 TAX ELECTIONS. The Company shall make the following elections on the
appropriate tax returns:

          (a) to adopt the year ending on May 31 as the Company's fiscal year;

          (b) to adopt a method of accounting as the Managers may determine from
     time to time;

          (c) if a distribution of Company property as described in section 734
     of the Code occurs or if a transfer of a Membership Interest as described
     in section 743 of the Code occurs, on written request of any Member, to
     elect, pursuant to section 754 of the Code, to adjust the basis of Company
     properties;

          (d) to elect to amortize the organizational expenses of the Company
     and the startup expenditures of the Company under Section 195 of the Code
     ratably over a period of 60 months as permitted by section 709(b) of the
     Code; and

          (e) any other election the Managers may deem appropriate and in the
     best interests of the Members.

Neither the Company nor any Manager or Member may make an election for the
Company to be excluded from the application of the provisions of subchapter K of
chapter 1 of subtitle A of the Code or any similar provisions of applicable
state law, and no provision of this Operating Agreement (including, without
limitation, Section 2.06) shall be construed to sanction or approve such an
election.

     9.03 "TAX MATTERS PARTNER." A majority of the Managers who are Members
shall designate one Manager that is a Member to be the "tax matters partner" of
the Company pursuant to section 6231(a)(7) of the Code,; or, if there is no
Manager that is a Member, the "tax matters partner" shall be a Member that is
designated as such by a Required Interest. Any Member who is designated "tax
matters partner" shall take such action as may be necessary to cause each other
Member to become a "notice partner" within the meaning of section 6223 of the
Code. Any Member who is designated "tax matters partner" shall inform each other
Member of all significant matters that may come to its attention in its capacity
as "tax matters partner" by giving notice thereof on or before the fifth
Business Day after becoming aware thereof and, within that time, shall forward
to each other Member copies of all significant written communications it may
receive in that capacity. Any Member who is designated "tax matters partner" may
not take any action contemplated by sections


                                      -22-

6222 through 6232 of the Code without the consent of a Required Interest, but
this sentence does not authorize such Manager (or any other Manager) to take any
action left to the determination of an individual Member under sections 6222
through 6232 of the Code.

                                    ARTICLE X
                   BOOKS, RECORDS, REPORTS, AND BANK ACCOUNTS

     10.01 MAINTENANCE OF BOOKS. The Company shall keep books and records of
accounts and shall keep minutes of the proceedings of its Members, its Managers
and each committee of the Managers. The books of account for the Company shall
be maintained on a cash basis in accordance with the terms of this Operating
Agreement, except that the capital accounts of the Members shall be maintained
in accordance with Section 4.06. The calendar year shall be the accounting year
of the Company.

     10.02 REPORTS. On or before the 120th day following the end of each fiscal
year during the term of the Company, the Managers shall cause each Member to be
furnished with a balance sheet, an income statement, and a statement of changes
in Members' capital of the Company for, or as of the end of, that year certified
by a recognized firm of certified public accountants. These financial statements
must be prepared in accordance with accounting principles generally employed for
cash basis records consistently applied (except as therein noted) and must be
accompanied by a report of the certified public accountants certifying the
statements and stating that (a) their examination was made in accordance with
generally accepted auditing standards and, in their opinion, the financial
statements fairly present the financial position, financial results of
operations, and changes in Members' capital in accordance with accounting
principles generally employed for cash-basis records consistently applied
(except as therein noted) and (b) in making the examination and reporting on the
financial statements described above, nothing came to their attention that
caused them to believe that (i) the income and revenues were not paid or
credited in accordance with the financial and accounting provisions of this
Operating Agreement, (ii) the costs and expenses were not charged in accordance
with the financial and accounting provisions of this Operating Agreement, or
(iii) the Managers or any Member failed to comply in any material respect with
the financial and accounting provisions of this Operating Agreement, or if they
do conclude that the Managers or a Member so failed, specifying the nature and
period of existence of the failure. The Managers also may cause to be prepared
or delivered such other reports as they may deem appropriate. The Company shall
bear the costs of all these reports.

     10.03 ACCOUNTS. The Managers shall establish and maintain one or more
separate bank and investment accounts and arrangements for Company funds in the
Company name with financial institutions and firms that the Managers determine.
The Managers may not commingle the Company's funds with the funds of any Member;
however, Company funds may be invested in a manner the same as or similar to the
Managers' investment of their own funds or investments by their Affiliates.

                                   ARTICLE XI
                             BANKRUPTCY OF A MEMBER

     11.01 BANKRUPT MEMBERS. Subject to Section 12.01(c), if any Member becomes
a Bankrupt Member, the Company shall have the option, exercisable by notice from
the Managers to the Bankrupt Member (or its representative) at any time prior to
the 180th day


                                      -23-

after receipt of notice of the occurrence of the event causing it to become a
Bankrupt Member, to buy, and on the exercise of this option the Bankrupt Member
or its representative shall sell, its Membership Interest. The purchase price
shall be an amount equal to the fair market value thereof determined by
agreement of the Bankrupt Member (or its representative) and the Managers;
however, if those Persons do not agree on the fair market value on or before the
30th day following the exercise of the option, either such Person, by notice to
the other, may require the determination of fair market value to be made by an
independent appraiser specified in that notice. If the Person receiving that
notice objects on or before the tenth day following receipt to the independent
appraiser designated in that notice, and those Persons otherwise fail to agree
on an independent appraiser, either such Person may petition the United States
District Judge for the Northern District of Georgia (Atlanta Division) then
senior in service to designate an independent appraiser. The determination of
the independent appraiser, however designated, is final and binding on all
parties. The Bankrupt Member and the Company each shall pay one-half of the
costs of the appraisal. The purchaser shall pay the fair market value as so
determined in four equal cash installments, the first due on closing and the
remainder (together with accumulated interest on the amount unpaid at the
General Interest Rate) due on each of the first three anniversaries thereof. The
payment to be made to the Bankrupt Member or its representative pursuant to this
Section 11.01 is in complete liquidation and satisfaction of all the rights and
interest of the Bankrupt Member and its representative (and of all Persons
claiming by, through, or under the Bankrupt Member and its representative) in
and in respect of the Company, including, without limitation, any Membership
Interest, any rights in specific Company property, and any rights against the
Company and (insofar as the affairs of the Company are concerned) against the
Members.

                                   ARTICLE XII
                    DISSOLUTION, LIQUIDATION, AND TERMINATION

     12.01 DISSOLUTION. The Company shall dissolve and its affairs shall be
wound up on the first to occur of the following:

          (a) the written consent of a Required Interest;

          (b) the expiration of the period fixed for the duration of the Company
     set forth herein;

          (c) any Manager who is a Member (or, if there is no Manager who is a
     Member, any Member) shall become a Bankrupt Member (with or without the
     consent of a Required Interest); provided, however, that if the event
     described in this Section 12.01(c) shall occur and there shall be at least
     one other Member remaining, the Company shall not be dissolved, and the
     business of the Company shall be continued, if all Members so agree; and

          (d) entry of a decree of judicial dissolution of the Company under
     article 6.02 of the Act.

Except as provided in Section 12.01(c), the death, retirement, resignation,
expulsion, bankruptcy or dissolution of a Member, or the occurrence of any other
event that terminates the continued membership of a Member in the Company, shall
not cause a dissolution of the Company.


                                      -24-

     12.02 LIQUIDATION AND TERMINATION. On dissolution of the Company, the
Managers shall act as liquidator or may appoint one or more Members as
liquidator. The liquidator shall proceed diligently to wind up the affairs of
the Company and make final distributions as provided herein and in the Act. The
costs of liquidation shall be borne as a Company expense. Until final
distribution, the liquidator shall continue to operate the Company properties
with all of the power and authority of the Managers. The steps to be
accomplished by the liquidator are as follows:

          (a) as promptly as possible after dissolution and again after final
     liquidation, the liquidator shall cause a proper accounting to be made by a
     recognized firm of certified public accountants of the Company's assets,
     liabilities, and operations through the last day of the calendar month in
     which the dissolution occurs or the final liquidation is completed, as
     applicable;

          (b) the liquidator shall cause the Statement of Commencement described
     in Section 14-11-606 of the Act to be filed with the Secretary of State in
     the manner described therein.

          (c) the liquidator shall cause the notices described in Section 14-11-
     607 of the Act to be mailed to each known creditor of and claimant against
     the Company in the manner described therein;

          (c) the liquidator shall cause such other notices described in Act to
     be made as the liquidator shall deem appropriate and advisable;

          (d) the liquidator shall pay, satisfy or discharge from Company funds
     all of the debts, liabilities and obligations of the Company (including,
     without limitation, all expenses incurred in liquidation and any advances
     described in Section 4.05) or otherwise make adequate provision for payment
     and discharge thereof (including, without limitation, the establishment of
     a cash escrow fund for contingent liabilities in such amount and for such
     term as the liquidator may reasonably determine); and

          (d) all remaining assets of the Company shall be distributed to the
     Members as follows:

               (i) the liquidator may sell any or all Company property,
          including to Members, and any resulting gain or loss from each sale
          shall be computed and allocated to the capital accounts of the
          Members;

               (ii) with respect to all Company property that has not been sold,
          the fair market value of that property shall be determined and the
          capital accounts of the Members shall be adjusted to reflect the
          manner in which the unrealized income, gain, loss, and deduction
          inherent in property that has not been reflected in the capital
          accounts previously would be allocated among the Members if there were
          a taxable disposition of that property for the fair market value of
          that property on the date of distribution; and


                                      -25-

               (iii) Company property shall be distributed among the Members in
          accordance with the positive capital account balances of the Members,
          as determined after taking into account all capital account
          adjustments far the taxable year of the Company during which the
          liquidation of the partnership occurs (other than those made by reason
          of this clause (iii)); and those distributions shall be made by the
          end of the taxable year of the Company during which the liquidation of
          the Company Occurs (or, if later, 90 days after the date of the
          liquidation).

All distributions in kind to the Members shall be made subject to the liability
of each distributee for costs, expenses, and liabilities theretofore incurred or
for which the Company has committed prior to the date of termination and those
costs, expenses, and liabilities shall be allocated to the distributee pursuant
to this Section 12.02. The distribution of cash and/or property to a Member in
accordance with the provisions of this Section 12.02 constitutes a complete
return to the Member of its Capital Contributions and a complete distribution to
the Member of its Membership Interest and all the Company's property. To the
extent that a Member returns funds to the Company, it has no claim against any
other Member for those funds.

     12.03 DEFICIT CAPITAL ACCOUNTS. Notwithstanding anything to the contrary
contained in this Operating Agreement, and notwithstanding any custom or rule of
law to the contrary, to the extent that the deficit, if any, in the capital
account of any Member results from or is attributable to deductions and losses
of the Company (including non-cash items such as depreciation), or distributions
of money pursuant to this Operating Agreement to all Members in proportion to
their respective Sharing Ratios, upon dissolution of the Company such deficit
shall not be an asset of the Company and such Members shall not be obligated to
contribute such amount to the Company to bring the balance of such Member's
capital account to zero.

     12.04 ARTICLES OF DISSOLUTION. On completion of the distribution of Company
assets as provided herein, the Company is terminated, and the Managers (or such
other Person or Persons as the Act may require or permit) shall file Articles of
Dissolution with the Secretary of State of Georgia, cancel any other filings
made pursuant to Section 2.05, and take such other actions as may be necessary
to terminate the Company.

                                  ARTICLE XIII
                               GENERAL PROVISIONS

     13.01 OFFSET. Whenever the Company is to pay any sum to any Member, any
amounts that Member owes the Company may be deducted from that sum before
payment.

     13.02 NOTICES. Except as expressly set forth to the contrary in this
Operating Agreement, all notices, requests, or consents provided for or
permitted to be given under this Operating Agreement must be in writing and must
be given either by depositing that writing in the United States mail, addressed
to the recipient, postage paid, and registered or certified with return receipt
requested or by delivering that writing to the recipient in person, by courier,
or by facsimile transmission; and a notice, request, or consent given under this
Operating Agreement is effective on receipt by the Person to receive it. All


                                      -26-

notices, requests, and consents to be sent to a Member must be sent to or made
at the addresses given for that Member on Exhibit A or in the instrument
described in Section 3.03(d) or 3.04, or such other address as that Member may
specify by notice to the other Members. Any notice, request, or consent to the
Company or the Managers must be given to the Managers at the following address:

          1600 Parkwood Circle, Suite 120
          Atlanta, Georgia 30339

Whenever any notice is required to be given by law, the Articles or this
Operating Agreement, a written waiver thereof, signed by the Person entitled to
notice, whether before or after the time stated therein, shall be deemed
equivalent to the giving of such notice.

     13.03 ENTIRE AGREEMENT; SUPERSEDURE. This Operating Agreement constitute
the entire agreement of the Members and their Affiliates relating to the Company
and supersedes all prior contracts or agreements with respect to the Company,
whether oral or written.

     13.04 EFFECT OF WAIVER OR CONSENT. A waiver or consent. express or implied,
to or of any breach or default by any Person in the performance by that Person
of its obligations with respect to the Company is not a consent or waiver to or
of any other breach or default in the performance by that Person of the same or
any other obligations of that Person with respect to the Company. Failure on the
part of a Person to complain of any act of any Person or to declare any Person
in default with respect to the Company, irrespective of how long that failure
continues, does not constitute a waiver by that Person of its rights with
respect to that default until the applicable statute-of-limitations period has
run.

     13.05 AMENDMENT OR MODIFICATION. This Operating Agreement may be amended or
modified from time to time only by a written instrument adopted by the Managers
and executed and agreed to by a Required Interest; provided, however, that (a)
an amendment or modification reducing a Member's Sharing Ratio or increasing its
Commitment (other than to reflect changes otherwise provided by this Operating
Agreement) is effective only with that Member's consent, (b) an amendment or
modification reducing the required Sharing Ratio or other measure for any
consent or vote in this Operating Agreement is effective only with the consent
or vote of Members having the Sharing Ratio or other measure theretofore
required, and (c) amendments of the type described in Section 3.04 may be
adopted as therein provided.

     13.06 BINDING EFFECT. Subject to the restrictions on Dispositions set forth
in this Operating Agreement, this Operating Agreement are binding on and inure
to the benefit of the Members and their respective heirs, legal representatives,
successors, and assigns.

     13.07 GOVERNING LAW; SEVERABILITY. This Operating Agreement is governed by
and shall be construed in accordance with laws of the State of Georgia,
excluding any conflict-of-laws rule or principle that might refer the
governance or the construction of this Operating Agreement to the law of another
jurisdiction. In the event of a direct conflict between the provisions of this
Operating Agreement and (a) any provision of the Articles, or (b) any mandatory
provision of the Act, the applicable provision of the Articles, and the Act,
shall control. If any provision of this Operating Agreement or the application
thereof to any Person or circumstance is held invalid or unenforceable to any
extent, the remainder of this


                                      -27-

Operating Agreement and the application of that provision to other Persons or
circumstances is not affected thereby and that provision shall be enforced to
the greatest extent permitted by law.

     13.08 FURTHER ASSURANCES. In connection with this Operating Agreement and
the transactions contemplated hereby, each Member shall execute and deliver any
additional documents and instruments and perform any additional acts that may be
necessary or appropriate to effectuate and perform the provisions of this
Operating Agreement and those transactions.

     13.09 WAIVER OF CERTAIN RIGHTS. Each Member irrevocably waives any right it
may have to maintain any action for dissolution of the Company or for partition
of the property of the Company.

     13.10 INDEMNIFICATION. To the fullest extent permitted by law, each Member
shall indemnify the Company, each Manager and each other Member and hold them
harmless from and against all losses, costs, liabilities, damages, and expenses
(including, without limitation, costs of suit and attorney's fees) they may
incur on account of any breach by that Member of this Operating Agreement.

     13.11 NOTICE TO MEMBERS OF PROVISIONS OF THIS AGREEMENT. By executing this
Operating Agreement, each Member acknowledges that it has actual notice of (a)
all of the provisions of this Agreement, including, without limitation, the
restrictions on the transfer of Membership Interests set forth in Article III,
and (b) all of the provisions of the Articles. Each Member hereby agrees that
this Operating Agreement constitutes adequate notice of all such provisions,
including, without limitation, any notice requirement under the Act and the
Georgia Uniform Commercial Code, and each Member hereby waives any requirement
that any further notice thereunder be given.

     13.12 COUNTERPARTS. This Operating Agreement may be executed in any number
of counterparts with the same effect as if all signing parties had signed the
same document. All counterparts shall be construed together and constitute the
same instrument.

     13.13 ARBITRATION. If, at any time or from time to time during the
continuance of the Company or after the dissolution or other termination
thereof, any dispute, difference or question shall arise between any of the
Members, or their successors, assigns or nominees, touching or concerning the
Company of the property, assets, rights or transactions thereof, or the
dissolution or other termination thereof, or the property of the Company or the
construction, meaning or effect of this Operating Agreement, or any provision
hereof, or the rights of obligations of the Members, or their successors,
assigns or nominees, under this Operating Agreement or otherwise, with respect
thereto, then every such dispute, difference or question shall be submitted to
and settled by arbitration and the decision of the arbitrator appointed as
hereinafter provided to deal with such matter shall be accepted by all the
Members to such dispute, difference or question. The arbitration shall be
conducted by a single arbitrator agreed upon by the Members to the matter. The
decision of the arbitrator shall be final and binding upon all the Members to
such dispute, difference or question and their nominees, and there shall be no
appeal therefrom.

                            [CONTINUED ON NEXT PAGE]


                                      -28-

     IN WITNESS WHEREOF, following adoption of this Operating Agreement by the
Managers, the Members have executed this Operating Agreement as of the date
first set forth above.

                                        MEMBERS:

                                        ELLY NEVADA, INC.,
                                        a Nevada Corporation


                                        By: /s/ Elly Reisman
                                            ------------------------------------
                                            Elly Reisman, President


                                        NORMAN NEVADA, INC.,
                                        a Nevada Corporation


                                        By: /s/ Norman Reisman
                                            ------------------------------------
                                            Norman Reisman, President


                                        LARRY NEVADA, INC.,
                                        a Nevada Corporation


                                        By: /s/ Larry Robbins
                                            ------------------------------------
                                            Larry Robbins, President


                                        BRUCE NEVADA, INC.,
                                        a Nevada Corporation


                                        By: /s/ Bruce Freeman
                                            ------------------------------------
                                            Bruce Freeman, President


                                        HARRY NEVADA, INC.,
                                        a Nevada corporation


                                        By: /s/ Harry Rosenbaum
                                            ------------------------------------
                                            Harry Rosenbaum, President


                                        SEYMOUR NEVADA, INC.,
                                        a Nevada Corporation


                                        By: /s/ Seymour Joffe
                                            ------------------------------------
                                            Seymour Joffe, President


                                        HAYDN NEVADA, INC.,
                                        a Nevada Corporation


                                        By: /s/ Haydn Matthews
                                            ------------------------------------
                                            Haydn Matthews, President


                                      -29-

EX-3.2(AJ)

                                                                 Exhibit 3.2(aj)

                    FIRST AMENDMENT TO OPERATING AGREEMENT OF
                        ASHTON ATLANTA RESIDENTIAL L.L.C.

     THIS FIRST AMENDMENT TO OPERATING AGREEMENT OF ASHTON ATLANTA RESIDENTIAL
L.L.C. (this "Amendment") is made and entered into by and among ELLY NEVADA,
INC., a Nevada corporation ("Elly NV"), NORMAN NEVADA, INC., a Nevada
corporation ("Norman NV"), LARRY NEVADA, INC., a Nevada corporation ("Larry
NV"), BRUCE NEVADA, INC., a Nevada corporation ("Bruce NV"), HARRY NEVADA, INC.,
a Nevada corporation ("Harry NV"), SEYMOUR NEVADA, INC., a Nevada corporation
("Seymour NV"), HAYDN NEVADA, INC., a Nevada corporation ("Haydn NV"), LITTLE
SHOTS NEVADA L.L.C., a Nevada limited liability company ("Little Shots"), and
ASHTON WOODS USA L.L.C., a Nevada limited liability company ("Ashton USA").

                                    RECITALS:

     A. Elly NV, Norman NV, Larry NV, Bruce NV, Harry NV, Seymour NV, and Haydn
NV have heretofore entered into an Operating Agreement of Ashton Atlanta
Residential L.L.C. (the "Operating Agreement") dated as of July 7, 1994,
creating Ashton Atlanta Residential L.L.C., a Georgia limited liability company
(the "Company").

     B. As permitted by the Operating Agreement, Bruce NV, Harry NV, Seymour NV,
and Haydn NV transferred all of their right, title, and interest in and to the
Company to Little Shots.

     C. As permitted by the Operating Agreement, Elly NV, Norman NV, Larry NV,
and Little Shots transferred all of their right, title, and interest in and to
the Company to Ashton USA.

     D. The parties hereto desire to amend the Operating Agreement to reflect
the transfers described above and provide for the admission of Ashton USA as the
sole member of the Company.

     E. Capitalized terms, not specifically defined in this Amendment, shall
have the meanings given such terms in the Operating Agreement.

     NOW, THEREFORE, for and in consideration of the premises and the respective
agreements set forth herein, the parties hereto agree as follows:

     1. The transfers described in Recitals B and C above are hereby approved.

     2. Ashton USA is hereby admitted as a Member of the Company and the parties
hereto recognize that Elly NV, Norman NV, Larry NV, Bruce NV, Harry NV, Seymour
NV, Haydn NV, and Little Shots have withdrawn as Members of the Company. The
only Member of the Company is Ashton USA.

     3. The Sharing Ratios and funding commitments of the Members set forth on
Exhibit "A" to the Operating Agreement shall be as follows:



Member                    Sharing Ratio and Funding Commitment
- ------                    ------------------------------------
                       
Ashton Woods USA L.L.C.                   100%


     4. Any and all notices, demands, requests, or other communications
permitted or required to be given to Ashton USA pursuant to the Operating
Agreement shall be delivered to Ashton USA in the manner provided in the
Operating Agreement, at the following address:

          250 Lesmill Road
          Don Mills, Ontario M3B 2T5 Canada

     5. By execution of this Amendment, Ashton USA agrees to be bound by the
terms and provisions of the Operating Agreement, as amended hereby.

     6. Except as amended hereby, the terms and provisions of the Operating
Agreement shall remain unchanged and shall continue in full force and effect.

     EXECUTED as of May 31, 1999.

                                        MEMBER:

                                        ASHTON WOODS USA L.L.C.,
                                        a Nevada limited liability company


                                        By: /s/ Bruce Freeman
                                            ------------------------------------
                                            Bruce Freeman - Managing Member


                                        By: /s/ Seymour Joffe
                                            ------------------------------------
                                            Seymour Joffe - Managing Member


                                        By: /s/ Harry Rosenbaum
                                            ------------------------------------
                                            Harry Rosenbaum - Managing Member


                                        2

                                        WITHDRAWING MEMBERS:

                                        ELLY NEVADA, INC.,
                                        a Nevada corporation


                                        By: /s/ Elly Reisman
                                            ------------------------------------
                                            Elly Reisman, President


                                        NORMAN NEVADA, INC.,
                                        a Nevada corporation


                                        By: /s/ Norman Reisman
                                            ------------------------------------
                                            Norman Reisman, President


                                        LARRY NEVADA, INC.,
                                        a Nevada corporation


                                        By: /s/ Larry Robbins
                                            ------------------------------------
                                            Larry Robbins, President


                                        BRUCE NEVADA, INC.,
                                        a Nevada corporation


                                        By: /s/ Bruce Freeman
                                            ------------------------------------
                                            Bruce Freeman, President


                                        HARRY NEVADA, INC.,
                                        a Nevada corporation


                                        By: /s/ Harry Rosenbaum
                                            ------------------------------------
                                            Harry Rosenbaum, President


                                        SEYMOUR NEVADA, INC.,
                                        a Nevada corporation


                                        By: /s/ Seymour Joffe
                                            ------------------------------------
                                            Seymour Joffe, President


                                        3

                                        HAYDN NEVADA, INC.,
                                        a Nevada corporation


                                        By: /s/ Haydn Matthews
                                            ------------------------------------
                                            Haydn Matthews, President


                                        LITTLE SHOTS NEVADA L.L.C.,
                                        a Nevada limited liability company


                                        By: /s/ Bruce Freeman
                                            ------------------------------------
                                            Bruce Freeman - Managing Member


                                        By: /s/ Seymour Joffe
                                            ------------------------------------
                                            Seymour Joffe - Managing Member


                                        By: /s/ Harry Rosenbaum
                                            ------------------------------------
                                            Harry Rosenbaum - Managing Member


                                        4

EX-4.1

                                                                     EXHIBIT 4.1

================================================================================

                            ASHTON WOODS USA L.L.C.,

                                       and

                            ASHTON WOODS FINANCE CO.,

                                  the Issuers,

                          the GUARANTORS named herein,

                                  as Guarantors

                                       and

                   U.S. Bank National Association, as Trustee

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

                                    INDENTURE

                         Dated as of September 21, 2005

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

                     9.5% Senior Subordinated Notes due 2015

================================================================================



                              CROSS-REFERENCE TABLE



  TIA                                                                           Indenture
Section                                                                          Section
- -------                                                                         ----------
                                                                             
310   (a)(1)...............................................................         7.10
      (a)(2)...............................................................         7.10
      (a)(3)...............................................................         N.A.
      (a)(4)...............................................................         N.A.
      (a)(5)...............................................................         N.A.
      (b)..................................................................         7.08; 7.10; 12.02
      (b)(1)...............................................................         7.10
      (c)..................................................................         N.A.
311   (a)..................................................................         7.11
      (b)..................................................................         7.11
      (c)..................................................................         N.A.
312   (a)..................................................................         2.06
      (b)..................................................................         12.03
      (c)..................................................................         12.03
313   (a)..................................................................         7.06
      (b)(1)...............................................................         N.A.
      (b)(2)...............................................................         7.06
      (c)..................................................................         7.06; 12.02
      (d)..................................................................         7.06
314   (a)..................................................................         4.02; 4.04; 12.02
      (b)..................................................................         N.A.
      (c)(1)...............................................................         9.01; 10.05; 12.04
      (c)(2)...............................................................         9.01; 10.05; 12.04
      (c)(3)...............................................................         N.A.
      (d)..................................................................         N.A.
      (e)..................................................................         12.05
      (f)..................................................................         N.A.
315   (a)..................................................................         7.01(b)
      (b)..................................................................         7.05; 12.02
      (c)..................................................................         7.01(a)
      (d)..................................................................         7.01(c)
      (e)..................................................................         6.12
316   (a) (last sentence)..................................................         2.10
      (a)(1)(A)............................................................         6.05
      (a)(1)(B)............................................................         6.04
      (a)(2)...............................................................         N.A.
      (b)..................................................................         6.08
      (c)..................................................................         8.04
317   (a)(1)...............................................................         6.09
      (a)(2)...............................................................         6.10
      (b)..................................................................         2.05; 7.12
318   (a)..................................................................         12.01
      (b)..................................................................         N.A.
      (c)..................................................................         12.01


- -----------------
N.A. means Not Applicable



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



                                TABLE OF CONTENTS



                                                                                                    Page
                                                                                                    ----
                                                                                                 
                                           ARTICLE ONE

                           DEFINITIONS AND INCORPORATION BY REFERENCE

SECTION 1.01.   Definitions....................................................................      1
SECTION 1.02.   Other Definitions..............................................................     32
SECTION 1.03.   Incorporation by Reference of Trust Indenture Act..............................     33
SECTION 1.04.   Rules of Construction..........................................................     33

                                           ARTICLE TWO

                                            THE NOTES

SECTION 2.01.   Amount of Notes................................................................     34
SECTION 2.02.   Form and Dating................................................................     34
SECTION 2.03.   Execution and Authentication...................................................     35
SECTION 2.04.   Registrar and Paying Agent.....................................................     36
SECTION 2.05.   Paying Agent To Hold Money in Trust............................................     36
SECTION 2.06.   Holder Lists...................................................................     36
SECTION 2.07.   Transfer and Exchange..........................................................     37
SECTION 2.08.   Replacement Notes..............................................................     37
SECTION 2.09.   Outstanding Notes..............................................................     38
SECTION 2.10.   Treasury Notes.................................................................     38
SECTION 2.11.   Temporary Notes................................................................     38
SECTION 2.12.   Cancellation...................................................................     39
SECTION 2.13.   Defaulted Interest.............................................................     39
SECTION 2.14.   CUSIP Number...................................................................     39
SECTION 2.15.   Deposit of Moneys..............................................................     39
SECTION 2.16.   Book-Entry Provisions for Global Notes.........................................     40
SECTION 2.17.   Special Transfer Provisions....................................................     42
SECTION 2.18.   Computation of Interest........................................................     43

                                          ARTICLE THREE

                                           REDEMPTION

SECTION 3.01.   Election To Redeem; Notices to Trustee.........................................     44
SECTION 3.02.   Selection by Trustee of Notes To Be Redeemed...................................     44
SECTION 3.03.   Notice of Redemption...........................................................     44
SECTION 3.04.   Effect of Notice of Redemption.................................................     45
SECTION 3.05.   Deposit of Redemption Price....................................................     45
SECTION 3.06.   Notes Redeemed in Part.........................................................     46


                                      -i-




                                                                                                    Page
                                                                                                    ----
                                                                                                 
                                          ARTICLE FOUR

                                            COVENANTS

SECTION 4.01.   Payment of Notes...............................................................     46
SECTION 4.02.   Reports to Holders.............................................................     46
SECTION 4.03.   Waiver of Stay, Extension or Usury Laws........................................     47
SECTION 4.04.   Compliance Certificate.........................................................     47
SECTION 4.05.   Taxes..........................................................................     48
SECTION 4.06.   Limitations on Additional Indebtedness.........................................     48
SECTION 4.07.   Limitations on Layering Indebtedness...........................................     50
SECTION 4.08.   Limitations on Restricted Payments.............................................     51
SECTION 4.09.   Limitations on Asset Sales.....................................................     53
SECTION 4.10.   Limitations on Transactions with Affiliates....................................     55
SECTION 4.11.   Limitations on Liens...........................................................     57
SECTION 4.12.   Additional Note Guarantees.....................................................     57
SECTION 4.13.   Limitations on Dividend and Other Restrictions Affecting Restricted
                   Subsidiaries................................................................     58
SECTION 4.14.   Limitations on Designation of Unrestricted Subsidiaries........................     59
SECTION 4.15.   Maintenance of Consolidated Tangible Net Worth.................................     60
SECTION 4.16.   Maintenance of Properties; Insurance; Compliance with Law......................     61
SECTION 4.17.   Payments for Consent...........................................................     62
SECTION 4.18.   Legal Existence................................................................     62
SECTION 4.19.   Change of Control Offer........................................................     62
SECTION 4.20.   Limitation on Activities of the Co-Issuer......................................     63

                                          ARTICLE FIVE

                                      SUCCESSOR CORPORATION

SECTION 5.01.   Limitations on Mergers, Consolidations, Etc....................................     63
SECTION 5.02.   Successor Person Substituted...................................................     66

                                           ARTICLE SIX

                                      DEFAULTS AND REMEDIES

SECTION 6.01.   Events of Default..............................................................     66
SECTION 6.02.   Acceleration...................................................................     68
SECTION 6.03.   Other Remedies.................................................................     68
SECTION 6.04.   Waiver of Past Defaults and Events of Default..................................     69
SECTION 6.05.   Control by Majority............................................................     69
SECTION 6.06.   Limitation on Suits............................................................     69
SECTION 6.07.   No Personal Liability of Directors, Officers, Employees and Stockholders.......     69
SECTION 6.08.   Rights of Holders To Receive Payment...........................................     70


                                      -ii-




                                                                                                    Page
                                                                                                    ----
                                                                                                 
SECTION 6.09.   Collection Suit by Trustee.....................................................     70
SECTION 6.10.   Trustee May File Proofs of Claim...............................................     70
SECTION 6.11.   Priorities.....................................................................     71
SECTION 6.12.   Undertaking for Costs..........................................................     71
SECTION 6.13.   Restoration of Rights and Remedies.............................................     71

                                          ARTICLE SEVEN

                                             TRUSTEE

SECTION 7.01.   Duties of Trustee..............................................................     71
SECTION 7.02.   Rights of Trustee..............................................................     73
SECTION 7.03.   Individual Rights of Trustee...................................................     74
SECTION 7.04.   Trustee's Disclaimer...........................................................     74
SECTION 7.05.   Notice of Defaults.............................................................     74
SECTION 7.06.   Reports by Trustee to Holders..................................................     74
SECTION 7.07.   Compensation and Indemnity.....................................................     75
SECTION 7.08.   Replacement of Trustee.........................................................     76
SECTION 7.09.   Successor Trustee by Consolidation, Merger, etc................................     76
SECTION 7.10.   Eligibility; Disqualification..................................................     77
SECTION 7.11.   Preferential Collection of Claims Against Issuers..............................     77
SECTION 7.12.   Paying Agents..................................................................     77

                                          ARTICLE EIGHT

                               AMENDMENTS, SUPPLEMENTS AND WAIVERS

SECTION 8.01.   Without Consent of Holders.....................................................     77
SECTION 8.02.   With Consent of Holders........................................................     78
SECTION 8.03.   Compliance with Trust Indenture Act............................................     79
SECTION 8.04.   Revocation and Effect of Consents..............................................     80
SECTION 8.05.   Notation on or Exchange of Notes...............................................     80
SECTION 8.06.   Trustee To Sign Amendments, etc................................................     80
SECTION 8.07.   Effect on Senior Debt..........................................................     81

                                          ARTICLE NINE

                               DISCHARGE OF INDENTURE; DEFEASANCE

SECTION 9.01.   Discharge of Indenture.........................................................     81
SECTION 9.02.   Legal Defeasance...............................................................     82
SECTION 9.03.   Covenant Defeasance............................................................     82
SECTION 9.04.   Conditions to Defeasance or Covenant Defeasance................................     82
SECTION 9.05.   Deposited Money and U.S. Government Obligations
                   To Be Held in Trust; Other Miscellaneous Provisions.........................     84
SECTION 9.06.   Reinstatement..................................................................     84


                                     -iii-




                                                                                                    Page
                                                                                                    ----
                                                                                                 
SECTION 9.07.   Moneys Held by Paying Agent....................................................     85
SECTION 9.08.   Moneys Held by Trustee.........................................................     85

                                           ARTICLE TEN

                                       GUARANTEE OF NOTES

SECTION 10.01.  Guarantee......................................................................     85
SECTION 10.02.  Execution and Delivery of Guarantee............................................     86
SECTION 10.03.  Subordination of Note Guarantee................................................     87
SECTION 10.04.  Limitation of Guarantee........................................................     87
SECTION 10.05.  Release of Guarantor...........................................................     87
SECTION 10.06.  Waiver of Subrogation..........................................................     88

                                         ARTICLE ELEVEN

                                     SUBORDINATION OF NOTES

SECTION 11.01.  Agreement to Subordinate.......................................................     88
SECTION 11.02.  Liquidation; Dissolution; Bankruptcy...........................................     89
SECTION 11.03.  Default on Designated Senior Debt..............................................     89
SECTION 11.04.  Acceleration of Securities.....................................................     90
SECTION 11.05.  When Distribution Must Be Paid Over............................................     90
SECTION 11.06.  Notice by the Issuers..........................................................     91
SECTION 11.07.  Subrogation....................................................................     91
SECTION 11.08.  Relative Rights................................................................     91
SECTION 11.09.  Subordination May Not Be Impaired by the Issuers...............................     92
SECTION 11.10.  Distribution or Notice to Representative.......................................     92
SECTION 11.11.  Rights of Trustee and Paying Agent.............................................     92
SECTION 11.12.  Authorization to Effect Subordination..........................................     93
SECTION 11.13.  Amendments.....................................................................     93

                                         ARTICLE TWELVE

                                          MISCELLANEOUS

SECTION 12.01.  Trust Indenture Act Controls...................................................     93
SECTION 12.02.  Notices........................................................................     93
SECTION 12.03.  Communications by Holders with Other Holders...................................     94
SECTION 12.04.  Certificate and Opinion as to Conditions Precedent.............................     94
SECTION 12.05.  Statements Required in Certificate and Opinion.................................     95
SECTION 12.06.  Rules by Trustee and Agents....................................................     95
SECTION 12.07.  Business Days; Legal Holidays..................................................     95
SECTION 12.08.  Governing Law..................................................................     95
SECTION 12.09.  No Adverse Interpretation of Other Agreements..................................     96
SECTION 12.10.  No Recourse Against Others.....................................................     96


                                      -iv-




                                                                                                   Page
                                                                                                   ----
                                                                                                
SECTION 12.11.  Successors.....................................................................     96
SECTION 12.12.  Multiple Counterparts..........................................................     96
SECTION 12.13.  Table of Contents, Headings, etc...............................................     96
SECTION 12.14.  Separability...................................................................     97

                                            EXHIBITS

Exhibit A       Form of Note...................................................................    A-1
Exhibit B       Form of Legend for Rule 144A Notes and Other Notes That Are Restricted
                   Notes.......................................................................    B-1
Exhibit C       Form of Legend for Regulation S Note...........................................    C-1
Exhibit D       Form of Legend for Global Note.................................................    D-1
Exhibit E       Form of Certificate To Be Delivered in Connection with Transfers to
                   Non-QIB Accredited Investors................................................    E-1
Exhibit F       Form of Certificate To Be Delivered in Connection with Transfers Pursuant
                   to Regulation S.............................................................    F-1
Exhibit G       Form of Guarantee..............................................................    G-1


                                      -v-



            INDENTURE, dated as of September 21, 2005, among ASHTON WOODS USA
L.L.C., a Nevada limited liability company (the "Issuer"), ASHTON WOODS FINANCE
CO., a Delaware corporation (the "Co-Issuer" and, together with the Issuer, the
"Issuers"), the Guarantors (as hereinafter defined) and U.S. BANK NATIONAL
ASSOCIATION, as trustee (the "Trustee").

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

                                  ARTICLE ONE

            DEFINITIONS AND INCORPORATION BY REFERENCE

SECTION 1.01. Definitions.

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

            "Additional Notes" shall mean Notes having identical terms and
conditions to the Notes (except for issue date, issue price and first interest
payment date) issued pursuant to Article Two and in compliance with Section
4.06.

            "Additional Interest" has the meaning set forth in the Registration
Rights Agreement.

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

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

            "amend" means to amend, supplement, restate or amend and restate or
otherwise modify, including successively; and "amendment" shall have a
correlative meaning.



            "asset" means any asset or property.

            "Asset Acquisition" means:

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

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

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

            (1) transfers of cash or Cash Equivalents;

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

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

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

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

            (6) any transfer or series of related transfers that, but for this
      clause, would be Asset Sales, if after giving effect to such transfers,
      the aggregate Fair Market Value of the assets transferred in such
      transaction or any such series of related transactions does not exceed
      $2.0 million.

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

                                      -2-


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

            "Board of Directors" means, with respect to any Person, (i) in the
case of any corporation, the board of directors of such Person, (ii) in the case
of any limited liability company, the board of managers or board of directors of
such Person, as the case may be, (iii) in the case of any partnership, the board
of directors of the general partner of such Person and (iv) in any other case,
the functional equivalent of the foregoing or, in each case, other than for
purposes of the definition of "Change of Control," any duly authorized committee
of such body.

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

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

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

            (2) 80% of the book value of Developed Land for which no
      construction has occurred;

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

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

            (5) 70% of the costs of Entitled Land (other than Developed Land) on
      which improvements have not commenced, less mortgage Indebtedness (other
      than under the Credit Facility) applicable to such land.

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

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

                                      -3-


            "Cash Equivalents" means:

            (1) marketable obligations with a maturity of 360 days or less
      issued or directly and fully guaranteed or insured by the United States of
      America or any agency or instrumentality thereof (provided that the full
      faith and credit of the United States of America is pledged in support
      thereof);

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

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

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

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

            "Change of Control" means the occurrence of any of the following
      events:

            (1) prior to a Public Equity Offering after the Issue Date, the
      Permitted Holders cease to own, or to have the power to vote or direct the
      voting of, Voting Stock representing more than 50% of the voting power of
      the total outstanding Voting Stock of the Issuer;

            (2) following a Public Equity Offering after the Issue Date, any
      "person" or "group" (as such terms are used in Sections 13(d) and 14(d) of
      the Exchange Act), other than one or more Permitted Holders, is or becomes
      the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the
      Exchange Act, except that for purposes of this clause that person or group
      shall be deemed to have "beneficial ownership" of all securities that any
      such person or group has the right to acquire, whether such right is
      exercisable immediately or only after the passage of time), directly or
      indirectly, of Voting Stock representing more than 35% of the voting power
      of the total outstanding Voting Stock of the Issuer; provided, however,
      that such event shall not be deemed to be a Change of Control so long as
      the Permitted Holders own Voting Stock representing in the aggregate a
      greater percentage of the total voting power of the Voting Stock of the
      Issuer than such other person or group;

            (3) following a Public Equity Offering after the Issue Date, during
      any period of two consecutive years, individuals who at the beginning of
      such period constituted the

                                      -4-


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

            (4) (a) all or substantially all of the assets of the Issuer and the
      Restricted Subsidiaries taken as a whole are sold or otherwise transferred
      to any Person other than a Wholly Owned Restricted Subsidiary or one or
      more Permitted Holders or their Affiliates or (b) the Issuer consolidates
      or merges with or into another Person or any Person consolidates or merges
      with or into the Issuer, in either case under this clause (4), in one
      transaction or a series of related transactions in which immediately after
      the consummation thereof Persons beneficially owning (as defined in Rule
      13d-3 and 13d-5 under the Exchange Act), directly or indirectly, Voting
      Stock representing in the aggregate 100% of the total voting power of the
      Voting Stock of the Issuer immediately prior to such consummation do not
      beneficially own (as defined in Rule 13d-3 and 13d-5 under the Exchange
      Act), directly or indirectly, Voting Stock representing a majority of the
      total voting power of the Voting Stock of the Issuer or the surviving or
      transferee Person; or

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

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

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

            (1) Consolidated Net Income; plus

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

                  (a) Consolidated Income Tax Expense,

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

                  (c) Consolidated Depreciation Expense,

                                      -5-


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

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

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

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

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

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

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

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

                                      -6-


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

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

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

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

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

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

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

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

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

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

            (3) the net costs associated with Hedging Obligations;

                                      -7-


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

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

            (6) all other non-cash interest expense;

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

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

            (9) all interest on any Indebtedness described in clause (7) or (8)
      of the definition of "Indebtedness".

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

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

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

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

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

                                      -8-


      in a net loss of any such Restricted Subsidiary for such period shall be
      included in determining Consolidated Net Income;

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

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

            (6) unrealized gains and losses with respect to Hedging Obligations;

            (7) the cumulative effect of any change in accounting principle;

            (8) the amount of dividends or distributions paid by the Issuer to
      any direct parent in reliance on clause (5) of the second paragraph of
      Section 4.08; and

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

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

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

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

                                      -9-


            "Consolidated Tangible Net Worth" means, with respect to any Person
as of any date, the Consolidated Net Worth of such Person determined on a
consolidated basis at the end of the fiscal quarter immediately preceding such
date less (without duplication) all Intangible Assets of such Person as of such
date.

            "Corporate Trust Office" means the office of the Trustee at which at
any particular time its corporate trust business shall be principally
administered, which office at the date of execution is located at U.S. Bank
National Association, Corporate Trust Department, EP-MN-WS3C, 60 Livingston
Avenue, St. Paul, MN 55107-1419.

            "Credit Facilities" means the Credit Agreement dated as of January
20, 2005 by and among the Issuer, as borrower, the lenders party thereto and
Wachovia Bank, National Association, as agent for the lenders including any
notes, guarantees, collateral and security documents, instruments and agreements
executed in connection therewith (including Hedging Obligations related to the
Indebtedness incurred thereunder), and in each case as amended or refinanced
from time to time, including any agreement or instrument extending the maturity
of, refinancing, replacing or otherwise restructuring (including increasing the
amount of borrowings or other Indebtedness outstanding or available to be
borrowed thereunder) all or any portion of the Indebtedness under such
agreements, and any successor or replacement agreement or agreements with the
same or any other agents, creditor, lender or group of creditors or lenders.

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

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

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

            "Designated Senior Debt" means (1) Senior Debt and Guarantor Senior
Debt under or in respect of the Credit Facilities and (2) any other Indebtedness
constituting Senior Debt or Guarantor Senior Debt which, at the time of
determination, has an aggregate principal amount of at least $25.0 million and
is specifically designated in the instrument evidencing such Senior Debt as
"Designated Senior Debt."

            "Designation" has the meaning given to this term in Section 4.14.

            "Designation Amount" has the meaning given to this term in Section
4.14.

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

            "Disqualified Equity Interests" of any Person means any class of
Equity Interests of such Person that, by its terms, or by the terms of any
related agreement or of any security into which it is convertible, puttable or
exchangeable, is, or upon the happening of any event or the

                                      -10-


passage of time would be, required to be redeemed by such Person, whether or not
at the option of the holder thereof, or matures or is mandatorily redeemable,
pursuant to a sinking fund obligation or otherwise, in whole or in part, on or
prior to the date which is 91 days after the final maturity date of the Notes;
provided, however, that any class of Equity Interests of such Person that, by
its terms, authorizes such Person to satisfy in full its obligations with
respect to the payment of dividends or upon maturity, redemption (pursuant to a
sinking fund or otherwise) or repurchase thereof or otherwise by the delivery of
Equity Interests that are not Disqualified Equity Interests, and that is not
convertible, puttable or exchangeable for Disqualified Equity Interests or
Indebtedness, will not be deemed to be Disqualified Equity Interests so long as
such Person satisfies its obligations with respect thereto solely by the
delivery of Equity Interests that are not Disqualified Equity Interests;
provided further, however, that any Equity Interests that would not constitute
Disqualified Equity Interests but for provisions thereof giving holders thereof
(or the holders of any security into or for which such Equity Interests are
convertible, exchangeable or exercisable) the right to require the Issuer to
redeem such Equity Interests upon the occurrence of a change in control
occurring prior to the final maturity date of the Notes shall not constitute
Disqualified Equity Interests if the change in control provisions applicable to
such Equity Interests are no more favorable to such holders than the provisions
of Section 4.19 and such Equity Interests specifically provide that the Issuer
will not redeem any such Equity Interests pursuant to such provisions prior to
the Issuer's purchase of the Notes as required pursuant to the provisions of
Section 4.19.

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

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

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

            "Exchange Notes" has the meaning provided in the Registration Rights
Agreement.

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

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

                                      -11-


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

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

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

            "Guarantor Senior Debt" means, with respect to any Guarantor, the
principal of, premium, if any, and interest (including any interest accruing
subsequent to the filing of a petition of bankruptcy at the rate provided for in
the documentation with respect thereto, whether or not such interest is an
allowed claim under applicable law) on any Indebtedness of such Guarantor,
whether outstanding on the Issue Date or thereafter created, incurred or
assumed, unless, in the case of any particular Indebtedness, the instrument
creating or evidencing the same or pursuant to which the same is outstanding
expressly provides that such Indebtedness shall not be senior in right of
payment to the Notes.

            Without limiting the generality of the foregoing, "Guarantor Senior
Debt" shall also include the principal of, premium, if any, interest (including
any interest accruing subsequent to the filing of a petition of bankruptcy at
the rate provided for in the documentation with respect thereto, whether or not
such interest is an allowed claim under applicable law) on, and all other
amounts owing in respect of:

            (1) all monetary obligations of every nature of such Guarantor
      under, or with respect to, the Credit Facilities, including, without
      limitation, obligations to pay principal and interest, reimbursement
      obligations under letters of credit, fees, expenses and indemnities (and
      guarantees thereof); and

            (2) all Hedging Obligations in respect of the Credit Facilities;

in each case whether outstanding on the Issue Date or thereafter incurred.

                                      -12-


            Notwithstanding the foregoing, "Guarantor Senior Debt" shall not
include:

            (1) any Indebtedness of such Guarantor to the Issuer or any of its
      Subsidiaries;

            (2) Indebtedness to, or guaranteed on behalf of, any director,
      officer or employee of the Issuer or any of its other Subsidiaries
      (including, without limitation, amounts owed for compensation);

            (3) obligations to trade creditors and other amounts incurred (but
      not under the Credit Facilities) in connection with obtaining goods,
      materials or services;

            (4) Indebtedness represented by Disqualified Equity Interests;

            (5) any liability for taxes owed or owing by such Guarantor;

            (6) that portion of any Indebtedness incurred in violation of
      Section 4.06 (but, as to any such obligation, no such violation shall be
      deemed to exist for purposes of this clause (6) if the holder(s) of such
      obligation or their representative shall have received an officers'
      certificate of such Guarantor to the effect that the incurrence of such
      Indebtedness does not (or, in the case of revolving credit indebtedness,
      that the incurrence of the entire committed amount thereof at the date on
      which the initial borrowing thereunder is made would not) violate such
      provisions of this Indenture);

            (7) Indebtedness which, when incurred and without respect to any
      election under Section 1111(b) of Title 11, United States Code, is without
      recourse to such Guarantor; and

            (8) any Indebtedness which is, by its express terms, subordinated in
      right of payment to any other Indebtedness of such Guarantor.

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

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

            "incur" means, with respect to any Indebtedness or Obligation,
incur, create, issue, assume, guarantee or otherwise become directly or
indirectly liable, contingently or otherwise, with respect to such Indebtedness
or Obligation; provided, however, that (1) the Indebtedness of a Person existing
at the time such Person became a Restricted Subsidiary or at the time such
Person merged with or into the Issuer or a Restricted Subsidiary shall be deemed
to have

                                      -13-


been incurred at such time and (2) neither the accrual of interest nor the
accretion of original issue discount shall be deemed to be an incurrence of
Indebtedness.

            "Indebtedness" of any Person at any date means, without duplication:

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

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

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

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

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

            (6) all Capitalized Lease Obligations of such Person;

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

            (8) all Indebtedness of others guaranteed by such Person to the
      extent of such guarantee; provided, however, that Indebtedness of the
      Issuer or its Subsidiaries that is guaranteed by the Issuer or the
      Issuer's Subsidiaries shall be counted only once in the calculation of the
      amount of Indebtedness of the Issuer and its Subsidiaries on a
      consolidated basis;

            (9) all Attributable Indebtedness;

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

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

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

            Notwithstanding the foregoing, the following shall not be considered
Indebtedness: (a) earn-outs or similar profit sharing arrangements provided for
in acquisition agreements

                                      -14-


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

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

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

            "Independent Financial Advisor" means an accounting, appraisal or
investment banking firm of nationally recognized standing that is, in the
reasonable judgment of the Issuer's Board of Directors, qualified to perform the
task for which it has been engaged and disinterested and independent with
respect to the Issuer and its Affiliates or, in the case of an Affiliate
Transaction involving the sale, transfer or other disposition or purchase of
real property by the Issuer or a Restricted Subsidiary, an appraisal firm
reasonably satisfactory to the independent financial institution that provided
the financing for the initial acquisition of such real property by the Affiliate
of the Issuer or such Restricted Subsidiary.

            "Initial Purchasers" means UBS Securities LLC and Wachovia Capital
Markets, LLC.

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

            "Intangible Assets" means, with respect to any Person, all
unamortized debt discount and expense, unamortized deferred charges, goodwill,
patents, trademarks, service marks, trade names, copyrights, write-ups of assets
over their carrying value (other than write-ups which occurred prior to the
Issue Date and other than, in connection with the acquisition of an asset, the
write-up of the value of such asset to its Fair Market Value in accordance with
GAAP on the date

                                      -15-


of acquisition) and all other items which would be treated as intangibles on the
consolidated balance sheet of such Person prepared in accordance with GAAP.

            "interest" means, with respect to the Notes, interest and Additional
Interest, if any, on the Notes.

            "Interest Payment Dates" means each April 1 and October 1,
commencing April 1, 2006.

            "Investments" of any Person means:

            (1) all direct or indirect investments by such Person in any other
      Person in the form of loans, advances or capital contributions or other
      credit extensions constituting Indebtedness of such other Person, and any
      guarantee of Indebtedness of any other Person;

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

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

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

Except as otherwise expressly specified in this definition, the amount of any
Investment (other than an Investment made in cash) shall be the Fair Market
Value thereof on the date such Investment is made. The amount of Investment
pursuant to clause (4) shall be the Designation Amount determined in accordance
with Section 4.14. If the Issuer or any Subsidiary sells or otherwise disposes
of any Equity Interests of any Subsidiary, or any Subsidiary issues any Equity
Interests, in either case such that, after giving effect to any such sale,
disposition or other issuance, such Person is no longer a Subsidiary, the Issuer
shall be deemed to have made an Investment on the date of any such sale, other
disposition or other issuance equal to the Fair Market Value of the Equity
Interests of and all other Investments in such Subsidiary not sold, disposed of
or issued, which amount shall be determined by the Board of Directors of the
Issuer. Notwithstanding the foregoing, redemptions of Equity Interests of the
Issuer shall be deemed not to be Investments.

            "Issue Date" means September 21, 2005, the date on which the Notes
are originally issued.

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

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

                                      -16-


            "Issuers" has the meaning given to this term in the preamble hereto.

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

            "Moody's" means Moody's Investors Service, Inc., and its successors.

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

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

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

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

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

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

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

                                      -17-


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

            "Notes" means the 9.5% Senior Subordinated Notes due 2015 issued by
the Issuers, including, without limitation, the Private Exchange Notes, if any,
and the Exchange Notes, treated as a single class of securities, as amended from
time to time in accordance with the terms hereof, that are issued pursuant to
this Indenture.

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

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

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

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

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

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

                                      -18-


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

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

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

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

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

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

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

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

            (11) that (a) if Notes in an aggregate principal amount less than or
      equal to the Purchase Amount are duly tendered and not withdrawn pursuant
      to the Offer to Purchase, the Issuer shall purchase all such Notes and (b)
      if Notes in an aggregate principal amount in excess of the Purchase Amount
      are tendered and not withdrawn pursuant to the Offer to Purchase, the
      Issuer shall purchase Notes having an aggregate principal amount equal to
      the Purchase Amount on a pro rata basis (with such adjustments as may be
      deemed appropriate so that only Notes in denominations of $1,000 principal
      amount or integral multiples thereof shall be purchased); and

                                      -19-


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

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

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

            "Offering" means the offering of the Notes as described in the
Offering Memorandum.

            "Offering Memorandum" means the Offering Memorandum dated September
16, 2005 pursuant to which the Notes were offered.

            "Officer" of any Person means any of the following of such Person:
the Chairman of the Board of Directors, the Chief Executive Officer, the Chief
Financial Officer, the President, any Vice President, the Treasurer or the
Secretary.

            "Officers' Certificate" of any Person means a certificate signed by
two Officers of such Person.

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

            "Pari Passu Indebtedness" means any Indebtedness of the Issuer or
any Guarantor that ranks pari passu in right of payment with the Notes or the
Note Guarantees, as applicable.

            "Permitted Holders" means (1)(a) Elly Nevada, Inc., (b) Norman
Nevada, Inc., (c) Larry Nevada, Inc., (d) Little Shots Nevada, L.L.C., (e) Elly
Colorado, Inc., (f) Norman Colorado, Inc. and (g) Larry Colorado, Inc; (2) any
equityholder, general partner or managing member of any of the Persons
referenced above in clause (1); (3) any officer, director, employee, member,
partner or equityholder of the manager or general partner of any of the Persons
referenced above in clauses (1) and (2); (4) the spouses and descendants of the
Persons referenced in clause (2); (5) in the event of the incompetence or death
of any of the persons referred to in clause (2) and (3) above, such Person's
estate, executor, administrator, committee or other personal representative, in
each case who at a particular date shall be the beneficial owner of or have the
right to acquire, directly or indirectly, capital stock of the Issuer (or any
other direct or indi-

                                      -20-


rect parent company of the Issuer); and (6) any trust created for the benefit
of, or any entity or entities wholly-owned by, the Persons referenced above in
clauses (1) through (5).

            "Permitted Investment" means:

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

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

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

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

            (5) cash and Cash Equivalents;

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

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

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

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

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

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

            (12) Investments in existence on the Issue Date;

            (13) Investments made by the Issuer or any Restricted Subsidiary in
      joint ventures in the business of the Issuer or such Restricted Subsidiary
      with unaffiliated third

                                      -21-


      parties in an aggregate amount at any one time outstanding not to exceed
      30% of the Issuer's Consolidated Tangible Net Worth at such time (with
      each Investment being valued as of the date made and without regard to
      subsequent changes in value); and

            (14) other Investments in an aggregate amount not to exceed 5% of
      the Issuer's Consolidated Tangible Net Worth at such time (with each
      Investment being valued as of the date made and without regard to
      subsequent changes in value).

            The amount of Investments outstanding at any time pursuant to
clauses (13) or (14) above shall be deemed to be reduced:

            (a) upon the disposition or repayment of or return on any Investment
      made pursuant to clauses (13) or (14) above, by an amount equal to the
      return of capital with respect to such Investment to the Issuer or any
      Restricted Subsidiary (to the extent not included in the computation of
      Consolidated Net Income), less the cost of the disposition of such
      Investment and net of taxes; and

            (b) upon a Redesignation of an Unrestricted Subsidiary as a
      Restricted Subsidiary, by an amount equal to the lesser of (x) the Fair
      Market Value of the Issuer's proportionate interest in such Subsidiary
      immediately following such Redesignation, and (y) the aggregate amount of
      Investments in such Subsidiary that increased (and did not previously
      decrease) the amount of Investments outstanding pursuant to clauses (13)
      or (14) above.

            "Permitted Junior Securities" means:

            (1) Equity Interests in the Issuer, the Co-Issuer or any Guarantor;
      or

            (2) debt securities issued pursuant to a confirmed plan of
      reorganization that are subordinated in right of payment to (a) all Senior
      Debt and Guarantor Senior Debt and (b) any debt securities issued in
      exchange for Senior Debt to substantially the same extent as, or to a
      greater extent than, the Notes and the Note Guarantees are subordinated to
      Senior Debt and Guarantor Senior Debt under this Indenture.

            "Permitted Liens" means the following types of Liens:

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

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

                                      -22-


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

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

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

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

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

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

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

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

            (10) Liens existing on the Issue Date securing Indebtedness
      outstanding on the Issue Date;

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

            (12) Liens securing Senior Debt or Guarantor Senior Debt, including
      Indebtedness under the Credit Facilities;

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

                                      -23-


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

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

            (16) Liens on assets of a Person existing at the time such Person is
      acquired or merged with or into or consolidated with the Issuer or any
      such Restricted Subsidiary (and not created in anticipation or
      contemplation thereof); provided, however, that the Liens do not extend to
      assets of a Person not subject to such Lien at the time of acquisition,
      merger or consolidation (other than improvements thereon) and are no more
      favorable to the lienholders than those securing such assets prior to the
      acquisition or merger with or into or consolidation with the Issuer or a
      Restricted Subsidiary;

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

            (18) Liens to secure Refinancing Indebtedness which is incurred to
      refinance any Indebtedness which has been secured by a Lien permitted
      under this Indenture and which has been incurred in accordance with the
      provisions of this Indenture;

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

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

            (21) zoning restrictions, licenses, restrictions on the use of real
      property or minor irregularities in title thereto, which do not materially
      impair the use of such real property in the ordinary course of business of
      the Issuer and its Subsidiaries or the value of such real property for the
      purpose of such business;

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

            (23) Liens securing Hedging Obligations entered into for bona fide
      hedging purposes of the Issuer or any Restricted Subsidiary not for the
      purpose of speculation;

                                      -24-


            (24) Liens securing Indebtedness incurred pursuant to clause (11) of
      the definition of Permitted Indebtedness; provided such Lien relates only
      to the Developed Land purchased;

            (25) Liens or leases of model home units;

            (26) Liens for homeowner and property owner association developments
      and assessments;

            (27) Liens incurred in the ordinary course of business as security
      for the obligations of the Issuer and its Restricted Subsidiaries with
      respect to indemnification in respect of title insurance providers;

            (28) Liens of a lessor under any Capitalized Lease Obligation
      permitted to be incurred under this Indenture; provided that such Liens do
      not extend to any property or assets which are not leased property subject
      to such Capitalized Lease Obligation; and

            (29) Liens securing Hedging Obligations permitted to be incurred
      pursuant to clause (4) of the definition of "Permitted Indebtedness".

            "Permitted Unrestricted Subsidiary Debt" means Indebtedness of an
Unrestricted Subsidiary:

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

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

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

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

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

                                      -25-


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

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

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

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

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

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

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

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

            "Public Equity Offering" means an underwritten public offering of
Qualified Equity Interests of the Issuer pursuant to an effective registration
statement filed under the Securities Act.

            "Purchase Money Indebtedness" means Indebtedness of the Issuer or
any Restricted Subsidiary incurred for the purpose of financing all or any part
of the purchase price of property, plant or equipment used in the business of
the Issuer or any Restricted Subsidiary or the cost of installation,
construction or improvement thereof; provided, however, that (1) the amount of
such Indebtedness shall not exceed such purchase price or cost, (2) such
Indebtedness shall not be secured by any asset other than the specified asset
being financed or, in the case of real property or fixtures, including additions
and improvements, the real property to which such asset is attached and (3) such
Indebtedness shall be incurred within 90 days after such acquisition of such
asset by the Issuer or such Restricted Subsidiary or such installation,
construction or improvement.

            "Qualified Equity Interests" means Equity Interests of such Person
other than Disqualified Equity Interests; provided, however, that of any Person
such Equity Interests shall

                                      -26-


not be deemed Qualified Equity Interests to the extent sold or owed to a
Subsidiary of any Person or financed, directly or indirectly, using funds (1)
borrowed from such Person or any Subsidiary of such Person until and to the
extent such borrowing is repaid or (2) contributed, extended, guaranteed or
advanced by such Person or any Subsidiary of such Person (including, without
limitation, in respect of any employee stock ownership or benefit plan). Unless
otherwise specified, Qualified Equity Interests refer to Qualified Equity
Interests of the Issuer.

            "Qualified Equity Offering" means the issuance and sale of Qualified
Equity Interests of the Issuer to any Persons other than in connection with a
transaction constituting a Change of Control; provided, however, that cash
proceeds therefrom equal to the redemption price of the Notes to be redeemed are
received by the Issuer as a capital contribution immediately prior to such
redemption.

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

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

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

            "refinance" means to refinance, repay, prepay, replace, renew or
refund.

            "Refinancing Indebtedness" means Indebtedness of the Issuer or a
Restricted Subsidiary incurred in exchange for, or the proceeds of which are
used to redeem or refinance in whole or in part, any Indebtedness of the Issuer
or any Restricted Subsidiary (the "Refinanced Indebtedness"); provided, however,
that:

            (1) the principal amount (and accreted value, in the case of
      Indebtedness issued at a discount) of the Refinancing Indebtedness does
      not exceed the principal amount (and accreted value, as the case may be)
      of the Refinanced Indebtedness plus the amount of accrued and unpaid
      interest on the Refinanced Indebtedness, any premium paid to the holders
      of the Refinanced Indebtedness and reasonable expenses incurred in
      connection with the incurrence of the Refinancing Indebtedness;

            (2) the obligor of Refinancing Indebtedness does not include any
      Person (other than the Issuer or any Restricted Subsidiary) that is not an
      obligor of the Refinanced Indebtedness;

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

                                      -27-


            (4) the Refinancing Indebtedness has a final stated maturity either
      (a) no earlier than the Refinanced Indebtedness being repaid or amended or
      (b) after the maturity date of the Notes;

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

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

            "Registration Rights Agreement" means (i) the Registration Rights
Agreement dated as of the Issue Date among the Issuer, the Co-Issuer, the
Guarantors and the Initial Purchasers of the Notes issued on the Issue Date and
(ii) any other registration rights agreement entered into in connection with an
issuance of Additional Notes in a private offering after the Issue Date.

            "Regulation S" means Regulation S promulgated under the Securities
Act.

            "Representative" means any agent or representative in respect of any
Designated Senior Debt; provided, however, that if, and for so long as, any
Designated Senior Debt lacks such representative, then the Representative for
such Designated Senior Debt shall at all times constitute the holders of a
majority in outstanding principal amount of such Designated Senior Debt.

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

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

            "Restricted Payment" means any of the following:

            (1) the declaration or payment of any dividend or any other
      distribution on Equity Interests of the Issuer or any Restricted
      Subsidiary or any payment made to the direct or indirect holders (in their
      capacities as such) of Equity Interests of the Issuer or any Restricted
      Subsidiary, including, without limitation, any payment in connection with
      any merger or consolidation involving the Issuer, but excluding (a)
      dividends or distributions

                                      -28-


      payable solely in Qualified Equity Interests or through accretion or
      accumulation of such dividends on such Equity Interests and (b) in the
      case of Restricted Subsidiaries, dividends or distributions payable to the
      Issuer or to a Restricted Subsidiary and pro rata dividends or
      distributions payable to minority stockholders of any Restricted
      Subsidiary;

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

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

            (4) any payment of principal of or redemption prior to the scheduled
      maturity or prior to any scheduled repayment of principal or sinking fund
      payment, as the case may be, in respect of Subordinated Indebtedness
      (other than Subordinated Indebtedness owed to and held by the Issuer or
      any Restricted Subsidiary).

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

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

            "Rule 144" means Rule 144 promulgated under the Securities Act.

            "Rule 144A" means Rule 144A promulgated under the Securities Act.

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

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

            "SEC" means the U.S. Securities and Exchange Commission.

            "Secretary's Certificate" means a certificate signed by the
Secretary or an Assistant Secretary of the Issuer.

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

            "Senior Debt" means the principal of, premium, if any, and interest
(including any interest accruing subsequent to the filing of a petition of
bankruptcy at the rate provided for in the documentation with respect thereto,
whether or not such interest is an allowed claim under applicable law) on any
Indebtedness of the Issuer or the Co-Issuer, whether outstanding on the

                                      -29-


Issue Date or thereafter created, incurred or assumed, unless, in the case of
any particular Indebtedness, the instrument creating or evidencing the same or
pursuant to which the same is outstanding expressly provides that such
Indebtedness shall not be senior in right of payment to the Notes.

            Without limiting the generality of the foregoing, "Senior Debt"
shall include the principal of, premium, if any, interest (including any
interest accruing subsequent to the filing of a petition of bankruptcy at the
rate provided for in the documentation with respect thereto, whether or not such
interest is an allowed claim under applicable law) on, and all other amounts
owing in respect of:

            (1) all monetary obligations of every nature under, or with respect
      to, the Credit Facilities, including, without limitation, obligations to
      pay principal and interest, reimbursement obligations under letters of
      credit, fees, expenses and indemnities (and guarantees thereof); and

            (2) all Hedging Obligations in respect of the Credit Facilities;

in each case whether outstanding on the Issue Date or thereafter incurred.

      Notwithstanding the foregoing, "Senior Debt" shall not include:

            (1) any Indebtedness of the Issuer or the Co-Issuer to any of their
      respective Subsidiaries;

            (2) Indebtedness to, or guaranteed on behalf of, any director,
      officer or employee of the Issuer or any of its Subsidiaries (including,
      without limitation, amounts owed for compensation);

            (3) obligations to trade creditors and other amounts incurred (but
      not under the Credit Facilities) in connection with obtaining goods,
      materials or services;

            (4) Indebtedness represented by Disqualified Equity Interests;

            (5) any liability for taxes owed or owing by the Issuer or the
      Co-Issuer;

            (6) that portion of any Indebtedness incurred in violation of
      Section 4.06 (but, as to any such obligation, no such violation shall be
      deemed to exist for purposes of this clause (6) if the holder(s) of such
      obligation or their representative shall have received an Officers'
      Certificate of the Issuer to the effect that the incurrence of such
      Indebtedness does not (or, in the case of revolving credit indebtedness,
      that the incurrence of the entire committed amount thereof at the date on
      which the initial borrowing thereunder is made would not) violate such
      provisions of this Indenture);

            (7) Indebtedness which, when incurred and without respect to any
      election under Section 1111(b) of Title 11, United States Code, is without
      recourse to the Issuer; and

                                      -30-


            (8) any Indebtedness which is, by its express terms, subordinated in
      right of payment to any other Indebtedness of the Issuer or the Co-Issuer,
      as the case may be.

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

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

            "Subsidiary" means, with respect to any Person, any corporation,
limited liability company, partnership, association or other business entity of
which (a) more than 50% of the total voting power of the Equity Interests
entitled (without regard to the occurrence of any contingency) to vote in the
election of the Board of Directors thereof is at the time owned or controlled,
directly or indirectly, by such Person or one or more of the other Subsidiaries
of such Person (or a combination thereof) or (b) that is or is required to be
included in the consolidated financial statements of such Person in accordance
with GAAP. Unless otherwise specified, "Subsidiary" refers to a Subsidiary of
the parent.

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

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

            "Unit" means a residence, whether single or part of a multifamily
building, whether completed or under construction, held by the Issuer or any
Restricted Subsidiary for sale in the ordinary course of business.

            "Unrestricted Subsidiary" means (1) any Subsidiary that at the time
of determination shall be designated an Unrestricted Subsidiary by the Board of
Directors of the Issuer in accordance with Section 4.14 and (2) any Subsidiary
of an Unrestricted Subsidiary.

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

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

                                      -31-


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

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

SECTION 1.02. Other Definitions.

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



                              Term                                  Defined in Section
- -----------------------------------------------------------------   ------------------
                                                                 
"Affiliate Transaction"..........................................            4.10
"Agent Members"..................................................            2.16(a)
"Business Day"...................................................           12.07
"CEDEL"..........................................................            2.16(a)
"Change of Control Date".........................................            4.19
"Change of Control Offer"-.......................................            4.19
"Change of Control Payment Date".................................            4.19
"Change of Control Purchase Price"...............................            4.19
"Covenant Defeasance"............................................            9.03
"Euroclear"......................................................            2.16(a)
"Event of Default"...............................................            6.01
"Excess Proceeds"................................................            4.09
"Global Notes"...................................................            2.16(a)
"Legal Defeasance"...............................................            9.02
"Legal Holiday"..................................................           12.07
"Other Notes"....................................................            2.02
"Paying Agent"...................................................            2.04
"Permitted Indebtedness".........................................            4.06
"Ratio Exception"................................................            4.06
"Redesignation"..................................................            4.14
"Registrar"......................................................            2.04
"Regulation S Global Notes"......................................            2.16(a)
"Regulation S Notes".............................................            2.02
"Restricted Global Note".........................................            2.16(a)
"Restricted Payment".............................................            4.08
"Restricted Period"..............................................            2.16(f)
"Revocation".....................................................            4.14(c)
"Rule 144A Notes"................................................            2.02


                                      -32-


SECTION 1.03. Incorporation by Reference of Trust Indenture Act.

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

            "indenture securities" means the Notes.

            "indenture securityholder" means a Holder or Noteholder.

            "indenture to be qualified" means this Indenture.

            "indenture trustee" or "institutional trustee" means the Trustee.

            "obligor on the indenture securities" means the Issuer, the
            Co-Issuer, the Guarantors or any other obligor on the Notes.

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

SECTION 1.04. Rules of Construction.

            Unless the context otherwise requires:

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

            (2) "or" is not exclusive;

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

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

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

            (6) unless otherwise specified herein, all accounting terms used
      herein shall be interpreted, all accounting determinations hereunder shall
      be made, and all financial statements required to be delivered hereunder
      shall be prepared in accordance with

                                      -33-


      GAAP as in effect from time to time, applied on a basis consistent with
      the most recent audited consolidated financial statements of the Issuer;

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

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

                                  ARTICLE TWO

                                   THE NOTES

SECTION 2.01. Amount of Notes.

            The Trustee shall authenticate (i) Notes for original issue on the
Issue Date in the aggregate principal amount not to exceed $125,000,000 and (ii)
subject to Section 4.06, Additional Notes, upon a written order of each Issuer
in the form of an Officers' Certificate of each Issuer. The Officers'
Certificate shall specify the amount of Notes to be authenticated and the date
on which the Notes are to be authenticated and persons in whose names the Notes
are to be registered, and shall direct delivery of the Notes to such persons or
representatives thereof.

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

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

SECTION 2.02. Form and Dating.

            The Notes and the Trustee's certificate of authentication with
respect thereto shall be substantially in the form set forth in Exhibit A, which
is incorporated in and forms a part of

                                      -34-


this Indenture. The Notes may have notations, legends or endorsements required
by law, rule or usage to which the Issuers are subject. Without limiting the
generality of the foregoing, Notes offered and sold to Qualified Institutional
Buyers in reliance on Rule 144A ("Rule 144A Notes") shall bear the legend and
include the form of assignment set forth in Exhibit B, Notes offered and sold in
offshore transactions in reliance on Regulation S ("Regulation S Notes") shall
bear the legend and include the form of assignment set forth in Exhibit C, and
Notes offered and sold to Institutional Accredited Investors in transactions
exempt from registration under the Securities Act not made in reliance on Rule
144A or Regulation S ("Other Notes") may be represented by a Restricted Global
Note or, if such an investor may not hold an interest in the Restricted Global
Note, a Physical Note, in each case, bearing the Private Placement Legend. Each
Note shall be dated the date of its authentication.

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

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

SECTION 2.03. Execution and Authentication.

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

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

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

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

                                      -35-


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

SECTION 2.04. Registrar and Paying Agent.

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

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

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

SECTION 2.05. Paying Agent To Hold Money in Trust.

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

SECTION 2.06. Holder Lists.

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

                                      -36-


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

SECTION 2.07. Transfer and Exchange.

            Subject to Sections 2.16 and 2.17, when Notes are presented to the
Registrar with a request from the Holder of such Notes to register a transfer or
to exchange them for an equal principal amount of Notes of other authorized
denominations, the Registrar shall register the transfer as requested. Every
Note presented or surrendered for registration of transfer or exchange shall be
duly endorsed or be accompanied by a written instrument of transfer in form
satisfactory to the Issuers and the Registrar, duly executed by the Holder
thereof or his attorneys duly authorized in writing. To permit registrations of
transfers and exchanges, the Issuer shall issue and execute and the Trustee
shall authenticate new Notes (and the Guarantors shall execute the guarantee
thereon) evidencing such transfer or exchange at the Registrar's request. No
service charge shall be made to the Holder for any registration of transfer or
exchange. The Issuers may require from the Holder payment of a sum sufficient to
cover any transfer taxes or other governmental charge that may be imposed in
relation to a transfer or exchange, but this provision shall not apply to any
exchange pursuant to Section 2.11, 3.06, 4.09, 4.19 or 8.05 (in which events the
Issuers shall be responsible for the payment of such taxes). The Registrar shall
not be required to exchange or register a transfer of any Note for a period of
15 days immediately preceding the mailing of notice of redemption of Notes to be
redeemed or of any Note selected, called or being called for redemption except
the unredeemed portion of any Note being redeemed in part.

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

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

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

SECTION 2.08.  Replacement Notes.

            If a mutilated Note is surrendered to the Registrar or the Trustee,
or if the Holder of a Note claims that the Note has been lost, destroyed or
wrongfully taken, the Issuers shall issue and the Trustee shall authenticate a
replacement Note (and the Guarantors shall execute the guarantee thereon) if the
Holder of such Note furnishes to the Issuers and the Trustee evidence reasonably
acceptable to them of the ownership and the destruction, loss or theft of such
Note and if the requirements of Section 8-405 of the New York Uniform Commercial
Code as in effect on the date of this Indenture are met. If required by the
Trustee or the Issuers, an indemnity bond shall be posted, sufficient in the
judgment of both to protect the Issuers, the Guarantors, the

                                      -37-


Trustee or any Paying Agent from any loss that any of them may suffer if such
Note is replaced. The Issuers may charge such Holder for the Issuers' reasonable
out-of-pocket expenses in replacing such Note and the Trustee may charge the
Issuers for the Trustee's expenses (including, without limitation, attorneys'
fees and disbursements) in replacing such Note. Every replacement Note shall
constitute a contractual obligation of the Issuers.

SECTION 2.09. Outstanding Notes.

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

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

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

SECTION 2.10. Treasury Notes.

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

SECTION 2.11. Temporary Notes.

            Until definitive Notes are prepared and ready for delivery, the
Issuers may prepare and the Trustee shall authenticate temporary Notes.
Temporary Notes shall be substantially in the form of definitive Notes but may
have variations that the Issuers considers appropriate for temporary Notes.
Without unreasonable delay, the Issuers shall prepare and the Trustee shall

                                      -38-


authenticate definitive Notes in exchange for temporary Notes. Until such
exchange, temporary Notes shall be entitled to the same rights, benefits and
privileges as definitive Notes.

SECTION 2.12. Cancellation.

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

SECTION 2.13. Defaulted Interest.

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

SECTION 2.14. CUSIP Number.

            The Issuers in issuing the Notes may use a "CUSIP" number, and if
so, such CUSIP number shall be included in notices of redemption or exchange as
a convenience to Holders; provided, that any such notice may state that no
representation is made as to the correctness or accuracy of the CUSIP number
printed in the notice or on the Notes, and that reliance may be placed only on
the other identification numbers printed on the Notes. The Issuers shall
promptly notify the Trustee of any such CUSIP number used by the Issuers in
connection with the issuance of the Notes and of any change in the CUSIP number.

SECTION 2.15. Deposit of Moneys.

            Prior to 10:00 a.m., New York City time, on each Interest Payment
Date and maturity date, the Issuers shall have deposited with the Paying Agent
in immediately available funds money sufficient to make cash payments, if any,
due on such Interest Payment Date or maturity date, as the case may be, in a
timely manner which permits the Trustee to remit payment to the Holders on such
Interest Payment Date or maturity date, as the case may be. The principal and
interest on Global Notes shall be payable to the Depository or its nominee, as
the case may

                                      -39-


be, as the sole registered owner and the sole holder of the Global Notes
represented thereby. The principal and interest on Physical Notes shall be
payable, either in person or by mail, at the office of the Paying Agent.

SECTION 2.16. Book-Entry Provisions for Global Notes.

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

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

            (b) Transfers of Global Notes shall be limited to transfer in whole,
but not in part, to the Depository, its successors or their respective nominees.
Interests of beneficial owners in the Global Notes may be transferred or
exchanged for Physical Notes in accordance with the rules and procedures of the
Depository and the provisions of Section 2.17. In addition, a Global Note shall
be exchangeable for Physical Notes if (i) the Depository (x) notifies the
Issuers that it is unwilling or unable to continue as depository for such Global
Note and the Issuers thereupon fail to appoint a successor depository or (y) has
ceased to be a clearing agency registered under the Exchange Act, (ii) the
Issuers, at their option, notify the Trustee in writing that they elect to cause
the issuance of such Physical Notes or (iii) there shall have occurred and be
continuing an Event of Default with respect to the Notes. In all cases, Physical
Notes delivered in exchange for any Global Note or beneficial interests therein
shall be registered in the names, and issued in any approved denominations,
requested by or on behalf of the Depository (in accordance with its customary
procedures).

            (c) In connection with any transfer or exchange of a portion of the
beneficial interest in any Global Note to beneficial owners pursuant to
paragraph (b), the Registrar shall (if one or more Physical Notes are to be
issued) reflect on its books and records the date and a decrease in the
principal amount of the Global Note in an amount equal to the principal amount
of the beneficial interest in the Global Note to be transferred, and the Issuers
shall execute, and the

                                      -40-


Trustee shall upon receipt of a written order from the Issuers authenticate and
make available for delivery, one or more Physical Notes of like tenor and
amount.

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

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

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

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

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

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

                                      -41-


SECTION 2.17. Special Transfer Provisions.

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

            (i) the Registrar shall register the transfer of any Note
      constituting a Restricted Note, whether or not such Note bears the Private
      Placement Legend, if (x) the requested transfer is after September 21,
      2007, or such other date as such Note shall be freely transferable under
      Rule 144 as certified in an Officers' Certificate or (y) (1) in the case
      of a transfer to an Institutional Accredited Investor which is not a QIB
      (excluding Non-U.S. Persons), the proposed transferee has delivered to the
      Registrar a certificate substantially in the form of Exhibit E hereto or
      (2) in the case of a transfer to a Non-U.S. Person (including a QIB), the
      proposed transferor has delivered to the Registrar a certificate
      substantially in the form of Exhibit F hereto; provided that in the case
      of any transfer of a Note bearing the Private Placement Legend for a Note
      not bearing the Private Placement Legend, the Registrar has received an
      Officers' Certificate authorizing such transfer; and

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

whereupon (a) the Registrar shall reflect on its books and records the date and
(if the transfer does not involve a transfer of outstanding Physical Notes) a
decrease in the principal amount of a Global Note in an amount equal to the
principal amount of the beneficial interest in a Global Note to be transferred,
and (b) the Registrar shall reflect on its books and records the date and an
increase in the principal amount of a Global Note in an amount equal to the
principal amount of the beneficial interest in the Global Note transferred or
the Issuers shall execute and the Trustee shall authenticate and make available
for delivery one or more Physical Notes of like tenor and amount.

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

            (i) the Registrar shall register the transfer if such transfer is
      being made by a proposed transferor who has checked the box provided for
      on such Holder's Note stating, or has otherwise advised the Issuers and
      the Registrar in writing, that the sale has been made in compliance with
      the provisions of Rule 144A to a transferee who has signed the
      certification provided for on such Holder's Note stating, or has otherwise
      advised the Issuers and the Registrar in writing, that it is purchasing
      the Note for its own account or an account with respect to which it
      exercises sole investment discretion and that it and any such account is a
      QIB within the meaning of Rule 144A, and is aware that the sale to it is
      being made in reliance on Rule 144A and acknowledges that it has received
      such information

                                      -42-


      regarding the Issuers as it has requested pursuant to Rule 144A or has
      determined not to request such information and that it is aware that the
      transferor is relying upon its foregoing representations in order to claim
      the exemption from registration provided by Rule 144A; and

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

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

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

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

SECTION 2.18. Computation of Interest.

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

                                      -43-


                                 ARTICLE THREE

                                   REDEMPTION

SECTION 3.01. Election To Redeem; Notices to Trustee.

            If the Issuers elect to redeem Notes pursuant to paragraph 5 of the
Notes, at least 45 days prior to the Redemption Date (unless a shorter notice
shall be agreed to in writing by the Trustee) but not more than 65 days before
the Redemption Date, the Issuers shall notify the Trustee in writing of the
Redemption Date, the principal amount of Notes to be redeemed and the redemption
price, and deliver to the Trustee an Officers' Certificate stating that such
redemption shall comply with the conditions contained in paragraph 5 of the
Notes. Notice given to the Trustee pursuant to this Section 3.01 may not be
revoked after the time that notice is given to Holders pursuant to Section 3.03.

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

            In the event that less than all of the Notes are to be redeemed at
any time pursuant to paragraph 5 of the Notes, selection of the Notes for
redemption will be made by the Trustee in compliance with the requirements of
the principal national securities exchange, if any, on which the Notes are
listed or, if the Notes are not then listed on a national security exchange, on
a pro rata basis, by lot or by such method as the Trustee shall deem fair and
appropriate; provided, however, that no Notes of a principal amount of $1,000 or
less shall be redeemed in part. In addition, if a partial redemption is made
pursuant to the second paragraph of paragraph 5 of the Notes, selection of the
Notes or portions thereof for redemption shall be made by the Trustee only on a
pro rata basis or on as nearly a pro rata basis as is practicable (subject to
the procedures of the Depository), unless that method is otherwise prohibited.
The Trustee shall promptly notify the Issuers of the Notes selected for
redemption and, in the case of any Notes selected for partial redemption, the
principal amount thereof to be redeemed. The Trustee may select for redemption
portions of the principal of the Notes that have denominations larger than
$1,000. For all purposes of this Indenture unless the context otherwise
requires, provisions of this Indenture that apply to Notes called for redemption
also apply to portions of Notes called for redemption. The Issuers may acquire
Notes by means other than redemption, whether pursuant to an Issuer tender
offer, open market purchase or otherwise; provided such acquisition does not
otherwise violate the other terms of this Indenture.

SECTION 3.03. Notice of Redemption.

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

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

            (1) the Redemption Date;

                                      -44-


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

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

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

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

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

            (7) the provision of paragraph 5 of the Notes, as the case may be,
      pursuant to which the Notes called for redemption are being redeemed; and

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

            At the Issuers' written request made at least five Business Days
prior to the date on which notice is to be given, the Trustee shall give the
notice of redemption, in the form prepared by the Issuers, in the Issuers' name
and at the Issuers' sole expense.

SECTION 3.04. Effect of Notice of Redemption.

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

SECTION 3.05. Deposit of Redemption Price.

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

                                      -45-


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

SECTION 3.06. Notes Redeemed in Part.

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

                                  ARTICLE FOUR

                                    COVENANTS

SECTION 4.01. Payment of Notes.

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

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

SECTION 4.02. Reports to Holders.

            Whether or not required by the SEC, so long as any Notes are
outstanding, the Issuer shall furnish to the Holders of Notes, or file
electronically with the SEC through the SEC's Electronic Data Gathering Analysis
and Retrieval System (or any successor system), within the time periods that
would be applicable to the Issuer if it were subject to Section 13(a) or 15(d)
of the Exchange Act:

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

                                      -46-


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

            In addition, whether or not required by the SEC, after the
consummation of the exchange offer contemplated by the Registration Rights
Agreement, the Issuer shall file a copy of all of the information and reports
referred to in clauses (1) and (2) above with the SEC for public availability
within the time periods that would be applicable to the Issuer if it were
subject to Section 13(a) or 15(d) of the Exchange Act (unless the SEC will not
accept the filing) and make the information available to securities analysts and
prospective investors upon request. For so long as any Notes remain outstanding,
the Issuers and the Guarantors shall furnish to the Holders and to securities
analysts and prospective investors, upon their request, the information required
to be delivered pursuant to Rule 144A(d)(4) under the Securities Act.

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

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

SECTION 4.04. Compliance Certificate.

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

            (b) The Issuers and the Guarantors shall, so long as any of the
Notes are outstanding, deliver to the Trustee, forthwith upon any Officer
becoming aware of any Default, an

                                      -47-


Officers' Certificate specifying such Default and what action the Issuers and
the Guarantors are taking or propose to take with respect thereto.

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

SECTION 4.05. Taxes.

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

SECTION 4.06. Limitations on Additional Indebtedness.

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

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

            (1) Indebtedness of the Issuers and any Restricted Subsidiary under
      the Credit Facilities in an aggregate amount at any time outstanding
      (whether incurred under the Ratio Exception or as Permitted Indebtedness)
      not to exceed the greater of (x) $300.0 million and (y) the amount of the
      Borrowing Base as of the date of such incurrence;

            (2) the Notes and the Note Guarantees issued on the Issue Date and
      the Exchange Notes and the Note Guarantees in respect thereof to be issued
      pursuant to the Registration Rights Agreement;

            (3) Indebtedness of the Issuer and the Restricted Subsidiaries to
      the extent outstanding on the Issue Date (other than Indebtedness referred
      to in clauses (1), (2) or (5), and after giving effect to the intended use
      of proceeds of the Notes);

            (4) Indebtedness of the Issuer and the Restricted Subsidiaries under
      Hedging Obligations entered into for bona fide hedging purposes of the
      Issuer or any Restricted Subsidiary not for the purpose of speculation;
      provided, however, that in the case of Hedging Obligations relating to
      interest rates, (a) such Hedging Obligations relate to payment obligations
      on Indebtedness otherwise permitted to be incurred by this Section 4.06
      and (b) the notional principal amount of such Hedging Obligations at the
      time incurred does not exceed the principal amount of the Indebtedness to
      which such Hedging Obligations relate;

                                      -48-


            (5) Indebtedness of the Issuer owed to a Restricted Subsidiary and
      Indebtedness of any Restricted Subsidiary owed to the Issuer or any other
      Restricted Subsidiary; provided, however, that (a) any Indebtedness of the
      Issuer owed to a Restricted Subsidiary is unsecured and subordinated,
      pursuant to a written agreement, to the Issuer's Obligations, under the
      Notes and this Indenture and (b) upon any such Restricted Subsidiary
      ceasing to be a Restricted Subsidiary or such Indebtedness being owed to
      any Person other than the Issuer or a Restricted Subsidiary, the Issuer or
      such Restricted Subsidiary, as applicable, shall be deemed to have
      incurred Indebtedness not permitted by this clause (5);

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

            (7) Purchase Money Indebtedness incurred by the Issuer or any
      Restricted Subsidiary, in an aggregate amount not to exceed at any time
      outstanding $10.0 million;

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

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

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

            (11) Indebtedness owed to a seller of Developed Land under the terms
      of which the Issuer or such Restricted Subsidiary, as obligor, is required
      to make a payment upon the future sale of such Developed Land in an amount
      not to exceed 5% of the gross sales price or, in the case of profit
      sharing agreements between such seller and the Issuer or such Restricted
      Subsidiary, an amount that is reasonable and customary in the industry and
      market;

            (12) Indebtedness owing under Capitalized Lease Obligations;

            (13) Indebtedness arising under a guarantee of Indebtedness of any
      joint venture (provided that such guarantee shall be deemed to be an
      investment in such joint venture constituting a Permitted Investment or
      otherwise permitted by Section 4.08);

            (14) Indebtedness arising from agreements of the Issuer or a
      Restricted Subsidiary providing for indemnification, adjustment of
      purchase price or similar obligations, in each case, incurred or assumed
      in connection with the acquisition or disposition of any

                                      -49-


      business, assets or a Subsidiary, other than guarantees of Indebtedness
      incurred by any Person acquiring all or any portion of such business,
      assets or a Subsidiary for the purpose of financing such acquisition;
      provided, however, that such Indebtedness is not reflected on the balance
      sheet of the Issuer or any Restricted Subsidiary (contingent obligations
      referred to in a footnote to financial statements and not otherwise
      reflected on the balance sheet will not be deemed to be reflected on such
      balance sheet for purposes of this clause (14));

            (15) Refinancing Indebtedness with respect to Indebtedness incurred
      pursuant to the Ratio Exception, clause (2) or (3) above or this clause
      (15); and

            (16) Indebtedness of the Issuer or any Restricted Subsidiary in an
      aggregate amount not to exceed $20.0 million at any time outstanding.

            For purposes of determining compliance with this Section 4.06, in
the event that an item of Indebtedness meets the criteria of more than one of
the categories of Permitted Indebtedness described in clauses (1) through (16)
above or is entitled to be incurred pursuant to the Ratio Exception, the Issuer
shall, in its sole discretion, classify or later reclassify such item of
Indebtedness and may divide and classify such Indebtedness in more than one of
the types of Indebtedness described, except that Indebtedness outstanding under
the Credit Facilities on the Issue Date shall be deemed to have been incurred
under clause (1) above. The accrual of interest, the accretion or amortization
of original issue discount, the payment of interest on any Indebtedness in the
form of additional Indebtedness with the same terms and the reclassification of
preferred equity as Indebtedness due to a change in accounting principles will
not be deemed to be an incurrence of Indebtedness for purposes of this Section
4.06. In addition, for purposes of determining any particular amount of
Indebtedness under this Section 4.06, guarantees, Liens or letter of credit
obligations supporting Indebtedness otherwise included in the determination of
such particular amount shall not be included so long as incurred by a Person
that could have incurred such Indebtedness.

SECTION 4.07. Limitations on Layering Indebtedness.

            The Issuers shall not, and shall not permit any Restricted
Subsidiary to, directly or indirectly, incur or suffer to exist any Indebtedness
that is or purports to be by its terms (or by the terms of any agreement
governing such Indebtedness) senior in right of payment to the Notes or the Note
Guarantee of such Restricted Subsidiary and subordinated in right of payment to
any other Indebtedness of the Issuers or of such Restricted Subsidiary, as the
case may be.

            For purposes of the foregoing, no Indebtedness will be deemed to be
subordinated in right of payment to any other Indebtedness of the Issuers or any
Restricted Subsidiary solely by virtue of being unsecured or secured by a junior
priority lien or by virtue of the fact that the holders of such Indebtedness
have entered into intercreditor agreements or other arrangements giving one or
more of such holders priority over the other holders in the collateral held by
them.

                                      -50-


SECTION 4.08. Limitations on Restricted Payments.

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

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

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

            (3) the amount of such Restricted Payment, when added to the
      aggregate amount of all other Restricted Payments made after the Issue
      Date (other than Restricted Payments made pursuant to clause (2), (3), (5)
      or (6) of the next paragraph), exceeds the sum (the "Restricted Payments
      Basket") of (without duplication):

                  (a) 50% of Consolidated Net Income for the period (taken as
            one accounting period) from June 1, 2005 to and including the last
            day of the fiscal quarter ended immediately prior to the date of
            such calculation for which consolidated financial statements are
            available (or, if such Consolidated Net Income shall be a deficit,
            minus 100% of such aggregate deficit), plus

                  (b) 100% of the aggregate net cash proceeds or the Fair Market
            Value of any assets to be used in the business of the Issuer (other
            than securities) received by the Issuer either (x) as contributions
            to the common equity of the Issuer after the Issue Date or (y) from
            the issuance and sale of Qualified Equity Interests after the Issue
            Date, other than (A) any such proceeds which are used to redeem
            Notes in accordance with paragraph 5 of the Notes, or (B) any such
            proceeds or assets received from a Subsidiary of the Issuer, plus

                  (c) the aggregate amount by which Indebtedness (other than any
            Subordinated Indebtedness) incurred by the Issuer or any Restricted
            Subsidiary subsequent to the Issue Date is reduced on the Issuer's
            balance sheet upon the conversion or exchange (other than by a
            Subsidiary of the Issuer) into Qualified Equity Interests (less the
            amount of any cash, or the fair value of assets, distributed by the
            Issuer or any Restricted Subsidiary upon such conversion or
            exchange), plus

                  (d) in the case of the disposition or repayment of or return
            on any Investment that was treated as a Restricted Payment made
            after the Issue Date, an amount (to the extent not included in the
            computation of Consolidated Net Income) equal to the lesser of (i)
            100% of the aggregate amount received by the Issuer or any
            Restricted Subsidiary in cash or other property (valued at the Fair
            Market Value thereof) as the return of capital with respect to such
            Investment and (ii) the amount of such Investment that was treated
            as a Restricted Payment, in either case, less the cost of the
            disposition of such Investment and net of taxes, plus

                                      -51-


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

                  (f) $5.0 million.

            The foregoing provisions will not prohibit:

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

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

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

            (4) so long as no Default shall have occurred and be continuing at
      the time of or as a consequence of such redemption, the redemption of
      Equity Interests of the Issuer held by officers, directors or employees or
      former officers, directors or employees (or their transferees, estates or
      beneficiaries under their estates), upon their death, disability,
      retirement, severance or termination of employment or service; provided,
      however, that the aggregate cash consideration paid for all such
      redemptions shall not exceed $2.0 million during any calendar year;

            (5) the payment of dividends, or distributions or amounts by the
      Issuer to its direct parents in amounts required to pay the tax
      obligations of any such direct parent that are solely attributable to the
      income of the Issuer and its Subsidiaries by virtue of the Issuer being a
      pass-through entity for Federal or state income tax purposes; provided,
      however, that (a) the amount of dividends or distributions paid pursuant
      to this clause (5) to enable any of the Issuer's direct parents to pay
      Federal and state income taxes at any time will not exceed the amount of
      such Federal and state income taxes actually owing by any such direct
      parent at such time for the respective period (excluding any tax liability
      of any such direct parent not attributable to the Issuer or its
      Subsidiaries) (provided that the

                                      -52-


      Issuer may make periodic payments based on an estimate of such tax
      liability with an annual reconciliation at the end of each tax year) and
      (b) any refunds received by or on behalf of, or any overpayment based on
      the annual reconciliation to, any of the Issuer's direct parents
      attributable to the Issuer and its Subsidiaries shall promptly be returned
      by any such direct parent to the Issuer or credited against the Restricted
      Payments Basket as an additional distribution to the Issuer's direct
      parents;

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

            (7) payments made to purchase, redeem, defease or otherwise acquire
      or retire for value any Subordinated Indebtedness of the Issuer pursuant
      to provisions requiring the Issuer to offer to purchase, redeem, defease
      or otherwise acquire or retire for value such Subordinated Indebtedness
      upon the occurrence of a "change of control" as defined in the agreements
      or instruments governing such Subordinated Indebtedness; provided,
      however, that the Issuers have made a Change of Control Offer and have
      purchased all Notes tendered in connection with such Change of Control
      Offer;

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

SECTION 4.09. Limitations on Asset Sales.

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

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

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

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

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

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

                                      -53-


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

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

            If the Issuer or any Restricted Subsidiary engages in an Asset Sale,
the Issuer or such Restricted Subsidiary shall, no later than 365 days following
the consummation thereof, apply all or any of the Net Available Proceeds
therefrom to:

            (1) repay any Senior Indebtedness; and/or

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

            (3) make a Net Proceeds Offer (and redeem Pari Passu Indebtedness)
      in accordance with the procedures described below and in this Indenture.

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

            When the aggregate amount of Excess Proceeds equals or exceeds $10.0
million, the Issuers shall be required to make an Offer to Purchase from all
Holders and, if applicable, redeem (or make an offer to do so) any Pari Passu
Indebtedness of the Issuers the provisions of which require the Issuers to
redeem such Indebtedness with the proceeds from any Asset Sales (or offer to do
so), in an aggregate principal amount of Notes and such Pari Passu Indebtedness
equal to the amount of such Excess Proceeds as follows:

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

                                      -54-


            (2) the offer price for the Notes shall be payable in cash in an
      amount equal to 100% of the principal amount of the Notes tendered
      pursuant to a Net Proceeds Offer, plus accrued and unpaid interest
      thereon, if any, to the date such Net Proceeds Offer is consummated (the
      "Offered Price"), in accordance with the procedures set forth in this
      Indenture and the redemption price for such Pari Passu Indebtedness (the
      "Pari Passu Indebtedness Price") shall be as set forth in the related
      documentation governing such Indebtedness;

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

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

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

            In the event of the transfer of substantially all (but not all) of
the assets of the Issuer and the Restricted Subsidiaries as an entirety to a
Person in a transaction covered by and effected in accordance with Section 5.01,
the successor shall be deemed to have sold for cash at Fair Market Value the
assets of the Issuer and the Restricted Subsidiaries not so transferred for
purposes of this Section 4.09, and the successor shall comply with the
provisions of this Section 4.09 with respect to such deemed sale as if it were
an Asset Sale (with such Fair Market Value being deemed to be Net Available
Proceeds for such purpose).

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

SECTION 4.10. Limitations on Transactions with Affiliates.

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

            (1) such Affiliate Transaction is on terms that are no less
      favorable to the Issuer or the relevant Restricted Subsidiary than those
      that may have been obtained in a

                                      -55-


      comparable transaction at such time on an arm's-length basis by the Issuer
      or that Restricted Subsidiary from a Person that is not an Affiliate of
      the Issuer or that Restricted Subsidiary; and

            (2) the Issuer delivers to the Trustee:

                  (a) with respect to any Affiliate Transaction involving
            aggregate value in excess of $5.0 million, an Officers' Certificate
            certifying that such Affiliate Transaction complies with clause (1)
            above and either (x) a Secretary's Certificate which sets forth and
            authenticates a resolution that has been adopted by a majority of
            the disinterested members of the Board of Directors of the Issuer
            approving such Affiliate Transaction or (y) a Secretary's
            Certificate which sets forth and authenticates a resolution that has
            been adopted by the Board of Directors of the Issuer approving such
            Affiliate Transaction together with the written opinion or appraisal
            described in clause (b) below; and

                  (b) with respect to any Affiliate Transaction involving
            aggregate value of $10.0 million or more, the certificates described
            in the preceding clause (a) and either (x) a written opinion as to
            the fairness of such Affiliate Transaction to the Issuer or such
            Restricted Subsidiary from a financial point of view or (y) a
            written appraisal supporting the value of such Affiliate
            Transaction, in either case, issued by an Independent Financial
            Advisor.

            The foregoing restrictions shall not apply to:

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

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

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

            (4) Restricted Payments which are made in accordance with Section
      4.08;

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

            (6) any transaction with a joint venture or similar entity which
      would constitute an Affiliate Transaction solely because the Issuer or a
      Restricted Subsidiary owns an

                                      -56-


      equity interest in or otherwise controls such joint venture or similar
      entity; provided, however, that no Affiliate of the Issuer or any of its
      Subsidiaries other than the Issuer or a Restricted Subsidiary shall have a
      beneficial interest in such joint venture or similar entity; or

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

SECTION 4.11. Limitations on Liens.

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

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

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

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

SECTION 4.12. Additional Note Guarantees.

            If, after the Issue Date, (a) the Issuer or any Restricted
Subsidiary shall acquire or create another Subsidiary (other than a Subsidiary
that has been designated an Unrestricted Subsidiary) or (b) any Unrestricted
Subsidiary is redesignated a Restricted Subsidiary, then, in each such case, the
Issuer shall cause such Restricted Subsidiary to:

            (1) execute and deliver to the Trustee (a) a supplemental indenture
      in form and substance satisfactory to the Trustee pursuant to which such
      Restricted Subsidiary shall unconditionally guarantee all of the Issuer's
      obligations under the Notes and this Indenture and (b) a notation of
      guarantee in respect of its Note Guarantee; and

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

provided that in respect of any newly created Restricted Subsidiary, the Issuer
shall deliver the executed documentation set forth in clauses (1) and (2) above
with respect to such newly created

                                      -57-


Restricted Subsidiary(ies) within ten (10) days of the end of the fiscal quarter
in which such Restricted Subsidiary was created.

SECTION 4.13. Limitations on Dividend and Other Restrictions Affecting
Restricted Subsidiaries.

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

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

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

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

except for:

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

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

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

            (4) encumbrances or restrictions existing under agreements existing
      on the date of this Indenture (including, without limitation, the Credit
      Facilities) as in effect on the date hereof;

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

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

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

            (8) any other agreement governing Indebtedness entered into after
      the Issue Date that contains encumbrances and restrictions that are not
      materially more restrictive with respect to any Restricted Subsidiary than
      those in effect on the Issue Date with respect to that Restricted
      Subsidiary pursuant to agreements in effect on the Issue Date;

                                      -58-


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

            (10) Purchase Money Indebtedness or Capitalized Lease Obligations
      incurred in compliance with Section 4.06 that impose restrictions of the
      nature described in clause (c) of this Section 4.13 on the assets
      acquired; and

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

SECTION 4.14. Limitations on Designation of Unrestricted Subsidiaries.

            The Issuer may designate any Subsidiary (including any newly formed
or newly acquired Subsidiary) of the Issuer (other than the Co-Issuer) as an
"Unrestricted Subsidiary" under this Indenture (a "Designation") only if:

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

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

            No Subsidiary shall be Designated as an "Unrestricted Subsidiary"
unless such Subsidiary:

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

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

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

                                      -59-


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

If, at any time, any Unrestricted Subsidiary fails to meet the preceding
requirements as an Unrestricted Subsidiary, it shall thereafter cease to be an
Unrestricted Subsidiary for purposes of this Indenture and any Indebtedness of
the Subsidiary, Liens on assets and Investments of such Subsidiary shall be
deemed to be incurred or made by a Restricted Subsidiary as of the date and, if
the Indebtedness is not permitted to be incurred or made under Section 4.06 or
the Lien is not permitted under Section 4.11 or the Investment is not permitted
to be made under Section 4.08, the Issuer shall be in default of the applicable
covenant. The Issuer may not designate the Co-Issuer as an Unrestricted
Subsidiary.

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

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

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

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

SECTION 4.15. Maintenance of Consolidated Tangible Net Worth.

            If the Issuer's Consolidated Tangible Net Worth declines below $60.0
million (the "Minimum Tangible Net Worth") at the end of any fiscal quarter, the
Issuer must deliver an Officers' Certificate to the Trustee within 55 days after
the end of such fiscal quarter (110 days after the end of any fiscal year) to
notify the Trustee of such decline. If, on the last day of each of any two
consecutive fiscal quarters (the last day of the second fiscal quarter being
referred to as a "Deficiency Date"), the Issuer's Consolidated Tangible Net
Worth is less than the Minimum Tangible Net Worth of the Issuer, then the
Issuers must make an Offer to Purchase (a "Net Worth Offer") to all Holders of
Notes to purchase 10% of the aggregate principal amount of the Notes (the "Net
Worth Offer Amount") at a purchase price equal to 100% of the principal amount
of the Notes, plus accrued and unpaid interest thereon, if any, to the date of
purchase; provided, however, that no such Net Worth Offer shall be required if,
after the Deficiency Date but prior to the date the Issuers are required to make
the Net Worth Offer, capital in cash or Cash Equivalents is contributed for
Qualified Equity Interests of the Issuer sufficient to increase the Issuer's
Consolidated Tangible Net Worth after giving effect to such contribution to an
amount equal to or above the Minimum Tangible Net Worth.

                                      -60-


            The Issuers must make the Net Worth Offer no later than 65 days
after each Deficiency Date (120 days if such Deficiency Date is the last day of
the Issuer's fiscal year). The Net Worth Offer is required to remain open for a
period of 20 Business Days following its commencement or for such longer period
as required by law. The Issuers are required to purchase the Net Worth Offer
Amount of the Notes on a designated date no later than five Business Days after
the termination of the Net Worth Offer, or if less than the Net Worth Offer
Amount of Notes shall have been tendered, all Notes then tendered.

            If the aggregate principal amount of Notes tendered exceeds the Net
Worth Offer Amount, the Issuers are required to purchase the Notes tendered pro
rata among the Notes tendered (with such adjustments as may be appropriate so
that only Notes in denominations of $1,000 and integral multiples thereof shall
be purchased).

            In no event shall the failure of the Issuer's Consolidated Tangible
Net Worth to equal or exceed the Minimum Tangible Net Worth at the end of any
fiscal quarter be counted toward the requirement to make more than one Net Worth
Offer. The Issuer may reduce the principal amount of Notes to be purchased
pursuant to the Net Worth Offer by subtracting 100% of the aggregate principal
amount (excluding premium) of the Notes redeemed by the Issuer prior to the
purchase (otherwise than under this provision). The Issuer, however, may not
credit Notes that have been previously used as a credit against any obligation
to repurchase Notes pursuant to this provision.

            The Issuers shall comply with applicable tender offer rules,
including the requirements of Rule 14e-1 under the Exchange Act and any other
applicable laws and regulations in connection with the purchase of Notes
pursuant to a Net Worth Offer. To the extent that the provisions of any
securities laws or regulations conflict with this Section 4.15, the Issuer shall
comply with the applicable securities laws and regulations and shall not be
deemed to have breached its obligations under this Section 4.15 by virtue of
this compliance.

SECTION 4.16. Maintenance of Properties; Insurance; Compliance with Law.

            (a) The Issuer shall, and shall cause each of its Restricted
Subsidiaries to, at all times cause all material properties used or useful in
the conduct of their business to be maintained and kept in good condition,
repair and working order (reasonable wear and tear excepted) and supplied with
all necessary equipment, and shall cause to be made all necessary repairs,
renewals, replacements, necessary betterments and necessary improvements
thereto, all as in the judgment of the Issuer may be necessary so that the
business carried on in connection therewith may be properly and advantageously
conducted at all times; provided, however, that the Issuer and its Restricted
Subsidiaries shall not be prevented from selling or otherwise disposing of their
properties for value in the ordinary course of business pursuant to a
transaction that does not otherwise constitute an Asset Sale or pursuant to an
Asset Sale conducted in accordance with Section 4.09.

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

                                      -61-


similarly situated and with such deductibles and by such methods as shall be
customary and reasonably consistent with past practice.

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

SECTION 4.17. Payments for Consent.

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

SECTION 4.18. Legal Existence.

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

SECTION 4.19. Change of Control Offer.

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

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

                                      -62-


            (1) a description of the transaction or transactions that constitute
      the Change of Control;

            (2) an Offer to Purchase all Notes properly tendered by such Holder
      pursuant to such Change of Control Offer on a specified date and at the
      Change of Control Offer Price, in each case set forth in such notice; and

            (3) a description of the procedures that Holders must follow to
      accept the Change of Control Offer.

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

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

            The Issuers shall comply with applicable tender offer rules,
including the requirements of Rule 14e-l under the Exchange Act and any other
applicable laws and regulations in connection with the purchase of Notes
pursuant to a Change of Control Offer. To the extent the provisions of any
securities laws or regulations conflict with the provisions under this Section
4.19, the Issuers shall comply with the applicable securities laws and
regulations and shall not be deemed to have breached its obligations under this
Section 4.19 by virtue thereof.

SECTION 4.20. Limitation on Activities of the Co-Issuer.

            The Co-Issuer may not hold any material assets, become liable for
any material obligations, engage in any trade or business, or conduct any
business activity, other than (1) the issuance of its Equity Interests to the
Issuer or any Wholly Owned Restricted Subsidiary of the Issuer, (2) the
incurrence of Indebtedness as a co-obligor or guarantor, as the case may be, of
the Notes, the Credit Facilities and any other Indebtedness that is permitted to
be incurred by the Issuer under Section 4.06; provided, however, that the net
proceeds of such Indebtedness are not retained by the Co-Issuer, and (3)
activities incidental thereto. Neither the Issuer nor any Restricted Subsidiary
shall engage in any transactions with the Co-Issuer in violation of the
immediately preceding sentence.

                                  ARTICLE FIVE

                              SUCCESSOR CORPORATION

SECTION 5.01. Limitations on Mergers, Consolidations, Etc.

            The Issuer shall not, directly or indirectly, in a single
transaction or a series of related transactions, (a) consolidate or merge with
or into another Person (other than a merger that satisfies the requirements of
clause (1) below with a Wholly Owned Restricted Subsidiary solely for the
purpose of changing the Issuer's jurisdiction of formation to another State of
the United

                                      -63-


States), or sell, lease, transfer, convey or otherwise dispose of or assign all
or substantially all of the assets of the Issuer or the Issuer and the
Restricted Subsidiaries (taken as a whole) or (b) adopt a Plan of Liquidation
unless, in either case:

            (1) either:

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

                  (b) the Person formed by or surviving such consolidation or
            merger or to which such sale, lease, conveyance or other disposition
            shall be made (or, in the case of a Plan of Liquidation, any Person
            to which assets are transferred) (collectively, the "Successor") is
            a corporation, limited liability company or limited partnership
            organized and existing under the laws of any State of the United
            States of America or the District of Columbia, and the Successor
            expressly assumes, by supplemental indenture in form and substance
            satisfactory to the Trustee, all of the obligations of the Issuer
            under the Notes, this Indenture and the Registration Rights
            Agreement; provided, however, that at any time the Successor is a
            limited liability company or a limited partnership, there shall be a
            co-issuer of the Notes that is a corporation;

            (2) immediately prior to and immediately after giving effect to such
      transaction and the assumption of the obligations as set forth in clause
      (1)(b) above and the incurrence of any Indebtedness to be incurred in
      connection therewith, and the use of any net proceeds therefrom on a pro
      forma basis, no Default shall have occurred and be continuing; and

            (3) immediately after giving effect to such transaction and the
      assumption of the obligations set forth in clause (1)(b) above and the
      incurrence of any Indebtedness to be incurred in connection therewith, and
      the use of any net proceeds therefrom on a pro forma basis, the Issuer or
      the Successor, as the case may be, could incur $1.00 of additional
      Indebtedness pursuant to the Ratio Exception.

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

            The Co-Issuer shall not, directly or indirectly, in a single
transaction or a series of related transactions, (a) consolidate or merge with
or into another Person, or sell, lease, transfer, convey or otherwise dispose of
or assign all or substantially all of the assets of the Co-Issuer or (b) adopt a
Plan of Liquidation unless, in either case:

            (1) either:

                  (a) the Co-Issuer shall be the surviving or continuing Person;
            or

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

                                      -64-


            the case of a Plan of Liquidation, any Person to which assets are
            transferred) (collectively, the "Co-Issuer Successor") is a
            corporation organized and existing under the laws of any State of
            the United States of America or the District of Columbia, and the
            Co-Issuer Successor expressly assumes, by supplemental indenture in
            form and substance satisfactory to the Trustee, all of the
            obligations of the Co-Issuer under the Notes, this Indenture and the
            Registration Rights Agreement; and

            (2) immediately prior to and immediately after giving effect to such
      transaction and the assumption of the obligations as set forth in clause
      (1)(b) above, no Default shall have occurred and be continuing.

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

            (1) either:

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

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

            (2) immediately after giving effect to such transaction and the
      assumption of the obligations as set forth in clause (1)(b) above, no
      Default shall have occurred and be continuing.

            For purposes of this Section 5.01, the transfer (by lease,
assignment, sale or otherwise, in a single transaction or series of
transactions) of all or substantially all of the assets of one or more
Restricted Subsidiaries, the Equity Interests of which constitute all or
substantially all of the assets of the Issuer, will be deemed to be the transfer
of all or substantially all of the assets of the Issuer.

            Upon any consolidation, combination or merger of the Issuer, the
Co-Issuer or a Guarantor, or any sale, lease, transfer, conveyance or other
disposition of all or substantially all of the assets of the Issuer or the
Co-Issuer in accordance with this Section 5.01, in which the Issuer, the
Co-Issuer or such Guarantor is not the continuing obligor under the Notes or its
Note Guarantee, as the case may be, the surviving entity formed by such
consolidation or into which the Issuer, the Co-Issuer or such Guarantor is
merged or the Person to which the sale, lease, transfer, conveyance or other
disposition is made will succeed to, and be substituted for, and may exercise
every right and power of, the Issuer, the Co-Issuer or such Guarantor under this
Indenture, the Notes and the Note Guarantees with the same effect as if such
surviving entity had been named therein as the Issuer, the Co-Issuer or such
Guarantor and, except in the case of a sale, lease, transfer, conveyance or
other disposition, the Issuer, the Co-Issuer or such Guarantor, as

                                      -65-


the case may be, will be released from the obligation to pay the principal of
and interest on the Notes or in respect of its Note Guarantee, as the case may
be, and all of the Issuer's, the Co-Issuer's or such Guarantor's other
obligations and covenants under the Notes, this Indenture and its Note
Guarantee, if applicable.

            Notwithstanding the foregoing, any Restricted Subsidiary (other than
the Co-Issuer) may merge into the Issuer or another Restricted Subsidiary.

SECTION 5.02. Successor Person Substituted.

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

                                  ARTICLE SIX

                              DEFAULTS AND REMEDIES

SECTION 6.01. Events of Default.

            Each of the following is an "Event of Default":

            (1) failure by the Issuer and the Co-Issuer to pay interest on any
      of the Notes when it becomes due and payable and the continuance of any
      such failure for 30 days (whether or not such payment is prohibited by the
      subordination provisions of this Indenture);

            (2) failure by the Issuer and the Co-Issuer to pay the principal on
      any of the Notes when it becomes due and payable, whether at stated
      maturity, upon redemption, upon purchase, upon acceleration or otherwise
      (whether or not such payment is prohibited by the subordination provisions
      of this Indenture);

            (3) failure by the Issuer to comply with Section 5.01, or in respect
      of its obligations to make a Change of Control Offer (whether or not such
      payment is prohibited by the subordination provisions of this Indenture);

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

                                      -66-


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

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

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

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

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

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

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

                  (a) commences a voluntary case,

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

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

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

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

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

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

                                      -67-


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

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

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

SECTION 6.02. Acceleration.

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

SECTION 6.03. Other Remedies.

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

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

                                      -68-


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

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

SECTION 6.05. Control by Majority.

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

SECTION 6.06. Limitation on Suits.

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

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

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

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

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

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

            No director, officer, employee, incorporator or stockholder of any
Issuer or Guarantor will have any liability for any obligations of the Issuers
under the Notes or this Indenture or

                                      -69-


of any Guarantor under its Note Guarantee or this Indenture or for any claim
based on, in respect of, or by reason of, such obligations or their creation.
Each Holder by accepting a Note waives and releases all such liability. The
waiver and release are part of the consideration for issuance of the Notes and
the Note Guarantees.

SECTION 6.08. Rights of Holders To Receive Payment.

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

SECTION 6.09. Collection Suit by Trustee.

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

SECTION 6.10. Trustee May File Proofs of Claim.

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

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

                                      -70-


SECTION 6.11. Priorities.

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

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

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

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

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

SECTION 6.12. Undertaking for Costs.

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

SECTION 6.13. Restoration of Rights and Remedies.

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

                                 ARTICLE SEVEN

                                     TRUSTEE

SECTION 7.01. Duties of Trustee.

            (a) If an Event of Default actually known to a Responsible Officer
of the Trustee has occurred and is continuing, the Trustee shall exercise such
of the rights and powers

                                      -71-


vested in it by this Indenture, and to use the same degree of care and skill in
their exercise as a prudent person would exercise or use under the circumstances
in the conduct of his or her own affairs.

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

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

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

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

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

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

            (3) The Trustee shall not be liable with respect to any action it
      takes or omits to take in good faith in accordance with a direction
      received by it from Holders of not less than a majority in principal
      amount of the Notes then outstanding.

            (4) No provision of this Indenture shall require the Trustee to
      expend or risk its own funds or otherwise incur any financial liability in
      the performance of any of its rights, powers or duties if it shall have
      reasonable grounds for believing that repayment of such funds or adequate
      indemnity satisfactory to it against such risk or liability is not
      reasonably assured to it.

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

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

                                      -72-


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

SECTION 7.02. Rights of Trustee.

            Subject to Section 7.01:

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

            (2) Before the Trustee acts or refrains from acting, it may require
      an Officers' Certificate or an Opinion of Counsel, or both, which shall
      conform to the provisions of Section 12.05. The Trustee shall be protected
      and shall not be liable for any action it takes or omits to take in good
      faith in reliance on such certificate or opinion. The Trustee may consult
      with counsel of its selection and the advice of such counsel or any
      Opinion of Counsel shall be full and complete authorization and protection
      from liability in respect of any action taken, suffered or omitted by it
      hereunder in good faith and in reliance thereon.

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

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

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

            (6) The Trustee shall not be bound to make any investigation into
      the facts or matters stated in any resolution, certificate (including any
      Officers' Certificate), statement, instrument, opinion (including any
      Opinion of Counsel), notice, request, direction, consent, order, bond,
      debenture, note, other evidence of Indebtedness or other paper or
      document, but the Trustee, in its discretion, may make such further
      inquiry or investigation into such facts or matters as it may see fit and,
      if the Trustee shall determine to make such further inquiry or
      investigation, it shall be entitled, upon reasonable notice to any Issuer,
      to examine the books, records, and premises of such Issuer, personally or
      by agent or attorney at the sole cost of such Issuer and shall incur no
      liability of any kind by reason of such inquiry or investigation.

                                      -73-


            (7) The Trustee shall not be required to give any bond or surety in
      respect of the performance of its powers and duties hereunder.

            (8) The permissive rights of the Trustee to do things enumerated in
      this Indenture shall not be construed as duties.

            (9) Except with respect to Section 4.04, the Trustee shall have no
      duty to inquire as to the performance of the Issuers' covenants herein,
      and the Trustee shall not be deemed to have notice of any Default or Event
      of Default unless a Responsible Officer of the Trustee has actual
      knowledge thereof or unless written notice of any event which is in fact
      such a Default is received by the Trustee at the Corporate Trust Office of
      the Trustee, and such notice references the Notes and this Indenture.

SECTION 7.03. Individual Rights of Trustee.

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

SECTION 7.04. Trustee's Disclaimer.

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

SECTION 7.05. Notice of Defaults.

            The Trustee shall, within 90 days after the occurrence of any
Default with respect to the Notes, give the Holders notice of all uncured
Defaults thereunder known to it; provided, however, that, except in the case of
an Event of Default in payment with respect to the Notes or a Default in
complying with Section 5.01, the Trustee shall be protected in withholding such
notice if and so long as a committee of its trust officers in good faith
determines that the withholding of such notice is in the interest of the
Holders.

SECTION 7.06. Reports by Trustee to Holders.

            If required by TIA Section 313(a), within 60 days after January 1 of
any year, commencing January 1, 2006 the Trustee shall mail to each Holder a
brief report dated as of such January 1 that complies with TIA Section 313(a).
The Trustee also shall comply with TIA Section 313(b)(2). The Trustee shall also
transmit by mail all reports as required by TIA Section 313(c) and TIA Section
313(d).

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

                                      -74-


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

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

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

SECTION 7.07. Compensation and Indemnity.

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

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

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

                                      -75-


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

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

SECTION 7.08. Replacement of Trustee.

            The Trustee may resign by so notifying the Issuers and the
Guarantors in writing. The Holders of a majority in principal amount of the
outstanding Notes may remove the Trustee by notifying the Issuers and the
removed Trustee in writing and may appoint a successor Trustee. The Issuers may
remove the Trustee at its election if:

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

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

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

            (4) the Trustee otherwise becomes incapable of acting.

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

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

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

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

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

            If the Trustee consolidates with, merges or converts into, or
transfers all or substantially all of its corporate trust assets to, another
entity, subject to Section 7.10, the successor

                                      -76-


entity without any further act shall be the successor Trustee; provided such
entity shall be otherwise qualified and eligible under this Article Seven.

SECTION 7.10. Eligibility; Disqualification.

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

SECTION 7.11. Preferential Collection of Claims Against Issuers.

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

SECTION 7.12. Paying Agents.

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

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

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

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

                                 ARTICLE EIGHT

                       AMENDMENTS, SUPPLEMENTS AND WAIVERS

SECTION 8.01. Without Consent of Holders.

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

            (1) to provide for the assumption of the Issuers' or Guarantor's
      obligations to the Holders pursuant to Section 5.01;

                                      -77-


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

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

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

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

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

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

SECTION 8.02. With Consent of Holders.

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

            (a) no such amendment may, without the consent of the Holders of
      two-thirds in aggregate principal amount of Notes then outstanding, amend
      the obligation of the Issuers under Section 4.19 or the related
      definitions that could adversely affect the rights of any Holder; and

            (b) without the consent of each Holder affected, no amendment or
      waiver may:

                  (1) reduce, or change the maturity or the principal of any
            Note;

                  (2) reduce the rate of or extend the time for payment of
            interest on the Notes;

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

                                      -78-


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

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

                  (6) reduce the principal amount of Notes whose Holders must
            consent to an amendment or waiver to this Indenture or the Notes;

                  (7) waive a Default in the payment of principal of or premium
            or interest on any Notes (except a rescission of acceleration of the
            Notes by the Holders thereof as provided in this Indenture and a
            waiver of the payment default that resulted from such acceleration);

                  (8) impair the rights of Holders to receive payments of
            principal of or interest on the Notes on or after the due date
            therefore or to institute suit for the enforcement of any payment on
            the Notes;

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

                  (10) make any change in this Section 8.02.

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

            Upon the written request of the Issuers, accompanied by a Board
Resolution authorizing the execution of any such supplemental indenture, and
upon the receipt by the Trustee of evidence reasonably satisfactory to the
Trustee of the consent of the Holders as aforesaid and upon receipt by the
Trustee of the documents described in Section 8.06, the Trustee shall join with
the Issuers and the Guarantors in the execution of such supplemental indenture
unless such supplemental indenture affects the Trustee's own rights, duties or
immunities under this Indenture, in which case the Trustee may, but shall not be
obligated to, enter into such supplemental indenture.

            It shall not be necessary for the consent of the Holders under this
Section 8.02 to approve the particular form of any proposed amendment,
supplement or waiver, but it shall be sufficient if such consent approves the
substance thereof.

SECTION 8.03. Compliance with Trust Indenture Act.

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

                                      -79-


SECTION 8.04. Revocation and Effect of Consents.

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

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

            After an amendment, supplement, waiver or other action becomes
effective, it shall bind every Holder, unless it makes a change described in any
of clauses (1) through (10) of Section 8.02. In that case the amendment,
supplement, waiver or other action shall bind each Holder of a Note who has
consented to it and every subsequent Holder of a Note or portion of a Note that
evidences the same debt as the consenting Holder's Note.

SECTION 8.05. Notation on or Exchange of Notes.

            If an amendment, supplement, or waiver changes the terms of a Note,
the Trustee (in accordance with the specific written direction of the Issuers)
shall request the Holder of the Note (in accordance with the specific written
direction of the Issuers) to deliver it to the Trustee. In such case, the
Trustee shall place an appropriate notation on the Note about the changed terms
and return it to the Holder. Alternatively, if the Issuers or the Trustee so
determines, the Issuers in exchange for the Note shall issue, the Guarantors
shall endorse, and the Trustee shall authenticate a new Note that reflects the
changed terms. Failure to make the appropriate notation or issue a new Note
shall not affect the validity and effect of such amendment, supplement or
waiver.

SECTION 8.06. Trustee To Sign Amendments, etc.

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

                                      -80-


SECTION 8.07. Effect on Senior Debt.

            No amendment of, or supplement or waiver to, this Indenture shall
adversely affect the rights of any Holder of Senior Debt or Guarantor Senior
Debt under Article Eleven and Section 10.03 and the defined terms as used
therein without the consent of such holder or its Representative.

                                  ARTICLE NINE

                       DISCHARGE OF INDENTURE; DEFEASANCE

SECTION 9.01. Discharge of Indenture.

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

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

            (2) (a) all Notes not delivered to the Trustee for cancellation
      otherwise (i) have become due and payable or (ii) have been called for
      redemption pursuant to paragraph 5 of the Notes, and the Issuer has
      irrevocably deposited or caused to be deposited with the Trustee trust
      funds, in trust, solely for the benefit of the Holders, U.S. legal tender,
      U.S. Government Obligations or a combination thereof, in such amounts as
      will be sufficient (without consideration of any reinvestment of interest)
      to pay and discharge the entire Indebtedness (including all principal and
      accrued interest) on the Notes not theretofore delivered to the Trustee
      for cancellation,

            (b) the Issuers have paid all sums payable by them under this
      Indenture, and

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

            In addition, the Issuers must deliver an Officers' Certificate and
an Opinion of Counsel stating that all conditions precedent to satisfaction and
discharge have been complied with.

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

                                      -81-


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

SECTION 9.02. Legal Defeasance.

            The Issuer may at its option and at any time, by Board Resolution of
the Board of Directors of the Issuer, be discharged from its obligations and the
obligations of the Co-Issuer with respect to the Notes and the Guarantors
discharged from their obligations under the Guarantees on the date the
conditions set forth in Section 9.04 are satisfied (hereinafter, "Legal
Defeasance"). For this purpose, such Legal Defeasance means that the Issuers and
the Guarantors shall be deemed to have paid and discharged the entire
indebtedness represented by the Notes and the Note Guarantees and to have
satisfied all their other obligations under such Notes and this Indenture
insofar as such Notes are concerned (and the Trustee, at the expense of the
Issuer, shall, subject to Section 9.06, execute instruments in form and
substance reasonably satisfactory to the Trustee and Issuer acknowledging the
same), except for the following which shall survive until otherwise terminated
or discharged hereunder: (A) the rights of Holders of outstanding Notes to
receive solely from the trust funds described in Section 9.04 and as more fully
set forth in such Section, payments in respect of the principal of, premium, if
any, and interest on such Notes when such payments are due, (B) the Issuers'
obligations with respect to such Notes under Sections 2.03, 2.04, 2.05, 2.06,
2.07, 2.08, 2.11 and 4.18, (C) the rights, powers, trusts, duties, and
immunities of the Trustee hereunder (including claims of, or payments to, the
Trustee under or pursuant to Section 7.07) and (D) this Article Nine. Subject to
compliance with this Article Nine, the Issuer may exercise its option under this
Section 9.02 with respect to the Notes notwithstanding the prior exercise of its
option under Section 9.03 with respect to the Notes.

SECTION 9.03. Covenant Defeasance.

            At the Issuer's option and at any time, pursuant to a Board
Resolution of the Board of Directors of the Issuer (x) the Issuers and the
Guarantors shall be released from their respective obligations under Sections
4.02 (except for obligations mandated by the TIA), 4.05 through 4.16, inclusive,
and 4.20 and clause (3) of the first paragraph of Section 5.01 and (y) Section
6.01 (5) and (6) shall no longer apply with respect to the outstanding Notes on
and after the date the conditions set forth in Section 9.04 are satisfied and
solely for a period of ninety-one (91) days following the deposit specified in
Section 9.04(1), Section 6.01(7) and Section 6.01(8) (hereinafter, "Covenant
Defeasance"). For this purpose, such Covenant Defeasance means that the Issuers
and the Guarantors may omit to comply with and shall have no liability in
respect of any term, condition or limitation set forth in any such specified
Section or portion thereof, whether directly or indirectly by reason of any
reference elsewhere herein to any such specified Section or portion thereof or
by reason of any reference in any such specified Section or portion thereof to
any other provision herein or in any other document, but the remainder of this
Indenture and the Notes shall be unaffected thereby.

SECTION 9.04. Conditions to Defeasance or Covenant Defeasance.

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

                                      -82-


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

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

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

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

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

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

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

            (5) the Legal Defeasance or Covenant Defeasance shall not result in
      a breach or violation of, or constitute a Default under this Indenture or
      a default under any other material agreement or instrument to which the
      Issuer or any of its Subsidiaries is a party or by which the Issuer or any
      of its Subsidiaries is bound (other than any such Default or default
      resulting solely from the borrowing of funds to be applied to such
      deposit);

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

                                      -83-


            (7) the Issuer shall have delivered to the Trustee an Officers'
      Certificate and an Opinion of Counsel, each stating that the conditions
      provided for in, in the case of the Officers' Certificate, clauses (1)
      through (6) and, in the case of the Opinion of Counsel, clauses (2) and/or
      (3) and (5) of this Section 9.04 have been complied with.

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

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

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

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

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

SECTION 9.06. Reinstatement.

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

                                      -84-


such Notes to receive such payment from the money or U.S. Government Obligations
held by the Trustee or Paying Agent.

SECTION 9.07. Moneys Held by Paying Agent.

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

SECTION 9.08. Moneys Held by Trustee.

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

                                  ARTICLE TEN

                               GUARANTEE OF NOTES

SECTION 10.01. Guarantee.

            Subject to the provisions of this Article Ten, each Guarantor, by
execution of this Indenture, jointly and severally, unconditionally guarantees
to each Holder (i) the due and punctual payment of the principal of and interest
on each Note, when and as the same shall become due and payable, whether at
maturity, by acceleration or otherwise, the due and punctual payment

                                      -85-


of interest on the overdue principal of and interest on the Notes, to the extent
lawful, and the due and punctual payment of all other Obligations and due and
punctual performance of all obligations of the Issuers to the Holders or the
Trustee all in accordance with the terms of such Note, this Indenture and the
Registration Rights Agreement, and (ii) in the case of any extension of time of
payment or renewal of any Notes or any of such other Obligations, that the same
will be promptly paid in full when due or performed in accordance with the terms
of the extension or renewal, at stated maturity, by acceleration or otherwise.
Each Guarantor, by execution of this Indenture, agrees that its obligations
hereunder shall be absolute and unconditional, irrespective of, and shall be
unaffected by, any invalidity, irregularity or unenforceability of any such Note
or this Indenture, any failure to enforce the provisions of any such Note, this
Indenture or the Registration Rights Agreement, any waiver, modification or
indulgence granted to the Issuer with respect thereto by the Holder of such
Note, or any other circumstances which may otherwise constitute a legal or
equitable discharge of a surety or such Guarantor.

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

SECTION 10.02. Execution and Delivery of Guarantee.

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

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

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

                                      -86-


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

SECTION 10.03. Subordination of Note Guarantee.

            The obligations of each Guarantor under its Note Guarantee pursuant
to this Article Ten shall be junior and subordinated to the prior payment in
full of the Guarantor Senior Debt of such Guarantor in cash, Cash Equivalents or
other cash equivalents reasonably acceptable to the holders of such Guarantor
Senior Debt of such Guarantor on the same basis as the Notes are junior and
subordinated to Senior Debt of the Issuers. For the purposes of the foregoing
sentence, the Trustee and the Holders shall have the right to receive and/or
retain payments by any of the Guarantors only at such times as they may receive
and/or retain payments in respect of the Notes pursuant to this Indenture,
including Article Eleven.

SECTION 10.04. Limitation of Guarantee.

            The obligations of each Guarantor are limited to the maximum amount
as will, after giving effect to all other contingent and fixed liabilities of
such Guarantor and after giving effect to any collections from or payments made
by or on behalf of any other Guarantor in respect of the obligations of such
other Guarantor under its Guarantee or pursuant to its contribution obligations
under this Indenture, result in the obligations of such Guarantor under its
Guarantee not constituting a fraudulent conveyance or fraudulent transfer under
federal or state law. Each Guarantor that makes a payment or distribution under
a Guarantee shall be entitled to a contribution from each other Guarantor in a
pro rata amount based on the Adjusted Net Assets of each Guarantor.

SECTION 10.05. Release of Guarantor.

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

            (i) all of the assets of such Guarantor have been sold or otherwise
      disposed of in a transaction in compliance with the terms of this
      Indenture (including Sections 4.09, 4.19 and 5.01);

            (ii) all of the Equity Interests held by the Issuer, the Co-Issuer
      and the Restricted Subsidiaries of such Guarantor have been sold or
      otherwise disposed of in a transaction in compliance with the terms of
      this Indenture (including Sections 4.19 and 5.01); or

            (iii) if such Guarantor is designated as an Unrestricted Subsidiary
      or otherwise ceases to be a Restricted Subsidiary, in each case in
      compliance with this Indenture (including Section 4.14), upon
      effectiveness of such designation or when it first ceases to be a
      Restricted Subsidiary, respectively;

                                      -87-


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

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

SECTION 10.06. Waiver of Subrogation.

            Each Guarantor hereby irrevocably waives any claim or other rights
which it may now or hereafter acquire against the Issuers that arise from the
existence, payment, performance or enforcement of such Guarantor's obligations
under its Guarantee and this Indenture, including, without limitation, any right
of subrogation, reimbursement, exoneration, indemnification, and any right to
participate in any claim or remedy of any Holder of Notes against the Issuers,
whether or not such claim, remedy or right arises in equity, or under contract,
statute or common law, including, without limitation, the right to take or
receive from the Issuers, directly or indirectly, in cash or other property or
by set-off or in any other manner, payment or Note on account of such claim or
other rights. If any amount shall be paid to any Guarantor in violation of the
preceding sentence and the Notes shall not have been paid in full, such amount
shall have been deemed to have been paid to such Guarantor for the benefit of,
and held in trust for the benefit of, the Holders, and shall forthwith be paid
to the Trustee for the benefit of such Holders to be credited and applied upon
the Notes, whether matured or unmatured, in accordance with the terms of this
Indenture. Each Guarantor acknowledges that it will receive direct and indirect
benefits from the financing arrangements contemplated by this Indenture and that
the waiver set forth in this Section 10.06 is knowingly made in contemplation of
such benefits.

                                 ARTICLE ELEVEN

                             SUBORDINATION OF NOTES

SECTION 11.01. Agreement to Subordinate.

            Each of the Issuers agree, and each Holder by accepting a Note
agrees, that the Indebtedness evidenced by the Notes is subordinated in right of
payment, to the extent and in the manner provided in this Article Eleven, to the
prior payment in full in cash or Cash Equivalents of all Senior Debt (whether
outstanding on the date hereof or hereafter created, incurred, assumed or
guaranteed), and that the subordination is for the benefit of the holders of
Senior Debt, including Senior Debt incurred after the date of this Indenture.

            A distribution may consist of cash, securities or other property, by
set-off or otherwise.

                                      -88-


SECTION 11.02. Liquidation; Dissolution; Bankruptcy.

            (a) The holders of Senior Debt shall be entitled to receive payment
in full in cash or Cash Equivalents of all Obligations due in respect of Senior
Debt before the Holders of Notes will be entitled to receive any payment or
distribution of any kind or character with respect to any Obligations on or
relating to the Notes (other than in Permitted Junior Securities) in the event
of any distribution to creditors of the Issuer or the Co-Issuer:

            (i) in a total or partial liquidation, dissolution or winding up of
      the Issuer or the Co-Issuer;

            (ii) in a bankruptcy, reorganization, insolvency, receivership or
      similar proceeding relating to the Issuer or the Co-Issuer or their
      respective assets;

            (iii) in an assignment for the benefit or creditors; or

            (iv) in any marshalling of the assets and liabilities of the Issuer
      or the Co-Issuer; and

            (b) If a payment or distribution is made to the holders of the Notes
that, due to the subordination provisions, should not have been made to them,
such holders are required to hold it in trust for the holders of the Senior Debt
and pay the payment or distribution over to the holders of the Senior Debt, as
their interests may appear.

SECTION 11.03. Default on Designated Senior Debt.

            (a) The Issuers may not make any payment or distribution to the
Trustee or any Holder in respect of Obligations with respect to the Notes and
may not acquire from the Trustee or any Holder any Notes for cash or property
(other than (A) Permitted Junior Securities and (B) payments and other
distributions made from any defeasance trust created pursuant to Section 9.01)
until all principal and other Obligations with respect to the Senior Debt have
been paid in full if:

            (i) a default (whether at stated maturity, upon acceleration or
      otherwise) in the payment of any principal or other Obligations with
      respect to Senior Debt occurs and is continuing beyond any applicable
      grace period in the agreement, indenture or other document governing such
      Senior Debt; or

            (ii) any other default, other than a payment default, on Designated
      Senior Debt occurs and is continuing that then permits holders of the
      Designated Senior Debt to accelerate its maturity and the Trustee receives
      a notice of the default (a "Payment Blockage Notice") from the
      Representative of such Designated Senior Debt. If the Trustee receives any
      such Payment Blockage Notice, no subsequent Payment Blockage Notice shall
      be effective for purposes of this Section unless and until at least 360
      days shall have elapsed since the delivery of the immediately prior
      Payment

                                      -89-


      Blockage Notice. No nonpayment default that existed or was continuing on
      the date of delivery of any Payment Blockage Notice to the Trustee shall
      be, or be made, the basis for a subsequent Payment Blockage Notice unless
      such default shall have been cured or waived for a period of not less than
      90 consecutive days. Any subsequent action or any breach of any covenants
      for a period ending after the date of delivery of the initial Payment
      Blockage Notice that in either case would give rise to a default pursuant
      to any provisions under which a default previously existed or was
      continuing will constitute a new default for this purpose.

            (b) The Issuers may and shall resume payments on and distributions
in respect of the Notes and may acquire them upon the earlier of:

            (i) in the case of a payment default (whether at stated maturity,
      upon acceleration or otherwise), the date upon which all payment defaults
      are cured or waived, and

            (ii) in the case of a default referred to in clause (ii) of Section
      11.03(a) hereof, the earlier of (1) the date on which all such non-payment
      defaults are cured or waived, (2) 179 days after the applicable Payment
      Blockage Notice is received, or (3) the date on which the Trustee receives
      notice from the Representative for such Designated Senior Debt rescinding
      the Payment Blockage Notice, unless the maturity of any Designated Senior
      Debt has been accelerated.

In the event that the Designated Senior Debt is accelerated because of a default
other than a payment default thereunder in accordance with the terms of such
Designated Senior Debt, and such acceleration has not been rescinded, then the
failure to make the payment required arising from such acceleration shall
constitute a payment default.

SECTION 11.04. Acceleration of Securities.

            If payment of the Notes is accelerated because of an Event of
Default, the Issuers shall promptly notify holders of Senior Debt of the
acceleration. In such case, no payment or distribution with respect to any
Obligations on or with respect to the Notes may be made until five Business Days
after the Representative of the Senior Debt receives notice of such acceleration
and, after such five Business Day period, payment or distribution with respect
to any Obligations on or with respect to the Notes may be made only if the
subordination provisions of this Indenture otherwise permit payment at that
time.

SECTION 11.05. When Distribution Must Be Paid Over.

            In the event that the Trustee or any Holder receives any payment of
any Obligations with respect to the Notes (except Permitted Junior Securities or
payments and other distributions made from the defeasance trust described under
Article Nine) when the payment is prohibited by Section 11.03, such payment
shall be held by the Trustee or such Holder, in trust for the benefit of, and
shall be paid forthwith over and delivered, upon written request, to, the
holders of Senior Debt as their interests may appear or their Representative
under this Indenture or other agreement (if any) pursuant to which Senior Debt
may have been issued, as their respective interests may appear, for application
to the payment of all Obligations with respect to Senior Debt remaining unpaid
to the extent necessary to pay such Obligations in full in accordance with their
terms, after giving effect to any concurrent payment or distribution to or for
the holders of Senior Debt.

                                      -90-


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

SECTION 11.06. Notice by the Issuers.

            The Issuers shall promptly notify the Trustee and the Paying Agent
of any facts known to the Issuers that would cause a payment of any Obligations
with respect to the Notes to violate this Article Eleven, but failure to give
such notice shall not affect the subordination of the Notes to the Senior Debt
as provided in this Article Eleven.

SECTION 11.07. Subrogation.

            After all Senior Debt is paid in full and until the Notes are paid
in full, Holders of Notes shall be subrogated (equally and ratably with all
other Indebtedness pari passu with the Notes) to the rights of holders of Senior
Debt to receive distributions applicable to Senior Debt to the extent that
distributions otherwise payable to the Holders of Notes have been applied to the
payment of Senior Debt. A distribution made under this Article Eleven to holders
of Senior Debt that otherwise would have been made to Holders of Notes is not,
as between the Issuers and Holders, a payment by the Issuers on the Notes.

SECTION 11.08. Relative Rights.

            This Article Eleven defines the relative rights of Holders of Notes
and holders of Senior Debt. Nothing in this Indenture shall:

            (i) impair, as between the Issuers and Holders of Notes, the
      obligation of the Issuers, which is absolute and unconditional, to pay
      principal of and interest on the Notes in accordance with their terms;

            (ii) affect the relative rights of Holders of Notes and creditors of
      the Issuers other than their rights in relation to holders of Senior Debt;

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

            (iv) subordinate in favor of holders of Senior Debt or otherwise
      impair the rights of the Trustee under Section 7.07 hereof.

                                      -91-


            If the Issuers fail because of this Article Eleven to pay principal
of or interest on a Note on the due date, the failure is still a Default or
Event of Default.

SECTION 11.09. Subordination May Not Be Impaired by the Issuers.

            No right of any holder of Senior Debt to enforce the subordination
of the Indebtedness evidenced by the Notes shall be impaired by any act or
failure to act by the Issuers or any Holder or by the failure of the Issuers or
any Holder to comply with this Indenture.

SECTION 11.10. Distribution or Notice to Representative.

            Whenever a distribution is to be made or a notice given to holders
of Senior Debt, the distribution may be made and the notice given to their
Representative.

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

SECTION 11.11. Rights of Trustee and Paying Agent.

            Notwithstanding the provisions of this Article Eleven or any other
provision of this Indenture, the Trustee shall not be charged with knowledge of
the existence of any facts that would prohibit the making of any payment or
distribution by the Trustee, and the Trustee and the Paying Agent may continue
to make payments on the Notes, unless the Trustee shall have received at its
Corporate Trust Office at least five Business Days prior to the date of such
payment written notice of facts that would cause the payment of any Obligations
with respect to the Notes to violate this Article Eleven. Only the Issuers or a
Representative may give the notice. Nothing in this Article Eleven shall impair
the claims of, or payments to, the Trustee under or pursuant to Section 7.07
hereof.

            The Trustee in its individual or any other capacity may hold Senior
Debt with the same rights it would have if it were not Trustee. Any Agent may do
the same with like rights.

            The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Debt and shall not be liable to any such holders if the
Trustee shall in good faith mistakenly pay over or distribute to Holders of
Notes or to the Issuers or to any other person cash, property or securities to
which any holders of Senior Debt shall be entitled by virtue of this Article
Eleven or otherwise. With respect to the holders of Senior Debt, the Trustee
undertakes to perform or to observe only such of its covenants or obligations as
are specifically set forth in this Indenture and no implied covenants or
obligations with respect to holders of Senior Debt shall be read into this
Indenture against the Trustee.

                                      -92-



SECTION 11.12. Authorization to Effect Subordination.

            Each Holder of Notes, by the Holder's acceptance thereof, authorizes
and directs the Trustee on such Holder's behalf to take such action as may be
necessary or appropriate to effectuate the subordination as provided in this
Article Eleven, and appoints the Trustee to act as such Holder's
attorney-in-fact for any and all such purposes. If the Trustee does not file a
proper proof of claim or proof of debt in the form required in any proceeding
referred to in Section 6.10 at least 30 days before the expiration of the time
to file such claim, the Representatives are hereby authorized to file an
appropriate claim for and on behalf of the Holders of the Notes.

SECTION 11.13. Amendments.

            The provisions of this Article Eleven shall not be amended or
modified without the written consent of the holders of all Senior Debt.

                                 ARTICLE TWELVE

                                  MISCELLANEOUS

SECTION 12.01. Trust Indenture Act Controls.

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

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

SECTION 12.02. Notices.

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

            If to the Issuer, the Co-Issuer or any Guarantor:

                   ASHTON WOODS USA L.L.C.
                   1080 Holcomb Bridge Road
                   Building 200, Suite 350
                   Roswell, GA 30076
                   Attention: Chief Financial Officer
                   Fax Number: (770) 998-7494

                                      -93-


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

                   PAUL, HASTINGS, JANOFSKY & WALKER LLP
                   600 Peachtree Street, N.E.
                   Suite 2400
                   Atlanta, GA 30308
                   Attention: Elizabeth Noe, Esq.
                   Fax Number: (404) 685-5287

            If to the Trustee:

                   U.S. BANK NATIONAL ASSOCIATION
                   EP-MN-WS3C
                   60 Livingston Avenue
                   St. Paul, MN 55107-1419
                   Attention: Corporate Trust Department
                   Fax Number: (651) 495-8097

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

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

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

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

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

SECTION 12.03. Communications by Holders with Other Holders.

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

SECTION 12.04. Certificate and Opinion as to Conditions Precedent.

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

                                      -94-


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

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

SECTION 12.05. Statements Required in Certificate and Opinion.

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

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

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

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

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

SECTION 12.06. Rules by Trustee and Agents.

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

SECTION 12.07. Business Days; Legal Holidays.

            A "Business Day" is a day that is not a Legal Holiday. A "Legal
Holiday" is a Saturday, a Sunday or other day on which banking institutions in
New York are authorized or required by law to close. If a payment date is a
Legal Holiday at a place of payment, payment may be made at that place on the
next succeeding day that is not a Legal Holiday, and no interest shall accrue
for the intervening period.

SECTION 12.08. Governing Law.

            THIS INDENTURE AND THE NOTES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE
AND PERFORMED WITHIN THE STATE OF NEW YORK.

                                      -95-


SECTION 12.09. No Adverse Interpretation of Other Agreements.

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

SECTION 12.10. No Recourse Against Others.

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

SECTION 12.11. Successors.

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

SECTION 12.12. Multiple Counterparts.

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

SECTION 12.13. Table of Contents, Headings, etc.

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

                                      -96-


SECTION 12.14. Separability.

            Each provision of this Indenture shall be considered separable and
if for any reason any provision which is not essential to the effectuation of
the basic purpose of this Indenture or the Notes shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.

                            [Signature Pages Follow]

                                      -97-


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

                                          ASHTON WOODS USA L.L.C.

                                          By: _________________________________
                                              Name:
                                              Title:

                                          By: _________________________________
                                              Name:
                                              Title:

                                          ASHTON WOODS FINANCE CO.

                                          By: _________________________________
                                              Name:
                                              Title:

                                          By: _________________________________
                                              Name:
                                              Title:

                                      S-1


                                          BLACK AMBER FLORIDA, INC.
                                          ASHTON BROOKSTONE, INC

                                          By: _________________________________
                                              Name:      Robert Salomon
                                              Title:     Chief Financial Officer

                                          ASHTON ATLANTA RESIDENTIAL, L.L.C.
                                          CANYON REALTY L.L.C.
                                          ASHTON DALLAS RESIDENTIAL L.L.C.
                                          ASHTON HOUSTON RESIDENTIAL L.L.C.
                                          ASHTON HOUSTON DEVELOPMENT L.L.C.
                                          ASHTON WOODS CORPORATE, LLC
                                          ASHTON ORLANDO RESIDENTIAL L.L.C.
                                          ASHTON BURDEN, LLC
                                          ASHTON WOODS ARIZONA L.L.C.
                                          ASHTON TAMPA RESIDENTIAL, LLC
                                          ASHTON DENVER RESIDENTIAL, LLC
                                          ASHTON WOODS FLORIDA L.L.C.
                                          ASHTON WOODS BUTLER L.L.C.
                                          ASHTON WOODS LAKESIDE L.L.C.
                                          ISLEWORTH WEST LIMITED PARTNERSHIP

                                          By: _________________________________
                                              Name:        Robert Salomon
                                              Title:       Manager

                                          ASHTON WOODS CONSTRUCTION, LLC

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

                                          By: _________________________________
                                              Name:     Robert Salomon
                                              Title:    Chief Financial Officer

                                          PINERY JOINT VENTURE

                                          By: ASHTON WOODS HOMES USA L.L.C.,
                                          partner

                                      S-2



                                          By: _________________________________
                                              Name:      Robert Salomon
                                              Title:     Chief Financial Officer

                                          ISLEWORTH WEST LIMITED PARTNERSHIP

                                          By: ASHTON WOODS FLORIDA L.L.C.,
                                          general partner

                                          By: _________________________________
                                              Name:        Robert Salomon
                                              Title:       Manager

                                          ASHTON WOODS ORLANDO LIMITED
                                          PARTNERSHIP

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

                                          By: _________________________________
                                              Name:        Robert Salomon
                                              Title:       Manager

                                      S-3



                                          U.S. BANK NATIONAL ASSOCIATION,
                                          as Trustee

                                          By: _________________________________
                                              Name:
                                              Title:

                                      S-4



                                                                       EXHIBIT A

                                                                     CUSIP

                             ASHTON WOODS USA L.L.C.
                            ASHTON WOODS FINANCE CO.

No.                                                           $

                     9.5% SENIOR SUBORDINATED NOTE DUE 2015

            ASHTON WOODS USA L.L.C., a Nevada limited liability company (the
"Issuer"), and ASHTON WOODS FINANCE CO., a Delaware corporation (the "Co-Issuer"
and, together with the Issuer, the "Issuers"), for value received, promises to
pay to CEDE & CO. or registered assigns the principal sum of $        dollars on
October 1, 2015.

            Interest Payment Dates: April 1 and October 1.

            Record Dates: March 15 and September 15.

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

                                      A-1


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

                                          ASHTON WOODS USA L.L.C.,
                                          as Issuer

                                          By: _________________________________
                                              Name:
                                              Title:

                                          By: _________________________________
                                              Name:
                                              Title:

                                          ASHTON WOODS FINANCE CO.,
                                          as Co-Issuer

                                          By: _________________________________
                                              Name:
                                              Title:

                                          By: _________________________________
                                              Name:
                                              Title:

Dated:

Certificate of Authentication

            This is one of the 9.5% Senior Subordinated Notes due 2015 referred
to in the within-mentioned Indenture.

                                          U.S. BANK NATIONAL ASSOCIATION,
                                          as Trustee

                                          By: _________________________________

Dated:

                                      A-2


                            [FORM OF REVERSE OF NOTE]

                             ASHTON WOODS USA L.L.C.
                            ASHTON WOODS FINANCE CO.

                     9.5% SENIOR SUBORDINATED NOTE DUE 2015

            1. Interest. ASHTON WOODS USA L.L.C., a Nevada limited liability
company (the "Issuer"), and ASHTON WOODS FINANCE CO., a Delaware corporation
(the "Co-Issuer" and, together with the Issuer, the "Issuers"), promises to pay,
until the principal hereof is paid or made available for payment, interest on
the principal amount set forth on the face hereof at a rate of 9.5% per annum.
Interest hereon will accrue from and including the most recent date to which
interest has been paid or, if no interest has been paid, from and including
September 21, 2005 to but excluding the date on which interest is paid. Interest
shall be payable in arrears on each April 1 and October 1, commencing April 1,
2006. Interest will be computed on the basis of a 360-day year of twelve 30-day
months. The Issuers shall pay interest on overdue principal and on overdue
interest (to the full extent permitted by law) at a rate of 9.5% per annum.

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

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

            4. Indenture and Subordination. The Issuers issued the Notes under
an Indenture dated as of September 21, 2005 (the "Indenture") among the Issuers,
the Guarantors (as defined in the Indenture) and the Trustee. This is one of an
issue of Notes of the Issuers issued, or to be issued, under the Indenture. The
terms of the Notes include those stated in the Indenture and those made part of
the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S. Code
Sections 77aaa-77bbbb), as amended from time to time. The Notes are subject to
all such terms, and Holders are referred to the Indenture and such Act for a
statement of them. The payment of the Notes will, to the extent set forth in the
Indenture, be subordinated in right of payment to the prior payment in full in
cash or cash equivalents of all Senior Debt. Capitalized and certain other terms
used herein and not otherwise defined have the meanings set forth in the
Indenture.

            5. Optional Redemption. (a) The Issuer, at its option, may redeem
the Notes, in whole or in part, at any time on or after October 1, 2010 upon not
less than 30 nor more than

                                      A-3


60 days' notice, at the redemption prices (expressed as percentages of principal
amount) set forth below, together, in each case, with accrued and unpaid
interest thereon, if any, to the Redemption Date, if redeemed during the
12-month period beginning on October 1 of each year listed below:



Year                                                              Optional Redemption Price
- ----                                                              -------------------------
                                                               
2010..........................................................           104.750%
2011..........................................................           103.167%
2012..........................................................           101.583%
2013 and thereafter...........................................           100.000%


            (b) At any time or from time to time prior to October 1, 2008, the
Issuer, at its option, may redeem up to 35% of the aggregate principal amount of
the Notes with the net cash proceeds of one or more Qualified Equity Offerings
at a redemption price equal to 109.500% of the principal amount of the Notes to
be redeemed, plus accrued and unpaid interest thereon, if any, to the Redemption
Date; provided, however, that (1) at least 65% of the aggregate principal amount
of Notes issued under the Indenture remains outstanding immediately after the
occurrence of such redemption and (2) the redemption occurs within 90 days of
the date of the closing of any such Qualified Equity Offering.

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

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

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

            8. Registration Rights. Pursuant to a Registration Rights Agreement
among the Issuers, the Guarantors, and UBS Securities LLC and Wachovia Capital
Markets, LLC, the Issuers and the Guarantors will be obligated to consummate an
exchange offer pursuant to which

                                      A-4


the Holder of this Note shall have the right to exchange this Note for notes of
a separate series issued under the Indenture (or a trust indenture substantially
identical to the Indenture in accordance with the terms of the Registration
Rights Agreement) which have been registered under the Securities Act, in like
principal amount and having substantially identical terms as the Notes. The
Holders shall be entitled to receive certain additional interest payments in the
event such exchange offer is not consummated and upon certain other conditions,
all pursuant to and in accordance with the terms of the Registration Rights
Agreement.

            9. Denominations, Transfer, Exchange. The Notes are in registered
form without coupons in denominations of $1,000 and integral multiples of
$1,000. A Holder may transfer or exchange Notes in accordance with the
Indenture. The Registrar may require a Holder, among other things, to furnish
appropriate endorsements and transfer documents and to pay to it any taxes and
fees required by law or permitted by the Indenture. The Registrar need not
register the transfer of or exchange any Notes or portion of a Note selected for
redemption, or register the transfer of or exchange any Notes for a period of 15
days before a mailing of notice of redemption.

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

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

            12. Amendment, Supplement, Waiver, Etc. The Issuers, the Guarantors
and the Trustee (if a party thereto) may, without the consent of the Holders of
any outstanding Notes, amend, waive or supplement the Indenture or the Notes for
certain specified purposes, including, among other things, curing ambiguities,
defects or inconsistencies, maintaining the qualification of the Indenture under
the Trust Indenture Act of 1939, as amended, and making any change that does not
materially and adversely affect the rights of any Holder. Other amendments and
modifications of the Indenture or the Notes may be made by the Issuers, the
Guarantors and the Trustee with the consent of the Holders of not less than a
majority of the aggregate principal amount of the outstanding Notes or
two-thirds of such aggregate principal amount as to amendments or modifications
relating to provisions governing Change of Control Offers, subject to certain
exceptions requiring the consent of the Holders of the particular Notes to be
affected.

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

                                      A-5


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

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

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

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

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

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

            20. Governing Law. This Note shall be governed by and construed in
accordance with the laws of the State of New York, as applied to contracts made
and performed within the State of New York. The Trustee, the Issuers, the
Guarantors and the Holders agree to submit

                                      A-6


to the jurisdiction of the courts of the State of New York in any action or
proceeding arising out of or relating to the Indenture or the Notes.

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

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

            ASHTON WOODS USA L.L.C.
            1080 Holcomb Bridge Road
            Building 200, Suite 350
            Roswell, GA  30076
            Attention: Chief Financial Officer

                                      A-7


                                   ASSIGNMENT

I or we assign and transfer this Note to:

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

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

and irrevocably appoint:
________________________________________________________________________________
________________________________________________________________________________
Agent to transfer this Note on the books of the Issuer. The Agent may substitute
another to act for him.

Date: ________________             Your Signature:________________________
                                                    (Sign exactly as your name
                                                    appears on the other side of
                                                    this Note)

                   Signature Guarantee:_______________________

                               SIGNATURE GUARANTEE

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

                                      A-8


                       OPTION OF HOLDER TO ELECT PURCHASE

            If you want to elect to have all or any part of this Note purchased
by the Issuers pursuant to Section 4.09, Section 4.15 or Section 4.19 of the
Indenture, check the appropriate box:

     [ ] Section 4.09            [ ] Section 4.15           [ ] Section 4.19

            If you want to have only part of the Note purchased by the Issuers
pursuant to Section 4.09, Section 4.15 or Section 4.19 of the Indenture, state
the amount you elect to have purchased:

$______________________________
(multiple of $1,000)

Date:__________________________

               Your Signature:______________________________________________
                              (Sign exactly as your name appears on the face of
                              this Note)

_______________________________
Signature Guaranteed

                               SIGNATURE GUARANTEE

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

                                      A-9


                                                                       EXHIBIT B

                 [FORM OF LEGEND FOR 144A NOTES AND OTHER NOTES
                           THAT ARE RESTRICTED NOTES]

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

                                      B-1


           [FORM OF ASSIGNMENT FOR 144A NOTES AND OTHER NOTES THAT ARE
                                RESTRICTED NOTES]

I or we assign and transfer this Note to:

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

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

and irrevocably appoint:
________________________________________________________________________________
________________________________________________________________________________
Agent to transfer this Note on the books of the Issuer. The Agent may substitute
another to act for him.

                                   [Check One]

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

                                       or

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

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

Date:____________           Your Signature:__________________________________
                                          (Sign exactly as your name
                                          appears on the face of this Note)

Signature Guarantee:___________________________________________________________

                                      B-2


                               SIGNATURE GUARANTEE

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

                                      B-3


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

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

Dated:______________________     _______________________________________________
                                 NOTICE:  To be executed by an executive officer

                                      B-4


                                                                       EXHIBIT C

                     [FORM OF LEGEND FOR REGULATION S NOTE]

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

                                      C-1


                   [FORM OF ASSIGNMENT FOR REGULATION S NOTE]

I or we assign and transfer this Note to:

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

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

and irrevocably appoint:
________________________________________________________________________________
________________________________________________________________________________
Agent to transfer this Note on the books of the Issuer. The Agent may substitute
another to act for him.

                                   [Check One]

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

                                       or

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

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

Date: __________________       Your Signature:__________________________________
                                              (Sign exactly as your name
                                              appears on the face of this Note)

Signature Guarantee:____________________________________________________________

                                      C-2


                               SIGNATURE GUARANTEE

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

                                      C-3


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

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

Dated:______________________     _______________________________________________
                                 NOTICE: To be executed by an executive officer

                                      C-4


                                                                       EXHIBIT D

                        [FORM OF LEGEND FOR GLOBAL NOTE]

            Any Global Note authenticated and delivered hereunder shall bear a
legend (which would be in addition to any other legends required in the case of
a Restricted Note) in substantially the following form:

            This Note is a Global Note within the meaning of the indenture
hereinafter referred to and is registered in the name of a depository or a
nominee of a depository. This Note is not exchangeable for Notes registered in
the name of a person other than the depository or its nominee except in the
limited circumstances described in the indenture, and no transfer of this Note
(other than a transfer of this Note as a whole by the depository to a nominee of
the depository or by a nominee of the depository to the depository or another
nominee of the depository) may be registered except in the limited circumstances
described in the Indenture.

            Unless this certificate is presented by an authorized representative
of the Depository Trust Company (a New York corporation) ("DTC") to the issuer
or its agent for registration of transfer, exchange, or payment, and any
certificate issued is registered in the name of CEDE & CO. or in such other name
as it requested by an authorized representative of DTC (and any payment is made
to CEDE & CO. or such other entity as is requested by an authorized
representative of DTC), any transfer, pledge or other use hereof for value or
otherwise by or to any Person is wrongful inasmuch as the registered owner
hereof, CEDE & CO., has an interest herein.

                                      D-1


                                                                       EXHIBIT E

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

U.S. Bank National Association
Ashton Woods USA L.L.C.
Ashton Woods Finance Co.
c/o U.S. Bank National Association
EP- MN-WS3C
60 Livingston Avenue
St. Paul, MN 55107-1419

Attention: Corporate Trust Department

Ladies and Gentlemen:

            In connection with our proposed purchase of 9.5% Senior Subordinated
Notes due 2015 (the "Notes") of ASHTON WOODS USA L.L.C., a Nevada limited
liability company (the "Issuer"), and ASHTON WOODS FINANCE CO., a Delaware
corporation (the "Co-Issuer" and, together with the Issuer, the "Issuers"), we
confirm that:

            1. We understand that any subsequent transfer of the Notes is
      subject to certain restrictions and conditions set forth in the Indenture
      dated as of September 21, 2005 relating to the Notes and we agree to be
      bound by, and not to offer, resell, pledge or otherwise transfer the Notes
      except in compliance with, such restrictions and conditions and the
      Securities Act of 1933, as amended (the "Securities Act").

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

                                      E-1


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

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

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

            6. We are not acquiring the Notes with a view toward the
      distribution thereof in a transaction that would violate the Securities
      Act or the securities laws of any state of the United States or any other
      applicable jurisdiction.

            You are entitled to rely upon this letter and are irrevocably
authorized to produce this letter or a copy hereof to any interested party in
any administrative or legal proceeding or official inquiry with respect to the
matters covered hereby.

                                          Very truly yours,

                                          [Name of Transferee]

                                          By: _____________________________
                                              Name:
                                              Title:

Date: _______________________

                                      E-2


                                                                       EXHIBIT F

                       Form of Certificate To Be Delivered
                          in Connection with Transfers
                            Pursuant to Regulation S

U.S. Bank National Association
Ashton Woods USA L.L.C.
Ashton Woods Finance Co.
c/o U.S. Bank National Association
EP- MN-WS3C
60 Livingston Avenue
St. Paul, MN 55107-1419

Attention: Corporate Trust Department

Dear Sirs:

            In connection with our proposed sale of $[-] aggregate principal
amount of the 9.5% Senior Subordinated Notes due 2015 (the "Notes") of ASHTON
WOODS USA L.L.C., a Nevada limited liability company (the "Issuer"), and ASHTON
WOODS FINANCE CO., a Delaware corporation (the "Co-Issuer" and, together with
the Issuer, the "Issuers"), we confirm that such sale has been effected pursuant
to and in accordance with Regulation S under the U.S. Securities Act of 1933, as
amended (the "Securities Act"), and, accordingly, we represent that:

            (1) the offer of the Notes was not made to a U.S. person or to a
      person in the United States;

            (2) either (a) at the time the buy offer was originated, the
      transferee was outside the United States or we and any person acting on
      our behalf reasonably believed that the transferee was outside the United
      States, or (b) the transaction was executed in, on or through the
      facilities of a designated off-shore securities market and neither we nor
      any person acting on our behalf knows that the transaction has been
      pre-arranged with a buyer in the United States;

            (3) no directed selling efforts have been made in the United States
      in contravention of the requirements of Rule 904(a) of Regulation S;

            (4) the transaction is not part of a plan or scheme to evade the
      registration requirements of the Securities Act; and

            (5) we have advised the transferee of the transfer restrictions
      applicable to the Notes.

                                      F-1


            You are entitled to rely upon this letter and are irrevocably
authorized to produce this letter or a copy hereof to any interested party in
any administrative or legal proceedings or official inquiry with respect to the
matters covered hereby. Terms used in this certificate have the meanings set
forth in Regulation S.

                                          Very truly yours,

                                          [Name of Transferee]

                                          By: _______________________________

                                      F-2


                                                                       EXHIBIT G

                              NOTATION OF GUARANTEE

            Each of the undersigned (the "Guarantors") hereby jointly and
severally unconditionally guarantees, to the extent set forth in the Indenture
dated as of September 21, 2005 by and among ASHTON WOODS USA L.L.C., a Nevada
limited liability company (the "Issuer"), and ASHTON WOODS FINANCE CO., a
Delaware corporation (the "Co-Issuer" and, together with the Issuer, the
"Issuers"), the Guarantors, as guarantors, and U.S. Bank National Association,
as trustee (the "Trustee") (as amended, restated or supplemented from time to
time, the "Indenture"), and subject to the provisions of the Indenture, (a) the
due and punctual payment of the principal of, and premium, if any, and interest
on the Notes, when and as the same shall become due and payable, whether at
maturity, by acceleration or otherwise, the due and punctual payment of interest
on overdue principal of, and premium and, to the extent permitted by law,
interest, and the due and punctual performance of all other obligations of the
Issuers to the Holders or the Trustee, all in accordance with the terms set
forth in Article Ten of the Indenture, and (b) in case of any extension of time
of payment or renewal of any Notes or any of such other obligations, that the
same will be promptly paid in full when due or performed in accordance with the
terms of the extension or renewal, whether at stated maturity, by acceleration
or otherwise.

            The obligations of the Guarantors to the Holders and to the Trustee
pursuant to this Guarantee and the Indenture are expressly set forth in Article
Ten of the Indenture, and reference is hereby made to the Indenture for the
precise terms and limitations of this Guarantee. Each Holder of the Note to
which this Guarantee is endorsed, by accepting such Note, agrees to and shall be
bound by such provisions.

                         [Signatures on Following Pages]

                                      G-1


            IN WITNESS WHEREOF, each of the Guarantors has caused this Guarantee
to be signed by a duly authorized officer.

                                          BLACK AMBER FLORIDA, INC.
                                          ASHTON BROOKSTONE, INC

                                          By: _________________________________
                                              Name:      Robert Salomon
                                              Title:     Chief Financial Officer

                                          ASHTON ATLANTA RESIDENTIAL, L.L.C.
                                          CANYON REALTY L.L.C.
                                          ASHTON DALLAS RESIDENTIAL L.L.C.
                                          ASHTON HOUSTON RESIDENTIAL L.L.C.
                                          ASHTON HOUSTON DEVELOPMENT L.L.C.
                                          ASHTON WOODS CORPORATE, LLC
                                          ASHTON ORLANDO RESIDENTIAL L.L.C.
                                          ASHTON BURDEN, LLC
                                          ASHTON WOODS ARIZONA L.L.C.
                                          ASHTON TAMPA RESIDENTIAL, LLC
                                          ASHTON DENVER RESIDENTIAL, LLC
                                          ASHTON WOODS FLORIDA L.L.C.
                                          ASHTON WOODS BUTLER L.L.C.
                                          ASHTON WOODS LAKESIDE L.L.C.
                                          ISLEWORTH WEST LIMITED PARTNERSHIP

                                          By: _________________________________
                                              Name:        Robert Salomon
                                              Title:       Manager

                                          ASHTON WOODS CONSTRUCTION, LLC

                                          By: ASHTON WOODS HOMES USA L.L.C.,
                                          sole member

                                          By: _________________________________
                                              Name:      Robert Salomon
                                              Title:     Chief Financial Officer

                                          PINERY JOINT VENTURE

                                      G-2


                                          By: ASHTON WOODS HOMES USA L.L.C.,
                                          partner

                                          By: _________________________________
                                              Name:      Robert Salomon
                                              Title:     Chief Financial Officer

                                          ISLEWORTH WEST LIMITED PARTNERSHIP

                                          By: ASHTON WOODS FLORIDA L.L.C.,
                                          general partner

                                          By: _________________________________
                                              Name:        Robert Salomon
                                              Title:       Manager

                                          ASHTON WOODS ORLANDO LIMITED
                                          PARTNERSHIP

                                          By: ASHTON WOODS LAKESIDE L.L.C.,
                                          general partner

                                          By: __________________________________
                                              Name:        Robert Salomon
                                              Title:       Manager

                                      G-3

EX-4.2

                                                                     EXHIBIT 4.2

                                                                   CUSIP

                             ASHTON WOODS USA L.L.C.
                            ASHTON WOODS FINANCE CO.

No.                                                       $

                     9.5% SENIOR SUBORDINATED NOTE DUE 2015

      ASHTON WOODS USA L.L.C., a Nevada limited liability company (the
"Issuer"), and ASHTON WOODS FINANCE CO., a Delaware corporation (the "Co-Issuer"
and, together with the Issuer, the "Issuers"), for value received, promises to
pay to CEDE & CO. or registered assigns the principal sum of $    dollars on
October 1, 2015.

      Interest Payment Dates: April 1 and October 1.

      Record Dates: March 15 and September 15.

      Reference is made to the further provisions of this Note contained herein,
which will for all purposes have the same effect as if set forth at this place.



      IN WITNESS WHEREOF, the Issuers have caused this Note to be signed
manually or by facsimile by its duly authorized officers.

                                           ASHTON WOODS USA L.L.C.,
                                           as Issuer

                                           By: _________________________________
                                           Name: _______________________________
                                           Title: ______________________________

                                           By: _________________________________
                                           Name: _______________________________
                                           Title: ______________________________

                                           ASHTON WOODS FINANCE CO.,
                                           as Co-Issuer

                                           By: _________________________________
                                           Name: _______________________________
                                           Title: ______________________________

                                           By: _________________________________
                                           Name: _______________________________
                                           Title: ______________________________

Dated:

Certificate of Authentication

      This is one of the 9.5% Senior Subordinated Notes due 2015 referred to in
the within-mentioned Indenture.

                                           U.S. BANK NATIONAL ASSOCIATION,
                                           as Trustee

                                           By: _________________________________

Dated:


                            [FORM OF REVERSE OF NOTE]

                             ASHTON WOODS USA L.L.C.
                            ASHTON WOODS FINANCE CO.

                     9.5% SENIOR SUBORDINATED NOTE DUE 2015

      1. Interest. ASHTON WOODS USA L.L.C., a Nevada limited liability company
(the "Issuer"), and ASHTON WOODS FINANCE CO., a Delaware corporation (the
"Co-Issuer" and, together with the Issuer, the "Issuers"), promises to pay,
until the principal hereof is paid or made available for payment, interest on
the principal amount set forth on the face hereof at a rate of 9.5% per annum.
Interest hereon will accrue from and including the most recent date to which
interest has been paid or, if no interest has been paid, from and including
September 21, 2005 to but excluding the date on which interest is paid. Interest
shall be payable in arrears on each April 1 and October 1, commencing April 1,
2006. Interest will be computed on the basis of a 360-day year of twelve 30-day
months. The Issuers shall pay interest on overdue principal and on overdue
interest (to the full extent permitted by law) at a rate of 9.5% per annum.

      2. Method of Payment. The Issuers will pay interest hereon (except
defaulted interest) to the Persons who are registered Holders at the close of
business on March 15 or September 15 next preceding the interest payment date
(whether or not a Business Day). Holders must surrender Notes to a Paying Agent
to collect principal payments. The Issuers will pay principal and interest in
money of the United States of America that at the time of payment is legal
tender for payment of public and private debts. Interest may be paid by check
mailed to the Holder entitled thereto at the address indicated on the register
maintained by the Registrar for the Notes.

      3. Paying Agent and Registrar. Initially, U.S. Bank National Association
(the "Trustee") will act as a Paying Agent and Registrar. The Issuers may change
any Paying Agent or Registrar without notice. Neither of the Issuers nor any of
their Affiliates may act as Paying Agent or Registrar.

      4. Indenture and Subordination. The Issuers issued the Notes under an
Indenture dated as of September 21, 2005 (the "Indenture") among the Issuers,
the Guarantors (as defined in the Indenture) and the Trustee. This is one of an
issue of Notes of the Issuers issued, or to be issued, under the Indenture. The
terms of the Notes include those stated in the Indenture and those made part of
the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S. Code
Sections 77aaa-77bbbb), as amended from time to time. The Notes are subject to
all such terms, and Holders are referred to the Indenture and such Act for a
statement of them. The payment of the Notes will, to the extent set forth in the
Indenture, be subordinated in right of payment to the prior payment in full in
cash or cash equivalents of all Senior Debt. Capitalized and certain other terms
used herein and not otherwise defined have the meanings set forth in the
Indenture.

      5. Optional Redemption. (a) The Issuer, at its option, may redeem the
Notes, in whole or in part, at any time on or after October 1, 2010 upon not
less than 30 nor more than



60 days' notice, at the redemption prices (expressed as percentages of principal
amount) set forth below, together, in each case, with accrued and unpaid
interest thereon, if any, to the Redemption Date, if redeemed during the
12-month period beginning on October 1 of each year listed below:



Year                                             Optional Redemption Price
- --------------------------------------------     -------------------------
                                              
2010........................................             104.750%
2011........................................             103.167%
2012........................................             101.583%
2013 and thereafter.........................             100.000%


      (b) At any time or from time to time prior to October 1, 2008, the Issuer,
at its option, may redeem up to 35% of the aggregate principal amount of the
Notes with the net cash proceeds of one or more Qualified Equity Offerings at a
redemption price equal to 109.500% of the principal amount of the Notes to be
redeemed, plus accrued and unpaid interest thereon, if any, to the Redemption
Date; provided, however, that (1) at least 65% of the aggregate principal amount
of Notes issued under the Indenture remains outstanding immediately after the
occurrence of such redemption and (2) the redemption occurs within 90 days of
the date of the closing of any such Qualified Equity Offering.

      (c) In the event of a redemption of fewer than all of the Notes, the
Trustee shall select the Notes to be redeemed in compliance with the
requirements of the principal national securities exchange, if any, while such
Notes are listed or, if such Notes are not then listed on a national securities
exchange, on a pro rata basis, by lot or in such other manner as the Trustee
shall deem fair and appropriate; provided, however that no Notes of a principal
amount of $1,000 or less shall be redeemed in part. The Notes will be redeemable
in whole or in part upon not less than 30 nor more than 60 days' prior written
notice, mailed by first class mail to a Holder's last address as it shall appear
on the register maintained by the Registrar of the Notes. On and after any
redemption date, interest will cease to accrue on the Notes or portions thereof
called for redemption unless the Issuers shall fail to redeem any such Note.

      6. Notice of Redemption. Notice of redemption will be mailed by
first-class mail at least 30 days but not more than 60 days before the
Redemption Date to each Holder of Notes to be redeemed at his registered
address, except that redemption notices may be mailed more than 60 days prior to
a Redemption Date if the notice is issued in connection with a satisfaction and
discharge of the Indenture. On and after the Redemption Date, unless the Issuers
default in making the redemption payment, interest ceases to accrue on Notes or
portions thereof called for redemption.

      7. Offers To Purchase. The Indenture provides that upon the occurrence of
a Change of Control or an Asset Sale and subject to further limitations
contained therein, the Issuers shall make an offer to purchase outstanding Notes
in accordance with the procedures set forth in the Indenture.

      8. Registration Rights. Pursuant to a Registration Rights Agreement among
the Issuers, the Guarantors, and UBS Securities LLC and Wachovia Capital
Markets, LLC, the Issuers and the Guarantors will be obligated to consummate an
exchange offer pursuant to which



the Holder of this Note shall have the right to exchange this Note for notes of
a separate series issued under the Indenture (or a trust indenture substantially
identical to the Indenture in accordance with the terms of the Registration
Rights Agreement) which have been registered under the Securities Act, in like
principal amount and having substantially identical terms as the Notes. The
Holders shall be entitled to receive certain additional interest payments in the
event such exchange offer is not consummated and upon certain other conditions,
all pursuant to and in accordance with the terms of the Registration Rights
Agreement.

      9. Denominations, Transfer, Exchange. The Notes are in registered form
without coupons in denominations of $1,000 and integral multiples of $1,000. A
Holder may transfer or exchange Notes in accordance with the Indenture. The
Registrar may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and to pay to it any taxes and fees required
by law or permitted by the Indenture. The Registrar need not register the
transfer of or exchange any Notes or portion of a Note selected for redemption,
or register the transfer of or exchange any Notes for a period of 15 days before
a mailing of notice of redemption.

      10. Persons Deemed Owners. The registered Holder of this Note may be
treated as the owner of this Note for all purposes.

      11. Unclaimed Money. If money for the payment of principal or interest
remains unclaimed for two years, the Trustee will pay the money back to the
Issuers at its written request. After that, Holders entitled to the money must
look to the Issuers for payment as general creditors unless an "abandoned
property" law designates another Person.

      12. Amendment, Supplement, Waiver, Etc. The Issuers, the Guarantors and
the Trustee (if a party thereto) may, without the consent of the Holders of any
outstanding Notes, amend, waive or supplement the Indenture or the Notes for
certain specified purposes, including, among other things, curing ambiguities,
defects or inconsistencies, maintaining the qualification of the Indenture under
the Trust Indenture Act of 1939, as amended, and making any change that does not
materially and adversely affect the rights of any Holder. Other amendments and
modifications of the Indenture or the Notes may be made by the Issuers, the
Guarantors and the Trustee with the consent of the Holders of not less than a
majority of the aggregate principal amount of the outstanding Notes or
two-thirds of such aggregate principal amount as to amendments or modifications
relating to provisions governing Change of Control Offers, subject to certain
exceptions requiring the consent of the Holders of the particular Notes to be
affected.

      13. Restrictive Covenants. The Indenture imposes certain limitations on
the ability of the Issuer and its Restricted Subsidiaries to, among other
things, incur additional Indebtedness, make payments in respect of their Equity
Interests or certain Indebtedness, make certain Investments, create or incur
Liens, enter into transactions with Affiliates, enter into agreements
restricting the ability of Restricted Subsidiaries to pay dividends and make
distributions and on the ability of the Issuer to merge or consolidate with any
other Person or transfer all or substantially all of the Issuer's, the
Co-Issuer's or any Guarantor's assets. Such limitations are subject to a number
of important qualifications and exceptions. Pursuant to Section 4.04, the
Issuers must annually report to the Trustee on compliance with such limitations.



      14. Successor Corporation. When a successor corporation assumes all the
obligations of its predecessor under the Notes and the Indenture and the
transaction complies with the terms of Article Five of the Indenture, the
predecessor corporation will, except as provided in Article Five, be released
from those obligations.

      15. Defaults and Remedies. Events of Default are set forth in the
Indenture. Subject to certain limitations in the Indenture, if an Event of
Default (other than an Event of Default specified in Section 6.01(7) or (8) with
respect to the Issuer) occurs and is continuing, the Trustee or the Holders of
not less than 25% in aggregate principal amount of the outstanding Notes may, by
written notice to the Trustee and the Issuers, and the Trustee upon the request
of the Holders of not less than 25% in aggregate principal amount of the
outstanding Notes shall, declare all principal of and accrued interest on all
Notes to be immediately due and payable and such amounts shall become
immediately due and payable. If an Event of Default specified in Section 6.01(7)
or (8) occurs with respect to the Issuer, the principal amount of and interest
on, all Notes shall ipso facto become and be immediately due and payable without
any declaration or other act on the part of the Trustee or any Holder. Holders
may not enforce the Indenture or the Notes except as provided in the Indenture.
The Trustee may require indemnity satisfactory to it before it enforces the
Indenture or the Notes. Subject to certain limitations, Holders of a majority in
principal amount of the then outstanding Notes may direct the Trustee in its
exercise of any trust or power. The Trustee may withhold from Holders notice of
any continuing default (except a default in payment of principal, premium, if
any, or interest on the Notes or a default in the observance or performance of
any of the obligations of the Issuers under Article Five of the Indenture) if it
determines that withholding notice is in their best interests.

      16. Trustee Dealings with Company. The Trustee, in its individual or any
other capacity, may make loans to, accept deposits from, and perform services
for the Issuers or their Affiliates, and may otherwise deal with the Issuers or
their Affiliates, as if it were not Trustee.

      17. Discharge. The Issuers' obligations pursuant to the Indenture will be
discharged, except for obligations pursuant to certain sections thereof, subject
to the terms of the Indenture, upon the payment of all the Notes or upon the
irrevocable deposit with the Trustee of United States dollars or U.S. Government
Obligations sufficient to pay when due principal of and interest on the Notes to
maturity or redemption, as the case may be.

      18. Guarantees. This Note will be entitled to the benefits of certain
Guarantees made for the benefit of the Holders. Reference is hereby made to the
Indenture for a statement of the respective rights, limitations of rights,
duties and obligations thereunder of the Guarantors, the Trustee and the
Holders.

      19. Authentication. This Note shall not be valid until the Trustee
signs the certificate of authentication on the other side of this Note.

      20. Governing Law. This Note shall be governed by and construed in
accordance with the laws of the State of New York, as applied to contracts made
and performed within the State of New York. The Trustee, the Issuers, the
Guarantors and the Holders agree to



submit to the jurisdiction of the courts of the State of New York in any action
or proceeding arising out of or relating to the Indenture or the Notes.

      21. Abbreviations. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (= tenants in common), TENANT (= tenants
by the entireties), JT TEN (= joint tenants with right of survivorship and not
as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to
Minors Act).

      The Issuers will furnish to any Holder upon written request and without
charge a copy of the Indenture. Requests may be made to:

      ASHTON WOODS USA L.L.C.
      1080 Holcomb Bridge Road
      Building 200, Suite 350
      Roswell, GA  30076
      Attention: Chief Financial Officer



                                   ASSIGNMENT

I or we assign and transfer this Note to:

                (Insert assignee's social security or tax I.D. number)
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
                (Print or type name, address and zip code of assignee)

and irrevocably appoint:

_______________________________________________________________________________
_______________________________________________________________________________

Agent to transfer this Note on the books of the Issuer. The Agent may substitute
another to act for him.

Date:________________                Your Signature:____________________________
                                                   (Sign exactly as your name
                                                   appears on the other side of
                                                   this Note)

               Signature Guarantee:_________________


                               SIGNATURE GUARANTEE

Signatures must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Registrar, which requirements include membership or
participation in the Security Transfer Agent Medallion Program ("STAMP") or such
other "signature guarantee program" as may be determined by the Registrar in
addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.



                       OPTION OF HOLDER TO ELECT PURCHASE

      If you want to elect to have all or any part of this Note purchased by the
Issuers pursuant to Section 4.09, Section 4.15 or Section 4.19 of the Indenture,
check the appropriate box:

  [ ] Section 4.09      [ ] Section 4.15        [ ] Section 4.19

      If you want to have only part of the Note purchased by the Issuers
pursuant to Section 4.09, Section 4.15 or Section 4.19 of the Indenture, state
the amount you elect to have purchased:

$______________________
 (multiple of $1,000)

Date:__________________

                Your Signature:_______________________________________________
                               (Sign exactly as your name appears on the face
                                of this Note)
________________________________
Signature Guaranteed

                               SIGNATURE GUARANTEE

Signatures must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Registrar, which requirements include membership or
participation in the Security Transfer Agent Medallion Program ("STAMP") or such
other "signature guarantee program" as may be determined by the Registrar in
addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.



                              NOTATION OF GUARANTEE

      Each of the undersigned (the "Guarantors") hereby jointly and severally
unconditionally guarantees, to the extent set forth in the Indenture dated as of
September 21, 2005 by and among ASHTON WOODS USA L.L.C., a Nevada limited
liability company (the "Issuer"), and ASHTON WOODS FINANCE CO., a Delaware
corporation (the "Co-Issuer" and, together with the Issuer, the "Issuers"), the
Guarantors, as guarantors, and U.S. Bank National Association, as trustee (the
"Trustee") (as amended, restated or supplemented from time to time, the
"Indenture"), and subject to the provisions of the Indenture, (a) the due and
punctual payment of the principal of, and premium, if any, and interest on the
Notes, when and as the same shall become due and payable, whether at maturity,
by acceleration or otherwise, the due and punctual payment of interest on
overdue principal of, and premium and, to the extent permitted by law, interest,
and the due and punctual performance of all other obligations of the Issuers to
the Holders or the Trustee, all in accordance with the terms set forth in
Article Ten of the Indenture, and (b) in case of any extension of time of
payment or renewal of any Notes or any of such other obligations, that the same
will be promptly paid in full when due or performed in accordance with the terms
of the extension or renewal, whether at stated maturity, by acceleration or
otherwise.

      The obligations of the Guarantors to the Holders and to the Trustee
pursuant to this Guarantee and the Indenture are expressly set forth in Article
Ten of the Indenture, and reference is hereby made to the Indenture for the
precise terms and limitations of this Guarantee. Each Holder of the Note to
which this Guarantee is endorsed, by accepting such Note, agrees to and shall be
bound by such provisions.

                         [Signatures on Following Pages]



      IN WITNESS WHEREOF, each of the Guarantors has caused this Guarantee to be
signed by a duly authorized officer.

                             BLACK AMBER FLORIDA, INC.
                             ASHTON BROOKSTONE, INC

                             By:  _____________________________________________
                                  Name:       Robert Salomon
                                  Title:      Chief Financial Officer

                             ASHTON ATLANTA RESIDENTIAL, L.L.C.
                             CANYON REALTY L.L.C.
                             ASHTON DALLAS RESIDENTIAL L.L.C.
                             ASHTON HOUSTON RESIDENTIAL L.L.C.
                             ASHTON HOUSTON DEVELOPMENT L.L.C.
                             ASHTON WOODS CORPORATE, LLC
                             ASHTON ORLANDO RESIDENTIAL L.L.C.
                             ASHTON BURDEN, LLC
                             ASHTON WOODS ARIZONA L.L.C.
                             ASHTON TAMPA RESIDENTIAL, LLC
                             ASHTON DENVER RESIDENTIAL, LLC
                             ASHTON WOODS FLORIDA L.L.C.
                             ASHTON WOODS BUTLER L.L.C.
                             ASHTON WOODS LAKESIDE L.L.C.
                             ISLEWORTH WEST LIMITED PARTNERSHIP

                             By:  _____________________________________________
                                  Name:       Robert Salomon
                                  Title:      Manager

                             ASHTON WOODS CONSTRUCTION, LLC

                             By: ASHTON WOODS HOMES USA L.L.C., sole
                             member

                             By:  _____________________________________________
                                  Name:       Robert Salomon
                                  Title:      Chief Financial Officer

                             PINERY JOINT VENTURE



                             By: ASHTON WOODS HOMES USA L.L.C., partner

                             By:  _____________________________________________
                                  Name:       Robert Salomon
                                  Title:      Chief Financial Officer

                             ISLEWORTH WEST LIMITED PARTNERSHIP

                             By: ASHTON WOODS FLORIDA L.L.C., general
                             partner

                             By:  _____________________________________________
                                  Name:       Robert Salomon
                                  Title:      Manager

                             ASHTON WOODS ORLANDO LIMITED
                             PARTNERSHIP

                             By: ASHTON WOODS LAKESIDE L.L.C., general
                             partner

                             By:  _____________________________________________
                                  Name:       Robert Salomon
                                  Title:      Manager

EX-4.3

                                                                     EXHIBIT 4.3

================================================================================

                          REGISTRATION RIGHTS AGREEMENT

                         Dated as of September 21, 2005

                                  By and Among

                            ASHTON WOODS USA L.L.C.,

                            ASHTON WOODS FINANCE CO.

                           the GUARANTORS named herein

                                       and

                               UBS SECURITIES LLC

                                       and

                         WACHOVIA CAPITAL MARKETS, LLC,
                              as Initial Purchasers

                     9.5% Senior Subordinated Notes due 2015

================================================================================



                                TABLE OF CONTENTS

                                                                         Page
                                                                         ----
Section 1.        Definitions.............................................. 1

Section 2.        Exchange Offer........................................... 4

Section 3.        Shelf Registration....................................... 7

Section 4.        Additional Interest...................................... 8

Section 5.        Registration Procedures.................................. 9

Section 6.        Registration Expenses................................... 18

Section 7.        Indemnification......................................... 18

Section 8.        Rules 144 and 144A...................................... 22

Section 9.        Underwritten Registrations.............................. 22

Section 10.       Miscellaneous........................................... 22

         (a)      No Inconsistent Agreements.............................. 22
         (b)      Adjustments Affecting Registrable Notes................. 23
         (c)      Amendments and Waivers.................................. 23
         (d)      Notices................................................. 23
         (e)      Guarantors.............................................. 24
         (f)      Successors and Assigns.................................. 24
         (g)      Counterparts............................................ 25
         (h)      Headings................................................ 25
         (i)      GOVERNING LAW........................................... 25
         (j)      Severability............................................ 25
         (k)      Securities Held by the Issuers or Their Affiliates...... 25
         (l)      Third-Party Beneficiaries............................... 25
         (m)      Entire Agreement........................................ 25

SIGNATURES............................................................... S-1

                                                       -i-



                          REGISTRATION RIGHTS AGREEMENT

            This Registration Rights Agreement (this "Agreement") is dated as of
September 21, 2005, by and among ASHTON WOODS USA L.L.C., a Nevada limited
liability company (the "Company"), ASHTON WOODS FINANCE CO., a Delaware
corporation, (the "Co-Issuer"), and each of the Guarantors (as defined herein)
(the Company, the Co-Issuer and the Guarantors are referred to collectively
herein as the "Issuers"), on the one hand, and UBS SECURITIES LLC (the
"Representative") and WACHOVIA CAPITAL MARKETS, LLC (together with the
Representative, the "Initial Purchasers"), on the other hand.

            This Agreement is entered into in connection with the Purchase
Agreement, dated as of September 16, 2005, by and among the Issuers and the
Initial Purchasers (the "Purchase Agreement"), relating to the offering of
$100,000,000 aggregate principal amount of 9.5% Senior Subordinated Notes due
2015 of the Company and the Co-Issuer (including the guarantees thereof by the
Guarantors, the "Notes"). The execution and delivery of this Agreement is a
condition to the Initial Purchasers' obligation to purchase the Notes under the
Purchase Agreement.

            The parties hereby agree as follows:

      Section 1. Definitions

            As used in this Agreement, the following terms shall have the
following meanings:

            "action" shall have the meaning set forth in Section 7(c) hereof.

            "Additional Interest" shall have the meaning set forth in Section
4(a) hereof.

            "Advice" shall have the meaning set forth in Section 5 hereof.

            "Additional Interest Payment Date" shall have the meaning set forth
in Section 4(b) 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.

            "Co-Issuer" shall have the meaning set forth in the introductory
paragraph hereto and shall also include the Co-Issuer's permitted successors and
assigns.

            "Company" shall have the meaning set forth in the introductory
paragraph hereto and shall also include the Company's permitted successors and
assigns.



                                      -2-

            "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 Section
3(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 subsidiary of the Company listed on the
signature page to this Agreement and each Person who executes and delivers a
counterpart of this Agreement after the date hereof 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 September 21,
2005, by and among the Issuers and U.S. Bank National Association, as trustee,
pursuant to which the Notes are being issued, as amended or supplemented from
time to time in accordance with the terms thereof.

            "Initial Purchasers" shall have the meaning set forth in the first
introductory paragraph hereof.

            "Inspectors" shall have the meaning set forth in Section 5(n)
hereof.

            "Issue Date" shall mean September 21, 2005, the date of original
issuance of the Notes.

            "Issuers" shall have the meaning set forth in the first 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.

            "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.



                                      -3-

            "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.

            "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 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.



                                      -4-

            "Representative" shall have the meaning set forth in the
introductory paragraph hereto.

            "Requesting Participating Broker-Dealer" shall have the meaning set
forth in Section 2(b) hereof.

            "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" shall have the meaning set forth in Section
3(a) hereof.

            "Shelf Registration Statement" shall mean a Registration Statement
filed in connection with a Shelf Registration.

            "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 Issuers are sold to an underwriter for
reoffering to the public.

      Section 2. Exchange Offer

            (a) Unless the Exchange Offer would violate applicable law or
interpretation of the staff of the Commission, the Issuers shall (i) file a
Registration Statement (the "Exchange Offer Registration Statement") 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 shall not contain
restrictive legends, terms with respect to transfer restrictions or Additional
Interest upon a



                                      -5-

Registration Default), (ii) use their reasonable best efforts to cause the
Exchange Offer Registration Statement to be declared effective under the
Securities Act and (iii) use their reasonable best efforts to consummate the
Exchange Offer within 210 days after the Issue Date. As soon as reasonably
practicable upon the Exchange Offer Registration Statement being declared
effective by the Commission, the Issuers will offer the Exchange Notes in
exchange for surrender of the Notes. The Issuers shall keep the Exchange Offer
open for not less than 30 days (or longer if required by applicable law) 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 Issuers in writing 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 provisions of the Securities Act, (iii) it is not an affiliate
of the Issuers as defined by Rule 405 of the Securities Act, 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 and (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.

            (b) The Issuers and the Initial Purchasers acknowledge that the
staff of the Commission has taken the position that any broker-dealer that
elects to exchange Notes that were acquired by such broker-dealer for its own
account as a result of market-making or other trading activities for Exchange
Notes in the Exchange Offer (a "Participating Broker-Dealer") may be deemed to
be an "underwriter" within the meaning of the Securities Act and must deliver a
prospectus meeting the requirements of the Securities Act in connection with any
resale of such Exchange Notes (other than a resale of an unsold allotment
resulting from the original offering of the Notes). The Issuers and the Initial
Purchasers also acknowledge that the staff of the Commission has taken the
position that if the Prospectus contained in the Exchange Offer Registration
Statement includes a plan of distribution containing a statement to the above
effect and the means by which Participating Broker-Dealers may resell the
Exchange Notes, without naming the Participating Broker-Dealers or specifying
the amount of Exchange Notes owned by them, such Prospectus may be delivered by
Participating Broker-Dealers to satisfy their prospectus delivery obligations
under the Securities Act in connection with resales of Exchange Notes for their
own accounts, so long as the Prospectus otherwise meets the requirements of the
Securities Act.

            In light of the foregoing, if requested by a Participating
Broker-Dealer (a "Requesting Participating Broker-Dealer"), the Issuers agree to
use their reasonable best efforts to keep the Exchange Offer Registration
Statement continuously effective for a period necessary to comply with
applicable law in connection with such resales but in no event more than 180
days after the date on which the Exchange Registration Statement is declared
effective, or such longer period if extended pursuant to any Delay Period in
accordance with the last paragraph of Section 5 hereof (such period, the
"Applicable Period"), or such earlier date as each Requesting Participating
Broker-Dealer shall have notified the Company in writing that such Requesting
Participating Broker-Dealer has resold all Exchange Notes acquired by it in the
Exchange Offer. The Issuers shall include a plan of distribution



                                      -6-

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 Initial
Purchaser or any other 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 Issuers upon the request of the Initial
Purchasers or any such Holder, as the case may be, shall simultaneously with the
delivery of the Exchange Notes in the Exchange Offer, issue and deliver to the
Initial Purchasers or any such Holder, as the case may be, in exchange (the
"Private Exchange") for such Notes held by such Initial Purchaser or any such
Holder a like principal amount of notes (the "Private Exchange Notes") of the
Issuers that are identical in all material respects to the Exchange Notes except
that the Private Exchange Notes may be subject to restrictions on transfer and
bear a legend to such effect. 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 (if permitted by the CUSIP Service Bureau).

            Upon consummation of the Exchange Offer in accordance with this
Section 2, the Issuers shall have no further registration obligations other than
the Issuers' continuing registration obligations with respect to (i) Private
Exchange Notes, (ii) Exchange Notes held by Participating Broker-Dealers and
(iii) Notes or Exchange Notes as to which clause (c)(iv) of this Section 2
applies.

            In connection with the Exchange Offer, the Issuers 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
      5:00 p.m., 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 Notes validly tendered and not validly
      withdrawn by the Holders 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



                                      -7-

            (3) cause the Trustee to authenticate and deliver promptly to each
      such Holder of Notes, Exchange Notes or Private Exchange Notes, as the
      case may be, equal in principal amount to the Registrable 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 and (iii) all governmental approvals shall have been obtained, which
approvals the Company deems necessary for the consummation of the Exchange Offer
or Private Exchange.

            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 (a) the Exchange Notes shall not be subject to the
transfer restrictions set forth in the Indenture and (b) the Private Exchange
Notes shall be subject to the transfer restrictions set forth in the Indenture.
The Indenture or such indenture shall provide that 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 210 days of the Issue Date, (iii) any Holder notifies the
Company prior to the 20th day following consummation of the Exchange Offer 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 who 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 within the meaning of the Securities
Act) or (v) any Initial Purchaser so requests with respect to Notes or Private
Exchange Notes that have, or that are reasonably likely to be determined to
have, the status of unsold allotments in an initial distribution (each such
event referred to in clauses (i) through (v) of this sentence, a "Shelf Filing
Event"), then the Issuers shall file a Shelf Registration pursuant to Section 3
hereof.

      Section 3. Shelf Registration

            If at any time a Shelf Filing Event shall occur, then:

            (a) Shelf Registration. 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 (the "Shelf Registration"). The Shelf Registration shall be



                                      -8-

on Form S-1 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 Shelf Registration.

            (b) The Issuers shall use all their reasonable best efforts (x) to
cause the Shelf Registration to be declared effective under the Securities Act
on or prior to the later of (A) the 210th day after the Issue Date and (B) the
120th day after the occurrence of the applicable Shelf Filing Event and (y) to
keep the Shelf Registration continuously effective under the Securities Act for
the period ending on the date which is two years from the Issue Date, subject to
extension pursuant to the penultimate paragraph of Section 5 hereof (the
"Effectiveness Period"), or such shorter period ending when all Registrable
Notes covered by the Shelf Registration have been sold in the manner set forth
and as contemplated in the Shelf Registration or such shorter period provided by
the Commission as a result of the applicable provisions of Rule 144(k) being
amended or revised to reduce the two year holding period set forth therein;
provided, however, that (i) the Effectiveness Period in respect of the Shelf
Registration 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 Shelf Registration Statement by written notice
to the Holders solely (A) as a result of the filing of a post-effective
amendment to the Shelf Registration Statement to incorporate annual audited
financial information with respect to the Company where such post-effective
amendment is not yet effective and needs to be declared effective to permit
Holders to use the related Prospectus or (B) to the extent and for so long as
permitted by the penultimate paragraph of Section 5.

            (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 Shelf Registration Statement or by any underwriter of such
Registrable Notes.

      Section 4. Additional Interest

            (a) The Issuers and the Initial Purchasers agree that the Holders
will suffer damages if the Issuers fail to fulfill their obligations under
Section 2 or Section 3 hereof and that it would not be feasible to ascertain the
extent of such damages with precision. Accordingly, the Issuers agree that if:

            (i) the Exchange Offer is not consummated on or prior to the 210th
      day following the Issue Date, or, if that day is not a Business Day, the
      next day that is a Business Day; or

            (ii) the Shelf Registration is required to be filed but is not
      declared effective within the time period specified in Section 3(b)(x), or
      is declared effective by such date but thereafter ceases to be effective
      or usable (unless the Shelf Registration ceases to be effective or usable
      as specifically permitted by Section 3(b)(ii)(A) or the penultimate
      paragraph of Section 5 hereof),



                                      -9-

(each such event referred to in clauses (i) and (ii) a "Registration Default"),
additional interest in the form of additional cash interest ("Additional
Interest") will accrue on the affected Registrable Notes. The rate of Additional
Interest will be 0.25% per annum for the first 90-day period immediately
following the occurrence of a Registration Default, increasing by an additional
0.25% per annum with respect to each subsequent 90-day period 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, (2) the date
on which such Registrable Note ceases to be a Registrable Note or otherwise
become freely transferable by Holders other than affiliates of the Issuers
without further registration under the Securities Act or (3) the date on which
such is held by an affiliate of the Issuers. If, after the cure of all
Registration Defaults then in effect, there is a subsequent Registration
Default, the rate of Additional Interest for such subsequent Registration
Default shall initially be 0.25% regardless of the rate in effect with respect
to any prior Registration Default at the time of cure of such Registration
Default and shall increase in the manner and be subject to the maximum
Additional Interest rate contained in the preceding sentence.

            Notwithstanding the foregoing, (1) the amount of Additional Interest
payable shall not increase because more than one Registration Default has
occurred and is pending and (2) a Holder of Registrable Notes that is not
entitled to the benefits of the Shelf Registration Statement (e.g., such Holder
has not elected to include information) shall not be entitled to Additional
Interest with respect to a Registration Default that pertains to the Shelf
Registration Statement.

            (b) So long as Notes remain outstanding, the Company shall notify
the Trustee within five Business Days after each and every date on which an
event occurs in respect of which Additional Interest is required to be paid. Any
amounts of Additional Interest due pursuant to clauses (a)(i) or (a)(ii) of this
Section 4 will be payable in cash semi-annually on each April 1 and October 1
(each a "Additional Interest Payment Date"), commencing with the first such date
occurring after any such Additional Interest commences to accrue, to Holders to
whom regular interest is payable on such Additional Interest Payment Date with
respect to Notes that are Registrable Notes. The amount of Additional Interest
for each Registrable Note will be determined by multiplying the applicable rate
of Additional Interest by the aggregate principal amount of such Registrable
Note outstanding on the Additional Interest Payment Date following such
Registration Default in the case of the first such payment of Additional
Interest with respect to a Registration Default (and thereafter at the next
succeeding Additional Interest Payment Date until the cure of such Registration
Default), and multiplying the product of the foregoing by a fraction, the
numerator of which is the number of days such Additional Interest rate was
applicable during such period (determined on the basis of a 360-day year
comprised of twelve 30-day months and, in the case of a partial month, the
actual number of days elapsed), and the denominator of which is 360.

      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:



                                      -10-

            (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 Issuers 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 (if
      requested by any such person) 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.

            (b) Prepare and file with the Commission such amendments and
      post-effective amendments to each Shelf Registration Statement or Exchange
      Offer Registration Statement, as the case may be, as may be necessary to
      keep such Registration Statement continuously effective for the
      Effectiveness Period or the Applicable Period, as the case may be; cause
      the related Prospectus to be supplemented by any Prospectus supplement
      required by applicable law, and as so supplemented to be filed pursuant to
      Rule 424 (or any similar provisions then in force) promulgated under the
      Securities Act; and comply with the applicable 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 or supplemented.

            (c) If (1) a Shelf Registration 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 Company has received written notice that such Broker-Dealer will
      be a Participating Broker-Dealer in the applicable Exchange Offer, notify
      the selling Holders of Registrable Notes, or each such Participating
      Broker-Dealer, as the case may be, their counsel (if such counsel is known
      to the Issuers) 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, obtain, at the sole
      expense of the Issuers, one conformed copy of such Registration



                                      -11-

      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;
      provided that with respect to (v) and (vi), the Issuers shall not be
      required to provide any information the provision of which would violate
      Regulation FD under the Exchange Act.

            (d) If (1) a Shelf Registration 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 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 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) promptly incorporate in such Registration Statement or Prospectus
      a prospectus supplement or post-effective amendment such information as
      the



                                      -12

      managing underwriter or underwriters (if any), such Holders or any
      Participating Broker-Dealer, as the case may be (based upon advice of
      counsel), determine is reasonably required to be included therein and (ii)
      make all required filings of such prospectus supplement or such
      post-effective amendment with the Commission 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 written opinion of counsel to the Issuers,
      violate applicable laws.

            (f) If (1) a Shelf Registration 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 or each such Participating Broker-Dealer, as
      the case may be, who so requests, their counsel (if requested by any such
      person) and each managing underwriter, if any, at the sole expense of the
      Issuers, 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 all exhibits.

            (g) If (1) a Shelf Registration 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 or each such Participating Broker-Dealer, as
      the case may be, their respective counsel (if requested) and the
      underwriters, if any, at the sole expense of the Issuers, as many copies
      of the Prospectus or Prospectuses (including each form of preliminary
      prospectus) and each amendment or supplement thereto and any documents
      incorporated by reference therein as such Persons may reasonably request;
      and, subject to the last paragraph of this Section 5, the Issuers hereby
      consent to the use of such Prospectus and each amendment or supplement
      thereto 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 covered by, or the sale by Participating
      Broker-Dealers of the Exchange Notes 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; provided,



                                      -13-

      however, that where Exchange Notes or Registrable Notes are offered other
      than through an underwritten offering, the Issuers agree to cause the
      Issuers' 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 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 request at least two Business Days prior to any sale of such
      Registrable 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 Issuers will cooperate in all reasonable respects with the filing of
      such Registration Statement and the granting of such approvals.

            (k) If (1) a Shelf Registration 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 Issuers, 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.



                                      -14-

            (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, enter into an underwriting
      agreement as is customary in underwritten offerings of debt securities
      similar to the Notes and take all such other actions as are reasonably
      requested by the managing underwriter or underwriters in order to expedite
      or facilitate the registration or the disposition of such Registrable
      Notes and (i) make such representations and warranties to the underwriter
      or underwriters (and to any Holder that has advised the Company that such
      Holder may have a "due diligence" defense under Section 11 of the
      Securities Act), 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; (ii) use their reasonable best efforts to obtain the written
      opinions of counsel to the Issuers and written updates thereof in form,
      scope and substance reasonably satisfactory to the managing underwriter or
      underwriters, addressed to the underwriters (and to any Holder that has
      advised the Company that such Holder may have a "due diligence" defense
      under Section 11 of the Securities Act) 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) 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 Issuers (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 (and to any Holder that has advised
      the Company that such Holder may have a "due diligence" defense under
      Section 11 of the Securities Act), such letters to be in customary form
      and covering matters of the type customarily covered in "cold comfort"
      letters in connection with underwritten offerings; and (iv) if an
      underwriting agreement is entered into, the same shall 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) with respect to all parties to be
      indemnified pursuant to said Section; provided that the Issuers shall not
      be required to provide indemnification to any underwriter selected in
      accordance with the provisions of Section 9 hereof with respect
      to information relating to such underwriter furnished in writing to the
      Company by or on behalf of such underwriter expressly for inclusion in
      such Registration Statement. The above shall be done at each closing under
      such underwriting agreement, or as and to the extent required thereunder.



                                      -15-

            (n) If (1) a Shelf Registration 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 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 that it will not disclose, or use
      in connection with any market transactions in violation of any applicable
      securities laws, 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 material 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 the opinion of counsel for an Inspector 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 disclosure by an
      Inspector or an "affiliate" (as defined in Rule 405 under the Securities
      Act) thereof; provided, however, that (i) each Inspector shall agree to
      use reasonable best efforts to provide notice to the Company of the
      potential disclosure of any information by such Inspector pursuant to
      clause (i), (ii) or (iii) of this sentence to permit the Issuers to obtain
      a protective order (or waive the provisions of this paragraph (n)) and
      (ii) each 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; provided, further, that, to the extent the
      foregoing shall be made contemporaneously by more than two Holders, there
      shall be one attorney (plus any local counsel) and one accountant retained
      by all Holders to make such investigation.

            (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(a) 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 re-



                                      -16-

      quired to effect such changes, and all other forms and documents required
      to be filed with the Commission to enable such indenture to be so
      qualified in a timely manner.

            (p) Comply with all applicable rules and regulations of the
      Commission and make generally available to the Company's securityholders
      earnings statements satisfying the provisions of Section 11(a) of the
      Securities Act and Rule 158 thereunder (or any similar rule promulgated
      under the Securities Act) no later than 45 days after the end of any
      12-month period (or 90 days after the end of any 12-month period if such
      period is a fiscal year) (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, which statements shall cover said 12-month periods
      consistent with the requirements of Rule 158.

            (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; provided that 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 NASD.

            (t) Use their reasonable best efforts to take all other steps
      reasonably 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 Company
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 Company may exclude from such registration the Registrable Notes of
any seller so long as such seller fails to furnish such information within a
reasonable time after receiving such request and in the event of such an
exclusion, the Issuers shall have no further ob-



                                      -17-

ligation under this Agreement (including, without limitation, the obligations
under Section 4) with respect to such seller or any subsequent Holder of such
Registrable Notes. Each seller as to which any Shelf Registration is being
effected agrees to furnish promptly to the Company all information required to
be disclosed in order to make any information previously furnished to the
Company by such seller not materially misleading.

            If any such Registration Statement refers to any Holder by name or
otherwise as the holder of any securities of the Company, the Co-Issuer or the
Guarantors, 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,
the Co-Issuer or the Guarantors, 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 applicable 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 the Company providing notice to such Holder or Participating
Broker-Dealer, as the case may be, (x) of the happening of any event of the kind
described in Section 5(c)(ii), 5(c)(iii), 5(c)(iv), or 5(c)(v) 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,
upon providing such notice (which shall refer to the penultimate paragraph of
this Section 5), the Issuers 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 Issuers' 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. The maximum
length of the Applicable Period set forth in Section 2(b) shall be extended by a
number of days equal to the number of days during any Delay Period. Any Delay
Period will not alter the obligations of the Issuers to pay Additional Interest
under the circumstances set forth in Section 4 hereof.

            Each Holder or Participating Broker-Dealer, by its acceptance of any
Registrable Note, agrees that during any Delay Period, each Holder or
Participating Broker-Dealer 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.



                                      -18-

      Section 6. Registration Expenses

            All fees and expenses incident to the performance of or compliance
with this Agreement by the Issuers (other than any underwriting discounts or
commissions) shall be borne by the Issuers, whether or not the Exchange Offer
Registration Statement or the Shelf Registration is filed or becomes effective
or the Exchange Offer is consummated, including, without limitation, (i) all
registration and filing fees (including, without limitation, fees and expenses
of compliance with state securities or Blue Sky laws (including, without
limitation, fees and disbursements of 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 a Shelf Registration or 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
the reasonable fees and disbursements of one special counsel for all of the
sellers of Registrable Notes pursuant to a Shelf Registration Statement
(exclusive of any counsel retained pursuant to Section 7 hereof) selected by the
Holders of a majority in aggregate principal amount of Notes, Exchange Notes and
Private Exchange Notes being registered and reasonably satisfactory to the
Issuers, (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 the Company performing legal or accounting duties), (ix) the
expense of any annual 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,
(xi) any required fees and expenses incurred in connection with any filing
required to be made with the NASD and (xii) 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, (i)
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
and (ii) the Holders shall pay all fees and expenses of counsel to the
underwriters of any such underwritten offering.

      Section 7. Indemnification

            (a) The Issuers, jointly and severally, agree 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, partners, members,



                                      -19-

employees, officers, managers 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
actually 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 of the Prospectus, in the
light of the circumstances under which they were made, not misleading, provided
that (i) 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, (ii) the foregoing
indemnity shall not be available to any Participant insofar as such losses are a
result of the use of a Shelf Registration Statement during a period when such
use has been suspended pursuant to Section 5(c), and (iii) the foregoing
indemnity with respect to any preliminary prospectus shall not inure to the
benefit of any Participant from whom the Person asserting such Losses purchased
Registrable Notes if (x) it is established in the related proceeding that such
Participant failed to send or give a copy of the Prospectus (as amended or
supplemented if such amendment or supplement was furnished to such Participant
prior to the written confirmation of such sale) to such Person with or prior to
the written confirmation of such sale, if required by applicable law, and (y)
the untrue statement or omission or alleged untrue statement or omission was
completely corrected in the Prospectus (as amended or supplemented if amended or
supplemented as aforesaid) and such Prospectus does not contain any other untrue
statement or omission or alleged untrue statement or omission that was the
subject matter of the related proceeding. This indemnity agreement will be in
addition to any liability that the Issuers may otherwise have, including, but
not limited to, liability under 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, partners, members, employees,
officers and members of the board of directors 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



                                      -20-

relating to such Participant furnished in writing to the Company by or on behalf
of such Participant expressly for use therein.

            (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). 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 reasonable 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 named parties to such action (including any impleaded
parties) include such indemnified party and the indemnifying party or parties
(or such indemnifying parties have assumed the defense of such action), and such
indemnified party or parties shall have reasonably concluded, after consultation
with counsel, 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. In no event shall the indemnifying
party be liable for the reasonable fees and expenses of more than one counsel
(together with appropriate local counsel) at any time for all indemnified
parties in connection with any one action or separate but substantially similar
or related actions arising in the same jurisdiction out of the same general
allegations or circumstances. Any such separate firm for the Participants shall
be designated in writing by Participants who sold a majority in interest of
Registrable Notes sold by all such Participants and shall be reasonably
acceptable to the Company and any such separate firm for the Issuers, their
affiliates, officers, directors, representatives, employees and agents and such
control Person of such Issuers shall be designated in writing by such Issuers
and shall be reasonably acceptable to the Holders. 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. Notwithstanding
the foregoing sentence, if at any time an indemnified party shall have requested
an indemnifying party to reimburse the indemnified party for fees and expenses
of counsel as contemplated by paragraph (a) or (b) of this Section 7, then the
indemnifying party agrees that it shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is
entered into more than 45 days after receipt by such indemnifying party of the
aforesaid request, (ii) such indemnifying party shall not have reimbursed the
indemnified party in accordance with such request prior to the date of such
settlement and (iii) such indemnified party shall have given the indemnifying
party at least 45 days' prior notice of its intention to settle. No indemnifying
party shall, without the prior written consent of the indemnified party, effect
any set-



                                      -21-

tlement 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 (x) includes
an unconditional release of such indemnified party from all liability on claims
that are the subject matter of such proceeding and (y) does not include a
statement as to or an admission of fault, culpability or a failure to act by or
on behalf of any indemnified party.

            (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 for any Losses referred to therein, or
is insufficient to hold harmless a party indemnified under this Section 7 for
any Losses referred to therein, each indemnifying party shall contribute to the
amount paid or payable by such indemnified party as a result of such aggregate
Losses (i) in such proportion as is appropriate to reflect the relative benefits
received by each indemnifying party, on the one hand, and each indemnified
party, on the other hand, from the sale of the Notes to the Initial Purchasers
or the resale of the Registrable Notes by such Holder, as applicable, or (ii) if
such allocation is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of each indemnified party, on the one hand,
and each indemnifying party, on the other hand, in connection with the
statements or omissions that resulted in such Losses, as well as any other
relevant equitable considerations. The relative benefits received by the
Issuers, on the one hand, and each Participant, on the other hand, shall be
deemed to be in the same proportion as (x) the total proceeds from the sale of
the Notes to the Initial Purchasers (net of discounts and commissions but before
deducting expenses) received by the Issuers are to (y) the total net profit
received by such Participant in connection with the sale of the Registrable
Notes. The relative fault of the parties shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Issuers or such Participant and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission or alleged statement or omission.

            (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 in excess of the discount granted or the
commission paid by the Company, as set forth in the Purchase Agreement with
respect to the Registrable Notes held by such Participant, or in the case of
Exchange Notes, the Registrable Notes exchanged for such 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 Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. 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



                                      -22-

for purposes of indemnification. No contributing party shall, without the
consent of the party seeking contribution, shall effect any settlement of any
pending claim for contribution in respect of which such contributing party is or
could have been a party and contributions could have been sought hereunder by
such party, when such settlement (x) includes an unconditional release of such
indemnified party from all liability on claims that are the subject matter of
such proceeding and (y) does not include a statement as to or an admission of
fault, culpability or a failure to act by or on behalf of any indemnified party.

      Section 8. Rules 144 and 144A

            The Issuers covenant that they will file the reports required, if
any, to be filed by them 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 Issuers are not required to file such reports, they 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. The Issuers further covenant that for so long as any
Registrable Notes remain outstanding 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
are to be sold in an underwritten offering, the investment banker or investment
bankers and manager or managers that will manage the offering will be selected
by the Holders of a majority in aggregate principal amount of such Registrable
Notes included in such offering and shall be reasonably acceptable to the
Company.

            No Holder of Registrable Notes may participate in any underwritten
registration hereunder if such Holder does not (a) agree to sell such Holder's
Registrable Notes on the basis provided in any underwriting arrangements
approved by the Persons entitled hereunder to approve such arrangements and (b)
complete and execute all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents required under the terms of such
underwriting arrangements.

      Section 10. Miscellaneous

            (a) No Inconsistent Agreements. The Issuers have not, as of the date
hereof, and shall not, after the date of this Agreement, enter 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.



                                      -23-

            (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 Company (on behalf of all 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
the Issuers and 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) affected by any such amendment, modification, waiver or supplement.
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.

            (ii) if to any Issuer, to it

                                    c/o Ashton Woods USA L.L.C.
                                    1080 Holcomb Bridge Road
                                    Building 200, Suite 350
                                    Roswell, GA  30076

                                    Fax:  (770) 998-7494
                                    Attention:  Chief Financial Officer



                                      -24-

                           with a copy to:

                                    Paul, Hastings, Janofsky & Walker LLP
                                    600 Peachtree Street, N.E.
                                    Suite 2400
                                    Atlanta, GA  30308
                                    Fax:  (404) 685-5287
                                    Attention:  Elizabeth Noe, Esq.

            (iii) if to the Initial Purchasers, at the address as follows:

                                    UBS Securities LLC
                                    677 Washington Blvd.
                                    Stamford, Connecticut  06901
                                    Fax number:  (203) 719-1075
                                    Attention:  High Yield Syndicate Department

                           with a copy to:

                                    Cahill Gordon & Reindel LLP
                                    80 Pine Street
                                    New York, NY   10005
                                    Fax:  (212) 378-2448
                                    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.

            (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 Issuers in all of their 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



                                      -25-

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 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 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. It is hereby stipulated and declared
to be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such that
may be hereafter declared invalid, illegal, void or unenforceable.

            (k) Securities Held by the Issuers or Their Affiliates. Whenever the
consent or approval of Holders of a specified percentage of Registrable Notes is
required hereunder, Registrable Notes held by the Issuers or any of their
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) 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.



            IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first written above.

                                   ASHTON WOODS USA L.L.C.,

                                   By: _________________________________________
                                       Name:      Robert Salomon
                                       Title:     Chief Financial Officer

                                   ASHTON WOODS FINANCE CO.,

                                   By: _________________________________________
                                       Name:      Robert Salomon
                                       Title:     Chief Financial Officer



                                   BLACK AMBER FLORIDA, INC.
                                   ASHTON BROOKSTONE, INC

                                   By: _________________________________________
                                       Name:       Robert Salomon
                                       Title:      Chief Financial Officer

                                   ASHTON ATLANTA RESIDENTIAL, L.L.C.
                                   CANYON REALTY L.L.C.
                                   ASHTON DALLAS RESIDENTIAL L.L.C.
                                   ASHTON HOUSTON RESIDENTIAL L.L.C.
                                   ASHTON HOUSTON DEVELOPMENT L.L.C.
                                   ASHTON WOODS CORPORATE, LLC
                                   ASHTON ORLANDO RESIDENTIAL L.L.C.
                                   ASHTON BURDEN, LLC
                                   ASHTON WOODS ARIZONA L.L.C.
                                   ASHTON TAMPA RESIDENTIAL, LLC
                                   ASHTON DENVER RESIDENTIAL, LLC
                                   ASHTON WOODS FLORIDA L.L.C.
                                   ASHTON WOODS BUTLER L.L.C.
                                   ASHTON WOODS LAKESIDE L.L.C.
                                   ISLEWORTH WEST LIMITED PARTNERSHIP

                                   By: _________________________________________
                                       Name:        Robert Salomon
                                       Title:       Manager

                                   ASHTON WOODS CONSTRUCTION, LLC

                                   By: ASHTON WOODS HOMES USA L.L.C., sole
                                   member

                                   By: _________________________________________
                                       Name:        Robert Salomon
                                       Title:       Chief Financial Officer

                                   PINERY JOINT VENTURE



                                   By: ASHTON WOODS HOMES USA L.L.C., partner

                                   By: _________________________________________
                                       Name:        Robert Salomon
                                       Title:       Chief Financial Officer

                                   ISLEWORTH WEST LIMITED PARTNERSHIP

                                   By: ASHTON WOODS FLORIDA L.L.C., general
                                   partner

                                   By: _________________________________________
                                       Name:        Robert Salomon
                                       Title:       Manager

                                   ASHTON WOODS ORLANDO LIMITED PARTNERSHIP

                                   By: ASHTON WOODS LAKESIDE L.L.C., general
                                   partner

                                   By: _________________________________________
                                       Name:        Robert Salomon
                                       Title:       Manager



                                   UBS SECURITIES LLC
                                   WACHOVIA CAPITAL MARKETS, LLC

                                   By: UBS SECURITIES LLC, as Representative
                                       of the Initial Purchasers

                                   By: _________________________________________
                                       Name:
                                       Title:

                                   By: _________________________________________
                                       Name:
                                       Title:

EX-5.1

                                                                     EXHIBIT 5.1

                      PAUL, HASTINGS, JANOFSKY & WALKER LLP


November 22, 2005

Ashton Woods USA L.L.C.
Ashton Woods Finance Co.
1080 Holcomb Bridge Road
Building 200, Suite 350
Roswell, Georgia 30076

            Re:   Ashton Woods USA L.L.C.
                  Ashton Woods Finance Co.
                  Registration Statement on Form S-4

Ladies and Gentlemen:

      This opinion is delivered in our capacity as counsel to Ashton Woods USA
L.L.C., a Nevada limited liability company ("Ashton Woods"), Ashton Woods
Finance Co., a Delaware corporation ("Finance", and together with Ashton Woods,
"Issuers") and the subsidiaries of Ashton Woods named on Schedule I hereto
(each, a "Guarantor" and collectively, the "Guarantors"), in connection with the
Registration Statement on Form S-4 (the "Registration Statement") filed by
Issuers and the Guarantors with the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended (the "Securities
Act"). The Registration Statement relates to the issuance by Issuers of up to
$125,000,000 aggregate principal amount of their 9.5% Senior Notes due 2015 (the
"New Notes") and the issuance by the Guarantors of guarantees (the "Guarantees")
with respect to the New Notes.

      The New Notes and the Guarantees will be issued under an indenture, dated
as of September 21, 2005 (the "Indenture") among the Issuers, the Guarantors and
U.S. Bank National Association, as trustee (the "Trustee"). The New Notes and
Guarantees will be offered by the Issuers in exchange for $125,000,000 aggregate
principal amount of their outstanding 9.5% Senior Notes due 2015 and the related
guarantees of those notes.

      As such counsel and for purposes of our opinions set forth below, we have
examined originals or copies, certified or otherwise identified to our
satisfaction, of such documents, corporate records, certificates of public
officials and other instruments as we have deemed necessary or appropriate as a
basis for the opinions set forth herein, including, without limitation:

      (i) the Registration Statement;

      (ii) the Indenture;

      (iii) the Notes;


Ashton Woods USA L.L.C.
Ashton Woods Finance Co.
November 22, 2005
Page 2

      (iv) the Guarantees;

      (v) the certificate of incorporation of Finance and the bylaws of Finance
      as presently in effect as certified by the Secretary of Finance as of the
      date hereof (collectively, the "Finance Charter Documents");

      (vi) the formation and governance documents of Ashton Atlanta Residential,
      L.L.C., a Guarantor formed as a Georgia limited liability company (the
      "Georgia Guarantor") presently in effect as certified by the Secretary of
      the Georgia Guarantor as of the date hereof;

      (vii) a certificate of the Secretary of State of the State of Delaware as
      to the incorporation and good standing of Finance under the laws of the
      State of Delaware as of November 22, 2005;

      (viii) a certificate of the Secretary of State of Georgia as to the
      existence of the Georgia Guarantor under the laws of the State of Georgia;
      and

      (ix) resolutions adopted by Finance's and the Georgia Guarantor's board of
      directors (or equivalent governing body), certified by the respective
      Secretaries of Finance and the Georgia Guarantor, relating to the
      execution and delivery of, and the performance by Finance and the Georgia
      Guarantor of their respective obligations under, the Transaction
      Documents.

      In addition to the foregoing, we have made such investigations of law as
we have deemed necessary or appropriate as a basis for the opinions set forth
herein.

      The Notes, the Guarantees and the Indenture are referred to herein,
individually, as a "Transaction Document" and, collectively, as the "Transaction
Documents".

      In such examination and in rendering the opinions expressed below, we have
assumed: (i) the due authorization of all agreements, instruments and other
documents by all the parties thereto (other than the due authorization of each
such agreement, instrument and document by the Issuers and the Guarantors); (ii)
the due execution and delivery of all agreements, instruments and other
documents by all the parties thereto (other than the due execution and delivery
of each such agreement, instrument and document by the Issuers and the
Guarantors); (iii) the genuineness of all signatures on all documents submitted
to us; (iv) the authenticity and completeness of all documents, corporate
records, certificates and other instruments submitted to us; (v) that photocopy,
electronic, certified, conformed, facsimile and other copies submitted to us of
original documents, corporate records, certificates and other instruments
conform to the original documents, records, certificates and other instruments,
and that all such original documents are authentic and complete; (vi) the legal
capacity of all individuals executing documents; (vii) that the Transaction
Documents executed in connection with the transactions contemplated thereby are
the valid and binding obligations of each of the parties thereto (other than the
Issuers and the Guarantors), enforceable against such parties (other than the
Issuers and the Guarantors) in accordance with their respective terms and that
no Transaction Document has been amended or terminated orally or in writing
except as has been disclosed to us; and (viii) that the statements contained in
the certificates and comparable documents of public officials, officers and
representatives of the Issuers and the


Ashton Woods USA L.L.C.
Ashton Woods Finance Co.
November 22, 2005
Page 3

Guarantors and other persons on which we have relied for the purposes of this
opinion are true and correct. As to all questions of fact material to this
opinion and as to the materiality of any fact or other matter referred to
herein, we have relied (without independent investigation) upon certificates or
comparable documents of officers and representatives of the Company.

      In addition, in rendering the opinions expressed below, we have relied
solely (without independent investigation) upon the opinions of the below listed
law firms to establish: (i) that Ashton Woods and each of the Guarantors other
than the Georgia Guarantor (the "Non-Georgia Guarantors") is validly existing
under the laws of its respective jurisdiction of incorporation or organization;
(ii) that the execution, delivery and performance by Ashton Woods and each of
the Non-Georgia Guarantors will not violate the certificate or articles of
incorporation or certificate of formation or bylaws, operating agreement or
partnership agreement, as applicable, of Ashton Woods and each such Non-Georgia
Guarantor; and (iii) that the execution, delivery and performance by Ashton
Woods and each of the Non-Georgia Guarantors will not violate the laws of the
jurisdiction of Ashton Woods' or such Non-Georgia Guarantor's organization or
other applicable laws (excepting the laws of the States of Georgia and New York
and the Federal laws of the United States). Opinions relied upon in accordance
with the foregoing, each of which is attached as an exhibit to the Registration
Statement, are the following: (i) Legal Opinion of Lionel, Sawyer & Collins,
regarding Ashton Woods and those Guarantors incorporated under the laws of the
State of Nevada; (ii) Legal Opinion of Hagan & Parsons, P.C., regarding those
Guarantors organized under the laws of the State of Texas; (iii) Legal Opinion
of Akerman Senterfitt, regarding those Guarantors organized under the laws of
the State of Florida; (iv) Legal Opinion of Holley, Albertson & Polk, P.C.,
regarding that Guarantor incorporated under the laws of the State of Colorado;
and (v) Legal Opinion of Fennemore Craig, P.C., regarding that Guarantor
incorporated under the laws of the State of Arizona.

      Based upon the foregoing, and in reliance thereon, and subject to the
limitations, qualifications and exceptions set forth herein, we are of the
following opinion:

      1. When the New Notes have been duly authenticated by U.S. Bank National
Association, in its capacity as Trustee, and duly executed and delivered on
behalf of the Issuers as contemplated by the Registration Statement, the New
Notes will be legally issued and will constitute valid and binding obligations
of the Issuers enforceable against the Issuers in accordance with their terms.

      2. When (a) the New Notes have been duly executed, authenticated, issued
and delivered in accordance with the provisions of the Indenture upon the
exchange and (b) the Guarantees have been duly endorsed on the New Notes, the
Guarantees will constitute valid and binding obligations of the Guarantors
enforceable against the Guarantors in accordance with their terms.

      Our opinions set forth above are subject to applicable bankruptcy,
insolvency, reorganization, fraudulent conveyance and transfer, moratorium or
other laws now or hereafter in effect relating to or affecting the rights or
remedies of creditors generally and by general principles of equity (whether
applied in a proceeding at law or in equity) including, without limitation,
standards of materiality, good faith and reasonableness in the interpretation
and enforcement of contracts, and the application of such principles to limit
the availability of equitable remedies such as specific performance.


Ashton Woods USA L.L.C.
Ashton Woods Finance Co.
November 22, 2005
Page 4

      We are members of the Bar of the States of New York and Georgia, and
accordingly, do not purport to be experts on or to be qualified to express any
opinion herein concerning the laws of any jurisdiction other than laws of the
States of New York and Georgia and the Delaware General Corporation Law
(including, with respect to the Delaware General Corporation Law all applicable
provisions of the Delaware Constitution and all reported judicial decisions
interpreting such law).

      This opinion has been prepared for your use in connection with the
Registration Statement and may not be relied upon for any other purpose. This
opinion speaks as of the date hereof. We assume no obligation to advise you of
any change in the foregoing subsequent to the effectiveness of the Registration
Statement even though the change may affect the legal analysis or a legal
conclusion or other matters in this opinion letter.

      We hereby consent to being named as counsel to the Issuers and the
Guarantors in the Registration Statement, to the references therein to our Firm
under the caption "Legal Matters" and to the inclusion of this opinion as an
exhibit to the Registration Statement. In giving this consent, we do not thereby
admit that we are within the category of persons whose consent is required under
Section 7 of the Securities Act, or the rules and regulations of the Commission
thereunder.

                                     Very truly yours,
                                     /s/ Paul, Hastings, Janofsky & Walker LLP

                                     Paul, Hastings, Janofsky & Walker LLP



Ashton Woods USA L.L.C.
Ashton Woods Finance Co.
November 22, 2005
Page 5

                                   SCHEDULE I

                                                       STATE OF
                                                     INCORPORATION/
                          NAME                         FORMATION
Ashton Woods Construction LLC                             AZ
Ashton Woods Corporate, LLC                               NV
Ashton Orlando Residential L.L.C.                         NV
Ashton Woods Arizona L.L.C.                               NV
Ashton Tampa Residential, LLC                             NV
Ashton Denver Residential, LLC                            NV
Ashton Woods Florida L.L.C.                               NV
Ashton Woods Butler L.L.C.                                NV
Ashton Woods Lakeside L.L.C.                              NV
Canyon Realty L.L.C.                                      TX
Ashton Dallas Residential L.L.C.                          TX
Ashton Houston Residential L.L.C.                         TX
Ashton Houston Development LLC                            TX
Ashton Brookstone, Inc.                                   TX
Black Amber Florida, Inc.                                 FL
Ashton Burden, LLC                                        FL
Ashton Woods Orlando Limited Partnership                  FL
Isleworth West Limited Partnership                        FL
Pinery Joint Venture                                      CO
Ashton Atlanta Residential, L.L.C.                        GA

EX-5.2

                                                                     EXHIBIT 5.2

                            Lionel Sawyer & Collins


                               November 22, 2005

Ashton Woods USA L.L.C.
Ashton Woods Finance Co.
1080 Holcomb Bridge Road
Building 200, Suite 350
Roswell, GA 30076

Ladies and Gentlemen:

      As special Nevada counsel for Ashton Woods USA, L.L.C., a Nevada limited
liability company (the "Company") and its Nevada Subsidiaries, (as hereinafter
defined) we are rendering this opinion in connection with the Registration
Statement on Form S-4 (the "Registration Statement") filed by the Company,
Ashton Woods Finance Co. ("Ashton Finance") and the subsidiary guarantors listed
in the Registration Statement, with the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933 (the "Act"), as amended. The
Registration Statement relates to the issuance by the Company and Ashton Finance
of up to $125 million aggregate principal amount of their 9.5% Senior
Subordinated Notes due 2015 (the "New Notes") and the issuance by the subsidiary
guarantors, including the Nevada Subsidiaries, named in the Registration
Statement of guarantees (each a "Guaranty" and collectively, the "Guarantees")
with respect to the New Notes.

      The New Notes and Guarantees will be issued under an indenture, dated as
of September 21, 2005 (the "Indenture"), among the Company, Ashton Finance, the
subsidiary guarantors named therein and U.S. Bank National Association, as
trustee. The New Notes and Guarantees will be offered by the Company and Ashton
Finance in exchange for $125 million aggregate principal amount of their
outstanding 9.5% Senior Subordinated Notes due 2015 and the related guarantees
of those notes.

      We have examined:

      1. The Registration Statement;

      2. the Indenture;

      3. the New Notes;

      4. the Guarantees of the Guarantors in the form attached to the New Notes;

      5. Articles of Organization for the Company and the Nevada Subsidiaries
      certified by the Nevada Secretary of State;


Ashton Woods USA L.L.C.
Ashton Woods Finance Co.
November 22, 2005
Page 2

      6. Good Standing Certificates for the Company and the Nevada Subsidiaries
      certified by the Nevada Secretary of State;

      7. Resolutions of the Board of Directors for the Company and the Nevada
      Subsidiaries certified by an officer of the Company;

      8. Regulations or Operating Agreement, as appropriate, for the Company and
      the Nevada Subsidiaries certified by an officer of the Company;

      9. Certificates of an officer of the Company.

      We have assumed the authenticity of all documents submitted to us as
originals, the genuineness of all signatures, the legal capacity of natural
persons and the conformity to originals of all copies of all documents submitted
to us. We have relied upon the certificates of all public officials and
corporate officers with respect to the accuracy of all matters contained
therein.

      Except as expressly provided otherwise herein, we have not conducted any
other investigation or review in connection with the opinions rendered herein,
including without limitation a review of any of our files or the files of the
Company nor any of the Subsidiaries.

      We assume the due authorization, execution and delivery of the Indenture
by the Trustee.

      Based upon the foregoing and subject to the following it is our opinion
that:

      (i) The Company and each of the Subsidiaries listed on Exhibit A hereto
(the "Nevada Subsidiaries"): (a) is a limited liability company which has been
duly formed and is validly existing as a limited liability company in good
standing under the laws of the State of Nevada and (b) has all requisite
corporate power and authority to own its property and carry on its business as
described in the Registration Statement.

      (ii) Each of the Company and the Nevada Subsidiaries has all requisite
limited liability company power and authority to enter into and deliver, the New
Notes, the Indenture, and, in the case of each of the Nevada Subsidiaries, its
Guarantee and to perform its specific obligations under the New Notes, the
Indenture, and, in the case of each of the Nevada Subsidiaries, its Guarantee.

      (iii) To the extent the Company or the Nevada Subsidiaries are parties
thereto, the Indenture, the New Notes, and the Guarantees have been validly
authorized by the requisite limited liability company action.

      (iv) The execution and delivery of the Indenture, the New Notes, and the
Guarantees, the performance of the Indenture, the New Notes, and the Guarantees
and the consummation of the transactions contemplated therein and compliance by
the Company or the Nevada Subsidiaries,


Ashton Woods USA L.L.C.
Ashton Woods Finance Co.
November 22, 2005
Page 3

as the case may be, with its or their obligations thereunder do not and will
not: (1) require any consent or approval of their respective members or (2)
result in any violation of the provisions of (A) any applicable Nevada law or
administrative regulation or to our actual knowledge, any administrative or
court decree of any agency or court of the State of Nevada, which would result
in a material adverse effect on the condition, financial or otherwise, or the
earnings, business affairs or business prospects of the Company and the Nevada
Subsidiaries considered as one enterprise or (B) the articles of organization or
regulations or operating agreement, of the Company or any Nevada Subsidiary.

      We express no opinion as to the laws of any jurisdiction other than the
State of Nevada.

      We consent to the use of this opinion as an exhibit to the Registration
Statement and to the use of our name under the caption "Legal Matters" in the
Prospectus which is part of the Registration Statement. In giving this consent,
we do not thereby admit that we are in the category of persons whose consent is
required under Section 7 of the Act or the rules and regulations of the
Commission thereunder.

      This opinion letter is intended solely for use in connection with the
registration and offering of the New Notes and the Guarantees as described in
the Registration Statement; provided, however, we hereby consent to the reliance
upon this opinion by Paul, Hastings, Janofsky & Walker LLP, in connection with
its opinions on the New Notes and the Guarantees.

                                              Very truly yours,

                                              /s/ Lionel Sawyer & Collins

                                              LIONEL SAWYER & COLLINS


Ashton Woods USA L.L.C.
Ashton Woods Finance Co.
November 22, 2005
Page 4

Exhibit A

Ashton Woods Lakeside LLC;

Ashton Denver Residential LLC;

Ashton Orlando Residential LLC;

Ashton Tampa Residential LLC;

Ashton Woods Arizona LLC;

Ashton Woods Corporate LLC;

Ashton Woods Butler LLC; and

Ashton Woods Florida LLC

EX-5.3

                                                                               .
                                                                               .
                                                                               .
                                                                     EXHIBIT 5.3



                                 HAGEN & PARSONS
                           A PROFESSIONAL CORPORATION

                            ATTORNEYS AND COUNSELORS

                                                  
TIM HAGEN                     WELLINGTON CENTRE
DIRECT DIAL NUMBER:    14643 DALLAS PARKWAY, SUITE 570  TELEPHONE (972) 386-0440
1972) 386-0441                DALLAS, TEXAS 75254             FAX (972) 386-0443






                                November 22, 2005



Ashton Woods USA L.L.C.
1080 Holcomb Bridge Road
Building 200, Suite 350
Roswell, Georgia 30076

         Re:      Ashton Woods USA L.L.C. and Ashton Woods Finance Co. - Rule
                  144A Offering of 9.5% Senior Subordinated Notes due 2015
                  OurFileNo.AW-7461

Ladies and Gentlemen:

         We have acted as counsel to Canyon Realty, LLC, a Texas limited
liability company ("CR"), Ashton Dallas Residential L.L.C, a Texas limited
liability company ("ADR"), Ashton Houston Residential L.L.C, a Texas limited
liability company ("AHR"), Ashton Houston Development LLC, a Texas limited
liability company ("AHD"), and Ashton Brookstone, Inc., a Texas corporation
("AB"), subsidiaries of Ashton Woods USA L.L.C. f'Ashton Woods"1. in connection
with the Registration Statement on Form S-4 (the "Registration Statement"")
filed by Ashton Woods, Ashton Woods Finance Co. C'Ashton Finance"1. and the
subsidiary guarantors listed in the Registration Statement, including CR, ADR,
AHR, AHD, and AB (collectively, the "Guarantors"), with the Securities and
Exchange Commission (the "Commission") under the Securities Act of 1933, as
amended (the "Securities Act"). The Registration Statement relates to the
issuance by Ashton Woods and Ashton Finance of up to $125 million aggregate
principal amount of their 9.5% Senior Subordinated Notes due 2015 (the "New
Notes"1 and the issuance by the subsidiary guarantors named in the Registration
Statement of guarantees (each a "Guarantee" and collectively, the "Guarantees"")
with respect to the New Notes.

         The New Notes and Guarantees will be issued under an indenture, dated
as of September 21, 2005 (the "Indenture"), among Ashton Woods, Ashton Finance,
the Guarantors, the other subsidiary guarantors named therein, and U.S. Bank
National Association, as trustee. The New Notes and Guarantees will be offered
by Ashton Woods and Ashton Finance in exchange for $125 million aggregate
principal amount of their outstanding 9.5% Senior Subordinated Notes due 2015
and the related guarantees of those notes.

         As such counsel and for purposes of our opinions set forth below, we
have examined originals or copies, certified or otherwise identified to our
satisfaction, of such documents, corporate records, certificates of public
officials, and other instrument as we have deemed necessary or appropriate as a
basis for the opinions set forth herein, including, without limitation:

         (i)      the Registration Statement;




Ashton Woods USA L.L.C.
November 22, 2005
Page 2

         (ii)     the Indenture;

         (iii)    the New Notes;

         (iv)     the Guarantees;

         (v)      Articles of Incorporation and Bylaws of AB;

         (vi)     Articles of Organization and Regulations of CR, ADR, AHR, and
                  AHD;

         (vii)    Certificates of Entity Status issued by the Office of the
                  Secretary of State of Texas for CR, ADR, AHR, AHD, and AB
                  ("Certificates of Entity Status""):

         (viii)   Certificate of Account Status issued by the Texas Comptroller
                  of Public Accounts for AB ("Certificate of Account Status");

         (ix)     Written Consent of the Board of Directors of AB in Lieu of a
                  Meeting; and

         (x)      Joint Written Consent of the Sole Member of CR, ADR, AHR, AHD,
                  and others.

         In addition to the foregoing, we have made such investigations of law
as we have deemed necessary or appropriate as a basis for the opinions set forth
herein.

         In such examination and in rendering the opinions expressed below, we
have assumed: (i) the genuineness of all signatures on all documents submitted
to us; (ii) the authenticity and completeness of all documents, corporate
records, certificates, and other instruments submitted to us; (iii) that
photocopy, electronic, certified, conformed, facsimile, and other copies
submitted to us of original documents, corporate records, certificates, and
other instruments conform to the original documents, records, certificates, and
other instruments, and that all such original documents were authentic and
complete; and (iv) the legal capacity of all individuals executing documents.

         Based upon the foregoing, and in reliance thereon, and subject to the
limitations, qualifications, and exceptions set forth herein, we are of the
following opinion:

         1.       AB is validly existing as a corporation and in good standing
under the laws of the State of Texas, and AB has the corporate power to execute,
deliver, and perform its obligations under the Guarantee.

         2.       CR, ADR, AHR, and AHD are each validly existing as a limited
liability company and in good standing under the laws of the State of Texas, and
CR, ADR, AHR, and AHD each has the limited liability company power to execute,
deliver, and perform its obligations under the Guarantees.




Ashton Woods USA L.L.C.
November 22, 2005
Page 3

         3.       The execution, delivery, and performance of the Indenture and
the Guarantees by the Guarantors have been duly authorized by all necessary
corporate or limited liability company action on the part of CR, ADR, AHR, AHD,
and AB.

         4.       The execution and delivery by the Guarantors of the Indenture
and the Guarantees and the performance of their obligations thereunder have been
duly authorized by all necessary corporate, limited liability company, or other
action and do not and will not (i) require any additional consents or approvals
of their stockholders and members, or (ii) violate any provision of any law,
rule, or regulation of the State of Texas or, to our knowledge, any order, writ,
judgment, injunction, decree, determination, or award presently in effect having
applicability to any of the Guarantors which violation would impair its ability
to perform its obligations under the Guarantees or (iii) violate any of their
respective articles of incorporation, bylaws, articles of organization, or
regulations.

         This opinion letter deals only with the specified legal issues
expressly addressed herein, and you should not infer any opinion that is not
explicitly addressed herein from any matter stated in this letter.

         This opinion has been prepared for your use in connection with the
Registration Statement. This opinion may not be relied upon for any other
purpose. In addition, the law firm of Paul, Hastings, Janofsky & Walker LLP may
rely on this opinion for the purpose of rendering its legal opinion in
connection with the Registration Statement. This opinion speaks as of the date
hereof. We assume no obligation to advise you of any change in the foregoing
subsequent to the effectiveness of the Registration Statement even though the
change may affect the legal analysis or a legal conclusion or other matters in
this opinion letter.

         We hereby consent to be named as counsel to the Guarantors in the
Registration Statement, to the references therein to our firm under the caption
"Legal Matters" and to the inclusion of this opinion as an exhibit to the
Registration Statement. In giving this consent, we do not thereby admit that we
are within the category of persons whose consent is required under Section 7 of
the Securities Act, or the rules and regulations of the Commission.



                                         Very truly yours,



                                         HAGEN & PARSONS,
                                         A PROFESSIONAL CORPORATION



                                         By: Tim Hagen
                                            ----------------------
                                             Tim Hagen, President


TDH:cw

EX-5.4

                                                                     EXHIBIT 5.4


                                             {AKERMAN Senterfitt LOGO]
                                                                ATTORNEYS AT LAW

Boca Raton                                   Citrus Center, 17th Floor
Fort Lauderdale                              255 South Orange Avenue
Jacksonville                                 Orlando, Florida 32801-3483
Miami
Orlando                                      Post Office Box 231 mail
Tallahassee                                  Orlando, Florida 32802-0231
Tampa
West Palm Beach                              www.akerman.com

November 22, 2005                            407 843 7860 tel  407 843 6610 fax

Ashton Woods USA L.L.C.
1080 Holcomb Bridge Road
Roswell, GA 30076

RE:      ASHTON WOODS USA L.L.C. AND ASHTON WOODS FINANCE CO.

Ladies and Gentlemen:

We have acted as Florida counsel to Ashton Woods Orlando Limited Partnership, a
Florida limited partnership ("Ashton Woods Orlando"), Black Amber Florida, Inc.,
a Florida corporation ("Black Amber"), Ashton Burden, LLC, a Florida limited
liability company ("Ashton Burden") and Isleworth West Limited Partnership, a
Florida limited partnership ("Isleworth West") (each a "Guarantor" and
collectively, the "Guarantors"), subsidiaries of Ashton Woods USA L.L.C.
("Ashton Woods") in connection with the Registration Statement on Form S-4 (the
"Registration Statement") filed by Ashton Woods, Ashton Woods Finance Co.
("Ashton Finance") and the subsidiary guarantors listed in the Registration
Statement, including the Guarantors, with the Securities and Exchange Commission
(the "Commission") under the Securities Act of 1933, as amended (the "Act"). The
Registration Statement relates to the issuance of by Ashton Woods and Ashton
Finance of up to $125 million aggregate principal amount of their 9.5% Senior
Subordinated Notes due 2015 (the "New Notes") and the issuance by the subsidiary
guarantors named in the Registration Statement of guarantees (each a "Guaranty"
and collectively, the "Guarantees") with respect to the New Notes, which will be
issued under an indenture referred to below. The New Notes and Guarantees will
be offered by Ashton Woods and Ashton Finance, in exchange for $125 million
aggregate principal amount of their outstanding 9.5% Senior Subordinated Notes
due 2015 and the related guarantees of those notes (the "Transaction") issued
under the Indenture, dated as of September 21, 2005 (the "Indenture"), among
Ashton Woods, Ashton Finance, the Guarantors, the other subsidiary guarantors
named therein and U.S. Bank National Association, as trustee. The Registration
Statement, Indenture and Guarantees constitute the "Transaction Documents."

In rendering our opinion, we have relied, with your approval, as to factual
matters that affect our opinion, on the following factual assumptions: (i) the
legal capacity of each natural person; (ii) the legal existence of all parties
to the Transaction Documents (other than the Guarantors); (iii) the power and
authority of each person (other than the Guarantors) to execute, deliver and
perform each document executed and delivered and to do each other act done or to
be done by such person with respect to the Transaction Documents; (iv) the
authorization, execution and






Ashton Woods USA L.L.C.
November 22, 2005
Page 2


delivery by each person (other than the Guarantors) of each document executed
and delivered by such person; (v) the payment of all required documentary
stamps, taxes and fees imposed upon the execution, filing or recording of
documents; (vi) that there have been no undisclosed modifications of any
provision of any document reviewed by us in connection with the rendering of
this opinion and no undisclosed prior waiver of any right or remedy contained in
any of the documents; (vii) the completeness of each document submitted to us,
the authenticity of each document reviewed by us as an original, the conformity
to the original of each document reviewed by us as a copy and the authenticity
of the original of each document received by us as a copy; (viii) the
truthfulness of each statement as to all factual matters otherwise not known to
us to be untruthful contained in any document encompassed within our due
diligence review; (ix) the accuracy on the date of this opinion as well as on
the date stated in all government certifications of each statement as to each
factual matter contained in such governmental certifications; (x) that all
statutes, judicial and administrative decisions, and rules and regulations of
governmental agencies constituting the law for which we are assuming
responsibility are published (e.g., reported court decisions and the specialized
reporting services of BNA, CCH and Prentice-Hall) or otherwise generally
accessible (e.g., LEXIS or WESTLAW) in each case in a matter generally available
(i.e., in terms of access and distribution following publication) to lawyers
practicing in our judicial circuit; (xi) that there are no other agreements or
understandings among the parties that would modify the terms of the Transaction
Documents or the respective rights or obligations of the parties to those
documents; and (xii) the constitutionality and validity of all relevant laws,
regulations and agency actions unless a reported case has otherwise held or
widespread concern has been expressed by commentators as reflected in materials
which lawyers routinely consult.

In rendering our opinion, we have relied, with your approval, as to factual
matters that affect our opinion, solely upon our examination of the Transaction
Documents and copies of (i) the Articles of Incorporation of Black Amber and all
amendments thereto; (ii) the Articles of Organization and Operating Agreement of
Ashton Burden and all amendments thereto; (iii) Affidavit and Certificate of
Limited Partnership and Limited Partnership Agreement of Ashton Woods Orlando
and all amendments thereto; and (iv) Affidavit and Certificate of Limited
Partnership and Limited Partnership Agreement of Isleworth West and all
amendments thereto (collectively the "Organizational Documents") and such other
agreements, instruments and documents as we have deemed necessary as a basis for
the opinions hereinafter expressed and have made no independent verification of
the facts asserted to be true and correct in the Organizational Documents or the
Transaction Documents.

As to questions of fact material to our opinion, we have relied upon
certificates of/statements from representatives of the Guarantors, without
undertaking to verify the same by independent investigation.

We are licensed to practice in Florida only and, accordingly, we express no
opinions as to matters under or involving any laws other than the laws of
Florida, and the law of the United States of America. We express no opinion as
to the applicability of the law of any particular jurisdiction to the
transactions described in this opinion.






Ashton Woods USA L.L.C.
November 22, 2005
Page 3


Based on the foregoing, and subject to the qualifications, assumptions, and
limitations stated in this letter and in the Report, we are of the opinion that:

                  1.       Black Amber is validly existing as a corporation in
         good standing under the laws of the State of Florida. Black Amber has
         the corporate power and authority to execute, deliver and perform its
         obligations under the Guaranty.

                  2.       Ashton Burden is validly existing as a limited
         liability company in good standing under the laws of the State of
         Florida. Ashton Burden has the limited liability company power and
         authority to execute, deliver and perform its obligations under the
         Guaranty.

                  3.       Ashton Woods is validly existing as a limited
         partnership in good standing under the laws of the State of Florida.
         Ashton Woods has the limited partnership power to execute, deliver and
         perform its obligations under the Guaranty.

                  4.       Isleworth West is validly existing as a limited
         partnership in good standing under the laws of the State of Florida.
         Isleworth West has the limited partnership power and authority to
         execute, deliver and perform its obligations under the Guaranty.

                  5.       The execution and delivery by the Guarantors of the
         Indenture and the Guarantees and performance of the Guarantors'
         obligations thereunder have been duly authorized by all necessary
         corporate, limited liability company, partnership or other action on
         the part of each of the Guarantors and do not and will not (i) require
         any consent or approval of their stockholders, members or partners,
         (ii) violate any provision of any law, rule or regulation of the State
         of Florida or, to our knowledge, any order, writ, judgment, injunction,
         decree, determination or award presently in effect having applicability
         to the Guarantors which violation would impair their ability to perform
         their obligations under the Guarantees or (iii) violate any provisions
         of the Organizational Documents.

This letter has been prepared for your use in connection with the Registration
Statement and may not be relied upon for any other purpose. The law firm of
Paul, Hastings, Janofsky & Walker LLP may rely on this opinion for purposes of
rendering its opinion in connection with the Registration Statement. The
information set forth herein speaks as of the date of this letter, and
subsequent to the effectiveness of the Registration Statement, we undertake no
obligation or responsibility to update or supplement this opinion in response to
or to make you aware of subsequent changes in the status of the Guarantors, the
law or future events or information affecting the transactions contemplated by
the documents relating to this transaction. We have conducted no investigation
or review of the business of the Guarantors, except as specifically delineated
in this letter.

We hereby consent to being named as counsel to the Guarantors in the
Registration Statement, to the references therein to our firm under the caption
"Legal Matters" and to the inclusion of this opinion as an exhibit to the
Registration Statement. In giving this consent, we do not thereby






Ashton Woods USA L.L.C.
November 22, 2005
Page 4


admit that we are in the category of persons whose consent is required under
Section 7 of the Act, or the rules and regulations of the Commission thereunder.


Very truly yours,

/s/ AKERMAN SENTERFITT

AKERMAN SENTERFITT

EX-5.5

                                                                 EXHIBIT 5.5

                               HOLLEY, ALBERTSON &
                                   POLK, P.C.
                                ATTORNEYS AT LAW
                             DENVER WEST OFFICE PARK
                             SUITE 100, BUILDING 19
                                 1667 COLE BLVD.
                             GOLDEN, COLORADO 80401
                              PHONE (303) 233-7838
                               FAX (303) 233-2860



SCOTT D. ALBERTSON
DENNIS B. POLK                                                GEORGE ALAN HOLLEY
ERIC E. TORGERSEN                                                (1925 - 2002)
- ----------
MATTHEW J. KRISTOFCO
BRANDY R. MAZE
JAMES J. EMANUEL


                               November 22, 2005


Ashton Woods Homes USA, L.L.C.
1080 Holcomb Bridge Road
Building 200, Suite 350
Roswell, Georgia  30076

Attn: Robert Salomon

   RE:   Registration Statement on Form S-4 filed by Ashton Woods USA, LLC and
         Ashton Woods Finance Co. and the subsidiary guarantors listed in the
         Registration Statement, including Pinery Joint Venture, with the
         Securities and Exchange Commission under the Securities Act of 1933, as
         amended.

 Gentlemen:

         We have acted as counsel to Pinery Joint Venture, a Colorado joint
venture (the "Guarantor"), as subsidiary of Ashton Woods USA LLC ("Ashton
Woods"), in connection with the Registration Statement on Form S-4 (the
"Registration Statement") filed by Ashton Woods, Ashton Woods Finance Co.
("Ashton Finance") and the subsidiary guarantors listed in the Registration
Statement, including the Guarantor, with the Securities and Exchange Commission
(the "Commission") under the Securities Act of 1933, as amended (the "Act"). The
Registration Statement relates to the issuance by Ashton Woods and Ashton
Finance of up to $125 million aggregate principal amount of their 9.5% Senior
Subordinated Notes due 2015 (the "New Notes") and the issuance by the subsidiary
guarantors named in the Registration Statement of guarantees (each a "Guaranty"
and collectively, the "Guarantees") with respect to the New Notes.

         The New Notes and Guarantees will be issued under an indenture, dated
as of September 21, 2005 (the "Indenture"), among Ashton Woods, Ashton Finance,
the Guarantor, the other subsidiary guarantors named therein and U.S. Bank
National Association, as trustee. The New Notes and Guarantees will be offered
by Ashton Woods and Ashton Finance in exchange for $125 million aggregate
principal amount of their outstanding 9.5% Senior Subordinated Notes due 2015
and the related guarantees of those notes.




Ashton Woods Homes USA, L.L.C.
November 22, 2005
Page 2

         For the purpose of rendering the opinions set forth herein, we have
examined the originals or copies of the following executed documents
(collectively, the "Entity Documents"):

         1.       Joint Venture Agreement of Pinery Joint Venture;

         2.       First Amendment to Joint Venture Agreement of Pinery Joint
                  Venture;

         3.       Second Amendment to Joint Venture Agreement of Pinery Joint
                  Venture;

         4.       Written Consent of the Members of Pinery Joint Venture in Lieu
                  of a Meeting.

         We have also examined and relied upon such certificates of public
officials and authorized representatives of Guarantor and other documents and
instruments as we have deemed necessary or appropriate to enable us to render
the opinions set forth below. For the purpose of rendering the opinions set
forth below, we have assumed each of the following:

         (a)      All documents submitted to us as originals are authentic; and
                  all documents submitted to us as copies conform to the
                  original documents which themselves are authentic; and

         (b)      Each natural person executing any of the Entity Documents is
                  legally competent to do so.

         Based upon the foregoing assumptions and subject to the qualifications
and other limitations herein set forth, it is our opinion that:

         1.       Guarantor is a validly existing as a partnership in good
                  standing under the laws of the State of Colorado, and
                  Guarantor has the power to execute, deliver and perform its
                  obligations under the Guarantee.

         2.       The execution, delivery and performance of the Indenture and
                  the Guaranty by the Guarantor has been duly authorized by all
                  necessary partnership action on the part of the Guarantor.

         3.       The execution and delivery by the Guarantor of the Indenture
                  and the Guarantee and the performance of its obligations
                  thereunder have been duly authorized by all necessary
                  partnership or other action and do not and will not (i)
                  require any consent or approval of its partners, or (ii)
                  violate any provision of any law, rule or regulation of the
                  State of Colorado or, to our knowledge, any order, writ,
                  judgment, injunction, decree, determination or award presently
                  in effect having applicability to the Guarantor which
                  violation would impair its ability to perform its obligations
                  under the Guarantee or (iii) or violate any of its joint
                  venture agreement, as amended.






Ashton Woods Homes USA, L.L.C.
November 22, 2005
Page 3

         The opinions set forth herein are limited in all respects to the laws
of the State of Colorado and the United States as they presently exist.

         We confirm that:

         (a) we do not have any financial interest in the Guarantor or the
Registration Statement, other than fees for legal services performed by us,
payment for which has been provided; and

         (b) other than as counsel for Guarantor, we have no interest in
Guarantor and we do not serve as a director, officer or employee of Guarantor.
We have no undisclosed interest in the subject matter of this Opinion Letter.

         This Opinion Letter and the foregoing opinions are limited to the
matters expressly stated, and they are rendered to you in connection with the
Registration Statement and may not be relied upon for any other purpose without
our prior written consent. Because this Opinion Letter is furnished to you in
connection with the Registration Statement, it may be relied on by your legal
counsel, Paul, Hastings, Janofsky & Walker, LLP, in connection with their
representation of you in connection with the Registration Statement and related
matters.

         The opinions rendered in this Opinion Letter are given as of the date
hereof. We assume no obligation to advise you of any change in the foregoing
subsequent to the effectiveness of the Registration Statement, even though that
change may affect our legal analysis or our legal conclusions or other matters
in this Opinion Letter.

         We hereby consent to being named as counsel to the Guarantor in the
Registration Statement, to the references therein to our firm under the caption
"Legal Matters," and to the inclusion of this Opinion Letter as an exhibit to
the Registration Statement. In giving this consent, we do not admit that we are
in the category of persons whose consent is required under Section 7 of the Act,
or the rules and regulations of the Commission.


                                              Sincerely,



                                              HOLLEY, ALBERTSON & POLK, P.C.


                                              /s/ Eric E. Torgersen

                                              Eric E. Torgersen


Cc:   Paul, Hastings, Janofsky & Walker, LLP

EX-5.6

                                                                               .
                                                                               .
                                                                               .
                              FENNEMORE CRAIG, P.C.
                      3003 North Central Avenue, Suite 2600
                           Phoenix, Arizona 85012-2913


                                                                                                  
James M. Bush                   Arthur D. Ehrenreich     C. Webb Crockett               Richard T. Coolidge   LAW OFFICES
Kenneth J. Sherk                Neal Kurn                Anthony V. Ehmann              Robert P. Robinson    Phoenix (602) 916-5000
Michael Preston Green           John D Everroad          James W. Johnson               Jay S. Ruffner        Tucson (520) 879-6800
Jordan Green                    Louis F. Comus, Jr.      A. Bates Butler III            Donald R. Gilbert     Nogales (520) 761-4215
Ronald L Ballard                Timothy J. Burke         Ronald J. Stolkin              Stephen M. Savage     Lincoln (402) 323-6200
Roger T Hargrove                William L. Kurtz         Mark A. Nesvig                 George T. Cole
Lauren J. Caster                Timothy Berg             Neil H. Hiller                 William L. Thorpe
Charles M. King                 Cynthia L. Shupe         Phillip F. Fargotstein         Paul J. Mooney
Cathy L. Reece                  David A. Weatherwax      Graeme Hancock                 Rita A. Eisenfeld
David N. Heap                   Don J. Miner             Anne L. Kleindienst            Norman D James
Ray K. Harris                   Margaret R. Gallogly     Scott M. Finical               Andrew M. Federhar
Nancy-Jo Merntt                 Kimberly A. Howard Arana Hector G. Arana                Gregg Hanks
Karen Ciupak McConnell          Jay S. Kramer            Christopher L. Callahan        Jim Wright
Bryan A. Albue                  David E. Vieweg          Benjamin W. Bauer              Sarah A. Strunk
Michael J. Phalen               J. Barry Shelley         Christopher P Staring          Janet Weinstein
George 0. Krauja                John Randall Jefferies   John J. Balitis, Jr            James J. Trimble      PAUL A. KRULISKY
Janice Procter-Murphy           Robert J. Kramer         John M. Pearce                 Jean M. Sullivan      (602)916-5330
Keith L Hendricks               W.T. Eggleston, Jr       Stephen A. Good                M. Virginia Perry     (602)916-5530
Douglas C Northup               Marc H- Lamber           Kendis K. Muscheid             Theresa Dwyer         pkrulisky@fclaw.com
Elizabeth M. Behnke             Susan M. Ciupak          Jeffrey S. Pitcher             Dewain D. Fox
Jay L. Shapiro                  John E. Kofron           James D. Burgess               Scott L. Altes
Amy Abdo                        Janna B. Day             Susan M. Wissink               Sal J. Rivera
Paul A. Krulisky                Barney M. Holtzman       Donald G. Blankenau1           John D. Bethea
Lori A Higuera                  Michael J. Pearce        Lawrence E. Palles             Thomas R. Wilmoth
Kevin J. Bonner                 Paul E. Wolf             Sharon J. Oscar                Ruth Graham Kern
John F. Daniels III             Cortland J. Silver       Susan Stone Rosenfield         Stacie Keim Smith
David H. Benton                 Jane Proctor             Thomas D. Ulreich-Power        Michele L. Tyler
Julio M Zapata                  Charles H. Houston, III  Patrick J Black                Dawn G. Meidinger
Catherine M Woods               Bart S. Wilhoit          Paul Moore                     Adrienne W. Wilhoit
M Brent Peugnet                 Alec R. Hillbo           Erwin D. Kratz                 Ali J. Farhang
Scott Day Freeman               Laura A. Lo Bianco       Lisa A. Brautigam              Christa D. Torralba
Elizabeth J. Whitton            Sean M. Sabo             Susan M. O                     Rodney J. Fuller(3)
Pamela O. Colquette(2)          Joshua R. Forest         Louis D. Lopez                 Melissa W. Rawlinson
Alexander R. Arpad              M. Ellen Peters          Chad R. Fuller                 Scott J. Shelley
Nicolas B. Hoskins              Eric J. Boyd             A. Joseph Chandler             Todd Kartchner
William D Sawkiw                Anthony M. Grafitti      Sherida Colvin                 John Lesueur
Todd Hall                       Renee E. Schmidt         Whitney M. Sedwick             Deryck R. Lavelle
Stephen D. Benedetto            Marc A. Marra            Sarah M. Glover                John P. Torgenson
Aaron Cain                      Jaron J Bromm(1)
                                (2) Admitted In          (3) Admitted In New York and
(1) Admitted In Nebraska Only   California Only          the District of Columbia only




                                November 22, 2005


Ashton Woods USA L.L.C.
1080 Holcomb Bridge Road
Building 200, Suite 350
Roswell, GA 30076

Ladies and Gentlemen:

         We have acted as special counsel to Ashton Woods Construction, LLC, an
Arizona limited liability company (the "Guarantor"), a subsidiary of Ashton
Woods USA L.L.C. ("Ashton Woods"), in connection with the Registration Statement
on Form S-4 (the "Registration Statement") filed by Ashton Woods, Ashton Woods
Finance Co. ("Ashton Finance") and the subsidiary guarantors listed in the
Registration Statement, including the Guarantor, with the Securities and
Exchange Commission under the Securities Act of 1933, as amended. The
Registration Statement relates to the issuance by Ashton Woods and Ashton
Finance of up to $125 million aggregate principal amount of their 9.5% Senior
Subordinated Notes due 2015 (the "New Notes") and the issuance by the subsidiary
guarantors named in the Registration Statement of guarantees (each a "Guaranty"
and collectively, the "Guarantees") with respect to the New Notes.






FENNEMORE CRAIG, P.C.

Ashton Woods USA L.L.C.

November 22, 2005
Page 2


         The New Notes and Guarantees will be issued under an indenture, dated
as of September 21, 2005 (the "Indenture"), among Ashton Woods, Ashton Finance,
the Guarantor, the other subsidiary guarantors named therein and U.S. Bank
National Association, as trustee. The New Notes and Guarantees will be offered
by Ashton Woods and Ashton Finance in exchange for $125 million aggregate
principal amount of their outstanding 9.5% Senior Subordinated Notes due 2015
and the related guarantees of those notes. In connection with the Registration
Statement, we have been requested to render the opinions set forth herein.

         In connection with this opinion, we have examined originals or copies,
certified or otherwise identified to our satisfaction, of (i) the Articles of
Organization of the Guarantor, (ii) certain written consents of the sole member
of the Guarantor, (iii) the Indenture, (iv) the Registration Statement, (v) a
specimen of the New Notes and the Guarantees; and (vi) such other corporate
records, agreements, certificates, documents and other instruments of the
Guarantor and such certificates or comparable documents of public officials and
of officers and representatives of the Guarantor as we deemed necessary or
appropriate for purposes of rendering the opinions set forth below.

         In such examination and in rendering the opinions set forth below, we
have assumed (i) the legal capacity of all natural persons, (ii) the genuineness
of all signatures, (iii) the authority of all signatories, (iv) the authenticity
and completeness of all documents submitted to us as forms of the documents to
be executed, (v) the conformity to original documents of all documents submitted
to us as certified or photostatic copies, (vi) that the statements contained in
the Indenture, the Guarantees and the Registration Statement are true, correct,
and complete as to all matters of fact, and (vii) that the New Notes and the
Guarantees will be issued as described in the Registration Statement. As to any
facts material to this opinion which we did not independently establish or
verify, we have relied upon statements or representations of officers and/or
other representatives of the Guarantor and others, all of which statements and
representations we have assumed to be true and correct in all respects as of the
date hereof.

         Based upon and subject to the assumptions, limitations, qualifications
and exceptions set forth herein, it is our opinion that:

         1. The Guarantor is validly existing as a limited liability company and
in good standing under the laws of the State of Arizona, and the Guarantor has
the limited liability company power to execute, deliver and perform its
obligations under the Guaranty.

         2. The execution, delivery and performance of the Indenture and the
Guaranty by the Guarantor has been duly authorized by all necessary limited
liability company action on the part of the Guarantor.




FENNEMORE CRAIG, P.C.


Ashton Woods USA L.L.C.

November 22, 2005
Page 3


         3. The execution and delivery by the Guarantor of the Indenture and the
Guaranty and the performance of its obligations thereunder have been duly
authorized by all necessary limited liability company action and do not and will
not (i) require any further consent or approval of its members, or (ii) violate
any provision of any law, rule or regulation of the State of Arizona, or (iii)
or violate its articles of organization.

         The foregoing opinions are subject to the following qualifications and
limitations:

         With respect to our opinions set forth in paragraph 3 we express no
opinion with respect to the enforceability of the Indenture or the Guaranty.

         We are qualified to practice law in the State of Arizona. We express no
opinion as to, and for the purposes of the opinions set forth herein, we have
conducted no investigation of, and do not purport to be experts on, any laws
other than the laws of the State of Arizona. This opinion speaks as of the date
hereof. We assume no obligation to advise you of any change in the foregoing
subsequent to the effectiveness of the Registration Statement even though the
change may affect the legal analysis or a legal conclusion or other matters in
this opinion letter.

         This opinion has been prepared for your use in connection with the
Registration Statement and may not be relied upon for any other purpose;
provided, however, that Paul, Hastings, Janofsky & Walker LLP may rely upon this
opinion with respect to its opinion to you in connection with the Registration
Statement. Notwithstanding the foregoing, we hereby consent to the filing of
this opinion with the Securities and Exchange Commission as Exhibit 5.6 to the
Registration Statement and to the reference to this firm under the heading
"LEGAL MATTERS" in the Prospectus forming a part of the Registration Statement.
In giving this consent, we do not thereby admit that we are included in the
category of persons whose consent is required under Section 7 of the Securities
Act of 1933, as amended, or the rules and regulations of the Securities and
Exchange Commission.


                                       Very truly yours,

                                       /s/ Fennemore Craig, P.C.
                                      --------------------------------
                                       Fennemore Craig, P.C.

EX-10.1

                                                                    Exhibit 10.1

                                CREDIT AGREEMENT

                          dated as of January 20, 2005

                                  by and among

                            ASHTON WOODS USA L.L.C.,
                                   as Borrower

                                       and

                            the Lenders Party Hereto

                                       and

                      WACHOVIA BANK, NATIONAL ASSOCIATION,
                            as Agent for the Lenders

                                       and

                             BANK OF AMERICA, N.A.,
                              as Syndication Agent

                                       and

                         KEY BANK, NATIONAL ASSOCIATION,
                             as Documentation Agent

                                      with

                         WACHOVIA CAPITAL MARKETS, LLC,
                      as Lead Arranger and Sole Bookrunner



                                TABLE OF CONTENTS

                                                                           
ARTICLE 1: DEFINITIONS.....................................................    1
   1.1     Defined Terms...................................................    1
   1.2     Other Definitional Provisions...................................   22

ARTICLE 2: AMOUNT AND TERMS OF COMMITMENTS, REVOLVING CREDIT LOANS,
           SWINGLINE LOANS AND FACILITY L/CS...............................   23
   2.1     Commitments.....................................................   23
   2.2     Notes...........................................................   23
   2.3     Procedure for Borrowing.........................................   24
   2.4     Commitment Fee..................................................   25
   2.5     Interest; Default Interest......................................   25
   2.6     Termination, Reduction or Increase of Aggregate Commitment......   27
   2.7     Maturity Date of Commitment; Extension..........................   29
   2.8     Computation of Interest and Fees................................   31
   2.9     Increased Costs.................................................   31
   2.10    Use of Proceeds.................................................   33
   2.11    Payments; Pro Rata Treatment....................................   33
   2.12    Swingline Loans.................................................   34
   2.13    The Facility L/Cs...............................................   36
   2.14    Designation or Resignation of LC Issuer.........................   36
   2.15    Issuance of Facility L/Cs.......................................   36
   2.16    Facility L/C Participations.....................................   38
   2.17    Payments........................................................   39
   2.18    Facility L/C Fee................................................   39
   2.19    Further Assurances..............................................   40
   2.20    Obligations Absolute............................................   40
   2.21    LC Issuer Reporting Requirements................................   41
   2.22    Indemnification; Nature of LC Issuer's Duties...................   41

ARTICLE 3: GENERAL PROVISIONS APPLICABLE TO LOANS..........................   42
   3.1     Conversion/Continuation Options.................................   42
   3.2     Inability to Determine Interest Rate............................   43
   3.3     Availability of LIBOR Rate Loans................................   43
   3.4     Designation of a Different Lending Office.......................   43
   3.5     Indemnity.......................................................   43
   3.6     Taxes...........................................................   44
   3.7     Survival of Indemnity...........................................   46
   3.8     Telephonic Notices..............................................   46
   3.9     Funding by Lenders; Presumption by Agent........................   46
   3.10    Replacement of Lenders..........................................   47




                                        i



                                                                           
ARTICLE 4: REPRESENTATIONS AND WARRANTIES..................................   47
   4.1     Financial Statements............................................   48
   4.2     Existence; Compliance with Law..................................   48
   4.3     Power; Authorization; Enforceable Obligations...................   48
   4.4     No Legal Bar....................................................   49
   4.5     No Material Litigation..........................................   49
   4.6     Regulation U....................................................   49
   4.7     Investment Company Act..........................................   49
   4.8     ERISA...........................................................   49
   4.9     Disclosure......................................................   50
   4.10    Subsidiary Information..........................................   50
   4.11    Schedules.......................................................   50
   4.12    Environment.....................................................   50
   4.13    Force Majeure Events............................................   51
   4.14    Other Agreements................................................   51
   4.15    No Defaults on Outstanding Judgments or Orders..................   51
   4.16    Ownership and Liens.............................................   51
   4.17    Operation of Business...........................................   51
   4.18    Taxes...........................................................   51
   4.19    OFAC............................................................   52

ARTICLE 5: CONDITIONS PRECEDENT............................................   52
   5.1     Conditions to Initial Loan(s)...................................   52
   5.2     Conditions to All Loans.:.......................................   55

ARTICLE 6: AFFIRMATIVE COVENANTS...........................................   55
   6.1     Financial Statements............................................   56
   6.2     Certificates; Other Information.................................   57
   6.3     Borrowing Base Certificate......................................   57
   6.4     Compliance with Borrowing Base Requirements.....................   57
   6.5     Payment of Obligations..........................................   58
   6.6     Maintenance of Existence........................................   58
   6.7     Maintenance of Property, Insurance..............................   58
   6.8     Inspection of Property; Books and Records; Discussions..........   58
   6.9     Notices.........................................................   58
   6.10    Maintenance of Tangible Net Worth...............................   59
   6.11    Maintenance of Leverage Ratio...................................   60
   6.12    Maintenance of Interest Coverage Ratio..........................   60
   6.13    Additional Guarantors...........................................   60
   6.14    Interest Rate Contracts.........................................   60

ARTICLE 7: NEGATIVE COVENANTS..............................................   60
   7.1     Limitation on Secured Indebtedness..............................   60
   7.2     Easements Encumbrances, Liens and Restrictive Covenants.........   60
   7.3     Mergers, etc....................................................   61




                                       ii



                                                                           
   7.4     Limitation on Entitled Land.....................................   61
   7.5     Land Components.................................................   61
   7.6     Investments, Loans and Advances.:...............................   61
   7.7     Transactions with Affiliates....................................   61
   7.8     Adjusted Working Capital........................................   61
   7.9     Limitation on Payment and Securing of Subordinated Debt.........   61
   7.10    Indebtedness....................................................   62
   7.11    Limitation on Distribution......................................   63
   7.12    Ownership and Management........................................   63
   7.13    Housing Inventory...............................................   63
   7.14    Nature of Business..............................................   63
   7.15    Sale or Discount of Receivables.................................   63
   7.16    Increase in Capital.............................................   63
   7.17    Capital Assets..................................................   64
   7.18    Environmental Responsibilities..................................   64
   7.19    Guaranties......................................................   64

ARTICLE 8: CASH COLLATERAL.................................................   64
   8.1     Facility L/C Collateral Account.................................   64
   8.2     Event of Default under Paragraph (5) of Article 9...............   64
   8.3     Other Events of Default.........................................   65
   8.4     Cure; Termination...............................................   65

ARTICLE 9: DEFAULTS, EVENTS OF DEFAULT; DISTRIBUTION OF PROCEEDS AFTER
           EVENT OF DEFAULT................................................   65

ARTICLE 10: THE AGENT......................................................   68
   10.1    Appointment and Authority.......................................   68
   10.2    Rights as a Lender..............................................   68
   10.3    Exculpatory Provisions..........................................   69
   10.4    Reliance by Agent...............................................   69
   10.5    Delegation of Duties............................................   70
   10.6    Resignation of Agent............................................   70
   10.7    Non-Reliance on Agent and Other Lenders.........................   71
   10.8    No Other Duties, etc............................................   71

ARTICLE 11: MISCELLANEOUS..................................................   71
   11.1    Amendments and Waivers..........................................   71
   11.2    Notices.........................................................   72
   11.3    No Waiver; Cumulative Remedies..................................   73
   11.4    Governmental Regulation.........................................   73
   11.5    Survival of Representations and Warranties......................   73
   11.6    Costs and Expenses; Indemnification; Reimbursement; Waiver of
           Damages.........................................................   73
   11.7    Successors and Assigns Generally; Assignments...................   75




                                       iii



                                                                           
   11.8    Setoff..........................................................   77
   11.9    Waiver Of Jury Trial............................................   78
   11.10   Treatment of Certain Information; Confidentiality...............   79
   11.11   Counterparts; Integration; Effectiveness........................   79
   11.12   Governing Law...................................................   80
   11.13   Severability of Provisions......................................   80
   11.14   Submission to Jurisdiction; Waiver of Venue; Service of
           Process.........................................................   80
   11.15   Headings........................................................   81
   11.16   FIN 46..........................................................   81
   11.17   USA Patriot Act.................................................   81



SCHEDULES

1    -- Commitments of Lenders
2    -- Existing L/Cs
3    -- Principal Places of Business, etc. of All Subsidiaries
4    -- Owner Guarantors
4.14 -- Other Agreements
5    -- Existing Shareholder Notes
6    -- Existing Joint Ventures
7.6  -- Investments, Loans and Advances
7.10 -- Indebtedness

EXHIBITS

A   -- Form of Borrowing Base Certificate
B-1 -- Form of Subsidiary Guaranty Agreement
B-2 -- Form of Owner Guaranty Agreement
C   -- Form of Note
D   -- Form of Commitment and Acceptance
E   -- Form of Opinion of Counsel to Borrower
F   -- Form of Chief Financial Officer's Certificate
G   -- Form of Assignment and Assumption
H      Form of Notice of Borrowing
I      Form of Conversion/Continuation


                                       iv



                                CREDIT AGREEMENT

          THIS CREDIT AGREEMENT (this "Agreement"), dated as of January 20,
2005, by and among ASHTON WOODS USA L.L.C., a Nevada limited liability company
("Borrower"), the Lenders party hereto (the "Lenders") and WACHOVIA BANK,
NATIONAL ASSOCIATION, a national banking association having its main office in
Charlotte, North Carolina, as agent for Lenders ("Agent"). For valuable
consideration, the receipt of which is hereby acknowledged, Borrower, Lenders
and Agent, each intending to be legally bound, hereby agree as follows:

                             ARTICLE 1: DEFINITIONS

          1.1 Defined Terms. As used in this Agreement, the following terms have
the following respective meanings:

          "ABR Loan" shall mean any Loan when and to the extent that the
interest rate thereon is determined by reference to the Alternate Base Rate.

          "Actual Costs" shall mean the amount that Borrower or any Subsidiary
Guarantor has actually expended (to the extent such expenditures shall
ultimately constitute costs of sales in accordance with GAAP) as of the most
recent Inventory Valuation Date for:

          (i)  the acquisition of Unimproved Entitled Land;

          (ii) the acquisition and development of Lots Under Development;

          (iii) the acquisition of a Finished Lot; and

          (iv) the construction of a Housing Unit on a Lot for a Model Housing
               Unit, Speculative Housing Unit or Presold Housing Unit.

          "Additional Lender" shall have the meaning set forth in Section
2.6(b)(i) hereof.

          "Adjusted Tangible Net Worth" shall mean, at any date, the sum of (a)
Tangible Net Worth plus (b) the lesser of (i) an amount equal to fifty percent
(50%) of the outstanding principal amount of Subordinated Notes or (ii) an
amount equal to thirty-five percent (35%) of Tangible Net Worth, all determined
as of such date.

          "Administrative Questionnaire" means an Administrative Questionnaire
in a form supplied by Agent.

          "Affiliate" shall mean (a) any Person (other than a Subsidiary of
Borrower) which, directly or indirectly, controls, is controlled by or is under
common control with Borrower or (b) any Person who is a director, officer or key
employee of Borrower, any Subsidiary of Borrower or any Person described in
clause (a) of this definition. For purposes of


                                        1



this definition, "control" of a Person means the power, direct or indirect, to
vote five percent (5%) or more of the securities having voting power for the
election of directors or similar governing body of such Person or otherwise to
direct or cause the direction of the management and policies of such Person,
whether by contract or otherwise.

          "Agent" shall have the meaning set forth in the preamble hereof and
shall include any successor agent appointed pursuant to Section 10.6 hereof.

          "Agent's Fee Letter" shall mean that certain fee letter from the Agent
and Arranger to Borrower dated and accepted by Borrower on November 11, 2004.

          "Aggregate Commitment" shall mean the aggregate Commitments of all the
Lenders, as reduced or increased from time to time pursuant to the terms of this
Agreement. As of the date of this Agreement, the Aggregate Commitment is
$225,000,000.

          "Aggregate Outstanding Credit Exposure" means, at any time, the sum of
(a) the aggregate of the Outstanding Credit Exposure of all Lenders and (b) the
outstanding principal amount of the Swingline Loans.

          "Agreement" shall mean this Agreement, as the same may be amended,
supplemented or otherwise modified from time to time.

          "Alternate Base Rate" means, for any day with respect to an ABR Loan,
the applicable British Bankers' Association LIBOR rate for deposits in Dollars
having a maturity of one month as reported by any comparable generally
recognized financial information service as of 11:00 a.m. (London time) on such
day, or if such day is not a Business Day, then on the immediately preceding
Business Day, provided that, if no such British Bankers' Association LIBOR rate
is available to Agent, the applicable Alternate Base Rate shall instead be the
rate determined by Agent from another comparable generally recognized source or
interbank quotation; provided, further, that if on any day Agent is unable to
determine the Alternate Base Rate from another source or quotation, the
Alternate Base Rate for such day shall be the rate per annum equal to the higher
of (i) the Federal Funds Rate for such day, plus 0.50%, and (ii) the Prime Rate
for such day.

          "Applicable ABR Margin" shall mean, as at any date of determination,
the margin indicated in Section 2.5(b) hereof as then applicable to ABR Loans
(under Section 2.5(a) hereof).

          "Applicable LIBOR Margin" shall mean, as at any date of determination,
the margin indicated in Section 2.5(b) hereof as then applicable to LIBOR Rate
Loans (under Section 2.5(a) hereof). The Applicable LIBOR Margin is also the
Applicable Facility L/C Rate.

          "Applicable Facility L/C Rate" shall mean, as at any date of
determination, the rate per annum indicated in Section 2.5(b) hereof as then
applicable in the determination of the Facility L/C Fee (under Section 2.18
hereof). The Applicable Facility L/C Rate is also the Applicable LIBOR Margin.

          "Applicable Margin(s)" shall mean the Applicable ABR Margin and/or the
Applicable LIBOR Margin, as the case may be.


                                        2



          "Applicable Unused Fee Rate" shall mean, as at any date of
determination, the rate per annum indicated in Section 2.5(b) hereof as then
applicable in the determination of the Unused Fee (under Section 2.4 hereof).

          "Approved Fund" means any Fund that is administered or managed by (a)
a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an
entity that administers or manages a Lender.

          "Arranger" shall mean Wachovia Capital Markets, LLC, as Lead Arranger
and Sole Bookrunner.

          "Assignment and Assumption" means an assignment and assumption entered
into by a Lender and an Eligible Assignee (with the consent of any party whose
consent is required by Section 11.7 hereof), and accepted by Agent, in
substantially the form of Exhibit G or any other form approved by Agent.

          "Assumed Borrower Taxes" shall mean forty percent (40%) of the
quarterly net income of Borrower until the effective date of any material change
in the aggregate federal, state and local income tax rate applicable to the
owners of Borrower with respect to the net income of Borrower. In the event that
there is a material change in the aggregate federal, state and local income tax
rate applicable to the owners of Borrower, Borrower shall so notify Agent prior
to the effective date of such change and Agent shall determine, in good faith,
the aggregate income tax rate that will become applicable to the owners of
Borrower on the effective date of such change (such determination shall be
conclusive and binding on Lenders and Borrower, absent manifest error) and on
such date the percentage used to calculate "Assumed Borrower Taxes" will be
reset to approximate the newly determined applicable aggregate income tax rate.

          "Bankruptcy Code" shall mean Title 11, U.S.C. as amended from time to
time.

          "Borrower" shall mean Ashton Woods USA L.L.C., a Nevada limited
liability company.

          "Borrowing Base" shall mean, as at any date of determination, an
amount equal to the sum of the following assets of Borrower and each Subsidiary
Guarantor (but only to the extent such assets are not subject to any Liens other
than Permitted Liens):

          (i)  fifty percent (50%) of the Actual Costs for Unimproved Entitled
               Land; provided, however, that any Unimproved Entitled Land not
               sold or converted to Lots Under Development within twenty-four
               (24) months following the date that such Unimproved Entitled Land
               was first included in the Borrowing Base, shall be excluded from
               the Borrowing Base, plus

          (ii) seventy percent (70%) of the Actual Costs for Lots Under
               Development; provided, however, that any Lots Under Development
               not sold or converted to Finished Lots within twenty-four (24)
               months following the date that such Lots Under Development were
               first included in the Borrowing Base shall be excluded from the
               Borrowing Base, plus


                                        3



          (iii) seventy percent (70%) of the Actual Costs for Finished Lots;
               provided, however, that such percentage with respect to any
               Finished Lot not sold or converted to a Speculative Housing Unit,
               a Model Housing Unit or a Presold Housing Unit within twenty-four
               (24) months following the date that such Finished Lot was first
               included in the Borrowing Base shall be reduced to fifty percent
               (50%); provided, further, however, that any Finished Lot not sold
               or converted to a Speculative Housing Unit, a Model Housing Unit
               or a Presold Housing Unit within thirty-six (36) months following
               the date that such Finished Lot was first included in the
               Borrowing Base shall be excluded from the Borrowing Base, plus

          (iv) ninety percent (90%) of the Actual Costs for Presold Housing
               Units; provided, however, that any Presold Housing Unit not sold
               within twelve (12) months following the date that such Presold
               Housing Unit was first included in the Borrowing Base shall be
               thereafter considered to be a Speculative Housing Unit for
               purposes of the Borrowing Base and, in such event, the date that
               such Presold Housing Unit was first included in the Borrowing
               Base shall continue to determine when it is excluded from the
               Borrowing Base pursuant to clause (v) of this definition, plus

          (v)  eighty-five percent (85%) of the Actual Costs for Speculative
               Housing Units; provided, however, that such percentage with
               respect to any Speculative Housing Unit not sold within twelve
               (12) months following the date that such Speculative Housing Unit
               was first included in the Borrowing Base shall be reduced to
               seventy percent (70%); provided, further, however, that any
               Speculative Housing Unit not sold within twenty-four (24) months
               following the date that such Speculative Housing Unit was first
               included in the Borrowing Base shall be excluded from the
               Borrowing Base, plus

          (vi) eighty-five percent (85%) of the Actual Costs for Model Housing
               Units; provided, however, that such percentage with respect to
               any Model Housing Unit not sold within twenty-four (24) months
               following the date that such Model Housing Unit was first
               included in the Borrowing Base shall be reduced to seventy
               percent (70%); provided, further, however, that any Model Housing
               Unit not sold within sixty (60) months following the date that
               such Model Housing Unit was first included in the Borrowing Base
               shall be excluded from the Borrowing Base.

          Notwithstanding the foregoing, (a) the amount calculated pursuant to
clause (i) of this definition shall not exceed at any time ten percent (10%) of
the Borrowing Base, (b) the aggregate of amounts calculated pursuant to clauses
(i), (ii) and (iii) of this definition shall not exceed at any time fifty
percent (50%) of the Borrowing Base, (c) the aggregate of amounts calculated
pursuant to clauses (v) and (vi) of this definition shall not exceed at any time
forty percent (40%) of the aggregate of the amounts calculated pursuant to
clauses (iv), (v) and (vi) of this definition, and (d) the amount calculated
under this definition with respect to Condo Units shall not exceed at any time
fifteen percent (15%) of the Borrowing Base.


                                        4



          "Borrowing Base Certificate" shall mean a certificate in the form of
Exhibit A hereto, certified by the Chief Financial Officer of Borrower.

          "Borrowing Base Indebtedness" shall mean at any date (i) Consolidated
Indebtedness, less (ii) the sum of (a) Secured Indebtedness, and (b)
Subordinated Indebtedness not due within one (1) year of such date, all as of
such date.

          "Borrowing Date" shall mean any Business Day specified pursuant to (a)
Section 2.3 hereof as a date on which Lenders make a disbursement of the
Revolving Credit Loans hereunder, (b) Section 2.12 hereof as a date on which
Swingline Lender makes, at Borrower's request, a disbursement of the Swingline
Loans hereunder, or (c) Section 2.13 hereof as a date on which an LC Issuer
issues, at Borrower's request, a Facility L/C hereunder.

          "Business Day" shall mean (a) with respect to any borrowing, payment
or rate selection of LIBOR Rate Loans or ABR Loans, a day (other than a Saturday
or Sunday) on which banks generally are open in Charlotte, North Carolina for
the conduct of substantially all of their commercial lending activities and on
which dealings in Dollars are carried on in the London interbank market and (b)
for all other purposes, a day (other than a Saturday or Sunday) on which banks
generally are open in Charlotte, North Carolina for the conduct of substantially
all of their commercial lending activities.

          "Capital Leases" shall mean all leases which have been or should be
capitalized on the books of the lessee in accordance with GAAP.

          "Change in Law" means the occurrence, after the date of this
Agreement, of any of the following: (a) the adoption or taking effect of any
law, rule, regulation or treaty, (b) any change in any law, rule, regulation or
treaty or in the administration, interpretation or application thereof by any
Governmental Authority or (c) the making or issuance of any request, guideline
or directive (whether or not having the force of law) by any Governmental
Authority.

          "Code" shall mean the Internal Revenue Code of 1986, as amended or
superseded from time to time. Any reference to a specific provision of the Code
shall be construed to include any comparable provision of the Code as hereafter
amended or superseded.

          "Collateral Shortfall Amount" shall have the meaning set forth in
Section 8.2 hereof.

          "Commitment" shall have the meaning set forth in Section 2.1(a)
hereof.

          "Commitment and Acceptance" shall have the meaning set forth in
Section 2.6(b)(i) hereof.

          "Commitment Period" shall mean the period from and including the date
of this Agreement to the Maturity Date, or such earlier or later date as the
Aggregate Commitment shall terminate as provided herein.


                                        5



          "Commonly Controlled Entity" shall mean an entity, whether or not
incorporated, which is under common control with Borrower within the meaning of
Section 414(b) or (c) of the Code.

          "Condo Units" shall mean the Housing Units related to the purchase and
development of condominiums, provided that the condominium building is four (4)
stories or less (excluding parking) in size.

          "Consolidated Earnings" shall mean, for any period, the amount which
would be set forth opposite the caption "net income" (or any like caption) in a
consolidated statement of income or operations of Borrower and its Subsidiaries
for such period prepared in accordance with GAAP, minus franchise taxes payable
in Texas and minus Assumed Borrower Taxes with respect to such period.

          "Consolidated Indebtedness" shall mean, at any date, the Indebtedness
of Borrower and its Subsidiaries determined on a consolidated basis as at such
date.

          "Construction Bonds" shall mean bonds issued by surety bond companies
for the benefit of, and as required by, municipalities or other political
subdivisions to secure the performance by Borrower or any Subsidiary of its
obligations relating to lot improvements and subdivision development and
completion.

          "Contingent Obligation" shall mean, as to any Person, any
reimbursement obligations (including, in the case of Borrower, the Reimbursement
Obligations) of such Person in respect of drafts that may be drawn under Letters
of Credit, any reimbursement obligations of such Person in respect of surety
bonds (including reimbursement obligations in respect of Construction Bonds),
and any obligation of such Person guaranteeing or in effect guaranteeing any
Indebtedness, leases, dividends or other obligations primarily to pay money
("primary obligations") of any other Person (the "primary obligor") in any
manner, whether directly or indirectly, including without limitation any
obligation of such Person, whether or not contingent, (a) to purchase any such
primary obligation or any property constituting direct or indirect security
therefor, (b) to advance or supply funds (i) for the purchase or payment of any
such primary obligation, or (ii) to maintain working capital or equity capital
of the primary obligor or otherwise to maintain the net worth or solvency of the
primary obligor, (c) to purchase property, securities or services primarily for
the purpose of assuring the obligee under any such primary obligation of the
ability of the primary obligor to make payment of such primary obligation, or
(d) otherwise to assure or hold harmless the obligee under such primary
obligation against loss in respect thereof; provided, however, that the term
"Contingent Obligation" shall not include (A) endorsements of instruments for
deposit or collection in the ordinary course of business, and (B) obligations
(including indemnity obligations) under purchase contracts or sale contracts
entered into in the ordinary course of business.

          "Contractual Obligation" shall mean, as to any Person, any provision
of any security issued by such Person or of any agreement, instrument or
undertaking to which such Person is a party or by which it or any of its
property is bound.


                                        6



          "Current Assets" shall mean all current assets shown on the
consolidated financial statements of Borrower most recently delivered to Agent
pursuant to Section 6.1(a) or (b) hereof, which shall (i) include cash, accounts
receivable, prepaids, Housing Units, Finished Lots and Lots Under Development,
and (ii) exclude receivables due from Subsidiaries or Affiliates of Borrower,
Unimproved Entitled Land and fixed assets.

          "Current Liabilities" shall mean all current liabilities shown on the
consolidated financial statements of Borrower most recently delivered to Agent
pursuant to Section 6.1(a) or (b) hereof, which shall (i) include accounts
payable, accruals, customer deposits, overdrafts, and Indebtedness associated
with Housing Units, Finished Lots and Lots Under Development, and (ii) exclude
Non-Recourse Indebtedness associated with long-term assets (Unimproved Entitled
Land and fixed assets) and Indebtedness owed to any Subsidiary or Affiliate of
Borrower.

          "Default" shall mean any of the events specified in Article 9 hereof,
whether or not any requirement for the giving of notice, the lapse of time, or
both, has been satisfied.

          "Dollars" and "$" shall mean dollars in lawful currency of the United
States of America.

          "EBITDA" means, for any period, the sum of (a) net income for such
period, less (b) franchise taxes payable in Texas, plus (c) the following, to
the extent deducted in calculating net income for such period, (i) depreciation
expense and amortization expense for such period, (ii) interest expense in cost
of goods sold for such period, and (iii) interest expense from operations for
such period, all as determined for Borrower and its Subsidiaries on a
consolidated basis in accordance with GAAP.

          "Eligible Assignee" means (a) a Lender, (b) an Affiliate of a Lender,
(c) an Approved Fund, and (d) any other Person (other than a natural person)
approved by (i) Agent, (ii) in the case of any assignment of a Commitment or
portion thereof, the LC Issuers and the Swingline Lender, and (iii) unless an
Event of Default has occurred and is continuing, Borrower (each such approval
not to be unreasonably withheld or delayed); provided that notwithstanding the
foregoing, "Eligible Assignee" shall not include Borrower or any of Borrower's
Affiliates or Subsidiaries.

          "Environmental Laws" means: (i) the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended by the Superfund
Amendments and Reauthorization Act of 1986, 42 U.S.C. 9601 et seq. ("CERCLA"),
(ii) the Resource Conservation and Recovery Act, as amended by the Hazardous and
Solid Waste Amendment of 1984, 42 U.S.C. 6901 et seq. ("RCRA"), (iii) the Clean
Air Act, 42 U.S.C. 7401 et seq., (iv) the Clean Water Act of 1977, 33 U.S.C.
1251 et seq., (v) the Toxic Substances Control Act, 15 U.S.C. 2601 et seq., (vi)
the Safe Drinking Water Act, 42 U.S.C. 300(E) et seq., (vii) the Refuse Act, 33
U.S.C. 407 et seq., (viii) the Texas Solid Waste Disposal Act, Tex. Health and
Safety Code, Section 361.001 et seq., (ix) the Texas Clean Air Act, Tex. Health
and Safety Code, Section 382.001 et seq., (x) the regulations promulgated
pursuant to the aforesaid laws, or any of them, and (xi) all other federal,
state or local laws, ordinances, orders, rules or regulations, now or hereafter
existing, that directly and/or indirectly relate to air pollution, water
pollution, noise control and/or the presence, storage, escape, seepage, leakage,
emission, release, use, spillage,


                                        7



generation, transportation, handling, discharge, disposal or recovery of on-site
or off-site hazardous or toxic substances, wastes or materials and/or
underground storage tanks, and as each and any of the foregoing laws,
ordinances, orders, rules or regulations may be amended or enacted from time to
time.

          "Environmental Liability" means any claim, demand, obligation, cause
of action, accusation, allegation, order, violation, damage, injury, judgment,
injunction, penalty or fine, cost of enforcement, cost of cleanup, removal,
encapsulation or other remedial action, or any other cost or expense whatsoever,
including, without limitation, reasonable attorneys' fees and reimbursements,
resulting from the violation of any Environmental Law or the existence of
Hazardous Material in violation of any Environmental Law, or the imposition of
any Environmental Lien.

          "Environmental Lien" means a Lien in favor of any Person arising as a
result of or securing (i) any liability under an Environmental Law or (ii)
damages arising from or costs incurred by any Person in response to any actual
or threatened Hazardous Discharge.

          "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time.

          "Eurocurrency Reserve Requirements" shall mean, for any day as applied
to a LIBOR Rate Loan, the aggregate (without duplication) of the rates
(expressed as a decimal fraction) of reserve requirements in effect on such day
(including, without limitation, basic, supplemental, marginal and emergency
reserves under any regulations of the Board of Governors of the Federal Reserve
System or other Governmental Authority having jurisdiction with respect thereto)
dealing with reserve requirements prescribed for eurocurrency funding (currently
referred to as "Eurocurrency Liabilities" in Regulation D of the Board of
Governors of the Federal Reserve System) maintained by a member bank of the
Federal Reserve System.

          "Event of Default" shall mean any of the events specified in Article 9
hereof, provided that any requirement for the giving of notice, the lapse of
time, or both, has been satisfied.

          "Excluded Taxes" means, with respect to Agent, any Lender, any LC
Issuer or any other recipient of any payment to be made by or on account of any
obligation of Borrower hereunder, (a) taxes imposed on or measured by its
overall net income (however denominated), and franchise taxes imposed on it (in
lieu of net income taxes), by the jurisdiction (or any political subdivision
thereof) under the laws of which such recipient is organized or in which its
principal office is located or, in the case of any Lender, in which its
applicable Lending Office is located, (b) any branch profits taxes imposed by
the United States of America or any similar tax imposed by any other
jurisdiction in which Borrower is located and (c) in the case of a Foreign
Lender (other than an assignee pursuant to a request by Borrower under Section
3.10 hereof), any withholding tax that is imposed on amounts payable to such
Foreign Lender at the time such Foreign Lender becomes a party hereto (or
designates a new Lending Office) or is attributable to such Foreign Lender's
failure or inability (other than as a result of a Change in Law) to comply with
Section 3.6(e) hereof, except to the extent that such Foreign Lender (or its
assignor, if any) was entitled, at the time of designation of a new Lending
Office (or assignment), to receive


                                        8



additional amounts from Borrower with respect to such withholding tax pursuant
to Section 3.6(a) hereof.

          "Existing Credit Agreement" shall mean the Unsecured Revolving Loan
Agreement, dated January 16, 2004, by and among the borrowers named therein, the
Borrower, the guarantors named therein, the banks named therein, and Washington
Mutual Bank, FA, as agent, as amended, modified or supplemented from time to
time.

          "Existing L/Cs" shall mean those certain Letters of Credit issued for
the account of Borrower prior to the date hereof and listed on Schedule 2
hereto.

          "Extension Request" shall have the meaning set forth in Section 2.7(b)
hereof.

          "Facility Increase Request" shall have the meaning set forth in
Section 2.6(b)(i) hereof.

          "Facility L/C" shall mean an irrevocable standby Letter of Credit,
including any extensions or renewals, (a) issued by an LC Issuer pursuant to
this Agreement or (b) in the case of the Existing L/Cs, previously issued by an
LC Issuer and which will remain in place as of the first Borrowing Date, in
which each Lender agrees to purchase a participation equal to its Ratable Share
and the LC Issuer agrees to make payments in Dollars for the account of
Borrower, on behalf of Borrower or any Subsidiary thereof in respect of
obligations of Borrower or such Subsidiary incurred pursuant to contracts made
or performances undertaken or to be undertaken or like matters relating to
contracts to which Borrower or such Subsidiary is or proposes to become a party
in the ordinary course of Borrower's or such Subsidiary's real estate operations
in the United States. The term "Facility L/C" shall not include any Letters of
Credit issued by any Lender other than pursuant to this Agreement or as provided
in clause (b) of this definition.

          "Facility L/C Application" shall have the meaning set forth in Section
2.15(a) hereof and shall also include each reimbursement agreement delivered to
an LC Issuer prior to the date hereof with respect to any Existing L/C.

          "Facility L/C Collateral Account" shall have the meaning set forth in
Section 8.1 hereof.

          "Facility L/C Fee" shall mean a fee, payable with respect to each
Facility L/C issued by an LC Issuer, in an amount per annum equal to the product
of the face amount of such Facility L/C and the Applicable Facility L/C Rate, in
each case as such Applicable Facility L/C Rate is determined on a daily basis
during the period in respect of which such fee is payable hereunder.

          "Facility L/C Obligations" shall mean, at any date, the sum of (i) the
aggregate undrawn face amount of all outstanding Facility L/Cs on such date,
plus (ii) the aggregate unpaid amount of all Reimbursement Obligations on such
date.

          "Federal Funds Rate" shall mean, for any day, the rate per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%) equal to the
weighted average of the rates on


                                        9



overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers on such day, as published by the Federal
Reserve Bank of New York on the Business Day next succeeding such day, provided,
however, that (a) if the day for which such rate is to be determined is not a
Business Day, the Federal Funds Rate for such day shall be such rate on such
transactions on the next preceding Business Day as so published on the next
succeeding Business Day, and (b) if such rate is not so published for any
Business Day, the Federal Funds Rate for such Business Day shall be the average
rate charged to Agent on such Business Day on such transactions as determined by
Agent.

          "Finished Lot" means a fully developed single-family residential lot
owned by Borrower or any Subsidiary Guarantor with respect to which all
development and construction work has been completed (including completion of
all public or private roadways necessary to provide sufficient access to such
lot and completion of all water, sanitary and storm sewer facilities in
capacities sufficient for single-family residential use) so that such lot is
ready and of sufficient size for a residence or condominium project to be
constructed thereon. The term "Finished Lot" shall not include any land upon
which the construction of a residential unit has commenced or lots that fall
under the definition of a Presold Housing Unit and have all permitting necessary
to commence construction in place.

          "Foreign Lender" means any Lender that is organized under the laws of
a jurisdiction other than that in which Borrower is resident for tax purposes.
For purposes of this definition, the United States of America, each State
thereof and the District of Columbia shall be deemed to constitute a single
jurisdiction.

          "Fund" means any Person (other than a natural person) that is (or will
be) engaged in making, purchasing, holding or otherwise investing in commercial
loans and similar extensions of credit in the ordinary course of its business.

          "GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect at the time any determination is made or
financial statement is required hereunder as promulgated by the American
Institute of Certified Public Accountants, the Accounting Principles Board, the
Financial Accounting Standards Board or any other body existing from time to
time which is authorized to establish or interpret such principles, applied on a
consistent basis throughout any applicable period, subject to any change
required by a change in GAAP; provided, however, that if any change in generally
accepted accounting principles from those applied in preparing the financial
statements referred to in Section 4.1 hereof affects the calculation of any
financial covenant contained herein, Borrower, Lenders and Agent hereby agree to
amend the Agreement to the effect that each such financial covenant is not more
or less restrictive than such covenant as in effect on the date hereof using
generally accepted accounting principles consistent with those reflected in such
financial statements.

          "Governmental Authority" means the government of the United States of
America or any other nation, or of any political subdivision thereof, whether
state or local, and any agency, authority, instrumentality, regulatory body,
court, central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government (including any supra-national bodies such as the European Union or
the European Central Bank).


                                       10



          "Guarantors" means, collectively, the Owner Guarantors and the
Subsidiary Guarantors.

          "Guaranty Agreements" means, collectively, the Owner Guaranty
Agreement and the Subsidiary Guaranty Agreement.

          "Hazardous Discharge" means the happening of any event involving the
presence, disposal, escape, seepage, leakage, emission, release, use, storage,
spillage, discharge, investigation, cleanup, removal or remediation of any
Hazardous Material which violates any Environmental Law.

          "Hazardous Material" shall mean one or more of the following
substances:

               (a) those substances included within the definitions of
"hazardous substances," "hazardous materials," "toxic substances" or "solid
waste" in any one or more of the Environmental Laws or the Hazardous Material
Transportation Act (49 U.S.C.) or in the regulations promulgated pursuant to
said laws;

               (b) those substances listed in the United States Department of
Transportation Table (49 CFR 172.101 and amendments thereto) or by the
Environmental Protection Agency (or any successor agency) as hazardous
substances (40 CFR Part 302 and amendments thereto);

               (c) such other substances, materials and wastes which are or
become regulated under applicable local, state or federal law, or the United
States government, or which are classified as hazardous or toxic under federal,
state or local laws, orders, ordinances, rules or regulations; and

               (d) any material, waste or substances which are: (i) asbestos,
(ii) polychlorinated biphenyls, (iii) explosives, (iv) radioactive materials,
(v) gasoline, (vi) petroleum, (vii) petroleum products or (viii) related or
similar materials or substances.

          "Housing Unit" means a single-family attached or detached dwelling
(including a condominium), including the Lot on which such dwelling is located,
that is or will be available for sale by Borrower or any Subsidiary Guarantor
that is proposed to be in the Borrowing Base. Each "Housing Unit" is a Presold
Housing Unit, a Speculative Housing Unit or a Model Housing Unit.

          "Housing Unit Closing" shall mean a closing of the sale of a Housing
Unit by Borrower or a Subsidiary Guarantor to a bona fide purchaser for value
that is not a Subsidiary or Affiliate of the Borrower.

          "Improvements" shall mean all Housing Units and any other
improvements, buildings, structures, equipment and amenities located on the Lots
owned by Borrower or any Subsidiary Guarantor.

          "Increase Date" shall have the meaning set forth in Section 2.6(b)(ii)
hereof.


                                       11



          "Indebtedness" shall mean, without duplication, with respect to any
Person (a) indebtedness or liability for borrowed money, including, without
limitation, subordinated indebtedness (other than trade accounts payable and
accruals incurred in the ordinary course of business); (b) obligations evidenced
by debentures, notes, bonds, or other similar instruments; (c) obligations for
the deferred purchase price of property (including, without limitation, seller
financing of any inventory) or services; (d) obligations as lessee under Capital
Leases to the extent that the same would, in accordance with GAAP, appear as
liabilities in such Person's consolidated balance sheet; (e) current liabilities
in respect of unfunded vested benefits under Plans and incurred withdrawal
liability under any Multiemployer Plan; (f) obligations under acceptance
facilities; (g) all Contingent Obligations, provided, however, that
"Indebtedness" shall not include reimbursement obligations in respect of
Performance Letters of Credit or guaranties of performance obligations (such as
bid or performance surety bonds) except to the extent that any such
reimbursement obligations or guaranties of performance obligations have been
drawn or called upon; (h) obligations secured by any Liens on any property of
such Person, whether or not the obligations have been assumed; and (i) net
liabilities under Interest Rate Contracts, exchange or cap agreements (valued as
the termination value thereof, computed in accordance with a method approved by
the International Swaps and Derivatives Association and agreed to by such Person
in the applicable agreement).

          "Indemnified Taxes" means Taxes other than Excluded Taxes.

          "Indemnitee" shall have the meaning set forth in Section 11.6(b)
hereof.

          "Intangible Assets" shall mean, at any time, the amount (to the extent
reflected in determining consolidated stockholders or members equity of
Borrower) of all unamortized debt discount and expense, unamortized deferred
charges, goodwill, patents, trademarks, service marks, trade names, copyrights
and all other items which would be treated as intangibles on a consolidated
balance sheet of Borrower prepared in accordance with GAAP.

          "Interest Coverage Ratio" shall mean, for any period, the ratio of (a)
EBITDA for such period to (b) Interest Expense for such period.

          "Interest Expense" means, for any period of four (4) consecutive
fiscal quarters of Borrower, all interest incurred (whether expensed or
capitalized and including interest on Subordinated Indebtedness) of Borrower on
a consolidated basis for such period, as determined in accordance with GAAP.

          "Interest Payment Date" shall mean, (a) with respect to any ABR Loan
(whether a Revolving Credit Loan or a Swingline Loan), the first day of each
calendar month, commencing on the first of such days to occur after the first
Borrowing Date, and (b) with respect to any LIBOR Rate Loan, the last day of the
Interest Period applicable thereto.

          "Interest Period" shall mean with respect to any LIBOR Rate Loan:

          (i) initially, the period commencing on the Borrowing Date or
     conversion date, as the case may be, with respect to such LIBOR Rate Loan
     and ending one month thereafter; and


                                       12



          (ii) thereafter, each period commencing on the last day of the next
     preceding Interest Period applicable to such LIBOR Rate Loan and ending one
     month thereafter;

provided that all of the foregoing provisions relating to Interest Periods are
subject to the following:

          (1) if any Interest Period would otherwise end on a day that is not a
Business Day, such Interest Period shall be extended to the next succeeding
Business Day unless the result of such extension would be to carry such Interest
Period into another calendar month in which event such Interest Period shall end
on the immediately preceding Business Day;

          (2) any Interest Period that begins on the last Business Day of a
calendar month (or on a day for which there is no numerically corresponding day
in the calendar month at the end of such Interest Period) shall end on the last
Business Day of a calendar month; and

          (3) no Interest Period shall be for less than one month, and Borrower
shall not select an Interest Period for a LIBOR Rate Loan as a Revolving Credit
Loan if the last day of such Interest Period would be after the last day of the
Commitment Period.

          "Interest Rate Contract" shall mean any interest rate swap agreement,
interest rate cap agreement, interest rate collar agreement, interest rate
insurance arrangement, or any other agreement or arrangement designed to provide
protection against fluctuation in interest rates.

          "Inventory Valuation Date" shall mean (a) the second (2nd) to last
Tuesday of the most recent calendar month with respect to which the Borrower is
required to have delivered a Borrowing Base Certificate pursuant to Section 6.3
hereof or (b) if Borrower elects, pursuant to Section 6.4 hereof, to deliver a
Borrowing Base Certificate as of a later date, such later date.

          "Joint Venture" shall mean any Person in which the Borrower or a
Subsidiary holds any stock, partnership interest, joint venture interest,
limited liability company interest or other equity interest and that is either
(i) identified on Schedule 6 hereto or (ii) identified by Borrower as a "Joint
Venture" in a notice delivered to Agent from time to time after the Closing
Date.

          "Land" shall mean land owned by Borrower or a Subsidiary Guarantor,
which land is being developed or is held for future development or sale.

          "Land Value" means, at any time, the sum of the net book value of (a)
Unimproved Entitled Land, (b) Lots Under Development, and (c) Finished Lots.

          "LC Issuer" shall mean Wachovia Bank in its capacity as issuer of
Facility L/Cs hereunder, and any other Lender that may from time to time be
designated as an LC Issuer in accordance with the provisions of Section 2.14
hereof.

          "Lenders" shall have the meaning set forth in the preamble hereof.


                                       13



          "Lending Office" shall mean with respect to a Lender, the office,
branch, subsidiary or affiliate of such Lender identified in the Administrative
Questionnaire delivered by such Lender to Agent or otherwise selected by such
Lender pursuant to Section 2.3(c) hereof.

          "Letter of Credit" of a Person shall mean a letter of credit or
similar instrument which is issued by a financial institution upon the
application of such Person or upon which such Person is an account party or for
which such Person is in any way liable.

          "Level" shall mean the level of the Applicable Margin or Applicable
Unused Fee Rate (as applicable) as designated in the table set forth in Section
2.5(b) hereof. The three Levels in such table are identified as Levels I through
III, and Level I shall constitute the highest Level and Level III shall
constitute the lowest Level.

          "Leverage Ratio" means, for any fiscal quarter of Borrower, the ratio
of (a) Total Liabilities on the last day of such fiscal quarter to (b) Adjusted
Tangible Net Worth on the last day of such fiscal quarter.

          "LIBOR Base Rate" shall mean, with respect to each LIBOR Rate Loan for
the relevant Interest Period, the applicable British Bankers' Association London
interbank offered rate for deposits in Dollars as reported by any generally
recognized financial information service selected by the Agent as of 11:00 a.m.
(London time) two Business Days prior to the first day of such Interest Period
and having a maturity equal to such Interest Period.

          "LIBOR Rate" shall mean, with respect to each day during each Interest
Period pertaining to a LIBOR Rate Loan, a rate per annum determined for such day
in accordance with the following formula (rounded upward to the nearest 1/100th
of 1%):

                       LIBOR Base Rate
          ----------------------------------------
          1.00 - Eurocurrency Reserve Requirements

          "LIBOR Rate Loans" shall mean any Revolving Credit Loan when and to
the extent that the interest rate thereon is determined by reference to the
LIBOR Rate.

          "Lien" shall mean any mortgage, deed of trust, pledge, hypothecation,
assignment, deposit arrangement, charge, encumbrance, lien (statutory or other),
preference, priority or other security agreement or similar preferential
arrangement of any kind or nature whatsoever (including without limitation any
conditional sale or other title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing, and the
authorized filing by or against a Person of any financing statement as debtor
under the Uniform Commercial Code or comparable law of any jurisdiction).

          "Loan Documents" shall mean this Agreement, the Notes, the Guaranty
Agreements and the Facility L/C Applications and all other documents (if any)
from time to time executed and delivered by Borrower or a Guarantor that
evidence, secure or guarantee any of the Obligations.

          "Loans" shall mean the Revolving Credit Loans and the Swingline Loans.


                                       14



          "Lot" shall mean a Finished Lot or a lot that is part of Lots Under
Development that Borrower or any Subsidiary Guarantor intends to make into a
Finished Lot.

          "Lots Under Development" means all Unimproved Entitled Land with
respect to which Borrower or any Subsidiary Guarantor has obtained all necessary
approvals for its subdivision for residential housing units (including
condominium units), and which Borrower or any Subsidiary Guarantor is actively
developing into Finished Lots, or which Borrower or any Subsidiary Guarantor
reasonably expects to begin development activity within a nine (9) month period;
provided, however, that the term "Lots Under Development" shall not include any
land upon which the construction of a residential housing unit has commenced.

          "Mandatory Borrowing" shall have the meaning set forth in Section
2.12(d) hereof.

          "Maturity Date" shall mean January 19, 2009.

          "Maximum Swingline Amount" shall mean Ten Million Dollars
($10,000,000).

          "Model Housing Unit" shall mean a Housing Unit constructed in an
ongoing active project initially for inspection by prospective purchasers that
is not intended to be sold until all or substantially all other Housing Units in
the applicable subdivision are sold.

          "Moody's" shall mean Moody's Investors Service, Inc., and any
successor thereto.

          "Multiemployer Plan" means a Plan maintained pursuant to a collective
bargaining agreement or any other arrangement as described in Section 3(37) of
ERISA to which Borrower or any Commonly Controlled Entity is a party to which
more than one employer is obligated to make contributions.

          "New Lender" shall have the meaning set forth in Section 2.6(b)(i)
hereof.

          "Non-Recourse Indebtedness" means, with respect to any Person, any
Indebtedness of such Person for which the owner of such Indebtedness has no
recourse, directly or indirectly, to such Person for the principal of, premium,
if any, and interest on such Indebtedness, and for which such Person is not
directly or indirectly obligated or otherwise liable for the principal of,
premium, if any, and interest on such Indebtedness, except with respect to
Property of such Person pursuant to mortgages, deeds of trust or other security
interests to which such Indebtedness relates, provided that recourse obligations
or liabilities solely for fraud, environmental matters and other customary
"non-recourse carve-outs" in respect of any Indebtedness will not prevent
Indebtedness from being classified as Non-Recourse Indebtedness.

          "Note" or "Notes" shall mean a promissory note or notes substantially
in the form of Exhibit C hereto, executed and delivered by Borrower payable to
the order of a Lender, and delivered pursuant to Section 2.2, Section 2.6(b) or
any other provision hereof, as the same may be modified, amended, supplemented
or replaced from time to time.


                                       15



          "Notice of Borrowing" shall have the meaning set forth in Section
2.3(a) hereof and shall be in the form of Exhibit H hereto.

          "Notice of Conversion/Continuation" shall have the meaning set forth
in Section 3.1 hereof and shall be in the form of Exhibit I hereto.

          "Obligations" shall mean all unpaid principal of and accrued and
unpaid interest on the Loans, all Reimbursement Obligations, all accrued and
unpaid fees and all expenses, reimbursements, indemnities and other obligations
of Borrower and any Guarantor to the Lenders or to any Lender, Agent, LC Issuer
or any Indemnitee arising under the Loan Documents and including interest and
fees that accrue after the commencement by or against Borrower or any Guarantor
or any Affiliate thereof of any bankruptcy or similar proceeding naming such
Person as the debtor in such proceeding, regardless of whether such interest and
fees are allowed claims in such proceeding.

          "Other Taxes" means all present or future stamp or documentary taxes
or any other excise or property taxes, charges or similar levies arising from
any payment made hereunder or under any other Loan Document or from the
execution, delivery or enforcement of, or otherwise with respect to, this
Agreement or any other Loan Document.

          "Outstanding Credit Exposure" means, as to any Lender at any time, the
sum of (i) the aggregate outstanding principal amount of its Loans (other than
Swingline Loans) outstanding at such time, plus (ii) an amount equal to its
Ratable Share of the Facility L/C Obligations at such time, plus (iii) an amount
equal to its Ratable Share of the Swingline Loans at such time.

          "Owner Guarantor" means each of the Persons listed on Schedule 4
hereto and each other Person which becomes an "Owner Guarantor" pursuant to a
Supplemental Owner Guaranty as provided in Section 6.13(b) hereof.

          "Owner Guaranty Agreement" shall mean the Guaranty Agreement
substantially in the form of Exhibit B-2 attached to this Agreement, executed by
one or more Owner Guarantors in favor of Agent (for the benefit of the Lenders),
as the same may be modified and supplemented and in effect from time to time.

          "Participant" has the meaning set forth in Section 11.7 (d) hereof.

          "PBGC" shall mean the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA.

          "Performance Letter of Credit" shall mean any Letter of Credit of
Borrower or a Subsidiary that is issued for the benefit of a municipality, other
governmental authority, utility, water or sewer authority, or other similar
entity for the purpose of assuring such beneficiary of the Letter of Credit of
the proper and timely completion of construction work.

          "Permitted Liens" shall mean the following: (i) Liens for taxes,
assessments or other governmental charges or levies not yet due or which are
being contested in good faith by appropriate action; (ii) Liens in connection
with worker's compensation, unemployment


                                       16



insurance or other social security, old age pension or public liability
obligations (other than any Lien imposed by ERISA); (iii) Liens in favor of
property owners' associations securing payment of assessments or other charges;
(iv) easements, rights-of-way, restrictions, plats, declarations of covenants,
conditions and restrictions, condominium declarations, or similar encumbrances
on the use of real property which do not interfere with the ordinary conduct of
business of Borrower or any Subsidiary Guarantor or materially detract from the
value of such real property; (v) Liens in favor of a seller of Unimproved
Entitled Land, Lots Under Development or Finished Lots requiring Borrower or any
Subsidiary Guarantor to make a payment upon the future sale of such Unimproved
Entitled Land, Lots Under Development or Finished Lots in an amount not to
exceed five percent (5%) of the gross sales price or in the case of profit
sharing agreements an amount that is reasonable and customary in the industry
and market; and (vi) any Liens of mechanics, materialmen or material suppliers
incurred in the ordinary course of business for which Borrower has provided
Agent with a surety bond or other security reasonably satisfactory to Agent
insuring Lenders against the priority of any such Liens.

          "Person" shall mean an individual, a partnership, a limited liability
company, a corporation, a business trust, a joint stock company, a trust, an
unincorporated association, a Governmental Authority or any other entity of
whatever nature (including without limitation a joint venture).

          "Plan" shall mean any pension plan which is covered by Title IV of
ERISA and in respect of which Borrower or a Commonly Controlled Entity is an
"employer" as defined in Section 3(5) of ERISA.

          "Premises" shall mean Unimproved Entitled Land, Lots Under
Development, Finished Lots, Housing Units, the improvements thereon, all
fixtures, equipment, leases, rentals and personal property of any kind or
character now or hereafter related to, situated on or used in connection with
Unimproved Entitled Land, Lots Under Development, Finished Lots or Housing Units
owned by Borrower or any Subsidiary Guarantor or in any improvements now or
hereafter constructed thereon, and all related parts, accessions and accessories
thereto and all replacements or substitutions therefor, as well as all other
improvements, benefits and appurtenances now or hereafter placed thereon or
accruing thereto.

          "Presold Housing Unit" means a Housing Unit which is subject to a
valid, bona-fide agreement of sale that (a) is with an unrelated third-party
purchaser, for fair market value, (b) provides for a cash deposit of an amount
comparable with market standards for a percentage of the purchase price (if
required by state law, deposits will be held either (i) by an independent third
party (i.e. a real estate broker) or (ii) in an escrow account of Borrower
placed with a Lender), (c) is not subject to, or conditioned upon, the sale or
lease by the purchaser of any existing real property owned by the purchaser, and
(d) contains no contingency other than for a mortgage commitment which is not to
exceed ninety-five percent (95%) of the gross sales price of the Housing Unit
(but any mortgage contingency for a loan in excess of ninety-five percent (95%)
of the sales price, if permitted by Agent, shall require certification of
pre-approval from a mortgage lender acceptable to Agent), and which is not
contingent upon the sale or lease of any other real estate (although if the
financing commitment does include such sale or lease contingency, such
contingency must be specifically excluded in the agreement of sale relating to
such Housing Unit).


                                       17



          "Prime Rate" means that interest rate so denominated and set by
Wachovia Bank from time to time as an interest rate basis for borrowings. The
Prime Rate is but one of several interest rate bases used by Wachovia Bank.
Wachovia Bank lends at interest rates above and below the Prime Rate.

          "Proceeds after Default" shall have the meaning set forth in Article 9
hereof.

          "Property" means any interest in any kind of property or asset,
whether real, personal or mixed, or tangible or intangible, which is owned by
Borrower or any Subsidiary.

          "Public Indebtedness" means Indebtedness of Borrower or any Subsidiary
evidenced by notes, debentures, or other similar instruments issued after the
date of this Agreement pursuant to either (i) a registered public offering or
(ii) a private placement of such instruments in accordance with an exemption
from registration under the Securities Act of 1933 and/or the Securities
Exchange Act of 1934 or similar law.

          "Quarterly Payment Date" shall have the meaning set forth in Section
2.18 hereof.

          "Ratable Share" shall mean, with respect to any Lender on any date,
the ratio of (a) the amount of the Commitment of such Lender to (b) the
Aggregate Commitment.

          "Rate Hedging Obligations" of a Person means any and all obligations
of such Person, whether absolute or contingent and howsoever and whensoever
created, arising, evidenced or acquired (including all renewals, extensions and
modifications thereof and substitutions therefor), under (i) any and all
agreements, devices or arrangements designed to protect at least one of the
parties thereto from the fluctuations of interest rates, exchange rates or
forward rates applicable to such party's assets, liabilities or exchange
transactions, including, but not limited to, dollar-denominated or
cross-currency interest rate exchange agreements, forward currency exchange
agreements, interest rate cap or collar protection agreements, forward rate
currency or interest rate options, puts and warrants, and (ii) any and all
cancellations, buy backs, reversals, terminations or assignments of any of the
foregoing.

          "Refinancing Indebtedness" means Indebtedness that refunds, refinances
or extends any Indebtedness (or that refunds, refinances or extends any
refunding, refinancing or extension of such Indebtedness), but only to the
extent that:

          (i) the Refinancing Indebtedness is subordinated to or pari passu with
     the Obligations to the same extent as the Indebtedness being refunded,
     refinanced or extended,

          (ii) the Refinancing Indebtedness is scheduled to mature no earlier
     than the then current maturity date of such Indebtedness,

          (iii) such Refinancing Indebtedness is in an aggregate amount that is
     equal to or less than the sum of the aggregate amount then outstanding plus
     all amounts committed but undisbursed under the Indebtedness being
     refunded, refinanced or extended,


                                       18



          (iv) the Person or Persons liable for the payment of such Refinancing
     Indebtedness are the same Person or Persons (or successor(s) thereto) that
     were liable for the Indebtedness being refunded, refinanced or extended
     when such Indebtedness was initially incurred, and

          (v) such Refinancing Indebtedness is incurred within one hundred
     twenty (120) days after the Indebtedness being refunded, refinanced or
     extended is so refunded, refinanced or extended.

          "Register" has the meaning set forth in Section 11.7(c) hereof.

          "Reimbursement Obligations" shall mean Borrower's obligations to
reimburse an LC Issuer as a result of draws on one or more Facility L/Cs.

          "Rejecting Lender" shall have the meaning set forth in Section 2.7(b)
hereof.

          "Rejecting Lender's Facility Termination Date" shall have the meaning
set forth in Section 2.7(b) hereof.

          "Related Parties" means, with respect to any Person, such Person's
Affiliates and the partners, directors, officers, employees, agents and advisors
of such Person and of such Person's Affiliates.

          "Reportable Event" shall mean any of the events set forth in Section
4043(b) of ERISA or the regulations thereunder.

          "Required Lenders" shall mean, at any particular time, Lenders having
at least 66-2/3% of the Aggregate Commitment or, if the Aggregate Commitment has
been terminated, Lenders having at least 66-2/3% of the aggregate amount of the
Revolving Credit Loans then outstanding.

          "Requirement of Law" shall mean as to any Person, the Certificate (or
Articles) of Incorporation, By-Laws (or Code of Regulations), or other
organizational or governing documents of such Person, and any law, treaty, rule
or regulation, or determination, including without limitation all environmental
laws, rules, regulations and determinations, of an arbitrator or a court or
other Governmental Authority, in each case applicable to or binding upon such
Person or any of its property or to which such Person or any of its properly is
subject.

          "Responsible Officer" shall mean as to Borrower or any of its
Subsidiaries, Tom Krobot or Bob Salomon or any person or persons succeeding them
and assuming their responsibilities with respect to Borrower or such Subsidiary
and, with respect to financial matters and matters described in Section 3.8
hereof, Seymour Joffe or Bob Salomon or any person or persons succeeding them
and assuming their responsibilities with respect to Borrower or such Subsidiary.

          "Revolving Credit Loans" shall mean the revolving credit loans made
pursuant to this Agreement that are more particularly described in Section 2.1
hereof.


                                       19



          "S&P" shall mean Standard & Poor's Rating Services, and any successor
thereto.

          "Secured Indebtedness" shall mean all Indebtedness of Borrower or any
of its Subsidiaries (excluding Indebtedness owing to Borrower or any of its
Subsidiaries) that is (a) secured by a Lien on assets of Borrower or any of its
Subsidiaries or (b) supported by a guarantee of Borrower or any Subsidiary
(including without limitation purchase money Indebtedness, Non-Recourse
Indebtedness, obligations under sale/leaseback transactions and obligations
under Capital Leases) and in either case is Indebtedness permitted under Section
7.10 hereof.

          "Shareholder Notes" means (i) those notes identified on Schedule 5
hereto, and (ii) any other notes like those notes referenced in clause (i) of
this definition that are unsecured, subordinated to the Obligations pursuant to
provisions satisfactory to Agent, contain repayment and other provisions
satisfactory to Agent in its sole discretion and in the aggregate (together with
the notes referred to in clause (i) of this definition) do not exceed
$15,000,000 at any time outstanding.

          "Single Employer Plan" shall mean any Plan which is not a
Multiemployer Plan (as defined in ERISA).

          "Speculative Housing Unit" shall mean any Housing Unit owned by
Borrower or any Subsidiary Guarantor that is not a Presold Housing Unit or a
Model Housing Unit.

          "Subordinated Indebtedness" shall mean, at any date, (i) the unsecured
Indebtedness of Borrower or any Subsidiary under the Subordinated Notes
outstanding at such date, (ii) Indebtedness evidenced by the Shareholder Notes
and outstanding at such date, and (iii) all other future unsecured subordinated
Indebtedness of Borrower, the terms and manner (including without limitation the
terms and manner with respect to subordination) of which are satisfactory to
Agent in its sole discretion and approved in writing by Agent and which is
subordinate to the Obligations.

          "Subordinated Notes" means any notes, debentures or other similar
instruments issued by the Borrower or any Subsidiary after the date of this
Agreement pursuant to either (i) a registered public offering or (ii) a private
placement of such instruments in accordance with an exemption from registration
under the Securities Act of 1933 and/or the Securities Exchange Act of 1934 or
similar law, and which meet the following requirements:

               (a) the maturity date of, and any amortization pursuant to, such
     instruments must be a date at least twelve (12) months after the Maturity
     Date;

               (b) such instruments must contain subordination and other
     provisions satisfactory to the Agent in its sole discretion (including
     without limitation standstill provisions and provisions requiring blockage
     of all payments thereunder for a period of at least 179 days upon the
     occurrence of an Event of Default); and

               (c) any covenants, terms, provisions and events of default
     contained in such instruments (or in any agreement or indenture under which
     such


                                       20



     instruments are issued) must be less restrictive than the covenants, terms,
     provisions and events of default in this Agreement, as determined by Agent
     in its sole discretion.

          "Subsidiary" shall mean, as to any Person, a corporation, limited
liability company or other entity of which shares of stock or other ownership
interests having ordinary voting power (other than stock or such other ownership
interests having such power only by reason of the happening of a contingency) to
elect a majority of the board of directors or other managers of such
corporation, limited liability company or other entity are at the time owned, or
the management of which is otherwise controlled, directly, or indirectly through
one or more intermediaries, or both, by such Person, and with respect to
Borrower shall include all Subsidiaries of Subsidiaries of Borrower, provided
that no Joint Venture will be a Subsidiary. Unless otherwise specified,
"Subsidiary" means a Subsidiary of Borrower (including Subsidiaries of
Subsidiaries).

          "Subsidiary Guarantor" shall mean each of Borrower's Subsidiaries
listed on Schedule 3 hereto (other than Ashton Orlando, L.P.) and each
Subsidiary of Borrower which becomes a "Subsidiary Guarantor" pursuant to a
Supplemental Subsidiary Guaranty as provided in Section 6.13 (a) hereof.

          "Subsidiary Guaranty Agreement" shall mean the Guaranty Agreement
substantially in the form of Exhibit B-1 attached to this Agreement, executed by
one or more Subsidiary Guarantors in favor of Agent (for the benefit of the
Lenders), as the same shall be modified and supplemented and in effect from time
to time.

          "Subsidiary Owner Guaranty" shall have the meaning set forth in the
Owner Guaranty Agreement.

          "Supplemental Subsidiary Guaranty" shall have the meaning set forth in
the Subsidiary Guaranty Agreement.

          "Swingline Expiry Date" shall mean the date which is five (5) Business
Days prior to the Maturity Date.

          "Swingline Lender" means Wachovia Bank in its capacity as lender of
Swingline Loans.

          "Swingline Loan" shall have the meaning set forth in Section 2.12
hereof.

          "Tangible Net Worth" shall mean, at any date, (a) the sum of (i) the
consolidated stockholders or members equity of Borrower determined in accordance
with GAAP plus (ii) the outstanding principal amount of Shareholder Notes, less
(b) Intangible Assets, all determined as of such date.

          "Taxes" means all present or future taxes, levies, imposts, duties,
deductions, withholdings, assessments, fees or other charges imposed by any
Governmental Authority, including any interest, additions to tax or penalties
applicable thereto.


                                       21



          "Total Liabilities" means (a) all liabilities as shown on Borrower's
consolidated balance sheet in accordance with GAAP (including any Subordinated
Notes) excluding trade payables in the normal course of business, bonus accruals
outstanding less than sixty (60) days, and excluding Shareholder Notes payable,
(b) all outstanding loan balances associated with recourse obligations of
Borrower or any Subsidiary not shown on Borrower's consolidated balance sheet
including guarantees, (c) the principal amount of all surety bonds, letters of
credit and/or tri-party agreements whether presented for payment or not but
excluding performance related liabilities for which payment has not been
demanded, by the beneficiary and for which reimbursement by Borrower or any
Subsidiary has not been made, and (d) net liabilities of Borrower or any of its
Subsidiaries under Interest Rate Contracts.

          "Uniform Customs" shall mean the Uniform Customs and Practice for
Documentary Credits, 1993 revision, ICC Publication No. 500, or amendment
thereof or successor thereto referenced in any LC Issuer's issued letters of
credit.

          "Unimproved Entitled Land" means land owned by Borrower or any
Subsidiary Guarantor which is zoned to permit single-family residential
development (attached or detached) as a use by right (or comparable
classification under local law).

          "Unused Fee" shall have the meaning set forth in Section 2.4 hereof.

          "Wachovia Bank" means Wachovia Bank, National Association, a national
banking association.

          "Working Capital" shall mean, at any date, Current Assets minus
Current Liabilities as of such date.

          1.2 Other Definitional Provisions.

               (a) All terms defined in this Agreement shall have the defined
meanings when used in any other Loan Document unless otherwise defined therein.

               (b) As used herein or in any other Loan Document, accounting
terms relating to Borrower and its Subsidiaries not defined in Section 1.1
hereof, to the extent not defined, shall have the respective meanings given to
them under GAAP.

               (c) Any reference to "value" of property shall mean the lower of
cost or market value of such property, determined in accordance with GAAP.

               (d) The definition of any document or instrument includes all
schedules, attachments and exhibits thereto and all renewals, extensions,
supplements and amendments thereof; terms otherwise defined herein have the same
meanings throughout this Agreement.

               (e) "Hereunder," "herein," "hereto," "this Agreement" and words
of similar import refer to this entire document; "including" is used by way of
illustration and not by way of limitation, unless the context clearly indicates
the contrary; and the singular includes the plural and conversely.


                                       22



          ARTICLE 2: AMOUNT AND TERMS OF COMMITMENTS, REVOLVING CREDIT
                    LOANS, SWINGLINE LOANS AND FACILITY L/CS

          2.1 Commitments.

               (a) Each Lender severally agrees, on the terms and conditions
hereinafter set forth, to make Revolving Credit Loans to Borrower from time to
time during the Commitment Period, and to purchase undivided interests and
participations in Facility L/Cs in accordance with Section 2.16 hereof, in an
aggregate principal amount of Revolving Credit Loans made by such Lender and of
such Lender's Ratable Share of the Facility L/C Obligations not to exceed at any
time outstanding the amount set forth in Schedule 1 hereto (such Lender's
obligations to make Revolving Credit Loans and to purchase undivided interests
and participations in Facility L/Cs in accordance with Section 2.16 hereof in
such amounts, as reduced, increased or otherwise modified from time to time
pursuant to the terms of this Agreement, being herein referred to as such
Lender's "Commitment"), subject to the limitations set forth in Section 2.1(b)
hereof.

               (b) No Revolving Credit Loan or Swingline Loan shall be made, nor
shall any Facility L/C be issued, that would have the effect of increasing the
then outstanding amount of the Borrowing Base Indebtedness to an amount
exceeding the Borrowing Base as of the most recent Inventory Valuation Date,
provided that a Revolving Credit Loan shall not be deemed to have increased the
amount of the Borrowing Base Indebtedness if, and only to the extent that, the
proceeds of such Revolving Credit Loan are immediately used to repay a Swingline
Loan.

               (c) No Revolving Credit Loans shall be made at any time that any
Swingline Loan is outstanding, except for Revolving Credit Loans that are used,
in whole or in part, on the day on which made, to repay in full the outstanding
principal balance of the Swingline Loans. During the Commitment Period and as
long as no Default or Event of Default exists, Borrower may borrow, prepay in
whole or in part and reborrow Revolving Credit Loans, all in accordance with the
terms and conditions hereof.

               (d) Subject to the terms and conditions of this Agreement
(including the limitations on the availability of LIBOR Rate Loans and including
the termination of the Aggregate Commitment as set forth in Article 9 hereof),
the Revolving Credit Loans may from time to time be (i) LIBOR Rate Loans, (ii)
ABR Loans, or (iii) a combination thereof, as determined by Borrower and
notified to Agent in accordance with Section 2.3 hereof, provided that no
Revolving Credit Loan shall be made as a LIBOR Rate Loan after the day that is
one month prior to the last day of the Commitment Period.

          2.2 Notes. The Revolving Credit Loans made by Lenders pursuant hereto
shall be evidenced by Notes, payable to the order of each Lender in the amount
of its Commitment and evidencing the obligation of Borrower to pay the aggregate
unpaid principal amount of the Revolving Credit Loans made by such Lender, with
interest thereon as prescribed in Section 2.5 hereof. Each Lender is hereby
authorized to record electronically or otherwise the date and amount of each
Revolving Credit Loan disbursement made by such Lender, and the date and amount
of each payment or prepayment of principal thereof, and any such recordation
shall


                                       23



be conclusive absent manifest error as to the accuracy of the information so
recorded; provided, however, the failure of such Lender to make, or any error in
making, any such recordation(s) shall not affect the obligation of Borrower to
repay outstanding principal, interest, or any other Obligation due hereunder or
under the Notes in accordance with the terms hereof and thereof. Each Note shall
(a) be dated as of the date hereof, (b) be stated to mature on the Maturity
Date, which Maturity Date may be extended as provided in Section 2.7 hereof, and
(c) bear interest for the period from and including the date thereof on the
unpaid principal amount thereof from time to time outstanding at the applicable
interest rate per annum determined as provided in Section 2.5 hereof. Interest
on each Revolving Credit Loan shall be payable as specified in Section 2.5
hereof.

          2.3 Procedure for Borrowing.

               (a) Borrower may borrow under the Commitments (subject to the
limitations on the availability of LIBOR Rate Loans), during the Commitment
Period, provided Borrower shall give Agent written notice (the "Notice of
Borrowing"), which Notice of Borrowing must be received (i) prior to 11:00 a.m.,
Charlotte, North Carolina time, at least three (3) Business Days prior to the
requested Borrowing Date for any borrowing of LIBOR Rate Loans, or (ii) prior to
10:00 a.m., Charlotte, North Carolina time on or before the requested Borrowing
Date for any borrowing of ABR Loans, which Notice of Borrowing shall be
irrevocable. Each Notice of Borrowing shall specify (A) the Borrowing Date
(which shall be a Business Day), (B) the amount of the requested borrowing
and(C) whether the borrowing is to be of LIBOR Rate Loans or ABR Loans. Each
borrowing pursuant to the Commitments shall be in the principal amount (1) in
the case of ABR Loans, of $1,000,000 or any larger amount which is an even
multiple of $100,000, and (2) in the case of LIBOR Rate Loans, of $10,000,000 or
any larger amount which is an even multiple of $1,000,000.

               (b) Subject to satisfaction of the terms and conditions of this
Agreement, each Lender shall deposit funds with Agent for the account of
Borrower by 2:00 p.m. Charlotte, North Carolina time on the Borrowing Date by
wire transfer or other immediately available funds equal to its Ratable Share of
the Revolving Credit Loans to be made on the Borrowing Date. The Loan(s) will
then be made available to Borrower by Agent crediting the account of Borrower on
the books of Agent with the aggregate amounts made available to Agent by
Lenders, and in like funds as received by Agent.

               (c) Each Lender may book its Loans and its participations in
Facility L/Cs at any Lending Office selected by such Lender and may change its
Lending Office from time to time. All terms of this Agreement shall apply to any
such Lending Office and the Loans and the Notes issued hereunder shall be deemed
held by each Lender for the benefit of any such Lending Office. Each Lender and
LC Issuer may, by written notice to the Agent and Borrower in accordance with
Section 11.2 hereof, designate replacement or additional Lending Offices through
which Loans will be made by it or Facility L/Cs will be issued by it and for
whose account Loan payments or a payment with respect to Facility L/Cs are to be
made.

               (d) Each ABR Loan shall continue as an ABR Loan unless and until
such ABR Loan is converted into a LIBOR Rate Loan pursuant to Section 3.1 hereof
or is repaid in accordance with Section 2.11 hereof. Each LIBOR Rate Loan shall
continue as a LIBOR Rate


                                       24



Loan until the end of the then applicable Interest Period therefor, at which
time such LIBOR Rate Loan shall be automatically converted into an ABR Loan
unless (x) such LIBOR Loan is or was repaid in accordance with Section 2.11
hereof or (y) such LIBOR Rate Loan is continued as a LIBOR Rate Loan in
accordance with Section 3.1 hereof.

               (e) Notwithstanding anything to the contrary in this Agreement,
Borrower may submit no more than two (2) Notices of Borrowing in any calendar
month.

          2.4 Unused Fee. Borrower agrees to pay to Agent for the benefit of
each Lender an unused fee (the "Unused Fee") for the Commitment Period, computed
at the Applicable Unused Fee Rate per annum on the average daily unused amount
of each Lender's Commitment during the Commitment Period, payable quarterly in
arrears and due on each Quarterly Payment Date and on the last day of the
Commitment Period, commencing on the first of such dates to occur after the date
of this Agreement. For purposes of determining the unused portion of the
Aggregate Commitment and the unused portion of a Lender's Commitment hereunder,
the Aggregate Commitment shall be deemed used to the extent of the aggregate
face amount of the outstanding Facility L/Cs and such Lender's Commitment shall
be deemed used to the extent of such Lender's Ratable Share of the aggregate
face amount of the outstanding Facility L/Cs.

          2.5 Interest; Default Interest.

               (a) Except as provided in Section 2.5(d) hereof, (i) the
Revolving Credit Loans shall bear interest on the unpaid principal amount
thereof at a rate per annum equal to (y) in the case of ABR Loans, the Alternate
Base Rate in effect from time to time, plus the Applicable ABR Margin in effect
for such day (provided that, notwithstanding the table below, on any day that
the Alternate Base Rate is determined pursuant to the second proviso of the
definition of "Alternate Base Rate" in Section 1.1 hereof, the Applicable ABR
Margin for such day shall be 0%), and (z) in the case of LIBOR Rate Loans, the
LIBOR Rate determined for the Interest Period applicable thereto, plus the
Applicable LIBOR Margin in effect on the first day of such Interest Period, and
(ii) the Swingline Loans shall bear interest on the unpaid principal amount
thereof at a rate per annum equal to the Alternate Base Rate in effect from time
to time, plus the Applicable ABR Margin in effect for such day, plus 0.25%.

               (b) The Applicable Margins and the Applicable Unused Fee Rate
shall be determined by reference to the Leverage Ratio in accordance with the
following table and the provisions of this Section 2.5(b):


                                       25





                               LEVEL I                              LEVEL II                        LEVEL III
                               -------                              --------                        ---------
                                                                                           
Leverage Ratio                 Less than or equal to 1.00 to 1.00   Greater than 1.00 to 1.00 but   Greater than 1.50 to 1.00
                                                                    less than or equal to 1.50 to
                                                                    1.00
Applicable LIBOR Margin and    1.50%                                1.75%                           2.00%
Applicable Facility L/C Rate
Applicable ABR Margin          1.50%                                1.75%                           2.00%
Applicable Unused Fee Rate     0.20%                                0.20%                           0.25%


               (c) The Applicable Unused Fee Rate, the Applicable Facility L/C
Rate and the Applicable ABR Margin shall be adjusted from time to time,
effective on the fifth (5th) Business Day following delivery by Borrower,
pursuant to Section 6.1(a) or (b) hereof, of annual or quarterly financial
statements evidencing a change in the Leverage Ratio. The Applicable LIBOR
Margin in respect of any LIBOR Rate Loan shall be adjusted from time to time
effective on the first day of the Interest Period for any LIBOR Rate Loan after
the fifth (5th) Business Day following the delivery by Borrower, pursuant to
Section 6.1(a) or (b) hereof, of annual or quarterly financial statement
evidencing a change in the Leverage Ratio.

               (d) As of the date of this Agreement, the Applicable Margins and
Applicable Unused Fee Rate are at Level I.

               (e) If all or a portion of the principal amount of any of the
Revolving Credit Loans made hereunder (whether as ABR Loans or LIBOR Rate Loans
or a combination thereof) or the Swingline Loans or any installment of interest
on any Revolving Credit Loan or Swingline Loan or any Unused Fee or Facility L/C
Fee shall not be paid when due (whether at the stated maturity, by acceleration
or otherwise and after any applicable opportunity to cure), any such overdue
principal amount and, to the extent permitted by applicable law, any overdue
installment of interest on any Revolving Credit Loan or Swingline Loan or any
overdue payment of Unused Fee or Facility L/C Fee hereunder shall, without
limiting any other rights of Lenders, bear interest at a rate per annum which is
the sum of the Alternate Base Rate in effect from time to time, plus the
Applicable ABR Margin, plus four percent (4%), from the date of such non-payment
until paid in full (before, as well as after, judgment); provided, however, if
all or any portion of any principal on any Revolving Credit Loan made as a LIBOR
Rate Loan hereunder shall not be paid when due and the then current Interest
Period for such LIBOR Rate Loan has not yet expired, the entire principal amount
of such LIBOR Rate Loan and, to the extent permitted by applicable law, any
overdue installment of interest on such LIBOR Rate Loan shall, without limiting
any other rights of Lenders, bear interest at a rate per annum which is the sum
of four percent (4%) plus the applicable non-default interest rate (which is the
sum of the applicable LIBOR Rate and the Applicable LIBOR Margin) on such LIBOR
Rate Loan then in effect from the date of such non-payment until the expiration
of the then current Interest Period with respect


                                       26



to such LIBOR Rate Loan (before, as well as after, judgment); thereafter, the
entire principal amount of such LIBOR Rate Loan and, to the extent permitted by
applicable law, any overdue installment of interest on such LIBOR Rate Loan
shall, without limiting any other rights of Lenders, bear interest at a rate per
annum which is the sum of the Alternate Base Rate in effect from time to time,
plus the Applicable ABR Margin, plus four percent (4%), until paid in full
(before, as well as after, judgment).

               (f) Interest shall be payable in arrears and shall be due on each
Interest Payment Date and on the last day of the Commitment Period.

          2.6 Termination, Reduction or Increase of Aggregate Commitment.

               (a) (i) Borrower shall have the right to terminate the Aggregate
Commitment or, from time to time (and so long as no Event of Default exists),
reduce the amount of the Aggregate Commitment, upon not less than five (5)
Business Days' written notice to each Lender specifying either a reduction (and
the amount of such reduction) or termination.

               (ii) Any such reduction of the Aggregate Commitment shall be in
the amount of $5,000,000 or a whole multiple of $1,000,000 in excess thereof and
shall reduce permanently the amount of the Aggregate Commitment then in effect.
Any such reduction shall be accompanied by (A) prepayment of the Revolving
Credit Loans made hereunder to the extent, if any, that the sum of the amount of
such Revolving Credit Loans, Swingline Loans and the Facility L/C Obligations
then outstanding exceeds the amount of the Aggregate Commitment, as then
reduced, together with accrued interest on the amount so prepaid to the date of
such prepayment (provided that (i) no more than two (2) prepayments may be made
in any calendar month, (ii) prepayments shall be applied, first, to Base Rate
Loans and any excess to LIBOR Loans, and (iii) each prepayment must be in an
amount equal to at least $250,000), and (B) if a Revolving Credit Loan is a
LIBOR Rate Loan that is prepaid other than at the end of the Interest Period
applicable thereto, by any amounts payable pursuant to Section 3.5 hereof. If
after giving effect to any reduction of the Aggregate Commitment, the Maximum
Swingline Amount or the aggregate principal amount of the Facility L/C
Obligations permitted pursuant to Section 2.15(c)(ii) hereof exceeds the
Aggregate Commitment, the Maximum Swingline Amount or the aggregate principal
amount of Facility L/C Obligations permitted pursuant to Section 2.15(c)(ii)
hereof shall be reduced by such excess.

               (iii) Any such termination of the Commitment shall be accompanied
(A) by prepayment in full of the Loans then outstanding hereunder, together with
accrued interest thereon to the date of such prepayment, and the payment of any
unpaid Unused Fee then accrued hereunder; (B) with respect to Facility L/Cs, by
Borrower's compliance with the terms of Section 2.15 hereof; and (C) if a
Revolving Credit Loan is a LIBOR Rate Loan that is prepaid other than at the end
of the Interest Period applicable thereto, by any amounts payable pursuant to
Section 3.5 hereof.

               (iv) Any such reduction or termination of the Aggregate
Commitment shall be allocated to each Lender's Commitment ratably in its Ratable
Share.


                                       27



               (b) (i) Subject to the provisions of this Section 2.6(b),
Borrower may, at any time and from time to time, request ("Facility Increase
Request"), by notice to Agent, Agent's approval of an increase of the Aggregate
Commitment within the limitations hereinafter set forth, which Facility Increase
Request shall set forth the amount of such requested increase. Within twenty
(20) days of such Facility Increase Request, Agent shall advise Borrower of its
approval or disapproval thereof; failure to so advise Borrower shall constitute
disapproval. Upon approval of Agent, the Aggregate Commitment may be so
increased either by having one or more Eligible Assignees (other than Lenders
then holding a Commitment hereunder) approved by Borrower and Agent (each a "New
Lender") become Lenders hereunder and/or by having any one or more Lenders then
holding a Commitment hereunder (at their respective election in their sole
discretion) that have been approved by Borrower and Agent increase the amount of
their Commitments (any such Lender that elects to increase its Commitment and
any New Lender being hereinafter referred to as an "Additional Lender"),
provided that (A) unless otherwise agreed by Borrower and Agent, the Commitment
of any New Lender shall not be less than $10,000,000 and (B) unless otherwise
agreed by Borrower and Agent, the increase in the Commitment of any Lender shall
be not less than $5,000,000; (C) the Aggregate Commitment shall not exceed
$300,000,000; (D) Borrower and each Additional Lender shall have executed and
delivered a commitment and acceptance (the "Commitment and Acceptance")
substantially in the form of Exhibit D hereto and Agent shall have accepted and
executed the same; (E) Borrower shall have executed and delivered to Agent a
Note or Notes payable to the order of each Additional Lender, each such Note to
be in the amount of such Additional Lender's Commitment or increased Commitment
(as applicable); (F) Borrower shall have delivered to Agent an opinion of
counsel (substantially similar to the form of opinion attached hereto as Exhibit
E, modified to apply to the increase in the Aggregate Commitment and each Note
and Commitment and Acceptance executed and delivered in connection therewith);
(G) the Guarantors shall have delivered to Agent a written instrument confirming
their consent to the new Commitments or increases in Commitments (as applicable)
and that their Guaranty Agreements continue in full force and effect; (H)
Borrower and each Additional Lender shall otherwise have executed and delivered
such other instruments and documents as Agent shall have reasonably requested in
connection with such new Commitment or increase in a Commitment (as applicable);
(I) Borrower shall pay (i) to the Agent for the account of the Additional
Lenders an upfront fee related to the increased Commitments and (ii) to the
Agent or its affiliate an arrangement fee related to the Facility Increase
Request, and such fees shall be in an amount to be determined by Borrower and
Agent, and payable on the Increase Date; and (J) no Default or Event of Default
shall exist on the Increase Date after giving effect to the increase in the
Aggregate Commitment. The form and substance of the documents required under
clauses (D) through (H) above shall be fully acceptable to Agent. Agent shall
provide written notice to Lenders following any such increase in the Aggregate
Commitment hereunder and shall furnish to Lenders, upon request, copies of the
Commitment and Acceptance.

               (ii) On the effective date of any increase in the Aggregate
Commitment pursuant to the provisions hereof ("Increase Date"), which Increase
Date shall be mutually agreed upon by Borrower, each Additional Lender and
Agent, each Additional Lender shall make a payment to Agent in an amount
sufficient, upon the application of such payments by all Additional Lenders to
the reduction of the outstanding ABR Loans (other than Swingline Loans) held by
Lenders, to cause the principal amount outstanding under such ABR Loans made by
all Lenders (including any Additional Lender) to be in the proportion of their
respective


                                       28



Commitments (as of such Increase Date). Borrower hereby irrevocably authorizes
each Additional Lender to fund to Agent the payment required to be made pursuant
to the immediately preceding sentence for application to the reduction of the
outstanding ABR Loans held by each Lender, and each such payment shall
constitute a ABR Loan hereunder. Such Additional Lender shall not participate in
any LIBOR Rate Loans that are outstanding on the Increase Date, but, if Borrower
shall, at any time on or after such Increase Date, convert or continue any LIBOR
Rate Loans outstanding on such Increase Date, Borrower shall be deemed to repay
such LIBOR Rate Loans on the date of the conversion or continuation thereof and
then to reborrow as a LIBOR Rate Loan a like amount on such date so that each
Additional Lender shall make a LIBOR Rate Loan on such date in its Ratable Share
of such LIBOR Rate Loans. Each Additional Lender shall also advance its Ratable
Share of all Revolving Credit Loans made on or after such Increase Date and
shall otherwise have all of the rights and obligations of a Lender hereunder on
and after such Increase Date. Notwithstanding the foregoing, upon the occurrence
of an Event of Default prior to the date on which an Additional Lender is
holding Revolving Credit Loans equal to its Ratable Share of all Revolving
Credit Loans hereunder, such Additional Lender shall, upon notice from Agent, on
or after the date on which the Obligations are accelerated or become due
following such Event of Default, pay to Agent (for the account of the other
Lenders, to which the Agent shall pay their pro rata shares upon receipt) a sum
equal to such Additional Lender's Ratable Share of each Revolving Credit Loan
then outstanding with respect to which such Additional Lender does not then hold
its Ratable Share thereof.

               (iii) On the Increase Date and the making of the Loans by an
Additional Lender in accordance with the provisions of the first sentence of
Section 2.6(b)(ii) hereof, such Additional Lender shall also be deemed to have
irrevocably and unconditionally purchased and received, without recourse or
warranty, from Lenders party to this Agreement immediately prior to the Increase
Date, an undivided interest and participation in any Facility L/C then
outstanding, ratably, such that all Lenders (including each Additional Lender)
hold participation interests in each such Facility L/C in the proportion of
their respective Commitments (taking into account the increase in the Aggregate
Commitment that is effective on such Increase Date).

               (iv) Nothing contained herein shall constitute, or otherwise be
deemed to be, a commitment or agreement on the part of any Lender to increase
its Commitment hereunder at any time or a commitment or agreement on the part of
Borrower or Agent to give or grant any Lender the right to increase its
Commitment hereunder at any time.

          2.7 Maturity Date of Commitment; Extension.

               (a) Unless earlier terminated pursuant to the terms of this
Agreement, the Aggregate Commitment shall terminate on the Maturity Date, and
the unpaid balance of the Revolving Credit Loans and Swingline Loans and all
other unpaid Obligations outstanding shall be paid on the Maturity Date

               (b) Not more than once in any fiscal year of Borrower, Borrower
may request an extension of the Maturity Date to the first anniversary of the
then scheduled Maturity Date by submitting a request for an extension (the
"Extension Request") to Agent not less than 180 days prior to the then scheduled
Maturity Date. Promptly upon (but not later than five (5)


                                       29



Business Days after) Agent's receipt and approval of the Extension Request,
Agent shall deliver to each Lender a copy of, and shall request each Lender to
approve, the Extension Request. Each Lender approving the Extension Request
shall deliver its written approval no later than 60 days after such Lender's
receipt of the Extension Request. If the written approval of the Extension
Request by Lenders whose Ratable Shares equal or exceed 66-2/3% in the aggregate
is received by the Agent within such 60-day period and provided no Default or
Event of Default exists on the effective date of such extension, the Maturity
Date shall be extended as specified in the Extension Request but only with
respect to Lenders that have given their written approval. Borrower shall pay to
the Lenders approving the extension an extension fee in an amount to be
determined by Borrower and Agent, payable on the effective date of such
extension. Except to the extent that a Lender that did not give its written
approval to such Extension Request ("Rejecting Lender") is replaced as provided
in Section 3.10 hereof, the Loans and all interest thereon, fees and other
Obligations owed to such Rejecting Lender shall be paid in full on the Maturity
Date as determined prior to such Extension Request (the "Rejecting Lender's
Facility Termination Date")

               (c) If Lenders whose Ratable Shares equal or exceed 66-2/3% in
the aggregate approve the Extension Request, Borrower, upon notice to Agent and
any Rejecting Lender, may, subject to the provisions of the next to the last
sentence of Section 2.7(d) hereof, terminate the Commitment of such Rejecting
Lender (or such portion of such Commitment that is not assigned to a Replacement
Lender in accordance with Section 3.10 hereof), which termination shall occur as
of a date set forth in Borrower's notice but in no event more than thirty (30)
days following such notice. The termination of a Lender's Commitment shall be
effected in accordance with Section 2.7 (d) hereof.

               (d) If Borrower elects to terminate a Commitment of a Rejecting
Lender as provided in Section 2.7(c), Borrower shall pay to the Rejecting Lender
on the effective date of such termination all Obligations due and owing to it
hereunder or under any other Loan Document, including, without limitation, the
aggregate outstanding principal amount of the Loans owed to such Rejecting
Lender, together with accrued interest thereon through the date of such
termination, amounts payable under Sections 2.9 and 3.5 hereof and the Unused
Fee and Facility LC Fee payable to such Rejecting Lender. Upon request by
Borrower or Agent, the Rejecting Lender will deliver to Borrower and Agent a
letter setting forth the amounts payable to such Rejecting Lender as set forth
above. Upon the termination of such Rejecting Lender's Commitment and payment of
the amounts provided for in the immediately preceding sentence, Borrower shall
have no further obligations to such Rejecting Lender under this Agreement and
such Rejecting Lender shall cease to be a Lender, provided, however, that such
Rejecting Lender shall continue to be entitled to the benefits of Sections 2.9,
3.5, 3.6 and 11.6 hereof, as well as to any fees accrued for its account
hereunder not yet paid, and shall continue to be obligated under Section 11.6(c)
hereof with respect to obligations and liabilities accruing prior to the
termination of such Rejecting Lender's Commitment. If, as a result of the
termination of the Rejecting Lender's Commitment, any payment of a LIBOR Rate
Loan occurs on a day which is not the last day of the applicable Interest
Period, Borrower shall pay to Agent for the benefit of Lenders (including any
Rejecting Lender) any loss or cost incurred by Lenders (including any Rejecting
Lender) resulting therefrom in accordance with Section 3.5 hereof. Upon the
effective date of the termination of the Rejecting Lender's Commitment, the
Aggregate Commitment shall be reduced by the amount of the terminated Commitment
of the Rejecting Lender, and each other


                                       30



Lender shall be deemed to have irrevocably and unconditionally purchased and
received (subject to the provisions of the next to the last sentence of this
Section 2.7(d)), without recourse or warranty, from the Rejecting Lender, an
undivided interest and participation in any Facility L/C then outstanding,
ratably, such that each Lender (excluding the Rejecting Lender but including any
replacement Lender that acquires an interest hereunder from such Rejecting
Lender) holds a participation interest in each Facility L/C in proportion to the
ratio that such Lender's Commitment (upon the effective date of such termination
of the Rejecting Lender's Commitment) bears to the Aggregate Commitment (as
reduced by the termination of such Rejecting Lender's Commitment or a part
thereof). Notwithstanding the foregoing, if, upon the termination of the
Commitment of such Rejecting Lender, the sum of the outstanding principal
balance of the Loans and the Facility L/C Obligations would exceed the Aggregate
Commitment (as reduced), Borrower may not terminate such Rejecting Lender's
Commitment unless Borrower, on or prior to the effective date of such
termination, prepays, in accordance with the provisions of this Agreement,
outstanding Loans or causes to be canceled, released and returned to the
applicable LC Issuer outstanding Facility L/Cs or deposits cash into the
Facility L/C Collateral Account in sufficient amounts in the aggregate such
that, on the effective date of such termination, the sum of the Aggregate
Outstanding Credit Exposure and the amounts held in the Facility L/C Collateral
Account does not exceed the Aggregate Commitment (as reduced). In the event that
Borrower makes such deposit into the Facility L/C Collateral Account, such
deposits shall be applied by Agent to pay to the applicable LC Issuer amounts
drawn on any Facility L/C that are not reimbursed by Borrower and, provided no
Default or Event of Default has occurred that is continuing, shall be returned
to Borrower when the Aggregate Outstanding Credit Exposure equals or is less
than the Aggregate Commitment.

          2.8 Computation of Interest and Fees. Unused Fees and interest in
respect of the Loans shall be calculated on the basis of a 360-day year for the
actual days elapsed. Any change in the interest rate on the Loans and the Notes
resulting from a change in the Alternate Base Rate or the Eurocurrency Reserve
Requirements shall become effective as of the opening of business of the day on
which such change in the Alternate Base Rate or the Eurocurrency Reserve
Requirements shall become effective, without notice to Lenders or Borrower.
However, Agent shall give Borrower and Lenders prompt notice of all changes in
the Alternate Base Rate or the Eurocurrency Reserve Requirements. Each
determination of an interest rate by Agent pursuant to any provision of this
Agreement shall be conclusive and binding on Lenders and Borrower in the absence
of manifest error.

          2.9 Increased Costs. (a) If any Change in Law shall:

               (i) impose, modify or deem applicable any reserve, special
deposit, compulsory loan, insurance charge or similar requirement against assets
of, deposits with or for the account of, or credit extended or participated in
by, any Lender (except the Eurocurrency Reserve Requirements) or LC Issuer;

               (ii) subject any Lender or LC Issuer to any tax of any kind
whatsoever with respect to this Agreement, any Facility L/C, any participation
in a Facility L/C or any LIBOR Rate Loan made by it, or change the basis of
taxation of payments to such Lender or LC Issuer in respect thereof (except for
Indemnified Taxes or Other Taxes covered by Section 3.6


                                       31



hereof and the imposition of, or any change in the rate of, any Excluded Tax
payable by such Lender or LC Issuer); or

               (iii) impose on any Lender or LC Issuer or the London interbank
market any other condition, cost or expense affecting this Agreement or LIBOR
Rate Loans made by such Lender or any Facility L/C or participation therein;

and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any LIBOR Rate Loan (or of maintaining its
obligation to make any such Loan), or to increase the cost to such Lender or LC
Issuer of participating in, issuing or maintaining any Facility L/C (or of
maintaining its obligation to participate in or to issue any Facility L/C), or
to reduce the amount of any sum received or receivable by such Lender or LC
Issuer hereunder (whether of principal, interest or any other amount) then, upon
request of such Lender or the LC Issuer, Borrower will pay to such Lender or the
LC Issuer, as the case may be, such additional amount or amounts as will
compensate such Lender or the LC Issuer, as the case may be, for such additional
costs incurred or reduction suffered.

               (b) If any Lender or LC Issuer determines that any Change in Law
affecting such Lender or LC Issuer or any Lending Office of such Lender or such
Lender's or LC Issuer's holding company, if any, regarding capital requirements
has or would have the effect of reducing the rate of return on such Lender's or
LC Issuer's capital or on the capital of such Lender's or LC Issuer's holding
company, if any, as a consequence of this Agreement, the Commitment of such
Lender or the Loans made by, or participations in Facility L/Cs held by, such
Lender, or the Facility L/Cs issued by such LC Issuer, to a level below that
which such Lender or LC Issuer or such Lender's or such LC Issuer's holding
company could have achieved but for such Change in Law (taking into
consideration such Lender's or LC Issuer's policies and the policies of such
Lender's or LC Issuer's holding company with respect to capital adequacy), then
from time to time Borrower will pay to such Lender or LC Issuer, as the case may
be, such additional amount or amounts as will compensate such Lender or LC
Issuer or such Lender's or the LC Issuer's holding company for any such
reduction suffered.

               (c) A certificate of a Lender or LC Issuer setting forth the
amount or amounts necessary to compensate such Lender or LC Issuer or its
holding company, as the case may be, as specified in paragraph (a) or (b) of
this Section and delivered to Borrower shall be conclusive absent manifest
error. Borrower shall pay such Lender or LC Issuer, as the case may be, the
amount shown as due on any such certificate within ten (10) days after receipt
thereof.

               (d) Failure or delay on the part of any Lender or LC Issuer to
demand compensation pursuant to this Section shall not constitute a waiver of
such Lender's or the LC Issuer's right to demand such compensation, provided
that Borrower shall not be required to compensate a Lender or LC Issuer pursuant
to this Section for any increased costs incurred or reductions suffered more
than nine (9) months prior to the date that such Lender or the LC Issuer, as the
case may be, notifies Borrower of the Change in Law giving rise to such
increased costs or reductions and of such Lender's or LC Issuer's intention to
claim compensation therefor (except that, if the Change in Law giving rise to
such increased costs or reductions is retroactive, then the nine (9) month
period referred to above shall be extended to include the period of retroactive
effect thereof).


                                       32



          2.10 Use of Proceeds.

               (a) The proceeds of the initial Loans made hereunder shall be
used by Borrower to pay in full the outstanding principal of and all accrued and
unpaid interest on all outstanding loans under the Existing Credit Agreement and
all accrued and unpaid fees, expenses and other amounts payable thereunder. Upon
Borrower's irrevocable payment in full of such outstanding amounts under the
Existing Credit Agreement, the Existing Credit Agreement shall be terminated
(except as provided in Section 2.10(b) below in respect of the Existing L/Cs)
and the lenders party thereto shall cancel all promissory notes and guaranties
executed pursuant to the Existing Credit Agreement. Thereafter, the proceeds of
the Loans made hereunder shall be used by Borrower to finance the acquisition
and development of land and lots and the construction of residential homes and
construction projects.

               (b) The termination of the Existing Credit Agreement as provided
in Section 2.10(a) above shall not terminate the Existing L/Cs or the
reimbursement agreements relating thereto, all of which shall remain in full
force and effect. The termination of the Existing Credit Agreement shall
terminate the participation interests in the Existing L/Cs under the Existing
Credit Agreement, and, immediately upon such termination, each LC Issuer shall
grant and does hereby grant to each Lender hereunder, and each Lender shall
accept and does hereby accept from such LC Issuer, an undivided interest in the
Existing L/Cs equal to such Lender's Ratable Share of the Existing L/Cs, all on
the terms set forth in Section 2.16 hereof.

          2.11 Payments; Pro Rata Treatment.

               (a) Each borrowing by Borrower from Lenders hereunder (other than
a Swingline Loan), each payment (including each prepayment) by Borrower on
account of principal of and interest on the Revolving Credit Loans, each payment
by Borrower on account of any Unused Fee hereunder and any reduction of the
Commitments shall be made pro rata according to the respective Lenders' Ratable
Shares. All payments (including prepayments) to be made by Borrower hereunder
and under the Notes, whether on account of principal, interest, fees or
otherwise, shall be made without set-off or counterclaim and shall be made prior
to 11:00 a.m., Charlotte, North Carolina time, on the due date thereof to Agent,
for the account of Lenders, at Agent's office at 301 South College Street,
Charlotte, North Carolina, or at such other office as directed by Agent from
time to time, in Dollars and in immediately available funds. Agent shall
promptly distribute such payments to Lenders upon receipt in like funds as
received. If any payment hereunder on an ABR Loan becomes due and payable on a
day other than a Business Day, such payment shall be extended to the next
succeeding Business Day, and, with respect to payments of principal, interest
thereon shall be payable at the then applicable rate during such extension. If
any payment hereunder on a LIBOR Rate Loan becomes due and payable on a day
other than a Business Day, such payment shall be extended to the next succeeding
Business Day (and, with respect to payments of principal, interest thereon shall
be payable at the then applicable rate during such extension) unless the result
of such extension would be to extend such payment into another calendar month,
in which event such payment shall be made on the immediately preceding Business
Day.

               (b) Borrower may from time to time pay, without penalty or
premium, all outstanding ABR Loans, or, in a minimum aggregate amount of
$250,000 or any integral


                                       33



multiple of $500,000 in excess thereof, any portion of the outstanding ABR Loans
upon notice to Agent not later than 11:00 a.m. Charlotte, North Carolina time on
the date of payment. Borrower may from time to time pay, subject to the payment
of any indemnification amounts required by Section 3.5 but without penalty or
premium, all outstanding LIBOR Rate Loans, or, in a minimum aggregate amount of
$5,000,000 or any integral multiple of $1,000,000 in excess thereof, any portion
of the outstanding LIBOR Rate Loans upon notice to Agent not later than 10:00
a.m. Charlotte, North Carolina time on the date of payment; provided, that,
notwithstanding the foregoing, other than any prepayment of Revolving Credit
Loans made by Borrower in order to comply with Section 6.4 hereof, no more than
two prepayments of Revolving Credit Loans may be made each calendar month.

          2.12 Swingline Loans.

               (a) Subject to the terms and conditions of this Agreement,
Swingline Lender agrees to make at any time and from time to time after the
initial Borrowing Date and prior to the Swingline Expiry Date swingline loans to
Borrower ("Swingline Loans"), which Swingline Loans (i) shall be made and
maintained as ABR Loans, (ii) shall be denominated in Dollars, (iii) may be
repaid and reborrowed in accordance with the provisions hereof, (iv) shall not
exceed, in aggregate principal amount at any one time outstanding, the lesser of
(A) the Maximum Swingline Amount and (B) the amount by which Swingline Lender's
Commitment exceeds its share of the sum of all Revolving Credit Loans and
Facility L/C Obligations and (v) shall be subject to the limitations set forth
in Section 2.1(b) hereof; provided, however, that after giving effect to any
Swingline Loan, (A) the Aggregate Outstanding Credit Exposure shall not exceed
the Aggregate Commitment and (B) the aggregate outstanding amount of the
Revolving Credit Loans of any Lender plus such Lender's Ratable Share of the
Facility L/C Obligations and outstanding Swingline Loans shall not exceed such
Lender's Commitment. Swingline Lender will not make a Swingline Loan after it
has received written notice from Borrower or the Required Lenders stating that a
Default or an Event of Default exists until such time as Swingline Lender shall
have received a written notice of (i) rescission of such notice from the party
or parties originally delivering the same or (ii) a waiver of such Default or
Event of Default, as required by this Agreement.

               (b) Borrower shall give Swingline Lender irrevocable telephonic
or written notice prior to 11:00 a.m., Charlotte, North Carolina time on the
requested Borrowing Date specifying the amount of the requested Swingline Loan
which shall be in a minimum amount of $500,000 or whole multiples of $100,000 in
excess thereof. The Swingline Loans will then be made available to Borrower by
Swingline Lender by crediting the account of Borrower on the books of Swingline
Lender.

               (c) The Swingline Loans shall be evidenced by the Note held by
Swingline Lender. Swingline Lender is hereby authorized to record electronically
or otherwise the date and amount of each Swingline Loan, and the date and amount
of each payment or prepayment of principal thereof, and any such recordation
shall constitute conclusive evidence of the accuracy of the information so
recorded absent manifest error, provided, however, the failure of Swingline
Lender to make, or any error in making, any such recordation(s) shall not affect
the obligation of Borrower to repay outstanding principal, interest, or any
other amount due hereunder in accordance with the terms hereof and thereof. The
Swingline Loan shall (i) mature


                                       34



on the Swingline Expiry Date, and (ii) bear interest for the period from and
including the date thereof on the unpaid principal amount thereof from time to
time outstanding at the applicable interest rate per annum determined as
provided in Section 2.5 hereof. Interest on each Swingline Loan shall be payable
as specified in Section 2.5 hereof.

               (d) Swingline Lender, at any time and in its sole and absolute
discretion, may (and, not later than four (4) Business Days after the making of
a Swing Line Loan, shall), on behalf of Borrower (which hereby irrevocably
directs Swingline Lender to act on Borrower's behalf), request each Lender,
including Swingline Lender, to make a Revolving Credit Loan (each, a "Mandatory
Borrowing") in an amount equal to such Lender's Ratable Share of the amount of
the Swingline Loans (provided that each such request shall be deemed to have
been automatically given upon the occurrence of a Default or an Event of Default
under Article 9 hereof or upon the exercise of any of the remedies provided in
the last paragraph of Article 9 hereof), in which case each Lender shall make
the proceeds of its Revolving Credit Loan available to Swingline Lender on the
immediately succeeding Business Day in its Ratable Share thereof, and the
proceeds thereof shall be applied directly to repay Swingline Lender for such
outstanding Swingline Loans. Each Lender hereby irrevocably agrees to make ABR
Loans upon one Business Day's notice pursuant to each Mandatory Borrowing in the
amount and in the manner specified in the preceding sentence and on the date
specified by Swingline Lender notwithstanding (i) that the amount of the
Mandatory Borrowing may not comply with the minimum borrowing amount otherwise
required hereunder, (ii) whether any conditions specified in Article 5 hereof
are then satisfied, (iii) whether a Default or an Event of Default has occurred
and is continuing, (iv) the date of such Mandatory Borrowing, (v) any reduction
in the Commitments after any such Swingline Loans were made, (vi) Borrower's
compliance with Borrowing Base requirements, (vii) any set-off, counterclaim,
recoupment, defense or other right which such Lender may have against Swingline
Lender, Borrower or any other Person for any reason whatsoever, or (viii) any
other circumstance, happening or event whatsoever, whether or not similar to any
of the foregoing. In the event that any Mandatory Borrowing cannot for any
reason be made on the date otherwise required above (including, without
limitation, as a result of the commencement of a proceeding under the Bankruptcy
Code in respect of Borrower), each Lender (other than Swingline Lender) hereby
agrees that it shall forthwith purchase from Swingline Lender (without recourse
or warranty) a participation interest in such outstanding Swingline Loans as
shall be necessary to cause the Lenders to hold participation interests in such
Swingline Loans in the proportion of their respective Ratable Shares thereof,
provided that all interest payable on the Swingline Loans shall be for the
account of Swingline Lender until the date the Mandatory Borrowing is made, and,
to the extent attributable to the Mandatory Borrowing, shall be payable to the
Lender making such Mandatory Borrowing from and after the date such Mandatory
Borrowing is made.

               (e) Whenever, at any time after Swingline Lender has received
from any Lender such Lender's assigned interest in a Swingline Loan and
Swingline Lender receives any payment on account thereof, Swingline Lender will
distribute to such Lender its assigned interest in such amount (appropriately
adjusted, in the case of interest payments, to reflect the period of time during
which such Lender's assigned interest was outstanding and funded); provided,
however, that in the event that such payment received by Swingline Lender is
required to be returned, such Lender will return to Swingline Lender any portion
thereof previously distributed by Swingline Lender to it.


                                       35



          2.13 The Facility L/Cs. So long as no Default or Event of Default
exists, Wachovia and each other Lender that is designated as an LC Issuer in
accordance with Section 2.14(a) hereof, agree to issue Facility L/Cs, on the
terms and conditions hereof, provided that (a) the aggregate of all Facility L/C
Obligations at any one time outstanding shall not exceed Twenty Five Million
Dollars ($25,000,000), (b) the sum of the aggregate amount of all Loans and the
aggregate amount of all Facility L/C Obligations at any one time outstanding
shall not exceed the Aggregate Commitment and (c) the issuance of Facility L/Cs
is subject to the limitation set forth in Section 2.1(b) hereof.

          2.14 Designation or Resignation of LC Issuer.

               (a) Upon request by Borrower and approval by Agent, a Lender may
at any time agree to be designated as an LC Issuer hereunder, which designation
shall be set forth in a written instrument or instruments delivered by Borrower,
Agent and such Lender. Agent shall promptly notify the other Lenders of such
designation. From and after such designation and unless and until such Lender
resigns as an LC Issuer in accordance with Section 2.14(b) below, such Lender
shall have all of the rights and obligations of an LC Issuer hereunder.

               (b) An LC Issuer shall continue to be an LC Issuer unless and
until (i) it shall have given Borrower and Agent notice that it has elected to
resign as LC Issuer and (ii) unless there is, at the time of such notice, at
least one other LC Issuer, another Lender shall have agreed to be the
replacement LC Issuer and shall have been approved in writing by Agent and
Borrower. A resigning LC Issuer shall continue to have the rights and
obligations of the LC Issuer hereunder solely with respect to Facility L/Cs
theretofore issued by it, notwithstanding the designation of a replacement LC
Issuer hereunder, but upon its notice of resignation (or, if at the time of such
notice, there is not at least one other LC Issuer, then upon such designation of
a replacement LC Issuer), the resigning LC Issuer shall not thereafter issue any
Facility L/C (unless it shall again thereafter be designated as an LC Issuer in
accordance with the provisions of this Section 2.14). The assignment of, or
grant of a participation interest in, all or any part of its Commitment or Loans
by a Lender that is also an LC Issuer shall not constitute an assignment or
transfer of any of its rights or obligations as an LC Issuer.

          2.15 Issuance of Facility L/Cs.

               (a) Borrower may request an LC Issuer to issue a Facility L/C by
delivering to such LC Issuer (with a copy to Agent if Agent is not such LC
Issuer), no later than 11:00 a.m. (local time at such LC Issuer's office
designated herein) two (2) Business Days prior to the date on which issuance of
the Facility L/C is requested by Borrower, a standby letter of credit
application and reimbursement agreement in such LC Issuer's then customary form
(the "Facility L/C Application") completed to the satisfaction of such LC
Issuer, together with the proposed form of such letter of credit (which shall
comply with the applicable requirements of Section 2.15(b) below) and such other
certificates, documents and other papers and information as such LC Issuer may
reasonably request.

               (b) Each Facility L/C issued hereunder shall, among other things,
(i) be in such form requested by Borrower as shall be acceptable to the LC
Issuer thereof in its sole discretion, and (ii) have an expiry date (taking into
account any automatic renewal provisions


                                       36



thereof) occurring prior to the Maturity Date. If the Aggregate Commitment is
terminated (whether by acceleration, demand, or otherwise), then, not later than
simultaneously with such termination, all outstanding Facility L/Cs shall be
returned to the LC Issuer thereof or Borrower shall cash collateralize all
outstanding Facility L/Cs in accordance with Article 8 hereof. Each Facility L/C
Application and each Facility L/C shall be subject to the Uniform Customs and,
to the extent not inconsistent therewith, the laws of the state in which is
located the LC Issuer's office from which such Facility L/C is issued.

               (c) An LC Issuer shall not issue, amend or extend, at any time,
any Facility L/C:

                    (i) if the aggregate maximum amount then available for
          drawing under Letters of Credit issued by such LC Issuer, after giving
          effect to the Facility L/C or amendment or extension thereof requested
          hereunder, shall exceed any limit imposed by law or regulation upon
          such LC Issuer;

                    (ii) if, after giving effect to the issuance, amendment or
          extension of the Facility L/C requested hereunder, the aggregate
          principal amount of the Facility L/C Obligations would exceed Twenty
          Five Million Dollars ($25,000,000);

                    (iii) if, after giving effect to the issuance, amendment or
          extension of the Facility L/C requested hereunder, Borrowing Base
          Indebtedness would exceed the Borrowing Base as of the most recent
          Inventory Valuation Date;

                    (iv) if, after giving effect to the issuance, amendment or
          extension of the Facility L/C requested hereunder, the sum of (A) the
          outstanding and unpaid principal amount of the Loans and (B) the
          Facility L/C Obligations would exceed the Aggregate Commitment;

                    (v) if such LC Issuer receives written notice from the Agent
          at or before 11:00 a.m. Charlotte, North Carolina time on the proposed
          date of issuance, amendment or extension of such Facility L/C that one
          or more of the conditions precedent contained in Section 2.15(d) below
          would not on such date be satisfied, unless such conditions are
          thereafter satisfied or waived and written notice of such satisfaction
          is given to such LC Issuer by Agent; or

                    (vi) that is in a currency other than Dollars.

               (d) The issuance, amendment or extension of any Facility L/C is
subject to the satisfaction in full of the following conditions on the date of
such issuance, amendment or extension:

                    (i) the conditions of Sections 5.1 and 5.2 hereof are
          satisfied; and


                                       37



                    (ii) no order, judgment or decree of any court, arbitrator
          or governmental authority shall enjoin or restrain the LC Issuer
          thereof from issuing the Facility L/C and no law, rule or regulation
          applicable to such LC Issuer and no directive from any governmental
          authority with jurisdiction over such LC Issuer shall prohibit such LC
          Issuer from issuing Letters of Credit generally or from issuing that
          Facility L/C.

               (e) Upon receipt of any Facility L/C Application from Borrower,
the LC Issuer will process such Facility L/C Application, and the other
certificates, documents and other papers delivered to such LC Issuer in
connection therewith, in accordance with its customary procedures and, upon
satisfaction of all conditions contained in this Agreement, shall promptly issue
the original of such Facility L/C and deliver it to the beneficiary thereof, or
to Borrower which shall deliver such original Facility L/C to the beneficiary,
and furnish a copy thereof to Borrower. The LC Issuer shall give Agent written
notice, or telephonic notice confirmed promptly thereafter in writing, of the
issuance of a Facility L/C.

               (f) No LC Issuer shall extend or amend any Facility L/C unless
the requirements of this Section 2.15 are met as though a new Facility L/C were
being requested and issued.

          2.16 Facility L/C Participations.

               (a) Each LC Issuer irrevocably agrees to grant and hereby grants
to each Lender, and, to induce the LC Issuers to issue Facility L/Cs hereunder,
each Lender irrevocably agrees to accept and purchase and hereby accepts and
purchases from the applicable LC Issuer, on the terms and conditions hereinafter
stated, for such Lender's own account and risk, an undivided interest equal to
such Lender's Ratable Share in such LC Issuer's obligations and rights under
each Facility L/C (including, as provided in Section 2.10(b) hereof, the
Existing L/Cs) and the amount of each draft paid by such LC Issuer.

               (b) Upon receipt from the beneficiary of any Facility L/C of any
demand for payment under such Facility L/C, the LC Issuer shall notify Agent and
Agent shall promptly notify Borrower and each other Lender as to the amount to
be paid by such LC Issuer as a result of such demand and the proposed payment
date. The responsibility of such LC Issuer to Borrower and each Lender shall be
only to determine that the documents (including each demand for payment)
delivered under each Facility L/C in connection with such presentment shall be
in conformity in all material respects with such Facility L/C. Each LC Issuer
shall exercise the same care in the issuance and administration of the Facility
L/Cs issued by it as it does with respect to Letters of Credit in which no
participations are granted, it being understood that, in the absence of any
gross negligence or willful misconduct by such LC Issuer, each Lender shall be
unconditionally and irrevocably liable without regard to the occurrence of any
Default or Event of Default or any condition precedent whatsoever, to reimburse
such LC Issuer on demand for such Lender's Ratable Share of the amount of each
payment made by such LC Issuer on each Facility L/C issued by it to the extent
such amount is not reimbursed by Borrower pursuant to Section 2.17 hereof, plus
interest thereon to the extent provided in Section 2.16(c) below.


                                       38



               (c) If any amount required to be paid by any Lender to an LC
Issuer in respect of any unreimbursed portion of any payment made by such LC
Issuer under any Facility L/C is not paid to such LC Issuer on the date such
payment is due but is paid within three (3) Business Days after such payment is
due, such Lender shall pay to such LC Issuer on demand an amount equal to the
product of (i) such amount, multiplied by (ii) the daily average Federal Funds
Rate during the period from and including the date such payment is required to
the date on which such payment is immediately available to such LC Issuer,
multiplied by (iii) a fraction the numerator of which is the number of days that
elapse during such period and the denominator of which is 360. If any such
amount required to be paid by any Lender pursuant to this Section 2.16 is not
paid to such LC Issuer by such Lender within three (3) Business Days after the
date such payment is due, such LC Issuer shall be entitled to recover from such
Lender, on demand, such amount with interest thereon calculated from the fourth
Business Day after such due date until paid in full at the rate per annum
applicable to Revolving Credit Loans made as ABR Loans hereunder. A certificate
of such LC Issuer submitted to any Lender with respect to any amounts owing
under this Section 2.16 shall be conclusive in the absence of manifest error.

               (d) Whenever, at any time after any LC Issuer has made payment
under any Facility L/C issued by it and has received from any Lender its Ratable
Share of such payment, such LC Issuer receives any payment related to such
Facility L/C (whether directly from Borrower or otherwise, including proceeds of
collateral applied thereto by such LC Issuer), or any payment of interest on
account thereof, such LC Issuer will distribute to such Lender its Ratable Share
thereof; provided, however, that in the event that any such payment received by
such LC Issuer shall be required to be returned by such LC Issuer, such Lender
shall return to such LC Issuer the portion thereof previously distributed by
such LC Issuer to it.

          2.17 Payments. Borrower agrees (a) to reimburse each LC Issuer, for
the pro rata benefit of the Lenders in accordance with each Lender's respective
Ratable Share, forthwith upon its or Agent's demand and otherwise in accordance
with the terms of the L/C Application relating thereto, for any expenditure or
payment made by such LC Issuer under any Facility L/C, and (b) to pay interest
on any unreimbursed portion of any such payments from the date of such payment
until reimbursement in full thereof at a rate per annum equal to (i) prior to
the date which is (A) one (1) Business Day after the day on which such LC Issuer
demands reimbursement from Borrower for such payment if such demand is made
prior to 11:00 a.m., Charlotte, North Carolina time or (B) two (2) Business Days
after the day on which such LC Issuer or Agent demands reimbursement if such
demand is made at or after 11:00 a.m. Charlotte, North Carolina time, the rate
which would then be payable on any outstanding ABR Loan which is not in default,
and (ii) thereafter, the rate which would then be payable on any outstanding ABR
Loan which is in default.

          2.18 Facility L/C Fee. In lieu of any letter of credit commissions and
fees provided for in any Facility L/C Application (other than standard issuance,
amendment, negotiation and administration fees and expenses), Borrower agrees to
pay Agent, in the case of each Facility L/C, for the account of the Lenders and
the LC Issuer thereof (as hereinafter provided), the Facility L/C Fee therefor,
on the average daily undrawn stated amount under such Facility L/C. The Facility
L/C Fees shall be due and payable quarterly in arrears not later than the day
("Quarterly Payment Date") that is five (5) Business Days following Agent's
delivery to Borrower of the quarterly statement of Facility L/C Fees and, to the
extent any such fees are then


                                       39



accrued and unpaid, on the last day of the Commitment Period. Facility L/C Fees
shall be calculated, for the period to which such payment applies, for actual
days on which such Facility L/C was outstanding during such period (excluding,
in the case of the Existing L/Cs, the portion of such period prior to the date
of this Agreement), on the basis of a 360-day year. Agent shall promptly remit
such Facility L/C Fees, when paid, as follows: (i) to each LC Issuer, solely for
its own account, with respect to each Facility L/C issued by such LC Issuer, an
amount per annum equal to the product of (A) 0.125% per annum and (B) the face
amount of such Facility L/C and (ii) to all Lenders, their Ratable Shares of the
balance of such Facility L/C Fees. In addition, an LC Issuer may charge and
retain for its own account, and Borrower agrees to pay, such LC Issuer's usual
and customary charges with respect to the issuance, amendment, negotiation and
administration of the Facility L/C.

          2.19 Further Assurances. Borrower hereby agrees to do and perform any
and all acts and to execute any and all further instruments reasonably requested
by Agent or an LC Issuer more fully to effect the purposes of this Agreement and
the issuance of Facility L/Cs hereunder.

          2.20 Obligations Absolute.

               (a) The obligations of the other Lenders to an LC Issuer with
respect to Facility L/Cs issued by such LC Issuer, and the Reimbursement
Obligations of Borrower with respect to Facility L/Cs, under this Agreement
shall be unconditional and irrevocable and shall be paid strictly in accordance
with the terms of this Agreement under all circumstances, including without
limitation the following:

                    (i) the existence of any claim, set-off, defense or other
     right which Borrower may have at any time against any beneficiary, or any
     transferee, of any Facility L/C (or any Persons for whom any such
     beneficiary or any such transferee may be acting), any LC Issuer or any
     other Person, whether in connection with this Agreement, the transaction
     contemplated herein, or any unrelated transaction (including any underlying
     transaction between Borrower or any Subsidiary and the beneficiary of such
     Facility L/C);

                    (ii) any draft, certificate, statement or any other document
     presented under any Facility L/C proving to be forged, fraudulent, invalid
     or insufficient in any respect or any statement therein being untrue or
     inaccurate in any respect;

                    (iii) payment by an LC Issuer under any Facility L/C against
     presentation of a draft or certificate which does not comply with the terms
     of such Facility L/C, provided that such LC Issuer has made such payment to
     the beneficiary set forth on the face of such Facility L/C;

                    (iv) the occurrence or any Default or Event of Default; or

                    (v) any other circumstances or happening whatsoever, whether
     or not similar to any of the foregoing.


                                       40



               (b) Each LC Issuer shall be entitled to rely, and shall be fully
protected in relying, upon any Facility L/C, draft, writing, resolution, notice,
consent, certificate, affidavit, letter, cablegram, telegram, telecopy, telex or
teletype message, statement, order or other document believed by it to be
genuine and correct and to have been signed, sent or made by the proper Person
or Persons, and upon advice and statements of legal counsel, independent
accountants and other experts selected by such LC Issuer. Each LC Issuer shall
be fully justified in failing or refusing to take any action under this
Agreement unless it shall first have received such advice or concurrence of the
Required Lenders as it reasonably deems appropriate or it shall first be
indemnified to its reasonable satisfaction by the Lenders against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take such action. Notwithstanding any other provision of this
Section 2.20, each LC Issuer shall in all cases be fully protected in acting, or
in refraining from acting, under this Agreement in accordance with a request of
the Required Lenders, and such request and any action taken or failure to act
pursuant thereto shall be binding upon the Lenders and any future holders of a
participation in any Facility L/Cs.

          2.21 LC Issuer Reporting Requirements. Each LC Issuer shall, no later
than the third (3rd) Business Day following the last day of each month, provide
to Agent a schedule of the Facility L/Cs issued by it showing the issuance date,
account party, original face amount, amount (if any) paid thereunder, expiration
date and the reference number of each Facility L/C outstanding at any time
during such month and the aggregate amount (if any) payable by Borrower to such
LC Issuer during the month pursuant to Section 2.9 hereof. Copies of such
reports shall be provided promptly to each Lender by Agent. Agent shall, with
reasonable promptness following receipt from all LC Issuers of the reports
provided for in this Section 2.21 for the months of March, June, September and
December, respectively, deliver to Borrower a quarterly statement of the
Facility L/C Fees and Unused Fees then due and payable.

          2.22 Indemnification; Nature of LC Issuer's Duties.

               (a) In addition to amounts payable as elsewhere provided in this
Agreement, Borrower hereby agrees to protect, indemnify, pay and save Agent,
each LC Issuer and each Lender harmless from and against any and all claims,
demands, liabilities, damages, losses, costs, charges and expenses (including
reasonable attorneys' fees) arising from the claims of third parties against
Agent, any LC Issuer or any Lender as a consequence, direct or indirect, of (i)
the issuance of any Facility L/C other than, in the case of an LC Issuer, as a
result of its willful misconduct or gross negligence, or (ii) the failure of an
LC Issuer to honor a drawing under a Facility L/C Credit as a result of any act
or omission, whether rightful or wrongful, of any court or other Governmental
Authority.

               (b) As among Borrower, Lenders, Agent and each LC Issuer,
Borrower assumes all risks of the acts and omissions of, or misuse of Facility
L/Cs by, the respective beneficiaries of such Facility L/Cs. In furtherance and
not in limitation of the foregoing, neither an LC Issuer nor Agent nor any
Lender shall be responsible (other than, in the case of an LC Issuer, as a
result of its gross negligence or willful misconduct): (i) for the form,
validity, sufficiency, accuracy, genuineness or legal effect of any document
submitted by any party in connection with the application for and issuance of
the Facility L/Cs, even if it should in fact prove to be in any or all respects
invalid, insufficient, inaccurate, fraudulent or forged; (ii)


                                       41



for the validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign a Facility L/C or the rights or benefits
thereunder or proceeds thereof, in whole or in part, which may prove to be
invalid or ineffective for any reason; (iii) for failure of the beneficiary of a
Facility L/C to comply fully with conditions required in order to draw upon such
Facility L/C; (iv) for errors, omissions, interruptions or delays in
transmission or delivery of any messages, by mail, cable, telegraph, telex,
facsimile transmission or otherwise; (v) for errors in interpretation of
technical terms; (vi) for any loss or delay in the transmission or otherwise of
any document required in order to make a drawing under any Facility L/C or of
the proceeds thereof; (vii) for the misapplication by the beneficiary of a
Facility L/C of the proceeds of any drawing under such Facility L/C; or (viii)
for any consequences arising from causes beyond the control of Agent, such LC
Issuer and the Lenders including, without limitation, any act or omission,
whether rightful or wrongful, of any government, court or other governmental
agency or authority. None of the above shall affect, impair, or prevent the
vesting of any of such LC Issuer's rights or powers under this Section 2.22.

               (c) In furtherance and extension and not in limitation of the
specific provisions hereinabove set forth, any action taken or omitted by an LC
Issuer under or in connection with the Facility L/Cs issued by it or any related
certificates, if taken or omitted in good faith and does not constitute gross
negligence or willful misconduct, shall not put such LC Issuer, Agent or any
Lender under any resulting liability to Borrower or relieve Borrower of any of
its Obligations hereunder to any such Person.

               (d) Notwithstanding anything to the contrary contained in this
Section 2.22, Borrower shall have no obligation to indemnify an LC Issuer under
this Section 2.22 in respect of any liability incurred by an LC Issuer arising
out of the wrongful dishonor by such LC Issuer of a proper demand for payment
made under any Facility L/C issued by such LC Issuer, unless such dishonor was
made at the request of Borrower.

                ARTICLE 3: GENERAL PROVISIONS APPLICABLE TO LOANS

          3.1 Conversion/Continuation Options. Subject to the limitations on the
availability of LIBOR Rate Loans, Borrower may elect from time to time to
convert outstanding Revolving Credit Loans from ABR Loans to LIBOR Rate Loans or
to continue any LIBOR Rate Loan as such upon the expiration of the then current
Interest Period thereof by giving the Agent telephonic or written notice (the
"Notice of Conversion/Continuation"), which Notice of Conversion/Continuation
must be received prior to 11:00 a.m., Charlotte, North Carolina time, at least
three (3) Business Days prior to the requested date for the conversion or
continuation, which notice shall specify (i) the date for the conversion or
continuation (which shall be a Business Day); and (ii) the aggregate amount of
ABR Loans to be converted or LIBOR Rate Loans to be continued. Each conversion
from ABR Loans to LIBOR Rate Loans and each continuation of LIBOR Rate Loans
shall be in the principal amount of $10,000,000 or any larger amount which is an
even multiple of $1,000,000. Agent shall give prompt telephonic or written
notice to each Lender of Borrower's request for conversion or continuation,
specifying (i) the date for the conversion or continuation; (ii) the aggregate
amount of ABR Loans to be converted or LIBOR Rate Loan to be continued; and
(iii) for each such ABR Loan to be converted to a LIBOR Rate Loan and each
continuation of any LIBOR Rate Loan, the respective LIBOR Rate applicable
thereto. All or any part of outstanding ABR Loans may be converted or LIBOR Rate


                                       42



Loans continued as provided herein, provided that (i) (unless the Required
Lenders otherwise consent) no ABR Loan may be converted into a LIBOR Rate Loan
nor any LIBOR Rate Loan continued as a LIBOR Rate Loan upon the expiration of
the current Interest Period therefor when any Default or Event of Default has
occurred and is continuing and (ii) no ABR Loan may be converted into a LIBOR
Rate Loan nor any LIBOR Rate Loan continued as a LIBOR Rate Loan upon the
expiration of the current Interest Period therefor after the date that is one
(1) month prior to the last day of the Commitment Period.

          3.2 Inability to Determine Interest Rate. If prior to the first day of
any Interest Period, the Agent or the Required Lenders shall have reasonably
determined (which determination shall be conclusive and binding upon Borrower)
that, by reason of circumstances affecting the relevant market, adequate and
reasonable means do not exist for ascertaining the LIBOR Rate for such Interest
Period, the Agent shall give telecopy, telephonic or written notice thereof to
Borrower and the Lenders as soon as practicable thereafter. If such notice is
given (x) any LIBOR Rate Loans requested to be made on the first day of such
Interest Period shall be made as ABR Loans and (y) any Loans that were to have
been converted on the first day of such Interest Period to or continued as LIBOR
Rate Loans shall be converted to or continued as ABR Loans. Until such notice
has been withdrawn by the Agent, no further LIBOR Rate Loans shall be made or
continued as such, nor shall Borrower have the right to convert ABR Loans to
LIBOR Rate Loans.

          3.3 Availability of LIBOR Rate Loans. If any Lender reasonably
determines that maintenance of its LIBOR Rate Loans at a Lending Office would
violate any applicable law, rule, regulation, or directive, whether or not
having the force of law, or if the Required Lenders determine that deposits of a
type and maturity appropriate to match fund LIBOR Rate Loans are not available,
then the Agent shall suspend the availability of LIBOR Rate Loans and require
any affected LIBOR Rate Loans to be repaid or converted to ABR Loans at the end
of the applicable Interest Period

          3.4 Designation of a Different Lending Office. If any Lender requests
compensation under Section 2.9 hereof, or requires Borrower to pay any
additional amount to any Lender or any Governmental Authority for the account of
any Lender pursuant to Section 3.6 hereof, then such Lender, unless directed by
Borrower not to do so, shall use reasonable efforts to designate a different
lending office for funding or booking its Loans hereunder or to assign its
rights and obligations hereunder to another of its offices, branches or
affiliates, if, in the judgment of such Lender, such designation or assignment
(i) would eliminate or reduce amounts payable pursuant to Section 2.9 or 3.6
hereof, as the case may be, in the future and (ii) would not subject such Lender
to any unreimbursed cost or expense and would not otherwise be disadvantageous
to such Lender. Borrower hereby agrees to pay all reasonable costs and expenses
incurred by any Lender in connection with any such designation or assignment.

          3.5 Indemnity. Borrower agrees to indemnify each Lender and to hold
each Lender harmless from any loss or expense which such Lender sustains or
incurs (other than through such Lender's gross negligence or willful misconduct)
as a consequence of (a) default by Borrower in making a borrowing of, conversion
into or continuation of LIBOR Rate Loans after Borrower has given Agent notice
that Borrower selects such LIBOR Rate Loans in accordance with Section 2.3 or
Section 3.1, as appropriate, of this Agreement, (b) default by Borrower in


                                       43



making any prepayment or conversion of a LIBOR Rate Loan after Borrower has
given a notice thereof in accordance with the provisions of this Agreement or
(c) the making of a prepayment of LIBOR Rate Loans on a day which is not the
last day of an Interest Period with respect thereto (whether by acceleration,
demand, required assignment or otherwise). Such indemnification may include,
without limitation, an amount equal to the excess, if any, of (i) the amount of
interest which would have accrued on the amount so prepaid, or converted, or not
so borrowed, converted or continued, for the period from the date of such
prepayment or conversion or of such failure to borrow, convert or continue to
the last day of the applicable Interest Period (or, in the case of a failure to
borrow, convert or continue, the Interest Period that would have commenced on
the date of such failure) in each case at the applicable rate of interest for
such LIBOR Rate Loans provided for herein over (ii) the amount of interest (as
reasonably determined by such Lender) which would have accrued to such Lender on
such amount by placing such amount on deposit for a comparable period with
leading banks in the interbank LIBOR market.

          3.6 Taxes.

               (a) Any and all payments by or on account of any obligation of
Borrower hereunder or under any other Loan Document shall be made free and clear
of and without reduction or withholding for any Indemnified Taxes or Other
Taxes, provided that if Borrower shall be required by applicable law to deduct
any Indemnified Taxes (including any Other Taxes) from such payments, then (i)
the sum payable shall be increased as necessary so that after making all
required deductions (including deductions applicable to additional sums payable
under this Section) the Agent, Lender or LC Issuer, as the case may be, receives
an amount equal to the sum it would have received had no such deductions been
made, (ii) Borrower shall make such deductions and (iii) Borrower shall timely
pay the full amount deducted to the relevant Governmental Authority in
accordance with applicable law.

               (b) Without limiting the provisions of paragraph (a) above,
Borrower shall timely pay any Other Taxes to the relevant Governmental Authority
in accordance with applicable law.

               (c) Borrower shall indemnify Agent, each Lender and LC Issuer,
within ten (10) days after demand therefor, for the full amount of any
Indemnified Taxes or Other Taxes (including Indemnified Taxes or Other Taxes
imposed or asserted on or attributable to amounts payable under this Section)
paid by Agent, such Lender or LC Issuer, as the case may be, and any penalties,
interest and reasonable expenses arising therefrom or with respect thereto,
whether or not such Indemnified Taxes or Other Taxes were correctly or legally
imposed or asserted by the relevant Governmental Authority. A certificate as to
the amount of such payment or liability delivered to Borrower by a Lender or LC
Issuer (with a copy to Agent), or by Agent on its own behalf or on behalf of a
Lender or LC Issuer, shall be conclusive absent manifest error.

               (d) As soon as practicable after any payment of Indemnified Taxes
or Other Taxes by Borrower to a Governmental Authority, Borrower shall deliver
to Agent the original or a certified copy of a receipt issued by such
Governmental Authority evidencing such payment, a copy of the return reporting
such payment or other evidence of such payment reasonably satisfactory to Agent.


                                       44



               (e) Any Foreign Lender that is entitled to an exemption from or
reduction of withholding tax under the law of the jurisdiction in which Borrower
is resident for tax purposes, or any treaty to which such jurisdiction is a
party, with respect to payments hereunder or under any other Loan Document shall
deliver to Borrower (with a copy to Agent), at the time or times prescribed by
applicable law or reasonably requested by Borrower or Agent, such properly
completed and executed documentation prescribed by applicable law as will permit
such payments to be made without withholding or at a reduced rate of
withholding. In addition, any Lender, if requested by Borrower or Agent, shall
deliver such other documentation prescribed by applicable law or reasonably
requested by Borrower or Agent as will enable Borrower or Agent to determine
whether or not such Lender is subject to backup withholding or information
reporting requirements.

          Without limiting the generality of the foregoing, in the event that
Borrower is resident for tax purposes in the United States of America, any
Foreign Lender shall deliver to Borrower and Agent (in such number of copies as
shall be requested by the recipient) on or prior to the date on which such
Foreign Lender becomes a Lender under this Agreement (and from time to time
thereafter upon the request of Borrower or Agent, but only if such Foreign
Lender is legally entitled to do so), whichever of the following is applicable:

                    (i) duly completed copies of Internal Revenue Service Form
     W-8BEN claiming eligibility for benefits of an income tax treaty to which
     the United States of America is a party,

                    (ii) duly completed copies of Internal Revenue Service Form
     W-8ECI,

                    (iii) in the case of a Foreign Lender claiming the benefits
     of the exemption for portfolio interest under section 881(c) of the Code,
     (x) a certificate to the effect that such Foreign Lender is not (A) a
     "bank" within the meaning of section 881(c)(3)(A) of the Code, (B) a "10
     percent shareholder" of Borrower within the meaning of section 881(c)(3)(B)
     of the Code, or (C) a "controlled foreign corporation" described in section
     881(c)(3)(C) of the Code and (y) duly completed copies of Internal Revenue
     Service Form W-8BEN, or

                    (iv) any other form prescribed by applicable law as a basis
     for claiming exemption from or a reduction in United States Federal
     withholding tax duly completed together with such supplementary
     documentation as may be prescribed by applicable law to permit Borrower to
     determine the withholding or deduction required to be made.

               (f) Treatment of Certain Refunds. If Agent, a Lender or LC Issuer
determines, in its sole discretion, that it has received a refund of any Taxes
or Other Taxes as to which it has been indemnified by Borrower or with respect
to which Borrower has paid additional amounts pursuant to this Section, it shall
pay to Borrower an amount equal to such refund (but only to the extent of
indemnity payments made, or additional amounts paid, by Borrower under this
Section with respect to the Taxes or Other Taxes giving rise to such refund),
net of all out-of-pocket expenses of Agent, such Lender or LC Issuer, as the
case may be, and


                                       45



without interest (other than any interest paid by the relevant Governmental
Authority with respect to such refund), provided that Borrower, upon the request
of Agent, such Lender or LC Issuer, agrees to repay the amount paid over to
Borrower (plus any penalties, interest or other charges imposed by the relevant
Governmental Authority) to Agent, such Lender or LC Issuer in the event Agent,
such Lender or LC Issuer is required to repay such refund to such Governmental
Authority. This paragraph shall not be construed to require Agent, any Lender or
LC Issuer to make available its tax returns (or any other information relating
to its taxes that it deems confidential) to Borrower or any other Person.

          3.7 Survival of Indemnity. Determination of amounts payable under
Sections 2.9 and 3.5 hereof in connection with a LIBOR Rate Loan shall be
calculated as though each Lender funded its LIBOR Rate Loan through the purchase
of a deposit of the type and maturity corresponding to the deposit used as a
reference in determining the LIBOR Rate applicable to such Loan, whether in fact
that is the case or not. The obligations of Borrower under Sections 2.9, 3.5 and
3.6 hereof shall survive payment of the Obligations and termination of this
Agreement.

          3.8 Telephonic Notices. Borrower hereby authorizes Lenders and Agent
to extend, convert or continue Loans, to effect selections of LIBOR Rate Loans
and each Interest Period thereof and ABR Loans and to transfer funds, in each
case based on telephonic notices made by any Person or Persons who Agent or any
Lender in good faith believes to be acting on behalf of Borrower, it being
understood that the foregoing authorization is specifically intended to allow
Notices of Borrowing and Notices of Conversion/Continuation to be given
telephonically. Borrower agrees to deliver promptly to Agent a written
confirmation, if such confirmation is requested by Agent or any Lender, of each
telephonic notice signed by a Responsible Officer. If the written confirmation
differs in any material respect from the action taken by Agent and Lenders, the
records of Agent and Lenders shall govern, absent manifest error.

          3.9 Funding by Lenders; Presumption by Agent. (a) Unless Agent shall
have received notice from a Lender prior to the proposed date of any borrowing
of Loans that such Lender will not make available to Agent such Lender's Ratable
Share of such Loans, Agent may assume that such Lender has made such Ratable
Share available on such date in accordance with Section 2.3 hereof and may, in
reliance upon such assumption, make available to Borrower a corresponding
amount. In such event, if a Lender has not in fact made its Ratable Share of the
Loans available to Agent, then the applicable Lender and Borrower severally
agree to pay to Agent forthwith on demand such corresponding amount with
interest thereon, for each day from and including the date such amount is made
available to Borrower to but excluding the date of payment to Agent, at (i) in
the case of a payment to be made by such Lender, the Federal Funds Rate and (ii)
in the case of a payment to be made by Borrower, the interest rate applicable to
ABR Loans. If Borrower and such Lender shall pay such interest to Agent for the
same or an overlapping period, Agent shall promptly remit to Borrower the amount
of such interest paid by Borrower for such period. If such Lender pays its
Ratable Share of Loans to Agent, then the amount so paid shall constitute such
Lender's Loan. Any payment by Borrower shall be without prejudice to any claim
Borrower may have against a Lender that shall have failed to make such payment
to Agent.


                                       46



               (b) Unless Agent shall have received notice from Borrower prior
to the date on which any payment is due to Agent for the account of the Lenders
or any LC Issuer hereunder that Borrower will not make such payment, Agent may
assume that Borrower has made such payment on such date in accordance herewith
and may, in reliance upon such assumption, distribute to Lenders or LC Issuer,
as the case may be, the amount due. In such event, if Borrower has not in fact
made such payment, then each of the Lenders or such LC Issuer, as the case may
be, severally agrees to repay to Agent forthwith on demand the amount so
distributed to such Lender or LC Issuer, with interest thereon, for each day
from and including the date such amount is distributed to it to but excluding
the date of payment to Agent, at the Federal Funds Rate.

          3.10 Replacement of Lenders. If any Lender is a Rejecting Lender under
Section 2.7(b) hereof, or any Lender requests compensation under Section 2.9
hereof, or if Borrower is required to pay any additional amount to any Lender or
any Governmental Authority for the account of any Lender pursuant to Section 3.6
hereof, or if any Lender defaults in its obligation to fund Loans hereunder,
then Borrower may, at its sole expense and effort, upon notice to such Lender
and Agent, require such Lender to assign and delegate, without recourse (in
accordance with and subject to the restrictions contained in, and consents
required by, Section 11.7 hereof), all of its interests, rights and obligations
under this Agreement and the related Loan Documents to an Eligible Assignee that
shall assume such obligations (which Eligible Assignee may be another Lender, if
a Lender accepts such assignment), provided that:

               (a) Borrower shall have paid to Agent the assignment fee
specified in Section 11.7 hereof;

               (b) such Lender shall have received payment of an amount equal to
the outstanding principal of its Loans and participations in Reimbursement
Obligations, accrued interest thereon, accrued fees and all other amounts
payable to it hereunder and under the other Loan Documents (including any
amounts under Section 3.5 hereof) from the assignee (to the extent of such
outstanding principal and accrued interest and fees) or Borrower (in the case of
all other amounts);

               (c) in the case of any such assignment resulting from a claim for
compensation under Section 2.9 hereof or payments required to be made pursuant
to Section 3.6 hereof, such assignment will result in a reduction in such
compensation or payments thereafter; and

               (d) such assignment does not conflict with applicable law.

A Lender shall not be required to make any such assignment or delegation if,
prior thereto, as a result of a waiver by such Lender or otherwise, the
circumstances entitling Borrower to require such assignment and delegation cease
to apply.

                    ARTICLE 4: REPRESENTATIONS AND WARRANTIES

          In order to induce Lenders, LC Issuers and Agent to enter into this
Agreement and to make the Revolving Credit Loans and Swingline Loans and to
issue the Facility L/Cs herein


                                       47



provided for, Borrower hereby, represents and warrants to each Lender, LC Issuer
and Agent that on the date hereof:

          4.1 Financial Statements. Borrower has heretofore furnished to each
Lender (a) the consolidated balance sheet of Borrower and its Subsidiaries as of
May 31, 2004, and the related consolidated statements of income, of
stockholders' equity and of cash flows for the fiscal year of Borrower then
ended, certified by an independent public accountant of recognized national
standing and (b) the consolidated unaudited balance sheet and income statement
of Borrower and its Subsidiaries as of November 30, 2004. Each of the foregoing
financial statements fairly presents, in all material respects, the financial
condition of Borrower and its Subsidiaries as of the date thereof and the
results of the operations of Borrower and its Subsidiaries for the period then
ended (subject, in the case of the November 30, 2004 statements, to year-end
audit adjustments) and, from the respective dates of the foregoing financial
statements to the date hereof, there has been no material adverse change in such
condition.

          4.2 Existence; Compliance with Law. Each Owner Guarantor and each of
Borrower and Borrower's Subsidiaries (a) is duly organized or formed, as
appropriate, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, formation or organization, as appropriate,
(b) has the requisite corporate, partnership or limited liability company power
and authority to conduct the business in which it is currently engaged, (c) is
qualified as a foreign entity to do business under the laws of any jurisdiction
where the failure to so qualify would have a material adverse effect on the
business of Borrower and Borrower's Subsidiaries taken as a whole, and (d) is in
compliance with all Requirements of Law except to the extent that the failure to
comply therewith would not, in the aggregate, have a material adverse effect on
the business, operations, property or financial or other condition of Borrower
and Borrower's Subsidiaries taken as a whole or would not materially adversely
affect the ability of Borrower or the Guarantors to perform their respective
obligations under the Loan Documents.

          4.3 Power; Authorization; Enforceable Obligations. Borrower and each
Guarantor has the corporate, partnership or limited liability company (as
applicable) power and authority to make, deliver and perform the Loan Documents
to which it is a party and (in the case of Borrower) to borrow hereunder, and
has taken all corporate or other action necessary to be taken by it to authorize
(a) (in the case of Borrower) the borrowings on the terms and conditions of this
Agreement and the Notes, and (b) the execution, delivery and performance of the
Loan Documents to which it is a party. No consent, waiver or authorization of,
or filing with any Person (including without limitation any Governmental
Authority) is required to be made or obtained by Borrower in connection with the
borrowings hereunder or by Borrower or any Guarantor in connection with the
execution, delivery, performance, validity or enforceability of the Loan
Documents to which it is a party. This Agreement has been, and each Note and
Guaranty Agreement will be, duly executed and delivered on behalf of Borrower or
each Guarantor (as the case may be), and this Agreement constitutes, and each
Note and Guaranty Agreement when executed and delivered hereunder will
constitute, a legal, valid and binding obligation of Borrower or the Guarantors
(as the case may be), enforceable against Borrower or the Guarantors (as the
case may be), in accordance with its terms, subject to the effect, if any, of
bankruptcy, insolvency, reorganization, arrangement or other similar laws
relating to or affecting


                                       48



the rights of creditors generally and the limitations, if any, imposed by the
general principles of equity and public policy.

          4.4 No Legal Bar. The execution, delivery and performance of this
Agreement and the Notes, the borrowings hereunder and the use of the proceeds
thereof and the execution, delivery and performance by the Guarantors of the
Guaranty Agreements (a) do not violate any Requirement of Law or Contractual
Obligation of any Owner Guarantor, Borrower or any of Borrower's Subsidiaries,
(b) do not contravene the articles of incorporation, charter, bylaws,
partnership agreement, articles or certificate of formation, operating agreement
or other organizational documents of any Owner Guarantor, Borrower or any of
Borrower's Subsidiaries and (c) do not result in, or require, the creation or
imposition of any Lien on any of its properties or revenues pursuant to any
Requirement of Law or Contractual Obligation.

          4.5 No Material Litigation. No litigation, investigation or proceeding
of or before any arbitrator or Governmental Authority is pending or, to the
knowledge of Borrower, threatened by or against any Owner Guarantor, Borrower or
any of Borrower's Subsidiaries or against any of their respective properties or
revenues (a) with respect to this Agreement, the Notes or any Guaranty Agreement
or any of the transactions contemplated hereby or thereby, or (b) which could
reasonably be expected to have a material adverse effect on the business,
operations, property or financial or other condition of Borrower and Borrower's
Subsidiaries taken as a whole.

          4.6 Regulation U. None of any Owner Guarantor, Borrower or any of
Borrower's Subsidiaries is engaged, nor will either of them engage, principally
or as one of its important activities, in the business of extending credit for
the purpose of "purchasing" or "carrying" any "margin stock" within the
respective meanings of each of the quoted terms under Regulation U of the Board
of Governors of the Federal Reserve System as now and from time to time
hereafter in effect. No part of the proceeds of any Loans will be used for
"purchasing" or "carrying" "margin stock" as so defined or for any purpose which
violates, or which would be inconsistent with, the provisions of the Regulations
of such Board of Governors. If requested by Agent, Owner Guarantors, Borrower
and each of Borrower's Subsidiaries will furnish to Agent a statement in
conformity with the requirements of Federal Reserve Form U-l referred to in said
Regulation U to the foregoing effect.

          4.7 Investment Company Act. None of any Owner Guarantor, Borrower or
any of Borrower's Subsidiaries is an "investment company" or a company
"controlled" by an "investment company," within the meaning of the Investment
Company Act of 1940, as amended.

          4.8 ERISA. Borrower and Borrower's Subsidiaries are in compliance in
all material respects with ERISA. There has been no Reportable Event with
respect to any Plan. There has been no institution of proceedings or any other
action by PBGC or Borrower or any Commonly Controlled Entity to terminate or
withdraw or partially withdraw from any Plan under any circumstances which could
lead to material liabilities to PBGC or, with respect to a Multiemployer Plan,
the Reorganization or Insolvency (as each such term is defined in ERISA) of the
Plan.


                                       49



          4.9 Disclosure. No representations or warranties made by Borrower in
this Agreement or in any other document furnished from time to time in
connection herewith (as such other documents may be supplemented from time to
time) contains or will contain any untrue statement of a material fact or omits
or will omit to state any material fact necessary to make the statements herein
or therein, in light of the circumstances under which they were made, not
misleading.

          4.10 Subsidiary Information. Schedule 3 attached hereto contains the
name, principal place of business, all other places of business and percentage
of ownership of all of the Subsidiaries of Borrower.

          4.11 Schedules. Each of the Schedules to this Agreement contains true,
complete and correct information in all material respects.

          4.12 Environment. Borrower and Borrower's Subsidiaries have been
issued and will maintain all required federal, state, and local permits,
licenses, certificates and approvals relating to (a) emissions; (b) discharges
to service water or groundwater; (c) noise emissions; (d) solid or liquid waste
disposal; (e) the use, generation, storage, transportation or disposal of toxic
or hazardous substances or hazardous wastes; or (f) other environmental, health
or safety matters, except to the extent the failure to have any such permit,
license, certificate or approval would not have a material adverse effect on
Borrower's consolidated operations, business or financial condition. Neither
Borrower nor any of Borrower's Subsidiaries have received notice of, or has
actual knowledge of any material violations of any federal, state or local
environmental, health or safety laws, codes or ordinances or any rules or
regulations promulgated thereunder. Except in accordance with a valid
governmental permit, license, certificate or approval, there has been no
material emission, spill, release or discharge into or upon (i) the air; (ii)
soils; (iii) service water or groundwater; (iv) the sewer, septic system or
waste treatment, storage or disposal system servicing any property of Borrower
or any of its Subsidiaries of any toxic or hazardous substances or hazardous
wastes at or from such property; and accordingly no such property has been
adversely affected, in any material respect, by any toxic or hazardous
substances or wastes. There has been no complaint, order, directive, claim,
citation or notice by any Governmental Authority or any person or entity with
respect to material violations of law or damages by reason of Borrower or
Borrower's Subsidiaries (1) air emissions; (2) spills, releases or discharges to
soils or improvements located thereon, surface water, groundwater or the sewer,
septic system or waste treatment, storage or disposal system servicing the
premises; (3) noise emissions; (4) solid or liquid waste disposal; (5) use,
generation, storage, transportation or disposal of toxic or hazardous substances
or hazardous wastes; or (6) other environmental, health or safety matters
affecting Borrower or any of Borrower's Subsidiaries. Neither Borrower nor any
of Borrower's Subsidiaries have any material indebtedness, obligation or
liability, absolute or contingent, matured or unmatured, with respect to the
storage, treatment, cleanup or disposal of any solid waste, hazardous wastes, or
other toxic or hazardous substances. For purposes of this Section 4.12, a
violation, emission, spill, release, discharge, damage, adverse effect,
indebtedness, obligation or liability shall be deemed material if, and only if,
such violation, emission, spill, release, discharge, damage, adverse effect,
indebtedness, obligation or liability, alone or in the aggregate, would have a
material adverse effect on Borrower's consolidated operations, business or
financial condition.


                                       50



          4.13 Force Majeure Events. Neither the business nor the properties of
Borrower or any Subsidiary are affected by any fire, explosion, accident,
drought, storm, hail, earthquake, embargo, act of God or of the public enemy, or
other casualty (whether or not covered by insurance), materially and adversely
affecting such business or properties or the operation of Borrower and its
Subsidiaries taken as a whole.

          4.14 Other Agreements. Other than as disclosed on Schedule 4.14
hereto, neither Borrower nor any Subsidiary is a party to any indenture, loan,
or credit agreement, or to any lease or other agreement or instrument or subject
to any charter, corporate or other restriction which could have a material
adverse effect on the business, properties, assets, operations, or conditions,
financial or otherwise, of Borrower and its Subsidiaries, taken as a whole, or
the ability of Borrower or any Subsidiary to carry out its obligations under the
Loan Documents to which it is a party. Neither Borrower nor any Subsidiary is in
default in any material respect in the performance, observance, or fulfillment
of any of the obligations, covenants, or conditions contained in any agreement
or instrument material to the business of Borrower and its Subsidiaries, taken
as a whole.

          4.15 No Defaults on Outstanding Judgments or Orders. Borrower and each
Subsidiary have satisfied all unstayed and unappealed judgments, and neither
Borrower nor any Subsidiary is in default with respect to any judgment, or any
material writ, injunction, decree, rule, or regulation of any court, arbitrator,
or federal, state, municipal, or other governmental authority, commission,
board, bureau, agency, or instrumentality, domestic or foreign applicable to
Borrower or any Subsidiary.

          4.16 Ownership and Liens. Borrower and each Subsidiary have title to,
or valid leasehold interests in, all of their respective properties and assets,
real and personal, including the properties and assets and leasehold interests
reflected in the financial statements referred to in Section 4.1 hereof (other
than any properties or assets disposed of in the ordinary course of business),
and none of the properties and assets owned by Borrower or any Subsidiary and
none of their leasehold interests is subject to any Lien, except for Permitted
Liens and liens pursuant to Secured Indebtedness permitted under Section 7.1.

          4.17 Operation of Business. Borrower and each Subsidiary possess all
material licenses, permits, franchises, patents, copyrights, trademarks, and
trade names, or rights thereto, required to conduct their respective businesses
substantially as now conducted and as presently proposed to be conducted and
neither Borrower nor any of its Subsidiaries is in violation of any valid rights
of others with respect to any of the foregoing where the failure to possess such
licenses, permits, franchises, patents, copyrights, trademarks, trade names or
rights thereto or the violation of the valid rights of others with respect
thereto may, in any one case or in the aggregate, adversely affect in any
material respect the financial condition, operations, properties, or business of
Borrower or any Subsidiary or the ability of Borrower and its Subsidiaries,
taken as a whole, to perform their respective obligations under the Loan
Documents to which they are a party.

          4.18 Taxes. All income tax liabilities or income tax obligations of
Borrower and each Subsidiary (other than those being contested in good faith by
appropriate proceedings) have been paid or have been accrued by or reserved for
by Borrower.


                                       51



          4.19 OFAC. None of Borrower, any Subsidiary of Borrower or any
Affiliate of Borrower: (i) is a person named on the list of Specially Designated
Nationals or Blocked Persons maintained by the U.S. Department of the Treasury's
Office of Foreign Assets Control available at
http://www.treas.gov/offices/eotffc/ofac/sdn/index.html, or as otherwise
published from time to time; or (ii) is (A) an agency of the government of a
country, (B) an organization controlled by a country, or (C) a person resident
in a country that is subject to a sanctions program identified on the list
maintained by OFAC and available at
http://www.treas.gov/offices/eotffc/ofac/sanctions/index.html, or as otherwise
published from time to time, as such program may be applicable to such agency,
organization or person; or (iii) derives more than fifteen percent (15%) of its
assets or operating income from investments in or transactions with any such
country, agency, organization or person; and (iv) none of the proceeds from any
Loan will be used to finance any operations, investments or activities in, or
make any payments to, any such country, agency, organization, or person.

                         ARTICLE 5: CONDITIONS PRECEDENT

          5.1 Conditions to Initial Loan(s). The obligation of the Lenders to
make the initial Loan(s), of the Swingline Lender to make Swingline Loans and of
any LC Issuer to issue, amend or extend any Facility L/C hereunder on the first
Borrowing Date is subject to the satisfaction of the following conditions
precedent on or prior to such date:

               (a) Notes. Each Lender shall have received its respective Note,
conforming to the requirements hereof and duly executed and delivered by a duly
authorized officer of Borrower.

               (b) Guaranty Agreements. The Guaranty Agreements shall have been
duly executed and delivered by all Guarantors to Agent.

               (c) Borrowing Base Compliance. Borrower shall have delivered to
each Lender and Agent a Borrowing Base Certificate, certified by a Responsible
Officer of Borrower, which shows compliance with the provisions of Section
2.1(b) hereof as of December 21, 2004.

               (d) Legal Opinion of Counsel to Borrower. Agent shall have
received an executed legal opinion of Hagen & Parsons P.C., counsel to Borrower
and Guarantors, dated as of the date hereof and addressed to Lenders and Agent,
substantially in the form of Exhibit E attached hereto, and otherwise in form
and substance reasonably satisfactory to each Lender and Agent and covering such
other matters incident to the transactions contemplated hereby as each Lender
and Agent or their respective counsel may reasonably require.

               (e) Proceedings of Borrower. Agent shall have received a copy of
the resolutions (in form and substance satisfactory to Agent) of the board of
directors, members, managers or other governing body of Borrower authorizing (i)
the execution, delivery and performance, of this Agreement, (ii) the
consummation of the transactions contemplated hereby, (iii) the borrowings
herein provided for, and (iv) the execution, delivery and performance of the
Notes and the other documents provided for in this Agreement, all certified by
the secretary, manager or other appropriate representative of Borrower as of the
date hereof. Such certificate


                                       52



shall state that the resolutions set forth therein have not been amended,
modified, revoked or rescinded as of the date hereof.

               (f) Proceedings of Guarantors. Agent shall have received a copy
of the respective resolutions (in form and substance reasonably satisfactory to
Agent) of the board of directors, management committee or other governing body
of each of the Guarantors (or of Borrower or another Subsidiary of Borrower as
the sole shareholder or sole member of the applicable Guarantor where
appropriate), each resolution authorizing the execution, delivery and
performance of the Guaranty Agreement to which such Guarantor is a party, all
certified by the Secretary or Assistant Secretary (or other person in a
comparable position) of the respective Guarantor (or Borrower or Subsidiary) as
of the date hereof. Such certificate shall state that the resolutions set forth
therein have not been amended, modified, revoked or rescinded as of the date
hereof.

               (g) Incumbency Certificate of Borrower. Agent shall have received
a certificate of the secretary, manager or other appropriate representative of
Borrower, dated the date hereof, as to the incumbency and signature of the
officer(s), members or managers of each executing this Agreement, the Notes and
any certificate or other documents to be executed and delivered by Borrower
pursuant hereto or thereto.

               (h) Incumbency Certificates of Guarantors. Agent shall have
received a certificate of the Secretary (or other person in a comparable
position) of each of the Guarantors, dated the date hereof, as to the incumbency
and signatures of the officer(s) (or other person(s) in a comparable position)
of each executing the Guaranty Agreement to which such Guarantor is a party.

               (i) Organization Documents of Borrower. Agent shall have received
copies of (i) the organizational documents of Borrower, together with all
amendments, and a certificate of good standing, all certified by the appropriate
governmental officer in its jurisdiction of organization and (ii) the bylaws or
code of regulations or comparable document of Borrower certified by the
secretary, manager or other appropriate representative of Borrower.

               (j) Organizational Documents of Guarantors. Agent shall have
received (i) with respect to each Guarantor that is a corporation (A) copies of
its articles or certificates of incorporation, including all amendments thereto,
and a certificate of good standing, all certified by the appropriate
governmental officer in its jurisdiction of incorporation and (B) the bylaws or
code of regulations of such Guarantor certified by the Secretary (or other
person in a comparable position) of each Guarantor, (ii) with respect to any
Guarantor that is a partnership, a true copy of its partnership agreement,
including all amendments thereto, certified by an officer of such partnership or
of its general partner, together with (in the case of any limited partnership)
copies of the certificates of limited partnerships and a certificate of good
standing, all certified by the appropriate governmental officer in its
jurisdiction of organization, and (iii) with respect to each Guarantor that is a
limited liability company, a copy of its operating agreement, including all
amendments thereto, certified by an officer of such limited liability company or
of its managing member, and a copy of its articles or certificate of formation
and a certificate of good standing, all certified by the appropriate officer of
the state of its formation.


                                       53



               (k) No Proceeding or Litigation; No Injunctive Relief. No action,
suit or proceeding before any arbitrator or any Governmental Authority shall
have been commenced, no investigation by any Governmental Authority shall have
been commenced and no action, suit, proceeding or investigation by any
Governmental Authority shall have been threatened, against Borrower or any
Subsidiary of Borrower or any Owner Guarantor or any of the officers, directors
or managers of Borrower or any Subsidiary of Borrower or any Owner Guarantor,
seeking to restrain, prevent or change the transactions contemplated by this
Agreement in whole or in part or questioning the validity or legality of the
transactions contemplated by this Agreement or seeking damages in connection
with such transactions.

               (l) Consents, Licenses, Approvals, etc. Agent shall have received
true copies (certified to be such by Borrower or other appropriate party) of all
consents, licenses and approvals required in accordance with applicable law in
connection with the execution, delivery, performance, validity and
enforceability of the Loan Documents, if the failure to obtain such consents,
licenses or approvals, individually or in the aggregate, would have a material
adverse effect on Borrower and Borrower's Subsidiaries taken as a whole, or
would adversely affect the validity or enforceability of any of the foregoing
documents, and approvals obtained shall be in full force and effect and be
satisfactory in form and substance to Agent.

               (m) Compliance with Law. Neither Borrower nor any of Borrower's
Subsidiaries nor any Owner Guarantor shall be in violation in any material
respect of any applicable statute, regulation or ordinance, including without
limitation statutes, regulations or ordinances relating to environmental
matters, of any governmental entity, or any agency thereof, in any respect
materially and adversely affecting the business, property, assets, operations or
condition, financial or otherwise, of Borrower and Borrower's Subsidiaries taken
as a whole.

               (n) No Default or Event of Default. No Default or Event of
Default shall have occurred and be continuing hereunder prior to or after giving
effect to the making of the initial Loans (including the issuance of Facility
L/Cs) or the purchase by Lenders of participation interests in the Existing L/Cs
on the first Borrowing Date hereunder.

               (o) No Material Adverse Change. There shall have been no material
adverse change in the consolidated financial condition or business or operations
of Borrower and Borrower's Subsidiaries from the date of Borrower's May 31, 2004
audited consolidated financial statements to the first Borrowing Date.

               (p) Fees. Borrower shall have paid to Agent the fees provided for
in the Agent's Fee Letter (which fees (except for any paid for the account of
Agent or Arranger) shall be paid by the Agent to the Lenders).

               (q) Financial Statements and Business Plan and Budget. Agent
shall have received the annual audited consolidated financial statements of
Borrower for the fiscal year ended May 31, 2004 and a copy of the management
prepared business plan and budget for the fiscal year ending May 31, 2005.

               (r) Compliance Certificate. Borrower shall have delivered to each
Lender and Agent the certificate of the Chief Financial Officer of Borrower
required to be


                                       54


delivered by Borrower quarterly pursuant to Section 6.2(a) hereof, prepared for
the period ending November 30, 2004.

               (s) Facility L/C Application. If the issuance of any Facility L/C
is part of the initial loan(s), Borrower shall have delivered to the applicable
LC Issuer a Facility L/C Application in accordance with Section 2.15 hereof for
each Facility L/C that Borrower has requested such LC Issuer to issue on the
first Borrowing Date.

               (t) Additional Matters. All corporate and other proceedings and
all other documents and legal matters in connection with the transactions
contemplated by the Loan Documents shall be reasonably satisfactory in form and
substance to each Lender and Agent and their respective counsel.

          5.2 Conditions to All Loans. In addition to the other terms and
conditions of this Agreement with respect to the making of Loans and the
issuance of Facility L/Cs, the obligation of each Lender to make any Loan and of
the LC Issuers to issue, amend or extend any Facility L/C hereunder on any date
(including without limitation the first Borrowing Date) is subject to the
satisfaction of the following conditions precedent as of such date:

               (a) Representations and Warranties. The representations and
warranties made by Borrower in this Agreement and any representations and
warranties made by Borrower or any Subsidiary of Borrower which are contained in
any certificate, document or financial or other statement furnished at any time
under or in connection herewith or therewith, shall be true and correct in all
material respects on and as of the date of such Loan or issuance of such
Facility L/C as if made on and as of such date unless stated to relate to a
specific earlier date.

               (b) No Default or Event of Default. No Default or Event of
Default shall have occurred and be continuing on such date or after giving
effect to the Loan to be made or Facility L/C to be issued, amended or extended
on such date.

               (c) Facility L/C Application. In the case of the issuance,
amendment or extension of any Facility L/C, Borrower shall have delivered to the
applicable LC Issuer a Facility L/C Application in accordance with Section 2.15
hereof for each Facility L/C that Borrower has requested such LC Issuer to
issue, amend or extend.

               (d) Borrowing Base. Such borrowing or the issuance, amendment or
extension of such Facility L/C shall not violate the provisions of Section
2.1(b) hereof.

Each borrowing by Borrower and each submission of a Facility L/C Application
under this Agreement shall constitute a representation and warranty by Borrower
as of the date of such borrowing or submission of such Facility L/C Application
that the conditions contained in the foregoing paragraphs (a), (b), (c) and (d)
of this Section 5.2 have been satisfied.

                        ARTICLE 6: AFFIRMATIVE COVENANTS

          Borrower hereby agrees that, from the date hereof and so long as any
Commitment remains in effect, any portion of any Note or Reimbursement
Obligation remains


                                       55



outstanding and unpaid, any Facility L/C remains outstanding that is not fully
collateralized with cash in accordance with the provisions of Article 8 hereof,
or any other amount is owing to Agent or any Lender hereunder, Borrower shall,
and shall cause each of its Subsidiaries to:

          6.1 Financial Statements. Furnish to Agent (with sufficient copies for
each Lender):

               (a) promptly after becoming available and in any event within one
hundred twenty (120) days after the close of each fiscal year of Borrower, the
audited consolidated financial statements of Borrower and the company-prepared
consolidating financial statements of Borrower and Subsidiaries of Borrower,
including a balance sheet as of the end of such year, the statement of profit
and loss for such year, and the statement of reconciliation of capital accounts
for such year, setting forth in each case in comparative form the corresponding
figures for the preceding fiscal year, accompanied by the related report of KPMG
LLP or another independent public accountant acceptable to Agent, which report
shall be to the effect that such statements have been prepared in accordance
with GAAP consistently followed throughout the period indicated except for such
changes in such principles with which the independent public accountants shall
have concurred. If upon a review of the audited consolidated financial
statements of Borrower and the company-prepared consolidating financial
statements of Borrower and its Subsidiaries, Agent is unable to reconcile such
financial statements with one another, then upon the request of Agent, Borrower
will promptly furnish a company-prepared reconciliation of the audited
consolidated financial statements of Borrower to the company-prepared
consolidating financial statements of Borrower;

               (b) promptly after becoming available and in any event within (i)
sixty (60) days after the end of the first, second, and third quarter and (ii)
ninety (90) days after the end of the fourth quarter, in each fiscal year of
Borrower, the company-prepared balance sheet of Borrower, the company-prepared
consolidating financial statements of Borrower, as of the end of such quarter,
the company-prepared statement of profit and loss of Borrower and its
Subsidiaries for such quarter and for the period from the beginning of the
fiscal year to the close of such quarter, and the company-prepared statement of
reconciliation of capital accounts of Borrower for such quarter and for the
period from the beginning of the fiscal year to the close of such quarter,
setting forth in each case, in comparative form, the corresponding figures for
the corresponding period of the preceding fiscal year, certified by the chief
financial officer of Borrower to have been prepared in accordance with GAAP
consistently followed throughout the period indicated except to the extent
stated therein, subject to normal changes resulting from year-end adjustments;
and

               (c) promptly after becoming available and in any event within one
hundred twenty (120) days after the close of each fiscal year of each Owner
Guarantor (other than Little Shots Nevada L.L.C.), the financial statements of
each such Owner Guarantor, including a balance sheet as of the end of such year,
the statement of profit and loss for such year, and the statement of
reconciliation of capital accounts for such year, setting forth in each case in
comparative form the corresponding figures for the preceding fiscal year, which
statements shall have been prepared in accordance with GAAP consistently
followed throughout the period indicated, as set forth therein.


                                       56



          6.2 Certificates; Other Information. Furnish to each Lender and Agent:

               (a) concurrently with the delivery of each financial statement
referred to in Section 6.1(a) above and each financial statement referred to in
Section 6.1(b) above, a certificate of the Chief Financial Officer of Borrower
(in the form of Exhibit F attached hereto or such other form as shall be
reasonably acceptable to Agent) stated to have been made after due examination
by such Chief Financial Officer (i) stating that, to the best of such officer's
knowledge, Borrower and each of its Subsidiaries during such period has observed
or performed in all material respects all of its covenants and other agreements,
and satisfied every condition contained in this Agreement and the Notes to be
observed, performed or satisfied by it, and that such Chief Financial Officer
has obtained no knowledge of any Default or Event of Default except as specified
in such certificate, and (ii) showing in detail the calculations supporting such
statement in respect of Sections 6.10, 6.11, 6.12, 7.1, 7.4, 7.5, 7.6(e), 7,8,
7.11 and 7.13 hereof;

               (b) concurrently with the delivery of the financial statements
referred to in Section 6.1(a) above, a copy of the management prepared business
plan and budget of Borrower and its Subsidiaries for the current fiscal year;

               (c) within sixty (60) days after the end of each quarterly period
of each fiscal year, a sales report identifying as to Borrower and its
Subsidiaries the inventory of real estate operations, including Land and Housing
Units as of such date, designated in such categories as are required by Agent;
such summary shall include a delineation of sold or unsold items in each
category;

               (d) promptly upon receipt thereof, copies of all final reports
submitted to Borrower by independent certified public accountants in connection
with each annual, interim or special audit of the books of Borrower or any of
its Subsidiaries made by such accountants, including without limitation any
final comment letter submitted by such accountants to management in connection
with their annual audit; and

               (e) promptly, on notice to Borrower, such additional financial
and other information as any Lender may from time to time reasonably request.

          6.3 Borrowing Base Certificate. Furnish to Agent as soon as available,
but in any event within twenty (20) days after the end of each calendar month, a
Borrowing Base Certificate, certified by the Chief Financial Officer of
Borrower, showing the calculation of the Borrowing Base as of the second (2nd)
to last Tuesday of such month.

          6.4 Compliance with Borrowing Base Requirements. At any time any
Borrowing Base Certificate required to be furnished to Agent in accordance with
Section 6.3 hereof indicates that the aggregate amount of Borrowing Base
Indebtedness outstanding exceeds the Borrowing Base, within fifteen (15)
calendar days after the delivery of such Borrowing Base Certificate to Agent,
(a) reduce the principal amount of the Loans and undrawn and drawn Facility L/Cs
or other Borrowing Base Indebtedness then outstanding by an amount sufficient to
reduce the aggregate amount of Borrowing Base Indebtedness outstanding to be
equal to or less than the Borrowing Base, or (b) deliver to Agent a more current
Borrowing Base Certificate that


                                       57



demonstrates that the aggregate amount of Borrowing Base Indebtedness does not
exceed the Borrowing Base.

          6.5 Payment of Obligations. Pay, discharge or otherwise satisfy at or
before maturity or before they become delinquent, as the case may be, all its
Indebtedness and other material obligations of whatever nature, except (a)
without prejudice to the effectiveness of Section 9 hereof, any Indebtedness or
other obligations (including any obligations for taxes), when the amount or
validity thereof is currently being contested in good faith by appropriate
proceedings and reserves in conformity with GAAP with respect thereto have been
provided on the books of Borrower or its Subsidiaries, as the case may be, and
(b) any Non-Recourse Indebtedness.

          6.6 Maintenance of Existence. Preserve, renew and keep in full force
and effect its corporate existence and take all reasonable action to maintain
all rights, privileges, contracts, copyrights, patents, trademarks, trade names
and franchises necessary or desirable in the normal conduct of its business, and
comply with all Contractual Obligations and Requirements of Law except to the
extent that the failure to take such actions or comply with such Contractual
Obligations and Requirements of Law would not, in the aggregate, have a material
adverse effect on the business, operations, property or financial or other
condition of Borrower or of Borrower and its Subsidiaries, taken as a whole.

          6.7 Maintenance of Property, Insurance. Keep all property useful in
and necessary to its business in good working order and condition; maintain with
financially sound and reputable insurance companies insurance on all its
property in at least such amounts and against at least such risks (but including
in any event public liability, general liability and business interruption
insurance) as are usually insured against in the same general area by companies
engaged in the same or a similar business; and furnish to Agent, upon written
request, full information as to the insurance carried.

          6.8 Inspection of Property; Books and Records; Discussions. Keep
proper books of record and account in which full, true and correct entries in
conformity with GAAP and all Requirements of Law shall be made of all dealings
and transactions in relation to its business and activities, subject in the case
of interim statements to year-end audit adjustments; and permit representatives
of each Lender and Agent, upon reasonable notice to Borrower, to visit and
inspect any of its properties, and examine and make abstracts from any of its
books and records at any reasonable time and as often as may reasonably be
requested, and to discuss the business, operations, properties and financial and
other condition of Borrower and its Subsidiaries with officers and employees of
Borrower and its Subsidiaries and, if notice thereof is given to Borrower prior
to the date of such discussions, with its independent certified public
accountants.

          6.9 Notices. Promptly give notice to Agent:

               (a) of the occurrence of any Default or Event of Default;

               (b) of any (i) default or event of default under any loan or
Letter of Credit agreement binding upon Borrower or any of its Subsidiaries,
(ii) default under any other Contractual Obligation that would enable the
obligee of the Contractual Obligations to compel


                                       58



Borrower or any of its Subsidiaries to immediately pay all amounts owing
thereunder or otherwise accelerate payments thereunder and would have a material
adverse effect on Borrower and its Subsidiaries taken as a whole, or (iii)
litigation, investigation or proceeding which may exist at any time between
Borrower or any Subsidiary and any Governmental Authority, which, if adversely
determined, would have a material adverse effect on the business, operations,
property or financial or other condition of Borrower and its Subsidiaries taken
as a whole;

               (c) of any litigation or proceeding affecting Borrower or any of
its Subsidiaries (i) (A) in which the amount involved is $1,000,000 or more and
not covered by insurance, or (B) which, in the reasonable opinion of a
Responsible Officer of Borrower, would, if adversely determined, have a material
adverse effect on Borrower and its Subsidiaries taken as a whole, or (ii) in
which injunctive or similar relief is sought and which, in the reasonable
opinion of a Responsible Officer of Borrower, would, if adversely determined,
have a material adverse effect on Borrower and its Subsidiaries taken as a
whole;

               (d) of the following events, as soon as possible and in any event
within thirty (30) days after Borrower knows: (i) the occurrence of any
Reportable Event with respect to any Plan with respect to which the PBGC has not
waived the thirty (30) day reporting requirement, or (ii) the institution of
proceedings or the taking or expected taking of any other action by PBGC or
Borrower or any Commonly Controlled Entity to terminate or withdraw or partially
withdraw from any Plan under circumstances which could lead to material
liability to the PBGC or, with respect to a Multiemployer Plan, the
Reorganization or Insolvency (as each such term is defined in ERISA) of the Plan
and in addition to such notice, deliver to each Lender and Agent whichever of
the following may be applicable: (A) a certificate of a Responsible Officer of
Borrower setting forth details as to such Reportable Event and the action that
Borrower or Commonly Controlled Entity proposes to take with respect thereto,
together with a copy of any notice of such Reportable Event that may be required
to be filed with PBGC, or (B) any notice delivered by PBGC evidencing its intent
to institute such proceedings or any notice to PBGC that such Plan is to be
terminated, as the case may be; and

               (e) of a material adverse change in the business, operations,
property or financial condition of Borrower and its Subsidiaries taken as a
whole.

Each notice pursuant to this Section 6.9 shall be accompanied by a statement of
a Responsible Officer of Borrower setting forth details of the occurrence
referred to therein and stating what action Borrower proposes to take with
respect thereto. For all purposes of clause (d) of this Section 6.9, Borrower
shall be deemed to have all knowledge or knowledge of all facts attributable to
the administrator of such Plan if such Plan is a Single Employer Plan.

          6.10 Maintenance of Tangible Net Worth. Maintain at all times Tangible
Net Worth in amounts at all times equal to or exceeding (i) $90,260,170, plus
(ii) fifty percent (50%) of the Consolidated Earnings for each quarter after
November 30, 2004 (excluding any quarter in which Consolidated Earnings are less
than zero (0)), plus (iii) fifty percent (50%) of the net proceeds or other
consideration received by Borrower for any capital stock issued or other equity
interests or sold after the date of this Agreement.


                                       59



          6.11 Maintenance of Leverage Ratio. Maintain a Leverage Ratio not in
excess of 2.25 to 1.0 (as determined on the last day of each fiscal quarter).

          6.12 Maintenance of Interest Coverage Ratio. Maintain an Interest
Coverage Ratio of not less than 2.50 to 1.00 (as determined on the last day of
each fiscal quarter for the four fiscal quarter period ending on the last day of
such fiscal quarter).

          6.13 Additional Guarantors. (a) Cause each new Subsidiary of Borrower
or any Subsidiary of Borrower formed or acquired after the date of this
Agreement to become a "Subsidiary Guarantor" by execution and delivery of a
Supplemental Subsidiary Guaranty by such Subsidiary to Agent, and to deliver
such proof of corporate or other appropriate action, incumbency of officers,
opinions of counsel and other documents delivered by the Subsidiary Guarantors
pursuant to Section 5.1 hereof or as Agent shall have requested.

               (b) Cause each Person (other than any Guarantor) that obtains an
ownership or equity interest in Borrower after the date of this Agreement to
become an "Owner Guarantor" by execution and delivery of a Supplemental Owner
Guaranty by such Person to Agent, and to deliver such proof of corporate or
other appropriate action, incumbency of officers, opinions of counsel and other
documents delivered by the Owner Guarantors pursuant to Section 5.1 hereof or as
Agent shall have requested.

          6.14 Interest Rate Contracts. Borrower may enter into Interest Rate
Contracts with any Lender or other Person acceptable to Agent for the purpose of
hedging its interest rate risk in respect of LIBOR Rate Loans and, on the
Maturity Date or any earlier date on which the Aggregate Commitment is
terminated, Borrower shall terminate such Interest Rate Contracts and pay any
Rate Hedging Obligations due in connection with such termination.

                          ARTICLE 7: NEGATIVE COVENANTS

          Borrower hereby agrees that, from the date hereof and so long as the
Commitment remains in effect, any portion of any Note or Reimbursement
Obligation remains outstanding and unpaid, any Facility L/C remains outstanding
that is not fully collateralized with cash in accordance with the provision of
Article 8 hereof, or any other amount is owing to Agent, any LC Issuer or any
Lender hereunder, Borrower shall not, nor shall it permit any of its
Subsidiaries to, directly or indirectly:

          7.1 Limitation on Secured Indebtedness. Create, incur, assume or
suffer to exist any Secured Indebtedness exceeding $25,000,000 in aggregate
principal amount at any time outstanding.

          7.2 Easements Encumbrances, Liens and Restrictive Covenants. With
respect to any of the Property included in the Borrowing Base, Borrower shall
not, without the prior written consent of Agent, create, place, suffer or permit
to be created or placed or, through any act or failure to act, acquiesce in the
placing or allow to remain, any Lien, regardless of whether same is expressly
subordinate to the Obligations, or grant any easement or impose any restrictive
covenants, or execute or file any subdivision plot, other than Permitted Liens;
or contractually agree with any other Person to provide such Person a negative
pledge, or other covenant similar to this Section 7.2.


                                       60



          7.3 Mergers, etc. Merge or consolidate with, or sell, assign, lease or
otherwise dispose of (whether in one transaction or in a series of transactions)
all or substantially all of their Properties (whether now owned or hereafter
acquired) to any Person.

          7.4 Limitation on Unimproved Entitled Land. Permit at any time the net
book value of Unimproved Entitled Land to exceed twenty percent (20%) of
Adjusted Tangible Net Worth.

          7.5 Land Components. Permit Land Value to exceed (a) at any time prior
to the issuance of Subordinated Notes, one hundred sixty percent (160%) of
Tangible Net Worth, and (b) at any time after the issuance of Subordinated
Notes, one hundred fifty percent (150%) of Adjusted Tangible Net Worth.

          7.6 Investments, Loans and Advances. Make or permit to remain
outstanding any loans or advances to or investments in any Person, except that
the foregoing restriction shall not apply to:

               (a) investments, loans or advances, the material details of which
have been set forth in the financial statements delivered to Agent pursuant to
Section 5.1(q) hereof or are disclosed to Agent and Lenders in Schedule 7.6
hereto;

               (b) investments in direct obligations of the United States of
America or any agency thereof;

               (c) investments in certificates of deposit of maturities less
than one (1) year, issued by commercial banks in the United States of America
having capital and surplus in excess of $50,000,000;

               (d) investments in commercial paper of maturities less than one
(1) year, if at the time of purchase such paper is rated in either of the two
highest rating categories of S&P, Moody's or any other rating agency selected by
Agent; and

               (e) investments in, loans or advances to, or, as indicated in
Section 7.10(xiv) hereof, guarantees of indebtedness of, Joint Ventures in an
aggregate amount not to exceed twenty percent (20%) of Adjusted Tangible Net
Worth.

          7.7 Transactions with Affiliates. Engage in any transaction with any
Affiliate of Borrower or any Subsidiary on terms less favorable to Borrower or
such Subsidiary than would be obtainable at the time in comparable transactions
with Persons not Affiliates of Borrower or any Subsidiary.

          7.8 Working Capital. Permit Working Capital at any time to be less
than $35,000,000.

          7.9 Limitation on Payment and Securing of Subordinated Indebtedness.
Give to any holder of Subordinated Indebtedness, directly or indirectly, in cash
or other property, or by set-off or in any other manner, payment of all or any
of the Subordinated Indebtedness unless and until all Obligations have been paid
in full and all Commitments have been terminated.


                                       61



Notwithstanding the foregoing, Borrower or any Subsidiary may make payments of
principal and interest (including any prepayments and balloon payment due at
maturity) on the Subordinated Indebtedness so long as no Default or Event of
Default has occurred and is continuing or would occur as a result of making such
payments.

          7.10 Indebtedness. Neither Borrower nor any Subsidiary will create,
incur or suffer to exist any Indebtedness, except, without duplication and
without duplication as to Borrower and Subsidiaries:

                    (i) The Loans.

                    (ii) Indebtedness existing on the date hereof (and not
     otherwise permitted under this Section 7.10) and described in Schedule 7.10
     hereto and Refinancing Indebtedness with respect thereto.

                    (iii) Indebtedness owed to a seller of Unimproved Entitled
     Land, Lots Under Development or Finished Lots under the terms of which
     Borrower or such Subsidiary, as obligor, is required to make a payment upon
     the future sale of such Unimproved Entitled Land, Lots Under Development or
     Finished Lots in an amount not to exceed five percent (5%) of the gross
     sales price or, in the case of profit sharing agreements between such
     seller and Borrower or such Subsidiary, an amount that is reasonable and
     customary in the industry and market, provided, that such Indebtedness is
     subordinated to the Obligations in a manner satisfactory to Agent.

                    (iv) Rate Hedging Obligations entered into in respect of the
     Obligations.

                    (v) Intercompany Indebtedness between Borrower and any
     Guarantor or between any Guarantors.

                    (vi) Trade accounts payable and accrued expenses arising or
     occurring in the ordinary course of business.

                    (vii) Indebtedness owing under Capital Leases.

                    (viii) Indebtedness with respect to Facility L/Cs.

                    (ix) Indebtedness consisting of taxes payable, obligations
     in respect of, customer deposits and obligations under lot purchase
     agreements, all to the extent incurred in the ordinary course of Borrower's
     or any Subsidiary's business.

                    (x) Indebtedness under the Subordinated Notes.

                    (xi) Non-Recourse Indebtedness secured by purchase-money
     Liens on any Property hereafter acquired or the assumption of any Lien on
     Property existing at the time of such acquisition (and not created in
     contemplation of such acquisition), or by a Lien incurred in connection
     with any conditional sale or other title retention; provided that


                                       62



                         (A) Any Property subject to any of the foregoing is
          acquired by Borrower or any Subsidiary in the ordinary course of its
          respective business and the Lien on any such Property attaches to such
          asset concurrently or within ninety (90) days after the acquisition
          thereof; and

                         (B) Each Lien shall attach only to the Property so
          acquired.

                    (xii) Performance bonds, completion bonds, guarantees of
     performance, and guarantees of Indebtedness of a special district entered
     into in the ordinary course of business.

                    (xiii) Public Indebtedness, so long as such Indebtedness is
     pari passu with the Obligations.

                    (xiv) Indebtedness arising under a guarantee of indebtedness
     of any Joint Venture (provided that such guarantee shall be deemed to be an
     investment in such Joint Venture and subject to the limitation in Section
     7.6(e) hereof).

                    (xv) Indebtedness which arises pursuant to a guarantee of
     payment or collection, guaranteeing the Indebtedness of Borrower or any
     Subsidiary which is permitted under clauses (i) through (x) or (xii) or
     (xiii) of this Section 7.10.

          7.11 Limitation on Distribution. Distribute to any Person or Persons
other than Borrower in any fiscal year in the aggregate more than fifty percent
(50%) of Consolidated Earnings for such fiscal year.

          7.12 Ownership and Management. Permit the sale or transfer of more
than twenty percent (20%) of the ownership interests in Borrower or any
Subsidiary Guarantor.

          7.13 Housing Inventory. Permit the number of Speculative Housing
Units, as at the end of any fiscal quarter, to exceed the number of Housing Unit
Closings occurring during the period of twelve (12) months ending on the last
day of such fiscal quarter, multiplied by thirty-five percent (35%).

          7.14 Nature of Business. Permit any material change to be made in the
character of their business as carried on at the date hereof.

          7.15 Sale or Discount of Receivables. Discount, sell without recourse
or sell for less than the greater of the face or market value thereof, any of
its notes receivable or accounts receivable.

          7.16 Increase in Capital. Increase the capital of Borrower or any
Guarantor by transferring assets among Borrower and Guarantors or Borrower's
Affiliates to Borrower and Guarantor.


                                       63



          7.17 Capital Assets. Make expenditures for capital or fixed assets in
any fiscal year of Borrower if such expenditure would result in a violation of
the terms of this Agreement.

          7.18 Environmental Responsibilities. Do any of the following: (i)
cause or permit any Hazardous Materials to be placed, held, located, escaped,
leaked, spilled, discharged, emitted, released or disposed of on, from, under or
at the Premises in violation of any Environmental Law, (ii) cause or permit the
Premises while under the control or ownership of Borrowers or any Subsidiary to
be used as a dumpsite or storage site (whether permanent or temporary) for any
Hazardous Material without first having in place adequate insurance of a
sufficient amount to totally cover (subject to deductibility clause not to
exceed $100,000) any and all potential liability of any nature or amount arising
from said events, and (iii) clean up or remove any Hazardous Materials placed,
held, located, escaped, leaked, spilled, discharged, emitted, released or
disposed of on, from, under or at the Premises.

          7.19 Guaranties. Assume, guarantee, endorse, or otherwise be or become
directly or contingently responsible or liable (including, but not limited to,
an agreement to purchase any obligation, stock, assets, goods, services, or to
supply or advance any funds, assets, goods, or services, or an agreement to
maintain or cause any Person to maintain a minimum working capital or net worth
or otherwise to assure the creditors of such Person against loss), for
obligations of any Person outside of the normal course of business, except
guaranties by endorsement of negotiable instruments for deposit or collection or
similar transactions in the ordinary course of business.

                           ARTICLE 8: CASH COLLATERAL

          8.1 Facility L/C Collateral Account. Borrower agrees that it will,
upon the request of Agent or the Required Lenders and until the final expiration
date of any Facility L/C and thereafter as long as any amount is payable to any
LC Issuer or the Lenders in respect of any Facility L/C, maintain a special
collateral account pursuant to arrangements satisfactory to Agent (the "Facility
L/C Collateral Account") at Agent's office in the name of Borrower but under the
sole dominion and control of Agent, for the benefit of the Lenders and LC
Issuers and in which Borrower shall have no interest other than set forth in
Sections 8.2, 8.3 or 8.4 hereof. Borrower hereby pledges, assigns and grants to
Agent, on behalf of and for the ratable benefit of the Lenders and LC Issuers, a
security interest in all of Borrower's right, title and interest in and to all
funds which may from time to time be on deposit in the Facility L/C Collateral
Account to secure the prompt and complete payment and performance of the
Obligations. Agent will invest any funds on deposit from time to time in the
Facility L/C Collateral Account in certificates of deposit of Wachovia having a
maturity not exceeding 30 days. Nothing in this Section 8.1 shall either require
Borrower to deposit any funds in the Facility L/C Collateral Account, obligate
Agent to require Borrower to deposit any funds in the Facility L/C Collateral
Account or limit the right of Agent to release to the Person entitled thereto
any funds held in the Facility L/C Collateral Account, in each case other than
as required by Sections 8.2, 8.3 or 8.4 hereof.

          8.2 Event of Default under Paragraph (5) of Article 9. Upon the
occurrence of an Event of Default specified in paragraph (5) of Article 9,
Borrower will be and become thereby unconditionally obligated, without any
further notice, act or demand, to pay to Agent an amount in immediately
available funds, which funds shall be held in the Facility L/C Collateral
Account,


                                       64



equal to the difference of (x) the amount of Facility L/C Obligations at such
time, less (y) the amount on deposit in the Facility L/C Collateral Account at
such time which is free and clear of all rights and claims of third parties and
has not been applied against the Obligations (such difference, the "Collateral
Shortfall Amount").

          8.3 Other Events of Default. If any Event of Default (other than an
Event of Default specified in paragraph (5) of Article 9) occurs, the Required
Lenders (or Agent with the consent of the Required Lenders) may, upon notice to
Borrower and in addition to the continuing right to demand payment of all
amounts payable under the Loan Documents, make demand on Borrower to pay, and
Borrower will, forthwith upon such demand and without any further notice or act,
pay to Agent the Collateral Shortfall Amount, which funds shall be deposited in
the Facility L/C Collateral Account.

          8.4 Cure; Termination.

               (a) If the Event of Default that resulted in the requirement for
deposit of funds in the Facility L/C Collateral Account is cured, and provided
no other Event of Default has occurred that is then continuing, Agent shall,
promptly upon request from Borrower, pay to or as directed by Borrower the
amount on deposit in the Facility L/C Collateral Account. Nothing contained in
this paragraph shall waive, limit or otherwise affect the rights of Agent or the
Lenders or the obligations of Borrower under this Article 8 if any other Event
of Default shall occur.

               (b) If the Aggregate Commitment is terminated (whether by
acceleration, demand or otherwise), then, not later than simultaneously with
such termination, and without limitation of Agent's and Lender's right to demand
payment of all amounts payable under the Loan Documents, Borrower shall pay to
Agent the Collateral Shortfall Amount, which funds shall be deposited in the
Facility L/C Collateral Account; provided, however, that (i) if all Obligations
of Borrower (other than Facility L/C Obligations in respect of issued and
outstanding Facility L/Cs that have not been drawn upon) have been paid in full,
and (ii) Borrower shall have provided to Agent and the LC Issuers, as security
for the remaining Facility L/C Obligations, one or more Letters of Credit, in an
aggregate amount at least equal to such remaining Facility L/C Obligations,
issued by a Lender or Lenders, and in form and substance, reasonably
satisfactory to Agent and the LC Issuers, the foregoing requirement for deposit
of funds in the Facility L/C Collateral Account shall not apply.

     ARTICLE 9: DEFAULTS, EVENTS OF DEFAULT; DISTRIBUTION OF PROCEEDS AFTER
                                EVENT OF DEFAULT

          Upon the occurrence of any of the following events:

               (1) Borrower shall fail to pay any principal of any Note or make
any reimbursement (including payment of Reimbursement Obligations) in connection
with any Facility L/C when due in accordance with the terms thereof and such
failure shall continue uncured for five (5) Business Days; or


                                       65



               (2) Borrower shall fail to pay (a) any interest on any Note or in
connection with any Facility L/C, or (b) any fee, charge or other amount payable
hereunder, and such failure shall continue uncured for five (5) Business Days;
or

               (3) any representation or warranty made or deemed made by
Borrower herein or which is contained in any certificate, document or financial
or other statement furnished at any time under or in connection herewith or
therewith, shall prove to have been incorrect in any material respect on or as
of the date made or deemed made; or

               (4) Borrower shall default in the observance or performance of
any covenant or agreement contained in any other provision of this Agreement
which default shall remain uncured thirty (30) days after Agent or any Lender
notifies Borrower that such a default has occurred, which notice shall specify
the nature of the default; or

               (5) (a) Borrower, any Owner Guarantor or any of Borrower's
Subsidiaries shall commence any case, proceeding or other action (i) under any
existing or future law of any jurisdiction, domestic or foreign, relating to
bankruptcy, insolvency, reorganization or relief of debtors, seeking to have an
order for relief entered with respect to it, or seeking to adjudicate it a
bankrupt or insolvent, or seeking reorganization, arrangement, adjustment,
winding-up, liquidation, dissolution, composition or other relief with respect
to it or its debts, or (ii) seeking appointment of a receiver, trustee,
custodian or other similar official for it or for all or any substantial part of
its assets, or Borrower, any Owner Guarantor or any of Borrower's Subsidiaries
shall make a general assignment for the benefit of its creditors; or (b) there
shall be commenced against Borrower, any Owner Guarantor or any of Borrower's
Subsidiaries any case, proceeding or other action of a nature referred to in
clause (a) above which (i) results in the entry of an order for relief of any
such adjudication or appointment, and (ii) remains undismissed, undischarged or
unbonded for a period of 60 days; or (c) there shall be commenced against
Borrower, any Owner Guarantor or any of Borrower's Subsidiaries any case,
proceeding or other action seeking issuance of a warrant of attachment,
execution, distraint or similar process against all or any substantial part of
its assets which results in the entry of an order for any such relief which
shall not have been vacated, discharged, or stayed or bonded pending appeal
within 60 days from the entry thereof; or (d) Borrower, any Owner Guarantor or
any of Borrower's Subsidiaries shall take any action in furtherance of, or
indicating its consent to, approval of, or acquiescence in, any of the acts set
forth in clauses (a), (b) or (c) above; or (e) Borrower, any Owner Guarantor or
any of Borrower's Subsidiaries shall generally not, or shall be unable to, or
shall admit in writing its inability to, pay its debts as they become due; or

               (6) Borrower, any Owner Guarantor or any Subsidiary of Borrower
shall (a) default in any payment of principal of or interest on any Indebtedness
(other than the Obligations) or in the payment of any Contingent Obligation
beyond the period of grace, if any, provided in the instrument or agreement
under which such Indebtedness or Contingent Obligation was created, and the
aggregate principal amount then outstanding of all such Indebtedness and
Contingent Obligations of Borrower, the Owner Guarantors and all Subsidiaries
exceeds $500,000, or (b) default in the observance or performance of any other
agreement or condition relating to any such Indebtedness or Contingent
Obligation or contained in any instrument or agreement evidencing, securing or
relating thereto, or any other event shall occur or condition exist, the effect
of which default or other event or condition is to cause, or to


                                       66



permit the holder or holders of such Indebtedness or beneficiary or
beneficiaries of such Contingent Obligation (or a trustee or agent on behalf of
such holder or holders or beneficiary or beneficiaries) to cause, with the
giving of notice if required, such Indebtedness to become due or repurchased,
prepaid, defeased or redeemed prior to its stated maturity or such Contingent
Obligation to become payable; or

               (7) (a) any party in interest (as defined in Section 3(14) of
ERISA) affiliated with Borrower or any of Borrower's Subsidiaries shall engage
in any "prohibited transaction" (as defined in Section 406 of ERISA or Section
4975 of the Code) involving any Plan, (b) any "accumulated funding deficiency"
(as defined in Section 302 of ERISA), whether or not waived, shall exist with
respect to any Plan, (c) a Reportable Event shall occur with respect to, or
proceedings shall commence to have a trustee appointed, or a trustee shall be
appointed, to administer or to terminate, any Single Employer Plan, which
Reportable Event or institution of proceedings is, in the opinion of the
Required Lenders, likely to result in the termination of such Plan for purposes
of Title IV of ERISA, and, in the case of a Reportable Event, the continuance of
such Reportable Event unremedied for thirty (30) days after notice of such
Reportable Event pursuant to Section 4043 (a), (c) or (d) of ERISA is given or,
in the case of institution of proceedings, the continuance of such proceedings
for thirty (30) days after commencement thereof, (d) any Single Employer Plan
shall terminate for purposes of Title IV of ERISA, or (e) any other event or
condition shall occur or exist with respect to a Single Employer Plan and in
each case in clauses (a) through (e) above, such event or condition, together
with all other such events or conditions, if any, could subject Borrower or any
of Borrower's Subsidiaries to any tax, penalty or other liabilities in the
aggregate material in relation to the business, operations, property or
financial or other condition of Borrower or of Borrower and Borrower's
Subsidiaries taken as a whole; or

               (8) one or more final judgments or decrees shall be entered
against Borrower, or any of Borrower's Subsidiaries involving in the aggregate a
liability (not covered by insurance) of $1,000,000 or more and all such
judgments or decrees in excess of $1,000,000 shall not have been vacated,
satisfied, discharged, or stayed or bonded pending appeal within 30 days from
the entry thereof; or

               (9) any subordination agreement that evidences any Subordinated
Indebtedness (i) ceases to be the legal, valid and binding agreement of any
Person party or subject thereto, enforceable against such Person in accordance
with its terms or a payment is made by Borrower or any other obligor in respect
of such Subordinated Indebtedness in violation of any provision thereof, or (ii)
shall be terminated, invalidated or set aside, or be declared ineffective or
inoperative or the Indebtedness related thereto is in any way not fully
subordinate to all of (A) Borrower's Indebtedness and other liabilities to
Lenders and Agent under this Agreement and the Notes or (B) any Guarantor's
liabilities to Lenders and Agent under any Guaranty Agreement; or

               (10) any event of default under or in connection with any
Subordinated Note;

then, and in any such event, (a) if such event is an Event of Default specified
in paragraph (5) above, the Commitments, if still outstanding, shall
automatically and immediately terminate and


                                       67



all Obligations shall immediately become due and payable and Borrower shall
immediately cash collateralize all outstanding Facility L/Cs in accordance with
Article 8 hereof, and (b) if such event is any other Event of Default and is
continuing, either or both of the following actions may be taken: (i) with the
consent of the Required Lenders, Agent may, or upon the request of the Required
Lenders, Agent shall, by notice to Borrower, declare the Commitments to be
terminated forthwith, whereupon the Commitments shall immediately terminate and,
upon demand by Agent, Borrower shall fully cash collateralize all outstanding
Facility L/Cs in accordance with Article 8 hereof; and (ii) with the consent of
the Required Lenders, Agent may, or upon the request of the Required Lenders,
Agent shall, by notice of default to Borrower, declare the full amount of all
outstanding Obligations to be due and payable forthwith, whereupon the same
shall immediately become due and payable. Except as expressly provided above in
this Article 9, presentment, demand, protest and all other notices of any kind
are hereby expressly waived. Additionally, Agent and each Lender may exercise
any and all other rights and remedies available to Agent and each Lender at law
or in equity to the extent not inconsistent with the rights specifically granted
to Agent and each Lender hereunder.

          Notwithstanding any provisions concerning distribution of payments to
the contrary in this Agreement, so long as any Event of Default exists that has
not been waived by all Lenders, each Lender shall share in any payments or
proceeds, including proceeds of any collateral, received by Agent or any Lender
made or received at any time from and after any Event of Default ("Proceeds
after Default") in an amount equal to such Lender's Ratable Share of the
Proceeds after Default; provided, however, if any one or more of the Lender(s)
has not made any funding when required hereunder, the distribution of Proceeds
after Default shall be adjusted so that each Lender shall receive Proceeds after
Default in an amount equal to (a) the Proceeds after Default multiplied by (b)
the percentage (rounded to five decimal places) of the total amount outstanding
funded by all Lenders that such Lender has actually funded (including the amount
of such Lender's participation in outstanding Facility L/Cs). If necessary,
Agent and each Lender shall use the adjustments procedure set forth in Section
11.8(b) hereof to make the appropriate distributions to Lenders as set forth in
this paragraph of this Article 9.

                              ARTICLE 10: THE AGENT

          10.1 Appointment and Authority. Each of the Lenders and LC Issuers
hereby irrevocably appoints Wachovia Bank to act on its behalf as Agent
hereunder and under the other Loan Documents and authorizes Agent to take such
actions on its behalf and to exercise such powers as are delegated to Agent by
the terms hereof or thereof, together with such actions and powers as are
reasonably incidental thereto. The provisions of this Article are solely for the
benefit of Agent, the Lenders and LC Issuers, and neither Borrower nor any
Guarantor shall have rights as a third party beneficiary of any of such
provisions.

          10.2 Rights as a Lender. The Person serving as Agent hereunder shall
have the same rights and powers in its capacity as a Lender as any other Lender
and may exercise the same as though it were not Agent and the term "Lender" or
"Lenders" shall, unless otherwise expressly indicated or unless the context
otherwise requires, include the Person serving as Agent hereunder in its
individual capacity. Such Person and its Affiliates may accept deposits from,
lend money to, act as the financial advisor or in any other advisory capacity
for and generally


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engage in any kind of business with Borrower or any Subsidiary or other
Affiliate thereof as if such Person were not Agent hereunder and without any
duty to account therefor to the Lenders.

          10.3 Exculpatory Provisions. Agent shall not have any duties or
obligations except those expressly set forth herein and in the other Loan
Documents. Without limiting the generality of the foregoing, Agent:

               (a) shall not be subject to any fiduciary or other implied
duties, regardless of whether a Default or Event of Default has occurred and is
continuing;

               (b) shall not have any duty to take any discretionary action or
exercise any discretionary powers, except discretionary rights and powers
expressly contemplated hereby or by the other Loan Documents that Agent is
required to exercise as directed in writing by the Required Lenders (or such
other number or percentage of Lenders as shall be expressly provided for herein
or in the other Loan Documents), provided that Agent shall not be required to
take any action that, in its opinion or the opinion of its counsel, may expose
Agent to liability or that is contrary to any Loan Document or applicable law;
and

               (c) shall not, except as expressly set forth herein and in the
other Loan Documents, have any duty to disclose, and shall not be liable for the
failure to disclose, any information relating to Borrower or any of its
Affiliates that is communicated to or obtained by the Person serving as Agent or
any of its Affiliates in any capacity.

Agent shall not be liable for any action taken or not taken by it (i) with the
consent or at the request of the Required Lenders (or such other number or
percentage of the Lenders as shall be necessary, or as Agent shall believe in
good faith shall be necessary, under the circumstances as provided in Sections
11.1 hereof and Article 9 hereof or (ii) in the absence of its own gross
negligence or willful misconduct. Agent shall be deemed not to have knowledge of
any Default or Event of Default unless and until notice describing such Default
or Event of Default is given to Agent by Borrower, a Lender or LC Issuer.

          Agent shall not be responsible for or have any duty to ascertain or
inquire into (i) any statement, warranty or representation made in or in
connection with this Agreement or any other Loan Document, (ii) the contents of
any certificate, report or other document delivered hereunder or thereunder or
in connection herewith or therewith, (iii) the performance or observance of any
of the covenants, agreements or other terms or conditions set forth herein or
therein or the occurrence of any Default or Event of Default, (iv) the validity,
enforceability, effectiveness or genuineness of this Agreement, any other Loan
Document or any other agreement, instrument or document or (v) the satisfaction
of any condition set forth in Article 5 hereof or elsewhere herein, other than
to confirm receipt of items expressly required to be delivered to Agent.

          10.4 Reliance by Agent. Agent shall be entitled to rely upon, and
shall not incur any liability for relying upon, any notice, request,
certificate, consent, statement, instrument, document or other writing
(including any electronic message, Internet or intranet website posting or other
distribution) believed by it to be genuine and to have been signed, sent or
otherwise authenticated by the proper Person. Agent also may rely upon any
statement made


                                       69



to it orally or by telephone and believed by it to have been made by the proper
Person, and shall not incur any liability for relying thereon. In determining
compliance with any condition hereunder to the making of a Loan, or the issuance
of a Facility L/C, that by its terms must be fulfilled to the satisfaction of a
Lender or LC Issuer, Agent may presume that such condition is satisfactory to
such Lender or LC Issuer unless Agent shall have received notice to the contrary
from such Lender or LC Issuer prior to the making of such Loan or the issuance
of such Facility L/C. Agent may consult with legal counsel (who may be counsel
for Borrower), independent accountants and other experts selected by it, and
shall not be liable for any action taken or not taken by it in accordance with
the advice of any such counsel, accountants or experts.

          10.5 Delegation of Duties. Agent may perform any and all of its duties
and exercise its rights and powers hereunder or under any other Loan Document by
or through any one or more sub-agents appointed by Agent. Agent and any such
sub-agent may perform any and all of its duties and exercise its rights and
powers by or through their respective Related Parties. The exculpatory
provisions of this Article shall apply to any such sub-agent and to the Related
Parties of Agent and any such sub-agent, and shall apply to their respective
activities in connection with the syndication of the credit facilities provided
for herein as well as activities as Agent.

          10.6 Resignation of Agent. Agent may at any time give notice of its
resignation to Lenders, LC Issuers and Borrower. Upon receipt of any such notice
of resignation, the Required Lenders shall have the right, with the consent of
Borrower unless an Event of Default has occurred and is continuing (such consent
not to be unreasonably withheld or delayed), to appoint a successor, which shall
be a bank with an office in the United States, or an Affiliate of any such bank
with an office in the United States. If no such successor shall have been so
appointed by the Required Lenders and shall have accepted such appointment
within thirty (30) days after the retiring Agent gives notice of its
resignation, then the retiring Agent may on behalf of the Lenders and LC
Issuers, appoint a successor Agent meeting the qualifications set forth above
provided that if Agent shall notify Borrower and the Lenders that no qualifying
Person has accepted such appointment, then such resignation shall nonetheless
become effective in accordance with such notice and (1) the retiring Agent shall
be discharged from its duties and obligations hereunder and under the other Loan
Documents and (2) all payments, communications and determinations provided to be
made by, to or through Agent shall instead be made by or to each Lender and LC
Issuers directly, until such time as the Required Lenders appoint a successor
Agent as provided for above in this Section. Upon the acceptance of a
successor's appointment as Agent hereunder, such successor shall succeed to and
become vested with all of the rights, powers, privileges and duties of the
retiring (or retired) Agent, and the retiring Agent shall be discharged from all
of its duties and obligations hereunder or under the other Loan Documents (if
not already discharged therefrom as provided above in this paragraph). The fees
payable by Borrower to a successor Agent shall be the same as those payable to
its predecessor unless otherwise agreed between Borrower and such successor. The
predecessor Agent shall pay to the successor the pro rata portion of any annual
administration fee paid in advance by Borrower for the portion of the year
between the time of the successor Agent's acceptance of its appointment as Agent
and the following anniversary date of this Agreement. After the retiring Agent's
resignation hereunder and under the other Loan Documents, the provisions of this
Article and Section 11.6 hereof shall continue in effect for the benefit of such
retiring Agent, its sub-agents and their respective Related Parties in respect
of


                                       70



any actions taken or omitted to be taken by any of them while the retiring Agent
was acting as Agent.

          10.7 Non-Reliance on Agent and Other Lenders. Each Lender and LC
Issuer acknowledges that it has, independently and without reliance upon Agent
or any other Lender or any of their Related Parties and based on such documents
and information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Lender and LC Issuer also
acknowledges that it will, independently and without reliance upon Agent or any
other Lender or any of their Related Parties and based on such documents and
information as it shall from time to time deem appropriate, continue to make its
own decisions in taking or not taking action under or based upon this Agreement,
any other Loan Document or any related agreement or any document furnished
hereunder or thereunder.

          10.8 No Other Duties, etc. Anything herein to the contrary
notwithstanding, none of the Syndication Agents or Documentation Agents listed
on the cover page hereof shall have any powers, duties or responsibilities under
this Agreement or any of the other Loan Documents, except in its capacity, as
applicable, as Agent, a Lender or LC Issuer hereunder.

                            ARTICLE 11: MISCELLANEOUS

          11.1 Amendments and Waivers. Agent and Borrower may, from time to
time, with the written consent of the Required Lenders, enter into written
amendments, supplements or modifications for the purpose of adding any
provisions to this Agreement or the Notes or changing in any manner the rights
of Lenders or Borrower hereunder or thereunder, and with the consent of the
Required Lenders, Agent on behalf of Lenders may execute and deliver to Borrower
a written instrument waiving, on such terms and conditions as Agent may specify
in such instrument, any of the requirements of this Agreement, the Notes or any
Default or Event of Default and its consequences; provided, however, that no
such waiver and no such amendment, supplement or modification shall extend the
final maturity of any Note, or reduce the rate or extend the time of payment of
interest or fees thereon or reduce the principal amount thereof, or change the
amount or terms of any Lender's Revolving Credit Loan or Ratable Share or the
amount of any Lender's Commitment (except for (i) changes resulting from an
assignment permitted hereunder or (ii) as provided in Section 2.6(b) or 3.10
hereof), or release any Guarantor from the Guaranty Agreement to which it is a
party, or amend, modify, change or waive any provision of this Section, or
reduce the percentage specified in the definition of Required Lenders, or
consent to the assignment or transfer by Borrower of any of its rights and
obligations under this Agreement, or consent to the release of any collateral,
or amend, modify or change any other provision of this Agreement that requires
the consent of all Lenders, in each case without the written consent of all
Lenders; and provided, further, that no such waiver and no such amendment,
supplement or modification shall alter in any way Swingline Lender's rights or
obligations with respect to Swingline Loans without the consent of Swingline
Lender; and provided, further, that no such waiver and no such amendment,
supplement or modification shall alter in any way any LC Issuer's rights or
obligations with respect to Facility L/Cs issued by it without the consent of
such LC Issuer; and provided, further, that no such waiver and no such
amendment, supplement or modification shall amend, modify, change or waive any
provision relating to the rights or obligations of Agent without the consent of
Agent. Any such waiver and any such amendment, supplement or modification shall
be binding upon Borrower, Agent and


                                       71



each Lender, and all future holders of the Notes. In the case of any waiver,
Borrower, Agent and each Lender shall be restored to their former position and
rights hereunder and under the outstanding Notes, and any Default or Event of
Default waived shall be deemed to be cured and not continuing; but no such
waiver shall extend to any subsequent or other Default or Event of Default, or
impair any right consequent thereon.

          11.2 Notices. (a) Except in the case of notices and other
communications expressly permitted to be given by telephone (and except as
provided in paragraph (b) below), all notices and other communications provided
for herein shall be in writing and shall be delivered by hand or overnight
courier service, mailed by certified or registered mail or sent by telecopier as
follows:

          (i) if to Borrower or any Guarantor, to it at 1080 Holcomb Bridge
Road, Building 200, Suite 350, Roswell, Georgia, 30076, Attention of Bob Salomon
(Telecopier No. (770) 998-7494; Telephone No. (770) 998-9663), with a copy to
3751 Victoria Park Avenue, Toronto, Ontario, M1W3Z4 Canada, Attention of Seymour
Joffe (Telecopier No. (416) 449-1073; Telephone No. (416) 449-1340) and a copy
to 3751 Victoria Park Avenue, Toronto, Ontario M1W 3Z4 Canada, Attention of
Harry Rosenbaum (Telecopier No. (416) 449-1340; Telephone No. (416) 449-1340).

          (ii) if to Agent, to Wachovia Bank, National Association, at One
Wachovia Center, 401 South Tryon Street NC1193, Charlotte, North Carolina 28288,
Attention of Scott Holtzapple (Telecopier No. (704) 383-7146; Telephone No.
(704) 383-0474);

          (iii) if to an LC Issuer, to it at its address (or telecopier number)
set forth in its Administrative Questionnaire; and

          (iv) if to a Lender, to it at its address (or telecopier number) set
forth in its Administrative Questionnaire.

Notices sent by hand or overnight courier service, or mailed by certified or
registered mail, shall be deemed to have been given when received; notices sent
by telecopier shall be deemed to have been given when sent (except that, if not
given during normal business hours for the recipient, shall be deemed to have
been given at the opening of business on the next business day for the
recipient). Notices delivered through electronic communications to the extent
provided in paragraph (b) below, shall be effective as provided in said
paragraph (b).

          (b) Notices and other communications to Lenders and LC Issuers
hereunder may be delivered or furnished by electronic communication (including
e-mail and Internet or intranet websites) pursuant to procedures approved by
Agent, provided that the foregoing shall not apply to notices to any Lender or
LC Issuer pursuant to Article 2 if such Lender or LC Issuer, as applicable, has
notified Agent that it is incapable of receiving notices under such Article by
electronic communication. Agent or Borrower may, in its discretion, agree to
accept notices and other communications to it hereunder by electronic
communications pursuant to procedures approved by it, provided that approval of
such procedures may be limited to particular notices or communications.


                                       72



          Unless Agent otherwise prescribes, (i) notices and other
communications sent to an e-mail address shall be deemed received upon the
sender's receipt of an acknowledgement from the intended recipient (such as by
the "return receipt requested" function, as available, return e-mail or other
written acknowledgement), provided that if such notice or other communication is
not sent during the normal business hours of the recipient, such notice or
communication shall be deemed to have been sent at the opening of business on
the next business day for the recipient, and (ii) notices or communications
posted to an Internet or intranet website shall be deemed received upon the
deemed receipt by the intended recipient at its e-mail address as described in
the foregoing clause (i) of notification that such notice or communication is
available and identifying the website address therefor.

          (c) Any party hereto may change its address or telecopier number for
notices and other communications hereunder by notice to the other parties
hereto.

          11.3 No Waiver; Cumulative Remedies. No failure to exercise and no
delay in exercising, on the part of Agent or any Lender, any right, remedy,
power or privilege hereunder shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, remedy, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, remedy, power or privilege. The rights, remedies, powers and privileges
herein provided are cumulative and, except for rights the exercise of which
require consent of the Required Lenders or all Lenders, as appropriate, under
this Agreement, not exclusive of any rights, remedies, powers and privileges
provided by law.

          11.4 Governmental Regulation. Anything contained in this Agreement to
the contrary notwithstanding, no Lender shall be obligated to extend credit to
Borrower in violation of any limitation or prohibition provided by any
applicable statute or regulation.

          11.5 Survival of Representations and Warranties. All representations
and warranties made hereunder and in any document, certificate or statement
delivered pursuant hereto or in connection herewith shall survive the execution
and delivery of this Agreement and the Notes and shall remain in full force and
effect until this Agreement is terminated, all Facility L/Cs are cancelled or
are fully collateralized with cash in accordance with Article 8 hereof and all
Obligations (including Facility L/C Obligations that are not fully
collateralized with cash) are paid in full.

          11.6 Costs and Expenses; Indemnification; Reimbursement; Waiver of
Damages. (a) Borrower shall pay (i) all reasonable out-of-pocket expenses
incurred by Agent and its Affiliates (including the reasonable fees, charges and
disbursements of counsel for Agent), in connection with the syndication of the
credit facilities provided for herein, the preparation, negotiation, execution,
delivery and administration of this Agreement and the other Loan Documents or
any amendments, modifications or waivers of the provisions hereof or thereof
(whether or not the transactions contemplated hereby or thereby shall be
consummated), (ii) all reasonable out-of-pocket expenses incurred by any LC
Issuer in connection with the issuance, amendment, renewal or extension of any
Facility L/C or any demand for payment thereunder, (iii) all out-of-pocket
expenses incurred by Agent, any Lender or any LC Issuer (including the fees,
charges and disbursements of any counsel for Agent, any Lender or any LC
Issuer), in connection with the enforcement or protection of its rights (A) in
connection with this


                                       73



Agreement and the other Loan Documents, including its rights under this Section,
or (B) in connection with the Loans made or Facility L/Cs issued hereunder,
including all such out-of-pocket expenses incurred during any workout,
restructuring or negotiations in respect of such Loans or Facility L/Cs, and
(iv) any civil penalty or fine assessed by the U.S. Department of the Treasury's
Office of Foreign Assets Control against, and all reasonable costs and expenses
(including counsel fees and disbursements) incurred in connection with defense
thereof by Agent, any Lender or any LC Issuer as a result of the funding of
Loans, the issuance of Facility L/Cs or the acceptance of payments due under the
Loan Agreement.

          (b) Borrower shall indemnify Agent (and any sub-agent thereof), each
Lender and LC Issuer, and each Related Party of any of the foregoing Persons
(each such Person being called an "Indemnitee") against, and hold each
Indemnitee harmless from, any and all losses, claims, damages, liabilities and
related expenses (including the fees, charges and disbursements of any counsel
for any Indemnitee), incurred by any Indemnitee or asserted against any
Indemnitee by any third party or by Borrower or any Guarantor arising out of, in
connection with, or as a result of (i) the execution or delivery of this
Agreement, any other Loan Document or any agreement or instrument contemplated
hereby or thereby, the performance by the parties hereto of their respective
obligations hereunder or thereunder or the consummation of the transactions
contemplated hereby or thereby, (ii) any Loan or Facility L/C or the use or
proposed use of the proceeds therefrom (including any refusal by any LC Issuer
to honor a demand for payment under a Facility L/C if the documents presented in
connection with such demand do not strictly comply with the terms of such
Facility L/C), (iii) any actual or alleged Hazardous Discharge on or from any
property owned or operated by Borrower or any of its Subsidiaries, or any
Environmental Liability related in any way to Borrower or any of its
Subsidiaries, or (iv) any actual or prospective claim, litigation, investigation
or proceeding relating to any of the foregoing, whether based on contract, tort
or any other theory, whether brought by a third party or by Borrower or any
Guarantor, and regardless of whether any Indemnitee is a party thereto, provided
that such indemnity shall not, as to any Indemnitee, be available to the extent
that such losses, claims, damages, liabilities or related expenses (x) are
determined by a court of competent jurisdiction by final and nonappealable
judgment to have resulted from the gross negligence or willful misconduct of
such Indemnitee or (y) result from a claim brought by Borrower or any Guarantor
against an Indemnitee for breach in bad faith of such Indemnitee's obligations
hereunder or under any other Loan Document, if Borrower or such Guarantor has
obtained a final and nonappealable judgment in its favor on such claim as
determined by a court of competent jurisdiction.

          (c) To the extent that Borrower for any reason fails to indefeasibly
pay any amount required under paragraph (a) or (b) of this Section to be paid by
it to Agent (or any sub-agent thereof), any LC Issuer or any Related Party of
any of the foregoing, each Lender severally agrees to pay to Agent (or any such
sub-agent), such LC Issuer or such Related Party, as the case may be, such
Lender's Ratable Share (determined as of the time that the applicable
unreimbursed expense or indemnity payment is sought) of such unpaid amount,
provided that the unreimbursed expense or indemnified loss, claim, damage,
liability or related expense, as the case may be, was incurred by or asserted
against Agent (or any such sub-agent) or such LC Issuer in its capacity as such,
or against any Related Party of any of the foregoing acting for Agent (or any
such sub-agent) or such LC Issuer in connection with such capacity. The
obligations of the Lenders under this paragraph (c) are several and not joint or
joint and several.


                                       74



          (d) To the fullest extent permitted by applicable law, Borrower shall
not assert, and hereby waives, any claim against any Indemnitee, on any theory
of liability, for special, indirect, consequential or punitive damages (as
opposed to direct or actual damages) arising out of, in connection with, or as a
result of, this Agreement, any other Loan Document or any agreement or
instrument contemplated hereby, the transactions contemplated hereby or thereby,
any Loan or Facility L/C or the use of the proceeds thereof. No Indemnitee
referred to in paragraph (b) above shall be liable for any damages arising from
the use by unintended recipients of any information or other materials
distributed by it through telecommunications, electronic or other information
transmission systems in connection with this Agreement or the other Loan
Documents or the transactions contemplated hereby or thereby.

          (e) All amounts due under this Section shall be payable not later than
ten (10) days after demand therefor.

          11.7 Successors and Assigns Generally; Assignments. (a) The provisions
of this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns permitted hereby, except that
Borrower may not assign or otherwise transfer any of its rights or obligations
hereunder without the prior written consent of Agent and each Lender and no
Lender may assign or otherwise transfer any of its rights or obligations
hereunder except (i) to an Eligible Assignee in accordance with the provisions
of paragraph (b) of this Section, (ii) by way of participation in accordance
with the provisions of paragraph (d) of this Section or (iii) by way of pledge
or assignment of a security interest subject to the restrictions of paragraph
(f) of this Section (and any other attempted assignment or transfer by any party
hereto shall be null and void). Nothing in this Agreement, expressed or implied,
shall be construed to confer upon any Person (other than the parties hereto,
their respective successors and assigns permitted hereby, Participants to the
extent provided in paragraph (d) of this Section and, to the extent expressly
contemplated hereby, the Related Parties of each of Agent and Lenders) any legal
or equitable right, remedy or claim under or by reason of this Agreement.

          (b) Any Lender may at any time assign to one or more Eligible
Assignees all or a portion of its rights and obligations under this Agreement
(including all or a portion of its Commitment and the Loans at the time owing to
it); provided that

               (i) except in the case of an assignment of the entire remaining
amount of the assigning Lender's Commitment and the Loans at the time owing to
it or in the case of an assignment to a Lender or an Affiliate of a Lender or an
Approved Fund with respect to a Lender, (A) the aggregate amount of the
Commitment (which for this purpose includes Loans outstanding thereunder) or, if
the Commitment is not then in effect, the principal outstanding balance of the
Loans of the assigning Lender subject to each such assignment (determined as of
the date the Assignment and Assumption with respect to such assignment is
delivered to Agent or, if "Trade Date" is specified in the Assignment and
Assumption, as of the Trade Date) shall not be less than $10,000,000 or any
amount in increments of $1,000,000 in excess thereof, and (B) the remaining
Commitment (including Loans outstanding) or, if the Commitments are not then in
effect, the principal outstanding balance of the Loans of the assigning Lender,
after giving effect to such assignment, is at least $10,000,000, unless each of
Agent and, so long as no


                                       75



Event of Default has occurred and is continuing, Borrower otherwise consent
(each such consent not to be unreasonably withheld or delayed);

               (ii) each partial assignment shall be made as an assignment of a
proportionate part of all the assigning Lender's rights and obligations under
this Agreement with respect to the Loan or the Commitment assigned;

               (iii) any assignment of a Commitment must be approved by Agent
and LC Issuers, unless the Person that is the proposed assignee is itself a
Lender (whether or not the proposed assignee would otherwise qualify as an
Eligible Assignee); and

               (iv) the parties to each assignment shall execute and deliver to
Agent an Assignment and Assumption, together with a processing and recordation
fee of $3,500, and the Eligible Assignee, if it shall not be a Lender, shall
deliver to Agent an Administrative Questionnaire.

Subject to acceptance and recording thereof by Agent pursuant to paragraph (c)
of this Section, from and after the effective date specified in each Assignment
and Assumption, the Eligible Assignee thereunder shall be a party to this
Agreement and, to the extent of the interest assigned by such Assignment and
Assumption, have the rights and obligations of a Lender under this Agreement,
and the assigning Lender thereunder shall, to the extent of the interest
assigned by such Assignment and Assumption, be released from its obligations
under this Agreement (and, in the case of an Assignment and Assumption covering
all of the assigning Lender's rights and obligations under this Agreement, such
Lender shall cease to be a party hereto) but shall continue to be entitled to
the benefits of Sections 2.9, 3.5, 3.6 and 11.6 hereof with respect to facts and
circumstances occurring prior to the effective date of such assignment. Any
assignment or transfer by a Lender of rights or obligations under this Agreement
that does not comply with this paragraph shall be treated for purposes of this
Agreement as a sale by such Lender of a participation in such rights and
obligations in accordance with paragraph (d) of this Section.

          (c) Agent, acting solely for this purpose as an agent of Borrower,
shall maintain at its office in Charlotte, North Carolina, a copy of each
Assignment and Assumption delivered to it and a register for the recordation of
the names and addresses of Lenders, and the Commitments of, and principal
amounts of the Loans owing to, each Lender pursuant to the terms hereof from
time to time (the "Register"). The entries in the Register shall be conclusive,
and Borrower, Agent and Lenders may treat each Person whose name is recorded in
the Register pursuant to the terms hereof as a Lender hereunder for all purposes
of this Agreement, notwithstanding notice to the contrary. The Register shall be
available for inspection by Borrower and any Lender, at any reasonable time and
from time to time upon reasonable prior notice.

          (d) Any Lender may at any time, without the consent of, or notice to,
Borrower or Agent, sell participations to any Person (other than a natural
person or the Borrower or any of Borrower's Affiliates or Subsidiaries) (each, a
"Participant") in all or a portion of such Lender's rights and/or obligations
under this Agreement (including all or a portion of its Commitment and/or the
Loans owing to it); provided that (i) such Lender's obligations under this
Agreement shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties


                                       76



hereto for the performance of such obligations and (iii) Borrower, Agent and
Lenders and LC Issuers shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations under this
Agreement.

          Any agreement or instrument pursuant to which a Lender sells such a
participation shall provide that such Lender shall retain the sole right to
enforce this Agreement and to approve any amendment, modification or waiver of
any provision of this Agreement; provided that such agreement or instrument may
provide that such Lender will not, without the consent of Participant, agree to
any amendment, modification or waiver described in Section 11.1 hereof that
requires the consent of all Lenders, that affects such Participant. Subject to
paragraph (e) of this Section, Borrower agrees that each Participant shall be
entitled to the benefits of Sections 2.9, 3.5 and 3.6 hereof to the same extent
as if it were a Lender and had acquired its interest by assignment pursuant to
paragraph (b) of this Section. To the extent permitted by law, each Participant
also shall be entitled to the benefits of Section 11.8(a) hereof as though it
were a Lender, provided such Participant agrees to be subject to Section 11.8
(b) hereof as though it were a Lender.

          (e) A Participant shall not be entitled to receive any greater payment
under Sections 2.9, 3.5 or 3.6 hereof than the applicable Lender would have been
entitled to receive with respect to the participation sold to such Participant,
unless the sale of the participation to such Participant is made with Borrower's
prior written consent. A Participant that would be a Foreign Lender if it were a
Lender shall not be entitled to the benefits of Section 3.6 hereof unless
Borrower is notified of the participation sold to such Participant and such
Participant agrees, for the benefit of Borrower, to comply with Section 3.6
hereof as though it were a Lender.

          (f) Any Lender may at any time pledge or assign a security interest in
all or any portion of its rights under this Agreement to secure obligations of
such Lender, including any pledge or assignment to secure obligations to a
Federal Reserve Bank; provided that no such pledge or assignment shall release
such Lender from any of its obligations hereunder or substitute any such pledgee
or assignee for such Lender as a party hereto.

          11.8 Setoff. Sharing of Payments by Lenders.

               (a) If an Event of Default shall have occurred and be continuing,
each Lender, each LC Issuer, and each of their respective Affiliates is hereby
authorized at any time and from time to time, to the fullest extent permitted by
applicable law, to set off and apply any and all deposits (general or special,
time or demand, provisional or final, in whatever currency) at any time held and
other obligations (in whatever currency) at any time owing by such Lender, LC
Issuer or any such Affiliate to or for the credit or the account of Borrower
against any and all of the obligations of Borrower now or hereafter existing
under this Agreement or any other Loan Document to such Lender or LC Issuer,
irrespective of whether or not such Lender or LC Issuer shall have made any
demand under this Agreement or any other Loan Document and although such
obligations of Borrower may be contingent or unmatured or are owed to a branch
or office of such Lender or LC Issuer different from the branch or office
holding such deposit or obligated on such indebtedness. The rights of each
Lender, LC Issuer and their respective Affiliates under this Section are in
addition to other rights and remedies (including other rights of setoff) that


                                       77



such Lender, LC Issuer or their respective Affiliates may have. Each Lender and
LC Issuer agrees to notify Borrower and Agent promptly after any such setoff and
application, provided that the failure to give such notice shall not affect the
validity of such setoff and application.

               (b) If any Lender shall, by exercising any right of setoff or
counterclaim or otherwise, obtain payment in respect of any principal of or
interest on any of its Loans or other obligations hereunder resulting in such
Lender's receiving payment of a proportion of the aggregate amount of its Loans
and accrued interest thereon or other such obligations greater than its pro rata
share thereof as provided herein, then the Lender receiving such greater
proportion shall (a) notify Agent of such fact, and (b) purchase (for cash at
face value) participations in the Loans and such other obligations of other
Lenders, or make such other adjustments as shall be equitable, so that the
benefit of all such payments shall be shared by Lenders ratably in accordance
with the aggregate amount of principal of and accrued interest on their
respective Loans and other amounts owing them, provided that:

               (i) if any such participations are purchased and all or any
portion of the payment giving rise thereto is recovered, such participations
shall be rescinded and the purchase price restored to the extent of such
recovery, without interest; and

               (ii) the provisions of this paragraph shall not be construed to
apply to (x) any payment made by Borrower pursuant to and in accordance with the
express terms of this Agreement or (y) any payment obtained by a Lender as
consideration for the assignment of or sale of a participation in any of its
Loans or participations in Facility L/C Obligations to any assignee or
participant, other than to Borrower or any Subsidiary thereof (as to which the
provisions of this paragraph shall apply).

Borrower consents to the foregoing and agrees, to the extent it may effectively
do so under applicable law, that any Lender acquiring a participation pursuant
to the foregoing arrangements may exercise against Borrower rights of setoff and
counterclaim with respect to such participation as fully as if such Lender were
a direct creditor of Borrower in the amount of such participation.

          11.9 Waiver Of Jury Trial. EACH PARTY HERETO HEREBY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER
THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE
BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG
OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.


                                       78



          11.10 Treatment of Certain Information; Confidentiality. Each of
Agent, Lenders and LC Issuers agrees to maintain the confidentiality of the
Information (as defined below), except that Information may be disclosed (a) to
its Affiliates and to its and its Affiliates' respective partners, directors,
officers, employees, agents, advisors and other representatives (it being
understood that the Persons to whom such disclosure is made will be informed of
the confidential nature of such Information and instructed to keep such
Information confidential), (b) to the extent requested by any regulatory
authority purporting to have jurisdiction over it (including any self-regulatory
authority, such as the National Association of Insurance Commissioners), (c) to
the extent required by applicable laws or regulations or by any subpoena or
similar legal process, (d) to any other party hereto, (e) in connection with the
exercise of any remedies hereunder or under any other Loan Document or any
action or proceeding relating to this Agreement or any other Loan Document or
the enforcement of rights hereunder or thereunder, (f) with the prior written
consent of Borrower and subject to an agreement containing provisions
substantially the same as those of this Section, to (i) any assignee of or
Participant in, or any prospective assignee of or Participant in, any of its
rights or obligations under this Agreement or (ii) any actual or prospective
counterparty (or its advisors) to any swap or derivative transaction relating to
Borrower and its obligations, (g) with the consent of Borrower or (h) to the
extent such Information (x) becomes publicly available other than as a result of
a breach of this Section or (y) becomes available to Agent, any Lender, any LC
Issuer or any of their respective Affiliates on a nonconfidential basis from a
source other than Borrower. Notwithstanding the foregoing, Agent or any Lender
may disclose Information, without notice to Borrower, to governmental regulatory
authorities in connection with any regulatory examination of Agent or such
Lender or in accordance with Agent's or such Lender's regulatory compliance
policy, if Agent or such Lender deems necessary for the mitigation of claims by
those authorities against Agent or such Lender or any of its subsidiaries or
Affiliates.

          For purposes of this Section, "Information" means all information
received from Borrower or any of its Subsidiaries relating to Borrower or any of
its Subsidiaries or any of their respective businesses, other than any such
information that is available to Agent, any Lender or any LC Issuer on a
nonconfidential basis prior to disclosure by Borrower or any of its
Subsidiaries, provided that, in the case of information received from Borrower
or any of its Subsidiaries after the date hereof (other than financial
information required to be delivered by Borrower or any Subsidiary under this
Agreement, which financial information shall be deemed to be confidential,
whether or not identified as confidential), such information is clearly
identified at the time of delivery as confidential. Any Person required to
maintain the confidentiality of Information as provided in this Section shall be
considered to have complied with its obligation to do so if such Person has
exercised the same degree of care to maintain the confidentiality of such
Information as such Person would accord to its own confidential information.

          11.11 Counterparts; Integration; Effectiveness. (a) This Agreement may
be executed in counterparts (and by different parties hereto in different
counterparts), each of which shall constitute an original, but all of which when
taken together shall constitute a single contract. This Agreement and the other
Loan Documents, and any separate letter agreements with respect to fees payable
to Agent, constitute the entire contract among the parties relating to the
subject matter hereof and supersede any and all previous agreements and
understandings, oral or written, relating to the subject matter hereof. Except
as provided in Article 5, this Agreement


                                       79



shall become effective when it shall have been executed by Agent and when Agent
shall have received counterparts hereof that, when taken together, bear the
signatures of each of the other parties hereto. Delivery of an executed
counterpart of a signature page of this Agreement by telecopy shall be effective
as delivery of a manually executed counterpart of this Agreement.

               (b) The words "execution," "signed," "signature," and words of
like import in any Assignment and Assumption shall be deemed to include
electronic signatures or the keeping of records in electronic form, each of
which shall be of the same legal effect, validity or enforceability as a
manually executed signature or the use of a paper-based recordkeeping system, as
the case may be, to the extent and as provided for in any applicable law,
including the Federal Electronic Signatures in Global and National Commerce Act,
the New York State Electronic Signatures and Records Act, or any other similar
state laws based on the Uniform Electronic Transactions Act.

          11.12 Governing Law. This Agreement, the Notes and the rights and
obligations of the parties under this Agreement and the Notes shall be governed
by, and construed and in accordance with, the law of the State of North
Carolina.

          11.13 Severability of Provisions. Any provision of any Loan Document
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of such Loan
Document or affecting the validity or enforceability of such provision in any
other jurisdiction.

          11.14 Submission to Jurisdiction; Waiver of Venue; Service of Process

               (a) BORROWER IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF
AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF
NORTH CAROLINA SITTING IN MECKLENBURG COUNTY AND OF THE UNITED STATES DISTRICT
COURT OF THE WESTERN DISTRICT OF NORTH CAROLINA AND ANY APPELLATE COURT FROM ANY
THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY
JUDGMENT, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES
THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND
DETERMINED IN SUCH NORTH CAROLINA STATE COURT OR, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT. EACH OF THE PARTIES HERETO
AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE
CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR
IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS AGREEMENT OR IN ANY OTHER
LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT AGENT, ANY LENDER OR LC ISSUER MAY
OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT AGAINST BORROWER OR ITS PROPERTIES IN THE COURTS OF ANY
JURISDICTION.


                                       80



               (b) BORROWER IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY COURT REFERRED
TO IN PARAGRAPH (a) OF THIS SECTION. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE
DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING
IN ANY SUCH COURT.

               (c) EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS
IN THE MANNER PROVIDED FOR NOTICES IN SECTION 11.2 HEREOF. NOTHING IN THIS
AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY APPLICABLE LAW.

          11.15 Headings. The headings of the Articles and Sections of this
Agreement are inserted for convenience only and shall not be deemed to
constitute a part hereof.

          11.16 FIN 46. For purposes of determining compliance with the
financial covenants in this Agreement, the application of Financial Accounting
Standards Board Interpretation No. 46 shall be disregarded with respect to
financial consolidation of any entity that is not a subsidiary of Borrower.

          11.17 USA Patriot Act. Each Lender that is subject to the requirements
of the USA Patriot Act (Title III of Pub. L. 107-56) (signed into law October
26, 2001)) (the "Act") hereby notifies Borrower that pursuant to the
requirements of the Act, it is required to obtain, verify and record information
that identifies Borrower, which information includes the name and address of
Borrower and other information that will allow such Lender to identify Borrower
in accordance with the Act.

            [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]


                                       81



          IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their proper and duly authorized officers as
of the day and year first above written.

                                        BORROWER:

                                        ASHTON WOODS USA L.L.C.,
                                        a Nevada limited liability company


                                        By:
                                            ------------------------------------
                                        Name: Harry Rosenbaum
                                        Title: Manager



                                        AGENT:

                                        WACHOVIA BANK, NATIONAL ASSOCIATION


                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------



                                        SYNDICATION AGENT:

                                        BANK OF AMERICA, N.A.


                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------



                                        DOCUMENTATION AGENT:

                                        KEY BANK, NATIONAL ASSOCIATION


                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------



                                        LENDERS:

                                        WACHOVIA BANK, NATIONAL ASSOCIATION,
                                        as a Lender


                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------



                                        BANK OF AMERICA, N.A., as a Lender


                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------



                                        KEY BANK, NATIONAL ASSOCIATION,
                                        as a Lender


                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------



                                        FIRST AMERICAN BANK, as a Lender


                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------



                                        GUARANTY BANK, as a Lender


                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------



                                        COMERICA BANK, as a Lender


                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------



                                        NATIONAL CITY BANK, as a Lender


                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------



                                        U.S. BANK NATIONAL ASSOCIATION,
                                        as a Lender


                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------

EX-10.2

                                                                    Exhibit 10.2

                       FIRST AMENDMENT TO CREDIT AGREEMENT

     THIS FIRST AMENDMENT TO CREDIT AGREEMENT (this "Amendment") is made as of
the 27th day of April, 2005, by and among ASHTON WOODS USA L.L.C. (the
"Borrower"), the LENDERS party hereto, WACHOVIA BANK, NATIONAL ASSOCIATION, as
Administrative Agent, BANK OF AMERICA, N.A., as Syndication Agent, KEY BANK,
NATIONAL ASSOCIATION, as Documentation Agent, and the GUARANTORS party hereto.

                                    RECITALS:

          The Borrower, the Administrative Agent and the Lenders have entered
into a certain Credit Agreement (the "Credit Agreement") dated as of January 20,
2005. Capitalized terms used in this Amendment which are not otherwise defined
in this Amendment shall have the respective meanings assigned to them in the
Credit Agreement.

          The Guarantors consist of Owner Guarantors that have executed or
otherwise become a party to the Owner Guaranty Agreement and Subsidiary
Guarantors that have executed or otherwise become a party to the Subsidiary
Guaranty Agreement.

          The Borrower and Guarantors have requested the Administrative Agent
and the Lenders to amend the Credit Agreement upon the terms and conditions
hereinafter set forth.

          NOW, THEREFORE, in consideration of the Recitals and the mutual
promises contained herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Borrower, the
Administrative Agent and the Lenders, intending to be legally bound hereby,
agree as follows:

          SECTION 1. Recitals. The Recitals are incorporated herein by reference
and shall be deemed to be a part of this Amendment.

          SECTION 2. Amendment. The Credit Agreement is hereby amended as
follows:

     2.1 The definition of "Secured Indebtedness" set forth in Section 1.1 of
the Credit Agreement is hereby amended and restated in its entirety as follows:

               "Secured Indebtedness" shall mean all Indebtedness of Borrower or
     any of its Subsidiaries (excluding Indebtedness owing to Borrower or any of
     its Subsidiaries) that is (a) secured by a Lien on assets of Borrower or
     any of its Subsidiaries or (b) supported by a guarantee of Borrower or any
     Subsidiary (including without limitation purchase money Indebtedness,
     Non-Recourse Indebtedness, obligations under sale/leaseback transactions
     and obligations under Capital Leases) and in either case is Indebtedness
     permitted under Section 7.10 hereof; provided, however, that Indebtedness
     under the Subordinated Notes shall not be Secured Indebtedness solely by
     reason of clause (b) of this definition.



     2.2. Section 6.2 of the Credit Agreement is hereby amended by (i) deleting
the word "and" at the end of paragraph (d) thereof, (ii) redesignating paragraph
(e) thereof to be paragraph (f) thereof, and (iii) adding a new paragraph (e)
thereto that shall read in its entirety as follows:

               (e) copies of all reports, notices and other information
     furnished to any holder of any Subordinated Notes as and when such reports,
     notices and other information are so furnished to such holder; and

     2.3 Section 7.9 of the Credit Agreement is hereby amended and restated in
its entirety to read as follows:

               7.9 Limitation on Payment of Subordinated Indebtedness. Pay,
     repay, purchase or defease any Subordinated Indebtedness, directly or
     indirectly, in cash or in other property, or by set-off or in any other
     manner, unless and until all Obligations have been paid in full and all
     Commitments have been terminated. Notwithstanding the foregoing, Borrower
     or any Subsidiary may make scheduled payments of interest on the
     Subordinated Indebtedness, may redeem Subordinated Indebtedness pursuant to
     provisions of such Subordinated Indebtedness allowing redemption at the
     option of the Borrower with the proceeds of any equity offering or after
     such Subordinated Indebtedness has been outstanding for a defined period,
     may purchase Subordinated Indebtedness by issuer tender offer or open
     market purchase and may repay Subordinated Indebtedness upon its scheduled
     maturity, so long as no Default or Event of Default has occurred and is
     continuing or would occur as a result of making such payment, redemption,
     purchase or repayment, as the case may be.

          SECTION 3. Conditions to Effectiveness. The effectiveness of this
Amendment and the obligations of the Lenders hereunder are subject to the
following conditions:

          (a) receipt by the Administrative Agent of a duly executed counterpart
of this Amendment signed by the Borrower, the Guarantors, and the Required
Lenders; and

          (b) the fact that the representations and warranties of the Borrower
contained in Article 4 of the Credit Agreement and in Section 5 of this
Amendment shall be true on and as of the date hereof.

          SECTION 4. No Other Amendment. Except for the amendments set forth
above, the text of the Credit Agreement shall remain unchanged and in full force
and effect. This Amendment is not intended to effect, nor shall it be construed
as, a novation. The Credit Agreement and this Amendment shall be construed
together as a single agreement. Nothing herein contained shall waive, annul,
vary or affect any provision, condition, covenant or agreement contained in the
Credit Agreement, except as herein amended, nor affect nor impair any rights,
powers or remedies under the Credit Agreement as hereby amended. The Lenders and
the Administrative Agent do hereby reserve all of their rights and remedies
against all parties who may be or may hereafter become secondarily liable for
the repayment of the Obligations. The Borrower promises and agrees to perform
all of the requirements, conditions, agreements and obligations under the terms
of the Credit Agreement, as heretofore and hereby amended, the Credit Agreement,
as amended, being


                                        2



hereby ratified and affirmed. The Borrower hereby expressly agrees that the
Credit Agreement, as amended, is in full force and effect.

          SECTION 5. Representations and Warranties. The Borrower hereby
represents and warrants to each of the Lenders as follows:

          (a) No Default under the Credit Agreement has occurred and is
continuing on the date hereof.

          (b) The Borrower and Guarantors have the power and authority to enter
into this Amendment and to do all acts and things as are required or
contemplated hereunder to be done, observed and performed by them.

          (c) This Amendment has been duly authorized, validly executed and
delivered by one or more authorized officers of the Borrower and Guarantors and
constitutes a legal, valid and binding obligation of the Borrower, and each
Guarantor enforceable against it in accordance with its terms, provided that
such enforceability is subject to general principles of equity.

          (d) The execution and delivery of this Amendment and the performance
of the Borrower and Guarantors hereunder do not and will not require the consent
or approval of any regulatory authority or governmental authority or agency
having jurisdiction over the Borrower or any Guarantor, nor be in contravention
of or in conflict with the articles of incorporation or bylaws or other
applicable organizational documents of the Borrower, or any Guarantor, or the
provision of any statute, or any judgment, order or indenture, instrument,
agreement or undertaking, to which the Borrower, or any Guarantor is party or by
which the assets or properties of the Borrower or Guarantors are or may become
bound.

          SECTION 6. Counterparts. This Amendment may be executed in multiple
counterparts, each of which shall be deemed to be an original and all of which,
taken together, shall constitute one and the same agreement.

          SECTION 7. Governing Law. This Amendment shall be governed by, and
construed in accordance with, the law of the State of North Carolina.

          SECTION 8. Consent by Guarantors. The Guarantors consent to the
foregoing amendments. Each Guarantor promises and agrees to perform all of the
requirements, conditions, agreements and obligations under the terms of the
Guaranty Agreement to which it is a party, said Guaranty Agreement being hereby
ratified and affirmed. Each Guarantor hereby expressly agrees that the Guaranty
Agreement to which it is a party is in full force and effect.

             [The remainder of this page intentionally left blank.]


                                        3



                                                                    Exhibit 10.2

     IN WITNESS WHEREOF, the parties hereto have executed and delivered, or have
caused their respective duly authorized officers or representatives to execute
and deliver, under seal, this Amendment as of the day and year first above
written.

                                        BORROWER:

                                        ASHTON WOODS USA L.L.C.,
                                        a Nevada limited liability company


                                        By:
                                            ------------------------------------
                                        Name: Harry Rosenbaum
                                        Title: Manager


                                Signature Page of
         Third Amendment to Second Amended and Restated Credit Agreement
                                  Page 1 of 13



                                        WACHOVIA BANK, NATIONAL ASSOCIATION,
                                        as Administrative Agent and a Lender


                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


                                Signature Page of
                       First Amendment to Credit Agreement
                                  Page 2 of 13



                                        BANK OF AMERICA, N.A., as Syndication
                                        Agent and a Lender


                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


                                Signature Page of
                       First Amendment to Credit Agreement
                                  Page 3 of 13



                                        KEY BANK, NATIONAL ASSOCIATION,
                                        as Documentation Agent and a Lender


                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


                                Signature Page of
                       First Amendment to Credit Agreement
                                  Page 4 of 13



                                        FIRST AMERICAN BANK, as a Lender


                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


                                Signature Page of
                       First Amendment to Credit Agreement
                                  Page 5 of 13



                                        GUARANTY BANK, as a Lender


                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


                                Signature Page of
                       First Amendment to Credit Agreement
                                  Page 6 of 13



                                        COMERICA BANK, as a Lender


                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


                                Signature Page of
                       First Amendment to Credit Agreement
                                  Page 7 of 13



                                        NATIONAL CITY BANK, as a Lender


                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


                                Signature Page of
                       First Amendment to Credit Agreement
                                  Page 8 of 13



                                        U.S. BANK NATIONAL ASSOCIATION, as a
                                        Lender


                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


                                Signature Page of
                       First Amendment to Credit Agreement
                                  Page 9 of 13



                                        OWNER GUARANTORS:

                                        ELLY NEVADA, INC., a Nevada corporation


                                        By:
                                            ------------------------------------
                                        Name: Harry Rosenbaum
                                        Title: Vice President


                                        NORMAN NEVADA, INC., a Nevada
                                        corporation


                                        By:
                                            ------------------------------------
                                        Name: Harry Rosenbaum
                                        Title: Vice President


                                        LARRY NEVADA, INC., a Nevada corporation


                                        By:
                                            ------------------------------------
                                        Name: Harry Rosenbaum
                                        Title: Vice President


                                        BRUCE NEVADA, INC., a Nevada corporation


                                        By:
                                            ------------------------------------
                                        Name: Harry Rosenbaum
                                        Title: Vice President


                                        HARRY NEVADA, INC., a Nevada corporation


                                        By:
                                            ------------------------------------
                                        Name: Harry Rosenbaum
                                        Title: President


                                        SEYMOUR NEVADA, INC., a Nevada
                                        corporation


                                        By:
                                            ------------------------------------
                                        Name: Harry Rosenbaum
                                        Title: Vice President


                                Signature Page of
                       First Amendment to Credit Agreement
                                  Page 10 of 13



                                        HAYDN NEVADA, INC., a Nevada corporation


                                        By:
                                            ------------------------------------
                                        Name: Harry Rosenbaum
                                        Title: Vice President


                                        LITTLE SHOTS NEVADA L.L.C., a Nevada
                                        limited liability company


                                        By:
                                            ------------------------------------
                                        Name: Harry Rosenbaum
                                        Title: Manager


                                Signature Page of
                       First Amendment to Credit Agreement
                                  Page 11 of 13



                                        SUBSIDIARY GUARANTORS:

                                        ASHTON ATLANTA RESIDENTIAL, L.L.C.,
                                        a Georgia limited liability company


                                        By:
                                            ------------------------------------
                                        Name: Harry Rosenbaum
                                        Title: Manager


                                        ASHTON DALLAS RESIDENTIAL L.L.C.,
                                        a Texas limited liability company


                                        By:
                                            ------------------------------------
                                        Name: Harry Rosenbaum
                                        Title: Manager


                                        ASHTON HOUSTON RESIDENTIAL L.L.C.,
                                        a Texas limited liability company


                                        By:
                                            ------------------------------------
                                        Name: Harry Rosenbaum
                                        Title: Manager


                                        ASHTON WOODS ARIZONA L.L.C.,
                                        a Nevada limited liability company


                                        By:
                                            ------------------------------------
                                        Name: Harry Rosenbaum
                                        Title: Manager


                                        ASHTON ORLANDO RESIDENTIAL L.L.C.,
                                        a Nevada limited liability company


                                        By:
                                            ------------------------------------
                                        Name: Harry Rosenbaum
                                        Title: Manager


                                Signature Page of
                       First Amendment to Credit Agreement
                                  Page 12 of 13



                                        ASHTON BURDEN, LLC,
                                        a Florida limited liability company


                                        By:
                                            ------------------------------------
                                        Name: Harry Rosenbaum
                                        Title: Manager


                                        ASHTON TAMPA RESIDENTIAL LLC,
                                        a Nevada limited liability company


                                        By:
                                            ------------------------------------
                                        Name: Harry Rosenbaum
                                        Title: Manager


                                        ASHTON DENVER RESIDENTIAL, LLC,
                                        a Nevada limited liability company


                                        By:
                                            ------------------------------------
                                        Name: Harry Rosenbaum
                                        Title: Manager


                                        PINERY JOINT VENTURE, a Colorado joint
                                        venture


                                        By:
                                            ------------------------------------
                                        Name: Harry Rosenbaum
                                        Title: Authorized Representative


                                Signature Page of
                       First Amendment to Credit Agreement
                                  Page 13 of 13

EX-10.3

                                                                    Exhibit 10.3

                      SECOND AMENDMENT TO CREDIT AGREEMENT

     THIS SECOND AMENDMENT TO CREDIT AGREEMENT (this "Amendment") is made as of
the 21st day of September, 2005, by and among ASHTON WOODS USA L.L.C. (the
"Borrower"), the LENDERS party hereto, WACHOVIA BANK, NATIONAL ASSOCIATION, as
Administrative Agent, BANK OF AMERICA, N.A., as Syndication Agent, KEY BANK,
NATIONAL ASSOCIATION, as Documentation Agent, and the GUARANTORS party hereto.

                                    RECITALS:

          The Borrower, the Administrative Agent and the Lenders have entered
into a certain Credit Agreement dated as of January 20, 2005 (as amended by the
First Amendment to Credit Agreement dated as of April 27, 2005, the "Credit
Agreement"). Capitalized terms used in this Amendment which are not otherwise
defined in this Amendment shall have the respective meanings assigned to them in
the Credit Agreement.

          The Guarantors consist of Owner Guarantors that have executed or
otherwise become a party to the Owner Guaranty Agreement and Subsidiary
Guarantors that have executed or otherwise become a party to the Subsidiary
Guaranty Agreement.

          The Borrower and Guarantors have requested the Administrative Agent
and the Lenders to amend the Credit Agreement upon the terms and conditions
hereinafter set forth.

          NOW, THEREFORE, in consideration of the Recitals and the mutual
promises contained herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Borrower, the
Administrative Agent and the Lenders, intending to be legally bound hereby,
agree as follows:

          SECTION 1. Recitals. The Recitals are incorporated herein by reference
and shall be deemed to be a part of this Amendment.

          SECTION 2. Amendment. The Credit Agreement is hereby amended as
follows:

     2.1 Section 1.1 of the Credit Agreement is hereby amended by adding the
following definitions:

               "Distribution" means any dividend or other distribution (whether
     in cash or other tangible property) with respect to any capital stock or
     other equity interest of any Person or any Subsidiary, or any payment
     (whether in cash or other tangible property) to any Person or Persons other
     than the Borrower, including any redemption, retirement, acquisition,
     cancellation or termination of any such capital stock or other equity
     interest or of any option, warrant or other right to acquire any such
     capital stock or other equity interest.



               "Cash Equivalents" means:

               (a) marketable obligations with a maturity of 360 days or less
     issued or directly and fully guaranteed or insured by the United States of
     America or any agency or instrumentality thereof (provided that the full
     faith and credit of the United States of America is pledged in support
     thereof);

               (b) demand and time deposits and certificates of deposit or
     acceptances with a maturity of 180 days or less of any financial
     institution that is a member of the Federal Reserve System having combined
     capital and surplus and undivided profits not less that $500 million and is
     assigned at least a "B" rating by Thomson Financial BankWatch;

               (c) commercial paper maturing no more than 180 days from the date
     of creation thereof issued by a corporation that is not the Borrower or an
     Affiliate of the Borrower, and is organized under the laws of any State of
     United States of America or the District of Columbia and rated at least A-1
     by S&P or at lease P-1 by Moody's;

               (d) repurchase obligations with a term of not more than ten days
     for underlying securities of the types described in clause (a) above
     entered into with any commercial bank meeting the specifications of clause
     (b) above; and

               (e) investments in money market or other mutual funds
     substantially all of whose assets comprise securities of the types
     described in clauses (a) through (d) above.

     2.2 Section 7.7 of the Credit Agreement is hereby amended and restated in
its entirety as follows;

               7.7 Transactions With Affiliates. Engage in any transaction with
     any Affiliate of Borrower or any Subsidiary on terms less favorable to
     Borrower or such Subsidiary than would be obtainable at the time in
     comparable transactions with Persons not Affiliates of the Borrower or any
     Subsidiary, provided that nothing herein shall be deemed to restrict any
     capital contribution or equity purchase by any Affiliate of the Borrower to
     or from the Borrower or any Distribution made by the Borrower in accordance
     with Section 7.11 hereof.

     2.3 Section 7.11 of the Credit Agreement is hereby amended and restated in
its entirety to read as follows:

               7.11. Limitation on Distributions. Declare or make, directly or
     indirectly, any Distribution, or incur any obligation (contingent or
     otherwise) to do so, except that, so long as no Default shall have occurred
     and be continuing at the time of any Distribution or would result
     therefrom, Borrower may make Distributions on any date in an amount not to
     exceed


                                        2



               (i) fifty percent (50%) of Consolidated Earnings earned between
     June 1, 2004 and the date of such Distribution, plus

               (ii) one hundred percent (100%) of the aggregate amount of cash
     or Cash Equivalents received by the Borrower either (x) as contributions to
     common equity of the Borrower after June 1, 2005 or (y) from the issuance
     and sale of equity interests after such date, other than any such amounts
     received from a Subsidiary of the Borrower, minus

               (iii) the amount of any Distributions previously made between
     June 1, 2004 and the date of such Distribution.

               Further, notwithstanding the foregoing, so long as no Default
     shall have occurred and be continuing at the time of any Distribution or
     would result therefrom, Borrower may make Distributions in addition to
     Distributions made pursuant to the foregoing limitations, to its direct
     parents in amounts required to pay federal, state and local income taxes
     payable by such direct parent that are solely attributable to the income of
     the Borrower and its Subsidiaries by virtue of the Borrower being a
     pass-through entity for federal or state income tax purposes; provided,
     however, that (a) the amount of Distributions paid with respect to such tax
     obligations at any time will not exceed the amount of such federal, state
     and local income taxes actually owing by any such direct parent at such
     time for the respective period (excluding any tax liability of any such
     direct parent not attributable to the Borrower or its Subsidiaries)
     (provided that the Borrower may make periodic Distributions based on an
     estimate of such tax liability with an annual reconciliation at the end of
     each tax year) and (b) any refunds received by or on behalf of, or any
     overpayment based on the annual reconciliation to, any of the Borrower's
     direct parents attributable to the Borrower and its Subsidiaries shall
     promptly be returned by such direct parent to the Borrower or credited
     against the Borrower's ability to make additional Distributions pursuant to
     the foregoing provisions of this Section 7.11.

          2.4 Section 7.16 of the Credit Agreement is hereby amended and
restated in its entirety to read as follows:

               7.16 Increase in Capital. Increase the capital of Borrower or any
     Guarantor by transferring assets among Borrower and Guarantors or
     Borrower's Affiliates to Borrower and Guarantor, provided that nothing
     herein shall prohibit the purchase of additional equity interests from, or
     the making of a capital contribution to, Borrower by any parent of Borrower
     that is also a Guarantor.

          SECTION 3. Conditions to Effectiveness. The effectiveness of this
Amendment and the obligations of the Lenders hereunder are subject to the
following conditions:

          (a) receipt by the Administrative Agent of a duly executed counterpart
of this Amendment signed by the Borrower, the Guarantors, and the Required
Lenders;


                                        3



          (b) receipt by the Administrative Agent from the Borrower of any and
all fees and expenses to be paid by the Borrower to the Administrative Agent in
connection with this Amendment; and

          (c) the fact that the representations and warranties of the Borrower
contained in Article 4 of the Credit Agreement and in Section 5 of this
Amendment shall be true on and as of the date hereof.

          SECTION 4. No Other Amendment. Except for the amendments set forth
above, the text of the Credit Agreement shall remain unchanged and in full force
and effect. This Amendment is not intended to effect, nor shall it be construed
as, a novation. The Credit Agreement and this Amendment shall be construed
together as a single agreement. Nothing herein contained shall waive, annul,
vary or affect any provision, condition, covenant or agreement contained in the
Credit Agreement, except as herein amended, nor affect nor impair any rights,
powers or remedies under the Credit Agreement as hereby amended. The Lenders and
the Administrative Agent do hereby reserve all of their rights and remedies
against all parties who may be or may hereafter become secondarily liable for
the repayment of the Obligations. The Borrower promises and agrees to perform
all of the requirements, conditions, agreements and obligations under the terms
of the Credit Agreement, as heretofore and hereby amended. The Credit Agreement,
as so amended, is hereby ratified and affirmed. The Borrower hereby expressly
agrees that the Credit Agreement, as amended, is in full force and effect.

          SECTION 5. Representations and Warranties. The Borrower hereby
represents and warrants to each of the Lenders as follows:

          (a) No Default under the Credit Agreement has occurred and is
continuing on the date hereof.

          (b) The Borrower and Guarantors have the power and authority to enter
into this Amendment and to do all acts and things as are required or
contemplated hereunder to be done, observed and performed by them.

          (c) This Amendment has been duly authorized, validly executed and
delivered by one or more authorized officers of the Borrower and Guarantors and
constitutes a legal, valid and binding obligation of the Borrower, and each
Guarantor enforceable against it in accordance with its terms, provided that
such enforceability is subject to general principles of equity.

          (d) The execution and delivery of this Amendment and the performance
of the Borrower and Guarantors hereunder do not and will not require the consent
or approval of any regulatory authority or governmental authority or agency
having jurisdiction over the Borrower or any Guarantor, nor be in contravention
of or in conflict with the articles of incorporation or bylaws or other
applicable organizational documents of the Borrower, or any Guarantor, or the
provision of any statute, or any judgment, order or indenture, instrument,
agreement or undertaking, to which the Borrower, or any Guarantor is party or by
which the assets or properties of the Borrower or Guarantors are or may become
bound.


                                        4



          SECTION 6. Counterparts. This Amendment may be executed in multiple
counterparts, each of which shall be deemed to be an original and all of which,
taken together, shall constitute one and the same agreement.

          SECTION 7. Governing Law. This Amendment shall be governed by, and
construed in accordance with, the law of the State of North Carolina.

          SECTION 8. Consent by Guarantors. The Guarantors consent to the
foregoing amendments. Each Guarantor promises and agrees to perform all of the
requirements, conditions, agreements and obligations under the terms of the
Guaranty Agreement to which it is a party, said Guaranty Agreement being hereby
ratified and affirmed. Each Guarantor hereby expressly agrees that the Guaranty
Agreement to which it is a party is in full force and effect.

             [The remainder of this page intentionally left blank.]


                                        5




     IN WITNESS WHEREOF, the parties hereto have executed and delivered, or have
caused their respective duly authorized officers or representatives to execute
and deliver, under seal, this Amendment as of the day and year first above
written.

                                        BORROWER:

                                        ASHTON WOODS USA L.L.C.,
                                        a Nevada limited liability company


                                        By:
                                            ------------------------------------
                                        Name: Harry Rosenbaum
                                        Title: Manager


                                Signature Page of
                          Amendment to Credit Agreement
                                  Page 1 of 13



                                        WACHOVIA BANK, NATIONAL ASSOCIATION,
                                        as Administrative Agent and a Lender


                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


                                Signature Page of
                          Amendment to Credit Agreement
                                  Page 2 of 13



                                        BANK OF AMERICA, N.A., as Syndication
                                        Agent and a Lender


                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


                                Signature Page of
                          Amendment to Credit Agreement
                                  Page 3 of 13



                                        KEY BANK, NATIONAL ASSOCIATION, as
                                        Documentation Agent and a Lender


                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


                                Signature Page of
                          Amendment to Credit Agreement
                                  Page 4 of 13



                                        FIRST AMERICAN BANK, as a Lender


                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


                                Signature Page of
                          Amendment to Credit Agreement
                                  Page 5 of 13



                                        GUARANTY BANK, as a Lender


                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


                                Signature Page of
                          Amendment to Credit Agreement
                                  Page 6 of 13



                                        COMERICA BANK, as a Lender


                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


                                Signature Page of
                          Amendment to Credit Agreement
                                  Page 7 of 13



                                        NATIONAL CITY BANK, as a Lender


                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


                                Signature Page of
                          Amendment to Credit Agreement
                                  Page 8 of 13



                                        U.S. BANK NATIONAL ASSOCIATION, as a
                                        Lender


                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


                                Signature Page of
                          Amendment to Credit Agreement
                                  Page 9 of 13



                                        OWNER GUARANTORS:

                                        Elly Nevada, Inc., a Nevada corporation


                                        By:
                                            ------------------------------------
                                        Name: Harry Rosenbaum
                                        Title: Vice President


                                        NORMAN NEVADA, INC., a Nevada
                                        corporation


                                        By:
                                            ------------------------------------
                                        Name: Harry Rosenbaum
                                        Title: Vice President


                                        LARRY NEVADA, INC., a Nevada corporation


                                        By:
                                            ------------------------------------
                                        Name: Harry Rosenbaum
                                        Title: Vice President


                                        BRUCE NEVADA, INC., a Nevada corporation


                                        By:
                                            ------------------------------------
                                        Name: Harry Rosenbaum
                                        Title: Vice President


                                        HARRY NEVADA, INC., a Nevada corporation


                                        By:
                                            ------------------------------------
                                        Name: Harry Rosenbaum
                                        Title: President


                                        SEYMOUR NEVADA, INC., a Nevada
                                        corporation


                                        By:
                                            ------------------------------------
                                        Name: Harry Rosenbaum
                                        Title: Vice President


                                Signature Page of
                          Amendment to Credit Agreement
                                  Page 10 of 13



                                        HAYDN NEVADA, INC., a Nevada corporation


                                        By:
                                            ------------------------------------
                                        Name: Harry Rosenbaum
                                        Title: Vice President


                                        LITTLE SHOTS NEVADA L.L.C., a Nevada
                                        limited liability company


                                        By:
                                            ------------------------------------
                                        Name: Harry Rosenbaum
                                        Title: Manager


                                Signature Page of
                          Amendment to Credit Agreement
                                  Page 11 of 13



                                        SUBSIDIARY GUARANTORS:

                                        ASHTON ATLANTA RESIDENTIAL, L.L.C.,
                                        a Georgia limited liability company


                                        By:
                                            ------------------------------------
                                        Name: Harry Rosenbaum
                                        Title: Manager


                                        ASHTON DALLAS RESIDENTIAL L.L.C.,
                                        a Texas limited liability company


                                        By:
                                            ------------------------------------
                                        Name: Harry Rosenbaum
                                        Title: Manager


                                        ASHTON HOUSTON RESIDENTIAL L.L.C.,
                                        a Texas limited liability company


                                        By:
                                            ------------------------------------
                                        Name: Harry Rosenbaum
                                        Title: Manager


                                        ASHTON WOODS ARIZONA L.L.C.,
                                        a Nevada limited liability company


                                        By:
                                            ------------------------------------
                                        Name: Harry Rosenbaum
                                        Title: Manager


                                        ASHTON ORLANDO RESIDENTIAL L.L.C.,
                                        a Nevada limited liability company


                                        By:
                                            ------------------------------------
                                        Name: Harry Rosenbaum
                                        Title: Manager


                                Signature Page of
                          Amendment to Credit Agreement
                                  Page 12 of 13



                                        ASHTON BURDEN, LLC,
                                        a Florida limited liability company


                                        By:
                                            ------------------------------------
                                        Name: Harry Rosenbaum
                                        Title: Manager


                                        ASHTON TAMPA RESIDENTIAL LLC,
                                        a Nevada limited liability company


                                        By:
                                            ------------------------------------
                                        Name: Harry Rosenbaum
                                        Title: Manager


                                        ASHTON DENVER RESIDENTIAL, LLC,
                                        a Nevada limited liability company


                                        By:
                                            ------------------------------------
                                        Name: Harry Rosenbaum
                                        Title: Manager


                                        PINERY JOINT VENTURE, a Colorado joint
                                        venture


                                        By:
                                            ------------------------------------
                                        Name: Harry Rosenbaum
                                        Title: Authorized Representative


                                Signature Page of
                          Amendment to Credit Agreement
                                  Page 13 of 13

EX-10.4

                                                                    EXHIBIT 10.4

                          LIMITED PARTNERSHIP AGREEMENT

                                       OF

                      NAVO SOUTH DEVELOPMENT PARTNERS, LTD.

                          (A TEXAS LIMITED PARTNERSHIP)

              THESE PARTNERSHIP INTERESTS HAVE NOT BEEN REGISTERED
                UNDER THE SECURITIES ACT OF 1933, AS AMENDED, NOR
             PURSUANT TO THE PROVISIONS OF ANY STATE SECURITIES ACT

                 CERTAIN RESTRICTIONS ON TRANSFERS OF INTERESTS
                              ARE SET FORTH HEREIN



                          LIMITED PARTNERSHIP AGREEMENT

                                       OF

                      NAVO SOUTH DEVELOPMENT PARTNERS, LTD.

     This Limited Partnership Agreement of Navo South Development Partners, Ltd.
(the "Partnership") dated as of the 18th day of December,2003, is made and
entered into by and among G.P. Navo South, L.L.C., a Texas limited liability
company, as General Partner, and ASHTON DALLAS RESIDENTIAL L.L.C., a Texas
limited liability company (sometimes referred to as "Ashton Woods Homes"),
HORIZON HOMES, LTD., a Texas limited partnership (sometimes referred to as
"Horizon Homes"), and PRIORITY DEVELOPMENT, L.P., a Delaware limited partnership
(sometimes referred to as "Priority Development"), collectively as Limited
Partners, whether one or more.

      WHEREAS, the General Partner and the Limited Partners wish to form a
limited partnership under the Texas Revised Limited Partnership Act for the
purpose of acquiring certain real property, holding such property for investment
and appreciation, and selling or leasing such property.

      NOW, THEREFORE, in consideration of the mutual promises made herein, the
parties, intending to be legally bound, hereby agree as follows:

                                    ARTICLE 1

                                   Definitions

      The capitalized terms used in this Agreement shall, unless the context
otherwise requires, have the meanings specified in this Article.

      1. "Act" means the Texas"Revised Limited Partnership Act, as amended from
time to time.

      2. "Adjusted Capital Account Deficit" means, with respect to any Partner,
the deficit balance, if any, in such Partner's capital account as of the end of
the relevant fiscal year, after giving effect to the following adjustments:

      (a)Credit to such capital account any amounts which such Partner is deemed
to be obligated to restore pursuant to Treasury Regulations Sections
1.704-1(b)(2)(ii)(c), 1.704-2(g)(1) and 1.704-2(i)(5); and

      (b) Debit to such capital account the items described in Treasury
Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) and (6).

      The foregoing definition of "Adjusted Capital Account Deficit" is intended
to comply with the provisions of the Treasury Regulations Sections
1.704-1(b)(2)(ii) (d) and 1.704-2, and shall be interpreted consistently
therewith.

                                      -2-



      3. "Affiliate" means any person who directly or indirectly through one or
more intermediaries controls or is controlled by or is under common control
with the person to whom reference is made. The term "control" as used herein
(including the terms "controlling," "controlled by," and "under common control
with") means the Possession, direct or indirect, of the power (i) to vote 50% or
more of the outstanding Voting securities of a person, or (ii) otherwise to
direct the management policies of such person by contract or otherwise.

      4. "Agreement" means this Limited Partnership Agreement of Navo South
Development Partners, Ltd.

      5. "Budget" means the cash budget prepared by the General Partner setting
forth the estimated Project costs and expenses and other expenditures, projected
revenues and capital and operating expenditures, as well as reasonable reserves
for future cash needs, all as approved from time by a Majority Interest of the
Partners.

      6. "Capital Contributions" means the total of all capital contributions
made by the Partners hereunder.

      7. "Capital Profits" means any Profits to the extent such Profits arise
from the sale or disposition of all or any portion of the Property.

      8. "Code" means the Internal Revenue Code of 1986, as amended from time to
time.

      9. "Distributable Cash Flow" means the amount, if any, of Partnership cash
on hand, as of the date of calculation, which is not necessary to meet the
immediate and reasonably foreseeable cash needs of the Partnership such that the
same is available for distribution to the Partners, as determined from time to
time by the General Partner with the approval of a Majority Interest of the
Limited Partners.

      10. "General Partner" means G.P. Navo South, L.L.C., a Texas limited
liability company, or any successor in such capacity.

      11. "Land" means the approximately 259.55 acre tract of land in Denton
County, Texas described in Schedule B hereto which is to be purchased by the
Partnership and developed into single family residential lots.

      12. "Limited Partner" means any of the parties identified as such on
Schedule A attached hereto, acting in his or its capacity as a limited partner
of the Partnership, or any successor in such capacity.

      13. "Majority Interest of the Limited Partners" means one (1) or more
Limited Partners who own in the aggregate more than fifty percent (50%) of the
total Partnership Interests of the Limited Partners, exclusive of the
Partnership Interest owned by any Limited Partner who is not entitled to vote
pursuant to Section 4.1(d) hereof, after receipt by the Limited Partners
entitled to vote of notice of such item requiring a vote and/or approval of the
Limited Partners.

                                      -3-



      14. "Majority Interest of the Partners" means one (1) or more Partners who
own in the aggregate more than fifty percent (50%) of the total Partnership
Interests of all of the Partners, exclusive of the Partnership Interest owned by
any Partner who is not entitled to vote pursuant to Section 4.1(d) hereof, after
receipt by the Partners entitled to vote of notice of such item requiring a vote
and/or approval of the Partners.

      15. "Minimum Gain" means, with respect to all norecourse liabilities of
the Partnership, the minimum amount of gain that would be realized by the
Partnership if the Partnership disposed of the Partnership Property subject to
such liability in full satisfaction thereof computed in accordance with Treasury
Regulations Section 1.704-2(d).

      16. "Minimum Gain Share" means, for such Partner, such Partner's share of
Minimum Gain for the fiscal year (after taking into account any decrease in
Minimum Gain for such year), such share to be determined under Treasury
Regulations Section 1.704-2(g).

      17. "Net Capital Contributions" means the aggregate of Capital
Contributions made by the Partners reduced (but not below zero) by the aggregate
distributions to such Partners under Section 6.1(a) hereof.

      18. "Optional Loans" means the loans made by the Partners in accordance
with Section 4.1 below.

      19. "Partner" means the General Partner or any Limited Partner.

      20. "Partnership" means the Texas limited partnership formed pursuant to
this Agreement.

      21. "Partnership Interest" means the percentage of ownership interest of a
Partner in the Partnership at any particular time.

      22. "Profits and Losses" means, for each fiscal year or other period, an
amount equal to the Partnership's income or loss for such year or period
determined in accordance with Code Section 703(a) (for this purposes, all items
of income, gain, loss, or deduction required to be stated separately pursuant to
Code Section 703(a)(1) shall be included in taxable income or loss), with the
following adjustments:

      (a) Any income of the Partnership that is exempt from federal income tax
and not otherwise taken into account in computing Profits or Losses pursuant to
this definition shall be added to such taxable income or loss;

      (b) Any expenditures of the Partnership described in Code Section
705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures pursuant to
Treasury Regulations Section 1.7041(b)(2)(iv)(i) and not otherwise taken into
account in computing Profits or Losses pursuant to this definition, shall be
subtracted from such taxable income or loss;

      (c) Gain or loss resulting from any disposition of Partnership property
with respect to which gain or loss is recognized for federal income tax purposes
shall be computed by reference to the fair

                                      -4-


market value of the property disposed of, notwithstanding that the adjusted tax
basis of such property differs from such fair market value;

      (d) In lieu of the depreciation, amortization, and other cost recovery
deductions taken into account for computing such taxable income or loss there
shall be taken into account depreciation, amortization and other deductions for
such fiscal year or period, computed in accordance with the fair market value of
the property to which such deductions relate.

      23. "Treasury Regulations" means the income tax regulations promulgated
under the Code, as amended from time to time.

                                    ARTICLE 2

                                  ORGANIZATION

      SECTION 2.1. FORMATION AND CONTINUATION OF BUSINESS

      The Partnership has been formed under and pursuant to the provisions of
the Act. The parties hereto hereby agree to continue the business of the
Partnership pursuant to this Agreement.

      SECTION 2.2. NAME, PLACE OF BUSINESS AND OFFICE

      (a) The Partnership shall be conducted under the name and style of Navo
South Development Partners Ltd., The Partnership shall maintain its principal
office at the following address: 12890 Hillcrest Road, Suite 103, Dallas, Texas
75230. The General Partner may at any time change the location of the
Partnership's office and may establish additional offices, if it deems it
advisable. The General Partner shall promptly give the Partners written notice
of any change in location of the principal office of the Partnership.

      (b) The General Partner shall serve as agent for service of process on the
Partnership. The General Partner shall timely record an appropriate certificate
of limited partnership in the proper records in the State of Texas and shall
take such steps as are necessary to qualify the Partnership to conduct business
in other states, as required by local law.

      SECTION 2.3. PURPOSES AND CHARACTERS OF BUSINESS; POWERS

      (a) The purposes and character of the business of the Partnership are as
follows:

            (1)   to acquire the Land;

            (2)   to obtain debt financing for the acquisition of the Land and
                  to mortgage or grant liens on Partnership assets as security
                  therefore;

            (3)   to subdivide and develop the Land into residential lots with
                  roads and underground utility facilities;

            (4)   to own, manage, operate, lease and sell the Land; and

                                      -5-



            (5)   to do any and all things necessary or desirable to carry out
                  the foregoing activities and any other activity contemplated
                  by this Agreement.

      (b) The Partnership shall have any and all powers which are necessary or
desirable to carry out the purposes and business of the Partnership. The
Partnership shall carry out the foregoing activities pursuant to the
arrangements set forth in this Agreement. The Partnership shall not engage in
any other business or activity without the unanimous consent of the Partners.

      SECTION 2.4. ACQUISITION OF THE LAND

      The Land is owned by Denton 380 Associates, L.P., an unrelated third
party. The Partners shall cause the Partnership to purchase the Land in
accordance with the provisions of a contract of sale entered into by J. Baker
Acquisition Corporation Which will be assigned to the Partnership.

      SECTION 2.5. DEVELOPMENT AGREEMENT

      The Partnership shall enter into a contract with J. Baker Corporation
(the "Development Manager") to supervise the development of the Land. The
Development Manager shall be entitled to receive such fees as may be specified
in a development agreement with the Partnership which has been approved by a
Majority Interest of the Limited & Partners.

      SECTION 2.6. TERM

      The Partnership term commenced on the effective date of the Original
Agreement and shall continue in full force and effect until December 31,2015,
unless dissolved earlier pursuant to the provisions hereof.

                                    ARTICLE 3

                               PARTNERSHIP CAPITAL

      SECTION 3.1. CAPITAL CONTRIBUTIONS

      Upon the formation of the Partnership the partners shall contribute to the
capital of the Partnership the respective amounts specified on Schedule A. No
Partner shall have an obligation to make any further Capital Contributions to
the Partnership.

      SECTION 3.2. PARTNERSHIP CAPITAL

      (a) No Partner shall be paid interest on any Capital Contribution to the
Partnership.

      (b) No Partner shall have the right to withdraw all or any part of its
Capital Contribution or to receive any return of any portion of its Capital
Contribution, except as may be otherwise specifically provided in this
Agreement. The obligations of the Partners to contribute Capital Contributions
are personal to the Partners and may not be enforced by any third party.

                                      -6-



      (c) Under circumstances involving a return of any Capital Contribution, no
Partner shall have the right to receive property other than cash.

      SECTION 3.3. LIABILITY OF PARTNERS

      (a) The Limited Partners shall not be liable for the debts, liabilities,
contracts or any other obligation of the partnership, except to the extent
provided in the Act. No Partner shall be liable for the debts or liabilities of
any other Partner.

      (b) No Partner shall be required to contribute to the capital of, or loan,
the Partnership any funds other than those amounts required to be made under
this Agreement.

      (c) The General Partner shall not be liable for the return of all or any
portion of the Capital Contributions of the Limited Partners.

      SECTION 3.4. CAPITAL ACCOUNTS

      (a)   (1) A capital account shall be established and maintained for each
Partner.

            (2) A Partner's capital account shall be credited with (A) the
amount of cash and the fair market value of any property contributed by such
Partner to the Partnership; (B) such Partner's allocable share of Profit, income
and gain; and (C) the amount of any partnership liabilities that are expressly
assumed by the Partner or that are secured any Partnership property distributed
to such Partner.

            (3) A Partner's capital account shall be debited with (A) the
amount of cash and the fair market Value of any Partnership property distributed
to such Partner pursuant to any provision of this Agreement; (B) such Partner's
allocable share of losses, deductions and other losses; and (C) the amount of
any liabilities of such Partner's that are expressly assumed by the Partnership
or that are secured by any Property contributed by such Partner to the
Partnership.

            (4) Upon the occurrence of certain events (as described in Treasury
Regulations Section 1.704-1 (b) (2) (iv) (f), a Majority Interest of the
Partners may agree to increase or decrease the capital accounts of the Partners
to reflect a revaluation of Partnership property on the Partnership's books.

            (5) From time to time the General Partner (with the consent of a
Majority Interest of the Partners) may make such modifications to the manner in
which the capital accounts are computed to comply with Treasury Regulations
Sections 1.704-1(b) and 1.704-2, provided that such modifications are not
likely to have a material effect on the amounts distributable to any Partner
pursuant to this Agreement or on the taxable income or loss allocated to any
Partner.

            (6) The capital account of each Partner shall be determined after
giving effect to all transactions which have been effected prior to the time
when such determination is made giving rise to the allocation of Profits and
Losses and to all of the Partner's contributions and distributions theretofore
made.

                                      -7-



            (7) In the event that any Partner makes a loan to the Partnership
(which may only be made with the consent of a Majority Interest of the
Partners), such loan shall not be considered a contribution to the capital of
the Partnership and shall not increase the capital account of the lending
Partner. Repayment of such loans shall not be deemed withdrawals from the
capital of the Partnership.

            (8) The foregoing provisions and the other provisions of this
Agreement relating to the maintenance of capital accounts are intended to comply
with Treasury Regulations Sections 1.704-1(b) and 1.704-2, and shall be
interpreted and applied in a manner consistent with these regulations.

      (b)Any fees, salary, or other compensation paid to a Partner pursuant to
this Agreement and any returns on capital provided herein shall be treated as
guaranteed payments under Code Section 707(c). The guaranteed payments shall
not be treated as distributions to such Partner for federal income tax purposes.
Such payments to a Partner shall not reduce the Partner's capital account,
except to the extent of its distributive share of any Partnership Losses or
other downward capital adjustments resulting from the guaranteed payment.

      (c) Any person who acquires a Partnership Interest directly from a
Partner, or whose Partnership Interest is increased by means of a transfer or
deemed transfer of all or part of the interest of another Partner, shall have a
single capital account which includes the capital account balance of the
Partnership Interest so acquired or transferred.

      (d) No Partner shall have any obligation to restore a deficit balance in
its capital account. Furthermore, a deficit capital account balance of a Partner
shall not be deemed a liability of such Partner or an asset of the Partnership.

      SECTION 3.5. PARTNERSHIP INTERESTS

      The Partnership Interest of each Partner is set forth opposite its
respective name on Schedule A, attached hereto.

                                    ARTICLE 4

                                 OPTIONAL LOANS

      SECTION 4.1. OPTIONAL LOANS

      (a) If at any time additional funds are required by the Partnership to
cover operating deficits or other cash needs of the Partnership, the General
Partner shall notify the Partners in writing of the need for the Partners to
loan funds to the Partnership (any loans made pursuant to this Section 4.1 are
hereinafter singularly called an "Optional Loan" and collectively called the
"Optional Loans". Such notice shall set forth the reason for such needed funds,
the total amount of money needed, each Partner's prorate share of the Optional
Loan and the due date thereof, which shall be within ten (10) business days of
the written notice.

                                      -8-



      (b) In addition, if a Partner or Affiliate of a Partner makes payment
directly to a creditor or another Partner in satisfaction of any indebtedness of
the Partnership pursuant to a guaranty, indemnity or otherwise, or if any
collateral interest given by a Partner or Affiliate of a Partner to such
creditor to secure the Partnership debt shall be foreclosed and the proceeds
applied to such debt, then in any such case, the Partner making such payment or
suffering such foreclosure (or whose Affiliate made payment or suffered the
foreclosure) shall be deemed to have made an Optional Loan to the Partnership in
the amount of the debt paid or value of the property foreclosed.

      (c) Each Optional Loan shall bear interest at the rate of ten percent
(10%) per annum, shall only be payable from the gross revenues received by the
Partnership from the ownership, operation and sale of the Land, and shall be so
repaid before any distribution of Distributable Cash Flow.

      (d) Each Partner shall be obligated to loan to the Partnership its share
(which shall be prorata, based on Partnership Interests) of Optional Loan within
ten (10) business days of the date the General Partner gives notice of the need
therefor or the date on which a Partner is deemed to have made an Optional Loan
pursuant to subparagraph (b) hereof, as applicable. No Partner shall be
personally liable to the Partnership or the other Partners for any failure to
make its share of any Optional Loan. However, any Partner (a "Defaulting
Partner") who fails to loan its share of the Optional Loan shall be deemed in
default hereunder and the other Partners (the "Contributing Partners") shall
make a loan, prorata, on behalf of the Defaulting Partner and shall have the
rights set forth in this Section 4.1 as a consequence thereof. Upon the
occurrence of such default, the Defaulting Party shall no longer be entitled to
cast any vote or otherwise participate in the management or operation of the
Partnership until the amount of the such Defaulting Partner's share of the
Optional Loan, together with interest thereon at the rate of ten percent (10%)
per annum, has been repaid to the Contributing Partners or the Contributing
Partners may exercise the Option, as set forth in Section 7.4(b). Further, until
such time as such Defaulting Partner's share of the Optional Loan has been so
repaid, all distributions of Distributable Cash Flow or other sums which would
otherwise be made to the Defaulting Partner under this Agreement shall instead
be distributed to the Contributing Partners in repayment of the amount of the
Defaulting Partner's share of the Optional Loan plus interest thereon has been
fully paid to the Contributing Partners.

                                    ARTICLE 5

                RIGHTS, POWERS AND DUTIES OF THE GENERAL PARTNER

             SECTION 5.1. MANAGEMENT AND CONTROL OF THE PARTNERSHIP

      (a) The General Partner shall have all the rights, powers and obligations
of a general partner of a limited partnership under the Act. Except as otherwise
provided in subsections (b) and (c) of this Section, the General Partner shall
have the full and exclusive right to manage and control the business and affairs
of the Partnership and to make all decisions on behalf of the Partnership
(without the joinder or consent of any Limited Partner), including (but not
limited to) the following:

            (1) to acquire the Land and make improvements thereto;

                                     -9-



            (2) to sell, exchange, lease, sublease or otherwise transfer assets
of the Partnership in the ordinary course of business;

            (3) to hire and terminate Partnership employees, if any, and engage
the services of attorneys, consultants, accountants and other independent
contractors;

            (4) to collect all payments due and owing to the Partnership;

            (5) to incur and pay all expenses, debts and obligations of the
Partnership at such time or times; and from any source of funds of the
Partnership as the General Partner deem necessary or desirable;

            (6) to execute and deliver from time to time such documents on
behalf of the Partnership as the General Partner may deem necessary or desirable
in the conduct of Partnership business;

            (7)to perform, or cause to be performed, all the Partnership's
obligations under any agreement to which the Partnership or any nominee of the
Partnership is a party;

            (8)to obtain and maintain any and all types of insurance coverage
on the assets and business of the Partnership and to protect the General Partner
and the Partnership against liability from third parties in such amounts as the
General Partner may deem necessary or desirable;

            (9) to institute, prosecute, defend and settle any legal,
arbitration or administrative actions or proceedings on behalf of or against the
Partnership;

            (10) to pay all taxes, assessments, and other impositions applicable
to Partnership assets and undertake when appropriate any action or proceeding
seeking to reduce such taxes, assessments or other impositions;

            (11) to open and maintain bank accounts for the deposit of
Partnership funds, with withdrawals to be made upon the signature of the Manager
of the General Partner and one representative of one of the members of the
General Partner;

            (12) to make such elections as are necessary or desirable pursuant
to the Code;

            (13) to act as "tax matters partner" for the Partnership in any
Internal Revenue Service administrative proceeding in accordance with and to the
extent allowable by the applicable provisions of the Code; and

            (14) to perform any and all acts, deemed by the General Partner as
necessary or desirable to conduct the business and affairs of the Partnership.

      Except as provided hereinabove, the General Partner shall not be entitled
to any fee or compensation for its services hereunder. The General Partner may
be removed, with or without cause, at any time by the unanimous vote of the
Limited Partners. Upon removal of the General Partner, the former General
Partner shall hold its Partnership Interest as and become a Limited

                                     -10-



Partner and a successor General Partner shall be selected by a Majority Interest
of the Limited Partners.

      (b) Without the consent of a Majority Interest of the Partners, the
General Partner shall not have the power or authority to take any action on
behalf of the Partnership with respect to the following:

            (1) the sale, exchange or other disposition of all or substantially
all of the Property, except in accordance with the approved Budget;

            (2) to make any expenditure or incur any obligation on behalf of the
Partnership except for expenditures and obligations incurred in accordance with
the Budget;

            (3) to borrow money on behalf of the Partnership other than the
Optional Loans and ordinary trade debt or obligations reflected in the Budget;

            (4) to mortgage, pledge, assign, encumber or grant security
interests in Partnership assets, revenues or incomes;

            (5) to dissolve and wind up the Partnership;

            (6) to permit any Partner to make a loan to the Partnership other
than the Optional Loans (for purposes hereof, funds expended by the General
Partner for which it is entitled to reimbursement under Section 5.3 here of
shall not be considered a loan to the Partnership);

            (7) to admit any new Partner to the Partnership;

            (8) to do any act in contravention of this Agreement;

            (9) to do any act that would make it impossible to carry out the
purposes and business of the Partnership, as set forth in Section 2.3;

            (10) to confess a judgment against the Partnership, except in
connection with the execution of mortgages and other security instruments;

            (11 to possess Partnership property, or assign, pledge or
hypothecate Partnership property, for other than a Partnership purpose;

            (12) as "Tax Matters Partner", (or its equivalent under state law),
to conclude a settlement or agreements extending the Statute of limitations
binding on the Partnership or any Partner with the Internal Revenue Service (or
any state taxing authority); or

            (13) subject to the provision of Section 6.1 hereof, determine the
amount of Distributable Cash Flow and the timing of a distribution thereof to
the Partners.

                                      -11-



      SECTION 5.2. AUTHORITY OF THE GENERAL PARTNER

      Any person dealing with the Partnership or the General Partner may rely
upon a certificate signed by the General Partner concerning:

            (a) the identity of the General Partner or any other Partner;

            (b) the existence or nonexistence any fact that may constitute
conditions precedent to acts by the General Partner or in any other manner
germane to the affairs of the Partnership;

            (c) any person who is authorized to execute and deliver any
instrument or document of the Partnership; or

            (d) any act or failure to act by the Partnership or concerning any
other matter whatsoever involving the Partnership or any Partner.

      SECTION 5.3. FEES AND OTHER COMPENSATION

      The General Partner shall not be entitled to receive any fees, salary or
other compensation for services rendered in managing the business and affairs of
the Partnership. The General Partner shall be entitled to reimbursement by the
Partnership from time to time for all reasonable and necessary out of
pocket-expenses (as determined by the Limited Partners) incurred by the General
Partner in connection with the management and supervision of the business and
affairs of the Partnership.

      SECTION 5.4. DEVOTION OF TIME

      The General Partner shall devote such time, services and efforts as may
be necessary for the proper furtherance, management, operation, maintenance and
care of the Partnership business and properties. The General Partner shall not
be required to devote its entire time to the business of the Partnership.

      SECTION 5.5. INDEMNIFICATION OF THE GENERAL PARTNER AND AFFILIATES

     (a)To the fullest extent allowed by the Act and other applicable law, the
General Partner shall not be liable, responsible or accountable in damages or
otherwise to the Limited Partners for, and the Partnership shall indemnify,
defend against and save harmless the General Partner, its officers, directors
and shareholders from, any expenses (including reasonable attorneys' fees and
court costs), liabilities, claims, causes of action, losses or damages incurred
by reason of any act or omission performed or omitted by the General Partner in
good faith on behalf of the Partnership or the Limited partners and within the
scope of the authority granted to the General Partner by this Agreement;
provided, however, that the indemnified party is not proven guilty of gross
negligence, fraud or willful misconduct with respect to such acts Or omissions.

     (b)The scope of the indemnification provided in this Section shall be
co-extensive with the provisions of Article 11 of the Act, and such provisions
of the Act are incorporated herein in their entirety. The satisfaction of any
indemnification under this Section shall be from and limited to

                                      -12-



Partnership assets, including insurance proceeds, if any, and the Limited
Partners shall not have any personal liability on account thereof.

      SECTION 5.6. NO MANAGEMENT BY LIMITED PARTNERS

      No Limited Partner shall participate in the management or business of the
Partnership, use its name in the Partnership's business or perform any actions
prohibited to limited partners under the laws of the State of Texas or the laws
of any other jurisdiction where the Partnership is qualified to conduct
business. The Limited Partners shall not have the power to represent, act for,
sign for or bind the General Partner or the Partnership.

      SECTION 5.7. TRANSACTIONS WITH RELATED PARTIES

      Except as otherwise set forth in this Agreement, the General Partner may
agree, contract or arrange with any of its respective Affiliates in the name and
on behalf of the Partnership, for the performance of services for the,
Partnership, and the payment of compensation therefore, in carrying out the
business of the Partnership as if such parties were independent contractors,
provided that the compensation for such services shall be (a) at rates
Comparable to the charges made to third parties for rendering comparable
services in the geographical area where such services are performed, (b) paid
only for actual services rendered to the Partnership, (c) otherwise normal or
justifiable, and (d) within the Budget.

      SECTION 5.8. RIGHTS OF COMPETITION

      Each Partner, in its individual capacity or otherwise, and its officers,
directors and shareholders shall be free to engage in, conduct or participate
in any business or activity whatsoever, including, without limitation, the
acquisition, development, management, and exploitation of real property, without
any accountability, liability, or obligation whatsoever to the Partnership or to
any other Partner, even if such business or activity competes with, directly or
indirectly, or is enhanced in any way by the business or affairs of the
Partnership. In furtherance thereof, the Partners hereby agree that any business
or activity in which a Partner engages, conducts or participates outside the
Partnership shall be conclusively deemed not to be a business or activity in
competition with or an opportunity of the Partnership. Any such business or
activity of a Partner may be undertaken with or without notice to or
participation therein by the other Partners. Each Partner and the Partnership
hereby waive any right or claim he or it may have against the other Partners
with respect to any such business or activity or the income or Profits
therefrom.

      SECTION 5.9. BUDGET

     On or prior to November 1 of each calendar year during the term hereof, the
General Partner shall prepare and submit to the other Partners a proposed budget
for the then upcoming calendar year, which proposed budget shall set forth the
expected expenditures and revenues for the Partnership for the upcoming calendar
year. When approved by a Majority Interest of the Partners, if ever, the same
shall constitute the Budget for the year to which it relates. The Partners shall
meet after receipt of such proposed budget and approve or disapprove the same
before December 1 of each calendar year. Pending approval of a budget for any
calendar year, the Budget from the preceding

                                      -13-


calendar year shall control; provided, however, line items for such matters such
as ad valorem taxes, utilities and debt service shall automatically be adjusted
to meet the actual cost of such items.

                                    ARTICLE 6

                         ALLOCATIONS AND DISTRIBUTIONS

      SECTION 6.1. DISTRIBUTIONS

      Except as otherwise provided in Section 9.2 regarding liquidation
proceeds, Distributable Cash Flow, to the extent distributed (which in no case
shall be made until all Optional Loans, if any, have been fully paid and
satisfied), shall be distributed to the Partners as follows:

      (a) First, to all Partners, prorata based upon the positive balances in
their respective capital accounts, until such time as each Partner has received
a return in full of its Net Capital Contributions; and

      (b) Second, any remaining balance shall be distributed to the Partners,
prorata, in accordance with their respective Partnership Interests.

      SECTION 6.2. PROFITS, LOSSES AND ALLOCATION RULES

      (a) The following rules will apply to the calculation and allocation of
Profits, Losses and other items:

            (1) Except as otherwise provided in the Agreement, all Profits,
Losses and other items allocated to the Partners will be allocated among them in
proportion to their Partnership Interests.

            (2) For purposes of determining the Profits, Losses or any other
item allocable to any period, Profits, Losses and other items will be determined
on a daily, monthly or other basis, as determined by the General Partner using
any permissible method under Code Section 706 and the related Treasury
Regulations.

            (3) Except as otherwise provided in this Agreement, all items of
Partnership income, gain, loss, deduction, credit and other allocations note
provided for in this Agreement will be divided among the Partners in the same
proportions as they share Profits and Losses.

      (b) The Partners agree to be bound by the provisions of this Section in
reporting their shares of Partnership income and loss for income tax purposes.

      SECTION 6.3. COMPLIANCE WITH CODE

      The foregoing provisions of this Article relating to the allocation of
Profits, Losses and other items for federal income tax purposes are intended to
comply with Treasury Regulations Sections 1.704-1(b) and 1.704-2, and shall be
interpreted and applied in a manner consistent with such

                                      - 14 -



Treasury Regulations. Notwithstanding anything to the contrary, nothing in this
Article shall apply if it lacks "economic effect."

      SECTION 6.4. ALLOCATIONS UPON TRANSFER OF PARTNERSHIP INTEREST

      Profits or Losses attributable to any partnership Interest which has been
transferred during any Partnership fiscal year shall be allocated between the
transferor and the transferee as follows:

      (a) To the transferor for the months of the fiscal year prior to the
transfer.

      (b) To the transferee for the months of the fiscal year subsequent to the
transfer.

      (c) To the transferee for the month of the transfer if the transfer occurs
on or before the 15th day of such month and to the transferor if occurring after
the 15th day.

                                    ARTICLE 7

                               CHANGES IN PARTNERS

      SECTION 7.1. TRANSFER OF PARTNERSHIP INTEREST

      (a) Without the consent of all of the other Partners, no Partner shall
voluntarily retire or withdraw from the Partnership or voluntarily sell, assign,
transfer, give, pledge, encumber or otherwise dispose of all or any Part of its
record or beneficial interest in the Partnership to any person. Any transfer
prohibited hereunder shall be null and void and of no force or effect, and such
transfer shall not be recognized by the Partnership.

      (b) In the event that any permitted transfer or assignment of a
Partnership Interest is made pursuant to this Article, the Partner making such
transfer making such transfer or assignment shall be and remain personally
liable to the Partnership and the other Partners for its share of the debts of
the Partnership and the performance of all its obligations under this Agreement
accrued as of the date of transfer.

      (c) Upon the death, dissolution legal incapacity capacity or bankruptcy of
a Limited Partner, its personal representative shall have all the rights of
Limited Partner for the purpose of settling or managing its estate and such
power as the Limited Partner possessed to assign all or any part of its
Partnership Interest. The death, dissolution, legal incapacity or bankruptcy of
a Limited Partner shall not dissolve the Partnership. No assignee of the
interest of a Partner may become a substituted Partner except as otherwise
provided herein.

      SECTION 7.2. GENERAL CONDITIONS

      (a) All costs and expenses incurred by the Partnership in connection with
any permitted disposition of a Partnership Interest pursuant to this Article and
the admission or substitution of another person as a Partner in respect of such
Partnership Interest, including any filing, recording and publishing costs and
fees and disbursements of counsel, shall be paid by the Partner disposing of
such Partnership Interest.

                                     - 15 -


      (b) No Partner shall have the right to substitute in its place a
purchaser, assignee, transferee, donee, heir, legatee, or other recipient of all
or any portion of the Partnership Interest of such Partner. Any such purchaser,
assignee, transferee, donee, legatee, distributee or other recipient of an
interest shall be admitted to the Partnership as a substituted Partner only with
the consent of the General Partner and a Majority Interest of the Limited
Partners, which consent may be granted or withheld by any Partner.

      (c) No person shall become a substituted Partner until such person has
satisfied the requirements of this Article 7; provided, however, that for the
purpose of allocating Profits, Losses and other items and distributing cash
available for distribution, a person a person shall be treated as having become,
and as appearing in the records of the Partnership as, a Partner, as the case
may be, on such date as the sale, assignment or transfer to such person was
recognized by the Partnership pursuant to Section 7.3.

      (d) At the request of a substituted Partner, the General Partner may, at
its option, file on behalf of the Partnership an election under Code Section 754
permitting adjustments to tax basis as provided in Code Sections 734 and 743.

      SECTION 7.3. ASSIGNEES

      (a) The Partnership shall not recognize for any purpose any purported
sale, assignment or transfer of all or any fraction of the interest of a Partner
unless the provisions of this Article 7 have been satisfied, all costs of such
assignment have been paid by the assigning Partner, such sale, assignment or
transfer is exempt from registration under the Securities Act of 1933, as
amended, the Texas Securities Act, as amended, and the securities act of any
other state and there is delivered to the General Partner an opinion of counsel
reasonably satisfactory to the General Partner with respect thereto, and there
is filed with the Partnership a written and dated notification of such sale,
assignment or transfer, in form satisfactory to the General Partner, executed
and acknowledged by both the seller, assignor or transferor and the purchaser,
assignee or transferee and such notification (1) contains the acceptance by the
purchaser assignee or transferee of and agreement to be bound by all the terms
and provisions of this Agreement and (2) represents that such sale, assignment
or transfer was made in accordance with all applicable securities laws and
regulations (including suitability standards). Any sale, assignment or transfer
shall be recognized by the Partnership as effective on the date of such
notification if the date of such notification is within fifteen (15) days of the
date on which such notification is filed with the Partnership, and otherwise
shall be recognized as effective on the date such notification is filed with the
Partnership.

      (b) Any Partner who assigns all its interest in the Partnership shall
cease to be a Partner, except that, unless and until a substituted Partner has
been admitted into the Partnership, such assigning Partner shall retain the
statutory rights of the assignor of a partner's interest under the Act.

      (c) A person who is the assignee of all or any fraction of the interest of
a Partner, but does not become a substituted Partner, and desires to make a
further assignment of such interest, shall be subject to all the provisions of
this Article to the same extent and in the same manner as any Partner desiring
to make an assignment of its interest.

                                     - 16 -


      SECTION 7.4. MUTUAL BUY-OUT PROVISIONS

      Notwithstanding anything contained in this Agreement to the contrary, the
following provisions shall be applicable to the Partners:

      (a) Right of First Refusal. (1) In the event a Partner shall desire to
sell all of its Partnership Interest to any third party, it must receive a bona
fide written offer therefor which is acceptable to it and which offer complies
with the provisions below, and such Partner shall, within five(5) days of
receipt of the proposed offer, give the written Notice of Sale to the
non-selling Partners; The Notice of Sale shall state that a bona fide offer has
been received by the selling Partner from such third party, shall contain the
price, terms and conditions of sale and the name and address of the third party
to whom such property is proposed to be sold, and shall be accompanied by a copy
of the written offer from the third party and a written offer by the selling
partner to sell such Partner's Partnership Interest to the non-selling Partners
for the same consideration and upon the same terms and conditions as are set
forth in the third party offer.

            (2) The non-selling Partners shall have the option ("Right of First
Refusal"), on a pro-rata basis for a period of fifteen (15) days from the date
such Notice of Sale is provided to them (the "Right of First Refusal Periods"),
within which to exercise the Right of First Refusal to purchase the Partnership
Interest of the selling Partner by notifying of such election in writing prior
to the expiration of the Right of Refusal Period. If the non-selling Partners
exercise such Right of First Refusal, the proposed purchase price shall be
payable at the scheduled closing date in the same manner as is set forth in the
third party offer.

            (3) If some but not all of the non-selling Partners timely exercise
the-Right of First Refusal, the non-selling Partner(s) so initially exercising
shall have an additional period of ten (10) days within which to exercise the
Right of First Refusal to purchase the balance of the Partnership Interest of
the selling Partner.

            (4) In the event the non-selling Partner(s) reject or do not
exercise the Right of First Refusal to purchase all of the selling partner's
Partnership Interest which is the subject of the third party offer on the same
terms as such third party offer, the none-selling Partner(s) shall not have the
right-to purchase such portion of the selling Partner's Partnership Interest,
and the selling Partner  shall have the right to sell its Partnership Interest
strictly in accordance with the terms of the Notice of Sale provided, however,
the selling Partner and the third party making the third party offer must
first comply with all other provisions of this Agreement as to transfers,
including the unanimous consent of all Partners to the sale (and admission of
transferee as a Partner, if requested), the Partnership Interest sold shall
continue to be subject to the terms and provisions of this Agreement and the
purchasing third party shall be required prior to closing, to acknowledge the
same in writing.

            (5) If no such sale is made within one hundred twenty (120) days
following expiration of the Right of First Refusal Period, the Right of First
Refusal provided herein shall be reinstated with respect to such Partner's
Partnership Interest and a new Notice of Sale shall be required in the manner
provided hereinbefore.

            (6) It is expressly agreed that the remedy at law for breach of any
of the obligations set forth in this Section 7.4(a) is inadequate in view of (i)
the complexities and

                                     - 17 -



uncertainties in measuring the actual damages that would be sustained by reason
of the failure of a Partner to comply fully with each of the obligations
contained herein, and (ii) the uniqueness of the Partnership Interests and the
development relationship created hereby. Accordingly, each of the aforesaid
obligations shall be, and is hereby expressly made, enforceable by specific
performance or injunction in addition to any other remedy available at law or in
equity.

            (7) Any third party offer shall comply with the following
requirements:

               (i) The proposed offer shall include an offer to buy the entire
      selling Partner's Partnership Interest, including all of the rights of
      Partner, under this Agreement and the Development Agreement, including the
      right and obligation to purchase Lots pursuant to any Lot Purchase
      Contract executed by and between that Partner and the Partnership.

               (ii) The proposed purchase price for the Partnership Interest
      shall be payable solely in lawful money of the United States and shall be
      payable in its entirety in cash.

               (iii) The offer shall contain provisions whereby the proposed
      purchaser is obligated to comply with the provisions of this Agreement and
      the Development Agreement, at and after closing.

               (iv) The offer shall be by a principal, identified in the offer,
      and not an agent acting on behalf of an undisclosed principal, and such
      principal shall not be an Affiliate of the selling Partner.

               (v) The offer shall be accompanied by a certified check of the
      prospective purchaser for a sum equal to at least five percent (5%) of the
      proposed purchase price.

               (vi) The prospective purchaser shall be of good business
      character and reputation and shall be financially capable of carrying out
      all obligations of the selling Partner under this Agreement and all
      related agreements.

            (8) Notwithstanding anything to the contrary contained in this
Section 7.4(a), a non-selling Partner who has committed an event of default
under this Agreement which is still continuing shall not be entitled to exercise
its right to purchase any portion of the selling Partner's Partnership Interest
offered for sale hereunder.

            (9) There shall be no sale concluded to a third party of less than
100% of a Partner's Partnership Interest.

      (b) Option. Each Partner hereby grants each of the other Partners the
right (the "Option") to acquire such Partner's entire Partnership Interest on a
pro-rata basis, whenever this Agreement specifically references the availability
of the Option, as set forth in Section 4.1(d) hereof, upon the following terms
and conditions.

                                     - 18 -



            (1) The electing Partner may exercise the Option at any time by
delivering written notice to the other Partner(s) or its/their legal
representatives setting forth the electing Partner's intention to effectuate the
Option. The closing of the transaction provided in this Section 7.4(b) shall
occur on the date which is the later of (i) ninety (90) days after delivery of
the electing Partner's written notice, or (ii) thirty (30) days after the
determination of the purchase price.

            (2) The Option shall be available only to Partners who have not
committed an event of default, uncured at the time of attempted exercise, under
this Agreement and who are current in their obligations for Lot take downs under
their Lot Purchase Contracts with the Partnership, if any.

            (3) If the non - electing Partner is in default hereunder, then the
purchase price for said Partner's Partnership Interest shall be the product of
(i) the defaulting Partner's Capital Account, multiplied by (ii) eighty five
percent (85%). The purchase price shall be paid at the closing of the
acquisition of the non-electing Partner's Partnership interest.

            (4) If the non - electing Partner is not in default hereunder, then
the electing Partner shall specify in its notice a closing date and purchase
price which the electing Partner is willing to pay for the non-electing
Partner's Partnership Interest. The non-electing Partner shall have thirty (30)
days (the "Option Period") within which to elect in writing either to (i) sell
its Partnership Interest to the electing Partner for the purchase price and on
the closing date contained in the electing Partner's notice, or (ii) purchase
the electing Partners partnership in the Partnership on the closing date and for
the purchase price (adjusted on a pro rata basis as applicable, to reflect the
size of the electing Partner's Partnership Interest), contained in the electing
Partner's notice. If no election is delivered to or received by the electing
Partner within the Option Period, then the non-electing Partner shall be deemed
to have elected to sell its Partnership Interest to the electing Partner.

            (5) At the closing, each of the Partners shall execute and deliver
all documents necessary or appropriate to effectuate and evidence the transfers
described herein. Without limiting the foregoing, each Partner grants to the
other partners an irrevocable power of attorney, coupled with an interest, to
execute and deliver such documents to consummate the transactions described
herein.

            (6) The purchase of any Partnership Interest sold pursuant to the
exercise of the Option contained in this Section 7.4 (b) shall include the sale
of all of the selling Partner's rights under this Agreement and the Development
Agreement, specifically including an assignment of the right to purchase any
Lots to which the non-electing Partner is then entitled under any Lot Purchase
Contract executed by and between that Partner and the Partnership.

                                     - 19 -


                                    ARTICLE 8

                          BOOKS AND RECORDS: ACCOUNTING

      SECTION 8.1. BOOKS AND RECORDS

      The books and records of the Partnership shall be maintained by the
General Partner at the principal office of the Partnership and shall be
available for examination at such office by any Partner or its duly authorized
representatives during regular business hours. Any Partner, at its own expense,
may cause audit of the books and records of the Partnership during regular
business hours and shall furnish a written report thereof to the other Partners.

      SECTION 8.2. ACCOUNTING BASIS FOR TAX REPORTING PURPOSES; FISCAL YEAR

      The books and records of the Partnership shall be kept on a cash basis
acceptable for income tax reporting purposes. The fiscal year of the Partnership
shall be the calendar year.

      SECTION 8.3. REPORTS

      (a) Within 10 days after the end of each month, the General Partner shall
cause the Partnership to send to each Partner a balance sheet and a profit and
loss statement for the month then ended (which financial statements need not be
audited), and a comparison of expenditures and revenues to date compared with
the amount budgeted therefor in the Budget.

      (b) Within 90 days after the end of each fiscal year, the General Partner
shall cause the Partnership to send to each Partner (a) a balance sheet and
profit and loss statement (including a statement of sources and uses of cash)
for the fiscal year that ended (which financial statements need not be audited);
(b) such tax information as shall be necessary for the preparation by each
partner of his federal and state income tax return, together with a copy of the
Partnership tax return; and (c) a report of the activities of the Partnership
during the fiscal year then ended and such other matters as the General Partner
may deem material to the operations of the Partnership.

      (c)Within ten (10) days after the end of each month, the General Partner
shall send to each Partner a sales report reflecting the sales of lots and/or
reserves during that particular calendar month.

                                    ARTICLE 9

                          DISSOLUTION, LIQUIDATION AND
                         TERMINATION OF THE PARTNERSHIP

      SECTION 9.1. EVENTS CAUSING DISSOLUTION

      (a) Except as otherwise permitted by this Agreement, each Partner hereby
waives any right it may have to cause a dissolution of the Partnership. The
Partnership shall be dissolved upon the happening of any of the following
events:

                                      -20-



            (1) the expiration of its term;

            (2) the withdrawal, dissolution, bankruptcy, or legal incapacity of
the General Partner or other event of withdrawal of the General Partner under
Section 4.02(a) of the Act, subject, however, to the right of the Limited
Partners to designate a new General Partner and continues the business of the
Partnership in accordance with the Act;

            (3) the bankruptcy of the Partnership;

            (4) the sale or other disposition for cash of all or substantially
all the assets of the Partnership;

            (5) the election to dissolve the Partnership by a Majority Interest
of the Partners; or

            (6) any other event causing a dissolution of the Partnership under
this Agreement.

      (b) Dissolution of the Partnership shall be effective as of the day on
which the event occurs giving rise to the dissolution, but the Partnership shall
not terminate until there has been a winding up of the Partnership's business
and affairs, and the assets of the Partnership have been distributed as provided
in Section 9.2.

      SECTION 9.2. LIQUIDATION

      (a) Upon dissolution of the Partnership, unless the Limited Partners elect
to continue the business of the Partnership as specified in Section 9.1(a)(2)
above, the General Partner shall have the sole power and authority to wind up
and terminate the business and affairs of the Partnership, but its authority
shall be limited as set forth in Section 5.1(b) above. In the event that the
General Partner has dissolved, withdrawn or become bankrupt or legally
incapacitated, a Majority Interest of the Limited Partners may select, within 30
days after any such occurrence, a person to perform the functions of the General
Partner in liquidating the assets of me Partnership and winding up its affairs.

      (b) In the course of winding up and terminating the business and affairs
of the Partnership, the General Partner (or liquidator, as the case may be) may
cause any part or all of the Partnership assets to be sold in such manner as it
may determine, in its sole discretion, in an effort to obtain the best prices
for such assets (provided, however that the General Partner or liquidator, as
the case may be, may distribute Partnership assets in kind to the Partners to
the extent practicable). During the liquidation period, the General Partner (or
liquidator, as the case may be) shall have the right to continue to operate and
otherwise to deal with Partnership Property.

      (c) The General Partner or liquidator, as the case may be, shall use all
reasonable efforts to complete the liquidation of the Partnership as soon as
Practical. After making payment, or provision for payment, of all debts and
liabilities of the Partnership and all expenses of liquidation, the General
Partner or the liquidator, as the case may be, may create a cash reserve in an
amount it deems reasonably necessary or advisable for any contingent or
unforeseen liabilities of the Partnership.

      (d) Upon completion of the liquidation of the Partnership and the
distribution of all Partnership funds, the Partnership shall terminate and the
General Partner (or liquidator, as the case

                                      -21-


may be) shall have the authority to execute and record all documents required to
dissolve and terminate the Partnership. Within a reasonable time following the
completion of the liquidation, the General Partner (or liquidator, as the case
may be)shall deliver to each Partner a final statement (which need not be
audited) setting forth(1) any remaining assets and liabilities of the
Partnership as of the date of the complete liquidation, (2) each Partner's share
of the distributions made pursuant to this Section and (3) the amount, if any,
retained as reserve for any contingent or unforeseen liabilities of the
Partnership. Each Partner shall look solely to the assets of the Partnership for
any distributions to which it may be entitled and shall have no recourse upon
dissolution or otherwise against the Partnership, the General Partner or the
liquidator.

      (e) In settling accounts after dissolution, the assets of the Partnership
shall be paid or distributed in the following order:

            (1) To the third party creditors, in order of priority as provided
by law;

            (2) then, to the Partners for any unreimbursed costs and expenses
owing to the Partners pursuant to this Agreement;

            (3) then, to the repayment of any loans, with interest, made by any
Partner to the Partnership, and if more than one Partner has any outstanding
loans owing from the Partnership, such repayment shall be made prorata in
accordance with the total amount outstanding to each Partner;

            (4) then, an amount equal to the then remaining positive balances in
the capital accounts of the Partners shall be distributed to the Partners in
proportion to the amount of such balance;

            (5) then, any remainder shall be distributed to the Partners
prorata, in accordance with their respective Partnership Interests.

      SECTION 9.3. DISTRIBUTIONS IN KIND

      If any assets of the Partnership are distributed in kind pursuant to this
Agreement, such assets shall be distributed to the Partners entitled thereto as
tenants-in-common in the same proportions as the Partners would have been
entitled to cash distributions if such Property had been sold for cash and the
net proceeds thereof distributed to the Partners. In the event that
distributions in kind are made to the Partners upon dissolution and liquidation
of the Partnership, the capital account balances of such Partners shall be
adjusted to reflect the Partners allocable share of gain or loss which would
have resulted if the distributed Property had been sold at its fair market
value.

                                      -22-


                                   ARTICLE 10

                   REPRESENTATIONS AND WARRANTIES OF PARTNERS

      SECTION 10.1. AEQUISITION OF INTEREST FOR INVESTMENT

      Each Partner hereby represents and warrants to the Partnership and the
other Partner that the acquisition of its Partnership Interest is made for its
own account for investment purposes only and not with a view toward the resale
or distribution of such Partnership Interest. Each Partner represents that it is
not acquiring its Partnership Interest with the present intention of reselling,
transferring or otherwise subdividing all or any portion of its Partnership
Interest and presently intends to hold its Partnership Interest during the
stated term of the Partnership.

      SECTION 10.2. TRANSFER OF PARTNERSHIP INTEREST

      Each Partner hereby represents and warrants to the Partnership and the
other Partner that it will not sell, assign or otherwise transfer its
Partnership Interest or any fraction thereof unless the Partnership Interest has
been registered under the Securities Act of 1933, as amended, or under any
applicable state securities laws, or such sale, assignment or transfer is exempt
from such registration and, in any event, it will not so sell, assign or
otherwise transfer its Partnership Interest or any fraction thereof to any
person who does not similarly represents, warrant and agree.

      SECTION 10.3. ACCESS TO INFORMATION

      Each Partner hereby represents and warrants to the Partnership and the
other Partner that it has been afforded access to all books, records and
premises of the Partnership and has examined the same or caused the same to be
examined by its reprehensive to the extent it deems necessary or appropriate.
Each Partner warrants and represents that it does not desire any further
information concerning the Partnership or its contemplated purposes and
business.

      SECTION 10.4. INVESTMENT EXPERIENCE

      Each Partner hereby represents and warrants to the Partnership and the
other Partner that it is experienced and knowledgeable in business and financial
matters in general and in real estate investments in particular and it is
capable of evaluating the merits and risk of the activities contemplated by the
Partnership. Each Partner further represents and warrants that it can afford to
bear the economic risk of its investment in the Partnership.

                                   ARTICLE 11

                            MISCELLANEOUS PROVISIONS

      SECTION 11.1. ADDRESS FOR NOTICES.

      All notices, demands, consents and reports provided for in this Agreement
shall be in writing and shall be given to the parties at the addresses set forth
herein or at such other addresses as the

                                      -23-

Partner may hereafter specify in writing. Such notices may be delivered by
hand, by telecopy or telegram or may be mailed, postage prepaid, by certified or
registered mail, by a deposit in a depository for the receipt of mail regularly
maintained by the United States Postal Service. All notices which are hand
delivered in the manner provided above shall be deemed received on the date of
delivery at the address of the addressee. All notices which are mailed in the
manner provided above shall be deemed effective five days after being mailed.

            If to General Partner:

                  G. P. Navo South, L.L.C.
                  12890 Hillcrest Road, Suite 103
                  Dallas, Texas 75230
                  Attention: John. A. Baker
                  Telephone: (972) 387-9200
                  Facsimile: (972) 387-9313

            If to Ashton Woods Homes:

                  Ashton Dallas Residential, L.L.C.
                  13800 Montfort Drive
                  Suite 100
                  Dallas, Texas 75240
                  Attention: David Rexroat
                  Telephone: (972) 490-3255 Ext. 104
                  Facsimile: (972) 991-4949

            With a copy to:

                  Ashton Woods Homes
                  1080 Holcomb Bridge Road,
                  Building 200, Suite 350
                  Roswell, Georgia 30076
                  Attention: Tom Krobot
                  Telephone: (770) 998-9663
                  Facsimile: (770) 998-7494

            And to:

                  Tim Hagen, Esq.
                  14643 Dallas Parkway, Suite 570
                  Dallas, Texas 75254
                  Telephone: (972) 386-0041
                  Facsimile: (972) 386-0443

                                      -24-


            If to Horizon Homes:

                  Horizon Homes, Ltd.
                  l2850 Hillcrest Road, Suite 200
                  Dallas, Texas 75230
                  Attention: L.F. Van Landingham
                  Telephone: (972) 387-7905
                  Facsimile: (972) 385-0403

            With a copy to:

                  Richardson K. Anderson, Esq.
                  12850 Hillcrest Road, Suite 200
                  Dallas, Texas 75230
                  Telephone: (972) 789-3551
                  Facsimile: (972) 385-0403

            If to Priority Development:

                  Priority Development, L.P.
                  1111 North Post Oak Road
                  Houston, Texas 77055
                  Attention: James C. Alexander
                  Telephone: (713) 316-3344
                  Facsimile: (713) 621-4053

      SECTION 11.2. ADDITIONAL DOCUMENTS AND ACTS

      In connection with this Agreement, as well as all transactions
contemplated by this Agreement, the Partners agree to execute such additional
documents and papers, and to perform and do such additional acts as may be
necessary and proper to effectuate and carry out all of the provisions of this
Agreement.

      SECTION 11.3. ASSUMED NAME

      The General Partner shall execute and file all assumed name certificates
required by applicable law.

      SECTION 11.4. QUALIFICATION IN FOREIGN JURISDICTIONS

      The General Partner shall take such steps as are necessary or desirable to
allow the Partnership to conduct business in any jurisdiction where the Partners
desire for the Partnership to conduct its business.

                                      -25-


      SECTION 11.5. APPLICABLE LAW

      This Agreement and the rights of the Partners shall be governed by and
construed in accordance with the laws of the State of Texas. With respect to all
matters not expressly provided for in this Agreement, the Act and other
applicable partnership laws of the State of Texas shall apply and control. In
the event that any provision in this Agreement conflicts with the Act, such
provision in this Agreement shall control and govern to the extent permitted by
applicable law.

      SECTION 11.6. WAIVER OF ACTION FOR PARTITION BY PARTNERS

      Each Partner irrevocably waives during the term of the Partnership any
right which it may have to maintain any action for partition with respect to any
asset of the Partnership.

      SECTION 11.7. NUMBERS AND GENDER

      Where the context so indicates, the masculine shall include feminine and
neuter, and the neuter shall include the masculine and feminine, the singular
shall include the plural and any reference to a "person" shall mean a natural
person or a corporation, association, partnership, joint venture, estate, trust
or any other entity.

      SECTION 11.8. BINDING EFFECT

      Except as herein otherwise provided to the contrary, this agreement shall
be binding upon and inure to the benefit of the Partners, their distributee,
heirs, legal representatives, executors, administrators, successors and assigns.

      SECTION 11.09. ENTIRE AGREEMENT

      This Agreement constitutes all of the understandings and agreements of
whatsoever kind and nature existing between the Partners with respect to the
subject matter contained herein and supersedes all prior agreements and
undertakings with respect thereto.

      SECTION 11.10. PLACE OF PERFORMANCE

      The obligations of the parties hereto are performable in Denton County,
Texas.

      SECTION 11.11. AMENDMENT

      Except as otherwise expressly set forth in this Agreement, this Agreement
may be amended, supplemented or restated only upon the unanimous consent of the
Partners.

      SECTION 11.12. SEVERABILITY

      If any term or provision of this Agreement or the application thereof to
any person or circumstances shall, to any extent, be deemed invalid or
unenforceable, the remainder of this Agreement, or the application of such term
or provision to persons or circumstances other than those

                                      -26-


as to which it is held invalid or unenforceable, shall not be affected thereby
and shall be valid and enforced to the fullest extent permitted by applicable
law.

      SECTION 11.13. SECTIONS

      Unless the context requires otherwise, all references in this Agreement to
Sections or Articles shall be deemed to mean and refer to Sections or Articles
of this Agreement.

      SECTION 11.14. CAPTIONS

      The titles and captions contained herein are for convenience only and
shall not be deemed part of the context of this Agreement.

      SECTION 11.15. NO WAIVER

      No waiver, express or implied, by any Partner of any breach or default by
any other Partner in the performance by the other Partner of its obligations
hereunder shall be deemed or construed to be a waiver of any other breach or
default under this Agreement. Failure on the part of any Partner to complain of
any act or omission of any other Partner, or to declare such other Partner in
default irrespective of how long such failure continues, shall not constitute a
waiver hereunder. No notice to or demand on a defaulting Partner shall entitle
such defaulting Partner to any other or further notice or demand in similar or
other circumstances.

      SECTION 11.16. ADDITIONAL REMEDIES

      Unless the context requires otherwise, the rights and remedies of the
Partners hereunder shall not be mutually exclusive so that the exercise of one
or more of the provisions hereof shall not preclude the exercise of any other
provision hereof.

      SECTION 11.17. U.S. DOLLARS

      All references in this Agreement to dollar amounts shall refer to United
States currency.

      SECTION 11.18. COUNTERPARTS

      This Agreement may be executed in counterparts, each of which shall be
deemed to be an original and shall be binding upon the Partner who executed the
same, but all of such counterparts shall constitute one and the same agreement.

      SECTION 11.19. APPROVALS

      Except where otherwise indicated, all approval, consent and other similar
rights of the Partners or a Majority Interest of the Limited Partners or a
Majority Interest of the Partners pursuant to this Agreement may be exercised by
such parties, and such approvals and consents may be granted or denied by such
parties, provided however, that such approvals and consents are not to be
unreasonably withheld.

                                      -27-


      IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.

                                   GENERAL PARTNER:

                                   G.P. NAVO SOUTH, L.L.C.,
                                   a Texas limited liability company

                                   By: /s/ John A. Baker
                                       ---------------------------
                                       John A. Baker, Manager

                                   LIMITED PARTNERS:

                                   ASHTON DALLAS RESIDENTIAL, L.L.C.,
                                   a Texas  limited liability company

                                   By: /s/ ILLEGIBLE
                                       -----------------------
                                   Printed Name: ILLEGIBLE
                                   Title: ILLEGIBLE

                                   HORIZON HOMES, LTD.,
                                   a Texas limited partnership

                                   By: Horizon Homes Management, Inc.,
                                       a Texas corporation
                                   Its: General Partner

                                        By: /s/ L.F. VanLandingham
                                            ----------------------
                                            L.F. VanLandingham,
                                            Vice-President

                                   PRIORITY DEVELOPMENT, L.P.,
                                   a Delaware limited partnership

                                   By: /s/ JAMES C. ALEXANDER
                                       -----------------------
                                   Printed Name: JAMES C. ALEXANDER
                                   Title: CFO

                                      -28-

EX-10.5

                                                                    EXHIBIT 10.5

                                                                  EXECUTION COPY

                        AGREEMENT OF LIMITED PARTNERSHIP

                                       FOR

                              CL ASHTON WOODS, L.P.



                                TABLE OF CONTENTS

                                                                                         
ARTICLE I   DEFINITIONS                                                                      1
            Section 1.1    Definitions                                                       1
            Section 1.2    Terms Generally                                                  10
            Section 1.3    Other Definitions                                                10
            Section 1.4    Exhibits and Schedules                                           10

ARTICLE II  GENERAL PROVISIONS                                                              11
            Section 2.1    Formation of Partnership                                         11
            Section 2.2    Certificates                                                     11
            Section 2.3    Name                                                             11
            Section 2.4    Place; Registered Agent                                          11
            Section 2.5    Term                                                             11
            Section 2.6    Purposes of Partnership                                          11
            Section 2.7    Nature of Partnership Interests                                  12
            Section 2.8    Form of Entity; Limited Authority                                12
            Section 2.9    Other Activities                                                 13

ARTICLE III CAPITAL CONTRIBUTIONS; PERCENTAGE INTERESTS                                     13
            Section 3.1    Initial Capital Contributions                                    13
            Section 3.2    Additional Capital Contributions                                 13
            Section 3.3    Optional Loans                                                   15
            Section 3.4    Capital Calls                                                    16
            Section 3.5    Capital Accounts                                                 18
            Section 3.6    Rights of Creditors                                              18
            Section 3.7    Percentage Interests and Residual Interests                      19
            Section 3.8    Additions to and Withdrawal of Capital                           19
            Section 3.9    Financing                                                        19
            Section 3.10   Power of Attorney                                                19

ARTICLE IV  DISTRIBUTIONS AND ALLOCATIONS                                                   19
            Section 4.1    Allocation of Net Profit                                         19
            Section 4.2    Allocation of Net Loss                                           20
            Section 4.3    Net Loss Limitation                                              21
            Section 4.4    Intentions and Construction of Allocations                       21
            Section 4.5    Special Allocations                                              21
            Section 4.6    Curative Allocations                                             22
            Section 4.7    Other Allocation Rules                                           22
            Section 4.8    Tax Allocations                                                  23
            Section 4.9    Distributions of Net Receipts                                    23
            Section 4.10   Manner of Distribution                                           24

ARTICLE V   BOOKS OF ACCOUNT, ACCOUNTING AND REPORTS                                        24
            Section 5.1    Books and Records; Fiscal Year                                   24



                                      -i-



                                                                                         
             Section 5.2    Financial Statements and Reports                                 25
             Section 5.3    Tax Status and Returns                                           25
             Section 5.4    Bank Accounts                                                    25
             Section 5.5    Accounting, Bookkeeping, Personnel                               25
             Section 5.6    Designation of Tax Matters Partner                               25
             Section 5.7    Tax Elections                                                    26
             Section 5.8    Custody of Partnership Funds                                     26

ARTICLE VI   MANAGEMENT OF THE PARTNERSHIP                                                   26
             Section 6.1    Management                                                       26
             Section 6.2    Powers and Duties of the Managing Partner                        26
             Section 6.3    Insurance                                                        28
             Section 6.4    Employment of Others                                             28
             Section 6.5    Project Development Budget Updates                               29
             Section 6.6    Management Fee                                                   29
             Section 6.7    Licenses                                                         29
             Section 6.8    Indemnification                                                  29
             Section 6.9    Limitations on Power and Authority of the
                            Managing Partner                                                 30
             Section 6.10   Annual Business Plan                                             33
             Section 6.11   Management by Limited Partners Prohibited                        35
             Section 6.12   Inspection                                                       35
             Section 6.13   Consultations                                                    35
             Section 6.14   Compensation                                                     35
             Section 6.15   Removal of Managing Partner                                      36
             Section 6.16   Partner Meetings                                                 36

ARTICLE VII  REPRESENTATIONS, WARRANTIES AND COVENANTS                                       38
             Section 7.1    Representations, Warranties and Covenants                        38
             Section 7.2    Indemnity for Breach of Warranty                                 39
             Section 7.3    Scope of Authority                                               39

ARTICLE VIII CONTRACTS WITH RELATED PARTIES; ACQUISITION
             AND DEVELOPMENT OF THE PROPERTY                                                 40
             Section 8.1    Related Party Contracts                                          40
             Section 8.2    Acquisition of the Real Property                                 40

ARTICLE IX   BUY-SELL                                                                        40
             Section 9.1    Buy-Sell                                                         40

ARTICLE X    TRANSFER OF PARTNERSHIP INTEREST(S)                                             43
             Section 10.1   Transfer of Partnership Interest(s)s Held by the
                            General Partner                                                  43
             Section 10.2   Acquisition of Partnership hiterest(s) for
                            Investment                                                       43
             Section 10.3   Transfer of Partnership Interest(s) Held by any
                            Limited Partner                                                  44



                                      -ii-



                                                                                         
             Section 10.4    Incapacity of a Partner                                         44
             Section 10.5    Assignees                                                       45
             Section 10.6    Substituted Partner                                             45
             Section 10.7    Indirect Transfers                                              45

ARTICLE XI   DEFAULT                                                                         46
             Section 11.1    Events of Default                                               46
             Section 11.2    Elections of Non-Defaulting Partner                             47

ARTICLE XII  TERM; LIQUIDATION AND DISSOLUTION                                               49
             Section 12.1    Term                                                            49
             Section 12.2    Dissolution                                                     49
             Section 12.3    Liquidation and Distribution Procedure                          49

ARTICLE XIII ARBITRATION                                                                     51
             Section 13.1    Initiation                                                      51
             Section 13.2    Court Enforcement of Arbitration Award                          52
             Section 13.3    Consolidation Proceedings                                       52

ARTICLE XIV  GENERAL PROVISIONS                                                              52
             Section 14.1    Independent Parties                                             52
             Section 14.2    Counterparts                                                    52
             Section 14.3    Notices                                                         53
             Section 14.4    Effect and Interpretation                                       54
             Section 14.5    Severability                                                    54
             Section 14.6    Binding Upon Successors                                         54
             Section 14.7    Gender                                                          54
             Section 14.8    Headings                                                        54
             Section 14.9    Entire Agreement                                                54
             Section 14.10   Force Majeure                                                   54
             Section 14.11   Time                                                            55



Exhibits

Exhibit A  Property

Exhibit B  Development Budget

Exhibit C  Development Plan

Exhibit D  Lot Sale Contract

Exhibit E  Initial Annual Business Plan

Exhibit F  Initial Annual Budget

Exhibit G  Purchase Agreement

                                     -iii-



Schedules

Schedule 3.1 - Initial Capital Contributions

Schedule 3.2(a) - Partners' Total Project Cost Commitments

Schedule 6.15   - Minimum Sales Requirements

                                      -iv-



                      AGREEMENT OF LIMITED PARTNERSHIP FOR

                             CL ASHTON WOODS, L.P.

      THIS AGREEMENT OF LIMITED PARTNERSHIP FOR CL ASHTON WOODS, L.P. (the
"Agreement") is made and entered into to be effective as of March 10, 2005, by
and among CL TEXAS I, GP, LLC, a Georgia limited liability company, as a General
Partner ("CLGP"); CL TEXAS, L.P., a Texas limited partnership ("CL"), as a
Limited Partner; AW SOUTHERN TRAILS, INC., a Texas corporation ("Ashton Woods
GP"), as a General Partner; and ASHTON HOUSTON RESIDENTIAL L.L.C., a Texas
limited liability company ("Ashton Woods LP"), as a Limited Partner.

      The parties hereto desire to form a limited partnership under the laws of
the State of Texas, for the purposes and on the terms provided herein.

      NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements herein contained, the General Partner and Limited Partners do hereby
agree as follows:

                                    ARTICLE I
                                   DEFINITIONS

      SECTION 1.1 DEFINITIONS. The following terms, explanations and definitions
of words, phrases and clauses shall govern when the terms are used in this
Agreement unless the context thereof specifically indicates a different meaning:

      ACT means the Texas Revised Limited Partnership Act, as the same from time
to time has been or may be amended.

      ADDITIONAL CAPITAL CONTRIBUTIONS means the contributions to the capital of
the Partnership to be made by each of the Partners, as applicable, in accordance
with the provisions of Sections 3.2 and 3.4 of this Agreement.

      ADJUSTED CAPITAL ACCOUNT DEFICIT means, with respect to a Partner, the
deficit balance, if any, in that Partner's Capital Account as of the end of the
relevant Fiscal Year or other applicable period, after giving effect to the
following adjustments:

                  (a)The Capital Account will be increased by any amount that
  the Partner is obligated to restore, if any, including any amount such Partner
  is deemed to be obligated to restore under the penultimate sentence of
  Regulations Sections 1.704-2(g) (1) and 1.704-2(i)(5); and

                  (b)The Capital Account will be decreased by the items
  described in Regulations Sections 1.704-l(b)(2)(ii)(d)(4), (5) and (6).

This definition of Adjusted Capital Account Deficit is intended to comply with
the provisions of Regulations Section 1.704-l(b)(2)(ii)(d) and shall be
interpreted consistently with those provisions.



      AFFILIATE means, with respect to any Person, (a) any officer, director,
trustee, partner, employee or current holder of ten percent (10%) or more of any
class of the voting securities of or equity or profits interest in such Person;
(b) any corporation, partnership, trust, estate or other entity controlling,
controlled by or under common control with such Person; (c) any officer,
director, trustee, partner, employee or current holder of ten percent (10%) or
more of the outstanding voting securities of or equity or profits interest in
any corporation, partnership, trust or other entity controlling, controlled by
or under common control with such Person; and (d) any relative (within the third
degree of consanguinity) or spouse (or any relative within the third degree of
consanguinity of any such spouse) of any natural person included in clauses (a),
(b) or (c) above, or any trusts for the benefit of or entities controlled by or
under common control with any such relative or spouse. With regard to CL, for
purposes of clause (b) of the immediately preceding sentence, "Affiliate" shall
include Cousins Real Estate Corporation, a Georgia corporation, and Lumbermen's
Investment Corporation, a Texas corporation, or an Affiliate of either
corporation.

      AGREEMENT means this Agreement of Limited Partnership, as the same may be
amended from time to time.

      ANNUAL BUDGET means the annual budget for the Partnership prepared and
approved as part of the Annual Business Plan pursuant to Section 6.10 herein
which shall be comprised of: (A) an estimate of all receipts from and
expenditures for the ownership, management, development and sale of Lots for
each Fiscal Year (that are not detailed in the Development Budget) and (B) an
estimate of all capital expenditures with respect to the Project for any Fiscal
Year (that are not detailed in the Development Budget).

      ANNUAL BUSINESS PLAN means the annual business plan prepared by the
Managing Partner and Approved by the Partners in accordance with the provisions
of Section 6.10 of this Agreement. Each Annual Business Plan shall include the
Minimum Sales Requirements for such period.

      APPROVED BY THE PARTNERS or APPROVAL OF THE PARTNERS shall mean approved
by or approval of the General Partners and the holders of at least two-thirds
(66.67%) of the Percentage Interests, provided, however, except for the specific
matters described in Section 6.9(a), a Defaulting Partner shall not have a right
to approve any matter hereunder.

      ASHTON WOODS shall mean Ashton Houston Residential L.L.C., a Texas limited
liability company.

      ASHTON WOODS GP shall mean AW Southern Trails, Inc., a Texas corporation.
Ashton Woods GP's principal place of business is located at 11375 West Sam
Houston Parkway South, Suite 100, Houston, Texas 77031.

      ASHTON WOODS LP shall mean Ashton Houston Residential L.L.C. Ashton Woods
LP's principal place of business is located at 11375 West Sam Houston Parkway
South, Suite 100, Houston, Texas 77031.

      BANKRUPTCY or BANKRUPT means and/or refers to bankruptcy or insolvency, or
a bankruptcy or insolvency, reorganization, arrangement, liquidation or similar
proceeding under

                                       2


the laws of any jurisdiction, Federal or state, including, but not limited to, a
voluntary or involuntary petition under any bankruptcy or insolvency laws or
under the reorganization provisions of any law, the voluntary or involuntary
appointment of a receiver, the voluntary or involuntary assignment for the
benefit of creditors generally, or an admission in writing of the inability to
pay debts as they become due; provided, however, that, in the case of any
involuntary petition, appointment, assignment or similar involuntary proceeding,
such action shall not constitute a Bankruptcy and the party which is the object
of such action shall not be considered Bankrupt until ninety (90) days has
elapsed from the initiation of such action without the dismissal of such
involuntary proceeding.

      BUSINESS DAY shall mean any day except a Saturday, Sunday or any other day
in which commercial banks in Atlanta, Georgia are authorized or required by law
to close.

      CAPITAL ACCOUNT shall mean one of the individual capital accounts
maintained for each Partner in accordance with the terms of Section 3.5 of this
Agreement.

      CAPITAL CONTRIBUTION means, with respect to any Partner, the amount of
cash and the initial Gross Asset Value of any property (other than money)
contributed to the Partnership with respect to the interest in the Partnership
held by that Partner, net of liabilities encumbering such contributed property
that the Partnership is considered to assume or take subject to under Section
752 of the Code, including all Initial Capital Contributions and Additional
Capital Contributions. Any reference in this Agreement to the Capital
Contribution of a particular Partner will include a Capital Contribution made by
any prior Partner with respect to the Partnership Interest(s) of the applicable
Partner.

      CL shall mean CL Texas, L.P., a Texas limited partnership and a Limited
Partner in the Partnership. CL's principal office is located at 5495 Beltline
Road, Suite 225, Dallas, Texas 75254.

      CLGP shall mean CL Texas I GP, LLC, a Georgia limited liability company
and a General Partner in the Partnership. CLGP's principal office is located at
2500 Windy Ridge Parkway, Suite 1600, Atlanta, Georgia 30339

      CODE shall mean the Internal Revenue Code of 1986, as from time to time
amended, together with all regulations thereunder from time to time in effect.

      CONTRIBUTION LOAN shall have the meaning set forth in Section 3.4(c)
herein.

      DEFAULTING PARTNER shall have the meaning set forth in Section 11.1.

      DEPRECIATION means, for each Fiscal Year or other period, an amount equal
to the depreciation, amortization or other cost recovery deduction allowable
with respect to an asset for the year or other period, except that if the Gross
Asset Value of an asset differs from its adjusted basis for federal income tax
purposes at the beginning of the year or other period Depreciation will be an
amount which bears the same ratio to the initial Gross Asset Value as the
federal income tax depreciation, amortization or other cost recovery deduction
for the year or other period bears to the beginning adjusted tax basis (except
as required by Regulations Section 1.704-3(d)), provided that if the federal
income tax depreciation, amortization, or other cost

                                       3


recovery deduction for the year or other period is zero, Depreciation will be
determined with reference to the initial Gross Asset Value using any reasonable
method selected by the General Partners.

      DESIGNATED REPRESENTATIVE(s) shall mean Tom Krobot and Bob Salomon with
respect to Ashton Woods GP, and Bruce Smith, Michael Quinley and Craig Knight
with respect to CLGP. Any Designated Representative may be replaced or
additional Designated Representatives may be appointed by the applicable Partner
upon notice to the other Partners. In the event any Partner has more than one
(1) Designated Representative, the decision of any Designated Representative of
such Partner that is in writing signed by a Designated Representative of such
Partner or is reflected in the approved minutes of a meeting shall be binding on
the applicable Partner and the other Designated Representative(s) of such
Partner and may be relied on by the other Partners hereunder.

      DEVELOPER shall mean the "Development Manager" designated in the
Development Agreement.

      DEVELOPMENT AGREEMENT shall mean that certain Development Agreement made
and entered into by and between Aurous Development Services, Ltd., a Texas
limited partnership, and Ashton Southern Trails Joint Venture, a Texas joint
venture, as assigned by Ashton Southern Trails Joint Venture to the Partnership,
or otherwise as approved by the Partners.

      DEVELOPMENT BUDGET shall mean the budget of the anticipated Development
Costs for the Project attached hereto as Exhibit B and incorporated herein by
reference, as the same may be amended from time to time with the Approval of the
Partners.

      DEVELOPMENT COSTS shall mean all costs which have been or are estimated to
be incurred by the Partnership with respect to the acquisition, design,
development, construction, financing, and completion of the Project and the
marketing and sale of Lots, as set forth in the Development Budget.

      DEVELOPMENT PLAN shall mean Development Plan for the Project attached
hereto as Exhibit C and incorporated herein by reference, including the Plans
and Specifications and the Development Budget, as the same may be amended from
time to time with the Approval of the Partners.

      DUE DILIGENCE MATERIALS shall mean all studies, reports, tests, plans,
investigations, entitlements, surveys, permit and zoning applications and/or
approvals, and other due diligence and predevelopment documents, materials and
applications which relate to the Project.

      FINANCING(s) shall mean one or more, as the context shall so indicate, of
those certain loan(s) made by the respective Lender(s) to the Partnership to
finance and/or refinance the acquisition and/or development of the Project, as
Approved by the Partners.

      FINANCING ENHANCEMENTS shall have the meaning set forth in Section 3.2(a).

                                       4


      FISCAL YEAR shall mean the fiscal year of the Partnership established
pursuant to Section 5.1, except that the first fiscal year of the Partnership
shall commence on the date hereof and shall terminate on the last day of 2005.

      FORCE MAJEURE EVENT shall mean strikes, embargoes, national emergencies,
acts of God, affirmative acts of governmental agencies relating to the
population in general (as opposed to acts of governmental agencies relating to
the Project or the Property) and other events beyond the reasonable control of
the parties (except for the inability of a party to pay money).

      GENERAL PARTNER(s) shall initially mean CL and Ashton Woods, and any
successors acting in such capacity.

      GROSS ASSET VALUE means, with respect to any asset, the adjusted basis
 of the asset for federal income tax purposes, except as follows:

            (a) The initial Gross Asset Value of any asset contributed (or
deemed contributed under Regulations Section 1.704-l(b)(l)(iv)) by a Partner to
the Partnership will be the fair market value of the asset on the date of the
contribution, as Approved by the Partners.

            (b) The General Partners may adjust the Gross Asset Values of all
Partnership assets to equal the respective fair market values of the assets as
of (i) the acquisition of an additional interest in the Partnership by any new
or existing Partner in exchange for more than a de minimus capital contribution;
(ii) the distribution by the Partnership to a Partner of more than a de minimus
amount of Partnership assets as consideration for an interest in the
Partnership; (iii) the grant of an interest in the Partnership (other than a de
minimums interest) as consideration for the provision of services to or for the
benefit of the Partnership by any new or existing Partner, and (iv) the
liquidation of the Partnership within the meaning of Regulations Section 1.704-
1(b)(2)(ii)(g); provided, however, that the adjustments pursuant to clauses (i),
(ii) and (iii) above shall be made only if the General Partners reasonably
determine an adjustment is necessary or appropriate to reflect the relative
economic interests of the Partners in the Partnership.

            (c) The Gross Asset Value of any Partnership asset distributed to
any Partner shall be adjusted to equal its then gross fair market value on the
date of distribution as reasonably determined by the General Partners.

            (d) The Gross Asset Values of Partnership assets will be increased
(or decreased) to reflect any adjustment to the adjusted basis of the assets
under Code Section 734(b) or 743(b), but only to the extent that the adjustment
is taken into account in determining Capital Accounts under Regulations Section
1.704-l(b)(2)(iv)(m); provided, however, Gross Asset Values will not be adjusted
under this paragraph to the extent that the General Partners reasonably
determine that an adjustment under paragraph (b) above is necessary or
appropriate in connection with a transaction that would otherwise result in an
adjustment under this paragraph (d).

            (e) If the Gross Asset Value of any asset has been determined or
adjusted under paragraphs (a), (b) or (d) above, the Gross Asset Value will
thereafter be adjusted by the Depreciation taken into account with respect to
the asset for purposes of computing Net Profit and Net Loss.

                                       5


      GROSS RECEIPTS shall mean revenues and receipts (other than funds received
as Capital Contributions), calculated on an accrual basis, from the conduct of
the business of the Partnership from all sources, including but not limited to
(a) the gross cash proceeds from any sale, ground lease, exchange, condemnation
or other disposition of Lots or the Project or any portion thereof, including
but not limited to all principal and interest payments received with respect to
any note or other obligation received by the Partnership in connection with a
sale or other disposition of the Project or any portion thereof, plus (b) the
principal amount of all funds borrowed by the Partnership from time to time,
plus (c) the amount of any recovery of title, hazard or casualty insurance
proceeds from time to time (other than rental interruption insurance) in excess
of amounts expended in the restoration or repair of the Project, and the
recovery from any voluntary or involuntary condemnation of the Project or any
portion thereof in excess of amounts expended in the restoration of the Project,
plus (d) infrastructure reimbursements from third parties, including but not
limited to, utility reimbursements.

      IMPROVEMENTS shall mean any and all improvements developed or to be
developed upon or for the benefit of the Project in accordance with the
Development Plan.

      INITIAL CAPITAL CONTRIBUTIONS shall mean the contributions to the capital
of the Partnership to be made by each of the Partners, as applicable, in
accordance with the provisions of Section 3.1 of this Agreement.

      LENDER(s) shall mean the financial institution(s) making the Financing
available to the Partnership, as the context shall so indicate.

      LIMITED PARTNER(s) shall initially mean Ashton Woods and CL, and any
respective permitted successors thereto or assigns thereof.

      LOT shall mean any subdivided lot developed or to be developed as a single
family residential lot in the Project.

      LOT SALE CONTRACT(s) shall mean the contract(s) of sale, substantially in
the form attached hereto as Exhibit D, to be entered into by the Partnership and
[Ashton Woods] providing for the sale of Lots to Ashton Woods or an Affiliate of
Ashton Woods and such other contracts of sale Approved by the Partners for the
sale of Lots to third-party builders.

      MAJOR DECISIONS shall mean those actions which are not to be taken by
either Partner unless and until Approved by the Partners as set forth in Section
6.9 of this Agreement or as required elsewhere in this Agreement.

      MINIMUM SALES REQUIREMENTS shall be include in each Annual Business Plan.
The Minimum Sales Requirements for the period of the first Annual Business Plan
are shown on Schedule 6.15 to this Agreement. Schedule 6.15 also sets forth the
projected Minimum Sales Requirements for periods beyond the period covered by
the first Annual Business Plan, but such projected Minimum Sales Requirements
are not binding on the Managing Partner and are subject to change each time the
Managing Partner prepares an Annual Business Plan and submits such Annual
Business Plan to be Approved by the Partners in accordance with the provisions
of Section 6.10 of this Agreement; provided, however, in no event shall the
Minimum Sales Requirements for any annual period exceed the projected Minimum
Sales Requirements set forth

                                       6


on Schedule 6.15 unless Approved by the Partners. The Minimum Sales Requirements
included within an Annual Business Plan Approved by the Partners shall become
the Minimum Sales Requirements for such period. In determining the Minimum Sales
Requirements to be included within an Annual Business Plan, for a particular
period as the Partners shall consider, among other things, (i) the general
economic conditions of the Houston Metropolitan Area and the specific economic
conditions of the City of Pearland, (iii) the performance or non-performance of
homebuilders (other than Ashton Woods or any Affiliate thereof) under lot sales
contract executed by the Partnership for the sale of lots in the Project, and
(iii) the extent that the lot sales and gross revenues in the periods covered by
previous Annual Business Plans exceed the lot sales or gross revenues set forth
in the Minimum Sales Requirements for such periods. In other words, should the
Managing Partner exceed the Minimum Sales Requirements for a particular period
or periods then the Minimum Sales Requirements included in the next Annual
Business Plan or Plans should reflect such fact and not penalize the Managing
Partner for executing the Minimum Sales Requirements for such period.

      MANAGING PARTNER shall mean Ashton Woods or any successor Managing
Partner.

      NET PROFIT or NET LOSS shall mean, for each Fiscal Year, the Partnership's
taxable income or taxable loss for such Fiscal Year, as determined under Section
703(a) of the Code (including all items required to be separately stated under
Section 703(a)(l) of the Code) and Regulations Section 1.703-1, but with the
following adjustments:

            (a)Any tax-exempt income, as described in Section 705(a)(l)(B) of
  the Code, realized by the Partnership during such Fiscal Year shall be added
  to such taxable income or taxable loss;

            (b)Any expenditures of the Partnership described in Section
  705(a)(2)(B) of the Code for such Fiscal Year or treated as being so described
  in Regulations Section 1.704-l(b)(2)(iv)(i) and not otherwise taken into
  account in this subsection shall be subtracted from such taxable income or
  taxable loss;

            (c)In the event the Gross Asset Value of any Partnership asset is
  adjusted pursuant to clauses (b) or (c) of the definition of "Gross Asset
  Value," the amount of such adjustment shall be taken into account as gain or
  loss from the disposition of such asset for purposes of computing Net Profit
  or Net Loss;

            (d)Any item of income, gain, loss or deduction that is required to
  be specially allocated to a Partner under this Agreement, including without
  limitation Sections 4.5, 4.6, 4.7 and 4.8(b) hereof, shall not be taken into
  account in computing such taxable income or taxable loss;

            (e) The amount of any gain or loss required to be recognized by the
  Partnership during such Fiscal Year by reason of a sale or other disposition
  of the Project, or any part thereof or any other asset of the Partnership,
  shall be computed as if the Partnership's adjusted basis in such property for
  income tax purposes were equal to the Gross Asset Value of the property
  disposed of, notwithstanding that the adjusted tax basis of such property
  differs from its Gross Asset Value; and

                                       7


            (f) In lieu of depreciation, amortization, and other cost recovery
  deductions taken into account in computing such taxable income or loss, there
  shall be taken into account Depreciation for the Fiscal Year or other
  applicable period.

If the Partnership's taxable income or taxable loss for such Fiscal Year, as
adjusted in the manner provided above in clauses (a) through (f) above, is (i) a
positive amount, such amount shall be the Partnership's Net Profit for such
Fiscal Year, and (ii) a negative amount, such amount shall be the Partnership's
Net Loss for such Fiscal Year.

      NET RECEIPTS shall mean for the applicable period the Gross Receipts of
the Partnership for such period plus any reserves not needed for operations as
reasonably determined by the General Partners, less Operating Expenses for such
period and less a reasonable reserve for the conduct of the business of the
Partnership reasonably established by the General Partners.

      NON-DEFAULTING PARTNER shall have the meaning set forth in Section 11.1.

      OPERATING DEFICIT means, for any particular period of time, the amount (if
any) by which Operating Expenses for such particular period of time exceed, or
are projected to exceed, Gross Receipts for such period of time.

      OPERATING EXPENSES shall mean, all expenses of any kind made with respect
to the operations of the Partnership in the normal course of business determined
on an accrual basis, including, but not limited to: (a) the actual, reasonable
and customary expenses and costs relating to any sale, financing or refinancing
of the Project, including any partial release payment made pursuant to the terms
of any applicable financing encumbering the Property or the portion thereof so
sold, any reserves for warranty items, and/or any prepayment charges or mortgage
broker fees (paid to third parties which are not an Affiliate of any Partners)
or incurred in connection with any financing or refinancing, (b) currently due
and payable principal, interest and extension fees, if any, payable pursuant to
any loans obtained by the Partnership, (c) expenditures for capital
improvements, (d) reasonable working capital reserves for payment of all
obligations of the Partnership for which loan proceeds are not available, as
reasonably established by the General Partners, (e) amounts paid from
condemnation and/or insurance proceeds for restoration and/or repair of the
Project or any portion thereof, (f) any amounts paid for taxes, assessments,
fees, governmental charges, insurance, maintenance costs, and utilities, (g) any
fees paid to consultants and other advisors hired by the Partnership in
conjunction with the Project, (h) any costs and expenses paid by the Partnership
to maintain any agricultural, open space use or other exemption or qualified use
for tax purposes, and (i) any other similar costs and expenses.

      OPTIONAL LOAN shall have the meaning set forth in Section 3.3 herein.

      PARTNER means any partner of the Partnership, including any General
Partner or any Limited Partner, and "Partners" means the General Partners and
the Limited Partners, collectively.

      PARTNERSHIP means CL ASHTON WOODS, L.P., a Texas limited partnership, as
such Partnership may from time to time be constituted.

                                       8


      PARTNERSHIP INTEREST means, as to any Partner at any time, such Partner's
Capital Account, Percentage Interest, Residual Interest, and right to
distributions, profits and losses of the Partnership in accordance with the
provisions of this Agreement, and any other rights which such Partner has in the
Partnership in accordance with the provisions of this Agreement or under
applicable law.

      PERCENTAGE INTEREST(s) means the respective percentage interests of the
Partners and their respective permitted successors and assigns in the
Partnership, as set forth in Section 3.7(a) of this Agreement.

      PERSON means an individual or an entity such as, but not limited to, a
corporation, general partnership, joint venture, limited partnership, limited
liability partnership, trust or business association. When a Person is an
entity, the words "he," "him" and "his" and similar words shall include or refer
to "it" and "its" and similar words.

      PHASES means one or more sections, phases, portions, parcels or segments
of the Property as reflected or to be reflected in the Development Plan.

      PLANS AND SPECIFICATIONS means the plans, drawings and specifications for
development of the Improvements prepared at the direction of the Managing
Partner for the Partnership and Approved by the Partners.

      PREFERRED RETURN shall mean, with respect to a Partner (and any permitted
transferee), a return on the average daily balance of such partner's (and any
permitted transferee's) Unreturned Contribution Account, commencing on the date
such Partner (and any permitted transferee) first makes (or is deemed to have
made) a Capital Contribution pursuant to this Agreement, during the period to
which such return relates, at a rate equal to eighteen percent (18%) per annum.
The return shall be determined on the basis of the actual number of days in the
period for which the return is being determined, cumulative and compounded
annually to the extent not distributed pursuant to Section 4.9(b).

      PREFERRED RETURN ACCOUNT shall mean, with respect to a Partner (and any
permitted transferee), the excess, if any, of (i) aggregate Preferred Return of
such Partner (and any permitted transferee) over (ii) the aggregate
distributions to such Partner (and any permitted transferee) pursuant to Section
4.9(b), in each case since the inception of the Partnership. In the event of the
sale, transfer, assignment or other disposition of the Partnership Interest in
the Partnership initially issued to such Partner, the transferee of such
Partnership Interest shall succeed to the Preferred Return Account balance, if
any, attributable to the transferred Partnership Interest.

      PRIME RATE means the prime lending rate for large U.S. money center
commercial banks, as published in the Money Rates section of the Wall Street
Journal, as the same may vary from time to time during the applicable period;
provided, however, in the event such method of determining the Prime Rate is no
longer available, then a comparable rate shall be used in lieu thereof as
Approved by the Partners.

      PRO FORMA SALES BUDGET shall have the meaning set forth in Section
6.10(a).

                                       9


      PROJECT shall mean, collectively, the Property and the Improvements to be
developed thereon as Approved by the Partners.

      PROJECT COST COMMITMENT shall have the meaning set forth in Section 3.2(a)
hereof.

      PROPERTY shall mean that certain tract of real property to be acquired by
the Partnership from Ashton Southern Trails Joint Venture, a Texas joint
venture, as of even date herewith and more particularly described on Exhibit A
attached hereto and incorporated herein by reference.

      PURCHASE AGREEMENT shall mean the Contract for the Sale of Real Estate
between the Partnership and Ashton Southern Trails Joint Venture, as approved by
CLGP on behalf of the Partnership and attached hereto as Exhibit G and
incorporated herein.

      REGULATIONS shall mean the Treasury Regulations promulgated under the
Code, as such regulations may be amended from time to time.

      RESIDUAL INTEREST(s) means the respective residual interests of the
Partners (and their respective permitted successors and assigns) in
distributions, if any, pursuant to Section 4.9(d) of this Agreement, as set
forth in Section 3.7(b).

      TOTAL PROJECT COST COMMITMENT shall have the meaning set forth in Section
3.2(a).

      TRANSFER shall mean any transfer, sale, pledge, hypothecation, encumbrance
or assignment of all or any portion of an interest in the Partnership, whether
voluntarily or by operation of law.

      UNRETURNED CONTRIBUTION ACCOUNT shall mean an account maintained for each
Partner equal to, as of any particular date, the excess, if any, of (i) the
aggregate amount of Capital Contributions of such Partner pursuant to this
Agreement, minus (ii) the aggregate amount of distributions to such Partner
pursuant to Section 4.9(c) herein, in each case since the inception of the
Partnership. In the event of the sale, transfer, assignment or other disposition
of the Partnership Interest in the Partnership initially issued to such Partner,
the transferee of such Partnership Interest shall succeed to the Unreturned
Contribution Account balance, if any, attributable to the transferred
Partnership Interest.

      SECTION 1.2 TERMS GENERALLY. The definitions in Section 1.1 above shall
apply equally to both the singular and plural forms of the terms defined herein.
Whenever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. The term "person" or "Party" includes
individuals, partnerships, corporations, trusts and other associations. The
words "include", "includes", and "including" shall be deemed to be followed by
the phrase "without limitation".

      SECTION 1.3 OTHER DEFINITIONS. In addition to the terms defined in Section
1.1, other terms will have the definitions provided elsewhere in this Agreement.

      SECTION 1.4 EXHIBITS AND SCHEDULES. The Exhibits and Schedules attached
hereto and listed in the Table of Contents are hereby incorporated into this
Agreement as if fully set forth herein.

                                       10


                                   ARTICLE II
                               GENERAL PROVISIONS

      SECTION 2.1 FORMATION OF PARTNERSHIP. The parties hereto hereby create a
limited partnership pursuant to the Act. The rights and liabilities of the
Partners shall be as provided in the Act, except as otherwise set forth herein.
In the event that any provision in this Agreement conflicts with the Act, such
provision in this Agreement shall control and govern to the extent permitted by
applicable law.

      SECTION 2.2 CERTIFICATES. Immediately prior to or contemporaneously with
the execution of this Agreement, the Managing Partner shall cause an appropriate
certificate of limited partnership to be filed with the Secretary of State of
the State of Texas. The Managing Partner shall also forthwith execute all other
certificates required by law, and the Managing Partner shall cause the same to
be filed in accordance with applicable law.

      SECTION 2.3 NAME. The name of the Partnership shall be CL ASHTON WOODS,
L.P. The General Partners may from time to time change the name of the
Partnership if Approved by the Partners.

      SECTION 2.4 PLACE; REGISTERED AGENT. The location of the principal place
of business of the Partnership shall be c/o Ashton Woods GP, 11375 West Sam
Houston Parkway South, Suite 100, Houston, Texas 77031, and shall continue at
such address unless changed by the General Partners. The registered agent for
service of process on the Partnership shall be Tim Hagen, whose address is Hagen
& Parsons, P.C., 14643 Dallas Parkway, Suite 570, Dallas, Texas 75254, unless
and until a new registered agent is designated by the General Partners. The
registered agent shall promptly send copies of all notices, pleadings, and
reports served on or delivered to him to each of the General Partners.

      SECTION 2.5 TERM. The Partnership shall commence on the effective date
hereof and shall terminate upon the earlier of (a) December 31, 2025, (b) such
time as the Partners, by mutual agreement, shall elect to terminate the
Partnership, or (c) as otherwise provided in this Agreement; provided, however,
with respect to subparagraphs (a) and (b) above, if, as of either of such dates,
the Project is not substantially completed (i.e., substantially all the Lots
sold), then the Partnership shall not so terminate until the Project is
substantially completed.

      SECTION 2.6 PURPOSES OF PARTNERSHIP. The purposes of the Partnership are:

            (a) To acquire the Property from an affiliate of Ashton Woods in
accordance with the terms and conditions of the Purchase Agreement.

            (b) To arrange for, obtain, negotiate, and close the Financing(s) on
terms Approved by the Partners, and to utilize the proceeds thereof to acquire,
develop and/or refinance the acquisition and development of the Project, or, in
the alternative, to arrange for, obtain, negotiate, and close such other
financing as may be Approved by the Partners;

            (c) To develop the Project in accordance with the Development Plan,
Development Budget, the provisions of the Development Agreement and the Plans
and Specifications, each as Approved by the Partners;

                                       11


            (d) To own, finance, develop, market, manage, sell and operate the
Project, and any other property acquired by the Partnership in accordance with
this Agreement, for investment and production of income and profit and, without
limiting the foregoing, to enter into the Lot Sale Contracts;

            (e) To subdivide, market and sell portions of the Project in
accordance with the Development Plan, the Lot Sale Contracts and this Agreement,
each as Approved by the Partners;

            (f) To negotiate and enter into such partnerships, ventures,
entities and other relationships relating to the acquisition, development, sale
and operation of the Property as may be Approved by the Partners from time to
time;

            (g) To engage in any one or more other business transactions
necessary or desirable to effect the purposes of this Agreement described in (a)
through (f) above, including, without limitation, to borrow funds in accordance
with the terms of this Agreement and to execute evidence of such indebtedness
and security instruments in connection therewith, subject to the Approval of the
Partners;

            (h) To take other actions necessary or appropriate in furtherance of
the foregoing purposes in accordance with the provisions of this Agreement; and

            (i) To act as principal, agent, joint venturer or in any other
capacity which may be authorized hereby or Approved by the Partners.

      SECTION 2.7 NATURE OF PARTNERSHIP INTERESTS. The Partnership Interests of
the Partners in the Partnership shall be personal property for all purposes.
Legal title to the Project and all other property and assets of the Partnership
shall be held in the name of the Partnership. Neither any Partner individually,
nor any partners or permitted successors or assigns of any Partner, shall have
any right, title or interest in or to the Project or any other property or
assets of the Partnership; rather the Project and all such property and assets
of the Partnership shall be subject to the terms of this Agreement. Further, the
Partners acknowledge and agree that the Project is not suitable for partition,
and thus all of the Partners hereby irrevocably waive any and all rights to
maintain any action for partition of the Project.

      SECTION 2.8 FORM OF ENTITY; LIMITED AUTHORITY. The entity created hereby
is a limited partnership formed under Texas law. Notwithstanding the foregoing,
except with respect to actions in furtherance of the business and purpose of the
Partnership in a manner consistent with and limited by specific agreements,
covenants, rights, privileges, duties and obligations arising under this
Agreement, neither the creation of the Partnership nor the execution and
delivery by the Partners of this Agreement inter se is intended to create a
general agency relationship or authority, nor shall the same be construed as to
authorize or entitle any Partner to act as a general agent for and on behalf of
the other Partners with respect to any business or activity other than in
furtherance of the specific purposes of the Partnership as described in this
Agreement. Without limiting the generality of the foregoing, neither the
Partnership nor any Partner shall be responsible or liable for any indebtedness
or obligation of a Partner incurred or arising before or after the formation of
the Partnership, except for those joint responsibilities,

                                       12


liabilities, indebtedness or obligations incurred after the date of formation of
the Partnership pursuant to and in accordance with the terms of this Agreement
or for any such obligations expressly and intentionally assumed pursuant to this
Agreement or any other written agreement duly executed and delivered by all of
the Partners.

      SECTION 2.9 OTHER ACTIVITIES. Each Partner may engage or invest in any
other activity or venture or possess any interest therein independently or with
others, whether or not competitive with the business of the Partnership or the
Property, and whether existing as of the date of this Agreement or hereafter
coming into existence. None of the Partners, the Partnership or any other Person
employed by, related to or in any way affiliated with any Partner or the
Partnership shall have any duty or obligation to disclose to or offer to the
Partnership or the Partners, or obtain for the benefit of the Partnership or the
Partners, any other activity or venture or interest therein. None of the
Partnership, the Partners, the creditors of the Partnership or any other Person
having an interest in the Partnership shall have (i) any claim, right or cause
of action against any Partner or any other Person employed by, related to or in
any way affiliated with, any Partner by reason of any direct or indirect
investment or other participation, whether active or passive, in any such
activity or interest therein, or (ii) any right to any such activity or interest
therein or the income or profits derived therefrom.

                                   ARTICLE III
                   CAPITAL CONTRIBUTIONS; PERCENTAGE INTERESTS

      SECTION 3.1 INITIAL CAPITAL CONTRIBUTIONS. Upon execution hereof, the
Partners shall contribute in cash to the capital of the Partnership as their
Initial Capital Contributions the respective amounts set forth opposite their
names on Schedule 3.1 attached hereto and incorporated herein.

      SECTION 3.2 ADDITIONAL CAPITAL CONTRIBUTIONS.

            (a) The Partners hereby agree to provide Additional Capital
Contributions (in cash or immediately available funds) to the Partnership pro
rata in proportion to their respective Percentage Interests to pay Development
Costs in an aggregate amount for each Partner as set forth on Schedule 3.2(a)
attached hereto and incorporated herein (each Partner's share of the aggregate
Additional Capital Contributions required to pay Development Costs is referred
to herein as such Partner's "Project Cost Commitment"), plus any amounts
guaranteed by such Partner or secured by letters of credit provided by such
Partner (or an Affiliate thereof) ("Financing Enhancements") as set forth on
Schedule 3.2 and pursuant to Section 3.2(e) below. Project Cost Commitment plus
funded Financing Enhancements with respect to the Project shall be sometimes
referred to as the "Total Project Cost Commitment". Such Additional Capital
Contributions shall be made to the Partnership pursuant to the procedures set
forth in Section 3.4 below. Notwithstanding anything to the contrary herein
(except to the extent set forth in Section 3.2(e) hereof), no Partner shall be
required to make any further Additional Capital Contributions with respect to
the Project once such Partner's aggregate Capital Contributions since the
inception of the Partnership equals (i) such Partner's Project Cost Commitment
unless and except to the extent a Financing Enhancement with respect to the
Project has been demanded in writing or drawn upon by the Lender, or (ii) such
Partner's Total Project Cost Commitment if a

                                       13


Financing Enhancement is reduced by the amount of a draw against or funding
under such Financing Enhancement.

            (b) As of the date of the funding of the Financing for the Project,
each Partner shall be reimbursed by the Partnership for all pre-development
expenses paid by such Partner with respect to the Project provided that such
expenses are set forth in the Development Budget.

            (c) Each Partner hereby transfers and conveys to the Partnership all
of such Partner's right, title and interest in and to the Project (including,
without limitation, all Due Diligence Materials in the possession of such
Partner). Such transfers of Due Diligence Materials shall not be treated as
having any value for purposes of determining the Partners' Capital Accounts.

            (d) If, at any time and from time to time, a General Partner
determines in its reasonable business judgment that additional funds are needed
with respect to the Project due to unforeseen circumstances regarding the
ownership, development, engineering and/or construction of the Project which are
not the obligation or responsibility of the Developer (for example, and not in
limitation, there shall occur events at force majeure, unexpected or unscheduled
price increases in materials, labor or equipment, or unexpected or unscheduled
increases in governmentally-imposed development fees which increase the costs of
any particular item in the Development Budget and/or Annual Budget beyond the
budgeted amount(s) plus contingency therefore), and such additional funds to
cover any increased costs are not on hand and available for use from available
funds of the Partnership after reasonable reserves and holdbacks required by the
Lender and/or Approved by the Partners or cannot be obtained through third party
financing Approved by the Partners, then (without limiting any provisions of
this Agreement regarding Approval by the Partners of amendments or modifications
to the Development Budget and/or Annual Budget), either such General Partner may
make a capital call in accordance with Section 3.4 hereof. However, except to
the extent set forth in Section 3.2(e) below, no Partner shall be required to
make an Additional Capital Contribution to the extent such Partner has already
made aggregate Capital Contributions equal to its Project Cost Commitment with
respect to the Project. If any Partner does not elect to make the voluntary
Additional Capital Contribution requested by a General Partner then such General
Partner may make an Additional Capital Contribution to cover any shortfall of
needed capital. Alternatively, the General Partner may make an Optional Loan,
subject to Section 3.3 below, to fund the needs of the Partnership described in
this Section 3.2(d).

            (e) Any amounts funded or drawn under any Financing Enhancements
provided by a Partner or its Affiliate securing or guaranteeing all or any
portion of any Financing(s) shall be deemed to be an Additional Capital
Contribution to the Partnership by such Partner (but only one Partner shall
receive credit for any Financing Enhancements from any of its Affiliates),
unless such Partner(s) elect(s) in writing to treat such funded amount as an
Optional Loan to the Partnership (with such election being made within five (5)
Business Days of making such funding or draw under such Financing Enhancement).
A General Partner shall make a Capital Call in accordance with Section 3.4 below
within ten (10) days after receipt by such General Partner of notice of the
funding, or a request or demand for funding under any Financing Enhancements,
and each of the Partners shall make an Additional Capital Contribution to the
Partnership in whatever proportions and amounts as are necessary so that, unless
otherwise

                                       14


set forth on Schedule 3.2(a) or agreed by the Partners, the amounts funded or
drawn under the Financing Enhancements are shared by the Partners pro rata in
accordance with their respective Percentage Interests. Upon the Partnership's
receipt of any Additional Capital Contributions made pursuant to this Section
3.2(e), the Partner whose Financing Enhancement was funded or drawn upon shall
be repaid an amount sufficient to reduce such Partner's Additional Capital
Contribution pursuant to this Section 3.2(e) to the amount which would have been
paid by such Partner on a pro rata basis of the total Additional Capital
Contribution, as applicable, in accordance with its Percentage Interest.
Notwithstanding anything to the contrary herein, this Section 3.2(e) shall not
apply to any letter of credit or guaranty or other contractual obligation
provided by Ashton Woods or any Affiliate thereof as earnest money under any Lot
Sale Contracts.

            (f) It is expressly understood and agreed by the Partners that each
Partner and its respective Affiliates are not required to advance or re-advance
Additional Capital Contributions or make loans to the Partnership once the Total
Project Cost Commitment for such Partner has been made to the Partnership,
notwithstanding subsequent distributions and reductions in such Partner's
Unreturned Contribution Account

      SECTION 3.3 OPTIONAL LOANS. Notwithstanding the foregoing, in the event
either General Partner shall determine in good faith that the Partnership
requires any amounts described in Section 3.2(d) or to pay Operating Deficits,
then such General Partner shall have the right to advance to the Partnership a
loan (in lieu of an Additional Capital Contribution(s) or in combination with
such Additional Capital Contribution(s)) that does not carry personal liability
to the Partners (hereinafter referred to as an "Optional Loan"), in an amount
sufficient to provide the needed funds. Prior to making any Optional Loan, a
General Partner shall notify the other Partners of its intent to make such
advance at least ten (10) Business Days prior to the date of such advance (an
"Optional Loan Notice"), and at any time within such period, the other
Partner(s) may elect to participate in making the Optional Loan. Each Partner at
its sole option may elect to loan to the Partnership its pro rata share (based
on its then respective Percentage Interest) of the amount described in such
Optional Loan Notice by delivering such amount into the Partnership operating
account on the date specified in such Optional Loan Notice. If a Partner does
not wish to loan its share of a requested loan pursuant to an Optional Loan
Notice, it shall not be required to do so, but it shall give the other
Partner(s) written notice of its decision not to make such loan (a "Refusal
Notice") within five (5) Business Days after the delivery of such Optional Loan
Notice. If a Refusal Notice is delivered in connection with an Optional Loan
Notice or if a Partner otherwise fails for any reason to make its full pro rata
share of such loan on the date requested, then any other Partner may advance the
amount of such shortfall as an Optional Loan. Any Optional Loan shall bear
interest at a fixed rate determined as of the date of the Optional Loan equal to
eighteen percent (18%) per annum, but shall not exceed the maximum rate allowed
by law, and shall be payable only out of the Net Receipts of the Partnership as
provided in Section 4.9(a) below or out of the Partnership's assets upon
liquidation of the Partnership. In the event there is more than one Optional
Loan outstanding at any time in which there is a distribution made pursuant to
Sections 4.9(a) or 12.3(c) hereof, then amounts distributed under such Sections
shall first be applied to repay the most recent Optional Loan, and if more than
one Partner has made an Optional Loan at the same time (or otherwise pursuant to
the same Optional Loan Notice) then as between the Partners such Optional Loans

                                       15


shall be repaid pro rata in proportion to the outstanding balance of such
Optional Loans (but still giving priority to the most recent Optional Loan(s)).

      SECTION 3.4 CAPITAL CALLS.

            (a) When the Partners are required to contribute Additional Capital
Contributions under this Agreement, the Partners shall make such Additional
Capital Contributions in accordance with the provisions herein ("Capital Call")
and in such amounts that are sufficient to provide such funds. Each Partner and
any permitted transferee(s) under Article X hereof shall be jointly and
severally liable for making any of their respective required contributions to
the Partnership under Section 3.2 or this Section 3.4. Notwithstanding anything
to the contrary herein, no Partner shall be required to make any Additional
Capital Contributions that would cause such Partner's (or its predecessors in
interest) aggregate Capital Contributions since inception of the Partnership
with respect to the Project to exceed such Partner's Total Project Cost
Commitment.

            (b) When Additional Capital Contributions are needed by the
Partnership, the Managing Partner (or if he fails to do so, any other General
Partner) shall give a notice (a "Capital Call Notice") to each Partner in the
manner provided in Section 14.3 hereof. Each Capital Call Notice shall specify
in reasonable detail the amount and purpose of any such Additional Capital
Contributions and that it is or is not pursuant to the Development Budget.
Capital Call Notices, other than pursuant to the Development Budget, shall also
include (A) a statement of the anticipated cash receipts and obligations for the
immediately following calendar quarter with the reasons, if ascertainable, that
the available funds of the Partnership will be insufficient to meet the
obligations for which the additional funds have been requested as they come due,
and (B) a representation from such General Partner that it has made a draw
request under the Financing for the Project to pay a portion of the expenditures
identified in the Capital Call Notice to the maximum extent permitted thereunder
or that the line item in the budget therefore has been exhausted, that no
uncured default under the Financing then exists, that the Lender under the
Financing has not declined to advance funds to pay all or any portion of any
costs identified in any Capital Call Notice to be paid pursuant to the draw
request. With respect to a Capital Call Notice, the following provisions shall
apply:

                  (i) Each Partner shall, within ten (10) Business Days (time
      being of the essence) after the receipt of such Capital Call Notice,
      deposit, by wire transfer of immediately available federal funds into the
      Partnership's bank account, the Additional Capital Contribution specified
      in the Capital Call Notice, to be credited to the contributing Partner's
      Capital Account.

                  (ii) If a Partner does not pay its share of any
      required Additional Capital Contribution (recognizing that no
      contributions are required once a Partner has made aggregate Capital
      Contributions to the Partnership with respect to the Project in the
      aggregate amount equal to its Total Project Cost Commitment) in accordance
      with any Capital Call Notice, the other Partner shall have the option, in
      addition to other rights and remedies set forth herein, (A) to make a
      Contribution Loan as provided in Section 3.4(c) hereof, or (B) to withdraw
      its Additional Capital Contribution, because the other Partner

                                       16


      failed to pay its share of the Additional Capital Contribution, or (C)
      bring suit against the other Partner for a breach of this Agreement.

                  (iii) If a Partner disputes whether any Additional
      Capital Contributions are due hereunder, the dispute shall be resolved
      pursuant to arbitration in accordance with Article XIII herein.

            (c) In addition to the rights set forth in Section 3.4(b)(ii) and
Article XI hereof, if a Partner fails to make any Additional Capital
Contribution within the time specified in Section 3.4(b) hereof, (a
"Non-Contributing Partner"), the other Partner who makes the requested
contribution of additional capital (the "Contributing Partner") shall have the
right but not the obligation to advance directly to the Partnership the funds
required from the Non-Contributing Partner as a loan ("Contribution Loan") to
the Non-Contributing Partner. If and when a Contribution Loan is made, the
Non-Contributing Partner shall not become a Defaulting Partner (as provided in
Article XI) but the Non-Contributing Partner shall be deemed to have waived the
right to make the requested capital contribution as of the date of such
Contribution Loan. Such Contribution Loan shall bear interest at a rate equal to
eighteen percent (18%) per annum, compounded annually, but in no event more than
the maximum rate permitted by law. The Non-Contributing Partner may prepay the
Contribution Loan at any time, but in any event the Contribution Loan shall be
due and payable on demand at any time upon written notice to the
Non-Contributing Partner. Failure of the Non-Contributing Partner to pay the
Contribution Loan within three (3) Business Days following demand shall
constitute a default hereunder. If the Contributing Partner does not elect to
advance the full amount of the additional funds required from the
Non-Contributing Partner, the Contributing Partner may withdraw its Additional
Capital Contribution or treat the failure of the Non-Contributing Partner to
make the Additional Capital Contribution as an Event of Default under Article XI
hereof.

            (d) A Contribution Loan shall be repaid on a first priority basis
out of any subsequent distributions to which the Non-Contributing Partner for
whose account the Contribution Loan was made would otherwise be entitled in
accordance with this Agreement, which amounts shall be applied first to accrued
interest and then to principal, until the Contribution Loan is paid in full.
Each Non-Contributing Partner irrevocably assigns its rights to distributions
from the Partnership to the Contributing Partner for the purpose of effectuating
this repayment until the Contribution Loan is repaid. Repayment of any Partner's
Contribution Loan shall also be secured by the Non-Contributing Partner's
Interest in the Partnership, and the Non-Contributing Partner hereby grants a
security interest in such Partnership Interest to the Contributing Partner who
has advanced such Contribution Loan and hereby irrevocably appoints the
Contributing Partner, and any of its agents, officers or employees, as its
attorney-in-fact, such appointment being coupled with an interest, to execute,
acknowledge and deliver any documents, instruments and agreements including, but
not limited to, any note evidencing the Contribution Loan, and such Uniform
Commercial Code financing statements, continuation statements, and other
security instruments as may be appropriate to perfect and continue such security
interest in favor of the Contributing Partner.

                                       17


      SECTION 3.5 CAPITAL ACCOUNTS. A Capital Account shall be established and
maintained for each Partner in accordance with the rules set forth in this
Section 3.5 and Regulations Section 1.704-1(b)(2)(iv).

                  (a) Each Partner's Capital Account shall be (i) increased by
   (A) the aggregate amount of cash contributed by or on behalf of such Partner
   to the Partnership, (B) the agreed upon Gross Asset Value (as of the date of
   contribution) of any property other than cash contributed by such Partner to
   the Partnership (net of liabilities encumbering such contributed property
   that the Partnership is considered to assume or take subject to under Section
   752 of the Code), (C) the aggregate amount of allocations of the
   Partnership's Net Profit to such Partner for income tax purposes in
   accordance with Section 4.1 hereof and the amount of items of income or gain
   which are specially allocated to such Partner, and (D) any other positive
   adjustments required by the Regulations which have not been previously taken
   into account in determining Capital Accounts, and shall be (ii) decreased by
   (A) the aggregate amount of cash distributed to or on behalf of such Partner
   by the Partnership, (B) the Gross Asset Value (as of the date of
   distribution) of all other property distributed to such Partner by the
   Partnership (net of liabilities encumbering such distributed property that
   such Partner is considered to assume or take subject to under Section 752 of
   the Code), (C) the aggregate amount of the Partnership's Net Loss that has
   been allocated to such Partner as of such date pursuant to Sections 4.2 and
   4.3 and the amount of any item of expense, deduction or loss which is
   specially allocated to such Partner, and (D) any other negative adjustments
   required by Regulations and which have not been previously taken into account
   in determining Capital Accounts, and (iii) otherwise adjusted in accordance
   with the rules of this Section 3.5 and Regulations Section 1.704-1(b)(2)(iv).

                  (b) Upon the permitted transfer of all or any portion of a
   Partner's Partnership Interest(s), the Capital Account of the transferor that
   is attributable to the transferred Partnership Interest(s) shall carry over
   to the transferee.

                  (c) The Capital Accounts shall be adjusted as and to the
   extent required by Regulations Section 1.704-1(b)(2)(iv)(m) in connection
   with the adjustment to the tax basis of any Partnership asset pursuant to
   Section 734(b) or Section 743(b) of the Code.

                  (d) The foregoing provisions and the other provisions of this
   Agreement relating to the maintenance of Capital Accounts are intended to
   comply with Regulations Section 1.704-1(b), and shall be interpreted and
   applied in a manner consistent with such Regulations. In the event the
   General Partners shall determine that it is prudent to modify the manner in
   which the Capital Accounts, or any debits or credits thereto are computed in
   order to comply with such Regulations, the General Partners may make such
   modification.

      SECTION 3.6 RIGHTS OF CREDITORS. The provisions of this Article III are
not intended to be for the benefit of any creditor or other Person (other than a
Partner in its capacity as a Partner herein) to whom any debts, liabilities or
obligations are owed or who otherwise has a claim against the Partnership or any
of the Partners, and no such creditor or other person shall obtain any right
under any of the foregoing provisions against the Partnership or any Partner by
reason of any such debt, liability or obligation, or otherwise.

                                       18


      SECTION 3.7 PERCENTAGE INTERESTS AND RESIDUAL INTERESTS.

            (a)   The Partners shall have the following Percentage Interests:

                  (i)   Ashton Woods GP       --       0.5%
                        Ashton Woods LP       --      19.5%

                  (ii)  CLGP                  --       0.5%
                        CL                    --      79.5%

            (b)   The Partners shall have the following Residual Interests:

                  (i)   Ashton Woods GP       --       0.5%
                        Ashton Woods LP       --      29.5%

                  (ii)  CLGP                  --       0.5%
                        CL                    --      69.5%

      SECTION 3.8 ADDITIONS TO AND WITHDRAWAL OF CAPITAL. Other than as provided
in Sections 3.1, 3.2 and 3.4 above, no Partner shall be required or permitted to
contribute capital to the Partnership. In addition and except as provided in
Section 3.4 hereof, no Partner shall have the right to withdraw from the
Partnership, and no Partner shall be entitled to a return of, its contributions
to the capital of the Partnership hereunder, except by way of the distribution
to it under the terms of this Agreement or by way of the distribution to it of
assets of the Partnership upon the winding up of the Partnership pursuant to the
provisions of this Agreement.

      SECTION 3.9 FINANCING. The General Partners will proceed with reasonable
diligence and in good faith to obtain the Financing(s) in the name of the
Partnership for the Project in accordance with the Development Budget.
Notwithstanding anything to the contrary set forth herein, any Financing and the
terms and conditions thereof shall be subject to the Approval of the Partners.
The Partners shall execute such documents, instruments and agreements as may be
required to effectuate the Financing as Approved by the Partners.

      SECTION 3.10 POWER OF ATTORNEY. Each Defaulting Partner hereby irrevocably
appoints the Non-Defaulting General Partner as its attorney-in-fact following
default to execute all documents reasonably necessary to accomplish the remedies
specified in Section 3.4(d) hereof, such appointment being coupled with an
interest (and being intended to survive the dissolution or incapacitation of any
Defaulting Partner, to the fullest extent permitted by law), and including,
without limitation, the power to execute UCC-1 Financing Statements,
assignments, bills of sale and amendments to this Agreement to effect any of
such remedies.

                                   ARTICLE IV
                          DISTRIBUTIONS AND ALLOCATIONS

      SECTION 4.1 ALLOCATION OF NET PROFIT. After giving effect to the special
allocations as provided in Sections 4.5, 4.6 and 4.7 and subject to the overall
directions of Section 4.4 (and

                                       19


giving effect to Section 4.7(c)), all Net Profit of the Partnership for each
Fiscal Year shall be allocated to the Partners as follows:

            (a) First, to the Partners, in proportion to and to the extent of
the negative balances, if any, in the Partners' respective Capital Accounts (as
of the last day of such Fiscal Year, but adjusted to reflect any allocations to
the Partners pursuant to Sections 4.5, 4.6 and 4.7);

            (b) Second, to the Partners, in proportion to and to the extent of
the amounts necessary to cause their respective Capital Accounts (as of the last
day of such Fiscal Year, but adjusted to reflect any allocations pursuant to
Sections 4.1 (a), 4.5, 4.6 and 4.7) to equal their respective Unreturned
Contribution Account balances (it being acknowledged that an allocation to a
Partner pursuant to this subparagraph may be zero because such Partner's Capital
Account balance already equals or exceeds the amount referred to in this
sentence);

            (c) Third, to the Partners in proportion to and to the extent of the
amounts necessary to cause their respective Capital Accounts (as of the last day
of such Fiscal Year, but adjusted to reflect any allocations pursuant to
Sections 4.1 (a), 4.1(b), 4.5, 4.6 and 4.7) to equal the sum of the balances in
their respective Unreturned Contribution Accounts and Preferred Return Accounts
(it being acknowledged that an allocation to a Partner pursuant to this
subparagraph may be zero because such Partner's Capital Account balance already
equals or exceeds the amount referred to in this sentence);

            (d) Fourth, to the Partners in proportion to and to the extent
necessary to cause the amounts by which their respective Capital Accounts (as of
the last day of such Fiscal Year, but adjusted to reflect allocations pursuant
to Sections 4.1(a)-(c), 4.5, 4.6 and 4.7) exceed the sum of the balances in
their respective Unreturned Contribution Accounts and Preferred Return Accounts
to be in the same proportions as their then respective Residual Interests (it
being acknowledged that an allocation to the Partners pursuant to this
subparagraph may be zero because the Partners' respective Capital Account
balances are already in such proportions); and

            (e) The balance of Net Profits, if any, shall be allocated among the
Partners pro rata in proportion to their then respective Residual Interests.

      SECTION 4.2 ALLOCATION OF NET LOSS. Except as provided in Section 4.3,
after giving effect to the special allocations as provided in Sections 4.5, 4.6
and 4.7 and subject to the overall directions of Section 4.4 (and giving effect
to Section 4.7(c)), all Net Loss of the Partnership for each Fiscal Year shall
be allocated to the Partners as follows:

            (a) First, to the Partners in proportion to and to the extent of the
amounts necessary to cause the amounts by which their respective Capital
Accounts (as of the last day of such Fiscal Year, but adjusted to reflect
allocations pursuant to Sections 4.5, 4.6 and 4.7) exceed the sum of the
balances in their respective Unreturned Contribution Accounts and Preferred
Return Accounts to be in the same proportion as their then respective Residual
Interests (it being acknowledged that an allocation to the Partners pursuant to
this subparagraph may be zero because the Partners' respective Capital Account
balances are already in such proportions);

            (b) Second, to the Partners in proportion to and to the extent of
the amounts necessary to cause their respective Capital Accounts (as of the last
day of such Fiscal Year, but

                                       20


adjusted to reflect allocations pursuant to Sections 4.2(a), 4.5, 4.6 and 4.7)
to equal the sum of the balances in their respective Unreturned Contribution
Accounts and Preferred Return Accounts (it being acknowledged that an allocation
to a Partner pursuant to this subparagraph may be zero because such Partner's
Capital Account balance already equals or is less than the amount referred to in
this sentence);

            (c) Third, to the Partners in proportion to and to the extent of the
amounts necessary to cause their respective Capital Accounts (as of the last day
of such Fiscal Year, but adjusted to reflect allocations pursuant to Sections
4.2(a), 4.2(b), 4.5, 4.6 and 4.7) to equal their respective Unreturned
Contribution Account balances (it being acknowledged that an allocation to a
Partner pursuant to this subparagraph may be zero because such Partner's Capital
Account balance already equals or is less than the amount referred to in this
sentence);

            (d) Fourth, to the Partners in proportion to and to the extent of
the amounts necessary to cause their respective Capital Accounts (as of the last
day of such Fiscal Year, but adjusted to reflect allocations pursuant to
Sections 4.2(a)-(c), 4.5, 4.6 and 4.7) to equal zero (it being acknowledged that
an allocation to a Partner pursuant to this subparagraph may be zero because
such Partner's Capital Account balance already equals or is less than the amount
referred to in this sentence); and

            (e) The balance of Net Loss, if any, shall be allocated among the
Partners pro rata in proportion to their then respective Percentage Interests.

      SECTION 4.3 NET LOSS LIMITATION. Notwithstanding any provision of this
Agreement to the contrary, except as otherwise specifically provided in this
Section 4.3, in no event shall Net Loss be allocated to a Partner if such
allocation would result in such Partner's having an Adjusted Capital Account
Deficit at the end of any Fiscal Year. All Net Loss in excess of the limitation
set forth in this Section 4.3 shall be allocated to any remaining Partner
without an Adjusted Capital Account Deficit, and if all Partners have an
Adjusted Capital Account Deficit, then to the Partners pursuant to Section
4.2(e) above.

      SECTION 4.4 INTENTIONS AND CONSTRUCTION OF ALLOCATIONS. It is the
intention of the Partners to allocate Net Profit and Net Loss in such a manner
as to cause each Partner's Capital Account as of the last day of each Fiscal
Year to always equal the amount of cash such Partner would be entitled to
receive if the Partnership sold its assets for their adjusted Gross Asset Values
and, after satisfying all Partnership liabilities (limited to the Gross Asset
Value of any asset that the Lender's sole recourse with respect to such
liability is such asset), the proceeds from such sale, as well as all other
funds of the Partnership, were then distributed to the Partners pursuant to
Section 4.9. This Article 4 shall be interpreted as necessary to accomplish such
result.

      SECTION 4.5 SPECIAL ALLOCATIONS.

      The following special allocations shall be made in the following order:

            (a) Minimum Gain Chargeback. To the extent required by Section
1.704-2(f) of the Regulations, if there is a net decrease in "partnership
minimum gain" (within the meaning

                                       21


of Section 1.704-2(b)(2) of the Regulations) in a Fiscal Year, then each Partner
will be allocated items of income and gain for that Fiscal Year, before any
other allocation of Net Profit or Net Loss, equal to that Partner's share of the
net decrease in partnership minimum gain.

            (b) Partner Minimum Gain Chargeback. If a Partner suffers a net
decrease in "partner nonrecourse debt minimum gain" (within the meaning of
Section 1.704-2(i)(4) of the Regulations) in any Fiscal Year, then that Partner
will be allocated items of income and gain to the extent required by Section
1.704-2(i)(4) of the Regulations.

            (c) Qualified Income Offset. In the event any Partner unexpectedly
receives any adjustments, allocations, or distributions described in Regulations
Sections 1.704-1(b)(2)(ii)(d)(4), Sections 1.704-1(b)(2)(ii)(d)(5) or Sections
1.704-1(b)(2)(ii)(d)(6), items of Partnership income and gain shall be specially
allocated to each such Partner in an amount and manner sufficient to eliminate,
to the extent required by the Regulations, the Adjusted Capital Account Deficit
of such Partner as quickly as possible, provided that an allocation pursuant to
this Section 4.5(c) shall be made if and only to the extent that such Partner
would have an Adjusted Capital Account Deficit after all other allocations
provided for in this Article have been tentatively made as if this Section
4.5(c) were not in the Agreement.

            (d) Nonrecourse Deductions. If there are any "nonrecourse
deductions" (within the meaning of Sections 1.704-2(b)(l) and 1.704-2(c) of the
Regulations) in a Fiscal Year, then such deductions shall be allocated to the
Partners pro rata in proportion to their then respective Percentage Interests.

            (e) Partner Nonrecourse Deductions. If there are any "partner
nonrecourse deductions" (within the meaning of Section 1.704-2(i)(l) of the
Regulations) in a Fiscal Year, then such deductions will be allocated to the
Partner who bears the economic risk of loss for the "partner nonrecourse
liability" (within the meaning of Section 1.704-2(b)(4) of the Regulations) to
which the deductions are attributable.

      SECTION 4.6 CURATIVE ALLOCATIONS. The allocations set forth in Sections
4.5(a) through 4.5(e) (the "Regulatory Allocations") are intended to comply with
certain requirements of Regulations Sections 1.704-1(b) and 1.704-2(b).
Notwithstanding any other provisions of this Agreement, other than the
Regulatory Allocations, with the Approval of the Partners the Regulatory
Allocations shall be taken into account in allocating other items of income,
gain, loss and deduction among the Partners so that, to the extent possible, the
net amount of such allocations of other items and the Regulatory Allocations to
each Partner shall be equal to the net amount that would have been allocated to
such Partner if the Regulatory Allocations had not occurred.

      SECTION 4.7 OTHER ALLOCATION RULES. The following rules shall apply for
purposes of making tax allocations:

            (a) For purposes of determining the Net Profit, Net Loss, or any
other items allocable to any period, Net Profit, Net Loss, and any such other
items shall be determined on a daily, monthly, or other basis, using any
permissible method under Code Section 706 and the Regulations as reasonably
selected by the Managing Partner and Approved by the Partners.

                                       22


            (b) If an amount paid or deemed paid by the Partnership to a Partner
(or any other Person) as interest, a guaranteed payment, or a payment for
property or services, is treated for federal income tax purposes as a
distribution to such Partner in its capacity as a partner for tax purposes and
is neither a guaranteed payment under Section 707(c) of the Code nor a payment
under Section 707(a) of the Code to a partner not acting in its capacity as a
partner, such Partner shall be allocated as soon as possible an amount of
Partnership's gross income or gain equal to the amount of such payment.

            (c) For purposes of determining the amount of Net Profit and Net
Loss to be allocated pursuant to Sections 4.1 and 4.2 for any Fiscal Year, the
Capital Account of each Partner shall be increased by such Partner's share of
"partnership minimum gain" as of the last day of such Fiscal Year, determined
pursuant to Regulations Section 1.704-2(g)(l), and by such Partner's share of
"partner non-recourse debt minimum gain" as of the last day of such Fiscal Year,
determined pursuant to Regulations Section 1.704-2(i)(5).

            (d) The Partners are aware of the income tax consequences of the
allocations made by this Article 4 and hereby agree to be bound by the
provisions of this Article 4 in reporting their shares of Partnership income and
loss for income tax purposes.

      SECTION 4.8 TAX ALLOCATIONS.

            (a) Except as provided in Section 4.8(b) herein, for income tax
purposes, Partnership income, gain, loss, deduction or credit (or any item
thereof) for each Fiscal Year shall be allocated to and among the Partners in
order to reflect the allocations made pursuant to the provisions of this Article
4 for such Fiscal Year (other than allocations of items which are not deductible
or are excluded from taxable income).

            (b) Notwithstanding any other provision of this Agreement to the
contrary, any gain or loss and any depreciation and cost recovery deductions
recognized by the Partnership for income tax purposes in any Fiscal Year with
respect to all or any part of the Partnership's property that is required or
permitted to be allocated among the Partners in accordance with Section 704(c)
of the Code and any Regulations promulgated thereunder so as to take into
account the variation, if any, between the adjusted tax basis of such property
and the initial Gross Asset Value of such property at the time of its
contribution, or following the adjustment to the Gross Asset Value of
Partnership property pursuant to this Agreement, shall be allocated to the
Partners for income tax purposes in the manner so required or permitted. Any
elections or other decisions relating to such allocations shall be Approved by
the Partners.

      SECTION 4.9 DISTRIBUTIONS OF NET RECEIPTS. Except as provided in Section
12.3(c) hereof, and giving effect to the Contribution Loan provisions of Section
3.4(c), Net Receipts shall be distributed to the Partners as follows:

            (a) First, Net Receipts shall be used to pay any accrued but unpaid
interest on, and then to pay the unpaid principal balance, if any, of any and
all Optional Loans made by the Partners to the Partnership in priorities set
forth in, and otherwise in accordance with, Section 3.3 hereof;

                                       23


            (b) Next, Net Receipts shall be distributed to the Partners pro rata
in accordance with the respective balances in their Preferred Return Accounts,
until such account balances are reduced to zero;

            (c) Next, Net Receipts shall be distributed to the Partners pro rata
in accordance with the respective amounts of each Partner's Unreturned
Contribution Account until such account balances are reduced to zero; and.

            (d) Finally, Net Receipts shall be distributed to the Partners, pro
rata in accordance with their then respective Residual Interests.

      SECTION 4.10 MANNER OF DISTRIBUTION.

            (a) Prior to repayment and discharge of the Financing(s), the
Partnership shall not distribute any Net Receipts pursuant to Sections 4.9(b),
(c) or (d) hereof (but, for clarity, the Partnership may make distributions
pursuant to Section 4.9(a) hereof in repayment of Optional Loans) unless
Approved by the Partners and unless such distributions are not prohibited by the
Lender(s). Thereafter, Net Receipts shall be distributed within fifteen (15)
days after the end of each calendar month during the term of the Partnership.

            (b) All distributions of Net Receipts shall be subject to adjustment
by reference to the financial statements for such monthly period prepared as
required by Section 5.2 hereof. If any additional amount is to be distributed by
reason of such financial statements, such additional amount shall be deemed a
distribution for such monthly period, and if any excess amount was distributed
during such monthly period as reflected by such financial statements, the excess
amount shall be taken into account in reducing subsequent distributions.

                                    ARTICLE V
                    BOOKS OF ACCOUNT, ACCOUNTING AND REPORTS

      SECTION 5.1 BOOKS AND RECORDS; FISCAL YEAR. The Partnership's books and
records shall be maintained at the office of the Managing Partner, or at such
other place or places as Approved by the Partners from time to time. Upon
reasonable notice, each Partner and its authorized agents and representatives
shall have access to all of such books and records at all reasonable times for
purposes of examination, copying and/or audit, at the sole expense of the
Partner conducting or causing same. The books and records of the Partnership (a)
shall be kept in accordance with the accrual basis method of accounting in
accordance with generally accepted accounting principles ("GAAP") consistently
applied, (b) shall reflect all Partnership transactions, (c) shall be
appropriate and adequate for the Partnership's business, and (d) if requested by
any Partner, shall be audited annually by the independent certified public
accountants for the Partnership (the "Partnership's Accountants") Approved by
the Partners, at the expense of the Partnership. Notwithstanding the foregoing,
for federal income tax accounting purposes, (i) the Partnership shall maintain
any and all books and records required under the Regulatory Allocations (as
defined in Section 4.6), and (ii) the Managing Partner shall satisfy or cause to
be satisfied any financial reporting requirements of any Lender(s) and the
Partners and as otherwise required herein. The fiscal year and tax year of the
Partnership shall be the Fiscal Year, unless another period is required by the
Code or Regulations.

                                       24


      SECTION 5.2 FINANCIAL STATEMENTS AND REPORTS.

            (a) Within ten (10) Business Days after the close of each calendar
month and within ten (10) Business Days after the end of each Fiscal Year of the
Partnership, the Managing Partner shall prepare or cause to be prepared, at the
cost of the Partnership, and shall furnish to the Partners a copy of (i) the
balance sheet of the Partnership for the month or Fiscal Year, as the case may
be, (ii) a statement of income or loss for the Partnership for such month or
Fiscal Year, as applicable, (iii) a statement of sources and uses of Net
Receipts, (iv) a budget-to-actual comparison for the Annual Business Plan and
Development Budget, and (v) a written status report on the development and sale
of Lots comprising the Project. All such statements and reports shall be
prepared in accordance with GAAP and shall be certified by the Managing Partner,
or its designee, as applicable, as being true and correct in all material
respects.

            (b) At the expense of the Partnership, the Managing Partner shall
also provide the Partners with such periodic reports (not more frequently than
monthly) as any Partner may reasonably request regarding the progress of
Partnership in pursuit of the current Annual Business Plan and the activities of
the Partnership.

      SECTION 5.3 TAX STATUS AND RETURNS. The Managing Partner shall, at the
Partnership's expense, on or before March 15 of each year, cause to be prepared
a statement of income or loss showing any item of income, deduction, credit or
loss allocable for federal income tax purposes pursuant to the terms of this
Agreement for the prior Fiscal Year, and all required tax returns and statements
for the prior Fiscal Year of the Partnership which must be prepared and/or filed
with any taxing authority on behalf of the Partnership, and shall submit such
returns and statements to the Partners for their approval by such date, and,
when Approved by the Partners, shall make timely filing thereof as required. In
addition, within thirty (30) days following the end of each calendar quarter,
the Managing Partner shall use reasonable efforts, at the expense of the
Partnership, to cause to be sent to each Partner an estimate of the
Partnership's taxable income for the current quarter and the year to date, and
such Partner's distributive share of such income. The Partnership shall furnish
to the Partners a projection of the Partnership's taxable income or loss for
each tax year of the Partnership by December 1 of each such year to assist in
year-end tax planning, all at the Partnership's expense.

      SECTION 5.4 BANK ACCOUNTS. Operating funds and monies of the Partnership
shall be deposited in special accounts to be maintained with such financial
institutions as are Approved by the Partners.

      SECTION 5.5 ACCOUNTING, BOOKKEEPING, PERSONNEL. Except as otherwise
provided herein, the Managing Partner (or its designee) shall perform the
accounting and bookkeeping functions of the Partnership until the General
Partners shall otherwise determine.

      SECTION 5.6 DESIGNATION OF TAX MATTERS PARTNER. CLGP shall act as the "tax
matters partner" of the Partnership as provided in the Regulations promulgated
under Section 6231 of the Code. The tax matters partner shall promptly take such
action as may be necessary to cause Ashton Woods GP to become a "notice partner"
within the meaning of Section 6223 of the Code. The tax matters partner shall
promptly inform the other Partners of all material matters that come to its
attention in its capacity as tax matters partner by giving written notice
thereof to the other

                                       25


Partners and shall forward to the other Partners copies of all material written
communications it may receive in that capacity. The tax matters partner shall
not take any action permitted or contemplated by Section 6222 through 6231 of
the Code to be made by a tax matters partner without the Approval of the
Partners. The tax matters partner shall receive no compensation for its
services. All third-party costs and expenses incurred by the tax matters partner
in performing its duties as such (including legal and accounting fees) shall be
borne by the Partnership. Nothing herein shall be construed to restrict the
Partnership from engaging an accounting firm and/or a law firm to assist the tax
matters partner in discharging his duties hereunder.

      SECTION 5.7 TAX ELECTIONS. Except as expressly provided otherwise herein,
all tax elections and decisions, including without limitation, an election on
behalf of the Partnership under Section 754 of the Code in connection with a
sale of a Partnership Interest or part thereof shall be Approved by the
Partners.

      SECTION 5.8 CUSTODY OF PARTNERSHIP FUNDS. The Managing Partner shall have
fiduciary responsibility for the safekeeping and use of all funds and assets of
the Partnership, whether or not in its immediate possession or control. The
funds of the Partnership shall be used exclusively for the benefit of the
Partnership and the purposes set forth in this Agreement, and shall not be
commingled with the funds of any other Person. The Managing Partner shall not
employ, or permit any Developer or any other person to employ, such funds in any
manner except for the benefit of the Partnership.

                                   ARTICLE VI
                          MANAGEMENT OF THE PARTNERSHIP

      SECTION 6.1 MANAGEMENT. The powers of the Partnership shall be exercised
by or under the authority of, and the business and affairs of the Partnership
shall be managed by or under the direction of, the General Partners. Any Person
dealing with the Partnership, other than a Limited Partner, may rely on the
authority of the General Partners and their respective officers and agents in
taking any action in the name of the Partnership without inquiry into the
provisions hereof or compliance herewith, regardless of whether that action is
actually taken in accordance with the provisions of this Partnership Agreement.

      SECTION 6.2 POWERS AND DUTIES OF THE MANAGING PARTNER.

            (a) Except as provided in this Agreement, including without
limitation Section 6.9, herein, the Managing Partner, without the consent or
approval of any other Partner, shall have the authority and power in accordance
with its fiduciary duties to manage and administer the business and affairs of
the Partnership and to do all things necessary to carry on the business and
purposes of the Partnership, in pursuit of the Project in accordance with the
Annual Business Plans, Annual Budgets, and Development Plan, and otherwise in
accordance with this Agreement and applicable laws and permits. Except as
provided in Section 6.2(e) with respect to change orders, the Development Plan
(or any component thereof) may not be amended without the Approval of the
Partners.

                                       26


            (b) Without limiting the generality of the foregoing and except as
provided in Section 6.9, the Managing Partner shall have the following rights
and powers, which it may exercise in a manner consistent with its fiduciary
duties and otherwise in accordance with, this Agreement, at the cost, expense
and risk of the Partnership:

                  (i) To perform all acts necessary to improve, develop,
operate, manage and maintain the Project and to sell Lots to third parties in
accordance with, and as limited by, the Annual Business Plans and the
Development Plan;

                  (ii) To protect and preserve the assets of the Partnership;

                  (iii) To acquire such tangible personal property and
intangible personal property necessary for the Project in accordance with, and
as limited by, the Annual Business Plans and the Development Plan, as may be
necessary or desirable to carry on the business of the Partnership and sell,
exchange or otherwise dispose of such personal properties in the ordinary course
of business;

                  (iv) To keep accurate books of account and other business
records of the Partnership;

                  (v) To negotiate and contract with all utility companies
servicing the Project and to grant utility easements in the ordinary course;

                  (vi) To pay all debts and other obligations of the
Partnership, including amounts due under the Financings and other loans to the
Partnership, the costs of formation of the Partnership and of ownership,
improvement, construction, operation and maintenance of the Project and the sale
of Lots, all subject to and in accordance with the Development Plan;

                  (vii) To do and perform all such other acts and things as are
reasonably necessary or appropriate to the conduct of the Partnership's
business.

            (c) The Managing Partner shall devote itself to the business and
purposes of the Partnership, as set forth above, to the extent reasonably
necessary for the efficient carrying on thereof, without compensation except as
otherwise provided herein. The acts of the Managing Partner shall bind the
Partners and the Partnership when within the scope of the Managing Partner's
authority expressly granted hereunder. The Managing Partner, at the expense of
and on behalf of the Partnership, shall make commercially reasonable efforts to
implement all decisions Approved by the Partners and shall conduct or cause to
be conducted the management of the business and affairs of the Partnership in
accordance with, and as limited by, this Agreement. The Partnership shall have
no employees.

            (d) The rights and obligations of the Managing Partner under this
Agreement shall not be assignable voluntarily or by operation of law by the
Managing Partner without the express prior written Approval of the Partners, and
any attempted assignment without such Approval shall be void.

            (e) The Managing Partner shall not amend, modify, alter or change
the Development Plan (or any component thereof) or enter into or approve any
change order relating

                                       27


to the Improvements without the Approval of the Partners; provided, however,
that the Approval of the Partners shall not be required for non-material change
orders if (i) such change order is legally mandated or is required in order to
obtain necessary governmental permits or approvals, or (ii)(A) the increased
cost resulting from such change order does not exceed the greater of (1)
Twenty-Five Thousand Dollars ($25,000.00) and (2) three percent (3%) of the
applicable line item in the Development Budget or (B) the increased cost
resulting from such change orders, together with the increased cost resulting
from all prior change orders not Approved by the Partners, does not exceed Two
Hundred Thousand Dollars ($200,000.00). Without limiting the generality of the
foregoing, a change order shall be considered "material" if it results in any of
the following: (i) a material downgrading of the quality of the Improvements
from those specified in the Development Plan, (ii) a material change in the
Development Plan relating to the Lots or the phases of development, or any
change in Lot prices in a contract with Ashton Woods or any Affiliate of Ashton
Woods that has been Approved by the Partners, or any change of more than 5% in
Lot prices in any other contracts that have been Approved by the Partners, or
any change in tract prices that have been Approved by the Partners, (iii) a
change which materially affects the design or appearance of the Project or any
public area (interior or exterior) of the Project, or (iv) any material delay in
or extension of the development schedule. The Managing Partner shall deliver to
the Partners all change orders as part of the next monthly report following the
execution thereof together with a written explanation supporting the need for
such change order and copies of all contract modifications relating to such
change order required to be delivered by the Developer pursuant to the
Development Agreement

      SECTION 6.3 INSURANCE.

            (a) At the expense of the Partnership, the Managing Partner shall
cause the Partnership to maintain insurance covering the injury or death of
employees (if any) or others, as well as insurance against fire and other
standard risks, and to adjust all losses and claims pertaining to or arising out
of such insurance in such amounts are Approved by the Partners. All coverages
will be obtained under policy terms, scope of coverage and conditions and from
companies acceptable to and Approved by the Partners and will be non-cancelable
except upon thirty (30) days notice to the General Partners. The Managing
Partner shall provide or cause to be provided copies of the applicable
certificates of insurance to each Partner. Insurance carriers must be licensed
to conduct business in the State of Texas.

            (b) The Managing Partner will cause the Developer to require all
contractors and subcontractors to maintain in force insurance with coverages,
Approved by the Partners, at all times while engaged in activities relating to
the Project. All coverages will be obtained under policy terms and conditions
and from companies acceptable to the Managing Partner and Approved by the
Partners and will be non-cancelable except upon thirty (30) days notice to the
Partnership. The Managing Partner shall provide or cause to be provided copies
of the applicable certificates of insurance to each Partner. Insurance carriers
must be licensed to conduct business in the State of Texas.

      SECTION 6.4 EMPLOYMENT OF OTHERS. The Managing Partner shall be authorized
to appoint or contract with, any Person (other than an Affiliate) it may deem
necessary or desirable for the transaction of the business of the Partnership
for the Project; provided, however, the Partnership shall have no employees. The
cost and expense of such Person shall be borne by the

                                       28


Managing Partner unless such expenditures are expressly set forth in the
Development Budget or an approved Annual Budget. In any case, the Partnership
shall not have any employees without the Approval of the Partners.

      SECTION 6.5 PROJECT DEVELOPMENT BUDGET UPDATES. The Managing Partner shall
periodically update or cause the Developer to update the Development Budget, as
Approved by the Partners, and provide copies thereof to the Partners (a) on not
less than a quarterly and annual basis, (b) at periodic times during the year
when and as circumstances warrant such updates and/or modifications, and (c) as
reasonably requested (not more frequently than monthly) by a Partner.

      SECTION 6.6 MANAGEMENT FEE. The Partnership shall pay a fee to the
Managing Partner while it serves in such capacity equal to One Thousand and
No/100 Dollars ($1,000.00) per developed Lot in the Project sold, to be paid at
or following the closing at which such Lot is actually sold and transferred. No
such fee shall be due or payable on any tract sales or on the sale of any Lots
from such tracts, except that a commission may be paid to an employee of an
Affiliate of Ashton Woods GP in connection with the sale of that certain tract
out of the Property containing approximately 116 acres known as the Briggs
parcel, in an amount equal to five percent (5%) of the portion (if any) of the
sales price, net of any sales or broker commissions paid or incurred to any
third party, for such tract that exceeds the projected net sales price of
$4,650,000 for such tract included as part of the Development Budget.

      SECTION 6.7 LICENSES. The Managing Partner shall, at its own expense,
qualify to do business and obtain and maintain such licenses as may be required
for the performance by such Managing Partner of its services hereunder. The
Managing Partner shall apply for and obtain in a timely manner on behalf of the
Partnership and at the Partnership' expense all necessary licenses and permits
for the development of the Project and the sale of the Lots.

      SECTION 6.8 INDEMNIFICATION.

            (a) The Partnership shall indemnify, save harmless and pay all
judgments arising against the General Partners (including the Managing Partner)
and their respective members, partners, employees and agents (each a "GP
Indemnified Party") from any cost, expense, claim, liability or damage incurred
by reason of such GP Indemnified Party's relationship to the Partnership or any
act performed or omitted to be performed by them in connection with this
Agreement or the business of the Partnership, including reasonable attorney's
fees and costs incurred by them in connection with the defense of any action
based on any such act or omission, which reasonable attorneys' fees and costs
may be paid as incurred, except that the Partnership shall have no
indemnification obligation hereunder with respect to any act or omission of any
GP Indemnified Party that constitutes willful misconduct or gross negligence or
was outside the scope of such GP Indemnified Party's authority under this
Article VI. All judgments against the Partnership with respect to which any GP
Indemnified Party is entitled to indemnification may only be satisfied from the
Partnership's assets. Any Person entitled to be indemnified hereunder shall also
be entitled to recover from the Partnership's assets its reasonable attorney's
fees and costs of enforcing this indemnity. Notwithstanding anything to the
contrary herein contained, if any Affiliate of a Partner has a contractual

                                       29


agreement with the Partnership, such Affiliate will look solely to the terms and
provisions set forth in such contract for indemnification, if any, and shall
have no rights hereunder.

            (b)   Each General Partner shall indemnify, save harmless and pay
all judgments arising against the Partnership or the other Partners and their
respective members, partners, employees, agents and Affiliates from any cost,
expense, claim, liability or damage incurred by reason of any act performed or
omitted to be performed by such General Partner that constitutes willful
misconduct or gross negligence or was outside the scope of the General Partner's
authority under this Article VI, including reasonable attorney's fees and costs
incurred by them in connection with the defense of any action based on any such
act or omission, which reasonable attorneys' fees and costs may be paid as
incurred.

      SECTION 6.9 LIMITATIONS ON POWER AND AUTHORITY OF THE MANAGING PARTNER.
      Notwithstanding any other provision in this Agreement to the contrary, all
"Major Decisions" shall require the Approval of the Partners and, without such
Approval of the Partners, the Managing Partner shall not (and shall not have any
authority to) take any action with respect thereto unless and until so Approved
by the Partners. A "Major Decision" as used in the Agreement means any decision
or action by or on behalf of the Partnership described in this Section 6.9,
including Sections 6.9(a), 6.9(b) and 6.9(c). If the Designated Representatives
of the Partners are unable to agree unanimously on any Major Decision, and if
such failure continues for ten (10) days after either the Managing Partner or
any other Partner gives the other Partners written notice of such disagreement,
then the Partners shall be deemed to be deadlocked in the matter in question
("Deadlock"). Upon the occurrence of a Deadlock, the following provisions of
this Section 6.9 apply.

            (a)   If the Deadlock occurs with respect to any of the matters
described in this Section 6.9(a), then the Managing Partner shall not take any
further action with respect to such matter, unless and until it is Approved by
the Partners, and any such matter shall not be subject to dispute resolution
pursuant to Article XIII and shall not trigger the Buy/Sell provisions of
Article IX herein. With respect to any matter described in this Section 6.9(a),
a Partner may withhold its approval in its sole and absolute discretion (without
regard to whether the withholding of such approval is unreasonable or
arbitrary).

      Notwithstanding any provision of this Agreement to the contrary, a Partner
that is a Defaulting Partner will continue to have a right of approval over the
specific matters set forth in this Section 6.9(a)(i), (ii), (iii), (iv), (v),
(vi), (x) and (xiv), (but with respect to (xv), only to the extent of any
amendment to the Certificate of Limited Partnership or this Agreement that would
treat the Preferred Return Accounts or Unreturned Contribution Accounts of
Ashton Woods GP, Ashton Woods LP, CLGP and CL other than on a pari passu basis
among them), notwithstanding the uncured Default. The matters requiring Approval
of the Partners pursuant to this Section 6.9(a) are the following:

                  (i)   Lend funds belonging to the Partnership to a Partner or
      to any third party, or extend to any person, firm or corporation credit on
      behalf of the Partnership except in accordance with the terms of this
      Agreement.

                  (ii)  Take any action in contravention of this Agreement.

                                       30


                  (iii)  Possess the Project or any other Partnership assets or
      assign its rights in the Project or any other Partnership assets for other
      than a Partnership purpose, or use the Project or any other Partnership
      assets except for the account and benefit of the Partnership.

                  (iv)   Require any Additional Capital Contributions, except as
      provided under Sections 3.2 and/or 3.4 hereof.

                  (v)    Take any act which would make it impossible to carry on
      the purpose and ordinary business of the Partnership except pursuant to
      Article XII hereof.

                  (vi)   Elect for the Partnership to be treated as other than a
      partnership for federal, state and local income tax purposes.

                  (vii)  Other than in connection with the development of the
      Property in accordance with the Development Plan, partition all or any
      portion of the Project or any other property of the Partnership, or file
      any complaint or institute any proceeding at law or in equity seeking such
      partition.

                  (viii) Cause the Partnership to enter into any profit
      participation or sharing agreement or arrangement with any other Person
      with respect to the Project, except for incentive compensation
      arrangements in the ordinary course with on site personnel or Persons
      engaged to market and sell Lots in the Project, but in any case only to
      the extent set forth in the Development Budget.

                  (ix)   The transfer by any Partner of its Partnership Interest
      in the Partnership or other rights or interests which are derived by it
      under this Agreement, or any part thereof or any interest therein, except
      as expressly permitted in Article X herein.

                  (x)    Except as otherwise specifically permitted herein,
      cause the Partnership to enter into any agreement or contract for goods,
      services or property, or any other transaction, with any Partner or any
      Affiliate of any Partner, or any modification of or amendment to any such
      agreement, contract or transaction Approved by the Partners.

                  (xi)   Admit, or cause the admission of, any additional
      Partners to the Partnership.

                  (xii)  Except as required by the Development Plan, cause the
      Partnership to enter into any business combination, joint venture,
      partnership, limited liability Partnership or other entity with any other
      Person for the ownership, development or financing of the Project.

                  (xiii) Institute a filing of Bankruptcy by the Partnership.

                  (xiv)  Amend this Agreement or the Certificate of Limited
      Partnership except as may be required by applicable law.

                                       31


            (b)    If the Deadlock occurs with respect to any of the matters
described in this Section 6.9(b), then the Managing Partner shall not take any
further action with respect to such matter, unless and until it is Approved by
the Partners, and any such matter shall be subject to dispute resolution
pursuant to Article XIII and shall not trigger the Buy/Sell provisions of
Article IX herein. With respect to any matter described in this Section 6.9(b),
a Partner may withhold its approval in its sole and absolute discretion (without
regard to whether the withholding of such approval is unreasonable or
arbitrary). A Partner that is a Defaulting Partner shall not continue to have a
right of approval over the matters set forth in this Section 6.9(b) while such
Partner is a Defaulting Partner. The matters requiring Approval of the Partners
pursuant to this Section 6.9(b) are the following:

            (i)    Amend the Development Plan, Development Budget, any Annual
      Business Plan, any Annual Budget or the Minimum Sales Requirements
      contained in any Annual Business Plan, except to the extent such plan or
      change would require or permit any action, commitment or inaction of the
      Partnership that is described in either Section 6.9(a) or 6.9(c), which
      shall be subject to those sections.

            (ii)   Except as provided in the Development Plan, acquire any
      material real property.

            (iii)  Change the name of the Partnership.

            (iv)   Enter into any Lot Sale Contract except in accordance with
      the Development Plan and at a price not less than 95% of the price for
      such Lot(s) set forth in the Pro Forma Sales Budget; provided any Lot Sale
      Contract with Ashton Woods or any of its Affiliates shall be subject to
      prior written approval of CLGP.

            (v)    Cause the Partnership to commit to any activities or business
      unrelated to the Project.

            (vi)   Terminate, dissolve or wind up the Partnership except as
      provided in Section 12.1 or 11.2.(d) hereof.

            (vii)  Commence, settle, or cause the settlement of, any claims,
      suits, debts, demands or judgments against the Partnership if the amount
      involved exceeds $50,000.

            (viii) Except as required by the Development Plan, pledge, mortgage,
      hypothecate or otherwise encumber any of the Partnership's assets.

            (ix)   Except as required by the Development Plan and any Optional
      Loans, cause the Partnership to become liable with respect to any
      obligation for any Financings or other indebtedness (including guarantees
      of the indebtedness or other obligations of any person or of any
      subsidiary or affiliate of the Partnership), or to issue any notes or
      other evidences of indebtedness, in any transaction or series of
      transactions that result or will result in such obligations and
      indebtedness being outstanding at any time.

                                       32


            (x)    Modify any loan to increase the amount of the loan or
      increase the rate of interest or change the terms of repayment outside of
      the parameters provided in the approved Development Plan.

            (xi)   Any determination of the Gross Asset Value of Partnership
      property.

            (xii)  Establishing cash reserves to be retained when determining
      Net Receipts for distribution.

            (xiii) Approve any other matter reserved to the Partners or
      requiring the Approval of the Partners under this Agreement.

            (xiv)  Change the Fiscal Year or the method of accounting of the
      Partnership.

            (xv)   Amend any agreement in any material manner the entering into
      of which was a Major Decision described in this Section 6.9(b).

               (c)    If the Deadlock occurs with respect to any of the matters
described in this Section 6.9(c), then any such matter shall not be subject to
dispute resolution pursuant to Article XIII hereto and any Partner may invoke
the Buy/Sell provisions set forth in Article IX herein. With respect to any
matter contained in this Section 6.9(c), no Partner may unreasonably withhold,
delay or condition its approval. A Partner that is a Defaulting Partner shall
not continue to have a right of approval over the matters set forth in this
Section 6.9(c) while such Partner is a Defaulting Partner. The matters requiring
Approval of the Partners pursuant to this Section 6.9(c) are the following:

                  (i)   Sell, or cause the sale by the Partnership of, any
      portion of the Project, or all or substantially all of the assets of the
      Partnership, other than the sale of single family Lots and budgeted tract
      sales in the ordinary course of business in accordance with the Annual
      Business Plan, the Development Budget, the Pro Forma Sales Budget, and the
      form Lot Sale Contract.

                  (ii)  Revise in a material manner the agreed upon scope of the
      Project or make any material change to the Development Plan.

                  (iii) Any determination of or adjustment to the Gross Asset
      Value of any Partnership property.

                  (iv)  Amend any agreement in any material manner the entering
      into of that was a Major Decision described in this Section 6.9(c).

      SECTION 6.10 ANNUAL BUSINESS PLAN.

            (a)   On or prior to October 1 of each year, the Managing Partner
shall prepare and deliver to each Designated Representative a description of the
proposed development activities of the Partnership planned for the following
Fiscal Year as provided in this Section 6.10(a) (the "Annual Business Plan").
The Annual Business Plan for each year shall

                                       33


reflect the current expectations of the Managing Partner regarding the
development of the Property and, in particular, shall include a description of:

                  (i)    the planned development activities of the Partnership
            during the year pursuant to the Development Plan and the reasons for
            any deviations from the Development Plan or the Development Budget;

                  (ii)   the amount of the expected capital expenditures of the
            Partnership pursuant to the Development Budget and the anticipated
            amount of capital that may be called from the Partners in accordance
            with Sections 3.2 and 3.4 herein and the Development Budget;

                  (iii)  the Lots expected to be marketed and sold by the
            Partnership and the budgeted gross and net revenues from such sales;

                  (iv)   the amount of anticipated distributions to each
            Partner, if any;

                  (v)    the marketing activities of the Partnership;

                  (vi)   any change to the anticipated phasing of the
            development of the Property as reflected in the Development Plan;

                  (vii)  a proposed Annual Budget for the next Fiscal Year in
            accordance with the Development Plan and the proposed Annual
            Business Plan;

                  (viii) prior to the sale of the first Lot by the Partnership,
            a proposed sales budget for the initial phase of the development of
            the Property, and prior to the sale of the first lot in each
            subsequent phase another proposed sales budget shall be prepared
            (each a "Pro Forma Sales Budget"). Each Pro Forma Sales Budget will
            establish a targeted sales price for each lot to be sold in the
            applicable phase that is consistent with the then Annual Business
            Plan;

                  (ix)   the proposed Minimum Sales Requirements for the Fiscal
            year; and

                  (x)    any other matter relating to the development of the
            Property that the Managing Partner determines should be provided for
            in the Annual Business Plan.

      (b)   The Managing Partner shall be available to discuss the proposed
Annual Business Plan and answer any questions related thereto at the meeting of
the Designated Representatives scheduled for the fourth quarter of such year.
Within thirty (30) days of receipt of the Annual Business Plan, or within ten
(10) days after the fourth quarter meeting of the Designated Representatives,
which ever is later, the Designated Representatives shall either approve or
disapprove the proposed Annual Business Plan, in whole or in part. The Annual
Business Plan generally must be approved by all Designated Representatives. If
at the end of such thirty (30) day or ten (10) day period, as applicable, the
proposed Annual Business Plan in its entirety has not been approved in the
manner required, then it shall be deemed disapproved in its entirety.

                                       34


      (c)   If a proposed Annual Business Plan, or any portion thereof, is not
approved in the time period specified in Section 6.10(b) above then the General
Partners shall cooperate with each other to resolve any questions with respect
to the proposed plan and any suggested revisions thereto and shall use their
good faith efforts to agree upon an Annual Business Plan for the Fiscal Year in
question prior to the beginning of such Fiscal Year. If an Annual Business Plan
for any Fiscal Year is not approved prior to the commencement thereof, then,
pending final resolution of any dispute, the Managing Partner shall continue to
manage, maintain, supervise, direct, and operate the activities of the
Partnership in accordance with the approved Annual Business Plan for the
previous Fiscal Year (or if no such plan exists, the Development Plan) until the
requisite approval of a new Annual Business Plan is obtained; except that the
Managing Partner shall be authorized during any interim period to reasonably
exceed the prior Fiscal Year's approved Annual Budget amounts for taxes, utility
charges and other items not within the reasonable control of the Partnership as
well as for increases in contract services and personnel costs to the extent
required to maintain the same level of service provided for during the previous
Fiscal Year. If after sixty (60) days following the end of the period described
in Section 6.10(b) above an Annual Business Plan has not been approved, then the
Partners shall be deemed to be in deadlock and any General Partner may initiate
the arbitration provisions of Article XIII herein; provided, however, no part of
any proposed Annual Business Plan shall be subject to arbitration if such matter
would require the Approval of the Partners under Section 6.9(a) or 6.9(c) of
this Agreement.

      (d)   Upon approval of an Annual Business Plan pursuant to Section 6.10(c)
above (whether by approval of the Partners or by arbitration), the Managing
Partner shall promptly take all action necessary to cause the Annual Business
Plan to be implemented by the Partnership.

      SECTION 6.11 MANAGEMENT BY LIMITED PARTNERS PROHIBITED. Except as
otherwise provided herein, the Limited Partners, as such, shall not participate
in or have control over the management of the Partnership's business and shall
not transact any business for the Partnership.

      SECTION 6.12 INSPECTION. Each Partner shall at all times have the right,
power and authority, at its sole cost and expense, to perform (or have its
agents or representatives perform) such tests, inspections, surveys and reviews
of the business and affairs of the Partnership as it shall, in its sole
discretion, deem necessary or advisable.

      SECTION 6.13 CONSULTATIONS. The Managing Partner shall, on a continuing
basis, use reasonable efforts to provide adequate opportunity for reasonable
consultations with the Partners (or their agents) prior to any recommendation
(preliminary or otherwise) with respect to any matter requiring the consent or
Approval of the Partners.

      SECTION 6.14 COMPENSATION.

            (a)   Except as otherwise set forth in Section 6.6, no Partner or
Affiliate thereof shall be paid compensation for serving as a Partner or in
connection with any services, directly or indirectly, rendered to or for the
Partnership.

            (b)   The General Partners will be reimbursed by the Partnership for
all reasonable costs and expenses incurred in connection with the management and
operation of the Partnership's assets and business, with the exception of
general overhead expenses, provided that

                                       35


(i) all such costs and expenses are evidenced by reasonable substantiating
documentation such as receipts, invoices, canceled checks and statements, and
(ii) such amounts are set forth in the Development Budget and/or Annual Business
Plan.

      SECTION 6.15 REMOVAL OF MANAGING PARTNER. Upon (i) the occurrence of an
Event of Default with respect to Ashton Woods GP or Ashton Woods LP (or any
Affiliate or any permitted transferee thereof); (ii) any Transfer of an interest
in Ashton Woods GP or Ashton Woods LP not permitted by Article X; (iii) the
occurrence of an event of default under the Financing (after giving effect to
any applicable grace or cure periods) that is not caused by CLGP, CL, or any
Affiliate of CLGP or CL; or (iv) the Partnership shall for any reason within the
reasonable control of the Managing Partner fail to achieve any of the Minimum
Sales Requirements included within an Approved Business Plan for two (2)
consecutive quarterly periods, then in each case CLGP shall have the right (but
not the obligation) in it sole discretion to remove Ashton Woods GP as the
Managing Partner by giving written notice of such removal to Ashton Woods GP;
provided that the time period by which the Minimum Sales Requirements must be
achieved shall be subject to extensions for an aggregate period of up to six (6)
months on account of one (1) or more Force Majeure Events. Items not within the
reasonable control of the Managing Partner: shall include, but not be limited
to, (i) the default by a homebuilder (other than Ashton Woods) in its obligation
to acquire Lots in the Project from the Partnership pursuant to a Lot Sales
Contract executed by the Partnership, and (ii) the failure of a contractor to
perform its obligations in accordance with a contract or agreement executed by
the Partnership. Any such removal shall be effective immediately upon the giving
of such notice, and CLGP or an Affiliate thereof designated by CLGP shall be the
Managing Partner and the Partnership shall continue, subject to the terms of
Article XI. CLGP, or its designee, shall have all power necessary to amend the
Partnership's Certificate of Limited Partnership and this Agreement as necessary
to reflect any such removal and the designation of CLGP, or its designee, as the
Manager Partner. Following any such removal, Ashton Woods GP shall continue to
be a General Partner, except as otherwise provided in Article XI. The Managing
Partner shall have the right to submit proposed updates of the Minimum Sales
Requirements and the reasons for such proposed changes to CLGP on a semi-annual
basis. If CLGP shall approve such proposed changes in the Minimum Sales
Requirements in its sole discretion, such revised Minimum Sales Requirements
shall be substituted for the sale requirements set forth on Schedule 6.15. The
parties acknowledge that the failure to achieve the Minimum Sales Requirement
will not give rise to any claim or action for damages unless such failure is due
to the default or material breach by the Managing Partner of its obligations
under this Agreement.

      SECTION 6.16 PARTNER MEETINGS.

            (a)   It is expressly understood and agreed that the Partners shall
reasonably cooperate with each other to meet, review documents and/or make
decisions. Furthermore, the Partners may be contacted, and decisions made, by
telephone, facsimile or email in lieu of face-to-face meetings, subject,
however, to those matters requiring the Approval of the Partners.

            (b)   Quarterly meetings of the Partners shall be held at 10:00
a.m., Atlanta, Georgia time, unless another date, time is or place is Approved
by the Partners. Any action may be taken at the quarterly meetings which is
reserved to the Partners pursuant hereto or is otherwise presented to the
Partners at the meeting.

                                       36


            (c)   Special meetings of the Partners may be called by any Partner
by delivering to the other Partners a written request stating that the
requesting Partner wishes to call a meeting and indicating the specific purpose
for which the meeting is to be held. Action at the meeting shall be limited to
those matters specified in the call of the meeting. This provision shall not be
construed to require the holding of any special meetings.

            (d)   Unless waived or otherwise not required pursuant hereto, a
notification of all meetings, stating the place, day and hour of the meeting and
the purpose or purposes for which the meeting is called, shall be delivered by
the Managing Partner or any Partner to each Partner. If the applicable party
fails to timely deliver such notices, then any Partner may deliver such notices,
provided that, in such event, the notices shall be delivered to each Partner no
less than two (2) nor more than sixty (60) days before the meeting.
Notwithstanding the foregoing, any Partner may request one postponement of the
meeting date for a period not to exceed five (5) Business Days by giving written
notice to the non-requesting Partners at least one (1) Business Day prior to the
scheduled date of such meeting.

            (e)   Attendance at a meeting shall constitute a waiver of
notification of the meeting, except where such Person attends for the express
purpose of objecting to the transaction of any business on the grounds that the
meeting is not lawfully called or convened. Notification of a meeting may also
be waived in writing. Attendance at a meeting is not a waiver of any right to
object to the consideration of matters required to be included in the
notification of the meeting but not so included, if the objection is expressly
made at the meeting.

            (f)   Any Partner may designate other parties to attend Partner
meetings in an ex-officio capacity, unless objected to by any other Partner.
Such parties may consult with and advise the Partners but may not vote at such
meetings.

            (g)   All Partners who are not in default hereunder may vote either
in person or by proxy at any meeting. Each Partner's percentage voting power at
a meeting shall be equal to its Percentage Interest. Notwithstanding anything
contained herein to the contrary, all references to approval or voting by the
Partners shall mean those Partners who are entitled to vote hereunder at the
time the vote is taken on such matter. All decisions reserved to the Partners
shall be made by the concurring majority vote of the Partners entitled to vote
at and attending such meeting; provided, however, any decisions which must be
Approved by the Partners or are subject to the Approval of the Partners shall be
made by the requisite percentage vote of the Percentage Interests of the
Partners entitled to vote at such meeting, whether attending the meeting or not,
and reduced to writing and signed by the Partners in order to be effective.

            (h)   Partners may participate in a meeting by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and participation in a meeting
pursuant to this subsection shall constitute presence in person at the meeting.

            (i)   Any action that may be taken at a meeting of the Partners may
be taken without a meeting if a consent in writing, setting forth the action to
be taken, shall be signed by all Partner(s) who are entitled to vote hereunder
and who are holding the percentage of Partner's Percentage Interests and/or are
required to approve such action under the Act or this Agreement.

                                       37


Such consent shall have the same force and effect as a vote of the signing
Partners at a meeting duly called and held pursuant to this Section 6.16. No
prior notice from the signing Partner(s) to the other Partner(s) shall be
required in connection with the use of a written consent pursuant to this
Section 6.16. Notification of any action taken by means of a written consent of
Partners shall, however, be sent within a reasonable time after the date of the
consent to all Partners who did not sign the written consent. In this regard, if
a Partner is requested in writing to consent to or reject any actions specified
in such request, such Partner shall be deemed to have rejected such action if
such Partner fails to respond in writing within five (5) business days after
receipt of such request.

            (j)   A Partner may vote either in person or by proxy executed in
writing by the Partner. A photographic, photo static, facsimile, email or
similar reproduction of a writing executed by the Partner, shall be treated as
an execution in writing for purposes of this Section 6.16. Proxies for use at
any meeting of Partners or in connection with the taking of any action by
written consent shall be filed with the Managing Partner before or at the time
of the meeting or execution of the written consent, as the case may be. No proxy
shall be valid after eleven (11) months from the date of its execution unless
otherwise provided in the proxy. A proxy shall be revocable unless the proxy
form conspicuously states that the proxy is irrevocable and the proxy is coupled
with an interest. Such person's proxy shall be deemed automatically revoked upon
the death, resignation or removal from such office of a Partner as such person
previously held.

            (k)   In addition to the other rights specifically set forth in this
Agreement, each Partner is entitled to all information to which that Partner is
entitled to have access pursuant to the Act under the circumstances and subject
to the conditions therein stated.

                                   ARTICLE VII
                    REPRESENTATIONS, WARRANTIES AND COVENANTS

      SECTION 7.1 REPRESENTATIONS, WARRANTIES AND COVENANTS.

            (a)   Ashton Woods GP and Ashton Woods LP hereby represent and
warrant to and covenant with the other Partners the following:

                  (i)   Ashton Woods GP is corporation duly organized and
      validly existing in the State of Texas, and has full power to carry on its
      business and to own and operate its assets and to carry out the
      transactions contemplated in this Agreement. Ashton Woods LP is a limited
      liability company duly organized and validly existing in the State of
      Texas, and has full power to carry on its business and to own and operate
      its assets and to carry out the transactions contemplated in this
      Agreement.

                  (ii)  Each of Ashton Woods GP and Ashton Woods LP has duly
      authorized, executed and delivered this Agreement, and this Agreement is
      the legal and binding obligation of each of Ashton Woods GP and Ashton
      Woods LP.

                  (iii) The execution, delivery and performance of this
      Agreement by each of Ashton Woods GP and Ashton Woods LP does not and will
      not conflict with, violate or constitute a breach or default under the
      respective organizational documents of Ashton Woods GP or Ashton Woods LP,
      any agreement or instrument by which either is

                                       38


      bound or to which its properties or assets are subject, or any law,
      regulation, writ, order, injunction or decree to which either is subject.

                  (iv)  There is no action, suit or proceeding pending against
      such Partner or, to its knowledge, threatened in any court or by or before
      any other governmental agency or instrumentality that could adversely
      affect or would prohibit its entering into or performing its obligations
      under this Agreement.

            (b)   CLGP and CL hereby represent and warrant to and covenant with
the other Partners the following:

                  (i)   CLGP is a Georgia limited liability company duly
      organized and validly existing in the State of Georgia, and has full power
      to carry on its business, to own and operate its assets and to carry out
      the transactions contemplated in this Agreement. CL is a Texas limited
      partnership duly organized and validly existing in the State of Texas, and
      has full power to carry on its business, to own and operate its assets and
      to carry out the transactions contemplated in this Agreement.

                  (ii)  Each of CLGP and CL has duly authorized, executed and
      delivered this Agreement, and this Agreement is the legal and binding
      obligation of each of CLGP and CL.

                  (iii) The execution, delivery and performance of this
      Agreement by each of CLGP and CL does not and will not conflict with,
      violate or constitute a breach or default under the certificate of
      formation or operating agreement of CLGP or the certificate of limited
      partnership or limited partnership agreement of CL, any agreement or
      instrument by which either is bound or to which its properties or assets
      are subject, or any law, regulation, writ, order, injunction or decree to
      which either is subject.

                  (iv)  There is no action, suit or proceeding pending against
      such Partner or, to its knowledge, threatened in any court or by or before
      any other governmental agency or instrumentality that could adversely
      affect or would prohibit its entering into or performing its obligations
      under this Agreement.

      SECTION 7.2 INDEMNITY FOR BREACH OF WARRANTY. If there is a breach by a
Partner of any of the representations, warranties set forth in Section 7.1
above, and if the non-breaching Partner(s) or the Partnership, as applicable,
suffer any loss or damages as a result thereof, then the breaching Partner shall
duly, irrevocably and unconditionally indemnify, defend and hold the other
Partners and the Partnership harmless from and against any claims, causes of
action, liabilities, costs, expenses, damages or losses of any nature whatsoever
arising out of, incident to or resulting from such breach, including without
limitation reasonable attorneys' fees and costs of litigation.

      SECTION 7.3 SCOPE OF AUTHORITY. Each Partner agrees to indemnify, defend
and hold harmless the other Partners and the Partnership from and against all
claims, causes of action, liabilities, costs, expenses, damages or losses of any
nature whatsoever arising or resulting from or by reason of (a) such Partner's
acting outside of the scope of its authority under this Agreement, or (b) such
Partner's gross negligence or willful misconduct (excluding, however,

                                       39


failure to make a required Additional Capital Contribution) in the performance
of its obligations and duties under this Agreement.

                                  ARTICLE VIII
                   CONTRACTS WITH RELATED PARTIES; ACQUISITION
                         AND DEVELOPMENT OF THE PROPERTY

      SECTION 8.1 RELATED PARTY CONTRACTS.

            (a)   With the exception of Lot Sale Contracts with an Affiliate of
Ashton Woods that are approved by CLGP, the Partnership shall not enter into any
agreement with any Partner or with any Affiliate of such Partner for the
furnishing to the Partnership of goods or services for the Project or for the
acquisition or sale of property, unless such relationship has been disclosed, in
writing, to the other Partners and such agreement is approved by the holders of
at least a majority of the Percentage Interests held by the Partners who are not
Affiliates of such Partner, with the rates of compensation, commission,
remuneration or purchase price not in excess of those prevailing in the market
place.

            (b)   Notwithstanding anything in this Agreement to the contrary, in
the event Ashton Woods or any Affiliate of Ashton Woods is in default under any
Lot Sale Contract (after giving effect to any applicable notice and cure period)
with the Partnership, then in such event and as long as the default is
continuing, CLGP will have the sole, exclusive and unilateral right on behalf of
the Partnership (i) to select which remedy or remedies that the Partnership may
exercise, and (ii) if a Lot Sale Contract is terminated, to thereafter remarket
to third parties the Lots in the Project which are the subject of such
terminated Lot Sale Contract (or portion thereof). In addition, notwithstanding
anything in this Agreement to the contrary, CLGP shall have the sole, exclusive
and unilateral right on behalf of the Partnership (1) to give all notices on
behalf of the Partnership under or with respect to all Lot Sale Contracts with
Ashton Woods or any Affiliate of Ashton Woods, (2) to terminate any Lot Sale
Contract executed by Ashton Woods or any Affiliate of Ashton Woods with the
Partnership if Ashton Woods or any Affiliate of Ashton Woods is in default with
respect to such Lot Sale Contract (after giving effort to any applicable notice
and cure period thereunder), (3) to select which remedy or remedies that the
Partnership may exercise, and (4) to remarket and sell to third parties the Lots
which are the subject of any terminated Lot Sale Contract(s).

            (c)   The Managing Partner shall have the unilateral right to
designate one or more third party national title companies to be used for all
lot closings.

      SECTION 8.2 ACQUISITION OF THE REAL PROPERTY. The Partnership shall
acquire the Real Property pursuant to the Purchase Agreement.

                                   ARTICLE IX
                                    BUY-SELL

      SECTION 9.1 BUY-SELL.

            (a)   At any time after the execution of this Agreement if any Major
Decision described in Section 6.9(c) hereof, is proposed by a Partner and
Approval of the Partners is not

                                       40


obtained within thirty (30) days following delivery of such proposal in writing
to the General Partners, the Partners agree to meet again within seven (7)
Business Days of a "Deadlock" (herein so called) on such Major Decision and
attempt in good faith to negotiate a mutually acceptable resolution to the
Deadlock. In the event the Partners are unable to reach such agreement and
resolve the Deadlock within ten (10) days thereafter, any Partner (that is not a
Defaulting Partner) shall have the right, by giving written notice (the "Offer
Notice") to the other Partner(s), to offer to purchase the other Partners' who
are not its Affiliates entire Partnership Interest(s) in the Partnership. The
Offer Notice shall state that the Partner giving such notice (on behalf of
itself and its Affiliates in this Partnership) (the Partner giving such notice
and all of such Partner's Affiliates in the Partnership shall hereinafter be
collectively referred to as the "Offering Party") desires to purchase (1) the
entire Partnership Interest(s) of the other Partner(s) and such other Partner's
Affiliates in the Partnership (the other Partner and such other Partner's
Affiliates in the Partnership shall hereinafter be collectively referred to as
the "Other Party"). The Offer Notice shall also specify (A) an amount (the
"Stated Amount") which the Offering Party would pay for all Partnership assets
which Stated Amount shall in any case be not less than the aggregate of all
indebtedness owed at that time by the Partnership, and which shall be used in
the calculations under this Section 9.1, and (B) the total amount of all
indebtedness for the Partnership.

            (b)   The aggregate purchase price (the "Interest Purchase Price")
for the Partnership Interest(s) of the Selling Partner (as defined in Section
9.1(d) below) pursuant to this Section 9.1 shall be the aggregate amount which
would be distributed to the Selling Partner pursuant to Section 4.9 of this
Agreement (after giving effect to all applicable provisions of this Agreement
and after liquidating all Partnership indebtedness and all the indebtedness and
reserves then existing but without establishing any additional reserves) if all
of the assets then held by the Partnership were sold on the Purchase Closing
Date (as defined below) for a gross sales price equal to the Stated Amount and
the proceeds of such sale were distributed pursuant to Section 4.9. In the event
that the amount described above which would be distributed to the Selling
Partner under Section 4.9 would be zero, then the Interest(s) Purchase Price
shall be Ten and No/100 Dollars ($10.00), subject to the provisions of Section
9.1(f) hereof. The Interest Purchase Price to be paid for the Selling Partner's
Partnership Interest(s) in the Partnership, and the terms of payment and closing
of such transaction, shall be subject to the provisions hereof.

            (c) The Other Party shall have a period of twenty (20) days after
the receipt of the Offer Notice within which to notify the Offering Party in
writing whether such Other Party shall, at the Other Party's option, (i)
purchase all of the Partnership Interest(s) of the Offering Party at the pro
rata Interest(s) Purchase Price and subject to the other terms established as
provided above, or (ii) sell its (and its Affiliates') entire Partnership
Interest(s) in the Partnership to the Offering Party at the pro rata Interest(s)
Purchase Price and subject to the other terms established as provided above. The
Other Party's failure to timely deliver such written notice shall be deemed to
be its election to sell its Interest(s) to the Offering Party.

            (d) If the Selling Partner (or its Affiliate) is also the Developer
then such Development Agreement may be terminated in whole or in part at the
option of the Purchasing Partner (as defined in Section 9.1(e) below) on notice
to the Selling Partner; provided, however, notwithstanding such termination of
the Development Agreement, the Developer will be entitled to be paid any unpaid
Development Fees and expenses accrued through the date of termination

                                       41


of the Development Agreement(s) and shall remain liable for any of its
obligations arising prior to such termination. In the event the Managing Partner
is a Selling Partner, no further fees shall be payable to it under Section 6.6
except as may accrue prior to the Purchase Closing Date (as defined in (e)
below).

            (e)   Irrespective of whether the Other Party timely notifies the
Offering Party that such Other Party desires to purchase the Partnership
Interest of the Offering Party or to sell its Partnership Interest to the
Offering Party, and irrespective of whether the Other Party fails to timely
reply within the specified twenty (20) day period, the purchase and sale
transaction to be effectuated pursuant to this Section 9.1 hereof with respect
to the applicable Partnership Interest(s) shall be closed on the date (the
"Purchase Closing Date"), whichever is earlier, that is (A) ninety (90) days
from the receipt by the Other Party of the original Offer Notice given by the
Offering Party, or (B) the date specified in the Offer Notice, but not earlier
than sixty (60) days from receipt of the Offer Notice. On the Purchase Closing
Date, the selling Partner and its Affiliates in the Partnership (the selling
Partner and its Affiliates are hereafter collectively referred to as the
"Selling Partner") shall convey, transfer and assign to the purchasing Partner
(herein the "Purchasing Partner"), by deed, bill of sale and/or other
instruments of transfer as may be reasonably requested by the Purchasing
Partner, the Selling Partner's entire Partnership Interest(s) in the Partnership
and shall then and thereafter, to the extent requested by the Purchasing
Partner, cooperate to effect an efficient continuation of the affairs of the
Partnership and the operation, management and maintenance of the Project. On the
Purchase Closing Date, the Purchasing Partner shall pay to the Selling Partner
the Interest(s) Purchase Price for the Selling Partner's interest(s) in the
Partnership.

            (f)   It shall be a condition precedent to the closing of the
purchase and sale of the Selling Partner's Partnership Interest(s) that the
Purchasing Partner shall either (i) pay in full any loan to the Partnership from
any Person under which the Selling Partner (or any Affiliate thereof) has
personal liability (plus any deferred and accrued and unpaid interest thereon
and any required prepayment premium and/or yield maintenance fees), or (ii) have
the Selling Partner (or any Affiliate thereof) released from personal liability
for payment of the principal and interest of such loan (and provide a complete
indemnity to the Selling Partner from the Purchasing Partner for other
obligations thereunder or relating thereto). In addition, the Selling Partner
may, in its sole, absolute and unilateral discretion, and without prejudice to
any other legal or equitable remedies it may have, unilaterally prohibit the
closing from occurring unless simultaneously therewith either (1) any such loan
is so repaid, or (2) such release from liability is obtained. For the avoidance
of doubt, the Interest Purchase Price shall not be increased or adjusted whether
any such loan is repaid or such release is obtained (it being understood and
agreed for purposes of calculation of the Interest Purchase Price that the
amount of any such indebtedness shall be deducted from the Stated Amount in
determining the Interest Purchase Price).

            (g) In the event a Partner (or any Affiliate) is at the time of the
Offer Notice holding a bona fide written third party offer to buy any Interest
in the Partnership (or all or substantially all of the Project), such offer must
be disclosed to the other Partner.

                                       42


                                    ARTICLE X
                       TRANSFER OF PARTNERSHIP INTEREST(S)

      SECTION 10.1 TRANSFER OF PARTNERSHIP INTEREST(S)S HELD BY THE GENERAL
PARTNER. Except as otherwise herein expressly provided, no General Partner may,
without the prior Approval of the Partners, voluntarily retire or withdraw from
the Partnership, substitute any person, firm or corporation in its stead or
sell, assign, transfer or otherwise dispose of all or any part of its
Partnership Interest(s) in the Partnership; provided, however, that nothing in
this Section 10. 1 shall prevent or restrict a General Partner from:

            (a)   pledging, granting a security interest in or otherwise
encumbering its Partnership Interest(s) to secure the Financing(s); or

            (b)   selling, assigning, transferring or otherwise disposing of its
right to receive distributions with respect to its respective Partnership
Interest(s) to Affiliates of the General Partner, provided that no such transfer
shall dissolve the Partnership or entitle the assignee to become a partner or to
interfere or otherwise participate in the management or administration of the
affairs or business of the Partnership, to require any information or accounts
of Partnership transactions, to inspect the Partnership's books or otherwise to
have any connection with or rights against the Partnership or the Partners
(except the assigning Partner), and provided further that the Partnership shall
not be required to recognize any such transfer until the Partners shall have
received from the General Partner notice and other evidence reasonably
satisfactory to the Partners of such transfer; or

            (c)   in the case of CLGP, transferring or assigning all of its
Partnership Interest to CREC and/or Lumberman's Investment Corporation or any
other Affiliate of CREC and/or Lumberman's Investment Corporation.

      SECTION 10.2 ACQUISITION OF PARTNERSHIP INTEREST(S) FOR INVESTMENT.

            (a)   Each Partner hereby represents and warrants to the other
Partners and to the Partnership that the acquisition of its Partnership
Interest(s) is made for its own account for investment purposes only and not
with a view to the resale or distribution of such Partnership Interest(s).

            (b)   Each Partner represents and agrees that it is aware that its
Partnership Interest has not been registered under the Securities Act of 1933,
as amended, or under any applicable state securities laws, and agrees that it
will not sell, assign or otherwise transfer its Partnership Interest(s) or any
fraction thereof unless the Partnership Interest(s) has(have) been registered
under the Securities Act of 1933, as amended, and under any applicable state
securities laws, or such sale, assignment or transfer is exempt from such
registration (and, if requested, opinions of counsel to such effect are obtained
and Approved by the Partners) and, in any event, it will not so sell, assign or
otherwise transfer its Partnership Interest(s) or any fraction thereof to any
person or entity who does not similarly represent, warrant and agree as provided
herein.

            (c)   Each Partner understands that its right to sell, pledge,
transfer, assign or dispose of its Partnership Interest is restricted by the
terms of this Agreement and state and federal securities laws.

                                       43


            (d)   Each Partner represents that it is a sophisticated and
knowledgeable investor with experience in making investments such as the one it
is making in the Partnership, it has been provided with, or has had access to,
such information as it deems necessary to or useful in its evaluation of the
merits, risks and tax consequences of an investment in the Partnership and of
making an informed investment decision, and it has been advised by its counsel,
accountants, financial advisors or such other Persons it has deemed appropriate
concerning this Agreement and its investment in the Partnership

      SECTION 10.3 TRANSFER OF PARTNERSHIP INTEREST(S) HELD BY ANY LIMITED
PARTNER.

            (a)   Except as otherwise herein expressly provided, no Partnership
Interest(s) of any Limited Partner nor any fraction thereof may be voluntarily
sold, exchanged, pledged, assigned or transferred by any Limited Partner without
being Approved by the Partners; provided, however, nothing in this Section
10.3(a) shall prevent or restrict any Limited Partner from (i) pledging,
granting a security interest in or otherwise encumbering its Partnership
Interest(s) for the Financing(s) subject to the terms and provisions of this
Agreement, including specifically, but not limited to, Section 10.5 hereof, and
(ii) transferring or assigning its Partnership Interest(s) to one or more
Affiliates of such Limited Partner.

            (b)   Any Approval of the Partners of a permitted sale, exchange,
transfer or assignment under Section 10.3(a) above shall be conditioned upon
receipt by the General Partners of a written opinion of counsel (if requested by
a Partner) reasonably satisfactory in all respects to counsel for the
Partnership and counsel for the Partner requesting same confirming that,

                  (i)   such sale, exchange, transfer or assignment would not
      violate the Securities Act of 1933, as amended, or any state securities or
      "blue sky" laws (including any investor suitability standards) applicable
      to the Partnership or the Partnership Interest(s) to be sold, exchanged,
      transferred or assigned;

                  (ii)  such sale, exchange, transfer or assignment would not
      terminate the Partnership or cause the Partnership to lose its status as a
      partnership for federal income tax purposes; and

                  (iii) such sale, exchange, transfer or assignment, when added
      to the total of all other sales, exchanges, transfers or assignments of
      Partnership Interest(s) within the preceding twelve (12) months, shall not
      result in the Partnership being considered to have terminated within the
      meaning of Section 708(b)(1)(B) of the Code.

      SECTION 10.4 INCAPACITY OF A PARTNER. Upon the incapacity of any Partner
that is a natural person, its permitted successors or assigns shall have (i) all
the rights of such Partner for the purpose of settling or managing its affairs,
and (ii) such power as the incapacitated Partner possessed to assign all or any
part of its Partnership Interest(s) and to join with such assignee in satisfying
conditions precedent to such assignee becoming a substituted Partner. The
incapacity of any Partner shall not dissolve the Partnership.

                                       44


      SECTION 10.5 ASSIGNEES.

            (a)   The Partnership shall not recognize for any purpose any
purported sale, exchange, pledge, assignment or transfer of all or any fraction
of the Partnership Interest(s) of any Partner unless (i) such Partner complies
with the provisions of this Article X, (ii) the Partnership shall have received
evidence satisfactory to the unaffected Partners that the proposed purchaser,
assignee or transferee has the financial capacity to fully perform and observe
the obligations of such Partner under this Agreement, and (iii) there shall have
been filed with the Partnership a written and dated notification of such sale,
exchange, pledge, assignment or transfer, in form Approved by the Partners,
executed and acknowledged by both the seller, assignor or transferor and the
purchaser, assignee or transferee, and such notification (1) contains the
acceptance and assumption by the purchaser, assignee or transferee of all of the
terms and provisions of this Agreement in a manner reasonably satisfactory to
the Partners, and (2) represents that such sale, exchange, pledge, assignment or
transfer was made in accordance with all applicable laws and regulations.
Notwithstanding anything to the contrary, no assignment hereunder shall release
the Partner assigning its Interest hereunder from the obligations and
indemnities contained herein and arising prior to the date of the assignment.

            (b)   If any Partner shall sell, assign or transfer all of its
Partnership Interest(s), it shall cease to be a Partner hereunder, as the case
may be, except that, unless and until a substituted partner is admitted in its
stead, such Partner shall retain the statutory rights of the assignor of a
partner's interest under the Act.

            (c)   A person who is the assignee of all or any fraction of the
Partnership Interest(s) of any Partner, but does not become a substituted
partner and desires to make a further assignment of such Partnership
Interest(s), shall be subject to all the provisions of this Section 10.5 to the
same extent and in the same manner as the assigning Partner.

      SECTION 10.6 SUBSTITUTED PARTNER. No Partner shall have any right to
substitute a purchaser, assignee, transferee, donee or other recipient of all or
any portion of such Partner's Partnership Interest as a partner in its place.
Any such purchaser, assignee, transferee, donee or other recipient of any such
Partner's Partnership Interest(s) shall be admitted to the Partnership as a
substituted partner only with the Approval of the Partners, which consent may
be arbitrarily granted or withheld in the sole discretion of the General
Partners. Any such consent by the General Partners shall be binding and
conclusive and shall be evidenced by the execution by the General Partners of an
amendment to this Agreement evidencing the admission of such person as a
substituted partner.

      SECTION 10.7 INDIRECT TRANSFERS. In order to effectuate the purpose of
this Article X, each Partner agrees that, except as expressly authorized in
Section 10.1 and Section 10.3 hereof, no transfer or other disposition of any
stock, partnership, limited liability company, or other beneficial interest in
any Partner or other such Person which controls any part of any Partnership
Interest will be effected, directly or indirectly, unless Approved by the
Partners; provided, however, the trading of shares of stock of any Person whose
shares are traded on a national securities exchange or in the over-the-counter
securities market, or a sale of all or substantially all the assets of such a
Person, or the merger or consolidation of such a Person, or acquisition of

                                       45


a controlling interest in such a Person, shall be permitted and will not be
deemed to violate the provisions of this Article X.

                                   ARTICLE XI
                                     DEFAULT

      SECTION 11.1 EVENTS OF DEFAULT. The occurrence of any of the events set
forth below shall constitute an event of default ("Event of Default") hereunder
on the part of a Partner with respect to whom such Event of Default occurs (the
Partner with respect to whom such Event of Default has occurred, shall
hereinafter be referred to as the "Defaulting Partner") if, within fifteen (15)
Business Days following the receipt of written notice of such Event of Default
described in Subsection 11.1(g), (h), (i), or (j) below from any other Partner,
the Defaulting Partner fails to pay such monies or, in the case of non-monetary
defaults, fails to cure such default; provided, however, notwithstanding the
foregoing, the occurrence of any of the events described in Subsections 11.1(a)
through (f) below shall constitute an Event of Default immediately upon such
occurrence without any requirement of notice or passage of time except as
specifically set forth in any such subsection. The Partners, other than the
Defaulting Partner and its Affiliate, shall hereinafter be collectively referred
to as the "Non-Defaulting Partners." The following shall be Events of Default as
set forth above and for all purposes of this Agreement:

            (a)   The violation of a Partner of any of the restrictions or
prohibitions set forth in this Agreement upon the right of a Partner to sell,
exchange, pledge, assign or transfer its Partnership Interest(s) or any portion
thereof or any interest therein;

            (b)   Institution of any Bankruptcy affecting a Partner or the
commencement of any other proceedings of any nature under any laws of the United
States or of any state for the relief of debtors wherein such Partner is seeking
relief as a debtor;

            (c)   A general assignment by a Partner for the benefit of
creditors;

            (d)   A proposed plan, arrangement or other action by a Partner's
creditors taken as a result of a general meeting of the creditors of such
Partner;

            (e)   Admission by a Partner in writing of its or his inability to
pay its or his debts as they mature;

            (f)   Attachment, execution or other judicial seizure of all or any
substantial part of a Partner's Partnership Interest(s) or other assets, such
attachment, execution or seizure remaining undismissed or undischarged for a
period of ninety (90) days after the levy thereof;

            (g)   Default in performance of or failure to comply with any
material agreement, obligation or undertaking of a Partner contained herein or
material breach of fiduciary duty by such Partner, or in the case of a General
Partner, any other event not specified herein which would constitute an "event
of withdrawal" of such general partner under the Act;

            (h)   Failure of a Partner to make an Additional Capital
Contribution when required pursuant to Article III of this Agreement;

                                       46


            (i)   Failure to repay any Contribution Loan when required pursuant
to Section 3.4(c) herein; and

            (j)   If any representation or warranty made by a Partner in this
Agreement shall be false or misleading or otherwise untrue in any material
respect.

      SECTION 11.2 ELECTIONS OF NON-DEFAULTING PARTNER.

            (a)   Purchase of Defaulting Partner's Interest. Within one-hundred
eighty (180) days following the occurrence of an Event of Default that is
continuing, any Non- Defaulting Partner that is not an Affiliate of the
Defaulting Partner shall have the right to acquire the entire Partnership
Interests of the Defaulting Partner (and such Defaulting Partner's Affiliates)
for cash, except as provided in Section 11.2(b) hereof, at a "Purchase Price"
determined pursuant to the procedure set forth in Section 11.2(c), subject to
reduction by the amount of any indebtedness, plus accrued interest thereon, owed
to the Non-Defaulting Partner (or its Affiliates) or the Partnership by the
Defaulting Partner (and such Defaulting Partner's Affiliates) as of the date on
which the Non-Defaulting Partner's purchase of the Defaulting Partner's (and
such Defaulting Partner's Affiliates) entire Partnership Interests is closed and
consummated, whereupon such indebtedness shall be simultaneously canceled. Any
indebtedness owed by the Partnership to the Defaulting Partner (and such
Defaulting Partner's Affiliates) as of such closing date shall be repaid at
closing. In furtherance of such right, the Non-Defaulting Partner may notify the
Defaulting Partner, at any time following an Event of Default and prior to a
cure thereof, of its election to institute the arbitration procedure set forth
in Article XIII to determine the Purchase Price of the Partnership Interests.
Upon receipt of notice of determination of the "Fair Market Value" pursuant to
Section 11.2(c), of the Defaulting Partner's (and its Affiliates') entire
Partnership Interests in the Partnership, the Non-Defaulting Partner may notify
the Defaulting Partner of its election to purchase the Partnership Interests of
the Defaulting Partner and its Affiliates. The right of the Non-Defaulting
Partner to institute the procedures for purchase of the Defaulting Partner's and
its Affiliates' entire Partnership Interests in the Partnership as set forth in
this Section 11.2 shall continue until either the Event of Default is cured or
the Non-Defaulting Partner elects to exercise its right to dissolve and
terminate the Partnership as provided in Section 11.2(d) below.

            (b)   Closing.

                  (i)   The purchase by the Non-Defaulting Partner of the
      Defaulting Partner's (and such Defaulting Partner's Affiliates) entire
      Partnership Interests shall be closed and consummated in the principal
      office of the Partnership at 11:00 a.m., local time, on a date specified
      by the Non-Defaulting Partner on at least five (5) days' notice to the
      Defaulting Partner, to be not later than the one hundred eightieth (180th)
      calendar day following the date of the Non-Defaulting Partner's notice of
      its election to purchase such Partnership Interests from the Defaulting
      Partner (and such Defaulting Partner's Affiliates). The Defaulting Partner
      (and such Defaulting Partner's Affiliates) shall transfer to the
      Non-Defaulting Partner their entire Partnership Interests free and clear
      of all liens, security interests, encumbrances and competing claims. The
      Non-Defaulting Partner shall deliver to the Defaulting Partner the
      Purchase Price, as provided in Section 11.2(g), by wire transfer of
      immediately available Federal Reserve System funds to an

                                       47


      account designated by the Defaulting Partner (such designation to be
      deemed given by the Defaulting Partner for itself and its Affiliates).
      Simultaneously with the receipt of such cash payment, the Defaulting
      Partner (and such Defaulting Partner's Affiliates) shall execute and
      deliver, and each does irrevocably constitute and appoint the
      Non-Defaulting Partner as its true and lawful attorney to execute and
      deliver for and on its behalf, such instruments of transfer, such evidence
      of due authorization, execution and delivery, and such evidence of the
      absence of any claims, security interests or competing claims as the
      Non-Defaulting Partner shall reasonably request.

                  (ii)  In addition to the adjustment provided for in Section
      11.2(c) the Non-Defaulting Partner may elect to offset against the cash
      portion of the purchase price, when such cash portion is paid, the amount
      of any loss, damage or injury, the amount of which has been caused to it
      by the Event of Default.

            (c)   Determination of Price. The purchase price (the "Purchase
Price") for the Defaulting Partner and its Affiliates' aggregate Partnership
Interests shall equal eighty percent (80%) of the Fair Market Value of the
Defaulting Partner's (and such Defaulting Partner's Affiliates') Partnership
Interests. The Partners shall first attempt to agree upon such Fair Market Value
of the Defaulting Partner's (and its Affiliates') Partnership Interests. The
"Fair Market Value" of the Partnership Interests shall mean the aggregate
amount, if any, that would be distributed by the Partnership to the Defaulting
Partner or its Affiliates, as the case may be, with respect to such Partnership
Interest (other than in repayment of loans made by such Partner to the
Partnership) if all of the assets then held by the Partnership were sold for a
gross sales price equal to their Fair Market Value and the proceeds thereof,
after payment of all debts and obligations of the Partnership (including loans
owed to Partners), were distributed to the Partners pursuant to Section 4.9
hereof. For this purpose, the "Fair Market Value" of the assets of the
Partnership shall mean the cash price which a bona fide arm's length purchaser
would pay on the date of the valuation for all assets of the Partnership. The
Fair Market Value of the Defaulting Partner's (and its Affiliates') Partnership
Interests, shall be determined pursuant to the arbitration provisions in Article
XIII unless the Partner otherwise agree regarding such value prior to either
Partners involving the arbitrator. In the event that the amount distributed to
the Defaulting Partner and its Affiliates under Section 4.9 would be zero, then
the Purchase Price shall be ten dollars ($10.00).

            (d)   Election to Dissolve. If the Non-Defaulting Partners do not
elect to acquire the entire Partnership Interests of the Defaulting Partner (and
such Defaulting Partner's Affiliates) as set forth in Section 11.2(a), the
holders of a majority of the Percentage Interests held by the Non-Defaulting
Partners may elect to dissolve and terminate the Partnership pursuant to Section
12.2 of this Agreement by written notice to the Defaulting Partner.

            (e)   Voting Rights of Defaulting Partner. Following the occurrence
and during the continuance of an Event of a Default by a Partner, such Partner
(and its Affiliates) shall cease to have any voting or approval rights as a
Partner or Managing Partner in the Partnership, except only that the Defaulting
Partner shall retain the right to approve and veto actions or decisions that are
set forth in Section 6.9(a) as surviving such Event of Default (except as
otherwise provided in Section 6.9(a)).

                                       48


            (f)   Conversion of Defaulting Partners' Partnership Interests. Any
Defaulting Partner and any Affiliate of a Defaulting Partner who may have been a
General Partner shall have its Partnership Interests automatically converted
into a Partnership Interest of a Limited Partner in the Partnership and the
Partnership shall continue with any remaining General Partners continuing to
serve as such, or in the event such Defaulting Partner is at the time of the
Event of Default the only general partner, such Person as shall be appointed as
successor general partner by the Non-Defaulting Partners acting by the vote of
the holders of a majority of the Partnership Interests held by Persons who are
not Affiliates of the Defaulting Partner. The Defaulting Partner (and its
Affiliates) shall not be entitled to exercise any voting right or other right of
approval, consent or determination under this Agreement, or otherwise to
participate in the management of the business of the Partnership, or to vote
upon or otherwise participate in Major Decisions or any of the other affairs of
the Partnership for so long as the Event of Default remains uncured, except as
otherwise may be provided in Section 6.9(a).

            (g)   Remedies. Non-Defaulting Partners shall be entitled to pursue
such other rights and remedies as may be available at law or in equity as a
result of the Event of Default by the Defaulting Partner. Notwithstanding
anything contained herein to the contrary, no party herein shall be entitled to
seek, claim, receive or collect any consequential, speculative, exemplary,
multiple or punitive damages except in the case of proven fraud or willful
misconduct.

                                   ARTICLE XII
                        TERM; LIQUIDATION AND DISSOLUTION

      SECTION 12.1 TERM. The Partnership shall commence on the date hereof and
shall continue until terminated in accordance with the provisions of Section 2.5
or this Article XII, provided that if it is not sooner terminated, the
Partnership shall terminate on December 31, 2025 (the applicable termination
date is hereinafter referred to as the "Partnership Termination Date") and will
be dissolved and its affairs shall be wound up, unless an extension is Approved
by the Partners. No Partner shall have the right to cause, and each Partner
hereby agrees not to cause, the dissolution, termination or liquidation of the
Partnership, or to petition a court for a dissolution, termination or
liquidation of the Partnership, except as provided in this Agreement. No Partner
at any time shall have the right to take any action or to subject the
Partnership's assets or any part thereof to the authority of any court of
bankruptcy, insolvency, receivership or similar proceedings, without the express
written consent and approval of the other Partners.

      SECTION 12.2 DISSOLUTION. The Partnership shall only be dissolved in the
event that (i) the General Partners determine to dissolve the Partnership, (ii)
the Partnership by its terms, as set forth in Section 12.1, is terminated by
virtue of the occurrence of the Partnership Termination Date, as extended in
accordance with the provisions of Section 12.1, if applicable, or (iii) an Event
of Default has occurred and the Non-Defaulting Partner(s) elect(s) to dissolve
the Partnership.

      SECTION 12.3 LIQUIDATION AND DISTRIBUTION PROCEDURE.

            (a)   Upon the dissolution of the Partnership, the General Partners
shall cause the Partnership to wind up the business and affairs of the
Partnership, to pay all just debts and

                                       49


obligations of the Partnership and to distribute the assets of the Partnership
in accordance with this Section 12.3. The expenses of liquidation shall be
expenses of the Partnership. Upon completion of any such distribution and
winding up, the parties hereto shall be relieved of all obligations hereunder
except for obligations, duties or rights which have not been determined or
ascertained as of the date of such termination and for rights or remedies which
a Non-Defaulting Partner may have against a Defaulting Partner at law or in
equity. During the period of such winding up, the business and affairs of the
Partnership shall be conducted so as to preserve the assets of the Partnership
in a manner consistent with the winding up of the affairs thereof.

            (b)   In the event of a liquidation and distribution as a result of
the occurrence of an Event of Default pursuant to Article XI hereof, the
Defaulting Partner shall have no power or authority to bind the Partnership or
Partners or to participate in any decisions pertaining to the liquidation and
winding up of the Partnership, but shall assist the other Partners in the
dissolution and winding up of the Partnership and the distribution of the assets
hereof. The Non-Defaulting Partners shall have the unilateral right to continue
or to terminate, in whole or in part, any Development Agreement between the
Defaulting Partner and the Partnership.

            (c) The assets of the Partnership shall be applied or distributed in
liquidation in the following order of priority (giving effect to repayment of
Contribution Loans pursuant to Section 3.4(c) hereof):

                  (i)   In payment of debts and obligations of the Partnership
      to third parties and to the establishment of such capital reserves as may
      be Approved by the Partners;

                  (ii)  In repayment of any loans, plus accrued interest
      thereon, made to the Partnership by the Partners (including Optional Loans
      in the priorities set forth in, and otherwise in accordance with the
      provisions of, Section 3.3 hereof); and

                  (iii) Then to the Partners in accordance with the provisions
      of Section 4.9 hereof.

            (d)   Upon dissolution, every reasonable effort shall be made to
dispose of the Partnership's assets so that distributions may be made to the
Partners in cash. If, upon termination of the Partnership, the Partnership shall
nevertheless own non-cash assets, such assets, if any, may be distributed in
kind to the Partners in lieu of cash, in proportion to their right to receive
the cash assets of the Partnership, on the basis of undivided interests in each
non-cash asset in proportions reflecting the net fair market value of the
assets so distributed, and reflecting all allocations that would have been made
had the assets distributed in kind been sold by the Partnership for their fair
market value.

            (e)   Notwithstanding any other provision of this Agreement, no
Partner will be required to pay to the Partnership or to any other Partner any
deficit or negative balance which may exist from time to time in such Partner's
Capital Account.

                                       50


                                  ARTICLE XIII
                                   ARBITRATION

      SECTION 13.1 INITIATION.

            (a)   Following either a Deadlock regarding any matter described in
Section 6.9(b) or a deadlock regarding the determination of Fair Market Value of
a Defaulting Partner's (and its Affiliates) Partnership Interests pursuant to
Section 11.2(c), (i) the Partners and their respective Affiliates shall attempt
in good faith for a period of at least ten (10) days following notice by one
Partner to the others, which notice is entitled "Notice of Dispute", to resolve
the dispute, and (ii) if the dispute is not resolved in such ten (10) day
period, arbitration may be invoked by one Partner after such Partner has
presented its (and its Affiliates) written proposal for resolution of the
dispute entitled "Proposal for Resolution" to the other and the other Partner
(and its Affiliates) have failed to deliver a written acceptance of such
proposal within five (5) days of receipt. The Partner invoking arbitration shall
do so by sending a notice entitled "Notice of Arbitration."

            (b)   In such cases where this Agreement provides for the
determination of any matter by arbitration, the same shall be settled and
finally determined by arbitration in accordance with the Rules of Commercial
Arbitration of the American Arbitration Association, subject to the provisions
of this Section 13.1. Any arbitration pursuant to this Agreement shall be
conducted by one (1) arbitrator, and the arbitration proceeding shall be held in
Atlanta, Georgia. The General Partners shall mutually select the arbitrator, who
shall be required to have at least ten (10) years of experience in real estate
finance or investment in the Southwestern United States and independent of each
of the Partners. If the General Partners are unable to agree upon an arbitrator
within twenty (20) days of the sending of a Notice of Arbitration, then at the
written request of either General Partner each shall select one arbitrator
within twenty (20) days of receipt of such request, and the two arbitrators so
selected shall appoint the arbitrator to make the determination under this
Section. In the event a General Partner fails to appoint its arbitrator in
accordance with the preceding sentence, the arbitrator appointed by the other
shall be the arbitrator for purposes of settling the dispute which is the
subject of such arbitration. In the event there is only one General Partner,
such General Partner and the unaffiliated Limited Partner holding the greatest
Percentage Interest among the unaffiliated Limited Partners shall select the
arbitrator(s).

            (c)   In all cases in which an arbitrator is required to render a
decision under this Section 13.1, each General Partner (or, if applicable,
Limited Partner) shall submit to the arbitrator, within ten (10) days of his
selection, its complete proposal for resolution of the issue in dispute. The
arbitrator shall be required to select one such proposal as the sole resolution
of the matter within ten (10) days of receipt of each party's proposal or after
receipt of any evidence and briefs requested by the arbitrator from the parties,
provided that the arbitrator's decision must be based on the standard of
determining which proposal is in the best interest of the Partnership and also
prudent in terms of permitting the Partnership to realize revenues sufficient to
pay the Preferred Return payable to the Partners and to return the amounts in
the Unreturned Contribution Accounts of the Partners, and taking into account
practices normally and customarily followed by real estate operating companies
with respect to comparable property in the Houston, Texas metropolitan area. The
arbitrator may, in its sole discretion, require that each

                                       51


party to the arbitration submit briefs and evidence to support its position,
which the parties shall be required to produce within ten (10) days after the
request by the arbitrator. Evidence submitted by the parties may be admitted or
excluded in the sole discretion of the arbitrator. The arbitrator shall
determine the rules of the hearing procedures for the arbitration, but each
party shall have the right to present witnesses to support its position, with
the other parties having the right to pose questions or cross-examine such
witnesses.

      SECTION 13.2 COURT ENFORCEMENT OF ARBITRATION AWARD. The decision of the
arbitrator and any award thereunder including award of costs and attorneys' fees
shall be binding upon all Partners and the Partnership and may be confirmed by
the judgment of a court of competent jurisdiction. The prevailing party in
arbitration shall be entitled to recover its costs and attorneys' fees in the
arbitration and in any subsequent legal proceedings required to enforce the
award.

      SECTION 13.3 CONSOLIDATION PROCEEDINGS. If Notices of Arbitration are sent
with respect to more than one Notice of Dispute involving some or all of the
same parties and arising from the same transactions or series of similar
transactions, all such arbitration proceedings for which hearings have not yet
commenced shall be consolidated through a Notice of Consolidation sent to all
General Partners and the Partnership. The process for selecting the arbitrator
shall be the same as set forth in Section 13.1, except the time periods for the
selection process shall run from the date of the deemed receipt of the Notice of
Consolidation instead of running from the sending of the Notice of Arbitration.

                                   ARTICLE XIV
                               GENERAL PROVISIONS

      SECTION 14.1 INDEPENDENT PARTIES. Nothing herein contained shall be
construed to constitute any Partner hereof as the agent of any other Partner
hereof or to limit in any manner the Partners or their respective Affiliates in
the carrying on of their own respective projects, businesses or activities.

      SECTION 14.2 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be effective only upon delivery and thereafter
shall be deemed an original, and all of which shall be taken to be one and the
same instrument, for the same effect as if all parties hereto had all signed the
same signature page. Any signature page of this Agreement may be detached from
any counterpart of this Agreement without impairing the legal effect of any
signature thereon and may be attached to another counterpart of this Agreement
identical in form hereto but having attached to it one or more additional
signature pages.

                                       52


      SECTION 14.3 NOTICES. Any notice, request, demand or other communication
required or permitted hereunder shall be in writing and shall be (a) effective
(i) upon delivery of the same to the intended addressee by hand delivery,
facsimile (with confirmation of delivery), or email (with confirmation of
delivery), (ii) upon deposit of the same with a reputable overnight courier
service (such as Federal Express) for delivery to the intended addressee, or
(iii) upon deposit of the same in the United States mail, postage prepaid,
registered or certified mail, return receipt requested, and (b) sent to the
intended addressee at the following addresses:

      Ashton Woods GP:           c/o AW Southern Trails, Inc.
               or                11375 West Sam Houston Parkway South, Suite 100
      Ashton Woods LP            Houston, Texas 77031
                                 Attn: Bob Salomon
                                 Fax: 281-561-7774

      with a copy to:            Ashton Woods Homes
                                 1080 Holcomb Bridge Road
                                 Building 200, Suite 350
                                 Atlanta, Georgia 30076
                                 Attn: Bob Salomon
                                 Fax: 770-998-7493

      with a copy to:            Hagen & Parsons, P.C.
                                 14043 Dallas Parkway, Suite 570
                                 Dallas, Texas 75254
                                 Attn: Tim Hagen
                                 Fax: 972-386-0443

      CLGP or CL:                CL Texas I GP, LLC
                                 c/o Cousins Properties Incorporated
                                 2500 Windy Ridge Parkway, Suite 1600
                                 Atlanta, Georgia 30339-5683
                                 Attn: Corporate Secretary
                                 Fax: 770-303-2893

      with copy to:              CL Texas I GP, LLC
                                 5495 Beltline Road, Suite 225
                                 Dallas, Texas 75254
                                 Attention: Craig Knight and Tom Burleson
                                 Telephone: (972) 702-8699
                                 Facsimile: (972) 702-8372
                                 Email: tburleson@guarantygroup.com

      with copy to:              Cousins Properties Incorporated
                                 2500 Windy Ridge Parkway, Suite 1600
                                 Atlanta, Georgia 30339-5683
                                 Attn: Chuck Olderman, Esq.
                                 Fax: 770-857-2362

                                       53


      with a copy to:    Troutman Sanders LLP
                         600 Peachtree Street, N.E.
                         Suite 5200
                         Atlanta, Georgia 30308-2216
                         Attn: Richard H. Brody, Esq.
                         Fax: 404-962-6514

or to such different address as the intended addressee shall have designated by
written notice sent in accordance herewith.

      SECTION 14.4 EFFECT AND INTERPRETATION. This Agreement shall be governed
by and shall be construed in conformance with the laws of the State of Texas.

      SECTION 14.5 SEVERABILITY. In the event any one or more of the provisions
contained in this Agreement shall for any reason be held to be invalid, illegal
or unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provisions of this Agreement, but this Agreement
shall be construed as if such invalid or unenforceable provision shall
automatically and retroactively be amended to the minimum extent absolutely
necessary to render such provision valid, legal and/or enforceable.

      SECTION 14.6 BINDING UPON SUCCESSORS. Subject to any restrictions on
transfer, sale, assignment, pledge, hypothecation or encumbrance contained in
this Agreement, this Agreement shall inure to the benefit of and be binding upon
the heirs, personal representatives, assigns, successors (including successor
trustees), distributees, transferees or other successors in interest to all of
the parties hereto. Anyone to whom any Partnership Interest(s) in the
Partnership may be properly transferred pursuant to the terms of this Agreement,
or who shall take such Partnership Interests) by operation of law, shall
automatically take such Partnership Interest(s) subject to all of the terms and
conditions of this Agreement and shall not be considered to have title to such
Partnership Interest(s) until such party has signified his acceptance and
assumption of the terms and conditions of this Agreement in writing delivered to
each of the Partners in form and substance Approved by the Partners.

      SECTION 14.7 GENDER. All words denoting gender herein shall be deemed to
include the masculine, feminine, neuter, singular or plural as the context and
facts require.

      SECTION 14.8 HEADINGS. The headings, titles and subtitles herein are
inserted for convenience of reference only and shall not control or affect the
meaning or construction of any of the provisions hereof.

      SECTION 14.9 ENTIRE AGREEMENT. This Agreement contains the entire
understanding among the parties with respect to this Partnership and shall not
be modified except in writing by all of the parties hereto. This Agreement may
not be amended or modified, except by a written amendment signed by the
Partners.

      SECTION 14.10 FORCE MAJEURE. If any party shall be unable to perform its
obligations in whole or in part due to a Force Majeure Event, such party shall
promptly notify the other parties of the nature of such Force Majeure Event and
the obligations affected thereby. Upon delivery of such notice, the performance
by the notifying party of the obligations set forth in such notice

                                       54


shall be suspended to the extent, but solely to the extent, performance of such
obligations is adversely affected by such Force Majeure Event.

      SECTION 14.11 TIME. Time is of the essence in this Agreement, In computing
a period of days for performance or payment as provided hereunder, the first day
shall be excluded and the last day shall be included. If the last day of any
such period is a Saturday, Sunday or legal holiday, the period shall extend to
include the next day which is not a Saturday, Sunday or legal holiday. Any
performance or payment which must be taken or made under this Agreement must be
taken or made prior to 5:00 p.m. Atlanta, Georgia time on the last day of the
applicable period provided hereunder for such action, unless another time is
expressly specified. All references to time shall be Atlanta, Georgia time.

                     [SIGNATURE PAGE IMMEDIATELY FOLLOWING]

                                       55



      IN WITNESS WHEREOF, the parties hereto have executed this Agreement to be
effective as of the date first above written.

                            AW SOUTHERN TRAILS, INC.,
                            a Texas corporation

                            By: /s/ Robert L. Saldmon
                                ------------------------------------------------
                            Name: Robert L. Saldmon
                            Title: Authorized Representatives

                            ASHTON HOUSTON RESIDENTIAL L.L.C.,
                            a Texas limited liability company

                            By: /s/ Robert L. Saldmon
                                ------------------------------------------------
                            Name: Robert L. Saldmon
                            Title: Authorized Representatives

                            CL Texas I GP, L.L.C.,
                            a Georgia limited  liability company

                            By: C L Realty, LLC
                            By: [ILLEGIBLE] Real Estate Corporation

                            By: /s/ Michael J. Quinley
                                ------------------------------------------------
                            Name: Michael J. Quinley
                            Title: Senior Vice President

                            CL TEXAS, L.P.,
                            a Taxas limited partnership

                            By: CL Texas I GP, L.L.C., a Georgia limited company
                            Its: General Partner
                            By: C L Realty, LLC
                            By: [ILLEGIBLE] Real Estate Corporation

                            By: /s/ Michael J. Quinley
                                ------------------------------------------------
                            Name: Michael J. Quinley
                            Title: Senior Vice President

                                       56

EX-10.6

                                                                    EXHIBIT 10.6

                       LIMITED LIABILITY COMPANY AGREEMENT
                          OF PALM COVE DEVELOPERS. LLC

      THIS LIMITED LIABILITY COMPANY AGREEMENT (this "AGREEMENT") of PALM COVE
DEVELOPERS, LLC (the "Company") is made and entered into effective as of the
19th day of January, 2005 ("Effective Date"), by and between ASHTON TAMPA
RESIDENTIAL, LLC, a Nevada limited liability company ("Ashton") and M/I HOMES OF
TAMPA LLC, a Florida limited liability company ("M/I"). M/I and Ashton are
sometimes referred to herein collectively as "Members" and individually as a
"Member."

                                    RECITALS

      WHEREAS, Ashton and Pulte Home Corporation entered into that certain
Agreement for Sale of Land (the "Pulte Contract") for the purchase and sale of
certain real and other related property subject to the Pulte Contract (defined
therein as the "Property") (The Pulte Contract is attached hereto as Exhibit "A"
and incorporated by reference herein) and;

      WHEREAS, as contemplated by that certain Letter Agreement ("Letter
Agreement") dated as of December 22, 2004, by and between Ashton and M/I, Ashton
assigned the Pulte Contract to Company and the Company acquired the Property
(the "Property Closing"); and

      WHEREAS, as further contemplated by the Letter Agreement, Company, Ashton
and M/I are entering into this Agreement to consummate M/I's subscription for
one-half (i.e., 50%) of the total equity or membership interests in and to the
Company and to set forth certain terms and conditions applicable to the
development of the Property by Company, the distribution of finished lots to the
Members and other applicable terms and conditions related to the business
affairs of the Company and the development of the Property; and

      NOW, THEREFORE, the Members, by the execution and delivery of this
Agreement, set forth the agreement for the Company under the laws of the State
of Florida upon the terms and subject to the conditions of this Agreement.

   1. DEFINITIONS. All capitalized terms not defined in this Agreement shall
have the meaning ascribed to them in the Pulte Contract. When used in this
Agreement, the following terms shall have the meanings set forth below:

         (a) "ACT" shall have the meaning ascribed to it in Section 2.1. All
references herein to sections of the Act shall include any corresponding
provisions of succeeding law.

         (b) "AFFILIATE" shall mean, when used with reference to a specified
Person, any Person who controls, is controlled by or is under common control
with the specified Person.

         (c) "AGREEMENT" shall mean this Limited Liability Company Agreement, as
originally executed and as amended from time to time.

                                       1


         (d) "APPROVED BUSINESS PLAN" means collectively, after submission and
approval as described herein, the following: (i) a pro-forma budget and
development plan for the Property (the "Project") in accordance with the Pulte
Contract, the Development Agreement (defined in Section 1.(o) hereof,) and this
Agreement (the "Project Budget and Plan") and (ii) a Member capital contribution
plan for the capital contributions by the Membere for the construction of the
Project by the Company (the "Project Contribution Plan"), as each of the same
may be amended from time to time in accordance with this Agreement. The
Day-to-Day Manager shall endeavor to prepare and provide for M/I's approval the
applicable Project Budget and Plan and the Project Contribution Plan within
fifteen (15) days after the Effective Date. M/I shall endeavor to approve such
Project Budget and Plan and the Project Contribution Plan submitted by the
Day-to-Day Manager within fifteen (15) days of M/I's receipt of the submitted
Project Budget and Plan and Project Contribution Plan; provided, the parties
intend to work together as reasonably possible in preparing and reviewing all
matters applicable to the Approved Business Plan (as defined in the following
sentence). Upon each party's written approval of the Project Budget and Plan and
Project Contribution Plan, such plans shall be considered and referred to herein
as the "Approved Project Budget and Plan" and the "Approved Project Contribution
Plan," and collectively shall be considered and referred to herein as the
"Approved Business Plan." The Approved Business Plan is intended to be the
overall plan and budget for the planning, development, and construction of the
Project, including the distribution of finished lots to the Members, the
projection and timing of annual Project expenditures, including, without
limitation, development costs, construction costs, and maintenance costs, all of
which shall be set forth in detail with each category of expense listed as a
separate line item and a preliminary cost analysis for the Project. Such
expenses shall be further separately delineated into two major categories of
line item expenses as follows: (a) those line item expenses constituting
"Operating Costs" and (b) those line item expenses constituting "Development
Costs." The parties acknowledge that the Approved Business Plan will require
updating or modification during the term of the Project as a result of changes
to projected and actual costs, permitting conditions, etc. The Day-to-Day
Manager shall regularly consult with and seek the input of the other Member in
connection with the Day-to-Day Manager's updating of the Approved Business Plan.
The Day-to-Day Manager shall use its commercially reasonable efforts to cause
the Project to be developed, constructed, operated and disposed of substantially
in accordance with the Approved Business Plan as it is updated and approved from
time to time, including, without limitation, the line items contained therein.
Subject to the approval rights set forth in Section 5.2 (a), below, and the
obligation of the Day-to-Day Manager to maintain the originally Approved
Business Plan as a comparative measure of how well the Company actually
performed in comparison to the such originally Approved Business Plan, the
Day-to-Day Manager shall update the Approved Business Plan as follows; (1) the
Approved Project Budget and Plan shall be updated on not less than a semi-annual
basis and the (2) the Approved Project Contribution Plan shall be updated every
fiscal quarter. No update, modification or amendment of the Approved Business
Plan (or any component budget item or plan thereof) shall be effective unless
and until approved by all Members, subject to Section 5.5(c).

         (e) "ARTICLES" shall mean the Articles of Organization of the Company
as filed with the Secretary of State of the State of Florida, as the same may be
amended from time to time by the approval of the Members.

                                       2


         (f) "AVAILABLE CASH" shall mean all cash and cash equivalents of the
Company on hand and in financial institutions or depositories and cash
equivalents, on the date of any proposed distribution, after payment or
provision for payment of all debts and liabilities of the Company then due
(including, without limitation, debts and liabilities to Members who are
creditors of the Company and payments then due under third-party loans to the
Company), provision for reasonable working capital reserves and payment or
provision for payment of operating expenditures, all as reasonably determined by
the Day-to-Day Manager and approved by the Members, subject to Section 5.5(c).
Available Cash shall not include Capital Contributions of the Members.

         (g) "BASE RATE" means the commercial loan rate of interest announced
publicly from time to time by Bank of America, N.A. (or any successor thereto)
in Tampa, Florida as such bank's "reference rate" or "prime rate" as from time
to time in effect.

         (h) "CAPITAL ACCOUNT" shall mean a capital account established for each
Member to which such Member's respective Capital Contributions shall from time
to time be credited, which shall be maintained in accordance with the provisions
of Section 704(b) of the Code and the Treasury Regulations promulgated
thereunder.

         (i) "CAPITAL CONTRIBUTIONS" shall mean the Initial Contributions and
any additional contributions contributed to the Company by each Member in
accordance with Section 3 of this Agreement.

         (j) "CODE" shall mean the Internal Revenue Code of 1986, as amended
from time to time.

         (k) "COMPANY" shall mean the limited liability company. Palm Cove
Developers, LLC, created on December 22,2004 and governed by this Agreement.

         (l) "DATE OF VALUE" shall have the meaning ascribed to it in
Section 12.

         (m) "DAY-TO-DAY MANAGER" shall mean Ashton or any other Person(s) that
succeeds to it in that capacity with the consent of the other Member.

         (n) "ENGINEERING AND PRE-DEVELOPMENT COSTS" shall mean those pre- and
post-formation engineering and pre-development costs incurred by or on behalf of
a Member to contract for the Property and conduct the engineering and
pre-development work for the Project, such as consulting fees and costs and
filing, investigatory and regulatory fees and costs, plus any additional similar
costs. To the extent the foregoing are paid by a Member in the ordinary course
of business on or prior to the Property Closing, they shall be referred to
herein as the "Paid Engineering and Pre-Development Costs," as more particularly
set forth on EXHIBIT "B" attached hereto. As provided herein, a Member shall
receive an initial contribution credit and Capital Account credit equal to the
amount paid by each respectively of the Paid Engineering and Pre-Development
Costs. The Company shall then assume and be responsible for paying

                                       3


those Engineering and Pre-Development Costs other than the Paid Engineering and
Pre-Development Costs.

         (o) "FINISHED LOT(s)" shall mean a residential lot developed by the
Company in accordance with the Pulte Contract, that certain Development
Agreement by and between Pulte and Company executed as part of the Property
Closing (the "Development Agreement"), this Agreement and all applicable
restrictions, governmental requirements and Laws, and that has (i) a recorded
plat that is acceptable to both Members with a copy of such recorded plat
delivered to both Members, (ii) public sanitary sewer lines extended to a
boundary of the lot with taps installed, (iii) public potable water lines
extended to a boundary of the lot with taps installed, (iv) installed stormwater
drainage lines and related facilities required by applicable Laws to serve the
lot, with all stormwater ponds and related facilities serving such lines and
facilities completed, (v) installed curbs and paved streets serving the lot that
are within a publicly dedicated right-of-way, (vi) conduits to accommodate
underground electric lines sufficient to service the lot extended to a boundary
of the lot with the applicable electric company having extended service to the
lot, (vii) graded in accordance with lot grading and drainage plans previously
approved by both Members and graded materially in accordance with the elevations
required for each lot on such plans, (viii) not been determined to be within the
"100 Year Flood Plane" and (ix) been compacted to not less than ninety five
(95%) modified proctor, maximum density (AASHTO T-180) and otherwise to such
standards as are applicable for the types of construction contemplated by each
Member and (x) all other work necessary to allow development and the subsequent
use by homeowners of the intended residential improvements on the lot completed
in accordance with all Laws (including, but not limited to, the issuance of the
applicable building permit and certificate of occupancy for such lot) and any
recorded covenants.

         (p) "LAWS" means all federal, state and local laws, moratoria,
initiatives, referenda, ordinances, rules, regulations, standards, orders,
judicial decisions, common law and other governmental, quasi-governmental and
utility company requirements (including those relating to the environment,
health and safety, or disabled persons).

         (q) "LIQUIDATING DISTRIBUTION AMOUNT" shall have the meaning ascribed
to it in Section 12.

         (r) "MAJOR DECISION" shall have the meaning ascribed to it in
Section 5.

         (s) "MEMBER" shall mean each Person who (a) is an initial signatory to
this Agreement or has been admitted to the Company as a Member in accordance
with the express provisions set out in this Agreement and (b) has not resigned,
withdrawn, been expelled or, if other than an individual, dissolved.

         (t) "MEMBER LOAN" shall mean any authorized loan made by a Member to
the Company during the term hereof.

                                       4


         (u) "MEMBERSHIP INTEREST" shall mean a Member's entire right, title and
interest in, to and against the Company, the Project and the profits, losses,
capital and distributions of the Company, the right to vote on or participate in
the management and the right to receive information concerning the business and
affairs, of the Company.

         (v) "OFFERING NOTICE" shall have the meaning ascribed to it in
Section 12.

         (w) "PAID ENGINEERING AND PRE-DEVELOPMENT COSTS" shall have the meaning
provided above in the definition of Engineering and Pre-Development Costs.

         (x) "PERCENTAGE INTEREST" shall mean fifty percent (50.0%) for M/I and
fifty percent (50.0%) for Ashton, as adjusted pursuant to this Agreement. Each
Member's Percentage Interest shall equal the ratio of such Member's Capital
Account relative to the aggregate amount of all Capital Accounts.

         (y) "PERSON" shall mean an individual, general partnership, limited
partnership, limited liability company, corporation, trust, estate, real estate
investment trust association or any other entity or combination of Persons.

         (z) "PURCHASE PRICE" shall have the meaning ascribed to it in
Section 12.

         (aa) "REGULAR MEETING" shall have the meaning ascribed to it in
Section 4. (bb) "RESPONDING MEMBER" shall have the meaning ascribed to it in
Section 12.

         (cc) "SPECIAL MEETING" shall have the meaning ascribed to it in
Section 4.

         (dd) "TRANSFER" shall have the meaning ascribed to it in Section 9.

   2. ORGANIZATIONAL MATTERS.

      2.1 FORMATION OF COMPANY. The Company has been formed pursuant to the
provisions of the Florida Limited Liability Company Act, Florida Statutes
Chapter 608, as the same may be amended from time to time (the "Act"), and shall
be governed by the terms and conditions contained in this Agreement. The terms
"Member" and "Members" include the Members and their respective permitted
successors and assigns as members in the Company.

      2.2 NAME. The business of the Company shall be conducted under the name of
"Palm Cove Developers, LLC" or any name mutually agreed upon by the Members.

      2.3 TERM. The term of the Company commenced on December 22, 2004 (the
"Commencement Date") and shall continue until the Company is dissolved as
provided herein.

                                       5

      2.4 CHARACTER OF BUSINESS. The express, limited and only purpose for which
the Company is formed is, and the business of the Company shall be, to acquire
the Property and to develop, improve, and distribute the Finished Lots to the
Company's Members as described herein. The Company shall have the power to do
and perform all things necessary for, connected with or arising out of such
activities and shall have the power to take such actions as may be necessary or
appropriate to accomplish such purposes and conduct such business. The Company
shall not engage in any other business without the prior written consent of the
Members. No Member shall have the authority to bind the other Member in any
capacity other than as a Member the of the Company, and nothing in this
Agreement shall create a relationship between the Members other than for the
purposes set forth in this Agreement.

      2.5 NAMES AND ADDRESSES OF MEMBERS. The names of the Members are as shown
above. The addresses of the Members are set forth hereinafter.

      2.6 PRINCIPAL PLACE OF BUSINESS. The principal place of business of the
Company shall be located at 500 N. Westshore Boulevard, Suite 1020, Tampa,
Florida 33609, and may be relocated with the approval of all the Members to any
location within Florida.

      2.7 REGISTERED OFFICE AND REGISTERED AGENT.

         (a) For purposes of the Act, the registered office of the Company is
500 N. Westshore Boulevard, Suite 1020, Tampa, Florida 33609. The registered
office of the Company may be changed from time to time with the approval of the
Members; provided, any replacement of the Day-to-Day Manager shall automatically
be deemed the approval of a change in the registered office of the Company to
that of the address of the new Day-to-Day Manager.

         (b) For purposes of the Act, the Company's registered agent for service
of process is Charles H. Carver, Esq., who, in addition to the Company, shall
provide a copy of each such notice to each Member. The registered agent of the
Company may be changed from time to time with the approval of the Members;
provided, any replacement of the Day-to-Day Manager shall automatically be
deemed the approval of a change in the registered agent of the Company to that
of the new Day-to-Day Manager.

      2.8 TRADE NAME AFFIDAVITS. The Company will file such trade or fictitious
name affidavits as may be necessary or desirable in connection with the
formation, existence and operation of the Company (including those filings
required in any jurisdiction where the Company owns or operates property).

      2.9 QUALIFICATION. The Company will promptly apply for authority to
transact business in those jurisdictions where it is required or elects to do
so. The Company will file such other certificates and instruments as may from
time-to-time be necessary or desirable in connection with its formation,
existence or operation.

      2.10 MANAGER-MANAGED. The Company shall be manager-managed by the Day-to-
Day Manager.

                                       6


   3. CAPITAL CONTRIBUTIONS, LOANS AND FUNDING OF PROJECT COSTS.

      3.1 INITIAL CAPITAL CONTRIBUTION BY M/I. On or before the date that is
one (1) business day following the Members' execution and delivery of this
Agreement (or such other date as agreed to in writing by the Members), M/I shall
pay to Ashton in readily available federal funds Five Million Nine Hundred
Fifteen Thousand Five Hundred Sixty-six and 46/ 100 U.S. Dollars ($5,915,566.46)
(the "M/I Membership Interest Purchase Price") to acquire one-half (i.e., 50%)
of the total equity and Membership Interests in the Company, such that M/I's
Percentage Interest shall be 50%, and to reimburse Ashton for one half (i.e.,
50%) of the aggregate of the Paid Engineering and Pre-Development Costs, closing
costs, title and escrow fees and premiums and prorations paid by Ashton on or
before the Effective Date. The M/I Membership Interest Purchase Price, less the
amount to reimburse Ashton for one half (i.e., 50%) of the aggregate of the Paid
Engineering and Pre-Development Costs, closing costs, title and escrow fees and
premiums and prorations paid by Ashton on or before the Property Closing, is
intended to be 50.0% of the Purchase Price for the Property paid to Pulte to
acquire the Property. As part of M/I's payment of the M/I Membership Interest
Purchase Price, the M/I Deposit (as defined in the Letter Agreement) shall be
paid by the Escrow Agent (as defined in the Letter Agreement) to Ashton and
credited against the M/I Membership Interest Purchase Price. All amounts paid
under this Section 3.1 by M/I, including the M/I Membership Interest Purchase
Price, shall be credited to M/I's Capital Account upon the date of such payment
and the Members intend that on the date of such payments by M/I, Ashton's and
M/I's Capital Accounts shall be equal. As part of M/I's acquisition of its
Membership Interest, Ashton shall execute and deliver to M/I an assignment of
such Membership Interest in form and substance reasonably acceptable to Ashton
and M/I.

      3.2 ADDITIONAL CAPITAL CONTRIBUTIONS. Except as otherwise provided below
in this Section 3.2, no Member shall be obligated to contribute additional
capital to the Company. Each Member, upon written call therefor (the "Capital
Call Notice") by the Day-to-Day Manager, shall promptly contribute to the
Company, in proportion to its respective Percentage Interest, additional Capital
Contributions (each, an "Additional Capital Contribution") in the event there
are insufficient funds to pay costs and expenses which are due and payable and
are in accordance with the Approved Project Budget and Plan. Capital Call
Notices shall only be made in accordance with the Approved Business Plan. In
addition to the foregoing, the Day-to-Day Manager shall reasonably consider and
consult with the non-managing Member on any request by the non-managing Member
to make a Capital Call Notice. Upon receipt of a Capital Call Notice delivered
pursuant to this Section 3.2, each Member shall have seven (7) business days to
make its share of the Additional Capital Contribution required thereby. If a
Member ("Non-Contributing Member") fails to fund to the Company its pro rata
share of any Additional Capital Contribution (a "Cash Deficit"), then the other
Member ("Contributing Member"), provided such Contributing Member has funded all
amounts required of such Contributing Member, shall have the right, but not the
obligation, to elect to do the following (which, except as provided in Section
5.5(c), shall be the sole and exclusive remedies of such Contributing Member
against such Non-Contributing Member):

                                       7


      (a) DEFICIT LOAN. Fund the Cash Deficit to the Company, in which event the
amount so funded shall constitute a loan from the Contributing Member to the
Non-Contributing Member ("Deficit Loan"). The Non-Contributing Member shall
receive a credit to its Capital Account in the amount of such Deficit Loan. Each
Deficit Loan shall be an obligation with recourse and shall bear interest at the
per annum rate of four hundred (400) basis points over the Base Rate prevailing
on the date such loan is made, compounded monthly, and shall be due and payable
no later than upon demand (the "Due Date"). Until such Deficit Loan is paid in
full, all fees, payments and distributions otherwise payable to the
Non-Contributing Member shall be deemed to be paid or distributed to the
Non-Contributing Member for Company tax and accounting purposes, but such fees,
payments or distributions shall actually be paid or distributed directly to the
Contributing Member in repayment of such Deficit Loan, with such funds being
applied first to reduce any interest accrued on such Deficit Loan and then to
reduce the principal amount of such Deficit Loan. If such Deficit Loan and all
accrued interest thereon is not paid by the Due Date, the Contributing Member
may elect to (i) convert the outstanding principal amount of the Deficit Loan
and the accrued and unpaid interest thereon to capital of the Contributing
Member, thereby diluting the Non-Contributing Member's Percentage Interest as
detailed in Section 3.2(b) (the "Dilution Contribution"), (ii) exercise the
buy/sell provisions of Section 12 pursuant to Section 3.2(c), or (iii) extend
the Due Date of the Deficit Loan for an additional period of time.

      (b) DILUTION. If a Contributing Member elects to convert the principal
amount of the Deficit Loan and the accrued interest thereon into a Dilution
Contribution in accordance with Section 3.2(a), the Capital Account of the
Members shall be adjusted such that the Non-Contributing Member's Capital
Account shall be decreased by amount due on the Deficit Loan and the
Contributing Member's Percentage Interest shall be similarly increased, with the
Members' Percentage Interests properly adjusted.

      (c) BUY/SELL. Rather than make or continue a Deficit Loan as provided in
Section 3.2(a), a Contributing Member shall have the right to invoke the
provisions of Section 12, and the Non-Contributing Member shall be considered,
for purposes of Section 12, to be in default hereunder.

      3.3 MEMBER LOANS. Except with the prior consent of all Members, no Member
shall be obligated or authorized to lend or advance money to the Company. To the
extent a Member Loan is made by a Member to the Company pursuant to this
Agreement, it shall be made without personal liability to any of the Members and
shall be unsecured. The unpaid principal balance of the Member Loan shall bear
interest at the Base Rate announced at the time of the making of the Member
Loan, not to exceed the maximum rate permitted by law. The Company shall pay in
full (i) the accrued interest on any such Member Loan and then (ii) the
principal amount of any such Member Loan, prior to any cash distributions
otherwise required or permitted pursuant to this Agreement to any of the
Members.

      3.4 THIRD-PARTY LOANS AND GUARANTEES. It is the intention of the Members
that the Company will not seek third-party financing for the development and
improvement of the Project. However, the Day-to-Day Manager and the non-managing
Member shall, pursuant to

                                       8


Section 5.1(c), regularly consult regarding the Approved Business Plan and the
need for and mutually satisfactory terms, if any, of third-party financing for
the second phase of the Project. If the Members do not agree on the need for, or
the terms or conditions of, third-party financing, then no such third-party
financing shall be obtained. The Members' failure to agree upon any third-party
financing shall not invoke the provisions of Section 14.10(b).

      3.5 CAPITAL CONTRIBUTIONS IN GENERAL. Except as otherwise expressly
provided in this Agreement or as may otherwise be agreed to in writing by the
Members (a) no part of the Capital Contributions of any Member may be withdrawn
by such Member, (b) no Member shall be entitled to receive interest on its
Capital Contributions, (c) no Member shall have the right to demand or receive
property, other than Finished Lots and except as otherwise provided herein, in
return for its Capital Contributions and (d) no Capital Contributions or loan
made by any Member to the Company shall increase its Percentage Interest.

   4. MEMBERS.

      4.1 LIMITED LIABILITY. Except as otherwise specifically provided herein,
no Member shall be personally liable under any judgment of a court, or in any
other manner, for any debt, obligation, or liability of the Company, whether
that liability or obligation arises in contract, tort, or otherwise.

      4.2 ADMISSION OF ADDITIONAL MEMBERS. No additional Members shall be
admitted to the Company unless approved by all of the Members.

      4.3 WITHDRAWALS OR RESIGNATIONS. No Member may withdraw or resign from the
Company without the prior written approval of all other Members.

      4.4 REMUNERATION TO MEMBERS. Except as otherwise authorized in, or
pursuant to, this Agreement, no Member is entitled to remuneration for acting in
the Company business, including, without limitation, the Day-to-Day Manager of
the Company.

      4.5 MEMBERS ARE NOT AGENTS. Pursuant to Section 5.1, the day-to-day
management of the Company is vested in the Day-to-Day Manager. Except as
expressly provided in this Agreement, no Member, acting solely in the capacity
of a Member, is an agent of the Company, nor can any Member in such capacity
bind, or execute any instrument on behalf of, the Company.

      4.6 VOTING RIGHTS. The Members shall have the voting, approval or consent
rights provided in this Agreement.

      4.7 MEETING OF THE MEMBERS.

         (a) MEETINGS. Unless otherwise agreed to by the Members, regular
meetings of the Members shall be held not less often than monthly at the office
of the Day-to-Day Manager or such other place in Hillsborough or Pasco County as
the Members shall mutually determine (in each case, the "Regular Meeting"). Such
Regular Meetings may be held

                                       9


telephonically. In addition to any Regular Meetings, any Member may call a
special meeting ("Special Meeting") by giving at least four (4) days (if the
meeting is to be held in person) or two (2) days (if the meeting is held
telephonically) oral or written notice to the other Member. The notice shall
specify the place, date and hour of the meeting and the general nature of the
business to be transacted. If the place of any scheduled meeting is inconvenient
to any Member, such Member may require by at least one (1) business day's oral
or written notice to the other Member that such meeting be held telephonically.

         (b) PURPOSE AND EFFECT. The Day-to-Day Manager shall endeavor to
prepare a written agenda for all Regular Meetings and deliver the same to each
Member prior to such meeting; provided, however, each Member shall be entitled
to add any matter it elects to such agenda at or before such meeting. The Member
calling a Special Meeting shall prepare a written agenda for such meeting and
deliver the same to the other Member prior to such meeting; provided, however,
each Member shall be entitled to add any matter it elects to such agenda at or
before such meeting. The Day-to-Day Manager shall be responsible for having
written minutes taken at each meeting (including each telephone conference
meeting) of the Members, which shall be sent to each Member within seven (7)
business days following such meeting. Whenever in this Agreement the consent or
approval of a Member is required, such consent or approval may be given without
a meeting if a writing signed by such Member evidences the same. Furthermore,
the Members may reach decisions regarding any matter which requires the approval
of all Members without a meeting if the decision is approved in writing by all
of the Members.

   5. MANAGEMENT AND CONTROL OF THE COMPANY.

      5.1 MANAGEMENT OF THE COMPANY BY DAY-TO-DAY MANAGER.

         (a) Subject to the restrictions set forth in this Agreement, the
Day-to-Day Manager shall be the manager of the Company and shall use its
commercially reasonable efforts consistent with customary practices in the
industry utilized by top-tier residential land developers on projects which are
similar in type and size to the Project (the "Standard of Care") to manage and
administer the day-to-day business and affairs of the Company and to implement
the Approved Business Plan, all on the terms set forth herein. Ashton shall be
the Day-to-Day Manager of the Company unless and until it is replaced pursuant
to Section 5.5. The Day-to-Day Manager shall at all times perform its duties and
responsibilities in compliance with all Laws and this Agreement (including,
without limitation, the restrictions on Major Decisions set forth in Section 5.2
below), and in an efficient, thorough, businesslike manner, devoting such time,
efforts and managerial resources to the business of the Company as is necessary
for the efficient operation of the day-to-day business and affairs of the
Company consistent with the Standard of Care. The Day-to-Day Manager shall not
retire, resign, dissolve, withdraw or cause or suffer any event which terminates
the continued status of the Day-to-Day Manager as a Member or as the Day-to-Day
Manager hereunder without the prior written consent of M/I or as otherwise
expressly permitted by Section 5.5 below. The Day-to-Day Manager shall
faithfully discharge the duties and obligations set forth in this Agreement
consistent with the Standard of Care.

                                       10


         (b) Without limiting the generality of the foregoing, the Day-to-Day
Manager shall have the following duties with respect to the development and
improvement of the Project, all to be carried out in accordance with this
Agreement and the Approved Business Plan:

            (i) Obtain and maintain in compliance with all Laws, all
governmental and agency approvals, permits and other entitlements necessary to
proceed with the development and improvement of the Project;

            (ii) Coordinate, control and supervise the preparation of such maps,
plats, plans and specifications as are necessary for the design, development and
construction of the Project;

            (iii) Negotiate and award contracts with appropriate firms, persons,
or entities to obtain all materials and services required in order to complete
the Project in accordance with the Approved Business Plan;

            (iv) Retain or employ and coordinate the services of all employees,
supervisors, architects, engineers, accountants, attorneys, real estate brokers,
advertising personnel and other persons necessary or appropriate for the
development of the Project;

            (v) Supervise the performance of all work in connection with the
planning, development, construction, and sale of the Project;

            (vi) Cause the Company to improve the Project in accordance with the
Pulte Contract, the Development Agreement, the Approved Project Budget and Plan
and substantially in accordance with the approved plans and specifications;

            (vii) Enforce all of the Company's rights and cause the Company to
perform all of the Company's obligations arising in connection with any contract
or agreement entered into in connection with the Project;

            (viii) Deliver to the Members copies of any notices or other written
materials received by the Day-to-Day Manager in connection with any material
disputes or claims relating to the Project (said disputes and claims shall be
deemed "material" if they reasonably could be anticipated to exceed the sum of
$50,000); and

            (ix) Otherwise diligently perform those duties and services in order
to plan, develop and improve the Project in accordance with the Approved
Business Plan.

         (c) The parties acknowledge that the Approved Business Plan will
require updating during the term of the Project. The Day-to-Day Manager shall
use good faith and diligent efforts to regularly consult with and update the
non-managing Member and shall seek the input of the non-managing Member in
connection with any material updating of the Approved Business Plan. The
Day-to-Day Manager shall use its commercially reasonable efforts to cause the
Project to be developed substantially in accordance with the Approved Business
Plan as it is

                                       11


updated and approved from time to time, including, without limitation, the line
items contained therein. Subject to the approval rights set forth in Section
5.2, the Day-to-Day Manager shall update the Approved Business Plan as set forth
below. Without limiting the generality of Sections 5.1(a) and 5.1(b), the
Day-to-Day Manager shall have the following additional rights and duties with
respect to the overall operation of the Company and ownership of the Project,
all to be carried out in accordance with this Agreement and the Approved
Business Plan:

            (i) Update the Approved Project Budget and Plan on a not less often
than a semi-annual basis. In connection therewith, the Day-to-Day Manager shall
deliver on or before May 1 and November 1 of each year a draft of an updated
Approved Project Budget and Plan for approval by M/I, which approval shall not
be unreasonably withheld, delayed or denied. Unless and until approved by M/I,
the existing Approved Project Budget and Plan shall remain in effect subject to
modifications required by any increases in "Non-Discretionary Expenditures"
(defined below) in order to avoid a material adverse change to the financial
condition or assets of the Company. As used herein, "Non-Discretionary
Expenditures" shall mean expenditures which the Company is required to pay by
law or pursuant to existing contracts between the Company and any third party in
accordance with the Approved Business Plan and shall include unforeseen material
cost increases; change orders to the contractor contract required by the project
engineer, the soils engineer, the county, or because of unforeseen site
conditions confirmed by the appropriate engineer; repair costs necessary because
of engineer errors and omissions, repair costs beyond contractual obligation of
contractor; losses and replacements; costs of addressing emergencies; and costs
associated with weather or other matters of force majeure. At such time as the
draft updated Approved Project Budget and Plan has been approved by M/I, it
shall become the Approved Project Budget and Plan in effect until the same has
been updated and such update has been approved by M/I in accordance herewith. If
M/I has not approved a draft updated Approved Project Budget and Plan within
thirty (30) days following receipt thereof, it shall be deemed disapproved by
M/I; and

            (ii) Update the Approved Project Contribution Plan (subject to the
limitations contained herein) on a not less than a quarterly basis. In
connection therewith, the Day-to-Day Manager shall deliver on or before February
1, May 1, August 1 and November 1 of each year a draft of the updated Project
Contribution Plan for approval by M/I, which approval shall not be unreasonably
withheld, delayed or denied. Unless and until approved by M/I and the Day-to-Day
Manager, the existing Approved Project Contribution Plan shall remain in effect;
provided, however, that if such existing Approved Project Contribution Plan is
insufficient to pay the costs and expenses of the Company in accordance with the
Approved Project Budget and Plan, then the Members shall fund such costs and
expenses through additional Capital Contributions pursuant to Section 3.2 above.
At such time as the draft updated Approved Project Contribution Plan has been
approved by M/I and the Day-to-Day Manager, it shall become the Approved Project
Contribution Plan in effect until the same has been updated and such update has
been approved by M/I and the Day-to-Day Manager in accordance herewith. If M/I
or the Day-to-Day Manager has not approved a draft updated Approved Project
Contribution Plan within thirty (30) days following receipt thereof, it shall be
deemed disapproved by M/I or the Day-to-Day Manager, as applicable.

                                       12


         (d) Notify the Members (i) in advance of public hearings and other
proceedings relating to entitlements and permits for the Project and (ii) of any
matter giving rise to a Major Decision pursuant to Section 5.2 below.

      5.2 MAJOR DECISIONS. Except for actions taken by the Day-to-Day Manager
with respect to an Emergency Situation in accordance with Section 5.9 below, the
Day-to-Day Manager shall not take any of the following actions on behalf of the
Company (in each case the taking of which shall be hereinafter referred to as a
"Major Decision") without the prior written consent of each Member. Major
Decisions shall bind the Company and all Members upon such written consent.

         (a) Update (or otherwise amend or modify) any component of the Approved
Business Plan in any manner;

         (b) Sell, convey, exchange, lease, hypothecate, pledge, encumber or
otherwise transfer any portion of or any interest in the Project or the Company,
other than contemplated in the Approved Project Business Plan and this
Agreement;

         (c) Sell, convey, exchange or otherwise transfer any portion of the
Property in either (i) a bulk sale, or (ii) any other transaction inconsistent
with this Agreement;

         (d) Expend funds or enter into an obligation on behalf of the Company
if the amount of such expenditure or obligation would either (i) exceed 112% of
any line item of the Development Costs component of the Approved Project Budget
and Plan; (ii) exceed 110% of any line item of the Operating Costs component of
the Approved Project Budget and Plan, (iii) increase the cost per Finished Lot
by more than $500 in the aggregate or (iv) result in an increase in the Capital
Contributions previously approved by or required from any Member beyond the
amounts required or permitted by Section 3 of this Agreement;

         (e) Incur any indebtedness on behalf of the Company, make or deliver on
behalf of the Company any indemnity bond or surety bond, lend funds belonging to
the Company to any Member or its Affiliate or to any third party, or extend
credit on behalf of the Company to any person, or obligate the Company or
another Member as a surety, guarantor, or accommodation party to any obligation,
or grant any lien or encumbrance on the Property, including, without limitation,
any modification of any of the foregoing, unless in accordance with the Approved
Business Plan;

         (f) Submit proposals to, or enter into agreements with, government
officials relating to mapping, development, zoning, subdivision, environmental
or other land use or entitlement matters, unless in accordance with the Approved
Business Plan (provided, however, the foregoing only applies to governmental
approvals or agreements that are discretionary and not ministerial in nature,
such ministerial acts by themselves not being deemed to be a Major Decision so
long as such ministerial action is consistent with the Approved Business Plan
and current entitlements for the Property). Without limiting the above, the
Day-to-Day Manager shall

                                       13


not cause any entitlements existing as of the Commencement Date to be modified
without the consent of M/I;

         (g) The delegation by the Day-to-Day Manager of any of its duties set
forth herein (other than to its manager, directors, officers, employees and any
contractors, agents or consultants engaged by the Company in accordance with the
Approved Project Budget and Plan, including the site development contractor
approved by the Members); provided, however, that the Day-to-Day Manager shall
only delegate its duties to such individuals and entities with the appropriate
level of experience and seniority to perform such duties in accordance with this
Agreement and, provided further, the selection of a site development contractor,
and its contract with the Company, shall be a Major Decision;

         (h) Except as otherwise expressly authorized by this Agreement, enter
into any transaction on behalf of the Company with a Member or an Affiliate or
related party of any Member;

         (i) Take any other action or make any other decision that this
Agreement provides must be approved or consented to by each Member;

         (j) Possess, assign, or use funds or other property of the Company for
other than a Company purpose;

         (k) Make, execute or deliver on behalf of the Company an assignment for
the benefit of creditors; cause the Company, a Member's Membership Interest or
the Project or any part thereof or interest therein to be subject to the
authority of any trustee, custodian or receiver or to be subject to any
proceeding for bankruptcy, insolvency, reorganization, arrangement, readjustment
of debt, relief of debtors, dissolution or liquidation or similar proceedings;

         (l) Partition all or any portion of the assets of the Company, or file
any complaint or institute any proceeding at law or in equity seeking such
partition;

         (m) Confess a judgment against the Company; settle or adjust any claims
against the Company; or commence, negotiate or settle any legal actions or
proceedings brought by the Company against unaffiliated third parties in excess
of $25,000;

         (n) Except as provided in this Agreement, dissolve, terminate or
liquidate the Company prior to the expiration of its term;

         (o) Effectuate the recapitalization, equity splitting or any similar
transaction of or with respect to the Company, or the issuance of any equity
interest, debentures or other securities of or in the Company or the issuance of
any options, warrants or rights to purchase or acquire or effectuate any of the
foregoing; or

         (p) Do any act that would make it impossible to carry on the business
of the Company.

                                       14


      5.3 EXECUTION OF COMPANY DOCUMENTS. The Day-to-Day Manager, acting alone,
shall have the authority to execute and deliver, on behalf of the Company,
agreements, instruments or other documents to which the Company will be a party
or be bound, so long as such agreements, instruments or other documents are
consistent with this Agreement and the Approved Business Plan.

      5.4 INSURANCE.

         (a) COMPANY POLICIES. In accordance with the Approved Business Plan,
the Day-to-Day Manager shall purchase and maintain, or shall cause to be
purchased and maintained, or shall retain existing coverage and maintain, for
and at the expense of the Company, policies of insurance standard for businesses
such as the Company (i) for the Company's operations, (ii) for the protection of
the Company's assets, and (iii) as may be reasonably required to comply with
third-party requirements, and shall provide the Members with the certificates or
other evidence of insurance coverage as provided therein.

         (b) CONTRACTORS' INSURANCE OBLIGATIONS. The Day-to-Day Manager shall
require the Project's general contractors and all subcontractors to at all times
obtain and comply with the insurance requirements set forth on EXHIBIT "C"
attached and incorporated herein by reference.

         (c) FUTURE COOPERATION. The Members recognize that the commercial
availability of insurance to cover the Company's and its contractors' and
agents' operations is subject to changing market conditions. In connection
therewith, the Members agree to cooperate and work together in good faith to
find alternative risk management strategies in the event that any of the
insurance required by this Agreement becomes commercially unavailable or is
financially prohibitive in cost.

      5.5 ELECTION, RESIGNATION, REMOVAL OF DAY-TO-DAY MANAGER.

         (a) NUMBER, TERM, AND QUALIFICATIONS. The Company shall have one Day-
to-Day Manager. Unless it is removed or resigns with the consent of the
non-managing Member, the Day-to-Day Manager shall hold office until a successor
shall have been elected and qualified. Unless the Day-to-Day Manager is removed
pursuant to Section 5.5(c), a new Day-to-Day Manager may not be appointed
without the unanimous affirmative vote of all Members. The Day-to-Day Manager
shall be a Member, but need not be an individual, a resident of the State of
Florida or a citizen of the United States.

         (b) RESIGNATION. The Day-to-Day Manager may not resign without the
prior written approval of all the Members. The approved resignation of the
Day-to-Day Manager shall not affect the Day-to-Day Manager's rights as a Member,
and shall not constitute a withdrawal of the Day-to-Day Manager as a Member.

                                       15


         (c) REMOVAL. Ashton shall cease to be the Day-to-Day Manager if Ashton
(or its authorized successor) ceases to be a Member of the Company or ceases to
beneficially own its Membership Interest, and, in such event, M/I shall have the
sole right to remove Ashton and appoint a new Day-to-Day Manager. Otherwise, the
Day-to-Day Manager may be removed only for "cause." For purposes of this Section
5.5(c), "cause" shall mean (i) the fraud, gross negligence, willful misconduct,
embezzlement or bankruptcy of the Day-to-Day Manager or (ii) a breach of the
Day-to-Day Manager's obligations as (A) a Member or (B) Day-to-Day Manager.
Unless waived in writing by the non-managing Member, the Day-to-Day Manager
shall be removed immediately upon the occurrence of such for "cause" event;
provided, however, with respect to the for "cause" events under clause (ii)
above such removal shall only be effective where the Day-to-Day Manager has
failed to cure such breach within thirty (30) days following its receipt of
notice from the non-managing Member of such for "cause" event, except for
monetary breaches which must be cured within fifteen (15) days from receipt of
such notice.

         Except as set forth above in this Section 5.5(c), the Day-to-Day
Manager may only be removed upon the decision of all Members, in which event the
Members shall, as a Major Decision, mutually agree upon a new Day-to-Day Manager
within thirty (30) days of the removal of the previous Day-to-Day Manager and,
if unable to do so, either party, as its sole remaining remedy, may exercise the
buy-sell provisions of Section 12 hereof. Upon the removal of the Day-to-Day
Manager, the Members shall account to each other with respect to all uncompleted
business, and shall otherwise cooperate in good faith to effect an orderly
transition of the management of the affairs of the Company. The party or parties
appointing the new Day-to-Day Manager may enter into a contract on behalf of the
Company with such new Day-to-Day Manager on such terms and conditions
(including, without limitation, compensation) as are determined in the
reasonable business judgment of the appointing party or parties. Upon its
removal, any former Day-to-Day Manager shall deliver to the Company all books,
records and other instruments in its possession or under its control relating to
the Project. The removal of Ashton (or its authorized successor) as the
Day-to-Day Manager shall not affect Ashton's (or such successor's) rights as a
Member, and shall not constitute a withdrawal of Ashton (or such successor) as a
Member; however, (a) such removed Day-to-Day Manager shall not receive any
further payments of the fee set forth in Section 6.2 below and (b) upon any such
removal, (i) M/I may appoint a new Day-to-Day Manager, and (ii) notwithstanding
anything herein to the contrary, neither Ashton nor its authorized successor
shall thereafter have any right to vote on Major Decisions or otherwise manage
or participate in the business, affairs or management of the Company if Ashton
is removed solely as a result of Ashton's fraud, willful misconduct,
embezzlement or bankruptcy.

      5.6 MEMBERS HAVE NO DAY-TO-DAY MANAGERIAL AUTHORITY. The Members shall
have no power to participate in the management of the Company except as
expressly authorized by this Agreement.

      5.7 COMPETING ACTIVITIES. The Members and their respective Affiliates may
engage or invest in, independently or with others, any business activity of any
type or description, including, without limitation, those that might be the same
as or similar to the Company's business and that might be in direct or indirect
competition with the Company. Neither the

                                       16


Company nor any Member shall have any right in or to such other ventures or
activities or to the income or proceeds derived therefrom, and the fiduciary
duties of the Members to each other and the Company shall be limited solely to
those arising from the purposes of the Company described in Section 2.4 above.
The Members shall not be obligated to present any investment opportunity or
prospective economic advantage to the Company, even if the opportunity is of the
character that, if presented to the Company, could be taken by the Company. The
Members shall have the right to hold any investment opportunity or prospective
economic advantage for their own account or to recommend such opportunity to
persons other than the Company.

      5.8 THIRD PARTY RELIANCE. Any person not a party to this Agreement who
shall deal with the Company shall be entitled to rely conclusively upon the
power and authority of the Day-to-Day Manager as set forth herein.

      5.9 EMERGENCY SITUATIONS. Notwithstanding anything herein to the contrary,
if the Day-to-Day Manager, in its reasonable business judgment, concludes that
emergency repairs, replacements or other actions (including by way of example
and not limitation, the signing of documents) are immediately necessary for the
preservation or safety of persons or any portion of the Project (individually or
collectively, an "Emergency Situation") and the Day-to-Day Manager, after using
reasonably diligent efforts, is unable to consult with the non-managing Member
prior to taking any action in such Emergency Situation, then the Day-to-Day
Manager may take said action without the prior approval of the non-managing
Member. If the Day-to-Day Manager takes such action by reason of an Emergency
Situation, the Day-to-Day Manager shall notify the non-managing Member in
writing as quickly as possible after the taking of such action, the reasons
therefore and the cost thereof. The Members agree to cooperate to establish
appropriate emergency notification procedures under this Agreement.

      6. COMPENSATION AND REIMBURSEMENTS TO MEMBERS.

         6.1 NO RIGHT TO COMPENSATION FOR SERVICES. Except as provided in this
Agreement, no Member shall receive compensation for services rendered to the
Company or for overhead expenses of any kind whatsoever. The fees to the
Day-to-Day Manager set forth in this Section 6 are fees and not distributions
for the purposes of this Agreement.

         6.2 MANAGER FEE. In consideration for the services to be performed
hereunder by the Day-to-Day Manager in connection with its obligations set out
in this Agreement, M/I shall pay the Day-to-Day Manager a fee (the "Manager
Fee") equal to Three Hundred Dollars ($300.00) per Finished Lot distributed to
M/I pursuant to this Agreement as and when such a Finished Lot is delivered. The
Company anticipates having approximately 364 Finished Lots.

         6.3 EXPENSES. The Day-to-Day Manager shall be entitled to receive
reimbursement from the Company for only those reasonable third-party costs and
expenses actually incurred by the Day-to-Day Manager on behalf of the Company in
accordance with the Approved Project Budget and Plan; provided, however, the
Day-to-Day Manager shall not be entitled to any reimbursement or credit of any
kind whatsoever for the costs and expenses incurred by the Day-

                                       17


to-Day Manager or any Affiliate of the Day-to-Day Manager in the performance of
its obligations hereunder which are covered by the Manager Fee.

         6.4 COMMISSIONS, BROKER'S FEES, ETC. M/I and Ashton hereby represent
and warrant to the other that such Member has employed no broker or finder in
connection with the formation of the Company or acquisition of the Property. M/I
and Ashton each agree to indemnify and hold the other harmless from and against
any and all claims, liabilities, damages, losses and expenses (including,
without limitation, attorneys' fees) arising from or in connection with such
party's breach of the representation set forth in this Section 6.4.

      7. ALLOCATIONS OF NET PROFITS AND NET LOSSES AND DISTRIBUTIONS.

         7.1 TAX AND ACCOUNTING. The Members intend that the Company shall be
treated as a "partnership" for Federal, state and local income and franchise tax
purposes. In furtherance of the foregoing intention, the Company and (at the
request of and at the direction of the Company) the Members shall take such
actions as may be required in order to give affect to such intent. Under no
circumstance shall the Company or any Member take any action that is
inconsistent with the foregoing intention.

         7.2 ALLOCATIONS OF LOSSES. Except to the extent provided in Section
7.4, if there shall be taxable losses of the Company for a fiscal year of the
Company, such taxable losses shall be allocated between the Members in the
following order:

            (i) first, to the Members (in proportion to the amounts of losses to
be allocated in accordance with this Section 7.2(i)) until there have been
allocated to each Member losses equal to the excess, if any, of (X) the
cumulative amount of income allocated to such Member pursuant to Section
7.3(iii) hereof through and including such fiscal year; and (Y) the cumulative
amount of losses allocated to such Member pursuant to this Section 7.2(i)
through and including such fiscal year;

            (ii) next, to the Members to cause, to the extent possible, their
respective Capital Account balances to be in proportion to their then respective
Percentage Interests; and

            (iii) next, to the Members, in accordance with their then respective
Percentage Interests.

         7.3 ALLOCATIONS OF INCOME. Except to the extent provided in Section
7.4, if there shall be taxable income of the Company for a fiscal year of the
Company, such taxable income shall be allocated between the Members in the
following order:

            (i) first, to the Members (in proportion to the amounts of income to
be allocated in accordance with this Section 7.3(i)) until there shall have been
allocated to each Member income equal to the excess, if any, of (X) the
cumulative amount of losses allocated to such Member pursuant to Section
7.2(iii) hereof through and including such fiscal year; and (Y)

                                       18


the cumulative amount of income allocated to such Member pursuant to this
Section 7.3(i) through and including such fiscal year;

            (ii) next, to the Members to cause, to the extent possible, their
respective Capital Account balances to be in proportion to their then respective
Percentage Interests; and

            (iii) next, to the Members, in accordance with their then respective
Percentage Interests.

         7.4 SPECIAL ALLOCATIONS.

            (a) QUALIFIED INCOME OFFSET. If any Member unexpectedly receives an
adjustment, allocation or distribution described in Regulations Section
1.704-1(b)(2)(ii)(d)(4), (5) or (6) in any fiscal year or other period which
would cause such Member to have a deficit Capital Account balance as of the end
of such fiscal year or other period, items of Company income and gain
(consisting of a pro rata portion of each item of Company income, including
gross income and gain) shall be specially allocated to such Member in an amount
and manner sufficient to eliminate, to the extent required by the Regulations,
the deficit Capital Account balance of such Member as quickly as possible. This
Section 7.4(a) is intended to comply with the qualified income offset provision
in Regulations Section 1.704-1(b)(2)(ii)(d), and shall be interpreted
consistently therewith.

            (b) COMPANY MINIMUM GAIN CHARGEBACK. If there is a net decrease in
"Partnership Minimum Gain" (as determined in accordance with the principles of
Regulation Section 1.704-2(d)) during a Company fiscal year or other period,
each Member shall be allocated items of Company income and gain for such fiscal
year or other period (and, if necessary, for subsequent fiscal years or periods)
in proportion to, and to the extent of, such Member's share of such net
decrease, except to the extent such allocation would not be required by
Regulations Section 1.704-2(f). The amounts referred to in this Section 7.4(b)
and the items to be so allocated shall be determined in accordance with
Regulations Section 1.704-2. This Section 7.4(b) is intended to constitute a
"minimum gain chargeback" provision as described in Regulations Section
1.704-2(f), and shall be interpreted consistently therewith and with Regulation
Section 1.704(e)(3).

            (c) MEMBER NONRECOURSE DEBT MINIMUM GAIN CHARGEBACK. If there is a
net decrease in "Partner Nonrecourse Debt Minimum Gain" (as defined in
Regulation Section 1.704-2(i)(2)) during a Company fiscal year or other period,
each Member shall be allocated items of Company income and gain for such fiscal
year or other period (and, if necessary, for subsequent fiscal years or periods)
equal to such Member's share of such net decrease, except to the extent such
allocation would not be required by Regulations Section 1.704-2(i)(4). The
amounts referred to in this Section 7.4(c) and the items to be so allocated
shall be determined in accordance with Regulations Section 1.704-2. This Section
7.4(c) is intended to comply with the minimum gain chargeback requirement
contained in Regulations Section 1.704-2(i)(4), and shall be interpreted
consistently therewith.

                                       19


            (d) MEMBER NONRECOURSE DEDUCTIONS. "Partner Nonrecourse Deductions"
(as defined in Regulation Section 1.704-2(b)(1)) for any fiscal year or other
period shall be specially allocated to the Members who bear the economic risk of
loss for the Partner Nonrecourse Debt (as defined in Regulations Section
1.704-2(b)(4)) to which such Member Nonrecourse Deductions are attributable, as
provided in Regulations Section 1.704-2(i)(1).

            (e) NONRECOURSE DEDUCTIONS. Nonrecourse Deductions for any fiscal
year shall be allocated to the Members in accordance with their respective
Percentage Interests.

            (f) EXCESS NONRECOURSE LIABILITIES. Nonrecourse Debts of the Company
which constitute "Excess Nonrecourse Liabilities" (as defined in Regulations
Section 1.704-2(b)(3)) shall be allocated among the Members in accordance with
their respective Percentage Interests.

            (g) ORDERING RULES. Anything contained in this Agreement to the
contrary notwithstanding, allocations for any fiscal year or other period of
Nonrecourse Deductions or Member Nonrecourse Deductions, or of items required to
be allocated pursuant to the minimum gain chargeback requirements contained in
Section 7.4(b) and Section 7.4(c) hereof, shall be made before any other
allocations hereunder.

            (h) SECTION 704(C) ALLOCATIONS. Notwithstanding Section 7.2 and 7.3,
the gain or loss for federal income tax purposes from the sale or other
disposition of Finished Lots and parcels at the Project shall be allocated to
the Members in accordance with the requirements of Section 704(c) of the Code
and the Treasury Regulations promulgated thereunder, using the traditional
method of allocations contained in Section 1.704-3(b) of the Treasury
Regulations and based upon the fair market values set forth in Section 3.1. Any
gain or loss in excess of the amount allocated pursuant to the preceding
sentence shall be allocated between the Members as provided in Section 7.2 or
Section 7.3, as the case may be.

         7.5 NO NEGATIVE CAPITAL ACCOUNT MAKEUP. No Member shall have any
obligation to contribute funds to bring any negative balance in its Capital
Account to zero.

         7.6 ORDER OF DISTRIBUTION OF AVAILABLE CASH. Available Cash may be
distributed to the Members pro rata in accordance with their respective
Percentage Interests at such times, and in such amounts as reasonably determined
by the Day to Day Manager; provided, however, that Available Cash shall not be
distributed without the consent of the non-Managing Members), which consent
shall not be unreasonably withheld or delayed.

         7.7 FORM OF DISTRIBUTION. A Member has no right to demand and receive
any distribution from the Company in any form other than the Finished Lots
except as otherwise provided herein.

         7.8 RETURN OF DISTRIBUTIONS. Except for distributions made in violation
of the Act or this Agreement, no Member shall be obligated to return any
distribution to the Company or pay the amount of any distribution for the
account of the Company or to any creditor of the Company.

                                       20


The amount of any distribution returned to the Company by a Member or paid by a
Member for the account of the Company or to a creditor of the Company pursuant
to the previous sentence shall be added to the account or accounts from which it
was subtracted when it was distributed to the Member.

      8. DISSOLUTION AND WINDING UP.

         8.1 DISSOLUTION. The Company shall be dissolved, its assets shall be
disposed of, and its affairs wound up on the first to occur of the following:

            (a) upon the sale or distribution of all or substantially all of the
assets of the Company including the distribution of all Finished Lots to the
Members and conveyance of any common areas to the homeowners association, and
the collection by the Company of any and all cash and other assets derived
therefrom; or

            (b) an election to dissolve the Company made in writing by all the
Members.

         8.2 WINDING UP. Upon the occurrence of any event specified in Section
8.1, the Members shall determine the manner in which the affairs of the Company
shall be wound up (which may include the sale of any remaining portion of the
Property). The Company shall engage in no further business thereafter other than
that necessary to wind up the business and distribute the assets. The Company
shall continue to allocate profits and losses during the winding up period in
the same manner as such amounts were divided before dissolution.

         8.3 ORDER OF PAYMENT OF LIABILITIES UPON DISSOLUTION. After determining
that all debts and liabilities of the Company in the process of winding-up,
debts and liabilities to Members and other parties who are creditors of the
Company, and the repayment of construction or other loans to the Company have
been paid or adequately provided for, the remaining assets shall be distributed
to the Members in accordance with Section 7.6 above.

         8.4 LIMITATIONS ON PAYMENTS MADE IN DISSOLUTION. Each Member shall only
be entitled to look solely to the assets of the Company for the return of its
positive Capital Contribution, and shall have no recourse for the return of its
Capital Contribution and/or share of net profits (upon dissolution or otherwise)
against the Day-to-Day Manager or any Member.

         9. TRANSFER OF INTEREST.

         9.1 TRANSFER AND ASSIGNMENT OF INTERESTS. A Member shall not transfer,
assign, convey, sell, encumber or in any way alienate (collectively, "Transfer")
all or any part of its Membership Interest without the prior written consent of
the other Member(s), except as otherwise provided herein. Transfers in violation
of this Section 9.1 shall be null and void ab initio. After the consummation of
any Transfer of any part of a Membership Interest, the Membership Interest so
transferred shall continue to be subject to the terms and provisions of this
Agreement and any further Transfers shall be required to comply with all the
terms and provisions of this Agreement.

                                       21


         9.2 FURTHER RESTRICTIONS ON TRANSFER OF INTERESTS. In addition to other
restrictions found in this Agreement, no Member shall Transfer all or any part
of such Member's Membership Interest without compliance with all applicable
federal and state securities law.

         9.3 SUBSTITUTION OF MEMBERS. An assignee of a Membership Interest shall
have the right to become a substitute Member only if (i) the requirements of
this Section 9 are satisfied, (ii) the assignee executes an instrument
satisfactory to all of the Members accepting and adopting the terms and
provisions of this Agreement, (iii) the Assignee pays any reasonable expenses
incurred by the Company in connection with its admission as a new Member, and
(iv) the other Member consents in writing to the substitution in its sole and
absolute discretion.

         9.4 PERMITTED TRANSFERS. Notwithstanding the restrictions set forth in
Sections 9.1 or 9.3, a Member shall have the right without the consent of the
other Member to Transfer all or a portion of its Membership Interest to an
Affiliate; provided, however, that for so long as Ashton is the Day-to-Day
Manager, any such Transfer by Ashton must be to an Affiliate approved by M/I in
writing, which approval shall not be unreasonably withheld, delayed or denied.
The admission of a Member's Affiliate as a substitute Member in place of such
Member shall not result in the release of the Member who assigned the Membership
Interest from any liability or obligations that such Member may have to the
Company.

         9.5 RIGHT OF FIRST REFUSAL. Notwithstanding the restrictions set forth
in Sections 9.1 or 9.3, M/I grants to Ashton and Ashton grants to M/I the right
of first refusal to purchase the other party's Membership Interest in the
Company on the following terms and conditions:

            (a) Each party's right of first refusal shall be exclusive and
neither party shall grant similar or the same right to any other;

            (b) If M/I or Ashton, directly or indirectly, enter into a bona
fide, arms length and binding agreement to sell its Membership Interest in the
Company (the "Notifying Party's Agreement"), such party shall notify ("Notifying
Party") the other party (the "Receiving Party") that the Notifying Party entered
into such Notifying Party's Agreement, which notice to be valid must include a
complete and legible copy of the Notifying Party's Agreement, including all
exhibits and any other terms and conditions applicable to the Notifying Party's
Agreement;

            (c) The Receiving Party shall have thirty (30) days following the
Receiving Party's receipt of the Notifying Party's notice (which notice shall
not be deemed sufficient unless it complies with the terms and conditions of
this Agreement) to elect to accept the terms and conditions of the Notifying
Party's Agreement, except as set forth below, by delivering written notice
thereof to the Notifying Party on or before the end of such thirty (30) days;
notwithstanding the foregoing, however, if the Receiving Party elects to accept
the terms and conditions of the Notifying Party's Agreement, the Receiving Party
shall have the further right to purchase the Membership Interest of the
Notifying Party for a purchase equal to the lesser of (i) the purchase price for
the Notifying Member's Membership Interest as set forth in the Notifying Party's
Agreement and (ii) the amount allocated to such Notifying Party's Capital
Account.

                                       22


            (d) If the Receiving Party elects in its sole discretion not to (or
fails to) accept the terms of the Notifying Party's Agreement, the Notifying
Party shall be free to sell the Notifying Party's Membership Interest in the
Company under the terms and conditions of the Notifying Party's Agreement but
only so long as (i) the transaction contemplated by the Notifying Party's
Agreement closes within ninety (90) days from the date of the Notifying Party's
receipt of the Receiving Party's election not to accept the Notifying Party's
Agreement (regardless of any contrary terms of the Notifying Party's Agreement)
and (ii) such closing occurs on substantially the same terms and conditions
under the Notifying Party's Agreement (without limiting the generality of the
foregoing, a reduction of the purchase price under the Notifying Party's
Agreement of greater then two percent (2%) shall be deemed a substantial change
in the Notifying Party's Agreement);

            (e) If the Receiving Party elects not to accept the Notifying
Party's Agreement and the transaction described in the Notifying Party's
Agreement fails to timely close or to close on the conditions herein required
for any reason, then the Receiving Party's right of first refusal shall be
deemed reinstated and the Notifying Party shall not be entitled to close under
the Notifying Party's Agreement or any other agreement without re-offering or
offering the Notifying Party's Agreement or such other to the Receiving Party;

            (f) A Notifying Party shall not be entitled to sell less than one
hundred percent (100%) of its Membership Interest in the Company;

            (g) Delivery of any notice required hereunder by the Notifying Party
or Receiving Party shall be made in writing under the terms required for
delivery of notice hereunder;

            (h) A direct or indirect transfer of an interest in the Property
that does not strictly comply with the terms and conditions of this Agreement
shall not terminate the non-transferring party's right of first refusal; and

            (i) If the Receiving Party accepts the terms of the Notifying
Party's Agreement but fails to close as required, then the Notifying Party's
sole and exclusive remedy shall be to either enforce an action for specific
enforcement and receive its costs of such action or to terminate the Receiving
Party's right of first refusal as agreed upon liquidated damages.

   10. ACCOUNTING, RECORDS, REPORTING BY MEMBERS.

      10.1 BOOKS AND RECORDS. The books and records of the Company shall be
kept, and the financial position and the results of its operations recorded, on
an accrual basis by the Day-to-Day Manager in accordance with generally accepted
accounting principles. The books and records of the Company shall reflect all
the Company transactions and shall be appropriate and adequate for the Company's
business. The Company shall maintain at its principal office in Florida all of
the following:

                                       23


            (a) A current list of the full name and last known business or
residence address of each Member set forth in alphabetical order, together with
the Capital Contributions, Capital Account and Percentage Interest of each
Member;

            (b) A copy of the Articles and any and all amendments thereto
together with executed copies of any powers of attorney pursuant to which the
Articles or any amendments thereto have been executed;

            (c) A copy of this Agreement and any and all amendments thereto
together with executed copies of any powers of attorney pursuant to which this
Agreement or any amendments thereto have been executed;

            (d) Copies of the Company's federal, state, and local income tax or
information returns and reports, if any, for the six (6) most recent taxable
years;

            (e) Copies of the financial statements of the Company, if any, for
the six (6) most recent fiscal years; and

            (f) The Company's books and records as they relate to the internal
affairs of the Company for at least the current and past four (4) fiscal years.

      10.2 INSPECTION. Each Member has the right, upon reasonable written
request to the Day-to-Day Manager (made at least five (5) business days prior to
such Member's intent to exercise their rights under this Section 10.2) for
purposes reasonably related to the interest of the Person as Member, to inspect
and copy during normal business hours any of the Company records described in
Sections 10.1.

      10.3 FINANCIAL STATEMENTS AND OTHER REPORTS.

            (a) ANNUAL FINANCIAL STATEMENTS. At the expense of the Company, the
Day-to-Day Manager shall provide each Member with financial statements of the
Company prepared by a certified public accounting firm selected by the Members,
within ninety (90) days after the completion of the Company's fiscal year. In
the event of a dispute between the Members regarding the Company's financial
statements, either Member has the right to require that the financial statements
of the Company be audited by a certified public accounting firm selected by the
Member desiring such audited financial statements (an "Audit"). The cost of any
such Audit shall be paid by the Company; provided, however, if any such Audit is
not, in the opinion of such accounting firm, materially different than the
unaudited financial statements of the Company, then the Audit shall be paid by
the Member which requested such Audit and such Member shall also pay to the
Day-to-Day Manager a liquidated amount equal to the cost of such audit to offset
the time and expense of the Day-to-Day Manager in connection with such audit.

            (b) QUARTERLY FINANCIAL REPORTS. The Day-to-Day Manager shall, by
the 15th day of each calendar quarter during the term of the Company, prepare,
or cause to be prepared, and deliver to the Members a balance sheet showing the
assets and liabilities of the

                                       24


Company as of the last day of the previous calendar quarter, an income statement
presenting the results of the operations of the Company for such quarter. On a
quarterly basis, Day-to-Day Manager shall prepare and deliver to the members a
job cost report for the Project which shall include all Project costs incurred
to the then current date, a variance schedule showing any deviations from the
cost line items provided for in the Approved Project Budget and Plan and a year
to date summary of such operations and, if requested by any Member, a statement
of sources and applications of funds.

            (c) FILINGS. The Day-to-Day Manager, at Company expense, shall
 cause the income tax returns for the Company to be prepared and timely filed
 with the appropriate authorities. The Day-to-Day Manager, at Company expense,
 shall also cause to be prepared and timely filed, with appropriate federal and
 state regulatory and administrative bodies, amendments to, or restatements of
 the Articles and all reports required to be filed by the Company with those
 entities under the Act or other then current applicable laws, rales, and
 regulations.

            (d) ACCOUNTING DECISIONS. All decisions as to accounting
 matters, except as otherwise specifically set forth herein, shall be made by
 the Members jointly.

      10.4 TAX MATTERS PARTNER. The Day-to-Day Manager shall be the "tax matters
partner" of the Company as such term is defined in Section 6231(a)(7) of Code
(the "Tax Matters Partner"), and it shall serve as such at the expense of the
Company with all powers granted to a tax matters partner under the Code. The Tax
Matters Partner shall use its commercially reasonable efforts to prepare and
file on a timely basis, with due regard to extensions, all tax and information
returns that the Company may be required to file, all at Company expense. No tax
or information return shall be filed unless approved by the Members, such
approval not to be unreasonably withheld or delayed. Each Member shall give
prompt notice to each other Member of any and all notices it receives from the
Internal Revenue Service concerning the Company, including any notice of audit,
any notice of action with respect to a revenue agent's report, any notice of a
30-day appeal letter and any notice of a deficiency in tax concerning the
Company's federal income tax return. The Tax Matters Partner shall, at Company
expense, furnish each Member with status reports regarding any negotiation
between the Internal Revenue Service and the Company, and each such Member, if
it so requests, may participate in such negotiation. The Tax Matters Partner
shall not enter into any settlement with any taxing authority (federal, state or
local) or extend the statute of limitations on behalf of the Company or the
Members without the approval of all Members.

      11. INVESTMENT REPRESENTATIONS.

      11.1 REPRESENTATIONS AND WARRANTIES. Each Member hereby represents and
warrants to the Company and each other Member as follows:

            (a) AUTHORIZATION. The Member is duly organized, validly existing,
and in good standing under the law of its state of organization and that it has
full power and authority to execute and agree to this Agreement and to perform
its obligations hereunder and that all actions

                                       25


necessary for the due authorization, execution, delivery and performance by that
Member of this Agreement have been duly taken.

            (b) COMPLIANCE WITH OTHER INSTRUMENTS. The Member's authorization,
execution, delivery, and performance of this Agreement do not conflict with any
other agreement or arrangement to which such Member is a party or by which it is
bound.

            (c) PURCHASE ENTIRELY FOR OWN ACCOUNT. The Member is acquiring its
Membership Interest in the Company for the Member's own account for investment
purposes only and not with a view to or for the resale, distribution,
subdivision or fractionalization thereof and has no contract, understanding,
undertaking, agreement or arrangement of any kind with any person to sell,
transfer or pledge to any person its interest or any part thereof nor does such
Member have any plan to enter into any such agreement.

            (d) INVESTMENT EXPERIENCE. By reason of its business or financial
experience, the Member has the capacity to protect its own interest in
connection with the transactions contemplated hereunder, is able to bear the
risks of an investment in the Company, and at the present time could afford a
complete loss of such investment.

            (e) DISCLOSURE OF INFORMATION. The Member is aware of the Company's
business affairs and financial condition and has acquired sufficient information
about the Company to reach an informed and knowledgeable decision to acquire an
interest in the Company.

            (f) FEDERAL AND STATE SECURITIES LAWS. The Member acknowledges that
the Membership Interests have not been registered under the Securities Act of
1933 or any state securities laws, inasmuch as they are being acquired in a
transaction not involving a public offering, and, under such laws and subject to
the transfer restrictions set forth in Article 9 may not be resold or
transferred by the Member without appropriate registration or the availability
of an exemption from such requirements. In this connection, the Member
represents that it is familiar with SEC Rule 144, as presently in effect, and
understands the resale limitations imposed thereby and by the Securities Act of
1933.

      11.2 REPRESENTATIONS AND WARRANTIES OF ASHTON. In addition to the
representations, warranties set forth in Section 11.1 above, and as an
inducement to M/I to enter into this Agreement, Ashton represents and warrants
to M/I that:

      (a) The Pulte Contract has been duly and validly assigned to the Company
by Ashton and, to Ashton's knowledge, neither the seller nor the purchaser
therein is now or ever has been in default thereunder and all payments due to be
made thereunder have been paid in full;

      (b) To Ashton's knowledge: no dispute currently exists between the seller
and purchaser or any other party with respect to the Pulte Contract; no
condition has been discovered upon the land or exists with respect thereto which
would result in a default or give either party the right to terminate the Pulte
Contract; and, to Ashton's actual knowledge, there are no title,

                                       26


survey, soil, environmental, governmental or other condition exists which would
materially and adversely effect the development of the Property in accordance
with, and as contemplated, herein and in the Pulte Contract;

      (c) To Ashton's actual knowledge, there are no actions, suits, proceedings
or investigations pending or threatened with respect to the Pulte Contract, the
Property or the Project;

      (d) No notices have been received by Ashton from any governmental
authority that the Project or Property is in violation of any Laws and, to
Ashton's knowledge, the Property can be developed as contemplated herein and in
the Pulte Contract;

      (e) To Ashton's knowledge, neither this Agreement or any related document,
exhibit or schedule attached hereto prepared or furnished by Ashton contains an
untrue statement in material fact or misstates a material fact relating to the
Property, the Project or the Pulte Contract.

      (f) Prior to M/I acquiring the M/I Interest: no other party other than
Ashton owned or controlled any interest in and to the equity or Membership
Interests of the Company; and the Company has no employees or consultants and no
assets or liabilities other than those contemplated by the Pulte Contract and
this Agreement.

      11.3 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and
warranties herein shall survive the execution and delivery of this Agreement,
the formation of the Company and the dissolution and final liquidation of the
Company.

   12. BUY/SELL.

      12.1 PUT/CALL OFFERING NOTICE. A Member (the "Initiating Member") shall
have the right to invoke the provisions of this Section 12 by giving written
notice (the "Offering Notice") to the other Member (the "Responding Member") of
its intent to rely on this Section 12 and to purchase all, but not less than
all, of the Responding Member's Membership Interest only under the following
circumstances: (i) By the non-defaulting Member, if at any time a Member is in
default hereunder and more than thirty (30) days have elapsed since such
non-defaulting Member has given written notice thereof to such defaulting Member
and such default has not been cured, or (ii) as otherwise provided in this
Agreement, including Sections 3.2(c), 5.5(c) and 14.10(b). In any such event,
the provisions set forth in this Section 12 shall apply. The Initiating Member
shall specify in its Offering Notice the all cash purchase price per percent of
Percentage Interest ("Purchase Price") at which the Initiating Member would be
willing to purchase all the Responding Member's Membership Interest.

12.2 EXERCISE OF PUT/CALL. Within 30 days after the delivery date of the
Offering Notice, the Responding Member shall then be obligated either to:

                                       27


            (a) Sell to the Initiating Member its Membership Interest for the
Purchase Price times its Percentage Interest; or

            (b) Purchase the Membership Interest of the Initiating Member for
the Purchase Price times the Initiating Member's Percentage Interest.

      The Responding Member shall notify the Initiating Member of its election
(the "Election Notice") within thirty (30) days after the date of its receipt of
the Offering Notice. In the event the Responding Member fails to give such
notice within the required time period, the Initiating Member shall purchase the
Responding Member's Membership Interest according to the terms of this Section
12. For purposes of this Section 12 the term "Purchasing Member" shall mean the
Member who is obligated to purchase the other Member's Membership Interest
(whether such Member is the Initiating Member or the Responding Member) and the
term "Selling Member" shall mean the Member who is obligated to sell its
Membership Interest to the Purchasing Member.

      12.3 DESIGNEE; FINANCING. In the event that any Member purchases the other
Member's Membership Interest pursuant to this Section 12, such Purchasing Member
shall be entitled to designate any third party to be the transferee of such
interest or obtain financing from any third party with respect to such purchase,
provided that the foregoing shall not be a condition to or delay any transaction
described in this Section 12.

      12.4 CLOSING.

            (a) The Members shall meet and exchange documents and pay any
amounts due, and otherwise do all things necessary to conclude the transaction
set forth herein at the closing of such purchase (the "Closing"). The Closing
shall occur in Florida at the office of the Selling Member's legal counsel at
1:00 p.m. on the date specified in the Responding Member's Election Notice,
which date shall not be more than thirty (30) days after the date of delivery of
the Election Notice (or the date such Election Notice was due if no Election
Notice was timely given). At the Closing, the Selling Member shall deliver to
the Purchasing Member a duly executed assignment of its Membership Interest and
shall also, upon the request of the Purchasing Member, concurrently therewith
(or at any time and from time to time thereafter) execute and deliver such other
customary documents and records as the Purchasing Member reasonably requests to
conclude the Closing and to transfer ownership, title and control of the
Membership Interest (including, but not limited to, execution, in recordable
form, of amended Articles). The Purchasing Member shall deliver to the Selling
Member cash in an amount determined pursuant to Section 12.2 (less the amount of
any outstanding debt owed by the Selling Member to the Purchasing Member (or an
Affiliate of the Purchasing Member)) for the full amount of the consideration,
if any, for such Membership Interest, and shall deliver any other documents
necessary from the Purchasing Member to conclude the Closing. The Selling Member
shall transfer its Membership Interest free of all liens or encumbrances.
Further, at the Closing, and as an express condition to the Selling Member's
obligation to transfer its Membership Interest pursuant to this Section 12, the
Selling Member and/or its Affiliates shall have been released from its liability
under any third-party loans to the Company and any guarantees made in connection
therewith. If a Company creditor refuses to so release the Selling

                                       28


Member and/or its Affiliates, the Purchasing Member shall indemnify the Selling
Member and/or its Affiliates from liability to any Company creditor. In
furtherance thereof, the Purchasing Member shall provide or shall cause one of
its Affiliates to provide guarantees or such other security as reasonably
requested by Selling Member.

            (b) If the Purchasing Member fails to close as aforesaid, in
addition to any other remedies available at law or in equity, the Selling Member
shall have the right, exercisable by written notice to the Purchasing Member
given within thirty (30) days of the date set for the Closing, to purchase under
this Section 12 the Membership Interest of the Purchasing Member. If the Selling
Member exercises such option, the Purchase Price used shall be seventy-five
percent (75%) of the Purchase Price the Purchasing Member was obligated to pay
at the originally scheduled Closing.

      13. FINISHED LOT DISTRIBUTION. Subject to the terms and conditions of this
Agreement, each Member shall be allocated the Finished Lots owned by the Company
from time to time, which Finished Lots shall be allocated in accordance with the
Members' respective Percentage Interests and as set forth on EXHIBIT "D"
attached hereto (EXHIBIT "D" to be adjusted as necessary should the respective
Percentage Interests of the Members change). Each Member shall be responsible
for all its customary closing costs associated with such allocation and
distribution. The Finished Lots shall be distributed to the Members in two
phases, Phase I and Phase II. Should the Members agree to a disproportionate
distribution of Phase I Finished Lots, then the distribution of the Phase II
Finished Lots shall be adjusted accordingly such that the total number of
Finished Lots distributed to each Member were allocated in accordance with the
Members' respective Percentage Interests. Should such reallocation of Phase I
Finished Lots occur following the Company's distribution of such Phase I
Finished Lots to the Members, the Members shall divide all customary closing
costs associated with such transfer equally. The Members' failure to agree upon
any disproportionate distribution shall not invoke the provisions of Section
14.10(b). The Members agree that all Finished Lots shall have an equal value.

      14. MISCELLANEOUS.

      14.1 NOTICES. Any notice which a party is required or may desire to give
the other party shall be in writing and may be personally delivered, delivered
by telecopy or given by United States certified mail, return receipt requested,
addressed as follows (subject to the right of a party to designate a different
address for itself by notice similarly given):

TO ASHTON:                                    Ashton Tampa Residential, LLC
                                              500 N. Westshore Boulevard
                                              Suite 1020
                                              Tampa, Florida 33609
                                              Attn: Mr. James D. Bowen
                                              Facsimile No.: (813) 281-0242

And:                                          Ashton Woods Homes
                                              1080 Holcomb Bridge, Building 200,

                                       29


                                              Suite 350
                                              Roswell, Georgia 30076
                                              Attn.: Thomas Krobot
                                              Facsimile No.: (770) 998-7494

And:                                          Charles H. Carver, Esquire
                                              Ward Rovell, Professional
                                              Association
                                              101 E. Kennedy Blvd, Suite 4100
                                              Tampa, Florida 33602
                                              Facsimile No.: (813) 222-8701

TO M/I:                                       M/I Homes of Tampa, LLC
                                              4904 Eisenhower Blvd., Suite 150
                                              Tampa, Florida 33634
                                              Attention: Fred Sikorski
                                              Area President
                                              Facsimile No. (813) 290-8203

And:                                          M/I Homes of Tampa, LLC
                                              c/o Tom Mason, Esq.
                                              General Counsel
                                              3 Easton Oval, Suite 500
                                              Columbus, Ohio 43219
                                              Telephone: (614)418-8000
                                              Facsimile: (614)418-8622

And:                                          Lee E. Nelson, Esquire
                                              Williams Schifino Mangione &
                                              Steady, P.A.
                                              One Tampa City Center, Suite 2600
                                              Tampa, Florida 33602
                                              Facsimile No.: (813) 221-7335

Any notice so given by United States mail shall be deemed to have been given on
the third day after the same is deposited in the United States mail as a
certified matter, return receipt requested, addressed as above provided, with
postage thereon fully prepaid. Any notice not given by certified mail as
aforesaid shall be deemed to be given upon actual receipt of the same by the
party to whom the same is to be given, provided that the refusal by such party
to receive any such notice shall be deemed such party's receipt of the same.

      14.2 ENTIRE AGREEMENT This Agreement, together with the exhibits attached
hereto, represents the entire agreement of the parties with respect to the
subject matter hereof and supersedes any and all prior agreements, writings or
understandings between the parties with

                                       30


respect to the subject matter hereof. Except as otherwise expressly provided
herein, no amendment or modification to this Agreement shall be binding unless
it shall be in writing and signed by all Members.

      14.3 BINDING EFFECT. Subject to the provisions of this Agreement relating
to transferability, this Agreement will be binding upon and inure to the benefit
of the Members and their respective successors and assigns This Agreement may be
executed by facsimile and in any number of counterparts, each of which when
executed and delivered shall be an original, but all such counterparts shall
constitute one and the same instrument. This Agreement, and any amendment
thereof, shall not be effective as against M/I unless executed and delivered by
at least one of the following officers on behalf of M/I (collectively, the
"Authorized Officers"): Robert H. Schottenstein, its Chief Executive Officer and
President; Steven Schottenstein, its Chief Operating Officer; Phillip G. Creek,
its Senior Vice President, Chief Financial Officer and Treasurer; J. Thomas
Mason, Senior Vice President, General Counsel, and Timothy C. Hall, Jr, its Vice
President, Assistant General Counsel and Assistant Secretary. Execution and
delivery by any one in addition to, or in lieu of, any of the Authorized
Officers may be for M/Ts convenience but is not to be relied upon or effective
as against M/I unless, as noted above, at least one of the Authorized Officers
also executes and delivers this Agreement or any amendment thereof; provided,
however, the foregoing shall not limit M/I's right, through a duly adopted
resolution of M/I, to add to, reduce or substitute the above named Authorized
Officers for any general or special purpose.

      14.4 PARTIES IN INTEREST. Nothing in this Agreement shall confer any
rights or remedies under or by reason of this Agreement on any Persons other
than the Members and their respective successors and assigns nor shall anything
in this Agreement relieve or discharge the obligation or liability of any third
person to any party to this Agreement nor shall any provision give any third
person any right of subrogation or action over or against any party to this
Agreement.

      14.5 PRONOUNS; STATUTORY REFERENCES. All pronouns and all variations
thereof shall be deemed to refer to the masculine, feminine, or neuter, singular
or plural, as the context in which they are used may require. Any reference to
the Code, the Act, or other statutes or laws will include all amendments,
modifications, or replacements of the specific sections and provisions
concerned.

      14.6 HEADINGS. All headings herein are inserted only for convenience and
case of reference and are not to be considered in the construction or
interpretation of any provision of this Agreement.

      14.7 INTERPRETATION, BUSINESS DAYS. In the event any claim is made by any
Member relating to any conflict, omission or ambiguity in this Agreement, no
presumption or burden of proof or persuasion shall be implied by virtue of the
fact that this Agreement was prepared by or at the request of a particular
Member or its counsel. The term "Business Days" as used herein shall mean all
days other than Saturdays, Sundays and Federal or State of Florida holidays.

                                       31


      14.8 REFERENCES TO THIS AGREEMENT/APPROVALS. Numbered or lettered
articles, sections and subsections herein contained refer to articles, sections
and subsections of this Agreement unless otherwise expressly stated. Except as
otherwise expressly stated herein, all consents and approvals by any party
hereto shall be in the sole and absolute discretion of such party.

      14.9 GOVERNING LAW/JURISDICTION. The laws of the State of Florida shall
govern the interpretation and effect of this Agreement. Each Member hereby
consents to the exclusive jurisdiction of the state courts sitting in Florida in
any action on a claim arising out of, under or in connection with this Agreement
or the transactions contemplated by this Agreement. Each Member further agrees
that personal jurisdiction over it may be effected by service of process by
certified mail addressed as provided in Section 14 of this Agreement, and that
when so made shall be as if served upon him or her personally within the State
of Florida.

      14.10 DISPUTED MATTERS.

      (a) In the event of a dispute ("Dispute") under this Agreement, the
parties (collectively, the "Parties") intend that, prior to the commencement of
any litigation proceedings, the Parties shall meet at the offices of a mutually
acceptable engineer or attorney, as appropriate, to attempt to resolve any
Dispute. The Parties shall have such a resolution meeting within ten (10)
business days of written notice to the other Party invoking any Dispute
provision, although there shall be no requirement that the meeting last for any
length of time or to have further meetings. Each Party must appoint a duly
authorized representative at each resolution meeting and the Parties must
negotiate with diligence and in good faith to avoid any further Dispute. The
Parties intend that M/I shall not delay or materially and adversely impact the
construction or timing of the construction of Ashton's intended projects in
connection with this Agreement. Likewise, the parties intend that Ashton shall
not delay or materially and adversely affect any of M/I's projects in connection
with this Agreement. Therefore, each Party has a mutual and identifiable
interest in the timely, good faith and diligent cooperation between each other
to ensure that each Party can pursue its projects in an orderly, cost-effective
and timely manner. Notwithstanding anything in this Agreement to the contrary,
if any Dispute remains unresolved, in whole or in part, after the initial
meeting described above, any such continuing Dispute shall be resolved by
binding arbitration, as hereinafter described. Within ten (10) days of written
demand by one Party to the other requiring binding arbitration, each Party shall
appoint a designated arbitrator with a minimum of seven (7) years of substantial
experience in the Tampa, Florida, single-family development market, including,
without limitation, an engineer, land planner, residential developer or
attorney, provided any such proposed arbitrator shall not be affiliated with any
party to this Agreement or involved in any transaction with the nominating
party. Each Party shall notify the other as to the name and address of the
nominated arbitrator within such ten (10) day period after any Party delivers
written notice to the other Party demanding binding arbitration. The two (2)
nominated arbitrators shall, during the following ten (10) days, meet and agree
upon a third (3rd) arbitrator that is acceptable to both of the arbitrators
appointed by M/I and Ashton, provided any such third arbitrator must also
satisfy the requirements set forth above as to experience, non-affiliation and
non-involvement. Within twenty (20) days of the selection of a third arbitrator,
the three (3) arbitrators (collectively, the

                                       32


"Arbitrators") shall make a determination on the merits of the dispute (the
"Final Decision"), which Final Decision shall be made in writing. Each Party
shall cooperate with the Arbitrators as they require. The Final Decision will be
final and binding on M/I and Ashton for all purposes. When prepared to issue a
ruling, the Arbitrators shall first so inform the Parties, who will have ten
(10) business days to resolve the Dispute by a binding agreement between them.
If the Parties resolve the Dispute, the Arbitrators will not make any award. If
the Parties do not resolve the Dispute in such ten (10) business day period, the
Arbitrators shall issue a written ruling on the eleventh (11th) day following
the notification to the Parties that the Arbitrators were prepared to issue a
ruling. The Arbitrators' written decision will resolve the Dispute, will include
written statements of fact and conclusions of law, and will be final and
binding. The phrase "final and binding" shall mean that it is not subject to any
further controversy and may not be the subject of any lawsuit or other action
between the Parties, shall not be appealable and that the Parties shall fully
and timely implement the Final Decision. No Party may petition a court to
correct or vacate the Final Decision. Any Final Decision will not prohibit
either Party from later determining that a Dispute of the same or similar nature
has occurred. Each Party will bear its own costs in connection with the
arbitration until such time as a Final Decision is issued. Thereafter, the
prevailing Party, as determined by the Arbitrators, will be entitled to recover
all costs and reasonable attorneys' fees from the non-prevailing Party or such
portion thereof as determined by the Arbitrators. If the Arbitrators do not make
a determination of a prevailing Party pursuant to their Final Decision, then in
that event, the Parties shall equally divide the costs and fees of the
arbitration proceedings. A court of competent jurisdiction shall be directed to
give full effect to the Parties' desire that the Final Decision in fact be final
and binding.

      (b) Should the Members be unable to agree upon any item requiring all
Members' approval such as, by way of example and not of limitation, Major
Decisions, but specifically excluding amendment of this Agreement or as
otherwise provided in this Agreement, the Members shall meet and confer for a
period of at least fifteen (15) days in an attempt to resolve such disagreement.
If after such 30-day period, the Members have still not come to an agreement on
the item in question, they shall enter into non-binding mediation for a period
not to exceed thirty (30) days (commencing from the expiration of such previous
15-day period) in an attempt to resolve the disagreement. If after such process,
the Members are still in disagreement, then either Member may invoke the
provisions of Section 12. During such periods of negotiation and mediation, the
Members shall continue to comply with their respective obligations.

      14.11 EXHIBITS. All Exhibits attached to this Agreement are incorporated
and shall be treated as if set forth herein.

      14.12 SEVERABILITY. If any provision of this Agreement or the application
of such provision to any person or circumstance shall be held invalid, the
remainder of this Agreement or the application of such provision to persons or
circumstances other than those to which it is held invalid shall not be affected
thereby.

      14.13 ADDITIONAL DOCUMENTS AND ACTS. Each Member agrees to execute and
deliver such additional documents and instruments and to perform such additional
acts as may be necessary or appropriate to effectuate, carry out and perform all
of the terms, provisions, and conditions of this Agreement and the transactions
contemplated hereby.

                                       33


      14.14 NO INTEREST IN COMPANY PROPERTY; WAIVER OF ACTION FOR PARTITION. No
Member has any interest in specific property of the Company. Without limiting
the foregoing, each Member irrevocably waives during the term of the Company any
right that it may have to maintain any action for partition with respect to the
property of the Company. This section is not intended, nor shall it serve, to
limit the Day-to-Day Manager's right to the Manager Fee.

      14.15 MULTIPLE COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument.

      14.16 TIME IS OF THE ESSENCE. All dates and times in this Agreement are of
the essence.

      14.17 REMEDIES CUMULATIVE; WAIVER OF RIGHT TO JURY TRIAL. The remedies
under this Agreement are cumulative and shall not exclude any other remedies to
which any Person may be lawfully entitled. To the greatest extent allowed by
applicable law, each Member hereby knowingly, irrevocably and voluntarily waives
any right any such Member may have to the right to a jury trial under any
applicable law. The waiver was specifically bargained for and agreed to as part
of the basis of the transaction herein contemplated.

      14.18 COMPANY INDEMNIFICATION. The Company shall (to the extent of the
Company's assets only) indemnify, defend and protect each Member and each
Member's respective partners, members, shareholders, officers, directors,
employees and agents from any losses, liabilities, damages, costs and expenses
(including, without limitation, reasonable attorney's fees and disbursements)
incurred by a Member or its respective officers, directors, employees and agents
by reason of its acts or omissions which are for or on behalf of the Company,
except for the failure of such Member or its respective partners, shareholders,
officers, directors, employees and agents to act in accordance with the terms of
this Agreement, or fraud, willful misconduct, gross negligence or any breach of
a fiduciary duty by such Member or its respective partners, shareholders,
officers, directors, employees and agents.

      15. MEMBER'S RIGHT TO PURCHASE FINISHED LOTS. In the event either Member
desires to sell or transfer any Finished Lot distributed to it hereunder prior
to its construction of a residence thereon (a "Transferring Member"), and the
other Member is not in default hereunder beyond any applicable notice and cure
periods, then the other Member shall have a right to purchase such Finished Lot
from the transferring Member as set forth below. Transferring Member shall give
the other Member written notice of its intention to sell any Finished Lots to a
third party, together with a copy of Transferring Member's agreement to sell
such Finished Lots ("Sale Agreement"), and the other Member shall have twenty
(20) days to elect by written notification to Transferring Member whether to
purchase the Finished Lot(s) at the lower of the value of the Finished Lot(s)
when distributed to the Transferring Member or the purchase price set forth in
the Sale Agreement The "value of the Finished Lot" as used in the preceding
sentence shall mean the Capital Contributions of the Transferring Member divided
by the total number of Finished Lots allocated to the Transferring Member. The
other Member shall so notify the Transferring Member in writing within such
20-day period of its election to

                                       34


purchase such Finished Lots at the selected price as set forth herein or be
deemed to have waived its right only as to such Finished Lot(s) specified in the
notice. If the other Member so exercises its purchase right, then such Member
shall specify in its notice a closing date within thirty (30) days of the date
of its notice. The purchase price shall be payable in cash at time of closing.
The Transferring Member shall pay the costs of title insurance and documentary
transfer taxes on the special warranty deed and the cost for recording the deed.
All other closing costs shall be equally divided and all other customary closing
procedures shall occur at such closing. Any violation of this paragraph shall
constitute a default of the Transferring Member's obligations under this
Agreement. The purchasing Member's obligations under this paragraph shall
survive each and every transfer of a Finished Lot and the recordation of any
deeds and the termination of this Agreement for any reason, and may be recorded
as a restrictive covenant running with the land upon distribution of each
Finished Lot. Notwithstanding anything in this Agreement to the contrary,
neither Member shall be restricted in the event that the Members desire to
assign amongst each other their right to any Finished Lots within the Project by
separate written agreement.

      16. VERIFICATION OF NET WORTH. Ashton represents and warrants to M/I that
its current net worth is not less than $6,000,000.00 (such net worth to be
calculated to exclude intercompany accounts other than demand obligations) and
that it shall maintain a net worth of not less than 90% of such net worth, which
obligation shall also apply to any Affiliate of Ashton that becomes a Member or
the Day to Day Manager. Upon reasonable request, Ashton shall provide an annual
certificate to M/I verifying its satisfaction of such covenant. M/I hereby
represents and warrants that its current net worth is not less than
$10,000,000.00 (such net worth to be calculated to exclude intercompany accounts
other than demand obligations) and that it shall maintain a net worth of not
less than 90% of such net worth. Upon reasonable request, M/I shall provide an
annual certificate to Ashton verifying its satisfaction of such covenant.

                                       35


      IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first above written.

                                        M/I HOMES OF TAMPA LLC,
                                        a Florida limited liability company
/s/ Stephen M. Bennett
- -------------------------------
Print Name:  STEPHEN M. BENNETT

/s/ Colleen Minek                       By: /s/ Fred Sikopski
- ------------------------------              ----------------------------
Print Name: COLLEEN MINEK               Name: FRED SIKOPSKI
                                        Its: AREA PRESIDENT

                                        AND

/s/ Timothy C.[ILLEGIBLE]
- ------------------------------
Print Name: TIMOTHY C.[ILLEGIBLE]

/s/ Barbara A. Lang                     By. /s/ Robert H. Schottenstein
- --------------------------                  -----------------------------
Print Name: BARBARA A. LANG             Name: ROBERT H. SCHOTTENSTEIN
                                        Its: CEO & PRESIDENT

                                        ASHTON TAMPA RESIDENTIAL, LLC,
                                        a Nevada limited liability company

- -----------------------------------
Print Name:
           ------------------------

                                        By:
                                           ------------------------------
- -----------------------------------
Print Name:                             James D. Bowen, Division President
           ------------------------
                                       36


Print Name:                             Name:
            ------------------------         ----------------------------------
                                        Its:
                                             ----------------------------------

                                        ASHTON TAMPA RESIDENTIAL, LLC,
                                        a Nevada limited liability company

/s/ [ILLEGIBLE]
- ------------------------------------
Print Name: [ILLEGIBLE]
            ------------------------

                                        BY: /s/ James D. Bowen
                                            -----------------------------------
- ------------------------------------    James D. Bowen, Division President
Print Name:
            ------------------------

/s/ Dovg Draper                         /s/ Dovg Draper
- ------------------------------------    ------------------------------------
DOVG DRAPER                             DOVG DRAPER

/s/ Thomas J. Collins                   /s/ Thomas J. Collins
- ------------------------------------    ------------------------------------
Thomas J. Collins                       Thomas J. Collins

                                       36


                          EXHIBIT "A" - PULTE CONTRACT

                                       37


                           AGREEMENT FOR SALE OF LAND

      THIS AGREEMENT FOR SALE OF LAND ("AGREEMENT") is made and entered into to
be effective as of the Effective Date referenced in Section 22 hereof by and
between PULTE HOME CORPORATION, a Michigan corporation ("SELLER"), and ASHTON
TAMPA RESIDENTIAL, LLC, a Nevada limited liability company ("BUYER").

      1. SALE AND PURCHASE. Seller hereby agrees to sell and convey to Buyer and
Buyer hereby agrees to purchase from Seller, subject to the terms and conditions
hereinafter set forth, all that certain parcel of land located in Pasco County,
Florida (the "COUNTY"), known as "PALM COVE PHASE II" and more particularly
described on EXHIBIT A attached hereto and incorporated herein, together with
the following:

            (a)   All and singular the rights and appurtenances pertaining
                  thereto, including any right, title and interest of Seller in
                  and to adjacent streets, roads, alleys and rights-of-way; and

            (b)   Such other rights, interests and properties as may be
                  specified in this Agreement to be sold, transferred, assigned,
                  or conveyed by Seller to Buyer.

The land described on EXHIBIT A and the rights, interests and other properties
described above, are collectively called the "PROPERTY." At Buyer's option,
title shall be conveyed by use of the metes and bounds description to be
obtained as a result of the survey provided for below.

      2. PURCHASE PRICE. The purchase price ("PURCHASE PRICE") to be paid for
the Property shall be Eleven Million Eight Hundred Thirty Thousand and no/100ths
Dollars ($11,830,000.00). The Purchase Price shall be paid by Buyer to Seller as
follows:

$99,500.00              Ninety-Nine Thousand Five Hundred and no/100ths Dollars
                        earnest money deposit (the "NON-REFUNDABLE DEPOSIT") to
                        be delivered to and held by Hill, Ward & Henderson,
                        P.A., Bank of America Plaza, 101 East Kennedy Boulevard,
                        Suite 3700, Tampa, Florida 33602 ("ESCROW AGENT" or
                        "TITLE AGENT," as applicable), within two (2) business
                        days after the Effective Date. Notwithstanding any
                        provision of this Agreement to the contrary, the
                        Non-Refundable Deposit shall be non-refundable to Buyer
                        except in the event of the Seller's default as provided
                        in Section 10 below.

$500.00                 Five Hundred and no/100ths Dollars earnest money deposit
                        (the "DEPOSIT") to be delivered to Escrow Agent within
                        two (2) business days after the Effective Date. At
                        Buyer's option, this deposit may be made in the form of
                        a Letter of Credit as referenced in Section 5 hereof.



$11,730,000.00          Eleven Million Seven Hundred Thirty Thousand and
                        no/100ths Dollars cash payable at Closing by wired
                        federal funds for immediately available credit, plus or
                        minus prorations and Closing costs as set forth
                        hereinafter.

$11,830,000.00          Total Purchase Price

      In addition to the Purchase Price, Buyer shall pay Seller, so long as
Seller has transportation impact fee credits available for transfer and as a
condition precedent to the platting of lots on the Property, an amount equal to
the product of the number of lots to be platted and the single family
transportation impact fee otherwise payable to the County. Simultaneously with
such payment, Seller shall assign to Buyer the transportation impact fee credits
paid for by Buyer. Payment shall be made in the form of cash or wired federal
funds for immediately available credit. This obligation to purchase impact fees
shall be made a matter of public record by the recording of a memorandum thereof
at Closing. The memorandum shall be released as to the lots to be platted upon
receipt by Seller of payment for the transportation impact fee credits for the
lots submitted to plat. Notwithstanding the foregoing requirement that Buyer
purchase transportation impact fee credits from Seller, it is expressly
understood that, to the extent Buyer receives transportation impact fee credits
for that portion of Overpass Road which Buyer constructs, Buyer may first use
the transportation impact fee credits which it receives and that are directly
associated with its construction of Overpass Road before it is required to
purchase transportation impact fee credits from Seller.

      3. CLOSING DATE. The consummation of the transaction contemplated by this
Agreement ("CLOSING") shall take place at 10:00 a.m. local time on December 22,
2004, or such earlier date as Buyer may select upon ten (10) days' written
notice to Seller. It is expressly acknowledged by Buyer that December 22, 2004,
is the absolute outside date by which the transaction contemplated by this
Agreement may close and that, if for any reason, the Closing fails to occur by
December 22, 2004, Buyer shall no longer have any contractual right to acquire
the Property unless such failure to close is a result of an event of default by
Seller.

      4. PLACE OF CLOSING. The Closing shall take place at a location designated
by Seller in Hillsborough County, Florida.

      5. DEPOSIT. All cash funds held in escrow shall be placed in an
interest-bearing account at Bank of America, N.A., in Tampa, Florida, and all
interest earned thereon shall be deemed to be a part of the Deposit. At Closing,
the Deposit shall be paid to Seller and shall be applied to the Purchase Price.
The Deposit shall constitute the earnest money securing Buyer's performance of
this Agreement and shall be non-refundable upon expiration of the Inspection
Period, unless Buyer earlier terminates this Agreement during the Inspection
Period or is otherwise entitled to a return of the Deposit pursuant to the terms
of this Agreement.

      Seller and Buyer acknowledge and are aware that the Federal Deposit
Insurance Corporation ("FDIC") insurance coverage for deposited funds applies
only to a maximum amount for each individual depositor. Seller and Buyer further
acknowledge and agree that Escrow Agent assumes no responsibility or liability
whatsoever for, nor will they hold Escrow Agent responsible or liable for, any
loss which arises from the fact that the amount of the Deposit

                                      -2-


Funds in the special-interest bearing escrow account established by Escrow Agent
will exceed $100,000.00 and that such excess amount in the account will not be
insured by the FDIC.

      In lieu of the Deposit being paid in cash, Buyer may deliver to Escrow
Agent an irrevocable, unconditional letter of credit in order to secure Buyer's
performance under this Agreement (the "LETTER OF CREDIT"). The Letter of Credit
shall: (i) be issued by a financial institution acceptable to Seller, (ii)
include an automatic pay provision in favor of Escrow Agent upon presentation of
the Letter of Credit (which presentation need not be in person but may be
delivered to the issuer by mail or other means of non-personal delivery from
Escrow Agent), (iii) be for an initial term extending at least through January
31, 2005, and (iv) be in a form and substance acceptable to Seller. In the event
Buyer fails to extend and/or replace the Letter of Credit at least thirty (30)
days prior to the expiration thereof, Buyer shall be deemed in default of this
Agreement and shall not have the benefit of any grace or curative periods that
may otherwise be afforded hereunder.

      At the end of the Inspection Period, provided that Buyer has not otherwise
terminated this Agreement within the Inspection Period pursuant to the
provisions of paragraph 8, the Deposit shall be non-refundable to Buyer except
as may be otherwise expressly provided to the contrary by the terms of this
Agreement, and Escrow Agent shall continue to hold the Deposit until Closing,
at which time the Deposit shall be applied to the Purchase Price. In the event
the Closing does not occur, the Deposit shall be held and distributed in
accordance with the terms of this Agreement.

      In the event Buyer and Seller are in agreement that Seller is entitled to
the Deposit, Buyer shall first have a period of five (5) days in which to
deliver the cash-equivalent to Seller, and Escrow Agent, upon being notified by
Seller that it has received the cash-equivalent Deposit, shall return the Letter
of Credit to Buyer. Otherwise, in the event there is a dispute as to who is
entitled to the Deposit and/or in the event the Letter of Credit has not been
renewed or replaced at least thirty (30) days prior to its expiration with a
renewal replacement Letter of Credit (or appropriate endorsement acceptable to
Seller), Escrow Agent, upon written demand by Seller and with simultaneous
written notice to Buyer, shall present the Letter of Credit for payment in which
event the Deposit shall revert to a cash Deposit and the same shall be held by
Escrow Agent pursuant to me terms and conditions of this Agreement Furthermore,
in the event Escrow Agent places the Deposit with the appropriate court pursuant
to the provisions to Section 35 hereof, the Letter of Credit shall be presented
for payment without the need for direction or approval of either Seller or Buyer
in which event the Deposit shall revert to a cash Deposit.

      6. TITLE COMMITMENT AND POLICIES; SURVEY.

      6.1. Title Commitment. Within seven (7) business days after the Effective
Date of this Agreement, but in no event later than December 10, 2004, Seller
shall, at Seller's expense, deliver to Buyer a title commitment for title
insurance (ALTA Owner's Policy Form 1992) through Chicago Title Insurance
Company ("TITLE COMPANY") covering the Property, issued by Title Agent, together
with legible copies of all recorded documents referenced therein and a special
tax search (the "COMMITMENT"), by which Commitment the title agent shall agree
to issue to Buyer, upon recording the special warranty deed, a standard owner's
ALTA policy in the amount of the full Purchase Price, without exception for any
matters other than (i) current taxes;

                                      -3-


(ii) applicable zoning and governmental regulations; (iii) easements and
restrictions of record contemplated by the provisions of this Agreement or
otherwise expressly approved by Buyer as a "PERMITTED EXCEPTION" hereunder, if
any, and (iv) the standard survey exception unless Buyer provides a survey of
the Property acceptable to the Title Company. Buyer shall have five (5) days
after the date of actual receipt of the Commitment by Buyer and Buyer's attorney
in which to examine the Commitment and to give written notice to Seller, or
Seller's attorney, of its approval or disapproval in Buyer's sole discretion of
any matter contained therein. If Buyer fails to give such notice, Buyer shall be
deemed to have accepted the condition of title. Seller shall have five (5) days
from the actual receipt of such notice of disapproval to cure the objections or
defects so specified. If Seller is unable to correct such objections or defects
to the Buyer's satisfaction, in Buyer's sole discretion, within said period of
time, or if Seller elects not to correct such objections or defects and notifies
Buyer of its election within five (5) days of Buyer's notice, then Buyer shall
have the right within five (5) days after the end of either such said period, as
applicable, to give notice terminating this Agreement and to receive the return
of the Deposit, or to waive such objections or defects in writing. A failure to
provide such notice shall be deemed to be an election by Buyer that it has
waived any such objections or defects. Any such defect or objection waived as
aforesaid shall become a "PERMITTED EXCEPTION" to title. The Commitment shall be
updated by the Title Company at Seller's expense, prior to the Closing Date. Any
title exception, other than a prior Permitted Exception hereunder, shall be
treated as a title defect hereunder.

            6.2. Current Survey. Within two (2) business days after the date
hereof, Seller shall provide Buyer with the most recent survey of the Property
in Seller's possession, custody, or control. Within fifteen (15) days after the
date hereof, Buyer, at Buyer's expense, may obtain a current survey of the
Property prepared by a duly licensed land surveyor ("SURVEY"). The Survey shall
be certified to Title Company, Buyer, Buyer's attorneys, Seller, Seller's
attorneys, and any lender. In the event the Survey, or any recertification
thereof, shows any encroachments of any improvements upon, from, or onto the
Property, any building set-back line or easement, or shows any evidence of use
which indicates that an unrecorded easement may exist, except as may be
acceptable to Buyer, in Buyer's reasonable judgment, the matter shall be treated
in the same manner as a title defect under the procedure set forth above, and
Buyer shall notify Seller of any such matters prior to the end of the Inspection
Period. In the event Buyer elects not to obtain a Survey, it is expressly
acknowledged that the Title Company will not remove the "standard" survey
exceptions from the Commitment at Closing.

            6.3. Permitted Exceptions. The Property shall be conveyed to Buyer
subject to no liens, charges, encumbrances, exceptions or reservations of any
kind or character other than those acceptable to Buyer under paragraph 6.1
hereof ("PERMITTED EXCEPTIONS"). The items set forth in EXHIBIT B attached
hereto and incorporated herein are acknowledged by Buyer to be Permitted
Exceptions.

            6.4. No Extension of Closing. Notwithstanding anything in this
Section 6 to the contrary, it is expressly acknowledged that any and all
curative opportunities provided herein shall in no event cause the Closing to be
extended beyond December 22, 2004, and that, if a curative period set forth in
this Section 6 would otherwise cause such extension, the curative and/or notice
period afforded by this Section shall be reduced accordingly.

                                      -4-


7. CLOSING PROCEDURES.

      7.1. Seller's Obligations at Closing. At Closing, Seller shall do the
      following:

            (a)   Execute, acknowledge and deliver to Buyer a special warranty
                  deed conveying the Property to Buyer subject to all matters of
                  record, including the Permitted Exceptions, which deed shall
                  be in form for recording with all required documentary stamps
                  in the proper amount affixed thereto, or provided for by
                  Seller at Seller's expense. The legal description of the
                  Property contained in the deed shall be identical to the legal
                  description of the Property contained in the Survey and the
                  Title Commitment.

            (b)   Deliver to Title Company and Buyer a certificate evidencing
                  Seller's good standing in both Michigan and Florida.

            (c)   Deliver to Title Company and Buyer evidence satisfactory to it
                  of Seller's authority to execute and deliver the documents
                  necessary or advisable to consummate the transaction
                  contemplated hereby.

            (d)   Execute and deliver to Title Company and Buyer duplicate
                  original copies of an affidavit of no liens satisfactory to
                  Title Company so as to cause Title Company to remove the
                  "gap," construction lien, parties in possession and unrecorded
                  easements standard exceptions from the Title Commitment.

            (e)   Execute and deliver to Title Company and Buyer a "non-foreign
                  person" affidavit in compliance with regulations issued by the
                  Internal Revenue Service.

            (f)   Execute and deliver to Title Company a memorandum in
                  recordable form evidencing the parties' agreement regarding
                  the purchase of transportation impact fee credits.

            (g)   Execute and deliver to Buyer a closing statement.

            (h)   Execute and deliver to Buyer a counterpart of the Developer's
                  Agreement referenced in Section 8 hereof.

                                      -5-


            7.2. Buyer's Obligations at Closing. Subject to the terms,
conditions and provisions hereof and contemporaneously with the performance by
Seller of its obligations set forth in paragraph 7.1 above, Buyer shall deliver
to Seller:

                  (a)   The Purchase Price to be paid at Closing, plus or minus
                        prorations and Closing costs as set forth herein.

                  (b)   Execute and deliver to Title Company a memorandum in
                        recordable form evidencing the parties' agreement
                        regarding the purchase of transportation impact fee
                        credits.

                  (c)   An executed closing statement.

                  (d)   Execute and deliver to Seller a counterpart of the
                        Developer's Agreement referenced in Section 8 hereof.

            7.3. Closing Costs.

                  (a)   Seller shall pay the following costs and expenses in
                        connection with the Closing:

                        (i)   The escrow fees of the Escrow Agent, if any, and
                              the cost of the preparation of the closing
                              documents;

                        (ii)  All documentary stamps which are required to be
                              affixed to the special warranty deed; and

                        (iii) The premium payable for the Title Commitment and
                              Title Policy issued pursuant thereto.

                  (b)   Buyer shall pay the cost of recording the special
                        warranty deed and the agreement regarding the purchase
                        of transportation impact fee credits.

            7.4. Proration of Taxes, Rents etc. Taxes for the year of Closing
shall be prorated to the date of Closing. If the Closing shall occur before the
tax rate is fixed for the then current year, the apportionment of taxes shall be
upon the basis of the tax rate of the preceding year applied to the latest
assessed valuation, and the parties agree to reprorate taxes for the year of
Closing once such taxes become known. The provisions of this subparagraph shall
survive the Closing.

      8. FEASIBILITY STUDIES AND LICENSE TO ENTER. Buyer or Buyer's agents, at
Buyer's expense, shall have the right to inspect the Property to determine
whether, in Buyer's sole discretion, the Property is suitable for Buyer's
intended use thereof. Such inspection may include, but shall not be limited to,
engineering, environmental, and feasibility studies. If the Property is
determined to be unsuitable, Buyer may terminate this Agreement by giving
written

                                      -6-


notice to Seller of such termination no later than 5:00 PM E.S.T. on December
15, 2004 ("INSPECTION PERIOD"), upon receipt of which Escrow Agent shall return
to Buyer the Deposit and the parties hereto shall be relieved of all further
obligations hereunder, except as provided in this paragraph. If Seller has not
received such notice of termination within said time period, the Property shall
be deemed suitable for Buyer's intended use thereof. Buyer shall cause all
persons or entities furnishing materials or services in connection with the
inspection rights granted hereunder to be paid promptly and Buyer shall not
allow the filing of any construction liens against the Property in connection
with the inspection permitted hereunder. Buyer hereby holds Seller harmless from
any damages or liabilities arising from the acts or omissions of Buyer or its
agents in pursuing the activities permitted under this paragraph. Buyer shall
restore any damage to the Property caused by Buyer's inspection. The provisions
of this paragraph 8 shall survive Closing and any termination of this Agreement.
If Buyer terminates this Agreement, Buyer shall furnish Seller with copies of
all third-party non-proprietary reports, studies, analyses, surveys and other
documentation prepared by or for Buyer with respect to the Property.

      From and after the Effective Date, Seller shall make available to Buyer
true and complete copies of the documents described on EXHIBIT "B" and all title
insurance policies; appraisals; environmental, soil, engineering, subsurface and
similar analyses; and other such third party studies and reports with respect to
the Property that are in Seller's possession or control, including, without
limitation, those received by Seller from Lennar Homes, Inc.

      During the Inspection Period, Buyer and Seller agree to negotiate with
each other in good faith with respect to a "DEVELOPER'S AGREEMENT" pursuant to
which Seller will assign to Buyer at Closing certain rights and privileges under
the homeowner's association documents and the Declaration of Covenants,
Conditions and Restrictions, which are referenced in Section 36.1 hereof, and,
pursuant to which, Buyer will assume certain responsibilities and obligations as
they relate to the Property. The Developer's Agreement shall include Seller's
assignment to Buyer of (i) all permits, authorizations, approvals, entitlements,
impact fee credits and capacity reservations with respect to the Property,
including density entitlements sufficient to allow Buyer to develop the Property
in accordance with the Construction Drawings referenced in Section 24, but
excluding the transportation impact fee credits referenced in Paragraph 2, and
(ii) Seller's right, title and interest in the Construction Drawings. A copy of
the proposed Developer's Agreement shall be delivered by Seller to Buyer within
five (5) days after the Effective Date of this Agreement. In the event Seller
and Buyer cannot agree upon the Developer's Agreement during the Inspection
Period, either party may elect to terminate this Agreement in which event Escrow
Agent shall return the Deposit to Buyer and the parties hereto shall be relieved
of all further obligations hereunder except as otherwise provided in this
Section 8.

      9. BUYER'S DEFAULT. Except as to a wrongful failure timely to close on the
acquisition of the Property, Buyer shall not be in breach or default hereunder
unless Seller is not in default hereunder, and within ten (10) business days
after the Buyer's receipt of notice of default. (i) Buyer fails to cure any
material breach of any obligation of Buyer under this Agreement which is set
forth in such notice or (ii) Buyer fails to complete its purchase of the
Property. If any such failure continues beyond such cure period, the sole and
exclusive remedy of Seller shall be to extinguish Buyer's right to purchase the
Property and Seller shall be entitled to retain the Deposit as the agreed upon
liquidated damages for Buyer's failure to perform. Seller

                                      -7-


expressly waives any other remedy, at law or in equity, against Buyer. The
parties agree and stipulate that as of the Effective Date, the exact amount of
damages would be extremely difficult to ascertain and that the Deposit
constitutes a reasonable and fair approximation of such damages and is not a
penalty. Notwithstanding the foregoing, it is expressly acknowledged that the
10-day curative opportunity provided to Buyer shall in no event cause the
Closing to be extended beyond December 22, 2004, and that, if a 10-day curative
period would otherwise cause such extension, the curative period afforded to
Buyer by this Section shall be reduced accordingly.

      With respect to any defaults which occur subsequent to Closing by Buyer
relating to matters which, by their nature, must be completed or arise
subsequent to Closing Seller shall have all rights and remedies afforded to it
by Florida law, whether in law or in equity, except to the extent specific
remedies may be set forth in an agreement which survives Closing, in which case
the remedies set forth in such agreement shall be binding upon the parties, and
the limitations with respect to remedies heretofore set forth in this paragraph
9 shall no longer be applicable.

      10. SELLER'S DEFAULT.

            10.1. Default by Seller. Except as to a wrongful failure timely to
close on the sale of the Property, Seller shall not be in default hereunder
unless within ten (10) business days after receipt of written notice from Buyer,
Seller fails to cure any of the following: (i) an any representation or warranty
made by Seller herein is or becomes false in any material respect; (ii) any
covenant or obligation made or undertaken by Seller hereunder is not
substantially performed in the time specified for such performance; (iii) there
is a failure of title not cured by Seller or waived by Buyer after the Title
Commitment is reviewed and Permitted Exceptions are established, except for any
subsequent matters authorized by paragraph 6.1 above; or (iv) Seller fails to
convey title to the Property in accordance herewith or otherwise breaches any
other provision of this Agreement when the Buyer is not in default hereunder.
This ten (10) business day notice provision shall not apply to any title or
survey matter as to which the notice and/or cure period already has expired
hereunder. Buyer's sole and exclusive remedies hereunder shall be (i) specific
performance, without any claim for delay damages or (ii) return of the Deposit
Notwithstanding the foregoing it is expressly acknowledged that the 10-day
curative opportunity provided to Seller shall in no event cause the Closing to
be extended beyond December 22, 2004, and that, if a 10-day curative period
would otherwise cause such extension, the curative period afforded to Seller by
this Section shall be reduced accordingly.

      With respect to any defaults which occur subsequent to Closing by Seller
relating to matters which, by their nature, must be completed or arise
subsequent to Closing, Buyer shall have all rights and remedies afforded to it
by Florida law, whether in law or in equity, except to the extent specific
remedies may be set forth in an agreement which survives Closing, in which case
the remedies set forth in such agreement shall be binding upon the parties, and
the limitations with respect to remedies heretofore set forth in this paragraph
10 shall no longer be applicable.

                                      -8-


      11. REPRESENTATIONS AND WARRANTIES OF BUYER.

            11.1 Buyer's Organization. Buyer is duly organized, existing and in
good standing under the laws of the State of Nevada, is authorized to transact
business in the State of Florida, and has not filed, voluntarily or
involuntarily, for bankruptcy relief within the last six months under the laws
of the United States Bankruptcy Code, nor has any petition for bankruptcy or
receivership been filed against Buyer within the last six months.

            11.2 Buyer's Capacity. Buyer represents that it has capacity to
enter into this Agreement and that the person signing below on behalf of Buyer
represents that he or she is duly authorized to execute this Agreement and to
bind the party for which he or she is signing.

      12. REPRESENTATIONS, WARRANTIES, AND COVENANTS OF SELLER WITH RESPECT TO
THE PROPERTY.

            12.1 Seller's Representations, Etc. Seller expressly covenants,
warrants and represents to Buyer the following matters:

                  (a)   In addition to the obligations required to be performed
                        hereunder by Seller at the Closing, Seller shall perform
                        such other acts, and shall execute, acknowledge and
                        deliver subsequent to Closing such other instruments,
                        documents and other materials as the other may
                        reasonably request in order to effectuate the
                        consummation of the transaction contemplated herein and
                        to vest title to the Property in Buyer.

                  (b)   Seller has received no written notice of any change
                        contemplated in any applicable laws, ordinances, or
                        restrictions, or of any judicial or administrative
                        action or of any action by adjacent landowners, which
                        would prevent or adversely affect Buyer's intended use
                        of the Property for single-family residential
                        development.

                  (c)   Seller has received no written notice of any violation
                        of any applicable laws, ordinances, regulations,
                        statutes, rules and restrictions pertaining to and
                        affecting the Property.

                  (d)   No other person, firm, corporation or other entity has
                        any right or option to acquire the Property or any
                        portion thereof.

                  (e)   To Seller's knowledge, there are no parties in
                        possession of any portion of the Property, whether as
                        lessees, tenants at sufferance, trespassers or
                        otherwise.

                  (f)   During the period between the date hereof and the
                        Closing, Seller agrees that it shall:

                                      -9-


                        (i)   Comply with the requirements of all state and
                              municipal laws, ordinances, regulations and orders
                              relating to the Property;

                        (ii)  Comply with all the terms, conditions and
                              provisions of all contractual arrangements
                              relating to the Property, if any, and make all
                              payments due thereunder, and

                        (iii) Neither negotiate nor enter into any contract
                              affecting the use or operation of the Property
                              which cannot be terminated without charge, cost,
                              penalty or premium on or before Closing.

                  (g)   Except as may be otherwise referenced in this Agreement,
                        including, by way of example but not limitation, the
                        agreements referenced in Sections 8 and 36 hereof, there
                        will be no contracts, leases, service contracts,
                        maintenance contracts, operating agreements or other
                        contracts or agreements of any kind in existence with
                        respect to the Property which would be binding on Buyer
                        subsequent to Closing.

                  (h)   To Seller's knowledge, no portion of the Property has
                        ever been used as a sanitary landfill or as a garbage
                        dump.

                  (i)   Without investigation, Seller has no knowledge of any
                        toxic substances, hazardous wastes, hazardous
                        substances, or any other pollutants or dangerous
                        substances regulated pursuant to any applicable
                        environmental laws including, without limitation,
                        polychlorinated biphenyls (PCB's), oil, petroleum
                        products and fractions, vinyl chloride, asbestos, heavy
                        metals, radon, underground storage tanks (whether empty,
                        filled or partially filled with any substance, regulated
                        or otherwise), any substance or materials the presence
                        of which on the Property is prohibited by any
                        environmental laws or any other substance or material
                        which requires special handling or notification of any
                        federal, state or local governmental entity regarding
                        collection, storage, treatment or disposal being present
                        on the Property. Seller further represents that, to
                        Seller's knowledge, without investigation, no person has
                        used, generated, manufactured, stored or disposed of on,
                        under or about the Property or transported to or from
                        the Property any of the aforementioned materials (the
                        "HAZARDOUS MATERIALS"). For the purpose of this
                        Paragraph 4.1(i), Hazardous Materials shall also include
                        but not be limited to substances defined as "hazardous
                        substances," "hazardous materials," or '"toxic
                        substances" in the Comprehensive Environmental Response,
                        Compensation and Liability Act of 1980, as amended, 42
                        U.S.C. Sec. 9601, et seq.;

                                      -10-


                        the Hazardous Materials Transportation Act, 49 U.S.C.
                        Section 1801, et seq.; the Resource Conservation and
                        Recovery Act, 42 U.S.C. Section 6901 et seq.; and in the
                        regulations adopted and publications promulgated
                        pursuant to said laws.

                  (j)   Seller will not make any application to change the
                        zoning classification of the Property in a manner which
                        will prevent Buyer from developing the Property for
                        single-family lots and attendant single-family
                        residential units.

                  (k)   To Seller's knowledge, there are no legal actions, suits
                        or other legal or administrative proceedings, including
                        zoning, land use, condemnation or similar cases or
                        proceedings, presently existing against the Property or
                        against Seller's interest therein or against any third
                        party known to Seller affecting the Property.

                  (l)   To Seller's knowledge, there are no uncured violations
                        of Federal, state or municipal laws, ordinances, orders,
                        regulations or requirements affecting the Property.

                  (m)   Seller has full authority to execute this Agreement, to
                        comply with its terms and to consummate the transaction
                        contemplated herein. The person signing below on behalf
                        of Seller represents that he or she is duly authorized
                        to execute this Agreement and to bind Seller. The
                        execution by Seller of this Agreement and the
                        consummation by Seller of the transaction contemplated
                        hereby do not, and will not, constitute a violation of
                        any order, rule or regulation of any court or any
                        federal, state or municipal regulatory body or
                        administrative agency or any other governmental body
                        having jurisdiction over Seller or any portion of the
                        Property.

            12.2 No Other Representations. No representation or inducement,
whether oral or written, made prior hereto which is not included in this
Agreement shall have any force or effect.

            12.3 Representations and Warranties as Condition Precedent. As a
condition precedent to Buyer's obligation to purchase the Property, the
covenants, representations and warranties set forth in this Paragraph and
elsewhere in this Agreement must be true and correct at the time of Closing,
and, unless Seller shall have otherwise expressly notified Buyer in writing to
the contrary, all representations, covenants and warranties of Seller contained
herein shall be deemed to have been affirmed in their entirety as of the time of
Closing.

            12.4 Knowledge. As used in this paragraph 12, the term "knowledge"
means the actual present knowledge of Matt O'Brien, the Vice President of Land
Development of Seller, without independent investigation or review of files.

                                      -11-


            12.5 Survival. Seller hereby agrees to defend, indemnify, save and
hold Buyer, its successors and assigns, harmless from and against any and all
losses, claims, damages, liabilities, costs and expenses, including, without
limitation, attorneys' fees and costs, related to, growing out of, or arising
from any intentional breach of any representation or warranty of Seller set
forth above. The foregoing indemnification shall survive the Closing for a
period of one (1) year.

      13. PATRIOT ACT REPRESENTATION. Seller and Buyer represent and warrant to
each other that it is not acting, directly or indirectly, for or on behalf of
any person, group, entity or nation named by the United States Treasury
Department as a Specially Designated National and Blocked Person, or for or on
behalf of any person, group, entity or nation designated in Presidential
Executive Order 13224 as a person who commits, threatens to commit, or supports
terrorism; and that they are not engaged in this transaction directly or
indirectly on behalf of, or facilitating this transaction directly or indirectly
on behalf of, any such person, group, entity or nation.

      14. CAPTIONS. Descriptive headings are for convenience only and shall not
control or affect the meaning or construction of any provision of this Agreement

      15. ENTIRE AGREEMENT. This Agreement embodies and constitutes the entire
understanding between the parties with respect to the transaction contemplated
herein. All prior or contemporaneous agreements, understandings, representations
and statements, oral or written, are merged into this Agreement. Neither this
Agreement nor any provision hereof may be waived, modified, amended, discharged,
or terminated except by an instrument in writing signed by the party against
which the enforcement of such waiver, modification, amendment, discharge or
termination is sought, and then only to the extent set forth in such instrument.

      16. ASSIGNMENT. Neither party hereto shall have the right to assign this
Agreement or any of its rights or obligations hereunder to any person,
corporation or other entity without the prior written approval of the other
party, which approval shall not be unreasonably withheld or delayed.
Notwithstanding the foregoing, Buyer shall have the right to assign this
Agreement to an entity that is controlled by, controls, or is under common
control with, Buyer.

      17. PARTIES BOUND. This Agreement shall be binding upon and shall inure to
the benefit of the parties hereto and their successors and assigns, provided
that no assignment shall be made except in accordance with the provisions of
paragraph 16 hereof.

      18. APPLICABLE LAW. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Florida.

      19. PARTIAL INAVALIDITY. In case any one or more of the provisions hereof
shall for any reason be held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not affect any
other provision hereof, and this Agreement shall be construed as if such
invalid, illegal or unenforceable provision had never been contained herein.

                                      -12-


      20. CONSTRUCTION OF AGREEMENT. The parties acknowledge that each has
played an equal part in the negotiation and drafting of this Agreement, and in
the event any ambiguities should be realized in the construction or
interpretation of this Agreement, such ambiguities shall not be construed
against either party solely on account of authorship.

      21. COUNTERPARTS. This Agreement may be executed in several counterparts,
each constituting a duplicate original, but all such counterparts constituting
one and the same Agreement.

      22. EFFECTIVE DATE. For the purpose of determining "the date hereof" or
the Effective Date, as used in this Agreement, such date shall be the last date
the Seller or Buyer executes this Agreement.

      23. PARTIES. Whenever the context hereof shall so require, the singular
shall include the plural, the male gender shall include the female gender and
the neuter, and vice versa, and the use of the terms "include," "includes" and
"including" shall be without limitation to the items which follow.

      24. CONDITIONS PRECEDENT.

            24.1. Conditions to Buyer's Obligations. The obligation of Buyer to
consummate the Closing is subject to the satisfaction, as of Closing, of each of
the following conditions (any of which may be waived in whole or in part in
writing by Buyer at or prior to Closing):

                  (a)   Buyer shall have been furnished with the Title
                        Commitment as required by paragraph 6.1 hereof, and such
                        commitment shall be (i) updated at Seller's expense at
                        Closing with such update showing no change in the status
                        of title as previously approved by Buyer, and (ii)
                        modified at Closing to delete the standard exceptions,
                        including those for taxes and assessments (other than
                        those that are not yet due and payable), matters of
                        survey (provided Buyer delivers to the Title Company a
                        current survey of the Properly that satisfies the
                        requirements of the Title Company), parties in
                        possession, construction liens, and matters appearing in
                        the "gap."

                  (b)   Seller shall furnish to Buyer, at least three (3)
                        business days prior to Closing, copies of all deeds,
                        affidavits or other documents which will be executed and
                        delivered by Seller at Closing, which documents shall be
                        subject to the reasonable approval of Buyer's attorney.

                  (c)   Seller shall have (i) obtained the approval of the
                        construction drawings relating to the Property and
                        prepared by Heidt & Associates, Inc. from Pasco County,
                        Florida (the "CONSTRUCTION DRAWINGS"), (ii) obtained
                        from SWFWMD the Status of Permit

                                      -13-


                        Application "completeness" letter for the Property and
                        (iii) completed the mass grading of the individual lots
                        as depicted on the Construction Drawings.

                  (d)   Any environmental assessment of the Property obtained by
                        Buyer prior to the Closing shall not (i) disclose that
                        the Property contains any Hazardous Materials, or (ii)
                        recommend a Phase II assessment.

                  (e)   There shall exist no governmental moratorium, delay or
                        hindrance that would impair Buyer's ability to timely
                        obtain the approved Construction Drawings or building
                        permits with respect to the Property.

      With respect to subsection (c) above, Buyer acknowledges and agrees that
it will be responsible for obtaining the required Construction Drawings once
they are approved by Pasco County and Buyer is prepared to commence its
development of the Property with the understanding that any and all fees
necessary to be paid as a prerequisite for Pasco County to release the subject
plans will be paid by Buyer including, by way of example but not limitation, any
and all prepayments of water and sewer impact fees that may be charged by Pasco
County.

      25. TIME. The parties acknowledge that time is of the essence for each
time and date specifically set forth in this Agreement. Without limiting the
generality of the foregoing, it is expressly understood that Seller shall have
no obligation to close the transaction contemplated by this Agreement and Buyer
shall have no right to acquire the Property subsequent to December 22, 2004.

      26. NOTICES. All notices which are required or permitted hereunder must be
in writing and shall be deemed to have been given, delivered or made, as the
case may be (notwithstanding lack of actual receipt by the addressee) (i) upon
hand delivery, (ii) three (3) business days after having been deposited in the
United States mail, certified or registered, return receipt requested,
sufficient postage affixed and prepaid, (iii) one (1) business day after having
been deposited with an expedited, overnight courier service (such as by way of
example but not limitation, U.S. Express Mail, Federal Express or Airborne), or
(iv) upon delivery of a facsimile transmission which is confirmed on the
sender's facsimile machine as having been sent to the recipient at the proper
telecopy number, addressed to the party to whom notice is intended to be given
at the address set forth below:

                Seller:              Pulte Home Corporation
                                     Northdale Executive Center
                                     3810 Northdale Boulevard
                                     Suite 100
                                     Tampa, Florida 33624
                                     Attn: Mr. Matt O'Brien
                                     Telephone No. (813)265-3343
                                     Facsimile No. (813) 265-3367

                                     -14-


               with a courtesy       Hill, Ward & Henderson, P.A.
               copy to:              Bank of America Plaza, Suite 3700
                                     101 East Kennedy Boulevard
                                     Tampa, Florida 33602
                                     Attn: Thomas N. Henderson, III, Esq.
                                     Telephone No. (813) 221-3900
                                     Facsimile No. (813) 221-2900

               Buyer:                Ashton Tampa Residential, LLC
                                     500 N. Westshore Drive, Suite 1020
                                     Tampa, Florida 33609
                                     Attn: Mr. James D.Bowen
                                     Telephone No. (813) 281-0232
                                     Facsimile No. (813) 281-0242

                                     and

                                     Ashton Woods Homes
                                     1080 Holcomb Bridge, Building 200
                                     Suite 350
                                     Roswell, Georgia 30076
                                     Attn. Mr. Thomas Krobot
                                     Telephone No. (770) 998-9663
                                     Facsimile No. [ILLEGIBLE]

               with a courtesy       Ward Rovell, Professional Association
               copy to:              Bank of America Plaza, Suite 4100
                                     101 East Kennedy Boulevard
                                     Tampa, Florida 33602
                                     Attn: Charles H. Carver, Esq.
                                     Telephone No. (813) 222-8700
                                     Facsimile No. (813)222-8701

               Escrow Agent:         Hill, Ward & Henderson, P.A.
                                     Bank of America Plaza, Suite 3700
                                     101 East Kennedy Boulevard
                                     Tampa, Florida 33602
                                     Attn: Thomas N. Henderson, III, Esq.
                                     Telephone No. (813)221-3900
                                     Facsimile No. (813) 221-2900

      The failure by any party to deliver a courtesy copy as referenced above
shall not constitute a default under the terms of this Agreement nor shall it
create a defect in any notice which is otherwise properly given. Furthermore, it
is agreed that, if any party hereto is

                                      -15-


represented by legal counsel, such legal counsel is authorized to deliver
written notice directly to the other party on behalf of his or her client, and
the same shall be deemed proper notice hereunder if delivered in the manner
hereinabove specified.

Any party hereto may, at any time by giving ten (10) days written notice to the
other party hereto, designate any other address in substitution of the foregoing
address to which such notice shall be given and other parties to whom copies of
all notices hereunder shall be sent.

      27. ATTORNEY'S FEES, ETC. Should either party employ an attorney or
attorneys to enforce any of the provisions hereof, or to protect its interest in
any matter arising hereunder, or to recover damages for the breach hereof, the
party prevailing shall be entitled to recover from the other party all
reasonable costs, charges and expenses, including attorneys' fees, the value of
time charged by paralegals and/or other staff members operating under the
supervision of an attorney, and other legal costs, expended or incurred in
connection therewith, before, during and subsequent to any litigation, including
arbitration and appellate proceedings, bankruptcy or similar debtor/creditor
proceedings, and proceedings to enforce any indemnity agreement herein
contained.

      28. [Intentionally Omitted].

      29. CONDEMNATION. If, after the date hereof and prior to Closing, all or a
part of the Property is subjected to a bona fide threat of condemnation by a
body having the power of eminent domain or is taken by eminent domain or
condemnation (or sale in lieu thereof), Buyer may, by written notice to Seller,
elect to cancel this Agreement no later than ten (10) days after notice of such
occurrence, in which event both parties shall be relieved and released of and
from any further liability hereunder, and the Deposit made by Buyer hereunder
shall forthwith be returned to Buyer, whereupon this Agreement shall become null
and void and be considered canceled. If no such election is made within said
10-day period, this Agreement shall remain in full force and effect and the
purchase contemplated herein, less any interest taken by eminent domain or
condemnation, shall be effected with no further adjustment, and upon Closing
Seller shall assign, transfer, and set over to Buyer all of the right, title and
interest of Seller in and to any awards that have been or that may thereafter be
made for such taking.

      30. WAIVER OF BREACH. The waiver of one or more defaults by any party to
this Agreement shall not be deemed a waiver of any subsequent default of the
same or any other provision of this Agreement under the same or other
circumstances.

      31. BROKERAGE COMMISSIONS. Seller and Buyer warrant each to the other that
they have not dealt with any real estate broker or salesperson with regards to
this transaction. Seller agrees to indemnify and hold Buyer harmless from any
and all commissions claimed by any broker or third party arising by virtue of
this transaction whose commissions might legally arise from acts of Seller.
Buyer agrees to hold Seller harmless from any and all commissions claimed by any
broker or third party arising by virtue of this transaction whose commissions
might legally arise from acts of Buyer.

                                      -16-


      32. DISCLAIMER OF WARRANTIES. Except as specifically set forth in this
Agreement, Seller has not made and does not make any warranty or representation,
express or implied as to the merchantability, quantity, quality, physical
condition or operation of the Property, zoning, the suitability or fitness of
the Property or any improvements thereon, if any, for any specific or general
use or purpose, the availability of water, sewer or other utility service, or
any other matter affecting or relating to the Property, its development or use
including but not limited to, the Property's compliance with any environmental
laws. Neither party is relying on any statement or representations made by the
other not embodied herein. Buyer hereby expressly acknowledges that no such
warranties and representations have been made, except as expressly set forth in
the Agreement; that it shall be Buyer's obligation to obtain and pay for all
commitments for water, sewer and other utilities and to pay the commitment,
impact, tap in or other fees and charges for such utilities (no such fees have
been paid by Seller). Buyer acknowledges that the provisions of this Agreement
for inspection and investigation of the Property are adequate to enable Buyer to
make Buyer's own determination with respect to merchantability, quantity,
quality, physical condition or operation of the Property, zoning, suitability or
fitness of the Property or any improvements thereon, if any, for any specific or
general use or purpose, the availability of water, sewer or other utility
service or any other matter affecting or relating to the Property, its
development or use, including without limitation, the Property's compliance with
any environmental laws. Buyer further acknowledges it has inspected the Property
or has caused such inspection to be made and is thoroughly familiar and
satisfied therewith, and agrees to take the Property in its physical condition,
"AS IS, WHERE IS, WITH ALL FAULTS" as of the date of Closing, subject to the
express conditions of this Agreement. Seller shall not be liable or bound in any
manner by any verbal or written statement, representation or information made or
given by anyone pertaining to the Property, unless specifically set forth in
this Agreement.

      In particular, but without in any way limiting the foregoing, Buyer hereby
releases Seller from any and all responsibility, liability and claims for or
arising out of the presence on or about the Property (including in the soil,
air, structures and surface and subsurface water) of materials, wastes or
substances that are or become regulated under or that are or become classified
as toxic or hazardous, under any Environmental Law, including without
limitations, petroleum, oil, gasoline or other petroleum products, byproducts or
waste. The foregoing release shall not apply, however, if the presence on or
about the Property of such materials, wastes or substances was caused by Seller,
nor shall the foregoing release be construed as limiting Seller's
indemnification obligations in Section 12.5. As used herein, "ENVIRONMENTAL LAW"
shall mean, as amended and in effect from time to time, any federal, state or
local statute, ordinance, rule, regulation, judicial decision, or the judgment
or decree of a governmental authority, arbitrator or other private adjudicator
by which Buyer or the Property is bound, pertaining to the environment,
including, without limitation, the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended, the Hazardous Materials
Transportation Act, as amended, the Resource Conservation and Recovery Act, as
amended, the Clean Air Act, as amended and in the statutes together with the
rules adopted and guidelines promulgated pursuant thereto, and all similar
statutes together with rules adopted and guidelines promulgated pursuant to the
foregoing.

                                      -17-


      33. MEMORANDUM OF AGREEMENT. Neither this Agreement nor a Memorandum of
this Agreement shall be filed of record by either party.

      34. RADON GAS DISCLOSURE. The following language is required by law in any
contract involving the sale or lease of any building within the State of
Florida:

            "RADON GAS: Radon is a naturally occurring radioactive gas that,
            when it has accumulated in a building in sufficient quantities, may
            present health risks to persons who are exposed to it over time.
            Levels of radon that exceed federal and state guidelines have been
            found in buildings in floridal. Additional information regarding
            radon and radon testing may be obtained from your county public
            health unit."

      35. ESCROW AGENT.

            35.1. Duties. It is agreed that the duties of Escrow Agent are only
such as are herein specifically provided, being purely ministerial in nature,
and that Escrow Agent shall incur no liability whatever except for willful
misconduct or gross negligence so long as Escrow Agent has acted in good faith.
The Seller and Buyer release Escrow Agent from any act done or omitted to be
done by Escrow Agent in good faith in the performance of Escrow Agent's duties
hereunder.

            35.2. Responsibilities. Escrow Agent shall be under no
responsibility with respect to any Deposit placed with it other than faithfully
to follow the instructions herein contained. Escrow Agent may consult with
counsel and shall be fully protected in any actions taken in good faith, in
accordance with counsel's advice. Escrow Agent shall not be required to defend
any legal proceedings which may be instituted against. Escrow Agent in respect
to the subject matter of these instructions unless requested to do so by Seller
and Buyer and indemnified to the satisfaction of Escrow Agent against the cost
and expense of such defense. Escrow Agent shall not be required to institute
legal proceedings of any kind. Escrow Agent shall have no responsibility for the
genuineness or validity of any document or other item deposited with Escrow
Agent, and shall be fully protected in acting in accordance with any written
instructions given to Escrow Agent hereunder and believed by Escrow Agent to
have been signed by the proper parties.

            35.3. Sole Liability, Escrow Agent assumes no liability hereunder
except that of a stakeholder. If there is any dispute as to whether Escrow Agent
is obligated to deliver the Deposit, or as to whom the Deposit is to be
delivered, Escrow Agent will not be obligated to make any delivery of the
Deposit, but in such event may hold the Deposit until receipt by Escrow Agent of
an authorization in writing signed by all of the persons having an interest in
such dispute, directing the disposition of the sum, or in the absence of such
authorization, Escrow Agent may hold the Deposit until the final determination
of the rights of the parties in an appropriate proceeding. If such written
authorization is not given, or proceedings for such determination are not begun
and diligently continued, Escrow Agent may, but is not required, to bring an
appropriate action or proceeding for leave to place the Deposit with the court,
pending

                                      -18-


such determination. Once Escrow Agent has tendered into the registry or custody
of any court of competent jurisdiction all money and/or property in its
possession under this Agreement, or has made delivery of the Deposit in any
other manner provided for herein, Escrow Agent shall be discharged from all
duties and shall have no further liability hereunder as Escrow Agent.

      It is expressly understood that Hill, Ward & Henderson, P.A., represents
Seller in connection with this transaction. In the event of any disputes as to
which party is entitled to the Deposit or in the event any disagreement shall
arise as a result of this Agreement or the transaction contemplated hereby,
Escrow Agent shall not be excluded from representing Seller by virtue of its
serving as Escrow Agent pursuant to this Agreement. Buyer shall not object to,
or request a disqualification of, Escrow Agent, as counsel for Seller.

      36. OTHER CONTRACTUAL MATTERS.

            36.1. Homeowner's Association/Restrictive Covenants. Seller owns and
is developing contiguous real property for a residential project known as "Palm
Cove". As part of the overall Palm Cove project, which will comprise both the
Property and Seller's additional land, Seller has created or will create a
homeowner's association and has recorded a Declaration of Covenants, Conditions
and Restrictions of Palm Cove of Wesley Chapel, both of which will encumber the
Property as Permitted Exceptions and as covenants running with the land. In this
regard, pursuant to the laws of the State of Florida, the homeowner's
association/community disclosure statement required by Section 689.26, Florida
Statutes is hereby deemed to have been provided.

            36.2. Overpass Road. In conjunction with the development of the
Property, Buyer covenants and agrees that it will construct the remaining
extension to Overpass Road, which is included in the approved Construction
Drawings, as well as entry monumentation and landscaping pursuant to the
monument and landscaping conceptual plan provided by and approved by Seller.

            36.3. Development Requirements. In conjunction with the development
of the Property, Buyer covenants and agrees that it will limit its horizontal
development and construction to what is depicted on the approved Construction
Drawings for the Property and that all platting(s) of the Property shall be
restricted to only what is shown on the approved Construction Drawings. No
modification of the Construction Drawings shall be made by Buyer without the
prior written consent of Seller, which consent may be withheld by Seller in the
exercise of its sole discretion. An appropriate reference to the aforesaid
development requirements shall be incorporated into the deed referenced in
paragraph 7.1(a) of this Agreement.

            36.4. Section 1445.

                  (a) The parties shall comply with the provisions of Code
Section 1445 and applicable Treasury Regulations issued thereunder. If the
Seller is a U.S. person for Code Section 1445 purposes, then on demand of the
Buyer and prior to dosing the Seller shall provide the Buyer with a certificate
of non-foreign status in the manner provided in Treasury Regulations

                                      -19-


Section 1.1445-2. If the Seller provides the Buyer with such certificate, and if
the Buyer is otherwise permitted to rely on such certificate under those
Regulations, the Buyer shall not withhold under Code Section 1445.

                  (b) If the Seller is a 'foreign person' as defined by the
Code, the Buyer generally is required to withhold 10% of the gross sales price
from the Seller at closing and to pay the withheld amount over to the Internal
Revenue Service (IRS) unless an applicable exemption from withholding or a
limitation on the amount to be withheld is available. To the extent that the
cash to be paid over to the Seller at closing is insufficient to cover the
Buyer's withholding obligation, the Seller shall provide to the Buyer at closing
cash equal to such excess for purposes of making such withholding payment. If
the Seller's federal income tax on the gain is less than the applicable
withholding amount, the Seller may make advance application to the IRS for
reduced withholding and, if granted, the Buyer shall withhold only the
authorized reduced amount. If such ruling has not been received by closing, the
parties at closing shall enter into an escrow agreement reasonably satisfactory
to the Buyer and Seller pending receipt of the ruling, provided that at closing
the Seller shall have the obligation to provide to the escrow agent from the
closing proceeds (or from the Seller's other resources if necessary) cash equal
to the maximum required withholding, with any excess withholding being
refundable to the Seller upon receipt of a favorable ruling from the IRS.

                  (c) Buyer and Seller understand that the IRS requires the
Buyer and the Seller to have a U.S. federal taxpayer identification number and
to supply that number on the foregoing forms. A foreign individual may acquire
an International Taxpayer Identification Number for this purpose. Since it may
take several weeks to receive the number after application and the IRS will not
process these forms without the actual number, a party lacking a TIN is advised
to apply immediately. The Seller's TIN is 38-154-5089. The Buyer's TIN is 90-
0193359.

      37. [Intentionally Omitted].

      38. FACSIMILE COPIES. Facsimile copies of this Agreement and the
signatures thereon shall have the same force and effect as if the same were
original documents. Facsimile signatures are acceptable and shall be deemed to
be original signatures.

         [THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK.
            THE SIGNATURE PAGE FOLLOWS ON THE NEXT SUCCEEDING PAGE.]

                                      -20-


                               [SIGNATURE PAGE TO
                           AGREEMENT FOR SALE OF LAND]

      IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the dates set forth below.

WITNESSES:                          SELLER:

                                    PULTE HOME CORPORATION, a
                                    Michigan corporation

/s/ [ILLEGIBLE]                     By: /s/[ILLEGIBLE]
- -----------------                        -----------------------
Name: [ILLEGIBLE]                        Name: [ILLEGIBLE]
      (Print or Type Name)               Title: [ILLEGIBLE]

                                        Date: December 3, 2004
/s/ Roy J. McCraw III
- -------------------------
Name: Roy J. McCraw III
      (Print or Type Name)

                                    BUYER:

                                    ASHTON TAMPA RESIDENTIAL, LLC,
                                    a Nevada limited liability company

___________________________         By: ____________________________
Name: _____________________             Name: ______________________
      (Print or Type Name)              Title: _____________________

___________________________             Date: December ___, 2004
Name: _____________________
      (Print or Type Name)           AND


___________________________         By: ____________________________
Name: _____________________             Name: ______________________
      (Print or Type Name)              Title: _____________________

___________________________             Date: December ___, 2004
Name: _____________________
      (Print or Type Name)


                                      -21-


                               [SIGNATURE PAGE TO
                           AGREEMENT FOR SALE OF LAND]

      IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the dates set forth below.

WITNESSES:                          SELLER:

                                    PULTE HOME CORPORATION, a
                                    Michigan corporation

/s/ [ILLEGIBLE]                       By: _____________________________
- -----------------                         Name: ______________________
Name: [ILLEGIBLE]                         Title: ______________________
      (Print or Type Name)
                                          Date: December ______, 2004
___________________________
Name: _____________________
      (Print or Type Name)


                                    BUYER:

                                    ASHTON TAMPA RESIDENTIAL, LLC,
                                    a Nevada limited liability company

/s/ Stacey M. Cook                  By: /s/ [ILLEGIBLE]
- --------------------                    --------------------------
Name: Stacey M. Cook                    Name: [ILLEGIBLE]
      (Print or Type Name)              Title: [ILLEGIBLE]

                                        Date: December 3, 2004

/s/ Dawn Carey
- ---------------------
Name: Dawn Carey
      (Print or Type Name)          AND

/s/ [ILLEGIBLE]                     By: /s/ [ILLEGIBLE]
- --------------------------              ------------------------------
Name: [ILLEGIBLE]                       Name: [ILLEGIBLE]
     (Print or Type Name)               Title: [ILLEGIBLE]

                                        Date: December 6, 2004

/s/ [ILLEGIBLE]
- --------------------------
Name: [ILLEGIBLE]
      (Print or Type Name)

                                      -22-

EX-10.7

                                                                    EXHIBIT 10.7


                     SERVICES AND SOFTWARE LICENSE AGREEMENT


THIS SERVICES AND SOFTWARE LICENSE AGREEMENT ("Agreement") dated as of June 1,
2005, by and between PARAMOUNT DEVELOPMENT CORPORATION LIMITED ("Paramount") and
ASHTON WOODS USA L.L.C. ("Customer").


1.       PAYMENTS

         1.1      QUARTERLY FEE. In consideration for the services and license
                  provided herein, Customer shall pay to Paramount a fee of $600
                  for each Closing (as hereinafter defined) which occurred
                  during the Customer's previous fiscal quarter. Customer shall
                  pay such quarterly fee by the thirtieth day of each fiscal
                  quarter. If Customer fails to pay the quarterly fee by the
                  thirtieth day of each fiscal quarter, then in addition to the
                  quarterly fee, Customer shall pay a late charge on the
                  outstanding balance of the quarterly fee at a rate per annum
                  equal to eighteen percent (18%) from such thirtieth day until
                  such quarterly fee is paid in full. Such late charge shall be
                  computed on the basis of a 360-day year of twelve 30-day
                  months.

         1.2      SUPPORTING DOCUMENTATION. By the tenth business day of each
                  calendar month, Customer shall provide to Paramount with a
                  report regarding the number of Closings during the previous
                  calendar month and reasonably detailed support for the
                  information in the report.

         1.3      AUDIT RIGHTS. Paramount may from time to time during the term
                  of this Agreement have access to and the right to examine any
                  of Customer's and its Affiliates' (as hereinafter defined)
                  pertinent books, documents, papers, or other records to
                  determine if Customer is in compliance with the provisions of
                  Section 1.1. Such audits shall be conducted upon reasonable
                  notice during Customer's or its Affiliate's ordinary business
                  hours and be subject to appropriate provisions protecting the
                  confidentiality of the data. Audits shall not be conducted
                  more often than once every twelve (12) months.

         1.4      TAXES. Customer shall promptly and directly pay, and shall
                  indemnify and hold Paramount harmless from, any taxes of any
                  jurisdiction that may be assessed or imposed on copies of the
                  Software, any documentation related to the Software delivered
                  to Customer, the license granted under this Agreement or the
                  services provided under this Agreement, or otherwise assessed
                  or imposed in connection with the transactions contemplated by
                  this Agreement, including, without limitation, sales, use,
                  excise, value added, personal property, export, import and
                  withholding taxes, excluding only taxes based upon Paramount's
                  net income and any payroll taxes related to those Paramount
                  employees providing services under this Agreement, and
                  Customer shall promptly reimburse Paramount for any such taxes
                  payable or collectible by Paramount. The fees and other
                  amounts payable by Customer to Paramount pursuant to Section 1
                  of this Agreement do not include such taxes.

         1.5      CERTAIN REMEDIES FOR NONPAYMENT. If Customer fails to pay to
                  Paramount, within ten (10) days after Paramount makes written
                  demand therefor, any past-due amount payable under this
                  Agreement then, in addition to all other rights and remedies
                  which Paramount may have at law or in equity, Paramount may,
                  in its sole discretion and without further notice to Customer,
                  suspend performance of any or all of its obligations under
                  this Agreement (including its ongoing support services under
                  Section 4.1 and the Land Development Services (as hereinafter
                  defined) under Section 2.1) until all past due amounts are
                  paid in full.



2.       LAND DEVELOPMENT SERVICES

         2.1      Paramount shall provide to Customer and its Affiliates
                  services of Paramount's employees to assist Customer and its
                  Affiliates with the management and oversight of the Customer's
                  land development process in a manner and in substance
                  generally consistent with land development management services
                  provided by Paramount to Customer on the date hereof ("Land
                  Development Services"). Paramount's employees performing the
                  Land Development Services shall perform such services at those
                  locations reasonably requested by Customer and its Affiliates,
                  and shall report to Customer's President.

3.       LIMITED LICENSE

         3.1      GRANT. Paramount grants to Customer and its Affiliates a
                  personal, non-transferable, non-exclusive, license to use, in
                  accordance with this Agreement, Paramount's proprietary
                  software identified on Schedule A to this Agreement
                  ("Software"), as the Software may be modified, revised and
                  updated from time to time, including, without limitation, in
                  accordance with Section 4.1(c) of this Agreement. The term of
                  the license granted hereunder for the proprietary software and
                  Documentation shall begin on the date this Agreement is
                  executed (the "Effective Date") and shall continue until this
                  Agreement is terminated in accordance with Section 8 of this
                  Agreement.

         3.2      DESIGNATED LOCATION(s). The Software may be installed and used
                  only on server(s) operated by Customer or its Affiliates at
                  their business offices in the United States and on laptops and
                  hand-held devices used in Customer's and its Affiliates'
                  businesses (the "Designated Locations"). Furthermore, as
                  Paramount converts the software from a server-based program to
                  a web-based program hosted on Paramount's servers, Paramount
                  will provide Customer's and its Affiliates' employees with
                  access to Paramount's website in order to access the Software.

         3.3      SCOPE. Customer and its Affiliates may use the Software only
                  in the ordinary course of their business operations and for
                  their own business purposes. Customer shall use the Software
                  only in accordance with the documentation provided by
                  Paramount and shall require that its Affiliates be bound by
                  this Agreement to the same extent as Customer.

         3.4      COPIES. Customer and its Affiliates may use only the copies of
                  the Software and related documentation that are provided by
                  Paramount, except that Customer and its Affiliates may copy
                  the Software and documentation to the extent reasonably
                  necessary for routine backup and disaster recovery purposes.

4.       PARAMOUNT'S OTHER OBLIGATIONS RELATED TO THE SOFTWARE

         4.1      ONGOING SUPPORT SERVICES. Beginning on the Effective Date,
                  Paramount shall provide the following ongoing support services
                  to Customer and its Affiliates:

                  (a)      Paramount shall provide to Customer and its
                           Affiliates, during Paramount's normal business hours,
                           telephone assistance regarding Customer's and its
                           Affiliates' proper and authorized use of the latest
                           release of the Software and all releases of the
                           Software previously provided to Customer and its
                           Affiliates.

                  (b)      Paramount shall provide to Customer and its
                           Affiliates, during Paramount's normal business hours,
                           commercially reasonable efforts in solving problems
                           that arise in connection with Customer's and its
                           Affiliates' proper and authorized use of the Software
                           or in correcting failures of the Software to perform
                           in accordance with the documentation provided to
                           Customer and its Affiliates. Customer shall

                                       2



                           provide to Paramount reasonably detailed
                           documentation and explanation, together with
                           underlying data, to substantiate any such problem or
                           failure and to assist Paramount in its efforts to
                           diagnose and correct the problem or failure. If,
                           within a commercially reasonable time, given the
                           severity of the failure, Paramount and Customer or
                           its Affiliate have been unable to diagnose a problem
                           through phone support, support services shall be
                           provided by Paramount at the Designated Location(s)
                           if necessary to diagnose or resolve the problem.

                  (c)      Paramount shall provide to Customer Paramount's
                           periodic modifications, revisions and updates to the
                           Software which Paramount incorporates into the
                           Software without additional charge. All
                           modifications, revisions and updates shall be
                           furnished by means of new releases of the Software
                           and shall be accompanied by updates to any related
                           documentation whenever Paramount determines that such
                           updates are necessary. To the extent any
                           modification, revision or update requires Customer or
                           its Affiliates to migrate data to the updated
                           Software, Paramount shall perform such migration at
                           its own expense.

         4.2      CONSULTING AND OTHER SOFTWARE-RELATED SERVICES. At Customer's
                  or its Affiliates' reasonable request, provided that Customer
                  is in compliance with its payment obligations under Paragraph
                  1.1. Paramount shall provide to Customer and its Affiliates
                  consulting services, custom modification programming, support
                  services relating to custom modifications, assistance with
                  data transfers, system restarts and reinstallations, and other
                  specialized support services with respect to the Software, in
                  each case, to the extent provided at the Customer's request
                  for such additional reasonable fee as the parties shall agree.
                  These services shall be provided by Paramount at the
                  Designated Location(s) if and when Customer or its Affiliate
                  reasonably determines that on-site services are necessary.
                  Paramount agrees that personnel supplied for Customer and its
                  Affiliates consulting services will have appropriate technical
                  and/or business skills. Paramount's project coordinators will
                  periodically report the project status to Customer or its
                  Affiliate, as applicable, and coordinate with all other areas
                  of Paramount.

5.       CUSTOMER'S OTHER SOFTWARE OBLIGATIONS

         5.1      PROCUREMENT OF HARDWARE. Customer shall be responsible, at its
                  expense, for procuring, maintaining and updating the computer
                  hardware, systems software and other items on which the
                  Software will be used.

         5.2      ACCESS TO FACILITIES AND EMPLOYEES. Customer and its
                  Affiliates shall provide to Paramount access to the Designated
                  Location(s) and Customer's and its Affiliates' equipment and
                  employees, and shall otherwise cooperate with Paramount, as
                  reasonably necessary for Paramount to perform its training,
                  support and other obligations under this Agreement. Customer
                  and its Affiliates shall devote all equipment, facilities,
                  personnel and other resources reasonably necessary to install
                  the Software and begin using the Software in production on a
                  timely basis as contemplated by this Agreement.

6.       WARRANTIES AND LIMITATIONS

         6.1      RIGHT TO LICENSE; NO INFRINGEMENT. Paramount warrants to
                  Customer that it has the full legal right to grant to Customer
                  the license granted under this Agreement, and that the
                  Software and any related documentation in the form delivered
                  to Customer and its Affiliates by Paramount and when properly
                  used for the purpose and in the manner specifically authorized
                  by this Agreement, do not infringe upon any United States or
                  Canadian patent or copyright or any trade secret or other
                  proprietary right of any person. Paramount shall defend,
                  indemnify, and hold Customer and its Affiliates harmless from
                  and against all costs, losses, expenses, and damages arising
                  from third-party claims

                                       3



                  related to Paramount's breach of the foregoing warranty.
                  Paramount shall have no liability under this Section 6.1
                  unless Customer gives written notice to Paramount (in
                  accordance with Section 9.1) within fifteen (15) days after
                  Customer becomes aware of any such potential infringement
                  claim that may be initiated against Customer or its Affiliate,
                  and allows Paramount to have sole control of the defense or
                  settlement of the claim. If Customer's or its Affiliate's use
                  of the Software is enjoined, then Paramount shall have the
                  option, at its expense, to:

                  (a)      modify or replace all or the infringing part of the
                           Software so that it is no longer infringing, provided
                           that the Software functionality does not change in
                           any material adverse respect; or

                  (b)      procure for Customer or its Affiliate the right to
                           continue using the infringing part of the Software.

                  In no event shall Paramount's total liability exceed the
                  limitations as described in Paragraphs 6.4 and 6.5.

         6.2      EXCLUSION FOR UNAUTHORIZED ACTIONS. Paramount shall have no
                  liability under any provision of this Agreement with respect
                  to any performance problem, claim of infringement or other
                  matter to the extent attributable to any unauthorized or
                  improper use or modification of the Software, any unauthorized
                  combination of the Software with other software, any use of
                  any version of the Software other than the latest release of
                  the Software that is provided to Customer and its Affiliates,
                  or any breach of this Agreement by Customer and its
                  Affiliates.

         6.3      FORCE MAJEURE. Paramount shall not be liable for, nor shall
                  Paramount be considered in breach of this Agreement due to,
                  any failure to perform its obligations under this Agreement as
                  a result of a cause beyond its control, including any act of
                  God or a public enemy, act of any military, civil or
                  regulatory authority, change in any law or regulation, fire,
                  flood, earthquake, storm or other like event, disruption or
                  outage of communications, power or other utility, or any other
                  cause, whether similar or dissimilar to any of the foregoing.

         6.4      Disclaimer and Exclusions. EXCEPT AS EXPRESSLY STATED IN THIS
                  AGREEMENT, PARAMOUNT MAKES NO REPRESENTATIONS OR WARRANTIES,
                  ORAL OR WRITTEN, EXPRESS OR IMPLIED, INCLUDING IMPLIED
                  WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR
                  PURPOSE, REGARDING THE SOFTWARE OR ANY OTHER MATTER PERTAINING
                  TO THIS AGREEMENT. PARAMOUNT'S TOTAL LIABILITY UNDER THIS
                  AGREEMENT SHALL UNDER NO CIRCUMSTANCES EXCEED THE TOTAL AMOUNT
                  ACTUALLY PAID BY CUSTOMER TO PARAMOUNT UNDER THIS AGREEMENT.
                  NOTWITHSTANDING ANY OTHER PROVISION UNDER THIS AGREEMENT,
                  PARAMOUNT MAKES NO REPRESENTATIONS OR WARRANTIES, ORAL OR
                  WRITTEN, EXPRESS OR IMPLIED, INCLUDING IMPLIED WARRANTIES OF
                  MERCHANTABILITY AND FITNESS FOR PARTICULAR PURPOSE, REGARDING
                  ANY THIRD PARTY HARDWARE, SOFTWARE OR SERVICES. UNDER NO
                  CIRCUMSTANCES SHALL EITHER PARTY BE LIABLE TO THE OTHER OR ANY
                  OTHER PERSON FOR LOST REVENUES, LOST PROFITS, LOSS OF
                  BUSINESS, OR ANY INDIRECT OR CONSEQUENTIAL DAMAGES OF ANY
                  NATURE, WHETHER OR NOT FORESEEABLE AND WHETHER OR NOT THE
                  POSSIBILITY OF SUCH DAMAGES HAS BEEN DISCLOSED.

         6.5      OTHER LIMITATIONS. The warranties made by Paramount in this
                  Agreement, and the obligations of Paramount under this
                  Agreement, run only to Customer and its Affiliates, but not
                  their customers or any other persons. Under no circumstances
                  shall any other

                                       4


                  person (other than the Customer's Affiliates) be considered a
                  third party beneficiary of this Agreement or otherwise
                  entitled to any rights or remedies under this Agreement.
                  Customer and its Affiliates shall have no rights or remedies
                  against Paramount except as specifically provided in this
                  Agreement. No action or claim of any type relating to this
                  Agreement may be brought or made by Customer or its Affiliate
                  more than one (1) year after Customer or its Affiliate first
                  has knowledge of the basis for the action or claim.

7.       CONFIDENTIALITY, OWNERSHIP AND RESTRICTIVE COVENANTS

         7.1      CONFIDENTIAL INFORMATION. All business information disclosed
                  by one party to the other in connection with this Agreement
                  shall be treated as confidential information unless it is or
                  later becomes publicly available through no fault of the other
                  party or it was or later is rightfully developed or obtained
                  by the other party from independent sources free from any duty
                  of confidentiality. The terms and provisions of this Agreement
                  as well as all negotiations, proposals and other written and
                  oral communications between the parties in connection herewith
                  shall be treated as confidential information. During the term
                  of this Agreement and for two (2) years following the
                  termination of this Agreement, each party's confidential
                  information shall be held in strict confidence by the other
                  party, using the standards generally accepted in the industry
                  or the same standard of care as it uses to protect its own
                  confidential information, whichever is greater and shall not
                  be used or disclosed by the other party for any purpose except
                  as necessary to implement or perform this Agreement, or except
                  as required by law provided that the other party is given a
                  reasonable opportunity to obtain a protective order. Without
                  limiting the generality of the foregoing, such confidential
                  information shall include Customer's and its Affiliates' data
                  and the details of Customer's and its Affiliates' computer
                  operations.

         7.2      PARAMOUNT'S PROPRIETARY ITEMS. Customer acknowledges that the
                  Software and related documentation, the object code and the
                  source code for the Software, and other design features of the
                  Software, all ideas, methods, algorithms, formulae and
                  concepts used in developing or incorporated into the Software,
                  all future modifications, revisions, updates, releases,
                  refinements, improvements and enhancements of the Software,
                  all derivative works based upon any of the foregoing, and all
                  copies of the foregoing (referred to, collectively, as
                  "Proprietary Items") are trade secrets and proprietary
                  property of Paramount, having great commercial value to
                  Paramount. Customer acknowledges that the restrictions in this
                  Agreement are reasonable and necessary to protect Paramount's
                  legitimate business interests.

         7.3      OWNERSHIP RIGHTS. All Proprietary Items provided to Customer
                  under this Agreement are being provided on a strictly
                  confidential and limited use basis. Title to all Proprietary
                  Items and all related patent, copyright, trademark, trade
                  secret, intellectual property and other ownership rights shall
                  remain exclusively with Paramount, except with respect to such
                  items that were created by Paramount specifically for or on
                  behalf of Customer and its Affiliates pursuant to a written
                  contract that vests title to such specifically created items
                  in Customer or its Affiliates. This Agreement is not an
                  agreement of sale, and no title, patent, copyright, trademark,
                  trade secret, intellectual property or other ownership rights
                  to any Proprietary Items are transferred to Customer or its
                  Affiliates by virtue of this Agreement. All copies of
                  Proprietary Items in Customer's and its Affiliates' possession
                  shall remain the exclusive property of Paramount and shall be
                  deemed to be licensed to Customer and its Affiliates during
                  the term of this Agreement.

         7.4      DISCLOSURE RESTRICTIONS. All Proprietary Items in Customer's
                  or its Affiliate's possession, whether or not authorized,
                  shall be held in strict confidence by Customer and its
                  Affiliates, and Customer and its Affiliates shall take all
                  steps reasonably necessary to preserve the confidentiality
                  thereof. Customer shall not, directly or indirectly,
                  communicate, publish, display, loan, give or otherwise
                  disclose any Proprietary Item to any unauthorized person,

                                       5



                  or permit any unauthorized person to have access to or
                  possession of any Proprietary Item. Customer and its
                  Affiliates shall limit their use of and access to Proprietary
                  Items to only those of its employees, agents, and consultants
                  whose responsibilities require such use or access. Customer
                  and its Affiliates shall advise all such employees, agents,
                  and consultants before they receive access to or possession of
                  any Proprietary Items, of the confidential nature of the
                  Proprietary Items and require them to abide by the terms of
                  this Agreement. Customer and its Affiliates shall use the same
                  standard of care for protecting the Proprietary Items as
                  Customer and its Affiliates uses to prevent disclosure,
                  publication, or dissemination of its own proprietary
                  information. Customer and its Affiliates shall not be liable
                  for the inadvertent or accidental disclosure of Proprietary
                  Items if such disclosure occurs despite the exercise of the
                  same degree of care Customer and its Affiliates normally takes
                  to preserve its own such data or information.

         7.5      USE RESTRICTIONS. Customer shall not do, nor shall it permit
                  any other person to do, any of the following:

                  (a)      use any Proprietary Item for any purpose, at any
                           location or in any manner not specifically authorized
                           by this Agreement; or

                  (b)      make or retain any copy of any Proprietary Item
                           except as specifically authorized by this Agreement;
                           or

                  (c)      create or recreate the source code for the Software,
                           or re-engineer, reverse engineer, decompile or
                           disassemble the Software; or

                  (d)      modify, adapt, translate or create derivative works
                           based upon the Software or Documentation, or combine
                           or merge any part of the Software with or into any
                           other software or documentation except as
                           contemplated by this Agreement for Customer's and its
                           Affiliates' own internal use; or

                  (e)      refer to or otherwise use any Proprietary Item as
                           part of any effort to develop a program having any
                           functional attributes, visual expressions or other
                           features similar to those of the Software or to
                           compete with Paramount; or

                  (f)      remove, erase or tamper with any copyright or other
                           proprietary notice printed or stamped on, affixed to,
                           or encoded or recorded in any Proprietary Item, or
                           fail to preserve all copyright and other proprietary
                           notices in any copy of any Proprietary Item made by
                           Customer; or

                  (g)      sell, market, license, sublicense, distribute or
                           otherwise grant to any person, including any
                           outsourcer, vender, consultant or partner, any right
                           to use any Proprietary Item; or

                  (h)      attempt to do any of the foregoing.

         7.6      NOTICE AND REMEDY OF BREACHES. Customer shall promptly give
                  written notice to Paramount (in accordance with Section 9.1)
                  of any actual or suspected breach by Customer of any of the
                  provisions of this Section 7, whether or not intentional, and
                  Customer shall, at its expense, take all steps reasonably
                  requested by Paramount to prevent or remedy the breach.

         7.7      ENFORCEMENT. Customer acknowledges that any breach of any of
                  the provisions of this Section 7 shall result in irreparable
                  injury to Paramount for which money damages could not
                  adequately compensate. If Paramount notifies Customer of a
                  breach in writing (in accordance with Section 9.1) and
                  Customer fails to cure the breach within thirty (30) days,

                                       6




                  then Paramount shall be entitled, in addition to all other
                  rights and remedies which Paramount may have at law or in
                  equity, to seek a decree of specific performance or to seek to
                  have an injunction issued by any competent court, requiring
                  the breach to be cured or enjoining all persons involved from
                  continuing the breach. The existence of any claim or cause of
                  action which Customer or any other person may have against
                  Paramount shall not constitute a defense or bar to the
                  enforcement of any of the provisions of this Section 7.

8.       TERM AND TERMINATION

         8.1      Unless terminated as provided herein, this Agreement shall be
                  effective from the Effective Date until the second (2nd)
                  anniversary of the Effective Date. This Agreement shall
                  automatically renew for successive one (1) year terms, unless
                  at least ninety (90) days prior to the second anniversary or
                  each succeeding one year anniversary thereafter, either party
                  gives the other party written notice (in accordance with
                  Section 9.1) of its intention not to renew this Agreement.

         8.2      TERMINATION BY NONDEFAULTING PARTY. The nondefaulting party
                  may immediately terminate this Agreement, by giving written
                  notice of termination to the defaulting party (in accordance
                  with Section 9.1), upon the occurrence of any of the following
                  events:

                  (a)      Customer fails to pay to Paramount, within thirty
                           (30) days after Paramount makes written demand
                           therefor, any past-due amount payable under this
                           Agreement (including interest thereon).

                  (b)      Customer or its Affiliate breaches, in any material
                           respect, any of the provisions of Section 7 and fails
                           to cure the breach within forty five (45) days of
                           written notification by Paramount.

                  (c)      Either party breaches any of its other obligations
                           under this Agreement and does not cure the breach
                           within forty five (45) days after the nondefaulting
                           party gives written notice to the defaulting party
                           (in accordance with Section 9.1) describing the
                           breach in reasonable detail.

                  (d)      Either party dissolves or liquidates or otherwise
                           discontinues all or a significant part of its
                           business operations.

         8.3      EFFECT OF TERMINATION. Within one (1) year after the
                  termination of this Agreement, whether under this Section 8 or
                  otherwise, Customer and its Affiliates shall discontinue all
                  use of the Software, Customer shall promptly return to
                  Paramount all copies of the Software, any related
                  documentation, and any other Proprietary Items then in
                  Customer's possession, and Customer shall give written notice
                  to Paramount (in accordance with Section 9.1) certifying that
                  all copies of the Software have been permanently deleted from
                  its computers. Customer shall remain liable for all payments
                  due to Paramount with respect to the period ending on the then
                  current term of the Agreement. The provisions of Section 7
                  shall survive any termination of this Agreement, whether under
                  this Section 8 or otherwise.

9.       OTHER PROVISIONS

         9.1      NOTICE. All notices, consents and other communications under
                  or regarding this Agreement shall be in writing and shall be
                  deemed to have been received on the earlier of the date of
                  actual receipt, the fifth business day after being mailed by
                  first class certified air mail, or the second business day
                  after being sent by a reputable overnight delivery service.
                  Any notice may be given by facsimile, provided that a signed
                  written original is

                                       7



                  sent by one of the foregoing methods within twenty-four (24)
                  hours thereafter. Customer's address for notices is 1080
                  Holcomb Bridge Road, Building 200, Suite 350, Roswell, Georgia
                  30076, Attention: Robert Salomon, fax: (770) 998-7494.
                  Paramount's address for notices is 3751 Victoria Park Avenue,
                  Toronto, Ontario M1W 3Z4, Attention: Seymour Joffe, fax: (416)
                  449-6438. Either party may change its address for notices by
                  giving written notice of the new address to the other party in
                  accordance with this Section.

         9.2      DEFINED TERMS. As used in this Agreement, the following terms
                  have the following meanings:

                  (a)      "Affiliate" means any corporation, firm, partnership
                           or other entity that directly or indirectly controls,
                           is controlled by or is under common control with a
                           party to this Agreement. As used herein, "control"
                           means ownership, directly or through one or more
                           Affiliates, of fifty percent (50%) or more of the
                           shares of stock entitled to vote for the election of
                           directors, in the case of a corporation, fifty
                           percent (50%) or more of the equity interests in the
                           case of any other type of legal entity, status as a
                           general partner in any partnership, manager of any
                           limited liability company operated under documents
                           providing authority for the limited liability company
                           manager similar to the authority of a general partner
                           in a partnership, or any other arrangement whereby a
                           party controls or has the right to control the board
                           of directors or equivalent governing body of a
                           corporation or other entity.

                  (b)      "Change of Control" means (i) the sale of all or
                           substantially all of the assets of a party in one or
                           any related series of transactions, (ii) a merger or
                           consolidation of the party with any other entity,
                           whether or not the party is the surviving entity, if
                           following such merger or consolidation less than 50%
                           of the total voting power of the surviving entity is
                           held by those persons who held voting securities of
                           the party immediately prior to such merger or
                           consolidation, (iii) any other transaction or series
                           of related transactions, the result of which is a
                           change in ownership of more than 50% of the total
                           voting power of the party, or (iv) the entities
                           holding more than 50% of the total voting power of a
                           party engage in a transaction described in (i) -
                           (iii).

                  (c)      "Closing" means the transference of the title to a
                           residence from the Customer or its Affiliate to the
                           buyer of the residence.

                  (d)      "copy" means any paper, disk, tape, film, memory
                           device, or other material or object on or in which
                           any words, object code, source code or other symbols
                           are written, recorded or encoded, whether permanent
                           or transitory.

                  (e)      "including" means including but not limited to.

                  (f)      "person" means any individual, sole proprietorship,
                           joint venture, partnership, corporation, limited
                           liability company, limited liability partnership,
                           company, firm, bank, association, cooperative, trust,
                           estate, government, governmental agency, regulatory
                           authority, or other entity of any nature.

         9.3      ASSIGNMENT. This Agreement will bind, benefit and be
                  enforceable by and against Paramount and Customer and, to the
                  extent permitted hereby, their respective successors and
                  assigns. Neither party shall assign this Agreement or any of
                  its rights hereunder, nor delegate any of its obligations
                  hereunder, without the other party's prior written consent.
                  Any Change in Control of a party, and any assignment by merger
                  or otherwise by operation of law, will constitute an
                  assignment of this Agreement by that party for the purposes of
                  this Section 9.3.

                                       8



         9.4      RELATIONSHIP. The relationship between the parties created by
                  this Agreement is that of independent contractors and not
                  partners, joint venturers or agents and any of Paramount's
                  employees providing services under this Agreement shall not be
                  deemed to be Customer's or its Affiliates' employees.

         9.5      ENTIRE UNDERSTANDING. This Agreement, which includes and
                  incorporates the Schedules referred to herein, states the
                  entire understanding between the parties with respect to its
                  subject matter, and supersedes all prior proposals, marketing
                  materials, negotiations and other written or oral
                  communications between the parties with respect to the subject
                  matter of this Agreement.

         9.6      MODIFICATION AND WAIVER. No modification of this Agreement,
                  and no waiver of any breach of this Agreement, shall be
                  effective unless in writing and signed manually by an
                  authorized representative of the party against whom
                  enforcement is sought. Such assigned writing containing a
                  manual signature may be transmitted by electronically
                  confirmed facsimile telephone transmission, but no other
                  electronic embodiment or means of transmission (such as
                  electronic mail, irrespective of whether an electronic or
                  digital signature statute has been enacted in any relevant
                  jurisdiction) shall constitute either a writing or a signature
                  for purposes of this Section. No waiver of any breach of this
                  Agreement, and no course of dealing between the parties, shall
                  be construed as a waiver of any subsequent breach of this
                  Agreement.

         9.7      SEVERABILITY. A determination that any provision of this
                  Agreement is invalid or unenforceable shall not affect the
                  other provisions of this Agreement.

         9.8      HEADINGS. Section headings are for convenience of reference
                  only and shall not affect the interpretation of this
                  Agreement.

         9.9      ARBITRATION. All disputes involving this Agreement, except
                  actions arising under the patent and copyright provisions of
                  the U.S. Code, and breaches of the provisions of Section 7,
                  shall be submitted to a binding arbitration by a panel of
                  three (3) arbitrators of the American Arbitration Association
                  under its rules and procedures in effect at the time of
                  submission. Such panel shall include only persons with
                  experience in the areas of information technology or computer
                  software licensing installation or implementation. Each party
                  shall choose one arbitrator, and the third arbitrator shall be
                  chosen by the two arbitrators selected by the parties. The
                  location of the arbitration hearing will be Atlanta, Georgia.
                  The costs of such arbitration shall be borne by the
                  non-prevailing party in such arbitration. The final
                  arbitration decision shall be enforceable by a court of
                  competent jurisdiction.

         9.10     JURISDICTION AND PROCESS. In any court action relating to this
                  Agreement, (a) each of the parties irrevocably consents to the
                  exclusive jurisdiction and venue of the federal and state
                  courts located in the State of Georgia, (b) each of the
                  parties irrevocably consents to service of process by first
                  class certified mail, return receipt requested, postage
                  prepaid, to the address at which the party is to receive
                  notice in accordance with Section 9.1 and (d) the prevailing
                  party shall be entitled to recover its reasonable attorney's
                  fees (including, if applicable, charges for in-house counsel),
                  court costs and other legal expenses from the other.

         9.11     GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED
                  IN ACCORDANCE WITH THE LAWS OF THE STATE OF GEORGIA.


                                       9


IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as a
sealed instrument as of the day and year first above written.


                                        PARAMOUNT DEVELOPMENT CORPORATION

                                        ----------------------------------------

                                        By:
                                           -------------------------------------
                                        Its:
                                           -------------------------------------


                                        ASHTON WOODS USA L.L.C.

                                        ----------------------------------------

                                        By:
                                           -------------------------------------
                                        Its:
                                           -------------------------------------




                                       10



                                   SCHEDULE A
                          TO SOFTWARE LICENSE AGREEMENT
                              DATED APRIL ___, 2005






SOFTWARE:                            Paramount's software systems which provides
                                     homebuilders with the following functions:
                                        1.   Sales and land development
                                        2.   Warranty and calendar
                                        3.   Custom reports
                                        4.   Work orders
                                        5.   Job costing
                                        6.   Layered takeoffs
                                        7.   Options and design centers
                                        8.   Purchase orders
                                        9.   Scheduling
                                        10.  Accounting





                                       11

EX-10.8

                                                                    EXHIBIT 10.8

                            ASHTON WOODS USA, L.L.C.
                    NONQUALIFIED DEFERRED COMPENSATION PLAN
                             Effective June 1, 2005



                                    SECTION 1

                           PURPOSE AND ADMINISTRATION

1.1. Name of Plan. Ashton Woods USA, L.L.C. (the "Company") hereby adopts the
Ashton Woods USA, L.L.C. Deferred Compensation Plan (the "Plan"), as set forth
herein.

1.2. Effective Date. The effective date of this Plan is June 1, 2005 .

1.3. Purpose. The Company has established the Plan primarily for the purpose of
providing deferred compensation to a select group of management or highly
compensated employees of the Participating Employers. The Plan is intended to be
a top-hat plan as described in Section 201(2), 301(a)(3) and 401(a)(1) of ERISA.
The Company intends that the Plan shall be treated as unfunded for tax purposes
and for purposes of Title I of ERISA. The Plan is not intended to qualify under
Section 401 (a) or the Code. A Participating Employer's obligations hereunder,
if any, to a Participant (or to a Participant's beneficiary) shall be unsecured
and shall be a mere promise by the Participating Employer to make payments
hereunder in the future. A Participant (and, if applicable, the Participant's
beneficiary) shall be treated as a general unsecured creditor of any
Participating Employer.

1.4. Administration. The Plan shall be administered by the committee appointed
by the Company's Board of Directors.

(a)   Authority. The Plan Administrative Committee shall have full authority and
      power to administer and construe the Plan, subject to applicable
      requirements of law. Without limiting the generality of the foregoing, the
      Plan Administrative Committee shall have the following powers and duties:

      (i)   To make and enforce such rules and regulations as it deems necessary
            or proper for the administration of the Plan;

      (ii)  To interpret the Plan and to decide all questions concerning the
            Plan;

      (iii) To designate persons eligible to participate in the Plan, subject to
            the approval of the Board;

      (iv)  To determine the amount and the recipient of any payments to be made
            under the Plan;

      (v)   To designate and value any investments deemed held in the Accounts;

      (vi)  To appoint such agents, counsel, accountants, consultants and other
            persons as may be required to assist in administering the Plan; and

                                                      Ashton Woods USA, L.L.C.
                                                     Deferred Compensation Plan
                                                         Effective June 1, 2005

                                       1



      (vii) To make all other determinations and to take all other steps
            necessary or advisable for the administration of the Plan.

      Subject to paragraph (b) below, all decisions made by the Plan
      Administrative Committee pursuant to the provisions of the Plan shall be
      made in its sole discretion and shall be final, conclusive, and binding
      upon all parties.

(b)   Authority of Board of Directors. Notwithstanding anything in this Plan to
      the contrary, the Board shall have the power

      (i)   to review and approve the persons who will be eligible to
            participate in the Plan; and

      (ii)  to make determinations with respect to the participation and
            benefits of to any member of the Plan Administrative Committee who
            is a participant in the Plan.

(c)   Delegation of Duties. The Plan Administrative Committee may delegate such
      of its duties and may engage such experts and other persons as it deems
      appropriate in connection with administering the Plan. The Plan
      Administrative Committee shall be entitled to rely conclusively upon, and
      shall be fully protected in any action taken by the Plan Administrative
      Committee, in good faith in reliance upon any opinions or reports
      furnished to it by any such experts or other persons.

(d)   Expenses. All expenses incurred prior to the termination of the Plan that
      shall arise in connection with the administration of the Plan, including,
      without limitation, administrative expenses and compensation and other
      expenses and charges of any actuary, counsel, accountant, specialist, or
      other person who shall be employed by the Plan Administrative Committee in
      connection with the administration of the Plan shall be paid by the
      Participating Employers.

(e)   Indemnification of Plan Administrative Committee. The Participating
      Employers agree to indemnify and to defend to the fullest extent permitted
      by law any person serving as a member of the Plan Administrative
      Committee, and each employee of a Participating Employer or any of their
      affiliated companies appointed by the Plan Administrative Committee to
      carry out duties under this Plan, against all liabilities, damages, costs
      and expenses (including attorneys' fees and amounts paid in settlement of
      any claims approved by the Company) occasioned by any act or omission to
      act in connection with the Plan, if such act or omission is in good faith.

(f)   Liability. To the extent permitted by law, neither the Plan Administrative
      Committee nor any other person shall incur any liability for any acts or
      for any failure to act except for liability arising out of such person's
      own willful misconduct or willful breach of the Plan.

                                                       Ashton Woods USA, L.L.C.
                                                     Deferred Compensation Plan
                                                          Effective June 1, 2005

                                       2



                                    SECTION 2
                                   DEFINITIONS

For purposes of the Plan, the following words and phrases shall have the
meanings set forth below, unless their context clearly requires a different
meaning:

2.1. Account. "Deferred Compensation Account" means the bookkeeping account
maintained for each Participant in accordance with Section 6.1 and which
includes the following subaccounts:

(a)   "Employer Contribution Account" means the portion of the Participant's
      Account attributable to Discretionary Contributions, and the earnings
      thereon.

2.2. Affiliate. "Affiliate" means any corporation, partnership, joint venture,
association or similar organization or entity in which the Company owns,
directly or indirectly, a majority of equity interests.

2.3. Board. "Board" means the Board of Directors of Ashton Woods USA, L.L.C.

2.4. Change in Control. "Change in Control" means a Change in Control as
described in Appendix A to this Plan.

2.5. Code. "Code" means the Internal Revenue Code of 1986, as amended from time
to time. Any reference to a section of the Code includes any comparable section
or sections of any future legislation that amends, supplements or supersedes
that section.

2.6. Company. "Company" means Ashton Woods USA, L.L.C. or any successor company
that adopts this Plan.

2.7. Compensation. "Compensation" means such forms of compensation payable in
cash as may be designated by the Plan Administrative Committee, from time to
time, in its sole discretion, as eligible for deferral under this Plan.
Compensation may include, but shall be not limited to, any performance based or
bonus compensation, payable to the Participant.

2.8. Discretionary Contribution. "Discretionary Contribution" means the
contribution deemed credited to a Participant's Account pursuant to Section 4.

2.9. Eligible Employee. "Eligible Employee" means an employee of a Participating
Employer who has been designated pursuant to Section 3 as eligible to
participate in the Plan.

2.10. "ERISA. "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time. Any reference to a section of ERISA includes any
comparable section or sections of any future legislation that amends,
supplements or supersedes that section.

                                                      Ashton Woods USA, L.L.C.
                                                     Deferred Compensation Plan
                                                         Effective June 1, 2005

                                       3



2.11. Participant. "Participant" means an Employee who meets the eligibility
criteria set forth in Section 3.

2.12. Participating Employer. "Participating Employer" means Ashton Woods USA,
L.L.C., and any of its participating Affiliates, or any successor companies.

2.13. Plan Administrative Committee. The "Plan Administrative Committee" means
the committee appointed by the Company's Board of Directors to administer the
Plan.

2.14. Plan Year. "Plan Year" shall be June 1 through May 31, which is the fiscal
year of the Company.

2.15. Retirement Date. "Retirement Date" means the date on which a Participant
elects to retire having an attained age of sixty-five (65) or greater.

2.16. Totally Disabled or Total Disability. A Participant shall be considered to
be "Totally Disabled" or to have a "Total Disability" if he or she meets the
definition of "Disabled" as defined in Internal Revenue Code Section
409A(a)(2)(C).

2.17. Valuation Date. "Valuation Date" means each business day the financial
markets are open, unless the underlying investment requires a less frequent
valuation.

2.18. Other Definitions. In addition to the terms defined in this Section 2,
other terms are defined when first used in Sections of this Plan.

                                                       Ashton Woods USA, L.L.C.
                                                     Deferred Compensation Plan
                                                         Effective June 1, 2005

                                       4



                                    SECTION 3
                          ELIGIBILITY AND PARTICIPATION

3.1. Eligible Employees. Only employees who are designated by the Plan
Administrative Committee and approved by the Board shall be eligible to
participate in the Plan.

3.2. Participation.

(a)   An Eligible Employee shall become a Participant in the Plan by (i)
      completing and submitting to the Company a Participation Agreement Form,
      and (ii) complying with such terms and conditions as the Board and/or the
      Plan Administrative Committee may from time to time establish for the
      implementation of the Plan, including, but not limited to, any condition
      the Board and/or the Plan Administrative Committee may deem necessary or
      appropriate for the Participating Employers to meet their obligations
      under the Plan.

(b)   An employee shall only be a Participant eligible to have compensation
      deferred under this Plan while he or she is designated as an Eligible
      Employee. If an employee subsequently ceases to be a designated eligible
      employee after becoming a Participant, he or she shall remain a
      Participant for the other purposes of the Plan to the extent of any
      existing Account balance subject to Section 13.1.

                                                       Ashton Woods USA, L.L.C.
                                                     Deferred Compensation Plan
                                                         Effective June 1, 2005

                                       5



                                    SECTION 4
                           DISCRETIONARY CONTRIBUTIONS

4.1. Discretionary Contribution.

(a)   For any Plan Year, a Participating Employer may credit to the Deferred
      Compensation Account of any Participant employed by that Participating
      Employer a Discretionary Contribution in such amount as may be determined
      by the Participating Employer in its sole discretion within forty-five
      (45) days after the end of the Plan Year.

      The amount of the Discretionary Contribution to be credited to a
      Participant's Account for a Plan Year shall be determined by the
      Participating Employer in its sole discretion. The formula to be used in
      determining the Discretionary Contribution shall be determined from time
      to time by the Participating Employer.

(b)   Any Discretionary Contribution will be credited to a Participant's
      Participating Employer Contribution Account as of the Valuation Date
      specified by the Participating Employer.

4.2. Vesting of Discretionary Contribution.

(a)   Except as otherwise provided in paragraph (b) below and subject to Section
      9, the Discretionary Contribution credited to a Participant's Account with
      respect to a particular Plan Year shall become vested in accordance with
      the following schedule:



 Years of Service Completed
Following Plan Year for which
   Contribution is Credited                 Vested Percentage
- -----------------------------               -----------------
                                         
     1 Year of Service                            20%
     2 Years of Service                           40%
     3 Years of Service                           60%
     4 Years of Service                           80%
     5 Years of Service                          100%


      A Participant will be credited with a Year of Service if he or she is
      actively employed by a Participating Employer for a continuous period of
      at least 6 months during the Plan Year AND is actively employed by a
      Participating Employer as of the date any bonus or performance based
      compensation is payable or credited to the Participant.

(b)   Notwithstanding the foregoing vesting schedule, the balance credited to a
      Participant's Participating Employer Contribution Account shall be become
      fully vested if the Participant remains continuously employed by a
      Participating Employer or an Affiliate until his or her death, Total
      Disability, attainment of age sixty-five (65), or the occurrence of a
      Change in Control in which the Participant is terminated without cause
      within two (2) years following the Change in Control.

                                                     Ashton Woods USA, L.L.C.
                                                     Deferred Compensation Plan
                                                         Effective June 1, 2005

                                       6



                                    SECTION 5
                             DISTRIBUTION ELECTIONS

5.1. In-Service Distribution of Discretionary Contributions. The Participant
shall receive the total amount of 100% vested Discretionary Contributions
credited to his or her Deferred Compensation Account, and any earnings thereon,
distributed in a lump sum as soon as administratively feasible following the
100% vesting date.

5.2. Retirement Distribution. The Participant shall have his or her Deferred
Compensation Account distributed in a single lump sum payment upon termination
of employment following his or her Retirement Date as soon as administratively
feasible.

                                                       Ashton Woods USA, L.L.C.
                                                     Deferred Compensation Plan
                                                         Effective June 1, 2005

                                       7



                                    SECTION 6
                         DEFERRED COMPENSATION ACCOUNTS

6.1. Participant's Accounts. The Company shall establish and maintain a separate
memorandum account in the name of each Participant. Such account shall be
credited or charged with (a) Discretionary Contributions, if any; (b) income,
gains, losses, and expenses of investments deemed held in such account; and (c)
distributions from such account.

6.2. Investment of Employer Discretionary Contribution Accounts. The amount
credited to a Participant's Employer Contribution Account shall be deemed to be
invested and reinvested in the growth of the Company, and any other assets or
investment vehicles, as may be selected by the Plan Administrative Committee in
its sole discretion. The amount credited to a Participant's Employer
Contribution Account shall be credited with interest earnings on an annual
basis. The amount credited for the First Plan Year shall be a minimum of nine
percent (9%). Thereafter, the Plan Administrative Committee shall review and
determine the minimum credit rate at least sixty (60) days prior to the
beginning of the Plan Year.

                                                       Ashton Woods USA, L.L.C.
                                                     Deferred Compensation Plan
                                                         Effective June 1, 2005

                                       8



                                    SECTION 7
DISTRIBUTION OF COMPENSATION DEFERRAL ACCOUNT PRIOR TO TERMINATION OF EMPLOYMENT

7.1. Financial Hardship. The Plan Administrative Committee, in his sole
discretion, may permit a hardship payment from the vested portion of a
Participant's Deferred Compensation Account to be made to a Participant at any
time prior to a Designated In-Service Distribution Date or termination of
employment in the event of an "unforeseeable emergency". Withdrawals of amounts
because of an unforeseeable emergency will be permitted to the extent reasonably
needed to satisfy the emergency need. Applications for hardship distributions
and determinations thereon by the Administrative Committee shall be in writing,
and a Participant may be required to furnish written proof of the Financial
Hardship. Amounts paid to a Participant pursuant to this Section 7.1 shall be
treated as distributions from the Participant's Account. The Administrative
Committee will designate the subaccount from which the hardship distribution
will be made.

(a)   For purposes of this Section, an "unforeseeable emergency" is a severe
      financial hardship to the Participant resulting from a sudden and
      unexpected illness or accident of the Participant or of a dependent (as
      defined in Section 152(a) of the Code) of the Participant, loss of the
      Participant's property due to casualty, or other similar extraordinary and
      unforeseeable circumstances arising as a result of events beyond the
      control of the Participant.

(b)   The circumstances that will constitute an unforeseeable emergency will
      depend upon the facts of each case, but, in any case, payment may not be
      made to the extent that such hardship is or may be relieved:

      (i)   Through reimbursement or compensation by insurance or otherwise; or

      (ii)  By liquidation of the Participant's assets, to the extent the
            liquidation of such assets would not itself cause severe financial
            hardship

                                                       Ashton Woods USA, L.L.C.
                                                     Deferred Compensation Plan
                                                         Effective June 1, 2005

                                       9



                                    SECTION 8
          DISTRIBUTION OF ACCOUNTS FOLLOWING TERMINATION OF EMPLOYMENT

8.1. Termination of Employment Prior to Retirement Date. In the event that a
Participant terminates employment for any reason other than death or becoming
Totally Disabled prior to his or her Retirement Date, the vested balance
credited to his or her Account will be distributed to the Participant in a
single lump sum within the calendar month following the calendar month of the
Participant's employment termination date.

8.2. Termination of Employment At or After Retirement Date. In the event that a
Participant terminates employment at or after his or her Retirement Date, the
Participant's Account shall be distributed in a single lump sum payment within
the calendar month following the calendar month of the Participant's employment
termination date.

8.3. Termination of Employment Due to Total Disability. In the event that a
Participant terminates employment at any time by reason of becoming Totally
Disabled, the balance credited to his or her Account will be distributed to the
Participant in a single lump payment within the calendar month following the
calendar month of the Participant's employment termination date.

8.4. Death. In the event that a Participant's employment is terminated by reason
of his or her death, the balance credited to his or her Account will be
distributed to the Participant's designated beneficiary in a single lump payment
within the calendar month following the calendar month of the Participant's
death.

8.5. Designated Beneficiary.

(a)   The Participant may name a beneficiary or beneficiaries to receive the
      balance of the Participant's Deferred Compensation Account in the event of
      the Participant's death prior to the payment of the Participant's entire
      Deferred Compensation Account. To be effective, any beneficiary
      designation must be filed in writing with the Plan Administrative
      Committee in accordance with rules and procedures adopted by the Plan
      Administrative Committee for that purpose.

(b)   A Participant may revoke an existing beneficiary designation by filing
      another written beneficiary designation with the Plan Administrative
      Committee. The latest beneficiary designation received by the Plan
      Administrative Committee shall be controlling; provided, however, that no
      designation, or change or revocation thereof, shall be effective unless
      received by the Plan Administrative Committee prior to the Participant's
      death.

(c)   If no beneficiary is named by a Participant, or if the Participant
      survives all of the Participant's named beneficiaries and does not
      designate another beneficiary, the

                                                       Ashton Woods USA, L.L.C.
                                                     Deferred Compensation Plan
                                                         Effective June 1, 2005

                                       10



Participant's Deferred Compensation Account shall be paid in the following order
of precedence:

(i)   The Participant's Spouse;

(ii)  The Participant's children (including adopted children) per stirpes; or

(iii) The Participant's estate.

                                                       Ashton Woods USA, L.L.C.
                                                     Deferred Compensation Plan
                                                         Effective June 1, 2005

                                       11


                                    SECTION 9
                             FORFEITURE OF BENEFITS

9.1. Notwithstanding anything in this Plan to the contrary, if the Plan
Administrative Committee, in its sole discretion, determines that the
Participant's employment with the Participating Employer has been terminated for
Good Cause, then the Plan Administrative Committee may cause the Participant's
entire interest in benefits attributable to his or her Employer Contribution
Account to be forfeited and discontinued, or may cause the Participant's
payments of benefits under the Plan to be limited or suspended for such other
period the Plan Administrative Committee finds advisable under the
circumstances, and may take any other action and seek any other relief the Plan
Administrative Committee, in its sole discretion, deems appropriate.

9.2. "Good Cause" means the Participant's fraud, dishonesty, or willful
violation of any law or significant policy of the Participating Employer that is
committed in connection with the Participant's employment by or association with
the Company or Affiliate. Whether a Participant has been terminated for Good
Cause shall be determined by the Plan Administrative Committee.

Regardless of whether a Participant's employment initially was considered to be
terminated for any reason other than Good Cause, the Participant's employment
will be considered to have been terminated for Good Cause for purposes of this
Plan if the Plan Administrative Committee subsequently determines that the
Participant engaged in an act constituting Good Cause.

9.3. The decision of the Plan Administrative Committee shall be final. The
omission or failure of the Plan Administrative Committee to exercise this right
at any time shall not be deemed a waiver of its right to exercise such right in
the future. The exercise of discretion will not create a precedent in any future
cases.

                                                        Ashton Woods USA, L.L.C.
                                                      Deferred Compensation Plan
                                                          Effective June 1, 2005

                                       12


                                   SECTION 10
                               APPEALS PROCEDURE

10.1. The Plan Administrative Committee shall approve or wholly or partially
deny all claims for benefits under the Plan within a reasonable period of time
after all required documentation has been furnished to the Plan Administrative
Committee.

10.2. If a claim is wholly or partially denied, the Plan Administrative
Committee shall provide the claimant with written notice setting forth the
specific reasons for the denial, making reference to the pertinent provisions of
the Plan or the Plan documents on which the denial is based; describe any
additional material or information that should be received before the claim may
be acted upon favorably, and explain why such material or information, if any,
is needed; and inform the person making the claim of his or her right pursuant
to this Section to request review of the decision by the Plan Administrative
Committee.

10.3. A claimant shall have the right to request a review of the decision
denying the claim. Such request must be made by filing a written application for
review with the Plan Administrative Committee no later than sixty (60) days
after receipt by the claimant of written notice of the denial of his or her
claim. The claimant may review pertinent Plan documents and shall submit such
written comments and other information which he or she wishes the Plan
Administrative Committee to consider in connection with his or her claim.

10.4. The Plan Administrative Committee may hold any hearing or conduct any
independent investigation which it deems necessary to render its decision on
review. Such decision shall be made as soon as practicable after the Plan
Administrative Committee receives the request for review. Written notice of the
decision on review shall be promptly furnished to the claimant and shall include
specific reasons for the decision.

10.5. For all purposes under the Plan, decisions on claims (where no review is
requested) and decisions on review (where review is requested) shall be final,
binding and conclusive on all interested persons.

                                                        Ashton Woods USA, L.L.C.
                                                      Deferred Compensation Plan
                                                          Effective June 1, 2005

                                       13


                                   SECTION 11
                      AMENDMENT OR TERMINATION OF THE PLAN

11.1. The Plan Administrative Committee may, in its sole discretion, modify,
terminate, suspend or amend this Plan at any time or from time to time, in whole
or in part, with respect to any Participants or beneficiaries whether or not
payments have commenced to such Participants or beneficiaries.

11.2. In the event the Plan is terminated, the Plan Administrative Committee
shall distribute the remaining amounts in Participants' Accounts at such times
and in such ways as the Plan Administrative Committee, in its sole discretion,
may deem appropriate.

                                                        Ashton Woods USA, L.L.C.
                                                      Deferred Compensation Plan
                                                          Effective June 1, 2005

                                       14


                                   SECTION 12
                        UNFUNDED PLAN; CHANGE IN CONTROL

12.1. Unfunded Plan. Nothing in this Plan shall be construed as giving any
Participant, or his or her legal representative or designated beneficiary, any
claim against any specific assets of the Company or any of its affiliated
companies or as imposing any trustee relationship upon the Company or any of its
affiliated companies in respect of the Participant. The Participating Employers
shall not be required to segregate any assets in order to provide for the
satisfaction of the obligations hereunder. Investments deemed held in the
Accounts shall continue to be a part of the general funds of the applicable
Participating Employers, and no individual or entity other than the
Participating Employer shall have any interest whatsoever in such funds. If and
to the extent that the Participant or his or her legal representative or
designated beneficiary acquires a right to receive any payment pursuant to this
Plan, such right shall be no greater than the right of an unsecured general
creditor of the applicable Participating Employer.

                                                        Ashton Woods USA, L.L.C.
                                                      Deferred Compensation Plan
                                                          Effective June 1, 2005

                                       15


                                   SECTION 13
                            MISCELLANEOUS PROVISIONS

13.1. Top-Hat Status. Notwithstanding any provision of the Plan to the contrary,
if the Plan Administrative Committee determines that participation in the Plan
by any one or more Participants shall cause the Plan to be subject to Parts 2, 3
or 4 of Title I of ERISA, the entire interest of such Participant or
Participants under the Plan shall be immediately paid to such Participant or
Participants by the Participating Employer, or shall otherwise be segregated
from the Plan in the discretion of the Plan Administrative Committee, and such
Participant or Participants shall cease to have any interest under the Plan.

13.2. Benefits Non-Assignable. Benefits under the Plan may not be anticipated,
assigned or alienated, and will not be subject to claims of a Participant's
creditors by any process whatsoever, except as specifically provided in this
Plan or by the Plan Administrative Committee in its sole discretion.

13.3. Right to Withhold Taxes. The Participating Employers shall have the right
to withhold such amounts from any payment under this Plan as it determines
necessary to fulfill any federal, state, or local wage or compensation
withholding requirements.

13.4. No Right to Continued Employment. Neither the Plan, nor any action taken
under the Plan, shall confer upon any Participant any right to continuance of
employment by the Company or any of its affiliated companies nor shall it
interfere in any way with the right of the Company or any of its affiliated
companies to terminate any Participant's employment at any time.

13.5. Mental or Physical Incompetency. If the Plan Administrative Committee
determines that any person entitled to payments under the Plan is incompetent by
reason of physical or mental disability, as established by a court of competent
jurisdiction, the Plan Administrative Committee may cause all payments
thereafter becoming due to such person to be made to any other person for his or
her benefit, without responsibility to follow the application of amounts so
paid. Payments made pursuant to this Section shall completely discharge the Plan
Administrative Committee and the Participating Employer.

13.6. Suspension of Payments. If any controversy, doubt or disagreement should
arise as to the person to whom any distribution or payment should be made, the
Plan Administrative Committee, in its discretion, may, without any liability
whatsoever, retain the funds involved or the sum in question pending settlement
or resolution to the Plan Administrative Committee's satisfaction of the matter,
or pending a final adjudication by a court of competent jurisdiction.

13.7. Governing Laws. The provisions of the Plan shall be construed,
administered and enforced according to applicable Federal law and the laws of
State of Georgia.

13.8. Severability. The provisions of the Plan are severable. If any provision
of the Plan is deemed legally or factually invalid or unenforceable to any
extent or in any application, then the

                                                      Ashton Woods USA, L.L.C.
                                                    Deferred Compensation Plan
                                                        Effective June 1, 2005

                                       16


remainder of the provision and the Plan, except to such extent or in such
application, shall not be affected, and each and every provision of the Plan
shall be valid and enforceable to the fullest extent and in the broadest
application permitted by law.

13.9. No Other Agreements or Understandings. This Plan represents the sole
agreement between the Participating Employers and Participants concerning its
subject matter, and it supersedes all prior agreements, arrangements,
understandings, warranties, representations, and statements between or among the
parties concerning its subject matter.

                                                        Ashton Woods USA, L.L.C.
                                                      Deferred Compensation Plan
                                                          Effective June 1, 2005

                                       17

IN WITNESS WHEREOF, the Company has caused this Plan to be executed by its duly
authorized officer on this_____day of_____,2005.

                                         ASHTON WOODS USA, L.L.C.
                                         (the "Company")

                                         By:________________________

                                         Title:_____________________

ATTEST:

By:___________________________

Title:________________________

                                                        Ashton Woods USA, L.L.C.
                                                      Deferred Compensation Plan
                                                          Effective June 1, 2005

                                       18


                                   APPENDIX_A
                                CHANGE IN CONTROL

A "Change in Control" of the Company shall occur upon the happening of any of
the following:

            (i) a change in ownership of the Company. A change in ownership
      generally occurs when a person (or group of people pursuant to a merger or
      similar transaction) acquires more than fifty-percent (50%) of the total
      fair market value or total voting power of the Company's stock;

            (ii) a change in effective ownership of the Company, A change in
      effective ownership generally occurs when (i) a person (or group of people
      as above) acquires (or has acquired during a 12-month period) fifty
      percent (50%) or more of the total voting power of the Company's stock or
      (ii) a majority of members of the Company's board of directors is replaced
      during any 12-month period by directors whose appointment or election is
      not endorsed by a majority of the members of the preexisting board of
      directors; or

            (iii) a change in ownership of substantial assets of the Company. A
      change in ownership of substantial assets generally occurs when a person
      (or group of people as above) acquires (or has acquired during the
      preceding 12-month period) assets totaling more than fifty-percent (50%)
      of the gross fair market value of all the Company's assets.

For purposes of this Appendix A, the Incumbent Board, by a majority vote, shall
have the power to determine on the basis of information known to them (a) the
number of shares beneficially owned by any person, entity or group; (b) whether
there exists an agreement, arrangement or understanding with another as to
matters referred to in this Appendix A; and (c) such other matters with respect
to which a determination is necessary under this Appendix A.

                                                        Ashton Woods USA, L.L.C.
                                                      Deferred Compensation Plan
                                                          Effective June 1, 2005

                                       19

EX-12.1

                                                                    EXHIBIT 12.1


                             ASHTON WOODS USA L.L.C.
     STATEMENT REGARDING COMPUTATIONS OF RATIO OF EARNINGS TO FIXED CHARGES
                          (IN THOUSANDS, EXCEPT RATIOS)



                                                                                                         THREE
                                                                                                         MONTHS
                                                                  YEAR ENDED MAY 31,                     ENDED
                                                    -----------------------------------------------   -----------
                                                     2005      2004       2003      2002      2001      8/31/2005
                                                    -------   -------   -------   -------   -------   -----------
                                                                                     
EARNINGS:
  Income before income taxes                         59,454    42,427    16,497    14,193    13,605       6,078
  Less:
  Earnings from unconsolidated entities              (1,571)   (1,259)   (1,523)     (543)     (353)       (555)
  Minority interest                                     398       112        12        --      (175)         --
  Fixed charges (from below)                          5,185     5,200     6,053     8,186    10,428       1,801
  Distributed income of unconsolidated entities       1,571     1,259     1,523       543       353         555
  Less: interest capitalized                         (4,840)   (4,932)   (5,796)   (7,960)  (10,243)     (1,669)
  Interest amortized to cost of sales                 4,790     5,822     7,460     8,721    12,355         892
                                                    -------   -------   -------   -------   -------   ---------

    Earnings available for fixed charges             64,987    48,629    24,226    23,140    25,970       7,102
                                                    -------   -------   -------   -------   -------   ---------

FIXED CHARGES:
  Interest incurred, including capitalized            4,840     4,932     5,796     7,960    10,243       1,669
  amounts and amortization of debt costs
  Estimated interest component of rent expense          345       268       257       226       185         132
                                                    -------   -------   -------   -------   -------   ---------

    Total fixed charges                               5,185     5,200     6,053     8,186    10,428       1,801
                                                    -------   -------   -------   -------   -------   ---------

RATIO OF EARNINGS TO FIXED CHARGES                    12.53      9.35      4.00      2.83      2.49        3.94
                                                    -------   -------   -------   -------   -------   ---------

EX-21

                                                                               .
                                                                               .
                                                                               .

                                                                      EXHIBIT 21

SUBSIDIARIES OF ASHTON WOODS USA LLC



                                                STATE OF
                                             INCORPORATION/
NAME                                           FORMATION
- ----                                           ---------
                                          
Ashton Woods Construction LLC                      AZ
Ashton Woods Corporate, LLC                        NV
Ashton Orlando Residential L.L.C.                  NV
Ashton Woods Arizona L.L.C.                        NV
Ashton Tampa Residential, LLC                      NV
Ashton Denver Residential, LLC                     NV
Ashton Woods Florida L.L.C.                        NV
Ashton Woods Butler L.L.C.                         NV
Ashton Woods Lakeside L.L.C.                       NV
Canyon Realty L.L.C.                               TX
Ashton Dallas Residential L.L.C.                   TX
Ashton Houston Residential L.L.C.                  TX
Ashton Houston Development LLC                     TX
Ashton Brookstone, Inc.                            TX
Black Amber Florida, Inc.                          FL
Ashton Burden, LLC                                 FL
Ashton Woods Orlando Limited Partnership           FL
Isleworth West Limited Partnership                 FL
Pinery Joint Venture                               CO
Ashton Atlanta Residential, L.L.C.                 GA
Ashton Woods Transportation, LLC                   GA
Ashton Finance Co.                                 DE

EX-23.7

                                                                    Exhibit 23.7

            Consent of Independent Registered Public Accounting Firm

The Members
Ashton Woods USA L.L.C.:

We consent to the use of our report included herein and to the reference to our
firm under the heading "Experts" in the prospectus.


(signed) KPMG LLP

Atlanta, Georgia
November 18, 2005

EX-25.1

                                                                    EXHIBIT 25.1

================================================================================


                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                           --------------------------

                                    FORM T-1

                         STATEMENT OF ELIGIBILITY UNDER
                      THE TRUST INDENTURE ACT OF 1939 OF A
                    CORPORATION DESIGNATED TO ACT AS TRUSTEE
               Check if an Application to Determine Eligibility of
                     a Trustee Pursuant to Section 305(b)(2)

                            -------------------------

                         U.S. BANK NATIONAL ASSOCIATION
               (Exact name of Trustee as specified in its charter)

                                   31-0841368
                       I.R.S. Employer Identification No.

- --------------------------------------------------------------------------------
  800 Nicollet Mall
Minneapolis, Minnesota                                           55402
- --------------------------------------------------------------------------------
(Address of principal executive offices)                       (Zip Code)
- --------------------------------------------------------------------------------

                              Raymond S. Haverstock
                         U.S. Bank National Association
                              60 Livingston Avenue
                               St. Paul, MN 55107
                                 (651) 495-3909
            (Name, address and telephone number of agent for service)

                             Ashton Woods USA L.L.C.
                                       And
                            Ashton Woods Finance Co.
                     (Issuer with respect to the Securities)


- --------------------------------------------------------------------------------
Nevada                                                          78-2721881

Delaware                                                        20-3548058

- --------------------------------------------------------------------------------
(State or other jurisdiction of                              (I.R.S. Employer
 incorporation or organization)                              Identification No.)
- --------------------------------------------------------------------------------


- --------------------------------------------------------------------------------
1080 Holcomb Bridge Road
Building 200, Suite 350
Roswell, GA                                                       30076
- --------------------------------------------------------------------------------

(Address of Principal Executive Offices)                        (Zip Code)
- --------------------------------------------------------------------------------



                     9.5% SENIOR SUBORDINATED NOTES DUE 2015
                       (TITLE OF THE INDENTURE SECURITIES)



================================================================================







                                    FORM T-1

ITEM 1.  GENERAL INFORMATION. Furnish the following information as to the
         Trustee.

         a)       Name and address of each examining or supervising authority to
                  which it is subject.

                        Comptroller of the Currency
                        Washington, D.C.

         b)       Whether it is authorized to exercise corporate trust powers.
                        Yes

ITEM 2.  AFFILIATIONS WITH OBLIGOR. If the obligor is an affiliate of the
         Trustee, describe each such affiliation.

                        None

ITEMS 3-15        Items 3-15 are not applicable because to the best of the
                  Trustee's knowledge, the obligor is not in default under any
                  Indenture for which the Trustee acts as Trustee.

ITEM 16. LIST OF EXHIBITS: List below all exhibits filed as a part of this
         statement of eligibility and qualification.

         1.       A copy of the Articles of Association of the Trustee.*

         2.       A copy of the certificate of authority of the Trustee to
                  commence business.*

         3.       A copy of the certificate of authority of the Trustee to
                  exercise corporate trust powers.*

         4.       A copy of the existing bylaws of the Trustee.*

         5.       A copy of each Indenture referred to in Item 4. Not
                  applicable.

         6.       The consent of the Trustee required by Section 321(b) of the
                  Trust Indenture Act of 1939, attached as Exhibit 6.

         7.       Report of Condition of the Trustee as of March 31, 2005
                  published pursuant to law or the requirements of its
                  supervising or examining authority, attached as Exhibit 7.

       * Incorporated by reference to Registration Number 333-67188.



                                       2



                                      NOTE

         The answers to this statement insofar as such answers relate to what
persons have been underwriters for any securities of the obligors within three
years prior to the date of filing this statement, or what persons are owners of
10% or more of the voting securities of the obligors, or affiliates, are based
upon information furnished to the Trustee by the obligors. While the Trustee has
no reason to doubt the accuracy of any such information, it cannot accept any
responsibility therefor.



                                    SIGNATURE

         Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the Trustee, U.S. BANK NATIONAL ASSOCIATION, a national banking
association organized and existing under the laws of the United States of
America, has duly caused this statement of eligibility and qualification to be
signed on its behalf by the undersigned, thereunto duly authorized, all in the
City of St. Paul, State of Minnesota on the 21st day of November, 2005.




                                  By: /s/ Raymond S. Havestock
                                     -----------------------------------
                                          Raymond S. Haverstock
                                          Vice President



By: /s/ Laurie Howard
   -------------------
        Laurie Howard
        Vice President



                                       3



                                    EXHIBIT 6

                                     CONSENT


         In accordance with Section 321(b) of the Trust Indenture Act of 1939,
the undersigned, U.S. BANK NATIONAL ASSOCIATION hereby consents that reports of
examination of the undersigned by Federal, State, Territorial or District
authorities may be furnished by such authorities to the Securities and Exchange
Commission upon its request therefor.


Dated:  November 21, 2005


                                   By: /s/ Raymond S. Havestock
                                       --------------------------
                                           Raymond S. Haverstock
                                           Vice President


By: /s/ Laurie Howard
    -----------------------
        Laurie Howard
        Vice President


                                       4




                                    EXHIBIT 7
                         U.S. BANK NATIONAL ASSOCIATION
                        STATEMENT OF FINANCIAL CONDITION
                                 AS OF 6/30/2005

                                    ($000'S)



                                                                       6/30/2005
                                                                      ------------
                                                                   
ASSETS

     Cash and Due From Depository Institutions                        $  6,450,815
     Federal Reserve Stock                                                       0
     Securities                                                         42,078,340
     Federal Funds                                                       3,154,120
     Loans & Lease Financing Receivables                               129,709,823
     Fixed Assets                                                        2,193,705
     Intangible Assets                                                  10,387,232
     Other Assets                                                        9,503,538
                                                                      ------------
         TOTAL ASSETS                                                 $203,477,573

LIABILITIES
     Deposits                                                         $128,180,426
     Fed Funds                                                          16,063,915
     Treasury Demand Notes                                                       0
     Trading Liabilities                                                   153,065
     Other Borrowed Money                                               25,358,095
     Acceptances                                                            94,841
     Subordinated Notes and Debentures                                   6,808,639
     Other Liabilities                                                   6,051,172
                                                                      ------------
     TOTAL LIABILITIES                                                $182,710,153

EQUITY
     Minority Interest in Subsidiaries                                $  1,024,947
     Common and Preferred Stock                                             18,200
     Surplus                                                            11,804,040
     Undivided Profits                                                   7,920,233
                                                                      ------------
         TOTAL EQUITY CAPITAL                                         $ 20,767,420

TOTAL LIABILITIES AND EQUITY CAPITAL                                  $203,477,573


To the best of the undersigned's determination, as of the date hereof, the above
financial information is true and correct.

U.S. BANK NATIONAL ASSOCIATION

By: /s/ Raymond S. Haverstock
    ---------------------------
          Vice President

Date:  November 21, 2005


                                       5

EX-99.1

Exhibit 99.1

LETTER OF TRANSMITTAL

Offer to Exchange

any and all outstanding

9.5% Senior Subordinated Notes due 2015,

which are not registered under the Securities Act of 1933,

for any and all outstanding

9.5% Senior Subordinated Notes due 2015,

which have been registered under the Securities Act of 1933,

of

ASHTON WOODS USA L.L.C.

and

ASHTON WOODS FINANCE CO.

PURSUANT TO THE PROSPECTUS DATED                     , 2006.

THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON                , 2006,

UNLESS EXTENDED (THE “EXPIRATION DATE”). ORIGINAL NOTES TENDERED IN THE EXCHANGE OFFER MAY BE WITHDRAWN AT ANY TIME PRIOR TO 5:00 P.M.,

NEW YORK CITY TIME, ON THE EXPIRATION DATE.

The Exchange Agent for the Exchange Offer is:

U.S. Bank, National Association

By Mail, Overnight Courier or Hand Delivery:

U.S. Bank, National Association

60 Livingston Avenue

EP-MN-WS2N

St. Paul, MN 55107

Attention: Specialized Finance Department

Reference: Ashton Woods USA L.L.C. Exchange

By Facsimile:

(651) 495-8158

Attention: Specialized Finance Department

Confirm by Telephone:

(800) 934-6802

Reference: Ashton Woods USA L.L.C. Exchange

To confirm by telephone or for information:

(800) 934-6802

Reference: Ashton Woods USA L.L.C. Exchange

      DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION OF THIS LETTER OF TRANSMITTAL VIA FACSIMILE TO A NUMBER OTHER THAN AS SET FORTH ABOVE OR OTHERWISE THAN AS PROVIDED ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. THE INSTRUCTIONS CONTAINED HEREIN SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.

      This Letter of Transmittal is to be completed by holders of Original Notes (as defined below) either if Original Notes are to be forwarded herewith or if tenders of Original Notes are to be made by book-entry transfer to an account maintained by U.S. Bank, National Association (the “Exchange Agent”) at The Depository Trust Company (“DTC”) pursuant to the procedures set forth in “The exchange offer — Exchange Offer Procedures” in the Prospectus.

      Holders of Original Notes (i) whose certificates (the “Certificates”) for such Original Notes are not immediately available or (ii) who cannot deliver their Original Notes, the Letter of Transmittal or any other required documents to the Exchange Agent prior to 5:00 p.m., New York City time, on the Expiration Date or (iii) who cannot complete the procedures for delivery by book-entry transfer prior to 5:00 p.m., New York City time, on the Expiration Date, must tender their Original Notes according to the guaranteed delivery procedures set forth in “The exchange offer — Guaranteed Delivery Procedures” in the Prospectus.

      SEE INSTRUCTION 1. DELIVERY OF DOCUMENTS TO DTC DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.

2

NOTE: SIGNATURES MUST BE PROVIDED BELOW

PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY

ALL TENDERING HOLDERS COMPLETE THIS BOX:

DESCRIPTION OF ORIGINAL NOTES TENDERED
If blank, please print Name and	Original Notes Tendered
Address of Registered Holder	(Attach Additional List of Notes)
			Principal Amount of
		Principal	Original Notes
	Certificate	Amount of	Tendered
	Number(s)*	Original Notes	(If Less Than All)**
	Total Amount Tendered:
* Need not be completed by book-entry holders.
** Original Notes may be tendered in whole or in part in denominations of $1,000 and integral multiples thereof. Unless otherwise indicated in this column, a holder will be deemed to have tendered ALL of the Original Notes held by such holder indicated in the corresponding column to the left of this column

BOXES BELOW TO BE CHECKED BY ELIGIBLE INSTITUTIONS ONLY:

o CHECK HERE IF TENDERED ORIGINAL NOTES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH DTC AND COMPLETE THE FOLLOWING:

       Name of Tendering Institution: 

       DTC Account No.    Transaction Code No.   

o CHECK HERE AND ENCLOSE A PHOTOCOPY OF THE NOTICE OF GUARANTEED DELIVERY IF TENDERED ORIGINAL NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND COMPLETE THE FOLLOWING:

       Name(s) of Registered Holder(s): 

       Window Ticket Number (if any): 

       Date of Execution of Notice of Guaranteed Delivery: 

       Name of Institution which Guaranteed Delivery: 

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IF GUARANTEED DELIVERY IS TO BE MADE BY BOOK-ENTRY TRANSFER:

Name of Tendering Institution:

____________________________________________________________________________

DTC Account No. Transaction Code No.

o CHECK HERE IF TENDERED BY BOOK-ENTRY TRANSFER AND NON-EXCHANGED ORIGINAL NOTES ARE TO BE RETURNED BY CREDITING THE DTC ACCOUNT NUMBER SET FORTH ABOVE.

o CHECK HERE IF YOU ARE A BROKER-DEALER WHO ACQUIRED THE ORIGINAL NOTES FOR ITS OWN ACCOUNT AS A RESULT OF MARKET MAKING OR OTHER TRADING ACTIVITIES (A “PARTICIPATING BROKER-DEALER”) AND WISH TO RECEIVE 10 ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO.

Name:

Address:

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Ladies and Gentlemen:

      The undersigned hereby tenders to Ashton Woods USA L.L.C., a Nevada limited liability company, and Ashton Woods Finance Co., a Delaware corporation (collectively, the “Issuers”), the above described aggregate principal amount of the Issuers’ 9.5% Senior Subordinated Notes due 2015, which are not registered under the Securities Act of 1933 (the “Original Notes”), in exchange for a like aggregate principal amount of the Issuers’ 9.5% Senior Subordinated Notes due 2015, which have been registered under the Securities Act of 1933 (the “New Notes”), upon the terms and subject to the conditions set forth in the Prospectus, dated                    , 2006 (as the same may be amended or supplemented from time to time, the “Prospectus”), receipt of which is hereby acknowledged, and in this Letter of Transmittal (which, together with the Prospectus, constitute the “Exchange Offer”).

      Subject to and effective upon the acceptance for exchange of all or any portion of the Original Notes tendered herewith in accordance with the terms and conditions of the Exchange Offer (including, if the Exchange Offer is extended or amended, the terms and conditions of any such extension or amendment), the undersigned hereby tenders, exchanges, sells, assigns and transfers to or upon the order of the Issuers all right, title and interest in and to such Original Notes as are being tendered herewith. The undersigned hereby irrevocably constitutes and appoints the Exchange Agent as its agent and attorney-in-fact (with full knowledge that the Exchange Agent is also acting as agent of the Issuers in connection with the Exchange Offer) with respect to the tendered Original Notes, with full power of substitution (such power of attorney being deemed to be an irrevocable power coupled with an interest), subject only to the right of withdrawal described in the Prospectus, to (i) deliver Certificates for Original Notes to the Issuers together with all accompanying evidences of transfer and authenticity to, or upon the order of, the Issuers, upon receipt by the Exchange Agent, as the undersigned’s agent, of the New Notes to be issued in exchange for such Original Notes, (ii) present Certificates for such Original Notes for transfer, and to transfer the Original Notes on the books of the Issuers and (iii) receive for the account of the Issuers all benefits and otherwise exercise all rights of beneficial ownership of such Original Notes, all in accordance with the terms and conditions of the Exchange Offer.

      THE UNDERSIGNED HEREBY REPRESENTS AND WARRANTS THAT THE UNDERSIGNED HAS FULL POWER AND AUTHORITY TO TENDER, EXCHANGE, SELL, ASSIGN AND TRANSFER THE ORIGINAL NOTES TENDERED HEREBY AND THAT, WHEN THE SAME ARE ACCEPTED FOR EXCHANGE, THE ISSUERS WILL ACQUIRE GOOD, MARKETABLE AND UNENCUMBERED TITLE THERETO, FREE AND CLEAR OF ALL LIENS, RESTRICTIONS, CHARGES AND ENCUMBRANCES, AND THAT THE ORIGINAL NOTES TENDERED HEREBY ARE NOT SUBJECT TO ANY ADVERSE CLAIMS OR PROXIES. THE UNDERSIGNED WILL, UPON REQUEST, EXECUTE AND DELIVER ANY ADDITIONAL DOCUMENTS DEEMED BY THE ISSUERS OR THE EXCHANGE AGENT TO BE NECESSARY OR DESIRABLE TO COMPLETE THE EXCHANGE, ASSIGNMENT AND TRANSFER OF THE ORIGINAL NOTES TENDERED HEREBY, AND THE UNDERSIGNED WILL COMPLY WITH ITS OBLIGATIONS UNDER THE REGISTRATION RIGHTS AGREEMENT, DATED AS OF SEPTEMBER 21, 2005 (THE “REGISTRATION RIGHTS AGREEMENT”), AMONG THE ISSUERS, THE GUARANTORS NAMED THEREIN AND THE INITIAL PURCHASERS NAMED THEREIN, FOR THE BENEFIT OF THE INITIAL PURCHASERS AND THE HOLDERS OF THE ORIGINAL NOTES. THE UNDERSIGNED HAS READ AND AGREES TO ALL OF THE TERMS OF THE EXCHANGE OFFER.

      The name(s) and address(es) of the registered holder(s) of the Original Notes tendered hereby should be printed above, if they are not already set forth above, as they appear on the Certificates representing such Original Notes or, in the case of book-entry securities, on the relevant securities position listing. The Certificate number(s) and the Original Notes that the undersigned wishes to tender should be indicated in the appropriate boxes above.

      If any tendered Original Notes are not exchanged pursuant to the Exchange Offer for any reason, or if Certificates are submitted for more Original Notes than are tendered or accepted for exchange, Certificates for such nonexchanged or nontendered Original Notes will be returned (or, in the case of Original Notes tendered by book-entry transfer, such Original Notes will be credited to an account maintained at DTC), without expense to the tendering holder, promptly following the expiration or termination of the Exchange Offer.

      The undersigned understands that tenders of Original Notes pursuant to any one of the procedures described in “The exchange offer — Exchange Offer Procedures” in the Prospectus and in the instructions hereto will, upon the Issuers’ acceptance for exchange of such tendered Original Notes, constitute a binding agreement between the

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undersigned and the Issuers upon the terms and subject to the conditions of the Exchange Offer. The undersigned recognizes that, under certain circumstances set forth in the Prospectus, the Issuers may not be required to accept for exchange any of the Original Notes tendered hereby.

      Unless otherwise indicated herein in the box entitled “Special Issuance Instructions” below, the undersigned hereby directs that the New Notes be issued in the name(s) of the undersigned or, in the case of a book-entry transfer of Original Notes, that such New Notes be credited to the account indicated above maintained at DTC. If applicable, substitute Certificates representing Original Notes not exchanged or not accepted for exchange will be issued to the undersigned or, in the case of a book-entry transfer of Original Notes, will be credited to the account indicated above maintained at DTC. Similarly, unless otherwise indicated under “Special Delivery Instructions,” please deliver New Notes to the undersigned at the address shown below the undersigned’s signature.

      By tendering Original Notes and executing this Letter of Transmittal, the undersigned hereby represents and agrees that (i) any New Notes acquired pursuant to the Exchange Offer are being obtained in the ordinary course of its business, (ii) the undersigned has no arrangement or understanding with any person to participate in a distribution (within the meaning of the Securities Act of 1933) of New Notes to be received in the Exchange Offer in violation of the provisions of the Securities Act of 1933, (iii) the undersigned is not an “affiliate” (as defined in Rule 405 under the Securities Act of 1933) of the Issuers or any of their subsidiaries, or, if the undersigned is an affiliate, the undersigned will comply with the registration and prospectus delivery requirements of the Securities Act of 1933 to the extent applicable, (iv) if the undersigned is not a broker-dealer, the undersigned is not engaged in, and does not intend to engage in, a distribution (within the meaning of the Securities Act of 1933) of such New Notes and (v) if the undersigned is a broker-dealer that received New Notes for its own account in the Exchange Offer, where such Original Notes were acquired by such broker-dealer as a result of market-making activities or other trading activities, such broker-dealer will deliver a Prospectus in connection with any resale of such New Notes (provided that, by so acknowledging and by delivering a prospectus, such broker-dealer will not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act of 1933). See “The exchange offer  — Terms of the Exchange Offer — Purpose of the exchange offer,” “The exchange offer — Exchange Offer Procedures” and “Plan of distribution” in the Prospectus.

      The Issuers have agreed that, subject to the provisions of the Registration Rights Agreement, the Prospectus, as it may be amended or supplemented from time to time, may be used by a Participating Broker-Dealer in connection with resales of New Notes received in exchange for Original Notes, where such Original Notes were acquired by such Participating Broker-Dealer for its own account as a result of market-making activities or other trading activities, for a period ending 180 days of the Prospectus (subject to extension under certain limited circumstances described in the Prospectus) or, if earlier, when all such New Notes have been disposed of by such Participating Broker-Dealer. However, a Participating Broker-Dealer who intends to use the Prospectus in connection with the resale of New Notes received in exchange for Original Notes pursuant to the Exchange Offer must notify the Issuers, or cause the Issuers to be notified, on or prior to the Expiration Date, that it is a Participating Broker-Dealer. Such notice may be given in the space provided herein for that purpose or may be delivered to the Exchange Agent at one of the addresses set forth in the Prospectus under “The exchange offer — Exchange Agent.” In that regard, each Participating Broker-Dealer, by tendering such Original Notes and executing this Letter of Transmittal, agrees that, upon receipt of notice from the Issuers of the occurrence of (i) the request of the Securities and Exchange Commission for amendments or supplements to the Registration Statement or the Prospectus included therein, (ii) the issuance by the Securities and Exchange Commission of any stop order suspending the effectiveness of the Registration Statement or the initiation of any proceedings for that purpose, (iii) the receipt by the Issuers or their legal counsel of any notification with respect to the suspension of the qualification of the New Notes for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose or (iv) the happening of any event that requires the Issuers to make changes in the Registration Statement or the Prospectus in order that the Registration Statement or the Prospectus does 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 case of the Prospectus, in light of the circumstances under which they were made), not misleading, such Participating Broker-Dealer shall suspend the use of such Prospectus, until the Issuers have promptly prepared and filed a post-effective amendment to the Registration Statement or a supplement to the related Prospectus and any other document required so that, the Prospectus will not contain an untrue statement of a material fact or omit to state any material fact required to be

6

stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading and has furnished an amended or supplemented Prospectus to the Participating Broker-Dealer or the Issuers have given notice that the sale of the New Notes may be resumed, as the case may be.

      If the Issuers give such notice to suspend the sale of the New Notes, it shall extend the 180-day period referred to above during which Participating Broker-Dealers are entitled to use the Prospectus in connection with the resale of New Notes by the number of days in the period from and including the date of the giving of such notice to and including the date when the Issuers shall have made available to Participating Broker-Dealers copies of the supplemented or amended Prospectus necessary to resume resales of the New Notes or to and including the date on which the Issuers have given notice that the use of the applicable Prospectus may be resumed, as the case may be.

      Holders of New Notes on the relevant record date for the first interest payment date following the consummation of the exchange offer will receive interest accruing from September 21, 2005. Such interest will be paid with the first interest payment on the New Notes on April 1, 2006.

      All authority herein conferred or agreed to be conferred in this Letter of Transmittal shall survive the death or incapacity of the undersigned and any obligation of the undersigned hereunder shall be binding upon the heirs, executors, administrators, personal representatives, trustees in bankruptcy, legal representatives, successors and assigns of the undersigned. Except as stated in the Prospectus, this tender is irrevocable.

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HOLDER(S) SIGN HERE

(SEE INSTRUCTIONS 1, 2, 5 AND 6)

(PLEASE COMPLETE SUBSTITUTE FORM W-9 BELOW)

(NOTE: SIGNATURE(S) MUST BE GUARANTEED IF REQUIRED BY INSTRUCTION 2)

      Must be signed by registered holder(s) exactly as name(s) appear(s) on Certificate(s) for the Original Notes hereby tendered or on a security position listing, or by any person(s) authorized to become the registered holder(s) by endorsements and documents transmitted herewith (including such opinions of counsel, certifications and other information as may be required by the Issuers or the Trustee for the Original Notes to comply with the restrictions on transfer applicable to the Original Notes). If the signature is by an attorney-in-fact, executor, administrator, trustee, guardian, officer of a corporation or another acting in a fiduciary capacity or representative capacity, please set forth the signer’s full title. See Instruction 5.

(SIGNATURE(S) OF HOLDER(S))

Signature(s):    Dated:                                                                                  ,2005

Name(s): 

(Please Print)

Address: 

(Include Zip Code)

Area Code and Telephone Number: 

TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NUMBER(S)

GUARANTEE OF SIGNATURE(S)

(SEE INSTRUCTIONS 2 AND 5)

Authorized Signature: 

Name: 

(Please Print)

Date: ____________________________________________________________________, 2005

Capacity or Title: 

Name of Firm: 

Address: 

(Include Zip Code)

Area Code and Telephone Number: 

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SPECIAL ISSUANCE INSTRUCTIONS

(See Instructions 1, 5 and 6)

To be completed ONLY if the New Notes are to be issued in the name of someone other than the registered holder of the Original Notes whose name(s) appear(s) above:

Issue New Notes to:

Name: 

(Please Print)

Address: 

(Include Zip Code)

(Taxpayer Identification or Social Security No.)

SPECIAL DELIVERY INSTRUCTIONS

(See Instructions 1, 5 and 6)

To be completed ONLY if the New Notes are to be delivered to someone other than the registered holder of the Original Notes whose name(s) appear(s) above, or to such registered holder(s) at an address other than that shown above.

Mail New Notes to:

Name: 

(Please Print)

Address: 

(Include Zip Code)

(Taxpayer Identification or Social Security No.)

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INSTRUCTIONS

FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER

      1. Delivery of Letter of Transmittal and Certificates; Guaranteed Delivery Procedures. This Letter of Transmittal is to be completed either if (a) Certificates are to be forwarded herewith or (b) tenders are to be made pursuant to the procedures for tender by book-entry transfer set forth in “The exchange offer — Exchange Offer Procedures” in the Prospectus. Certificates, or timely confirmation of a book-entry transfer of such Original Notes into the Exchange Agent’s account at DTC, as well as a Letter of Transmittal (or manually signed facsimile thereof), properly completed and duly executed, with any required signature guarantees, or an Agent’s Message in the case of a book-entry delivery, and any other documents required by this Letter of Transmittal, must be received by the Exchange Agent at one of its addresses set forth herein prior to 5:00 p.m., New York City time, on the Expiration Date. Original Notes may be tendered in whole or in part in the principal amount of $1,000 and integral multiples thereof.

      Holders who wish to tender their Original Notes and (i) whose Certificate of such Original Notes are not immediately available or (ii) who cannot deliver their Original Notes, the Letter of Transmittal or any other required documents to the Exchange Agent prior to 5:00 p.m., New York City time, on the Expiration Date or (iii) who cannot complete the procedures for delivery by book-entry transfer prior to 5:00 p.m., New York City time, on the Expiration Date, must tender their Original Notes by properly completing and duly executing a Notice of Guaranteed Delivery pursuant to the guaranteed delivery procedures set forth in “The exchange offer — Guaranteed Delivery Procedures” in the Prospectus. Pursuant to such procedures: (i) such tender must be made by or through an Eligible Guarantor Institution (as defined below); (ii) a properly completed and duly executed Notice of Guaranteed Delivery, substantially in the form made available by the Issuers, must be received by the Exchange Agent prior to 5:00 p.m., New York City time, on the Expiration Date; and (iii) the Certificates (or a book-entry confirmation (as defined in the Prospectus)) representing all tendered Original Notes, in proper form for transfer, together with a Letter of Transmittal (or manually signed facsimile thereof), properly completed and duly executed, with any required signature guarantees, or an Agent’s Message in the case of a book-entry delivery, and any other documents required by this Letter of Transmittal, must be received by the Exchange Agent within three business days after the Expiration Date, all as provided in “The exchange offer  — Guaranteed Delivery Procedures” in the Prospectus.

      The Notice of Guaranteed Delivery may be delivered by hand, overnight courier or mail or transmitted by facsimile to the Exchange Agent, and must include a guarantee by an Eligible Guarantor Institution in the form set forth in such Notice. For Original Notes to be properly tendered pursuant to the guaranteed delivery procedure, the Exchange Agent must receive a Notice of Guaranteed Delivery prior to 5:00 p.m., New York City time, on the Expiration Date. As used herein and in the Prospectus, “Eligible Guarantor Institution” means a firm or other entity identified in Rule 17Ad-15 under the Exchange Act as “an eligible guarantor institution,” including (as such terms are defined therein) (i) a bank; (ii) a broker, dealer, municipal securities broker or dealer or government securities broker or dealer; (iii) a credit union; (iv) a national securities exchange, registered securities association or clearing agency; or (v) a savings association.

      THE METHOD OF DELIVERY OF CERTIFICATES, THIS LETTER OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND SOLE RISK OF THE TENDERING HOLDER AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE EXCHANGE AGENT. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, OR OVERNIGHT OR HAND DELIVERY SERVICE IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.

      The Issuers will not accept any alternative, conditional or contingent tenders. Each tendering holder, by executing a Letter of Transmittal (or manually signed facsimile thereof), waives any right to receive any notice of the acceptance of such tender.

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      2. Guarantee of Signatures. No signature guarantee on this Letter of Transmittal is required if:

      (i) this Letter of Transmittal is signed by the registered holder (which term, for purposes of this document, shall include any participant in DTC whose name appears on the relevant security position listing as the owner of the Original Notes) of Original Notes tendered herewith, unless such holder(s) has completed either the box entitled “Special Issuance Instructions” or the box entitled “Special Delivery Instructions” above, or

      (ii) such Original Notes are tendered for the account of a firm that is an Eligible Guarantor Institution.

      In all other cases, an Eligible Guarantor Institution must guarantee the signature(s) on this Letter of Transmittal. See Instruction 5.

      3. Inadequate Space. If the space provided in the box captioned “Description of Original Notes” is inadequate, the Certificate number(s) and/or the aggregate principal amount of Original Notes and any other required information should be listed on a separate signed schedule which is attached to this Letter of Transmittal.

      4. Partial Tenders and Withdrawal Rights. Tenders of Original Notes will be accepted only in the principal amount of $1,000 and integral multiples thereof. If less than all the Original Notes evidenced by any Certificate submitted are to be tendered, fill in the principal amount of Original Notes which are to be tendered in the box entitled “Principal Amount of Original Notes Tendered (if less than all).” In such case, new Certificate(s) for the remainder of the Original Notes that were evidenced by your old Certificate(s) will only be sent to the holder of the Original Notes, or such other party as you identify in the box captioned “Special Delivery Instructions” promptly after the Expiration Date. All Original Notes represented by Certificates delivered to the Exchange Agent will be deemed to have been tendered unless otherwise indicated.

      Except as otherwise provided herein, tenders of Original Notes may be withdrawn at any time prior to 5:00 p.m., New York City time, on the Expiration Date. In order for a withdrawal to be effective on or prior to that time, a written, telegraphic, telex or facsimile transmission of such notice of withdrawal must be timely received by the Exchange Agent at one of its addresses set forth above or in the Prospectus prior to 5:00 p.m., New York City time, on the Expiration Date. Any such notice of withdrawal must specify the name of the person who tendered the Original Notes to be withdrawn, the aggregate principal amount of Original Notes to be withdrawn, and (if Certificates for Original Notes have been tendered) the name of the registered holder of the Original Notes as set forth on the Certificate for the Original Notes, if different from that of the person who tendered such Original Notes. If Certificates for the Original Notes have been delivered or otherwise identified to the Exchange Agent, then prior to the physical release of such Certificates for the Original Notes, the tendering holder must submit the serial numbers shown on the particular Certificates for the Original Notes to be withdrawn and the signature on the notice of withdrawal must be guaranteed by an Eligible Guarantor Institution, except in the case of Original Notes tendered for the account of an Eligible Guarantor Institution. If Original Notes have been tendered pursuant to the procedures for delivery by book-entry transfer set forth in “The exchange offer — Exchange Offer Procedures,” in the Prospectus, the notice of withdrawal must specify the name and number of the account at DTC to be credited with the withdrawal of Original Notes, in which case a notice of withdrawal will be effective if delivered to the Exchange Agent by written, telegraphic, telex or facsimile transmission. Withdrawals of tenders of Original Notes may not be rescinded. Original Notes properly withdrawn will not be deemed validly tendered for purposes of the Exchange Offer, but may be retendered at any subsequent time prior to 5:00 p.m., New York City time, on the Expiration Date by following any of the procedures described in the Prospectus under “The exchange offer — Exchange Offer Procedures.”

      All questions as to the validity, form and eligibility (including time of receipt) of such withdrawal notices will be determined by the Issuers, in their sole discretion, whose determination shall be final and binding on all parties. Neither the Issuers, any affiliates or assigns of the Issuers, the Exchange Agent nor any other person shall be under any duty to give any notification of any irregularities in any notice of withdrawal or incur any liability for failure to give any such notification. Any Original Notes which have been tendered but which are withdrawn will be returned to the holder thereof without cost to such holder promptly after withdrawal.

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      5. Signatures on Letter of Transmittal, Assignments and Endorsements. If this Letter of Transmittal is signed by the registered holder(s) of the Original Notes tendered hereby, the signature(s) must correspond exactly with the name(s) as written on the face of the Certificate(s) or, in the case of book-entry securities, on the relevant security position listing) without alteration, enlargement or any change whatsoever.

      If any of the Original Notes tendered hereby are owned of record by two or more joint owners, all such owners must sign this Letter of Transmittal.

      If any tendered Original Notes are registered in different name(s) on several Certificates, it will be necessary to complete, sign and submit as many separate Letters of Transmittal (or manually signed facsimiles thereof) as there are different registrations of Certificates.

      If this Letter of Transmittal or any Certificates or bond powers are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, such persons should so indicate when signing and must submit proper evidence satisfactory to the Issuers, in their sole discretion, of such persons’ authority to so act.

      When this Letter of Transmittal is signed by the registered owner(s) of the Original Notes listed and transmitted hereby, no endorsement(s) of Certificate(s) or separate bond power(s) are required unless New Notes are to be issued in the name of a person other than the registered holder(s). Signature(s) on such Certificate(s) or bond power(s) must be guaranteed by an Eligible Guarantor Institution.

      If this Letter of Transmittal is signed by a person other than the registered owner(s) of the Original Notes listed, the Certificates must be endorsed or accompanied by appropriate bond powers, signed exactly as the name or names of the registered owner(s) appear(s) on the Certificates, and also must be accompanied by such opinions of counsel, certifications and other information as the Issuers or the Trustee for the Original Notes may require in accordance with the restrictions on transfer applicable to the Original Notes. Signatures on such Certificates or bond powers must be guaranteed by an Eligible Guarantor Institution.

      6. Special Issuance and Delivery Instructions. If New Notes are to be issued in the name of a person other than the signer of this Letter of Transmittal, or if New Notes are to be sent to someone other than the signer of this Letter of Transmittal or to an address other than that shown above, the appropriate boxes on this Letter of Transmittal should be completed. Certificates for Original Notes not exchanged will be returned by mail or, if tendered by book-entry transfer, by crediting the account indicated above maintained at DTC. See Instruction 4.

      7. Irregularities. The Issuers determine, in their sole discretion, all questions as to the form of documents, validity, eligibility (including time of receipt) and acceptance for exchange of any tender of Original Notes, which determination shall be final and binding on all parties. The Issuers reserve the absolute right to reject any and all tenders determined by it not to be in proper form or the acceptance of which, or exchange for, may, in the view of counsel to the Issuers, be unlawful. The Issuers also reserve the absolute right, subject to applicable law, to waive any of the conditions of the Exchange Offer set forth in the Prospectus under “The exchange offer  — Conditions” or any conditions or irregularity in any tender of Original Notes of any particular holder whether or not similar conditions or irregularities are waived in the case of other holders. The Issuers’ interpretation of the terms and conditions of the Exchange Offer (including this Letter of Transmittal and the instructions hereto) will be final and binding. No tender of Original Notes will be deemed to have been validly made until all irregularities with respect to such tender have been cured or waived. Neither the Issuers, any affiliates or assigns of the Issuers, the Exchange Agent, nor any other person shall be under any duty to give notification of any irregularities in tenders or incur any liability for failure to give such notification.

      8. Questions, Requests for Assistance and Additional Copies. Questions and requests for assistance may be directed to the Exchange Agent at one of its addresses and telephone number set forth on the front of this Letter of Transmittal. Additional copies of the Prospectus, the Notice of Guaranteed Delivery and the Letter of Transmittal may be obtained from the Exchange Agent or from your broker, dealer, commercial bank, trust company or other nominee.

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      9. 28% Backup Withholding; Substitute Form W-9. Under U.S. Federal income tax law, a U.S. holder whose tendered Original Notes are accepted for exchange is required to provide the Exchange Agent with such U.S. holder’s correct taxpayer identification number (“TIN”) on Substitute Form W-9 below. If the Exchange Agent is not provided with the correct TIN, the Internal Revenue Service (the “IRS”) may subject the U.S. holder or other payee to a $50 penalty. In addition, payments to such U.S. holders or other payees with respect to Original Notes exchanged pursuant to the Exchange Offer may be subject to a 28% (in 2005) backup withholding.

      The box in Part 2 of the Substitute Form W-9 may be checked if the tendering U.S. holder has not been issued a TIN and has applied for a TIN or intends to apply for a TIN in the near future. If the box in Part 2 is checked, the U.S. holder or other payee must also complete the Certificate of Awaiting Taxpayer Identification Number below in order to avoid backup withholding. Notwithstanding that the box in Part 2 is checked and the Certificate of Awaiting Taxpayer Identification Number is completed, the Exchange Agent will withhold 28% of all payments made prior to the time a properly certified TIN is provided to the Exchange Agent. The Exchange Agent will retain such amounts withheld during the 60 day period following the date of the Substitute Form W-9. If the U.S. holder furnishes the Exchange Agent with its TIN within 60 days after the date of the Substitute Form W-9, the amounts retained during the 60 day period will be remitted to the U.S. holder and no further amounts shall be retained or withheld from payments made to the U.S. holder thereafter. If, however, the U.S. holder has not provided the Exchange Agent with its TIN within such 60 day period, amounts withheld will be remitted to the IRS as backup withholding. In addition, 28% of all payments made thereafter will be withheld and remitted to the IRS until a correct TIN is provided.

      The U.S. holder is required to give the Exchange Agent the TIN (e.g., social security number or employer identification number) of the registered owner of the Original Notes or of the last transferee appearing on the transfers attached to, or endorsed on, the Original Notes. If the Original Notes are registered in more than one name or are not in the name of the actual owner, consult the enclosed “Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9” for additional guidance on which number to report.

      Certain U.S. holders (including, (1) an organization exempt from tax under Section 501(a), any IRA, or a custodial account under Section 403(b)(7) if the account satisfies the requirements of Section 401(f)(2); (2) the United States or any of its agencies or instrumentalities; (3) a state, the District of Columbia, a possession of the United States, or any of their political subdivisions or instrumentalities; (4) a foreign government or any of its political subdivisions, agencies or instrumentalities; (5) an international organization or any of its agencies or instrumentalities; (6) a corporation; (7) a foreign central bank of issue; (8) a dealer in securities or commodities required to register in the U.S., the District of Columbia or a possession of the U.S.; (9) a futures commission merchant registered with the Commodity Futures Trading Commission; (10) a REIT; (11) an entity registered at all times during the tax year under the Investment Company Act of 1940; (12) a common trust fund operated by a bank under Section 584(a); (13) a financial institution; (14) a middleman known in the investment community as a nominee or custodian; or (15) a trust exempt from tax under Section 664 or described in Section 4947) may not be subject to these backup withholding and reporting requirements. Such U.S. holders should nevertheless complete the attached Substitute Form W-9 below, and check the box “Exempt from backup withholding” provided on Substitute Form W-9, to avoid possible erroneous backup withholding. A foreign person may qualify as an exempt recipient by submitting a properly completed IRS Form W-8 BEN, signed under penalties of perjury, attesting to that U.S. holder’s exempt status.

      Backup withholding is not an additional U.S. Federal income tax. Rather, the U.S. Federal income tax liability of a person subject to backup withholding will be reduced by the amount of tax withheld. If withholding results in an overpayment of taxes, a refund may be obtained.

      10. Lost, Destroyed or Stolen Certificates. If any Certificate(s) representing Original Notes has been lost, destroyed or stolen, the holder should promptly notify the Exchange Agent. The holder will then be instructed as to the steps that must be taken in order to replace the Certificate(s). This Letter of Transmittal and related documents cannot be processed until the procedures for replacing lost, destroyed or stolen Certificate(s) have been followed.

13

      11. Security Transfer Taxes. Holders who tender their Original Notes for exchange will not be obligated to pay any transfer taxes in connection therewith. If, however, New Notes are to be delivered to, or are to be issued in the name of, any person other than the registered holder of the Original Notes tendered, or if a transfer tax is imposed for any reason other than the exchange of Original Notes in connection with the Exchange Offer, then the amount of any such transfer tax (whether imposed on the registered holder or any other persons) will be payable by the tendering holder. If satisfactory evidence of payment of such taxes or exemption therefrom is not submitted with the Letter of Transmittal, the amount of such transfer taxes will be billed directly to such tendering holder.

      IMPORTANT: THIS LETTER OF TRANSMITTAL (OR MANUALLY SIGNED FACSIMILE THEREOF) AND ALL OTHER REQUIRED DOCUMENTS MUST BE RECEIVED BY THE EXCHANGE AGENT PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.

14

TO BE COMPLETED BY ALL TENDERING NOTEHOLDERS

(SEE INSTRUCTION 9)

PAYERS NAME: U.S. BANK, NATIONAL ASSOCIATION

  Name:

  Business name, if different from above:

  Check appropriate box: o Individual/sole proprietoro  Corporation
o  Partnershipo  Other

                           o Exempt from backup withholding

  Address (number, street and apt. or suite no.):

  City, state and ZIP code:

  List account number(s) here (optional):

SUBSTITUTE Form W-9	Part 1 — PLEASE PROVIDE YOUR TIN AT THE BOX AT RIGHT AND CERTIFY BY SIGNING AND DATING BELOW	Social Security Number or Employer Identification Number
Department of the Treasury,	Part 2 — Awaiting TIN o

Internal Revenue Service	CERTIFICATION — UNDER THE PENALTIES OF PERJURY, I CERTIFY THAT:
Payor’s Request for Taxpayer	(1) the number on this form is my correct Taxpayer Identification Number (or that I am waiting for a number to be issued to me).
Identification
Number (TIN) and Certification	(2) I am not subject to backup withholding because: (a) I am exempt from backup withholding, (b) I have not been notified by the Internal Revenue Service (the “IRS”) that I am subject to backup withholding as a result of a failure to report all interest or dividends, or (c) the IRS has notified me that I am no longer subject to withholding.
	(3) I am a U.S. person (including a U.S. resident alien).
	CERTIFICATION INSTRUCTIONS — YOU MUST CROSS OUT ITEM (2) ABOVE IF YOU HAVE BEEN NOTIFIED BY THE IRS THAT YOU ARE CURRENTLY SUBJECT TO BACKUP WITHHOLDING BECAUSE OF UNDER-REPORTING INTEREST OR DIVIDENDS ON YOUR TAX RETURN. HOWEVER, IF AFTER BEING NOTIFIED BY THE IRS THAT YOU WERE SUBJECT TO BACKUP WITHHOLDING, YOU RECEIVED ANOTHER NOTIFICATION FROM THE IRS THAT YOU ARE NO LONGER SUBJECT TO BACKUP WITHHOLDING, DO NOT CROSS OUT ITEM (2).

Signature  Date 

NOTE:  FAILURE TO COMPLETE AND RETURN THIS FORM MAY IN CERTAIN CIRCUMSTANCES RESULT IN BACKUP WITHHOLDING OF 28% (in 2005) OF ANY AMOUNTS PAID TO YOU PURSUANT TO THE EXCHANGE OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.

15

YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART 2 OF SUBSTITUTE FORM W-9.

CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER

          I certify under penalties of perjury that a Taxpayer Identification Number has not been issued to me, and either (1) I have mailed or delivered an application to receive a Taxpayer Identification Number to the appropriate Internal Revenue Service Center or Social Security Administrative Office or (2) I intend to mail or deliver an application in the near future. I understand that if I do not provide a Taxpayer Identification Number by the time of payment, 28% of all payments made to me on account of the New Notes shall be retained until I provide a Taxpayer Identification Number to the Exchange Agent and that, if I do not provide my Taxpayer Identification Number within 60 days, such retained amounts shall be remitted to the Internal Revenue Service as backup withholding and 28% of all reportable payments made to me thereafter will be withheld and remitted to the Internal Revenue Service until I provide a Taxpayer Identification Number:

Signature Date

16 EX-99.2 85 g97582exv99w2.htm EX-99.2 FORM OF LETTER TO CLIENTS.

Exhibit 99.2

Offer to Exchange

9.5% Senior Subordinated Notes due 2015,

which are not registered under the Securities Act of 1933,

for any and all outstanding

9.5% Senior Subordinated Notes due 2015,

which have been registered under the Securities Act of 1933,

of

ASHTON WOODS USA L.L.C.

and

ASHTON WOODS FINANCE CO.

THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON                     , 2006, UNLESS EXTENDED (THE “EXPIRATION DATE”). ORIGINAL NOTES TENDERED IN THE EXCHANGE OFFER MAY BE WITHDRAWN AT ANY TIME PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.

To Our Clients:

      We are enclosing herewith a Prospectus, dated                    , 2006 (the “Prospectus”), of Ashton Woods USA L.L.C., a Nevada limited liability company, and Ashton Woods Finance Co., a Delaware corporation (collectively, the “Issuers”), and the related Letter of Transmittal (which, together with the Prospectus, constitute the “Exchange Offer”) relating to the offer by the Issuers to exchange its 9.5% Senior Subordinated Notes due 2015, which have been registered under the Securities Act of 1933 (the “New Notes”), for a like principal amount of its issued and outstanding 9.5% Senior Subordinated Notes due 2015, which are not registered under the Securities Act of 1933 (the “Original Notes”), upon the terms and subject to the conditions set forth in the Exchange Offer.

      The Exchange Offer is not conditioned upon any minimum number of Original Notes being tendered.

      We are the holder of record of Original Notes held by us for your own account. A tender of such Original Notes can be made only by us as the record holder and pursuant to your instructions. The Letter of Transmittal is furnished to you for your information only and cannot be used by you to tender Original Notes held by us for your account.

      We request instructions as to whether you wish to tender any or all of the Original Notes held by us for your account pursuant to the terms and conditions of the Exchange Offer. We also request that you confirm that we may on your behalf make the representations contained in the Letter of Transmittal.

      Pursuant to the Letter of Transmittal, each holder of Original Notes will represent to the Issuers that (i) any New Notes acquired pursuant to the Exchange Offer are being obtained in the ordinary course of its business, (ii) the holder has no arrangement or understanding with any person to participate in a distribution (within the meaning of the Securities Act of 1933) of New Notes to be received in the Exchange Offer in violation of the provisions of the Securities Act of 1933, (iii) the holder is not an “affiliate” (as defined in Rule 405 under the Securities Act of 1933) of the Issuers or any of their subsidiaries, or, if the holder is an affiliate, the holder will comply with the registration and prospectus delivery requirements of the Securities Act of 1933 to the extent applicable, (iv) if the holder is not a Broker-Dealer, the holder is not engaged in, and does not intend to engage in, a distribution (within the meaning of the Securities Act of 1933) of such New Notes and (v) if the holder is a Broker-Dealer that received New Notes for its own account in the Exchange Offer, where such Original Notes were acquired by such Broker-Dealer as a result of market-making activities or other trading activities, such Broker-Dealer will deliver a Prospectus in connection with any resale of such New Notes (by so acknowledging and delivering a prospectus meeting the requirements of the Securities Act of 1933 in connection with any resale of such New Notes, the holder is not deemed to admit that it is an “underwriter” within the meaning of the Securities Act of 1933).

Instructions with Respect to the Exchange Offer

      The undersigned hereby acknowledges receipt of the Prospectus and the accompanying Letter of Transmittal relating to the exchange of the Issuers’ 9.5% Senior Subordinated Notes due 2015, which have been registered under the Securities Act of 1933 (the “New Notes”), for a like principal amount of issued and outstanding 9.5% Senior Subordinated Notes due 2015 (the “Original Notes”), upon the terms and subject to the conditions set forth in the Exchange Offer.

      This will instruct you, the registered holder and/or book-entry transfer facility participant, as to the action to be taken by you relating to the Exchange Offer with respect to the Original Notes held by you for the account of the undersigned.

      The aggregate face amount of the Original Notes held by you for the account of the undersigned is (fill in an amount):

           $          of the 9.5% Senior Subordinated Notes due 2015

      With respect to the Exchange Offer, the undersigned hereby instructs you (check appropriate box):

o  To tender the following Original Notes held by you for the account of the undersigned (insert amount of Original Notes to be tendered (if any)):

           $          of the 9.5% Senior Subordinated Notes due 2015

o  Not to tender any Original Notes held by you for the account of the undersigned.

      If the undersigned instructs you to tender the Original Notes held by you for the account of the undersigned, it is understood that you are authorized to make, on behalf of the undersigned (and the undersigned, by its signature below, hereby makes to you), the representations and warranties contained in the Letter of Transmittal that are to be made with respect to the undersigned as a beneficial owner, including but not limited to the representations, that (i) any New Notes acquired pursuant to the Exchange Offer are being obtained in the ordinary course of its business, (ii) the undersigned has no arrangement or understanding with any person to participate in a distribution (within the meaning of the Securities Act of 1933) of New Notes to be received in the Exchange Offer in violation of the provisions of the Security Act of 1933, (iii) the undersigned is not an “affiliate” (as defined in Rule 405 under the Securities Act of 1933) of the Issuers or any of their subsidiaries, or, if the undersigned is an affiliate, the undersigned will comply with the registration and prospectus delivery requirements of the Securities Act of 1933 to the extent applicable, (iv) if the undersigned is not a Broker-Dealer, the undersigned is not engaged in, and does not intend to engage in, a distribution (within the meaning of the Securities Act of 1933) of such New Notes and (v) if the undersigned is a Broker-Dealer that received New Notes for its own account in the Exchange Offer, where such Original Notes were acquired by such Broker-Dealer as a result of market-making activities or other trading activities, such Broker-Dealer will deliver a Prospectus in connection with any resale of such New Notes (by so acknowledging and delivering a prospectus meeting the requirements of the Securities Act of 1933 in connection with any resale of such New Notes, the undersigned is not deemed to admit that it is an “underwriter” within the meaning of the Securities Act of 1933).

Name of beneficial owner(s):

Signature(s):

Name(s) (please print):

Address:

Telephone Number:

Taxpayer Identification or Social Security Number:

Date:

EX-99.2

exv99w2

EX-99.3

Exhibit 99.3

Offer to Exchange

9.5% Senior Subordinated Notes due 2015,

which are not registered under the Securities Act of 1933,

for any and all outstanding

9.5% Senior Subordinated Notes due 2015,

which have been registered under the Securities Act of 1933,

of

ASHTON WOODS USA L.L.C.

and

ASHTON WOODS FINANCE CO.

THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON                         , 2006, UNLESS EXTENDED (THE “EXPIRATION DATE”). ORIGINAL NOTES TENDERED IN THE EXCHANGE OFFER MAY BE WITHDRAWN AT ANY TIME PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.

To Registered Holders and The Depository Trust Company Participants:

      We are enclosing herewith the materials listed below relating to the offer by Ashton Woods USA L.L.C., a Nevada limited liability company, and Ashton Woods Finance Co., a Delaware corporation (collectively, the “Issuers”), to exchange its 9.5% Senior Subordinated Notes due 2015, which have been registered under the Securities Act of 1933 (the “New Notes”), for a like principal amount of its issued and outstanding 9.5% Senior Subordinated Notes due 2015, which are not registered under the Securities Act of 1933 (the “Original Notes”), upon the terms and subject to the conditions set forth in the Issuers’ Prospectus, dated                    , 2006 (the “Prospectus”) and the related Letter of Transmittal (which, together with the Prospectus constitute the “Exchange Offer”).

      Enclosed herewith are copies of the following documents:

      1. Prospectus;

      2. Letter of Transmittal;

      3. Notice of Guaranteed Delivery; and

4.  Letter which may be sent to your clients for whose account you hold Original Notes in your name or in the name of your nominee, with space provided for obtaining such client’s instruction with regard to the Exchange Offer.

      We urge you to contact your clients promptly. Please note that the Exchange Offer will expire on 5:00 p.m., New York City time, on the Expiration Date unless extended.

      The Exchange Offer is not conditioned upon any minimum number of Original Notes being tendered.

      The Issuers will not pay any fee or commissions to any broker or dealer or to any other persons (other than the Exchange Agent) in connection with the solicitation of tenders of Original Notes pursuant to the Exchange Offer. The Issuers will pay or cause to be paid any transfer taxes payable on the transfer of Original Notes to it, except as otherwise provided in Instruction 11 of the enclosed Letter of Transmittal.

      Additional copies of the enclosed material may be obtained from the Exchange Agent.

EX-99.4

Exhibit 99.4

NOTICE OF GUARANTEED DELIVERY

Offer to Exchange

9.5% Senior Subordinated Notes due 2015,

which are not registered under the Securities Act of 1933,

for any and all outstanding

9.5% Senior Subordinated Notes due 2015,

which have been registered under the Securities Act of 1933,

of

ASHTON WOODS USA L.L.C.

and

ASHTON WOODS FINANCE CO.

         This Notice of Guaranteed Delivery, or one substantially equivalent to this form, must be used to accept the Exchange Offer (as defined below) if (i) certificates for the Issuers’ (as defined below) 9.5% Senior Subordinated Notes due 2015 (the “Original Notes”) are not immediately available, (ii) Original Notes, the Letter of Transmittal or any other required documents cannot be delivered to U.S. Bank, National Association (the “Exchange Agent”) prior to 5:00 p.m., New York City time, on the Expiration Date (as defined below) or (iii) the procedures for delivery by book-entry transfer cannot be completed prior to 5:00 p.m., New York City time, on the Expiration Date (as defined below). This Notice of Guaranteed Delivery may be delivered by hand, overnight courier or mail, or transmitted by facsimile transmission, to the Exchange Agent. See “The exchange offer — Guaranteed Delivery Procedures” in the Prospectus (as defined below).

THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON                       , 2006 UNLESS EXTENDED (THE “EXPIRATION DATE”). ORIGINAL NOTES TENDERED IN THE EXCHANGE OFFER MAY BE WITHDRAWN AT ANY TIME PRIOR TO 5:00 P.M., NEW YORK CITY TIME                       , ON THE EXPIRATION DATE.

The Exchange Agent for the Exchange Offer is:

U.S. Bank, National Association

By Mail, Overnight Courier or Hand Delivery:

U.S. Bank, National Association

60 Livingston Avenue

EP-MN-WS2N

St. Paul, MN 55107

Attention: Specialized Finance Department

Reference: Ashton Woods USA L.L.C. Exchange

By Facsimile:

(651) 495-8158

Attention: Specialized Finance Department

Confirm by Telephone:

(800) 934-6802

Reference: Ashton Woods USA L.L.C. Exchange

To confirm by telephone or for information:

(800) 934-6802

Reference: Ashton Woods USA L.L.C. Exchange

      DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION OF THIS NOTICE OF GUARANTEED DELIVERY VIA FACSIMILE TO A NUMBER OTHER THAN AS SET FORTH ABOVE OR OTHERWISE THAN AS PROVIDED ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.

      THIS NOTICE OF GUARANTEED DELIVERY IS NOT TO BE USED TO GUARANTEE SIGNATURES. IF A SIGNATURE ON A LETTER OF TRANSMITTAL IS REQUIRED TO BE GUARANTEED BY AN “ELIGIBLE GUARANTOR INSTITUTION” UNDER THE INSTRUCTIONS THERETO, SUCH SIGNATURE GUARANTEE MUST APPEAR IN THE APPLICABLE SPACE PROVIDED IN THE SIGNATURE BOX ON THE LETTER OF TRANSMITTAL.

THE GUARANTEE ON THE NEXT PAGE MUST BE COMPLETED.

Ladies and Gentlemen:

      The undersigned hereby tenders to Ashton Woods USA L.L.C., a Nevada limited liability company, and Ashton Woods Finance Co., a Delaware corporation (collectively, the “Issuers”), upon the terms and subject to the conditions set forth in the Prospectus, dated                    , 2006 (as the same may be amended or supplemented from time to time, the “Prospectus”), and the related Letter of Transmittal (which, together with the Prospectus, constitute the “Exchange Offer”), receipt of which is hereby acknowledged, the aggregate principal amount of Original Notes set forth below pursuant to the guaranteed delivery procedures set forth in the Prospectus under the caption “The exchange offer — Guaranteed Delivery Procedures.” All authority herein conferred or agreed to be conferred by this Notice of Guaranteed Delivery shall survive the death or incapacity of the undersigned, and every obligation of the undersigned hereunder shall be binding upon the heirs, personal representatives, successors and assigns of the undersigned.

9.5% Senior Subordinated Notes due 2015

Aggregate Principal Amount Tendered:*	Name(s) of Registered Holder(s):
Certificate No.(s) (if available):	Addresses:
If Original Notes will be tendered by book-entry transfer, provide the following information: DTC Account Number:	Area Code and Telephone Number(s): Signatures:
* Original Notes may be tendered in whole or in part in denominations of $1,000 and integral multiples thereof. Unless otherwise indicated here, a holder will be deemed to have tendered ALL of the Original Notes held by such holder.

GUARANTEE

(NOT TO BE USED FOR SIGNATURE GUARANTEE)

      The undersigned, a firm or other entity identified in Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended, as an “eligible guarantor institution,” including (as such terms are defined therein): (i) a bank; (ii) a broker, dealer, municipal securities broker, municipal securities dealer, government securities broker, government securities dealer; (iii) a credit union; (iv) a national securities exchange, registered securities association or clearing agency; or (v) a savings association (each, an “Eligible Guarantor Institution”), hereby guarantees to deliver to the Exchange Agent, at one of its addresses set forth above, either the Original Notes tendered hereby in proper form for transfer, or confirmation of the book-entry transfer of such Original Notes to the Exchange Agent’s account at The Depository Trust Company (“DTC”), pursuant to the procedures for book-entry transfer set forth in the Prospectus, in either case together with one or more properly completed and duly executed Letter of Transmittal (or manually signed facsimile thereof), or an Agent’s Message in the case of a book-entry delivery, and any other required documents within three New York Stock Exchange trading days after the date of execution of this Notice of Guaranteed Delivery.

      The undersigned acknowledges that it must deliver the Letter of Transmittal and the Original Notes tendered hereby to the Exchange Agent within the time period set forth above, and that failure to do so could result in a financial loss to the undersigned.

Name of Firm: 

Address: 

Area Code and Telephone Number: 

(Authorized Signature)

Title: 

Name: 

(Please type or print)

Date: 

NOTE:  DO NOT SEND ORIGINAL NOTES WITH THIS NOTICE OF GUARANTEED DELIVERY. ACTUAL SURRENDER OF ORIGINAL NOTES MUST BE MADE PURSUANT TO, AND BE ACCOMPANIED BY, A PROPERLY COMPLETED AND DULY EXECUTED LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS.

INSTRUCTIONS FOR NOTICE OF GUARANTEED DELIVERY

      1. Delivery of this Notice of Guaranteed Delivery. A properly completed and duly executed copy of this Notice of Guaranteed Delivery and any other documents required by this Notice of Guaranteed Delivery must be received by the Exchange Agent at its address set forth herein prior to 5:00 p.m., New York City time, on the Expiration Date. The method of delivery of this Notice of Guaranteed Delivery and any other required documents to the Exchange Agent is at the election and sole risk of the holder, and the delivery will be deemed made only when actually received by the Exchange Agent. If delivery is by mail, registered mail with return receipt requested, properly insured, is recommended. As an alternative to delivery by mail, the holders may wish to consider using an overnight or hand delivery service. In all cases, sufficient time should be allowed to assure timely delivery. For a description of the guaranteed delivery procedures, see Instruction 1 of the Letter of Transmittal.

      2. Signatures on this Notice of Guaranteed Delivery. If this Notice of Guaranteed Delivery is signed by the registered holder(s) of the Original Notes, the signature must correspond with the name(s) written on the face of the Original Notes without alteration, enlargement, or any change whatsoever. If this Notice of Guaranteed Delivery is signed by a participant of the Book-Entry Transfer Facility whose name appears on a security position listing as the owner of the Original Notes, the signature must correspond with the name shown on the security position listing as the owner of the Original Notes.

      If this Notice of Guaranteed Delivery is signed by a person other than the registered holder(s) of any Original Notes listed or a participant of the Book-Entry Transfer Facility, this Notice of Guaranteed Delivery must be accompanied by appropriate bond powers, signed as the name of the registered holder(s) appears on the Original Notes or signed as the name of the participant shown on the Book-Entry Transfer Facility’s security position listing.

      3. Requests for Assistance or Additional Copies. Questions and requests for assistance for additional copies of the Prospectus may be directed to the Exchange Agent at the address specified in the Prospectus. Holders may also contact their broker, dealer, commercial bank, trust company or other nominee for assistance concerning the Exchange Offer.

NOTE:  DO NOT SEND ORIGINAL NOTES WITH THIS NOTICE OF GUARANTEED DELIVERY. ACTUAL SURRENDER OF ORIGINAL NOTES MUST BE MADE PURSUANT TO, AND BE ACCOMPANIED BY, A PROPERLY COMPLETED AND DULY EXECUTED LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS.