Taylor Morrison Home Corp (Form: 10-Q, Received: 05/07/2015 16:54:37)

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller Reporting Company

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2015

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-35873

TAYLOR MORRISON HOME CORPORATION

(Exact name of Registrant as specified in its Charter)

Delaware

90-0907433

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

4900 N. Scottsdale Road, Suite 2000

Scottsdale, Arizona

85251

(Address of principal executive offices)

(Zip Code)

(480) 840-8100

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year—if changed since last report)

Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:


Class		Outstanding as of May 7, 2015
Class A common stock, $0.00001 par value		33,073,747
Class B common stock, $0.00001 par value		89,200,063

TAYLOR MORRISON HOME CORPORATION

TABLE OF CONTENTS


	Page
PART I. FINANCIAL INFORMATION

Item 1. Financial Statements of Taylor Morrison Home Corporation (Unaudited)		2

Condensed Consolidated Balance Sheets as of March 31, 2015 and December 31, 2014		2

Condensed Consolidated Statements of Operations for the three month periods ended March 31, 2015 and 2014		3

Condensed Consolidated Statements of Comprehensive Income for the three month periods ended March 31, 2015 and 2014		4

Condensed Consolidated Statements of Stockholders’ Equity for the three month periods ended March 31, 2015 and 2014		5

Condensed Consolidated Statements of Cash Flows for the three month periods ended March 31, 2015 and 2014		6

Notes to the Condensed Consolidated Financial Statements		7

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		23

Item 3. Quantitative and Qualitative Disclosures About Market Risk		37

Item 4. Controls and Procedures		38

PART II. OTHER INFORMATION

Item 1. Legal Proceedings		39

Item 1A. Risk Factors		39

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		39

Item 3. Defaults Upon Senior Securities		39

Item 4. Mine Safety Disclosure		39

Item 5. Other Information		39

Item 6. Exhibits		39

SIGNATURES		41

Certification of CEO Pursuant to Section 302
Certification of CFO Pursuant to Section 302
Certification of CEO Pursuant to Section 906
Certification of CFO Pursuant to Section 906

PART I — FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS

TAYLOR MORRISON HOME CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share amounts)


	March 31, 2015			December 31, 2014
	(Unaudited)
Assets
Cash and cash equivalents	$	399,537		$	234,217
Restricted cash		655			1,310
Real estate inventory:
Owned inventory		2,750,090			2,511,623
Real estate not owned under option agreements		4,640			6,698

Total real estate inventory		2,754,730			2,518,321
Land deposits		31,364			34,544
Mortgages receivable		83,407			191,140
Prepaid expenses and other assets, net		101,854			89,210
Other receivables, net		99,354			85,274
Investments in unconsolidated entities		112,813			110,291
Deferred tax assets, net		251,392			258,190
Property and equipment, net		4,893			5,337
Intangible assets, net		6,392			5,459
Goodwill		23,375			23,375
Assets of discontinued operations		—			576,445

Total assets	$	3,869,766		$	4,133,113

Liabilities
Accounts payable	$	136,815		$	122,466
Accrued expenses and other liabilities		179,488			200,556
Income taxes payable		39,772			50,096
Customer deposits		85,772			70,465
Senior notes		1,388,676			1,388,840
Loans payable and other borrowings		128,184			147,516
Revolving credit facility borrowings		—			40,000
Mortgage warehouse borrowings		55,245			160,750
Liabilities attributable to consolidated option agreements		4,640			6,698
Liabilities of discontinued operations		—			168,565

Total liabilities		2,018,592			2,355,952
COMMITMENTS AND CONTINGENCIES (Note 17)
Stockholders’ Equity
Class A common stock, $0.00001 par value, 400,000,000 shares authorized, 33,073,747 and 33,060,540 shares issued and outstanding as of March 31, 2015 and December 31, 2014, respectively		—			—
Class B common stock, $0.00001 par value, 200,000,000 shares authorized, 89,200,063 and 89,227,416 shares issued and outstanding as of March 31, 2015 and December 31, 2014, respectively		1			1
Preferred stock, $0.00001 par value, 50,000,000 shares authorized, no shares issued and outstanding as of March 31, 2015 and December 31, 2014		—			—
Additional paid-in capital		375,194			374,358
Retained earnings		140,910			114,948
Accumulated other comprehensive loss		(17,850	)		(10,910	)

Total stockholders’ equity attributable to Taylor Morrison Home Corporation		498,255			478,397
Non-controlling interests – joint ventures		6,624			6,528
Non-controlling interests – Principal Equityholders		1,346,295			1,292,236

Total stockholders’ equity		1,851,174			1,777,161

Total liabilities and stockholders’ equity	$	3,869,766		$	4,133,113

See accompanying Notes to the Unaudited Condensed Consolidated Financial Statements

TAYLOR MORRISON HOME CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share and per share amounts, unaudited)


	Three Months Ended March 31,
	2015			2014
Home closings revenue, net	$	493,592		$	455,295
Land closings revenue		8,188			8,918
Mortgage operations revenue		7,635			6,262

Total revenues		509,415			470,475
Cost of home closings		405,104			356,300
Cost of land closings		4,666			6,858
Mortgage operations expenses		5,062			3,936

Total cost of revenues		414,832			367,094
Gross margin		94,583			103,381
Sales, commissions and other marketing costs		36,220			33,384
General and administrative expenses		20,704			19,241
Equity in income of unconsolidated entities		(303	)		(984	)
Interest (income) expense, net		(50	)		686
Other expense, net		5,771			3,098
Gain on foreign currency forward		(29,983	)		—

Income from continuing operations before income taxes		62,224			47,956
Income tax provision		22,042			10,956

Net income from continuing operations		40,182			37,000

Discontinued operations:
Income from discontinued operations		—			6,435
Transaction expenses from discontinued operations		(9,043	)		—
Gain on sale of discontinued operations		80,205			—
Income tax expense from discontinued operations		(14,500	)		(2,139	)

Net income from discontinued operations		56,662			4,296
Net income before allocation to non-controlling interests		96,844			41,296
Net income attributable to non-controlling interests — joint ventures		(368	)		(117	)

Net income before non-controlling interests — Principal Equityholders		96,476			41,179

Net income from continuing operations attributable to non-controlling interests — Principal Equityholders		(29,133	)		(27,105	)
Net income from discontinued operations attributable to non-controlling interests — Principal Equityholders		(41,381	)		(3,142	)

Net income available to Taylor Morrison Home Corporation	$	25,962		$	10,932

Earnings per common share — basic:
Income from continuing operations	$	0.33		$	0.30
Income from discontinued operations — net of tax	$	0.46		$	0.03

Net income available to Taylor Morrison Home Corporation	$	0.79		$	0.33
Earnings per common share — diluted:
Income from continuing operations	$	0.33		$	0.30
Income from discontinued operations — net of tax	$	0.46		$	0.03

Net income available to Taylor Morrison Home Corporation	$	0.79		$	0.33
Weighted average number of shares of common stock:
Basic		33,067			32,858
Diluted		122,355			122,344

See accompanying Notes to the Unaudited Condensed Consolidated Financial Statements

TAYLOR MORRISON HOME CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands, unaudited)


	Three Months Ended March 31,
	2015			2014
Income before non-controlling interests, net of tax	$	96,844		$	41,296
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments, net of tax		(27,413	)		(14,264	)
Post-retirement benefits adjustments, net of tax		1,757			338

Other comprehensive loss, net of tax		(25,656	)		(13,926	)
Comprehensive income		71,188			27,370
Comprehensive income attributable to non-controlling interests — joint ventures		(368	)		(117	)
Comprehensive income attributable to non-controlling interests — Principal Equityholders		(51,798	)		(20,062	)

Comprehensive income available to Taylor Morrison Home Corporation	$	19,022		$	7,191

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements

TAYLOR MORRISON HOME CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands, except share data, unaudited)


	Common Stock
										Additional
	Class A				Class B					Paid-in Capital
	Shares		Amount		Shares			Amount		Amount		Retained Earnings		Accumulated Other Comprehensive Income (Loss)			Non-controlling Interest - Joint Venture			Non-controlling Interest - Principal Equityholders			Total Stockholders’ Equity
Balance – December 31, 2013		32,857,800	$	—		89,451,164		$	1	$	372,789	$	43,479	$	(452	)	$	7,236		$	1,121,848		$	1,544,901
Net income		—		—		—			—		—		10,932		—			117			30,247			41,296
Other comprehensive loss		—		—		—			—		—		—		(3,741	)		—			(10,185	)		(13,926	)
Share based compensation		—		—		—			—		361		—		—			—			984			1,345
Distributions to non-controlling interests—joint ventures		—		—		—			—		—		—		—			(87	)		—			(87	)

Balance – March 31, 2014		32,857,800	$	—		89,451,164		$	1	$	373,150	$	54,411	$	(4,193	)	$	7,266		$	1,142,894		$	1,573,529

Balance – December 31, 2014		33,060,540	$	—		89,227,416		$	1	$	374,358	$	114,948	$	(10,910	)	$	6,528		$	1,292,236		$	1,777,161
Net income		—		—		—			—		—		25,962		—			368			70,514			96,844
Other comprehensive loss		—		—		—			—		—		—		(6,940	)		—			(18,716	)		(25,656	)
Exchange of New TMM Units and corresponding number of Class B Common Stock		8,330		—		(8,330	)		—		—		—		—			—			—			—
Cancellation of forfeited New TMM Units and corresponding number of Class B Common Stock		—		—		(19,023	)		—		—		—		—			—			—			—
Issuance of restricted stock units		4,877		—		—			—		—		—		—			—			—			—
Share based compensation		—		—		—			—		836		—		—			—			2,261			3,097
Distributions to non-controlling interests—joint ventures		—		—		—			—		—		—		—			(272	)		—			(272	)

Balance – March 31, 2015		33,073,747	$	—		89,200,063		$	1	$	375,194	$	140,910	$	(17,850	)	$	6,624		$	1,346,295		$	1,851,174

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements

TAYLOR MORRISON HOME CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands, unaudited)


	For the Three Months Ended March 31,
	2015			2014
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	96,844		$	41,296
Adjustments to reconcile net income to net cash used in operating activities:
Equity in income of unconsolidated entities		(303	)		(2,629	)
Stock compensation expense		1,558			1,345
Distributions of earnings from unconsolidated entities		507			13,977
Depreciation and amortization		861			(387	)
Net income from discontinued operations		(56,662	)		—
Gain on foreign currency forward		(29,983	)		—
Contingent consideration		1,676			—
Deferred income taxes		6,798			(5,726	)
Changes in operating assets and liabilities:
Real estate inventory and land deposits		(246,993	)		(242,296	)
Receivables, prepaid expenses and other assets		67,888			(26,146	)
Customer deposits		14,495			16,490
Accounts payable, accrued expenses and other liabilities		(15,952	)		(15,981	)
Income taxes payable		(10,912	)		(26,389	)

Net cash used in operating activities		(170,178	)		(246,446	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment		(317	)		693
Distribution from unconsolidated entities		—			1,130
Decrease in restricted cash		655			6,244
Investments of capital into unconsolidated entities		(2,726	)		(10,412	)
Proceeds from sale of discontinued operations		268,853			—
Gain on foreign currency forward		29,983			—

Net cash provided by (used in) investing activities		296,448			(2,345	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings on line of credit related to mortgage borrowings		158,638			89,178
Repayment on line of credit related to mortgage borrowings		(264,143	)		(112,151	)
Proceeds from loans payable and other borrowings		—			1,859
Repayments of loans payable and other borrowings		(20,167	)		(35,288	)
Borrowings on revolving credit facility		—			53,000
Payments on revolving credit facility		(40,000	)		(53,000	)
Proceeds from the issuance of senior notes		—			350,000
Deferred financing costs		—			5,806
Payment of contingent consideration		(3,050	)		—
Distributions to non-controlling interests — joint ventures		(272	)		(87	)

Net cash (used in) provided by financing activities		(168,994	)		299,317

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS		(19,944	)		(6,707	)

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS	$	(62,668	)	$	43,819
CASH AND CASH EQUIVALENTS — Beginning of period ⁽¹⁾		462,205			389,181

CASH AND CASH EQUIVALENTS — End of period	$	399,537		$	433,000

SUPPLEMENTAL CASH FLOW INFORMATION:
Income taxes paid, net	$	(40,067	)	$	(45,318	)

SUPPLEMENTAL NON-CASH INVESTING AND FINANCING ACTIVITIES:
Increase in loans payable issued to sellers in connection with land purchase contracts	$	(21,400	)	$	(25,019	)

Decrease in income taxes payable	$	—		$	51

⁽¹⁾	Cash and cash equivalents shown here include the cash related to Monarch. At December 31, 2014, cash held at Monarch was $227,988.

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements

TAYLOR MORRISON HOME CORPORATION

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. BUSINESS

Organization and Description of the Business — Taylor Morrison Home Corporation (referred to herein as “TMHC,” “we,” “our,” the “Company” and “us”), through its divisions and segments, owns and operates a residential homebuilding business and is a developer of lifestyle communities. We currently operate in Arizona, California, Colorado, Florida and Texas. Our homes appeal to entry-level, move-up, 55+ and luxury homebuyers. The Company operates under our Taylor Morrison and Darling Homes brands. Our business has ten homebuilding operating divisions, and a mortgage operations division, which are organized into three reportable segments: East, West, and Mortgage. The communities in our East and West segment offer single family attached and/or detached homes. We are the general contractors for all real estate projects and retain subcontractors for home construction and site development. Our Mortgage Operations reportable segment provides financial services to customers through our wholly owned mortgage subsidiary, operating as Taylor Morrison Home Funding, LLC (“TMHF”).

On July 13, 2011, TMM Holdings Limited Partnership (“TMM Holdings”), an entity formed by a consortium comprised of affiliates of TPG Global, LLC (the “TPG Entities” or “TPG”), investment funds managed by Oaktree Capital Management, L.P. (“Oaktree”) or their respective subsidiaries (the “Oaktree Entities”), and affiliates of JH Investments, Inc. (the “JH Entities” and together with the TPG Entities and Oaktree Entities, the “Principal Equityholders”), acquired (the “Acquisition”) our predecessor, Taylor Woodrow Holdings (USA), Inc., now known as Taylor Morrison Communities, Inc.

On April 12, 2013, TMHC completed the initial public offering (the “IPO”) of its Class A common stock, par value $0.00001 per share (the “Class A Common Stock”). The shares of Class A Common Stock began trading on the New York Stock Exchange on April 10, 2013 under the ticker symbol “TMHC.” As a result of the completion of the IPO and a series of transactions pursuant to a Reorganization Agreement dated as of April 9, 2013 (the “Reorganization Transactions”), TMHC became the indirect parent of TMM Holdings through the formation of TMM Holdings II Limited Partnership (“New TMM”). In the Reorganization Transactions, the TPG Entities and the Oaktree Entities each formed new holding vehicles to hold interests in New TMM (the “TPG Holding Vehicle” and the “Oaktree Holding Vehicle” respectively). As of March 31, 2015 and December 31, 2014, the Principal Equityholders owned 73.0% of the Company.

On January 28, 2015 we closed on the sale of Monarch Corporation, our former Canadian operating segment (“Monarch”), to an affiliate of Mattamy Homes Limited. As a result of the sale, we do not have significant continuing involvement with Monarch.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Consolidation — The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the Consolidated Financial Statements and accompanying notes included in our 2014 Annual Report on Form 10-K. In the opinion of management, the accompanying Condensed Consolidated Financial Statements include all normal and recurring adjustments that are considered necessary for the fair presentation of our results for the interim periods present. Results for interim periods are not necessarily indicative of results to be expected for a full fiscal year.

Unless otherwise stated, amounts are shown in U.S. dollars. Assets and liabilities recorded in foreign currencies are translated at the exchange rate on the balance sheet date, and revenues and expenses are translated at average rates of exchange prevailing during the period. Translation adjustments resulting from this process are recorded to accumulated other comprehensive income (loss) in the Condensed Consolidated Balance Sheets and Condensed Consolidated Statements of Stockholders’ Equity.

Discontinued Operations — As a result of our decision in December 2014 to dispose of Monarch Corporation, our former Canadian operating segment, the operating results and financial position of the Monarch business are presented as discontinued operations for all periods presented (see Note 4 – Discontinued Operations ).

Non-controlling interests — In the Reorganization Transactions, the Company became the sole owner of the general partner of New TMM. As the general partner of New TMM, the Company exercises exclusive and complete control over New TMM. Consequently, the Company consolidates New TMM and records a non-controlling interest in the Condensed Consolidated Balance Sheets for the economic interests in New TMM, that are directly or indirectly held by the Principal Equityholders or by members of management and the Board of Directors.

Use of Estimates — The preparation of financial statements in accordance with GAAP requires us to make estimates and assumptions that affect the amounts reported in the Condensed Consolidated Financial Statements and accompanying notes. Significant estimates include real estate development costs to complete, valuation of real estate, valuation of equity awards, valuation allowance on deferred tax assets and reserves for warranty and self-insured risks. Actual results could differ from those estimates.

Non-controlling Interests – Principal Equityholders – Immediately prior to our IPO, the existing holders of TMM Holdings’ limited partnership interests exchanged their limited partnership interests for limited partnership interests of New TMM (“New TMM Units”) as part of the Reorganization Transactions. For each New TMM Unit received in the exchange, the holders of New TMM Units also received a corresponding number of shares of our Class B common stock (the “Class B Common Stock”). Our Class B Common Stock has voting rights but no economic rights. One share of Class B Common Stock, together with one New TMM Unit is exchangeable into one share of our Class A Common Stock in accordance with the Exchange Agreement, dated as of April 9, 2013, among the Company, New TMM and the holders of Class B Common Stock and New TMM Units.

Stock Based Compensation — We account for stock-based compensation in accordance with ASC Topic 718-10, Compensation – Stock Compensation. The fair value of each stock option granted is estimated on the date of grant using the Black-Scholes option pricing model. We use a Monte Carlo model for the valuation of our restricted stock grants that have a market condition. These models require the input of subjective assumptions. This guidance also requires us to estimate forfeitures in calculating the expense related to stock-based compensation.

Recently Issued Accounting Pronouncements — In April 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2015-03, Simplifying the Presentation of Debt Issuance Costs (“ASU 2015-03”), which changes the presentation of debt issuance costs in financial statements. Under the ASU, an entity presents such costs in the balance sheet as a direct deduction from the related debt liability rather than as an asset. Amortization of the costs continues to be reported as interest expense. ASU 2015-03 will be effective for us for our fiscal year beginning January 1, 2016. The adoption of ASU 2015-03 is not expected to have a material effect on our condensed consolidated financial statements or disclosures.

In February 2015, the FASB issued ASU No. 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis (“ASU 2015-02”). ASU 2015-02 amends the consolidation requirements and changes the consolidation analysis required. ASU 2015-02 requires management to reevaluate all legal entities under a revised consolidation model specifically (i) modify the evaluation of whether limited partnership and similar legal entities are VIEs, (ii) eliminate the presumption that a general partner should consolidate a limited partnership, (iii) affect the consolidation analysis of reporting entities that are involved with VIEs particularly those that have fee arrangements and related party relationships, and (iv) provide a scope exception from consolidation guidance for reporting entities with interests in legal entities that are required to comply with or operate in accordance with requirements that are similar to those in Rule 2a-7 of the Investment Act of 1940 for registered money market funds. ASU 2015-02 will be effective for us for our fiscal year beginning January 1, 2016. The adoption of ASU 2015-02 is not expected to have a material effect on our condensed consolidated financial statements or disclosures.

In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements – Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (“ASU 2014-15”), which requires management to evaluate, at each annual and interim reporting period, whether there are conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date the financial statements are issued and provide related disclosures. ASU 2014-15 is effective for us for our fiscal year ending December 31, 2017. The adoption of ASU 2014-15 is not expected to have a material effect on our condensed consolidated financial statements or disclosures.

In June 2014, the FASB issued ASU No. 2014-12, Compensation – Stock Compensation (“ASU 2014-12”), which provides guidance on the accounting for share-based payments when the terms of an award provide that a performance target could be achieved after the requisite service period. ASU 2014-12 is effective beginning January 1, 2016. We do not anticipate that the adoption of ASU 2014-12 will have a material effect on our condensed consolidated financial statements or disclosures.

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”), which provides guidance for revenue recognition. ASU 2014-09 affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets and supersedes the revenue recognition requirements in ASC Topic 605, “Revenue Recognition,” and most industry-specific guidance. This ASU also supersedes some cost guidance included in ASC Subtopic 605-35, “Revenue Recognition-Construction-Type and Production-Type Contracts.” The standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which a company expects to be entitled in exchange for those goods or services. In doing so, companies will generally need to use more judgment and make more estimates than under today’s guidance. These may include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. ASU 2014-09 is proposed to be effective beginning January 1, 2018 and, at that time we will adopt the new standard under either the full retrospective approach or the modified

retrospective approach. Early adoption is not permitted. We are currently evaluating the method and impact the adoption of ASU 2014-09 will have our condensed consolidated financial statements or disclosures.

In April 2014, the FASB issued ASU No. 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity (“ASU 2014-08”), which changes the criteria for reporting discontinued operations while enhancing disclosures in this area. Pursuant to ASU 2014-08, only disposals representing a strategic shift, such as a major line of business, a major geographical area or a major equity investment, should be presented as a discontinued operation. If the disposal does qualify as a discontinued operation under ASU 2014-08, the entity will be required to provide expanded disclosures. ASU 2014-08 was effective for annual periods beginning after December 15, 2014. The adoption of this ASU did not have a material impact on our condensed consolidated financial statements or disclosures.

3. EARNINGS PER SHARE

Basic earnings per common share is computed by dividing net income available to TMHC by the weighted average number of Class A Common Stock outstanding during the period. Diluted earnings per share gives effect to the potential dilution that could occur if all shares of Class B Common Stock and their corresponding New TMM Units were exchanged for Class A Common Stock and if equity awards to issue common stock that are dilutive were exercised:


(In thousands, except per share amounts)
	Three Months Ended March 31,
Numerator:	2015			2014
Net income available to TMHC – basic	$	25,962		$	10,932
Income from discontinued operations, net of tax		56,662			4,296
Income from discontinued operations, net of tax attributable to non-controlling interest – Principal Equityholders		(41,381	)		(3,142	)

Net income from discontinued operations – basic	$	15,281		$	1,154

Net income from continuing operations – basic	$	10,681		$	9,778

Net income from continuing operations – basic	$	10,681		$	9,778
Net income from continuing operations attributable to non-controlling interest – Principal Equityholders		29,133			27,105
Loss fully attributable to Class A Common Stock		119			199

Net income from continuing operations – diluted	$	39,933		$	37,082

Net income from discontinued operations – diluted	$	56,662		$	4,296


Denominator:
Weighted average shares – basic (Class A)		33,067			32,858
Weighted average shares – Principal Equityholders’ non-controlling interest (Class B)		89,204			89,451
Restricted stock units		84			35

Weighted average shares – diluted		122,355			122,344

Earnings per common share – basic:
Income from continuing operations	$	0.33		$	0.30
Income from discontinued operations, net of tax	$	0.46		$	0.03

Net income available to Taylor Morrison Home Corporation	$	0.79		$	0.33

Earnings per common share – diluted:
Income from continuing operations	$	0.33		$	0.30
Income from discontinued operations, net of tax	$	0.46		$	0.03

Net income available to Taylor Morrison Home Corporation	$	0.79		$	0.33

We excluded a total weighted average of 1,515,967 and 1,236,782 stock options and restricted stock units (“RSUs”) from the calculation of earnings per share for the three months ended March 31, 2015 and 2014, respectively, as their inclusion is anti-dilutive.

The shares of Class B Common Stock have voting rights but do not have economic rights or rights to dividends or distributions on liquidation and therefore, are not participating securities. Accordingly, Class B Common Stock is not included in basic earnings per share. Additionally, the income from Principal Equityholders’ non-controlling interest and the related Class B Common Stock may produce a slight anti-dilutive effect on diluted earnings per common share.

4. DISCONTINUED OPERATIONS

In connection with the decision to sell Monarch Corporation in December 2014, the operating results associated with the Monarch business are classified as discontinued operations – net of applicable taxes in the Condensed Consolidated Statements of Operations for all periods presented, and the assets and liabilities associated with this business are classified as assets of discontinued operations and liabilities of discontinued operations, as appropriate, in the Condensed Consolidated Balance Sheets for all applicable periods presented.

In the three months ended March 31, 2015, we did not record any revenues related to Monarch. The activity recorded in 2015 consists of post-closing transaction expenses, including administrative costs, legal fees, and stock based compensation charges. The gain on sale of discontinued operations was determined using the purchase premium of Monarch, less related costs and tax. In the three months ended March 31, 2014 we recorded $48.7 million of revenues related to Monarch, which is included in discontinued operations.

The components of assets and liabilities of discontinued operations at December 31, 2014 are as follows (in thousands):


Cash and cash equivalents	$	227,988
Restricted cash		11,474
Real estate inventory		149,087
Land deposits		7,547
Loans receivable		40,808
Tax indemnification receivable		5,194
Prepaid expenses and other assets, net		11,197
Other receivables, net		1,984
Investments in unconsolidated entities		111,887
Deferred tax assets, net		3,233
Property and equipment, net		2,546
Intangible assets, net		3,500

Assets of discontinued operations	$	576,445

Accounts payable	$	14,438
Accrued expenses and other liabilities		44,554
Income taxes payable		8,076
Customer deposits		11,166
Loans payable and other borrowings		90,331

Liabilities of discontinued operations	$	168,565

The sale of Monarch was completed in the first quarter of 2015, so there are no assets or liabilities of discontinued operations on the Condensed Consolidated Balance Sheet as of March 31, 2015.

5. DERIVATIVE FINANCIAL INSTRUMENT AND HEDGING ACTIVITY

In December 2014, we entered into a derivative financial instrument in the form of a foreign currency forward. The derivative financial instrument hedged our exposure to the Canadian dollar in conjunction with the disposition of the Monarch business. The aggregate notional amount of the foreign exchange derivative financial instrument was $471.2 million at December 31, 2014. At December 31, 2014 the fair value of the instrument was not material to our consolidated financial position or results of operations. The final settlement of the derivative financial instrument occurred on January 30, 2015 and a gain in the amount of $30.0 million was recorded in foreign currency forward in the accompanying Condensed Consolidated Statements of Operations for the three months ended March 31, 2015.

6. REAL ESTATE INVENTORY AND LAND DEPOSITS

In accordance with the provisions of ASC Topic 360, Property, Plant, and Equipment , we review our real estate inventory for indicators of impairment by community during each reporting period. In conducting the review for indicators of impairment on a community level, we evaluate, among other things, the margins on homes that have been delivered, margins on homes under sales contracts in backlog, projected margins with regard to future home sales over the life of the community, projected margins with regard

to future land sales and the estimated fair value of the land itself. For the three months ended March 31, 2015 and 2014, we recorded no impairments on real estate assets.

In the ordinary course of business, we enter into various specific performance contracts to acquire lots. Real estate not owned under these contracts is consolidated into real estate inventory with a corresponding liability in liabilities attributable to consolidated option agreements in the Condensed Consolidated Balance Sheets.

Inventory consists of the following (in thousands):


	As of March 31, 2015		As of December 31, 2014
Operating communities, including capitalized interest	$	2,481,227	$	2,217,067
Real estate held for development or held for sale		268,863		294,556

Total owned inventory		2,750,090		2,511,623
Real estate not owned under option contracts		4,640		6,698

Total real estate inventory	$	2,754,730	$	2,518,321

The development status of our land inventory is as follows (dollars in thousands):


	As of March 31, 2015				As of December 31, 2014
	Owned Lots		Book Value of Land and Development		Owned Lots		Book Value of Land and Development
Raw		8,648	$	401,092		9,825	$	464,882
Partially developed		8,292		756,311		8,680		654,759
Finished		9,851		881,689		8,727		787,033
Long-term strategic assets		3,561		20,829		3,564		27,993

Total		30,352	$	2,059,921		30,796	$	1,934,667

Land Deposits — We provide deposits related to land options and land purchase contracts, which are capitalized when paid and classified as land deposits until the associated property is purchased.

As of March 31, 2015 and December 31, 2014, we had the right to purchase 5,405 and 5,372 lots under land option purchase contracts, respectively, which represents an aggregate purchase price of $403.4 million and $323.5 million as of March 31, 2015 and December 31, 2014, respectively. We do not have title to the property and the creditors generally have no recourse. As of March 31, 2015 and December 31, 2014, our exposure to loss related to our option contracts with third parties and unconsolidated entities consists of non-refundable option deposits totaling $31.4 million and $34.5 million, respectively, in land deposits related to land options and land purchase contracts. Creditors of these VIEs, if any, generally have no recourse against us.

For the three months ended March 31, 2015 and 2014, no impairment of option deposits or capitalized pre-acquisition costs were recorded. We continue to evaluate the terms of open land option and purchase contracts and may impair option deposits and capitalized pre-acquisition costs in the future.

Capitalized Interest — Interest capitalized, incurred, expensed and amortized is as follows (in thousands):


	Three Months Ended March 31,
	2015			2014
Interest capitalized - beginning of period	$	94,880		$	71,263
Interest incurred/capitalized		25,039			17,901
Interest amortized to cost of closings		(16,027	)		(9,626	)

Interest capitalized - end of period	$	103,892		$	79,538

7. INVESTMENTS IN UNCONSOLIDATED ENTITIES

We participate in a number of joint ventures with related and unrelated third parties, with ownership interests up to 50.0%. These entities are generally involved in real estate development, homebuilding and mortgage lending activities.

Summarized, unaudited financial information of unconsolidated entities that are accounted for by the equity method is as follows (in thousands):


	As of March 31, 2015		As of December 31, 2014
Assets:
Real estate inventory	$	407,166	$	396,858
Other assets		56,411		59,963

Total assets	$	463,577	$	456,821

Liabilities and owners’ equity:
Debt	$	142,954	$	129,561
Other liabilities		6,154		8,870

Total liabilities		149,108	$	138,431

Owners’ equity:
TMHC		112,813		110,291
Others		201,656		208,099

Total owners’ equity		314,469		318,390

Total liabilities and owners’ equity	$	463,577	$	456,821


	Three Months Ended March 31,
	2015			2014
Revenues	$	1,695		$	1,630
Costs and expenses		(1,173	)		(227	)

Income of unconsolidated entities	$	522		$	1,403

Company’s share of income in unconsolidated entities	$	303		$	984

Distributions of earnings from unconsolidated entities	$	507		$	1,037

We have investments in, and advances to, a number of joint ventures with unrelated parties to develop land and to develop housing communities, including for-sale residential homes. Some of these joint ventures develop land for the sole use of the venture participants, including us, and others develop land for sale to the joint venture participants and to unrelated builders. Our share of the joint venture profit relating to lots we purchase from the joint ventures is deferred until homes are delivered by us and title passes to a homebuyer.

8. ACCRUED EXPENSES AND OTHER LIABILITIES

Accrued expenses and other liabilities consist of the following (in thousands):


	As of March 31, 2015		As of December 31, 2014
Real estate development costs to complete	$	21,329	$	24,222
Compensation and employee benefits		28,200		51,475
Self-insurance and warranty reserves		42,956		44,595
Interest payable		33,153		22,033
Property and sales taxes payable		7,931		12,808
Other accruals		45,919		45,423

Total accrued expenses and other liabilities	$	179,488	$	200,556

Self-Insurance and Warranty Reserves – A summary of the changes in our reserves are as follows (in thousands):


	Three Months Ended March 31,
	2015			2014
Reserve - beginning of period	$	44,595		$	34,814
Additions to reserves		2,700			2,194
Costs and claims incurred		(5,934	)		(2,013	)
Change in estimates to pre-existing reserves		1,595			4,259

Reserve - end of period	$	42,956		$	39,254

9. DEBT


(Dollars in thousands)	As of March 31, 2015		As of December 31, 2014
7.75% Senior Notes due 2020, unsecured, with $8.5 million and $8.9 million of unamortized debt issuance costs at March 31, 2015 and December 31, 2014, respectively and $3.3 million and $3.4 million of unamortized bond premium at March 31, 2015 and December 31, 2014, respectively	$	488,676	$	488,840
5.25% Senior Notes due 2021, unsecured, with $7.2 million and $7.5 million of unamortized debt issuance costs at March 31, 2015 and December 31, 2014, respectively		550,000		550,000
5.625% Senior Notes due 2024, unsecured, with $4.8 million and $4.9 million of unamortized debt issuance costs at March 31, 2015 and December 31, 2014, respectively		350,000		350,000

Senior Notes sub-total	$	1,388,676	$	1,388,840
$400 million Revolving Credit Facility with $5.0 million and $5.6 million of unamortized debt issuance costs at March 31, 2015 and December 31, 2014, respectively		—		40,000
Mortgage warehouse borrowings		55,245		160,750
Loans payable and other borrowings		128,184		147,516

Total Senior Notes and bank financing	$	1,572,105	$	1,737,106

2020 Senior Notes

On April 13, 2012, we issued $550.0 million of 7.75% Senior Notes due 2020 (the “Initial Notes”) at an initial offering price of 100% of the principal amount (the “Offering”). The net proceeds from the sale of the Initial Notes were used, in part, to repay existing indebtedness. The remaining proceeds of approximately $187.4 million from the Offering were used for general corporate purposes. An additional $3.0 million of issuance costs were incurred.

On August 21, 2012, we issued an additional $125.0 million of 7.75% Senior Notes due 2020 (the “Additional Notes” together with the Initial Notes, the “2020 Senior Notes”) at an initial offering price of 105.5% of the principal amount. The net proceeds were used for general corporate purposes. The Additional Notes issued August 21, 2012 were issued pursuant to the existing indenture for the 2020 Senior Notes. The 2020 Senior Notes are unsecured and not subject to registration rights.

On April 12, 2013, we used $204.3 million of the net proceeds of the IPO to acquire New TMM Units from New TMM (at a price equal to the price paid by the underwriters for shares of Class A Common Stock in the IPO). TMM Holdings used these proceeds to repay a portion of the 2020 Senior Notes.

affiliates, among others. The indenture governing the 2020 Senior Notes contains customary events of default. If we do not apply the net cash proceeds of certain asset sales within specified deadlines, we will be required to offer to repurchase the 2020 Senior Notes at par (plus accrued and unpaid interest) with such proceeds. The 2020 Senior Notes were redeemed in full on May 1, 2015 using the net proceeds from an issuance of new senior unsecured notes, together with cash on hand. For further information, see Note 18 – Subsequent Events .

There are no financial maintenance covenants for the 2020 Senior Notes.

2021 Senior Notes

On April 16, 2013, we issued $550.0 million aggregate principal amount of 5.25% Senior Notes due 2021 (the “2021 Senior Notes”). The 2021 Senior Notes are unsecured and are not subject to registration rights. The net proceeds from the issuance of the 2021 Senior Notes were used to repay the outstanding balance under the Revolving Credit Facility and for general corporate purposes, including the purchase of additional land inventory.

The 2021 Senior Notes are guaranteed by the same Guarantors that guarantee the 2020 Senior Notes. The indenture governing the 2021 Senior Notes contains covenants, change of control and asset sale offer provisions that are similar to those contained in the indenture governing the 2020 Senior Notes.

There are no financial maintenance covenants for the 2021 Senior Notes.

2024 Senior Notes

On March 5, 2014, we issued $350.0 million aggregate principal amount of 5.625% Senior Notes due 2024 (the “2024 Senior Notes”). The 2024 Senior Notes are unsecured and are not subject to registration rights. The net proceeds from the issuance of the 2024 Senior Notes were used to repay the outstanding balance under the Revolving Credit Facility and for general corporate purposes.

The 2024 Senior Notes mature on March 1, 2024. The 2024 Senior Notes are guaranteed by the same Guarantors that guarantee the 2020 and 2021 Senior Notes. The 2024 Senior Notes and the guarantees are senior unsecured obligations. The indenture governing the 2024 Senior Notes contains covenants that limit our ability to incur debt secured by liens and enter into certain sale and leaseback transactions. The indenture governing the 2024 Senior Notes contains events of default that are similar to those contained in the indentures governing the 2020 and the 2021 Senior Notes. The change of control provisions in the indenture governing the 2024 Senior Notes are similar to those contained in the indentures governing the 2020 and the 2021 Senior Notes, but a credit rating downgrade must occur in connection with the change of control before the repurchase offer requirement is triggered for the 2024 Senior Notes.

Prior to December 1, 2023, the 2024 Senior Notes are redeemable at a price equal to 100% plus a “make-whole” premium for payments through December 1, 2023 (plus accrued and unpaid interest). Beginning on December 1, 2023, the 2024 Senior Notes are redeemable at par (plus accrued and unpaid interest).

There are no financial maintenance covenants for the 2024 Senior Notes.

Revolving Credit Facility

The Revolving Credit Facility contains certain “springing” financial covenants, requiring TMM Holdings and its subsidiaries to comply with a certain maximum capitalization ratio and a certain minimum consolidated tangible net worth test. The financial covenants would be in effect for any fiscal quarter during which any (a) loans under the Revolving Credit Facility are outstanding during the last day of such fiscal quarter or on more than five separate days during such fiscal quarter or (b) undrawn letters of credit (except to the extent cash collateralized) issued under the Revolving Credit Facility in an aggregate amount greater than $40.0 million or unreimbursed letters of credit issued under the Revolving Credit Facility are outstanding on the last day of such fiscal quarter or for more than five consecutive days during such fiscal quarter. For purposes of determining compliance with the financial covenants for any fiscal quarter, the Revolving Credit Facility provides that TMC may exercise an equity cure by issuing certain permitted securities for cash or otherwise recording cash contributions to its capital that will, upon the contribution of such cash to TMC, be included in the calculation of consolidated tangible net worth and consolidated total capitalization. The equity cure right is exercisable up to twice in any period of four consecutive fiscal quarters and up to five times overall. The maximum debt to total capitalization ratio is 0.60 to 1.00. The ratio as calculated by Taylor Morrison Communities, Inc. (“TMC” or the “Borrower”) at March 31, 2015 was 0.38 to 1.00. The minimum consolidated tangible net worth requirement was $1.4 billion at March 31, 2015. At March 31, 2015, the Borrower’s tangible net worth, as defined in the Revolving Credit Facility, was $1.8 billion.

indebtedness and limitations on fundamental changes. The Revolving Credit Facility contains customary events of default, subject to applicable grace periods, including for nonpayment of principal, interest or other amounts, violation of covenants (including financial covenants, subject to the exercise of an equity cure), incorrectness of representations and warranties in any material respect, cross default and cross acceleration, bankruptcy, material monetary judgments, ERISA events with material adverse effect, actual or asserted invalidity of material guarantees and change of control. As of March 31, 2015, we were in compliance with all of the covenants under the Revolving Credit Facility.

On April 24, 2015, we amended our senior revolving credit facility (the “Revolving Credit Facility”) to increase the amount available thereunder to $500.0 million, extend its maturity to April 12, 2019 and reduce certain margins payable thereunder. For more information, see Note 18 – Subsequent Events .

Mortgage Borrowings

The following is a summary of our mortgage subsidiary borrowings (in thousands):

As of March 31, 2015

Facility

Amount Drawn

Facility Amount

Interest Rate

Expiration Date

Collateral ⁽¹⁾

Flagstar

22,995

85,000

LIBOR + 2.5%

30 days written notice

Mortgage Loans

Comerica

—

50,000

LIBOR + 2.75%

August 19, 2015

Mortgage Loans

J.P. Morgan

32,250

50,000

⁽²⁾

September 28, 2015

Pledged Cash

Total

55,245

185,000

As of December 31, 2014

Facility

Amount Drawn

Facility Amount

Interest Rate

Expiration Date

Collateral ⁽¹⁾

Flagstar

62,894

85,000

LIBOR + 2.5%

30 days written notice

Mortgage Loans

Comerica

11,430

50,000

LIBOR + 2.75%

August 19, 2015

Mortgage Loans

J.P. Morgan

86,426

100,000

⁽³⁾

⁽²⁾

September 28, 2015

Pledged Cash

Total

160,750

235,000

⁽¹⁾

The mortgage borrowings outstanding as of March 31, 2015 and December 31, 2014, are collateralized by $83.4 million and $191.1 million, respectively, of mortgage loans held for sale, which comprise the balance of mortgage receivables and $0.6 million and $1.3 million, respectively, of restricted short-term investments which are included in restricted cash in the accompanying Condensed Consolidated Balance Sheets.

⁽²⁾	Interest under the J.P. Morgan agreement ranges from 2.50% plus 30-day LIBOR to 2.875% plus 30-day LIBOR or 0.25% (whichever is greater).

⁽³⁾	The warehouse facility with J.P. Morgan has a maximum credit line of $50.0 million. On December 12, 2014 the agreement was temporarily amended to increase the capacity from $50.0 million to $100.0 million. Effective January 23, 2015, the temporary increase expired.

Loans Payable and Other Borrowings

Loans payable and other borrowings as of March 31, 2015 and December 31, 2014 consist of amounts due to various land sellers and a seller carryback note from a prior year acquisition. Loans payable bear interest at rates that ranged from 0% to 8% at March 31, 2015 and December 31, 2014, and generally are secured by the land that was acquired with the loans. We impute interest for loans with no stated interest rates.

10. FAIR VALUE DISCLOSURES

We have adopted ASC Topic 820, Fair Value Measurements for valuation of financial instruments. ASC 820 provides a framework for measuring fair value under GAAP, expands disclosures about fair value measurements, and establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The three levels of the fair value hierarchy are summarized as follows:

Level 1 — Fair value is based on quoted prices for identical assets or liabilities in active markets.

Level 2 — Fair value is determined using quoted prices for similar assets or liabilities in active markets or quoted prices for identical or similar assets or liabilities in markets that are not active or are directly or indirectly observable.

Level 3 — Fair value is determined using one or more significant inputs that are unobservable in active markets at the measurement date, such as a pricing model, discounted cash flow, or similar technique.

The fair value of our mortgages receivable is derived from negotiated rates with partner lending institutions. The fair value of our mortgage borrowings, loans payable and other borrowings and the borrowings under our Revolving Credit Facility approximate carrying value due to their short term nature and variable interest rate terms. The fair value of our 2020 Senior Notes, 2021 Senior Notes and 2024 Senior Notes is derived from quoted market prices by independent dealers in markets that are not active. The carrying value and fair value of our financial instruments are as follows (in thousands):


		March 31, 2015				December 31, 2014
	Level in Fair Value Hierarchy	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
Description:
Mortgages receivable	2	$	83,407	$	83,407	$	191,140	$	191,140
Mortgage borrowings	2		55,245		55,245		160,750		160,750
Loans payable and other borrowings	2		128,184		128,184		147,516		147,516
7.75% Senior Notes due 2020	2		488,676		519,218		488,840		518,170
5.25% Senior Notes due 2021	2		550,000		543,125		550,000		539,000
5.625% Senior Notes due 2024	2		350,000		340,375		350,000		336,000
Revolving Credit Facility	2		—		—		40,000		40,000

11. INCOME TAXES

The effective tax rate for the three months ended March 31, 2015 and 2014 was based on the federal statutory income tax rates, affected by state income taxes, changes in deferred tax assets, changes in valuation allowances, preferential treatment of deductions relating to homebuilding activities.

As of March 31, 2015, cumulative gross unrecognized tax benefits were $2.4 million and all unrecognized tax benefits, if recognized, would affect the effective tax rate. As of December 31, 2014, our cumulative gross unrecognized tax benefits were $2.4 million. These amounts are included in income taxes payable in the accompanying Condensed Consolidated Balance Sheets at March 31, 2015 and December 31, 2014. None of the unrecognized tax benefits are expected to reverse in the next 12 months.

In accordance with ASC Topic 740-10, Income Taxes, we assess whether a valuation allowance should be established based on the consideration of available evidence using a “more likely than not” standard with significant weight being given to evidence that can be objectively verified. This assessment includes a review of both positive and negative evidence including our earnings history, forecasts and future profitability, assessment of the industry, the length of statutory carry-forward periods, experiences of utilizing NOL’s and built-in losses, and tax planning alternatives.

12. STOCKHOLDERS’ EQUITY

Capital Stock — Holders of Class A Common Stock and Class B Common Stock are entitled to one vote for each share held on all matters submitted to stockholders for their vote or approval. The holders of Class A Common Stock and Class B Common Stock vote together as a single class on all matters submitted to stockholders for their vote or approval, except with respect to the amendment of certain provisions of the amended and restated Certificate of Incorporation that would alter or change the powers, preferences or special rights of the Class B Common Stock so as to affect them adversely. Such amendments must be approved by a majority of the votes entitled to be cast by the holders of the shares affected by the amendment, voting as a separate class, or as otherwise required by applicable law. The voting power of the outstanding Class B Common Stock (expressed as a percentage of the total voting power of all common stock) is equal to the percentage of partnership interests in New TMM not held directly or indirectly by TMHC.

The components and respective voting power of our outstanding Common Stock at March 31, 2015 are as follows:


	Shares Outstanding		Percentage
Class A Common Stock		33,073,747		27.0	%
Class B Common Stock		89,200,063		73.0

Total		122,273,810		100.0	%

13. STOCK BASED COMPENSATION

Equity-Based Compensation

In April 2013, we adopted the Taylor Morrison Home Corporation 2013 Omnibus Equity Award Plan (the “Plan”). The Plan provides for the grant of stock options, restricted stock units, and other awards based on our common stock. As of March 31, 2015 we had an aggregate of 5,669,330 shares of common stock available for future grants under the Plan.

The following table provides information regarding the amount and components of stock-based compensation expense, which is included in general and administrative expenses in the accompanying Condensed Consolidated Statements of Operations (in thousands):


	Three Months Ended March 31,
	2015		2014
Restricted stock units (RSUs) ⁽¹⁾	$	608	$	292
Stock options		1,970		676
New TMM Units		519		377

Total stock compensation ⁽²⁾	$	3,097	$	1,345

Income tax benefit recognized	$	14	$	—

⁽¹⁾	Includes compensation expense related to restricted stock units and performance based restricted stock units.

⁽²⁾

Included in the table above is $1.5 million of stock compensation expense related to the acceleration of vesting for equity awards held by Monarch employees. The sale of Monarch triggered a change in control provision provided for in the respective award agreements and Plan document. The expense related to the acceleration of awards is included in transaction expenses from discontinued operations in the accompanying Condensed Consolidated Statement of Operations for the three months ended March 31, 2015.

At March 31, 2015 and December 31, 2014, the aggregate unamortized value of all outstanding stock-based compensation awards was approximately $23.1 million and $16.0 million, respectively.

Restricted Stock – the following table summarizes the restricted stock unit and performance based restricted stock unit activity for the three months ended March 31, 2015:


	Shares			Weighted Average Grant Date Fair Value
Balance at December 31, 2014		185,679		$	24.19
Granted		417,733			18.38
Vested		(7,377	)		24.52
Forfeited		(4,290	)		24.30

Balance at March 31, 2015		591,745		$	20.09

During the three months ended March 31, 2015, we issued non-performance RSU awards and performance-based RSU awards to certain employees of the Company. The non-performance RSU awards were granted on the same terms as existing non-performance RSU awards with the exception of vesting. The new awards vest with respect to 33.3% on the second, third and fourth anniversaries of the grant date. The performance-based RSU awards are based on the attainment of certain performance metrics set by the Company in the year of grant. The number of shares underlying the performance-based RSUs that will be issued to the recipients may range from the base award depending on actual performance metrics as compared to the target performance metrics. Vesting of these performance-based RSU awards is subject to continued employment with TMHC or an affiliate, through the applicable vesting dates and will become vested with respect to 100% of the RSUs on the third anniversary of the grant date. During the period ended March 31, 2015, a total of 2,500 shares were withheld on net settlement for a de minimis amount.

Stock Options – the following table summarizes the stock option activity for the three months ended March 31, 2015:


	Shares			Weighted Average Exercise Price Per Share
Outstanding at December 31, 2014		1,325,029		$	22.35
Granted		390,170			18.76
Exercised		—			—
Cancelled		(22,000	)		22.00

Outstanding at March 31, 2015		1,693,199		$	21.53

Options exercisable at March 31, 2015		176,283		$	25.31

During the three months ended March 31, 2015, we issued stock options to certain employees. These stock options granted vest 25% on the first four anniversaries of the grant date.

New TMM Units – Certain members of management and certain members of the Board of Directors were issued Class M partnership units in TMM Holdings. Those units were subject to both time and performance vesting conditions. In addition, TMM Holdings issued phantom Class M Units to certain employees who resided in Canada, which were treated as Class M Units for the purposes of this description and the financial statements. In connection with the sale of Monarch, all of the phantom Class M Units were settled pursuant to change in control provisions provided for in the award agreement. During the three months ended March 31, 2015, we paid $1.4 million in settlement of these awards.

Pursuant to the Reorganization Transactions the time-vesting Class M Units in TMM Holdings were exchanged for New TMM Units with vesting terms substantially the same as the Class M Units surrendered for exchange. One New TMM Unit together with a corresponding share of Class B Common Stock is exchangeable for one share of Class A Common Stock. The shares of Class B Common Stock/New TMM Units outstanding as of March 31, 2015 are as follows:


	Shares/New TMM Units			Weighted Average Grant Date Fair Value
Balance at December 31, 2014		1,431,721		$	5.11
Granted		—			—
Exchanges ⁽¹⁾		(8,330	)		5.56
Forfeited ⁽²⁾		(19,023	)		4.23

Balance at March 31, 2015		1,404,368		$	5.12

⁽¹⁾	Exchanges during the period represent the exchange of a vested New TMM Unit along with the corresponding share of Class B Common Stock for a newly issued share of Class A Common Stock.

⁽²⁾	Awards forfeited during the period represent the unvested portion of New TMM Unit awards for employees who have terminated employment with the Company and for which the New TMM Unit and the corresponding Class B Share have been cancelled.

14. RELATED-PARTY TRANSACTIONS

From time to time, we may engage in transactions with entities or persons that are affiliated with us or one or more of the Principal Equityholders. There were no real estate inventory acquisitions from such affiliates in the three months ended March 31, 2015 and $15.7 million in real estate inventory acquisitions from such affiliates in the three months ended March 31, 2014. We believe such real estate transactions with related parties are in the normal course of operations and are executed at arm’s length, as they are entered into at terms comparable to those with unrelated third parties.

15. ACCUMULATED OTHER COMPREHENSIVE INCOME

The table below provides the components of accumulated other comprehensive income (loss) for the three months ended March 31, 2015 (in thousands):


	Total Post- Retirement Benefits Adjustments			Foreign Currency Translation Adjustments			Non-controlling Interest - Principal Equityholders Reclassification			Total
Balance, beginning of period	$	692		$	(52,148	)	$	40,546		$	(10,910	)

Other comprehensive income (loss) before reclassifications		269			(27,413	)		—			(27,144	)
Gross amounts reclassified from accumulated other comprehensive loss		1,488			—			—			1,488
Foreign currency translation		518			—			(518	)		—
Income tax (expense) benefit		—			—			—			—

Other comprehensive income (loss), net of tax	$	2,275		$	(27,413	)	$	(518	)	$	(25,656	)
Gross amounts reclassified within accumulated other comprehensive income (loss) to		(2,289	)		—			21,005			18,716

Balance, end of period	$	678		$	(79,561	)	$	61,033		$	(17,850	)

Reclassifications for the amortization of the employee retirement plans are included in selling, general and administrative expense in the accompanying Condensed Consolidated Statements of Operations.

16. OPERATING AND REPORTING SEGMENTS

We have ten homebuilding operating divisions which are aggregated into two reportable homebuilding segments. These segments are engaged in the business of acquiring and developing land, constructing homes, marketing and selling those homes, and providing warranty and customer service. We aggregate our homebuilding operating segments into reporting segments based on similar long-term economic characteristics. We also have a mortgage and financial services segment. We have no inter-segment sales as all sales are to external customers. Our reporting segments are as follows:


East		Houston (which includes a Taylor Morrison division and a Darling Homes division), Austin, Dallas, North Florida and West Florida
West		Phoenix, Northern California, Southern California and Denver
Mortgage Operations		Mortgage and Financial Services (TMHF)

Management primarily evaluates segment performance based on GAAP gross margin, defined as homebuilding and land revenue less cost of home construction, commissions and other sales costs, land development and other land sales costs and other costs incurred by, or allocated to each segment, including impairments. Operating results for each segment may not be indicative of the results for such segment had it been an independent, stand-alone entity.

Segment information, excluding discontinued operations, is as follows (in thousands):


	Three Months Ended March 31, 2015
	East			West			Mortgage Operations		Corporate and Unallocated			Total
Total revenues	$	305,754		$	196,026		$	7,635	$	—		$	509,415
Gross margin		61,464			30,546			2,573		—			94,583
Selling, general and administrative expense		(30,380	)		(13,619	)		—		(12,925	)		(56,924	)
Equity in income of unconsolidated entities		144			(180	)		339		—			303
Interest and other (expense) income		(3,708	)		(284	)		—		(1,729	)		(5,721	)
Gain on foreign currency forward		—			—			—		29,983			29,983

Income from continuing operations before income taxes	$	27,520		$	16,463		$	2,912	$	15,329		$	62,224


	Three Months Ended March 31, 2014
	East			West			Mortgage Operations		Corporate and Unallocated			Total
Total revenues	$	273,027		$	191,186		$	6,262	$	—		$	470,475
Gross margin		59,886			41,169			2,326		—			103,381
Selling, general and administrative expense		(26,746	)		(14,486	)		—		(11,393	)		(52,625	)
Equity in income of unconsolidated entities		299			279			406		—			984
Interest and other (expense) income		(3,438	)		(54	)		—		(292	)		(3,784	)

Income from continuing operations before income taxes	$	30,001		$	26,908		$	2,732	$	(11,685	)	$	47,956


	As of March 31, 2015
	East		West		Mortgage Operations		Corporate and Unallocated		Total
Real estate inventory and land deposits	$	1,378,789	$	1,407,305	$	—	$	—	$	2,786,094
Investments in unconsolidated entities		59,374		52,195		1,244		—		112,813
Other assets		152,999		30,111		100,253		687,496		970,859

Total assets	$	1,591,162	$	1,489,611	$	101,497	$	687,496	$	3,869,766


	As of December 31, 2014
	East		West		Mortgage Operations		Corporate and Unallocated		Assets of Discontinued Operations		Total
Real estate inventory and land deposits	$	1,275,192	$	1,277,673	$	—	$	—	$	—	$	2,552,865
Investments in unconsolidated entities		57,138		51,909		1,244		—		—		110,291
Other assets		166,854		37,989		204,685		483,984		576,445		1,469,957

Total assets	$	1,499,184	$	1,367,571	$	205,929	$	483,984	$	576,445	$	4,133,113

17. COMMITMENTS AND CONTINGENCIES

Letters of Credit and Surety Bonds — We are committed, under various letters of credit and surety bonds, to perform certain development and construction activities and provide certain guarantees in the normal course of business. Outstanding letters of credit and surety bonds under these arrangements totaled $349.1 million and $315.6 million as of March 31, 2015 and December 31, 2014, respectively. Although significant development and construction activities have been completed related to these site improvements, the bonds are generally not released until all development and construction activities are completed. We do not believe that it is probable that any outstanding bonds as of March 31, 2015 will be drawn upon.

Legal Proceedings — We are involved in various litigation and legal claims in the normal course of business, including actions brought on behalf of various classes of claimants. We are also subject to a variety of local, state, and federal laws and regulations related to land development activities, house construction standards, sales practices, mortgage lending operations, employment practices, and protection of the environment. As a result, we are subject to periodic examination or inquiry by various governmental agencies that administer these laws and regulations.

We establish liabilities for legal claims and regulatory matters when such matters are both probable of occurring and any potential loss can be reasonably estimated. At March 31, 2015 and December 31, 2014, our legal accruals were $1.0 million and $0.9 million, respectively. We accrue for such matters based on the facts and circumstances specific to each matter and revise these estimates as the matters evolve. In such cases, there may exist an exposure to loss in excess of any amounts currently accrued. Predicting the ultimate resolution of the pending matters, the related timing, or the eventual loss associated with these matters is inherently difficult. While the outcome of such contingencies cannot be predicted with certainty, we do not believe that the resolution of such matters will have a material adverse impact on our results of operations, financial position, or cash flows. Accordingly, the liability arising from the ultimate resolution of any matter may exceed the estimate reflected in the recorded reserves relating to such matter.

18. SUBSEQUENT EVENTS

2023 Senior Notes and Redemption of 2020 Senior Notes

On April 16, 2015, we issued $350.0 million aggregate principal amount of 5.875% Senior Notes due 2023 (the “2023 Senior Notes”). The 2023 Senior Notes are unsecured and are not subject to registration rights. The net proceeds of the offering together with cash on hand, were used to redeem the entire remaining $485.4 million aggregate principal amount of 2020 Senior Notes on May 1, 2015, at a redemption price of 105.813% of their aggregate principal amount, plus accrued and unpaid interest thereon to, but not including, the date of redemption. As a result of the redemption of the 2020 Senior Notes, we will record a loss on extinguishment of debt in the second quarter of 2015.

The 2023 Senior Notes mature on April 15, 2023. The 2023 Senior Notes are guaranteed by the same Guarantors that guarantee the 2021 and 2024 Senior Notes. The 2023 Senior Notes and the guarantees are senior unsecured obligations. The indenture governing the 2023 Senior Notes contains covenants that are substantially similar to those in the indenture governing the 2024 Senior Notes. The indenture governing the 2023 Senior Notes contains events of default that are similar to those contained in the indentures governing the 2021 and the 2024 Senior Notes. The change of control provisions in the indenture governing the 2023 Senior Notes are similar to those contained in the indenture governing the 2024 Senior Notes.

Prior to January 15, 2023, the 2023 Senior Notes are redeemable at a price equal to 100% plus a “make-whole” premium for payments through January 15, 2023 (plus accrued and unpaid interest). Beginning January 15, 2023, the 2023 Senior Notes are redeemable at par (plus accrued and unpaid interest).

Revolving Credit Facility

On April 24, 2015, we entered into Amendment No. 3 to the Revolving Credit Facility. Among other things, this amendment increased the amount available under the Revolving Credit Facility up to $500.0 million, extended the maturity of the Restated Revolving Credit Facility to April 12, 2019 and reduced certain margins payable thereunder.

JEH Homes

On April 30, 2015 we completed the acquisition of JEH Homes, a homebuilder in Atlanta. This was a 2,000 lot acquisition with consideration paid in cash and a performance earn-out. We utilized a portion of the funds from the Monarch transaction to fund the acquisition. The Company has not completed its initial purchase price allocation with respect to the acquisition of JEH Homes.

******

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

For purposes of this “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” the terms “the Company,” “we,” “us,” or “our” are to Taylor Morrison Home Corporation (“TMHC”) and its subsidiaries.

Forward-Looking Statements

This quarterly report includes certain forward-looking statements within the meaning of the federal securities laws regarding, among other things, our or management’s intentions, plans, beliefs, expectations or predictions of future events, which are considered forward-looking statements. You should not place undue reliance on those statements because they are subject to numerous uncertainties and factors relating to our operations and business environment, all of which are difficult to predict and many of which are beyond our control. Forward-looking statements include information concerning our possible or assumed future results of operations, including descriptions of our business strategy. These statements often include words such as “may,” “will,” “should,” “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate,” “can,” “could,” “might,” “project” or similar expressions. These statements are based upon assumptions that we have made in light of our experience in the industry, as well as our perceptions of historical trends, current conditions, expected future developments and other factors that we believe are appropriate under the circumstances. As you read this quarterly report, you should understand that these statements are not guarantees of performance or results. They involve known and unknown risks, uncertainties and assumptions, including those described under the heading “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2014 (the “Annual Report”) filed with the Securities and Exchange Commission (“SEC”). Although we believe that these forward-looking statements are based upon reasonable assumptions, you should be aware that many factors, including those described under the heading “Risk Factors” in the Annual Report, could affect our actual financial results or results of operations and could cause actual results to differ materially from those in the forward-looking statements.

Our forward-looking statements made herein are made only as of the date of this quarterly report. We expressly disclaim any intent, obligation or undertaking to update or revise any forward-looking statements made herein to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any such statements are based, except as required by applicable law. All subsequent written and verbal forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements contained in this quarterly report.

Business Overview

Our principal business is residential homebuilding and the development of lifestyle communities with operations geographically focused in Arizona, California, Colorado, Florida, and Texas. Our homes appeal to entry-level, move-up, 55+ and luxury homebuyers, with a focus on move-up customers in high-growth markets. Our homebuilding company operates under our Taylor Morrison and Darling Homes brand names. Our business is organized into ten homebuilding operating divisions, and a mortgage division, which are managed as three reportable segments: East, West and Mortgage Operations, as follows:


East		North Florida and West Florida, Houston, which includes a Taylor Morrison division and a Darling Homes division, Dallas and Austin
West		Denver, Phoenix, Northern California and Southern California
Mortgage Operations		Mortgage and Financial Services (TMHF)

We offer single family attached and/or detached homes and revenue is recognized when the homes are completed and delivered to the buyers. Our primary costs are the acquisition of land in various stages of development and the construction costs of the homes we sell.

Our Mortgage Operations reportable segment provides financial services to customers through our wholly owned mortgage subsidiary, TMHF. Revenues from loan origination are recognized at the time the related real estate transactions are completed, usually upon the close of escrow.

On January 28, 2015 we closed on the sale of Monarch Corporation, our former Canadian operating segment (“Monarch”), to an affiliate of Mattamy Homes Limited (“Mattamy”). As a result of the sale, we do not have significant continuing involvement with Monarch, and the operating results and financial condition are presented as discontinued operations.

Non-GAAP Measures

In addition to the results reported in accordance with accounting principles generally accepted in the United States (“GAAP”), we have provided information in this quarterly report relating to “adjusted home closings gross margins.”

Adjusted home closings gross margins

We calculate adjusted home closings gross margin from U.S. GAAP gross margin by adding impairment charges, if any, attributable to the write-down of communities, and the amortization of capitalized interest through cost of home closings. We evaluate adjusted home closings gross margin, which is calculated by adding back to home closings gross margin the capitalized interest amortization related to the homes closed. Management uses adjusted home closings gross margin to evaluate our operational and economic performance on a consolidated basis. We believe adjusted home closings gross margin is relevant and useful to investors for evaluating our overall financial performance. This measure is considered a non-GAAP financial measure and should be considered in addition to, rather than as a substitute for, the comparable U.S. GAAP financial measure as a measure of our operating performance. Although other companies in the homebuilding industry report similar information, the methods used may differ. We urge investors to understand the methods used by other companies in the homebuilding industry to calculate gross margins and any adjustments to such amounts before comparing our measures to those of such other companies.

Recent Developments

2023 Senior Notes and Redemption of 2020 Senior Notes

Revolving Credit Facility

JEH Homes

On April 30, 2015 we completed the acquisition of JEH Homes, a homebuilder in Atlanta. This was a 2,000 lot acquisition for $64.6 million. We utilized a portion of the funds from the Monarch transaction to fund the acquisition.

First Quarter 2015 Highlights

Key financial results as of and for the three months ended March 31, 2015, as compared to the same period in 2014, are as follows:

•

Average community count increased 22% to 228 average communities from 187 in the prior year quarter

•

Net sales orders increased 14% to 1,729

•

Home closings were 1,063

•

Backlog of homes under contract was 2,918 units, with a sales value of $1.4 billion as of March 31, 2015

•

Cancellations as a percentage of gross sales orders were 11.9%, compared to 11.4% in the prior year quarter

•

Average price of homes closed increased 7% to $464,000

•

Average monthly absorption pace was 2.5 compared to 2.7 in the prior year quarter.

•

Mortgage operations reported gross profit of $2.6 million on revenue of $7.6 million

Results of Operations

The following table sets forth our results of operations (unaudited):


(Dollars in thousands)	Three Months Ended March 31,
	2015			2014
Statements of Operations Data:
Home closings revenue, net	$	493,592		$	455,295
Land closings revenue		8,188			8,918
Mortgage operations revenue		7,635			6,262

Total revenues		509,415			470,475
Cost of home closings		405,104			356,300
Cost of land closings		4,666			6,858
Mortgage operations expenses		5,062			3,936

Gross margin		94,583			103,381
Sales, commissions and other marketing costs		36,220			33,384
General and administrative expenses		20,704			19,241
Equity in income of unconsolidated entities		(303	)		(984	)
Interest (income) expense, net		(50	)		686
Other expense, net		5,771			3,098
Gain on foreign currency forward		(29,983	)		—

Income from continuing operations before income taxes		62,224			47,956
Income tax provision		22,042			10,956

Net income from continuing operations		40,182			37,000

Discontinued operations:
Income from discontinued operations		—			6,435
Transaction expenses from discontinued operations		(9,043	)		—
Gain on sale of discontinued operations		80,205			—
Income tax provision from discontinued operations		(14,500	)		(2,139	)

Net income from discontinued operations		56,662			4,296
Net income before allocation to non-controlling interests		96,844			41,296
Net income attributable to non-controlling interests – joint ventures		(368	)		(117	)

Net income before non-controlling interests – Principal Equityholders		96,476			41,179

Net income from continuing operations attributable to non-controlling interests – Principal Equityholders		(29,133	)		(27,105	)
Net income from discontinued operations attributable to non-controlling interests – Principal Equityholders		(41,381	)		(3,142	)

Net income available to Taylor Morrison Home Corporation	$	25,962		$	10,932

Home closings gross margin as a percentage of home closings revenue		17.9	%		21.7	%
Adjusted home closings gross margin as a percentage of home closings revenue		21.2	%		23.8	%
Sales, commissions and other marketing costs as a % of home closings revenue		7.3	%		7.3	%
General and administrative expenses as a % of home closings revenue		4.2	%		4.2	%
Average sales price per home closed	$	464		$	432

Three Months Ended March 31, 2015 Compared to Three Months Ended March 31, 2014

Average Active Selling Communities


	Three Months Ended March 31,
	2015		2014		Change
East		166		136		22.1	%
West		62		51		21.6

Total		228		187		21.9	%

Consolidated:

Average active selling communities increased 21.9%, primarily due to significant additions in our West Florida, Houston, Northern California and Phoenix divisions. We opened new communities and completed existing communities throughout all of our markets since March 31, 2014. We open communities when we believe we have the greatest probability of capitalizing on favorable market conditions in which the community is located.

East:

The number of average active selling communities in the East segment increased period over period, primarily due to the opening of 17 new communities in West Florida, partially offset by community close-outs.

West:

The number of average active selling communities in the West segment increased period over period, primarily due to 17 new community openings in Northern California and 13 new community openings in Phoenix, partially offset by community close-outs.

Net Sales Orders


(Dollars in thousands)	Three Months Ended March 31, ⁽¹⁾
	Net Homes Sold							Sales Value							Average Selling Price
	2015		2014		Change			2015		2014		Change			2015		2014		Change
East		1,042		922		13.0	%	$	440,464	$	381,220		15.5	%	$	423	$	413		2.4	%
West		687		592		16.0			331,033		313,108		5.7			482		529		(8.9	)

Total		1,729		1,514		14.2	%	$	771,497	$	694,328		11.1	%	$	446	$	459		(2.8	)%

⁽¹⁾	Net sales orders represent the number and dollar value of new sales contracts executed with customers.

Consolidated:

The increase in the value of sales orders and the number of net new homes sold in 2015 compared to 2014 was due to an increase in our average active selling communities. The increases were also driven by consumer demand for our well-located and desirable product offerings in our markets. Consumer demand increased as a result of historically low interest rates and stabilizing macroeconomic conditions relative to the prior comparable period. Average selling price decreased slightly due to a shift in geographic mix to homes with a lower sales value. Overall, sales pace decreased to 2.5 homes per month per community for the three months ended March 31, 2015 from 2.7 homes per month per community in the prior year comparable period.

East:

Net sales orders increased in both units and in sales value in 2015 compared to 2014 due to an increase in average active selling communities and an increase in average selling price per home. We increased the average selling price of net homes sold in the East segment by 2.4% to $423,000, resulting in an increase in sales value of net homes sold of 15.5%. Our Houston, North Florida and West Florida divisions were the largest contributors to this increase.

West:

Net sales orders increased in both units and in sales value in 2015 compared to 2014. Sales order increased as a result of an increase in average active selling communities. However, this was partially offset by a decrease in average selling price of net homes sold, driven by a shift in product mix from Southern California, to Phoenix and Denver.

Sales Order Cancellation s


	Three Months Ended March 31,
	Cancelled Sales Orders				Cancellation Rate ⁽¹⁾
	2015		2014		2015			2014
East		148		126		12.4	%		12.0	%
West		86		68		11.1			10.3

Total/weighted average		234		194		11.9	%		11.4	%

⁽¹⁾	Cancellation rate represents the number of cancelled sales orders divided by gross sales orders.

We believe a favorable financing market, our use of prequalification criteria through TMHF and increased earnest money deposits help us maintain a low cancellation rate. The slight fluctuation in cancellation rate was mostly due to a shift in product mix in the West to lower priced products. However, our cancellation rate decreased from 15.4% in the fourth quarter of 2014 to 11.9% in the first quarter of 2015.

Sales Order Backlog


	As of March 31,
(Dollars in thousands)	Sold Homes in Backlog ⁽¹⁾							Sales Value							Average Selling Price
	2015		2014		Change			2015		2014		Change			2015		2014		Change
East		2,059		1,794		14.8	%	$	976,036	$	811,300		20.3	%	$	474	$	452		4.9	%
West		859		831		3.4			441,092		451,931		(2.4	)		513		544		(5.7	)

Total		2,918		2,625		11.2	%	$	1,417,128	$	1,263,231		12.2	%	$	486	$	481		1.0	%

⁽¹⁾

Sales order backlog represents homes under contract for which revenue has not yet been recognized at the end of the period (including homes sold but not yet started). Some of the contracts in our sales order backlog are subject to contingencies including mortgage loan approval and buyers selling their existing homes, which can result in cancellations.

East:

Backlog value increased as a result of a 14.8% increase in unit volume and higher average selling prices generated from a shift in product mix to homes with a higher sales value. The East increase in backlog units is consistent with our increases in net homes sold and new community openings year over year.

West:

Backlog units increased primarily as a result of an increase in average active selling communities and an increase in net sales orders. Backlog sales value and average selling price decreased as a result of the shift in sales order mix from Southern California to Phoenix and Denver.

Home Closings Revenue


	Three Months Ended March 31,
(Dollars in thousands)	Homes Closed							Sales Value ⁽¹⁾							Average Selling Price
	2015		2014		Change			2015		2014		Change			2015		2014		Change
East		692		672		3.0	%	$	297,566	$	264,334		12.6	%	$	430	$	393		9.4	%
West		371		383		(3.1	)		196,026		190,961		2.7			528		499		5.8

Total		1,063		1,055		0.8	%	$	493,592	$	455,295		8.4	%	$	464	$	432		7.4	%

⁽¹⁾	Home closings revenue represents homes where possession has transferred to the buyer.

East:

The number of homes closed increased as a result of increased homes sold in prior periods. In the first quarter of 2015, the average selling price of homes closed increased as a result of an increase in aggregate sales value of homes closed of 12.6%. Economic market improvements, as well as favorable homebuyer reception of communities, helped contribute to closing revenue increases. Specifically, homes closed in our North Florida division surpassed that in the prior year same period by a significant amount, driving both units and dollars higher as consumer demand for move-up product benefited our communities in these markets.

West:

Average selling price of homes closed increased by 5.8% to $528,000, driven primarily by a shift to more move up and higher priced products in Southern California. This increase in average selling price drove the aggregate increase in sales value. Homes closed in our Northern California and Denver division surpassed that in the prior year period due to increased selling communities, however these increases were offset by decreases in homes closed in our Phoenix and Southern California markets.

Land Closings Revenue


	Three Months Ended March 31,
(In thousands)	2015		2014		Change
East	$	8,188	$	8,693		(5.8	)%
West		—		225		(100.0	)

Total	$	8,188	$	8,918		(8.2	)%

We generally purchase land and lots with the intent to build and sell homes on them. However, in some locations where we act as a developer, we occasionally purchase land that includes commercially zoned parcels or areas designated for school or government use, which we typically sell to commercial developers or municipalities. We also sell residential lots or land parcels to manage our land and lot supply on larger tracts of land we would otherwise not achieve financial returns that are in line with our internal expectations based on longer development timelines. Land and lot sales occur at various intervals and varying degrees of profitability. Therefore, the revenue and gross margin from land closings will fluctuate from period to period.

Segment Home Closings Gross Margins

The following table sets forth a reconciliation between our GAAP home closings gross margins and adjusted home closings gross margins. See “—Non-GAAP Measures—Adjusted home closings gross margins.”


	East						West						Consolidated
	Three Months Ended March 31,
(Dollars in thousands)	2015			2014			2015			2014			2015			2014
Home Closings
Home closings revenue, net	$	297,566		$	264,334		$	196,026		$	190,961		$	493,592		$	455,295
Cost of home closings		239,624			206,513			165,480			149,787			405,104			356,300

Home closings gross margin		57,942			57,821			30,546			41,174			88,488			98,995
Capitalized interest amortization		9,208			3,846			6,819			5,644			16,027			9,490

Adjusted home closings gross margin	$	67,150		$	61,667		$	37,365		$	46,818		$	104,515		$	108,485

Home closings gross margin %		19.5	%		21.9	%		15.6	%		21.6	%		17.9	%		21.7	%
Adjusted home closings gross margin %		22.6	%		23.3	%		19.1	%		24.5	%		21.2	%		23.8	%

Consolidated:

Our consolidated adjusted home closings gross margin percentage for the three months ended March 31, 2015 decreased compared to the same period in 2014. We are experiencing higher land and development costs as we naturally deplete our legacy holdings supply of inventory. The legacy holdings have lower carrying costs and as a result home closings gross margin percentage is decreasing as those legacy holdings are at a reduced proportion of our overall mix. Geographic and product mix also had an impact on margin rate.

East:

Home closings gross margin and adjusted home closings gross margin percentage decreased for the three months ended March 31, 2015 compared to the prior year first quarter, primarily as a result of Texas experiencing longer construction times due to inclement weather and certain labor supply constraints. Community pricing also negatively affected margin rates.

West:

Home closings gross margin percentage and adjusted home closings gross margin percentage decreased primarily due to a geographic shift in the percentage of homes closed in Northern California where the margin rate is lower though margin dollars are significantly higher. In addition, a shift in product penetration within the West divisions, commodity and labor pricing for self-developed lots continued to negatively affect margin rates.

Mortgage Operations

Our Mortgage Operations segment provides mortgage lending through our subsidiary, TMHF. The following is a summary of mortgage operations gross margin:


	Three Months Ended March 30,
(Dollars in thousands)	2015			2014
Mortgage operations revenue	$	7,635		$	6,262
Mortgage operations expenses		5,062			3,936

Mortgage operations gross margin	$	2,573		$	2,326

Mortgage operations margin %		33.7	%		37.1	%

Our Mortgage Operations segment’s revenue increased due primarily to increased closings volume and average loan amounts, while gross margin percentage decreased period over period due to increases in underwriting costs.

The following details the number of loans closed, the aggregate value and capture rate on our loans for the last two comparable periods:


	Closed Loans		Aggregate Loan Volume (in millions)		Capture Rate
Three Months Ended March 31, 2015		651	$	218.3		74	%
Three Months Ended March 31, 2014		608		193.0		73

Our mortgage capture rate represents the percentage of our homes sold to a home purchaser that utilized a mortgage, for which the borrower obtained such mortgage from TMHF or one of our preferred third party lenders. Our capture rate remained consistent during the three months ended March 31, 2015 as compared to the same period in 2014. In the first quarter of 2015 and 2014, the average FICO score of customers who obtained mortgages through TMHF was 740 and 743, respectively.

Sales, Commissions and Other Marketing Costs

As a percentage of home closings revenue, sales, commissions and other marketing costs was consistent at 7.3% for both the three months ended March 31, 2015 and 2014. For the three months ended March 31, 2015 and 2014, sales commissions, and other marketing costs such as advertising and sales office expenses were $36.2 million and $33.4 million, respectively, as a result of a 0.8% increase in homes closed as well as an increase in average selling price of homes closed.

General and Administrative Expenses

General and administrative expenses were consistent at 4.2% of home closings revenue in both the three months ended March 31, 2015 and 2014. For the three months ended March 31, 2015, general and administrative expenses were $20.7 million as compared to $19.2 million in the same period in 2014, which represents a 7.6% increase. During both periods we were able to utilize our scalable platform, providing leverage with existing infrastructure to maintain operating costs.

Equity in Income of Unconsolidated Entities

Equity in income of unconsolidated entities was $0.3 million for the three months ended March 31, 2015 compared to $1.0 million for the three months ended March 31, 2014. The decrease was due to the closeout of a joint venture in June 2014 and incurrence of start-up costs from two new joint ventures.

Interest (Income) Expense, Net

Interest expense represents interest incurred, but not capitalized on our long-term debt and other borrowings. In the three months ended March 31, 2015 compared to March 31, 2014, the change from net interest expense to net interest income was due to increased capitalization of interest as a result of higher levels of qualified assets and an increase in cash on deposit.

Other Expense, Net

Other expense, net for the three months ended March 31, 2015 and 2014 was $5.8 million and $3.1 million, respectively. The primary reason for the increase is the current year accrual for contingent payments related to the Darling acquisition in December 2012 (the “Darling Acquisition”). Other expense also generally consists of mothball community expense, pre-acquisition costs on unpursued land projects, captive insurance claims costs and financing fees on our revolving credit facility.

Gain on Foreign Currency Forward

Income Tax Provision

The effective income tax rate from continuing operations for the three months ended March 31, 2015 was 35.4% compared to 22.8% for the same period in 2014. Both rates reflect the benefit for the domestic production activities deduction, however, the prior year results also benefitted from discrete items related to U.S. repatriation of foreign funds.

Liquidity and Capital Resources

Liquidity

We finance our operations through the following:

•

Borrowings under our Revolving Credit Facility;

•

Our various series of Senior Notes;

•

Project-level financing (including non-recourse loans);

•

Mortgage warehouse facilities; and

•

Performance, payment and completion surety bonds, and letters of credit.

We believe that we can fund our current and foreseeable liquidity needs for the next 12 months from:

•

Cash generated from operations;

•

Borrowings under our Revolving Credit Facility; and

•

Cash generated from the sale of our Monarch business.

Our principal uses of capital in the three months ended March 31, 2015 and 2014 were land purchases, lot development, home construction, operating expenses, payment of debt service, income taxes, investments in joint ventures and the payment of various liabilities. Cash flows for each of our communities depend on the status of the development cycle and can differ substantially from reported earnings. Early stages of development or expansion require significant capital expenditures for land acquisitions, plats, vertical and horizontal development, construction of model homes, general landscaping and other amenities. Because these costs are a component of our inventory and are not recognized in our statement of operations until a home closes, we incur significant cash outflows prior to recognition of earnings.

We have a defined strategy for cash management, particularly related to capital expenditures for land and inventory development. We used $170.2 million of cash in operating activities for the three months ended March 31, 2015 and used $246.4 million of cash in operating activities in the same period in 2014. Our principal cash uses in 2015 were real estate inventory acquisitions, construction and taxes. We generated the cash used in 2015 through our operating activities and the sale of our Monarch business.

Depending upon future homebuilding market conditions and our expectations for these conditions, we may use a portion of our cash and cash equivalents to take advantage of land opportunities. We intend to maintain adequate liquidity and balance sheet strength, and we will continue to evaluate opportunities to access the debt and equity capital markets on an opportunistic basis.

Capital Resources

Cash and Cash Equivalents

As of March 31, 2015, we had available cash and cash equivalents of $399.5 million from continuing operations. Cash and cash equivalents consist of cash on hand, demand deposits with financial institutions and short-term, highly liquid investments. We consider all highly liquid investments with original maturities of 90 days or less, such as certificates of deposit, money market funds, and commercial paper, to be cash equivalents. Cash accounts are insured up to $250,000 in the United States by the Federal Deposit Insurance Corporation.

The following table summarizes our outstanding senior unsecured notes (collectively, the “Senior Notes”), as of March 31, 2015.


(Dollars in thousands)	Date Issued		Principal Amount		Initial Offering Price			Interest Rate			Original Net Proceeds		Original Debt Issuance Cost
Senior Notes due 2020		April 13, 2012	$	395,372		100.0	%		7.750	%	$	537,400	$	12,600
Senior Notes due 2020		August 21, 2012		93,304		105.5	%		7.750	%		132,500		3,100
Senior Notes due 2021		April 16, 2013		550,000		100.0	%		5.250	%		541,700		8,300
Senior Notes due 2024		March 5, 2014		350,000		100.0	%		5.625	%		345,300		4,700

Total			$	1,388,676							$	1,556,900	$	28,700

2020 Senior Notes

On August 21, 2012, we issued an additional $125.0 million of 7.75% Senior Notes due 2020 (the “Additional Notes” together with the Initial Notes the “2020 Senior Notes”) at an initial offering price of 105.5% of the principal amount. The net proceeds were used for general corporate purposes. The Additional Notes issued August 21, 2012 were issued pursuant to the existing indenture for the 2020 Senior Notes. The 2020 Senior Notes are unsecured and not subject to registration rights.

Obligations to pay principal and interest on the 2020 Senior Notes are guaranteed by TMM Holdings, Taylor Morrison Holdings, Inc., Taylor Morrison Communities II, Inc. and the U.S. homebuilding subsidiaries of Taylor Morrison Communities, Inc. (collectively, the “Guarantors”). The 2020 Senior Notes and the guarantees are senior unsecured obligations. The indenture for the 2020 Senior Notes contains covenants that limit (i) the making of investments, (ii) the payment of dividends and the redemption of equity and junior debt, (iii) the incurrence of additional indebtedness, (iv) asset dispositions, (v) mergers and similar corporate transactions, (vi) the incurrence of liens, (vii) the incurrence of prohibitions on payments and asset transfers among the issuers and restricted subsidiaries and (viii) transactions with affiliates, among others. The indenture governing the 2020 Senior Notes contains customary events of default. If we do not apply the net cash proceeds of certain asset sales within specified deadlines, we will be required to offer to repurchase the 2020 Senior Notes at par (plus accrued and unpaid interest) with such proceeds.

On May 1, 2015, we redeemed all $485.4 million aggregate principal amount of outstanding 2020 Senior Notes at a redemption price of 105.813% plus accrued and unpaid interest. To pay the total consideration in the redemption, we used cash on hand, together with net proceeds from the issuance in April 2015 of $350.0 million aggregate principal amount of new 5.875% Senior Notes due 2023 (the “2023 Senior Notes”). For more information regarding the 2023 Senior Notes, see “— 2023 Senior Notes ,” below. As a result of the redemption of the 2020 Senior Notes, we will record a loss on extinguishment of debt in the second quarter of 2015 and write off all unamortized deferred financing fees.

There are no financial maintenance covenants for the 2020 Senior Notes.

2021 Senior Notes

There are no financial maintenance covenants for the 2021 Senior Notes.

2023 Senior Notes

On April 16, 2015, we issued $350.0 million aggregate principal amount of 5.875% Senior Notes due 2023. The 2023 Senior Notes are unsecured and are not subject to registration rights. The net proceeds of the offering together with cash on hand, were used to redeem all of the outstanding 2020 Senior Notes on May 1, 2015.

The 2023 Senior Notes mature on April 15, 2023. The 2023 Senior Notes are guaranteed by the same Guarantors that guarantee the 2021 and 2024 Senior Notes. The 2023 Senior Notes and the guarantees are senior unsecured obligations. The indenture governing the 2023 Senior Notes contains covenants that are substantially similar to those in the indenture governing the 2024 Senior Notes. The indenture governing the 2023 Senior Notes contains events of default that are similar to those contained in the indenture governing the 2021 and the 2024 Senior Notes. The change of control provisions in the indenture governing the 2023 Senior Notes are similar to those contained in the indenture governing the 2024 Senior Notes.

There are no financial maintenance covenants for the 2023 Senior Notes.

2024 Senior Notes

The 2024 Senior Notes will mature on March 1, 2024. The 2024 Senior Notes are guaranteed by the same Guarantors that guarantee the 2020 and 2021 Senior Notes. The 2024 Senior Notes and the guarantees are senior unsecured obligations. The indenture governing the 2024 Senior Notes contains covenants that limit our ability to incur debt secured by liens and enter into certain sale and leaseback transactions. The indenture governing the 2024 Senior Notes contains events of default that are similar to those contained in the indentures governing the 2020 and the 2021 Senior Notes. The change of control provisions in the indenture governing the 2024 Senior Notes are similar to those contained in the indentures governing the 2020 and the 2021 Senior Notes, but a credit rating downgrade must occur in connection with the change of control before the repurchase offer requirement is triggered for the 2024 Senior Notes.

There are no financial maintenance covenants for the 2024 Senior Notes.

TMHC compared to TMM Holdings

The financial information of TMHC is substantially identical to the financial performance and operations of TMM Holdings except for certain SEC and regulatory fees which are attributable to TMHC.

Revolving Credit Facility

The Revolving Credit Facility contains certain “springing” financial covenants, requiring TMM Holdings and its subsidiaries to comply with a certain maximum capitalization ratio and a certain minimum consolidated tangible net worth test. The financial covenants would be in effect for any fiscal quarter during which any (a) loans under the Revolving Credit Facility are outstanding during the last day of such fiscal quarter or on more than five separate days during such fiscal quarter or (b) undrawn letters of credit (except to the extent cash collateralized) issued under the Revolving Credit Facility in an aggregate amount greater than $40.0 million or unreimbursed letters of credit issued under the Revolving Credit Facility are outstanding on the last day of such fiscal quarter or for more than five consecutive days during such fiscal quarter. For purposes of determining compliance with the financial covenants for any fiscal quarter, the Revolving Credit Facility provides that TMC may exercise an equity cure by issuing certain permitted securities for cash or otherwise recording cash contributions to its capital that will, upon the contribution of such cash to TMC, be included in the calculation of consolidated tangible net worth and consolidated total capitalization. The equity cure right is exercisable up to twice in any period of four consecutive fiscal quarters and up to five times overall. The maximum debt to total capitalization ratio is 0.60 to 1.00. The ratio as calculated by the Borrower at March 31, 2015 was 0.38 to 1.00. The minimum consolidated tangible net worth requirement was $1.4 billion at March 31, 2015. At March 31, 2015, the Borrower’s tangible net worth, as defined in the Revolving Credit Facility, was $1.8 billion.

The Revolving Credit Facility contains certain restrictive covenants including limitations on incurrence of liens, dividends and other distributions, asset dispositions and investments in entities that are not guarantors, limitations on prepayment of subordinated indebtedness and limitations on fundamental changes. The Revolving Credit Facility contains customary events of default, subject to applicable grace periods, including for nonpayment of principal, interest or other amounts, violation of covenants (including financial covenants, subject to the exercise of an equity cure), incorrectness of representations and warranties in any material respect, cross default and cross acceleration, bankruptcy, material monetary judgments, ERISA events with material adverse effect, actual or asserted invalidity of material guarantees and change of control. As of March 31, 2015, we were in compliance with all of the covenants under the Revolving Credit Facility.

On April 24, 2015, we entered into Amendment No. 3 to our senior revolving credit facility (“the Revolving Credit Facility”). Among other things, this

amendment increased the amount available under the Revolving Credit Facility up to $500.0 million, extended the maturity of the Revolving Credit Facility to April 12, 2019 and reduced certain margins payable thereunder.

Mortgage Company Loan Facilities

Borrowings under our TMHF warehouse facilities are accounted for as secured borrowings under ASC Topic 860, “ Transfers and Servicing .” Total capacity under the TMHF warehouse facilities available to TMHC at March 31, 2015 is $185.0 million. The following table summarizes the terms of our TMHF warehouse facilities:

As of March 31, 2015

Facility

Amount Drawn

Facility Amount

Interest Rate

Expiration Date

Collateral ⁽¹⁾

Flagstar

22,995

85,000

LIBOR + 2.5%

30 days written notice

Mortgage Loans

Comerica

—

50,000

LIBOR + 2.75%

August 19, 2015

Mortgage Loans

J.P. Morgan

32,250

50,000

⁽²⁾

September 28, 2015

Pledged Cash

Total

55,245

185,000

⁽¹⁾

⁽²⁾	Interest under the J.P. Morgan agreement ranges from 2.50% plus 30-day LIBOR to 2.875% plus 30-day LIBOR or 0.25% (whichever is greater).

Loans Payable and Other Borrowings

Loans payable and other borrowings as of March 31, 2015 consist of project-level debt due to various land sellers and municipalities, and are generally secured by the land that was acquired. Principal payments generally coincide with corresponding project lot sales or a principal reduction schedule. The weighted average interest rate on $83.2 million of the loans as of March 31, 2015 was 5.5% per annum, and $45.0 million of the loans were non-interest bearing.

Letters of Credit, Surety Bonds and Financial Guarantees

In the course of land development and acquisition, we have issued letters of credit under our Revolving Credit Facility to various land sellers and municipalities in the amounts below as of the dates indicated:


	As of March 31, 2015				As of December 31, 2014
(In thousands)	Available		Issued		Available		Issued
Revolving Credit Facility	$	200,000	$	31,147	$	200,000	$	35,071

Operating Cash Flow Activities

Our net cash used in operating activities was $170.2 million for the three months ended March 31, 2015, compared to $246.4 million used in operating activities for the three months ended March 31, 2014. The primary driver of the change year over year was a decrease in mortgage receivables. Mortgage receivables decreased as a result of the seasonal increase in mortgage loan sales of our TMHF mortgage subsidiary. Also contributing to the change was a $30.0 million gain on a foreign currency forward.

Investing Cash Flow Activities

Net cash provided by investing activities was $296.4 million for the three months ended March 31, 2015, as compared to cash used in investing activities of $2.3 million in the first quarter 2014. The increase in cash provided by investing activities was primarily the result of proceeds from our Monarch disposition in the first quarter of 2015, and cash received from a foreign currency forward.

Financing Cash Flow Activities

Net cash used in financing activities was $169.0 million for the three months ended March 31, 2015, compared to $299.3 million of net cash provided by financing activities in the first quarter of 2014. The change in net cash from financing activities year over year was primarily attributable to an increase in net repayments on our lines of credit related to mortgage borrowings and the issuance of $350.0 million of senior notes in the first quarter of 2014, whereas we did not issue senior notes in the first quarter 2015.

Commercial Commitments and Off-Balance Sheet Arrangements

The following table summarizes our letters of credit and surety bonds as of the dates indicated:


(In thousands)	As of March 31, 2015		As of December 31, 2014
Letters of credit	$	31,147	$	35,071
Surety bonds	$	317,940	$	280,559

Total outstanding letters of credit, surety bonds	$	349,087	$	315,630

Investments in Land Development and Homebuilding Joint Ventures or Unconsolidated Entities

We participate in strategic land development and homebuilding joint ventures with related and unrelated third parties. The use of these entities, in some instances, enables us to acquire land to which we could not otherwise obtain access, or could not obtain access on terms that are favorable. Our partners in these joint ventures historically have been land owners/developers, other homebuilders and financial or strategic partners. Joint ventures with land owners/developers have given us access to sites owned or controlled by our partners. Joint ventures with other homebuilders have provided us with the ability to bid jointly with our partners for large or expensive land parcels. Joint ventures with financial partners have allowed us to combine our homebuilding expertise with access to our partners’ capital. Joint ventures with strategic partners have allowed us to combine our homebuilding expertise with the specific expertise (e.g. commercial or infill experience) of our partners.

In certain of our unconsolidated joint ventures, we enter into loan agreements, whereby one of our subsidiaries will provide the lenders with customary guarantees, including completion, indemnity and environmental guarantees subject to usual non-recourse terms.

The following is a rollforward of the investments in unconsolidated land development and homebuilding joint ventures:


(In thousands)	East			West			Corporate			Total
Investment balance, December 31, 2014	$	57,138		$	51,909		$	1,244		$	110,291
Joint venture income		144			(180	)		339			303
Distributions		(168	)		—			(339	)		(507	)
Contributions		2,260			466			—			2,726

Investment balance, March 31,2015	$	59,374		$	52,195		$	1,244		$	112,813

Land Purchase and Land Option Contracts

We enter into land purchase and option contracts to procure land or lots for the construction of homes in the ordinary course of business. Lot option contracts enable us to control significant lot positions with a minimal capital investment and substantially reduce the risks associated with land ownership and development. As of March 31, 2015, we had outstanding land purchase and lot option contracts of $403.4 million for lots. We are obligated to close the transaction under our land purchase contracts. However, our obligations with respect to the option contracts are generally limited to the forfeiture of the related non-refundable cash deposits and/or letters of credit provided to obtain the options.

Seasonality

Our business is seasonal. We have historically experienced, and in the future expect to continue to experience, variability in our results on a quarterly basis. We generally have more homes under construction, close more homes and have greater revenues and operating income in the third and fourth quarters of the year. Therefore, although new home contracts are obtained throughout the year, a higher portion of our home closings occur during the third and fourth calendar quarters. Our revenue therefore may fluctuate significantly on a quarterly basis and we must maintain sufficient liquidity to meet short-term operating requirements. Factors expected to contribute to these fluctuations include:

•

the timing of the introduction and start of construction of new projects;

•

the timing of project sales;

•

the timing of closings of homes, lots and parcels;

•

our ability to continue to acquire land and options on that land on acceptable terms;

•

the timing of receipt of regulatory approvals for development and construction;

•

the condition of the real estate market and general economic conditions in the areas in which we operate;

•

mix of homes closed;

•

construction timetables;

•

the prevailing interest rates and the availability of financing, both for us and for the purchasers of our homes;

•

the cost and availability of materials and labor; and

•

weather conditions in the markets in which we build.

As a result of seasonal activity, our quarterly results of operations and financial position are not necessarily representative of the results we expect at year end.

Inflation

We and the homebuilding industry in general may be adversely affected during periods of high 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. However, during periods of soft housing market conditions, we may not be able to offset our cost increases with higher selling prices.

Critical Accounting Policies

There have been no significant changes to our critical accounting policies during the three months ended March 31, 2015 as compared to those we disclosed in Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2014.

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk

Our operations are interest rate sensitive. We monitor our exposure to changes in interest rates and incur both fixed rate and variable rate debt. At March 31, 2015, approximately 96.5% of our debt was fixed rate and 3.5% was variable rate. None of our market sensitive instruments were entered into for trading purposes. For fixed rate debt, changes in interest rates generally affect the fair value of the debt instrument, but not our earnings or cash flows. Conversely, for variable rate debt, changes in interest rates generally do not impact the fair value of the debt instrument but may affect our future earnings and cash flows, and may also impact our variable rate borrowing costs, which principally relate to any borrowings under our Revolving Credit Facility and to any borrowings by TMHF under its various warehouse facilities. As of March 31, 2015, we had no outstanding borrowings under our Revolving Credit Facility. We had $368.9 million of additional availability for borrowings and $168.9 million of additional availability for letters of credit (giving effect to $31.1 million of letters of credit outstanding as of such date). Our fixed rate debt is subject to a requirement that we offer to purchase the 2020 Senior Notes (see Note 18 Subsequent Events in the Notes to the Condensed Consolidated Financial Statements for more information on the 2020 Senior Notes) and 2021 Senior Notes at par with certain proceeds of asset sales (to the extent not applied in accordance with the indenture governing such Senior Notes). We are also required to offer to purchase all of the outstanding Senior Notes at 101% of their aggregate principal amount upon the occurrence of specified change of control events. Other than in those circumstances, we do not have an obligation to prepay fixed rate debt prior to maturity and, as a result, interest rate risk and changes in fair value would not be expected to have a significant impact on our cash flows related to our fixed rate debt until such time as we are required to refinance, repurchase or repay such debt.

We are not materially exposed to interest rate risk associated with TMHF’s mortgage loan origination business, because at the time any loan is originated, TMHF has identified the investor who will agree to purchase the loan on the interest rate terms that are locked in with the borrower at the time the loan is originated.

The following table sets forth principal cash flows by scheduled maturity and effective weighted average interest rates and estimated fair value of our debt obligations as of March 31, 2015. The interest rate for our variable rate debt represents the interest rate on our borrowings under our Revolving Credit Facility and mortgage warehouse facilities. Because the mortgage warehouse facilities are effectively secured by certain mortgage loans held for sale which are typically sold within 20 days, its outstanding balance is included as a variable rate maturity in the most current period presented.


	Expected Maturity Date																					Fair Value
*(In millions, except percentage data)*	2015			2016			2017			2018			2019			Thereafter			Total			Fair Value
Fixed Rate Debt	$	43.5		$	40.9		$	16.8		$	9.9		$	13.9			1,391.9			1,516.9			1,534.2
Average interest rate ⁽¹⁾		3.6	%		3.6	%		3.7	%		3.7	%		3.7	%		6.2	%		6.0	%		—
Variable Rate Debt ⁽²⁾	$	55.2		$	—		$	—		$	—		$	—		$	—		$	55.2		$	55.2
Average interest rate		2.7	%		—			—			—			—			—			2.7	%		—

⁽¹⁾	Represents the coupon rate of interest on the full principal amount of the debt.

⁽²⁾	Based upon the amount of variable rate debt at March 31, 2015, and holding the variable rate debt balance constant, each 1% increase in interest rates would increase the interest incurred by us by approximately $0.5 million per year.

Currency Exchange Risk

ITEM 4.

CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, management has evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) of the Securities Exchange Act of 1934) as of March 31, 2015. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective to ensure information required to be disclosed by us in the reports we file or submit under the Securities Exchange Act is recorded, processed, summarized and reported within the periods specified in the Securities and Exchange Commission’s rules and forms and is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error and mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of controls.

The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, a control may become inadequate because of changes in conditions or because the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and may not be detected.

Changes in Internal Controls

No change in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) occurred during the quarter ended March 31, 2015 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II — OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS

We are involved in various litigation and legal claims in the normal course of our business operations, including actions brought on behalf of various classes of claimants. We are also subject to a variety of local, state, and federal laws and regulations related to land development activities, house construction standards, sales practices, mortgage lending operations, employment practices, and protection of the environment. As a result, we are subject to periodic examination or inquiry by various governmental agencies that administer these laws and regulations. We establish liabilities for legal claims and regulatory matters when such matters are both probable of occurring and any potential loss is reasonably estimable. We accrue for such matters based on the facts and circumstances specific to each matter and revise these estimates as the matters evolve. In such cases, there may exist an exposure to loss in excess of any amounts currently accrued. In view of the inherent difficulty of predicting the outcome of these legal and regulatory matters, we generally cannot predict the ultimate resolution of the pending matters, the related timing, or the eventual loss. While the outcome of such contingencies cannot be predicted with certainty, we do not believe that the resolution of such matters will have a material adverse impact on our results of operations, financial position, or cash flows. However, to the extent the liability arising from the ultimate resolution of any matter exceeds the estimates reflected in the recorded reserves relating to such matter, we could incur additional charges that could be significant.

ITEM 1A.

RISK FACTORS

There have been no material changes to the Risk Factors set forth in Part 1, Item 1A. of our 2014 Annual Report on Form 10-K. These Risk Factors may materially affect our business, financial condition or results of operations. You should carefully consider the Risk Factors set forth in our 2014 Annual Report on Form 10-K and the other information set forth elsewhere in this quarterly report. You should be aware that these Risk Factors and other information may not describe every risk facing our Company.

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.

MINE SAFETY DISCLOSURE

None.

ITEM 5.

OTHER INFORMATION

None.

ITEM 6.

EXHIBITS


Exhibit No.		Description

3.1		Amended and Restated Certificate of Incorporation (included as Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed on April 15, 2013, and incorporated herein by reference).

3.2		Amended and Restated By-laws (included as Exhibit 3.2 to the Company’s Current Report on Form 8-K, filed on April 15, 2013, and incorporated herein by reference).

4.1*		Indenture, dated as of April 16, 2015, relating to Taylor Morrison Communities, Inc.’s and Taylor Morrison Holdings II, Inc.’s 5.875% Senior Notes due 2023, by and among Taylor Morrison Communities, Inc., Taylor Morrison Holdings II, Inc., the guarantors party thereto and U.S. Bank National Association.

10.1*		Amendment dated as of March 15, 2015 to the Amended and Restated Agreement of Exempted Limited Partnership of TMM Holdings II Limited Partnership of TMM Holdings II Limited Partnership.


Exhibit No.		Description

10.2*		Amendment No. 3, dated as of April 24, 2015, to the Second Amended and Restated Credit Agreement, dated as of July 13, 2011 (as amended and restated as of April 13, 2012, thereafter amended as of August 15, 2012 and December 27, 2012, as further amended and restated as of April 12, 2013 and thereafter amended as of January 15, 2014 and December 22, 2014), by and among Taylor Morrison Communities, Inc., TMM Holdings Limited Partnership, Taylor Morrison Holdings II, Inc., Taylor Morrison Communities II, Inc., Taylor Morrison Holdings, Inc., Taylor Morrison Finance, Inc., the lenders party thereto and Credit Suisse AG, as administrative agent for the lenders.

10.3*		Employment Agreement, dated as of December 28, 2012, between Taylor Morrison, Inc. and Darrell C. Sherman.

10.4*		2015 Non-Employee Director Deferred Compensation Plan

10.5*		Form of Deferred Stock Unit Award Agreement

31.1*		Certification of Sheryl D. Palmer, Chief Executive Officer, pursuant to Section 302 of the Sarbanes–Oxley Act of 2002.

31.2*		Certification of C. David Cone, Chief Financial Officer, pursuant to Section 302 of the Sarbanes–Oxley Act of 2002.

32.1*		Certification of Sheryl D. Palmer, Chief Executive Officer, pursuant to Section 906 of the Sarbanes–Oxley Act of 2002.

32.2*		Certification of C. David Cone, Chief Financial Officer, pursuant to Section 906 of the Sarbanes–Oxley Act of 2002.

101.INS		XBRL Instance Document.

101.SCH		XBRL Taxonomy Extension Schema Document.

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB		XBRL Taxonomy Extension Label Linkbase Document.

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document.

*	Filed herewith.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		TAYLOR MORRISON HOME CORPORATION
		Registrant
DATE: May 7, 2015
		/s/ Sheryl D. Palmer
		Sheryl D. Palmer
		President and Chief Executive Officer (Principal Executive Officer)

		/s/ C. David Cone
		C. David Cone
		Vice President and Chief Financial Officer (Principal Financial Officer)

		/s/ Joseph Terracciano
		Joseph Terracciano
		Chief Accounting Officer (Principal Accounting Officer)

EXHIBIT INDEX


Exhibit No.		Description

3.1		Amended and Restated Certificate of Incorporation (included as Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed on April 15, 2013, and incorporated herein by reference).

3.2		Amended and Restated By-laws (included as Exhibit 3.2 to the Company’s Current Report on Form 8-K, filed on April 15, 2013, and incorporated herein by reference).

4.1*		Indenture, dated as of April 16, 2015, relating to Taylor Morrison Communities, Inc.’s and Taylor Morrison Holdings II, Inc.’s 5.875% Senior Notes due 2023, by and among Taylor Morrison Communities, Inc., Taylor Morrison Holdings II, Inc., the guarantors party thereto and U.S. Bank National Association.

10.1*		Amendment dated as of March 15, 2015 to the Amended and Restated Agreement of Exempted Limited Partnership of TMM Holdings II Limited Partnership of TMM Holdings II Limited Partnership.

10.2*		Amendment No. 3, dated as of April 24, 2015, to the Second Amended and Restated Credit Agreement, dated as of July 13, 2011 (as amended and restated as of April 13, 2012, thereafter amended as of August 15, 2012 and December 27, 2012, as further amended and restated as of April 12, 2013 and thereafter amended as of January 15, 2014 and December 22, 2014), by and among Taylor Morrison Communities, Inc., TMM Holdings Limited Partnership, Taylor Morrison Holdings II, Inc., Taylor Morrison Communities II, Inc., Taylor Morrison Holdings, Inc., Taylor Morrison Finance, Inc., the lenders party thereto and Credit Suisse AG, as administrative agent for the lenders.

10.3*		Employment Agreement, dated as of December 28, 2012, between Taylor Morrison, Inc. and Darrell C. Sherman.

10.4*		2015 Non-Employee Director Deferred Compensation Plan

10.5*		Form of Deferred Stock Unit Award Agreement

31.1*		Certification of Sheryl D. Palmer, Chief Executive Officer, pursuant to Section 302 of the Sarbanes–Oxley Act of 2002.

31.2*		Certification of C. David Cone, Chief Financial Officer, pursuant to Section 302 of the Sarbanes–Oxley Act of 2002.

32.1*		Certification of Sheryl D. Palmer, Chief Executive Officer, pursuant to Section 906 of the Sarbanes–Oxley Act of 2002.

32.2*		Certification of C. David Cone, Chief Financial Officer, pursuant to Section 906 of the Sarbanes–Oxley Act of 2002.

101.INS		XBRL Instance Document.

101.SCH		XBRL Taxonomy Extension Schema Document.

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB		XBRL Taxonomy Extension Label Linkbase Document.

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document.

*	Filed herewith.

Exhibit 4.1

EXECUTION COPY

TAYLOR MORRISON COMMUNITIES, INC.

TAYLOR MORRISON HOLDINGS II, INC.

Issuers

5.875% SENIOR NOTES DUE 2023

INDENTURE

Dated as of April 16, 2015

U.S. BANK NATIONAL ASSOCIATION,

Trustee

TABLE OF CONTENTS


		Page

ARTICLE 1

DEFINITIONS AND INCORPORATION
BY REFERENCE

Section 1.01	Definitions		1
Section 1.02	Other Definitions		22
Section 1.03	Incorporation by Reference of Trust Indenture Act		23
Section 1.04	Rules of Construction and Calculation		23

ARTICLE 2

THE NOTES

Section 2.01	Form and Dating		24
Section 2.02	Execution and Authentication		25
Section 2.03	Registrar and Paying Agent		25
Section 2.04	Paying Agent to Hold Money in Trust		26
Section 2.05	Holder Lists		26
Section 2.06	Transfer and Exchange		26
Section 2.07	Replacement Notes		36
Section 2.08	Outstanding Notes		36
Section 2.09	Treasury Notes		37
Section 2.10	Temporary Notes		37
Section 2.11	Cancellation		37
Section 2.12	Defaulted Interest		37
Section 2.13	CUSIP Numbers		37
Section 2.14	Issuance of Additional Notes		38

ARTICLE 3

REDEMPTION AND PREPAYMENT

Section 3.01	Notices to Trustee		38
Section 3.02	Selection of Notes to Be Redeemed or Purchased		38
Section 3.03	Notice of Redemption		39
Section 3.04	Effect of Notice of Redemption		40
Section 3.05	Deposit of Redemption or Purchase Price		40
Section 3.06	Notes Redeemed or Purchased in Part		40
Section 3.07	Optional Redemption		40
Section 3.08	Mandatory Redemption		40

ARTICLE 4

COVENANTS

Section 4.01	Payment of Notes		41
Section 4.02	Maintenance of Office or Agency		41
Section 4.03	Reports		41
Section 4.04	Compliance Certificate		44
Section 4.05	Taxes		44
Section 4.06	Stay, Extension and Usury Laws		44

- i -


Section 4.07	Restrictions on Sale and Leaseback Transactions	44
Section 4.08	Liens	45
Section 4.09	Offer to Repurchase Upon Change of Control	46
Section 4.10	Designation of Restricted and Unrestricted Subsidiaries	48
Section 4.11	Payments for Consent	48
Section 4.12	Additional Note Guarantees	49
Section 4.13	Covenant Termination	49

ARTICLE 5

SUCCESSORS

Section 5.01	Merger, Consolidation, or Sale of Assets	49
Section 5.02	Successor Corporation Substituted	50

ARTICLE 6

DEFAULTS AND REMEDIES

Section 6.01	Events of Default	50
Section 6.02	Acceleration	52
Section 6.03	Other Remedies	52
Section 6.04	Waiver of Past Defaults	52
Section 6.05	Control by Majority	52
Section 6.06	Limitation on Suits	52
Section 6.07	Rights of Holders to Receive Payment	53
Section 6.08	Collection Suit by Trustee	53
Section 6.09	Trustee May File Proofs of Claim	53
Section 6.10	Priorities	53
Section 6.11	Undertaking for Costs	54

ARTICLE 7

TRUSTEE

Section 7.01	Duties of Trustee	54
Section 7.02	Rights of Trustee	55
Section 7.03	Individual Rights of Trustee	56
Section 7.04	Trustee’s Disclaimer	56
Section 7.05	Notice of Defaults	56
Section 7.06	Compensation and Indemnity	56
Section 7.07	Replacement of Trustee	57
Section 7.08	Successor Trustee by Merger, etc.	57
Section 7.09	Eligibility; Disqualification	58
Section 7.10	Preferential Collection of Claims Against Issuers	58

ARTICLE 8

LEGAL DEFEASANCE AND COVENANT DEFEASANCE

Section 8.01	Option to Effect Legal Defeasance or Covenant Defeasance	58
Section 8.02	Legal Defeasance and Discharge	58
Section 8.03	Covenant Defeasance	59
Section 8.04	Conditions to Legal or Covenant Defeasance	59
Section 8.05	Deposited Money and Government Securities to be Held in Trust; Other Miscellaneous Provisions	60
Section 8.06	Repayment to Issuers	60

- ii -


Section 8.07	Reinstatement	60

ARTICLE 9

AMENDMENT, SUPPLEMENT AND WAIVER

Section 9.01	Without Consent of Holders	61
Section 9.02	With Consent of Holders	61
Section 9.03	Compliance with Trust Indenture Act	63
Section 9.04	Revocation and Effect of Consents	63
Section 9.05	Notation on or Exchange of Notes	63
Section 9.06	Trustee to Sign Amendments, etc.	63
ARTICLE 10

NOTE GUARANTEES

Section 10.01	Guarantee	63
Section 10.02	Limitation on Guarantor Liability	65
Section 10.03	Execution and Delivery of Note Guarantee	65
Section 10.04	Guarantors May Consolidate, etc., on Certain Terms	65
Section 10.05	Releases	66

ARTICLE 11

SATISFACTION AND DISCHARGE

Section 11.01	Satisfaction and Discharge	67
Section 11.02	Application of Trust Money	68

ARTICLE 12

MISCELLANEOUS

Section 12.01	Indenture Shall Control	68
Section 12.02	Notices	68
Section 12.03	U.S.A. Patriot Act	69
Section 12.04	Certificate and Opinion as to Conditions Precedent	69
Section 12.05	Statements Required in Certificate or Opinion	70
Section 12.06	Rules by Trustee and Agents	70
Section 12.07	No Personal Liability of Directors, Officers, Employees and Stockholders	70
Section 12.08	Governing Law	70
Section 12.09	No Adverse Interpretation of Other Agreements	70
Section 12.10	Successors	70
Section 12.11	Severability	71
Section 12.12	Counterpart Originals	71
Section 12.13	Table of Contents, Headings, etc.	71
Section 12.14	Waiver of Jury Trial	71
Section 12.15	Force Majeure	71
Section 12.16	Consent to Jurisdiction and Service	71
Section 12.17	Currency Indemnity	72


EXHIBITS

Exhibit A1		FORM OF NOTE
Exhibit A2		FORM OF REGULATION S TEMPORARY GLOBAL NOTE
Exhibit B		FORM OF CERTIFICATE OF TRANSFER
Exhibit C		FORM OF CERTIFICATE OF EXCHANGE
Exhibit D		FORM OF NOTATION OF NOTE GUARANTEE
Exhibit E		FORM OF SUPPLEMENTAL INDENTURE

- iii -

INDENTURE, dated as of April 16, 2015, among Taylor Morrison Communities, Inc., a Delaware corporation, and Taylor Morrison Holdings II, Inc., a British Columbia corporation (together, the “ Issuers ”), the Guarantors (as defined herein) and U.S. Bank National Association, a national banking association, as trustee (the “ Trustee ”).

The Issuers, the Guarantors and the Trustee agree as follows for the benefit of each other and for the equal and ratable benefit of the Holders (as defined herein) of the Issuers’ 5.875% Senior Notes due 2023 (the “ Notes ”):

ARTICLE 1

DEFINITIONS AND INCORPORATION

BY REFERENCE

Section 1.01 Definitions .

“ 144A Global Note ” means a Global Note substantially in the form of Exhibit A1 hereto bearing the Global Note Legend and the Private Placement Legend and deposited with or on behalf of, and registered in the name of, the Depositary or its nominee, issued in a denomination equal to the outstanding principal amount of the Notes sold in reliance on Rule 144A.

“ 2020 Notes ” means the Issuers’ 7.750% senior notes due 2020.

“ 2021 Notes ” means the Issuers’ 5.25% senior notes due 2021.

“ 2024 Notes ” means the Issuers’ 5.625% senior notes due 2024.

“ Additional Notes ” means any Notes (other than the Initial Notes), if any, issued under this Indenture in accordance with Section 2.02 and 2.14.

“ Affiliate ” of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, “control,” as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise.

“ Agent ” means any Registrar, co-registrar, Paying Agent or additional paying agent.

“ Applicable Accounting Standards ” means, as of the Issue Date, U.S. GAAP; provided , however , that the Issuers may, upon not less than sixty (60) days’ prior written notice to the Trustee, change the Applicable Accounting Standards to IFRS; provided , however , that notwithstanding the foregoing, if the Issuers so change to IFRS, they may elect, in their sole discretion, to continue to utilize U.S. GAAP for the purposes of making all calculations under this Indenture that are subject to Applicable Accounting Standards and the notice to the Trustee required upon the change to IFRS shall set forth whether or not the Issuers intend to continue to use U.S. GAAP for purposes of making all calculations under this Indenture. In the event the Issuers elect to change to IFRS for purposes of making calculations under this Indenture, references in this Indenture to a standard or rule under U.S. GAAP shall be deemed to refer to the most nearly comparable standard or rule under IFRS.

- 1 -

“ Applicable Premium ” means, with respect to any Note on any Redemption Date, the excess, if any, of (a) the present value at such Redemption Date of (i) 100% of the principal amount of the notes redeemed, plus (ii) all required interest payments due on such Note (excluding accrued but unpaid interest to the Redemption Date) to, but excluding, January 15, 2023, computed using a discount rate equal to the Treasury Rate as of such Redemption Date plus 50 basis points; over (b) the principal amount of such Note.

“ Applicable Procedures ” means, with respect to any transfer or exchange of or for beneficial interests in any Global Note, the rules and procedures of the Depositary, Euroclear and Clearstream that apply to such transfer or exchange.

“ Attributable Debt ” means, in respect of a Sale and Leaseback Transaction, the present value (discounted at the weighted average effective interest rate per annum of the Notes, compounded semiannually) of the obligation of the lessee for rental payments during the remaining term of the lease included in such transaction, including any period for which such lease has been extended or may, at the option of the lessor, be extended or, if earlier, until the earliest date on which the lessee may terminate such lease upon payment of a penalty (in which case the obligation of the lessee for rental payments shall include such penalty), after excluding all amounts required to be paid on account of maintenance and repairs, insurance, taxes, assessments, water and utility rates and similar charges.

“ Bankruptcy Law ” means Title 11, U.S. Code or any similar federal or state law for the relief of debtors.

“ Below Investment Grade Rating Event ” means that the Notes become rated below an Investment Grade Rating by each of the Rating Agencies on any date from the date of the public notice of an arrangement that results in a Change of Control until the end of the 60 day period following public notice of the occurrence of a Change of Control (which period shall be extended so long as the rating of the Notes is under publicly announced consideration for possible downgrade by any of the Rating Agencies) (the “ Ratings Decline Period ”). In determining whether a Change of Control has occurred for purposes of this definition, clause (E) of the last paragraph of the definition of “Change of Control” shall be disregarded.

“ Board of Directors ” means:

(1) with respect to a corporation, the board of directors of the corporation or any committee thereof duly authorized to act on behalf of such board;

(2) with respect to a partnership, the Board of Directors of the general partner of the partnership;

(3) with respect to a limited liability company, the managing member or members or any controlling committee of managing members thereof; and

(4) with respect to any other Person, the board or committee of such Person serving a similar function.

“ Business Day ” means each day that is not a Saturday, a Sunday or a day on which banking institutions are not required to be open in the State of New York, the State of Arizona or the Province of Ontario. If a payment date is not a Business Day at such place, payment may be made at such place on the next succeeding Business Day, and no interest shall accrue for the intervening period.

“ Canadian Issuer ” means Taylor Morrison Holdings II, Inc., a British Columbia corporation.

“ Capital Lease Obligation ” means, at the time any determination is to be made, the amount of the liability in respect of a capital lease that would at that time be required to be capitalized on a balance sheet prepared in accordance with Applicable Accounting Standards, and the Stated Maturity

- 2 -

thereof shall be the date of the last payment of rent or any other amount due under such lease prior to the first date upon which such lease may be prepaid by the lessee without payment of a penalty.

“ Capital Stock ” means:

(1) in the case of a corporation, corporate stock;

(2) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock;

(3) in the case of a partnership or limited liability company, partnership interests (whether general or limited) or membership interests; and

(4) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person, but excluding from all of the foregoing any debt securities convertible into Capital Stock, whether or not such debt securities include any right of participation with Capital Stock.

“ Cash Equivalents ” means:

(1) United States dollars or any other currencies held from time to time in the ordinary course of business;

(2) securities issued or directly and fully and unconditionally guaranteed or insured by the United States government or any agency or instrumentality thereof the securities of which are unconditionally guaranteed as a full faith and credit obligation of such government with maturities of 24 months or less from the date of acquisition;

(3) certificates of deposit, time deposits and eurodollar time deposits with maturities of two years or less from the date of acquisition, bankers’ acceptances with maturities not exceeding two years and overnight bank deposits, in each case with any domestic commercial bank having capital and surplus of not less than $250.0 million;

(4) repurchase obligations for underlying securities of the types described in clauses (2), (3) and (7) entered into with any financial institution meeting the qualifications specified in clause (3) above;

(5) commercial paper rated at least P-1 by Moody’s or at least A-1 by S&P (or, if at any time neither Moody’s nor S&P shall be rating such obligations, an equivalent rating from another nationally recognized statistical rating agency selected by the Issuers) and in each case maturing within 24 months after the date of creation thereof and Indebtedness or preferred stock issued by Persons with a rating of “A” or higher from S&P or “A2” or higher from Moody’s with maturities of 24 months or less from the date of acquisition;

(6) marketable short-term money market and similar funds either having (A) assets in excess of $250.0 million or (B) a rating of at least P-2 or A-2 from either Moody’s or S&P, respectively (or, if at any time neither Moody’s nor S&P shall be rating such obligations, an equivalent rating from another nationally recognized statistical rating agency selected by the Issuers);

(7) readily marketable direct obligations issued by any state, commonwealth or territory of the United States or any political subdivision or taxing authority thereof having an Investment Grade Rating from either Moody’s or S&P (or, if at any time neither Moody’s nor S&P shall be rating such obligations, an equivalent rating from another nationally recognized statistical rating agency selected by the Issuers) with maturities of 24 months or less from the date of acquisition;

(8) readily marketable direct obligations issued by any foreign government or any political subdivision or public instrumentality thereof, in each case having an Investment Grade

- 3 -

Rating from either Moody’s or S&P (or, if at any time neither Moody’s nor S&P shall be rating such obligations, an equivalent rating from another nationally recognized statistical rating agency selected by the Issuers) with maturities of 24 months or less from the date of acquisition; and

(9) investment funds investing at least 90% of their assets in securities of the types described in clauses (1) through (8) above.

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

(1) the direct or indirect sale, lease, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the properties or assets of the Restricted Parents and their Restricted Subsidiaries, taken as a whole, to any “person” (as that term is used in Section 13(d) of the Exchange Act) other than Permitted Holders;

(2) the adoption of a plan relating to the liquidation or dissolution of Holdings, U.S. Holdings or an Issuer; or

(3) Holdings, U.S. Holdings or an Issuer becomes aware of (by way of a report or any other filing pursuant to Section 13(d) of the Exchange Act, proxy, vote, written notice or otherwise) the acquisition by (A) any Person (other than any Permitted Holder) or (B) Persons (other than any Permitted Holder) that are together a group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act, or any successor provision), including any such group acting for the purpose of acquiring, holding or disposing of securities (within the meaning of Rule 13d-5(b)(1) under the Exchange Act), in a single transaction or in a related series of transactions, by way of merger, consolidation or other business combination or purchase of beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act, or any successor provision) of more than 50.0% of the total voting power of the Voting Stock of Holdings directly or indirectly through any direct or indirect parent holding companies of Holdings (including Taylor Morrison Home Corporation); provided that a Change of Control shall not be deemed to have occurred solely as a result of Holdings becoming a Subsidiary of any direct or indirect parent holding companies so long as no Person or Persons that are together a group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act, or any successor provision), including any such group acting for the purpose of acquiring, holding or disposing of securities (within the meaning of Rule 13d-5(b)(1) under the Exchange Act), in a single transaction or in a related series of transactions, by way of merger, consolidation or other business combination or purchase of beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act, or any successor provision), in each case other than the Permitted Holders, owns or holds, directly or indirectly, more than 50.0% of the total voting power of the ultimate parent holding company. For purposes of calculating beneficial ownership of any Person under this clause (3), such Person will be deemed to also have beneficial ownership of all securities that such Person has the right to acquire by conversion or exercise of other securities, whether such right is currently exercisable or is exercisable only after the passage of time.

Notwithstanding the foregoing: (A) the transfer of assets between or among the Restricted Subsidiaries, Holdings and the Restricted Parents shall not itself constitute a Change of Control; (B) the term “Change of Control” shall not include a merger or consolidation of a Restricted Parent (or any direct or indirect parent thereof) with, or the sale, assignment, conveyance, transfer, lease or other disposition of all or substantially all of the assets of such Restricted Parent (or direct or indirect parent thereof) to, an Affiliate incorporated or organized solely for the purpose of reincorporating or reorganizing U.S. Holdings or an Issuer in another jurisdiction and/or for the sole purpose of forming or collapsing a holding company structure; (C) a “person” or “group” shall not be deemed to have beneficial ownership of securities subject to a stock purchase agreement, merger agreement or similar agreement (or voting or option agreement related thereto) until the consummation of the transactions contemplated by such agreement; (D) a sale of assets pursuant to a Designated Asset Sale or a transfer of Excess Designated Proceeds shall not itself constitute a Change of Control; and (E) any of the events described above in clauses (1) through (3) shall not constitute a “Change of Control” (i) after a Covenant Termination Event

- 4 -

unless a Below Investment Grade Rating Event also occurs in connection therewith and (ii) if the Notes are rated below an Investment Grade Rating prior to the announcement of such event, unless a Ratings Decline also occurs in connection therewith.

“ Clearstream ” means Clearstream Banking, S.A.

“ Consolidated Adjusted Tangible Assets ” means, as at any date of determination, the total amount of all assets of Holdings and its Restricted Subsidiaries as shown on the consolidated balance sheet of Holdings for the then most recently completed fiscal quarter for which internal financial statements are available, less, without duplication, Intangible Assets and assets purchased, constructed, leased, installed or improved after the Issue Date with the proceeds of Indebtedness secured by a Lien described in any of clauses (b), (c) or (e) of the definition of “Permitted Liens”; provided that assets of Restricted Subsidiaries that are not Wholly Owned Subsidiaries of a Restricted Parent will be included in the calculation of Consolidated Adjusted Tangible Assets only to the extent the Capital Stock of such Restricted Subsidiaries is owned by a Restricted Parent and/or any Restricted Subsidiary of a Restricted Parent, in each case, determined on a consolidated basis in accordance with Applicable Accounting Standards. In addition, for purposes of calculating the Consolidated Adjusted Tangible Assets, investments, acquisitions, mergers, consolidations, dispositions, amalgamations, discontinued operations (as determined in accordance with Applicable Accounting Standards) any operational changes and changes in the composition of the Restricted Subsidiaries that have been made by Holdings or any of its Restricted Subsidiaries, or any Person or any of its Restricted Subsidiaries acquired by, merged or consolidated with Holdings or any of its Restricted Subsidiaries, and including any related financing transactions and including increases in ownership of Restricted Subsidiaries, subsequent to the end of the most recently completed fiscal quarter and on or prior to the date of determination will be given pro forma effect as if they had occurred at the end of such fiscal quarter. For purposes of this definition, whenever pro forma effect is given to a transaction or other event, the pro forma calculations shall be made in good faith by a responsible financial or accounting officer of an Issuer.

“ Consolidated Total Indebtedness ” means, as at any date of determination, an amount equal to the sum of (1) the aggregate amount of all outstanding Indebtedness of Holdings and its Restricted Subsidiaries on a consolidated basis consisting of Indebtedness for borrowed money, Obligations in respect of Capital Lease Obligations and debt obligations evidenced by promissory notes and similar instruments, as determined in accordance with Applicable Accounting Standards (but excluding the effects of any discounting of Indebtedness resulting from the application of purchase accounting in connection with any permitted acquisition under this Indenture) and (2) the aggregate amount of all outstanding Disqualified Stock of Holdings and its Restricted Subsidiaries on a consolidated basis, with the amount of such Disqualified Stock equal to the greater of their respective voluntary or involuntary liquidation preferences and maximum fixed repurchase prices, in each case determined on a consolidated basis in accordance with Applicable Accounting Standards; provided that Consolidated Total Indebtedness shall not include Indebtedness in respect of (i) letters of credit, except to the extent of unreimbursed amounts thereunder, (ii) Unrestricted Subsidiaries, (iii) Hedging Obligations and (iv) Guarantees, except to the extent Holdings or any of its Restricted Subsidiaries has made any payment in respect of any such Guarantee. For purposes hereof, the “maximum fixed repurchase price” of any Disqualified Stock or preferred stock that does not have a fixed repurchase price shall be calculated in accordance with the terms of such Disqualified Stock or preferred stock as if such Disqualified Stock were purchased on any date on which Consolidated Total Indebtedness shall be required to be determined pursuant to this Indenture, and if such price is based upon, or measured by, the fair market value of such Disqualified Stock, such fair market value shall be determined reasonably and in good faith by the Issuers.

“ Corporate Trust Office of the Trustee ” shall be at the address of the Trustee specified in Section 12.02 or such other address as to which the Trustee may give notice to the Issuers.

“ Credit Agreement ” means that certain Credit Agreement, dated as of July 13, 2011, by and among the U.S. Issuer and Monarch Corporation, as borrowers, Holdings, the Canadian Issuer, U.S. Holdings, Credit Suisse AG, as administrative agent, and various lenders providing for revolving credit borrowings, including any related notes, Guarantees, collateral documents, instruments and agreements

- 5 -

executed in connection therewith, and, in each case, as amended, restated, modified, renewed, refunded, replaced (whether upon or after termination or otherwise) or refinanced by any other term or revolving Indebtedness (including by means of sales of debt securities and including any amendment, restatement, modification, renewal, refunding, replacement or refinancing that increases the amount borrowed thereunder or extends the maturity thereof) in whole or in part from time to time subsequent to the Reference Date. Any agreement or instrument other than the Credit Agreement, as it has been amended and restated and in effect as of the Issue Date, must be designated in a writing delivered to the Trustee by the Issuers as a “Credit Agreement” for purposes of this Indenture in order to be deemed a Credit Agreement. For the avoidance of doubt, the Credit Agreement dated as of July 13, 2011, by and among the U.S. Issuer and Monarch Corporation, as borrowers, Holdings, the Canadian Issuer, U.S. Holdings, the lenders from time to time party thereto and Credit Suisse AG, as administrative agent, as heretofore amended, restated, modified or supplemented, shall be a “Credit Agreement.”

“ Credit Facilities ” means one or more debt facilities or commercial paper facilities (including the credit facilities provided under the Credit Agreement), in each case, with banks or other lenders or credit providers or a Trustee providing for the revolving credit loans, term loans, receivables financing (including through the sale of receivables to such lenders or to special purpose entities formed to borrow from such lenders against such receivables), bankers acceptances, letters of credit or issuances of debt securities, including any related notes, guarantees, collateral documents, instruments, documents and agreements executed in connection therewith and in each case, as amended, restated, modified, renewed, extended, supplemented, restructured, refunded, replaced in any manner (whether upon or after termination or otherwise) or in part from time to time, in one or more instances and including any amendment increasing the amount of Indebtedness incurred or available to be borrowed thereunder, extending the maturity of any Indebtedness incurred thereunder or contemplated thereby or deleting, adding or substituting one or more parties thereto (whether or not such added or substituted parties are banks or other institutional lenders), including one or more separate instruments or facilities, in each case, whether any such amendment, restatement, modification, renewal, extension, supplement, restructuring, refunding, replacement or refinancing occurs simultaneously or not with the termination or repayment of a prior Credit Facility. Any agreement or instrument other than the Credit Agreement, as it has been amended and restated and in effect as of the Issue Date must be designated in a writing delivered to the Trustee by the Issuers as a “Credit Facility” for purposes of this Indenture in order to be a Credit Facility. For the avoidance of doubt, the Credit Agreement dated as of July 13, 2011, by and among the U.S. Issuer and Monarch Corporation, as borrowers, Holdings, the Canadian Issuer, U.S. Holdings, the lenders from time to time party thereto and Credit Suisse AG, as administrative agent, as heretofore amended, restated, modified or supplemented, shall be a “Credit Facility.”

“ Custodian ” means the Trustee, as custodian with respect to the Notes in global form, or any successor entity thereto.

“ Default ” means any event that is, or with the passage of time or the giving of notice or both would be, an Event of Default.

“ Definitive Note ” means a certificated Note registered in the name of the Holder thereof and issued in accordance with Section 2.06, substantially in the form of Exhibit A1 hereto except that such Note shall not bear the Global Note Legend and shall not have the “Schedule of Exchanges of Interests in the Global Note” attached thereto.

“ Depositary ” means, with respect to the Notes issuable or issued in whole or in part in global form, the Person specified in Section 2.03 as the Depositary with respect to the Notes, and any and all successors thereto appointed as depositary hereunder and having become such pursuant to the applicable provision of this Indenture.

“ Designated Asset Sale ” means the sale, conveyance, transfer or other disposition, whether in a single transaction or a series of related transactions, of Designated Assets (including by way of a sale and lease-back transaction and including the disposition of Capital Stock of any Subsidiary) of Holdings, U.S. Holdings, the Issuers or any of their Restricted Subsidiaries such that, on a pro forma basis,

- 6 -

after giving effect to such sale, conveyance, transfer or other disposition (and the repayment, prepayment, purchase or other retirement (if any) of any Indebtedness of Holdings or any of its Restricted Subsidiaries related to such transaction), the Specified Inventory Ratio of Holdings and its Restricted Subsidiaries is greater than 2.00 to 1.00; provided , however , that the aggregate amount of all Designated Asset Sales shall not exceed $150.0 million since the Reference Date.

“ Designated Assets ” means any property or assets (including Capital Stock of any Subsidiary) of Holdings, U.S. Holdings, the Issuers and their Restricted Subsidiaries constituting a business, a line or unit of a business or used in operating a business substantially as an entirety.

“ Disqualified Stock ” means any Capital Stock that, by its terms (or by the terms of any security into which it is convertible, or for which it is exchangeable, in each case, at the option of the holder of the Capital Stock), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at the option of the holder of the Capital Stock, in whole or in part, on or prior to the date that is 90 days after the date on which the Notes mature. Notwithstanding the preceding sentence, (x) any Capital Stock that would constitute Disqualified Stock solely because the holders of the Capital Stock have the right to require the Person that issued such Capital Stock to repurchase such Capital Stock upon the occurrence of a change of control or an asset sale will not constitute Disqualified Stock and (y) any Capital Stock issued to any plan for the benefit of employees will not constitute Disqualified Stock solely because it may be required to be repurchased by the Person that issued such Capital Stock in order to satisfy applicable statutory or regulatory obligations. The amount of Disqualified Stock deemed to be outstanding at any time for purposes of this Indenture will be the maximum amount that the Restricted Parents and their Restricted Subsidiaries may become obligated to pay upon the maturity of, or pursuant to any mandatory redemption provisions of, such Disqualified Stock, exclusive of accrued dividends.

“ Equity Interests ” means Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any debt security that is convertible into, or exchangeable for, Capital Stock).

“ Euroclear ” means Euroclear Bank, S.A./N.V., as operator of the Euroclear system.

“ Excess Designated Proceeds ” means, with respect to any Designated Asset Sale:

(1) that portion of the Net Proceeds from such Designated Asset Sale that remains after giving effect to the repayment or prepayment, purchase or other retirement of Indebtedness in connection with such Designated Asset Sale; and

(2) any non-cash proceeds of any Designated Asset Sale.

“ Exchange Act ” means the Securities Exchange Act of 1934, as amended from time to time.

“ Excluded Subsidiary ” means (a) any Subsidiary that is restricted by applicable law from guaranteeing the Notes, (b) any Immaterial Subsidiary (provided that Immaterial Subsidiaries shall not be excluded from guaranteeing the Notes to the extent that (i) the aggregate amount of gross revenue for all Immaterial Subsidiaries excluded by this clause (b) exceeds 5% of the consolidated gross revenues of Holdings, U.S. Holdings, the Issuers and their Restricted Subsidiaries for Holdings’ most recently ended four full fiscal quarters for which internal financial statements are available or (ii) the aggregate amount of total assets for all Immaterial Subsidiaries excluded by this clause (b) exceeds 5% of Consolidated Adjusted Tangible Assets), (c) any Mortgage Subsidiary, (d) any Insurance Subsidiary and (e) any Non-U.S. Subsidiary. In the event it is necessary for one or more Immaterial Subsidiaries to guarantee the Notes to comply with the proviso to clause (b) above, the Restricted Parents will cause one or more Immaterial Subsidiaries to Guarantee the Notes as and to the extent required to comply with such proviso within 30 days from when the financial statements referred to above are available.

“ Global Note Legend ” means the legend set forth in Section 2.06(f)(2) which is required to be placed on all Global Notes issued under this Indenture.

- 7 -

“ Global Notes ” means, individually and collectively, each of the Restricted Global Notes and the Unrestricted Global Notes deposited with or on behalf of and registered in the name of the Depositary or its nominee, substantially in the form of Exhibit A1 and A2 hereto and that bears the Global Note Legend and that has the “Schedule of Exchanges of Interests in the Global Note” attached thereto, issued in accordance with Section 2.01, 2.06(b)(3), 2.06(b)(4), 2.06(d)(2) or 2.06(e).

“ Government Securities ” means direct obligations of, or obligations guaranteed by, the United States of America (including any agency or instrumentality thereof) and the payment for which the United States pledges its full faith and credit.

“ Guarantee ” means a guarantee other than by endorsement of negotiable instruments for collection in the ordinary course of business, direct or indirect, in any manner including, by way of a pledge of assets or through letters of credit or reimbursement agreements in respect thereof, of all or any part of any Indebtedness (whether arising by virtue of partnership arrangements, or by agreements to keep-well, to purchase assets, goods, securities or services, to take or pay or to maintain financial statement conditions or otherwise).

“ Guarantors ” means (a) each Person that executes this Indenture on the date hereof (other than the Issuers and the Trustee) and (b) each Person that subsequently executes a Note Guarantee in accordance with the provisions of this Indenture, and their respective successors and assigns, in each case, until the Note Guarantee of such Person has been released in accordance with the provisions of this Indenture.

“ Hedging Obligations ” means, with respect to any specified Person, the obligations of such Person under:

(1) interest rate swap agreements (whether from fixed to floating or from floating to fixed), interest rate cap agreements and interest rate collar agreements;

(2) other agreements or arrangements designed to manage interest rates or interest rate risk; and

(3) other agreements or arrangements designed to protect such Person against fluctuations in currency exchange rates or commodity prices.

“ Holder ” means a Person in whose name a Note is registered.

“ Holdings ” means TMM Holdings Limited Partnership, a British Columbia limited partnership.

“ Housing Unit ” means a detached or attached (including townhouse condominium or condominium) single-family house (but excluding mobile homes) owned by a Restricted Parent or a Subsidiary of a Restricted Parent (i) which is completed or for which there has been a start of construction and (ii) which has been or is being constructed on any real estate which immediately prior to the start of construction constituted a Lot.

“ IFRS ” means the International Financial Reporting Standards, as promulgated by the International Accounting Standards Board (or any successor board or agency), as in effect on the date of the election, if any, by the Issuers to change Applicable Accounting Standards to IFRS; provided that IFRS shall not include any provision of such standards that would require a lease that would be classified as an operating lease under U.S. GAAP to be classified as indebtedness or a finance or capital lease.

“ Immaterial Subsidiary ” means, at any date of determination, any Subsidiary of a Restricted Parent whose total assets at the last day of the most recently ended fiscal quarter ending immediately prior to such date for which internal financial statements are available were less than 5.0% of Consolidated Adjusted Tangible Assets at such last day and whose gross revenues for the most recently ended four fiscal quarters ending immediately prior to such date for which internal financial statements are

- 8 -

available were less than 5.0% of the consolidated gross revenues of Holdings, U.S. Holdings, the Issuers and their Restricted Subsidiaries for such period, in each case determined in accordance with Applicable Accounting Standards.

“ Indebtedness ” means, with respect to any specified Person, the principal and premium (if any) of any indebtedness of such Person (excluding accrued expenses and trade payables), whether or not contingent (without duplication):

(1) in respect of borrowed money;

(2) evidenced by bonds, notes, debentures or similar instruments or letters of credit (or reimbursement agreements in respect thereof) (other than letters of credit issued in respect of trade payables);

(3) in respect of banker’s acceptances;

(4) representing Capital Lease Obligations;

(5) representing the balance deferred and unpaid of the purchase price of any property or services due more than twelve months after such property is acquired or such services are completed (except any such balance that constitutes a trade payable or similar obligation to a trade creditor); or

(6) representing the net obligations under any Hedging Obligations,

if and to the extent any of the preceding items (other than letters of credit and Hedging Obligations) would appear as a liability upon a balance sheet of the specified Person prepared in accordance with Applicable Accounting Standards. In addition, the term “Indebtedness” includes all Indebtedness of others secured by a Lien on any asset of the specified Person (whether or not such Indebtedness is assumed by the specified Person) and, to the extent not otherwise included, the Guarantee by the specified Person of any Indebtedness of any other Person. Notwithstanding the foregoing, the term “Indebtedness” shall not include (a) in connection with the purchase by any of the Restricted Parents or their Restricted Subsidiaries of any business, post-closing payment adjustments to which the seller may become entitled to the extent such payment is determined by a final closing balance sheet or such payment depends on the performance of such business after the closing unless such payments are required under Applicable Accounting Standards to appear as a liability on the balance sheet (excluding the footnotes); provided , however , that at the time of closing, the amount of any such payment is not determinable and, to the extent such payment thereafter becomes fixed and determined, the amount is paid within 30 days thereafter; (b) contingent obligations; incurred in the ordinary course of business and not in respect of borrowed money; (c) deferred or prepaid revenues; (d) any Capital Stock other than Disqualified Stock; or (e) purchase price holdbacks in respect of a portion of the purchase price of an asset to satisfy warranty or other unperformed obligations of the respective seller. Notwithstanding anything in this Indenture to the contrary, Indebtedness shall not include, and shall be calculated without giving effect to, the effects of ASC Topic 815 and related interpretations to the extent such effects would otherwise increase or decrease an amount of Indebtedness for any purpose under this Indenture as a result of accounting for any embedded derivatives created by the terms of such Indebtedness; and any such amounts that would have constituted Indebtedness under this Indenture but for the application of this sentence shall not be deemed an incurrence of Indebtedness under this Indenture.

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

“ Indirect Participant ” means a Person who holds a beneficial interest in a Global Note through a Participant.

“ Initial Notes ” means the first $350.0 million aggregate principal amount of Notes issued under this Indenture.

- 9 -

“ Initial Purchasers ” means Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, J.P. Morgan Securities LLC, Deutsche Bank Securities Inc., Goldman, Sachs & Co., Comerica Securities, Inc., FBR Capital Markets & Co., HSBC Securities (USA) Inc. and Wells Fargo Securities, LLC.

“ Insurance Subsidiaries ” means (1) Taylor Woodrow Insurance Services, Inc., (2) Beneva Indemnity Company and (3) any other corporation, limited partnership, limited liability company or business trust that is (A) organized after the Reference Date or designated by an Issuer as an Insurance Subsidiary pursuant to an Officer’s Certificate delivered to the Trustee and (B) a Subsidiary of a Restricted Parent; provided that, in the case of clause (1), (2) and (3), such Person is primarily engaged in the business it is engaging in on the Reference Date or is otherwise primarily engaged in the business of providing title insurance, captive insurance (whether for an Issuer and its Subsidiaries or otherwise) or insurance agency or other ancillary or complementary services that in each case is subject to state regulation and/or licensing requirements.

“ Intangible Assets ” means all unamortized debt discount and expense, unamortized deferred charges, goodwill, patents, trademarks, service marks, trade names, copyrights, write-ups of assets over their prior carrying value (other than write-ups which occurred prior to July 14, 2011 and other than, in connection with the acquisition of an asset, the write-up of the value of such asset (within one year of its acquisition) to its fair market value in accordance with Applicable Accounting Standards) and all other items which would be treated as intangible on the consolidated balance sheet of Holdings, U.S. Holdings, the Issuers and their Restricted Subsidiaries prepared in accordance with Applicable Accounting Standards.

“Investment Grade Rating” means a rating equal to or higher than Baa3 (or the equivalent) by Moody’s, BBB- (or the equivalent) by S&P or an equivalent rating by any other Rating Agency.

“ Issue Date ” means April 16, 2015.

“ Issuers ” shall have the meaning assigned to such term in the introductory statement of this Indenture.

“ Lien ” means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind 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, any lease in the nature thereof, any option or other agreement to sell or give a security interest in and any filing of or agreement to give any financing statement under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction.

“ Lots ” means all land owned by a Restricted Parent or a Subsidiary of a Restricted Parent which is zoned by the applicable governmental authority having jurisdiction for construction and use as Housing Units.

“March 2012 Offering Circular” means the final Offering Circular dated March 30, 2012, related to the 2020 Notes.

“ Model Home Unit ” means a completed Housing Unit to be used as a model home in connection with the sale of Housing Units in a residential housing project.

“ Moody’s ” means Moody’s Investors Service, Inc.

“ Mortgage Subsidiary ” means (1) Taylor Morrison Home Funding, LLC, (2) Mortgage Funding Direct Ventures, LLC and (3) any corporation, limited partnership, limited liability company or business trust that is (A) organized after the Reference Date or designated by an Issuer as a Mortgage Subsidiary pursuant to an Officer’s Certificate delivered to the Trustee and (B) a Subsidiary of a Restricted Parent; provided that, in the case of clause (1), (2) and (3), such Person is primarily engaged in the business it is engaging in on the Reference Date or is otherwise primarily engaged in the business of issuing

- 10 -

mortgage loans on residential properties (whether for purchase of homes or refinancing of existing mortgages), purchasing and selling mortgage loans, issuing securities backed by mortgage loans, acting as a broker of mortgage loans and other activities customarily associated with mortgage banking and related businesses.

“ Net Proceeds ” means the aggregate cash proceeds received by a Restricted Parent or any Restricted Subsidiary of a Restricted Parent in respect of any Designated Asset Sale (including any cash received upon the sale or other disposition of any non-cash consideration received in any Designated Asset Sale), net of the direct costs relating to such Designated Asset Sale, including legal, accounting and investment banking fees, payments made in order to obtain a necessary consent or required by applicable law, and sales commissions, and any relocation expenses incurred as a result of the Designated Asset Sale, taxes paid or payable as a result of the Designated Asset Sale, including taxes resulting from the transfer of the proceeds of such Designated Asset Sale to an Issuer, in each case, after taking into account:

(1) any available tax credits or deductions and any tax sharing arrangements;

(2) amounts required to be applied to the repayment of Indebtedness secured by a Lien on the asset or assets that were the subject of such Designated Asset Sale;

(3) any reserve for adjustment in respect of the sale price of such asset or assets established in accordance with Applicable Accounting Standards;

(4) any reserve for adjustment in respect of any liabilities associated with the asset disposed of in such transaction and retained by a Restricted Parent or any Restricted Subsidiary of a Restricted Parent after such sale or other disposition thereof;

(5) any distributions and other payments required to be made to minority interest holders in Subsidiaries or joint ventures as a result of such Designated Asset Sale; and

(6) in the event that a Restricted Subsidiary of a Restricted Parent consummates a Designated Asset Sale and makes a pro rata payment of dividends to all of its stockholders from any cash proceeds of such Designated Asset Sale, the amount of dividends paid to any stockholder other than a Restricted Parent or any Restricted Subsidiary of a Restricted Parent.

“ New York Office of the Trustee ” means the office of U.S. Bank National Association at 100 Wall Street, Suite 1600, New York, New York 10005.

“ Non-Guarantor Subsidiaries ” means, at any time, any Subsidiary of a Restricted Parent that at such time (1) is an Unrestricted Subsidiary, (2) is an Excluded Subsidiary, (3) is not a Wholly Owned U.S. Subsidiary or (4) has not created, incurred, issued, assumed, guaranteed or otherwise become directly or indirectly liable, contingently or otherwise, with respect to any Indebtedness that is owed or otherwise outstanding at such time. The Board of Directors of a Restricted Parent may designate any Subsidiary of such Restricted Parent as a Non-Guarantor Subsidiary by filing with the Trustee a certified copy of a resolution of such Board of Directors giving effect to such designation and an Officer’s Certificate certifying as to the applicable clause of the definition of “Non-Guarantor Subsidiaries” that warrants such designation.

“ Non-Recourse Debt ” means Indebtedness:

(1) as to which neither a Restricted Parent nor any Restricted Subsidiary of a Restricted Parent (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 of the Indebtedness 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 of a Restricted

- 11 -

Parent or any Restricted Subsidiary of a Restricted Parent to declare a default on such other Indebtedness or cause the payment of such other Indebtedness to be accelerated or payable prior to its Stated Maturity; and

(3) as to which the lenders have been notified in writing or have agreed in writing (in the agreement relating thereto or otherwise) that they will not have any recourse to the stock or assets of a Restricted Parent or any Restricted Subsidiary of a Restricted Parent.

“ Non-U.S. Subsidiary ” means, with respect to any Person, any Subsidiary of such Person that is not a U.S. Subsidiary and any Subsidiary of such a Subsidiary, whether or not a U.S. Subsidiary.

“ Note Guarantee ” means the Guarantee by each Guarantor of the Issuers’ obligations under this Indenture and the Notes, executed pursuant to the provisions of this Indenture.

“ Notes ” has the meaning assigned to it in the preamble to this Indenture.

“ Obligations ” means any principal, interest, penalties, fees, indemnifications, reimbursements, damages and other liabilities payable under the documentation governing any Indebtedness.

“ Offering Memorandum ” means the final Offering Memorandum dated April 1, 2015 for the Initial Notes.

“ Officer ” means, with respect to any Person, the Chairman of the Board, the Chief Executive Officer, the President, the Chief Operating Officer, the Chief Financial Officer, the Treasurer, the Controller, the Secretary or any Vice-President of such Person.

“ Officer’s Certificate ” means a certificate signed on behalf of the Issuers by one Officer of an Issuer, who must be the principal executive officer, the principal financial officer, the principal legal officer, the treasurer or the principal accounting officer of such Issuer that meets the requirements of Section 12.05.

“ Opinion of Counsel ” means an opinion from legal counsel that meets the requirements of Section 12.05, which opinion may be subject to customary assumptions, qualifications and exceptions. The counsel may be an employee of or counsel to Holdings or any Subsidiary of Holdings.

“ PAPA ” means an arrangement, other than with an Affiliate of Holdings, which may be unsecured or secured by a Lien granted in conjunction with purchase contracts for the purchase of real estate and which provides for future payments due to the sellers of such real estate at the time of the sale of homes constructed on such real estate and which payments may be contingent on the sale price of such homes, which arrangement may include (1) adjustments to the land purchase price, (2) profit participations, (3) community marketing fees and community enhancement fees and (4) reimbursable costs paid by the land developer.

“ Pari Passu Indebtedness ” means:

(1) all Indebtedness of U.S. Holdings, the Issuers or any Subsidiary Guarantor outstanding under a Credit Agreement or under any other Credit Facilities (including post-petition interest at the rate provided in the documentation with respect thereto, whether or not allowed as a claim in any bankruptcy proceeding), and all Hedging Obligations and Treasury Management Obligations with respect thereto;

(2) any other Indebtedness of U.S. Holdings, the Issuers or any Subsidiary Guarantor permitted to be incurred under the terms of this Indenture, unless the instrument under which such Indebtedness is incurred expressly provides that it is subordinated in right of payment to the Notes or any Note Guarantee; and

- 12 -

(3) all Obligations with respect to the items listed in the preceding clauses (1) and (2).

Notwithstanding anything to the contrary in the preceding clauses (1), (2) and (3), Pari Passu Indebtedness will not include:

(1) any intercompany Indebtedness of the Restricted Parents or any of their Subsidiaries to any of their Affiliates;

(2) any trade payables;

(3) the portion of any Indebtedness that is incurred in violation of this Indenture (but only to the extent so incurred); provided that Indebtedness outstanding under Credit Facilities will not cease to be Pari Passu Indebtedness as a result of this clause (3) if the lenders or agents thereunder obtained a representation from the Restricted Parents or any of their Subsidiaries on the date such Indebtedness was incurred to the effect that such Indebtedness was not prohibited by this Indenture; or

(4) Indebtedness which is classified as non-recourse in accordance with Applicable Accounting Standards or any unsecured claim arising in respect thereof by reason of the application of Section 1111(b)(1) of the Bankruptcy Code.

“ Participant ” means, with respect to the Depositary, Euroclear or Clearstream, a Person who has an account with the Depositary, Euroclear or Clearstream, respectively (and, with respect to DTC, shall include Euroclear and Clearstream).

“ Permitted Holders ” means (i) JH Investments Inc., Oaktree Capital Management, L.P. and TPG Capital, L.P. and their respective Affiliates and all investment funds managed by any of the foregoing (excluding, for the avoidance of doubt, their respective portfolio companies or other operating companies affiliated with JH Investments Inc., Oaktree Capital Management, L.P. or TPG Capital, L.P.), (ii) any Person or any of the Persons who were a group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act, or any successor provision) whose ownership of assets or Voting Stock has triggered a Change of Control in respect of which a Change of Control Offer has been made and all Notes that were tendered therein have been accepted and paid, (iii) any group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act or any successor provision) of which any of the foregoing beneficially own, without giving effect to the existence of such group or any other group, more than 50.0% of the total voting power of the aggregate Voting Stock of the U.S. Issuer and the Canadian Issuer held directly or indirectly by such group and (iv) any members of a group described in clause (iii) for so long as such Person is a member of such group.

“ Permitted Liens ” means:

(a) Liens in favor of the Restricted Parents or the Subsidiary Guarantors;

(b) Liens on property or assets of a Person, plus renewals and extensions of such Liens, existing at the time such Person is merged with or into, consolidated with or acquired by a Restricted Parent or any Subsidiary of a Restricted Parent, whether in existence prior to the merger, consolidation or acquisition or incurred in contemplation thereof; provided that such Liens do not extend to any assets other than those of the Person merged into, consolidated with or acquired by such Restricted Parent or such Subsidiary and additions, accessions, improvements and replacements and customary deposits in connection therewith and proceeds and products therefrom, and other than pursuant to customary after-acquired property clauses;

(c) Liens on property (including Capital Stock), and additions, accessions, improvements and replacements and customary deposits in connection therewith and proceeds and products therefrom, existing at the time of acquisition of the property by a Restricted Parent or any Restricted Subsidiary of a Restricted Parent, whether such Liens

- 13 -

were in existence prior to such acquisition, or were incurred in contemplation of such acquisition;

(d) Liens (including deposits and pledges) to secure the performance of public or statutory obligations, progress payments, surety or appeal bonds, performance bonds, completion bonds, completion guarantees or other obligations of a like nature incurred in the ordinary course of business;

(e) Liens to secure Indebtedness (including Capital Lease Obligations) covering only the assets acquired, constructed or improved with or financed by such Indebtedness, and additions, accessions, improvements and replacements and customary deposits in connection therewith and proceeds and products therefrom; provided that individual financings of equipment provided by one lender may be cross collateralized to other financings of equipment provided by such lender;

(f) Liens existing on the Issue Date, plus renewals and extensions of such Liens;

(g) Liens for taxes, assessments or governmental charges or claims that are not yet delinquent or that are being contested in good faith by appropriate proceedings promptly instituted and diligently concluded; provided that any reserve or other appropriate provision as is required in conformity with Applicable Accounting Standards has been made therefor;

(h) Liens imposed by law, such as carriers’, warehousemen’s, landlord’s, materialmen’s, repairmen’s, construction contractors’, laborers’, employees’, suppliers’ and mechanics’ Liens, in each case, incurred in the ordinary course of business;

(i) survey exceptions, title defects, encumbrances, easements or reservations of, or rights of others for, licenses, rights-of-way, sewers, electric lines, telegraph and telephone lines and other similar purposes, or zoning or other restrictions as to the use of real property that do not materially interfere with the ordinary conduct of the business of the Restricted Parents and their Subsidiaries, taken as a whole;

(j) Liens created for the benefit of (or to secure) the Notes (or the Note Guarantees);

(k) Liens to secure any Permitted Refinancing Indebtedness; provided , however , that:

(i) the new Lien shall be limited to all or part of the same property and assets securing the original Indebtedness (and additions, accessions, improvements and replacements and customary deposits in connection therewith and proceeds and products therefrom); and assets that secured or, under the written agreements pursuant to which the original Lien arose, could secure the original Indebtedness; and

(ii) the Indebtedness secured by the new Lien is not increased to any amount greater than the sum of (x) the outstanding principal amount, or, if greater, the committed amount, of the Permitted Refinancing Indebtedness, plus accrued interest thereon and (y) an amount necessary to pay any fees, commissions, discounts and expenses, including premiums, related to such renewal, refunding, refinancing, replacement, defeasance or discharge;

(l) Liens on any collateral securing the Notes or the Note Guarantees that rank junior in priority to the Liens on such collateral securing the Notes or the Note Guarantees (as applicable) pursuant to customary intercreditor arrangements;

- 14 -

(m) Liens incurred or pledges or deposits made in connection with workers’ compensation, unemployment insurance and other types of social security or similar legislation, or to secure the performance of tenders, statutory obligations, surety, stay, customs and appeal bonds, bids, leases, government contracts, trade contracts, performance and return-of-money bonds, utility services, developer’s or others’ obligations to make on-site or off-site improvements and other similar obligations (including those to secure health, safety and environmental obligations) incurred in the ordinary course of business but not including any Liens imposed under the Pension Benefits Act (Ontario) or any pension standards legislation of any other applicable jurisdiction in Canada;

(n) zoning restrictions, easements, licenses, reservations, provisions, encroachments, encumbrances, protrusion permits, servitudes, covenants, conditions, waivers, restrictions on the use of property or minor irregularities of title (and with respect to leasehold interests, mortgages, obligations, liens and other encumbrances incurred, created, assumed or permitted to exist and arising by, through or under a landlord or owner of the leased property, with or without consent of the lessee), in each case, not materially interfering with the ordinary conduct of the business of the Restricted Parents and their Subsidiaries, taken as a whole;

(o) leases, subleases, licenses or sublicenses to third parties entered into in the ordinary course of business;

(p) Liens securing Hedging Obligations and cash management obligations;

(q) Liens arising out of judgments, decrees, orders or awards in respect of which an Issuer shall in good faith be prosecuting an appeal or proceedings for review which appeal or proceedings shall not have been finally terminated, or if the period within which such appeal or proceedings may be initiated shall not have expired;

(r) Liens on Capital Stock of an Unrestricted Subsidiary that secure Indebtedness or other obligation of such Unrestricted Subsidiary;

(s) Liens for homeowner, condominium and similar association fees, assessments and other payments;

(t) rights of purchasers and borrowers with respect to security deposits, escrow funds and other amounts held by a Restricted Parent or any Subsidiary of a Restricted Parent;

(u) Liens on 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;

(v) Liens arising from Uniform Commercial Code financing statement filings regarding operating leases entered into by a Restricted Parent and any Restricted Subsidiary of a Restricted Parent in the ordinary course of business;

(w) deposits made in the ordinary course of business to secure liability to insurance carriers;

(x) judgment and attachment Liens not giving rise to an Event of Default and notices of lis pendens and associated rights related to litigation being contested in good faith by appropriate proceedings and for which adequate reserves have been made;

- 15 -

(y) Liens arising out of conditional sale, title retention, consignment or similar arrangements for the sale of goods entered into in the ordinary course of business;

(z) Liens incurred to secure cash management services or to implement cash pooling arrangements in the ordinary course of business;

(aa) any amounts held by a trustee in the funds and accounts under an indenture securing any revenue bonds issued for the benefit of a Restricted Parent or any Restricted Subsidiary of a Restricted Parent;

(bb) Liens arising by virtue of any statutory or common law provisions relating to banker’s Liens, rights of set-off or similar rights and remedies as to deposit accounts or other funds maintained with a depository or financial institution;

(cc) pledges, deposits and other Liens existing under, or required to be made in connection with, (i) earnest money obligations, escrows or similar purpose undertakings or indemnifications in connection with any purchase and sale agreement, (ii) development agreements or other contracts entered into with governmental authorities (or an entity sponsored by a governmental authority) in connection with the entitlement of real property or (iii) agreements for the funding of infrastructure, including in respect of the issuance of community facility district bonds, metro district bonds, subdivision improvement bonds and similar bonding requirements arising in the ordinary course of business of a homebuilder;

(dd) Liens on Model Home Units and additions, accessions, improvements and replacements and customary deposits in connection therewith and proceeds and products therefrom;

(ee) Liens deemed to exist by reason of (i) any encumbrance or restriction (including put and call arrangements) with respect to the Capital Stock of any joint venture or similar arrangement pursuant to any joint venture or similar agreement or (ii) any encumbrance or restriction imposed under any contract for the sale by a Restricted Parent or any Subsidiary of a Restricted Parent of the Capital Stock of any Subsidiary of a Restricted Parent, or any business unit or division of a Restricted Parent or any Subsidiary of a Restricted Parent permitted by this Indenture; provided that in each case such Liens shall extend only to the relevant Capital Stock;

(ff) Liens securing Specified SPE Debt of a Restricted Parent or a Restricted Subsidiary of a Restricted Parent; provided that such Liens do not at any time encumber any property, other than the Equity Interests of the relevant SPE and the property financed by such Indebtedness and additions, accessions, improvements and replacements and customary deposits in connection therewith and proceeds and products therefrom;

(gg) Liens securing obligations of a Restricted Parent or any Restricted Subsidiary of a Restricted Parent to any third party in connection with PAPAs, any option, repurchase right or right of first refusal to purchase real property granted to the master developer or the seller of real property that arises as a result of the non-use or non-development of such real property by a Restricted Parent or any Restricted Subsidiary of a Restricted Parent and joint development agreements with third parties to perform and/or pay for or reimburse the costs of construction and/or development related to or benefiting property (and additions, accessions, improvements and replacements and customary deposits in connection therewith and proceeds and products therefrom) of a Restricted Parent or any Restricted Subsidiary of a Restricted Parent and property belonging to such third parties, in each case entered into in the ordinary course of business; provided that such Liens do not at any time encumber any property, other than the property (and additions, accessions, improvements and replacements and customary deposits in

- 16 -

connection therewith and proceeds and products therefrom) financed by such Indebtedness and the proceeds and products thereof;

(hh) Liens on “land under development,” “land held for future development” or “improved lots and parcels” (as such categories of assets are determined in accordance with Applicable Accounting Standards) securing Non-Recourse Debt;

(ii) Liens on assets of Mortgage Subsidiaries securing Indebtedness incurred by Mortgage Subsidiaries in their ordinary course of business or consistent with past practice; and

(jj) Purchase money mortgages and mortgages securing construction, improvement or development loans (including Capital Lease Obligations and purchase money Indebtedness), covering only the assets acquired, constructed, improved, developed or financed by such Indebtedness (and additions, accessions, improvements and replacements and customary deposits in connection therewith and proceeds and products of the foregoing); provided that any such Liens are established within 365 days of such purchase, construction, improvement or development.

“ Permitted Refinancing Indebtedness ” means any Indebtedness of a Restricted Parent or any Restricted Subsidiary of a Restricted Parent issued in exchange for, or the net proceeds of which are used to extend, renew, refund, refinance, replace, defease or discharge other Indebtedness of a Restricted Parent or any Restricted Subsidiary of a Restricted Parent (other than intercompany Indebtedness); provided that:

(1) the principal amount (or accreted value, if applicable) of such Permitted Refinancing Indebtedness does not exceed the principal amount (or accreted value, if applicable) of the Indebtedness extended, renewed, refunded, refinanced, replaced, defeased or discharged (plus all accrued interest on the Indebtedness and the amount of all fees, commissions, discounts and expenses, including premiums, incurred in connection therewith);

(2) either (a) such Permitted Refinancing Indebtedness has a final maturity date later than the final maturity date of, and has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of, the Indebtedness being extended, renewed, refunded, refinanced, replaced, defeased or discharged or (b) all scheduled payments on or in respect of such Permitted Refinancing Indebtedness (other than interest payments) shall be at least 91 days following the final scheduled maturity of the Notes; and if such Indebtedness is Pari Passu Indebtedness and has a final stated maturity later than the final stated maturity of the Notes, such Permitted Refinancing Indebtedness has a final stated maturity later than the final stated maturity of the Notes;

(3) if the Indebtedness being extended, renewed, refunded, refinanced, replaced, defeased or discharged is subordinated in right of payment to the Notes, such Permitted Refinancing Indebtedness is subordinated in right of payment to the Notes on terms at least as favorable to the Holders of Notes as those contained in the documentation governing the Indebtedness being extended, renewed, refunded, refinanced, replaced, defeased or discharged; and

(4) Permitted Refinancing Indebtedness may not be incurred by a Person other than an Issuer and any of the Guarantors to renew, refund, refinance, replace, defease or discharge any Indebtedness of an Issuer or a Guarantor.

“ Person ” means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization, limited liability company or government or other entity.

“ Private Placement Legend ” means the legend set forth in Section 2.06(f)(1) to be placed on all Notes issued under this Indenture except where otherwise permitted by the provisions of this Indenture.

- 17 -

“ QIB ” means a “qualified institutional buyer” as defined in Rule 144A.

“ Rating Agencies ” mean Moody’s and S&P or if Moody’s or S&P or both shall not make a rating on the Notes publicly available, a nationally recognized statistical rating agency or agencies, as the case may be, selected by the Issuers (as certified by a resolution by their Board of Directors) which shall be substituted for Moody’s or S&P or both, as the case may be.

“ Ratings Category ” means:

(1)

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

(2)

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

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

“ Ratings Decline ” means a downgrade by one or more gradations (including gradations within Ratings Categories as well as between Ratings Categories) or withdrawal of the rating of the notes within the Ratings Decline Period by each of the Rating Agencies (unless the applicable Rating Agency shall have put forth a written statement to the effect that such downgrade is not attributable in whole or in part to the applicable Change of Control).

“ Reference Date ” means April 13, 2012.

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

“ Regulation S Global Note ” means a Regulation S Temporary Global Note or Regulation S Permanent Global Note, as appropriate.

“ Regulation S Permanent Global Note ” means a permanent Global Note in the form of Exhibit A1 hereto bearing the Global Note Legend and the Private Placement Legend and deposited with or on behalf of and registered in the name of the Depositary or its nominee, issued in a denomination equal to the outstanding principal amount of the Regulation S Temporary Global Note upon expiration of the Restricted Period.

“ Regulation S Temporary Global Note ” means a temporary Global Note in the form of Exhibit A2 hereto deposited with or on behalf of and registered in the name of the Depositary or its nominee, issued in a denomination equal to the outstanding principal amount of the Notes initially sold in reliance on Rule 903 of Regulation S.

“ Responsible Officer ” when used with respect to the Trustee, means any officer within the corporate trust administration of the Trustee (or any successor group of the Trustee) or any other officer of the Trustee customarily performing functions similar to those performed by any of the above designated officers 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 and who shall have responsibility for the administration of this Indenture.

“ Restricted Definitive Note ” means a Definitive Note bearing the Private Placement Legend.

“ Restricted Global Note ” means a Global Note bearing the Private Placement Legend.

“ Restricted Parents ” means the Canadian Issuer and U.S. Holdings.

- 18 -

“ Restricted Period ” means the 40-day distribution compliance period as defined in Regulation S.

“ Restricted Subsidiary ” of a Person means any Subsidiary of the referent Person that is not an Unrestricted Subsidiary. For the avoidance of doubt, (a) the Restricted Subsidiaries of U.S. Holdings shall be the U.S. Issuer and the Restricted Subsidiaries of the U.S. Issuer; (b) the Restricted Subsidiaries of the Restricted Parents shall be construed as a collective reference to each Restricted Subsidiary of either the Canadian Issuer or U.S. Holdings; and (c) a reference to the Restricted Subsidiaries of Holdings for purposes of the calculation of Consolidated Adjusted Tangible Assets and Specified Inventory Ratio (and components of any of the foregoing) shall be deemed to include the Restricted Parents, the U.S. Issuer and all Restricted Subsidiaries of the Restricted Parents (and any intermediate holding companies between Holdings and the Restricted Parents).

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

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

“ Rule 903 ” means Rule 903 promulgated under the Securities Act.

“ Rule 904 ” means Rule 904 promulgated under the Securities Act.

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

“ Sale and Leaseback Transaction ” means a sale or transfer made by a Restricted Parent, the U.S. Issuer or a Subsidiary Guarantor (except a sale or transfer made to a Restricted Parent, the U.S. Issuer or another Subsidiary Guarantor) of any property which is either (a) a manufacturing facility, office building or warehouse whose book value equals or exceeds 1% of Consolidated Adjusted Tangible Assets as of the date of determination or (b) another property or group of properties (not including Model Home Units) whose book value exceeds 5% of Consolidated Adjusted Tangible Assets as of the date of determination, in each case if such sale or transfer is made with the agreement, commitment or intention of leasing such property to a Restricted Parent, the U.S. Issuer or any Subsidiary Guarantor.

“ SEC ” means the Securities and Exchange Commission.

“ Secured Indebtedness ” means any Indebtedness which is secured by (i) a Lien in or on any property of the Restricted Parents, the U.S. Issuer or any Subsidiary Guarantor or (ii) a Lien in or on shares of Capital Stock owned directly or indirectly by the Restricted Parents, the U.S. Issuer or any Subsidiary Guarantor or in respect of Indebtedness of a Person in which the Restricted Parents, the U.S. Issuer or any Subsidiary Guarantor has an equity interest. The securing in the foregoing manner of any Indebtedness which immediately prior thereto was not Secured Indebtedness shall be deemed to be the creation of Secured Indebtedness at the time the Lien is created, incurred, assumed or otherwise caused to exist or become effective.

“ Securities Act ” means the Securities Act of 1933, as amended from time to time.

“ Significant Subsidiary ” means, with respect to any specified Person, any Subsidiary of such Person that would be a “significant subsidiary” as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated pursuant to the Securities Act, as such Regulation is in effect on the Issue Date.

“ SPE ” means (i) an entity formed for the purpose of holding, acquiring, constructing, developing or improving assets whose acquisition, construction, development or improvement will be financed by Specified SPE Debt or equity investments in such entity or (ii) an entity acquired by a Restricted Parent or a Restricted Subsidiary of a Restricted Parent whose outstanding Indebtedness is all Specified SPE Debt.

- 19 -

“ Specified Inventory Ratio ” means, as at any date of determination, the ratio of (a) the aggregate amount of inventory (other than real estate not owned) of Holdings and its Restricted Subsidiaries as of the end of the most recent fiscal quarter for which internal financial statements are available plus the aggregate amount of unrestricted cash and Cash Equivalents of Holdings and its Restricted Subsidiaries as of the end of such fiscal quarter to (b) Consolidated Total Indebtedness of Holdings and its Restricted Subsidiaries as of the end of such fiscal quarter, in each case determined on a consolidated basis in accordance with Applicable Accounting Standards. In the event that Holdings or any of its Restricted Subsidiaries incurs, assumes, Guarantees, repays, repurchases, redeems, defeases or otherwise discharges any Indebtedness (other than ordinary working capital borrowings) or issues, repurchases or redeems preferred stock or Disqualified Stock on or prior to the date on which the event for which the calculation of the Specified Inventory Ratio is made (the “ Calculation Date ”) and subsequent to the end of the most recent fiscal quarter for which internal financial statements are available, then the Specified Inventory Ratio will be calculated giving pro forma effect to such incurrence, assumption, Guarantee, repayment, repurchase, redemption, defeasance or other discharge of Indebtedness, or such issuance, repurchase or redemption of preferred stock or Disqualified Stock, and the use of the proceeds therefrom. In addition, investments, acquisitions, mergers, consolidations, dispositions, amalgamations, discontinued operations (as determined in accordance with Applicable Accounting Standards), any operational changes and changes in the composition of the Restricted Subsidiaries that have been made by Holdings or any of its Restricted Subsidiaries, or any Person or any of its Restricted Subsidiaries acquired by, merged or consolidated with Holdings or any of its Restricted Subsidiaries, and including any related financing transactions and including increases in ownership of Restricted Subsidiaries, subsequent to the end of the most recently completed fiscal quarter and on or prior to the Calculation Date will be given pro forma effect as if they had occurred at the end of such fiscal quarter. For purposes of this definition, whenever pro forma effect is given to a transaction or other event, the pro forma calculations shall be made in good faith by a responsible financial or accounting officer of an Issuer.

“ Specified SPE Debt ” means, with respect to any SPE, Indebtedness of such SPE for which the sole legal recourse for collection of principal and interest on such Indebtedness is against the assets of such SPE and its Subsidiaries or the assets of any projects, land, lots or Housing Units acquired, developed or improved by such SPE and its Subsidiaries. Notwithstanding the foregoing, Indebtedness which otherwise constitutes Specified SPE Debt will not lose its character as Specified SPE Debt because there is recourse to an Issuer, any Guarantor or any other Person with respect to such Indebtedness for or in respect of (a) environmental warranties and indemnities, (b) indemnities for and losses arising from fraud, misrepresentation, misapplication or nonpayment of rents, profits, insurance and condemnation proceeds and other sums actually received by the relevant borrower from secured assets to be paid to the lender, waste and mechanics’ liens, (c) a voluntary bankruptcy filing (or similar filing or action) or collusive involuntary bankruptcy filings by such borrower, and other events, actions and circumstances customarily excluded by institutional lenders from exculpation provisions and/or included in separate indemnification agreements or guarantees in non-recourse financings of real estate, (d) performance and completion guarantees, or (e) financial guarantees by a Restricted Parent or any of its Restricted Subsidiaries.

“ Stated Maturity ” means, with respect to any installment of interest or principal on any series of Indebtedness, the date on which the payment of interest or principal was scheduled to be paid in the documentation governing such Indebtedness as of the Issue Date, and will not include any contingent obligations to repay, redeem or repurchase any such interest or principal prior to the date originally scheduled for the payment thereof.

- 20 -

“ Subsidiary ” means, with respect to any specified Person:

(1) any corporation, association or other business entity of which more than 50% of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency and after giving effect to any voting agreement or stockholders’ agreement that effectively transfers voting power) to vote in the election of directors, managers or trustees of the corporation, association or other business entity is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person (or a combination thereof); and

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

“ Subsidiary Guarantors ” means each Restricted Subsidiary of a Restricted Parent (other than the U.S. Issuer) that executes a Note Guarantee in accordance with the provisions of this Indenture, and their respective successors and assigns, in each case, until the Note Guarantee of such Person has been released in accordance with the provisions of this Indenture.

“ TIA ” means the Trust Indenture Act of 1939 (15 U.S.C. §§ 77aaa-77bbbb), as amended from time to time.

“ Treasury Management Obligations ” means obligations under any agreement governing the provision of treasury or cash management services, including deposit accounts, funds transfer, automated clearinghouse, zero balance accounts, returned check concentration, controlled disbursement, lockbox, account reconciliation and reporting and trade finance services. Treasury Management Obligations shall not constitute Indebtedness.

“ Treasury Rate ” means, as of any redemption date or date of deposit, the yield to maturity as of such redemption date of United States Treasury securities with a constant maturity (as compiled and published in the most recent Federal Reserve Statistical Release H.15 (519) that has become publicly available at least two Business Days prior to the redemption date or date of deposit (or, if such Statistical Release is no longer published, any publicly available source of similar market data)) most nearly equal to the period from the redemption date to January 15, 2023; provided that if the period from the redemption date to January 15, 2023 is less than one year, the weekly average yield on actively traded United States Treasury securities adjusted to a constant maturity of one year will be used.

“ Trustee ” means the party named as such in the preamble to this Indenture until a successor replaces it in accordance with the applicable provisions of this Indenture and thereafter means the successor serving hereunder.

“ Unrestricted Global Note ” means a Global Note that does not bear and is not required to bear the Private Placement Legend.

“ Unrestricted Definitive Note ” means a Definitive Note that does not bear and is not required to bear the Private Placement Legend.

“ Unrestricted Subsidiary ” means any Subsidiary of a Restricted Parent and any Subsidiary of an Unrestricted Subsidiary that is designated by the Board of Directors of a Restricted Parent as an Unrestricted Subsidiary pursuant to a resolution of such Board of Directors, but only to the extent that such Subsidiary:

(1) has no Indebtedness other than Non-Recourse Debt;

(2) is a Person with respect to which neither a Restricted Parent nor any Restricted Subsidiary of a Restricted Parent has any direct or indirect obligation (a) to subscribe for

- 21 -

additional Equity Interests or (b) to maintain or preserve such Person’s financial condition or to cause such Person to achieve any specified levels of operating results; and

(3) has not guaranteed or otherwise directly or indirectly provided credit support for any Indebtedness of a Restricted Parent or any Restricted Subsidiary of a Restricted Parent.

“ U.S. 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 have been approved by a significant segment of the accounting profession, which are in effect on the Reference Date.

“ U.S. Holdings ” means Taylor Morrison Holdings, Inc. a Delaware corporation.

“ U.S. Issuer ” means Taylor Morrison Communities, Inc., a Delaware corporation.

“ U.S. Person ” means a U.S. Person as defined in Rule 902(k) promulgated under the Securities Act.

“ U.S. Subsidiary ” means, with respect to any Person, any Subsidiary of such Person that is organized or existing under the laws of the United States, any state thereof, or the District of Columbia.

“ Voting Stock ” of any specified Person as of any date means the Capital Stock of such Person that is at the time entitled to vote in the election of the Board of Directors of such Person.

“ Weighted Average Life to Maturity ” means, when applied to any Indebtedness at any date, 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 payments of principal, including payment at final maturity, in respect of the Indebtedness, 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 U.S. Subsidiary ” means any Restricted Subsidiary of U.S. Holdings that was formed under the laws of the United States or any state of the United States or the District of Columbia that is a Wholly Owned Subsidiary of U.S. Holdings.

“ Wholly Owned Subsidiary ” of any specified Person means a Subsidiary of such Person all of the outstanding Capital Stock or other ownership interest of which (other than directors’ qualifying shares) will at that time be owned by such Person or by one or more Wholly Owned Subsidiaries of such person.

Section 1.02 Other Definitions.


Term		Defined in Section
“ Aggregate Payments ”		10.01(e)
“ Authentication Order ”		2.02
“ Calculation Date ”		1.01 (Definition of “Specified Inventory Ratio”)
“ Change of Control Offer ”		4.09(a)
“ Change of Control Payment ”		4.09(a)
“ Change of Control Payment Date ”		4.09(a)
“ Contributing Guarantors ”		10.01(e)
“ Covenant Defeasance ”		8.03
“ Covenant Termination Event ”		4.13

- 22 -


“ Covenant Termination Event Notice ”		4.13
“ DTC ”		2.03
“ Event of Default ”		6.01
“ Exchange Rate ”		12.17
“ Exempt Sale and Leaseback Transaction ”		4.07(c)
“ Fair Share ”		10.01(e)
“ Fair Share Contribution Amount ”		10.01(e)
“ Financial Reports ”		4.03(g)
“ Funding Guarantor ”		10.01(e)
“ Legal Defeasance ”		8.02
“ Paying Agent ”		2.03
“ Payment Default ”		6.01
“ Permitted Sale and Leaseback Transaction ”		4.07(b)
“ Registrar ”		2.03
“ Substitute Reports ”		4.03(i)
“ Triggering Lien ”		4.08(a)

Section 1.03 Incorporation by Reference of Trust Indenture Act.

Whenever this Indenture refers to a provision of the TIA and subject to Section 12.01, the provision is incorporated by reference in and made a part of this Indenture.

The following TIA terms if and to the extent used in this Indenture by virtue of Section 7.10 have the following meanings:

“ indenture securities ” means the Notes;

“ indenture security Holder ” means a Holder of a Note;

“ indenture to be qualified ” means this Indenture;

“ indenture trustee ” or “institutional trustee” means the Trustee; and

“ obligor ” on the Notes and the Note Guarantees means the Issuers and the Guarantors, respectively, and any successor obligor upon the Notes and the Note Guarantees, respectively.

Section 1.04 Rules of Construction and Calculation.

(a) Unless the context otherwise requires:

(1) a term has the meaning assigned to it;

(2) an accounting term not otherwise defined has the meaning assigned to it in accordance with Applicable Accounting Standards;

(3) “or” is not exclusive;

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

(5) “will” shall be interpreted to express a command;

(6) provisions apply to successive events and transactions;

(7) references to sections of or rules under the Securities Act will be deemed to include substitute, replacement or successor sections or rules adopted by the SEC from time to time;

(8) “including” shall be interpreted to mean “including without limitation”;

- 23 -

(9) references to Sections refer to Sections of this Indenture; and

(10) the term “all or substantially all,” when applied to the assets of a Person and/or its Subsidiaries shall not be read to mean “any” of such assets as a result of such Person and/or its Subsidiaries being in the “zone of insolvency.”

ARTICLE 2

THE NOTES

Section 2.01 Form and Dating.

(a) General . The Notes and the Trustee’s certificate of authentication shall be substantially in the form of Exhibits A1 or A2 attached hereto. The Notes may have notations, legends or endorsements required by law, stock exchange rule or usage ( provided that any such notation, legend or endorsement required by usage is in a form reasonably acceptable to the Issuers). Each Note shall be dated the date of its authentication. The Notes shall be in denominations of $2,000 and integral multiples of $1,000 in excess thereof.

The terms and provisions contained in the Notes shall constitute, and are hereby expressly made, a part of this Indenture and the Issuers, the Guarantors and the Trustee, by their execution and delivery of this Indenture, expressly agree to such terms and provisions and to be bound thereby. However, to the extent any provision of any Note conflicts with the express provisions of this Indenture, the provisions of this Indenture shall govern and be controlling.

(b) Global Notes . Notes issued in global form shall be substantially in the form of Exhibits A1 or A2 attached hereto (including the Global Note Legend thereon and the “Schedule of Exchanges of Interests in the Global Note” attached thereto). Notes issued in definitive form shall be substantially in the form of Exhibit A1 attached hereto (but without the Global Note Legend thereon and without the “Schedule of Exchanges of Interests in the Global Note” attached thereto). Each Global Note shall represent such of the outstanding Notes as shall be specified therein and each shall provide that it represents the aggregate principal amount of outstanding Notes from time to time endorsed thereon and that the aggregate principal amount of outstanding Notes represented thereby may from time to time be reduced or increased, as appropriate, to reflect exchanges, repurchases, and redemptions. Any endorsement of a Global Note to reflect the amount of any increase or decrease in the aggregate principal amount of outstanding Notes represented thereby shall be made by the Trustee or the Custodian, at the direction of the Trustee, in accordance with instructions given by the Holder thereof as required by Section 2.06 and shall be made on the records of the Trustee and the Depositary.

(c) Temporary Global Notes . Notes offered and sold in reliance on Regulation S shall be issued initially in the form of the Regulation S Temporary Global Note, which shall be deposited on behalf of the purchasers of the Notes represented thereby with the Custodian, at its New York office and registered in the name of the Depositary or the nominee of the Depositary for the accounts of designated agents holding on behalf of Euroclear or Clearstream, duly executed by the Issuers and authenticated by the Trustee as hereinafter provided. Following the expiration of the Restricted Period, beneficial interests in the Regulation S Temporary Global Note shall be exchanged for beneficial interests in the Regulation S Permanent Global Note upon the receipt by the Trustee of:

(1) a written certificate from the Depositary, together with copies of certificates from Euroclear and Clearstream certifying that they have received certification of non-United States beneficial ownership of 100% of the aggregate principal amount of the Regulation S Temporary Global Note (except to the extent of any beneficial owners thereof who acquired an interest therein during the Restricted Period pursuant to another exemption from registration under the Securities Act and who shall take delivery of a beneficial ownership interest in a 144A Global Note bearing a Private Placement Legend, all as contemplated by Section 2.06(b)); and

(2) an Officer’s Certificate from the Issuers.

- 24 -

Any such exchange of beneficial interests in the Regulation S Temporary Global Note for beneficial interests in the Regulation S Permanent Global Note shall be subject to the Applicable Procedures. Simultaneously with the authentication of the Regulation S Permanent Global Note, the Trustee shall cancel the Regulation S Temporary Global Note. The aggregate principal amount of the Regulation S Temporary Global Note and the Regulation S Permanent Global Note may from time to time be increased or decreased by adjustments made on the records of the Trustee and the Depositary or its nominee, as the case may be, in connection with transfers of interest as hereinafter provided.

(d) Euroclear and Clearstream Procedures Applicable . The provisions of the “Operating Procedures of the Euroclear System” and “Terms and Conditions Governing Use of Euroclear” and the “General Terms and Conditions of Clearstream Banking” and “Customer Handbook” of Clearstream shall be applicable to transfers of beneficial interests in the Regulation S Temporary Global Note and the Regulation S Permanent Global Notes that are held by Participants through Euroclear or Clearstream.

Section 2.02 Execution and Authentication.

At least one Officer of each Issuer must sign the Notes for the Issuers by manual or facsimile signature.

If an Officer whose signature is on a Note no longer holds that office at the time a Note is authenticated, the Note shall nevertheless be valid.

A Note shall not be valid until authenticated by the manual signature of the Trustee. The signature shall be conclusive evidence that the Note has been duly authenticated under this Indenture.

The Trustee shall authenticate and deliver: (i) on the Issue Date, an aggregate principal amount of $350.0 million 5.875% Senior Notes due 2023 and (ii) Additional Notes for an original issue in an aggregate principal amount specified in an Authentication Order pursuant to this Section 2.02 and Section 2.14, in each case upon a written order of the Issuers signed by one Officer of each Issuer (an “ Authentication Order ”). Such Authentication Order shall specify the amount of the Notes to be authenticated and the date on which the original issue of the Notes is to be authenticated.

The Trustee may appoint an authenticating agent acceptable to the Issuers to authenticate Notes. An authenticating agent may authenticate 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 Holders or an Affiliate of the Issuers.

Section 2.03 Registrar and Paying Agent.

The Issuers shall maintain an office or agency where Notes may be presented for registration of transfer or for exchange (“ Registrar ”) and an office or agency where Notes may be presented for payment (“ Paying Agent ”). The Registrar shall keep a register of the Notes and of their transfer and exchange. The Issuers may appoint one or more co-registrars and one or more additional paying agents. The term “Registrar” includes any co-registrar and the term “Paying Agent” includes any additional paying agent. The Issuers may change any Paying Agent or Registrar without notice to any Holder. The Issuers shall notify the Trustee in writing of the name and address of any Agent not a party to this Indenture. If the Issuers fail to appoint or maintain another entity as Registrar or Paying Agent, the Trustee shall act as such. An Issuer or any of its Subsidiaries may act as Paying Agent or Registrar.

The Issuers initially appoint The Depository Trust Company (“ DTC ”) to act as Depositary with respect to the Global Notes.

The Issuers initially appoint the Trustee to act as the Registrar and Paying Agent and to act as Custodian with respect to the Global Notes.

- 25 -

Section 2.04 Paying Agent to Hold Money in Trust.

The Issuers shall require each Paying Agent other than the Trustee to agree in writing that the Paying Agent shall hold in trust for the benefit of Holders or the Trustee all money held by the Paying Agent for the payment of principal, premium, if any, or interest on the Notes, and shall notify the Trustee in writing of any default by the Issuers in making any such payment. While any such default continues, the Trustee may require in writing a Paying Agent to pay all money held by it in trust to the Trustee. The Issuers at any time may require in writing a Paying Agent to pay all money held by it in trust to the Trustee. Upon payment over to the Trustee, the Paying Agent (if other than Holdings or any of its Subsidiaries) shall have no further liability for the money. If Holdings or any of its Subsidiaries acts as Paying Agent, it shall segregate and hold in a separate trust fund for the benefit of the Holders all money held by it as Paying Agent. Upon any bankruptcy or reorganization proceedings relating to Holdings or any of its Subsidiaries, the Trustee shall serve as Paying Agent for the Notes.

Section 2.05 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 all Holders. If the Trustee is not the Registrar, the Issuers shall furnish to the Trustee at least seven Business Days before each interest payment date and at such other times as the Trustee may request in writing, a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of the Holders.

Section 2.06 Transfer and Exchange.

(a) Transfer and Exchange of Global Notes . A Global Note may not be transferred except in whole (but not in part) by the Depositary to a nominee of the Depositary, by a nominee of the Depositary to the Depositary or to another nominee of the Depositary, or by the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary. All Global Notes shall be exchanged by the Issuers for Definitive Notes if:

(1) the Depositary (a) notifies the Issuers that it is unwilling or unable to continue as Depositary for the Global Notes or (b) has ceased to be a clearing agency registered under the Exchange Act and, in either case, a successor Depositary is not appointed by the Issuers within 120 days after the date of such notice from the Depositary;

(2) the Issuers in their sole discretion determine that the Global Notes (in whole but not in part) should be exchanged for Definitive Notes and deliver a written notice to such effect to the Trustee; provided that in no event shall the Regulation S Temporary Global Note be exchanged by the Issuers for Definitive Notes prior to (x) the expiration of the Restricted Period and (y) the receipt by the Registrar of any certificates required pursuant to Rule 903(b)(3)(ii)(B) under the Securities Act; or

(3) there has occurred and is continuing an Event of Default with respect to the Notes.

Upon the occurrence of any of the preceding events in (1), (2) or (3) above, Definitive Notes shall be issued in such names as the Depositary shall instruct the Trustee. Global Notes also may be exchanged or replaced, in whole or in part, as provided in Sections 2.07 and 2.10. Every Note authenticated and delivered in exchange for, or in lieu of, a Global Note or any portion thereof, pursuant to this Section 2.06 or Sections 2.07 or 2.10, shall be authenticated and delivered in the form of, and shall be, a Global Note. A Global Note may not be exchanged for another Note other than as provided in this Section 2.06(a); however, beneficial interests in a Global Note may be transferred and exchanged as provided in Section 2.06(b) or (c).

(b) Transfer and Exchange of Beneficial Interests in the Global Notes . The transfer and exchange of beneficial interests in the Global Notes shall be effected through the Depositary, in accordance with the provisions of this Indenture and the Applicable Procedures. Beneficial interests in the Restricted Global Notes shall be subject to restrictions on transfer comparable to those set forth herein to the extent

- 26 -

required by the Securities Act. Transfers of beneficial interests in the Global Notes also shall require compliance with either subparagraph (1) or (2) below, as applicable, as well as one or more of the other following subparagraphs, as applicable:

(1) Transfer of Beneficial Interests in the Same Global Note . Beneficial interests in any Restricted Global Note may be transferred to Persons who take delivery thereof in the form of a beneficial interest in the same Restricted Global Note in accordance with the transfer restrictions set forth in the Private Placement Legend; provided , however , that prior to the expiration of the Restricted Period, transfers of beneficial interests in the Regulation S Temporary Global Note may not be made to a U.S. Person or for the account or benefit of a U.S. Person (other than an Initial Purchaser). Beneficial interests in any Unrestricted Global Note may be transferred to Persons who take delivery thereof in the form of a beneficial interest in an Unrestricted Global Note. No written orders or instructions shall be required to be delivered to the Registrar to effect the transfers described in this Section 2.06(b)(1).

(2) All Other Transfers and Exchanges of Beneficial Interests in Global Notes . In connection with all transfers and exchanges of beneficial interests that are not subject to Section 2.06(b)(1) above, the transferor of such beneficial interest must deliver to the Registrar either:

(A) both:

(i) a written order from a Participant or an Indirect Participant given to the Depositary in accordance with the Applicable Procedures directing the Depositary to credit or cause to be credited a beneficial interest in another Global Note in an amount equal to the beneficial interest to be transferred or exchanged; and

(ii) instructions given in accordance with the Applicable Procedures containing information regarding the Participant account to be credited with such increase; or

(B) both:

(i) a written order from a Participant or an Indirect Participant given to the Depositary in accordance with the Applicable Procedures directing the Depositary to cause to be issued a Definitive Note in an amount equal to the beneficial interest to be transferred or exchanged; and

(ii) instructions given by the Depositary to the Registrar containing information regarding the Person in whose name such Definitive Note shall be registered to effect the transfer or exchange referred to in clause (i) above; provided that in no event shall Definitive Notes be issued upon the transfer or exchange of beneficial interests in the Regulation S Temporary Global Note prior to (A) the expiration of the Restricted Period and (B) the receipt by the Registrar of any certificates required pursuant to Rule 903 under the Securities Act.

Upon satisfaction of all of the requirements for transfer or exchange of beneficial interests in Global Notes contained in this Indenture and the Notes or otherwise applicable under the Securities Act, the Trustee shall adjust the principal amount of the relevant Global Note(s) pursuant to Section 2.06(g).

(3) Transfer of Beneficial Interests to Another Restricted Global Note . A beneficial interest in any Restricted Global Note may be transferred to a Person who takes delivery thereof in the form of a beneficial interest in another Restricted Global Note if the transfer complies with the requirements of Section 2.06(b)(2) above and the Registrar receives the following:

(A) if the transferee shall take delivery in the form of a beneficial interest in the 144A Global Note, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (1) thereof; and

- 27 -

(B) if the transferee shall take delivery in the form of a beneficial interest in the Regulation S Global Note then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (2) thereof.

(4) Transfer and Exchange of Beneficial Interests in a Restricted Global Note for Beneficial Interests in an Unrestricted Global Note . A beneficial interest in any Restricted Global Note may be exchanged by any holder thereof for a beneficial interest in an Unrestricted Global Note or transferred to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note if the exchange or transfer complies with the requirements of Section 2.06(b)(2) above and the Registrar receives the following:

(i) if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a beneficial interest in an Unrestricted Global Note, a certificate from such holder in the form of Exhibit C hereto, including the certifications in item (1)(a) thereof; or

(ii) if the holder of such beneficial interest in a Restricted Global Note proposes to transfer such beneficial interest to a Person who shall take delivery thereof in the form of a beneficial interest in an Unrestricted Global Note, a certificate from such holder in the form of Exhibit B hereto, including the certifications in item (4) thereof;

and, in each such case, if the Registrar so requests or if the Applicable Procedures so require, an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act.

If any such transfer is effected at a time when an Unrestricted Global Note has not yet been issued, the Issuers shall issue and, upon receipt of an Authentication Order in accordance with Section 2.02, the Trustee shall authenticate one or more Unrestricted Global Notes in an aggregate principal amount equal to the aggregate principal amount of beneficial interests transferred.

Beneficial interests in an Unrestricted Global Note cannot be exchanged for, or transferred to Persons who take delivery thereof in the form of, a beneficial interest in a Restricted Global Note.

(1) Beneficial Interests in Restricted Global Notes to Restricted Definitive Notes . If any holder of a beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a Restricted Definitive Note or to transfer such beneficial interest to a Person who takes delivery thereof in the form of a Restricted Definitive Note, then, upon receipt by the Registrar of the following documentation:

(A) if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a Restricted Definitive Note, a certificate from such holder in the form of Exhibit C hereto, including the certifications in item (2)(a) thereof;

(B) if such beneficial interest is being transferred to a QIB in accordance with Rule 144A, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (1) thereof;

(C) if such beneficial interest is being transferred to a Non-U.S. Person in an offshore transaction in accordance with Rule 903 or Rule 904, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (2) thereof;

- 28 -

(D) if such beneficial interest is being transferred pursuant to an exemption from the registration requirements of the Securities Act in accordance with Rule 144, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(a) thereof;

(E) if such beneficial interest is being transferred to an Issuer or any of its Subsidiaries, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(b) thereof; or

(F) if such beneficial interest is being transferred pursuant to an effective registration statement under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(c) thereof,

the Trustee shall cause the aggregate principal amount of the applicable Global Note to be reduced accordingly pursuant to Section 2.06(g), and the Issuers shall execute and, upon receipt of an Authentication Order, the Trustee shall authenticate and deliver to the Person designated in the instructions a Definitive Note in the appropriate principal amount. Any Definitive Note issued in exchange for a beneficial interest in a Restricted Global Note pursuant to this Section 2.06(c) shall be registered in such name or names and in such authorized denomination or denominations as the holder of such beneficial interest shall instruct the Registrar through instructions from the Depositary and the Participant or Indirect Participant. The Trustee shall deliver such Definitive Notes to the Persons in whose names such Notes are so registered. Any Definitive Note issued in exchange for a beneficial interest in a Restricted Global Note pursuant to this Section 2.06(c)(1) shall bear the Private Placement Legend and shall be subject to all restrictions on transfer contained therein.

(2) Beneficial Interests in Regulation S Temporary Global Note to Definitive Notes . Notwithstanding Sections 2.06(c)(1)(A) and (C), a beneficial interest in the Regulation S Temporary Global Note may not be exchanged for a Definitive Note or transferred to a Person who takes delivery thereof in the form of a Definitive Note prior to (A) the expiration of the Restricted Period and (B) the receipt by the Registrar of any certificates required pursuant to Rule 903(b)(3)(ii)(B) under the Securities Act, except in the case of a transfer pursuant to an exemption from the registration requirements of the Securities Act other than Rule 903 or Rule 904.

(3) Beneficial Interests in Restricted Global Notes to Unrestricted Definitive Notes . A holder of a beneficial interest in a Restricted Global Note may exchange such beneficial interest for an Unrestricted Definitive Note or may transfer such beneficial interest to a Person who takes delivery thereof in the form of an Unrestricted Definitive Note only if the Registrar receives the following:

(i) if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for an Unrestricted Definitive Note, a certificate from such holder in the form of Exhibit C hereto, including the certifications in item (1)(b) thereof; or

(ii) if the holder of such beneficial interest in a Restricted Global Note proposes to transfer such beneficial interest to a Person who shall take delivery thereof in the form of an Unrestricted Definitive Note, a certificate from such holder in the form of Exhibit B hereto, including the certifications in item (4) thereof;

(iii) and, in each such case, if the Registrar so requests or if the Applicable Procedures so require, an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained

- 29 -

herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act.

(4) Beneficial Interests in Unrestricted Global Notes to Unrestricted Definitive Notes . If any holder of a beneficial interest in an Unrestricted Global Note proposes to exchange such beneficial interest for a Definitive Note or to transfer such beneficial interest to a Person who takes delivery thereof in the form of a Definitive Note, then, upon satisfaction of the conditions set forth in Section 2.06(b)(2), the Trustee shall cause the aggregate principal amount of the applicable Global Note to be reduced accordingly pursuant to Section 2.06(g), and the Issuers shall execute and, upon receipt of an Authentication Order, the Trustee shall authenticate and deliver to the Person designated in the instructions a Definitive Note in the appropriate principal amount. Any Definitive Note issued in exchange for a beneficial interest pursuant to this Section 2.06(c)(4) shall be registered in such name or names and in such authorized denomination or denominations as the holder of such beneficial interest requests through instructions to the Registrar from or through the Depositary and the Participant or Indirect Participant. The Trustee shall deliver such Definitive Notes to the Persons in whose names such Notes are so registered. Any Definitive Note issued in exchange for a beneficial interest pursuant to this Section 2.06(c)(4) shall not bear the Private Placement Legend.

(d) Transfer and Exchange of Definitive Notes for Beneficial Interests.

(1) Restricted Definitive Notes to Beneficial Interests in Restricted Global Notes . If any Holder of a Restricted Definitive Note proposes to exchange such Note for a beneficial interest in a Restricted Global Note or to transfer such Restricted Definitive Notes to a Person who takes delivery thereof in the form of a beneficial interest in a Restricted Global Note, then, upon receipt by the Registrar of the following documentation:

(A) if the Holder of such Restricted Definitive Note proposes to exchange such Note for a beneficial interest in a Restricted Global Note, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in item (2)(b) thereof;

(B) if such Restricted Definitive Note is being transferred to a QIB in accordance with Rule 144A, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (1) thereof;

(C) if such Restricted Definitive Note is being transferred to a Non-U.S. Person in an offshore transaction in accordance with Rule 903 or Rule 904, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (2) thereof;

(D) if such Restricted Definitive Note is being transferred pursuant to an exemption from the registration requirements of the Securities Act in accordance with Rule 144, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(a) thereof;

(E) if such Restricted Definitive Note is being transferred to an Issuer or any of its Subsidiaries, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(b) thereof; or

(F) if such Restricted Definitive Note is being transferred pursuant to an effective registration statement under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(c) thereof,

the Trustee shall cancel the Restricted Definitive Note and increase or cause to be increased the aggregate principal amount of the applicable Global Note.

(2) Restricted Definitive Notes to Beneficial Interests in Unrestricted Global Notes . A Holder of a Restricted Definitive Note may exchange such Note for a beneficial interest in an

- 30 -

Unrestricted Global Note or transfer such Restricted Definitive Note to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note only if the Registrar receives the following:

(i) if the Holder of such Definitive Notes proposes to exchange such Notes for a beneficial interest in the Unrestricted Global Note, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in item (1)(c) thereof; or

(ii) if the Holder of such Definitive Notes proposes to transfer such Notes to a Person who shall take delivery thereof in the form of a beneficial interest in the Unrestricted Global Note, a certificate from such Holder in the form of Exhibit B hereto, including the certifications in item (4) thereof;

Upon satisfaction of the conditions of any of the subparagraphs in this Section 2.06(d)(2), the Trustee shall cancel the Definitive Notes and increase or cause to be increased the aggregate principal amount of the Unrestricted Global Note.

(3) Unrestricted Definitive Notes to Beneficial Interests in Unrestricted Global Notes . A Holder of an Unrestricted Definitive Note may exchange such Note for a beneficial interest in an Unrestricted Global Note or transfer such Definitive Notes to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note at any time. Upon receipt of a request for such an exchange or transfer, the Trustee shall cancel the applicable Unrestricted Definitive Note and increase or cause to be increased the aggregate principal amount of one of the Unrestricted Global Notes.

If any such exchange or transfer from a Definitive Note to a beneficial interest is effected at a time when an Unrestricted Global Note has not yet been issued, the Issuers shall issue and, upon receipt of an Authentication Order in accordance with Section 2.02, the Trustee shall authenticate one or more Unrestricted Global Notes in an aggregate principal amount equal to the principal amount of Definitive Notes transferred or exchanged.

(e) Transfer and Exchange of Definitive Notes for Definitive Notes . Upon request by a Holder of Definitive Notes and such Holder’s compliance with the provisions of this Section 2.06(e), the Registrar shall register the transfer or exchange of Definitive Notes. Prior to such registration of transfer or exchange, the requesting Holder must present or surrender to the Registrar the Definitive Notes duly endorsed or accompanied by a written instruction of transfer in form satisfactory to the Registrar duly executed by such Holder or by its attorney, duly authorized in writing. In addition, the requesting Holder must provide any additional certifications, documents and information, as applicable, required pursuant to the following provisions of this Section 2.06(e).

(1) Restricted Definitive Notes to Restricted Definitive Notes . Any Restricted Definitive Note may be transferred to and registered in the name of Persons who take delivery thereof in the form of a Restricted Definitive Note if the Registrar receives the following:

(A) if the transfer shall be made pursuant to Rule 144A, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (1) thereof;

- 31 -

(B) if the transfer shall be made pursuant to Rule 903 or Rule 904, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (2) thereof; and

(C) if the transfer shall be made pursuant to any other exemption from the registration requirements of the Securities Act, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications required by item (3) thereof, if applicable.

(2) Restricted Definitive Notes to Unrestricted Definitive Notes . Any Restricted Definitive Note may be exchanged by the Holder thereof for an Unrestricted Definitive Note or transferred to a Person or Persons who take delivery thereof in the form of an Unrestricted Definitive Note if the Registrar receives the following:

(i) if the Holder of such Restricted Definitive Notes proposes to exchange such Notes for an Unrestricted Definitive Note, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in item (1)(d) thereof; or

(ii) if the Holder of such Restricted Definitive Notes proposes to transfer such Notes to a Person who shall take delivery thereof in the form of an Unrestricted Definitive Note, a certificate from such Holder in the form of Exhibit B hereto, including the certifications in item (4) thereof;

and, in each such case, if the Registrar so requests, an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act.

(3) Unrestricted Definitive Notes to Unrestricted Definitive Notes . A Holder of Unrestricted Definitive Notes may transfer such Notes to a Person who takes delivery thereof in the form of an Unrestricted Definitive Note. Upon receipt of a request to register such a transfer, the Registrar shall register the Unrestricted Definitive Notes pursuant to the instructions from the Holder thereof.

(f) Legends . The following legends shall appear on the face of all Global Notes and Definitive Notes issued under this Indenture unless specifically stated otherwise in the applicable provisions of this Indenture.

(1) Private Placement Legend.

(A) Except as permitted by subparagraph (B) below, each Global Note and each Definitive Note (and all Notes issued in exchange therefor or substitution thereof) shall bear the legend in substantially the following form:

“THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND THE SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE ACQUIRER:

(1) REPRESENTS THAT IT, AND ANY ACCOUNT FOR WHICH IT IS ACTING, (A) IS A “QUALIFIED INSTITUTIONAL BUYER” (WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT) OR (B) IS NOT A “U.S. PERSON” (WITHIN THE MEANING OF RULE 902 OF REGULATION S UNDER THE SECURITIES ACT), AND

- 32 -

THAT IT EXERCISES SOLE INVESTMENT DISCRETION WITH RESPECT TO EACH SUCH ACCOUNT, AND

(2) AGREES FOR THE BENEFIT OF THE ISSUERS THAT IT WILL NOT OFFER, SELL, PLEDGE OR OTHERWISE TRANSFER THIS SECURITY OR ANY BENEFICIAL INTEREST HEREIN PRIOR TO THE RESALE RESTRICTION TERMINATION DATE (AS DEFINED IN THE NEXT PARAGRAPH), EXCEPT:

(A) TO THE PARENT OR ANY SUBSIDIARY THEREOF;

(B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BECOME EFFECTIVE UNDER THE SECURITIES ACT;

(D) IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT; OR

(E) PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT OR ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.

THE RESALE RESTRICTION TERMINATION DATE WILL BE THE DATE (1) THAT IS AT LEAST ONE YEAR AFTER THE ORIGINAL ISSUE DATE HEREOF AND (2) ON WHICH THE ISSUERS INSTRUCT THE TRUSTEE THAT THIS LEGEND SHALL BE DEEMED REMOVED FROM THIS SECURITY, IN ACCORDANCE WITH THE PROCEDURES DESCRIBED IN THE INDENTURE RELATED TO THIS SECURITY. PRIOR TO THE REGISTRATION OF ANY TRANSFER OTHER THAN IN ACCORDANCE WITH 2(B) ABOVE, THE ISSUERS AND THE TRUSTEE RESERVE THE RIGHT TO REQUIRE THE DELIVERY OF SUCH LEGAL OPINIONS, CERTIFICATIONS OR OTHER EVIDENCE AS MAY REASONABLY BE REQUIRED IN ORDER TO DETERMINE THAT THE PROPOSED TRANSFER IS BEING MADE IN COMPLIANCE WITH THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS. NO REPRESENTATION IS MADE AS TO THE AVAILABILITY OF ANY EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.”

(F) Notwithstanding the foregoing, any Global Note or Definitive Note issued pursuant to subparagraphs (b)(4), (c)(3), (c)(4), (d)(2), (d)(3), (e)(2) or (e)(3) of this Section 2.06 (and all Notes issued in exchange therefor or substitution thereof) shall not bear the Private Placement Legend.

(2) Global Note Legend . Each Global Note shall bear a legend in substantially the following form:

“THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (1) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.01 AND SECTION 2.06 OF THE INDENTURE, (2) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (3) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (4) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE ISSUERS.

- 33 -

UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) (“DTC”), TO THE ISSUERS OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE 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.”

(3) Regulation S Temporary Global Note Legend . Each Regulation S Temporary Global Note shall bear a legend in substantially the following form:

“THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED NOTES, ARE AS SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN).

THIS NOTE AND THE GUARANTEES ENDORSED HEREON HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAWS. NEITHER THIS NOTE NOR THE GUARANTEES ENDORSED HEREON NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE OFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THE HOLDER OF THIS NOTE AND THE GUARANTEES ENDORSED HEREON BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE WHICH IS ONE YEAR AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH AN ISSUER OR ANY AFFILIATE OF AN ISSUER WAS THE OWNER OF THIS NOTE AND THE GUARANTEES ENDORSED HEREON (OR ANY PREDECESSOR OF THIS NOTE AND THE GUARANTEES ENDORSED HEREON) (THE “RESALE RESTRICTION TERMINATION DATE”) ONLY (A)(1) TO TAYLOR MORRISON COMMUNITIES, INC., TAYLOR MORRISON HOLDINGS II, INC. OR ANY OF THEIR RESPECTIVE SUBSIDIARIES, (2) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, (3) FOR SO LONG AS THE NOTES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT (“RULE 144A”), TO A PERSON IT REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (4) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT (“REGULATION S”) IN AN OFFSHORE TRANSACTION COMPLYING WITH REGULATION S OR (5) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE ISSUERS’ AND THE TRUSTEE’S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER (i) PURSUANT TO CLAUSE (A)(4) PRIOR TO THE END OF THE 40-DAY DISTRIBUTION COMPLIANCE PERIOD WITHIN THE MEANING OF REGULATION S OR PURSUANT TO CLAUSE (A)(5) PRIOR TO THE RESALE RESTRICTION TERMINATION DATE, TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND (ii) IN EACH OF THE FOREGOING CASES, TO REQUIRE THAT A CERTIFICATE OF TRANSFER IN THE FORM

- 34 -

APPEARING ON THIS NOTE IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE TRUSTEE AND (B) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED STATES AND OTHER APPLICABLE JURISDICTIONS. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF A HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.”

(4) OID Legend . To the extent required by Section 1275(c)(1)(A) of the Internal Revenue Code of 1986, as amended, and Treasury Regulation Section 1.1275-3(b)(1), each Note issued at a discount to its stated redemption price at maturity shall bear a legend (the “ OID Legend ”) in substantially the following form (with any necessary amendments thereto to reflect any amendments occurring after the Issue Date to the applicable sections):

“FOR THE PURPOSES OF SECTIONS 1272, 1273 AND 1275 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED, THIS NOTE IS BEING ISSUED WITH ORIGINAL ISSUE DISCOUNT. YOU MAY CONTACT THE ISSUERS AT TAYLOR MORRISON COMMUNITIES, INC., 4900 NORTH SCOTTSDALE ROAD, SUITE 2000, SCOTTSDALE, ARIZONA 85251, ATTENTION: TREASURER, AND THE ISSUERS WILL PROVIDE YOU WITH THE ISSUE PRICE, THE AMOUNT OF ORIGINAL ISSUE DISCOUNT, THE ISSUE DATE AND THE YIELD TO MATURITY OF THIS NOTE.”

(g) Cancellation and/or Adjustment of Global Notes . At such time as all beneficial interests in a particular Global Note have been exchanged for Definitive Notes or a particular Global Note has been redeemed, repurchased or canceled in whole and not in part, each such Global Note shall be returned to or retained and canceled by the Trustee in accordance with Section 2.11. At any time prior to such cancellation, if any beneficial interest in a Global Note is exchanged for or transferred to a Person who shall take delivery thereof in the form of a beneficial interest in another Global Note or for Definitive Notes, the principal amount of Notes represented by such Global Note shall be reduced accordingly and an endorsement shall be made on such Global Note by the Trustee or by the Depositary at the direction of the Trustee to reflect such reduction; and if the beneficial interest is being exchanged for or transferred to a Person who shall take delivery thereof in the form of a beneficial interest in another Global Note, such other Global Note shall be increased accordingly and an endorsement shall be made on such Global Note by the Trustee or by the Depositary at the direction of the Trustee to reflect such increase.

(h) General Provisions Relating to Transfers and Exchanges.

(1) To permit registrations of transfers and exchanges, the Issuers shall execute and the Trustee shall authenticate Global Notes and Definitive Notes upon receipt of an Authentication Order in accordance with Section 2.02 or at the Registrar’s request.

(2) No service charge shall be made to a Holder of a beneficial interest in a Global Note or to a Holder of a Definitive Note for any registration of transfer or exchange, but the Issuers may require payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith (other than any such transfer taxes or similar governmental charge payable upon exchange or transfer pursuant to Sections 2.10, 3.06 and 9.05).

(3) The Registrar shall not be required to register the transfer of or exchange of any Note selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part.

(4) All Global Notes and Definitive Notes issued upon any registration of transfer or exchange of Global Notes or Definitive Notes shall be the valid obligations of the Issuers, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Global Notes or Definitive Notes surrendered upon such registration of transfer or exchange.

(5) The Issuers shall not be required:

- 35 -

(A) to issue, to register the transfer of or to exchange any Notes during a period beginning at the opening of business 15 days before the day of any selection of Notes for redemption under Section 3.02 and ending at the close of business on the day of selection;

(B) to register the transfer of or to exchange any Note selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part; or

(C) to register the transfer of or to exchange a Note between a record date and the next succeeding interest payment date.

(6) Prior to due presentment for the registration of a transfer of any Note, the Trustee, any Agent and the Issuers may deem and treat the Person in whose name any Note is registered as the absolute owner of such Note for the purpose of receiving payment of principal of and interest on such Notes and for all other purposes, and none of the Trustee, any Agent or the Issuers shall be affected by notice to the contrary.

(7) The Trustee shall authenticate Global Notes and Definitive Notes in accordance with the provisions of Section 2.02.

(8) All certifications, certificates and Opinions of Counsel required to be submitted to the Registrar pursuant to this Section 2.06 to effect a registration of transfer or exchange may be submitted by facsimile.

(9) The Trustee shall have no obligation or duty to monitor, determine or inquire as to compliance with any restrictions on transfer imposed under this Indenture or under applicable law with respect to any transfer of any interest in any Notes (including any transfers between or among Depositary Participants or beneficial owners of interests in any Global Notes) other than to require delivery of such certificates and other documentation or evidence as are expressly required by, and to do so if and when expressly required by the terms of, this Indenture, and to examine the same to determine substantial compliance as to form with the express requirements hereof. Neither the Trustee nor any Agent shall have any responsibility or liability for any actions taken or not taken by the Depositary.

Section 2.07 Replacement Notes.

If any mutilated Note is surrendered to the Trustee or the Issuers and the Trustee receives evidence to its satisfaction of the destruction, loss or theft of any Note, the Issuers shall issue and the Trustee, upon receipt of an Authentication Order, shall authenticate a replacement Note if the Trustee’s requirements are met. If required by the Trustee or the Issuers, an indemnity bond must be supplied by the Holder that is sufficient in the judgment of the Trustee and the Issuers to protect the Issuers, the Trustee, any Agent and any authenticating agent from any loss that any of them may suffer if a Note is replaced. The Issuers may charge for their expenses, including the Trustee’s expenses, in replacing a Note.

Every replacement Note is an additional obligation of the Issuers and shall be entitled to all of the benefits of this Indenture equally and proportionately with all other Notes duly issued hereunder.

Section 2.08 Outstanding Notes.

The Notes outstanding at any time are all the Notes authenticated by the Trustee except for those canceled by it, those delivered to it for cancellation, those reductions in the interest in a Global Note effected by the Trustee in accordance with the provisions hereof, and those described in this Section 2.08 as not outstanding. Except as set forth in Section 2.09, a Note does not cease to be outstanding because the Issuers or an Affiliate of the Issuers holds the Note.

If a Note is replaced pursuant to Section 2.07, it ceases to be outstanding unless the Trustee receives proof satisfactory to it that the replaced Note is held by a protected purchaser.

- 36 -

If the principal amount of any Note is considered paid under Section 4.01, it ceases to be outstanding and interest on it ceases to accrue.

If the Paying Agent (other than the Issuers, a Subsidiary or an Affiliate of any thereof) holds, on a redemption date or maturity date, money sufficient to pay Notes payable on that date, then on and after that date such Notes shall be deemed to be no longer outstanding and shall cease to accrue interest.

Section 2.09 Treasury Notes.

In determining whether the Holders of the required principal amount of Notes have concurred in any direction, waiver or consent, Notes owned by an Issuer or any Guarantor, or by any Person directly or indirectly controlled by an Issuer or any Guarantor, shall be considered as though not outstanding, except that for the purposes of determining whether the Trustee shall be protected in relying on any such direction, waiver or consent, only Notes that a Responsible Officer of the Trustee actually knows are so owned shall be so disregarded.

Section 2.10 Temporary Notes.

Until certificates representing Notes are ready for delivery, the Issuers may prepare and the Trustee, upon receipt of an Authentication Order, shall authenticate temporary Notes. Temporary Notes shall be substantially in the form of certificated Notes but may have variations that the Issuers consider appropriate for temporary Notes and as may be reasonably acceptable to the Trustee. Without unreasonable delay, the Issuers shall prepare and the Trustee shall authenticate definitive Notes in exchange for temporary Notes.

Holders of temporary Notes shall be entitled to all of the benefits of this Indenture.

Section 2.11 Cancellation.

The Issuers at any time may deliver Notes to the Trustee for cancellation. The Registrar and Paying Agent shall forward to the Trustee any Notes surrendered to them for registration of transfer, exchange or payment. The Trustee and no one else shall cancel all Notes surrendered for registration of transfer, exchange, payment, replacement or cancellation and shall dispose of such canceled Notes (subject to the record retention requirement of the Exchange Act) in accordance with its customary procedures. Certification of the disposal of all canceled Notes shall be delivered to the Issuers upon their written request therefor. The Issuers may not issue new Notes to replace Notes that it has paid or that have been delivered to the Trustee for cancellation.

Section 2.12 Defaulted Interest.

If the Issuers default in a payment of interest on the Notes, they shall pay the defaulted interest in any lawful manner plus, to the extent lawful, interest payable on the defaulted interest, to the Persons who are Holders on a subsequent special record date, in each case at the rate provided in the Notes and in Section 4.01. The Issuers shall notify the Trustee in writing of the amount of defaulted interest proposed to be paid on each Note and the date of the proposed payment. The Issuers shall fix or cause to be fixed each such special record date and payment date; provided that no such special record date may be less than 10 days prior to the related payment date for such defaulted interest. At least 15 days before the special record date, the Issuers (or, upon five Business Days’ prior written request of the Issuers, the Trustee in the name and at the expense of the Issuers) shall mail or cause to be mailed to Holders a notice that states the special record date, the related payment date and the amount of such interest to be paid.

Section 2.13 CUSIP Numbers.

The Issuers in issuing the Notes may use CUSIP numbers (if then generally in use), and, if so, the Trustee will use CUSIP numbers in notices of redemption as a convenience to Holders; provided that any such notice may state that no representation is made as to the correctness of such numbers either as

- 37 -

printed on the Notes or as contained in any notice of a redemption and that reliance may be placed only on the other identification numbers printed on the Notes, and any such redemption will not be affected by any defect in or omission of such numbers. The Issuers will promptly notify the Trustee in writing of any change in the CUSIP numbers.

Section 2.14 Issuance of Additional Notes.

The Issuers will be entitled, from time to time, without consent of the Holders, to issue Additional Notes under this Indenture with identical terms as the Initial Notes issued on the Issue Date other than with respect to (i) the date of issuance and initial accrual of interest, (ii) the issue price, (iii) the amount of interest payable on the first interest payment date and (iv) any adjustments in order to conform to and ensure compliance with the Securities Act (or other applicable securities laws). The Initial Notes issued on the Issue Date and any Additional Notes will be treated as a single class for all purposes under this Indenture, except that Additional Notes issued with “original issue discount” within the meaning of the Internal Revenue Code of 1986, as amended, shall not have the same CUSIP number as any Initial Notes and, to the extent required by applicable tax regulations, may be treated as a separate class for purposes of transfer and exchanges of Notes.

With respect to any Additional Notes, the Issuers will set forth in an Officer’s Certificate pursuant to a resolution of the Board of Directors of the Issuers, copies of which will be delivered to the Trustee, the following information:

(1) the aggregate principal amount of such Additional Notes to be authenticated and delivered pursuant to this Indenture;

(2) the issue price, the issue date and the CUSIP number of such Additional Notes; and

(3) whether such Additional Notes will be subject to transfer restrictions.

ARTICLE 3

REDEMPTION AND PREPAYMENT

Section 3.01 Notices to Trustee.

If the Issuers elect to redeem Notes pursuant to the optional redemption provisions of Section 3.07, they must furnish to the Trustee, at least 30 days but not more than 60 days before the redemption date, an Officer’s Certificate setting forth:

(1) the clause of this Indenture pursuant to which the redemption shall occur;

(2) the redemption date;

(3) the principal amount of Notes to be redeemed; and

(4) the redemption price.

Section 3.02 Selection of Notes to Be Redeemed or Purchased.

If less than all of the Notes are to be redeemed or are required to be purchased at any time, the Trustee shall select Notes for redemption or purchase on a pro rata basis except:

(1) if the Notes are listed on any national securities exchange, in compliance with the requirements of the principal national securities exchange on which the Notes are listed; or

(2) if otherwise required by law or the procedures of DTC.

- 38 -

If less than all of the Notes are to be redeemed or are required to be purchased, the particular Notes to be redeemed or purchased shall be selected, unless otherwise provided herein, not less than 30 nor more than 60 days prior to the redemption or purchase date by the Trustee from the outstanding Notes not previously called for redemption or purchase; provided , however , that the Issuers have delivered to the Trustee, at least 35 days prior to the redemption date (or such shorter or longer period as the Trustee may agree (but in no case less than 30 days prior to the redemption date)), an Officer’s Certificate requesting that the Trustee make such selection as provided in the preceding paragraph.

The Trustee shall promptly notify the Issuers in writing of the Notes selected for redemption or purchase and, in the case of any Note selected for partial redemption or purchase, the principal amount thereof to be redeemed or purchased. Notes and portions of Notes selected shall be in amounts of $2,000 or integral multiples of $1,000; except that if all of the Notes of a Holder are to be redeemed or purchased, the entire outstanding amount of Notes held by such Holder, even if not a multiple of $1,000, shall be redeemed or purchased. Except as provided in the preceding sentence, provisions of this Indenture that apply to Notes called for redemption or purchase also apply to portions of Notes called for redemption or purchase.

Section 3.03 Notice of Redemption.

At least 30 days but not more than 60 days before a redemption date, the Issuers shall mail or cause to be mailed, by first class mail, a notice of redemption to each Holder whose Notes are 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 defeasance of the Notes or a satisfaction and discharge of this Indenture pursuant to Articles 8 or 11 of this Indenture.

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

(1) the redemption date;

(2) the redemption price;

(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 upon surrender of such Note, a new Note or Notes in principal amount equal to the unredeemed portion shall be issued in the name of the applicable Holder upon cancellation of the original Note;

(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 Issuers default in making such redemption payment, interest on Notes called for redemption ceases to accrue on and after the redemption date;

(7) the paragraph of the Notes and/or Section of this Indenture pursuant to which the Notes called for redemption are being redeemed; and

(8) that no representation is made as to the correctness or accuracy of the CUSIP number, if any, listed in such notice or printed on the Notes.

At the Issuers’ request, the Trustee shall give the notice of redemption in the Issuers’ name and at its expense; provided , however , that the Issuers have delivered to the Trustee, at least 35 days prior to the redemption date (or such shorter period as the Trustee may agree (but in no case less than 30 days prior to the redemption date)), an Officer’s Certificate requesting that the Trustee give such notice and setting forth the information to be stated in such notice as provided in the preceding paragraph. The Issuers may provide in a notice of redemption that payment of the redemption price and the performance of the Issuers’ obligations with respect to such redemption may be performed by another Person.

- 39 -

Section 3.04 Effect of Notice of Redemption.

Once a notice of redemption is mailed in accordance with Section 3.03, Notes called for redemption become irrevocably due and payable on the redemption date at the redemption price. Any such redemption or notice of redemption may, in the Issuers’ discretion, be subject to the satisfaction of one or more conditions precedent, including the occurrence of a Change of Control, and any Redemption Date may be delayed up to ten Business Days in order to fulfill any such condition precedent by a notice delivered in writing to the Trustee.

Section 3.05 Deposit of Redemption or Purchase Price.

Prior to 11:00 a.m., New York City time, on the relevant redemption date or required purchase date, the Issuers shall deposit with the Trustee or with the Paying Agent money sufficient to pay the redemption or purchase price of, and accrued interest on, all Notes to be redeemed or purchased on that date. The Trustee or the Paying Agent shall promptly return to the Issuers any money deposited with the Trustee or the Paying Agent by the Issuers in excess of the amounts necessary to pay the redemption or purchase price of, and accrued interest on, all Notes to be redeemed or purchased.

If the Issuers comply with the provisions of the preceding paragraph, on and after the redemption or required purchase date, interest shall cease to accrue on the Notes or the portions of Notes called for redemption or purchase. If a Note is redeemed or purchased on or after an interest record date but on or prior to the related interest payment date, then any accrued and unpaid interest shall be paid to the Person in whose name such Note was registered at the close of business on such record date. If any Note called for redemption or purchase is not so paid upon surrender for redemption or purchase because of the failure of the Issuers to comply with the preceding paragraph, interest shall be paid on the unpaid principal, from the redemption or purchase date until such principal is paid, and to the extent lawful on any interest not paid on such unpaid principal, in each case at the rate provided in the Notes and in Section 4.01.

Section 3.06 Notes Redeemed or Purchased in Part.

Upon surrender of a Note that is redeemed or purchased in part, the Issuers shall issue and, upon receipt of an Authentication Order, the Trustee shall authenticate for the Holder at the expense of the Issuers a new Note equal in principal amount to the unredeemed or unpurchased portion of the Note surrendered.

Section 3.07 Optional Redemption.

At any time prior to January 15, 2023, the Issuers are entitled to redeem all or a part of the Notes at a redemption price equal to 100% of the principal amount of the Notes redeemed plus the Applicable Premium as of, and accrued and unpaid interest to, but excluding, the date of redemption (the “ Redemption Date ”), subject to the rights of Holders of record of Notes on the relevant record date to receive interest due on the relevant interest payment date.

On or after January 15, 2023, the Issuers are entitled to redeem all or a part of the Notes upon not less than 30 nor more than 60 days’ notice, at a redemption price equal to 100% of the principal amount of the Notes redeemed plus accrued and unpaid interest to, but excluding, the date of redemption, subject to the rights of Holders of record of Notes on the relevant record date to receive interest due on the relevant interest payment date.

Any redemption pursuant to this Section 3.07 shall be made pursuant to the provisions of Sections 3.01 through 3.06.

Section 3.08 Mandatory Redemption.

The Issuers are not required to make mandatory redemption or sinking fund payments with respect to the Notes.

- 40 -

ARTICLE 4

COVENANTS

Section 4.01 Payment of Notes.

The Issuers shall pay or cause to be paid the principal of, premium, if any, and interest on the Notes on the dates and in the manner provided in the Notes. Principal, premium, if any, and interest shall be considered paid on the date due if the Paying Agent, if other than the Issuers or a Subsidiary thereof, holds as of 11:00 a.m., New York City time, on the due date money deposited by or on behalf of the Issuers in immediately available funds and designated for and sufficient to pay all principal, premium, if any, and interest then due.

The Issuers shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal at the rate equal to the then applicable interest rate on the Notes. The Issuers shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest (without regard to any applicable grace period) at the rate equal to the then applicable interest rate on the Notes. Interest on the Notes shall accrue from the date of original issuance or, if interest has already been paid, from the date it was most recently paid. Interest shall be computed on the basis of a 360-day year comprised of twelve 30-day months.

Section 4.02 Maintenance of Office or Agency.

The Issuers shall maintain in the Borough of Manhattan, the City of New York, an office or agency (which may be an office of the Trustee or an affiliate of the Trustee, Registrar or co-registrar) where Notes may be surrendered for registration of transfer or for exchange and where notices and demands to or upon the Issuers in respect of the Notes and this Indenture may be served. The Issuers shall give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Issuers fail to maintain any such required office or agency or fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee.

The Issuers may also from time to time designate one or more other offices or agencies where the Notes may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided , however , that no such designation or rescission shall in any manner relieve the Issuers of their obligation to maintain an office or agency in the Borough of Manhattan, the City of New York for such purposes. The Issuers shall give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency.

The Issuers hereby designate the New York Office of the Trustee as one such office or agency of the Issuers in accordance with Section 2.03.

Section 4.03 Reports.

(a) So long as any Notes are outstanding, the Issuers shall distribute, as provided in this Section 4.03, the following information:

(1) within 90 days after the end of each fiscal year, annual consolidated reports of Holdings and its Subsidiaries containing substantially all of the information that would have been required to be contained (pursuant to applicable rules and regulations in effect on the Reference Date) in an Annual Report on Form 10-K under the Exchange Act if Holdings had been a reporting company under the Exchange Act (but only to the extent similar information was included in the March 2012 Offering Circular), including (A) “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and (B) audited financial statements prepared in accordance with Applicable Accounting Standards, but, without limiting the generality of the foregoing, such reports (A) will not be required to contain information required by Items 1B, 4, 5, 9A or 14 of Form 10-K and (B) will not be required to contain information required by Items 10

- 41 -

and 11 of Form 10-K (relating to management and compensation) but in lieu of such information will include information of the type and scope contained in the March 2012 Offering Circular under the caption “Management”;

(2) within 45 days after the end of each of the first three fiscal quarters of each fiscal year, quarterly consolidated reports of Holdings and its Subsidiaries containing substantially all of the information that would have been required to be contained (pursuant to applicable rules and regulations in effect on the Reference Date) in a Quarterly Report on Form 10-Q under the Exchange Act if Holdings had been a reporting company under the Exchange Act (but only to the extent similar information was provided in the March 2012 Offering Circular), including (A) “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and (B) unaudited quarterly financial statements prepared in accordance with Applicable Accounting Standards but, without limiting the generality of the foregoing, such reports will not be required to contain information required by Items 2 or 4 of Part II of Form 10-Q; and

(3) within five Business Days after the occurrence of each event that would have been required to be reported (pursuant to applicable rules and regulations in effect on the Reference Date) in a Current Report on Form 8-K under the Exchange Act if Holdings had been a reporting company under the Exchange Act, current reports containing substantially all of the information that would have been required to be contained (pursuant to applicable rules and regulations in effect on the Reference Date) in a Current Report on Form 8-K under the Exchange Act if Holdings had been a reporting company under the Exchange Act; provided , however , that (A) no such current report will be required to be furnished if Holdings determines in its good faith judgment that such event is not material to Holders or the business, assets, operations, financial positions or prospects of the Issuers and their Restricted Subsidiaries, taken as a whole and (B) such reports will not be required to contain information required by Items 2.02, 3.01, 3.02 of Form 8-K or Items 5.02(c), (d) or (e) (except to the extent similar information is contained in the March 2012 Offering Circular under the caption “Management”) of Form 8-K;

provided , however , that all of the foregoing reports (A) will not be required to comply with Section 302 or Section 404 of the Sarbanes-Oxley Act of 2002, or related Items 307 and 308 of Regulation S-K promulgated by the SEC, or Item 10(e)(l)(ii) of Regulation S-K promulgated by the SEC (with respect to any non-GAAP financial measures contained therein), (B) will not be required to contain the separate financial information for Guarantors and non-guarantor subsidiaries contemplated by Rule 3-10 of Regulation S-X promulgated by the SEC and (C) will not be required to contain information required by Item 601 of Regulation S-K.

(b) At any time that there shall be one or more Unrestricted Subsidiaries that, in the aggregate, hold more than 15.0% of Consolidated Adjusted Tangible Assets, the quarterly and annual financial information required by the preceding paragraph shall include a reasonably detailed presentation, either on the face of the financial statements or in the footnotes thereto of the financial condition and results of operations of Holdings and its Restricted Subsidiaries separate from the financial condition and results of operations of the Unrestricted Subsidiaries.

(c) References under this Section 4.03 to the laws, rules, forms, items, articles and sections shall be to such laws, rules, forms, items, articles and sections as they exist on the Reference Date, without giving effect to amendments thereto that may take effect after the Reference Date.

(d) All such reports will be prepared in all material respects in accordance with all of the rules and regulations applicable to such reports. Each annual report will include a report on the relevant entity’s consolidated financial statements by the relevant entity’s certified independent accountants. Notwithstanding the deadlines for the reports set forth in Section 4.03(a), such report by the certified independent accountants need not be provided until 120 days after the end of the relevant fiscal year, so long as the related annual report contains unaudited financial statements as of the time it is distributed in accordance with the deadlines set forth in Section 4.03(a).

- 42 -

(e) In addition, the Issuers agree that, for so long as any Notes remain outstanding, if at any time they are not required to file with the SEC the reports required by the foregoing provisions of this Section 4.03, they will furnish to the Holders and beneficial owners of Notes and prospective investors, upon their request, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act.

(f) Any subsequent restatement of financial statements shall have no retroactive effect for purposes of calculations previously made pursuant to the covenants contained in this Indenture.

(g) The Issuers shall (1) distribute the information and reports described in Section 4.03(a) (the “ Financial Reports ”) electronically to the Trustee and (2) make the Financial Reports available to any Holder or beneficial owner of Notes, any prospective investor, any security analyst and any market maker affiliated with any Initial Purchaser by posting the Financial Reports on Intralinks or any comparable password protected online data system; provided that the Issuers shall not be required to make available any password or other login information to any person other than any such Holder, beneficial owner, prospective investor, security analyst or market maker that establishes its identity as such to the reasonable satisfaction of the Issuers. The Trustee will have no responsibility whatsoever to determine if such posting or filing (or any other filing referenced below) has occurred.

(h) In addition, the Issuers (or any direct or indirect parent of the Issuers) shall:

(1) hold a quarterly conference call to discuss the information contained in the Financial Reports or the relevant Substitute Reports not later than ten business days from the time the Issuers furnish the Financial Reports or the relevant Substitute Reports to the Trustee (or from the time the same are filed or furnished to the SEC as provided in Section 4.03(i)); and

(2) no fewer than three Business Days prior to the date of the conference call required to be held in accordance with clause (1) above, issue a press release to the appropriate U.S. wire services announcing the time and date of such conference call and directing the Holders and beneficial owners of, and prospective investors in, the Notes and securities analysts and market makers to contact an individual at the Issuers (for whom contact information shall be provided in such press release) to obtain the Financial Reports or the relevant Substitute Reports and information on how to access such conference call.

(i) If at any time the Notes are guaranteed by a direct or indirect parent of Holdings, and such company has furnished the Financial Reports described herein with respect to such company as required by this Section 4.03 as if such company were Holdings (including any financial information required hereby), Holdings and the Issuers shall be deemed to be in compliance with the provisions of this Section 4.03. Any information filed with, or furnished to, the SEC within the time periods specified in this Section 4.03 shall be deemed to have been made available as required by this Section 4.03, and to the extent such filings comply with the rules and regulations of the SEC regarding such filings, they will be deemed to comply with the requirements of this Section 4.03. If Holdings or a direct or indirect parent of Holdings files with or furnishes to the SEC (a) an Annual Report on Form 10-K with respect to a fiscal year that complies in all material respects with the rules and regulations of the SEC regarding such filing, then such filing shall be deemed to satisfy the requirements of Section 4.03(a)(1) with respect to the relevant fiscal year; (b) a quarterly report on Form 10-Q with respect to a fiscal quarter that complies in all material respects with the rules and regulations of the SEC regarding such filing, then such filing shall be deemed to satisfy the requirements of Section 4.03(a)(2) with respect to the relevant fiscal quarter; and (c) a current report on Form 8-K with respect to any of the events described Section 4.03(a)(3) that complies in all material respects with the rules and regulations of the SEC regarding such filing, then such filing shall be deemed to satisfy the requirements of Section 4.03(a)(3) with respect to such event (each of (a), (b) and (c), “ Substitute Reports ”); provided , in each case of clause (a) through (c), that such filings include such disclosure as is reasonably necessary to describe any material differences between the consolidated financial information of such direct or indirect parent and the consolidated financial information of Holdings. The subsequent filing or making available of any materials or conference call required by this Section 4.03 shall be deemed automatically to cure any Default or Event of Default resulting from the failure to file or make available such materials or conference call within the required time frame. The

- 43 -

Trustee shall have no obligation whatsoever to determine whether or not such filings referred to in this Section 4.03 have been made.

Section 4.04 Compliance Certificate.

(a) The Issuers shall deliver to the Trustee, within 105 days after the end of each fiscal year of Holdings, an Officer’s Certificate signed by the principal executive officer or the principal financial officer stating that a review of the activities of Holdings and its Subsidiaries during the preceding 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 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 of this Indenture (or, if a Default or Event of Default has occurred, describing all such Defaults or Events of Default of which he or she may have knowledge and what action the Issuers are taking or propose to take with respect thereto) and that to 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 are taking or propose to take with respect thereto.

(b) So long as any of the Notes are outstanding, the Issuers shall deliver to the Trustee, within 30 days after any Officer becoming aware of any Default or Event of Default, an Officer’s Certificate specifying such Default or Event of Default and what action the Issuers are taking or propose to take with respect thereto.

Section 4.05 Taxes.

The Restricted Parents shall pay, and shall cause each of their respective Subsidiaries to pay, prior to delinquency, all material taxes, assessments, and governmental levies except such as are contested in good faith and by appropriate proceedings or where the failure to effect such payment is not adverse in any material respect to the Holders.

Section 4.06 Stay, Extension and Usury Laws.

The Issuers and each of the Guarantors covenant (to the extent that they may lawfully do so) that they shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law wherever enacted, now or at any time hereafter in force, that may affect the covenants or the performance of this Indenture; and the Issuers and each of the Guarantors (to the extent that they may lawfully do so) hereby expressly waive all benefit or advantage of any such law, and covenant that they shall not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Trustee, but shall suffer and permit the execution of every such power as though no such law has been enacted.

Section 4.07 Restrictions on Sale and Leaseback Transactions.

(a) The Restricted Parents shall not, and shall not permit the U.S. Issuer or any of the Subsidiary Guarantors to, enter into any Sale and Leaseback Transaction after the Issue Date, unless:

(1) notice is given by Holdings or a Restricted Parent to the Trustee of the Sale and Leaseback Transaction within 30 days after its completion;

(2) the Restricted Parents, the U.S. Issuer or the relevant Subsidiary Guarantor receive fair value for the property sold, as determined in good faith by a Restricted Parent or the U.S. Issuer (evidenced by a resolution of the Board of Directors of such entity delivered to the Trustee, in the case of a Sale and Leaseback Transaction with respect to property whose fair value exceeds $20.0 million), it being understood that, for the avoidance of doubt, fair value may take into

- 44 -

account all circumstances of the Sale and Leaseback Transaction, including, without limitation, the lease back arrangement; and

(3) the Restricted Parents, the U.S. Issuer or a Subsidiary Guarantor, within 365 days after the completion of the Sale and Leaseback Transaction, applies, or enters into a definitive agreement to apply within such 365-day period, an amount equal to the net proceeds therefrom either:

(A) to the redemption, repayment or other retirement for value of (a) the Notes or (b) any indebtedness of the Restricted Parents, the U.S. Issuer or any Subsidiary Guarantor that is for borrowed money or is evidenced by a bond, note, debenture, guarantee or similar instrument (other than a trade payable or a current liability arising in the ordinary course of business) and which indebtedness ranks equally in right of payment with the Notes or a Note Guarantee, as applicable or

(B) to the purchase by the Restricted Parents, the U.S. Issuer or a Subsidiary Guarantor of property used in the trade or business of the Restricted Parents, the U.S. Issuer or any Subsidiary Guarantor.

(b) Any Sale and Leaseback Transaction that fulfills the requirements of Section 4.07(a) (1), (2) and (3) is a “ Permitted Sale and Leaseback Transaction ”.

(1) a Sale and Leaseback Transaction if, at the time such Sale and Leaseback Transaction is entered into, the term of the related lease to the Restricted Parents, the U.S. Issuer or the relevant Subsidiary Guarantor of the property being sold pursuant to such transaction is three years or less;

(2) a Sale and Leaseback Transaction for which the encumbrance on the relevant property would be a Permitted Lien; and

(3) a Sale and Leaseback Transaction relating to a property entered into within 180 days after the latest of (x) the date of acquisition of such property by a Restricted Parent, the U.S. Issuer or any Subsidiary Guarantor, (y) the date of completion of construction of such property and (z) the date of commencement of full operations of such property.

(d) In addition, the Restricted Parents, the U.S. Issuer or and the Subsidiary Guarantors may enter into a Sale and Leaseback Transaction if immediately thereafter the sum of (a) the aggregate principal amount of all Secured Indebtedness outstanding (excluding Indebtedness secured by Permitted Liens and any Equal and Ratable Secured Indebtedness) and (b) all Attributable Debt in respect of Sale and Leaseback Transactions (excluding Attributable Debt in respect of Permitted Sale and Leaseback Transactions or Exempt Sale and Leaseback Transactions) as of the date of determination would not exceed 20% of Consolidated Adjusted Tangible Assets as of such date.

Section 4.08 Liens.

(a) The Restricted Parents shall not, and shall not permit the U.S. Issuer or any of the Subsidiary Guarantors to, create, incur, assume or otherwise cause to exist or become effective any Lien (a “ Triggering Lien ”) of any kind (other than Permitted Liens) securing Indebtedness upon any of their property or assets, now owned or hereafter acquired, or any income or profits therefrom unless all payments due under this Indenture and the Notes (or under a Note Guarantee in the case of Liens of a Guarantor) are secured on an equal and ratable basis with the obligations so secured (such Indebtedness in respect of which the Notes or Note Guarantees have been so secured, the “ Equal and Ratable Secured Indebtedness ”) until such time as such obligations are no longer secured by a Triggering Lien.

- 45 -

(b) In addition, the Restricted Parents, the U.S. Issuer or the Subsidiary Guarantors may create, incur, assume or otherwise cause to exist or become effective any Lien of any kind (other than Permitted Liens) securing Indebtedness, without equally and ratably securing the notes (or a Note Guarantee in the case of Liens of a Guarantor) pursuant to the preceding paragraph, if immediately thereafter the sum of (a) the aggregate principal amount of all Secured Indebtedness outstanding (excluding Indebtedness secured by Permitted Liens and any Equal and Ratable Secured Indebtedness) and (b) all Attributable Debt in respect of Sale and Leaseback Transactions (excluding Attributable Debt in respect of Permitted Sale and Leaseback Transactions and Exempt Sale and Leaseback Transactions) would not exceed 20% of Consolidated Adjusted Tangible Assets as of such date.

(c) For purposes of determining compliance with Section 4.07 and this Section 4.08, (A) a Lien securing an item of Indebtedness need not be permitted solely by reference to either of Sections 4.08(a) or (b) or to one category (or portion thereof) of Permitted Liens described in clauses (a) through (jj) of the definition of “Permitted Liens” but may be permitted in part under any combination thereof and (B) in the event that a Lien securing an item of Indebtedness, Disqualified Stock or preferred stock (or any portion thereof) meets the criteria of either of Sections 4.08(a) or (b) or one or more of the categories (or portions thereof) of Permitted Liens described in clauses (a) through (jj) of the definition of “Permitted Liens,” the Issuers shall, in their sole discretion, divide, classify or reclassify, or later divide, classify, or reclassify, such Lien securing such item of Indebtedness (or any portion thereof) in any manner that complies (based on circumstances existing at the time of such division, classification or reclassification) with this Section 4.08. For the avoidance of doubt, if and to the extent that any Indebtedness is incurred to refinance, refund or replace any Indebtedness secured by Liens permitted under any clause of the definition of “Permitted Liens” or Section 4.08(b) that is limited by a percentage of Consolidated Adjusted Tangible Assets, the Indebtedness so incurred may be secured by Liens pursuant to such clause or subclause, or Section 4.08(b) at such time.

(d) With respect to any Lien securing Indebtedness that was permitted to secure such Indebtedness at the time of the incurrence of such Indebtedness, such Lien shall also be permitted to secure any Increased Amount of such Indebtedness. The “ Increased Amount ” of any Indebtedness shall mean any increase in the amount of such Indebtedness in connection with any accrual of interest, the accretion of accreted value, the amortization of original issue discount, the payment of interest in the form of additional Indebtedness with the same terms or in the form of common equity of a Restricted Parent or any direct or indirect parent of a Restricted Parent, the payment of dividends on preferred stock in the form of additional shares of preferred stock of the same class, accretion of original issue discount or liquidation preference and increases in the amount of Indebtedness outstanding solely as a result of fluctuations in the exchange rate of currencies or increases in the value of property securing Indebtedness described in the definition of “Indebtedness.”

Section 4.09 Offer to Repurchase Upon Change of Control.

(a) If a Change of Control occurs after the Issue Date, unless, prior to the time the Issuers are required to make a Change of Control Offer, the Issuers have previously or concurrently mailed a redemption notice that is or has become unconditional with respect to all the outstanding Notes as described under Section 3.07 or 11.01, the Issuers shall make an offer to purchase all of the Notes pursuant to the offer described below (the “ Change of Control Offer ”) at a price in cash (the “ Change of Control Payment ”) equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest to, but excluding, the date of purchase, subject to the right of Holders on the relevant record date to receive interest due on the relevant interest payment date. Within 30 days following any Change of Control, the Issuers shall send notice of such Change of Control Offer by first class mail, with a copy to the Trustee, to each Holder of Notes to the address of such Holder appearing in the security register with a copy to the Trustee or otherwise in accordance with the procedures of DTC, with the following information:

(1) that a Change of Control Offer is being made pursuant to this Section 4.09 and that all Notes tendered pursuant to such Change of Control Offer will be accepted for payment by the Issuers;

- 46 -

(2) the purchase price and the purchase date, which shall be no earlier than 30 days nor later than 60 days from the date such notice is mailed (the “ Change of Control Payment Date ”);

(3) that any Note not properly tendered will remain outstanding and continue to accrue interest;

(4) that, unless the Issuers default in the payment of the Change of Control Payment, all Notes accepted for payment pursuant to the Change of Control Offer will cease to accrue interest on the Change of Control Payment Date;

(5) that Holders electing to have any Notes purchased pursuant to a Change of Control Offer will be required to surrender such Notes, with the form entitled “Option of Holder to Elect Purchase” on the reverse of such Notes completed, to the Paying Agent specified in the notice at the address specified in the notice prior to the close of business on the third Business Day preceding the Change of Control Payment Date;

(6) that Holders will be entitled to withdraw their tendered Notes and their election to require the Issuers to purchase such Notes; provided that the Paying Agent receives, not later than the expiration time of the Change of Control Offer, a facsimile transmission or letter setting forth the name of the Holder, the principal amount of Notes tendered for purchase, and a statement that such Holder is withdrawing its tendered Notes and its election to have such Notes purchased;

(7) that if a Holder requests that only a portion of a Note held by it be purchased, such Holder will be issued a new Note equal in principal amount to the unpurchased portion of the Note surrendered. The unpurchased portion of the Note must be equal to $2,000 or an integral multiple of $1,000 in excess thereof;

(8) if such notice is delivered prior to the occurrence of a Change of Control, stating that the Change of Control Offer is conditional on the occurrence of such Change of Control; and

(9) the other instructions, as determined by the Issuers, consistent with this Section 4.09, that a Holder must follow.

While the Notes are in global form and the Issuers make an offer to purchase all of the Notes pursuant to the Change of Control Offer, a holder of Notes may exercise its option to elect for the purchase of the Notes through the facilities of DTC, subject to its rules and regulations.

The Issuers shall comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent those laws and regulations are applicable in connection with the repurchase of the Notes as a result of a Change of Control. To the extent that the provisions of any securities laws or regulations conflict with the provisions of this Section 4.09, the Issuers shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under this Section 4.09 by virtue of such compliance.

(b) On the Change of Control Payment Date, the Issuers shall, to the extent lawful:

(1) accept for payment all Notes or portions of Notes properly tendered pursuant to the Change of Control Offer;

(2) deposit with the Paying Agent an amount equal to the Change of Control Payment in respect of all Notes or portions of Notes properly tendered; and

(3) deliver or cause to be delivered to the Trustee the Notes properly accepted together with an Officer’s Certificate stating the aggregate principal amount of Notes or portions of Notes being purchased by the Issuers.

The Paying Agent shall promptly mail to each Holder of Notes properly tendered the Change of Control Payment for such Notes, and the Trustee shall, upon receipt of an Authentication Order,

- 47 -

promptly authenticate and mail (or cause to be transferred by book entry) to each Holder a new Note equal in principal amount to any unpurchased portion of the Notes surrendered, if any. The Issuers shall publicly announce the results of the Change of Control Offer on or as soon as practicable after the Change of Control Payment Date.

(c) Notwithstanding anything to the contrary in this Section 4.09, the Issuers shall not be required to make a Change of Control Offer upon a Change of Control if (1) a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in this Section 4.09 and purchases all Notes properly tendered and not withdrawn under the Change of Control Offer, or (2) a notice of redemption that is or has become unconditional has been given pursuant to Section 3.07 unless and until there is a Default in payment of the applicable redemption price.

(d) Notwithstanding anything to the contrary in this Section 4.09, a Change of Control Offer may be made in advance of a Change of Control, conditional upon such Change of Control, if a definitive agreement is in place for the Change of Control at the time of the making of such Change of Control Offer.

Section 4.10 Designation of Restricted and Unrestricted Subsidiaries.

The Board of Directors of a Restricted Parent may designate any Restricted Subsidiary of a Restricted Parent to be an Unrestricted Subsidiary if (1) that designation would not cause a Default and (2) the Board of Directors of such Restricted Parent concurrently designates such Restricted Subsidiary to be an Unrestricted Subsidiary pursuant to and in compliance with the corresponding Indenture provisions from time to time in effect, if any, governing the 2021 Notes, the 2024 Notes and any other similar debt securities of the Issuers then outstanding. The Board of Directors of an Issuer or a Restricted Parent may redesignate any Unrestricted Subsidiary to be a Restricted Subsidiary.

Any designation of a Subsidiary of a Restricted Parent as an Unrestricted Subsidiary shall be evidenced to the Trustee by filing with the Trustee a certified copy of a resolution of the Board of Directors of a Restricted Parent giving effect to such designation and an Officer’s Certificate certifying that such designation complied with the preceding conditions. If, at any time, any Unrestricted Subsidiary would fail to meet the requirements of an Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted Subsidiary for purposes of this Indenture and any Liens of such Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of a Restricted Parent as of such date and, if such Liens are not permitted to be incurred as of such date under Section 4.08, the Restricted Parents shall be in Default of Section 4.08. The Board of Directors of a Restricted Parent may at any time designate any Unrestricted Subsidiary to be a Restricted Subsidiary of a Restricted Parent; provided that such designation shall be deemed to be an incurrence of Liens by a Restricted Subsidiary of a Restricted Parent of any outstanding Liens of such Unrestricted Subsidiary, and such designation shall only be permitted if (1) such Liens are permitted under Section 4.08 and (2) no Default or Event of Default would be in existence following such designation.

Section 4.11 Payments for Consent.

The Restricted Parents shall not, and shall not permit any of their Restricted Subsidiaries to, directly or indirectly, pay or cause to be paid any consideration to or for the benefit of any Holder of 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 and is paid to all Holders of the Notes that consent, waive or agree to amend in the time frame set forth in the solicitation documents relating to such consent, waiver or agreement. Notwithstanding the foregoing, in the case of an offering of securities to Holders of Notes by the Restricted Parents or any of their Restricted Subsidiaries (including, without limitation, an exchange offer) in which a consent, waiver or amendment is sought, if such offering is intended to be exempt from the registration requirements of the Securities Act, the Restricted Parents and their Restricted Subsidiaries may offer and issue such securities only to Holders of Notes who are eligible to receive such securities in accordance with such exemption from registration.

- 48 -

Section 4.12 Additional Note Guarantees.

If at any time any existing or future Restricted Subsidiary of U.S. Holdings does not qualify as a Non-Guarantor Subsidiary and such Subsidiary is not at that time a Guarantor, then that Restricted Subsidiary will, within 30 days from being acquired, created or ceasing to qualify as a Non-Guarantor Subsidiary, as applicable, become a Guarantor and execute a supplemental indenture and deliver an Officer’s Certificate and Opinion of Counsel reasonably satisfactory to the Trustee; provided that no such Restricted Subsidiary will be required to so become a Guarantor for so long as such Subsidiary does not Guarantee any Obligations or otherwise become an obligor under any Credit Agreement. The form of such supplemental indenture is attached as Exhibit E hereto.

Section 4.13 Covenant Termination.

At any time after the Notes have received Investment Grade Ratings from two Rating Agencies (a “ Covenant Termination Event ”), upon notice by the Issuers to the Trustee certifying that a Covenant Termination Event has occurred and that at the time of the giving of such notice no Default has occurred and is continuing under this Indenture (a “ Covenant Termination Event Notice ”), the Restricted Parents and their Restricted Subsidiaries will not thereafter be subject to the provisions of this Indenture described under Section 4.12. Upon the delivery of a Covenant Termination Event Notice pursuant to a Covenant Termination Event, the Guarantees of the Guarantors will also be released.

ARTICLE 5

SUCCESSORS

Section 5.01 Merger, Consolidation, or Sale of Assets.

(a) None of Holdings, the Restricted Parents nor the U.S. Issuer shall, directly or indirectly: (1) consolidate or merge with or into another Person (whether or not it is the surviving corporation); or (2) sell, assign, transfer, convey or otherwise dispose of all or substantially all of the properties or assets of the Restricted Parents and their Restricted Subsidiaries, taken as a whole, in one or more related transactions, to another Person, unless:

(1) in the case of a consolidation or merger of, or a sale, assignment, transfer, conveyance or other disposition by, the U.S. Issuer or U.S. Holdings, the Person formed by or surviving any such consolidation or merger (if other than the U.S. Issuer or U.S. Holdings) or to which such sale, assignment, transfer, conveyance or other disposition has been made is a corporation organized or existing under the laws of the United States, any state of the United States or the District of Columbia;

(2) the Person formed by or surviving any such consolidation or merger (if other than a Restricted Parent or the U.S. Issuer) or the Person to which such sale, assignment, transfer, conveyance or other disposition has been made assumes all the obligations of Holdings, such Restricted Parent and/or such Issuer, as applicable, under the Notes or the Note Guarantees, as applicable, and this Indenture pursuant to agreements reasonably satisfactory to the Trustee; and

(3) immediately after such transaction, no Default or Event of Default exists.

In addition, the Restricted Parents shall not, and shall not permit their Restricted Subsidiaries to, directly or indirectly, lease all or substantially all of the properties and assets of the Restricted Parents and their Restricted Subsidiaries, taken as a whole, in one or more related transactions, to any other Person.

(b) The provisions of Section 5.01(a) shall not apply to:

(1) a merger of Holdings, a Restricted Parent or the U.S. Issuer with an Affiliate solely for the purpose of reincorporating Holdings, such Restricted Parent or the U.S. Issuer in another

- 49 -

jurisdiction; provided that in the case of the U.S. Issuer and U.S. Holdings such other jurisdiction is any state of the United States or the District of Columbia;

(2) any consolidation or merger, or any sale, assignment, transfer, conveyance, lease or other disposition of assets between or among Restricted Parents and their Restricted Subsidiaries; or

(3) any sale or other transfer of assets pursuant to a Designated Asset Sale or that constitute Excess Designated Proceeds.

Section 5.02 Successor Corporation Substituted.

Upon any consolidation or merger, or any sale, assignment, transfer, lease, conveyance or other disposition of properties or assets in a transaction that is subject to, and that complies with the provisions of, Section 5.01, the successor Person formed by such consolidation or into or with which Holdings, the applicable Restricted Parent or U.S. Issuer is merged or to which such sale, assignment, transfer, lease, conveyance or other disposition is made shall succeed to, and be substituted for (so that from and after the date of such consolidation, merger, sale, assignment, transfer, lease, conveyance or other disposition, the provisions of this Indenture referring to “Holdings”, a “Restricted Parent” or the “U.S. Issuer”, as applicable, shall refer instead to the successor Person and not to Holdings, such Restricted Parent or the U.S. Issuer), and may exercise every right and power of Holdings, such Restricted Parent or the U.S. Issuer, as applicable, under this Indenture with the same effect as if such successor Person had been named as Holdings, a Restricted Parent or the U.S. Issuer herein; provided , however , that the predecessor Holdings, Restricted Parents or the U.S. Issuer, if any, shall not be relieved from the obligation to pay the principal of and interest on the Notes except in the case of a sale of all or substantially all of the properties or assets of Holdings, the Restricted Parents and their Restricted Subsidiaries, taken as whole, in a transaction that is subject to, and that complies with the provisions of, Section 5.01.

ARTICLE 6

DEFAULTS AND REMEDIES

Section 6.01 Events of Default.

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

(1) default for 30 days in the payment when due of interest on the Notes;

(2) default in the payment when due (at maturity, upon redemption, acceleration or otherwise) of the principal of, or premium, if any, on, the Notes;

(3) failure by a Restricted Parent or any Restricted Subsidiary of a Restricted Parent to comply with Section 5.01;

(4) failure by Holdings or any Restricted Subsidiary of Holdings for 60 days after notice to an Issuer by the Trustee or the holders of at least 25% in aggregate principal amount of the Notes then outstanding voting as a single class to comply with any of the other agreements in this Indenture;

(5) default under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed (other than Non-Recourse Debt and any such Indebtedness owed to Holdings, a Restricted Parent or a Restricted Subsidiary of a Restricted Parent) by a Restricted Parent or any Significant Subsidiary of a Restricted Parent (or the payment of which is guaranteed by a Restricted Parent or any Significant Subsidiary of a Restricted Parent), whether such Indebtedness or Guarantee now exists, or is created after the Issue Date, if that default:

- 50 -

(A) is caused by a failure to pay principal at the final Stated Maturity of such Indebtedness (a “ Payment Default ”); or

(B) results in the acceleration of such Indebtedness prior to its express maturity,

and, in each case, the principal amount of such Indebtedness, together with the principal amount of any other such Indebtedness under which there has been a Payment Default or the maturity of which has been so accelerated, aggregates $40.0 million or more;

(6) with respect to any judgment or decree for the payment of money (net of any amount covered by insurance issued by a reputable and creditworthy insurer that has not contested coverage or reserved rights with respect to an underlying claim) in excess of $40.0 million or its foreign currency equivalent against a Restricted Parent or any Restricted Subsidiary of a Restricted Parent, the failure by a Restricted Parent or such Restricted Subsidiary, as applicable, to pay such judgment or decree, which judgment or decree has remained outstanding for a period of 60 days after such judgment or decree became final and nonappealable without being paid, discharged, waived or stayed;

(7) except as permitted by this Indenture, any Note Guarantee of a Restricted Parent or any Significant Subsidiary of a Restricted Parent is declared to be unenforceable or invalid by any final and nonappealable judgment or decree or ceases for any reason to be in full force and effect, or a Restricted Parent or any Subsidiary Guarantor that is a Significant Subsidiary of a Restricted Parent or any Person acting on behalf of a Restricted Parent or any such Subsidiary Guarantor denies or disaffirms its obligations in writing under its Note Guarantee and such Default continues for 10 days after receipt of the notice specified in this Indenture;

(8) any of Holdings, a Restricted Parent, the U.S. Issuer or any Subsidiary of any of the foregoing that is a Significant Subsidiary pursuant to or within the meaning of Bankruptcy Law:

(A) commences a voluntary case;

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

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

(E) generally is not paying its debts as they become due; and

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

(A) is for relief against any of Holdings, a Restricted Parent, the U.S. Issuer or any Subsidiary of any of the foregoing that is a Significant Subsidiary in an involuntary case;

(B) appoints a custodian of any of Holdings, a Restricted Parent, the U.S. Issuer or any Subsidiary of any of the foregoing that is a Significant Subsidiary for all or substantially all of the property of Holdings, such Restricted Parent, the U.S. Issuer or such Significant Subsidiary, as applicable; or

(C) orders the liquidation of any of Holdings, a Restricted Parent, the U.S. Issuer or any Subsidiary of any of the foregoing that is a Significant Subsidiary;

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

- 51 -

Section 6.02 Acceleration.

In the case of an Event of Default specified in clause (8) or (9) of Section 6.01, all outstanding Notes shall become due and payable immediately without further action or notice. If any other Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in aggregate principal amount of the then outstanding Notes may declare all the Notes to be due and payable immediately.

Upon any such declaration, the Notes shall become due and payable immediately. The Holders of a majority in aggregate principal amount of the then outstanding Notes by written notice to the Trustee may, on behalf of all of the Holders, rescind an acceleration or waive any existing Default or Event of Default and its consequences under this Indenture except a continuing Default or Event of Default in the payment of interest or premium, if any, on, or the principal of, the Notes.

Section 6.03 Other Remedies.

If an Event of Default occurs and is continuing, the Trustee may pursue any available remedy to collect the payment of principal, premium, if any, and interest on the Notes or to enforce the performance of any provision of the Notes or this Indenture.

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 of a Note 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. All remedies are cumulative to the extent permitted by law.

Section 6.04 Waiver of Past Defaults.

Holders of a majority in aggregate principal amount of the then outstanding Notes by written notice to the Trustee may, on behalf of all of the Holders, waive any existing Default or Event of Default and its consequences hereunder, except a continuing Default or Event of Default in the payment of the principal of, premium, if any, or interest on, the Notes; provided , however , that the Holders of a majority in aggregate principal amount of the then outstanding Notes may rescind an acceleration and its consequences, including any related payment default that resulted from such acceleration. 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 thereon.

Section 6.05 Control by Majority.

Holders of a majority in aggregate principal amount of the then outstanding Notes may direct the time, method and place of conducting any proceeding for exercising any remedy available to the Trustee or exercising any trust or power conferred on it. However, the Trustee may refuse to follow any direction that conflicts with law or this Indenture that the Trustee determines may be unduly prejudicial to the rights of other Holders or that may involve the Trustee in personal liability.

Section 6.06 Limitation on Suits.

Except to enforce the right to receive payment of principal, premium, if any, or interest when due, no Holder may pursue any remedy with respect to this Indenture or the Notes unless:

(1) such Holder has previously given the Trustee written notice that an Event of Default is continuing;

(2) Holders of at least 25% in aggregate principal amount of the then outstanding Notes have requested the Trustee to pursue the remedy;

(3) such Holders have offered the Trustee indemnity or security reasonably satisfactory to the Trustee against any loss, liability or expense;

- 52 -

(4) the Trustee has not complied with such request within 60 days after the receipt of the request and the offer of security or indemnity; and

(5) Holders of a majority in aggregate principal amount of the then-outstanding Notes have not given the Trustee a direction inconsistent with such request within such 60-day period.

Section 6.07 Rights of Holders to Receive Payment.

Notwithstanding any other provision of this Indenture, the right of any Holder to receive payment of principal, premium, if any, and interest on the Notes, on or after the respective due dates expressed in the Notes (including in connection with an offer to purchase), or to bring suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of such Holder.

Section 6.08 Collection Suit by Trustee.

If an Event of Default specified in Section 6.01(1) or (2) occurs and is continuing, the Trustee is authorized to recover judgment in its own name and as Trustee of an express trust against the Issuers and each Guarantor for the whole amount of principal of, premium, if any, and interest remaining unpaid on the Notes and interest on overdue principal and, to the extent lawful, interest and such further amount 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 6.09 Trustee May File Proofs of Claim.

The Trustee is authorized to 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 the Holders of the Notes allowed in any judicial proceedings relative to the Issuers (or any other obligor upon the Notes), its creditors or its property and shall be entitled and empowered to collect, receive and distribute any money or other property payable or deliverable on any such claims 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 to the Trustee hereunder. To the extent that the payment of any such compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee hereunder out of the estate in any such proceeding, shall be denied for any reason, payment of the same shall be secured by a Lien on, and shall be paid out of, any and all distributions, dividends, money, securities and other properties that the Holders may be entitled to receive in such proceeding whether in liquidation or under any plan of reorganization or arrangement or otherwise. 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 of reorganization, arrangement, adjustment or composition affecting the Notes or the rights of any Holder, or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding.

Section 6.10 Priorities.

If the Trustee collects any money pursuant to this Article 6, it shall pay out the money in the following order:

First : to the Trustee, its agents and attorneys for amounts due hereunder, including payment of all compensation, expenses and liabilities incurred, and all advances made, by the Trustee and the costs and expenses of collection;

Second : to Holders for amounts due and unpaid on the Notes for principal, premium, if any, and interest, ratably, without preference or priority of any kind, according to the amounts due and payable on the Notes for principal, premium, if any, and interest, respectively; and

- 53 -

Third : to the Issuers or to such party as a court of competent jurisdiction shall direct.

The Trustee may fix a record date and payment date for any payment to Holders pursuant to this Section 6.10.

Section 6.11 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 a 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 and expenses, 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 6.11 does not apply to a suit by the Trustee, a suit by a Holder of a Note pursuant to Section 6.07, or a suit by Holders of more than 10% in principal amount of the then outstanding Notes.

ARTICLE 7

TRUSTEE

Section 7.01 Duties of Trustee.

(a) If an Event of Default has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in its exercise, as a prudent person would exercise or use under the circumstances in the conduct of such person’s own affairs.

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

(1) the duties of the Trustee shall be determined solely by the express provisions of this Indenture and the Trustee need perform only those duties that are specifically set forth in this Indenture and no others, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and

(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. However, in the case of certificates or opinions specifically required by any provision hereof to be furnished to it, the Trustee shall examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture (but need not to confirm or investigate the accuracy of mathematical calculations or other facts stated therein).

(c) The Trustee may not be relieved from liabilities for its own grossly negligent action, its own grossly 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, unless it is proved that the Trustee was negligent in ascertaining the pertinent facts; and

(3) the Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 6.05.

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

- 54 -

(e) No provision of this Indenture shall require the Trustee to expend or risk its own funds or incur any liability.

(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. Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law.

Section 7.02 Rights of Trustee.

(a) The Trustee may conclusively rely in good faith upon any document 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.

(b) Before the Trustee acts or refrains from acting, it may require an Officer’s Certificate or an Opinion of Counsel or both. The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on such Officer’s Certificate or Opinion of Counsel. The Trustee may consult with counsel of its own 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.

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

(d) The Trustee shall not be liable for any action it takes or omits to take in good faith that it believes to be authorized or within the rights or powers conferred upon it by this Indenture provided , however , that the Trustee’s conduct does not constitute willful misconduct or gross negligence.

(e) Unless otherwise specifically provided in this Indenture, any demand, request, direction or notice from an Issuer shall be sufficient if signed by an Officer of such Issuer.

(f) The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders unless such Holders have offered to the Trustee security and indemnity reasonably satisfactory to it against any loss, liability or expense that might be incurred by it in compliance with such request or direction.

(g) 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.

(h) The rights, privileges, protections, immunities and benefits given to the Trustee, including, its right to be indemnified, are extended to, and shall be enforceable by, the Trustee in each of its capacities hereunder.

(i) The Trustee may request that the Issuers deliver an Officer’s Certificate setting forth the names of individuals and/or titles of officers authorized at such time to take specified actions pursuant to this Indenture, which Officer’s Certificate may be signed by any person authorized to sign an Officer’s Certificate, including any person specified as so authorized in any such certificate previously delivered and not superseded.

(j) In no event shall the Trustee be responsible or liable for special, indirect, punitive or consequential loss or damage of any kind whatsoever (including, but not limited to, loss of profit) irrespective of whether the Trustee has been advised of the likelihood of such loss or damage and regardless of the form of action.

(k) The Trustee shall not be required to give any bond or surety in respect of the performance of its powers and duties hereunder.

- 55 -

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 otherwise deal with the Issuers or any Affiliate of the Issuers with the same rights it would have if it were not Trustee. However, in the event that the Trustee acquires any conflicting interest it must eliminate such conflict within 90 days or resign. Any Agent may do the same with like rights and duties. The Trustee is also subject to Sections 7.09 and 7.10.

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, it shall not be accountable for the Issuers’ use of the proceeds from the Notes or any money paid to the Issuers or upon the Issuers’ direction under any provision of this Indenture, it shall not be responsible for the use or application of any money received by any Paying Agent other than the Trustee, and it shall not be responsible for any statement or recital herein or any statement in the Notes or any other document in connection with the sale of the Notes or pursuant to this Indenture other than its certificate of authentication.

Section 7.05 Notice of Defaults.

If a Default or Event of Default occurs and is continuing and if it is actually known to the Trustee, the Trustee shall mail to Holders a notice of the Default or Event of Default within 90 days after it occurs. Except in the case of a Default or Event of Default relating to the payment of principal of, premium, if any, or interest on, any Note, the Trustee may withhold the notice if and so long as it in good faith determines that withholding the notice is in the interests of the Holders of the Notes.

Section 7.06 Compensation and Indemnity.

(a) The Issuers shall pay to the Trustee from time to time such compensation for its acceptance of this Indenture and services hereunder as agreed to in writing between the Issuers and the Trustee. The Trustee’s compensation shall not be limited by any law on compensation of a Trustee of an express trust. The Issuers shall reimburse the Trustee promptly upon request for all disbursements, advances and expenses incurred or made by it in addition to the compensation for its services. Such expenses shall include the reasonable compensation, disbursements and expenses of the Trustee’s agents and counsel.

(b) The Issuers and the Guarantors, jointly and severally, shall indemnify the Trustee against any and all losses, liabilities, claims, damages or expenses incurred by it arising out of or in connection with the acceptance or administration of its duties under this Indenture, including the costs and expenses of enforcing this Indenture against the Issuers and the Guarantors (including this Section 7.06) and defending itself against any claim (whether asserted by the Issuers, the Guarantors, any Holder or any other Person) or liability in connection with the exercise or performance of any of its powers or duties hereunder, except to the extent any such loss, liability or expense shall be determined to have been caused by its own gross negligence or willful misconduct. The Trustee shall notify the Issuers promptly of any claim of which a Responsible Officer has received written notice for which it may seek indemnity. Failure by the Trustee to so notify the Issuers shall not relieve the Issuers or any of the Guarantors of their obligations hereunder. The Issuers or such Guarantor shall defend the claim and the Trustee shall cooperate in the defense. The Trustee may have separate counsel and the Issuers shall pay the reasonable fees and expenses of such counsel. Neither the Issuers nor any Guarantor need pay for any settlement made without its consent, which consent shall not be unreasonably withheld.

(c) The obligations of the Issuers and the Guarantors under this Section 7.06 shall survive the satisfaction and discharge of this Indenture and the resignation or removal of the Trustee.

(d) To secure the Issuers’ and the Guarantors’ payment obligations in this Section 7.06, the Trustee shall have a Lien prior to the Notes on all money or property held or collected by the Trustee,

- 56 -

except that held in trust to pay principal and interest on particular Notes. Such Lien shall survive the satisfaction and discharge of this Indenture.

(e) When the Trustee incurs expenses or renders services after an Event of Default specified in Section 6.01(8) or 6.01(9) occurs, the expenses and the compensation for the services (including the fees and expenses of its agents and counsel) are intended to constitute expenses of administration under any Bankruptcy Law.

Section 7.07 Replacement of Trustee.

(a) A resignation or removal of the Trustee and appointment of a successor Trustee shall become effective only upon the successor Trustee’s acceptance of appointment as provided in this Section 7.07.

(b) The Trustee may resign in writing at any time and be discharged from the trust hereby created by so notifying the Issuers. The Holders of a majority in principal amount of the then outstanding Notes may remove the Trustee by so notifying the Trustee and the Issuers in writing. The Issuers may remove the Trustee if:

(1) the Trustee fails to comply with Section 7.09;

(2) the Trustee is adjudged bankrupt or insolvent or an order for relief is entered with respect to the Trustee under any Bankruptcy Law;

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

(4) the Trustee becomes incapable of acting.

(c) If the Trustee resigns or is removed or if a vacancy exists in the office of the Trustee for any reason, the Issuers shall promptly appoint a successor Trustee. Within one year after the successor Trustee takes office, the Holders of a majority in principal amount of the then outstanding Notes may appoint a successor Trustee to replace the successor Trustee appointed by the Issuers.

(d) 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 at least 10% in principal amount of the then outstanding Notes may petition, at the expense of the Issuers, any court of competent jurisdiction for the appointment of a successor Trustee.

(e) If the Trustee, after written request by any Holder who has been a Holder for at least six months, fails to comply with Section 7.09, such Holder may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee.

(f) A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Issuers. Thereupon, 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. The successor Trustee shall mail a notice of its succession to the Holders. The retiring Trustee shall promptly transfer all property held by it as Trustee to the successor Trustee, provided all sums owing to the Trustee hereunder have been paid and subject to the Lien provided for in Section 7.06. Notwithstanding replacement of the Trustee pursuant to this Section 7.07, the Issuers’ obligations under Section 7.06 shall continue for the benefit of the retiring Trustee.

Section 7.08 Successor Trustee by Merger, etc.

If the Trustee consolidates, merges or converts into, or transfers all or substantially all of its corporate trust business to, another corporation, the successor corporation without any further act shall be the successor Trustee.

- 57 -

Section 7.09 Eligibility; Disqualification.

There shall at all times be a Trustee hereunder that is a corporation organized and doing business under the laws of the United States of America or of any state thereof that is authorized under such laws to exercise corporate trustee power, that is subject to supervision or examination by federal or state authorities and that together with its affiliates has a combined capital and surplus of at least $50.0 million as set forth in its most recent published annual report of condition. No Person directly or indirectly controlling, controlled by or under common control with either of the Issuers or any Guarantor shall serve as the Trustee.

Section 7.10 Preferential Collection of Claims Against Issuers.

The provisions of TIA § 311 are hereby expressly incorporated by reference herein and made a part hereof with the same force and effect as if reproduced in its entirety herein. If any provision of this Indenture limits, qualifies or conflicts with § 311 of the TIA, the provision of § 311 of the TIA shall control.

ARTICLE 8

LEGAL DEFEASANCE AND COVENANT DEFEASANCE

Section 8.01 Option to Effect Legal Defeasance or Covenant Defeasance.

The Issuers may, at any time, elect to have either Section 8.02 or 8.03 applied to all outstanding Notes and all obligations of the Guarantors with respect to the Note Guarantees upon compliance with the conditions set forth below in this Article 8.

Section 8.02 Legal Defeasance and Discharge.

Upon the Issuers’ exercise under Section 8.01 of the option applicable to this Section 8.02, the Issuers and each of the Guarantors shall, subject to the satisfaction of the conditions set forth in Section 8.04, be deemed to have been discharged from their obligations with respect to all outstanding Notes (including the Note Guarantees) on the date the conditions set forth in Section 8.04 are satisfied (hereinafter, “ Legal Defeasance ”). For this purpose, Legal Defeasance means that the Issuers and the Guarantors shall be deemed to have paid and discharged the entire Indebtedness represented by the outstanding Notes (including the Note Guarantees), which shall thereafter be deemed to be “outstanding” only for the purposes of Section 8.05 and the other Sections of this Indenture referred to in clauses (1) and (2) below, and to have satisfied all their other obligations under such Notes, the Note Guarantees and this Indenture (and the Trustee, on demand of and at the expense of the Issuers, shall execute proper instruments acknowledging the same), except for the following provisions which shall survive until otherwise terminated or discharged hereunder:

(1) the rights of Holders of outstanding Notes to receive payments in respect of the principal of, or interest or premium, if any, on, such Notes when such payments are due from the trust referred to in Section 8.04;

(2) the Issuers’ obligations with respect to such Notes under Article 2 and Section 4.02;

(3) the rights, powers, trusts, duties and immunities of the Trustee hereunder and the Issuers’ and the Guarantors’ obligations in connection therewith; and

(4) this Article 8.

Subject to compliance with this Section 8.02, the Issuers may exercise their option under this Section 8.02 notwithstanding the prior exercise of their option under Section 8.03.

- 58 -

Section 8.03 Covenant Defeasance.

Upon the Issuers’ exercise under Section 8.01 of the option applicable to this Section 8.03, Holdings, the Restricted Parents and their Restricted Subsidiaries shall, subject to the satisfaction of the conditions set forth in Section 8.04, be released from each of their obligations under the covenants contained in Sections 4.03, 4.04(a), 4.05, 4.06, 4.07, 4.08, 4.09, 4.10 and Section 5.01 with respect to the outstanding Notes on and after the date the conditions set forth in Section 8.04 are satisfied (hereinafter, “ Covenant Defeasance ”), and the Notes shall thereafter be deemed not “outstanding” for the purposes of any direction, waiver, consent or declaration or act of Holders (and the consequences of any thereof) in connection with such covenants, but shall continue to be deemed “outstanding” for all other purposes hereunder (it being understood that such Notes shall not be deemed outstanding for accounting purposes). For this purpose, Covenant Defeasance means that, with respect to the outstanding Notes and the Note Guarantees, Holdings, the Restricted Parents and their Restricted Subsidiaries may omit to comply with and shall have no liability in respect of any term, condition or limitation set forth in any such covenant, whether directly or indirectly, by reason of any reference elsewhere herein to any such covenant or by reason of any reference in any such covenant to any other provision herein or in any other document and such omission to comply shall not constitute a Default or an Event of Default under Section 6.01, but, except as specified above, the remainder of this Indenture and such Notes and Note Guarantees shall be unaffected thereby. In addition, upon the Issuers’ exercise under Section 8.01 of the option applicable to this Section 8.03 subject to the satisfaction of the conditions set forth in Section 8.04, Sections 6.01(3) through 6.01(7) and, to the extent relating to a Significant Subsidiary of an Issuer, Sections 6.01(8) and 6.01(9) shall not constitute Events of Default.

Section 8.04 Conditions to Legal or Covenant Defeasance.

In order to exercise either Legal Defeasance or Covenant Defeasance under either Section 8.02 or 8.03:

(1) the Issuers must irrevocably deposit with the Trustee, in trust, for the benefit of the Holders of the Notes, cash in U.S. dollars, non-callable Government Securities, or a combination of cash in U.S. dollars and non-callable Government Securities, in amounts as shall be sufficient, in the opinion of a nationally recognized investment bank, appraisal firm or firm of independent public accountants, to pay the principal of, or interest and premium, if any, on, the outstanding Notes on the stated date for payment thereof or on the applicable redemption date, as the case may be, and the Issuers must specify whether the Notes are being defeased to such stated date for payment or to a particular redemption date;

(2) in the case of Legal Defeasance, the Issuers must deliver to the Trustee an Opinion of Counsel reasonably acceptable to the Trustee confirming that (a) the Issuers have received from, or there has been published by, the Internal Revenue Service a ruling or (b) since the Issue Date, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such Opinion of Counsel shall confirm that, the Holders of the outstanding Notes shall not recognize income, gain or loss for federal income tax purposes as a result of such Legal Defeasance and shall be subject to 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 Issuers must deliver to the Trustee an Opinion of Counsel reasonably acceptable to the Trustee confirming that the Holders of the outstanding Notes shall not recognize income, gain or loss for federal income tax purposes as a result of such Covenant Defeasance and shall be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred;

(4) such Legal Defeasance or Covenant Defeasance shall not result in a breach or violation of, or constitute a default under, any material agreement (including the Credit

- 59 -

Agreement) or instrument (other than this Indenture) to which an Issuer or any Subsidiary of an Issuer is a party or by which an Issuer or any Subsidiary of an Issuer is bound;

(5) the Issuers must deliver to the Trustee an Officer’s Certificate stating that the deposit was not made by the Issuers with the intent of preferring the Holders over the other creditors of the Issuers with the intent of defeating, hindering, delaying or defrauding any creditors of the Issuers or others; and

(6) the Issuers must deliver to the Trustee an Officer’s Certificate and an Opinion of Counsel, each stating that all conditions precedent relating to the Legal Defeasance or the Covenant Defeasance have been complied with.

Section 8.05 Deposited Money and Government Securities to be Held in Trust; Other Miscellaneous Provisions.

Subject to Section 8.06, all money and non-callable Government Securities (including the proceeds thereof) deposited with the Trustee (or other qualifying trustee, collectively for purposes of this Section 8.05, the “ Trustee ”) pursuant to Section 8.04 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 (including the Issuers acting as Paying Agent) as the Trustee may determine, to the Holders of such Notes of all sums due and to become due thereon in respect of principal, premium, if any, and interest, but such money need not be segregated from other funds except to the extent required by law.

The Issuers shall pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the cash or non-callable Government Securities deposited pursuant to Section 8.04 or the principal 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.

Notwithstanding anything in this Article 8 to the contrary, the Trustee shall deliver or pay to the Issuers from time to time upon the request of the Issuers any money or non-callable Government Securities held by it as provided in Section 8.04 which, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee (which may be the opinion delivered under Section 8.04(1)), are in excess of the amount thereof that would then be required to be deposited to effect an equivalent Legal Defeasance or Covenant Defeasance.

Section 8.06 Repayment to Issuers.

Any money deposited with the Trustee or any Paying Agent, or then held by the Issuers, in trust for the payment of the principal of, premium, if any, or interest on any Note and remaining unclaimed for two years after such principal, premium, if any, or interest has become due and payable shall be paid to the Issuers on their request or (if then held by the Issuers) shall be discharged from such trust; and the Holder of such Note shall thereafter be permitted to look only to the Issuers for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Issuers as trustee thereof, shall thereupon cease.

Section 8.07 Reinstatement.

If the Trustee or Paying Agent is unable to apply any United States dollars or non-callable Government Securities in accordance with Section 8.02 or 8.03, as the case may be, by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, then the Issuers’ and the Guarantors’ obligations under this Indenture and the Notes and the Note Guarantees shall be revived and reinstated as though no deposit had occurred pursuant to Section 8.02 or 8.03 until such time as the Trustee or Paying Agent is permitted to apply all such money in accordance with Section 8.02 or 8.03, as the case may be; provided , however , that, if the Issuers make any payment of principal of, premium, if any, or interest on any Note following the reinstatement of their

- 60 -

obligations, the Issuers shall be subrogated to the rights of the Holders of such Notes to receive such payment from the cash or Government Securities held by the Trustee or Paying Agent.

ARTICLE 9

AMENDMENT, SUPPLEMENT AND WAIVER

Section 9.01 Without Consent of Holders.

(a) Notwithstanding Section 9.02, the Issuers, the Guarantors and the Trustee may amend or supplement this Indenture, the Note Guarantees or the Notes (and any other documents related thereto) without the consent of any Holder of a Note:

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

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

(3) to provide for the assumption of an Issuer’s or a Guarantor’s obligations to the Holders under the Notes and/or the Note Guarantees by a successor to such Issuer or such Guarantor pursuant to Article 5 or Section 10.04;

(4) to make any change that would provide any additional rights or benefits (including the addition of collateral) to the Holders or that does not adversely affect in any material respect the legal rights hereunder of any such Holder;

(5) to comply with requirements of the SEC in order to effect or maintain the qualification of this Indenture under the TIA (to the extent this Indenture is or becomes so qualified);

(6) to conform the text of this Indenture, the Note Guarantees or the Notes to any provision of the “Description of Notes” section of the Offering Memorandum;

(7) to provide for the issuance of Additional Notes in accordance with the limitations set forth in this Indenture as of the Issue Date;

(8) to allow any Guarantor to execute a supplemental indenture and/or a Note Guarantee with respect to the Notes; or

(9) to comply with the rules of any applicable securities depository.

(b) Upon the request of the Issuers accompanied by a resolution of its Board of Directors authorizing the execution of any such amendment or supplement to this Indenture, and upon receipt by the Trustee of the documents described in Section 7.02(b), the Trustee shall join with the Issuers and the Guarantors in the execution of any amendment or supplement to this Indenture authorized or permitted by the terms of this Indenture and to make any further appropriate agreements and stipulations that may be therein contained, but the Trustee shall not be obligated to enter into such amended or supplemental indenture that affects its own rights, duties or immunities under this Indenture or otherwise.

Section 9.02 With Consent of Holders.

(a) Except as provided below in this Section 9.02, the Issuers, the Guarantors and the Trustee may amend or supplement this Indenture (including, without limitation, Section 4.09), the Note Guarantees or the Notes (and any documents related thereto) with the consent of the Holders of at least a majority in aggregate principal amount of the Notes then outstanding (including consents obtained in connection with a purchase of, or tender offer or exchange offer for, Notes), and, subject to Sections 6.04 and 6.07, any existing Default or Event of Default or compliance with any provision of this Indenture, the Note Guarantees or the Notes may be waived with the consent of the Holders of a majority in aggregate

- 61 -

principal amount of the then outstanding Notes (including consents obtained in connection with a purchase of, or tender offer or exchange offer for, Notes).

(b) Upon the request of the Issuers accompanied by a resolution of its Board of Directors authorizing the execution of any such amendment or supplement to this Indenture, and upon the filing with the Trustee of evidence satisfactory to the Trustee of the consent of the Holders as aforesaid, and upon receipt by the Trustee of the documents described in Section 7.02(b), the Trustee shall join with the Issuers and the Guarantors in the execution of such amendment or supplement to this Indenture unless such amendment or supplement directly affects the Trustee’s own rights, duties or immunities under this Indenture or otherwise, in which case the Trustee may in its discretion, but shall not be obligated to, enter into such amendment or supplement.

(c) It is not be necessary for the consent of the Holders under this Section 9.02 to approve the particular form of any proposed amendment or waiver, but it is sufficient if such consent approves the substance thereof.

(d) After an amendment, supplement or waiver under this Section 9.02 becomes effective, the Issuers shall mail to the Holders affected thereby a notice briefly describing the amendment, supplement or waiver. Any failure of the Issuers to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such amendment, supplement or waiver. Subject to Sections 6.04 and 6.07, the Holders of a majority in aggregate principal amount of the Notes then outstanding, voting as a single class, may waive compliance in a particular instance by the Issuers and the Guarantors with any provision of this Indenture, the Notes, or the Note Guarantees. However, without the consent of each Holder affected, an amendment, supplement or waiver under this Section 9.02 may not (with respect to any Notes held by a non-consenting Holder):

(1) reduce the principal amount of Notes whose Holders must consent to an amendment, supplement or waiver;

(2) reduce the principal of or change the fixed maturity of any Note or alter the provisions with respect to the redemption of the Notes, except as provided above with respect to Section 4.09 and except with respect to provisions specifying the notice periods for effecting a redemption;

(3) reduce the rate of or change the time for payment of interest, including default interest, on any Note;

(4) waive a Default or Event of Default in the payment of principal of, or interest or premium, if any, on, the Notes (except a rescission of acceleration of the Notes by the Holders of at least a majority in aggregate principal amount of the then outstanding Notes and a waiver of the payment default that resulted from such acceleration);

(5) make any Note payable in money other than that stated in the Notes;

(6) make any change in the provisions of this Indenture relating to waivers of past Defaults or the rights of Holders to receive payments of principal of, or interest or premium, if any, on, the Notes;

(7) waive a redemption payment with respect to any Note (other than a payment required by Section 4.09);

(8) release any Guarantor from any of its obligations under its Note Guarantee or this Indenture, except in accordance with the terms of this Indenture;

(9) impair the right of any Holder of the Notes to receive payment of principal of, or interest on such Holder’s Notes on or after the due dates therefor or to institute suit for the enforcement of any payment on or with respect to such Holder’s Notes;

- 62 -

(10) make any change to or modify the ranking as to contractual right of payment of any such Note or related Note Guarantee that would adversely affect the Holders; or

(11) make any change in the preceding amendment and waiver provisions.

Section 9.03 Compliance with Trust Indenture Act.

Every amendment or supplement to this Indenture or the Notes shall be set forth in an amended or supplemental indenture that complies with the TIA as then in effect if this Indenture is then qualified under the TIA.

Section 9.04 Revocation and Effect of Consents.

Until an amendment, supplement or waiver becomes effective, a consent to it by a Holder of a Note is a continuing consent by the Holder of a Note and every subsequent Holder of a Note or portion of a Note that evidences the same debt as the consenting Holder’s Note, even if notation of the consent is not made on any Note. However, any such Holder of a Note or subsequent Holder of a Note may revoke the consent as to its Note if the Trustee receives written notice of revocation before the date the waiver, supplement or amendment becomes effective. An amendment, supplement or waiver becomes effective in accordance with its terms and thereafter binds every Holder.

Section 9.05 Notation on or Exchange of Notes.

The Trustee may place an appropriate notation about an amendment, supplement or waiver on any Note thereafter authenticated. The Issuers in exchange for all Notes may issue and the Trustee shall, upon receipt of an Authentication Order, authenticate new Notes that reflect the amendment, supplement or waiver.

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 9.06 Trustee to Sign Amendments, etc.

The Trustee shall sign any amendment or supplement to this Indenture authorized pursuant to this Article 9 if the amendment or supplement does not adversely affect the rights, duties, liabilities or immunities of the Trustee. The Issuers may not sign an amendment or supplement to this Indenture until the Board of Directors of each Issuer approves of such amendment or supplement. In executing any amendment or supplement to this Indenture, the Trustee shall be provided with and (subject to Section 7.01) shall be fully protected in relying upon, in addition to the documents required by Section 12.03, an Officer’s Certificate and an Opinion of Counsel stating that the execution of such amendment or supplement is authorized or permitted by this Indenture.

ARTICLE 10

NOTE GUARANTEES

Section 10.01 Guarantee.

(a) Subject to this Article 10, each of the Guarantors hereby, jointly and severally, unconditionally guarantees to each Holder of a Note authenticated and delivered by the Trustee and to the Trustee and its successors and assigns, irrespective of the validity and enforceability of this Indenture, the Notes or the obligations of the Issuers hereunder or thereunder, that:

(1) the principal of, premium, if any, and interest on the Notes shall be promptly paid in full when due, whether at maturity, by acceleration, redemption or otherwise, and interest on the overdue principal of and interest on the Notes, if any, if lawful, and all other Obligations of the Issuers to the Holders or the Trustee hereunder or thereunder shall be promptly paid in full or performed, all in accordance with the terms hereof and thereof; and

- 63 -

(2) in case of any extension of time of payment or renewal of any Notes or any of such other Obligations, that same shall 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.

Failing payment when due of any amount so guaranteed or any performance so guaranteed for whatever reason, the Guarantors shall be jointly and severally obligated to pay the same immediately. Each Guarantor agrees that this is a guarantee of payment and not a guarantee of collection.

(b) The Guarantors hereby agree that their obligations hereunder are unconditional, irrespective of the validity, regularity or enforceability of the Notes or this Indenture, the absence of any action to enforce the same, any waiver or consent by any Holder of the Notes with respect to any provisions hereof or thereof, the recovery of any judgment against the Issuers, any action to enforce the same or any other circumstance which might otherwise constitute a legal or equitable discharge or defense of a guarantor. Each Guarantor hereby waives diligence, presentment, demand of payment, filing of claims with a court in the event of insolvency or bankruptcy of the Issuers, any right to require a proceeding first against the Issuers, protest, notice and all demands whatsoever and covenant that this Note Guarantee shall not be discharged except by complete performance of the obligations contained in the Notes and this Indenture or by release in accordance with the provisions of this Indenture.

(c) If any Holder or the Trustee is required by any court or otherwise to return to the Issuers, the Guarantors or any custodian, trustee, liquidator or other similar official acting in relation to either the Issuers or the Guarantors, any amount paid by either the Issuers or the Guarantors to the Trustee or such Holder, this Note Guarantee, to the extent theretofore discharged, shall be reinstated in full force and effect.

(d) Each Guarantor agrees that it shall not be entitled to any right of subrogation in relation to the Holders in respect of any obligations guaranteed hereby until payment in full of all Obligations guaranteed hereby. Each Guarantor further agrees that, as between the Guarantors, on the one hand, and the Holders and the Trustee, on the other hand, (1) the maturity of the Obligations guaranteed hereby may be accelerated as provided in Article 6 for the purposes of this Note Guarantee, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the Obligations guaranteed hereby, and (2) in the event of any declaration of acceleration of such Obligations as provided in Article 6, such Obligations (whether or not due and payable) shall forthwith become due and payable by the Guarantors for the purpose of this Note Guarantee.

(e) All Guarantors desire to allocate among themselves (collectively, the “ Contributing Guarantors ”), in a fair and equitable manner, the economic consequences resulting from the performance of their respective obligations arising under this Indenture. Accordingly, in the event any payment or distribution is made on any date by a Guarantor (a “ Funding Guarantor ”) under its Notes Guarantee such that its Aggregate Payments exceed its Fair Share as of such date, such Funding Guarantor shall be entitled to a contribution from each of the other Contributing Guarantors in an amount sufficient to cause each Contributing Guarantor’s Aggregate Payments to equal its Fair Share as of such date. “ Fair Share ” means, with respect to a Contributing Guarantor as of any date of determination, an amount equal to (a) the ratio of (i) the Fair Share Contribution Amount with respect to such Contributing Guarantor, to (ii) the aggregate of the Fair Share Contribution Amounts with respect to all Contributing Guarantors, multiplied by (b) the aggregate amount paid or distributed on or before such date by all Funding Guarantors under their respective Notes Guarantees in respect of the obligations guaranteed. “ Fair Share Contribution Amount ” means, with respect to a Contributing Guarantor as of any date of determination, the maximum aggregate amount of the obligations of such Contributing Guarantor under its Notes Guarantee that would not render its obligations hereunder or thereunder subject to avoidance as a fraudulent transfer or conveyance under Section 548 of the Bankruptcy Code or any comparable applicable provisions of state law; provided that solely for purposes of calculating the Fair Share Contribution Amount with respect to any Contributing Guarantor for purposes of this Section 10.01, any assets or liabilities of such Contributing Guarantor arising by virtue of any rights to subrogation, reimbursement or indemnification or any rights to or obligations of contribution hereunder shall not be considered as assets or liabilities of such Contributing Guarantor. “ Aggregate Payments ” means, with respect to a Contributing Guarantor as of any date of determination, an

- 64 -

amount equal to (1) the aggregate amount of all payments and distributions made on or before such date by such Contributing Guarantor in respect of its Notes Guarantee (including in respect of this Section 10.01), minus (2) the aggregate amount of all payments received on or before such date by such Guarantor from the other Contributing Guarantors as contributions under this Section 10.01. The amounts payable as contributions hereunder shall be determined as of the date on which the related payment or distribution is made by the applicable Funding Guarantor. Each Contributing Guarantor is a third party beneficiary to the contribution agreement set forth in this Section 10.01(e). For the avoidance of doubt, nothing in this Section 10.01(e) shall limit or impair, by implication or otherwise, each Guarantor’s obligations under its Note Guarantee.

Section 10.02 Limitation on Guarantor Liability.

Each Guarantor, and by its acceptance of Notes, each Holder, hereby confirms that it is the intention of all such parties that the Note Guarantee of such Guarantor not constitute a fraudulent transfer or conveyance for purposes of Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar federal or state law to the extent applicable to any Note Guarantee. To effectuate the foregoing intention, the Trustee, the Holders and the Guarantors hereby irrevocably agree that the obligations of such Guarantor shall be limited to the maximum amount that shall, after giving effect to such maximum amount and all other contingent and fixed liabilities of such Guarantor that are relevant under such laws, and after giving effect to any collections from, rights to receive contribution from or payments made by or on behalf of any other Guarantor in respect of the obligations of such other Guarantor under this Article 10, result in the obligations of such Guarantor under its Note Guarantee not constituting a fraudulent transfer or conveyance.

Section 10.03 Execution and Delivery of Note Guarantee.

To evidence its Note Guarantee set forth in Section 10.01, each Guarantor hereby agrees that a notation of such Note Guarantee substantially in the form attached as Exhibit D hereto shall be endorsed by an Officer of such Guarantor on each Note authenticated and delivered by the Trustee and that this Indenture shall be executed on behalf of such Guarantor by one of its Officers.

Each Guarantor hereby agrees that its Note 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 Note Guarantee.

If an Officer whose signature is on this Indenture or on the Note Guarantee no longer holds that office at the time the Trustee authenticates the Note on which a Note Guarantee is endorsed, the Note Guarantee shall be valid nevertheless.

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

Section 10.04 Guarantors May Consolidate, etc., on Certain Terms.

Except as otherwise provided in this Section 10.04, neither U.S. Holdings nor any Subsidiary Guarantor may sell or otherwise dispose of all or substantially all of its assets to, or consolidate with or merge with or into (whether or not it is the surviving Person) another Person, other than a Restricted Parent, the U.S. Issuer or another Subsidiary Guarantor, unless:

(1) immediately after giving effect to such transaction, no Default or Event of Default exists; and

(2) either:

(a) the Person (if other than a Restricted Parent, the U.S. Issuer or a Subsidiary Guarantor) acquiring the property in any such sale or disposition or the Person (if other than a Restricted Parent, the U.S. Issuer or a Subsidiary Guarantor) formed by or surviving any such

- 65 -

consolidation or merger assumes all the obligations of U.S. Holdings or that Subsidiary Guarantor, as applicable, under this Indenture and its Note Guarantee pursuant to a supplemental indenture satisfactory to the Trustee; or

(b) such transaction is (i) a sale or other disposition of all or substantially all of the assets of such Subsidiary Guarantor (including by way of merger or consolidation) to a Person or Persons that are not (either before or after giving effect to such transaction) a Restricted Parent or a Restricted Subsidiary of a Restricted Parent; or (ii) a sale or other disposition of all of the Capital Stock of that Subsidiary Guarantor to a Person or Persons that are not (either before or after giving effect to such transaction) a Restricted Parent or a Restricted Subsidiary of a Restricted Parent.

In case of any such consolidation, merger, sale or conveyance and upon the assumption by the successor Person, by supplemental indenture, executed and delivered to the Trustee and satisfactory in form to the Trustee, of the Note Guarantee endorsed upon the Notes and the due and punctual performance of all of the covenants and conditions of this Indenture to be performed by the Guarantor, such successor Person shall succeed to and be substituted for the Guarantor with the same effect as if it had been named herein as a Guarantor. Such successor Person thereupon may cause to be signed any or all of the Note Guarantees to be endorsed upon all of the Notes issuable hereunder which theretofore shall not have been signed by the Issuers and delivered to the Trustee. All the Note Guarantees so issued shall in all respects have the same legal rank and benefit under this Indenture as the Note Guarantees theretofore and thereafter issued in accordance with the terms of this Indenture as though all of such Note Guarantees had been issued at the date of the execution hereof.

Except as set forth in Articles 4 and 5, and notwithstanding subclauses (a) and (b) of the second preceding paragraph, nothing in this Indenture or in any of the Notes shall prevent any consolidation or merger of U.S. Holdings or a Subsidiary Guarantor with or into a Restricted Parent, the U.S. Issuer or another Subsidiary Guarantor, or shall prevent any sale or conveyance of the property of U.S. Holdings or a Subsidiary Guarantor as an entirety or substantially as an entirety to a Restricted Parent, the U.S. Issuer or another Subsidiary Guarantor.

Section 10.05 Releases.

The Note Guarantee of a Subsidiary Guarantor will be released:

(a) in connection with any sale or other disposition of all or substantially all of the assets of that Subsidiary Guarantor (including by way of merger or consolidation) to a Person that is not (either before or after giving effect to such transaction) a Restricted Parent or a Restricted Subsidiary of a Restricted Parent;

(b) in connection with any sale or other disposition of all of the Capital Stock of that Subsidiary Guarantor to a Person that is not (either before or after giving effect to such transaction) a Restricted Parent or a Restricted Subsidiary of a Restricted Parent;

(c) if a Restricted Parent designates any Subsidiary that is a Subsidiary Guarantor to be a Non-Guarantor Subsidiary in accordance with the definition of “Non-Guarantor Subsidiary”;

(d) if that Subsidiary Guarantor is released from its obligations under all Credit Agreements (other than upon the release of all Subsidiary Guarantors from their guarantees under all Credit Agreements in connection with the termination or discharge in full of all Credit Agreements);

(e) upon legal defeasance in accordance with Article 8 or satisfaction and discharge in accordance with Article 11; or

(f) upon delivery of a Covenant Termination Event Notice pursuant to a Covenant Termination Event.

- 66 -

If any Subsidiary Guarantor is released from its Note Guarantee (other than a Subsidiary Guarantor so released pursuant to clause (c) above in reliance upon clause (2) or clause (4) of the definition of “Non-Guarantor Subsidiary”), any of its Subsidiaries that are Subsidiary Guarantors will also be released from their Note Guarantees, if any. Notwithstanding the foregoing, U.S. Holdings shall not be released from its Note Guarantee.

Any Guarantor not released from its obligations under its Note Guarantee as provided in this Section 10.05 shall remain liable for the full amount of principal of and interest on the Notes and for the other obligations of any Guarantor under this Indenture as provided in and subject to any limitations contained in this Article 10.

ARTICLE 11

SATISFACTION AND DISCHARGE

Section 11.01 Satisfaction and Discharge.

This Indenture shall be discharged and shall cease to be of further effect as to all Notes issued hereunder, when:

(1) either:

(a) all Notes that have been authenticated, except lost, stolen or destroyed Notes that have been replaced or paid and Notes for whose payment money has been deposited in trust and thereafter repaid to the Issuers, have been delivered to the Trustee for cancellation; or

(b) all Notes that have not been delivered to the Trustee for cancellation have become due and payable by reason of the mailing of a notice of redemption that is or has become unconditional or otherwise or shall become due and payable within one year and the Issuers or any Guarantor has irrevocably deposited or caused to be deposited with the Trustee as trust funds in trust solely for the benefit of the Holders, cash in U.S. dollars, non-callable Government Securities, or a combination of cash in U.S. dollars and non-callable Government Securities, in amounts as shall be sufficient, without consideration of any reinvestment of interest, to pay and discharge the entire Indebtedness on the Notes not delivered to the Trustee for cancellation for principal, premium, if any, and accrued interest to the date of maturity or redemption (for the avoidance of doubt, in the case of a discharge that occurs in connection with a redemption that is to occur on a Redemption Date, the amount to be deposited shall be the amount that, as of the date of such deposit, is deemed reasonably sufficient to make such payment and discharge on the Redemption Date, in the good-faith determination of the Board of Directors of Holdings pursuant to a resolution of the Board of Directors of Holdings and as evidenced by an Officer’s Certificate);

(2) no Default or Event of Default has occurred and is continuing on the date of the deposit (other than a Default or Event of Default resulting from the borrowing of funds to be applied to such deposit and the incurrence of any Lien in respect thereof) and the deposit shall not result in a breach or violation of, or constitute a default under, any other instrument to which the Issuers or any Guarantor is a party or by which the Issuers or any Guarantor is bound;

(3) the Issuers or any Guarantor has paid or caused to be paid all sums payable by it under this Indenture; and

(4) the Issuers have delivered irrevocable instructions to the Trustee under this Indenture to apply the deposited money toward the payment of the Notes at maturity or on the redemption date, as the case may be, (subject to the proviso in the first paragraph of Section 11.02).

- 67 -

In addition, the Issuers must deliver an Officer’s Certificate and an Opinion of Counsel to the Trustee stating that all conditions precedent to satisfaction and discharge have been satisfied.

Notwithstanding the satisfaction and discharge of this Indenture, if money has been deposited with the Trustee pursuant to sub-clause (b) of clause (1) of this Section 11.01, the provisions of Sections 12.02 and 8.06 shall survive. In addition, nothing in this Section 11.01 shall be deemed to discharge those provisions of Section 7.06, that, by their terms, survive the satisfaction and discharge of this Indenture.

Section 11.02 Application of Trust Money.

Subject to the provisions of Section 8.06, all money deposited with the Trustee pursuant to Section 11.01 shall be held in trust and applied by it, in accordance with the provisions of the Notes and this Indenture, to the payment, either directly or through any Paying Agent (including an Issuer acting as its own Paying Agent) as the Trustee may determine, to the Persons entitled thereto, of the principal (and premium, if any) and interest for whose payment such money has been deposited with the Trustee; but such money need not be segregated from other funds except to the extent required by law; provided that, if there is a tender offer by the Issuers for outstanding Notes that is in progress at the time of such deposit, such money deposited with the Trustee pursuant to Section 11.01 may be applied to pay any cash consideration for any Notes validly tendered into such tender offer and not validly withdrawn so long as prior to any such application the Issuers deliver an Officer’s Certificate to the Trustee certifying that after giving effect to such application, the amount remaining on deposit with the Trustee will be sufficient, without consideration of any reinvestment of interest, to pay and discharge the entire Indebtedness on the Notes (excluding Notes delivered to the Trustee for cancellation and Notes to be repurchased in such tender offer) for principal, premium, if any, and accrued interest to the date of maturity or redemption, as the case may be.

To the extent that and so long as the Trustee or Paying Agent is unable to apply any money or Government Securities in accordance with Section 11.01 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 any Guarantor’s obligations under this Indenture and the Notes shall be revived and reinstated as though no deposit had occurred pursuant to Section 11.01; provided , however , that if the Issuers have made any payment of principal of, premium, if any, or interest on any Notes following the reinstatement of their obligations, the Issuers shall be subrogated to the rights of the Holders of such Notes to receive such payment from the money or Government Securities held by the Trustee or Paying Agent.

ARTICLE 12

MISCELLANEOUS

Section 12.01 Indenture Shall Control.

In the event of a conflict between the terms and provisions of this Indenture on the one hand and the terms and provisions of any Note or Note Guarantee on the other hand, the terms and provisions of this Indenture shall govern and be controlling.

Section 12.02 Notices.

Any notice or communication by either of the Issuers, any Guarantor or the Trustee to the others is duly given if in writing and delivered in Person or mailed by first class mail (registered or certified, return receipt requested), telecopier or overnight air courier guaranteeing next day delivery, to the others’ address:

If to either of the Issuers and/or any Guarantor:

Taylor Morrison Communities, Inc.

Attention: General Counsel

- 68 -

4900 North Scottsdale Road, Suite 2000

Scottsdale, Arizona 85251

Telecopy: (866) 629-4310

If to the Trustee:

U.S. Bank National Association, as Trustee

Global Corporate Trust Services

Mailcode: EP-MN-WS3C

60 Livingston Avenue

St. Paul, MN 55107-2292

Attn: Taylor Morrison Administrator

Telecopy: (651) 466-7430

The Issuers, any Guarantor or the Trustee, by notice to the others, may designate additional or different addresses for subsequent notices or communications.

All notices and communications (other than those sent to Holders) shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; five Business Days after being deposited in the mail, postage prepaid, if mailed; when answered back, if telecopied; and the next Business Day after timely delivery to the courier, if sent by overnight air courier guaranteeing next day delivery.

Any notice or communication to a Holder shall be mailed by first class mail, certified or registered, return receipt requested, or by courier to its 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 is mailed in the manner provided above within the time prescribed, it is duly given, whether or not the addressee receives it.

If an Issuer mails a notice or communication to Holders, it shall provide a copy to the Trustee and each Agent at the same time.

Section 12.03 U.S.A. Patriot Act.

The parties hereto acknowledge that in accordance with Section 326 of the U.S.A. Patriot Act, the Trustee, like all financial institutions and in order to help fight the funding of terrorism and money laundering, is required to obtain, verify, and record information that identifies each person or legal entity that establishes a relationship or opens an account with the Trustee. The parties to this Indenture agree that they will provide the Trustee with such information as it may request in order for the Trustee to satisfy the requirements of the U.S.A. Patriot Act.

Section 12.04 Certificate and Opinion as to Conditions Precedent.

Upon any request or application by an Issuer or a Restricted Parent to the Trustee to take any action under this Indenture, such Issuer or Restricted Parent, as applicable, shall furnish to the Trustee:

(1) an Officer’s Certificate in form and substance reasonably satisfactory to the Trustee (which must include the statements set forth in Section 12.05) stating that, in the opinion of the signers, all conditions precedent and covenants, if any, provided for in this Indenture relating to the proposed action have been satisfied; and

(2) except with respect to the issuance of the Initial Notes, an Opinion of Counsel in form and substance reasonably satisfactory to the Trustee (which must include the statements set forth in Section 12.05) stating that, in the opinion of such counsel, all such conditions precedent and covenants have been satisfied.

- 69 -

Section 12.05 Statements Required in Certificate or Opinion.

Each certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture must 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, he or she has made such examination or investigation as is necessary to enable him or her to express an informed opinion as to whether or not such covenant has been complied with or such condition has been satisfied; and

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

Section 12.06 Rules by Trustee and Agents.

The Trustee may make reasonable rules for action by or at a meeting of Holders. The Registrar or Paying Agent may make reasonable rules and set reasonable requirements for its functions.

Section 12.07 No Personal Liability of Directors, Officers, Employees and Stockholders.

No director, officer, employee, incorporator, stockholder, member or other holder of Equity Interests of the Issuers or any Guarantor, in their capacities as such and without limiting the Note Guarantees, shall have any liability for any obligations of the Issuers or the Guarantors under the Notes, this Indenture, the Note Guarantees 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 that may arise other than pursuant to a Note Guarantee. The waiver and release are part of the consideration for issuance of the Notes. The waiver may not be effective to waive liabilities under the federal securities laws.

Section 12.08 Governing Law.

THE INTERNAL LAW OF THE STATE OF NEW YORK WILL GOVERN AND BE USED TO CONSTRUE THIS INDENTURE, THE NOTES AND THE NOTE GUARANTEES WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.

Section 12.09 No Adverse Interpretation of Other Agreements.

This Indenture may not be used to interpret any other indenture, loan or debt agreement of the Issuers or its Subsidiaries or of any other Person. Any such indenture, loan or debt agreement may not be used to interpret this Indenture.

Section 12.10 Successors.

All agreements of the Issuers in this Indenture and the Notes shall bind its successors. All agreements of the Trustee in this Indenture shall bind its successors. All agreements of each Guarantor in this Indenture shall bind its successors, except as otherwise provided in Section 10.05.

- 70 -

Section 12.11 Severability.

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

Section 12.12 Counterpart Originals.

The parties may sign any number of copies of this Indenture. Each signed copy (including copies transmitted via telecopy or electronic mail) shall be an original, but all of them together represent the same agreement.

Section 12.13 Table of Contents, Headings, etc.

The Table of Contents 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 of this Indenture and shall in no way modify or restrict any of the terms or provisions hereof.

Section 12.14 Waiver of Jury Trial.

EACH OF THE ISSUERS, THE GUARANTORS AND THE TRUSTEE HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE, THE NOTES OR THE TRANSACTION CONTEMPLATED HEREBY.

Section 12.15 Force Majeure.

In no event shall the Trustee be responsible or liable for any failure or delay in the performance of its obligations hereunder arising out of or caused by, directly or indirectly, forces beyond its control, including strikes, work stoppages, accidents, acts of war or terrorism, civil or military disturbances, nuclear or natural catastrophes or acts of God, and interruptions, loss or malfunctions of utilities, communications or computer (software and hardware) services; it being understood that the Trustee shall use reasonable efforts which are consistent with accepted practices in the banking industry to resume performance as soon as practicable under the circumstances.

Section 12.16 Consent to Jurisdiction and Service.

Each of the Canadian Issuer and the Guarantors organized under Canadian law hereby irrevocably and unconditionally: (1) submits itself and its property in any legal action or proceeding relating to this Indenture, the Notes and, as applicable, its Notes Guarantee for recognition and enforcement of any judgment in respect thereof, to the general jurisdiction of the courts of the State of New York, sitting in the Borough of Manhattan, The City of New York, the courts of the United States of America for the Southern District of New York, appellate courts from any thereof and courts of its own corporate domicile, with respect to actions brought against it as defendant; (2) consents that any such action or proceeding may be brought in such courts and waive any objection that it may now or hereafter have to the venue of any such action or proceeding in any such court or that such action or proceeding was brought in an inconvenient court and agrees not to plead or claim the same; (3) designates and appoints U.S. Issuer as its authorized agent upon which process may be served in any action, suit or proceeding arising out of or relating to this Indenture, the Notes and, as applicable, its Note Guarantee that may be instituted in any federal or state court in the State of New York (and the U.S. Issuer hereby accepts such appointments); and (4) agrees that service of any process, summons, notice or document by U.S. registered mail addressed to the U.S. Issuer, with written notice of said service to such Person at the address of the U.S. Issuer set forth in this Indenture shall be effective service of process for any action, suit or proceeding brought in any such court.

- 71 -

Section 12.17 Currency Indemnity.

The U.S. dollar is the sole currency of account and payment for all sums payable by the Issuers or any Guarantor under or in connection with the Notes, including damages. Any amount with respect to the Notes received or recovered in a currency other than U.S. dollars, whether as a result of, or the enforcement of, a judgment or order of a court of any jurisdiction, in the winding-up or dissolution of the Issuers or any Guarantor or otherwise by any Holder of a Note or by the Trustee, in respect of any sum expressed to be due to it from the Issuers or any Guarantor will only constitute a discharge to the Issuers or any Guarantor to the extent of the U.S. dollar amount which the recipient is able to purchase with the amount so received or recovered in that other currency on the date of that receipt or recovery (or, if it is not practicable to make that purchase on that date, on the first date on which it is practicable to do so).

If that U.S. dollar amount is less than the U.S. dollar amount expressed to be due to the recipient or the Trustee under the Notes, the Issuers and each Guarantor will indemnify such recipient and/or the Trustee against any loss sustained by it as a result. In any event, the Issuers and each Guarantor will indemnify the recipient against the cost of making any such purchase. For the purposes of this Section 12.17, it will be prima facie evidence of the matter stated therein, for the Holder of a Note or the Trustee to certify in a manner satisfactory to the Issuers (indicating the sources of information used) the loss it incurred in making any such purchase. These indemnities constitute a separate and independent obligation from the Issuers and each Guarantor’s other obligations, shall give rise to a separate and independent cause of action, shall apply irrespective of any waiver granted by any Holder of a Note or the Trustee (other than a waiver of the indemnities set out herein) and will continue in full force and effect despite any other judgment, order, claim or proof for a liquidated amount in respect of any sum due under any Note or to the Trustee. For the purposes of determining the amount in a currency other than U.S. dollars, such amount shall be determined using the Exchange Rate then in effect.

For purposes of this Section 12.17, “ Exchange Rate ” means, on any day, the rate at which the currency other than U.S. dollars may be exchanged into U.S. dollars at approximately 11:00 a.m., New York City time, on such date on the Bloomberg Key Cross Currency Rates Page for the relevant currency. In the event that such rate does not appear on any Bloomberg Key Cross Currency Rate Page, the Exchange Rate shall be determined by the Issuers in good faith.

(Signature Pages Follow)

- 72 -

IN WITNESS WHEREOF, the parties have caused this Indenture to be duly executed as of April 16, 2015.

ISSUERS:


TAYLOR MORRISON COMMUNITIES, INC.

By:		/s/ Darrell C. Sherman
Name:		Darrell C. Sherman
Title:		General Counsel, Secretary, Vice President


TAYLOR MORRISON HOLDINGS II, INC.

By:		/s/ Darrell C. Sherman
Name:		Darrell C. Sherman
Title:		Secretary, Vice President

TRUSTEE:


U.S. BANK NATIONAL ASSOCIATION, as Trustee

By:		/s/ Richard Prokosch
Name:		Richard Prokosch
Title:		Vice President

[ Signature Page to the Indenture ]

GUARANTORS:


TMM HOLDINGS LIMITED PARTNERSHIP
By:		TMM Holdings (G.P.) ULC., its General Partner

By:		/s/ Rajath Shourie
Name:		Rajath Shourie
Title:		Director


TAYLOR MORRISON HOLDINGS, INC.

By:		/s/ Darrell C. Sherman
Name:		Darrell C. Sherman
Title:		General Counsel, Secretary, Vice President


TAYLOR MORRISON COMMUNITIES II, INC.

By:		/s/ Darrell C. Sherman
Name:		Darrell C. Sherman
Title:		Secretary, Vice President

[ Signature Page to the Indenture ]


ATPD, LLC DARLING HOMES OF TEXAS, LLC DFP TEXAS (GP), LLC TAYLOR MORRISON AT CRYSTAL FALLS, LLC TAYLOR MORRISON ESPLANADE NAPLES, LLC TAYLOR MORRISON FINANCE, INC. TAYLOR MORRISON HOLDINGS OF ARIZONA, INC. TAYLOR MORRISON MARBLEHEAD HOLDINGS, LLC TAYLOR MORRISON OF CALIFORNIA, LLC TAYLOR MORRISON OF COLORADO, INC. TAYLOR MORRISON OF FLORIDA, INC. TAYLOR MORRISON OF TEXAS, INC. TAYLOR MORRISON SERVICES, INC. TAYLOR MORRISON TRAMONTO HOLDINGS, LLC TAYLOR MORRISON, INC. TAYLOR MORRISON/ARIZONA, INC. TAYLOR WOODROW COMMUNITIES – LEAGUE CITY, LTD. TAYLOR WOODROW COMMUNITIES AT MIRASOL, LTD. TAYLOR WOODROW COMMUNITIES AT PORTICO, L.L.C. TAYLOR WOODROW COMMUNITIES AT ST. JOHNS FOREST, L.L.C. TAYLOR WOODROW HOMES – CENTRAL FLORIDA DIVISION, L.L.C. TAYLOR WOODROW HOMES – SOUTHWEST FLORIDA DIVISION, L.L.C. TM CALIFORNIA SERVICES, INC. TM HOMES OF ARIZONA, INC. TM OYSTER HARBOR, LLC TW ACQUISITIONS, INC. TWC/FALCONHEAD WEST, L.L.C. TWC/MIRASOL, INC. TWC/STEINER RANCH, LLC

On behalf of each of the above named entities,

By:		/s/ Darrell C. Sherman
Name:		Darrell C. Sherman
Title:		General Counsel, Secretary, Vice President

[ Signature Page to the Indenture ]

EXHIBIT A1

[Face of Note]

CUSIP:

5.875% Senior Notes due 2023


No.		$

TAYLOR MORRISON COMMUNITIES, INC.

and

TAYLOR MORRISON HOLDINGS II, INC.

promise to pay to CEDE & CO. or registered assigns,

the principal sum of DOLLARS on April 15, 2023.

Interest Payment Dates: April 15 and October 15

Record Dates: April 1 and October 1

Dated:

A1-1


TAYLOR MORRISON COMMUNITIES, INC.

By:

Name: Title:


TAYLOR MORRISON HOLDINGS II, INC.

By:

Name: Title:

This is one of the Notes referred to

in the within-mentioned Indenture:


U.S. BANK NATIONAL ASSOCIATION, as Trustee

By:
		Authorized Signatory

A1-2

[Back of Note]

5.875% Senior Notes due 2023

[Insert the Global Note Legend, if applicable pursuant to the provisions of the Indenture]

[Insert the Private Placement Legend, if applicable pursuant to the provisions of the Indenture]

[Insert the OID Legend, if applicable pursuant to the provisions of the Indenture]

Capitalized terms used herein have the meanings assigned to them in the Indenture referred to below unless otherwise indicated.

(1) INTEREST . Taylor Morrison Communities, Inc., a Delaware corporation, and Taylor Morrison Holdings II, Inc., a British Columbia corporation (together, the “ Issuers ”), promise to pay interest on the principal amount of this Note at 5.875% per annum from until maturity. The Issuers shall pay interest semi-annually in arrears on April 15 and October 15 of each year, or if any such day is not a Business Day, on the next succeeding Business Day (each, an “ Interest Payment Date ”). Interest on the Notes shall accrue from the most recent date to which interest has been paid or, if no interest has been paid, from ; provided that the first Interest Payment Date shall be . The Issuers shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal and premium, if any, from time to time on demand at the rate equal to the then applicable interest rate on the Notes. The Issuers shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest (without regard to any applicable grace periods) from time to time on demand at the rate equal to the then applicable interest rate on the Notes. Interest shall be computed on the basis of a 360-day year of twelve 30-day months.

(2) METHOD OF PAYMENT . The Issuers shall pay interest on the Notes (except defaulted interest) to the Persons who are registered Holders at the close of business on the April 1 or October 1 next preceding the Interest Payment Date, even if such Notes are canceled after such record date and on or before such Interest Payment Date, except as provided in Section 2.12 of the Indenture with respect to defaulted interest. The Notes shall be payable as to principal, interest and premium, if any, at the office or agency of the Paying Agent within the City and State of New York, or, at the option of the Issuers, payment of interest may be made by check mailed to the Holders at their addresses set forth in the register of Holders; provided that payment by wire transfer of immediately available funds shall be required with respect to principal, interest and premium, if any, on all Global Notes and all other Notes the Holders of which shall have provided wire transfer instructions to the Issuers or the Paying Agent. Such payment shall be in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts.

(3) PAYING AGENT AND REGISTRAR . Initially, U.S. Bank National Association, the Trustee under the Indenture, shall act as Paying Agent and Registrar. The Issuers may change any Paying Agent or Registrar without notice to any Holder. An Issuer or any of its Subsidiaries may act in any such capacity.

(4) INDENTURE . The Issuers issued the Notes under an Indenture dated as of April 16, 2015 (the “Indenture”), among the Issuers, the Guarantors and the Trustee. The terms of the Notes include those stated in the Indenture. The Notes are subject to all such terms, and Holders are referred to the Indenture for a statement of such terms. In the event of a conflict between the terms and provisions of the Indenture on the one hand and the terms and provisions of this Note or any Note Guarantee on the other hand, the terms and provisions of the Indenture shall govern and be controlling. The Notes are general unsecured obligations of the Issuers. Subject to the conditions set forth in the Indenture, the Issuers may issue Additional Notes.

(5) OPTIONAL REDEMPTION .

(a) At any time prior to January 15, 2023, the Issuers are entitled to redeem all or a part of the Notes at a redemption price equal to 100% of the principal amount of the Notes redeemed plus the Applicable Premium as of, and accrued and unpaid interest to, but excluding, the Redemption Date, subject to the rights of Holders of record of Notes on the relevant record date to receive interest due on the relevant interest payment date.

A1-3

(b) On or after January 15, 2023, the Issuers are entitled to redeem all or a part of the Notes upon not less than 30 nor more than 60 days’ notice, at a redemption price equal to 100% of the principal amount of the Notes redeemed plus accrued and unpaid interest to, but excluding, the date of redemption, subject to the rights of Holders of record of Notes on the relevant record date to receive interest due on the relevant interest payment date.

(6) MANDATORY REDEMPTION . The Issuers shall not be required to make mandatory redemption or sinking fund payments with respect to the Notes.

(7) REPURCHASE AT THE OPTION OF HOLDER . The Issuers may be required to repurchase the Notes as a result of a Change of Control, as provided in Section 4.09 of the Indenture. Holders may elect to have such Notes purchased pursuant to a Change of Control Offer by completing the form entitled “ Option of Holder to Elect Purchase ” attached to the Notes.

(8) NOTICE OF REDEMPTION . Notice of redemption shall be provided pursuant to Section 3.03 of the Indenture.

(9) DENOMINATIONS, TRANSFER, EXCHANGE . The Notes are in registered form without coupons in denominations of $2,000 and integral multiples of $1,000. The transfer of Notes may be registered and Notes may be exchanged as provided in the Indenture. The Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and the Issuers may require a Holder to pay any taxes and fees required by law or permitted by the Indenture. The Issuers need not exchange or register the transfer of any Note or portion of a Note selected for redemption, except for the unredeemed portion of any Note being redeemed in part. Also, the Issuers need not exchange or register the transfer of any Notes for a period of 15 days before a selection of Notes to be redeemed or during the period between a record date and the corresponding Interest Payment Date.

(10) PERSONS DEEMED OWNERS. The registered Holder of a Note may be treated as its owner for all purposes.

(11) AMENDMENT, SUPPLEMENT AND WAIVER . Subject to certain exceptions, the Indenture, the Note Guarantees or the Notes (and any documents related thereto) may be amended or supplemented, both with and without the consent of the Holders of Notes, as provided in Article 9 of the Indenture.

(12) DEFAULTS AND REMEDIES . Events of Default include default for 30 days in the payment when due of interest on the Notes, default in the payment when due (at maturity, upon redemption, acceleration or otherwise) of the principal of, or premium, if any, on the Notes, as well as other Events of Default set forth in Section 6.01 of the Indenture. The Issuers are required to deliver to the Trustee annually a statement regarding compliance with the Indenture, and the Issuers are required, within 30 days after any Officer becomes aware of any Default or Event of Default, to deliver to the Trustee a statement specifying such Default or Event of Default.

(13) TRUSTEE DEALINGS WITH ISSUERS . The Trustee, in its individual or any other capacity, may make loans to, accept deposits from, and perform services for the Issuers or its Affiliates, and may otherwise deal with the Issuers or its Affiliates, as if it were not the Trustee.

(14) NO RECOURSE AGAINST OTHERS . No director, officer, employee, incorporator, stockholder, member or other holder of Equity Interests of the Issuers or any Guarantor, in their capacities as such and without limiting the Note Guarantees, shall have any liability for any obligations of the Issuers or Guarantors under the Notes, the Note Guarantees or the 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 that may arise other than pursuant to a Note Guarantee. The waiver and release are part of the consideration for the issuance of the Notes.

(15) AUTHENTICATION . This Note shall not be valid until authenticated by the manual signature of the Trustee or an authenticating agent.

A1-4

of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).

(17) CUSIP NUMBERS . Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Issuers have caused CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers in notices of redemption as a convenience to Holders. No representation is made as to the accuracy of such numbers either as printed on the Notes or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon.

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

Taylor Morrison Communities, Inc.

Attention: General Counsel

4900 North Scottsdale Road, Suite 2000

Scottsdale, Arizona 85251

A1-5

ASSIGNMENT FORM

To assign this Note, fill in the form below:

(I) or (we) assign and transfer this Note to:

(Insert assignee’s legal name)

(Insert assignee’s soc. sec. or tax I.D. no.)

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

and irrevocably appoint to transfer this Note on the books of the Issuers. The agent may substitute another to act for him.

Date:


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

Signature Guarantee*:

*	Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee).

A1-6

OPTION OF HOLDER TO ELECT PURCHASE

If you want to elect to have only part of the Note purchased by the Issuers pursuant to Section 4.09 of the Indenture, state the amount you elect to have purchased:

Date:


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

Tax Identification No.:

Signature Guarantee*:

*	Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee).

A1-7

SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE*

The following exchanges of a part of this Global Note for an interest in another Global Note or for a Definitive Note, or exchanges of a part of another Global Note or Definitive Note for an interest in this Global Note, have been made:

Date of

Exchange

Amount of

decrease in

Principal

Amount of this

Global Note

Amount of

increase in

Principal

Amount of this

Global Note

Principal Amount
of this Global
Note following
such decrease
(or increase)

Signature of

authorized
signatory of
Trustee or
Custodian

*	This schedule should be included only if the Note is issued in global form.

A1-8

EXHIBIT A2

[Face of Regulation S Temporary Global Note]

CUSIP:

5.875% Senior Notes due 2023


No.		$

TAYLOR MORRISON COMMUNITIES, INC.

and

TAYLOR MORRISON HOLDINGS II, INC.

promise to pay to CEDE & CO. or registered assigns,

the principal sum of DOLLARS on April 15, 2023.

Interest Payment Dates: April 15 and October 15

Record Dates: April 1 and October 1

Dated:

A2-1


		TAYLOR MORRISON COMMUNITIES, INC.

By
Name:
Title:

		TAYLOR MORRISON HOLDINGS II, INC.

By
Name:
Title:

This is one of the Notes referred to

in the within-mentioned Indenture:


U.S. BANK NATIONAL ASSOCIATION, as Trustee

By:
		Authorized Signatory

A2-2

[Back of Regulation S Temporary Global Note]

5.875% Senior Notes due 2023

THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED NOTES, ARE AS SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN).

THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (1) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.01 AND SECTION 2.06 OF THE INDENTURE, (2) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (3) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (4) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE ISSUERS.

A2-3

ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) (“DTC”), TO THE ISSUERS OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE 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.

[Insert the OID Legend, if applicable pursuant to the provisions of the Indenture.]

Capitalized terms used herein have the meanings assigned to them in the Indenture referred to below unless otherwise indicated.

A2-4

(5) OPTIONAL REDEMPTION.

(6) MANDATORY REDEMPTION . The Issuers shall not be required to make mandatory redemption or sinking fund payments with respect to the Notes.

(8) NOTICE OF REDEMPTION . Notice of redemption shall be provided pursuant to Section 3.03 of the Indenture.

(10) PERSONS DEEMED OWNERS . The registered Holder of a Note may be treated as its owner for all purposes.

A2-5

other than pursuant to a Note Guarantee. The waiver and release are part of the consideration for the issuance of the Notes.

(15) AUTHENTICATION . This Note shall not be valid until authenticated by the manual signature of the Trustee or an authenticating agent.

(16) ABBREVIATIONS . Customary abbreviations may be used in the name of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= 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 shall furnish to any Holder upon written request and without charge a copy of the Indenture. Requests may be made to:

Taylor Morrison Communities, Inc.

Attention: General Counsel

4900 North Scottsdale Road, Suite 2000

Scottsdale, Arizona 85251

A2-6

ASSIGNMENT FORM

To assign this Note, fill in the form below:

(I) or (we) assign and transfer this Note to:

(Insert assignee’s legal name)

(Insert assignee’s soc. sec. or tax I.D. no.)

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

and irrevocably appoint to transfer this Note on the books of the Issuers. The agent may substitute another to act for him.

Date:


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

Signature Guarantee*:

*	Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee).

A2-7

OPTION OF HOLDER TO ELECT PURCHASE

If you want to elect to have only part of the Note purchased by the Issuers pursuant to Section 4.09 of the Indenture, state the amount you elect to have purchased:

Date:


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

Tax Identification No.:

Signature Guarantee*:

*	Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee).

A2-8

SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE*

Date of Exchange

Amount of

decrease in

Principal

Amount of

this Global

Note

Amount of

increase in

Principal
Amount of
this Global Note

Principal Amount
of this Global
Note following
such decrease
(or increase)

Signature of

authorized
signatory of
Trustee or
Custodian

*	This schedule should be included only if the Note is issued in global form.

A2-9

EXHIBIT B

FORM OF CERTIFICATE OF TRANSFER

Taylor Morrison Communities, Inc.

Taylor Morrison Holdings II, Inc.

4900 North Scottsdale Road, Suite 2000

Scottsdale, Arizona 85251

U.S. Bank National Association

Global Corporate Trust Services

Mailcode: EP-MN-WS3C

60 Livingston Avenue

St. Paul, MN 55107-2292

Attn: Taylor Morrison Administrator

Telephone No.:(651) 466-6619

Fax No.: (651) 466-7430

Email: rick.prokosch@usbank.com

Re:

5.875% Senior Notes due 2023

Reference is hereby made to the Indenture, dated as of April 16, 2015 (the “ Indenture ”), among Taylor Morrison Communities, Inc., a Delaware corporation, and Taylor Morrison Holdings II, Inc., a British Columbia corporation (together, the “ Issuers ”), the Guarantors party thereto and U.S. Bank National Association, as trustee. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture.

, (the “ Transferor ”) owns and proposes to transfer the Note[s] or interest in such Note[s] specified in Annex A hereto, in the principal amount of $ in such Note[s] or interests (the “ Transfer ”), to (the “ Transferee ”), as further specified in Annex A hereto. In connection with the Transfer, the Transferor hereby certifies that:

[CHECK ALL THAT APPLY]

1. ¨ Check if Transferee shall take delivery of a beneficial interest in the 144A Global Note or a Restricted Definitive Note pursuant to Rule 144A . The Transfer is being effected pursuant to and in accordance with Rule 144A under the Securities Act of 1933, as amended (the “ Securities Act ”), and, accordingly, the Transferor hereby further certifies that the beneficial interest or Definitive Note is being transferred to a Person that the Transferor reasonably believes is purchasing the beneficial interest or Definitive Note for its own account, or for one or more accounts with respect to which such Person exercises sole investment discretion, and such Person and each such account is a “qualified institutional buyer” within the meaning of Rule 144A in a transaction meeting the requirements of Rule 144A, and such Transfer is in compliance with any applicable blue sky securities laws of any state of the United States. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note shall be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the 144A Global Note and/or the Restricted Definitive Note and in the Indenture and the Securities Act.

2. ¨ Check if Transferee shall take delivery of a beneficial interest in the Regulation S Global Note or a Restricted Definitive Note pursuant to Regulation S . The Transfer is being effected pursuant to and in accordance with Rule 903 or Rule 904 under the Securities Act and, accordingly, the Transferor hereby further certifies that (i) the Transfer is not being made to a Person in the United States and (x) at the time the buy order was originated, the Transferee was outside the United States or such Transferor and any Person acting on its behalf reasonably believed and believes that the Transferee was outside the United States or (y) the transaction was executed in, on or through the facilities of a designated offshore securities market and neither such Transferor nor any Person acting on its behalf knows that the transaction was prearranged with a buyer in the United States, (ii) no

B-1

directed selling efforts have been made in contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S under the Securities Act, (iii) the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act and (iv) if the proposed transfer is being made prior to the expiration of the Restricted Period, the transfer is not being made to a U.S. Person or for the account or benefit of a U.S. Person (other than an Initial Purchaser). Upon consummation of the proposed transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note shall be subject to the restrictions on Transfer enumerated in the Private Placement Legend printed on the Regulation S Global Note and/or the Restricted Definitive Note and in the Indenture and the Securities Act.

3. ¨ Check and complete if Transferee will take delivery of a beneficial interest in a Restricted Global Note or a Restricted Definitive Note pursuant to any provision of the Securities Act other than Rule 144A or Regulation S . The Transfer is being effected in compliance with the transfer restrictions applicable to beneficial interests in Restricted Global Notes and Restricted Definitive Notes and pursuant to and in accordance with the Securities Act and any applicable blue sky securities laws of any state of the United States, and accordingly the Transferor hereby further certifies that (check one):

(a) ¨ such Transfer is being effected pursuant to and in accordance with Rule 144 under the Securities Act;

(b) ¨ such Transfer is being effected to an Issuer or a subsidiary of an Issuer;

4. ¨ Check if Transferee shall take delivery of a beneficial interest in an Unrestricted Global Note or of an Unrestricted Definitive Note .

(a) ¨ Check if Transfer is pursuant to Rule 144 . (i) The Transfer is being effected pursuant to and in accordance with Rule 144 under the Securities Act and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any state of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note shall no longer be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes, on Restricted Definitive Notes and in the Indenture.

(b) ¨ Check if Transfer is Pursuant to Regulation S . (i) The Transfer is being effected pursuant to and in accordance with Rule 903 or Rule 904 under the Securities Act and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any state of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note shall no longer be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes, on Restricted Definitive Notes and in the Indenture.

(c) ¨ Check if Transfer is Pursuant to Other Exemption . (i) The Transfer is being effected pursuant to and in compliance with an exemption from the registration requirements of the Securities Act other than Rule 144, Rule 903 or Rule 904 and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any State of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note shall not

B-2

be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes or Restricted Definitive Notes and in the Indenture.

B-3

This certificate and the statements contained herein are made for your benefit and the benefit of the Issuers.


[Insert Name of Transferor]

By:
Name:
Title:

Dated:

B-4

ANNEX A TO CERTIFICATE OF TRANSFER

1.	The Transferor owns and proposes to transfer the following:

[CHECK ONE OF (a) OR (b)]

(a)

¨ a beneficial interest in the:

(i)

¨ 144A Global Note (CUSIP ), or

(ii)

¨ Regulation S Global Note (CUSIP ), or

(b)

¨ a Restricted Definitive Note.

2.	After the Transfer the Transferee shall hold:

[CHECK ONE]

(a)

¨ a beneficial interest in the:

(i)

¨ 144A Global Note (CUSIP ), or

(ii)

¨ Regulation S Global Note (CUSIP ), or

(iii)

¨ Unrestricted Global Note (CUSIP ); or

(b)

¨ a Restricted Definitive Note; or

(c)

¨ an Unrestricted Definitive Note,

in accordance with the terms of the Indenture.

B-5

EXHIBIT C

FORM OF CERTIFICATE OF EXCHANGE

Taylor Morrison Communities, Inc.

Taylor Morrison Holdings II, Inc.

4900 North Scottsdale Road, Suite 2000

Scottsdale, Arizona 85251

U.S. Bank National Association

Global Corporate Trust Services

Mailcode: EP-MN-WS3C

60 Livingston Avenue

St. Paul, MN 55107-2292

Attn: Taylor Morrison Administrator

Telephone No.:(651) 466-6619

Fax No.: (651) 466-7430

Email: rick.prokosch@usbank.com

Re:	5.875% Senior Notes due 2023

(CUSIP )

, (the “ Owner ”) owns and proposes to exchange the Note[s] or interest in such Note[s] specified herein, in the principal amount of $ in such Note[s] or interests (the “ Exchange ”). In connection with the Exchange, the Owner hereby certifies that:

1. Exchange of Restricted Definitive Notes or Beneficial Interests in a Restricted Global Note for Unrestricted Definitive Notes or Beneficial Interests in an Unrestricted Global Note

(a) ¨ Check if Exchange is from beneficial interest in a Restricted Global Note to beneficial interest in an Unrestricted Global Note . In connection with the Exchange of the Owner’s beneficial interest in a Restricted Global Note for a beneficial interest in an Unrestricted Global Note in an equal principal amount, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner’s own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Global Notes and pursuant to and in accordance with the Securities Act of 1933, as amended (the “ Securities Act ”), (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the beneficial interest in an Unrestricted Global Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States.

(b) ¨ Check if Exchange is from beneficial interest in a Restricted Global Note to Unrestricted Definitive Note . In connection with the Exchange of the Owner’s beneficial interest in a Restricted Global Note for an Unrestricted Definitive Note, the Owner hereby certifies (i) the Definitive Note is being acquired for the Owner’s own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Restricted Global Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the Definitive Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States.

C-1

(c) ¨ Check if Exchange is from Restricted Definitive Note to beneficial interest in an Unrestricted Global Note . In connection with the Owner’s Exchange of a Restricted Definitive Note for a beneficial interest in an Unrestricted Global Note, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner’s own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to Restricted Definitive Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the beneficial interest is being acquired in compliance with any applicable blue sky securities laws of any state of the United States.

(d) ¨ Check if Exchange is from Restricted Definitive Note to Unrestricted Definitive Note . In connection with the Owner’s Exchange of a Restricted Definitive Note for an Unrestricted Definitive Note, the Owner hereby certifies (i) the Unrestricted Definitive Note is being acquired for the Owner’s own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to Restricted Definitive Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the Unrestricted Definitive Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States.

2. Exchange of Restricted Definitive Notes or Beneficial Interests in Restricted Global Notes for Restricted Definitive Notes or Beneficial Interests in Restricted Global Notes

(a) ¨ Check if Exchange is from beneficial interest in a Restricted Global Note to Restricted Definitive Note . In connection with the Exchange of the Owner’s beneficial interest in a Restricted Global Note for a Restricted Definitive Note with an equal principal amount, the Owner hereby certifies that the Restricted Definitive Note is being acquired for the Owner’s own account without transfer. Upon consummation of the proposed Exchange in accordance with the terms of the Indenture, the Restricted Definitive Note issued shall continue to be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Definitive Note and in the Indenture and the Securities Act.

(b) ¨ Check if Exchange is from Restricted Definitive Note to beneficial interest in a Restricted Global Note . In connection with the Exchange of the Owner’s Restricted Definitive Note for a beneficial interest in the [CHECK ONE] ¨ 144A Global Note, ¨ Regulation S Global Note with an equal principal amount, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner’s own account without transfer and (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Restricted Global Notes and pursuant to and in accordance with the Securities Act, and in compliance with any applicable blue sky securities laws of any state of the United States. Upon consummation of the proposed Exchange in accordance with the terms of the Indenture, the beneficial interest issued shall be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the relevant Restricted Global Note and in the Indenture and the Securities Act.

This certificate and the statements contained herein are made for your benefit and the benefit of the Issuers.



[Insert Name of Transferor]

By:
Name:
Title:

Dated:

C-2

EXHIBIT D

[FORM OF NOTATION OF NOTE GUARANTEE]

For value received, each Guarantor (which term includes any successor Person under the Indenture) has, jointly and severally, unconditionally guaranteed, to the extent set forth in the Indenture and subject to the provisions in the Indenture dated as of April 16, 2015 (the “ Indenture ”) among Taylor Morrison Communities, Inc., a Delaware corporation, and Taylor Morrison Holdings II, Inc., a British Columbia corporation (together, the “ Issuers ”), the Guarantors party thereto and U.S. Bank National Association, as trustee (the “ Trustee ”), (a) the due and punctual payment of the principal, premium and interest on, the Notes, whether at maturity, by acceleration, redemption or otherwise, the due and punctual payment of interest on overdue principal of and interest on the Notes, if any, if lawful, 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 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 shall 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 the Note Guarantee and the Indenture are expressly set forth in Article 10 of the Indenture and reference is hereby made to the Indenture for the precise terms of the Note Guarantee. Each Holder of a Note, by accepting the same, (a) agrees to and shall be bound by such provisions, (b) authorizes and directs the Trustee, on behalf of such Holder, to take such action as may be necessary or appropriate to effectuate provisions of the Indenture and (c) appoints the Trustee attorney-in-fact of such Holder for such purpose.

In the event of a conflict between the terms and provisions of the Indenture on the one hand and the terms and provisions of this Notation of Note Guarantee on the other hand, the terms and provisions of the Indenture shall govern and be controlling.

Capitalized terms used but not defined herein have the meanings given to them in the Indenture.

D-1


TMM HOLDINGS LIMITED PARTNERSHIP
By: TMM Holdings (G.P.) Inc., its General Partner

		By:
		Name:
		Title:



TAYLOR MORRISON HOLDINGS, INC.

		By:
		Name:
		Title:

(Signature Page to Notation of Note Guarantee)

D-2


TAYLOR MORRISON COMMUNITIES II, INC.

		By:
		Name:
		Title:

D-3


ATPD, LLC
DARLING HOMES OF TEXAS, LLC
DFP TEXAS (GP), LLC
TAYLOR MORRISON AT CRYSTAL FALLS, LLC
TAYLOR MORRISON ESPLANADE NAPLES, LLC
TAYLOR MORRISON FINANCE, INC.
TAYLOR MORRISON HOLDINGS OF ARIZONA, INC.
TAYLOR MORRISON MARBLEHEAD HOLDINGS, LLC
TAYLOR MORRISON OF CALIFORNIA, LLC
TAYLOR MORRISON OF COLORADO, INC.
TAYLOR MORRISON OF FLORIDA, INC.
TAYLOR MORRISON OF TEXAS, INC.
TAYLOR MORRISON SERVICES, INC.
TAYLOR MORRISON TRAMONTO HOLDINGS, LLC
TAYLOR MORRISON, INC.
TAYLOR MORRISON/ARIZONA, INC.
TAYLOR WOODROW COMMUNITIES – LEAGUE CITY, LTD.
TAYLOR WOODROW COMMUNITIES AT MIRASOL, LTD.
TAYLOR WOODROW COMMUNITIES AT PORTICO, L.L.C.
TAYLOR WOODROW COMMUNITIES AT ST. JOHNS FOREST, L.L.C.
TAYLOR WOODROW HOMES – CENTRAL FLORIDA DIVISION, L.L.C.
TAYLOR WOODROW HOMES – SOUTHWEST FLORIDA DIVISION, L.L.C.
TM CALIFORNIA SERVICES, INC.
TM HOMES OF ARIZONA, INC.
TM OYSTER HARBOR, LLC
TW ACQUISITIONS, INC.
TWC/FALCONHEAD WEST, L.L.C.
TWC/MIRASOL, INC.
TWC/STEINER RANCH, LLC



On behalf of each of the above named entities,

		By:
		Name:
		Title:

D-4

EXHIBIT E

FORM OF SUPPLEMENTAL INDENTURE

TO BE DELIVERED BY SUBSEQUENT GUARANTORS

SUPPLEMENTAL INDENTURE (this “ Supplemental Indenture ”), dated as of , 20 , among Taylor Morrison Communities, Inc., a Delaware corporation, Taylor Morrison Holdings II, Inc., a British Columbia corporation (collectively, the “ Issuers ”), the undersigned Restricted Subsidiary (the “ Guaranteeing Subsidiary ”) and U.S. Bank National Association, as trustee under the Indenture referred to below (the “ Trustee ”).

W I T N E S S E T H

WHEREAS, the Issuers have heretofore executed and delivered to the Trustee an indenture (the “ Indenture ”), dated as of April 16, 2015 providing for the issuance of 5.875% Senior Notes due 2023 (the “ Notes ”);

WHEREAS, the Indenture provides that under certain circumstances the Guaranteeing Subsidiary shall execute and deliver to the Trustee a supplemental indenture pursuant to which the Guaranteeing Subsidiary shall unconditionally guarantee all of the Issuers’ Obligations under the Notes and the Indenture on the terms and conditions set forth herein (the “ Note Guarantee ”); and

WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is authorized to execute and deliver this Supplemental Indenture.

NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Guaranteeing Subsidiary and the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders of the Notes as follows:

1. CAPITALIZED TERMS. Capitalized terms used herein without definition shall have the meanings assigned to them in the Indenture.

2. AGREEMENT TO GUARANTEE. The Guaranteeing Subsidiary hereby provides an unconditional Guarantee on the terms and subject to the conditions set forth in the Note Guarantee and in the Indenture, including Article 10 thereof.

3. NO RECOURSE AGAINST OTHERS. No director, officer, employee, incorporator, stockholder, member or other holder of Equity Interests of the Guaranteeing Subsidiary, in their capacities as such and without limiting the Note Guarantees, shall have any liability for any obligations of the Issuers or the Guarantors under the Notes, any Note Guarantees, the Indenture or this Supplemental Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of the Notes by accepting a Note waives and releases all such liability that may arise other than pursuant to a Note Guarantee. The waiver and release are part of the consideration for issuance of the Notes. Such waiver may not be effective to waive liabilities under the federal securities laws.

4. NEW YORK LAW TO GOVERN. THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS SUPPLEMENTAL INDENTURE WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.

5. COUNTERPARTS. The parties may sign any number of copies of this Supplemental Indenture. Each signed copy shall be an original (including copies transmitted via facsimile or electronic mail), but all of them together represent the same agreement.

6. EFFECT OF HEADINGS. The Section headings herein are for convenience only and shall not affect the construction hereof.

E-1

7. THE TRUSTEE. The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Supplemental Indenture or for or in respect of the recitals contained herein, all of which recitals are made solely by the Guaranteeing Subsidiary and the Issuers.

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

Dated: , 20


[GUARANTEEING SUBSIDIARY]

By:
Name:
Title:

TAYLOR MORRISON COMMUNITIES, INC.

By:
Name:
Title:

TAYLOR MORRISON HOLDINGS II, INC.

By:
Name:
Title:

U.S. BANK NATIONAL ASSOCIATION, as Trustee

By:
		Authorized Signature

E-2

Exhibit 10.1

THIS AMENDMENT TO THE AMENDED AND RESTATED AGREEMENT OF EXEMPTED LIMITED PARTNERSHIP (THE “AMENDMENT”) OF TMM HOLDINGS II LIMITED PARTNERSHIP (THE “PARTNERSHIP”) is made the 15th of March 2015.

BETWEEN:

(1)	TMM Holdings II GP, ULC, a foreign company registered in the Cayman Islands whose registered office in the Cayman Islands is at P.O. Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands (the “ General Partner ” ) ;

(2)	TPG TMM Holdings II, L.P., a Cayman Islands exempted limited partnership whose registered office in the Cayman Islands is at P.O. Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands ( “ TPG Cayman ” ) ; and

(3)	OCM TMM Holdings II, L.P., a Cayman Islands exempted limited partnership whose registered office in the Cayman Islands is at [ *Insert Address* ] ( “ Oaktree Cayman ” ) .

WHEREAS:

(A)	The Partnership is governed by an amended and restated agreement of exempted limited partnership dated 9 April 2013 (the “ Agreement ” ) .

(B)

The General Partner desires to amend the Agreement in accordance with clause 16.1 of the Agreement as set forth in this Amendment, with the written consent of TPG Cayman and Oaktree Cayman with effect from 1 June 2014, to ensure that the General Partner remains obligated to act at all times in good faith in the interests of the Partnership, notwithstanding the adoption of section 19(1) of the Exempted Limited Partnership Law, 2014 of the Cayman Islands.

ACCORDINGLY, IT IS AGREED as follows:

1.	This Amendment shall be effective in amending the Agreement on the terms of this Amendment from 1 June 2014.

2.	Clause 2.6(c) of the Agreement shall be deleted in its entirety.

Except as amended and modified hereby, the terms and provisions of the Agreement remain in full force and effect. Any reference herein to the Agreement and any future reference to the Agreement shall be deemed to be a reference to the Agreement as amended by this Amendment and as the same may, from time to time, be hereafter further amended or modified.

4.	This Amendment is made pursuant to and is governed by the laws of the Cayman Islands.

5.	This Amendment may be executed in any number of counterparts, each of which, when executed and delivered, shall be an original, and all the counterparts together shall constitute one and the same instrument.

IN WITNESS WHEREOF , the parties hereto have executed and unconditionally delivered this Amendment as a deed on the date first above written.


GENERAL PARTNER

EXECUTED as a Deed by	)
TMM Holdings II GP, ULC	)
acting by:	)	/s/ Sheryl Palmer
	)	Signature
in the presence of:	)
	)
	)
/s/ Dawn D. Baxter	)
Witness

TPG CAYMAN

EXECUTED as a Deed by	)
TPG TMM Holdings II L.P.	)
acting by TPG TMM Holdings II GP, ULC,	)
its General Partner, acting by:	)	/s/ Ronald Cami
	)	Name: Ronald Cami
in the presence of:	)	Title: Vice President & Secretary
	)
	)
/s/ J. Coleman	)
Witness

OAKTREE CAYMAN

EXECUTED as a Deed by	)
OCM TMM Holdings II L.P.	)
acting by: OCM TMM Holdings II GP, ULC	)	/s/ Kenneth Liang /s/ Emily Stephens
	)	Signature
in the presence of:	)	Kenneth Liang Emily Stephens
	)
	)
/s/ JoBeth A. Linstrot	)
Witness JoBeth A. Linstrot

Exhibit 10.2

EXECUTION VERSION

AMENDMENT NO. 3 dated as of April 24, 2015 (this “ Amendment ”), to the SECOND AMENDED AND RESTATED CREDIT AGREEMENT dated as of July 13, 2011 (as amended, supplemented or otherwise modified prior to the date hereof, the “ Credit Agreement ”), among TAYLOR MORRISON COMMUNITIES, INC., a Delaware corporation (the “ U.S. Borrower ”), TMM HOLDINGS LIMITED PARTNERSHIP, a British Columbia limited partnership (“ Holdings ”), TAYLOR MORRISON HOLDINGS II, INC. (f/k/a MONARCH COMMUNITIES INC.), a company continued under the laws of the province of British Columbia (“ Canada Holdings ”), TAYLOR MORRISON COMMUNITIES II, INC. (f/k/a MONARCH PARENT INC.), a company incorporated under the laws of the province of British Columbia (“ Canada Intermediate Holdings ”), TAYLOR MORRISON HOLDINGS, INC., a Delaware corporation (“ U.S. Holdings ”), TAYLOR MORRISON FINANCE, INC., a Delaware corporation (“ U.S. FinCo ”), each lender from time to time party thereto (each individually referred to therein as a “ Lender ” and collectively as “ Lenders ”) and CREDIT SUISSE AG, as administrative agent for the Lenders (in such capacity, the “ Administrative Agent ”).

A. Holdings has requested that the Credit Agreement be amended as set forth herein.

B. The Lenders are willing to so amend the Credit Agreement on the terms and subject to the conditions set forth herein.

Accordingly, in consideration of the mutual agreements herein contained and other good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, the parties hereto agree as follows:

SECTION 1. Defined Terms. Capitalized terms used and not defined herein shall have the meanings assigned to such terms in the Credit Agreement. The rules of interpretation set forth in Section 1.2A of the Credit Agreement are hereby incorporated by reference herein, mutatis mutandis .

SECTION 2. Assignments. (a) Effective as of the Amendment Effective Date (as defined below), each of the lenders listed on Exhibit A hereto under the captions “Departing Lenders” (the “ Departing Lenders ”), “Continuing Lenders” (the “ Continuing Lenders ”) and “Additional Lenders” (the “ Additional Lenders ”) shall sell, assign and transfer, or purchase and assume, as the case may be, such interests in (i) the Commitments and (ii) the participations in the Letters of Credit outstanding as of the Amendment Effective Date (the “ Existing Letters of Credit ”), in each case as shall be necessary in order that, after giving effect to all such assignments and purchases, the Commitments and the participations in the Existing Letters of Credit will be held by the

Continuing Lenders and Additional Lenders ratably in accordance with their Commitments as set forth in Schedule 2.1 of the Credit Agreement, as amended by this Amendment. Each Lender purchasing interests of any type under this Section 2 shall be deemed to have purchased such interests from each Departing Lender and Continuing Lender selling interests of such type ratably in accordance with the amounts of such interests sold by them. The assignments and purchases provided for in this Section 2 shall be without recourse, warranty or representation, except that each assigning Lender shall be deemed to have represented that it is the legal and beneficial owner of the interests assigned by it and that such interests are free and clear of any adverse claim.

(b) Each of the parties hereto hereby consents to the assignments and purchases provided for in paragraph (a) above and agrees that (i) each Additional Lender and each Continuing Lender that is purchasing interests in the Commitments and the Existing Letters of Credit pursuant to paragraph (a) above are Eligible Assignees permitted under Section 10.1 of the Credit Agreement, (ii) each Additional Lender shall become a “Lender” for all purposes of the Credit Agreement and the other Loan Documents, in accordance with the terms thereof and (iii) each Additional Lender and each Continuing Lender shall have all the rights and obligations of a Lender under the Credit Agreement with respect to the interests purchased by it pursuant to such paragraphs, in accordance with the terms thereof.

SECTION 3. Commitments. Effective as of the Amendment Effective Date, (i) the Commitment of each Departing Lender shall terminate, (ii) the Commitment of each Continuing Lender and each Additional Lender shall be as set forth in Schedule 2.1 of the Credit Agreement, as amended by this Amendment, and (iii) each Departing Lender shall cease to be a party to the Credit Agreement and shall be released from all further obligations thereunder, in each case under this clause (iii) in accordance with terms of the Credit Agreement, including such terms with respect to continuing benefits under Sections 2.7 and 10.2 of the Credit Agreement which the Departing Lenders are entitled to.

SECTION 4. Amendments . Effective as of the Amendment Effective Date, the Credit Agreement is hereby amended as follows:

(a) The last line of the cover page of the Credit Agreement is hereby amended by deleting therefrom the dollar amount “$400,000,000” and substituting therefor the dollar amount “$500,000,000”.

(b) The definition of the term “Applicable Margin” in Section 1.1 of the Credit Agreement is hereby amended by deleting therefrom the table setting forth the applicable rates per annum and substituting therefor the following table:


CAPITALIZATION RATIO	EURODOLLAR / CDOR MARGIN			BASE RATE / CANADIAN PRIME RATE MARGIN
Category 1		2.000	%		1.000	%
³ 0.55 to 1.00

Category 2		1.750	%		0.750	%

< 0.55 to 1.00 > 0.40 to 1.00

Category 3 £ 0.40 to 1.00		1.500	%		0.500	%

(c) The definition of the term “Base Rate” in Section 1.1 of the Credit Agreement is hereby amended by amending and restating the first proviso in such definition in its entirety as follows: “ provided that, solely for purposes of the foregoing, the Reserve Adjusted Eurodollar Rate for any day shall be calculated using the Eurodollar Base Rate based on the rate set forth on such day at approximately 11:00 a.m. (London time) by reference to the ICE Benchmark Administration Limited (or the successor thereto that takes over the administration of such rate) LIBO Rate for deposits in U.S. Dollars (as set forth by any service selected by the Administrative Agent which has been nominated by the ICE Benchmark Administration Limited (or its successor) as an authorized information vendor for the purpose of displaying such rates) for a period equal to one month;”.

(d) The definition of the term “Base Rate” in Section 1.1 of the Credit Agreement is hereby further amended by inserting the following proviso at the end of the first sentence of such definition: “; provided further that, if such rate shall be less than zero, such rate shall be deemed to be zero”.

(e) The definition of the term “Canadian Prime Rate” in Section 1.1 of the Credit Agreement is hereby amended by inserting the following proviso at the end of such definition: “; provided that, if such rate shall be less than zero, such rate shall be deemed to be zero”.

(f) The definition of the term “CDOR Rate” in Section 1.1 of the Credit Agreement is hereby amended by inserting the following proviso at the end of such definition: “; provided further that, if such rate shall be less than zero, such rate shall be deemed to be zero”.

(g) The definition of the term “Commitment Termination Date” in Section 1.1 of the Credit Agreement is hereby amended by deleting therefrom the words “April 12, 2017” and substituting therefor the words “April 12, 2019”.

(h) The definition of the term “Eurodollar Base Rate” in Section 1.1 of the Credit Agreement is hereby amended and restated in its entirety as follows: ““ Eurodollar Base Rate ” means the rate per annum determined by the Administrative Agent at approximately 11:00 a.m. (London time) on the date which is two Business Days prior to the beginning of the relevant Interest Period (as specified in the applicable Notice of Borrowing or Notice of Conversion/Continuation) by reference to the ICE Benchmark Administration Limited (or the successor thereto that takes over the administration of such rate) LIBO Rate for deposits in U.S. Dollars (as set forth by any service selected by the Administrative Agent which has been nominated by the ICE Benchmark Administration Limited (or its successor) as an authorized information vendor for the purpose of displaying such rates) for a period equal to such Interest Period; provided that, to the extent that an interest rate is not ascertainable pursuant to the foregoing provisions of this definition, the “Eurodollar Base Rate” shall be the interest rate per annum determined by the Administrative Agent to be the average of the rates per annum at which deposits in U.S. Dollars are offered for such relevant Interest Period to major banks in the London interbank market in London, England by the Reference Lenders at approximately 11:00 a.m. (London time) on the date which is two Business Days prior to the beginning of such Interest Period. If any of the Reference Lenders shall be unable or shall otherwise fail to supply such rates to the Administrative Agent upon its request, the rate of interest shall be determined on the basis of the quotations of the remaining Reference Lenders; provided further that, if such rate shall be less than zero, such rate shall be deemed to be zero.”.

(i) The definition of the term “Facility Fee Rate” in Section 1.1 of the Credit Agreement is hereby amended by deleting therefrom the table setting forth the applicable facility fee rates and substituting therefor the following table:


CAPITALIZATION RATIO	FACILITY FEE RATE
Category 1 ³ 0.55 to 1.00		0.400	%

Category 2 < 0.55 to 1.00 > 0.40 to 1.00		0.300	%

Category 3

£ 0.40 to 1.00

0.250

(j) The definition of the term “Reference Lenders” in Section 1.1 of the Credit Agreement is hereby amended and restated in its entirety as follows: ““ Reference Lenders ” means (a) Credit Suisse AG and (b) another Lender determined by the Administrative Agent with the consent of such Lender and of Holdings, which consent shall not be unreasonably withheld or delayed.”.

(k) The second sentence of Section 2.1(A)(i) of the Credit Agreement is hereby amended and restated in its entirety to read as follows: “The aggregate amount of the Commitments as of the Amendment Effective Date (as defined in Amendment No. 3 to this Agreement dated as of April 24, 2015, among the U.S. Borrower, Holdings, Canada Holdings, Canada Intermediate Holdings, U.S. Holdings, U.S. FinCo, the Lenders and the Administrative Agent) is $500,000,000.”.

(l) Section 5.15 of the Credit Agreement is hereby amended by deleting therefrom each reference to the word “currently”.

(m) Schedule 2.1 of the Credit Agreement is hereby amended and restated in its entirety with Schedule 2.1 attached as Exhibit B to this Amendment.

SECTION 5. Representations and Warranties. To induce the other parties hereto to enter into this Agreement, each of Holdings, U.S. Holdings, Canada Holdings, Canada Intermediate Holdings, U.S. FinCo and the U.S. Borrower, jointly and severally, hereby represents and warrants to the Administrative Agent and each of the other parties hereto that:

(a) As of the Amendment Effective Date, each Loan Party has duly executed and delivered and authorized this Amendment and this Amendment constitutes the legal, valid and binding obligation of such Loan Party enforceable in accordance with its terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization and other similar laws relating to or affecting creditors’ rights generally and general principles of equity (whether considered in a proceeding in equity or law).

(b) As of the Amendment Effective Date, (i) the representations and warranties set forth in Section 5 of the Credit Agreement and in the other Loan Documents are true and correct in all material respects (unless qualified as to materiality or Material Adverse Effect, in which case such representations and warranties shall be true and correct in all respects) on and as of the Amendment Effective Date to the same extent as though made on and as of such date, except (x) to the extent such representations and warranties specifically relate to an

earlier date, in which case such representations and warranties were true and correct in all material respects (unless qualified as to materiality or Material Adverse Effect, in which case such representations and warranties were true and correct in all respects) on and as of such earlier date, and (y) the reference to the Restatement Effective Date in Section 5.12 of the Credit Agreement shall, for purposes of this Section 3(b), be deemed to refer to the Amendment Effective Date, and (ii) no Default or Event of Default has occurred and is continuing.

SECTION 6. Fees. On the Amendment Effective Date, the Borrower shall pay to the Administrative Agent, for the accounts of the Departing Lenders and the Continuing Lenders, the fees payable pursuant to Sections 2.3 and 3.2 of the Credit Agreement which have accrued for the period from the last date such fees were paid to but excluding the Amendment Effective Date. The fees described in this Section 6 shall be payable in immediately available funds. Once paid, such fees shall not be refundable under any circumstances.

SECTION 7. Conditions to Effectiveness. The effectiveness of this Amendment is subject to the satisfaction or waiver, on or prior to April 24, 2015, of the following conditions precedent (the date on which all such conditions are satisfied or waived, the “ Amendment Effective Date ”):

(a) The Administrative Agent (or its counsel) shall have received from each Loan Party and each Lender either (i) a counterpart of this Agreement signed on behalf of such parties or (ii) written evidence satisfactory to the Administrative Agent (which may include facsimile or other electronic transmission of a signed signature page of this Agreement) that such parties have signed a counterpart of this Agreement.

(b) The Administrative Agent shall have received reimbursement of all costs and expenses required to be paid by the Loan Parties in connection with the transactions contemplated hereby.

(c) The representations and warranties set forth in Section 5 shall be true and correct, and the Administrative Agent shall have received a certificate to that effect dated as of the Amendment Effective Date and executed by a Responsible Officer of Holdings.

(d) The Administrative Agent and its counsel shall have received executed copies of favorable written opinions of Paul, Weiss, Rifkind, Wharton & Garrison LLP, counsel for the Loan Parties, and each local counsel listed on Exhibit C, in each case, in form and substance reasonably satisfactory to the Administrative Agent and its counsel, dated as of the Amendment Effective Date.

(e) On or before the Amendment Effective Date, each Loan Party shall deliver or cause to be delivered to the Administrative Agent and each of the Lenders the following, each, unless otherwise noted, dated the Amendment Effective Date:

(i) Certified copies of the certificate of incorporation, organization or formation, together with a good standing certificate, certificate of status or certificate of compliance (as applicable) from the applicable Governmental Authority of its jurisdiction of incorporation, organization or formation, each dated a recent date prior to the Amendment Effective Date (or, in lieu of such certificate of incorporation, organization or formation, a certification by a Responsible Officer that there has been no change to such certificate of incorporation, organization or formation since the most recent copy delivered to the Administrative Agent, together with a good standing certificate, certificate of status or certificate of compliance (as applicable) from the applicable Governmental Authority of its jurisdiction of incorporation, organization or formation dated a recent date prior to the Amendment Effective Date);

(ii) Copies of its Organizational Documents, other than such Organizational Documents required to be delivered under clause (i) above, certified as of the Amendment Effective Date by its corporate secretary or an assistant secretary (or, in lieu of such Organizational Documents, a certification by a Responsible Officer that there has been no change to such Organizational Documents since the most recent copy delivered to the Administrative Agent);

(iii) A certification by a Responsible Officer, certified as of the Amendment Effective Date, that board resolutions or similar authorizing documents authorizing the execution, delivery and performance of this Amendment have been approved by the board of directors or similar governing body of each Loan Party and that such resolutions or documents are in full force and effect without modification or amendment; and

(iv) An incumbency certificate of its Responsible Officers executing this Amendment (or, in lieu of such incumbency certificate, a certification by a Responsible Officer that there has been no change to such incumbency certificate since the most recent copy delivered to the Administrative Agent).

(f) The Borrower shall have paid the fees required to be paid pursuant to Section 6 hereof.

(g) The Borrower shall have paid (i) to the Administrative Agent, for the account of each Continuing Lender, an upfront fee in an amount equal to the sum of (A) 0.15% of the amount of such Continuing Lender’s Commitment under the Credit Agreement as in effect immediately prior to the Amendment Effective Date and (B) 0.35% of the amount by which such Continuing Lender’s Commitment under the Credit Agreement as in effect on the Amendment Effective Date, as amended by this Amendment, exceeds such Continuing Lender’s Commitment under the Credit Agreement as in effect immediately prior to the Amendment Effective Date and (ii) to the Administrative Agent, for the account of each Additional Lender, an upfront fee in an amount equal to the sum of (A) 0.15% of the amount of the Commitments assigned to such Additional

Lender on the Amendment Effective Date and (B) 0.35% of the amount by which such Additional Lender’s Commitment under the Credit Agreement as in effect on the Amendment Effective Date, as amended by this Amendment, exceeds the amount of the Commitments assigned to such Additional Lender on the Amendment Effective Date; provided that the upfront fee to be paid to Bank of America, N.A. (“ BofA ”) shall be in an amount equal to 0.35% of the amount of BofA’s Commitment under the Credit Agreement as in effect on the Amendment Effective Date, as amended by this Amendment.

The Administrative Agent shall notify the U.S. Borrower and the Lenders of the Amendment Effective Date, and such notice shall be conclusive and binding.

SECTION 8. Consent and Reaffirmation. Each of the Loan Parties hereby (i) consents to this Amendment and the transactions contemplated hereby, (ii) agrees that, notwithstanding the effectiveness of this Amendment, the Guaranty and each of the other Loan Documents continues to be in full force and effect, (iii) affirms and confirms its guarantee (in the case of a Guarantor) of the Obligations pursuant to the Guaranty, all as provided in the Loan Documents, and (iv) acknowledges and agrees that such guarantee continues in full force and effect in respect of, the Obligations under the Credit Agreement and the other Loan Documents.

SECTION 9. Loan Documents. This Amendment shall constitute a “Loan Document” for all purposes of the Credit Agreement and the other Loan Documents.

SECTION 10. Counterparts. This Amendment may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. Delivery of an executed counterpart of a signature page of this Amendment by facsimile or other electronic transmission shall be as effective as delivery of an original executed counterpart of this Amendment.

SECTION 11. Governing Law. THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.

SECTION 12. Headings. Section headings used herein are for convenience of reference only, are not part of this Amendment and shall not affect the construction of, or be taken into consideration in interpreting, this Amendment.

SECTION 13. Tax Matters . For purposes of determining withholding Taxes imposed under FATCA, from and after the Amendment Effective Date, the Borrowers and the Administrative Agent shall treat (and the Lenders hereby authorize the Administrative Agent to treat) the Credit Agreement as not qualifying as a “grandfathered obligation” within the meaning of Treasury Regulation Section 1.1471-2(b)(2)(i).

[Remainder of page intentionally left blank]

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed by their respective authorized officers or representatives as of the day and year first above written.


TAYLOR MORRISON COMMUNITIES, INC.,

By:		/s/ Darrell C. Sherman
Name:		Darrell C. Sherman
Title:		General Counsel, Secretary, Vice President

TMM HOLDINGS LIMITED PARTNERSHIP,

By: TMM Holdings (G.P.) ULC, its General Partner

By:		/s/ Rajath Shourie
Name:		Rajath Shourie
Title:		Director

TAYLOR MORRISON HOLDINGS II, INC.,

By:		/s/ Darrell C. Sherman
Name:		Darrell C. Sherman
Title:		Secretary, Vice President

TAYLOR MORRISON COMMUNITIES II, INC.,

By:		/s/ Darrell C. Sherman
Name:		Darrell C. Sherman
Title:		Secretary, Vice President

[Signature Page to Amendment No. 3]


TAYLOR MORRISON HOLDINGS, INC.,

By:		/s/ Darrell C. Sherman
Name:		Darrell C. Sherman
Title:		General Counsel, Secretary, Vice President

TAYLOR MORRISON FINANCE, INC.,

By:		/s/ Darrell C. Sherman
Name:		Darrell C. Sherman
Title:		General Counsel, Secretary, Vice President

TAYLOR MORRISON ESPLANADE NAPLES, LLC

By:		/s/ Darrell C. Sherman
Name:		Darrell C. Sherman
Title:		General Counsel, Secretary, Vice President

EACH SUBSIDIARY GUARANTOR SET FORTH ON EXHIBIT D HERETO

By:		/s/ Darrell C. Sherman
Name:		Darrell C. Sherman
Title:		Authorized Signatory

[Signature Page to Amendment No. 3]


CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH, individually and as Administrative Agent,

By:		/s/ Bill O’Daly
Name:		Bill O’Daly
Title:		Authorized Signatory

By:		/s/ Sean MacGregor
Name:		Sean MacGregor
Title:		Authorized Signatory

[Signature Page to Amendment No. 3]

SIGNATURE PAGE TO AMENDMENT NO. 3 TO

THE TAYLOR MORRISON COMMUNITIES INC.

SECOND AMENDED AND RESTATED CREDIT

AGREEMENT DATED AS OF JULY 13, 2011, AS

AMENDED


NAME OF LENDER:	Bank of America, N.A.

	By:	/s/ Michael J. Kauffman
	Name:	Michael J. Kauffman
	Title:	Vice President

NAME OF LENDER:	Bank of America, National Association (Canada Branch)

	*By:	/s/ Medina Sales De Andrade
	Name:	Medina Sales De Andrade
	Title:	Vice President

*	For any Lender requiring a second signature.

[ Signature Page to Amendment No. 3 ]

SIGNATURE PAGE TO AMENDMENT NO. 3 TO THE

TAYLOR MORRISON COMMUNITIES INC. SECOND

AMENDED AND RESTATED CREDIT AGREEMENT

DATED AS OF JULY 13, 2011, AS AMENDED


NAME OF LENDER:	Deutsche Bank AG New York Branch

	By:	/s/ Kirk L. Tashjian
	Name:	Kirk L. Tashjian
	Title:	Director

	*By:	/s/ Peter Cucchiara
	Name:	Peter Cucchiara
	Title:	Vice President

*	For any Lender requiring a second signature

[Signature Page to Amendment No. 3]

SIGNATURE PAGE TO AMENDMENT NO. 3 TO THE

TAYLOR MORRISON COMMUNITIES INC. SECOND

AMENDED AND RESTATED CREDIT AGREEMENT

DATED AS OF JULY 13, 2011, AS AMENDED

EXHIBIT A


Departing Lenders	Continuing Lenders	Additional Lenders

HSBC Realty Credit Corporation (USA)	Credit Suisse AG, Cayman Islands Branch	Bank of America, N.A. (as assignee of Western Alliance Bank)

Western Alliance Bank	Citibank, N.A., Canadian Branch	HSBC Bank USA, N.A. (as assignee of HSBC Realty Credit Corporation (USA))

	Comerica Bank

	Deutsche Bank AG, New York Branch

	Goldman Sachs Bank USA

	JPMorgan Chase Bank, N.A.

	Texas Capital Bank, N.A.

	Wells Fargo Bank, N.A.

EXHIBIT B

Schedule 2.1

[omitted]

EXHIBIT C

Local Counsel

[omitted]

EXHIBIT D

Subsidiary Guarantors

ATPD, LLC

DARLING HOMES OF TEXAS, LLC

DFP TEXAS (GP), LLC

TAYLOR MORRISON, INC.

TAYLOR MORRISON AT CRYSTAL FALLS, LLC

TAYLOR MORRISON HOLDINGS OF ARIZONA, INC.

TAYLOR MORRISON OF CALIFORNIA, LLC

TAYLOR MORRISON OF COLORADO, INC.

TAYLOR MORRISON OF FLORIDA, INC.

TAYLOR MORRISON OF TEXAS, INC.

TAYLOR MORRISON SERVICES, INC.

TAYLOR MORRISON/ARIZONA, INC.

TAYLOR WOODROW COMMUNITIES – LEAGUE CITY, LTD.

TAYLOR WOODROW COMMUNITIES AT MIRASOL, LTD.

TAYLOR WOODROW COMMUNITIES AT PORTICO, L.L.C.

TAYLOR WOODROW COMMUNITIES AT ST. JOHNS FOREST, L.L.C.

TAYLOR WOODROW HOMES – CENTRAL FLORIDA DIVISION, L.L.C.

TAYLOR WOODROW HOMES – SOUTHWEST FLORIDA DIVISION, L.L.C.

TM HOMES OF ARIZONA, INC.

TW ACQUISITIONS, INC.

TWC/FALCONHEAD WEST, L.L.C.

TWC/MIRASOL, INC.

TWC/STEINER RANCH, LLC

TAYLOR MORRISON MARBLEHEAD HOLDINGS, LLC

TM CALIFORNIA SERVICES, INC.

TM OYSTER HARBOR, LLC

TAYLOR MORRISON TRAMONTO HOLDINGS, LLC

Exhibit 10.3

TaylorMorrison

December 28, 2012

Darrell Sherman

c/o TaylorMorrison Inc.

4900 N. Scottsdale Road, Suite 2000

Scottsdale, AZ 85251

Re:

Amendment to Employment Agreement

Dear Darrell:

This letter confirms your acceptance of a clarifying change to that certain Employment Agreement, by and between you and Taylor Morrison Inc. (the “Company”), dated as of February 1, 2011 (your “Employment Agreement”), which is designed to avoid adverse tax consequences that could otherwise arise absent this amendment.

Notwithstanding anything to the contrary in your Employment Agreement or otherwise, the payment schedule for any severance due under your Employment Agreement shall run from the date of your termination from employment; provided, that: (i) the “Separation Agreement and Release of Claims” required to be signed by you under your Employment Agreement in order to receive any severance payments and benefits thereunder must, within 55 days following the date of termination of employment be executed by you, delivered to the Company and become irrevocable in accordance with its terms; (ii) no severance payment will be made to you pursuant to your Employment Agreement until the first regular payroll date following the date on which the condition described in clause (i) is satisfied; and (iii) any severance payments that would have otherwise been paid to you between the date of termination of employment and such payroll date shall be paid to you on such payroll date.

All other terms and conditions of your Employment Agreement remain the same and arc unaffected by this letter. Except as specifically provided herein, this letter shall not constitute a waiver, amendment or modification of any term or condition of your employment and the provisions of your Employment Agreement shall remain in full force and effect.

Please indicate your acceptance of this amendment to your Employment Agreement by signing and returning a copy of this letter, to Katy Owen, no later than December 31, 2012.

Sincerely,

/s/ Sheryl Palmer

Sheryl Palmer

President and Chief Executive Officer

Agreed to and Accepted by:

/s/ Darrell Sherman

Darrell Sherman

Date: 12-31-12

TaylorMorrison

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (“Agreement”) is made by and between the Executive and the Company to be effective as of February 1, 2011 subject to the terms and conditions herein.

1.	Employee

Darrell Sherman (the “Executive”)

2.	Employer

Taylor Morrison, Inc. (“the Company,” a term which for the purposes of this Agreement includes Taylor Wimpey PLC and all affiliates or subsidiaries thereof) with its principal place of business and corporate office located in Phoenix, Arizona.

3.	Terms of Employment

The Executive was first employed by the Company on June 15, 2009 and Executive remains in the employ of the Company. This Agreement shall be deemed effective as of February 1, 2011 and shall continue for Executive’s employment unless Executive is terminated pursuant to Section 12 of this Agreement.

4.	Position and Duties

The Executive is serving as Vice President and General Counsel and is responsible for overseeing the management and operations for the Legal function for North America and Executive shall continue to serve in such capacity under the terms of this Agreement. Additionally, Executive will have the duties, responsibilities and authority assigned by the President/CEO and/or Board of Directors. The Executive currently reports to the President/CEO of Taylor Morrison, Inc. The Executive shall carry out assigned duties in good faith and in the best interests of the Company, consistent with the policies and business strategies of the Company. Executive agrees to faithfully perform at all times the duties assigned to Executive to the best of Executive’s ability, experience and talents and to devote to Company all of Executive’s undivided working time, attention and efforts. During employment with Company, Executive agrees not to hold employment, ownership, directorship or any interest whatsoever in any competing business, entity or enterprise. Executive’s duties include reasonable business travel, either as necessary to meet the job or as directed by Company.

5.	Conditions of Employment

Executive agrees to the terms and conditions contained in this Agreement, the Company’s employee handbook, and other Company policies as they may be changed by Company in its sole discretion from time to time.

6.	Salary

The Executive’s current base salary shall be per annum, paid bi-weekly on regularly scheduled payroll dates. The Executive’s base salary shall be reviewed annually at the end of each calendar year and may be adjusted by the Company in accordance with the Company’s compensation policies, overall financial condition and other business factors.

7.	Conflicts of Interest

Executive agrees to avoid actual or potential conflicts of interest with Company’s business. In this regard, Executive agrees (1) not to solicit, offer, or accept any gifts, gratuities, bribes, or other financial benefit in excess of $100.00 from actual or prospective customers, vendors, suppliers, or competitors; and (2) not to have, either directly or indirectly through Executive’s family, financial interests in competing or supplying companies which could affect Executive’s duties to Company. When issues of potential conflict arise, Executive agrees to immediately discuss them with Company’s President/CEO.

8.	Contributions .

Executive agrees not to offer or provide the contribution of labor, materials, or inventory for charity, civil, social, or community use or service, outside the normal course of day to day operating practices, without the prior written approval of the President/CEO.

9.	Benefits

The Executive shall be eligible to participate in the following incentive compensation, retirement and benefits plans as such plans may exist from time to time and any replacements or variations thereof (collectively, the “Compensation and Benefits Plans”) which are offered to similarly situated executives:

9.1

The Company’s Annual Bonus Program;

9.2

The Company’s Nonelective Bonus Deferral Program;

9.3

The Company’s Long-term Incentive Plan;

9.4

The Company’s Employee Stock Purchase Plan;

9.5

The Company’s Non-Qualified Management Deferred Compensation Plan;

9.6

The Company’s 401(k) and Cash Balance Retirement Plans; and

9.7

The Company’s Employees’ Welfare Benefit Plans

Nothing in this Agreement shall obligate the Company to continue the Compensation and Benefit Plans, or to continue them in their current forms. The Company may terminate, modify or amend the Compensation and Benefit Plans at any time or from time to time in accordance with the terms and provisions of such plans and applicable law.

10.	Business Expense Reimbursement

The Company shall reimburse the Executive for reasonable business-related expenses properly and reasonably incurred by the Executive in connection with the performance of the Executive’s duties, subject to such expenses being properly claimed and substantiated in accordance with Company policies in force from time to time.

11.	Vacation and Holidays

The Executive shall be entitled to paid vacation and paid holidays in accordance with Company policies in force from time to time.

12.	Termination of Employment

12.1

The Company may terminate the Executive’s employment by giving written notice of termination to the Executive at any time, with or without “Good Cause” (as defined below).

12.2

The Executive may voluntarily terminate employment at any time, with or without cause, by giving 60 days written notice of termination to the Company.

12.3

If the Company terminates the Executive’s employment without Good Cause, the Executive shall be entitled to be paid the following subject to certain conditions:

a) An amount equal to the Executive’s current base salary at the time of termination as a “Severance Payment” if the Executive executes and returns the Company’s “Separation Agreement and General Release.” The Severance Payment shall be paid in 26 equal installments, commencing on the first regular payroll date which occurs after the effective date of termination in accordance with the Company’s payroll schedule and occurring after (and only if) the Executive has executed and returned the Company’s then current “Separation Agreement and General Release.”

b) In addition to the Severance Payment, the Company shall pay the applicable COBRA premiums for Executive and eligible dependents enrolled (if any) in any then existing Welfare Benefit Plans which are group health plans (the “COBRA” Benefit”), commencing on the effective date of termination through the earlier of (i) one year from the date of termination or (ii) the date that EMPLOYEE becomes eligible for health insurance coverage under another group health insurance program, if the Executive has executed and returned the Company’s “Separation Agreement and General Release.” Executive agrees to promptly notify the COMPANY in writing if the Executive becomes eligible for health insurance coverage under another group health insurance program.

c) Notwithstanding the fact that the Executive may not be employed by the Company on the date that the Executive would otherwise be eligible to receive the Executive’s annual bonus payment under the Company’s Annual Bonus Program for the performance period(s) prior to the effective date of termination, the Company will include the Executive in the Annual Bonus Program and calculate a bonus payout pursuant to the Annual Bonus Program plan matrix which will then be prorated based on the number of days that the Executive was employed by the Company in the applicable performance period(s). Any bonus payment described herein will be made to the Executive on the date that the Company pays other employees under the Annual Bonus Program.

In the event that the financial targets identified in the Executive’s Annual Bonus Program plan have not been formalized or are unable to be determined, the Executive’s overall Annual Bonus Plan Attainment as a percent of the Executive’s Annual Bonus Opportunity will be calculated for each of the prior three completed or annualized partially completed performance periods the Executive was employed by the Company, then averaged to establish a Projected Annual Bonus Plan Attainment Percentage. If Executive does not have three years of bonus history, the Projected Annual Bonus Plan Attainment Percentage will be equal to the Taylor Morrison NA Corporate bonus percentage attained for same three year period. The Executive’s current Annual Bonus Plan Opportunity will be multiplied by the Projected Annual Bonus Plan Attainment Percentage to calculate a bonus payout which will then be prorated based on the number of days that the Executive was employed by the Company in the applicable performance period.

Issuance of this negotiated bonus payment to which Executive otherwise would not be entitled requires that the Executive execute and return the “Separation Agreement and General Release” described herein.

d) Any unpaid salary for time worked and accrued vacation pay shall be paid promptly after the Executive’s termination of employment.

12.4

If the Executive voluntarily resigns or is terminated by the Company for Good Cause, the Executive shall not be entitled to the Severance Payment, COBRA Benefit or Annual Bonus Program, but shall only be entitled to be paid any unpaid salary for time worked and accrued vacation pay through the date of termination. Such unpaid salary and accrued vacation, if any, shall be paid promptly after the Executive’s termination.

Notwithstanding the foregoing, in the event of a Change in Control, as hereinafter defined, combined with either (a) the Executive’s organizational level, scope of duties and responsibilities, or total compensation being materially changed, or (b) the Executive’s offices being moved more than 50 miles from their current assigned location, then the Executive may, by written notice to the Company within 30 days of the occurrence of (a) or (b), terminate this Agreement, in which case the Executive shall receive the Severance Payment specified in 12.3(a), COBRA benefit specified in 12.3(b), and the Annual Bonus payment specified in 12.3(c) upon execution of the Company’s “Separation Agreement and General Release”. “Change in Control” shall mean (i) the sale of all or substantially all of the assets of Taylor Morrison, Inc. (the “Direct

Employer”), (ii) the sale of over 50% of the voting stock in the Direct Employer or any entity indirectly or directly controlling the Direct Employer, (iii) the merger of the Direct Employer or any entity indirectly or directly controlling the Direct Employer.

12.5

Except as specifically set forth in this Agreement, nothing in this Agreement is intended to affect either the Company’s or the Executive’s rights and obligations under the Compensation and Benefit Plans in the event of the Executive’s termination of employment, and the terms and provisions of the Compensation and Benefit Plans shall control in the event of the Executive’s termination.

12.6

The payment of any Severance Payment specified in 12.3(a), COBRA benefit specified in 12.3(b), and the Annual Bonus payment specified in 12.3(c) to the Executive upon termination of the Executive’s employment (no matter the cause) shall be conditioned upon execution by the Executive of a general release (“Separation Agreement and General Release”), in such form as the Company may reasonably require, of any and all claims against the Company (and their respective officers, directors and employees) arising out of or relating to the executive’s employment with the Company and/or the termination thereof.

12.7

The term “Good Cause” shall mean the occurrence of any of the following by the Executive: (i) Executive is convicted of, pleads guilty to, or confesses to any felony or any act of fraud, theft, misappropriation or embezzlement; (ii) any act or omission by Executive involving malfeasance, negligence, or intentional failure in the performance of Executive’s duties to the Company and, within five (5) days after written notice from the Company of any such act or omission, Executive has not corrected such act or omission; or (iii) Executive otherwise fails to comply with the terms of this Agreement or deviates from any written policies, directives of the Board of Directors, employee handbook, or rules of conduct, including without limitation, the Company’s drug and alcohol and no harassment policies, as the Company may change such policies from time to time.

12.8

All payments made to the Executive under this Agreement and/or the Compensation and Benefit Plans are subject to applicable withholding as required by law.

12.9

The Executive agrees that the Company may offset any monies due or owing to the Company from the Executive against any payments due to the Executive under this Agreement or the Compensation and Benefit Plans.

12.10

In the event that the Executive breaches any of the provisions of this Agreement, the Executive agrees that the Company, without limiting any other rights or remedies that it may have under the law, may cease making any further payments of any type (Severance, COBRA or Annual Bonus Program) which may be due to be paid.

13.	Proprietary and Confidential Information

Executive acknowledges that in the course of employment, Executive has or will have access to and obtained or will obtain knowledge of trade secrets and/or confidential information relating to the Company’s business. Confidential information means information which is treated by the

Company as confidential and which is of value to the Company because it has not been made generally available to the public or to competitors of the Company (other than by fault of Executive), and includes but is not limited to such information related to the Company’s methods of operation and sales, current and future development, expansion or contraction plans of the Company, information concerning personnel assignments and personnel matters, and any other information relating to the Company’s business that is treated by the Company as confidential. Executive agrees that during employment with the Company and for a period of two (2) years following the termination of said employment, Executive shall not, other than on behalf of the Company, divulge or make use of any confidential information of the Company directly, indirectly, personally, or on behalf of any other person, business, corporation or entity. This covenant is not intended to and does not limit in any way Executive’s duties and obligations to the Company under statutory or case law not to disclose or make personal use of such information or any trade secret information of the Company.

14.	Non-Solicitation of the Customers and Suppliers

Executive agrees that the Company’s relationships with its Customers and Suppliers are solely the assets and property of the Company. Executive agrees that for a period of two (2) years following termination of Executive’s employment with the Company for any reason, Executive shall not directly or through others solicit or attempt to solicit any of the Company’s Customers and/or Suppliers for the purpose of providing products or services competitive to those offered by the Company. This restriction applies only to those Customers and/or Suppliers with whom Executive had material contact on behalf of the Company. “Material contact” means: (i) direct personal contact with a Supplier or Customer for the purpose of, respectively, purchasing real estate, materials or services for use by the Company or selling the Company’s real estate, products or services to Customers or (ii) any direct supervision of direct personal contacts other employees of the Company may have with Suppliers and/or Customers. Customers and Suppliers are those Customers or Suppliers with whom Executive had material contact within one (1) year prior to the termination of Executive’s employment with the Company. The terms Customer and Supplier shall also include prospective Customers and Suppliers of the Company. “Customers and Suppliers” does not include any of the companies listed on Exhibit A which is incorporated into this agreement.

15.	Non-Solicitation of the Company Employee s

Executive agrees that Company has invested substantial time and effort in assembling and training its present staff of personnel. Accordingly, Executive agrees that for a period of two (2) years from the date of termination, Executive will not directly or indirectly induce or solicit or seek to induce or solicit on behalf of Executive or other persons or entities, any of the Company’s employees to leave employment with the Company if said employee was employed by the Company during the last six (6) months of the Executive’s employment.

16.	Other Employment After Termination .

Executive acknowledges and represents that Executive has substantial experience and knowledge such that Executive can readily obtain subsequent employment which does not violate this Agreement. Executive also agrees that Company may notify any future employer of Executive

or any prospective future employer of Executive as to the existence and provisions of this Agreement and Company’s intention to enforce its rights hereunder.

17.	Notices

All notices and other communications given pursuant to the terms of this Agreement shall be in writing and shall be given by personal delivery or by recognized overnight courier or certified mail: (1) to the Executive at the Executive’s address as shown in the Company’s records; or (2) the Company at its principal office in the State of Arizona (or such other office as may be confirmed by the Company from time to time) to the attention of the Company’s President and Chief Executive Officer.

18.	Company Property

All equipment, computers, notebooks, documents, memoranda, reports, photographs, files, books, correspondence, employee or other lists, calendars, card files, Rolodexes, and all other written, electronic, and graphic records affecting or relating to the business of Company and its employees, regardless of the medium in which such information is stored, shall be and remain the sole and exclusive property of Company. Executive agrees not to remove any things or documents from Company premises at any time unless those things or documents are necessary to those duties which the Executive must perform outside of Company premises. Executive shall not participate in any way with either the sale or the removal from Company-controlled premises of any materials, equipment, tools, labor, computer software, corporate forms, information, data, manuals or any other Company property, without the prior written approval of the President/CEO. In the event of termination of employment with Company for any reason, Executive shall promptly deliver to Company all equipment, computers, including laptop computers, notebooks, documents, memoranda, reports, photographs, files, books, correspondence, employee or other lists, calendars, card files, Rolodexes, and all other written, electronic, and graphic records relating to Company’s business, which are or have been in the possession or under control of Executive. Executive shall not maintain any copy or other reproduction whatsoever of any of the items described in this section after the termination of such employment.

19.	Arbitration

The parties understand and agree that any claim of any nature whatsoever, including those arising out of or connected with Executive’s employment with Company, including but not limited to wrongful termination, breach of contract, defamation, and claims of discrimination (including age, disability, sex, religion, national origin, race, color, etc.), harassment or retaliation whether under federal, state or local laws, regulations, or Executive Orders, common law, or in equity, shall be decided by submission to final and binding arbitration. The arbitrator shall be a retired or former state or federal court judge. The parties further agree that the performance of Executive’s duties as contemplated by this employment agreement involves commerce. This arbitration provision shall be governed by the Federal Arbitration Act. The arbitrator shall apply the law (including applicable filing limitations periods and exhaustion of administrative remedies) to the same extent, and with same force and effect as would an Arizona court or a federal court sitting in Arizona. The arbitration shall be pursuant to rules and procedures hereafter adapted by Company, and failing such adoption, the Federal Rules of Civil Procedure. Judgment shall be final upon the award rendered by the arbitrator and may be

entered in any court having jurisdiction thereof. The parties further understand and agree that actions seeking temporary injunctions are hereby excluded from arbitration and, therefore, may be sought in a court of appropriate jurisdiction without resort to arbitration, even though resolution of the underlying claim must be submitted to arbitration.


Employee Signature:		/s/ Darrell C. Sherman

20.	Remedies

Executive agrees that should a breach of any portion of this Agreement be asserted by Company, Company shall be entitled to cease immediately any outstanding payments due to Executive under this Agreement. Prior to ccasing any such payments, Company will provide written notice to Executive and allow Executive five (5) calendar days from date of such notice to cure the breach. Executive also agrees that Executive’s covenants contained in this Agreement are the essence of this Agreement; that each such covenant is reasonable and necessary to protect the business, interests and properties of Company; and that irreparable loss and damage will be suffered by Company should Executive breach any of the covenants. Therefore, Executive agrees and consents that, in addition to all the remedies provided at law or in equity, Company shall be entitled to a temporary restraining order and temporary and permanent injunctions to prevent a breach or contemplated breach of any of the covenants. The Parties agree that all remedies available to the Parties shall be cumulative and that the Parties shall be entitled to collect separate damages for each covenant or restriction breached. Executive acknowledges that should Executive violate any of the covenants of this Agreement, it will be difficult to determine the resulting damages to Company and that monetary damages would not be adequate in any event. In addition to any other remedies it may have, Company shall be entitled to temporary and permanent injunctive relief without the necessity of proving actual damage Executive shall indemnify Company for all costs, expenses, liabilities, and damages, in connection with Company’s response to any breach by Executive of any provision of this Agreement. Executive shall be liable to pay all costs, including without limitation, reasonable attorneys’ fees, which Company may incur in enforcing, to any extent, the provisions of this Agreement, whether or not litigation is actually commenced and including litigation of any appeal taken or defended by Company in an action to enforce this Agreement. Company may elect to seek one or more of these remedies at its sole discretion on a case-by-case basis. Failure to seek any or all remedies in one case does not restrict Company from seeking any remedies in another situation. Such an action by Company shall not constitute a waiver of any of its rights.

21.	Miscellaneous

21.1

In the event any portion of this Agreement is held to be invalid, void or unenforceable by an arbitrator or a final judgment of any court of competent jurisdiction, such portion of the Agreement shall be deemed severed and the remaining parts of this Agreement shall remain in full force and effect. The waiver by either party of any breach of any provision of the Agreement, or of the right to enforce any provision of the Agreement, shall not operate of be construed as a waiver of any subsequent breach or right of enforcement.

21.2

This Agreement shall be governed and construed in accordance with the laws of the State of Arizona, and the proper venue for any dispute hereunder shall be the state or federal court (as applicable) in the county of the Direct Employer’s principal office in the State of Arizona.

21.3

This Agreement contains the entire agreement between the parties relating to its subject matter and supersedes all prior or contemporaneous agreements, understandings and representations, oral or written. No modification or amendment to this Agreement shall be valid unless the same is in writing and signed by both parties to this Agreement.

21.4

This Agreement shall be binding upon and inure to the benefit of the Executive and the Company and, as applicable, their respective legal representatives, heirs, successors and assigns.

This Agreement has been executed on the dates set forth below, effective as of February 1, 2011.


Date: February 1, 2011	THE EXECUTIVE:

	/s/ Darrell C. Sherman

	THE COMPANY:

	TAYLOR MORRISON, INC.,
	a Delaware corporation

	By:	/s/ Sherlyl D. Palmer
	Name:	Sherlyl D. Palmer
	Title:	President and Chief Executive Officer

Exhibit A

Companies not included in the definition of “Customers and/or Suppliers:”

Exhibit 10.4

TAYLOR MORRISON HOME CORPORATION

NON-EMPLOYEE DIRECTOR DEFERRED COMPENSATION PLAN

Effective March 16, 2015

This Taylor Morrison Home Corporation Non-Employee Director Deferred Compensation Plan (the “ Plan ”) is intended to (i) enhance the ability of Taylor Morrison Home Corporation, a Delaware corporation (the “ Company ”), to attract and retain highly-qualified individuals to serve as non-employee members of the Board of Directors of the Company (the “ Board ”) by providing such members the opportunity to defer all or a portion of compensation earned for their services on the Board and (ii) provide for such deferral opportunity in the form of awards under the Taylor Morrison Home Corporation 2013 Omnibus Equity Award Plan (as may be amended from time to time, the “ Equity Plan ”), thereby aligning the interests of the members of the Board with those of the holders of the Company’s class A common stock, par value $0.00001 per share (“ Common Stock ”) in enhancing the value of the Common Stock.

The Plan is effective as of March 16, 2015 (the “ Effective Date ”) and permits the deferral of compensation received for services rendered after the Effective Date. This Plan applies to all such compensation and all earnings thereon, as applicable (as defined below).

The Plan is intended to be, and shall be administered as, an unfunded plan for the purpose of providing deferred compensation to members of the Board who are not also employees or officers of the Company or certain of its affiliates and, as such, is not an “employee benefit plan” within the meaning of the Employee Retirement Income Security Act of 1974, as amended from time to time (“ ERISA ”). The Plan is also intended to comply with Section 409A of the Internal Revenue Code of 1986, as amended (the “ Code ”).

ARTICLE I

DEFINITIONS

Capitalized terms used in this Plan shall have the meanings specified below.

1.1 “ Annual Deferral Amount ” means the portion of a Participant’s Director Payments that a Participant elects to be deferred.

1.2 “ Annual Equity Award ” means the component of an Eligible Director’s annual compensation package that consists of an equity award granted pursuant to the Equity Plan.

1.3 “ Cash Compensation ” means any cash compensation earned by an Eligible Director in respect of such Eligible Director’s services as a member of the Board, including, but not limited to, retainers (whether annual, semi-annual or otherwise), board meeting fees, committee meeting fees and committee chairman fees.

1.4 “ Change in Control ” has the meaning ascribed to such term in the Equity Plan, but only if such transaction is also a change in the ownership or effective control of a corporation or a change in the ownership of a substantial portion of the assets of a corporation within the meaning of U.S. Treas. Regs. Section 1.409A-3(i)(5).

1.5 “ Committee ” means the Board or any subcommittee of its members that has been appointed by the Board, which subcommittee may be the Compensation Committee.

1.6 “ Compensation Committee ” means the Compensation Committee of the Board.

1.7 “ Deferral Election Form ” means the election form attached hereto as Annex A or any election form approved by the Board.

1.8 “ Deferred Stock Units ” means the right to receive one share of Common Stock, credited to a Participant’s Account in connection with an Annual Deferral Amount under the Plan.

1.9 “ Director ” means a member of the Board.

1.10 “ Director Payments ” means, with respect to any Eligible Director, such Eligible Director’s Cash Compensation and Annual Equity Award.

1.11 “ Eligible Director ” means a Director who is not an employee or officer of the Company, TMM Holdings II Limited Partnership, TMM Holdings Limited Partnership, Taylor Morrison Holdings, Inc. or any of its subsidiaries during any years of service covered by the election made on the Deferral Election Form.

1.12 “ Fair Market Value ” has the meaning ascribed to such term in the Equity Plan.

1.13 “ Grant Date ” means the date of grant of an Annual Equity Award.

1.14 “ Participant ” means any Eligible Director who becomes a Participant in this Plan in accordance with Article II.

1.15 “ Plan Year ” means each calendar year.

ARTICLE II

ELIGIBILITY FOR PARTICIPATION

2.1 Eligibility of Directors. Each Eligible Director is eligible to participate in the Plan.

2.2 Participation . An Eligible Director shall automatically become a Participant by electing to make a deferral of Director Payments in accordance with Article III.

ARTICLE III

ELECTIONS

3.1 Elections to Defer Director Payments . Elections to defer Director Payments must be made in writing, pursuant to a Deferral Election Form, and otherwise comply with this Article III.

(a) Timing of Election

(1) Cash Compensation Component . A Participant may elect to defer any Cash Compensation on or prior to December 31 of the Plan Year that is prior to the Plan Year during which the services that give rise to the right to receive the Cash Compensation are rendered (such date, the “ Cash Election Date ”).

(2) Annual Equity Award Component . For any Annual Equity Award with a vesting schedule that requires the Eligible Director to remain as a member of the Board for not less than 12 months after the Grant Date in order to vest in such award, a Participant may elect to defer such Annual Equity Award at any time prior to the Grant Date (the “ Long-Vest Equity Election Date ”). For any other Annual Equity Award, a Participant may elect to defer such Annual Equity Award on or prior to December 31 of the Plan Year that is prior to the Plan Year in which the Grant Date occurs (the “ Short-Vest Equity Election Date ”).

(3) Special Rule . Notwithstanding the provisions of Section 3.1(a)(1) or (2), a Participant who has not previously been eligible to participate in another elective deferred compensation plan that would be treated as the same type of plan as the Plan for purposes of Section 409A may make an initial deferral election under the Plan in accordance with Section 3.1(a)(1) and/or (2), as applicable, within 30 calendar days after first becoming eligible to participate under the Plan; provided, that, in such event, such deferral elections shall apply only to Director Payments that are due for services rendered after the date of such election.

(b) Amount Eligible for Deferral . An Eligible Director may elect to defer up to 100% of such Eligible Director’s Director Payments; provided, that, if an election will apply to an Annual Equity Award, such election must apply to the full Annual Equity Award. The Committee may change the amount that may be deferred in respect of any Plan Year at any time, or from time to time.

(c) Timing of Distributions . The timing of distributions of the Annual Deferral Amount shall be the earlier of (i) a Change in Control and (ii) the date that is 30 days after the Participant’s separation from membership on the Board (as long as such separation is also a “separation from service” within the meaning of Section 409A of the Code and the regulations promulgated thereunder) or, if the Participant is a “specified employee” within the meaning of Section 409A at the time of separation, then on the date that is six months following such date of separation (or a later date required under Section 409A of the Code) (such events described in (i) and (ii) the “ Default Distribution Events ”); provided, that each Participant may elect to designate a date of distribution

other than the Default Distribution Events which, if such date occurs before the Default Distribution Events shall be the distribution date and such date may be (x) with respect to an Annual Equity Award, no earlier than September 1 of the calendar year following the year in which the Annual Equity Award vests; provided, however, that if an Annual Equity Award vests following September 1 in a calendar year, then the distribution date with respect to such Annual Equity Award can be no earlier than the one-year anniversary of the vesting date applicable to such Annual Equity Award, or (y) with respect to Cash Compensation, September 1 of the calendar year that is more than one year after the Plan Year with respect to which the Cash Compensation was earned. Any such election by a Participant shall be set forth in the Deferral Election Form.

3.2 Application and Revocability of Election . Except as permitted by this Section 3.2, elections shall become irrevocable as of the Cash Election Date, the Long-Vest Election Date or the Short-Vest Election Date, as applicable. An election as to time and form of payment made with respect to any Director Payments in a Plan Year shall remain in effect with respect to all such Director Payments in future Plan Years unless and until a new written Deferral Election Form is submitted. Any such new Deferral Election Form shall only be applicable with respect Cash Compensation and Annual Equity Awards with respect to which the Cash Election Date or the Long-Vest Election Date or Short-Vest Election Date have not already passed.

3.3 Subsequent Changes in Time of Distributions . A Participant may delay the timing of a previously-scheduled distribution only if such Participant submits a written subsequent deferral election meeting all of the following requirements: (i) the subsequent deferral election shall not take effect until at least 12 months after the date on which it is made; (ii) the election must be made at least 12 months prior to the date the distribution is scheduled to be made; and (iii) the subsequent deferral election must delay the distribution for at least five years from the date the distribution would otherwise have been made.

ARTICLE IV

DEFERRAL ACCOUNTS

4.1 Accounts . An account shall be established and maintained for each Participant under the Plan. The account shall be sub-allocated as a recordkeeping matter and for accounting convenience to identify years of participation (“ Annual Subaccounts ”). No actual amounts credited to any account or subaccount shall be required to be segregated. It is intended that the amount credited to each Annual Subaccount shall be considered a separate amount of nonqualified deferred compensation under Section 409A of the Code, even if the deferral occurred pursuant to a single Deferral Election Form that remained in effect as contemplated hereunder for several Plan Years. Accounts may also be sub-allocated to reflect deferrals of Cash Compensation or Annual Equity Awards, and any earnings, distributions or dividends in respect of such account.

4.2 Crediting of Accounts . The portion of a Participant’s Annual Deferral Amount that consists of Annual Equity Awards shall be credited to the

Participant’s account on the Grant Date in the form of a number of Deferred Stock Units equal to the number of shares of Common Stock that are subject to the Annual Equity Award, subject to adjustment as described in the Equity Plan. The portion of a Participant’s Annual Deferral Amount that consists of Cash Compensation shall be credited to the Participant’s account on the date on which such Cash Compensation would otherwise have been paid to the Participant, in the form of a number of Deferred Stock Units equal to the quotient of the amount of such Cash Compensation, divided by the Fair Market Value of one share of Common Stock on the date credited. If the result of the quotient contemplated by the preceding sentence would be a fractional amount, then such fractional amount shall be credited in the form of a fraction and aggregated with any other fractional Deferred Stock Units on the date of distribution. If any fractional Deferred Stock Units remain in an account on the date of distribution, such fractional Deferred Stock Units shall be settled in the form of cash. The Deferred Stock Units so credited shall be granted under and subject to the terms of the Equity Plan and pursuant to a Deferred Stock Unit Agreement substantially in the form of Annex B . The Deferred Stock Units shall be subject to adjustment, and shall be eligible to receive dividend equivalents as contemplated by the Equity Plan.

ARTICLE V

VESTING

Those Deferred Stock Units, and earnings or dividend equivalents thereon, that are credited to a Participant’s account in respect of the portion of a Participant’s Annual Deferral Amount (i) that was attributable to Cash Compensation, shall at all times be 100% vested or (ii) that was attributable to Annual Equity Awards, shall vest or be forfeited on the same terms and conditions as would have applied to the Annual Equity Award.

ARTICLE VI

DISTRIBUTIONS

Distributions in respect of Deferred Stock Units credited to accounts shall be made on the earliest of (i) a Change in Control, (ii) the date that is 30 days after the Participant’s separation from membership on the Board (as long as such separation is also a “separation from service” within the meaning of Section 409A of the Code and the regulations promulgated thereunder) or, if the Participant is a “specified employee” within the meaning of Section 409A at the time of separation, then on the date that is six months following such date of separation (or a later date required under Section 409A of the Code) and (iii) the date elected by a Participant in a Deferral Election Form duly submitted under the Plan. Distributions shall be made in the form of shares of Common Stock, on a one-for-one basis, and any fractional shares after accumulation as described in Article IV, shall be settled in cash, where such cash amount is determined based upon the Fair Market Value of one share of Common Stock on the applicable distribution date. If any distribution date contemplated by this Article VI is not a business day, then the distribution date, and valuation date for purposes of determining Fair Market Value, shall be the immediately subsequent business day.

ARTICLE VII

ADMINISTRATION

The Plan shall be administered by the Board, which may delegate its duties and powers in whole or in part as it deems appropriate. The Board is authorized to interpret the Plan, to establish, amend and rescind any rules and regulations relating to the Plan, and to make any other determinations that it deems necessary or desirable for the administration of the Plan, and may delegate such authority, as it deems appropriate. The Board may correct any defect or supply any omission or reconcile any inconsistency in the Plan in the manner and to the extent the Board deems necessary or desirable. Any decision of the Board in the interpretation and administration of the Plan, as described herein, shall lie within its sole and absolute discretion and shall be final, conclusive and binding on all parties concerned (including, but not limited to, Participants and their beneficiaries or successors).

ARTICLE VIII

MISCELLANEOUS

8.1 Unsecured General Creditor . Participants and their beneficiaries, heirs, successors, and assigns shall have no legal or equitable rights, claims, or interest in any specific property or assets of the Company. No assets of the Company shall be held in any way as collateral security for the fulfilling of the obligations of the Company under this Plan. Any and all of the Company’s assets shall be, and remain, the general unpledged, unrestricted assets of the Company. The Company’s obligation under the Plan shall be merely that of an unfunded and unsecured promise of the Company to pay money in the future, and the rights of the Participants and their beneficiaries, heirs, successors, and assigns shall be no greater than those of unsecured general creditors. It is the intention of the Company that this Plan be unfunded for purposes of the Code and for purposes of Title I of ERISA.

8.2 Restriction Against Assignment . The Company shall pay all amounts payable hereunder only to the person or persons designated by the Plan and not to any other person or corporation. No part of a Participant’s Accounts shall be liable for the debts, contracts, or engagements of any Participant, his or her beneficiary, or successors in interest, nor shall a Participant’s Accounts be subject to execution by levy, attachment, or garnishment or by any other legal or equitable proceeding, nor shall any such person have any right to alienate, anticipate, sell, transfer, commute, pledge, encumber, or assign any benefits or payments hereunder in any manner whatsoever.

8.3 Withholding . The Company or its subsidiaries shall have the right to reduce any payment (or compensation) by the amount of any required tax withholding due in respect of such compensation.

8.4 Adjustments Upon Certain Events . Deferred Stock Units credited to accounts under the Plan shall be subject to adjustment as Other Stock-Based Awards under the Equity Plan.

8.5 Amendment, Modification, Suspension or Termination . The Committee may amend, modify, suspend or terminate the Plan or any portion thereof at any time; provided, that except as provided for herein, that any such amendment, modification, suspension or termination that would materially and adversely affect the rights of any Participant shall not to that extent be effective without the consent of the affected Participant.

8.6 Governing Law . Except to extent preempted by Federal law, this Plan shall be governed by and construed in accordance with the laws of the State of Delaware applicable to contracts made and performed wholly within the State of Delaware without giving effect to the conflict of laws provisions thereof that would cause the laws of another jurisdiction to apply.

8.7 Receipt or Release . Any payment to a Participant or the Participant’s beneficiary in accordance with the provisions of the Plan shall, to the extent thereof, be in full satisfaction of all claims against the Committee and the Company and its affiliates. The Committee may require such Participant or beneficiary, as a condition precedent to such payment, to execute a receipt and release to such effect.

8.8 Limitation of Rights and Service Relationship; No Uniformity of Treatment . Neither the establishment of the Plan nor any modification thereof, nor the creating of any fund or account, nor the payment of any benefits shall be construed as giving to any Participant, or beneficiary or other person any legal or equitable right against the Company or its subsidiaries except as provided in the Plan; and in no event shall the terms of service relationship of any Participant be modified or in any way be affected by the provisions of the Plan. There is no obligation for uniformity of treatment of Participants or holders of Accounts. The terms and conditions of the Plan and the Board’s determinations and interpretations with respect thereto need not be the same with respect to each Participant (whether or not such Participants are similarly situated).

8.9 Headings . Headings and subheadings in this Plan are inserted for convenience of reference only and are not to be considered in the construction of the provisions hereof.

8.10 Section 409A . It is intended that the Plan comply with Section 409A of the Code so as to prevent the inclusion in gross income of any Deferred Stock Units credited to an account in a taxable year that is prior to the taxable year or years in which such amounts are otherwise actually distributed or made available to a Participant. All provisions of the Plan shall be construed and interpreted in a manner consistent with the requirements for avoiding taxes or penalties under Section 409A of the Code. If the Committee determines that any amounts payable hereunder may be taxable to a Participant under Section 409A, the Company may (i) adopt such amendments to the Plan and appropriate policies and procedures, including amendments and policies with retroactive effect, that the Committee determines necessary or appropriate to preserve the intended tax treatment of the benefits provided by the Plan and/or (ii) take such other actions as the Committee determines necessary or appropriate to avoid or limit the imposition of an additional tax under Section 409A; provided, that neither the Company

nor any of its subsidiaries nor any other person or entity shall have any liability to a Participant or beneficiary with respect to the tax imposed by Section 409A.

* * * *

Annex A

Deferral Election Form

[omitted]

Annex B

Form of Deferred Stock Units Agreement

[omitted]

Exhibit 10.5

FORM

TAYLOR MORRISON HOME CORPORATION

2013 OMNIBUS EQUITY AWARD PLAN

DEFERRED STOCK UNITS AGREEMENT RELATING TO ELECTIVE CASH

DEFERRALS AND ANNUAL EQUITY AWARD DEFERRALS BY NON-EMPLOYEE

DIRECTORS

THIS DEFERRED STOCK UNIT AWARD AGREEMENT (this “ Agreement ”), dated as of [ , 20 ], is made by and between Taylor Morrison Home Corporation, a Delaware corporation (the “ Company ”), and [Name] (“ Participant ”).

WHEREAS, the Board believes that giving non-employee members of the Board the opportunity to defer receipt of compensation for their services to the Company in the form of deferred stock units will promote its ability to attract and retain talented individuals as members of the Board; and

WHEREAS, in this regard, the Board has adopted the Taylor Morrison Home Corporation Non-Employee Director Deferred Compensation Plan (the “ Director Plan ”); and

WHEREAS, the Company has adopted the Taylor Morrison Home Corporation 2013 Omnibus Equity Award Plan (the “ Equity Plan ”), the terms of which are hereby incorporated by reference and made a part of this Agreement; and

WHEREAS, pursuant to Section 4(b) of the Equity Plan, the Committee that administers the Equity Plan (i) has the authority to grant Other-Stock Based Awards, which are Awards valued by reference to shares of Common Stock and that may be in the form, and dependent on such terms and conditions, as the Committee may determine, and (ii) has determined to grant deferred stock units as described in this Agreement pursuant to such authority; and

WHEREAS, pursuant to the Director Plan, Participant has provided the Committee with a Deferral Election Form pursuant to which Participant has elected to defer a portion of Cash Compensation and/or defer the settlement of Participant’s Annual Equity Award in exchange for receiving deferred stock units under the Equity Plan.

NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth, the parties agree as follows:

1. Definitions . Whenever the following terms are used in this Agreement, they shall have the meanings set forth in the Director Plan. All other capitalized terms not otherwise defined herein shall have the same meanings as in the Equity Plan.

(a) “ Annual Deferral Amount ”.

(b) “ Annual Equity Award ”.

(d) “ Deferral Election Form ”.

(e) “ Deferred Stock Unit ”, also referred to herein as a “ DSU ”.

2. Grant of Deferred Stock Units . The Company hereby grants to Participant, upon and subject to the terms and conditions set forth below, the number of DSUs set forth on the Notice attached hereto (the “ DSU Award ”). Each DSU represents the unfunded, unsecured right of Participant to receive one share of Class A common stock of the Company (a “ Share ”) on the date(s) specified herein. DSUs do not constitute issued and outstanding Shares for any corporate purposes and do not confer on Participant any right to vote on matters that are submitted to a vote of holders of Shares.

3. Dividend Equivalents; No Voting Rights . Each outstanding DSU shall be credited with dividend equivalents with respect to any extraordinary dividends, if so determined by the Committee, declared and paid to other shareholders of the Company in respect of one Share. Dividend equivalents shall not bear interest. On the Settlement Date, such dividend equivalents, if any, in respect of each vested DSU shall be settled by delivery to Participant of a number of Shares equal to the quotient obtained by dividing (i) the aggregate accumulated value of such dividend equivalents by (ii) the Fair Market Value of a Share on the applicable Settlement Date (as defined below), rounded down to the nearest whole share, less any applicable withholding taxes. No dividend equivalents shall be accrued for the benefit of Participant with respect to record dates occurring prior to the Date of Grant, or with respect to record dates occurring on or after the date, if any, on which Participant has forfeited the DSUs. Participant shall have no voting rights with respect to the DSUs or any dividend equivalents.

4. Vesting; Forfeiture; and Delivery of Securities .

(a) Vesting .

(i) Annual Equity Award DSUs . Except as may otherwise be provided herein, subject to Participant’s continued Employment with the Company or an Affiliate through the applicable vesting date, the DSUs related to Participant’s deferred Annual Equity Award shall become vested with respect to one-hundred percent (100%) of such DSUs on the first anniversary of the Date of Grant. Notwithstanding the foregoing, the Committee shall have the authority to remove the restrictions on the DSUs whenever it may determine that, by reason of changes in applicable laws or other changes in circumstances arising after the Date of Grant, such action is appropriate.

(ii) Cash Compensation DSUs . The DSUs related to Participant’s deferred Cash Compensation, will be 100% vested as of the applicable Date of Grant, including any DSUs received pursuant to Section 3.

(b) Termination of Employment; Forfeiture . If Participant’s Employment with the Company or any Affiliate, as applicable, terminates for any reason, then the unvested portion of the DSUs shall be cancelled immediately and Participant shall immediately forfeit any rights to the DSUs subject to such unvested portion.

(c) Settlement . Subject to the terms and provisions of the Equity Plan, the Director Plan and this Agreement, except as provided below, the Company shall issue or transfer to Participant, on the date specified in such Participant’s Deferral Election Form and as set forth on the Notice attached hereto (the “ Settlement Date ”) in respect of the DSU Award, the number of Shares as set forth in Notice attached hereto and the dividend equivalents, if any, covered by that portion of the DSU Award.

(d) DSUs Extinguished . Upon the issuance or transfer of Shares in accordance with this Agreement, the DSUs shall be extinguished and such DSUs will not be considered to be held by Participant for any purpose.

5. No Rights as Shareholder . Participant shall not be deemed for any purpose to be the owner of any Shares subject to the DSUs until such Shares, if any, are delivered to Participant in accordance with Section 4 hereof. The Company shall not be required to set aside any fund for the payment of the DSUs.

6. Compliance with Legal Requirements .

(a) Generally . The granting and settlement of the DSUs, and any other obligations of the Company under this Agreement, shall be subject to all applicable federal, provincial, state, local and foreign laws, rules and regulations and to such approvals by any regulatory or governmental agency as may be required. The Committee shall have the right to impose such restrictions or delay the settlement of the DSUs as it deems necessary or advisable under applicable income tax laws, federal securities laws, the rules and regulations of any stock exchange or market upon which the Shares are then listed or traded, and/or any blue sky or state securities laws applicable to the Shares; provided that any settlement shall be delayed only until the earliest date on which settlement would not be so prohibited. Participant agrees to take all steps the Committee or the Company determines are necessary to comply with all applicable provisions of federal and state securities law in exercising his or her rights under this Agreement.

(b) Tax Withholding . All distributions under the Equity Plan are subject to withholding of all applicable federal, state, local and foreign taxes, and the Committee may condition the settlement of the DSUs on satisfaction of the applicable withholding obligations. The Company shall have the power and the right to deduct or withhold from all amounts payable to Participant in connection with the DSUs or otherwise, or require Participant to remit to the Company, an amount sufficient to satisfy the minimum statutory withholding liability required by law. Further, the Company may permit or require Participant to satisfy, in whole or in part, such tax obligations by withholding Shares or other property deliverable to Participant in connection with the settlement of DSUs or from any compensation or other amounts owing to Participant the amount (in cash, Shares or other property) of any required tax withholding upon the settlement of the DSUs.

7. Clawback . In the event of an accounting restatement due to material noncompliance by the Company with any financial reporting requirement under the securities laws or as a result of any mistake in calculations or other administrative error, in each case, which reduces the amount payable in respect of the DSUs that would have been earned had the financial results been properly reported (as determined by the Committee) (i) the DSUs will be cancelled and (ii) Participant will forfeit (A) the Shares (or cash) received or payable on the settlement of the DSUs and (B) the amount of the proceeds of the sale, gain or other value realized on the settlement of the DSUs (and Participant may be required to return or pay such Shares or amount to the Company). Notwithstanding anything to the contrary contained herein, if Participant, without the consent of the Company, while employed by or providing services to the Company or any Affiliate or after termination of such Employment, violates a non-competition, non-solicitation, non-disparagement or non-disclosure covenant or agreement, or otherwise has engaged in or engages in activity that constitutes Cause under the Equity Plan or is in conflict with or adverse to the interest of the Company or any Affiliate as determined by the Committee in its sole discretion, then (i) any outstanding, vested or unvested, earned or unearned portion of the DSUs, may at the Committee’s discretion, be canceled without payment therefor and (ii) the

Committee, in its discretion, may require Participant or other person to whom any payment has been made or Shares or other property have been transferred in connection with the settlement of the DSUs to forfeit and pay over to the Company, on demand, all or any portion of the compensation, gain or other value (whether or not taxable) realized upon on the settlement of such DSUs, or the subsequent sale of acquired Shares (if any). To the extent required by applicable law (including without limitation Section 304 of the Sarbanes-Oxley Act and Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act) and/or the rules and regulations of New York Stock Exchange or other securities exchange or inter-dealer quotation system on which the Shares are listed or quoted, or if so required pursuant to a written policy adopted by the Company, which may be amended from time to time, the DSUs (or the Shares acquired upon settlement of the DSUs (if any)) shall be subject (including on a retroactive basis) to clawback, forfeiture or similar requirements (and such requirements shall be deemed incorporated by reference into this Agreement).

8. Miscellaneous .

(a) Transferability . The DSUs may not be assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered by a Participant other than by will or by the laws of descent and distribution, pursuant to a qualified domestic relations order or as otherwise permitted under Section 15(b) of the Equity Plan.

(b) Waiver . Any right of the Company contained in this Agreement may be waived in writing by the Committee. No waiver of any right hereunder by any party shall operate as a waiver of any other right, or as a waiver of the same right with respect to any subsequent occasion for its exercise, or as a waiver of any right to damages. No waiver by any party of any breach of this Agreement shall be held to constitute a waiver of any other breach or a waiver of the continuation of the same breach.

(c) Section 409A . The DSUs are intended to comply with Section 409A of the Code so as to prevent the inclusion in gross income of any DSUs credited to an account in a taxable year that is prior to the taxable year or years in which such amounts are otherwise actually distributed or made available to Participant. All provisions of this Agreement and the Director Plan shall be construed and interpreted in a manner consistent with the requirements for avoiding taxes or penalties under Section 409A of the Code. If the Committee determines that any amounts payable hereunder may be taxable to a Participant under Section 409A, the Company may (i) adopt such amendments to this Agreement and the Director Plan and appropriate policies and procedures, including amendments and policies with retroactive effect, that the Committee determines necessary or appropriate to preserve the intended tax treatment of the benefits provided by this Agreement and the Director Plan and/or (ii) take such other actions as the Committee determines necessary or appropriate to avoid or limit the imposition of an additional tax under Section 409A; provided, that neither the Company nor any of its subsidiaries nor any other person or entity shall have any liability to a Participant or beneficiary with respect to the tax imposed by Section 409A.

(d) Notices . Any written notices provided for in this Agreement, the Director Plan, or the Equity Plan shall be in writing and shall be deemed sufficiently given if either hand delivered or if sent by fax, pdf/email or overnight courier, or by postage paid first class mail. Notices sent by mail shall be deemed received three business days after mailing but in no event later than the date of actual receipt. Notices shall be directed, if to Participant, at Participant’s address indicated by the Company’s records, or if to the Company, to the attention of the General Counsel at the Company’s principal business office.

(e) Severability . The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, and each other provision of this Agreement shall be severable and enforceable to the extent permitted by law.

(f) No Rights to Employment . Nothing contained in this Agreement shall be construed as giving Participant any right to be retained, in any position with the Company or its Affiliates or shall interfere with or restrict in any way the right of the Company or its Affiliates, which are hereby expressly reserved, to remove, terminate or discharge Participant at any time for any reason whatsoever.

(g) Beneficiary . Participant may file with the Committee a written designation of a beneficiary on such form as may be prescribed by the Committee and may, from time to time, amend or revoke such designation. Any notice should be made to the attention of the General Counsel of the Company at the Company’s principal business office. If no designated beneficiary survives Participant, Participant’s estate shall be deemed to be Participant’s beneficiary.

(h) Bound by the Equity Plan, the Director Plan and Acceptance of Agreement . By signing this Agreement, Participant acknowledges that Participant has received a copy of the Equity Plan and the Director Plan and has had an opportunity to review the Equity Plan and the Director Plan and agrees to be bound by all the terms and provisions of the Equity Plan and the Director Plan. By accepting this Agreement, Participant consents to the electronic delivery of prospectuses, annual reports and other information required to be delivered by Securities and Exchange Commission rules (which consent may be revoked in writing by Participant at any time upon three business days’ notice to the Company, in which case subsequent prospectuses, annual reports and other information will be delivered in hard copy to Participant).

(i) Successors . The terms of this Agreement shall be binding upon and inure to the benefit of the Company and its successors and assigns, and of Participant and the beneficiaries, executors, administrators, heirs and successors of Participant.

(j) Entire Agreement . This Agreement, the Director Plan and the Equity Plan contain the entire agreement and understanding of the parties hereto with respect to the subject matter contained herein and supersede all prior communications, representations and negotiations in respect thereto. No change, modification or waiver of any provision of this Agreement shall be valid unless the same be in writing and signed by the parties hereto, except for any changes permitted without consent under Section 12 of the Equity Plan.

(k) Governing Law; JURY TRIAL WAIVER . To the extent not otherwise governed by the Code or the laws of the United States, this Agreement shall be governed, construed and interpreted in accordance with the laws of the State of Delaware without regard to principles of conflicts of law thereof, or principles of conflicts of laws of any other jurisdiction which could cause the application of the laws of any jurisdiction other than the laws of the United States, as applicable. THE PARTIES EXPRESSLY AND KNOWINGLY WAIVE ANY RIGHT TO A JURY TRIAL IN THE EVENT ANY ACTION ARISING UNDER OR IN CONNECTION WITH THIS AGREEMENT IS LITIGATED OR HEARD IN ANY COURT.

(l) Headings . The headings of the Sections hereof are provided for convenience only and are not to serve as a basis for interpretation or construction, and shall not constitute a part, of this Agreement.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

IN WITNESS WHEREOF, the Company and Participant have executed this Agreement as set forth below.


TAYLOR MORRISON HOME CORPORATION

By:
Name:		Sheryl D. Palmer
Title:		Chief Executive Officer

Date:

Agreed to and Accepted by:

[Name]



Date:

[Signature Page to Deferred Stock Unit Award Agreement]

EXHIBIT 31.1

CEO CERTIFICATION

PURSUANT TO SECTION 302 OF THE

SARBANES – OXLEY ACT OF 2002

I, Sheryl D. Palmer, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Taylor Morrison Home Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s Board of Directors (or persons performing the equivalent functions):

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 7, 2015


By:		/s/ Sheryl D. Palmer
		Sheryl D. Palmer
		President and Chief Executive Officer
		Taylor Morrison Home Corporation

EXHIBIT 31.2

CFO CERTIFICATION

PURSUANT TO SECTION 302 OF THE

SARBANES – OXLEY ACT OF 2002

I, C. David Cone, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Taylor Morrison Home Corporation;

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 7, 2015


By:		/s/ C. David Cone
		C. David Cone
		Vice President and Chief Financial Officer Taylor Morrison Home Corporation

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Taylor Morrison Home Corporation (the “Company”) on Form 10-Q for the period ending March 31, 2015 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Sheryl D. Palmer, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(1)

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.


May 7, 2015				/s/ Sheryl D. Palmer
				Sheryl D. Palmer
				President and Chief Executive Officer
				Taylor Morrison Home Corporation

EXHIBIT 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Taylor Morrison Home Corporation (the “Company”) on Form 10-Q for the period ending March 31, 2015 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, C. David Cone, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(1)

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.


May 7, 2015				/s/ C. David Cone
				C. David Cone
				Vice President and Chief Financial Officer
				Taylor Morrison Home Corporation