10-K

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

(Mark One)
ý	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2005
OR
o	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 0-6201

BRESLER & REINER, INC.
(Exact Name of Registrant as Specified in Its Charter)

Delaware (State or Other Jurisdiction of Incorporation or Organization)	52-0903424 (I.R.S. Employer Identification Number)
11200 Rockville Pike, Suite 502 Rockville, Maryland (Address of Principal Executive Offices)	20852 (Zip Code)

Registrant's telephone number, including area code: (301) 945-4300

Securities registered pursuant to Section 12(b) of the Act: Common Stock, $0.01 par value

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o    No ý

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o    No ý

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 ý    No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ý

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act.

Large accelerated filer o        Accelerated filer o        Non-accelerated filer ý

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

The aggregate market value of the voting stock held by non-affiliates (1,265,232 shares) was $39,222,192 as of June 30, 2005. The aggregate market value was computed by reference to the last sale of the Common Stock of the Registrant at $31.00 per share. For purposes of this computation, directors, officers and holders of 5% or more of the Registrant's Common Stock are considered affiliates of the Registrant at that date.

The number of shares of the registrant's Common Stock outstanding as of March 24, 2006 was 5,477,212.

DOCUMENTS INCORPORATED BY REFERENCE

Part III of this Report incorporates by reference information from the definitive Proxy Statement for the registrant's 2006 Annual Meeting of Stockholders to be held on June 14, 2006.

BRESLER & REINER, INC.

ANNUAL REPORT ON
FORM 10-K

For the Fiscal Year Ended December 31, 2005

TABLE OF CONTENTS

			Page
PART I
	Item 1	Business	1
	Item 1A	Risk Factors	5
	Item 1B	Unresolved Staff Comments	9
	Item 2	Properties	10
	Item 3	Legal Proceedings	13
	Item 4	Submission of Matters to a Vote of Security Holders	13
PART II
	Item 5	Market for Registrant's Common Equity and Related Stockholder Matters	15
	Item 6	Selected Financial and Operating Data	15
	Item 7	Management's Discussion and Analysis of Financial Condition and Results of Operations	16
	Item 7A	Quantitative and Qualitative Disclosures About Market Risk	26
	Item 8	Financial Statements and Supplementary Data	27
	Item 9	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	27
	Item 9A	Controls and Procedures	27
	Item 9B	Other Information	28
PART III
	Item 10	Directors and Executive Officers of the Registrant	29
	Item 11	Executive Compensation	29
	Item 12	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	29
	Item 13	Certain Relationships and Related Transactions	29
	Item 14	Principal Accountant Fees and Services	29
PART IV
	Item 15	Exhibits and Financial Statement Schedules	29
		Signatures	32

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This report, together with other statements and information publicly disseminated by the Company, contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and includes this statement for purposes of complying with these safe harbor provisions. Forward-looking statements, which are based on certain assumptions and describe the Company's future plans, strategies and expectations, are generally identifiable by use of the words "believe," "expect," "intend," "anticipate," "estimate," "project" or similar expressions. You should not rely on forward-looking statements since they involve known and unknown risks, uncertainties and other factors that are, in some cases, beyond the Company's control and which could materially affect actual results, performances or achievements. Factors that may cause actual results to differ materially from current expectations include, but are not limited to the risk factors discussed in this Annual Report on Form 10-K. Accordingly, there is no assurance that the Company's expectations will be realized. Except as otherwise required by the federal securities laws, the Company disclaims any obligations or undertaking to publicly release any updates or revisions to any forward-looking statement contained herein (or elsewhere) to reflect any change in the Company's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

The "Company" means Bresler & Reiner, Inc., a Delaware corporation, and one or more of its subsidiaries and affiliates, and, as the context may require, Bresler & Reiner, Inc. only.

ITEM 1. BUSINESS

Our Company

Bresler & Reiner, Inc. is a Delaware corporation engaged in the ownership of commercial, residential, and hospitality properties; and in the development of commercial and residential buildings and land for over 35 years. We conduct our business activities through both direct ownership and through joint ventures with third parties.

We engage in real estate activities in the Philadelphia, Pennsylvania; Washington, D.C.; Wilmington, Delaware; Baltimore, Maryland; Maryland Eastern Shore; and Orlando, Florida, metropolitan areas. As of January 2006, we also own properties in the Houston, Texas metropolitan market. We are not involved in any operations outside of the United States of America.

Our Strategy

Our goal is to generate attractive risk-adjusted investment returns through ownership of operating properties and participation in development projects.

Operating Properties

To achieve our goal with regards to operating properties, we employ the following strategy:

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Target Properties that Have Stable Cash Flows and Present Upside Potential.    We seek to acquire well located properties that have stable cash flows and also present upside potential that may result from valued added improvements, enhanced tenant services and strong management. We focus on properties that can benefit from better management and leasing strategies, that can be cost effectively renovated and that are located in areas that can support higher rents at the target property. We view existing vacancies or near-term lease expirations as opportunities to increase rental revenue.



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Use Third Party Property Managers and Leasing Agents.    We use third-party property managers and leasing agents who have a strong presence in the applicable local market. We believe property management is local in nature. We hire property managers and leasing agents who embrace the idea of building a collaborative relationship with us, are highly motivated, offer value-added services and have solid relationships with quality, cost-effective vendors providing janitorial, grounds, snow removal and other necessary services. They are an integral part of a property's success.



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Employ Asset Management and Oversight.    We take a disciplined approach to acquiring, managing and leasing properties, and we rely on local third-party property managers to handle day-to-day operations. We make on-site visits; regularly meet with our local property managers and leasing agents, and identify revenue generation and expense reduction opportunities. We establish internal controls to ensure compliance with our operating,

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accounting and reporting requirements. We test these controls during periodic site visits conducted by our internal audit department. We review and approve each property's long and short-term capital replacement plans, annual operating budgets and evaluate monthly reports from our property managers. Unbudgeted capital expenditures are approved after a thorough review.

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Provide Cost-Effective Onsite Property Maintenance.    A solid preventive maintenance program and timely response to tenant service calls and concerns increases tenant loyalty and lowers tenant turnover costs. By clustering our properties, our local on-site property managers can develop more cost-effective and timely maintenance services.



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Employ Successful Bidding and Due Diligence Techniques.    Our strong local relationships and effective due diligence allows us to make an informed bid based on a thorough evaluation of the property and its potential. We consider such factors as:



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economic and demographic conditions in the property's local and regional market;



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the location, age, construction quality and design of the property;



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the current and projected cash flow of the property in its current condition;



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the potential to increase cash flow through modest to moderate renovation and enhanced tenant service;



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the terms of existing debt on the property and the availability of new financing on favorable terms;



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the potential for capital appreciation of the property;



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the terms of tenant leases, including the relationship between the property's current rents and market rents and the ability to increase rents upon lease rollover;



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the property's current expense structure and the potential to increase operating margins;



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access to experienced local property managers and leasing agents;



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whether we have or can achieve a sufficient concentration of properties in a sub-market to achieve economies of scale and enhanced service levels from local service providers; and



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competition for comparable or alternative properties in the market area.

Development Properties

We employ the following strategy to achieve our goals with respect to development projects:

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Due Diligence Techniques.    We thoroughly evaluate a development project's potential for generating strong risk-adjusted returns by considering such factors as:



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the highest and best use for the project;



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the economic and demographic conditions in the project's local and regional market;



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competition from comparable projects;



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the projected cash flow of the project;



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potential risk-adjusted returns on our investment;



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development risks including cost overruns and delays; and



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interest-rate risk.



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Partner with Local Developers.    We partner with reputable local, regional and national developers who have expert knowledge of their markets and strong relationships with general contractors and service providers. The agreements with our joint venture partners generally provide for a distribution waterfall that provides us with a preferred return on our investment as well as incentives to our partners to maximize returns on the project.

Selling Properties

We acquire operating properties as a long term investment, and we pursue our development properties to complete the development process. However, opportunities sometimes are presented to us to sell a property under appropriate market conditions. In our evaluation of a sale of a property, we consider the opportunity cost of funds and re-deployment opportunities for the sale proceeds. We may decide that the greater returns may be achieved through the

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sale of a property and the reinvestment of the funds in new properties, than from continuing to own and operate the existing property.

Prudent Financing

We maintain a strong liquidity position that allows us to effectively compete for acquisitions where the seller may require the buyer to rapidly close on the purchase of a property. We employ mortgage debt in order to enhance our returns on invested capital. In certain instances we enter into master lease agreements or provide loan guarantees in order to maximize the benefits of leverage. At other times we prepay existing mortgage debt in order to place more favorable debt, or to fix rates. While under Generally Accepted Accounting Principles (GAAP) the cost and other penalties associated with such prepayments adversely affect our earnings in the year in which they occur, we proceed with such prepayments after considering among other things, whether the benefits to be gained over the course of the loan from the new leverage outweigh the costs incurred in the current year on a net present value basis.

Our Competitive Strengths

To employ our strategy we utilize our competitive strengths which include:

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Experienced Management.    Our management team has extensive experience acquiring, financing, developing, repositioning and selling real estate. The co-founders of the Company are active members of the Board.



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Network of Industry Contacts and Collaborative Relationships.    Our management team has developed a broad network of contacts that include property owners, developers, lenders, brokers, property managers and leasing agents.



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Growth Oriented Capital Structure.    Our strong liquidity position provides us with flexibility in structuring transactions and allows us to react quickly to investment opportunities.

Financial Information about Business Segments

We operate in four reportable business segments: Commercial Rental Property, including the rental income derived by commercial properties from leases of office and industrial space; Residential Rental Property, including the rental income derived from residential properties from leases of apartment units; Hospitality Properties, including revenue and income derived from services provided at our hotel properties; and Commercial, Residential and Land Under Development, including the income derived from development and sale of residential and commercial condominium units and developed and undeveloped land. For additional information about these segments see Note 17 of Notes to Consolidated Financial Statements and Managements' Discussion and Analysis of Financial Condition and Results of Operations included in Item 7 of Part II of this report.

Narrative Description of the Business

The following is a brief description of each of our reportable business segments:

Commercial Rental Property

This segment includes the rental income derived by commercial properties from the leasing of office and industrial space and other related revenue sources. Commercial leases generally provide for a fixed monthly rental over terms that range from three to 10 years. At December 31, 2005 we owned, or had an ownership interest in, 39 commercial office and flex warehouse buildings containing approximately 3,149,000 square feet of space. The properties are located in the Philadelphia, Pennsylvania; Washington, D.C.; Wilmington, Delaware; and Baltimore, Maryland metropolitan areas. Since December 31, 2005, we have acquired an additional eight commercial office buildings containing 427,000 square feet of space in the Houston, Texas metropolitan market; acquired three commercial office and warehouse buildings containing 455,000 square feet of space in the Philadelphia, Pennsylvania market; and disposed of three commercial office buildings containing 205,000 square feet of space in the Baltimore, Maryland market. For additional information about these transactions, See Note 18 of Notes to Consolidated Financial Statements.

Also included in this segment is income generated from management and leasing activities associated with our 50% ownership interest in Redwood Commercial Management, LLC (Redwood), a commercial management company. Redwood manages approximately 1,488,000 square feet of commercial office space, approximately 486,000 square feet of which are owned by entities which we control.

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Residential Rental Property

This segment includes the rental income derived by residential properties from the leasing of apartment units and other related revenue sources. Apartment leases generally provide for a fixed monthly rental over a one-year term. At December 31, 2005, we owned, or had an ownership interest in, four residential properties containing a total of 1,022 apartment units. The properties are located in the Washington, D.C. and Orlando, Florida metropolitan areas.

Included in this segment for 2003 and 2004 are fees previously generated from a wholly-owned subsidiary that formerly managed residential properties owned both by us and by affiliated third parties. The management contracts on two residential properties that we managed were terminated during the year ended December 31, 2003, while the one remaining management contract was terminated during the year ended December 31, 2004.

Hospitality Properties

This segment includes revenue and income generated from services provided at our two hotel properties. The properties bear the Doubletree and Holiday Inn Express brands and are both managed by third party managers. The properties are located in Baltimore, Maryland, across from Johns Hopkins University and Camp Springs, Maryland, across from Andrews Air Force base.

Commercial, Residential and Land Development

This segment primarily includes the development and sale of residential condominium and rental apartment units, the development and sale of commercial condominium and rental buildings, the development and sale of land to homebuilders, and sales of undeveloped commercial land. At December 31, 2005, we owned, or had a material ownership interest in, entities involved in 13 development projects. These projects are located in the Washington, D.C., Maryland Eastern Shore and Philadelphia, Pennsylvania metropolitan areas.

Other Information

Competition

We operate in highly competitive marketplaces in virtually all aspects of our real estate activities:

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During the acquisition process we compete against other buyers of real estate; including both public and private real estate investment trusts, real estate development companies, investment firms, investment funds and financial institutions. We compete primarily based on offer prices, the ability to fund the acquisition and close the transaction in a timely manner. This competition may reduce the availability of properties at prices that meet our targeted rates of return on invested capital or may require us to reduce our targeted rates of return.



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We compete for tenants and guests at our operating commercial, residential and hospitality properties primarily based on price, location and amenities offered. An oversupply of real property created by other developers and owners could hinder our ability to maintain high occupancy levels or could require that we reduce rents or offer significant concessions. Such situations could materially and adversely affect our results of operations and cash flows.



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We compete for development projects with other developers of similar projects as well as existing projects. Increased supply of condominium units and developed land could affect the prices at which we can sell these projects, thereby adversely affecting our results of operations and cash flows.

Employees

On December 31, 2005, we had 22 full-time employees, all of whom were located at our corporate offices in Rockville, Maryland, working in such areas as finance, accounting, asset management and internal audit. We believe that our relations with our employees are good. The on-site personnel engaged in the day-to-day operations and the development activities of properties are employees or sub-contactors of the management companies or developers contracted to operate or develop such properties.

Market Concentrations

The commercial properties we owned at December 31, 2005 are concentrated in the Mid-Atlantic region of the country, with properties located in the Philadelphia, Pennsylvania; Wilmington, Delaware; Baltimore, Maryland; and Washington, D.C. metropolitan areas. Our residential apartment properties are located in the Washington, D.C. and Orlando, Florida metropolitan areas. Our hospitality properties are located in the Baltimore, Maryland and Washington, D.C.

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metropolitan areas. Our development projects are located in the Washington, D.C., Maryland Eastern Shore, and Philadelphia, Pennsylvania metropolitan areas. During the first quarter of 2006 we expanded the geographic footprint of our commercial office properties to include the Houston, Texas metropolitan area. No single tenant represents more than 10% of our total revenues.

Seasonality

Our commercial properties are unaffected by seasonality. There are limited seasonal impacts on results at our residential properties due to students moving in/out; however, most residential units are leased on a one-year term. Our hospitality properties are affected to a larger extent by seasonality; however, the impact is minimal to our overall results of operations. Sales of residential condominiums are affected by seasonality with fewer sales in the winter months. Sales of developed land are not affected by seasonality since the sales contracts with the homebuilders incorporate structured take-down of lots on a quarterly basis.

Access to Company Information

We electronically file our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and all exhibits and amendments to these reports, with the Securities and Exchange Commission (the SEC). The public may read and copy any of the reports that are filed with the SEC at the SEC's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an internet site (http://www.sec.gov) that contains reports, proxy and information statements and other information regarding issuers that file electronically.

We make available, free of charge, by responding to requests addressed to our investor relations department, our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and all exhibits and amendments to these reports. These reports are available as soon as reasonably practicable after such material is electronically filed with or furnished to the SEC. These reports can also be accessed on our website (http://www.breslerandreiner.com). Information on our website, however is not part of this report.

ITEM 1A. RISK FACTORS

Risk Factors That May Affect Our Future Business Results

We face a number of material risks and uncertainties in our business, which could materially and adversely affect our business, financial condition and/or results of operations and, as a result, the trading price of our common stock. We believe that the risks and uncertainties described below are the material risks that we face. Any investor in our securities should carefully consider the risks described below.

We are subject to risks associated with investments in real estate.    The value of and our income from our properties may decline due to factors that adversely affect real estate generally and those that are specific to our properties. General factors that may adversely affect our real estate portfolios include:

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increases in interest rates;



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a general tightening of the availability of credit;



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a decline in the economic conditions in one or more of our primary markets;



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an increase in competition for tenants and customers or a decrease in demand by tenants and customers;



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an increase in supply of our property types in our primary markets;



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a continuation of terrorist activities or other acts of violence, war in the United States or abroad or the occurrence of such activities or acts that impact properties in our real estate portfolios or that may impact the general economy; and



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the adoption on the national, state or local level of more restrictive laws and governmental regulations, including more restrictive zoning, land use or environmental regulations and increased real estate taxes.

In addition, there are factors that may adversely affect the value of, and our income from, specific properties, including:

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adverse changes in the perceptions of prospective tenants or purchasers of the attractiveness of the property;



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opposition from local community or political groups with respect to development or construction at a particular site;

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our inability to provide adequate management and maintenance or to obtain adequate insurance;



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our inability to collect rent or other receivables;



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an increase in operating costs;



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introduction of a competitor's property in or in close proximity to one of our current markets; and



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earthquakes, floods or underinsured or uninsured natural disasters.

The occurrence of one or more of the above risks could result in a significant reduction in the net operating income generated by these properties and we could lose some or all of our investments in those properties.

We may not be able to recover increased property maintenance costs through rent increases.    Our properties are subject to increases in operating expenses. Certain commercial tenants are obligated to pay a portion of the escalating operating costs. In addition, certain tenants are subject to rent escalations for cost of living increases. However, we may not be able to increase revenues enough to offset these increased expenses.

Various factors could adversely affect development of new projects or the repositioning of existing projects.    Our development projects are subject to significant risks relating to our ability to complete our projects on time and on budget. Factors that may result in a development project exceeding budget or being prevented from completion include:

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an inability to secure sufficient financing on favorable terms, including an inability to refinance construction loans;



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construction delays or cost overruns, either of which may increase project development costs;



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an increase in commodity costs;



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an inability to obtain zoning, occupancy and other required governmental permits and authorizations;



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an inability to secure tenants or anchors necessary to support the project; and



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failure to achieve or sustain anticipated occupancy or sales levels.

If any of these occur, we may not achieve our projected returns on properties under development and we could lose some or all of our investments in those properties. In the past, we have elected not to proceed with specific development projects, and we anticipate that this may occur again from time to time in the future.

The construction of real estate projects entails unique risks, including risks that the project will fail to conform to building plans, specifications and timetables. These failures could be caused by strikes, weather, government regulations and other conditions beyond our control. In addition, we may become liable for injuries and accidents occurring during the construction process that are not insured.

In the construction of new projects, we may guarantee the lender of the construction loan the lien-free completion of the project. This guaranty is recourse to us and places the risk of construction delays and cost overruns on us. This type of guaranty is released upon completion of the project. Furthermore, we typically guarantee a portion of project indebtedness. We may have to make significant expenditures in the future in order to comply with our guaranty obligations.

We face risks associated with property acquisitions.    We have in the past acquired, and intend in the future to acquire, properties and portfolios of properties, including large portfolios that would increase our size and potentially alter our capital structure. Although we believe that the acquisitions that we have completed in the past and that we expect to undertake in the future have and will enhance our future financial performance, the success of such transactions is subject to a number of factors, including the risk that:

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we may not be able to obtain financing for acquisitions on favorable terms;



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acquired properties may fail to perform as expected;



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the actual costs of repositioning or redeveloping acquired properties may be higher than our estimates; and



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we may not be able to efficiently integrate acquired properties, particularly portfolios of properties, into our organization and to manage new properties in a way that allows us to realize cost savings and synergies.

We may be unable to sell properties at fair value to avoid losses or to reposition our portfolio.    Because real estate investments are relatively illiquid, we may be unable to dispose of underperforming properties and may be unable to reposition our portfolio in response to changes in regional or local real estate markets. As a result, we may incur

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operating losses from some of our properties and may have to write down the value of some properties due to impairment. In addition, we may be forced to sell properties during unfavorable market conditions and therefore not realize their fair market value.

We face significant competition from other real estate developers.    We compete with real estate developers, operators and institutions for tenants and acquisition and development opportunities. Some of these competitors have significantly greater financial resources than we do. Such competition may reduce the number of suitable investment opportunities offered to us, may interfere with our ability to attract and retain tenants and may increase vacancies, which could result in increased supply and lower market rental rates. In addition, some of our competitors may be willing to make space available at lower prices than available space in our properties.

We may be unable to renew expiring leases, lease vacant space or re-lease space on a timely basis or on comparable or better terms.     Leases representing 14% of our annualized base rent (excluding residential rental properties) at December 31, 2005, expire on or before December 31, 2006. In addition, leases accounting for 23% and 12% of the annualized base rent expire on or before December 31, 2007 and December 31, 2008, respectively. Current tenants may not renew their leases upon the expiration of their terms; or we may not be able to locate qualified replacement tenants under acceptable terms.

We cannot assure you that our tenants will not default on their leases and fail to make rental payments to us. Moreover, we may be unable to locate a replacement tenant in a timely manner or on comparable or better terms if a tenant defaults on its lease. The loss of rental revenues from a number of our tenants and our inability to replace such tenants may adversely affect our profitability and our ability to meet our financial obligations.

Increased interest rates would raise our cost of capital and could affect our ability to obtain new mortgage debt or refinance existing mortgage debt.    An increase in interest rates would increase our cost of capital, which may affect our ability to obtain new mortgage debt or to refinance existing mortgage debt and would limit our ability to make future acquisitions. Higher interest rates upon refinancing mortgage debt would decrease cash flow from operations, negatively impacting our earnings and lowering our cash returns as a percentage of our invested equity. In addition, a rise in interest rates could raise the cost of our variable rate debt in excess of increased earnings on our short-term investments; thereby, negatively impacting our earnings. In addition, an increase in interest rates could decrease the amounts that third parties are willing to pay for our assets; thereby, limiting our ability to alter our portfolio promptly in relation to economic or other conditions.

We may have difficulty obtaining financing in weak markets.    Weak real estate markets not only affect the prices for which real estate properties can be purchased or sold, and rental revenues, but also affect the availability of financing. Under such conditions we may have difficulty refinancing existing acquisition and construction financing with long-term financing, which could result in our having to accept less favorable financing terms or use our cash resources to repay indebtedness that otherwise would be refinanced. If principal payments due at maturity cannot be refinanced, extended or repaid with proceeds from other sources, such as the proceeds of sales of assets or new equity securities, cash flow will not be sufficient to repay all maturing debt in years when significant "balloon" payments come due.

Our debt level may impair our ability to pursue our business plan.    As of December 31, 2005, our indebtedness totaled $485,526,000, and we are likely to incur significant additional debt to finance future acquisition and development activities. In addition, in March 2006, we increased our line of credit facility from $32,200,000 to $50,000,000. Our level of debt and the limitations imposed on us by our debt agreements creates risks, including the following:

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our cash flow may be insufficient to make required payments of principal and interest;



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we may be unable to borrow additional funds as needed or on favorable terms;



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we may be unable to refinance some or all of our indebtedness, including mortgage debt, or any refinancing may not be on terms as favorable as those of the existing indebtedness;



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we may be forced to dispose of one or more of our properties, possibly on disadvantageous terms;



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any default in payment of our indebtedness or violation of any covenants in our loan documents could result in acceleration of those obligations and possible loss of property to foreclosure; and



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our default under any one of our mortgage loans with cross default provisions could result in a default on other indebtedness and loss of properties securing the indebtedness.

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If the economic performance of any of our properties declines, our ability to make debt service payments could be adversely affected. If a property is mortgaged to secure payment of indebtedness and we are unable to meet mortgage payments, we may lose that property to lender foreclosure.

We do not have a policy limiting the amount of debt that we may incur. Furthermore, our charter and bylaws do not limit the amount or percentage of indebtedness that we may incur. Accordingly, our management and board of directors have discretion to increase the amount of our outstanding debt at any time without approval by our stockholders. Changes in our debt policies could expose us to greater credit risk, interest rate risk or result in a more leveraged balance sheet. If we become highly leveraged, then the resulting increase in debt service could adversely affect our ability to make payments on our outstanding indebtedness and may harm our financial condition.

Weaker economic conditions in the markets in which our properties are located could adversely affect our financial condition.    Our commercial properties are located primarily in and around Washington, D.C.; Wilmington, Delaware; Philadelphia, Pennsylvania; and Baltimore, Maryland metropolitan areas. As of January 2006 we are also active in the Houston, Texas metropolitan area. Our residential rental properties are principally located in the Central Florida and Washington, D.C. areas. A decline in the economies of one or more of our core real estate markets, or in the U.S. economy as a whole, could adversely affect our financial position, results of operations, cash flow and ability to make distributions to shareholders.

We are investing in properties in real estate markets that are outside our core geographic markets.    We have begun to make, and will continue to make, acquisitions or develop properties outside of our core geographic areas, and may not be able to operate effectively outside of those core markets. We may be exposed to a variety of risks if we choose to enter new markets. These risks include:

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a lack of market knowledge and understanding of the local economies; and



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unfamiliarity with local government and permitting procedures.

Our insurance may not be adequate to cover losses, including those that result from environmental damage or terrorist acts.    We carry comprehensive general liability, property, flood, earthquake and rental loss insurance with respect to our properties within insured limits and policy specifications that we believe are customary for similar properties. There are specific types of losses, generally of a catastrophic nature, such as losses from wars, biological, chemical or radioactive contamination, terrorism or earthquakes, for which we may not have adequate insurance coverage or, in our judgment, for which we cannot obtain insurance at a reasonable cost.

Should an uninsured loss or a loss in excess of insured limits occur, including any loss resulting from floods or other natural disasters, we could lose all or a portion of the capital we have invested in a property, as well as the anticipated future revenue from the property. Any such loss could materially and adversely affect our results of operations, cash flows and financial position. Nevertheless, we might remain obligated for any mortgage debt or other financial obligations related to the property, even if the property is irreparably damaged. We are also subject to additional wind damage underwriting premiums for certain properties. It is also possible that third-party insurance carriers will not be able to maintain reinsurance sufficient to cover any losses that may be incurred.

The costs of compliance with or liabilities under environmental laws may adversely affect our operating results.    Our operating expenses could be higher than anticipated due to the cost of complying with existing or future environmental laws and regulations. As an owner of real property, we can be liable for environmental contamination created by the presence or discharge of hazardous substances on the property, regardless of:

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our lack of knowledge of the contamination;



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the timing of the contamination;



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the cause of the contamination; or



•

the party responsible for the contamination of the property.

There may be environmental problems associated with our properties of which we are unaware.    We could be held liable for the environmental costs associated with the release of regulated substances or related claims, whether by us, our tenants, former owners or tenants of the affected property or others. The presence of hazardous substances on a property could result in personal injury or other claims by private parties; such claims could result in costs or liabilities that could exceed the value of that property.

We are aware of asbestos-containing materials that exist in the Waterfront Complex that will require remediation as part of the property's redevelopment. A $3,000,000 escrow account to address the asbestos removal project at the

8

Waterfront Complex has been established, of which we contributed 54%. This amount is in excess of written estimates of the cost to remediate and clean the site; however, we can not be certain that these amounts will be adequate.

Although our leases generally require our tenants to operate in compliance with all applicable laws and to indemnify us against any environmental liabilities arising from a tenant's activities on the property, we could nonetheless be subject to strict liability by virtue of our ownership interest for environmental liabilities created by our tenants, and we cannot be sure that our tenants would satisfy their indemnification obligations under the applicable lease.

Our properties may contain or develop harmful mold, which could lead to liability for adverse health effects and costs of remediating the problem and which could adversely affect the value of our properties.    Molds exist everywhere and reproduce under most levels of moisture and temperature. Some molds may produce airborne toxins or irritants. Concern about indoor exposure to mold has been increasing because exposure to mold may cause a variety of adverse health effects and symptoms, including allergic or other reactions. As a result, the presence of significant mold could expose us to liability from our tenants, employees of our tenants and others if property damage or health concerns arise.

We are controlled by the Bresler and Reiner families, whose interests may differ from those of other shareholders.    As of March 25, 2006, members of the Bresler and Reiner families, which include members of our current board of directors and executive officers, owned over 70% of our common stock. As a result of their ownership, these family members have the ability to elect our board of directors and to control our management and policies. Generally, they may also determine, without the consent of our other shareholders, the outcome of any corporate transaction or other matters submitted to our shareholders for approval, including mergers, consolidations and the sale of all or substantially all of our assets and prevent or cause a change in control.

We expect to experience significant growth in the future and may not be able to adapt our management and operational systems to integrate additional properties without unanticipated significant disruption or expense.    During the two year period ended December 31, 2005, we acquired 22 commercial office buildings containing 1,900,000 square feet of space for a total purchase price of $244,000,000. We intend to continue to make a significant number of additional acquisitions and cannot assure you that we will be able to adapt our management, administrative, accounting and operational systems to integrate the properties into our portfolio, or that we will be able to manage any future acquisitions of additional properties without operating disruptions or unanticipated costs. In addition, acquisitions will require substantial attention from our management, and may cause disruptions in our operations and divert management's attention away from day-to-day operations. Our failure to successfully integrate additional property acquisitions into our portfolio could have a material adverse effect on our results of operations and financial condition.

If our property managers or leasing agents default on their obligations, operating results from affected properties could suffer and we may have difficulty finding replacements.    We outsource property management and leasing of our properties to local property managers and leasing agents, who perform all day-to-day property management and leasing functions for our properties. Although we oversee our property managers and leasing agents, they may not satisfy their obligations under our agreements. If they fail to do so, our relationships with our tenants could be damaged or we could incur liabilities from loss or injury at a property. In either case our operating results and financial condition could be negatively affected. If a property manager or leasing agent breaches its agreement with us, we will seek to replace them. However, we may not be able to obtain suitable replacements within the relevant market. In addition, as we enter a new market we will seek to engage local third-party property managers, leasing agents and other service providers. However, we may not be able to identify such service providers who meet our standards and who are capable of complying with our property management and leasing guidelines.

Property ownership through joint ventures may limit our ability to act exclusively in our interests.    Several of our properties are owned through joint ventures with third parties. We could become engaged in a dispute with one or more of our joint venture partners that might affect our ability to operate a jointly-owned property. Moreover, our joint venture partners may have business objectives that are inconsistent with ours or may have competing interests that could create conflicts of interest. If the objectives of our joint venture partners are inconsistent with ours, we may not be able to act exclusively in our interests.

Compliance with the Americans with Disabilities Act and fire, safety and other regulations may require us to make unanticipated expenditures that adversely affect our financial condition.    Under the Americans with Disabilities Act of 1990, or the ADA, all public accommodations must meet federal requirements related to access and use by disabled persons. We believe our properties substantially comply with present requirements of the ADA; however, if found non-compliant we would have to incur additional costs to bring the property into compliance.

ITEM 1B. UNRESOLVED STAFF COMMENTS

        None.

9

ITEM 2. PROPERTIES

Commercial Rental Properties

We owned or held an ownership interest in the following commercial office properties at December 31, 2005:

		Location	Date of Acquisition/ Opening	Number of Buildings		Square Feet	Occupancy at 12/31/05		B&R Ownership		Loan Balance at 12/31/05		Purchase Price/ Development Cost (8)
						(in 000s)					(in 000s)		(in 000s)
Consolidated Properties (1)
Washington Business Park		Lanham, MD	2001	9	(2)	568	93.7%		80.0%		$	38,586	$	46,300
Historic Baltimore Portfolio (3)		Baltimore, MD	2004	4		409	77.1%		51.0%	(5)		16,421		29,500
Fort Washington Executive Center		Ft. Washington, PA	2004	3		393	98.8%		97.5%	(6)		47,921		52,664
919 Market Street		Wilmington, DE	2005	1		223	93.8%		100.0%	(7)		35,600		40,525
Versar Center		Springfield, VA	2002	2		217	90.0%		100.0%			17,869		20,000
1105 Market Street		Wilmington, DE	2005	1		173	49.8%	(4)	100.0%	(7)		19,000		20,700
Sudley North (Buildings A,B&C)		Manassas, VA	1987	3		116	91.4%		100.0%			10,275		9,848
West Germantown Pike		Plymouth Meeting, PA	2004	2		115	94.6%		98.1%	(6)		15,852		20,500
One Northbrook		Trevose, PA	2004	1		95	84.8%		100.0%	(7)		14,973		16,900
Wynwood		Chantilly, VA	2005	2		88	100.0%		100.0%			—		13,000
Cross Keys		Doylestown, PA	2005	1		82	97.8%		100.0%	(7)		10,855		17,792
102 Pickering Way		Exton, PA	2005	1		80	97.9%		100.0%	(7)		10,069		15,275
Sudley North (Building D)		Manassas, VA	1987	1		69	100.0%		50.0%			6,183		4,729
900 Northbrook		Trevose, PA	2003	1		66	94.0%		90.0%	(6)		10,937		12,050
Fort Hill		Centreville, VA	2000	1		66	96.0%		80.0%			5,493		7,050
7800 Building		Manassas, VA	1988	1		15	100.0%		100.0%			—		1,919
Bank Building		Manassas, VA	1991	1		3	100.0%		100.0%			958		876
	Total consolidated properties			35		2,778						260,992		329,628
Unconsolidated Properties (1)
1925 K Street		Washington, DC	2002	1		149	99.2%		85.0%			19,785		27,150
Devon Square		Devon, PA	2005	2		140	61.4%	(4)	5.5%			13,064		17,109
Madison Building		McLean, VA	2002	1		82	96.3%		24.9%			14,060		22,000
	Total unconsolidated properties			4		371						46,909		66,259
	Total consolidated and unconsolidated properties			39		3,149					$	307,901	$	395,887

NOTES:

(1)

Consolidated properties represent properties whose assets, liabilities and results of operations are consolidated into our consolidated financial statements. Unconsolidated properties represent properties that are accounted for under the equity method of accounting, in accordance with GAAP.

(2)

Consists of two office buildings and seven flex and warehouse buildings.

(3)

We acquired eight buildings in November 2004. During 2005, we entered into contracts to sell seven of the eight buildings, four of which were sold in 2005. The loan balances and the purchase prices included in the table relates to the loan balances and the purchase prices for the four remaining buildings at December 31, 2005.

(4)

Properties currently under renovation.

(5)

While we own 51% of the joint venture, based on the Membership Agreement we will receive approximately 28% of the net proceeds generated by the sale of the properties.

(6)

Represents our share of the Class A voting membership interest in the entity. An unrelated third party owns a Class B membership interest in the joint venture that entitles this party to 15% of cash available from operations after the Class A members have received a cumulative annual 12% return on their investment in the property and 15% of cash available from a refinancing or sale of the property after the Class A members have received a full return of their investment along with a cumulative annual 12% return on their investment.

(7)

We have entered into an asset supervision agreement with an unrelated third party that entitles this party to 20% of cash available from operations after we have received a cumulative annual 12% return on our investment in the property, and 20% of cash available from a refinancing or sale of the property after we have received a full return of our investment along with a cumulative annual 12% return on our investment.

(8)

Includes intangible in-place lease assets and liabilities for purchased properties.

10

Subsequent to December 31, 2005, and prior to the issuance of this report, we acquired additional commercial properties in the Philadelphia, Pennsylvania; and in the Houston, Texas metropolitan markets. See Note 18 of Notes to Consolidated Financial Statements.

Residential Apartment Properties

We owned or held an ownership interest in the following residential apartment properties at December 31, 2005:

		Location	Date of Acquisition/ Opening	Apt. Units	Occupancy at 12/31/05	B&R Ownership %	Loan Balance at 12/31/05		Purchase Price/ Development Cost (2)
							(in 000s)		(in 000s)
Consolidated Properties (1)
The Fountains		Orlando, FL	2003	400	94.8%	100.0%	$	39,500	$	35,100
Victoria Place		Orlando, FL	2003	364	93.4%	85.0%		32,907		39,500
Charlestown North		Greenbelt, MD	1971	178	94.4%	100.0%		4,816		2,179
	Total Consolidated Properties			942				77,223		76,779
Unconsolidated Property (1)
Arbor Crest		Silver Spring, MD	2004	80	97.5%	33.3%		9,000		8,455
	Total Consolidated and Unconsolidated			1,022			$	86,223	$	85,234

(1)

Consolidated properties represent properties whose assets, liabilities and results of operations are consolidated into our consolidated financial statements. Unconsolidated property represents a property that is accounted for under the equity method of accounting, in accordance with GAAP.

(2)

Includes intangible in-place lease assets and liabilities for purchased properties.

Hospitality Properties

We owned the following hospitality properties at December 31, 2005:

	Location	Rooms	Date of Acquisition/ Opening	Average Room Rate for the Year Ended 12/31/05		REVPAR for the Year Ended 12/31/05		Occupancy for the Year Ended 12/31/05	B&R Ownership %	Loan Balance at 12/31/05		Purchase Price/ Development Cost
										(in 000s)		(in 000s)
Inn at the Colonnade	Baltimore, MD	125	1993	$	137.99	$	92.86	67.3%	100.0%	$	9,632	$	7,368
Holiday Inn Express	Camp Springs, MD	151	1987	$	88.77	$	56.01	63.1%	100.0%		3,566		3,170
Total		276								$	13,198	$	10,538

11

Commercial, Residential and Land Development

We owned or had an ownership interest in the following development projects at December 31, 2005:

Project Name		Location	Date of Acquisition	Development Type	Size (1)	Number sold (2)		B&R Ownership %	Loan Balance at 12/31/05
									(in 000s)
Consolidated Properties (3)
Laguna Vista		Ocean City, MD	2003	Residential Condominiums	41 units	19		100.0%	$	1,670
400 S Philadelphia Ave. (6)		Ocean City, MD	2004	Residential Condominiums	20 units	—		51.0%		—
Crisfield		Ocean City, MD	2005	Residential Lots	232	16		51.0%		9,867
Red Mill Pond		Ocean City, MD	2005	Residential Lots	541	—		51.0%		35,394
Seaside		Ocean City, MD	2004	Residential Lots	138 lots	18		51.0%		17,484
Waterfront		Washington, DC	1964	Commercial Office Complex	1,144,000 sq ft (4)	—	(5)	46.0%		—
1150 Northbrook		Trevose, PA	2003	Commercial Office Building	108,000 sq. ft.	—	(5)	100.0%		—
Sudley South		Manassas, VA		Commercial Office Condo	54,000 sq. ft.	—		100.0%		4,283
640 N Broad Street (6)		Philadelphia, PA	2004	Residential Apartments	266 units	—	(5)	86.5%		35,196
Divine Lorraine (7)		Philadelphia, PA	2003	Residential Apartments	135 units	—	(5)	95.0%		—
	Total consolidated projects									103,894
Unconsolidated Properties (3)
Symphony House		Philadelphia, PA	2005	Residential Condominiums	163 units (8)	—		22.3%		14,813
Venice Lofts		Philadelphia, PA	2005	Residential Condominiums	128 units	—		22.3%		4,349
Washington Business Park Land		Lanham, MD	2001	Undeveloped Land	79 acres	29 acres		80.0%		5,000
	Total unconsolidated projects									24,162
	Total consolidated and unconsolidated projects								$	128,056

NOTES:

(1)

Represents the actual or planned size of the project based on square footage, lots, units or acres.

(2)

Represents number of sales that had closed as of December 31, 2005.

(3)

Consolidated properties represent properties whose assets, liabilities and results of operations are consolidated into our consolidated financial statements. Unconsolidated property represents a property that is accounted for under the equity method of accounting, in accordance with GAAP.

(4)

Represents the current size of the Waterfront Complex. The size of the development project has not yet been determined.

(5)

Upon completion, the space will be leased to tenants.

(6)

During 2005 we entered into an agreement to sell our interest in this development project and in January 2006 we closed on the sale. The assets and liabilities of this entity are included in assets and liabilities held for sale in the accompanying consolidated financial statements.

(7)

During 2005 we entered into an agreement to sell this property. The assets and liabilities of this entity are included in assets and liabilities held for sale in the accompanying consolidated financial statements.

(8)

Project also includes a theatre containing 35,000 square feet of space and other retail space, as well as a parking garage.

12

In addition, we benefited from the following development projects for which we either had sold all remaining units or we had sold our membership interest in, during 2005.

Project Name	Location	Date of Acquisition	Development Type	Number sold in 2005	B&R Ownership %
Clarksburg Ridge	Clarksburg, MD	2003	Residential Lots	remaining 10 lots of 159 unit subdivision	100.0%
Golfview	St. Petersburg, FL	2004	Residential Condominiums	remaining 137 units of a 139 unit property	50.0%
Cigar Factory	Philadelphia, PA	2003	Residential Condominiums	11 units of a 30 unit property (1)	66.7%
146th Street	Ocean City, MD	2004	Residential Condominiums	— (2)	51.0%

(1)

We sold our interest in this property in June 2005, subsequent to the sale of 11 units.

(2)

We sold this property prior to the commencement of any development

Major Tenants

There are no tenants or recurring customers whose revenues are 10% or more of our total operating revenues from continuing operations. The following is a table of our three largest tenants:

Tenant Name	Property Name Location	Lease Maturity Date	Base Rental Income for the 12 months ended December 31, 2005		Percent of commercial Rental Revenue for the twelve months ended December 31, 2005	Percent of Total Operating Revenue for the twelve months ended December 31, 2005
Hartford Fire Insurance Company	Ft Washington Executive Ctr. Ft Washington, PA	2007	$	4,617,000	10.0%	3.8%
Platinum Technology, Inc.	W Germantown Pike Plymouth Meeting, PA	2009	$	2,169,000	4.7	1.8
Board of County Supervisors of Prince William County	Sudley North Manassas, VA	2009	$	1,343,000	2.9	1.1

ITEM 3. LEGAL PROCEEDINGS

We are currently a party to a lawsuit filed by its partner in a joint venture that owns one of its commercial properties. The suit was filed in the Circuit Court of Montgomery County, Maryland in December 2005. A motion for preliminary injunction preventing any sale or further encumbrance of the property was denied by the Court in February 2006. The plaintiff seeks $15,000,000 in damages for breach of fiduciary duty and fraud and $25,000,000 for exemplary and punitive damages. Our management believes the complaint is without merit and intends to vigorously defend the lawsuit.

We are subject to various legal proceedings and claims that arise in the ordinary course of our business. Management believes that the final outcome of such matters will not have a material adverse effect on our financial position, results of operations or liquidity.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to the vote of the security holders during the fourth quarter of 2005.

13

Executive Officers of the Registrant

Executive Officers of Registrant (included pursuant to General Instruction G to Form 10-K and instruction 3 to Item 401(b) of Regulation S-K).

The following list is included as an unnumbered Item in Part I of this Report in lieu of being included in the Proxy Statement for the Annual Meeting of Shareholders to be held on June 14, 2006

Name	Age	Positions & Offices	Date Elected to Office
Charles S. Bresler	78	Chairman & Director	June 1970
Sidney M. Bresler	51	Chief Executive Officer, Director & Assistant Secretary	June 2002 August 2002 February 2003
Jean S. Cafardi	59	Corporate Secretary	November 2000
Darryl M. Edelstein	38	Chief Operating Officer & Treasurer	March 2005 May 2004
Robert O. Moore	57	Chief Financial Officer	August 2005

In accordance with Article V of our By-Laws, each officer was elected to serve until his successor is chosen and shall have qualified or until his earlier resignation or removal.

Mr. Sidney M. Bresler is the son of Mr. Charles S. Bresler.

Each officer has held the above positions as his principal occupation for more than the past five years with the exception of Mr. Sidney M. Bresler, Mr. Darryl M. Edelstein, and Mr. Robert O Moore.

Prior to June 2002 and during his seventeen years of employment with the Company, Mr. Sidney M. Bresler has served in various capacities.

Mr. Darryl M. Edelstein joined us in August 2003, as our Chief Financial Officer. He became our Chief Operating Officer in March 2005. During the previous five years Mr. Edelstein worked at the Company and in various finance capacities for Crestline Capital Corporation. During the eight years prior to that he worked in various finance and accounting capacities at Host Marriott Corporation, Kraft Foods Inc. and Ernst & Young, LLP. Mr. Edelstein is a CPA.

Mr. Robert O. Moore joined us in August 2005 as our Chief Financial Officer. He served from 2002 until 2005 as Chief Financial Officer and Treasurer of The Deltona Corporation, a real estate development company. He served from 2000 to 2001 as Chief Financial Officer of SkyWay Partners, Inc, an operator/contractor for voice, video and data services for multi-tenant properties. From 1985 through 2000 he served as Chief Financial Officer for several public and private companies. Mr. Moore began his career as a CPA for Coopers & Lybrand where he worked for over 10 years.

14

PART II

ITEM 5. MARKET FOR THE COMPANY'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

        Our Common Stock is traded in the over-the-counter market. The following table presents the high and low bid quotations for the periods shown, as reported by the National Quotation Bureau, Inc.

		High		Low
2005
	First Quarter	$	30.00	$	29.50
	Second Quarter		33.50		28.75
	Third Quarter		39.00		31.00
	Fourth Quarter		36.00		32.40
2004
	First Quarter	$	25.77	$	22.70
	Second Quarter		28.25		25.52
	Third Quarter		30.87		27.39
	Fourth Quarter		30.00		28.88

The above quotations are adjusted for a 2-for-1 stock split which was effected in the form of a stock dividend on September 1, 2004. These quotations also represent prices between dealers and do not include retail markup, markdown or commissions and do not represent actual transactions. As of March 4, 2006, there were 77 record holders of Common Stock.

On May 10, 2005, our Board of Directors declared a cash dividend of $0.28 per common share, $0.14 per share of which was paid on June 15, 2005, and the remaining dividend payment of $0.14 was paid on December 15, 2005. On May 17, 2004, our Board of Directors declared a cash dividend of $0.25 per common share, $0.125 per share of which was paid on June 15, 2004. The remaining dividend payment was made on December 15, 2004 at an adjusted per share amount of $0.125. All per share amounts have been adjusted to take into account the 2-for-1 stock split. Prior to 2004, we had not declared any dividends.

ITEM 6. SELECTED FINANCIAL DATA

The following table sets forth our selected consolidated financial data (in thousands, except weighted average number of common shares outstanding and per share amounts). The historical financial data should be read in conjunction with the consolidated financial statements and accompanying notes and the discussion set forth in the section entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations," each included elsewhere in this Form 10-K.

	Years Ended December 31,
	2005			2004		2003			2002			2001
Operating revenues	$	122,944		$	77,646	$	31,298		$	52,833		$	46,891
(Loss) income from continuing operations	$	(3,069	)	$	3,276	$	1,832		$	5,300		$	9,564
Net (loss) income	$	(2,249	)	$	4,419	$	9,581		$	6,086		$	10,216
(Loss) income from continuing operations per common share, basic and diluted	$	(0.56	)	$	0.60	$	0.33		$	0.97		$	1.75
(Loss) earnings per common share, basic and diluted	$	(0.41	)	$	0.81	$	1.75		$	1.11		$	1.87
Total assets	$	763,998		$	535,180	$	348,249		$	243,492		$	203,778
Long-term obligations (3)	$	485,526		$	311,227	$	183,142		$	100,586		$	72,496
Cash dividends per common share	$	0.28		$	0.25		(1	)		(1	)		(1	)
Weighted average number of common shares outstanding (2)		5,477,212			5,477,212		5,477,212			5,477,502			5,477,812

(1)

No dividends were declared or paid.

(2)

Weighted average number of common shares outstanding has been restated to reflect the 2-for-1 stock split, effected in the form of a stock dividend in 2004.

(3)

Excludes long-term obligations related to assets held for sale.

15

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the Consolidated Financial Statements and the related notes that appear elsewhere in this document.

Overview

We are a real estate owner and developer with a portfolio that includes commercial, residential and hospitality properties as well as undeveloped and developed land. We earn our revenues and profits primarily from leasing commercial office space and residential apartment units; providing services at our hospitality properties; selling residential and commercial properties and selling both developed and undeveloped land.

Over the three year period ending December 31, 2005, we aggressively acquired real estate assets, more than trebling our total assets. In doing so we have applied a dual investment approach, investing in both operating commercial and residential properties that generate immediate returns that are relatively stable and predictable in addition to investments in development projects where returns are generally higher but are less immediate and predictable.

In order to maximize returns on our investments we have implemented a strategy that includes targeting properties with stable cash flows and upside potential; using third party property managers and leasing agents; partnering with regional and national developers; employing intensive asset management and oversight; utilizing successful bidding and due diligence techniques; and using prudent leverage. To implement our strategy we took advantage of our strong liquidity position, a low interest rate environment and our core strengths, including our extensive experience and knowledge of the real estate industry; our strong relationships with financial institutions, real estate investors, management companies and developers; our ability to perform due diligence, arrange financing and execute a transaction in an efficient and expedient manner; and our reputation and track record for executing such transactions.

During this three year period we acquired, through both wholly-owned subsidiaries and joint venture entities with unaffiliated third parties that we consolidate into our Consolidated Financial Statements, a total of 21 commercial office buildings containing 1,845,000 square feet of office space and two residential apartment properties containing 764 apartment units. The total purchase price of these acquisitions was $331,000,000. In connection with these acquisitions, we obtained or assumed fixed-rate mortgage debt totaling $203,000,000 at an average interest rate of 5.5% and obtained variable-rate mortgage debt of $34,000,000.

During this three year period we also acquired, through joint venture entities with unaffiliated third parties, 14 parcels of real estate for the purpose of developing residential for-sale condominium units, residential rental apartment units and residential lots.

In the first quarter of 2005, with the goal of raising additional capital for future growth, we decided to monetize several of our commercial properties in which we had significant equity positions, but for which debt refinancing was prohibitively expensive due to high loan prepayment costs, through the sale of these properties to a newly created Real Estate Investment Trust called Midlantic Office Trust Inc. (Midlantic). We participated as a sponsor for Midlantic's proposed initial public offering (IPO). Due to general market conditions, in the third quarter of 2005, Midlantic determined not to proceed with its IPO. Subsequent to this, we focused on additional sources of capital and in the remainder of 2005 completed a private placement of $40,000,000 of trust preferred securities, generating net proceeds of $38,748,000. In the first quarter of 2006, we amended our unsecured line of credit to increase the borrowing capacity to $50,000,000 from $32,200,000.

We continued to utilize our liquidity in the first quarter of 2006, through the acquisition of 11 commercial office and warehouse buildings containing 882,000 square feet of space with purchase prices totaling $85,759,000. In connection with these acquisitions we incurred or assumed mortgage debt totaling $68,725,000. These acquisitions included eight buildings located in Houston, Texas, representing an expansion of our geographic footprint beyond the East Coast.

We are focused on growing our portfolio of assets, and acquiring properties for long term investment. However, we consider and evaluate the sale of existing properties and our investments in development projects when we believe we can re-deploy the sales proceeds and achieve superior returns through investments in a new property or development opportunity rather than continuing to own and operate the existing property.

During the three year period ended December 31, 2005, we sold five commercial office buildings containing 183,000 square feet of space, a residential apartment complex containing 116 apartment units, five commercial properties leased to convenience store operators; and our interests in three development projects. We also entered into agreements to sell three additional commercial buildings containing 205,000 square feet, and our interests in two development projects,

16

which either closed or are expected to close in 2006. Where possible, we structure the sales of our properties as part of a tax free exchange under §1031 of the US Internal Revenue Code, which provides for the deferral of the gain on the sale.

We intend to continue to utilize our liquidity position and access to borrowings under our line of credit to both acquire operating properties and to invest in development real estate. We may continue to expand into other geographic regions should properties in these regions meet our criteria as attractive investment opportunities. Challenges we will face over the course of the year include an interest rate environment that may not be as accommodating as it has been in recent years and a general softening in the housing and condominium market.

It is widely anticipated that the Federal Reserve will continue to raise short term interest rates in 2006 and while the yield curve has remained flat or at times been inverted, there is no assurance that the yield curve will not change over the course of the year. A higher interest rate environment would raise our cost of capital, thereby putting pressure on the returns on our invested equity. Higher interest rates would also adversely affect sales at our development projects, since higher potential mortgage payments could lower the amount buyers would be prepared to pay for houses and condominium units. Conversely, we may benefit from a higher interest rate environment through higher occupancy rates at our residential apartment properties since fewer tenants will likely vacate their apartments in order to purchase their own homes.

A softening in the housing market could adversely affect sales of our condominium units. Sales at our land development projects will be less affected by the general softening in the housing market since we have entered into purchase and sale agreements for all our current land development projects with national homebuilders who have provided significant non-refundable deposits.

The discussion that follows is based primarily on our consolidated balance sheets as of December 31, 2005 and 2004, and the results of operations for the years ended December 31, 2005, 2004 and 2003 and should be read with our Consolidated Financial Statements. The ability to compare one period to another may be significantly affected by operating properties in the process of being repositioned, acquisitions and dispositions of commercial and residential properties, development projects and the acquisition and subsequent partial sale of undeveloped commercial and residential lots. Historical results set forth in our consolidated financial statements are not necessarily indicative of our future financial position and results of our operations.

Application of Critical Accounting Policies.    Our accounting policies comply with accounting principles generally accepted in the United States. The application of these accounting policies involves the exercise of judgment and use of assumptions as to future uncertainties. We have made best estimates and judgments of certain amounts included in the financial statements. However, actual results could differ from these estimates and a change in the facts and circumstances of the underlying transactions could significantly change the application of an accounting policy and the resulting financial statement impact. We have listed below those policies that we believe are critical and require the use of significant judgment in their application.

Rental Property and Equipment.    Rental property and equipment is stated at cost. We use judgment in order to allocate the purchase price of all acquired assets and assign useful lives to those assets that have finite lives. Depreciation expense is computed using the straight-line method applied over the deemed useful life of depreciable assets, generally 39 years for buildings and three to ten years for furniture, fixtures and equipment. Replacements and renovations that extend the useful life of an asset are capitalized and depreciated over their estimated useful lives. Repairs, maintenance and minor improvements are expensed as incurred. The allocation of the purchase price to assets or assignment of useful lives will affect the amount of depreciation expense recorded.

Upon acquisitions of real estate, we assess the fair value of the acquired assets (including land, buildings and improvements, and identified intangibles such as above- and below -market leases and acquired in-place leases and tenant relationships) and acquired liabilities in accordance with Statement of Financial Accounting Standards (SFAS) No. 141, Business Combinations and SFAS No. 142, Goodwill and Other Intangible Assets and allocate purchase price based on these assessments. We assess fair value based on estimated cash flow projections that utilize appropriate discount and capitalization rates and available market information. Estimates of future cash flows are based on a number of factors including the historical operating results, known trends, and market conditions that may affect the property.

In accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, we evaluate the recoverability of long-lived assets whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. Recoverability is measured based on net, undiscounted expected cash flows. Assets are

17

considered to be impaired if the undiscounted expected cash flows are less than the carrying amount of the assets. Impairment charges are recorded based upon the difference between the carrying value of the asset and its fair value.

The use of different assumptions would result in different values at acquisition, initial allocations of purchase price and future impairment charges. The impact of our estimates in connection with acquisitions and future impairment analysis could be material to our consolidated financial statements.

In accordance with SFAS No. 143, and FASB Interpretation No. 47, we recognize a liability for the fair value of a legal obligation to perform asset-retirement activities that are conditional on a future event if the amount can be reasonably estimated. The asset cost is increased by the value of the cost of the future conditional costs and depreciated over the useful life of the respective asset. The amount recorded on our books related to the recognition of this liability could vary significantly depending on the assumptions used.

In accordance with SFAS No. 141, we record on our balance sheet the fair value of debt assumed in connection with our acquisitions. In order to calculate the fair value of assumed debt, we discount the cash flows relating to the debt by an interest rate that is an estimate of the market rate of interest for a loan of that type, taking into account such factors as the cash flow generated by the property, any guarantees of indebtedness, and the amount of debt relative to the property's fair market value. The estimate of fair value of the assumed debt will affect our interest expense and the carrying amount of the assumed debt on our balance sheet.

Cost of Real Estate Sales.    Homebuilding and land development costs are charged to the cost of the homes and land parcels sold under either the specific identification or relative sales value basis methods, based on what is deemed more appropriate for the project. The relative sales value basis method requires us to estimate the total project revenue. An inaccurate projection of total revenue would affect the cost of sales recorded related to the sale of homes and developed land.

Investments in Joint Ventures.    For all investments not wholly-owned, we determine if the entity is a variable interest entity (VIE). Such a determination includes, among other requirements that we evaluate whether the equity investment at risk is sufficient to allow the entity to finance its activities without additional subordinated support from others. If the equity at risk is not sufficient then the entity is considered a VIE and is subject to consolidation based on the guidelines of FASB Interpretation No. 46R, Consolidation of Variable Interest Entities (FIN 46R). If the equity at risk is sufficient, and various other conditions are met, then the entity is not considered to be a VIE.

If an investee of ours is a VIE under FIN 46R, we determine whether we are the primary beneficiary through being subject to a majority of the potential variability in gains or losses of the VIE. If we are the primary beneficiary, then we consolidate our investment in the joint venture. If we are not the primary beneficiary, then we do not consolidate our investment.

Our evaluation of the sufficiency of equity at risk and our determination of the primary beneficiary is based on subjective assessments that involve our estimating a number of possible future outcomes of cash flows for the entity as well as the probability of each outcome occurring. This process includes our estimating future operating income and losses, taking into account industry trends, the impact of macro economic forces, as well as the effects of demand, competition and other factors. The evaluation of the sufficiency of equity of an entity and the determination of the primary beneficiary will affect the presentation of that entity in our consolidated balance sheet and results of operations.

Deferred Charges and Other Assets.    Fees incurred in connection with obtaining financing are deferred and amortized as a part of interest expense over the term of the related debt instrument on a straight-line basis, which approximates the effective interest method. Tenant allowances incurred at the origination of a lease are deferred and amortized on a straight-line basis over the term of the related lease. Lease commissions incurred to originate a lease are deferred and amortized on a straight-line basis over the term of the related lease.

Included in Other Assets is the value of acquired in-place leases for purchased properties. In accordance with SFAS No. 141 and SFAS No. 142 we allocate a portion of the real estate acquisition purchase price to acquired in-place leases based on the relative fair values of the assets and liabilities acquired. In order to determine the amount of the purchase price to be allocated to the acquired leases, we develop assumptions regarding the relative value of the in-place leases when compared to the current market. Some of the judgments required as part of this exercise include (1) determining the market rental rates of the acquired leases (2) estimating the market value of concessions (including rent concessions and tenant improvement allowances) and leasing commissions to be paid on new leases (3) estimating an appropriate lease-up period and (4) applying an estimated risk-adjusted discount rate to the existing tenant's leases. The amount

18

allocated to in-place leases and the associated amortization of those leases could vary significantly depending on the assumptions used.

Other Liabilities.    The application of FASB Interpretation No. 45 (FIN 45), "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others", requires us to recognize, upon the issuance of a guarantee, a liability for the fair value of the obligation we assume. The calculation of the fair value of this obligation involves significant judgment. The liability recorded for such obligation on our balance sheet could vary significantly depending on the assumptions used.

Balance Sheet Overview

The following table reflects certain condensed balance sheet items as of the dates presented (in thousands):

		December 31,
						Increase (decrease)
		2005		2004
Assets:
	Rental property and equipment, at cost	$	409,563	$	302,083	$	107,480
	Property and land development		154,139		103,537		50,602
	Cash, cash equivalents, and investments		73,848		49,943		23,905
	Investments in and advances to joint ventures		30,053		9,842		20,211
	Deferred charges and other assets, net		45,770		29,361		16,409
	Total assets		763,998		535,180		228,818
Liabilities and Shareholders' Equity:
	Mortgage and construction loans and other debt	$	485,526	$	311,227	$	174,299
	Total liabilities		586,940		371,067		215,873
	Minority interest		49,696		32,968		16,728
	Shareholders' equity		127,362		131,145		(3,783	)

Material changes in assets include:

•

Rental property and equipment, at cost, increased primarily as a result of the acquisitions of the Wynwood, 919 Market Street, Cross Keys, 102 Pickering Way and 1105 Market Street commercial office properties in the year 2005. The increase was partially offset by the sale of four of the Historic Baltimore portfolio buildings in the year 2005.



•

Property and land development increased primarily as a result of the acquisitions of Red Mill Pond and Crisfield and development work performed on the Laguna Vista and Seaside projects. This increase was partially offset by sales of condominium units at Golfview, Cigar Factory and Laguna Vista and sales of residential lots at Clarksburg Ridge, Seaside and Crisfield.



•

Cash, cash equivalents and investments increased in total primarily due to the $38,748,000 of net proceeds from the sale of Trust Preferred securities (see Note 8 of the Notes to the Consolidated Financial Statements), the proceeds from the refinancing of certain debt instruments, and cash flow from our operations. This increase was offset, in part, by cash used for the acquisition of operating properties and for investments in development projects.



•

Investments in and advances to joint ventures increased primarily due to our investments in Symphony House and Venice Lofts.



•

Deferred charges and other assets, net, increased primarily due to the in-place lease assets and deferred financing costs associated with commercial properties acquired, partially offset by the amortization of these assets.

Material changes in liabilities and shareholders' equity include:

•

Mortgage and construction loans and other debt increased primarily as a result of the mortgage loans obtained or assumed in connection with the commercial office properties acquired; the draws on construction and development loans related to Red Mill Pond, Laguna Vista, Seaside and Crisfield; the issuance of Trust Preferred securities draws on our line of credit to facilitate the acquisition of Wynwood, Cross Keys and 102 Pickering Way; and the refinancing of the debt on The Fountains. This increase was partially offset by loan repayments from sale proceeds at Golfview, Laguna Vista, Seaside and Crisfield.



•

Minority interest reflecting our minority partners' interest in applicable properties, increased primarily as a result of $10,000,000 of contributions from minority partners related to Philadelphia Condo Investors along with earnings generated primarily from our development projects.

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Financial Overview

Results of Operations—Comparison of the results of operations for the year ended December 31, 2005 compared to 2004.

The following table reflects key line items from our statements of operations for the twelve months ended December 31, 2005 and 2004 (in thousands, except percentages):

		Years Ended December 31,
							$ Change 2004 to 2005			% Change 2004 to 2005
		2005			2004
							Increase (decrease)
Operating revenues from:
	Homebuilding and residential lots	$	55,364		$	24,605	$	30,759		125.0	%
	Commercial rental properties		46,163			32,540		13,623		41.9
	Residential rental properties		11,365			10,343		1,022		9.9
	Hospitality properties		9,713			8,099		1,614		19.9
	Total operating revenues		122,944			77,646		45,298		58.3
Cost of homebuilding and residential lots			43,679			21,071		22,608		107.3
Commercial operating expenses			18,984			12,746		6,238		48.9
Residential operating expenses			5,028			5,017		11		0.2
Hospitality operating expenses			8,869			6,172		2,697		43.7
Commercial depreciation and amortization expense			12,760			8,985		3,775		42.0
General and administrative expense			7,723			3,973		3,750		94.4
Withdrawn public offering costs			3,312			—		3,312		100.0
Interest income			1,130			1,885		(755	)	(40.1	)
Interest expense			20,462			13,890		6,572		47.3
Debt extinguishment costs			3,171			—		3,171		100.0
Gain on sale of investments in joint ventures			1,551			624		927		148.6
Income from investments in joint ventures			793			1,360		(567	)	(41.7	)
Minority interest			5,542			2,067		3,475		168.1
Net (loss) income			(2,249	)		4,419		(6,668	)	(150.9	)

General Overview.    Total operating revenues for 2005 increased by $45,298,000 over 2004. This was primarily due to revenue generated from sales of condominium apartment units at Cigar Factory, Laguna Vista and Golfview, revenue generated from sales of developed lots at Seaside and Crisfield, and a full year's revenue from the operation of commercial properties acquired during the fourth quarter of 2004 and during the year 2005.

Net income for 2005 decreased by $6,668,000 from 2004. This decrease is primarily due to the one-time recognition of $3,312,000 of expenses associated with the withdrawal of the Midlantic IPO, expenses of $3,171,000 related to the early extinguishment of debt, and $1,330,000 of retirement expenses incurred related to the retirement of one of the founders of the Company.

Homebuilding and Residential Lots.    Homebuilding and residential lots revenue in 2005 increased by $30,759,000 from 2004. The increase can be primarily attributed to the sale in 2005 of 10 developed lots at Clarksburg Ridge, 11 condominium units at Cigar Factory, 137 condominium units at Golfview, 19 condominium units at Laguna Vista, 18 lots at Seaside and 16 lots at Crisfield. In 2004, we sold 120 developed lots at Clarksburg Ridge, 13 condominium units at Cigar factory and two condominium units at Golfview.

The increase in the cost of homebuilding and residential lots in 2005 by $22,608,000 compared to 2004 is a result of increased development sales described in the proceeding paragraph.

Commercial Rental Properties.    The $13,623,000 revenue increase in 2005 compared to 2004 was primarily due to the operation of commercial office properties acquired during the fourth quarter of 2004 and during 2005. Revenues from properties that we owned for a full twelve months in 2005 and 2004 decreased by $600,000 from 2004 due to lower average occupancy in 2005 at Washington Business Park and Versar Center.

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Operating expenses consist of direct operating costs of the properties including property taxes and insurance and excluding interest expense and depreciation expense. Operating expenses in 2005 increased by $6,238,000 compared to 2004 due to the addition of operating expenses of properties acquired in the fourth quarter of 2004 and in 2005. Operating expenses from properties that we owned for a full twelve months in 2005 and 2004 were comparable.

Depreciation and amortization expense in 2005 increased by $3,775,000 compared to 2004 due to the net increase in acquisitions.

Residential Rental Properties.    The $1,022,000 increase in revenue in 2005 compared to 2004 was primarily due to higher occupancy and increased rental rates at all three of our properties.

Operating expenses consist of direct operating costs of the properties including property taxes and insurance and excluding interest expense and depreciation expense. Operating expenses in 2005 were comparable with 2004.

Hospitality Properties.    Revenue for 2005 increased by $1,614,000 compared to 2004, primarily due to the inclusion of $1,056,000 of food and beverage revenue generated by The Club at the Colonnade, a restaurant on the premises of the Inn at the Colonnade. Prior to November 2004, the restaurant space was leased to an unrelated third party operator. The revenue increase is also attributed to an increase in revenue per available room (RevPAR) in 2005 at both properties.

Operating expenses, which consist of direct operating costs of the properties including property taxes and insurance, and excluding interest expense and depreciation expense, increased by $2,697,000 compared to 2004. The increase can be primarily attributed to inclusion of $1,879,000 of food and beverage expenses associated with The Club at the Colonnade; increased salary and benefits at the Inn at the Colonnade due to the hiring of additional staff; and management fees incurred at the Holiday Inn due to the termination of the management agreement with a wholly-owned subsidiary and the signing of a new management agreement with an unrelated third party management company in July 2004.

General and Administrative Expense.    General and administrative expense increased by $3,750,000 in 2005 over 2004, primarily due to retirement benefit expenses totaling $1,330,000 for Burton J Reiner, one of our co-founders. Of the retirement expenses $1,000,000 was paid in 2005 and $330,000 was accrued related to post retirement benefits. We have also hired additional personnel and incurred other additional administrative costs due to the increased operations and moving to new premises.

Withdrawn Public Offering Costs.    The $3,312,000 of expense relates to costs incurred by us associated with the proposed Midlantic initial public offering, which were recorded by us upon Midlantic's decision to withdraw the offering.

Interest Income.    The decrease in interest income of $755,000 for 2005 from 2004 was primarily due to the repayment of several notes receivable from unrelated parties during the fourth quarter of 2004.

Interest Expense.    The increase in interest expense of $6,572,000 in 2005 compared to 2004 was primarily due to interest on debt obtained or assumed in connection with properties acquired during the fourth quarter of 2004 and during 2005. For the years ended December 31, 2005 and 2004, we capitalized interest of $1,979,000 and $1,738,000, respectively, related to our investment in development projects.

Debt Extinguishment Costs.    The $3,171,000 of expense are costs incurred related to the defeasance of debt secured by The Fountains and by 919 Market Street both of which we refinanced.

Gain on Sale of Investments in Joint Ventures.    The increase of $927,000 in the gain on the sale of investments in joint ventures was a result of our share of a gain on the sale of Foxchase Village, an unconsolidated low-income residential housing complex in the second quarter of 2005.

Income from Investments in Joint Ventures.    Income from investments in joint ventures, which consists of income earned from joint ventures that are not consolidated into our financial statements, decreased by $567,000 in 2005. This is attributed primarily to operating losses at Arbor Crest and decreased income from 1925 K Street. These were offset, in part, by operating income from Devon Square.

Minority Interest.    Minority interest expense, reflecting our minority partner's share of profits in joint ventures that we consolidate into our consolidated financial statements, increased by $3,475,000 in 2005 compared to 2004 primarily due to sales of condominiums and lots at Cigar Factory, Golfview, Seaside and Crisfield.

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Results of Operations—Comparison of the results of operations for the year ended December 31, 2004 compared to 2003.

The following table reflects key line items from our statements of operations for the years ended December 31, 2004 and 2003 (in thousands, except percentages):

		Years Ended December 31,
						Change 2003 to 2004			% Change 2003 to 2004
		2004		2003
						Increase/(decrease)
Operating Revenues from:
	Commercial rental properties	$	32,540	$	15,864	$	16,676		105.1	%
	Residential rental properties		10,343		4,592		5,751		125.2
	Hospitality properties		8,099		7,896		203		2.6
	Homebuilding and residential lots		24,605		1,633		22,972		1,406.7
	Other revenues		2,059		1,313		746		56.8
	Total operating revenues		77,646		31,298		46,348		148.1
Commercial operating expenses			12,746		6,484		6,262		96.6
Residential operating expenses			5,017		2,389		2,628		110.0
Hospitality operating expenses			6,172		5,236		936		17.9
Commercial depreciation and amortization expense			8,985		4,272		4,713		110.3
Residential depreciation and amortization expense			2,680		1,025		1,655		161.5
Cost of homebuilding and residential lots			21,071		1,650		19,421		1,177.0
General and administrative expense			3,973		3,762		211		5.6
Interest expense			13,890		8,025		5,865		73.1
Gain on sale of investments in joint ventures			624		—		624		100.0
Income from investments in joint ventures			1,360		1,725		(365	)	(21.2	)
Minority interest			2,067		49		2,018		4,118.4
Income from discontinued operations, net of tax			1,143		7,749		(6,606	)	(85.2	)
Net income			4,419		9,581		(5,162	)	(53.9	)

General Overview.    Total operating revenues for 2004 increased by $46,348,000 compared to 2003. The increase was primarily due to revenue generated from sales of residential lots at Clarksburg Ridge, sales of condominium units at Cigar Factory, and operating revenue generated from the acquisition of rental properties during the second half of 2003 and during 2004.

Net income for 2004 decreased by $5,162,000 from 2003. The decrease was primarily due to $7,129,000 gain, net of taxes, recognized in 2003. This gain was from the sale of a commercial building and from the sale of 95% of our interest in a residential apartment complex.

Commercial Rental Properties.    The $16,676,000 revenue increase in 2004 compared to 2003 was primarily due to a $16,010,000 increase related to the operations of properties acquired during the second half of 2003 and during 2004. In addition, the average occupancy during the year at Washington Business Park increased in 2004 compared to 2003.

Operating expenses consist of direct operating costs of the properties including property taxes and insurance and excluding interest expense and depreciation expense. Operating expenses in 2004 increased compared to 2003 by $6,262,000 due to operating expenses for properties acquired during 2004 and during the second half of 2003.

Depreciation and amortization expense in 2004 increased by $4,713,000 compared to 2003 due to the depreciation expense for the properties acquired during 2004 and the second half of 2003.

Residential Rental Properties.    The $5,751,000 increase in residential rental revenue for 2004 compared to 2003 was primarily due to a full year of revenues from Victoria Place and The Fountains.

Operating expenses consist of direct operating costs of the properties including property taxes and insurance and excluding interest expense and depreciation expense. The increase in residential operating expenses of $2,628,000 in 2004 compared to 2003 was primarily due to a full year of operating expenses from Victoria Place and The Fountains.

Depreciation and amortization expense in 2004 increased compared to 2003 by $1,655,000 which was primarily due to a full year of expense from Victoria Place and The Fountains.

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Hospitality Properties.    Revenue increased by $203,000 in 2004 compared to 2003 which was primarily due to an increase in revenues at the Inn at the Colonnade, partially offset by lower revenues at the Holiday Inn.

Operating expenses, which consist of direct operating costs of the properties including property taxes and insurance and excluding interest expense and depreciation expense, increased by $936,000 in 2004 compared to 2003. The increase can be primarily attributed to increased salary and benefits at the Inn at the Colonnade due to the hiring of additional staff in 2004 and severance payments made and management fees incurred at the Holiday Inn due to the termination of the management agreement with a wholly-owned subsidiary and the signing of a new management agreement with an unrelated third party management company in July 2004.

Homebuilding and Residential Lots.    Homebuilding and residential lots revenue in 2004 increased by $22,972,000 compared to the prior year. The increase can be attributed to the sale in 2004 of 120 developed lots at Clarksburg Ridge, 13 condominium units at Cigar Factory and two condominium units at Golfview, compared to the sale in 2003 of 11 developed lots at Clarksburg Ridge and one remaining home in a residential subdivision we developed in 2002.

The cost of homebuilding and residential lots in 2004 increased by $19,421,000 compared to the prior year. The increase can be attributed to the cost of sales allocated to the developed lots and condominium units sold at Clarksburg Ridge, Cigar Factory and Golfview.

Other Revenues.    Other revenues in 2004 increased by $746,000 compared to 2003, primarily due to the payment in full by Third Street S.W. Investors (Third Street), a joint venture in which we have a 1% ownership interest, of a note receivable for which $1,584,000 had been previously written-off as uncollectible. This increase was partially offset by decreased management fee income earned on the residential properties we managed.

General and Administrative Expense.    General and administrative expense increased by $211,000 compared to 2003 primarily due to higher salary and benefits expense due to the hiring of additional personnel as well as an increase in consulting expense in 2004, partially offset by a reduction in the pension liability accrual.

Interest Expense.    The increase in interest expense of $5,865,000 over the prior year is primarily due to interest on debt obtained or assumed in 2004 and 2003 in connection with the acquisitions of Fort Washington, Victoria Place, The Fountains, the Baltimore portfolio, West Germantown Pike, One Northbrook and 900 Northbrook. For the years ended December 31, 2004 and December 31, 2003, we capitalized interest of $1,738,000 and $1,023,000, respectively related to our investment in development projects.

Gain on Sale of Investments in Joint Ventures.    Gain on sale of investments in joint ventures increased by $624,000 due to a $731,000 gain recorded in 2004, related to the sale of our 25% interest in Congressional Village Associates, LLC (Congressional South), a joint venture that owned a shopping center. This gain was partially offset by a $107,000 loss recorded in 2004, related to the sale of all the assets owned by Builders Leasing Company, a joint venture in which we had a 20% ownership interest.

Income from Investments in Joint Ventures.    Income from investments in joint ventures, which consists of income earned from joint ventures that are not consolidated into our financial statements, decreased by $365,000 in 2004 primarily due to the sale in 2003 of five parcels consisting of 15 acres of undeveloped land at Washington Business Park compared to no land sales by unconsolidated joint ventures in 2004, partially offset by increased income at 1925K Street and Redwood Commercial in 2004.

Income from Discontinued Operations, Net of Tax.    Discontinued operations, net of tax, decreased by $6,606,000, primarily due to a $7,129,000 gain, net of taxes, recorded in 2003 relating to the sale of Maplewood Manor, a commercial building leased to a nursing home operator and the sale of 95% of our interest in Town Square Commons, LLC (The Commons), which owned a residential apartment complex. In 2004 gains on sale, net of taxes, totaling $1,462,000 were recorded relating to the recognition of a deferred gain on the sale of a residential apartment building and a gain on the sale of five commercial properties leased to convenience store operators.

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Funds From Operations

We consider Funds From Operations (FFO) to be a meaningful measure of our performance and we evaluate management based on FFO. We provide FFO as a supplemental measure for reviewing our operating performance, although FFO should be reviewed in conjunction with net income which remains the primary measure of performance. FFO is a recognized metric used extensively within the real estate industry by operators of rental properties. Accounting for real estate assets using historical cost accounting under GAAP is based on the presumption of the value of real estate assets diminishing predictably over time. Since real estate values instead have risen or fallen with market conditions, many industry investors and analysts have considered presentations of operating results that exclude historical cost depreciation to be useful in evaluating the operating performance of real estate companies. As a result, the National Association of Real Estate Investment Trusts (NAREIT) created the concept of FFO as a standard supplemental measure of operating performance that adjusts GAAP net income to exclude historical cost depreciation.

While we are not a real estate investment trust (REIT), our real estate operations include large amounts of depreciable and amortizable real estate assets and we compete against REITS; therefore, we believe FFO to be a relevant measurement of our performance.

FFO as defined by the NAREIT is net income (computed in accordance with GAAP), excluding gains (or losses) from sales of depreciable property, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures are calculated to reflect funds from operations on the same basis. Our FFO measure differs from NAREIT'S definition in that we also exclude income tax expense related to property sales. The exclusion of income tax expense on property sales is consistent with the objective of presenting comparative period operating performance. FFO should not be considered an alternative to net income as an indicator of our operating performance, or as an alternative to cash flows from operating, investing or financing activities as a measure of liquidity. Additionally, the FFO measure presented by us is not calculated in the same manner as FFO measures of other real estate companies and therefore may not necessarily be comparable. We believe that FFO provides relevant information about our operations and is useful, along with net income, for an understanding of our operating activities.

Our FFO was $12,012,000 for the year ended December 31, 2005, compared to $15,953,000 for the year ended December 31, 2004, a decrease of $3,941,000 or 24.7%. This decrease is primarily due to the recognition in 2005 of (i) $3,312,000 of expenses associated with the withdrawal of the Midlantic IPO; (ii) $3,171,000 of costs incurred related to the early extinguishments of debt; and (iii) $1,330,000 of retirement costs incurred related to the retirement of one of our founders. The after-tax impact of these expenses totaled $4,782,000. This decrease was partially offset by FFO generated from properties we acquired in 2005 and 2004 and increased development sales of condominium units and lots in 2005.

The following table reflects the calculation of FFO (in thousands):

		Years Ended December 31,
		2005			2004			2003
Net (loss) income		$	(2,249	)	$	4,419		$	9,581
	Add: Depreciation and amortization including share of unconsolidated real estate joint ventures		16,125			12,659			7,301
	Add: Income tax expense from property sales, net of minority interest		1,243			749			4,753
	Less: Gain on sale of properties, net of minority interest		(3,107	)		(1,874	)		(11,882	)
Funds from operations		$	12,012		$	15,953		$	9,753

Liquidity and Capital Resources

General.    At December 31, 2005 our consolidated current cash and cash equivalents and investments that are principally short-term municipal obligations were $71,330,000. Of this amount, approximately $14,000,000 is either maintained for working capital purposes or represents our joint venture partner's share of cash at our consolidated joint ventures. The remaining amount is available for funding future acquisitions, investments in development projects and capital expenditures, or to fund a short term need, subject to certain debt covenants requiring us to maintain a minimum liquidity of $30,000,000. In addition, under our line of credit which we amended and restated in March 2006, we have as of the time of this filing available borrowing capacity totaling $34,602,000. While the availability of these

24

funds is restricted by certain covenants and sub-limits it should still aid us in quickly responding to real estate acquisition opportunities.

Short-Term Liquidity.    Our most material short-term liquidity requirements over the next twelve months relate to interest and scheduled principal payments on our outstanding debt that total approximately $30,000,000 in 2006, based on existing debt and variable interest rates as of December 31, 2005; and to capital improvements at our existing properties budgeted to total approximately $12,000,000 in 2006. Other short-term liquidity requirements include recurring repair and maintenance necessary to adequately maintain our properties; tenant improvement allowance payments, lease commissions; and general and administrative expenses. In addition, we intend to make additional acquisitions that will require the use of capital. We anticipate meeting these short-term liquidity requirements from the cash provided from operations, and to the extent necessary, from our available cash on hand at December 31, 2005.

A number of factors could affect our cash provided from operations, including a change in occupancy levels and leasing rates, caused by tenants' perception about the attractiveness of the property relative to competing properties; the physical deterioration of the property; competitive pressure caused by newly developed properties within the same geographic market; and rent concessions offered by competitors. Furthermore, an economic downturn in the markets in which we operate could affect the ability of tenants to meet their rental obligations, the likelihood that tenants will renew their leases and our ability to lease the space on economically favorable terms.

Future Capital Requirements.    Our future capital requirements include funds necessary to pay scheduled debt maturities and capital improvements, additional investment that could be required at our current development projects as a result of cost overruns, and funds required for future property acquisitions and investments in development projects. Our fixed-rate mortgage debt matures on average in 11.8 years, beginning in 2007 (see annual contractual principal payments schedule in Note 8 of Notes to Consolidated Financial Statements). We anticipate meeting these liquidity requirements through available cash on hand, debt refinancings, draws on our line of credit and asset dispositions.

In the first quarter of 2006 we acquired 11 commercial office and warehouse buildings with an aggregate purchase price of $85,759,000. In connection with these acquisitions, we placed or assumed mortgage debt totaling $68,725,000 and funded the remaining amount with cash. During this time period we also sold three commercial office buildings and our interest in a development project, generating net proceeds to us of $7,400,000.

Several of our loans contain financial covenants, including requirements that we maintain a minimum liquidity of $30,000,000, a minimum net worth of $110,000,000 and minimum annual funds from operations of $11,000,000 in 2005 and of $15,000,000 thereafter.

If we default on the payment of interest or principal in connection with an existing loan or violate any loan covenant, the lender may accelerate the maturity of the debt, requiring us to repay all outstanding indebtedness along with any prepayment fees due. If we are unable to repay the debt, the lender may foreclose on any assets pledged as collateral for the lender.

Operating Activities.    For the year ended December 31, 2005, net cash used in operating activities was $7,982,000. Net cash used for operating activities includes uses of $32,417,000 associated with operating homebuilding and land development.

Investing Activities.    For the year ended December 31, 2005, net cash used in investing activities totaled $153,772,000 primarily due to the acquisition of five commercial office properties, development activity at five investment development projects, investments in joint ventures and an increase in investments in municipal obligations.

Financing Activities.    For the year ended December 31, 2005, net cash provided by financing activities totaled $162,660,000. This primarily resulted from the placement or assumption of mortgage debt related to the acquisition of five commercial office properties, draws on construction debt related to Crisfield and Red Mill Pond and the refinancing of the mortgage on The Fountains at Waterford Lakes. Reductions in cash as a result of loan principal payments and an increase in deposits held in escrow were partially offset by amounts contributed by our equity partners into joint venture entities that we consolidate into our consolidated financial statements.

Excess cash flow generated from our properties' operations and from distributions from joint ventures is typically invested in municipal obligations that are short-term in nature. These investments are then liquidated as needed for our real estate acquisitions and investments in development projects.

25

Off-Balance Sheet Commitments.    To assist in obtaining beneficial terms for certain debt instruments for properties in which we have an unconsolidated investment, we sometimes provide loan guaranties, or master lease agreements for the lenders.

We have guarantied repayment of up to $39,240,000 under the $98,100,000 primary construction loan and repayment of the full amount outstanding under the $16,900,000 mezzanine construction loan obtained by Symphony House. The guarantied repayment under the primary loan will be reduced to $12,263,000 upon the joint venture obtaining $83,500,000 in sales revenue and will be further reduced to $4,950,000 once net sales proceeds reach 110% of the outstanding principal balance of the loan. Both the primary construction loan and the mezzanine loan mature in 2008. Funding of the guaranty would increase our equity participation in the venture. At December 31, 2005, there was no amount outstanding under the primary loan and the amount outstanding under the mezzanine loan totaled $14,813,000.

We have guarantied repayment of an $8,500,000 mezzanine construction loan obtained by Venice Lofts. The loan matures in 2007. The amount outstanding under the loan totaled $1,226,000 at December 31, 2005.

We have guarantied repayment of the entire loan balance outstanding under a $21,300,000 acquisition and construction loan obtained by Devon Square, our equity partner in the venture has provided the same guaranty. Funding of the guaranty would increase our equity participation in the venture. The loan matures in 2007. At December 31, 2005, the balance outstanding under the loan totaled $13,064,000.

We have provided an unconditional and irrevocable payment guaranty of $5,500,000 to Wachovia Bank, N.A in connection with a loan made to 1925K Associates, LLC. The loan matures in April 2007, but may be extended for up to an additional two years at the option of the borrower. Funding of the guaranty would increase our equity participation in the venture.

At December 31, 2005 we were a guarantor of both the $32,000,000 acquisition and construction loan and the $6,900,000 bridge construction loan obtained by 640 North Broad. In 2004 the joint venture admitted another equity partner which is obligated to contribute approximately $7,300,000 in exchange for receiving the benefit of certain tax credits. A portion of these equity contributions will be used to repay the bridge construction loan. At December 31, 2005, the amount outstanding under the acquisition and construction loan totaled $28,651,000 and the amount outstanding under the bridge construction loan totaled $6,545,000. In the first quarter of 2006 we sold our interest in 640 North Broad and were released from our guaranty of the acquisition and construction loan, while the guaranty under the bridge construction loan remains in place. In connection with the sale of our interest, we guarantied a $6,000,000 loan obtained by the purchaser of our interest (See Note 18 of the Notes to the Consolidated Financial Statements). We have received an indemnification against our funding under all the guaranties from an equity partner in the venture.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk is the risk of loss arising from adverse changes in interest rates. Our market risk arises from interest rate risk inherent in our investment assets and our variable rate debt. Interest rate risk is the possibility that changes in interest rates will cause unfavorable changes in net income or in the value of interest rate-sensitive assets, liabilities and commitments.

We do not believe that we have any material exposures to adverse changes in interest rates associated with our investment assets. We invest in investment grade state and local government issues with short-term maturities and fixed rates of return. The short-term nature of the investments provides opportunities for reinvestment at higher interest rates, as those rates increase.

We do not currently use derivatives to manage interest rate risk. At December 31, 2005, $125,989,000 of our debt was variable-rate. In addition, a joint venture in which we have an 85% non-controlling interest had $20,000,000 of variable-rate debt outstanding. Based on the total of this variable-rate debt outstanding at December 31, 2005, a 1% increase in market interest rates would adversely impact our annual pre-tax earnings by approximately $1,430,000. While it is difficult to predict the spread between interest rates of our variable-rate debt and rates of interest we earn on our short-term investments, an increase in interest rates should increase the yield on our investments, partially offsetting this adverse impact on earnings.

At December 31, 2005, $402,671,000 of our debt was fixed rate. Based upon requirements for assessing the market value of debt instruments, we estimate the fair market value by discounting future cash payments at interest rates that approximate the current market. Based on these parameters, at December 31, 2005, the estimated fair value of our fixed-rate debt was $396,873,000.

26

Contractual Obligations

The following table summarizes our contractual obligations as of December 31, 2005 (in thousands):

			Payments Due by Period
	Total		Less than 1-Year		1-3 Years		3-5 Years		More than 5-Years
Long-term debt obligations (1)	$	528,660	$	21,170	$	148,065	$	44,141	$	315,284
Fixed interest payments		206,592		25,318		52,285		41,081		87,908
Variable interest payments (2)		10,708		7,335		3,373		—		—
Operating lease obligations		8,722		381		784		816		6,741
Outstanding letters of credit		2,189		2,189		—		—		—
Other		551		33		73		86		359
Total	$	757,422	$	56,426	$	204,580	$	86,124	$	410,292

(1)

Included on balance sheet. Excludes debt on assets held for sale.

(2)

Based on variable interest rates in effect on December 31, 2005.

During 2005, we assumed debt with a total principal balance of $43,616,000. This assumed debt had a fair value in excess of carrying amount of $145,000 as of December 31, 2005.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Our audited financial statements are listed under Item 15 in this annual report and are included therein.

No supplementary data are supplied because none are required.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

In October 2004, upon recommendation of the Audit Committee and approval of the Board of Directors, we dismissed Ernst & Young LLP (Ernst & Young) as our independent auditors. Effective as of that date, we appointed Deloitte & Touche LLP (Deloitte & Touche) to serve as our independent auditors for the year ended December 31, 2004.

Ernst & Young's report on our consolidated financial statements for the year ended December 31, 2003 did not contain an adverse opinion or disclaimer of opinion, nor was such report qualified or modified as to uncertainty, audit scope or accounting principles. During the year ended December 31, 2003 and through the dismissal date, there were: (i) no disagreements with Ernst & Young on any matter of accounting principles or practices, financial statement disclosure, or auditing scope and procedure which, if not resolved to the satisfaction of Ernst & Young, would have caused Ernst & Young to make reference to the matter in their report; and (ii) there were no reportable events as defined in Item 304(a)(1)(v) of Regulation S-K.

During the year ended December 31, 2003 and through the appointment date, we did not consult Deloitte & Touche with respect to the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on our consolidated financial statements, or any other matters or reportable events as set forth in Items 304(a)(2)(i) and (ii) of Regulation S-K.

ITEM 9A. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures—We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of December 31, 2005. Based upon that evaluation and subject to the foregoing, our Chief Executive Officer and Chief Financial Officer concluded that the design and operation of disclosure control and

27

procedures provided reasonable assurance that the disclosure controls and procedures are effective to accomplish their objectives, except as noted below.

During the course of the year ended December 31, 2005 our Chief Executive Officer and Chief Financial Officer concluded that there were insufficient resources at the company to adequately review the accounting for cost of sales at our development projects and the accounting for straight-line rental income and depreciation and amortization expense at our operating properties. In response, the Chief Executive Officer and Chief Financial Officer caused the company to hire additional personnel, principally in the areas of accounting and internal audit, thereby substantially increasing the total number of employees of the company. The hiring of additional personnel and the implementation of a new fixed-asset accounting system, enabled us to assume primary responsibility for accounting for development costs, straight-line rental income and depreciation and amortization expense and to increase our level of supervision of transactions and of operations at our properties.

The Chief Executive Officer and Chief Financial Officer will continue to evaluate and, if necessary, modify our staffing, systems and accounting processes in order for our disclosure controls and procedures to be effective.

ITEM 9B. OTHER INFORMATION

No information is required to be disclosed under this Item.

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PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information required by this item will be incorporated by reference to a definitive proxy statement involving the election of directors, which is expected to be filed by us pursuant to Regulation 14A, within 120 days after the close of our fiscal year.

ITEM 11. EXECUTIVE COMPENSATION

The information required by this item will be incorporated by reference to a definitive proxy statement involving the election of directors, which is expected to be filed by us pursuant to Regulation 14A, within 120 days after the close of our fiscal year, except for the information contained in such definitive proxy statement under the captions "Board Compensation Committee Report on Executive Compensation" and "Performance Graph."

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The information required by this item will be incorporated by reference to a definitive proxy statement involving the election of directors, which we expect to be filed pursuant to Regulation 14A, within 120 days after the close of our fiscal year.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information required by this item will be incorporated by reference to a definitive proxy statement involving the election of directors, which we expect to be filed pursuant to Regulation 14A, within 120 days after the close of our fiscal year.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

The information required by this item will be incorporated by reference to a definitive proxy statement involving the election of directors, which we expect to be filed pursuant to Regulation 14A, within 120 days after the close of our fiscal year.

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

A. Financial Statements

Reports of Independent Registered Public Accounting Firms

Consolidated Balance Sheets as of December 31, 2005 and 2004

Consolidated Statements of Operations for the years ended December 31, 2005, 2004 and 2003

Consolidated Statements of Changes in Shareholders' Equity for the years ended December 31, 2005, 2004 and 2003

Consolidated Statements of Cash Flows for the years ended December 31, 2005, 2004 and 2003

Notes to the Consolidated Financial Statements

Schedule III—Real Estate and Accumulated Depreciation as of December 31, 2005

Schedules other than those listed above have been omitted because they are not required, not applicable, or the required information is set forth in the financial statements or notes thereto.

29

B. Exhibits

Exhibit Number	Description of Document
3.1	Restated Certificate of Incorporation of Registrant filed February 23, 1971, Amendment filed August 12, 1987, and Amendment filed May 31, 1991. (Incorporated by reference to Exhibit 3A of Registrant's Quarterly Report on Form 10-Q for the second quarter of 1991, filed August 14, 1991.)
3.2	Certificate of Amendment to Certificate of Incorporation filed September 1, 2004 (incorporated by reference to Exhibit 3.1 of Registrant's Quarterly Report on Form 10-Q for the third quarter of 2004, filed November 15, 2004.)
3.3	Amended and Restated By-laws of Registrant. (Incorporated by reference to Exhibit 4 to Registrant's Annual Report on Form 10-K for 2001, filed April 1, 2002.)
3.4	First Amendment to Bresler & Reiner, Inc. Amended and Restated Bylaws of Registrant. (Incorporated by reference to Exhibit 3.3 of Registrant's Report on Form 10-K for 2002, filed March 31, 2003.)
3.5	Second Amendment to Bresler & Reiner, Inc. Amended and Restated Bylaws of Registrant. (Incorporated by reference to Exhibit 3.2 to Registrant's Current Report on Form 8-K filed February 26, 2003.)
9.1	First Amended and Restated Shareholders Agreement, dated as of July 31, 2002, by and between Bresler Family Investors, LLC, Burton J. Reiner and Anita O. Reiner, Joint Tenants, Burton and Anita Reiner Charitable Remainder Unitrust and Registrant. (Incorporated by reference to Exhibit 2.5 to Registrant's Current Report on Form 8-K, filed August 8, 2002.)
9.2	Second Amended and Restated Shareholders Agreement, dated as of February 21, 2003, by and among Bresler Family Investors, LLC, Burton J. Reiner and Anita O. Reiner, husband and wife as joint tenants, Burton and Anita Reiner Charitable Remainder Unitrust and Registrant. (Incorporated by reference to Exhibit 10.1 to Registrant's Current Report on Form 8-K, filed February 26, 2003.)
10.1	Agreement of Sale and Purchase dated May 14. 2001 between ASP Washington, L.L.C. and ASP Washington Development, L.L.C., and Cohen Companies, LLC. (Incorporated by reference to Exhibit 10.1 of Registrant's Report on Form 10-K for 2003, filed March 30, 2004.)
10.2	Membership Interest Purchase Agreement dated May 6, 2003 by and among KGH Corporation, Victoria Place Apartments, Ltd. and Osprey Capital, Inc., P.A.C. Land Development Corporation and Bresler & Reiner, Inc. (Incorporated by reference to Exhibit 10.2 of Registrant's Report on Form 10-K for 2003, filed March 30, 2004.)
10.3	Purchase and Sale Agreement dated June 6, 2003 between Fountain Ponds, LLC and Bresler & Reiner, Inc. (Incorporated by reference to Exhibit 10.3 of Registrant's Report on Form 10-K for 2003, filed March 30, 2004.)
10.4	Bresler & Reiner 2006 Stock Appreciation Rights Incentive Plan. (Filed herewith.)
10.5	Amended and Restated Trust Agreement of Bresler & Reiner Statutory Trust I, dated November 23, 2005, by and among Bresler & Reiner, Inc., JPMorgan Chase Bank, National Association, Chase Bank USA and others named therein. (Filed herewith).
10.6	Junior Subordinated Indenture dated November 29, 2005 by and between Bresler & Reiner, Inc. and JPMorgan Chase Bank, National Association. (Filed herewith.)
10.7	Common Securities Subscription Agreement dated November 29, 2005 by and between Bresler & Reiner, Inc. and Bresler & Reiner Statutory Trust I. (Filed herewith.)
10.8	Purchase Agreement dated November 23, 2005 by and among Bresler & Reiner, Inc., Bresler & Reiner Statutory Trust I, and Merrill Lynch International. (Filed herewith.)
16.1	Letter from Ernst & Young LLP to the SEC dated October 7, 2004 regarding the change in certifying accountants. (Incorporated by reference to Exhibit 16 to Registrant's Current Report on Form 8-K, filed October 7, 2004.)
21	Subsidiaries of the Registrant. (Filed herewith.)

30

31.1	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 from Sidney M. Bresler, Chief Executive Officer. (Filed herewith.)
31.2	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 from Robert O. Moore, Chief Financial Officer. (Filed herewith.)
32	Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 from Sidney M. Bresler, Chief Executive Officer and Robert O. Moore, Chief Financial Officer. (Filed herewith.)

Shareholders may obtain a copy of any financial statement schedules and any exhibits filed with Form 10-K by writing to: Mr. Robert O. Moore, CFO, 11200 Rockville Pike, Suite 502, Rockville, MD 20852. Mr. Moore will advise shareholders of the fee for any exhibit.

31

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on March 31, 2006.

BRESLER & REINER, INC.
By:	/s/  SIDNEY M. BRESLERSidney M. Bresler Chief Executive Officer
By:	/s/  ROBERT O. MOORERobert O. Moore Chief Financial Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Company and in the capacities indicated on March 31, 2006.

/s/  SIDNEY M. BRESLERSidney M. Bresler	Chief Executive Officer, Director
/s/  ROBERT O. MOORERobert O. Moore	Chief Financial Officer (Principal Financial & Accounting Officer)
Benjamin C. Auger	Director
/s/  CHARLES S. BRESLERCharles S. Bresler	Director
/s/  GARY F. BULMASHGary F. Bulmash	Director
/s/  RALPH S. CHILDS, JR.Ralph S. Childs, Jr.	Director
/s/  MICHAEL W. MALAFRONTEMichael W. Malafronte	Director
/s/  BURTON J. REINERBurton J. Reiner	Director
/s/  RANDALL L. REINERRandall L. Reiner	Director
/s/  JOHN P. CASEYJohn P. Casey	Director

32

BRESLER & REINER, INC.

FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2005 and 2004

CONTENTS

Reports of Independent Registered Public Accounting Firms		F-2 & 3
Audited Financial Statements
	Consolidated Balance Sheets	F-4
	Consolidated Statements of Operations	F-5
	Consolidated Statements of Changes in Shareholders' Equity	F-6
	Consolidated Statements of Cash Flows	F-7
	Notes to Consolidated Financial Statements	F-8

F-1

Report of Independent Registered Public Accounting Firm

To the Shareholders of Bresler & Reiner, Inc.

We have audited the accompanying consolidated balance sheets of Bresler & Reiner, Inc. as of December 31, 2005 and 2004 and the related consolidated statements of operations, changes in shareholders' equity, and cash flows for the years then ended. Our audit also included the 2005 and 2004 information included in the financial statement schedule listed in the Index at Item 15. These consolidated financial statements and financial statement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on the consolidated financial statements and financial statement schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Bresler & Reiner Inc., at December 31, 2005 and 2004, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, the 2005 and 2004 information included in the financial statement schedule, when considered in relation to the basic 2005 and 2004 consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

/s/ Deloitte & Touche LLP

McLean, Virginia
March 31, 2006

F-2

Report of Independent Registered Public Accounting Firm

To the Shareholders of Bresler & Reiner, Inc.

We have audited the accompanying consolidated statements of operations, changes in shareholders' equity, and cash flows for the year ended December 31, 2003 of Bresler & Reiner, Inc. (a Delaware corporation, the Company). Our audit also included the 2003 information included in the financial statement schedule listed in the Index at Item 15. These consolidated financial statements and financial statement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements and financial statement schedule based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company's internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated results of operations and cash flows for the year ended December 31, 2003 of Bresler & Reiner, Inc., in conformity with accounting principles generally accepted in the United States. Also, in our opinion, the 2003 information included in the financial statement schedule when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

/s/ Ernst & Young LLP

McLean, Virginia
March 26, 2004

F-3

BRESLER & REINER, INC.

CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2005 AND 2004

			2005			2004
ASSETS
Real Estate:
	Rental property and equipment		$	409,563,000		$	302,083,000
	Property and land development			154,139,000			103,537,000
	Land held for investment			2,989,000			2,847,000
Real estate, at cost				566,691,000			408,467,000
Less: accumulated depreciation				(42,394,000	)		(32,762,000	)
		Total real estate, net		524,297,000			375,705,000
Assets held for sale				66,494,000			45,511,000
Receivables:
	Income taxes receivable			2,429,000			1,535,000
	Mortgage and notes receivable, other			834,000			5,680,000
	Other receivables			6,239,000			7,063,000
Cash and cash equivalents				10,820,000			9,914,000
Restricted cash and deposits held in escrow				14,034,000			10,540,000
Investments, principally available-for-sale securities				63,028,000			40,029,000
Investment in and advances to joint ventures				30,053,000			9,842,000
Deferred charges and other assets, net				45,770,000			29,361,000
		Total assets	$	763,998,000		$	535,180,000
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Mortgage and construction loans and other debt			$	485,526,000		$	311,227,000
Liabilities of assets held for sale				43,402,000			23,655,000
Accounts payable, trade and accrued expenses				18,662,000			15,045,000
Deferred income taxes payable				11,453,000			8,911,000
Other liabilities				27,897,000			12,229,000
		Total liabilities		586,940,000			371,067,000
Minority interest				49,696,000			32,968,000
Commitments and contingencies
SHAREHOLDERS' EQUITY
Common shares, $0.01 par value; 7,000,000 shares authorized, 5,477,212 shares issued and outstanding as of December 31, 2005; and 7,000,000 shares authorized; 5,679,306 shares issued, and 5,477,212 shares outstanding as of December 31, 2004				55,000			57,000
Additional paid-in capital				5,721,000			7,536,000
Retained earnings				121,586,000			125,369,000
Treasury stock (202,094 shares as of December 31, 2004)				—			(1,817,000	)
		Total shareholders' equity		127,362,000			131,145,000
		Total liabilities and shareholders' equity	$	763,998,000		$	535,180,000

See Notes to Consolidated Financial Statements

F-4

BRESLER & REINER, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003

			2005			2004			2003
OPERATING REVENUES
Homebuilding, residential lots and other development			$	55,364,000		$	24,605,000		$	1,633,000
Rentals—commercial				46,163,000			32,540,000			15,864,000
Rentals—residential				11,365,000			10,343,000			4,592,000
Hospitality				9,713,000			8,099,000			7,896,000
Other				339,000			2,059,000			1,313,000
		Total operating revenues		122,944,000			77,646,000			31,298,000
COSTS AND EXPENSES
Cost of homebuilding, residential lots and other development				43,679,000			21,071,000			1,650,000
Rental expense—commercial
	Operating expenses			18,984,000			12,746,000			6,484,000
	Depreciation and amortization expense			12,760,000			8,985,000			4,272,000
Rental expense—residential
	Operating expenses			5,028,000			5,017,000			2,389,000
	Depreciation and amortization expense			2,741,000			2,680,000			1,025,000
Hospitality expense
	Operating expenses			8,869,000			6,172,000			5,236,000
	Depreciation and amortization expense			563,000			685,000			863,000
General and administrative expense				7,723,000			3,973,000			3,762,000
Withdrawn public offering costs				3,312,000			—			—
Other expenses				121,000			—			14,000
		Total operating expenses		103,780,000			61,329,000			25,695,000
		Total operating income		19,164,000			16,317,000			5,603,000
OTHER INCOME (EXPENSES)
Interest income				1,130,000			1,885,000			2,041,000
Interest expense				(20,462,000	)		(13,890,000	)		(8,025,000	)
Debt extinguishment costs				(3,171,000	)		—			—
Gain on sale of investments in joint ventures				1,551,000			624,000			—
(Loss) income before income taxes, income from investments in joint ventures, minority interest and income from discontinued operations				(1,788,000	)		4,936,000			(381,000	)
Income from investments in joint ventures				793,000			1,360,000			1,725,000
Minority interest				(5,542,000	)		(2,067,000	)		(49,000	)
(Loss) income before income taxes and discontinued operations				(6,537,000	)		4,229,000			1,295,000
Benefit (provision) for income taxes				3,468,000			(953,000	)		537,000
(Loss) income from continuing operations				(3,069,000	)		3,276,000			1,832,000
Income from discontinued operations, net of tax				820,000			1,143,000			7,749,000
Net (loss) income			$	(2,249,000	)	$	4,419,000		$	9,581,000
(LOSS) EARNINGS PER SHARE OF COMMON STOCK
Basic and Diluted:
	(Loss) income from continuing operations		$	(0.56	)	$	0.60		$	0.33
	Income from discontinued operations, net of tax			0.15			0.21			1.42
	Net (loss) income		$	(0.41	)	$	0.81		$	1.75
Weighted average number of common shares outstanding				5,477,212			5,477,212			5,477,212

See Notes to Consolidated Financial Statements

F-5

BRESLER & REINER, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003

	COMMON STOCK			ADDITIONAL PAID-IN CAPTIAL			RETAINED EARNINGS			TREASURY STOCK			TOTAL SHAREHOLDERS' EQUITY
Balance, January 1, 2003	$	28,000		$	7,565,000		$	112,738,000		$	(1,817,000	)	$	118,514,000
Net income		—			—			9,581,000			—			9,581,000
Balance, December 31, 2003		28,000			7,565,000			122,319,000			(1,817,000	)		128,095,000
Stock split		29,000			(29,000	)		—			—			—
Cash dividends paid		—			—			(1,369,000	)		—			(1,369,000	)
Net income		—			—			4,419,000			—			4,419,000
Balance, December 31, 2004		57,000			7,536,000			125,369,000			(1,817,000	)		131,145,000
Cash dividends paid		—			—			(1,534,000	)		—			(1,534,000	)
Cancellation of treasury stock		(2,000	)		(1,815,000	)		—			1,817,000			—
Net loss		—			—			(2,249,000	)		—			(2,249,000	)
Balance, December 31, 2005	$	55,000		$	5,721,000		$	121,586,000		$	—		$	127,362,000

See Notes to Consolidated Financial Statements

F-6

BRESLER & REINER, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003

					2005			2004			2003
OPERATING ACTIVITIES:
Net (loss) income					$	(2,249,000	)	$	4,419,000			9,581,000
Adjustments to reconcile net (loss) income to net cash (used in) operating activities:
	Depreciation and amortization					15,398,000			12,482,000			7,554,000
	Gain on sale of properties and investments in joint ventures					(4,300,000	)		(1,680,000	)		(11,990,000	)
	Income from investments in joint ventures					(793,000	)		(1,360,000	)		(1,725,000	)
	Minority interest expense					7,746,000			2,007,000			49,000
	Deferred income taxes					2,542,000			(862,000	)		5,092,000
	Amortization of finance costs and capitalized interest					(670,000	)		(925,000	)		472,000
	Homebuilding and land development					(32,417,000	)		(45,741,000	)		(13,820,000	)
	Distribution of income from investments in joint ventures					526,000			1,583,000			1,502,000
	Early extinguishment of debt					3,171,000			—			—
	Changes in assets and liabilities:
		Receivables				(710,000	)		(318,000	)		(3,518,000	)
		Other assets				(997,000	)		(4,933,000	)		(3,325,000	)
		Other liabilities				4,771,000			8,018,000			1,680,000
			Total adjustments			(5,733,000	)		(31,729,000	)		(18,029,000	)
				Net cash used in operating activities		(7,982,000	)		(27,310,000	)		(8,448,000	)
INVESTING ACTIVITIES:
	Increase in cash due to change in consolidation method					—			519,000			—
	Investment in joint ventures					(21,849,000	)		(1,154,000	)		(1,284,000	)
	Distributions from joint ventures in excess of income					416,000			7,278,000			2,926,000
	Deposits for property acquisitions					(2,613,000	)		(3,610,000	)		(2,044,000	)
	(Increase) decrease in restricted cash					(3,494,000	)		2,328,000			(8,799,000	)
	(Increase) decrease in investments principally available-for-sale securities					(22,999,000	)		12,606,000			23,200,000
	Purchase of rental property, equipment and other					(73,938,000	)		(101,626,000	)		(63,781,000	)
	Net purchase of property and land under development					(40,549,000	)		(26,923,000	)		(4,735,000	)
	Decrease (increase) in notes receivable					4,546,000			4,060,000			(1,339,000	)
	Proceeds from sale of properties and investments in joint ventures					6,708,000			535,000			13,804,000
				Net cash used in investing activities		(153,772,000	)		(105,987,000	)		(42,052,000	)
FINANCING ACTIVITIES:
	Proceeds from mortgage and construction loans and other debt					256,732,000			129,234,000			58,912,000
	Repayment of mortgage and construction loans and other debt					(101,726,000	)		(2,737,000	)		(1,201,000	)
	Contributions from (distributions to) minority partners					11,150,000			6,489,000			(123,000	)
	Increase in deferred charges					(1,962,000	)		(1,967,000	)		(611,000	)
	Dividends paid and purchase of treasury stock					(1,534,000	)		(1,369,000	)		—
				Net cash provided by financing activities		162,660,000			129,650,000			56,977,000
Net increase (decrease) in cash and cash equivalents						906,000			(3,647,000	)		6,477,000
Cash and cash equivalents, beginning of year						9,914,000			13,561,000			7,084,000
Cash and cash equivalents, end of year					$	10,820,000		$	9,914,000		$	13,561,000
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
	Cash paid during the year for:
		Interest (net of amount capitalized)			$	22,128,000		$	15,312,000		$	8,673,000
		Income taxes (current and estimated)				942,000			236,000			2,241,000
SUPPLEMENTAL DISCLOSURES OF NON-CASH ACTIVITIES:
	Consolidation of Waterfront Associates, LLC					—			9,385,000			—
	Debt assumed on acquisitions					43,616,000			24,716,000			29,184,000
	Deposit liability assumed on Clarksburg Ridge acquisition					—			—			2,875,000
	Liabilities related to loan guaranties					531,000			—			—
	Accrued rental property and equipment					1,593,000			880,000			451,000

See Notes to Consolidated Financial Statements

F-7

BRESLER & REINER, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION AND ORGANIZATION

Bresler & Reiner, Inc. ("B&R" and, together with its subsidiaries and affiliates, "we," the "Company" or "us") engages in the acquisition, development, and ownership of commercial, residential and hospitality real estate in the Washington, D.C.; Wilmington, Delaware; Philadelphia, Pennsylvania; Baltimore, Maryland; Maryland Eastern Shore; and Orlando, Florida metropolitan areas.

PRINCIPLES OF CONSOLIDATION

Our consolidated financial statements include the accounts of Bresler & Reiner, Inc., our wholly owned subsidiaries, and entities which we control or, entities that are required to be consolidated under Financial Accounting Standards Board (FASB) Interpretation No. 46R (FIN 46R). Entities which we do not control or entities that are not to be consolidated under FIN 46R and over whom we exercise significant influence, are accounted for under the equity method. All significant intercompany balances and transactions have been eliminated in consolidation.

REVENUE RECOGNITION

Real estate sales—Gains on sales of real estate are recognized pursuant to the provisions of Statement of Financial Accounting Standards (SFAS) No. 66, Accounting for Sales of Real Estate. For condominium and land sales, revenues and cost of sales are recorded at the time the sale of each unit or lot is closed and title and possession have been transferred to the buyer. Gains on sale of long-lived assets are recognized based on the full accrual method when all the criteria for such recognition as detailed in SFAS No. 66 have been met.

Rentals—we recognize rental revenue in accordance with SFAS No. 13, Accounting for Leases. SFAS No. 13 requires that revenue be recognized on a straight-line basis over the term of the lease for operating leases. We recognize revenue related to expense recoveries from tenants based on the accrual method, which matches the timing of the recoveries with the underlying expense.

Hospitality—we recognize hospitality revenue as services are provided.

Rental, construction and management fees—we recognize rental, construction and management fees as services are provided.

RENTAL PROPERTY AND EQUIPMENT

Rental property and equipment are stated at cost. Depreciation is recorded using the straight-line method over the estimated useful lives of the related assets, generally 39 years for buildings and three to 10 years for furniture, fixtures and equipment. Depreciation expense totaled $9,585,000, $7,660,000 and $6,393,000 for the years ended December 31, 2005, 2004 and 2003, respectively.

Upon acquisitions of real estate, we assess the fair value of acquired assets (including land, buildings and improvements, and identified intangibles such as above and below market leases and acquired in-place leases and tenant relationships) and acquired liabilities in accordance with SFAS No. 141, Business Combinations and SFAS No. 142, Goodwill and Other Intangible Assets (together SFAS 141 and 142) and allocate purchase price based on these assessments. We assess fair value based on estimated cash flow projections that utilize appropriate discount and capitalization rates and available market information. Estimates of future cash flows are based on a number of factors including the historical operating results, known trends, and market conditions that may affect the property.

In accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, we evaluate the recoverability of long-lived assets whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. Recoverability is measured based on net, undiscounted expected cash flows. Assets are considered to be impaired if the undiscounted expected cash flows are less than the carrying amount of the assets. Impairment charges are recorded based upon the difference between the carrying value of the asset and its fair value.

F-8

PROPERTY AND LAND DEVELOPMENT

When construction commences, costs are recorded in property and land development where they are accumulated by project. Project costs included in property and land development include materials and labor, capitalized interest and property taxes. These costs are charged to costs of homes and lots sold based on either the specific identification method or the relative sales value method, whichever is more appropriate, in accordance with SFAS No. 67, "Accounting for Costs and Initial Rental Operations of Real Estate Projects." We review our accumulated costs to ensure that any costs in excess of net realizable value are charged to operations when identified. As part of our construction and development activities, we capitalized $1,979,000, $1,738,000 and $1,023,000 of interest in 2005, 2004 and 2003, respectively.

LAND HELD FOR INVESTMENT

Land held for investment is recorded at cost and reviewed for impairment when such indicators arise. If determined to be impaired, it is recorded at its estimated fair value.

ASSETS HELD FOR SALE

We account for long-lived assets to be disposed of by sale in accordance with SFAS No. 144. Accordingly, a long-lived asset is classified as held for sale in the period in which management commits to a plan to sell the asset; the asset is available for immediate sale in its present condition; an active program to locate a buyer has been initiated and the asset is marketed at a price that is reasonable in relation to its current fair value; and the sale of the asset is probable within one year.

INVESTMENTS IN AND ADVANCES TO JOINT VENTURES

For entities that are not deemed to be variable interest entities (VIEs), as set forth in FIN 46R, we account for our investments in these joint ventures in accordance with Statement of Position No. 78-9, Accounting for Investments in Real Estate Ventures and APB Opinion No. 18, The Equity Method of Accounting for Investments in Common Stock. For entities in which we have a controlling interest, we consolidate the investment and a minority interest is recognized in our consolidated financial statements. Minority interest in the balance sheet represents the minority owners' share of equity as of the balance sheet date, consisting of contributions made by the minority partner plus or minus the minority partner's share of income or loss, less any distributions made to the minority partner. Minority interest in the statements of operations represents the minority owners' share of the income or loss of the consolidated joint venture. For entities in which we exercise significant influence but do not control, we account for our investment using the equity method of accounting and do not consolidate the investment. We evaluate control primarily based on the investors' relative voting rights in the joint venture.

For entities that are deemed to be VIEs, as set forth in FIN 46R, we account for our investments based on a determination of the entity's primary beneficiary. If we are the primary beneficiary through being subject to a majority of the potential variability in gains or losses of the VIE, then we consolidate our investment. If we are not the primary beneficiary then we do not consolidate our investment, but account for it under the equity method.

INVESTMENTS

Investments consist principally of investments in municipal instruments. Our investments are classified as available-for-sale securities. Available-for-sale securities are recorded at fair value, with unrealized holding gains and losses included in comprehensive income. At December 31, 2005 and 2004, cost approximated fair value for these securities. At December 31, 2005 and December 31, 2004, the total of these investments which were short term in nature with maturities of less than one year, was $60,510,000 and $34,748,000 respectively.

CASH AND CASH EQUIVALENTS

We consider all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.

F-9

RESTRICTED CASH AND DEPOSITS HELD IN ESCROW

Deposits held in escrow include: escrow balances funded in accordance with lender requirements, including escrows for real estate taxes, insurance, replacement reserves, and lease reserves; deposits held in escrow for tenants; deposits on homes held for sale; and loan funds held back by a lender pending the successful achievement of various coverage targets and occupancy statistics.

DEFERRED CHARGES AND OTHER ASSETS

Included in deferred charges are fees incurred in connection with obtaining financing for our real estate. These fees are deferred and amortized as a part of interest expense over the term of the related debt instrument on a straight-line basis, which approximates the effective interest method. In addition, deferred costs include leasing charges, comprised of tenant allowances and lease commissions incurred to originate a lease, which are amortized on a straight-line basis over the term of the related lease.

Included in Other Assets are the costs allocated to above and below market leases, acquired in-place leases and tenant relationships for properties that were acquired. The application of SFAS No. 141 and 142 to real estate acquisitions requires us to allocate the purchase price to these assets in addition to land, building and improvements based on the relative fair values of the assets and liabilities acquired. In order to determine the amount of the purchase price to be allocated to these assets, we make assumptions regarding the relative value of the in-place leases when compared to the current market. Some of the judgments required as a part of this exercise include (1) determining the market rental rates of the acquired leases, (2) estimating the market value of concessions (including rent concessions and tenant improvement allowances) and leasing commissions to be paid on new leases, (3) estimating an appropriate lease-up period and (4) applying an estimated risk-adjusted discount rate to the existing tenants' leases. The acquired above and below market leases are amortized through revenues. The acquired in-place leases and tenant relationships are amortized through depreciation and amortization expense.

OTHER LIABILITIES

We account for loan guarantees of the indebtedness of joint ventures that are not consolidated into our consolidated financial statements in accordance with FASB Interpretation No. 45 ("FIN 45"), "Guarantor's Accounting and Disclosure Requirements of Guarantees, Including Indirect Guarantees of Indebtedness of Others." FIN 45 requires that upon issuance of a guarantee, the guarantor recognize a liability for the fair value of the obligation it assumes under that guarantee. At December 31, 2005 the total recorded liability related to loan guarantees was $531,000. There were no recorded liabilities related to loan guarantees at December 31, 2004.

INCOME TAXES

SFAS No. 109, "Accounting for Income Taxes," is applied in calculating our provision for income taxes. As prescribed therein, the provision for income tax is based on both current and deferred taxes. Current taxes represent the estimated taxes payable or refundable in the current year, and deferred taxes represent estimated future tax effects attributable to temporary differences and loss carryforwards. Nontaxable income, such as interest on state and municipal securities, is excluded from the provision calculation.

Deferred income taxes result principally from temporary differences related to the timing of the recognition of real estate sales, lease income, interest expense, and real estate taxes during development and the timing of depreciation for tax and financial reporting purposes.

USE OF ESTIMATES

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the stated amounts of assets, liabilities, revenues, and expenses presented in the financial statements, as well as the disclosures relating to contingent liabilities. Consequently, actual results could differ from those estimates that have been reported in our consolidated financial statements. Critical accounting policies that require the use of estimates and significant judgement include the allocation of purchase prices and assignment of useful lives for property acquisitions; the recording of cost of sales for development projects; and the determination of consolidation methodology for joint ventures.

F-10

RECLASSIFICATIONS

Certain amounts for the years 2004 and 2003 consolidated financial statements have been reclassified to conform to the current year presentation.

EARNINGS PER COMMON SHARE

We have no dilutive securities; therefore, basic and fully diluted earnings per share are identical. Weighted average common shares outstanding were 5,477,212 for the years ended December 31, 2005, 2004 and 2003 (after adjusting for the 2-for-1 stock split).

In June 2004, the Board of Directors approved an amendment to the Certificate of Incorporation to increase the authorized Common Stock from 4,000,000 shares to 7,000,000 shares. On the same date the Board of Directors approved a 2-for-1 stock split of the Company's common stock, which was effected in the form of a stock dividend. In July 2004, stockholders holding more than fifty percent of the voting power of the issued and outstanding capital stock executed the shareholder consent to this amendment. The amendment was filed with the Secretary of State of Delaware in September 2004, at which time the stock dividend was distributed.

DIVIDENDS

In May 2005, our Board of Directors declared a cash dividend of $0.28 per common share. Of the total dividend, $0.14 per share was paid in June 2005, while the remaining $0.14 dividend was paid in December 2005. In May 2004, our Board of Directors declared a cash dividend of $0.25 per common share. Of the total dividend, $0.125 per share was paid in June 2004, while the remaining dividend of $.0125 was paid in December 2004. The per-share dividend payment disclosure has been adjusted for the 2-for-1 stock split.

COMPREHENSIVE INCOME

Except for net income, we do not have any items impacting comprehensive income. Therefore, comprehensive income and net income are the same.

2.     NEW ACCOUNTING PRONOUNCEMENTS

In March 2005, the FASB issued Interpretation No. 47, Accounting for Conditional Asset Retirement Obligations, an interpretation of Statement No. 143, Accounting for Asset Retirement Obligation. Interpretation No. 47 requires companies to recognize a liability for the fair value of a legal obligation to perform asset-retirement activities that are conditional on a future event if the amount can be reasonably estimated. We adopted Interpretation No. 47 in 2005. The impact of adopting Interpretation No. 47 was not material to our financial position or results of operations.

In December 2004, the FASB issued Statement No. 123R, Share-Based Payments. Statement No. 123R requires companies to recognize in the income statement the grant-date fair value of stock options and other equity-based compensation issued to employees. We adopted Statement No. 123R in January, 2006. Prior to that date Statement 123R did not apply to the Company.

In December 2004, the FASB issued Statement No. 153, Exchanges of Nonmonetary Assets, an Amendment of APB No. 29. Statement No. 153 amends APB Opinion No. 29 and states that companies will no longer be permitted to use the "similar productive assets" concept to account for nonmonetary exchanges at book value with no gain being recognized. An exchange must be accounted for at fair value if the exchange has commercial substance and fair value is determinable. We adopted Statement No. 153 in 2005. The impact of adopting Statement No. 153 was not material to our financial position or results of operations.

In May 2005, the FASB issued Statement No. 154, Accounting Changes and Error Corrections. SFAS No. 154 replaces APB Opinion No. 20, Accounting Changes, and SFAS No. 3, Reporting Accounting Changes in Interim Financial Statements. SFAS No. 154 changes the requirements for the accounting for and reporting of a change in accounting principles. It requires retrospective application to prior periods' financial statements of changes in accounting principle, unless it is impracticable to determine either the period-specific effects or the cumulative effect of the change. The statement is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005.

F-11

Emerging Issues Task Force (EITF) Issue 04-5, Determining Whether a General Partner or the General Partners, as a Group, Controls a Limited Partnership or Similar Entity When the Limited Partners have Certain Rights (Issue 04-5) was ratified by the FASB in June 2005. At issue is what rights held by the limited partner(s) preclude consolidation in circumstances in which the sole general partner would consolidate the limited partnership. The assessment of limited partners' rights and their impact on the presumption of control of the limited partnership by the sole general partner should be made when an investor becomes the sole general partner and should be reassessed if (a) there is a change to the terms or in the exercisability of the rights of the limited partners, (b) the sole general partner increases or decreases its ownership of limited partnership interests, or (c) there is an increase or decrease in the number of outstanding limited partnership interests. Issue 04-5 is effective no later than for fiscal years beginning after December 15, 2005 and as of June 29, 2005 for new or modified arrangements. The guidance provided in this EITF will not have a material effect on our financial position or results of operations.

3.     SIGNIFICANT TRANSACTIONS, ACQUISITIONS AND INVESTMENTS

During the years ended December 31, 2005, 2004 and 2003, we entered into several material transactions as described below. All acquisitions of real estate and investments in joint ventures have been included in our accompanying statements of operations from the date of the transaction forward and any gain or losses on sales of assets have been calculated and recorded as of the date of the transaction. All investments have been consolidated unless noted below:

SIGNIFICANT TRANSACTIONS

Midlantic Office Trust, Inc.    In May 2005, Midlantic Office Trust, Inc. (Midlantic) filed a registration statement with the Securities Exchange Commission for its initial common stock public offering (IPO). We participated as a sponsor for the Midlantic offering, and in July 2005, agreed to sell it certain commercial properties. In August 2005, Midlantic determined not to proceed with its IPO, due to market conditions. As a result, our agreements with Midlantic were cancelled. We incurred $3,312,000 in expenses related to this transaction.

Purchase and sale of equity investments    In June 2005, we acquired one of our equity partner's interests in the entities that own the Fort Washington, West Germantown Pike and 900 Northbrook properties for a total consideration of $1,175,000. Funding of the purchase was provided by the sale to such equity partner of our interest in the Cigar Factory residential condominium project valued at $800,000, the cancellation of a promissory note receivable from such equity partner with a principal balance outstanding of $300,000 and the assumption of a $75,000 note payable of such equity partner. As a result of the transaction, we recorded an increase in the carrying amount of the Fort Washington, West Germantown Pike and 900 Northbrook properties totaling $1,034,000 and a decrease in minority interest liability of $66,000.

Third Street    In October 2004, Third Street, in which we own a 1% interest, sold its interests in two residential buildings located in Washington DC, to an unaffiliated third party for $10,600,000; $8,400,000 of the proceeds were used to repay notes and advances we made to Third Street. For the year ended December 31, 2004, we recognized $2,400,000 of income, before taxes, on the repayment of amounts that had been subject to uncollectibility allowances and the recognition of a previously deferred gain on sale.

F-12

ACQUISITIONS AND INVESTMENTS

The following table summarizes the commercial, residential and development real estate acquired during the years ended December 31, 2005, 2004 and 2003, described in further detail below:

	Location	Date of Acquisition	Size (1)	B&R Ownership		Purchase Price (in 000s) (2)
Commercial Properties
Wynwood	Chantilly, VA	June 2005	88,000 sq. ft.	100.0	%	$	13,000
919 Market Street	Wilmington, DE	April 2005	223,000 sq. ft.	100.0	%		40,525
Cross Keys	Doylestown, PA	April 2005	82,000 sq. ft.	100.0%	(3)		17,792
102 Pickering Way	Exton, PA	April 2005	80,000 sq. ft.	100.0%	(3)		15,275
1105 Market Street	Wilmington, DE	February 2005	173,000 sq. ft.	100.0%	(3)		20,700
Devon Square	Devon, PA	February 2005	140,000 sq. ft.	5.5	%		2,667	(4)
Historic Baltimore Portfolio	Baltimore, MD	November 2004	530,000 sq. ft.	51.0	%		29,500
Fort Washington Executive Center	Ft. Washington, PA	February 2004	393,000 sq. ft.	97.5%	(5)		52,664
West Germantown Pike	Plymouth Meeting, PA	February 2004	115,000 sq. ft.	98.1%	(5)		20,500
One Northbrook	Trevose, PA	February 2004	95,000 sq. ft.	100.0%	(3)		16,900
900 Northbrook	Trevose, PA	November 2003	66,000 sq. ft.	90.0%	(5)		12,050
Total Commercial Properties			1,985,000 sq. ft.			$	241,573
Residential Properties
The Fountains	Orlando, FL	September 2003	400 units	100.0	%	$	35,100
Victoria Place	Orlando, FL	July 2003	364 units	85.0	%		39,500
Total Residential Properties			764 units			$	74,600
Development Projects
Red Mill Pond	Ocean City, MD	May 2005	541 lots	51.0	%	$	37,990
Symphony House	Philadelphia, PA	May 2005	163 units	22.3	%		5,029	(4)
Venice Lofts	Philadelphia, PA	May 2005	128 units	22.3	%		2,971	(4)
Crisfield	Ocean City, MD	March 2005	232 lots	51.0	%		10,250
Seaside	Ocean City, MD	November 2004	138 lots	51.0	%		25,000
400 S Philadelphia Ave	Ocean City, MD	September 2004	20 units	51.0	%		2,000
146th Street	Ocean City, MD	August 2004	18 units	51.0	%		1,726
Golfview	St. Petersburg, FL	April 2004	139 units	50.0	%		10,800
640 N Broad Street	Philadelphia, PA	January 2004	266 units	86.5	%		9,050
1150 Northbrook	Trevose, PA	November 2003	108,000 sq. ft.	100.0	%		2,000
Laguna Vista	Ocean City, MD	September 2003	41 units	100.0	%		6,000
Divine Lorraine	Philadelphia, PA	August 2003	135 units	95.0	%		5,875
Cigar Factory	Philadelphia, PA	July 2003	30 units	66.7	%		1,500
Clarksburg Ridge	Clarksburg, MD	March 2003	159 lots	100.0	%		12,200
Total Development Projects						$	132,391

(1)

For development projects, size represents the anticipated size of the project following development.

(2)

Unless noted otherwise, amounts represent the gross purchase price for commercial and residential properties and the initial land acquisition price for development properties, which are included in the consolidated financial statements.

(3)

We have entered into an asset supervision agreement with an unrelated third party that entitles this party to 20% of cash available from operations after we have received a cumulative annual 12% return on our investment in the

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property, and 20% of cash available from a refinancing or sale of the property after we have received a full return of our investment along with a cumulative annual 12% return on our investment.

(4)

Amount represents our initial investment in the joint venture entity that purchased the property. This joint venture entity is not consolidated into our consolidated financial statements.

(5)

An unrelated third party owns a Class B membership interest in the joint venture that entitles him to 15% of cash available from operations after the Class A members have received a cumulative annual 12% return on their investment in the property and 15% of cash available from a refinancing or sale of the property after the Class A members have received a full return of their investment along with a cumulative annual 12% return on their investment.

COMMERCIAL ACQUISITIONS

Wynwood    In June 2005, we acquired two commercial office buildings containing a total of 88,000 square feet of office space, located in Chantilly, Virginia, for a purchase price of $13,000,000. We funded the purchase through a draw on our unsecured acquisition line of credit.

919 Market Street    In April 2005, we acquired a 223,000 square foot commercial office building located in Wilmington, Delaware for $40,525,000. We assumed a 5.89% fixed-rate $22,498,000 mortgage loan on the building which matures in 2033. The interest rate increases by a minimum of 2% in 2013. In November 2005 we defeased this loan and placed a $35,600,000 mortgage loan on the property (see Note 8). The loan bears interest at 5.52% and matures in 2015. Interest-only payments are due during the first three years of the loan.

Cross Keys    In April 2005, we acquired an 82,000 square foot commercial office building located in Doylestown, Pennsylvania for $17,792,000. In connection with the acquisition, we assumed a $10,969,000 5.45% fixed-rate mortgage loan which matures in 2013 on the building and recorded a debt discount of $528,000.

102 Pickering Way    In April 2005, we acquired an 80,000 square foot commercial office building located in Exton, Pennsylvania for $15,275,000. In connection with the acquisition, we assumed a 6.5% fixed-rate mortgage loan for $10,149,000, which matures in 2013 and recorded a debt premium of $692,000.

1105 Market Street    In February 2005, we acquired a 173,000 square foot commercial office building located in Wilmington, Delaware, for a purchase price of $20,700,000. At the time of purchase, we placed a two-year $19,000,000 mortgage loan bearing interest at one-month LIBOR plus 195 basis points that we guaranteed. We anticipate spending between $3,000,000 and $4,000,000 on capital expenditures, and lease-up costs.

Devon Square    In February 2005, we invested $2,667,000 for a 50% ownership interest in Devon Square which consists of two commercial office buildings containing a total of 140,000 square feet of office space in Devon, Pennsylvania through a tenant-in-common (TIC) agreement. The purchase price of the buildings was $17,109,000. A $21,350,000 acquisition and development loan at one-month LIBOR plus 170 basis points, maturing in August 2007, was obtained, which we guaranteed. In September 2005, we sold 89% of our 50% interest in the TIC to our third party joint venture member for $2,496,000 and recognized a $140,000 gain on the sale. We account for our investment in Devon Square using the equity method. We have recorded a $78,000 liability related to the loan guaranty, which is included in Other Liabilities in the Consolidated Balance Sheet at December 31, 2005.

Historic Baltimore Portfolio    In November 2004 we invested $4,500,000 for a 51% interest in a joint venture that purchased a portfolio of eight historic commercial office buildings located in the central business district of Baltimore, Maryland containing a total of 530,000 square feet of office space (the Baltimore Properties). The purchase price for the eight buildings was $29,500,000. The joint venture obtained a $15,000,000 loan on seven of the buildings bearing interest at one-month LIBOR plus 175 basis points and maturing in November 2006 and assumed an $8,470,000 loan on one of the buildings bearing interest at 5.95% and maturing in October 2012. In accordance with the joint venture agreement we receive 28% of the net proceeds from any building sales. In 2005 four of the buildings were sold and we recognized a pre-tax gain of $1,003,000, net of our partner's share of the gain. A further three buildings have been classified in assets held for sale in the accompanying consolidated financial statements. These three buildings were sold in January 2006 (see Note 18).

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Fort Washington Executive Center    In February 2004, we invested $7,000,000 for a 96.5% Class A interest in a joint venture that acquired an executive center located in Fort Washington, Pennsylvania for $52,664,000, consisting of three commercial buildings containing a total of 393,000 square feet of office space. In connection with the acquisition, the joint venture placed two 10 year, 5.6% fixed-rate, mortgage loans aggregating $49,000,000 on the buildings. In June 2005, we acquired one of our equity partner's interests, thereby increasing our equity interest to 97.5% (see Purchase and sale of equity interests above).

West Germantown Pike    In February 2004, we invested $4,875,000 for a 97.5% Class A interest in a joint venture that acquired two commercial office buildings aggregating 115,000 square feet, located in Plymouth Meeting, Pennsylvania for $20,500,000. The buildings were acquired subject to a 5.9% fixed-rate $16,246,000 mortgage loan maturing in 2013. In June 2005, we acquired one of our entity partner's interests, thereby increasing our entity interest to 98.1% (see Purchase and sale of equity interests above).

One Northbrook    In February 2004, we acquired a 95,000 square foot office building located in Trevose, Pennsylvania, for $16,900,000. We placed a 10-year, 5.75% fixed-rate, mortgage loan for $15,300,000 on the property.

900 Northbrook    In November 2003, we invested $1,312,000 for an 87.5% Class A interest in a joint venture that purchased a 66,000 square foot office building located in Trevose, Pennsylvania for $12,050,000. We placed an $11,200,000 ten-year, 5.98% fixed-rate mortgage on the property. In June 2005, we acquired one of our equity partner's interests, thereby increasing our equity interest to 90.0% (see Purchase and sale of equity interests above).

RESIDENTIAL ACQUISITIONS

The Fountains at Waterford Lakes    In September 2003, we acquired a 400 unit apartment community, located in Orange County, Florida for $35,100,000. The property was acquired subject to a 5.0% fixed-rate $24,600,000 mortgage that matures in December 2007. We recorded a premium of $245,000 in connection with the loan assumption. In September 2005, we defeased this loan and placed a 10-year $39,500,000 loan on the property bearing interest at a fixed-rate of 5.45% (see Note 8). Interest-only payments are due during the loan term.

Victoria Place Apartments    In July 2003, we invested $8,500,000 for an 85% interest in a joint venture that purchased Victoria Place Apartments, a 364 unit apartment complex in Orange County, Florida for $39,500,000. The venture placed a $34,120,000 ten-year, 4.72% fixed-rate, mortgage on the property.

DEVELOPMENT PROJECTS

Red Mill Pond    In May 2005, we invested $3,500,000 for a 51% interest in an entity that purchased and is developing a 541 residential lot community in Sussex County, Delaware to be sold to a homebuilder. An unaffiliated third party owns the remaining interest in the entity. The land to be developed was acquired for $37,990,000. To fund the development, the entity drew down $24,845,000 on an acquisition and development loan, issued an $8,115,000 deferred purchase money note, and received a $7,000,000 advance deposit from the homebuilder. Both the loan and the deferred purchase money note bear interest at 6.0% and mature in May 2008.

Based on the terms of the acquisition and development loan, we are required to contribute an additional $3,500,000 to the venture during 2006, with such funds to be available to repay a portion of the loan.

B&R Philadelphia Condo Investors    In May 2005, we invested $8,000,000 for a 44.5% interest in Philadelphia Condo Investors LP (Philadelphia Condo Investors). The remaining limited partners in Philadelphia Condo Investors, including several officers and directors of the Company, contributed a total of $10,000,000 for their equity interests. We have consolidated this entity's assets and liabilities into our consolidated financial statements. Philadelphia Condo Investors has made the following two investments in joint ventures, which it has accounted for under the equity method:

Symphony House    In May 2005, Philadelphia Condo Investors invested $11,000,000 for a 50% interest in Symphony House Associates LP (Symphony House), an entity that is developing 163 luxury high-rise condominium units, a 35,000 square foot theater, a parking garage and 4,300 square feet of retail space in center city Philadelphia, Pennsylvania. Symphony House obtained a $98,100,000 construction loan at one-month LIBOR, plus 220 basis points, and a $16,900,000 mezzanine construction loan at one-month LIBOR plus 1000 basis points. Both loans mature in March 2008. In August 2005, the construction loan cost was reduced by 40 basis points due to a certain pre-sales target being achieved. We have provided a repayment guaranty for up to $39,240,000 of the

F-15

construction loan and the full amount of the mezzanine loan for which we have recorded a $454,000 liability, which is included in Other Liabilities in the Consolidated Balance Sheet at December 31, 2005.

Venice Lofts    In May 2005, Philadelphia Condo Investors invested $6,500,000 for a 50% interest in Venice Lofts Associates LP (Venice Lofts), an entity that is developing 38 luxury townhouse and 90 mid-rise condominium units in Philadelphia, Pennsylvania. In May 2005, Venice Lofts obtained both a $30,000,000 construction loan at one-month LIBOR, plus 225 points, and an $8,500,000 mezzanine loan at 16.25%. Both loans mature in November 2007. We have guarantied the full amount of the mezzanine loan.

Crisfield    In January and March 2005, we invested a total of $2,500,000 for a 51% interest in an entity that owns a parcel of undeveloped land in Crisfield, Maryland that is subdivided into 232 residential lots. The entity is developing the land as lots to be sold to a homebuilder. The entity purchased the parcel for $10,250,000, which was funded by an $7,950,000 drawdown on an $11,700,000 acquisition and development loan and a $2,300,000 deposit from a homebuilder. The loan bears interest at one month LIBOR plus 200 basis points and matures in January 2008. During 2005 16 lots were sold.

Seaside    In November 2004, we invested $2,500,000 for a 51% interest in an entity that owns a parcel of undeveloped land in Ocean City, Maryland which is subdivided into 138 residential lots along with 50 boat slips. The entity is developing the land as lots to be sold along with the boat slips to a homebuilder. The entity purchased the parcel of land and boat slips for $25,000,000 which was funded primarily by a $16,000,000 acquisition loan, a $2,000,000 drawdown on a $5,500,000 construction loan and a $7,000,000 deposit from the homebuilder. Both the acquisition and the construction loan bear interest at the lender's prime rate and mature in October 2007. During 2005 18 lots were sold.

400 S. Philadelphia    In September 2004, we invested $2,000,000 for a 51% interest in a joint venture that purchased a parcel of land in Ocean City, Maryland for the purpose of developing 20 for-sale residential condominium units. In February 2006, the joint venture obtained a $6,400,000 construction loan. We have begun development and anticipate completing the units in 2006.

146^th Street    In August 2004 we invested $1,726,000 for a 51% interest in a joint venture that purchased a parcel of land in Ocean City, Maryland for the purpose of developing 18 for-sale residential condominium units. In November 2005, prior to performing any development activity, the joint venture sold the land parcel for $2,550,000 and we recorded a pre-tax gain of $269,000.

Golfview    In April 2004 we invested $3,664,000 for a 50% interest in a joint venture that purchased a 144 unit mid-rise residential rental complex located in St. Petersburg, Florida, for $10,800,000. The joint venture converted the complex into 139 residential condominium units. The condo conversion process was completed in 2004 and the joint venture sold two units and 137 units in 2004 and 2005, respectively.

640 North Broad    In January 2004 we invested $3,200,000 for an 80% interest in a joint venture that purchased an historic property in Philadelphia, PA for a purchase price of $9,050,000 to be redeveloped into a 266 unit apartment property. In 2004 the venture obtained a $32,000,000 acquisition and construction loan bearing interest at one-month LIBOR plus 155 basis points and maturing in August 2007, and a $6,900,000 construction bridge loan bearing interest at one month LIBOR plus 175 basis points and maturing in September 2007. Simultaneous with the closing of the bridge construction loan, the joint venture admitted another equity partner which is obligated to contribute approximately $7,300,000 in exchange for receiving the benefit of certain tax credits, when certain conditions are met. A portion of these equity contributions will be used to repay the bridge loan. In 2005 we entered into an agreement to sell our interest in the project to one of our minority partners. As a result, we have included this property in assets held for sale in the accompanying consolidated financial statements. In January 2006, we closed on the sale of our interest (see Note 18).

1150 Northbrook Development Parcel    In November 2003, we acquired a 9.6-acre tract of land adjacent to the 900 Northbrook building in the commercial office park in Trevose, Pennsylvania for $2,000,000. We intend to develop a commercial office building containing 108,000 square feet of office space on the land.

F-16

Laguna Vista    In September 2003, we entered into an agreement that resulted in us acquiring 100% of a 41 unit luxury condominium development project in Ocean City, Maryland for a total investment of $6,000,000. In March 2004, we obtained a $15,100,000 construction loan with interest at one-month LIBOR, plus 185 basis points. Development was completed and 19 of the units were sold in 2005.

Divine Lorraine    In August 2003, we acquired for $2,375,000 a 95% interest, in a joint venture which acquired an historic building in Philadelphia, Pennsylvania called the Divine Lorraine for $2,295,000 for the purpose of developing 135 apartment units. In October 2004 we acquired 3.8 acres of adjacent land for $3,580,000, using a draw on our unsecured line of credit. In 2005, we reached an agreement to sell the building and adjacent land for $10,100,000 and as a result have included this property in assets held for sale in the accompanying consolidated financial statements. The sale is anticipated to close in the second quarter of 2006.

Cigar Factory    In 2003, we acquired for $1,000,000 a 66.7% interest in a joint venture that owned a warehouse in Philadelphia, PA, for the purpose of developing a 30 unit for-sale condominium property. The joint venture obtained a $6,300,000 acquisition and construction loan. The joint venture sold 13 units in 2004 and 11 units in the first six months of 2005. In June 2005, we sold our interest in the Cigar Factory for a value of $1,100,000 (see Purchase and sale of equity investments above).

Clarksburg Ridge, LLC    In March 2003, we acquired an undeveloped 159 lot residential subdivision in Clarksburg, Maryland, for $12,200,000. Simultaneous with the acquisition, we entered into a $7,000,000 development management agreement for the development of the lots. We also entered into an agreement with a homebuilder for the sale of the lots. We sold 11 lots in 2003, 138 lots in 2004 and the remaining 10 lots in 2005.

Pro-Forma Results of Operations—Unaudited    The following unaudited pro-forma statements reflect our results of operations as if our acquisitions completed in 2005, which are in the aggregate material, had occurred on the first day of the periods presented (in thousands, except earnings per share amounts):

	Pro-forma Years Ended December 31,
	2005			2004
Operating revenues	$	126,506		$	89,414
Net (loss) income	$	(2,447	)	$	3,623
(Loss) earnings per share	$	(0.45	)	$	0.66

These unaudited pro-forma results have been prepared for comparative purposes only and do not purport to be indicative of the results of operations which would have actually resulted had the acquisitions been effective on the first day of the periods presented.

4.     RENTAL PROPERTY AND EQUIPMENT (in thousands):

	December 31,
	2005			2004
Land	$	56,815		$	42,989
Buildings and improvements		341,954			253,656
Equipment		10,794			5,438
		409,563			302,083
Less—Accumulated depreciation		(42,394	)		(32,762	)
Rental property and equipment, net	$	367,169		$	269,321

F-17

5.     MORTGAGE AND NOTES RECEIVABLES (in thousands):

		December 31,
		2005		2004
Notes receivable:
	12% due 2006	$	—	$	4,393
	8.5% due 2006		585		750
	7.0% due through 2015		149		160
	Other (1)		100		377
		$	834	$	5,680

All mortgages are collateralized by first deeds of trust on real estate property.

(1)

Other is comprised of multiple notes with various interest rates and maturity dates.

6.     INTANGIBLE ASSETS

        In recording our acquisitions of rental properties, we have established intangible in-place lease assets and intangible in-place lease liabilities. The following table summarizes these intangible assets and liabilities as of the dates presented (in thousands):

	December 31,
	2005				2004
	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Acquired in-place lease assets	$	35,665	$	13,002	$	19,800	$	6,893
Acquired in-place lease liabilities		9,263		3,093		3,130		1,224

The amortization of acquired above and below-market-in-place leases, included as a net increase in revenues, totaled $840,000 and $57,000 for the years ended December 31, 2005 and 2004, respectively.

The amortization of acquired lease assets and tenant relationships, included in depreciation and amortization expense, totaled $5,176,000 and $3,512,000 for the years ended December 31, 2005 and 2004, respectively.

The estimated annual amortization of acquired in-place lease liabilities, net of acquired in-place lease assets to be included as a net increase in revenues for each of the five succeeding years is as follows (in thousands):

2006	$	1,066
2007		823
2008		815
2009		627
2010		269

The estimated annual amortization of acquired in-place lease assets to be included in amortization expense for each of the five succeeding years is as follows (in thousands):

2006	$	5,754
2007		4,758
2008		3,531
2009		2,443
2010		1,353

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7.     INVESTMENTS IN AND ADVANCES TO JOINT VENTURES

        At December 31, 2005, our investments in non-consolidated joint ventures and partnerships consisted of the following:

Joint Venture	Ownership Percentage
1925 K Associates LLC (1925 K Street)	85%
WBP Undeveloped Land (WBP Undeveloped Land)	80%
Redwood Commercial Management, LLC (Redwood Commercial)	50%
Tech-High Leasing Company (Tech-High Leasing)	50%
Selborne House at St. Marks Owner, LLC (Arbor Crest)	33%
Madison Building Associates, LLC (Madison Building)	25%
Venice Lofts	22%
Symphony House	22%
B&R Devon Square Owner, LP (Devon Square)	6%

Below are condensed combined balance sheets for our unconsolidated joint venture entities as of December 31, 2005 and 2004 (in thousands):

		December 31,
		2005		2004
ASSETS
Cash		$	3,523	$	1,348
Land held for investment			5,929		5,432
Construction in progress			42,359		—
Land, building and equipment, net			68,766		77,654
Other assets			4,772		1,276
	Total assets	$	125,349	$	85,710
LIABILITIES AND MEMBERS' EQUITY
Mortgages and notes		$	80,070	$	39,366
Other liabilities			9,284		5,527
	Total liabilities		89,354		44,893
Members' equity			35,995		40,817
	Total liabilities and members' equity	$	125,349	$	85,710
Company's interest in members' equity (1)		$	29,063	$	9,842

(1)

Included in Company's interest in members' equity is $1,247,000 of equity from the trust preferred security disclosed in Note 8.

The difference between the carrying amount of our investment in and advances to joint ventures and our accumulated membership interest noted above is primarily due to advances to joint ventures, capitalized interest on our investment balance in joint ventures that own real estate under development and the fair value of loan guaranties we have provided. The capitalized interest is expensed as the development units are sold.

F-19

Below are condensed combined statements of operations for our unconsolidated joint venture entities for the periods indicated (in thousands):

	Years Ended December 31,
	2005		2004		2003
Operating revenues	$	12,194	$	23,397	$	18,609
Operating expenses		5,776		8,132		11,591
Interest expense		3,130		2,511		2,263
Depreciation and amortization expense		2,482		2,112		1,703
Net income	$	806	$	10,642	$	3,052
Company's equity in earnings of unconsolidated joint ventures (2)	$	793	$	1,360	$	1,725

(2)

Included in Company's equity in earnings of unconsolidated joint ventures is $9,000 of equity in earnings from the trust preferred security disclosed in Note 8.

Waterfront Associates    In October 2002, B&R Waterfront Properties, LLC (BRW), a 54% owned subsidiary of ours that is consolidated into our Consolidated Financial Statements, entered into a joint venture called Waterfront Associates LLC (WALLC), with K/FCE Investment LLC (K/FCE), to redevelop and reposition the Waterfront Complex. BRW contributed the leasehold improvements relating to the Waterfront Complex to WALLC. Affiliates of K/FCE are marketing, leasing, redeveloping, and managing the complex. K/FCE is the managing member of WALLC and has sole responsibility for the management, control, and operation of WALLC, as well as for the formulation and execution of its business and investment policy. Beginning the date the joint venture was formed through March 31, 2004, BRW did not consolidate the assets, liabilities and operations of WALLC, since BRW did not had control of the Waterfront Complex. Beginning March 31, 2004 BRW consolidated the assets, liabilities and operations of WALLC, in accordance with FIN 46R.

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8.     MORTGAGE AND CONSTRUCTION LOANS AND OTHER DEBT (in thousands):

				December 31,
Property (1)
		Interest Rate	Maturity	2005		2004
Fort Washington		5.60%	2014	$	47,921	$	48,556
Washington Business Park		7.63%	2031		38,586		38,983
The Fountains at Waterford Lakes (2)(8)		5.45%	2010		39,500		24,600
919 Market Street (2)		5.52%	2015		35,600		—
Victoria Place Apartments		4.72%	2013		32,907		33,446
640 North Broad—Construction Loan (7)		LIBOR + 155 basis pts. (6)	2007		28,651		6,076
640 North Broad—Bridge Loan (7)		LIBOR + 175 basis pts.	2007		6,545		2,052
Red Mill Pond—Development Loans		6.00%	2008		27,279		—
Red Mill Pond—Promissory Note		6.00%	2012		8,115		—
1105 Market Street		LIBOR +195 basis pts. (6)	2007		19,000		—
Versar Center		6.18%	2013		17,869		18,100
Seaside (4)		Lender's Prime Rate	2007		17,484		19,095
Sudley N. Bldgs A,B,C,& D and Bank Bldg.		7.47%	2012		17,416		17,597
West Germantown Pike		5.90%	2033		15,852		16,064
One Northbrook		5.75%	2014		14,973		15,166
900 Northbrook		5.98%	2013		10,937		11,073
Cross Keys (8)		5.45%	2013		10,855		—
102 Pickering Way (8)		6.50%	2013		10,069		—
Inn at the Colonnade		7.45%	2011		9,632		9,806
Crisfield (4)		LIBOR + 200 basis pts. (6)	2008		9,867		—
Baltimore Portfolio (1 Building)		5.95%	2012		8,338		8,452
Baltimore Portfolio (3 Buildings) (7)(4)		LIBOR + 175 basis pts.	2006		8,083		15,000
Fort Hill		7.70%	2011		5,493		5,554
Charlestown North		6.74%	2012		4,816		4,874
Holiday Inn Express		7.88%	2011		3,566		3,627
Sudley South		LIBOR + 180 basis pts. (6)	2006		4,283		—
Laguna Vista (4)		LIBOR + 185 basis pts. (6)	2006		1,670		10,236
Golfview (4)		LIBOR + 175 basis pts. (6)	2007		—		10,385
Cigar Factory (4)		LIBOR + 275 basis pts. (6)	2005		—		1,566
	Total mortgage and construction loans				455,307		320,308
Junior subordinated notes (5)		8.37%	2035		41,238		—
Line of Credit (3)		LIBOR + 175 basis pts. (6)	2006		30,406		7,874
Unsecured Loan		LIBOR + 195 basis pts. (6)	2005		—		6,000
Other		(9)	(9)		1,709		—
Total mortgage and construction loans and other debt				$	528,660	$	334,182

(1)

Note is secured by the property.

(2)

Note was refinanced during the third quarter of 2005. See additional disclosure immediately following table.

(3)

Represents an unsecured line of credit to the Company.

(4)

Note was paid down from proceeds from sales.

(5)

See description of the unsecured junior subordinated notes set forth below.

(6)

LIBOR rate is the one-Month LIBOR rate which was 4.39% at December 31, 2005.

(7)

The debt for these properties is included in liabilities of assets held for sale on the balance sheet.

(8)

The debt shown for these properties does not include the related premium or discount.

(9)

Represents a deferred purchase money promissory note.

F-21

In March 2006, we amended our unsecured line of credit facility increasing the capacity under the line from $32,200,000 to $50,000,000, extending the maturity date to May 2007 and reducing the required annual funds from operations, for the year ending December 31, 2005, from $15,000,000 to $11,000,000.

Several of our loans contain certain financial covenants. The most stringent of these covenants require that we maintain a minimum net worth of $110,000,000, a minimum liquidity of $30,000,000, and a minimum liquidity to unsecured debt ratio of 1:1.

We are in compliance with our loan covenants, including covenants under our line of credit as amended in March 2006.

Annual contractual principal payments as of December 31, 2005, are as follows (in thousands):

2006		$	21,170
2007			105,949
2008			37,751
2009			4,365
2010			44,141
2011 and thereafter			315,284
	Total	$	528,660

Included in mortgages and construction loans and other debt are fair market value adjustments on assumed debt. The net unamortized fair market value adjustments were $145,000 at December 31, 2005 and $173,000 at December 31, 2004.

UNSECURED JUNIOR SUBORDINATED NOTES AND TRUST PREFERRED SECURITIES

On November 29, 2005, Bresler & Reiner, Statutory Trust I, (the Trust) a wholly owned subsidiary of the Company, completed the issuance and sale in a private placement of $40,000,000 in aggregate principal amount of trust preferred securities. The Trust simultaneously issued $1,238,000 in aggregate principal amount of common securities to the Company. Both the preferred securities and the common securities (together the Capital Securities), mature on January 30, 2036 and may be redeemed by the Trust at any time on or after January 30, 2011. The Capital Securities require quarterly distributions payable at a fixed rate equal to 8.37% per annum until January 30, 2011 and at a floating rate equal to three-month LIBOR plus 350 basis points per annum thereafter.

The Trust used the proceeds from the sale of the Capital Securities to purchase $41,238,000 in aggregate principal amount of unsecured junior subordinated debentures due January 30, 2036 issued by the Company (the Debentures). The payment terms of the Debentures are substantially the same as the terms of the Capital Securities.

Since we are not the primary beneficiary of the Trust, we have accounted for our investment in the Trust under the equity method, in accordance with FIN46. As a result, we have reflected in our consolidated financial statements as mortgage and construction loans and other debt, the debentures issued to the Trust totaling S41,238,000 and have included in investment in and advances to joint ventures the common securities held by the Company totaling $l,238,000. Interest paid under the debentures totaling $307,000 for the year ended December 31, 2005 is recorded as interest expense while our share of earnings of the trust totaling $9,000 for the year ended December 31, 2005 is included in income from investments in joint ventures.

LOAN DEFEASANCE

In September 2005, we defeased the $24,600,000 mortgage note collateralized by The Fountains by purchasing $25,408,000 of U.S Treasury securities. In November 2005, we defeased the $22,329,000 mortgage note collateralized by 919 Market Street, by purchasing $24,024,000 of U.S. Treasury and government sponsored agency securities. These securities, whose cash flow is structured to match the principal and interest payments due under the mortgage notes, were placed in trusts for the sole purpose of funding these payments under the mortgage notes. Since both the transactions were structured as legal defeasances, in accordance with SFAS No. 140, Accounting for Transfers on Servicing of Financial Assets and Liabilities, these mortgage notes payable were accounted for as having been extinguished. We have recorded the difference between the cost of the securities purchased and the carrying amount of the mortgage notes extinguished, along with the write-off of unamortized deferred financing costs, totaling $865,000 and $2,046,000 for The Fountains and 919 Market Street, respectively, as debt extinguishment costs for the year ended December 31, 2005, in the accompanying Consolidated Statements of Operations. We subsequently placed new mortgage debt on these properties.

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9.     COMMITMENTS AND CONTINGENCIES

GUARANTIES

We have guarantied repayment of up to $39,240,000 under the $98,100,000 primary construction loan and repayment of the full amount outstanding under the $16,900,000 mezzanine construction loan obtained by Symphony House. The guarantied repayment under the primary loan will be reduced to $12,263,000 upon the joint venture obtaining $83,500,000 in sales revenue and will be further reduced to $4,950,000 once net sales proceeds reach 110% of the outstanding principal balance of the loan. Both the primary construction loan and the mezzanine loan mature in 2008. Funding of the guaranty would increase our equity participation in the venture. At December 31, 2005, there was no amount outstanding under the primary loan and the amount outstanding under the mezzanine loan totaled $14,813,000.

We have guarantied repayment of an $8,500,000 mezzanine construction loan obtained by Venice Lofts. The loan matures in 2007. The amount outstanding under the loan totaled $1,226,000 at December 31, 2005.

We have guarantied repayment of the entire loan balance outstanding under a $21,350,000 acquisition and construction loan obtained by Devon Square and our equity partner in the venture has provided the same guarantee. Funding of the guaranty would increase our equity participation in the venture. The loan matures in 2007. At December 31, 2005, the balance outstanding under the loan totaled $13,064,000.

We have provided an unconditional and irrevocable payment guaranty of $5,500,000 to Wachovia Bank, N.A in connection with a loan made to 1925 K Street. The loan matures in April 2007, but may be extended for up to an additional two years at the option of the borrower. Funding of the guaranty would increase our equity participation in the venture.

At December 31, 2005 we were a guarantor of both the $32,000,000 acquisition and construction loan and the $6,900,000 bridge construction loan obtained by 640 North Broad. In 2004 the joint venture admitted another equity partner which is obligated to contribute approximately $7,300,000 in exchange for receiving the benefit of certain tax credits. A portion of these equity contributions will be used to repay the bridge construction loan. At December 31, 2005, the amount outstanding under the acquisition and construction loan totaled $28,651,000 and the amount outstanding under the bridge construction loan totaled $6,545,000. In the first quarter of 2006 we sold our interest in 640 North Broad and were released from our guarantee of the acquisition and construction loan, while the guarantee under the bridge construction loan remains in place. In connection with the sale of our interest, we guarantied a $6,000,000 loan obtained by the purchaser of our interest (see Note 18). We have received an indemnification against our funding under all the guaranties from an equity partner in the venture.

In connection with the $15,100,000 construction loan Laguna Vista has obtained from Wachovia Bank, N.A., we have guarantied the purchase of half of all unpurchased condominium units at Laguna Vista for a total acquisition price that will equate to one half of the outstanding loan balance at that date. At December 31, 2005, the outstanding loan balance totaled $1,670,000.

We have guarantied repayment of the entire loan balance outstanding under a $15,000,000 mortgage loan made by Wachovia Bank, N.A. to the entities that own seven of the Baltimore Properties. The loan matures in 2006 and provides for two, two-year extension options. The outstanding loan balance totaled $8,074,000 at December 31, 2005, reflecting a reduction in the loan as a result of the sale of four of the properties in 2005. In the first quarter of 2006 the full amount outstanding under the loan was repaid upon the sale of the remaining three properties. (See Note 18.)

Paradise Developers, our wholly-owned subsidiary has obtained a $7,044,000 development loan from Wachovia Bank, N.A., maturing in 2006, the full amount of which has been guarantied by us. At December 31, 2005, the outstanding loan balance totaled $4,283,000.

In February 2004, in connection with two mortgage loans totaling $49,000,000 obtained by the Fort Washington Executive Center, we guarantied the rental income under a master lease agreement for 110,000 square feet of office space at an annual rent of $21.00 per square foot for a five year term beginning January 2008, providing a major tenant fails to exercise a five year extension option on their lease at that time.

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LITIGATION

We are currently a party to a lawsuit filed by its partner in a joint venture that owns one of its commercial properties. The suit was filed in the Circuit Court of Montgomery County, Maryland in December 2005. A motion by the plaintiff for a preliminary injunction preventing any sale or further encumbrance of the property was denied by the Court in February 2006. The plaintiff seeks $15,000,000 in damages for breach of fiduciary duty and fraud and $25,000,000 for exemplary and punitive damages. We believe the complaint is without merit and intends to vigorously defend the lawsuit. No provision has been recorded in the accompanying Consolidated Financial Statements for our exposure, if any, related to this litigation.

We are subject to various legal proceedings and claims that arise in the ordinary course of our business. Management believes that the final outcome of such matters will not have a material adverse effect on our financial position, results of operations or liquidity.

10.   DISCONTINUED OPERATIONS

The assets and liabilities of the following properties comprised assets held for sale in the accompanying consolidated balance sheets: 640 North Broad; Divine Lorraine; and three properties in the Historic Baltimore Portfolio.

The results of operations and gains on sale for the following properties are included in discontinued operations in the accompanying consolidated statements of operations: 640 North Broad; seven properties in the Historic Baltimore Portfolio; 146^th Street, The Commons, five commercial properties leased to convenience store operators, Maplewood Manor and Third Street.

During 2005, we sold four of the eight Baltimore Properties for a total of $12,651,000 and recorded a pre-tax gain on sale of $783,000, net of our equity partner's share of the gain. We have also executed agreements to sell another three of the remaining four properties. The sales of these three properties were completed in January 2006 (See Note 18).

In November 2005, we sold 146^th Street Developers, LLC (146^th Street) for $2,550,000 and recorded a pre-tax gain on sale of $269,000.

In June 2005, we executed an agreement to sell our interest in 640 North Broad to one of our equity partners for $5,462,000. The sale closed in January 2006 (See Note 18).

In September 2005, we executed an agreement to sell the Divine Lorraine property and the adjacent ground for $10,100,000. Upon the closing of the sale, which is anticipated to occur in the second quarter of 2006, we will record a pre-tax gain on sale of approximately $2,200,000.

In December 2004, we sold to two unaffiliated parties five commercial properties that were leased to convenience store operators. The total sales price, less closing costs, was $1,474,000, of which $910,000 was paid by promissory notes. One note, in the amount of $750,000, bears interest at a fixed-rate of 8.5%, is non-amortizing and matures in December 2006. The other note, in the amount of $160,000, bears interest at a fixed-rate of 7.0%, is amortized over an 11 year period and matures in December 2015. We have recorded the results of operations of the five properties along with a $575,000 gain, net of taxes, as part of discontinued operations, in the accompanying Consolidated Statements of Operations.

In October 2004, Third Street, in which we own a 1% interest, sold its interests in two residential buildings to an unaffiliated third party for $10,600,000. A total of $8,400,000 of the net proceeds received by Third Street was used to pay in full notes and advances made by us to Third Street, together with accrued interest thereon. We have recorded a $478,000 of previously deferred gain on sale, net of taxes, in the accompanying Consolidated Statements of Operations related to the repayment of the notes.

In December 2003, we sold 95% of our interest in Town Square Commons, LLC (The Commons), to an unaffiliated party, for $9,918,000. The Commons owns a 116 unit apartment complex in Washington DC. The sale was part of a tax free exchange under §1031 of the US Internal Revenue Code and, as such, the taxable gain on the sale was deferred. In 2005 we sold our remaining 5% interest in The Commons for $522,000. We have recorded the results of operations of The Commons along with a $5,418,000 gain, net of taxes which was recorded in 2005, as part of discontinued operations, in the accompanying consolidated statements of operations.

F-24

In May 2003, we sold our Maplewood Manor nursing home in Lakewood, New Jersey to an unaffiliated party for $6,500,000. Of the total purchase price, $3,900,000 was paid in cash. The balance $2,600,000 was donated by us as a charitable gift to the purchaser, a charitable organization. The sale was part of a tax free exchange under §1031 of the US Internal Revenue Code and, as such, the taxable gain on the sale was deferred. We have recorded the operating results of the nursing home along with a $1,711,000 gain, net of taxes, as part of discontinued operations in the accompanying consolidated statements of operations.

The following summary presents the combined operating results of and gains on sale from properties we have classified as discontinued operations (in thousands):

	Years Ended December 31,
	2005			2004			2003
Revenues	$	7,404		$	807		$	1,573
(Loss) income before gain on sale and provision for income taxes	$	(898	)	$	25		$	772
Gain on sale		4,458			1,874			11,882
Minority interest		(2,204	)		60			—
Provision for income taxes		(536	)		(816	)		(4,905	)
Income from discontinued operations	$	820		$	1,143		$	7,749

11.   INCOME TAXES

SFAS No. 109, "Accounting for Income Taxes," establishes financial accounting and reporting standards for the effects of income taxes that result from our activities during the current and preceding years. It requires an asset and liability approach to accounting for income taxes. Balance sheet accruals for income taxes are adjusted to reflect changes in tax rates in the period such changes are enacted.

We file a consolidated Federal income tax return. The (benefit) provision for income taxes includes the following components (in thousands):

		Years Ended December 31,
		2005			2004			2003
(Benefit) provision for income taxes
	Current tax	$	(474	)	$	2,631		$	(724	)
	Deferred tax		(2,459	)		(862	)		5,092
Total (benefit) provision for income taxes (including discontinued operations)		$	(2,933	)	$	1,769		$	4,368

A reconciliation of the statutory Federal tax rate to the Company's effective income tax rate follows:

			Years Ended December 31,
			2005 (1)	2004	2003
Statutory rate			34.0%	34.0%	34.0%
Increase (decrease) resulting from:
	State taxes, net of federal income tax benefit		7.0%	5.3%	5.5%
	Interest income from tax-exempt bonds		5.8%	(6.2)%	(5.7)%
	Other (includes return to accrual adjustment)		9.8%(2)	(4.5)%	(2.5)%
		Effective rate	56.6%	28.6%	31.3%

(1)

The 2005 tax rates reflect the tax rates of the benefit the Company receives, since the Company recorded a net loss before income taxes for the year.

(2)

Includes adjustments related to reconciliation of net receivables due on 2005 filed income tax returns to income taxes receivable on December 31, 2004.

F-25

Deferred income taxes result from temporary differences in the recognition of revenue and expense for income tax and financial statement reporting purposes. The sources of these differences and the estimated tax effect of each are as follows (in thousands):

		Deferred tax liability (asset) as of December 31, 2005			Deferred income tax provision (benefit) for the year ended December 31, 2005			Deferred tax liability (asset) as of December 31, 2004
Basis in property		$	9,035		$	4,508		$	4,527
Charitable contributions			(769	)		(61	)		(708	)
Investments in partnerships			1,414			190			1,224
Lease intangibles			(2,582	)		(1,339	)		(1,243	)
Gain on sale			4,539			(375	)		4,914
Other			(184	)		(381	)		197
Deferred tax liability			11,453			2,542			8,911
Deferred tax asset (net operating losses)			(5,001	)		—			—
	Total	$	6,452		$	2,542		$	8,911

At December 31, 2005 we had an estimated net operating loss (NOL) carryforward with an estimated tax effect of $5,001,000. The NOL is recorded as a deferred tax asset and is included in deferred charges and other assets on the balance sheet.

12.   OPERATING LEASES

AS A LESSEE

At December 31, 2005 we were obligated under two land leases with the District of Columbia Redevelopment Land Agency for the Waterfront Complex. The leases pertain to land on which we own commercial properties that are currently under development. The leases, which expire in 2058, have aggregate annual rental payments of $130,000.

During 2005, we relocated our corporate offices within Rockville, Maryland and terminated our previous office lease agreement that was entered into in 2003. We paid a $50,000 fee to terminate this lease. The rent for our current office space commenced in July, 2005 and expires in December, 2012. Total rent paid under both of these leases for the year ended 2005 was $169,000.

Minimum rentals to be paid under these leases at December 31, 2005, are as follows (in thousands):

2006		$	381
2007			388
2008			396
2009			404
2010			412
2011 and thereafter			6,741
	Total	$	8,722

AS A LESSOR

Substantially all leases of our residential property are for a term of one year of less. Other leases are subject to cancellation at the lessee's option under certain conditions. No single tenant represents more than 10% of our total

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revenues. Minimum future rentals to be received for commercial property subject to non-cancelable and other leases as of December 31, 2005 are as follows (in thousands):

2006		$	45,849
2007			39,759
2008			30,289
2009			23,155
2010			11,341
2011 and thereafter			31,869
	Total	$	182,262

We are also entitled to additional rents, which are not included above that are primarily based upon escalations of real estate taxes and operating expenses over base period amounts. We earned approximately $3,268,000, $2,174,000 and $1,054,000 of additional rents for the years ended December 31, 2005, 2004 and 2003.

13.   TRANSACTIONS WITH AFFILIATES

We have business transactions with several affiliates that are owned in part by certain of our shareholders, officers, and directors. These transactions are summarized as follows (in thousands):

		Years Ended December 31,
		2005			2004		2003
Revenues:
	Management fees	$	16		$	16	$	365
	Interest		—			—		306
Cost and expenses:
	Interest		837	(1)		329		—

(1)

Includes interest on an $8,000,000 loan to the Company bearing interest at 10%. This loan was repaid in December 2005.

In addition, certain affiliated entities participate under our insurance policy and reimburse us for the associated policy premiums.

14.   BENEFIT PLANS

DEFINED CONTRIBUTION PLAN

In November 2004, we established a defined contribution plan (401K) that covers all employees. For the years ended December 31, 2005 and 2004, we contributed $75,000 and $12,000, respectively, to the 401K plan, representing 3% of all employee's salaries up to a maximum salary of $210,000 per employee in 2005 and $200,000 per employee in 2004.

DEFINED BENEFIT PENSION PLAN

Most of our employees are covered by our defined benefit pension plan. We have made contributions to the plan to trusts established to pay future benefits to eligible retirees and dependents. We use December 31 as our measurement date. Benefit obligations as of the end of the year reflect assumptions in effect as of those dates. Net pension costs for each of the years presented were based on assumptions in effect at the end of the respective preceding year.

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Obligations and Funded Status (in thousands):

		December 31,
Change in benefit obligations:
		2005			2004
Benefit obligation at beginning of year		$	3,438		$	4,818
Service cost			91			174
Interest cost			101			265
Benefits paid			(15	)		(1,488	)
Curtailment gains			—			(564	)
Settlement loss			(1,518	)		400
Actuarial gains			91			(167	)
	Benefit obligations at end of year	$	2,188		$	3,438

		December 31,
Change in plan assets:
		2005			2004
Fair value of plan assets at beginning of year		$	3,273		$	4,422
Actual return on plan assets			116			339
Contributions by Employer			50
Benefits paid			(15	)		(1,488	)
Settlement			(1,518	)		—
	Fair value of plan assets at end of year	$	1,906		$	3,273

	2005			2004
Unfunded status of plan	$	(282	)	$	(165	)
Unrecognized (loss) gains		(120	)		117
Unrecognized transition asset		74			130
Accrued liabilities		88			—
Prepaid pension expense		—			83

	December 31,
Amounts recognized in the consolidated balance sheet:
	2005		2004
Prepaid assets	$	—	$	83
Accrued liabilities		88		—

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	December 31,
Information for pension plans with an accumulated benefit obligation in excess of plan assets
	2005		2004
Projected benefit obligation	$	2,188	$	3,438
Accumulated benefit obligation		1,937		3,039
Fair value of plan assets		1,906		3,273

	December 31,
Components of Net Periodic Benefit Cost
	2005			2004
Service cost	$	91		$	174
Interest cost		101			265
Expected return on plan assets		(110	)		(291	)
Amortization of transition asset		57			57
Preliminary net pension expense		139			205
Curtailment gain		—			(411	)
Settlement loss		83			50
Final net periodic pension expense (income)	$	222		$	(156	)

The actuarial assumptions used to determine the benefit obligations at December 31, 2005 and 2004 related to our defined benefit pension plan, as appropriate, are as follows:

	December 31,
Benefit Obligation Assumptions
	2005	2004
Discount rates	5.50%	6.00%
Rates of increase in future compensation	4.25%	4.25%

The actuarial assumptions used to determine the net (income) expense related to our defined benefit plan for years ended December 31, 2005 and 2004, as appropriate, are as follows:

	December 31,
Pension Cost Assumptions
	2005	2004
Discount rates	5.50%	5.50%
Expected long-term rates of return on assets	7.00%	7.00%
Rates of increase in future compensation levels	4.25%	4.25%

The long-term rate of return assumption represents the expected average rate of earnings on the funds invested or to be invested to provide for the benefits included in the benefit obligations. The long-term rate of return assumption is determined based on a number of factors, including historical market index returns, the anticipated long-term asset allocation of the plan, historical plan return data, plan expenses and the potential to outperform market index returns.

The asset allocations of our plans at December 31, 2005 and 2004, by asset category, were as follows:

	December 31,
Asset Category
	2005	2004
Equity securities	26.0%	56.0%
Debt securities	72.0%	41.0%
Other	2.0%	3.0%

The investment objectives for the assets of the defined benefit pension plan are to minimize the net present value of expected funding contributions and to meet or exceed the rate of return assumed for plan funding purposes over the long term. The nature and duration of benefit obligations; along with assumptions concerning assets class returns and

F-29

return correlations, are considered when determining an appropriate asset allocation to achieve the investment objectives.

Investment policies and strategies governing the assets of the plan are designed to achieve investment objectives within prudent risk parameters. Risk management practices include the use of external investment managers and the maintenance of a portfolio diversified by asset class, investment approach and security holdings, and the maintenance of sufficient liquidity to meet benefit obligations as they come due.

The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid (in thousands):

2006	$	52
2007		53
2008		395
2009		49
2010		49
2011-2015		683

15.   DISCLOSURE ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS

The estimated fair values of our financial instruments are described below.

As of December 31, 2005, the fair value of our $528,660,000 of mortgage and construction loans and other debt was $522,862,000. As of December 31, 2004, the fair value of our $334,182,000 of mortgage and construction loans and other debt was $331,848,000. The fair value of fixed rate debt is estimated by discounting the future cash flows based on borrowing rates currently available to us for financing on similar terms for borrowers with similar credit ratings. For variable rate obligations the carrying amount is a reasonable estimate of fair value.

The fair value of our other financial instruments approximates their carrying amounts.

16.   QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
(in thousands except earnings per common share amounts):

	Three Months Ended
	March 31, 2005		June 30, 2005		September 30, 2005			December 31, 2005
Operating revenues	$	29,874	$	44,630	$	20,967		$	27,473
Operating income		6,995		10,619		(38	)		1,957
Net income (loss)		881		2,765		(3,503	)		(2,249	)
Net income (loss) per common share		.16		.50		(.64	)		(.41	)

	Three Months Ended
	March 31, 2004		June 30, 2004		September 30, 2004		December 31, 2004
Operating revenues	$	13,537	$	16,997	$	21,965	$	25,147
Operating income		2,653		3,549		3,532		6,583
Net income		292		636		981		2,510
Net income per common share		.05		.12		.18		.46

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17.   SEGMENT INFORMATION:

In accordance with SFAS No. 131, "Disclosures About Segments of an Enterprise and Related Information," we report segment information for the following four categories:

Commercial Rental Property

This segment includes the rental income derived by commercial properties from leases of office and industrial space and other related revenue sources. Commercial leases generally provide for a fixed monthly rental over terms that range from three to 10 years.

Also included in this segment is income generated from management and leasing activities associated with our 50% ownership interest in Redwood Commercial, a commercial management company.

Residential Rental Property

This segment includes the rental income derived from residential properties from leases of apartment units and other related revenue sources. Apartment leases generally provide for a fixed monthly rental over a one-year term. Also included in this segment are fees earned from our management of residential properties in 2004 and 2003.

Hospitality Properties

This segment includes revenue and income derived from services provided at our hospitality properties.

Commercial, Residential and Land Under Development

This segment primarily includes the development and sale of homes and residential condominium units, the development of commercial and residential buildings and the development and sale of lots as part of residential subdivisions. Also included are the revenues and costs associated with undeveloped commercial land sales, and other construction activity.

Our real estate investments are located in the Washington DC, Philadelphia, Pennsylvania, Baltimore, Maryland, Wilmington, Delaware, Ocean City, Maryland, Orlando Florida and Tampa, Florida metropolitan areas. We are not involved in any operations in countries other than the United States of America.

The accounting policies of the segments are the same as those described in the summary of significant accounting policies. We evaluate performance based upon revenues less operating expenses of the combined properties in each segment.

Our reportable segments are a consolidation of related subsidiaries that are managed separately as each segment requires different operating, pricing, and leasing strategies.

F-31

Following is a summary of our reportable segments.

December 31, 2005 (in thousands)		Commercial, Residential and Land Development			Commercial Rental			Residential Rental			Hospitality			Corporate and Other			Consolidated
Statement of Operations:
	Total operating revenues	$	55,364		$	46,163		$	11,365		$	9,713		$	339		$	122,944
	Cost of homebuilding, residential lots and other development		(43,679	)		—			—			—			—			(43,679	)
	Operating expenses		—			(18,984	)		(5,028	)		(8,869	)		—			(32,881	)
	Depreciation and amortization expense		—			(12,760	)		(2,741	)		(563	)		—			(16,064	)
	Interest expense		—			(14,768	)		(3,508	)		(1,113	)		(1,073	)		(20,462	)
	Gain on sale of investments in joint ventures		(118	)		127			1,542			—			—			1,551
	Income (loss) from investments in joint ventures		1			1,018			(235	)		—			9			793
	Minority interest		(5,636	)		119			(25	)		—			—			(5,542	)
	Withdrawn public offering		—			—			—			—			(3,312	)		(3,312	)
	Debt extinguishment costs		—			(2,046	)		(865	)		—			(260	)		(3,171	)
	General, administrative and other expenses		—			—			—			—			(7,844	)		(7,844	)
	Other (expense)		—			—			—			—			1,130			1,130
	Income (loss) before taxes and discontinued operations	$	5,932		$	(1,131	)	$	505		$	(832	)	$	(11,011	)	$	(6,537	)
Assets:
	Real estate at cost	$	157,128		$	308,258		$	84,312		$	16,993		$	—		$	566,691
	Accumulated depreciation		—			(24,311	)		(8,948	)		(9,135	)		—			(42,394	)
	Investments in joint ventures		19,013			10,669			371			—			—			30,053
	Cash, cash equivalents and restricted cash		—			—			—			—			24,854			24,854
	Investments		—			—			—			—			63,028			63,028
	Other		55,931			39,397			2,195			864			23,379			121,766
		$	232,072		$	334,013		$	77,930		$	8,722		$	111,261		$	763,998

F-32

December 31, 2004 (in thousands)		Commercial, Residential and Land Development			Commercial Rental			Residential Rental			Hospitality			Corporate and Other			Consolidated
Statement of Operations:
	Total operating revenues	$	24,605		$	32,812		$	10,395		$	8,099		$	1,735		$	77,646
	Cost of homebuilding, residential lots and other development		(21,071	)		—			—			—			—			(21,071	)
	Operating expenses		—			(12,746	)		(5,017	)		(6,172	)		—			(23,935	)
	Depreciation and amortization expense		—			(8,985	)		(2,680	)		(685	)		—			(12,350	)
	Interest expense		—			(19,608	)		3,316			997			1,405			(13,890	)
	Gain on sale of investments in joint ventures		—			—			—			—			624			624
	Income from investments in joint ventures		(114	)		1,502			(28	)		—			—			1,360
	Minority interest		(1,983	)		(136	)		52			—			—			(2,067	)
	General, administrative and other expenses		—			—			—			—			(3,973	)		(3,973	)
	Other income		—			—			—			—			1,885			1,885
	Income (loss) before taxes and discontinued operations	$	1,437		$	(7,161	)	$	6,038		$	2,239		$	1,676		$	4,229
Assets:
	Real estate at cost	$	106,384		$	203,583		$	82,596		$	15,904		$	—		$	408,467
	Accumulated depreciation		—			(17,973	)		(6,217	)		(8,572	)		—			(32,762	)
	Investments in joint ventures		415			8,942			485			—			—			9,842
	Cash, cash equivalents and restricted cash		—			—			—			—			20,454			20,454
	Investments		—			—			—			—			40,029			40,029
	Other		29,027			26,443			5,162			905			27,613			89,150
		$	135,826		$	220,995		$	82,026		$	8,237		$	88,096		$	535,180

December 31, 2003 (in thousands)		Commercial, Residential and Land Development			Commercial Rental			Residential Rental			Hospitality			Corporate and Other			Consolidated
Statement of Operations:
	Total operating revenues	$	1,633		$	16,106		$	4,715		$	7,896		$	948		$	31,298
	Cost of homebuilding, residential lots and other development		(1,650	)		—			—			—			—			(1,650	)
	Operating expenses		—			(6,484	)		(2,389	)		(5,236	)		—			(14,109	)
	Depreciation and amortization expense		—			(4,272	)		(1,025	)		(863	)		—			(6,160	)
	Interest expense		—			(6,545	)		(659	)		(821	)		—			(8,025	)
	Gain on sale of investments in joint ventures
	Income from investments in joint ventures		141			1,584			—			—			—			1,725
	Minority interest		—			(49	)		—			—			—			(49	)
	General, administrative and other expenses		—			—			—			—			(3,776	)		(3,776	)
	Other income														2,041			2,041
	Income (loss) before taxes and discontinued operations	$	124		$	340		$	642		$	976		$	(787	)	$	1,295

F-33

18.   SUBSEQUENT EVENTS:

10333 Harwin Drive    In January 2006 we acquired a 148,000 square foot commercial office building located in Houston, Texas for a purchase price of $12,585,000. We placed a ten-year $10,640,000 mortgage loan on the building bearing a fixed interest rate of 5.78%.

El Camino Real    In January 2006 we acquired four commercial office buildings containing a total of 82,000 square feet of office space located in Houston, Texas for a purchase price of $6,052,000. We placed a ten-year $5,075,000 mortgage loan on the buildings bearing a fixed interest rate of 5.78%.

1100 NASA Road    In February 2006 we acquired a 57,000 square foot commercial office building located in Houston, Texas for a purchase price of $4,502,000. In connection with the acquisition we assumed a mortgage loan with an outstanding principal balance of $2,864,000, maturing in 2012. The loan bears a fixed interest rate of 6.12%.

1110 NASA Road    In March 2006, we acquired a 60,000 square foot commercial office building located in Houston, Texas for a purchase price of $4,978,000. In connection with the acquisition we assumed a mortgage loan with an outstanding principal balance of $3,500,000, maturing in 2014. The loan bears a fixed interest rate of 5.55%.

1120 NASA Road    In March 2006, we acquired an 80,000 square foot commercial office building located in Houston, Texas for a purchase price of $6,642,000. In connection with the acquisition we assumed a mortgage loan with an outstanding principal balance of $5,300,000, maturing in 2015. The loan bears a fixed interest rate of 5.41%.

Blue Bell Plaza    In January 2006 we acquired an office complex located in Plymouth Meeting, Pennsylvania, containing two commercial office buildings totaling 155,000 square feet of office space. The total purchase price of the buildings was $32,000,000. We placed a ten-year $29,800,000 mortgage loan on the buildings. The loan bears a fixed interest rate of 5.65% with interest-only payments due during the first two years of the loan. In connection with the acquisition we reimbursed the seller for approximately $2,300,000 for costs associated with prepayment of the existing mortgage debt, which we recorded as an addition to the purchase price.

Mearns Park    In March 2006, we acquired a property located in Warminster Pennsylvania, containing 230,000 square feet of industrial space, 70,000 square feet of commercial office space and land upon which we intend to construct a 48,000 square foot industrial building. The purchase price of the property was $19,000,000. In connection with the acquisition we assumed a mortgage loan with an outstanding principal balance of $11,546,000, maturing in 2013. The loan bears a fixed interest rate of 5.82%.

Historic Baltimore Portfolio    In January 2006, we sold three of the remaining four Baltimore properties for $17,100,000. We received $3,500,000 in net proceeds from the sales. All three properties are classified as assets held for sale on our consolidated balance sheet at December 31, 2005.

640 North Broad Street    In January 2006, we sold our interest in 640 North Broad to one of our equity partners for $5,462,000. At the time of the sale we received a promissory note for the entire purchase price. This note was repaid in March 2006 from proceeds obtained by the maker of the note from a $6,000,000 loan guaranteed by us and secured in part by a $3,000,000 certificate of deposit that we have purchased from the lender. In connection with the sale of our interest, we were removed as a guarantor under 640 North Broad's $32,000,000 acquisition and construction loan. In connection with the transaction, we recorded a deferred gain on sale of $596,000.

Stock Appreciation Rights Incentive Plan    In January 2006, our Board of Directors adopted a Stock Appreciation Rights Incentive Plan (the Plan). Under the Plan, we may grant to employees and consultants stock appreciation rights (SARs) with respect to up to 280,000 shares of our common stock. Upon exercise, each SAR will entitle the exercising holder to a cash payment equal to the excess of the market value of a share of common stock at the time of exercise over the market value of a share of common stock at the time of grant of the SAR. The Plan is administered by our Compensation Committee, which has sole authority to grant SARs to employees and consultants under the Plan. At the time of adoption, the term of each SAR granted pursuant to the Plan is no more than ten years after the date of grant. The SARs vest immediately upon grant. In January 2006, the Compensation Committee granted 172,500 SARs to our employees and our consultants. At the time of the grant the market value of a share of our common stock was $32.91. We will recognize in the Consolidated Statement of Operations the grant-date fair value of the SARs granted. As of the date of this filing, we have not calculated the grant-date fair value.

F-34

BRESLER & REINER, INC.

SCHEDULE III—REAL ESTATE AND ACCUMULATED DEPRECIATION
AS OF DECEMBER 31, 2005
(Dollars in thousands)

							Cost Capitalization Subsequent to Acquisition		Gross Amount at Which Carried at Close of Period										Life on Which Depreciation on Latest Income Statement is Computed
			Initial Cost to Company
Description	Encumbrances		Land		Buildings and Improvements		Improvements		Land		Buildings and Improvements		Total		Accumulated Depreciation		Date of Construction	Date Acquired
Versar Center (Two office buildings in Springfield, VA)	$	17,870	$	2,187	$	21,149	$	2,250	$	2,556	$	23,030	$	25,586	$	2,378	1982/1986	2002	3 – 39 years
Bank Building (Office building in Manassas, VA)		958		90		786		—		118		758		876		422	1991	—	3 – 39 years
Paradise/Sudley North (Four office buildings in Manassas, VA)		16,458		1,898		12,679		4,625		3,534		15,668		19,202		9,473	1987	1987	3 – 39 years
7800 Building (Office building in Manassas, VA)		0		283		1,636		382		427		1,874		2,301		1,238	1986	—
Fort Hill (Office building in Centreville, VA)		5,493		500		6,492		347		554		6,785		7,339		1,123	1987	2000	3 – 39 years
Washington Business Park (Two office buildings and seven flex warehouse buildings in Lanham, MD)		38,586		9,260		30,492		5,480		9,260		35,972		45,232		3,706	VAR	2001	3 – 39 years
900 Northbrook (Office building in Trevose, PA)		10,937		1,800		7,874		417		2,115		7,976		10,091		486	2001	2003	3 – 39 years
Charlestown North (Apartments in Greenbelt, MD)		4,816		—		2,179		4,119		253		6,045		6,298		3,909	1966	1971	3 – 39 years
Victoria Place (Apartments in Orlando, FL)		32,907		3,825		35,863		138		3,855		35,971		39,826		2,754	—	2003	3 – 39 years
The Fountains (Apartments in Orlando, FL)		39,500		4,000		32,745		1,443		4,000		34,188		38,188		2,285	—	2003	3 – 39 years
Inn at the Colonnade (Hotel in Baltimore, MD)		9,632		1,955		5,413		2,220		1,955		7,633		9,588		4,044	—	1993	3 – 39 years
Holiday Inn Express (Hotel in Camp Spings, MD)		3,566		377		2,793		3,713		378		6,505		6,883		5,090	—	1987	3 – 39 years
Fort Washington (2 Office buildings in Fort Washington, PA)		47,921		9,489		37,507		4,204		7,114		44,086		51,200		2,047	1987	2004	3 – 39 years
West Germantown Pike (2 Office buildings in Plymouth Meeting, PA)		15,852		3,136		14,961		275		3,193		15,179		18,372		759	1950	2004	3 – 39 years
One Northbrook (Office building in Trevose, PA)		14,973		2,590		13,586		556		2,590		14,142		16,732		695	1989	2004	3 – 39 years
10 Calvert Street (Office building in Baltimore, MD)		8,338		1,599		9,626		159		1,599		9,785		11,384		301	—	2004	3 – 39 years
102 Pickering Way (Office building in Exton, PA)		10,069		2,501		11,469		56		2,522		11,504		14,026		222	—	2005	3 – 39 years
Cross Keys (Office building in Doylestown, PA)		10,855		2,836		11,817		3		2,836		11,820		14,656		227	—	2005	3 – 39 years
Wynwood (Office building in Chantilly, VA)		—		1,105		11,318		—		1,105		11,318		12,423		174	—	2005	3 – 39 years
1105 Market Street (Office building in Wilmington, DE)		19,000		2,417		18,806		651		2,417		19,457		21,874		452	—	2005	3 – 39 years
919 Market Steet (Office building in Wilmington, DE)		35,600		4,434		30,646		52		4,435		30,697		35,132		591	—	2005	3 – 39 years
Total properties	$	343,331	$	56,282	$	319,837	$	31,090	$	56,816	$	350,393	$	407,209	$	42,376
Corporate		30,406		—		—		1,034		—		1,034		1,034		16			3 – 39 years
Total Properties and Corporate	$	373,737	$	56,282	$	319,837	$	32,124	$	56,816	$	351,427	$	408,243	$	42,392

F-35

BRESLER & REINER, INC.

NOTES TO SCHEDULE III
(in thousands)

The aggregate cost of total real estate for Federal income tax purposes was $561,187,000 at December 31, 2005.

The changes in rental property and equipment for the years ended December 31, 2005, 2004 and 2003 are as follows:

		Years Ended December 31,
		2005			2004		2003
Balance, January 1		$	319,322		$	203,335	$	112,991
Additions during period— Acquisitions			98,110			115,987		92,014
	Improvements		7,158
Deductions during period— Real Estate Sold			(7,299	)		—		(1,670	)
	Other— (1)		(10,082	)		—		—
Balance, December 31		$	407,209		$	319,322	$	203,335

The changes in accumulated depreication for the years ended December 31, 2005, 2004 and 2003 are as follows:

		Years Ended December 31,
		2005			2004		2003
Balance, January 1		$	32,820		$	24,948	$	20,415
Additions during period— Depreciation expense			9,830			7,872		6,393
Deductions during period— Real Estate Sold			(45	)		—		—
	Other— (1)		(229	)		—		(1,860	)
Balance, December 31		$	42,376		$	32,820	$	24,948

Notes:

(1)

Included in assets held for sale and are not included in the Schedule III table.

F-36

QuickLinks

BRESLER & REINER, INC. ANNUAL REPORT ON FORM 10-K For the Fiscal Year Ended December 31, 2005
TABLE OF CONTENTS
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
PART II
PART III
PART IV
SIGNATURES
BRESLER & REINER, INC. FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2005 and 2004
BRESLER & REINER, INC. CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2005 AND 2004
BRESLER & REINER, INC. CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003
BRESLER & REINER, INC. CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY FOR THE YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003
BRESLER & REINER, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003
BRESLER & REINER, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
BRESLER & REINER, INC. SCHEDULE III—REAL ESTATE AND ACCUMULATED DEPRECIATION AS OF DECEMBER 31, 2005 (Dollars in thousands)
BRESLER & REINER, INC. NOTES TO SCHEDULE III (in thousands)

EX-10.4

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Exhibit 10.4

BRESLER & REINER, INC.

2006 STOCK APPRECIATION RIGHTS INCENTIVE PLAN

ARTICLE I

PURPOSE

        The purposes of this Bresler & Reiner, Inc. 2006 Stock Appreciation Rights Incentive Plan (the "Plan") are (a) to enhance the Company's ability to attract and retain the services of qualified employees, officers and directors (including non-employee officers and directors), and consultants and other service providers upon whose judgment, initiative and efforts the successful conduct and development of the Company's business largely depends, and (b) to provide additional incentives to such persons to devote their utmost effort and skill to the advancement and betterment of the Company, by providing them an opportunity to participate in the ownership of the Company and thereby have an interest in the success and increased value of the Company.

ARTICLE II

DEFINITIONS

        For purposes of this Plan, the following terms shall have the following meanings:

        2.1   "Affiliated Company" means any "parent corporation" or "subsidiary corporation" of the Company, whether now existing or hereafter created or acquired, as those terms are defined in Sections 424(e) and 424(f) of the Code, respectively.

        2.2   "Award" shall mean any award under this Plan of any Stock Appreciation Right. All Awards shall be confirmed by, and subject to the terms of, a written agreement executed by the Company and the Participant (an "Award Agreement").

        2.3   "Base Value" shall mean the Fair Market Value of a share of Common Stock as of the date of grant of a Stock Appreciation Right, as set forth in the Award Agreement.

        2.4   "Board" shall mean the Board of Directors of the Company.

        2.5   "Cause" shall mean, with respect to a Participant's Termination of Employment or engagement, unless otherwise determined by the Committee at grant, or, if no rights of the Participant are reduced, thereafter: (i) in the case where there is no employment agreement or service agreement in effect between the Company and the Participant at the time of the grant of the Award (or where there is such an agreement but it does not define "cause" (or words of like import)), termination due to a Participant's dishonesty, fraud, insubordination, willful misconduct, or refusal to perform services (for any reason other than illness or incapacity; or (ii) in the case where there is an employment agreement or service agreement in effect between the Company and the Participant at the time of the grant of the Award that defines "cause" (or words of like import), as defined under such agreement.

        2.6   "Code" shall mean the Internal Revenue Code of 1986, as amended. Any reference to any section of the Code shall also be a reference to any successor provision and any Treasury regulation thereunder.

        2.7   "Committee" shall mean the Compensation Committee of the Board, which shall consist solely of two or more Independent Directors appointed by and holding office at the pleasure of the Board, each of whom is both a "non-employee director" as defined by Rule 16b-3. Appointment of Committee members shall be effective upon acceptance of appointment. Committee members may resign at any time by delivering written notice to the Board. Vacancies in the Committee may be filled by the Board.

        2.8   "Common Stock" shall mean the Company's common stock, par value $0.001 per share.

        2.9   "Company" shall mean Bresler & Reiner, Inc., a Delaware corporation.

        2.10 "Disability" shall mean total and permanent disability, as defined in Section 22(e)(3) of the Code.

        2.11 "Distributable Amount" shall mean, as of the date of exercise of a Stock Appreciation Right, an amount in cash per share equal to the excess of the Fair Market Value as of the date of exercise over the Base Value.

        2.12 "Eligible Employees" shall mean the employees of the Company and Affiliated Companies who are eligible pursuant to Article V to be granted Awards under this Plan.

        2.13 "Fair Market Value" for purposes of this Plan, unless otherwise required by any applicable provision of the Code or any regulations issued thereunder, shall mean, as of any given date, the value of one share of Common Stock, determined as follows:

        (a)   If the Common Stock is then listed or admitted to trading on the Nasdaq National Market System or a stock exchange which reports closing sale prices, the Fair Market Value shall be the closing sale price on the date of valuation on the Nasdaq National Market System or principal stock exchange on which the Common Stock is then listed or admitted to trading, or, if no closing sale price is quoted or no sale takes place on such day, then the Fair Market Value shall be the average of the closing sale prices of the Common Stock on the Nasdaq National Market system or such exchange for the thirty trading days prior to the date of valuation.

        (b)   If the Common Stock is not then listed or admitted to trading on the Nasdaq National Market System or a stock exchange which reports closing sale prices, the Fair Market Value shall be the average of the closing bid prices of the Common Stock in the over-the-counter market for the thirty trading days prior to the date of valuation.

        (c)   If neither (a) nor (b) is applicable as of the date of valuation, then the Fair Market Value shall be determined by the Committee in good faith using any reasonable method of evaluation, which determination shall be conclusive and binding on all interested parties

        2.14 "Participant" shall mean an Eligible Employee or Service Provider to whom an Award has been made pursuant to this Plan.

        2.15 "Retirement" with respect to a Participant's Termination of Employment shall mean a Termination of Employment without Cause from the Company by a Participant who has attained (i) at least age sixty-five (65); or (ii) such earlier date after age fifty-five (55) as may be approved by the Committee with regard to such Participant.

        2.16 "Section 162(m) of the Code" shall mean Section 162(m) of the Code and any Treasury regulations thereunder.

        2.17 "Section 162(m) Participant" shall mean the Participant whose compensation for a fiscal year may be subject to the limit on deductible compensation imposed by Section 162(m) of the Code, as determined by the Committee in its sole discretion.

        2.18 "Stock Appreciation Right" shall mean the right pursuant to an Award granted under Article VI, to receive an amount in cash equal to the Distributable Amount.

        2.19 "Service Provider" means a consultant or other person who provides services to the Company or an Affiliated Company who the Committee authorizes to become a Participant in the Plan.

        2.20 "Subsidiary" shall mean any corporation that is defined as a subsidiary corporation in Section 424(f) of the Code.

2

        2.21 "Termination of Employment," except as provided in the next sentence, shall mean a termination of employment or service (for reasons other than a military or personal leave of absence granted by the Company) of a Participant as an employee of or Service Provider to the Company or an Affiliated Company; or (ii) when an entity which is employing or retaining a Participant ceases to be an Affiliated Company, unless the Participant thereupon becomes employed by the Company or another Affiliated Company. The Committee may otherwise define Termination of Employment in the Award or, if no rights of the Participant are reduced, may otherwise define Termination of Employment thereafter, including, but not limited to, defining Termination of Employment with regard to entities controlling, under common control with or controlled by the Company rather than just the Company and its Affiliated Companies.

        2.22 "Transfer" or "Transferred" shall mean anticipate, alienate, attach, sell, assign, pledge, encumber, charge or otherwise transfer.

ARTICLE III

ADMINISTRATION

        3.1   ADMINISTRATION. The Plan shall be administered and interpreted by the Committee. In its absolute discretion, the Board may at any time and from time to time exercise any and all rights and duties of the Committee under this Plan except with respect to matters which under Rule 16b-3, or any regulations or rules issued thereunder, are required to be determined in the sole discretion of the Committee.

        3.2   AWARDS. The Committee shall have full authority to grant Stock Appreciation Rights pursuant to the terms of this Plan:

        (a)   to select the Eligible Employees and/or Service Providers to whom Stock Appreciation Rights may from time to time be granted hereunder;

        (b)   to determine whether and to what extent Stock Appreciation Rights are to be granted hereunder to one or more Eligible Employees and/or Service Providers;

        (c)   to determine, in accordance with the terms of this Plan, the number of shares of Common Stock to be covered by each Award to a Participant hereunder;

        (d)   to determine the terms and conditions, not inconsistent with the terms of this Plan, of any Award granted hereunder to a Participant;

        (e)   to modify, extend or renew an Award, subject to Article VIII hereof; and

        (f)    to grant Awards under the Plan as a conversion from, and replacement of, comparable rights held by employees of another entity who become Eligible Employees of a Affiliated Company as the result of a merger or consolidation of the employing entity with a Affiliated Company, or as the result of the acquisition by the Company or a Affiliated Company of property or stock of the employing corporation. The Company may direct that replacement Awards be granted on such terms and conditions as the Committee considers appropriate in the circumstances.

        3.3   AWARD AGREEMENT. Each Stock Appreciation Right shall be evidenced by a written Award Agreement, which shall be executed by the Participant and an authorized officer of the Company and which shall contain such terms and conditions as the Committee shall determine, consistent with this Plan.

        3.4   GUIDELINES. Subject to Article VIII hereof, the Committee shall have the authority to adopt, alter and repeal such administrative rules, guidelines and practices governing this Plan and perform all acts, including the delegation of its administrative responsibilities, as it shall, from time to

3

time, deem advisable; to construe and interpret the terms and provisions of this Plan and any Award issued under this Plan (and any agreements relating thereto); and to otherwise supervise the administration of this Plan. The Committee may correct any defect, supply any omission or reconcile any inconsistency in this Plan or in any agreement relating thereto in the manner and to the extent it shall deem necessary to carry this Plan into effect. The Committee may adopt special guidelines and provisions for persons who are residing in, or subject to the taxes of, countries other than the United States to comply with applicable tax and securities laws.

        3.5   DECISIONS FINAL. Any decision, interpretation or other action made or taken in good faith by or at the direction of the Company or the Committee (or any of its members) arising out of or in connection with the Plan shall be within the absolute discretion of all and each of them, as the case may be, and shall be final, binding and conclusive on the Company and all employees and Participants and their respective heirs, executors, administrators, successors and assigns. The Committee shall not be bound to any standards of uniformity or similarity of action, interpretation or conduct in the discharge of its duties hereunder, regardless of the apparent similarity of the matters coming before it.

        3.6   RELIANCE ON COUNSEL. The Company or the Committee may consult with legal counsel, who may be counsel for the Company or other counsel, with respect to its obligations or duties hereunder, or with respect to any action or proceeding or any question of law, and shall not be liable with respect to any action taken or omitted by it in good faith pursuant to the advice of such counsel.

        3.7   PROCEDURES. The Board may designate one of the members of the Committee as chairman and the Committee shall hold meetings, subject to the By-Laws of the Company, at such times and places as it shall deem advisable. A majority of the Committee members shall constitute a quorum. All determinations of the Committee shall be made by a majority of its members. Any decision or determination reduced to writing and signed by all Board members in accordance with the By-Laws of the Company shall be fully effective as if it had been made by a vote at a meeting duly called and held. The Committee shall keep minutes of its meetings and shall make such rules and regulations for the conduct of its business as it shall deem advisable.

        3.8   DESIGNATION OF CONSULTANTS—LIABILITY.

        (a)   The Board may designate employees of the Company and professional advisors to assist the Committee in the administration of the Plan and may grant authority to employees to execute agreements or other documents on behalf of the Committee.

        (b)   The Committee may employ such legal counsel, consultants and agents as it may deem desirable for the administration of the Plan and may rely upon any opinion received from any such counsel or consultant and any computation received from any such consultant or agent. Expenses incurred by the Committee or Board in the engagement of any such counsel, consultant or agent shall be paid by the Company. The Committee, its members and any person designated pursuant to paragraph above shall not be liable for any action or determination made in good faith with respect to the Plan.

        (c)   To the maximum extent permitted by applicable law, no officer of the Company or member or former member of the Board or of the Committee shall be liable for any action or determination made in good faith with respect to the Plan or any Award granted under it. To the maximum extent permitted by applicable law and the Certificate of Incorporation and By-Laws of the Company and to the extent not covered by insurance, each employee of the Company and member or former member of the Board or of the Committee shall be indemnified and held harmless by the Company against any cost or expense (including reasonable fees of counsel reasonably acceptable to the Company) or liability (including any sum paid in settlement of a claim with the approval of the Company), and advanced amounts necessary to pay the foregoing at the earliest time and to the fullest extent permitted, arising out of any act or omission to act in

4

connection with the Plan, except to the extent arising out of such officer's, member's or former member's own fraud or bad faith. Such indemnification shall be in addition to any rights of indemnification the employees, officers, directors or members or former officers, directors or members may have under applicable law or under the Certificate of Incorporation or By-Laws of the Company or Affiliated Company. Notwithstanding anything else herein, this indemnification will not apply to the actions or determinations made by an individual with regard to Awards granted to him or her under this Plan.

ARTICLE IV

SHARE AND OTHER LIMITATIONS

        4.1   SHARES.

        (a)   The aggregate number of shares of Common Stock which may be used for reference purposes under this Plan or with respect to which other Awards may be granted shall not exceed 280,000 shares (subject to any increase or decrease pursuant to Section 4.2).

        (b)   If any Stock Appreciation Right granted under this Plan expires, terminates or is canceled for any reason without having been exercised in full, the number of shares of Common Stock underlying any unexercised Stock Appreciation Right shall again be available for the purposes of Awards under the Plan.

        (c)   In the event Awards are granted to employees pursuant to Section 3.2(g), the aggregate number of shares of Common Stock available under the Plan for Awards shall be increased by the number of shares of Common Stock which may be used for reference with respect to those Awards granted pursuant to Section 3.2(g).

        4.2   CHANGES.

        (a)   The existence of the Plan and the Awards granted hereunder shall not affect in any way the right or power of the Board or the stockholders of the Company to make or authorize any adjustment, recapitalization, reorganization or other change in the Company's capital structure or its business, any merger or consolidation of the Company or its Affiliated Companies, any issue of bonds, debentures, preferred or prior preference stock ahead of or affecting Common Stock, the dissolution or liquidation of the Company or its Affiliated Companies, any sale or transfer of all or part of its assets or business or any other corporate act or proceeding.

        (b)   In the event of any such change in the capital structure or business of the Company by reason of any stock dividend or distribution, stock split or reverse stock split, recapitalization, reorganization, merger, consolidation, split-up, combination or exchange of shares, distribution with respect to its outstanding Common Stock or capital stock other than Common Stock, sale or transfer of all or part of its assets or business, reclassification of its capital stock, or any similar change affecting the Company's capital structure or business and the Board determines an adjustment is appropriate under the Plan, then the aggregate number and kind of shares which thereafter may be used for reference under this Plan and the initial Fair Market Value thereof shall be appropriately adjusted consistent with such change in such manner as the Board may deem equitable to prevent substantial dilution or enlargement of the rights granted to, or available for, Participants under this Plan or as otherwise necessary to reflect the change, and any such adjustment determined by the Board shall be binding and conclusive on the Company and all Participants and employees and their respective heirs, executors, administrators, successors and assigns.

        (c)   In the event of a merger or consolidation in which the Company is not the surviving entity or in the event of any transaction that results in the acquisition of substantially all of the

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Company's outstanding Common Stock by a single person or entity or by a group of persons and/or entities acting in concert, or in the event of the sale or transfer of all of the Company's assets (all of the foregoing being referred to as "Acquisition Events"), then the Board may, in its sole discretion, terminate all outstanding Stock Appreciation Rights, effective as of the date of the Acquisition Event, by delivering notice of termination to each such Participant at least twenty (20) days prior to the date of consummation of the Acquisition Event; provided, that during the period from the date on which such notice of termination is delivered to the consummation of the Acquisition Event, each such Participant shall have the right to exercise in full all of his or her Stock Appreciation Rights that are then outstanding (without regard to any limitations on exercisability otherwise contained in the Award Agreements) but contingent on occurrence of the Acquisition Event, and, provided that, if the Acquisition Event does not take place within a specified period after giving such notice for any reason whatsoever, the notice and exercise shall be null and void.

        (d)   If an Acquisition Event occurs, to the extent the Board does not terminate the outstanding Stock Appreciation Rights pursuant to Section 4.2(c), then the provisions of Section 4.2(b) shall apply.

        (e)   With respect to Stock Appreciation Rights which are granted to Section 162(m) Participants, no adjustment or action described in this Section 4.2 or in any other provision of this Plan shall be authorized to the extent that such adjustment or action would result in short-swing profits liability under Section 16 or violate the exemptive conditions of Rule 16b-3 unless the Committee (or the Board, in the case of Stock Appreciation Rights granted to Independent Directors) determines that the Stock Appreciation Right is not to comply with such exemptive conditions.

ARTICLE V

ELIGIBILITY

        The employees of the Company and of each Affiliated Company, regardless of title, as determined by the Board, and Service Providers, shall be eligible to be granted Stock Appreciation Rights under this Plan.

ARTICLE VI

STOCK APPRECIATION RIGHTS

        6.1   TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS. Stock Appreciation Rights shall be subject to such terms and conditions, not inconsistent with the provisions of this Plan, as shall be determined from time to time by the Committee, including Article X and the following:

        (a)   The term of each Stock Appreciation Right shall be fixed by the Committee, but shall not be greater than ten (10) years after the date the Stock Appreciation Right is granted.

        (b)   Stock Appreciation Rights shall be exercisable immediately upon grant; provided, that if at the time of exercise the Awardee is a Section 162(m) Participant, then the SAR may not be exercised for a number of shares of Common Stock that would yield a Distributable Amount that, when added to other compensation paid by the Company to the Awardee in the same fiscal year would exceed the limit on deductible compensation under Section 162(m) of the Code.

        (c)   Stock Appreciation Rights may be exercised in whole or in part at any time during the term, by giving written notice of exercise to the Company specifying the number of Stock Appreciation Rights to be exercised.

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        (d)   Upon the exercise of a Stock Appreciation Right a Participant shall be entitled to receive, for each right exercised, an amount in cash equal to the Distributable Amount per share of Common Stock.

        6.2   LIMITED STOCK APPRECIATION RIGHTS. The Committee may, in its sole discretion, grant Stock Appreciation Rights either as a general Stock Appreciation Right or as a Limited Stock Appreciation Right. Limited Stock Appreciation Rights may be exercised only upon the occurrence of such event as the Board may, in its sole discretion, designate at the time of grant or thereafter. Upon the exercise of Limited Stock Appreciation Rights, except as otherwise provided in an Award Agreement, the Participant shall receive in cash an amount equal to the amount set forth in Section 6.1(d).

        6.3   TERMINATION OF EMPLOYMENT. The following rules apply with regard to Stock Appreciation Rights upon the Termination of Employment of a Participant:

        (a)   If a Participant's Termination of Employment is by reason of death, any Stock Appreciation Right held by such Participant, unless otherwise determined by the Committee at grant or if no rights of the Participant's estate are reduced, thereafter, may be exercised, to the extent exercisable at the Participant's death, by the legal representative of the estate, at any time within a period of one (1) year from the date of such death or until the expiration of the stated term of such Stock Appreciation Right, whichever period is the shorter.

        (b)   If a Participant's Termination of Employment is by reason of Disability, any Stock Appreciation Right held by such Participant, unless otherwise determined by the Committee at grant or, if no rights of the Participant are reduced, thereafter, may be exercised, to the extent exercisable at the Participant's termination, by the Participant (or the legal representative of the Participant's estate if the Participant dies after termination) at any time within a period of one (1) year from the date of such termination or until the expiration of the stated term of such Stock Appreciation Right, whichever period is the shorter.

        (c)   If a Participant's Termination of Employment is by reason of Retirement, any Stock Appreciation Right held by such Participant, unless otherwise determined by the Committee at grant or, if no rights of the Participant are reduced, thereafter, shall be fully vested and may thereafter be exercised by the Participant at any time prior to the expiration of the stated term of such right.

        (d)   If a Participant's Termination of Employment is by involuntary termination without Cause, any Stock Appreciation Right held by such participant, unless otherwise determined by the Committee at grant or if no rights of the participant are reduced, thereafter, may be exercised, to the extent exercisable at termination, by the Participant at any time within a period of ninety (90) days from the date of such termination or until the expiration of the stated term of such right, whichever period is shorter.

        (e)   Unless otherwise determined by the Committee at grant, or, if no rights of the Participant are reduced thereafter, if a Participant's Termination of Employment is for any reason other than death, Disability, Retirement or involuntary termination without Cause, any Stock Appreciation Right held by such Participant shall thereupon terminate or expire as of the date of termination, provided, that (unless the Committee determines a different period upon grant, or, if no rights of the Participant are reduced, thereafter) in the event the termination is for Cause or is a voluntary termination within ninety (90) days after occurrence of an event which would be grounds for Termination of Employment by the Company for Cause (without regard to any notice or cure period requirement), any Stock Appreciation Right held by the Participant at the time of the occurrence of the event which would be grounds for Termination of Employment by the Company

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for Cause shall be deemed to have terminated and expired upon occurrence of the event which would be grounds for Termination of Employment by the Company for Cause.

ARTICLE VII

NON-TRANSFERABILITY

        Except as provided in the last sentence of this Article VII, no Stock Appreciation Right granted to an Employee shall be Transferable by the Participant otherwise than by will or by the laws of descent and distribution. All Stock Appreciation Rights granted to a Participant shall be exercisable, during the Participant's lifetime, only by the Participant. No Award shall, except as otherwise specifically provided by law or herein, be Transferable in any manner, and any attempt to Transfer any such Award shall be void, and no such Award shall in any manner be liable for or subject to the debts, contracts, liabilities, engagements or torts of any person who shall be entitled to such Award, nor shall it be subject to attachment or legal process for or against such person.

ARTICLE VIII

TERMINATION OR AMENDMENT OF THE PLAN

        8.1   TERMINATION OR AMENDMENT.

        (a)   Notwithstanding any other provision of this Plan, the Board may at any time, and from time to time, amend, in whole or in part, any or all of the provisions of the Plan, or suspend or terminate it entirely, retroactively or otherwise; provided, however, that, unless otherwise required by law or specifically provided herein, the rights of a Participant with respect to Awards granted prior to such amendment, suspension or termination, may not be impaired without the consent of such Participant.

        (b)   The Committee may amend the terms of any Award theretofore granted, prospectively or retroactively, but, subject to Article IV above or as otherwise specifically provided herein, no such amendment or other action by the Board or the Committee shall impair the rights of any holder without the holder's consent.

ARTICLE IX

UNFUNDED PLAN

        This Plan is intended to constitute an "unfunded" plan for incentive compensation. With respect to any payments as to which a Participant has a fixed and vested interest but which are not yet made to a Participant by the Company, nothing contained herein shall give any such Participant any rights that are greater than those of a general creditor of the Company.

ARTICLE X

GENERAL PROVISIONS

        10.1 OTHER PLANS. Nothing contained in this Plan shall prevent the Board from adopting other or additional compensation arrangements, subject to stockholder approval if such approval is required; and such arrangements may be either generally applicable or applicable only in specific cases.

        10.2 NO RIGHT TO EMPLOYMENT. Neither this Plan nor the grant of any Award hereunder shall give any Participant or other employee or Service Provider any right with respect to continuance of employment or engagement by any Affiliated Company, nor shall there be a limitation in any way on the right of any Affiliated Company by which an employee is employed or a Service Provider is engaged to terminate his or her employment or engagement at any time.

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        10.3 WITHHOLDING OF TAXES. The Company shall have the right to deduct from any payment to be made to a Participant, or to otherwise require payment by the Participant of, any Federal, state or local taxes required by law to be withheld. Upon making an election under Code Section 83(b), a Participant shall pay all required withholding to the Company.

        10.4 GOVERNING LAW. This Plan shall be governed and construed in accordance with the laws of the state of incorporation of the Company (regardless of the law that might otherwise govern under applicable principles of conflict of laws).

        10.5 CONSTRUCTION. Wherever any words are used in this Plan in the masculine gender they shall be construed as though they were also used in the feminine gender in all cases where they would so apply, and wherever any words are used herein in the singular form they shall be construed as though they were also used in the plural form in all cases where they would so apply. To the extent applicable, the Plan shall be limited, construed and interpreted in a manner so as to comply with the applicable requirements of Section 162(m) of the Code.

        10.6 OTHER BENEFITS. No Award payment under this Plan shall be deemed compensation for purposes of computing benefits under any retirement plan of the Company or any Affiliated Company nor affect any benefits under any other benefit plan now or subsequently in effect under which the availability or amount of benefits is related to the level of compensation.

        10.7 COSTS. The Company shall bear all expenses incurred in administering this Plan.

        10.8 NO RIGHT TO SAME BENEFITS. The provisions of Awards need not be the same with respect to each Participant, and such Awards to individual Participants need not be the same in subsequent years.

        10.9 DEATH. The Committee may in its discretion require the transferee of a Participant to supply it with written notice of the Participant's death and to supply it with a copy of the will (in the case of the Participant's death) or such other evidence as the Committee deems necessary to establish the validity and permissibility of the transfer of an Award. The Committee may also require the agreement of the transferee to be bound by all of the terms and conditions of the Plan.

        10.10 SEVERABILITY OF PROVISIONS. If any provision of the Plan shall be held invalid or unenforceable, such invalidity or unenforceability shall not affect any other provisions hereof, and the Plan shall be construed and enforced as if such provisions had not been included.

        10.11 HEADINGS AND CAPTIONS. The headings and captions herein are provided for reference and convenience only, shall not be considered part of the Plan, and shall not be employed in the construction of the Plan.

ARTICLE XI

TERM OF PLAN

        No Award shall be granted pursuant to the Plan on or after the tenth anniversary of the earlier of the date the Plan is adopted or the date of stockholder approval, but Awards granted prior to such tenth anniversary may extend beyond that date.

ARTICLE XII

NAME OF PLAN

        This Plan shall be known as the Bresler & Reiner, Inc. 2006 Stock Appreciation Rights Incentive Plan.

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ARTICLE XIII

NOTICES

        Any communication or notice required or permitted to be given under the Plan shall be in writing, and mailed by certified mail, delivered by a national overnight delivery company or by hand, if to the Company, to its principal place of business and addressed to the attention of the Chief Executive Officer or the Chief Operating Officer, and if to the holder of a Stock Appreciation Right, to the address as appearing on the records of the Company.

        Executed as of January 25, 2006.

BRESLER & REINER, INC.

/s/ Sidney M. Bresler By: Sidney M. Bresler, Chief Executive Officer

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QuickLinks

ARTICLE I PURPOSE
ARTICLE II DEFINITIONS
ARTICLE III ADMINISTRATION
ARTICLE IV SHARE AND OTHER LIMITATIONS
ARTICLE V ELIGIBILITY
ARTICLE VI STOCK APPRECIATION RIGHTS
ARTICLE VII NON-TRANSFERABILITY
ARTICLE VIII TERMINATION OR AMENDMENT OF THE PLAN
ARTICLE IX UNFUNDED PLAN
ARTICLE X GENERAL PROVISIONS
ARTICLE XI TERM OF PLAN
ARTICLE XII NAME OF PLAN
ARTICLE XIII NOTICES

EX-10.5

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Exhibit 10.5

AMENDED AND RESTATED TRUST AGREEMENT

among

BRESLER & REINER, INC.,
as Depositor

JPMORGAN CHASE BANK, NATIONAL ASSOCIATION
as Property Trustee

CHASE BANK USA, NATIONAL ASSOCIATION,
as Delaware Trustee

and

THE ADMINISTRATIVE TRUSTEES NAMED HEREIN
as Administrative Trustees

Dated as of November 29, 2005

Bresler & Reiner Statutory Trust I

TABLE OF CONTENTS

		Page
ARTICLE I.    DEFINED TERMS		1
	Section 1.1.    Definitions	1
ARTICLE II.    THE TRUST		9
	Section 2.1.    Name	9
	Section 2.2.    Office of the Delaware Trustee; Principal Place of Business	9
	Section 2.3.    Initial Contribution of Trust Property; Fees, Costs and Expenses	9
	Section 2.4.    Purposes of Trust	10
	Section 2.5.    Authorization to Enter into Certain Transactions	10
	Section 2.6.    Assets of Trust	12
	Section 2.7.    Title to Trust Property	12
ARTICLE III.    PAYMENT ACCOUNT; PAYING AGENTS		12
	Section 3.1.    Payment Account	12
	Section 3.2.    Appointment of Paying Agents	13
ARTICLE IV.    DISTRIBUTIONS; REDEMPTION		13
	Section 4.1.    Distributions	13
	Section 4.2.    Redemption	15
	Section 4.3.    Subordination of Common Securities	17
	Section 4.4.    Payment Procedures	17
	Section 4.5.    Withholding Tax	18
	Section 4.6.    Tax Returns and Other Reports	18
	Section 4.7.    Payment of Taxes, Duties, Etc. of the Trust	18
	Section 4.8.    Payments under Indenture or Pursuant to Direct Actions	18
	Section 4.9.    Exchanges	18
	Section 4.10.    Calculation Agent	19
	Section 4.11.    Certain Accounting Matters	20
ARTICLE V.    SECURITIES		20
	Section 5.1.    Initial Ownership	20
	Section 5.2.    Authorized Trust Securities	21
	Section 5.3.    Issuance of the Common Securities; Subscription and Purchase of Notes	21
	Section 5.4.    The Securities Certificates	21
	Section 5.5.    Rights of Holders	22
	Section 5.6.    Book-Entry Preferred Securities	22
	Section 5.7.    Registration of Transfer and Exchange of Preferred Securities Certificates	23
	Section 5.8.    Mutilated, Destroyed, Lost or Stolen Securities Certificates	25
	Section 5.9.    Persons Deemed Holders	25
	Section 5.10.    Cancellation	25
	Section 5.11.    Ownership of Common Securities by Depositor	26
	Section 5.12.    Restricted Legends	26
	Section 5.13.    Form of Certificate of Authentication	28
ARTICLE VI.    MEETINGS; VOTING; ACTS OF HOLDERS		29
	Section 6.1.    Notice of Meetings	29
	Section 6.2.    Meetings of Holders of the Preferred Securities	29
	Section 6.3.    Voting Rights	29

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	Section 6.4.    Proxies, Etc	29
	Section 6.5.    Holder Action by Written Consent	29
	Section 6.6.    Record Date for Voting and Other Purposes	30
	Section 6.7.    Acts of Holders	30
	Section 6.8.    Inspection of Records	31
	Section 6.9.    Limitations on Voting Rights	31
	Section 6.10.    Acceleration of Maturity; Rescission of Annulment; Waivers of Past Defaults	32
ARTICLE VII.    REPRESENTATIONS AND WARRANTIES		33
	Section 7.1.    Representations and Warranties of the Property Trustee and the Delaware                         Trustee	33
	Section 7.2.    Representations and Warranties of Depositor	35
ARTICLE VIII.    THE TRUSTEES		35
	Section 8.1.    Number of Trustees	35
	Section 8.2.    Property Trustee Required	36
	Section 8.3.    Delaware Trustee Required	36
	Section 8.4.    Appointment of Administrative Trustees	36
	Section 8.5.    Duties and Responsibilities of the Trustees	37
	Section 8.6.    Notices of Defaults	38
	Section 8.7.    Certain Rights of Property Trustee	38
	Section 8.8.    Delegation of Power	40
	Section 8.9.    May Hold Securities	40
	Section 8.10.    Compensation; Reimbursement; Indemnity	40
	Section 8.11.    Resignation and Removal; Appointment of Successor	41
	Section 8.12.    Acceptance of Appointment by Successor	42
	Section 8.13.    Merger, Conversion, Consolidation or Succession to Business	43
	Section 8.14.    Not Responsible for Recitals or Issuance of Securities	43
	Section 8.15.    Property Trustee May File Proofs of Claim	43
	Section 8.16.    Reports to the Property Trustee	44
ARTICLE IX.    TERMINATION, LIQUIDATION AND MERGER		44
	Section 9.1.    Dissolution Upon Expiration Date	44
	Section 9.2.    Early Termination	44
	Section 9.3.    Termination	45
	Section 9.4.    Liquidation	45
	Section 9.5.    Mergers, Consolidations, Amalgamations or Replacements of Trust	46
ARTICLE X.    MISCELLANEOUS PROVISIONS		47
	Section 10.1.    Limitation of Rights of Holders	47
	Section 10.2.    Agreed Tax Treatment of Trust and Trust Securities	47
	Section 10.3.    Amendment	48
	Section 1014.    Separability	49
	Section 10.5.    Governing Law	49
	Section 10.6.    Successors	49
	Section 10.7.    Headings	49
	Section 10.8.    Reports, Notices and Demands	49
	Section 10.9.    Agreement Not to Petition	50
	Section 10.10.    Counterparts	50

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Exhibit A    Certificate of Trust of Bresler & Reiner Statutory Trust I

Exhibit B    Form of Common Securities Certificate

Exhibit C    Form of Preferred Securities Certificate

Exhibit D    Reserved

Exhibit E    Form of Transferor Certificate

Exhibit F    Form of Officer's Financial Certificate

Schedule A    Determination of LIBOR

iii

        THIS AMENDED AND RESTATED TRUST AGREEMENT, dated as of November 29, 2005, among (i) Bresler & Reiner, Inc., a Delaware corporation (including any successors or permitted assigns, the "Depositor"), (ii) JPMorgan Chase Bank, National Association, as property trustee (in such capacity, the "Property Trustee"), (iii) Chase Bank USA, National Association, a national banking association, as Delaware trustee (in such capacity, the "Delaware Trustee"), (iv) Sidney M. Bresler, an individual, and Darryl M. Edelstein, an individual, each of whose address is c/o Bresler & Reiner, Inc., 11200 Rockville Pike, Suite 502, Rockville, MD 20852 as administrative trustees (in such capacities, each an "Administrative Trustee" and, collectively, the "Administrative Trustees" and, together with the Property Trustee and the Delaware Trustee, the "Trustees") and (v) the several Holders, as hereinafter defined.

WITNESSETH

        WHEREAS, the Depositor, the Property Trustee and the Delaware Trustee have heretofore created a Delaware statutory trust pursuant to the Delaware Statutory Trust Act by entering into a Trust Agreement, dated as of November 23, 2005 (the "Original Trust Agreement's,") and by executing and filing with the Secretary of State of the State of Delaware the Certificate of Trust, substantially in the form attached as Exhibit A; and

        WHEREAS, the Depositor and the Trustees desire to amend and restate the Original Trust Agreement in its entirety as set forth herein to provide for, among other things, (i) the issuance of the Common Securities by the Trust to the Depositor, (ii) the issuance and sale of the Preferred Securities by the Trust pursuant to the Purchase Agreement and (iii) the acquisition by the Trust from the Depositor of all of the right, title and interest in and to the Notes;

        Now, THEREFORE, in consideration of the agreements and obligations set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, each party, for the benefit of the other parties and for the benefit of the Holders, hereby amends and restates the Original Trust Agreement in its entirety and agrees as follows:

ARTICLE I.

DEFINED TERMS

        SECTION 1.1.    Definitions.

        For all purposes of this Trust Agreement, except as otherwise expressly provided or unless the context otherwise requires:

        (a) the terms defined in this Article I have the meanings assigned to them in this Article I;

        (b) the words "include", "includes" and "including" shall be deemed to be followed by the phrase "without limitation";

        (c) all accounting terms used but not defined herein have the meanings assigned to them in accordance with United States generally accepted accounting principles;

        (d) unless the context otherwise requires, any reference to an "Article", a "Section", a "Schedule" or an "Exhibit" refers to an Article, a Section, a Schedule or an Exhibit, as the case may be, of or to this Trust Agreement;

        (e) the words "hereby", "herein", "hereof" and "hereunder" and other words of similar import refer to this Trust Agreement as a whole and not to any particular Article, Section or other subdivision;

        (f) a reference to the singular includes the plural and vice versa; and

        (g) the masculine, feminine or neuter genders used herein shall include the masculine, feminine and neuter genders.

"Act" has the meaning specified in Section 6.7.

"Additional Interest" has the meaning specified in Section 1.1 of the Indenture.

"Additional Interest Amount" means, with respect to Trust Securities of a given Liquidation Amount and/or a given period, the amount of Additional Interest paid by the Depositor on a Like Amount of Notes for such period.

"Additional Taxes" has the meaning specified in Section 1.1 of the Indenture.

"Additional Tax Sums" has the meaning specified in Section 10.5 of the Indenture.

"Administrative Trustee" means each of the Persons identified as an "Administrative Trustee" in the preamble to this Trust Agreement, solely in each such Person's capacity as Administrative Trustee of the Trust and not in such Person's individual capacity, or any successor Administrative Trustee appointed as herein provided.

"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 the purposes of this definition, "control" when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing.

"Applicable Depositary Procedures" means, with respect to any transfer or transaction involving a Book-Entry Preferred Security, the rules and procedures of the Depositary for such Book-Entry Preferred Security, in each case to the extent applicable to such transaction and as in effect from time to time.

"Bankruptcy Event" means, with respect to any Person:

        (a) the entry of a decree or order by a court having jurisdiction in the premises (i) judging such Person a bankrupt or insolvent, (ii) approving as properly filed a petition seeking reorganization, arrangement, adjudication or composition of or in respect of such Person under any applicable Federal or state bankruptcy, insolvency, reorganization or other similar law, (iii) appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of such Person or of any substantial part of its property or (iv) ordering the winding up or liquidation of its affairs, and the continuance of any such decree or order unstayed and in effect for a period of sixty (60) consecutive days; or

        (b) the institution by such Person of proceedings to be adjudicated a bankrupt or insolvent, or the consent by it to the institution of bankruptcy or insolvency proceedings against it, or the filing by it of a petition or answer or consent seeking reorganization or relief under any applicable Federal or State bankruptcy, insolvency, reorganization or other similar law, or the consent by it to the filing of any such petition or to the appointment of a custodian, receiver, liquidator, assignee, trustee, sequestrator or similar official of such Person or of any substantial part of its property, or the making by it of an assignment for the benefit of creditors, or the admission by it in writing of its inability to pay its debts generally as they become due and its willingness to be adjudicated a bankrupt or insolvent, or the taking of corporate action by such Person in furtherance of any such action.

"Bankruptcy Laws" means all Federal and state bankruptcy, insolvency, reorganization and other similar laws, including the United States Bankruptcy Code.

"Book-Entry Preferred Security" means a Preferred Security, the ownership and transfers of which shall be made through book entries by a Depositary.

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"Business Day" means a day other than (a) a Saturday or Sunday, (b) a day on which banking institutions in the City of New York are authorized or required by law or executive order to remain closed or (c) a day on which the Corporate Trust Office is closed for business.

"Calculation Agent" has the meaning specified in Section 4.10.

"Closing Date" has the meaning specified in the Purchase Agreement.

"Code" means the United States Internal Revenue Code of 1986, as amended.

"Commission" means the Securities and Exchange Commission, as from time to time constituted, created under the Exchange Act or, if at any time after the execution of this Trust Agreement such Commission is not existing and performing the duties assigned to it, then the body performing such duties at such time.

"Common Securities Certificate" means a certificate evidencing ownership of Common Securities, substantially in the form attached as Exhibit B.

"Common Security" means an undivided beneficial interest in the assets of the Trust, having a Liquidation Amount of $1,000 and having the rights provided therefor in this Trust Agreement.

"Common Securities Subscription Agreement" means the agreement of even date herewith by and between the Depositor and the Trust pertaining to the sale and purchase of the Common Securities.

"Corporate Trust Office" means the principal office of the Property Trustee at which any particular time its corporate trust business shall be administered, which office at the date of this Trust Agreement is located at 600 Travis, 50th Floor, Houston, Texas 77002, Attention: Worldwide Securities Services—Bresler & Reiner Statutory Trust I.

"Definitive Preferred Securities Certificates" means Preferred Securities issued in certificated, fully registered form that are not Global Preferred Securities.

"Delaware Statutory Trust Act" means Chapter 38 of Title 12 of the Delaware Code, 12 Del. Code § 3801 et seq., or any successor statute thereto, in each case as amended from time to time.

"Delaware Trustee" means the Person identified as the "Delaware Trustee" in the preamble to this Trust Agreement, solely in its capacity as Delaware Trustee of the Trust and not in its individual capacity, or its successor in interest in such capacity, or any successor Delaware Trustee appointed as herein provided.

"Depositary" means an organization registered as a clearing agency under the Exchange Act that is designated as Depositary by the Depositor or any successor thereto. DTC will be the initial Depositary.

"Depositary Participant" means a broker, dealer, bank, other financial institution or other Person for whom from time to time the Depositary effects book-entry transfers and pledges of securities deposited with the Depositary.

"Depositor" has the meaning specified in the preamble to this Trust Agreement and any successors and permitted assigns.

"Depositor Affiliate" has the meaning specified in Section 4.9.

"Distribution Date" has the meaning specified in Section 4.1(a)(i).

"Distributions" means amounts payable in respect of the Trust Securities as provided in Section 4.1.

"DTC" means The Depository Trust Company, a New York corporation, or any successor thereto.

"Early Termination Event" has the meaning specified in Section 9.2.

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"Event of Default" means any one of the following events (whatever the reason for such event and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body):

        (a) the occurrence of a Note Event of Default; or

        (b) default by the Trust in the payment of any Distribution when it becomes due and payable, and continuation of such default for a period of thirty (30) days; or

        (c) default by the Trust in the payment of any Redemption Price of any Trust Security when it becomes due and payable; or

        (d) default in the performance, or breach, in any material respect of any covenant or warranty of the Trustees in this Trust Agreement (other than those specified in clause (b) or (c) above) and continuation of such default or breach for a period of thirty (30) days after there has been given, by registered or certified mail, to the Trustees and to the Depositor by the Holders of at least twenty five percent (25%) in aggregate Liquidation Amount of the Outstanding Preferred Securities a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a "Notice of Default" hereunder; or

        (e) the occurrence of a Bankruptcy Event with respect to the Property Trustee if a successor Property Trustee has not been appointed within ninety (90) days thereof.

"Exchange Act" means the Securities Exchange Act of 1934, and any successor statute thereto, in each case as amended from time to time.

"Expiration Date" has the meaning specified in Section 9.1.

"Fixed Rate Period" has the meaning specified in the Indenture.

"Fiscal Year" shall be the fiscal year of the Trust, which shall be the calendar year, or such other period as is required by the Code.

"Global Preferred Security" means a Preferred Securities Certificate evidencing ownership of Book-Entry Preferred Securities.

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"Holder" means a Person in whose name a Trust Security or Trust Securities are registered in the Securities Register; any such Person shall be deemed to be a beneficial owner within the meaning of the Delaware Statutory Trust Act.

"Indemnified Person" has the meaning specified in Section 8.10(c).

"Indenture" means the Junior Subordinated Indenture executed and delivered by the Depositor and the Note Trustee contemporaneously with the execution and delivery of this Trust Agreement, for the benefit of the holders of the Notes.

"Indenture Redemption Price" means the Optional Note Redemption Price or the Special Note Redemption Price, as applicable.

"Initial Purchaser" shall mean the initial purchasers of the Preferred Securities.

"Interest Payment Date" has the meaning specified in Section 1.1 of the Indenture.

"Investment Company Act" means the Investment Company Act of 1940, or any successor statute thereto, in each case as amended from time to time.

"Investment Company Event" has the meaning specified in Section 1.1 of the Indenture.

"Junior Subordinated Note Purchase Agreement" means the agreement of even date herewith by and between the Depositor and the Trust pertaining to the issuance and purchase of the Notes.

"LIBOR" has the meaning specified in Schedule A.

"LIBOR Business Day" has the meaning specified in Schedule A.

"LIBOR Determination Date" has the meaning specified in Schedule A.

"Lien" means any lien, pledge, charge, encumbrance, mortgage, deed of trust, adverse ownership interest, hypothecation, assignment, security interest or preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever.

"Like Amount" means (a) with respect to a redemption of any Trust Securities, Trust Securities having a Liquidation Amount equal to the principal amount of Notes to be contemporaneously redeemed or paid at maturity in accordance with the Indenture, the proceeds of which will be used to pay the Redemption Price of such Trust Securities, (b) with respect to a distribution of Notes to Holders of Trust Securities in connection with a dissolution of the Trust, Notes having a principal amount equal to the Liquidation Amount of the Trust Securities of the Holder to whom such Notes are distributed and (c) with respect to any distribution of Additional Interest Amounts to Holders of Trust Securities, Notes having a principal amount equal to the Liquidation Amount of the Trust Securities in respect of which such distribution is made.

"Liquidation Amount" means the stated amount of $1,000 per Trust Security.

"Liquidation Date" means the date on which assets are to be distributed to Holders in accordance with Section 9.4(a) hereunder following dissolution of the Trust.

"Liquidation Distribution" has the meaning specified in Section 9.4(d).

"Majority in Liquidation Amount" means Common or Preferred Securities, as the case may be, representing more than fifty percent (50%) of the aggregate Liquidation Amount of all (or a specified group of) then Outstanding Common or Preferred Securities, as the case may be.

"Note Event of Default" means any "Event of Default" specified in Section 5.1 of the Indenture.

"Note Redemption Date" means, with respect to any Notes to be redeemed under the Indenture, the date fixed for redemption of such Notes under the Indenture.

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"Note Trustee" means the Person identified as the "Trustee" in the Indenture, solely in its capacity as Trustee pursuant to the Indenture and not in its individual capacity, or its successor in interest in such capacity, or any successor Trustee appointed as provided in the Indenture.

"Notes" means the Depositor's Junior Subordinated Notes issued pursuant to the Indenture.

"Officers' Certificate" means a certificate signed by the Chief Executive Officer, the President or an Executive Vice President, and by the Chief Financial Officer, Treasurer or an Assistant Treasurer, of the Depositor, and delivered to the Trustees. Any Officers' Certificate delivered with respect to compliance with a condition or covenant provided for in this Trust Agreement (other than the certificate provided pursuant to Section 8.16 which is not an Officers' Certificate) shall include:

        (a) a statement by each officer signing the Officers' Certificate that such officer has read the covenant or condition and the definitions relating thereto;

        (b) a brief statement of the nature and scope of the examination or investigation undertaken by such officer in rendering the Officers' Certificate;

        (c) a statement that such officer has made such examination or investigation as, in such officer's opinion, is necessary to enable such officer to express an informed opinion as to whether or not such covenant or condition has been complied with; and

        (d) a statement as to whether, in the opinion of such officer, such condition or covenant has been complied with.

"Operative Documents" means the Purchase Agreement, the Indenture, the Trust Agreement, the Notes and the Trust Securities.

"Opinion of Counsel" means a written opinion of counsel, who may be counsel for, or an employee of, the Depositor or any Affiliate of the Depositor.

"Optional Redemption Price" means, with respect to any Trust Security, an amount equal to one hundred percent (100%) of the Liquidation Amount of such Trust Security on the Redemption Date, plus accumulated and unpaid Distributions to the Redemption Date, plus the related amount of the premium, if any, and/or accrued interest, including Additional Interest, if any, thereon paid by the Depositor upon the concurrent redemption or payment at maturity of a Like Amount of Notes.

"Optional Note Redemption Price" means, with respect to any Note to be redeemed on any Redemption Date under the Indenture, an amount equal to one hundred percent (100%) of the outstanding principal amount of such Note, together with accrued interest, including any Additional Interest (to the extent legally enforceable), thereon through but not including the date fixed as such Redemption Date.

"Original Issue Date" means the date of original issuance of the Trust Securities.

"Original Trust Agreement" has the meaning specified in the recitals to this Trust Agreement.

"Outstanding", when used with respect to any Trust Securities, means, as of the date of determination, all Trust Securities theretofore executed and delivered under this Trust Agreement, except:

        (a) Trust Securities theretofore canceled by the Property Trustee or delivered to the Property Trustee for cancellation;

        (b) Trust Securities for which payment or redemption money in the necessary amount has been theretofore deposited with the Property Trustee or any Paying Agent in trust for the Holders of such Trust Securities; provided, that if such Trust Securities are to be redeemed, notice of such redemption has been duly given pursuant to this Trust Agreement; and

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        (c) Trust Securities that have been paid or in exchange for or in lieu of which other Trust Securities have been executed and delivered pursuant to the provisions of this Trust Agreement, unless proof satisfactory to the Property Trustee is presented that any such Trust Securities are held by Holders in whose hands such Trust Securities are valid, legal and binding obligations of the Trust;

provided that in determining whether the Holders of the requisite Liquidation Amount of the Outstanding Preferred Securities have given any request, demand, authorization, direction, notice, consent or waiver hereunder, Preferred Securities owned by the Depositor, any Trustee or any Affiliate of the Depositor or of any Trustee shall be disregarded and deemed not to be Outstanding, except that (i) in determining whether any Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Preferred Securities that such Trustee knows to be so owned shall be so disregarded and (ii) the foregoing shall not apply at any time when all of the Outstanding Preferred Securities are owned by the Depositor, one or more of the Trustees and/or any such Affiliate. Preferred Securities so owned that have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Administrative Trustees the pledgee's right so to act with respect to such Preferred Securities and that the pledgee is not the Depositor, any Trustee or any Affiliate of the Depositor or of any Trustee.

"Owner" means each Person who is the beneficial owner of Book-Entry Preferred Securities as reflected in the records of the Depositary or, if a Depositary Participant is not the beneficial owner, then the beneficial owner as reflected in the records of the Depositary Participant.

"Paying Agent" means any Person (other than the Company or any Affiliate of the Company) authorized by the Administrative Trustee to pay Distributions or other amounts in respect of any Trust Securities on behalf of the Trust.

"Payment Account" means a segregated non-interest-bearing corporate trust account maintained by the Property Trustee for the benefit of the Holders in which all amounts paid in respect of the Notes will be held and from which the Property Trustee, through the Paying Agent, shall make payments to the Holders in accordance with Sections 3.1, 4.1 and 4.2.

"Person" means a legal person, including any individual, corporation, estate, partnership, joint venture, association, joint stock company, company, limited liability company, trust, unincorporated association or government, or any agency or political subdivision thereof, or any other entity of whatever nature.

"Preferred Security" means an undivided beneficial interest in the assets of the Trust, having a Liquidation Amount of $1,000 and having the rights provided therefor in this Trust Agreement.

"Preferred Securities Certificate" means a certificate evidencing ownership of Preferred Securities, substantially in the form attached as Exhibit C.

"Property Trustee" means the Person identified as the "Property Trustee" in the preamble to this Trust Agreement, solely in its capacity as Property Trustee of the Trust and not in its individual capacity, or its successor in interest in such capacity, or any successor Property Trustee appointed as herein provided.

"Purchase Agreement" means the Purchase Agreement or Purchase Agreements (whether one or more) executed and delivered contemporaneously with this Agreement by the Trust, the Depositor and the purchaser(s) named therein, as the same may be amended from time to time.

"QIB" means a "Qualified Institutional Buyer" as defined in Rule 144A under the Securities Act of 1933, as amended.

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"QP" means a "Qualified Purchaser" as defined in Section 2(a)(51) of the Investment Company Act of 1940, as amended.

"QIB/QP" means a QIB that is also a QP.

"Redemption Date" means, with respect to any Trust Security to be redeemed, the date fixed for such redemption by or pursuant to this Trust Agreement; provided, that each Note Redemption Date and the stated maturity (or any date of principal repayment upon early maturity) of the Notes shall be a Redemption Date for a Like Amount of Trust Securities.

"Redemption Price" means the Special Redemption Price or Optional Redemption Price, as applicable. If the Depositor has redeemed the Notes at the Special Note Redemption Price, the Trust shall redeem the Trust Securities at the Special Redemption Price. If the Depositor has redeemed the Notes at the Optional Note Redemption Price, the Trust shall redeem the Trust Securities at the Optional Redemption Price.

"Reference Banks" has the meaning specified in Schedule A.

"Responsible Officer" means, with respect to the Property Trustee, the officer in the Worldwide Securities Services department of the Property Trustee having direct responsibility for the administration of this Trust Agreement.

"Securities Act" means the Securities Act of 1933, and any successor statute thereto, in each case as amended from time to time.

"Securities Certificate" means any one of the Common Securities Certificates or the Preferred Securities Certificates.

"Securities Register" and "Securities Registrar" have the respective meanings specified in Section 5.7.

"Special Redemption Price" means, with respect to any Trust Security, an amount equal to one hundred seven and one half percent (107.5%) of the Liquidation Amount of such Trust Security on the Redemption Date, plus accumulated and unpaid Distributions to the Redemption Date, plus the related amount of the premium, if any, and/or accrued interest, including Additional Interest, if any, thereon paid by the Depositor upon the concurrent redemption or payment at maturity of a Like Amount of Notes.

"Special Note Redemption Price" means, with respect to any Note to be redeemed on any Redemption Date under the Indenture, an amount equal to one hundred seven and one half percent (107.5%) of the outstanding principal amount of such Note, together with accrued interest, including Additional Interest, thereon through but not including the date fixed as such Redemption Date.

"Successor Securities" has the meaning specified in Section 9.5(a).

"Tax Event" has the meaning specified in Section 1.1 of the Indenture.

"Trust" means the Delaware statutory trust known as "Bresler & Reiner Statutory Trust I," which was created on November 23, 2005 under the Delaware Statutory Trust Act pursuant to the Original Trust Agreement and the filing of the Certificate of Trust, and continued pursuant to this Trust Agreement.

"Trust Agreement" means this Amended and Restated Trust Agreement, as the same may be modified, amended or supplemented from time to time in accordance with the applicable provisions hereof, including all Schedules and Exhibits.

"Trustees" means the Administrative Trustees, the Property Trustee and the Delaware Trustee, each as defined in this Article I.

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"Trust Property" means (a) the Notes, (b) any cash on deposit in, or owing to, the Payment Account and (c) all proceeds and rights in respect of the foregoing and any other property and assets for the time being held or deemed to be held by the Property Trustee pursuant to the trusts of this Trust Agreement.

"Trust Security" means any one of the Common Securities or the Preferred Securities.

ARTICLE II.

THE TRUST

        SECTION 2.1.    Name.

        The trust continued hereby shall be known as "Bresler & Reiner Statutory Trust I", as such name may be modified from time to time by the Administrative Trustees following written notice to the Holders of Trust Securities and the other Trustees, in which name the Trustees may conduct the business of the Trust, make and execute contracts and other instruments on behalf of the Trust and sue and be sued.

        SECTION 2.2.    Office of the Delaware Trustee; Principal Place of Business.

        The address of the Delaware Trustee in the State of Delaware is Chase Bank USA, National Association, 500 Stanton Christiana Road, Building 4 (3rd Floor), Newark, DE 19713, Attention: Worldwide Securities Services, or such other address in the State of Delaware as the Delaware Trustee may designate by written notice to the Holders, the Depositor, the Property Trustee and the Administrative Trustees. The principal executive office of the Trust is 11200 Rockville Pike, Suite 502, Rockville, MD 20852, Attention: Darryl M. Edelstein, as such address may be changed from time to time by the Administrative Trustees following written notice to the Holders and the other Trustees.

        SECTION 2.3.    Initial Contribution of Trust Property, Fees, Costs and Expenses.

        The Property Trustee acknowledges receipt from the Depositor in connection with the Original Trust Agreement of the sum of ten dollars ($10), which constituted the initial Trust Property. The Depositor shall pay all fees, costs and expenses of the Trust (except with respect to the Trust Securities) as they arise or shall, upon request of any Trustee, promptly reimburse such Trustee for any such fees, costs and expenses paid by such Trustee. The Depositor shall make no claim upon the Trust Property for the payment of such fees, costs or expenses.

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        SECTION 2.4.    Purposes of Trust.

        (a) The exclusive purposes and functions of the Trust are to (i) issue and sell Trust Securities and use the proceeds from such sale to acquire the Notes and (ii) engage in only those activities necessary or incidental thereto. The Delaware Trustee, the Property Trustee and the Administrative Trustees are trustees of the Trust, and have all the rights, powers and duties to the extent set forth herein. The Trustees hereby acknowledge that they are trustees of the Trust.

        (b) So long as this Trust Agreement remains in effect, the Trust (or the Trustees acting on behalf of the Trust) shall not undertake any business, activities or transaction except as expressly provided herein or contemplated hereby. In particular, the Trust (or the Trustees acting on behalf of the Trust) shall not (i) acquire any investments or engage in any activities not authorized by this Trust Agreement, (ii) sell, assign, transfer, exchange, mortgage, pledge, set-off or otherwise dispose of any of the Trust Property or interests therein, including to Holders, except as expressly provided herein, (iii) incur any indebtedness for borrowed money or issue any other debt, (iv) take or consent to any action that would result in the placement of a Lien on any of the Trust Property, (v) take or consent to any action that would reasonably be expected to cause the Trust to become taxable as a corporation or classified as other than a grantor trust for United States federal income tax purposes, (vi) take or consent to any action that would cause the Notes to be treated as other than indebtedness of the Depositor for United States federal income tax purposes or (vii) take or consent to any action that would cause the Trust to be deemed to be an "investment company" required to be registered under the Investment Company Act.

        SECTION 2.5.    Authorization to Enter into Certain Transactions.

        (a) The Trustees shall conduct the affairs of the Trust in accordance with and subject to the terms of this Trust Agreement. In accordance with the following provisions (i) and (ii), the Trustees shall have the authority to enter into all transactions and agreements determined by the Trustees to be appropriate in exercising the authority, express or implied, otherwise granted to the Trustees, under this Trust Agreement, and to perform all acts in furtherance thereof, including the following:

        (i) As among the Trustees, each Administrative Trustee shall severally have the power and authority to act on behalf of the Trust with respect to the following matters:

        (A) the issuance and sale of the Trust Securities;

        (B) to cause the Trust to enter into, and to execute, deliver and perform on behalf of the Trust, such agreements as may be necessary or desirable in connection with the purposes and function of the Trust, including, without limitation, a common securities subscription agreement and a junior subordinated note purchase agreement;

        (C) assisting in the sale of the Preferred Securities in one or more transactions exempt from registration under the Securities Act, and in compliance with applicable state securities or blue sky laws;

        (D) assisting in the sending of notices (other than notices of default) and other information regarding the Trust Securities and the Notes to the Holders in accordance with this Trust Agreement;

        (E) execution of the Trust Securities on behalf of the Trust in accordance with this Trust Agreement;

        (F) the appointment of a Paying Agent and Securities Registrar in accordance with this Trust Agreement;

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        (G) execution and delivery of closing certificates, if any, pursuant to the Purchase Agreement and application for a taxpayer identification number for the Trust;

        (H) preparation and filing of all applicable tax returns and tax information reports that are required to be filed on behalf of the Trust;

        (I) establishing a record date with respect to all actions to be taken hereunder that require a record date to be established, except as provided in Section 6.10(a);

        (J) unless otherwise required by the Delaware Statutory Trust Act to execute on behalf of the Trust (either acting alone or together with the other Administrative Trustees) any documents that such Administrative Trustee has the power to execute pursuant to this Trust Agreement; and

        (K) the taking of any action incidental to the foregoing as such Administrative Trustee may from time to time determine is necessary or advisable to give effect to the terms of this Trust Agreement.

        (ii) As among the Trustees, the Property Trustee shall have the power, duty and authority to act on behalf of the Trust with respect to the following matters:

        (A) the receipt and holding of legal title of the Notes;

        (B) the establishment of the Payment Account;

        (C) the collection of interest, principal and any other payments made in respect of the Notes and the holding of such amounts in the Payment Account;

        (D) the distribution through the Paying Agent of amounts distributable to the Holders in respect of the Trust Securities;

        (E) the exercise of all of the rights, powers and privileges of a holder of the Notes in accordance with the terms of this Trust Agreement;

        (F) the sending of notices of default and other information regarding the Trust Securities and the Notes to the Holders in accordance with this Trust Agreement;

        (G) the distribution of the Trust Property in accordance with the terms of this Trust Agreement;

        (H) to the extent provided in this Trust Agreement, the winding up of the affairs of and liquidation of the Trust, provided that the Administrative Trustees shall have the power, duty and authority to act on behalf of the Trust with respect to the preparation, execution and filing of the certificate of cancellation of the Trust with the Secretary of State of the State of Delaware; and

        (I) the taking of any action incidental to the foregoing as the Property Trustee may from time to time determine is necessary or advisable to give effect to the terms of this Trust Agreement and protect and conserve the Trust Property for the benefit of the Holders (without consideration of the effect of any such action on any particular Holder).

        (b) In connection with the issue and sale of the Preferred Securities, the Depositor shall have the right and responsibility to assist the Trust with respect to, or effect on behalf of the Trust, the following (and any actions taken by the Depositor in furtherance of the following prior to the date of this Trust Agreement are hereby ratified and confirmed in all respects):

        (i) the negotiation of the terms of, and the execution and delivery of, the Purchase Agreement providing for the sale of the Preferred Securities in one or more transactions

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exempt from registration under the Securities Act, and in compliance with applicable state securities or blue sky laws; and

        (ii) the taking of any other actions necessary or desirable to carry out any of the foregoing activities.

        (c) Notwithstanding anything herein to the contrary, the Administrative Trustees are authorized and directed to conduct the affairs of the Trust and authorized to operate the Trust so that the Trust will not be taxable as a corporation or classified as other than a grantor trust for United States federal income tax purposes, so that the Notes will be treated as indebtedness of the Depositor for United States federal income tax purposes and so that the Trust will not be deemed to be an "investment company" required to be registered under the Investment Company Act. In respect thereof, each Administrative Trustee is authorized to take any action, not inconsistent with applicable law, the Certificate of Trust or this Trust Agreement, that such Administrative Trustee determines in his or her discretion to be necessary or desirable for such purposes, as long as such action does not adversely affect in any material respect the interests of the Holders of the Outstanding Preferred Securities. In no event shall the Administrative Trustees be liable to the Trust or the Holders for any failure to comply with this Section 2.5 to the extent that such failure results solely from a change in law or regulation or in the interpretation thereof.

        (d) Any action taken by a Trustee in accordance with its powers shall constitute the act of and serve to bind the Trust. In dealing with any Trustee acting on behalf of the Trust, no Person shall be required to inquire into the authority of such Trustee to bind the Trust. Persons dealing with the Trust are entitled to rely conclusively on the power and authority of any Trustee as set forth in this Trust Agreement.

        SECTION 2.6.    Assets of Trust

        The assets of the Trust shall consist of the Trust Property.

        SECTION 2.7.    Title to Trust Property.

        (a) Legal title to all Trust Property shall be vested at all times in the Property Trustee and shall be held and administered by the Property Trustee in trust for the benefit of the Trust and the Holders in accordance with this Trust Agreement.

        (b) The Holders shall not have any right or title to the Trust Property other than the undivided beneficial interest in the assets of the Trust conferred by their Trust Securities and they shall have no right to call for any partition or division of property, profits or rights of the Trust except as described below. The Trust Securities shall be personal property giving only the rights specifically set forth therein and in this Trust Agreement.

ARTICLE III.

PAYMENT ACCOUNT; PAYING AGENTS

        SECTION 3.1.    Payment Account.

        (a) On or prior to the Closing Date, the Property Trustee shall establish the Payment Account. The Property Trustee and the Paying Agent shall have exclusive control and sole right of withdrawal with respect to the Payment Account for the purpose of making deposits in and withdrawals from the Payment Account in accordance with this Trust Agreement. All monies and other property deposited or held from time to time in the Payment Account shall be held by the Property Trustee in the Payment Account for the exclusive benefit of the Holders and for Distribution as herein provided.

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        (b) The Property Trustee shall deposit in the Payment Account, promptly upon receipt, all payments of principal of or interest on, and any other payments with respect to, the Notes. Amounts held in the Payment Account shall not be invested by the Property Trustee pending distribution thereof.

        SECTION 3.2.    Appointment of Paying Agents.

        The Paying Agent shall initially be the Property Trustee. The Paying Agent shall make Distributions to Holders from the Payment Account and shall report the amounts of such Distributions to the Property Trustee and the Administrative Trustees. Any Paying Agent shall have the revocable power to withdraw funds from the Payment Account solely for the purpose of making the Distributions referred to above. The Administrative Trustees may revoke such power and remove the Paying Agent in their sole discretion. Any Person acting as Paying Agent shall be permitted to resign as Paying Agent upon thirty (30) days' written notice to the Administrative Trustees and the Property Trustee. If the Property Trustee shall no longer be the Paying Agent or a successor Paying Agent shall resign or its authority to act be revoked, the Administrative Trustees shall appoint a successor (which shall be a bank or trust company) to act as Paying Agent. Such successor Paying Agent appointed by the Administrative Trustees shall execute and deliver to the Trustees an instrument in which such successor Paying Agent shall agree with the Trustees that as Paying Agent, such successor Paying Agent will hold all sums, if any, held by it for payment to the Holders in trust for the benefit of the Holders entitled thereto until such sums shall be paid to such Holders. The Paying Agent shall return all unclaimed funds to the Property Trustee and upon removal of a Paying Agent such Paying Agent shall also return all funds in its possession to the Property Trustee. The provisions of Article VIII shall apply to the Property Trustee also in its role as Paying Agent, for so long as the Property Trustee shall act as Paying Agent and, to the extent applicable, to any other Paying Agent appointed hereunder. Any reference in this Trust Agreement to the Paying Agent shall include any co-paying agent unless the context requires otherwise. For the avoidance of doubt, the Company shall not be permitted to appoint itself or any Affiliate as a Paying Agent hereunder.

ARTICLE IV.

DISTRIBUTIONS; REDEMPTION

        SECTION 4.1.    Distributions.

        (a) The Trust Securities represent undivided beneficial interests in the Trust Property, and Distributions (including any Additional Interest Amounts) will be made on the Trust Securities at the rate and on the dates that payments of interest (including any Additional Interest) are made on the Notes. Accordingly:

        (i) Distributions on the Trust Securities shall be cumulative, and shall accumulate whether or not there are funds of the Trust available for the payment of Distributions. Distributions shall accumulate from November 29, 2005, and, except as provided in clause (ii) below, shall be payable quarterly in arrears on January 30, April 30, July 30 and October 30 of each year, commencing on January 30, 2006. If any date on which a Distribution is otherwise payable on the Trust Securities is not a Business Day, then the payment of such Distribution shall be made on the next succeeding Business Day (and no interest shall accrue in respect of the amounts whose payment is so delayed for the period from and after each such date until the next succeeding Business Day), except that, if such Business Day falls in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day, in each case, with the same force and effect as if made on such date (each date on which Distributions are payable in accordance with this Section4.1(a)(i), a "Distribution Date") ;

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        (ii) Distributions shall accumulate in respect of the Trust Securities at a fixed rate equal to 8.37% per annum through the interest payment date on January 30, 2011 ("Fixed Rate Period') and thereafter at a variable rate equal to LIBOR plus 3.50% per annum of the Liquidation Amount of the Trust Securities, such rate being the rate of interest payable on the Notes. LIBOR shall be determined by the Calculation Agent in accordance with Schedule A. The amount of Distributions payable for any Distribution period shall be computed shall be computed during the Fixed Rate Period on the basis of a 360-day year of twelve 30-day months, and thereafter on the basis of a 360-day year and the actual number of days elapsed in the relevant interest period. The amount of Distributions payable for any period shall include any Additional Interest Amounts in respect of such period; and

        (iii) Distributions on the Trust Securities shall be made by the Paying Agent from the Payment Account and shall be payable on each Distribution Date only to the extent that the Trust has funds then on hand and available in the Payment Account for the payment of such Distributions.

        (b) Distributions on the Trust Securities with respect to a Distribution Date shall be payable to the Holders thereof as they appear on the Securities Register for the Trust Securities at the close of business on the relevant record date, which shall be at the close of business on the fifteenth day (whether or not a Business Day) preceding the relevant Distribution Date, except that Distributions and any Additional Interest Amounts payable on the stated maturity (or any date of principal repayment upon early maturity) of the principal of a Trust Security or on a Redemption Date shall be paid to the Person to whom principal is paid. Distributions payable on any Trust Securities that are not punctually paid on any Distribution Date as a result of the Depositor having failed to make an interest payment under the Notes will cease to be payable to the Person in whose name such Trust Securities are registered on the relevant record date, and such defaulted Distributions and any Additional Interest Amounts will instead be payable to the Person in whose name such Trust Securities are registered on the special record date, or other specified date for determining Holders entitled to such defaulted Distribution and Additional Interest Amount, established in the same manner, and on the same date, as such is established with respect to the Notes under the Indenture.

        (c) As a condition to the payment of any principal of or interest on the Trust Securities without the imposition of withholding tax, the Administrative Trustees shall require the previous delivery of properly completed and signed applicable U.S. federal income tax certifications (generally, an Internal Revenue Service Form W-9 (or applicable successor form) in the case of a person that is a "United States person" within the meaning of Section 7701(a)(30) of the Code or an Internal Revenue Service Form W-8 (or applicable successor form) in the case of a person that is not a "United States person," within the meaning of Section 7701(a)(30) of the Code) and any other certification acceptable to it to enable the Paying Agent to determine its respective duties and liabilities with respect to any taxes or other charges that it may be required to pay, deduct or withhold in respect of such Trust Securities.

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        SECTION 4.2.    Redemption.

        (a) On each Note Redemption Date and on the stated maturity (or any date of principal repayment upon early maturity) of the Notes and on each other date on (or in respect of) which any principal on the Notes is repaid, the Trust will be required to redeem a Like Amount of Trust Securities at the Redemption Price.

        (b) Notice of redemption shall be given by the Property Trustee by first-class mail, postage prepaid, mailed not less than thirty (30) nor more than sixty (60) days prior to the Redemption Date to each Holder of Trust Securities to be redeemed, at such Holder's address appearing in the Securities Register. All notices of redemption shall state:

        (i) the Redemption Date;

        (ii) the Redemption Price or, if the Redemption Price cannot be calculated prior to the time the notice is required to be sent, the estimate of the Redemption Price provided pursuant to the Indenture, as calculated by the Depositor, together with a statement that it is an estimate and that the actual Redemption Price will be calculated by the Calculation Agent on the fifth (5th) Business Day prior to the Redemption Date (and if an estimate is provided, a further notice shall be sent of the actual Redemption Price on the date that such Redemption Price is calculated);

        (iii) if less than all the Outstanding Trust Securities are to be redeemed, the identification (and, in the case of partial redemption, the respective amounts) and Liquidation Amounts of the particular Trust Securities to be redeemed;

        (iv) that on the Redemption Date, the Redemption Price will become due and payable upon each such Trust Security, or portion thereof, to be redeemed and that Distributions thereon will cease to accumulate on such Trust Security or such portion, as the case may be, on and after said date, except as provided in Section 4.2(d);

        (v) the place or places where the Trust Securities are to be surrendered for the payment of the Redemption Price; and

        (vi) such other provisions as the Property Trustee deems relevant.

        (c) The Trust Securities (or portion thereof) redeemed on each Redemption Date shall be redeemed at the Redemption Price with the proceeds from the contemporaneous redemption or payment at maturity of Notes. Redemptions of the Trust Securities (or portion thereof) shall be made and the Redemption Price shall be payable on each Redemption Date only to the extent that the Trust has funds then on hand and available in the Payment Account for the payment of such Redemption Price. Under the Indenture, the Notes may be redeemed by the Depositor on any Interest Payment Date, at the Depositor's option, on or after January 30, 2011, in whole or in part, from time to time at the Optional Note Redemption Price. The Notes may also be redeemed by the Depositor, at its option pursuant to the terms of the Indenture, in whole but not in part, upon the occurrence and during the continuation of an Investment Company Event or a Tax Event, at the Special Note Redemption Price.

        (d) If the Property Trustee gives a notice of redemption in respect of any Preferred Securities, then by 10:00 A.M., New York City time, on the Redemption Date, the Depositor shall deposit sufficient funds with the Property Trustee to pay the Redemption Price. If such deposit has been made by such time, then by 12:00 noon, New York City time, on the Redemption Date, the Property Trustee will, with respect to Book-Entry Preferred Securities, irrevocably deposit with the Depositary for such Book-Entry Preferred Securities, to the extent available therefor, funds sufficient to pay the applicable Redemption Price and will give such Depositary irrevocable instructions and authority to pay the Redemption Price to the Holders of the Preferred Securities.

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With respect to Preferred Securities that are not Book-Entry Preferred Securities, the Property Trustee will irrevocably deposit with the Paying Agent, to the extent available therefor, funds sufficient to pay the applicable Redemption Price and will give the Paying Agent irrevocable instructions and authority to pay the Redemption Price to the Holders of the Preferred Securities upon surrender of their Preferred Securities Certificates. Notwithstanding the foregoing, Distributions payable on or prior to the Redemption Date for any Trust Securities (or portion thereof) called for redemption shall be payable to the Holders of such Trust Securities as they appear on the Securities Register on the relevant record dates for the related Distribution Dates. If notice of redemption shall have been given and funds deposited as required, then upon the date of such deposit, all rights of Holders holding Trust Securities (or portion thereof) so called for redemption will cease, except the right of such Holders to receive the Redemption Price and any Distribution payable in respect of the Trust Securities on or prior to the Redemption Date, but without interest, and, in the case of a partial redemption, the right of such Holders to receive a new Trust Security or Securities of authorized denominations, in aggregate Liquidation Amount equal to the unredeemed portion of such Trust Security or Securities, and such Securities (or portion thereof) called for redemption will cease to be Outstanding. In the event that any date on which any Redemption Price is payable is not a Business Day, then payment of the Redemption Price payable on such date will be made on the next succeeding Business Day (and no interest shall accrue in respect of the amounts whose payment is so delayed for the period from and after each such date until the next succeeding Business Day), except that, if such Business Day falls in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day, in each case, with the same force and effect as if made on such date. In the event that payment of the Redemption Price in respect of any Trust Securities (or portion thereof) called for redemption is improperly withheld or refused and not paid either by the Trust, Distributions on such Trust Securities (or portion thereof) will continue to accumulate, as set forth in Section 4.1, from the Redemption Date originally established by the Trust for such Trust Securities (or portion thereof) to the date such Redemption Price is actually paid, in which case the actual payment date will be the date fixed for redemption for purposes of calculating the Redemption Price.

        (e) Subject to Section 4.3(a), if less than all the Outstanding Trust Securities are to be redeemed on a Redemption Date, then the aggregate Liquidation Amount of Trust Securities to be redeemed shall be allocated pro rata to the Common Securities and the Preferred Securities based upon the relative aggregate Liquidation Amounts of the Common Securities and the Preferred Securities. Upon such a partial redemption, the Preferred Securities to be redeemed from each Holder of Preferred Securities shall be selected on a pro rata basis based upon the respective Liquidation Amounts of the Preferred Securities then held by each Holder of the Preferred Securities not more than sixty (60) days prior to the Redemption Date by the Property Trustee from the Outstanding Preferred Securities not previously called for redemption; provided, that with respect to Holders that would be required to hold less than one hundred (100) but more than zero (0) Trust Securities as a result of such redemption, the Trust shall redeem Trust Securities of each such Holder so that after such redemption such Holder shall hold either one hundred (100) Trust Securities or such Holder no longer holds any Trust Securities, and shall use such method (including, without limitation, by lot) as the Trust shall deem fair and appropriate; and provided, further, that so long as the Preferred Securities are Book-Entry Preferred Securities, such selection shall be made in accordance with the Applicable Depositary Procedures for the Preferred Securities by such Depositary. The Property Trustee shall promptly notify the Securities Registrar in writing of the Preferred Securities (or portion thereof) selected for redemption and, in the case of any Preferred Securities selected for partial redemption, the Liquidation Amount thereof to be redeemed. For all purposes of this Trust Agreement, unless the context otherwise requires, all provisions relating to the redemption of Preferred Securities shall relate, in the case of any

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Preferred Securities redeemed or to be redeemed only in part, to the portion of the aggregate Liquidation Amount of Preferred Securities that has been or is to be redeemed.

        (f) The Trust in issuing the Trust Securities may use "CUSIP" numbers (if then generally in use), and, if so, the Property Trustee shall indicate the "CUSIP" numbers of the Trust Securities in notices of redemption and related materials 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 printed on the Trust Securities or as contained in any notice of redemption and related materials.

        SECTION 4.3.    Subordination of Common Securities.

        (a) Payment of Distributions (including any Additional Interest Amounts) on, the Redemption Price of and the Liquidation Distribution in respect of, the Trust Securities, as applicable, shall be made, pro rata among the Common Securities and the Preferred Securities based on the Liquidation Amount of the respective Trust Securities; provided, that if on any Distribution Date, Redemption Date or Liquidation Date an Event of Default shall have occurred and be continuing, no payment of any Distribution (including any Additional Interest Amounts) on, Redemption Price of or Liquidation Distribution in respect of, any Common Security, and no other payment on account of the redemption, liquidation or other acquisition of Common Securities, shall be made unless payment in full in cash of all accumulated and unpaid Distributions (including any Additional Interest Amounts) on all Outstanding Preferred Securities for all Distribution periods terminating on or prior thereto, or in the case of payment of the Redemption Price the full amount of such Redemption Price on all Outstanding Preferred Securities then called for redemption, or in the case of payment of the Liquidation Distribution the full amount of such Liquidation Distribution on all Outstanding Preferred Securities, shall have been made or provided for, and all funds immediately available to the Property Trustee shall first be applied to the payment in full in cash of all Distributions (including any Additional Interest Amounts) on, or the Redemption Price of or the Liquidation Distribution in respect of, the Preferred Securities then due and payable.

        (b) In the case of the occurrence of any Event of Default, the Holders of the Common Securities shall have no right to act with respect to any such Event of Default under this Trust Agreement until all such Events of Default with respect to the Preferred Securities have been cured, waived or otherwise eliminated. Until all such Events of Default under this Trust Agreement with respect to the Preferred Securities have been so cured, waived or otherwise eliminated, the Property Trustee shall act solely on behalf of the Holders of the Preferred Securities and not on behalf of the Holders of the Common Securities, and only the Holders of all the Preferred Securities will have the right to direct the Property Trustee to act on their behalf.

        SECTION 4.4.    Payment Procedures.

        Payments of Distributions (including any Additional Interest Amounts), the Redemption Price, Liquidation Amount or any other amounts in respect of the Preferred Securities shall be made by wire transfer at such place and to such account at a banking institution in the United States as may be designated in writing at least ten (10) Business Days prior to the date for payment by the Person entitled thereto unless proper written transfer instructions have not been received by the relevant record date, in which case such payments shall be made by check mailed to the address of such Person as such address shall appear in the Securities Register. If any Preferred Securities are held by a Depositary, such Distributions thereon shall be made to the Depositary in immediately available funds. Payments in respect of the Common Securities shall be made in such manner as shall be mutually agreed between the Property Trustee and the Holder of all the Common Securities.

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        SECTION 4.5.    Withholding Tax.

        (a) The Trust and the Administrative Trustees shall comply with all withholding and backup withholding tax requirements under United States federal, state and local law. The Administrative Trustees on behalf of the Trust shall request, and the Holders shall provide to the Trust, such forms or certificates as are necessary to establish an exemption from withholding and backup withholding tax with respect to each Holder and any representations and forms as shall reasonably be requested by the Administrative Trustees on behalf of the Trust to assist it in determining the extent of, and in fulfilling, its withholding and backup withholding tax obligations. The Administrative Trustees shall file required forms with applicable jurisdictions and, unless an exemption from withholding and backup withholding tax is properly established by a Holder, shall remit amounts withheld with respect to the Holder to applicable jurisdictions. To the extent that the Trust is required to withhold and pay over any amounts to any jurisdiction with respect to Distributions or allocations to any Holder, the amount withheld shall be deemed to be a Distribution in the amount of the withholding to the Holder. In the event of any claimed over withholding, Holders shall be limited to an action against the applicable jurisdiction. If the amount required to be withheld was not withheld from actual Distributions made, the Administrative Trustees on behalf of the Trust may reduce subsequent Distributions by the amount of such required withholding.

        SECTION 4.6.    Tax Returns and Other Reports.

        The Administrative Trustees shall prepare (or cause to be prepared) at the principal office of the Trust in the United States, as defined for purposes of Treasury regulations section 301.7701-7, at the Depositor's expense, and file, all United States federal, state and local tax and information returns and reports required to be filed by or in respect of the Trust. The Administrative Trustees shall prepare at the principal office of the Trust in the United States, as defined for purposes of Treasury regulations section 301.7701-7, and furnish (or cause to be prepared and furnished), by January 31 in each taxable year of the Trust to each Holder all Internal Revenue Service forms and returns required to be provided by the Trust. The Administrative Trustees shall provide the Depositor, Taberna Capital Management, LLC and the Property Trustee with a copy of all such returns and reports promptly after such filing or furnishing.

        SECTION 4.7.    Payment of Taxes, Duties, Etc. of the Trust.

        Upon receipt under the Notes of Additional Tax Sums and upon the written direction of the Administrative Trustees, the Property Trustee shall promptly pay, solely out of monies on deposit pursuant to this Trust Agreement, any Additional Taxes imposed on the Trust by the United States or any other taxing authority.

        SECTION 4.8.    Payments under Indenture or Pursuant to Direct Actions.

        Any amount payable hereunder to any Holder of Preferred Securities shall be reduced by the amount of any corresponding payment such Holder (or any Owner with respect thereto) has directly received pursuant to Section 5.8 of the Indenture or Section 6.10(b) of this Trust Agreement.

        SECTION 4.9.    Exchanges.

        (a) If at any time the Depositor or any of its Affiliates (in either case, a "Depositor Affiliate" is the Owner or Holder of any Preferred Securities, such Depositor Affiliate shall have the right to deliver to the Property Trustee all or such portion of its Preferred Securities as it elects and, subject to compliance with Sections 2.2 and 3.5 of the Indenture, receive, in exchange therefor, a Like Amount of Notes. Such election shall be exercisable effective on any Distribution Date by such Depositor Affiliate delivering to the Property Trustee (i) at least ten (10) Business Days prior to the Distribution Date on which such exchange is to occur, the registration instructions and the

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documentation, if any, required pursuant to Sections 2.2 and 3.5 of the Indenture to enable the Indenture Trustee to issue the requested Like Amount of Notes, (ii) a written notice of such election specifying the Liquidation Amount of Preferred Securities with respect to which such election is being made and the Distribution Date on which such exchange shall occur, which Distribution Date shall be not less than ten (10) Business Days after the date of receipt by the Property Trustee of such election notice and (iii) shall be conditioned upon such Depositor Affiliate having delivered or caused to be delivered to the Property Trustee or its designee the Preferred Securities that are the subject of such election by 10:00 A.M. New York time, on the Distribution Date on which such exchange is to occur. After the exchange, such Preferred Securities will be canceled and will no longer be deemed to be Outstanding and all rights of the Depositor Affiliate with respect to such Preferred Securities will cease.

        (b) In the case of an exchange described in Section 4.9(a), the Property Trustee on behalf of the Trust will, on the date of such exchange, exchange Notes having a principal amount equal to a proportional amount of the aggregate Liquidation Amount of the Outstanding Common Securities, based on the ratio of the aggregate Liquidation Amount of the Preferred Securities exchanged pursuant to Section 4.9(a) divided by the aggregate Liquidation Amount of the Preferred Securities Outstanding immediately prior to such exchange, for such proportional amount of Common Securities held by the Depositor (which contemporaneously shall be canceled and no longer be deemed to be Outstanding); provided, that the Depositor delivers or causes to be delivered to the Property Trustee or its designee the required amount of Common Securities to be exchanged by 10:00 A.M. New York time, on the Distribution Date on which such exchange is to occur.

        SECTION 4.10.    Calculation Agent.

        (a) The Calculation Agent may be removed by the Administrative Trustees at any time. Notwithstanding the foregoing, the Property Trustee shall initially, and, subject to the immediately following sentence, for so long as it holds any of the Notes, be the Calculation Agent for purposes of determining LIBOR for each Distribution Date. If the Calculation Agent is unable or unwilling to act as such or is removed by the Administrative Trustees, the Administrative Trustees will promptly appoint as a replacement Calculation Agent the London office of a leading bank which is engaged in transactions in three-month Eurodollar deposits in the international Eurodollar market and which does not control or is not controlled by or under common control with the Administrative Trustee or its Affiliates. The Calculation Agent may not resign its duties without a successor having been duly appointed.

        (b) The Calculation Agent shall be required to agree that, as soon as possible after 11:00 a.m. (London time) on each LIBOR Determination Date, but in no event later than 11:00 a.m. (London time) on the Business Day immediately following each LIBOR Determination Date, the Calculation Agent will calculate the interest rate (rounded to the nearest cent, with half a cent being rounded upwards) for the related Distribution Date, and will communicate such rate and amount to the Depositor, the Administrative Trustees, the Note Trustee, each Paying Agent and the Depositary. The Calculation Agent will also specify to the Administrative Trustee the quotations upon which the foregoing rates and amounts are based and, in any event, the Calculation Agent shall notify the Administrative Trustees before 5:00 p.m. (London time) on each LIBOR Determination Date that either: (i) it has determined or is in the process of determining the foregoing rates and amounts or (ii) it has not determined and is not in the process of determining the foregoing rates and amounts, together with its reasons therefor. The Calculation Agent's determination of the foregoing rates and amounts for any Distribution Date will (in the absence of manifest error) be final and binding upon all parties. For the sole purpose of calculating the interest rate for the Trust Securities, "Business Day" shall be defined as any day on which dealings in deposits in Dollars are transacted in the London interbank market.

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        SECTION 4.11.    Certain Accounting Matters.

        (a) At all times during the existence of the Trust, the Administrative Trustees shall keep, or cause to be kept at the principal office of the Trust in the United States, as defined for purposes of Treasury Regulations section 301.7701-7, full books of account, records and supporting documents, which shall reflect in reasonable detail each transaction of the Trust. The books of account shall be maintained on the accrual method of accounting, in accordance with generally accepted accounting principles, consistently applied.

        (b) The Administrative Trustees shall either (i) if the Depositor is then subject to such reporting requirements, cause each Form 10-K and Form 10-Q prepared by the Depositor and filed with the Commission in accordance with the Exchange Act to be delivered to each Holder, with a copy to the Property Trustee, within thirty (30) days after the filing thereof or (ii) cause to be prepared at the principal office of the Trust in the United States, as defined for purposes of Treasury Regulations section 301.7701-7, and delivered to each of the Holders, with a copy to the Property Trustee, within ninety (90) days after the end of each Fiscal Year, annual financial statements of the Trust, including a balance sheet of the Trust as of the end of such Fiscal Year, and the related statements of income or loss.

        (c) If the Depositor intends to file its annual and quarterly information with the Commission in electronic form pursuant to Regulation S-T of the Commission using the Commission's Electronic Data Gathering, Analysis and Retrieval ("EDGAR") system, the Administrative Trustees shall notify the Property Trustee in the manner prescribed herein of each such annual and quarterly filing. The Property Trustee is hereby authorized and directed to access the EDGAR system for purposes of retrieving the financial information so filed. Compliance with the foregoing shall constitute delivery by the Administrative Trustees of its financial statements to the Property Trustee in compliance with the provisions of Section 314(a) of the Trust Indenture Act, if applicable. The Property Trustee shall have no duty to search for or obtain any electronic or other filings that the Depositor makes with the Commission, regardless of whether such filings are periodic, supplemental or otherwise. Delivery of reports, information and documents to the Property Trustee pursuant to this Section 4.11(c) shall be solely for purposes of compliance with this Section 4.11 and, if applicable, with Section 314(a) of the Trust Indenture Act. The Property Trustee's receipt of such reports, information.and documents shall not constitute notice to it of the content thereof or any matter determinable from the content thereof, including the Depositor's compliance with any of its covenants hereunder, as to which the Property Trustee is entitled to rely upon Officers' Certificates.

        (d) The Trust shall maintain one or more bank accounts in the United States, as defined for purposes of Treasury Regulations section 301.7701-7, in the name and for the sole benefit of the Trust; provided, however, that all payments of funds in respect of the Notes held by the Property Trustee shall be made directly to the Payment Account and no other funds of the Trust shall be deposited in the Payment Account. The sole signatories for such accounts (including the Payment Account) shall be designated by the Property Trustee.

ARTICLE V.

SECURITIES

        SECTION 5.1.    Initial Ownership.

        Upon the creation of the Trust and the contribution by the Depositor referred to in Section 2.3 and until the issuance of the Trust Securities, and at any time during which no Trust Securities are Outstanding, the Depositor shall be the sole beneficial owner of the Trust.

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        SECTION 5.2.    Authorized Trust Securities.

        The Trust shall be authorized to issue one series of Preferred Securities having an aggregate Liquidation Amount of $40,000,000 and one series of Common Securities having an aggregate Liquidation Amount of $1,238,000.

        SECTION 5.3.    Issuance of the Common Securities; Subscription and Purchase of Notes.

        On the Closing Date, an Administrative Trustee, on behalf of the Trust, shall execute and deliver to the Depositor Common Securities Certificates, registered in the name of the Depositor, evidencing an aggregate of 1,238 Common Securities having an aggregate Liquidation Amount of One Million Two Hundred Thirty Eight Thousand Dollars ($1,238,000), against receipt by the Trust of the aggregate purchase price of such Common Securities of One Million Two Hundred Thirty Eight Thousand Dollars ($1,238,000). Contemporaneously therewith and with the sale by the Trust to the Holders of an aggregate of 40,000 Preferred Securities having an aggregate Liquidation Amount of Forty Million Dollars ($40,000,000) an Administrative Trustee, on behalf of the Trust, shall purchase from the Depositor Notes, to be registered in the name of the Property Trustee on behalf of the Trust and having an aggregate principal amount equal to Forty One Million Two Hundred Thirty Eight Thousand Dollars ($41,238,000), and, in satisfaction of the purchase price for such Notes, the Property Trustee, on behalf of the Trust, shall deliver to the Depositor the sum of Forty One Million Two Hundred Thirty Eight Thousand Dollars ($41,238,000) (being the aggregate amount paid by the Holders for the Preferred Securities, and the amount paid by the Depositor for the Common Securities).

        SECTION 5.4.    The Securities Certificates.

        (a) The Preferred Securities Certificates shall be issued in minimum denominations of $100,000 Liquidation Amount and integral multiples of $1,000 in excess thereof, and the Common Securities Certificates shall be issued in minimum denominations of $10,000 Liquidation Amount and integral multiples of $1,000 in excess thereof. The Securities Certificates shall be executed on behalf of the Trust by manual or facsimile signature of at least one Administrative Trustee. Securities Certificates bearing the signatures of individuals who were, at the time when such signatures shall have been affixed, authorized to sign such Securities Certificates on behalf of the Trust shall be validly issued and entitled to the benefits of this Trust Agreement, notwithstanding that such individuals or any of them shall have ceased to be so authorized prior to the delivery of such Securities Certificates or did not have such authority at the date of delivery of such Securities Certificates.

        (b) On the Closing Date, upon the written order of an authorized officer of the Depositor, the Administrative Trustees shall cause Securities Certificates to be executed on behalf of the Trust and delivered, without further corporate action by the Depositor, in authorized denominations.

        (c) The Preferred Securities issued to QIBs/QPs shall be, except as provided in Section 5.6, Book-Entry Preferred Securities issued in the form of one or more Global Preferred Securities registered in the name of the Depositary, or its nominee and deposited with the Depositary or a custodian for the Depositary for credit by the Depositary to the respective accounts of the Depositary Participants thereof (or such other accounts as they may direct). The Preferred Securities issued to a Person other than a QIB/QP shall be issued in the form of Definitive Preferred Securities Certificates.

        (d) A Preferred Security shall not be valid until authenticated by the manual signature of an authorized signatory of the Property Trustee. Such signature shall be conclusive evidence that the Preferred Security has been authenticated under this Trust Agreement. Upon written order of the Trust signed by one Administrative Trustee, the Property Trustee shall authenticate the Preferred Securities for original issue. The Property Trustee may appoint an authenticating agent that is a U.S. Person acceptable to the Trust to authenticate the Preferred Securities. A Common Security

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need not be so authenticated and shall be valid upon execution by one or more Administrative Trustees. The form of this certificate of authentication can be found in Section 5.13.

        SECTION 5.5.    Rights of Holders.

        The Trust Securities shall have no preemptive or similar rights and when issued and delivered to Holders against payment of the purchase price therefor will be fully paid and non-assessable by the Trust. Except as provided in Section 5.11(b), the Holders of the Trust Securities, in their capacities as such, shall be entitled to the same limitation of personal liability extended to stockholders of private corporations for profit organized under the General Corporation Law of the State of Delaware.

        SECTION 5.6.    Book-Entry Preferred Securities.

        (a) A Global Preferred Security may be exchanged, in whole or in part, for Definitive Preferred Securities Certificates registered in the names of the Owners only if such exchange complies with Section 5.7 and (i) the Depositary advises the Administrative Trustees and the Property Trustee in writing that the Depositary is no longer willing or able properly to discharge its responsibilities with respect to the Global Preferred Security, and no qualified successor is appointed by the Administrative Trustees within ninety (90) days of receipt of such notice, (ii) the Depositary ceases to be a clearing agency registered under the Exchange Act and the Administrative Trustees fail to appoint a qualified successor within ninety (90) days of obtaining knowledge of such event, (iii) the Administrative Trustees at their option advise the Property Trustee in writing that the Trust elects to terminate the book-entry system through the Depositary or (iv) a Note Event of Default has occurred and is continuing. Upon the occurrence of any event specified in clause (i), (ii), (iii) or (iv) above, the Administrative Trustees shall notify the Depositary and instruct the Depositary to notify all Owners of Book-Entry Preferred Securities, the Delaware Trustee and the Property Trustee of the occurrence of such event and of the availability of the Definitive Preferred Securities Certificates to Owners of the Preferred Securities requesting the same. Upon the issuance of Definitive Preferred Securities Certificates, the Trustees shall recognize the Holders of the Definitive Preferred Securities Certificates as Holders. Notwithstanding the foregoing, if an Owner of a beneficial interest in a Global Preferred Security wishes at any time to transfer an interest in such Global Preferred Security to a Person other than a QIB/QP, such transfer shall be effected, subject to the Applicable Depositary Procedures, in accordance with the provisions of this Section 5.6 and Section 5.7, and the transferee shall receive a Definitive Preferred Securities Certificate in connection with such transfer. A holder of a Definitive Preferred Securities Certificate that is a QIB/QP may, upon request and in accordance with the provisions of this Section 5.6 and Section 5.7, exchange such Definitive Preferred Securities Certificate for a beneficial interest in a Global Preferred Security.

        (b) If any Global Preferred Security is to be exchanged for Definitive Preferred Securities Certificates or canceled in part, or if any Definitive Preferred Securities Certificate is to be exchanged in whole or in part for any Global Preferred Security, then either (i) such Global Preferred Security shall be so surrendered for exchange or cancellation as provided in this Article V or (ii) the aggregate Liquidation Amount represented by such Global Preferred Security shall be reduced, subject to Section 5.4, or increased by an amount equal to the Liquidation Amount represented by that portion of the Global Preferred Security to be so exchanged or canceled, or equal to the Liquidation Amount represented by such Definitive Preferred Securities Certificates to be so exchanged for any Global Preferred Security, as the case may be, by means of an appropriate adjustment made on the records of the Securities Registrar, whereupon the Property Trustee, in accordance with the Applicable Depositary Procedures, shall instruct the Depositary or its authorized representative to make a corresponding adjustment to its records. Upon any such surrender to the Administrative Trustees or the Securities Registrar of any Global Preferred Security or Securities by the Depositary, accompanied by registration instructions, the

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Administrative Trustees, or any one of them, shall execute the Definitive Preferred Securities Certificates in accordance with the instructions of the Depositary. None of the Securities Registrar or the Trustees shall be liable for any delay in delivery of such instructions and may conclusively rely on, and shall be fully protected in relying on, such instructions.

        (c) Every Definitive Preferred Securities Certificate executed and delivered upon registration or transfer of, or in exchange for or in lieu of, a Global Preferred Security or any portion thereof shall be executed and delivered in the form of, and shall be, a Global Preferred Security, unless such Definitive Preferred Securities Certificate is registered in the name of a Person other than the Depositary for such Global Preferred Security or a nominee thereof.

        (d) The Depositary or its nominee, as registered owner of a Global Preferred Security, shall be the Holder of such Global Preferred Security for all purposes under this Trust Agreement and the Global Preferred Security, and Owners with respect to a Global Preferred Security shall hold such interests pursuant to the Applicable Depositary Procedures. The Securities Registrar and the Trustees shall be entitled to deal with the Depositary for all purposes of this Trust Agreement relating to the Global Preferred Securities (including the payment of the Liquidation Amount of and Distributions on the Book-Entry Preferred Securities represented thereby and the giving of instructions or directions by Owners of Book-Entry Preferred Securities represented thereby and the giving of notices) as the sole Holder of the Book-Entry Preferred Securities represented thereby and shall have no obligations to the Owners thereof. None of the Trustees nor the Securities Registrar shall have any liability in respect of any transfers effected by the Depositary.

        (e) The rights of the Owners of the Book-Entry Preferred Securities shall be exercised only through the Depositary and shall be limited to those established by law, the Applicable Depositary Procedures and agreements between such Owners and the Depositary and/or the Depositary Participants; provided, that solely for the purpose of determining whether the Holders of the requisite amount of Preferred Securities have voted on any matter provided for in this Trust Agreement, to the extent that Preferred Securities are represented by a Global Preferred Security, the Trustees may conclusively rely on, and shall be fully protected in relying on, any written instrument (including a proxy) delivered to the Property Trustee by the Depositary setting forth the Owners' votes or assigning the right to vote on any matter to any other Persons either in whole or in part. To the extent that Preferred Securities are represented by a Global Preferred Security, the initial Depositary will make book-entry transfers among the Depositary Participants and receive and transmit payments on the Preferred Securities that are represented by a Global Preferred Security to such Depositary Participants, and none of the Depositor or the Trustees shall have any responsibility or obligation with respect thereto.

        (f) To the extent that a notice or other communication to the Holders is required under this Trust Agreement, for so long as Preferred Securities are represented by a Global Preferred Security, the Trustees shall give all such notices and communications to the Depositary, and shall have no obligations to the Owners.

        SECTION 5.7.    Registration of Transfer and Exchange of Preferred Securities Certificates.

        (a) The Property Trustee shall keep or cause to be kept, at the Corporate Trust Office, a register or registers (the "Securities Register") in which the registrar and transfer agent with respect to the Trust Securities (the "Securities Registrar"), subject to such reasonable regulations as it may prescribe, shall provide for the registration of Preferred Securities Certificates and Common Securities Certificates and registration of transfers and exchanges of Preferred Securities Certificates as herein provided. The Person acting as the Property Trustee shall at all times also be the Securities Registrar. The provisions of Article VIII shall apply to the Property Trustee in its role as Securities Registrar.

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        (b) Subject to Section 5.7(d), upon surrender for registration of transfer of any Preferred Securities Certificate at the office or agency maintained pursuant to Section 5.7(f), the Administrative Trustees or any one of them shall execute by manual or facsimile signature and deliver to the Property Trustee, and the Property Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Preferred Securities Certificates in authorized denominations of a like aggregate Liquidation Amount as may be required by this Trust Agreement dated the date of execution by such Administrative Trustee or Trustees. At the option of a Holder, Preferred Securities Certificates may be exchanged for other Preferred Securities Certificates in authorized denominations and of a like aggregate Liquidation Amount upon surrender of the Preferred Securities Certificate to be exchanged at the office or agency maintained pursuant to Section 5.7(f). Whenever any Preferred Securities Certificates are so surrendered for exchange, the Administrative Trustees or any one of them shall execute by manual or facsimile signature and deliver to the Property Trustee, and the Property Trustee shall authenticate and deliver, the Preferred Securities Certificates that the Holder making the exchange is entitled to receive.

        (c) The Securities Registrar shall not be required, (i) to issue, register the transfer of or exchange any Preferred Security during a period beginning at the opening of business fifteen (15) days before the day of selection for redemption of such Preferred Securities pursuant to Article IV and ending at the close of business on the day of mailing of the notice of redemption or (ii) to register the transfer of or exchange any Preferred Security so selected for redemption in whole or in part, except, in the case of any such Preferred Security to be redeemed in part, any portion thereof not to be redeemed.

        (d) Every Preferred Securities Certificate presented or surrendered for registration of transfer or exchange shall be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Securities Registrar duly executed by the Holder or such Holder's attorney duly authorized in writing and accompanied by a certificate of the transferor substantially in the form set forth as Exhibit E hereto.

        (e) No service charge shall be made for any registration of transfer or exchange of Preferred Securities Certificates, but the Property Trustee on behalf of the Trust may require payment of a sum sufficient to cover any tax or governmental charge that may be imposed in connection with any transfer or exchange of Preferred Securities Certificates.

        (f) The Administrative Trustees shall designate an office or offices or agency or agencies where Preferred Securities Certificates may be surrendered for registration of transfer or exchange and initially designate the Corporate Trust Office as its office and agency for such purposes. The Administrative Trustees shall give prompt written notice to the Depositor, the Property Trustee and to the Holders of any change in the location of any such office or agency.

        (g) The Preferred Securities may only be transferred to a "Qualified Purchaser" as such term is defined in Section 2(a)(51) of the Investment Company Act.

        (h) Neither the Property Trustee nor the Securities Registrar shall be responsible for ascertaining whether any transfer hereunder complies with the registration provisions of or any exemptions from the Securities Act, applicable state securities laws or the applicable laws of any other jurisdiction, ERISA, the Code or the Investment Company Act; provided, that if a certificate is specifically required by the express terms of this Section 5.7 to be delivered to the Trustee or the Securities Registrar by a Holder or transferee of a Security, the Trustee and the Securities registrar shall be under a duty to receive and examine the same to determine whether or not the certificate substantially conforms on its face to the requirements of this Indenture and shall promptly notify the party delivering the same if such certificate does not comply with such terms.

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        SECTION 5.8.    Mutilated, Destroyed, Lost or Stolen Securities Certificates.

        (a) If any mutilated Securities Certificate shall be surrendered to the Securities Registrar together with such security or indemnity as may be required by the Securities Registrar to save each of the Trustees harmless, the Administrative Trustees, or any one of them, on behalf of the Trust, shall execute and make available for delivery in exchange therefor a new Securities Certificate of like class, tenor and denomination.

        (b) If the Securities Registrar shall receive evidence to its satisfaction of the destruction, loss or theft of any Securities Certificate and there shall be delivered to the Securities Registrar such security or indemnity as may be required by it to save each of the Trustees harmless, then in the absence of notice that such Securities Certificate shall have acquired by a protected purchaser, the Administrative Trustees, or any one of them, on behalf of the Trust, shall execute and make available for delivery, and, with respect to Preferred Securities, the Property Trustee shall authenticate, in exchange for or in lieu of any such destroyed, lost or stolen Securities Certificate, a new Securities Certificate of like class, tenor and denomination.

        (c) In connection with the issuance of any new Securities Certificate under this Section 5.8, the Administrative Trustees or the Securities Registrar may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection therewith.

        (d) Any duplicate Securities Certificate issued pursuant to this Section 5.8 shall constitute conclusive evidence of an undivided beneficial interest in the assets of the Trust corresponding to that evidenced by the mutilated, lost, stolen or destroyed Securities Certificate, as if originally issued, whether or not the lost, stolen or destroyed Securities Certificate shall be found at any time.

        (e) If any such mutilated, destroyed, lost or stolen Securities Certificate has become or is about to become due and payable, the Depositor in its discretion may provide the Property Trustee or Paying Agent, as applicable, with the funds to pay such Trust Security and upon receipt of such funds, the Property Trustee or Paying Agent, as applicable, shall pay such Trust Security instead of issuing a new Securities Certificate.

        (f) The provisions of this Section 5.8 are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement of mutilated, destroyed, lost or stolen Securities Certificates.

        SECTION 5.9.    Persons Deemed Holders.

        The Trustees and the Securities Registrar shall each treat the Person in whose name any Securities Certificate shall be registered in the Securities Register as the owner of such Securities Certificate for the purpose of receiving Distributions and for all other purposes whatsoever, and none of the Trustees and the Securities Registrar shall be bound by any notice to the contrary.

        SECTION 5.10.    Cancellation.

        All Preferred Securities Certificates surrendered for registration of transfer or exchange or for payment shall, if surrendered to any Person other than the Property Trustee, be delivered to the Property Trustee, and any such Preferred Securities Certificates and Preferred Securities Certificates surrendered directly to the Property Trustee for any such purpose shall be promptly canceled by it. The Administrative Trustees may at any time deliver to the Property Trustee for cancellation any Preferred Securities Certificates previously delivered hereunder that the Administrative Trustees may have acquired in any manner whatsoever, and all Preferred Securities Certificates so delivered shall be promptly canceled by the Property Trustee. No Preferred Securities Certificates shall be executed and delivered in lieu of or in exchange for any Preferred Securities Certificates canceled as provided in this

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Section 5.10, except as expressly permitted by this Trust Agreement. All canceled Preferred Securities Certificates shall be retained by the Property Trustee in accordance with its customary practices.

        SECTION 5.11.    Ownership of Common Securities by Depositor.

        (a) On the Closing Date, the Depositor shall acquire, and thereafter shall retain, beneficial and record ownership of the Common Securities. Neither the Depositor nor any successor Holder of the Common Securities may transfer less than all the Common Securities, and the Depositor or any such successor Holder may transfer the Common Securities only (i) in connection with a consolidation or merger of the Depositor into another Person, or any conveyance, transfer or lease by the Depositor of its properties and assets substantially as an entirety to any Person (in which event such Common Securities will be transferred to such surviving entity, transferee or lessee, as the case may be), pursuant to Section 8.1 of the Indenture or (ii) to the Depositor or an Affiliate of the Depositor, in each such case in compliance with applicable law (including the Securities Act, and applicable state securities and blue sky laws). To the fullest extent permitted by law, any attempted transfer of the Common Securities other than as set forth in the immediately preceding sentence shall be void. The Administrative Trustees shall cause each Common Securities Certificate issued to the Depositor to contain a legend stating substantially "THIS CERTIFICATE IS NOT TRANSFERABLE EXCEPT IN COMPLIANCE WITH APPLICABLE LAW AND SECTION 5.11 OF THE TRUST AGREEMENT."

        (b) Any Holder of the Common Securities shall be liable for the debts and obligations of the Trust in the manner and to the extent set forth with respect to the Depositor and agrees that it shall be subject to all liabilities to which the Depositor may be subject and, prior to becoming such a Holder, shall deliver to the Administrative Trustees an instrument of assumption satisfactory to such Trustees.

        SECTION 5.12.    Restricted Legends.

        (a) Each Preferred Security Certificate shall bear a legend in substantially the following form:

"[IF THIS SECURITY IS A GLOBAL SECURITY INSERT: THIS PREFERRED SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE TRUST AGREEMENT HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE DEPOSITORY TRUST COMPANY ("DTC") OR A NOMINEE OF DTC. THIS PREFERRED SECURITY IS EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN DTC OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE TRUST AGREEMENT, AND NO TRANSFER OF THIS PREFERRED SECURITY (OTHER THAN A TRANSFER OF THIS PREFERRED SECURITY AS A WHOLE BY DTC TO A NOMINEE OF DTC OR BY A NOMINEE OF DTC TO DTC OR ANOTHER NOMINEE OF DTC) MAY BE REGISTERED EXCEPT IN LIMITED CIRCUMSTANCES.

UNLESS THIS PREFERRED SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF DTC TO BRESLER & REINER STATUTORY TRUST I OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY PREFERRED SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON

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IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]

THE PREFERRED SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND SUCH PREFERRED SECURITIES OR ANY INTEREST THEREIN, MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF ANY PREFERRED SECURITIES IS HEREBY NOTIFIED THAT THE SELLER OF THE PREFERRED SECURITIES MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A UNDER THE SECURITIES ACT.

THE HOLDER OF THE PREFERRED SECURITIES REPRESENTED BY THIS CERTIFICATE AGREES FOR THE BENEFIT OF THE TRUST AND THE DEPOSITOR THAT (A) SUCH PREFERRED SECURITIES MAY BE OFFERED, RESOLD OR OTHERWISE TRANSFERRED ONLY (I) TO THE TRUST, OR (II) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A "QUALIFIED PURCHASER" (AS DEFINED IN SECTION 2(A)(51) OF THE INVESTMENT COMPANY ACT OF1940, AS AMENDED), AND (B) THE HOLDER WILL NOTIFY ANY PURCHASER OF ANY PREFERRED SECURITIES FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE.

THE PREFERRED SECURITIES WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN BLOCKS HAVING AN AGGREGATE LIQUIDATION AMOUNT OF NOT LESS THAN $100,000. TO THE FULLEST EXTENT PERMITTED BY LAW, ANY ATTEMPTED TRANSFER OF PREFERRED SECURITIES, OR ANY INTEREST THEREIN, IN A BLOCK HAVING AN AGGREGATE LIQUIDATION AMOUNT OF LESS THAN $100,000 AND MULTIPLES OF $1,000 IN EXCESS THEREOF SHALL BE DEEMED TO BE VOID AND OF NO LEGAL EFFECT WHATSOEVER. TO THE FULLEST EXTENT PERMITTED BY LAW, ANY SUCH PURPORTED TRANSFEREE SHALL BE DEEMED NOT TO BE THE HOLDER OF SUCH PREFERRED SECURITIES FOR ANY PURPOSE, INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF PRINCIPAL OF OR INTEREST ON SUCH PREFERRED SECURITIES, OR ANY INTEREST THEREIN, AND SUCH PURPORTED TRANSFEREE SHALL BE DEEMED TO HAVE NO INTEREST WHATSOEVER IN SUCH PREFERRED SECURITIES.

THE HOLDER OF THIS SECURITY, OR ANY INTEREST THEREIN, BY ITS ACCEPTANCE HEREOF OR THEREOF ALSO AGREES, REPRESENTS AND WARRANTS THAT IT IS NOT AN EMPLOYEE BENEFIT, INDIVIDUAL RETIREMENT ACCOUNT OR OTHER PLAN OR ARRANGEMENT SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE") (EACH A "PLAN"), OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE "PLAN ASSETS" BY REASON OF ANY PLAN'S INVESTMENT IN THE ENTITY, AND NO PERSON INVESTING "PLAN ASSETS" OF ANY PLAN MAY ACQUIRE OR HOLD THIS PREFERRED SECURITY OR ANY INTEREST THEREIN. ANY PURCHASER OR HOLDER OF THE PREFERRED SECURITIES OR ANY INTEREST THEREIN WILL BE

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DEEMED TO HAVE REPRESENTED BY ITS PURCHASE AND HOLDING THEREOF THAT IT IS NOT AN EMPLOYEE BENEFIT PLAN WITHIN THE MEANING OF SECTION 3(3) OF ERISA, OR A PLAN TO WHICH SECTION 4975 OF THE CODE IS APPLICABLE, A TRUSTEE OR OTHER PERSON ACTING ON BEHALF OF AN EMPLOYEE BENEFIT PLAN OR PLAN, OR ANY OTHER PERSON OR ENTITY USING THE ASSETS OF ANY EMPLOYEE BENEFIT PLAN OR PLAN TO FINANCE SUCH PURCHASE."

        (b) The above legend shall not be removed from any of the Preferred Securities Certificates unless there is delivered to the Property Trustee and the Depositor satisfactory evidence, which may include an opinion of counsel, as may be reasonably required to ensure that any future transfers thereof may be made without restriction under the provisions of the Securities Act and other applicable law. Upon provision of such satisfactory evidence, one or more of the Administrative Trustees on behalf of the Trust shall execute and deliver to the Property Trustee, and the Property Trustee shall deliver, at the written direction of the Administrative Trustees and the Depositor, Preferred Securities Certificates that do not bear the legend.

        SECTION 5.13.    Form of Certificate of Authentication.

        The Property Trustee's certificate of authentication shall be in substantially the following form:

        This is one of the Preferred Securities referred to in the within-mentioned Trust Agreement.

Dated:	JPMORGAN CHASE BANK, NATIONAL ASSOCIATION, not in its individual capacity, but solely as Property Trustee
	By:
		Authorized signatory

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ARTICLE VI.

MEETINGS; VOTING; ACTS OF HOLDERS

        SECTION 6.1.    Notice of Meetings.

        Notice of all meetings of the Holders of the Preferred Securities, stating the time, place and purpose of the meeting, shall be given by the Property Trustee pursuant to Section 10.8 to each Holder of Preferred Securities, at such Holder's registered address, at least fifteen (15) days and not more than ninety (90) days before the meeting. At any such meeting, any business properly before the meeting may be so considered whether or not stated in the notice of the meeting. Any adjourned meeting may be held as adjourned without further notice.

        SECTION 6.2.    Meetings of Holders of the Preferred Securities.

        (a) No annual meeting of Holders is required to be held. The Property Trustee, however, shall call a meeting of the Holders of the Preferred Securities to vote on any matter upon the written request of the Holders of at least twenty five percent (25%) in aggregate Liquidation Amount of the Outstanding Preferred Securities and the Administrative Trustees or the Property Trustee may, at any time in their discretion, call a meeting of the Holders of the Preferred Securities to vote on any matters as to which such Holders are entitled to vote.

        (b) The Holders of at least a Majority in Liquidation Amount of the Preferred Securities, present in person or by proxy, shall constitute a quorum at any meeting of the Holders of the Preferred Securities.

        (c) If a quorum is present at a meeting, an affirmative vote by the Holders present, in person or by proxy, holding Preferred Securities representing at least a Majority in Liquidation Amount of the Preferred Securities held by the Holders present, either in person or by proxy, at such meeting shall constitute the action of the Holders of the Preferred Securities, unless this Trust Agreement requires a lesser or greater number of affirmative votes.

        SECTION 6.3.    Voting Rights.

        Holders shall be entitled to one vote for each $10,000 of Liquidation Amount represented by their Outstanding Trust Securities in respect of any matter as to which such Holders are entitled to vote.

        SECTION 6.4.    Proxies, Etc.

        At any meeting of Holders, any Holder entitled to vote thereat may vote by proxy, provided, that no proxy shall be voted at any meeting unless it shall have been placed on file with the Administrative Trustees, or with such other officer or agent of the Trust as the Administrative Trustees may direct, for verification prior to the time at which such vote shall be taken. Pursuant to a resolution of the Property Trustee, proxies may be solicited in the name of the Property Trustee or one or more officers of the Property Trustee. Only Holders of record shall be entitled to vote. When Trust Securities are held jointly by several Persons, any one of them may vote at any meeting in person or by proxy in respect of such Trust Securities, but if more than one of them shall be present at such meeting in person or by proxy, and such joint owners or their proxies so present disagree as to any vote to be cast, such vote shall not be received in respect of such Trust Securities. A proxy purporting to be executed by or on behalf of a Holder shall be deemed valid unless challenged at or prior to its exercise, and the burden of proving invalidity shall rest on the challenger. No proxy shall be valid more than three years after its date of execution.

        SECTION 6.5.    Holder Action by Written Consent.

        Any action that may be taken by Holders at a meeting may be taken without a meeting and without prior notice if Holders holding at least a Majority in Liquidation Amount of all Preferred

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Securities entitled to vote in respect of such action (or such lesser or greater proportion thereof as shall be required by any other provision of this Trust Agreement) shall consent to the action in writing; provided, that notice of such action is promptly provided to the Holders of Preferred Securities that did not consent to such action. Any action that may be taken by the Holders of all the Common Securities may be taken without a meeting and without prior notice if such Holders shall consent to the action in writing.

        SECTION 6.6.    Record Date for Voting and Other Purposes.

        Except as provided in Section 6.10(a), for the purposes of determining the Holders who are entitled to notice of and to vote at any meeting or to act by written consent, or to participate in any distribution on the Trust Securities in respect of which a record date is not otherwise provided for in this Trust Agreement, or for the purpose of any other action, the Administrative Trustees may from time to time fix a date, not more than ninety (90) days prior to the date of any meeting of Holders or the payment of a Distribution or other action, as the case may be, as a record date for the determination of the identity of the Holders of record for such purposes.

        SECTION 6.7.    Acts of Holders.

        (a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided or permitted by this Trust Agreement to be given, made or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by an agent thereof duly appointed in writing; and, except as otherwise expressly provided herein, such action shall become effective when such instrument or instruments are delivered to an Administrative Trustee. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the "Act" of the Holders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Trust Agreement and conclusive in favor of the Trustees, if made in the manner provided in this Section 6.7.

        (b) The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by a certificate of a notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to him the execution thereof. Where such execution is by a signer acting in a capacity other than such signer's individual capacity, such certificate or affidavit shall also constitute sufficient proof of such signer's authority. The fact and date of the execution of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other manner that any Trustee receiving the same deems sufficient.

        (c) The ownership of Trust Securities shall be proved by the Securities Register.

        (d) Any request, demand, authorization, direction, notice, consent, waiver or other Act of the Holder of any Trust Security shall bind every future Holder of the same Trust Security and the Holder of every Trust Security issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof in respect of anything done, omitted or suffered to be done by the Trustees, the Administrative Trustees or the Trust in reliance thereon, whether or not notation of such action is made upon such Trust Security.

        (e) Without limiting the foregoing, a Holder entitled hereunder to take any action hereunder with regard to any particular Trust Security may do so with regard to all or any part of the Liquidation Amount of such Trust Security or by one or more duly appointed agents each of which may do so pursuant to such appointment with regard to all or any part of such Liquidation Amount.

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        (f) If any dispute shall arise among the Holders or the Trustees with respect to the authenticity, validity or binding nature of any request, demand, authorization, direction, notice, consent, waiver or other Act of such Holder or Trustee under this Article VI, then the determination of such matter by the Property Trustee shall be conclusive with respect to such matter.

        SECTION 6.8.    Inspection of Records.

        Upon reasonable written notice to the Administrative Trustees and the Property Trustee, the records of the Trust shall be open to inspection by any Holder during normal business hours for any purpose reasonably related to such Holder's interest as a Holder.

        SECTION 6.9.    Limitations on Voting Rights.

        (a) Except as expressly provided in this Trust Agreement and in the Indenture and as otherwise required by law, no Holder of Preferred Securities shall have any right to vote or in any manner otherwise control the administration, operation and management of the Trust or the obligations of the parties hereto, nor shall anything herein set forth, or contained in the terms of the Securities Certificates, be construed so as to constitute the Holders from time to time as partners or members of an association.

        (b) So long as any Notes are held by the Property Trustee on behalf of the Trust, the Property Trustee shall not (i) direct the time, method and place of conducting any proceeding for any remedy available to the Note Trustee, or exercise any trust or power conferred on the Property Trustee with respect to the Notes, (ii) waive any past default that may be waived under Section 5.13 of the Indenture or waive compliance with any covenant or condition under Section 10.7 of the Indenture, (iii) exercise any right to rescind or annul a declaration that the principal of all the Notes shall be due and payable or (iv) consent to any amendment, modification or termination of the Indenture or the Notes, where such consent shall be required, without, in each case, obtaining the prior approval of the Holders of at least a Majority in Liquidation Amount of the Preferred Securities; provided, that where a consent under the Indenture would require the consent of each holder of Notes (or each Holder of Preferred Securities) affected thereby, no such consent shall be given by the Property Trustee without the prior written consent of each Holder of Preferred Securities. The Property Trustee shall not revoke any action previously authorized or approved by a vote of the Holders of the Preferred Securities, except by a subsequent vote of the Holders of the Preferred Securities. In addition to obtaining the foregoing approvals of the Holders of the Preferred Securities, prior to taking any of the foregoing actions, the Property Trustee shall, at the expense of the Depositor, obtain an Opinion of Counsel experienced in such matters to the effect that such action shall not cause the Trust to be taxable as a corporation or classified as other than a grantor trust for United States federal income tax purposes.

        (c) If any proposed amendment to the Trust Agreement provides for, or the Trustees otherwise propose to effect, (i) any action that would adversely affect in any material respect the powers, preferences or special rights of the Preferred Securities, whether by way of amendment to the Trust Agreement or otherwise or (ii) the dissolution, winding-up or termination of the Trust, other than pursuant to the terms of this Trust Agreement, then the Holders of Outstanding Preferred Securities as a class will be entitled to vote on such amendment or proposal and such amendment or proposal shall not be effective except with the approval of the Holders of at least a Majority in Liquidation Amount of the Preferred Securities. Notwithstanding any other provision of this Trust Agreement, no amendment to this Trust Agreement may be made if, as a result of such amendment, it would cause the Trust to be taxable as a corporation or classified as other than a grantor trust for United States federal income tax purposes.

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        SECTION 6.10.    Acceleration of Maturity; Rescission of Annulment; Waivers of Past Defaults.

        (a) For so long as any Preferred Securities remain Outstanding, if, upon a Note Event of Default, the Note Trustee fails or the holders of not less than twenty five percent (25%) in principal amount of the outstanding Notes fail to declare the principal of all of the Notes to be immediately due and payable, the Holders of at least twenty five percent (25%) in Liquidation Amount of the Preferred Securities then Outstanding shall have the right to make such declaration by a notice in writing to the Property Trustee, the Depositor and the Note Trustee. At any time after a declaration of acceleration with respect to the Notes has been made and before a judgment or decree for payment of the money due has been obtained by the Note Trustee as provided in the Indenture, the Holders of at least a Majority in Liquidation Amount of the Preferred Securities, by written notice to the Property Trustee, the Depositor and the Note Trustee, may rescind and annul such declaration and its consequences if:

        (i) the Depositor has paid or deposited with the Note Trustee a sum sufficient to pay:

        (A) all overdue installments of interest on all of the Notes;

        (B) any accrued Additional Interest on all of the Notes;

        (C) the principal of and any premium, if any, on any Notes that have become due otherwise than by such declaration of acceleration and interest and Additional Interest thereon at the rate borne by the Notes; and

        (D) all sums paid or advanced by the Note Trustee under the Indenture and the reasonable compensation, expenses, disbursements and advances of the Note Trustee, the Property Trustee and their agents and counsel; and

        (ii) all Note Events of Default, other than the non-payment of the principal of the Notes that has become due solely by such acceleration, have been cured or waived as provided in Section 5.13 of the Indenture.

        Upon receipt by the Property Trustee of written notice requesting such an acceleration, or rescission and annulment thereof, by Holders of any part of the Preferred Securities, a record date shall be established for determining Holders of Outstanding Preferred Securities entitled to join in such notice, which record date shall be at the close of business on the day the Property Trustee receives such notice. The Holders on such record date, or their duly designated proxies, and only such Persons, shall be entitled to join in such notice, whether or not such Holders remain Holders after such record date; provided, that, unless such declaration of acceleration, or rescission and annulment, as the case may be, shall have become effective by virtue of the requisite percentage having joined in such notice prior to the day that is ninety (90) days after such record date, such notice of declaration of acceleration, or rescission and annulment, as the case may be, shall automatically and without further action by any Holder be canceled and of no further effect. Nothing in this paragraph shall prevent a Holder, or a proxy of a Holder, from giving, after expiration of such ninety (90)-day period, a new written notice of declaration of acceleration, or rescission and annulment thereof, as the case may be, that is identical to a written notice that has been canceled pursuant to the proviso to the preceding sentence, in which event a new record date shall be established pursuant to the provisions of this Section 6.10(a).

        (b) For so long as any Preferred Securities remain Outstanding, to the fullest extent permitted by law and subject to the terms of this Trust Agreement and the Indenture, upon a Note Event of Default specified in paragraph (a) or (b) of Section 5.1 of the Indenture, any Holder of Preferred Securities shall have the right to institute a proceeding directly against the Depositor, pursuant to Section 5.8 of the Indenture, for enforcement of payment to such Holder of any amounts payable in respect of Notes having an aggregate principal amount equal to the aggregate Liquidation Amount of the Preferred Securities of such Holder. Except as set forth in Section 6.10(a) and this

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Section 6.10(b), the Holders of Preferred Securities shall have no right to exercise directly any right or remedy available to the holders of, or in respect of, the Notes.

        (c) Notwithstanding paragraphs (a) and (b) of this Section 6.10, the Holders of at least a Majority in Liquidation Amount of the Preferred Securities may, on behalf of the Holders of all the Preferred Securities, waive any Note Event of Default, except any Note Event of Default arising from the failure to pay any principal of or any premium, if any, or interest on (including any Additional Interest) the Notes (unless such Note Event of Default has been cured and a sum sufficient to pay all matured installments of interest and all principal and premium, if any, on all Notes due otherwise than by acceleration has been deposited with the Note Trustee) or a Note Event of Default in respect of a covenant or provision that under the Indenture cannot be modified or amended without the consent of the holder of each outstanding Note. Upon any such waiver, such Note Event of Default shall cease to exist and any Note Event of Default arising therefrom shall be deemed to have been cured for every purpose of the Indenture; but no such waiver shall affect any subsequent Note Event of Default or impair any right consequent thereon.

        (d) Notwithstanding paragraphs (a) and (b) of this Section 6.10, the Holders of at least a Majority in Liquidation Amount of the Preferred Securities may, on behalf of the Holders of all the Preferred Securities, waive any past Event of Default and its consequences. Upon such waiver, any such Event of Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Trust Agreement, but no such waiver shall extend to any subsequent or other Event of Default or impair any right consequent thereon.

        (e) The Holders of a Majority in Liquidation Amount of the Preferred Securities shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Property Trustee in respect of this Trust Agreement or the Notes or exercising any trust or power conferred upon the Property Trustee under this Trust Agreement; provided, that, subject to Sections 8.5 and 8.7, the Property Trustee shall have the right to decline to follow any such direction if the Property Trustee being advised by counsel determines that the action so directed may not lawfully be taken, or if the Property Trustee in good faith shall, by an officer or officers of the Property Trustee, determine that the proceedings so directed would be illegal or involve it in personal liability or be unduly prejudicial to the rights of Holders not party to such direction, and provided, further, that nothing in this Trust Agreement shall impair the right of the Property Trustee to take any action deemed proper by the Property Trustee and which is not inconsistent with such direction.

ARTICLE VII.

REPRESENTATIONS AND WARRANTIES

        SECTION 7.1.    Representations and Warranties of the Property Trustee and the Delaware Trustee.

        The Property Trustee and the Delaware Trustee, each severally on behalf of and as to itself, hereby represents and warrants for the benefit of the Depositor and the Holders that:

        (a) the Property Trustee is a national banking association, duly organized and validly existing under the laws of the United States of America;

        (b) the Property Trustee has full corporate power, authority and legal right to execute, deliver and perform its obligations under this Trust Agreement and has taken all necessary action to authorize the execution, delivery and performance by it of this Trust Agreement;

        (c) the Delaware Trustee is a national banking association, duly formed and validly existing under the laws of the United States;

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        (d) the Delaware Trustee has full corporate power, authority and legal right to execute, deliver and perform its obligations under this Trust Agreement and has taken all necessary action to authorize the execution, delivery and performance by it of this Trust Agreement;

        (e) this Trust Agreement has been duly authorized, executed and delivered by the Property Trustee and the Delaware Trustee and constitutes the legal, valid and binding agreement of each of the Property Trustee and the Delaware Trustee enforceable against each of them in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws affecting creditors' rights generally and to general principles of equity;

        (f) the execution, delivery and performance of this Trust Agreement have been duly authorized by all necessary corporate or other action on the part of the Property Trustee and the Delaware Trustee and do not require any approval of stockholders of the Property Trustee and the Delaware Trustee and such execution, delivery and performance will not (i)violate the Restated Organization Certificate or Articles of Association, as applicable, or By-laws of the Property Trustee or the Delaware Trustee, (ii) violate any provision of, or constitute, with or without notice or lapse of time, a default under, or result in the imposition of any lien on any properties included in the Trust Property pursuant to the provisions of any indenture, mortgage, credit agreement, license or other agreement or instrument to which the Property Trustee or the Delaware Trustee is a party or by which it is bound, or (iii)violate any applicable law, governmental rule or regulation of the United States or the State of Delaware, as the case may be, governing the banking, trust or general powers of the Property Trustee or the Delaware Trustee or any order, judgment or decree applicable to the Property Trustee or the Delaware Trustee;

        (g) neither the authorization, execution or delivery by the Property Trustee or the Delaware Trustee of this Trust Agreement nor the consummation of any of the transactions by the Property Trustee or the Delaware Trustee contemplated herein requires the consent or approval of, the giving of notice to, the registration with or the taking of any other action with respect to any governmental authority or agency under any existing law of the United States or the State of Delaware governing the banking, trust or general powers of the Property Trustee or the Delaware Trustee, as the case may be; and

        (h) of each of the Property Trustee's and the Delaware Trustee's knowledge, there are no proceedings pending or threatened against or affecting the Property Trustee or the Delaware Trustee in any court or before any governmental authority, agency or arbitration board or tribunal that, individually or in the aggregate, would materially and adversely affect the Trust or would question the right, power and authority of the Property Trustee or the Delaware Trustee, as the case may be, to enter into or perform its obligations as one of the Trustees under this Trust Agreement.

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        SECTION 7.2.    Representations and Warranties of Depositor.

        The Depositor hereby represents and warrants for the benefit of the Holders that:

        (a) the Depositor is a corporation duly organized, validly existing and in good standing under the laws of its state of incorporation;

        (b) the Depositor has full corporate power, authority and legal right to execute, deliver and perform its obligations under this Trust Agreement and has taken all necessary action to authorize the execution, delivery and performance by it of this Trust Agreement;

        (c) this Trust Agreement has been duly authorized, executed and delivered by the Depositor and constitutes the legal, valid and binding agreement of the Depositor enforceable against the Depositor in accordance with its terms, subject to applicable bankruptcy, insolvency and similar laws affecting creditors' rights generally and to general principles of equity;

        (d) the Securities Certificates issued at the Closing Date on behalf of the Trust have been duly authorized and will have been duly and validly executed, issued and delivered by the applicable Trustees pursuant to the terms and provisions of, and in accordance with the requirements of, this Trust Agreement and the Holders will be, as of such date, entitled to the benefits of this Trust Agreement;

        (e) the execution, delivery and performance of this Trust Agreement have been duly authorized by all necessary corporate or other action on the part of the Depositor and do not require any approval of stockholders of the Depositor and such execution, delivery and performance will not (i) violate the articles or certificate of incorporation or by-laws (or other organizational documents) of the Depositor or (ii) violate any applicable law, governmental rule or regulation governing the Depositor or any material portion of its property or any order, judgment or decree applicable to the Depositor or any material portion of its property;

        (f) neither the authorization, execution or delivery by the Depositor of this Trust Agreement nor the consummation of any of the transactions by the Depositor contemplated herein requires the consent or approval of, the giving of notice to, the registration with or the taking of any other action with respect to any governmental authority or agency under any existing law governing the Depositor or any material portion of its property; and

        (g) there are no proceedings pending or, to the best of the Depositor's knowledge, threatened against or affecting the Depositor or any material portion of its property in any court or before any governmental authority, agency or arbitration board or tribunal that, individually or in the aggregate, would materially and adversely affect the Trust or would question the right, power and authority of the Depositor, as the case may be, to enter into or perform its obligations under this Trust Agreement.

ARTICLE VIII.

THE TRUSTEES

        SECTION 8.1.    Number of Trustees.

        The number of Trustees shall be four (4); provided, that the Property Trustee and the Delaware Trustee may be the same Person, in which case the number of Trustees shall be three (3). The number of Trustees may be increased or decreased by Act of the Holder of the Common Securities subject to Sections 8.2, 8.3, and 8.4. The death, resignation, retirement, removal, bankruptcy, incompetence or incapacity to perform the duties of a Trustee shall not operate to annul, dissolve or terminate the Trust.

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        SECTION 8.2.    Property Trustee Required.

        There shall at all times be a Property Trustee hereunder with respect to the Trust Securities. The Property Trustee shall be a corporation organized and doing business under the laws of the United States or of any state thereof, authorized to exercise corporate trust powers, having a combined capital and surplus of at least fifty million dollars ($50,000,000), subject to supervision or examination by federal or state authority and having an office within the United States. If any such Person publishes reports of condition at least annually pursuant to law or to the requirements of its supervising or examining authority, then for the purposes of this Section 8.2, the combined capital and surplus of such Person shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time the Property Trustee shall cease to be eligible in accordance with the provisions of this Section 8.2, it shall resign immediately in the manner and with the effect hereinafter specified in this Article VIII.

        SECTION 8.3.    Delaware Trustee Required.

        (a) If required by the Delaware Statutory Trust Act, there shall at all times be a Delaware Trustee with respect to the Trust Securities. The Delaware Trustee shall either be (i) a natural person who is at least 21 years of age and a resident of the State of Delaware or (ii) a legal entity that has its principal place of business in the State of Delaware, otherwise meets the requirements of applicable Delaware law and shall act through one or more persons authorized to bind such entity. If at any time the Delaware Trustee shall cease to be eligible in accordance with the provisions of this Section 8.3, it shall resign immediately in the manner and with the effect hereinafter specified in this Article VIII. The Delaware Trustee shall have the same rights, privileges and immunities as the Property Trustee.

        (b) The Delaware Trustee shall not be entitled to exercise any powers, nor shall the Delaware Trustee have any of the duties and responsibilities, of the Property Trustee or the Administrative Trustees set forth herein. The Delaware Trustee shall be one of the trustees of the Trust for the sole and limited purpose of fulfilling the requirements of Section 3807 of the Delaware Statutory Trust Act and for taking such actions as are required to be taken by a Delaware trustee under the Delaware Statutory Trust Act. The duties (including fiduciary duties), liabilities and obligations of the Delaware Trustee shall be limited to (a) accepting legal process served on the Trust in the State of Delaware and (b) the execution of any certificates required to be filed with the Secretary of State of the State of Delaware that the Delaware Trustee is required to execute under Section 3811 of the Delaware Statutory Trust Act and there shall be no other duties (including fiduciary duties) or obligations, express or implied, at law or in equity, of the Delaware Trustee.

        SECTION 8.4.    Appointment of Administrative Trustees.

        (a) There shall at all times be one or more Administrative Trustees hereunder with respect to the Trust Securities. Each Administrative Trustee shall be either a natural person who is at least 21 years of age or a legal entity that shall act through one or more persons authorized to bind that entity. Each of the individuals identified as an "Administrative Trustee" in the preamble of this Trust Agreement hereby accepts his or her appointment as such.

        (b) Except where a requirement for action by a specific number of Administrative Trustees is expressly set forth in this Trust Agreement, any act required or permitted to be taken by, and any power of the Administrative Trustees may be exercised by, or with the consent of, any one such Administrative Trustee. Whenever a vacancy in the number of Administrative Trustees shall occur, until such vacancy is filled by the appointment of an Administrative Trustee in accordance with Section 8.11, the Administrative Trustees in office, regardless of their number (and notwithstanding any other provision of this Trust Agreement), shall have all the powers granted to the

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Administrative Trustees and shall discharge all the duties imposed upon the Administrative Trustees by this Trust Agreement.

        SECTION 8.5.    Duties and Responsibilities of the Trustees.

        (a) The rights, immunities, duties and responsibilities of the Trustees shall be as provided by this Trust Agreement and there shall be no other duties (including fiduciary duties) or obligations, express or implied, at law or in equity, of the Trustees; provided, however, that if an Event of Default known to the Property Trustee has occurred and is continuing, the Property Trustee shall, prior to the receipt of directions, if any, from the Holders of at least a Majority in Liquidation Amount of the Preferred Securities, exercise such of the rights and powers vested in it by this Trust Agreement, 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. Notwithstanding the foregoing, no provision of this Trust Agreement shall require any of the Trustees to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its or their rights or powers, if it or they shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. Whether or not herein expressly so provided, every provision of this Trust Agreement relating to the conduct or affecting the liability of or affording protection to the Trustees shall be subject to the provisions of this Section 8.5. Nothing in this Trust Agreement shall be construed to release any Administrative Trustee from liability for his or her own negligent action, negligent failure to act; or his or her own willful misconduct. To the extent that, at law or in equity, a Trustee has duties and liabilities relating to the Trust or to the Holders, such Trustee shall not be liable to the Trust or to any Holder for such Trustee's good faith reliance on the provisions of this Trust Agreement. The provisions of this Trust Agreement, to the extent that they restrict the duties and liabilities of the Trustees otherwise existing at law or in equity, are agreed by the Depositor and the Holders to replace such other duties and liabilities of the Trustees.

        (b) All payments made by the Property Trustee or a Paying Agent in respect of the Trust Securities shall be made only from the revenue and proceeds from the Trust Property and only to the extent that there shall be sufficient revenue or proceeds from the Trust Property to enable the Property Trustee or a Paying Agent to make payments in accordance with the terms hereof. Each Holder, by its acceptance of a Trust Security, agrees that it will look solely to the revenue and proceeds from the Trust Property to the extent legally available for distribution to it as herein provided and that the Trustees are not personally liable to it for any amount distributable in respect of any Trust Security or for any other liability in respect of any Trust Security. This Section 8.5(b) does not limit the liability of the Trustees expressly set forth elsewhere in this Trust Agreement.

        (c) No provisions of this Trust Agreement shall be construed to relieve the Property Trustee from liability with respect to matters that are within the authority of the Property Trustee under this Trust Agreement for its own negligent action, negligent failure to act or willful misconduct, except that:

(i)

the Property Trustee shall not be liable for any error or judgment made in good faith by an authorized officer of the Property Trustee, unless it shall be proved that the Property Trustee was negligent in ascertaining the pertinent facts;



(ii)

the Property Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of at least a Majority in Liquidation Amount of the Preferred Securities;

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(iii)

the Property Trustee's sole duty with respect to the custody, safe keeping and physical preservation of the Notes and the Payment Account shall be to deal with such Property in a similar manner as the Property Trustee deals with similar property for its own account, subject to the protections and limitations on liability afforded to the Property Trustee under this Trust Agreement;



(iv)

the Property Trustee shall not be liable for any interest on any money received by it except as it may otherwise agree in writing with the Depositor; and money held by the Property Trustee need not be segregated from other funds held by it except in relation to the Payment Account maintained by the Property Trustee pursuant to Section 3.1 and except to the extent otherwise required by law; and



(v)

the Property Trustee shall not be responsible for monitoring the compliance by the Administrative Trustees or the Depositor with their respective duties under this Trust Agreement, nor shall the Property Trustee be liable for the default or misconduct of any other Trustee or the Depositor.

        SECTION 8.6.    Notices of Defaults.

        (a) Within ninety (90) days after the occurrence of a default actually known to the Property Trustee, the Property Trustee shall transmit notice of such default to the Holders, the Administrative Trustees and the Depositor, unless such default shall have been cured or waived. For the purpose of this Section 8.6, the term "default" means any event that is, or after notice or lapse of time or both would become, an Event of Default.

        (b) The Property Trustee shall not be charged with knowledge of any Event of Default unless either (i) a Responsible Officer of the Property Trustee shall have actual knowledge or (ii) the Property Trustee shall have received written notice thereof from the Depositor, an Administrative Trustee or a Holder.

        (c) The Property Trustee shall notify all Holders of the Preferred Securities of any notice of default received with respect to the Notes.

        SECTION 8.7.    Certain Rights of Property Trustee.

        Subject to the provisions of Section 8.5:

        (a) the Property Trustee may conclusively rely and shall be protected in acting or refraining from acting in good faith and in accordance with the terms hereof upon any resolution, Opinion of Counsel, certificate, written representation of a Holder or transferee, certificate of auditors or any other resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, appraisal, bond, debenture, note, other evidence of indebtedness or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties;

        (b) if (i) in performing its duties under this Trust Agreement the Property Trustee is required to decide between alternative courses of action, (ii) in construing any of the provisions of this Trust Agreement the Property Trustee finds a provision ambiguous or inconsistent with any other provisions contained herein or (iii) the Property Trustee is unsure of the application of any provision of this Trust Agreement, then, except as to any matter as to which the Holders of the Preferred Securities are entitled to vote under the terms of this Trust Agreement, the Property Trustee shall deliver a notice to the Depositor requesting the Depositor's written instruction as to the course of action to be taken and the Property Trustee shall take such action, or refrain from taking such action, as the Property Trustee shall be instructed in writing to take, or to refrain from taking, by the Depositor; provided,that if the Property Trustee does not receive such instructions of the Depositor within ten (10) Business Days after it has delivered such notice or such reasonably

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shorter period of time set forth in such notice, the Property Trustee may, but shall be under no duty to, take such action, or refrain from taking such action, as the Property Trustee shall deem advisable and in the best interests of the Holders, in which event the Property Trustee shall have no liability except for its own negligence, bad faith or willful misconduct;

        (c) any direction or act of the Depositor contemplated by this Trust Agreement shall be sufficiently evidenced by an Officers' Certificate unless otherwise expressly provided herein;

        (d) any direction or act of an Administrative Trustee contemplated by this Trust Agreement shall be sufficiently evidenced by a certificate executed by such Administrative Trustee and setting forth such direction or act;

        (e) the Property Trustee shall have no duty to see to any recording, filing or registration of any instrument (including any financing or continuation statement or any filing under tax or securities laws) or any re-recording, re-filing or re-registration thereof;

        (f) the Property Trustee may consult with counsel (which counsel may be counsel to the Property Trustee, the Depositor or any of its Affiliates, and may include any of its employees) and the advice of such counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon and in accordance with such advice; the Property Trustee shall have the right at any time to seek instructions concerning the administration of this Trust Agreement from any court of competent jurisdiction;

        (g) the Property Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Trust Agreement at the request or direction of any of the Holders pursuant to this Trust Agreement, unless such Holders shall have offered to the Property Trustee reasonable security or indemnity against the costs, expenses (including reasonable attorneys' fees and expenses) and liabilities that might be incurred by it in compliance with such request or direction, including reasonable advances as may be requested by the Property Trustee; provided, however, that nothing contained in this Section 8.7(g) shall be construed to relieve the Property Trustee, upon the occurrence of an Event of Default, of its obligation to exercise the rights and powers vested in it by this Trust Agreement; provided, further, that nothing contained in this Section 8.7(g) shall prevent the Property Trustee from exercising its rights under Section 8.11 hereof;

        (h) the Property Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, approval, bond, debenture, note or other evidence of indebtedness or other paper or document, unless requested in writing to do so by one or more Holders, but the Property Trustee may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Property Trustee shall determine to make such inquiry or investigation, it shall be entitled to examine the books, records and premises of the Depositor, personally or by agent or attorney;

        (i) the Property Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through its agents, attorneys, custodians or nominees and the Property Trustee shall not be responsible for any negligence or misconduct on the part of any such agent, attorney, custodian or nominee appointed with due care by it hereunder;

        (j) whenever in the administration of this Trust Agreement the Property Trustee shall deem it desirable to receive instructions with respect to enforcing any remedy or right hereunder, the Property Trustee (i)may request instructions from the Holders (which instructions may only be given by the Holders of the same proportion in Liquidation Amount of the Trust Securities as would be entitled to direct the Property Trustee under this Trust Agreement in respect of such remedy, right or action), (ii) may refrain from enforcing such remedy or right or taking such other

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action until such instructions are received and (iii)shall be protected in acting in accordance with such instructions;

        (k) except as otherwise expressly provided by this Trust Agreement, the Property Trustee shall not be under any obligation to take any action that is discretionary under the provisions of this Trust Agreement;

        (l) without prejudice to any other rights available to the Property Trustee under applicable law, when the Property Trustee incurs expenses or renders services in connection with a Bankruptcy Event, such expenses (including legal fees and expenses of its agents and counsel) and the compensation for such services are intended to constitute expenses of administration under any bankruptcy law or law relating to creditors rights generally; and

        (m) whenever in the administration of this Trust Agreement the Property Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Property Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, request and conclusively rely on an Officers' Certificate which, upon receipt of such request, shall be promptly delivered by the Depositor.

        No provision of this Trust Agreement shall be deemed to impose any duty or obligation on any Trustee to perform any act or acts or exercise any right, power, duty or obligation conferred or imposed on it, in any jurisdiction in which it shall be illegal, or in which such Person shall be unqualified or incompetent in accordance with applicable law, to perform any such act or acts, or to exercise any such right, power, duty or obligation.

        SECTION 8.8.    Delegation of Power.

        Any Trustee may, by power of attorney consistent with applicable law, delegate to any other natural person over the age of 21 its, his or her power for the purpose of executing any documents contemplated in Section 2.5. The Trustees shall have power to delegate from time to time to such of their number or to the Depositor the doing of such things and the execution of such instruments either in the name of the Trust or the names of the Trustees or otherwise as the Trustees may deem expedient, to the extent such delegation is not prohibited by applicable law or contrary to the provisions of this Trust Agreement.

        SECTION 8.9.    May Hold Securities.

        Any Trustee or any other agent of any Trustee or the Trust, in its individual or any other capacity, may become the owner or pledgee of Trust Securities and except as provided in the definition of the term "Outstanding" in Article I, may otherwise deal with the Trust with the same rights it would have if it were not a Trustee or such other agent.

        SECTION 8.10.    Compensation; Reimbursement," Indemnity.

        The Depositor agrees:

        (a) to pay to the Trustees from time to time such reasonable compensation for all services rendered by them hereunder as may be agreed by the Depositor and the Trustees from time to time (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust);

        (b) to reimburse the Trustees upon request for all reasonable expenses, disbursements and advances incurred or made by the Trustees in accordance with any provision of this Trust Agreement (including the reasonable compensation and the expenses and disbursements of their agents and counsel), except any such expense, disbursement or advance as may be attributable to their gross negligence, bad faith or willful misconduct; and

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        (c) to the fullest extent permitted by applicable law, to indemnify and hold harmless (i)each Trustee, (ii) any Affiliate of any Trustee, (iii) any officer, director, shareholder, employee, representative or agent of any Trustee or any Affiliate of any Trustee and (iv) any employee or agent of the Trust (referred to herein as an "Indemnified Person") from and against any loss, damage, liability, tax (other than income, franchise or other taxes imposed on amounts paid pursuant to Section 8.10(a) or (b) hereof), penalty, expense or claim of any kind or nature whatsoever incurred without negligence, bad faith or willful misconduct on its part, arising out of or in connection with the acceptance or administration of the Trust hereunder, including the advancement of funds to cover the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder.

        The Trust shall have no payment, reimbursement or indemnity obligations to the Trustees under this Section 8.10. The provisions of this Section 8.10 shall survive the termination of this Trust Agreement and the earlier removal or resignation of any Trustee.

        No Trustee may claim any Lien on any Trust Property whether before or after termination of the Trust as a result of any amount due pursuant to this Section 8.10.

        To the fullest extent permitted by law, in no event shall the Property Trustee and the Delaware Trustee be liable for any indirect, special, punitive or consequential loss or damage of any kind whatsoever, including, but not limited to, lost profits, even if the Trustee has been advised of the likelihood of such loss or damage and regardless of the form of action.

        In no event shall the Property Trustee and the Delaware Trustee be liable for any failure or delay in the performance of its obligations hereunder because of circumstances beyond its control, including, but not limited to, acts of God, flood, war (whether declared or undeclared), terrorism, fire, riot, embargo, government action, including any laws, ordinances, regulations, governmental action or the like which delay, restrict or prohibit the providing of the services contemplated by this Trust Agreement.

        SECTION 8.11.    Resignation and Removal," Appointment of Successor.

        (a) No resignation or removal of any Trustee and no appointment of a successor Trustee pursuant to this Article VIII shall become effective until the acceptance of appointment by the successor Trustee in accordance with the applicable requirements of Section 8.12.

        (b) A Trustee may resign at any time by giving written notice thereof to the Depositor and, in the case of the Property Trustee and the Delaware Trustee, to the Holders.

        (c) Unless an Event of Default shall have occurred and be continuing, the Property Trustee or the Delaware Trustee, or both of them, may be removed (with or without cause) at any time by Act of the Holder of Common Securities. If an Event of Default shall have occurred and be continuing, the Property Trustee or the Delaware Trustee, or both of them, may be removed (with or without cause) at such time by Act of the Holders of at least a Majority in Liquidation Amount of the Preferred Securities, delivered to the removed Trustee (in its individual capacity and on behalf of the Trust). An Administrative Trustee may be removed (with or without cause) only by Act of the Holder of the Common Securities at any time.

        (d) If any Trustee shall resign, be removed or become incapable of acting as Trustee, or if a vacancy shall occur in the office of any Trustee for any reason, at a time when no Event of Default shall have occurred and be continuing, the Holder of the Common Securities, by Act of the Holder of the Common Securities, shall promptly appoint a successor Trustee or Trustees, and such successor Trustee and the retiring Trustee shall comply with the applicable requirements of Section 8.12. If the Property Trustee or the Delaware Trustee shall resign, be removed or become incapable of continuing to act as the Property Trustee or the Delaware Trustee, as the case may be,

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at a time when an Event of Default shall have occurred and be continuing, the Holders of the Preferred Securities, by Act of the Holders of a Majority in Liquidation Amount of the Preferred Securities, shall promptly appoint a successor Property Trustee or Delaware Trustee, and such successor Property Trustee or Delaware Trustee and the retiring Property Trustee or Delaware Trustee shall comply with the applicable requirements of Section 8.12. If an Administrative Trustee shall resign, be removed or become incapable of acting as Administrative Trustee, at a time when an Event of Default shall have occurred and be continuing, the Holder of the Common Securities by Act of the Holder of Common Securities shall promptly appoint a successor Administrative Trustee and such successor Administrative Trustee and the retiring Administrative Trustee shall comply with the applicable requirements of Section 8.12. If no successor Trustee shall have been so appointed by the Holder of the Common Securities or Holders of the Preferred Securities, as the case may be, and accepted appointment in the manner required by Section 8.12 within thirty (30) days after the giving of a notice of resignation by a Trustee, the removal of a Trustee, or a Trustee becoming incapable of acting as such Trustee, any Holder who has been a Holder of Preferred Securities for at least six (6) months may, on behalf of himself and all others similarly situated, and any resigning Trustee may, in each case, at the expense of the Depositor, petition any court of competent jurisdiction for the appointment of a successor Trustee.

        (e) The Depositor shall give notice of each resignation and each removal of the Property Trustee or the Delaware Trustee and each appointment of a successor Property Trustee or Delaware Trustee to all Holders in the manner provided in Section 10.8. Each notice shall include the name of the successor Property Trustee or Delaware Trustee and the address of its Corporate Trust Office if it is the Property Trustee.

        (f) Notwithstanding the foregoing or any other provision of this Trust Agreement, in the event any Administrative Trustee or a Delaware Trustee who is a natural person dies or becomes, in the opinion of the Holder of Common Securities, incompetent or incapacitated, the vacancy created by such death, incompetence or incapacity may be filled by (i) the unanimous act of the remaining Administrative Trustees if there are at least two of them or (ii) otherwise by the Holder of the Common Securities (with the successor in each case being a Person who satisfies the eligibility requirement for Administrative Trustees or Delaware Trustee, as the case may be, set forth in Sections 8.3 and 8.4).

        (g) Upon the appointment of a successor Delaware Trustee, such successor Delaware Trustee shall file a Certificate of Amendment to the Certificate of Trust in accordance with Section 3810 of the Delaware Statutory Trust Act.

        SECTION 8.12.    Acceptance of Appointment by Successor.

        (a) In case of the appointment hereunder of a successor Trustee, each successor Trustee shall execute and deliver to the Depositor and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and each such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee; but, on request of the Trust or any successor Trustee such retiring Trustee shall, upon payment of its charges, duly assign, transfer and deliver to such successor Trustee all Trust Property, all proceeds thereof and money held by such retiring Trustee hereunder with respect to the Trust Securities and the Trust.

        (b) Upon request of any such successor Trustee, the Trust (or the retiring Trustee if requested by the Depositor) shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Trustee all such rights, powers and trusts referred to in the preceding paragraph.

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        (c) No successor Trustee shall accept its appointment unless at the time of such acceptance such successor Trustee shall be qualified and eligible under this Article VIII.

        SECTION 8.13.    Merger, Conversion, Consolidation or Succession to Business.

        Any Person into which the Property Trustee or the Delaware Trustee may be merged or converted or with which it may be consolidated, or any Person resulting from any merger, conversion or consolidation to which such Trustee shall be a party, or any Person succeeding to all or substantially all the corporate trust business of such Trustee, shall be the successor of such Trustee hereunder, without the execution or filing of any paper or any further act on the part of any of the parties hereto, provided, that such Person shall be otherwise qualified and eligible under this Article VIII.

        SECTION 8.14.    Not Responsible for Recitals, Issuance of Securities, or Representations.

        The recitals contained herein and in the Securities Certificates shall be taken as the statements of the Trust and the Depositor, and the Trustees do not assume any responsibility for their correctness. The Trustees make no representations as to the title to, or value or condition of, the property of the Trust or any part thereof, nor as to the validity or sufficiency of this Trust Agreement, the Notes or the Trust Securities. The Trustees shall not be accountable for the use or application by the Depositor of the proceeds of the Notes. It is expressly understood and agreed by the parties hereto that insofar as any document, agreement or certificate is executed on behalf of the Trust by any Trustee (i) such document, agreement or certificate is executed and delivered by such Trustee, not in its individual capacity but solely as Trustee under this Trust Agreement in the exercise of the powers and authority conferred and vested in it, (ii) each of the representations, undertakings and agreements made on the part of the Trust is made and intended not as individual capacity but is made and intended not as representations, warranties, covenants, undertakings and agreements by any Trustee in its individual capacity but is made and intended for the purpose of binding only the Trust and (iii) under no circumstances shall any Trustee in its individual capacity be personally liable for the payment of any indebtedness or expenses of the Trust or be liable for the breach or failure of any obligation, representation, warranty or covenant made or undertaken by the Trust under this Trust Agreement or any other document, agreement or certificate.

        SECTION 8.15.    Property Trustee May File Proofs of Claim.

        (a) In case of any Bankruptcy Event (or event that with the passage of time would become a Bankruptcy Event) relative to the Trust or any other obligor upon the Trust Securities or the property of the Trust or of such other obligor or their creditors, the Property Trustee (irrespective of whether any Distributions on the Trust Securities shall then be due and payable and irrespective of whether the Property Trustee shall have made any demand on the Trust for the payment of any past due Distributions) shall be entitled and empowered, to the fullest extent permitted by law, by intervention in such proceeding or otherwise:

        (i) to file and prove a claim for the whole amount of any Distributions owing and unpaid in respect of the Trust Securities and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Property Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Property Trustee, its agents and counsel) and of the Holders allowed in such judicial proceeding; and

        (ii) to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same;

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such proceeding is hereby authorized by each Holder to make such payments to the Property Trustee and, in the event the Property Trustee shall consent to the making of such payments directly to the Holders, to pay to the Property Trustee first any amount due it for

43

the reasonable compensation, expenses, disbursements and advances of the Property Trustee, its agents and counsel, and any other amounts due the Property Trustee.

        (b) shall be deemed to authorize the Property Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or compensation affecting the Trust Securities or the rights of any Holder thereof or to authorize the Property Trustee to vote in respect of the claim of any Holder in any such proceeding.

        SECTION 8.16.    Reports to the Property Trustee.

        (a) The Depositor and the Administrative Trustees shall deliver to the Property Trustee, not later than forty five (45) days after the end of each of the first three fiscal quarters of the Depositor and not later than ninety (90) days after the end of each fiscal year of the Trust ending after the date of this Trust Agreement, an Officers' Certificate covering the preceding fiscal year, stating whether or not to the knowledge of the signers thereof the Depositor and the Trust are in default in the performance or observance of any of the terms, provisions and conditions of this Trust Agreement (without regard to any period of grace or requirement of notice provided hereunder) and, if the Depositor or the Trust shall be in default, specifying all such defaults and the nature and status thereof of which they have knowledge.

        (b) The Depositor shall furnish (i) to the Property Trustee; (ii) Taberna Capital Management, LLC (at 450 Park Avenue, New York, New York 10022, Attention: Thomas Bogal or such other address as designated by Taberna Capital Management, LLC); and (iii) any Owner of the Preferred Securities reasonably identified to the Depositor and the Trust (which identification may be made either by such Owner or by Taberna Capital Management, LLC) a duly completed and executed certificate substantively and substantially in the form attached hereto as Exhibit F, including the financial statements referenced in such Exhibit, which certificate and financial statements shall be so furnished by the Depositor not later than forty five (45) days after the end of each of the first three fiscal quarters of each fiscal year of the Depositor and not later than ninety (90) days after the end of each fiscal year of the Depositor.

        The Property Trustee shall obtain all reports, certificate and information, which it is entitled to obtain under each of the Operative Documents.

ARTICLE IX.

TERMINATION, LIQUIDATION AND MERGER

        SECTION 9.1.    Dissolution Upon Expiration Date.

        Unless earlier dissolved, the Trust shall automatically dissolve on January 30, 2041 (the "Expiration Date"), and the Trust Property shall be liquidated in accordance with Section 9.4.

        SECTION 9.2.    Early Termination.

        The first to occur of any of the following events is an "Early Termination Event", upon the occurrence of which the Trust shall be dissolved:

        (a) the occurrence of a Bankruptcy Event in respect of, or the dissolution or liquidation of, the Depositor, in its capacity as the Holder of the Common Securities, unless the Depositor shall have transferred the Common Securities as provided by Section 5.11, in which case this provision shall refer instead to any such successor Holder of the Common Securities;

        (b) the written direction to the Property Trustee from the Holder of the Common Securities at any time to dissolve the Trust and, after satisfaction of any liabilities of the Trust as required by

44

applicable law, to distribute the Notes to Holders in exchange for the Preferred Securities (which direction is optional and wholly within the discretion of the Holder of the Common Securities);

        (c) the redemption of all of the Preferred Securities in connection with the payment at maturity or redemption of all the Notes; and

        (d) the entry of an order for dissolution of the Trust by a court of competent jurisdiction.

        SECTION 9.3.    Termination.

        (a) The respective obligations and responsibilities of the Trustees and the Trust shall terminate upon the latest to occur of the following: (a) the distribution by the Property Trustee to Holders of all amounts required to be distributed hereunder upon the liquidation of the Trust pursuant to Section 9.4, or upon the redemption of all of the Trust Securities pursuant to Section 4.2;(b) the satisfaction of any expenses owed by the Trust; and (c)the discharge of all administrative duties of the Administrative Trustees, including the performance of any tax reporting obligations with respect to the Trust or the Holders.

        (b) As soon as practicable thereafter, and after satisfaction of liabilities to creditors of the Trust as required by applicable law, including Section 3808 of the Delaware Statutory Trust Act, the Delaware Trustee, when notified in writing of the completion of the winding up of the Trust in accordance with the Delaware Statutory Trust Act, shall terminate the Trust by filing, at the expense of the Depositor, a certificate of cancellation with the Secretary of State of the State of Delaware.

        SECTION 9.4.    Liquidation.

        (a) If an Early Termination Event specified in Section 9.2(a), (b) or (d) occurs or upon the Expiration Date, the Trust shall be liquidated by the Property Trustee as expeditiously as the Property Trustee shall determine to be possible by distributing, after satisfaction of liabilities to creditors of the Trust as provided by applicable law, to each Holder a Like Amount of Notes, subject to Section 9.4(d). Notice of liquidation shall be given by the Property Trustee not less than thirty (30) nor more than sixty (60) days prior to the Liquidation Date to each Holder of Trust Securities at such Holder's address appearing in the Securities Register. All such notices of liquidation shall:

        (i) state the Liquidation Date;

        (ii) state that from and after the Liquidation Date, the Trust Securities will no longer be deemed to be Outstanding and (subject to Section 9.4(d)) any Securities Certificates not surrendered for exchange will be deemed to represent a Like Amount of Notes; and

        (iii) provide such information with respect to the mechanics by which Holders may exchange Securities Certificates for Notes, or if Section 9.4(d) applies, receive a Liquidation Distribution, as the Property Trustee shall deem appropriate.

        (b) Except where Section 9.2(c) or 9.4(d) applies, in order to effect the liquidation of the Trust and distribution of the Notes to Holders, the Property Trustee, either itself acting as exchange agent or through the appointment of a separate exchange agent, shall establish a record date for such distribution (which shall not be more than forty five (45) days prior to the Liquidation Date nor prior to the date on which notice of such liquidation is given to the Holders) and establish such procedures as it shall deem appropriate to effect the distribution of Notes in exchange for the Outstanding Securities Certificates.

        (c) Except where Section 9.2(c) or 9.4(d) applies, after the Liquidation Date, (i) the Trust Securities will no longer be deemed to be Outstanding, (ii) certificates representing a Like Amount of Notes will be issued to Holders of Securities Certificates, upon surrender of such Certificates to

45

the exchange agent for exchange, (iii) the Depositor shall use its best efforts to have the Notes listed on the New York Stock Exchange or on such other exchange, interdealer quotation system or self-regulatory organization on which the Preferred Securities are then listed, if any, (iv) Securities Certificates not so surrendered for exchange will be deemed to represent a Like Amount of Notes bearing accrued and unpaid interest in an amount equal to the accumulated and unpaid Distributions on such Securities Certificates until such certificates are so surrendered (and until such certificates are so surrendered, no payments of interest or principal will be made to Holders of Securities Certificates with respect to such Notes) and (v) all rights of Holders holding Trust Securities will cease, except the right of such Holders to receive Notes upon surrender of Securities Certificates.

        (d) Notwithstanding the other provisions of this Section 9.4, if distribution of the Notes in the manner provided herein is determined by the Property Trustee not to be permitted or practical, the Trust Property shall be liquidated, and the Trust shall be wound up by the Property Trustee in such manner as the Property Trustee determines. In such event, Holders will be entitled to receive out of the assets of the Trust available for distribution to Holders, after satisfaction of liabilities to creditors of the Trust as provided by applicable law, an amount equal to the Liquidation Amount per Trust Security plus accumulated and unpaid Distributions thereon to the date of payment (such amount being the "Liquidation Distribution". If, upon any such winding up the Liquidation Distribution can be paid only in part because the Trust has insufficient assets available to pay in full the aggregate Liquidation Distribution, then, subject to the next succeeding sentence, the amounts payable by the Trust on the Trust Securities shall be paid on a pro rata basis (based upon Liquidation Amounts). The Holder of the Common Securities will be entitled to receive Liquidation Distributions upon any such winding up pro rata (based upon Liquidation Amounts) with Holders of all Trust Securities, except that, if an Event of Default has occurred and is continuing, the Preferred Securities shall have a priority over the Common Securities as provided in Section 4.3.

        SECTION 9.5.    Mergers, Consolidations, Amalgamations or Replacements of Trust.

        The Trust may not merge with or into, consolidate, amalgamate, or be replaced by, or convey, transfer or lease its properties and assets substantially as an entirety to, any Person except pursuant to this Article IX. At the request of the Holders of the Common Securities, without the consent of the Holders of the Preferred Securities, the Trust may merge with or into, consolidate, amalgamate, or be replaced by or convey, transfer or lease its properties and assets substantially as an entirety to a trust organized as such under the laws of any State; provided, that:

        (a) such successor entity either (i) expressly assumes all of the obligations of the Trust under this Trust Agreement with respect to the Preferred Securities or (ii) substitutes for the Preferred Securities other securities having substantially the same terms as the Preferred Securities (such other Securities, the "Successor Securities") so long as the Successor Securities have the same priority as the Preferred Securities with respect to distributions and payments upon liquidation, redemption and otherwise;

        (b) a trustee of such successor entity possessing substantially the same powers and duties as the Property Trustee is appointed to hold the Notes;

        (c) if the Preferred Securities or the Notes are rated, such merger, consolidation, amalgamation, replacement, conveyance, transfer or lease does not cause the Preferred Securities or the Notes (including any Successor Securities) to be downgraded by any nationally recognized statistical rating organization that then assigns a rating to the Preferred Securities or the Notes;

46

        (d) the Preferred Securities are listed, or any Successor Securities will be listed upon notice of issuance, on any national securities exchange or interdealer quotation system on which the Preferred Securities are then listed, if any;

        (e) such merger, consolidation, amalgamation, replacement, conveyance, transfer or lease does not adversely affect the rights, preferences and privileges of the Holders of the Preferred Securities (including any Successor Securities) in any material respect;

        (f) such successor entity has a purpose substantially identical to that of the Trust;

        (g) prior to such merger, consolidation, amalgamation, replacement, conveyance, transfer or lease, the Depositor has received an Opinion of Counsel from a nationally recognized, independent counsel to the Depositor experienced in such matters to the effect that (i) such merger, consolidation, amalgamation, replacement, conveyance, transfer or lease does not adversely affect the rights, preferences and privileges of the Holders of the Preferred Securities (including any Successor Securities) in any material respect; (ii) following such merger, consolidation, amalgamation, replacement, conveyance, transfer or lease, neither the Trust nor such successor entity will be required to register as an "investment company" under the Investment Company Act and (iii) following such merger, consolidation, amalgamation, replacement, conveyance, transfer or lease, the Trust (or the successor entity) will continue to be classified as a grantor trust for U.S. federal income tax purposes; and

        (h) the Depositor or its permitted transferee owns all of the common securities of such successor entity.

Notwithstanding the foregoing, the Trust shall not, except with the consent of Holders of all of the Preferred Securities, consolidate, amalgamate, merge with or into, or be replaced by or convey, transfer or lease its properties and assets substantially as an entirety to any other Person or permit any other entity to consolidate, amalgamate, merge with or into, or replace, the Trust if such consolidation, amalgamation, merger, replacement, conveyance, transfer or lease would cause the Trust or the successor entity to be taxable as a corporation or classified as other than a grantor trust for United States federal income tax purposes or cause the Notes to be treated as other than indebtedness of the Depositor for United States federal income tax purposes.

ARTICLE X.

MISCELLANEOUS PROVISIONS

        SECTION 10.1.    Limitation of Rights of Holders.

        Except as set forth in Section 9.2, the death, bankruptcy, termination, dissolution or incapacity of any Person having an interest, beneficial or otherwise, in Trust Securities shall not operate to terminate this Trust Agreement, nor annul, dissolve or terminate the Trust nor entitle the legal representatives or heirs of such Person or any Holder for such Person, to claim an accounting, take any action or bring any proceeding in any court for a partition or winding up of the arrangements contemplated hereby, nor otherwise affect the rights, obligations and liabilities of the parties hereto or any of them.

        SECTION 10.2.    Agreed Tax Treatment of Trust and Trust Securities.

        The parties hereto and, by its acceptance or acquisition of a Trust Security or a beneficial interest therein, the Holder of, and any Person that acquires a beneficial interest in, such Trust Security intend and agree to treat the Trust as a grantor trust for United States federal, state and local tax purposes, and to treat the Trust Securities (including all payments and proceeds with respect to such Trust Securities) as undivided beneficial ownership interests in the Trust Property (and payments and proceeds therefrom, respectively) for United States federal, state and local tax purposes and to treat

47

the Notes as indebtedness of the Depositor for United States federal, state and local tax purposes. The provisions of this Trust Agreement shall be interpreted to further this intention and agreement of the parties.

        SECTION 10.3.    Amendment.

        (a) This Trust Agreement may be amended from time to time by the Property Trustee, the Administrative Trustees and the Holder of all the Common Securities, without the consent of any Holder of the Preferred Securities, (i) to cure any ambiguity, correct or supplement any provision herein that may be defective or inconsistent with any other provision herein, or to make or amend any other provisions with respect to matters or questions arising under this Trust Agreement, which shall not be inconsistent with the other provisions of this Trust Agreement, (ii) to modify, eliminate or add to any provisions of this Trust Agreement to such extent as shall be necessary to ensure that the Trust will neither be taxable as a corporation nor be classified as other than a grantor trust for United States federal income tax purposes at all times that any Trust Securities are Outstanding or to ensure that the Notes are treated as indebtedness of the Depositor for United States federal income tax purposes, or to ensure that the Trust will not be required to register as an "investment company" under the Investment Company Act or (iii) to add to the covenants, restrictions or obligations of the Depositor; provided, that in the case of clauses (i), (ii) or (iii), such action shall not adversely affect in any material respect the interests of any Holder.

        (b) Except as provided in Section 10.3(c), any provision of this Trust Agreement may be amended by the Property Trustee, the Administrative Trustees and the Holder of all of the Common Securities and with (i) the consent of Holders of at least a Majority in Liquidation Amount of the Preferred Securities and (ii) receipt by the Trustees of an Opinion of Counsel to the effect that such amendment or the exercise of any power granted to the Trustees in accordance with such amendment will not cause the Trust to be taxable as a corporation or classified as other than a grantor trust for United States federal income tax purposes or affect the treatment of the Notes as indebtedness of the Depositor for United States federal income tax purposes or affect the Trust's exemption from status (or from any requirement to register) as an "investment company" under the Investment Company Act. In addition to and subject to the foregoing, the Distribution Dates, Redemption Date and Stated Maturity (as defined in the Indenture) with respect to the Preferred Securities or a portion of the Preferred Securities shall be conformed in connection with any modification of the Interest Payment Date, Redemption Date or Stated Maturity of the Junior Subordinated Notes made by the Company and the Trust at the direction of any holder of the Preferred Securities or a portion of the Preferred Securities as set forth in Section 6 of the Purchase Agreement.

        (c) Notwithstanding any other provision of this Trust Agreement, without the consent of each Holder, this Trust Agreement may not be amended to (i) change the accrual rate, amount, currency or timing of any Distribution on or the redemption price of the Trust Securities or otherwise adversely affect the amount of any Distribution or other payment required to be made in respect of the Trust Securities as of a specified date, except as set forth in the last sentence of Section 10.3(b) above, (ii) restrict or impair the right of a Holder to institute suit for the enforcement of any such payment on or after such date, (iii) reduce the percentage of aggregate Liquidation Amount of Outstanding Preferred Securities, the consent of whose Holders is required for any such amendment, or the consent of whose Holders is required for any waiver of compliance with any provision of this Trust Agreement or of defaults hereunder and their consequences provided for in this Trust Agreement; (iv) impair or adversely affect the rights and interests of the Holders in the Trust Property, or permit the creation of any Lien on any portion of the Trust Property; or (v) modify the definition of "Outstanding," this Section 10.3(c), Sections 4.1, 4.2, 4.3, 6.10(e) or Article IX.

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        (d) Notwithstanding any other provision of this Trust Agreement, no Trustee shall enter into or consent to any amendment to this Trust Agreement that would cause the Trust to be taxable as a corporation or to be classified as other than a grantor trust for United States federal income tax purposes or that would cause the Notes to fail or cease to be treated as indebtedness of the Depositor for United States federal income tax purposes or that would cause the Trust to fail or cease to qualify for the exemption from status (or from any requirement to register) as an "investment company" under the Investment Company Act.

        (e) If any amendment to this Trust Agreement is made, the Administrative Trustees or the Property Trustee shall promptly provide to the Depositor and the Note Trustee a copy of such amendment.

        (f) No Trustee shall be required to enter into any amendment to this Trust Agreement that affects its own rights, duties or immunities under this Trust Agreement. The Trustees shall be entitled to receive an Opinion of Counsel and an Officers' Certificate stating that any amendment to this Trust Agreement is in compliance with this Trust Agreement and all conditions precedent herein provided for relating to such action have been met.

        (g) No amendment or modification to this Trust Agreement that adversely affects in any material respect the rights, duties, liabilities, indemnities or immunities of the Delaware Trustee hereunder shall be permitted without the prior written consent of the Delaware Trustee.

        SECTION 10.4.    Separability.

        If any provision in this Trust Agreement or in the Securities Certificates shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby, and there shall be deemed substituted for the provision at issue a valid, legal and enforceable provision as similar as possible to the provision at issue.

        SECTION 10.5.    Governing Law.

THIS TRUST AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF EACH OF THE HOLDERS, THE TRUST, THE DEPOSITOR AND THE TRUSTEES WITH RESPECT TO THIS TRUST AGREEMENT AND THE TRUST SECURITIES SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF DELAWARE WITHOUT REFERENCE TO ITS CONFLICTS OF LAWS PROVISIONS.

        SECTION 10.6.    Successors.

        This Trust Agreement shall be binding upon and shall inure to the benefit of any successor to the Depositor, the Trust and any Trustee, including any successor by operation of law. Except in connection with a transaction involving the Depositor that is permitted under Article VIII of the Indenture and pursuant to which the assignee agrees in writing to perform the Depositor's obligations hereunder, the Depositor shall not assign its obligations hereunder.

        SECTION 10.7.    Headings.

        The Article and Section headings are for convenience only and shall not affect the construction of this Trust Agreement.

        SECTION 10.8.    Reports, Notices and Demands.

        (a) Any report, notice, demand or other communication that by any provision of this Trust Agreement is required or permitted to be given or served to or upon any Holder or the Depositor may be given or served in writing delivered in person, or by reputable, overnight courier, by telecopy or by deposit thereof, first-class postage prepaid, in the United States mail, addressed, (a) in the case of a Holder of Preferred Securities, to such Holder as such Holder's name and

49

address may appear on the Securities Register; and (b) in the case of the Holder of all the Common Securities or the Depositor, to Bresler & Reiner, Inc. 11200 Rockville Pike, Suite 502, Rockville, MD 20852, Attention: Mr. Edelstein, or to such other address as may be specified in a written notice by the Holder of all the Common Securities or the Depositor, as the case may be, to the Property Trustee. Such report, notice, demand or other communication to or upon a Holder or the Depositor shall be deemed to have been given when received in person, within one (1) Business Day following delivery by overnight courier, when telecopied with receipt confirmed, or within three (3) Business Days following delivery by mail, except that if a notice or other document is refused delivery or cannot be delivered because of a changed address of which no notice was given, such notice or other document shall be deemed to have been delivered on the date of such refusal or inability to deliver.

        (b) Any notice, demand or other communication that by any provision of this Trust Agreement is required or permitted to be given or served to or upon the Property Trustee, the Delaware Trustee, the Administrative Trustees or the Trust shall be given in writing by deposit thereof, first-class postage prepaid, in the U.S. mail, personal delivery or facsimile transmission, addressed to such Person as follows: (i) with respect to the Property Trustee to JPMorgan Chase Bank, National Association, 600 Travis, 50th Floor, Houston, Texas 77002, Attention: Worldwide Securities Services—Bresler & Reiner Statutory Trust I, facsimile no. (713) 216-2101, (ii) with respect to the Delaware Trustee, to Chase Bank USA, National Association, 500 Stanton Christiana Road, Building 4 (3rd Floor), Newark, Delaware 19713, Attention: Institutional Trust Services—Bresler & Reiner Statutory Trust I, facsimile no. (302) 552-6280; (iii) with respect to the Administrative Trustees, to them at the address above for notices to the Depositor, marked "Attention: Administrative Trustees of Bresler & Reiner Statutory Trust I," and (iv) with respect to the Trust, to its principal executive office specified in Section 2.2, with a copy to the Property Trustee. Such notice, demand or other communication to or upon the Trust, the Property Trustee or the Administrative Trustees shall be deemed to have been sufficiently given or made only upon actual receipt of the writing by the Trust, the Property Trustee or the Administrative Trustees.

        SECTION 10.9.    Agreement Not to Petition.

        Each of the Trustees and the Depositor agree for the benefit of the Holders that, until at least one year and one day after the Trust has been terminated in accordance with Article IX, they shall not file, or join in the filing of, a petition against the Trust under any Bankruptcy Law or otherwise join in the commencement of any proceeding against the Trust under any Bankruptcy Law. If the Depositor takes action in violation of this Section 10.9, the Property Trustee agrees, for the benefit of Holders, that at the expense of the Depositor, it shall file an answer with the applicable bankruptcy court or otherwise properly contest the filing of such petition by the Depositor against the Trust or the commencement of such action and raise the defense that the Depositor has agreed in writing not to take such action and should be estopped and precluded therefrom and such other defenses, if any, as counsel for the Property Trustee or the Trust may assert.

        SECTION 10.10.    Counterparts. This instrument may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument.

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

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        IN WITNESS WHEREOF, the parties hereto have executed this Amended and Restated Trust Agreement as of the day and year first above written.

			BRESLER & REINER, INC., as Depositor
			By:	/s/  SIDNEY M. BRESLER
				Name:	Sidney M. Bresler
				Title:	CEO
JPMORGAN CHASE BANK, NATIONAL ASSOCIATION, as Property Trustee			CHASE BANK USA, NATIONAL ASSOCIATION, as Delaware Trustee
By:	/s/  MARIA D. CALZADO		By:	/s/  SARIKA M. SMITH
	Name:	Maria D. Calzado		Name:	Sarika M. Smith
	Title:	Vice President		Title:	Trust Officer
/s/ SIDNEY M. BRESLER			/s/ DARRYL M. EDELSTEIN
	Administrative Trustee			Administrative Trustee
	Name:	Sidney M. Bresler		Name:	Darryl M. Edelstein

51

Exhibit A

CERTIFICATE OF TRUST

OF

Bresler & Reiner Statutory Trust I

        This Certificate of Trust of Bresler & Reiner Statutory Trust I (the "Trust") is being duly executed and filed on behalf of the Trust by the undersigned, as trustees, to form a statutory trust under the Delaware Statutory Trust Act (12 Del. C. §3801 et seq.) (the "Act").

        1.    Name.    The name of the statutory trust formed by this Certificate of Trust is: Bresler & Reiner Statutory Trust I.

        2.    Delaware Trustee.    The name and business address of the trustee of the Trust with its principal place of business in the State of Delaware are:

Chase Bank USA, National Association
c/o JPMorgan Chase Bank, National Association
500 Stanton Christiana Road, OPS4/3rd Floor
Newark, Delaware 19713
Attention: Worldwide Securities Services.

        3.    Effective Date.    This Certificate of Trust shall be effective upon its filing with the Secretary of State of the State of Delaware.

        IN WITNESS WHEREOF, the undersigned trustee has executed this Certificate of Trust in accordance with Section 381 l(a)(1) of the Act.

CHASE BANK USA, NATIONAL ASSOCIATION, not in its individual capacity, but solely as Delaware Trustee
By:
	Name: Title:

A-1

Exhibit B

[FORM OF COMMON SECURITIES CERTIFICATE]

THIS COMMON SECURITY HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS OR
ANY OTHER APPLICABLE SECURITIES LAWS AND MAY NOT BE OFFERED,
SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN
EXEMPTION FROM REGISTRATION. THIS CERTIFICATE IS NOT
TRANSFERABLE EXCEPT IN COMPLIANCE WITH APPLICABLE LAW AND
SECTION 5.11 OF THE TRUST AGREEMENT

Certificate Number Number of Common Securities: 1,238

C-                

Certificate Evidencing Common Securities

of

BRESLER & REINER STATUTORY TRUST I

Common Securities

(liquidation amount $1,000 per Common Security)

        Bresler & Reiner Statutory Trust I, a statutory trust created under the laws of the State of Delaware (the "Trust", hereby certifies that Bresler & Reiner, Inc., a Delaware corporation (the "Holder") is the registered owner of 1,238 common securities of the Trust representing undivided common beneficial interests in the assets of the Trust and designated the Bresler & Reiner Statutory Trust I Common Securities (liquidation amount $1,000 per Common Security) (the "Common Securities"). Except in accordance with Section 5.11 of the Trust Agreement (as defined below), the Common Securities are not transferable and, to the fullest extent permitted by law, any attempted transfer hereof other than in accordance therewith shall be void. The designations, rights, privileges, restrictions, preferences and other terms and provisions of the Common Securities are set forth in, and this certificate and the Common Securities represented hereby are issued and shall in all respects be subject to the terms and provisions of, the Amended and Restated Trust Agreement of the Trust, dated as of November 29, 2005 as the same may be amended from time to time (the "Trust Agreement"), among Bresler & Reiner, Inc., as Depositor, JPMorgan Chase Bank, National Association, as Property Trustee, Chase Bank USA, National Association, as Delaware Trustee, the Administrative Trustees named therein and the Holders, from time to time, of Trust Securities. The Trust will furnish a copy of the Trust Agreement to the Holder without charge upon written request to the Trust at its principal place of business or registered office.

        Upon receipt of this certificate, the Holder is bound by the Trust Agreement and is entitled to the benefits thereunder.

        This Common Securities Certificate shall be governed by and construed in accordance with the laws of the State of Delaware.

        Terms used but not defined herein have the meanings set forth in the Trust Agreement.

        IN WITNESS WHEREOF, one of the Administrative Trustees of the Trust has executed on behalf of the Trust this certificate this     day of                  , 200  .

BRESLER & REINER STATUTORY TRUST I
By:
	Name: Administrative Trustee

B-1

Exhibit C

[FORM OF PREFERRED SECURITIES CERTIFICATE]

"[IF THIS SECURITY IS A GLOBAL SECURITY INSERT: THIS PREFERRED SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE TRUST AGREEMENT HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE DEPOSITORY TRUST COMPANY ("DTC") OR A NOMINEE OF DTC. THIS PREFERRED SECURITY IS EXCHANGEABLE FOR PREFERRED SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN DTC OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE TRUST AGREEMENT, AND NO TRANSFER OF THIS PREFERRED SECURITY (OTHER THAN A TRANSFER OF THIS PREFERRED SECURITY AS A WHOLE BY DTC TO A NOMINEE OF DTC OR BY A NOMINEE OF DTC TO DTC OR ANOTHER NOMINEE OF DTC) MAY BE REGISTERED EXCEPT IN LIMITED CIRCUMSTANCES.

UNLESS THIS PREFERRED SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF DTC TO BRESLER & REINER STATUTORY TRUST I OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY PREFERRED SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]

THE PREFERRED SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND SUCH PREFERRED SECURITIES OR ANY INTEREST THEREIN MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF ANY PREFERRED SECURITIES IS HEREBY NOTIFIED THAT THE SELLER OF THE PREFERRED SECURITIES MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A UNDER THE SECURITIES ACT.

THE HOLDER OF THE PREFERRED SECURITIES REPRESENTED BY THIS CERTIFICATE AGREES FOR THE BENEFIT OF THE TRUST AND THE DEPOSITOR THAT (A) SUCH PREFERRED SECURITIES MAY BE OFFERED, RESOLD OR OTHERWISE TRANSFERRED ONLY (I) TO THE TRUST, OR (II) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A "QUALIFIED PURCHASER" (AS DEFINED IN SECTION 2(A)(51) OF THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED), AND (B) THE HOLDER WILL NOTIFY ANY PURCHASER OF ANY PREFERRED SECURITIES FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE.

THE PREFERRED SECURITIES WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN BLOCKS HAVING AN AGGREGATE LIQUIDATION AMOUNT OF NOT LESS THAN $100,000. TO THE FULLEST EXTENT PERMITTED BY LAW, ANY ATTEMPTED TRANSFER OF PREFERRED SECURITIES, OR ANY INTEREST THEREIN, IN A BLOCK HAVING AN AGGREGATE LIQUIDATION AMOUNT OF LESS THAN $100,000 AND MULTIPLES OF $1,000 IN EXCESS THEREOF SHALL BE DEEMED TO BE VOID AND OF NO LEGAL EFFECT WHATSOEVER. TO THE FULLEST EXTENT PERMITTED BY LAW, ANY SUCH PURPORTED TRANSFEREE SHALL BE DEEMED NOT TO BE THE HOLDER OF SUCH PREFERRED

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SECURITIES FOR ANY PURPOSE, INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF PRINCIPAL OF OR INTEREST ON SUCH PREFERRED SECURITIES, OR ANY INTEREST THEREIN, AND SUCH PURPORTED TRANSFEREE SHALL BE DEEMED TO HAVE NO INTEREST WHATSOEVER IN SUCH PREFERRED SECURITIES.

THE HOLDER OF THIS SECURITY, OR ANY INTEREST THEREIN, BY ITS ACCEPTANCE HEREOF OR THEREOF ALSO AGREES, REPRESENTS AND WARRANTS THAT IT IS NOT AN EMPLOYEE BENEFIT PLAN, INDIVIDUAL RETIREMENT ACCOUNT OR OTHER PLAN OR ARRANGEMENT SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, ASAMENDED (THE "CODE") (EACH A "PLAN"), OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE "PLAN ASSETS" BY REASON OF ANY PLAN'S INVESTMENT IN THE ENTITY, AND NO PERSON INVESTING "PLAN ASSETS" OF ANY PLAN MAY ACQUIRE OR HOLD THIS PREFERRED SECURITY OR ANY INTEREST THEREIN. ANY PURCHASER OR HOLDER OF THE PREFERRED SECURITIES OR ANY INTEREST THEREIN WILL BE DEEMED TO HAVE REPRESENTED BY ITS PURCHASE AND HOLDING THEREOF THAT IT IS NOT AN EMPLOYEE BENEFIT PLAN WITHIN THE MEANING OF SECTION 3(3) OF ERISA, OR A PLAN TO WHICH SECTION 4975 OF THE CODE IS APPLICABLE, A TRUSTEE OR OTHER PERSON ACTING ON BEHALF OF AN EMPLOYEE BENEFIT PLAN OR PLAN, OR ANY OTHER PERSON OR ENTITY USING THE ASSETS OF ANY EMPLOYEE BENEFIT PLAN OR PLAN TO FINANCE SUCH PURCHASE.

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Certificate Number: P- Forty Million Aggregate Liquidation
Amount
Preferred Securities

CUSIP NO.

Certificate Evidencing Preferred Securities

of

BRESLER & REINER STATUTORY TRUST I

Preferred Securities
(liquidation amount $1,000 per Preferred Security)

        Bresler & Reiner Statutory Trust I, a statutory trust created under the laws of the State of Delaware (the "Trust's,hereby certifies that Merrill Lynch, Pierce, Fenner & Smith Incorporated (the "Holder's is the registered owner of 40,000 Preferred Securities of the Trust representing an undivided preferred beneficial interest in the assets of the Trust and designated the Bresler & Reiner Statutory Trust I Preferred Securities, (liquidation amount $1,000 per Preferred Security) (the "Preferred Securities"). Subject to the terms of the Trust Agreement (as defined below), the Preferred Securities are transferable on the books and records of the Trust, in person or by a duly authorized attorney, upon surrender of this certificate duly endorsed and in proper form for transfer as provided in Section 5.7 of the Trust Agreement (as defined below). The designations, rights, privileges, restrictions, preferences and other terms and provisions of the Preferred Securities are set forth in, and this certificate and the Preferred Securities represented hereby are issued and shall in all respects be subject to the terms and provisions of, the Amended and Restated Trust Agreement of the Trust, dated as of November 29, 2005 as the same may be amended from time to time (the "Trust Agreement"), among Bresler & Reiner, Inc., as Depositor, JPMorgan Chase Bank, National Association, as Property Trustee, Chase Bank USA, National Association, as Delaware Trustee, the Administrative Trustees named therein and the Holders, from time to time, of Trust Securities. The Trust will furnish a copy of the Trust Agreement to the Holder without charge upon written request to the Property Trustee at its Corporate Trust Office.

        Upon receipt of this certificate, the Holder is bound by the Trust Agreement and is entitled to the benefits thereunder.

        This Preferred Securities Certificate shall be governed by and construed in accordance with the laws of the State of Delaware.

        All capitalized terms used but not defined in this Preferred Securities Certificate are used with the meanings specified in the Trust Agreement, including the Schedules and Exhibits thereto.

        IN WITNESS WHEREOF, one of the Administrative Trustees of the Trust has executed on behalf of the Trust this certificate this    day of                  , 2005.

BRESLER & REINER STATUTORY TRUST
By:
	Name: Administrative Trustee

        This is one of the Preferred Securities referred to in the within-mentioned Trust Agreement.

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Dated:

JPMORGAN CHASE BANK, NATIONAL ASSOCIATION, not in its individual capacity, but solely as Property Trustee
By:	Authorized signatory

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[FORM OF REVERSE OF SECURITY]

        The Trust promises to pay Distributions from November 29, 2005, or from the most recent Distribution Date to which Distributions have been paid or duly provided for, quarterly in arrears on January 30, April 30, July 30 and October 30 of each year, commencing on January 30, 2006, at a fixed rate equal to 8.37% per annum through the interest payment date on January 30, 2011 ("Fixed Rate Period") and thereafter at a variable rate equal to LIBOR plus 3.50% per annum of the Liquidation Amount of the Preferred Securities represented by this Preferred Securities Certificate, together with any Additional Interest Amounts, in respect to such period.

        Distributions on the Trust Securities shall be made by the Paying Agent from the Payment Account and shall be payable on each Distribution Date only to the extent that the Trust has funds then on hand and available in the Payment Account for the payment of such Distributions.

        Distributions on the Securities must be paid on the dates payable to the extent that the Trust has funds available for the payment of such Distributions in the Payment Account of the Trust. The Trust's funds available for Distribution to the Holders of the Preferred Securities will be limited to payments received from the Depositor.

        During an Event of Default, the Depositor shall not (i) declare or pay any dividends or distributions on, or redeem, purchase, acquire or make a liquidation payment with respect to, any of the Depositor's Equity Interests (as defined in the Indenture) or (ii) make any payment of principal of or any interest or premium, if any, on or repay, repurchase or redeem any debt securities of the Depositor that rank pari passu in all respects with or junior in interest to the Notes.

        On each Note Redemption Date, on the stated maturity (or any date of principal repayment upon early maturity) of the Notes and on each other date on (or in respect of) which any principal on the Notes is repaid, the Trust will be required to redeem a Like Amount of Trust Securities at the Redemption Price. Under the Indenture, the Notes may be redeemed by the Depositor on any Interest Payment Date, at the Depositor's option, on or after January 30, 2011, in whole or in part from time to time at the Optional Note Redemption Price of the principal amount thereof or the redeemed portion thereof, as applicable, together, in the case of any such redemption, with accrued interest, including any Additional Interest, to but excluding the date fixed for redemption. The Notes may also be redeemed by the Depositor, at its option, at any time, in whole but not in part, upon the occurrence of an Investment Company Event or a Tax Event at the Special Note Redemption Price; provided, that such Investment Company Event or a Tax Event is continuing on the Redemption Date.

        The Trust Securities redeemed on each Redemption Date shall be redeemed at the Redemption Price with the proceeds from the contemporaneous redemption or payment at maturity of Notes. Redemptions of the Trust Securities (or portion thereof) shall be made and the Redemption Price shall be payable on each Redemption Date only to the extent that the Trust has funds then on hand and available in the Payment Account for the payment of such Redemption Price.

        Payments of Distributions (including any Additional Interest Amounts), the Redemption Price, Liquidation Amount or any other amounts in respect of the Preferred Securities shall be made by wire transfer at such place and to such account at a banking institution in the United States as may be designated in writing at least ten (10) Business Days prior to the date for payment by the Person entitled thereto unless proper written transfer instructions have not been received by the relevant record date, in which case such payments shall be made by check mailed to the address of such Person as such address shall appear in the Security Register. If any Preferred Securities are held by a Depositary, such Distributions shall be made to the Depositary in immediately available funds.

        The indebtedness evidenced by the Notes is, to the extent provided in the Indenture, subordinate and junior in right of payment to the prior payment in full of all Senior Debt (as defined in the Indenture), and this Security is issued subject to the provisions of the Indenture with respect thereto.

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ASSIGNMENT

FOR VALUE RECEIVED, the undersigned assigns and transfers this Preferred Securities Certificate to:

(Insert assignee's social security or tax identification number)

(Insert address and zip code of assignee)

and irrevocably appoints

agent to transfer this Preferred Securities Certificate on the books of the Trust. The agent may substitute another to act for him or her.

Date:
Signature:	(Sign exactly as your name appears on the other side of this Preferred Securities Certificate)

The signature(s) should be guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit unions with membership in an approved signature guarantee medallion program), pursuant to S.E.C. Rule 17Ad-15.

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Exhibit D

Reserved

D-1

Exhibit E

Form of Transferor Certificate

JPMorgan Chase Bank, National Association
600 Travis, 50th Floor
Houston, Texas 77002
Attention: Worldwide Securities Services

Bresler & Reiner, Inc.
Bresler & Reiner Statutory Trust I
11200 Rockville Pike, Suite 502
Rockville, MD 20852

Re:

Purchase of $                  stated liquidation amount of Preferred Securities (the "Preferred Securities") of Bresler & Reiner Statutory Trust I

Ladies and Gentlemen:

        In connection with our purchase of the Preferred Securities we confirm that:

        1.    We understand that the Preferred Securities (the "Preferred Securities") of Bresler & Reiner Statutory Trust I (the "Trust") of Bresler & Reiner, Inc. (the "Company") executed in connection therewith) and the Junior Subordinated Notes due 2036 of the Company (the "Subordinated Notes") (the entire amount of the Trust's outstanding Preferred Securities and the Subordinated Notes together being referred to herein as the "Offered Securities"), have not been registered under the Securities Act of 1933, as amended (the "Securities Act"), and may not be offered or sold except as permitted in the following sentence. We agree on our own behalf and on behalf of any investor account for which we are purchasing the Offered Securities that, if we decide to offer, sell or otherwise transfer any such Offered Securities, (i) such offer, sale or transfer will be made only (a) to the Trust, (b) to a person we reasonably believe is a "Qualified Purchaser" (a "QP") (as defined in Section 2(a)(51) of the Investment Company Act of 1940, as amended) and in compliance with the Securities Act. We understand that the certificates for any Offered Security that we receive will bear a legend substantially to the effect of the foregoing.

        2.    We are a "Qualified Purchaser" within the meaning of Section 2(a)(51) of the Investment Company Act of 1940, as amended, and are purchasing for our own account or for the account of such a "Qualified Purchaser," and we have such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of our investment in the Offered Securities, and we and any account for which we are acting are each able to bear the economic risks of our or its investment.

        3.    We are acquiring the Offered Securities purchased by us for our own account (or for one or more accounts as to each of which we exercise sole investment discretion and have authority to make, and do make, the statements contained in this letter) and not with a view to any distribution of the Offered Securities, subject, nevertheless, to the understanding that the disposition of our property will at all times be and remain within our control.

        4.    In the event that we purchase any Preferred Securities or any Subordinated Notes, we will acquire such Preferred Securities having an aggregate stated liquidation amount of not less than $100,000 or such Subordinated Notes having an aggregate principal amount not less than $100,000, for our own account and for each separate account for which we are acting.

        5.    We acknowledge that we are not a fiduciary of (i) an employee benefit, individual retirement account or other plan or arrangement subject to Title I of the Employee Retirement Income Security

E-1

Act of 1974, as amended ("ERISA"), or Section 4975 of the Internal Revenue Code of 1986, as amended (the "Code") (each a "Plan"); or (ii) an entity whose underlying assets include "plan assets" by reason of any Plan's investment in the entity, and are not purchasing any of the Offered Securities on behalf of or with "plan assets" by reason of any Plan's investment in the entity.

        6.    We acknowledge that the Trust and the Company and others will rely upon the truth and accuracy of the foregoing acknowledgments, representations, warranties and agreements and agree that if any of the acknowledgments, representations, warranties and agreements deemed to have been made by our purchase of any of the Offered Securities are no longer accurate, we shall promptly notify the Company. If we are acquiring any Offered Securities as a fiduciary or agent for one or more investor accounts, we represent that we have sole discretion with respect to each such investor account and that we have full power to make the foregoing acknowledgments, representations and agreement on behalf of each such investor account.

(Name of Purchaser)

By:

Date:

        Upon transfer, the Preferred Securities (having a stated liquidation amount of $            ) would be registered in the name of the new beneficial owner as follows.

Name:

Address:

Taxpayer ID Number

By:

E-2

Exhibit F

Officer's Financial Certificate

        The undersigned, the [Chairman/Vice Chairman/Chief Executive Officer/President/Vice President/Chief Financial Officer/Treasurer/Assistant Treasurer], hereby certifies pursuant to Section 8.16(b) of the Amended and Restated Trust Agreement, dated as of November 29, 2005 (the "Trust Agreement"), among Bresler & Reiner, Inc. (the "Company"), JPMorgan Chase Bank, National Association, as property trustee, Chase Bank USA, National Association, as Delaware trustee, and the administrative trustees named therein, that, as of [date], [20    ], the Company had the following ratios and balances:

As of [Quarterly/Annual Financial Date], 20            

Senior secured indebtedness for borrowed money	$
Senior unsecured Debt	$
Subordinated Debt	$
Total Debt	$
Ratio of (x) senior secured and unsecured Debt to (y) total Debt

[FOR FISCAL YEAR END: Attached hereto are the audited consolidated financial statements (including the balance sheet, income statement and statement of cash flows, and notes thereto, together with the report of the independent accountants thereon) of the Company and its consolidated subsidiaries for the three years ended,                        , 20    ].]

[FOR FISCAL QUARTER END: Attached hereto are the unaudited consolidated and consolidating financial statements (including the balance sheet and income statement) of the Company and its consolidated subsidiaries for the fiscal quarter ended [date], 20    .]

The financial statements fairly present in all material respects, in accordance with U.S. generally accepted accounting principles ("GAAP"), the financial position of the Company and its consolidated subsidiaries, and the results of operations and changes in financial condition as of the date, and for the [quarter] [annual] period ended [date], 20    , and such financial statements have been prepared in accordance with GAAP consistently applied throughout the period involved (except as otherwise noted therein).

There has been no monetary default with respect to any indebtedness owed by the Company and/or its subsidiaries (other than those defaults cured within 30 days of the occurrence of the same)[except as set forth below:]

Insert any exceptions by listing, in detail, the nature of the condition or event causing such noncompliance, the period during which such condition or event has existed and the action(s) the Company has taken, is taking, or proposes to take with respect to each such condition or event.

I, the undersigned, the Chairman/Vice Chairman/Chief Executive Officer/President/Vice President/Chief Financial Officer/Treasurer/Assistant Treasurer], hereby certify that I have reviewed the terms of the Indenture and I have made, or have caused to be made under my supervision, a detailed review of (i) the covenants of the Company set forth therein, in particular, Section [    ] (the "Financial Covenants") and (ii) the transactions and conditions of the Company and its subsidiaries during the accounting period ended as of [            ] (the "Accounting Period"), which Accounting Period is covered by the financial statements attached hereto. The examinations described in the preceding sentence did not disclose, and I have no knowledge of, the existence of any condition or event which constitutes a

F-1

Default or an Event of Default (each as defined in the Indenture) during or at the end of the Accounting Period or as of the date of this certificate, except as set forth below:

Insert any exceptions by listing, in detail, the nature of the condition or event causing such noncompliance, the period during which such condition or event has existed and the action(s) the Company has taken, is taking, or proposes to take with respect to each such condition or event.

Page     attached hereto sets forth the financial data and computations evidencing the Company's compliance with the Financial Covenants, all of which data and computations are true, complete and correct.

        IN WITNESS WHEREOF, the undersigned has executed this Officer's Financial Certificate as of this    day of                  , 20    .

Bresler & Reiner, Inc.

By:

Name:

Bresler & Reiner, Inc.
11200 Rockville Pike, Suite 502
Rockville, MD 20852
(301) 945-4300

F-2

DETERMINATION OF LIBOR

        With respect to the Trust Securities, the London interbank offered rate ("LIBOR") shall be determined by the Calculation Agent in accordance with the following provisions (in each case rounded to the nearest .000001%):

        (1)    Subsequent to expiration of the Fixed Rate Period, on the second LIBOR Business Day (as defined below) prior to a Distribution Date (each such day, a "LIBOR Determination Date"), LIBOR for any given security shall for the following interest payment period equal the rate, as obtained by the Calculation Agent from Bloomberg Financial Markets Commodities News, for three-month Eurodollar deposits that appears on Dow Jones Telerate Page 3750 (as defined in the International Swaps and Derivatives Association, Inc. 2000 Interest Rate and Currency Exchange Definitions), or such other page as may replace such Page 3750, as of 11:00 a.m. (London time) on such LIBOR Determination Date.

        (2)    If, on any LIBOR Determination Date, such rate does not appear on Dow Jones Telerate Page 3750 or such other page as may replace such Page 3750, the Calculation Agent shall determine the arithmetic mean of the offered quotations of the Reference Banks (as defined below) to leading banks in the London interbank market for three-month Eurodollar deposits in an amount determined by the Calculation Agent by reference to requests for quotations as of approximately 11:00 a.m. (London time) on the LIBOR Determination Date made by the Calculation Agent to the Reference Banks. If, on any LIBOR Determination Date, at least two of the Reference Banks provide such quotations, LIBOR shall equal such arithmetic mean of such quotations. If, on any LIBOR Determination Date, only one or none of the Reference Banks provide such quotations, LIBOR shall be deemed to be the arithmetic mean of the offered quotations that leading banks in the City of New York selected by the Calculation Agent are quoting on the relevant LIBOR Determination Date for three-month Eurodollar deposits in an amount determined by the Calculation Agent by reference to the principal London offices of leading banks in the London interbank market; provided, that if the Calculation Agent is required but is unable to determine a rate in accordance with at least one of the procedures provided above, LIBOR shall be LIBOR as determined on the previous LIBOR Determination Date.

        (3)    As used herein: "Reference Banks" means four major banks in the London interbank market selected by the Calculation Agent; and "LIBOR Business Day" means a day on which commercial banks are open for business (including dealings in foreign exchange and foreign currency deposits) in London.

F-3

TO:	Bresler & Reiner, Inc. Bresler & Reiner Statutory Trust I JPMorgan Chase Bank, National Association
DATE:	November 29, 2005
FROM:	DLA Piper Rudnick Gray Cary US LLP

Flow of Funds Memorandum

        Set forth below is the flow of funds that will occur on November 29, 2005 in connection with the closing of the sale by Bresler & Reiner Statutory Trust I (the "Issuer") of trust preferred securities to Merrill Lynch International. When accepted and agreed to, this memorandum will serve as authorization by Bresler & Reiner, Inc. (the "Company") and Bresler & Reiner Statutory Trust I (the "Trust") to JPMorgan Chase Bank, National Association, (the "Trustee") to establish the accounts and make the payments as described herein. The transactions described below shall all be deemed to occur simultaneously. All capitalized terms used herein shall have the meanings assigned thereto in the Transaction Documents as defined in the Purchase Agreement dated November 23, 2005 among Bresler & Reiner, Inc. and Bresler & Reiner Statutory Trust I.

Transaction	Amount	Funding Instructions
1. Purchase of the Capital Securities from the Trust	$40,000,000	JPMorgan Chase Bank, National Association Bank Name: JPMorgan Chase Bank, National Association ABA # 113000609 Acct # 00102619468 Bnf: Asset Backed Structured Bnf address: JPMorgan Chase Tower Re: Bresler & Reiner Statutory Trust I Trustee credits the Trust Property Account
2. Purchase of Notes from the Company by the Trust	$40,000,000	Trustee debits the Property Account and makes the wire transfers as set forth in 5-9 below
3. Purchase of Common Securities from the Trust by the Company	$1,238,000	Trustee through internal book entries, credits the Property Account
4. Purchase of Notes from the Company by the Trust	$1,238,000	Trustee through internal book entries debits the Property Account
5. Payment of preferred securities commission	$1,200,000	Trustee debits fee from the Property Account and makes wire transfer to: JPMorgan Chase Bank, National Association Account Name: Cohen Bros. & Company/Escrow Contact Name: Michael Shenkman Contact Phone: (215) 861-7808 Contact Fax: (215) 861-7897

1

6. Payment of legal fee and expenses to DLA Piper Rudnick Gray Cary US LLP, as pool counsel	$30,000	Trustee debits fee from the Property Account and makes wire transfer to: M & T Bank 25 South Charles Street, 18th Floor Baltimore, MD 21201 ABA # 022000046 For the Account of DLA Piper Rudnick Gray Cary US LLP Account # 074-8148-5 (Bresler & Reiner Statutory Trust I) Notify David Jones at 512-457-7079
7. Payment of Trustee fees and expenses (including legal fees) to JPMorgan Chase Bank, National Association, as Trustee	$6,000	Trustee debits fee from the Property Account and makes wire transfer to: JPMorgan Chase Bank, National Association Bank Name: JPMorgan Chase Bank, National Association ABA # 113000609 Acct # 00102619468 Bnf: Asset Backed Structured Bnf address: JPMorgan Chase Tower Re: FBR Capital Trust XV Trustee credits the Trust (Property Account)
8. Payment of legal fee and disbursements to Richards, Layton & Finger	$3,500	Trustee debits $3,500 in respect of Richards, Layton & Finger, P.A. legal fee and disbursements from the Property Account and makes wire transfer to: Richards, Layton & Finger at Wilmington Trust Company Rodney Square North Wilmington, Delaware 19890 ABA # 031100092 Account Name: Richards, Layton & Finger
9. Payment of balance of $12,500due diligence fee to Cohen Bros. & Company	$12,500	Trustee debits fee from the Properly Account and makes wire transfer to: JPMorgan Chase Bank, National Association Account Name: Cohen Bros. & Company/Escrow Contact Name: Michael Shenkman Contact Phone: (215) 861-7808 Contact Fax: (215) 861-7897
10. Balance of the Company's Property Account to be wired to the Company	$38,748,000	Trustee debits the Property Account and makes wire transfer to: Name of Company: Bresler & Reiner, Inc. Name of Bank: Wachovia Bank ABA#055003201 Account: 2000009175031 Attn: Melissa Brooks

2

        Accepted and agreed to as of the date first above written.

BRESLER & REINER, INC.
By:	/s/  SIDNEY M. BRESLER
Name:	Sidney M. Bresler
Title:	CEO
BRESLER & REINER STATUTORY TRUST I
By:
	/s/  DARRYL M. EDELSTEIN
Name:	Darryl M. Edelstein
Title:	Administration Trustee

JPMorgan Chase Bank, National Association, hereby certifies that the book entry and wire transfers detailed above have been made as of the date first set forth above.

JPMORGAN CHASE BANK, NATIONAL ASSOCIATION, as Trustee

By:

Name:

Title:

        Accepted and agreed to as of the date first above written.

BRESLER & REINER, INC.
By:
Name:
Title:
BRESLER & REINER STATUTORY TRUST I
By:
Name:
Title:	Administrative Trustee

        JPMorgan Chase Bank, National Association, hereby certifies that the book entry and wire transfers detailed above have been made as of the date first set forth above.

JPMORGAN CHASE BANK, NATIONAL ASSOCIATION, as Trustee

By:

Name:

Title:

3

FEE AGREEMENT

        This Fee Agreement ("Fee Agreement") is effective as of November 29, 2005, and entered into by and between JPMorgan Chase Bank, National Association (the "Trustee") and Bresler & Reiner, Inc. (the "Company"). Capitalized terms used herein and not herein defined shall have the meaning set forth in the Trust Agreement (as defined below).

WITNESSETH

        WHEREAS, The Company is obligated to pay certain fees and expenses of the Trustee and the Delaware Trustee incurred in connection with the execution of the Trust Agreement, the Indenture and the Guarantee (collectively, the "Transaction Documents");

        WHEREAS, the Trustee and the Company desire to set forth with greater particularity the specific agreement as to the compensation owing to the Trustee and the Delaware Trustee pursuant to the Transaction Documents;

        NOW, THEREFORE, for good and valuable consideration, the parties hereto hereby agree as follows:

        1.     The Company agrees to pay the following fees and expenses of the Trustee and the Delaware Trustee:

        (a)    Initial Fee:    The "Initial Fee" shall equal $2,000. This fee covers the acceptance of appointment, commenting upon the Transaction Documents and supporting documentation, establishment of the appropriate accounts and procedures, and for closing the transaction.

        (b)    Legal Fees:    The "Legal Fees" shall equal $3,500. This covers the fees and expenses of counsel engaged by each of the Trustee and the Delaware Trustee in connection with the transaction for actions taken prior to and through the Closing Date.

        2.     The Company agrees to pay all amounts due pursuant to paragraph 1 above, on or prior to the Closing Date.

        3.     The Company shall pay an annual administration fee in the amount of $4,000 per annum to the Trustee and the Delaware Trustee (collectively, the "Annual Administration Fee") for the routine administration fees of the Trustee and the Delaware Trustee under the Transaction Documents, on or prior to each anniversary of the Closing Date.

        4.     All other amounts payable to the Trustee and the Delaware Trustee as fees, expenses and indemnities, including reasonable fees and expenses relating to the termination of the Trust and the final distribution of the property held by the Trust, shall be payable by the Company as set forth in the Transaction Documents.

        5.     No waiver, modification or amendment of this Agreement shall be valid unless executed in writing by the parties hereto.

        6.     This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without regard to conflicts of laws principles.

        IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be effective as of the day as first above written.

JPMORGAN CHASE BANK, NATIONAL ASSOCIATION,
By:	/s/ Illegible
Name:
Title:
BRESLER & REINER, INC.
By:	/s/  SIDNEY M BRESLER
Name:	Sidney M Bresler
Title:	CEO

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TABLE OF CONTENTS
ARTICLE I. DEFINED TERMS
ARTICLE II. THE TRUST
ARTICLE III. PAYMENT ACCOUNT; PAYING AGENTS
ARTICLE IV. DISTRIBUTIONS; REDEMPTION
ARTICLE V. SECURITIES
ARTICLE VI. MEETINGS; VOTING; ACTS OF HOLDERS
ARTICLE VII. REPRESENTATIONS AND WARRANTIES
ARTICLE VIII. THE TRUSTEES
ARTICLE IX. TERMINATION, LIQUIDATION AND MERGER
ARTICLE X. MISCELLANEOUS PROVISIONS
CERTIFICATE OF TRUST OF Bresler & Reiner Statutory Trust I
[FORM OF COMMON SECURITIES CERTIFICATE]
Certificate Evidencing Common Securities of BRESLER & REINER STATUTORY TRUST I Common Securities (liquidation amount $1,000 per Common Security)
CUSIP NO.
ASSIGNMENT
Form of Transferor Certificate
Officer's Financial Certificate
DETERMINATION OF LIBOR
Flow of Funds Memorandum
FEE AGREEMENT
WITNESSETH

EX-10.6

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JUNIOR SUBORDINATED INDENTURE

between

BRESLER & REINER, INC.

and

JPMORGAN CHASE BANK, NATIONAL ASSOCIATION,
as Trustee

Dated as of November 29, 2005

TABLE OF CONTENTS

			Page
ARTICLE I    DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION			1
	Section 1.1.	Definitions	1
	Section 1.2.	Compliance Certificate and Opinions	8
	Section 1.3.	Forms of Documents Delivered to Trustee	8
	Section 1.4.	Acts of Holders	9
	Section 1.5.	Notices, Etc. to Trustee and Company	10
	Section 1.6.	Notice to Holders; Waiver	10
	Section 1.7.	Effect of Headings and Table of Contents	11
	Section 1.8.	Successors and Assigns	11
	Section 1.9.	Separability Clause	11
	Section 1.10.	Benefits of Indenture	11
	Section 1.11.	Governing Law	11
	Section 1.12.	Submission to Jurisdiction	11
	Section 1.13.	Non-Business Days	12
ARTICLE II    SECURITY FORMS			12
	Section 2.1.	Form of Security	12
	Section 2.2.	Restricted Legend	15
	Section 2.3.	Form of Trustee's Certificate of Authentication	17
	Section 2.4.	Temporary Securities	18
	Section 2.5.	Definitive Securities	18
ARTICLE III    THE SECURITIES			18
	Section 3.1.	Payment of Principal and Interest	18
	Section 3.2.	Denominations	20
	Section 3.3.	Execution, Authentication, Delivery and Dating	20
	Section 3.4.	Global Securities	21
	Section 3.5.	Registration, Transfer and Exchange Generally	22
	Section 3.6.	Mutilated, Destroyed, Lost and Stolen Securities	23
	Section 3.7.	Persons Deemed Owners	24
	Section 3.8.	Cancellation	24
	Section 3.9.	Reserved	24
	Section 3.10.	Reserved	24
	Section 3.11.	Agreed Tax Treatment	24
	Section 3.12.	CUSIP Numbers	24
ARTICLE IV    SATISFACTION AND DISCHARGE			25
	Section 4.1.	Satisfaction and Discharge of Indenture	25
	Section 4.2.	Application of Trust Money	26

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ARTICLE V    REMEDIES			26
	Section 5.1.	Events of Default	26
	Section 5.2.	Acceleration of Maturity; Rescission and Annulment	27
	Section 5.3.	Collection of Indebtedness and Suits for Enforcement by Trustee	28
	Section 5.4.	Trustee May File Proofs of Claim	28
	Section 5.5.	Trustee May Enforce Claim Without Possession of Securities	28
	Section 5.6.	Application of Money Collected	28
	Section 5.7.	Limitation on Suits	29
	Section 5.8.	Unconditional Right of Holders to Receive Principal, Premium,if any, and Interest; Direct Action by Holders of Preferred Securities	29
	Section 5.9.	Restoration of Rights and Remedies	30
	Section 5.10.	Rights and Remedies Cumulative	30
	Section 5.11.	Delay or Omission Not Waiver	30
	Section 5.12.	Control by Holders	30
	Section 5.13.	Waiver of Past Defaults	30
	Section 5.14.	Undertaking for Costs	31
	Section 5.15.	Waiver of Usury, Stay or Extension Laws	31
ARTICLE VI    THE TRUSTEE			31
	Section 6.1.	Corporate Trustee Required	31
	Section 6.2.	Certain Duties and Responsibilities	32
	Section 6.3.	Notice of Defaults	33
	Section 6.4.	Certain Rights of Trustee	33
	Section 6.5.	May Hold Securities	35
	Section 6.6.	Compensation; Reimbursement; Indemnity	35
	Section 6.7.	Resignation and Removal; Appointment of Successor	36
	Section 6.8.	Acceptance of Appointment by Successor	37
	Section 6.9.	Merger, Conversion, Consolidation or Succession to Business	37
	Section 6.10.	Not Responsible for Recitals or Issuance of Securities	37
	Section 6.11.	Appointment of Authenticating Agent	37
ARTICLE VII    HOLDER'S LISTS AND REPORTS BY COMPANY			39
	Section 7.1.	Company to Furnish Trustee Names and Addresses of Holders	39
	Section 7.2.	Preservation of Information, Communications to Holders	39
	Section 7.3.	Reports by Company	39
ARTICLE VIII    CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE			40
	Section 8.1.	Company May Consolidate, Etc., Only on Certain Terms	40
	Section 8.2.	Successor Company Substituted	41
ARTICLE IX    SUPPLEMENTAL INDENTURES			41
	Section 9.1.	Supplemental Indentures without Consent of Holders	41

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	Section 9.2.	Supplemental Indentures with Consent of Holders	42
	Section 9.3.	Execution of Supplemental Indentures	42
	Section 9.4.	Effect of Supplemental Indentures	43
	Section 9.5.	Reference in Securities to Supplemental Indentures	43
ARTICLE X    COVENANTS			43
	Section 10.1.	Payment of Principal, Premium, if any, and Interest	43
	Section 10.2.	Money for Security Payments to be Held in Trust	43
	Section 10.3.	Statement as to Compliance	44
	Section 10.4.	Calculation Agent	44
	Section 10.5.	Additional Tax Sums	45
	Section 10.6.	Additional Covenants	45
	Section 10.7.	Waiver of Covenants	45
	Section 10.8.	Treatment of Securities,	46
	Section 10.9.	Financial Covenant	46
ARTICLE XI    REDEMPTION OF SECURITIES			46
	Section 11.1.	Optional Redemption	46
	Section 11.2.	Special Event Redemption	46
	Section 11.3.	Election to Redeem; Notice to Trustee	47
	Section 11.4.	Selection of Securities to be Redeemed	47
	Section 11.5.	Notice of Redemption	47
	Section 11.6.	Deposit of Redemption Price	48
	Section 11.7.	Payment of Securities Called for Redemption	48
ARTICLE XII    SUBORDINATION OF SECURITIES			48
	Section 12.1.	Securities Subordinate to Senior Debt	48
	Section 12.2.	No Payment When Senior Debt in Default; Payment Over of Proceeds Upon Dissolution, Etc.	49
	Section 12.3.	Payment Permitted If No Default	50
	Section 12.4.	Subrogation to Rights of Holders of Senior Debt	50
	Section 12.5.	Provisions Solely to Define Relative Rights	50
	Section 12.6.	Trustee to Effectuate Subordination	51
	Section 12.7.	No Waiver of Subordination Provisions	51
	Section 12.8.	Notice to Trustee	51
	Section 12.9.	Reliance on Judicial Order or Certificate of Liquidating Agent	52
	Section 12.10.	Trustee Not Fiduciary for Holders of Senior Debt	52
	Section 12.11.	Rights of Trustee as Holder of Senior Debt; Preservation of Trustee's Rights	52
	Section 12.12.	Article Applicable to Paying Agents	52

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			Page
SCHEDULES
Schedule A	—	Determination of LIBOR
Exhibit A	—	Form of Officer's Financial Certificate

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        JUNIOR SUBORDINATED INDENTURE, dated as of November 29, 2005, between Bresler & Reiner, Inc. a Corporation corporation (the "Company"), and JPMORGAN CHASE BANK, NATIONAL ASSOCIATION, a national banking corporation, as Trustee (in such capacity, the "Trustee").

RECITALS OF THE COMPANY

        WHEREAS, the Company has duly authorized the execution and delivery of this Indenture to provide for the issuance of its unsecured junior subordinated notes (the "Securities") issued to evidence loans made to the Company of the proceeds from the issuance by Bresler & Reiner Statutory Trust I, a Delaware statutory trust (the "Trust"), of undivided preferred beneficial interests in the assets of the Trust (the "Preferred Securities") and undivided common beneficial interests in the assets of the Trust (the "Common Securities" and, collectively with the Preferred Securities, the "Trust Securities"), and to provide the terms and conditions upon which the Securities are to be authenticated, issued and delivered; and

        WHEREAS, all things necessary to make this Indenture a valid agreement of the Company, in accordance with its terms, have been done.

        Now, THEREFORE, this Indenture Witnesseth:

        For and in consideration of the premises and the purchase of the Securities by the Holders thereof, it is mutually covenanted and agreed, for the equal and proportionate benefit of all Holders of the Securities, as follows:

ARTICLE I

DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION

        SECTION 1.1.    Definitions.

        For all purposes of this Indenture, except as otherwise expressly provided or unless the context otherwise requires:

        (a)   the terms defined in this Article I have the meanings assigned to them in this Article I;

        (b)   the words "include", "includes" and "including" shall be deemed to be followed by the phrase "without limitation";

        (c)   all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with GAAP;

        (d)   unless the context otherwise requires, any reference to an "Article" or a "Section" refers to an Article or a Section, as the case may be, of this Indenture;

        (e)   the words "hereby", "herein", "hereof" and "hereunder" and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision;

        (f)    a reference to the singular includes the plural and vice versa; and

        (g)   the masculine, feminine or neuter genders used herein shall include the masculine, feminine and neuter genders.

"Act" when used with respect to any Holder, has the meaning specified in Section 1.4.

"Administrative Trustee" means, with respect to the Trust, each Person identified as an

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        "Administrative Trustee" in the Trust Agreement, solely in its capacity as Administrative Trustee of the Trust under the Trust Agreement and not in its individual capacity, or its successor in interest in such capacity, or any successor Administrative Trustee appointed as therein provided.

"Additional Interest" means the interest, if any, that shall accrue on any amounts payable on the Securities, the payment of which has not been made on the applicable Interest Payment Date and which shall accrue at the rate per annum specified or determined as specified in such Security, in each case to the extent legally enforceable.

"Additional Tax Sums" has the meaning specified in Section 10.5.

"Additional Taxes" means taxes, duties or other governmental charges imposed on the Trust as a result of a Tax Event (which, for the sake of clarity, does not include amounts required to be deducted or withheld by the Trust from payments made by the Trust to or for the benefit of the Holder of, or any Person that acquires a beneficial interest in, the Securities).

"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 the purposes of this definition, "control," when used with respect to any specified Person, means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing.

"Applicable Depositary Procedures" means, with respect to any transfer or transaction involving a Global Security or beneficial interest therein, the rules and procedures of the Depositary for such Security, in each case to the extent applicable to such transaction and as in effect from time to time.

"Authenticating Agent" means any Person authorized by the Trustee pursuant to Section 6.11 to act on behalf of the Trustee to authenticate the Securities.

"Bankruptcy Code" means Title 11 of the United States Code or any successor statute(s) thereto, or any similar federal or state law for the relief of debtors, in each case as amended from time to time.

"Board of Directors" means the board of directors of the Company or any duly authorized committee of that board.

"Board Resolution" means a copy of a resolution certified by the Secretary or an Assistant Secretary of the Company to have been duly adopted by the Board of Directors and to be in full force and effect on the date of such certification.

"Business Day" means any day other than (i) a Saturday or Sunday, (ii) a day on which banking institutions in the City of New York are authorized or required by law or executive order to remain closed or (iii) a day on which the Corporate Trust Office of the Trustee is closed for business.

"Calculation Agent" has the meaning specified in Section 10.4.

"Code" means the Internal Revenue Code of 1986, as amended.

"Common Securities" has the meaning specified in the first recital of this Indenture.

"Common Stock" means the common stock, par value $1,238,000 per share, of the Company.

"Company" means the Person named as the "Company" in the first paragraph of this Indenture until a successor corporation shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Company" shall mean such successor Corporation.

"Company Request" and "Company Order" mean, respectively, the written request or order signed in the name of the Company by its Chairman of the Board of Directors, its Vice Chairman of the Board of Directors, its Chief Executive Officer, President or a Vice President, and by its Chief

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Financial Officer, its Treasurer, an Assistant Treasurer, its Secretary or an Assistant Secretary, and delivered to the Trustee.

"Corporate Trust Office" means the principal office of the Trustee at which at any particular time its corporate trust business shall be administered, which office at the date of this Indenture is located at 600 Travis, 50th Floor, Houston, Texas 77002 Attn: Worldwide Securities Services—Bresler & Reiner Statutory Trust I.

"Debt" means, with respect to any Person, whether recourse is to all or a portion of the assets of such Person, whether currently existing or hereafter incurred and whether or not contingent and without duplication, (i) every obligation of such Person for money borrowed; (ii) every obligation of such Person evidenced by bonds, debentures, notes or other similar instruments, including obligations incurred in connection with the acquisition of property, assets or businesses; (iii) every reimbursement obligation of such Person with respect to letters of credit, bankers' acceptances or similar facilities issued for the account of such Person; (iv) every obligation of such Person issued or assumed as the deferred purchase price of property or services (but excluding trade accounts payable or other accrued liabilities arising in the ordinary course of business); (v) every capital lease obligation of such Person; (vi) all indebtedness of such Person, whether incurred on or prior to the date of this Indenture or thereafter incurred, for claims in respect of derivative products, including interest rate, foreign exchange rate and commodity forward contracts, options and swaps and similar arrangements; (vii) every obligation of the type referred to in clauses (i) through (vi) of another Person and all dividends of another Person the payment of which, in either case, such Person has guaranteed or is responsible or liable for, directly or indirectly, as obligor or otherwise; and (viii) any renewals, extensions, refundings, amendments or modifications of any obligation of the type referred to in clauses (i) through (vii).

"Defaulted Interest" has the meaning specified in Section 3.1.

"Delaware Trustee" means, with respect to the Trust, the Person identified as the "Delaware Trustee" in the Trust Agreement, solely in its capacity as Delaware Trustee of the Trust under the Trust Agreement and not in its individual capacity, or its successor in interest in such capacity, or any successor Delaware Trustee appointed as therein provided.

"Depositary" means an organization registered as a clearing agency under the Exchange Act that is designated as Depositary by the Company or any successor thereto. DTC will be the initial Depositary.

"Depositary Participant" means a broker, dealer, bank, other financial institution or other Person for whom from time to time a Depositary effects book-entry transfers and pledges of securities deposited with the Depositary.

"Distributions" means amounts payable in respect of the Trust Securities as provided in the Trust Agreement and referred to therein as "Distributions."

"Dollar" or "$" means the currency of the United States of America that, as at the time of payment, is legal tender for the payment of public and private debts.

"DTC" means The Depository Trust Company, a New York corporation, or any successor thereto.

"Event of Default" has the meaning specified in Section 5.1.

"Exchange Act" means the Securities Exchange Act of 1934 or any statute successor thereto, in each case as amended from time to time.

"Expiration Date" has the meaning specified in Section 1.4.

"Fixed Rate Period" has the meaning specified in Section 2.1.

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"GAAP" means United States generally accepted accounting principles, consistently applied, from time to time in effect.

"Global Security" means a Security that evidences all or part of the Securities, the ownership and transfers of which shall be made through book entries by a Depositary.

"Government Obligation" means (a) any security that is (i) a direct obligation of the United States of America of which the full faith and credit of the United States of America is pledged or (ii) an obligation of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America or the payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States of America, which, in either case (i) or (ii), is not callable or redeemable at the option of the issuer thereof, and (b) any depositary receipt issued by a bank (as defined in Section 3(a)(2) of the Securities Act) as custodian with respect to any Government Obligation that is specified in clause (a) above and held by such bank for the account of the holder of such depositary receipt, or with respect to any specific payment of principal of or interest on any Government Obligation that is so specified and held, provided, that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depositary receipt from any amount received by the custodian in respect of the Government Obligation or the specific payment of principal or interest evidenced by such depositary receipt.

"Holder" means a Person in whose name a Security is registered in the Securities Register.

"Indenture" means this instrument as originally executed or as it may from time to time be amended or supplemented by one or more amendments or indentures supplemental hereto entered into pursuant to the applicable provisions hereof.

"Interest Payment Date" means January 30, April 30, July 30, and October 30 of each year, commencing on January 30, 2006, during the term of this Indenture.

"Investment Company Act" means the Investment Company Act of 1940 or any successor statute thereto, in each case as amended from time to time.

"Investment Company Event" means the receipt by the Company of an Opinion of Counsel experienced in such matters to the effect that, as a result of the occurrence of a change in law or regulation (including any announced prospective change) or a written change in interpretation or application of law or regulation by any legislative body, court, governmental agency or regulatory authority, there is more than an insubstantial risk that the Trust is or, within ninety (90) days of the date of such opinion will be, considered an "investment company" that is required to be registered under the Investment Company Act, which change or prospective change becomes effective or would become effective, as the case may be, on or after the date of the issuance of the Securities.

"LIBOR" has the meaning specified in Schedule A.

"LIBOR Business Day" has the meaning specified in Schedule A.

"LIBOR Determination Date" has the meaning specified in Schedule A.

"Liquidation Amount" has the meaning specified in the Trust Agreement.

"Maturity," when used with respect to any Security, means the date on which the principal of such Security or any installment of principal becomes due and payable as therein or herein provided, whether at the Stated Maturity or by declaration of acceleration, all for redemption or otherwise.

"Notice of Default" means a written notice of the kind specified in Section 5.1 (c).

"Officers' Certificate" means a certificate signed by the Chairman of the Board, a Vice Chairman of the Board, the Chief Executive Officer, the President or a Vice President, and by the Chief Financial

4

Officer, the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary, of the Company and delivered to the Trustee.

"Operative Documents" means the Trust Agreement, the Indenture, the Purchase Agreement and the Securities.

"Opinion of Counsel" means a written opinion of counsel, who may be counsel for or an employee of the Company or any Affiliate of the Company.

"Optional Redemption Price" has the meaning set forth in Section 11.1.

"Original Issue Date" means the date of original issuance of each Security.

"Outstanding" means, when used in reference to any Securities, as of the date of determination, all Securities theretofore authenticated and delivered under this Indenture, except:

(i)

Securities theretofore canceled by the Trustee or delivered to the Trustee for cancellation;



(ii)

Securities for whose payment or redemption money in the necessary amount has been theretofore deposited with the Trustee or any Paying Agent in trust for the Holders of such Securities; provided, that, if such Securities are to be redeemed, notice of such redemption has been duly given pursuant to this Indenture or provision therefor satisfactory to the Trustee has been made; and



(iii)

Securities that have been paid or in substitution for or in lieu of which other Securities have been authenticated and delivered pursuant to the provisions of this Indenture, unless proof satisfactory to the Trustee is presented that any such Securities are held by Holders in whose hands such Securities are valid, binding and legal obligations of the Company;

provided, that in determining whether the Holders of the requisite principal amount of Outstanding Securities have given any request, demand, authorization, direction, notice, consent or waiver hereunder, Securities owned by the Company or any other obligor upon the Securities or any Affiliate of the Company or such other obligor shall be disregarded and deemed not to be Outstanding unless the Company shall hold all Outstanding Securities, except that, in determining whether the Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Securities that a Responsible Officer of the Trustee actually knows to be so owned shall be so disregarded. Securities so owned that have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee's right so to act with respect to such Securities and that the pledgee is not the Company or any other obligor upon the Securities or any Affiliate of the Company or such other obligor. Notwithstanding anything herein to the contrary, Securities initially issued to the Trust that are owned by the Trust shall be deemed to be Outstanding notwithstanding the ownership by the Company or an Affiliate of any beneficial interest in the Trust.

"Paying Agent" means the Trustee or any Person (other than the Company or any Affiliate of the Company) authorized by the Company to pay the principal of or any premium or interest on, or other amounts in respect of, any Securities on behalf of the Company.

"Person" means a legal person, including any individual, corporation, estate, partnership, joint venture, association, joint stock company, limited liability company, trust, unincorporated association, government or any agency or political subdivision thereof, or any other entity of whatever nature.

"Place of Payment" means, with respect to the Securities, the Corporate Trust Office of the Trustee.

"Preferred Securities" has the meaning specified in the first recital of this Indenture.

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"Predecessor Security" of any particular Security means every previous Security evidencing all or a portion of the same debt as that evidenced by such particular Security. For the purposes of this definition, any security authenticated and delivered under Section 3.6 in lieu of a mutilated, destroyed, lost or stolen Security shall be deemed to evidence the same debt as the mutilated, destroyed, lost or stolen Security.

"Proceeding" has the meaning specified in Section 12.2.

"Property Trustee" means the Person identified as the "Property Trustee" in the Trust Agreement, solely in its capacity as Property Trustee of the Trust under the Trust Agreement and not in its individual capacity, or its successor in interest in such capacity, or any successor Property Trustee appointed as therein provided.

"Purchase Agreement" means the Purchase Agreement or Purchase Agreements (whether one or more) executed and delivered contemporaneously with this Indenture by the Trust, the Company and the purchaser(s), named therein, as the same may be amended from time to time.

"Redemption Date" means, when used with respect to any Security to be redeemed, the date fixed for such redemption by or pursuant to this Indenture.

"Redemption Price" means, when used with respect to any Security to be redeemed, in whole or in part, the Special Redemption Price or the Optional Redemption Price, as applicable, at which such Security or portion thereof is to be redeemed as fixed by or pursuant to this Indenture.

"Reference Banks" has the meaning specified in Schedule A.

"Regular Record Date" for the interest payable on any Interest Payment Date with respect to the Securities means the date that is fifteen (15) days preceding such Interest Payment Date (whether or not a Business Day).

"Responsible Officer" means, when used with respect to the Trustee, the officer in the Worldwide Securities Services department of the Trustee having direct responsibility for the administration of this Indenture.

"Rights Plan" means a plan of the Company providing for the issuance by the Company to all holders of its Common Stock of rights entitling the holders thereof to subscribe for or purchase shares of any class or series of capital stock of the Company which rights (i) are deemed to be transferred with such shares of such Common Stock and (ii) are also issued in respect of future issuances of such Common Stock, in each case until the occurrence of a specified event or events.

"Securities" or "Security means any debt securities or debt security, as the case may be, authenticated and delivered under this Indenture.

"Securities Act" means the Securities Act of 1933 or any successor statute thereto, in each case as amended from time to time.

"Securities Register" and "Securities Registrar" have the respective meanings specified in Section 3.5.

"Senior Debt" means the principal of and any premium and interest on (including interest accruing on or after the filing of any petition in bankruptcy or for reorganization relating to the Company, whether or not such claim for post-petition interest is allowed in such proceeding) all Debt of the Company, whether incurred on or prior to the date of this Indenture or thereafter incurred, unless it is provided in the instrument creating or evidencing the same or pursuant to which the same is outstanding, that such obligations are not superior in right of payment to the Securities issued under this Indenture; provided, that Senior Debt shall not be deemed to include any (i) debt or (ii) other debt securities (and guarantees, if any), in respect of such debt securities issued to any trust other than the Trust (or a trustee of any such trust), partnership or other entity affiliated with the Company that is a

6

financing vehicle of the Company (a "financing entity") in connection with the issuance by such financing entity of equity securities or other securities, in each case of (i) or (ii) pursuant to an instrument that ranks pari passu with or junior in right of payment to this Indenture.

"Special Event" means the occurrence of an Investment Company Event or a Tax Event.

"Special Record Date" for the payment of any Defaulted Interest means a date fixed by the Trustee pursuant to Section 3.1.

"Special Redemption Price" has the meaning set forth in Section 11.2.

"Stated Maturity" means January 30, 2036.

"Subsidiary" of a Person means (a) any corporation more than 50% of the outstanding securities having ordinary voting power of which shall at the time be owned or controlled, directly or indirectly, by such Person and/or by one or more of its Subsidiaries or (b) any partnership, limited liability company, association, joint venture or similar business organization more than 50% of the ownership interests having ordinary voting power of which shall at the time be owned or controlled, directly or indirectly, by such Person and/or by one or more of its Subsidiaries. Unless otherwise expressly provided, all references herein to a "Subsidiary" shall mean a Subsidiary of the Company.

"Tax Event" means the receipt by the Company of an Opinion of Counsel experienced in such matters to the effect that, as a result of (a) any amendment to or change (including any announced prospective change) in the laws or any regulations thereunder of the United States or any political subdivision or taxing authority thereof or therein or (b) any judicial decision or any official administrative pronouncement (including any private letter ruling, technical advice memorandum or field service advice) or regulatory procedure, including any notice or announcement of intent to adopt any such pronouncement or procedure (an "Administrative Action"), regardless of whether such judicial decision or Administrative Action is issued to or in connection with a proceeding involving the Company or the Trust and whether or not subject to review or appeal, which amendment, change, judicial decision or Administrative Action is enacted, promulgated or announced, in each case, on or after the date of issuance of the Securities, there is more than an insubstantial risk that (i) the Trust is, or will be within ninety (90) days of the date of such opinion, subject to United States federal income tax with respect to income received or accrued on the Securities, (ii) interest payable by the Company on the Securities is not, or within ninety (90) days of the date of such opinion, will not be, deductible by the Company, in whole or in part, for United States federal income tax purposes, or (iii) the Trust is, or will be within ninety (90) days of the date of such opinion, subject to more than a de minimis amount of other taxes, duties or other governmental charges.

"Trust" has the meaning specified in the first recital of this Indenture.

"Trust Agreement" means the Amended and Restated Trust Agreement executed and delivered by the Company, the Property Trustee, as Delaware Trustee and the Administrative Trustees named therein, contemporaneously with the execution and delivery of this Indenture, for the benefit of the holders of the Trust Securities, as amended or supplemented from time to time.

"Trustee" means the Person named as the "Trustee" in the first paragraph of this instrument, solely in its capacity as such and not in its individual capacity, until a successor Trustee shall have become such pursuant to the applicable provisions of this Indenture, and, thereafter, "Trustee" shall mean or include each Person who is then a Trustee hereunder.

"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended and as in effect on the date as of this Indenture.

"Trust Securities" has the meaning specified in the first recital of this Indenture.

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        SECTION 1.2.    Compliance Certificate and Opinions.

        (a)   Upon any application or request by the Company to the Trustee to take any action under any provision of this Indenture, the Company shall, if requested by the Trustee, furnish to the Trustee an Officers' Certificate stating that all conditions precedent (including covenants compliance with which constitutes a condition precedent), if any, provided for in this Indenture relating to the proposed action have been complied with and an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent (including covenants compliance with which constitutes a condition precedent), if any, have been complied with.

        (b)   Every certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture (other than the certificate provided pursuant to Section 10.3) shall include:

(i)

a statement by each individual signing such certificate or opinion that such individual has read such covenant or condition and the definitions herein relating thereto;



(ii)

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



(iii)

a statement that, in the opinion of such individual, 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 or condition has been complied with; and



(iv)

a statement as to whether, in the opinion of such individual, such condition or covenant has been complied with.

        SECTION 1.3.    Forms of Documents Delivered to Trustee.

        (a)   In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents.

        (b)   Any certificate or opinion of an officer of the Company may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such officer knows, or after reasonable inquiry should know, that the certificate or opinion or representations with respect to matters upon which his or her certificate or opinion is based are erroneous. Any such certificate or Opinion of Counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an officer or officers of the Company stating that the information with respect to such factual matters is in the possession of the Company, unless such counsel knows, or after reasonable inquiry should know, that the certificate or opinion or representations with respect to such matters are erroneous.

        (c)   Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument.

        (d)   Whenever, subsequent to the receipt by the Trustee of any Board Resolution, Officers' Certificate, Opinion of Counsel or other document or instrument, a clerical, typographical or other inadvertent or unintentional error or omission shall be discovered therein, a new document or instrument may be substituted therefor in corrected form with the same force and effect as if originally received in the corrected form and, irrespective of the date or dates of the actual execution and/or delivery thereof, such substitute document or instrument shall be deemed to have been executed and/or

8

delivered as of the date or dates required with respect to the document or instrument for which it is substituted. Without limiting the generality of the foregoing, any Securities issued under the authority of such defective document or instrument shall nevertheless be the valid obligations of the Company entitled to the benefits of this Indenture equally and ratably with all other Outstanding Securities.

        SECTION 1.4.    Acts of Holders.

        (a)   Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given to or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by an agent thereof duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments (including any appointment of an agent) is or are delivered to the Trustee, and, where it is hereby expressly required, to the Company. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the "Act" of the Holders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and conclusive in favor of the Trustee and the Company, if made in the manner provided in this Section 1.4.

        (b)   The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by the certificate of any notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to him or her the execution thereof. Where such execution is by a Person acting in other than his or her individual capacity, such certificate or affidavit shall also constitute sufficient proof of his or her authority. The fact and date of the execution by any Person of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other manner that the Trustee deems sufficient and in accordance with such reasonable rules as the Trustee may determine.

        (c)   The ownership of Securities shall be proved by the Securities Register.

        (d)   Any request, demand, authorization, direction, notice, consent, waiver or other action by the Holder of any Security shall bind every future Holder of the same Security and the Holder of every Security issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof in respect of anything done or suffered to be done by the Trustee or the Company in reliance thereon, whether or not notation of such action is made upon such Security.

        (e)   Without limiting the foregoing, a Holder entitled to take any action hereunder with regard to any particular Security may do so with regard to all or any part of the principal amount of such Security or by one or more duly appointed agents each of which may do so pursuant to such appointment with regard to all or any part of such principal amount.

        (f)    Except as set forth in paragraph (g) of this Section 1.4, the Company may set any day as a record date for the purpose of determining the Holders of Outstanding Securities entitled to give, make or take any request, demand, authorization, direction, notice, consent, waiver or other action provided or permitted by this Indenture to be given, made or taken by Holders of Securities. If any record date is set pursuant to this paragraph, the Holders of Outstanding Securities on such record date, and no other Holders, shall be entitled to take the relevant action, whether or not such Holders remain Holders after such record date; provided,that no such action shall be effective hereunder unless taken on or prior to the applicable Expiration Date (as defined in Section 1.4(h)) by Holders of the requisite principal amount of Outstanding Securities on such record date. Nothing in this paragraph shall be construed to prevent the Company from setting a new record date for any action for which a record date has previously been set pursuant to this paragraph (whereupon the record date previously set shall automatically and with no action by any Person be canceled and of no effect). Promptly after

9

any record date is set pursuant to this paragraph, the Company, at its own expense, shall cause notice of such record date, the proposed action by Holders and the applicable Expiration Date to be given to the Trustee in writing and to each Holder of Securities in the manner set forth in Section 1.6.

        (g)   The Trustee may set any day as a record date for the purpose of determining the Holders of Outstanding Securities entitled to join in the giving or making of (i) any Notice of Default, (ii) any declaration of acceleration or rescission or annulment thereof referred to in Section 5.2, (iii) any request to institute proceedings referred to in Section 5.7(b) or (iv) any direction referred to in Section 5.12. If any record date is set pursuant to this paragraph, the Holders of Outstanding Securities on such record date, and no other Holders, shall be entitled to join in such notice, declaration, request or direction, whether or not such Holders remain Holders after such record date; provided, that no such action shall be effective hereunder unless taken on or prior to the applicable Expiration Date by Holders of the requisite principal amount of Outstanding Securities on such record date. Nothing in this paragraph shall be construed to prevent the Trustee from setting a new record date for any action for which a record date has previously been set pursuant to this paragraph (whereupon the record date previously set shall automatically and with no action by any Person be canceled and of no effect). Promptly after any record date is set pursuant to this paragraph, the Trustee, at the Company's expense, shall cause notice of such record date, the proposed action by Holders and the applicable Expiration Date to be given to the Company in writing and to each Holder of Securities in the manner set forth in Section 1.6.

        (h)   With respect to any record date set pursuant to paragraph (f) or (g) of this Section 1.4, the party hereto that sets such record date may designate any day as the "ExpirationDate" and from time to time may change the Expiration Date to any earlier or later day; provided, that no such change shall be effective unless notice of the proposed new Expiration Date is given to the other party hereto in writing, and to each Holder of Securities in the manner set forth in Section 1.6, on or prior to the existing Expiration Date. If an Expiration Date is not designated with respect to any record date set pursuant to this Section 1.4, the party hereto that set such record date shall be deemed to have initially designated the ninetieth (90th) day after such record date as the Expiration Date with respect thereto, subject to its right to change the Expiration Date as provided in this paragraph. Notwithstanding the foregoing, no Expiration Date shall be later than the one hundred eightieth (180th) day after the applicable record date.

        SECTION 1.5.    Notices, Etc. to Trustee and Company.

        Any request, demand, authorization, direction, notice, consent, waiver, Act of Holders, or other document provided or permitted by this Indenture to be made upon, given or furnished to, or filed with:

        (a)   the Trustee by any Holder, any holder of Preferred Securities or the Company shall be sufficient for every purpose hereunder if made, given, fumished or filed in writing to or with and received by the Trustee at its Corporate Trust Office, or

        (b)   the Company by the Trustee, any Holder or any holder of Preferred Securities shall be sufficient for every purpose hereunder if in writing and mailed, first class, postage prepaid, to the Company addressed to it at 11200 Rockville Pike, Suite 502, Rockville, MD 20852 or at any other address previously furnished in writing to the Trustee by the Company.

        SECTION 1.6.    Notice to Holders; Waiver.

        Where this Indenture provides for notice to Holders of any event, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first class, postage prepaid, to each Holder affected by such event to the address of such Holder as it appears in the Securities Register, not later than the latest date (if any), and not earlier than the earliest date (if any), prescribed for the giving of such notice. If, by reason of the suspension of or irregularities in regular

10

mail service or for any other reason, it shall be impossible or impracticable to mail notice of any event to Holders when said notice is required to be given pursuant to any provision of this Indenture, then any manner of giving such notice as shall be satisfactory to the Trustee shall be deemed to be a sufficient giving of such notice. In any case where notice to Holders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Holder shall affect the sufficiency of such notice with respect to other Holders. Where this Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver.

        SECTION 1.7.    Effect of Headings and Table of Contents.

        The Article and Section headings herein, and the Table of Contents are for convenience only and shall not affect the construction of this Indenture.

        SECTION 1.8.    Successors and Assigns.

        This Indenture shall be binding upon and shall inure to the benefit of any successor to the Company and the Trustee, including any successor by operation of law. Except in connection with a transaction involving the Company that is permitted under Article VIII and pursuant to which the assignee agrees in writing to perform the Company's obligations hereunder, the Company shall not assign its obligations hereunder.

        SECTION 1.9.    Separability Clause.

        If any provision in this Indenture or in the Securities shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby, and there shall be deemed substituted for the provision at issue a valid, legal and enforceable provision as similar as possible to the provision at issue.

        SECTION 1.10.    Benefits of Indenture.

        Nothing in this Indenture or in the Securities, express or implied, shall give to any Person, other than the parties hereto and their successors and assigns, the holders of Senior Debt, the Holders of the Securities and, to the extent expressly provided in Sections 5.2, 5.8, 5.9, 5.11, 5.13, 9.2 and 10.7, the holders of Preferred Securities, any benefit or any legal or equitable right, remedy or claim under this Indenture.

        SECTION 1.11.    Governing Law.

This Indenture and the rights and obligations of each of the Holders, the Company and the Trustee shall be construed and enforced in accordance with and governed by the laws of the State of New York without reference to its conflict of laws provisions (other than Section 5-1401 of the General Obligations Law).

        SECTION 1.12.    Submission to Jurisdiction.

        ANY LEGAL ACTION OR PROCEEDING BY OR AGAINST ANY PARTY HERETO OR WITH RESPECT TO OR ARISING OUT OF THIS INDENTURE MAY BE BROUGHT IN OR REMOVED TO THE COURTS OF THE STATE OF NEW YORK, IN AND FOR THE COUNTY OF NEW YORK, OR OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK (IN EACH CASE SITTING IN THE BOROUGH OF MANHATTAN). BY EXECUTION AND DELIVERY OF THIS INDENTURE, EACH PARTY ACCEPTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS (AND COURTS OF APPEALS THEREFROM)

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FOR LEGAL PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS INDENTURE.

        SECTION 1.13.    Non-Business Days.

        If any Interest Payment Date, Redemption Date or Stated Maturity of any Security shall not be a Business Day, then (notwithstanding any other provision of this Indenture or the Securities) payment of interest, premium, if any, or principal or other amounts in respect of such Security shall not be made on such date, but shall be made on the next succeeding Business Day (and no interest shall accrue in respect of the amounts whose payment is so delayed for the period from and after such Interest Payment Date, Redemption Date or Stated Maturity, as the case may be, until such next succeeding Business Day) except that, if such Business Day falls in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day, in each case with the same force and effect as if made on the Interest Payment Date or Redemption Date or at the Stated Maturity.

ARTICLE II

SECURITY FORMS

        SECTION 2.1.    Form of Security.

        Any Security issued hereunder shall be in substantially the following form:

Bresler & Reiner, Inc.

Junior Subordinated Note due 2036

No. $41,238,000

        Bresler & Reiner, Inc., a corporation organized and existing under the laws of Delaware (hereinafter called the "Company," which term includes any successor Person under the Indenture hereinafter referred to), for value received, hereby promises to pay to Merrill Lynch, Pierce, Fenner & Smith Incorporated, or registered assigns, the principal sum of Forty One Million Two Hundred Thirty Eight Thousand Dollars ($41,238,000) on January 30, 2036. The Company further promises to pay interest on said principal sum from November 29, 2005, or from the most recent Interest Payment Date to which interest has been paid or duly provided for, quarterly in arrears on January 30, April 30, July 30 and October 30, of each year, commencing January 30, 2006, or if any such day is not a Business Day, on the next succeeding Business Day (and no interest shall accrue in respect of the amounts whose payment is so delayed for the period from and after such Interest Payment Date until such next succeeding Business Day), except that, if such Business Day falls in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day, in each case, with the same force and effect as if made on the Interest Payment Date, at a fixed rate equal to 8.37% per annum through the interest payment date on January 30, 2011 ("Fixed Rate Period') and thereafter at a variable rate equal to LIBOR plus 3.50% per annum, together with Additional Tax Sums, if any, as provided in Section 10.5 of the Indenture, until the principal hereof is paid or duly provided for or made available for payment; provided, further, that any overdue principal, premium, if any, or Additional Tax Sums and any overdue installment of interest shall bear Additional Interest at a fixed rate equal to 8.37% through the interest payment date on January 30, 2011 and thereafter at a variable rate equal to LIBOR plus 3.50% per annum (to the extent that the payment of such interest shall be legally enforceable), compounded quarterly, from the dates such amounts are due until they are paid or made available for payment, and such interest shall be payable on demand.

        The amount of interest payable on any Interest Payment Date shall be computed during the Fixed Rate Period on the basis of a 360-day year of twelve 30-day months, and thereafter on the basis of a

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360-day year and the actual number of days elapsed in the relevant interest period. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date shall, as provided in the Indenture, be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest installment. Any such interest not so punctually paid or duly provided for shall forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holders of Securities not less than ten (10) days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities may be listed, and upon such notice as may be required by such exchange, all as more fully provided in the Indenture.

        During an Event of Default, the Company shall not (i) declare or pay any dividends or distributions on, or redeem, purchase, acquire or make a liquidation payment with respect to, any of the Company's capital stock or (ii) make any payment of principal of or any interest or premium, if any, on or repay, repurchase or redeem any debt securities of the Company that rank pari passu in all respects with or junior in interest to this Security

        Payment of principal of, premium, if any, and interest on this Security shall be made 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. Payments of principal, premium, if any, and interest due at the Maturity of this Security shall be made at the Place of Payment upon surrender of such Securities to the Paying Agent, and payments of interest shall be made, subject to such surrender where applicable, by wire transfer at such place and to such account at a banking institution in the United States as may be designated in writing to the Paying Agent at least ten (10) Business Days prior to the date for payment by the Person entitled thereto unless proper written transfer instructions have not been received by the relevant record date, in which case such payments shall be made by check mailed to the address of such Person as such address shall appear in the Security Register. Notwithstanding the foregoing, so long as the Holder of this Security is the Property Trustee, the payment of the principal of (and premium, if any) and interest (including any overdue installment of interest and Additional Tax Sums, if any) on this Security will be made at such place and to such account as may be designated by the Property Trustee.

        The indebtedness evidenced by this Security is, to the extent provided in the Indenture, subordinate and junior in right of payment to the prior payment in full of all Senior Debt, and this Security is issued subject to the provisions of the Indenture with respect thereto. Each Holder of this Security, by accepting the same, (a) agrees to and shall be bound by such provisions, (b) authorizes and directs the Trustee on his or her behalf to take such actions as may be necessary or appropriate to effectuate the subordination so provided and (c) appoints the Trustee his or her attorney-in-fact for any and all such purposes. Each Holder hereof, by his or her acceptance hereof, waives all notice of the acceptance of the subordination provisions contained herein and in the Indenture by each holder of Senior Debt, whether now outstanding or hereafter incurred, and waives reliance by each such holder upon said provisions.

        Unless the certificate of authentication hereon has been executed by the Trustee by manual signature, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.

[FORM OF REVERSE OF SECURITY]

        This Security is one of a duly authorized issue of securities of the Company (the "Securities") issued under the Junior Subordinated Indenture, dated as of November 29, 2005 (the "Indenture"),

13

between the Company and JPMorgan Chase Bank, National Association, as Trustee (in such capacity, the "Trustee," which term includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee, the holders of Senior Debt, the Holders of the Securities and the holders of the Preferred Securities, and of the terms upon which the Securities are, and are to be, authenticated and delivered.

        All terms used in this Security that are defined in the Indenture or in the Amended and Restated Trust Agreement, dated as of November 29, 2005 (as modified, amended or supplemented from time to time, the "Trust Agreement"), relating to the Bresler & Reiner Statutory Trust I (the "Trust") among the Company, as Depositor, the Trustees named therein and the Holders from time to time of the Trust Securities issued pursuant thereto, shall have the meanings assigned to them in the Indenture or the Trust Agreement, as the case may be.

        The Company may, on any Interest Payment Date, at its option, upon not less than thirty (30) days' nor more than sixty (60) days' written notice to the Holders of the Securities (unless a shorter notice period shall be satisfactory to the Trustee) on or after January 30, 2011 and subject to the terms and conditions of Article XI of the Indenture, redeem this Security in whole at any time or in part from time to time at a Redemption Price equal to one hundred percent (100%) of the principal amount hereof, together, in the case of any such redemption, with accrued interest, including any Additional Interest, through but excluding the date fixed as the Redemption Date.

        In addition, upon the occurrence and during the continuation of a Special Event, the Company may, at its option, upon not less than thirty (30) days' nor more than sixty (60) days' written notice to the Holders of the Securities (unless a shorter notice period shall be satisfactory to the Trustee), redeem this Security, in whole but not in part, subject to the terms and conditions of Article XI of the Indenture at a Redemption Price equal to one hundred seven and one half percent (107.5%) of the principal amount hereof, together, in the case of any such redemption, with accrued interest, including any Additional Interest, through but excluding the date fixed as the Redemption Date.

        In the event of redemption of this Security in part only, a new Security or Securities for the unredeemed portion hereof will be issued in the name of the Holder hereof upon the cancellation hereof. If less than all the Securities are to be redeemed, the particular Securities to be redeemed shall be selected not more than sixty (60) days prior to the Redemption Date by the Trustee from the Outstanding Securities not previously called for redemption, by such method as the Trustee shall deem fair and appropriate and which may provide for the selection for redemption of a portion of the principal amount of any Security.

        The Indenture permits, with certain exceptions as therein provided, the Company and the Trustee at any time to enter into a supplemental indenture or indentures for the purpose of modifying in any manner the rights and obligations of the Company and of the Holders of the Securities, with the consent of the Holders of not less than a majority in principal amount of the Outstanding Securities. The Indenture also contains provisions permitting Holders of specified percentages in principal amount of the Securities, on behalf of the Holders of all Securities, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future Holders of this Security and of any Security issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Security.

        No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and any premium, if any, and interest, including any Additional Interest (to the extent legally

14

enforceable), on this Security at the times, place and rate, and in the coin or currency, herein prescribed.

        As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Security is restricted to transfers to "Qualified Purchasers" (as such term is defined in the Investment Company Act of 1940, as amended), and is registrable in the Securities Register, upon surrender of this Security for registration of transfer at the office or agency of the Company maintained for such purpose, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Securities Registrar and duly executed by, the Holder hereof or such Holder's attorney duly authorized in writing, and thereupon one or more new Securities, of like tenor, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees.

        The Securities are issuable only in registered form without coupons in minimum denominations of $100,000 and any integral multiple of $1,000 in excess thereof. As provided in the Indenture and subject to certain limitations therein set forth, Securities are exchangeable for a like aggregate principal amount of Securities and of like tenor of a different authorized denomination, as requested by the Holder surrendering the same.

        No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.

        The Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Security is registered as the owner hereof for all purposes, whether or not this Security be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary.

        The Company and, by its acceptance of this Security or a beneficial interest herein, the Holder of, and any Person that acquires a beneficial interest in, this Security agree that, for United States federal, state and local tax purposes, it is intended that this Security constitute indebtedness.

This Security shall be construed and enforced in accordance with and governed by the laws of the State of New York, without reference to its conflict of laws provisions (other than Section 5-1401 of the General Obligations Law).

        IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed on this day of                                        , 20    .

Bresler & Reiner, Inc.
By:
	Name:
	Title:

        SECTION 2.2.    Restricted Legend.

        (a)   Any Security issued hereunder shall bear a legend in substantially the following form:

"[IF THIS SECURITY IS A GLOBAL SECURITY INSERT: THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE DEPOSITORY TRUST COMPANY ("DTC") OR A NOMINEE OF DTC. THIS SECURITY IS EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN DTC OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE

15

INDENTURE, AND NO TRANSFER OF THIS SECURITY (OTHER THAN A TRANSFER OF THIS SECURITY AS A WHOLE BY DTC TO A NOMINEE OF DTC OR BY A NOMINEE OF DTC TO DTC OR ANOTHER NOMINEE OF DTC) MAY BE REGISTERED EXCEPT IN LIMITED CIRCUMSTANCES.

UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF DTC TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]

THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND SUCH SECURITIES, AND ANY INTEREST THEREIN, MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF ANY SECURITIES IS HEREBY NOTIFIED THAT THE SELLER OF THE SECURITIES MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A UNDER THE SECURITIES ACT.

THE HOLDER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH SECURITIES MAY BE OFFERED, RESOLD OR OTHERWISE TRANSFERRED ONLY (I) TO THE COMPANY OR (II) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A "QUALIFIED PURCHASER" (AS DEFINED IN SECTION 2(a)(51) OF THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED), AND (B) THE HOLDER WILL NOTIFY ANY PURCHASER OF ANY SECURITIES FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE.

THE SECURITIES WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN BLOCKS HAVING AN AGGREGATE PRINCIPAL AMOUNT OF NOT LESS THAN $100,000. TO THE FULLEST EXTENT PERMITTED BY LAW, ANY ATTEMPTED TRANSFER OF SECURITIES, OR ANY INTEREST THEREIN, IN A BLOCK HAVING AN AGGREGATE PRINCIPAL AMOUNT OF LESS THAN $100,000 AND MULTIPLES OF $1,000 IN EXCESS THEREOF SHALL BE DEEMED TO BE VOID AND OF NO LEGAL EFFECT WHATSOEVER. TO THE FULLEST EXTENT PERMITTED BY LAW, ANY SUCH PURPORTED TRANSFEREE SHALL BE DEEMED NOT TO BE THE HOLDER OF SUCH SECURITIES FOR ANY PURPOSE, INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF PRINCIPAL OF OR INTEREST ON SUCH SECURITIES, OR ANY INTEREST THEREIN, AND SUCH PURPORTED TRANSFEREE SHALL BE DEEMED TO HAVE NO INTEREST WHATSOEVER IN SUCH SECURITIES.

THE HOLDER OF THIS SECURITY, OR ANY INTEREST THEREIN, BY ITS ACCEPTANCE HEREOF OR THEREOF ALSO AGREES, REPRESENTS AND WARRANTS THAT IT IS NOT AN EMPLOYEE BENEFIT, INDIVIDUAL RETIREMENT ACCOUNT OR OTHER PLAN OR ARRANGEMENT SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR

16

SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE") (EACH A "PLAN"), OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE "PLAN ASSETS" BY REASON OF ANY PLAN'S INVESTMENT IN THE ENTITY, AND NO PERSON INVESTING "PLAN ASSETS" OF ANY PLAN MAY ACQUIRE OR HOLD THIS SECURITY OR ANY INTEREST THEREIN. ANY PURCHASER OR HOLDER OF THE SECURITIES OR ANY INTEREST THEREIN WILL BE DEEMED TO HAVE REPRESENTED BY ITS PURCHASE AND HOLDING THEREOF THAT IT IS NOT AN EMPLOYEE BENEFIT PLAN WITHIN THE MEANING OF SECTION 3(3) OF ERISA, OR A PLAN TO WHICH SECTION 4975 OF THE CODE IS APPLICABLE, A TRUSTEE OR OTHER PERSON ACTING ON BEHALF OF AN EMPLOYEE BENEFIT PLAN OR PLAN, OR ANY OTHER PERSON OR ENTITY USING THE ASSETS OF ANY EMPLOYEE BENEFIT PLAN OR PLAN TO FINANCE SUCH PURCHASE."

        (b)   The above legends shall not be removed from any Security unless there is delivered to the Company satisfactory evidence, which may include an Opinion of Counsel, as may be reasonably required to ensure that any future transfers thereof may be made without restriction under or violation of the provisions of the Securities Act and other applicable law. Upon provision of such satisfactory evidence, the Company shall execute and deliver to the Trustee, and the Trustee shall deliver, upon receipt of a Company Order directing it to do so, a Security that does not bear the legend.

        SECTION 2.3.    Form of Trustee's Certificate of Authentication.

        The Trustee's certificate of authentication shall be in substantially the following form:

        This is one of the Securities referred to in the within-mentioned Indenture.

Dated:
	JPMORGAN CHASE BANK, NATIONAL ASSOCIATION, not in its individual capacity, but solely as Trustee
	By:	Authorized signatory

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        SECTION 2.4.    Temporary Securities.

        (a)   Pending the preparation of definitive Securities, the Company may execute, and upon Company Order the Trustee shall authenticate and deliver, temporary Securities that are printed, lithographed, typewritten, mimeographed or otherwise produced, in any denomination, substantially of the tenor of the definitive Securities in lieu of which they are issued and with such appropriate insertions, omissions, substitutions and other variations as the officers executing such Securities may determine, as evidenced by their execution of such Securities.

        (b)   If temporary Securities are issued, the Company will cause definitive Securities to be prepared without unreasonable delay. After the preparation of definitive Securities, the temporary Securities shall be exchangeable for definitive Securities upon surrender of the temporary Securities at the office or agency of the Company designated for that purpose without charge to the Holder. Upon surrender for cancellation of any one or more temporary Securities, the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor one or more definitive Securities of any authorized denominations having the same Original Issue Date and Stated Maturity and having the same terms as such temporary Securities. Until so exchanged, the temporary Securities shall in all respects be entitled to the same benefits under this Indenture as definitive Securities.

        SECTION 2.5.    Definitive Securities.

        The Securities issued on the Original Issue Date shall be in definitive form. The definitive Securities shall be printed, lithographed or engraved, or produced by any combination of these methods, if required by any securities exchange on which the Securities may be listed, on a steel engraved border or steel engraved borders or may be produced in any other manner permitted by the rules of any securities exchange on which the Securities may be listed, all as determined by the officers executing such Securities, as evidenced by their execution of such Securities.

ARTICLE III

THE SECURITIES

        SECTION 3.1.    Payment of Principal and Interest.

        (a)   The unpaid principal amount of the Securities shall bear interest at a fixed rate equal to 8.37% per annum through the interest payment date on January 30, 2011 and thereafter at a variable rate of LIBOR plus 3.50% per annum until paid or duly provided for such interest to accrue from the Original Issue Date or from the most recent Interest Payment Date to which interest has been paid or duly provided for, and any overdue principal, premium, if any, or Additional Tax Sums and any overdue installment of interest shall bear Additional Interest at the rate equal to a fixed rate equal to 8.37% per annum through the interest payment date on January 30, 2011 and thereafter at a variable rate of LIBOR plus 3.50% per annum compounded quarterly from the dates such amounts are due until they are paid or funds for the payment thereof are made available for payment.

        (b)   Interest and Additional Interest on any Security that is payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid to the Person in whose name that Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest, except that interest and any Additional Interest payable on the Stated Maturity (or any date of principal repayment upon early maturity) of the principal of a Security or on a Redemption Date shall be paid to the Person to whom principal is paid. The initial payment of interest on any Security that is issued between a Regular Record Date and the related Interest Payment Date shall be payable as provided in such Security.

        (c)   Any interest on any Security that is due and payable, but is not timely paid or duly provided for, on any Interest Payment Date for Securities (herein called "Defaulted Interest") shall forthwith

18

cease to be payable to the registered Holder on the relevant Regular Record Date by virtue of having been such Holder, and such Defaulted Interest may be paid by the Company, at its election in each case, as provided in paragraph (i) or (ii) below:

(i)

The Company may elect to make payment of any Defaulted Interest to the Persons in whose names the Securities (or their respective Predecessor Securities) are registered at the close of business on a Special Record Date for the payment of such Defaulted Interest (a "Special Record Date"), which shall be fixed in the following manner. At least thirty (30) days prior to the date of the proposed payment, the Company shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Security and the date of the proposed payment, and at the same time the Company shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest. Thereupon the Trustee shall fix a Special Record Date for the payment of such Defaulted Interest, which shall be not more than fifteen (15) days and not less than ten (10) days prior to the date of the proposed payment and not less than ten (10) days after the receipt by the Trustee of the notice of the proposed payment. The Trustee shall promptly notify the Company of such Special Record Date and, in the name and at the expense of the Company, shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, first class, postage prepaid, to each Holder of a Security at the address of such Holder as it appears in the Securities Register not less than ten (10) days prior to such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor having been so mailed, such Defaulted Interest shall be paid to the Persons in whose names the Securities (or their respective Predecessor Securities) are registered on such Special Record Date; or



(ii)

The Company may make payment of any Defaulted Interest in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities may be listed and, upon such notice as may be required by such exchange (or by the Trustee if the Securities are not listed), if, after notice given by the Company to the Trustee of the proposed payment pursuant to this clause, such payment shall be deemed practicable by the Trustee.

        (d)   Payments of interest on the Securities shall include interest accrued to but excluding the respective Interest Payment Dates. Interest payments for the Securities shall be computed and paid during the Fixed Rate Period based on a 360-day year of twelve 30-day months. Upon expiration of the Fixed Rate Period, interest shall be computed and paid on the basis of a 360-day year and the actual number of days elapsed in the relevant interest period.

        (e)   Payment of principal of, premium, if any, and interest on the Securities shall be made 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. Payments of principal, premium, if any, and interest due at the Maturity of such Securities shall be made at the Place of Payment upon surrender of such Securities to the Paying Agent and payments of interest shall be made subject to such surrender where applicable, by wire transfer at such place and to such account at a banking institution in the United States as may be designated in writing to the Paying Agent at least ten (10) Business Days prior to the date for payment by the Person entitled thereto unless proper written transfer instructions have not been received by the relevant record date, in which case such payments shall be made by check mailed to the address of such Person as such address shall appear in the Security Register. Notwithstanding the foregoing, so long as the holder of this Security is the Property Trustee, the payment of the principal of (and premium, if any) and interest (including any overdue installment of interest and Additional Tax Sums, if

19

any) on this Security will be made at such place and to such account as may be designated by the Property Trustee.

        (f)    The parties hereto acknowledge and agree that the holders of the Preferred Securities have certain rights to direct the Company to modify the Interest Payment Dates and corresponding Redemption Date and Stated Maturity of the Securities or a portion of the Securities pursuant to the Purchase Agreement. In the event any such modifications are made to the Securities or a portion of the Securities, appropriate changes to the form of Security set forth in Article II hereof shall be made prior to the issuance and authentication of new or replacement Securities. Any such modification of the Interest Payment Date and corresponding Redemption Date and Stated Maturity with respect to any Securities or tranche of Securities shall not require or be subject to the consent of the Trustee. In no event will the interest payment Dates (and corresponding Redemption Date and Stated Maturity) on the Securities vary by more than sixty (60) calendar days from the original Interest Payment Dates, Redemption Date, and Stated Maturity. No action requested of the Company pursuant to this Section 3.1(0 shall materially increase the obligations or materially decrease the rights of the Company.

        (g)   Subject to the foregoing provisions of this Section 3.1 each Security delivered under this Indenture upon transfer of or in exchange for or in lieu of any other Security shall carry the rights to interest accrued and unpaid, and to accrue, that were carried by such other Security.

        SECTION 3.2.    Denominations.

        The Securities shall be in registered form without coupons and shall be issuable in minimum denominations of $100,000 and any integral multiple of $1,000 in excess thereof.

        SECTION 3.3.    Execution, Authentication, Delivery and Dating.

        (a)   At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Securities in an aggregate principal amount (including all then Outstanding Securities) not in excess of Forty One Million Two Hundred Thirty Eight Thousand Dollars ($41,238,000) executed by the Company to the Trustee for authentication, together with a Company Order for the authentication and delivery of such Securities, and the Trustee in accordance with the Company Order shall authenticate and deliver such Securities. In authenticating such Securities, and accepting the additional responsibilities under this Indenture in relation to such Securities, the Trustee shall be entitled to receive, and shall be fully protected in relying upon:

(i)

a copy of any Board Resolution relating thereto; and



(ii)

an Opinion of Counsel stating that: (1) such Securities, when authenticated and delivered by the Trustee and issued by the Company in the manner and subject to any conditions specified in such Opinion of Counsel, will constitute, and the Indenture constitutes, valid and legally binding obligations of the Company, each enforceable in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general equity principles; (2) the Securities have been duly authorized and executed by the Company and have been delivered to the Trustee for authentication in accordance with this Indenture; (3) the Securities are not required to be registered under the Securities Act; and (4) the Indenture is not required to be qualified under the Trust Indenture Act.

        (b)   The Securities shall be executed on behalf of the Company by its Chairman of the Board, its Vice Chairman of the Board, its Chief Executive Officer, its President or one of its Vice Presidents. The signature of any of these officers on the Securities may be manual or facsimile. Securities bearing the manual or facsimile signatures of individuals who were at any time the proper officers of the Company shall bind the Company, notwithstanding that such individuals or any of them have ceased to

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hold such offices prior to the authentication and delivery of such Securities or did not hold such offices at the date of such Securities.

        (c)   No Security shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose, unless there appears on such Security a certificate of authentication substantially in the form provided for herein executed by the Trustee by the manual signature of one of its authorized signatories, and such certificate upon any Security shall be conclusive evidence, and the only evidence, that such Security has been duly authenticated and delivered hereunder. Notwithstanding the foregoing, if any Security shall have been authenticated and delivered hereunder but never issued and sold by the Company, and the Company shall deliver such Security to the Trustee for cancellation as provided in Section 3.8, for all purposes of this Indenture such Security shall be deemed never to have been authenticated and delivered hereunder and shall never be entitled to the benefits of this Indenture.

        (d)   Each Security shall be dated the date of its authentication.

[If DTC Entry insert the following Section:]

        SECTION 3.4.    Global Securities.

        (a)   Upon the election of the Holder after the Original Issue Date, which election need not be in writing, the Securities owned by such Holder shall be issued in the form of one or more Global Securities registered in the name of the Depositary or its nominee. Each Global Security issued under this Indenture shall be registered in the name of the Depositary designated by the Company for such Global Security or a nominee thereof and delivered to such Depositary or a nominee thereof or custodian therefor, and each such Global Security shall constitute a single Security for all purposes of this Indenture.

        (b)   Notwithstanding any other provision in this Indenture, no Global Security may be exchanged in whole or in part for registered Securities, and no transfer of a Global Security in whole or in part may be registered, in the name of any Person other than the Depositary for such Global Security or a nominee thereof unless (i) such Depositary advises the Trustee and the Company in writing that such Depositary is no longer willing or able to properly discharge its responsibilities as Depositary with respect to such Global Security, and no qualified successor is appointed by the Company within ninety (90) days of receipt by the Company of such notice, (ii) such Depositary ceases to be a clearing agency registered under the Exchange Act and no successor is appointed by the Company within ninety (90) days after obtaining knowledge of such event, (iii) the Company executes and delivers to the Trustee a Company Order stating that the Company elects to terminate the book-entry system through the Depositary or (iv) an Event of Default shall have occurred and be continuing. Upon the occurrence of any event specified in clause (i), (ii), (iii) or (iv) above, the Trustee shall notify the Depositary and instruct the Depositary to notify all owners of beneficial interests in such Global Security of the occurrence of such event and of the availability of Securities to such owners of beneficial interests requesting the same. The Trustee may conclusively rely, and be protected in relying, upon the written identification of the owners of beneficial interests furnished by the Depositary, and shall not be liable for any delay resulting from a delay by the Depositary. Upon the issuance of such Securities and the registration in the Securities Register of such Securities in the names of the Holders of the beneficial interests therein, the Trustees shall recognize such holders of beneficial interests as Holders.

        (c)   If any Global Security is to be exchanged for other Securities or canceled in part, or if another Security is to be exchanged in whole or in part for a beneficial interest in any Global Security, then either (i) such Global Security shall be so surrendered for exchange or cancellation as provided in this Article III or (ii) the principal amount thereof shall be reduced or increased by an amount equal to (x) the portion thereof to be so exchanged or canceled, or (y) the principal amount of such other Security to be so exchanged for a beneficial interest therein, as the case may be, by means of an appropriate adjustment made on the records of the Securities Registrar, whereupon the Trustee, in accordance with the Applicable Depositary Procedures, shall instruct the Depositary or its authorized representative to make a corresponding adjustment to its records. Upon any such surrender or adjustment of a Global Security by the Depositary, accompanied by registration instructions, the Company shall execute and the Trustee shall authenticate and deliver any Securities issuable in exchange for such Global Security (or any portion thereof) in accordance with the instructions of the Depositary. The Trustee shall not be liable for any delay in delivery of such instructions and may conclusively rely on, and shall be fully protected in relying on, such instructions.

        (d)   Every Security authenticated and delivered upon registration of transfer of, or in exchange for or in lieu of, a Global Security or any portion thereof shall be authenticated and delivered in the form of, and shall be, a Global Security, unless such Security is registered in the name of a Person other than the Depositary for such Global Security or a nominee thereof.

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        (e)   Securities distributed to holders of Book-Entry Preferred Securities (as defined in the applicable Trust Agreement) upon the dissolution of the Trust shall be distributed in the form of one or more Global Securities registered in the name of a Depositary or its nominee, and deposited with the Securities Registrar, as custodian for such Depositary, or with such Depositary, for credit by the Depositary to the respective accounts of the beneficial owners of the Securities represented thereby (or such other accounts as they may direct). Securities distributed to holders of Preferred Securities other than Book-Entry Preferred Securities upon the dissolution of the Trust shall not be issued in the form of a Global Security or any other form intended to facilitate book-entry trading in beneficial interests in such Securities.

        (f)    The Depositary or its nominee, as the registered owner of a Global Security, shall be the Holder of such Global Security for all purposes under this Indenture and the Securities, and owners of beneficial interests in a Global Security shall hold such interests pursuant to the Applicable Depositary Procedures. Accordingly, any such owner's beneficial interest in a Global Security shall be shown only on, and the transfer of such interest shall be effected only through, records maintained by the Depositary or its nominee or its Depositary Participants. The Securities Registrar and the Trustee shall be entitled to deal with the Depositary for all purposes of this Indenture relating to a Global Security (including the payment of principal and interest thereon and the giving of instructions or directions by owners of beneficial interests therein and the giving of notices) as the sole Holder of the Security and shall have no obligations to the owners of beneficial interests therein. Neither the Trustee nor the Securities Registrar shall have any liability in respect of any transfers effected by the Depositary.

        (g)   The rights of owners of beneficial interests in a Global Security shall be exercised only through the Depositary and shall be limited to those established by law and agreements between such owners and the Depositary and/or its Depositary Participants.

        (h)   No holder of any beneficial interest in any Global Security held on its behalf by a Depositary shall have any rights under this Indenture with respect to such Global Security, and such Depositary may be treated by the Company, the Trustee and any agent of the Company or the Trustee as the owner of such Global Security for all purposes whatsoever. None of the Company, the Trustee nor any agent of the Company or the Trustee will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests of a Global Security or maintaining, supervising or reviewing any records relating to such beneficial ownership interests. Notwithstanding the foregoing, nothing herein shall prevent the Company, the Trustee or any agent of the Company or the Trustee from giving effect to any written certification, proxy or other authorization furnished by a Depositary or impair, as between a Depositary and such holders of beneficial interests, the operation of customary practices governing the exercise of the rights of the Depositary (or its nominee) as Holder of any Security.

        SECTION 3.5.    Registration, Transfer and Exchange Generally.

        (a)   The Trustee shall cause to be kept at the Corporate Trust Office a register (the "Securities Register") in which the registrar and transfer agent with respect to the Securities (the "Securities Registrar"), subject to such reasonable regulations as it may prescribe, shall provide for the registration of Securities and of transfers and exchanges of Securities. The Trustee shall at all times also be the Securities Registrar. The provisions of Article VI shall apply to the Trustee in its role as Securities Registrar.

        (b)   Subject to compliance with Section 2.2(b), upon surrender for registration of transfer of any Security at the offices or agencies of the Company designated for that purpose the Company shall execute, and the Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Securities of any authorized denominations of like tenor and aggregate principal amount.

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        (c)   At the option of the Holder, Securities may be exchanged for other Securities of any authorized denominations, of like tenor and aggregate principal amount, upon surrender of the Securities to be exchanged at such office or agency. Whenever any Securities are so surrendered for exchange, the Company shall execute, and the Trustee shall authenticate and deliver, the Securities that the Holder making the exchange is entitled to receive.

        (d)   All Securities issued upon any transfer or exchange of Securities shall be the valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Securities surrendered upon such transfer or exchange.

        (e)   Every Security presented or surrendered for transfer or exchange shall (if so required by the Company or the Trustee) be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Company and the Securities Registrar, duly executed by the Holder thereof or such Holder's attorney duly authorized in writing.

        (f)    No service charge shall be made to a Holder for any transfer or exchange of Securities, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any transfer or exchange of Securities.

        (g)   Neither the Company nor the Trustee shall be required pursuant to the provisions of this Section 3.5 (g): (i) to issue, register the transfer of or exchange any Security during a period beginning at the opening of business fifteen (15) days before the day of selection for redemption of Securities pursuant to Article XI and ending at the close of business on the day of mailing of the notice of redemption or (ii) to register the transfer of or exchange any Security so selected for redemption in whole or in part, except, in the case of any such Security to be redeemed in part, any portion thereof not to be redeemed.

        (h)   The Company shall designate an office or offices or agency or agencies where Securities may be surrendered for registration or transfer or exchange. The Company initially designates the Corporate Trust Office as its office and agency for such purposes. The Company shall give prompt written notice to the Trustee and to the Holders of any change in the location of any such office or agency.

        (i)    The Securities may only be transferred to a "Qualified Purchaser" as such term is defined in Section 2(a)(51) of the Investment Company Act.

        (j)    Neither the Trustee nor the Securities Registrar shall be responsible for ascertaining whether any transfer hereunder complies with the registration provisions of or any exemptions from the Securities Act, applicable state securities laws or the applicable laws of any other jurisdiction, ERISA, the Code, or the Investment Company Act; provided, that if a certificate is specifically required by the express terms of this Section 3.5 to be delivered to the Trustee or the Securities Registrar by a Holder or transferee of a Security, the Trustee and the Securities Registrar shall be under a duty to receive and examine the same to determine whether or not the certificate substantially conforms on its face to the requirements of this Indenture and shall promptly notify the party delivering the same if such certificate does not comply with such terms.

        SECTION 3.6.    Mutilated, Destroyed, Lost and Stolen Securities.

        (a)   If any mutilated Security is surrendered to the Trustee together with such security or indemnity as may be required by the Trustee to save the Company and the Trustee harmless, the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a new Security of like tenor and aggregate principal amount and bearing a number not contemporaneously outstanding.

        (b)   If there shall be delivered to the Trustee (i) evidence to its satisfaction of the destruction, loss or theft of any Security and (ii) such security or indemnity as may be required by it to save each of the Company and the Trustee harmless, then, in the absence of notice to the Company or the Trustee that

23

such Security has been acquired by a bona fide purchaser, the Company shall execute and upon its written request the Trustee shall authenticate and deliver, in lieu of any such destroyed, lost or stolen Security, a new Security of like tenor and aggregate principal amount as such destroyed, lost or stolen Security, and bearing a number not contemporaneously outstanding.

        (c)   If any such mutilated, destroyed, lost or stolen Security has become or is about to become due and payable, the Company in its discretion may, instead of issuing a new Security, pay such Security.

        (d)   Upon the issuance of any new Security under this Section 3.6, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith.

        (e)   Every new Security issued pursuant to this Section 3.6 in lieu of any mutilated, destroyed, lost or stolen Security shall constitute an original additional contractual obligation of the Company, whether or not the mutilated, destroyed, lost or stolen Security shall be at any time enforceable by anyone, and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Securities duly issued hereunder.

        (f)    The provisions of this Section 3.6 are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities.

        SECTION 3.7.    Persons Deemed Owners.

        The Company, the Trustee and any agent of the Company or the Trustee shall treat the Person in whose name any Security is registered as the owner of such Security for the purpose of receiving payment of principal of and any interest on such Security and for all other purposes whatsoever, and neither the Company, the Trustee nor any agent of the Company or the Trustee shall be affected by notice to the contrary.

        SECTION 3.8.    Cancellation.

        All Securities surrendered for payment, redemption, transfer or exchange shall, if surrendered to any Person other than the Trustee, be delivered to the Trustee, and any such Securities and Securities surrendered directly to the Trustee for any such purpose shall be promptly canceled by it. The Company may at any time deliver to the Trustee for cancellation any Securities previously authenticated and delivered hereunder that the Company may have acquired in any manner whatsoever, and all Securities so delivered shall be promptly canceled by the Trustee. No Securities shall be authenticated in lieu of or in exchange for any Securities canceled as provided in this Section 3.8, except as expressly permitted by this Indenture. All canceled Securities shall be retained or disposed of by the Trustee in accordance with its customary practices and the Trustee shall deliver to the Company a certificate of such disposition.

        SECTION 3.9.    Reserved.

        SECTION 3.10.    Reserved.

        SECTION 3.11.    Agreed Tax Treatment.

        Each Security issued hereunder shall provide that the Company and, by its acceptance or acquisition of a Security or a beneficial interest therein, the Holder of, and any Person that acquires a direct or indirect beneficial interest in, such Security, intend and agree to treat such Security as indebtedness of the Company for United States Federal, state and local tax purposes and to treat the Preferred Securities (including but not limited to all payments and proceeds with respect to the Preferred Securities) as an undivided beneficial ownership interest in the Securities (and any other Trust property) (and payments and proceeds therefrom, respectively) for United States Federal, state and local tax purposes. The provisions of this Indenture shall be interpreted to further this intention and agreement of the parties.

        SECTION 3.12.    CUSIP Numbers.

        The Company in issuing the Securities may use "CUSIP" numbers (if then generally in use), and, if so, the Trustee shall use "CUSIP" numbers in notices of redemption and other similar or related materials as a convenience to Holders; provided, that any such notice or other materials may state that no representation is made as to the correctness of such numbers either as printed on the Securities or as contained in any notice of redemption or other materials and that reliance may be placed only on the other identification numbers printed on the Securities, and any such redemption shall not be affected by any defect in or omission of such numbers.

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ARTICLE IV

SATISFACTION AND DISCHARGE

        SECTION 4.1.    Satisfaction and Discharge of Indenture.

        This Indenture shall, upon Company Request, cease to be of further effect (except as to any surviving rights of registration of transfer or exchange of Securities herein expressly provided for and as otherwise provided in this Section 4.1) and the Trustee, on demand of and at the expense of the Company, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture, when

        (a)   either

(i)

all Securities theretofore authenticated and delivered (other than (A) Securities that have been mutilated, destroyed, lost or stolen and that have been replaced or paid as provided in Section 3.6 and (B) Securities for whose payment money has theretofore been deposited in trust or segregated and held in trust by the Company and thereafter repaid to the Company or discharged from such trust as provided in Section 10.2.) have been delivered to the Trustee for cancellation; or



(ii)

all such Securities not theretofore delivered to the Trustee for cancellation

        (A)  have become due and payable, or

        (B)  will become due and payable at their Stated Maturity within one year of the date of deposit, or

        (C)  are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Company,

and the Company, in the case of subclause (ii)(A), (B) or (C) above, has deposited or caused to be deposited with the Trustee as trust funds in trust for such purpose (x) an amount in the currency or currencies in which the Securities are payable, (y) Government Obligations which through the scheduled payment of principal and interest in respect thereof in accordance with their terms will provide, not later than the due date of any payment, money in an amount or (z) a combination thereof, in each case sufficient, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, to pay and discharge the entire indebtedness on such Securities not theretofore delivered to the Trustee for cancellation, for principal and any premium and interest (including any Additional Interest) to the date of such deposit (in the case of Securities that have become due and payable) or to the Stated Maturity (or any date of principal repayment upon early maturity) or Redemption Date, as the case may be;

        (b)   the Company has paid or caused to be paid all other sums payable hereunder by the Company; and

        (c)   the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture have been complied with.

Notwithstanding the satisfaction and discharge of this Indenture, the obligations of the Company to the Trustee under Section 6.6, the obligations of the Company to any Authenticating Agent under Section 6.11 and, if money shall have been deposited with the Trustee pursuant to subclause (a)(ii) of this Section 4.1, the obligations of the Trustee under Section 4.2 and Section 10.2(e) shall survive.

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        SECTION 4.2.    Application of Trust Money.

        Subject to the provisions of Section 10.2(e), all money deposited with the Trustee pursuant to Section 4.1 shall be held in trust and applied by the Trustee, in accordance with the provisions of the Securities and this Indenture, to the payment in accordance with Section 3.1, either directly or through any Paying Agent as the Trustee may determine, to the Persons entitled thereto, of the principal and any premium and interest (including any Additional Interest) for the payment of which such money or obligations have been deposited with or received by the Trustee. Moneys held by the Trustee under this Section 4.2 shall not be subject to the claims of holders of Senior Debt under Article XII.

ARTICLE V

REMEDIES

        SECTION 5.1.    Events of Default.

"Event of Default" means, wherever used herein with respect to the Securities, any one of the following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body):

        (a)   default in the payment of any interest upon any Security, including any Additional Interest in respect thereof, when it becomes due and payable, and continuance of such default for a period of thirty (30) days; or

        (b)   default in the payment of the principal of or any premium on any Security at its Maturity; or

        (c)   default in the performance, or breach, of any covenant or warranty of the Company in this Indenture or the Purchase Agreement and continuance of such default or breach for a period of thirty (30) days after there has been given, by registered or certified mail, to the Company by the Trustee or to the Company and the Trustee by the Holders of at least twenty five percent (25%) in aggregate principal amount of the Outstanding Securities a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a "Notice of Default" hereunder;

        (d)   the entry by a court having jurisdiction in the premises of a decree or order adjudging the Company a bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjustment or composition of or in respect of the Company under any applicable Federal or state bankruptcy, insolvency, reorganization or other similar law, or appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or of any substantial part of its property, or ordering the winding up or liquidation of its affairs, and the continuance of any such decree or order for relief or any such other decree or order unstayed and in effect for a period of sixty (60) consecutive days;

        (e)   the institution by the Company of proceedings to be adjudicated a bankrupt or insolvent, or the consent by the Company to the institution of bankruptcy or insolvency proceedings against it, or the filing by the Company of a petition or answer or consent seeking reorganization or relief under any applicable Federal or state bankruptcy, insolvency, reorganization or other similar law, or the consent by it to the filing of such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or of any substantial part of its property, or the making by it of an assignment for the benefit of creditors, or the admission by it in writing of its inability to pay its debts generally as they become due and its willingness to be adjudicated a bankrupt or insolvent, or the taking of corporate action by the Company in furtherance of any such action; or

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        (f)    the Trust shall have voluntarily or involuntarily liquidated, dissolved, wound-up its business or otherwise terminated its existence, except in connection with (1) the distribution of the Securities to holders of the Preferred Securities in liquidation of their interests in the Trust, (2) the redemption of all of the outstanding Preferred Securities or (3)certain mergers, consolidations or amalgamations, each as and to the extent permitted by the Trust Agreement.

        SECTION 5.2.    Acceleration of Maturity; Rescission and Annulment.

        (a)   If an Event of Default occurs and is continuing, then and in every such case the Trustee or the Holders of not less than twenty five percent (25%) in aggregate principal amount of the Outstanding Securities may declare the principal amount of all the Securities to be due and payable immediately, by a notice in writing to the Company (and to the Trustee if given by Holders), provided, that if, upon an Event of Default, the Trustee or the Holders of not less than twenty five percent (25%) in principal amount of the Outstanding Securities fail to declare the principal of all the Outstanding Securities to be immediately due and payable, the holders of at least twenty five percent (25%) in aggregate Liquidation Amount of the Preferred Securities then outstanding shall have the right to make such declaration by a notice in writing to the Property Trustee, the Company and the Trustee; and upon any such declaration the principal amount of and the accrued interest (including any Additional Interest) on all the Securities shall become immediately due and payable.

        (b)   At any time after such a declaration of acceleration with respect to Securities has been made and before a judgment or decree for payment of the money due has been obtained by the Trustee as hereinafter provided in this Article V, the Holders of a majority in aggregate principal amount of the Outstanding Securities, by written notice to the Indenture Trustee, or the holders of a majority in aggregate Liquidation Amount of the Preferred Securities, by written notice to the Property Trustee, the Company and the Trustee, may rescind and annul such declaration and its consequences if:

(i)

the Company has paid or deposited with the Trustee a sum sufficient to pay:

        (A)  all overdue installments of interest on all Securities,

        (B)  any accrued Additional Interest on all Securities,

        (C)  the principal of and any premium on any Securities that have become due otherwise than by such declaration of acceleration and interest (including any Additional Interest) thereon at the rate borne by the Securities, and

        (D)  all sums paid or advanced by the Trustee hereunder and the reasonable compensation, expenses, disbursements and advances of the Trustee, the Property Trustee and their agents and counsel; and

(ii)

all Events of Default with respect to Securities, other than the non-payment of the principal of Securities that has become due solely by such acceleration, have been cured or waived as provided in Section 5.13;

provided, that if the Holders of such Securities fail to annul such declaration and waive such default, the holders of not less than a majority in aggregate Liquidation Amount of the Preferred Securities then outstanding shall also have the right to rescind and annul such declaration and its consequences by written notice to the Property Trustee, the Company and the Trustee, subject to the satisfaction of the conditions set forth in paragraph (b) of this Section 5.2. No such rescission shall affect any subsequent default or impair any right consequent thereon.

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        SECTION 5.3.    Collection of Indebtedness and Suits for Enforcement by Trustee.

        (a)   The Company covenants that if;

(i)

default is made in the payment of any installment of interest (including any Additional Interest) on any Security when such interest becomes due and payable and such default continues for a period of thirty (30) days, or



(ii)

default is made in the payment of the principal of and any premium on any Security at the Maturity thereof,

the Company will, upon demand of the Trustee, pay to the Trustee, for the benefit of the Holders of such Securities, the whole amount then due and payable on such Securities for principal and any premium and interest (including any Additional Interest) and, in addition thereto, all amounts owing the Trustee under Section 6.6.

        (b)   If the Company fails to pay such amounts forthwith upon such demand, the Trustee, in its own name and as trustee of an express trust, may institute a judicial proceeding for the collection of the sums so due and unpaid, and may prosecute such proceeding to judgment or final decree, and may enforce the same against the Company or any other obligor upon such Securities and collect the moneys adjudged or decreed to be payable in the manner provided by law out of the property of the Company or any other obligor upon the Securities, wherever situated.

        (c)   If an Event of Default with respect to Securities occurs and is continuing, the Trustee may in its discretion proceed to protect and enforce its rights and the rights of the Holders of Securities by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy.

        SECTION 5.4.    Trustee May File Proofs of Claim.

        In case of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or similar judicial proceeding relative to the Company (or any other obligor upon the Securities), its property or its creditors, the Trustee shall be entitled and empowered, by intervention in such proceeding or otherwise, to take any and all actions authorized hereunder in order to have claims of the Holders and the Trustee allowed in any such proceeding. In particular, the Trustee shall be authorized to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official 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 first pay to the Trustee any amount due it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts owing the Trustee, any predecessor Trustee and other Persons under Section 6.6.

        SECTION 5.5.    Trustee May Enforce Claim Without Possession of Securities.

        All rights of action and claims under this Indenture or the Securities may be prosecuted and enforced by the Trustee without the possession of any of the Securities or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall, subject to Article XII and after provision for the payment of all the amounts owing the Trustee, any predecessor Trustee and other Persons under Section 6.6, be for the ratable benefit of the Holders of the Securities in respect of which such judgment has been recovered.

        SECTION 5.6.    Application of Money Collected.

        Any money or property collected or to be applied by the Trustee with respect to the Securities pursuant to this Article V shall be applied in the following order, at the date or dates fixed by the Trustee and, in case of the distribution of such money or property on account of principal or any premium or interest (including any Additional Interest), upon presentation of the Securities and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid:

        FIRST: To the payment of all amounts due the Trustee, any predecessor Trustee and other Persons under Section 6.6;

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        SECOND: To the payment of all Senior Debt of the Company if and to the extent required by Article XII;

        THIRD: Subject to Article XII, to the payment of the amounts then due and unpaid upon the Securities for principal and any premium and interest (including any Additional Interest) in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind, according to the amounts due and payable on the Securities for principal and any premium and interest (including any Additional Interest), respectively; and

        FOURTH: The balance, if any, to the Person or Persons entitled thereto.

        SECTION 5.7.    Limitation on Suits.

        Subject to Section 5.8, no Holder of any Securities shall have any right to institute any proceeding, judicial or otherwise, with respect to this Indenture or for the appointment of a custodian, receiver, assignee, trustee, liquidator, sequestrator (or other similar official) or for any other remedy hereunder, unless:

        (a)   such Holder has previously given written notice to the Trustee of a continuing Event of Default with respect to the Securities;

        (b)   the Holders of not less than a majority in aggregate principal amount of the Outstanding Securities shall have made written request to the Trustee to institute proceedings in respect of such Event of Default in its own name as Trustee hereunder;

        (c)   such Holder or Holders have offered to the Trustee reasonable indemnity against the costs, expenses and liabilities to be incurred in compliance with such request;

        (d)   the Trustee after its receipt of such notice, request and offer of indemnity has failed to institute any such proceeding for sixty (60) days; and

        (e)   no direction inconsistent with such written request has been given to the Trustee during such sixty (60)-day period by the Holders of a majority in aggregate principal amount of the Outstanding Securities;

it being understood and intended that no one or more of such Holders shall have any right in any manner whatever by virtue of, or by availing itself of, any provision of this Indenture to affect, disturb or prejudice the rights of any other Holders of Securities, or to obtain or to seek to obtain priority or preference over any other of such Holders or to enforce any right under this Indenture, except in the manner herein provided and for the equal and ratable benefit of all such Holders.

        SECTION 5.8.    Unconditional Right of Holders to Receive Principal, Premium, if any, and Interest; Direct Action by Holders of Preferred Securities.

        Notwithstanding any other provision in this Indenture, the Holder of any Security shall have the right, which is absolute and unconditional, to receive payment of the principal of and any premium on such Security at its Maturity and payment of interest (including any Additional Interest) on such Security when due and payable and to institute suit for the enforcement of any such payment, and such right shall not be impaired without the consent of such Holder. Any registered holder of the Preferred Securities shall have the right, upon the occurrence of an Event of Default described in Section 5.1(a) or Section 5.1(b), to institute a suit directly against the Company for enforcement of payment to such holder of principal of and any premium and interest (including any Additional Interest) on the Securities having a principal amount equal to the aggregate Liquidation Amount of the Preferred Securities held by such holder.

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        SECTION 5.9.    Restoration of Rights and Remedies.

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

        SECTION 5.10.    Rights and Remedies Cumulative.

        Except as otherwise provided in Section 3.6(f), no right or remedy herein conferred upon or reserved to the Trustee or the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy.

        SECTION 5.11.    Delay or Omission Not Waiver.

        No delay or omission of the Trustee, any Holder of any Securities or any holder of any Preferred Security to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this Article V or by law to the Trustee or to the Holders and the right and remedy given to the holders of Preferred Securities by Section 5.8 may be exercised from time to time, and as often as may be deemed expedient, by the Trustee, the Holders or the holders of Preferred Securities, as the case may be.

        SECTION 5.12.    Control by Holders.

        The Holders of not less than a majority in aggregate principal amount of the Outstanding Securities (or, as the case may be, the holders of a majority in aggregate Liquidation Amount of Preferred Securities) shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee; provided, that:

        (a)   such direction shall not be in conflict with any rule of law or with this Indenture,

        (b)   the Trustee may take any other action deemed proper by the Trustee that is not inconsistent with such direction, and

        (c)   subject to the provisions of Section 6.2, the Trustee shall have the right to decline to follow such direction if a Responsible Officer or Officers of the Trustee shall, in good faith, reasonably determine that the proceeding so directed would be unjustly prejudicial to the Holders not joining in any such direction or would involve the Trustee in personal liability.

        SECTION 5.13.    Waiver of Past Defaults.

        (a)   The Holders of not less than a majority in aggregate principal amount of the Outstanding Securities or the holders of not less than a majority in aggregate Liquidation Amount of the Preferred Securities may waive any past Event of Default hereunder and its consequences except an Event of Default:

(i)

in the payment of the principal of or any premium or interest (including any Additional Interest) on any Outstanding Security (unless such Event of Default has been cured and the Company has paid to or deposited with the Trustee a sum sufficient to pay all installments of interest (including any Additional Interest) due and past due and all principal of and any premium on all Securities due otherwise than by acceleration), or



(ii)

in respect of a covenant or provision hereof that under Article IX cannot be modified or amended without the consent of each Holder of any Outstanding Security.

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        (b)   Any such waiver shall be deemed to be on behalf of the Holders of all the Outstanding Securities or, in the case of a waiver by holders of Preferred Securities issued by such Trust, by all holders of Preferred Securities.

        (c)   Upon any such waiver, such Event of 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 Event of Default or impair any right consequent thereon.

        SECTION 5.14.    Undertaking for Costs.

        All parties to this Indenture agree, and each Holder of any Security by his or her acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken or omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys' fees and expenses, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this Section 5.14 shall not apply to any suit instituted by the Trustee, to any suit instituted by any Holder, or group of Holders, holding in the aggregate more than ten percent (10%) in aggregate principal amount of the Outstanding Securities, or to any suit instituted by any Holder for the enforcement of the payment of the principal of or any premium on the Security after the Stated Maturity or any interest (including any Additional Interest) on any Security after it is due and payable.

        SECTION 5.15.    Waiver of Usury, Stay or Extension Laws.

        The Company covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any usury, stay or extension law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Indenture; and the Company (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted.

ARTICLE VI

THE TRUSTEE

        SECTION 6.1.    Corporate Trustee Required.

        There shall at all times be a Trustee hereunder with respect to the Securities. The Trustee shall be a corporation or a national banking association organized and doing business under the laws of the United States or of any state thereof, authorized to exercise corporate trust powers, having a combined capital and surplus of at least $50,000,000, subject to supervision or examination by Federal or state authority and having an office within the United States. If such entity publishes reports of condition at least annually, pursuant to law or to the requirements of such supervising or examining authority, then, for the purposes of this Section 6.1, the combined capital and surplus of such entity shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section 6.1, it shall resign immediately in the manner and with the effect hereinafter specified in this Article VI.

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        SECTION 6.2.    Certain Duties and Responsibilities.

        Except during the continuance of an Event of Default:

(i)

the Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and



(ii)

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; provided, that in the case of any such certificates or opinions that by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they substantially conform on their face to the requirements of this Indenture.

        (b)   If an Event of Default known to the Trustee has occurred and is continuing, the Trustee shall, prior to the receipt of directions, if any, from the Holders of at least a majority in aggregate principal amount of the Outstanding Securities (or, if applicable, from the holders of at least a majority in aggregate Liquidation Amount of Preferred Securities), 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.

        (c)   Notwithstanding the foregoing, no provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. Whether or not therein expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section 6.2. To the extent that, at law or in equity, the Trustee has duties and liabilities relating to the Holders, the Trustee shall not be liable to any Holder or any holder of Preferred Securities for the Trustee's good faith reliance on the provisions of this Indenture. The provisions of this Indenture, to the extent that they restrict the duties and liabilities of the Trustee otherwise existing at law or in equity, are agreed by the Company and the Holders and the holders of Preferred Securities to replace such other duties and liabilities of the Trustee.

        (d)   No provisions of this Indenture shall be construed to relieve the Trustee from liability with respect to matters that are within the authority of the Trustee under this Indenture for its own negligent action, negligent failure to act or willful misconduct, except that:

(i)

the Trustee shall not be liable for any error or judgment made in good faith by an authorized officer of the Trustee, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts;



(ii)

the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of at least a majority in aggregate principal amount of the Outstanding Securities (or, as the case may be, the holders of a majority in aggregate Liquidation Amount of Preferred Securities); and



(iii)

the Trustee shall be under no liability for interest on any money received by it hereunder except as otherwise agreed in writing with the Company and money held by the Trustee in trust hereunder need not be segregated from other funds except to the extent required by law.

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        (e)   If at any time the Trustee hereunder is not the same Person as the Property Trustee under the Trust Agreement:

(i)

whenever a reference is made herein to the dissolution, termination or liquidation of the Trust, the Trustee shall be entitled to assume that no such dissolution, termination, or liquidation has occurred so long as the Securities are or continue to be registered in the name of such Property Trustee, and the Trustee shall be charged with notice or knowledge of such dissolution, termination or liquidation only upon written notice thereof given to the Trustee by the Depositor under the Trust Agreement; and



(ii)

the Trustee shall not be charged with notice or knowledge that any Person is a holder of Preferred Securities or Common Securities issued by the Trust or whether any group of holders of Preferred Securities constitutes any specified percentage of all outstanding Preferred Securities for any purpose under this Indenture, unless and until the Trustee is furnished with a list of holders by such Property Trustee and the aggregate Liquidation Amount of the Preferred Securities then outstanding. The Trustee may conclusively rely and shall be protected in relying on such list.

        (f)    Notwithstanding Section 1.10, the Trustee shall not, and shall not be deemed to, owe any fiduciary duty to the holders of any of the Trust Securities issued by the Trust and shall not be liable to any such holder (other than for the willful misconduct or negligence of the Trustee) if the Trustee in good faith (i) pays over or distributes to a registered Holder of the Securities or to the Company or to any other Person, cash, property or securities to which such holders of such Trust Securities shall be entitled or (ii) takes any action or omits to take any action at the request of the Holder of such Securities. Nothing in this paragraph shall affect the obligation of any other such Person to hold such payment for the benefit of, and to pay such amount over to, such holders of Preferred Securities or Common Securities or their representatives.

        SECTION 6.3.    Notice of Defaults.

        Within ninety (90) days after the occurrence of any default actually known to the Trustee, the Trustee shall give the Holders notice of such default unless such default shall have been cured or waived; provided, that except in the case of a default in the payment of the principal of or any premium or interest on any Securities, the Trustee shall be fully protected in withholding the notice if and so long as the board of directors, the executive committee or a trust committee of directors and/or Responsible Officers of the Trustee in good faith determines that withholding the notice is in the interest of holders of Securities; and provided, further, that in the case of any default of the character specified in Section 5.1(c), no such notice to Holders shall be given until at least thirty (30) days after the occurrence thereof. For the purpose of this Section 6.3, the term "default" means any event which is, or after notice or lapse of time or both would become, an Event of Default.

        SECTION 6.4.    Certain Rights of Trustee.

        Subject to the provisions of Section 6.2:

        (a)   the Trustee may conclusively rely and shall be fully protected in acting or refraining from acting in good faith and in accordance with the terms hereof upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties;

        (b)   if (i) in performing its duties under this Indenture the Trustee is required to decide between alternative courses of action, (ii) in construing any of the provisions of this Indenture the Trustee finds ambiguous or inconsistent with any other provisions contained herein or (iii) the Trustee is unsure of the application of any provision of this Indenture, then, except as to any matter as to which the

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Holders are entitled to decide under the terms of this Indenture, the Trustee shall deliver a notice to the Company requesting the Company's written instruction as to the course of action to be taken and the Trustee shall take such action, or refrain from taking such action, as the Trustee shall be instructed in writing to take, or to refrain from taking, by the Company; provided, that if the Trustee does not receive such instructions from the Company within ten Business Days after it has delivered such notice or such reasonably shorter period of time set forth in such notice the Trustee may, but shall be under no duty to, take such action, or refrain from taking such action, as the Trustee shall deem advisable and in the best interests of the Holders, in which event the Trustee shall have no liability except for its own negligence, bad faith or willful misconduct;

        (c)   any request or direction of the Company shall be sufficiently evidenced by a Company Request or Company Order and any resolution of the Board of Directors may be sufficiently evidenced by a Board Resolution;

        (d)   the Trustee may consult with counsel (which counsel may be counsel to the Trustee, the Company or any of its Affiliates, and may include any of its employees) and the advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon;

        (e)   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 or any holder of Preferred Securities pursuant to this Indenture, unless such Holders (or such holders of Preferred Securities) shall have offered to the Trustee security or indemnity reasonably satisfactory to it against the costs, expenses (including reasonable attorneys' fees and expenses) and liabilities that might be incurred by it in compliance with such request or direction, including reasonable advances as may be requested by the Trustee;

        (f)    the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, indenture, note or other paper or document, but the Trustee in its discretion may make such inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such inquiry or investigation, it shall be entitled to examine the books, records and premises of the Company, personally or by agent or attorney;

        (g)   the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents, attorneys, custodians or nominees and the Trustee shall not be responsible for any misconduct or negligence on the part of any such agent, attorney, custodian or nominee appointed with due care by it hereunder;

        (h)   whenever in the administration of this Indenture the Trustee shall deem it desirable to receive instructions with respect to enforcing any remedy or right or taking any other action with respect to enforcing any remedy or right hereunder, the Trustees (i) may request instructions from the Holders (which instructions may only be given by the Holders of the same aggregate principal amount of Outstanding Securities as would be entitled to direct the Trustee under this Indenture in respect of such remedy, right or action), (ii) may refrain from enforcing such remedy or right or taking such action until such instructions are received and (iii) shall be protected in acting in accordance with such instructions;

        (i)    except as otherwise expressly provided by this Indenture, the Trustee shall not be under any obligation to take any action that is discretionary under the provisions of this indenture;

        (j)    without prejudice to any other rights available to the Trustee under applicable law, when the Trustee incurs expenses or renders services in connection with any bankruptcy, insolvency or other proceeding referred to in clauses (d) or (e) of the definition of Event of Default, such expenses (including legal fees and expenses of its agents and counsel) and the compensation for such services are

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intended to constitute expenses of administration under any bankruptcy laws or law relating to creditors rights generally;

        (k)   whenever in the administration of this Indenture the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, conclusively rely upon an Officers' Certificate addressing such matter, which, upon receipt of such request, shall be promptly delivered by the Company;

        (l)    the Trustee shall not be charged with knowledge of any Event of Default unless either (i) a Responsible Officer of the Trustee shall have actual knowledge or (ii) the Trustee shall have received written notice thereof from the Company or a Holder; and

        (m)  in the event that the Trustee is also acting as Paying Agent, Authenticating Agent or Securities Registrar hereunder, the rights and protections afforded to the Trustee pursuant to this Article VI shall also be afforded such Paying Agent, Authenticating Agent, or Securities Registrar.

        SECTION 6.5.    May Hold Securities.

        The Trustee, any Authenticating Agent, any Paying Agent, any Securities Registrar or any other agent of the Company, in its individual or any other capacity, may become the owner or pledgee of Securities and may otherwise deal with the Company with the same rights it would have if it were not Trustee, Authenticating Agent, Paying Agent, Securities Registrar or such other agent.

        SECTION 6.6.    Compensation; Reimbursement; Indemnity.

        (a)   The Company agrees:

(i)

to pay to the Trustee from time to time reasonable compensation for all services rendered by it hereunder in such amounts as the Company and the Trustee shall agree from time to time (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust);



(ii)

to reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by the Trustee in accordance with any provision of this Indenture (including the reasonable compensation and the expenses and disbursements of its agents and counsel), except any such expense, disbursement or advance as may be attributable to its negligence, bad faith or willful misconduct; and



(iii)

to the fullest extent permitted by applicable law, to indemnify the Trustee and its Affiliates, and their officers, directors, shareholders, agents, representatives and employees for, and to hold them harmless against, any loss, damage, liability, tax (other than income, franchise or other taxes imposed on amounts paid pursuant to (i) or (ii) hereof), penalty, expense or claim of any kind or nature whatsoever incurred without negligence, bad faith or willful misconduct on its part arising out of or in connection with the acceptance or administration of this trust or the performance of the Trustee's duties hereunder, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder.

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        (b)   To secure the Company's payment obligations in this Section 6.6, the Company hereby grants and pledges to the Trustee and the Trustee shall have a lien prior to the Securities on all money or property held or collected by the Trustee, other than money or property held in trust to pay principal and interest on particular Securities. Such lien shall survive the satisfaction and discharge of this Indenture or the resignation or removal of the Trustee.

        (c)   The obligations of the Company under this Section 6.6 shall survive the satisfaction and discharge of this Indenture and the earlier resignation or removal of the Trustee.

        (d)   In no event shall the Trustee be liable for any indirect, special, punitive or consequential loss or damage of any kind whatsoever, including, but not limited to, lost profits, even if the Trustee has been advised of the likelihood of such loss or damage and regardless of the form of action.

        (e)   In no event shall the Trustee be liable for any failure or delay in the performance of its obligations hereunder because of circumstances beyond its control, including, but not limited to, acts of God, flood, war (whether declared or undeclared), terrorism, fire, riot, embargo, government action, including any laws, ordinances, regulations, governmental action or the like which delay, restrict or prohibit the providing of the services contemplated by this Indenture.

        SECTION 6.7.    Resignation and Removal; Appointment of Successor.

        (a)   No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article VI shall become effective until the acceptance of appointment by the successor Trustee under Section 6.8.

        (b)   The Trustee may resign at any time by giving written notice thereof to the Company.

        (c)   Unless an Event of Default shall have occurred and be continuing, the Trustee may be removed at any time by the Company by a Board Resolution. If an Event of Default shall have occurred and be continuing, the Trustee may be removed by Act of the Holders of a majority in aggregate principal amount of the Outstanding Securities, delivered to the Trustee and to the Company.

        (d)   If the Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Trustee for any reason, at a time when no Event of Default shall have occurred and be continuing, the Company, by a Board Resolution, shall promptly appoint a successor Trustee, and such successor Trustee and the retiring Trustee shall comply with the applicable requirements of Section 6.8. If the Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Trustee for any reason, at a time when an Event of Default shall have occurred and be continuing, the Holders, by Act of the Holders of a majority in aggregate principal amount of the Outstanding Securities, shall promptly appoint a successor Trustee, and such successor Trustee and the retiring Trustee shall comply with the applicable requirements of Section 6.8. If no successor Trustee shall have been so appointed by the Company or the Holders and accepted appointment within sixty (60) days after the giving of a notice of resignation by the Trustee or the removal of the Trustee in the manner required by Section 6.8, any Holder who has been a bona fide Holder of a Security for at least six months (or, if the Securities have been Outstanding for less than six (6) months, the entire period of such lesser time) may, on behalf of such Holder and all others similarly situated, and any resigning Trustee may, at the expense of the Company, petition any court of competent jurisdiction for the appointment of a successor Trustee.

        (e)   The Company shall give notice to all Holders in the manner provided in Section 1.6 of each resignation and each removal of the Trustee and each appointment of a successor Trustee. Each notice shall include the name of the successor Trustee and the address of its Corporate Trust Office.

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        SECTION 6.8.    Acceptance of Appointment by Successor.

        (a)   In case of the appointment hereunder of a successor Trustee, each successor Trustee so appointed shall execute, acknowledge and deliver to the Company and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee; but, on the request of the Company or the successor Trustee, such retiring Trustee shall, upon payment of its charges, execute and deliver an instrument transferring to such successor Trustee all the rights, powers and trusts of the retiring Trustee and shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder.

        (b)   Upon request of any such successor Trustee, the Company shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Trustee all rights, powers and trusts referred to in paragraph (a) of this Section 6.8.

        (c)   No successor Trustee shall accept its appointment unless at the time of such acceptance such successor Trustee shall be qualified and eligible under this Article VI.

        SECTION 6.9.    Merger, Conversion, Consolidation or Succession to Business.

        Any Person into which the Trustee may be merged or converted or with which it may be consolidated, or any Person resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any Person succeeding to all or substantially all of the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, without the execution or filing of any paper or any further act on the part of any of the parties hereto, provided, that such Person shall be otherwise qualified and eligible under this Article VI. In case any Securities shall have been authenticated, but not delivered, by the Trustee then in office, any successor by merger, conversion or consolidation or as otherwise provided above in this Section 6.9 to such authenticating Trustee may adopt such authentication and deliver the Securities so authenticated, and in case any Securities shall not have been authenticated, any successor to the Trustee may authenticate such Securities either in the name of any predecessor Trustee or in the name of such successor Trustee, and in all cases the certificate of authentication shall have the full force which it is provided anywhere in the Securities or in this Indenture that the certificate of the Trustee shall have.

        SECTION 6.10.    Not Responsible for Recitals or Issuance of Securities.

        The recitals contained herein and in the Securities, except the Trustee's certificates of authentication, shall be taken as the statements of the Company, and neither the Trustee nor any Authenticating Agent assumes any responsibility for their correctness. The Trustee makes no representations as to the validity or sufficiency of this Indenture or of the Securities. Neither the Trustee nor any Authenticating Agent shall be accountable for the use or application by the Company of the Securities or the proceeds thereof.

        SECTION 6.11.    Appointment of Authenticating Agent.

        (a)   The Trustee may appoint an Authenticating Agent or Agents with respect to the Securities, which shall be authorized to act on behalf of the Trustee to authenticate Securities issued upon original issue and upon exchange, registration of transfer or partial redemption thereof or pursuant to Section 3.6, and Securities so authenticated shall be entitled to the benefits of this Indenture and shall be valid and obligatory for all purposes as if authenticated by the Trustee hereunder. Wherever reference is made in this Indenture to the authentication and delivery of Securities by the Trustee or the Trustee's certificate of authentication, such reference shall be deemed to include authentication and delivery on behalf of the Trustee by an Authenticating Agent. Each Authenticating Agent shall be acceptable to the Company and shall at all times be a corporation organized and doing business under

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the laws of the United States of America, or of any State or Territory thereof or the District of Columbia, authorized trader such laws to act as Authenticating Agent, having a combined capital and surplus of not less than $50,000,000 and subject to supervision or examination by Federal or state authority. If such Authenticating Agent publishes reports of condition at least annually pursuant to law or to the requirements of said supervising or examining authority, then for the purposes of this Section 6.11 the combined capital and surplus of such Authenticating Agent shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time an Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section 6.11, such Authenticating Agent shall resign immediately in the manner and with the effect specified in this Section 6.11.

        (b)   Any Person into which an Authenticating Agent may be merged or converted or with which it may be consolidated, or any Person resulting from any merger, conversion or consolidation to which such Authenticating Agent shall be a party, or any Person succeeding to all or substantially all of the corporate trust business of an Authenticating Agent shall be the successor Authenticating Agent hereunder, provided such Person shall be otherwise eligible under this Section 6.11, without the execution or filing of any paper or any further act on the part of the Trustee or the Authenticating Agent.

        (c)   An Authenticating Agent may resign at any time by giving written notice thereof to the Trustee and to the Company. The Trustee may at any time terminate the agency of an Authenticating Agent by giving written notice thereof to such Authenticating Agent and to the Company. Upon receiving such a notice of resignation or upon such a termination, or in case at any time such Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section 6.11, the Trustee may appoint a successor Authenticating Agent eligible under the provisions of this Section 6.11, which shall be acceptable to the Company, and shall give notice of such appointment to all Holders. Any successor Authenticating Agent upon acceptance of its appointment hereunder shall become vested with all the rights, powers and duties of its predecessor hereunder, with like effect as if originally named as an Authenticating Agent.

        (d)   The Company agrees to pay to each Authenticating Agent from time to time reasonable compensation for its services under this Section 6.11 in such amounts as the Company and the Authenticating Agent shall agree from time to time.

        (e)   If an appointment of an Authenticating Agent is made pursuant to this Section 6.11, the Securities may have endorsed thereon, in addition to the Trustee's certificate of authentication, an alternative certificate of authentication in the following form:

        This is one of the Securities referred to in the within mentioned Indenture.

Dated:
	JPMORGAN CHASE BANK, NATIONAL ASSOCIATION, as Trustee
	By:	Authenticating Agent
	By:	Authorized Signatory

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ARTICLE VII

HOLDER'S LISTS AND REPORTS BY COMPANY

        SECTION 7.1.    Company to Furnish Trustee Names and Addresses of Holders.

        The Company will furnish or cause to be furnished to the Trustee:

        (a)   semiannually, on or before June 30 and December 31 of each year, a list, in such form as the Trustee may reasonably require, of the names and addresses of the Holders as of a date not more than fifteen (15) days prior to the delivery thereof, and

        (b)   at such other times as the Trustee may request in writing, within thirty (30) days after the receipt by the Company of any such request, a list of similar form and content as of a date not more than fifteen (15) days prior to the time such list is furnished, in each case to the extent such information is in the possession or control of the Company and has not otherwise been received by the Trustee in its capacity as Securities Registrar.

        SECTION 7.2.    Preservation of Information, Communications to Holders.

        (a)   The Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of Holders contained in the most recent list furnished to the Trustee as provided in Section 7.1 and the names and addresses of Holders received by the Trustee in its capacity as Securities Registrar. The Trustee may destroy any list furnished to it as provided in Section 7.1 upon receipt of a new list so furnished.

        (b)   The rights of Holders to communicate with other Holders with respect to their rights under this Indenture or under the Securities, and the corresponding rights and privileges of the Trustee, shall be as provided in the Trust Indenture Act.

        (c)   Every Holder of Securities, by receiving and holding the same, agrees with the Company and the Trustee that neither the Company nor the Trustee nor any agent of either of them shall be held accountable by reason of the disclosure of information as to the names and addresses of the Holders made pursuant to the Trust Indenture Act.

        SECTION 7.3.    Reports by Company.

        (a)   The Company shall furnish to the Holders and to prospective purchasers of Securities, upon their request, the information required to be furnished pursuant to Rule 144A(d)(4) under the Securities Act. The delivery requirement set forth in the preceding sentence may be satisfied by compliance with Section 7.3(b) hereof.

        (b)   The Company shall furnish to each of (i) the Trustee, (ii) the Holders and to subsequent holders of Securities, (iii) Taberna Capital Management, LLC at 450 Park Avenue, New York, New York 10022, Attn: Thomas Bogal (or such other address as designated by Taberna Capital Management, LLC) and (iv) any beneficial owner of the Securities reasonably identified to the Company (which identification may be made either by such beneficial owner or by Taberna Capital Management, LLC), a duly completed and executed certificate substantially and substantively in the form attached hereto as Exhibit A, including the financial statements referenced in such Exhibit, which certificate and financial statements shall be so furnished by the Company not later than forty-five (45) days after the end of each of the first three fiscal quarters of each fiscal year of the Company and not later than ninety (90) days after the end of each fiscal year of the Company. The delivery requirements under this Section 7.3(b) may be satisfied by compliance with Section 8.16(b) of the Trust Agreement.

        (c)   If the Company intends to file its annual and quarterly information with the Securities and Exchange Commission (the "Commission") in electronic form pursuant to Regulation S-T of the Commission using the Commission's Electronic Data Gathering, Analysis and Retrieval ("EDGAR")

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system, the Company shall notify the Trustee in the manner prescribed herein of each such annual and quarterly filing. The Trustee is hereby authorized and directed to access the EDGAR system for purposes of retrieving the financial information so filed. Compliance with the foregoing shall constitute delivery by the Company of its financial statements to the Trustee in compliance with the provisions of Section 314(a) of the Trust Indenture Act, if applicable. The Trustee shall have no duty to search for or obtain any electronic or other filings that the Company makes with the Commission, regardless of whether such filings are periodic, supplemental or otherwise. Delivery of reports, information and documents to the Trustee pursuant to this Section 7.3(c) shall be solely for purposes of compliance with this Section 7.3(c) and, if applicable, with Section 314(a) of the Trust Indenture Act. The Trustee's receipt of such reports, information and documents shall not constitute notice to it of the content thereof or any matter determinable from the content thereof, including the Company's compliance with any of its covenants hereunder, as to which the Trustee is entitled to rely upon Officers' Certificates.

ARTICLE VIII

CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE

        SECTION 8.1.    Company May Consolidate, Etc., Only on Certain Terms.

        The Company shall not consolidate with or merge into any other Person or convey, transfer or lease its properties and assets substantially as an entirety to any Person, and no Person shall consolidate with or merge into the Company or convey, transfer or lease its properties and assets substantially as an entirety to the Company, unless:

        (a)   if the Company shall consolidate with or merge into another Person or convey, transfer or lease its properties and assets substantially as an entirety to any Person, the entity formed by such consolidation or into which the Company is merged or the Person that acquires by conveyance or transfer, or that leases, the properties and assets of the Company substantially as an entirety shall be an entity organized and existing under the laws of the United States of America or any State or Territory thereof or the District of Columbia and shall expressly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, in form reasonably satisfactory to the Trustee, the due and punctual payment of the principal of and any premium and interest (including any Additional Interest) on all the Securities and the performance of every covenant of this Indenture on the part of the Company to be performed or observed;

        (b)   immediately after giving effect to such transaction, no Event of Default, and no event that, after notice or lapse of time, or both, would constitute an Event of Default, shall have happened and be continuing; and

        (c)   the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that such consolidation, merger, conveyance, transfer or lease and, if a supplemental indenture is required in connection with such transaction, any such supplemental indenture comply with this Article VIII and that all conditions precedent herein provided for relating to such transaction have been complied with; and the Trustee may rely upon such Officers' Certificate and Opinion of Counsel as conclusive evidence that such transaction complies with this Section 8.1.

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        SECTION 8.2.    Successor Company Substituted.

        (a)   Upon any consolidation or merger by the Company with or into any other Person, or any conveyance, transfer or lease by the Company of its properties and assets substantially as an entirety to any Person in accordance with Section 8.1 and the execution and delivery to the Trustee of the supplemental indenture described in Section 8.1 (a), the successor entity formed by such consolidation or into which the Company is merged or to which such conveyance, transfer or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture with the same effect as if such successor Person had been named as the Company herein; and in the event of any such conveyance or transfer, following the execution and delivery of such supplemental indenture, the Company shall be discharged from all obligations and covenants under the Indenture and the Securities.

        (b)   Such successor Person may cause to be executed, and may issue either in its own name or in the name of the Company, any or all of the Securities issuable hereunder that theretofore shall not have been signed by the Company and delivered to the Trustee; and, upon the order of such successor Person instead of the Company and subject to all the terms, conditions and limitations in this Indenture prescribed, the Trustee shall authenticate and shall deliver any Securities that previously shall have been signed and delivered by the officers of the Company to the Trustee for authentication, and any Securities that such successor Person thereafter shall cause to be executed and delivered to the Trustee on its behalf. All the Securities so issued shall in all respects have the same legal rank and benefit under this Indenture as the Securities theretofore or thereafter issued in accordance with the terms of this Indenture.

        (c)   In case of any such consolidation, merger, sale, conveyance or lease, such changes in phraseology and form may be made in the Securities thereafter to be issued as may be appropriate to reflect such occurrence.

ARTICLE IX

SUPPLEMENTAL INDENTURES

        SECTION 9.1.    Supplemental Indentures without Consent of Holders.

        Without the consent of any Holders, the Company, when authorized by a Board Resolution, and the Trustee, at any time and from time to time, may enter into one or more indentures supplemental hereto, in form reasonably satisfactory to the Trustee, for any of the following purposes:

        (a)   to evidence the succession of another Person to the Company, and the assumption by any such successor of the covenants of the Company herein and in the Securities; or

        (b)   to evidence and provide for the acceptance of appointment hereunder by a successor trustee; or

        (c)   to cure any ambiguity, to correct or supplement any provision herein that may be defective or inconsistent with any other provision herein, or to make or amend any other provisions with respect to matters or questions arising under this Indenture, which shall not be inconsistent with the other provisions of this Indenture, provided, that such action pursuant to this clause (b) shall not adversely affect in any material respect the interests of any Holders or the holders of the Preferred Securities; or

        (d)   to comply with the rules and regulations of any securities exchange or automated quotation system on which any of the Securities may be listed, traded or quoted; or

        (e)   to add to the covenants, restrictions or obligations of the Company or to add to the Events of Default, provided,that such action pursuant to this clause (c) shall not adversely affect in any material respect the interests of any Holders or the holders of the Preferred Securities; or

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        (f)    to modify, eliminate or add to any provisions of the Indenture or the Securities to such extent as shall be necessary to ensure that the Securities are treated as indebtedness of the Company for United States Federal income tax purposes, provided,that such action pursuant to this clause (d) shall not adversely affect in any material respect the interests of any Holders or the holders of the Preferred Securities.

        SECTION 9.2.    Supplemental Indentures with Consent of Holders.

        (a)   Subject to Section 9.1, with the consent of the Holders of not less than a majority in aggregate principal amount of the Outstanding Securities, by Act of said Holders delivered to the Company and the Trustee, the Company, when authorized by a Board Resolution, and the Trustee may enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of modifying in any manner the rights of the Holders of Securities under this Indenture; provided, that no such supplemental indenture shall, without the consent of the Holder of each Outstanding Security,

(i)

change the Stated Maturity of the principal or any premium of any Security or change the date of payment of any installment of interest (including any Additional Interest) on any Security, or reduce the principal amount thereof or the rate of interest thereon or any premium payable upon the redemption thereof or change the place of payment where, or the coin or currency in which, any Security or interest thereon is payable, or restrict or impair the right to institute suit for the enforcement of any such payment on or after such date, or



(ii)

reduce the percentage in aggregate principal amount of the Outstanding Securities, the consent of whose Holders is required for any such supplemental indenture, or the consent of whose Holders is required for any waiver of compliance with any provision of this Indenture or of defaults hereunder and their consequences provided for in this Indenture, or



(iii)

modify any of the provisions of this Section 9.2, Section 5.13 or Section 10.7, except to increase any percentage in aggregate principal amount of the Outstanding Securities, the consent of whose Holders is required for any reason, or to provide that certain other provisions of this Indenture cannot be modified or waived without the consent of the Holder of each Security;

provided, further, that, so long as any Preferred Securities remain outstanding, no amendment under this Section 9.2 shall be effective until the holders of a majority in Liquidation Amount of the Preferred Securities shall have consented to such amendment; provided, further, that if the consent of the Holder of each Outstanding Security is required for any amendment under this Indenture, such amendment shall not be effective until the holder of each Outstanding Preferred Security shall have consented to such amendment.

        (b)   It shall not be necessary for any Act of Holders under this Section 9.2 to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such Act shall approve the substance thereof.

        SECTION 9.3.    Execution of Supplemental Indentures.

        In executing or accepting the additional trusts created by any supplemental indenture permitted by this Article IX or the modifications thereby of the trusts created by this Indenture, the Trustee shall be entitled to receive, and shall be fully protected in conclusively relying upon, an Officers' Certificate and an Opinion of Counsel stating that the execution of such supplemental indenture is authorized or permitted by this Indenture, and that all conditions precedent herein provided for relating to such action have been complied with. The Trustee may, but shall not be obligated to, enter into any such supplemental indenture that affects the Trustee's own rights, duties, indemnities or immunities under this Indenture or otherwise. Copies of the final form of each supplemental indenture shall be delivered

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by the Trustee at the expense of the Company to each Holder, and, if the Trustee is the Property Trustee, to each holder of Preferred Securities, promptly after the execution thereof.

        SECTION 9.4.    Effect of Supplemental Indentures.

        Upon the execution of any supplemental indenture under this Article IX, this Indenture shall be modified in accordance therewith, and such supplemental indenture shall form a part of this Indenture for all purposes; and every Holder of Securities and every holder of Preferred Securities theretofore or thereafter authenticated and delivered hereunder shall be bound thereby.

        SECTION 9.5.    Reference in Securities to Supplemental Indentures.

        Securities authenticated and delivered after the execution of any supplemental indenture pursuant to this Article IX may, and shall if required by the Company, bear a notation in form approved by the Company as to any matter provided for in such supplemental indenture. If the Company shall so determine, new Securities so modified as to conform, in the opinion of the Company, to any such supplemental indenture may be prepared and executed by the Company and authenticated and delivered by the Trustee in exchange for Outstanding Securities.

ARTICLE X

COVENANTS

        SECTION 10.1.    Payment of Principal, Premium, if any, and Interest.

        The Company covenants and agrees for the benefit of the Holders of the Securities that it will duly and punctually pay the principal of and any premium and interest (including any Additional Interest) on the Securities in accordance with the terms of the Securities and this Indenture.

        SECTION 10.2.    Money for Security Payments to be Held in Trust.

        (a)   Whenever the Company shall have one or more Paying Agents, it will, prior to 10:00 a.m., New York City time, on each due date of the principal of or any premium or interest (including any Additional Interest) on any Securities, deposit with such Paying Agent a sum sufficient to pay such amount, such sum to be held as provided in the Trust Indenture Act and (unless such Paying Agent is the Trustee) the Company will promptly notify the Trustee of its failure to so act.

        (b)   The Company will cause each Paying Agent for the Securities other than the Trustee to execute and deliver to the Trustee an instrument in which such Paying Agent shall agree with the Trustee, subject to the provisions of this Section 10.2, that such Paying Agent will (i) comply with the provisions of this Indenture and the Trust Indenture Act applicable to it as a Paying Agent and (ii) during the continuance of any default by the Company (or any other obligor upon the Securities) in the making of any payment in respect of the Securities, upon the written request of the Trustee, forthwith pay to the Trustee all sums held in trust by such Paying Agent for payment in respect of the Securities.

        (c)   The Company may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, pay, or by Company Order direct any Paying Agent to pay, to the Trustee all sums held in trust by the Company or such Paying Agent, such sums to be held by the Trustee upon the same trusts as those upon which such sums were held by the Company or such Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with respect to such money.

        (d)   Any money deposited with the Trustee or any Paying Agent for the payment of the principal of and any premium or interest (including any Additional Interest) on any Security and remaining unclaimed for two years after such principal and any premium or interest has become due and payable

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shall (unless otherwise required by mandatory provision of applicable escheat or abandoned or unclaimed property law) be paid on Company Request to the Company, or (if then held by the Company) shall (unless otherwise required by mandatory provision of applicable escheat or abandoned or unclaimed property law) be discharged from such trust; and the Holder of such Security shall thereafter, as an unsecured general creditor, look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, shall thereupon cease; provided, that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Company cause to be published once, in a newspaper published in the English language, customarily published on each Business Day and of general circulation in the Borough of Manhattan, The City of New York, notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than thirty (30) days from the date of such publication, any unclaimed balance of such money then remaining will be repaid to the Company.

        SECTION 10.3.    Statement as to Compliance.

        The Company shall deliver to the Trustee, within one hundred and twenty (120) days after the end of each fiscal year of the Company ending after the date hereof, an Officers' Certificate covering the preceding calendar year, stating whether or not to the knowledge of the signers thereof the Company is in default in the performance or observance of any of the terms, provisions and conditions of this Indenture (without regard to any period of grace or requirement of notice provided hereunder), and if the Company shall be in default, specifying all such defaults and the nature and status thereof of which they may have knowledge. The delivery requirements of this Section 10.3 may be satisfied by compliance with Section 8.16(a) of the Trust Agreement.

        SECTION 10.4.    Calculation Agent.

        (a)   The Company hereby agrees that for so long as any of the Securities remain Outstanding, there will at all times be an agent appointed to calculate LIBOR in respect of each Interest Payment Date in accordance with the terms of Schedule A (the "Calculation Agent"). The Company has initially appointed the Property Trustee as Calculation Agent for purposes of determining LIBOR for each Interest Payment Date. The Calculation Agent may be removed by the Company at any time. Notwithstanding the foregoing, so long as the Property Trustee holds any of the Securities, the Calculation Agent shall be the Property Trustee. If the Calculation Agent is unable or unwilling to act as such or is removed by the Company, the Company will promptly appoint as a replacement Calculation Agent the London office of a leading bank which is engaged in transactions in Eurodollar deposits in the international Eurodollar market and which does not control or is not controlled by or under common control with the Company or its Affiliates. The Calculation Agent may not resign its duties without a successor having been duly appointed.

        (b)   The Calculation Agent shall be required to agree that, as soon as possible after 11:00 a.m. (London time) on each LIBOR Determination Date (as defined in Schedule A), but in no event later than 11:00 a.m. (London time) on the Business Day immediately following each LIBOR Determination Date, the Calculation Agent will calculate the interest rate (the Interest Payment shall be rounded to the nearest cent, with half a cent being rounded upwards) for the related Interest Payment Date, and will communicate such rate and amount to the Company, the Trustee, each Paying Agent and the Depositary. The Calculation Agent will also specify to the Company the quotations upon which the foregoing rates and amounts are based and, in any event, the Calculation Agent shall notify the Company before 5:00 p.m. (London time) on each LIBOR Determination Date that either: (i) it has determined or is in the process of determining the foregoing rates and amounts or (ii) it has not determined and is not in the process of determining the foregoing rates and amounts, together with its reasons therefor. The Calculation Agent's determination of the foregoing rates and amounts for any Interest Payment Date will (in the absence of manifest error) be final and binding upon all parties. For

44

the sole purpose of calculating the interest rate for the Securities, "Business Day" shall be defined as any day on which dealings in deposits in Dollars are transacted in the London interbank market.

        SECTION 10.5.    Additional Tax Sums.

        So long as no Event of Default has occurred and is continuing, if (a) the Trust is the Holder of all of the Outstanding Securities and (b) a Tax Event described in clause (i) or (iii) in the definition of Tax Event in Section 1.1 hereof has occurred and is continuing, the Company shall pay to the Trust (and its permitted successors or assigns under the related Trust Agreement) for so long as the Trust (or its permitted successor or assignee) is the registered holder of the Outstanding Securities, such amounts as may be necessary in order that the amount of Distributions (including any Additional Interest Amount (as defined in the Trust Agreement)) then due and payable by the Trust on the Preferred Securities and Common Securities that at any time remain outstanding in accordance with the terms thereof shall not be reduced as a result of any Additional Taxes arising from such Tax Event (additional such amounts payable by the Company to the Trust, the "Additional Tax Sums"). Whenever in this Indenture or the Securities there is a reference in any context to the payment of principal of or interest on the Securities, such mention shall be deemed to include mention of the payments of the Additional Tax Sums provided for in this Section 10.5 to the extent that, in such context, Additional Tax Sums are, were or would be payable in respect thereof pursuant to the provisions of this Section 10.5 and express mention of the payment of Additional Tax Sums (if applicable) in any provisions hereof shall not be construed as excluding Additional Tax Sums in those provisions hereof where such express mention is not made.

        SECTION 10.6.    Additional Covenants.

        (a)   The Company covenants and agrees with each Holder of Securities that if an Event of Default shall have occurred and be continuing, it shall not (i) declare or pay any dividends or distributions on, or redeem, purchase, acquire or make a liquidation payment with respect to, any shares of the Company's capital stock (for the avoidance of doubt, the term "capital stock" includes both common stock and preferred stock of the Company), (ii) vote in favor of or permit or otherwise allow any of its subsidiaries to declare or pay any dividends or distributions on, or redeem, purchase, acquire or make a liquidation payment with respect to or otherwise retire, any shares of such subsidiaries preferred stock (for the avoidance of doubt, whether such preferred stock is perpetual or otherwise), or (iii) make any payment of principal of or any interest or premium, if any, on or repay, repurchase or redeem any debt securities of the Company that rank pari passu in all respects with or junior in interest to the Securities.

        (b)   The Company also covenants with each Holder of Securities (i) to hold, directly or indirectly, one hundred percent (100%) of the Common Securities of the Trust, provided, that any permitted successor of the Company hereunder may succeed to the Company's ownership of such Common Securities, (ii) as holder of such Common Securities, not to voluntarily dissolve, wind-up or liquidate the Trust other than (A) in connection with a distribution of the Securities to the holders of the Preferred Securities in liquidation of the Trust or (B) in connection with certain mergers, consolidations or amalgamations permitted by the Trust Agreement and (iii) to use its reasonable commercial efforts, consistent with the terms and provisions of the Trust Agreement, to cause the Trust to continue to be taxable as a grantor trust and not as a corporation for United States Federal income tax purposes.

        (c)   The Company also agrees to use its reasonable best efforts to meet the requirements to qualify, effective for the fiscal year ending December 31, 2005, as a real estate investment trust under the Internal Revenue Code of 1986, as amended.

        SECTION 10.7.    Waiver of Covenants.

        The Company may omit in any particular instance to comply with any covenant or condition contained in Section 10.6 if, before or after the time for such compliance, the Holders of at least a majority in aggregate principal amount of the Outstanding Securities shall, by Act of such Holders, and

45

at least a majority of the aggregate Liquidation Amount of the Preferred Securities then outstanding, by consent of such holders, either waive such compliance in such instance or generally waive compliance with such covenant or condition, but no such waiver shall extend to or affect such covenant or condition except to the extent so expressly waived, and, until such waiver shall become effective, the obligations of the Company in respect of any such covenant or condition shall remain in full force and effect.

        SECTION 10.8.    Treatment of Securities.

        The Company will treat the Securities as indebtedness, and the amounts, other than payments of principal, payable in respect of the principal amount of such Securities as interest, for all U.S. federal income tax purposes. All payments in respect of the Securities will be made free and clear of U.S. withholding tax to any beneficial owner thereof that has provided an Internal Revenue Service Form W-9 or W-8BEN (or any substitute or successor form) establishing its U.S. or non-U.S, status for U.S. federal income tax purposes, or any other applicable form establishing a complete exemption from U.S. withholding tax.

        SECTION 10.9.    Financial Covenant.    The Company shall fully perform and satisfy the following financial covenant:

        The Company covenants and agrees to at all times maintain a tangible net worth determined in conformity with GAAP ("Net Worth") equal to not less than $100,000,000, except that in computing Net Worth intangible assets (e.g., goodwill) shall be excluded from total assets.

ARTICLE XI

REDEMPTION OF SECURITIES

        SECTION 11.1.    Optional Redemption.

        The Company may, at its option, on any Interest Payment Date, on or after January 30, 2011, redeem the Securities in whole at any time or in part from time to time, at a Redemption Price equal to one hundred percent (100%) of the principal amount thereof (or of the redeemed portion thereof, as applicable), together, in the case of any such redemption, with accrued interest, including any Additional Interest, through but excluding the date fixed as the Redemption Date (the "Optional Redemption Price").

        SECTION 11.2.    Special Event Redemption.

        Prior to January 30, 2011, upon the occurrence and during the continuation of a Special Event, the Company may, at its option, redeem the Securities, in whole but not in part, at a Redemption Price equal to one hundred seven and one half percent (107.5%) of the principal amount thereof, together, in the case of any such redemption, with accrued interest, including any Additional Interest, through but excluding the date fixed as the Redemption Date (the "Special Redemption Price").

46

        SECTION 11.3.    Election to Redeem; Notice to Trustee.

        The election of the Company to redeem any Securities, in whole or in part, shall be evidenced by or pursuant to a Board Resolution. In case of any redemption at the election of the Company, the Company shall, not less than forty-five (45) days and not more than seventy-five (75) days prior to the Redemption Date (unless a shorter notice shall be satisfactory to the Trustee), notify the Trustee and the Property Trustee under the Trust Agreement in writing of such date and of the principal amount of the Securities to be redeemed and provide the additional information required to be included in the notice or notices contemplated by Section 11.5. In the case of any redemption of Securities, in whole or in part, (a) prior to the expiration of any restriction on such redemption provided in this Indenture or the Securities or (b) pursuant to an election of the Company which is subject to a condition specified in this Indenture or the Securities, the Company shall furnish the Trustee with an Officers' Certificate and an Opinion of Counsel evidencing compliance with such restriction or condition.

        SECTION 11.4.    Selection of Securities to be Redeemed.

        (a)   If less than all the Securities are to be redeemed, the particular Securities to be redeemed shall be selected and redeemed on a pro rata basis not more than sixty (60) days prior to the Redemption Date by the Trustee from the Outstanding Securities not previously called for redemption, provided, that the unredeemed portion of the principal amount of any Security shall be in an authorized denomination (which shall not be less than the minimum authorized denomination) for such Security.

        (b)   The Trustee shall promptly notify the Company in writing of the Securities selected for redemption and, in the case of any Securities selected for partial redemption, the principal amount thereof to be redeemed. For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the redemption of Securities shall relate, in the case of any Security redeemed or to be redeemed only in part, to the portion of the principal amount of such Security that has been or is to be redeemed.

        (c)   The provisions of paragraphs (a) and (b) of this Section 11.4 shall not apply with respect to any redemption affecting only a single Security, whether such Security is to be redeemed in whole or in part. In the case of any such redemption in part, the unredeemed portion of the principal amount of the Security shall be in an authorized denomination (which shall not be less than the minimum authorized denomination) for such Security.

        SECTION 11.5.    Notice of Redemption.

        (a)   Notice of redemption shall be given not later than the thirtieth (30th) day, and not earlier than the sixtieth (60th) day, prior to the Redemption Date to each Holder of Securities to be redeemed, in whole or in part, (unless a shorter notice shall be satisfactory to the Property Trustee under the related Trust Agreement).

        (b)   With respect to Securities to be redeemed, in whole or in part, each notice of redemption shall state:

(i)

the Redemption Date;



(ii)

the Redemption Price or, if the Redemption Price cannot be calculated prior to the time the notice is required to be sent, the estimate of the Redemption Price, as calculated by the Company, together with a statement that it is an estimate and that the actual Redemption Price will be calculated on the fifth Business Day prior to the Redemption Date (and if an estimate is provided, a further notice shall be sent of the actual Redemption Price on the date that such Redemption Price is calculated);

47

(iii)

if less than all Outstanding Securities are to be redeemed, the identification (and, in the case of partial redemption, the respective principal amounts) of the amount of and particular Securities to be redeemed;



(iv)

that on the Redemption Date, the Redemption Price will become due and payable upon each such Security or portion thereof, and that any interest (including any Additional Interest) on such Security or such portion, as the case may be, shall cease to accrue on and after said date; and



(v)

the place or places where such Securities are to be surrendered for payment of the Redemption Price.

        (c)   Notice of redemption of Securities to be redeemed, in whole or in part, at the election of the Company shall be given by the Company or, at the Company's request, by the Trustee in the name and at the expense of the Company and shall be irrevocable. The notice if mailed in the manner provided above shall be conclusively presumed to have been duly given, whether or not the Holder receives such notice. In any case, a failure to give such notice by mail or any defect in the notice to the Holder of any Security designated for redemption as a whole or in part shall not affect the validity of the proceedings for the redemption of any other Security.

        SECTION 11.6.    Deposit of Redemption Price.

        Prior to 10:00 a.m., New York City time, on the Redemption Date specified in the notice of redemption given as provided in Section 11.5, the Company will deposit with the Trustee or with one or more Paying Agents an amount of money sufficient to pay the Redemption Price of, and any accrued interest (including any Additional Interest) on, all the Securities (or portions thereof) that are to be redeemed on that date.

        SECTION 11.7.    Payment of Securities Called for Redemption.

        (a)   If any notice of redemption has been given as provided in Section 11.5, the Securities or portion of Securities with respect to which such notice has been given shall become due and payable on the date and at the place or places stated in such notice at the applicable Redemption Price, together with accrued interest (including any Additional Interest) to the Redemption Date. On presentation and surrender of such Securities at a Place of Payment specified in such notice, the Securities or the specified portions thereof shall be paid and redeemed by the Company at the applicable Redemption Price, together with accrued interest (including any Additional Interest) to the Redemption Date.

        (b)   Upon presentation of any Security redeemed in part only, the Company shall execute and the Trustee shall authenticate and deliver to the Holder thereof, at the expense of the Company, a new Security or Securities, of authorized denominations, in aggregate principal amount equal to the unredeemed portion of the Security so presented and having the same Original Issue Date, Stated Maturity and terms.

        (c)   If any Security called for redemption shall not be so paid upon surrender thereof for redemption, the principal of and any premium on such Security shall, until paid, bear interest from the Redemption Date at the rate prescribed therefor in the Security.

ARTICLE XII

SUBORDINATION OF SECURITIES

        SECTION 12.1.    Securities Subordinate to Senior Debt.

        The Company covenants and agrees, and each Holder of a Security, by its acceptance thereof, likewise covenants and agrees, that, to the extent and in the manner hereinafter set forth in this

48

Article XII, the payment of the principal of and any premium and interest (including any Additional Interest) on each and all of the Securities are hereby expressly made subordinate and subject in right of payment to the prior payment in full of all Senior Debt.

        SECTION 12.2.    No Payment When Senior Debt in Default; Payment Over of Proceeds Upon Dissolution, Etc.

        (a)   In the event and during the continuation of any default by the Company in the payment of any principal of or any premium or interest on any Senior Debt (following any grace period, if applicable) when the same becomes due and payable, whether at maturity or at a date fixed for prepayment or by declaration of acceleration or otherwise, then, upon written notice of such default to the Company by the holders of such Senior Debt or any trustee therefor, unless and until such default shall have been cured or waived or shall have ceased to exist, no direct or indirect payment (in cash, property, securities, by set-off or otherwise) shall be made or agreed to be made on account of the principal of or any premium or interest (including any Additional Interest) on any of the Securities, or in respect of any redemption, repayment, retirement, purchase or other acquisition of any of the Securities.

        (b)   In the event of a bankruptcy, insolvency or other proceeding described in clause (d) or (e) of the definition of Event of Default (each such event, if any, herein sometimes referred to as a "Proceeding"), all Senior Debt (including any interest thereon accruing after the commencement of any such proceedings) shall first be paid in full before any payment or distribution, whether in cash, securities or other property, shall be made to any Holder of any of the Securities on account thereof. Any payment or distribution, whether in cash, securities or other property (other than securities of the Company or any other entity provided for by a plan of reorganization or readjustment the payment of which is subordinate, at least to the extent provided in these subordination provisions with respect to the indebtedness evidenced by the Securities, to the payment of all Senior Debt at the time outstanding and to any securities issued in respect thereof under any such plan of reorganization or readjustment), which would otherwise (but for these subordination provisions) be payable or deliverable in respect of the Securities shall be paid or delivered directly to the holders of Senior Debt in accordance with the priorities then existing among such holders until all Senior Debt (including any interest thereon accruing after the commencement of any Proceeding) shall have been paid in full.

        (c)   In the event of any Proceeding, after payment in full of all sums owing with respect to Senior Debt, the Holders of the Securities, together with the holders of any obligations of the Company ranking on a parity with the Securities, shall be entitled to be paid from the remaining assets of the Company the amounts at the time due and owing on account of unpaid principal of and any premium and interest (including any Additional Interest) on the Securities and such other obligations before any payment or other distribution, whether in cash, property or otherwise, shall be made on account of any capital stock or any obligations of the Company ranking junior to the Securities and such other obligations. If, notwithstanding the foregoing, any payment or distribution of any character or any security, whether in cash, securities or other property (other than securities of the Company or any other entity provided for by a plan of reorganization or readjustment the payment of which is subordinate, at least to the extent provided in these subordination provisions with respect to the indebtedness evidenced by the Securities, to the payment of all Senior Debt at the time outstanding and to any securities issued in respect thereof under any such plan of reorganization or readjustment) shall be received by the Trustee or any Holder in contravention of any of the terms hereof and before all Senior Debt shall have been paid in full, such payment or distribution or security shall be received in trust for the benefit of, and shall be paid over or delivered and transferred to, the holders of the Senior Debt at the time outstanding in accordance with the priorities then existing among such holders for application to the payment of all Senior Debt remaining unpaid, to the extent necessary to pay all such Senior Debt (including any interest thereon accruing after the commencement of any Proceeding) in full. In the event of the failure of the Trustee or any Holder to endorse or assign any such payment,

49

distribution or security, each holder of Senior Debt is hereby irrevocably authorized to endorse or assign the same.

        (d)   The Trustee and the Holders, at the expense of the Company, shall take such reasonable action (including the delivery of this Indenture to an agent for any holders of Senior Debt or consent to the filing of a financing statement with respect hereto) as may, in the opinion of counsel designated by the holders of a majority in principal amount of the Senior Debt at the time outstanding, be necessary or appropriate to assure the effectiveness of the subordination effected by these provisions.

        (e)   The provisions of this Section 12.2 shall not impair any rights, interests, remedies or powers of any secured creditor of the Company in respect of any security interest the creation of which is not prohibited by the provisions of this Indenture.

        (f)    The securing of any obligations of the Company, otherwise ranking on a parity with the Securities or ranking junior to the Securities, shall not be deemed to prevent such obligations from constituting, respectively, obligations ranking on a parity with the Securities or ranking junior to the Securities.

        SECTION 12.3.    Payment Permitted If No Default.

        Nothing contained in this Article XII or elsewhere in this Indenture or in any of the Securities shall prevent (a) the Company, at any time, except during the pendency of the conditions described in paragraph (a) of Section 12.2 or of any Proceeding referred to in Section 12.2, from making payments at any time of principal of and any premium or interest (including any Additional Interest) on the Securities or (b) the application by the Trustee of any moneys deposited with it hereunder to the payment of or on account of the principal of and any premium or interest (including any Additional Interest) on the Securities or the retention of such payment by the Holders, if, at the time of such application by the Trustee, it did not have knowledge (in accordance with Section 12.8) that such payment would have been prohibited by the provisions of this Article XII, except as provided in Section 12.8.

        SECTION 12.4.    Subrogation to Rights of Holders of Senior Debt.

        Subject to the payment in full of all amounts due or to become due on all Senior Debt, or the provision for such payment in cash or cash equivalents or otherwise in a manner satisfactory to the holders of Senior Debt, the Holders of the Securities shall be subrogated to the extent of the payments or distributions made to the holders of such Senior Debt pursuant to the provisions of this Article XII (equally and ratably with the holders of all indebtedness of the Company that by its express terms is subordinated to Senior Debt of the Company to substantially the same extent as the Securities are subordinated to the Senior Debt and is entitled to like rights of subrogation by reason of any payments or distributions made to holders of such Senior Debt) to the rights of the holders of such Senior Debt to receive payments and distributions of cash, property and securities applicable to the Senior Debt until the principal of and any premium and interest (including any Additional Interest) on the Securities shall be paid in full. For purposes of such subrogation, no payments or distributions to the holders of the Senior Debt of any cash, property or securities to which the Holders of the Securities or the Trustee would be entitled except for the provisions of this Article XII, and no payments made pursuant to the provisions of this Article XII to the holders of Senior Debt by Holders of the Securities or the Trustee, shall, as among the Company, its creditors other than holders of Senior Debt, and the Holders of the Securities, be deemed to be a payment or distribution by the Company to or on account of the Senior Debt.

        SECTION 12.5.    Provisions Solely to Define Relative Rights.

        The provisions of this Article XII are and are intended solely for the purpose of defining the relative rights of the Holders of the Securities on the one hand and the holders of Senior Debt on the

50

other hand. Nothing contained in this Article XII or elsewhere in this Indenture or in the Securities is intended to or shall (a) impair, as between the Company and the Holders of the Securities, the obligations of the Company, which are absolute and unconditional, to pay to the Holders of the Securities the principal of and any premium and interest (including any Additional Interest) on the Securities as and when the same shall become due and payable in accordance with their terms, (b) affect the relative rights against the Company of the Holders of the Securities and creditors of the Company other than their rights in relation to the holders of Senior Debt or (c) prevent the Trustee or the Holder of any Security (or to the extent expressly provided herein, the holder of any Preferred Security) from exercising all remedies otherwise permitted by applicable law upon default under this Indenture, including filing and voting claims in any Proceeding, subject to the rights, if any, under this Article XII of the holders of Senior Debt to receive cash, property and securities otherwise payable or deliverable to the Trustee or such Holder.

        SECTION 12.6.    Trustee to Effectuate Subordination.

        Each Holder of a Security by his or her acceptance thereof authorizes and directs the Trustee on his or her behalf to take such action as may be necessary or appropriate to acknowledge or effectuate the subordination provided in this Article XII and appoints the Trustee his or her attorney-in-fact for any and all such purposes.

        SECTION 12.7.    No Waiver of Subordination Provisions.

        (a)   No right of any present or future holder of any Senior Debt to enforce subordination as herein provided shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of the Company or by any act or failure to act, in good faith, by any such holder, or by any noncompliance by the Company with the terms, provisions and covenants of this Indenture, regardless of any knowledge thereof that any such holder may have or be otherwise charged with.

        (b)   Without in any way limiting the generality of paragraph (a) of this Section 12.7, the holders of Senior Debt may, at any time and from to time, without the consent of or notice to the Trustee or the Holders of the Securities, without incurring responsibility to such Holders of the Securities and without impairing or releasing the subordination provided in this Article XII or the obligations hereunder of such Holders of the Securities to the holders of Senior Debt, do any one or more of the following: (i) change the manner, place or terms of payment or extend the time of payment of, or renew or alter, Senior Debt, or otherwise amend or supplement in any manner Senior Debt or any instrument evidencing the same or any agreement under which Senior Debt is outstanding, (ii) sell, exchange, release or otherwise deal with any property pledged, mortgaged or otherwise securing Senior Debt, (iii) release any Person liable in any manner for the payment of Senior Debt and (iv) exercise or refrain from exercising any rights against the Company and any other Person.

        SECTION 12.8.    Notice to Trustee.

        (a)   The Company shall give prompt written notice to a Responsible Officer of the Trustee of any fact known to the Company that would prohibit the making of any payment to or by the Trustee in respect of the Securities. Notwithstanding the provisions of this Article XII or any other provision of this Indenture, the Trustee shall not be charged with knowledge of the existence of any facts that would prohibit the making of any payment to or by the Trustee in respect of the Securities, unless and until a Responsible Officer of the Trustee shall have received written notice thereof from the Company or a holder of Senior Debt or from any trustee, agent or representative therefor; provided, that if the Trustee shall not have received the notice provided for in this Section 12.8 at least two Business Days prior to the date upon which by the terms hereof any monies may become payable for any purpose (including, the payment of the principal of and any premium on or interest (including any Additional Interest) on any Security), then, anything herein contained to the contrary notwithstanding, the Trustee shall have full power and authority to receive such monies and to apply the same to the purpose for

51

which they were received and shall not be affected by any notice to the contrary that may be received by it within two Business Days prior to such date.

        (b)   The Trustee shall be entitled to rely on the delivery to it of a written notice by a Person representing himself or herself to be a holder of Senior Debt (or a trustee, agent, representative or attorney-in-fact therefor) to establish that such notice has been given by a holder of Senior Debt (or a trustee, agent, representative or attorney-in-fact therefor). In the event that the Trustee determines in good faith that further evidence is required with respect to the right of any Person as a holder of Senior Debt to participate in any payment or distribution pursuant to this Article XII, the Trustee may request such Person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of Senior Debt held by such Person, the extent to which such Person is entitled to participate in such payment or distribution and any other facts pertinent to the rights of such Person under this Article XII, and if such evidence is not furnished, the Trustee may defer any payment to such Person pending judicial determination as to the right of such Person to receive such payment.

        SECTION 12.9.    Reliance on Judicial Order or Certificate of Liquidating Agent.

        Upon any payment or distribution of assets of the Company referred to in this Article XII, the Trustee and the Holders of the Securities shall be entitled to conclusively rely upon any order or decree entered by any court of competent jurisdiction in which such Proceeding is pending, or a certificate of the trustee in bankruptcy, receiver, liquidating trustee, custodian, assignee for the benefit of creditors, agent or other Person making such payment or distribution, delivered to the Trustee or to the Holders of Securities, for the purpose of ascertaining the Persons entitled to participate in such payment or distribution, the holders of the Senior Debt and other indebtedness of the Company, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article XII.

        SECTION 12.10.    Trustee Not Fiduciary for Holders of Senior Debt.

        The Trustee, in its capacity as trustee under this Indenture, shall not be deemed to owe any fiduciary duty to the holders of Senior Debt and shall not be liable to any such holders if it shall in good faith mistakenly pay over or distribute to Holders of Securities or to the Company or to any other Person cash, property or securities to which any holders of Senior Debt shall be entitled by virtue of this Article XII or otherwise.

        SECTION 12.11.    Rights of Trustee as Holder of Senior Debt; Preservation of Trustee's Rights.

        The Trustee in its individual capacity shall be entitled to all the rights set forth in this Article XII with respect to any Senior Debt that may at any time be held by it, to the same extent as any other holder of Senior Debt, and nothing in this Indenture shall deprive the Trustee of any of its rights as such holder.

        SECTION 12.12.    Article Applicable to Paying Agents.

        If at any time any Paying Agent other than the Trustee shall have been appointed by the Company and be then acting hereunder, the term "Trustee" as used in this Article XII shall in such case (unless the context otherwise requires) be construed as extending to and including such Paying Agent within its meaning as fully for all intents and purposes as if such Paying Agent were named in this Article XII in addition to or in place of the Trustee. For the avoidance of doubt, the Company shall not be permitted to appoint itself or any Affiliate as a Paying Agent hereunder.

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

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

BRESLER & RE1NER, INC.
By:	/s/  SIDNEY M BRESLER
	Name:	Sidney M Bresler
	Title:	CEO
JPMorgan Chase Bank, National Association, as Trustee
By:	/s/ Illegible
	Name:
	Title:

53

Schedule A

DETERMINATION OF LIBOR

        With respect to the Securities, the London interbank offered rate ("LIBOR") shall be determined by the Calculation Agent in accordance with the following provisions (in each case rounded to the nearest .000001%):

        (1)   Subsequent to expiration of the Fixed Rate Period, on the second LIBOR Business Day (as defined below) prior to an Interest Payment Date (each such day, a "LIBOR Determination Date"), LIBOR for any given security shall for the following interest payment period equal the rate, as obtained by the Calculation Agent from Bloomberg Financial Markets Commodities News, for three-month Eurodollar deposits that appears on Dow Jones Telerate Page 3750 (as defined in the International Swaps and Derivatives Association, Inc. 1991 Interest Rate and Currency Exchange Definitions), or such other page as may replace such Page 3750, as of 11:00 a.m. (London time) on such LIBOR Determination Date.

        (2)   If, on any LIBOR Determination Date, such rate does not appear on Dow Jones Telerate Page 3750 or such other page as may replace such Page 3750, the Calculation Agent shall determine the arithmetic mean of the offered quotations of the Reference Banks (as defined below) to leading banks in the London interbank market for three-month Eurodollar deposits in an amount determined by the Calculation Agent by reference to requests for quotations as of approximately 11:00 a.m. (London time) on the LIBOR Determination Date made by the Calculation Agent to the Reference Banks. If, on any LIBOR Determination Date, at least two of the Reference Banks provide such quotations, LIBOR shall equal such arithmetic mean of such quotations. If, on any LIBOR Determination Date, only one or none of the Reference Banks provide such quotations, LIBOR shall be deemed to be the arithmetic mean of the offered quotations that leading banks in the City of New York selected by the Calculation Agent are quoting on the relevant LIBOR Determination Date for three-month Eurodollar deposits in an amount determined by the Calculation Agent by reference to the principal London offices of leading banks in the London interbank market; provided that, if the Calculation Agent is required but is unable to determine a rate in accordance with at least one of the procedures provided above, LIBOR shall be LIBOR as determined on the previous LIBOR Determination Date.

        (3)   As used herein: "Reference Banks" means four major banks in the London interbank market selected by the Calculation Agent; and "LIBOR Business Day" means a day on which commercial banks are open for business (including dealings in foreign exchange and foreign currency deposits) in London.

Schedule A-1

Form of Officer's Financial Certificate

        The undersigned, the [Chief Financial Officer/Treasurer/Assistant Treasurer/Secretary/ Assistant Secretary, Chairman/Vice Chairman/Chief Executive Officer/President/Vice President] hereby certifies, pursuant to Section 7.3(b) of the Junior Subordinated Indenture, dated as of November 29, 2005 (the "Indenture"), among Bresler & Reiner, Inc. (the "Company") and JPMorgan Chase Bank, National Association, as trustee, that, as of [date], [20    ], the Company, if applicable, and its subsidiaries had the following ratios and balances:

As of [Quarterly/Annual Financial Date], 20
Senior secured indebtedness for borrowed money ("Debt")	$
Senior unsecured Debt	$
Subordinated Debt	$
Total Debt	$
Ratio of (x) senior secured and unsecured Debt to (y) total Debt		%

        [FOR FISCAL YEAR END: Attached hereto are the audited consolidated financial statements (including the balance sheet, income statement and statement of cash flows, and notes thereto, together with the report of the independent accountants thereon) of the Company and its consolidated subsidiaries for the three years ended [date], 20     and all required Financial Statement (as defined in the Purchase Agreement for the year ended [date], 20    .]

        [FOR FISCAL QUARTER END: Attached hereto are the unaudited consolidated and consolidating financial statements (including the balance sheet and income statement) of the Company and its consolidated subsidiaries and all required Financial Statement (as defined in the Purchase Agreement) for the year ended [date], 20    for the fiscal quarter ended [date], 20    .]

        The financial statements fairly present in all material respects, in accordance with U.S. generally accepted accounting principles ("GAAP"), the financial position of the Company and its consolidated subsidiaries, and the results of operations and changes in financial condition as of the date, and for the [quarter] [annual] period ended [date], 20    , and such financial statements have been prepared in accordance with GAAP consistently applied throughout the period involved (except as otherwise noted therein).

        There has been no monetary default with respect to any indebtedness owed by the Company and /or its subsidiaries (other than those defaults cured within 30 days of the occurrence of the same)[, except as set forth below:].

        [Insert any exceptions by listing, in detail, the nature of the condition or event causing such noncompliance, the period during which such condition or event has existed and the action(s) the Company has taken, is taking, or proposes to take with respect to each such condition or event.]

        I, the undersigned, the {Chairman/Chief Executive Officer/President/Vice President/Chief Financial Officer/Treasurer/Assistant Treasurer], hereby certify that I have reviewed the terms of the Indenture and I have made, or have caused to be made under my supervision, a detailed review of (i) the covenants of the Company set forth therein, in particular, Section [    ](the "Financial Covenants") and (ii) the transactions and conditions of the Company or its subsidiaries during the accounting period ended as of [    ] (the "Accounting Period"), which Accounting Period is covered by the financial statements attached hereto. The examinations described in the preceding sentence did not disclose, and I have no knowledge of, the existence of any condition or event which constitutes a Default or an Event of Default (each as defined in the Indenture) during or at the end of the Accounting Period or as of the date of this certificate, [except as set forth below:],

Exhibit A-1

        [Insert any exceptions by listing, in detail, the nature of the condition or event causing such noncompliance, the period during which such condition or event has existed and the actions(s) the Company has taken, is taking, or proposes to take with respect to each such condition or event.]

        Page     attached hereto sets forth the financial data and computations evidencing the Company's compliance with the Financial Covenants, all of which data and computations are true, complete and correct.]

Exhibit A-2

        IN WITNESS WHEREOF, the undersigned has executed this Officer's Financial Certificate as of this        day of                    , 20    .

By:

Name:

Bresler & Reiner, Inc.
11200 Rockville Pike, Suite 502
Rockville, MD 20852
(301) 945-4300

Exhibit A-3

QuickLinks

TABLE OF CONTENTS
RECITALS OF THE COMPANY
ARTICLE I DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
ARTICLE II SECURITY FORMS
Bresler & Reiner, Inc.
Junior Subordinated Note due 2036
[FORM OF REVERSE OF SECURITY]
ARTICLE III THE SECURITIES
ARTICLE IV SATISFACTION AND DISCHARGE
ARTICLE V REMEDIES
ARTICLE VI THE TRUSTEE
ARTICLE VII HOLDER'S LISTS AND REPORTS BY COMPANY
ARTICLE VIII CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
ARTICLE IX SUPPLEMENTAL INDENTURES
ARTICLE X COVENANTS
ARTICLE XI REDEMPTION OF SECURITIES
ARTICLE XII SUBORDINATION OF SECURITIES
Form of Officer's Financial Certificate

EX-10.7

Exhibit 10.7

COMMON SECURITIES CERTIFICATE

THIS COMMON SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS OR ANY OTHER APPLICABLE SECURITIES LAWS AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EXEMPTION FROM REGISTRATION. THIS CERTIFICATE IS NOT TRANSFERABLE EXCEPT IN COMPLIANCE WITH APPLICABLE LAW AND SECTION 5.11 OF THE TRUST AGREEMENT

Certificate Number	Number of Common Securities: 1,238
C-1

Certificate Evidencing Common Securities

of

BRESLER & REINER STATUTORY TRUST I

Common Securities

(liquidation amount $1,000 per Common Security)

        Bresler & Reiner Statutory Trust I, a statutory trust created under the laws of the State of Delaware (the "Trust"), hereby certifies that Bresler & Reiner, Inc., a Delaware corporation (the "Holder") is the registered owner of 1,238 common securities of the Trust representing undivided common beneficial interests in the assets of the Trust and designated the Bresler & Reiner Statutory Trust I Common Securities (liquidation amount $1,000 per Common Security) (the "Common Securities"). Except in accordance with Section 5.11 of the Trust Agreement (as defined below), the Common Securities are not transferable and, to the fullest extent permitted by law, any attempted transfer hereof other than in accordance therewith shall be void. The designations, rights, privileges, restrictions, preferences and other terms and provisions of the Common Securities are set forth in, and this certificate and the Common Securities represented hereby are issued and shall in all respects be subject to the terms and provisions of, the Amended and Restated Trust Agreement of the Trust, dated as of November 29, 2005 as the same may be amended from time to time (the "Trust Agreement"), among Bresler & Reiner, Inc., as Depositor, JPMorgan Chase Bank, National Association, as Property Trustee, Chase Bank USA, National Association, as Delaware Trustee, the Administrative Trustees named therein and the Holders, from time to time, of Trust Securities. The Trust will furnish a copy of the Trust Agreement to the Holder without charge upon written request to the Trust at its principal place of business or registered office.

        Upon receipt of this certificate, the Holder is bound by the Trust Agreement and is entitled to the benefits thereunder.

        This Common Securities Certificate shall be governed by and construed in accordance with the laws of the State of Delaware.

        Terms used but not defined herein have the meanings set forth in the Trust Agreement.

        IN WITNESS WHEREOF, one of the Administrative Trustees of the Trust has executed on behalf of the Trust this certificate this 29th day of November, 2005.

BRESLER & REINER STATUTORY TRUST I
By:	/s/  SIDNEY M. BRESLER
	Name:  Sidney M. Bresler Administrative Trustee

EX-10.8

Exhibit 10.8

PURCHASE AGREEMENT

among

Bresler & Reiner, Inc.

Bresler & Reiner Statutory Trust I

and

Merrill Lynch International

Dated as of November 23, 2005

PURCHASE AGREEMENT
($40,000,000 Trust Preferred Securities)

        THIS PURCHASE AGREEMENT, dated as of November 23, 2005 (this "Purchase Agreement"), is entered into among Bresler & Reiner, Inc., a Delaware corporation (the "Company"), Bresler & Reiner Statutory Trust I, a Delaware statutory trust (the "Trust", and together with the Company, the "Sellers"), and Merrill Lynch International or its assignee. (the "Purchaser").

WITNESSETH:

        WHEREAS, the Trust proposes to issue and sell 40,000 Preferred Securities of the Trust, having a stated liquidation amount of $1,000 per security (the "Preferred Securities");

        WHEREAS, the entire proceeds from the sale of the Preferred Securities will be combined with the entire proceeds from the sale by the Trust to the Company of its common securities (the "Common Securities"), and will be used by the Trust to purchase Forty One Million Two Hundred Thirty Eight Thousand Dollars ($41,238,000) in principal amount of the unsecured junior subordinated notes of the Company (the "Junior Subordinated Notes");

        WHEREAS, the Preferred Securities and the Common Securities for the Trust will be issued pursuant to the Amended and Restated Trust Agreement (the "Trust Agreement"), dated as of the Closing Date, among the Company, as depositor, JPMorgan Chase Bank, National Association, a national banking association, as property trustee (in such capacity, the "Property Trustee"), Chase Bank USA, National Association, a national banking association, as Delaware trustee (in such capacity, the "Delaware Trustee"), the Administrative Trustees named therein (in such capacities, the "Administrative Trustees") and the holders from time to time of undivided beneficial interests in the assets of the Trust; and

        WHEREAS, the Junior Subordinated Notes will be issued pursuant to a Junior Subordinated Indenture, dated as of the Closing Date (the "Indenture"), between the Company and JPMorgan Chase Bank, National Association, a national banking association, as indenture trustee (in such capacity, the "Indenture Trustee").

        NOW, THEREFORE, in consideration of the mutual agreements and subject to the terms and conditions herein set forth, the parties hereto agree as follows:

        1.Definitions.    The Preferred Securities, the Common Securities and the Junior Subordinated Notes are collectively referred to herein as the "Securities." This Purchase Agreement, the Indenture, the Trust Agreement and the Securities are collectively referred to herein as the "Operative Documents." All other capitalized terms used but not defined in this Purchase Agreement shall have the respective meanings ascribed thereto in the Indenture.

        2.Purchase and Sale of the Preferred Securities.

        (a)   The Sellers agree to sell to the Purchaser, and the Purchaser agrees to purchase from the Sellers the Preferred Securities for an amount (the "Purchase Price") equal to Forty Million Dollars ($40,000,000). The Purchaser shall be responsible for the rating agency costs and expenses. The Sellers shall use the Purchase Price, together with the proceeds from the sale of the Common Securities, to purchase the Junior Subordinated Notes.

        (b)   Delivery or transfer of, and payment for, the Preferred Securities shall be made at 11:00 A.M. New York time on November 29, 2005 (such date and time of delivery and payment for the Preferred Securities being herein called the "Closing Date"). The Preferred Securities shall be transferred and delivered to the Purchaser against the payment of the Purchase Price to the Sellers made by wire transfer in immediately available funds on the Closing Date to a U.S. account designated in writing by the Company at least two business days prior to the Closing Date.

        (c)   Delivery of the Preferred Securities shall be made at such location, and in such names and denominations, as the Purchaser shall designate at least two business days in advance of the Closing Date. The Company and the Trust agree to have the Preferred Securities available for

inspection and checking by the Purchaser in New York, New York, not later than 2:00 P.M., New York time, on the business day prior to the Closing Date. The closing for the purchase and sale of the Preferred Securities shall occur at the offices of DLA Piper Rudnick Gray Cary US LLP, 1221 S. Mopac Expressway, Suite 400, Austin, Texas 78746, or such other place as the parties hereto shall agree.

        3.Conditions.    The obligations of the parties under this Purchase Agreement are subject to the following conditions:

        (a)   The representations and warranties contained herein shall be accurate as of the date of delivery of the Preferred Securities.

        (b)   The Purchaser shall have sold securities issued by it in such an amount that the net proceeds therefrom shall be available on the Closing Date and shall be sufficient to purchase the Preferred Securities and all other preferred securities contemplated in agreements similar to this Agreement.

        (c)   Counsel for the Company and the Trust (the "Company Counsel"), shall have delivered an opinion, dated the Closing Date, addressed to the Purchaser, Taberna Capital Management, LLC and its successors and assigns and JPMorgan Chase Bank, National Association, in substantially the form set out in Annex A-I hereto and (ii) the Company shall have furnished to the Purchaser the opinion of the Company's General Counsel or a certificate signed by the Company's Chief Executive Officer, President, an Executive Vice President, Chief Financial Officer, Treasurer or Assistant Treasurer, dated the Closing Date, addressed to the Purchaser, in substantially the form set out in Annex A-II hereto. In rendering their opinion, the Company Counsel may rely as to factual matters upon certificates or other documents furnished by officers, directors and trustees of the Company and the Trust and by government officials (provided, however, that copies of any such certificates or documents are delivered to the Purchaser) and by and upon such other documents as such counsel may, in their reasonable opinion, deem appropriate as a basis for the Company Counsel's opinion. The Company Counsel may specify the jurisdictions in which they are admitted to practice and that they are not admitted to practice in any other jurisdiction and are not experts in the law of any other jurisdiction. If the Company Counsel is not admitted to practice in the State of New York, the opinion of the Company Counsel may assume, for purposes of the opinion, that the laws of the State of New York are substantively identical, in all respects material to the opinion, to the internal laws of the state in which such counsel is admitted to practice. Such Company Counsel Opinion shall not state that they are to be governed or qualified by, or that they are otherwise subject to, any treatise, written policy or other document relating to legal opinions, including, without limitation, the Legal Opinion Accord of the ABA Section of Business Law (1991).

        (d)   The Purchaser shall have been furnished the opinion of DLA Piper Rudnick Gray Cary US LLP, special tax counsel for the Purchaser, dated the Closing Date, addressed to the Purchaser and its successors and assigns and JPMorgan Chase Bank, National Association, in substantially the form set out in Annex B hereto.

        (e)   The Purchaser shall have received the opinion of Richards, Layton & Finger, P.A., special Delaware counsel for the Delaware Trustee, dated the Closing Date, addressed to the Purchaser and its successors and assigns, JPMorgan Chase Bank, National Association, the Delaware Trustee and the Company, in substantially the form set out in Annex C hereto.

        (f)    The Purchaser shall have received the opinion of Gardere Wynne Sewell LLP, special counsel for the Property Trustee and the Indenture Trustee, dated the Closing Date, addressed to the Purchaser and its successors and assigns, in substantially the form set out in Annex D hereto.

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        (g)   The Purchaser shall have received the opinion of Richards, Layton & Finger, P.A., special Delaware counsel for the Delaware Trustee, dated the Closing Date, addressed to the Purchaser and its successors and assigns and JPMorgan Chase Bank, National Association, in substantially the form set out in Annex E hereto.

        (h)   The Company shall have furnished to the Purchaser a certificate of the Company, signed by the Chief Executive Officer, President or an Executive Vice President, and Chief Financial Officer, Treasurer or Assistant Treasurer of the Company, and the Trust shall have furnished to the Purchaser a certificate of the Trust, signed by an Administrative Trustee of the Trust, in each case dated the Closing Date, and, in the case of the Company, as to (i) and (ii) below and, in the case of the Trust, as to (i) below.

        (i)    the representations and warranties in this Purchase Agreement are true and correct on and as of the Closing Date with the same effect as if made on the Closing Date, and the Company and the Trust have complied with all the agreements and satisfied all the conditions on either of their part to be performed or satisfied at or prior to the Closing Date; and

        (ii)   since September 30, 2005 (the date of the latest Financial Statements), there has been no material adverse change in the condition (financial or other), earnings, business or assets of the Company and its subsidiaries, whether or not arising from transactions occurring in the ordinary course of business (a "Material Adverse Change").

        (i)    Subsequent to the execution of this Purchase Agreement, there shall not have been any change, or any development involving a prospective change, in or affecting the condition (financial or other), earnings, business or assets of the Company and its subsidiaries, whether or not occurring in the ordinary course of business, the effect of which is, in the Purchaser's judgment, so material and adverse as to make it impractical or inadvisable to proceed with the purchase of the Preferred Securities.

        (j)    Prior to the Closing Date, the Company and the Trust shall have furnished to the Purchaser and its counsel such further information, certificates and documents as the Purchaser or its counsel may reasonably request.

        If any of the conditions specified in this Section 3 shall not have been fulfilled when and as provided in this Purchase Agreement, or if any of the opinions, certificates and documents mentioned above or elsewhere in this Purchase Agreement shall not be reasonably satisfactory in form and substance to the Purchaser or its counsel, this Purchase Agreement and all the Purchaser's obligations hereunder may be canceled at, or at any time prior to, the Closing Date by the Purchaser. Notice of such cancellation shall be given to the Company and the Trust in writing or by telephone or facsimile confirmed in writing.

        Each certificate signed by any trustee of the Trust or any officer of the Company and delivered to the Purchaser or the Purchaser's counsel in connection with the Operative Documents and the transactions contemplated hereby and thereby shall be deemed to be a representation and warranty of the Trust and/or the Company, as the case may be, and not by such trustee or officer in any individual capacity.

        4.Representations and Warranties of the Company and the Trust.    The Company and the Trust jointly and severally represent and warrant to, and agree with the Purchaser, as follows:

        (a)   Neither the Company nor the Trust, nor any of their "Affiliates" (as defined in Rule 501(b) of Regulation D ("Regulation D") under the Securities Act (as defined below)), nor any person acting on its or their behalf, has, directly or indirectly, made offers or sales of any security, or solicited offers to buy any security, under circumstances that would require the

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registration of any of the Securities under the Securities Act of 1933, as amended (the "Securities Act").

        (b)   Neither the Company nor the Trust, nor any of their Affiliates, nor any person acting on its or their behalf, has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D) in connection with any offer or sale of any of the Securities.

        (c)   The Securities (i) are not and have not been listed on a national securities exchange registered under section 6 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or quoted on a U.S. automated inter-dealer quotation system and (ii) are not of an open-end investment company, unit investment trust or face-amount certificate company that are, or are required to be, registered under section 8 of the Investment Company Act of 1940, as amended (the "Investment Company Act"), and the Securities otherwise satisfy the eligibility requirements of Rule 144A(d)(3) promulgated pursuant to the Securities Act ("Rule 14 4A (d) (3) ").

        (d)   Neither the Company nor the Trust, nor any of their Affiliates, nor any person acting on its or their behalf, has engaged, or will engage, in any "directed selling efforts" within the meaning of Regulation S under the Securities Act with respect to the Securities.

        (e)   Neither the Company nor the Trust is, and, immediately following consummation of the transactions contemplated hereby and the application of the net proceeds therefrom, will not be, an "investment company" or an entity "controlled" by an "investment company," in each case within the meaning of section 3(a) of the Investment Company Act.

        (f)    Neither the Company nor the Trust has paid or agreed to pay to any person any compensation for soliciting another to purchase any of the Securities, except for the preferred securities commission and/or the sales commission the Company has agreed to pay to Cohen Bros. & Company (or to the Company's introducing agent on behalf of Cohen Bros. & Company) pursuant to the letter agreement between the Company and Cohen Bros. & Company.

        (g)   The Trust has been duly created and is validly existing in good standing as a statutory trust under the Delaware Statutory Trust Act, 12 Del. C. §3801, et seq. (the "Statutory Trust Act") with all requisite power and authority to own property and to conduct the business it transacts and proposes to transact and to enter into and perform its obligations under the Operative Documents to which it is a party. The Trust is duly qualified to transact business as a foreign entity and is in good standing in each jurisdiction in which such qualification is necessary, except where the failure to so qualify or be in good standing would not have a material adverse effect on the condition (financial or otherwise), earnings, business, liabilities or assets (taken as a whole) or business prospects of the Company and its subsidiaries taken as a whole, whether or not occurring in the ordinary course of business (a "Material Adverse Effect"). The Trust is not a party to or otherwise bound by any agreement other than the Operative Documents. The Trust is and will be, under current law, classified for federal income tax purposes as a grantor trust and not as an association or publicly traded partnership taxable as a corporation.

        (h)   The Trust Agreement has been duly authorized by the Company and, on the Closing Date specified in Section 2(b) hereof, will have been duly executed and delivered by the Company and the Administrative Trustees of the Trust, and, assuming due authorization, execution and delivery by the Property Trustee and the Delaware Trustee, will be a legal, valid and binding obligation of the Company and the Administrative Trustees, enforceable against them in accordance with its terms, subject to applicable bankruptcy, insolvency and similar laws affecting creditors' rights generally and to general principles of equity. Each of the Administrative Trustees of the Trust is an employee of the Company and has been duly authorized by the Company to execute and deliver the Trust Agreement.

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        (i)    The Indenture has been duly authorized by the Company and, on the Closing Date, will have been duly executed and delivered by the Company, and, assuming due authorization, execution and delivery by the Indenture Trustee, will be a legal, valid and binding obligation of the Company enforceable against it in accordance with its terms, subject to applicable bankruptcy, insolvency and similar laws affecting creditors' rights generally and to general principles of equity.

        (j)    The Preferred Securities and the Common Securities have been duly authorized by the Trust and, when issued and delivered against payment therefor on the Closing Date in accordance with this Purchase Agreement, in the case of the Preferred Securities, and in accordance with the Common Securities Subscription Agreement, in the case of the Common Securities, will be validly issued, fully paid and non-assessable and will represent undivided beneficial interests in the assets of the Trust entitled to the benefits of the Trust Agreement, enforceable against the Trust in accordance with their terms, subject to applicable bankruptcy, insolvency and similar laws affecting creditors' rights generally and to general principles of equity. The issuance of the Securities is not subject to any preemptive or other similar rights. On the Closing Date, all of the issued and outstanding Common Securities will be directly owned by the Company free and clear of any pledge, security interest, claim, lien or other encumbrance of any kind (each, a "Lien").

        (k)   The Junior Subordinated Notes have been duly authorized by the Company and, on the Closing Date, will have been duly executed and delivered to the Indenture Trustee for authentication in accordance with the Indenture and, when authenticated in the manner provided for in the Indenture and delivered to the Trust against payment therefor in accordance with the certain Junior Subordinated Note Purchase Agreement, of even date herewith between the Company and the Trust (the "Junior Subordinated Note Purchase Agreement", will constitute legal, valid and binding obligations of the Company entitled to the benefits of the Indenture, enforceable against the Company in accordance with their terms, subject to applicable bankruptcy, insolvency and similar laws affecting creditors' rights generally and to general principles of equity.

        (l)    This Purchase Agreement has been duly authorized, executed and delivered by the Company and the Trust.

        (m)  Neither the issue and sale of the Common Securities, the Preferred Securities or the Junior Subordinated Notes, nor the purchase of the Junior Subordinated Notes by the Trust, nor the execution and delivery of and compliance with the Operative Documents by the Company or the Trust, nor the consummation of the transactions contemplated herein or therein, (i) will conflict with or constitute a violation or breach of the Trust Agreement or the charter or bylaws or similar organizational documents of the Company or any subsidiary of the Company or to the Company's knowledge any applicable law, statute, rule, regulation, judgment, order, writ or decree of any government, governmental authority, agency or instrumentality or court, domestic or foreign, having jurisdiction over the Trust or the Company or any of its subsidiaries or their respective properties or assets (collectively, the "Governmental Entities"), (ii) will conflict with or constitute a violation or breach of, or a default or Repayment Event (as defined below) under, or result in the creation or imposition of any Lien upon any property or assets of the Trust, the Company or any of the Company's subsidiaries pursuant to, any contract, indenture, mortgage, loan agreement, note, lease or other agreement or instrument to which (A) the Trust, the Company or any of its subsidiaries is a party or by which it or any of them may be bound, or (B) to which any of the property or assets of any of them is subject, or any judgment, order or decree of any court, Governmental Entity or arbitrator, except, in the case of this clause (ii), for such conflicts, breaches, violations, defaults, Repayment Events (as defined below) or Liens which (X) would not, singly or in the aggregate, adversely affect the consummation of the transactions contemplated by the Operative Documents and (Y) would not, singly or in the aggregate, have a Material Adverse Effect or (iii) require the consent, approval, authorization or order of any court or Governmental Entity. As used herein, a "Repayment Event" means any event or condition which

5

gives the holder of any note, debenture or other evidence of indebtedness (or any person acting on such holder's behalf) the right to require the repurchase, redemption or repayment of all or a portion of such indebtedness by the Trust or the Company or any of its subsidiaries prior to its scheduled maturity.

        (n)   The Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of Delaware, with all requisite corporate power and authority to own, lease and operate its properties and conduct the business it transacts and proposes to transact, and is duly qualified to transact business and is in good standing as a foreign corporation in each jurisdiction where the nature of its activities requires such qualification, except where the failure of the Company to be so qualified would not, singly or in the aggregate, have a Material Adverse Effect.

        (o)   The Company has no subsidiaries that are material to its business, financial condition or earnings other than those subsidiaries listed in Schedule 1 attached hereto (collectively, the "Significant Subsidiaries"). Each Significant Subsidiary is a corporation, partnership or limited liability company duly and properly incorporated or organized or formed, as the case may be validly existing and in good standing under the laws of the jurisdiction in which it is chartered or organized or formed, with all requisite corporate power and authority to own, lease and operate its properties and conduct the business it transacts and proposes to transact. Each Significant Subsidiary is duly qualified to transact business as a foreign corporation, partnership or limited liability company, as applicable, and is in good standing in each jurisdiction where the nature of its activities requires such qualification, except where the failure to be so qualified would not, singly or in the aggregate, have a Material Adverse Effect. No Significant Subsidiary of the Company is currently prohibited, directly or indirectly, under any agreement or other instrument, other than as required by applicable law, to which it is a party or is subject, from paying any dividends to the Company, from making any other distribution on such Significant Subsidiary's capital stock or other equity interests, from the Company or from transferring any of such Significant Subsidiary's properties or assets to the Company or any other subsidiary of the Company.

        (p)   Each of the Trust, the Company and each of the Company's subsidiaries hold all necessary approvals, authorizations, orders, licenses, consents, registrations, qualifications, certificates and permits (collectively, the "Governmental Licenses") of and from Governmental Entities necessary to conduct their respective businesses as now being conducted, and neither the Trust, the Company nor any of the Company's subsidiaries has received any notice of proceedings relating to the revocation or modification of any such Government License, except where the failure to be so licensed or approved or the receipt of an unfavorable decision, ruling or finding, would not, singly or in the aggregate, have a Material Adverse Effect; all of the Governmental Licenses are valid and in full force and effect, except where the invalidity or the failure of such Governmental Licenses to be in full force and effect, would not, singly or in the aggregate, have a Material Adverse Effect; and the Company and its subsidiaries are in compliance with all applicable laws, rules, regulations, judgments, orders, decrees and consents, except where the failure to be in compliance would not, singly or in the aggregate, have a Material Adverse Effect.

        (q)   All of the issued and outstanding shares of capital stock of the Company and each of its subsidiaries are validly issued, fully paid and non-assessable; all of the issued and outstanding capital stock of each subsidiary of the Company is owned by the Company, directly or through subsidiaries, free and clear of any Lien, claim or equitable right; and none of the issued and outstanding capital stock of the Company or any subsidiary was issued in violation of any preemptive or similar rights arising by operation of law, under the charter or by-laws of such entity or under any agreement to which the Company or any of its subsidiaries is a party.

6

        (r)   Neither the Company nor any of its subsidiaries is (i) in violation of its respective charter or by-laws or similar organizational documents or (ii) in default in the performance or observance of any obligation, agreement, covenant or condition contained in any contract, indenture, mortgage, loan agreement, note, lease or other agreement or instrument to which the Company or any such subsidiary is a party or by which it or any of them may be bound or to which any of the property or assets of any of them is subject, except, in the case of clause (ii), where such violation or default would not, singly or in the aggregate, have a Material Adverse Effect.

        (s)   There is no action, suit or proceeding before or by any Governmental Entity, arbitrator or court, domestic or foreign, now pending or, to the knowledge of the Company or the Trust after due inquiry, threatened against or affecting the Trust or the Company or any of the Company's subsidiaries, except for such actions, suits or proceedings that, if adversely determined, would not, singly or in the aggregate, adversely affect the consummation of the transactions contemplated by the Operative Documents or have a Material Adverse Effect; and the aggregate of all pending legal or governmental proceedings to which the Trust or the Company or any of its subsidiaries is a party or of which any of their respective properties or assets is subject, including ordinary routine litigation incidental to the business, are not expected to result in a Material Adverse Effect.

        (t)    The accountants of the Company who certified the Financial Statements (as defined below) are independent public accountants of the Company and its subsidiaries within the meaning of the Securities Act, and the rules and regulations of the Securities and Exchange Commission (the "Commission") thereunder.

        (u)   The audited consolidated financial statements (including the notes thereto) and schedules of the Company and its consolidated subsidiaries for the fiscal year ended December 31, 2004 (the "Financial Statements") and the interim unaudited consolidated financial statements of the Company and its consolidated subsidiaries for the quarter ended September 30, 2005 (the "Interim Financial Statements") provided to the Purchaser are the most recent available audited and unaudited consolidated financial statements of the Company and its consolidated subsidiaries, respectively, and fairly present in all material respects, in accordance with U.S. generally accepted accounting principles ("GAAP"), the financial position of the Company and its consolidated subsidiaries, and the results of operations and changes in financial condition as of the dates and for the periods therein specified, subject, in the case of Interim Financial Statements, to year-end adjustments (which are expected to consist solely of normal recurring adjustments). Such consolidated financial statements and schedules have been prepared in accordance with GAAP consistently applied throughout the periods involved (except as otherwise noted therein).

        (v)   None of the Trust, the Company nor any of its subsidiaries has any material liability, whether known or unknown, whether asserted or unasserted, whether absolute or contingent, whether accrued or unaccrued, whether liquidated or unliquidated, and whether due or to become due, including any liability for taxes (and there is no past or present fact, situation, circumstance, condition or other basis for any present or future action, suit, proceeding, hearing, charge, complaint, claim or demand against the Company or its subsidiaries that could give rise to any such liability), except for (i) liabilities set forth in the Financial Statements or the Interim Financial Statements and (ii) normal fluctuations in the amount of the liabilities referred to in clause (i) above occurring in the ordinary course of business of the Trust, the Company and all of its subsidiaries since the date of the most recent balance sheet included in such Financial Statements.

        (w)  Since the respective dates of the Financial Statements and the Interim Financial Statements, there has not been (A) any Material Adverse Change or (B) any dividend or distribution of any kind declared, paid or made by the Company on any class of its capital stock other than regular quarterly dividends on the Company's common stock.

7

        (x)   The documents of the Company filed with the Commission in accordance with the Exchange Act, from and including the commencement of the fiscal year covered by the Company's most recent Annual Report on Form 10-K, at the time they were or hereafter are filed by the Company with the Commission (collectively, the "1934 Act Reports"), complied and will comply in all material respects with the requirements of the Exchange Act and the rules and regulations of the Commission thereunder (the "1934 Act Regulations"), and, at the date of this Purchase Agreement and on the Closing Date, do not and will not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; and other than such instruments, agreements, contracts and other documents as are filed as exhibits to the Company's Annual Report on Form 10-K, Quarterly Reports on Form 10- Q or Current Reports on Form 8-K, there are no instruments, agreements, contracts or documents of a character described in Item 601 of Regulation S-K promulgated by the Commission to which the Company or any of its subsidiaries is a party. The Company is in compliance with all currently applicable requirements of the Exchange Act that were added by the Sarbanes-Oxley Act of 2002.

        (y)   No labor dispute with the employees of the Trust, the Company or any of its subsidiaries exists or, to the knowledge of the executive officers of the Trust or the Company, is imminent, except those which would not, singly or in the aggregate, have a Material Adverse Effect.

        (z)   No filing with, or authorization, approval, consent, license, order, registration, qualification or decree of, any Governmental Entity, other than those that have been made or obtained, is necessary or required for the performance by the Trust or the Company of their respective obligations under the Operative Documents, as applicable, or the consummation by the Trust and the Company of the transactions contemplated by the Operative Documents.

        (aa) Each of the Trust, the Company and each subsidiary of the Company has good and marketable title to all of its respective real and personal properties, in each case free and clear of all Liens and defects, except for those that would not, singly or in the aggregate, have a Material Adverse Effect; and all of the leases and subleases under which the Trust, the Company or any subsidiary of the Company holds properties are in full force and effect, except where the failure of such leases and subleases to be in full force and effect would not, singly or in the aggregate, have a Material Adverse Effect, and none of the Trust, the Company or any subsidiary of the Company has any notice of any claim of any sort that has been asserted by anyone adverse to the rights of the Trust, the Company or any subsidiary of the Company under any such leases or subleases, or affecting or questioning the rights of such entity to the continued possession of the leased or subleased premises under any such lease or sublease, except for such claims that would not, singly or in the aggregate, have a Material Adverse Effect.

        (bb) The Company and each of the Significant Subsidiaries have timely and duly filed all Tax Returns (as defined below) required to be filed by them, and all such Tax Returns are true, correct and complete in all material respects. The Company and each of the Significant Subsidiaries have timely and duly paid in full all material Taxes (as defined below) required to be paid by them (whether or not such amounts are shown as due on any Tax Return). There are no federal, state, or other Tax audits or deficiency assessments proposed or pending with respect to the Company or any of the Significant Subsidiaries, and no such audits or assessments are threatened. As used herein, the terms "Tax" or "Taxes" mean (i) all federal, state, local, and foreign taxes, and other assessments of a similar nature (whether imposed directly or through withholding), including any interest, additions to tax, or penalties applicable thereto, imposed by any Governmental Entity, and (ii) all liabilities in respect of such amounts arising as a result of being a member of any affiliated, consolidated, combined, unitary or similar group, as a successor to another person or by contract. As used herein, the term "Tax Returns" means all federal, state, local, and foreign Tax returns,

8

declarations, statements, reports, schedules, forms, and information returns and any amendments thereto filed or required to be filed with any Governmental Entity.

        (cc) The Trust is not subject to United States federal income tax with respect to income received or accrued on the Junior Subordinated Notes, interest payable by the Company on the Junior Subordinated Notes is deductible by the Company, in whole or in part, for United States federal income tax purposes, and the Trust is not, or will not be within ninety (90) days of the date hereof, subject to more than a de minimis amount of other taxes, duties or other governmental charges. There are no rulemaking or similar proceedings before the United States Internal Revenue Service or comparable federal, state, local or foreign government bodies which involve or affect the Company or any subsidiary, which, if the subject of an action unfavorable to the Company or any subsidiary, could result in a material adverse effect on the Company and the Significant Subsidiaries, taken as a whole.

        (dd) The books, records and accounts of the Company and its subsidiaries accurately and fairly reflect, in reasonable detail, the transactions in, and dispositions of, the assets of, and the results of operations of, the Company and its subsidiaries. The Company and each of its subsidiaries maintains a system of internal accounting controls sufficient to provide reasonable assurances that (i) transactions are executed in accordance with management's general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management's general or specific authorization and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.

        (ee) The Company and the Significant Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts in all material respects as are customary in the businesses in which they are engaged or propose to engage after giving effect to the transactions contemplated hereby including but not limited to, real or personal property owned or leased against theft, damage, destruction, act of vandalism and all other risks customarily insured against. All policies of insurance and fidelity or surety bonds insuring the Company or any of the Significant Subsidiaries or the Company's or Significant Subsidiaries' respective businesses, assets, employees, officers and directors are in full force and effect. The Company and each of the subsidiaries are in compliance with the terms of such policies and instruments in all material respects. Neither the Company nor any Significant Subsidiary has reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business at a cost that would not have a Material Adverse Effect. Within the past twelve months, neither the Company nor any Significant Subsidiary has been denied any insurance coverage which it has sought or for which it has applied.

        (ff)  The Company and its subsidiaries or any person acting on behalf of the Company and its subsidiaries including, without limitation, any director, officer, agent or employee of the Company or its subsidiaries has not, directly or indirectly, while acting on behalf of the Company and its subsidiaries (i) used any corporate funds for unlawful contributions, gifts, entertainment or other unlawful expenses relating to political activity; (ii) made any unlawful payment to foreign or domestic government officials or employees or to foreign or domestic political parties or campaigns from corporate funds; (iii) violated any provision of the Foreign Corrupt Practices Act of 1977, as amended; or (iv) made any other unlawful payment.

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        (gg) The information provided by the Company and the Trust pursuant to this Purchase Agreement and the transactions contemplated hereby does not, as of the date hereof, and will not as of the Closing Date, contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.

        (hh) Except as would not, individually or in the aggregate, result in a Material Adverse Effect, (i) the Company and its subsidiaries have been and are in compliance with applicable Environmental Laws (as defined below), (ii) none of the Company, any of its subsidiaries or, to the best of the Company's knowledge, any other owners of any of the real properties currently or previously owned, leased or operated by the Company or any of its subsidiaries (collectively, the "Properties") at any time or any other party, has at any time released (as such term is defined in CERCLA (as defined below)) or otherwise disposed of Hazardous Materials (as defined below) on, to, in, under or from the Properties, (iii) neither the Company nor any of its subsidiaries has used nor intends to use the Properties or any subsequently acquired properties, other than in compliance with applicable Environmental Laws, (iv) neither the Company nor any of its subsidiaries has received any notice of, or has any knowledge of any occurrence or circumstance which, with notice or passage of time or both, would give rise to a claim under or pursuant to any Environmental Law with respect to the Properties, or their respective assets or arising out of the conduct of the Company or its subsidiaries, (v) none of the Properties are included or, to the best of the Company's knowledge, proposed for inclusion on the National Priorities List issued pursuant to CERCLA by the United States Environmental Protection Agency or, to the best of the Company's knowledge, proposed for inclusion on any similar list or inventory issued pursuant to any other Environmental Law or issued by any other Governmental Entity, (vi) none of the Company, any of its subsidiaries or agents or, to the best of the Company's knowledge, any other person or entity for whose conduct any of them is or may be held responsible, has generated, manufactured, refined, transported, treated, stored, handled, disposed, transferred, produced or processed any Hazardous Material at any of the Properties, except in compliance with all applicable Environmental Laws, and has not transported or arranged for the transport of any Hazardous Material from the Properties to another property, except in compliance with all applicable Environmental Laws, (vii) no lien has been imposed on the Properties by any Governmental Entity in connection with the presence on or off such Property of any Hazardous Material or with respect to an Environmental Law, and (viii) none of the Company, any of its subsidiaries or, to the best of the Company's knowledge, any other person or entity for whose conduct any of them is or may be held responsible, has entered into or been subject to any consent decree, compliance order, or administrative order in connection with an Environmental Law with respect to the Properties or any facilities or improvements or any operations or activities thereon.

        As used herein, "Hazardous Materials" shall include, without limitation, any flammable materials, explosives, radioactive materials; hazardous materials, hazardous substances, hazardous wastes, toxic substances or related materials, asbestos, petroleum, petroleum products and any hazardous material as defined by any federal, state or local environmental law, statute, ordinance, rule or regulation, including, without limitation, the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended, 42 U.S.C. §§ 9601-9675 ("CERCLA"), the Hazardous Materials Transportation Act, as amended, 49 U.S.C. §§ 5101-5127, the Resource Conservation and Recovery Act, as amended, 42 U.S.C. §§ 6901-6992k, the Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C. 11001-11050, the Toxic Substances Control Act, 15 U.S.C. §§ 2601-2692, the Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. §§ 136-136y, the Clean Air Act, 42 U.S.C. §§ 7401-7642, the Clean Water Act (Federal Water Pollution Control Act), 33 U.S.C. §§ 1251-1387, the Safe Drinking Water Act, 42 U.S.C. §§ 300f-300j-26, and the Occupational Safety and Health Act, 29 U.S.C. §§ 651-678, and any analogous state laws, as any of the above may be amended from time to time and in the regulations promulgated pursuant to each of the foregoing (including environmental

10

statutes and laws not specifically defined herein) (individually, an "Environmental Law" and collectively, the "Environmental Laws") or by any Governmental Entity.

        (ii)   In the ordinary course of its business, the Company periodically reviews the effect of Environmental Laws on the business, operations and properties of the Company and its subsidiaries, and periodically identifies and evaluates associated costs and liabilities (including, without limitation, any capital or operating expenditures required for clean-up, closure of properties or compliance with Environmental Laws or any permit, license or approval, any related constraints on operating activities and any potential liabilities to third parties). On the basis of such reviews and the amount of its established reserves, the Company has reasonably concluded that such associated costs and liabilities would not, individually or in the aggregate, result in a Material Adverse Change.

        5.Representations and Warranties of the Purchaser.    The Purchaser represents and warrants to, and agrees with, the Company and the Trust as follows:

        (a)   The Purchaser is aware that the Preferred Securities have not been and will not be registered under the Securities Act and may not be offered or sold within the United States or to "U.S. persons" (as defined in Regulation S under the Securities Act) except in accordance with Rule 903 of Regulation S under the Securities Act or pursuant to an exemption from the registration requirements of the Securities Act.

        (b)   The Purchaser is an "accredited investor," as such term is defined in Rule 501(a) of Regulation D under the Securities Act.

        (c)   Neither the Purchaser, nor any of the Purchaser's affiliates, nor any person acting on the Purchaser's or the Purchaser's Affiliate's behalf has engaged, or will engage, in any form of "general solicitation or general advertising" (within the meaning of Regulation D under the Securities Act) in connection with any offer or sale of the Preferred Securities.

        (d)   The Purchaser understands and acknowledges that (i) no public market exists for any of the Preferred Securities and that it is unlikely that a public market will ever exist for the Preferred Securities, (ii) the Purchaser is purchasing the Preferred Securities for its own account, for investment and not with a view to, or for offer or sale in connection with, any distribution thereof in violation of the Securities Act or other applicable securities laws, subject to any requirement of law that the disposition of its property be at all times within its control and subject to its ability to resell such Preferred Securities pursuant to an effective registration statement under the Securities Act or pursuant to an exemption therefrom or in a transaction not subject thereto, and the Purchaser agrees to the legends and transfer restrictions applicable to the Preferred Securities contained in the Indenture, and (iii) the Purchaser has had the opportunity to ask questions of, and receive answers and request additional information from, the Company and is aware that it may be required to bear the economic risk of an investment in the Preferred Securities.

        (e)   The Purchaser is a company with limited liability duly incorporated, validly existing and in good standing under the laws of the jurisdiction in which it is organized with all requisite (i) power and authority to execute, deliver and perform the Operative Documents to which it is a party, to make the representations and warranties specified herein and therein and to consummate the transactions contemplated herein and (ii) right and power to purchase the Preferred Securities.

        (f)    This Purchase Agreement has been duly authorized, executed and delivered by the Purchaser and no filing with, or authorization, approval, consent, license, order registration, qualification or decree of, any governmental body, agency or court having jurisdiction over the Purchaser, other than those that have been made or obtained, is necessary or required for the performance by the Purchaser of its obligations under this Purchase Agreement or to consummate

11

the transactions contemplated herein. This Purchase Agreement does not conflict with any other agreement to which the Purchaser is a party.

        (g)   The Purchaser is a "Qualified Purchaser" as such term is defined in Section 2(a)(51) of the Investment Company Act.

        6.Covenants and Agreements of the Company and the Trust.    The Company and the Trust jointly and severally agree with the Purchaser as follows:

        (a)   During the period from the date of this Agreement to the Closing Date, the Company and the Trust shall use their best efforts and take all action necessary or appropriate to cause their representations and warranties contained in Section 4 hereof to be true as of the Closing Date, after giving effect to the transactions contemplated by this Purchase Agreement, as if made on and as of the Closing Date.

        (b)   Neither the Company nor the Trust will, nor will either of them permit any of its Affiliates to, nor will either of them permit any person acting on its or their behalf (other than the Purchaser) to, resell any Preferred Securities that have been acquired by any of them.

        (c)   Neither the Company nor the Trust will, nor will either of them permit any of their Affiliates or any person acting on their behalf to, engage in any "directed selling efforts" within the meaning of Regulation S under the Securities Act with respect to the Preferred Securities.

        (d)   Neither the Company nor the Trust will, nor will either of them permit any of their Affiliates or any person acting on their behalf to, directly or indirectly, make offers or sales of any security, or solicit offers to buy any security, under circumstances that would require the registration of any of the Preferred Securities under the Securities Act.

        (e)   Neither the Company nor the Trust will, nor will either of them permit any of its Affiliates or any person acting on their behalf to, engage in any form of "general solicitation or general advertising" (within the meaning of Regulation D) in connection with any offer or sale of the any of the Preferred Securities.

        (f)    So long as any of the Preferred Securities are outstanding, (i) the Preferred Securities shall not be listed on a national securities exchange registered under section 6 of the Exchange Act or quoted in a U.S. automated inter-dealer quotation system and (ii) neither the Company nor the Trust shall be an open-end investment company, unit investment trust or face-amount certificate company that is, or is required to be, registered under section 8 of the Investment Company Act, and, the Preferred Securities shall otherwise satisfy the eligibility requirements of Rule 144A(d)(3).

        (g)   Each of the Company and the Trust shall furnish to (i) the holders, and subsequent holders of the Preferred Securities, (ii) Taberna Capital Management, LLC (at 450 Park Avenue, 23rd Floor, New York, New York 10022, or such other address as designated by Taberna Capital Management, LLC) and (iii) any beneficial owner of the Preferred Securities reasonably identified to the Company and the Trust (which identification may be made by either such beneficial owner or by Taberna Capital Management, LLC), a duly completed and executed certificate in the form attached hereto as Annex F, including the financial statements referenced in such Annex, which certificate and financial statements shall be so furnished by the Company and the Trust not later than forty five (45) days after the end of each of the first three fiscal quarters of each fiscal year of the Company and not later than ninety (90) days after the end of each fiscal year of the Company, provided however that such financial statements may be made available via Electronic Data Gathering Analysis and Retrieval ("EDGAR").

        (h)   Each of the Company and the Trust will, during any period in which it is not subject to and in compliance with section 13 or 15(d) of the Exchange Act, or it is not exempt from such reporting requirements pursuant to and in compliance with Rule 12g3-2(b) under the Exchange

12

Act, shall provide to each holder of the Preferred Securities and to each prospective purchaser (as designated by such holder) of the Preferred Securities, upon the request of such holder or prospective purchaser, any information required to be provided by Rule 144A(d)(4) under the Securities Act. If the Company and the Trust are required to register under the Exchange Act, such reports filed in compliance with Rule 12g3-2(b) shall be sufficient information as required above. This covenant is intended to be for the benefit of the Purchaser, the holders of the Preferred Securities, and the prospective purchasers designated by the Purchaser and such holders, from time to time, of the Preferred Securities.

        (i)    Neither the Company nor the Trust will, until one hundred eighty (180) days following the Closing Date, without the Purchaser's prior written consent, offer, sell, contract to sell, grant any option to purchase or otherwise dispose of, directly or indirectly, (i) any Preferred Securities or other securities substantially similar to the Preferred Securities other than as contemplated by this Purchase Agreement or (ii) any other securities convertible into, or exercisable or exchangeable for, any Preferred Securities or other securities substantially similar to the Preferred Securities.

        (j)    Neither the Company nor the Trust will identify any of the Indemnified Parties (as defined below) in a press release or any other public statement without the consent of such Indemnified Party.

        (1)   Purchaser and each successor to Purchaser's interest in the Preferred Securities is granted the right under the Indenture and Amended and Restated Trust Agreement to request the substitution of new notes for all or a portion of the Junior Subordinated Notes held by the Trust. The Trust is required under the terms of the Indenture and Amended and Restated Trust Agreement to accept such newly issued notes (the "Replacement Notes") and surrender a like amount of Junior Subordinated Notes to Depositor. The Replacement Notes shall bear terms identical to the Junior Subordinated Notes with the sole exception of interest payment dates (and corresponding redemption date and maturity date), which will be specified by Purchaser or applicable successor. In no event will the interest payment dates (and corresponding redemption date and maturity date) on the Replacement Notes vary by more than sixty (60) calendar days from the original interest payment dates (and corresponding redemption date and maturity date) under the Junior Subordinated Notes.

        Each of the Company and the Trust acknowledges and agrees that, to the extent of the principal amount of the Replacement Notes issued to the Trust under the Indenture, Purchaser (and each successor to Purchaser's interest in the Preferred Securities) will require the Trust to issue a new series of Preferred Securities having a principal amount related to the principal amount of the Replacement Notes (the "Replacement Securities") to designated holders of Preferred Securities, provided that any such Replacement Securities, and any distributions from the Trust to the holders of Replacement Securities, must relate solely to the Trust's interest in the Replacement Notes and in no event will the Preferred Securities other than the Replacement Securities share in the returns from any Replacement Notes. The Replacement Securities shall have payment dates (and corresponding redemption date and maturity date) that relate to the Replacement Notes.

        Each of the Company and the Trust agrees to cooperate with all reasonable requests of Purchaser in connection with any of the foregoing, provided that no action requested of the Company or the Trust in connection with such cooperation shall materially increase the obligations or materially decrease the rights of the Company pursuant to such documents.

        7.Payment of Expenses.    The Company, as depositor of the Trust, agrees to pay all costs and expenses incident to the performance of the obligations of the Company and the Trust under this Purchase Agreement, whether or not the transactions contemplated herein are consummated or this Purchase Agreement is terminated, including all costs and expenses incident to (i) the authorization,

13

issuance, sale and delivery of the Preferred Securities and any taxes payable in connection therewith; (ii) the fees and expenses of the counsel, the accountants and any other experts or advisors retained by the Company or the Trust; (iii) the fees and all reasonable expenses of the Property Trustee, the Delaware Trustee, the Indenture Trustee and any other trustee or paying agent appointed under the Operative Documents, including the fees and disbursements of counsel for such trustees, which fees shall not exceed a $2,000 acceptance fee, $3,500 for the fees and expenses of Richards, Layton & Finger, P.A., special Delaware counsel retained by the Delaware Trustee in connection with the Closing, and $4,000 in administrative fees annually; and (iv) $30,000 for the fees and expenses of DLA Piper Rudnick Gray Cary US LLP, special counsel retained by Taberna Capital Management, LLC.

        If the sale of the Preferred Securities provided for in this Purchase Agreement is not consummated because any condition set forth in Section 3 hereof to be satisfied by either the Company or the Trust is not satisfied, because this Purchase Agreement is terminated pursuant to Section 9 or because of any failure, refusal or inability on the part of the Company or the Trust to perform all obligations and satisfy all conditions on its part to be performed or satisfied hereunder other than by reason of a default by the Purchaser, the Company will reimburse the Purchaser upon demand for all reasonable out-of-pocket expenses (including the fees and expenses of each of the Purchaser's counsel specified in subparagraphs (v) and (vi) of the immediately preceding paragraph) that shall have been incurred by the Purchaser in connection with the proposed purchase and sale of the Preferred Securities. The Company shall not in any event be liable to the Purchaser for the loss of anticipated profits from the transactions contemplated by this Purchase Agreement.

        8.Indemnification.    (a) The Sellers agree, jointly and severally, to indemnify and hold harmless the Purchaser, the Purchaser's affiliates, Taberna Capital Management, LLC, Cohen Bros. & Company, and their respective affiliates, and Merrill Lynch, Pierce, Fenner & Smith Incorporated (collectively, the "Indemnified Parties") each person, if any, who controls any of the Indemnified Parties within the meaning of the Securities Act or the Exchange Act, and the Indemnified Parties' respective directors, officers, employees and agents and each person, if any, who controls the Indemnified Parties within the meaning of the Securities Act, or the U.S. Securities Exchange Act of 1934, as amended (the "Exchange Act") against any losses, claims, damages or liabilities, joint or several, to which the Indemnified Parties may become subject, under the Securities Act, the Exchange Act or other federal or state statutory law or regulation, at common law or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon (i) any untrue statement or alleged untrue statement of a material fact contained in any information or documents furnished or made available to the Purchaser by or on behalf of the Company, (ii) the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, (iii) the breach or alleged breach of any representation, warranty, or agreement of either Seller contained herein, or (iv) the execution and delivery by the Company and/or the Trust of this Purchase Agreement or any of the other Operative Documents and/or the consummation by the Company and/or the Trust of the transactions contemplated hereby and thereby, and agrees to reimburse each such Indemnified Party, as incurred, for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action. This indemnity agreement will be in addition to any liability which the Company or the Trust may otherwise have.

        (b)   The Company agrees to indemnify the Trust against all loss, liability, claim, damage and expense whatsoever due from the Trust under paragraph (a) above.

        (c)   Promptly after receipt by an Indemnified Party under this Section 8 of notice of the commencement of any action, such Indemnified Party will, if a claim in respect thereof is to be made against the indemnifying party under this Section 8, promptly notify the indemnifying party in writing of the commencement thereof; but the failure so to notify the indemnifying party (i) will not relieve the indemnifying party from liability under paragraph (a) above unless and to the

14

extent that such failure results in the forfeiture by the indemnifying party of material rights and defenses and (ii) will not, in any event, relieve the indemnifying party from any obligations to any Indemnified Party other than the indemnification obligation provided in paragraph (a) above. Purchaser shall be entitled to appoint counsel to represent the Indemnified Party in any action for which indemnification is sought. An indemnifying party may participate at its own expense in the defense of any such action; provided, that counsel to the indemnifying party shall not (except with the consent of the Indemnified Party) also be counsel to the Indemnified Party. In no event shall the indemnifying parties be liable for fees and expenses of more than one counsel (in addition to any local counsel) separate from their own counsel for all Indemnified Parties in connection with any one action or separate but similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances, unless an Indemnified Party believes that its interests are not aligned with the interests of another Indemnified Party or that a conflict of interest might result. An indemnifying party will not, without the prior written consent of the Indemnified Parties, settle or compromise or consent to the entry of any.judgment with respect to any pending or threatened claim, action, suit or proceeding in respect of which indemnification may be sought hereunder (whether or not the Indemnified Parties are actual or potential parties to such claim, action, suit or proceeding) unless such settlement, compromise or consent includes an unconditional release of each Indemnified Party from all liability arising out of such claim, action, suit or proceeding.

        9.Termination; Representations and Indemnities to Survive.    This Purchase Agreement shall be subject to termination in the absolute discretion of the Purchaser, by notice given to the Company and the Trust prior to delivery of and payment for the Preferred Securities, if prior to such time (i) a downgrading shall have occurred in the rating accorded the Company's debt securities or preferred stock by any "nationally recognized statistical rating organization," as that term is used by the Commission in Rule 15c3-1(c)(2)(vi)(F) under the Exchange Act, or such organization shall have publicly announced that it has under surveillance or review, with possible negative implications, its rating of the Company's debt securities or preferred stock, (ii) the Trust shall be unable to sell and deliver to the Purchaser at least $40,000,000 stated liquidation value of Preferred Securities, (iii) a suspension or material limitation in trading in securities generally shall have occurred on the New York Stock Exchange, (iv) a suspension or material limitation in trading in any of the Company's securities shall have occurred on the exchange or quotation system upon which the Company' securities are traded, if any, (v) a general moratorium on commercial business activities shall have been declared either by federal or applicable state authorities or (vi) there shall have occurred any outbreak or escalation of hostilities, or declaration by the United States of a national emergency or war or other calamity or crisis the effect of which on financial markets is such as to make it, in the Purchaser's judgment, impracticable or inadvisable to proceed with the offering or delivery of the Preferred Securities. The respective agreements, representations, warranties, indemnities and other statements of the Company and the Trust or their respective officers or trustees and of the Purchaser set forth in or made pursuant to this Purchase Agreement will remain in full force and effect, regardless of any investigation made by or on behalf of the Purchaser, the Company or the Trust or any of the their respective officers, directors, trustees or controlling persons, and will survive delivery of and payment for the Preferred Securities. The provisions of Sections 7 and 8 shall survive the termination or cancellation of this Purchase Agreement.

        10.Amendments.    This Purchase Agreement may not be modified, amended, altered or supplemented, except upon the execution and delivery of a written agreement by each of the parties hereto.

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        11.Notices.

        (a)   Any communication shall be given by letter or facsimile, in the case of notices to the Issuer, to it at:

Bresler & Reiner Statutory Trust I
c/o Bresler & Reiner, Inc.
11200 Rockville Pike, Suite 502
Rockville, MD 20852
Facsimile:(301) 945-4301
Attention: Darryl M. Edelstein

in the case of notices to the Sponsor, to it at:

Bresler & Reiner, Inc.
11200 Rockville Pike, Suite 502
Rockville, MD 20852
Facsimile: (301) 945-4301
Attention: Darryl M. Edelstein

and in the case of notices to the Purchaser, all communications hereunder shall be in writing and effective only on receipt, and, if sent to the Purchaser, shall be mailed, delivered by hand or courier or sent by facsimile and confirmed to the Purchaser at:

Merrill Lynch International
c/o Taberna Capital Management, LLC
450 Park Avenue, 23rd Floor
New York, New York 10022
Facsimile: (215) 735-1499
Attention: Thomas Bogal

or other address as the Purchaser shall designate for such purpose in a notice to the company and the Trust

with a copy to:

DLA Piper Rudnick Gray Cary US LLP
1221 S. Mopac Expressway, Suite 400
Austin, TX 78746
Facsimile: (512) 457-7001
Attention: David B. Jones

        (b)   Any such communication shall take effect, in the case of a letter, at the time of delivery and in the case of facsimile, at the time of dispatch.

        (c)   Any communication not by facsimile shall be confirmed by letter but failure to send or receive the letter of confirmation shall not invalidate the original communication.

        12.Successors and Assigns.    This Purchase Agreement will inure to the benefit of and be binding upon the parties hereto and their respective successors and permitted assigns. Nothing expressed or mentioned in this Purchase Agreement is intended or shall be construed to give any person other than the parties hereto and the affiliates, directors, officers, employees, agents and controlling persons referred to in Section 8 hereof and their successors, assigns, heirs and legal representatives, any right or obligation hereunder. None of the rights or obligations of the Company or the Trust under this Purchase Agreement may be assigned, whether by operation of law or otherwise, without the Purchaser's prior written consent; however, the Company may consolidate with or merge into another Person or convey, transfer, or lease its properties and assets substantially as an entirety to any Person

16

without the Purchaser's prior written consent, provided that the entity formed by such consolidation or into which the Company is merged or the Person that acquired by conveyance or transfer, or that leases, the properties, and assets of the Company substantially as an entirety shall (i) be an entity organized and existing under the laws of the United States of America or any State or Territory thereof or the District of Columbia and (ii) expressly assume the due and punctual payment of the principal of and any premium and interest on the Junior Subordinated Notes and the performance of every covenant of this Purchase Agreement on the part of the Company to be performed or observed. The rights and obligations of the Purchaser under this Purchase Agreement may be assigned by the Purchaser without the Company's or the Trust's consent; provided that the assignee assumes the obligations of the Purchaser under this Purchase Agreement.

        13.Applicable Law.    THIS PURCHASE AGREEMENT WILL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK WITHOUT REFERENCE TO PRINCIPLES OF CONFLICTS OF LAW (OTHER THAN SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW).

        14.Submission To Jurisdiction.    ANY LEGAL ACTION OR PROCEEDING BY OR AGAINST ANY PARTY HERETO OR WITH RESPECT TO OR ARISING OUT OF THIS PURCHASE AGREEMENT MAY BE BROUGHT IN OR REMOVED TO THE COURTS OF THE STATE OF NEW YORK, IN AND FOR THE COUNTY OF NEW YORK, OR OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK (IN EACH CASE SITTING IN THE BOROUGH OF MANHATTAN). BY EXECUTION AND DELIVERY OF THIS PURCHASE AGREEMENT, EACH PARTY ACCEPTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS (AND COURTS OF APPEALS THEREFROM) FOR LEGAL PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS PURCHASE AGREEMENT.

        15.Counterparts and Facsimile.    This Purchase Agreement may be executed by any one or more of the parties hereto in any number of counterparts, each of which shall be deemed to be an original, but all such counterparts shall together constitute one and the same instrument. This Purchase Agreement may be executed by any one or more of the parties hereto by facsimile.

17

        IN WITNESS WHEREOF, this Purchase Agreement has been entered into as of the date first written above.

BRESLER & REINER, INC.
By:	/s/  SIDNEY M BRESLER
	Name:	Sidney M Bresler
	Title:	CEO
BRESLER & REINER STATUTORY TRUST I
By:	Bresler & Reiner, Inc., as Depositor
	By:	/s/  DARRYL M. EDELSTEIN
		Name:  Darryl M. Edelstein
		Title:

18

Merrill Lynch International
By:	/s/  WILLIAM BERRY
	Name:	William Berry
	Title:	Managing Director

19

SCHEDULE 1

List of Significant Subsidiaries

Schedule 1-1

ANNEX A-I

        Pursuant to Section 3(c)(i) of the Purchase Agreement, counsel for the Company, shall deliver an opinion to the effect that:

        (i)    the Company and each Significant Subsidiary is validly existing as a corporation or other organization in good standing under the laws of the jurisdiction in which it is chartered or organized; each of the Company and the Significant Subsidiaries has full corporate power and authority to own or lease its properties and to conduct its business as such business is currently conducted in all material respects; all outstanding shares of capital stock of the Significant Subsidiaries have been duly authorized and validly issued, and are fully paid and nonassessable and owned of record and beneficially, directly or indirectly by the Company; the Company has corporate power and authority to (i) execute and deliver, and to perform its obligations under, the Operative Documents to which it is a party and (iii) issue and perform its obligations under the Notes;

        (ii)   neither the issue and sale of the Common Securities, the Preferred Securities or the Junior Subordinated Notes, nor the purchase by the Trust of the Junior Subordinated Notes, nor the execution and delivery of and compliance with the Operative Documents by the Company or the Trust nor the consummation of the transactions contemplated thereby will constitute a breach or violation of the Trust Agreement or the charter or by-laws or similar organizational documents of the Company;

        (iii)  the Trust Agreement has been duly authorized, executed and delivered by the Company and duly executed and delivered by the Administrative Trustees;

        (iv)  the Indenture has been duly authorized, executed and delivered by the Company and, assuming it has been duly authorized, executed and delivered by the Indenture Trustee, constitutes a legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms, subject to applicable bankruptcy, insolvency and similar laws affecting creditors' rights generally and to general principles of equity;

        (v)   the Junior Subordinated Notes have been duly authorized and executed by the Company and delivered to the Indenture Trustee for authentication in accordance with the Indenture and, when authenticated in accordance with the provisions of the Indenture and delivered to the Trust against payment therefor, will constitute legal, valid and binding obligations of the Company entitled to the benefits of the Indenture and enforceable against the Company in accordance with their terms, subject to applicable bankruptcy, insolvency and similar laws affecting creditors' rights generally and to general principles of equity;

        (vi)  the Trust is not, and, following the issuance of the Preferred Securities and the consummation of the transactions contemplated by the Operative Documents and the application of the proceeds therefrom, the Trust will not be, an "investment company" or an entity "controlled" by an "investment company," in each case within the meaning of Section 3(a) of the Investment Company Act;

        (vii) assuming the truth and accuracy of the representations and warranties of the Purchaser in the Purchase Agreement, it is not necessary in connection with the offer, sale and delivery of the Common Securities, the Preferred Securities and the Junior Subordinated Notes to register the same under the Securities Act of 1933, as amended, under the circumstances contemplated in the Purchase Agreement and the Trust Agreement, or to require qualification of the Indenture under the Trust Indenture Act of 1939, as amended;

        (viii) the Purchase Agreement has been duly authorized, executed and delivered by each of the Company and the Trust and constitutes a legal, valid and binding obligation of the Company and

A-I-1

the Trust enforceable against the Company and the Trust in accordance with its terms, subject to applicable bankruptcy, insolvency and similar laws affecting creditors' rights generally and to general principles of equity;

        (ix)  neither the Company nor any of its "Affiliates" (as defined in Rule 501(b) of Regulation D under the Securities Act ("Regulation D") has directly or indirectly, made offers or sales of any security, or solicited offers to buy any security, under circumstances that would require the registration of any of the Notes, the Preferred Securities or the Common Securities being issued pursuant to this transaction under the Securities Act, engaged in any form of general solicitation or general advertising (within the meaning of Regulation D) in connection with any offer or sale of any of the Securities, or engaged, nor will engage, in any "directed selling efforts" within the meaning of Regulation S under the Securities Act with respect to the Securities;

        (x)   neither the Company, the Trust, nor any Significant Subsidiaries of the Company is in breach or violation of, or default under, with or without notice or lapse of time or both, its articles of incorporation or charter, by-laws or other governing documents (including without limitation, the Trust Agreement); the execution, delivery and performance of the Operative Documents and the consummation of the transactions contemplated by the Purchase Agreement and the Operative Documents do not and will not (A) result in the creation or imposition of any material lien, claim, charge, encumbrance or restriction upon any property or assets of the Company or the Significant Subsidiaries, or (B) conflict with, constitute a material breach or violation of, or constitute a material default under, with or without notice or lapse of time or both, any of the terms, provisions or conditions of (x) the Articles of Incorporation or Charter, By-Laws or other governing documents of the Company or its Significant Subsidiaries, or (y) to the best of our knowledge, any material contract, indenture, mortgage, deed of trust, loan or credit agreement, note, lease, franchise, license or any other agreement or instrument to which the Company or its Significant Subsidiaries is a party or by which any of them or any of their respective properties may be bound or (z) any order, decree, judgment, franchise, license, permit, rule or regulation of any court, arbitrator, government, or governmental agency or instrumentality, domestic or foreign, known to us having jurisdiction over the Company or its Significant Subsidiaries or any of their respective properties which, in the case of each of (A) or (B) above, is material to the Company and the Significant Subsidiaries on a consolidated basis;

        (xi)  except for filings, registrations or qualifications that may be required by applicable securities laws, no authorization, approval, consent or order of, or filing, registration or qualification with, any person (including, without limitation, any court, governmental body or authority) is required under the laws of the State of Delaware in connection with the transactions contemplated by the Operative Documents in connection with the offer and sale of the Securities as contemplated by the Operative Documents;

        (xii) (A) no action, suit or proceeding at law or in equity is pending or threatened to which the Company, the Trust or the Significant Subsidiaries are or may be a party, and (B) no action, suit or proceeding is pending or threatened against or affecting the Company, the Trust or the Significant Subsidiaries or any of their properties, before or by any court or governmental official, commission, board or other administrative agency, authority or body, or any arbitrator, wherein an unfavorable decision, ruling or finding could reasonably be expected to have a material adverse effect on the consummation of the transactions contemplated by the Operative Documents or the issuance and sale of the Common Securities, or the Preferred Securities as contemplated therein or the condition (financial or otherwise), earnings, affairs, business, or results of operations of the Company, the Trust and the Significant Subsidiaries on a consolidated basis; and

A-I-2

ANNEX A-II

        Pursuant to Section 3(c)(ii) of the Purchase Agreement, General Counsel for the Company shall deliver an opinion, or the Company shall provide an Officers' Certificate, to the effect that:

        (i)    all of the issued and outstanding shares of capital stock of each Significant Subsidiary are owned of record by the Company, and the issuance of the Preferred Securities and the Common Securities is not subject to any contractual preemptive rights known to such [counsel/officer];

        (ii)   no consent, approval, authorization or order of any court or Governmental Entity is required for the issue and sale of the Common Securities, the Preferred Securities or the Junior Subordinated Notes, the purchase by the Trust of the Junior Subordinated Notes, the execution and delivery of and compliance with the Operative Documents by the Company or the Trust or the consummation of the transactions contemplated in the Operative Documents, except such approvals (specified in such [opinion/certificate]) as have been obtained;

        (iii)  to the knowledge of such [counsel/officer], there is no action, suit or proceeding before or by any government, governmental instrumentality, arbitrator or court, domestic or foreign, now pending or threatened against or affecting the Trust or the Company or any Significant Subsidiary that could adversely affect the consummation of the transactions contemplated by the Operative Documents or could have a Material Adverse Effect.

        (iv)  The execution, delivery and performance of the Operative Documents, as applicable, by the Company and the Trust and the consummation by the Company and the Trust of the transactions contemplated by the Operative Documents, as applicable, (i) will not result in any violation of the charter or bylaws or similar organizational documents of the Company, the charter or bylaws or similar organizational documents of the Company's subsidiaries, the Trust Agreement or the Certificate of Trust of the Trust, and (ii) will not conflict with, or result in a breach of any of the terms or provisions of, or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, or result in the creation or imposition of any lien, charge and encumbrance upon any assets or properties of the Company or any Significant Subsidiary under, (a) any agreement, indenture, mortgage or instrument that the Company or any Significant Subsidiary of the Company is a party to or by which it may be bound or to which any of its assets or properties may be subject, or (b) any existing applicable law, rule or administrative regulation of any court or governmental agency or authority having jurisdiction over the Company or any Significant Subsidiary of the Company or any of their respective assets or properties, except in case of (ii), where any such violation, conflict, breach, default, lien, charge or encumbrance, would not have a material adverse effect on the assets, properties, business, results of operations or financial condition of the Company and its subsidiaries, taken as whole.

A-II-1

ANNEX B

        Pursuant to Section 3(d) of the Purchase Agreement, special tax counsel for the Purchaser, shall deliver an opinion to the effect that:

It is our opinion that, under current law and assuming the performance of the Operative Documents in accordance with the terms described therein, the Subordinated Debt Securities will be treated for United States federal income tax purposes as indebtedness of the Company. It is our opinion that the Trust will be classified as a grantor trust and not as an association or publicly traded partnership taxable as a corporation.

        In rendering such opinions, such counsel may (A) state that its opinion is limited to the federal laws of the United States and (B) rely as to matters of fact, to the extent deemed proper, on certificates of responsible officers of the Company and public officials.

B-1

ANNEX C

        Pursuant to Section 3(e) of the Purchase Agreement, Richards, Layton & Finger, P.A., special Delaware counsel for the Delaware Trustee, shall deliver an opinion to the effect that:

        (i)    the Trust has been duly created and is validly existing in good standing as a statutory trust under the Delaware Statutory Trust Act, and all filings required under the laws of the State of Delaware with respect to the creation and valid existence of the Trust as a statutory trust have been made;

        (ii)   under the Delaware Statutory Trust Act and the Trust Agreement, the Trust has the trust power and authority (A) to own property and conduct its business, all as described in the Trust Agreement, (B) to execute and deliver, and to perform its obligations under, each of the Purchase Agreement, the Common Securities Subscription Agreement, the Junior Subordinated Note Purchase Agreement and the Preferred Securities and the Common Securities and (C) to purchase and hold the Junior Subordinated Notes;

        (iii)  under the Delaware Statutory Trust Act, the certificate attached to the Trust Agreement as Exhibit C is an appropriate form of certificate to evidence ownership of the Preferred Securities; the Preferred Securities have been duly authorized by the Trust Agreement and, when issued and delivered against payment of the consideration as set forth in the Purchase Agreement, the Preferred Securities will be validly issued and (subject to the qualifications set forth in this paragraph) fully paid and nonassessable and will represent undivided beneficial interests in the assets of the Trust; the holders of the Preferred Securities will be entitled to the benefits of the Trust Agreement and, as beneficial owners of the Trust, will be entitled to the same limitation of personal liability extended to stockholders of private corporations for profit organized under the General Corporation Law of the State of Delaware; and such counsel may note that the holders of the Preferred Securities may be obligated, pursuant to the Trust Agreement, to (A) provide indemnity and/or security in connection with and pay taxes or governmental charges arising from transfers or exchanges of Preferred Securities certificates and the issuance of replacement Preferred Securities certificates and (B) provide security or indemnity in connection with requests of or directions to the Property Trustee to exercise its rights and remedies under the Trust Agreement;

        (iv)  the Common Securities have been duly authorized by the Trust Agreement and, when issued and delivered by the Trust to the Company against payment therefor as described in the Trust Agreement and the Common Securities Subscription Agreement, will be validly issued and fully paid and will represent undivided beneficial interests in the assets of the Trust entitled to the benefits of the Trust Agreement;

        (v)   under the Delaware Statutory Trust Act and the Trust Agreement, the issuance of the Preferred Securities and the Common Securities is not subject to preemptive or other similar rights;

        (vi)  under the Delaware Statutory Trust Act and the Trust Agreement, the execution and delivery by the Trust of the Purchase Agreement, the Common Securities Subscription Agreement and the Junior Subordinated Note Purchase Agreement, and the performance by the Trust of its obligations thereunder, have been duly authorized by all necessary trust action on the part of the Trust;

        (vii) the Trust Agreement constitutes a legal, valid and binding obligation of the Company and the Trustees, and is enforceable against the Company and the Trustees, in accordance with its terms subject, as to enforcement, to the effect upon the Trust Agreement of (i) bankruptcy, insolvency, moratorium, receivership, reorganization, liquidation, fraudulent conveyance or transfer and other similar laws relating to or affecting the rights and remedies of creditors generally,

C-1

(ii) principles of equity, including applicable law relating to fiduciary duties (regardless of whether considered and applied in a proceeding in equity or at law), and (iii) the effect of applicable public policy on the enforceability of provisions relating to indemnification or contribution;

        (viii) the issuance and sale by the Trust of the Preferred Securities and the Common Securities, the purchase by the Trust of the Junior Subordinated Notes, the execution, delivery and performance by the Trust of the Purchase Agreement, the Common Securities Subscription Agreement and the Junior Subordinated Note Purchase Agreement, the consummation by the Trust of the transactions contemplated by the Purchase Agreement and compliance by the Trust with its obligations thereunder do not violate (i) any of the provisions of the Certificate of Trust or the Amended and Restated Trust Agreement or (ii) any applicable Delaware law, rule or regulation;

        (ix)  no filing with, or authorization, approval, consent, license, order, registration, qualification or decree of, any Delaware court or Delaware Governmental Entity or Delaware agency is necessary or required solely in connection with the issuance and sale by the Trust of the Common Securities or the Preferred Securities, the purchase by the Trust of the Junior Subordinated Notes, the execution, delivery and performance by the Trust of the Purchase Agreement, the Common Securities Subscription Agreement and the Junior Subordinated Note Purchase Agreement, the consummation by the Trust of the transactions contemplated by the Purchase Agreement and compliance by the Trust with its obligations thereunder; and

        (x)   the holders of the Preferred Securities (other than those holders who reside or are domiciled in the State of Delaware) will have no liability for income taxes imposed by the State of Delaware solely as a result of their participation in the Trust and the Trust will not be liable for any income tax imposed by the State of Delaware.

        In rendering such opinions, such counsel may (A) state that its opinion is limited to the laws of the State of Delaware, (B) rely as to matters of fact, to the extent deemed proper, on certificates of responsible officers of the Company and public officials and (C) take customary assumptions and exceptions as to enforceability and other matters.

C-2

ANNEX D

        Pursuant to Section 3(0 of the Purchase Agreement, Gardere Wynne Sewell LLP, special counsel for the Property Trustee and the Indenture Trustee, shall deliver an opinion to the effect that:

        (i)    JPMorgan Chase Bank, National Association (the "Bank") is a national banking association with trust powers, duly and validly existing under the laws of the United States of America, with corporate power and authority to execute, deliver and perform its obligations under the Indenture and to authenticate and deliver the Securities, and is duly eligible and qualified to act as Trustee under the Indenture pursuant to Section 6.1 thereof and as Property Trustee under the Trust Agreement pursuant to Section 8.2 thereof. (The Indenture and the Trust Agreement are each, an "Agreement" and together, the "Agreements").

        (ii)   Each Agreement has been duly authorized, executed and delivered by the Bank and constitutes the valid and binding obligation of the Bank, enforceable against it in accordance with its terms except (A) as may be limited by bankruptcy, fraudulent conveyance, fraudulent transfer, insolvency, reorganization, liquidation, receivership, moratorium or other similar laws now or hereafter in effect relating to creditors' rights generally, and by general equitable principles, regardless of whether considered in a proceeding in equity or at law and (B) that the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought;

        (iii)  Neither the execution or delivery by the Bank of the Agreements, the authentication and delivery of the Preferred Securities (as defined in the Trust Agreement) and junior subordinated notes (issued under the Indenture, and together with the Preferred Securities, the "Securities") by the Trustee pursuant to the terms of the Agreements, respectively, nor the performance by the Bank of its obligations under the Agreements (A) requires the consent or approval of, the giving of notice to or the registration or filing with, any governmental authority or agency under any existing law of the United States of America governing the banking or trust powers of the Bank or (B) violates or conflicts with the Articles of Association or By-laws of the Bank or any law or regulation of the State of New York or the United States of America governing the banking or trust powers of the Bank;

        (iv)  The Securities have been authenticated and delivered by a duly authorized officer of the Bank.

        In rendering such opinions, such counsel may (A) state that its opinion is limited to the laws of the State of New York and the laws of the United States of America, (B) rely as to matters of fact, to the extent deemed proper, on certificates of responsible officers of JPMorgan Chase Bank, National Association, the Company and public officials, and (C) make customary assumptions and exceptions as to enforceability and other matters.

D-1

ANNEX E

        Pursuant to Section 3(g) of the Purchase Agreement, Richards, Layton & Finger, P.A., counsel for the Delaware Trustee, shall deliver an opinion to the effect that:

        (i)    Chase Bank USA, National Association is duly formed and validly existing as a national banking association under the federal laws of the United States of America with trust powers and with its principal place of business in the State of Delaware;

        (ii)   Chase Bank USA, National Association has the corporate power and authority to execute, deliver and perform its obligations under, and has taken all necessary corporate action to authorize the execution, delivery and performance of, the Trust Agreement and to consummate the transactions contemplated thereby;

        (iii)  The Trust Agreement has been duly authorized, executed and delivered by Chase Bank USA, National Association and constitutes a legal, valid and binding obligation of Chase Bank USA, National Association, and is enforceable against Chase Bank USA, National Association, in accordance with its terms subject as to enforcement, to the effect upon the Trust Agreement of (i) applicable bankruptcy, insolvency, reorganization, moratorium, receivership, fraudulent conveyance or transfer and similar laws relating to or affecting the rights and remedies of creditors generally, (ii) principles of equity, including applicable law relating to fiduciary duties (regardless of whether considered and applied in a proceeding in equity or at law), and (iii) the effect of applicable public policy on the enforceability of provisions relating to indemnification or contribution;

        (iv)  The execution, delivery and performance by Chase Bank USA, National Association of the Trust Agreement do not conflict with or result in a violation of (A) articles of association or by-laws of Chase Bank USA, National Association or (B) any law or regulation of the State of Delaware or the United States of America governing the trust powers of Chase Bank USA, National Association or, to our knowledge, without independent investigation, of any indenture, mortgage, bank credit agreement, note or bond purchase agreement, long-term lease, license or other agreement or instrument to which Chase Bank USA, National Association is a party or by which it is bound or, to our knowledge, without independent investigation, of any judgment or order applicable to Chase Bank USA, National Association; and

        (v)   No approval, authorization or other action by, or filing with, any Governmental Entity of the State of Delaware or the United States of America governing the trust powers of Chase Bank USA, National Association is required in connection with the execution and delivery by Chase Bank USA, National Association of the Trust Agreement or the performance by Chase Bank USA, National Association of its obligations thereunder, except for the filing of the Certificate of Trust with the Secretary of State of the State of Delaware, which Certificate of Trust has been filed with the Secretary of State of the State of Delaware.

        In rendering such opinions, such counsel may (A) state that its opinion is limited to the laws of the State of Delaware and the federal laws of the United States governing the trust powers of Chase Bank USA, National Association, (B) rely as to matters of fact, to the extent deemed proper, on certificates of responsible officers of the Company and public officials and (C) take customary assumptions and exceptions.

E-1

ANNEX F

Officer's Financial Certificate

        The undersigned, the [Chairman/Vice Chairman/Chief Executive Officer/President/ Vice President/Chief Financial Officer/Treasurer/Assistant Treasurer], hereby certifies, pursuant to Section 6(h) of the Purchase Agreement, dated as of November 23, 2005, among Bresler & Reiner, Inc. (the "Company"), Bresler & Reiner Statutory Trust I (the "Trust") and Merrill Lynch International, that, as of [date], [20    ], the Company, if applicable, and its Subsidiary had the following ratios and balances:

As of [Quarterly/Annual Financial Date], 20
Senior secured indebtedness for borrowed money ("Debt")	$
Senior unsecured Debt	$
Subordinated Debt	$
Total Debt	$
Ratio of (x) senior secured and unsecured Debt to (y) total Debt		%

        [FOR FISCAL YEAR END:    Attached hereto are the audited consolidated financial statements (including the balance sheet, income statement and statement of cash flows, and notes thereto, together with the report of the independent accountants thereon) of the Company and its consolidated subsidiaries for the three years ended [date], 20    and all required Statutory Financial Statements (as defined in the Purchase Agreement) for the year ended [date], 20    ]

        [FOR FISCAL QUARTER END: Attached hereto are the unaudited consolidated and consolidating financial statements (including the balance sheet and income statement) of the Company and its consolidated subsidiaries and all required Statutory Financial Statements (as defined in the Purchase Agreement) for the year ended [date], 20    ] for the fiscal quarter ended [date], 20    .]

        The financial statements fairly present in all material respects, in accordance with U.S. generally accepted accounting principles ("GAAP"), the financial position of the Company and its consolidated subsidiaries, and the results of operations and changes in financial condition as of the date, and for the [.    quarter interim] [annual] period ended [date], 20    , and such financial statements have been prepared in accordance with GAAP consistently applied throughout the period involved (expect as otherwise noted therein).

        There has been no monetary default with respect to any indebtedness owed by the Company and/or its subsidiaries (other than those defaults cured within 30 days of the occurrence of the same) [, except as set forth below;].

        [Insert any exceptions by listing, in detail, the nature of the condition or event causing such noncompliance, the period during which such condition or event has existed and the action(s) the Company has taken, is taking, or proposes to take with respect to each such condition or event.]

        I, the undersigned, the [Chairman/Vice Chairman/Chief Executive Officer/President/Vice President/Chief Financial Officer/Treasurer/Assistant Treasurer], hereby certify that I have reviewed the terms of the Indenture and I have made, or have caused to be made under my supervision, a detailed review of (i) the covenants of the Company set forth therein, in particular, Section 10.9 of the Indenture (the "Financial Covenants") and (ii) the transactions and conditions of the Company and its subsidiaries during the accounting period ended as of [    ] (the "Accounting Period"), which Accounting Period is covered by the financial statements attached hereto. The examinations described in the preceding sentence did not disclose, and I have no knowledge of, the existence of any condition or event which

F-1

constitutes a Default or an Event of Default (each as defined in the Indenture) during or at the end of the Accounting Period or as of the date of this certificate [, except as set forth below:],

        [Insert any exceptions by listing, I detail, the nature of the condition or event causing such noncompliance, the period during which such condition or event has existed and the action(s) the Company has taken, is taking, or proposes to take with respect to each such condition or event.]

        Page    attached hereto sets forth the financial data and computation evidencing the Company's compliance with the Financial Covenants, all of which data and computations are true, complete and correct.

F-2

        IN WITNESS WHEREOF, the undersigned has executed this Officer's Financial Certificate as of this        day of                        ,20            .

Bresler & Reiner, Inc.

By:

Name:

Bresler & Reiner, Inc.
11200 Rockville Pike, Suite 502
Rockville, MD 20852

F-3

EX-21

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EXHIBIT 21

Subsidiaries of Registrant

Name (2)	Place of Incorporation or Formation	Percentage of Voting Securities of Subsidiaries Owned by Registrant as of December 31, 2005
B-R Holdings, Inc.	Virginia	100.0%
Investment Company of B&R, Inc.	Delaware	100.0%
Sudley Corporation	Virginia	100.0%
WMC Management Co., Inc.	District of Columbia	100.0%
B&R Waterfront Properties, LLC	District of Columbia	54.0%
Washington Business Park (Twelve Limited Liability Companies)	Delaware	80.0%
Ft. Hill Office Associates, LLC	Virginia	80.0%
Springfield Realty Investors, LLC	Virginia	100.0%
1925 K Street Associates, LLC	District of Columbia	85.0%	(1)
Waterside Associates, LLC	District of Columbia	49.0%
EGAP Corporation	Maryland	100.0%
Redwood Commercial Management, LLC	Virginia	50.0%	(1)
Charlestown North Owner, LLC	Delaware	100.0%
900 Northbrook Owner, LP	Pennsylvania	87.5%
Northbrook Development Parcel Owner, LP	Pennsylvania	100.0%
Cigar Factory Apartments, LP	Pennsylvania	66.7%
Fountains Owner, LLC	Delaware	100.0%
Victoria Place Apartments, LLC	Florida	85.0%
699 North Broad Street Associates, LP	Pennsylvania	95.0%
Baltimore portfolio (Four Limited Liability Companies)	Maryland	51.0%
B&R PA Holdings, Inc.	Pennsylvania	96.5%
B.R. Properties Owner, LP	Pennsylvania	96.5%
One Northbrook Owner, LLP	Pennsylvania	100.0%
220 West Germantown Pike Owner, LP	Pennsylvania	97.5%
Seaside Investor, LLC	Maryland	51.0%
400 South Philadelphia Developers, LLC	Maryland	51.0%
14th Street Developers, LLC	Maryland	51.0%
B&R Investment Properties FL, Inc.	Florida	50.0%
B-R Penn Realty Owner, LP	Pennsylvania	80.0%
Fourteenth Street Borrower, Inc.	Maryland	100.0%
B&R 1105, LLC	Delaware	100.0%
B&R 5160 Parkstone Owner, LLC	Virginia	100.0%
B&R 919, LLC	Delaware	100.0%
Crisfield Borrower, LLC	Maryland	51.0%
Jersey Island Owner, LLC	Maryland	51.0%
4259 West Swamp Road Owner, LP	Pennsylvania	100.0%
B&R Devon Owner, LP	Pennsylvania	5.5%

(1)

Not included in the consolidated financial statements as a subsidiary.

(2)

The names of certain subsidiaries have been omitted because, considered in the aggregate as a single entity, they do not constitute a significant subsidiary.

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Subsidiaries of Registrant

EX-31.1

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EXHIBIT 31.1

BRESLER & REINER, INC.

CERTIFICATIONS

I, Sidney M. Bresler, certify that:

1.

I have reviewed this Annual Report on Form 10-K of Bresler & Reiner, Inc. ("the Company");



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 Company as of, and for, the periods presented in this report;



4.

The Company'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 Company and have:



a)

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 Company, 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;



b)

Evaluated the effectiveness of the Company'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



c)

Disclosed in this report any change in the Company's internal control over financial reporting that occurred during the Company's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting; and



5.

The Company's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company's auditors and the audit committee of the Company's board of directors (or persons performing the equivalent functions):



a)

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 Company's ability to record, process, summarize and report financial information; and



b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal control over financial reporting.

Date: March 31, 2006

/s/  SIDNEY M. BRESLER Sidney M. Bresler
Chief Executive Officer,
Assistant Secretary of the Company

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BRESLER & REINER, INC. CERTIFICATIONS

EX-31.2

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Exhibit 31.2

BRESLER & REINER, INC.

CERTIFICATIONS

I, Robert O. Moore, certify that:

1.

I have reviewed this Annual Report on Form 10-K of Bresler & Reiner, Inc. ("the Company");



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 Company as of, and for, the periods presented in this report;



4.

The Company'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 Company and have:



a)

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 Company, 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;



b)

Evaluated the effectiveness of the Company'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



c)

Disclosed in this report any change in the Company's internal control over financial reporting that occurred during the Company's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting; and



5.

The Company's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company's auditors and the audit committee of the Company's board of directors (or persons performing the equivalent functions):



a)

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 Company's ability to record, process, summarize and report financial information; and



b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal control over financial reporting.

Date: March 31, 2006

/s/  ROBERT O. MOORE Robert O. Moore
Chief Financial Officer

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BRESLER & REINER, INC. CERTIFICATIONS

EX-32

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Exhibit 32

BRESLER & REINER, INC.

Section 906 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 Annual Report of Bresler & Reiner, Inc. (the "Company") on Form 10-K for the year ended December 31, 2005 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned officers of the Company certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1)

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended and



(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/  SIDNEY M. BRESLERSIDNEY M. BRESLER
CHIEF EXECUTIVE OFFICER

/s/  ROBERT O. MOOREROBERT O. MOORE
CHIEF FINANCIAL OFFICER

Dated: March 31, 2006

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BRESLER & REINER, INC. Section 906 Certification