Exhibit 10.24
EXECUTION
Published CUSIP Number: ________________
 
REVOLVING LOAN AGREEMENT
Dated as of November 22, 2005
among
KB HOME
as Borrower
THE BANKS PARTY HERETO
BANK OF AMERICA, N.A.
as Administrative Agent
CITICORP NORTH AMERICA, INC.
and
JPMORGAN CHASE BANK, N.A.
as Co-Syndication Agents
CALYON NEW YORK BRANCH,
WACHOVIA BANK, N.A.,
BARCLAYS BANK PLC
and
THE ROYAL BANK OF SCOTLAND PLC
as Co-Documentation Agents
and
BANC OF AMERICA SECURITIES LLC
and
CITIGROUP GLOBAL MARKETS INC.
as Joint Lead Arrangers and Joint Book Managers
 

 

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TABLE OF CONTENTS

              Page  
ARTICLE I DEFINITIONS AND ACCOUNTING TERMS
    1  
 
       
1.1 Defined Terms
    1  
 
       
1.2 Accounting Terms
    1  
 
       
1.3 Rounding
    1  
 
       
1.4 Other Interpretive Provisions
    1  
 
       
1.5 Exhibits and Schedules
    1  
 
       
1.6 References to “Borrower and its Subsidiaries”
    1  
 
       
1.7 Time of Day
    1  
 
       
1.8 Letter of Credit Amounts
    1  
 
       
ARTICLE II LOANS AND LETTERS OF CREDIT
    1  
 
       
2.1 Loans-General
    1  
 
       
2.2 Base Rate Loans
    1  
 
       
2.3 Eurodollar Rate Loans
    1  
 
       
2.4 Swing Line
    1  
 
       
2.5 Letters of Credit
    1  
 
       
2.6 Reduction of Commitment
    1  
 
       
2.7 Optional Increase to Commitment
    1  
 
       
2.8 Borrowing Base
    1  
 
       
2.9 Extension of Maturity Date
    1  
 
       
ARTICLE III PAYMENTS AND FEES
    1  
 
       
3.1 Principal and Interest
    1  
 
       
3.2 Commitment Fee
    1  
 
       
3.3 Other Fees
    1  
 
       
3.4 [Intentionally Omitted]
    1  

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              Page  
3.5 Capital Adequacy
    1  
 
       
3.6 Eurodollar Fees and Costs
    1  
 
       
3.7 Late Payments/Default Interest
    1  
 
       
3.8 Computation of Interest and Fees
    1  
 
       
3.9 Holidays
    1  
 
       
3.10 Payment Free of Taxes
    1  
 
       
3.11 Funding Sources
    1  
 
       
3.12 Failure to Charge or Making of Payment Not Subsequent Waiver
    1  
 
       
3.13 Time and Place of Payments; Evidence of Payments; Application of Payments
    1  
 
       
3.14 Administrative Agent’s Right to Assume Payments Will be Made
    1  
 
       
3.15 Survivability
    1  
 
       
3.16 Bank Calculation Certificate
    1  
 
       
3.17 Transition
    1  
 
       
3.18 Designation of a Different Lending Office
    1  
 
       
ARTICLE IV REPRESENTATIONS AND WARRANTIES
    1  
 
       
4.1 Existence and Qualification; Power; Compliance with Law
    1  
 
       
4.2 Authority; Compliance with Other Instruments and Government Regulations
    1  
 
       
4.3 No Governmental Approvals Required
    1  
 
       
4.4 Subsidiaries
    1  
 
       
4.5 Financial Statements
    1  
 
       
4.6 No Other Liabilities; No Material Adverse Effect
    1  
 
       
4.7 Title to Assets
    1  
 
       
4.8 Intangible Assets
    1  
 
       
4.9 Existing Indebtedness and Contingent Guaranty Obligations
    1  
 
       
4.10 Governmental Regulation
    1  
 
       
4.11 Litigation
    1  

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              Page  
4.12 Binding Obligations
    1  
 
       
4.13 No Default
    1  
 
       
4.14 Pension Plans
    1  
 
       
4.15 Tax Liability
    1  
 
       
4.16 Regulation U
    1  
 
       
4.17 Environmental Matters
    1  
 
       
4.18 Disclosure
    1  
 
       
4.19 Projections
    1  
 
       
4.20 ERISA Compliance
    1  
 
       
4.21 Solvency
    1  
 
       
4.22 Tax Shelter Regulations
    1  
 
       
ARTICLE V AFFIRMATIVE COVENANTS (OTHER THAN INFORMATION AND REPORTING
REQUIREMENTS)
    1  
 
       
5.1 Payment of Taxes and Other Potential Liens
    1  
 
       
5.2 Preservation of Existence
    1  
 
       
5.3 Maintenance of Properties
    1  
 
       
5.4 Maintenance of Insurance
    1  
 
       
5.5 Compliance with Laws
    1  
 
       
5.6 Inspection Rights
    1  
 
       
5.7 Keeping of Records and Books of Account
    1  
 
       
5.8 Use of Proceeds
    1  
 
       
5.9 Subsidiary Guaranty
    1  
 
       
ARTICLVI NEGATIVE COVENANTS
    1  
 
       
6.1 Payment or Prepayment of Subordinated Obligations
    1  
 
       
6.2 [Intentionally Omitted]
    1  
 
       
6.3 Mergers and Sale of Assets
    1  
 
       
6.4 Investments and Acquisitions
    1  

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              Page  
6.5 ERISA Compliance
    1  
 
       
6.6 Change in Business
    1  
 
       
6.7 Liens and Negative Pledges
    1  
 
       
6.8 Transactions with Affiliates
    1  
 
       
6.9 Consolidated Tangible Net Worth
    1  
 
       
6.10 Consolidated Leverage Ratio
    1  
 
       
6.11 Consolidated Interest Coverage Ratio
    1  
 
       
6.12 Distributions
    1  
 
       
6.13 Amendments
    1  
 
       
6.14 [Intentionally Omitted]
    1  
 
       
6.15 Inventory
    1  
 
       
6.16 Investment in Subsidiaries and Joint Ventures
    1  
 
       
6.17 Senior Indebtedness Not to Exceed Borrowing Base
    1  
 
       
6.18 Maximum Speculative Units
    1  
 
       
6.19 Regulation U
    1  
 
       
ARTICLE VII INFORMATION AND REPORTING REQUIREMENTS
    1  
 
       
7.1 Financial and Business Information of Borrower and Its Subsidiaries
    1  
 
       
7.2 Compliance Certificate
    1  
 
       
ARTICLE VIII CONDITIONS
    1  
 
       
8.1 Initial Advances, Etc.
    1  
 
       
8.2 Any Advance
    1  
 
       
8.3 Any Letter of Credit
    1  
 
       
ARTICLE IX EVENTS OF DEFAULT AND REMEDIES UPON EVENTS OF DEFAULT
    1  
 
       
9.1 Events of Default
    1  
 
       
9.2 Remedies Upon Event of Default
    1  
 
       
ARTICLE X THE ADMINISTRATIVE AGENT
    1  

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              Page  
10.1 Appointment and Authorization
    1  
 
       
10.2 Delegation of Duties
    1  
 
       
10.3 Liability of Administrative Agent
    1  
 
       
10.4 Reliance by Administrative Agent
    1  
 
       
10.5 Notice of Default
    1  
 
       
10.6 Credit Decision; Disclosure of Information by Administrative Agent
    1  
 
       
10.7 Indemnification of Administrative Agent
    1  
 
       
10.8 Administrative Agent in its Individual Capacity
    1  
 
       
10.9 Successor Administrative Agent
    1  
 
       
10.10 Administrative Agent May File Proofs of Claim
    1  
 
       
10.11 Guaranty Matters
    1  
 
       
10.12 Other Agents; Arrangers and Managers
    1  
 
       
10.13 Defaulting Banks
    1  
 
       
10.14 No Obligations of Borrower
    1  
 
       
ARTICLE XI MISCELLANEOUS
    1  
 
       
11.1 Cumulative Remedies; No Waiver
    1  
 
       
11.2 Amendments; Consents
    1  
 
       
11.3 Costs, Expenses and Taxes
    1  
 
       
11.4 Nature of Banks’ Obligations
    1  
 
       
11.5 Survival of Representations and Warranties
    1  
 
       
11.6 Notices and Other Communications; Facsimile Copies
    1  
 
       
11.7 Execution in Counterparts; Facsimile Delivery
    1  
 
       
11.8 Successors and Assigns
    1  
 
       
11.9 Sharing of Setoffs
    1  
 
       
11.10 Indemnification by the Borrower
    1  
 
       
11.11 Nonliability of Banks
    1  

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              Page  
11.12 Confidentiality
    1  
 
       
11.13 No Third Parties Benefited
    1  
 
       
11.14 Other Dealings
    1  
 
       
11.15 Right of Setoff — Deposit Accounts
    1  
 
       
11.16 Further Assurances
    1  
 
       
11.17 Integration
    1  
 
       
11.18 Governing Law
    1  
 
       
11.19 Severability of Provisions
    1  
 
       
11.20 Headings
    1  
 
       
11.21 Conflict in Loan Documents
    1  
 
       
11.22 Waiver of Right to Trial by Jury
    1  
 
       
11.23 Purported Oral Amendments
    1  
 
       
11.24 Payments Set Aside
    1  
 
       
11.25 Hazardous Materials Indemnity
    1  
 
       
11.26 USA PATRIOT Act Notice
    1  
 
       
11.27 Replacement of Banks
    1  
 
       
11.28 Deliveries Under Prior Revolving Loan Agreement
    1  

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          Exhibits     A    
- Assignment and Assumption
  B    
- Borrowing Base Certificate
  C    
- Compliance Certificate
  D    
- Loan Notice
  E    
- Note
  F-1    
- Opinion of Counsel
  F-2    
- Opinion of Counsel
  G    
- Subsidiary Guaranty
  H    
- Swing Line Loan Notice

          Schedules     1.1    
Pro Rata Shares
  3.17    
Existing Letters of Credit
  4.4    
Subsidiaries
  4.7    
Existing Liens and Rights of Others
  4.9    
Existing Indebtedness and Contingent Obligations
  6.4    
Investments
  11.6    
Notices
  11.8    
Processing and Recordation Fees

-vii-

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REVOLVING LOAN AGREEMENT
Dated as of November 22, 2005
This Revolving Loan Agreement (as it may from time to time be supplemented,
modified, amended, renewed, extended or supplanted, this “Agreement”), dated as
of November 22, 2005, is entered into by and among KB HOME, a Delaware
corporation (“Borrower”), each financial institution set forth on the signature
pages of this Agreement or which from time to time becomes party hereto
(collectively, the “Banks” and individually, a “Bank”), Bank of America, N.A.,
as Administrative Agent, Citicorp North America, Inc. and JPMorgan Chase Bank,
N.A., as Co-Syndication Agents, Calyon New York Branch, Wachovia Bank, N.A.,
Barclays Bank plc and The Royal Bank of Scotland plc, as Co-Documentation
Agents, and Banc of America Securities LLC and Citigroup Global Markets Inc., as
Joint Lead Arrangers and Joint Book Managers.
RECITALS
This Agreement establishes a new credit facility replacing that certain
Revolving Loan Agreement dated as of October 24, 2003 (as amended, the “Prior
Revolving Loan Agreement”) by and among Borrower, the banks named therein, Bank
of America, N.A., as administrative agent, and various other banks in various
agent capacities. Subject to the transition provisions of Section 3.17, and as
contemplated by Section 8.1(a)(ix), the terms and provisions of this Agreement
shall become effective and the Prior Revolving Loan Agreement shall terminate as
of the Closing Date.
WHEREFORE, in consideration of the mutual covenants and agreements herein
contained, the parties hereto covenant and agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS

1.1   Defined Terms.

   As used in this Agreement, the following terms shall have the meanings set
forth below:
“Acquisition” means any transaction, or any series of related transactions,
consummated after the Closing Date, by which Borrower or any of its Subsidiaries
directly or indirectly (a) acquires any ongoing business or all or substantially
all of the assets of any firm, corporation, partnership or limited liability
company, joint venture or other business entity or division thereof, whether
through purchase of assets, merger or otherwise, (b) acquires control of
securities of a corporation representing 50% or more of the ordinary voting
power for the election of directors or (c) acquires control of a 50% or more
ownership interest in any firm, corporation, partnership, limited liability
company, joint venture or other business entity.
“Additional Commitment Bank” has the meaning set forth in Section 2.9(d).
“Administrative Agent” means Bank of America in its capacity as administrative
agent under this Agreement and the other Loan Documents, or any successor
administrative agent.
“Administrative Agent’s Office” means the Administrative Agent’s address and, as
appropriate, account set forth on Schedule 11.6, or such other address or
account as the Administrative Agent may, from time to time, notify the Borrower
and the Banks.

-1-

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“Administrative Questionnaire” means an Administrative Questionnaire in a form
supplied by the Administrative Agent to the Banks.
“Advance” means an advance made or to be made to Borrower by a Bank pursuant to
Article II.
“Affiliate” means, with respect to any Person, any other Person which directly
or indirectly controls, or is under common control with, or is controlled by,
such Person. As used in this definition, “control” (including its correlative
meanings, “controlled by” and “under common control with”) shall mean
possession, directly or indirectly, of power to direct or cause the direction of
management or policies (whether through ownership of securities or partnership
or other ownership interests, by contract or otherwise); provided that, in any
event, any Person which owns directly or indirectly 10% or more of the
securities having ordinary voting power for the election of directors or other
governing body of a corporation that has more than 100 record holders of such
securities or 10% or more of the partnership or other ownership interests of any
other Person that has more than 100 record holders of such interests will be
deemed to control such corporation or other Person.
“Agent Parties” has the meaning set forth in Section 11.6(c).
“Agent-Related Persons” means the Administrative Agent, together with its
Affiliates (including Bank of America in its capacity as the Administrative
Agent and BAS in its capacity as an Arranger), and the officers, directors,
employees, agents and attorneys-in-fact of such Persons and Affiliates.
“Agreement” has the meaning set forth in the first paragraph hereof.
“Applicable Base Rate Spread” means the applicable per annum percentage set
forth in the definition of “Applicable Rates”.
“Applicable Commitment Fee Rate” means the applicable per annum percentage set
forth in the definition of “Applicable Rates”.
“Applicable Eurodollar Rate Spread” means the applicable per annum percentage
set forth in the definition of “Applicable Rates”.
“Applicable Federal Funds Rate” means, as of any date of determination, a rate
per annum equal to the Federal Funds Rate in effect on such date and if such
Federal Funds Rate is not available to the Swing Line Bank, such rate per annum
as is reasonably determined by the Swing Line Bank as representing its actual
cost of funding Swing Line Loans, without the addition of fees or markup of any
kind.
“Applicable Letter of Credit Fee” means the applicable per annum percentage set
forth in the definition of “Applicable Rates”.

-2-

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“Applicable Pricing Level” means, for any day, the Applicable Pricing Level that
is determined in accordance with Borrower’s Debt Rating and Consolidated
Leverage Ratio, as appropriate, on such date as follows:

          Applicable         Pricing Level   Debt Ratings   Consolidated
Leverage Ratio
I
  BBB/Baa2 or better   £0.75:1
 
       
II
  BBB-/Baa3   >0.75:1 but £1.00:1
 
       
III
  BB+/Ba1   >1.00:1 but £1.25:1
 
       
IV
  BB/Ba2   >1.25:1 but £1.75:1
 
       
V
  BB-/Ba3 or worse or no rating   >1.75:1

Borrower must, pursuant to Section 7.1(k), provide the Administrative Agent with
notice of each change in the Applicable Pricing Level that is due to any change
in a Debt Rating. Any change in the Applicable Pricing Level resulting from a
change in the Consolidated Leverage Ratio shall be effective as of the first
Business Day immediately following the date a Compliance Certificate is
delivered pursuant to Section 7.2; provided, however, that if a Compliance
Certificate is not delivered on or prior to a date required by Section 7.2, and
if the Compliance Certificate indicates that the Applicable Pricing Level of
Borrower will increase (i.e., becomes less favorable to Borrower), the date of
increase in the Applicable Pricing Level will be deemed to be the date upon
which such Compliance Certificate was due under Section 7.2, not the date upon
which such Compliance Certificate was delivered.
In the event that there is a difference in the Applicable Pricing Levels
determined by the Debt Ratings and the Consolidated Leverage Ratio,
respectively, the lower of such Applicable Pricing Levels shall apply (with the
Applicable Pricing Level I being the lowest and the Applicable Pricing Level V
being the highest), unless there is a difference in the Applicable Pricing
Levels (as indicated by the Debt Ratings and the Consolidated Leverage Ratio) of
more than one level, in which case, the Applicable Pricing Level that is one
level lower than the Applicable Pricing Level of the higher Applicable Pricing
Level shall apply.

-3-

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“Applicable Rates” means, as of any date of determination, the following
percentages per annum, based upon the Applicable Pricing Level on that date:

                          Applicable Letter         Applicable   of Credit Fee
Applicable   Applicable Base   Commitment Fee   Applicable Eurodollar Pricing
Level   Rate Spread   Rate   Rate Spread
I
  0.000%   0.150%   0.625%
II
  0.000%   0.175%   0.750%
III
  0.000%   0.200%   0.875%
IV
  0.000%   0.225%   1.125%
V
  0.000%   0.250%   1.500%

“Arrangers” mean BAS and CGMI, in their capacity as joint lead arrangers and
joint book managers.
“Assignee Group” means two or more Eligible Assignees that are Affiliates of one
another.
“Assignment and Assumption” means an assignment and assumption substantially in
the form of Exhibit A.
“Associate” shall have the meaning ascribed to such term in Rule 12b-2 of the
General Rules and Regulations under the Exchange Act, as in effect on the date
hereof.
“Attorney Costs” means and includes all reasonable fees, expenses and
disbursements of any law firm or other external counsel.
“Authorizations” has the meaning set forth for that term in Section 4.1.
“Bank” means each financial institution whose name is set forth in the signature
pages of this Agreement and each lender which may hereafter become a party to
this Agreement pursuant to Section 11.8.
“Bank of America” means Bank of America, N.A. and its successors.
“BAS” means Banc of America Securities LLC and its successors.
“Base Rate" means for any day a fluctuating rate per annum equal to the higher
of (a) the Federal Funds Rate plus 1/2 of 1% and (b) the rate of interest in
effect for such day as publicly announced from time to time by Bank of America
as its “prime rate.” The “prime rate” is a rate set by Bank of America based
upon various factors including Bank of America’s costs and desired return,
general economic conditions and other factors, and is used as a reference point
for pricing some loans, which may be priced at, above, or below such announced
rate. Any change in such rate announced by Bank of America shall take effect at
the opening of business on the day specified in the public announcement of such
change.

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“Base Rate Advance” means an Advance made by a Bank to fund its Pro Rata Share
of a Base Rate Loan.
“Base Rate Loan” means a Loan that bears interest based on the Base Rate.
“Borrower” means KB Home, a Delaware corporation, and its successors and
permitted assigns.
“Borrower Materials” has the meaning set forth in Section 7.1.
“Borrowing Base” has the meaning set forth in Section 2.8(b).
“Borrowing Base Certificate” means a written calculation of the Borrowing Base,
substantially in the form of Exhibit B signed, on behalf of Borrower by a Senior
Officer of Borrower.
“Borrowing Base Subsidiary” means (a) any Guarantor Subsidiary and (b) any
direct or indirect wholly-owned Domestic Subsidiary of Borrower or any Guarantor
Subsidiary.
“Business Day” means any day other than a Saturday, Sunday or other day on which
commercial banks are authorized to close under the Laws of, or are in fact
closed in, the state of New York, the state where the Administrative Agent’s
Office is located and, if such day relates to any Eurodollar Rate Loan, means
any such day on which dealings in Dollar deposits are conducted by and between
banks in the London interbank eurodollar market.
“Capital Lease” means, with respect to any Person, a lease of any Property by
that Person as lessee that is, or should be in accordance with Financial
Accounting Standards Board Statement No. 13, recorded as a “capital lease” on a
balance sheet of that Person prepared in accordance with Generally Accepted
Accounting Principles consistently applied.
“Cash” means all monetary items (including currency, coin and bank demand
deposits) that are treated as cash under Generally Accepted Accounting
Principles consistently applied.
“Cash Collateralize” has the meaning set forth in Section 2.5(g).
“Cash Equivalents” means, with respect to any Person, that Person’s Investments
in:

  (a)   Government Securities due within one year of the making of the
Investment;     (b)   readily marketable direct obligations of any State of the
United States of America or any political subdivision of any such State or any
public agency or instrumentality thereof given on the date of such Investment a
credit rating of at least Aa3 by Moody’s or AA- by S&P, in each case due within
one year from the making of the Investment;     (c)   certificates of deposit
issued by, deposits in, deposits in the London interbank eurodollar market made
through, bankers’ acceptances of, and repurchase agreements covering Government
Securities executed by, (i) any Bank or (ii) any bank or savings and loan
association doing business in and incorporated under the Laws of the United
States of America, any state thereof or the District of Columbia and having on
the date of such Investment combined capital, surplus and undivided profits of
at least $500,000,000 and which carries on the date of such Investment a credit
rating of P-1 or higher by Moody’s or A-1 or higher by S&P, in each case due
within one year after the date of the making of the Investment;

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  (d)   certificates of deposit issued by, bank deposits in, deposits in the
London interbank eurodollar market made through, bankers’ acceptances of, and
repurchase agreements covering Government Securities executed by any branch or
office located in the United States of America of a bank incorporated under the
Laws of any jurisdiction outside the United States of America having on the date
of such Investment combined capital, surplus and undivided profits of at least
$500,000,000 and which carries on the date of such Investment a credit rating of
P-1 or higher by Moody’s or A-1 or higher by S&P, in each case due within one
year after the date of the making of the Investment;     (e)   readily
marketable commercial paper or other debt securities of (i) any Bank that is a
Bank as of the Closing Date, (ii) corporations, commercial banks or financial
institutions doing business in and incorporated under the Laws of the United
States of America or any state thereof or the District of Columbia or (iii) a
holding company for a bank described in clause (c) or (d) above, given on the
date of such Investment a credit rating of P-1 or higher by Moody’s, of A-1 or
higher by S&P, or F-1 or higher by Fitch, in each case due within one year of
the making of the Investment;     (f)   repurchase agreements covering
Government Securities executed by a broker or dealer registered under Section
15(b) of the Exchange Act, having on the date of the Investment capital of at
least $50,000,000, due within 90 days after the date of the making of the
Investment; provided, that the maker of the Investment receives written
confirmation of the transfer to it of record ownership of the Government
Securities on the books of a “primary dealer” in such government Securities or
on the books of such registered broker or dealer, as soon as practicable after
the making of the Investment;     (g)   “money market preferred stock” issued by
a corporation incorporated under the Laws of the United States of America or any
State thereof (i) given on the date of such Investment a credit rating of at
least Aa3 by Moody’s and AA- by S&P, in each case having an investment period
not exceeding 50 days or (ii) to the extent that investors therein have the
benefit of a standby letter of credit issued by a Bank or a bank described in
clauses (c) or (d) above; provided, that (y) the amount of all such Investments
issued by the same issuer does not exceed $20,000,000 and (z) the aggregate
amount of all such Investments does not exceed $50,000,000;     (h)   a readily
redeemable “money market mutual fund” sponsored by a bank described in clause
(c) or (d) hereof, or a registered broker or dealer described in clause (f)
hereof, that has and maintains an investment policy limiting its investments
primarily to instruments of the types described in clauses (a) through
(g) hereof and given on the date of such Investment a credit rating of at least
Aa3 by Moody’s and AA- by S&P; and     (i)   corporate notes or bonds having an
original term to maturity of not more than one year issued by a corporation
incorporated under the Laws of the United States of America or any state
thereof, or a participation interest therein; provided, that (i) commercial
paper issued by such corporation is given on the date of such Investment a
credit rating of at least Aa3 by Moody’s and AA- by S&P, (ii) the amount of all
such Investments issued by the same issuer does not exceed $20,000,000 and (iii)
the aggregate amount of all such Investments does not exceed $50,000,000.  

“CGMI” means Citigroup Global Markets Inc. and its successors.

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“Change in Control” means, and shall be deemed to have occurred at such time as
any of the following events shall occur:

  (a)   there shall be consummated any consolidation or merger of Borrower in
which Borrower is not the continuing or surviving corporation or pursuant to
which the Borrower’s Voting Stock would be converted into Cash, securities or
other property, other than a merger or consolidation of Borrower where the
Borrower is not the continuing or surviving corporation and in which the holders
of Borrower’s Voting Stock immediately prior to the merger have at least 50%
ownership, directly or indirectly, of the Voting Stock of the surviving
corporation immediately after such merger or consolidation; or     (b)   there
is a report filed by any person, including its Affiliates and Associates, on
Schedule 13D or 14D-1 (or any successor schedule, form or report) pursuant to
the Exchange Act, disclosing that such person (for the purposes of the
definition of Change in Control only, the term “person” is used as defined in
Section 13(d)(3) or Section 14(d)(2) of the Exchange Act or any successor
provision to either of the foregoing) has become the beneficial owner (as the
term “beneficial owner” is defined under Rule 13d-3 or any successor rule or
regulation promulgated under the Exchange Act) of 50% or more of the voting
power of Borrower’s Voting Stock then outstanding; provided, however, that a
person shall not be deemed beneficial owner of, or to own beneficially (1) any
Securities tendered pursuant to a tender or exchange offer made by or on behalf
of such person or any of such person’s Affiliates or Associates until such
tendered Securities are accepted for purchase or exchange thereunder, or (2) any
Securities if such beneficial ownership (a) arises solely as a result of a
revocable proxy delivered in response to a proxy or consent solicitation made
pursuant to, and in accordance with, the applicable rules and regulations under
the Exchange Act, and (b) is not also then reportable on Schedule 13D (or any
successor schedule) under the Exchange Act; or     (c)   a “Change in Control”
(or analogous term) as defined in one or more indentures or agreements governing
any Subordinated Obligations occur and at least $50,000,000 of Subordinated
Obligations thereupon become due and payable by Borrower or its Subsidiaries.

Notwithstanding the foregoing, a Change in Control shall not be deemed to have
occurred if at any time Borrower, any Subsidiary of Borrower, any employee stock
ownership plan or any other employee benefit plan, including any Pension Plan of
Borrower or any Subsidiary of Borrower, or any person holding Borrower’s Voting
Stock for or pursuant to the terms of such employee benefit plan, files or
becomes obligated to file a report under or in response to Schedule 13D or
Schedule 14D-1 (or any successor schedule, form or report) under the Exchange
Act disclosing beneficial ownership by it of shares of Borrower’s Voting Stock,
whether in excess of 50% or otherwise.
“Change in Law” means the occurrence, after the date of this Agreement, of any
of the following:

  (a)   the adoption or taking effect of any law, rule, regulation or treaty;  
  (b)   any change in any law, rule, regulation or treaty or in the
administration, interpretation or application thereof by any Governmental
Agency; or

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  (c)   the making or issuance of any request, guideline or directive (whether
or not having the force of law) by any Governmental Agency.

“Closing Date” means the date of this Agreement.
“Code” means the Internal Revenue Code of 1986, as amended or replaced and as in
effect from time to time.
“Commission” means the Securities and Exchange Commission and any successor
commission.
“Commitment” means, subject to Sections 2.6, 2.7 and 2.9, $1,500,000,000. The
Pro Rata Shares of the Banks with respect to the Commitment are set forth in
Schedule 1.1.
“Compensation Period” has the meaning set forth for that term in Section 3.14.
“Compliance Certificate” means a compliance certificate in the form of Exhibit C
signed, on behalf of Borrower, by a Senior Officer of Borrower.
“Consolidated Adjusted EBITDA” means, for any period, Consolidated EBITDA for
such period plus (a) the amount of capitalized interest that was included in
cost of sales in determining Consolidated Net Income for such period plus
(b) all non-Cash Net Realizable Value Adjustments made during such period.
“Consolidated EBITDA” means, for any period, the sum of (a) Consolidated Net
Income for such period, plus (b) any extraordinary loss reflected in such
Consolidated Net Income, minus (c) any extraordinary gain reflected in such
Consolidated Net Income, plus (d) Consolidated Interest Expense for such period,
plus (e) the aggregate amount of federal, state and foreign income taxes payable
by Borrower and its Consolidated Subsidiaries for such period, plus
(f) depreciation, amortization and all other non-cash expenses of Borrower and
its Consolidated Subsidiaries for such period, in each case as determined in
accordance with Generally Accepted Accounting Principles consistently applied,
plus (g) any Distributions made in Cash by KB France to Borrower during such
period, and in the case of items (d), (e) and (f), only to the extent deducted
in the determination of Consolidated Net Income for such period.
“Consolidated FIN 46 Subsidiaries” means entities that would not be GAAP
Subsidiaries but for the issuance of the pronouncement entitled Financial
Interpretation Number 46 (“FIN 46”) “Consolidation of Variable Interest
Entities” by the Financial Accounting Standards Board on January 17, 2003.
“Consolidated Interest Coverage Ratio” means, as of any date of determination,
the ratio of (a) Consolidated Adjusted EBITDA for the 12 month period ending on
such date to (b) the sum of (i) Consolidated Interest Expense for the 12 month
period ending on such date plus (ii) all dividends (other than dividends paid in
the same class of stock) paid on any preferred stock of Borrower during the
12 month period ending on such date.
“Consolidated Interest Expense” means, for any period, the aggregate amount of
interest, fees, charges and related expenses paid or payable to a lender by
Borrower and its Consolidated Subsidiaries on a consolidated basis in connection
with borrowed money (including any capitalized interest and accretion of
original issue discount on long-term debt) and the interest portion of any
capitalized lease payments.

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“Consolidated Leverage Ratio” means, as of any date of determination, the ratio
of (a) Consolidated Total Indebtedness on that date to (b) Consolidated Tangible
Net Worth on that date.
“Consolidated Net Income” means, for any period, the net income of Borrower and
its Consolidated Subsidiaries on a consolidated basis determined in accordance
with Generally Accepted Accounting Principles consistently applied.
“Consolidated Subsidiaries” means, with respect to Borrower, Borrower’s GAAP
Subsidiaries (other than KB France and Borrower’s Consolidated FIN 46
Subsidiaries).
“Consolidated Tangible Net Worth” means, as of any date of determination, the
Shareholders’ Equity of Borrower and its GAAP Subsidiaries on a consolidated
basis on that date minus the Intangible Assets of Borrower and its GAAP
Subsidiaries on a consolidated basis on that date minus any non-cash gain (or
plus any non-cash loss, as applicable) resulting from any marked to market
adjustments made directly to Consolidated Tangible Net Worth as a result of
fluctuations in the value of foreign currency instruments owned by Borrower or
any of its GAAP Subsidiaries as mandated under FAS 133.
“Consolidated Total Indebtedness” means, as of any date of determination, all
Indebtedness and Contingent Guaranty Obligations of Borrower and its
Consolidated Subsidiaries on a consolidated basis on that date (without
duplication for any guaranty by Borrower of a Consolidated Subsidiary’s
Indebtedness or any guaranty by a Consolidated Subsidiary of either Borrower’s
or another Consolidated Subsidiary’s Indebtedness or otherwise) minus (a) all
Indebtedness and Contingent Guaranty Obligations of Financial Subsidiaries on a
consolidated basis (but only to the extent that such Financial Subsidiaries are
also Consolidated Subsidiaries and there is no recourse to Borrower or any other
Consolidated Subsidiary) on that date minus (b) all Indebtedness and Contingent
Guaranty Obligations of Foreign Subsidiaries of the Borrower on a consolidated
basis (but only to the extent that such Foreign Subsidiaries of the Borrower are
also Consolidated Subsidiaries and there is no recourse to Borrower or any other
Consolidated Subsidiary or any of their respective Property) on that date minus
(c) the amount, if any, by which the aggregate Cash and Cash Equivalents of
Borrower and its Consolidated Subsidiaries (other than the Financial
Subsidiaries and Foreign Subsidiaries) on a consolidated basis on that date are
in excess of $15,000,000 (but not to exceed $300,000,000).
“Construction Costs” means, as of any date of determination, all costs actually
incurred by Borrower or any Borrowing Base Subsidiary with respect to the
construction of Units on Developed Lots, including land basis.
“Contingent Guaranty Obligation” means, as to any Person, any (a) direct or
indirect guarantee of Indebtedness of, or other obligation performable by, any
other Person (other than a performance obligation undertaken in the ordinary and
usual course of business or obligations with respect to letters of credit),
including any endorsement (other than for collection or deposit in the ordinary
course of business), co-making or sale with recourse of the obligations of any
other Person or (b) assurance given to an obligee with respect to the
performance of an obligation (other than a performance obligation undertaken in
the ordinary and usual course of business) by, or the financial condition of,
any other Person, whether direct, indirect or contingent, including any purchase
or repurchase agreement covering such obligation or any collateral security
therefor, any agreement to provide funds (by means of loans, capital
contributions or otherwise) to such other Person, any agreement to support the
solvency or level of any balance sheet item of such other Person, any
“keep-well”, “take-or-pay”, “through put” or other arrangement of whatever

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nature having the effect of assuring or holding harmless any obligee against
loss with respect to any obligation of such other Person, or the LTV Maintenance
Exposure resulting from any LTV Maintenance Agreement; provided, however, that
notwithstanding the foregoing, no such guarantee or assurance shall constitute a
Contingent Guarantee Obligation of a Person, if such Person’s obligations
thereunder constitute limited exclusions from the otherwise non-recourse nature
of such other Person’s Indebtedness or other obligations, except and until the
acts, conduct or events triggering recourse to such Person have occurred. The
amount of any Contingent Guaranty Obligation shall be deemed to be an amount
equal to the stated or determinable amount of the related primary obligation
(unless the Contingent Guaranty Obligation is limited by its terms to a lesser
amount, in which case to the extent of such amount) or, if not stated or
determinable, the maximum reasonably anticipated liability in respect thereof as
determined by the Person in good faith; provided, however, that if any Person is
liable severally but not jointly and severally with one or more other obligors
under any Contingent Guaranty Obligation, the amount of such Contingent Guaranty
Obligation shall be the product of (x) the amount determined as set forth above
and (y) the maximum percentage of the aggregate liability under such Contingent
Guaranty Obligation with respect to which such Person is severally liable.
“Contractual Obligation” means, as to any Person, any provision of any
outstanding Securities issued by that Person or of any material agreement,
instrument or undertaking to which that Person is a party or by which it or any
of its Property is bound, other than, in the case of Borrower and its
Subsidiaries, any of the Loan Documents.
“Debt Rating” means, as of any date of determination, the rating as determined
by the Rating Agencies (collectively, the “Debt Ratings”) of the Borrower’s
non-credit-enhanced, senior unsecured long-term debt; provided that if a Debt
Rating is issued by each of the Rating Agencies, then the two highest of such
Debt Ratings shall apply (with the Debt Rating for Applicable Pricing Level I
being the highest and the Debt Rating for Applicable Pricing Level V being the
lowest), unless there is a split in Debt Ratings of more than one level, in
which case the Applicable Pricing Level that is one level higher than the
Applicable Pricing Level of the lower Debt Rating shall apply.
“Debtor Relief Laws” means the Bankruptcy Code of the United States of America,
as amended from time to time, and all other applicable liquidation,
conservatorship, insolvency, reorganization, or similar debtor relief Laws from
time to time in effect affecting the rights of creditors generally.
“Default” means any event that, with the giving of any notice or passage of
time, or both, would be an Event of Default.
“Default Rate” has the meaning set forth for that term in Section 3.7.
“Defaulting Bank” has the meaning set forth for that term in Section 10.13.
“Designated Deposit Account” means a demand deposit account to be maintained by
Borrower with Bank of America, as from time to time designated by Borrower by
written notification to the Administrative Agent.
“Developed Lots” means, as of any date of determination, subdivision lots
located in the United States that are wholly-owned by Borrower or its Borrowing
Base Subsidiaries, unencumbered by any Lien or Liens (other than Permitted
Encumbrances), and that are subject to a recorded plat or

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subdivision map, in substantial compliance with all applicable Laws and
available for the construction thereon of foundations for Units.
“Distribution” means, with respect to any shares of capital stock or any warrant
or right to acquire shares of capital stock or any other equity security issued
by a Person, (a) the retirement, redemption, purchase, or other acquisition for
value (other than for capital stock of the same type of such Person) by such
Person of any such security, (b) the declaration or payment by such Person of
any dividend in Cash or in Property (other than in capital stock of the same
type of such Person) on or with respect to any such security, and (c) any
Investment by such Person in any holder of 5% or more of the capital stock (or
other equity securities) of such Person, if a purpose of such Investment is to
avoid the characterization of the transaction between such Person and such
holder as a Distribution under clause (a) or (b) above. In addition, to the
extent any loan or advance by Borrower to one of its Subsidiaries is deemed to
be an “Investment” for purposes of this Agreement, then any principal payment
made by such Subsidiary in respect of such loan or advance shall be considered a
Distribution for purposes of Section 6.12.
“Dollars” means the national currency of the United States of America.
“Domestic Lending Office” means, with respect to each Bank, its office, branch
or affiliate identified on the signature pages hereof as its Domestic Lending
Office or such other office, branch or affiliate as such Bank may hereafter
designate as its Domestic Lending Office by notice to the Borrower and the
Administrative Agent.
“Domestic Subsidiary” means, with respect to any Person and as of any date of
determination, a Subsidiary of such Person (a) that is organized under the Laws
of the United States of America or any state thereof and (b) the majority of the
assets of which (as reflected on a balance sheet of such Subsidiary prepared in
accordance with Generally Accepted Accounting Principles consistently applied)
is located in the United States of America; provided that Kaufman and Broad
International, Inc., a California corporation, shall in no event be considered a
Domestic Subsidiary of Borrower.
“Domestic Unimproved Land” means, as of any date of determination, real Property
located in the United States of America that is: (a) owned by Borrower or any of
its Subsidiaries if on that date there has been expended by Borrower or any of
its Subsidiaries less than 50% of the costs reasonably estimated by Borrower (in
accordance with its past practices as of the Closing Date) to develop such real
Property into Developed Lots; or (b) owned by Persons other than Borrower or any
of its Subsidiaries but which, if owned by Borrower or any of its Subsidiaries
on that date, would have satisfied the requirement set forth in clause (a) and
if on that date Borrower or any of its Subsidiaries holds an option to purchase
such real Property for which it has paid an amount equal to 33% or more of the
purchase price provided for in such option to purchase, provided, that in the
event an option to purchase land covers more than one parcel, phase or lot, any
deposit paid by Borrower or any of its Subsidiaries shall be allocated to each
parcel, phase or lot pro rata in accordance with the purchase price of the
parcels, phases or lots. The “book value” with respect to Domestic Unimproved
Land referred to in Section 6.15 shall be calculated as if the option to
purchase had been exercised as of the date of determination, and otherwise in
accordance with Generally Accepted Accounting Principles, consistently applied.
“Eligible Assignee” means: (a) a Bank; (b) an Affiliate of a Bank; and (c) any
other Person (other than a natural person) approved by (i) the Administrative
Agent and the Swing Line Bank, and (ii) unless a Default or an Event of Default
has occurred and is continuing, the Borrower (each such approval not to be
unreasonably withheld or delayed); provided that notwithstanding the

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foregoing, “Eligible Assignee” shall not include the Borrower or any of the
Borrower’s Affiliates or Subsidiaries.
“ERISA” means, at any date, the Employee Retirement Income Security Act of 1974
and the regulations thereunder, all as the same shall be in effect at such date.
“ERISA Affiliate” means, with respect to any Person, any other Person (or any
trade or business, whether or not incorporated) that is under common control
with that Person within the meaning of Section 414 of the Code.
“ERISA Event” means: (a) a Reportable Event with respect to a Pension Plan;
(b) a withdrawal by the Borrower or any ERISA Affiliate from a Pension Plan
subject to Section 4063 of ERISA during a plan year in which it was a
substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation
of operations that is treated as such a withdrawal under Section 4062(e) of
ERISA; (c) a complete or partial withdrawal by the Borrower or any ERISA
Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is
in reorganization; (d) the filing of a notice of intent to terminate, the
treatment of a Plan amendment as a termination under Sections 4041 or 4041A of
ERISA, or the commencement of proceedings by the PBGC to terminate a Pension
Plan or Multiemployer Plan; (e) an event or condition which constitutes grounds
under Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Pension Plan or Multiemployer Plan; or (f) the
imposition of any liability under Title IV of ERISA, other than for PBGC
premiums due but not delinquent under Section 4007 of ERISA, upon the Borrower
or any ERISA Affiliate.
“Escrow Receivables” means, as of any date of determination, the amounts due to
Borrower or any Borrowing Base Subsidiary and held at an escrow or title company
following the sale and conveyance of title of a Model Home or Unit to a buyer
(including an escrow or title company that is a Subsidiary of the Borrower) to
the extent that such amounts are free and clear of all Liens and Rights of
Others and are not subject to any restriction pursuant to any Contractual
Obligations.
“Eurodollar Advance” means an Advance made by a Bank to fund its Pro Rata Share
of a Eurodollar Rate Loan.
“Eurodollar Base Rate” has the meaning set forth in the definition of Eurodollar
Rate.
“Eurodollar Rate” means for any Interest Period with respect to any Eurodollar
Rate Loan, a rate per annum determined by the Administrative Agent pursuant to
the following formula:

     
Eurodollar Rate =
  Eurodollar Base Rate
 
 
1.00 – Eurodollar Reserve Percentage

Where, “Eurodollar Base Rate” means, for such Interest Period, the rate per
annum equal to the British Bankers Association LIBOR Rate (“BBA LIBOR”), as
published by Reuters (or other commercially available source providing
quotations of BBA LIBOR as designated by the Administrative Agent from time to
time) at approximately 11:00 a.m., London time, 2 Business Days prior to the
commencement of such Interest Period, for Dollar deposits (for delivery on the
first day of such Interest Period) with a term equivalent to such Interest
Period. If such rate is not available at such time for any reason, then the
“Eurodollar Base Rate” for such Interest Period shall be the rate per annum
determined by the Administrative Agent to be the rate at which deposits in
Dollars

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for delivery on the first day of such Interest Period in same day funds in the
approximate amount of the Eurodollar Rate Loan being made, continued or
converted by Bank of America and with a term equivalent to such Interest Period
would be offered by Bank of America’s London Branch to major banks in the London
interbank eurodollar market at their request at approximately 11:00 a.m., London
time, 2 Business Days prior to the commencement of such Interest Period.
“Eurodollar Rate Loan” means a Loan that bears interest at a rate based on the
Eurodollar Rate.
“Eurodollar Reserve Percentage” means, for any day during any Interest Period,
the reserve percentage (expressed as a decimal, carried out to 5 decimal places)
in effect on such day, whether or not applicable to any Bank, under regulations
issued from time to time by the Federal Reserve Board for determining the
maximum reserve requirement (including any emergency, supplemental or other
marginal reserve requirement) with respect to Eurocurrency funding (currently
referred to as “Eurocurrency liabilities”). The Eurodollar Rate for each
outstanding Eurodollar Rate Loan shall be adjusted automatically as of the
effective date of any change in the Eurodollar Reserve Percentage.
“Event of Default” has the meaning provided in Section 9.1.
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
“Excluded Taxes” means, with respect to the Administrative Agent, any Bank, an
Issuing Bank or any other recipient of any payment to be made by or on account
of any obligation of the Borrower hereunder,

  (a)   taxes imposed on or measured by its overall net income (however
denominated), and franchise taxes imposed on it (in lieu of net income taxes),
by the jurisdiction (or any political subdivision thereof) under the laws of
which such recipient is organized or in which its principal office is located
or, in the case of any Bank, in which its applicable Lending Office is located,
    (b)   any branch profits taxes imposed by the United States or any similar
tax imposed by any other jurisdiction in which the Borrower is located and    
(c)   in the case of a Foreign Bank (other than an assignee pursuant to a
request by the Borrower under Section 11.27), any withholding tax that is
imposed on amounts payable to such Foreign Bank at the time such Foreign Bank
becomes a party hereto (or designates a new Lending Office) or is attributable
to such Foreign Bank’s failure or inability (other than as a result of a Change
in Law) to comply with Section 3.10(e), except to the extent that such Foreign
Bank (or its assignor, if any) was entitled, at the time of designation of a new
Lending Office (or assignment), to receive additional amounts from the Borrower
with respect to such withholding tax pursuant to Section 3.10(a).

“Existing Letters of Credit” has the meaning set forth in Section 3.17.
“Existing Maturity Date” has the meaning set forth in Section 2.9(a).
“Exposure” means for any Bank, as of any date of determination, the product
obtained by multiplying that Bank’s then effective Pro Rata Share by the then
effective Commitment.

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“Extended Maturity Date” has the meaning set forth in Section 2.9(e).
“Extending Bank” means a Bank that agrees to extend its Maturity Date pursuant
to Section 2.9.
“Extension Effective Date” has the meaning set forth in Section 2.9(c).
“Federal Funds Rate” means, for any day, the rate per annum equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank on the Business Day next
succeeding such day; provided that (a) if such day is not a Business Day, the
Federal Funds Rate for such day shall be such rate on such transactions on the
next preceding Business Day as so published on the next succeeding Business Day,
and (b) if no such rate is so published on such next succeeding Business Day,
the Federal Funds Rate for such day shall be the average rate (rounded upward,
if necessary, to a whole multiple of 1/100 of 1%) charged to Bank of America on
such day on such transactions as determined by the Administrative Agent.
“Financial Letter of Credit” means any letter of credit issued by an issuer for
the account of the Borrower or a Subsidiary that represents an irrevocable
obligation on the part of the issuer:

  (a)   to repay money borrowed by or advanced to the Borrower or a Subsidiary;
or     (b)   to make payment on account of any indebtedness undertaken by the
Borrower or a Subsidiary, in the event that the Borrower or Subsidiary fails to
fulfill its financial obligations to the beneficiary.

“Financial Subsidiary” means (a) the Mortgage Company and its Subsidiaries, so
long as such entities continue to engage in the mortgage banking business,
(b) any Subsidiary of Borrower that is organized and operates solely to issue
(i) collateralized mortgage obligations or (ii) other similar asset-backed
obligations, and (c) any other Subsidiary of Borrower that (i) is engaged
primarily in the business of origination, marketing, and servicing of
residential mortgage loans, the sale of servicing rights, or the financing of
long term residential mortgage loans, (ii) holds not less than 95% of its total
assets in the form of Cash, Cash Equivalents, notes and mortgages receivable,
Cash held by a trustee for the benefit of such Subsidiary or other financial
instruments and (iii) is the subject of an Officer’s Certificate of Borrower
delivered to the Administrative Agent stating that such Subsidiary is a
Financial Subsidiary within the meaning hereof. As of the Closing Date, the
Financial Subsidiaries are Westview Company, KB Home Title Services Inc., KB
Home Insurance Agency Inc., KB Home Insurance Agency of Texas Holdings Inc.,
Homesafe Company and San Antonio Title Co.
“Fiscal Quarter” means each of the fiscal quarters of Borrower ending on each
February 28 (or 29, if a leap year), May 31, August 31 and November 30, or as
otherwise changed by the Borrower upon advance written notice to the
Administrative Agent, but subject to the requirements of Section 1.2.
“Fiscal Year” means each of the fiscal years of Borrower ending on each
November 30 or as otherwise changed by the Borrower upon advance written notice
to the Administrative Agent, but subject to the requirements of Section 1.2.
“Fitch” means Fitch Ratings, or any successor thereto.

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“Foreign Bank” means any Bank that is organized under the laws of a jurisdiction
other than that in which the Borrower is resident for tax purposes. For purposes
of this definition, the United States, each State thereof and the District of
Columbia shall be deemed to constitute a single jurisdiction.
“Foreign Subsidiary” means, with respect to any Person, a Subsidiary of that
Person which is not a Domestic Subsidiary and with respect to Borrower, includes
Kaufman and Broad International, Inc., a California corporation.
“GAAP Subsidiaries” means, with respect to Borrower, all entities whose
financial statements are consolidated with the consolidated financial statements
of Borrower under Generally Accepted Accounting Principles.
“GAAP Value” means, with respect to any property or asset, the book value for
such property or asset determined in accordance with Generally Accepted
Accounting Principles consistently applied.
“Generally Accepted Accounting Principles” means, as of any date of
determination, accounting principles set forth as “generally accepted” in then
currently effective statements of the Auditing Standards Board of the American
Institute of Certified Public Accountants, or, if such statements are not then
in effect, accounting principles that are then approved by a significant segment
of the accounting profession in the United States of America. The term
“consistently applied,” as used in connection therewith, means that the
accounting principles applied to financial statements of a Person as of any date
or for any period are consistent in all material respects (subject to
Section 1.2) to those applied to financial statements of that Person as of
recent prior dates and for recent prior periods.
“Government Securities” means (a) readily marketable direct full faith and
credit obligations of the United States of America or obligations
unconditionally guaranteed by the full faith and credit of the United States of
America and (b) obligations of an agency or instrumentality of, or corporation
owned, controlled or sponsored by, the United States of America that are
generally considered in the securities industry to be implicit obligations of
the United States of America.
“Governmental Agency” means (a) any federal, state, county or municipal
government, or political subdivision thereof, (b) any governmental or
quasi-governmental agency, authority, board, bureau, commission, department,
instrumentality, or public body, (c) any court or administrative tribunal, or
(d) any arbitration tribunal or other non-governmental authority to whose
jurisdiction a Person has consented, in each case whether of the United States
of America or any other nation.
“Guarantor Subsidiary” means (a) any Domestic Subsidiary which is a Consolidated
Subsidiary and a Significant Subsidiary, other than any Financial Subsidiary and
(b) any other Domestic Subsidiary, other than any Financial Subsidiary, that is
designated in writing by Borrower as a Guarantor Subsidiary.
“Hazardous Materials” means substances defined as “hazardous substances”
pursuant to the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, 42 U.S.C. § 9601 et seq., or as “hazardous”, “toxic” or “pollutant”
substances or as “solid waste” pursuant to the Hazardous Materials
Transportation Act, 49 U.S.C. § 1801, et seq., the Resource Conservation and
Recovery Act, 42 U.S.C. § 6901, et seq., or as “friable asbestos” pursuant to
the

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Toxic Substances Control Act, 15 U.S.C. § 2601 et seq. or any other applicable
Hazardous Materials Law, in each case as such Laws are amended from time to
time.
“Hazardous Materials Laws” means all Laws governing the treatment,
transportation or disposal of Hazardous Materials applicable to any real
Property of Borrower or its Subsidiaries.
“Increasing Bank” has the meaning set forth in Section 2.7(a).
“Indebtedness” means, with respect to any Person, without duplication, (a) all
indebtedness of such Person for borrowed money, (b) that portion of the
obligations of such Person under Capital Leases which should properly be
recorded as a liability on a balance sheet of that Person prepared in accordance
with Generally Accepted Accounting Principles consistently applied, (c) any
obligation of such Person that is evidenced by a promissory note or other
instrument representing an extension of credit to such Person, whether or not
for borrowed money, (d) any obligation of such Person for the deferred purchase
price of Property or services (other than trade or other accounts payable in the
ordinary course of business in accordance with customary industry terms),
(e) any obligation of the types referred to in clauses (a) through (d) above
that is secured by a Lien (other than a Permitted Encumbrance) on assets of such
Person, whether or not that Person has assumed such obligation or whether or not
such obligation is non-recourse to the credit of such Person, but only to the
extent of the fair market value of the assets so subject to the Lien if such
obligation is non-recourse, (f) obligations of such Person arising under
acceptance facilities or under facilities for the discount of accounts
receivable of such Person, (g) any obligation of such Person under Financial
Letters of Credit issued for the account of such Person, and (h) net obligations
of such Person under any Swap Contract. The amount of any net obligation under
any Swap Contract on any date shall be deemed to be the Swap Termination Value
thereof as of such date.
“Indemnified Liabilities” has the meaning set forth in Section 11.10.
“Indemnified Taxes” means Taxes other than Excluded Taxes.
“Indemnitees” has the meaning set forth in Section 11.10.
“Information” has the meaning set forth in Section 11.12.
“Intangible Assets” means assets that are considered intangible assets under
Generally Accepted Accounting Principles consistently applied, including (a)
customer lists, goodwill, computer software, unamortized deferred charges,
unamortized debt discount, capitalized research and development costs and other
intangible assets and (b) any write-up in book value of any asset subsequent to
its acquisition, but excluding any existing write-up in book value of any asset
acquired by Borrower or any of its Subsidiaries prior to October 3, 2000, as
such write-up may decrease (but not increase) from time to time.
“Interest Period” means, as to each Eurodollar Rate Loan, a period of 1, 2, 3 or
6 months or, subject to the consent of the Administrative Agent, in its
reasonable discretion, a period of 1, 2 or 3 weeks, as designated by Borrower;
provided that (a) the first day of each Interest Period must be a Business Day,
(b) any Interest Period that would otherwise end on a day that is not a Business
Day shall be extended to the next succeeding Business Day, unless such Business
Day falls in the next calendar month, in which case the Interest Period shall
end on the next preceding Business Day, and (c) no Interest Period may extend
beyond the Maturity Date.

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“Investment” means, with respect to any Person, any investment by that Person,
whether by means of purchase or other acquisition of capital stock or other
Securities of any other Person or by means of loan, advance, capital
contribution, or other debt or equity participation or interest in any other
Person, including any partnership or joint venture interest in any other Person;
provided that an Investment of a Person shall not include any trade or account
receivable arising in the ordinary course of the business of such Person,
whether or not evidenced by a note or other writing. The amount of any
Investment shall be the amount actually invested, less any return of capital,
without adjustment for subsequent increases or decreases in the market value of
such Investment.
“Investment Grade Credit Rating” means, as of any date of determination, that at
least 2 Rating Agencies have as of that date issued credit ratings for
Borrower’s non-credit-enhanced long-term senior unsecured debt of (a) at least
BBB- in the case of S&P, (b) at least Baa3 in the case of Moody’s and (c) at
least BBB- in the case of Fitch.
“IRS” means the United States Internal Revenue Service.
“ISP98” has the meaning set forth in Section 2.5(h).
“Issuing Bank” means:

  (a)   Bank of America or other Bank which is an issuer with respect to the
Existing Letters of Credit; or     (b)   Bank of America or any Bank in its
capacity as issuer in Letters of Credit hereunder.

“Joint Venture” means any Person, other than a Subsidiary, (a) in which Borrower
or any Subsidiary of Borrower holds an equity Investment which entitles Borrower
or such Subsidiary to more than 10% of (i) the ordinary voting power for the
election of the board of directors or other governing body of such Person or
(ii) the partnership, membership or other ownership interest in such Person, and
(b) which has at least one holder of its equity interests that is not an
Affiliate of Borrower or any Subsidiary of Borrower. Notwithstanding the
foregoing, for the purposes of Section 6.16, the term “Joint Venture” will not
include any equity Investment in any Person if the dollar amount of that
investment is less than $1,000,000, computed in accordance with Generally
Accepted Accounting Principles consistently applied, but only to the extent that
the aggregate dollar amount of such equity Investments is less than $25,000,000.
“KB France” means Kaufman & Broad S.A., a French Société Anonyme.
“L/C Advance” means, with respect to each Bank, such Bank’s funding of its
participation in any L/C Borrowing in accordance with its Pro Rata Share.
“L/C Borrowing” means an extension of credit resulting from a drawing under a
Letter of Credit which has not been reimbursed on the date required or
refinanced as a Loan.
“Land Parcels” means parcels of land located in the United States wholly-owned
by Borrower or any Borrowing Base Subsidiary that are unencumbered by any Lien
or Liens (other than Permitted Encumbrances).
“Laws” means, collectively, all foreign, federal, state and local statutes,
treaties, codes, ordinances, rules, regulations and controlling precedents of
any Governmental Agency.

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“Lending Office” means, as to any Bank, the office or offices of such Bank
described as such in such Bank’s Administrative Questionnaire, or such other
office or offices as a Bank may from time to time notify the Borrower and the
Administrative Agent.
“Letter of Credit” means any of the standby letters of credit issued by an
Issuing Bank under the Commitment pursuant to Section 2.5, either as originally
issued or as the same may be supplemented, modified, amended, renewed, extended
or supplanted. A Letter of Credit shall be a Financial Letter of Credit or a
Performance Letter of Credit.
“Letter of Credit Application” means an application and agreement for the
issuance or amendment of a Letter of Credit in the form, from time to time, that
is in use by an Issuing Bank.
“Letter of Credit Collateralize” has the meaning set forth in Section 2.5(g).
“Letter of Credit Usage” means, as of any date of determination, the aggregate
undrawn face amount of outstanding Letters of Credit plus the aggregate amount
of all Unreimbursed Amounts, including all L/C Borrowings.
“Lien” means any mortgage, deed of trust, pledge, hypothecation, assignment for
security, security interest, encumbrance, lien or charge of any kind, whether
voluntarily incurred or arising by operation of Law or otherwise, affecting any
Property, including any agreement to grant any of the foregoing (other than an
agreement which gives to a Person the right to become equally and ratably
secured with any other Person to whom a Lien is granted on any item of Property)
any conditional sale or other title retention agreement, any lease in the nature
of a security interest, or the filing of or agreement to give any financing
statement (other than a precautionary financing statement with respect to a
lease that is not in the nature of a security interest) under the Uniform
Commercial Code or comparable Law of any jurisdiction with respect to any
Property.
“Loans” means the aggregate of the Advances made at any one time by the Banks
pursuant to Article II.
“Loan Documents” means, collectively, this Agreement, the Notes, the Letters of
Credit, Letter of Credit Applications, the Swing Line Documents, the Subsidiary
Guaranty, any Loan Notice, any Swing Line Loan Notice, any Request for Letter of
Credit, any Compliance Certificate, any Borrowing Base Certificate and any other
instruments, documents or agreements of any type or nature hereafter executed
and delivered by Borrower or any of its Subsidiaries or Affiliates to the
Administrative Agent or any other Bank in any way relating to or in furtherance
of this Agreement, in each case either as originally executed or as the same may
from time to time be supplemented, modified, amended, restated, extended or
supplanted.
“Loan Notice” means a notice of (a) a request for a Loan, (b) a conversion of
Loans from one Type to the other or (c) a continuation of Eurodollar Rate Loans,
which may be given by telephone and, if in writing, shall be substantially in
the form of Exhibit D.
“Loan Parties” means, collectively, the Borrower and each Guarantor Subsidiary.
“Lots Under Development” means, as of any date of determination, Land Parcels
that are being developed into Developed Lots or that are scheduled for the
commencement of development into Developed Lots within 6 calendar months after
the date of determination.

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“LTV Maintenance Agreement” means a guaranty or other agreement entered into by
the Borrower or any of its Consolidated Subsidiaries, for the benefit of the
holder of any secured Indebtedness of a Person that is not the Borrower or any
of its Consolidated Subsidiaries, to maintain a specified loan-to-value ratio
with respect to real Property that secures such Indebtedness.
“LTV Maintenance Exposure” means, with respect to any LTV Maintenance Agreement,
the amount equal to (a) the amount of the Indebtedness with respect to which the
LTV Maintenance Agreement is delivered exceeds (b) the product of (i) the book
value of the real Property securing such Indebtedness (or such lesser value as
is provided in or determined under the agreements governing such Indebtedness)
and (ii) a percentage equal to the loan-to-value ratio (stated as a fraction)
that the Borrower or any of its Consolidated Subsidiaries agrees to maintain
under the applicable LTV Maintenance Agreement; provided that if the Borrower or
one of its Consolidated Subsidiaries is liable severally but not jointly and
severally with one or more other obligors under the LTV Maintenance Agreement,
the amount of the Contingent Guaranty Obligation in respect of such LTV
Maintenance Agreement for the Borrower or such Consolidated Subsidiary shall be
the product of (x) the amount determined as set forth above and (y) the maximum
percentage of the aggregate liability under such LTV Maintenance Agreement with
respect to which the Borrower or such Consolidated Subsidiary is severally
liable; provided further, that if the LTV Maintenance Exposure with respect to a
LTV Maintenance Agreement is less than zero, the LTV Maintenance Exposure for
that LTV Maintenance Agreement shall be deemed to be zero.
“Material Adverse Effect” means any circumstance or event, or any set of
circumstances or events which, individually or when aggregated with any other
circumstances or events, (a) has or is reasonably likely to have any material
adverse effect upon the validity or enforceability of any Loan Document, (b) is
or is reasonably likely to be material and adverse to the condition (financial
or otherwise) or operations of Borrower and its Subsidiaries, taken as a whole,
or (c) materially impairs or is reasonably likely to materially impair the
ability of Borrower and its Subsidiaries, taken as a whole, to perform the
Obligations.
“Material Amount of Assets” means, as of any date of determination, more than
15% of the consolidated total assets of Borrower and its Subsidiaries as of such
date (other than assets of, or Investments in, Financial Subsidiaries, KB France
or Borrower’s Consolidated FIN 46 Subsidiaries).
“Maturity Date” means the later of (a) November 22, 2010 and (b) if maturity is
extended pursuant to Section 2.9, such extended maturity date as determined
pursuant to such Section.
“Model Homes” means housing Units which have been completed, furnished and
landscaped and are used in the marketing efforts with respect to a residential
home community.
“Moody’s” means Moody’s Investors Service, Inc. and any successor thereto.
“Mortgage Company” means KB Home Mortgage Company, an Illinois corporation and a
wholly owned Financial Subsidiary of Borrower.
“Multiemployer Plan” means any employee benefit plan of a type described in
Section 4001(a)(3) of ERISA.
“Net Realizable Value Adjustment” means the adjustment required pursuant to
Generally Accepted Accounting Principles consistently applied (including FAS 121
issued by the Financial

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Accounting Standards Board) to reflect a decrease in the book value of assets
below their historical costs.
“New Bank” has the meaning set forth in Section 2.7(a).
“Non-Extending Bank” has the meaning set forth in Section 2.9(b).
“Non-Recourse Indebtedness” means Indebtedness incurred in connection with the
purchase or improvement of Property (a) that is secured solely by the Property
purchased or improved, (b) with respect to which the holder of such Indebtedness
has recourse only to such Property, and (c) that is otherwise non-recourse
(whether by contract or under applicable Law) to any Person.
“Note” means each promissory note made by Borrower to a Bank evidencing the
Advances under that Bank’s Pro Rata Share of the Commitment, substantially in
the form of Exhibit E, either as originally executed or as the same may from
time to time be supplemented, modified, amended, renewed, extended or
supplanted.
“Notice Date” has the meaning set forth in Section 2.9(a).
“Obligations” means all present and future obligations of every kind or nature
of Borrower or any Party at any time and from time to time owed to the
Administrative Agent or the Banks or any one or more of them under any one or
more of the Loan Documents, whether due or to become due, matured or unmatured,
liquidated or unliquidated, or contingent or noncontingent, including
obligations of performance as well as obligations of payment, and including
interest that accrues to the extent permitted by applicable Law after the
commencement of any proceeding under any Debtor Relief Law by or against
Borrower.
“Officer’s Certificate” means, when used with reference to any Person, a
certificate signed by a Senior Officer of such Person.
“Opinions of Counsel” means the favorable written legal opinions of (a) Munger,
Tolles & Olson llp, special counsel to Borrower and (b) Kimberly N. King, Vice
President and Secretary of Borrower, substantially in the form of Exhibits F-1
and F-2, respectively, together with copies of all factual certificates and
legal opinions upon which such counsel has relied.
“Other Taxes” means all present or future stamp or documentary taxes or any
other excise or property taxes, charges or similar levies arising from any
payment made hereunder or under any other Loan Document or from the execution,
delivery or enforcement of, or otherwise with respect to, this Agreement or any
other Loan Document.
“Outstanding Amount” means:

  (a)   with respect to Loans and Swing Line Loans on any date, the aggregate
outstanding principal amount thereof after giving effect to any borrowings and
prepayments or repayments of Loans and Swing Line Loans, as the case may be,
occurring on such date; and     (b)   with respect to any Letter of Credit Usage
on any date, the amount of such Letter of Credit Usage on such date, after
giving effect to the issuance, extension, expiry, renewal or increase of any
Letter of Credits occurring on such date and any other changes in the aggregate
amount of the Letter of Credit Usage as of such date, including as a result of

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      any reimbursements of outstanding unpaid drawings under any Letters of
Credit or any reductions in the maximum amount available for drawing under
Letters of Credit taking effect on such date.

“Participant” has the meaning set forth in Section 11.8(d).
“Party” means any Person other than the Banks or the Administrative Agent which
now or hereafter is a party to any of the Loan Documents.
“PBGC” means the Pension Benefit Guaranty Corporation or any successor thereto
established under ERISA.
“Pension Plan” means any “employee pension benefit plan” (as such term is
defined in ERISA) which is subject to Title IV of ERISA and which is maintained
for employees of Borrower or any of its ERISA Affiliates.
“Performance Letter of Credit” means any letter of credit issued by an issuer
for the account of the Borrower or a Subsidiary that is not a Financial Letter
of Credit.
“Permitted Encumbrances” means:

  (a)   inchoate Liens incident to construction or maintenance of real property;
or Liens incident to construction or maintenance of real property now or
hereafter filed of record for which adequate reserves have been set aside if
required by, and in accordance with, Generally Accepted Accounting Principles
and which are being contested in good faith by appropriate proceedings and have
not proceeded to judgment, provided that, by reason of nonpayment of the
obligations secured by such Liens, no material property is subject to a material
risk of loss or forfeiture;     (b)   Liens for taxes and assessments on real
property which are not yet past due; or Liens for taxes and assessments on real
property for which adequate reserves have been set aside if required by, and in
accordance with, Generally Accepted Accounting Principles and are being
contested in good faith by appropriate proceedings and have not proceeded to
judgment, provided that, by reason of nonpayment of the obligations secured by
such Liens, no material property is subject to a material risk of loss or
forfeiture;     (c)   minor defects and irregularities in title to any real
property which in the aggregate do not materially impair the fair market value
or use of the real property for the purposes for which it is or may reasonably
be expected to be held;     (d)   easements, exceptions, reservations, or other
agreements for the purpose of pipelines, conduits, cables, wire communication
lines, power lines and substations, streets, trails, walkways, drainage,
irrigation, water, utilities, and sewerage purposes, dikes, canals, ditches, the
removal of oil, gas, coal, or other minerals, and other like purposes affecting
real property, facilities, or equipment which in the aggregate do not materially
burden or impair the fair market value or use of such property for the purposes
for which it is or may reasonably be expected to be held;     (e)   easements,
exceptions, reservations, or other agreements for the purpose of facilitating
the joint or common use of property affecting real property which in the
aggregate do not

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      materially burden or impair the fair market value or use of such property
for the purposes for which it is or may reasonably be expected to be held;    
(f)   rights reserved to or vested in any Governmental Agency to control or
regulate the use of any real property;     (g)   any obligations or duties
affecting any real property to any Governmental Agency with respect to any
right, power, franchise, grant, license, or permit;     (h)   present or future
zoning laws and ordinances or other laws and ordinances restricting the
occupancy, use, or enjoyment of real property;     (i)   statutory Liens,
including warehouseman’s liens, other than those described in clauses (a) or
(b) above, arising in the ordinary course of business with respect to
obligations which are not delinquent or are being contested in good faith,
provided that, if delinquent, adequate reserves have been set aside with respect
thereto and, by reason of nonpayment, no material property is subject to a
material risk of loss or forfeiture;     (j)   covenants, conditions, and
restrictions affecting the use of real property which in the aggregate do not
materially impair the fair market value or use of the real property for the
purposes for which it is or may reasonably be expected to be held;     (k)  
rights of tenants under leases and rental agreements covering real property
entered into in the ordinary course of business of the Person owning such real
property;     (l)   Liens consisting of pledges or deposits to secure
obligations under workers’ compensation laws or similar legislation, including
Liens of judgments thereunder which are not currently dischargeable;     (m)  
Liens consisting of pledges or deposits of property to secure performance in
connection with operating leases made in the ordinary course of business to
which the Borrower or a Subsidiary is a party as lessee, provided the aggregate
value of all such pledges and deposits in connection with any such lease does
not at any time exceed 25% of the annual fixed rentals payable under such lease;
    (n)   Liens consisting of deposits of property to secure statutory
obligations of the Borrower or a Subsidiary of Borrower in the ordinary course
of its business; and     (o)   Liens consisting of deposits of property to
secure (or in lieu of) surety, appeal or customs bonds in proceedings to which
Borrower or a Subsidiary of Borrower is a party in the ordinary course of its
business.

“Permitted Right of Others” means a Right of Others consisting of (a) an
interest (other than a legal or equitable co-ownership interest, an option or
right to acquire a legal or equitable co-ownership interest and any interest of
a ground lessor under a ground lease), that does not materially impair the value
or use of property for the purposes for which it is or may reasonably be
expected to be held, (b) an option or right to acquire a Lien that would be a
Permitted Encumbrance or (c) the reversionary interest of a landlord under a
lease of Property.

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“Person” means an individual, trustee, corporation, general partnership, limited
partnership, limited liability company, joint stock company, trust, estate,
unincorporated organization, union, tribe, business association or firm, joint
venture, Governmental Agency, or other entity.
“Plan” means any “employee benefit plan” (as such term is defined in
Section 3(3) of ERISA) established by the Borrower or, with respect to any such
plan that is subject to Section 412 of the Code or Title IV of ERISA, any ERISA
Affiliate.
“Platform” has the meaning set forth in Section 7.1.
“Prior Revolving Loan Agreement” has the meaning set forth for that term in the
recitals of the parties hereto.
“Pro Rata Share” of a Bank, as it pertains to the Commitment, means the
applicable percentage set forth opposite the name of that Bank on Schedule 1.1
to this Agreement, as such Schedule 1.1 may change from time to time in
accordance with the terms of this Agreement or in accordance with any effective
Assignment and Assumption.
“Profit and Participation Agreement” means an agreement, secured by a deed of
trust, mortgage, or other lien against a purchased Property, with respect to
which the purchaser of any Property agrees to pay the seller of such Property a
profit, price, or premium participation in such Property.
“Projections” means the financial projections of Borrower delivered to the
Administrative Agent on October 28, 2005.
“Property” means any interest in any kind of property or asset, whether real,
personal or mixed, or tangible or intangible.
“Public Lender” has the meaning set forth in Section 7.1.
“Qualified Issuer” means a commercial bank, savings bank, savings and loan
association or similar financial institution which, (a) has total assets of
$5,000,000,000 or more, (b) is “well capitalized” within the meaning of such
term under the Federal Depository Institutions Control Act, (c) is engaged in
the business of lending money and extending credit under credit facilities
substantially similar to those extended under this Agreement and (d) is
operationally and procedurally able to meet the obligations of a Bank hereunder
to the same degree as a commercial bank
“Quarterly Payment Date” means December 31, 2005, and each March 31, June 30,
September 30 and December 31 thereafter through and including the Maturity Date.
“rateOne” means rateOne Home Loan, LLC, a Delaware limited liability company and
a Subsidiary of Mortgage Company.
“Rating Agencies” means S&P, Moody’s and Fitch.
“Register” has the meaning set forth in Section 11.8(c).
“Regulation D” means Regulation D, as at any time amended, of the Board of
Governors of the Federal Reserve System or any other regulation in substance
substituted therefor.

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“Related Parties” means, with respect to any Person, such Person’s Affiliates
and the partners, directors, officers, employees, agents and advisors of such
Person and of such Person’s Affiliates.
“Reply Date” has the meaning set forth in Section 2.9(b).
“Reportable Event” means any of the events set forth in Section 4043(c) of
ERISA, other than events for which the 30 day notice period has been waived.
“Request for Letter of Credit” means a written request for the issuance of a
Letter of Credit signed by a Responsible Official of Borrower, in a form
reasonably designated from time to time by the Administrative Agent.
“Required Banks” means, as of any date of determination, Banks having more than
50% of the Commitment or, if the commitment of each Bank to make Advances and
the obligation of the Issuing Banks to issue Letters of Credit have been
terminated or suspended, Banks holding in the aggregate more than 50% of the
Total Outstandings (with the aggregate amount of each Bank’s risk participation
and funded participation in Letter of Credit Usage and Swing Line Loans being
deemed “held” by such Bank for purposes of this definition); provided that the
Commitment of, and the portion of the Total Outstandings held or deemed held by,
any Defaulting Bank shall be excluded for purposes of making a determination of
Required Banks.
“Requirement of Law” means, as to any Person, any Law or any judgment, award,
decree, writ or determination of, or any consent or similar agreement with, a
Governmental Agency, in each case applicable to or binding upon such Person or
any of its Property or to which such Person or any of its Property is subject.
“Responsible Official” means (a) when used with reference to a Person other than
an individual, any corporate officer of such Person, general partner of such
Person, corporate officer of a corporate general partner of such Person, or
corporate officer of a corporate general partner of a partnership that is a
general partner of such Person, or any other responsible official thereof duly
acting on behalf thereof, and (b) when used with reference to a Person who is an
individual, such Person. Any document or certificate hereunder that is signed or
executed by a Responsible Official of a Person shall be conclusively presumed to
have been authorized by all necessary corporate, partnership or other action on
the part of that Person.
“Right of Others” means, with respect to any Property in which a Person has an
interest, (a) any legal or equitable claim or other interest (other than a Lien)
in or with respect to that Property held by any other Person, and (b) any option
or right held by any other Person to acquire any such claim or other interest
(including a Lien).
“S&P” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill
Companies, Inc., and any successor thereto.
“Securities” means any capital stock, share, voting trust certificate, bonds,
debentures, notes or other evidences of indebtedness, limited partnership
interests, or any warrant, option or other right to purchase or acquire any of
the foregoing.
“Senior Indebtedness” means, as of any date of determination, the aggregate
amount of Indebtedness for borrowed money, and the aggregate amount of
obligations under Financial Letters of Credit, of Borrower and Borrowing Base
Subsidiaries that is not Subordinated Obligations and that is not Non-Recourse
Indebtedness.

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“Senior Officer” means the (a) chief executive officer, (b) chief operating
officer, (c) chief financial officer, (d) vice president and controller,
(e) vice president, treasury, or (f) treasurer, in each case whatever the title
nomenclature may be, of the Person designated.
“Shareholders’ Equity” means, as of any date of determination, shareholders’
equity as of that date determined in accordance with Generally Accepted
Accounting Principles consistently applied; provided that there shall be
excluded from Shareholders’ Equity any amount attributable to capital stock that
is, directly or indirectly, required to be redeemed or repurchased by the issuer
thereof prior to the date which is one year after the Maturity Date or upon the
occurrence of specified events or at the election of the holder thereof.
“Significant Subsidiary” means, as of the Closing Date, those Subsidiaries of
Borrower identified as such in Schedule 4.4 and, as of any other date of
determination, any Subsidiary of Borrower (other than a Joint Venture) with
respect to which any of the following conditions is met:

  (a)   the aggregate book value of all Investments of Borrower and its
Subsidiaries in such Subsidiary exceeds 5% of the consolidated total assets
(other than assets of Financial Subsidiaries) of Borrower and its Subsidiaries
as of such date; or     (b)   the proportionate share of Borrower and its
Subsidiaries in the total assets of such Subsidiary (after intercompany
eliminations) exceeds 5% of the consolidated total assets (other than assets of
Financial Subsidiaries) of Borrower and its Subsidiaries as of such date; or    
(c)   the equity of Borrower and its Subsidiaries in the net income of such
Subsidiary (before income taxes, extraordinary items and cumulative effect of a
change in accounting principles) as of the end of the most recently ended fiscal
year of such Subsidiary exceeds the greater of (i) an amount equal to 5% of the
consolidated net income (other than net income of Financial Subsidiaries) of
Borrower and its Subsidiaries (computed as aforesaid) as of the end of the most
recent Fiscal Year ended prior to such date or (ii) $10,000,000.

“Solvent” means, as to any Person, that such Person (a) owns Property whose fair
saleable value is greater than the amount required to pay all of such Person’s
indebtedness and other obligations (including contingent debts), (b) is able to
pay all of its indebtedness and other obligations as such indebtedness and other
obligations mature and (c) has capital sufficient to carry on its business and
transactions and all business and transactions in which it is about to engage.
“Speculative Units” means Developed Lots having fully or partially constructed
Units thereon (including, at a minimum, a completed foundation for any such
Unit) that are not subject to bona fide contracts for the sale of such Units to
a third party, excluding Developed Lots containing Units used as Model Homes.
“Subordinated Notes” means (i) Borrower’s 8 ?% Senior Subordinated Notes due
2008, (ii) Borrower’s 7 3/4% Senior Subordinated Notes due 2010 and
(iii) Borrower’s 9 1/2% Senior Subordinated Notes due 2011.
“Subordinated Obligations” means, collectively, all obligations of Borrower or
any of its Subsidiaries that (a) do not provide for any scheduled redemption on
or before 30 days after the Maturity Date, (b) are expressly subordinated to the
Obligations by a written instrument containing subordination and related
provisions (including interest payment blockage, standstill

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and related provisions) not materially less favorable to the Banks in any
respect whatsoever from those applicable to Borrower’s Subordinated Notes (or
such other subordination and related provisions as may be approved in writing by
the Required Banks), (c) are subject to financial covenants not materially more
burdensome to Borrower taken as a whole than those applicable to the
Subordinated Notes, except such covenants as may be approved in writing by the
Required Banks and (d) are subject to other covenants (other than the covenant
to pay interest) and events of default which in the aggregate are not materially
more burdensome to Borrower than those applicable to the Subordinated Notes,
except such covenants or events of default as may be approved in writing by the
Required Banks.
“Subsidiary” means, with respect to any Person, any corporation, limited
liability company, partnership, joint venture or other business entity whether
now existing or hereafter organized or acquired: (a) in the case of a
corporation or limited liability company, of which securities having a majority
of the ordinary voting power for the election of the board of directors (other
than securities having such power only by reason of the happening of a
contingency) are at the time owned by such Person or one or more Subsidiaries of
such Person; or (b) in the case of a partnership, joint venture or other
business entity, in which such Person or a Subsidiary of such Person is a
general partner.
“Subsidiary Guaranty” means the guaranty of the Indebtedness of Borrower under
this Agreement executed by each Guarantor Subsidiary of Borrower substantially
in the form of Exhibit G, either as originally executed or as the same may from
time to time be supplemented, modified, amended, renewed, extended or
supplanted.
“Swap Contract” means (a) any and all rate swap transactions, basis swaps,
credit derivative transactions, forward rate transactions, commodity swaps,
commodity options, forward commodity contracts, equity or equity index swaps or
options, bond or bond price or bond index swaps or options or forward bond or
forward bond price or forward bond index transactions, interest rate options,
forward foreign exchange transactions, cap transactions, floor transactions,
collar transactions, currency swap transactions, cross-currency rate swap
transactions, currency options, spot contracts, or any other similar
transactions or any combination of any of the foregoing (including any options
to enter into any of the foregoing), whether or not any such transaction is
governed by or subject to any master agreement, and (b) any and all transactions
of any kind, and the related confirmations, which are subject to the terms and
conditions of, or governed by, any form of master agreement published by the
International Swaps and Derivatives Association, Inc., any International Foreign
Exchange Master Agreement, or any other master agreement (any such master
agreement, together with any related schedules, a “Master Agreement”), including
any such obligations or liabilities under any Master Agreement.
“Swap Termination Value” means, in respect of any one or more Swap Contracts,
after taking into account the effect of any legally enforceable netting
agreement relating to such Swap Contracts, (a) for any date on or after the date
such Swap Contracts have been closed out and termination value(s) determined in
accordance therewith, such termination value(s), and (b) for any date prior to
the date referenced in clause (a), the amount(s) determined as the
mark-to-market value(s) for such Swap Contracts, as determined based upon one or
more mid-market or other readily available quotations provided by any recognized
dealer in such Swap Contracts (which may include a Bank or any Affiliate of a
Bank).
“Swing Line” means the revolving line of credit established by the Swing Line
Bank in favor of Borrower pursuant to Section 2.4.

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“Swing Line Bank” means Bank of America or any successor swing line lender
hereunder.
“Swing Line Documents” means the promissory note and any other documents
executed by Borrower in favor of the Swing Line Bank in connection with the
Swing Line.
“Swing Line Loan Notice” means a notice of a request for a Swing Line Loan,
which may be given by telephone and, if in writing, shall be substantially in
the form of Exhibit H.
“Swing Line Loans” means loans made by the Swing Line Bank to Borrower pursuant
to Section 2.4.
“Swing Line Maturity Date” means the earlier to occur of (a) the date
immediately following the date the Swing Line Bank demands repayment of a Swing
Line Loan and (b) the date 10 days following the date of disbursement of a Swing
Line Loan or, if such day is not a Business Day, the next Business Day.
“Swing Line Outstandings” means, as of any date of determination, the aggregate
principal Indebtedness of Borrower on all Swing Line Loans then outstanding.
“Taxes” means all present or future taxes, levies, imposts, duties, deductions,
withholdings, assessments, fees or other charges imposed by any Governmental
Agency, including any interest, additions to tax or penalties applicable
thereto.
“Termination Event” means (a) a “reportable event” as defined in Section 4043 of
ERISA (other than a “reportable event” that is not subject to the provision for
30 day notice to the PBGC), (b) the withdrawal of Borrower or any of its ERISA
Affiliates from a Pension Plan during any plan year in which it was a
“substantial employer” as defined in Section 4001(a)(2) of ERISA, (c) the filing
of a notice of intent to terminate a Pension Plan or the treatment of an
amendment to a Pension Plan as a termination thereof pursuant to Section 4041 of
ERISA, other than pursuant to Section 4041(b) of ERISA, (d) the institution of
proceedings to terminate a Pension Plan by the PBGC or (e) any other event or
condition which might reasonably be expected to constitute grounds under ERISA
for the termination of, or the appointment of a trustee to administer, any
Pension Plan.
“to the best knowledge of” means, when modifying a representation, warranty or
other statement of any Person, that such representation, warranty or statement
is a representation, warranty or statement that (a) the Person making it has no
actual knowledge of the inaccuracy of the matters therein stated and
(b) assuming the exercise by the Person making it of reasonable due diligence
under the circumstances (in accordance with the standard of what a reasonable
Person would have done under similar circumstances), the Person making it would
have no actual knowledge of the inaccuracy of the matters therein stated. Where
the Person making the representation, warranty or statement is not a natural
Person, the aforesaid actual or constructive knowledge shall be that of any
Senior Officer of that Person.
“Total Outstandings” means the aggregate Outstanding Amount of all Loans
(including Swing Line Loans) and all Letter of Credit Usage.
“Type” means, with respect to a Loan, its character as a Base Rate Loan or a
Eurodollar Rate Loan.

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“UCP500” means the Uniform Customs and Practice for Documentary Credits, 1993
Revision, International Chamber of Commerce Publication 500, or any substitution
therefor or replacement thereof.
“Unit” means a residential housing unit available for sale located in the United
States.
“Unreimbursed Amount” has the meaning set forth in Section 2.5(c)(i).
“Unrestricted Cash” means, as of any date of determination, the Cash and Cash
Equivalents of Borrower and its Borrowing Base Subsidiaries to the extent that
such Cash and Cash Equivalents are free and clear of all Liens and Rights of
Others and are not subject to any restriction pursuant to any Contractual
Obligations.
“Voting Stock” means, with respect to any Person, the capital stock of such
Person having general voting power under ordinary circumstances to elect at
least a majority of the board of directors, managers or trustees of such Person
(irrespective of whether or not at the time capital stock of any other class or
classes shall have or might have voting power by reason of the happening of any
contingency).

1.2   Accounting Terms.

     All accounting terms not specifically defined in this Agreement shall be
construed in conformity with, and all financial data required to be submitted by
this Agreement shall be prepared in conformity with, Generally Accepted
Accounting Principles consistently applied, except as otherwise specifically
prescribed herein. In the event that Generally Accepted Accounting Principles
change during the term of this Agreement such that the financial covenants
contained in Sections 6.9, 6.10, 6.11, 6.15 or 6.16 would then be calculated in
a different manner or with different components or would render the same not
meaningful criteria for evaluating Borrower’s financial condition, (a) Borrower
and the Banks agree to amend this Agreement in such respects as are necessary to
conform those covenants as criteria for evaluating Borrower’s financial
condition to substantially the same criteria as were effective prior to such
change in Generally Accepted Accounting Principles and (b) Borrower shall be
deemed to be in compliance with the financial covenants contained in such
Sections during the 90 day period following such change in Generally Accepted
Accounting Principles if and to the extent that Borrower would have been in
compliance therewith under Generally Accepted Accounting Principles as in effect
immediately prior to such change. In the event that the Borrower changes its
Fiscal Year during the term of this Agreement, Borrower and the Banks agree to
amend this Agreement and the other Loan Documents in such respects as are
necessary to conform the definitions, the financial covenants, the reporting
requirements and the other provisions thereof to fairly reflect such change in
the Borrower’s Fiscal Year.

1.3   Rounding.

     Any financial ratios required to be maintained by Borrower pursuant to this
Agreement shall be calculated by dividing the appropriate component by the other
component, carrying the result to one place more than the number of places by
which such ratio is expressed in this Agreement and rounding the result up or
down to the nearest number (with a round-up if there is no nearest number) to
the number of places by which such ratio is expressed in this Agreement.

1.4   Other Interpretive Provisions.

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     With reference to this Agreement and each other Loan Document, unless
otherwise specified herein or in such other Loan Document:

  (a)   The meanings of defined terms are equally applicable to the singular and
plural forms of the defined terms.     (b)   Any definition of or reference to
any agreement, instrument or other document shall be construed as referring to
such agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein or in any other Loan
Document).     (c)   The words “herein,” “hereto,” “hereof” and “hereunder” and
words of similar import when used in any Loan Document shall refer to such Loan
Document as a whole and not to any particular provision thereof.     (d)  
Article, Section, Exhibit and Schedule references are to the Loan Document in
which such reference appears.     (e)   Any reference to any law shall include
all statutory and regulatory provisions consolidating, amending, replacing or
interpreting such law and any reference to any law or regulation shall, unless
otherwise specified, refer to such law or regulation as amended, modified or
supplemented from time to time.     (f)   The term “including” is by way of
example and not limitation.     (g)   The term “or” is not exclusive.     (h)  
The term “documents” includes any and all instruments, documents, agreements,
certificates, notices, reports, financial statements and other writings, however
evidenced, whether in physical or electronic form.     (i)   In the computation
of periods of time from a specified date to a later specified date, the word
“from” means “from and including;” the words “to” and “until” each mean “to but
excluding;” and the word “through” means “to and including.”     (j)   Section
headings herein and in the other Loan Documents are included for convenience of
reference only and shall not affect the interpretation of this Agreement or any
other Loan Document.

1.5   Exhibits and Schedules.

     All Exhibits and Schedules to this Agreement, either as originally existing
or as the same may from time to time be supplemented, modified, or amended, are
incorporated herein by reference. A matter disclosed on any Schedule shall be
deemed disclosed on all Schedules.

1.6   References to “Borrower and its Subsidiaries”.

     Any reference herein to “Borrower and its Subsidiaries” or the like shall
refer solely to Borrower during such times, if any, as Borrower shall have no
Subsidiaries.

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  1.7   Time of Day.

     Unless otherwise specified, all references herein to times of day shall be
references to Central time (daylight or standard, as applicable).

1.8   Letter of Credit Amounts.

     Unless otherwise specified herein, the amount of a Letter of Credit at any
time shall be deemed to be the stated amount of such Letter of Credit in effect
at such time (after taking into account amounts drawn prior to such time that
are not subject to reinstatement); provided, however, that with respect to any
Letter of Credit that, by its terms or the terms of any document related
thereto, provides for one or more automatic increases in the stated amount
thereof, the amount of such Letter of Credit shall be deemed to be the maximum
stated amount of such Letter of Credit after giving effect to all such
increases, whether or not such maximum stated amount is in effect at such time.

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ARTICLE II
LOANS AND LETTERS OF CREDIT

2.1   Loans-General.

  (a)   Subject to the terms and conditions set forth in this Agreement
(including Section 8.2), at any time and from time to time from the Closing Date
through the Business Day immediately preceding the Maturity Date, each Bank
shall, pro rata according to that Bank’s Pro Rata Share of the Commitment then
in effect, make Advances to Borrower under the Commitment in such amounts as
Borrower may request; provided that after giving effect to such Advance, the
Total Outstandings shall not exceed the Commitment. Subject to the limitations
set forth herein, Borrower may borrow, repay and reborrow under this
Section 2.1(a) without premium or penalty. In no event shall the Banks be
obligated to make Loans to the Borrower at any time if, after giving effect to
such Loans, the provisions of Section 6.17 would be violated.     (b)  
[Intentionally Omitted].     (c)   Subject to the next sentence and to
Sections 2.4(e) and 2.5(c), each Loan shall be made pursuant to Borrower’s
irrevocable Loan Notice to the Administrative Agent, which shall specify the
requested (i) date of such Loan, (ii) type of Loan, (iii) amount of such Loan
and (iv) in the case of a Eurodollar Rate Loan, Interest Period for such Loan.
Each telephonic Loan Notice by the Borrower pursuant to this Section 2.1(c) must
be confirmed promptly by delivery to the Administrative Agent of a written Loan
Notice, appropriately completed and signed by a Responsible Official of the
Borrower.     (d)   Promptly following receipt of a Loan Notice, the
Administrative Agent shall notify each Bank by telephone, telecopier or telex of
the date and type of the Loan, the applicable Interest Period in the case of a
Eurodollar Rate Loan, and that Bank’s Pro Rata Share of the Loan. Not later than
12:00 noon, Los Angeles time, on the date specified for any Loan, each Bank
shall make its Pro Rata Share of the Loan in immediately available funds
available to the Administrative Agent at the Administrative Agent’s Office. Upon
fulfillment of the applicable conditions set forth in Article VIII, all Advances
shall be credited in immediately available funds to the Designated Deposit
Account.     (e)   The principal amount of each Loan shall be an integral
multiple of $1,000,000 and shall be in an amount not less than (i) $1,000,000 if
such Loan is a Base Rate Loan and (ii) $5,000,000 if such Loan is a Eurodollar
Rate Loan.     (f)   A Loan Notice shall be irrevocable upon the Administrative
Agent’s first notification thereof. The obligation of each Bank to make any
Advance is several, and not joint or joint and several, and is not conditioned
upon the performance by any other Bank of its obligation to make Advances. The
failure by any Bank to perform its obligation to make any Advance will not
increase the obligation of any other Bank to make Advances.     (g)   Borrower
may redesignate a Base Rate Loan as a Eurodollar Rate Loan, or a Eurodollar Rate
Loan as a Base Rate Loan or a Eurodollar Rate Loan with a new Interest Period,
by delivering a Loan Notice to the Administrative Agent, within the time periods
and pursuant to the conditions set forth in Section 2.1(c), 2.2 or 2.3, as
applicable, and elsewhere in this Agreement. If no Loan Notice has been made
prior to the last day of the Interest Period for an outstanding Eurodollar Rate
Loan within the requisite notice

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      periods set forth in Section 2.3, then Borrower shall be deemed to have
requested that such Eurodollar Rate Loan be redesignated as a Base Rate Loan.  
  (h)   The Advances made by each Bank under this Section 2.1 shall be evidenced
by that Bank’s Note.

2.2   Base Rate Loans.            Each request by Borrower for a Base Rate Loan
shall be made pursuant to a Loan Notice received by the Administrative Agent, at
the Administrative Agent’s Office, not later than 11:00 a.m., Los Angeles time,
on the Business Day on which the requested Base Rate Loan is to be made. The
Administrative Agent shall notify each Bank of a request for a Base Rate Loan as
soon as practicable after receipt of the same. All Loans shall constitute Base
Rate Loans unless properly designated as Eurodollar Rate Loans pursuant to
Section 2.3.   2.3   Eurodollar Rate Loans.

  (a)   Each request by Borrower for a Eurodollar Rate Loan shall be made
pursuant to a Loan Notice received by the Administrative Agent, at the
Administrative Agent’s Office, not later than 11:00 a.m., Los Angeles time, at
least 3 Business Days before the first day of the applicable Interest Period,
provided that such advance notice period may be reduced by the Administrative
Agent in its discretion with respect to any Eurodollar Rate Loan made on the
Closing Date. The Administrative Agent shall notify each Bank of a request for a
Eurodollar Rate Loan as soon as practicable after receipt of the same.     (b)  
At or about 10:00 a.m., Los Angeles time, 2 Business Days before the first day
of the applicable Interest Period, the Administrative Agent shall determine the
applicable Eurodollar Rate (which determination shall be conclusive in the
absence of manifest error) and promptly shall give notice of the same to
Borrower and the Banks by telephone, telecopier or, in the case of Banks, telex.
    (c)   No more than 10 Eurodollar Rate Loans may be outstanding at any
particular time.

2.4   Swing Line.

  (a)   Subject to the terms and conditions set forth herein, the Swing Line
Bank agrees, in reliance upon the agreements of the other Banks set forth in
this Section 2.4, to make Swing Line Loans to Borrower from time to time from
the Closing Date through the Business Day immediately preceding the Maturity
Date in such amounts as Borrower may request, provided that (i) giving effect to
such Swing Line Loan, the Swing Line Outstandings do not exceed $100,000,000,
(ii) the conditions to an Advance specified in Article VIII have been satisfied
(other than delivery of a Loan Notice), (iii) without the consent of all of the
Banks, no Swing Line Loan may be made during the continuation of an Event of
Default, (iv) the Swing Line Bank has not given at least 24 hours prior notice
to Borrower that availability under the Swing Line is suspended or terminated,
(v) after giving effect to such Swing Line Loan, the Total Outstandings shall
not exceed the Commitment and (vi) in no event shall the Swing Line Bank be
obligated to make a Swing Line Loan to Borrower if, after giving effect to such
Swing Line Loan, the provisions of Section 6.17 would be violated. Borrower may
borrow, repay and reborrow under this Section 2.4. Unless notified to the
contrary by the Swing Line Bank, borrowings under the Swing Line shall be made
in amounts which are integral multiples

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      of $100,000. Unless notified to the contrary by the Swing Line Bank, each
repayment of a Swing Line Loan shall be in an amount which is an integral
multiple of $100,000. A Swing Line Loan may, at any time and from time to time,
voluntarily be prepaid at the election of Borrower in whole or in part without
premium or penalty. Each Swing Line Loan shall be made pursuant to Borrower’s
irrevocable Swing Line Loan Notice to the Administrative Agent at the
Administrative Agent’s Office not later than 4:00 p.m. Los Angeles time on the
day the requested Swing Line Loan is to be made. Each telephonic Swing Line Loan
Notice by the Borrower pursuant to this Section 2.4(a) must be confirmed
promptly by delivery to the Administrative Agent of a written Swing Line Loan
Notice, appropriately completed and signed by a Responsible Official of the
Borrower.     (b)   Swing Line Loans shall bear interest at a fluctuating rate
per annum equal to the sum of the Applicable Federal Funds Rate plus the
Applicable Eurodollar Rate Spread, payable on the dates principal is due and in
any event on the Maturity Date. The Swing Line Bank shall be responsible for
invoicing Borrower for such interest. The interest payable on Swing Line Loans
is solely for the account of the Swing Line Bank (or, if applicable, for the
account of the Banks funding such Swing Line Loans pursuant to Section 2.4(d)).
    (c)   Each Swing Line Loan shall be payable on the applicable Swing Line
Maturity Date and in any event on the Maturity Date.     (d)   Upon the making
of a Swing Line Loan, each Bank shall be deemed to have purchased from the Swing
Line Bank a participation therein in an amount equal to that Bank’s Pro Rata
Share of the Commitment times the amount of the Swing Line Loan. Upon demand
made by the Swing Line Bank, each Bank shall, according to its Pro Rata Share of
the Commitment, promptly provide to the Swing Line Bank its purchase price
therefor in an amount equal to its participation therein. The obligation of each
Bank to so provide its purchase price to the Swing Line Bank shall be absolute
and unconditional and shall not be affected by the occurrence of an Event of
Default or any other occurrence or event.     (e)   In the event that any Swing
Line Outstandings have not been repaid by the applicable Swing Line Maturity
Date, then on the next Business Day (unless Borrower has made other arrangements
acceptable to the Swing Line Bank to repay the Swing Line Outstandings),
Borrower shall request a Base Rate Loan under the Commitment pursuant to
Section 2.2 in an amount complying with Section 2.1(e) and sufficient to repay
the Swing Line Outstandings. The Administrative Agent shall automatically
provide such amount to the Swing Line Bank (which the Swing Line Bank shall then
apply to the Swing Line Outstandings or, if applicable, pay such amount ratably
to such Banks as have funded their purchase of a participation pursuant to
Section 2.4(d) in accordance with their Pro Rata Shares) and credit any balance
of the Loan in immediately available funds to the Designated Deposit Account. In
the event that Borrower fails to request a Base Rate Loan under the Commitment
within the time specified by Section 2.2 on any such Swing Line Maturity Date,
the Administrative Agent may, but is not required to, without notice to or the
consent of Borrower, cause Base Rate Advances to be made by the Banks under the
Commitment in the amount necessary to comply with Section 2.1(e) and sufficient
to repay the Swing Line Outstandings and, for this purpose, the conditions
precedent set forth in Section 8.2 shall not apply. The proceeds of such
Advances shall be paid to the Swing Line Bank for application to the Swing Line
Outstandings, with any balance credited in immediately available funds to the
Designated Deposit Account.

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2.5   Letters of Credit.

  (a)   Letter of Credit Commitment. Subject to the terms and conditions of this
Agreement (including Section 8.3), Borrower may request from time to time during
the period from the Closing Date through the day 30 days prior to the Maturity
Date (unless the Issuing Bank otherwise agrees to a later date prior to the
Maturity Date) that the Issuing Bank, in reliance upon the agreements of the
other Banks set forth in this Section 2.5, issue Letters of Credit for the
account of Borrower, and the Issuing Bank agrees to issue for the account of
Borrower one or more Letters of Credit and to amend Letters of Credit previously
issued by it in accordance with Section 2.5(b), provided that (i) Borrower shall
not request that the Issuing Bank issue any Letter of Credit if, after giving
effect to such issuance, the Total Outstandings exceeds the Commitment,
(ii) Borrower shall not request that the Issuing Bank issue any Letter of Credit
if, after giving effect to such issuance, Borrower would not be in compliance
with Section 6.17, (iii) Borrower shall not request that the Issuing Bank issue
any Letter of Credit having an expiration date that is beyond 364 days from the
Maturity Date and (iv) the Borrower shall not request that the Issuing Bank
issue any Letter of Credit if, after giving effect to such issuance, the Letter
of Credit Usage would exceed $1,000,000,000 or any limit established by Law
after the Closing Date on the Issuing Bank’s ability to issue the requested
Letter of Credit at any time. Notwithstanding the foregoing, the Issuing Bank
shall not issue any Letter of Credit if, (A) on or prior to the Business Day
immediately preceding the issuance thereof any Bank has notified the Issuing
Bank in writing that the conditions set forth in Section 8.3 have not been
satisfied with respect to the issuance of such Letter of Credit, (B) the expiry
date of such requested Letter of Credit would occur after 364 days from the
Maturity Date, unless all of the Banks have approved such expiry date, or
(C) after issuing such Letter of Credit the provisions of Section 6.17 would be
violated. The Issuing Bank shall not be obligated to issue any Letter of Credit
if, (x) any order, judgment or decree of any Governmental Agency or arbitrator
shall by its terms purport to enjoin or restrain the Issuing Bank from issuing
such Letter of Credit, or any Law applicable to the Issuing Bank or any request
or directive (whether or not having the force of law) from any Governmental
Agency with jurisdiction over the Issuing Bank shall prohibit, or request that
the Issuing Bank refrain from, the issuance of letters of credit generally or
such Letter of Credit in particular or shall impose upon the Issuing Bank with
respect to such Letter of Credit any restriction, reserve or capital requirement
(for which the Issuing Bank is not otherwise compensated hereunder) not in
effect on the Closing Date, or shall impose upon the Issuing Bank any
unreimbursed loss, cost or expense which was not applicable on the Closing Date
and which the Issuing Bank in good faith deems material to it, (y) the issuance
of such Letter of Credit would violate one or more policies of the Issuing Bank
applicable to the customers of the Issuing Bank generally, or (z) a default of
any Bank’s obligations to fund under Section 2.5(c) exists or any Bank is at
such time a Defaulting Bank hereunder, unless the Issuing Bank has entered into
satisfactory arrangements with the Borrower or such Bank to eliminate the
Issuing Bank’s risk with respect to such Bank.     (b)   Procedures for Issuance
and Amendment of Letters of Credit.

  (i)   Each Letter of Credit shall be issued or amended, as the case may be,
upon the request of the Borrower delivered to the Issuing Bank (with a copy to
the Administrative Agent) in the form of a Letter of Credit Application,
appropriately completed and signed by a Responsible Official of the Borrower.
Such Letter of Credit Application must be received by the Issuing Bank and the

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      Administrative Agent not later than 1:00 p.m., Los Angeles time, at least
3 Business Days (or such later date and time as the Issuing Bank may agree in a
particular instance in its sole discretion) prior to the proposed issuance date
or date of amendment, as the case may be. In the case of a request for an
initial issuance of a Letter of Credit, such Letter of Credit Application shall
specify in form and detail satisfactory to the Issuing Bank: (A) the proposed
issuance date of the requested Letter of Credit (which shall be a Business Day);
(B) the amount thereof; (C) the expiry date thereof; (D) the name and address of
the beneficiary thereof; (E) the documents to be presented by such beneficiary
in case of any drawing thereunder; (F) the full text of any certificate to be
presented by such beneficiary in case of any drawing thereunder; and (G) such
other matters as the Issuing Bank may require. In the case of a request for an
amendment of any outstanding Letter of Credit, such Letter of Credit Application
shall specify in form and detail satisfactory to the Issuing Bank (w) the Letter
of Credit to be amended; (x) the proposed date of amendment thereof (which shall
be a Business Day); (y) the nature of the proposed amendment; and (z) such other
matters as the Issuing Bank may require.     (ii)   Promptly after receipt of
any Letter of Credit Application, the Issuing Bank will confirm with the
Administrative Agent (by telephone or in writing) that the Administrative Agent
has received a copy of such Letter of Credit Application from the Borrower and,
if not, the Issuing Bank will provide the Administrative Agent with a copy
thereof. Upon receipt by the Issuing Bank of confirmation from the
Administrative Agent that the requested issuance or amendment is permitted in
accordance with the terms hereof, then, subject to the terms and conditions
hereof, the Issuing Bank shall, on the requested date, issue a Letter of Credit
for the account of the Borrower or enter into the applicable amendment, as the
case may be, in each case in accordance with the Issuing Bank’s usual and
customary business practices. Immediately upon the issuance of each Letter of
Credit, each Bank shall be deemed to, and hereby irrevocably and unconditionally
agrees to, purchase from the Issuing Bank a risk participation in such Letter of
Credit in an amount equal to the product of such Bank’s Pro Rata Share times the
amount of such Letter of Credit.     (iii)   Promptly after its delivery of any
Letter of Credit or any amendment to a Letter of Credit to an advising bank with
respect thereto or to the beneficiary thereof, the Issuing Bank will also
(x) deliver to the Borrower and the Administrative Agent a true and complete
copy of such Letter of Credit or amendment and (y) notify the Borrower and the
Administrative Agent of any return, surrender or cancellation of any Letter of
Credit.

  (c)   Drawings and Reimbursements; Funding of Participations.

  (i)   Upon receipt from the beneficiary of any Letter of Credit of any notice
of a drawing under such Letter of Credit, the Issuing Bank shall promptly notify
the Borrower and the Administrative Agent thereof and of the date the Issuing
Bank proposes to pay such drawing. The Borrower shall reimburse the Issuing Bank
through the Administrative Agent in an amount equal to the amount of any payment
by the Issuing Bank under a Letter of Credit, which reimbursement shall be made,
(x) if the Issuing Bank notifies the Borrower and the Administrative Agent of
such payment before 2:00 p.m. Los Angeles time on the Business Day

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      immediately preceding the date of such payment (the date of such payment
being, the “Honor Date”), then on the Honor Date, or (y) if the Issuing Bank
notifies the Borrower and the Administrative Agent after 2:00 p.m. Los Angeles
time on the Business Day immediately preceding the Honor Date or any Business
Day thereafter, then on the Business Day immediately following such notice (with
any notice received on or after 2:00 p.m. Los Angeles time on any day deemed to
be received before 2:00 p.m. Los Angeles time on the next Business Day). If the
Borrower fails to so reimburse the Issuing Bank by such date, the Administrative
Agent shall promptly notify each Bank of the Honor Date, the amount of the
unreimbursed drawing (the “Unreimbursed Amount”), and the amount of such Bank’s
Pro Rata Share thereof. In such event, the Borrower shall be deemed to have
requested a Base Rate Loan in an amount equal to the Unreimbursed Amount,
without regard to the minimum and multiples specified in Section 2.1(e) for the
principal amount of Base Rate Loans, but subject to the amount of the unutilized
portion of the Commitments and the conditions set forth in Section 8.2 (other
than the delivery of a Loan Notice). Any notice given by the Issuing Bank or the
Administrative Agent pursuant to this Section 2.5(c)(i) may be given by
telephone if immediately confirmed in writing; provided that the lack of such an
immediate confirmation shall not affect the conclusiveness or binding effect of
such notice.     (ii)   Each Bank (including the Bank acting as Issuing Bank)
shall upon any notice pursuant to Section 2.5(c)(i) make funds available to the
Administrative Agent for the account of the Issuing Bank at the Administrative
Agent’s Office in an amount equal to its Pro Rata Share of the Unreimbursed
Amount not later than 1:00 p.m. on the Business Day specified in such notice by
the Administrative Agent (provided that the Administrative Agent gives notice on
or prior to 11:00 a.m. on such Business Day), whereupon, subject to the
provisions of Section 2.5(c)(iii), each Bank that so makes funds available shall
be deemed to have made an Advance to the Borrower in such amount. The
Administrative Agent shall remit the funds so received to the Issuing Bank.    
(iii)   With respect to any Unreimbursed Amount that is not fully refinanced by
a Base Rate Loan because the conditions set forth in Section 8.2 cannot be
satisfied or for any other reason, the Borrower shall be deemed to have incurred
from the Issuing Bank an L/C Borrowing in the amount of the Unreimbursed Amount
that is not so refinanced, which L/C Borrowing shall be due and payable on
demand (together with interest) and shall bear interest at the Default Rate. In
such event, each Bank’s payment to the Administrative Agent for the account of
the Issuing Bank pursuant to Section 2.5(c)(ii) shall be deemed payment in
respect of its participation in such L/C Borrowing and shall constitute an L/C
Advance from such Bank in satisfaction of its participation obligation under
this Section 2.5.     (iv)   Until each Bank funds its Advance or L/C Advance
pursuant to this Section 2.5(c) to reimburse the Issuing Bank for any amount
drawn under any Letter of Credit, interest in respect of such Bank’s Pro Rata
Share of such amount shall be solely for the account of the Issuing Bank.    
(v)   Each Bank’s obligation to make Advances or L/C Advances to reimburse the
Issuing Bank for amounts drawn under Letters of Credit, as contemplated by this
Section 2.5(c), shall be absolute and unconditional and shall not be affected by

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      any circumstance, including (A) any set-off, counterclaim, recoupment,
defense or other right which such Bank may have against the Issuing Bank, the
Borrower or any other Person for any reason whatsoever; (B) the occurrence or
continuance of a Default, or (C) any other occurrence, event or condition,
whether or not similar to any of the foregoing; provided, however, that each
Bank’s obligation to make Advances pursuant to this Section 2.5(c) is subject to
the conditions set forth in Section 8.2 (other than delivery by the Borrower of
a Loan Notice). No such making of an L/C Advance shall relieve or otherwise
impair the obligation of the Borrower to reimburse the Issuing Bank for the
amount of any payment made by the Issuing Bank under any Letter of Credit,
together with interest as provided herein.     (vi)   If any Bank fails to make
available to the Administrative Agent for the account of the Issuing Bank any
amount required to be paid by such Bank pursuant to the foregoing provisions of
this Section 2.5(c) by the time specified in Section 2.5(c)(ii), the Issuing
Bank shall be entitled to recover from such Bank (acting through the
Administrative Agent), on demand, such amount with interest thereon for the
period from the date such payment is required to the date on which such payment
is immediately available to the Issuing Bank at a rate per annum equal to the
Federal Funds Rate from time to time in effect. A certificate of the Issuing
Bank submitted to any Bank (through the Administrative Agent) with respect to
any amounts owing under this clause (vi) shall be conclusive absent manifest
error.

  (d)   Repayment of Participations.

  (i)   At any time after the Issuing Bank has made a payment under any Letter
of Credit and has received from any Bank such Bank’s L/C Advance in respect of
such payment in accordance with Section 2.5(c), if the Administrative Agent
receives for the account of the Issuing Bank any payment in respect of the
related Unreimbursed Amount or interest thereon (whether directly from the
Borrower or otherwise, including proceeds of cash collateral applied thereto by
the Administrative Agent), the Administrative Agent will distribute to such Bank
its Pro Rata Share thereof (appropriately adjusted, in the case of interest
payments, to reflect the period of time during which such Bank’s L/C Advance was
outstanding) in the same funds as those received by the Administrative Agent.  
  (ii)   If any payment received by the Administrative Agent for the account of
the Issuing Bank pursuant to Section 2.5(c)(i) is required to be returned under
any of the circumstances described in Section 11.24 (including pursuant to any
settlement entered into by the Issuing Bank in its discretion), each Bank shall
pay to the Administrative Agent for the account of the Issuing Bank its Pro Rata
Share thereof on demand of the Administrative Agent, plus interest thereon from
the date of such demand to the date such amount is returned by such Bank, at a
rate per annum equal to the Federal Funds Rate from time to time in effect.

  (e)   Obligations Absolute. The obligation of the Borrower to reimburse the
Issuing Bank for each drawing under each Letter of Credit and to repay each L/C
Borrowing shall be absolute, unconditional and irrevocable, and shall be paid
strictly in accordance with the terms of this Agreement under all circumstances
(except as otherwise provided in clauses (ii) through (v) below), including the
following:

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  (i)   any lack of validity or enforceability of such Letter of Credit, this
Agreement, or any other agreement or instrument relating thereto;     (ii)   the
existence of any claim, counterclaim, set-off, defense or other right that the
Borrower may have at any time against any beneficiary or any transferee of such
Letter of Credit (or any Person for whom any such beneficiary or any such
transferee may be acting), the Issuing Bank or any other Person, whether in
connection with this Agreement, the transactions contemplated hereby or by such
Letter of Credit or any agreement or instrument relating thereto, or any
unrelated transaction, except for payment with respect to a Letter of Credit
when such payment violates the terms of ISP98;     (iii)   any draft, demand,
certificate or other document presented under such Letter of Credit proving to
be forged, fraudulent, invalid or insufficient in any respect (so long as
payment under such Letter of Credit would otherwise be permitted under the terms
of ISP98) or any statement therein being untrue or inaccurate in any respect; or
any loss or delay in the transmission or otherwise of any document required in
order to make a drawing under such Letter of Credit;     (iv)   any payment by
the Issuing Bank under such Letter of Credit against presentation of a draft or
certificate that does not strictly comply with the terms of such Letter of
Credit (except if such payment violates the terms of ISP98); or any payment made
by the Issuing Bank under such Letter of Credit to any Person purporting to be a
trustee in bankruptcy, debtor-in-possession, assignee for the benefit of
creditors, liquidator, receiver or other representative of or successor to any
beneficiary or any transferee of such Letter of Credit, including any arising in
connection with any proceeding under any Debtor Relief Law; or     (v)   any
other circumstance or happening whatsoever, whether or not similar to any of the
foregoing, including any other circumstance that might otherwise constitute a
defense available to, or a discharge of, the Borrower (except for payment by an
Issuing Bank (or any other applicable “issuer” within the meaning of ISP98) with
respect to a Letter of Credit that violates the terms of ISP98).

      The Borrower shall promptly examine a copy of each Letter of Credit and
each amendment thereto that is delivered to it and, in the event of any claim of
noncompliance with the Borrower’s instructions or other irregularity, the
Borrower will promptly notify the Issuing Bank. The Borrower shall be
conclusively deemed to have waived any such claim against the Issuing Bank and
its correspondents unless such notice is given as aforesaid.     (f)   Role of
Issuing Bank. Each Bank and the Borrower agree that, in paying any drawing under
a Letter of Credit, the Issuing Bank shall not have any responsibility to obtain
any document (other than any sight draft, certificates and documents expressly
required by the Letter of Credit) or to ascertain or inquire as to the validity
or accuracy of any such document or the authority of the Person executing or
delivering any such document. None of the Issuing Bank, any Agent-Related Person
nor any of the respective correspondents, participants or assignees of the
Issuing Bank shall be liable to any Bank for (i) any action taken or omitted in
connection herewith at the request or with the approval of the Banks or the
Required Banks, as applicable; (ii) any action taken or omitted in the absence
of gross negligence or willful misconduct; or (iii) the due

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      execution, effectiveness, validity or enforceability of any document or
instrument related to any Letter of Credit or Letter of Credit Application. The
Borrower hereby assumes all risks of the acts or omissions of any beneficiary or
transferee with respect to its use of any Letter of Credit; provided, however,
that this assumption is not intended to, and shall not, preclude the Borrower’s
pursuing such rights and remedies as it may have against the beneficiary or
transferee at law or under any other agreement. None of any Issuing Bank, any
Agent-Related Person, nor any of the respective correspondents, participants or
assignees of any Issuing Bank, shall be liable or responsible for any of the
matters described in clauses (i) through (v) of Section 2.5(e); provided,
however, that anything in such clauses to the contrary notwithstanding, the
Borrower may have a claim against an Issuing Bank (and any other applicable
“issuer” within the meaning of ISP98), and an Issuing Bank (or such issuer) may
be liable to the Borrower, to the extent, but only to the extent, of any direct,
as opposed to consequential or exemplary, damages suffered by the Borrower which
the Borrower proves were caused by such Issuing Bank’s (or such issuer’s)
willful misconduct or gross negligence or such Issuing Bank’s (or such issuer’s)
failure to pay under any Letter of Credit after the presentation to it by the
beneficiary of a sight draft and certificate(s) strictly complying with the
terms and conditions of a Letter of Credit or for payment with respect to a
Letter of Credit by an Issuing Bank (or such issuer) when such payment violates
the terms of ISP98. In furtherance and not in limitation of the foregoing, an
Issuing Bank may accept documents that appear on their face to be in order,
without responsibility for further investigation, regardless of any notice or
information to the contrary, and such Issuing Bank shall not be responsible for
the validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign a Letter of Credit or the rights or benefits
thereunder or proceeds thereof, in whole or in part, which may prove to be
invalid or ineffective for any reason.     (g)   Cash or Letter of Credit
Collateral. Upon the request of the Administrative Agent, (i) if an Issuing Bank
has honored any full or partial drawing request under any Letter of Credit and
such drawing has resulted in an L/C Borrowing, (ii) if, as of the Maturity Date
or acceleration pursuant to Section 9.2(a)(ii), any Letter of Credit may for any
reason remain outstanding and partially or wholly undrawn or (iii) if any amount
remains available to be drawn under any Letter of Credit by reason of the
operation of Section 3.14 of the “International Standby Practices 1998”
published by the Institute of International Banking Law & Practice (or such
later version thereof as may be in effect at the time of issuance), the Borrower
shall immediately Cash Collateralize or Letter of Credit Collateralize the then
outstanding amount of the Letter of Credit Usage (in an amount equal to such
outstanding amount determined as of the date of such L/C Borrowing or the
Maturity Date, as the case may be). For purposes hereof, “Cash Collateralize”
means to pledge and deposit with or deliver to the Administrative Agent, for the
benefit of the Issuing Banks and the Banks, as collateral for the then
outstanding amount of the Letter of Credit Usage, cash or deposit account
balances pursuant to documentation in form and substance satisfactory to the
Administrative Agent and the Issuing Banks (which documents are hereby consented
to by the Banks). Derivatives of such term have corresponding meanings. The
Borrower hereby grants to the Administrative Agent, for the benefit of the
Issuing Banks and the Banks, a security interest in all such cash, deposit
accounts and all balances therein and all proceeds of the foregoing. Cash
collateral shall be maintained in a blocked, non-interest bearing deposit
account at Bank of America. For purposes hereof, “Letter of Credit
Collateralize” means to deliver to the Administrative Agent, for the benefit of
the Issuing Banks and the Banks, as collateral for the then outstanding amount
of the Letter of Credit Usage, one or more irrevocable standby letters of credit
(other than a Letter of Credit) in the aggregate

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      amount of the then outstanding amount of the Letter of Credit Usage (less
the amount, if any, of the then outstanding amount of the Letter of Credit Usage
being Cash Collateralized) issued by one or more financial institutions that
each is a Qualified Issuer in form and substance satisfactory to the
Administrative Agent and the Issuing Banks (which documents are hereby consented
to by the Banks). Derivatives of such term have corresponding meanings. The
Borrower hereby agrees that the Administrative Agent may immediately apply cash
collateral or draw upon any irrevocable standby letters of credit delivered
pursuant to this Section 2.5(g) in order to reimburse the Issuing Banks for any
drawings under any Letters of Credit.     (h)   Applicability of ISP98. The
rules of the “International Standby Practices 1998” published by the Institute
of International Banking Law & Practice (or such later version thereof as may be
in effect at the time of issuance) (“ISP98”) shall apply to each Letter of
Credit, except as provided in Section 2.5(l) below.     (i)   Conflict with
Letter of Credit Application. In the event of any conflict between the terms
hereof and the terms of any Letter of Credit Application, the terms hereof shall
control.     (j)   Letter of Credit Fees.

  (i)   Borrower shall pay to the Administrative Agent for the account of the
Banks a letter of credit fee payable to the Banks in accordance with their Pro
Rata Shares with respect to each Letter of Credit issued or renewed equal to the
sum of (A) the Applicable Letter of Credit Fee times the daily maximum amount
available to be drawn under such Letter of Credit (whether or not such maximum
amount is then in effect under such Letter of Credit) minus (B) any amounts due
and payable under clause (ii) below. Such letter of credit fee shall accrue and
be computed on a quarterly basis in arrears, and shall be due and payable on the
Quarterly Payment Date, commencing with the first such date to occur after the
issuance of such Letter of Credit, on the Maturity Date, and
thereafter            on the last Business Day of each March, June, September
and December, commencing with the first such date to occur after the Maturity
Date and on the 364th day from the Maturity Date.     (ii)   Borrower shall pay
directly to the applicable Issuing Bank for its own account a fronting fee with
respect to each Letter of Credit issued or renewed by such Issuing Bank equal to
0.100% per annum times the daily maximum amount which is available to be drawn
under such Letter of Credit (whether or not such maximum amount is then in
effect under such Letter of Credit). Such fronting fee shall accrue and be
computed on a quarterly basis in arrears, and shall be due and payable on the
Quarterly Payment Date, commencing with the first such date to occur after the
issuance of such Letter of Credit and on the expiry date of such Letter of
Credit.     (iii)   Borrower shall pay directly to the applicable Issuing Bank
for its own account the customary issuance, presentation, amendment, and other
processing fees, and other standard costs and charges, of such Issuing Bank
relating to letters of credit as from time to time in effect. Such customary
fees and standard costs and charges are due and payable on demand and are
nonrefundable.

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  (k)   Number of Issuing Banks/Reports to the Administrative Agent. In addition
to Bank of America, Borrower may, with the consent of the Administrative Agent
(and the consent of any Bank requested to be an Issuing Bank), designate up to 3
additional Issuing Banks, each of which must be Banks, for the purposes of this
Agreement; provided that there shall not be more than 4 Issuing Banks hereunder
at any time. Each Issuing Bank shall, no later than the 3rd Business Day
following the last day of each month, provide to the Administrative Agent a
report in form and substance reasonably satisfactory to the Administrative
Agent, showing the date of issuance or amendment of each Letter of Credit, the
account party, the original face amount (if any), the expiration date, and the
reference number of any Letter of Credit issued or amended during such month.
Upon request of any Bank, the Administrative Agent shall forward copies of such
reports to such Bank.     (l)   Existing Letters of Credit. For an Existing
Letter of Credit, references to “ISP98” in this Agreement will be deemed to mean
references to UCP500, if such Existing Letter of Credit is governed by UCP500.

2.6   Reduction of Commitment.            Borrower shall have the right, at any
time and from time to time, without penalty or charge, upon at least 5 Business
Days prior written notice voluntarily to reduce or terminate permanently and
irrevocably, in aggregate principal amounts in an integral multiple of
$1,000,000 but not less than $5,000,000 (unless all of the unused Commitment is
being terminated), all or a portion of the unused Commitment. Borrower shall pay
to the Administrative Agent (for the account of each Bank, pro rata according to
that Bank’s Pro Rata Share) on the date of such termination all unpaid
commitment fees which have accrued to such date in respect of the terminated
portion of the Commitment.   2.7   Optional Increase to Commitment.

  (a)   Subject to the limitations set forth in this Section, the Administrative
Agent may, at any time and from time to time at the request of Borrower,
increase the Commitment by (i) admitting additional Banks hereunder (each a “New
Bank”), or (ii) increasing the Exposure of any Bank (each an “Increasing Bank”),
subject to the following conditions:

  (i)   each New Bank is an Eligible Assignee;     (ii)   Borrower executes
(A) a new Note payable to the order of a New Bank, or (B) a replacement Note
payable to the order of an Increasing Bank if such Increasing Bank previously
received a Note;     (iii)   each New Bank executes and delivers to the
Administrative Agent an instrument of joinder to this Agreement which is in form
and substance acceptable to the Administrative Agent;     (iv)   after giving
effect to the admission of any New Bank or the increase in the Exposure of any
Increasing Bank, the Commitment does not exceed $2,000,000,000 less the
aggregate amount of reductions, if any, of the Commitment made pursuant to
Sections 2.6 and 2.9(g);

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  (v)   each increase in the Commitment shall be in the amount of $50,000,000 or
a greater integral multiple of $500,000;     (vi)   no admission of any New Bank
shall increase the Exposure of any existing Bank without the written consent of
such Bank;     (vii)   no Bank shall be an Increasing Bank without the written
consent of such Bank;     (viii)   no Default or Event of Default exists;    
(ix)   the Administrative Agent shall have received from Borrower such documents
as it may reasonably request in connection with such increase, including:

  (A)   a certificate signed by a Responsible Official of the Borrower
(x) certifying and attaching the resolutions adopted by Borrower approving or
consenting to such increase and (y) certifying that (1) the representations and
warranties contained in Article IV and the other Loan Documents are true and
correct on and as of the date of the increase, except to the extent that such
representations and warranties specifically refer to an earlier date, and (2) no
Default or Event of Default exists as of the date of the increase or will result
from the increase; and     (B)   a written consent to the increase executed by
each Guarantor Subsidiary; and

  (x)   Any such increase shall be effective, if at all, as of the date
determined by the Administrative Agent and the Borrower. The Administrative
Agent shall promptly notify the Banks of the effective date of such increase.

  (b)   Except as set forth in Section 2.7(a), no consent of the Banks shall be
required for an increase in the amount of the Commitment pursuant to this
Section 2.7.     (c)   After the admission of any New Bank or the increase in
the Exposure of any Increasing Bank, the Administrative Agent shall promptly
provide to each Bank and to Borrower a new Schedule 1.1 to this Agreement.    
(d)   Concurrently with the effectiveness of any increase to the Commitment
under this Section, (i) the participation interest of each Bank in each
outstanding Letter of Credit and in each Swing Line Loan shall be adjusted, and
(ii) each New Bank and each Increasing Bank shall make additional Advances
available to the Administrative Agent (the proceeds of which shall be paid to
the other Banks or used in part to refinance expiring Eurodollar Rate Loans) in
the amount required to result in the aggregate outstanding Advances of each Bank
being equal to its Pro Rata Share of the Commitment, as so increased.     (e)  
The Borrower confirms its obligation pursuant to Section 3.6(f) to repay any
breakage fees resulting from the prepayment of any Eurodollar Rate Loans
resulting from Borrower’s request to increase the Commitment under this
Section 2.7.     (f)   This Section shall supersede any provisions in
Section 11.2 or 11.8 to the contrary.

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2.8   Borrowing Base.

  (a)   Reporting of Borrowing Base. Within 50 days after the end of each Fiscal
Quarter (other than the fourth Fiscal Quarter of any Fiscal Year), 90 days after
the end of each Fiscal Year, and within 30 days after Borrower loses an
Investment Grade Credit Rating, the Borrower shall provide the Administrative
Agent with a Borrowing Base Certificate in a form satisfactory to the
Administrative Agent showing the Borrower’s calculations of the components of
the Borrowing Base as of the end of the last Fiscal Quarter and such data
supporting such calculations per Exhibit B or in another form as the
Administrative Agent may reasonably require; provided that Borrower shall have
no obligation to provide a Borrowing Base Certificate to the Administrative
Agent at any time at which Borrower holds an Investment Grade Credit Rating. Any
change in the Borrowing Base shall be effective upon receipt of a Borrowing Base
Certificate.     (b)   Amount of Borrowing Base. As used in this Agreement, the
term “Borrowing Base” means a Dollar amount equal to the sum of the following:

  (i)   Escrow Receivables. 90% of the aggregate GAAP Value of Escrow
Receivables; plus     (ii)   Developed Lots. 65% of the aggregate GAAP Value of
Developed Lots; plus     (iii)   Lots Under Development. 65% of the aggregate
GAAP Value of Lots Under Development; plus     (iv)   Construction Costs. 85% of
the aggregate GAAP Value of Construction Costs; plus     (v)   Unrestricted
Cash. 100% of Unrestricted Cash in excess of $15,000,000;

      provided, however, that the aggregate of the amounts set forth in clauses
(ii) and (iii) shall be less than 50% of the Borrowing Base.

2.9   Extension of Maturity Date.

  (a)   Requests for Extension. No more than once during each Fiscal Year,
beginning with the Fiscal Year commencing on December 1, 2006, but no later than
90 days prior to the Maturity Date then in effect hereunder (the “Existing
Maturity Date”), Borrower may, by notice to the Administrative Agent (who shall
promptly notify the Banks), request that the Existing Maturity Date be extended
by each Bank for an additional one year from the Existing Maturity Date;
provided that the Extended Maturity Date (as defined below) may not be more than
5 years from the date Borrower gives such notice (the “Notice Date”).     (b)  
Bank Elections to Extend. Each Bank, acting in its sole and individual
discretion, shall, by notice to the Administrative Agent given no later than the
date (the “Reply Date”) that is 30 days after the Notice Date, advise the
Administrative Agent whether or not such Bank agrees to such extension of the
Existing Maturity Date (and each Bank that determines not to so extend the
Existing Maturity Date (a “Non-Extending Bank”) shall

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      notify the Administrative Agent of such fact promptly after such
determination (but in any event no later than the Reply Date)) and any Bank that
does not so advise the Administrative Agent on or before the Reply Date shall be
deemed to be a Non-Extending Bank. The election of any Bank to agree to any
extension of the Existing Maturity Date shall not obligate any other Bank to so
agree.     (c)   Notification by Administrative Agent. The Administrative Agent
shall notify Borrower of each Bank’s determination under this Section no later
than the date (the “Extension Effective Date”) that is 15 days after the Reply
Date (or, if such date is not a Business Day, on the next preceding Business
Day).     (d)   Additional Commitment Banks; Prepayment. Borrower shall have the
right on or before the Existing Maturity Date with respect to each Non-Extending
Bank to:

  (i)   replace such Non-Extending Bank with, and add as one or more “Banks”
under this Agreement in place thereof, one or more Eligible Assignees approved
by the Administrative Agent (each, an “Additional Commitment Bank”) as provided
in Section 11.27, each of which Additional Commitment Banks shall have entered
into an Assignment and Assumption pursuant to which such Additional Commitment
Bank shall, effective as of the date such assignment becomes effective,
undertake a Commitment (and, if any such Additional Commitment Bank is already a
Bank, its Commitment shall be in addition to such Bank’s existing Commitment
hereunder on such date); or     (ii)   prepay in full all Advances, with
interest, of such Non-Extending Bank (together with any additional amounts
required pursuant to Section 3.6(f) and all other accrued amounts payable
hereunder).

  (e)   Minimum Extension Requirement. If (and only if) the total of the
Commitments of the Banks that have agreed so to extend the Existing Maturity
Date shall be more than 50% of the aggregate amount of the Commitments in effect
immediately prior to the Extension Effective Date, then, effective as of the
Extension Effective Date, the Existing Maturity Date with respect to each
Extending Bank shall be extended to the date (the “Extended Maturity Date”) that
is one year after the Existing Maturity Date (except that, if such date is not a
Business Day, such Maturity Date as so extended shall be the next preceding
Business Day), and such Extended Maturity Date shall then become the Existing
Maturity Date for all Banks other than the Non-Extending Banks.     (f)  
Conditions to Effectiveness of Extensions. Notwithstanding the foregoing, the
extension of the Existing Maturity Date pursuant to this Section shall not be
effective with respect to any Bank unless:

  (i)   no Default or Event of Default shall have occurred and be continuing on
the date of such extension and after giving effect thereto;     (ii)   the
representations and warranties contained in this Agreement are true and correct
on and as of the date of such extension and after giving effect thereto, as
though made on and as of such date (or, if any such representation or warranty
is expressly stated to have been made as of a specific date, as of such specific
date); and

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  (iii)   for all Non-Extending Banks whose Commitments were not assumed or
terminated pursuant to Section 2.9(d), on the Existing Maturity Date with
respect to each such Non-Extending Bank, Borrower shall pay in full all
Advances, with interest, outstanding to each such Non-Extending Bank on such
date (and pay any additional amounts required pursuant to Section 3.6(f) and all
other accrued amounts payable hereunder) to the extent necessary to keep the
outstanding Loans ratable with any revised Pro Rata Shares of the respective
Banks (other than the Non-Extending Banks) effective as of such date.

  (g)   Reduction of Commitments. The Commitment of each Non-Extending Bank
shall be permanently and irrevocably reduced and terminated by any amounts
prepaid pursuant to Section 2.9(d)(ii) or paid on the Maturity Date of such
Non-Extending Bank pursuant to Section 2.9(f)(iii), and the Pro Rata Share of
the Banks shall be adjusted accordingly.     (h)   Conflicting Provisions. This
Section shall supersede any provisions in Section 11.2 or 11.9 to the contrary.

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ARTICLE III
PAYMENTS AND FEES

3.1   Principal and Interest.

  (a)   Interest shall be payable on the outstanding daily unpaid principal
amount of each Advance from the date of such Advance until payment in full and
shall accrue and be payable at the rates set forth herein, to the extent
permitted by applicable Laws, before and after default, before and after
maturity, before and after any judgment, and before and after the commencement
of any proceeding under any Debtor Relief Law, with interest on overdue interest
to bear interest at the Default Rate.     (b)   Interest accrued on each Base
Rate Loan shall be due and payable on the last day of each calendar month.
Except as otherwise provided in Section 3.7, the unpaid principal amount of any
Base Rate Loan shall bear interest at a fluctuating rate per annum equal to the
sum of the Base Rate plus the Applicable Base Rate Spread.     (c)   Interest
accrued on each Eurodollar Rate Loan shall be due and payable on the last day of
each calendar month. Except as otherwise provided in Section 3.7, the unpaid
principal amount of any Eurodollar Rate Loan shall bear interest at a rate per
annum equal to the sum of the Eurodollar Rate for that Eurodollar Rate Loan plus
the Applicable Eurodollar Rate Spread.     (d)   If not sooner paid, the
principal Indebtedness evidenced by the Notes shall be payable as follows:

  (i)   the principal Indebtedness evidenced by the Notes shall be payable
within one Business Day in Cash to the extent that the Total Outstandings
exceeds at any time the Commitment as then in effect; and     (ii)   the
principal Indebtedness evidenced by the Notes shall in any event be immediately
payable in Cash on the Maturity Date.

  (e)   The Notes may, at any time and from time to time, voluntarily be prepaid
at the election of Borrower in whole or in part without premium or penalty;
provided that: (i) any partial prepayment shall be in integral multiples of
$1,000,000, (ii) any partial prepayment shall be in an amount not less than
$1,000,000 on a Base Rate Loan, and not less than $5,000,000 on a Eurodollar
Rate Loan, (iii) the Administrative Agent must have received written notice (or
telephonic notice confirmed promptly in writing) of any prepayment at least 3
Business Days before the date of prepayment in the case of a Eurodollar Rate
Loan and by 10:00 a.m., Los Angeles time, on the date of prepayment in the case
of a Base Rate Loan, (iv) each prepayment of principal, except for partial
prepayments on Base Rate Loans, shall be accompanied by prepayment of interest
accrued to the date of payment on the amount of principal paid and (v) in the
case of any prepayment of any Eurodollar Rate Loan, Borrower shall promptly upon
demand reimburse each Bank for any loss or cost directly or indirectly resulting
from the prepayment, determined as set forth in Section 3.6.

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  (f)   Change in Control.

  (i)   If a Change in Control shall have occurred, at the option of the
Required Banks, Borrower shall repay in Cash the entire principal Indebtedness
evidenced by the Notes, together with interest thereon and all other amounts due
in connection with the Notes and this Agreement, and deliver to the
Administrative Agent an amount equal to the Letter of Credit Usage then
outstanding, to be held as cash collateral as provided in Section 9.2(c) (the
“Change in Control Repayment”), on the date that is no more than 27 Business
Days after the occurrence of the Change in Control (the “Change in Control
Payment Date”), subject to receipt by Borrower of a Change in Control Payment
Notice as set forth in Section 3.1(f)(iii). On the Change in Control Payment
Date, the Commitment shall automatically terminate.     (ii)   Within 15
Business Days after the occurrence of a Change in Control, Borrower shall
provide written notice of the Change in Control to the Administrative Agent and
each Bank. The notice shall state:

  (A)   the events causing a Change in Control and the date of such Change in
Control;     (B)   the date by which the Change in Control Payment Notice (as
defined in Section 3.1(f)(iii)) must be given; and     (C)   the Change in
Control Payment Date.

  (iii)   At the direction of the Required Banks, the Administrative Agent
shall, on behalf of the Banks, exercise the rights specified in Section
3.1(f)(i) by delivery of a written notice (a “Change in Control Payment Notice”)
to Borrower at any time prior to or on the Change in Control Payment Date,
stating that the Notes shall be prepaid and cash collateral shall be provided
for the Letter of Credit Usage on the Change in Control Payment Date. On the
Change in Control Payment Date, Borrower shall make the Change in Control
Repayment to the Administrative Agent for the benefit of the Banks, and the
Commitment shall terminate.

3.2   Commitment Fee.            From the Closing Date until the Maturity Date,
Borrower shall pay to the Administrative Agent, for the account of each Bank,
pro rata according to that Bank’s Pro Rata Share of the Commitment, a commitment
fee equal to the Applicable Commitment Fee Rate per annum in effect from time to
time times the average daily amount by which the Commitment exceeds the
aggregate outstanding principal of the Loans evidenced by the Notes plus the
Letter of Credit Usage plus the Swing Line Outstandings. This commitment fee
shall accrue daily and be payable in arrears with respect to each calendar
quarter on the Quarterly Payment Date falling at the end of such calendar
quarter. The Administrative Agent shall calculate the commitment fee and the
amount thereof allocable to each Bank according to that Bank’s Pro Rata Share of
the Commitment and shall notify Borrower in writing of such amounts.   3.3  
Other Fees.

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         Borrower shall pay to Bank of America and the Arrangers such other fees
in such amounts and at such times as heretofore set forth in letter agreements
to which Borrower is a party.   3.4   [Intentionally Omitted].   3.5   Capital
Adequacy.

  (a)   If any Bank (an “Affected Bank”) determines that compliance with any Law
or regulation or with any guideline or request from any central bank or other
Governmental Agency (whether or not having the force of Law) enacted or issued
after the Closing Date relating to the capital adequacy of banks or corporations
in control of banks has or would have the effect of reducing the rate of return
on the capital of such Affected Bank or any corporation controlling such
Affected Bank as a consequence of, or with reference to, such Affected Bank’s
Pro Rata Share of the Commitment below the rate which the Bank or such other
corporation could have achieved but for such compliance (taking into account the
policies of such Bank or corporation with regard to capital adequacy), then
Borrower shall from time to time, upon demand by such Affected Bank in
accordance with this Section 3.5 (with a copy of such demand to the
Administrative Agent), within 15 days after demand pay to such Affected Bank
additional amounts sufficient to compensate such Affected Bank or other
corporation for such reduction.     (b)   An Affected Bank may not seek
compensation under Section 3.5(a) unless the demand for such compensation is
delivered to Borrower within 6 months following the date of enactment or
issuance of the Law, regulation, guideline or request giving rise to such demand
for compensation.     (c)   A certificate as to any amounts for which an
Affected Bank is seeking compensation under Section 3.5(a), submitted to
Borrower and the Administrative Agent by such Affected Bank, shall be conclusive
and binding for all purposes, absent manifest error. Each Affected Bank shall
calculate such amounts in a manner which is consistent with the manner in which
it makes calculations for comparable claims with respect to similarly situated
borrowers from such Affected Bank, will not allocate to Borrower a
proportionately greater amount of such compensation than it allocates to each of
its other commitments to lend or other loans with respect to which it is
entitled to demand comparable compensation, and will not include amounts already
factored into the rates of interest or fees already provided for herein. Each
Bank agrees promptly to notify Borrower and the Administrative Agent of any
circumstances that would cause Borrower to pay additional amounts pursuant to
this Section, provided that the failure to give such notice shall not affect
Borrower’s obligation to pay such additional amounts hereunder.     (d)  
Without limiting its obligation to reimburse an Affected Bank for compensation
theretofore claimed by an Affected Bank pursuant to Section 3.5(a), Borrower
may, within 60 days following any demand by an Affected Bank, request that one
or more Persons that are Eligible Assignees and that are acceptable to Borrower
and approved by the Administrative Agent (which approval shall not be
unreasonably withheld) purchase all (but not part) of the Affected Bank’s then
outstanding Advances, its Note and its participation interest in outstanding
Letters of Credit, and assume its Pro Rata Share of the Commitment and its
obligations hereunder. If one or more such Banks or banks so agree in writing
(each, an “Assuming Bank” and collectively, the “Assuming Banks”), the

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      Affected Bank shall assign its Pro Rata Share of the Commitment, together
with the Indebtedness then evidenced by its Note and its participation interest
in outstanding Letters of Credit, to the Assuming Bank or Assuming Banks in
accordance with Section 11.8. On the date of any such assignment, the Affected
Bank which is being so replaced shall cease to be a “Bank” for all purposes of
this Agreement and shall receive (x) from the Assuming Bank or Assuming Banks
the principal amount of its Advances then outstanding and (y) from Borrower all
interest and fees accrued and then unpaid with respect to such Advances,
together with any other amounts accrued or then payable to such Bank by
Borrower. In the event the Affected Bank is also an Issuing Bank, then the
Assuming Bank shall become an Issuing Bank for all purposes of this Agreement
and shall either (at the Affected Bank’s election, subject to the approval of
Borrower, the Administrative Agent and the Assuming Bank (which approvals shall
not be unreasonably withheld) and, in the case of clause (i) below, the approval
of the applicable Letter of Credit beneficiaries) (i) issue new letters of
credit to replace the outstanding Letters of Credit issued by the Affected Bank,
or (ii) issue new letters of credit to the Affected Bank in support of the
outstanding Letters of Credit issued by the Affected Bank, whereupon such
outstanding Letters of Credit shall no longer be considered “Letters of Credit”
under this Agreement, and such new letters of credit shall be considered Letters
of Credit for all purposes of this Agreement (including the participation
therein by the other Banks pursuant to Section 2.5).

3.6   Eurodollar Fees and Costs.

  (a)   Increased Costs Generally. If any Change in Law shall:

  (i)   impose, modify or deem applicable any reserve, special deposit,
compulsory loan, insurance charge or similar requirement against assets of,
deposits with or for the account of, or credit extended or participated in by,
any Bank (except any reserve requirement reflected in the Eurodollar Rate) or an
Issuing Bank;     (ii)   subject any Bank or an Issuing Bank to any tax of any
kind whatsoever with respect to this Agreement, any Letter of Credit, any
participation in a Letter of Credit or any Eurodollar Rate Loan made by it, or
change the basis of taxation of payments to such Bank or such Issuing Bank in
respect thereof (except for Indemnified Taxes or Other Taxes covered by Section
3.10 and the imposition of, or any change in the rate of, any Excluded Tax
payable by such Bank or such Issuing Bank); or     (iii)   impose on any Bank or
an Issuing Bank or the London interbank market any other condition, cost or
expense affecting this Agreement or Eurodollar Rate Loans made by such Bank or
any Letter of Credit or participation therein;

      and the result of any of the foregoing would be to increase the cost to
such Bank of making or maintaining any Eurodollar Rate Loan (or of maintaining
its obligation to make any such Loan), or to increase the cost to such Bank or
such Issuing Bank of participating in, issuing or maintaining any Letter of
Credit (or of maintaining its obligation to participate in or to issue any
Letter of Credit), or to reduce the amount of any sum received or receivable by
such Bank or such Issuing Bank hereunder (whether of principal, interest or any
other amount) then, upon request of such Bank or such Issuing Bank, the Borrower
will pay to such Bank or such Issuing Bank, as the case may be, such

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      additional amount or amounts as will compensate such Bank or such Issuing
Bank, as the case may be, for such additional costs incurred or reduction
suffered.     (b)   Capital Requirements. If any Bank or an Issuing Bank
determines that any Change in Law affecting such Bank or such Issuing Bank or
any Lending Office of such Bank or such Bank’s or such Issuing Bank’s holding
company, if any, regarding capital requirements has or would have the effect of
reducing the rate of return on such Bank’s or such Issuing Bank’s capital or on
the capital of such Bank’s or such Issuing Bank’s holding company, if any, as a
consequence of this Agreement, the Commitments of such Bank or the Loans made
by, or participations in Letters of Credit held by, such Bank, or the Letters of
Credit issued by such Issuing Bank, to a level below that which such Bank or
such Issuing Bank or such Bank’s or such Issuing Bank’s holding company could
have achieved but for such Change in Law (taking into consideration such Bank’s
or such Issuing Bank’s policies and the policies of such Bank’s or such Issuing
Bank’s holding company with respect to capital adequacy), then from time to time
the Borrower will pay to such Bank or such Issuing Bank, as the case may be,
such additional amount or amounts as will compensate such Bank or such Issuing
Bank or such Bank’s or such Issuing Bank’s holding company for any such
reduction suffered.     (c)   Certificates for Reimbursement. A certificate of a
Bank or an Issuing Bank setting forth the amount or amounts necessary to
compensate such Bank or such Issuing Bank or its holding company, as the case
may be, as specified in Section 3.6(a) or Section 3.6(b) and delivered to the
Borrower shall be conclusive absent manifest error. The Borrower shall pay such
Bank or such Issuing Bank, as the case may be, the amount shown as due on any
such certificate within 10 days after receipt thereof.     (d)   Delay in
Requests. Failure or delay on the part of any Bank or an Issuing Bank to demand
compensation pursuant to the foregoing provisions of this Section shall not
constitute a waiver of such Bank’s or such Issuing Bank’s right to demand such
compensation, provided that the Borrower shall not be required to compensate a
Bank or an Issuing Bank pursuant to the foregoing provisions of this Section for
any increased costs incurred or reductions suffered more than 6 months prior to
the date that such Bank or such Issuing Bank, as the case may be, notifies the
Borrower of the Change in Law giving rise to such increased costs or reductions
and of such Bank’s or such Issuing Bank’s intention to claim compensation
therefor (except that, if the Change in Law giving rise to such increased costs
or reductions is retroactive, then the 6-month period referred to above shall be
extended to include the period of retroactive effect thereof).     (e)   If,
with respect to any proposed Eurodollar Rate Loan:

  (i)   the Administrative Agent reasonably determines that, by reason of
circumstances affecting the London interbank eurodollar market generally that
are beyond the reasonable control of the Banks, deposits in dollars (in the
applicable amounts) are not being offered to each of the Banks in the London
interbank eurodollar market for the applicable Interest Period; or     (ii)  
the Required Banks advise the Administrative Agent that the Eurodollar Rate as
determined by the Administrative Agent will not adequately and fairly reflect
the cost to such Banks of making the applicable Eurodollar Advances;

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      then the Administrative Agent forthwith shall give notice thereof to
Borrower and the Banks, whereupon until the Administrative Agent notifies
Borrower that the circumstances giving rise to such suspension no longer exist,
the obligation of the Banks to make any future Eurodollar Advances shall be
suspended. If at the time of such notice there is then pending a Loan Notice
that specifies a Eurodollar Rate Loan, such Loan Notice shall be deemed to
specify a Base Rate Loan.

  (f)   Compensation for Losses. Upon demand of any Bank (with a copy to the
Administrative Agent) from time to time, the Borrower shall promptly compensate
such Bank for and hold such Bank harmless from any loss, cost or expense
incurred by it as a result of:

  (i)   any continuation, conversion, payment or prepayment of any Loan other
than a Base Rate Loan on a day other than the last day of the Interest Period
for such Loan (whether voluntary, mandatory, automatic, by reason of
acceleration, or otherwise);     (ii)   any failure by the Borrower (for a
reason other than the failure of any Bank to make a Loan) to prepay, borrow,
continue or convert any Loan other than a Base Rate Loan on the date or in the
amount notified by the Borrower; or     (iii)   any assignment of a Eurodollar
Rate Loan on a day other than the last day of the Interest Period therefor as a
result of a request by the Borrower pursuant to Section 11.27;

      including any loss, cost or expense arising from the liquidation or
reemployment of funds obtained by it to maintain such Loan or from fees payable
to terminate the deposits from which such funds were obtained. The Borrower
shall also pay any customary administrative fees charged by such Bank in
connection with the foregoing. For purposes of calculating amounts payable by
the Borrower to the Banks under this Section 3.6, each Bank shall be deemed to
have funded each Eurodollar Rate Loan made by it at the Eurodollar Base Rate
used in determining the Eurodollar Rate for such Loan by a matching deposit or
other borrowing in the London interbank eurodollar market for a comparable
amount and for a comparable period, whether or not such Eurodollar Rate Loan was
in fact so funded.

3.7   Late Payments/Default Interest.            If any installment of principal
or interest under the Notes or any other amount payable to the Banks under any
Loan Document is not paid when due, it shall thereafter bear interest at a
fluctuating interest rate per annum at all times equal to the sum of the Base
Rate plus the Applicable Base Rate Spread plus 2% (the “Default Rate”), provided
however that, subject to the following sentence, principal, interest or other
amounts due with respect to Eurodollar Rate Loans shall bear interest at a
fluctuating rate per annum at all times equal to the sum of the Eurodollar Rate
plus the Applicable Eurodollar Rate Spread plus 2%; in each case, to the extent
permitted by applicable Law, until paid in full (whether before or after
judgment). Upon and during the continuance of any Event of Default, the
Indebtedness evidenced by the Notes shall, at the election of the Required Banks
and upon notice to Borrower (and in lieu of interest provided for in the
preceding sentence), bear interest at a fluctuating interest rate per annum at
all times equal to the Default Rate, to the extent permitted by applicable Law,
until no Event of Default exists (whether before or after judgment).
Notwithstanding the preceding sentence, after the occurrence of any Event of
Default under Sections 6.7, 6.10 or 6.16, the Indebtedness evidenced by the
Notes

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    may not bear interest at the increased rate provided for in the preceding
sentence until such Event of Default has continued for at least 15 days, in the
case of Section 6.7, or 30 days, in the case of Sections 6.10 or 6.16.   3.8  
Computation of Interest and Fees.            All computations of interest for
Base Rate Loans when the Base Rate is determined by Bank of America’s “prime
rate” shall be calculated on the basis of a year of 365 or 366 days, as the case
may be, and actual days elapsed. All other computations of interest and fees
hereunder shall be calculated on the basis of a year of 360 days and paid for
the actual number of days elapsed (including the first day and excluding the
last day), which results in greater interest than if a year of 365 days were
used. Any Loan that is repaid on the same day on which it is made shall bear
interest for one day.   3.9   Holidays.       If any payment to be made by the
Borrower shall come due on a day other than a Business Day, payment shall be
made on the next following Business Day, and such extension of time shall be
reflected in computing interest or fees, as the case may be.   3.10   Payment
Free of Taxes.

  (a)   Payments Free of Taxes. Any and all payments by or on account of any
obligation of the Borrower hereunder or under any other Loan Document shall be
made free and clear of and without reduction or withholding for any Indemnified
Taxes or Other Taxes, provided that if the Borrower shall be required by
applicable law to deduct any Indemnified Taxes (including any Other Taxes) from
such payments, then

  (i)   the sum payable shall be increased as necessary so that after making all
required deductions (including deductions applicable to additional sums payable
under this Section) the Administrative Agent, Bank or Issuing Bank, as the case
may be, receives an amount equal to the sum it would have received had no such
deductions been made,     (ii)   the Borrower shall make such deductions, and  
  (iii)   the Borrower shall timely pay the full amount deducted to the relevant
Governmental Agency in accordance with applicable law.

  (b)   Payment of Other Taxes by the Borrower. Without limiting the provisions
of Section 3.10(a) above, the Borrower shall timely pay any Other Taxes to the
relevant Governmental Agency in accordance with applicable law.     (c)  
Indemnification by the Borrower. The Borrower shall indemnify the Administrative
Agent, each Bank and each Issuing Bank, within 10 days after demand therefor,
for the full amount of any Indemnified Taxes or Other Taxes (including
Indemnified Taxes or Other Taxes imposed or asserted on or attributable to
amounts payable under this Section) paid by the Administrative Agent, such Bank
or such Issuing Bank, as the case may be, and any penalties, interest and
reasonable expenses arising therefrom or with respect thereto, whether or not
such Indemnified Taxes or Other Taxes were correctly or legally imposed or
asserted by the relevant Governmental Agency. A certificate as to the

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      amount of such payment or liability delivered to the Borrower by a Bank or
an Issuing Bank (with a copy to the Administrative Agent), or by the
Administrative Agent on its own behalf or on behalf of a Bank or an Issuing
Bank, shall be conclusive absent manifest error.     (d)   Evidence of Payments.
As soon as practicable after any payment of Indemnified Taxes or Other Taxes by
the Borrower to a Governmental Agency, the Borrower shall deliver to the
Administrative Agent the original or a certified copy of a receipt issued by
such Governmental Agency evidencing such payment, a copy of the return reporting
such payment or other evidence of such payment reasonably satisfactory to the
Administrative Agent.     (e)   Status of Banks. Any Foreign Bank that is
entitled to an exemption from or reduction of withholding tax under the law of
the jurisdiction in which the Borrower is resident for tax purposes, or any
treaty to which such jurisdiction is a party, with respect to payments hereunder
or under any other Loan Document shall deliver to the Borrower (with a copy to
the Administrative Agent), at the time or times prescribed by applicable law or
reasonably requested by the Borrower or the Administrative Agent, such properly
completed and executed documentation prescribed by applicable law as will permit
such payments to be made without withholding or at a reduced rate of
withholding. In addition, any Bank, if requested by the Borrower or the
Administrative Agent, shall deliver such other documentation prescribed by
applicable law or reasonably requested by the Borrower or the Administrative
Agent as will enable the Borrower or the Administrative Agent to determine
whether or not such Bank is subject to backup withholding or information
reporting requirements. Without limiting the generality of the foregoing, in the
event that the Borrower is resident for tax purposes in the United States, any
Foreign Bank shall deliver to the Borrower and the Administrative Agent (in such
number of copies as shall be requested by the recipient) on or prior to the date
on which such Foreign Bank becomes a Bank under this Agreement (and from time to
time thereafter upon the request of the Borrower or the Administrative Agent,
but only if such Foreign Bank is legally entitled to do so), whichever of the
following is applicable:

  (i)   duly completed copies of Internal Revenue Service Form W-8BEN claiming
eligibility for benefits of an income tax treaty to which the United States is a
party,     (ii)   duly completed copies of Internal Revenue Service Form W-8ECI,
    (iii)   in the case of a Foreign Bank claiming the benefits of the exemption
for portfolio interest under section 881(c) of the Code, (x) a certificate to
the effect that such Foreign Bank is not (A) a “bank” within the meaning of
section 881(c)(3)(A) of the Code, (B) a “10 percent shareholder” of the Borrower
within the meaning of section 881(c)(3)(B) of the Code, or (C) a “controlled
foreign corporation” described in section 881(c)(3)(C) of the Code and (y) duly
completed copies of Internal Revenue Service Form W-8BEN, or     (iv)   any
other form prescribed by applicable law as a basis for claiming exemption from
or a reduction in United States Federal withholding tax duly completed together
with such supplementary documentation as may be prescribed by applicable law to
permit the Borrower to determine the withholding or deduction required to be
made.

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  (f)   Treatment of Certain Refunds. If the Administrative Agent, any Bank or
an Issuing Bank determines, in its sole discretion, that it has received a
refund of any Taxes or Other Taxes as to which it has been indemnified by the
Borrower or with respect to which the Borrower has paid additional amounts
pursuant to this Section, it shall pay to the Borrower an amount equal to such
refund (but only to the extent of indemnity payments made, or additional amounts
paid, by the Borrower under this Section with respect to the Taxes or Other
Taxes giving rise to such refund), net of all out-of-pocket expenses of the
Administrative Agent, such Bank or such Issuing Bank, as the case may be, and
without interest (other than any interest paid by the relevant Governmental
Agency with respect to such refund), provided that the Borrower, upon the
request of the Administrative Agent, such Bank or such Issuing Bank, agrees to
repay the amount paid over to the Borrower (plus any penalties, interest or
other charges imposed by the relevant Governmental Agency) to the Administrative
Agent, such Bank or such Issuing Bank in the event the Administrative Agent,
such Bank or such Issuing Bank is required to repay such refund to such
Governmental Agency. This Section 3.10(f) shall not be construed to require the
Administrative Agent, any Bank or an Issuing Bank to make available its tax
returns (or any other information relating to its taxes that it deems
confidential) to the Borrower or any other Person.

3.11   Funding Sources.            Nothing in this Agreement shall be deemed to
obligate any Bank to obtain the funds for its share of any Loan in any
particular place or manner or to constitute a representation by any Bank that it
has obtained or will obtain the funds for its share of any Loan in any
particular place or manner.   3.12   Failure to Charge or Making of Payment Not
Subsequent Waiver.            Any decision by any Bank not to require payment of
any fee or costs, or to reduce the amount of the payment required for any fee or
costs, or to calculate any fee or any cost in any particular manner, shall not
limit or be deemed a waiver of any Bank’s right to require full payment of any
fee or costs, or to calculate any fee or any costs in any other manner. Any
decision by Borrower to pay any fee or costs shall not limit or be deemed a
waiver of any right of Borrower to protest or dispute the payment amount of such
fee or costs.   3.13   Time and Place of Payments; Evidence of Payments;
Application of Payments.            All payments to be made by the Borrower
shall be made without conditions or deduction for any counterclaim, defense,
recoupment or setoff. The amount of each payment hereunder, under the Notes or
under any Loan Document shall be made to the Administrative Agent at the
Administrative Agent’s Office, for the account of each of the Banks or the
Administrative Agent, as the case may be, in lawful money of the United States
of America without deduction, offset or counterclaim and in immediately
available funds on the day of payment (which must be a Business Day). All
payments of principal received after 10:00 a.m., Los Angeles time, on any
Business Day, shall be deemed received on the next succeeding Business Day for
purposes of calculating interest thereon. The amount of all payments received by
the Administrative Agent for the account of a Bank shall be promptly paid by the
Administrative Agent to that Bank in immediately available funds. Each Bank
shall keep a record of Advances made by it and payments of principal with
respect to each Note, and such record shall be presumptive evidence of the
principal amount owing under such Note; provided that failure to keep such
record shall in no way affect the Obligations of Borrower. Prior to the Maturity
Date or an acceleration of the

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    maturity of the Loans, payments under the Loan Documents shall be applied
first to amounts owing under the Loan Documents other than the principal amount
of and accrued interest on the Loans and Borrower’s obligations with respect to
Letter of Credit Usage, second to accrued interest on the Swing Line Loans,
third to accrued interest on the Loans (other than the Swing Line Loans),
fourth, to the principal amount of the Swing Line Loans, fifth, to the principal
amount of the Loans (other than the Swing Line Loans) and sixth to Borrower’s
Obligations with respect to Letter of Credit Usage then due and owing. Following
the Maturity Date or an acceleration of the maturity of the Loans, payments and
recoveries under the Loan Documents shall be applied in a manner designated in
Section 9.2(e). All payments with respect to principal and interest shall be
applied ratably in accordance with the Pro Rata Shares.   3.14   Administrative
Agent’s Right to Assume Payments Will be Made.       Unless the Borrower or any
Bank has notified the Administrative Agent, prior to the date any payment is
required to be made by it to the Administrative Agent hereunder, that the
Borrower or such Bank, as the case may be, will not make such payment, the
Administrative Agent may assume that the Borrower or such Bank, as the case may
be, has timely made such payment and may (but shall not be so required to), in
reliance thereon, make available a corresponding amount to the Person entitled
thereto. If and to the extent that such payment was not in fact made to the
Administrative Agent in immediately available funds, then:

  (a)   if the Borrower failed to make such payment, each Bank shall forthwith
on demand repay to the Administrative Agent the portion of such assumed payment
that was made available to such Bank in immediately available funds, together
with interest thereon in respect of each day from and including the date such
amount was made available by the Administrative Agent to such Bank to the date
such amount is repaid to the Administrative Agent in immediately available funds
at the Federal Funds Rate from time to time in effect; and     (b)   if any Bank
failed to make such payment, such Bank shall forthwith on demand pay to the
Administrative Agent the amount thereof in immediately available funds, together
with interest thereon for the period from the date such amount was made
available by the Administrative Agent to the Borrower to the date such amount is
recovered by the Administrative Agent (the “Compensation Period”) at a rate per
annum equal to the Federal Funds Rate from time to time in effect. If such Bank
pays such amount to the Administrative Agent, then such amount shall constitute
such Bank’s Advance included in the applicable Loan. If such Bank does not pay
such amount forthwith upon the Administrative Agent’s demand therefor, the
Administrative Agent may make a demand therefor upon the Borrower, and the
Borrower shall pay such amount to the Administrative Agent, together with
interest thereon for the Compensation Period at a rate per annum equal to the
rate of interest applicable to the applicable Advance. Nothing herein shall be
deemed to relieve any Bank from its obligation to fulfill its Pro Rata Share of
the Commitment or to prejudice any rights which the Administrative Agent or the
Borrower may have against any Bank as a result of any default by such Bank
hereunder.

    A notice of the Administrative Agent to any Bank or the Borrower with
respect to any amount owing under this Section 3.14 shall be conclusive, absent
manifest error.   3.15   Survivability.

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         All of Borrower’s obligations under this Article III shall survive
termination of the Commitments and repayment of all other Obligations hereunder.
  3.16   Bank Calculation Certificate.            Any request for compensation
pursuant to Section 3.5 or 3.6 shall be accompanied by a statement of an officer
of the Bank requesting such compensation and describing the methodology used by
such Bank in calculating the amount of such compensation, which methodology
(i) may consist of any reasonable averaging and attribution methods and (ii) in
the case of Section 3.5 hereof shall be consistent with the methodology used by
such Bank in making similar calculations in respect of loans or commitments to
other borrowers.   3.17   Transition.

  (a)   Borrower warrants and covenants that immediately following the initial
Advances made pursuant to Section 8.1(a) of this Agreement, there will be no
loans of any nature outstanding under the Prior Revolving Loan Agreement. The
parties hereto agree that as of the Closing Date all commitments to extend
credit under the Prior Revolving Loan Agreement shall terminate.     (b)   The
letters of credit identified on Schedule 3.17 (“Existing Letters of Credit”)
were issued by Bank of America for the account of Borrower as “Letters of
Credit” pursuant to the terms of the Prior Revolving Loan Agreement and are
expected to remain outstanding on the Closing Date. The parties hereto agree
that the Existing Letters of Credit shall be deemed for all purposes to be
Letters of Credit issued pursuant to the terms of Section 2.5.     (c)   On the
Closing Date, Borrower shall pay to the Administrative Agent (for the account of
the “Banks” under the Prior Revolving Loan Agreement pro rata according to the
“Pro Rata Share” of each such “Bank” under the Prior Revolving Loan Agreement)
all accrued but unpaid letter of credit fees payable under Section 2.5(j)(i) of
the Prior Revolving Loan Agreement.     (d)   On or before December 31, 2005,
Borrower shall pay to the Administrative Agent (for the account of Bank of
America as “Issuing Bank” under the Prior Revolving Loan Agreement) all accrued
but unpaid fronting fees payable under Section 2.5(j)(ii) of the Prior Revolving
Loan Agreement.

3.18   Designation of a Different Lending Office.            If any Bank
requests compensation under Sections 3.6(a) through 3.6(e), or the Borrower is
required to pay any additional amount to any Bank or any Governmental Agency for
the account of any Bank pursuant to Section 3.10, then such Bank shall use
reasonable efforts to designate a different Lending Office for funding or
booking its Advances hereunder or to assign its rights and obligations hereunder
to another of its offices, branches or affiliates, if, in the judgment of such
Bank, such designation or assignment (i) would eliminate or reduce amounts
payable pursuant to Sections 3.6(a) through 3.6(e) or Section 3.10, as the case
may be, in the future, and (ii) in each case, would not subject such Bank to any
unreimbursed cost or expense and would not otherwise be disadvantageous to such
Bank. The Borrower hereby agrees to pay all reasonable costs and expenses
incurred by any Bank in connection with any such designation or assignment.

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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants to the Banks that:

4.1   Existence and Qualification; Power; Compliance with Law.      
     Borrower is a corporation duly organized, validly existing and in good
standing under the Laws of the State of Delaware, and its certificate of
incorporation does not provide for the termination of its existence. Borrower is
duly qualified or registered to transact business as a foreign corporation in
the State of California, and in each other jurisdiction in which the conduct of
its business or the ownership of its properties makes such qualification or
registration necessary, except where the failure so to qualify or register would
not constitute a Material Adverse Effect. Borrower has all requisite corporate
power and authority to conduct its business, to own and lease its Properties and
to execute, deliver and perform all of its obligations under the Loan Documents.
All outstanding shares of capital stock of Borrower are duly authorized, validly
issued, fully paid, non-assessable, and were issued in compliance with all
applicable state and federal securities Laws, except where the failure to so
comply would not constitute a Material Adverse Effect. Borrower is in
substantial compliance with all Laws and other legal requirements applicable to
its business and has obtained all authorizations, consents, approvals, orders,
licenses and permits (collectively, “Authorizations”) from, and has accomplished
all filings, registrations and qualifications with, or obtained exemptions from
any of the foregoing from, any Governmental Agency that are necessary for the
transaction of its business, except where the failure so to obtain
Authorizations, comply, file, register, qualify or obtain exemptions does not
constitute a Material Adverse Effect.   4.2   Authority; Compliance with Other
Instruments and Government Regulations.            The execution, delivery, and
performance by Borrower, and by each Guarantor Subsidiary of Borrower, of the
Loan Documents to which it is a Party, have been duly authorized by all
necessary corporate or partnership action, and do not:

  (a)   require any consent or approval not heretofore obtained of any
stockholder, partner, security holder, or creditor of such Party;     (b)  
violate or conflict with any provision of such Party’s charter, certificate or
articles of incorporation, bylaws, certificate or articles of organization,
operating agreement, partnership agreement or other organizational or governing
documents of such Party;     (c)   result in or require the creation or
imposition of any Lien or Right of Others upon or with respect to any Property
now owned or leased or hereafter acquired by such Party;     (d)   constitute a
“transfer of an interest” or an “obligation incurred” that is avoidable by a
trustee under Section 548 of the Bankruptcy Code of 1978, as amended, or
constitute a “fraudulent transfer” or “fraudulent obligation” within the meaning
of the Uniform Fraudulent Transfer Act as enacted in any jurisdiction or any
analogous Law;     (e)   violate any Requirement of Law applicable to such
Party; or     (f)   result in a breach of or constitute a default under, or
cause or permit the acceleration of any obligation owed under, any indenture or
loan or credit agreement or any other

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      Contractual Obligation to which such Party or any of its Property is bound
or affected with respect to any obligation or obligations aggregating
$50,000,000 or more;

    and neither Borrower nor any Guarantor Subsidiary of Borrower is in
violation of, or default under, any Requirement of Law or Contractual
Obligation, or any indenture, loan or credit agreement described in
Section 4.2(f) in any respect that would constitute a Material Adverse Effect.  
4.3   No Governmental Approvals Required.            Except such as have
heretofore been obtained, no authorization, consent, approval, order, license or
permit from, or filing, registration, or qualification with, or exemption from
any of the foregoing from, any Governmental Agency is or will be required to
authorize or permit the execution, delivery and performance by Borrower or any
Guarantor Subsidiary of Borrower of the Loan Documents to which it is a Party.  
4.4   Subsidiaries.

  (a)   Schedule 4.4 correctly sets forth the names, the form of legal entity
and jurisdictions of organization of all Subsidiaries of Borrower as of the
Closing Date and identifies each such Subsidiary that is a Consolidated
Subsidiary, a Significant Subsidiary, a Guarantor Subsidiary, a Foreign
Subsidiary and a Financial Subsidiary. As of the Closing Date, unless otherwise
indicated in Schedule 4.4, all of the outstanding shares of capital stock, or
all of the units of equity interest, as the case may be, of each Subsidiary
indicated thereon are owned of record and beneficially by Borrower or one of
such Subsidiaries, and all such shares or equity interests so owned were issued
in compliance with all state and federal securities Laws and are duly
authorized, validly issued, fully paid and non-assessable (other than with
respect to required capital contributions to any joint venture in accordance
with customary terms and provisions of the related joint venture agreement),
except where the failure to so comply would not constitute a Material Adverse
Effect, and are free and clear of all Liens and Rights of Others, except for
Permitted Encumbrances and Permitted Rights of Others.     (b)   Each
Significant Subsidiary that is a Consolidated Subsidiary is duly organized,
validly existing and in good standing under the Laws of its jurisdiction of
organization, is duly qualified to do business as a foreign organization and is
in good standing as such in each jurisdiction in which the conduct of its
business or the ownership or leasing of its Properties makes such qualification
necessary (except where the failure to be so duly qualified and in good standing
does not constitute a Material Adverse Effect) and has all requisite power and
authority to conduct its business, to own and lease its Properties and to
execute, deliver and perform the Loan Documents to which it is a Party.     (c)
  Each Significant Subsidiary that is a Consolidated Subsidiary is in
substantial compliance with all Laws and other requirements applicable to its
business and has obtained all Authorizations from, and each such Significant
Subsidiary has accomplished all filings, registrations, and qualifications with,
or obtained exemptions from any of the foregoing from, any Governmental Agency
that are necessary for the transaction of its business, except where the failure
so to obtain Authorizations, comply, file, register, qualify or obtain
exemptions does not constitute a Material Adverse Effect.

4.5   Financial Statements.

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         Borrower has furnished to each Bank the following financial statements:

  (a)   the audited consolidated financial statements of Borrower and its GAAP
Subsidiaries as at November 30, 2004 and for the Fiscal Year then ended; and    
(b)   the unaudited consolidated financial statements of Borrower and its GAAP
Subsidiaries as at August 31, 2005 for the Fiscal Quarter then ended and for the
portion of the Fiscal Year ended with such Fiscal Quarter.

    The audited financial statements described in clause (a) are in accordance
with the books and records of Borrower and its GAAP Subsidiaries, were prepared
in accordance with Generally Accepted Accounting Principles consistently applied
and fairly present in accordance with Generally Accepted Accounting Principles
consistently applied the consolidated financial condition and results of
operations of Borrower and its GAAP Subsidiaries as at the date and for the
period covered thereby. The unaudited financial statements described in clause
(b), are in accordance with the books and records of Borrower and its GAAP
Subsidiaries, were prepared in accordance with Generally Accepted Accounting
Principles consistently applied and fairly present in accordance with Generally
Accepted Accounting Principles consistently applied the consolidated financial
condition and results of operation of Borrower and its GAAP Subsidiaries as at
the date and for the period covered thereby.   4.6   No Other Liabilities; No
Material Adverse Effect.       Borrower and its Consolidated Subsidiaries do not
have any material liability or material contingent liability required by GAAP to
be reflected or disclosed in the financial statements or in the notes to the
financial statements described in Section 4.5, other than as reflected or
disclosed and liabilities and contingent liabilities arising in the ordinary
course of business subsequent to November 30, 2004. From November 30, 2004 to
the Closing Date, no event or circumstance has occurred that constitutes a
Material Adverse Effect with respect to Borrower and its Subsidiaries.   4.7  
Title to Assets.

  (a)   Borrower and its Consolidated Subsidiaries have good and valid title to
all of the assets reflected in the financial statements described in Section 4.5
as owned by them or any of them (other than assets disposed of in the ordinary
course of business), free and clear of all Liens and Rights of Others other than
(i) those reflected or disclosed in the notes to the financial statements
described in Section 4.5, (ii) Liens or Rights of Others not required under
Generally Accepted Accounting Principles consistently applied to be so reflected
or disclosed, (iii) Liens permitted pursuant to Section 6.7, (iv) Permitted
Rights of Others, and (v) such existing Liens or Rights of Others as are
described on Schedule 4.7 hereto.     (b)   The Borrower and its Borrowing Base
Subsidiaries have good record and marketable title in fee simple to all
Developed Lots, Lots Under Development and Units being constructed on Developed
Lots included in the Borrowing Base (as set forth in the Borrowing Base
Certificate delivered by Borrower to the Administrative Agent pursuant to
Section 8.1(a)(x)), except for defects in title that do not interfere in any
material respect with its ability to conduct its business as currently conducted
or to utilize such properties for their intended purposes.

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4.8   Intangible Assets.            Borrower and its Guarantor Subsidiaries own,
or possess the right to use, all trademarks, trade names, copyrights, patents,
patent rights, licenses and other intangible assets that are necessary in the
conduct of their businesses as operated, and no such intangible asset, to the
best knowledge of Borrower, conflicts with the valid trademark, trade name,
copyright, patent, patent right or intangible asset of any other Person to the
extent that such conflict would constitute a Material Adverse Effect.   4.9  
Existing Indebtedness and Contingent Guaranty Obligations.            As of
August 31, 2005, except as set forth in Schedule 4.9 or in the financial
statements described in Section 4.5, neither Borrower nor any of its
Consolidated Subsidiaries has (a) any Indebtedness owed to any Person or
(b) outstanding any Contingent Guaranty Obligation with respect to obligations
of another Person that is not a Subsidiary of Borrower.   4.10   Governmental
Regulation.            Neither Borrower nor any of the Guarantor Subsidiaries is
subject to regulation under the Public Utility Holding Company Act of 1935 or
the Investment Company Act of 1940.   4.11   Litigation.            There are no
actions, suits, or proceedings pending or, to the best knowledge of Borrower,
threatened against or affecting Borrower or any of its Subsidiaries or any
Property of any of them before any Governmental Agency which would constitute a
Material Adverse Effect. To the best knowledge of the Borrower, there are no
investigations by any Governmental Agency pending or threatened against or
affecting Borrower or any of its Subsidiaries or any Property of any of them
which would constitute a Material Adverse Effect.   4.12   Binding Obligations.
           Each of the Loan Documents to which Borrower or any Guarantor
Subsidiary of Borrower is a Party has been duly authorized, executed and
delivered and constitutes the legal, valid and binding obligation of Borrower or
the Guarantor Subsidiary, as the case may be, enforceable against Borrower or
the Guarantor Subsidiary, as the case may be, in accordance with its terms,
except as enforcement may be limited by Debtor Relief Laws or by equitable
principles relating to the granting of specific performance and other equitable
remedies as a matter of judicial discretion.   4.13   No Default.            No
event has occurred and is continuing that is a Default or an Event of Default.  
4.14   Pension Plans.            All contributions required to be made under any
Pension Plan maintained by Borrower or any of its ERISA Affiliates (or to which
Borrower or any ERISA Affiliate contributes or is required to contribute) have
been made or accrued in the most recent balance sheet of Borrower and its
Consolidated Subsidiaries.

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4.15   Tax Liability.            Borrower and its Consolidated Subsidiaries have
filed all tax returns which are required to be filed, and have paid, or made
provision for the payment of, all taxes which have become due pursuant to said
returns or pursuant to any assessment received by Borrower or any Consolidated
Subsidiary, except (a) such taxes, if any, as are being contested in good faith
by appropriate proceedings (and with respect to which Borrower or its
Consolidated Subsidiary has established adequate reserves for the payment of the
same to the extent required by, and in accordance with, Generally Accepted
Accounting Principles), and (b) such taxes the failure of which to pay will not
constitute a Material Adverse Effect.   4.16   Regulation U.            Neither
the Borrower nor any of its Subsidiaries is engaged (or will engage),
principally or as one of its important activities, in the business of purchasing
or carrying margin stock (within the meaning of Regulation U issued by the Board
of Governors of the Federal Reserve System), or extending credit for the purpose
of purchasing or carrying margin stock.   4.17   Environmental Matters.      
     To the best knowledge of Borrower, Borrower and its Consolidated
Subsidiaries are in substantial compliance with all applicable Laws relating to
environmental protection where the failure to comply would constitute a Material
Adverse Effect. To the best knowledge of Borrower, neither Borrower nor any of
its Consolidated Subsidiaries has received any notice from any Governmental
Agency respecting the alleged violation by Borrower or any Consolidated
Subsidiary of such Laws which would constitute a Material Adverse Effect and
which has not been or is not being corrected.   4.18   Disclosure.      
     The information provided by Borrower to the Banks in connection with this
Agreement or any Loan, taken as a whole, has not contained any untrue statement
of a material fact and has not omitted a material fact necessary to make the
statements contained therein, taken as a whole, not misleading under the
totality of the circumstances existing at the date such information was provided
and in the context in which it was provided.   4.19   Projections.            As
of the Closing Date, the assumptions upon which the Projections are based are
reasonable and consistent with each other assumption and with all facts known to
Borrower and that the Projections are reasonably based on those assumptions.
Nothing in this Section 4.19 shall be construed as a representation or warranty
as of any date other than the Closing Date or that the Projections will in fact
be achieved by Borrower.   4.20   ERISA Compliance

  (a)   Each Plan is in compliance in all material respects with the applicable
provisions of ERISA, the Code and other Federal or state Laws. Each Plan that is
intended to qualify under Section 401(a) of the Code has received a favorable
determination letter from the IRS or an application for such a letter is
currently being processed by the IRS with respect thereto and, to the best
knowledge of the Borrower, nothing has occurred which

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      would prevent, or cause the loss of, such qualification. Neither the
Borrower nor any ERISA Affiliate sponsors, or has sponsored within the past
10 years, a defined benefit pension plan, or is a participant, or has
participated within the past 10 years, in a Multiemployer Plan.     (b)   There
are no pending or, to the best knowledge of the Borrower, threatened claims,
actions or lawsuits, or action by any Governmental Agency, with respect to any
Plan that could be reasonably be expected to have a Material Adverse Effect.
There has been no prohibited transaction or violation of the fiduciary
responsibility rules with respect to any Plan that has resulted or could
reasonably be expected to result in a Material Adverse Effect. No ERISA Event
has occurred or is reasonably expected to occur.

4.21   Solvency.            The Borrower and each Guarantor Subsidiary is and
will be, after giving effect to the making of the Loans and issuance of the
Letters of Credit, Solvent.   4.22   Tax Shelter Regulations.            The
Borrower does not intend to treat the Loans or Letters of Credit as being a
“reportable transaction” (within the meaning of Treasury
Regulation Section 1.6011-4). In the event the Borrower determines to take any
action inconsistent with such intention, it will promptly notify the
Administrative Agent thereof. Accordingly, if the Borrower so notifies the
Administrative Agent, the Borrower acknowledges that one or more of the Banks
may treat its Loans or its interest in Swing Line Loans or Letters of Credit as
part of a transaction that is subject to Treasury Regulation Section 301.6112-1,
and such Bank or Banks, as applicable, will maintain the lists and other records
required by such Treasury Regulation.

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ARTICLE V
AFFIRMATIVE COVENANTS
(OTHER THAN INFORMATION AND REPORTING REQUIREMENTS)
As long as any Loan remains unpaid, or any other Obligation remains unpaid, or
any portion of the Commitment or any Letter of Credit remains outstanding,
Borrower shall, and shall cause each of its Consolidated Subsidiaries to, unless
the Administrative Agent (with the approval of the Required Banks) otherwise
consents in writing:

5.1   Payment of Taxes and Other Potential Liens.

     Pay and discharge promptly, all taxes, assessments, and governmental
charges or levies imposed upon Borrower or any of its Consolidated Subsidiaries,
upon their respective Property or any part thereof, upon their respective income
or profits or any part thereof, except any tax, assessment, charge, or levy that
is not yet past due, or is being contested in good faith by appropriate
proceedings, as long as Borrower or its Consolidated Subsidiary has established
and maintains adequate reserves for the payment of the same to the extent
required by, and in accordance with, Generally Accepted Accounting Principles
and by reason of such nonpayment no material Property of Borrower or its
Significant Subsidiaries is subject to a risk of loss or forfeiture.

5.2   Preservation of Existence.

     Preserve and maintain their respective existence, licenses, rights,
franchises, and privileges in the jurisdiction of their formation and all
authorizations, consents, approvals, orders, licenses, permits, or exemptions
from, or registrations with, any Governmental Agency that are necessary for the
transaction of their respective business, and qualify and remain qualified to
transact business in each jurisdiction in which such qualification is necessary
in view of their respective business or the ownership or leasing of their
respective Properties; provided that (a) the failure to preserve and maintain
any particular right, franchise, privilege, authorization, consent, approval,
order, license, permit, exemption, or registration, or to qualify or remain
qualified in any jurisdiction, that does not constitute a Material Adverse
Effect will not constitute a violation of this covenant, and (b) nothing in this
Section 5.2 shall prevent any consolidation or merger or disposition of assets
permitted by Section 6.3 or shall prevent the termination of the business or
existence (corporate or otherwise) of any Subsidiary of Borrower which in the
reasonable judgment of the management of Borrower is no longer necessary or
desirable.

5.3   Maintenance of Properties.

     Maintain, preserve and protect all of their respective real Properties in
good order and condition, subject to wear and tear in the ordinary course of
business and damage caused by the natural elements, and not permit any waste of
their respective real Properties, except that the failure to so maintain,
preserve or protect any particular real Property, or the permitting of waste on
any particular real Property, where such failure or waste with respect to all
real Properties of Borrower and its Subsidiaries, in the aggregate, would not
constitute a Material Adverse Effect.

5.4   Maintenance of Insurance.

     Maintain insurance with responsible insurance companies in such amounts and
against such risks as in Borrower’s reasonable business judgment is adequate in
light of Borrower’s and its Consolidated Subsidiaries’ size, business, assets
and location of operations.

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5.5   Compliance with Laws.

     Comply with all Requirements of Laws noncompliance with which would
constitute a Material Adverse Effect, except that Borrower and its Consolidated
Subsidiaries need not comply with a Requirement of Law then being contested by
any of them in good faith by appropriate procedures, so long as such contest (or
a bond or surety posted in connection therewith) operates as a stay of
enforcement of any material penalty that would otherwise apply as a result of
such failure to comply.

5.6   Inspection Rights.

     At any time during regular business hours and as often as reasonably
requested (and, in any event, upon 24 hours’ prior notice), permit any Bank or
any appropriately designated employee, agent or representative thereof at the
expense of such Bank (unless a Default or an Event of Default has occurred and
is continuing) to examine, audit and make copies and abstracts from the records
and books of account of, and to visit and inspect the Properties of Borrower and
its Consolidated Subsidiaries, and to discuss the affairs, finances and accounts
of Borrower and such Subsidiaries with any of their officers or employees;
provided that none of the foregoing unreasonably interferes with the normal
business operations of Borrower or any of such Subsidiaries and that the Banks
shall engage in any such inspections on a cooperative basis, if there has been
no Default or Event of Default.

5.7   Keeping of Records and Books of Account.

     Keep adequate records and books of account fairly reflecting all financial
transactions in conformity with Generally Accepted Accounting Principles applied
on a consistent basis (except for changes concurred with by Borrower’s
independent certified public accountants) and all applicable requirements of any
Governmental Agency having jurisdiction over Borrower or any of its Consolidated
Subsidiaries.

5.8   Use of Proceeds.

     Use the proceeds of all Loans solely for working capital, Acquisitions
permitted hereunder and other general corporate purposes of Borrower and its
Subsidiaries and not in contravention of any Law or of any Loan Document.

5.9   Subsidiary Guaranty.

     Cause each of its Guarantor Subsidiaries hereafter formed, acquired or
qualifying as a Guarantor Subsidiary, to (a) execute and deliver to the
Administrative Agent promptly following such formation, acquisition or
qualification a joinder of the Subsidiary Guaranty or such other document as the
Administrative Agent shall deem appropriate, and (b) deliver to the
Administrative Agent documents of the types referred to in clause (v) of
Section 8.1(a) and, if requested by the Administrative Agent, favorable opinions
of counsel to such Guarantor Subsidiary (which shall cover, among other things,
the legality, validity, binding effect and enforceability of the documentation
referred to in clause (a)), all in form, content and scope reasonably
satisfactory to the Administrative Agent.

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ARTICLE VI
NEGATIVE COVENANTS
As long as any Loan remains unpaid, or any other Obligation remains unpaid, or
any portion of the Commitment or any Letter of Credit remains outstanding,
Borrower shall not, and shall not permit any of its Consolidated Subsidiaries
to, unless the Administrative Agent (with the approval of the Required Banks)
otherwise consents in writing:

6.1   Payment or Prepayment of Subordinated Obligations.

  (a)   Make any payment with respect to any Subordinated Obligation in
violation of the provisions in the instruments governing such Subordinated
Obligation; or     (b)   if a Default or Event of Default then exists or would
result therefrom:

  (i)   make an optional or unscheduled payment or prepayment of any principal
(including an optional or unscheduled sinking fund payment), interest or any
other amount with respect to any Subordinated Obligation; or     (ii)   make a
purchase or redemption of any Subordinated Obligation.

6.2   [Intentionally Omitted].   6.3   Mergers and Sale of Assets.

     Merge or consolidate with or into any Person, or sell a Material Amount of
Assets to any Person, except, subject to Section 6.6:

  (a)   a merger of Borrower into a wholly-owned Subsidiary of Borrower that has
nominal assets and liabilities, the primary purpose of which is to effect the
reincorporation of Borrower in another state;     (b)   mergers or
consolidations of a Subsidiary of Borrower into Borrower (with Borrower as the
surviving corporation) or into any other Subsidiary of Borrower, provided that
(i) the reduction in the proportionate share of Borrower and its Subsidiaries in
the total assets of such resulting Subsidiary (after intercompany eliminations)
does not constitute a Material Amount of Assets and (ii) immediately after
giving effect to such transaction, no Default or Event of Default shall have
occurred and be continuing;     (c)   mergers, consolidations, liquidations, or
sales of all or substantially all of the assets of a Subsidiary; provided that
(i) any such transaction does not involve a transfer by Borrower or its
Consolidated Subsidiaries of a Material Amount of Assets and (ii) immediately
after giving effect to such transaction, no Default or Event of Default shall
have occurred and be continuing; or     (d)   a merger or consolidation of
Borrower with another Person if (i) no Change in Control results therefrom,
(ii) Borrower does not transfer a Material Amount of Assets to one or more
Persons in connection with the merger or consolidation and (iii) immediately
after

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giving effect to such merger, no Default or Event of Default shall have occurred
and be continuing.

6.4   Investments and Acquisitions.

   Make any Acquisition, or enter into an agreement to make any Acquisition, or
make or suffer to exist any Investment, other than:

  (a)   Investments in Cash or Cash Equivalents;     (b)   advances to officers,
directors and employees of Borrower or its Subsidiaries for travel,
entertainment, housing expenses, relocation, stock option plans, or otherwise in
connection with their employment or the business of Borrower or any of its
Subsidiaries;     (c)   Investments of Borrower in any of its wholly-owned
Subsidiaries and Investments of any Subsidiary of Borrower in Borrower or any of
Borrower’s wholly-owned Subsidiaries;     (d)   Acquisitions of or Investments
in Persons engaged primarily in the same businesses as Borrower and its
Subsidiaries, or in a business reasonably related to such businesses, including
electronic commerce and similar activities related to real estate;     (e)  
Acquisitions of or Investments in the Borrower’s own capital stock;     (f)  
Acquisitions of or Investments in Persons engaged primarily in businesses other
than those permitted by Sections 6.4(d), provided that the aggregate cost of all
such Acquisitions and Investments made in any fiscal year does not exceed
$100,000,000;     (g)   Investments in Subsidiaries in existence on the Closing
Date or as otherwise disclosed on Schedule 6.4;     (h)   Investments received
in connection with the settlement of a bona fide dispute with another Person;  
  (i)   Investments consisting of readily marketable securities actively traded
on a public exchange, provided that (i) the aggregate amount of any such
Investments at any one time does not exceed $100,000,000 and (ii) subject to
Section 6.16 hereof, the Borrower’s Investment in KB France shall be permitted
for all purposes hereunder and shall not be subject to the limitation set forth
in clause (i) of this Section 6.4(i); and     (j)   Investments consisting of
the extension of credit to suppliers in the ordinary course of business and any
Investments received in satisfaction or partial satisfaction thereof, provided
that the aggregate amount of any such Investments at any one time does not
exceed $50,000,000;

but in all events, subject to the restrictions of Section 6.16.

6.5   ERISA Compliance.

     Permit any Pension Plan maintained by Borrower or any of its ERISA
Affiliates (or to which Borrower or any ERISA Affiliate contributes or is
required to contribute), other than a Multiemployer Plan, to incur any material
“accumulated funding deficiency,” as such term is

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defined in Section 302 of ERISA, unless waived, or permit any Pension Plan
maintained by any of them to suffer a Termination Event or incur withdrawal
liability under any Multiemployer Plan if any of such events would result in a
liability of Borrower or any ERISA affiliate exceeding in the aggregate
$50,000,000.

6.6   Change in Business.

     Engage in any business other than the businesses as now conducted by
Borrower or its Subsidiaries, and any business reasonably related to such
businesses, other than:

  (a)   businesses in which Borrower and its Subsidiaries have invested no more
than $50,000,000 in any Fiscal Year; and     (b)   as permitted pursuant to
Section 6.4(f).

6.7   Liens and Negative Pledges.

     Create, incur, assume, or suffer to exist, any Lien of any nature upon or
with respect to any of their respective Properties, whether now owned or
hereafter acquired, or enter or suffer to exist any Contractual Obligation
wherein Borrower or any of its Consolidated Subsidiaries agrees not to grant any
Lien on any of their Properties, except:

  (a)   Liens and Contractual Obligations existing on the date hereof and
described in Schedule 4.7, provided that the obligations secured by such Liens
are not increased and that no such Lien extends to any Property of Borrower or
any Consolidated Subsidiary other than the Property subject to such Lien on the
Closing Date;     (b)   Liens on Property of any Financial Subsidiary or Foreign
Subsidiary securing Indebtedness of that Financial Subsidiary or Foreign
Subsidiary;     (c)   Liens on Property securing Indebtedness of Borrower or any
of its Subsidiaries, provided that the aggregate Indebtedness (other than
Indebtedness described in clause (b) above and clause (q) below) secured by all
such Liens shall at no time exceed $200,000,000;     (d)   Liens that may exist
from time to time under the Loan Documents;     (e)   Liens consisting of a
Capital Lease covering personal Property;     (f)   Permitted Encumbrances;    
(g)   attachment, judgment and other similar Liens arising in connection with
court proceedings; provided that the execution or enforcement of such Lien is
effectively stayed and the claims secured thereby do not in the aggregate exceed
$50,000,000 and are being contested in good faith by appropriate proceedings
timely commenced and diligently prosecuted;     (h)   Liens existing on any
asset of any Person at the time such Person becomes a Subsidiary and not created
in contemplation of such event;

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  (i)   Liens on any asset of any Person existing at the time such Person is
merged or consolidated with or into Borrower or any of its Subsidiaries and not
created in contemplation of such event;     (j)   Liens existing on any asset
prior to the acquisition thereof by Borrower or any of its Subsidiaries and not
created in contemplation of such acquisition;     (k)   Liens arising out of the
refinancing, extension, renewal or refunding of any Indebtedness secured by any
Lien permitted by any of the foregoing clauses of this Section, provided that
such Indebtedness is not increased and is not secured by additional assets;    
(l)   Liens arising in the ordinary course of business which (i) do not secure
Indebtedness, (ii) do not secure any obligation in an amount exceeding
$10,000,000 individually, or $50,000,000 in the aggregate, and (iii) do not in
the aggregate materially detract from the value of the assets covered by such
Liens or materially impair the use thereof in the operation of Borrower’s
business;     (m)   Liens not otherwise permitted by the foregoing clauses of
this Section which secure Indebtedness not exceeding $10,000,000 in the
aggregate;     (n)   assessment district or similar Liens in connection with
municipal financings;     (o)   a Contractual Obligation wherein Borrower or any
of its Subsidiaries agrees to grant any Lien on any of their Properties, if such
Contractual Obligation provides for the grant of a Lien on a pari passu basis in
favor of the Administrative Agent for the benefit of the Banks with respect to
the Obligations and in favor of the holders of such other Senior Indebtedness,
if any, as the Borrower designates (and Borrower shall, as soon as reasonably
possible, provide to the Banks a copy of any such Contractual Obligation);    
(p)   Liens on Property of a Joint Venture;     (q)   Liens on Property of the
Borrower or any of its Subsidiaries that secure Non-Recourse Indebtedness to the
seller of such Property incurred by the Borrower or any of its Subsidiaries upon
acquisition of such Property; and     (r)   Liens on Property that secure any
obligation of the Borrower or any of its Subsidiaries under any Profit and
Participation Agreement.

For purposes of compliance with this Section: (x) in the event that any Lien
meets the criteria set forth in more than one of clauses (a) through (r) of this
Section, Borrower, in its sole discretion, may classify or reclassify such Lien
in any manner that complies with this Section and such Lien shall be treated as
having been permitted pursuant to only one of the clauses of this Section; and
(y) any Indebtedness secured by a Lien may be divided and classified among more
than one of the clauses of this Section.

6.8   Transactions with Affiliates.

     Enter into any transaction of any kind with any Affiliate of Borrower other
than (a) a transaction that results in Subordinated Obligations, (b) a
transaction between or among Borrower and its wholly-owned Subsidiaries, (c) a
transaction that has been authorized by the board of directors of Borrower with
the favorable vote of a majority of the directors who have no financial

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or other interest in the transaction or by the vote of a majority of the
outstanding shares of capital stock of Borrower, (d) a transaction entered into
on terms and under conditions not less favorable to Borrower or any of its
Subsidiaries than could be obtained from a Person that is not an Affiliate of
Borrower, (e) salary, bonus, employee stock options and other compensation
arrangements and indemnification arrangements with directors or officers or
(f) transactions permitted by Sections 6.4 or 6.16.

6.9   Consolidated Tangible Net Worth.

     Permit Consolidated Tangible Net Worth to be, at the end of any Fiscal
Quarter, less than an amount equal to (a) $1,731,507,000, plus (b) an amount
equal to 50% of aggregate of the cumulative Consolidated Net Income for each
Fiscal Quarter contained in the fiscal period commencing on September 1, 2005
and ending as of the last day of such Fiscal Quarter (provided that there shall
be no reduction hereunder in the event of a consolidated net loss in any such
Fiscal Quarter), plus (c) an amount equal to 50% of the cumulative net proceeds
received by Borrower from the issuance of its capital stock subsequent to
August 31, 2005.

6.10   Consolidated Leverage Ratio.

     Permit the Consolidated Leverage Ratio to be, at the end of any Fiscal
Quarter, greater than 2.00 to 1.00.

6.11   Consolidated Interest Coverage Ratio.

     Permit the Consolidated Interest Coverage Ratio to be, at the end of any
Fiscal Quarter, less than 2.00 to 1.00.

6.12   Distributions.

     Make any Distribution (other than a Distribution made to Borrower or to a
Guarantor Subsidiary) if an Event of Default then exists or if an Event of
Default or Default would result therefrom.

6.13   Amendments.

     Amend, waive or terminate any provision in any instrument or agreement
governing Subordinated Obligations unless such amendment, waiver or termination
would not be materially adverse to the interests of the Banks under this
Agreement.

6.14   [Intentionally Omitted].

6.15   Inventory.

     Permit, as of the end of any Fiscal Quarter at which the Borrower does not
hold an Investment Grade Credit Rating, the book value of Domestic Unimproved
Land to exceed an amount equal to 100% of Consolidated Tangible Net Worth.

6.16   Investment in Subsidiaries and Joint Ventures.

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     Permit, as of the last day of any Fiscal Quarter, Borrower’s equity
interest, computed in accordance with Generally Accepted Accounting Principles
consistently applied, in all Subsidiaries of Borrower (other than Guarantor
Subsidiaries), Financial Subsidiaries, Foreign Subsidiaries, all Joint Ventures
and all other entities with financial statements not consolidated with those of
Borrower under Generally Accepted Accounting Principles consistently applied to
exceed 35% of Consolidated Tangible Net Worth; provided, however, that
Borrower’s equity interest in KB France on the Closing Date will be excluded for
purposes of this Section 6.16. For purposes of this Section 6.16, any increase
in Borrower’s equity interest in KB France after the Closing Date will be
included only if such increase arises from further investment by Borrower in KB
France, and then only to the extent of such further investment.

6.17   Senior Indebtedness Not to Exceed Borrowing Base.

     Permit, at any time at which the Borrower does not hold an Investment Grade
Credit Rating, the Senior Indebtedness at such time to exceed the Borrowing Base
(as set forth in the then most recent Borrowing Base Certificate delivered
hereunder by Borrower to the Administrative Agent).

6.18   Maximum Speculative Units.

     Permit, at any time at which the Borrower does not hold an Investment Grade
Credit Rating, the total number of Speculative Units to exceed 40% of the number
of Units that were sold and conveyed to buyers during the previous 4 Fiscal
Quarters.

6.19   Regulation U.

     Permit, any Loan hereunder to be used, whether directly or indirectly, and
whether immediately, incidentally or ultimately, to purchase or carry margin
stock or to extend credit to others for the purpose of purchasing or carrying
margin stock or to refund indebtedness originally incurred for such purpose.

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ARTICLE VII
INFORMATION AND REPORTING REQUIREMENTS

7.1   Financial and Business Information of Borrower and Its Subsidiaries.

     As long as any Loan remains unpaid or any other Obligation remains unpaid,
or any portion of the Commitment or any Letter of Credit remains outstanding,
Borrower shall, unless the Administrative Agent (with the approval of the
Required Banks) otherwise consents in writing, deliver to the Administrative
Agent and each of the Banks (except as otherwise provided below) at its own
expense:

  (a)   As soon as reasonably possible, and in any event within 50 days after
the close of each Fiscal Quarter of Borrower (other than the fourth Fiscal
Quarter), (i) the consolidated and consolidating balance sheet of Borrower and
its GAAP Subsidiaries as of the end of such Fiscal Quarter, setting forth in
comparative form the corresponding figures for the corresponding Fiscal Quarter
of the preceding Fiscal Year, if available, and (ii) the consolidated and
consolidating statements of profit and loss and the consolidated statements of
cash flows of Borrower and its GAAP Subsidiaries for such Fiscal Quarter and for
the portion of the Fiscal Year ended with such Fiscal Quarter, setting forth in
comparative form the corresponding periods of the preceding Fiscal Year. Such
consolidated and consolidating balance sheets and statements shall be prepared
in reasonable detail in accordance with Generally Accepted Accounting Principles
consistently applied (other than those which require footnote disclosure of
certain matters), and shall be certified by the principal financial officer of
Borrower, subject to normal year-end accruals and audit adjustments;     (b)  
As soon as reasonably possible, and in any event within 90 days after the close
of each Fiscal Year of Borrower, (i) the consolidated and consolidating (in
accordance with past practices of Borrower) balance sheets of Borrower and its
GAAP Subsidiaries as at the end of such Fiscal Year, setting forth in
comparative form the corresponding figures at the end of the preceding Fiscal
Year and (ii) the consolidated and consolidating (in accordance with past
practices of Borrower) statements of profit and loss and the consolidated
statements of cash flows of Borrower and its GAAP Subsidiaries for such Fiscal
Year, setting forth in comparative form the corresponding figures for the
previous Fiscal Year. Such consolidated and consolidating balance sheet and
statements shall be prepared in reasonable detail in accordance with Generally
Accepted Accounting Principles consistently applied. Such consolidated balance
sheet and statements shall be accompanied by a report and opinion of Ernst &
Young llp or other independent certified public accountants of recognized
national standing selected by Borrower, which report and opinion shall state
that the examination of such consolidated financial statements by such
accountants was made in accordance with generally accepted auditing standards
and that such consolidated financial statements fairly present the financial
condition, results of operations and of cash flows of Borrower and its GAAP
Subsidiaries subject to no exceptions as to scope of audit and subject to no
other exceptions or qualifications (other than changes in accounting principles
in which the auditors concur) unless such other exceptions or qualifications are
approved by the Required Banks in their reasonable discretion. Such accountants’
report and opinion shall be accompanied by a certificate stating that, in
conducting the audit examination of books and records necessary for the
certification of such financial statements, such accountants have obtained no
knowledge of any Default or Event of Default hereunder or, if in the opinion of
such accountants, any such Default or Event of Default shall exist, stating the

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nature and status of such event, and setting forth the applicable calculations
under Sections 6.9, 6.10, 6.11, 6.15 (without requiring any physical count of
inventory), 6.16, 6.17 and 6.18 as of the date of the balance sheet. Such
consolidating balance sheet and statements shall be certified by a Responsible
Official of Borrower;

  (c)   Promptly after the receipt thereof by Borrower, copies of any audit or
management reports submitted to it by independent accountants in connection with
any audit or interim audit submitted to the board of directors of Borrower or
any of its Consolidated Subsidiaries;     (d)   Promptly after the same are
available, copies of each annual report, proxy or financial statement or other
report or communication sent to its stockholders, and copies of all annual,
regular, periodic and special reports and registration statements which Borrower
may file or be required to file with the Commission or any similar or
corresponding Governmental Agency or with any securities exchange;     (e)  
Promptly upon a Senior Officer of Borrower becoming aware, and in any event
within 10 Business Days after becoming aware, of the occurrence of any (i)
“reportable event” (as such term is defined in Section 4043 of ERISA) other than
any such event as to which the PBGC has by regulation waived the requirement of
30 days’ notice or (ii) “prohibited transaction” (as such term is defined in
Section 406 of ERISA or Section 4975 of the Code) in connection with any Pension
Plan, other than a Multiemployer Plan, or any trust created thereunder, a
written notice specifying the nature thereof, what action Borrower and any of
its Consolidated Subsidiaries is taking or proposes to take with respect
thereto, and, when known, any action taken by the Internal Revenue Service with
respect thereto;     (f)   Promptly upon a Senior Officer of Borrower becoming
aware, and in any event within 5 Business Days after becoming aware, of the
existence of a Default or an Event of Default, a written notice specifying the
nature and period of existence thereof and what action Borrower is taking or
proposes to take with respect thereto;     (g)   Promptly upon a Senior Officer
of Borrower becoming aware, and in any event within 5 Business Days after
becoming aware, that the holder of any evidence of Indebtedness (in a principal
amount in excess of $50,000,000) of Borrower or any of its Consolidated
Subsidiaries has given notice or taken any other action with respect to a
default or event of default, a written notice specifying the notice given or
action taken by such holder and the nature of such default or event of default
and what action Borrower or its Consolidated Subsidiary is taking or proposes to
take with respect thereto;     (h)   Promptly upon a Senior Officer of Borrower
becoming aware, and in any event within 5 Business Days after becoming aware, of
the existence of any pending or threatened litigation or any investigation by
any Governmental Agency that would constitute a Material Adverse Effect
(provided, that no failure of a Senior Officer to provide notice of any such
event shall be the sole basis for any Default or Event of Default hereunder);  
  (i)   [Intentionally Omitted];     (j)   As soon as reasonably possible, and
in any event prior to the date that is 60 days after the commencement of each
Fiscal Year, deliver to the Administrative Agent the business plan of Borrower
and its Consolidated Subsidiaries for that Fiscal Year, together with

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projections (in substantially the same format as the Projections) covering the
next 2 Fiscal Years;

  (k)   Promptly following obtaining knowledge thereof by a Senior Officer of
Borrower, written notice to the Administrative Agent of (i) the inception or
cessation of the Investment Grade Credit Rating or (ii) any announcement by the
Rating Agencies of any change or possible change in a Debt Rating; and     (l)  
Such other data and information as from time to time may be reasonably requested
by any of the Banks.

The Borrower hereby acknowledges that (i) the Administrative Agent, the
Arrangers or both will make available to the Banks and the Issuing Bank(s)
materials or information provided by or on behalf of the Borrower hereunder
(collectively, “Borrower Materials”) by posting the Borrower Materials on
IntraLinks or another similar electronic system (the “Platform”) and
(ii) certain of the Banks may be “public-side” Banks (i.e., Banks that do not
wish to receive material non-public information with respect to the Borrower or
its securities) (each, a “Public Lender”). The Borrower hereby agrees that so
long as the Borrower is the issuer of any outstanding debt or equity securities
that are registered or issued pursuant to a private offering or is actively
contemplating issuing any such securities:

  (A)   all Borrower Materials that are to be made available to Public Lenders
shall be clearly and conspicuously marked “PUBLIC” which, at a minimum, shall
mean that the word “PUBLIC” shall appear prominently on the first page thereof;
    (B)   by marking Borrower Materials “PUBLIC,” the Borrower shall be deemed
to have authorized the Administrative Agent, the Arrangers, the Issuing Bank(s)
and the Banks to treat such Borrower Materials as not containing any material
non-public information with respect to the Borrower or its securities for
purposes of United States Federal and state securities laws (provided, however,
that to the extent such Borrower Materials constitute Information, they shall be
treated as set forth in Section 11.12);     (C)   all Borrower Materials marked
“PUBLIC” are permitted to be made available through a portion of the Platform
designated “Public Investor”; and     (D)   the Administrative Agent and the
Arrangers shall be entitled to treat any Borrower Materials that are not marked
“PUBLIC” as being suitable only for posting on a portion of the Platform not
designated “Public Investor.”

Notwithstanding the foregoing, the Borrower shall be under no obligation to mark
any Borrower Materials “PUBLIC.”

7.2   Compliance Certificate.

     Concurrently with the delivery of the financial statements described in
Section 7.1(a) and (b), Borrower shall deliver to the Administrative Agent and
the Banks, at Borrower’s sole expense, a Compliance Certificate dated as of the
last day of the Fiscal Quarter or Fiscal Year, as the case may be:

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(a)   setting forth computations showing, in detail reasonably satisfactory to
the Administrative Agent, whether Borrower and its Consolidated Subsidiaries
were in compliance with their obligations to the Banks pursuant to Sections 6.9,
6.10, 6.11, 6.15, 6.16, 6.17 and 6.18;   (b)   certifying a sales report by
geographical region, in the form attached to the Compliance Certificate, setting
forth the number of homes or other units sold and delivered during such period
and in backlog at the end of such period;   (c)   certifying an inventory report
for such period in the form attached to the Compliance Certificate, summarizing
such inventory by type and geographical region;   (d)   reporting any change, as
of the last day of such Fiscal Quarter, in the listing of Subsidiaries set forth
in Schedule 4.4 (as the same may have been revised by previous Compliance
Certificates), including changes in Guarantor Subsidiaries;   (e)   either

  (i)   stating that to the best knowledge of the certifying officer as of the
date of such certificate there is no Default or Event of Default, or     (ii)  
if there is a Default or Event of Default as of the date of such certificate,
specifying all such Defaults or Events of Default and their nature and status;
and

(f)   stating, to the best knowledge of the certifying officer, whether any
event or circumstance constituting a Material Adverse Effect (other than a
Material Adverse Effect which is not particular to the Borrower and which is
generally known) has occurred since the date of the most recent Compliance
Certificate delivered under this Section and, if so, describing such Material
Adverse Effect in reasonable detail. No failure of the certifying officer to
describe the existence of an event or circumstance constituting a Material
Adverse Effect shall be the sole basis for any Default or Event of Default
hereunder.

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ARTICLE VIII
CONDITIONS

8.1   Initial Advances, Etc.

     The obligation of each Bank to make the initial Advance to be made by it
and of the Issuing Bank(s) to issue the initial Letter of Credit are subject to
the following conditions precedent, each of which shall be satisfied prior to
the making of the initial Advances (unless all of the Banks, in their sole and
absolute discretion, shall agree otherwise):

  (a)   The Administrative Agent shall have received all of the following, each
dated as of the Closing Date (unless otherwise specified or unless the
Administrative Agent otherwise agrees) and all in form and substance
satisfactory to the Administrative Agent and each of the Banks:

  (i)   executed counterparts of this Agreement, sufficient in number for
distribution to the Banks and Borrower;     (ii)   a Note executed by Borrower
in favor of each Bank, each in a principal amount equal to that Bank’s Pro Rata
Share of the Commitment. Promptly following the Closing Date, the promissory
notes delivered to the Banks pursuant to the Prior Revolving Loan Agreement
shall be canceled and promptly returned to Borrower;     (iii)   the Subsidiary
Guaranty executed by each Subsidiary which is a Guarantor Subsidiary as of the
Closing Date;     (iv)   the Swing Line Documents, executed by Borrower;     (v)
  with respect to Borrower and each Subsidiary which is a Guarantor Subsidiary
as of the Closing Date, such documentation as the Administrative Agent may
reasonably require to establish the due organization, valid existence and good
standing of Borrower and each such Subsidiary, its qualification to engage in
business in each jurisdiction in which it is required to be so qualified, its
authority to execute, deliver and perform any Loan Documents to which it is a
Party, and the identity, authority and capacity of each Responsible Official
thereof authorized to act on its behalf, including certified copies of articles
of incorporation and amendments thereto, bylaws and amendments thereto,
certificates of good standing or qualification to engage in business, tax
clearance certificates, certificates of corporate resolutions, incumbency
certificates, and the like;     (vi)   the Opinions of Counsel;     (vii)   an
Officer’s Certificate of Borrower affirming, to the best knowledge of the
certifying Senior Officer, that the conditions set forth in Sections 8.1(c) and
8.1(d) have been satisfied;     (viii)   [Intentionally omitted];

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  (ix)   a payoff letter executed by the Borrower directing payment of the Prior
Revolving Loan Agreement, with such other provisions as may be reasonably
requested by the Administrative Agent;     (x)   a Borrowing Base Certificate
calculated as of the last day of the Fiscal Quarter ending on August 31, 2005,
showing the Borrower to be in compliance with Section 6.17 after giving effect
to the Loans made and Letters of Credit issued on the Closing Date;     (xi)  
the financial statements described in Section 4.5;     (xii)   a Compliance
Certificate calculated as of the last day of the Fiscal Quarter ending on
August 31, 2005; and     (xiii)   such other assurances, certificates,
documents, consents or opinions relevant hereto as the Administrative Agent may
reasonably require.

  (b)   All fees then payable under the letter agreements referred to in
Section 3.3 shall have been paid, and all fees payable pursuant to Section 3.17
have been paid.     (c)   The representations and warranties of Borrower
contained in Article IV shall be true and correct in all material respects on
and as of the Closing Date.     (d)   Borrower and its Consolidated Subsidiaries
and any other Parties shall be in compliance with all the terms and provisions
of the Loan Documents, and at and after giving effect to the initial Advance, no
Default or Event of Default shall have occurred and be continuing.

8.2   Any Advance.

     The obligations of the Banks to make any Advance are subject to the
following conditions precedent:

  (a)   the Administrative Agent shall have received a Loan Notice;     (b)  
the representations and warranties contained in Article IV (other than the
representations and warranties contained in Sections 4.4(a), 4.6, 4.9, 4.18 and
4.19) shall be true and correct in all material respects on and as of the date
of the Loan as though made on and as of that date (except that the financial
statements referred to in Section 4.5(a) shall be deemed to refer to the most
recent statements furnished pursuant to Section 7.1(b) and the financial
statements referred to in Section 4.5(b) shall be deemed to refer to the most
recent statements furnished pursuant to Section 7.1(a)) and no event or
circumstance that constitutes a Material Adverse Effect shall have occurred and
be continuing since the date as of which the most recent Compliance Certificate
delivered pursuant to Section 7.2 is dated;     (c)   the Administrative Agent
shall have received such other information relating to any matters which are the
subject of Section 8.2(b) or the compliance by Borrower with this Agreement as
may reasonably be requested by the Administrative Agent on behalf of a Bank; and

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  (d)   at and after giving effect to such Advance, no Default or Event of
Default shall have occurred and be continuing.

Each Loan Notice (or Swing Line Loan Notice) submitted by the Borrower shall be
deemed to be a representation and warranty that the conditions specified in this
Section have been satisfied on and as of the date of the Loan requested thereby.

8.3   Any Letter of Credit.

     The obligations of an Issuing Bank to issue, renew or increase any Letter
of Credit are subject to the following conditions precedent:

  (a)   the Administrative Agent and the Issuing Bank shall have received a
Request for Letter of Credit;     (b)   the representations and warranties
contained in Article IV (other than the representations and warranties contained
in Sections 4.4(a), 4.6, 4.9, 4.18 and 4.19) shall be true and correct in all
material respects on and as of the date of the issuance of the Letter of Credit
as though made on and as of that date (except that the financial statements
referred to in Section 4.5(a) shall be deemed to refer to the most recent
statements furnished pursuant to Section 7.1(b) and the financial statements
referred to in Section 4.5(b) shall be deemed to refer to the most recent
statements furnished pursuant to Section 7.1(a)) and no event or circumstance
that constitutes a Material Adverse Effect shall have occurred and be continuing
since the date as of which the most recent Compliance Certificate delivered
pursuant to Section 7.2 is dated;     (c)   the Administrative Agent shall have
received such other information relating to any matters which are the subject of
Section 8.3(b) or the compliance by Borrower with this Agreement as may
reasonably be requested by the Administrative Agent on behalf of a Bank; and    
(d)   at and after giving effect to the issuance, renewal or increase of such
Letter of Credit, no Default or Event of Default shall have occurred and be
continuing.

Each Request for Letter of Credit submitted by the Borrower shall be deemed to
be a representation and warranty that the conditions specified in this Section
have been satisfied on and as of the date of the issuance of the Letter of
Credit requested thereby.

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ARTICLE IX
EVENTS OF DEFAULT AND REMEDIES UPON EVENTS OF DEFAULT

9.1   Events of Default.

     There will be a default hereunder if any one or more of the following
events (“Events of Default”) occurs and is continuing, whatever the reason
therefor:

  (a)   failure to pay any installment of principal on any of the Notes or a
Swing Line note on the date, or any payment in respect of a Letter of Credit
pursuant to Section 2.5, when due; or     (b)   failure to pay any installment
of interest on any of the Notes, or to pay any fee or other amounts due the
Administrative Agent or any Bank hereunder, within 5 Business Days after the
date when due; or     (c)   any failure to comply with Sections 6.1, 6.3, 6.4
(with respect to Acquisitions), 6.7, 6.10, 6.11, 6.17 or 7.1(f); or     (d)  
any failure to comply with Sections 2.8(a), 5.8, 5.9, 6.4 (with respect to
Investments), 6.8, 6.9, 6.15, 6.16 or 6.18 that remains unremedied for a period
of 15 calendar days after notice by the Administrative Agent of such Default or
20 calendar days after a Senior Officer becomes aware of such Default, whichever
occurs first; or     (e)   Borrower or any other Party fails to perform or
observe any other term, covenant, or agreement contained in any Loan Document on
its part to be performed or observed within 30 calendar days after notice by the
Administrative Agent of such Default; or     (f)   any representation or
warranty in any Loan Document or in any certificate, agreement, instrument, or
other document made or deemed made or delivered, on or after the Closing Date,
pursuant to or in connection with any Loan Document proves to have been
incorrect when made in any respect material to the ability of Borrower to duly
and punctually perform all of the Obligations; or     (g)   Borrower or any of
its Significant Subsidiaries which is also a Consolidated Subsidiary (i) fails
to pay the principal, or any principal installment, of any present or future
Indebtedness (other than Non-Recourse Indebtedness, or any guaranty of present
or future Indebtedness (other than Non-Recourse Indebtedness)) on its part to be
paid, when due (or within any stated grace period), whether at the stated
maturity, upon acceleration, by reason of required prepayment or otherwise in
excess of $50,000,000 in the aggregate or (ii) fails to perform or observe any
other material term, covenant, or agreement on its part to be performed or
observed, or suffers to exist any condition, in connection with any present or
future Indebtedness (other than Non-Recourse Indebtedness, or any guaranty of
present or future Indebtedness (other than Non-Recourse Indebtedness)), in
excess of $50,000,000 in the aggregate, if as a result of such failure or such
condition any holder or holders thereof (or an agent or trustee on its or their
behalf) has the right to declare it due before the date on which it otherwise
would become due or has the right to cause a demand such that such Indebtedness
be repurchased, prepaid, defeased or redeemed; or     (h)   any Loan Document,
at any time after its execution and delivery and for any reason other than the
agreement of all the Banks or satisfaction in full of all the Obligations,
ceases to

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be in full force and effect or is declared by a court of competent jurisdiction
to be null and void, invalid, or unenforceable in any respect which is, in the
reasonable opinion of the Required Banks, materially adverse to the interest of
the Banks; or

  (i)   a final judgment (or judgments) against Borrower or any of its
Significant Subsidiaries which is also a Consolidated Subsidiary is entered for
the payment of money in excess of $50,000,000 in the aggregate over the amount
of any insurance proceeds reasonably expected to be received and remains
unsatisfied without procurement of a stay of execution within 30 calendar days
after the issuance of any writ of execution or similar legal process or the date
of entry of judgment, whichever is earlier, or in any event at least 5 calendar
days prior to the sale of any assets pursuant to such legal process; or     (j)
  Borrower or any Significant Subsidiary of Borrower which is also a
Consolidated Subsidiary institutes or consents to any proceeding under a Debtor
Relief Law relating to it or to all or any part of its Property, or fails
generally, or admits in writing its inability, to pay its debts as they mature,
or makes a general assignment for the benefit of creditors; or applies for or
consents to the appointment of any receiver, trustee, custodian, conservator,
liquidator, rehabilitator, or similar officer for it or for all or any part of
its property; or any receiver, trustee, custodian, conservator, liquidator,
rehabilitator, or similar officer is appointed without the application or
consent of that Person and the appointment continues undischarged or unstayed
for 60 calendar days; or any proceeding under any Debtor Relief Law relating to
any such Person or to all or any part of its Property is instituted without the
consent of that Person, and continues undismissed or unstayed for 60 calendar
days; or     (k)   the occurrence of a Termination Event with respect to any
Pension Plan if the aggregate liability of Borrower and its ERISA Affiliates
under ERISA as a result thereof exceeds $50,000,000; or the complete or partial
withdrawal by Borrower or any of its ERISA Affiliates from any Multiemployer
Plan if the aggregate liability of Borrower and its ERISA Affiliates as a result
thereof exceeds $50,000,000; or     (l)   any determination is made by a court
of competent jurisdiction that payment of principal or interest or both is due
to the holder of any Subordinated Obligations which would not be permitted by
Section 6.1 or that any Subordinated Obligation is not subordinated in
accordance with its terms to the Obligations.

9.2   Remedies Upon Event of Default.

     Without limiting any other rights or remedies of the Administrative Agent
or the Banks provided for elsewhere in this Agreement or the Loan Documents, or
by applicable Law or in equity, or otherwise:

  (a)   Upon the occurrence of any Event of Default, and so long as any such
Event of Default shall be continuing (other than an Event of Default described
in Section 9.1(j) with respect to Borrower or a Guarantor Subsidiary):

  (i)   all commitments to make Advances or issue Letters of Credit, and all
other obligations of the Administrative Agent, any Issuing Bank or the Banks
shall be suspended without notice to or demand upon Borrower, which are
expressly waived by Borrower, except that the Required Banks (or greater number,
if so required) may waive the Event of Default or, without waiving, determine,
upon

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terms and conditions satisfactory to the Required Banks (or greater number, if
so required), to reinstate the Commitment and make further Advances or issue
Letters of Credit, which waiver or determination shall apply equally to, and
shall be binding upon, all the Banks; and

  (ii)   the Required Banks may request the Administrative Agent to, and the
Administrative Agent thereupon shall:

  (A)   declare the unpaid principal of all Obligations due to the Banks
hereunder and under the Notes, an amount equal to the Letter of Credit Usage,
all interest accrued and unpaid thereon, and all other amounts payable to the
Banks under the Loan Documents to be forthwith due and payable, whereupon the
same shall become and be forthwith due and payable, without protest,
presentment, notice of dishonor, demand, or further notice of any kind, all of
which are expressly waived by Borrower; provided that the Administrative Agent
shall notify Borrower (by telecopy and, if practicable, by telephone)
substantially concurrently with any such acceleration (but the failure of
Borrower to receive such notice shall not affect such acceleration); provided
further, that all commitments to make Advances or issue Letters of Credit, and
all other obligations of the Administrative Agent, any Issuing Bank or the Banks
under the Loan Documents shall terminate concurrently with such acceleration;
and     (B)   apply cash collateral or make drawings under irrevocable standby
letters of credit delivered pursuant to Section 2.5(g).

  (b)   Upon the occurrence of any Event of Default described in Section 9.1(j)
with respect to Borrower or a Guarantor Subsidiary:

  (i)   all commitments to make Advances or issue Letters of Credit, and all
other obligations of the Administrative Agent, any Issuing Bank or the Banks
under the Loan Documents shall terminate without notice to or demand upon
Borrower, which are expressly waived by Borrower; and

  (ii)   (A) the unpaid principal of all Obligations due to the Banks hereunder
and under the Notes, an amount equal to the Letter of Credit Usage and all
interest accrued and unpaid on such Obligations, and all other amounts payable
under the Loan Documents shall be forthwith due and payable, without protest,
presentment, notice of dishonor, demand, or further notice of any kind, all of
which are expressly waived by Borrower; and (B) the Administrative Agent may
apply cash collateral or make drawings under irrevocable standby letters of
credit delivered pursuant to Section 2.5(g).

  (c)   So long as any Letter of Credit shall remain outstanding, any amounts
received by the Administrative Agent in respect of the Letter of Credit Usage
pursuant to Section 9.2(a)(ii) or 9.2(b)(ii) may be held as cash collateral for
the obligation of Borrower to reimburse the Issuing Banks in event of any
drawing under any Letter of Credit (and Borrower hereby grants to the
Administrative Agent for the benefit of the Issuing Banks and the Banks a
security interest in such cash collateral). In the event any Letter of Credit in
respect of which Borrower has deposited cash collateral with the

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Administrative Agent is canceled or expires, the cash collateral shall be
applied first to the reimbursement of the Issuing Banks (or all of the Banks, as
the case may be) for any drawings thereunder, and second to the payment of any
outstanding Obligations of Borrower hereunder or under any other Loan Document.

  (d)   Upon the occurrence of an Event of Default, the Banks and the
Administrative Agent, or any of them, may proceed to protect, exercise, and
enforce their rights and remedies under the Loan Documents against Borrower or
any other Party and such other rights and remedies as are provided by Law or
equity, without notice to or demand upon Borrower (which are expressly waived by
Borrower) except to the extent required by applicable Laws. The order and manner
in which the rights and remedies of the Banks under the Loan Documents and
otherwise are exercised shall be determined by the Required Banks.

  (e)   All payments received by the Administrative Agent and the Banks, or any
of them, after the acceleration of the maturity of the Loans or after the
Maturity Date shall be applied first to the costs and expenses (including
Attorney Costs) of the Administrative Agent, acting as Administrative Agent, and
of the Banks and thereafter paid pro rata to the Banks in the same proportion
that the aggregate of the unpaid principal amount owing on the Obligations of
Borrower to each Bank, plus accrued and unpaid interest thereon, bears to the
aggregate of the unpaid principal amount owing on all the Obligations, plus
accrued and unpaid interest thereon. Regardless of how each Bank may treat the
payments for the purpose of its own accounting, for the purpose of computing
Borrower’s Obligations, the payments shall be applied first, to the costs and
expenses of the Administrative Agent, acting as Administrative Agent, and the
Banks as set forth above, second, to the payment of accrued and unpaid fees
hereunder and interest on all Obligations to the Banks, to and including the
date of such application (ratably according to the accrued and unpaid interest
on the Loans), third, to the ratable payment of the unpaid principal of all
Obligations to the Banks, and fourth, to the payment of all other amounts then
owing to the Administrative Agent or the Banks under the Loan Documents. Subject
to Section 9.2(a)(i), no application of the payments will cure any Event of
Default or prevent acceleration, or continued acceleration, of amounts payable
under the Loan Documents or prevent the exercise, or continued exercise, of
rights or remedies of the Banks hereunder or under applicable Law unless all
amounts then due (whether by acceleration or otherwise) have been paid in full.

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ARTICLE X
THE ADMINISTRATIVE AGENT

10.1   Appointment and Authorization.

  (a)   Each Bank hereby irrevocably appoints, designates and authorizes the
Administrative Agent to take such action on its behalf under the provisions of
this Agreement and each other Loan Document and to exercise such powers and
perform such duties as are expressly delegated to it by the terms of this
Agreement or any other Loan Document, together with such powers as are
reasonably incidental thereto. Notwithstanding any provision to the contrary
contained elsewhere herein or in any other Loan Document, the Administrative
Agent shall not have any duties or responsibilities, except those expressly set
forth herein, nor shall the Administrative Agent have or be deemed to have any
fiduciary relationship with any Bank or participant, and no implied covenants,
functions, responsibilities, duties, obligations or liabilities shall be read
into this Agreement or any other Loan Document or otherwise exist against the
Administrative Agent. Without limiting the generality of the foregoing sentence,
the use of the term “agent” herein and in the other Loan Documents with
reference to the Administrative Agent is not intended to connote any fiduciary
or other implied (or express) obligations arising under agency doctrine of any
applicable Law. Instead, such term is used merely as a matter of market custom,
and is intended to create or reflect only an administrative relationship between
independent contracting parties.     (b)   An Issuing Bank shall act on behalf
of the Banks with respect to any Letters of Credit issued by it and the
documents associated therewith, and such Issuing Bank shall have all of the
benefits and immunities (i) provided to the Administrative Agent in this
Article X with respect to any acts taken or omissions suffered by such Issuing
Bank in connection with Letters of Credit issued by it or proposed to be issued
by it and the applications and agreements for letters of credit pertaining to
such Letters of Credit as fully as if the term “Administrative Agent” as used in
this Article X and in the definition of “Agent-Related Person” included such
Issuing Bank with respect to such acts or omissions, and (ii) as additionally
provided herein with respect to such Issuing Bank.

10.2   Delegation of Duties.

     The Administrative Agent may execute any of its duties under this Agreement
or any other Loan Document by or through agents, employees or attorneys-in-fact
and shall be entitled to advice of counsel and other consultants or experts
concerning all matters pertaining to such duties. The Administrative Agent shall
not be responsible for the negligence or misconduct of any agent or
attorney-in-fact that it selects in the absence of gross negligence or willful
misconduct.

10.3   Liability of Administrative Agent.

     No Agent-Related Person shall (a) be liable for any action taken or omitted
to be taken by any of them under or in connection with this Agreement or any
other Loan Document or the transactions contemplated hereby (except for its own
gross negligence or willful misconduct in connection with its duties expressly
set forth herein, and with respect to the Borrower, except as set forth in
Sections 2.5(e) and 2.5(f) and for any failure to comply with Section 11.12), or
(b) be responsible in any manner to any Bank or participant for any recital,
statement, representation or warranty made by any Party or any officer thereof,
contained herein or in any other Loan

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Document, or in any certificate, report, statement or other document referred to
or provided for in, or received by the Administrative Agent under or in
connection with, this Agreement or any other Loan Document, or the validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or
any other Loan Document, or for any failure of any Party or any other party to
any Loan Document to perform its obligations hereunder or thereunder. No
Agent-Related Person shall be under any obligation to any Bank or participant to
ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the properties, books or records of any Party or any
Affiliate thereof.

10.4   Reliance by Administrative Agent.

  (a)   The Administrative Agent shall be entitled to rely, and shall be fully
protected in relying, upon any writing, communication, signature, resolution,
representation, notice, consent, certificate, affidavit, letter, telegram,
facsimile, telex or telephone message, electronic mail message, statement or
other document or conversation believed by it to be genuine and correct and to
have been signed, sent or made by the proper Person or Persons, and upon advice
and statements of legal counsel (including counsel to any Party), independent
accountants and other experts selected by the Administrative Agent. The
Administrative Agent shall be fully justified in failing or refusing to take any
action under any Loan Document unless it shall first receive such advice or
concurrence of the Required Banks as it deems appropriate and, if it so
requests, it shall first be indemnified to its satisfaction by the Banks against
any and all liability and expense which may be incurred by it by reason of
taking or continuing to take any such action. The Administrative Agent shall in
all cases be fully protected in acting, or in refraining from acting, under this
Agreement or any other Loan Document in accordance with a request or consent of
the Required Banks (or such greater number of Banks as may be expressly required
hereby in any instance) and such request and any action taken or failure to act
pursuant thereto shall be binding upon all the Banks.     (b)   For purposes of
determining compliance with the conditions specified in Section 8.1, each Bank
that has signed this Agreement shall be deemed to have consented to, approved or
accepted or to be satisfied with, each document or other matter required
thereunder to be consented to or approved by or acceptable or satisfactory to a
Bank unless the Administrative Agent shall have received notice from such Bank
prior to the proposed Closing Date specifying its objection thereto.

10.5   Notice of Default.

     The Administrative Agent shall not be deemed to have knowledge or notice of
the occurrence of any Default or Event of Default, except with respect to
defaults in the payment of principal, interest and fees required to be paid to
the Administrative Agent for the account of the Banks, unless the Administrative
Agent shall have received written notice from a Bank or the Borrower referring
to this Agreement, describing such Default or Event of Default and stating that
such notice is a “notice of default.” The Administrative Agent will promptly
notify the Banks of its receipt of any such notice. The Administrative Agent
shall take such action with respect to such Default or Event of Default as may
be directed by the Required Banks in accordance with Article IX; provided,
however, that unless and until the Administrative Agent has received any such
direction, the Administrative Agent may (but shall not be obligated to) take
such action, or refrain from taking such action, with respect to such Default or
Event of Default as it shall deem advisable or in the best interest of the
Banks.

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10.6   Credit Decision; Disclosure of Information by Administrative Agent.

     Each Bank acknowledges that no Agent-Related Person has made any
representation or warranty to it, and that no act by the Administrative Agent
hereafter taken, including any consent to and acceptance of any assignment or
review of the affairs of any Party or any Affiliate thereof, shall be deemed to
constitute any representation or warranty by any Agent-Related Person to any
Bank as to any matter, including whether Agent-Related Persons have disclosed
material information in their possession. Each Bank represents to the
Administrative Agent that it has, independently and without reliance upon any
Agent-Related Person and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition and
creditworthiness of the Parties and their respective Subsidiaries, and all
applicable bank or other regulatory Laws relating to the transactions
contemplated hereby, and made its own decision to enter into this Agreement and
to extend credit to the Borrower hereunder. Each Bank also represents that it
will, independently and without reliance upon any Agent-Related Person and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions in taking or
not taking action under this Agreement and the other Loan Documents, and to make
such investigations as it deems necessary to inform itself as to the business,
prospects, operations, property, financial and other condition and
creditworthiness of the Borrower and the other Parties. Except for notices,
reports and other documents expressly required to be furnished to the Banks by
the Administrative Agent herein, the Administrative Agent shall not have any
duty or responsibility to provide any Bank with any credit or other information
concerning the business, prospects, operations, property, financial and other
condition or creditworthiness of any of the Parties or any of their respective
Affiliates which may come into the possession of any Agent-Related Person.

10.7   Indemnification of Administrative Agent.

     Whether or not the transactions contemplated hereby are consummated, the
Banks shall, ratably in accordance with their respective Pro Rata Shares,
indemnify upon demand each Agent-Related Person (to the extent not reimbursed by
or on behalf of any Party and without limiting the obligation of any Party to do
so), and hold harmless each Agent-Related Person from and against any and all
Indemnified Liabilities incurred by it; provided, however, that no Bank shall be
liable for the payment to any Agent-Related Person of any portion of such
Indemnified Liabilities to the extent determined in a final, nonappealable
judgment by a court of competent jurisdiction to have resulted from such
Agent-Related Person’s own gross negligence or willful misconduct; provided,
however, that no action taken in accordance with the directions of the Required
Banks (or greater number, if so required) shall be deemed to constitute gross
negligence or willful misconduct for purposes of this Section. Without
limitation of the foregoing, each Bank shall reimburse the Administrative Agent
upon demand for its ratable share of any costs or out-of-pocket expenses
(including Attorney Costs) incurred by the Administrative Agent in connection
with the preparation, execution, delivery, administration, modification,
amendment or enforcement (whether through negotiations, legal proceedings or
otherwise) of, or legal advice in respect of rights or responsibilities under,
this Agreement, any other Loan Document, or any document contemplated by or
referred to herein, to the extent that the Administrative Agent is not
reimbursed for such expenses by or on behalf of the Borrower. The undertaking in
this Section shall survive termination of the Commitments, the payment of all
other Obligations and the resignation of the Administrative Agent.

10.8   Administrative Agent in its Individual Capacity.

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     The Administrative Agent and its Affiliates may make loans to, issue
letters of credit for the account of, accept deposits from, acquire equity
interests in and generally engage in any kind of banking, trust, financial
advisory, underwriting or other business with each of the Loan Parties and their
respective Affiliates as though the Administrative Agent were not the
Administrative Agent or an Issuing Bank hereunder and without notice to or
consent of the Banks. The Banks acknowledge that, pursuant to such activities,
the Administrative Agent or its Affiliates may receive information regarding any
Party or its Affiliates (including information that may be subject to
confidentiality obligations in favor of such Party or such Affiliate) and
acknowledge that the Administrative Agent shall be under no obligation to
provide such information to them. With respect to its Loans, the Administrative
Agent shall have the same rights and powers under this Agreement as any other
Bank and may exercise such rights and powers as though it were not the
Administrative Agent or an Issuing Bank, and the terms “Bank” and “Banks”
include the Administrative Agent in its individual capacity.

10.9   Successor Administrative Agent.

     The Administrative Agent may resign as Administrative Agent upon 60 days’
notice to the Banks. If the Administrative Agent resigns under this Agreement,
the Required Banks shall appoint from among the Banks a successor administrative
agent for the Banks, which successor administrative agent shall be consented to
by the Borrower at all times other than during the existence of an Event of
Default (which consent of the Borrower shall not be unreasonably withheld or
delayed). If no successor administrative agent is appointed 15 days prior to the
effective date of the resignation of the Administrative Agent, the
Administrative Agent may appoint, after consulting with the Banks and the
Borrower, a successor administrative agent from among the Banks. Upon the
acceptance of its appointment as successor administrative agent hereunder, the
Person acting as such successor administrative agent shall succeed to all the
rights, powers and duties of the retiring Administrative Agent and the term
“Administrative Agent” shall mean such successor administrative agent and the
retiring Administrative Agent’s appointment, powers and duties as Administrative
Agent shall be terminated. After any retiring Administrative Agent’s resignation
hereunder as Administrative Agent, the provisions of this Article X and
Sections 11.3 and 11.10 shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was Administrative Agent under this
Agreement. If no successor administrative agent has accepted appointment as
Administrative Agent by the date which is 60 days following a retiring
Administrative Agent’s notice of resignation, the retiring Administrative
Agent’s resignation shall nevertheless thereupon become effective and the Banks
shall perform all of the duties of the Administrative Agent hereunder until such
time, if any, as the Required Banks appoint a successor agent as provided for
above. In addition, upon a good faith, written allegation by the Required Banks
that the Administrative Agent has committed an act of gross negligence or
willful misconduct, which written allegation sets forth the specifics of such
alleged gross negligence or willful misconduct, the Required Banks may remove
the Administrative Agent by giving written notice to the Administrative Agent to
that effect to be effective on such date as the Required Banks designate,
provided however that no such removal shall be effective until Required Banks
have appointed a Bank, and such Bank has accepted its appointment as, successor
administrative agent, which successor administrative agent shall be consented to
by the Borrower at all times other than during the existence of an Event of
Default (which consent of the Borrower shall not be unreasonably withheld or
delayed).

10.10   Administrative Agent May File Proofs of Claim.

     In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to any

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Party, the Administrative Agent (irrespective of whether the principal of any
Loan or other Obligation shall then be due and payable as herein expressed or by
declaration or otherwise and irrespective of whether the Administrative Agent
shall have made any demand on the Borrower) shall be entitled and empowered, by
intervention in such proceeding or otherwise

  (a)   to file and prove a claim for the whole amount of the principal and
interest owing and unpaid in respect of the Loans and all other Obligations that
are owing and unpaid and to file such other documents as may be necessary or
advisable in order to have the claims of the Banks and the Administrative Agent
(including any claim for the reasonable compensation, expenses, disbursements
and advances of the Banks and the Administrative Agent and their respective
agents and counsel and all other amounts due the Banks and the Administrative
Agent under Sections 2.5, 3.2 and 11.3) allowed in such judicial proceeding; and
    (b)   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 judicial proceeding is hereby authorized by
each Bank to make such payments to the Administrative Agent and, in the event
that the Administrative Agent shall consent to the making of such payments
directly to the Banks, to pay to the Administrative Agent any amount due for the
reasonable compensation, expenses, disbursements and advances of the
Administrative Agent and its agents and counsel, and any other amounts due the
Administrative Agent under Sections 3.2, 3.3 and 11.3.
Nothing contained herein shall be deemed to authorize the Administrative Agent
to authorize or consent to or accept or adopt on behalf of any Bank any plan of
reorganization, arrangement, adjustment or composition affecting the Obligations
or the rights of any Bank or to authorize the Administrative Agent to vote in
respect of the claim of any Bank in any such proceeding.

10.11   Guaranty Matters.

     The Banks irrevocably authorize the Administrative Agent, at its option and
in its discretion, to release any Guarantor Subsidiary from its obligations
under the Subsidiary Guaranty if such Person ceases to be a Subsidiary as a
result of a transaction permitted hereunder. Upon request by the Administrative
Agent at any time, the Required Banks will confirm in writing the Administrative
Agent’s authority to release any Guarantor Subsidiary from its obligations under
the Subsidiary Guaranty pursuant to this Section 10.11.

10.12   Other Agents; Arrangers and Managers.

     None of the Banks or other Persons identified on the facing page or
signature pages of this Agreement as a “syndication agent,” “documentation
agent,” “senior managing agent,” “managing agent,” “co-agent,” “joint book
manager”, “sole book manager,” “lead manager,” “joint lead arranger”, “sole lead
arranger,” “arranger” or “co-arranger” shall have any right, power, obligation,
liability, responsibility or duty under this Agreement or any of the other Loan
Documents other than, in the case of such Banks, those applicable to all Banks
as such. Without limiting the foregoing, none of the Banks or other Persons so
identified shall have or be deemed to have any fiduciary relationship with any
Bank. Each Bank acknowledges that it has not relied, and will not rely, on any
of the Banks or other Persons so identified in deciding to enter into this
Agreement or in taking or not taking action hereunder.

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10.13   Defaulting Banks.

     If for any reason any Bank wrongfully (in violation of this Agreement)
fails or refuses to timely make any Advance required of it, or otherwise
defaults on any of its material obligations under this Agreement, and fails to
cure its default within 5 Business Days of receiving notice of its failure to
perform (such Bank being a “Defaulting Bank”), then in addition to the rights
and remedies that may be available to the Administrative Agent and the Banks at
law or in equity, the Defaulting Bank’s right to participate in the Loan and the
Agreement will be suspended during the pendency of the Defaulting Bank’s uncured
default, and (without limiting the foregoing) the Administrative Agent may (or
at the direction of the Required Banks, shall) withhold from the Defaulting Bank
any interest payments, fees, principal payments or other sums otherwise payable
to such Defaulting Bank under the Loan Documents until such default of such
Defaulting Bank has been cured. Each non-defaulting Bank will have the right,
but not the obligation, in its sole discretion, to acquire at par a
proportionate share (based on the ratio of its Pro Rata Share of the Commitment
to the aggregate amount of the Pro Rata Shares of the Commitments of all of the
non-defaulting Banks that elect to acquire a share of the Defaulting Bank’s Pro
Rata Share of the Commitment) of the Defaulting Bank’s Pro Rata Share of the
Commitment, including its proportionate share in the outstanding principal
balance of the Loans. The Defaulting Bank will pay and protect, defend and
indemnify the Administrative Agent and each of the other Banks against, and hold
the Administrative Agent, and each of the other Banks harmless from, all claims,
actions, proceedings, liabilities, damages, losses, and expenses (including
Attorney Costs, and interest at the Base Rate plus 2.0% per annum for the funds
advanced by the Administrative Agent or any Banks on account of the Defaulting
Bank) they may sustain or incur by reason of or in consequence of the Defaulting
Bank’s failure or refusal to perform its obligations under the Loan Documents.
The Administrative Agent may set off against payments due to the Defaulting Bank
for the claims of the Administrative Agent and the other Banks against the
Defaulting Bank. The exercise of these remedies will not reduce, diminish or
liquidate the Defaulting Bank’s Pro Rata Share of the Commitment (except to the
extent that part or all of such Pro Rata Share of the Commitment is acquired by
the other Banks as specified above) or its obligations to share losses and
reimbursement for costs, liabilities and expenses under this Agreement. This
indemnification will survive the payment and satisfaction of all of the
Borrower’s obligations and liabilities to the Banks. The foregoing provisions of
this Section 10.13 are solely for the benefit of the Administrative Agent and
the Banks, and may not be enforced or relied upon by the Borrower.

10.14   No Obligations of Borrower.

     Nothing contained in this Article X shall be deemed to impose upon Borrower
any obligation in respect of the due and punctual performance by the
Administrative Agent of its obligations to the Banks under any provision of this
Agreement, and Borrower shall have no liability to the Administrative Agent or
any of the Banks in respect of any failure by the Administrative Agent or any
Bank to perform any of its obligations to the Administrative Agent or the Banks
under this Agreement. Without limiting the generality of the foregoing, where
any provision of this Agreement relating to the payment of any amounts due and
owing under the Loan Documents provides that such payments shall be made by
Borrower to the Administrative Agent for the account of the Banks, Borrower’s
obligations to the Banks in respect of such payments shall be deemed to be
satisfied upon the making of such payments to the Administrative Agent in the
manner provided by this Agreement.

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ARTICLE XI
MISCELLANEOUS

11.1   Cumulative Remedies; No Waiver.

     The rights, powers, and remedies of the Administrative Agent or any Bank
provided herein or in any Note or other Loan Document are cumulative and not
exclusive of any right, power, or remedy provided by law or equity. No failure
or delay on the part of the Administrative Agent or any Bank in exercising any
right, power, or remedy may be, or may be deemed to be, a waiver thereof; nor
may any single or partial exercise of any right, power, or remedy preclude any
other or further exercise of any other right, power, or remedy. The terms and
conditions of Sections 8.1, 8.2, and 8.3 hereof are inserted for the sole
benefit of the Banks and the Administrative Agent may (with the approval of the
Required Banks) waive them in whole or in part with or without terms or
conditions in respect of any Loan, without prejudicing the Banks’ rights to
assert them in whole or in part in respect of any other Loans.

11.2   Amendments; Consents.

     No amendment or waiver of any provision of this Agreement or any other Loan
Document, and no consent to any departure by Borrower or any other Party
therefrom, may in any event be effective unless in writing signed by the
Administrative Agent with the approval of the Required Banks and Borrower, and
then only in the specific instance and for the specific purpose given; and
without the approval in writing of all of the affected Banks, no amendment,
waiver or consent may be effective:

  (a)   to amend or modify the principal of, or the amount of principal or
principal prepayments payable on any Obligation, to increase the Exposure of any
Bank without the consent of that Bank, to decrease the rate of any interest or
fee payable to any Bank without the consent of that Bank, or to reduce or waive
any interest or other amount payable to any Bank without the consent of that
Bank;     (b)   to postpone any date fixed for any payment of principal of,
prepayment of principal of, or any installment of interest on, any Obligation
owing to a Bank or any installment of any fee owing to a Bank, or to extend the
term of the Commitment (except as provided in Section 2.9);     (c)   to amend
or modify the provisions of the definitions in Section 1.1 of “Required Banks”
or of Sections 11.2, 11.9, 11.10, or 11.11, or any provision providing for the
ratable or pro rata treatment of the Banks;     (d)   release any Guarantor
Subsidiary from liability under the Subsidiary Guaranty (except as provided
below); or     (e)   to amend or modify any provision of this Agreement or the
Loan Documents that expressly requires the consent or approval of all the Banks.

Any amendment, waiver or consent pursuant to this Section 11.2 shall apply
equally to, and shall be binding upon, all the Banks and the Administrative
Agent. Any amendment, waiver or consent pursuant to this Section 11.2 that
permits the sale or other transfer of the capital stock of (or all or
substantially all of the assets of) a Guarantor Subsidiary shall automatically
release the Guarantor Subsidiary effective concurrently with such sale or other
transfer.

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11.3   Costs, Expenses and Taxes.

     Borrower shall pay within 30 days after demand (which demand shall be
accompanied by an invoice in reasonable detail) the reasonable actual
out-of-pocket costs and expenses of the Administrative Agent and BAS in
connection with (a) the negotiation, preparation, execution, delivery,
arrangement, syndication and closing of the Loan Documents, (b) administration
of the Loan Documents and (c) any amendment, waiver or modification of the Loan
Documents. Borrower shall pay within 30 days after demand the reasonable actual
out-of-pocket costs and expenses of the Administrative Agent and each of the
Banks in connection with the enforcement of any Loan Documents following the
occurrence of a Default or an Event of Default, including in connection with any
refinancing, restructuring, reorganization (including a bankruptcy
reorganization, if such payment is approved by the bankruptcy court or any
similar proceeding). The costs and expenses referred to in the first sentence
above (for which Borrower shall be liable solely with respect to costs and
expenses of the Administrative Agent and BAS) and the second sentence above
(which shall apply to costs and expenses of the Administrative Agent and the
Banks) shall include filing fees, recording fees, title insurance fees,
appraisal fees, search fees, and other out-of-pocket expenses and Attorney Costs
of the Administrative Agent, BAS or any of the Banks, as the case may be, or
independent public accountants and other outside experts retained by the
Administrative Agent (provided that (i) Borrower shall not be liable under this
Section 11.3 for fees and expenses of more than one firm of independent public
accountants, or more than one expert with respect to a specific subject matter,
at any one time and (ii) with respect to the costs and expenses referred to in
the second sentence above (pertaining to enforcement matters), Borrower shall
not be liable for the fees and expenses of more than one firm of outside legal
counsel retained to represent the Administrative Agent and the Banks, but if any
of such parties does not consent to such joint representation, Borrower shall be
liable for the fees and expenses of not more than one firm of outside legal
counsel retained to represent the Administrative Agent and also for not more
than one additional firm of outside legal counsel retained to otherwise
represent one or more of the Banks). Nothing herein shall obligate Borrower to
pay any costs and expenses in connection with an assignment of or participation
in a Bank’s Pro Rata Share of a Commitment. Borrower shall pay any and all
documentary and transfer taxes, assessments or charges made by any Governmental
Agency and all reasonable actual costs, expenses, fees, and charges of Persons
(other than the Administrative Agent, the Arrangers or the Banks) payable or
determined to be payable in connection with the execution, delivery, filing or
recording of this Agreement, any other Loan Document, or any other instrument or
writing to be delivered hereunder or thereunder, and shall reimburse, hold
harmless, and indemnify the Administrative Agent, each Arranger, each Bank and
each Participant from and against any and all loss, liability, or legal or other
expense with respect to or resulting from any delay in paying or failure to pay
any such tax, cost, expense, fee, or charge or that any of them may suffer or
incur by reason of the failure of Borrower to perform any of its Obligations.
Any amount payable to the Administrative Agent, any Arranger, any Bank or any
Participant under this Section 11.3 shall bear interest from the date which is
30 days after Borrower’s receipt of demand (together with reasonable supporting
documentation) for payment at the rate then in effect for Base Rate Loans.

11.4   Nature of Banks’ Obligations.

     Nothing contained in this Agreement or any other Loan Document and no
action taken by the Administrative Agent or the Banks or any of them pursuant
hereto or thereto may, or may be deemed to, make the Banks a partnership, an
association, a joint venture, or other entity, either among themselves or with
Borrower. The obligations of the Banks hereunder to make Advances and to fund
participations in Letters of Credit and Swing Line Loans are several and not
joint or

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joint and several. The failure of any Bank to make any Advance or to fund any
such participation on any date required hereunder shall not relieve any other
Bank of its corresponding obligation to do so on such date, and no Bank shall be
responsible for the failure of any other Bank to so make its Advance or purchase
its participation.

11.5   Survival of Representations and Warranties.

     All representations and warranties made hereunder and in any other Loan
Document or other document delivered pursuant hereto or thereto or in connection
herewith or therewith shall survive the execution and delivery hereof and
thereof. Such representations and warranties have been or will be relied upon by
the Administrative Agent and each Bank, regardless of any investigation made by
the Administrative Agent or any Bank or on their behalf and notwithstanding that
the Administrative Agent or any Bank may have had notice or knowledge of any
Default at the time of the making of any Advance or the issuance of any Letter
of Credit, and shall continue in full force and effect as long as any Loan or
any other Obligation hereunder shall remain unpaid or unsatisfied or any Letter
of Credit shall remain outstanding.

11.6   Notices and Other Communications; Facsimile Copies.

  (a)   Notices Generally. Except in the case of notices and other
communications expressly permitted to be given by telephone (and except as
provided in Section 11.6(b) below), all notices and other communications
provided for herein shall be in writing and shall be delivered by hand or
overnight courier service, mailed by certified or registered mail or sent by
telecopier as follows, and all notices and other communications expressly
permitted hereunder to be given by telephone shall be made to the applicable
telephone number, as follows:

  (i)   if to the Borrower, the Administrative Agent, an Issuing Bank or the
Swing Line Bank, to the address, telecopier number, electronic mail address or
telephone number specified for such Person on Schedule 11.6; and     (ii)   if
to any other Bank, to the address, telecopier number, electronic mail address or
telephone number specified in its Administrative Questionnaire.

All such notices and other communications shall be deemed to be given or made
upon the earlier to occur of (x) actual receipt by the relevant party hereto and
(y) (A) if sent by hand or overnight courier service, when signed for by or on
behalf of the relevant party hereto, (B) if mailed by certified or registered
mail, 4 Business Days after deposit in the mails, postage prepaid or (C) if sent
by telecopier, when sent (except that, if not given during normal business hours
for the recipient, shall be deemed to have been given at the opening of business
on the next business day for the recipient). Notices delivered through
electronic communications to the extent provided in Section 11.6(b) below, shall
be effective as provided in Section 11.6(b).

  (b)   Electronic Communications. Notices and other communications to the Banks
and the Issuing Bank(s) hereunder may be delivered or furnished by electronic
communication (including e mail and Internet or intranet websites) pursuant to
procedures approved by the Administrative Agent, provided that the foregoing
shall not apply to notices to any Bank or the Issuing Bank(s) pursuant to
Article II if such Bank or such Issuing Bank, as applicable, has notified the
Administrative Agent that it is incapable of receiving notices under such
Article by electronic communication. The Administrative Agent or the

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Borrower may, in its discretion, agree to accept notices and other
communications to it hereunder by electronic communications pursuant to
procedures approved by it, provided that approval of such procedures may be
limited to particular notices or communications. Unless the Administrative Agent
otherwise prescribes,

  (i)   notices and other communications sent to an e-mail address shall be
deemed received upon the sender’s receipt of an acknowledgement from the
intended recipient (such as by the “return receipt requested” function, as
available, return e-mail or other written acknowledgement), provided that if
such notice or other communication is not sent during the normal business hours
of the recipient, such notice or communication shall be deemed to have been sent
at the opening of business on the next business day for the recipient, and    
(ii)   notices or communications posted to an Internet or intranet website shall
be deemed received upon the deemed receipt by the intended recipient at its
e-mail address as described in the foregoing clause (i) of notification that
such notice or communication is available and identifying the website address
therefor.

  (c)   The Platform. THE PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE.” THE
AGENT PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF
THE BORROWER MATERIALS OR THE ADEQUACY OF THE PLATFORM, AND EXPRESSLY DISCLAIM
LIABILITY FOR ERRORS IN OR OMISSIONS FROM THE BORROWER MATERIALS. NO WARRANTY OF
ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD
PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY ANY AGENT
PARTY IN CONNECTION WITH THE BORROWER MATERIALS OR THE PLATFORM. In no event
shall the Administrative Agent or any of its Related Parties (collectively, the
“Agent Parties”) have any liability to the Borrower, any Bank, any Issuing Bank
or any other Person for losses, claims, damages, liabilities or expenses of any
kind (whether in tort, contract or otherwise) arising out of the Borrower’s or
the Administrative Agent’s transmission of Borrower Materials through the
Internet, except to the extent that such losses, claims, damages, liabilities or
expenses are determined by a court of competent jurisdiction by a final and
nonappealable judgment to have resulted from the gross negligence or willful
misconduct of such Agent Party; provided, however, that in no event shall any
Agent Party have any liability to the Borrower, any Bank, any Issuing Bank or
any other Person for indirect, special, incidental, consequential or punitive
damages (as opposed to direct or actual damages).     (d)   Change of Address,
Etc. Each of the Borrower, the Administrative Agent, the Issuing Bank(s) and the
Swing Line Bank may change its address, telecopier or telephone number for
notices and other communications hereunder by notice to the other parties
hereto. Each other Bank may change its address, telecopier or telephone number
for notices and other communications hereunder by notice to the Borrower, the
Administrative Agent, the Issuing Bank(s) and the Swing Line Bank. In addition,
each Bank agrees to notify the Administrative Agent from time to time to ensure
that the Administrative Agent has on record

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  (i)   an effective address, contact name, telephone number, telecopier number
and electronic mail address to which notices and other communications may be
sent and     (ii)   accurate wire instructions for such Bank.

  (e)   Reliance by Administrative Agent, Issuing Bank(s) and Banks. The
Administrative Agent, the Issuing Bank(s) and the Banks shall be entitled to
rely and act upon any notices (including telephonic Loan Notices and Swing Line
Loan Notices) purportedly given by or on behalf of the Borrower even if

  (i)   such notices were not made in a manner specified herein, were incomplete
or were not preceded or followed by any other form of notice specified herein,
or     (ii)   the terms thereof, as understood by the recipient, varied from any
confirmation thereof.

The Borrower shall indemnify each Agent-Related Person, each Issuing Bank and
each Bank from all losses, costs, expenses and liabilities resulting from the
reliance by such Person on each notice purportedly given by or on behalf of the
Borrower. All telephonic notices to and other telephonic communications with the
Administrative Agent may be recorded by the Administrative Agent, and each of
the parties hereto hereby consents to such recording.
11.7 Execution in Counterparts; Facsimile Delivery.
     This Agreement and any other Loan Document to which Borrower is a Party may
be executed in any number of counterparts and any party hereto or thereto may
execute any counterpart, each of which when executed and delivered will be
deemed to be an original and all of which counterparts of this Agreement or any
other Loan Document, as the case may be, taken together will be deemed to be but
one and the same instrument. Such counterparts may be sent by telecopy, with the
original counterparts to follow by mail or courier. The execution of this
Agreement or any other Loan Document by any party hereto or thereto will not
become effective until executed counterparts hereof or thereof (or other
evidence of execution satisfactory to the Administrative Agent and Borrower)
have been delivered to the Administrative Agent and Borrower. The parties hereto
agree and acknowledge that delivery of any signature by facsimile shall
constitute execution by such signatory.
11.8 Successors and Assigns.

  (a)   The provisions of this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns
permitted hereby, except that the Borrower may not assign or otherwise transfer
any of its rights or obligations hereunder without the prior written consent of
each Bank and no Bank may assign or otherwise transfer any of its rights or
obligations hereunder except (i) to an Eligible Assignee in accordance with the
provisions of Section 11.8(b), (ii) by way of participation in accordance with
the provisions of Section 11.8(d), (iii) by way of pledge or assignment of a
security interest subject to the restrictions of Section 11.8(f) or (iv) in
accordance with Section 11.27 (and any other attempted assignment or transfer by
any party hereto shall be null and void). Nothing in this Agreement, expressed
or implied, shall be construed to confer upon any Person (other than the parties
hereto, their

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      respective successors and assigns permitted hereby, Participants to the
extent provided in Section 11.8(d) and, to the extent expressly contemplated
hereby, the Indemnitees) any legal or equitable right, remedy or claim under or
by reason of this Agreement.

  (b)   Any Bank may at any time assign to one or more Eligible Assignees all or
a portion of its rights and obligations under this Agreement (including all or a
portion of its Commitment and the Loans (including for purposes of this
Section 11.8(b), participations in Letters of Credit and in Swing Line Loans) at
the time owing to it); provided that (i) except in the case of an assignment of
the entire remaining amount of the assigning Bank’s Commitment and the Loans at
the time owing to it or in the case of an assignment to a Bank or an Affiliate
of a Bank, the aggregate amount of the Commitment (which for this purpose
includes Loans outstanding thereunder) or, if the Commitment is not then in
effect, the principal outstanding balance of the Loans of the assigning Bank
subject to each such assignment, determined as of the date the Assignment and
Assumption with respect to such assignment is delivered to the Administrative
Agent or, if “Trade Date” is specified in the Assignment and Assumption, as of
the Trade Date, shall not be less than $10,000,000 and shall be an integral
multiple of $5,000,000 unless each of the Administrative Agent and, so long as
no Event of Default has occurred and is continuing, the Borrower otherwise
consents (each such consent not to be unreasonably withheld or delayed);
provided, however, that concurrent assignments to members of an Assignee Group
and concurrent assignments from members of an Assignee Group to a single
Eligible Assignee (or to an Eligible Assignee and members of its Assignee Group)
will be treated as a single assignment for purposes of determining whether such
minimum amount has been met; (ii) each partial assignment shall be made as an
assignment of a proportionate part of all the assigning Bank’s rights and
obligations under this Agreement with respect to the Loans or the Commitment
assigned, except that this clause (ii) shall not apply to rights in respect of
Swing Line Loans; (iii) any assignment to an Eligible Assignee other than a Bank
or an Affiliate of a Bank shall be subject to the prior written consent of the
Administrative Agent and the Swing Line Bank, not to be unreasonably withheld or
delayed; (iv) the parties to each assignment shall execute and deliver to the
Administrative Agent an Assignment and Assumption, together with a processing
and recordation fee in the amount, if any, required as set forth in
Schedule 11.8, and the Eligible Assignee, if it shall not be a Bank, shall
deliver to the Administrative Agent an Administrative Questionnaire; and (v) any
assignment to an Eligible Assignee other than a Bank or an Affiliate of a Bank
shall be subject to the prior written consent of the Borrower, not to be
unreasonably withheld or delayed, but such consent of Borrower shall not be
required if a Default or an Event of Default has then occurred and is
continuing. Subject to acceptance and recording thereof by the Administrative
Agent pursuant to Section 11.8(c), from and after the effective date specified
in each Assignment and Assumption, the Eligible Assignee thereunder shall be a
party to this Agreement and, to the extent of the interest assigned by such
Assignment and Assumption, have the rights and obligations of a Bank under this
Agreement, and the assigning Bank thereunder shall, to the extent of the
interest assigned by such Assignment and Assumption, be released from its
obligations under this Agreement (and, in the case of an Assignment and
Assumption covering all of the assigning Bank’s rights and obligations under
this Agreement, such Bank shall cease to be a party hereto but shall continue to
be entitled to the benefits of Sections 3.5, 3.6, 3.10, 11.3, 11.6(e) and 11.10
with respect to facts and circumstances occurring prior to the effective date of
such assignment). Upon request, the Borrower shall execute and deliver a Note to
the assignee Bank. Any assignment or transfer by a Bank of rights or obligations
under this Agreement that does not comply with this Section 11.8(b) shall be
treated for purposes of

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      this Agreement as a sale by such Bank of a participation in such rights
and obligations in accordance with Section 11.8(d). Any costs and expenses
incurred in connection with an assignment hereunder (including a processing and
recordation fee set forth in Schedule 11.8) shall be paid by the Eligible
Assignee (except as otherwise provided in Section 11.27).

  (c)   The Administrative Agent, acting solely for this purpose as an agent of
the Borrower, shall maintain at the Administrative Agent’s Office a copy of each
Assignment and Assumption delivered to it and a register for the recordation of
the names and addresses of the Banks, and the Commitments of, and principal
amounts of the Loans and other Obligations owing to, each Bank pursuant to the
terms hereof from time to time (the “Register”). The entries in the Register
shall be conclusive absent manifest error, and the Borrower, the Administrative
Agent and the Banks may treat each Person whose name is recorded in the Register
pursuant to the terms hereof as a Bank hereunder for all purposes of this
Agreement, notwithstanding notice to the contrary. The Register shall be
available for inspection by the Borrower and any Bank, at any reasonable time
and from time to time upon reasonable prior notice.     (d)   Any Bank may at
any time, without the consent of, or notice to, the Borrower or the
Administrative Agent, sell participations to any Person (other than a natural
person or the Borrower or any of the Borrower’s Affiliates or Subsidiaries)
(each, a “Participant”) in all or a portion of such Bank’s rights or obligations
under this Agreement (including all or a portion of its Commitment or the Loans
(including such Bank’s participations in Letters of Credit or Swing Line Loans)
owing to it); provided that (i) such Bank’s obligations under this Agreement
otherwise shall remain unchanged, (ii) such Bank shall remain solely responsible
to the other parties hereto for the performance of such obligations and
(iii) the Borrower, the Administrative Agent and the other Banks shall continue
to deal solely and directly with such Bank in connection with such Bank’s rights
and obligations under this Agreement. Any agreement or instrument pursuant to
which a Bank sells such a participation shall provide that such Bank shall
retain the sole right to enforce this Agreement and to approve any amendment,
modification or waiver of any provision of this Agreement; provided further,
that such agreement or instrument may provide that such Bank will not, without
the consent of the Participant, agree to any amendment, waiver or other
modification described in Sections 11.2(a), 11.2(b) or 11.2(d) that directly
affects such Participant; provided further, that any Bank selling a
participation shall endeavor promptly to give Borrower notice following any such
sale, but the failure to give such notice will not give rise to any liability on
the part of such Bank or otherwise affect the validity of any such sale. Subject
to clause (e) of this Section, the Borrower agrees that each Participant shall
be entitled to the benefits of Sections 3.5, 3.6 and 3.10 to the same extent as
if it were a Bank and had acquired its interest by assignment pursuant to
Section 11.8(b). To the extent permitted by law, each Participant also shall be
entitled to the benefits of Section 11.15 as though it were a Bank, provided
such Participant agrees to be subject to Section 11.9 as though it were a Bank.
    (e)   A Participant shall not be entitled to receive any greater payment
under Sections 3.5, 3.6 and 3.10 than the applicable Bank would have been
entitled to receive with respect to the participation sold to such Participant.
    (f)   Any Bank may at any time pledge or assign a security interest in all
or any portion of its rights under this Agreement (including under its Note, if
any) to secure obligations of such Bank, including any pledge or assignment to
secure obligations to a Federal Reserve

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      Bank; provided that no such pledge or assignment shall release such Bank
from any of its obligations hereunder or substitute any such pledgee or assignee
for such Bank as a party hereto.

  (g)   [Intentionally Omitted].     (h)   Notwithstanding anything to the
contrary contained herein, if at any time Bank of America assigns all of its
Commitment and Loans pursuant to Section 11.8(b) above, Bank of America may,
(i) upon 60 days’ notice to the Borrower and the Banks, resign as an Issuing
Bank or (ii) upon 60 days’ notice to the Borrower, resign as Swing Line Bank.
Notwithstanding anything to the contrary contained herein, if at any time Bank
of America is removed as Administrative Agent by the Required Banks pursuant to
Section 10.9 herein, then Bank of America shall resign as Swing Line Bank on the
effective date of such removal. In the event of any such resignation as an
Issuing Bank or Swing Line Bank, the Borrower shall be entitled to appoint from
among the Banks a successor Issuing Bank or Swing Line Bank hereunder; provided,
however, that no failure by the Borrower to appoint any such successor shall
affect the resignation of Bank of America as an Issuing Bank or Swing Line Bank,
as the case may be. If Bank of America resigns as an Issuing Bank, it shall
retain all the rights and obligations of an Issuing Bank hereunder with respect
to all Letters of Credit outstanding as of the effective date of its resignation
as an Issuing Bank and all Obligations with respect thereto (including the right
to require the Banks to make Base Rate Loans or fund risk participations in
Unreimbursed Amounts pursuant to Section 2.5). If Bank of America resigns as
Swing Line Bank, it shall retain all the rights of the Swing Line Bank provided
for hereunder with respect to Swing Line Loans made by it and outstanding as of
the effective date of such resignation, including the right to require the Banks
to make Base Rate Loans or fund risk participations in outstanding Swing Line
Loans pursuant to Section 2.4.

11.9 Sharing of Setoffs.
     Each Bank severally agrees that if it, through the exercise of the right of
setoff, banker’s lien, or counterclaim against Borrower or otherwise, receives
payment of the Obligations due it hereunder and under the Notes that is ratably
more than that to which it is entitled hereunder pursuant to Section 3.13 or
9.2(e), then: (a) the Bank exercising the right of setoff, banker’s lien, or
counterclaim or otherwise receiving such payment shall purchase, and shall be
deemed to have simultaneously purchased, from the other Bank a participation in
the Obligations held by the other Bank and shall pay to the other Bank a
purchase price in an amount so that the share of the Obligations held by each
Bank after the exercise of the right of setoff, banker’s lien, or counterclaim
or receipt of payment shall be in the same proportion that existed prior to the
exercise of the right of setoff, banker’s lien, or counterclaim or receipt of
payment, and (b) such other adjustments and purchases of participations shall be
made from time to time as shall be equitable to ensure that all of the Banks
share any payment obtained in respect of the Obligations ratably in accordance
with the provisions of Section 3.13 and 9.2(e), provided that, if all or any
portion of a disproportionate payment obtained as a result of the exercise of
the right of setoff, banker’s lien, counterclaim or otherwise is thereafter
recovered from the purchasing Bank by Borrower or any Person claiming through or
succeeding to the rights of Borrower, the purchase of a participation shall be
rescinded and the purchase price thereof shall be restored to the extent of the
recovery, but without interest. Each Bank that purchases a participation in the
Obligations pursuant to this Section shall from and after the purchase have the
right to give all notices, requests, demands, directions and other
communications under this Agreement with respect to the portion of the
Obligations purchased to the same extent as though the purchasing Bank were the

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original owner of the Obligations purchased. Borrower expressly consents to the
foregoing arrangements and agrees that, to the extent permitted by Law, any Bank
holding a participation in an Obligation so purchased may exercise any and all
rights of setoff, banker’s lien or counterclaim with respect to the
participation as fully as if the Bank were the original owner of the Obligation
purchased.
11.10 Indemnification by the Borrower.
     The Borrower shall indemnify and hold harmless each Agent-Related Person,
the Arrangers, each Bank and their respective Affiliates, directors, officers,
employees, counsel, agents and attorneys-in-fact (collectively the
“Indemnitees”) from and against any and all liabilities, obligations, losses,
damages (including punitive and exemplary damages), penalties, claims, demands,
actions, judgments, suits, costs, expenses and disbursements (including Attorney
Costs) of any kind or nature whatsoever which may at any time be imposed on,
incurred by or asserted against any such Indemnitee in any way relating to or
arising out of or in connection with (a) the execution, delivery, enforcement,
performance or administration of any Loan Document or any other agreement,
letter or instrument delivered in connection with the transactions contemplated
thereby or the consummation of the transactions contemplated thereby, (b) any
Commitment, Loan or Letter of Credit or the use or proposed use of the proceeds
therefrom (including any refusal by an Issuing Bank to honor a demand for
payment under a Letter of Credit if the documents presented in connection with
such demand do not strictly comply with the terms of such Letter of Credit) or
(c) any actual or prospective claim, litigation, investigation or proceeding
relating to any of the foregoing, whether based on contract, tort or any other
theory (including any investigation of, preparation for, or defense of any
pending or threatened claim, investigation, litigation or proceeding) and
regardless of whether any Indemnitee is a party thereto (all the foregoing,
collectively, the “Indemnified Liabilities”); provided that such indemnity shall
not, as to any Indemnitee, be available to the extent that such liabilities,
obligations, losses, damages, penalties, claims, demands, actions, judgments,
suits, costs, expenses or disbursements are determined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted from the
(x) gross negligence or willful misconduct of such Indemnitee, (y) payment with
respect to a Letter of Credit by such Indemnitee (or any other applicable
“issuer” within the meaning of ISP98) when such payment violated the terms of
ISP98 or (z) for any failure to comply with Section 11.12 by such Indemnitee. No
Indemnitee shall be liable for any damages arising from the use by others of any
information or other materials obtained through IntraLinks or other similar
information transmission systems in connection with this Agreement, nor shall
any Indemnitee have any liability for any indirect or consequential damages
relating to this Agreement or any other Loan Document or arising out of its
activities in connection herewith or therewith (whether before or after the
Closing Date). All amounts due under this Section 11.10 shall be payable within
10 Business Days after demand therefor. The agreements in this Section 11.10
shall survive the resignation of the Administrative Agent, the replacement of
any Bank, the termination of the Commitments and the repayment, satisfaction or
discharge of all the other Obligations.
11.11 Nonliability of Banks.
     The relationship between Borrower and the Banks is, and shall at all times
remain, solely that of borrower and lenders, and the Banks and the
Administrative Agent neither undertake nor assume any responsibility or duty to
Borrower to review, inspect, supervise, pass judgment upon, or inform Borrower
of any matter in connection with any phase of Borrower’s business, operations,
or condition, financial or otherwise. Borrower shall rely entirely upon its own
judgment with respect to such matters, and any review, inspection, supervision,
exercise of judgment, or

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information supplied to Borrower by any Bank, the Administrative Agent or any
Arranger in connection with any such matter is for the protection of the Banks,
the Administrative Agent and the Arrangers, and neither Borrower nor any third
party is entitled to rely thereon.
11.12 Confidentiality.
     Each of the Administrative Agent, each Bank and each Issuing Bank agrees to
maintain the confidentiality of the Information (as defined below), except that
Information may be disclosed

  (a)   to its Affiliates and to its and its Affiliates’ respective partners,
directors, officers, employees, agents, advisors and representatives only for
the purposes of administration or enforcement of this Agreement (it being
understood that the Persons to whom such disclosure is made will be informed of
the confidential nature of such Information and instructed to keep such
Information confidential),     (b)   to the extent requested by any regulatory
authority purporting to have jurisdiction over it (including any self-regulatory
authority, such as the National Association of Insurance Commissioners),     (c)
  to the extent required by applicable laws or regulations or by any subpoena or
similar legal process,     (d)   to any other party hereto,     (e)   in
connection with the exercise of any remedies hereunder or under any other Loan
Document or any action or proceeding relating to this Agreement or any other
Loan Document or the enforcement of rights hereunder or thereunder,     (f)  
subject to an agreement containing a standard of confidentiality substantially
the same as that in this Section, to (i) any assignee of or Participant in, or
any prospective assignee of or Participant in, any of its rights or obligations
under this Agreement or (ii) any actual or prospective counterparty (or its
advisors) to any swap or derivative transaction relating to the Borrower and its
obligations,     (g)   with the consent of the Borrower or     (h)   to the
extent such Information (i) becomes publicly available other than as a result of
a breach of this Section or (ii) becomes available to the Administrative Agent,
any Bank, any Issuing Bank or any of their respective Affiliates on a
nonconfidential basis from a source other than the Borrower.

For purposes of this Section 11.12, “Information” means all information received
from the Borrower or any Subsidiary relating to the Borrower or any Subsidiary
or any of their respective businesses, other than any such information that is
available to the Administrative Agent, any Arranger, any Bank or an Issuing Bank
on a nonconfidential basis prior to disclosure by the Borrower or any
Subsidiary, provided that, in the case of information received from the Borrower
or any Subsidiary after the date hereof, such information is clearly identified
at the time of delivery as confidential. Any Person required to maintain the
confidentiality of Information as provided in this Section shall be considered
to have complied with its obligation to do so if such Person has exercised the
same degree of care to maintain the confidentiality of such Information as such
Person would accord to its own confidential information. Each of the
Administrative

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Agent, each Bank and each Issuing Bank acknowledges that (x) the Information may
include material non-public information concerning the Borrower or a Subsidiary,
as the case may be, (y) it has developed compliance procedures regarding the use
of material non-public information and (z) it will handle such material
non-public information in accordance with applicable Law, including Federal and
state securities Laws.
11.13 No Third Parties Benefited.
     This Agreement is made for the purpose of defining and setting forth
certain obligations, rights and duties of Borrower, the Administrative Agent and
the Banks in connection with the Commitment, and is made for the sole benefit of
Borrower, the Administrative Agent and the Banks, and the Administrative Agent’s
and the Banks’ successors and assigns. Except as provided in Sections 11.8 and
11.10, no other Person shall have any rights of any nature hereunder or by
reason hereof.
11.14 Other Dealings.
     Any Bank may, without liability to account to the other Banks, accept
deposits from, lend money or provide credit facilities to and generally engage
in any kind of banking or other business with Borrower and its Subsidiaries.
11.15 Right of Setoff — Deposit Accounts.
     Upon the occurrence of an Event of Default and the acceleration of maturity
of the principal indebtedness under any of the Notes pursuant to Section 9.2,
Borrower hereby specifically authorizes each Bank in which Borrower maintains a
deposit account (whether a general or special deposit account, other than trust
accounts) or a certificate of deposit to setoff any Obligations owed to the
Banks against such deposit account or certificate of deposit without prior
notice to Borrower (which notice is hereby waived) whether or not such deposit
account or certificate of deposit has then matured. Nothing in this Section
shall limit or restrict the exercise by a Bank of any right to setoff or
banker’s lien under applicable Law, subject to the approval of the Required
Banks.
11.16 Further Assurances.
     Borrower shall, at its expense and without expense to the Banks or the
Administrative Agent, do, execute, and deliver such further acts and documents
as any Bank or the Administrative Agent from time to time reasonably requires
for the assuring and confirming unto the Banks or the Administrative Agent the
rights hereby created or intended now or hereafter so to be, or for carrying out
the intention or facilitating the performance of the terms of any Loan Document;
provided that this Section 11.16 is not intended to create any affirmative
obligation on the part of Borrower to provide collateral security, additional
guarantors or other credit enhancement with respect to the Obligations.
11.17 Integration.
     This Agreement, together with the other Loan Documents, comprises the
complete and integrated agreement of the parties on the subject matter hereof
and supersedes all prior agreements, written or oral (including the mandate
letter and the summary of terms relating to this Agreement), on the subject
matter hereof except as provided in Section 3.3 hereof or otherwise expressly
provided herein to the contrary. The Loan Documents were drafted with the joint

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participation of Borrower and the Banks and shall be construed neither against
nor in favor of either, but rather in accordance with the fair meaning thereof.
11.18 Governing Law.

  (a)   This Agreement shall be governed by, and construed in accordance with,
the law of the state of California applicable to agreements made and to be
performed entirely within such state; provided that the parties hereto shall
retain all rights arising under federal law.

  (b)   Any legal action or proceeding with respect to this Agreement or any
other Loan Document may be brought in the Superior Court of the State of
California for the County of Los Angeles or the United States District Court for
the Central District of California, and by execution and delivery of this
agreement, the Borrower, the Administrative Agent and each Bank consents, for
itself and in respect of its property, to the non-exclusive jurisdiction of
those courts. The Borrower, the Administrative Agent and each Bank irrevocably
waives any objection, including any objection to the laying of venue or based on
the grounds of forum non conveniens, which it may now or hereafter have to the
bringing of any action or proceeding in such jurisdiction in respect of any Loan
Document or other document related thereto. The Borrower, the Administrative
Agent and each Bank waives personal service of any summons, complaint or other
process, which may be made by any other means permitted by California law.

11.19 Severability of Provisions.
     Any provision in any Loan Document that is held to be inoperative,
unenforceable, or invalid in any jurisdiction shall, as to that jurisdiction, be
inoperative, unenforceable, or invalid without affecting the remaining
provisions in that jurisdiction or the operation, enforceability, or validity of
that provision in any other jurisdiction, and to this end the provisions of all
Loan Documents are declared to be severable.
11.20 Headings.
     Article and section headings in this Agreement and the other Loan Documents
are included for convenience of reference only and are not part of this
Agreement or the other Loan Documents for any other purpose.
11.21 Conflict in Loan Documents.
     To the extent there is any actual irreconcilable conflict between the
provisions of this Agreement and any other Loan Document, the provisions of this
Agreement shall prevail.
11.22 Waiver of Right to Trial by Jury.
     EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY
LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO
(A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD

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NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND
(B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE
MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
11.23 Purported Oral Amendments.
     BORROWER EXPRESSLY ACKNOWLEDGES THAT THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS MAY ONLY BE AMENDED OR MODIFIED, OR THE PROVISIONS HEREOF OR THEREOF
WAIVED OR SUPPLEMENTED, BY AN INSTRUMENT IN WRITING THAT COMPLIES WITH SECTION
11.2. BORROWER AGREES THAT IT WILL NOT RELY ON ANY COURSE OF DEALING, COURSE OF
PERFORMANCE, OR ORAL OR WRITTEN STATEMENTS BY ANY REPRESENTATIVE OF ANY AGENT OR
ANY BANK THAT DOES NOT COMPLY WITH SECTION 11.2 TO EFFECT AN AMENDMENT,
MODIFICATION, WAIVER OR SUPPLEMENT TO THE AGREEMENT OR THE OTHER LOAN DOCUMENTS.
11.24 Payments Set Aside.
     To the extent that any payment by or on behalf of the Borrower is made to
the Administrative Agent or any Bank, or the Administrative Agent or any Bank
exercises its right of set-off, and such payment or the proceeds of such set-off
or any part thereof is subsequently invalidated, declared to be fraudulent or
preferential, set aside or required (including pursuant to any settlement
entered into by the Administrative Agent or such Bank in its discretion) to be
repaid to a trustee, receiver or any other party, in connection with any
proceeding under any Debtor Relief Law or otherwise, then (a) to the extent of
such recovery, the obligation or part thereof originally intended to be
satisfied shall be revived and continued in full force and effect as if such
payment had not been made or such set-off had not occurred, and (b) each Bank
severally agrees to pay to the Administrative Agent upon demand its applicable
share of any amount so recovered from or repaid by the Administrative Agent,
plus interest thereon from the date of such demand to the date such payment is
made at a rate per annum equal to the Federal Funds Rate from time to time in
effect.
11.25 Hazardous Materials Indemnity.
     Without limiting any other indemnity provided for in the Loan Documents,
Borrower agrees to indemnify the Indemnitees from any claim, liability, loss,
cost or expense (including Attorney Costs) directly or indirectly arising out of
the use, generation, manufacture, production, storage, release, threatened
release, discharge, disposal or presence of any Hazardous Materials if such
Hazardous Materials are on, under, about or relate to Borrower’s Property or
operations, so long as such claim, liability, loss, cost or expense arises out
of or relates to a Commitment, the use of proceeds of any Loans, any transaction
contemplated pursuant to this Agreement, or any relationship or alleged
relationship of any Indemnitee to Borrower related to this Agreement.
11.26 USA PATRIOT Act Notice.
     Each Bank that is subject to the Act (as hereinafter defined) and the
Administrative Agent (for itself and not on behalf of any Bank) hereby notifies
the Borrower that pursuant to the requirements of the USA Patriot Act (Title III
of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Act”), it is
required to obtain, verify and record information that identifies the

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Borrower, which information includes the name and address of the Borrower and
other information that will allow such Bank or the Administrative Agent, as
applicable, to identify the Borrower in accordance with the Act. The Borrower
hereby agrees to provide any such information that is reasonably requested by
any Bank or the Administrative Agent.
11.27 Replacement of Banks.
     If (a) any Bank requests compensation under Section 3.5 or Sections 3.6(a)
through 3.6(e), (b) any Bank is a Non-Extending Bank under Section 2.9, (c) the
Borrower is required to pay any additional amount pursuant to Section 3.10,
(d) any Bank is a Defaulting Bank or (e) any other circumstance exists hereunder
that gives the Borrower the right to replace a Bank as a party hereto, then the
Borrower may, at its sole expense and effort, upon notice to such Bank and the
Administrative Agent, require such Bank to assign and delegate, without recourse
(in accordance with and subject to the restrictions contained in, and consents
required by, Section 11.8), and such Bank shall assign within 5 Business Days
after the date of such notice, all of its interests, rights and obligations
under this Agreement and the related Loan Documents to an Eligible Assignee that
shall assume such obligations (which assignee may be another Bank, if a Bank
accepts such assignment), provided that:

  (a)   the Borrower shall have paid to the Administrative Agent the assignment
fee specified in Section 11.8(b);     (b)   such Bank shall have received
payment of an amount equal to the outstanding principal of its Loans and L/C
Advances, accrued interest thereon, accrued fees and all other amounts payable
to it hereunder and under the other Loan Documents (including any amounts under
Section 3.6(f) from the assignee (to the extent of such outstanding principal
and accrued interest and fees) or the Borrower (in the case of all other
amounts) and including all amounts due to such Bank under Sections 3.5, 3.10,
11.3, 11.6(e) and 11.10, but subject to the provisions of clause (c) below);    
(c)   in the case of any such assignment resulting from a claim for compensation
under Sections 3.6(a) through 3.6(e) or payments required to be made pursuant to
Section 3.10, such assignment will result in a reduction in such compensation or
payments thereafter; and     (d)   such assignment does not conflict with
applicable Laws.

A Bank shall not be required to make any such assignment or delegation if, prior
thereto, as a result of a waiver by such Bank or otherwise, the circumstances
entitling the Borrower to require such assignment and delegation cease to apply.

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11.28 Deliveries Under Prior Revolving Loan Agreement.
     Any items required to be delivered under this Agreement which may have been
delivered under the Prior Revolving Loan Agreement prior to the Closing Date
hereof will be deemed delivered for all purposes under this Agreement.
[Remainder of Page Intentionally Left Blank]

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the date first above written.

                  KB HOME, a Delaware Corporation    
 
           
 
  By:        
 
           
 
      Kelly M. Allred    
 
           Vice President, Treasury & Risk Management    

[Signature Page —
Revolving Loan Agreement]

 

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                  BANK OF AMERICA, N.A., as Administrative Agent and a Bank    
 
           
 
  By:        
 
           
 
  Name:        
 
  Title:        

[Signature Page —
Revolving Loan Agreement]

 

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                  CITICORP NORTH AMERICA, INC., as Co-Syndication Agent and a
Bank    
 
           
 
  By:        
 
           
 
  Name:        
 
  Title:        

[Signature Page —
Revolving Loan Agreement]

 

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                  CALYON NEW YORK BRANCH, as Co-Documentation Agent and a Bank  
 
 
           
 
  By:        
 
           
 
  Name:        
 
  Title:          
 
  By:        
 
           
 
  Name:        
 
  Title:        

[Signature Page —
Revolving Loan Agreement]

 

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                  JPMORGAN CHASE BANK, N.A., as Co-Syndication Agent and a Bank
   
 
           
 
  By:        
 
           
 
  Name:        
 
  Title:        

[Signature Page —
Revolving Loan Agreement]

 

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                  THE ROYAL BANK OF SCOTLAND plc, as Co-Documentation Agent and
a Bank    
 
           
 
  By:        
 
           
 
  Name:        
 
  Title:        

[Signature Page —
Revolving Loan Agreement]

 

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                  WACHOVIA BANK, N.A., as Co-Documentation Agent and a Bank    
 
           
 
  By:        
 
           
 
  Name:        
 
  Title:        

[Signature Page —
Revolving Loan Agreement]

 

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                  BARCLAYS BANK PLC, as Co-Documentation Agent and a Bank    
 
           
 
  By:        
 
           
 
  Name:        
 
  Title:        

[Signature Page —
Revolving Loan Agreement]

 

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                  BNP PARIBAS, as Managing Agent and a Bank    
 
           
 
  By:        
 
           
 
  Name:        
 
  Title:          
 
  By:        
 
           
 
  Name:        
 
  Title:        

[Signature Page —
Revolving Loan Agreement]

 

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                  SUNTRUST BANK, as Managing Agent and a Bank    
 
           
 
  By:        
 
           
 
  Name:        
 
  Title:        

[Signature Page —
Revolving Loan Agreement]

 

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                  U.S. BANK NATIONAL ASSOCIATION, as Co-Agent and a Bank    
 
           
 
  By:        
 
           
 
  Name:        
 
  Title:        

[Signature Page —
Revolving Loan Agreement]

 

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                  FANNIE MAE, as Co-Agent and a Bank    
 
           
 
  By:        
 
           
 
  Name:        
 
  Title:        

[Signature Page —
Revolving Loan Agreement]

 

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                  GUARANTY BANK, as Co-Agent and a Bank    
 
           
 
  By:        
 
  Name:  
 
   
 
  Title:        

[Signature Page –
Revolving Loan Agreement]

 

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                  UBS LOAN FINANCE LLC, as Co-Agent and a Bank    
 
           
 
  By:        
 
  Name:  
 
   
 
  Title:        

[Signature Page –
Revolving Loan Agreement]

 

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                  NATEXIS BANQUES POPULAIRES, as a Bank    
 
           
 
  By:        
 
  Name:  
 
   
 
  Title:        

[Signature Page –
Revolving Loan Agreement]

 

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                  COMERICA BANK, as a Bank    
 
           
 
  By:        
 
  Name:  
 
   
 
  Title:        

[Signature Page –
Revolving Loan Agreement]

 

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                  EMIGRANT SAVINGS BANK,         A Division of New York Private
Bank & Trust, as a Bank    
 
           
 
  By:        
 
  Name:  
 
   
 
  Title:        

[Signature Page –
Revolving Loan Agreement]

 

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                  KEYBANK NATIONAL ASSOCIATION, as a Bank    
 
           
 
  By:        
 
  Name:  
 
   
 
  Title:        

[Signature Page –
Revolving Loan Agreement]

 

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                  HSBC BANK USA, NATIONAL ASSOCIATION, as a Bank    
 
           
 
  By:        
 
  Name:  
 
   
 
  Title:        

[Signature Page –
Revolving Loan Agreement]

 

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                  LASALLE BANK NATIONAL ASSOCIATION, as a Bank    
 
           
 
  By:        
 
  Name:  
 
   
 
  Title:        

[Signature Page –
Revolving Loan Agreement]

 

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                  PNC BANK, NATIONAL ASSOCIATION, as a Bank    
 
           
 
  By:        
 
  Name:  
 
   
 
  Title:        

[Signature Page –
Revolving Loan Agreement]

 

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                  SOCIÉTÉ GÉNÉRALE , as a Bank    
 
           
 
  By:        
 
  Name:  
 
   
 
  Title:        

[Signature Page –
Revolving Loan Agreement]

 

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                  THE GOVERNOR AND COMPANY OF THE BANK OF         IRELAND, as a
Bank    
 
           
 
  By:        
 
  Name:  
 
   
 
  Title:        

[Signature Page –
Revolving Loan Agreement]

 

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                  CITY NATIONAL BANK, a national banking association,         as
a Bank    
 
           
 
  By:        
 
  Name:  
 
   
 
  Title:        

[Signature Page –
Revolving Loan Agreement]

 

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                  FIFTH THIRD BANK, as a Bank    
 
           
 
  By:        
 
  Name:  
 
   
 
  Title:        

[Signature Page –
Revolving Loan Agreement]

 

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                  MIZUHO CORPORATE BANK, LTD., as a Bank    
 
           
 
  By:        
 
  Name:  
 
   
 
  Title:        

[Signature Page –
Revolving Loan Agreement]

 

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                  SUMITOMO MITSUI BANKING CORPORATION, as a Bank    
 
           
 
  By:        
 
  Name:  
 
   
 
  Title:        

[Signature Page –
Revolving Loan Agreement]

 

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                  UNION BANK OF CALIFORNIA, N.A., as a Bank    
 
           
 
  By:        
 
  Name:  
 
   
 
  Title:        

[Signature Page –
Revolving Loan Agreement]

 

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                  CALIFORNIA BANK & TRUST, a California banking        
corporation, as a Bank    
 
           
 
  By:        
 
  Name:  
 
   
 
  Title:        

[Signature Page –
Revolving Loan Agreement]

 

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                  COMPASS BANK, an Alabama banking corporation, as a Bank    
 
           
 
  By:        
 
  Name:  
 
   
 
  Title:        

[Signature Page –
Revolving Loan Agreement]

 

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                  THE NORTHERN TRUST COMPANY, as a Bank    
 
           
 
  By:        
 
  Name:  
 
   
 
  Title:        

[Signature Page –
Revolving Loan Agreement]

 

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SUBSIDIARY GUARANTY
          THIS SUBSIDIARY GUARANTY (“Guaranty”) dated as of November 22, 2005,
is made by each of the undersigned guarantors and each other person who may
become a guarantor pursuant to Section 19 hereof (each a “Guarantor” and,
collectively, the “Guarantors”) in favor of Bank of America, N.A., as the
Administrative Agent (“Administrative Agent”), under the Loan Agreement referred
to below, and the Banks that are party to the Loan Agreement from time to time
(each a “Bank” and collectively the “Banks”) (the Administrative Agent and the
Banks are referred to herein collectively as the “Lender Parties” and each
individually as a “Lender Party”), with reference to the following facts:
RECITALS
          A. Pursuant to that certain Revolving Loan Agreement dated as of
November 22, 2005, by and among KB Home, a Delaware corporation (the
“Borrower”), the Banks and the Administrative Agent (as amended, extended,
renewed, supplemented, or otherwise modified from time to time, the “Loan
Agreement”), the Banks are making certain credit facilities available to
Borrower. Terms defined in the Loan Agreement and not otherwise defined in this
Guaranty shall have the meanings given to those terms in the Loan Agreement and
such definitions are incorporated by reference herein in full.
          B. As a condition to the availability of such credit facilities, each
Guarantor is required to enter into this Guaranty and to guaranty the Guarantied
Obligations (as hereinafter defined), subject to the limitations set forth
herein.
          C. Each Guarantor expects to realize direct and indirect benefits from
the availability of the aforementioned credit facilities to Borrower, as the
result of financial or business support which will be provided to such Guarantor
by Borrower.
AGREEMENT
          NOW, THEREFORE, in order to induce the Banks to extend the
aforementioned credit facilities, and for other good and valuable consideration,
the receipt and adequacy of which hereby are acknowledged, each Guarantor hereby
represents, warrants, covenants, agrees and guaranties, on a joint and several
basis, as follows:
          1. Guaranty. Each Guarantor hereby absolutely and unconditionally
guarantees, as a guarantee of payment and not merely as a guarantee of
collection, prompt payment when due, whether at stated maturity, upon
acceleration or otherwise, and at all times thereafter, of any and all existing
and future indebtedness and liabilities of every kind, nature and character,
direct or indirect, absolute or contingent, liquidated or unliquidated,
voluntary or involuntary, of the Borrower to Lender Parties arising under the
Loan Agreement and the Loan Documents (collectively, the “Guaranteed
Obligations”). The Lender Parties’ books and records showing the amount of the
Guaranteed Obligations shall be admissible in evidence in any action or
proceeding, and shall be binding upon the Guarantors and conclusive for the
purpose of establishing the amount of the Guaranteed Obligations, absent
manifest error. This Guaranty shall not be affected by the validity, regularity
or enforceability of the Guaranteed Obligations or any instrument or agreement
evidencing any Guaranteed Obligations, or any question as to the authenticity of
such instrument or agreement, or by the existence, validity, enforceability,
perfection, or extent of any collateral therefor, or by any fact or circumstance
relating to the Guaranteed Obligations which might otherwise constitute a
defense to the obligations of any Guarantor under this Guaranty, other than
payment in full by the Borrower or any other Person. The obligations of each
Guarantor hereunder shall

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be limited to an aggregate amount equal to the largest amount that would not
render its obligations hereunder subject to avoidance under Section 548 of the
Bankruptcy Code (Title 11, United States Code) or any comparable provisions of
any applicable state law.
          2. No Setoff or Deductions; Taxes. Each Guarantor represents and
warrants that it is incorporated or formed under the laws of a state of the
United States of America and is a resident in the United States of America. All
payments by each Guarantor hereunder shall be paid in full, without setoff or
counterclaim or any deduction or withholding whatsoever, including, without
limitation, for any and all present and future taxes. If any Guarantor must make
a payment under this Guaranty, such Guarantor represents and warrants that it
will make the payment from one of its U.S. resident offices to the Lender
Parties so that no withholding tax is imposed on the payment. If notwithstanding
the foregoing, a Guarantor makes a payment under this Guaranty to which
withholding tax applies, or any taxes (other than taxes on net income
(a) imposed by the country or any subdivision of the country in which a Lender
Party’s principal office or actual lending office is located and (b) measured by
the United States taxable income the Lender Parties would have received if all
payments under or in respect of this Guaranty were exempt from taxes levied by
such Guarantor’s country) are at any time imposed on any payments under or in
respect of this Guaranty including, but not limited to, payments made pursuant
to this Section 2, such Guarantor shall pay all such taxes to the relevant
authority in accordance with applicable law such that the Lender Parties receive
the sum they would have received had no such deduction or withholding been made
and shall also pay to the Lender Parties, on demand, all additional amounts
which the Lender Parties specify as necessary to preserve the after-tax yield
the Lender Parties would have received if such taxes had not been imposed. The
Guarantors shall promptly provide the Lender Parties with an original receipt or
certified copy issued by the relevant authority evidencing the payment of any
such amount required to be deducted or withheld.
          3. No Termination. This Guaranty is a continuing and irrevocable
guaranty of all Guaranteed Obligations now or hereafter existing and shall
remain in full force and effect until all of the Guaranteed Obligations are paid
in full and any commitments of the Banks or facilities provided by the Banks
with respect to the Guaranteed Obligations are terminated. At the Administrative
Agent’s option, all payments under this Guaranty shall be made to an office of
the Administrative Agent located in the United States and in U.S. Dollars.
          4. Waiver of Notices. Each Guarantor waives notice of the acceptance
of this Guaranty and of the extension or continuation of the Guaranteed
Obligations or any part thereof. Each Guarantor further waives presentment,
protest, notice, dishonor or default, demand for payment and any other notices
to which such Guarantor might otherwise be entitled.
          5. Subrogation. The Guarantors shall exercise no right of subrogation,
contribution or similar rights against the Borrower or any other Guarantor with
respect to any payments on the Guaranteed Obligations made to the Lender Parties
under this Guaranty until all of the Guaranteed Obligations are paid in full and
any commitments of the Banks or facilities provided by the Banks with respect to
the Guaranteed Obligations are terminated. If any amounts are paid to a
Guarantor in violation of the foregoing limitation, then such amounts shall be
held in trust for the benefit of the Lender Parties and shall forthwith be paid
to the Lender Parties to reduce the amount of the Guaranteed Obligations,
whether matured or unmatured.
          6. Waiver of Suretyship Defenses. Each Guarantor agrees that the
Lender Parties may, at any time and from time to time, and without notice to
such Guarantor, make any agreement with the Borrower or with any other person or
entity liable on any of the Guaranteed Obligations or providing collateral as
security for the Guaranteed Obligations, for the extension, renewal, payment,
compromise, discharge or release of the Guaranteed Obligations or any collateral
(in whole or in part), or for any

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modification or amendment of the terms thereof or of any instrument or agreement
evidencing the Guaranteed Obligations or the provision of collateral, all
without in any way impairing, releasing, discharging or otherwise affecting the
obligations of such Guarantor under this Guaranty. Each Guarantor waives any
defense arising by reason of any disability or other defense of the Borrower or
any other Guarantor, or the cessation from any cause whatsoever of the liability
of the Borrower (other than payment in full of the Guaranteed Obligations), or
any claim that such Guarantor’s obligations exceed or are more burdensome than
those of the Borrower and waives the benefit of any statute of limitations
affecting the liability of such Guarantor hereunder. Each Guarantor waives any
right to enforce any remedy which any Lender Party now has or may hereafter have
against the Borrower and waives any benefit of and any right to participate in
any security now or hereafter held by any Lender Party until all of the
Guaranteed Obligations are paid in full and any commitments of the Banks and
facilities provided by the Banks with respect to the Guaranteed Obligations are
terminated. Further, each Guarantor consents to the Lender Parties’ taking of,
or failure to take, any action which might in any manner or to any extent vary
the risks of the Guarantors under this Guaranty or which, but for this
provision, might operate as a discharge of any Guarantor. Each Guarantor waives
any rights and defenses that are or may become available to such Guarantor by
reason of Sections 2787 to 2855 inclusive, of the California Civil Code.
          7. Exhaustion of Other Remedies Not Required. The obligations of each
Guarantor hereunder are those of primary obligor, and not merely as surety, and
are independent of the Guaranteed Obligations. Each Guarantor waives diligence
by the Lender Parties and action on delinquency in respect of the Guaranteed
Obligations or any part thereof, including, without limitation any provisions of
law requiring the Lender Parties to exhaust any right or remedy or to take any
action against the Borrower, any other guarantor or any other person, entity or
property before enforcing this Guaranty against such Guarantor.
          8. Reinstatement. Notwithstanding anything in this Guaranty to the
contrary, this Guaranty shall continue to be effective or be reinstated, as the
case may be, if at any time any payment of any portion of the Guaranteed
Obligations is revoked, terminated, rescinded or reduced or must otherwise be
restored or returned upon the insolvency, bankruptcy or reorganization of the
Borrower or any other person or entity or otherwise, as if such payment had not
been made and whether or not the Lender Parties are in possession of or have
released this Guaranty and regardless of any prior revocation, rescission,
termination or reduction.
          9. Subordination. While an Event of Default has occurred and is
continuing, each Guarantor hereby subordinates the payment of all obligations
and indebtedness of the Borrower owing to such Guarantor, whether now existing
or hereafter arising, including but not limited to any obligation of the
Borrower to the Guarantor as subrogee of the Lender Parties or resulting from
such Guarantor’s performance under this Guaranty, until such time as all
Guaranteed Obligations have been paid in full. If the Lender Parties so request,
any such obligation or indebtedness of the Borrower to the Guarantor shall be
enforced and performance received by the Guarantors as trustee for the Lender
Parties and the proceeds thereof shall be paid over to the Lender Parties on
account of the Guaranteed Obligations, but without reducing or affecting in any
manner the liability of the Guarantors under this Guaranty.
          10. Information. While an Event of Default has occurred and is
continuing, each Guarantor shall furnish promptly to the Lender Parties any and
all financial or other information regarding such Guarantor or its property as
the Lender Parties may reasonably request in writing.
          11. Stay of Acceleration. In the event that acceleration of the time
for payment of any of the Guaranteed Obligations is stayed, upon the insolvency,
bankruptcy or reorganization of the

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Borrower or any other person or entity, or otherwise, all such amounts shall
nonetheless be payable by the Guarantors immediately upon demand by the Lender
Parties.
          12. Expenses. The Guarantors shall pay, within 30 days after demand,
all the reasonable out-of-pocket expenses (including reasonable attorneys’ fees
and expenses and costs disbursements of any law firm or other external counsel)
in any way relating to the enforcement or protection of the Lender Parties’
rights under this Guaranty, including any incurred in the preservation,
protection or enforcement of any rights of the Lender Parties in any case
commenced by or against any Guarantor under the Bankruptcy Code (Title 11,
United States Code) or any similar or successor statute, subject to the
limitations set forth in Section 11.3 of the Loan Agreement (which limitations
shall be applied as if such expenses were payable by the Borrower thereunder).
The obligations of the Guarantors under the preceding sentence shall survive
termination of this Guaranty.
          13. Amendments. No provision of this Guaranty may be waived, amended,
supplemented or modified, except by a written instrument executed by the
Administrative Agent, the Required Banks under Section 11.2 of the Loan
Agreement and the Guarantors.
          14. No Waiver; Enforceability. No failure by the Lender Parties to
exercise, and no delay in exercising, any right, remedy or power hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right, remedy or power hereunder preclude any other or further exercise thereof
or the exercise of any other right. The remedies herein provided are cumulative
and not exclusive of any remedies provided by law or in equity. The
unenforceability or invalidity of any provision of this Guaranty shall not
affect the enforceability or validity of any other provision herein. Subject to
the terms hereof and of the Loan Agreement, any right, remedy, power or
privilege of the Lender Parties hereunder may be exercised by the Administrative
Agent or the Required Banks.
          15. Assignment; Governing Laws; Jurisdiction. This Guaranty shall
(a) bind each Guarantor and its successors and assigns, provided that no
Guarantor may assign its rights or obligations under this Guaranty without the
prior written consent of the Lender Parties (and any attempted assignment
without such consent shall be void), (b) inure to the benefit of the Lender
Parties and their respective successors and assigns and the Lender Parties may,
subject to the terms of the Loan Agreement but without notice to the Guarantors
and without affecting the Guarantors’ obligations hereunder, assign or sell
participations in the Guaranteed Obligations and this Guaranty, in whole or in
part, and (c) be governed by the internal laws of the State of California. Each
Guarantor hereby irrevocably (i) submits to the non-exclusive jurisdiction of
any United States Federal or State court sitting in Los Angeles, California in
any action or proceeding arising out of or relating to this Guaranty, and
(ii) waives to the fullest extent permitted by law any defense asserting an
inconvenient forum in connection therewith. Service of process by the Lender
Parties in connection with such action or proceeding shall be binding on a
Guarantor if sent to such Guarantor by registered or certified mail at its
address specified below. Each Guarantor agrees that the Lender Parties may,
subject to Section 11.12 of the Loan Agreement, disclose to any prospective
purchaser and any purchaser of all or part of the Guaranteed Obligations any and
all information in the Lender Parties’ possession concerning the Guarantors.
          16. Condition of the Borrower. Each Guarantor acknowledges and agrees
that it has the sole responsibility for, and has adequate means of, obtaining
from the Borrower such information concerning the financial condition, business
and operations of the Borrower as such Guarantor requires, and that the Lender
Parties have no duty, and such Guarantor is not relying on the Lender Parties at
any time, to disclose to such Guarantor any information relating to the
business, operations or financial condition of the Borrower.

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          17. Setoff. After demand upon the Guarantors for payment under this
Guaranty, each Guarantor hereby specifically authorizes each Bank (subject to
the approval of the Required Banks) in which such Guarantor maintains a deposit
account (whether a general or special deposit account, other than trust
accounts) or a certificate of deposit to setoff any Guaranteed Obligations owed
to the Banks against such deposit account or certificate of deposit without
prior notice to any Guarantor (which notice is hereby waived) whether or not
such deposit account or certificate of deposit has then matured. Nothing in this
shall limit or restrict the exercise by a Bank of any right to setoff or
banker’s lien under applicable Law, subject to the approval of the Required
Banks.
          18. Other Guarantees. Unless otherwise agreed by the Lender Parties
and the Guarantors in writing, this Guaranty is not intended to supersede or
otherwise affect any other guaranty now or hereafter given by the Guarantors for
the benefit of the Lender Parties or any term or provision thereof.
          19. Additional Guarantors. Any other Person may become a Guarantor
hereunder and become bound by the terms and conditions of this Guaranty by
executing and delivering to the Administrative Agent an Instrument of Joinder
substantially in the form attached hereto as Exhibit “A”.
          20. Representations and Warranties. Each Guarantor represents and
warrants that (i) it is duly organized and in good standing under the laws of
the jurisdiction of its organization and has the requisite corporate or limited
partnership, as applicable, power to make and perform this Guaranty, and all
necessary corporate or limited partnership, as applicable, authority for the
making and performance of this Guaranty by such Guarantor has been obtained;
(ii) this Guaranty constitutes its legal, valid and binding obligation
enforceable in accordance with its terms, except as enforcement may be limited
by Debtor Relief Laws or by equitable principles relating to the granting of
specific performance and other equitable remedies as a matter of judicial
discretion; (iii) the making and performance of this Guaranty does not and will
not violate the provisions of any applicable material law, regulation or order,
does not and will not require any consent under, any material agreement,
instrument, or document to which it is a party or by which it or any of its
property may be bound or affected and does not and will not (when aggregated
with any defaults and breaches of the Borrower and other Guarantors) result in
the breach of or constitute a default under, any material agreement, instrument,
or document to which it is a party or by which it or any of its property may be
bound or affected with respect to any obligation or obligations aggregating
$50,000,000 or more; (iv) all material consents, approvals, licenses and
authorizations of, and filings and registrations with, any governmental
authority required under applicable law and regulations for the making and
performance of this Guaranty have been obtained or made and are in full force
and effect; and (v) by virtue of its relationship with the Borrower, the
execution, delivery and performance of this Guaranty is for the direct benefit
of such Guarantor and it has received adequate consideration for this Guaranty.
          21. WAIVER OF JURY TRIAL; FINAL AGREEMENT. EACH PARTY HERETO HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT
IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY
ARISING OUT OF OR RELATING TO THIS GUARANTY. THIS GUARANTY REPRESENTS THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BETWEEN THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
[Signature Pages Follow]

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          Executed as of the date first written above.

              GUARANTORS:
 
            KB HOME PHOENIX INC., an Arizona corporation
 
       
 
  By:              
 
      Kelly M. Allred
 
      Vice President and Treasurer
 
            KB HOME COASTAL INC., a California corporation
 
       
 
  By:              
 
      Kelly M. Allred
 
      Vice President and Treasurer
 
            KB HOME NORTH BAY INC., a California corporation
 
       
 
  By:              
 
      Kelly M. Allred
 
      Vice President and Treasurer
 
            KB HOME SOUTH BAY INC., a California corporation
 
       
 
  By:              
 
      Kelly M. Allred
 
      Vice President and Treasurer
 
            KB HOME GREATER LOS ANGELES INC., a     California corporation
 
       
 
  By:              
 
      Kelly M. Allred
 
      Vice President and Treasurer
 
            KB HOME COLORADO INC., a Colorado corporation
 
       
 
  By:              
 
      Kelly M. Allred
 
      Vice President and Treasurer

 

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                  KB HOME NEVADA INC., a Nevada corporation
 
           
 
  By:                           Kelly M. Allred         Vice President and
Treasurer
 
                KB HOME LONE STAR LP, a Texas limited     partnership
 
                By:   KBSA, Inc., a Texas corporation,         Its general
partner
 
           
 
      By:                  
 
          Kelly M. Allred
 
          Vice President and Treasurer

 

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EXHIBIT A
INSTRUMENT OF JOINDER
          THIS INSTRUMENT OF JOINDER (“Joinder”) is executed as of
                    , by
                                                                                                                                            ,
a                      (“Joining Party”), and delivered to the Administrative
Agent pursuant to the Subsidiary Guaranty dated as of November 22, 2005 (the
“Guaranty”). Terms used but not defined in this Joinder shall have the meanings
defined for those terms in the Guaranty.
RECITALS
          A. The Guaranty was made by the Guarantors in favor of the Banks that
are parties to that certain Revolving Loan Agreement, dated as of November 22,
2005 (the “Loan Agreement”) among KB Home, a Delaware corporation, as Borrower,
the Banks signatory thereto, and Bank of America, N.A., as Administrative Agent.
          B. Joining Party has become a Significant Subsidiary (as defined in
the Loan Agreement) or has been designated by Borrower as a Guarantor Subsidiary
(as defined in the Loan Agreement), and as such is required pursuant to
Section 5.9 of the Loan Agreement to become a Guarantor.
          C. Joining Party expects to realize direct and indirect benefits as a
result of the availability to Borrower of a credit facility pursuant to the Loan
Agreement, and as a result of becoming a party to the Guaranty.
          NOW THEREFORE, Joining Party agrees as follows:
AGREEMENT
          1. By this Joinder, Joining Party becomes a “Guarantor” under and
pursuant to Section 19 of the Guaranty. Joining Party agrees that, upon its
execution hereof, it will become a Guarantor under the Guaranty with respect to
all Indebtedness of Borrower heretofore or hereafter incurred under the Loan
Agreement, and will be bound by all terms, conditions, and duties applicable to
a Guarantor under the Guaranty.
          2. The effective date of this Joinder is                     .

                  “Joining Party”
 
                   
 
  a                
 
           
 
  By:                      
 
                         
 
          Printed Name and Title

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ACKNOWLEDGED:
BANK OF AMERICA, N.A., as Administrative Agent

         
By:
                 
 
                 
 
  Printed Name and Title    
 
        KB HOME, a Delaware corporation    
 
       
By:
                 
 
                 
 
  Printed Name and Title    

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