EXHIBIT 10.9

2002 REVOLVING CREDIT AGREEMENT

Dated as of

August 22, 2002

among

THE RYLAND GROUP, INC.,
as the Company,

THE LENDERS NAMED HEREIN

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

BANK ONE, NA,
as Syndication Agent,

WACHOVIA BANK, NATIONAL ASSOCIATION,
as Syndication Agent,

GUARANTY BANK,
as Documentation Agent,

and

SUNTRUST BANK,
as Managing Agent

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BANC OF AMERICA SECURITIES LLC
Sole Lead Arranger and Sole Book Manager

 

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TABLE OF CONTENTS

                              Page            

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ARTICLE I DEFINITIONS AND ACCOUNTING TERMS     1     1.1    
Defined Terms
    1     1.2    
Other Interpretive Provisions
    24     1.3    
Accounting Terms
    25     1.4    
Rounding
    25     1.5    
References to Agreements and Laws
    25     1.6    
Exhibits, Schedules and Annexes
    25     1.7    
Letter of Credit Amounts
    26   ARTICLE II BORROWING PROCEDURES AND LETTER OF CREDIT SUBLIMIT     27  
  2.1    
Disbursement of Loan Proceeds
    27     2.2    
Base Rate Loans
    29     2.3    
LIBOR Loans
    29     2.4    
Redesignation of Borrowings and Continuation of LIBOR Loans
    29     2.5    
Calculation of Borrowing Base
    31     2.6    
Borrowing Base
    33     2.7    
Payments by the Lenders to the Administrative Agent
    33     2.8    
Sharing of Payments, Etc.
    34     2.9    
Letters of Credit
    34     2.10    
Increase of Commitments
    42     2.11    
Voluntary Termination or Reduction of Commitments
    44   ARTICLE III PAYMENTS AND FEES     45     3.1    
Principal and Interest
    45     3.2    
Non-use Fee
    47     3.3    
Facility Fee
    47     3.4    
Up-front Fees
    47     3.5    
Other Fees
    47     3.6    
Late Payments
    47     3.7    
Taxes
    47     3.8    
Illegality
    48     3.9    
Increased Costs and Reduction of Return
    48     3.10    
Funding Indemnification
    49     3.11    
Inability to Determine Rates
    50     3.12    
Certificate of Lenders
    50     3.13    
Substitution of Lenders
    50     3.14    
Survival
    51     3.15    
Manner and Treatment of Payments
    51     3.16    
Mandatory Prepayment
    51     3.17    
Maturity Date Extension Option
    52     3.18    
Limitation on Additional Amounts, Etc.
    53     3.19    
Payments Generally
    53  

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ARTICLE IV CONDITIONS     56     4.1    
Conditions to First Extension of Credit
    56     4.2    
Conditions for Subsequent Extensions of Credit
    57   ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE COMPANY     58     5.1
   
Incorporation, Qualification, Powers and Capital Stock
    58     5.2    
Execution, Delivery and Performance of Loan Documents
    58     5.3    
Compliance with Laws and Other Requirements
    59     5.4    
Subsidiaries
    59     5.5    
Financial Statements of the Company and its Consolidated Subsidiaries
    60     5.6    
No Material Adverse Change
    60     5.7    
Tax Liability
    61     5.8    
Litigation
    61     5.9    
ERISA
    61     5.10    
Regulations U and X; Investment Company Act
    61     5.11    
No Default or Event of Default
    62     5.12    
Ownership of Property; Liens
    62     5.13    
Environmental Matters
    62     5.14    
Borrowing Base
    63     5.15    
Borrowing Base Components
    63     5.16    
Purpose of Loans
    63   ARTICLE VI AFFIRMATIVE COVENANTS OF THE COMPANY     64     6.1    
Financial Statements
    64     6.2    
Certificates; Other Information
    64     6.3    
Payment of Obligations
    65     6.4    
Conduct of Business and Maintenance of Existence
    66     6.5    
Maintenance of Property; Insurance
    66     6.6    
Inspection of Property; Books and Records; Discussions
    66     6.7    
Notices
    67     6.8    
Environmental Laws
    68     6.9    
Guarantees from Future Subsidiaries
    68   ARTICLE VII NEGATIVE COVENANTS OF THE COMPANY     70     7.1    
Consolidated Tangible Net Worth
    70     7.2    
Leverage Ratio
    70     7.3    
Minimum Fixed Charge Coverage
    70     7.4    
Senior Permitted Debt Not to Exceed Borrowing Base
    70     7.5    
Limitation on Land Inventory
    70     7.6    
Limitation on Housing Inventory
    71     7.7    
Limitation on Indebtedness
    71     7.8    
Limitation on Liens
    73     7.9    
Limitation on Guarantee Obligations
    74     7.10    
Limitations of Fundamental Changes
    75     7.11    
Limitation on Sales of Assets
    75     7.12    
Limitation on Dividends
    76     7.13    
Limitation on Investments
    76     7.14    
Limitation on Optional Payments and Modification of Debt Instruments
    78     7.15    
Transactions with Affiliates
    79  

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  7.16    
Fiscal Year
    79     7.17    
Compliance with ERISA
    79     7.18    
Preferred Stock
    79   ARTICLE VIII EVENTS OF DEFAULT AND REMEDIES UPON DEFAULT     80     8.1
   
Events of Default
    80     8.2    
Remedies
    82     8.3    
Rights Not Exclusive
    83   ARTICLE IX THE ADMINISTRATIVE AGENT     84     9.1    
Appointment and Authorization of Administrative Agent
    84     9.2    
Delegation of Duties
    84     9.3    
Liability of Administrative Agent
    84     9.4    
Reliance by Administrative Agent
    85     9.5    
Notice of Default
    85     9.6    
Credit Decision; Disclosure of Information by Administrative Agent
    86     9.7    
Indemnification of Administrative Agent
    86     9.8    
Agent in Individual Capacity
    87     9.9    
Successor Administrative Agent; Resignation as Swing Line Lender
    87     9.10    
Administrative Agent May File Proofs of Claim
    88     9.11    
Other Agents, Arrangers and Managers
    88     9.12    
Performance by the Administrative Agent
    88     9.13    
Actions
    89   ARTICLE X MISCELLANEOUS     90     10.1    
Amendments and Waivers
    90     10.2    
Notices and Other Communications; Facsimile Copies
    91     10.3    
No Waiver; Cumulative Remedies
    92     10.4    
Attorney Costs, Expenses and Taxes
    92     10.5    
Indemnification by the Company
    93     10.6    
Payments Set Aside
    94     10.7    
Successors and Assigns
    94     10.8    
Assignments, Participations, Etc.
    94     10.9    
Confidentiality
    98     10.10    
Set-off
    99     10.11    
Integration
    99     10.12    
Survival of Representations and Warranties
    99     10.13    
Severability
    99     10.14    
Tax Forms
    100     10.15    
Counterparts
    102     10.16    
No Third Parties Benefited
    102     10.17    
Section Headings
    102     10.18    
Further Acts by the Company
    102     10.19    
Time of the Essence
    102     10.20    
GOVERNING LAW
    102     10.21    
Submission to Jurisdiction
    102     10.22    
WAIVER OF JURY TRIAL
    103  

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LIST OF ANNEXES

      Annex I   Commitments of the Lenders   Annex II   Guarantors   LIST OF
EXHIBITS
  Exhibit “A”   Assignment and Assumption   Exhibit “B”   Borrowing Base
Certificate   Exhibit “C”   Compliance Certificate   Exhibit “D”   Continuing
Guaranty   Exhibit “E”   Note   Exhibit “F-1”   Form of Legal Opinion of Timothy
J. Geckle for the Company and Guarantors   Exhibit “F-2”   Form of Legal Opinion
of Piper Rudnick LLP for the Company and the Guarantors   Exhibit “G”   Request
for Borrowing/Continuation/Redesignation/Letter of Credit   LIST OF SCHEDULES
  Schedule 1.1(a)   Existing Investments   Schedule 1.1(b)   Existing Letters of
Credit   Schedule 5.4   Subsidiaries and Homebuilding Joint Ventures  
Schedule 6.2(g)   Financial Information   Schedule 10.2   Administrative Agent’s
Office, Certain Addresses for Notices

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2002 REVOLVING CREDIT AGREEMENT

This 2002 Revolving Credit Agreement (“Agreement”) is dated as of August 22,
2002, by and among THE RYLAND GROUP, INC., a Maryland corporation (the
“Company”), the several financial institutions from time to time party to this
Agreement (collectively, the “Lenders” and individually, a “Lender”), BANK OF
AMERICA, N.A., as administrative agent for the Lenders (in such capacity, the
“Administrative Agent”), BANK ONE, NA and WACHOVIA BANK, NATIONAL ASSOCIATION,
as syndication agents (each, in such capacity, a “Syndication Agent”), GUARANTY
BANK, as documentation agent (in such capacity, the “Documentation Agent”), and
SUNTRUST BANK, as managing agent (in such capacity, the “Managing Agent”), and
is made with reference to the facts set forth below.

RECITALS

A.    The Company is primarily engaged in the homebuilding business and
developing residential single-family housing projects.   B.    The Company has
requested the Lenders to make certain extensions of credit to finance or
refinance the acquisition of land and the development and construction of
various single-family housing projects, and for general corporate purposes
(including the refinancing of all obligations under the Existing Credit
Agreement).   C.    The Lenders are willing to make such extensions of credit to
the Company on the terms and conditions set forth in this Agreement and in the
other Loan Documents.

AGREEMENT

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Company, the Lenders and the
Administrative Agent hereby agree as follows:

ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS

1.1    Defined Terms. As used in this Agreement the following terms shall have
the meaning set forth respectively after each:        “Adjusted Consolidated
Tangible Net Worth” means, with respect to the Company at any date, the
Company’s Consolidated Tangible Net Worth at such date less the Company’s
Investments in the Financial Services Segment, determined in accordance with
GAAP.        “Administrative Agent” means Bank of America when acting in its
capacity as the Administrative Agent under any of the Loan Documents, or any
successor administrative agent.        “Administrative Questionnaire” means an
Administrative Questionnaire in a form supplied by the Administrative Agent.    
   “Affected Lender” has the meaning set forth in Section 3.13.

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     “Affiliate” means, with respect to any Person, another Person that
directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified. “Control”
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management or policies of a Person, whether through the
ability to exercise voting power, by contract or otherwise. “Controlling” and
“Controlled” have meanings correlative thereto. Without limiting the generality
of the foregoing, a Person shall be deemed to be Controlled by another Person if
such other Person possesses, directly or indirectly, power to vote 25% or more
of the securities having ordinary voting power for the election of directors,
managing general partners or the equivalent.        “Agent-Related Persons”
means the Administrative Agent, together with its Affiliates (including, in the
case of Bank of America in its capacity as the Administrative Agent, the
Arranger), and the officers, directors, employees, agents and attorneys-in-fact
of such Persons and Affiliates.        “Aggregate Commitment” means the
aggregate combined Commitments of the Lenders. As of the date of this Agreement,
the Aggregate Commitment currently equals $300,000,000, and may decrease as
provided in Section 2.11 or increase as provided in Section 2.10.       
“Agreement” means this 2002 Revolving Credit Agreement, either as originally
executed or as it may from time to time be supplemented, modified or amended.  
     “Applicable Rates” means the following percentages per annum, based upon
the Leverage Ratio as set forth in the most recent Compliance Certificate
received by the Administrative Agent pursuant to Section 6.2(b):

                                              LIBOR Margin                    

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                    L/C Fee Rate                    

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Pricing Level   Leverage Ratio   Facility Fee Rate   Swing Line Rate Spread

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I
  < 1.25:1     0.125 %     1.300 %
II
  > 1.25:1 but < 1.50:1     0.125 %     1.500 %
III
  > 1.50:1 but < 1.75:1     0.150 %     1.700 %
IV
  > 1.75:1 but < 2.00:1     0.200 %     1.875 %
V
  > 2.00:1     0.200 %     2.150 %

     The Applicable Rates will be adjusted as of the first Banking Day
immediately following the date a Compliance Certificate is delivered pursuant to
Section 6.2(b); provided, however, that if a Compliance Certificate is not
delivered when due in accordance with Section 6.2(b), then Pricing Level V shall
apply as of the first Banking Day after the date on which such Compliance
Certificate was required to have been delivered. For the period beginning on the
Closing Date until the first Compliance Certificate is delivered hereunder
(provided such

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     Compliance Certificate is delivered when due in accordance with Section
6.2(b)), the Applicable Rates shall be determined based upon Pricing Level I.  
     “Approved Fund” means any Fund that is administered or managed by:

      (a)    a Lender;         (b)    an Affiliate of a Lender; or         (c)
   an entity or an Affiliate of an entity that administers or manages a Lender.

     “Arranger” means Banc of America Securities LLC, in its capacity as sole
lead arranger and sole book manager.        “Assignment and Assumption” means an
Assignment and Assumption substantially in the form of Exhibit “A”.       
“Attorney Costs” means and includes all reasonable fees, expenses and
disbursements of any law firm or other external counsel and, without
duplication, the allocated cost of internal legal services and all expenses and
disbursements of internal counsel.        “Audited Financial Statements” means
the audited consolidated balance sheet of the Company and its Subsidiaries for
the fiscal year ended December 31, 2001, and the related consolidated statements
of income or operations, shareholders’ equity and cash flows for such fiscal
year of the Company and its Subsidiaries, including the notes thereto.       
“Authorized Official” means Responsible Official or other person designated in
writing by a Responsible Official.        “Bank of America” means Bank of
America, N.A. and its successors.        “Banking 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 Illinois.       
“Base Rate” means for any day a fluctuating rate per annum equal to the higher
of:

      (a)    the Federal Funds Rate plus 0.5%; and         (b)    the Prime
Rate.

     “Base Rate Loan” means any Loan or portion thereof which is designated as a
Base Rate Loan or which is not designated or redesignated by the Company as a
LIBOR Loan pursuant to Sections 2.3 or 2.4 and which is not a Swing Line
Advance.        “Borrowing” means each of the Loans to be made by the Lenders to
the Company as provided in Article II.        “Borrowing Base” has the meaning
set forth in Section 2.5(b).        “Borrowing Base Certificate” means a written
calculation of the Borrowing Base, substantially in the form of Exhibit “B”
attached hereto and made a part hereof, signed by a Responsible

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     Official of the Company and properly completed to provide all information
required to be included thereon.        “Business” has the meaning set forth in
Section 5.13(b).        “Capital Adequacy Regulation” means any guideline,
request or directive of any central bank or other Governmental Authority, or any
other law, rule or regulation, whether or not having the force of law, in each
case, regarding capital adequacy of any bank or of any corporation controlling a
bank.        “Cash Equivalents” means:

      (a)    securities issued or directly and fully guaranteed or insured by
the United States Government or any agency or instrumentality thereof having
maturities of not more than 90 days from the date of acquisition;         (b)   
time deposits and certificates of deposit of any of the Lenders, or of any
domestic or foreign commercial bank which has capital and surplus in excess of
$500,000,000 or which has a commercial paper rating meeting the requirements
specified in clause (d) below, having maturities of not more than 90 days from
the date of acquisition;         (c)    repurchase obligations with a term of
not more than 30 days for underlying securities of the types described in
clauses (a) and (b) above entered into with any bank meeting the qualifications
specified in clause (b) above; and         (d)    commercial paper of any Person
rated at least A-2 or the equivalent thereof by S&P or P-2 or the equivalent
thereof by Moody’s and in either case maturing within 90 days after the date of
acquisition.

     “Closing Date” means the date on which the conditions precedent in
Article IV are satisfied in full.        “Code” means the Internal Revenue Code
of 1986, as amended, reformed or otherwise modified from time to time.       
“Combined Debt” means, with respect to a Person or segment at a particular date,
without duplication, the sum of

      (a)    all Funded Debt plus         (b)    all obligations, contingent or
otherwise, in respect of Financial L/Cs plus         (c)    all Guarantee
Obligations guaranteeing or in effect guaranteeing Funded Debt of another party
plus         (d)    all Guarantee Obligations guaranteeing or in effect
guaranteeing obligations, contingent or otherwise, in respect of Financial L/Cs,

     in each case of such Person and its Subsidiaries or such segment, in each
case together with their respective Consolidated Joint Ventures, as at such
date, determined on a combined basis in accordance with GAAP.

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     “Combined Net Income” means, with respect to a Person or segment for any
period, the combined net income (or loss) of such Person and its Subsidiaries or
such segment, in each case together with their respective Consolidated Joint
Ventures, for such period (taken as a cumulative whole), determined on a
combined basis in accordance with GAAP.        “Commitment” means, as to each
Lender, its obligation to

      (a)    make Loans to the Company pursuant to Article II,         (b)   
purchase participations in L/C Obligations, and         (c)    purchase
participations in Swing Line Advances,

     in an aggregate principal amount at any one time outstanding not to exceed
the amount set forth opposite such Lender’s name on Annex I hereto or in the
Assignment and Assumption pursuant to which such Lender becomes a party hereto,
as applicable, as such amount may be adjusted from time to time in accordance
with this Agreement.        “Common Stock” means the Company’s common stock, par
value $1.00 per share, as the same exists on the date hereof or any other class
of stock of the Company the right of which to share in distributions of earnings
or assets of the Company is without limit as to amount or percentage.       
“Commonly Controlled Entity” means an entity, whether or not incorporated, which
is under common control with the Company within the meaning of Section 4001 of
ERISA or is part of a group which includes the Company and which is treated as a
single employer under Section 414 of the Code.        “Company” means The Ryland
Group, Inc., a Maryland corporation, and its successors and assigns.       
“Completed Unit” means a Unit as to which either (or both) of the following has
occurred:

      (a)    a notice of completion has been filed or recorded in the
appropriate real estate records, or         (b)    all necessary construction
has been completed in order to obtain a certificate of occupancy (whether or not
such certificate of occupancy has actually been obtained).

     “Compliance Certificate” means a certificate substantially in the form of
Exhibit “C”.        “Consolidated Intangibles” means, with respect to any Person
at any date, all amounts, determined in accordance with GAAP, included in the
Consolidated Net Worth of such Person and attributable to intangibles including

      (a)    goodwill, including any amounts (however designated on the balance
sheet) representing the cost of acquisitions of Subsidiaries in excess of
underlying tangible assets or         (b)    patents, trademarks and copyrights.

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     “Consolidated Joint Ventures” means, at any time, real estate joint
ventures in which the Company or any of its Subsidiaries has an investment at
such time and which are being consolidated in the Company’s consolidated
financial statements.        “Consolidated Net Income” means, with respect to a
Person for any period, the consolidated net income (or loss) of such Person and
its Subsidiaries and Consolidated Joint Ventures for such period (taken as a
cumulative whole), determined in accordance with GAAP.        “Consolidated Net
Worth” means, with respect to any Person at any date, all amounts which would,
in accordance with GAAP, be included under shareholders’ equity on a
consolidated balance sheet of such Person and its consolidated Subsidiaries and
Consolidated Joint Ventures at such date.        “Consolidated Tangible Net
Worth” means, with respect to any Person at any date, such Person’s Consolidated
Net Worth at such date less such Person’s Consolidated Intangibles at such date.
       “Construction in Progress” means Finished Lots:

      (a)    for which a final subdivision map has been recorded; and        
(b)    upon which construction has commenced, as evidenced by the commencement
of excavation for foundations, but has not been completed.

     “Contractual Obligation” means, with respect to any Person, any provision
of any security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.        “Countrywide “ means Countrywide Home Loans, Inc.    
   “Countrywide Loan Purchase Agreement” means the Loan Purchase Agreement by
and between Ryland Mortgage Company and Countrywide dated as of June 26, 1995,
as supplemented, modified, amended, restated or extended from time to time.    
   “Credit Advance” means any advance, loan or extension of credit to any Person
or the purchase of any bonds, notes, debentures or other debt securities of any
Person.        “Credit Extension” means each of the following:

      (a)    a Borrowing; and         (b)    an L/C Credit Extension.

     “Daily Usage” means the sum of

      (a)    the aggregate principal balance of the Loans plus         (b)   
the aggregate L/C Obligations

     outstanding on any day.

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     “Debtor Relief Laws” means the Bankruptcy Code of the United States, and
all other liquidation, conservatorship, bankruptcy, assignment for the benefit
of creditors, moratorium, rearrangement, receivership, insolvency,
reorganization, or similar debtor relief Laws of the United States or other
applicable jurisdictions from time to time in effect and affecting the rights of
creditors generally.        “Default” means any of the events specified in
Section 8.1, whether or not any requirement for the giving of notice, the lapse
of time, or both, or any other condition, has been satisfied.        “Defaulting
Lender” means any Lender that:

      (a)    has failed to fund any portion of the Loans, participations in L/C
Obligations or participations in Swing Line Advances required to be funded by it
hereunder within one Banking Day of the date required to be funded by it
hereunder,         (b)    has otherwise failed to pay over to the Administrative
Agent or any other Lender any other amount required to be paid by it hereunder
within two Banking Days of the date when due, unless the subject of a good faith
dispute; or         (c)    has been deemed insolvent or become the subject of a
bankruptcy or insolvency proceeding.

     “Designated Event” means the occurrence of any of the following events:

      (a)    there shall be consummated any consolidation, share exchange or
merger of the Company in which the Company is not the continuing or surviving
corporation or pursuant to which the Company’s Voting Stock would be converted
into cash, securities or other property, other than, in any case, a merger of
the Company in which the holders of Voting Stock immediately prior to the merger
have 70% or more of the ownership, directly or indirectly, of the Voting Stock
of the surviving corporation immediately after the merger;         (b)    there
is a report filed by any Person, including Affiliates of the Company (other than
the Company, its Subsidiaries, employee stock ownership plans or employee
benefit plans of the Company or its Subsidiaries) on Schedule 13D or l4D-l (or
any successor schedule, form or report under the Securities Exchange Act of 1934
(the “Exchange Act”)) disclosing that such Person (for the purpose of this
definition of “Designated Event” only, the term “Person” shall include a
“person” within the meaning of Section 13(d)(3) and 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, Rule 13d-5 or any successor rule or regulation promulgated under the
Exchange Act) of 30% or more of the Company’s Voting Stock; provided, however,
that a Person shall not be deemed the beneficial owner of, or to own
beneficially

             (1)    any securities tendered pursuant to a tender or exchange
offer made on behalf of such Person or any of such Person’s Affiliates until
such tendered securities are accepted for purchase or exchange thereunder or  
      (2)    any securities if such beneficial ownership

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                     (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, form or report) under the Exchange Act; or

      (c)    during any period of 2 consecutive calendar years, individuals who,
at the beginning of such period constituted the board of directors of the
Company cease for any reason to constitute a majority of the directors of the
Company then in office unless such new directors were elected by the directors
of the Company who constituted the board of directors of the Company at the
beginning of such period.

     “Dollars” or “$” means lawful money of the United States.        “EBITDA”
means, for any period, without duplication, the sum of the following amounts
attributable to such period:

      (a)    the Combined Net Income of the Homebuilding Segment;         (b)   
cash distributions received by the Company from the Financial Services Segment,
determined in accordance with GAAP;         (c)    federal, state and local
income and franchise taxes deducted from combined revenues in determining such
Combined Net Income;         (d)    depreciation and amortization deducted from
combined revenues in determining such Combined Net Income;         (e)   
interest expense deducted from combined revenues in determining such Combined
Net Income (including, without duplication, previously capitalized interest
expense which would be included in “Cost of Goods Sold” and deducted from
combined revenues in determining such Combined Net Income on a combined income
statement of the Homebuilding Segment in accordance with GAAP);         (f)   
other non-recurring non-cash charges and expenses (including net realizable
value write-down charges) deducted from combined revenues in determining such
Combined Net Income;              less

             (1)    any non-recurring non-cash credits included in combined
revenues in determining such Combined Net Income; and         (2)    any
non-cash equity interest in earnings received by the Company from the Financial
Services Segment which was included in combined revenues in determining such
Combined Net Income.

     “Eligible Assignee” means:

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      (a)    a Lender;         (b)    an Affiliate of a Lender;         (c)   
an Approved Fund; and         (d)    any other Person (other than a natural
person) approved by

             (1)    the Administrative Agent (such approval not to be
unreasonably withheld or delayed), and         (2)    unless an Event of Default
has occurred and is continuing, the Company (such approval not to be
unreasonably withheld or delayed);

     provided that notwithstanding the foregoing, “Eligible Assignee” shall not
include the Company or any of the Company’s Affiliates or Subsidiaries.       
“Entitled Land” means:

      (a)    land where all requisite zoning requirements and land use
requirements have been satisfied, and all requisite approvals have been obtained
(on a final and unconditional basis) from all applicable Governmental
Authorities (other than approvals which are simply ministerial and
non-discretionary in nature), in order to develop the land as a residential
housing project and construct Units thereon; and         (b)    as to land
located in California, land which satisfies the requirements of clause
(a) immediately above, and which is subject to a currently effective vesting,
tentative map (unless a county or city where the land is located does not grant
vesting tentative maps) which has received all necessary approvals (on a final
and unconditional basis) by all applicable Governmental Authorities.

     “Environmental Laws” means any and all foreign, Federal, state, local or
municipal laws, rules, orders, regulations, statutes, ordinances, codes,
decrees, requirements of any Governmental Authority or other Requirements of Law
(including common law) regulating, relating to or imposing liability or
standards of conduct concerning pollution or protection of the environment, as
now or may at any time hereafter be in effect.        “Environmental Liability”
means any liability, contingent or otherwise (including any liability for
damages, costs of environmental remediation, fines, penalties or indemnities),
of the Company, any other Loan Party or any of their respective Subsidiaries
directly or indirectly resulting from or based upon

      (a)    violation of any Environmental Law,         (b)    the generation,
use, handling, transportation, storage, treatment or disposal of any Materials
of Environmental Concern,         (c)    exposure to any Materials of
Environmental Concern,         (d)    the release or threatened release of any
Materials of Environmental Concern into the environment or

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      (e)    any contract, agreement or other consensual arrangement pursuant to
which liability is assumed or imposed with respect to any of the foregoing.

     “ERISA” means the Employee Retirement Income Security Act of 1974, and any
regulations issued pursuant thereto, as now or from time to time hereafter in
effect.        “Event of Default” means any of the events specified in
Section 8.1, provided that any requirement for the giving of notice, the lapse
of time, or both, or any other condition, has been satisfied.        “Existing
Credit Agreement” means that certain Revolving Credit Agreement dated as of
October 19, 1999, as supplemented and amended, by the Company, Bank of America,
as administrative agent, and a syndicate of lenders.        “Existing Letters of
Credit” means those Letters of Credit issued by Bank of America under the
Existing Credit Agreement or issued by another Lender, all of which are
identified in Schedule 1.1(b).        “Extension Notice Date” has the meaning
set forth in Section 3.17.        “Facility Fee” has the meaning set forth in
Section 3.3.        “Facility Fee Rate” means the applicable per annum
percentage set forth in the definition of Applicable Rate.        “FDIC” means
the Federal Deposit Insurance Corporation, and any Governmental Authority
succeeding to any of its principal functions.        “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 Banking Day next succeeding such day; provided that

      (a)    if such day is not a Banking Day, the Federal Funds Rate for such
day shall be such rate on such transactions on the next preceding Banking Day as
so published on the next succeeding Banking Day, and         (b)    if no such
rate is so published on such next succeeding Banking 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 L/C” means any letter of credit (other than a Performance L/C)
that represents an irrevocable obligation on the part of the issuer:

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

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     “Financial Services Segment” means the business segment of the Company and
its Subsidiaries engaged in mortgage banking (including the title and escrow
businesses), homeowners’ insurance, mortgage servicing, securities issuance,
bond administration and management services and related activities, which
segment on the date of this Agreement consists principally of the activities of
Ryland Mortgage Company and its Subsidiaries but excludes the Limited-Purpose
Subsidiaries.        “Financing Lease” means any lease of property, real or
personal, the obligations of the lessee in respect of which are required in
accordance with GAAP to be capitalized on a balance sheet of the lessee.       
“Finished Lots” means lots of Entitled Land as to which:

      (a)    a final subdivision map has been recorded;         (b)    all major
offsite construction and infrastructure has been completed to local government
requirements;         (c)    utilities have been installed to local government
requirements; and         (d)    building permits may be pulled and construction
commenced without the satisfaction of any further material conditions.

     “Fixed Charges” means, for any period, without duplication, the sum of the
following amounts:

      (a)    interest expense of the Homebuilding Segment for such period
(including such interest expense constituting capitalized interest for such
period), determined in accordance with GAAP;         (b)    principal payments
(excluding balloon payments) on long-term Indebtedness scheduled to be made by
the Homebuilding Segment during such period;         (c)    the principal
portion of payments in respect of Financing Leases scheduled to be made by the
Homebuilding Segment during such period; and         (d)    dividends on any of
the Company’s preferred stock paid or payable during such period.

     “Foreign Lender” has the meaning set forth in Section 10.14(a).       
“FRB” means the Board of Governors of the Federal Reserve System, and any
Governmental Authority succeeding to any of its principal functions.       
“Fund” means any Person (other than a natural person) that is (or will be)
engaged in making, purchasing, holding or otherwise investing in commercial
loans and similar extensions of credit in the ordinary course of its business.  
     “Funded Debt” of any Person means, at any date, all Indebtedness of such
Person of the nature referred to in clauses (a), (b), (c), (d), (e) and (g) of
the definition of “Indebtedness” at such date.

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     “GAAP” means generally accepted accounting principles in the United States
set forth in the opinions and pronouncements of the Accounting Principles Board
and the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or such other
principles as may be approved by a significant segment of the accounting
profession in the United States, that are applicable to the circumstances as of
the date of determination, consistently applied.        “GAAP Value” means, with
respect to each property or asset constituting part of the Real Estate
Inventory, the book value for such property or asset determined in accordance
with GAAP.        “Governmental Authority” means any nation or government, any
state or other political subdivision thereof, any central bank (or similar
monetary or regulatory authority) thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government, and any corporation or other entity owned or controlled, through
stock or capital ownership or otherwise, by any of the foregoing.       
“Guarantee Obligation” means, as to any Person (the “guaranteeing person”), any
obligation of:

      (a)    the guaranteeing person; or         (b)    another Person
(including any bank under any letter of credit) to induce the creation of which
the guaranteeing person has issued a reimbursement, counterindemnity or similar
obligation, in either case guaranteeing or in effect guaranteeing any
indebtedness, leases, dividends or other obligations (the “primary obligations”)
of any third Person (the “primary obligor”) in any manner, whether directly or
indirectly, including any obligation of the guaranteeing person, whether or not
contingent,

             (1)    to purchase any such primary obligation or any property
constituting direct or indirect security therefor,         (2)    to advance or
supply funds

                     (A)    for the purchase or payment of any such primary
obligation or                (B)    to maintain working capital or equity
capital of the primary obligor or otherwise to maintain the net worth or
solvency of the primary obligor,         (C)    to purchase property, securities
or services primarily for the purpose of assuring the owner of such primary
obligation of the ability of the primary obligor to make payment of such primary
obligation or         (D)    otherwise to assure or hold harmless the owner of
any such primary obligation against loss in respect thereof;

                  provided, however, that the term Guarantee Obligation shall
not include endorsements of instruments for deposit or collection in the
ordinary course of business. The amount of any Guarantee Obligation of any
guaranteeing person shall be deemed to be the maximum stated amount of the
primary obligation relating to such Guarantee

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                  Obligation (or, if less, the maximum stated liability set
forth in the instrument embodying such Guarantee Obligation), provided, however,
that in the absence of any such stated amount or stated liability, the amount of
such Guarantee Obligation shall be such guaranteeing person’s maximum reasonably
anticipated liability in respect thereof as reasonably determined by the Company
in good faith.

     “Guarantors” means, collectively, the Subsidiaries listed on Annex II
hereto, and each other Person that from time to time executes a Guaranty in
favor of the Lenders with respect to the Loans and the other Obligations, and
their successors and assigns.        “Guaranty” means a continuing guaranty,
substantially in the form of Exhibit “D”, either as originally executed or as it
may from time to time be supplemented, modified, amended, restated or extended,
to be executed and delivered by the Guarantors to the Administrative Agent for
the benefit of the Lenders.        “Hedge Agreement” means, as to any Person,
any swap, cap, collar or similar arrangement entered into by such Person
providing for protection against fluctuations in interest rates or currency
exchange rates or the exchange of nominal interest obligations, either generally
or under specific contingencies.        “Hedge Agreement Termination Value”
means, in respect of any one or more Hedge Agreements, after taking into account
the effect of any legally enforceable netting agreement relating to such Hedge
Agreements,

      (a)    for any date on or after the date such Hedge Agreements 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 Hedge Agreements, as determined based upon one or more
mid-market or other readily available quotations provided by any recognized
dealer in such Hedge Agreements (which may include a Lender or any Affiliate of
a Lender).

     “Home Proceeds Receivable” means, with respect to the Company or a
wholly-owned Subsidiary in the Homebuilding Segment, funds due to the Company or
such wholly-owned Subsidiary held at an escrow or title company following the
sale and conveyance of title of a Unit to a buyer (including an escrow or title
company which is a Subsidiary of the Company).        “Homebuilding Segment”
means the business segment of the Company and its Subsidiaries and their
respective Consolidated Joint Ventures engaged in the construction and sale of
single family attached and unattached dwellings and related activities,
including all activities of the Company outside the Financial Services Segment
but excluding the Limited Purpose Subsidiaries.        “Improvements” means on
and off-site development work, including but not limited to filling to grade,
main water distribution and sewer collection systems and drainage system
installation, paving, and other improvements necessary for the use of
residential dwelling units and as required pursuant to development agreements
which may have been entered into with Governmental Authorities.

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     “Indebtedness” of any Person means, at any date, without duplication, all
of the following, whether or not included as indebtedness or liabilities in
accordance with GAAP:

      (a)    all indebtedness of such Person for borrowed money;         (b)   
all indebtedness of such Person for the deferred purchase price of property or
services (other than trade liabilities due 90 days or less from invoice and
accrued expenses incurred in the ordinary course of business and payable in
accordance with customary practices);         (c)    all net obligations of such
Person under any Hedge Agreement;         (d)    any other indebtedness of such
Person which is evidenced by a note, bond, debenture or similar instrument;  
      (e)    all obligations of such Person under Financing Leases;         (f)
   all obligations, contingent or otherwise, of such Person in respect of
letters of credit, whether or not drawn, and acceptances issued or created for
the account of such Person; and         (g)    all liabilities secured by any
Lien on any property owned by such Person even though such Person has not
assumed or otherwise become liable for the payment thereof.

     For all purposes hereof, the Indebtedness of any Person shall include the
Indebtedness of any partnership or joint venture (other than a joint venture
that is itself a corporation or limited liability company) in which such Person
is a general partner or a joint venturer, except to the extent such Indebtedness
is non-recourse to such Person. The amount of any net obligation under any Hedge
Agreement on any date shall be deemed to be the Hedge Agreement Termination
Value thereof as of such date.        “Indemnified Liabilities” has the meaning
set forth in Section 10.5.        “Indemnitees” has the meaning set forth in
Section 10.5.        “Insolvency” or “Insolvent” means, with respect to any
Multiemployer Plan, the condition that such Plan is insolvent within the meaning
of Section 4245 of ERISA.        “Interest Payment Date” means:

      (a)    as to any Base Rate Loan or Swing Line Advance, the first day of
each January, April, July and October to occur while such Loan is outstanding,  
      (b)    as to any LIBOR Loan having a LIBOR Period of 3 months or less, the
last day of such LIBOR Period, and         (c)    as to any LIBOR Loan having an
LIBOR Period longer than 3 months, the day which is 3 months after the first day
of such LIBOR Period and the last day of such LIBOR Period.

     “Investment” means any Credit Advance to, or any contribution to or
purchase of stock or other equity securities of, or any purchase of assets
constituting a business unit of, any Person,

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     excluding investments in stock or other equity securities existing on the
date of this Agreement and listed on the attached Schedule 1.1(a), and including
any investment representing any interest of the Company or any Subsidiary in the
retained or undistributed earnings of any Person.        “Issuance Fees” means
the fees described in Section 2.9(j).        “Land Under Development” means
Entitled Land upon which a final subdivision map has been recorded and upon
which construction of Improvements has commenced and is being diligently pursued
but has not been completed.        “Laws” means, collectively, all
international, foreign, federal, state and local statutes, treaties, rules,
regulations, ordinances, codes and administrative or judicial precedents.       
“L/C Advance” means, with respect to each Lender, such Lender’s funding of its
participation in any L/C Borrowing in accordance with its Pro Rata Share.       
“L/C Application” means an application and agreement for the issuance or
amendment of a Letter of Credit in the form from time to time in use by the L/C
Issuer.        “L/C Borrowing” means an extension of credit resulting from a
drawing under any Letter of Credit which has not been reimbursed on the date
when made or refinanced as a Borrowing.        “L/C Credit Extension” means,
with respect to any Letter of Credit, the issuance thereof or extension of the
expiry date thereof, or the renewal or increase of the amount thereof.       
“L/C Expiration Date” means the day that is 7 days prior to the Maturity Date
then in effect (or, if such day is not a Banking Day, the next preceding Banking
Day).        “L/C Fee Rate” means the applicable per annum percentage set forth
in the definition of Applicable Rate.        “L/C Fronting Fee” means, with
respect to any Letter of Credit, the greater of:

      (a)    0.125% of the face amount of the Letter of Credit; and         (b)
   $250.

     “L/C Issuer” means:

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

     provided that at any one time there are not more than 4 L/C Issuers with
respect to outstanding Letters of Credit.        “L/C Obligations” means, as at
any date of determination, the aggregate undrawn amount of all outstanding
Letters of Credit plus the aggregate of all Unreimbursed Amounts, including all
L/C Borrowings.

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     “Lender” has the meaning specified in the introductory paragraph hereto
and, as the context requires, includes the L/C Issuer and the Swing Line Lender.
       “Lending Office” means, as to each Lender, the office or offices of such
Lender described as such in such Lender’s Administrative Questionnaire, or such
other office as a Lender from time to time may notify the Company and the
Administrative Agent.        “Letter of Credit” means any letter of credit
issued by a L/C Issuer hereunder and includes Existing Letters of Credit. A
Letter of Credit may be a Financial L/C or a Performance L/C.        “Letter of
Credit Fees” means the fees described in Section 2.9(i).        “Letter of
Credit Sublimit” means an amount equal to $150,000,000. The Letter of Credit
Sublimit is part of, and not in addition to, the Aggregate Commitment.       
“Leverage Ratio” means the ratio of

      (a)    Combined Debt of the Homebuilding Segment, to         (b)   
Adjusted Consolidated Tangible Net Worth.

     “LIBOR Banking Day” means any Banking Day on which banks are open for
business in London, England and New York, New York and Bank of America is open
for business in Chicago, Illinois.        “LIBOR Base Rate” means, with respect
to a LIBOR Loan for the relevant LIBOR Period, the rate per annum equal to:

      (a)    the rate determined by the Administrative Agent to be the offered
rate that appears on the page of the Telerate screen (or any successor thereto)
that displays an average British Bankers Association Interest Settlement Rate
for deposits in Dollars (for delivery on the first day of such LIBOR Period)
with a term equivalent to such LIBOR Period, determined as of approximately
11:00 a.m., London time, 2 Banking Days prior to the first day of such LIBOR
Period, or         (b)    if the rate referenced in the preceding clause
(a) does not appear on such page or service or such page or service shall not be
available, the rate per annum equal to the rate determined by the Administrative
Agent to be the offered rate on such other page or other service that displays
an average British Bankers Association Interest Settlement Rate for deposits in
Dollars (for delivery on the first day of such LIBOR Period) with a term
equivalent to such LIBOR Period, determined as of approximately 11:00 a.m.,
London time, 2 Banking Days prior to the first day of such LIBOR Period, or  
      (c)    if the rates referenced in the preceding clauses (a) and (b) are
not available, the rate per annum determined by the Administrative Agent as the
rate of interest at which deposits in Dollars for delivery on the first day of
such LIBOR Period in same day funds in the approximate amount of the LIBOR Loan
being made, continued or converted by Bank of America and with a term equivalent
to such LIBOR Period would be offered by Bank of America’s London Branch to
major banks in the London

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               interbank eurodollar market at their request at approximately
4:00 p.m., London time, 2 Banking Days prior to the first day of such LIBOR
Period.

     “LIBOR Lending Office” means the office or branch of each Lender so
designated on such Lender’s Administrative Questionnaire, or such other office
or branch of each Lender as it may hereafter designate, by written notice to the
Company and the Administrative Agent, as its LIBOR Lending Office.        “LIBOR
Loan” means any Loan or portion thereof designated, redesignated or continued by
the Company as a LIBOR Loan pursuant to Section 2.3 or 2.4.        “LIBOR
Margin” means the applicable per annum percentage set forth in the definition of
Applicable Rate.        “LIBOR Period” means, as to each LIBOR Loan, the period
commencing on the date specified in the applicable Request for Borrowing,
Request for Redesignation or Request for Continuation by the Company pursuant to
Section 2.3 or 2.4 and ending 1 month, 2 months, 3 months or 6 months
thereafter, as designated by the Company in the applicable Request for
Borrowing, Request for Redesignation or Request for Continuation, provided, in
each case, that:

      (a)    the first day in any LIBOR Period shall be a LIBOR Banking Day;  
      (b)    any LIBOR Period that would otherwise end on a day that is not a
LIBOR Banking Day shall be extended to the next succeeding LIBOR Banking Day
unless such LIBOR Banking Day falls in another calendar month, in which case
such LIBOR Period shall end on the next preceding LIBOR Banking Day; and        
(c)    No LIBOR Period shall extend beyond the Maturity Date.

     “LIBOR Rate” means, for any LIBOR Period for any LIBOR Loan, the rate
(rounded upward, if necessary, to the next 1/100 of 1%) obtained by dividing:

      (a)    the LIBOR Base Rate for such LIBOR Period; by         (b)    a
percentage equal to 100% minus the Reserve Requirement for such LIBOR Period.

     “Lien” means any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), or preference, priority or
other security agreement or preferential arrangement of any kind or nature
whatsoever, including any conditional sale or other title retention agreement,
any Financing Lease having substantially the same economic effect as any of the
foregoing, and the filing of any financing statement under the Uniform
Commercial Code (other than precautionary notification of operating leases) or
comparable law of any jurisdiction in respect of any of the foregoing.       
“Limited-Purpose Subsidiaries” means Subsidiaries included within the
Limited-Purpose Subsidiaries Segment.        “Limited-Purpose Subsidiaries
Segment” means the business segment of the Company and its Subsidiaries which
facilitates, through special-purpose entities created or existing solely for

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     such purpose, the financing of mortgage loans and mortgage backed
securities and the securitization of mortgage loans and other related
activities.        “Loan” or “Loans” means each of the loans under this
Agreement, including the Swing Line Advances.        “Loan Documents” means,
collectively, this Agreement, the Notes, the Swing Line Documents, the Guaranty,
each Request for Borrowing, Request for Redesignation or Request for
Continuation, each L/C Application, each Compliance Certificate and any other
agreements of any type or nature hereafter executed and delivered by the Company
or any of its Subsidiaries to the Administrative Agent or to any Lender 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 Party” means,
collectively, the Company and each Guarantor.        “Material Adverse Effect”
means a material adverse effect on

      (a)    the business or financial condition of the Company and its
Restricted Subsidiaries taken as a whole,         (b)    the ability of the
Company to perform its obligations under this Agreement and the other Loan
Documents to which the Company is a party or         (c)    the validity or
enforceability of this Agreement or any of the other Loan Documents or the
rights or remedies of the Administrative Agent or the Lenders hereunder or
thereunder.

     “Materials of Environmental Concern” means any gasoline or petroleum
(including crude oil or any fraction thereof) or petroleum products or any
hazardous or toxic substances. materials or wastes, defined or regulated as such
in or under any Environmental Law, including asbestos, polychlorinated biphenyls
and urea-formaldehyde insulation.        “Maturity Date” means August 22, 2005,
subject to a one-time extension pursuant to the terms of Section 3.17.       
“Model Unit” means a Completed Unit to be used as a model home in connection
with the sale of Units in a residential housing project.        “Moody’s” means
Moody’s Investors Service, Inc. and any successor thereto.        “Multiemployer
Plan” means a Plan which is a multiemployer plan as defined in
Section 4001(a)(3) of ERISA.        “Non-use Fee” has the meaning set forth in
Section 3.2.        “Non-use Fee Rate” means

      (a)    0.30% per annum, if Daily Usage is less than 35% of the Aggregate
Commitment for the day in question; or

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      (b)    0.15% per annum, if Daily Usage is equal to or exceeds 35% of the
Aggregate Commitment for the day in question,

     in each case calculated on the basis of a year of 365 or 366 days.       
“Note” means each of the promissory notes, substantially in the form of Exhibit
“E” attached hereto, executed by the Company in favor of the Lenders, as
originally executed or as the same may from time to time be supplemented,
modified, amended, renewed, extended or refinanced (and any promissory note that
may be issued in substitution or exchange therefor).        “Obligations” means
all advances to, and debts, liabilities, obligations, covenants and duties of,
any Loan Party arising under any Loan Document or otherwise with respect to any
Loan or Letter of Credit, whether direct or indirect (including those acquired
by assumption), absolute or contingent, due or to become due, now existing or
hereafter arising and including interest and fees that accrue after the
commencement by or against any Loan Party or any Affiliate thereof of any
proceeding under any Debtor Relief Laws naming such Person as the debtor in such
proceeding, regardless of whether such interest and fees are allowed claims in
such proceeding.        “Opinion of Counsel” means the favorable written legal
opinions of Timothy J. Geckle, Esq., general counsel to the Company and Piper
Rudnick LLP, as counsel to the Company and the Subsidiaries with respect to this
Agreement, substantially in the form of Exhibits “F-l” and “F-2” attached
hereto, together with copies of all factual certificates upon which such counsel
has relied.        “Organization Documents” means:

      (a)    with respect to any corporation, the certificate or articles of
incorporation and the bylaws (or equivalent or comparable constitutive documents
with respect to any non-U.S. jurisdiction);         (b)    with respect to any
limited liability company, the certificate or articles of formation or
organization and operating agreement; and         (c)    with respect to any
partnership, joint venture, trust or other form of business entity, the
partnership, joint venture or other applicable agreement of formation or
organization and any agreement, instrument, filing or notice with respect
thereto filed in connection with its formation or organization with the
applicable Governmental Authority in the jurisdiction of its formation or
organization and, if applicable, any certificate or articles of formation or
organization of such entity.

     “Other Taxes” means any present or future stamp or documentary taxes or any
other excise or property taxes, charges or similar levies which arise from any
payment made hereunder or from the execution, delivery or registration of, or
otherwise with respect to, this Agreement or any other Loan Documents.       
“Outstanding Amount” means:

      (a)    with respect to Loans and Swing Line Advances on any date, the
aggregate outstanding principal amount thereof after giving effect to any
borrowings and

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           prepayments or repayments of Loans and Swing Line Advances, as the
case may be, occurring on such date; and         (b)    with respect to any L/C
Obligations on any date, the amount of such L/C Obligations on such date after
giving effect to any L/C Credit Extension occurring on such date and any other
changes in the aggregate amount of the L/C Obligations as of such date,
including as a result of 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 10.8.        “PBGC”
means the Pension Benefit Guaranty Corporation established pursuant to Subtitle
A of Title IV of ERISA.        “Performance L/C” means a letter of credit issued
by a Lender or other party for the account of the Company or a Subsidiary to a
party, as beneficiary, to which the Company, or such Subsidiary owes certain
performance obligations in connection with its ordinary course of business real
estate development and homebuilding activity (for example, to a municipality, as
beneficiary, to support the Company’s or a Subsidiary’s obligation to widen
public streets in connection with a residential development project). A direct
pay letter of credit to support community improvement bonds associated with the
Company’s residential development operations is a Financial L/C and not a
Performance L/C.        “Permitted Debt” means, with respect to a Person or
segment at a particular date, all Combined Debt of such Person and its
Subsidiaries or such segment as at such date, determined on a combined basis in
accordance with GAAP, less

      (a)    any portion of such Combined Debt that is secured by any asset that
would have been included in the Borrowing Base as at such date if such asset
were not subject to or encumbered by a Lien and         (b)    any portion of
such Combined Debt consisting of Guarantee Obligations guaranteeing or in effect
guaranteeing Funded Debt of unconsolidated Affiliates of the Company.

     “Person” means any entity, whether an individual, trustee, corporation,
general partnership, limited partnership, limited liability company, joint stock
company, trust, unincorporated organization, bank, business association, firm,
joint venture, Governmental Authority or otherwise.        “Plan” means, at a
particular time, any employee benefit plan which is covered by ERISA and in
respect of which the Company or a Commonly Controlled Entity is (or, if such
plan were terminated at such time, would under Section 4069 of ERISA be deemed
to be) an “employer” as defined in Section 3(5) of ERISA.        “Prime Rate”
means for any day a fluctuating rate per annum equal to 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

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     take effect at the opening of business on the day specified in the public
announcement of such change.        “Properties” has the meaning set forth in
Section 5.13(a).        “Pro Rata Share” means, as to any Lender at any time,
the percentage equivalent (expressed as a decimal, rounded to the ninth decimal
place as determined by the Administrative Agent) at such time of such Lender’s
Commitment divided by the Aggregate Commitment.        “Raw Land” means Raw Land
— Entitled and Raw Land — Unentitled.        “Raw Land — Entitled” means land
not under development which is Entitled Land.        “Raw Land — Unentitled”
means land not under development which is not Entitled Land but which the
Company in its reasonable commercial judgment believes it will be able to
develop as residential property for its own use and not to be held
speculatively.        “Real Estate Inventory” means Construction in Progress,
Completed Units (including Model Units), Finished Lots, Land Under Development,
Raw Land - Entitled, and Raw Land — Unentitled.        “Regulation D” means
Regulation D of the FRB as now or from time to time hereafter in effect and any
other regulation issued in substitution therefor.        “Reorganization” means,
with respect to any Multiemployer Plan, the condition that such Plan is in
reorganization within the meaning of Section 241 of ERISA.        “Replacement
Lender” has the meaning set forth in Section 3.13.        “Reportable Event”
means any of the events set forth in Section 4043(b) of ERISA, other than events
for which the 30 day notice period has been waived.        “Request for
Borrowing” means a certificate substantially in the form of Exhibit “G”.       
“Request for Continuation” means a certificate substantially in the form of
Exhibit “G”.        “Request for Redesignation” means a certificate
substantially in the form of Exhibit “G”.        “Required Lenders” means, at
any time, Lenders then having in excess of 66-2/3% of the Aggregate Commitment
or, if the Commitments have been terminated, Lenders then holding in excess of
66-2/3% of the then aggregate unpaid principal amount of the Loans (or
participation interests in the Swing Line Advances) and interests (or
participation interests) in the reimbursement obligations of the Company with
respect to Letters of Credit; provided that the Commitment of, and the portion
of the Total Outstandings held or deemed held by, any Defaulting Lender shall be
excluded for purposes of making a determination of Required Lenders.       
“Requirement of Law” means, as to any Person, any law (statutory or common),
treaty, rule or regulation or determination of an arbitrator or of a
Governmental Authority, in each case applicable to or binding upon such Person
or any of its property or to which such Person or any of its property is
subject.

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     “Reserve Requirement” means, with respect to a LIBOR Period, the maximum
aggregate reserve requirement (including all basic, supplemental, marginal and
other reserves) which is imposed under Regulation D on Eurocurrency liabilities.
       “Responsible Official” means any of the chief executive officer or the
president of the Company or, with respect to financial matters, the chief
financial officer, the chief accounting officer or the treasurer of the Company.
With respect to a Guarantor, Responsible Official means any of the chief
executive officer, the president or the treasurer of such Guarantor.       
“Restricted Payments” has the meaning set forth in Section 7.12.       
“Restricted Subsidiary” means any Subsidiary of the Company other than:

      (a)    Limited-Purpose Subsidiaries; and         (b)    any Subsidiary
that the Required Lenders agree in writing is not to be deemed a Restricted
Subsidiary.

     “Ryland Financial Division” means all subsidiaries and operations of the
Company and its Subsidiaries other than the Homebuilding Segment.        “Ryland
Mortgage Company” means Ryland Mortgage Company, an Ohio corporation.       
“S&P” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill
Companies, Inc. and any successor thereto.        “Senior Permitted Debt” means,
at any time of determination thereof, the Loans, the L/C Obligations and all
Permitted Debt senior to or ranking in equal priority to the Obligations other
than Indebtedness which is non-recourse to the Company and its Subsidiaries and,
with respect to purchase money Indebtedness, such Indebtedness for which
recourse is limited solely to the assets financed with the proceeds of such
Indebtedness.        “Single Employer Plan” means any Plan which is covered by
Title IV of ERISA, but which is not a Multiemployer Plan.        “Sold” means,
with respect to any item of Real Estate Inventory, that:

      (a)    a third party purchase contract has been executed for such item of
Real Estate Inventory;         (b)    the third party purchaser of such item of
Real Estate Inventory has made a cash deposit for such item (except that up to
1% of Real Estate Inventory at any time may be deemed “Sold” even if such
deposit has not been made); and         (c)    such third party purchaser’s
obligation to purchase such item of Real Estate Inventory pursuant to such third
party purchase contract is not subject to any contingencies other than the
contingency that it shall have obtained mortgage financing or that it shall have
sold other identified property.

     “Specified Debt” means the Company’s Senior Debt Securities issued pursuant
to the Company’s Registration Statements on Form S-3 (Registration Nos.
33-50933, 333-03791,

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     333-31034 and 333-58208) or any successor registration statement and
outstanding on the date of this Agreement.        “Subordinated Debt” means:

      (a)    Indebtedness of the Company outstanding on the date hereof issued
pursuant to the Subordinated Debt Indentures; and         (b)    any other
unsecured Indebtedness of the Company that is contractually subordinated in
right of payment and otherwise to the Indebtedness hereunder upon terms and
conditions consistent with those set forth in the Subordinated Debt Indentures
or upon other terms and conditions reasonably satisfactory to the Required
Lenders.

     “Subordinated Debt Indentures” means the Indenture, dated as of July 15,
1992, between the Company and First Union National Bank, successor to Security
Trust Company, N.A., as trustee, pursuant to which the Company’s 8-1/4% Senior
Subordinated Notes due April, 2008 were issued, and the Indenture, dated as of
June 12, 2001, between the Company and SunTrust Bank, as trustee, pursuant to
which the Company’s 9-1/8% Senior Subordinated Notes due June, 2011 were issued.
       “Subsidiary” means:

      (a)    any corporation of which at least a majority of the outstanding
securities of any class or classes (however designated) having ordinary voting
power to elect directors of the corporation is owned by the Company or by one or
more than one other Subsidiary; and         (b)    any partnership, joint
venture or limited liability company in which the Company or any Subsidiary owns
at least a majority interest.

     Unless otherwise qualified, all references to a “Subsidiary” or to
“Subsidiaries” in this Agreement shall refer to a Subsidiary or Subsidiaries of
the Company and shall exclude any Consolidated Joint Venture.        “Swing Line
Advances” means Borrowings initially funded by Bank of America in the manner
provided in Section 2.1(h).        “Swing Line Documents” means the promissory
note and any other documents executed by the Company in favor of the Swing Line
Lender in connection with the Swing Line Advances, either as originally executed
or as it may from time to time be supplemented, modified, amended, restated or
extended.        “Swing Line Lender” means Bank of America in its capacity as
provider of Swing Line Advances, or any successor swing line lender hereunder.  
     “Swing Line Rate” means, with respect to any Swing Line Advance for any
day, a rate per annum (rounded upwards, if necessary to the next 1/100 of 1%)
equal to the higher of:

      (a)    the Prime Rate in effect on such day; and         (b)    the
Federal Funds Rate on such day plus the applicable Swing Line Rate Spread.

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     “Swing Line Rate Spread” means the applicable per annum percentage set
forth in the definition of Applicable Rate.        “Taxes” means any and all
present or future taxes, duties, levies, imposts, deductions, assessments, fees,
withholdings or similar charges, and all liabilities with respect thereto,
excluding, in the case of each Lender and the Administrative Agent, such taxes
(including income taxes or franchise taxes) as are imposed on or measured by
each Lender’s net income.        “Third Party L/C” means a letter of credit
issued for the account of the Company or a Subsidiary (other than a Letter of
Credit issued hereunder). A Third Party L/C may be either a Financial L/C or a
Performance L/C.        “Total Outstandings” means the aggregate Outstanding
Amount of all Loans and all L/C Obligations.        “Unencumbered Real Estate
Inventory” means Real Estate Inventory which is not subject to or encumbered by
any deed of trust, mortgage, judgment Lien, attachment Lien or any other Lien
(other than Liens which have been bonded around so as to remove such Liens as
encumbrances against the Real Estate Inventory or Liens which are permitted
under clauses (a), (b) or (e) of Section 7.8).        “Unit” means a single
family residential housing unit available for sale.        “Unreimbursed Amount”
has the meaning set forth in Section 2.9(c)(1).        “Unsold” means, with
respect to any item of Real Estate Inventory, that such item of Real Estate
Inventory is not Sold.        “Unsold Housing Inventory” means, collectively,
Unsold Construction in Progress, Unsold Completed Units and Unsold Model Units.
       “Voting Stock” means shares of stock of the Company entitling the holder
thereof to vote generally for the election of directors of the Company.   1.2   
Other Interpretive Provisions. 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)    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.         (c)    Article, Section, Exhibit
and Schedule references are to the Loan Document in which such reference
appears.         (d)    The term “including” is by way of example and not
limitation.         (e)    The term “or” is disjunctive.         (f)    The term
“and” is conjunctive.

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        (g)    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.         (h)
   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.”

1.3    Accounting Terms.

        (a)    All accounting terms not specifically or completely defined
herein shall be construed in conformity with, and all financial data (including
financial ratios and other financial calculations) required to be submitted
pursuant to this Agreement shall be prepared in conformity with, GAAP applied on
a consistent basis, as in effect from time to time, applied in a manner
consistent with that used in preparing the Audited Financial Statements, except
as otherwise specifically prescribed herein.         (b)    If at any time any
change in GAAP would affect the computation of any financial ratio or
requirement set forth in any Loan Document, and either the Company or the
Required Lenders shall so request, the Administrative Agent, the Lenders and the
Company shall negotiate in good faith to amend such ratio or requirement to
preserve the original intent thereof in light of such change in GAAP (subject to
the approval of the Required Lenders); provided that, until so amended, (1) such
ratio or requirement shall continue to be computed in accordance with GAAP prior
to such change therein and (2) the Company shall provide to the Administrative
Agent and the Lenders financial statements and other documents required under
this Agreement or as reasonably requested hereunder setting forth a
reconciliation between calculations of such ratio or requirement made before and
after giving effect to such change in GAAP.

1.4    Rounding. Any financial ratios required to be maintained by the Company
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 herein and rounding the result
up or down to the nearest number (with a rounding-up if there is no nearest
number).   1.5    References to Agreements and Laws. Unless otherwise expressly
provided herein:

        (a)    references to Organization Documents, agreements (including the
Loan Documents) and other contractual instruments shall be deemed to include all
subsequent amendments, restatements, extensions, supplements and other
modifications thereto, but only to the extent that such amendments,
restatements, extensions, supplements and other modifications are not prohibited
by any Loan Document; and         (b)    references to any Law shall include all
statutory and regulatory provisions and rulings consolidating, amending,
replacing, supplementing or interpreting such Law.

1.6    Exhibits, Schedules and Annexes. All Exhibits, Schedules and Annexes 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.

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1.7    Letter of Credit Amounts. Unless otherwise specified, all references
herein to the amount of a Letter of Credit at any time shall be deemed to mean
the maximum face amount of such Letter of Credit after giving effect to all
increases thereof contemplated by such Letter of Credit or the L/C Application
therefor, whether or not such maximum face amount is in effect at such time.

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ARTICLE II
BORROWING PROCEDURES AND LETTER OF CREDIT SUBLIMIT

2.1    Disbursement of Loan Proceeds.

        (a)    Subject to the terms and conditions set forth in this Agreement,
at any time and from time to time from the Closing Date through the Banking Day
immediately preceding the Maturity Date, each Lender severally agrees, according
to its Pro Rata Share, to make Loans to the Company in such amounts as the
Company may request that do not exceed in the aggregate at any one time
outstanding, the Commitment of such Lender (less the Pro Rata Share of such
Lender’s L/C Obligations, if any, and Swing Line Advances, if any). Subject to
the limitations set forth herein, the Company may borrow, repay and reborrow
under each Lender’s Commitment without premium or penalty. In no event shall the
Lenders be obligated to make Loans to the Company at any time if, after giving
effect to such Loans, the provisions of Section 2.6 would be violated.        
(b)    Unless the Administrative Agent otherwise consents, the aggregate amount
of each Borrowing (whether a LIBOR Loan or a Base Rate Loan or Swing Line
Advance) shall be in an integral multiple of $100,000, but not less than
$1,000,000.         (c)    The Loans made by the Lenders pursuant to this
Agreement shall be evidenced by each Note.         (d)    A Request for
Borrowing shall be irrevocable upon receipt by the Administrative Agent. The
Administrative Agent shall not be bound by any preliminary information that it
may give the Company concerning a particular LIBOR Rate before it delivers the
binding LIBOR Rate notice in accordance with Section 2.3(b) below.         (e)
   No more than 6 LIBOR Loans in the aggregate shall be outstanding at any one
time.         (f)    The Administrative Agent will notify each Lender of its
receipt of a Request for Borrowing by the Company and of the amount of such
Lender’s Pro Rata Share of that Borrowing promptly, in time to reasonably enable
each Lender to meet its obligations hereunder, upon receipt of such Request for
Borrowing.         (g)    Each Lender will make the amount of its Pro Rata Share
of each Borrowing available to the Administrative Agent for the account of the
Company at such location as is specified by the Administrative Agent by 1:00
p.m., Chicago time, on the date of such Borrowing requested by the Company in
funds immediately available to the Administrative Agent. Subject to the
provisions of Section 2.7, the proceeds of all such Loans will then be made
available to the Company by the Administrative Agent by wire transfer in
accordance with written instructions provided to the Administrative Agent by the
Company of like funds as received by the Administrative Agent.         (h)   
The following procedures shall apply to Swing Line Advances:

                (1)    Not later than 1:30 p.m., Chicago time, on the Banking
Day on which a proposed Swing Line Advance is to be made, Bank of America must
have received a Request for Borrowing requesting that a Swing Line Advance be

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                     made on that Banking Day, stating that such Borrowing shall
be a Swing Line Advance, and specifying the amount of the requested Swing Line
Advance. Each Swing Line Advance shall mature on the date which is 5 Banking
Days after the date such Swing Line Advance is made, and in any event on the
Maturity Date.         (2)    Upon fulfillment of each of the applicable
conditions in Article IV and the condition that the aggregate amount of
outstanding Swing Line Advances at no time exceeds the amounts specified in
Section 2.1(h)(4), Bank of America shall then make available to the Company by
wire transfer in accordance with written instructions provided to Bank of
America by the Company, from Bank of America’s funds, the amount of the
requested Swing Line Advance.         (3)    Upon the occurrence of any Event of
Default, Bank of America shall have the option, which shall be exercisable by
Bank of America in its sole discretion, to sell and transfer to each Lender,
pursuant to the terms and conditions set forth herein, an undivided interest and
participation, to the extent of such Lender’s Pro Rata Share, in all outstanding
Swing Line Advances. Forthwith upon notice from Bank of America to the Lenders
that Bank of America has elected to exercise the option set forth in the
immediately preceding sentence, Bank of America shall be deemed irrevocably and
unconditionally to have sold and transferred to each Lender without recourse
and, each Lender shall have deemed to have irrevocably and unconditionally
purchased and received, an undivided interest and participation, to the extent
of such Lender’s Pro Rata Share, in all outstanding Swing Line Advances. Each
Lender shall promptly (and in any event within 2 Banking Days) pay to the
Administrative Agent (for the benefit of Bank of America) in immediately
available funds an amount equal to such Lender’s Pro Rata Share of the
outstanding principal amount of such Swing Line Advances. The Administrative
Agent shall pay all amounts received to Bank of America, which shall apply such
amounts to the purchase price of such participations in such Swing Line
Advances. Any amount payable to the Administrative Agent (for the benefit of
Bank of America) pursuant to this Section 2.l(h)(3) and not paid within 2
Banking Days of the day on which notice of such payment received from the
Administrative Agent shall bear interest, payable by such Defaulting Lender,
until paid at the Federal Funds Rate. If the Lenders make any payment in respect
of Swing Line Advances as contemplated by this Section 2.1(h)(3) and thereafter
the Administrative Agent or Bank of America receives a payment on account of any
such Swing Line Advance, the Administrative Agent or Bank of America, as
appropriate, shall promptly pay to each Lender which funded its participation
therein an amount equal to such Lender’s Pro Rata Share thereof. The obligation
of each Lender to make payments under this Section 2.1(h)(3) shall be
unconditional and irrevocable and shall be made under all circumstances. If any
payment received on account of any Swing Line Advance and distributed to a
Lender as a participant under this Section 2.1(h)(3) is thereafter recovered
from the Administrative Agent or Bank of America in connection with any
bankruptcy or insolvency proceeding relating to the Company or otherwise, each
Lender which received such distribution shall, upon demand by the Administrative
Agent, repay to the Administrative Agent or Bank of America, as applicable, such
Lender’s Pro Rata Share of the amount so recovered together with an amount equal
to such

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                     Lender’s Pro Rata Share (according to the proportion of (A)
the total of such Lender’s required repayment to (B) the total amount so
recovered) of any interest or other amount paid or payable by the Administrative
Agent or Bank of America in respect of the total amount so recovered.        
(4)    Bank of America shall not make any Swing Line Advance pursuant to this
Section 2.1(h) if the making of such Swing Line Advance would result in an
aggregate amount of Swing Line Advances which are outstanding in excess of
$50,000,000.

                  Swing Line Advances shall be considered Borrowings for all
purposes hereunder (including conditions to disbursement but excluding the
notice requirement of Section 2.2) subject only to the special reimbursement
obligations of the Lenders pursuant to this Section 2.1(h). If Bank of America
is excused from its obligation to make a requested Swing Line Advance by this
Section 2.1(h)(4), the Company shall still be entitled to obtain the requested
Borrowing pursuant to the other provisions of Article II, subject to the
conditions applicable to such Borrowings.

2.2    Base Rate Loans. All Loans shall at all times constitute Base Rate Loans
unless properly designated or redesignated as LIBOR Loans pursuant to
Sections 2.3 or 2.4 or as a Swing Line Advance pursuant to Section 2.1(h). Each
request by the Company for a new Base Rate Loan (except for Swing Line Advances)
shall be made pursuant to a Request for Borrowing received by the Administrative
Agent, at the Administrative Agent’s office, not later than 10:30 a.m., Chicago
time, on the date the proposed Base Rate Loan is to be funded to the Company.
The Administrative Agent will promptly notify each Lender of its receipt of a
Request for Borrowing in accordance with Section 2.1(f).   2.3    LIBOR Loans.

        (a)    Each request by the Company for a LIBOR Loan shall be made
pursuant to a Request for Borrowing received by the Administrative Agent, at the
Administrative Agent’s office, not later than 12:00 noon, Chicago time, at least
3 LIBOR Banking Days before the first day of the applicable LIBOR Period. The
Administrative Agent will promptly notify each Lender of its receipt of a
Request for Borrowing in accordance with Section 2.1(f).         (b)    At or
about 12:00 noon, Chicago time, one LIBOR Banking Day after the LIBOR Banking
Day on which the Administrative Agent receives the Company’s Request for
Borrowing, the Administrative Agent shall determine the applicable LIBOR Rate
(which determination shall be conclusive in the absence of manifest error) and
shall promptly give notice of the same to the Company and the Lenders by
telephone or telecopier.         (c)    Upon fulfillment of the applicable
conditions set forth in Article IV, a LIBOR Loan shall become effective on the
first day of the applicable LIBOR Period.

2.4    Redesignation of Borrowings and Continuation of LIBOR Loans.

        (a)    If any LIBOR Loan is not repaid on the last day of the applicable
LIBOR Period or continued on such date into a subsequent LIBOR Period, such
Borrowing automatically shall be redesignated as a Base Rate Loan on such date.

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      (b)    Subject to the terms and conditions set forth in this Agreement, at
any time and from time to time from the Closing Date until one month preceding
the Maturity Date, the Company may request that all or a portion of outstanding
Base Rate Loans be redesignated as a LIBOR Loan or that any outstanding LIBOR
Loan be continued from the current LIBOR Period for such LIBOR Loan into a
subsequent LIBOR Period to begin on the last day of such current LIBOR Period,
provided that, in the case of either a redesignation of Base Rate Loans as a
LIBOR Loan or a continuation of a LIBOR Loan, the LIBOR Period for such LIBOR
Loan shall end on or before the Maturity Date.         (c)    Each redesignation
of all or a portion of outstanding Base Rate Loans as a LIBOR Loan shall be made
pursuant to a written Request for Redesignation. Not later than 12:00 noon,
Chicago time, at least 3 LIBOR Banking Days prior to the first day of the
applicable LIBOR Period, the Administrative Agent shall have received, at the
Administrative Agent’s office, a properly completed Request for Redesignation
specifying

             (1)    the requested date of redesignation,         (2)    the
requested amount of Base Rate Loans to be redesignated as a LIBOR Loan, and  
      (3)    the requested LIBOR Period.

           The Administrative Agent may, in its sole and absolute discretion,
permit a Request for Redesignation to be made by telephone (with confirmation
sent promptly by telecopier) by the Company.         (d)    Each continuation of
an outstanding LIBOR Loan from the current LIBOR Period for such LIBOR Loan into
a subsequent LIBOR Period to begin on the last day of such current LIBOR Period
shall be made pursuant to a written Request for Continuation. Not later than
12:00 noon, Chicago time, at least 3 LIBOR Banking Days prior to the last day of
the current LIBOR Period, the Administrative Agent shall have received, at the
Administrative Agent’s office, a properly completed Request for Continuation
specifying:

             (1)    the LIBOR Loan to be continued; and         (2)    the
subsequent LIBOR Period requested.

           The Administrative Agent may, in its sole and absolute discretion,
permit a Request for Continuation to be made by telephone (with confirmation
sent promptly by telecopier) by the Company.         (e)    The Administrative
Agent will promptly notify each Lender of its receipt of a Request for
Redesignation or a Request for Continuation on the date of timely receipt of a
Request for Redesignation or Request for Continuation from the Company. All
redesignations shall be made ratably according to the respective outstanding
principal amount of the Loans with respect to which the Request for
Redesignation was given then held by each Lender.

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      (f)    Unless all of the Lenders otherwise agree, during the existence of
an Event of Default, the Company may not elect to have a Loan continued as or
converted into a LIBOR Loan.         (g)    The amount of Base Rate Loans to be
redesignated as a LIBOR Loan, and the amount of any outstanding LIBOR Loan to be
continued into a subsequent LIBOR Period, shall be an integral multiple of
$100,000, but not less than $1,000,000.         (h)    With respect to any
redesignation of a Base Rate Loan as a LIBOR Loan or any continuation of an
outstanding LIBOR Loan into a subsequent LIBOR Period, no later than 12:00 noon,
Chicago time, one LIBOR Banking Day after the LIBOR Banking Day on which the
Administrative Agent receives the Company’s Request for Redesignation or Request
for Continuation, as the case may be, the Administrative Agent shall determine
the applicable LIBOR Rate (which determination shall be conclusive in the
absence of manifest error) and shall promptly give notice of the same to the
Company and the Lenders by telephone or telecopier.         (i)    Upon
fulfillment of the applicable conditions set forth in this Agreement, the
redesignation of all or a portion of outstanding Base Rate Loans as a LIBOR Loan
shall become effective on the first day of the applicable LIBOR Period and the
continuation of an outstanding LIBOR Loan into a subsequent LIBOR Period shall
become effective on the last day of the current LIBOR Period for such LIBOR
Loan.           (j)    A Request for Redesignation or a Request for Continuation
shall be irrevocable upon receipt by the Administrative Agent.

2.5    Calculation of Borrowing Base.

        (a)    Within 45 days after the end of each calendar quarter, and at
such other times as the Required Lenders may reasonably require or as the
Company may determine (but in each case no more often than monthly), the Company
shall provide the Administrative Agent with a Borrowing Base Certificate in a
form satisfactory to the Administrative Agent showing the Company’s calculations
of the components of the Borrowing Base and such data supporting such
calculations per Exhibit B or in another form as the Required Lenders may
reasonably require. Any change in the Borrowing Base shall be effective upon
receipt of a Borrowing Base Certificate. The Required Lenders shall then have a
period of 30 days following receipt of a Borrowing Base Certificate to notify
the Company of the determination that the Borrowing Base Certificate, as
calculated in accordance with the provisions hereof, is incorrect in the
Required Lenders’ reasonable judgment. If the Required Lenders fail to so notify
the Company within such 30 day period, the Borrowing Base Certificate shall be
deemed to be correct. If the Required Lenders so determine, the Borrowing Base
shall be recalculated as determined by the Required Lenders as of the date of
such determination based upon the reasonable judgment of the Required Lenders.  
      (b)    Amount of Borrowing Base. As used in this Agreement, the term
“Borrowing Base” has the meaning set forth in this Section 2.5(b):

               (1)    Except as set forth in Sections 2.5(b)(2) and (3) below,
the Borrowing Base shall consist of the Dollar amount equal to the sum of the
following Unencumbered Real Estate Inventory owned by the Company or any wholly-

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                       owned Subsidiary in the Homebuilding Segment and Home
Proceeds Receivable owned by the Company or any wholly-owned Subsidiary in the
Homebuilding Segment:

                       (A)    Home Proceeds Receivable. 90% of the amount of
Home Proceeds Receivable; plus         (B)    Sold Construction in Progress and
Sold Completed Units. 90% of the aggregate GAAP Value of Sold Construction in
Progress and Sold Completed Units; plus         (C)    Unsold Construction in
Progress and Completed Units.

                                 (i)    75% of the aggregate GAAP Value of
Unsold Construction in Progress and Unsold Completed Units which have been in an
Unsold status for less than 180 days; plus         (ii)    50% of the aggregate
GAAP Value of Unsold Construction in Progress and Unsold Completed Units which
have been in an Unsold status for 180 days or more but not more than 270 days
(for purposes of the Borrowing Base, no value (i.e., a 0% advance rate) shall be
attributed to Unsold Construction in Progress and Unsold Completed Units which
have been in an Unsold status for more than 270 days); plus

                       (D)    Finished Lots. 70% of the GAAP Value of Finished
Lots; plus         (E)    Land Under Development. 50% of the GAAP Value of the
Land Under Development; plus         (F)    Raw Land — Entitled. 25% of the GAAP
Value of Raw Land — Entitled;

                         provided, however, that the amount set forth in clause
(F) shall not exceed 10% of the Borrowing Base; and provided further that the
sum of

                                 (i)    70% of Finished Lots,         (ii)   
50% of Land Under Development and         (iii)    25% of Raw Land Entitled

                      shall not exceed 40% of the Borrowing Base.         (2)   
In calculating the GAAP Value of the classes of Unencumbered Real Estate
Inventory listed in Section 2.5(b)(1) above, all of the Unencumbered Real Estate
Inventory of the Company or any wholly-owned Subsidiary in the Homebuilding
Segment qualifies for inclusion in the Borrowing Base but shall specifically
exclude the cost of or investment in any land upon which the Company or such
wholly-owned Subsidiary holds a purchase option until

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                      such time as the Company or such wholly-owned Subsidiary
exercises the option and takes title to such land.         (3)    Only Real
Estate Inventory which is Unencumbered Real Estate Inventory may be added to the
Borrowing Base. Any Real Estate Inventory that is not Unencumbered Real Estate
Inventory shall have no value for purposes of the Borrowing Base (i.e., a 0%
advance rate). Furthermore, land in the Real Estate Inventory which is not
Entitled Land shall have no value for purposes of the Borrowing Base (i.e., a 0%
advance rate). Once Units or any other Real Estate Inventory are sold and
conveyed to a buyer, or otherwise cease to be owned by the Company or any
wholly-owned Subsidiary that is in the Homebuilding Segment, the applicable
advance rate for such asset shall decrease to 0%, and the Company shall not be
entitled to have any value for such assets attributed to the Borrowing Base.

2.6    Borrowing Base. The Total Outstandings shall not at any time exceed the
lesser of:

        (a)    the Aggregate Commitment; or         (b)    the Borrowing Base
less the aggregate principal amount of outstanding Senior Permitted Debt of the
Homebuilding Segment at such time (exclusive of the outstanding amount of the
Total Outstandings).

2.7    Payments by the Lenders to the Administrative Agent.

        (a)    Unless the Administrative Agent receives notice from a Lender on
or prior to the Closing Date or, with respect to any Borrowing after the Closing
Date, at least one Banking Day prior to the date of such Borrowing or in the
case of a Base Rate Loan upon notice to such Lender of such Base Rate Loan, that
such Lender will not make available as and when required hereunder to the
Administrative Agent for the account of the Company the amount of that Lender’s
Pro Rata Share of the Borrowing, the Administrative Agent may assume that each
Lender has made such amount available to the Administrative Agent in immediately
available funds on the date of Borrowing and the Administrative Agent may (but
shall not be so required), in reliance upon such assumption, make available to
the Company on such date a corresponding amount. If and to the extent any Lender
shall not have made its full amount available to the Administrative Agent in
immediately available funds and the Administrative Agent in such circumstances
has made available to the Company such amount, that Lender shall on the Banking
Day following such date of Borrowing make such amount available to the
Administrative Agent, together with interest at the Federal Funds Rate for each
day during such period. A notice of the Administrative Agent submitted to any
Lender with respect to amounts owing under this clause (a) shall be conclusive,
absent manifest error. If such amount is so made available, such payment to the
Administrative Agent shall constitute such Lender’s Loan on the date of
Borrowing for all purposes of this Agreement. If such amount is not made
available to the Administrative Agent on the Banking Day following the date of
Borrowing, the Administrative Agent will notify the Company of such failure to
fund and, upon demand by the Administrative Agent, the Company shall pay such
amount to the Administrative Agent for the Administrative Agent’s account,
together with accrued interest thereon for each day elapsed since the date of
such Borrowing, at a rate per annum equal to the interest rate applicable at the
time to the Loans comprising such

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             Borrowing. Nothing herein shall prejudice the rights of the Company
against such non-funding Lender.         (b)    The failure of any Lender to
make any Loan on any date of Borrowing shall not relieve any other Lender of any
obligation hereunder to make a Loan on such date of Borrowing, but no Lender
shall be responsible for the failure of any other Lender to make the Loan to be
made by such other Lender on any date of Borrowing.

2.8    Sharing of Payments, Etc. If, other than as expressly provided elsewhere
herein, any Lender shall obtain on account of the Loans made by it any payment
(whether voluntary, involuntary, through the exercise of any right of set-off,
or otherwise) in excess of its Pro Rata Share, such Lender shall immediately

        (a)    notify the Administrative Agent of such fact, and         (b)   
purchase from the other Lenders such participations in the Loans made by them as
shall be necessary to cause such purchasing Lender to share the excess payment
pro rata with each of them;

     provided, however, that if all or any portion of such excess payment is
thereafter recovered from the purchasing Lender, such purchase shall to that
extent be rescinded and each other Lender shall repay to the purchasing Lender
the purchase price paid therefor, together with an amount equal to such paying
Lender’s ratable share (according to the proportion of (1) the amount of such
paying Lender’s required repayment to (2) the total amount so recovered from the
purchasing Lender) of any interest or other amount paid or payable by the
purchasing Lender in respect of the total amount so recovered. The Company
agrees that any Lender so purchasing a participation from another Lender may, to
the fullest extent permitted by law, exercise all its rights of payment
(including the right of set-off, but subject to Section 10.6) with respect to
such participation as fully as if such Lender were the direct creditor of the
Company in the amount of such participation. The Administrative Agent will keep
records (which shall be conclusive and binding in the absence of manifest error)
of participations purchased under this Section and will in each case notify the
Lenders following any such purchases or repayments.   2.9    Letters of Credit.

        (a)    The Letter of Credit Commitment.

               (1)    Subject to the terms and conditions set forth herein,

                       (A)    the L/C Issuer agrees, in reliance upon the
agreements of the other Lenders set forth in this Section 2.9,

                               (i)    from time to time on any Banking Day
during the period from the Closing Date until the L/C Expiration Date, to issue
Letters of Credit for the account of the Company or a Guarantor, and to amend or
renew Letters of Credit previously issued by it, in accordance with clause
(b) below, and         (ii)    to honor drafts under the Letters of Credit; and

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                       (B)    the Lenders severally agree to participate in
Letters of Credit issued for the account of the Company or a Guarantor; provided
that the L/C Issuer shall not be obligated to make any L/C Credit Extension with
respect to any Letter of Credit, and no Lender shall be obligated to participate
in any Letter of Credit if as of the date of such L/C Credit Extension,

                               (i)    the Total Outstandings would exceed the
Aggregate Commitment,         (ii)    the aggregate Outstanding Amount of the
Loans of any Lender, plus such Lender’s Pro Rata Share of the Outstanding Amount
of all L/C Obligations, plus such Lender’s Pro Rata Share of the Outstanding
Amount of all Swing Line Advances would exceed such Lender’s Commitment, or  
      (iii)    the Outstanding Amount of the L/C Obligations would exceed the
Letter of Credit Sublimit.

           In no event shall any L/C Issuer be obligated to make any L/C Credit
Extension at any time if, after giving effect to such L/C Credit Extension, the
provisions of Section 2.6 would be violated. Within the foregoing limits, and
subject to the terms and conditions hereof, the Company’s and the Guarantors’
ability to obtain Letters of Credit shall be fully revolving, and accordingly
the Company and the Guarantors may, during the foregoing period, obtain Letters
of Credit to replace Letters of Credit that have expired or that have been drawn
upon and reimbursed. All Existing Letters of Credit shall be deemed to have been
issued pursuant hereto, and from and after the Closing Date shall be subject to
and governed by the terms and conditions hereof.                  (2)    The L/C
Issuer shall be under no obligation to issue any Letter of Credit if:

                       (A)    any order, judgment or decree of any Governmental
Authority or arbitrator shall by its terms purport to enjoin or restrain the L/C
Issuer from issuing such Letter of Credit, or any Law applicable to the L/C
Issuer or any request or directive (whether or not having the force of law) from
any Governmental Authority with jurisdiction over the L/C Issuer shall prohibit,
or request that the L/C Issuer refrain from, the issuance of letters of credit
generally or such Letter of Credit in particular or shall impose upon the L/C
Issuer with respect to such Letter of Credit any restriction, reserve or capital
requirement (for which the L/C Issuer is not otherwise compensated hereunder)
not in effect on the Closing Date, or shall impose upon the L/C Issuer any
unreimbursed loss, cost or expense which was not applicable on the Closing Date
and which the L/C Issuer in good faith deems material to it;         (B)   
[intentionally omitted];

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                       (C)    the expiry date of such requested Letter of Credit
would occur after the L/C Expiration Date, unless all the Lenders have approved
such expiry date;         (D)    the issuance of such Letter of Credit would
violate one or more policies of the L/C Issuer; or         (E)    such Letter of
Credit is to be denominated in a currency other than Dollars.

               (3)    The L/C Issuer shall be under no obligation to amend any
Letter of Credit if

                       (A)    The L/C Issuer would have no obligation at such
time to issue such Letter of Credit in its amended form under the terms hereof,
or         (B)    The beneficiary of such Letter of Credit does not accept the
proposed amendment to such Letter of Credit.

        (b)    Procedures for Issuance and Amendment of Letters of Credit.

               (1)    Each Letter of Credit shall be issued or amended, as the
case may be, upon the request of the Company or a Guarantor delivered to the L/C
Issuer selected by the Company (with a copy to the Administrative Agent) in the
form of a L/C Application, appropriately completed and signed by an Authorized
Official of the Company and, in the case of a Letter of Credit issued for the
account of a Guarantor, also by an Authorized Official of such Guarantor. Such
L/C Application must be received by the L/C Issuer and the Administrative Agent
not later than 4:00 p.m., Chicago time, at least 3 Banking Days (or such later
date and time as the L/C Issuer and the Administrative Agent each may agree in a
particular instance in their sole discretion) prior to the proposed issuance
date or date of amendment, as the case may be. The Company shall be primarily
and directly liable for any and all obligations and other liabilities arising in
connection with each Letter of Credit issued for the account of a Guarantor. In
the case of a request for an initial issuance of a Letter of Credit, such L/C
Application shall specify in form and detail satisfactory to the L/C Issuer:

                       (A)    the proposed issuance date of the requested Letter
of Credit (which shall be a Banking 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

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                       (G)    such other matters as the L/C Issuer may require.

                         In the case of a request for an amendment of any
outstanding Letter of Credit, such L/C Application shall specify in form and
detail satisfactory to the L/C Issuer:

                       (A)    the Letter of Credit to be amended;         (B)   
the proposed date of amendment thereof (which shall be a Banking Day);        
(C)    the nature of the proposed amendment; and         (D)    such other
matters as the L/C Issuer may require.

               (2)    Promptly after receipt of any L/C Application, the L/C
Issuer will confirm with the Administrative Agent (by telephone or in writing)
that the Administrative Agent has received a copy of such L/C Application from
the Company or a Guarantor and, if not, the L/C Issuer will provide the
Administrative Agent with a copy thereof. Upon receipt by the L/C Issuer of
confirmation from the Administrative Agent that the requested issuance or
amendment is permitted in accordance with the terms hereof, which confirmation
may be relied upon for a period of up to 3 Banking Days following delivery by
the Administrative Agent to the L/C Issuer, then, subject to the terms and
conditions hereof, the L/C Issuer shall, on or prior to the requested date,
issue a Letter of Credit for the account of the Company or a Guarantor or enter
into the applicable amendment, as the case may be, in each case in accordance
with the L/C Issuer’s usual and customary business practices. Immediately upon
the issuance of each Letter of Credit, each Lender shall be deemed to, and
hereby irrevocably and unconditionally agrees to, purchase from the L/C Issuer a
risk participation in such Letter of Credit in an amount equal to:

                       (A)    the product of such Lender’s Pro Rata Share times
        (B)    the amount of such Letter of Credit.

               (3)    [Intentionally omitted.]         (4)    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 L/C Issuer
will also deliver to the Company and the Guarantor applying for the Letter of
Credit, as applicable, and the Administrative Agent a true and complete copy of
such Letter of Credit or amendment.

      (c)    Drawings and Reimbursements; Funding of Participations.

               (1)    Upon receipt from the beneficiary of any Letter of Credit
of any notice of a drawing under such Letter of Credit, the L/C Issuer shall
notify the Company and the Administrative Agent thereof. Not later than 12:00
noon., Chicago time, on the date of any payment by the L/C Issuer under a Letter
of Credit

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           (each such date, an “Honor Date”), the Company shall reimburse the
L/C Issuer through the Administrative Agent in an amount equal to the amount of
such drawing. If the Company fails to so reimburse the L/C Issuer by such time,
the Administrative Agent shall promptly notify each Lender of the Honor Date,
the amount of the unreimbursed drawing (the “Unreimbursed Amount”), and the
amount of such Lender’s Pro Rata Share thereof. In such event, the Company shall
be deemed to have requested a Base Rate Loan to be disbursed on the Honor Date
in an amount equal to the Unreimbursed Amount, without regard to the minimum and
multiples specified in Section 2.1 for the principal amount of Base Rate Loans,
but subject to the amount of the unutilized portion of the Aggregate Commitment
and the conditions set forth in Section 4.2 (other than the delivery by the
Company of a Request for Borrowing, a Request for Redesignation or Request for
Continuation). If the conditions set forth in the preceding sentence are
satisfied by the Company, each Lender severally agrees, according to its Pro
Rata Share, to make a Loan to the Company in the amount of the Unreimbursed
Amount. Any notice given by the L/C Issuer or the Administrative Agent pursuant
to this Section 2.9(c)(1) shall be in writing.         (2)    Each Lender
(including the Lender acting as L/C Issuer) shall upon any notice pursuant to
Section 2.9(c)(1) make funds available to the Administrative Agent for the
account of the L/C Issuer 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.,
Chicago time, on the Banking Day specified in such notice by the Administrative
Agent, whereupon, subject to the provisions of Section 2.9(c)(3), each Lender
that so makes funds available shall be deemed to have made a Base Rate Loan to
the Company in such amount. The Administrative Agent shall remit the funds so
received to the L/C Issuer.         (3)    With respect to any Unreimbursed
Amount that is not fully refinanced by a Base Rate Loan because the conditions
set forth in Section 4.2 cannot be satisfied or for any other reason, the
Company shall be deemed to have incurred from the L/C Issuer 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 Base Rate plus 3% per annum. In such event, each Lender’s
payment to the Administrative Agent for the account of the L/C Issuer pursuant
to Section 2.9(c)(2) shall be deemed payment in respect of its participation in
such L/C Borrowing and shall constitute an L/C Advance from such Lender in
satisfaction of its participation obligation under this Section 2.9.         (4)
   Until each Lender funds its Loan or L/C Advance pursuant to this
Section 2.9(c) to reimburse the L/C Issuer for any amount drawn under any Letter
of Credit, interest in respect of such Lender’s Pro Rata Share of such amount
shall be solely for the account of the L/C Issuer.         (5)    Each Lender’s
obligation to make Loans or L/C Advances to reimburse the L/C Issuer for amounts
drawn under Letters of Credit, as contemplated by this Section 2.9(c), shall be
absolute and unconditional and shall not be affected by any circumstance,
including:

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                       (A)    any set-off, counterclaim, recoupment, defense or
other right which such Lender may have against the L/C Issuer, the Company 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 Lender’s obligation to make
Base Rate Loans pursuant to this Section 2.9(c) is subject to the conditions set
forth in Section 4.2 (other than delivery by the Company of a Request for
Borrowing, a Request for Redesignation or Request for Continuation). No such
making of an L/C Advance shall relieve or otherwise impair the obligation of the
Company to reimburse the L/C Issuer for the amount of any payment made by the
L/C Issuer under any Letter of Credit, together with interest as provided
herein.         (6)    If any Lender fails to make available to the
Administrative Agent for the account of the L/C Issuer any amount required to be
paid by such Lender pursuant to the foregoing provisions of this Section 2.9(c)
by the time specified in Section 2.9(c)(2), the L/C Issuer shall be entitled to
recover from such Lender (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 L/C
Issuer at a rate per annum equal to the Federal Funds Rate from time to time in
effect. A certificate of the L/C Issuer submitted to any Lender (through the
Administrative Agent) with respect to any amounts owing under this clause (6)
shall be conclusive absent manifest error.

      (d)    Repayment of Participations.

               (1)    At any time after the L/C Issuer has made a payment under
any Letter of Credit and has received from any Lender such Lender’s L/C Advance
in respect of such payment in accordance with Section 2.9(c), if the
Administrative Agent receives for the account of the L/C Issuer any payment in
respect of the related Unreimbursed Amount or interest thereon (whether directly
from the Company or otherwise, including proceeds of cash collateral applied
thereto by the Administrative Agent), the Administrative Agent will distribute
to such Lender its Pro Rata Share thereof (appropriately adjusted, in the case
of interest payments, to reflect the period of time during which such Lender’s
L/C Advance was outstanding) in the same funds as those received by the
Administrative Agent.         (2)    If any payment received by the
Administrative Agent for the account of the L/C Issuer pursuant to Section
2.9(c)(1) is required to be returned under any of the circumstances described in
Section 10.6 (including pursuant to any settlement entered into by the L/C
Issuer in its discretion), each Lender shall pay to the Administrative Agent for
the account of the L/C Issuer 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

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                         Lender, at a rate per annum equal to the Federal Funds
Rate from time to time in effect.

        (e)    Obligations Absolute. The obligation of the Company to reimburse
the L/C Issuer 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, including the following:

               (1)    any lack of validity or enforceability of such Letter of
Credit, this Agreement, or any other agreement or instrument relating thereto;  
      (2)    the existence of any claim, counterclaim, set-off, defense or other
right that the Company 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 L/C Issuer 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;         (3)    any draft, demand, certificate or
other document presented under such Letter of Credit proving to be forged,
fraudulent, invalid or insufficient in any respect 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;         (4)    any payment by the L/C Issuer 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; or any payment made
by the L/C Issuer 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         (5)   
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 Company.

             The Company 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 Company’s instructions or other irregularity,
the Company will immediately notify the L/C Issuer. The Company shall be
conclusively deemed to have waived any claim against the L/C Issuer and its
correspondents for such noncompliance or irregularity unless such notice is
given as aforesaid.         (f)    Role of L/C Issuer. Each Lender and the
Company agree that, in paying any drawing under a Letter of Credit, the L/C
Issuer 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 L/C Issuer, any Agent-Related Person nor any of the

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                respective correspondents, participants or assignees of the L/C
Issuer shall be liable to any Lender for:

               (1)    any action taken or omitted in connection herewith at the
request or with the approval of the Lenders or the Required Lenders, as
applicable;         (2)    any action taken or omitted in the absence of gross
negligence or willful misconduct; or         (3)    the due execution,
effectiveness, validity or enforceability of any document or instrument related
to any Letter of Credit or L/C Application.

             The Company 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 Company’s pursuing such rights and remedies as it may have against
the beneficiary or transferee at law or under any other agreement. None of the
L/C Issuer, any Agent-Related Person, nor any of the respective correspondents,
participants or assignees of the L/C Issuer, shall be liable or responsible for
any of the matters described in clauses (1) through (5) of Section 2.9(e);
provided, however, that anything in such clauses to the contrary
notwithstanding, the Company may have a claim against the L/C Issuer, and the
L/C Issuer may be liable to the Company, to the extent, but only to the extent,
of any direct, as opposed to consequential or exemplary, damages suffered by the
Company which were caused by the L/C Issuer’s willful misconduct or gross
negligence or the L/C Issuer’s willful 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. In furtherance and not in limitation of the foregoing, the L/C Issuer
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 the L/C Issuer 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)    [Intentionally omitted.]  
      (h)    Applicability of ISP98. Unless otherwise expressly agreed by the
L/C Issuer and the Company when a Letter of Credit is issued (including any such
agreement applicable to an Existing Letter of Credit), 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) shall apply to each standby Letter of Credit.  
      (i)    Letter of Credit Fees. The Company agrees to pay to the
Administrative Agent, for the account of each Lender in accordance with its Pro
Rata Share, a fee (the “Letter of Credit Fee”) computed at the applicable L/C
Fee Rate on the average daily face amount of all Letters of Credit outstanding
hereunder from time to time. The Letter of Credit Fee shall commence to accrue
on the date of this Agreement and shall be payable in arrears on the first day
of January, April, July and October of each year, beginning with the first of
such dates to occur after the date of this Agreement, on the Maturity Date and
upon payment in full of the Obligations. If there is any change in

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               the L/C Fee Rate during any quarter, the daily maximum amount of
each Letter of Credit shall be computed and multiplied by the L/C Fee Rate
separately for each period during such quarter that such L/C Fee Rate was in
effect.         (j)    Fronting Fee and Documentary and Processing Charges
Payable to L/C Issuer. The Company shall pay directly to the Administrative
Agent for the account of each L/C Issuer a fronting fee with respect to each
Letter of Credit issued by such L/C Issuer in an amount equal to the L/C
Fronting Fee. No L/C Fronting Fee shall be payable for the Existing Letters of
Credit. In addition, the Company shall pay directly to the Administrative Agent
for the account of each L/C Issuer the customary issuance, presentation,
amendment and other processing fees, and other standard costs and charges, of
the L/C Issuer relating to letters of credit as from time to time in effect. The
Company shall pay all fees described in this clause (j) to the Administrative
Agent in arrears on the first day of January, April, July and October of each
year, beginning with the first of such dates to occur after the date of this
Agreement, on the Maturity Date and upon payment in full of the Obligations. All
such fees shall be deemed fully earned by the L/C Issuer upon issuance of the
relevant Letter of Credit and are nonrefundable.         (k)    Conflict with
L/C Application. In the event of any conflict between the terms hereof and the
terms of any L/C Application, the terms hereof shall control.         (l)   
Number of L/C Issuers; Reports to Administrative Agent.

                   (1)    In addition to the Administrative Agent, at any one
time there may be up to 3 additional L/C Issuers, each of whom must be Lenders.
        (2)    Each Lender who acts as a L/C Issuer during any fiscal quarter of
the Company must send a report to the Administrative Agent detailing all Letters
of Credit issued by such Lender (as L/C Issuer) during that fiscal quarter,
together with such other information relating to such Letters of Credit as the
Administrative Agent may reasonably request (including bills for all fees, costs
and charges described in clause (j) above). Such reports and bills are due by
the 2nd day of each month following the end of each fiscal quarter of the
Company, commencing on October 2, 2002.

          (m)    Letters of Credit Issued by Each L/C Issuer. A L/C Issuer
(other than the Administrative Agent) may refuse to issue a Letter of Credit
otherwise permitted under this Agreement if, by issuing such Letter of Credit,
the aggregate undrawn amount of Letters of Credit issued by such L/C Issuer
would exceed 35% of the Letter of Credit Sublimit.

2.10    Increase of Commitments.

          (a)    Provided there exists no Default, upon notice to the
Administrative Agent (which shall promptly notify the Lenders), the Company may
from time to time request an increase in the Aggregate Commitments by an amount
(for all such requests) that will not result in the Aggregate Commitment under
this Agreement exceeding $400,000,000 less the aggregate amount of reductions to
the Commitments made pursuant to Section 2.11. The Company may (in consultation
with the Administrative Agent) accomplish such an increase by doing either or
both of the following:

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               (1)    inviting one or more Eligible Assignees to become Lenders
pursuant to a joinder agreement in form and substance satisfactory to the
Administrative Agent and its counsel; or         (2)    requesting the Lenders
to increase the amount of the Aggregate Commitments in accordance with the
procedure set forth in clause (b).

      (b)    If the Company (in consultation with the Administrative Agent)
requests that the Lenders increase the amount of the Aggregate Commitments, the
Company (in consultation with the Administrative Agent) shall specify the time
period within which each Lender is requested to respond (which shall in no event
be less than 10 Banking Days from the date of delivery of such notice to the
Lenders). Each Lender shall notify the Administrative Agent within such time
period whether or not it agrees to increase its Commitment and, if so, whether
by an amount equal to, greater than, or less than its Pro Rata Share of such
requested increase. Any Lender not responding within such time period shall be
deemed to have declined to increase its Commitment. The Administrative Agent
shall notify the Company and each Lender of the Lender’s responses to each
request made hereunder.         (c)    If the Aggregate Commitment is increased
in accordance with this Section, the Administrative Agent and the Company shall
determine the effective date (the “Increase Effective Date”) and the final
allocation of such increase. The Administrative Agent shall promptly notify the
Company and the Lenders of the final allocation of such increase and the
Increase Effective Date. As a condition precedent to such increase, the Company
shall deliver to the Administrative Agent a certificate of each Loan Party dated
as of the Increase Effective Date (in sufficient copies for each Lender) signed
by an Authorized Official of such Loan Party

               (1)    certifying and attaching the resolutions adopted by such
Loan Party approving or consenting to such increase, and         (2)    in the
case of the Company, certifying that, before and after giving effect to such
increase,

                       (A)    the representations and warranties contained in
Article V and the other Loan Documents are true and correct on and as of the
Increase Effective Date, except to the extent that such representations and
warranties specifically refer to an earlier date, in which case they are true
and correct as of such earlier date, and except that for purposes of this
Section, the representations and warranties contained in Section 5.5 shall be
deemed to refer to the most recent statements furnished pursuant to
Section 6.1(a) and (b), and         (B)    no Default exists.

           The Company shall prepay any Loans outstanding on the Increase
Effective Date (and pay any additional amounts required pursuant to
Section 3.10) to the extent necessary to keep the outstanding Loans ratable with
any revised Pro Rata Shares arising from any nonratable increase in the
Commitments under this Section.         (d)    This Section supercedes any
provisions in Sections 2.8 and 10.1 to the contrary.

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2.11    Voluntary Termination or Reduction of Commitments. The Company may, upon
not less than 5 Banking Days’ prior notice to the Administrative Agent,
terminate the Commitments, or permanently reduce the Commitments by an aggregate
minimum amount of $10,000,000 or any multiple of $1,000,000 in excess thereof;
unless, after giving effect thereto and to any prepayments of Loans made on the
effective date thereof, the then-outstanding amount of the Loans plus the L/C
Obligations would exceed the amount of the combined Commitments then in effect.
Once reduced in accordance with this Section 2.11, the Commitments may not be
increased, except pursuant to Section 2.10. Any reduction of the Commitments
shall be applied to each Lender according to its Pro Rata Share. All accrued
fees (including Non-use Fees and Facility Fees) to, but not including the
effective date of any reduction or termination of Commitments, shall be paid on
the effective date of such reduction or termination.

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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 Borrowing from the date thereof until payment in full
is made and shall accrue and be payable at the rates set forth herein both
before and after default and before and after maturity and judgment. Upon any
partial prepayment or redesignation of outstanding Base Rate Loans, interest
accrued to but not including the date of such prepayment or redesignation shall
be payable on the next following Interest Payment Date. Upon any partial
prepayment or payment in full or redesignation or conversion of any LIBOR Loan,
or upon any payment or redesignation in full of all outstanding Base Rate Loans,
interest accrued to but not including the date of such prepayment, payment,
redesignation or conversion shall be payable on the next following Interest
Payment Date.           (b)    Interest on each Base Rate Loan shall be computed
on the basis of a year of 365 or 366 days and the actual number of days elapsed,
at the Base Rate times the total principal balance outstanding under each Note.
Interest accrued on each Base Rate Loan shall be payable on each Interest
Payment Date, commencing with the first such date to occur after the Closing
Date. The Administrative Agent shall use its best efforts to notify the Company
of the amount of interest due on each Interest Payment Date, but failure of the
Administrative Agent to do so shall not excuse payment of such interest when
payable. Except as otherwise provided in Section 3.6, the unpaid principal
amount of any Base Rate Loan shall bear interest at a fluctuating rate per annum
equal to the Base Rate. Each change in the interest rate shall take effect
simultaneously with the corresponding change in the Base Rate.           (c)   
Interest on each LIBOR Loan shall be computed on the basis of a year of 360 days
and the actual number of days elapsed. Interest accrued on each LIBOR Loan shall
be payable on each Interest Payment Date. The Administrative Agent shall use its
best efforts to notify the Company of the amount of interest so payable prior to
each such date, but failure of the Administrative Agent to do so shall not
excuse payment of such interest when payable. The unpaid principal amount of any
LIBOR Loan shall bear interest at a rate per annum equal to the LIBOR Rate for
that LIBOR Loan plus the applicable LIBOR Margin.           (d)    Interest on
each Swing Line Advance shall be computed on the basis of a year of 365 or
366 days and the actual number of days elapsed. Interest accrued on each Swing
Line Advance shall be payable on each Interest Payment Date. The Administrative
Agent shall use its best efforts to notify the Company of the amount of interest
so payable prior to each such date, but failure of the Administrative Agent to
do so shall not excuse payment of such interest when payable. The unpaid
principal amount of any Swing Line Advance shall bear interest at a rate per
annum equal to the Swing Line Rate for that Swing Line Advance.           (e)   
If not sooner paid, the principal indebtedness evidenced by each Note shall be
payable as follows:

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               (1)    subject to the applicable provisions of Section 2.4 of
this Agreement providing for automatic redesignation of Borrowings and the
continuation of LIBOR Loans into a subsequent LIBOR Period upon compliance with
Section 2.4, the principal amount of each LIBOR Loan shall be payable on the
last day of the LIBOR Period for such LIBOR Loan if such LIBOR Loan is not
redesignated or continued pursuant to Section 2.4;         (2)    the amount, if
any, by which the principal indebtedness evidenced by each Note at any time
exceeds the applicable Lender’s Commitment shall be payable immediately;        
(3)    the amount of each payment required pursuant to Section 3.16 shall be
payable immediately, except that if no Default or Event of Default has occurred
and is continuing, such payment may be held as cash collateral, at the request
of the Company, and applied to the Loans at the end of any LIBOR Period with
respect thereto;         (4)    all outstanding Loans shall be payable on the
Maturity Date; and         (5)    the principal amount of each Swing Line
Advance shall be payable on the fifth Banking Day after the date such Swing Line
Advance was made, and in any event on the Maturity Date. In the event that any
Swing Line Advance is not repaid by the Company (including a repayment made with
the proceeds of a Base Rate Loan or a LIBOR Loan obtained by the Company under
the terms of this Agreement) in immediately available funds prior to 12:00 noon,
Chicago time, on such fifth Banking Day, the Administrative Agent shall, on
behalf of the Company (which hereby irrevocably directs the Administrative Agent
to act on its behalf), promptly request the Lenders to make a Base Rate Loan on
the such Banking Day in an amount equal to the unpaid principal amount of such
Swing Line Advance. Unless any Event of Default shall have occurred (in which
case the provisions of Section 2.1(h)(3) shall apply), each Lender shall make
the amount of its Pro Rata Share of such Base Rate Loan available to the
Administrative Agent for the account of Bank of America at the office of the
Administrative Agent set forth below its signature hereto by 2:00 p.m., Chicago
time, on such Banking Day in funds immediately available to the Administrative
Agent. The proceeds of such Base Rate Loan shall be immediately applied to the
payment of such Swing Line Advance.

        (f)    Each Note may, at any time and from time to time, be paid or
prepaid in whole or in part, provided that:

               (1)    any partial prepayment shall be an integral multiple of
$100,000;         (2)    any partial prepayment shall be in an amount not less
than $1,000,000; and         (3)    any payment or prepayment of all or any part
of any LIBOR Loan on a day other than the last day of the applicable LIBOR
Period shall be made on a LIBOR Banking Day, shall be preceded by at least 5
LIBOR Banking Days written notice to the Administrative Agent of the date and
amount of such payment or payments, and shall be subject to the indemnification
requirements of Section 3.10.

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                In addition, if at any time the amount of any LIBOR Loan is
reduced (by payment, prepayment or conversion of a part thereof) to an amount
less than $1,000,000, such LIBOR Loan shall automatically convert into a Base
Rate Loan, and on and after such date the right of the Company to continue such
Borrowing as a LIBOR Loan shall terminate.

3.2    Non-use Fee. For the period commencing on the date of this Agreement and
ending on the earlier of (i) the termination of the Commitments or (ii) the
Maturity Date, the Company shall pay to the Administrative Agent for the account
of each Lender in accordance with its Pro Rata Share a non-use fee (the “Non-use
Fee”), computed daily at the rate of

        (a)    the applicable Non-use Fee Rate times         (b)    the
difference between

               (1)    the Aggregate Commitment in effect on such day, and  
      (2)    the Daily Usage for such day.

     The Non-use Fee shall be calculated on a daily basis but payable in arrears
on the first day of each July, October, January and April, respectively, except
that upon payment of each Note in full, the Non-use Fee accrued to the date of
payment shall be payable on the date of payment.   3.3    Facility Fee. For the
period commencing on the date of this Agreement and ending on the earlier of
(i) the termination of the Commitments and payment of all outstanding
Obligations in full or (ii) the Maturity Date, the Company shall pay to the
Administrative Agent for the account of each Lender a facility fee (the
“Facility Fee”), computed on the basis of a year of 360 days and the actual
number of days, payable at the Facility Fee Rate times the amount of the
Commitment (whether used or unused) of such Lender. The Facility Fee owing to
each Lender under this Section 3.3 shall be payable quarterly in arrears on the
first day of each January, April, July and October of each year.   3.4   
Up-front Fees. The Company shall pay to the Administrative Agent for the account
of each Lender an up-front fee in the amount set forth in letter agreements
between each Lender and the Arranger and advised by the Arranger to the Company.
Such up-front fees are payable in full on the Closing Date and are fully earned
and nonrefundable.   3.5    Other Fees. The Company shall pay to the Arranger
and the Administrative Agent for their own respective accounts fees in the
amounts and at the times specified as heretofore agreed upon by letter agreement
between the Company, the Administrative Agent and the Arranger, as well as the
other fees provided for herein. Such fees shall be fully earned when paid and
nonrefundable.   3.6    Late Payments. Should any amount of principal or other
amount payable under any Loan Document to the Lenders not be 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 3% per annum, to the fullest extent
permitted by applicable Law.   3.7    Taxes. All payments payable to the Lenders
hereunder or with respect to the Loan Documents shall be made to the Lenders
without deductions for any Taxes or Other Taxes except to the extent the Company
is required by any Law or Governmental Authority to withhold and

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except in accordance with Section 10.14 to the extent, if any, that such amounts
are required to be withheld by the Administrative Agent under the laws of the
United States of America or any other applicable taxing authority. In the event
of any such withholding then the Company will pay such amount as shall cause the
Lenders to receive an amount which they would have received except for such
withholding (and an amount equal to any tax due on such additional amount).

3.8    Illegality.

        (a)    If any Lender determines that the introduction after the date
hereof of any Requirement of Law, or any change after the date hereof in any
Requirement of Law or in the interpretation or administration of any Requirement
of Law, has made it unlawful, or that any central bank or other Governmental
Authority has asserted that it is unlawful, for any Lender or its applicable
Lending Office to make LIBOR Loans, then, on notice thereof by the Lender to the
Company through the Administrative Agent, any obligation of that Lender to make
LIBOR Loans shall be suspended until the Lender notifies the Administrative
Agent and the Company that the circumstances giving rise to such determination
no longer exist.         (b)    If a Lender determines that it is unlawful to
maintain any LIBOR Loan, the Company shall, upon its receipt of notice of such
fact and demand from such Lender (with a copy to the Administrative Agent),
prepay in full such LIBOR Loans of that Lender then outstanding, together with
interest accrued thereon and amounts required under Section 3.10, either on the
last day of the LIBOR Period thereof, if the Lender may lawfully continue to
maintain such LIBOR Loans to such day, or immediately, if the Lender may not
lawfully continue to maintain such LIBOR Loan. If the Company is required to so
prepay any LIBOR Loan, then concurrently with such prepayment, the Company may,
at its option, borrow from the affected Lender, in the amount of such repayment,
a Base Rate Loan.           (c)    If the obligation of any Lender to make or
maintain LIBOR Loans has been so terminated or suspended, the Company may elect,
by giving notice to the Lender through the Administrative Agent, that all Loans
which would otherwise be made by the Lender as LIBOR Loans shall be instead Base
Rate Loans.           (d)    Before giving any notice to the Administrative
Agent under this Section, the affected Lender shall designate a different
Lending Office with respect to its LIBOR Loans if such designation will avoid
the need for giving such notice or making such demand and will not, in the
judgment of the Lender, be illegal or otherwise disadvantageous to the Lender.

3.9    Increased Costs and Reduction of Return.

        (a)    If any Lender determines that, due to either

               (1)    the introduction after the date hereof of or any change
(other than any change by way of imposition of or increase in reserve
requirements included in the calculation of the LIBOR Rate or in respect of the
assessment rate payable by any Lender to the FDIC for insuring U.S. deposits) in
or in the interpretation after the date hereof of any law or regulation or

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               (2)    the compliance by that Lender with any guideline imposed
or request made by any central bank or other Governmental Authority after the
date hereof (whether or not having the force of law),

             there shall be any increase in the cost to such Lender of agreeing
to make or making, funding or maintaining any LIBOR Loans, then the Company
shall be liable for, and shall from time to time, upon demand (with a copy of
such demand to be sent to the Administrative Agent), pay to the Administrative
Agent for the account of such Lender, additional amounts as are sufficient to
compensate such Lender for such increased costs.           (b)    If any Lender
shall have determined that

               (1)    the introduction after the date hereof of any Capital
Adequacy Regulation,         (2)    any change after the date hereof in any
Capital Adequacy Regulation,         (3)    any change after the date hereof in
the interpretation or administration of any Capital Adequacy Regulation by any
central bank or other Governmental Authority charged with the interpretation or
administration thereof, or         (4)    compliance by the Lender (or its
Lending Office) or any corporation controlling the Lender with any Capital
Adequacy Regulation described in clauses (1) through (3) above,

                 affects or would affect the amount of capital required or
expected to be maintained by the Lender or any corporation controlling the
Lender and (taking into consideration such Lender’s or such corporation’s
policies with respect to capital adequacy and such Lender’s desired return on
capital) determines that the amount of such capital is increased as a
consequence of its Commitment, Loans, credits or obligations under this
Agreement, then, upon demand of such Lender to the Company through the
Administrative Agent, the Company shall pay to the Lender, from time to time as
specified by the Lender, additional amounts sufficient to compensate the Lender
for such increase.

3.10    Funding Indemnification. If any payment of a LIBOR Loan occurs on a date
which is not the last day of the LIBOR Period, whether because of acceleration,
prepayment or otherwise, or if, for any reason other than default by one or more
of the Lenders, a LIBOR Loan is requested and subsequently cancelled or is
otherwise not made or continued as a LIBOR Loan, or a Base Rate Loan is not
redesignated as a LIBOR Loan on the date specified by the Company, the Company
will indemnify and hold harmless each Lender from and against any loss, damage,
expense or cost incurred by such Lender resulting therefrom, including any loss
of anticipated profits and any loss 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 (collectively,
“Funding Indemnification Costs”). In addition to the Funding Indemnification
Costs described in the preceding sentence, if the Company gives notice that it
intends to prepay a LIBOR Loan on a date which is not the last day of a LIBOR
Period, the Company will indemnify and hold harmless each Lender from Funding
Indemnification Costs resulting from any failure by the Company to prepay on the
date set forth in such notice. The Company shall also pay any customary
administrative fees charged by such Lender in connection with the foregoing. The
Company shall pay to the

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     Administrative Agent for the account of each Lender the amount required to
indemnify such Lender within 15 days after written certification by such Lender
of such loss, damage, expense or cost (which certification shall be delivered by
such Lender to the Administrative Agent for delivery to the Company).
Determination of amounts payable under this Section in connection with a LIBOR
Loan shall be calculated as though each Lender funded its LIBOR Loan through the
purchase of a deposit of the type and maturity corresponding to the deposit used
as a reference in determining the LIBOR Rate applicable to such LIBOR Loan,
whether in fact that is the case or not.   3.11    Inability to Determine Rates.
If the Administrative Agent determines that for any reason adequate and
reasonable means do not exist for determining the LIBOR Rate for any requested
LIBOR Period with respect to a proposed LIBOR Loan, or that the LIBOR Rate
applicable pursuant to Section 3.1(c) for any requested LIBOR Period with
respect to a proposed LIBOR Loan does not adequately and fairly reflect the cost
to the Lenders of funding such Borrowing, the Administrative Agent will promptly
so notify the Company and each Lender. Thereafter, the obligation of the Lenders
to make or maintain LIBOR Loans, as the case may be, hereunder shall be
suspended until the Administrative Agent revokes such notice in writing. Upon
receipt of such notice, the Company may revoke any Request for Borrowing or
Request for Redesignation of Borrowing then submitted by it. If the Company does
not revoke such a request, the Lenders shall make, convert or continue the
Loans, as proposed by the Company, in the amount specified in the applicable
notice submitted by the Company, but such Loans shall be made, converted or
continued as Base Rate Loans instead of LIBOR Loans. As of the date of this
Agreement, no Lender has made the determination or is aware of the conditions
referenced in the first sentence of this Section 3.11.   3.12    Certificate of
Lenders. Any Lender claiming reimbursement or compensation under this
Article III shall deliver to the Company (with a copy to the Administrative
Agent) a certificate setting forth in reasonable detail the amount payable to
the Lender hereunder and the basis for such calculation and claim, and such
certificate shall be conclusive and binding on the Company in the absence of
manifest error.   3.13    Substitution of Lenders. Upon the receipt by the
Company from any Lender (an “Affected Lender”) of a claim for compensation under
Section 3.9 or, to the extent such problem affects less than the Required
Lenders, notice of a Lender’s inability to fund LIBOR Loans under Section 3.8 or
determine LIBOR rates under Section 3.11, the Company may:

          (a)    request the Administrative Agent to use its best efforts to
obtain a replacement bank or financial institution satisfactory to the Company
to acquire and assume all or a ratable part of all of such Affected Lender’s
Loans and Commitment (a “Replacement Lender”); or           (b)    request one
or more of the other Lenders to acquire and assume all or part of such Affected
Lender’s Loans and Commitment; or           (c)    designate a Replacement
Lender.

          Any such designation of a Replacement Lender under clause (a) or (c)
shall be subject to the prior written consent of the Administrative Agent (which
consent shall not be unreasonably withheld or delayed) and shall provide that
the Affected Lender will receive payment in immediately available funds on the
date of replacement of an amount equal to 100% of the outstanding principal
amount of that portion of such Affected Lender’s Loans being acquired

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     or assumed, together with all interest accrued thereon to the date of
replacement, and all amounts, if any, due at the date of replacement to such
Affected Lender under Section 3.9.   3.14    Survival. The agreements and
obligations of the Company in this Article III shall survive the payment in full
of all Obligations and the termination of this Agreement.   3.15    Manner and
Treatment of Payments. The amount of each payment hereunder or on each Note
shall be made to the Administrative Agent for the account of each applicable
Lender in immediately available funds on the day of payment (which must be a
Banking Day). Any payment received after 2:00 p.m., Chicago time, on any Banking
Day, shall be deemed received on the next succeeding Banking Day. The amount of
all payments received by the Administrative Agent for the account of each Lender
shall be promptly paid by the Administrative Agent to the applicable Lender(s)
in immediately available funds (and any such payment not remitted on the same
Banking Day that it is deemed received by the Administrative Agent shall
thereafter be payable by the Administrative Agent to the applicable Lender(s)
together with interest at the overnight Federal Funds Rate, as such rate is
reasonably determined by the Administrative Agent). Whenever any payment to be
made hereunder or on each Note is due on a day that is not a Banking Day,
payment shall be made on the next succeeding Banking Day, provided that the
extension shall be included in the computation of interest owing on the next
following Interest Payment Date. Any payment of the principal of any LIBOR Loan
shall be made on a LIBOR Banking Day, as applicable.   3.16    Mandatory
Prepayment.

        (a)    In the event that the Total Outstandings at any time exceed the
limitations specified in Section 2.6 (whether because of the outstanding amount
of the Total Outstandings or because of other outstanding Senior Permitted Debt
not arising under this Agreement), the Company shall immediately make a
prepayment of the Loans in such amount as is necessary to cause the Total
Outstandings to comply with the limitations of Section 2.6.             (b)   
In the event that the L/C Obligations at any time exceed

                 (1)    the Borrowing Base less           (2)    the aggregate
principal amount of outstanding Senior Permitted Debt of the Homebuilding
Segment (including the aggregate principal amount of outstanding Loans, but
exclusive of the L/C Obligations),

               the Company shall immediately upon demand by the Administrative
Agent deposit with the Administrative Agent, for the benefit of the Lenders, an
amount in cash equal to such excess. Such cash shall be deposited in an interest
bearing account with the Administrative Agent as to which the Company shall have
no right of withdrawal except as provided below.           (c)    At such time
as

                 (1)    the Borrowing Base less

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                 (2)    the aggregate principal amount of outstanding Senior
Permitted Debt of the Homebuilding Segment (including the aggregate principal
amount of outstanding Loans, but exclusive of the L/C Obligations)

             once again equals or exceeds the outstanding L/C Obligations, and
provided no other Event of Default has occurred and is continuing and the
Company is otherwise in compliance with this Agreement, the amount so deposited
by the Company in such restricted account with the Administrative Agent,
together with any interest accrued thereon, shall be immediately remitted to the
Company.

3.17    Maturity Date Extension Option.

          (a)    Not earlier than 120 days prior to, nor later than 60 days
prior to the Maturity Date, the Company may, upon written notice to the
Administrative Agent (which shall promptly notify the Lenders), request a
one-year extension of the Maturity Date (the date such written notice is
received by the Administrative Agent being the “Extension Notice Date”). Such
notice, once given to the Administrative Agent, is irrevocable by the Company.
Subject to the Company’s compliance with each of the conditions set forth in
this Section 3.17, each Lender agrees to so extend the Maturity Date.          
(b)    This is a one-time option permitting only one extension of the Maturity
Date.           (c)    As a condition precedent to such extension, the Company
shall deliver to the Administrative Agent a certificate of each Loan Party (an
“Extension Certificate”) dated as of the Extension Notice Date signed by an
Authorized Official of such Loan Party

                 (1)    certifying and attaching the resolutions adopted by such
Loan Party approving or consenting to such extension and           (2)    in the
case of the Company, certifying that, before and after giving effect to such
extension,

                       (A)    the representations and warranties contained in
Article V and the other Loan Documents are true and correct on and as of the
Extension Notice Date, except to the extent that such representations and
warranties specifically refer to an earlier date, in which case they are true
and correct as of such earlier date, and except that for purposes of this
Section, the representations and warranties contained in Section 5.5 shall be
deemed to refer to the most recent statements furnished pursuant to
Section 6.1(a) and (b), and           (B)    no Default or Event of Default
exists.

          (d)    As a further condition precedent to such extension, the Company
shall deliver to the Administrative Agent an Extension Certificate dated as of
the Maturity Date (before extension) signed by an Authorized Official of each
Loan Party.           (e)    In connection with such extension of the Maturity
Date, the Company shall pay to the Administrative Agent for the account of each
Lender, on the Maturity Date, an

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               extension fee in an amount equal to 0.25% of the Aggregate
Commitment in effect on the Maturity Date.           (f)    This Section
supercedes any provisions in Section 10.1 to the contrary.

3.18    Limitation on Additional Amounts, Etc. Notwithstanding anything to the
contrary contained in Section 3.7 or 3.9, unless a Lender gives notice to the
Company that the Company is obligated to pay an amount under any such Section
within 180 days after the later of

          (a)    the date such Lender incurs the respective increased costs,
Taxes, loss, expense or liability, reduction in amounts received or receivable
or reduction in return on capital or           (b)    the date such Lender has
actual knowledge of its incurrence of the respective increased costs, Taxes,
loss, expense, or liability, reductions in amounts received or receivable or
reduction in return on capital,

          then such Lender shall only be entitled to be compensated for such
amount by the Company pursuant to said Section 3.7 or 3.9, as the case may be,
to the extent the costs, Taxes, loss, expense or liability, reduction in amounts
received or receivable or reduction in return on capital are incurred or
suffered on or after the date which occurs 180 days prior to such Lender giving
notice to the Company that the Company is obligated to pay the respective
amounts pursuant to Section 3.7 or 3.9, as the case may be.   3.19    Payments
Generally.

          (a)    All payments to be made by the Company shall be made without
condition or deduction for any counterclaim, defense, recoupment or setoff.
Except as otherwise expressly provided herein, all payments by the Company
hereunder shall be made to the Administrative Agent, for the account of the
respective Lenders to which such payment is owed, at the Administrative Agent’s
office in Dollars and in immediately available funds not later than 1:00 p.m.,
Chicago time, on the date specified herein. The Administrative Agent will
promptly distribute to each Lender its Pro Rata Share (or other applicable share
as provided herein) of such payment in like funds as received by wire transfer
to such Lender’s Lending Office. All payments received by the Administrative
Agent after 1:00 p.m., Chicago time, shall be deemed received on the next
succeeding Banking Day and any applicable interest or fee shall continue to
accrue.           (b)    If any payment to be made by the Company shall come due
on a day other than a Banking Day, payment shall be made on the next following
Banking Day, and such extension of time shall be reflected in computing interest
or fees, as the case may be.           (c)    Unless the Company or any Lender
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 Company or such
Lender, as the case may be, will not make such payment, the Administrative Agent
may assume that the Company or such Lender, 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:

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               (1)    if the Company failed to make such payment, each Lender
shall forthwith on demand repay to the Administrative Agent the portion of such
assumed payment that was made available to such Lender 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
Lender to the date such amount is repaid to the Administrative Agent in
immediately available funds at a rate per annum equal to the Federal Funds Rate
from time to time in effect; and           (2)    if any Lender failed to make
such payment, such Lender 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 Company 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 Lender pays such
amount to the Administrative Agent, then such amount shall constitute such
Lender’s Loan included in the applicable Borrowing. If such Lender does not pay
such amount forthwith upon the Administrative Agent’s demand therefor, the
Administrative Agent may make a demand therefor upon the Company, and the
Company 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 Borrowing. Nothing herein shall be
deemed to relieve any Lender from its obligation to fulfill its Commitment or to
prejudice any rights which the Administrative Agent or the Company may have
against any Lender as a result of any default by such Lender hereunder.

             A notice of the Administrative Agent to any Lender or the Company
with respect to any amount owing under this clause (c) shall be conclusive,
absent manifest error.           (d)    If any Lender makes available to the
Administrative Agent funds for any Loan to be made by such Lender as provided in
the foregoing provisions of this Article II, and such funds are not made
available to the Company by the Administrative Agent because the conditions to
the applicable Credit Extension set forth in Article IV are not satisfied or
waived in accordance with the terms hereof, the Administrative Agent shall
return such funds (in like funds as received from such Lender) to such Lender,
without interest.           (e)    The obligations of the Lenders hereunder to
make Base Rate Loans and LIBOR Loans and to fund participations in Letters of
Credit and Swing Line Advances are several and not joint. The failure of any
Lender to make any Base Rate Loan or LIBOR Loan or to fund any such
participation on any date required hereunder shall not relieve any other Lender
of its corresponding obligation to do so on such date, and no Lender shall be
responsible for the failure of any other Lender to so make its Base Rate Loan or
LIBOR Loan or purchase its participation.           (f)    Nothing herein shall
be deemed to obligate any Lender to obtain the funds for any Loan in any
particular place or manner or to constitute a representation by any Lender that
it has obtained or will obtain the funds for any Loan in any particular place or
manner.

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        (g)    All fees arising under or in connection with this Agreement which
have not previously been paid and which were due and payable on or prior to the
Maturity Date or the date on which the Commitments were terminated shall be
payable on the earlier of the Maturity Date or the termination of the
Commitments.

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ARTICLE IV
CONDITIONS

4.1    Conditions to First Extension of Credit. The obligation of the Lenders to
make the first extension of credit hereunder, whether in the form of a Borrowing
or the issuance of a Letter of Credit by the L/C Issuer, is subject to the
following conditions precedent (any one or more of which the Lenders may waive
in their sole discretion):

        (a)    The Administrative Agent shall have received the following
original executed documents (in form and substance satisfactory to the
Administrative Agent and legal counsel for the Administrative Agent in
sufficient number for the Administrative Agent and each Lender):

               (1)    this Agreement;           (2)    each Note;           (3)
   the Guaranty;           (4)    the Opinion of Counsel;           (5)    a
certified copy of resolutions of the board of directors of the Company
authorizing the execution of the Loan Documents, together with an incumbency
certificate executed by the corporate secretary of the Company;           (6)   
a certified copy of resolutions of the board of directors of each Guarantor
authorizing the execution of the Guaranty, together with an incumbency
certificate executed by the corporate secretary of each Guarantor;           (7)
   a Borrowing Base Certificate calculated as of June 30, 2002, showing the
Company to be in compliance with Sections 2.6 and 7.4; and           (8)    such
other agreements, instruments and documents as any Lender shall reasonably
request.

        (b)    The Administrative Agent shall have received evidence
satisfactory to the Administrative Agent and legal counsel to the Administrative
Agent that the Company has been duly incorporated, validly exists and is in good
standing under the laws of the State of Maryland, is duly qualified to do
business as, and is in good standing as, a foreign corporation in each
jurisdiction in which the conduct of its business or the ownership or leasing of
its properties makes such qualification necessary, and has all requisite power
and authority to conduct its business and to own and lease its properties.  
        (c)    The Administrative Agent shall have received evidence
satisfactory to the Administrative Agent that all Indebtedness (other than the
Existing Letters of Credit) under the Existing Credit Agreement shall have been
simultaneously paid in full and such agreement shall have been terminated.  
        (d)    The Company shall have paid all fees due hereunder which have
been invoiced.

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4.2    Conditions for Subsequent Extensions of Credit. The obligation of the
Lenders to make any extension of credit hereunder (including the first and any
subsequent extension of credit but excluding any redesignation or continuation
of any Loan that does not increase the amount of such Loan and also excluding
any L/C Borrowing with respect to a Letter of Credit), whether in the form of a
Borrowing or the issuance of a Letter of Credit by a L/C Issuer, is subject to
the following conditions precedent:

        (a)    the representations and warranties contained in Sections 5.1
through 5.16, inclusive, as of the latest reporting required under this
Agreement, shall be correct in all material respects on and as of the date of
the Borrowing, or the issuance of the Letter of Credit, as the case may be, as
though made on and as of that date (except with respect to representations and
warranties which expressly relate to an earlier date); and           (b)    no
Default or Event of Default shall have occurred and be continuing.

        In the case of a Borrowing, or redesignation or continuation thereof,
the Company shall, at its sole expense, deliver or cause to be delivered to the
Administrative Agent, in form and substance satisfactory to the Administrative
Agent, a Request for Borrowing, a Request for Redesignation or a Request for
Continuation, as applicable.

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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company represents and warrants to each Lender that:

5.1    Incorporation, Qualification, Powers and Capital Stock. The Company is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Maryland. The Company is duly qualified to do business as,
and is in good standing as, a foreign corporation 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 do so would not
reasonably be expected to have a Material Adverse Effect. The Company has all
requisite power and authority to conduct its business and to own and lease its
properties.   5.2    Execution, Delivery and Performance of Loan Documents.

        (a)    The Company has all requisite power and authority to execute and
deliver, and to perform all of its obligations under, the Loan Documents.  
        (b)    Each Guarantor has all requisite power and authority to execute
and deliver, and to perform all of its obligations under, the Guaranty.  
        (c)    The execution and delivery by the Company of, and the performance
by the Company of each of its obligations under, each Loan Document to which it
is a party and the execution and delivery by each Guarantor of, and the
performance by each Guarantor of each of its obligations under, the Guaranty,
have been duly authorized by all necessary action and do not and will not:

               (1)    require any consent or approval not heretofore obtained of
any stockholder, security holder or creditor of the Company, any Subsidiary or
any Guarantor;           (2)    violate any provision of the certificate of
incorporation or bylaws of the Company or any Guarantor or any provision of the
articles or certificate of incorporation, bylaws or partnership agreement of any
Subsidiary;           (3)    result in or require the creation or imposition of
any Lien, claim or encumbrance (except to the extent that any Lien is created
under this Agreement) upon or with respect to any property now owned or leased
or hereafter acquired by the Company, any Subsidiary or any Guarantor;          
(4)    violate any provision of any Law, order, writ, judgment, injunction,
decree, determination or award presently in effect having applicability to the
Company, any Subsidiary or any Guarantor; or           (5)    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
material Contractual Obligation of the Company, any Subsidiary or any Guarantor.

        (d)    The Company, each Subsidiary and each Guarantor is not in default
under any Law, order, writ, judgment, injunction, decree, determination, award,
indenture, agreement,

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             lease or instrument described in Section 5.2(c)(4) or 5.2(c)(5)
above, in any respect that is materially adverse to the interests of any Lender,
or that could materially impair the ability of the Company, its Subsidiaries and
each Guarantor taken as a whole to perform its obligation under the Loan
Documents, as applicable, or that has a Material Adverse Effect.           (e)
   No authorization, consent, approval, order, license, permit or exemption
from, or filing, registration or qualification with, any Governmental Authority
not heretofore obtained is or will be required under applicable Law to authorize
or permit the execution and delivery by the Company or any Guarantor of, and the
performance by the Company or any Guarantor of all of its obligations under, the
Loan Documents.           (f)    Each of the Loan Documents to which the Company
is a party, when executed and delivered, will constitute the legal, valid and
binding obligations of the Company, and the Guaranty, when executed and
delivered, will constitute the legal, valid and binding obligations of each
Guarantor, enforceable against it in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency, reorganization,
arrangement, moratorium or other similar laws relating to or affecting
creditors’ rights generally or equitable principles relating to the granting of
specific performance or other equitable remedies as a matter of judicial
discretion.

5.3    Compliance with Laws and Other Requirements. The Company is in compliance
in all material respects with all Laws and other requirements applicable to its
business and has obtained all material authorizations, consents, approvals,
orders, licenses, permits and exemptions from, and has accomplished all material
filings, registrations or qualifications with, any Governmental Authority that
is necessary for the transaction of its business except where such noncompliance
would not reasonably be expected to have a Material Adverse Effect.   5.4   
Subsidiaries.

        (a)    Schedule 5.4 hereto correctly sets forth the names and
jurisdictions of incorporation or formation of all Subsidiaries and real estate
joint ventures in which the Company or any of its Subsidiaries has an investment
as of the date of this Agreement, and the Subsidiaries that, as of the date of
this Agreement, are Restricted Subsidiaries are designated as such on
Schedule 5.4. Except as described in Schedule 5.4, the Company does not own any
capital stock or ownership interest in any Person other than the Subsidiaries
and real estate joint ventures (including limited liability companies and
partnerships) in which the Company or any Subsidiary within the Homebuilding
Segment participates. All outstanding shares of capital stock or ownership
interests, as the case may be, of each Subsidiary and each such real estate
joint venture that are owned by the Company or any Subsidiary are

               (1)    owned of record and beneficially by the Company or by one
or more Subsidiaries, free and clear of all Liens, claims, encumbrances and
rights of others, and are           (2)    duly authorized, validly issued,
fully paid, nonassessable (except for capital calls or contribution requirements
in connection with ownership interests in such real estate joint ventures), and
issued in compliance with all applicable state and federal securities and other
Laws.

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             The Company may update Schedule 5.4 from time to time by sending
written notice to the Administrative Agent.           (b)    Each Restricted
Subsidiary is a corporation, partnership or limited liability company duly
incorporated or formed, validly existing and in good standing under the laws of
its respective jurisdiction of incorporation or formation. Each Restricted
Subsidiary is duly qualified to do business as, and is in good standing as, a
foreign corporation, partnership or limited liability company 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
do so would not reasonably be expected to result in a Material Adverse Effect.
Each Restricted Subsidiary has all requisite power and authority to conduct its
business and to own and lease its properties           (c)    Each Restricted
Subsidiary is in compliance in all material respects with all Laws and other
requirements applicable to its business and has obtained all material
authorizations, consents, approvals, orders, licenses, permits and exemptions
from, and has accomplished all material filings, registrations or qualifications
with, any Governmental Authority that are necessary for the transaction of its
business, except where the failure to do so would not reasonably be expected to
result in a Material Adverse Effect.

5.5    Financial Statements of the Company and its Consolidated Subsidiaries.
The consolidated balance sheets of the Company and its consolidated Subsidiaries
as at December 31, 2001 and the related consolidated statements of income and
cash flows for the fiscal year ended on such date, reported on by Ernst & Young
LLP, copies of which have heretofore been furnished to each Lender, present
fairly the consolidated financial condition of the Company and its consolidated
Subsidiaries as at such date, and the consolidated results of their operations
and changes in cash flows for the fiscal year then ended. The unaudited
consolidated balance sheet of the Company and its consolidated Subsidiaries as
at March 31, 2002 and the related unaudited consolidated statements of income
and of cash flows for the three-month period ended on such date, certified by a
Responsible Official, copies of which have heretofore been furnished to each
Lender, present fairly the consolidated financial condition of the Company and
its consolidated Subsidiaries as at such date, and the consolidated results of
their operations and changes in cash flows for the three-month period then ended
(subject to normal year-end audit adjustments). All such financial statements,
including the related schedules and notes thereto, have been prepared in
accordance with GAAP throughout the periods involved (except as approved by such
accountants or Responsible Official, as the case may be, and as disclosed
therein and except the quarterly statements are unaudited and do not include
footnotes as would be required for audited financial statements).   5.6    No
Material Adverse Change. There has been no material adverse change in the
condition, financial or otherwise, of the Company and the Subsidiaries, taken as
a whole, from the financial condition of the Company and the Subsidiaries, taken
as a whole, since December 31, 2001 which would reasonably be expected to have a
Material Adverse Effect, and the Company and the Subsidiaries, taken as a whole,
do not have any material liability incurred outside of the ordinary course of
business or, to the best knowledge of the Company, material contingent liability
not reflected or disclosed in the financial statements or notes thereto
described in Section 5.5 (or, to the extent that financial statements have been
delivered pursuant to Section 6.1, in the most recently delivered financial
statements), or otherwise disclosed to the Administrative Agent in writing.

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5.7    Tax Liability. The Company and each Subsidiary have filed all tax returns
(federal, state and local) required to be filed by them and have paid all
material taxes shown thereon to be due and all property taxes due, including
interest and penalties, if any. To the best knowledge of the Company, there does
not exist any substantial likelihood that any Governmental Authority will
successfully assert a tax deficiency against the Company or any Subsidiary that
is material to the Company and the Subsidiaries, taken as a whole, that has not
been adequately reserved against in the financial statements described in
Section 5.5 (or, to the extent that financial statements have been delivered
pursuant to Section 6.1, in the most recently delivered financial statements).
The Company and each Subsidiary have established and is maintaining adequate
reserves for tax liabilities, if any, sufficient to comply with GAAP.   5.8   
Litigation. There are no actions, suits or proceedings pending or, to the best
knowledge of the Company, threatened against or affecting the Company or any
Restricted Subsidiary, or any property of the Company or any Restricted
Subsidiary, before any Governmental Authority in which there is a reasonable
possibility of a decision adverse to the Company or a Restricted Subsidiary and
which, if determined adversely to the Company or the Restricted Subsidiary,
could reasonably be expected to have a Material Adverse Effect.   5.9    ERISA.
Neither a Reportable Event nor an “accumulated funding deficiency” (within the
meaning of Section 412 of the Code or Section 302 of ERISA) has occurred during
the five-year period prior to the date on which this representation is made or
deemed made with respect to any Plan, and each Plan has complied in all material
respects with the applicable provisions of ERISA and the Code. No termination of
a Single Employer Plan has occurred, and no Lien in favor of the PBGC or a Plan
has arisen, during such five-year period. The present value of all accrued
benefits under each Single Employer Plan (based on those assumptions used to
fund such Plans) did not, as of the last annual valuation date prior to the date
on which this representation is made or deemed made, exceed the value of the
assets of such Plan allocable to such accrued benefits to an extent which could
reasonably be expected to have a Material Adverse Effect. Neither the Company
nor any Commonly Controlled Entity has had a complete or partial withdrawal from
any Multiemployer Plan which could reasonably be expected to have a Material
Adverse Effect, and neither the Company nor any Commonly Controlled Entity would
become subject to any liability under ERISA in an amount which could reasonably
be expected to have a Material Adverse Effect if the Company or any such
Commonly Controlled Entity were to withdraw completely from all Multiemployer
Plans as of the valuation date most closely preceding the date on which this
representation is made or deemed made. To the knowledge of the Company or any
Commonly Controlled Entity, no such Multiemployer Plan for which the Company or
any Subsidiary could reasonably be expected to have a material liability is in
Reorganization or Insolvent. The present value (determined using actuarial and
other assumptions which are reasonable in respect of the benefits provided and
the employees participating) of the liability of the Company and each Commonly
Controlled Entity for post retirement benefits to be provided to their current
and former employees under Plans which are welfare benefit plans (as defined in
Section 3(1) of ERISA) does not, in the aggregate, exceed the assets under all
such Plans allocable to such benefits by an amount in excess of $5,000,000.  
5.10    Regulations U and X; Investment Company Act. Neither the Company nor any
Subsidiary is engaged principally, or as one of its important activities, in the
business of extending credit for the purpose of “purchasing” or “carrying” any
“margin stock” within the meanings of Regulation U of the FRB. No part of the
Loans or the Letters of Credit will be used to purchase or carry any margin
stock, or to extend credit to others for that purpose, or for any purpose that
violates the provisions of Regulations U or X of the FRB. Neither the Company

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     nor any Subsidiary is or is required to be registered under the Investment
Company Act of 1940.   5.11    No Default or Event of Default. No Default or
Event of Default has occurred and is continuing.   5.12    Ownership of
Property; Liens. Each of the Company and its Restricted Subsidiaries has good
record and marketable title in fee simple to, or a valid leasehold interest in,
all its real property, and good title to all its other property, 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, and none of such property is subject to any Lien except
as permitted by Section 7.8. Each of the Company and its Restricted Subsidiaries
has good record and marketable title in fee simple to all Real Estate Inventory
included in the Borrowing Base, 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.  
5.13    Environmental Matters. Except to the extent that all of the following,
in the aggregate, would not reasonably be expected to have a Material Adverse
Effect:

          (a)    To the knowledge of the Company, the facilities and properties
owned, leased or operated by the Company or any of its Subsidiaries (the
“Properties”) do not contain, and have not previously contained, any Materials
of Environmental Concern in amounts or concentrations which

                 (1)    constitute or constituted a violation of, or          
(2)    could reasonably be expected to give rise to liability under, any
Environmental Law.

          (b)    To the knowledge of the Company, the Properties and all
operations at the Properties are in compliance, and, to the extent of the
Company’s and its Subsidiaries’ involvement with the Properties, have in the
last five years been in compliance, in all material respects with all applicable
Environmental Laws, and there is no contamination at, under or about the
Properties or violation of any Environmental Law with respect to the Properties
or the business operated by the Company or any of its Subsidiaries (the
“Business”).           (c)    Neither the Company nor any of its Subsidiaries
has received any notice of violation, alleged violation, non-compliance,
liability or potential liability regarding environmental matters or compliance
with Environmental Laws with regard to any of the Properties or the Business,
nor does the Company have knowledge or reason to believe that any such notice
will be received or is being threatened.           (d)    To the knowledge of
the Company, Materials of Environmental Concern have not been transported or
disposed of from the Properties while owned or operated by the Company or any of
its Subsidiaries in violation of, or in a manner or to a location which could
reasonably be expected to give rise to liability under, any Environmental Law,
nor have any Materials of Environmental Concern been generated, treated, stored
or disposed of at, on or under any of the Properties in violation of, or in a

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             manner that could reasonably be expected to give rise to liability
under, any applicable Environmental Law.             (e)    No judicial
proceeding or governmental or administrative action is pending or, to the
knowledge of the Company, threatened, under any Environmental Law to which the
Company or any Subsidiary is or will be named as a party with respect to the
Properties or the Business, nor are there any consent decrees or other decrees,
consent orders, administrative orders or other orders, or other administrative
or judicial requirements outstanding under any Environmental Law with respect to
the Properties or the Business.           (f)    To the knowledge of the
Company, there has been no release or threat of release of Materials of
Environmental Concern at or from the Properties, or arising from or related to
the operations of the Company or any Subsidiary in connection with the
Properties or otherwise in connection with the Business, in violation of, or in
amounts or in a manner that could reasonably give rise to liability under,
Environmental Laws.

5.14    Borrowing Base. The aggregate principal amount of outstanding Senior
Permitted Debt of the Homebuilding Segment does not exceed the Borrowing Base.  
5.15    Borrowing Base Components. At any time of determination thereof, the
value of any component of Real Estate Inventory used to calculate the Borrowing
Base does not exceed the GAAP Value of such component of Real Estate Inventory.
  5.16    Purpose of Loans. The proceeds of the Loans shall be used by the
Company for working capital purposes, to make purchases and investments
permitted hereunder and to repay indebtedness under the Existing Credit
Agreement.

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ARTICLE VI
AFFIRMATIVE COVENANTS OF THE COMPANY

     As long as any Note remains unpaid or any other Obligation remains
outstanding or any Commitment or any Letter of Credit remains in effect, unless
the Required Lenders otherwise consent in writing:

6.1    Financial Statements. The Company shall cause to be delivered to the
Administrative Agent, in form and detail satisfactory to the Administrative
Agent (for prompt distribution by the Administrative Agent to the Lenders):

        (a)    as soon as available, but in any event within 90 days after the
end of each fiscal year of the Company, copies of the consolidated balance
sheets of the Company and its consolidated Subsidiaries as at the end of such
year and the related consolidated statements of income and retained earnings and
changes in cash flows for such year, setting forth in each case in comparative
form the figures for the previous year, reported on without a “going concern” or
like qualification or exception, or qualification arising out of the scope of
the audit (other than qualifications related to the incorporation of reports by
other independent certified public accountants), by Ernst & Young LLP or other
independent certified public accountants of nationally recognized standing
reasonably acceptable to the Required Lenders; and           (b)    as soon as
available, but in any event not later than 45 days after the end of each of the
first three quarterly periods of each fiscal year of the Company, the unaudited
consolidated balance sheets of the Company and its consolidated Subsidiaries as
at the end of such quarter and the related unaudited consolidated statements of
income and retained earnings and changes in cash flows of the Company and its
consolidated Subsidiaries for such quarter and the portion of the fiscal year
through the end of such quarter, setting forth in each case in comparative form
the figures for the previous year, certified by a Responsible Official as being
fairly stated in all material respects when considered in relation to the
consolidated financial position of the Company and its consolidated Subsidiaries
(subject to normal year-end audit adjustments);

     all such financial statements to be prepared in accordance with GAAP
throughout the periods reflected therein and with prior periods (except as
approved by such accountants or officer, as the case may be, and disclosed
therein).   6.2    Certificates; Other Information. The Company shall cause to
be delivered to the Administrative Agent, in form and detail satisfactory to the
Administrative Agent (for prompt distribution by the Administrative Agent to the
Lenders):

        (a)    concurrently with the delivery of the financial statements
referred to in Section 6.1(a), a certificate of the independent certified public
accountants reporting on such financial statements stating that in making the
examination necessary therefor no knowledge was obtained of any Default or Event
of Default, except as specified in such certificate;           (b)   
concurrently with the delivery of the financial statements referred to in
Sections 6.1(a) and 6.1(b), a Compliance Certificate executed by a Responsible
Official, stating that, to the best of such officer’s knowledge, the Company
during such period has observed

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             or performed all of its covenants and other agreements, and
satisfied every condition, contained in this Agreement and in the Notes to be
observed, performed or satisfied by it (and containing calculations
demonstrating compliance with Sections 7.1 through 7.6 and such other financial
information as requested by the Administrative Agent), and that such officer has
obtained no knowledge of any Default or Event of Default except as specified in
such certificate;           (c)    not later than 90 days after the end of each
fiscal year of the Company, a copy of the projections by the Company of the
operating budget and cash flow budget of the Company and its Subsidiaries for
the succeeding two fiscal years and the projected consolidated balance sheet of
the Company and its Subsidiaries as at the end of such succeeding fiscal years,
such projections to be accompanied by a certificate of a Responsible Official to
the effect that while such officer has no reason to believe such projections are
incorrect or misleading in any material respect, such projections are based upon
assumptions that may not materialize or may change adversely due to factors
related to the Company’s business or industry, and unanticipated events and
circumstances may occur subsequent to the date of such projections, such that
the actual results achieved may vary from such projections, and such variations
may be material, and that the Company is under no obligation to update such
projections;           (d)    promptly upon their becoming available, but in any
event no later than 10 days after the same are sent, copies of all financial
statements, reports, notices and proxy statements sent or made available
generally by the Company to its stockholders, or by any Restricted Subsidiary of
the Company to its stockholders (other than the Company or any Subsidiary of the
Company), of all regular and periodic reports and all registration statements
(excluding exhibits thereto and Registration Statements on Form S-8) and
prospectuses, if any, filed by the Company or any of its Restricted Subsidiaries
with any securities exchange or with the Securities and Exchange Commission or
any successor or analogous Governmental Authority; and all press releases and
other statements made available generally by the Company or any of its
Restricted Subsidiaries to the public concerning material developments in the
business of the Company and any of its Restricted Subsidiaries;           (e)   
promptly, such additional financial and other information as any Lender may from
time to time reasonably request;           (f)    as soon as practicable, but in
no event later than 45 days after the end of each fiscal quarter, a Borrowing
Base Certificate certifying in reasonable detail the Borrowing Base as of the
last day of such fiscal quarter, which certificate shall be complete and correct
as of the date thereof; and           (g)    concurrently with the delivery of
the financial statements referred to in Sections 6.1(a) and 6.1(b), the
financial information set forth on Schedule 6.2(g) hereto.

6.3    Payment of Obligations. The Company and each Restricted Subsidiary will
pay, discharge or otherwise satisfy at or before maturity or before they become
delinquent, as the case may be, all obligations of whatever nature which if not
so paid could reasonably be expected to have a Material Adverse Effect, except
where the amount or validity thereof is currently being contested in good faith
by appropriate proceedings and reserves in conformity with GAAP with respect
thereto have been provided on the books of the Company or its Subsidiaries, as
the case maybe.

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6.4    Conduct of Business and Maintenance of Existence. The Company and the
Restricted Subsidiaries, taken as a whole, will at all times remain principally
engaged in the business currently being conducted by the Company and the
Restricted Subsidiaries, and in all respects material to the business of the
Company and the Restricted Subsidiaries taken as a whole, the Company shall, and
will cause each of the Restricted Subsidiaries to, preserve, renew and keep in
full force and effect its corporate existence and take all reasonable action to
maintain all rights, privileges and franchises required for the normal conduct
of such business, except

        (a)    as otherwise permitted pursuant to Section 7.10 and           (b)
   the Company shall not be required to preserve any such right, privilege or
franchise if the Company shall determine that the preservation thereof is no
longer desirable in the conduct of the business of the Company or any Subsidiary
and that the loss thereof could not reasonably be expected to have a Material
Adverse Effect.

     The Company shall, and will cause each Restricted Subsidiary to, comply
with all Contractual Obligations and Requirements of Law except to the extent
that failure to comply therewith could not reasonably be expected to have a
Material Adverse Effect.   6.5    Maintenance of Property; Insurance.

        (a)    The Company and each Restricted Subsidiary will keep in all
material respects all property useful and necessary in its business in good
working order and condition (provided, however, that nothing in this Section 6.5
shall prevent the Company from discontinuing the operation or maintenance, or
both the operation and maintenance, of any of such properties if such
discontinuance is, in the judgment of the Company, desirable in the conduct of
its business or the business of any Subsidiary and could not reasonably be
expected to have a Material Adverse Effect).           (b)    The Company and
each Restricted Subsidiary will maintain insurance for their respective
properties assets and businesses,

               (1)    with financially sound and reputable insurance companies
or associations, and           (2)    of such types (including insurance against
theft and fraud and against loss or damage by fire, flood, explosion or hazard
of or to property and general public liability insurance),

                 in such amounts and with such deductibles, covering such
casualties and contingencies and otherwise on such terms as those usually
carried by companies of established reputations engaged in similar businesses
and owning similar properties and assets in the same general areas in which the
Company or its applicable Subsidiary operates or as may otherwise be required by
applicable Requirements of Law. The Company shall furnish to each Lender, upon
written request, reasonable information as to the insurance carried.

6.6    Inspection of Property; Books and Records; Discussions. The Company and
each Restricted Subsidiary will in all material respects keep proper books of
records and account in which full, true and correct entries in conformity with
GAAP and all Requirements of Law shall be made of all dealings and transactions
in relation to its business and activities; and permit representatives of any
Lender, at such Lender’s expense, to visit and inspect as reasonably

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     requested any of its properties and the properties of the real estate joint
ventures in which the Company or any Subsidiary within the Homebuilding Segment
participates or manages and examine and make abstracts from any of its books and
records at any reasonable time and as often as may reasonably be desired and to
discuss the business, operations, properties and financial and other condition
of the Company and its Subsidiaries and such real estate joint ventures in which
the Company or any Subsidiary within the Homebuilding Segment participates or
manages, as reasonably requested with officers and employees of the Company and
its Subsidiaries and with its independent certified public accountants.   6.7   
Notices. The Company will promptly give notice to the Administrative Agent and
each Lender of:

        (a)    the occurrence of any Default or Event of Default;           (b)
   any

               (1)    default or event of default under any Contractual
Obligation of the Company or any of its Restricted Subsidiaries or           (2)
   litigation, investigation or, proceeding which may exist at any time between
the Company or any of its Restricted Subsidiaries and any Governmental
Authority,

             which, in either case, reasonably could be expected to have a
Material Adverse Effect;           (c)    any litigation or proceeding affecting
the Company or any of its Restricted Subsidiaries

               (1)    in which the amount involved and not covered by insurance
is $10,000,000 or more or           (2)    in which injunctive or similar relief
is sought

             which reasonably could be expected to have a Material Adverse
Effect;           (d)    the following events, as soon as possible and in any
event within 30 days after the Company knows or has reason to know thereof:

               (1)    the occurrence of any Reportable Event with respect to any
Plan which must be reported to the applicable governmental authorities, or any
withdrawal from, or the termination, Reorganization or Insolvency of any
Multiemployer Plan; or           (2)    the institution of proceedings or the
taking of any other action by the PBGC or the Company or any Commonly Controlled
Entity or any Multiemployer Plan with respect to the withdrawal from, or the
terminating, Reorganization or Insolvency of, any Plan; and

        (e)    any event or occurrence which has a Material Adverse Effect.

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     Each notice pursuant to this Section shall be accompanied by a statement of
a Responsible Official setting forth details of the occurrence referred to
therein and stating what action the Company proposes to take with respect
thereto.   6.8    Environmental Laws.

        (a)    The Company, each Restricted Subsidiary and each joint venture in
which the Company or any Restricted Subsidiary participates or manages will
comply and insure compliance by all tenants and subtenants, if any, with all
Environmental Laws and obtain and comply in all material respects with and
maintain, and insure that all tenants and subtenants obtain and comply with and
maintain, any and all licenses, approvals, registrations or permits required by
Environmental Laws, except in each case to the extent that failure to do so
could not reasonably be expected to have a Material Adverse Effect.          
(b)    The Company, each Restricted Subsidiary and each such joint venture will
conduct and complete all investigations, studies, sampling and testing, and all
remedial, removal and other actions required under Environmental Laws and
promptly comply in all material respects with all lawful orders and directives
of all Governmental Authorities respecting Environmental Laws, except to the
extent that the same are being contested in good faith by appropriate
proceedings and the pendency of such proceedings could not reasonably be
expected to have a Material Adverse Effect.           (c)    The Company will
defend, indemnify and hold harmless the Administrative Agent and the Lenders,
and their respective employees, agents, officers and directors, from and against
any claims, demands, penalties, fines, liabilities, settlements, damages, costs
and expenses of whatever kind or nature known or unknown, contingent or
otherwise, arising out of, or in any way relating to the violation of or
noncompliance with, any Environmental Laws, or any orders, requirements or
demand of Governmental Authorities related thereto, including reasonable
attorney and consultant fees, investigation and laboratory fees, court costs and
litigation expenses, except to the extent that any of the foregoing arise out of
the gross negligence or willful misconduct of the party seeking indemnification
therefor. The agreements contained in this clause (c) shall survive the
termination of this Agreement and the payment of the Notes and all other amounts
payable hereunder or under any other Loan Document.

6.9    Guarantees from Future Subsidiaries. The Company will promptly secure the
execution and delivery of the Guaranty to the Administrative Agent on behalf of
the Lenders from each Subsidiary, whether now existing or formed and organized
after the date hereof, if such Subsidiary

        (a)    is included in the Homebuilding Segment and           (b)   
either

               (1)    has assets with an aggregate book value equal to or
greater than $10,000,000, or           (2)    has assets with an aggregate book
value of less than $10,000,000 and the aggregate book value of the assets of all
Subsidiaries of the Company in the

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             Homebuilding Segment which individually have assets with an
aggregate book value of less than $10,000,000 each and which has not provided a
Guaranty then exceeds $15,000,000.

     Each such Subsidiary which hereafter meets the criteria set forth in the
preceding sentence shall execute and deliver a counterpart of the Guaranty
within 30 days after it meets such criteria. Concurrently with the execution and
delivery by such a Subsidiary of a counterpart of the Guaranty, the Company will
deliver to the Administrative Agent such legal opinions and evidence of
corporate action and authority in respect thereof as shall be reasonably
requested by the Administrative Agent.

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ARTICLE VII
NEGATIVE COVENANTS OF THE COMPANY

     As long as any Note remains unpaid or any other Obligation remains
outstanding or any Commitment or any Letter of Credit remains in effect, unless
the Required Lenders otherwise consent in writing:

7.1    Consolidated Tangible Net Worth. The Company shall not permit its
Consolidated Tangible Net Worth at any time to be less than the sum of

        (a)    $435,742,000, plus           (b)    50% of the Consolidated Net
Income (without deduction for losses sustained during any fiscal quarter) of the
Company for each fiscal quarter subsequent to the fiscal quarter ended
December 31, 2001, plus           (c)    90% of the net proceeds from any equity
offerings of the Company from and after December 31, 2001.

7.2    Leverage Ratio. The Company shall not permit the Leverage Ratio at any
time to exceed 2.50:1.   7.3    Minimum Fixed Charge Coverage. The Company shall
not permit the ratio of

        (a)    EBITDA to           (b)    Fixed Charges,

     for any period consisting of the preceding 4 fiscal quarters, to be less
than 1.75:1 at any time.   7.4    Senior Permitted Debt Not to Exceed Borrowing
Base. The Company shall not permit the Senior Permitted Debt of the Homebuilding
Segment to at any time exceed the Borrowing Base.   7.5    Limitation on Land
Inventory. The Company shall not permit:

        (a)    the ratio of

               (1)    the sum of the GAAP Value of

                       (A)    Unsold Finished Lots,           (B)    Unsold Land
Under Development, and           (C)    Unsold Raw Land of the Homebuilding
Segment on a combined basis to

               (2)    Adjusted Consolidated Tangible Net Worth

                 at any time to exceed 1.50:1; or

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        (b)    the ratio of

               (1)    the book value of Unsold Raw Land of the Homebuilding
Segment on a combined basis to           (2)    Adjusted Consolidated Tangible
Net Worth

             at any time to exceed 0.20:1.

7.6    Limitation on Housing Inventory. The Company shall not permit the
aggregate unit number of Unsold Housing Inventory of the Homebuilding Segment on
a combined basis at any time to exceed the greater of:

        (a)    50% of homes delivered by the Homebuilding Segment during the
immediately preceding 12 months; or           (b)    70% of the homes delivered
by the Homebuilding Segment during the immediately preceding 6 months.

7.7    Limitation on Indebtedness. Neither the Company nor any Restricted
Subsidiary will create, incur, assume or suffer to exist any Indebtedness,
except:

        (a)    Indebtedness in respect of the Loans, the Notes, and the other
Obligations;           (b)    Indebtedness of the Company to any Subsidiary and
of any Subsidiary to the Company or any other Subsidiary, provided, in each
case, that such Indebtedness be permitted as an Investment pursuant to
Section 7.13;           (c)    Indebtedness of the Company or any of its
Subsidiaries in respect of purchase money mortgage financing for Real Estate
Inventory (including financing for the construction and development of Real
Estate Inventory), provided that the holder of such Indebtedness shall have no
recourse against the Company or any Subsidiary in respect of such Indebtedness,
such recourse being limited solely to the assets financed with the proceeds of
such Indebtedness;           (d)    Subordinated Debt;           (e)   
Indebtedness constituting, or constituting the primary obligations guaranteed
by, the Guarantee Obligations permitted pursuant to clauses (a), (b) or (c) of
Section 7.9;           (f)    Indebtedness of the Company or any other entity in
the Homebuilding Segment in the form of reimbursement obligations in respect of
Third Party L/Cs, provided that:

               (1)    the aggregate maximum face amount of all such Third Party
L/Cs outstanding at any one time may not exceed $40,000,000; and           (2)
   all such Third Party L/Cs are Performance L/Cs or Financial L/Cs.

        (g)    Indebtedness of a corporation which becomes a Subsidiary or which
is merged into the Company or any Subsidiary after the date hereof, provided
that

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               (1)    such Indebtedness existed at the time such corporation
became a Subsidiary or was so merged and was not created in anticipation thereof
and           (2)    immediately after giving effect to the acquisition of such
corporation by the Company no Default or Event of Default shall have occurred
and be continuing;

        (h)    refinancing of existing Indebtedness of the Company or any
Restricted Subsidiary or other Indebtedness permitted under this Section 7.7 on
terms and conditions not resulting in an Event of Default or Default hereunder,
provided that the provisions of the applicable clause (other than this clause
(h)) of this Section 7.7 under which such Indebtedness is permitted are
satisfied after giving effect thereto, and provided further, that if such
Indebtedness is permitted under clause (n) of this Section 7.7, the new terms
and conditions of such Indebtedness (other than the interest rate) are no less
favorable to the Company than those of the Indebtedness being refinanced;  
        (i)    additional Indebtedness of the Company or any of its Subsidiaries
in the Homebuilding Segment (other than the Indebtedness described in the
clauses of this Section 7.7 other than this clause (i))

               (1)    having restrictive covenants no more restrictive or less
favorable to the Company than the terms and provisions hereof, or, if such
restrictive covenants are more restrictive or less favorable to the Company
(such covenants, the “More Restrictive Covenants”) than the terms and provisions
hereof, then the Lenders shall be entitled to the benefit of the More
Restrictive Covenants pursuant to an amendment to this Agreement,           (2)
   having a final maturity of greater than one year from the date of incurrence
of such Indebtedness, and           (3)    having no revolving credit or other
provisions for short-term repayment and reborrowing, provided that no more than
an aggregate of $50,000,000 in principal of such Indebtedness matures prior to
the Maturity Date;

        (j)    Indebtedness of any entity within the Ryland Financial Division
so long as there is no recourse in respect thereof to the Company or any entity
in the Homebuilding Segment or so long as any such recourse to the Company or
any entity within the Homebuilding Segment is permitted pursuant to Section 7.9;
          (k)    Indebtedness of the Company and any of its Subsidiaries
incurred to finance the acquisition or construction of fixed or capital assets
(whether pursuant to a loan, a Financing Lease or otherwise), provided that such
Indebtedness shall be secured solely by the assets financed with the proceeds of
such Indebtedness;           (l)    Indebtedness of the Company or any other
entity in the Homebuilding Segment in the form of reimbursement obligations in
respect of completion bonds issued for the account of the Company or such other
entity in the ordinary course of business of the Homebuilding Segment in respect
of construction projects undertaken by it;           (m)    Indebtedness of the
Company or any other entity in the Homebuilding Segment in the form of
reimbursement obligations in respect of letters of credit issued for the account

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             of the Company or such other entity for the benefit of employee
benefit or employee insurance programs of the Company or any of its
Subsidiaries;           (n)    Specified Debt; and           (o)    obligations
(contingent or otherwise) of the Company or any Subsidiary existing or arising
under any Hedge Agreement, provided that:

               (1)    such obligations are (or were) entered into by such Person
in the ordinary course of business for the purpose of directly mitigating risks
associated with liabilities, commitments, investments, assets, or property held
or reasonably anticipated by such Person, or changes in the value of securities
issued by such Person, and not for purposes of speculation or taking a “market
view;” and           (2)    such Hedge Agreement does not contain any provision
exonerating the non-defaulting party (unless the non-defaulting party is the
Company or a Subsidiary) from its obligation to make payments on outstanding
transactions to the defaulting party.

7.8    Limitation on Liens. Neither the Company nor any Restricted Subsidiary
will create, incur, assume or suffer to exist any Lien of any nature upon any of
its property, assets or revenues, whether now owned or hereafter acquired,
except for:

        (a)    Liens for taxes not yet due or which are being contested in good
faith by appropriate proceedings, provided that adequate reserves with respect
thereto are maintained on the books of the Company or its Subsidiaries, as the
case may be, in conformity with GAAP;           (b)    carriers’,
warehousemen’s, mechanics’, materialmen’s, repairmen’s or other like Liens
arising in the ordinary course of business which are not overdue for a period of
more than 60 days or which are being contested in good faith by appropriate
proceedings;           (c)    pledges or deposits in connection with workers’
compensation, unemployment insurance and other social security legislation and
deposits securing liability to insurance carriers under insurance or
self-insurance arrangements;           (d)    deposits to secure the performance
of bids, trade contracts (other than for borrowed money), leases, statutory
obligations, surety and appeal bonds, performance bonds and other obligations of
a like nature incurred in the ordinary course of business;           (e)   
easements, rights-of-way, restrictions and other similar encumbrances incurred
in the ordinary course of business which, in the aggregate, are not substantial
in amount and which do not in any case materially detract from the value of the
property subject thereto or materially interfere with the ordinary conduct of
the business of the Company or such Subsidiary;           (f)    Liens securing
Indebtedness of the Company and its Subsidiaries permitted by Section 7.7(c) or
7.7(k) incurred to finance the acquisition, construction or development of Real
Estate Inventory or the construction or acquisition of fixed or capital assets
or a refinancing thereof, provided that

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               (1)    such Liens shall be created within 180 days after

                       (A)    the acquisition of such Real Estate Inventory or  
        (B)    the acquisition or completion of construction of fixed or capital
assets

                    (or, in the case of a refinancing pursuant to Section
7.7(h), such Liens shall be renewals or replacements of Liens created within
such 180 day time period) and           (2)    such Liens do not at any time
encumber any property other than the property financed by such Indebtedness;

        (g)    Liens on the property or assets of a corporation which becomes a
Subsidiary or which is merged into the Company or a Subsidiary after the date
hereof securing Indebtedness permitted by Section 7.7(g) (or Section 7.7(h) in
respect of such Indebtedness), provided that

               (1)    such Liens existed at the time such corporation became a
Subsidiary or was so merged and were not created in anticipation thereof,  
        (2)    any such Lien is not spread to cover any additional property or
assets of such corporation after the time such corporation becomes a Subsidiary
or is so merged, and           (3)    the amount of Indebtedness secured thereby
is not increased;

        (h)    Liens on assets of the Financial Services Segment securing
Indebtedness of the Financial Services Segment permitted by Section 7.7(e) or
7.7(j); and           (i)    judgment and other similar Liens arising in
connection with court proceedings, provided that

               (1)    the execution or other enforcement thereof is effectively
stayed and the claims secured thereby are being actively contested in good faith
by appropriate proceedings and           (2)    no Default or Event of Default
shall have occurred and be continuing.

7.9    Limitation on Guarantee Obligations. Neither the Company nor any
Restricted Subsidiary will create, incur, assume or suffer to exist any
Guarantee Obligation except:

        (a)    the Company and other entities within the Homebuilding Segment
may incur Guarantee Obligations for the benefit of the Ryland Financial
Division;           (b)    the entities within the Financial Services Segment
may incur other Guarantee Obligations;           (c)    the Company and other
entities within the Homebuilding Segment may incur Guarantee Obligations in
respect of letters of credit and completion bonds permitted pursuant to clauses
(l) or (m) of Section 7.7;

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          (d)    Subsidiaries of the Company may incur Guarantee Obligations in
respect of the Specified Debt, provided that simultaneously with the execution
and delivery of any guaranty in respect thereof by any Subsidiary, such
Subsidiary shall execute and deliver a substantially identical guaranty in
respect of all obligations of the Company under this Agreement and the other
Loan Documents; and           (e)    the Company may incur Guarantee Obligations
for the benefit of Subsidiaries, Consolidated Joint Ventures and other joint
ventures in each case in the Homebuilding Segment.

7.10    Limitations of Fundamental Changes. Neither the Company nor any
Restricted Subsidiary will enter into any merger, consolidation or amalgamation,
or liquidate, wind up or dissolve itself (or suffer any liquidation or
dissolution), or convey, sell, lease, assign, transfer or otherwise dispose of,
all or substantially all of its property, business or assets, except:

          (a)    any Restricted Subsidiary of the Company may be merged or
consolidated with or into the Company, provided that the Company shall be the
continuing or surviving corporation, or with or into any one or more
wholly-owned Restricted Subsidiaries of the Company, provided that the wholly
owned Restricted Subsidiary or Subsidiaries shall be the continuing or surviving
corporation;           (b)    any wholly-owned Restricted Subsidiary may sell,
lease, transfer or otherwise dispose of any or all of its assets (upon voluntary
liquidation or otherwise) to the Company or any other wholly-owned Restricted
Subsidiary of the Company;           (c)    the Company or any Restricted
Subsidiary may sell, lease, transfer or otherwise dispose of any or all of its
assets to the Company or any Restricted Subsidiary of the Company, whether
existing on or created after the date of this Agreement, provided that if the
transferor is the Company or a Guarantor, the transferee shall be the Company or
a Guarantor; and           (d)    sales, conveyances, leases, assignments,
transfers or other dispositions of property, business or assets permitted under
Section 7.11.

7.11    Limitation on Sales of Assets. Neither the Company nor any Restricted
Subsidiary will convey, sell, lease, assign, transfer or otherwise dispose of
any of its property, business or assets (including stock of Subsidiaries,
receivables and leasehold interests and, with respect to the Financial Services
Segment, its loan servicing portfolios), whether now owned or hereafter
acquired, except:

          (a)    obsolete or worn out property disposed of in the ordinary
course of business;           (b)    the sale of inventory in the ordinary
course of business, including sale-leasebacks of model homes;           (c)   
the sale or discount of accounts receivable arising in the ordinary course of
business in connection with the compromise or collection thereof;           (d)
   the sale or discount without recourse of mortgage loan receivables;

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          (e)    the sale by the Financial Services Segment of its rights under
loan servicing portfolios;           (f)    as permitted by Section 7.10 (other
than pursuant to clause (d) thereof);           (g)    the sale of mortgages and
mortgage-backed or other securities by the Financial Services Segment;          
(h)    the sale, transfer or other disposition of any stock, property or assets
of the Limited-Purpose Subsidiaries;           (i)    the sale, transfer or
other disposition of Cash Equivalents; and           (j)    any other sale or
disposition of property or assets (including stock or assets of Subsidiaries),
provided that the aggregate book value of all assets so sold or disposed of
pursuant to this clause (j) in any period of 12 consecutive months shall not
exceed 10% of the book value of the consolidated total assets of the Company
(excluding the assets of the Limited Purpose Subsidiaries) as at the beginning
of such 12 month period.

7.12    Limitation on Dividends. The Company will not declare or pay any
dividend (other than dividends payable solely in Common Stock of the Company)
on, or make any payment on account of, or set apart assets for a sinking or
other analogous fund for, the purchase, redemption, defeasance, retirement or
other acquisition of, any shares of any class of stock of the Company or any
warrants or options to purchase any such stock, whether now or hereafter
outstanding, or make any other distribution in respect thereof, either directly
or indirectly, whether in cash or property or in obligations of the Company or
any Subsidiary (such declarations, payments, setting apart, purchases,
redemptions, defeasances, retirements, acquisitions and distributions being
herein called “Restricted Payments”), except that the Company may make any
Restricted Payment so long as, after giving effect thereto, no Default or Event
of Default will be in existence.   7.13    Limitation on Investments. Neither
the Company nor any Restricted Subsidiary will make any Investments, except:

          (a)    extensions of trade credit and other payables in the ordinary
course of business and extensions of non-material advances for Improvements to
property not then owned by the Company in the ordinary course of business
provided that the Company shall give notice to the Lenders of any such
non-material advances aggregating in excess of $20,000,000 in any fiscal
quarter;           (b)    Investments in Cash Equivalents;           (c)   
acquisitions by the Company or any of its Restricted Subsidiaries within the
Homebuilding Segment of assets constituting a business unit or the capital stock
of any Person, provided that such business unit or Person is engaged in the same
general type of business as conducted by the Company or one of its Restricted
Subsidiaries and provided, further, that before any such acquisition and after
giving effect thereto, no Default or Event of Default shall be in existence and
the Company shall, at its sole expense, have delivered to the Administrative
Agent not less than 10 days prior to the

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             date of such acquisition a certificate to such effect, in form and
substance satisfactory to the Administrative Agent, signed by a Responsible
Official;           (d)    acquisitions by the Company or any of its Restricted
Subsidiaries other than acquisitions permitted under clauses (c) or (h) of this
Section 7.13 of, or investments in, assets constituting a business unit or the
capital stock of any Person; provided, that the aggregate amount of
consideration paid by the Company and its Restricted Subsidiaries for all such
acquisitions of assets or capital stock (including as a part of such
consideration any Indebtedness assumed as a part thereof) does not exceed an
aggregate amount equal to $25,000,000; and provided, further, that after giving
effect thereto, no Default or Event of Default shall be in existence;          
(e)    Investments by the Company or any of its Subsidiaries within the
Homebuilding Segment in joint ventures in an aggregate amount for all such
Investments not exceeding at any date an amount equal to the greater of

               (1)    20% of the Company’s Consolidated Tangible Net Worth less
the aggregate amount of Investments (if any) by the Company or any of its
Subsidiaries within the Homebuilding Segment in joint ventures which are in
default in the payment of principal of or interest on non-recourse Indebtedness
or in the observance or performance of any other agreement or condition relating
to such non-recourse Indebtedness or contained in any instrument or agreement
evidencing, securing or relating thereto, the effect of which default in
observance or performance is to cause, or permit the holder or holders of such
non-recourse Indebtedness to cause, with the giving of notice if required, such
non-recourse Indebtedness to become due prior to its stated maturity, or  
        (2)    $75,000,000;

        (f)    Investments by the Company in any Subsidiary within the
Homebuilding Segment or by any Subsidiary within the Homebuilding Segment in the
Company or in any other Subsidiary within the Homebuilding Segment;          
(g)    Investments by the Company or any other entity within the Homebuilding
Segment in the Financial Services Segment, so long as the aggregate amount of
such Investments shall not at any time exceed the greater of:

               (1)    $50,000,000; or           (2)    10% of Consolidated
Tangible Net Worth;

                 provided, that the limits set forth above will not apply
following termination of the Countrywide Loan Purchase Agreement (or any
successor agreement thereto) until the first to occur of:

                       (A)    90 days following the date such termination
becomes effective; or           (B)    the date upon which Ryland Mortgage
Company enters into a successor agreement;

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        (h)    Investments by entities within the Financial Services Segment in
any Person and acquisitions of assets constituting a business unit or the
capital stock of any Person by entities within the Financial Services Segment;  
        (i)    loans and advances to employees of the Company or its
Subsidiaries for travel, entertainment and relocation expenses in the ordinary
course of business; and             (j)    other loans and advances to employees
of the Company in connection with incentive or stock purchase plans or
arrangements in an aggregate amount not to exceed $3,000,000 at any time
outstanding.

7.14    Limitation on Optional Payments and Modification of Debt Instruments.

          (a)    Neither the Company nor any Restricted Subsidiary will

                 (1)    make any optional payment or prepayment on or redemption
of any Subordinated Debt or           (2)    amend, modify or change, or consent
or agree to any amendment, modification or change to, any of the terms
(including the subordination terms) of any Subordinated Debt (other than any
such amendment, modification or change in form reasonably satisfactory to the
Required Lenders),

                   provided that so long as no Default is in existence or would
result therefrom, the Company may prepay Subordinated Debt

                        (A)    to the extent that the aggregate face amount of
the Subordinated Debt so prepaid after the date of this Agreement does not
exceed $25,000,000, or           (B)    with the proceeds of other Subordinated
Debt.

          (b)    No Restricted Subsidiary within the Financial Services Segment
will amend, modify or change, or consent or agree to any amendment, modification
or change to, any of the terms of any debt instrument to which it is a party the
effect of which would be to:

                 (1)    impose restrictions on the payment of dividends,
directly or indirectly, to or for the benefit of the Company which would limit
such dividends to an aggregate amount for all Restricted Subsidiaries in the
Financial Services Segment in any fiscal year which is less than the Combined
Net Income of the Financial Services Segment for the current fiscal year; or  
        (2)    impose restrictions on the making by such Restricted Subsidiaries
of Credit Advances, directly or indirectly, to or for the benefit of the Company
which would limit such Credit Advances to an aggregate amount for all Restricted
Subsidiaries in the Financial Services Segment which is less than $25,000,000 at
any time outstanding,

                  provided that provisions which by their terms would impose
such restrictions only in the event of a default under such debt instrument and
solely as a result of such default

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                  shall not be deemed to be included in the restrictions
described in the foregoing clauses (1) or (2).

7.15    Transactions with Affiliates. Neither the Company nor any Restricted
Subsidiary will enter into any transaction, including any purchase, sale, lease
or exchange of property or the rendering of any service, with any Affiliate
unless such transaction is otherwise permitted under this Agreement, or is upon
fair and reasonable terms no less favorable to the Company or such Subsidiary,
as the case may be, than it would obtain in a comparable arm’s-length
transaction with a Person not an Affiliate.   7.16    Fiscal Year. The Company
will not permit the fiscal year of the Company to end on a day other than
December 31.   7.17    Compliance with ERISA. Neither the Company nor any
Restricted Subsidiary will:

          (a)    terminate any Plan so as to result in any material liability to
the PBGC;           (b)    engage in any “prohibited transaction” (as defined in
Section 4975 of the Code or Section 406 of ERISA) involving any Plan which would
result in a material liability for an excise tax or civil penalty in connection
therewith;           (c)    incur or suffer to exist any material “accumulated
funding deficiency” (as defined in Section 302 of ERISA), whether or not waived,
involving any Plan; or           (d)    allow or suffer to exist any event or
condition which presents a material risk of incurring a material liability to
the PBGC by reason of termination of any such Plan.

7.18    Preferred Stock. The Company will not permit any Restricted Subsidiary
within the Homebuilding Segment to issue preferred stock to any Person other
than the Company.

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ARTICLE VIII
EVENTS OF DEFAULT AND REMEDIES UPON DEFAULT

                         8.1   Events of Default. The occurrence of any one or
more of the following events shall constitute an Event of Default hereunder:

        (a)    The Company shall fail to pay any principal of any Note when due
in accordance with the terms thereof or hereof; or the Company shall fail to pay
any interest on any Note, or any other amount payable hereunder, within 2 days
(or 15 days in the case of the Letter of Credit Fees or the Issuance Fees or
5 days in the case of any other fee) after any such interest or other amount
becomes due in accordance with the terms thereof or hereof; or           (b)   
Any representation or warranty made or deemed made by the Company or any
Guarantor herein or in any other Loan Document or which is contained in any
certificate or document furnished at any time under or in connection with this
Agreement shall prove to have been incorrect in any material respect on or as of
the date made or deemed made; or           (c)    The Company shall default in
the observance or performance of any agreement contained in Article VII (other
than the Sections 7.5 and 7.6); or           (d)    The Company shall default in
the observance or performance of any other agreement contained in this Agreement
(other than as provided in paragraphs (a) through (c) of this Section 8.1), and
such default shall continue unremedied:

               (1)    for a period of 90 days in the case of Section 7.5 or 7.6,
or           (2)    for a period of 30 days in the case of any other provision;
or

        (e)    The Company or any of its Restricted Subsidiaries shall:

               (1)    default in any payment of principal of or interest on any
Indebtedness having an aggregate principal balance of $10,000,000 or more (other
than the Notes) or in the payment of any Guarantee Obligation of $10,000,000 or
more in the aggregate, beyond the period of grace (not to exceed 15 days), if
any, provided in the instrument or agreement under which such Indebtedness or
Guarantee Obligation was created; or           (2)    default in the observance
or performance of any other agreement or condition relating to any such
Indebtedness or Guarantee Obligation or contained in any instrument or agreement
evidencing, securing or relating thereto, or any other event shall occur or
condition exist, the effect of which default or other event or condition is to
cause, or to permit the holder or holders of such Indebtedness or beneficiary or
beneficiaries of such Guarantee Obligation (or a trustee or agent on behalf of
such holder or holders or beneficiary or beneficiaries) to cause, with the
giving of notice if required, such Indebtedness to become due or to be
repurchased, prepaid, defeased or redeemed (automatically or otherwise), or an
offer to repurchase, prepay, defease or redeem such Indebtedness to be made,
prior to its stated maturity

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                        or such Guarantee Obligation to become payable, provided
that the failure by Ryland Mortgage Company or any of its Subsidiaries to pay
any such Indebtedness or Guarantee Obligation in the form of reimbursement
obligations in respect of letters of credit issued for the account of Ryland
Mortgage Company or any of its Subsidiaries backing obligations under master
servicing agreements shall not constitute an Event of Default under this clause
(e) until the date which is 90 days after the date on which such reimbursement
obligations become due and payable; or

                              (f)   Any one or more of the following occurs:  
         (1)   the Company or any of its Restricted Subsidiaries shall commence
any case, proceeding or other action                (A)   under any existing or
future law of any jurisdiction, domestic or foreign, relating to bankruptcy,
insolvency, reorganization or relief of debtors, seeking to have an order for
relief entered with respect to it, or seeking to adjudicate it a bankrupt or
insolvent, or seeking reorganization, arrangement, adjustment, winding-up,
liquidation, dissolution, composition or other relief with respect to it or its
debts, or                (B)    seeking appointment of a receiver, trustee,
custodian, conservator or other similar official for it or for all or any
substantial part of its assets, or the Company or any of its Restricted
Subsidiaries shall make a general assignment for the benefit of its creditors;
or            (2)    there shall be commenced against the Company or any of its
Restricted Subsidiaries any case, proceeding or other action of a nature
referred to in clause (1) above which                (A)    results in the entry
of an order for relief or any such adjudication or appointment or               
(B)   remains undismissed, undischarged or unbonded for a period of 60 days; or
           (3)    there shall be commenced against the Company or any of its
Restricted Subsidiaries any case, proceeding or other action seeking issuance of
a warrant of attachment, execution, distraint or similar process against all or
any substantial part of its assets which results in the entry of an order for
any such relief which shall not have been vacated, discharged, or stayed or
bonded pending appeal within 60 days from the entry thereof; or            (4)
   the Company or any of its Restricted Subsidiaries shall take any action in
furtherance of, or indicating its consent to, approval of, or acquiescence in,
any of the acts set forth in clause (1), (2), or (3) above; or            (5)  
the Company or any of its Restricted Subsidiaries shall generally not, or shall
be unable to, or shall admit in writing its inability to, pay its debts as they
become due; or

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                             (g)   Any one or more of the following occurs:    
      (1)   Any Person shall engage in any “prohibited transaction” (as defined
in Section 406 of ERISA or Section 4975 of the Code) involving any Plan; or    
      (2)    any “accumulated funding deficiency” (as defined in Section 302 of
ERISA), whether or not waived, shall exist with respect to any Plan or any Lien
in favor of the PBGC or a Plan shall arise on the assets of the Company or any
Commonly Controlled Entity; or           (3)    a Reportable Event shall occur
with respect to, or proceedings shall commence to have a trustee appointed, or a
trustee shall be appointed, to administer or to terminate, any Single Employer
Plan, which Reportable Event or commencement of proceedings or appointment of a
trustee is, in the reasonable opinion of the Required Lenders, likely to result
in the termination of such Plan for purposes of Title IV of ERISA; or          
(4)    any Single Employer Plan shall terminate for purposes of Title IV of
ERISA; or           (5)    the Company or any Commonly Controlled Entity shall,
or in the reasonable opinion of the Required Lenders is likely to, incur any
liability in connection with a withdrawal from, or the Insolvency or
Reorganization of, a Multiemployer Plan; or           (6)    any other event or
condition shall occur or exist with respect to a Plan;           and in each
case in clauses (1) through (6) above, such event or condition, together with
all other such events or conditions, if any, could reasonably be expected to
have a Material Adverse Effect; or       (h)   One or more judgments or decrees
shall be entered against the Company or any of its Restricted Subsidiaries
involving in the aggregate a liability (not paid or fully covered by insurance)
of $10,000,000 or more and all such judgments or decrees shall not have been
vacated, discharged, stayed or bonded pending appeal within 60 days from the
entry thereof; or       (i)    A Designated Event shall occur; or       (j)   
The Company shall cease to own, directly or indirectly and free and clear of any
Lien, 100% of the issued and outstanding capital stock of Ryland Homes of
California, Inc. and Ryland Mortgage Company; or       (k)    The Guaranty shall
cease, for any reason, to be in full force and effect, or the Company or any
Guarantor shall so assert in writing.   8.2    Remedies. If any Event of Default
occurs, the Administrative Agent shall, at the request of, or may, with the
consent of, the Required Lenders,

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                             (a)   declare the obligation of each Lender to make
Loans and the obligation of the L/C Issuers to issue Letters of Credit to be
terminated, whereupon such obligations shall be terminated;       (b)    declare
the unpaid principal amount of all outstanding Loans, all interest accrued and
unpaid thereon and all other amounts payable under the Loan Documents to be due
and payable forthwith, whereupon the same shall become immediately due and
payable without presentment, demand, protest or other notice of any kind, all of
which are hereby expressly waived by the Company; and       (c)    exercise on
behalf of itself and the Lenders all rights and remedies available to it and the
Lenders under the Loan Documents or applicable law;       provided, however,
that upon the occurrence of any event specified in clause (1) or (2) of
Section 8.1(f), the obligation of each Lender to make Loans and the obligation
of the L/C Issuer to issue Letters of Credit shall automatically terminate and
the unpaid principal amount of all outstanding Loans and all interest and other
amounts as aforesaid shall automatically become due and payable without further
act of the Administrative Agent or any Lender. Upon the occurrence of any Event
of Default, the Company shall immediately pay to the Administrative Agent, for
the benefit of the Lenders, an amount (the “L/C Obligations Amount”) equal to
the aggregate outstanding L/C Obligations; and upon receipt of the payment of
the L/C Obligations Amount, the Administrative Agent shall deposit such funds in
an interest-bearing cash account (the “Cash Account”) in the name of the Company
maintained with the Administrative Agent as to which the Company shall have no
right of withdrawal except as provided below. The Company hereby grants to the
Administrative Agent, for the benefit of the Lenders, a security interest in the
Cash Account and all balances therein and all proceeds thereof. The Company
hereby irrevocably authorizes and directs the Administrative Agent to apply
amounts on deposit in the Cash Account against draws on the outstanding Letters
of Credit as such draws are made. Upon expiration of all Letters of Credit and
payment in full of all draws thereunder and all outstanding Loans and other
Obligations, the amounts then on deposit in the Cash Account and any interest
accrued thereon shall then be returned to the Company (to the extent any funds
remain in the Cash Account after application of such funds as provided above.)  
8.3    Rights Not Exclusive. The rights and remedies of the Administrative Agent
and Lenders provided for in this Agreement and the other Loan Documents are
cumulative and are not exclusive of any other rights, powers, privileges or
remedies provided by law or in equity, or under any other instrument, document
or agreement now existing or hereafter arising.

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ARTICLE IX
THE ADMINISTRATIVE AGENT

                         9.1    Appointment and Authorization of Administrative
Agent.       (a)    Each Lender 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 Lender 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)    The L/C Issuer shall act on behalf
of the Lenders with respect to any Letters of Credit issued by it and the
documents associated therewith, and the L/C Issuer shall have all of the
benefits and immunities           (1)    provided to the Administrative Agent in
this Article IX with respect to any acts taken or omissions suffered by the L/C
Issuer 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 IX and in the definition of “Agent-Related
Person” included the L/C Issuer with respect to such acts or omissions, and    
      (2)    as additionally provided herein with respect to the L/C Issuer.  
9.2    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.   9.3    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

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                                 contemplated hereby (except for its own gross
negligence or willful misconduct in connection with its duties expressly set
forth herein), or       (b)    be responsible in any manner to any Lender or
participant for any recital, statement, representation or warranty made by any
Loan Party or any officer thereof, contained herein or in any other Loan
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 Loan 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 Lender 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 Loan Party or
any Affiliate thereof.       No Agent-Related Person shall be under any
obligation to any Lender 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 Loan Party or any Affiliate thereof.   9.4    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 Loan 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 Lenders as it
deems appropriate and, if it so requests, it shall first be indemnified to its
satisfaction by the Lenders against any and all liability and expense which may
be incurred by it by reason of taking or continuing to take 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 Lenders (or such greater
number of Lenders 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 Lenders.       (b)    For purposes of determining compliance with
the conditions specified in Article IV, each Lender 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 Lender unless the
Administrative Agent shall have received notice from such Lender prior to the
proposed Closing Date specifying its objection thereto.   9.5   Notice of
Default. The Administrative Agent shall not be deemed to have knowledge or
notice of the occurrence of any Default, except with respect to defaults in the
payment of

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                              principal, interest and fees required to be paid
to the Administrative Agent for the account of the Lenders, unless the
Administrative Agent shall have received written notice from a Lender or the
Company referring to this Agreement, describing such Default and stating that
such notice is a “notice of default.” The Administrative Agent will notify the
Lenders of its receipt of any such notice. The Administrative Agent shall take
such action with respect to such Default as may be directed by the Required
Lenders in accordance with Article VIII; 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 as it shall deem
advisable or in the best interest of the Lenders.   9.6   Credit Decision;
Disclosure of Information by Administrative Agent. Each Lender 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 Loan Party or any
Affiliate thereof, shall be deemed to constitute any representation or warranty
by any Agent-Related Person to any Lender as to any matter, including whether
Agent-Related Persons have disclosed material information in their possession.
Each Lender 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 Loan 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 Company hereunder. Each Lender 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 Company and the other Loan
Parties. Except for notices, reports and other documents expressly required to
be furnished to the Lenders by the Administrative Agent herein, the
Administrative Agent shall not have any duty or responsibility to provide any
Lender with any credit or other information concerning the business, prospects,
operations, property, financial and other condition or creditworthiness of any
of the Loan Parties or any of their respective Affiliates which may come into
the possession of any Agent-Related Person.   9.7    Indemnification of
Administrative Agent. Whether or not the transactions contemplated hereby are
consummated, the Lenders shall indemnify upon demand each Agent-Related Person
(to the extent not reimbursed by or on behalf of any Loan Party and without
limiting the obligation of any Loan Party to do so), pro rata, and hold harmless
each Agent-Related Person from and against any and all Indemnified Liabilities
incurred by it; provided, however, that no Lender shall be liable for the
payment to any Agent-Related Person of any portion of such Indemnified
Liabilities to the extent resulting from such Agent-Related Person’s own gross
negligence or willful misconduct; provided, further, that no action taken in
accordance with the directions of the Required Lenders shall be deemed to
constitute gross negligence or willful misconduct for purposes of this Section.
Without limitation of the foregoing, each Lender 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,

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                              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 Company. The
undertaking in this Section shall survive termination of the Aggregate
Commitment, the payment of all other Obligations and the resignation of the
Administrative Agent.   9.8    Agent in Individual Capacity. Bank of America 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 Bank of
America were not the Administrative Agent hereunder and without notice to or
consent of the Lenders. Each Lender acknowledges that, pursuant to such
activities, Bank of America or its Affiliates may receive information regarding
any Loan Party or its Affiliates (including information that may be subject to
confidentiality obligations in favor of such Loan Party or such Affiliate) and
acknowledges that the Administrative Agent shall be under no obligation to
provide such information to it. With respect to its Loans, Bank of America shall
have the same rights and powers under this Agreement as any other Lender and may
exercise the same as though it were not the Administrative Agent or the L/C
Issuer, and the terms “Lender” and “Lenders” include Bank of America in its
individual capacity.   9.9    Successor Administrative Agent; Resignation as
Swing Line Lender. The Administrative Agent may resign as Administrative Agent
upon 30 days’ notice to the Lenders; provided that any such resignation by Bank
of America shall also constitute its resignation as L/C Issuer and Swing Line
Lender. If Bank of America resigns as Swing Line Lender, such resignation shall
also constitute its resignation as Administrative Agent. If the Administrative
Agent resigns under this Agreement, the Required Lenders shall appoint from
among the Lenders a successor administrative agent for the Lenders, which
successor administrative agent shall be consented to by the Company at all times
other than during the existence of an Event of Default (which consent of the
Company shall not be unreasonably withheld or delayed). If no successor
administrative agent is appointed prior to the effective date of the resignation
of the Administrative Agent, the Administrative Agent may appoint, after
consulting with the Lenders and the Company, a successor administrative agent
from among the Lenders. 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, L/C Issuer and Swing Line Lender and the
respective terms “Administrative Agent,” “L/C Issuer” and “Swing Line Lender”
shall mean such successor administrative agent, Letter of Credit issuer and
swing line bank, and the retiring Administrative Agent’s appointment, powers and
duties as Administrative Agent shall be terminated and the retiring L/C Issuer’s
and Swing Line Lender’s rights, powers and duties as such shall be terminated,
without any other or further act or deed on the part of such retiring L/C Issuer
or Swing Line Lender or any other Lender, other than the obligation of the
successor L/C Issuer to issue letters of credit in substitution for the Letters
of Credit, if any, outstanding at the time of such succession or to make other
arrangements satisfactory to the retiring L/C Issuer to effectively assume the
obligations of the retiring L/C Issuer with respect to such Letters of Credit.
After any retiring Administrative Agent’s resignation hereunder as
Administrative Agent, the provisions of this Article IX and Sections 10.4 and
10.5 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 30 days following a retiring Administrative Agent’s notice of
resignation, the retiring Administrative Agent’s resignation shall nevertheless
thereupon become effective and the Lenders shall perform all of the duties of
the

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                              Administrative Agent hereunder until such time, if
any, as the Required Lenders appoint a successor agent as provided for above.  
9.10    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 Loan Party, the Administrative Agent (irrespective of whether the principal
of any Loan or L/C 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 Company) 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, L/C Obligations 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 Lenders and the Administrative
Agent (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Lenders and the Administrative Agent and their
respective agents and counsel and all other amounts due the Lenders and the
Administrative Agent under Section 2.9, Article III and Sections 10.4 and 10.5)
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 Lender 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 Lenders, 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 Section 2.9,
Article III and Sections 10.4 and 10.5.   9.11    Other Agents, Arrangers and
Managers. None of the Lenders or other Persons identified on the face page, the
first page or signature pages of this Agreement as a “syndication agent,”
“documentation agent,” “managing agent,” “sole book manager” or “sole lead
arranger” shall have any right, power, obligation, liability, responsibility or
duty under this Agreement other than, in the case of such Lenders, those
applicable to all Lenders as such. Notwithstanding anything contained herein
which may be construed to the contrary, none of such Lenders or other Persons
shall exercise any of the rights or have any of the responsibilities of the
Administrative Agent hereunder, or any other rights or responsibilities other
than their respective rights and responsibilities as Lenders hereunder. Without
limiting the foregoing, none of the Lenders or other Persons so identified shall
have or be deemed to have any fiduciary relationship with any Lender. Each
Lender acknowledges that it has not relied, and will not rely, on any of the
Lenders or other Persons so identified in deciding to enter into this Agreement
or in taking or not taking action hereunder.   9.12    Performance by the
Administrative Agent. In the event that the Company shall default in or fail to
perform any of its obligations under the Loan Documents, which default is not
cured within any applicable cure period, the Administrative Agent shall have the
right, but not the duty, without limitation upon any of the Administrative
Agent’s or the Lenders rights pursuant thereto, to perform the same, and the
Company agrees to pay to the Administrative Agent within 5 Banking Days after
demand, all reasonable costs and expenses incurred by the

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                              Administrative Agent in connection therewith,
including reasonable Attorney Costs, together with interest thereon from the
date which is 5 Banking Days after demand until paid at a rate per annum equal
to the Base Rate plus 2%.   9.13    Actions. The Administrative Agent shall have
the right to commence, appear in, and defend any action or proceeding purporting
to affect the rights or duties of the Lenders hereunder or the payment of any
funds, and in connection therewith the Administrative Agent may pay necessary
expenses, employ counsel, and pay Attorney Costs. The Company agrees to pay to
the Administrative Agent, within 5 Banking Days after demand, all reasonable
costs and expenses incurred by the Administrative Agent in connection therewith,
including reasonable Attorney Costs, together with interest thereon from the
date which is 5 Banking Days after demand until paid at a rate per annum equal
to the Base Rate plus 2%.

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ARTICLE X
MISCELLANEOUS

                         10.1    Amendments and Waivers. No amendment or waiver
of any provision of this Agreement or any other Loan Document, and no consent
with respect to any departure by the Company therefrom, shall be effective
unless the same shall be in writing and signed by the Required Lenders (or by
the Administrative Agent at the written request of the Required Lenders) and the
Company and acknowledged by the Administrative Agent, and then any such waiver
or consent shall be effective only in the specific instance and for the specific
purpose for which given; provided, however, that no such waiver, amendment, or
consent shall, unless in writing and signed by all the Lenders and the Company
and acknowledged by the Administrative Agent, do any of the following:       (a)
  increase or extend the Commitment of any Lender, unless such Lender has
consented thereto in writing;       (b)    postpone or delay any date fixed by
this Agreement or any other Loan Document for any payment of principal,
interest, fees or other amounts due to the Lenders (or any of them) hereunder or
under any other Loan Document;       (c)    reduce the principal of, or the rate
of interest specified herein on, any Loan, the amount of the L/C Obligations, or
any fees or other amounts payable hereunder or under any other Loan Document;  
    (d)    change the percentage of the Commitments or of the aggregate unpaid
principal amount of the Loans which is required for the Lenders or any of them
to take any action hereunder;       (e)    amend the percentages set forth in
Section 2.5(b) used in the calculation of the Borrowing Base;       (f)    amend
the provisions of Section 2.8;       (g)    amend the definition of Required
Lenders;       (h)    amend this Section or any provision herein providing for
consent or other action by all Lenders;       (i)    discharge any Guarantor; or
      (j)    amend, or perform any act pursuant to, any provision herein
expressly requiring the consent of each Lender;        provided, further, that
no amendment, waiver or consent shall, unless in writing and signed by the
Administrative Agent in addition to the Required Lenders or all the Lenders, as
the case may be, affect the rights or duties of the Administrative Agent under
this Agreement or any other Loan Document; and provided, further, that no
amendment or waiver with respect to a Letter of Credit shall be effected without
the consent of the relevant L/C Issuer. Each Lender shall bear its Pro Rata
Share of all costs and expenses incurred in any amendment, waiver or consent
pursuant to this Agreement not reimbursed by the Company. Notwithstanding

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                              anything to the contrary herein, no Defaulting
Lender shall have any right to approve or disapprove any amendment, waiver or
consent hereunder, except that the Commitment of such Lender may not be
increased or extended without the consent of such Lender.   10.2    Notices and
Other Communications; Facsimile Copies.       (a)   Unless otherwise expressly
provided herein, all notices and other communications provided for hereunder
shall be in writing (including by facsimile transmission). All such written
notices shall be mailed, faxed or delivered to the applicable address, facsimile
number or (subject to clause (e) below) electronic mail address, and all notices
and other communications expressly permitted hereunder to be given by telephone
shall be made to the applicable telephone number, as follows:           (1)   if
to the Company, the Administrative Agent or the Swing Line Lender, to the
address, facsimile number, electronic mail address or telephone number specified
for such Person on Schedule 10.2 or to such other address, facsimile number,
electronic mail address or telephone number as shall be designated by such party
in a notice to the other parties; and           (2)    if to any other Lender,
to the address, facsimile number, electronic mail address or telephone number
specified in its Administrative Questionnaire or to such other address,
facsimile number, electronic mail address or telephone number as shall be
designated by such party in a notice to the Company and the Administrative
Agent.       (b)    All such notices and other communications shall be deemed to
be given or made upon the earlier to occur of :           (1)    actual receipt
by the relevant party hereto; and           (2)    as applicable:              
(A)   if delivered by hand or by courier, when signed for by or on behalf of the
relevant party hereto;               (B)    if delivered by mail, 4 Banking Days
after deposit in the mails, postage prepaid;               (C)    if delivered
by facsimile, when sent and receipt has been confirmed by telephone; and        
      (D)    if delivered by electronic mail (which form of delivery is subject
to the provisions of clause (e) below), when delivered; provided, however, that
notices and other communications to the Administrative Agent, the L/C Issuer and
the Swing Line Lender pursuant to Article II shall not be effective until
actually received by such Person.       (c)    In no event shall a voicemail
message be effective as a notice, communication or confirmation hereunder.

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                             (d)    Loan Documents may be transmitted or signed
by facsimile. The effectiveness of any such documents and signatures shall,
subject to applicable Law, have the same force and effect as manually-signed
originals and shall be binding on all Loan Parties, the Administrative Agent and
the Lenders. The Administrative Agent may also require that any such documents
and signatures be confirmed by a manually-signed original thereof; provided,
however, that the failure to request or deliver the same shall not limit the
effectiveness of any facsimile document or signature.       (e)    Electronic
mail and Internet and intranet websites may be used only to distribute routine
communications, such as financial statements and other information as provided
in Sections 6.1 and 6.2, and to distribute Loan Documents for execution by the
parties thereto, and may not be used for any other purpose.       (f)    The
Administrative Agent and the Lenders shall be entitled to rely and act upon any
notices (including telephonic Loan requests and Swing Line Advance requests)
purportedly given by or on behalf of the Company even if           (1)    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          
(2)    the terms thereof, as understood by the recipient, varied from any
confirmation thereof.           The Company shall indemnify each Agent-Related
Person and each Lender 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 Company. All telephonic notices to and other communications
with the Administrative Agent may be recorded by the Administrative Agent, and
each of the parties hereto hereby consents to such recording.   10.3    No
Waiver; Cumulative Remedies. No failure by any Lender or the Administrative
Agent to exercise, and no delay by any such Person in exercising, any right,
remedy, power or privilege hereunder shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, remedy, power or privilege
hereunder preclude any other or further exercise thereof or the exercise of any
other right, remedy, power or privilege. The rights, remedies, powers and
privileges herein provided are cumulative and not exclusive of any rights,
remedies, powers and privileges provided by Law.   10.4    Attorney Costs,
Expenses and Taxes. The Company agrees:       (a)   to pay or reimburse the
Administrative Agent for all reasonable costs and expenses incurred in
connection with the development, preparation, negotiation and execution of this
Agreement and the other Loan Documents and any amendment, waiver, consent or
other modification of the provisions hereof and thereof (whether or not the
transactions contemplated hereby or thereby are consummated), and the
consummation and administration of the transactions contemplated hereby and
thereby, including all Attorney Costs;       (b)    to pay or reimburse each
Lender for all reasonable costs and expenses incurred in connection with any
future amendment or waiver, provided that with respect to

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                                  assignments or participations, the only amount
payable by the Company will be the processing fee owing pursuant to
Section 10.8; and       (c)    to pay or reimburse the Administrative Agent and
each Lender for all reasonable costs and expenses incurred in connection with
the enforcement, attempted enforcement, or preservation of any rights or
remedies under this Agreement or the other Loan Documents (including all such
costs and expenses incurred during any “workout” or restructuring in respect of
the Obligations and during any legal proceeding, including any proceeding under
any Debtor Relief Law), including all Attorney Costs.       The foregoing costs
and expenses shall include all search, filing, recording, title insurance and
appraisal charges and fees and taxes related thereto, and other out-of-pocket
expenses incurred by the Administrative Agent and the cost of independent public
accountants and other outside experts retained by the Administrative Agent or
any Lender. All amounts due under this Section 10.4 shall be payable within 10
Banking Days after demand therefor. Any amount payable to the Administrative
Agent and the Lenders under this Section 10.4 shall, from the date of demand for
payment, and any other amount payable to the Administrative Agent under the Loan
Documents which is not paid when due or within any applicable grace period
shall, thereafter, bear interest at the rate in effect under each Note with
respect to Base Rate Loans. The agreements in this Section shall survive the
termination of the Aggregate Commitments and repayment of all other Obligations.
  10.5    Indemnification by the Company. Whether or not the transactions
contemplated hereby are consummated, the Company shall indemnify and hold
harmless each Agent-Related Person, each Lender 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, 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 the L/C Issuer 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),      
(c)    any actual or alleged presence or release of Materials of Environmental
Concern on or from any property currently or formerly owned or operated by the
Company, any Subsidiary or any other Loan Party, or any Environmental Liability
related in any way to the Company, any Subsidiary or any other Loan Party, or  
    (d)    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”), in all

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                                  cases, whether or not caused by or arising, in
whole or in part, out of the negligence of the Indemnitee;        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 have resulted from
the gross negligence or willful misconduct of 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 10.5 shall be payable within
10 Banking Days after demand therefor. The agreements in this Section shall
survive the resignation of the Administrative Agent, the replacement of any
Lender, the termination of the Aggregate Commitment and the repayment,
satisfaction or discharge of all the other Obligations.   10.6    Payments Set
Aside. To the extent that any payment by or on behalf of the Company is made to
the Administrative Agent or any Lender, or the Administrative Agent or any
Lender 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 Lender 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 Lender 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.   10.7    Successors and
Assigns. The provisions of this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns,
except that the Company may not assign or transfer any of its rights or
obligations under this Agreement without the prior written consent of the
Administrative Agent and each Lender, and no Lender may assign or transfer any
of its rights or obligations under this Agreement except in accordance with
Section 10.8. Nothing in this Agreement, expressed or implied, shall be
construed to confer upon any Person (other than the parties hereto, their
respective successors and assigns permitted hereby, Participants to the extent
provided in Section 10.8(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.   10.8    Assignments, Participations, Etc.       (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 Company may not assign or otherwise transfer
any of its rights or obligations

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                                        hereunder without the prior written
consent of each Lender and no Lender may assign or otherwise transfer any of its
rights or obligations hereunder except           (1)   to an Eligible Assignee
in accordance with the provisions of subsection (b) of this Section,          
(2)    by way of participation in accordance with the provisions of subsection
(d) of this Section, or           (3)    by way of pledge or assignment of a
security interest subject to the restrictions of clause (f) of this Section.    
      Nothing in this Agreement, expressed or implied, shall be construed to
confer upon any Person (other than the parties hereto, their respective
successors and assigns permitted hereby, Participants to the extent provided in
clause (d) of this Section 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 Lender may at any time assign to one or more
Eligible Assignees all or a portion of its rights and obligations under this
Agreement (including all or a portion of its Commitment and the Loans (including
for purposes of this clause (b), participations in L/C Obligations and in Swing
Line Advances) at the time owing to it); provided that:           (1)    each
Lender (including each Eligible Assignee) must retain a Commitment of not less
than $5,000,000 after giving effect to such assignment unless its Commitment has
been reduced to zero by such assignment;           (2)    except in the case of
an assignment of the entire remaining amount of the assigning Lender’s
Commitment and the Loans at the time owing to it or in the case of an assignment
to a Lender or an Affiliate of a Lender or an Approved Fund with respect to a
Lender, the aggregate amount of the Commitment (which for this purpose includes
Loans outstanding thereunder) 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 the “Trade Date” is specified in
the Assignment and Assumption, as of the Trade Date, shall not be less than
$1,000,000 unless each of the Administrative Agent and, so long as no Event of
Default has occurred and is continuing, the Company otherwise consents;        
  (3)    each partial assignment shall be made as an assignment of a
proportionate part of all the assigning Lender’s rights and obligations under
this Agreement with respect to the Loans or the Commitment assigned, except that
this clause (3) shall not apply to rights in respect of Swing Line Advances in
the case of an assignment by a Lender that is also the Swing Line Lender;      
    (4)    any assignment of a Commitment must be approved by the Administrative
Agent unless the Person that is the proposed assignee is itself a Lender
(whether or not the proposed assignee would otherwise qualify as an Eligible
Assignee); and

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                                       (5)    the parties to each assignment
shall execute and deliver to the Administrative Agent an Assignment and
Assumption, together with a processing and recordation fee of $3,500.          
Subject to acceptance and recording thereof by the Administrative Agent pursuant
to clause (c) of this Section, from and after the effective date specified in
each Assignment and Assumption, the Eligible Assignee thereunder shall be a
party to this Agreement and, to the extent of the interest assigned by such
Assignment and Assumption, have the rights and obligations of a Lender under
this Agreement, and the assigning Lender thereunder shall, to the extent of the
interest assigned by such Assignment and Assumption, be released from its
obligations under this Agreement (and, in the case of an Assignment and
Assumption covering all of the assigning Lender’s rights and obligations under
this Agreement, such Lender shall cease to be a party hereto but shall continue
to be entitled to the benefits of Sections 3.7, 3.9, 3.10, 10.4 and 10.5 with
respect to facts and circumstances occurring prior to the effective date of such
assignment). Upon request, the Company (at its expense) shall execute and
deliver a Note to the assignee Lender. Any assignment or transfer by a Lender of
rights or obligations under this Agreement that does not comply with this
subsection shall be treated for purposes of this Agreement as a sale by such
Lender of a participation in such rights and obligations in accordance with
clause (d) of this Section.       (c)    The Administrative Agent, acting solely
for this purpose as an agent of the Company, 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
Lenders, and the Commitments of, and principal amounts of the Loans and L/C
Obligations owing to, each Lender pursuant to the terms hereof from time to time
(the “Register”). The entries in the Register shall be conclusive, and the
Company, the Administrative Agent and the Lenders may treat each Person whose
name is recorded in the Register pursuant to the terms hereof as a Lender
hereunder for all purposes of this Agreement, notwithstanding notice to the
contrary. The Register shall be available for inspection by the Company and any
Lender, at any reasonable time and from time to time upon reasonable prior
notice.       (d)    Any Lender may at any time, without the consent of, or
notice to, the Company or the Administrative Agent, sell participations to any
Person (other than a natural person or the Company or any of the Company’s
Affiliates or Subsidiaries ) (each, a “Participant”) in all or a portion of such
Lender’s rights or obligations under this Agreement (including all or a portion
of its Commitment or the Loans (including such Lender’s participations in L/C
Obligations or Swing Line Advances) owing to it); provided that:           (1)
   such Lender’s obligations under this Agreement shall remain unchanged;      
    (2)    such Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations; and           (3)    the
Company, the Administrative Agent and the other Lenders shall continue to deal
solely and directly with such Lender in connection with such Lender’s rights and
obligations under this Agreement.

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                                        Any agreement or instrument pursuant to
which a Lender sells such a participation shall provide that such Lender shall
retain the sole right to enforce this Agreement and to approve any amendment,
modification or waiver of any provision of this Agreement; provided that such
agreement or instrument may provide that such Lender will not, without the
consent of the Participant, agree to any amendment, waiver or other modification
described in clauses (a), (b) or (c) of the first proviso to Section 10.1 that
directly affects such Participant. Subject to clause (e) of this Section, the
Company agrees that each Participant shall be entitled to the benefits of
Sections 3.7, 3.9 and 3.10 to the same extent as if it were a Lender and had
acquired its interest by assignment pursuant to clause (b) of this Section. To
the extent permitted by law, each Participant also shall be entitled to the
benefits of Section 10.10 as though it were a Lender, provided such Participant
agrees to be subject to Section 2.8 as though it were a Lender.       (e)    A
Participant shall not be entitled to receive any greater payment under
Sections 3.7 or 3.9 than the applicable Lender would have been entitled to
receive with respect to the participation sold to such Participant, unless the
sale of the participation to such Participant is made with the Company’s prior
written consent. A Participant that would be a Foreign Lender if it were a
Lender shall not be entitled to the benefits of Section 3.7 unless the Company
is notified of the participation sold to such Participant and such Participant
agrees, for the benefit of the Company, to comply with Section 10.14 as though
it were a Lender.       (f)    Any Lender may at any time pledge or assign a
security interest in all or any portion of its rights under this Agreement
(including under its Note, if any) to secure obligations of such Lender,
including any pledge or assignment to secure obligations to a Federal Reserve
Bank; provided that no such pledge or assignment shall release such Lender from
any of its obligations hereunder or substitute any such pledgee or assignee for
such Lender as a party hereto.       (g)    Notwithstanding anything to the
contrary contained herein, if at any time Bank of America assigns all of its
Commitment and Loans pursuant to clause (b) of this Section, Bank of America may
do one or both of the following:           (1)    upon 30 days’ notice to the
Company and the Lenders, resign as L/C Issuer; or           (2)    upon 30 days’
notice to the Company, resign as Swing Line Lender.           In the event of
any such resignation as L/C Issuer or Swing Line Lender, the Company may appoint
from among the Lenders a successor L/C Issuer or Swing Line Lender hereunder;
provided, however, that no failure by the Company to appoint any such successor
shall affect the resignation of Bank of America as L/C Issuer or Swing Line
Lender, as the case may be. If Bank of America resigns as L/C Issuer, it shall
retain all the rights and obligations of the L/C Issuer hereunder with respect
to all Letters of Credit outstanding as of the effective date of its resignation
as L/C Issuer and all L/C Obligations with respect thereto (including the right
to require the Lenders to make Base Rate Loans or fund risk participations in
Unreimbursed Amounts pursuant to Section 2.9(c)). If Bank of America resigns as
Swing Line Lender, it shall retain all the rights of the Swing Line Lender
provided for hereunder with respect to Swing Line Advances made by it and
outstanding as of the effective date of such

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                                  resignation, including the right to require
the Lenders to fund risk participations in outstanding Swing Line Advances
pursuant to Section 2.1(h)(3).   10.9    Confidentiality. Each of the
Administrative Agent and the Lenders agrees to maintain the confidentiality of
the Information (as defined below), except that Information may be disclosed:  
    (a)    to its and its Affiliates’ directors, officers, employees and agents,
including accountants, legal counsel and other advisors (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;
      (c)    to the extent required by applicable laws or regulations or by any
subpoena or similar legal process;       (d)    to any other party to this
Agreement;       (e)    in connection with the exercise of any remedies
hereunder or any suit, action or proceeding relating to this Agreement or the
enforcement of rights hereunder;       (f)    subject to an agreement containing
provisions substantially the same as those of this Section, to            (1)   
any Eligible Assignee of or Participant in, or any prospective Eligible Assignee
of or Participant in, any of its rights or obligations under this Agreement or  
         (2)    any direct or indirect contractual counterparty or prospective
counterparty (or such contractual counterparty’s or prospective counterparty’s
professional advisor) to any credit derivative transaction relating to
obligations of the Loan Parties;       (g)    with the consent of the Company;  
    (h)    to the extent such Information            (1)    becomes publicly
available other than as a result of a breach of this Section or            (2)
   becomes available to the Administrative Agent or any Lender on a
nonconfidential basis from a source other than the Company; or       (i)    to
the National Association of Insurance Commissioners or any other similar
organization.       In addition, the Administrative Agent and the Lenders may
disclose the existence of this Agreement and information about this Agreement to
market data collectors, similar service providers to the lending industry, and
service providers to the Administrative Agent and the Lenders in connection with
the administration and management of this Agreement, the other Loan Documents,
the Commitments, and the Loans. For the purposes of this Section,

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                              “Information” means all information received from
any Loan Party relating to any Loan Party or its business, other than any such
information that is available to the Administrative Agent or any Lender on a
nonconfidential basis prior to disclosure by any Loan Party; provided that in
the case of information received from a Loan Party after the date hereof, such
information is clearly identified in writing 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.   10.10    Set-off. In addition to any rights
and remedies of the Lenders provided by Law, if an Event of Default exists or
the Loans have been accelerated, each Lender is authorized at any time and from
time to time, without prior notice to the Company, any such notice being waived
by the Company to the fullest extent permitted by law, to set off and apply any
and all deposits (general or special, time or demand, provisional or final
excluding the Company’s customer trust accounts) at any time held by, and other
indebtedness at any time owing by, such Lender to or for the credit or the
account of the Company against any and all Obligations owing to the Lenders, now
or hereafter existing, irrespective of whether or not the Administrative Agent
or such Lender shall have made demand under this Agreement or any Loan Document
and although such Obligations may be contingent or unmatured. Each Lender agrees
promptly to notify the Company and the Administrative Agent after any such
set-off and application made by such Lender; provided, however, that the failure
to give such notice shall not affect the validity of such set-off and
application.   10.11    Integration. This Agreement, together with the other
Loan Documents, comprises the complete and integrated agreement of the parties
on the subject matter hereof and thereof and supersedes all prior agreements,
written or oral, on such subject matter. In the event of any conflict between
the provisions of this Agreement and those of any other Loan Document, the
provisions of this Agreement shall control; provided that the inclusion of
supplemental rights or remedies in favor of the Administrative Agent or the
Lenders in any other Loan Document shall not be deemed a conflict with this
Agreement. Each Loan Document was drafted with the joint participation of the
respective parties thereto and shall be construed neither against nor in favor
of any party, but rather in accordance with the fair meaning thereof.   10.12   
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
Lender, regardless of any investigation made by the Administrative Agent or any
Lender or on their behalf and notwithstanding that the Administrative Agent or
any Lender may have had notice or knowledge of any Default at the time of any
Loan or 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.   10.13   
Severability. If any provision of this Agreement or the other Loan Documents is
held to be illegal, invalid or unenforceable,       (a)    the legality,
validity and enforceability of the remaining provisions of this Agreement and
the other Loan Documents shall not be affected or impaired thereby and

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                              (b)    the parties shall endeavor in good faith
negotiations to replace the illegal, invalid or unenforceable provisions with
valid provisions the economic effect of which comes as close as possible to that
of the illegal, invalid or unenforceable provisions.       The invalidity of a
provision in a particular jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.   10.14    Tax Forms.  
    (a)    Each Lender that is not a “United States person” within the meaning
of Section 7701(a)(30) of the Code (a “Foreign Lender”) shall deliver to the
Administrative Agent, prior to receipt of any payment subject to withholding
under the Code (or upon accepting an assignment of an interest herein), two duly
signed completed copies of either IRS Form W-8BEN or any successor thereto
(relating to such Foreign Lender and entitling it to an exemption from, or
reduction of, withholding tax on all payments to be made to such Foreign Lender
by the Company pursuant to this Agreement) or IRS Form W-8ECI or any successor
thereto (relating to all payments to be made to such Foreign Lender by the
Company pursuant to this Agreement) or such other evidence satisfactory to the
Company and the Administrative Agent that such Foreign Lender is entitled to an
exemption from, or reduction of, U.S. withholding tax, including any exemption
pursuant to Section 881(c) of the Code. Thereafter and from time to time, each
such Foreign Lender shall:         (1)    promptly submit to the Administrative
Agent such additional duly completed and signed copies of one of such forms (or
such successor forms as shall be adopted from time to time by the relevant
United States taxing authorities) as may then be available under then current
United States laws and regulations to avoid, or such evidence as is satisfactory
to the Company and the Administrative Agent of any available exemption from or
reduction of, United States withholding taxes in respect of all payments to be
made to such Foreign Lender by the Company pursuant to this Agreement;        
(2)    promptly notify the Administrative Agent of any change in circumstances
which would modify or render invalid any claimed exemption or reduction; and    
      (3)    take such steps as shall not be materially disadvantageous to it,
in the reasonable judgment of such Lender, and as may be reasonably necessary
(including the re-designation of its Lending Office) to avoid any requirement of
applicable Laws that the Company make any deduction or withholding for taxes
from amounts payable to such Foreign Lender.       (b)    Each Foreign Lender,
to the extent it does not act or ceases to act for its own account with respect
to any portion of any sums paid or payable to such Lender under any of the Loan
Documents (for example, in the case of a typical participation by such Lender),
shall deliver to the Administrative Agent on the date when such Foreign Lender
ceases to act for its own account with respect to any portion of any such sums
paid or payable, and at such other times as may be necessary in the
determination of the Administrative Agent (in the reasonable exercise of its
discretion):

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                                        (1)    two duly signed completed copies
of the forms or statements required to be provided by such Lender as set forth
above, to establish the portion of any such sums paid or payable with respect to
which such Lender acts for its own account that is not subject to U.S.
withholding tax; and           (2)    two duly signed completed copies of IRS
Form W-8IMY (or any successor thereto), together with any information such
Lender chooses to transmit with such form, and any other certificate or
statement of exemption required under the Code, to establish that such Lender is
not acting for its own account with respect to a portion of any such sums
payable to such Lender.       (c)    The Company shall not be required to pay
any additional amount to any Foreign Lender under Section 3.7:           (1)   
with respect to any Taxes required to be deducted or withheld on the basis of
the information, certificates or statements of exemption such Lender transmits
with an IRS Form W-8IMY pursuant to this Section 10.14; or           (2)    if
such Lender shall have failed to satisfy the foregoing provisions of this
Section 10.14;           provided that if such Lender shall have satisfied the
requirement of this Section 10.14 on the date such Lender became a Lender or
ceased to act for its own account with respect to any payment under any of the
Loan Documents, nothing in this Section 10.14 shall relieve the Company of its
obligation to pay any amounts pursuant to Section 3.7 in the event that, as a
result of any change in any applicable law, treaty or governmental rule,
regulation or order, or any change in the interpretation, administration or
application thereof, such Lender is no longer properly entitled to deliver
forms, certificates or other evidence at a subsequent date establishing the fact
that such Lender or other Person for the account of which such Lender receives
any sums payable under any of the Loan Documents is not subject to withholding
or is subject to withholding at a reduced rate.       (d)    The Administrative
Agent may, without reduction, withhold any Taxes required to be deducted and
withheld from any payment under any of the Loan Documents with respect to which
the Company is not required to pay additional amounts under this Section 10.14.
      (e)    Upon the request of the Administrative Agent, each Lender that is a
“United States person” within the meaning of Section 7701(a)(30) of the Code
shall deliver to the Administrative Agent two duly signed completed copies of
IRS Form W-9. If such Lender fails to deliver such forms, then the
Administrative Agent may withhold from any interest payment to such Lender an
amount equivalent to the applicable back-up withholding tax imposed by the Code,
without reduction.       (f)    If any Governmental Authority asserts that the
Administrative Agent did not properly withhold or backup withhold, as the case
may be, any tax or other amount from payments made to or for the account of any
Lender, such Lender shall indemnify the Administrative Agent therefor, including
all penalties and interest, any taxes imposed by any jurisdiction on the amounts
payable to the Administrative Agent under this Section, and costs and expenses
(including Attorney Costs) of the Administrative

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                                  Agent. The obligation of the Lenders under
this Section shall survive the termination of the Aggregate Commitments,
repayment of all other Obligations hereunder and the resignation of the
Administrative Agent.   10.15    Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.   10.16    No Third
Parties Benefited. This Agreement is made and entered into for the sole
protection and legal benefit of the Company, the Lenders, the Administrative
Agent and the Agent-Related Persons, and their permitted successors and assigns,
and no other Person shall be a direct or indirect legal beneficiary of, or have
any direct or indirect cause of action or claim in connection with, this
Agreement or any of the other Loan Documents.   10.17    Section Headings.
Section headings in this Agreement 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.   10.18    Further Acts by the
Company. The Company agrees, at its own expense, to do such acts and execute and
deliver such documents as any Lender, acting through the Administrative Agent,
from time to time reasonably requires for the purpose of carrying out the
intention or facilitating the performance of the terms hereof.   10.19    Time
of the Essence. Time is of the essence of the Loan Documents.   10.20   
GOVERNING LAW. THE LOAN DOCUMENTS SHALL BE GOVERNED BY, AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF ILLINOIS WITHOUT
REGARD TO THE CONFLICT OF LAW PROVISIONS THEREOF.   10.21    Submission to
Jurisdiction. The Company hereby irrevocably and unconditionally:       (a)   
submits for itself and its property in any legal action or proceeding relating
to this Agreement and the other Loan Documents to which it is a party, or for
the recognition and enforcement of any judgment in respect thereof, to the
non-exclusive general jurisdiction of the courts of the State of Illinois, the
courts of the United States of America for the Northern District of Illinois,
and appellate courts therefrom;       (b)    consents that any such action or
proceeding may be brought in such courts and waives any objection that it may
now or hereafter have to the venue of any such action or proceeding in any such
court or that such action or proceeding was brought in an inconvenient court and
agrees not to plead or claim the same;       (c)    agrees that service of
process in any such action or proceeding may be effected by mailing a copy
thereof by registered or certified mail (or any substantially similar form of
mail), postage prepaid, to the Company at its address set forth on Schedule 10.2
of this Agreement or at such other address as may be designated by it in a
written notice to the Administrative Agent in accordance with Section 10.2(a);
and       (d)    agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the right
to sue in any other jurisdiction.

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                          10.22    WAIVER OF JURY TRIAL. EACH PARTY TO THIS
AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM,
DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER ANY LOAN DOCUMENT OR IN ANY WAY
CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR
ANY OF THEM WITH RESPECT TO ANY LOAN DOCUMENT, OR THE TRANSACTIONS RELATED
THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER
FOUNDED IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND
CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED
BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN
ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENT OF THE SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT
TO TRIAL BY JURY.

[Signature pages follow]

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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.

              The Company:             THE RYLAND GROUP, INC., a Maryland
corporation                   By:   /s/ Cathey S. Lowe        

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        Cathey S. Lowe, Vice President and Treasurer        

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        [Printed Name and Title]

 

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              The Lenders:               BANK OF AMERICA, N.A., as
Administrative
Agent and as a Lender                   By:   /s/ Kelley Prentiss        

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        Kelley Prentiss, Principal        

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        [Printed Name and Title]

 

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              BANK ONE, NA, as Syndication Agent and as a Lender                
  By:   /s/ Mark Kramer        

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        Mark Kramer, Director        

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        [Printed Name and Title]

 

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              WACHOVIA BANK, NATIONAL ASSOCIATION,
as Syndication Agent and as a Lender                   By:   /s/ Brian A.
Phillips        

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        Brian A. Phillips, Bank Officer        

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        [Printed Name and Title]

 

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              GUARANTY BANK, as Documentation Agent and as a Lender            
      By:   /s/ Amy W. Satsky        

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        Amy W. Satsky, Vice-President        

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        [Printed Name and Title]

 

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              SUNTRUST BANK, as Managing Agent and as a Lender                  
By:   /s/ W. John Wendler        

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        W. John Wendler, Director        

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        [Printed Name and Title]

 

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              ALLFIRST BANK, as a Lender                   By:   /s/ Jennifer G.
Erickson        

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        Jennifer G. Erickson, Vice President        

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        [Printed Name and Title]

 

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              AMSOUTH BANK, as a Lender                   By:   /s/ Ronny
Hudspeth        

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        Ronny Hudspeth, Sr. VP        

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        [Printed Name and Title]

 

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              COMERICA BANK, as a Lender                   By:   /s/ Sam F.
Meehan        

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        Sam F. Meehan, Assistant Vice President        

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        [Printed Name and Title]

 

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              FIFTH THIRD BANK, as a Lender                   By:   /s/ Jeffrey
Assenmacher        

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        Jeffrey Assenmacher, Large Corp. Officer        

--------------------------------------------------------------------------------

        [Printed Name and Title]

 

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              PNC BANK, NATIONAL ASSOCIATION, as a Lender                   By:
  /s/ Douglas G. Paul        

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        Douglas G. Paul, Senior Vice President        

--------------------------------------------------------------------------------

        [Printed Name and Title]

 

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              WASHINGTON MUTUAL BANK, FA as a Lender                   By:   /s/
Kris W. Klinger, V.P        

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        Kris W. Klinger, V.P.        

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        [Printed Name and Title]

 

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FIRST AMENDMENT AGREEMENT

This First Amendment Agreement dated as of September 29, 2002 (“Amendment”) is
entered into with reference to the 2002 Revolving Credit Agreement dated as of
August 22, 2002 (the “Credit Agreement”) by and among THE RYLAND GROUP, INC., a
Maryland corporation (“Company”), the Lenders party thereto, and Bank of
America, N.A., as Administrative Agent. Company and Administrative Agent, acting
on behalf of the Lenders under the Credit Agreement, hereby agree to amend the
Credit Agreement as follows:

1.    Definitions. Capitalized terms used herein but not defined are used with
the meanings set forth for those terms in the Credit Agreement.   2.    Changes
to Defined Terms. Section 1.1 of the Credit Agreement is hereby amended to
delete definition of “L/C Fronting Fee” and replace it to read in full as
follows and to add a definition of “L/C Fronting Fee Rate” to read in full as
follows:

            “L/C Fronting Fee” has the meaning set forth in Section 2.9(j).  
            “L/C Fronting Fee Rate” means 0.125% per annum computed on the
average daily face amount of each Letter of Credit; provided, however, that a
minimum fronting fee of $250 per annum is payable on each Letter of Credit.

3.    Amendment to Section 2.9(i) of the Credit Agreement. Section 2.9(i) of the
Credit Agreement is hereby amended to read in full as follows:

            Letter of Credit Fees. The Company agrees to pay to the
Administrative Agent, for the account of each Lender in accordance with its Pro
Rata Share, a fee (the “Letter of Credit Fee”) computed at the applicable L/C
Fee Rate (calculated on the basis of a year of 360 days) on the average daily
face amount of all Letters of Credit outstanding hereunder from time to time.
The Letter of Credit Fee shall commence to accrue on the date of this Agreement
and shall be payable in arrears on the first day of January, April, July and
October of each year, beginning with the first of such dates to occur after the
date of this Agreement, on the Maturity Date and upon payment in full of the
Obligations. If there is any change in the L/C Fee Rate during any quarter, the
daily maximum amount of each Letter of Credit shall be computed and multiplied
by the L/C Fee Rate separately for each period during such quarter that such L/C
Fee Rate was in effect.

4.    Amendment to Section 2.9(j) of the Credit Agreement. Section 2.9(j) of the
Credit Agreement is hereby amended to read in full as follows:

            Fronting Fee and Documentary and Processing Charges Payable to L/C
Issuer. The Company shall pay directly to the Administrative Agent for the
account of each L/C Issuer fronting fees computed at the L/C Fronting Fee Rate
(calculated on the basis of a year of 360 days) on the average daily face amount
of all Letters of Credit outstanding hereunder from time to time (the “L/C
Fronting Fee”). The L/C Fronting Fee shall commence to accrue on the date of
this Agreement (i.e., August 22, 2002). In addition, the Company shall pay
directly to the Administrative Agent for the

-1-

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            account of each L/C Issuer the customary issuance, presentation,
amendment and other processing fees, and other standard costs and charges, of
the L/C Issuer relating to letters of credit as from time to time in effect, and
all such fees shall be deemed fully earned by the L/C Issuer upon issuance of
the relevant Letter of Credit and are nonrefundable. The Company shall pay all
fees described in this clause (j) to the Administrative Agent in arrears on the
first day of January, April, July and October of each year, beginning with the
first of such dates to occur after the date of this Agreement, on the Maturity
Date and upon payment in full of the Obligations.

5.    Conditions Precedent. The effectiveness of this Amendment shall be
conditioned upon the receipt by Administrative Agent of written consents to the
execution, delivery and performance hereof from all the Lenders under the Credit
Agreement.   6.    Representation and Warranty. Company represents and warrants
to Administrative Agent and the Lenders that no Default or Event of Default has
occurred and remains continuing, and that each of the representations and
warranties of Company set forth in the Credit Agreement (as updated from time to
time in accordance with the terms of the Credit Agreement) is true and correct
as of the date hereof (other than those which relate by their terms solely to
another date).   7.    Confirmation. In all other respects, the terms of the
Credit Agreement and the other Loan Documents are hereby confirmed.   8.   
Acknowledgement. Upon receiving a fully executed counterpart of this Amendment,
together with a fully executed Consent of Lender in the form attached hereto
from each of the Lenders, Administrative Agent shall acknowledge receipt by
delivering copies thereof to Company and each of the Lenders.

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

        THE RYLAND GROUP, INC., a Maryland corporation  
    By:  /s/ Cathey S. Lowe  

--------------------------------------------------------------------------------

  Its: Vice President and Treasurer  

--------------------------------------------------------------------------------

        BANK OF AMERICA, N.A., as Administrative Agent  
    By:  /s/ Kelley Prentiss  

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  Its:  Principal  

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-2-

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CONSENT OF GUARANTORS

Reference is hereby made to the First Amendment Agreement (“Amendment”) dated as
of September 29, 2002 and entered into with reference to that certain 2002
Revolving Credit Agreement dated as of August 22, 2002 (the “Credit Agreement”)
by and among THE RYLAND GROUP, INC., a Maryland corporation (“Company”), the
Lenders parties thereto, and Bank of America, N.A., as Administrative Agent.
Capitalized terms used but not defined in this Consent of Guarantors have the
meanings given to them in the Credit Agreement.

Reference is also hereby made to the Continuing Guaranty dated as of August 22,
2002 and executed by the Guarantors party thereto (the “Guaranty”).

Each of the undersigned hereby consents to changes to the Credit Agreement
contemplated by the Amendment. Each of the undersigned agrees that the execution
of this Consent of Guarantors is not necessary for the continued validity and
enforceability of the Guaranty, but is executed to induce Administrative Agent
and the Lenders to agree to the Amendment.

Each of the undersigned represents and warrants to Administrative Agent and the
Lenders that the Guaranty remains in full force and effect in accordance with
its terms.

This Consent of Guarantors is dated as of the date of the Amendment.

        THE RYLAND CORPORATION, a California
corporation  
    By:  /s/ Cathey S. Lowe  

--------------------------------------------------------------------------------

  Cathey S. Lowe, Vice President and Treasurer

--------------------------------------------------------------------------------

  [Printed Name and Title]

        RYLAND HOMES OF CALIFORNIA, INC., a Delaware corporation  
    By:  /s/ Cathey S. Lowe  

--------------------------------------------------------------------------------

  Cathey S. Lowe, Vice President and Treasurer

--------------------------------------------------------------------------------

  [Printed Name and Title]

[signatures continued on following page]

-3-

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        RYLAND COMMUNITIES, INC., a Florida corporation  
    By:  /s/ Cathey S. Lowe  

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  Cathey S. Lowe, Vice President and Treasurer

--------------------------------------------------------------------------------

  [Printed Name and Title]

        RH INVESTMENT OF INDIANA, INC., an Indiana corporation  
    By:  /s/ Cathey S. Lowe  

--------------------------------------------------------------------------------

  Cathey S. Lowe, Vice President and Treasurer

--------------------------------------------------------------------------------

  [Printed Name and Title]

        RYLAND HOMES INVESTMENT — TEXAS,
INC., a Maryland corporation  
    By:  /s/ Cathey S. Lowe  

--------------------------------------------------------------------------------

  Cathey S. Lowe, Vice President and Treasurer

--------------------------------------------------------------------------------

  [Printed Name and Title]

        RYLAND VENTURES III, INC., a Maryland corporation  
    By:  /s/ Cathey S. Lowe  

--------------------------------------------------------------------------------

  Cathey S. Lowe, Vice President and Treasurer

--------------------------------------------------------------------------------

  [Printed Name and Title]

-4-

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CONSENT OF LENDER

This Consent of Lender is delivered with reference to the 2002 Revolving Credit
Agreement dated as of August 22, 2002 (the “Credit Agreement”) by and among THE
RYLAND GROUP, INC., a Maryland corporation (“Company”), the Lenders party
thereto, and Bank of America, N.A., as Administrative Agent.

The undersigned Lender hereby consents to and approves of the execution,
delivery and performance of the proposed First Amendment Agreement (the
“Amendment”) to the Credit Agreement by Administrative Agent on behalf of the
Lenders, in the form attached to this Consent of Lender. This Consent of Lender,
when executed by the undersigned Lender, constitutes the undersigned Lender’s
signature to the Amendment, as required by Section 10.1 of the Credit Agreement.

  Bank of America, N.A.  

--------------------------------------------------------------------------------

[Typed/Printed Name of Lender]     By: /s/ Kelley Prentiss

--------------------------------------------------------------------------------

    Title:   Principal

--------------------------------------------------------------------------------

    Date: 10/22/02

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-5-

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CONSENT OF LENDER

This Consent of Lender is delivered with reference to the 2002 Revolving Credit
Agreement dated as of August 22, 2002 (the “Credit Agreement”) by and among THE
RYLAND GROUP, INC., a Maryland corporation (“Company”), the Lenders party
thereto, and Bank of America, N.A., as Administrative Agent.

The undersigned Lender hereby consents to and approves of the execution,
delivery and performance of the proposed First Amendment Agreement (the
“Amendment”) to the Credit Agreement by Administrative Agent on behalf of the
Lenders, in the form attached to this Consent of Lender. This Consent of Lender,
when executed by the undersigned Lender, constitutes the undersigned Lender’s
signature to the Amendment, as required by Section 10.1 of the Credit Agreement.

  Bank One, N.A.  

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[Typed/Printed Name of Lender]     By: /s/ Mark Kramer

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    Title:   Director

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    Date: 10/18/02

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-6-

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CONSENT OF LENDER

This Consent of Lender is delivered with reference to the 2002 Revolving Credit
Agreement dated as of August 22, 2002 (the “Credit Agreement”) by and among THE
RYLAND GROUP, INC., a Maryland corporation (“Company”), the Lenders party
thereto, and Bank of America, N.A., as Administrative Agent.

The undersigned Lender hereby consents to and approves of the execution,
delivery and performance of the proposed First Amendment Agreement (the
“Amendment”) to the Credit Agreement by Administrative Agent on behalf of the
Lenders, in the form attached to this Consent of Lender. This Consent of Lender,
when executed by the undersigned Lender, constitutes the undersigned Lender’s
signature to the Amendment, as required by Section 10.1 of the Credit Agreement.

  Wachovia Bank, N.A.  

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[Typed/Printed Name of Lender]     By: /s/ Brian A. Phillips

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    Title:   Bank Officer

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    Date: October 23, 2002

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-7-

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CONSENT OF LENDER

This Consent of Lender is delivered with reference to the 2002 Revolving Credit
Agreement dated as of August 22, 2002 (the “Credit Agreement”) by and among THE
RYLAND GROUP, INC., a Maryland corporation (“Company”), the Lenders party
thereto, and Bank of America, N.A., as Administrative Agent.

The undersigned Lender hereby consents to and approves of the execution,
delivery and performance of the proposed First Amendment Agreement (the
“Amendment”) to the Credit Agreement by Administrative Agent on behalf of the
Lenders, in the form attached to this Consent of Lender. This Consent of Lender,
when executed by the undersigned Lender, constitutes the undersigned Lender’s
signature to the Amendment, as required by Section 10.1 of the Credit Agreement.

  Guaranty Bank  

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[Typed/Printed Name of Lender]     By: /s/ Amy Satsky

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    Title:   Vice President

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    Date: 10-21-02

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-8-

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CONSENT OF LENDER

This Consent of Lender is delivered with reference to the 2002 Revolving Credit
Agreement dated as of August 22, 2002 (the “Credit Agreement”) by and among THE
RYLAND GROUP, INC., a Maryland corporation (“Company”), the Lenders party
thereto, and Bank of America, N.A., as Administrative Agent.

The undersigned Lender hereby consents to and approves of the execution,
delivery and performance of the proposed First Amendment Agreement (the
“Amendment”) to the Credit Agreement by Administrative Agent on behalf of the
Lenders, in the form attached to this Consent of Lender. This Consent of Lender,
when executed by the undersigned Lender, constitutes the undersigned Lender’s
signature to the Amendment, as required by Section 10.1 of the Credit Agreement.

  SunTrust Bank  

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[Typed/Printed Name of Lender]     By: /s/ W. John Wendler

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    Title:   Director

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    Date: October 21, 2002

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-9-

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CONSENT OF LENDER

This Consent of Lender is delivered with reference to the 2002 Revolving Credit
Agreement dated as of August 22, 2002 (the “Credit Agreement”) by and among THE
RYLAND GROUP, INC., a Maryland corporation (“Company”), the Lenders party
thereto, and Bank of America, N.A., as Administrative Agent.

The undersigned Lender hereby consents to and approves of the execution,
delivery and performance of the proposed First Amendment Agreement (the
“Amendment”) to the Credit Agreement by Administrative Agent on behalf of the
Lenders, in the form attached to this Consent of Lender. This Consent of Lender,
when executed by the undersigned Lender, constitutes the undersigned Lender’s
signature to the Amendment, as required by Section 10.1 of the Credit Agreement.

  Allfirst Bank  

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[Typed/Printed Name of Lender]     By: /s/ Jennifer G. Erickson

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    Title:   Vice President

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    Date: October 18, 2002

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-10-

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CONSENT OF LENDER

This Consent of Lender is delivered with reference to the 2002 Revolving Credit
Agreement dated as of August 22, 2002 (the “Credit Agreement”) by and among THE
RYLAND GROUP, INC., a Maryland corporation (“Company”), the Lenders party
thereto, and Bank of America, N.A., as Administrative Agent.

The undersigned Lender hereby consents to and approves of the execution,
delivery and performance of the proposed First Amendment Agreement (the
“Amendment”) to the Credit Agreement by Administrative Agent on behalf of the
Lenders, in the form attached to this Consent of Lender. This Consent of Lender,
when executed by the undersigned Lender, constitutes the undersigned Lender’s
signature to the Amendment, as required by Section 10.1 of the Credit Agreement.

  Amsouth Bank  

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[Typed/Printed Name of Lender]     By: /s/ Ronny Hudspeth

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    Title:   Sr. VP

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    Date: 10-18-02

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-11-

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CONSENT OF LENDER

This Consent of Lender is delivered with reference to the 2002 Revolving Credit
Agreement dated as of August 22, 2002 (the “Credit Agreement”) by and among THE
RYLAND GROUP, INC., a Maryland corporation (“Company”), the Lenders party
thereto, and Bank of America, N.A., as Administrative Agent.

The undersigned Lender hereby consents to and approves of the execution,
delivery and performance of the proposed First Amendment Agreement (the
“Amendment”) to the Credit Agreement by Administrative Agent on behalf of the
Lenders, in the form attached to this Consent of Lender. This Consent of Lender,
when executed by the undersigned Lender, constitutes the undersigned Lender’s
signature to the Amendment, as required by Section 10.1 of the Credit Agreement.

  Comerica Bank  

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[Typed/Printed Name of Lender]     By: /s/ Sam F. Meehan

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    Title:   Vice President

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    Date: 10/31/02

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-12-

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CONSENT OF LENDER

This Consent of Lender is delivered with reference to the 2002 Revolving Credit
Agreement dated as of August 22, 2002 (the “Credit Agreement”) by and among THE
RYLAND GROUP, INC., a Maryland corporation (“Company”), the Lenders party
thereto, and Bank of America, N.A., as Administrative Agent.

The undersigned Lender hereby consents to and approves of the execution,
delivery and performance of the proposed First Amendment Agreement (the
“Amendment”) to the Credit Agreement by Administrative Agent on behalf of the
Lenders, in the form attached to this Consent of Lender. This Consent of Lender,
when executed by the undersigned Lender, constitutes the undersigned Lender’s
signature to the Amendment, as required by Section 10.1 of the Credit Agreement.

  Fifth Third Bank  

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[Typed/Printed Name of Lender]     By: /s/ Jeffrey Assenmacher

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    Title:   Large Corporate Officer

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    Date: 10/22/02

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-13-

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CONSENT OF LENDER

This Consent of Lender is delivered with reference to the 2002 Revolving Credit
Agreement dated as of August 22, 2002 (the “Credit Agreement”) by and among THE
RYLAND GROUP, INC., a Maryland corporation (“Company”), the Lenders party
thereto, and Bank of America, N.A., as Administrative Agent.

The undersigned Lender hereby consents to and approves of the execution,
delivery and performance of the proposed First Amendment Agreement (the
“Amendment”) to the Credit Agreement by Administrative Agent on behalf of the
Lenders, in the form attached to this Consent of Lender. This Consent of Lender,
when executed by the undersigned Lender, constitutes the undersigned Lender’s
signature to the Amendment, as required by Section 10.1 of the Credit Agreement.

  PNC Bank NA  

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[Typed/Printed Name of Lender]     By: /s/ Douglas G. Paul

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    Title:   Senior Vice President

--------------------------------------------------------------------------------

    Date: 10/25/02

--------------------------------------------------------------------------------

 

-14-

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CONSENT OF LENDER

This Consent of Lender is delivered with reference to the 2002 Revolving Credit
Agreement dated as of August 22, 2002 (the “Credit Agreement”) by and among THE
RYLAND GROUP, INC., a Maryland corporation (“Company”), the Lenders party
thereto, and Bank of America, N.A., as Administrative Agent.

The undersigned Lender hereby consents to and approves of the execution,
delivery and performance of the proposed First Amendment Agreement (the
“Amendment”) to the Credit Agreement by Administrative Agent on behalf of the
Lenders, in the form attached to this Consent of Lender. This Consent of Lender,
when executed by the undersigned Lender, constitutes the undersigned Lender’s
signature to the Amendment, as required by Section 10.1 of the Credit Agreement.

  Washington Mutual Bank, FA  

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[Typed/Printed Name of Lender]     By: /s/ Kris W. Klinger

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    Title:   Vice President

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    Date: October 18, 2002

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-15-