Exhibit 10.1


 


CREDIT
AGREEMENT


 


DATED
AS OF JANUARY 12, 2006


 


AMONG


 


THE
RYLAND GROUP, INC.,


 


THE
LENDERS,


 


JPMORGAN
CHASE BANK, N.A.,

AS AGENT,


 


BANK
OF AMERICA, N.A.

AND

WACHOVIA BANK, NATIONAL ASSOCIATION,

AS SYNDICATION AGENTS


 


AND


 


SUNTRUST
BANK,

AND

THE ROYAL BANK OF SCOTLAND PLC,

AS DOCUMENTATION AGENTS


 


AND


 


GUARANTY
BANK,

WASHINGTON MUTUAL BANK, FA,

BARCLAYS BANK PLC,

CITICORP NORTH AMERICA, INC.,

PNC BANK, NATIONAL ASSSOCIATION,

AND

UBS LOAN FINANCE LLC,

AS MANAGING AGENTS


 


AND


 




AMSOUTH BANK,

COMERICA BANK,

AND

CALYON NEW YORK BRANCH,

AS CO-AGENTS







 





















 


J.P.
MORGAN SECURITIES INC.,

LEAD ARRANGER AND SOLE BOOK RUNNER


 





















 


TABLE OF CONTENTS


 


	
  ARTICLE I
  DEFINITIONS

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.1

  	
   

  	
  Definitions

  	
   

  	
  1

  
	
  1.2

  	
   

  	
  Classification
  of Loans and Advances

  	
   

  	
  21

  
	
  1.3

  	
   

  	
  Terms
  Generally

  	
   

  	
  21

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE II
  THE CREDITS

  	
   

  	
  21

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.1

  	
   

  	
  Commitment

  	
   

  	
  21

  
	
  2.2

  	
   

  	
  Required
  Payments; Termination

  	
   

  	
  21

  
	
  2.3

  	
   

  	
  Ratable
  Revolving Loans

  	
   

  	
  21

  
	
  2.4

  	
   

  	
  Types
  of Advances

  	
   

  	
  22

  
	
  2.5

  	
   

  	
  Commitment
  Fee; Reductions and Increases in Aggregate Commitment

  	
   

  	
  22

  
	
  2.6

  	
   

  	
  Minimum
  Amount of Each Advance

  	
   

  	
  24

  
	
  2.7

  	
   

  	
  Optional
  Principal Payments

  	
   

  	
  24

  
	
  2.8

  	
   

  	
  Method
  of Selecting Types and Interest Periods for New Advances

  	
   

  	
  25

  
	
  2.9

  	
   

  	
  Conversion
  and Continuation of Outstanding Advances

  	
   

  	
  25

  
	
  2.10

  	
   

  	
  Changes
  in Interest Rate, etc

  	
   

  	
  26

  
	
  2.11

  	
   

  	
  Rates
  Applicable After Default

  	
   

  	
  26

  
	
  2.12

  	
   

  	
  Method
  of Payment

  	
   

  	
  26

  
	
  2.13

  	
   

  	
  Noteless
  Agreement; Evidence of Indebtedness

  	
   

  	
  27

  
	
  2.14

  	
   

  	
  Telephonic
  and Facsimile Notices

  	
   

  	
  28

  
	
  2.15

  	
   

  	
  Interest
  Payment Dates; Interest and Fee Basis

  	
   

  	
  28

  
	
  2.16

  	
   

  	
  Notification
  of Advances, Interest Rates, Prepayments and Commitment Reductions

  	
   

  	
  28

  
	
  2.17

  	
   

  	
  Lending
  Installations

  	
   

  	
  28

  
	
  2.18

  	
   

  	
  Non-Receipt
  of Funds by the Agent

  	
   

  	
  29

  
	
  2.19

  	
   

  	
  Facility
  LCs

  	
   

  	
  29

  
	
  2.20

  	
   

  	
  Extension
  of Facility Termination Date

  	
   

  	
  34

  
	
  2.21

  	
   

  	
  Replacement
  of Lender

  	
   

  	
  36

  
	
  2.22

  	
   

  	
  Swing
  Line

  	
   

  	
  37

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III
  YIELD PROTECTION; TAXES 

  	
   

  	
  38

  
	
   

  	
   

  	
   

  
	
  3.1

  	
   

  	
  Yield
  Protection

  	
   

  	
  38

  
	
  3.2

  	
   

  	
  Changes
  in Capital Adequacy Regulations

  	
   

  	
  38

  
	
  3.3

  	
   

  	
  Availability
  of Types of Advances

  	
   

  	
  39

  
	
  3.4

  	
   

  	
  Funding
  Indemnification

  	
   

  	
  39

  
	
  3.5

  	
   

  	
  Taxes

  	
   

  	
  39

  
	
  3.6

  	
   

  	
  Lender
  Statements; Survival of Indemnity

  	
   

  	
  41

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IV
  CONDITIONS PRECEDENT

  	
   

  	
  41

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.1

  	
   

  	
  Initial
  Credit Extension

  	
   

  	
  41

  
	
  4.2

  	
   

  	
  Each
  Credit Extension

  	
   

  	
  42

  



 


i





















 


	
  ARTICLE V
  REPRESENTATIONS AND WARRANTIES

  	
   

  	
  43

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.1

  	
   

  	
  Incorporation,
  Qualification, Powers and Capital Stock

  	
   

  	
  43

  
	
  5.2

  	
   

  	
  Execution,
  Delivery and Performance of Loan Documents

  	
   

  	
  43

  
	
  5.3

  	
   

  	
  Compliance
  with Laws and Other Requirements

  	
   

  	
  44

  
	
  5.4

  	
   

  	
  Subsidiaries

  	
   

  	
  44

  
	
  5.5

  	
   

  	
  Financial
  Statements of the Borrower and its Consolidated Subsidiaries

  	
   

  	
  45

  
	
  5.6

  	
   

  	
  No
  Material Adverse Change

  	
   

  	
  45

  
	
  5.7

  	
   

  	
  Tax
  Liability

  	
   

  	
  46

  
	
  5.8

  	
   

  	
  Litigation

  	
   

  	
  46

  
	
  5.9

  	
   

  	
  ERISA

  	
   

  	
  46

  
	
  5.10

  	
   

  	
  Regulations
  U and X

  	
   

  	
  47

  
	
  5.11

  	
   

  	
  No
  Default or Unmatured Default

  	
   

  	
  47

  
	
  5.12

  	
   

  	
  Ownership
  of Property; Liens

  	
   

  	
  47

  
	
  5.13

  	
   

  	
  Environmental
  Matters

  	
   

  	
  47

  
	
  5.14

  	
   

  	
  Investment
  Company Act

  	
   

  	
  48

  
	
  5.15

  	
   

  	
  Public
  Utility Holding Company Act

  	
   

  	
  48

  
	
  5.16

  	
   

  	
  Subordinated
  Indebtedness

  	
   

  	
  48

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VI
  COVENANTS

  	
   

  	
  49

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.1

  	
   

  	
  Financial
  Statements

  	
   

  	
  49

  
	
  6.2

  	
   

  	
  Certificates;
  Other Information

  	
   

  	
  49

  
	
  6.3

  	
   

  	
  Payment
  of Obligations

  	
   

  	
  51

  
	
  6.4

  	
   

  	
  Conduct
  of Business and Maintenance of Existence

  	
   

  	
  51

  
	
  6.5

  	
   

  	
  Maintenance
  of Property; Insurance

  	
   

  	
  51

  
	
  6.6

  	
   

  	
  Inspection
  of Property; Books and Records; Discussions

  	
   

  	
  52

  
	
  6.7

  	
   

  	
  Notices

  	
   

  	
  52

  
	
  6.8

  	
   

  	
  Environmental
  Laws

  	
   

  	
  53

  
	
  6.9

  	
   

  	
  Guaranties
  from Future Subsidiaries; Release of Guarantors

  	
   

  	
  53

  
	
  6.10

  	
   

  	
  Use of
  Proceeds

  	
   

  	
  54

  
	
  6.11

  	
   

  	
  Taxes

  	
   

  	
  54

  
	
  6.12

  	
   

  	
  Limitation
  on Liens

  	
   

  	
  54

  
	
  6.13

  	
   

  	
  Limitation
  on Guarantee Obligations

  	
   

  	
  55

  
	
  6.14

  	
   

  	
  Limitations
  on Fundamental Changes

  	
   

  	
  56

  
	
  6.15

  	
   

  	
  Limitations
  on Sales of Assets

  	
   

  	
  56

  
	
  6.16

  	
   

  	
  Limitation
  on Dividends

  	
   

  	
  57

  
	
  6.17

  	
   

  	
  Limitation
  on Investments

  	
   

  	
  57

  
	
  6.18

  	
   

  	
  Limitation
  on Optional Payments and Modification of Debt Instruments

  	
   

  	
  58

  
	
  6.19

  	
   

  	
  Transactions
  with Affiliates

  	
   

  	
  59

  
	
  6.20

  	
   

  	
  Fiscal
  Year

  	
   

  	
  59

  
	
  6.21

  	
   

  	
  Compliance
  with ERISA

  	
   

  	
  59

  
	
  6.22

  	
   

  	
  Preferred
  Stock

  	
   

  	
  60

  
	
  6.23

  	
   

  	
  No
  Other Negative Pledges

  	
   

  	
  60

  
	
  6.24

  	
   

  	
  Consolidated
  Tangible Net Worth

  	
   

  	
  60

  
	
  6.25

  	
   

  	
  Leverage
  Ratio

  	
   

  	
  60

  



 


ii





















 


	
  6.26

  	
   

  	
  Minimum
  Interest Coverage

  	
   

  	
  60

  
	
  6.27

  	
   

  	
  Senior
  Permitted Debt Not to Exceed Borrowing Base

  	
   

  	
  60

  
	
  6.28

  	
   

  	
  Limitation
  on Housing Inventory

  	
   

  	
  60

  
	
  6.29

  	
   

  	
  Limitations
  on Land Inventory

  	
   

  	
  61

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VII
  DEFAULTS

  	
   

  	
  61

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VIII
  ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES

  	
   

  	
  63

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.1

  	
   

  	
  Acceleration;
  Facility LC Collateral Account

  	
   

  	
  63

  
	
  8.2

  	
   

  	
  Amendments

  	
   

  	
  64

  
	
  8.3

  	
   

  	
  Preservation
  of Rights

  	
   

  	
  65

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IX
  GENERAL PROVISIONS

  	
   

  	
  65

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9.1

  	
   

  	
  Survival
  of Representations

  	
   

  	
  65

  
	
  9.2

  	
   

  	
  Governmental
  Regulation

  	
   

  	
  65

  
	
  9.3

  	
   

  	
  Headings

  	
   

  	
  65

  
	
  9.4

  	
   

  	
  Entire
  Agreement

  	
   

  	
  65

  
	
  9.5

  	
   

  	
  Several
  Obligations; Benefits of this Agreement

  	
   

  	
  66

  
	
  9.6

  	
   

  	
  Expenses;
  Indemnification

  	
   

  	
  66

  
	
  9.7

  	
   

  	
  Numbers
  of Documents

  	
   

  	
  66

  
	
  9.8

  	
   

  	
  Accounting

  	
   

  	
  67

  
	
  9.9

  	
   

  	
  Severability
  of Provisions

  	
   

  	
  67

  
	
  9.10

  	
   

  	
  Nonliability
  of Lenders

  	
   

  	
  67

  
	
  9.11

  	
   

  	
  Confidentiality

  	
   

  	
  67

  
	
  9.12

  	
   

  	
  Nonreliance

  	
   

  	
  68

  
	
  9.13

  	
   

  	
  Disclosure

  	
   

  	
  68

  
	
  9.14

  	
   

  	
  USA
  PATRIOT Act

  	
   

  	
  68

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE X
  THE AGENT

  	
   

  	
  68

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10.1

  	
   

  	
  Appointment;
  Nature of Relationship

  	
   

  	
  68

  
	
  10.2

  	
   

  	
  Powers

  	
   

  	
  69

  
	
  10.3

  	
   

  	
  General
  Immunity

  	
   

  	
  69

  
	
  10.4

  	
   

  	
  No
  Responsibility for Loans, Recitals, etc

  	
   

  	
  69

  
	
  10.5

  	
   

  	
  Action
  on Instructions of Lenders

  	
   

  	
  69

  
	
  10.6

  	
   

  	
  Employment
  of Agents and Counsel

  	
   

  	
  69

  
	
  10.7

  	
   

  	
  Reliance
  on Documents; Counsel

  	
   

  	
  70

  
	
  10.8

  	
   

  	
  Agent’s
  Reimbursement and Indemnification

  	
   

  	
  70

  
	
  10.9

  	
   

  	
  Notice
  of Default

  	
   

  	
  70

  
	
  10.10

  	
   

  	
  Rights
  as a Lender

  	
   

  	
  71

  
	
  10.11

  	
   

  	
  Lender
  Credit Decision

  	
   

  	
  71

  
	
  10.12

  	
   

  	
  Successor
  Agent

  	
   

  	
  71

  
	
  10.13

  	
   

  	
  Agent
  and Arranger Fees

  	
   

  	
  72

  
	
  10.14

  	
   

  	
  Delegation
  to Affiliates

  	
   

  	
  72

  



 


iii





















 


	
  10.15

  	
   

  	
  Co-Agent,
  Documentation Agent, Managing Agent, Syndication Agent, etc

  	
   

  	
  72

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XI
  SETOFF; RATABLE PAYMENTS

  	
   

  	
  72

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  11.1

  	
   

  	
  Setoff

  	
   

  	
  72

  
	
  11.2

  	
   

  	
  Ratable
  Payments

  	
   

  	
  72

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XII
  BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS

  	
   

  	
  73

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  12.1

  	
   

  	
  Successors
  and Assigns

  	
   

  	
  73

  
	
  12.2

  	
   

  	
  Participations

  	
   

  	
  75

  
	
  12.3

  	
   

  	
  Pledge
  to Federal Reserve Bank

  	
   

  	
  75

  
	
  12.4

  	
   

  	
  Dissemination
  of Information

  	
   

  	
  76

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XIII
  NOTICES

  	
   

  	
  76

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  13.1

  	
   

  	
  Notices;
  Effectiveness; Electronic Communication

  	
   

  	
  76

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XIV
  COUNTERPARTS; INTEGRATION; EFFECTIVENESS; ELECTRONIC EXECUTION

  	
   

  	
  77

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  14.1

  	
   

  	
  Counterparts;
  Effectiveness

  	
   

  	
  77

  
	
  14.2

  	
   

  	
  Electronic
  Execution of Assignments

  	
   

  	
  77

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XV
  CHOICE OF LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL

  	
   

  	
  77

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  15.1

  	
   

  	
  CHOICE OF LAW

  	
   

  	
  77

  
	
  15.2

  	
   

  	
  CONSENT TO
  JURISDICTION

  	
   

  	
  78

  
	
  15.3

  	
   

  	
  WAIVER OF JURY
  TRIAL

  	
   

  	
  78

  



 


	
  PRICING
  SCHEDULE

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBIT A
  – BORROWING BASE CERTIFICATE

  	
   

  	
   

  
	
  EXHIBIT B
  – GUARANTY

  	
   

  	
   

  
	
  EXHIBIT C
  – COMMITMENT AND ACCEPTANCE

  	
   

  	
   

  
	
  EXHIBIT D
  – NOTE

  	
   

  	
   

  
	
  EXHIBIT E
  – ASSIGNMENT AND ASSUMPTION AGREEMENT

  	
   

  	
   

  
	
  EXHIBIT F
  – SWING LINE NOTE

  	
   

  	
   

  
	
  EXHIBIT G-1
  – OPINIONS OF TIMOTHY J. GECKLE, GENERAL COUNSEL

  	
   

  	
   

  
	
  EXHIBIT G-2
  – OPINION OF DLA PIPER RUDNICK GRAY CARY LLP

  	
   

  	
   

  
	
  EXHIBIT H
  – COMPLIANCE CERTIFICATE

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SCHEDULE 1
  – LENDERS AND COMMITMENTS

  	
   

  	
   

  
	
  SCHEDULE 2
  – EXISTING LCs

  	
   

  	
   

  
	
  SCHEDULE 3
  – GUARANTORS

  	
   

  	
   

  
	
  SCHEDULE 5.4
  – SUBSIDIARIES

  	
   

  	
   

  



 


iv





















 


	
  SCHEDULE 6.9
  – SUBSIDIARIES THAT ARE NOT REQUIRED TO BE GUARANTORS

  	
   

  	
   

  



 


v





















 


CREDIT
AGREEMENT


 


This Agreement, dated as
of January 12, 2006, is among The Ryland Group, Inc., a Maryland
corporation, the Lenders and JPMorgan Chase Bank, N.A., as Agent.  The parties hereto agree as follows:


 


ARTICLE I


 


DEFINITIONS


 


1.1           Definitions.  As used in this Agreement:


 


“ABR”, when used in
reference to any Loan or Advance, refers to whether such Loan, or the Loans
comprising such Advance, are bearing interest at a rate determined by reference
to the Alternate Base Rate.


 


“Acquisition” means any
transaction, or any series of related transactions, consummated on or after the
date of this Agreement, by which the Borrower or any of its Subsidiaries (i) acquires
any going business or all or substantially all of the assets of any firm,
corporation or limited liability company, or division thereof, whether through
purchase of assets, merger or otherwise or (ii) directly or indirectly
acquires (in one transaction or as the most recent transaction in a series of
transactions) at least a majority (in number of votes) of the securities of a
corporation which have ordinary voting power for the election of directors
(other than securities having such power only by reason of the happening of a
contingency) or a majority (by percentage or voting power) of the outstanding
ownership interests of a partnership or limited liability company.


 


“Additional Lender” is
defined in Section 2.5.3(i).


 


“Administrative
Questionnaire” means an Administrative Questionnaire in a form supplied by the
Agent.


 


“Adjusted LIBO Rate”
means, with respect to any Eurodollar Advance for any Interest Period, an
interest rate per annum (rounded upwards, if necessary, to the next 1/100 of
1%) equal to (a) the LIBO Rate for such Interest Period multiplied by (b) the
Statutory Reserve Rate.


 


“Advance” means a
borrowing hereunder consisting of Loans (i) made by the Lenders on the
same Borrowing Date, or (ii) converted or continued by the Lenders on the
same date of conversion or continuation, consisting, in either case, of the
aggregate amount of the several Loans of the same Type and, in the case of
Eurodollar Loans, for the same Interest Period.


 


“Affected Lender” is
defined in Section 2.21(a).


 


“Affiliate” of any Person
means any other Person directly or indirectly controlling, controlled by or
under common control with such Person.  A
Person shall be deemed to control another Person if the controlling Person owns
25% or more of any class of voting securities (or other ownership interests) of
the controlled Person or possesses, directly or indirectly, the power


 





















 


to direct or cause
the direction of the management or policies of the controlled Person, whether
through ownership of stock, by contract or otherwise.


 


“Agent” means JPMorgan
Chase Bank, N.A., in its capacity as agent for the Lenders hereunder and any
successor agent appointed pursuant to Section 10.12.


 


“Aggregate Commitment” means
the aggregate of the Commitments of all the Lenders, as reduced or increased
from time to time pursuant to the terms hereof. 
As of the date of this Agreement, the Aggregate Commitment is
$750,000,000.


 


“Aggregate Credit
Exposure” means, at any time, the sum of the Revolving Credit Exposure of all
the Lenders.


 


“Agreement” means this
credit agreement, as it may be amended or modified and in effect from time to
time.


 


“Alternate Base Rate”
means, for any day, a rate per annum equal to the greatest of (a) the
Prime Rate in effect on such day, (b) the Base CD Rate in effect on such
day plus 1% and (c) the Federal Funds Effective Rate in effect on such day
plus 1⁄2 of 1%.  Any change in the
Alternate Base Rate due to a change in the Prime Rate, the Base CD Rate or the
Federal Funds Effective Rate shall be effective from and including the
effective date of such change in the Prime Rate, the Base CD Rate or the
Federal Funds Effective Rate, respectively.


 


“Applicable Fee Rate”
means, at any time, the percentage rate per annum at which the Commitment Fee
is accruing on the unused portion of the Aggregate Commitment at such time as
set forth in the Pricing Schedule.


 


“Applicable Margin”
means, with respect to Eurodollar Advances at any time, the percentage rate per
annum which is applicable at such time with respect to Eurodollar Advances as
set forth in the Pricing Schedule.


 


“Approved Fund” means any
Person (other than a natural person) that is engaged in making, purchasing,
holding or investing in bank loans and similar extensions of credit in the
ordinary course of business and that is administered or managed by (a) a
Lender, (b) an Affiliate of a Lender or (c) an entity or Affiliate of
an entity that administers or manages a Lender.


 


“Arranger” means J.P.
Morgan Securities Inc., a Delaware corporation, and its successors, in its
capacity as Lead Arranger and Sole Book Runner.


 


“Article” means an article of
this Agreement unless another document is specifically referenced.


 


“Assessment Rate” means,
for any day, the annual assessment rate in effect on such day that is payable
by a member of the Bank Insurance Fund classified as “well-capitalized” and
within supervisory subgroup “B” (or a comparable successor risk classification)
within the meaning of 12 C.F.R. Part 327 (or any successor provision) to
the Federal Deposit Insurance Corporation for insurance by such corporation of
time deposits made in dollars at the offices of such member in the United
States; provided that if, as a result of
any change in any law, rule or


 


2





















 


regulation, it is
no longer possible to determine the Assessment Rate as aforesaid, then the
Assessment Rate shall be such annual rate as shall be determined by the Agent
to be representative of the cost of such insurance to the Lenders.


 


“Assignment and
Assumption” means an assignment and assumption entered into by a Lender and an
assignee (with the consent of any party whose consent is required by Section 12.1(b)),
and accepted by the Agent, in the form of Exhibit E or any other
form approved by the Agent.


 


“Authorized Person” means
any Responsible Official of the Borrower or any Person designated, by written
notice from any such Responsible Official to the Agent from time to time, as an
“Authorized Person,” provided, however, that, for purposes of
each Borrowing Base Certificate and the certificates provided for in Sections
6.1(b), 6.2(b), 6.2(c) and 6.17(c), such Authorized Person must be an
officer of the Borrower.


 


“Available Aggregate
Commitment” means, at any time, the Aggregate Commitment then in effect minus
the Aggregate Credit Exposure at such time.


 


“Base CD Rate” means the
sum of (a) the Three-Month Secondary CD Rate multiplied by the Statutory
Reserve Rate plus (b) the Assessment Rate.


 


“Borrower” means The
Ryland Group, Inc., a Maryland corporation, and its successors and
assigns.


 


“Borrowing Base” means,
except as set forth below, an amount equal to the sum of the following
Unencumbered Real Estate Inventory owned by the Borrower or any Guarantor and
Home Proceeds Receivable owned by the Borrower or any Guarantor:


 


(a)           90%
of the amount of Home Proceeds Receivable; plus


 


(b)           90%
of the book value of Sold Construction in Progress and Sold Completed Units; plus


 


(c)           80%
of the book value of Unsold Construction in Progress and Unsold Completed
Units; plus


 


(d)           70%
of the book value of Finished Lots; plus


 


(e)           50%
of the book value of the Land Under Development; plus


 


(f)            25%
of the book value of the 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 the amounts set forth in clauses (d), (e) and (f) shall
not exceed 40% of the Borrowing Base.


 


“Borrowing Base
Certificate” means a written calculation of the Borrowing Base, substantially
in the form of Exhibit A attached hereto and made a part hereof,
signed by an


 


3





















 


Authorized Person
and properly completed to provide all information required to be included
thereon.


 


“Borrowing Date” means a
date on which an Advance or Swing Line Loan is made hereunder.


 


“Borrowing Notice” is
defined in Section 2.8.


 


“Business” is defined in Section 5.13(b).


 


“Business Day” means any
day that is not a Saturday, Sunday or other day on which commercial banks in
Houston, Texas, Los Angeles, California or New York, New York are authorized or
required by law to remain closed; provided
that, when used in connection with a Eurodollar Advance or Eurodollar Loan, the
term “Business Day” shall also exclude any
day on which banks are not open for dealings in dollar deposits in the London
interbank market.


 


“Capitalized Lease” of a
Person means any lease of Property by such Person as lessee which would be
capitalized on a balance sheet of such Person prepared in accordance with GAAP.


 


“Capitalized Lease
Obligations” of a Person means the amount of the obligations of such Person
under Capitalized Leases which would be shown as a liability on a balance sheet
of such Person prepared in accordance with GAAP.


 


“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 banks 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.


 


“Change in Control” means
the acquisition by any Person, or two or more Persons acting in concert, of
beneficial ownership (within the meaning of Rule 13d-3 of the Securities
and Exchange Commission under the Securities Exchange Act of 1934) of 30% or
more of the outstanding shares of voting stock of the Borrower.


 


“Change in Law” means (a) the
adoption of any Requirement of Law after the date of this Agreement, (b) any
change in any Requirement of Law, or in the interpretation, administration or
application thereof by any Governmental Authority after the date of this
Agreement or (c) compliance by any Lender or LC Issuer (or, for purposes
of Section 3.1 and 3.2, by any Lending Installation of such Lender or by
such Lender’s or LC Issuer’s holding company, if any) with any request,
guideline or directive (whether or not having the force of law) of any
Governmental Authority made or issued after the date of this Agreement.


 


4





















 


“Class”, when used in
reference to any Loan or Advance, refers to whether such Loan, or the Loans
comprising such Advance, are Revolving Loans or Swing Line Loans.


 


“Closing Date” means the
date on which the conditions set forth in Section 4.1 are satisfied.


 


“Code” means the Internal
Revenue Code of 1986, as amended, reformed or otherwise modified from time to
time.


 


“Commitment” means, with
respect to each Lender, the commitment of such Lender to make Revolving Loans
and to acquire participations in Facility LCs and Swing Line Loans hereunder,
expressed as an amount representing the maximum aggregate amount of such Lender’s
potential Revolving Credit Exposure hereunder, as such commitment may be
reduced or increased from time to time pursuant to the terms hereof.  The initial amount of each Lender’s
Commitment is set forth on Schedule 1.


 


“Commitment and
Acceptance” is defined in Section 2.5.3(i).


 


“Commitment Fee” is
defined in Section 2.5.1.


 


“Commonly Controlled
Entity” means an entity, whether or not incorporated, which is under common
control with the Borrower within the meaning of Section 4001 of ERISA or
is part of a group which includes the Borrower and which is treated as a single
employer under Section 414 of the Code.


 


“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).


 


“Consolidated
Indebtedness” means at any time the Indebtedness of the Borrower and the
Guarantors (specifically excluding the Indebtedness of any Subsidiaries that
are not Guarantors but including the pro rata share of the Indebtedness of
Joint Ventures to the extent provided for in the definition of “Indebtedness”).


 


“Consolidated Intangible
Assets” 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.


 


“Consolidated Interest
Incurred” means for any period, for the Borrower and the Guarantors
(specifically excluding any Subsidiaries that are not Guarantors) on a
consolidated basis, interest expense plus interest capitalized into inventory
in such period.


 


“Consolidated Net Income”
means, for any period, the consolidated net income (or loss) of the Borrower
and the Guarantors (specifically excluding any Subsidiaries, joint ventures and
partnerships that are not Guarantors) for such period (taken as a cumulative
whole).


 


5





















 


“Consolidated Net Worth”
means, with respect to a Person, all amounts which would, in accordance with
GAAP, be included under shareholders’ equity on a consolidated balance sheet
for such Person and its consolidated Subsidiaries.


 


“Consolidated Tangible
Net Worth” means (a) Consolidated Net Worth of the Borrower and the
Guarantors (specifically excluding any Subsidiaries that are not Guarantors but
specifically including the investment of the Borrower or any Guarantor in any
Joint Venture) less (b) all Consolidated
Intangible Assets included in such Consolidated Net Worth.


 


“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.


 


“Contingent Obligation”
of a Person means any agreement, undertaking or arrangement by which such
Person assumes, guarantees, endorses, contingently agrees to purchase or
provide funds for the payment of, or otherwise becomes or is contingently
liable upon, the obligation or liability of any other Person, or agrees to
maintain the net worth or working capital or other financial condition of any
other Person, or otherwise assures any creditor of such other Person against
loss, including, without limitation, any comfort letter, operating agreement,
take-or-pay contract or the obligations of any such Person as general partner
of a partnership with respect to the liabilities of the partnership.


 


“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.


 


“Controlled Group” means
all members of a controlled group of corporations or other business entities
and all trades or businesses (whether or not incorporated) under common control
which, together with the Borrower or any of its Subsidiaries, are treated as a
single employer under Section 414 of the Code.


 


“Conversion/Continuation
Notice” is defined in Section 2.9.


 


“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
the making of an Advance or Swing Line Loan or the issuance or Modification (other
than a Modification that does not increase the amount or extend the expiry
date)  of a Facility LC hereunder, but
not the conversion or continuation of an Advance.


 


“Credit Extension Date”
means the Borrowing Date for an Advance or the issuance date for a Facility LC.


 


6





















 


“Default” means an event
described in Article VII.


 


“EBITDA” means, for any
period, (i) the sum of the following amounts:  (a) Consolidated Net Income for such
period; (b) cash distributions received by Borrower from the Financial
Services Segment not otherwise included in the determination of such
Consolidated Net Income; (c) income and franchise taxes deducted from
revenues in determining such Consolidated Net Income; (d) depreciation and
amortization deducted from revenues in determining such Consolidated Net
Income; (e) interest expense deducted from revenues in determining such
Consolidated Net Income (including, without duplication, previously capitalized
interest expense which would be included in “Cost of Goods Sold” and deducted
from revenues in determining such Consolidated Net Income on a combined income
statement of the Borrower and the Guarantors); (f) other non-cash charges
and expenses (including net realizable value write-down charges) deducted from
revenues in determining such Consolidated Net Income; and (g) any losses
arising outside of the ordinary course of business which have been included in
the determination of such Consolidated Net Income; less (ii) the sum of
(x) any non-cash credits included in revenues in determining such Consolidated
Net Income and (y) any gains arising outside of the ordinary course of business
included in the determination of such Consolidated Net Income.


 


“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) as
now or may at any time hereafter be in effect regulating, relating to or
imposing liability or standards to conduct concerning (i) pollution or
protection of the environment, (ii) the effect of the environment on human
health, (iii) emissions, discharges or releases of pollutants,
contaminants, hazardous substances or wastes into surface water, ground water
or land, or (iv) the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of pollutants, contaminants,
hazardous substances or wastes or the clean-up or other remediation thereof.


 


“Environmental Liability”
means any liability, contingent or otherwise (including any liability for
damages, costs of environmental remediation, fines, penalties or indemnities),
of the Borrower or any Subsidiary directly or indirectly resulting from or
based upon (a) 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 (e) any
contract, agreement or other consensual arrangement pursuant to which liability
is assumed or imposed with respect to any of the foregoing.


 


7





















 


“ERISA” means the
Employee Retirement Income Security Act of 1974, as amended from time to time,
and any rule or regulation issued thereunder.


 


“Eurodollar”, when used
in reference to any Loan or Advance, refers to whether such Loan, or the Loans
comprising such Advance, are bearing interest at a rate determined by reference
to the Adjusted LIBO Rate.


 


“Excluded Taxes” means,
in the case of each Lender or applicable Lending Installation and the Agent,
taxes (including income taxes and franchise taxes) as are measured by or
imposed on its net income.


 


“Exhibit” refers to an
exhibit to this Agreement, unless another document is specifically referenced.


 


“Existing Credit
Agreement” means that certain Credit Agreement dated as of June 16, 2004
among the Borrower, JPMorgan Chase Bank (successor by merger to Bank One, NA)
as Agent, and a syndicate of lenders.


 


“Existing LCs” means
those Letters of Credit issued for the account of the Borrower prior to the
date hereof and listed on Schedule 2 hereto.


 


“Extension Request” is
defined in Section 2.20(a).


 


“Facility Increase
Request” is defined in Section 2.5.3(i).


 


“Facility LC” is defined
in Section 2.19.1.


 


“Facility LC Application”
is defined in Section 2.19.3.


 


“Facility LC Collateral
Account” is defined in Section 2.19.12.


 


“Facility Termination
Date” means January 11, 2011 or any later date as may be specified as the
Facility Termination Date in accordance with Section 2.20 or any earlier
date on which the Aggregate Commitment is reduced to zero or otherwise
terminated pursuant to the terms hereof.


 


“Fed. Board” means the
Board of Governors of the Federal Reserve System of the United States of
America.


 


“Federal Funds Effective
Rate” means, for any day, the weighted average (rounded upwards, if necessary,
to the next 1/100 of 1%) of the rates on overnight Federal funds transactions
with members of the Federal Reserve System arranged by Federal funds brokers,
as published on the next succeeding Business Day by the Federal Reserve Bank of
New York, or, if such rate is not so published for any day that is a Business
Day, the average (rounded upwards, if necessary, to the next 1/100 of 1%) of
the quotations for such day for such transactions received by the Agent from
three Federal funds brokers of recognized standing selected by it.


 


8





















 


“Financial LC” means any
Letter of Credit (other than a Performance LC) 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 Borrower or a Subsidiary or (b) to
make payment on account of any Indebtedness undertaken by the Borrower or a
Subsidiary, in the event that the Borrower or Subsidiary fails to fulfill its
obligation to the beneficiary.


 


“Financial Services
Segment” means the business segment of the Borrower and its Subsidiaries
engaged in mortgage banking (including the title and escrow business), homeowners’
insurance, mortgage servicing, securities issuance, bond administration and
management services and related activities, which segment currently consists
principally of the activities of Ryland Mortgage Company and its Subsidiaries
but excludes the Limited-Purpose Subsidiaries.


 


“Finished Lots” means
lots of Entitled Land as to which (a) a final subdivision map has been
recorded; (b) all major off-site construction and infrastructure necessary
to permit construction of Units has been completed to local governmental
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.


 


“GAAP” means generally
accepted accounting principles as in effect from time to time in the United
States, applied in a manner consistent with that used in preparing the
financial statements referred to in Section 5.5.


 


“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 Obligations”
means, as to any Person (the “guaranteeing person”), any obligation of the
guaranteeing person or 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 obligations 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 or (C) to
purchase property, securities or services 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 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 shall be deemed to be the maximum or stated amount of the primary
obligation relating to such Guarantee Obligation (or, if less, the maximum stated
liability set forth in the instrument


 


9





















 


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 Borrower in good
faith.


 


“Guarantor” means (a) the
Subsidiaries of Borrower identified on Schedule 3 hereto and (b) any
Subsidiary that hereafter guarantees the Obligations, subject, in the case of
either (a) or (b) to release of an entity as a Guarantor as provided
in Section 6.9(b).


 


“Guaranty” means that
certain Guaranty of even date herewith in the form of Exhibit B
hereto executed by the Guarantors in favor of the Agent, for the ratable
benefit of the Lenders, as it may be amended, modified or supplemented
(including by delivery of a Supplemental Guaranty) and in effect from time to
time.


 


“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).


 


“Homebuilding Segment”
means the business segment of the Borrower and its Subsidiaries engaged in the
construction and sale of single-family attached and unattached dwellings and
related activities, including all activities of the Borrower outside the
Financial Services Segment but excluding the Limited-Purpose Subsidiaries.


 


“Home Proceeds Receivable”
means, with respect to the Borrower or a Guarantor, funds due to the Borrower
or such Guarantor held at an escrow or title company (including an escrow or
title company which is a Subsidiary of the Borrower) following the sale and
conveyance of title of a Unit to a buyer.


 


“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.


 


“Increase Date” is
defined in Section 2.5.3(ii).


 


“Indebtedness” of any
Person means all of the following, whether or not included as indebtedness or
liabilities in accordance with GAAP:  (a) all
obligations of such Person for


 


10





















 


borrowed money; (b) all
obligations 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 (measured as the Hedge Agreement Termination
Value thereof); (d) any other obligations of such Person evidenced by a
note, bond, debenture or similar instrument; (e) all Capitalized Lease
Obligations of such Person; (f) all obligations, contingent or otherwise,
of such Person in respect of Letters of Credit (excluding Performance LCs not
yet drawn upon) and acceptances issued or created for the account of such
Person; (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; (h) all Guarantee Obligations of such Person; (i) such
Person’s Unfunded Liabilities; and (j) any other obligation for borrowed money
or other financial accommodations which in accordance with GAAP would be shown
as a liability on the consolidated balance sheet of such Person.  For all purposes hereof, the Indebtedness of
any Person shall include its pro rata share of the Indebtedness of any Joint
Venture in which such Person holds an interest.


 


“Indemnified Taxes” means
Taxes other than Excluded Taxes.


 


“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 Period” means
with respect to any Eurodollar Advance, the period commencing on the date of
such Advance and ending on the numerically corresponding day in the calendar
month that is one, two, three or six months thereafter, as the Borrower may
elect; provided, that (i) if any
Interest Period would end on a day other than a Business Day, such Interest
Period shall be extended to the next succeeding Business Day unless such next
succeeding Business Day would fall in the next calendar month, in which case
such Interest Period shall end on the next preceding Business Day and (ii) any
Interest Period that commences on the last Business Day of a calendar month (or
on a day for which there is no numerically corresponding day in the last
calendar month of such Interest Period) shall end on the last Business Day of
the last calendar month of such Interest Period.  For purposes hereof, the date of an Advance
initially shall be the date on which such Advance is made and thereafter shall
be the effective date of the most recent conversion or continuation of such
Advance.


 


“Investment” of a Person
means any loan, advance (other than commission, travel and similar advances to
officers and employees made in the ordinary course of business), extension of
credit (other than accounts receivable arising in the ordinary course of
business on terms customary in the trade) or contribution of capital by such
Person; stocks, bonds, mutual funds, partnership interests, notes, debentures or
other securities owned by such Person; any deposit accounts and certificate of
deposit owned by such Person; and structured notes, derivative financial
instruments and other similar instruments or contracts owned by such Person.


 


“Investment Grade Rating”
means a rating of the Borrower’s unsecured senior public debt of BBB- or higher
from S&P or Baa3 or higher from Moody’s.


 


11





















 


“Joint Venture” means an
entity (whether a partnership, joint venture, limited liability company or
other form of business organization) in which the Borrower or a Subsidiary owns
an interest but which is not a Subsidiary of the Borrower.


 


“JPMorgan Chase Bank”
means JPMorgan Chase Bank, N.A., in its individual capacity, (and its successors).


 


“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.


 


“LC Exposure” means, at
any time, the sum of (a) the aggregate undrawn amount of all outstanding
Facility LCs at such time plus (b) the aggregate amount of all
Reimbursement Obligations that have not yet been reimbursed by or on behalf of
the Borrower at such time.  The LC
Exposure of any Lender at any time shall be its Pro Rata Share of the total LC
Exposure at such time.


 


“LC Fee” is defined in Section 2.19.4.


 


“LC Issuer” means
JPMorgan Chase Bank (or any subsidiary or affiliate of JPMorgan Chase Bank
designated by JPMorgan Chase Bank and acceptable to the Borrower), any other
Lender that is the issuer of an Existing LC and any other Lender that, at the
request of the Borrower and with the approval of the Agent, shall agree to
issue Facility LCs, each in its capacity as issuer of Facility LCs hereunder.


 


“LC Payment Date” is
defined in Section 2.19.6.


 


“Lenders” means the
Persons listed on Schedule 1 and any
other Person that shall have become a party hereto pursuant to a Commitment and
Acceptance or an Assignment and Assumption, other than any such Person that
ceases to be a party hereto pursuant to an Assignment and Assumption.  Unless the context otherwise requires, the
term “Lenders” includes the Swing Line Lender.


 


“Lending Installation”
means, with respect to a Lender or the Agent, the office, branch, subsidiary or
affiliate of such Lender or the Agent listed on the signature pages hereof
or on a Schedule or otherwise selected by such Lender or the Agent
pursuant to Section 2.17.


 


“Letter of Credit” of a
Person means a letter of credit or similar instrument which is issued upon the
application of such Person or upon which such Person is an account party or for
which such Person is in any way liable.


 


“Leverage Ratio” means,
at any date, the ratio of (a) Consolidated Indebtedness at such date to (b) the
sum of Consolidated Indebtedness and Consolidated Tangible Net Worth at such
date.


 


12





















 


“LIBO Rate” means, with
respect to any Eurodollar Advance for any Interest Period, the rate appearing
on Telerate Page 3750 (formerly the Dow Jones Market Service) or on any
successor or substitute page of such Service, or any successor to or
substitute for such Service, providing rate quotations comparable to those
currently provided on such page of such Service, as determined by the
Agent from time to time for purposes of providing quotations of interest rates
applicable to dollar deposits in the London interbank market, at approximately
11:00 a.m., London time, two Business Days prior to the commencement of
such Interest Period, as the rate for dollar deposits with a maturity
comparable to such Interest Period.  In
the event that such rate is not available at such time for any reason, then the
“LIBO Rate” with respect to such Eurodollar
Advance for such Interest Period shall be the rate at which dollar deposits of
$5,000,000 and for a maturity comparable to such Interest Period are offered by
the principal London office of the Agent in immediately available funds in the
London interbank market at approximately 11:00 a.m., London time, two
Business Days prior to the commencement of such Interest Period.


 


“Lien” means any lien
(statutory or other), mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance or preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever (including, without
limitation, the interest of a vendor or lessor under any conditional sale,
Capitalized Lease or other title retention agreement).


 


“Limited-Purpose
Subsidiaries” means subsidiaries of the Borrower included within the
Limited-Purpose Subsidiaries Segment.


 


“Limited-Purpose
Subsidiaries Segment” means the business segment of the Borrower and its
Subsidiaries which facilitates, through special-purpose entities created or
existing solely for such purpose, the financing of mortgage loans and
mortgage-backed securities and the securitization of mortgage loans and other
related activities.


 


“Loan Documents” means
this Agreement, the Facility LC Applications, the Swing Line Note, any Notes
issued pursuant to Section 2.13 and the Guaranty.


 


“Loans” means, the loans
made by the Lenders or Swing Line Lender pursuant to this Agreement (including
any conversion or continuation of a Eurodollar Loan).


 


“Material Adverse Effect”
means a material adverse effect on (i) the business or financial condition
of the Borrower and its Restricted Subsidiaries taken as a whole, (ii) the
ability of the Borrower to perform its obligations under the Loan Documents to
which it is a party, or (iii) the validity or enforceability of any of the
Loan Documents or the rights or remedies of the Agent, the LC Issuers or the
Lenders thereunder.


 


“Material Indebtedness”
means Indebtedness in an outstanding principal amount of $10,000,000 or more in
the aggregate.


 


“Material Indebtedness
Agreement” means any agreement to which the Borrower or any Guarantor is a
party (or is otherwise obligated in respect thereof) under which any
Indebtedness was created or is governed, which Indebtedness has an outstanding
principal balance of $10,000,000 or more or which provides for the incurrence
of Indebtedness on a revolving basis


 


13





















 


in an amount which
would constitute Material Indebtedness (whether or not an amount of
Indebtedness constituting Material Indebtedness is outstanding 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,
urea-formaldehyde insulation and mold.


 


“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.


 


“Modify” and “Modification”
are defined in Section 2.19.1.


 


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


 


“Multiemployer Plan”
means a Plan maintained pursuant to a collective bargaining agreement or any
other arrangement to which the Borrower or any member of the Controlled Group
is a party to which more than one employer is obligated to make contributions.


 


“New Lender” is defined
in Section 2.5.3(i).


 


“Non-Recourse
Indebtedness” means, with respect to any Person, any Indebtedness of such
Person for which the owner of such Indebtedness has no recourse, directly or
indirectly, to such Person for the principal of, premium, if any, and interest
on such Indebtedness, and for which such Person is not directly or indirectly
obligated or otherwise liable for the principal of, premium, if any, and
interest on such Indebtedness, except pursuant to Liens on Property to which
such Indebtedness relates, provided that recourse obligations or
liabilities solely for fraud, environmental matters and other customary “non-recourse
carve-outs” in respect of any Indebtedness will not prevent Indebtedness from
being classified as Non-Recourse Indebtedness.


 


“Non-U.S. Lender” means
any Lender that is organized under the laws of a jurisdiction other than that
the United States of America, any State thereof or the District of Columbia.


 


“Note” is defined in Section 2.13(iv).


 


“Obligations” means all
unpaid principal of and accrued and unpaid interest on the Loans, all
Reimbursement Obligations, all accrued and unpaid fees and all expenses,
reimbursements, indemnities and other obligations of the Borrower to the
Lenders or to any Lender, the Agent, any LC Issuer, the Swing Line Lender or
any indemnified party arising under the Loan Documents.


 


“Other Taxes” is defined
in Section 3.5(ii).


 


“Participant” is defined
in Section 12.2(a).


 


“Payment Date” means the
first day of each calendar month.


 


“PBGC” means the Pension
Benefit Guaranty Corporation, or any successor thereto.


 


14





















 


“Performance LC” means a
Letter of Credit issued by a Lender or other Person for the account of the
Borrower or a Subsidiary to a party, as beneficiary, to which the Borrower, or
such Subsidiary owes certain performance obligations in connection with its
real estate development and homebuilding activity in the ordinary course of
business (for example, to a municipality, as beneficiary, to support the
Borrower’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 Borrower’s residential development operations is a
Financial LC and not a Performance LC.


 


“Person” means any
natural person, corporation, firm, joint venture, partnership, limited liability
company, association, enterprise, trust or other entity or organization, or any
government or political subdivision or any agency, department or
instrumentality thereof.


 


“Plan” means an employee
pension benefit plan which is covered by Title IV of ERISA or subject to the
minimum funding standards under Section 412 of the Code as to which the
Borrower or any member of the Controlled Group may have any liability.


 


“Pricing Schedule” means
the Schedule attached hereto identified as such.


 


“Prime Rate” means the
rate of interest per annum publicly announced from time to time by JPMorgan
Chase Bank, as its prime rate in effect at its principal office in New York
City; each change in the Prime Rate shall be effective from and including the
date such change is publicly announced as being effective.


 


“Property” of a Person
means any and all property, whether real, personal, tangible, intangible, or
mixed, of such Person, or other assets owned, leased or operated by such
Person.


 


“Pro Rata Share” means,
with respect to a Lender, a portion equal to a fraction the numerator of which
is such Lender’s Commitment and the denominator of which is the Aggregate
Commitment.


 


“Quarterly Payment Date”
is defined in Section 2.19.4.


 


“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
Borrower 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.


 


“Refinancing Indebtedness”
means, with respect to any specified Indebtedness, Indebtedness that refinances
such specified Indebtedness but does not increase the amount thereof.


 


15





















 


“Register” has the
meaning set forth in Section 12.1(b)(iv).


 


“Regulation D” means
Regulation D of the Board of Governors of the Federal Reserve System as from
time to time in effect and any successor thereto or other regulation or
official interpretation of said Board of Governors relating to reserve
requirements applicable to member banks of the Federal Reserve System.


 


“Regulation U” means
Regulation U of the Board of Governors of the Federal Reserve System as from
time to time in effect and any successor or other regulation or official
interpretation of said Board of Governors relating to the extension of credit
by banks for the purpose of purchasing or carrying margin stocks applicable to
member banks of the Federal Reserve System.


 


“Regulation X” means
Regulation X of the Board of Governors of the Federal Reserve System as from
time to time in effect and any successor or other regulation or official
interpretation of said Board of Governors relating to the extension of credit
by foreign lenders for the purpose of purchasing or carrying margin stock.


 


“Reimbursement
Obligations” means, at any time, the aggregate of all obligations of the
Borrower then outstanding under Section 2.19 to reimburse the LC Issuers
for amounts paid by the LC Issuers in respect of any one or more drawings under
Facility LCs.


 


“Rejecting Lender” is
defined in Section 2.20(a).


 


“Rejecting Lender’s
Facility Termination Date” is defined in Section 2.20(a).


 


“Related Parties” means,
with respect to any specified Person, such Person’s Affiliates and the
respective directors, officers, employees, agents and advisors of such Person
and such Person’s Affiliates.


 


“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” is
defined in Section 2.21(a).


 


“Reportable Event” means
a reportable event as defined in Section 4043 of ERISA and the regulations
issued under such section, with respect to a Plan, excluding, however, such
events as to which the PBGC has by regulation waived the requirement of Section 4043(a) of
ERISA that it be notified within 30 days of the occurrence of such event, provided, however, that a failure to meet
the minimum funding standard of Section 412 of the Code and of Section 302
of ERISA shall be a Reportable Event regardless of the issuance of any such
waiver of the notice requirement in accordance with either Section 4043(a) of
ERISA or Section 412(d) of the Code.


 


“Reports” is defined in Section 9.6.


 


“Required Lenders” means
Lenders in the aggregate having at least 66 2/3% of the Aggregate Commitment
or, if the Aggregate Commitment has been terminated, Lenders in the


 


16





















 


aggregate holding
at least 66-2/3% of the aggregate unpaid principal amount of the Aggregate
Credit Exposure.


 


“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.


 


“Responsible Official”
means (a) with respect to the Borrower, any of the chief executive
officer, president or chief financial officer of the Borrower or, with respect
to financial matters, the chief accounting officer or the treasurer of the
Borrower and (b) with respect to a Guarantor, any of the chief executive
officer, the president, any vice president or the treasurer of such Guarantor.


 


“Restricted Payments” is
defined in Section 6.16.


 


“Restricted Subsidiary”
means any Subsidiary of the Borrower other than (a) Limited-Purpose
Subsidiaries, (b) those Subsidiaries identified on Schedule 5.4
as not being Restricted Subsidiaries and (c) any Subsidiary that the
Required Lenders agree in writing is not to be deemed a Restricted Subsidiary.


 


“Revolving Credit
Exposure” means, with respect to any Lender at any time, the sum of the
outstanding principal amount of such Lender’s Revolving Loans and its LC
Exposure and Swing Line Exposure at such time.


 


“Revolving Loan” means a
Loan made pursuant to Section 2.1.


 


“Ryland Financial
Division” means all Subsidiaries and operations of the Borrower and its
Subsidiaries other than the Homebuilding Segment.


 


“Ryland Mortgage Company”
means Ryland Mortgage Company, an Ohio corporation.


 


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


 


“Schedule” refers to a
specific schedule to this Agreement, unless another document is
specifically referenced.


 


“Section” means a
numbered section of this Agreement, unless another document is
specifically referenced.


 


“Senior Permitted Debt”
means (without duplication) the Obligations, the LC Exposure and all
Indebtedness of the Borrower or the Guarantors (specifically excluding the
Indebtedness of any Subsidiary that is not a Guarantor) senior to or ranking in
equal priority to the Obligations, other than (a) Indebtedness that is
secured by any Property that would have been included in the Borrowing Base if
such asset were not subject to or encumbered by a Lien, (b) Indebtedness
which is Non-Recourse Indebtedness of the Borrower and its Subsidiaries and (c)


 


17





















 


with respect to
purchase money Indebtedness, such Indebtedness for which recourse is limited
solely to the Property financed with the proceeds of such Indebtedness.


 


“Single Employer Plan”
means a Plan maintained by the Borrower or any member of the Controlled Group
for employees of the Borrower or any member of the Controlled Group.


 


“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 for 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 Borrower’s senior debt securities issued pursuant to the Borrower’s
Registration Statements on Form S-3 (Registration Nos. 333-03791, 333-58208,
333-100167, 333-121469 and 333-12400) or any subsequent registration statement
and whether outstanding on the date of this Agreement or hereafter incurred.


 


“Statutory Reserve Rate”
means a fraction (expressed as a decimal), the numerator of which is the number
one and the denominator of which is the number one minus the aggregate of the
maximum reserve percentages (including any marginal, special, emergency or
supplemental reserves) expressed as a decimal established by the Fed. Board to
which the Agent is subject (a) with respect to the Base CD Rate, for new
negotiable nonpersonal time deposits in dollars of over $100,000 with
maturities approximately equal to three months and (b) with respect to the
Adjusted LIBO Rate, for eurocurrency funding (currently referred to as “Eurocurrency
Liabilities” in Regulation D of the Fed. Board).  Such reserve percentages shall include those
imposed pursuant to Regulation D. 
Eurodollar Loans shall be deemed to constitute eurocurrency funding and
to be subject to such reserve requirements without benefit of or credit for
proration, exemptions or offsets that may be available from time to time to any
Lender under Regulation D or any comparable regulation.  The Statutory Reserve Rate shall be adjusted
automatically on and as of the effective date of any change in any reserve
percentage.


 


“Subordinated Debt” means
(a) Indebtedness of the Borrower 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 Obligations upon terms and conditions that, in the
reasonable determination of the Agent, are consistent with those set forth in
the Subordinated Debt Indentures or upon other terms and conditions
satisfactory to the Required Lenders.


 


“Subordinated Debt
Indenture” means the Indenture, dated as of June 12, 2001, between the
Borrower and SunTrust Bank, as trustee, pursuant to which the Borrower’s 9-1/8%
Senior Subordinated Notes due June, 2011 were issued.


 


“Subsidiary” of a Person
means (i) any corporation more than 50% of the outstanding securities
having ordinary voting power of which shall at the time be owned or controlled,


 


18





















 


directly or
indirectly, by such Person or by one or more of its Subsidiaries or by such
Person and one or more of its Subsidiaries, or (ii) any partnership,
limited liability company, association, joint venture or similar business
organization more than 50% of the ownership interests having ordinary voting
power of which shall at the time be so owned or controlled.  Unless otherwise expressly provided, all
references herein to a “Subsidiary” shall mean a Subsidiary of the Borrower.


 


“Substantial Portion”
means, with respect to the Property of the Borrower and its Subsidiaries,
Property which represents more than 10% of the consolidated assets of the
Borrower and its Subsidiaries or property which is responsible for more than
10% of the consolidated net sales or of the consolidated net income of the
Borrower and its Subsidiaries, in each case, as would be shown in the
consolidated financial statements of the Borrower and its Subsidiaries as at
the beginning of the twelve-month period ending with the month in which such
determination is made (or if financial statements have not been delivered
hereunder for that month which begins the twelve-month period, then the
financial statements delivered hereunder for the quarter ending immediately
prior to that month).


 


“Supplemental Guaranty”
means a Supplemental Guaranty in the form provided for in, and attached to, the
Guaranty.


 


“Swing Line Commitment”
means the commitment of the Swing Line Lender to make Swing Line Loans pursuant
to Section 2.22(a) hereof.  The
Swing Line Commitment is in the amount of $75,000,000.


 


“Swing Line Exposure”
means, at any time, the aggregate principal amount of all Swing Line Loans
outstanding at such time.  The Swing Line
Exposure of any Lender at any time shall be its Pro Rata Share of the total
Swing Line Exposure at such time.


 


“Swing Line Lender” means
JPMorgan Chase Bank or any assignee to which JPMorgan Chase Bank assigns the
Swing Line Commitment in accordance with Section 12.1 hereof.


 


“Swing Line Loan” is
defined in Section 2.22(a).


 


“Swing Line Note” is
defined in Section 2.22(a).


 


“Taxes” means any and all
present or future taxes, duties, levies, imposts, deductions, charges or
withholdings, and any and all liabilities with respect to the foregoing, but
excluding Excluded Taxes and Other Taxes.


 


“Third Party LC” means a
Letter of Credit issued for the account of the Borrower or a Subsidiary (other
than a Facility LC).  A Third Party LC
may be either a Financial LC or a Performance LC.


 


“Three-Month Secondary CD
Rate” means, for any day, the secondary market rate for three-month
certificates of deposit reported as being in effect on such day (or, if such
day is not a Business Day, the next preceding Business Day) by the Fed. Board
through the public information telephone line of the Federal Reserve Bank of
New York (which rate will, under the current practices of the Board, be
published in Federal Reserve Statistical Release H.15(519)


 


19





















 


during the week
following such day) or, if such rate is not so reported on such day or such
next preceding Business Day, the average of the secondary market quotations for
three-month certificates of deposit of major money center banks in New York
City received at approximately 10:00 a.m., New York City time, on such day
(or, if such day is not a Business Day, on the next preceding Business Day) by
the Agent from three negotiable certificate of deposit dealers of recognized
standing selected by it.


 


“Transferee” is defined
in Section 12.4.


 


“Type”, when used in
reference to any Loan or Advance, refers to whether the rate of interest on
such Loan, or on the Loans comprising such Advance, is determined by reference
to the Adjusted LIBO Rate or the Alternate Base Rate.


 


“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 (a) liens which have been bonded over so as to remove such
liens as encumbrances against the Real Estate Inventory, (b) liens for
taxes not yet due or which are being contested, provided that adequate reserves
are maintained, (c) mechanic’s liens and similar liens arising in the
ordinary course of business that are not overdue for a period of more than 60
days or that are being contested in good faith and (d) easements, rights
of way, restrictions and other similar encumbrances incurred during 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
applicable Property or materially interfere with the ordinary conduct of the
business of the Borrower or Guarantor that owns the applicable Property.


 


“Unfunded Liabilities”
means the amount (if any) by which the present value of all vested and unvested
accrued benefits under all Single Employer Plans exceeds the fair market value
of all such Plan assets allocable to such benefits, all determined as of the
then most recent valuation date for such Plans using PBGC actuarial assumptions
for single employer plan terminations.


 


“Unit” means a
single-family residential housing unit available for sale.


 


“Unmatured Default” means
an event which but for the lapse of time or the giving of notice, or both,
would constitute a Default.


 


“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 Units and Unsold
Model Units.


 


“Wholly-Owned Subsidiary”
of a Person means (i) any Subsidiary all of the outstanding voting
securities of which shall at the time be owned or controlled, directly or
indirectly, by such Person or one or more Wholly-Owned Subsidiaries of such
Person, or by such Person and one or more Wholly-Owned Subsidiaries of such Person,
or (ii) any partnership, limited liability company, association, joint
venture or similar business organization 100% of the ownership interests having
ordinary voting power of which shall at the time be so owned or controlled.


 


20





















 


1.2           Classification of Loans and Advances.  For purposes of this Agreement, Loans may be
classified and referred to by Class (e.g.,
a “Revolving Loan”) or by Type (e.g., a “Eurodollar
Loan”) or by Class and Type (e.g., a “Eurodollar
Revolving Loan”).  Advances also may be
classified and referred to by Class (e.g.,
a “Revolving Advance”) or by Type (e.g., a “Eurodollar
Advance”) or by Class and Type (e.g.,
a “Eurodollar Revolving Advance”).


 


1.3           Terms Generally. 
The definitions of terms herein shall apply equally to the singular and
plural forms of the terms defined. 
Whenever the context may require, any pronoun shall include the
corresponding masculine, feminine and neuter forms.  The words “include”, “includes” and “including”
shall be deemed to be followed by the phrase “without limitation”.  The word “will” shall be construed to have
the same meaning and effect as the word “shall”.  Unless the context requires otherwise (a) any
definition of or reference to any agreement, instrument or other document
herein shall be construed as referring to such agreement, instrument or other
document as from time to time amended, supplemented or otherwise modified
(subject to any restrictions on such amendments, supplements or modifications set
forth herein), (b) any reference herein to any Person shall be construed
to include such Person’s successors and assigns, (c) the words “herein”, “hereof”
and “hereunder”, and words of similar import, shall be construed to refer to
this Agreement in its entirety and not to any particular provision hereof, (d) all
references herein to Articles, Sections, Exhibits and Schedules shall be
construed to refer to Articles and Sections of, and Exhibits and Schedules to,
this Agreement and (e) the words “asset” and “property” shall be construed
to have the same meaning and effect and to refer to any and all tangible and
intangible assets and properties, including cash, securities, accounts and
contract rights.


 


ARTICLE II


 


THE CREDITS


 


2.1           Commitment. 
From and including the date of this Agreement and prior to the Facility
Termination Date, each Lender severally agrees, on the terms and conditions set
forth in this Agreement, to (i) make Revolving Loans to the Borrower and (ii) participate
in Facility LCs issued upon the request of the Borrower (including the Existing
LCs) and in Swing Line Loans, provided
that, after giving effect to the making of each such Revolving Loan and each
Swing Line Loan and the issuance of each such Facility LC (including the
participations in the Existing LCs), (a) such Lender’s Revolving Credit
Exposure shall not exceed its Commitment and (b) the Aggregate Credit
Exposure does not exceed the Aggregate Commitment.  Subject to the terms of this Agreement, the
Borrower may borrow, repay and reborrow the Loans at any time prior to the
Facility Termination Date.  The
Commitments to extend credit hereunder shall expire on the Facility Termination
Date.  The LC Issuers will issue Facility
LCs hereunder on the terms and conditions set forth in Section 2.19.


 


2.2           Required Payments; Termination.  The Aggregate Credit Exposure and all other
unpaid Obligations shall be paid in full by the Borrower on the Facility
Termination Date.


 


2.3           Ratable Revolving Loans.  Each Advance hereunder shall consist of Revolving
Loans made from the several Lenders ratably in proportion to the ratio that
their respective Commitments bear to the Aggregate Commitment.


 


21





















 


2.4           Types of Advances.  The Advances may be ABR Advances or
Eurodollar Advances, or a combination thereof, selected by the Borrower in
accordance with Sections 2.8 and 2.9.


 


2.5           Commitment Fee; Reductions and Increases in Aggregate
Commitment.


 


2.5.1        Commitment Fee. 
The Borrower agrees to pay to the Agent for the account of each Lender a
commitment fee (the “Commitment Fee”) at a per annum rate equal to the
Applicable Fee Rate on the daily unused portion of such Lender’s Commitment
from the date hereof to and including the Facility Termination Date, payable in
arrears on each Quarterly Payment Date hereafter and on the Facility
Termination Date.  For purposes of
determining the Commitment Fee payable to the Swing Line Lender, its Swing Line
Loans shall be treated as usage of its Commitment.


 


2.5.2        Reduction in Aggregate Commitment.  The Borrower may permanently reduce the
Aggregate Commitment in whole, or in part ratably among the Lenders in the
minimum amount of $10,000,000 (and in multiples of $1,000,000 in excess
thereof), upon at least five Business Days’ written notice to the Agent, which
notice shall specify the amount of any such reduction, provided,
however, that the amount of the
Aggregate Commitment may not be reduced below the Aggregate Credit
Exposure.  All accrued Commitment Fees
and LC Fees shall be payable on the effective date of any termination of the
obligations of the Lenders to make Credit Extensions hereunder.


 


2.5.3        Increases in Aggregate Commitment.


 


(i)            Subject
to the provisions of this Section 2.5.3, the Borrower may, at any time and
from time to time, make a request (a “Facility Increase Request”), by notice to
the Agent, for the Agent’s approval of an increase of the Aggregate Commitment
within the limitations hereinafter set forth, which Facility Increase Request
shall set forth the amount of such requested increase.  Within twenty (20) days of such Facility
Increase Request, Agent shall advise Borrower of its approval or disapproval
thereof; failure to so advise Borrower shall constitute disapproval.  Upon approval of the Agent, the Aggregate
Commitment may be so increased either by having one or more financial
institutions (other than the Lenders then holding a Commitment hereunder)
approved in writing by the Borrower and the Agent (each, a “New Lender”) become
Lenders hereunder and/or by having any one or more of Lenders then holding a
Commitment hereunder (at their respective election in their sole discretion)
that have been approved in writing by the Borrower and the Agent increase the
amount of their Commitments (any such Lender that elects to increase its
Commitment and any New Lender being hereinafter referred to as an “Additional
Lender”), provided that (A) on the applicable Increase Date, (1) no
Default or Unmatured Default shall then exist nor would occur immediately after
giving effect to such increase and (2) the representations and warranties
contained in Article V and in the Guaranty are true and correct except to
the extent any such representation or


 


22





















 


warranty is stated to relate solely to an earlier date, in which case
such representation or warranty shall have been true and correct on and as of
such earlier date, (B) unless otherwise agreed by the Borrower and the
Agent, the Commitment of any New Lender shall not be less than $5,000,000 (and,
if in excess thereof, in integral multiples of $1,000,000), (C) unless
otherwise agreed by the Borrower and the Agent, the increase in the Commitment
of any Lender shall be not less than $5,000,000 (and, if in excess thereof, in
integral multiples of $1,000,000); (D) after giving effect to such
increase, the Aggregate Commitment shall not exceed $1,500,000,000; (E) the
Borrower and each Additional Lender shall have executed and delivered a
commitment and acceptance (the “Commitment and Acceptance”) substantially in
the form of Exhibit C hereto, and the
Agent shall have accepted and executed the same; (F) the Borrower shall
have executed and delivered to the Agent a Note payable to the order of each
Additional Lender that requests a Note, each such Note to be in the amount of
such Additional Lender’s Commitment or increased Commitment (as applicable); (G) the
Borrower shall have delivered to the Agent opinions of counsel (substantially
similar to the forms of opinion referred to in Section 4.1(v), modified to
apply to the increase in the Aggregate Commitment and each Note and Commitment
and Acceptance executed and delivered in connection therewith); (H) each
of the Guarantors shall have consented in writing to the new Commitments or
increases in Commitments (as applicable) and shall have agreed that its
Guaranty continues in full force and effect; and (I) the Borrower and each
Additional Lender shall otherwise have executed and delivered such other
instruments and documents as the Agent shall have reasonably requested in
connection with such new Commitment or increase in the Commitment (as
applicable).  The form and substance of
the documents required under clauses (E) through (I) above shall be fully
acceptable to the Agent.  The Agent shall
promptly provide written notice to the Lenders following any such increase in
the Aggregate Commitment.


 


(ii)           On the
effective date of any increase in the Aggregate Commitment pursuant to the
provisions hereof (“Increase Date”), which Increase Date shall be mutually
agreed upon by Borrower, each Additional Lender and the Agent, each Additional
Lender shall make a payment to the Agent in an amount sufficient, upon the
application of such payments by all Additional Lenders to the reduction of the
outstanding ABR Advances held by the Lenders, to cause the principal amount
outstanding under the ABR Loans made by all Lenders (including any Additional
Lender) to be in the proportion of their respective Commitments (as of such
Increase Date).  The Borrower hereby irrevocably
authorizes each Additional Lender to fund to the Agent the payment required to
be made pursuant to the immediately preceding sentence for application to the
reduction of the outstanding ABR Loans held by each Lender, and each such
payment shall constitute an ABR Loan hereunder. 
Such Additional Lender shall not participate in any Eurodollar Advance
outstanding on the Increase Date,


 


23





















 


but,
if the Borrower shall at any time on or after such Increase Date convert or
continue any Eurodollar Advance outstanding on such Increase Date, the Borrower
shall be deemed to repay such Eurodollar Advance on the date of the conversion
or continuation thereof and then to reborrow as a Eurodollar Advance a like amount
on such date so that each Additional Lender shall make a Eurodollar Loan on
such date in its Pro Rata Share of such Eurodollar Advance.  Each Additional Lender shall also make a
Revolving Loan in the amount of its Pro Rata Share of all Advances made on or
after such Increase Date and shall otherwise have all of the rights and
obligations of a Lender hereunder on and after such Increase Date.  Notwithstanding the foregoing, upon the
occurrence of a Default prior to the date on which an Additional Lender is
holding Revolving Loans equal to its Pro Rata Share of all Advances hereunder,
such Additional Lender shall, upon notice from the Agent, on or after the date
on which the Obligations are accelerated or become due following such Default,
pay to the Agent (for the account of the other Lenders, to which the Agent
shall pay their Pro Rata Shares upon receipt) a sum equal to such Additional
Lender’s Pro Rata Share of each Advance then outstanding with respect to which
such Additional Lender does not then hold a Revolving Loan equal to its Pro
Rata Share thereof.


 


(iii)          On
the Increase Date and the making of the Loans by an Additional Lender in
accordance with the provisions of the first sentence of Section 2.5.3(ii),
such Additional Lender shall also be deemed to have irrevocably and
unconditionally purchased and received, without recourse or warranty, from the
Lenders party to this Agreement immediately prior to the Increase Date, an
undivided interest and participation in any Facility LC then outstanding, ratably,
such that all Lenders (including each Additional Lender) hold participation
interests in each such Facility LC in the proportion of their respective
Commitments (as so increased).


 


(iv)          Nothing
contained herein shall constitute, or otherwise be deemed to be, a commitment
or agreement on the part of any Lender to increase its Commitment hereunder at
any time or a commitment or agreement on the part of the Borrower or the Agent
to give or grant any Lender the right to increase its Commitment hereunder at any
time.


 


2.6           Minimum Amount of Each Advance.  Each Advance shall be in the minimum amount
of $5,000,000 (and in multiples of $500,000 in excess thereof), provided, however, that any ABR Advance may
be in the amount of the unused Aggregate Commitment.


 


2.7           Optional Principal Payments.  The Borrower may from time to time pay,
without penalty or premium, all outstanding ABR Advances, or, in a minimum
aggregate amount of $5,000,000 or any integral multiple of $500,000 in excess
thereof, any portion of the outstanding ABR Advances upon prior notice to the
Agent not later than noon (Central time) on the day of prepayment.  The Borrower may from time to time pay,
subject to the payment of any funding indemnification amounts required by Section 3.4
but without penalty or premium, all outstanding


 


24





















 


Eurodollar Advances, or, in a minimum aggregate amount
of $5,000,000 or any integral multiple of $500,000 in excess thereof, any
portion of the outstanding Eurodollar Advances upon not less than five (5) Business
Days’ prior notice to the Agent.


 


2.8           Method of Selecting Types and Interest Periods for New
Advances.  The Borrower shall
select the Type of Advance and, in the case of each Eurodollar Advance, the
Interest Period applicable thereto from time to time.  The Borrower shall give the Agent irrevocable
notice (a “Borrowing Notice”) from an Authorized Person not later than noon
(Central time) on the Borrowing Date of each ABR Advance and noon (Central
time) three Business Days before the Borrowing Date for each Eurodollar
Advance, specifying:


 


(i)            the
Borrowing Date, which shall be a Business Day, of such Advance,


 


(ii)           the
aggregate amount of such Advance,


 


(iii)          the
Type of Advance selected, and


 


(iv)          in the case
of each Eurodollar Advance, the Interest Period applicable thereto.


 


Not later than
2:00 p.m. (Central time) on each Borrowing Date, each Lender shall make
available its Revolving Loan or Revolving Loans in funds immediately available
in Houston, Texas to the Agent at its address specified pursuant to Article XIII
(or otherwise provided by the Agent to the Lenders).  The Agent will make the funds so received
from the Lenders available to the Borrower at the Agent’s aforesaid address.


 


2.9           Conversion and Continuation of Outstanding Advances.  ABR Advances shall continue as ABR Advances
unless and until such ABR Advances are converted into Eurodollar Advances
pursuant to this Section 2.9 or are repaid in accordance with Section 2.7.  Each Eurodollar Advance shall continue as a
Eurodollar Advance until the end of the then applicable Interest Period
therefor, at which time such Eurodollar Advance shall be automatically
converted into an ABR Advance unless (x) such Eurodollar Advance is or was
repaid in accordance with Section 2.7 or (y) the Borrower shall have given
the Agent a Conversion/Continuation Notice (as defined below) requesting that,
at the end of such Interest Period, such Eurodollar Advance continue as a
Eurodollar Advance for the same or another Interest Period.  Subject to the limitations set forth in Section 2.6,
the Borrower may elect from time to time to convert all or any part of an ABR
Advance into a Eurodollar Advance.  The
Borrower shall give the Agent irrevocable notice (a “Conversion/Continuation Notice”)
from an Authorized Person of each conversion of an ABR Rate Advance into a
Eurodollar Advance or continuation of a Eurodollar Advance not later than noon
(Central time) at least three Business Days prior to the date of the requested
conversion or continuation, specifying:


 


(i)            the
requested date, which shall be a Business Day, of such conversion or
continuation,


 


(ii)           the
aggregate amount and Type of the Advance which is to be converted or continued,
and


 


25










 













 


(iii)          the
amount of such Advance which is to be converted into or continued as a
Eurodollar Advance and the duration of the Interest Period applicable thereto.


 


2.10         Changes in Interest Rate, etc.  Each ABR Advance shall bear interest on the
outstanding principal amount thereof, for each day from and including the date
such Advance is made or is automatically converted from a Eurodollar Advance
into an ABR Advance pursuant to Section 2.9, to but excluding the date it
is paid or is converted into a Eurodollar Advance pursuant to Section 2.9
hereof, at a rate per annum equal to the Alternate Base Rate for such day.  Each Swing Line Loan shall bear interest on
the outstanding principal amount thereof, for each day from and including the
date such Swing Line Loan is made, to but excluding the date it is paid, at a
rate per annum equal to the Alternate Base Rate for such day.  Changes in the rate of interest on that
portion of any Advance maintained as an ABR Advance and on any Swing Line Loan
will take effect simultaneously with each change in the Alternate Base
Rate.  Each Eurodollar Advance shall bear
interest on the outstanding principal amount thereof from and including the
first day of the Interest Period applicable thereto to (but not including) the
last day of such Interest Period at a rate per annum equal to be Adjusted LIBO
Rate plus the Applicable Margin, as determined by the Agent as applicable to
such Eurodollar Advance based upon the Borrower’s selections under Sections 2.8
and 2.9 and otherwise in accordance with the terms hereof.  No Interest Period may end after the Facility
Termination Date.


 


2.11         Rates Applicable After Default.  Notwithstanding anything to the contrary
contained in Section 2.8, 2.9 or 2.10, during the continuance of a Default
or Unmatured Default the Required Lenders may, at their option, by notice to
the Borrower (which notice may be revoked at the option of the Required Lenders
notwithstanding any provision of Section 8.2 requiring unanimous consent
of the Lenders to changes in interest rates), declare that no Advance may be
made as, converted into or continued as a Eurodollar Advance.  During the continuance of a Default the
Required Lenders may, at their option, by notice to the Borrower (which notice
may be revoked at the option of the Required Lenders notwithstanding any
provision of Section 8.2 requiring unanimous consent of the Lenders to
changes in interest rates), declare that (i) each Eurodollar Advance shall
bear interest for the remainder of the applicable Interest Period at the rate
otherwise applicable to such Interest Period plus 2% per annum, and (ii) each
ABR Advance and Swing Line Loan shall bear interest at a rate per annum equal
to the Alternate Base Rate in effect from time to time plus 2% per annum, and (iii) the
LC Fee shall be increased by 2% per annum, provided
that, during the continuance of a Default under Section 7.6 or 7.7, the
interest rates set forth in clauses (i) and (ii) above and the
increase in the LC Fee set forth in clause (iii) above shall be applicable
to all Credit Extensions without any election or action on the part of the
Agent or any Lender.


 


2.12         Method of Payment.  All payments of the Obligations hereunder
shall be made, without setoff, deduction, or counterclaim, in immediately
available funds to the Agent at the Agent’s address specified pursuant to Article XIII,
or at any other Lending Installation of the Agent specified in writing by the
Agent to the Borrower, by 2:00 p.m. (Central time) on the date when due
and shall be applied ratably by the Agent among the Lenders.  Each payment delivered to the Agent for the
account of any Lender shall (except in the case of Reimbursement Obligations
for which an LC Issuer has not been fully indemnified by the Lenders, or as
otherwise specifically required hereunder) be applied ratably by the Agent
among the Lenders.


 


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Each payment delivered to the Agent for the account of
any Lender shall be delivered promptly by the Agent to such Lender in the same
type of funds that the Agent received at its address specified pursuant to Article XIII
or at any Lending Installation specified in a notice received by the Agent from
such Lender.  If the Agent receives, for
the account of a Lender, a payment from the Borrower and fails to remit such
payment to such Lender on the Business Day such payment is received (if
received by 2:00 p.m. ( Central time) by the Agent) or on the next
Business Day (if received after 2:00 p.m. (Central time) by the Agent),
the Agent shall pay to such Lender interest on such payment at a rate per annum
equal to the Federal Funds Effective Rate for each of the first three days for
which such payment is so delayed and thereafter at the rate applicable to the
relevant Loan.  The Agent is hereby
authorized to charge the account of the Borrower maintained with JPMorgan Chase
Bank for each payment of principal, interest, Reimbursement Obligations and
fees that the Borrower is obligated to pay as such payment becomes due
hereunder.  Each reference to the Agent
in this Section 2.12 shall also be deemed to refer, and shall apply
equally, to the LC Issuers, in the case of payments required to be made by the
Borrower to the LC Issuers pursuant to Section 2.19.7.


 


2.13         Noteless Agreement; Evidence of Indebtedness.  (i)  Each Lender shall maintain in
accordance with its usual practice an account or accounts evidencing the
indebtedness of the Borrower to such Lender resulting from each Loan made by
such Lender from time to time, including the amounts of principal and interest
payable and paid to such Lender from time to time hereunder.


 


(ii)           The
Agent shall also maintain accounts in which it will record (a) the amount
of each Loan made hereunder, the Type thereof and the Interest Period with
respect thereto and the amount of each Swing Line Loan made hereunder, (b) the
amount of any principal or interest due and payable or to become due and
payable from the Borrower to each Lender and the Swing Line Lender hereunder, (c) the
original stated amount of each Facility LC and the amount of LC Exposure at any
time and (d) the amount of any sum received by the Agent hereunder from
the Borrower and each Lender’s share thereof and the amount thereof paid to the
Swing Line Lender.


 


(iii)          The
entries maintained in the accounts maintained pursuant to paragraphs (i) and
(ii) above shall be prima facie
evidence of the existence and amounts of the Obligations therein recorded; provided, however, that the failure of the
Agent or any Lender (or the Swing Line Lender) to maintain such accounts or any
error therein shall not in any manner affect the obligation of the Borrower to
repay the Obligations in accordance with their terms.


 


(iv)          Any
Lender may request that its Loans be evidenced by a promissory note in
substantially the form of Exhibit D (a “Note”).  In such event, the Borrower shall prepare,
execute and deliver to such Lender such Note payable to the order of such
Lender.  Thereafter, the Loans evidenced
by such Note and interest thereon shall at all times (prior to any assignment
pursuant to Section 12.1) be represented by one or more Notes payable to
the order of the payee named therein, except to the extent that any such Lender
subsequently returns any such Note for cancellation and requests that such
Loans once again be evidenced as described in paragraphs (i) and (ii) above.


 


27





















 


2.14         Telephonic and Facsimile Notices.  The Borrower hereby authorizes the Lenders
and the Agent and the Swing Line Lender to extend, convert or continue Advances
and Swing Line Loans, effect selections of Types of Advances and to transfer
funds based on telephonic or facsimile notices made by any person or persons
the Agent or any Lender in good faith believes to be acting on behalf of the Borrower,
it being understood that the foregoing authorization is specifically intended
to allow Borrowing Notices and Conversion/Continuation Notices to be given
telephonically or by facsimile.  The
Borrower agrees to deliver promptly to the Agent a written confirmation, if
such confirmation is requested by the Agent or any Lender or Swing Line Lender,
of each telephonic notice signed by an Authorized Person.  If the written confirmation differs in any
material respect from the action taken by the Agent and the Lenders or Swing
Line Lender, the records of the Agent and the Lenders or Swing Line Lender
shall govern absent manifest error.


 


2.15         Interest Payment Dates; Interest and Fee Basis.  Interest accrued on each ABR Advance shall be
payable on each Payment Date, commencing with the first such date to occur
after the date hereof, on any date on which the ABR Advance is prepaid, whether
due to acceleration or otherwise, and on the Facility Termination Date.  Interest accrued on that portion of the
outstanding principal amount of any ABR Advance converted into a Eurodollar
Advance on a day other than a Payment Date shall be payable on the Payment Date
following the date of such conversion. 
Interest accrued on each Eurodollar Advance shall be payable on the last
day of its applicable Interest Period, on any date on which the Eurodollar
Advance is prepaid, whether by acceleration or otherwise, and at maturity.  Interest accrued on each Eurodollar Advance
having an Interest Period longer than three months shall also be payable on the
last day of each three-month interval during such Interest Period.  Commitment Fees and LC Fees and interest on
Eurodollar Loans shall be calculated for actual days elapsed on the basis of a
360-day year; interest on ABR Loans and Swing Line Loans shall be calculated
for actual days elapsed on the basis of a 365-day (or, if applicable, 366-day)
year.  Interest shall be payable for the
day an Advance is made but not for the day of any payment on the amount paid if
payment is received prior to 2:00 p.m. (Central time) in accordance with Section 2.12.  If any payment of principal of or interest on
an Advance or Swing Line Loan shall become due on a day which is not a Business
Day, such payment shall be made on the next succeeding Business Day and, in the
case of a principal payment, such extension of time shall be included in
computing interest in connection with such payment.


 


2.16         Notification of Advances, Interest Rates, Prepayments and
Commitment Reductions. 
Promptly after receipt thereof, the Agent will notify each Lender of the
contents of each Aggregate Commitment reduction notice, Borrowing Notice,
Conversion/Continuation Notice, and repayment notice received by it
hereunder.  Promptly after notice from an
LC Issuer of the issuance or Modification of a Facility LC, the Agent will
notify each Lender of the issuance or Modification of such Facility LC.  The Agent will notify each Lender of the
interest rate applicable to each Eurodollar Advance promptly upon determination
of such interest rate and will give each Lender prompt notice of each change in
the Alternate Base Rate.


 


2.17         Lending Installations.  Each Lender may book its Revolving Loans and
its participation in any Facility LC, the Swing Line Lender may book the Swing
Line Loans and each LC Issuer may book the Facility LCs at any Lending
Installation selected by such Lender, Swing Line Lender or LC Issuer, as the
case may be, and may change its Lending Installation


 


28





















 


from time to time. 
All terms of this Agreement shall apply to any such Lending Installation
and the Loans, Swing Line Loans, Facility LCs, participations in Facility LCs
and any Notes and the Swing Line Note issued hereunder shall be deemed held by
each Lender, Swing Line Lender or LC Issuer, as the case may be, for the
benefit of any such Lending Installation. 
Each Lender, Swing Line Lender and LC Issuer may, by written notice to
the Agent and the Borrower in accordance with Article XIII, designate
replacement or additional Lending Installations through which Revolving Loans
and Swing Line Loans will be made by it or Facility LCs will be issued by it
and for whose account Loan payments or payments with respect to Facility LCs
are to be made.


 


2.18         Non-Receipt of Funds by the Agent.  Unless the Borrower or a Lender, as the case
may be, notifies the Agent (i) in the case of the Borrower, prior to the
date on which it is scheduled to make a payment of principal, interest or fees
to the Agent for the account of the Lenders or (ii) in the case of a
Lender, prior to the date on which it is scheduled to make a Eurodollar Loan or
30 minutes prior to the time at which it is scheduled to make an ABR Loan, that
it does not intend to make such payment, the Agent may assume that such payment
has been made.  The Agent may, but shall
not be obligated to, make the amount of such payment available to the intended
recipient in reliance upon such assumption. 
If such Lender or the Borrower, as the case may be, has not in fact made
such payment to the Agent, the recipient of such payment shall, on demand by
the Agent, repay to the Agent the amount so made available together with
interest thereon in respect of each day during the period commencing on the
date such amount was so made available by the Agent until the date the Agent
recovers such amount at a rate per annum equal to (x) in the case of payment by
a Lender, the Federal Funds Effective Rate for such day for the first three
days and, thereafter, the interest rate applicable to the relevant Loan or (y)
in the case of payment by the Borrower, the interest rate applicable to the
relevant Loan.


 


2.19         Facility LCs.


 


2.19.1      Issuance. 
Each LC Issuer hereby agrees, on the terms and conditions set forth in
this Agreement, to issue standby Letters of Credit (each such Letter of Credit
and each Existing LC, a “Facility LC”) and to renew, extend, increase, decrease
or otherwise modify each Facility LC (“Modify,” and each such action a “Modification”),
from time to time from and including the date of this Agreement and prior to
the Facility Termination Date upon the request of the Borrower; provided that immediately after each such
Facility LC is issued or Modified, (i) the aggregate amount of the LC
Exposure shall not exceed $600,000,000, (ii) the Aggregate Credit Exposure
shall not exceed the Aggregate Commitment and (iii) if the Facility
Termination Date shall have been extended pursuant to Section 2.20 with
respect to some but not all of the Lenders, (A) the Aggregate Credit
Exposure, less the portion of the LC Exposure attributable to Facility LCs
expiring after the applicable Rejecting Lender’s Facility Termination Date,
shall not exceed (B) the amount to which the Aggregate Commitment would be
reduced upon such Rejecting Lender’s Facility Termination Date and provided, further, that with
respect to each Modification (other than an increase or extension), the
beneficiary under such Facility LC shall have consented in writing
thereto.  No Facility LC shall have an
expiry date later than the Facility Termination Date.


 


29





















 


2.19.2      Participations. 
Upon the issuance or Modification by the LC Issuer of a Facility LC in
accordance with this Section 2.19 (or, in the case of the Existing LC, on
the Closing Date), the applicable LC Issuer shall be deemed, without further
action by any party hereto, to have unconditionally and irrevocably sold to
each Lender, and each Lender shall be deemed, without further action by any
party hereto, to have unconditionally and irrevocably purchased from such LC
Issuer, a participation in such Facility LC (and each Modification thereof) and
the related LC Exposure in proportion to its Pro Rata Share.


 


2.19.3      Notice. 
Subject to Section 2.19.1, the Borrower shall give the applicable
LC Issuer notice from an Authorized Person prior to noon (Central time) at
least two (2) Business Days (or such lesser period to which an LC Issuer
may agree) prior to the proposed date of issuance or Modification of each
Facility LC, specifying the beneficiary, the proposed date of issuance (or
Modification) and the expiry date of such Facility LC, and describing the
proposed terms of such Facility LC and the nature of the transactions proposed
to be supported thereby.  Upon receipt of
such notice, such LC Issuer shall promptly notify the Agent.  Upon issuance of such Facility LC, the LC
Issuer shall promptly notify the Agent and the Agent shall promptly notify each
Lender of the issuance of such Facility LC and of the amount of such Lender’s
participation in such Facility LC.  The
issuance, renewal, extension or increase by an LC Issuer of any Facility LC
shall be subject to the conditions precedent set forth in Article IV (the
satisfaction of which the LC Issuer shall have no duty to ascertain).  The issuance or Modification by an LC Issuer
of any Facility LC shall also be subject to the conditions precedent that such
Facility LC shall be satisfactory to the LC Issuer and that the Borrower shall
have executed and delivered such application agreement and/or such other
instruments and agreements relating to such Facility LC as the LC Issuer shall
have reasonably requested (each, a “Facility LC Application”).  In the event of any conflict between the
terms of this Agreement and the terms of any Facility LC Application, the terms
of this Agreement shall control.  The LC
Issuer shall not issue, renew, extend or increase any Facility LC hereunder if
it has received written notice from the Agent, the Borrower or the Required
Lenders, prior to the requested date of issuance, renewal, extension or
increase of the applicable Facility LC, that one or more applicable conditions
contained in Section 4.2 shall not be satisfied.


 


2.19.4      Compensation for Facility LCs.  The Borrower agrees to pay to the Agent, in
the case of each Facility LC, a fee (the “LC Fee”) therefor, in an amount per
annum equal to the Applicable Margin on the amount of such Facility LC, payable
quarterly in arrears not later than five (5) Business Days following the
Agent’s delivery to Borrower of the quarterly statement specifying the amount
of the LC Fees properly due and payable hereunder with respect to the preceding
calendar quarter (each date on which such payment is due being herein referred
to as a “Quarterly Payment Date”) and on the Facility Termination Date (which
payment shall be in the amount of all accrued and unpaid Facility LC
Fees).  LC Fees shall be calculated, on a
pro rata basis for the period to which such payment applies, for actual days on
which such Facility LC was outstanding during such period, on the basis of a 360-day
year.  The Agent shall, with reasonable
promptness following receipt from all LC Issuers of the reports provided for in
Section 2.19.5 for the months of March, June, September and December,
respectively,


 


30





















 


deliver to the Borrower a quarterly statement of the LC Fees then due
and payable.  The Agent shall promptly
remit such LC Fees, when received by the Agent, as follows:  (i) to each LC Issuer, solely for its own
account, with respect to each Facility LC issued by such LC Issuer, an amount
per annum equal to the product of (A) 0.125% per annum and (B) the
face amount of such Facility LC and (ii) to all Lenders, ratably, the
balance of such LC Fees.  LC Fees shall
be payable hereunder with respect to the Existing LCs from and after the
Closing Date.  Each LC Issuer shall also
have the right to charge the Borrower, solely for such LC Issuer’s own account,
customary processing fees, charges and expenses of issuing and servicing
Facility LCs.


 


2.19.5      LC Issuer Reporting Requirements.  Each LC Issuer shall, no later than the third
(3rd) Business Day following the last day of each month, provide to
the Agent a schedule of the Facility LCs issued by it showing the issuance
date, account party, original face amount, amount (if any) paid thereunder,
expiration date and the reference number of each Facility LC outstanding at any
time during such month (and indicating, with respect to each Facility LC,
whether it is a Financial LC or a Performance LC) and the aggregate amount (if
any) payable by the Borrower to such LC Issuer during the month pursuant to
Sections 3.1 and 3.2.  Copies of such
reports shall be provided promptly to each Lender by the Agent.  The reporting requirements hereunder are in
addition to those set forth in Section 2.19.3.


 


2.19.6      Administration; Reimbursement by Lenders.  Upon receipt by an LC Issuer from the
beneficiary of any Facility LC of any demand for payment under such Facility
LC, such LC Issuer shall notify the Agent and the Agent shall promptly notify
the Borrower and each other Lender as to the amount to be paid by such LC
Issuer as a result of such demand and the proposed payment date (the “LC
Payment Date”).  The responsibility of
the LC Issuer to the Borrower and each Lender shall be only to determine that
the documents (including each demand for payment) delivered under each Facility
LC in connection with such presentment shall be in conformity in all material
respects with such Facility LC.  Each LC
Issuer shall endeavor to exercise the same care in the issuance and
administration of the Facility LCs issued by it as it does with respect to
letters of credit in which no participations are granted, it being understood
that in the absence of any gross negligence or willful misconduct by an LC
Issuer, each Lender shall be unconditionally and irrevocably liable without
regard to the occurrence of any Default or any condition precedent whatsoever,
to reimburse such LC Issuer on demand for (i) such Lender’s Pro Rata Share
of the amount of each payment made by such LC Issuer under each Facility LC to
the extent such amount is not reimbursed by the Borrower pursuant to Section 2.19.7
below, plus (ii) interest on the foregoing amount to be reimbursed by such
Lender, for each day from the date of such LC Issuer’s demand for such
reimbursement (or, if such demand is made after 11:00 a.m. (Central time)
on such date, from the next succeeding Business Day) to the date on which such
Lender pays the amount to be reimbursed by it, at a rate of interest per annum
equal to the Federal Funds Effective Rate for the first three days and,
thereafter, at the Alternate Base Rate.


 


2.19.7      Reimbursement by Borrower.  The Borrower shall be irrevocably and
unconditionally obligated to reimburse each LC Issuer on or before the
applicable LC Payment Date for any amounts to be paid by such LC Issuer upon
any drawing under any


 


31





















 


Facility LC, without presentment, demand, protest or other formalities
of any kind; provided that neither the
Borrower nor any Lender shall hereby be precluded from asserting any claim for
direct (but not consequential) damages suffered by the Borrower or such Lender
to the extent, but only to the extent, caused by (i) the willful
misconduct or gross negligence of such LC Issuer in determining whether a
request presented under any Facility LC issued by it complied with the terms of
such Facility LC or (ii) such LC Issuer’s failure to pay under any
Facility LC issued by it after the presentation to it of a request strictly
complying with the terms and conditions of such Facility LC.  All such amounts paid by an LC Issuer and
remaining unpaid by the Borrower shall bear interest, payable on demand, for
each day until paid at a rate per annum equal to (x) the Alternate Base Rate
for such day if such day falls on or before the applicable LC Payment Date and
(y) the sum of 2% plus the Alternate Base Rate for such day if such day falls
after such LC Payment Date.  Each LC
Issuer will pay to each Lender ratably in accordance with its Pro Rata Share
all amounts received by it from the Borrower for application in payment, in
whole or in part, of the Reimbursement Obligation in respect of any Facility LC
issued by such LC Issuer, but only to the extent such Lender has made payment
to such LC Issuer in respect of such Facility LC pursuant to Section 2.19.6.  Subject to the terms and conditions of this
Agreement (including without limitation the submission of a Borrowing Notice in
compliance with Section 2.8 and the satisfaction of the applicable
conditions precedent set forth in Article IV), the Borrower may request an
Advance hereunder for the purpose of satisfying any Reimbursement Obligation.


 


2.19.8      Obligations Absolute.  The Borrower’s obligations under this Section 2.19
shall be absolute and unconditional under any and all circumstances and
irrespective of any setoff, counterclaim or defense to payment which the
Borrower may have or have had against any LC Issuer, any Lender or any
beneficiary of a Facility LC.  The
Borrower further agrees with each LC Issuer and each Lender that the LC Issuers
and the Lenders shall not be responsible for, and the Borrower’s Reimbursement
Obligation in respect of any Facility LC shall not be affected by, among other
things, the validity or genuineness of documents or of any endorsements
thereon, even if such documents should in fact prove to be in any or all
respects invalid, fraudulent or forged, or any dispute between or among the Borrower,
any of its Affiliates, the beneficiary of any Facility LC or any financing
institution or other party to whom any Facility LC may be transferred or any
claims or defenses whatsoever of the Borrower or of any of its Affiliates
against the beneficiary of any Facility LC or any such transferee.  No LC Issuer shall be liable for any error,
omission, interruption or delay in transmission, dispatch or delivery of any
message or advice, however transmitted, in connection with any Facility
LC.  The Borrower agrees that any action
taken or omitted by any LC Issuer or Lender under or in connection with each
Facility LC and the related drafts and documents, if done without gross
negligence or willful misconduct, shall be binding upon the Borrower and shall
not put any LC Issuer or Lender under any liability to the Borrower.  Nothing in this Section 2.19.8 is
intended to limit the right of the Borrower to make a claim against an LC
Issuer for damages as contemplated by the proviso to the first sentence of Section 2.19.7.


 


2.19.9      Actions of LC Issuer.  Each LC Issuer shall be entitled to rely, and
shall be fully protected in relying, upon any Facility LC, draft, writing,
resolution, notice, consent, certificate, affidavit, letter, cablegram,
telegram, telecopy, telex or teletype


 


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message, statement, order or other document believed by it to be
genuine and correct and to have been signed, sent or made by the proper Person
or Persons, and upon advice and statements of legal counsel, independent
accountants and other experts selected by such LC Issuer.  Each LC Issuer shall be fully justified in
failing or refusing to take any action under this Agreement unless it shall
first have received such advice or concurrence of the Required Lenders as it
reasonably deems appropriate or it shall first be indemnified to its reasonable
satisfaction by the Lenders against any and all liability and expense which may
be incurred by it by reason of taking or continuing to take any such action.  Notwithstanding any other provision of this Section 2.19,
each LC Issuer shall in all cases be fully protected in acting, or in
refraining from acting, under this Agreement in accordance with a request of
the Required Lenders, and such request and any action taken or failure to act
pursuant thereto shall be binding upon the Lenders and any future holders of a
participation in any Facility LC.


 


2.19.10    Indemnification. 
The Borrower hereby agrees to indemnify and hold harmless each Lender,
each LC Issuer and the Agent, and their respective directors, officers, agents
and employees from and against any and all claims and damages, losses,
liabilities, costs or expenses which such Lender, such LC Issuer or the Agent
may incur (or which may be claimed against such Lender, such LC Issuer or the
Agent by any Person whatsoever) by reason of or in connection with the
issuance, execution and delivery or transfer of or payment or failure to pay
under any Facility LC or any actual or proposed use of any Facility LC,
including, without limitation, any claims, damages, losses, liabilities, costs
or expenses which such LC Issuer may incur by reason of or in connection with (i) the
failure of any other Lender to fulfill or comply with its obligations to such
LC Issuer hereunder (but nothing herein contained shall affect any rights the
Borrower may have against any defaulting Lender) or (ii) by reason of or
on account of such LC Issuer issuing any Facility LC which specifies that the
term “Beneficiary” included therein includes any successor by operation of law
of the named Beneficiary, but which Facility LC does not require that any
drawing by any such successor Beneficiary be accompanied by a copy of a legal
document, satisfactory to such LC Issuer, evidencing the appointment of such
successor Beneficiary; provided that
the Borrower shall not be required to indemnify any Lender, LC Issuer or the
Agent for any claims, damages, losses, liabilities, costs or expenses to the
extent, but only to the extent, caused by (x) the willful misconduct or gross
negligence of such LC Issuer in determining whether a request presented under
any Facility LC complied with the terms of such Facility LC or (y) such LC
Issuer’s failure to pay under any Facility LC after the presentation to it of a
request strictly complying with the terms and conditions of such Facility
LC.  Nothing in this Section 2.19.10
is intended to limit the obligations of the Borrower under any other provision
of this Agreement.


 


2.19.11    Lenders’ Indemnification.  Each Lender shall, ratably in accordance with
its Pro Rata Share, indemnify each LC Issuer, its affiliates and their
respective directors, officers, agents and employees (to the extent not
reimbursed by the Borrower but without limiting any obligation of the Borrower
to do so) against any cost, expense (including reasonable counsel fees and
disbursements), claim, demand, action, loss or liability (except such as result
from such indemnitees’ gross negligence or willful misconduct or such LC Issuer’s
failure to pay under any Facility LC after the presentation


 


33





















 


to it of a request strictly complying with the terms and conditions of
the Facility LC) that such indemnitees may suffer or incur in connection with
this Section 2.19 or any action taken or omitted by such indemnitees
hereunder.


 


2.19.12    Cash
Collateralization.  If any Default
shall have occurred and be continuing, on the Business Day that the Borrower
receives written notice from the Agent or the Required Lenders demanding the
deposit of cash collateral pursuant to this paragraph, the Borrower shall
deposit in an account (the “Facility LC Collateral Account”) with the Agent, in
the name of the Agent and for the ratable benefit of the Lenders and the
benefit of the LC Issuers (as applicable), an amount in cash equal to the LC
Exposure as of such date plus any accrued and unpaid interest thereon; provided
that the obligation to deposit such cash collateral shall become effective
immediately, and such deposit shall become immediately due and payable, without
demand or other notice of any kind, upon the occurrence of a Default with
respect to the Borrower described in Section 7.6 or 7.7.  Such deposit shall be held by the Agent as
collateral for the payment and performance of the Obligations.  The Agent shall have exclusive dominion and
control, including the exclusive right of withdrawal, over the Facility LC
Collateral Account.  The Agent will
invest any funds on deposit from time to time in the Facility LC Collateral
Account in certificates of deposit of JPMorgan Chase Bank having a maturity not
exceeding 30 days.  Interest or profits,
if any, on such investments shall accumulate in such account.  Moneys in the Facility LC Collateral Account
shall be applied by the Agent to reimburse each LC Issuer for Reimbursement
Obligations for which it has not been reimbursed and, to the extent not so
applied, shall be held for the satisfaction of the LC Exposure at such time or,
if the maturity of the Loans has been accelerated, be applied to satisfy other
obligations of the Borrower under this Agreement.  If the Borrower is required to provide an
amount of cash collateral hereunder as a result of the occurrence of a Default,
such amount (to the extent not applied as aforesaid) shall be returned to the
Borrower within three Business Days after all Defaults have been cured or
waived.


 


2.19.13    Rights as a Lender.  In its capacity as a Lender, each LC Issuer
shall have the same rights and obligations as any other Lender.


 


2.20         Extension of Facility Termination Date.  (a)  Not more than once in any fiscal
year of the Borrower, the Borrower may request an extension of the Facility
Termination Date to a date not later than the fifth (5th)
anniversary of the date of such request by submitting a request for an
extension (the “Extension Request”) to the Agent not less than 180 days prior
to the then scheduled Facility Termination Date.  Promptly upon (but not later than five
Business Days after) the Agent’s receipt and approval of the Extension Request,
the Agent shall deliver to each Lender a copy of, and shall request each Lender
to approve, the Extension Request.  Each
Lender approving the Extension Request shall deliver its written approval no later
than 60 days after such Lender’s receipt of the Extension Request.  If the written approval of the Extension
Request by Lenders whose Pro Rata Shares equal or exceed 66-2/3% in the
aggregate is received by the Agent within such 60-day period and provided that,
on the last day of such 60-day period, no Default exists and the
representations and warranties contained in Article V and in the Guaranty
are true and correct except to the extent any such representation or warranty
is stated to relate solely to an earlier date, in which case such representation
or warranty shall have been true and


 


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correct on and as of such earlier date, then the
Facility Termination Date shall be extended as specified in the Extension
Request but only with respect to the Lenders that have given their written
approval.  Except to the extent that a
Lender that did not give its written approval to such Extension Request (“Rejecting
Lender”) is replaced as provided in Section 2.21, the Loans and all
interest thereon, fees and other Obligations owed to such Rejecting Lender
shall be paid in full on the Facility Termination Date as determined prior to
such Extension Request (the “Rejecting Lender’s Facility Termination Date”),
and Borrower shall make such additional payments (if any) of the Loan as are
necessary to cause the Aggregate Credit Exposure not to exceed the Aggregate
Commitment (as reduced) on any Rejecting Lender’s Termination Date.


 


(b)           If
Lenders whose Pro Rata Shares equal or exceed 66-2/3% in the aggregate approve
the Extension Request, the Borrower, upon notice to the Agent and any Rejecting
Lender, may, subject to the provisions of the last sentence of Section 2.20(c),
terminate the Commitment of such Rejecting Lender (or such portion of such
Commitment that is not assigned to a Replacement Lender in accordance with Section 2.21),
which termination shall occur as of a date set forth in such Borrower’s notice
but in no event more than thirty (30) days following such notice.  The termination of a Lender’s Commitment
shall be effected in accordance with Section 2.20(c).


 


(c)           If
the Borrower elects to terminate a Commitment of a Rejecting Lender as provided
in Section 2.20(b), the Borrower shall pay to the Rejecting Lender all
Obligations due and owing to it hereunder or under any other Loan Document,
including, without limitation, the aggregate outstanding principal amount of
the Loans owed to such Rejecting Lender, together with accrued interest thereon
through the date of such termination, amounts payable under Sections 3.1 and
3.2 and the Reimbursement Obligations, Commitment Fees and LC Fees payable to
such Rejecting Lender.  Upon request by
the Borrower or the Agent, the Rejecting Lender will deliver to the Borrower
and the Agent a letter setting forth the amounts payable to such Rejecting
Lender as set forth above.  Upon the
termination of such Rejecting Lender’s Commitment and payment of the amounts
provided for in the immediately preceding sentence, the Borrower shall have no
further obligations to such Rejecting Lender under this Agreement and such
Rejecting Lender shall cease to be a Lender, provided, however,
that such Rejecting Lender shall continue to be entitled to the benefits of
Sections 2.19.10, 2.19.11, 2.19.12, 3.1, 3.2, 3.4, 3.5, 6.8(c), 9.6, 9.10 and
this Section 2.20(c), as well as to any fees accrued for its account
hereunder not yet paid, and shall continue to be obligated under Section 10.8
with respect to obligations and liabilities accruing prior to the termination
of such Rejecting Lender’s Commitment. 
If, as a result of the termination of the Rejecting Lender’s Commitment,
any payment of a Eurodollar Loan occurs on a day which is not the last day of
the applicable Interest Period, the Borrower shall pay to the Agent for the
benefit of the Lenders (including any Rejecting Lender) any loss or cost
incurred by the Lenders (including any Rejecting Lender) resulting therefrom in
accordance with Section 3.4.  Upon
the effective date of the termination of the Rejecting Lender’s Commitment, the
Aggregate Commitment shall be reduced by the amount of the terminated
Commitment of the Rejecting Lender, and each other Lender shall be deemed to
have irrevocably and unconditionally purchased and received (subject to the
provisions of the last sentence of this Section 2.20(c)), without recourse
or warranty, from the Rejecting Lender, an undivided interest and participation
in any Facility LC then outstanding, ratably, such that each Lender (excluding
the Rejecting Lender but including any Replacement Lender that acquires an
interest hereunder from such Rejecting Lender) holds a participation


 


35





















 


interest in each Facility
LC in proportion to the ratio that such Rejecting Lender’s Commitment (upon the
effective date of such termination of the Rejecting Lender’s Commitment) bears
to the Aggregate Commitment (as reduced by the termination of such Rejecting
Lender’s Commitment or a part thereof). 
Notwithstanding the foregoing, if, upon the termination of the Commitment
of such Rejecting Lender, the Aggregate Credit Exposure would exceed the
Aggregate Commitment (as reduced), the Borrower may not terminate such
Rejecting Lender’s Commitment unless the Borrower, on or prior to the effective
date of such termination, prepays, in accordance with the provisions of this
Agreement, outstanding Advances or Swing Line Loans or causes to be canceled,
released and returned to the applicable LC Issuer outstanding Facility LCs or
deposits cash into the Facility LC Collateral Account in sufficient amounts in
the aggregate such that, on the effective date of such termination, the
Aggregate Credit Exposure, less
the amounts held in the Facility LC Collateral Account, does not exceed the
Aggregate Commitment (as reduced).  In
the event that the Borrower makes such deposit into the Facility LC Collateral
Account, such deposits shall be applied by the Agent to pay to the applicable
LC Issuer amounts drawn on any Facility LC that are not reimbursed by the
Borrower and, provided no Default has occurred that is continuing, shall be
returned to the Borrower when the Aggregate Credit Exposure equals or is less
than the Aggregate Commitment.


 


2.21         Replacement
of Lender.  (a)  If the Borrower
is required pursuant to Section 3.1, 3.2 or 3.5 to make any additional
payment to any Lender or if any Lender’s obligation to make or continue, or to
convert ABR Loans into, Eurodollar Loans shall be suspended pursuant to Section 3.3
or a Lender is a Rejecting Lender (any Lender so affected, an “Affected Lender”),
the Borrower may elect, if such amounts continue to be charged or such
suspension is still effective or if such Affected Lender is a Rejecting Lender,
to replace such Affected Lender as a Lender party to this Agreement, provided that no Default or Unmatured
Default shall have occurred and be continuing at the time of such replacement,
and provided  further
that, concurrently with such replacement, (i) another bank or other entity
which is reasonably satisfactory to the Borrower and the Agent shall agree, as
of such date, to purchase for cash the Loans and other Obligations due to the
Affected Lender pursuant to an Assignment and Assumption and to become a Lender
for all purposes under this Agreement and to assume all obligations of the
Affected Lender to be terminated as of such date and to comply with the
requirements of Section 12.1 applicable to assignments (such bank or other
entity, a “Replacement Lender”), and (ii) the Borrower shall pay to such
Affected Lender in same day funds on the day of such replacement (A) all
interest, fees and other amounts then accrued but unpaid to such Affected
Lender by the Borrower hereunder to and including the date of termination,
including without limitation payments due to such Affected Lender under
Sections 3.1, 3.2 and 3.5, and (B) an amount, if any, equal to the payment
which would have been due to such Lender on the day of such replacement under Section 3.4
had the Loans of such Affected Lender been prepaid on such date rather than
sold to the Replacement Lender.  Upon
replacement of such Affected Lender and payment of the amounts provided for in
the immediately preceding sentence, the Borrower shall have no further
obligations to such Affected Lender under this Agreement and such Affected
Lender shall cease to be a Lender, provided, however, such
Affected Lender shall continue to be entitled to the benefits of Sections
2.19.10, 2.19.11, 2.19.12, 3.1, 3.2, 3.4, 3.5, 6.8(c), 9.6 and 9.10, as well as
to any fees accrued for its account hereunder and not yet paid, and shall
continue to be obligated under Section 10.8 with respect to obligations
and liabilities accruing prior to such Affected Lender’s replacement.


 


36





















 


(b)           In
the event that the Affected Lender is a Rejecting Lender, the Borrower may
elect to have a part of the Rejecting Lender’s rights and obligations under
this Agreement and the other Loan Documents assigned pursuant to this Section 2.21,
provided that the Borrower also elects, pursuant to Section 2.20(b) to
terminate the entire amount of such Rejecting Lender’s Commitment not so
assigned, which termination shall be effective on the date on which such
assignment of the Rejecting Lender’s rights and obligations is consummated
under this Section 2.21.


 


2.22         Swing
Line.  (a)  The Swing Line
Lender agrees, on the terms and conditions hereinafter set forth, to make loans
(“Swing Line Loans”) to the Borrower from time to time during the period from
the date of this Agreement, up to but not including the Facility Termination
Date, in an aggregate principal amount not to exceed at any time outstanding
the lesser of (i) the Swing Line Commitment or (ii) the amount by
which the Aggregate Commitment exceeds the Aggregate Credit Exposure.  The Swing Line Loan shall be evidenced by a
note in the form of Exhibit F hereto (the “Swing Line Note”).  Swing Line Loans shall bear interest at the
Alternate Base Rate, which interest shall be payable monthly on each Payment
Date.


 


(b)           Each Swing
Line Loan which shall not utilize the Swing Line Commitment in full shall be in
an amount not less than One Million Dollars ($1,000,000) and, if in excess
thereof, in integral multiples of One Hundred Thousand Dollars ($100,000).  Within the limits of the Swing Line
Commitment, the Borrower may borrow, repay and reborrow under this Section 2.22.


 


(c)           The
Borrower shall give the Swing Line Lender notice of any request for a Swing
Line Loan not later than 3:00 p.m. (Central time) on the Business Day of
such Swing Line Loan, specifying the amount of such requested Swing Line
Loan.  All notices given by the Borrower
under this Section 2.22(c) shall be irrevocable.  Upon fulfillment of the applicable conditions
set forth in Article IV, the Swing Line Lender will make the Swing Line
Loan available to the Borrower in immediately available funds by crediting the
amount thereof to the Borrower’s account with the Swing Line Lender, provided, however, that the Swing Line Lender shall not make
a Swing Line Loan hereunder if it has received written notice from the Agent,
the Borrower or the Required Lenders, prior to the requested date of such Swing
Line Loan, that one or more applicable conditions contained in Section 4.2
shall not be satisfied.


 


(d)           Each Swing
Line Loan shall be paid in full on or before the fifth (5th)
Business Day following the making of such Swing Line Loan.  Payment of a Swing Line Loan may be effected
by an Advance pursuant to Section 2.8. 
If such Swing Line Loan is not paid in full by the fifth (5th)
Business Day following the making of such Swing Line Loan, it shall be paid
from the proceeds of an Advance made by the close of the next Business Day
pursuant to Section 2.8, which Advance shall be made by the Lenders upon
request by the Agent without regard to whether a Borrowing Notice is delivered
or the conditions to such Advance under Section 4.2 are satisfied
(provided the conditions to the making of such Swing Line Loan were
satisfied).  If for any reason such
Advance cannot be made, the Lenders shall, upon notice from the Agent, purchase
(without recourse or warranty) participations equal to their Pro Rata Shares of
such Swing Line Loan.


 


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ARTICLE III


 


YIELD PROTECTION; TAXES


 


3.1           Yield Protection. 
If any Change in Law:


 


(i)            subjects
any Lender or LC Issuer or any applicable Lending Installation to any Taxes, or
changes the basis of taxation of payments (other than with respect to Excluded
Taxes) to any Lender or LC Issuer in respect of its Eurodollar Loans, Facility
LCs or participations therein, or


 


(ii)           imposes or
increases or deems applicable any reserve, assessment, insurance charge,
special deposit or similar requirement against assets of, deposits with or for
the account of, or credit extended by, any Lender or LC Issuer or any
applicable Lending Installation (other than reserves and assessments taken into
account in determining the interest rate applicable to Eurodollar Advances or
ABR Advances, as applicable), or


 


(iii)          imposes
on such Lender or LC Issuer or any applicable Lending Installation any other
condition,


 


and the result of any of
the foregoing is to increase the cost to such Lender or LC Issuer or applicable
Lending Installation, as the case may be, of making or maintaining its
Eurodollar Loans or Commitment or of issuing or participating in Facility LCs
or to reduce the return received or receivable by such Lender or LC Issuer or
applicable Lending Installation, as the case may be, in connection with such
Eurodollar Loans, or Commitment, or Facility LCs or participations therein,
then, within 15 days of demand by such Lender or LC Issuer, as the case may be,
the Borrower shall pay such Lender or LC Issuer, as the case may be, such
additional amount or amounts as will compensate such Lender or LC Issuer, as
the case may be, for such increased cost or reduction in amount received.


 


3.2           Changes in Capital Adequacy Regulations.  If any Lender or LC Issuer determines that
any Change in Law regarding capital requirements has or would have the effect
of reducing the rate of return on such Lender’s or LC Issuer’s capital or on
the capital of such Lender’s or LC Issuer’s holding company, if any, as a
consequence of this Agreement or the Loans made or maintained by, or
participations in Facility LCs held by, such Lender, or the Facility LCs issued
by such LC Issuer, to a level below that which such Lender or LC Issuer or such
Lender’s or LC Issuer’s holding company could have achieved but for such Change
in Law (taking into consideration such Lender’s or LC Issuer’s policies and the
policies of such Lender’s or LC Issuer’s holding company with respect to
capital adequacy), then from time to time the Borrower will pay to such Lender
or LC Issuer, as the case may be, such additional amount or amounts as will
compensate such Lender or LC Issuer or such Lender’s or LC Issuer’s holding
company for any such reduction suffered. 
The Borrower shall not be required to compensate any Lender pursuant to
this paragraph for any amounts incurred more than 90 days prior to the date
such Lender notifies the Borrower in writing of such Lender’s intention to
claim compensation therefor; provided, however, that if the circumstances giving rise to such claim have a
retroactive effect, then such 90-day period shall be extended to include the
period of such retroactive effect.


 


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3.3           Availability of Types of Advances.  If any Lender determines that maintenance of
its Eurodollar Loans at a suitable Lending Installation would violate any
applicable law, rule, regulation, or directive, whether or not having the force
of law, or if the Required Lenders determine that (i) deposits of a type
and maturity appropriate to match fund Eurodollar Advances are not available or
(ii) the interest rate applicable to Eurodollar Advances does not
accurately reflect the cost of making or maintaining Eurodollar Advances, then
the Agent shall suspend the availability of Eurodollar Advances until the
Lender notifies the Agent and the Borrower that the circumstances giving rise to
such determination no longer exist, and require any affected Eurodollar
Advances to be repaid or converted to ABR Advances, subject to the payment of
any funding indemnification amounts required by Section 3.4, either on the
last day of the Interest Period thereof, if such Lender may lawfully continue
to maintain such Eurodollar Loans, or immediately, if such Lender may not
lawfully continue to maintain such Eurodollar Loans.


 


3.4           Funding
Indemnification.  In the event of (a)
the payment of any principal of any Eurodollar Loan other than on the last day
of an Interest Period applicable thereto (including as a result of a Default),
(b) the conversion of any Eurodollar Loan other than on the last day of the
Interest Period applicable thereto, (c) the failure to borrow, convert,
continue or prepay any Eurodollar Loan on the date specified in any notice
delivered pursuant hereto, or (d) the assignment of any Eurodollar Loan other
than on the last day of the Interest Period applicable thereto as a result of
an election by the Borrower pursuant to Section 2.20, then, in any such event,
the Borrower shall compensate each Lender for the loss, cost and expense
attributable to such event.  Such loss,
cost or expense to any Lender shall be deemed to include an amount determined
by such Lender to be the excess, if any, of (i) the amount of interest which
would have accrued on the principal amount of such Loan had such event not
occurred, at the Adjusted LIBO Rate that would have been applicable to such
Loan, for the period from the date of such event to the last day of the then
current Interest Period therefor (or, in the case of a failure to borrow,
convert or continue, for the period that would have been the Interest Period
for such Loan), over (ii) the amount of interest which would accrue on such
principal amount for such period at the interest rate which such Lender would
bid were it to bid, at the commencement of such period, for dollar deposits of
a comparable amount and period from other banks in the eurodollar market.


 


3.5           Taxes.  (i) 
All payments by the Borrower to or for the account of any Lender, LC
Issuer or the Agent hereunder or under any Note or Facility LC Application
shall be made free and clear of and without deduction for any and all
Taxes.  If the Borrower shall be required
by law to deduct any Taxes from or in respect of any sum payable hereunder to
any Lender, LC Issuer or the Agent, (a) the sum payable shall be increased as
necessary so that after making all required deductions (including deductions applicable
to additional sums payable under this Section 3.5) such Lender, LC Issuer or
the Agent (as the case may be) receives an amount equal to the sum it would
have received had no such deductions been made, (b) the Borrower shall make
such deductions, (c) the Borrower shall pay the full amount deducted to the
relevant authority in accordance with applicable law and (d) the Borrower shall
furnish to the Agent the original copy of a receipt evidencing payment thereof
within 30 days after such payment is made. 


 


(ii)           In
addition, the Borrower hereby agrees to pay any present or future stamp or
documentary taxes and any other excise or property taxes, charges or similar
levies which arise


 


39





















 


from any payment made hereunder or under any Note or Facility LC
Application or from the execution or delivery of, or otherwise with respect to,
this Agreement or any Note or Facility LC Application (“Other Taxes”).


 


(iii)          The
Borrower hereby agrees to indemnify the Agent and each Lender and LC Issuer for
the full amount of Taxes or Other Taxes (including, without limitation, any
Taxes or Other Taxes imposed on amounts payable under this Section 3.5) paid by
the Agent or such Lender or LC Issuer as a result of its Commitment, any Loans
made by it hereunder, or otherwise in connection with its participation in this
Agreement and any liability (including penalties, interest and expenses)
arising therefrom or with respect thereto. 
Payments due under this indemnification shall be made within 30 days of
the date the Agent or such Lender or LC Issuer makes demand therefor pursuant
to Section 3.6.


 


(iv)          Each Lender
that is not incorporated under the laws of the United States of America or a
state thereof (each a “Non-U.S. Lender”) agrees that it will, not more than ten
Business Days after the date of this Agreement, (i) deliver to the Agent two
duly completed copies of United States Internal Revenue Service Form W-8BEN or
W-8ECI, certifying in either case that such Lender is entitled to receive
payments under this Agreement without deduction or withholding of any United
States federal income taxes, and (ii) deliver to the Agent a United States
Internal Revenue Form W-8 or W-9, as the case may be, and certify that it is
entitled to an exemption from United States backup withholding tax.  Each Non-U.S. Lender further undertakes to
deliver to each of the Borrower and the Agent (x) renewals or additional copies
of such form (or any successor form) on or before the date that such form expires
or becomes obsolete, and (y) after the occurrence of any event requiring a
change in the most recent forms so delivered by it, such additional forms or
amendments thereto as may be reasonably requested by the Borrower or the Agent.  All forms or amendments described in the
preceding sentence shall certify that such Lender is entitled to receive
payments under this Agreement without deduction or withholding of any United
States federal income taxes, unless an event (including without limitation any
change in treaty, law or regulation) has occurred prior to the date on which
any such delivery would otherwise be required which renders all such forms
inapplicable or which would prevent such Lender from duly completing and
delivering any such form or amendment with respect to it and such Lender
advises the Borrower and the Agent that it is not capable of receiving payments
without any deduction or withholding of United States federal income tax.


 


(v)           For any
period during which a Non-U.S. Lender has failed to provide the Borrower with
an appropriate form pursuant to clause (iv), above (unless such failure is due
to a change in treaty, law or regulation, or any change in the interpretation
or administration thereof by any governmental authority, occurring subsequent
to the date on which a form originally was required to be provided), such
Non-U.S. Lender shall not be entitled to indemnification under this Section 3.5
with respect to Taxes imposed by the United States; provided that, should a
Non-U.S. Lender which is otherwise exempt from or subject to a reduced rate of
withholding tax become subject to Taxes because of its failure to deliver a
form required under clause (iv), above, the Borrower shall take such steps as
such Non-U.S. Lender shall reasonably request to assist such Non-U.S. Lender to
recover such Taxes.


 


(vi)          Any Lender
that is entitled to an exemption from or reduction of withholding tax with
respect to payments under this Agreement or any Note pursuant to the law of any
relevant


 


40





















 


jurisdiction or any treaty shall deliver to the Borrower (with a copy
to the Agent), at the time or times prescribed by applicable law, such properly
completed and executed documentation prescribed by applicable law as will
permit such payments to be made without withholding or at a reduced rate.


 


(vii)         If
the U.S. Internal Revenue Service or any other governmental authority of the
United States or any other country or any political subdivision thereof asserts
a claim that the Agent did not properly withhold tax from amounts paid to or
for the account of any Lender (because the appropriate form was not delivered
or properly completed, because such Lender failed to notify the Agent of a
change in circumstances which rendered its exemption from withholding
ineffective, or for any other reason), such Lender shall indemnify the Agent
fully for all amounts paid, directly or indirectly, by the Agent as tax,
withholding therefor, or otherwise, including penalties and interest, and including
taxes imposed by any jurisdiction on amounts payable to the Agent under this
subsection, together with all costs and expenses related thereto (including
attorneys fees and time charges of attorneys for the Agent, which attorneys may
be employees of the Agent).  The
obligations of the Lenders under this Section 3.5(vii) shall survive the
payment of the Obligations and termination of this Agreement.


 


3.6           Lender Statements; Survival of Indemnity.  To the extent reasonably possible, each
Lender shall designate an alternate Lending Installation with respect to its
Eurodollar Loans to reduce any liability of the Borrower to such Lender under
Sections 3.1, 3.2 and 3.5 or to avoid the unavailability of Eurodollar Advances
under Section 3.3, so long as such designation is not, in the judgment of
such Lender, disadvantageous to such Lender. 
Each Lender shall deliver a written statement of such Lender to the
Borrower (with a copy to the Agent) as to the amount due, if any, under Section 3.1,
3.2, 3.4 or 3.5.  Such written statement
shall set forth in reasonable detail the calculations upon which such Lender
determined such amount and shall be final, conclusive and binding on the
Borrower in the absence of manifest error. 
Determination of amounts payable under such Sections in connection with
a Eurodollar Loan shall be calculated as though each Lender funded its
Eurodollar Loan through the purchase of a deposit of the type and maturity
corresponding to the deposit used as a reference in determining the Adjusted LIBO
Rate applicable to such Loan, whether in fact that is the case or not.  Unless otherwise provided herein, the amount
specified in the written statement of any Lender shall be payable on demand
after receipt by the Borrower of such written statement.  The obligations of the Borrower under
Sections 3.1, 3.2, 3.4 and 3.5 shall survive payment of the Obligations and
termination of this Agreement.


 


ARTICLE IV


 


CONDITIONS PRECEDENT


 


4.1           Initial Credit Extension.  The Lenders shall not be required to make the
initial Credit Extension hereunder unless the Borrower has furnished to the
Agent with sufficient copies for the Lenders:


 


(i)            Copies of
the articles or certificate of incorporation of the Borrower, together with all
amendments thereto, and a certificate of good standing of the Borrower, each
certified by the appropriate governmental officer in its


 


41





















 


jurisdiction of incorporation; any other information required by Section 326
of the USA PATRIOT ACT or necessary for the Agent or any Lender to verify the
identity of Borrower as required by Section 326 of the USA PATRIOT ACT;
and such comparable documents as Agent may require with respect to the
Guarantors.


 


(ii)           Copies,
certified by the Secretary or Assistant Secretary of the Borrower, of its
by-laws and of its Board of Directors’ resolutions and of resolutions or
actions of any other body authorizing the execution of the Loan Documents to
which the Borrower is a party and copies, certified by the Secretary, Assistant
Secretary or comparable officer of each Guarantor of the Board of Directors’
resolutions and of resolutions or actions of any other party authorizing the
execution of the Guaranty.


 


(iii)          An
incumbency certificate, executed by the Secretary or Assistant Secretary of the
Borrower, which shall identify by name and title and bear the signatures of the
Responsible Officials and any other officers of the Borrower authorized to sign
the Loan Documents to which the Borrower is a party, upon which certificate the
Agent and the Lenders shall be entitled to rely until informed of any change in
writing by the Borrower; and such comparable certificates as Agent may require
with respect to the Guarantors.


 


(iv)          A
certificate, signed by the chief financial officer of the Borrower, stating
that on the initial Credit Extension Date no Default or Unmatured Default has
occurred and is continuing.


 


(v)           Written
opinions of the Borrower’s and Guarantor’s counsel, addressed to the Lenders in
substantially the forms of Exhibits G-1 and G-2.


 


(vi)          The Swing
Line Note and any Notes requested by a Lender pursuant to Section 2.13
payable to the order of each such requesting Lender.


 


(vii)         Evidence
satisfactory to the Agent that all Indebtedness (other than the Existing LCs)
under the Existing Credit Agreement shall have been simultaneously paid in full
and the Existing Credit Agreement shall have been terminated.


 


(viii)        Such
other documents as the Agent or its counsel may have reasonably requested.


 


4.2           Each Credit Extension.  The Lenders, LC Issuer and Swing Line Lender
shall not be required to make any Credit Extension unless on the applicable
Credit Extension Date:


 


(i)            There
exists no Default or Unmatured Default.


 


(ii)           The
representations and warranties contained in Article V and in the Guaranty
are true and correct as of such Credit Extension Date except to


 


42





















 


the extent any such representation or warranty is stated to relate
solely to an earlier date, in which case such representation or warranty shall
have been true and correct on and as of such earlier date.


 


Each Borrowing
Notice with respect to each such Advance or request for issuance or
Modification (other than a Modification that does not increase the amount or
extend the expiry date) of a Facility LC or request for a Swing Line Loan shall
constitute a representation and warranty by the Borrower that the conditions
contained in Sections 4.2(i) and (ii) have been satisfied.  Notwithstanding the foregoing, in the case of
a Loan (provided for in Section 2.22(d)) made to repay a Swing Line Loan,
the satisfaction of the foregoing conditions with respect to such Swing Line
Loan shall constitute satisfaction of such conditions with respect to the Loan
to be made to repay such Swing Line Loan as provided for in Section 2.22(d).


 


ARTICLE V


 


REPRESENTATIONS AND WARRANTIES


 


The Borrower represents
and warrants to the Lenders that:


 


5.1           Incorporation, Qualification, Powers and Capital Stock.  The Borrower is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of
Maryland.  The Borrower 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 Borrower 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
Borrower has all requisite corporate power and authority to execute and
deliver, and to perform all of its obligations under, the Loan Documents to
which it is a party.


 


(b)           Each
Guarantor has all requisite corporate, partnership or limited liability company
power and authority to execute and deliver, and to perform all of its
obligations under, the Guaranty.


 


(c)           The
execution and delivery by the Borrower of, and the performance by the Borrower
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
Borrower, any Subsidiary or any Guarantor; (2) violate any provision of
the articles or certificate of incorporation or formation or bylaws,
partnership agreement or operating agreement of the Borrower or any Guarantor
or any provision of the articles or certificate of incorporation or formation,
bylaws or partnership agreement or operating 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


 


43





















 


respect to any Property
now owned or leased or hereafter acquired by the Borrower, 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 Borrower, 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 Material Indebtedness Agreement.


 


(d)           Neither
the Borrower nor any Subsidiary or Guarantor is in default under any Law,
order, writ, judgment, injunction, decree, determination or award described in
Section 5.2(c)(4) or any Material Indebtedness Agreement that in either case
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 Borrower or any Guarantor of, and the
performance by the Borrower or any Guarantor of all of its obligations under,
the Loan Documents.


 


(f)            Each
of the Loan Documents to which the Borrower is a party, when executed and
delivered, will constitute the legal, valid and binding obligations of the
Borrower, and the Guaranty, when executed and delivered, will constitute the
legal, valid and binding obligations of each Guarantor, enforceable against the
Borrower or each Guarantor, as the case may be, 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 Borrower (i) is in compliance in all
material respects with all Laws and other requirements applicable to its
business and (ii) 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 in the
case of either (i) or (ii) 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 joint ventures in which the
Borrower 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
(as updated on a quarterly basis pursuant to a notice given at the same time as
the Compliance Certificate pursuant to Section 6.2(b)), the Borrower does not
own any capital stock or ownership interest in any Person other than the
Subsidiaries and Joint Ventures in which the Borrower or any Guarantor has an
interest.  All outstanding shares of
capital stock or ownership interests, as the case may be, of each Subsidiary
and each such Joint Venture that are owned by the Borrower or any Subsidiary
are (1) owned of record and


 


 


44





















 


beneficially by the
Borrower or by one or more Subsidiaries, free and clear of all Liens, claims,
encumbrances and rights of others, and (2) duly authorized, validly
issued, fully paid, nonassessable (except for capital calls or contribution
requirements in connection with ownership interests in the Joint Ventures), and
issued in compliance with all applicable state and federal securities and other
Laws.  The Borrower may update Schedule 5.4 from time to time by sending
written notice to the 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 corporate, partnership or limited liability
company power and authority to conduct its business and to own and lease its
properties.


 


(c)           Each
Restricted Subsidiary (i) is in compliance in all material respects with
all Laws and other requirements applicable to its business and (ii) 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 in the case of either (i) or (ii) where
the failure to do so would not reasonably be expected to result in a Material
Adverse Effect.


 


5.5           Financial Statements of the Borrower and its Consolidated
Subsidiaries.  The
consolidated balance sheets of the Company and its consolidated Subsidiaries as
at December 31, 2004 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 Borrower 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 Borrower and its consolidated Subsidiaries as at September 30, 2005
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 Borrower 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 change in the condition,
financial or otherwise, of the Borrower and the Subsidiaries, taken as a whole,
from the financial condition of the Borrower and the Subsidiaries, taken as a
whole, since December 31, 2004


 


45





















 


which would reasonably be expected to have a Material Adverse Effect,
and the Borrower and the Subsidiaries, taken as a whole, do not have any
material liability or, to the best knowledge of the Borrower, 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 Agent and the
Lenders in writing.


 


5.7           Tax Liability. 
The Borrower 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, other than any taxes of which the amount or validity is
being contested in good faith by appropriate proceedings and with respect to
which adequate reserves have been provided for on the books of the Borrower or
its Subsidiaries, as the case may be.  To
the best knowledge of the Borrower, there does not exist any substantial
likelihood that any Governmental Authority will assert a tax deficiency against
the Borrower or any Subsidiary that is material to the Borrower 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 Borrower and each Subsidiary have
established and are 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 Borrower, threatened against or affecting the Borrower or any
Restricted Subsidiary, or any Property of the Borrower or any Restricted
Subsidiary, before any Governmental Authority in which there is a reasonable
possibility of a decision adverse to the Borrower or a Restricted Subsidiary
and which, if determined adversely to the Borrower or the Restricted
Subsidiary, could reasonably be expected to have a Material Adverse Effect.


 


5.9           ERISA.  (a) 
Neither the Borrower nor any member or the Controlled Group has established, is
a party to or has any liability under any Plan as of the date hereof.


 


(b)           In
the event that, at any time after the date hereof at which the representation
under this paragraph (b) is made or deemed remade, the Borrower or any
member of the Controlled Group shall have established, be a party or have any
liability under any Plan, then: (i) 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; (ii) 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; (iii) 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; (iv) neither the Borrower 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 Borrower nor any Commonly


 


46





















 


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 Borrower 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; (v) to the knowledge of the
Borrower or any Commonly Controlled Entity, no such Multiemployer Plan for
which the Borrower or any Subsidiary could reasonably be expected to have a
material liability is in Reorganization or Insolvent; and (vi) 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 Borrower 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.  Neither the Borrower 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. 
No part of the Advances or the Facility LCs 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.


 


5.11         No Default or Unmatured Default.  No Default or Unmatured Default has occurred
and is continuing.


 


5.12         Ownership
of Property; Liens.  Each of the
Borrower 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
6.12.  Each of the Borrower 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 Borrower, no Property of the Borrower or any of its
Subsidiaries contains or has 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 Borrower, the Properties of the Borrower and its
Subsidiaries and all operations at such Properties are in compliance, and, to
the extent of the Borrower’s and its Subsidiaries’ involvement with the
Properties, have heretofore been in compliance, in all material respects with
all applicable Environmental Laws, and there is no


 


47





















 


contamination at, under
or about such Properties or violation of any Environmental Law with respect to
such Properties or the business operated by the Borrower or any of its
Subsidiaries (the “Business”).


 


(c)           Neither
the Borrower 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 of the Borrower and its Subsidiaries or the Business, nor
does the Borrower have knowledge or reason to believe that any such notice will
be received or is being threatened.


 


(d)           To
the knowledge of the Borrower, Materials of Environmental Concern have not been
transported or disposed of from the Properties of the Borrower and its
Subsidiaries while owned or operated by the Borrower 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 such Properties in violation of, or in a 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 Borrower, threatened, under any Environmental Law to which
the Borrower or any Subsidiary is or will be named as a party with respect to
the Properties of the Borrower and its Subsidiaries 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 such Properties or the
Business.


 


(f)            To
the knowledge of the Borrower, there has been no release or threat of release
of Materials of Environmental Concern at or from the Properties of the Borrower
and its Subsidiaries, or arising from or related to the operations of the
Borrower or any Subsidiary in connection with such 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         Investment Company Act.  Neither the Borrower nor any Subsidiary is an
“investment company” or a company “controlled” by an “investment company”,
within the meaning of the Investment Company Act of 1940, as amended.


 


5.15         Public Utility Holding Company Act.  Neither the Borrower nor any Subsidiary is a “holding
company” or a “subsidiary company” of a “holding company”, or an “affiliate” of
a “holding company” or of a “subsidiary company” of a “holding company”, within
the meaning of the Public Utility Holding Company Act of 1935, as amended.


 


5.16         Subordinated Indebtedness.  The Obligations constitute senior
Indebtedness which is entitled to the benefits of the subordination provisions
of all outstanding Subordinated Indebtedness.


 


48





















 


ARTICLE VI


 


COVENANTS


 


During the term of this
Agreement, unless the Required Lenders shall otherwise consent in writing:


 


6.1           Financial Statements.  The Borrower shall cause to be delivered to
the Agent, in form and detail satisfactory to the Agent (for prompt
distribution by the 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 Borrower, copies of the consolidated balance sheets of the Borrower
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 Borrower,
the unaudited consolidated balance sheets of the Borrower 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 Borrower 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 an Authorized Person as being fairly stated in all material respects when
considered in relation to the consolidated financial position of the Borrower
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 Borrower shall cause to be delivered to
the Agent, in form and detail satisfactory to the Agent (for prompt
distribution by the 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 Unmatured 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 in substantially the form of Exhibit H
hereto executed by an Authorized Person, stating that, to the best of such
Authorized Person’s


 


49





















 


knowledge, the Borrower during such period has observed or performed
all of its covenants and other agreements, and satisfied every condition,
contained in this Agreement to be observed, performed or satisfied by it (and
containing calculations demonstrating compliance with Sections 6.17(f), 6.24,
6.25, 6.26, 6.28 and 6.29 and such other financial information as requested by
the Agent), and that such officer has obtained no knowledge of any Default or
Unmatured Default except as specified in such certificate;


 


(c)           not
later than 90 days after the end of each fiscal year of the Borrower, a copy of
the projections by the Borrower of the operating budget and cash flow budget of
the Borrower and its Subsidiaries for the succeeding two fiscal years and the
projected consolidated balance sheet of the Borrower and its Subsidiaries as at
the end of such succeeding fiscal years, such projections to be accompanied by
a certificate of an Authorized Person to the effect that while such an
Authorized Person 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
Borrower’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 Borrower is under no obligation to update such projections;


 


(d)           promptly
after the same are filed with any security exchange or with the Securities and
Exchange Commission or any successor or analogous Governmental Authority,
copies of all financial statements, reports, notices and proxy statements and
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 Borrower or any of its Restricted
Subsidiaries with any securities exchange or with the Securities and Exchange
Commission or any successor or analogous Governmental Authority;


 


(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 30 days after the end of each
calendar quarter, a Borrowing Base Certificate certifying in reasonable detail
the Borrowing Base as of the last day of such quarter, which certificate shall
be complete and correct as of the date thereof;


 


(g)           from
and after the date on which the Borrower or any member of the Controlled Group
shall establish, become a party to or have any liability under any Plan, (i) within
270 days after the close of each fiscal year, a statement of the Unfunded
Liabilities of each Single Employer Plan, certified as correct by an actuary
enrolled under ERISA and (ii) as soon as possible and in any event within
10 days after the Borrower knows that any Reportable Event has occurred with
respect to any Plan, a statement, signed by the chief financial officer of the
Borrower, describing said Reportable Event and the action which the Borrower
proposes to take with respect thereto; and


 


(h)           as
soon as possible and in any event within 10 days after receipt by the Borrower,
a copy of (i) any notice or claim to the effect that the Borrower or any
of its


 


50





















 


Subsidiaries is or may be
liable to any Person as a result of the release by the Borrower, any of its
Subsidiaries, or any other Person of any Materials of Environmental Concern
into the environment, and (ii) any notice alleging any violation of any
Environmental Law by the Borrower or any of its Subsidiaries, which, in either
case, could reasonably be expected to have a Material Adverse Effect.


 


If any information which
is required to be furnished to the Lenders under Section 6.1 or this Section 6.2
is required by law or regulation to be filed by the Borrower with a government
body on an earlier date, then the information required hereunder shall be
furnished to the Lenders at such earlier date.


 


6.3           Payment of Obligations.  The Borrower and each Restricted Subsidiary
shall pay, discharge or otherwise satisfy at or before maturity or before they
become delinquent, as the case may be, all obligations of whatever nature
except where (a) failure to pay could reasonably be expected to have a
Material Adverse Effect, and (b) 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 Borrower or its Subsidiaries, as the case may be.


 


6.4           Conduct
of Business and Maintenance of Existence. 
The Borrower and the Restricted Subsidiaries, taken as a whole, shall at
all times remain principally engaged in the business conducted as of the date
of this Agreement by the Borrower and the Restricted Subsidiaries, and, in all
respects material to the business of the Borrower and the Restricted
Subsidiaries taken as a whole, the Borrower shall, and shall cause each of the
Restricted Subsidiaries to, preserve, renew and keep in full force and effect
its corporate, partnership or limited liability company existence (as
applicable) 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 6.14 and (b) the Borrower shall not be
required to preserve any such right, privilege or franchise if the Borrower
shall determine that the preservation thereof is no longer desirable in the
conduct of the business of the Borrower or any Subsidiary and that the loss
thereof could not reasonably be expected to have a Material Adverse
Effect.  The Borrower shall, and shall
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
Borrower and each Restricted Subsidiary shall 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 Borrower 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 Borrower, 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
Borrower and each Restricted Subsidiary shall maintain insurance for their
respective Properties and businesses, (1) with financially sound and
reputable insurance


 


51





















 


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 Borrower or its applicable Subsidiary operates or as
may otherwise be required by applicable Requirements of Law.  The Borrower 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 Borrower and each Restricted Subsidiary
shall 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 prior to the occurrence of a Default and at the Borrower’s
expense after the occurrence and during the continuance of a Default, to visit
and inspect as reasonably requested any of its Properties and the Properties of
the Joint Ventures in which the Borrower or any Guarantor 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
Borrower and its Subsidiaries and such Joint Ventures in which the Borrower or
any Guarantor participates or manages, as reasonably requested with officers
and employees of the Borrower and its Subsidiaries and with its independent
certified public accountants.


 


6.7           Notices. 
The Borrower will promptly give notice to the Agent and each Lender of:


 


(a)           the
occurrence of any Default or Unmatured Default;


 


(b)           any
(1) default or event of default under any Contractual Obligation of the
Borrower or any of its Restricted Subsidiaries or (2) litigation,
investigation or, proceeding which may exist at any time between the Borrower
or any of its Restricted Subsidiaries and any Governmental Authority, which, in
the case of either clause (1) or clause (2), reasonably could be expected
to have a Material Adverse Effect;


 


(c)           any
litigation or proceeding affecting the Borrower or any of its Restricted
Subsidiaries in which damages or injunctive or similar relief is sought which
reasonably could be expected to have a Material Adverse Effect (which notice
shall be required to be given at the time the Borrower files with the
Securities and Exchange Commission a filing disclosing such litigation);


 


(d)           from
and after the date on which the Borrower or any member of the Controlled Group
shall establish, become a party to or have any liability under any Plan, any of
the following events, as soon as possible and in any event within 30 days after
the Borrower 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
Borrower or any


 


52





















 


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.


 


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 Borrower proposes to take with respect thereto.


 


6.8           Environmental Laws.


 


(a)           The
Borrower, each Restricted Subsidiary and each Joint Venture which the Borrower
or any Restricted Subsidiary manages shall comply and cause compliance by all
tenants and subtenants, if any, with all Environmental Laws and obtain and
comply in all material respects with and maintain, and cause all tenants and
subtenants to 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
Borrower, each Restricted Subsidiary and each such Joint Venture shall 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
Borrower shall defend, indemnify and hold harmless the Agent and the Lenders,
and their respective Related Parties 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 by the Borrower or any of its
Subsidiaries of or their 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 Obligations.


 


6.9           Guaranties from Future Subsidiaries; Release of Guarantors.  (a) The Borrower shall promptly secure
the execution and delivery of the Guaranty (or a Supplemental Guaranty) to the
Agent for the benefit of the Lenders from each Subsidiary, whether now existing
or formed and organized after the date hereof, if such Subsidiary is a
Wholly-Owned Subsidiary of the Borrower and is included in the Homebuilding
Segment; provided that (i) any Subsidiary whose sole purpose is to
serve as a joint venturer, partner, member or shareholder in a Joint Venture
shall not be required to deliver a Guaranty, (ii) none of the Subsidiaries
listed on Schedule 6.9 hereto shall be required to be a Guarantor and (iii) a
Subsidiary hereafter formed or


 


53





















 


organized will not be required to be a Guarantor if
federal or state regulatory requirements prohibit such Subsidiary from being a
Guarantor or if such Subsidiary is not engaged in the construction or sale of
homes or in any activities that are material to the Homebuilding Segment.  Each such Subsidiary that does not deliver
the Guaranty on the Closing Date shall execute and deliver a Supplemental
Guaranty within 30 days after it meets the criteria set forth in the preceding
sentence.  Concurrently with the
execution and delivery by such a Subsidiary of a Supplemental Guaranty, the
Borrower will deliver to the Agent such legal opinions and evidence of
corporate or other action and authority in respect thereof as shall be
reasonably requested by the Agent.


 


(b)           In
the event that any Guarantor ceases to be a Wholly-Owned Subsidiary of the
Borrower in the Homebuilding Segment or ceases to be engaged in the active
conduct of business, the Borrower may request the release of such Guarantor
from its obligations under its Guaranty, and provided no Default or
Unmatured Default exists, the Agent shall deliver to the Borrower a written
release of such Guarantor from its obligations under the Guaranty and shall so
notify the Lenders.


 


(c)           The
Borrower shall not cause or permit the voting securities or other ownership
interests of any Subsidiary in the Homebuilding Segment to be less than 100%
owned and controlled, directly or indirectly, by the Borrower except for a
legitimate business purpose unrelated to whether such Subsidiary is required to
be a Guarantor hereunder.


 


6.10         Use of Proceeds. 
The Borrower shall, and shall cause each Subsidiary to, use the proceeds
of the Credit Extensions for repayment of the obligations under the Existing
Credit Agreement and for general corporate purposes, including Acquisitions
(that are not hostile) in the same or similar lines of business.  The Borrower will not, nor will it permit any
Subsidiary to, use any of the proceeds of the Advances to purchase or carry any
“margin stock” (as defined in Regulation U).


 


6.11         Taxes.  The
Borrower shall, and shall cause each Subsidiary to, timely file (subject to
extensions as permitted by law) complete and correct United States federal and
applicable foreign, state and local tax returns required by law and pay when
due all taxes, assessments and governmental charges and levies upon it or its
income, profits or Property, except those which are being contested in good
faith by appropriate proceedings and with respect to which adequate reserves
have been set aside in accordance with GAAP.


 


6.12         Limitation on Liens.  Neither the Borrower 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 Borrower 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;


 


54





















 


(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 Borrower or such Subsidiary;


 


(f)            Liens
securing Non-Recourse Indebtedness of the Borrower and its Subsidiaries
incurred to finance the acquisition, construction or development of Real Estate
Inventory or Liens securing Indebtedness of the Borrower and its Subsidiaries
incurred to finance the construction or acquisition of fixed or capital assets
or a Refinancing Indebtedness with respect to any of such Indebtedness, provided that (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 Refinancing Indebtedness with
respect thereto, 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 or other entity which becomes a
Subsidiary or which is merged into the Borrower or a Subsidiary after the date
hereof securing Indebtedness of such corporation or other entity, provided that (1) such Liens
existed at the time such corporation or other entity 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 of such corporation or other
entity after the time such corporation or other entity 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; and


 


(i)            Judgment
and other similar Liens arising in connection with court proceedings except
Liens arising from judgments that constitute a Default under Section 7.9.


 


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


 


(a)           the
Borrower and any Guarantor may incur Guarantee Obligations, not to exceed
$35,000,000 in the aggregate at any time, in respect of obligations of entities
in the Financial Services Segment;


 


(b)           the
entities within the Financial Services Segment may incur Guarantee Obligations;


 


55





















 


(c)           the
Borrower and any Guarantor may incur Guarantee Obligations in respect of
reimbursement obligations with respect to Letters of Credit issued for the
account of the Borrower or any Guarantor for the benefit of employee benefit or
employee insurance programs of the Borrower or any of its Subsidiaries;


 


(d)           Subsidiaries
of the Borrower 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
Supplemental Guaranty if it is not already a Guarantor; and


 


(e)           the
Borrower and any Guarantor may incur Guarantee Obligations in respect of
obligations of the Borrower and Subsidiaries, joint ventures and other entities
in each case in the Homebuilding Segment.


 


6.14         Limitations on Fundamental Changes.  Neither the Borrower 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 Borrower may be merged or consolidated (i) with
or into the Borrower, provided that
the Borrower shall be the continuing or surviving corporation, or (ii) with
or into any one or more Restricted Subsidiaries of the Borrower, provided that the Restricted
Subsidiary or Restricted Subsidiaries shall be the continuing or surviving
entity and that, if either Subsidiary was a Guarantor, the continuing or
surviving entity shall also be a Guarantor or become a Guarantor on the
effective date of such merger or consolidation;


 


(b)           the
Borrower or any Restricted Subsidiary may sell, lease, transfer or otherwise
dispose of any or all of its assets (upon voluntary liquidation or otherwise)
to the Borrower or any other Restricted Subsidiary of the Borrower; provided
that, if the transferor is the Borrower or a Guarantor, the transferee shall be
the Borrower or shall be a Guarantor or become a Guarantor on the effective
date of such transaction;


 


(c)           any
Restricted Subsidiary may sell, lease, transfer or otherwise dispose of any or
all of its assets to the Borrower or any Restricted Subsidiary of the Borrower,
whether existing on or created after the date of this Agreement, provided that if the transferor
is a Guarantor, the transferee shall be the Borrower or a Guarantor; and


 


(d)           sales,
conveyances, leases, assignments, transfers or other dispositions of property,
business or assets permitted under Section 6.15.


 


6.15         Limitations on Sales of Assets.  Neither the Borrower nor any Restricted
Subsidiary will convey, sell, lease, assign, transfer or otherwise dispose of
any of its Property or business (including stock of Subsidiaries, receivables
and leasehold interests), whether now owned or hereafter acquired, except:


 


(a)           obsolete
or worn out property disposed of in the ordinary course of business;


 


56





















 


(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;


 


(e)           the
sale by the Financial Services Segment of its rights under loan servicing
portfolios;


 


(f)            as
permitted by Section 6.14 (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 (including stock or Property 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 twelve (12) consecutive months shall not exceed 10%
of the book value of the consolidated total assets of the Borrower and its
Subsidiaries (excluding the assets of the Limited Purpose Subsidiaries) as at
the beginning of such twelve (12) month period.


 


6.16         Limitation on Dividends.  The Borrower will not declare or pay any
dividend (other than dividends payable solely in Common Stock of the Borrower)
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 Borrower 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 Borrower or
any Subsidiary (such declarations, payments, setting apart, purchases,
redemptions, defeasances, retirements, acquisitions and distributions being
herein called “Restricted Payments”), except that the Borrower may make any
Restricted Payment so long as, after giving effect thereto, no Default or
Unmatured Default will be in existence.


 


6.17         Limitation on Investments.  Neither the Borrower 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 Borrower in the ordinary course of business, provided that the
Borrower shall give notice to the Lenders of any such non-material advances
aggregating in excess of $20,000,000 in any fiscal quarter;


 


57





















 


(b)           Investments
in Cash Equivalents;


 


(c)           Acquisitions
by the Borrower or any of its Restricted Subsidiaries 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 Borrower or one of its Restricted Subsidiaries and
provided, further, that before any such
Acquisition and after giving effect thereto, no Default or Unmatured Default
shall be in existence and the Borrower shall, at its sole expense, have
delivered to the Agent not less than 10 days prior to the date of such
Acquisition a certificate to such effect, in form and substance satisfactory to
the Agent, signed by an Authorized Person;


 


(d)           Acquisitions
by the Borrower or any of its Restricted Subsidiaries other than Acquisitions
permitted under clauses (c) or (g) of this Section 6.17 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 Borrower 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 in any 12-month period; and provided, further, that after giving effect
thereto, no Default or Unmatured Default shall be in existence;


 


(e)           Investments
by the Borrower in any Guarantor or by any Guarantor in the Borrower or in any
other Guarantor;


 


(f)            Investments
by the Borrower or any Guarantor in Joint Ventures, in Subsidiaries that are
not wholly-owned Subsidiaries, in the Limited-Purposes Subsidiaries Segment and
in the Financial Services Segment, so long as the aggregate amount of such
Investments shall not at any time exceed 40% of Consolidated Tangible Net
Worth; provided, that such limitation
shall not apply to Investments in the Financial Services Segment to the extent
made following termination of the Countrywide Loan Purchase Agreement (or any successor
agreement thereto) and that are repaid in full not later than 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;


 


(g)           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;


 


(h)           loans
and advances to officers, employees, consultants and agents of the Borrower or
its Subsidiaries for travel, entertainment and relocation expenses in the
ordinary course of business; and


 


(i)            other
loans and advances to employees of the Borrower in connection with incentive or
stock purchase plans or arrangements in an aggregate amount not to exceed
$3,000,000 at any time outstanding.


 


6.18         Limitation on Optional Payments and Modification of Debt
Instruments.


 


58





















 


(a)           Neither
the Borrower 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 that is in form
reasonably satisfactory to the Agent), provided
that so long as no Unmatured Default or Default is in existence or would result
therefrom, the Borrower may prepay 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 Borrower 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 consolidated 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 Borrower 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 shall not be deemed
to be included in the restrictions described in the foregoing clauses (1) or
(2).


 


6.19         Transactions with Affiliates.  Neither the Borrower 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
(other than the Borrower or a Guarantor) unless such transaction is otherwise
expressly permitted under this Agreement, or is upon fair and reasonable terms
no less favorable to the Borrower 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.


 


6.20         Fiscal Year. 
The Borrower will not permit the fiscal year of the Borrower to end on a
day other than December 31 without at least 90 days’ prior written notice
to the Agent (which notice shall be forwarded promptly by the Agent to the
Lenders).


 


6.21         Compliance with ERISA.  From and after the date on which the Borrower
or any member of the Controlled Group shall establish, become a party to or
have any liability under any Plan, neither the Borrower 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


 


59





















 


(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.


 


6.22         Preferred Stock. 
The Borrower will not permit any Guarantor to issue preferred stock to
any Person other than the Borrower.


 


6.23         No
Other Negative Pledges.  Neither the
Borrower nor any Restricted Subsidiary will enter into, assume or become
subject to any agreement prohibiting or otherwise restricting the creation or
assumption of any Lien upon its properties or assets, whether now owned or
hereafter acquired, or requiring the grant of any security for such obligation
if security is given for some other obligation except as set forth in (a) the
Loan Documents, (b) any indenture or equivalent instrument (or any
amendment or supplement thereto) relating to any Specified Debt and (c) agreements
which evidence or secure Indebtedness secured by Liens permitted under this
Agreement so long as such prohibition applies only to the Property subject to
such Lien.


 


6.24         Consolidated Tangible Net Worth.  The Borrower shall not permit Consolidated
Tangible Net Worth at any time to be less than the sum of (a) $967,974,000
plus (b) 50% of the Consolidated Net
Income (without deduction for losses sustained during any fiscal quarter) for
each fiscal quarter subsequent to the fiscal quarter ended September 30,
2005, plus (c) 50% of the net proceeds from
any equity offerings of the Borrower from and after September 30,
2005.  Notwithstanding the foregoing, in the event that the Borrower shall at
any time engage in an Acquisition with a purchase price (determined under GAAP)
equaling or exceeding $100,000,000, the minimum Consolidated Tangible Net Worth
requirement shall be adjusted to the sum of (i) 80% of Consolidated
Tangible Net Worth at the end of the fiscal quarter in which the closing of
such Acquisition occurs, plus (ii) an
amount equal to 50% of the Consolidated Net Income (without deduction for
losses sustained in any fiscal quarter) for each fiscal quarter subsequent to
the closing of such Acquisition, plus (iii) 50%
of the net proceeds received by the Borrower for any capital stock issued after
the closing of such Acquisition.


 


6.25         Leverage Ratio. 
The Borrower shall not permit the Leverage Ratio at any time to exceed
60%.


 


6.26         Minimum Interest Coverage.  The Borrower shall not permit the ratio of (a) EBITDA
to (b) Consolidated Interest Incurred, for any period consisting of the
preceding four fiscal quarters, to be less than 2.0 to 1.0 at any time.


 


6.27         Senior Permitted Debt Not to Exceed Borrowing Base.  As of the end of the first fiscal quarter
that is at least thirty days after the date on which the Borrower does not have
an Investment Grade Rating from at least one of Moody’s or S&P and
thereafter for so long as the Borrower does not have an Investment Grade Rating
from at least one of Moody’s or S&P, the Borrower shall not permit Senior
Permitted Debt to exceed the Borrowing Base.


 


6.28         Limitation on Housing Inventory.  As of the end of the first fiscal quarter
that is at least thirty days after the date on which the Borrower does not have
an Investment Grade Rating from at least one of Moody’s or S&P and
thereafter for so long as the Borrower does not have an Investment Grade Rating
from at least one of Moody’s or S&P, the Borrower shall not permit the
aggregate unit number of Unsold Housing Inventory of the Borrower and
Guarantors on a


 


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combined basis at
any time to exceed the greater of:  (a) 50%
of homes delivered by the Borrower and Guarantors during the immediately
preceding twelve (12) months; or (b) 70% of the homes delivered by the
Borrower and Guarantors during the immediately preceding six (6) months.


 


6.29         Limitations
on Land Inventory.  As of the end of
the first fiscal quarter that is at least thirty days after the date on which
the Borrower does not have an Investment Grade Rating from at least one of
Moody’s or S&P and thereafter for so long as the Borrower does not have an
Investment Grade Rating from at least one of Moody’s or S&P, the Borrower
shall not permit the ratio of (1) the sum of the book value of (A) Unsold
Finished Lots, (B) Unsold Land Under Development, and (C) Unsold Raw
Land of the Borrower and Guarantors to (2) Consolidated Tangible Net Worth
to exceed 1.0 to 1.0 at any time.


 


ARTICLE VII


 


DEFAULTS


 


The occurrence of any one
or more of the following events shall constitute a Default:


 


7.1           Any
representation or warranty made or deemed made by or on behalf of the Borrower
or any of its Subsidiaries to the Lenders, any LC Issuer or the Agent under or
in connection with this Agreement, any Credit Extension, or any certificate or
information delivered in connection with this Agreement or any other Loan
Document shall be materially false on the date as of which made.


 


7.2           Nonpayment
of principal of any Loan or any Reimbursement Obligation when due; or
nonpayment of interest upon any Loan within five (5) days of the date when
due; or nonpayment or of any Commitment Fee, LC Fee or other payment under any
of the Loan Documents within five (5) days after the same becomes due
(following receipt of an accurate invoice).


 


7.3           The
breach by the Borrower of any of the terms or provisions of Section 6.14,
6.18, 6.20, 6.22, 6.24, 6.25, 6.26, 6.27, 6.28 or 6.29.


 


7.4           The
breach by the Borrower (other than a breach which constitutes a Default under
another Section of this Article VII) of any of the terms or
provisions of this Agreement which is not remedied within thirty (30) days.


 


7.5           Failure
of the Borrower or any of its Restricted Subsidiaries to pay when due any
Material Indebtedness (beyond the applicable grace period (not to exceed
fifteen (15) days) with respect thereto, if any); or the default by the
Borrower or any of its Restricted Subsidiaries in the performance of any term,
provision or condition contained in any Material Indebtedness Agreement or any
other event shall occur or condition exist, the effect of which default, event or
condition is to cause, or to permit the holder(s) of such Material Indebtedness
or the lender(s) under any Material Indebtedness Agreement to cause, such
Material Indebtedness to become due prior to its stated maturity or any
commitment to lend under any Material Indebtedness Agreement to be terminated
prior to its stated expiration date or any Material Indebtedness of the
Borrower or any of its Restricted Subsidiaries shall be declared to be due and
payable or the


 


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repurchase,
prepayment, defeasance or redemption thereof shall be required prior to the
stated maturity thereof; provided that
the failure by Ryland Mortgage Company or any of its Subsidiaries that is a
Restricted Subsidiary to pay any such Indebtedness 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 that is a Restricted Subsidiary
backing obligations under master servicing agreements shall not constitute a
Default under this Section 7.5 until the date which is 90 days after the
date on which such reimbursement obligations become due and payable; or the
Borrower or any of its Restricted Subsidiaries shall not pay, or shall admit in
writing its inability to pay, its debts generally as they become due.


 


7.6           The
Borrower or any of its Restricted Subsidiaries shall (i) have an order for
relief entered with respect to it under the Federal bankruptcy laws as now or
hereafter in effect, (ii) make an assignment for the benefit of creditors,
(iii) apply for, seek, consent to, or acquiesce in, the appointment of a
receiver, custodian, trustee, examiner, liquidator or similar official for it
or any Substantial Portion of its Property, (iv) institute any proceeding
seeking an order for relief under the Federal bankruptcy laws as now or
hereafter in effect or seeking to adjudicate it a bankrupt or insolvent, or
seeking dissolution, winding up, liquidation, reorganization, arrangement,
adjustment or composition of it or its debts under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors or fail to file
an answer or other pleading denying the material allegations of any such
proceeding filed against it, (v) take any corporate or partnership action
to authorize or effect any of the foregoing actions set forth in this Section 7.6
or (vi) fail to contest in good faith any appointment or proceeding
described in Section 7.7.


 


7.7           Without
the application, approval or consent of the Borrower or any of its Restricted
Subsidiaries, a receiver, trustee, examiner, liquidator or similar official
shall be appointed for the Borrower or any of its Restricted Subsidiaries or
any Substantial Portion of its Property, or a proceeding described in Section 7.6(iv) shall
be instituted against the Borrower or any of its Restricted Subsidiaries and
such appointment continues undischarged or such proceeding continues
undismissed or unstayed for a period of 60 consecutive days.


 


7.8           Any
court, government or governmental agency shall condemn, seize or otherwise
appropriate, or take custody or control of, all or any portion of the Property
of the Borrower and its Subsidiaries which, when taken together with all other
Property of the Borrower and its Subsidiaries so condemned, seized,
appropriated, or taken custody or control of, during the twelve-month period
ending with the month in which any such action occurs, constitutes a
Substantial Portion.


 


7.9           The
Borrower or any of its Subsidiaries shall fail within 30 days to pay, bond or
otherwise discharge one or more judgments or orders for the payment of money in
excess of $10,000,000.


 


7.10         Any
Change in Control shall occur.


 


7.11         The
Borrower or any of its Subsidiaries shall (i) be the subject of any
proceeding pertaining to the release by the Borrower, any of its Subsidiaries
or any other Person of any Materials of Environmental Concern into the
environment, or (ii) violate any Environmental


 


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Law, which, in the
case of an event described in clause (i) or clause (ii), could reasonably
be expected to have a Material Adverse Effect.


 


7.12         The
occurrence of any “default”, as defined in any Loan Document (other than this
Agreement) or the breach of any of the terms or provisions of any Loan Document
(other than this Agreement), which default or breach continues beyond any
period of grace therein provided.


 


7.13         Except
for the release of any Guarantor pursuant to Section 6.9, (a) any
Guaranty shall fail to remain in full force or effect or any action shall be
taken to discontinue or to assert the invalidity or unenforceability of any
Guaranty, (b) any Guarantor shall fail to comply with any of the terms or
provisions of any Guaranty to which it is a party, or (c) any Guarantor
shall deny that it has any further liability under any Guaranty to which it is
a party, or shall give notice to such effect.


 


7.14         Any
one or more of the following occurs at any time from and after the date on
which the Borrower or any member of the Controlled Group shall establish,
become a party to or have any liability under any Plan:  (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 Borrower 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 Borrower 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.


 


7.15         The
Borrower 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.


 


ARTICLE VIII


 


ACCELERATION,
WAIVERS, AMENDMENTS AND REMEDIES


 


8.1           Acceleration;
Facility LC Collateral Account.  (i) If
any Default described in Section 7.6 or 7.7 occurs with respect to the
Borrower, the obligations of the Lenders to make Loans hereunder and the
obligation and power of the LC Issuers to issue Facility LCs shall
automatically terminate and the Obligations shall immediately become due and
payable without any election or action on the part of the Agent or any Lender
or LC Issuer and the Borrower will


 


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be and become
thereby unconditionally obligated, without any notice, act or demand, to pay to
the Agent in immediately available funds the amount required to be paid
pursuant to Section 2.19.12.  If any
other Default occurs, the Required Lenders (or the Agent with the consent of
the Required Lenders) may (a) terminate or suspend the obligations of the
Lenders to make Loans hereunder and the obligation and power of LC Issuers to
issue Facility LCs, or declare the Obligations to be due and payable, or both,
whereupon the Obligations shall become immediately due and payable, without
presentment, demand, protest or notice of any kind, all of which the Borrower
hereby expressly waives, and (b) upon notice to the Borrower and in
addition to the continuing right to demand payment of all amounts payable under
this Agreement, make demand on the Borrower to pay, and the Borrower will,
forthwith upon such demand and without any further notice or act, pay to the
Agent the amount required to be paid pursuant to Section 2.19.12.


 


(ii)           If,
within 30 days after acceleration of the maturity of the Obligations or
termination of the obligations of the Lenders to make Loans and the obligation
and power of the LC Issuers to issue Facility LCs hereunder as a result of any
Default (other than any Default as described in Section 7.6 or 7.7 with
respect to the Borrower) and before any judgment or decree for the payment of
the Obligations due shall have been obtained or entered, the Required Lenders
(in their sole discretion) shall so direct, the Agent shall, by notice to the
Borrower, rescind and annul such acceleration and/or termination.


 


8.2           Amendments. 
Subject to the provisions of this Section 8.2, the Required Lenders
(or the Agent with the consent in writing of the Required Lenders) and the
Borrower may enter into agreements supplemental hereto for the purpose of
adding or modifying any provisions to the Loan Documents or changing in any
manner the rights of the Lenders or the Borrower hereunder or waiving any
Default hereunder; provided, however, that no such
supplemental agreement shall, without the consent of all of the Lenders:


 


(i)                                     Extend
the final maturity of any Loan or extend the expiry date of any Facility LC to
a date after the Facility Termination Date or forgive all or any portion of the
principal amount of any Loan or Reimbursement Obligation, or reduce the rate or
extend the time of payment of interest or fees on any Loan or Reimbursement
Obligation;


 


(ii)                                  Reduce
the percentage specified in the definition of Required Lenders;


 


(iii)                               Extend the Facility
Termination Date (except as provided in Section 2.20) or increase the
amount of the Aggregate Commitment or of the Commitment of any Lender hereunder
or the commitment to issue Facility LCs (except as provided in Section 2.5.3),
or permit the Borrower to assign its rights under this Agreement;


 


(iv)                              Amend
this Section 8.2;


 


(v)                                 Release
any Guarantor (except as provided in Section 6.9(b)); or


 


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(vi)                              Release
any collateral from the Facility LC Collateral Account (except as provided in Section 2.19.12
or 2.20(c)).


 


No amendment of any
provision of this Agreement relating to the Agent shall be effective without
the written consent of the Agent.  No
amendment of any provision of this Agreement relating to the Swing Line Lender
shall be effective without the written consent of the Swing Line Lender.  No amendment of any provision of the
Agreement relating to the LC Issuers shall be effective without the written
consent of the LC Issuers affected thereby. 
The Agent may waive payment of the fee required under Section 12.1(b)(ii)(C)
without obtaining the consent of any other party to this Agreement.


 


8.3           Preservation of Rights.  No delay or omission of the Lenders, the LC
Issuers or the Agent to exercise any right under the Loan Documents shall
impair such right or be construed to be a waiver of any Default or an
acquiescence therein, and the making of a Credit Extension notwithstanding the
existence of a Default or the inability of the Borrower to satisfy the
conditions precedent to such Credit Extension shall not constitute any waiver
or acquiescence.  Any single or partial
exercise of any such right shall not preclude other or further exercise thereof
or the exercise of any other right, and no waiver, amendment or other variation
of the terms, conditions or provisions of the Loan Documents whatsoever shall
be valid unless in writing signed by the Lenders required pursuant to Section 8.2,
and then only to the extent in such writing specifically set forth.  All remedies contained in the Loan Documents
or by law afforded shall be cumulative and all shall be available to the Agent,
the Lenders and the LC Issuers until the Obligations have been paid in full.


 


ARTICLE IX


 


GENERAL PROVISIONS


 


9.1           Survival of Representations.  All representations and warranties of the
Borrower contained in this Agreement shall survive the making of the Credit
Extensions herein contemplated.


 


9.2           Governmental Regulation.  Anything contained in this Agreement to the
contrary notwithstanding, no Lender or LC Issuer shall be obligated to extend
credit to the Borrower in violation of any limitation or prohibition provided
by any applicable Law.


 


9.3           Headings.  Section headings
in the Loan Documents are for convenience of reference only, and shall not
govern the interpretation of any of the provisions of the Loan Documents.


 


9.4           Entire Agreement. 
The Loan Documents embody the entire agreement and understanding among
the Borrower, the Agent, the Lenders and the LC Issuers and supersede all prior
agreements and understandings among the Borrower, the Agent, the Lenders and
the LC Issuers relating to the subject matter thereof other than those
contained in the fee letter described in Section 10.13 which shall survive
and remain in full force and effect during the term of this Agreement.


 


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9.5           Several Obligations; Benefits of this Agreement.  The respective obligations of the Lenders
hereunder are several and not joint and no Lender shall be the partner or agent
of any other (except to the extent to which the Agent is authorized to act as
such).  The failure of any Lender to
perform any of its obligations hereunder shall not relieve any other Lender
from any of its obligations hereunder. 
This Agreement shall not be construed so as to confer any right or
benefit upon any Person other than the parties to this Agreement and their
respective successors and assigns, provided,
however, that the parties hereto
expressly agree that the Arranger shall enjoy the benefits of the provisions of
Sections 9.6, 9.10 and 10.11 to the extent specifically set forth therein and
shall have the right to enforce such provisions on its own behalf and in its
own name to the same extent as if it were a party to this Agreement.


 


9.6           Expenses; Indemnification.  (i)  The Borrower shall reimburse the
Agent and the Arranger for any costs, internal charges and out-of-pocket
expenses (including attorneys’ fees and time charges of attorneys for the Agent,
which attorneys may be employees of the Agent) paid or incurred by the Agent or
the Arranger in connection with the preparation, negotiation, execution,
delivery, syndication, distribution (including, without limitation, via the
internet), review, amendment, modification, and administration of the Loan
Documents.  The Borrower also agrees to
reimburse the Agent, the Arranger, the Lenders and the LC Issuers for any
costs, internal charges and out-of-pocket expenses (including attorneys’ fees
and time charges of attorneys for the Agent, the Arranger, the Lenders and the
LC Issuers which attorneys may be employees of the Agent, the Arranger, the
Lenders and the LC Issuers) paid or incurred by the Agent, the Arranger, any
Lender or LC Issuer in connection with the collection and enforcement of the
Loan Documents (including any workout or restructuring).  Expenses being reimbursed by the Borrower
under this Section include, without limitation, costs and expenses
incurred in connection with the Reports described in the following
sentence.  The Borrower acknowledges that
from time to time JPMorgan Chase Bank may prepare and may distribute to the
Lenders (but shall have no obligation or duty to prepare or to distribute to the
Lenders) certain audit reports (the “Reports”) pertaining to the Borrower’s
assets for internal use by JPMorgan Chase Bank from information furnished to it
by or on behalf of the Borrower, after JPMorgan Chase Bank has exercised its
rights of inspection pursuant to this Agreement.


 


(ii)           The
Borrower hereby further agrees to indemnify the Agent, the Arranger, each
Lender, each LC Issuer, their respective Related Parties against all losses,
claims, damages, penalties, judgments, liabilities and expenses (including,
without limitation, all expenses of litigation or preparation therefor whether
or not the Agent, the Arranger, any Lender or LC Issuer or any affiliate is a
party thereto) which any of them may pay or incur arising out of or relating to
this Agreement, the other Loan Documents, the transactions contemplated hereby
or the direct or indirect application or proposed application of the proceeds
of any Credit Extension hereunder except to the extent that they are determined
in a final non-appealable judgment by a court of competent jurisdiction to have
resulted from the gross negligence or willful misconduct of, or breach of its
obligations under this Agreement by, the party seeking indemnification.  The obligations of the Borrower under this Section 9.6
shall survive the termination of this Agreement.


 


9.7           Numbers of Documents.  All statements, notices, closing documents,
and requests hereunder shall be furnished to the Agent with sufficient
counterparts so that the Agent may


 


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furnish one to each
of the Lenders, and the Agent shall promptly furnish the same to each of the
Lenders.


 


9.8           Accounting. 
Except as provided to the contrary herein, all accounting terms used
herein shall be interpreted and all accounting determinations hereunder shall be
made in accordance with GAAP in a manner consistent with that used in preparing
the financial statements referred to in Section 5.4, provided, that, for
purposes of determining compliance with the financial covenants contained in
Article VI, the application of Financial Accounting Standards Board
Interpretation No. 46 shall be disregarded with respect to financial
consolidation of any Person that is not a Subsidiary.  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 the Borrower, the Agent or the Required Lenders shall so
request, the Agent, the Lenders and the Borrower 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, such ratio or requirement shall continue to be computed in
accordance with GAAP prior to such change therein and the Borrower shall provide
to the Agent and the Lenders reconciliation statements showing the difference
in such calculation, together with the delivery of quarterly and annual
financial statements required hereunder.


 


9.9           Severability of Provisions.  Any provision in any Loan Document that is
held to be inoperative, unenforceable, or invalid in any jurisdiction shall, as
to that jurisdiction, be inoperative, unenforceable, or invalid without
affecting the remaining provisions in that jurisdiction or the operation,
enforceability, or validity of that provision in any other jurisdiction, and to
this end the provisions of all Loan Documents are declared to be severable.


 


9.10         Nonliability of Lenders.  The relationship between the Borrower on the
one hand and the Lenders, the LC Issuers and the Agent on the other hand shall
be solely that of borrower and lender. 
Neither the Agent, the Arranger nor any Lender or LC Issuer shall have
any fiduciary responsibilities to the Borrower. 
Neither the Agent, the Arranger nor any Lender or LC Issuer undertakes
any responsibility to the Borrower to review or inform the Borrower of any
matter in connection with any phase of the Borrower’s business or
operations.  The Borrower agrees that
neither the Agent, the Arranger nor any Lender or LC Issuer shall have
liability to the Borrower (whether sounding in tort, contract or otherwise) for
losses suffered by the Borrower in connection with, arising out of, or in any
way related to, the transactions contemplated and the relationship established
by the Loan Documents, or any act, omission or event occurring in connection
therewith, unless it is determined in a final non-appealable judgment by a
court of competent jurisdiction that such losses resulted from the gross
negligence or willful misconduct of the party from which recovery is
sought.  Neither the Agent, the Arranger
nor any Lender or LC Issuer shall have any liability with respect to, and the
Borrower hereby waives, releases and agrees not to sue for, any special,
indirect, consequential or punitive damages suffered by the Borrower in
connection with, arising out of, or in any way related to the Loan Documents or
the transactions contemplated thereby.


 


9.11         Confidentiality. 
The Agent and each Lender agrees to hold any confidential information
which it may receive from the Borrower in connection with this Agreement in
confidence, except for disclosure (i) to its Affiliates and to the Agent
and any other Lender and


 


67





















 


their respective
Affiliates, (ii) to legal counsel, accountants, and other professional
advisors to such Lender or to a Transferee, (iii) to regulatory officials,
(iv) to any Person as requested pursuant to or as required by law,
regulation, or legal process, (v) to any Person in connection with any
legal proceeding to which it is a party, (vi) to its direct or indirect
contractual counterparties in swap agreements or to legal counsel, accountants
and other professional advisors to such counterparties, (vii) permitted by
Section 12.4, and (viii) to rating agencies if requested or required
by such agencies in connection with a rating relating to the Advances
hereunder.  Without limiting Section 9.4,
the Borrower agrees that the terms of this Section 9.11 shall set forth
the entire agreement between the Borrower and each Lender (including the Agent)
with respect to any confidential information previously or hereafter received
by such Lender in connection with this Agreement, and this Section 9.11
shall supersede any and all prior confidentiality agreements entered into by
such Lender with respect to such confidential information.


 


9.12         Nonreliance. 
Each Lender hereby represents that it is not relying on or looking to
any margin stock (as defined in Regulation U of the Fed. Board) for the repayment
of the Credit Extensions provided for herein.


 


9.13         Disclosure. 
The Borrower and each Lender hereby acknowledge and agree that JP Morgan
Chase Bank and/or its Affiliates from time to time may hold investments in,
make other loans to or have other relationships with the Borrower and its
Affiliates.


 


9.14         USA PATRIOT Act. 
Each Lender that is subject to the requirements of the USA Patriot Act
(Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Act”)
hereby notifies the Borrower that pursuant to the requirements of the Act, it
is required to obtain, verify and record information that identifies the
Borrower, which information includes the name and address of the Borrower and
other information that will allow such Lender to identify the Borrower in
accordance with the Act and is or may be required (or may elect) to obtain
comparable information with respect to the Guarantors.


 


ARTICLE X


 


THE AGENT


 


10.1         Appointment; Nature of Relationship.  JPMorgan Chase Bank is hereby appointed by
each of the Lenders as its contractual representative (herein referred to as
the “Agent”) hereunder and under each other Loan Document, and each of the
Lenders irrevocably authorizes the Agent to act as the contractual
representative of such Lender with the rights and duties expressly set forth
herein and in the other Loan Documents. 
The Agent agrees to act as such contractual representative upon the
express conditions contained in this Article X.  Notwithstanding the use of the defined term “Agent,”
it is expressly understood and agreed that the Agent shall not have any
fiduciary responsibilities to any Lender by reason of this Agreement or any
other Loan Document and that the Agent is merely acting as the contractual
representative of the Lenders with only those duties as are expressly set forth
in this Agreement and the other Loan Documents. 
In its capacity as the Lenders’ contractual representative, the Agent (i) does
not hereby assume any fiduciary duties to any of the Lenders, (ii) is a “representative”
of the Lenders within the meaning of the term “secured party” as defined in the
New York Uniform


 


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Commercial Code
and (iii) is acting as an independent contractor, the rights and duties of
which are limited to those expressly set forth in this Agreement and the other
Loan Documents.  Each of the Lenders
hereby agrees to assert no claim against the Agent on any agency theory or any
other theory of liability for breach of fiduciary duty, all of which claims each
Lender hereby waives.


 


10.2         Powers. 
The Agent shall have and may exercise such powers under the Loan
Documents as are specifically delegated to the Agent by the terms of each
thereof, together with such powers as are reasonably incidental thereto.  The Agent shall have no implied duties to the
Lenders, or any obligation to the Lenders to take any action thereunder except
any action specifically provided by the Loan Documents to be taken by the
Agent.


 


10.3         General Immunity. 
Neither the Agent nor any of its directors, officers, agents or
employees shall be liable to the Borrower, the Lenders or any Lender for any
action taken or omitted to be taken by it or them hereunder or under any other
Loan Document or in connection herewith or therewith except to the extent such
action or inaction is determined in a final non-appealable judgment by a court
of competent jurisdiction to have arisen from the gross negligence or willful
misconduct of such Person.


 


10.4         No Responsibility for Loans, Recitals, etc.  Neither the Agent nor any of its directors,
officers, agents or employees shall be responsible for or have any duty to
ascertain, inquire into, or verify (a) any statement, warranty or
representation made in connection with any Loan Document or any borrowing hereunder;
(b) the performance or observance of any of the covenants or agreements of
any obligor under any Loan Document, including, without limitation, any
agreement by an obligor to furnish information directly to each Lender; (c) the
satisfaction of any condition specified in Article IV, except receipt of
items required to be delivered solely to the Agent; (d) the existence or
possible existence of any Default or Unmatured Default; (e) the validity,
enforceability, effectiveness, sufficiency or genuineness of any Loan Document
or any other instrument or writing furnished in connection therewith; (f) the
value, sufficiency, creation, perfection or priority of any Lien in any
collateral security; or (g) the financial condition of the Borrower or any
Subsidiary.


 


10.5         Action on Instructions of Lenders.  The Agent shall in all cases be fully
protected in acting, or in refraining from acting, hereunder and under any
other Loan Document in accordance with written instructions signed by the
Required Lenders, and such instructions and any action taken or failure to act
pursuant thereto shall be binding on all of the Lenders.  The Lenders hereby acknowledge that the Agent
shall be under no duty to take any discretionary action permitted to be taken
by it pursuant to the provisions of this Agreement or any other Loan Document
unless it shall be requested in writing to do so by the Required Lenders.  The Agent shall be fully justified in failing
or refusing to take any action hereunder and under any other Loan Document unless
it shall first be indemnified to its satisfaction by the Lenders pro rata
against any and all liability, cost and expense that it may incur by reason of
taking or continuing to take any such action.


 


10.6         Employment of Agents and Counsel.  The Agent may execute any of its duties as
Agent hereunder and under any other Loan Document by or through employees,
agents, and attorneys-in-fact and shall not be answerable to the Lenders,
except as to money or securities


 


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received by it or
its authorized agents, for the default or misconduct of any such agents or
attorneys-in-fact selected by it with reasonable care.  The Agent shall be entitled to advice of
counsel concerning the contractual arrangement between the Agent and the
Lenders and all matters pertaining to the Agent’s duties hereunder and under
any other Loan Document.


 


10.7         Reliance on Documents; Counsel.  The Agent shall be entitled to rely upon any
Note, notice, consent, certificate, affidavit, letter, telegram, facsimile,
telex, electronic mail message, statement, paper or document believed by it in
good faith to be genuine and correct and to have been signed or sent by the
proper person or persons, and, in respect to legal matters, upon the opinion of
counsel selected by the Agent, which counsel may be employees of the
Agent.  For purposes of determining
compliance with the conditions specified in Sections 4.1 and 4.2, 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 Agent shall have received notice from such Lender prior to
the applicable date specifying its objection thereto.


 


10.8         Agent’s Reimbursement and Indemnification.  The Lenders agree to reimburse and indemnify
the Agent ratably in proportion to their respective Commitments (or, if the
Commitments have been terminated, in proportion to their Commitments
immediately prior to such termination) (i) for any amounts not reimbursed
by the Borrower for which the Agent is entitled to reimbursement by the
Borrower under the Loan Documents (but without limiting the Borrower’s
obligation to do so), (ii) for any other expenses incurred by the Agent on
behalf of the Lenders, in connection with the preparation, execution, delivery,
administration and enforcement of the Loan Documents (including, without
limitation, for any expenses incurred by the Agent in connection with any
dispute between the Agent and any Lender or between two or more of the Lenders)
and (iii) for any liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind and
nature whatsoever which may be imposed on, incurred by or asserted against the
Agent in any way relating to or arising out of the Loan Documents or any other
document delivered in connection therewith or the transactions contemplated
thereby (including, without limitation, for any such amounts incurred by or
asserted against the Agent in connection with any dispute between the Agent and
any Lender or between two or more of the Lenders), or the enforcement of any of
the terms of the Loan Documents or of any such other documents, provided that (i) no Lender
shall be liable for any of the foregoing to the extent any of the foregoing is
found in a final non-appealable judgment by a court of competent jurisdiction
to have resulted from the gross negligence or willful misconduct of the Agent, (ii) any
indemnification required pursuant to Section 3.5(vii) shall,
notwithstanding the provisions of this Section 10.8, be paid by the
relevant Lender in accordance with the provisions thereof and (iii) no
Lender shall have any obligation to indemnify or reimburse the Agent with
respect to defaults by Borrower under any fee letter.  The obligations of the Lenders under this Section 10.8
shall survive payment of the Obligations and termination of this Agreement.


 


10.9         Notice of Default.  The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Unmatured Default
hereunder (other than the Borrower’s failure to make a payment of principal,
interest or fees required to be made to the Agent hereunder) unless the Agent
has received written notice from a Lender or the Borrower referring to this
Agreement describing such Default or Unmatured Default and stating that such
notice is a


 


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“notice of default”.  In the event that the Agent receives such a
notice, the Agent shall give prompt notice thereof to the Lenders.


 


10.10       Rights as a Lender.  In the event the Agent is a Lender, the Agent
shall have the same rights and powers hereunder and under any other Loan
Document with respect to its Commitment and its Loans as any Lender and may
exercise the same as though it were not the Agent, and the term “Lender” or “Lenders”
shall, at any time when the Agent is a Lender, unless the context otherwise
indicates, include the Agent in its individual capacity.  The Agent and its Affiliates may accept
deposits from, lend money to, and generally engage in any kind of trust, debt,
equity or other transaction, in addition to those contemplated by this
Agreement or any other Loan Document, with the Borrower or any of its
Subsidiaries in which the Borrower or such Subsidiary is not restricted hereby
from engaging with any other Person.


 


10.11       Lender Credit Decision.  Each Lender acknowledges that it has,
independently and without reliance upon the Agent, the Arranger or any other
Lender and based on the financial statements prepared by the Borrower and such
other documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement and the other Loan
Documents.  Each Lender also acknowledges
that it will, independently and without reliance upon the Agent, the Arranger
or any other Lender and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Agreement and the other Loan
Documents.  Except for any notice,
report, document or other information expressly required to be furnished to the
Lenders by the Agent or Arranger hereunder, neither the Agent nor the Arranger
shall have any duty or responsibility (either initially or on a continuing
basis) to provide any Lender with any notice, report, document, credit
information or other information concerning the affairs, financial condition or
business of the Borrower or any of its Affiliates that may come into the
possession of the Agent or Arranger (whether or not in their respective
capacity as Agent or Arranger) or any of their Affiliates.


 


10.12       Successor Agent. 
The Agent may resign at any time by giving written notice thereof to the
Lenders and the Borrower, such resignation to be effective upon the appointment
of a successor Agent or, if no successor Agent has been appointed, forty-five
days after the retiring Agent gives notice of its intention to resign.  The Agent may be removed at any time with or
without cause by written notice received by the Agent from the Required
Lenders, such removal to be effective on the date specified by the Required
Lenders.  Upon any such resignation or
removal, the Required Lenders shall have the right to appoint, on behalf of the
Borrower and the Lenders, a successor Agent. 
If no successor Agent shall have been so appointed by the Required
Lenders within thirty days after the resigning Agent’s giving notice of its
intention to resign, then the resigning Agent may appoint, on behalf of the
Borrower and the Lenders, a successor Agent. 
Notwithstanding the previous sentence, the Agent may at any time without
the consent of the Borrower or any Lender, appoint any of its Affiliates which
is a commercial bank as a successor Agent hereunder.  If the Agent has resigned or been removed and
no successor Agent has been appointed, the Lenders may perform all the duties
of the Agent hereunder and the Borrower shall make all payments in respect of
the Obligations to the applicable Lender and for all other purposes shall deal
directly with the Lenders.  No successor
Agent shall be deemed to be appointed hereunder until such successor Agent has accepted
the appointment.  Any such successor
Agent shall be a commercial bank having capital and retained


 


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earnings of at
least $100,000,000.  Upon the acceptance
of any appointment as Agent hereunder by a successor Agent, such successor
Agent shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the resigning or removed Agent.  Upon the effectiveness of the resignation or
removal of the Agent, the resigning or removed Agent shall be discharged from
its duties and obligations hereunder and under the Loan Documents.  After the effectiveness of the resignation or
removal of an Agent, the provisions of this Article X shall continue in
effect for the benefit of such Agent in respect of any actions taken or omitted
to be taken by it while it was acting as the Agent hereunder and under the
other Loan Documents.  In the event that
there is a successor to the Agent by merger, or the Agent assigns its duties
and obligations to an Affiliate pursuant to this Section 10.12, then the
term “Prime Rate” as used in this Agreement shall mean the prime rate, base
rate or other analogous rate of the new Agent.


 


10.13       Agent and Arranger Fees.  The Borrower agrees to pay to the Agent and
the Arranger, for their respective accounts, the fees agreed to by the
Borrower, the Agent and the Arranger pursuant to that certain letter agreement
dated November 19, 2005, or as otherwise agreed from time to time.


 


10.14       Delegation to Affiliates.  The Borrower and the Lenders agree that the
Agent may delegate any of its duties under this Agreement to any of its
Affiliates.  Any such Affiliate (and such
Affiliate’s directors, officers, agents and employees) which performs duties in
connection with this Agreement shall be entitled to the same benefits of the
indemnification, waiver and other protective provisions to which the Agent is
entitled under Articles IX and X.


 


10.15       Co-Agent, Documentation Agent, Managing Agent, Syndication
Agent, etc.  Neither any of
the Lenders identified in this Agreement as a co-agent, documentation agent,
managing agent or syndication agent shall have any right, power, obligation,
liability, responsibility or duty under this Agreement other than those
applicable to all Lenders as such. 
Without limiting the foregoing, none of such Lenders shall have or be
deemed to have a fiduciary relationship with any Lender.  Each Lender hereby makes the same acknowledgments
with respect to such Lenders as it makes with respect to the Agent in Section 10.11.


 


ARTICLE XI


 


SETOFF; RATABLE
PAYMENTS


 


11.1         Setoff.  In
addition to, and without limitation of, any rights of the Lenders under
applicable law, if the Borrower becomes insolvent, however evidenced, or any
Default occurs, any and all deposits (including all account balances, whether
provisional or final and whether or not collected or available) and any other
Indebtedness at any time held or owing by any Lender or any Affiliate of any
Lender to or for the credit or account of the Borrower may be offset and
applied toward the payment of the Obligations owing to such Lender, whether or
not the Obligations, or any part thereof, shall then be due.


 


11.2         Ratable Payments. 
If any Lender, whether by setoff or otherwise, has payment made to it upon
its Revolving Credit Exposure (other than payments received pursuant to Section 3.1,
3.2, 3.4 or 3.5) in a greater proportion than that received by any other
Lender, such Lender agrees, promptly upon demand, to purchase a portion of the
Aggregate Credit Exposure held by


 


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the other Lenders
so that after such purchase each Lender will hold its Pro Rata Share of the
Aggregate Credit Exposure.  If any
Lender, whether in connection with setoff or amounts which might be subject to
setoff or otherwise, receives collateral or other protection for its
Obligations or such amounts which may be subject to setoff, such Lender agrees,
promptly upon demand, to take such action necessary such that all Lenders share
in the benefits of such collateral ratably in proportion to their respective
Pro Rata Shares of the Revolving Credit Exposure.  In case any such payment is disturbed by
legal process, or otherwise, appropriate further adjustments shall be made.


 


ARTICLE XII


 


BENEFIT OF
AGREEMENT; ASSIGNMENTS; PARTICIPATIONS


 


12.1         Successors and Assigns.  (a)  The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns permitted hereby (including any Affiliate of
an LC Issuer that issues any Facility LC), except that (i) other than
pursuant to a merger consented to by the Required Lenders, the Borrower may not
assign or otherwise transfer any of its rights or obligations hereunder without
the prior written consent of each Lender (and any attempted assignment or
transfer by the Borrower without such consent shall be null and void) and (ii) no
Lender may assign or otherwise transfer its rights or obligations hereunder
except in accordance with 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 (including any Affiliate of an LC
Issuer that issues any Facility LC), Participants (to the extent provided in Section 12.2)
and, to the extent expressly contemplated hereby, the Arranger and the Related
Parties of each of the Agent, the LC Issuers and the Lenders) any legal or
equitable right, remedy or claim under or by reason of this Agreement.


 


(b)           (i) 
Subject to the conditions set forth in paragraph (b)(ii) below, any Lender
may assign to one or more assignees all or a portion of its rights and
obligations under this Agreement (including all or a portion of its Commitment
and the Loans at the time owing to it) with the prior written consent (such
consent not to be unreasonably withheld or delayed) of:


 


(A)          the
Borrower, provided that no consent of the
Borrower shall be required for an assignment to a Lender, an Affiliate of a
Lender, an Approved Fund or, if a Default has occurred and is continuing, any
other assignee; and


 


(B)           the
Agent, provided that no consent of the Agent shall be required for an
assignment of any Commitment to an assignee that is a Lender, an Affiliate of a
Lender or an Approved Fund.


 


(ii)           Assignments
shall be subject to the following additional conditions:


 


(A)          except
in the case of an assignment to a Lender or an Affiliate of a Lender or an
assignment of the entire remaining amount of the assigning Lender’s Commitment
or Loans of any Class, the amount of the Commitment or Loans of the assigning
Lender subject to each such assignment (determined as of the date the


 


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Assignment and
Assumption with respect to such assignment is delivered to the Agent) shall not
be less than $1,000,000 unless each of the Borrower and the Agent otherwise
consent, provided that no such consent of the Borrower shall be required if a
Default has occurred and is continuing;


 


(B)           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, provided that this clause shall not be construed
to prohibit the assignment of a proportionate part of all the assigning Lender’s
rights and obligations in respect of one Class of Commitments or Loans;


 


(C)           the
parties to each assignment shall execute and deliver to the Agent an Assignment
and Assumption, together with a processing and recordation fee of $3,500; and


 


(D)          the
assignee, if it shall not be a Lender, shall deliver to the Agent an
Administrative Questionnaire.


 


(iii)          Subject
to acceptance and recording thereof pursuant to paragraph (b)(iv) of this
Section, from and after the effective date specified in each Assignment and
Assumption the assignee thereunder shall be a party hereto and, to the extent
of the interest assigned by such Assignment and Assumption, have the rights and
obligations of a Lender under this Agreement, and the assigning Lender
thereunder shall, to the extent of the interest assigned by such Assignment and
Assumption, be released from its obligations under this Agreement (and, in the
case of an Assignment and Assumption covering all of the assigning Lender’s
rights and obligations under this Agreement, such Lender shall cease to be a
party hereto but shall continue to be entitled to the benefits of Sections
2.19.10, 2.19.11, 2.19.12, 3.1, 3.2, 3.4, 3.5, 6.8(c), 9.6 and 9.10).  Any assignment or transfer by a Lender of
rights or obligations under this Agreement that does not comply with this Section 12.1
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 Section 12.2.


 


(iv)          The
Agent, acting for this purpose as an agent of the Borrower, shall maintain at
one of its offices 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 Commitment of, and principal amount of the Loans and Reimbursement
Obligations owing to, each Lender pursuant to the terms hereof from time to
time (the “Register”).  The entries in
the Register shall be conclusive, absent manifest error, and the Borrower, the
Agent, the LC Issuer 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 Borrower, the LC Issuers and any Lender, at any reasonable time and from
time to time upon reasonable prior notice.


 


(v)           Upon
its receipt of a duly completed Assignment and Assumption executed by an
assigning Lender and an assignee, the assignee’s completed


 


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Administrative
Questionnaire (unless the assignee shall already be a Lender hereunder), the
processing and recordation fee referred to in paragraph (b) of this Section and
any written consent to such assignment required by paragraph (b) of this
Section, the Agent shall accept such Assignment and Assumption and record the
information contained therein in the Register; provided that if either the
assigning Lender or the assignee shall have failed to make any payment required
to be made by it pursuant to Section 2.18, 2.19.6, 2.22(d), 10.8 or 11.2,
the Agent shall have no obligation to accept such Assignment and Assumption and
record the information therein in the Register unless and until such payment
shall have been made in full, together with all accrued interest thereon.  No assignment shall be effective for purposes
of this Agreement unless it has been recorded in the Register as provided in
this paragraph.


 


12.2         Participations. 
(a) Any Lender may, without notice to or the consent of the
Borrower, the Agent, any other Lender or any LC Issuer, sell participations to
one or more banks or other entities (a “Participant”) in all or a portion of
such Lender’s rights and obligations under this Agreement (including all or a
portion of its Commitment and the Loans owing to it); provided that (i) such
Lender’s obligations under this Agreement shall remain unchanged, (ii) such
Lender shall remain solely responsible to the other parties hereto for the performance
of such obligations and (iii) the Borrower, the Agent, the 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.  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, modification or waiver described in Section 8.2
that requires the consent of all Lenders. 
Subject to paragraph (b) of this Section, the Borrower agrees that
each Participant shall be entitled to the benefits of Sections 3.1, 3.2, 3.4
and 3.5 to the same extent as if it were a Lender and had acquired its interest
by assignment pursuant to Section 12.1. 
To the extent permitted by law, each Participant also shall be entitled
to the benefits of Section 11.1 as though it were a Lender, provided such
Participant agrees to be subject to Section 11.2 as though it were a
Lender.


 


(b)           A
Participant shall not be entitled to receive any greater payment under Section 3.1,
3.2 and 3.5 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 Borrower’s prior written consent.  A Participant that would be a Non-U.S. Lender
if it were a Lender shall not be entitled to the benefits of Section 3.5
unless the Borrower is notified of the participation sold to such Participant
and such Participant agrees, for the benefit of the Borrower, to comply with Section 3.5(e) as
though it were a Lender.


 


12.3         Pledge to Federal Reserve Bank.  Any Lender may at any time pledge or assign a
security interest in all or any portion of its rights under this Agreement to
secure obligations of such Lender, including without limitation any pledge or
assignment to secure obligations to a Federal Reserve Bank, and this Section shall
not apply to any such pledge or assignment of a security interest; provided that no such pledge or assignment of a
security interest shall release a Lender from any of its obligations hereunder
or substitute any such pledgee or assignee for such Lender as a party hereto.


 


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12.4         Dissemination of Information.  The Borrower authorizes each lender to
disclose to any Participant, assignee of an interest in the Loan Documents or
any other Person acquiring an interest in the Loan Documents by operation of
law (each a “Transferee”) and any prospective Transferee any and all information
in such Lender’s possession concerning the creditworthiness of the Borrower and
its Subsidiaries, including without limitation any information contained in any
Reports; provided that each Transferee and prospective Transferee agrees to be
bound by Section 9.11 of this Agreement.


 


ARTICLE XIII


 


NOTICES


 


13.1         Notices;
Effectiveness; Electronic Communication


 


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


 


(i)            if
to the Borrower, at its address or telecopier number set forth on the signature
page hereof;


 


(ii)           if
to the Agent, at its address or telecopier number set forth on the signature page hereof;


 


(iii)          if
to a Lender, to it at its address or telecopier number set forth in its
Administrative Questionnaire.  The Agent
shall promptly furnish such information to the Borrower.


 


Notices sent by hand or
overnight courier service, or mailed by certified or registered mail, shall be
deemed to have been given when received; notices sent by telecopier shall be
deemed to have been given when sent (except that, if not given during normal
business hours for the recipient, shall be deemed to have been given at the
opening of business on the next Business Day for the recipient).  Notices delivered through electronic
communications to the extent provided in paragraph (b) below, shall be
effective as provided in said paragraph (b).


 


(b)           Electronic Communications.  Notices and other communications to the
Lenders and LC Issuers hereunder may be delivered or furnished by electronic
communication (including e-mail and internet or intranet websites) pursuant to
procedures approved by the Agent or as otherwise determined by the Agent,
provided that the foregoing shall not apply to notices to any Lender or LC
Issuer pursuant to Article II if such Lender or LC Issuer, as applicable,
has notified the Agent that it is incapable of receiving notices under such Article by
electronic communication.  The Agent or
the Borrower may, in its respective discretion, agree to accept notices and
other communications to it hereunder by electronic communications pursuant to
procedures approved by it or as it otherwise determines, provided that such
determination or approval may be limited to particular notices or communications.


 


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


 


(c)           Change of Address, Etc.  Any party hereto may change its address or
telecopier number for notices and other communications hereunder by notice to
the other parties hereto.


 


ARTICLE XIV


 


COUNTERPARTS;
INTEGRATION; EFFECTIVENESS; ELECTRONIC EXECUTION


 


14.1         Counterparts; Effectiveness.  This Agreement may be executed in
counterparts (and by different parties hereto in different counterparts), each
of which shall constitute an original, but all of which when taken together
shall constitute a single contract. 
Except as provided in Article IV, this Agreement shall become
effective when it shall have been executed by the Agent and when the Agent
shall have received counterparts hereof which, when taken together, bear the
signatures of each of the parties hereto, and thereafter shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and assigns.  Delivery of an executed
counterpart of a signature page of this Agreement by telecopy shall be
effective as delivery of a manually executed counterpart of this Agreement.


 


14.2         Electronic Execution of Assignments.  The words “execution,” “signed,” “signature,”
and words of like import in any assignment and assumption agreement shall be
deemed to include electronic signatures or the keeping of records in electronic
form, each of which shall be of the same legal effect, validity or
enforceability as a manually executed signature or the use of a paper-based
recordkeeping system, as the case may be, to the extent and as provided for in
any applicable law, including the Federal Electronic Signatures in Global and
National Commerce Act, or any other state laws based on the Uniform Electronic
Transactions Act.


 


ARTICLE XV


 


CHOICE OF LAW;
CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL


 


15.1         CHOICE OF LAW.  THE LOAN DOCUMENTS (OTHER THAN THOSE CONTAINING
A CONTRARY EXPRESS CHOICE OF LAW PROVISION) SHALL BE CONSTRUED IN ACCORDANCE
WITH THE INTERNAL LAWS (BUT WITHOUT REGARD TO THE CONFLICT OF LAWS PROVISIONS)
OF THE STATE OF NEW


 


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YORK, BUT GIVING EFFECT
TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.


 


15.2         CONSENT TO JURISDICTION.  THE BORROWER HEREBY IRREVOCABLY SUBMITS TO
THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR NEW YORK STATE
COURT SITTING IN NEW YORK, NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF
OR RELATING TO ANY LOAN DOCUMENTS AND THE BORROWER HEREBY IRREVOCABLY AGREES
THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND
DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW
OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING
BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM.  NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE
AGENT OR ANY LENDER OR LC ISSUER TO BRING PROCEEDINGS AGAINST THE BORROWER IN
THE COURTS OF ANY OTHER JURISDICTION. 
ANY JUDICIAL PROCEEDING BY THE BORROWER AGAINST THE AGENT OR ANY LENDER
OR LC ISSUER OR ANY AFFILIATE OF THE AGENT OR ANY LENDER OR LC ISSUER
INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF,
RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT SHALL BE BROUGHT ONLY IN A
COURT IN NEW YORK, NEW YORK.


 


15.3         WAIVER OF JURY TRIAL.  THE BORROWER, THE AGENT AND EACH LENDER AND
LC ISSUER HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY
OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN
ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT OR THE
RELATIONSHIP ESTABLISHED THEREUNDER.


 


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IN WITNESS WHEREOF, the
Borrower, the Lenders and the Agent have executed this Agreement as of the date
first above written.


 


 


	
   

  	
   

  	
  THE RYLAND GROUP, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   By:

  	
  /s/ Gordon A.
  Milne

  	
   

  
	
   

  	
   

  	
   

  	
  Gordon A. Milne

  
	
   

  	
   

  	
   

  	
  Executive Vice
  President and

  
	
   

  	
   

  	
   

  	
  Chief Financial
  Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  The Ryland
  Group, Inc.

  
	
   

  	
   

  	
   

  	
  24025 Park
  Sorrento, Suite 400

  
	
   

  	
   

  	
   

  	
  Calabasas, CA
  91302

  
	
   

  	
   

  	
   

  	
  Attention:
  Cathey S. Lowe

  
	
   

  	
   

  	
   

  	
  Telephone:

  	
  (818) 223-7530

  
	
   

  	
   

  	
   

  	
  FAX:

  	
  (818) 223-7685

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  With a copy to:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  The Ryland
  Group, Inc.

  
	
   

  	
   

  	
   

  	
  24025 Park
  Sorrento, Suite 400

  
	
   

  	
   

  	
   

  	
  Calabasas, CA
  91302

  
	
   

  	
   

  	
   

  	
  Attention:
  Timothy J. Geckle

  
	
   

  	
   

  	
   

  	
  Telephone:

  	
  (818) 223-7575

  
	
   

  	
   

  	
   

  	
  FAX:

  	
  (818) 223-7685

  
						



 


79





















 


SIGNATURE PAGE TO
CREDIT AGREEMENT


WITH THE RYLAND
GROUP, INC.


 


 


	
   

  	
   

  	
  JPMORGAN CHASE
  BANK, N.A.

  	
   

  
	
   

  	
   

  	
  as Agent and
  Lender

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Kent Kaiser

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Kent Kaiser

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address for
  JPMorgan Chase Bank, N.A.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  JPMorgan Chase Bank, N.A.

  
	
   

  	
   

  	
   

  	
  Loan and Agency Services Group

  
	
   

  	
   

  	
   

  	
  1111 Fannin – 8th Fl.

  
	
   

  	
   

  	
   

  	
  Houston, TX 77002

  
	
   

  	
   

  	
   

  	
  Attention: Kimberly
  Brown

  
	
   

  	
   

  	
   

  	
  Telephone:

  	
  (713) 750-2880

  
	
   

  	
   

  	
   

  	
  FAX:

  	
  (713) 750-2782

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  With a copy to:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  JPMorgan Chase Bank, N.A.

  
	
   

  	
   

  	
   

  	
  707 Travis, Floor 6, Suite TX2-NO47

  
	
   

  	
   

  	
   

  	
  Houston, TX 77002

  
	
   

  	
   

  	
   

  	
  Attention: Kent Kaiser

  
	
   

  	
   

  	
   

  	
  Telephone:

  	
  (713) 216-8699

  
	
   

  	
   

  	
   

  	
  FAX:

  	
  (713) 216-6190

  
								



 


80





















 


SIGNATURE PAGE TO
CREDIT AGREEMENT


WITH THE RYLAND
GROUP, INC.


 


	
   

  	
   

  	
  BANK OF AMERICA,
  N.A.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Mark W. Lariviere

  	
   

  
	
   

  	
   

  	
  Name:

  	
    MARK
  W. LARIVIERE

  	
   

  
	
   

  	
   

  	
  Title:

  	
       SENIOR
  VICE PRESIDENT

  	
   

  
								



 


81





















 


SIGNATURE PAGE TO CREDIT
AGREEMENT

WITH THE RYLAND GROUP, INC.


 


 


	
   

  	
   

  	
  WACHOVIA BANK, NATIONAL ASSOCIATION

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Timothy S.
  Blake

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Timothy S Blake

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  	
   

  
									



 


82





















 


SIGNATURE PAGE TO CREDIT
AGREEMENT

WITH THE RYLAND GROUP, INC.


 


 


	
   

  	
   

  	
  SUNTRUST BANK

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Gregory T. Herstman

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Gregory T. Herstman

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice
  President

  	
   

  
							



 


83





















 


SIGNATURE PAGE TO CREDIT
AGREEMENT

WITH THE RYLAND GROUP, INC.


 


 


	
   

  	
   

  	
  THE ROYAL BANK
  OF SCOTLAND PLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ David Apps

  	
   

  
	
   

  	
   

  	
  Name:

  	
  David Apps

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Managing
  Director

  	
   

  
						



 


84





















 


SIGNATURE PAGE TO CREDIT
AGREEMENT

WITH THE RYLAND GROUP, INC.


 


 


	
   

  	
   

  	
  GUARANTY BANK

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Doug Dixon

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Doug Dixon

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice
  President

  	
   

  
							



 


85





















 


SIGNATURE PAGE TO CREDIT
AGREEMENT

WITH THE RYLAND GROUP, INC.


 


 


	
   

  	
   

  	
  WASHINGTON
  MUTUAL BANK, FA

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Anne D.
  Brehony

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Anne D. Brehony

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  	
   

  
						



 


86





















 


SIGNATURE PAGE TO CREDIT
AGREEMENT

WITH THE RYLAND GROUP, INC.


 


 


	
   

  	
   

  	
  BARCLAYS BANK
  PLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ David Barton

  	
   

  
	
   

  	
   

  	
  Name:

  	
   David
  Barton

  	
   

  
	
   

  	
   

  	
  Title:

  	
      Associate
  Director

  	
   

  
								



 


87





















 


SIGNATURE PAGE TO CREDIT
AGREEMENT

WITH THE RYLAND GROUP, INC.


 


 


	
   

  	
   

  	
  CITICORP NORTH
  AMERICA, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Jeanne M.
  Craig

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Jeanne M. Craig

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  	
   

  
							



 


88





















 


SIGNATURE PAGE TO CREDIT
AGREEMENT

WITH THE RYLAND GROUP, INC.


 


 


	
   

  	
   

  	
  PNC BANK, NATIONAL
  ASSOCIATION

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Douglas G.
  Paul

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Douglas G. Paul

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice
  President

  	
   

  
							



 


89





















 


SIGNATURE PAGE TO CREDIT
AGREEMENT

WITH THE RYLAND GROUP, INC.


 


 


	
   

  	
   

  	
  UBS LOAN FINANCE LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Richard L. Tavrow

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Richard L. Tavrow

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Director

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Irja R. Otsa

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Irja R. Otsa

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Associate Director

  	
   

  
						



 


90





















 


SIGNATURE PAGE TO CREDIT
AGREEMENT

WITH THE RYLAND GROUP, INC.


 


 


	
   

  	
   

  	
  AMSOUTH BANK

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Ronny Hudspeth

  	
   

  
	
   

  	
   

  	
  Name:

  	
  RONNY HUDSPETH

  	
   

  
	
   

  	
   

  	
  Title:

  	
  SR. VICE
  PRESIDENT

  	
   

  
							



 


91





















 


SIGNATURE PAGE TO CREDIT
AGREEMENT

WITH THE RYLAND GROUP, INC.


 


 


	
   

  	
   

  	
  COMERICA BANK

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Leslie A. Vogel

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Leslie A. Vogel

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  	
   

  
							



 


92





















 


SIGNATURE PAGE TO CREDIT
AGREEMENT

WITH THE RYLAND GROUP, INC.


 


 


	
   

  	
   

  	
  CALYON NEW YORK BRANCH

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Samuel L. Hill

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Samuel L. Hill

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Managing Director

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ David Cagle

  	
   

  
	
   

  	
   

  	
  Name:

  	
  David Cagle

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Managing Director

  	
   

  
									



 


93





















 


SIGNATURE PAGE TO CREDIT
AGREEMENT

WITH THE RYLAND GROUP, INC.


 


 


	
   

  	
   

  	
  CITY NATIONAL BANK

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ James D. Nichols V.P.

  	
   

  
	
   

  	
   

  	
  Name:

  	
  James D. Nichols

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  	
   

  
						



 


94





















 


SIGNATURE PAGE TO CREDIT
AGREEMENT

WITH THE RYLAND GROUP, INC.


 


 


	
   

  	
   

  	
  THE GOVERNOR AND
  COMPANY OF 

  
	
   

  	
   

  	
  THE BANK OF IRELAND

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Gwen Evans

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Gwen Evans

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Authorised Signatory

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  /s/ Frank Schmitt

  	
   

  
	
   

  	
   

  	
   

  	
  Frank Schmitt

  	
   

  
	
   

  	
   

  	
   

  	
  Authorised Signatory

  	
   

  
						



 


95





















 


SIGNATURE PAGE TO CREDIT
AGREEMENT

WITH THE RYLAND GROUP, INC.


 


 


	
   

  	
   

  	
  CHANG HWA COMMERCIAL
  BANK,

  LTD., LOS ANGELES BRANCH

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Wen-Che Chen

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Wen-Che Chen

  	
   

  
	
   

  	
   

  	
  Title:

  	
  VP & General Manager

  	
   

  
						



 


96





















 


SIGNATURE PAGE TO CREDIT
AGREEMENT

WITH THE RYLAND GROUP, INC.


 


 


	
   

  	
   

  	
  MALAYAN BANKING BERHAD,

  NEW YORK BRANCH

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Fauzi Zulkilli

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Fauzi Zulkilli

  	
   

  
	
   

  	
   

  	
  Title:

  	
  General Manager

  	
   

  
						



 


97





















 


	
   

  	
  JPMORGAN CHASE BANK,
  N.A.,

  
	
   

  	
  Individually and as
  Agent

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
  JPMorgan Chase Bank,
  N.A.

  
	
   

  	
   

  	
  Loan and Agency
  Services Group

  
	
   

  	
   

  	
  1111 Fannin – 8th
  Fl.

  
	
   

  	
   

  	
  Houston, TX 77002

  
	
   

  	
   

  	
  Attention: Kimberly
  Brown

  
	
   

  	
   

  	
  Telephone: (713) 750-2880

  
	
   

  	
   

  	
  FAX:

  	
  (713) 750-2782

  
	
   

  	
   

  	
   

  
	
   

  	
  With a copy to:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  JPMorgan Chase Bank,
  N.A.

  
	
   

  	
   

  	
  707 Travis, Floor 6,
  Suite TX2-NO47

  
	
   

  	
   

  	
  Houston, TX 77002

  
	
   

  	
   

  	
  Attention: Kent Kaiser

  
	
   

  	
   

  	
  Telephone:

  	
  (713) 216-8699

  
	
   

  	
   

  	
  FAX:

  	
  (713) 216-6190

  
									



 


98





















 


EXHIBIT B


 


GUARANTY


 


THIS
GUARANTY (this “Guaranty”) is made as of January 12,
2006 by the undersigned parties hereto (collectively, the “Guarantors”) in
favor of the Agent, for the benefit of the Lenders under the Credit Agreement
referred to below.


 


WITNESSETH:


 


WHEREAS,
The Ryland Group, Inc., a Maryland corporation (the “Borrower”) and
JPMorgan Chase Bank, N.A., as Agent (the “Agent”), and certain other Lenders
from time to time party thereto have entered into a certain Credit Agreement
dated as of January 12, 2006 (as same may be amended or modified from time
to time, the “Credit Agreement”), providing, subject to the terms and
conditions thereof, for extensions of credit to be made by the Lenders to the
Borrower;


 


WHEREAS,
it is a condition precedent to the execution of the Credit Agreement by the
Agent and the Lenders that each of the Guarantors execute and deliver this
Guaranty whereby each of the Guarantors shall guarantee the payment when due,
subject to Section 9 hereof, of all Guaranteed Obligations, as defined
below; and


 


WHEREAS,
in consideration of the financial and other support that the Borrower has provided,
and in consideration of such financial and other support as the Borrower may in
the future provide, to the Guarantors, and in order to induce the Lenders and
the Agent to enter into the Credit Agreement, and because each Guarantor has
determined that executing this Guaranty is in its interest and to its financial
benefit, each of the Guarantors is willing to guarantee the obligations of the
Borrower under the Credit Agreement, any Note and any other Loan Documents;


 


NOW,
THEREFORE, in consideration of the premises and other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:


 


SECTION 1.           Defined Terms. “Guaranteed Obligations” is
defined in Section 3 below.  Other
capitalized terms used herein but not defined herein shall have the meaning set
forth in the Credit Agreement.


 


SECTION 2.           Representations and Warranties.  Each of the Guarantors represents and
warrants (which representations and warranties shall be deemed to have been
renewed upon each Credit Extension Date under the Credit Agreement) that:


 


(a)           Such
Guarantor has all requisite power and authority to execute and deliver, and to
perform all of its obligations under, this Guaranty.


 


(b)           The
execution and delivery by such Guarantor of, and the performance by such
Guarantor of its obligations under, this 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 of its stockholders, security holders or creditors; (2) violate
any provision of such Guarantor’s articles or certificate of incorporation,
limited partnership or formation or bylaws, partnership agreement or operating
agreement; (3) result in or require the creation or imposition of any
Lien, claim or encumbrance upon or with respect to any Property now owned or
leased or hereafter acquired by such Guarantor; (4) violate any provision
of any Law, order, writ, judgment, injunction, decree, determination or award
presently in effect having applicability to such 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 Material Indebtedness Agreement.


 


(c)           Such
Guarantor is not in default under any Law, order, writ, judgment, injunction,
decree, determination or award described in subparagraph (b)(4) above or any Material Indebtedness
Agreement in any respect that is materially adverse to the interests of any
Lender or that has a Material Adverse Effect.


 


(d)           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 such Guarantor of, and the performance by
it of all of its obligations under, this Guaranty.


 


(e)           This
Guaranty constitutes such Guarantor’s legal, valid and binding obligations
enforceable against such Guarantor 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.


 


SECTION 3.           The Guaranty. 
Subject to Section 9 hereof, each of the Guarantors hereby
absolutely, irrevocably and unconditionally guarantees, as primary obligor and
not as surety, the full and punctual payment (whether at stated maturity, upon
acceleration or early termination or otherwise, and at all times thereafter, at
the time and place and in the manner provided for in the Credit Agreement) and
performance of the Obligations, including without limitation any such
Obligations incurred or accrued during the pendency of any bankruptcy,
insolvency, receivership or other similar proceeding, whether or not allowed or
allowable in such proceeding (collectively, subject to the provisions of Section 9
hereof, being referred to collectively as the “Guaranteed Obligations”).  Upon failure by the Borrower to pay
punctually any such amount, each of the Guarantors agrees that it shall
forthwith on demand pay to the Agent for the benefit of the Lenders, the amount
not so paid at the place and in the manner specified in the Credit Agreement,
any Note or any other Loan Document, as the case may be.  This Guaranty is a continuing guaranty of
payment and not of collection.  Each of
the Guarantors waives any right to require the Agent or any Lender to sue the
Borrower, any other guarantor, or any other Person obligated for all or any
part of the Guaranteed Obligations, or otherwise to enforce its payment against
any collateral securing all or any part of the Guaranteed Obligations.


 


SECTION 4.           Guaranty Unconditional.  Subject to Section 9 hereof, the
obligations of each of the Guarantors hereunder shall be unconditional and
absolute and, without limiting the generality of the foregoing, shall not be
released, discharged or otherwise affected by:


 


2





















 


(i)            any
extension, renewal, settlement, compromise, waiver or release in respect of any
of the Guaranteed Obligations, by operation of law or otherwise, or any
obligation of any other guarantor of any of the Guaranteed Obligations, or any
default, failure or delay, willful or otherwise, in the payment or performance
of the Guaranteed Obligations;


 


(ii)           any
modification or amendment of or supplement to the Credit Agreement, any Note or
any other Loan Document;


 


(iii)          any
release, nonperfection or invalidity of any direct or indirect security for any
obligation of the Borrower under the Credit Agreement, any Note, any other Loan
Document or any obligations of any other guarantor of any of the Guaranteed
Obligations, or any action or failure to act by the Agent, any Lender or any
Affiliate of any Lender with respect to any collateral securing all or any part
of the Guaranteed Obligations;


 


(iv)          any
change in the corporate existence, structure or ownership of the Borrower or
any other guarantor of any of the Guaranteed Obligations, or any insolvency,
bankruptcy, reorganization or other similar proceeding affecting the Borrower,
or any other guarantor of the Guaranteed Obligations, or its assets or any
resulting release or discharge of any obligation of the Borrower or any other
guarantor of any of the Guaranteed Obligations;


 


(v)           the
existence of any claim, setoff or other rights which the Guarantors may have at
any time against the Borrower, any other guarantor of any of the Guaranteed
Obligations, the Agent, any Lender or any other Person, whether in connection
herewith or any unrelated transactions;


 


(vi)          any
invalidity or unenforceability relating to or against the Borrower, or any
other guarantor of any of the Guaranteed Obligations, for any reason related to
the Credit Agreement, any Note, any other Loan Document or any provision of
applicable law or regulation purporting to prohibit the payment by the Borrower,
or any other guarantor of the Guaranteed Obligations, of the principal of or
interest on any Note or any other amount payable by the Borrower under the
Credit Agreement, any Note or any other Loan Document;


 


(vii)         any
law, regulation or order of any jurisdiction, or any other event affecting any
term of any Guaranteed Obligation or any Lender’s rights with respect thereto;
or


 


3





















 


(viii)        any
other act or omission to act or delay of any kind by the Borrower, any other
guarantor of the Guaranteed Obligations, the Agent, any Lender or any other
Person or any other circumstance whatsoever which might, but for the provisions
of this paragraph, constitute a legal or equitable discharge of any Guarantor’s
obligations hereunder.


 


SECTION 5.           Discharge Only Upon Payment In Full: Reinstatement In
Certain Circumstances.  Each
of the Guarantor’s obligations hereunder shall remain in full force and effect
until all Guaranteed Obligations shall have been indefeasibly paid in full and
the Commitments under the Credit Agreement shall have terminated or
expired.  If at any time any payment of
the principal of or interest on any Note or any other amount payable by the
Borrower or any other party under the Credit Agreement, any Note or any other
Loan Document is rescinded or must be otherwise restored or returned upon the
insolvency, bankruptcy or reorganization of the Borrower or otherwise, each of
the Guarantor’s obligations hereunder with respect to such payment shall be reinstated
as though such payment had been due but not made at such time.


 


SECTION 6.           Waivers. 
Each of the Guarantors irrevocably waives acceptance hereof,
presentment, demand, protest and, to the fullest extent permitted by law, any
notice not provided for herein, as well as any requirement that at any time any
action be taken by any Person against the Borrower, any other guarantor of any
of the Guaranteed Obligations, or any other Person.


 


SECTION 7.           Subordination; Subrogation.  Each of the Guarantors hereby subordinates to
the Guaranteed Obligations all indebtedness or other liabilities now or
hereafter payable to such Guarantor by the Borrower or by any other
Guarantor.  Each of the Guarantors hereby
further agrees not to assert any right, claim or cause of action, including,
without limitation, a claim for subrogation, reimbursement, indemnification or
otherwise, against the Borrower arising out of or by reason of this Guaranty or
the obligations hereunder, including, without limitation, the payment or securing
or purchasing of any of the Guaranteed Obligations by any of the Guarantors
unless and until the Guaranteed Obligations are indefeasibly paid in full and
all Commitments have terminated or expired.


 


SECTION 8.           Stay of Acceleration.  If acceleration of the time for payment of
any of the Guaranteed Obligations is stayed upon the insolvency, bankruptcy or
reorganization of the Borrower, all such amounts otherwise subject to
acceleration under the terms of the Credit Agreement, any Note or any other Loan
Document shall nonetheless be payable by each of the Guarantors hereunder
forthwith on demand by the Agent made at the request of the Required Lenders.


 


SECTION 9.           Limitation on Obligations. (a) The
provisions of this Guaranty are severable, and in any action or proceeding
involving any state corporate law, or any state, federal or foreign bankruptcy,
insolvency, reorganization or other law affecting the rights of creditors
generally, if the obligations of any Guarantor under this Guaranty would
otherwise be held or determined to be avoidable, invalid or unenforceable on
account of the amount of such Guarantor’s liability under this Guaranty, then,
notwithstanding any other provision of this Guaranty to the contrary, the
amount of such liability shall, without any further action by the


 


4





















 


Guarantors, the Agent or any Lender, be automatically limited and
reduced to the highest amount that is valid and enforceable as determined in
such action or proceeding (such highest amount determined hereunder being the
relevant Guarantor’s “Maximum Liability”). 
This Section 9(a) with respect to the Maximum Liability of the
Guarantors is intended solely to preserve the rights of the Agent hereunder to
the maximum extent not subject to avoidance under applicable law, and neither
the Guarantor nor any other person or entity shall have any right or claim
under this Section 9(a) with respect to the Maximum Liability, except
to the extent necessary so that the obligations of the Guarantors hereunder
shall not be rendered voidable under applicable law.


 


(b)           Each of
the Guarantors agrees that the Guaranteed Obligations may at any time and from
time to time exceed the Maximum Liability of each Guarantor, and may exceed the
aggregate Maximum Liability of all other Guarantors, without impairing this
Guaranty or affecting the rights and remedies of the Agent hereunder.  Nothing in this Section 9(b) shall
be construed to increase any Guarantor’s obligations hereunder beyond its
Maximum Liability.


 


(c)           In the
event any Guarantor (a “Paying Guarantor”) shall make any payment or payments
under this Guaranty or shall suffer any loss as a result of any realization
upon any collateral granted by it to secure its obligations under this
Guaranty, each other Guarantor (each a “Non-Paying Guarantor”) shall contribute
to such Paying Guarantor an amount equal to such Non-Paying Guarantor’s “Pro
Rata Share” of such payment or payments made, or losses suffered, by such
Paying Guarantor.  For the purposes hereof,
each Non-Paying Guarantor’s “Pro Rata Share” with respect to any such payment
or loss by a Paying Guarantor shall be determined as of the date on which such
payment or loss was made by reference to the ratio of (i) such Non-Paying
Guarantor’s Maximum Liability as of such date (without giving effect to any
right to receive, or obligation to make, any contribution hereunder) or, if
such Non-Paying Guarantor’s Maximum Liability has not been determined, the
aggregate amount of all monies received by such Non-Paying Guarantor from the
Borrower after the date hereof (whether by loan, capital infusion or by other
means) to (ii) the aggregate Maximum Liability of all Guarantors hereunder
(including such Paying Guarantor) as of such date (without giving effect to any
right to receive, or obligation to make, any contribution hereunder), or to the
extent that a Maximum Liability has not been determined for any Guarantors, the
aggregate amount of all monies received by such Guarantors from the Borrower
after the date hereof (whether by loan, capital infusion or by other
means).  Nothing in this Section 9(c) shall
affect any Guarantor’s several liability for the entire amount of the
Guaranteed Obligations (up to such Guarantor’s Maximum Liability).  Each of the Guarantors covenants and agrees
that its right to receive any contribution under this Guaranty from a
Non-Paying Guarantor shall be subordinate and junior in right of payment to all
the Guaranteed Obligations.  The provisions
of this Section 9(c) are for the benefit of both the Agent and the
Guarantors and may be enforced by any one, or more, or all of them in
accordance with the terms hereof.


 


SECTION 10.         Notices. 
All notices, requests and other communications to any party hereunder
shall be given or made by telecopier or other writing and telecopied, or mailed
or delivered to the intended recipient at its address or telecopier number set
forth on the signature pages hereof or such other address or telecopy
number as such party may hereafter specify for such purpose by notice to the
Agent in accordance with the provisions of Section 13.1 of the Credit
Agreement.  Except as otherwise provided
in this Guaranty, all such communications shall be deemed to have been duly
given when transmitted by telecopier, or personally delivered


 


5





















 


or, in the case of a mailed notice sent by certified mail
return-receipt requested, on the date set forth on the receipt (provided, that
any refusal to accept any such notice shall be deemed to be notice thereof as
of the time of any such refusal), in each case given or addressed as aforesaid.


 


SECTION 11.         No Waivers. 
No failure or delay by the Agent or any Lenders in exercising any right,
power or privilege hereunder shall operate as a waiver thereof nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege.  The rights and remedies provided in this
Guaranty, the Credit Agreement, any Note or the other Loan Documents shall be
cumulative and not exclusive of any rights or remedies provided by law.


 


SECTION 12.         No Duty to Advise.  Each of the Guarantors assumes all
responsibility for being and keeping itself informed of the Borrower’s
financial condition and assets, and of all other circumstances bearing upon the
risk of nonpayment of the Guaranteed Obligations and the nature, scope and
extent of the risks that each of the Guarantors assumes and incurs under this
Guaranty, and agrees that neither the Agent nor any Lender has any duty to
advise any of the Guarantors of information known to it regarding those
circumstances or risks.


 


SECTION 13.         Successors and Assigns.  This Guaranty is for the benefit of the Agent
and the Lenders and their respective successors and permitted assigns and in
the event of an assignment of any amounts payable under the Credit Agreement,
any Note or any other Loan Documents, the rights hereunder, to the extent
applicable to the indebtedness so assigned, shall be transferred with such
indebtedness.  This Guaranty shall be
binding upon each of the Guarantors and their respective successors and
permitted assigns.


 


SECTION 14.         Changes in Writing.  Neither this Guaranty nor any provision
hereof may be changed, waived, discharged or terminated orally, but only in
writing signed by each of the Guarantors and the Agent with the consent of the
Required Lenders or all of the Lenders as may be required pursuant to the
Credit Agreement.


 


SECTION 15.         Costs of Enforcement.  Each of the Guarantors agrees to pay all
costs and expenses including, without limitation, all court costs and attorneys’
fees and expenses paid or incurred by the Agent or any Lender or any Affiliate
of any Lender in endeavoring to collect all or any part of the Guaranteed
Obligations from, or in prosecuting any action against, the Borrower, the
Guarantors or any other guarantor of all or any part of the Guaranteed
Obligations.


 


SECTION 16.         GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY
TRIAL.  THIS GUARANTY SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW
YORK.  EACH OF THE GUARANTORS HEREBY
SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT,
AND ANY NEW YORK STATE COURT, SITTING IN NEW YORK, NEW YORK AND FOR PURPOSES OF
ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS GUARANTY (INCLUDING,
WITHOUT LIMITATION, ANY OF THE OTHER LOAN DOCUMENTS) OR THE TRANSACTIONS
CONTEMPLATED HEREBY.  EACH OF THE
GUARANTORS IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
OBJECTION WHICH ANY OF THEM MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE
VENUE OF ANY 


 


6





















 


SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH
PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM.  EACH OF THE GUARANTORS, AND THE
AGENT AND THE LENDERS ACCEPTING THIS GUARANTY, HEREBY IRREVOCABLY WAIVES ANY
AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR
RELATING TO THIS GUARANTY OR THE TRANSACTIONS CONTEMPLATED HEREBY.


 


SECTION 17.         Taxes, etc. 
All payments required to be made by any of the Guarantors hereunder
shall be made without setoff or counterclaim and free and clear of and without
deduction or withholding for or on account of, any present or future Taxes, provided,
however, that if any of the Guarantors is required by law to make such
deduction or withholding, such Guarantor shall forthwith (i) pay to the
Agent or any Lender, as applicable, such additional amount as results in the
net amount received by the Agent or any Lender, as applicable, equaling the
full amount which would have been received by the Agent or any Lender, as
applicable, had no such deduction or withholding been made, (ii) pay the
full amount deducted to the relevant authority in accordance with applicable
law, and (iii) furnish to the Agent or any Lender, as applicable,
certified copies of official receipts evidencing payment of such withholding
Taxes within 30 days after such payment is made.


 


SECTION 18.         Supplemental Guaranties.  Pursuant to Section 6.9 of the Credit
Agreement, additional Subsidiaries shall become obligated as Guarantors
hereunder (each as fully as though an original signatory hereto) by executing
and delivering to the Agent a supplemental guaranty in the form of Exhibit A
attached hereto (with blanks appropriately filled in), together with such
additional supporting documentation required pursuant to Section 6.9 of
the Credit Agreement.


 


IN
WITNESS WHEREOF, each of the Guarantors has caused this Guaranty to be duly
executed, under seal, by its authorized officer as of the day and year first
above written.


 


	
   

  	
  [GUARANTOR
  SIGNATURES]

  
	
   

  	
   

  
	
   

  	
  Address for
  Notices to all Guarantors

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  



 


7





















 


EXHIBIT A


 


SUPPLEMENTAL
GUARANTY


 


[Date]


 


JPMorgan Chase Bank,
N.A., as Agent

for the Lenders


 


Ladies and Gentlemen:


 


Reference is hereby made
to (i) that certain Credit Agreement, dated as of January 12, 2006 as
amended, among The Ryland Group, Inc., the lenders from time to time
parties thereto (the “Lenders”), and JPMorgan Chase Bank, N.A., as a Lender and
as Agent (the “Agent”) on behalf of itself and the other Lenders (as amended,
restated, supplemented or otherwise modified from time to time, the “Credit
Agreement”) and (ii) that certain Guaranty, dated as of January 12,
2006, executed and delivered by the Guarantors parties thereto in favor of the
Agent, for the benefit of the Lenders (as amended, restated, supplemented or
otherwise modified from time to time, the “Guaranty”).  Terms not defined herein which are defined in
the Credit Agreement shall have for the purposes hereof the respective meanings
provided therein.


 


In accordance with Section 6.9
of the Credit Agreement and Section 18 of the Guaranty, the undersigned,
[GUARANTOR]                     ,
a corporation [limited partnership/limited liability company] organized or
formed under the laws of                     ,
hereby elects to be a “Guarantor” for all purposes of the Credit Agreement and
the Guaranty, respectively, effective from the date hereof.


 


Without limiting the
generality of the foregoing, the undersigned hereby agrees to perform all the
obligations of a Guarantor under, and to be bound in all respects by the terms
of, the Guaranty, to the same extent and with the same force and effect as if
the undersigned were a direct signatory thereto.


 


This Supplemental
Guaranty shall be construed in accordance with and governed by the internal
laws of the State of New York (but otherwise without regard to the conflict of
laws provisions).


 


IN WITNESS WHEREOF, this
Supplemental Guaranty has been duly executed by the undersigned as of the       
day of         , 200   .


 


	
   

  	
  [GUARANTOR]

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  



 


8





















 


Schedule 3

Guarantors


 


	
  Entity

  	
   

  	
  State

  InCorp

  
	
   

  	
   

  	
   

  
	
  Convest Management Corporation

  	
   

  	
  DE

  
	
  Moore’s Orchard, LLC

  	
   

  	
  MD

  
	
  RH at Emory Grove, LLC

  	
   

  	
  MD

  
	
  RH at Mount Hebron, LLC

  	
   

  	
  MD

  
	
  RH Builders of Indiana, Inc.

  	
   

  	
  IN

  
	
  RH Investment of Indiana, Inc.

  	
   

  	
  IN

  
	
  RH of Indiana, L.P.

  	
   

  	
  IN

  
	
  RH of Maryland, LLC

  	
   

  	
  MD

  
	
  RH of Texas Limited Partnership

  	
   

  	
  MD

  
	
  RH Organization, Inc.

  	
   

  	
  CA

  
	
  Ryland Communities, Inc.

  	
   

  	
  FL

  
	
  Ryland Golf Course At The Colony, Inc.

  	
   

  	
  CA

  
	
  Ryland Homes Investment - Texas, Inc.

  	
   

  	
  MD

  
	
  Ryland Homes Nevada, LLC

  	
   

  	
  DE

  
	
  Ryland Homes of Arizona, Inc.

  	
   

  	
  AZ

  
	
  Ryland Homes of California, Inc.

  	
   

  	
  CA

  
	
  Ryland Homes of Texas, Inc.

  	
   

  	
  TX

  
	
  Ryland Organization Company

  	
   

  	
  CA

  
	
  Ryland Ventures III, Inc.

  	
   

  	
  MD

  
	
  Ryland Ventures IV, Inc.

  	
   

  	
  MD

  
	
  Ryland Ventures, II, Inc.

  	
   

  	
  MD

  
	
  Ryland Ventures, Inc.

  	
   

  	
  MD

  
	
  The Regency Organization, Inc.

  	
   

  	
  FL

  
	
  The Ryland Corporation

  	
   

  	
  CA

  



 


1