exv10w1



 





Exhibit
10.1




EXECUTION VERSION




SECOND AMENDED AND RESTATED CREDIT AGREEMENT




DATED AS OF MARCH 22, 2006




AMONG




M.D.C. HOLDINGS, INC.




as Borrower




And




THE LENDERS NAMED HEREIN




And




JPMORGAN CHASE BANK, N.A.

as Administrative Agent




And




WACHOVIA BANK, NATIONAL ASSOCIATION,

as Syndication Agent

And




BNP PARIBAS, CITICORP NORTH AMERICA, INC.,

THE ROYAL BANK OF SCOTLAND PLC, SUNTRUST BANK,

and U.S. BANK NATIONAL ASSOCIATION,

as Documentation Agents




And




BANK OF AMERICA, N.A.

and GUARANTY BANK, as

Senior Managing Agents




And




CALIFORNIA BANK & TRUST,

COMERICA BANK

And

WASHINGTON MUTUAL BANK, FA

as Managing Agents




And




AMSOUTH BANK, KEYBANK NATIONAL ASSOCIATION,

MIZUHO CORPORATE BANK, LTD., NATEXIS BANQUE POPULAIRES,

PNC BANK, NATIONAL ASSOCIATION and RBC CENTURA BANK

as Co-Agents




J.P. MORGAN SECURITIES INC.




Sole Arranger and Sole Bookmanager




 









 





TABLE OF CONTENTS




	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page
	ARTICLE I DEFINITIONS	 	1
	 
	 	 	 	 	 	 
	ARTICLE II THE CREDITS	 	23
	 
	 	 	 	 	 	 
	 
	 	2.1	 	Commitment	 	23
	 
	 	2.2	 	Required Payments	 	23
	 
	 	2.3	 	Ratable Loans	 	24
	 
	 	2.4	 	Types of Advances	 	24
	 
	 	2.5	 	Fees; Reduction and Increase in Commitment	 	24
	 
	 	2.6	 	Minimum Amount of Each Advance	 	27
	 
	 	2.7	 	Optional Principal Payments	 	27
	 
	 	2.8	 	Method of Selecting Types and Interest Periods for New Advances	 	27
	 
	 	2.9	 	Conversion and Continuation of Outstanding Advances	 	28
	 
	 	2.10	 	Changes in Interest Rate, etc	 	29
	 
	 	2.11	 	Determination of Applicable LIBOR
Rate Margin and Applicable Unused Commitment Rate	 	29
	 
	 	2.12	 	Rates Applicable After Event of Default	 	30
	 
	 	2.13	 	Method of Payment	 	30
	 
	 	2.14	 	Notes; Telephonic Notices	 	31
	 
	 	2.15	 	Interest Payment Dates; Interest Basis	 	31
	 
	 	2.16	 	Notification of Advances, Interest
Rates, Prepayments and Commitment Reductions	 	31
	 
	 	2.17	 	Lending Installations	 	31
	 
	 	2.18	 	Non-Receipt of Funds by Administrative Agent	 	31
	 
	 	2.19	 	Swing Line	 	32
	 
	 	2.20	 	Intentionally Omitted	 	33
	 
	 	2.21	 	Extension of Facility Maturity Date	 	33
	 
	 	2.22	 	Term Out Period	 	35
	 
	 	2.23	 	Replacement of Certain Lenders	 	36
	 
	 	 	 	 	 	 
	ARTICLE III CHANGE IN CIRCUMSTANCES	 	37
	 
	 	 	 	 	 	 
	 
	 	3.1	 	Increased Costs	 	37
	 
	 	3.2	 	Break Funding Payments	 	38
	 
	 	3.3	 	Taxes	 	39
	 
	 	3.4	 	Alternate Lending Office	 	40
	 
	 	3.5	 	Survival	 	40
	i







 









 






	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page
	ARTICLE IV THE LETTER OF CREDIT FACILITY	 	40
	 
	 	 	 	 	 	 
	 
	 	4.1	 	Facility Letters of Credit	 	40
	 
	 	4.2	 	Limitations	 	41
	 
	 	4.3	 	Conditions	 	41
	 
	 	4.4	 	Procedure for Issuance of Facility Letters of Credit	 	42
	 
	 	4.5	 	Duties of Issuing Bank	 	44
	 
	 	4.6	 	Participation	 	44
	 
	 	4.7	 	Compensation for Facility Letters of Credit	 	46
	 
	 	4.8	 	Issuing Bank Reporting Requirements	 	47
	 
	 	4.9	 	Indemnification; Nature of Issuing Bank’s Duties	 	47
	 
	 	4.10	 	Facility LC Collateral Account	 	49
	 
	 	4.11	 	Obligations of Issuing Bank and Other Lenders	 	49
	 
	 	 	 	 	 	 
	ARTICLE V CONDITIONS PRECEDENT	 	49
	 
	 	 	 	 	 	 
	 
	 	5.1	 	Initial Advance	 	49
	 
	 	5.2	 	Each Advance	 	51
	 
	 	 	 	 	 	 
	ARTICLE VI REPRESENTATIONS AND WARRANTIES	 	52
	 
	 	 	 	 	 	 
	 
	 	6.1	 	Existence and Standing	 	52
	 
	 	6.2	 	Authorization and Validity	 	53
	 
	 	6.3	 	No Conflict; Government Consent	 	53
	 
	 	6.4	 	Financial Statements	 	53
	 
	 	6.5	 	Material Adverse Change	 	54
	 
	 	6.6	 	Taxes	 	54
	 
	 	6.7	 	Litigation and Contingent Obligations	 	54
	 
	 	6.8	 	Subsidiaries	 	54
	 
	 	6.9	 	ERISA	 	54
	 
	 	6.10	 	Accuracy of Information	 	55
	 
	 	6.11	 	Regulation U	 	55
	 
	 	6.12	 	Material Agreements	 	55
	 
	 	6.13	 	Labor Disputes and Acts of God	 	55
	 
	 	6.14	 	Ownership	 	55
	 
	 	6.15	 	Operation of Business	 	55
	 
	 	6.16	 	Laws; Environment	 	55
	 
	 	6.17	 	Investment Company Act	 	56
	 
	 	6.18	 	Intentionally Omitted	 	56
	 
	 	6.19	 	Subordinated Indebtedness	 	56
	 
	 	6.20	 	Indenture Provisions	 	56
	ii







 









 






	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page
	ARTICLE VII AFFIRMATIVE COVENANTS	 	56
	 
	 	 	 	 	 	 
	 
	 	7.1	 	Financial Reporting	 	57
	 
	 	7.2	 	Use of Proceeds	 	60
	 
	 	7.3	 	Notice of Event of Default	 	60
	 
	 	7.4	 	Conduct of Business	 	60
	 
	 	7.5	 	Taxes	 	60
	 
	 	7.6	 	Insurance	 	60
	 
	 	7.7	 	Compliance with Laws	 	60
	 
	 	7.8	 	Maintenance of Properties	 	60
	 
	 	7.9	 	Inspection	 	61
	 
	 	7.10	 	Environment	 	61
	 
	 	7.11	 	New Guarantors	 	61
	 
	 	7.12	 	Change in Schedules	 	61
	 
	 	 	 	 	 	 
	ARTICLE VIII NEGATIVE COVENANTS	 	62
	 
	 	 	 	 	 	 
	 
	 	8.1	 	Dividends; Repurchase of Stock	 	62
	 
	 	8.2	 	Indebtedness	 	62
	 
	 	8.3	 	Merger	 	63
	 
	 	8.4	 	Sale of Assets	 	64
	 
	 	8.5	 	Investments and Acquisitions	 	65
	 
	 	8.6	 	Liens	 	67
	 
	 	8.7	 	Affiliates	 	69
	 
	 	8.8	 	Modifications to Certain Indebtedness	 	70
	 
	 	8.9	 	Amendments of Indenture or Senior Notes	 	70
	 
	 	8.10	 	Negative Pledge	 	70
	 
	 	 	 	 	 	 
	ARTICLE IX FINANCIAL COVENANTS	 	70
	 
	 	 	 	 	 	 
	 
	 	9.1	 	Consolidated Tangible Net Worth Test	 	70
	 
	 	9.2	 	Leverage Test; Interest Coverage Test	 	71
	 
	 	9.3	 	Consolidated Tangible Net Worth Floor	 	72
	 
	 	9.4	 	Land-Owned Test	 	73
	 
	 	9.5	 	Spec Unit Inventory Test	 	73
	 
	 	 	 	 	 	 
	ARTICLE X EVENTS OF DEFAULT	 	73
	 
	 	 	 	 	 	 
	 
	 	10.1	 	Representations and Warranties	 	73
	 
	 	10.2	 	Non-payment	 	73
	 
	 	10.3	 	Other Defaults	 	74
	 
	 	10.4	 	Other Indebtedness	 	74
	iii







 









 






	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page
	 
	 	10.5	 	Bankruptcy	 	74
	 
	 	10.6	 	Receiver	 	75
	 
	 	10.7	 	Judgment	 	75
	 
	 	10.8	 	Unfunded Liabilities	 	75
	 
	 	10.9	 	Withdrawal Liability	 	75
	 
	 	10.10	 	Increased Contributions	 	75
	 
	 	10.11	 	Change in Control	 	76
	 
	 	10.12	 	Dissolution	 	76
	 
	 	10.13	 	Guaranty	 	76
	 
	 	10.14	 	Consolidated Tangible Net Worth Covenant	 	76
	 
	 	10.15	 	No Defaults	 	76
	 
	 	 	 	 	 	 
	ARTICLE XI ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES	 	77
	 
	 	 	 	 	 	 
	 
	 	11.1	 	Acceleration; Remedies	 	77
	 
	 	11.2	 	Amendments	 	78
	 
	 	11.3	 	Preservation of Rights	 	79
	 
	 	 	 	 	 	 
	ARTICLE XII GENERAL PROVISIONS	 	80
	 
	 	 	 	 	 	 
	 
	 	12.1	 	Survival of Representations	 	80
	 
	 	12.2	 	Governmental Regulation	 	80
	 
	 	12.3	 	Taxes	 	80
	 
	 	12.4	 	Headings	 	80
	 
	 	12.5	 	Entire Agreement	 	80
	 
	 	12.6	 	Nature of Obligations; Benefits of this Agreement	 	80
	 
	 	12.7	 	Expenses; Indemnification	 	80
	 
	 	12.8	 	Numbers of Documents	 	81
	 
	 	12.9	 	Accounting	 	81
	 
	 	12.10	 	Severability of Provisions	 	81
	 
	 	12.11	 	Nonliability of Lenders and Issuing Banks	 	81
	 
	 	12.12	 	CHOICE OF LAW	 	81
	 
	 	12.13	 	Arbitration	 	82
	 
	 	12.14	 	Jurisdiction; Consent to Service of Process	 	83
	 
	 	12.15	 	WAIVER OF JURY TRIAL	 	83
	 
	 	12.16	 	Confidentiality	 	84
	 
	 	12.17	 	USA PATRIOT ACT	 	84
	 
	 	 	 	 	 	 
	ARTICLE XIII ADMINISTRATIVE AGENT	 	84
	 
	 	 	 	 	 	 
	 
	 	13.1	 	Appointment	 	84
	 
	 	13.2	 	Rights as a Lender	 	84
	iv







 









 






	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page
	 
	 	13.3	 	Duties	 	85
	 
	 	13.4	 	Reliance by Administrative Agent	 	85
	 
	 	13.5	 	Sub-Agents	 	85
	 
	 	13.6	 	Successor Agents	 	86
	 
	 	13.7	 	No Reliance by Lenders	 	86
	 
	 	13.8	 	Agent’s Reimbursement and Indemnification	 	86
	 
	 	13.9	 	Agent and Arranger Fees	 	87
	 
	 	13.10	 	Co-Agents, Documentation Agents,
Managing Agents, Senior Managing Agents, Syndication Agent, etc	 	87
	 
	 	 	 	 	 	 
	ARTICLE XIV RATABLE PAYMENTS	 	87
	 
	 	 	 	 	 	 
	 
	 	14.1	 	Ratable Payments	 	87
	 
	 	 	 	 	 	 
	ARTICLE XV BENEFIT OF AGREEMENT, ASSIGNMENTS; PARTICIPATIONS	 	88
	 
	 	 	 	 	 	 
	 
	 	15.1	 	Successors and Assigns	 	88
	 
	 	15.2	 	Dissemination of Information	 	91
	 
	 	 	 	 	 	 
	ARTICLE XVI NOTICES	 	91
	 
	 	 	 	 	 	 
	 
	 	16.1	 	Giving Notice	 	91
	 
	 	16.2	 	Change of Address	 	91
	 
	 	 	 	 	 	 
	ARTICLE XVII COUNTERPARTS	 	91
	v








 










 







LIST OF SCHEDULES AND EXHIBITS




	 	 	 
	EXHIBITS:
	 	 
	 
	 	 
	Exhibit A
	 	Form of Guaranty
	 
	 	 
	Exhibit B
	 	Form of Note
	 
	 	 
	Exhibit C
	 	Form of Commitment and Acceptance
	 
	 	 
	Exhibit D
	 	Form of Borrowing Notice
	 
	 	 
	Exhibit E
	 	Form of Opinion of General Counsel
	 
	 	 
	Exhibit F
	 	Form of Compliance Certificate of
Authorized Officer (Financial Covenant Tests)
	 
	 	 
	Exhibit G
	 	Form of Assignment and Assumption Agreement
	 
	 	 
	SCHEDULES:
	 	 
	 
	 	 
	Schedule 1
	 	Non-Guarantor Subsidiaries
	 
	 	 
	Schedule 2
	 	Commitments
	 
	 	 
	Schedule 4.4
	 	Existing Letters of Credit
	 
	 	 
	Schedule 6.3
	 	Required Orders, Consents and Approvals
	 
	 	 
	Schedule 6.8
	 	Subsidiaries
	 
	 	 
	Schedule 8.2
	 	Existing Indebtedness
	 
	 	 
	Schedule 8.6
	 	Existing Liens









vi









 








SECOND AMENDED AND RESTATED CREDIT AGREEMENT




     THIS SECOND AMENDED AND RESTATED CREDIT AGREEMENT is entered into as of March 22, 2006, among
M.D.C. HOLDINGS, INC., a Delaware corporation, as Borrower, the Lenders listed on the signature
pages of this Agreement, JPMORGAN CHASE BANK, N.A., as Administrative Agent and BANK ONE, ARIZONA,
N.A. (solely for the purposes set forth in Section 4.4(f)).



RECITALS




     A. M.D.C. Holdings, Inc., as borrower, JPMorgan Chase Bank, N.A., as administrative agent and
certain lenders are party to a certain Credit Agreement dated January 28, 2005 (the “Prior Credit
Agreement”).



     B. The parties hereto desire to increase the amount of the Aggregate Commitment and otherwise
amend and restate the Prior Credit Agreement in its entirety.



     NOW THEREFORE, the parties hereto hereby agree as follows:



ARTICLE I




DEFINITIONS




     As used in this Agreement:



     “AAA” is defined in Section 12.13.



     “ABR Advance” means an Advance which bears interest at the Alternate Base Rate.



     “ABR Loan” means a Loan which bears interest at 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 Borrower or any Guarantor (i) acquires any going concern
or all or substantially all of the assets of any firm, corporation 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 partnership or other
ownership interests of a partnership, joint venture, limited liability company or other similar
business organization.



     “Additional Lender” is defined in Section 2.5(d)(i).



1









 





     “Adjusted Book Value of Land Owned” means, as of the last day of any fiscal quarter, (i) the
book value of all land owned by Borrower or any Guarantor at such date, including without
limitation Land Under Development, Entitled Land and Finished Lots but excluding any parcel of land
on which a Housing Unit is located, less (ii) an amount equal to the lesser of (A) fifty
percent (50%) of the book value of the land component of all Housing Units with respect to which
Housing Unit Closings occurred during the period of four consecutive fiscal quarters ending on such
date and (B) fifty percent (50%) of Adjusted Consolidated Tangible Net Worth as of such date.



     “Adjusted Consolidated Tangible Net Worth” means, at any date, (a) Consolidated Tangible Net
Worth, plus (b) the lesser of (i) fifty percent (50%) of the Subordinated Indebtedness of
Borrower and Guarantors (taken as a whole on a consolidated basis) and (ii) $100,000,000.



     “Adjusted LIBO Rate” means, with respect to any LIBOR Advance for any Interest Period, an
interest rate per annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to (a) the
Base LIBO Rate for such Interest Period multiplied by (b) the Statutory Reserve Rate.



     “Administrative Agent” means JPMorgan Chase Bank, N.A., in its capacity as administrative
agent for Lenders pursuant to Article XIII, and not in its individual capacity as a Lender, and any
successor Administrative Agent appointed pursuant to Article XIII.



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



     “Advance” means a borrowing hereunder consisting of the aggregate amount of the several Loans
made by Lenders (or Swing Line Advances made by Swing Line Lender) to Borrower of the same Type
and, in the case of a LIBOR Advance, for the same Interest Period.



     “Affected Lender” is defined in Section 2.23.



     “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 beneficially owns (within the meaning of Rule 13d-3 of the
Securities Exchange Act of 1934, as amended) 10% 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.



     “Aggregate Commitment” means the aggregate of the Commitments of all Lenders, as increased or
reduced from time to time pursuant to the terms hereof. As of the date of this Agreement, the
Aggregate Commitment is $1,250,000,000.



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



     “Agreement Accounting Principles” is defined in Section 12.9.



2









 





     “Alternate Base Rate” means, for any day, a rate of interest 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 Letter of Credit Rate” means, as at any date of determination, a rate per annum
equal to the Applicable LIBOR Rate Margin.



     “Applicable LIBOR Rate Margin” means, as at any date of determination, the margin indicated in
Section 2.11 as then applicable in the determination of LIBOR Rates.



     “Applicable Unused Commitment Rate” means, as at any date of determination, the rate per annum
indicated in Section 2.11 as then applicable in the determination of the Unused Commitment Fee
under Section 2.5(a).



     “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 its business and that is administered or managed by (a) a Lender, (b) an Affiliate of a
Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.



     “Arranger” means J.P. Morgan Securities Inc.



     “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 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 Administrative 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 15.1(b)), and accepted
by Administrative Agent, in the form of Exhibit G or any other form approved by Administrative
Agent.



     “Authorized Officer” means any one or more of the Chairman, President, Senior Vice President
or any Vice President, Chief Financial Officer, Treasurer, or other officer of Borrower or a
Guarantor, as applicable, acting singly or together, in accordance with the applicable resolutions
and bylaws of Borrower or such Guarantor.



3









 





     “Available Credit” means, at any date with respect to any Lender, the amount (if any) by which
such Lender’s Commitment exceeds the sum of (i) the outstanding principal balance of such Lender’s
Loans as of such date, plus (ii) such Lender’s ratable share (determined in accordance with Section
4.6) of the Facility LC Obligations as of such date, plus (iii) an amount equal to such Lender’s
ratable share of the outstanding Swing Line Advances.



     “Average Daily Outstandings” means, for any quarter (or portion thereof), the sum of (i) the
outstanding principal balance of the Loans (including the outstanding principal balance of the
Swing Line Advances) plus (ii) the outstanding amount of the Facility Letters of Credit, all
calculated for each day during the quarter (or portion thereof) for which the Unused Commitment Fee
is being computed, divided by the number of days in that quarter (or portion thereof).



     “Bank One, Arizona” means Bank One, Arizona, N.A., in its capacity as an Issuing Bank under
Section 4.4(f).



     “Bank One, Arizona LCs” is defined in Section 4.4(f).



     “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.



     “Base LIBO Rate” means, with respect to any LIBOR 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
Administrative 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 “Base LIBO Rate” with respect to such LIBOR 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
Administrative 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.



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



     “Borrower” means M.D.C. Holdings, Inc., a Delaware corporation, its successors and assigns.



     “Borrowing Base” means, with respect to an Inventory Valuation Date for which it is to be
determined, an amount equal to the sum (without duplication) of the following assets of Borrower
and each Guarantor (but only to the extent that such assets are not subject to any Liens other than
Permitted Liens):




     (i) the Receivables, multiplied by ninety percent (90%); plus



4









 






     (ii) the book value of Presold Units, multiplied by ninety percent (90%); plus




     (iii) the book value of Spec Units (other than such Spec Units, if any, as are excluded
from the Borrowing Base pursuant to the provisions of Section 9.5), multiplied by eighty
percent (80%); plus




     (iv) the book value of Model Units, multiplied by eighty percent (80%); plus




     (v) the book value of Finished Lots (other than such Finished Lots, if any, as are
excluded from the Borrowing Base pursuant to the provisions of Section 9.4), multiplied by
seventy percent (70%); plus




     (vi) the book value of Land Under Development (other than such Land Under Development,
if any, as is excluded from the Borrowing Base pursuant to the provisions of Section 9.4),
multiplied by fifty percent (50%); plus




     (vii) the book value of Entitled Land (other than such Entitled Land, if any, as is
excluded from the Borrowing Base pursuant to the provisions of Section 9.4), multiplied by
thirty percent (30%);


provided, however, that the aggregate (without duplication) of the amounts calculated pursuant to
clauses (v), (vi) and (vii) shall not exceed at any time forty percent (40%) of the Borrowing Base.




     “Borrowing Base Certificate” means a written certificate in a form acceptable to
Administrative Agent setting forth the amount of the Borrowing Base with respect to the calendar
quarter most recently completed, certified as true and correct by an Authorized Officer of
Borrower.



     “Borrowing Date” means a date on which an Advance is made hereunder.



     “Borrowing Notice” is defined in Section 2.8.



     “Business Day” means (i) with respect to any borrowing, payment or rate selection of LIBOR
Advances, a day (other than a Saturday or Sunday) on which banks generally are open in Chicago and
New York for the conduct of substantially all of their commercial lending activities and on which
dealings in United States dollars are carried on in the London interbank market, and (ii) for all
other purposes, a day (other than a Saturday or Sunday) on which banks generally are open in
Chicago and New York for the conduct of substantially all of their commercial lending activities.



     “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 Agreement
Accounting Principles.



     “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 Agreement Accounting Principles.



5









 





     “Cash Equivalents” means:




     (a) U.S. Treasury bills and notes;




     (b) GNMA securities;




     (c) debt insured by other agencies guaranteed by the full faith and credit of the
United States of America;




     (d) commercial paper rated either “A1” or better by S&P or “P1” by Moody’s;




     (e) Dutch Auction Preferred Stocks (DAP) rated either “AA” or better by S&P or “Aa2” or
better by Moody’s;




     (f) certificates of deposit issued by commercial banks, savings banks or savings and
loan associations whose short-term debt is rated either “A1” or better by S&P or “P1” or
better by Moody’s, or if such an institution is a subsidiary whose short-term debt is
unrated, then its parent corporation must have such a rating;




     (g) bankers acceptances issued by financial institutions that meet the requirements for
certificates of deposit;




     (h) deposits in institutions having the same qualifications required for investments in
certificates of deposit;




     (i) repurchase agreements collateralized by any otherwise acceptable collateral as
defined above; and




     (j) money market accounts a majority of whose assets are composed of items described by
any of the foregoing clauses (a) through (i) through brokerage firms deemed acceptable by
Borrower’s management.



     “Change in Control” means (a) as to Borrower, 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 50% or more of the
outstanding shares of voting stock of Borrower, or (b) as to any Guarantor, the acquisition by any
Person (except Borrower or one or more of the Guarantors), or two or more Persons acting in concert
of any beneficial ownership (within the meaning of Rule 13d-3 of the Securities and Exchange
Commission under the Securities Exchange Act of 1934) of any of the outstanding shares of voting
stock of such Guarantor.



     “Change in Law” means (a) the adoption of any law, rule or regulation after the date of this
Agreement, (b) any change in any law, rule or regulation or in the interpretation or application
thereof by any Governmental Authority after the date of this Agreement or (c) compliance by any
Lender or the Issuing Bank (or, for purposes of Section 3.1(b), by any Lending Installation of such
Lender or by such Lender’s or the Issuing Bank’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.



6









 





     “Co-Agent” means each entity identified as such on the cover page of this Agreement.



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



     “Collateral Shortfall Amount” is defined in Section 11.1(a).



     “Commitment” means, for each Lender, the obligation of such Lender to make Loans, and to
participate in the Facility Letters of Credit in accordance with Section 4.6(a), not exceeding the
amount set forth in Schedule 2 or as set forth in any Commitment and Acceptance delivered
pursuant to Section 2.5(d) or as set forth in any Assignment and Assumption relating to any
assignment that has become effective pursuant to Section 15.3.3, as such amount may be modified
from time to time pursuant to the terms hereof.



     “Commitment and Acceptance” is defined in Section 2.5(d)(i).



     “Consolidated Indebtedness” means, at any date, the outstanding amount of all Indebtedness
(including without limitation any Subordinated Indebtedness) of Borrower and Guarantors, without
duplication, (taken as a whole on a consolidated basis in conformity with Agreement Accounting
Principles). “Consolidated Indebtedness” shall specifically exclude Indebtedness of any
Non-Guarantor Subsidiary.



     “Consolidated Interest Expense” means for any period, without duplication, the aggregate
amount of interest which, in conformity with Agreement Accounting Principles, would be set opposite
the caption “interest expense” or any like caption on a consolidated income statement for Borrower
and Guarantors (specifically excluding the Non-Guarantor Subsidiaries), including, without
limitation, imputed interest included on Capitalized Lease Obligations, all commissions, discounts
and other fees and charges owed with respect to Letters of Credit and bankers’ acceptance
financing, the net costs associated with Rate Hedging Obligations, amortization of other financing
fees and expenses, the interest portion of any deferred payment obligation, amortization of
discount or premiums, if any, and all other noncash interest expense, other than interest and other
charges amortized to cost of sales. Consolidated Interest Expense includes, with respect to
Borrower and Guarantors (specifically excluding the Non-Guarantor Subsidiaries), without
duplication, all interest included as a component of cost of sales for such period.



     “Consolidated Interest Incurred” means for any period, without duplication, the aggregate
amount of interest which, in conformity with Agreement Accounting Principles, would be set opposite
the caption “interest expense” or any like caption on a consolidated income statement for Borrower
and Guarantors (specifically excluding the Non-Guarantor Subsidiaries), including, without
limitation, imputed interest included on Capitalized Lease Obligations, all commissions, discounts
and other fees and charges owed with respect to Letters of Credit and bankers’ acceptance
financing, the net costs associated with Rate Hedging Obligations, amortization of other financing
fees and expenses, the interest portion of any deferred payment obligation, amortization of
discount or premium, if any, and all other noncash interest expense other than interest and other
charges amortized to cost of sales. Consolidated Interest Incurred includes, with respect to
Borrower and Guarantors, without duplication, all capitalized interest for such



7









 







period, all interest attributable to discontinued operations for such period to the extent not
set forth on the income statement under the caption “interest expense” or any like caption, and all
interest actually paid by Borrower or any Guarantor (specifically excluding the Non-Guarantor
Subsidiaries) under any contingent obligation during such period.



     “Consolidated Net Income” means, for any period, the net income (or loss) of Borrower on a
consolidated basis for such period taken as a single accounting period, determined in conformity
with Agreement Accounting Principles.



     “Consolidated Senior Debt Borrowings” means, at any date, with respect to Borrower and
Guarantors, without duplication (taken as a whole on a consolidated basis), the outstanding
principal amount of all obligations described in clauses (i), (iv) or (viii) of the definition of
“Indebtedness” (including the Obligations and the Senior Debt) calculated in accordance with
Agreement Accounting Principles but excluding (i) Indebtedness of any Non-Guarantor Subsidiary,
(ii) Indebtedness of Borrower to a Guarantor, a Guarantor to Borrower or a Guarantor to another
Guarantor, (iii) any Subordinated Indebtedness and (iv) Indebtedness secured by collateral having a
value in excess of the amount of such Indebtedness.



     “Consolidated Tangible Net Worth” means, at any date, (a) the stockholders’ equity of Borrower
determined on a consolidated basis in conformity with Agreement Accounting Principles less
(i) its consolidated Intangible Assets, and less (ii) loans and advances to directors,
officers and employees of Borrower but excluding (A) loans for purposes of exercising options to
purchase capital stock in Borrower to the extent not otherwise netted out in the determination of
stockholders’ equity, and (B) any arms-length mortgage loans made by any Subsidiary in the ordinary
course of such Subsidiary’s business, and (C) any advances made to employees in the ordinary course
of business for travel and other items, and (D) other such loans and advances not to exceed
$5,000,000 in the aggregate outstanding at any one time, all determined as of such date
less (b) the Net Worth of the Non-Guarantor Subsidiaries (taken as a whole on a
consolidated basis). For purposes of this definition “Intangible Assets” means the amount (to the
extent reflected in determining such consolidated stockholders’ equity) of (1) all write-ups in the
book value of any asset owned by Borrower or any Subsidiary, (2) any amount, however designated on
the balance sheet, representing the excess of the purchase price paid for assets or stock acquired
over the value assigned thereto on the books of Borrower or any Subsidiary, (3) all unamortized
debt discount, goodwill, patents, trademarks, service marks, trade names, copyrights, organization
or developmental expenses and other intangible items, and (4) all items that would be considered
intangible assets under Agreement Accounting Principles.



     “Consolidated Tangible Net Worth Test” is defined in Section 9.1.



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



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



     “Coverage Test Failure Quarter” is defined in Section 9.2(b).



8









 





     “Dividend” means (i) any dividend paid or declared by Borrower or any Guarantor, as
applicable; (ii) any purchase, redemption, retirement or other acquisition by Borrower or any
Guarantor, as applicable, for value, or the setting aside of any funds or issuance of any warrants
for such purpose, of any of the capital stock of Borrower or such Guarantor, as applicable, now or
hereafter outstanding or any interest therein; and (iii) as to any Guarantor, any distribution of
assets, properties, cash, rights, obligations or other consideration or securities of such
Guarantor, directly or indirectly, to Borrower.



     “Documentation Agent” means each entity identified as such on the cover page of this
Agreement.



     “Dollars” and the sign “$” mean lawful money of the United States of America.



     “EBITDA” means, for any period, without duplication, the following, all as determined on a
consolidated basis for Borrower and Guarantors (specifically excluding the Non-Guarantor
Subsidiaries) in conformity with Agreement Accounting Principles,




     (i) the sum of the amounts for such period of (a) Consolidated Net Income (specifically
excluding for purposes of this definition net income of the Non-Guarantor Subsidiaries but
including, however, any dividends and reimbursements of taxes paid by any Non-Guarantor
Subsidiary to Borrower or any Guarantor), (b) Consolidated Interest Expense, (c) charges
against income for all federal, state and local taxes, (d) depreciation expense, (e)
amortization expense, (f) other non-cash charges and expenses, 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) any gains arising outside of the ordinary course of business which have been
included in the determination of such Consolidated Net Income.



     “Entitled Land” means parcels of land owned by Borrower or any Guarantor which are zoned for
the construction of single-family dwellings, whether detached or attached (excluding mobile homes);
provided, however, that the term “Entitled Land” shall not include Land under Development, Finished
Lots or any real property upon which the construction of Housing Units has commenced (as described
in the definition of “Housing Unit”).



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



     “Event of Default” means an event described in Article X after the expiration of any
applicable cure or notice period provided in Article X.



     “Excluded Taxes” means, with respect to the Administrative Agent, any Lender, the Issuing Bank
or any other recipient of any payment to be made by or on account of any obligation of the Borrower
hereunder, (a) income or franchise taxes imposed on (or measured by) its net income by the United
States of America, or by the jurisdiction under the laws of which such recipient is organized or in
which its principal office is located or, in the case of any Lender, in which its applicable
lending office is located, (b) any branch profits taxes imposed by the United States of America or
any similar tax imposed by any other jurisdiction in which the



9









 







Borrower is located and (c) in the case of a Foreign Lender (other than an assignee pursuant
to a request by the Borrower under Section 2.23), any withholding tax that is imposed on amounts
payable to such Foreign Lender at the time such Foreign Lender becomes a party to this Agreement
(or designates a new lending office) or is attributable to such Foreign Lender’s failure to comply
with Section 3.3(e), except to the extent that such Foreign Lender (or its assignor, if any) was
entitled, at the time of designation of a new lending office (or assignment), to receive additional
amounts from the Borrower with respect to such withholding tax pursuant to Section 3.3(a).



     “Existing Letters of Credit” means, collectively, the Bank One, Arizona LCs and the Other
Existing LCs.



     “Extension Request” is defined in Section 2.21(a).



     “Facility Increase Request” is defined in Section 2.5(d)(i).



     “Facility LC Collateral Account” is defined in Section 4.10.



     “Facility LC Obligations” means, at any date, the sum of (i) the aggregate undrawn face amount
of all outstanding Facility Letters of Credit, plus (ii) the aggregate amount paid by an
Issuing Bank on any Facility Letters of Credit to the extent (if any) not reimbursed by Borrower or
by Lenders under Section 4.6.



     “Facility Letter of Credit” means each Existing Letter of Credit and any Letter of Credit
issued by an Issuing Bank for the account of Borrower or any Guarantor in accordance with Article
IV.



     “Facility Letter of Credit Fee” means a fee, payable with respect to each Facility Letter of
Credit issued by an Issuing Bank, in an amount per annum equal to the product of (i) the Applicable
Letter of Credit Rate (determined as of the date on which the quarterly installment of such fee is
due) and (ii) the face amount of such Facility Letter of Credit. The Applicable Letter of Credit
Rate shall be adjusted, as applicable, from time to time, effective on the first January 1, April
1, June 1 or October 1 to occur on or after any change in the Applicable LIBOR Rate Margin.



     “Facility Maturity Date” means March 21, 2011 as the same may be extended as provided in
Section 2.21.



     “Facility Termination Date” means the earlier of (i) the Facility Maturity Date, or (ii) the
last day of the Term Out Period (if applicable) then in effect, as calculated pursuant to Section
2.22.



     “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



10









 







by the Administrative Agent from three Federal funds brokers of recognized standing selected
by it.



     “Financial Covenant Test” means each of the Consolidated Tangible Net Worth Test and the
Leverage Test. Neither the covenant set forth in Section 9.3 nor the Land-Owned Test or Spec Unit
Inventory Test shall constitute a Financial Covenant Test.



     “Finished Lots” means parcels of land owned by Borrower or any Guarantor which are duly
recorded and platted for the construction of single-family dwelling units, whether detached or
attached (but excluding mobile homes) and zoned for such use, with respect to which all requisite
governmental consents and approvals required for a building permit to be issued have been, or could
be, obtained; provided, however, that the term “Finished Lots” shall not include any real property
upon which the construction of a Housing Unit has commenced (as described in the definition of
“Housing Unit”).



     “Fitch” means Fitch, Inc.



     “Foreign Lender” means any Lender that is organized under the laws of a jurisdiction other
than that in which the Borrower is located. For purposes of this definition, the United States of
America, each State thereof and the District of Columbia shall be deemed to constitute a single
jurisdiction.



     “Fund” means any Person (other than a natural person) that is (or will be) engaged in making,
purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in
the ordinary course of its business.



     “GAAP” means generally accepted accounting principles in effect from time to time,
consistently applied.



     “Governmental Authority” means the government of the United States of America, any other
nation or any political subdivision thereof, whether state or local, and any agency, authority,
instrumentality, regulatory body, court, central bank or other entity exercising executive,
legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to
government.



     “Guarantors” means M.D.C. LAND CORPORATION, a Colorado corporation, RAH OF FLORIDA, INC., a
Colorado corporation, RAH OF TEXAS, LP, a Colorado limited partnership, RAH TEXAS HOLDINGS, LLC, a
Colorado limited liability company, RICHMOND AMERICAN CONSTRUCTION, INC., a Delaware corporation,
RICHMOND AMERICAN HOMES OF ARIZONA, INC., a Delaware corporation, RICHMOND AMERICAN HOMES OF
CALIFORNIA, INC., a Colorado corporation, RICHMOND AMERICAN HOMES OF COLORADO, INC., a Delaware
corporation, RICHMOND AMERICAN HOMES OF DELAWARE, INC., a Colorado corporation, RICHMOND AMERICAN
HOMES OF FLORIDA, LP, a Colorado limited partnership, RICHMOND AMERICAN HOMES OF ILLINOIS, INC., a
Colorado corporation, RICHMOND AMERICAN HOMES OF MARYLAND, INC., a Maryland corporation, RICHMOND
AMERICAN HOMES OF NEVADA, INC., a Colorado corporation, RICHMOND AMERICAN HOMES OF NEW JERSEY,
INC., a Colorado corporation, RICHMOND AMERICAN HOMES OF



11









 







PENNSYLVANIA, INC., a Colorado corporation, RICHMOND AMERICAN HOMES OF TEXAS, INC., a Colorado
corporation, RICHMOND AMERICAN HOMES OF UTAH, INC., a Colorado corporation, RICHMOND AMERICAN HOMES
OF VIRGINIA, INC., a Virginia corporation, RICHMOND AMERICAN HOMES OF WEST VIRGINIA, INC., a
Colorado corporation, and any Subsidiary that shall hereafter become a Guarantor in accordance with
Section 7.11 hereof, and any successors and assigns of any of the foregoing. “Guarantor” means any
one of the Guarantors.



     “Guaranty” means the Second Amended and Restated Guaranty, in substantially the form of
Exhibit A hereto, duly executed by the Guarantors, as the same may be supplemented, amended
or modified and in effect from time to time.



     “Housing Unit” means a single-family dwelling (where construction has commenced), whether
detached or attached (including condominiums but excluding mobile homes), including the parcel of
land on which such dwelling is located, that is or will be available for sale by Borrower or a
Guarantor. The construction of a Housing Unit shall be deemed to have commenced upon commencement
of the trenching for the foundation of the Housing Unit. Each “Housing Unit” is either a Presold
Unit, a Spec Unit or a Model Unit.



     “Housing Unit Closing” means a closing of the sale of a Housing Unit by Borrower or a
Guarantor to a bona fide purchaser for value.



     “Increase Date” is defined in Section 2.5(d)(ii).



     “Indebtedness” of a Person means, without duplication, such Person’s





     (i) obligations for borrowed money,




     (ii) obligations representing the deferred purchase price of Property or services
(other than (A) trade accounts payable and accrued expenses arising or occurring in the
ordinary course of such Person’s business, and (B) obligations evidenced by the Permitted
Liens described in clause (vi) of the definition of Permitted Liens),




     (iii) obligations, whether or not assumed, secured by Liens on, or payable out of the
proceeds or production from, Property now or hereafter owned or acquired by such Person
(other than the obligations evidenced by the Permitted Liens described in clause (vi) of the
definition of Permitted Liens),




     (iv) obligations which are evidenced by notes, bonds, debentures, or other similar
instruments,




     (v) Capitalized Lease Obligations,




     (vi) net liabilities under Rate Hedging Obligations,




     (vii) all liabilities and obligations of others of the kind described in clauses (i)
through (vi) and (viii) that such Person has guaranteed, or that are secured by Liens on
Property now or hereafter owned or acquired by such Person (other than the obligations



12









 







evidenced by the Permitted Liens described in clause (vi) of the definition of
Permitted Liens) or that are otherwise the legal liability of such Person,




     (viii) reimbursement obligations for which such Person is obligated with respect to a
Letter of Credit (which shall be included in the face amount of such Letter of Credit,
whether or not such reimbursement obligations are due and payable), provided, however, that
Letters of Credit supporting performance obligations shall not be included in Indebtedness
unless and until such Letter of Credit is drawn upon, and




     (ix) a pro rata share of the Indebtedness of any joint venture in which such Person
holds an interest.


Indebtedness includes, without limitation, in the case of Borrower, the Obligations (subject to
clause (viii) above) and the obligations evidenced by the Senior Notes and the documents executed
in connection therewith.




     “Indemnified Taxes” means Taxes other than Excluded Taxes.



     “Indenture” means that certain Senior Debt Securities Indenture, dated as of December 3, 2002
between Borrower and U.S. Bank National Association (the “Base Indenture”), as supplemented by (i)
that certain Supplemental Indenture dated December 3, 2002 relating to the issuance of the 7.0%
Senior Notes (as that term is defined in the definition of “Senior Notes”), (ii) that certain
Supplemental Indenture dated May 19, 2003 relating to the issuance of the 5.5% Senior Notes (as
that term is defined in the definition of “Senior Notes”), (iii) that certain Second Supplemental
Indenture dated September 29, 2003 relating to the 7.0% Senior Notes, (iv) that certain Second
Supplemental Indenture dated September 29, 2003 relating to the 5.5% Senior Notes, (v) that certain
Third Supplemental Indenture dated February 12, 2004 relating to the 7.0% Senior Notes, (vi) that
certain Third Supplemental Indenture dated as of February 12, 2004 relating to the 5.5% Senior
Notes, (vii) that certain Supplemental Indenture dated as of October 6, 2004 relating to Medium
Term Senior Notes, including the 5.375% Medium Term Senior Notes due 2014 (as that term is defined
in the definition of “Senior Notes”), (viii) that certain Pricing Supplement No. 1 relating to the
5.375% Medium Term Senior Notes due 2014, (ix) that certain Pricing Supplement No. 2 relating to
the 5.375% Medium Term Senior Notes due 2015 (as defined in the definition of “Senior Notes”), (x)
that certain Amendment No. 1 dated July 20, 2005 to the Supplemental Indenture dated as of October
6, 2004 and (xi) that certain Amendment No. 2 dated January 9, 2006 to the Supplemental Indenture
dated as of October 6, 2004 pursuant to which the Senior Notes were issued.



     “Interest Coverage Test” is defined in Section 9.2(b).



     “Interest Period” means, with respect to a LIBOR Advance, a period of one, two, three or six
months commencing on a Business Day selected by Borrower pursuant to this Agreement. Such Interest
Period shall end on (but exclude) the day which corresponds numerically to such date one, two,
three or six months thereafter, provided, however, that if there is no such numerically
corresponding day in such next, second, third or sixth succeeding month, such Interest Period shall
end on the last Business Day of such next, second, third or sixth succeeding month. If an Interest
Period would otherwise end on a day which is not a Business Day, such



13









 







Interest Period shall end on the next succeeding Business Day, provided, however, that if said
next succeeding Business Day falls in a new calendar month, such Interest Period shall end on the
immediately preceding Business Day. No Interest Period shall extend beyond the Facility
Termination Date (or, if the provisions of Section 2.21(c) apply, the Previous Maturity Date).



     “Inventory Valuation Date” means the last day of the most recent calendar month with respect
to which a Borrower is required to have delivered a Borrowing Base Certificate pursuant to Section
7.1(vi) hereof.



     “Investment” of a Person means any loan, advance, extension of credit (other than accounts
receivable arising in the ordinary course of business), or contribution of capital by such Person
to any other Person or any investment in, or purchase or other acquisition of, the stock,
partnership, joint venture or limited liability company interests, notes, debentures or other
securities of any other Person made by such Person.



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



     “Issuance Date” means the date on which a Facility Letter of Credit is issued, amended or
extended.



     “Issuing Bank” means (i) solely with respect to the Bank One, Arizona LCs, Bank One, Arizona,
(ii) solely with respect to the Other Existing LCs, the Prior Issuing Banks, and (iii) with respect
to all Facility Letters of Credit issued after the date hereof, JPMorgan Chase Bank or such other
Lender as Borrower, Administrative Agent and such other Lender may agree upon, that may from time
to time issue Facility Letters of Credit.



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



     “Land-Owned Test” is defined in Section 9.4.



     “Land Under Development” means parcels of land owned by Borrower or any Guarantor which are
zoned for the construction of single-family dwelling units, whether attached or detached (excluding
mobile homes) and upon which the construction of site improvements has commenced and is proceeding;
provided, however, that the term “Land Under Development” shall not include (i) Finished Lots, (ii)
Entitled Land, (iii) any real property upon which the construction of a Housing Unit has commenced,
or (iv) vacant land held by Borrower or any Guarantor for future development or sale and designated
as inactive land in the footnotes to Borrower’s or such Guarantor’s financial statements.



     “Lenders” means the lending institutions listed on the signature pages of this Agreement and
their respective successors and assigns.



     “Lending Installation” means, with respect to a Lender or Administrative Agent, any office,
branch, banking subsidiary of the holding company of a Lender or Administrative Agent, or banking
Affiliate of such Lender or Administrative Agent located in each event in the United States.



14









 





     “Letter of Credit” means a letter of credit or similar instrument which is issued by a
financial institution upon the application of a 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 (expressed as a percentage) of (i) Consolidated
Indebtedness to (ii) the sum of Consolidated Indebtedness and Adjusted Consolidated Tangible Net
Worth.



     “Leverage Test” is defined in Section 9.2(a).



     “LIBOR Advance” means an Advance which bears interest at a LIBOR Rate.



     “LIBOR Loan” means a Loan which bears interest at a LIBOR Rate.



     “LIBOR Rate” means, with respect to a LIBOR Advance for the relevant Interest Period, the sum
of (i) the Adjusted LIBO Rate applicable to such Interest Period, plus (ii) the Applicable
LIBOR Rate Margin. The LIBOR Rate shall be rounded to the next higher multiple of 1/16 of 1% if
the rate is not such a multiple.



     “Lien” means any lien (statutory or other), mortgage, pledge, hypothecation, assignment (the
purpose of which is to grant a security interest), deposit arrangement (the purpose of which is to
grant a security interest), encumbrance or other security agreement or arrangement of any kind or
nature whatsoever the purpose of which is to grant a security interest, whether or not filed or
recorded or otherwise perfected (including the interest of a vendor or lessor under any conditional
sale, any Capitalized Lease or any lease deemed to constitute a security interest or any other
title retention agreement).



     “Loan” means, with respect to a Lender, such Lender’s portion of any Advance. For purposes of
a Swing Line Advance, Swing Line Lender’s portion of such Advance is 100%.



     “Loan Documents” means this Agreement, the Notes, any Reimbursement Agreements and the
Guaranty.



     “Managing Agent” means each entity identified as such on the cover page of this Agreement.



     “Material Adverse Effect” means a material adverse effect, based on commercially reasonable
standards, on (i) the business, Property, condition (financial or otherwise), or results of
operations of Borrower and Guarantors, taken as a whole, (ii) the ability of Borrower to perform
its obligations under the Loan Documents, or (iii) the validity or enforceability under applicable
law of any of the Loan Documents or the rights or remedies of Administrative Agent, Lenders or any
Issuing Bank thereunder (other than as to clause (iii), a Material Adverse Effect resulting solely
from the acts or omissions of Administrative Agent and/or any Lender(s)). Items disclosed by
Borrower in its form 10-Q and form 10-K or any other filings with the Securities and Exchange
Commission shall not be deemed to have a Material Adverse Effect solely because of such disclosure,
and the existence and content of such disclosure shall not be prima facie evidence of a Material
Adverse Effect.



15









 





     “Model Unit” means a Housing Unit constructed initially for inspection by prospective
purchasers that is not intended to be sold until all or substantially all other Housing Units in
the applicable subdivision are sold.



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



     “Multiemployer Plan” means a Plan maintained pursuant to a collective bargaining agreement or
any other arrangement as described in Section 3(37) of ERISA to which Borrower, any Guarantor or
any member of the Controlled Group is a party to which more than one employer is obligated to make
contributions.



     “Net Worth” means, at any date as to each Non-Guarantor Subsidiary (taken as a whole on a
consolidated basis), the sum of (A) all stockholders’ equity of such Non-Guarantor Subsidiary,
less (B) all loans or advances made by such Subsidiary to Borrower or any Guarantor and
outstanding at such date, all as determined in conformity with Agreement Accounting Principles.



     “New Lender” is defined in Section 2.5(d)(i).



     “Non-Guarantor Subsidiary” means each Subsidiary of Borrower that is not a Guarantor. The
Non-Guarantor Subsidiaries as of the date of this Agreement are listed on Schedule 1.



     “Non-Recourse Indebtedness” with respect to any Person means Indebtedness of such Person (i)
for which the sole legal recourse for collection of principal and interest on such Indebtedness is
against the specific property identified in the instruments evidencing or securing such
Indebtedness and such property was acquired with the proceeds of such Indebtedness or such
Indebtedness was incurred within ninety (90) days after the acquisition of such property and for
which no other assets of such Person may be realized upon in collection of principal or interest on
such Indebtedness, or (ii) that refinances Indebtedness described in clause (i) and for which the
recourse is limited to the same extent described in clause (i).



     “Note” means a promissory note, in substantially the form of Exhibit B hereto, duly
executed by Borrower and payable to the order of a Lender in the amount of its Commitment,
including any amendment, modification, renewal or replacement of such promissory note.



     “Obligations” means all unpaid principal of and accrued and unpaid interest on the Notes, the
Facility LC Obligations, all accrued and unpaid fees and all expenses, reimbursements, indemnities
and other obligations of Borrower to Lenders or to any Lender, Administrative Agent, any Issuing
Bank or any indemnified party hereunder arising under the Loan Documents.



     “Other Existing LCs” is defined in Section 4.4(g).



     “Other Taxes” means any and all present or future stamp or documentary taxes or any other
excise or property taxes, charges or similar levies arising from any payment made hereunder or from
the execution, delivery or enforcement of, or otherwise with respect to, this Agreement.



     “Participants” is defined in Section 15.1(c).



16









 





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



     “Permitted Leverage Ratio” means, at the date hereof, 55%, as such amount may hereafter be
adjusted from time to time as provided in Sections 9.2(b) and 9.2(c).



     “Permitted Liens” means, as to Borrower or any Guarantor, any of the following:




     (i) Liens for taxes, assessments or governmental charges or levies on Borrower’s or
such Guarantor’s Property if the same (A) shall not at the time be delinquent or thereafter
can be paid without penalty, or (B) are being contested in good faith and by appropriate
proceedings and for which adequate reserves shall have been established on Borrower’s or
such Guarantor’s books in accordance with Agreement Accounting Principles.




     (ii) Liens imposed by law, such as carriers’, warehousemen’s, mechanics’ and
materialmen’s Liens and other similar Liens arising in the ordinary course of business with
respect to amounts that either (A) are not yet delinquent, or (B) are delinquent but are
being contested in a timely manner in good faith by appropriate proceedings and for which
adequate reserves shall have been established on Borrower’s or Guarantor’s books in
accordance with Agreement Accounting Principles.




     (iii) Utility easements, rights of way, zoning restrictions, covenants, reservations,
and such other burdens, encumbrances or charges against real property, or other minor
irregularities of title, as are of a nature generally existing with respect to properties of
a similar character and which do not in any material way interfere with the use thereof or
the sale thereof in the ordinary course of business of Borrower or such Guarantor.




     (iv) Easements, dedications, assessment district or similar Liens in connection with
municipal financing and other similar encumbrances or charges, in each case reasonably
necessary or appropriate for the development of real property of Borrower or such Guarantor,
and which are granted in the ordinary course of the business of Borrower or such Guarantor,
and which in the aggregate do not materially burden or impair the fair market value or use
of such real property (or the project to which it is related) for the purposes for which it
is or may reasonably be expected to be held.




     (v) Any option or right of first refusal to purchase real property granted to the
master developer or the seller of real property that arises as a result of the non-use or
non-development of such real property by Borrower or such Guarantor.




     (vi) Any agreement or contract to participate in the income or revenue or to pay lot
premiums, in each case derived from the sale of Housing Units and granted in the ordinary
course of business to the seller of the real property upon which the Housing Unit is
constructed.



     “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.



17









 





     “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 Borrower, any Guarantor
or any member of the Controlled Group may have any liability.



     “Presold Unit” means a Housing Unit owned by Borrower or any Guarantor that is subject to a
bona fide written agreement between Borrower or such Guarantor and a third Person purchaser for
sale in the ordinary course of Borrower’s or such Guarantor’s business of such Housing Unit and the
related lot, accompanied by a cash earnest money deposit or down payment in an amount that is
customary, and subject only to ordinary and customary contingencies to the purchaser’s obligation
to buy the Housing Unit and related lot.



     “Previous Maturity Date” is defined in Section 2.21(c).



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



     “Prior Credit Agreement” is defined in Recital A.



     “Prior Issuing Banks” means those Lenders party to the Prior Credit Agreement that have issued
the Other Existing LCs.



     “Prior Lenders” means the “Lenders” as defined in the Prior Credit Agreement.



     “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.



     “Public Indebtedness” means Indebtedness evidenced by notes, debentures, or other similar
instruments issued after the date of this Agreement pursuant to either (i) a registered public
offering or (ii) a private placement of such instruments in accordance with an exemption from
registration under the Securities Act of 1933 and/or the Securities Exchange Act of 1934 or similar
law.



     “Rating” means the second highest of the publicly announced ratings of the Borrower’s senior
unsecured debt by Moody’s, S&P and Fitch.



     “Rate Hedging Obligations” of a Person means any and all obligations of such Person, whether
absolute or contingent and howsoever and whensoever created, arising, evidenced or acquired
(including all renewals, extensions and modifications thereof and substitutions therefor), under
(i) any and all agreements, devices or arrangements designed to protect at least one of the parties
thereto from the fluctuations of interest rates, exchange rates or forward rates applicable to such
party’s assets, liabilities or exchange transactions, including, but not limited to,
dollar-denominated or cross-currency interest rate exchange agreements, forward currency exchange
agreements, interest rate cap or collar protection agreements, forward rate currency or interest
rate options, puts and warrants, and (ii) any and all cancellations, buy backs, reversals,
terminations or assignments of any of the foregoing.



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     “Receivables” means the net proceeds payable to, but not yet received by, Borrower or any
Guarantor following a Housing Unit Closing.



     “Refinancing Indebtedness” means Indebtedness that refunds, refinances or extends any
Indebtedness (or that refunds, refinances or extends any refund, refinancing or extension of such
Indebtedness), but only to the extent that




     (i) the Refinancing Indebtedness is subordinated to or pari passu with the
Obligations (or a Guarantor’s obligations under its Guaranty, as applicable) to the same
extent as the Indebtedness being refunded, refinanced or extended,




     (ii) the Refinancing Indebtedness is scheduled to mature no earlier than the then
current maturity date of such Indebtedness,




     (iii) such Refinancing Indebtedness is in an aggregate amount that is equal to or less
than the sum of the aggregate amount then outstanding plus all amounts committed but
undisbursed under the Indebtedness being refunded, refinanced or extended,




     (iv) the Person or Persons liable for the payment of such Refinancing Indebtedness are
the same Person or Persons (or successor(s) thereto) that were liable for the Indebtedness
being refunded, refinanced or extended when such Indebtedness was initially incurred, and




     (v) such Refinancing Indebtedness is incurred within 120 days after the Indebtedness
being refunded, refinanced or extended is so refunded, refinanced or extended.



     “Register” is defined in Section 15.1(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 thereto 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.



     “Reimbursement Agreement” means, with respect to a Facility Letter of Credit, such form of
application therefor and form of reimbursement agreement therefor (whether in a single or several
documents, taken together) as an Issuing Bank may employ in the ordinary course of business for its
own account, with such modifications thereto as may be agreed upon by such Issuing Bank and
Borrower and as are not materially adverse (in the reasonable judgment of such Issuing Bank and
Administrative Agent) to the interests of Lenders; provided, however, in the



19









 







event of any conflict between the terms of any Reimbursement Agreement and this Agreement, the
terms of this Agreement shall control.



     “Rejecting Lender” is defined in Section 2.21(b).



     “Related Business” means any of the following lines of business or business activity of the
type conducted by Borrower, Guarantors and their Subsidiaries on the date hereof: (i) the home
building business, (ii) the residential mortgage loan business, (iii) the real estate development
business, (iv) the title insurance agency and settlement business, and (v) the insurance agency
business.



     “Related Parties” is defined in Section 12.7.



     “Replacement Lender” is defined in Section 2.23.



     “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 by regulation waived the requirement of Section 4043(a) of ERISA that it be
notified within thirty (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 waiver of the funding requirements under Section
412(d) of the Code.



     “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 aggregate holding at
least 66-2/3% of the aggregate unpaid principal amount of the outstanding Advances.



     “S&P” means Standard & Poor’s Ratings Services.



     “SEC Filing” means any form 10-K, form 10-Q or form 8-K of Borrower hereafter filed by
Borrower with the Securities and Exchange Commission and delivered to Administrative Agent pursuant
to Section 7.1(xii).



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



     “Senior Debt” means the Senior Notes or, if the Senior Notes are refinanced, the Refinancing
Indebtedness with respect thereto.



     “Senior Managing Agent” means each entity identified as such on the cover page of this
Agreement.



     “Senior Notes” means (a) the 7.0% Senior Notes due 2012 of Borrower issued in the original
principal amount of $150,000,000 pursuant to the Indenture (the “7% Senior Notes”), (b)



20









 







the 5.5% Senior Notes due 2013 of Borrower issued in the original principal amounts of
$150,000,000 and $200,000,000, respectively, pursuant to the Indenture (the “5.5% Senior Notes”),
(c) the 5.375% Medium Term Senior Notes due 2014 of Borrower issued in the original principal
amount of $250,000,000 pursuant to the Indenture (the “5.375% Medium Term Senior Notes due 2014”)
and (d) the 5.375% Medium Term Senior Notes due 2015 of Borrower issued in the original principal
amount of $250,000,000 pursuant to the Indenture (the “5.375% Medium Term Senior Notes due 2015”).



     “Significant Subsidiary” means any Non-Guarantor Subsidiary that has a Net Worth equal to or
exceeding $1,000,000.00.



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



     “Spec Unit” means any Housing Unit owned by Borrower or any Guarantor that is not a Presold
Unit or a Model Unit.



     “Spec Unit Inventory Test” is defined in Section 9.5.



     “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 Board to which the Administrative 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
Board). Such reserve percentages shall include those imposed pursuant to such Regulation D. LIBOR
Advances 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 such 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 Indebtedness” means any Indebtedness of Borrower or any Guarantor (a) which has
a maturity date that is later than the Facility Maturity Date and (b) the payment of which
Indebtedness is subordinated to payment of the Obligations or to such Guarantor’s Guaranty of the
Obligations (as applicable) to the satisfaction of the Required Lenders. Subordinated Indebtedness
shall specifically not include Indebtedness of any Guarantor to Borrower or Borrower to any
Guarantor.



     “Subsidiary” of a Person means (i) any corporation more than 50% of the outstanding securities
having ordinary voting power for the election of the board of directors of which shall at the time
be beneficially owned (within the meaning of Rule 13d-3 of the Securities Exchange Act of 1934, as
amended) 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,



21









 







association, joint venture, limited liability company 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 direct or indirect Subsidiary of Borrower.



     “Substantial Portion” means, with respect to the Property of Borrower and Guarantors, taken as
a whole, Property which represents more than 10% of Consolidated Tangible Net Worth, as would be
shown in the consolidated financial statements of Borrower as of the beginning of the fiscal
quarter in which such determination is made.



     “Swing Line Advances” has the meaning set forth in Section 2.19.



     “Swing Line Advance Maturity Date” means that day that is the second Business Day following
the date in which a Swing Line Advance was funded by Swing Line Lender.



     “Swing Line Lender” means JPMorgan Chase Bank.



     “Syndication Agent” means each entity identified as such on the cover page of this Agreement.



     “Taxes” means any and all present or future taxes, levies, imposts, duties, deductions,
charges or withholdings imposed by any Governmental Authority.



     “Term Out Date” is defined in Section 2.22(a).



     “Term Out Period” means the period of time commencing on the Term Out Date and expiring on the
Facility Termination Date.



     “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 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) 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 time, on such day (or, if such day is
not a Business Day, on the next preceding Business Day) by Administrative Agent from three
negotiable certificate of deposit dealers of recognized standing selected by it.



     “Transferee” is defined in Section 15.2.



     “Type” means, with respect to any Advance, its nature as an ABR Advance or LIBOR Advance.



     “Unfunded Liabilities” means the amount (if any) by which the present value of all vested
nonforfeitable benefits under all Single Employer Plans exceeds the fair market value of the assets
of such Plans allocable to such benefits, all determined as of the then most recent



22









 







valuation date for such Plans, using the actuarial methods and assumptions utilized in the
actuarial report for each such Plan as of such date.



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



     “Unused Commitment” means, at any date with respect to any Lender, the amount (if any) by
which such Lender’s Commitment exceeds the sum of (i) the outstanding principal balance of such
Lender’s Loans as of such date (including, in the case of Swing Line Lender, the Swing Line
Advances), plus (ii) such Lender’s ratable share (determined in accordance with Section
4.6) of the outstanding amount of the Facility Letters of Credit.



     “Unused Commitment Fee” means a fee payable by Borrower to each Lender with respect to such
Lender’s Unused Commitment, calculated in accordance with Section 2.5(a).



     “Wholly-Owned Subsidiary” of a Person means (i) any Subsidiary all of the outstanding voting
securities (or the power to elect the board of directors) of which shall at the time be
beneficially owned (within the meaning of Rule 13d-3 of the Securities Exchange Act of 1934, as
amended) 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, association, joint venture, limited liability company or similar business organization
100% of the ownership interests having ordinary voting power of which shall at the time be so owned
or controlled.



     The foregoing definitions shall be equally applicable to both the singular and plural forms of
the defined terms.



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 make Loans to Borrower and to participate in Facility Letters of Credit (as
provided in Article IV) from time to time in amounts not to exceed in the aggregate at any one time
outstanding the amount of its Commitment; provided, however, that (i) a Lender shall not be
required to make any Loan or Loans in excess of the amount of such Lender’s then Available Credit,
and (ii) at any time at which Borrower does not have an Investment Grade Rating, the aggregate
principal amount of all Consolidated Senior Debt Borrowings outstanding at any time and from time
to time shall not exceed the Borrowing Base determined as of the most recent Inventory Valuation
Date. The Commitments to lend hereunder shall expire on the Facility Termination Date.




          2.2 Required Payments. Any outstanding Advances and all other unpaid Obligations
shall be paid in full by Borrower on the Facility Termination Date. Additionally, if for any
reason at any time either (i) the principal amount of all Advances plus the aggregate
amount of the Facility LC Obligations outstanding exceeds the Aggregate Commitment, or (ii) at




23









 







any time at which Borrower does not have an Investment Grade Rating, the aggregate principal
amount of all Consolidated Senior Debt Borrowings exceeds the Borrowing Base determined as of the
most recent Inventory Valuation Date, then Borrower shall, within five (5) Business Days after
notice from Administrative Agent, make a payment to Administrative Agent for the benefit of Lenders
in an amount equal to such excess principal amount.




          2.3 Ratable Loans. Each Advance hereunder, including without limitation, any
Advance made by Lenders pursuant to Section 2.19(d), but excluding Swing Line Advances, shall
consist of Loans made by the several Lenders ratably in proportion to the ratio that their
respective Commitments bear to the Aggregate Commitment. Swing Line Advances shall consist of
Loans made by Swing Line Lender.




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




          2.5 Fees; Reduction and Increase in Commitment.





     (a) Unused Commitment Fee. Borrower agrees to pay to Administrative Agent for
the account of Lenders an Unused Commitment Fee, at a rate per annum equal to the Applicable
Unused Commitment Rate, calculated on the basis of a 360-day year in accordance with this
Section from the date hereof and to and including the Facility Termination Date, and payable
quarterly in arrears on the first day of each January, April, July and October hereafter and
on the Facility Termination Date. For each quarter (or portion thereof), the Unused
Commitment Fee shall be equal to (A) the average daily Aggregate Commitment during such
quarter (or portion thereof) minus (B) the Average Daily Outstandings for such
quarter (or portion thereof), with the resulting number multiplied by (C) the Applicable
Unused Commitment Rate, and the final product divided by (D) four (4). Each Lender
(including Swing Line Lender) shall be entitled to a share of the Unused Commitment Fee in
the proportion that (x) such Lender’s average daily Unused Commitment for such quarter (or
portion thereof) bears to (y) the average daily aggregate Unused Commitments of all Lenders
for such quarter (or portion thereof). If the Unused Commitment Fee is being computed for
less than a full quarter, the number used in clause (D) above shall be computed on a daily
basis for the number of days for which the fee is being computed. The Unused Commitment Fee
shall continue to be payable during the Term Out Period. All accrued Unused Commitment Fees
shall be payable on the effective date of any termination of the obligations of Lenders to
make Loans hereunder.




     (b) Extension Fee. If the Facility Maturity Date is extended pursuant to the
provisions of Section 2.21, then Borrower shall pay an extension fee for each such extension
as provided in Section 2.21(d).




     (c) Reductions in Aggregate Commitment. Borrower may permanently reduce the
Aggregate Commitment in whole, or in part ratably among Lenders (in proportion to the ratio
that their respective Commitment bear to the Aggregate Commitment) in integral multiples of
$5,000,000 at any time or from time to time, upon



24









 







at least three (3) Business Days’ written notice to Administrative 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 sum of (i) the aggregate principal amount
of the outstanding Advances plus (ii) the Facility LC Obligations.




     (d) Increases in Aggregate Commitment.




     (i) Subject to the provisions of this Section 2.5(d)(i) and Section 2.5(d)(v),
Borrower may, at any time and from time to time, request (“Facility Increase
Request”), by notice to Administrative Agent, Administrative 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, Administrative
Agent shall advise Borrower of its approval or disapproval thereof; failure to so
advise Borrower shall constitute disapproval. Upon approval of Administrative Agent,
the Aggregate Commitment may be so increased either by having financial institutions
(other than Lenders then holding a Commitment hereunder) approved by Borrower and
Administrative Agent (“New Lenders”) 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 by Borrower and
Administrative 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
a “Additional Lender”), provided that (A) unless otherwise agreed by Borrower and
Administrative Agent, the Commitment of any New Lender shall not be less than
$10,000,000 (and, if in excess thereof, in integral multiples of $5,000,000), (B)
unless otherwise agreed by Borrower and Administrative Agent, the increase in the
Commitment of any Lender shall be not less than $10,000,000 (and, if in excess
thereof, in integral multiples of $5,000,000); (C) the Aggregate Commitment shall not
exceed $1,750,000,000; (D) 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 Administrative Agent shall
have accepted and executed the same; (E) Borrower shall have executed and delivered
to Administrative Agent a Note or Notes payable to the order of each Additional
Lender, each such Note to be in the amount of such Additional Lender’s Commitment or
increased Commitment (as applicable); (F) Borrower shall have delivered to
Administrative Agent an opinion of counsel and certificate of Borrower’s general
counsel (substantially similar to the forms of opinion attached hereto as Exhibit
E, modified to apply to the increase in the Aggregate Commitment and each Note
and Commitment and Acceptance executed and delivered in connection therewith); (G)
Guarantors shall have consented in writing to the new Commitments or increases in
Commitments (as applicable) and shall have agreed that their Guaranties continue in
full force and effect; and (H) Borrower and each Additional Lender shall otherwise
have executed and delivered such other instruments and documents as Administrative
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



25









 







under clauses (D) through (H) above shall be fully acceptable to Administrative
Agent. Administrative Agent shall promptly provide written notice to Lenders
following any such increase in the Aggregate Commitment hereunder and shall promptly
furnish to Lenders copies of the documents required under clauses (D), (F), (G) and
(H) above.




     (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 Administrative Agent, each
Additional Lender shall make a payment to Administrative 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 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). Borrower hereby irrevocably authorizes each Additional Lender to fund to
Administrative 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 LIBOR Advances that are outstanding on
the Increase Date, but, if Borrower shall at any time on or after such Increase Date
convert or continue any LIBOR Advance outstanding on such Increase Date, Borrower
shall be deemed to repay such LIBOR Advance on the date of the conversion or
continuation thereof and then to reborrow as a LIBOR Advance a like amount on such
date so that each Additional Lender shall make a LIBOR Loan on such date in its pro
rata share of such LIBOR Advance. Each Additional Lender shall also make a 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
an Event of Default prior to the date on which an Additional Lender is holding Loans
equal to its pro rata share of all Advances hereunder, such Additional Lender shall,
upon notice from Administrative Agent, on or after the date on which the Obligations
are accelerated or become due following such Event of Default, pay to Administrative
Agent (for the account of the other Lenders, to which Administrative 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 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(d)(ii), such
Additional Lender shall also be deemed to have irrevocably and unconditionally
purchased and received, without recourse or warranty, from Lenders party to this
Agreement immediately prior to the Increase Date, an undivided interest and
participation in any Facility Letter of Credit then outstanding, ratably, such that
all Lenders (including each Additional Lender) hold



26









 







participation interests in each such Facility Letter of Credit 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 Borrower or
Administrative Agent to give or grant any Lender the right to increase its Commitment
hereunder at any time.




     (v) Notwithstanding anything to the contrary contained herein, Borrower may not
request an increase in the Aggregate Commitment during the Term Out Period, and, if
Borrower has requested an increase in the Aggregate Commitment prior to the Term Out
Period but the Term Out Period commences prior to the effective date of such
increase, such increase shall not take effect. Notwithstanding anything to the
contrary contained herein, no increase of the Aggregate Commitment may be effected
under this Section 2.5(d) if (x) an Unmatured Event of Default or Event of Default
shall be in existence on the effective date of such increase or would occur after
giving effect thereto or (y) any representation or warranty made or deemed made by
Borrower in any Loan Document or any Guarantor in any Guaranty is not (or would not
be) true or correct in any material respect on the effective date of such increase
(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 be true and
correct on and as of such earlier date).



          2.6 Minimum Amount of Each Advance. Except with respect to Swing Line Advances,
each Advance shall be in the minimum amount of $2,000,000 (and in multiples of $1,000,000 if in
excess thereof).




          2.7 Optional Principal Payments. Borrower may at any time or from time to time
pay, without penalty or premium, all ABR Advances outstanding with respect to Borrower, or, in a
minimum aggregate amount of $1,000,000 or any integral multiple of $500,000 in excess thereof
(except with respect to Swing Line Advances), any portion of the outstanding ABR Advances upon one
(1) Business Day’s prior notice to Administrative Agent. Borrower may, (i) upon one (1) Business
Days’ prior notice to Administrative Agent, pay, without penalty or premium, any LIBOR Advance in
full on the last day of the Interest Period for such LIBOR Advance, and (ii) upon three (3)
Business Days’ prior notice to Administrative Agent, prepay any LIBOR Advance in full prior to the
last day of the Interest Period for such LIBOR Advance, provided that Borrower shall also pay at
the time of such prepayment all amounts payable with respect thereto pursuant to Section 3.2
hereof.




          2.8 Method of Selecting Types and Interest Periods for New Advances. Borrower
shall select the Type of Advance and, in the case of each LIBOR Advance, the Interest Period
applicable to each Advance from time to time. Borrower shall give Administrative Agent irrevocable
notice (a “Borrowing Notice”) in the form of Exhibit D not later than (a) 11:00 a.m., New
York time, on the Borrowing Date of each ABR Advance (except a Swing Line Advance), (b) 1:00 p.m.,
New York time, three (3) Business Days before the Borrowing Date of each




27









 




LIBOR Advance, and (c) 3:00 p.m., New York time, on the Borrowing Date of each Swing Line
Advance, specifying:





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




     (ii) whether the Advance is a Swing Line Advance,




     (iii) the aggregate amount of such Advance,




     (iv) except in the case of a Swing Line Advance, the Type of Advance selected;
provided, however, that the aggregate number of LIBOR Advances outstanding at any one
time shall not exceed five (5), and




     (v) in the case of each LIBOR Advance, the Interest Period applicable thereto.


Not later than 1:00 p.m., New York time, on each Borrowing Date, each Lender shall make available
its Loan or Loans, in funds immediately available to Administrative Agent at its address specified
pursuant to Article XVI. Administrative Agent will make the funds so received from Lenders
available to the applicable Borrower at Administrative Agent’s aforesaid address. Disbursements of
Advances (other than Swing Line Advances) may be made not more frequently than one time per
Business Day. Disbursements of all Swing Line Advances to Borrower may be made not more frequently
than one time per Business Day, or on a more frequent basis as Swing Line Lender may agree.
Interest on all Advances shall be calculated on the basis of a 360-day year, based on the actual
days elapsed.




          2.9 Conversion and Continuation of Outstanding Advances. ABR Advances shall
continue as ABR Advances unless and until such ABR Advances are converted into LIBOR Advances.
Each LIBOR Advance shall continue as a LIBOR Advance until the end of the then applicable Interest
Period therefor, at which time such LIBOR Advance shall be automatically converted into a ABR
Advance unless Borrower shall have given Administrative Agent a Conversion/Continuation Notice
requesting that, at the end of such Interest Period, such LIBOR Advance either continues as a LIBOR
Advance for the same or another Interest Period or be repaid. Subject to the terms of Section 2.6,
Borrower may elect from time to time to convert all or any part of an Advance of any Type into any
other Type or Types of Advances; provided, however, that any conversion of any LIBOR Advance may be
made on, and only on, the last day of the Interest Period applicable thereto, and further provided
that the aggregate number of LIBOR Advances outstanding at any one time shall not exceed five (5).




     Borrower shall give Administrative Agent irrevocable notice (a “Conversion/Continuation
Notice”) of each conversion of an Advance or continuation of a LIBOR Advance not later than 11:00
a.m., New York time on the day of conversion into an ABR Advance, or 1:00 p.m., New York time, at
least three (3) Business Days prior to the conversion into or continuation of a LIBOR Advance,
specifying:




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



28









 






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




     (iii) the amount and Type(s) of Advance(s) into which such Advance is to be
converted or continued and, in the case of a conversion into or continuation of a
LIBOR Advance, 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 converted from a LIBOR Advance into an ABR Advance pursuant to Section 2.9 to but excluding
the date it becomes due or is converted into a LIBOR Advance pursuant to Section 2.9 hereof, at a
rate per annum equal to the Alternate Base Rate for such day. Changes in the rate of interest on
any Advance maintained as an ABR Advance will take effect simultaneously with each change in the
Alternate Base Rate. Each LIBOR Advance shall bear interest from and including the first day of
the Interest Period applicable thereto to (but not including) the last day of such Interest Period
at the interest rate determined as applicable to such LIBOR Advance. No Interest Period may end
after the Facility Termination Date.




     2.11 Determination of Applicable LIBOR Rate Margin and Applicable Unused Commitment
Rate.




     (a) Pricing Grid. The Applicable LIBOR Rate Margin and the Applicable Unused
Commitment Rate shall be determined by reference to (i) the Rating and (ii) the Leverage
Ratio in accordance with the following table:



	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	LEVEL I	 	LEVEL II	 	LEVEL III	 	LEVEL IV
	Rating

	 	BBB+/Baa1 or higher
	 	BBB/Baa2
	 	BBB-/Baa3
	 	BB+/Ba1 or below or
no Rating

	Leverage Ratio

	 	Less than or
equal to 30%
	 	Greater than 30%
and less than or
equal to 40%
	 	Greater than 40%
and less than or
equal to 50%
	 	Greater than 50%

	Applicable

LIBOR Rate Margin

	 	 	0.50	%	 	 	0.625	%	 	 	0.75	%	 	 	1.00	%
	Applicable Unused

Commitment Rate

	 	 	0.125	%	 	 	0.15	%	 	 	0.175	%	 	 	0.20	%







     In the event of a difference of one level between (x) the Leverage Ratio and (y)
the Rating, the lower pricing shall apply; if the difference is more than one level, the
level that is one level lower than the higher pricing shall apply.



29









 






     (b) Adjustment. The Applicable Unused Commitment Rate shall be adjusted, as
applicable from time to time, effective on (i) the first Business Day after any change in
the Rating or (ii) the fifth (5th) Business Day following the delivery by
Borrower, pursuant to Section 7.1(i) or (ii), of annual or quarterly financial statements
evidencing a change in the Leverage Ratio. The Applicable LIBOR Rate Margin in respect of
any LIBOR Advance shall be adjusted, as applicable from time to time, effective on the first
day of the Interest Period for any LIBOR Advance after (i) any change in the Rating or (ii)
the fifth (5th) Business Day following the delivery by Borrower, pursuant to
Section 7.1(i) or (ii), of annual or quarterly financial statements evidencing a change in
the Leverage Ratio.



          2.12 Rates Applicable After Event of Default. Notwithstanding anything to the
contrary contained in Section 2.8, 2.9 or 2.10, during the continuance of an Event of Default the
Required Lenders may, at their option, by notice to Borrower (which notice may be revoked at the
option of the Required Lenders notwithstanding any provision of Section 11.2 requiring unanimous
consent of Lenders to changes in interest rates), declare that no Advance may be made as, converted
into or continued as a LIBOR Advance. Notwithstanding anything to the contrary contained in
Section 2.8, 2.9 or 2.10, during the continuance of an Unmatured Event of Default the Required
Lenders may, at their option, by notice to Borrower (which notice may be revoked at the option of
the Required Lenders notwithstanding any provision of Section 11.2 requiring unanimous consent of
Lenders to changes in interest rates), declare that no Advance may be made as or converted into a
LIBOR Advance. During the continuance of an Event of Default, the Required Lenders may, at their
option, by notice to Borrower (which notice may be revoked at the option of the Required Lenders
notwithstanding any provision of Section 11.2 requiring unanimous consent of Lenders to changes in
interest rates), declare that (i) each LIBOR 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 shall bear interest at a rate per annum equal to the Alternate Base
Rate plus 2% per annum.




          2.13 Method of Payment. All payments of the Obligations hereunder shall be made,
without setoff, deduction, or counterclaim, in immediately available funds to Administrative Agent
at Administrative Agent’s address specified pursuant to Article XVI, or at any other Lending
Installation of Administrative Agent specified in writing by Administrative Agent to Borrower, by
1:00 p.m. (local time at the place of receipt) on the date when due (or with respect to Swing Line
Advances, in accordance with Section 2.19), and, except for Swing Line Advances shall be applied
ratably by Administrative Agent among Lenders, in proportion to the ratio that each Lender’s
Commitment bears to the Aggregate Commitment. Each payment delivered to Administrative Agent for
the account of any Lender shall be delivered promptly by Administrative Agent to such Lender in the
same type of funds that Administrative Agent received at its address specified pursuant to Article
XVI or at any Lending Installation specified in a notice received by Administrative Agent from such
Lender. If Administrative Agent receives, for the account of a Lender, a payment from 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., New York time, by Administrative Agent) or on the next Business Day (if
received after 2:00 p.m., New York time, by Administrative Agent), Administrative Agent shall pay
to such Lender interest on such payment at a rate per annum equal to the Federal Funds Effective
Rate for each day for which such payment is so delayed.




30









 








          2.14 Notes; Telephonic Notices. Each Lender is hereby authorized to record the
principal amount of each of its Loans and each repayment on the schedule attached to its Note;
provided, however, that the failure to so record shall not affect Borrower’s obligations under such
Note. Borrower hereby authorizes Administrative Agent to extend, convert or continue Advances,
effect selections of Types of Advances and to transfer funds based on telephonic notices made by
any person or persons who Administrative Agent in good faith believes to be acting on behalf of
Borrower. Borrower agrees to deliver promptly to Administrative Agent a written confirmation, if
such confirmation is requested by Administrative Agent, of each telephonic notice signed by an
Authorized Officer of Borrower. If the written confirmation differs in any material respect from
the action taken by Administrative Agent, the records of Administrative Agent shall govern absent
manifest error.




          2.15 Interest Payment Dates; Interest Basis. Interest accrued on each Advance
shall be payable on the first day of each calendar month, commencing with the first such date to
occur after the date hereof, and on any date on which the Advance is prepaid, whether due to
acceleration or otherwise. 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 noon (local time at the
place of receipt). If any payment of principal of or interest on an Advance shall become due on a
day which is not a Business Day, such payment shall be made on the next succeeding Business Day,
and 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, Administrative 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. Administrative
Agent will notify each Lender of the interest rate applicable to each LIBOR Advance promptly upon
determination of such interest rate and will give each Lender prompt notice of each change in the
Alternate Base Rate, the Applicable LIBOR Rate Margin or the Applicable Unused Commitment Rate.




          2.17 Lending Installations. Each Lender may book its Loans at any Lending
Installation selected by such Lender and may change its Lending Installation from time to time.
All terms of this Agreement shall apply to any such Lending Installation and the Notes shall be
deemed held by each Lender for the benefit of such Lending Installation. Each Lender may, by
written or telex notice to Administrative Agent and Borrower, designate a Lending Installation
through which Loans will be made by it and for whose account Loan payments are to be made.




          2.18 Non-Receipt of Funds by Administrative Agent. Unless Borrower or a Lender, as
the case may be, notifies Administrative Agent prior to the date (or, in the case of funding of an
ABR Loan by a Lender, prior to the time) on which such payment is due to Administrative Agent of
(i) in the case of a Lender, the proceeds of a Loan or (ii) in the case of Borrower, a payment of
principal, interest, fees or other amounts due under the Loan Documents to Administrative Agent for
the account of Lenders, that it does not intend to make such payment, Administrative Agent may
assume that such payment has been made. Administrative 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 Borrower or such Lender, as the case




31









 




may be, has not in fact made such payment to Administrative Agent, the recipient of such
payment shall, on demand by Administrative Agent, repay to Administrative 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 Administrative Agent until the date Administrative Agent
recovers such amount at a rate per annum equal to (a) in the case of payment by a Lender, the
Federal Funds Effective Rate for such day or (b) in the case of payment by Borrower, the interest
rate applicable to the relevant Advance.




          2.19 Swing Line. Notwithstanding the minimum amount of an Advance that may be
requested and the minimum amount of an Advance repaid under this Agreement, Lenders desire to
permit Advances to Borrower in amounts that may be less than the minimum Advance amounts required
under Section 2.6, and Lenders desire to permit Borrower to repay such Advances in amounts that may
be less than the minimum repayment amounts required under Section 2.7. Such Advances made pursuant
to this Section 2.19 shall be deemed to be Advances for purposes of this Agreement and are referred
to herein as “Swing Line Advances.” Swing Line Advances shall be requested, advanced, and repaid
in accordance with the provisions and limitations of this Agreement relating to all Advances,
subject to the following:





     (a) Aggregate Limit. The aggregate amount of all outstanding Swing Line
Advances shall not exceed at any one time $30,000,000. The Swing Line Advances and the
purchase by Lenders of interests therein pursuant to Section 2.19(d) below shall also be
subject to the limitations contained in Section 2.1.




     (b) Interest. Swing Line Advances bear interest at the greater of (i) the
Alternate Base Rate, minus 0.50% per annum and (ii) a rate equal to the LIBOR Rate for a
one-month Interest Period if such rate had been selected by Borrower on the date Borrower
requested such Swing Line Advance (the use of such LIBOR Rate in determining interest shall
not affect the Swing Line Maturity Date of any Swing Line Advance or cause any Swing Line
Advance to constitute a LIBOR Advance).




     (c) Funding Swing Line Advances. Swing Line Advances shall be funded by Swing
Line Lender pursuant to the procedures set forth in Section 2.8 of this Agreement. The
principal amount of each Swing Line Advance, together with all accrued interest, shall be
repaid by Borrower to Swing Line Lender in same day funds by 4:00 p.m. (or such later time
as may be acceptable to Swing Line Lender), New York time, on the Swing Line Advance
Maturity Date.




     (d) Repayment of Swing Line Advances. If Borrower fails to pay any Swing Line
Advances on the applicable Swing Line Advance Maturity Date, then such Advances shall no
longer be Swing Line Advances, but shall continue to be ABR Advances for purposes of this
Agreement. Each Lender shall be deemed to have irrevocably and unconditionally purchased
and received from Swing Line Lender an undivided interest and participation (ratably in
proportion to the ratio that such Lender’s Commitment bears to the Aggregate Commitment) in
such Advances. In such event, as of 11:59 p.m., New York time, on the Swing Line Advance
Maturity Date, Administrative Agent shall notify each Lender of the total principal amount
of all matured Swing Line Advances and each Lender’s ratable share thereof. Upon receipt of



32









 







such notice, each Lender shall promptly and unconditionally pay to Administrative Agent
for the account of Swing Line Lender the amount of such Lender’s share (ratably in
proportion to the ratio that such Lender’s Commitment bears to the Aggregate Commitment) of
such payment in same day funds, and Administrative Agent shall promptly pay such amount, and
any other amounts received by Administrative Agent for Swing Line Lender’s account pursuant
to this Section 2.19(d), to Swing Line Lender. If Administrative Agent so notifies such
Lender prior to 11:00 a.m., New York time, on any Business Day, such Lender shall make
available to Administrative Agent for the account of Swing Line Lender, such Lender’s share
of the amount of such payment on such Business Day in same day funds. If Administrative
Agent notifies such Lender after 11:00 a.m., New York time, on any Business Day, such Lender
shall make available to Administrative Agent for the account of Swing Line Lender such
Lender’s share of the amount of such payment on the next succeeding Business Day in same day
funds. If and to the extent such Lender shall not have so made its share of the amount of
such payment available to Administrative Agent for the account of Swing Line Lender, such
Lender agrees to pay to Administrative Agent for the account of Swing Line Lender forthwith
on demand such amount, together with interest thereon, for each day from the date such
payment was first due until the date such amount is paid to Administrative Agent for the
account of Swing Line Lender, at the Federal Funds Effective Rate. The failure of any
Lender to make available to Administrative Agent for the account of Swing Line Lender such
Lender’s share of any such payment shall not relieve any other Lender of its obligation
hereunder to make available to Administrative Agent for the account of Swing Line Lender its
share of any payment on the date such payment is to be made.




     (e) Advances. The payments made by Lenders to Swing Line Lender in
reimbursement of Swing Line Advances shall constitute, and Borrower hereby expressly
acknowledges and agrees that such payments shall constitute, Advances hereunder to Borrower
and such payments shall for all purposes be treated as Advances to Borrower (notwithstanding
that the amounts thereof may not comply with the provisions of Section 2.6 and 2.7). Such
Advances shall be ABR Advances, subject to Borrower’s rights under Article II hereof.



          2.20 Intentionally Omitted.




          2.21 Extension of Facility Maturity Date.





     (a) Extension Requests. Borrower may request, but not more than once in each
fiscal year of the Borrower, a one-year extension of the Facility Maturity Date by
submitting a request for an extension to Administrative Agent, provided that the extended
Facility Maturity Date may not be more than five (5) years after the Extension Request. At
the time of or prior to the delivery of such request, Borrower shall propose to
Administrative Agent the amount of the fees that Borrower agrees to pay with respect to such
one-year extension if approved by Lenders (such request for an extension, together with the
fee proposal, being herein referred to as the “Extension Request”). Promptly upon (but not
later than five (5) Business Days after) receipt of the Extension Request, Administrative
Agent shall notify each Lender of the contents thereof and shall request each Lender to
approve the Extension Request. Each Lender approving the Extension



33









 







Request shall deliver its written approval no later than sixty (60) days after the date
of the Extension Request. If the approval of all Lenders is received by Administrative
Agent within sixty (60) days after the date of the Extension Request (or as otherwise
provided in Section 2.21(b)), Administrative Agent shall promptly so notify Borrower and
each Lender, and the Facility Maturity Date shall be extended by one (1) year, and in such
event Borrower may thereafter request further extension(s) of the then scheduled Facility
Maturity Date in accordance with this Section 2.21. If any Lender does not deliver to
Administrative Agent such Lender’s written approval to any Extension Request within sixty
(60) days after the date of such Extension Request, the Facility Maturity Date shall not be
extended, except as otherwise provided in Section 2.21(b) or 2.21(c).




     (b) Rejecting Lenders/Full Assignment. If (i) Lenders whose pro rata shares of
the Aggregate Commitment exceed 66 2/3% of the Aggregate Commitment shall approve an
Extension Request but one or more other Lenders (“Rejecting Lenders”) do not approve such
Extension Request, (ii) all rights and obligations of such Rejecting Lenders under this
Agreement and under the other Loan Documents (including, without limitation, their
Commitment and all Loans owing to them) shall have been assigned, within ninety (90) days
following such Extension Request, in accordance with Section 2.23, to one or more
Replacement Lenders who shall have approved in writing such Extension Request at the time of
such assignment, and (iii) no other Lender shall have given written notice to Administrative
Agent of such Lender’s withdrawal of its approval of the Extension Request, Administrative
Agent shall promptly so notify Borrower and each Lender, and the Facility Maturity Date
shall be extended by one (1) year, and in such event Borrower may thereafter request further
extension(s) as provided in Section 2.21(a).




     (c) Rejecting Lenders/No Full Assignment. If (i) one or more Rejecting Lenders
shall not approve an Extension Request, (ii) the provisions of clause (ii) of Section
2.21(b) do not apply and (iii) no other Lender shall have given written notice to
Administrative Agent of such Lender’s withdrawal of its approval of the Extension Request,
Administrative Agent shall promptly notify Borrower and each Lender and any Replacement
Lender, and the Facility Maturity Date shall be extended by one (1) year (subject to the
limitations set forth in this Section 2.21(c)), and in such event Borrower may thereafter
request further extension(s) as provided in Section 2.21(a); provided, however, that (A) the
Aggregate Commitment shall be automatically reduced, effective as of the Facility Maturity
Date as determined prior to such extension (the “Previous Maturity Date”) and shall equal
the aggregate Commitments of Lenders who are not Rejecting Lenders and Lenders who are
Replacement Lenders; (B) all rights and obligations of such Rejecting Lenders under this
Agreement and under the other Loan Documents (including, without limitation, their
Commitment and all Loans owing to them) shall either be (1) assigned to Replacement Lenders
pursuant to Section 2.21(b), or (2) terminated, effective as of the Previous Maturity Date
(or such earlier date as Borrower and Administrative Agent may designate, in which case the
reduction of the Aggregate Commitment provided for in clause (A) above shall occur on such
earlier date); (C) if and to the extent such Rejecting Lender’s Commitment is assigned to
one or more Replacement Lenders, such assignment shall be effected in accordance with the
provisions of Section 2.23; and (D) if and to the extent such Rejecting Lender’s



34









 







Commitment is terminated, Borrower shall pay to Administrative Agent on the date of
such termination, solely for the account of such Rejecting Lender, all amounts due and owing
such Rejecting Lender hereunder or under any other Loan Document, including without
limitation the aggregate outstanding principal amount of the Loans owed to such Rejecting
Lender with respect to the terminated Commitment, together with accrued interest thereon
through the date of such termination, all amounts payable under Sections 3.1, 3.2 and 3.3
with respect to such Rejecting Lender and all fees payable to such Rejecting Lender
hereunder with respect to the terminated Commitment (and payment of such amount may not be
waived except with the consent of each Rejecting Lender, as more specifically provided in
Section 11.2(i)); and upon such Rejecting Lender’s termination, such Rejecting Lender shall
cease to be a party hereto but shall continue to be entitled to the benefits of Article III
and Section 12.7, as well as to any fees accrued hereunder and not yet paid, and shall
continue to be obligated under Section 13.8 with respect to obligations and liabilities
accruing prior to such termination of such Rejecting Lender’s Commitment.




     (d) Approval of Extension. Within ten (10) days after Administrative Agent’s
notice to Borrower that all (or some, as applicable) of Lenders have approved an Extension
Request (whether pursuant to Section 2.21(a), (b) or (c)), Borrower shall pay to
Administrative Agent for the account of each Lender approving the extension and each
Replacement Lender an extension fee in the amount provided in the Extension Request.




     (e) No Default. Notwithstanding anything to the contrary contained herein, no
extension of the Facility Maturity Date may be effected under this Section 2.21 if (x) an
Unmatured Event of Default or Event of Default shall be in existence on the effective date
of such extension or would occur after giving effect thereto or (y) any representation or
warranty made or deemed made by Borrower or any Guarantor in any Loan Document is not (or
would not be) true or correct in any material respect on the effective date of such increase
(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 be true and correct on and
as of such earlier date).



          2.22 Term Out Period.





     (a) Commencement of Term Out Period. If pursuant to the provisions of Section
9.1 or 9.2(e) the Term Out Period shall commence (the date of commencement thereof (as
provided in Section 9.1 or 9.2(e), as applicable) is herein referred to as the “Term Out
Date”), the provisions of this Section 2.22 shall apply.




     (b) Term Out Period. From and after three (3) calendar months after
the Term Out Date, the Aggregate Commitment (and each Lender’s Commitment) in effect
as of the Term Out Date shall be reduced on the first day after the end of each
three-month period by a percentage of such Aggregate Commitment amount (or such
Lender’s Commitment amount) as follows:




35









 





	 	 	 	 	 
	 	 	Percentage	 	Percentage
	 	 	of Commitment	 	of Commitment
	Period 	 	Reduction	 	Remaining
	3 calendar months after
Term Out Date
	 	16.666%	 	83.334%
	 
	 	 	 	 
	6 calendar months after
Term Out Date
	 	16.667%	 	66.667%
	 
	 	 	 	 
	9 calendar months after
Term Out Date
	 	16.667%	 	50.000%
	 
	 	 	 	 
	12 calendar months after
Term Out Date
	 	16.666%	 	33.334%
	 
	 	 	 	 
	15 calendar months after
Term Out Date
	 	16.667%	 	16.667%
	 
	 	 	 	 
	18 calendar months after
Term Out Date
	 	16.667%	 	0%







The commencement of the Term Out Period shall not extend the Facility Termination Date.



          2.23 Replacement of Certain Lenders. In the event a Lender (the “Affected
Lender”):





     (i) shall have requested compensation from Borrower under Section 3.1 or 3.3 to
cover additional costs incurred by such Lender that are not being incurred generally
by the other Lenders, or




     (ii) is a Rejecting Lender pursuant to Section 2.21,




then, in any such case, and at any time after such event occurs, Borrower or Administrative
Agent may make written demands on such Affected Lender (with a copy to Administrative Agent
in the case of a demand by Borrower and a copy to Borrower in the case of a demand by
Administrative Agent) for the Affected Lender to assign, and such Affected Lender shall
assign, pursuant to one or more duly executed Assignment and Assumptions, within five (5)
Business Days after the date of such demand, to one or more financial institutions that
comply with the provisions of Section 15.1(b), and that are selected by Borrower or
Administrative Agent, that are reasonably acceptable to Administrative Agent and Borrower,
that Borrower and/or Administrative Agent, as the case may be, shall have engaged for such
purpose (each, a “Replacement Lender”), all of such Affected Lender’s rights and obligations
under this Agreement and the other Loan Documents (including, without limitation, its
Commitment and all Loans owing to it) in accordance with Section 15.1. If any Affected
Lender fails to execute and deliver such




36









 








assignment agreements within thirty (30) days after
demand, then such Affected Lender shall have no further right to receive any amounts payable
under Sections 3.1 and 3.3.



     Administrative Agent agrees, upon the occurrence of such events with respect to an Affected
Lender and upon written request of Borrower, to use its reasonable efforts to obtain the
commitments from one or more financial institutions to act as a Replacement Lender. Administrative
Agent, the Replacement Lender and all other parties to this Agreement are authorized, but shall not
be obligated to, treat as fully assigned, in accordance with an Assignment and Assumption tendered
to an Affected Lender in accordance herewith, the rights and obligations of an Affected Lender that
fails to execute and deliver the same within five (5) Business Days after the date of such demand.
Further, with respect to such assignment, the Affected Lender shall have concurrently received, in
cash, all amounts due and owing to the Affected Lender hereunder or under any other Loan Document,
including without limitation the aggregate outstanding principal amount of the Loans owed to such
Lender, together with accrued interest thereon through the date of such assignment, amounts payable
under Sections 3.1, 3.2
and 3.3 with respect to such Affected Lender and all fees payable to such Affected Lender
hereunder; provided that, upon such Affected Lender’s replacement, such Affected Lender shall cease
to be a party hereto but shall continue to be entitled to the benefits of Article III and Section
12.7, as well as to any fees accrued hereunder and not yet paid, and shall continue to be obligated
under Section 13.8 with respect to obligations and liabilities accruing prior to the replacement of
such Affected Lender.



ARTICLE III




CHANGE IN CIRCUMSTANCES




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





          (i) impose, modify or deem applicable any reserve, special deposit or
similar requirement against assets of, deposits with or for the account of,
or credit extended by, any Lender (except any such reserve requirement
reflected in the Adjusted LIBO Rate) or Issuing Bank; or




          (ii) impose on any Lender or Issuing Bank or the London interbank market
any other condition affecting this Agreement or LIBOR Loans made by such
Lender or any Facility Letter of Credit or participation therein;


and the result of any of the foregoing shall be to increase the cost to such Lender of making or
maintaining any LIBOR Loan (or of maintaining its obligation to make any such Loan) or to increase
the cost to such Lender or Issuing Bank of participating in, issuing or maintaining any Facility
Letter of Credit or to reduce the amount of any sum received or receivable by such Lender or
Issuing Bank hereunder (whether of principal, interest or otherwise), then Borrower will pay to
such Lender or Issuing Bank, as the case may be, such additional amount or amounts as will
compensate such Lender or Issuing Bank, as the case may be, for such additional costs incurred or
reduction suffered.




37









 









          (b) If any Lender or Issuing Bank 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 Issuing Bank’s capital or on the capital of such Lender’s or
Issuing Bank’s holding company, if any, as a consequence of this Agreement or the
Loans made by, or participations in Facility Letters of Credit held by, such Lender,
or Facility Letters of Credit issued by such Issuing Bank, to a level below that
which such Lender or Issuing Bank or such Lender’s or Issuing Bank’s holding company
could have achieved but for such Change in Law (taking into consideration such
Lender’s or Issuing Bank’s policies and the policies of such Lender’s or Issuing
Bank’s holding company with respect to capital adequacy), then from time to time
Borrower will pay to such Lender or Issuing Bank, as the case may be, such
additional amount or amounts as will compensate such Lender or Issuing Bank or such
Lender’s or Issuing Bank’s holding company for any such reduction suffered.




          (c) A certificate of a Lender or Issuing Bank setting forth the amount or
amounts necessary to compensate such Lender or Issuing Bank or its holding company,
as the case may be, as specified in paragraph (a) or (b) of this Section shall be
delivered to Borrower and shall be conclusive absent manifest error. Borrower shall
pay such Lender or Issuing Bank, as the case may be, the amount shown as due on any
such certificate within 10 days after receipt thereof.




          (d) Failure or delay on the part of any Lender or Issuing Bank to demand
compensation pursuant to this Section shall not constitute a waiver of such Lender’s
or Issuing Bank’s right to demand such compensation; provided that Borrower
shall not be required to compensate a Lender or Issuing Bank pursuant to this
Section for any increased costs or reductions incurred more than 360 days prior to
the date that such Lender or Issuing Bank, as the case may be, notifies Borrower of
the Change in Law giving rise to such increased costs or reductions and of such
Lender’s or Issuing Bank’s intention to claim compensation therefor;
provided further that, if the Change in Law giving rise to such
increased costs or reductions is retroactive, then the 360-day period referred to
above shall be extended to include the period of retroactive effect thereof.



          3.2 Break Funding Payments. In the event of (a) the payment of any principal of
any LIBOR Loan other than on the last day of an Interest Period applicable thereto (including as a
result of an Event of Default), (b) the conversion of any LIBOR Loan other than on the last day of
the Interest Period applicable thereto, (c) the failure to borrow, convert, continue or prepay any
LIBOR Loan on the date specified in any notice delivered pursuant hereto or (d) the assignment of
any LIBOR Loan other than on the last day of the Interest Period applicable thereto as a result of
a request by the Borrower pursuant to Section 2.23, then, in any such event, Borrower shall
compensate each Lender for the loss, cost and expense attributable to such event. In the case of a
LIBOR Loan, 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,




38









 







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. A
certificate of any Lender setting forth any amount or amounts that such Lender is entitled to
receive pursuant to this Section shall be delivered to Borrower and shall be conclusive absent
manifest error. Borrower shall pay such Lender the amount shown as due on any such certificate
within 10 days after receipt thereof.




     3.3 Taxes. (a) Any and all payments by or on account of any obligation of
Borrower hereunder shall be made free and clear of and without deduction for any Indemnified Taxes
or Other Taxes; provided that if Borrower shall be required to deduct any Indemnified Taxes
or Other Taxes from such payments, then (i) the sum payable shall be increased as necessary so that
after making all required deductions (including deductions applicable to
additional sums payable under this Section) Administrative Agent, Lender or Issuing Bank (as
the case may be) receives an amount equal to the sum it would have received had no such deductions
been made, (ii) Borrower shall make such deductions and (iii) Borrower shall pay the full amount
deducted to the relevant Governmental Authority in accordance with applicable law.





     (b) In addition, Borrower shall pay any Other Taxes to the relevant
Governmental Authority in accordance with applicable law.




     (c) Borrower shall indemnify Administrative Agent and each Lender and Issuing
Bank, within 10 days after written demand therefor, for the full amount of any
Indemnified Taxes or Other Taxes paid by Administrative Agent or such Lender or
Issuing Bank, as the case may be, on or with respect to any payment by or on account
of any obligation of Borrower hereunder (including Indemnified Taxes or Other Taxes
imposed or asserted on or attributable to amounts payable under this Section) and
any penalties, interest and reasonable expenses arising therefrom or with respect
thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or
legally imposed or asserted by the relevant Governmental Authority. A certificate
as to the amount of such payment or liability delivered to the Borrower by a Lender
or Issuing Bank, or by Administrative Agent on its own behalf or on behalf of a
Lender or Issuing Bank, shall be conclusive absent manifest error.




     (d) As soon as practicable after any payment of Indemnified Taxes or Other
Taxes by the Borrower to a Governmental Authority, Borrower shall deliver to
Administrative Agent the original or a certified copy of a receipt issued by such
Governmental Authority evidencing such payment, a copy of the return reporting such
payment or other evidence of such payment reasonably satisfactory to Administrative
Agent.




     (e) Any Foreign Lender that is entitled to an exemption from or reduction of
withholding tax under the law of the jurisdiction in which Borrower is located, or
any treaty to which such jurisdiction is a party, with respect to payments under
this Agreement shall deliver to Borrower (with a copy to the



39









 






Administrative Agent),
at the time or times prescribed by applicable law, such properly completed and
executed documentation prescribed by applicable law or reasonably requested by
Borrower as will permit such payments to be made without withholding or at a reduced
rate.




     (f) If Administrative Agent or a Lender determines, in its sole discretion,
that it has received a refund of any Taxes or Other Taxes as to which it has been
indemnified by Borrower or with respect to which Borrower has paid additional
amounts pursuant to this Section 3.3, it shall pay over such refund to Borrower (but
only to the extent of indemnity payments made, or additional amounts paid, by
Borrower under this Section 3.3 with respect to the Taxes or Other Taxes giving rise
to such refund), net of all out-of-pocket expenses of Administrative Agent or such
Lender and without interest (other than any interest paid by the relevant
Governmental Authority with respect to such refund);
provided, that Borrower, upon the request of Administrative Agent or such
Lender, agrees to repay the amount paid over to Borrower (plus any penalties,
interest or other charges imposed by the relevant Governmental Authority) to
Administrative Agent or such Lender in the event Administrative Agent or such Lender
is required to repay such refund to such Governmental Authority. This Section shall
not be construed to require Administrative Agent or any Lender to make available its
tax returns (or any other information relating to its taxes which it deems
confidential) to Borrower or any other Person.



          3.4 Alternate Lending Office. To the extent reasonably possible, each Lender shall
designate an alternate lending office with respect to its LIBOR Loans to reduce any liability of
the Borrower to such Lender under Section 3.1, so long as such designation is not disadvantageous
to such Lender.




          3.5 Survival. The obligations of Borrower under Sections 3.1, 3.2 and 3.3 shall
survive payment of the Obligations and termination of this Agreement.




ARTICLE IV




THE LETTER OF CREDIT FACILITY




          4.1 Facility Letters of Credit. Each Issuing Bank agrees, on the terms and
conditions set forth in this Agreement, to issue from time to time for the account of Borrower or a
Guarantor designated by Borrower, through such offices or branches as it and Borrower may jointly
agree, one or more Facility Letters of Credit in accordance with this Article IV, during the period
commencing on the date hereof and ending on the Business Day prior to the Facility Termination
Date. Each Facility Letter of Credit shall be either (i) a standby letter of credit to support
obligations of Borrower or a Guarantor designated by Borrower, contingent or otherwise, arising in
the ordinary course of business, or (ii) a documentary letter of credit in respect of the purchase
of goods or services by Borrower or such Guarantor in the ordinary course of business.





40









 








4.2 Limitations. No Issuing Bank shall issue, amend or extend, at any time, any
Facility Letter of Credit:





     (i) if the aggregate maximum amount then available for drawing under Letters of
Credit issued by such Issuing Bank, after giving effect to the Facility Letter of
Credit or amendment or extension thereof requested hereunder, shall exceed any limit
imposed by law or regulation upon such Issuing Bank;




     (ii) if, after giving effect to the Facility Letter of Credit or amendment or
extension thereof requested hereunder, the aggregate principal amount of the Facility
LC Obligations would exceed $500,000,000;




     (iii) that, in the case of the issuance of a Facility Letter of Credit, is in,
or in the case of an amendment of a Facility Letter of Credit, increases the face
amount thereof by, an amount in excess of the then Available Credit of all
Lenders in the aggregate;




     (iv) if, after giving effect to the Facility Letter of Credit or amendment or
extension thereof requested hereunder, at any time at which Borrower does not have an
Investment Grade Rating the aggregate principal amount of all Consolidated Senior
Debt Borrowings would exceed the Borrowing Base determined as of the most recent
Inventory Valuation Date;




     (v) if such Issuing Bank receives written notice from Administrative Agent at or
before 1:00 p.m., New York time, on the proposed Issuance Date of such Facility
Letter of Credit that one or more of the conditions precedent contained in Sections
5.1 or 5.2, as applicable, would not on such Issuance Date be satisfied, unless such
conditions are thereafter satisfied and written notice of such satisfaction is given
to such Issuing Bank by Administrative Agent;




     (vi) that has an expiration date (taking into account any automatic renewal
provisions thereof) that is later than one (1) year after the Issuance Date, or such
later time as such Issuing Bank may agree; provided, however, in no event shall the
expiration date be later than the Business Day next preceding the scheduled Facility
Termination Date; or




     (vii) that is in a currency other than Dollars.



     4.3 Conditions. In addition to being subject to the satisfaction of the conditions
contained in Sections 5.1 and 5.2, as applicable, the issuance of any Facility Letter of Credit is
subject to the satisfaction in full of the following conditions:





     (i) Borrower shall have delivered to the Issuing Bank at such times and in such
manner as such Issuing Bank may reasonably prescribe a Reimbursement Agreement and
such other documents and materials as may be reasonably required pursuant to the
terms thereof, and the proposed Facility Letter of Credit shall be reasonably
satisfactory to such Issuing Bank in form and content; and



41









 






     (ii) as of the Issuance Date no order, judgment or decree of any court,
arbitrator or governmental authority shall enjoin or restrain such Issuing Bank from
issuing the Facility Letter of Credit and no law, rule or regulation applicable to
such Issuing Bank and no directive from and governmental authority with jurisdiction
over the Issuing Bank shall prohibit such Issuing Bank from issuing Letters of Credit
generally or from issuing that Facility Letter of Credit.



     4.4 Procedure for Issuance of Facility Letters of Credit.





     (a) Request for Facility Letter of Credit. Borrower shall give the Issuing
Bank and Administrative Agent not less than five (5) Business Days’ prior written notice of
any requested issuance of a Facility Letter of Credit under this Agreement. Such
notice shall specify (i) the stated amount of the Facility Letter of Credit requested,
(ii) the requested Issuance Date, which shall be a Business Day, (iii) the date on which
such requested Facility Letter of Credit is to expire, which date shall be in compliance
with the requirements of Section 4.2(vi), (iv) the purpose for which such Facility Letter of
Credit is to be issued (which shall be a purpose permitted pursuant to Sections 4.1 and
7.2), and (v) the Person for whose benefit the requested Facility Letter of Credit is to be
issued. At the time such request is made, Borrower shall also provide Administrative Agent
and such Issuing Bank with a copy of the form of the Facility Letter of Credit it is
requesting be issued.




     (b) Issuing Bank. Within two (2) Business Days after its receipt of a request
for issuance of a Facility Letter of Credit in accordance with Section 4.4(a), the Issuing
Bank shall approve or disapprove, in its reasonable discretion, the form of such requested
Facility Letter of Credit, but the issuance of such approved Facility Letter of Credit shall
continue to be subject to the provisions of this Article IV. The Issuing Bank shall use
reasonable efforts to notify Borrower of any changes in the Issuing Bank’s policies or
procedures that could reasonably be expected to affect adversely the Issuing Bank’s approval
of the form of any requested Facility Letters of Credit.




     (c) Confirmation of Issuance. Upon receipt of a request for issuance of a
Facility Letter of Credit in accordance with Section 4.4(a), Administrative Agent shall
determine, as of the close of business on the day it receives such request, whether the
issuance of such Facility Letter of Credit would be permitted under the provisions of
Sections 4.2(ii), (iii) and (iv) and, prior to the close of business on the second Business
Day after Administrative Agent received such request, Administrative Agent shall notify the
Issuing Bank and Borrower (in writing or by telephonic notice confirmed promptly thereafter
in writing) whether issuance of the requested Facility Letter of Credit would be permitted
under the provisions of Sections 4.2(ii), (iii) and (iv). If Administrative Agent notifies
the Issuing Bank and the applicable Borrower that such issuance would be so permitted, then,
subject to the terms and conditions of this Article IV and provided that the applicable
conditions set forth in Sections 5.1 and 5.2 have been satisfied, the Issuing Bank shall, on
the requested Issuance Date, issue the requested Facility Letter of Credit in accordance
with the Issuing Bank’s usual and customary business practices. The Issuing Bank shall give
Administrative Agent written notice, or telephonic notice confirmed promptly thereafter in
writing, of the issuance of a Facility Letter of Credit.



42









 






     (d) Extension and Amendment. An Issuing Bank shall not extend or amend any
Facility Letter of Credit unless the requirements of this Section 4.4 are met as though a
new Facility Letter of Credit were being requested and issued; provided, however, that if
the Facility Letter of Credit, as originally issued, sets forth such extension or amendment,
then the Issuing Bank shall so extend or amend the Facility Letter of Credit upon the
request of Borrower given in the manner set forth in Section 4.4(a) and upon satisfaction of
the terms and conditions of Section 4.4(c).




     (e) Other Letters of Credit. Any Lender may, but shall not be obligated to,
issue to Borrower or any Guarantor Letters of Credit (that are not Facility Letters of
Credit) for its own account, and at its own risk. None of the provisions of this
Article IV shall apply to any Letter of Credit that is not a Facility Letter of Credit.




     (f) Bank One, Arizona LCs. Bank One, Arizona issued prior to the date of the
Prior Credit Agreement, and there are currently outstanding pursuant to the Prior Credit
Agreement, those certain Letters of Credit identified in Schedule 4.4 hereto as
having been issued by Bank One, Arizona (as the same may be extended or amended (but not
increased) by Bank One, Arizona in accordance with this Agreement, the “Bank One, Arizona
LCs”). The Bank One, Arizona LCs shall remain outstanding after the date of this Agreement
and, from and after the date of this Agreement, shall constitute Facility Letters of Credit
for all purposes under this Agreement and shall be subject to all terms and conditions
hereof. On the date hereof, simultaneously with the payment made to the Prior Lenders under
Section 5.1(ix), the participation of the Prior Lenders in the Bank One, Arizona LCs shall
terminate and Bank One, Arizona shall be deemed to have sold and transferred, and each
Lender shall be deemed to have irrevocably and unconditionally purchased and received from
Bank One, Arizona, in each case without further action on the part of any Person, an
undivided interest and participation (ratably in proportion to the ratio that such Lender’s
Commitment bears to the Aggregate Commitment) in each such Bank One, Arizona LCs. Each
Lender severally agrees to fund any disbursements by Bank One, Arizona pursuant to the Bank
One, Arizona LCs by funding in accordance with Section 4.6. Bank One, Arizona shall have
all of the rights, duties and obligations of an Issuing Bank but solely with respect to the
Bank One, Arizona LCs. Bank One, Arizona shall not have the right, duty or obligation to
issue any Facility Letters of Credit other than the Bank One, Arizona LCs heretofore issued
and shall not increase the face amount of any Bank One, Arizona LCs. Upon request by
Borrower, Bank One, Arizona may extend or otherwise amend (but without increasing the face
amount thereof) any Bank One, Arizona LCs, subject to and in accordance with the provisions
of this Agreement. Bank One, Arizona joins in this Agreement solely for the purposes set
forth in this Section 4.4(f) and does not hold any Commitment or any other interest as a
Lender hereunder except the rights, duties and obligations as Issuing Bank with respect to
the Bank One, Arizona LCs.




     (g) Other Existing LCs. Pursuant to the Prior Credit Agreement, certain of the
Prior Issuing Banks have issued prior to the date hereof, and there are currently
outstanding, those certain Letters of Credit identified in Schedule 4.4 hereto as
having been issued by the Prior Issuing Banks identified therein (as the same may be
extended, amended or increased by any such Prior Issuing Bank in accordance with this
Agreement,



43









 






the “Other Existing LCs”). The Other Existing LCs shall remain outstanding after
the date of this Agreement and, from and after the date of this Agreement, shall constitute
Facility Letters of Credit for all purposes under this Agreement and shall be subject to all
terms and conditions hereof. On the date hereof, simultaneously with the payment made to
the Prior Lenders under Section 5.1(ix), the participation of the Prior Lenders in the Other
Existing LCs shall terminate and the Prior Issuing Banks that have issued such Other
Existing LCs shall be deemed to have sold and transferred, and each Lender shall be deemed
to have irrevocably and unconditionally purchased and received from such Prior Issuing
Banks, in each case without further action on the part of any Person, an
undivided interest and participation (ratably in proportion to the ratio that such
Lender’s Commitment bears to the Aggregate Commitment) in each such Other Existing LCs.
Each Lender severally agrees to fund any disbursements by the Prior Issuing Banks that have
issued such Other Existing LCs pursuant to the Other Existing LCs by funding in accordance
with Section 4.6.



     4.5 Duties of Issuing Bank. Any action taken or omitted to be taken by an Issuing
Bank under or in connection with any Facility Letter of Credit, if taken or omitted in the absence
of willful misconduct or gross negligence, shall not put such Issuing Bank under any resulting
liability to any Lender or, assuming that such Issuing Bank has complied with the procedures
specified in Section 4.4, relieve any Lender of its obligations hereunder to such Issuing Bank. In
determining whether to pay under any Facility Letter of Credit, an Issuing Bank shall have no
obligation relative to Lenders other than to confirm that any documents required to be delivered
under such Facility Letter of Credit appear to have been delivered in compliance and that they
appear to comply on their face with the requirements of such Facility Letter of Credit.




     4.6 Participation.





     (a) Proportionate Share of Lenders. Immediately upon issuance by an Issuing
Bank of any Facility Letter of Credit in accordance with Section 4.4, each Lender shall be
deemed to have irrevocably and unconditionally purchased and received from such Issuing
Bank, without recourse or warranty, an undivided interest and participation (ratably in
proportion to the ratio that such Lender’s Commitment bears to the Aggregate Commitment) in
such Facility Letter of Credit.




     (b) Payment by Issuing Bank. In the event that an Issuing Bank makes any
payment under any Facility Letter of Credit and Borrower shall not have repaid such amount
to such Issuing Bank on or before the date of such payment by such Issuing Bank, such
Issuing Bank shall promptly so notify Administrative Agent, which shall promptly so notify
each Lender. Upon receipt of such notice, each Lender severally agrees that it shall
promptly and unconditionally pay to Administrative Agent for the account of such Issuing
Bank the amount of such Lender’s share (ratably in proportion to the ratio that such
Lender’s Commitment bears to the Aggregate Commitment) of such payment in same day funds,
and Administrative Agent shall promptly pay such amount, and any other amounts received by
Administrative Agent for such Issuing Bank’s account pursuant to this Section 4.6(b), to
such Issuing Bank. If Administrative Agent so notifies such Lender prior to 11:00 a.m., New
York time, on any Business Day, such Lender shall



44









 






make available to Administrative Agent for
the account of such Issuing Bank such Lender’s share of the amount of such payment on such
Business Day in same day funds. If and to the extent such Lender shall not have so made its
share of the amount of such payment available to Administrative Agent for the account of
such Issuing Bank, such Lender agrees to pay to Administrative Agent for the account of such
Issuing Bank forthwith on demand such amount, together with interest thereon, for each day
from the date such payment was first due until the date such amount is paid to
Administrative Agent for the account of such Issuing Bank, at the Federal Funds Effective
Rate. The failure of any Lender to make available to Administrative Agent for the account
of such
Issuing Bank such Lender’s share of any such payment shall not relieve any other Lender
of its obligation hereunder to make available to Administrative Agent for the account of
such Issuing Bank its share of any payment on the date such payment is to be made.




     (c) Advances. The payments made by Lenders to an Issuing Bank in reimbursement
of amounts paid by it under a Facility Letter of Credit shall constitute, and Borrower
hereby expressly acknowledges and agrees that such payments shall constitute, Advances
hereunder to Borrower and such payments shall for all purposes be treated as Advances to
Borrower (notwithstanding that the amounts thereof may not comply with the provisions of
Section 2.6). Such Advances shall be ABR Advances, subject to Borrower’s rights under
Article II hereof.




     (d) Copies of Documents. Upon the request of Administrative Agent or any
Lender, an Issuing Bank shall furnish to the requesting Administrative Agent or Lender
copies of any Facility Letter of Credit or Reimbursement Agreement to which such Issuing
Bank is party and such other documentation as may reasonably be requested by Administrative
Agent or a Lender.




     (e) Obligations of Lenders. The obligations of Lenders to make payments to
Administrative Agent for the account of an Issuing Bank with respect to a Facility Letter of
Credit shall be irrevocable, not subject to any qualification or exception whatsoever and
shall be made in accordance with, but not subject to, the terms and conditions of this
Agreement under all circumstances notwithstanding:




     (i) any lack of validity or enforceability of this Agreement,
any Facility Letter of Credit (except where due to the gross
negligence or willful misconduct of the Issuing Bank), or any of the
other Loan Documents;




     (ii) the existence of any claim, setoff, defense or other right
which Borrower may have at any time against a beneficiary named in a
Facility Letter of Credit or any transferee of any Facility Letter
of Credit (or any Person for whom any such transferee may be
acting), such Issuing Bank, Administrative Agent, any Lender, or any
other Person, whether in connection with this Agreement, any
Facility Letter of Credit, the transactions contemplated herein or
any unrelated transactions (including any underlying transactions
between Borrower or any Subsidiary and



45









 






the beneficiary named in any
Facility Letter of Credit) other than the defense of payment in
accordance with this Agreement or a defense based on the gross
negligence or willful misconduct of the Issuing Bank;




     (iii) any draft, certificate or any other document presented
under the Facility Letter of Credit proving to be forged,
fraudulent, invalid or insufficient in any respect of any statement
therein being untrue or inaccurate in any respect so long as the
payment by the Issuing Bank under such Facility Letter of
Credit against presentation of such draft, certificate or other
document shall not have constituted gross negligence or willful
misconduct;




     (iv) the surrender or impairment of any security for the
performance or observance of any of the terms of any of the Loan
Documents;




     (v) any failure by Administrative Agent or the Issuing Bank to
make any reports required pursuant to Section 4.8; or




     (vi) the occurrence of any Event of Default or Unmatured Event
of Default.



4.7 Compensation for Facility Letters of Credit.





      (a) Payment of Facility Letter of Credit Fee. Borrower agrees to pay to
Administrative Agent, in the case of each outstanding Facility Letter of Credit (including
without limitation the Existing Letters of Credit), the Facility Letter of Credit Fee
therefor, payable in quarterly installments in arrears, not later than five (5) Business
Days following Administrative Agent’s delivery to Borrower of each quarterly statement of
Facility Letter of Credit Fees provided for in paragraph (c) below, commencing with the
calendar quarter next following the Issuance Date or, in the case of the Existing Letters of
Credit, next following the date hereof. The initial installment of the Facility Letter of
Credit Fees for the Existing Letters of Credit shall be a pro rata portion of the annual
Facility Letter of Credit Fee for the period commencing on the date hereof and ending on the
day preceding such payment date. The initial installment of the Facility Letter of Credit
Fee for any Facility Letter of Credit hereafter issued shall be a pro rata portion of the
annual Facility Letter of Credit Fee for the period commencing on the Issuance Date and
ending on the day preceding such payment date. Facility Letter of Credit Fees shall be
calculated, on a pro rata basis for the period to which such payment applies, for actual
days that will elapse during such period, on the basis of a 360-day year. Administrative
Agent shall promptly remit such Facility Letter of Credit Fees, when paid, as follows: (i)
to each Issuing Bank as an issuance fee in an amount equal to the product of (A) 0.125% per
annum and (B) the face amount of the Facility Letters of Credit issued by such Issuing Bank
with respect to which such Facility Letters of Credit Fees have been paid, and (ii) the
balance of such Facility Letter of Credit Fees to Lenders (including such



46









 






Issuing Bank)
(ratably in the proportion that each Lender’s Commitment bears to the Aggregate Commitment).




     (b) Amounts Owed to Issuing Bank. An Issuing Bank shall have the right to
receive solely for its own account, and in addition to the issuance fee provided for in
Section 4.7(a)(i), such amounts as Borrower may agree, in writing, to pay for such Issuing
Bank’s out-of-pocket costs of issuing and servicing Facility Letters of Credit.




     (c) Quarterly Statement. Administrative Agent shall, with reasonable
promptness following receipt from all Issuing Banks of the reports provided for in
Section 4.8 for the months of March, June, September and December, respectively,
deliver to Borrower a quarterly statement of the Facility Letter of Credit Fees then due and
payable.



     4.8 Issuing Bank Reporting Requirements. Each Issuing Bank shall, no later than
the third (3rd) Business Day following the last day of each month, provide to
Administrative Agent a schedule of the Facility Letters of Credit issued by it, in form and
substance reasonably satisfactory to Administrative Agent, showing the Issuance Date, account
party, original face amount, amount (if any) paid thereunder, expiration date and the reference
number of each Facility Letter of Credit outstanding at any time during such month (and whether
such Facility Letter of Credit is a performance Letter of Credit or financial Letter of Credit) and
the aggregate amount (if any) payable by Borrower to such Issuing Bank during the month pursuant to
Section 3.2. Copies of such reports shall be provided promptly to each Lender and Borrower by
Administrative Agent.




     4.9 Indemnification; Nature of Issuing Bank’s Duties.





     (a) Indemnity. In addition to amounts payable as elsewhere provided in this
Article IV, Borrower hereby agrees to protect, indemnify, pay and hold harmless
Administrative Agent and each Lender and Issuing Bank from and against any and all claims,
demands, liabilities, damages, losses, costs, charges and expenses (including reasonable
attorneys’ fees) arising from the claims of third parties against Administrative Agent or
any Issuing Bank or Lender as a consequence, direct or indirect, of (i) the issuance of any
Facility Letter of Credit for Borrower other than, in the case of an Issuing Bank, as a
result of its willful misconduct or gross negligence, or (ii) the failure of an Issuing Bank
issuing a Facility Letter of Credit for Borrower to honor a drawing under such Facility
Letter of Credit as a result of any act or omission, whether rightful or wrongful, of any
present or future de jure or de facto government or governmental authority.




     (b) Assumption of Risk. As among Borrower, Lenders, Administrative Agent and
Issuing Banks, Borrower assumes all risks of the acts and omissions of, or misuse of
Facility Letters of Credit by, the respective beneficiaries of such Facility Letters of
Credit. In furtherance and not in limitation of the foregoing, neither Administrative Agent
nor any Lender or Issuing Bank shall be responsible:



47









 






     (i) for the form, validity, sufficiency, accuracy, genuineness
or legal effect of any document submitted by any party in connection
with the application for and issuance of the Facility Letters of
Credit, even if it should in fact prove to be in any or all respects
invalid, insufficient, inaccurate, fraudulent or forged;




     (ii) for the validity or sufficiency of any instrument
transferring or assigning or purporting to transfer or assign a
Facility Letter of Credit or the rights or benefits thereunder or
proceeds thereof, in whole or in part, which may prove to be
invalid or ineffective for any reason;




     (iii) for failure of the beneficiary of a Facility Letter of
Credit to comply fully with conditions required in order to draw
upon such Facility Letter of Credit;




     (iv) for errors, omissions, interruptions or delays in
transmission or delivery of any messages, by mail, cable, telegraph,
telex or otherwise, whether or not they be in cipher;




     (v) for errors in interpretation of technical terms;




     (vi) for any loss or delay in the transmission or otherwise of
any document required in order to make a drawing under any Facility
Letter of Credit or of the proceeds thereof;




     (vii) for the misapplication by the beneficiary of a Facility
Letter of Credit of the proceeds of any drawing under such Facility
Letter of Credit; and




     (viii) for any consequences arising from causes beyond the
control of Administrative Agent, the Issuing Banks and Lenders
including, without limitation, any act or omission, whether rightful
or wrongful, of any present or future de jure or de facto government
or governmental authority. None of the above shall affect, impair,
or prevent the vesting of any of the Issuing Banks’ rights or powers
under this Section 4.9.




     (c) Good Faith. In furtherance and extension and not in limitation of the
specific provisions hereinabove set forth, any action taken or omitted by an Issuing Bank
under or in connection with the Facility Letters of Credit or any related certificates, if
taken or omitted in good faith under commercially reasonable standards, shall not put such
Issuing Bank, Administrative Agent or any Lender under any resulting liability to Borrower
or relieve Borrower of any of its obligations hereunder to any such Person.




     (d) Certain Acts of Issuing Bank. Notwithstanding anything to the contrary
contained in this Section 4.9, Borrower shall have no obligation to indemnify an Issuing



48









 






Bank under this Section 4.9 in respect of any liability incurred by such Issuing Bank
arising primarily out of the willful misconduct or gross negligence of such Issuing Bank, as
determined by a court of competent jurisdiction, or out of the wrongful dishonor by such
Issuing Bank of a proper demand for payment made under the Facility Letters of Credit issued
by such Issuing Bank, unless such dishonor was made at the request of Borrower.



          4.10 Facility LC Collateral Account. Borrower agrees that it will, upon the
request of Administrative Agent and until the final expiration date of any Facility Letter of
Credit and thereafter as long as any amount is payable to any Issuing Bank or Lender in
respect of any Facility Letter of Credit, maintain a special collateral account pursuant to
arrangements satisfactory to Administrative Agent (the “Facility LC Collateral Account”) at
Administrative Agent’s office at the address specified pursuant to Article XVI, in the name of
Borrower but under the sole dominion and control of Administrative Agent, for the ratable benefit
of Lenders and in which Borrower shall have no interest other than as set forth in Section 11.1.
Borrower hereby pledges, assigns and grants to Administrative Agent, on behalf of and for the
ratable benefit of Lenders, a security interest in all of Borrower’s right, title and interest in
and to all funds which may from time to time be on deposit in the Facility LC Collateral Account to
secure the prompt and complete payment and performance of the Facility LC Obligations and any other
amounts in respect of any Facility Letter of Credit or Reimbursement Agreement as shall from time
to time have become due and payable by Borrower to any Lender or Issuing Bank under the Loan
Documents. Administrative Agent will invest any funds on deposit from time to time in the Facility
LC Collateral Account in certificates of deposit of the Lender acting as Administrative Agent and
having a maturity not exceeding 30 days. Nothing in this Section 4.10 shall (i) obligate Borrower
to deposit any funds in the Facility LC Collateral Account other than as required in Section 11.1
or (ii) obligate Administrative Agent to require Borrower to make deposits in the Facility LC
Collateral Account or limit the right of Administrative Agent to release any funds held in the
Facility LC Collateral Account, in each case other than as required by Section 11.1.




          4.11 Obligations of Issuing Bank and Other Lenders. Except to the extent that a
Lender shall have agreed to be designated as an Issuing Bank, no Lender shall have any obligation
to accept or approve any request for, or to issue, amend or extend, any Letter of Credit, and the
obligations of each Issuing Bank to issue, amend or extend any Facility Letter of Credit are
expressly limited by and subject to the provisions of this Article IV.




ARTICLE V




CONDITIONS PRECEDENT




          5.1 Initial Advance. Lenders shall not be required to make the initial Advance
hereunder, and the Issuing Banks shall not be required to issue the initial Facility Letter of
Credit hereunder, unless Borrower has paid to Administrative Agent (a) the fees for the account of
Lenders set forth in Arranger’s letter to Lenders dated February 3,
2006 and (b) the fees for the
account of Administrative Agent and Arranger set forth in the letter agreement dated February 3,




49









 







2006 (and accepted by Borrower on February 3, 2006) herewith among Administrative Agent, Arranger
and Borrower, and Borrower has furnished to Administrative Agent:





          (i) Subject to the provisions of the last paragraph of this Section
5.1, copies of the articles or certificate of incorporation of Borrower,
together with all amendments, and a certificate of good standing, all
certified by the appropriate governmental officer in the jurisdiction of
incorporation.




          (ii) Subject to the provisions of the last paragraph of this Section
5.1, copies of the articles or certificate of incorporation of each
Guarantor that is a corporation, together with all amendments, certified by
an authorized officer of such Guarantor and a certificate of good standing
from the appropriate governmental officer in the jurisdiction of
incorporation.




          (iii) Subject to the provisions of the last paragraph of this Section
5.1, copies, certified by the Secretary or Assistant Secretary of Borrower
and each Guarantor that is a corporation, of each such corporation’s by-laws
and of its Board of Directors’ resolutions (and resolutions of other bodies,
if any are deemed necessary by counsel for any Lender), or, in the case of
each Guarantor that is not a corporation, other appropriate consents and
approvals, authorizing the execution of the Loan Documents.




          (iv) Subject to the provisions of the last paragraph of this Section
5.1, for each Guarantor that is a limited liability company or limited
partnership (A) a copy of the certificate or articles of formation or
certificate of limited partnership (as applicable), certified by the
appropriate officer of such Guarantor’s manager, managing member or general
partner, (B) a certificate of good standing from the appropriate
governmental officer in the jurisdiction of formation and (C) a copy,
certified by the appropriate officer of such Guarantor or of such
Guarantor’s manager, managing member or general partner, of such Guarantor’s
operating agreement or limited partnership, as applicable.




          (v) Subject to the provisions of the last paragraph of this Section
5.1, incumbency certificates, executed by the Secretary or Assistant
Secretary of Borrower and each Guarantor (or, in the case of a Guarantor
that is not a corporation, the appropriate officer of such Guarantor or of
its manager, managing member or general partner), which shall identify by
name and title and bear the signature of the officers of the such
corporation (or other applicable entity) authorized to sign the applicable
Loan Documents and (if applicable) to make borrowings hereunder and to
request, apply for and execute Reimbursement Agreements with respect to
Facility Letters of Credit hereunder, upon which certificates Administrative
Agent, Lenders and the Issuing Banks




50









 





shall be entitled to rely until
informed of any change in writing by Borrower or the applicable Guarantor.




          (vi) A written opinion of General Counsel of Borrower, addressed to
Administrative Agent and Lenders in substantially the form of Exhibit
E hereto.




          (vii) Notes payable to the order of each of Lenders.




          (viii) The Guaranty duly executed by the Guarantors.




          (ix) Such written money transfer instructions, in form acceptable to
Administrative Agent, addressed to Administrative Agent and signed by an
Authorized Officer, as Administrative Agent may have reasonably requested.




          (x) Evidence satisfactory to Administrative Agent of payment in full
(which payment may be made from the proceeds of the initial Advance
hereunder) of all principal sums outstanding under the Prior Credit
Agreement, all accrued and unpaid interest and fees, and amounts (if any)
payable under Section 3.4 of the Prior Credit Agreement.




          (xi) Any other information required by Section 326 of the USA PATRIOT
ACT or necessary for Administrative Agent or any Lender to verify the
identity of Borrower and Guarantors as is or may be required by Section 326
of the USA PATRIOT ACT.




          (xii) Such other documents as any Lender or Issuing Bank or their
respective counsel may have reasonably requested.


In the case of the documents (other than good standing certificates and resolutions) provided for
in subsections (i), (ii), (iii), (iv) and (v), Borrower may furnish, in lieu of the documentation
specified in such subsections, a certificate or certificates of a secretary or assistant secretary
or other applicable officer to the effect that the documents furnished pursuant to the Prior Credit
Agreement remain in full force and effect and have not been amended or (if they have been amended)
including copies of such amendments.




          5.2 Each Advance. Lenders shall not be required to make any Advance (other than
(a) the conversion of an Advance of one Type to an Advance of another Type that does not increase
the aggregate amount of outstanding Advances and (b) Advances pursuant to Section 2.19(d)), unless
on the applicable Borrowing Date, and an Issuing Bank shall not be required to issue, amend or
extend a Facility Letter of Credit unless on the applicable Issuance Date:





     (i) There exists no Event of Default or Unmatured Event of Default.




          (ii) The representations and warranties contained in Article VI are true
and correct in all material respects as of such Borrowing Date or



51









 







Issuance
Date 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 be true and correct in all material respects on and as of such
earlier date and except for changes permitted by this Agreement. Solely for
purposes of this Section 5.2, the representations and warranties in Sections
6.5 and 6.7 relate solely to the date of this Agreement.




     (iii) After the making of such Advance or issuance of such Facility
Letter of Credit, (A) the principal amount of all Advances plus the aggregate
amount of the Facility LC Obligations outstanding shall not exceed the
Aggregate Commitment, and (B) at any time at which Borrower does not have an
Investment Grade Rating, the aggregate principal amount of all Consolidated
Senior Debt Borrowings shall not exceed the Borrowing Base (determined as of
the most recent Inventory Valuation Date).




     (iv) Borrower shall have delivered to Administrative Agent, within the
time period specified in Section 2.8, a duly completed Borrowing Notice in
substantially the form of Exhibit D hereto.




     (v) All legal matters incident to (A) the making of such Advance shall
be reasonably satisfactory to Administrative Agent and its counsel and (B)
the issuance of such Facility Letter of Credit shall be reasonably
satisfactory to Administrative Agent, such Issuing Bank and their respective
counsel.



          Each Borrowing Notice with respect to each such Advance and each request for a Facility Letter
of Credit shall constitute a representation and warranty by Borrower that the conditions contained
in Sections 5.2(i) and (ii) have been satisfied.




ARTICLE VI




REPRESENTATIONS AND WARRANTIES




          Borrower represents and warrants to Lenders and Administrative Agent that:



                 6.1 Existence and Standing. Borrower is a corporation duly incorporated, validly
existing and in good standing under the laws of its jurisdiction of incorporation and has all
requisite authority to conduct its business in each jurisdiction in which its business is conducted
(except to the extent that a failure to maintain such existence, good standing or authority would
not reasonably be expected to have and does not have a Material Adverse Effect). Each Guarantor is
a corporation, limited liability company or limited partnership (as applicable) duly incorporated
or formed, validly existing and in good standing under the laws of its jurisdiction of
incorporation or formation and has all requisite authority to conduct its business in each
jurisdiction in which its business is conducted (except to the extent that a failure




52









 







to maintain
such existence, good standing or authority would not reasonably be expected to have and does not
have a Material Adverse Effect).




          6.2 Authorization and Validity. Borrower has the corporate power and authority to
execute and deliver the Loan Documents and to perform its obligations hereunder and thereunder.
The execution and delivery by Borrower of the Loan Documents and the performance of its obligations
thereunder have been duly authorized and the Loan Documents constitute legal, valid and binding
obligations of Borrower enforceable against Borrower in
accordance with their terms, subject to bankruptcy, insolvency or similar laws affecting the
enforcement of creditors’ rights generally and general principles of equity. Each Guarantor has
the corporate, limited liability company or limited partnership (as applicable) power and authority
to execute and deliver the Guaranty delivered by it and to perform its obligations thereunder. The
execution and delivery by each Guarantor of such Guaranty and the performance of its obligations
thereunder have been duly authorized, and each Guaranty constitutes the legal, valid and binding
obligations of such Guarantor enforceable against such Guarantor in accordance with its terms,
subject to bankruptcy, insolvency or similar laws affecting the enforcement of creditors’ rights
generally and general principles of equity.




          6.3 No Conflict; Government Consent. Neither the execution and delivery by
Borrower or Guarantors of the Loan Documents, nor the consummation of the transactions herein
contemplated, nor compliance with the provisions hereof or thereof will violate in any material
respect any law, rule, regulation, order, writ, judgment, injunction, decree or award binding on
Borrower or any Guarantor or Borrower’s or a Guarantor’s certificate of incorporation, bylaws,
certificate or articles of formation, operating agreement, certificate of limited partnership, or
limited partnership agreement or the provisions of any indenture (including without limitation the
Indenture), instrument or agreement to which Borrower or any Guarantor is a party or is subject, or
by which it, or its Property, is bound, or conflict with or constitute a default thereunder, or
result in the creation or imposition of any Lien in, of or on the Property of Borrower or any
Guarantor pursuant to the terms of any such indenture, instrument or agreement. Except as set
forth on Schedule 6.3 hereto, no order, consent, approval, license, authorization, or
validation of, or filing, recording or registration with, or exemption by, any governmental or
public body or authority, or any subdivision thereof, is required to authorize, or is required in
connection with the execution, delivery and performance of, or the legality, validity, binding
effect or enforceability of, any of the Loan Documents.




          6.4 Financial Statements. The December 31, 2005 consolidated and consolidating
financial statements of Borrower (and its Subsidiaries) delivered to Lenders were prepared pursuant
to the rules and regulations of the Securities and Exchange Commission. Such statements fairly
present, in all material respects, the financial condition and operations of Borrower and its
Subsidiaries on a consolidated or consolidating basis (as applicable) at such date and the results
of their operations for the period then ended on a consolidated or consolidating basis (as
applicable). The September 30, 2005 consolidated and consolidating financial statements of
Borrower (and its Subsidiaries) delivered to Lenders were prepared pursuant to the rules and
regulations of the Securities and Exchange Commission. Such statements fairly present, in all
material respects, the financial condition and operations of Borrower and its Subsidiaries on a
consolidated or consolidating basis (as applicable) at such




53









 







date and the results of their
operations for the period then ended on a consolidated or consolidating basis (as applicable),
subject to final audit adjustments.




          6.5 Material Adverse Change. Since the date of the financial statements of
Borrower described in Section 6.4, there has been no change in the business, Property, condition
(financial or otherwise) or results of operations of Borrower and Guarantors (taken as a whole)
that has had or would reasonably be expected to have a Material Adverse Effect. The foregoing
representation and warranty is made solely as of the date of this Agreement.




          6.6 Taxes. Borrower and each Guarantor have filed all United States federal income
tax returns and all other material tax returns which are required to be filed and have paid all
taxes due pursuant to said returns or pursuant to any assessment received by Borrower or a
Guarantor, except such taxes, if any, as are being contested in good faith and as to which adequate
reserves have been provided. No tax Liens (except Permitted Liens) have been filed and no claims
are being asserted with respect to any such taxes that have had or would reasonably be expected to
have a Material Adverse Effect. The charges, accruals and reserves on the books of Borrower and
each Guarantor in respect of any taxes or other governmental charges are adequate in accordance
with Agreement Accounting Principles.




          6.7 Litigation and Contingent Obligations. Except as set forth in Borrower’s form
10-K report for the period ending December 31, 2005 or Borrower’s form 10-Q report for the period
ending September 30, 2005 or (with respect to any litigation, arbitration, governmental
investigation, proceeding or inquiry commenced after the date hereof) in any SEC Filing, there is
no litigation, arbitration, governmental investigation, proceeding or inquiry pending or, to the
knowledge of any Authorized Officer, threatened against or affecting Borrower or any Guarantor that
has had or would reasonably be expected to have a Material Adverse Effect. Other than any
liability incident to such litigation, arbitration or proceedings, neither Borrower nor any
Guarantor have any material contingent obligations not provided for or disclosed in the financial
statements (whether quarterly or annual) of Borrower and Guarantors that have been most recently
delivered by Borrower and Guarantors to Administrative Agent that has had or would reasonably be
expected to have a Material Adverse Effect.




          6.8 Subsidiaries. Schedule 6.8 hereto contains an accurate list of all of
the Subsidiaries of Borrower, setting forth their respective jurisdictions of incorporation or
formation and the percentage of their respective capital stock, membership or partnership interests
owned by Borrower or its Subsidiaries. All of the issued and outstanding shares of capital stock
of those Subsidiaries that are corporations have been duly authorized and validly issued and are
fully paid and non-assessable. All of the Non-Guarantor Subsidiaries are listed on Schedule
1 hereto.




          6.9 ERISA. The Unfunded Liabilities of all Single Employer Plans do not in the
aggregate exceed $5,000,000. The withdrawal liabilities to Multiemployer Plans of the Guarantor,
Borrower and any other member of the Controlled Group do not, and are not reasonably expected to,
exceed $5,000,000 in the aggregate. Each Plan complies in all
material respects with all applicable
requirements of law and regulations, no Reportable Event has occurred with respect to any Plan,
neither Borrower, nor any Guarantor nor any other member of the Controlled Group has withdrawn from
any Multiemployer Plan or initiated steps to do so, and no steps have been taken to terminate any
Plan.




54









 








          6.10 Accuracy of Information. All factual information heretofore or
contemporaneously furnished in writing by or on behalf of Borrower or any Guarantor to
Administrative Agent or any Issuing Bank for purposes of or in connection with this Agreement or
any transaction contemplated hereby is, and all other such factual information hereafter furnished
in writing by or on behalf of Borrower or any Guarantor to Administrative Agent or any Issuing Bank
will be, true and accurate (taken as a whole), in all material respects, on the date as of which
such information is dated or certified and not incomplete by omitting to state
any material fact necessary to make such information (taken as a whole) not misleading at such
time.




          6.11 Regulation U. Neither Borrower, nor any Guarantor 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 Margin Stock (as defined in Regulation U).




          6.12 Material Agreements. Neither Borrower nor any Guarantor is in default in the
performance, observance or fulfillment of any of the obligations, covenants or conditions contained
in (i) any agreement to which it is a party, or (ii) any agreement or instrument evidencing or
governing Indebtedness, which default has had or would reasonably be expected to have a Material
Adverse Effect.




          6.13 Labor Disputes and Acts of God. Neither the business nor the Property of
Borrower or of any Guarantor is affected by any fire, explosion, accident, strike, lockout, or
other labor dispute, drought, storm, hail, earthquake, embargo, act of God or of the public enemy,
or other casualty (whether or not covered by insurance), which has had or would reasonably be
expected to have a Material Adverse Effect.




          6.14 Ownership. Borrower and each Guarantor have title to, or valid leasehold
interests in, all of their respective properties and assets, real and personal, including the
properties and assets and leasehold interests reflected in the financial statements referred to in
Section 6.4 (except to the extent that (i) such properties or assets have been disposed of in the
ordinary course of business or (ii) the failure to have such title has not had and would not
reasonably be expected to have a Material Adverse Effect).




          6.15 Operation of Business. Borrower and each Guarantor possess all licenses,
permits, franchises, patents, copyrights, trademarks, and trade names, or rights thereto, to
conduct their respective businesses substantially as now conducted, and as presently proposed to be
conducted, with such exceptions as have not had and would not reasonably be expected to have a
Material Adverse Effect.




          6.16 Laws; Environment. Except as set forth in Borrower’s form 10-K report for the
period ending December 31, 2005 or Borrower’s form 10-Q report for the period ending September 30,
2005 or (with respect to matters arising after the date hereof) in any SEC Filing, (a) Borrower and
each Guarantor have duly complied, and their businesses, operations and Property are in compliance,
in all material respects, with the provisions of all federal, state, and local statutes, laws,
codes, and ordinances and all rules and regulations promulgated thereunder (including without
limitation those relating to the environment, health and safety); (b) Borrower and each Guarantor
have been issued all required federal, state, and local permits, licenses,





55










 






certificates, and approvals relating to (1) air emissions; (2) discharges to surface
water or groundwater; (3) solid or liquid waste disposal; (4) the use, generation, storage,
transportation, or disposal of toxic or hazardous substances or hazardous wastes (intended hereby
and hereafter to include any and all such materials listed in any federal, state, or local law,
code, or ordinance and all rules and regulations promulgated thereunder as hazardous); or (5) other
environmental, health or safety matters; (c) except in accordance with a valid governmental permit,
license, certificate or approval, to the best knowledge of Borrower, there has been no material
emission, spill, release, or discharge into or upon (1) the air; (2) soils, or any improvements
located thereon; (3) surface water or groundwater; or (4) the sewer, septic system or waste
treatment, storage or disposal system servicing any Property of Borrower or a Guarantor, of any
toxic or hazardous substances or hazardous wastes at or from such Property; (d) neither Borrower
nor any Guarantor has received notice of any written complaint, order, directive, claim, citation,
or notice from any governmental authority or any person or entity with respect to violations of law
or damage by reason of Borrower’s or any Guarantor’s (1) air emissions; (2) spills, releases, or
discharges to soils or improvements located thereon, surface water, groundwater or the sewer,
septic system or waste treatment, storage or disposal systems servicing any Property; (3) solid or
liquid waste disposal; (4) use, generation, storage, transportation, or disposal of toxic or
hazardous substances or hazardous waste; or (5) other environmental, health or safety matters
affecting Borrower or any Guarantor or its business, operation or Property; and (e) neither
Borrower nor any Guarantor has any material Indebtedness, obligation, or liability, absolute or
contingent, matured or not matured, with respect to the storage, treatment, cleanup, or disposal of
any solid wastes, hazardous wastes, or other toxic or hazardous substances (including without
limitation any such indebtedness, obligation, or liability with respect to any current regulation,
law or statute regarding such storage, treatment, cleanup, or disposal). A matter will not
constitute a breach of this Section 6.16 unless it is reasonably likely to result in a Material
Adverse Effect.




          6.17 Investment Company Act. Neither Borrower nor any Guarantor is an “investment
company” or a company “controlled” by an “investment company,” within the meaning of the Investment
Company Act of 1940, as amended.




          6.18 Intentionally Omitted.




          6.19 Subordinated Indebtedness. There is no Subordinated Indebtedness outstanding
as of the date of this Agreement.




          6.20 Indenture Provisions. Each Guarantor is a Restricted Subsidiary, as that term
is defined in the Indenture. Each Guarantor is a Wholly-Owned Subsidiary of Borrower.




ARTICLE VII




AFFIRMATIVE COVENANTS




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



56









 





          7.1 Financial Reporting. Borrower will maintain, and each Guarantor will maintain,
a system of accounting established and administered in accordance with GAAP, and furnish to
Lenders:





     (i) Within 100 days after the close of each fiscal year, (A) an
unqualified (or qualified as reasonably acceptable to Administrative Agent)
audited consolidated financial statements of Borrower certified by one of the
“Big Four” accounting firms or other nationally recognized independent
certified public accountants, reasonably acceptable to Lenders, prepared in
accordance with GAAP on a consolidated basis, including balance sheets as of
the end of such fiscal year and statements of income and retained earnings
and a statement of cash flows, in each case setting forth in comparative form
the figures for the preceding fiscal year, and (B) unaudited financial
statements, prepared in accordance with GAAP (excluding footnotes) on a
consolidating basis for Borrower (and its Subsidiaries), including balance
sheets as of the end of such fiscal year and statements of income and
retained earnings and a statement of cash flows, in each case setting forth
in comparative form the figures for the preceding fiscal year.




     (ii) Within sixty (60) days after the close of the first three (3)
quarterly periods of each fiscal year, for Borrower, on a consolidated basis
and on a consolidating basis, unaudited financial statements, including
balance sheets as of the end of such period, statements of income and
retained earnings, and a statement of cash flows for the portion of the
fiscal year ending with such fiscal period, all certified by an Authorized
Officer. All such balance sheets shall set forth in comparative form figures
for the preceding year end. All such income statements shall reflect current
period and year-to-date figures.




     (iii) Annually, together with the financial statements described in
clause (i) above, a copy of the business plan of Borrower and each Guarantor
(on a consolidated basis) for the upcoming two (2) fiscal years, including,
as to Borrower, a consolidated balance sheet, statement of income and
projection of cash flows.




     (iv) Within sixty (60) days of the end of each of the first three
quarterly periods of each fiscal year, a quarterly variance analysis
comparing actual quarterly results versus projected quarterly results for the
fiscal quarter most recently ended, including an analysis of revenues,
Housing Unit Closings and operating profits (by operating division) for such
period, and such other items as are reasonably requested by Administrative
Agent, together with a written explanation of material variances.




     (v) Within 100 days after the end of each fiscal year, a variance
analysis comparing actual annual results versus the business plan for the



57









 






fiscal year most recently ended, including an analysis of revenues,
Housing Unit Closings and operating profits (by operating division) for such
period, and such other items as are reasonably requested by Administrative
Agent, together with a written explanation of material variances.




     (vi) By the twenty-fifth day of each fiscal quarter of each fiscal year
(and without regard to whether Borrower has an Investment Grade Rating), a
Borrowing Base Certificate of an Authorized Officer of Borrower, with respect
to the Inventory Valuation Date occurring on the last day of the immediately
preceding calendar fiscal quarter.




     (vii) Within sixty (60) days after the end of each quarterly period of
each fiscal year, a report identifying as to Borrower and its Subsidiaries
the inventory of real estate operations, including land and Housing Units as
of such date, designated in the same categories as are identified in
Borrower’s corporate status report currently delivered to Administrative
Agent; such summary shall include a delineation of sold or unsold items in
each category.




     (viii) Within sixty (60) days after the end of each of the first three
quarterly periods, and within one hundred (100) days after the end, of each
fiscal year, a certificate of an Authorized Officer of Borrower as to
Borrower’s compliance with the Financial Covenant Tests and (without regard
to whether compliance is required under Sections 9.4 and 9.5) the Land-Owned
Test and the Spec Unit Inventory Test in the form of Exhibit F
hereto.




     (ix) 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 (which requirement may be satisfied by the
delivery of the most recent actuarial valuation of each such Single Employer
Plan).




     (x) As soon as possible and in any event within ten (10) days after
Borrower knows that any Reportable Event has occurred with respect to any
Plan, a statement, signed by an Authorized Officer of Borrower, describing
said Reportable Event and the action which Borrower proposes to take with
respect thereto.




     (xi) As soon as possible, and in any event within thirty (30) days after
Borrower knows or has reason to know that any circumstances exist that
constitute grounds entitling the PBGC to institute proceedings to terminate a
Plan subject to ERISA with respect to Borrower or any member of the
Controlled Group and promptly but in any event within two (2) Business Days
of receipt by Borrower, any Guarantor or any member of the Controlled Group
of notice that the PBGC intends to terminate a Plan or appoint a trustee to
administer the same, and promptly but in any event



58









 






within five (5) Business Days of the receipt of notice concerning the
imposition of withdrawal liability in excess of $500,000 with respect to
Borrower, any Guarantor or any member of the Controlled Group, a certificate
of an Authorized Officer setting forth all relevant details of such event and
the action which Borrower proposes to take with respect thereto.




     (xii) Promptly after the sending or filing thereof, copies of all proxy
statements, financial statements, SEC Filings (exclusive of exhibits and form
8-K filings unless otherwise requested by Administrative Agent), and reports
which Borrower sends to its stockholders, and copies of all regular (except
form S-8), periodic, and special reports, and all effective registration
statements (exclusive of exhibits unless otherwise requested by
Administrative Agent) which Borrower is required to file with the Securities
and Exchange Commission or any governmental authority which may be
substituted therefor, or with any national securities exchange.




     (xiii) Promptly after the commencement thereof, notice of all actions,
suits and proceedings before any court or governmental department,
commission, board, bureau, agency, or instrumentality, domestic or foreign,
affecting Borrower or a Guarantor (a) which, if determined adversely to
Borrower or Guarantor, could reasonably be expected to have a Material
Adverse Effect or (b) in which liability in excess of $2,500,000 (in the
aggregate with respect to any action, suit or proceeding) is claimed and
alleged against Borrower or such Guarantor.




     (xiv) As soon as possible and in any event within ten (10) days after
receipt by Borrower or any Guarantor, a copy of (a) any written notice or
claim to the effect that Borrower or any Guarantor is or may be liable to any
Person as a result of the release of any toxic or hazardous waste or
substance into the environment, and (b) any notice alleging any violation of
any federal, state or local environmental, health or safety law or regulation
by Borrower or any Guarantor which, in the case of either (a) or (b), could
reasonably be expected to have a Material Adverse Effect or could result in
liability to Borrower or any Guarantor in excess of $2,500,000 (in the
aggregate with respect to any notice or claim).




     (xv) Promptly after the occurrence of any change in the business,
Property, condition (financial or otherwise) or results of operations of
Borrower and Guarantors (taken as a whole) that has had or would reasonably
be expected to have a Material Adverse Effect, notice thereof.




     (xvi) Such other information (including non-financial information) as
Administrative Agent may from time to time reasonably request.



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          7.2 Use of Proceeds. Subject to the limitations contained in this Agreement,
Borrower will use the proceeds of Advances for its or any one or more Guarantor’s own acquisition,
development and/or holding of real property and the construction of improvements in connection with
the home building or other Related Businesses of Borrower or such Guarantor (including payment of
reimbursement obligations with respect to Facility Letters of Credit), general corporate purposes,
and to repay outstanding Advances (and, in the case of the initial Advance, to repay amounts
outstanding under the Prior Credit Agreement). 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).




          7.3 Notice of Event of Default. Borrower will give prompt notice in writing to
Administrative Agent of the occurrence of (i) any Event of Default or Unmatured Event of Default
and (ii) any other development, financial or otherwise, that has had or would be reasonably
expected to have a Material Adverse Effect.




          7.4 Conduct of Business. Except as otherwise permitted under this Agreement,
Borrower and each Guarantor will carry on and conduct business in the same general manner and in
substantially the same fields of enterprise as presently conducted and to do all things necessary
to remain duly incorporated, validly existing and in good standing as a domestic corporation,
limited liability company or limited partnership (as applicable) in their respective jurisdictions
of incorporation or formation and maintain all requisite authority to conduct business in each
jurisdiction in which business is conducted; provided, however, that nothing contained herein shall
prohibit the dissolution of any Guarantor as long as Borrower or another Guarantor succeeds to the
assets, liabilities and business of the dissolved Guarantor. Without limitation of the foregoing,
Borrower shall at all times engage principally in the Related Businesses.




          7.5 Taxes. Borrower and each Guarantor will pay prior to delinquency all taxes,
assessments and governmental charges and levies upon them or their income, profits or Property,
except (i) those that solely encumber property abandoned or in the process of being abandoned and
with respect to which there is no recourse to Borrower or any Subsidiary; (ii) those that are being
contested in good faith by appropriate proceedings and with respect to which adequate reserves have
been established in accordance with GAAP, and (iii) to the extent that the failure to do so would
not reasonably be expected to have and does not have a Material Adverse Effect.




          7.6 Insurance. Borrower and each Guarantor will maintain with financially sound
and reputable insurance companies insurance on all their Property in such amounts and covering such
risks as is consistent with sound business practice, and Borrower will furnish to Administrative
Agent upon request full information as to the insurance carried.




          7.7 Compliance with Laws. Borrower and each Guarantor will comply with all laws,
rules, regulations, orders, writs, judgments, injunctions, decrees or awards to which it may be
subject, except to the extent that the failure to do so would not reasonably be expected to have
and does not have a Material Adverse Effect.




          7.8 Maintenance of Properties. Borrower and each Guarantor will do all things
necessary to maintain, preserve, protect and keep its Property in good repair, working order and




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condition, except to the extent that the failure to do so would not reasonably be expected to
have and does not have a Material Adverse Effect.




          7.9 Inspection. Borrower and each Guarantor will permit Administrative Agent and
Lenders, by their respective representatives and agents, to inspect any of the Property, corporate
(or partnership) books and financial records of Borrower and such Guarantor to examine and make
copies of the books of accounts and other financial records of Borrower and such Guarantor, and to
discuss the affairs, finances and accounts of Borrower and such Guarantor with, and to be advised
as to the same by, their respective officers at such reasonable times and intervals as
Administrative Agent may designate.




          7.10 Environment. Borrower and each Guarantor will (i) comply, in all material
respects, with the provisions of all federal, state, and local environmental, health, and safety
laws, codes and ordinances, and all rules and regulations issued thereunder; (ii) promptly contain
and remove or otherwise remediate any hazardous discharge from or affecting the Property of
Borrower or any Guarantor, to the extent required by and in compliance with all applicable laws;
(iii) promptly pay any fine or penalty assessed in connection therewith or contest the same in good
faith; (iv) permit Administrative Agent to inspect such Property, to conduct tests thereon, and to
inspect all books, correspondence, and records pertaining thereto at reasonable hours and places;
and (v) at the request of the Required Lenders, and at Borrower’s expense, provide a report of a
qualified environmental engineer, satisfactory in scope, form, and content to the Required Lenders,
and such other and further assurances reasonably satisfactory to the Required Lenders that any new
condition or occurrence hereafter identified in any SEC Filing has been corrected; provided that a
failure to comply with the provisions of clauses (i) through (v) of this Section 7.10 shall not
constitute an Event of Default or an Unmatured Event of Default unless such noncompliance has
resulted in or is reasonably likely to result in a Material Adverse Effect.




          7.11 New Guarantors. If, as of the end of any calendar quarter, any Subsidiary of
Borrower (whether now existing or hereafter created or acquired but excluding Lion Warranty
Corporation, Lion Insurance Company, HomeAmerican Mortgage Corporation, American Home Title &
Escrow Company and American Home Insurance Agency, Inc. and any other Subsidiary that is not in the
homebuilding business and is in a regulated business (such as insurance) ) that is not a Guarantor
shall be a Significant Subsidiary, then, unless the Required Lenders shall otherwise consent in
writing, Borrower shall, within forty-five (45) days of the end of such quarter, (i) cause such
Significant Subsidiary to execute and deliver to Administrative Agent a Supplemental Guaranty in
the form attached to and provided for in the Guaranty, pursuant to which such Guarantor shall
become a party thereunder and (ii) deliver or cause to be delivered, by and with respect to such
Significant Subsidiary, certificates, opinions and other documents substantially similar to those
referred to in Sections 5.1(i), (ii), (iii), (iv), (v) and (vi) and such other documents as any
Lender or Issuing Bank or their respective counsel may reasonably request; all of the foregoing
shall be in form and substance satisfactory to Administrative Agent.




          7.12 Change in Schedules. Promptly following the occurrence of but in any event
not later than forty-five (45) days following any quarter in which there shall occur any event or
circumstance as a result of which either of Schedules 1 or 6.8 ceases to be
accurate in all material respects, Borrower shall furnish to Administrative Agent the applicable
revised




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Schedule and shall certify that such revised Schedule is true, correct and complete in all
material respects, and such revised Schedule shall be substituted for the applicable Schedule
hereunder.




ARTICLE VIII




NEGATIVE COVENANTS




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



          8.1 Dividends; Repurchase of Stock. Borrower will not, directly or indirectly,
declare, make or pay, or incur any liability to make or pay, or cause or permit to be declared,
made or paid, any Dividend, or purchase, or incur any obligation to purchase, any capital stock of
Borrower either (a) during the Term-Out Period or (b) if, prior to or after giving effect to the
declaration and payment of any Dividend or purchase of such stock, there shall exist any Event of
Default under this Agreement or any violation of any Financial Covenant Test (without regard to
whether the Term Out Period has commenced).




          8.2 Indebtedness. Neither Borrower nor any Guarantor will create, incur or suffer
to exist any Indebtedness, except, without duplication and without duplication as to Borrower and
Guarantors:





     (i) The Loans.




     (ii) Indebtedness existing on the date hereof (and not otherwise
permitted under this Section 8.2) and described in Schedule 8.2
hereto and Refinancing Indebtedness with respect thereto.




     (iii) Indebtedness of Borrower’s mortgage lending and financial asset
management Subsidiaries.




     (iv) Rate Hedging Obligations.




     (v) Intercompany Indebtedness between Borrower, any Guarantor and/or any
Subsidiary (subject to the limitations contained in Section 8.5(vii)).




     (vi) Trade accounts payable and accrued expenses arising or occurring in
the ordinary course of business.




     (vii) Indebtedness constituting Capitalized Lease Obligations.




     (viii) Indebtedness with respect to Letters of Credit (including
Facility Letters of Credit).




     (ix) Indebtedness secured by purchase-money Liens permitted under
Section 8.6(iii).



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     (x) Subordinated Indebtedness.




     (xi) Non-Recourse Indebtedness incurred in the ordinary course of
business.




     (xii) Performance bonds, completion bonds, guarantees of performance,
and guarantees of Indebtedness of a special district entered into in the
ordinary course of business.




     (xiii) Indebtedness of a Person existing as of the time of the
Acquisition of such Person by Borrower or any Guarantor, provided that, after
giving effect to such Acquisition, Borrower is in compliance with the terms
of this Agreement (including without limitation the Financial Covenant
Tests).




     (xiv) Indebtedness evidenced by the Senior Notes and Refinancing
Indebtedness with respect thereto.




     (xv) Public Indebtedness, so long as such Indebtedness is either
Subordinated Indebtedness or pari passu with the Obligations
(or Guarantors’ obligations under the Guaranties, if applicable).




     (xvi) Indebtedness of Borrower or a Guarantor secured by a Lien on real
property owned by Borrower or such Guarantor, where (A) the real property is
not related to Housing Units or Land Under Development, and (B) the aggregate
outstanding amount of such Indebtedness, plus all amounts committed but
undisbursed in connection with such Indebtedness, does not exceed
seventy-five percent (75%) of the fair market value of the real property
encumbered by such Lien.




     (xvii) Indebtedness, except Public Indebtedness, not otherwise permitted
by this Section 8.2 in an aggregate amount outstanding at any time not to
exceed $60,000,000.




     (xviii) From and after, but not prior to, the first to occur of (A) the
Term Out Date and (B) the day that is two years prior to the Facility
Maturity Date (as the same may be extended pursuant to this Agreement),
Indebtedness secured by a Lien permitted under Section 8.6(xxi).




     (xix) Indebtedness of Borrower which arises pursuant to a guarantee of
payment or collection executed by Borrower, guaranteeing the Indebtedness of
one or more Guarantors which is permitted under clauses (i) through (xviii)
of this Section 8.2.



          8.3 Merger. Neither Borrower nor any Guarantor will merge or consolidate with or
into any other Person, unless:




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     (i) (A) any Guarantor is merging with any other Guarantor; (B) any
Guarantor is merging with Borrower, and Borrower is the continuing
corporation; (C) a Guarantor is merging with a Person that is not a
Subsidiary of Borrower and such transaction is in compliance with the
provisions of Section 8.4(b); or (D) a Non-Guarantor Subsidiary is merging
with Borrower or any Guarantor, and Borrower or a Guarantor, as applicable,
is the continuing corporation; and




     (ii) no Event of Default shall exist or shall occur after giving effect
to such transaction; and




     (iii) after giving effect to such transaction, Borrower shall be in
compliance with the Financial Covenant Tests; and




     (iv) (a) the other Person to the transaction is in a Related Business or
(b) if not in a Related Business, such transaction is in compliance with the
provisions of Section 8.5(vii), and Borrower or a Guarantor, if involved in
the merger, is the continuing corporation; and




     (v) the transaction is not otherwise prohibited under this Agreement.



          8.4 Sale of Assets.





     (a) Neither Borrower nor any Guarantor will lease, sell or otherwise dispose of
its Property, in a single transaction or a series of transactions, to any other
Person (other than Borrower or another Guarantor) except for (i) sales or leases in
the ordinary course of business, (ii) leases, sales or other dispositions of its
Property that, together with all other Property of Borrower and Guarantors
previously leased, sold or disposed of (other than in the ordinary course of
business) as permitted by this Section during the month in which any such lease,
sale or other disposition occurs, do not constitute a Material Portion of the
Property of Borrower and Guarantors (taken as a whole) and (iii) transfers of assets
by a Guarantor to another Guarantor (including any Subsidiary that becomes a
Guarantor by executing and delivering a Guaranty to Administrative Agent at the time
at which such assets are transferred to such Subsidiary).




     (b) Borrower shall not sell or transfer or cause to be sold or transferred
(other than to Borrower or another Guarantor), in a single transaction or a series
of transactions (i) all or substantially all of the assets of any Guarantor or (ii)
such securities or other ownership interests in a Guarantor as would result in such
Guarantor ceasing to be a Subsidiary of Borrower (whether by merger, consolidation,
sale, assignment or otherwise) unless (A) any such transaction is (and, if it were
the sale of all of the assets of such Guarantor, such transaction would be) in
compliance with the provisions of Section 8.4(a) and (B) following such transaction
and the release of such Guarantor provided for below, Borrower would be in
compliance with its obligations under this Agreement. Upon not less



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than 30 days’ prior written request from Borrower, accompanied by a certificate
of Borrower certifying as to the foregoing, Administrative Agent shall deliver, at
the time of the consummation of such transaction, a release of such Guarantor from
its obligations under the Guaranty, and such entity shall cease to be a Guarantor
hereunder.




     (c) For purposes of this Section 8.4, “Material Portion” means, with respect to
the Property of Borrower and Guarantors (taken as a whole), Property which
represents more than 25% of the book value of all assets of Borrower and Guarantors
(taken as a whole). If a Material Portion of the Property of Borrower and
Guarantors (taken as a whole) is leased, sold or disposed of in violation of this
Section 8.4, Borrower shall pay to Administrative Agent for the benefit of Lenders
at the time of such lease, sale or disposal, all amounts owed by Borrower pursuant
to Section 2.2, taking into account the effect of such lease, sale or disposal.



          8.5 Investments and Acquisitions. Neither Borrower nor any Guarantor will make or
suffer to exist any Investments (including without limitation, loans and advances to, and other
Investments in, Subsidiaries), or commitments therefor, or to create any Subsidiary or to become or
remain a partner in any partnership or joint venture, or to make any Acquisition of any Person,
except:





     (i) Investments in Cash Equivalents.




     (ii) Loans or advances made to officers, directors or employees of
Borrower or any Guarantor or any Subsidiary.




     (iii) Carryback loans made in the ordinary course of business in
conjunction with the sale of Property of Borrower or such Guarantor.




     (iv) Investments in interests in issuances of collateralized mortgage
obligations, mortgages, mortgage loan servicing or other mortgage related
assets.




     (v) Investments in contract rights granted by, entitlements granted by,
interests in securities issued by, or tangible assets of, political
subdivisions or enterprises thereof related to the home building or real
estate operations of Borrower or any Guarantor or any Subsidiary, including
without limitation Investments in special districts as described in Section
8.2(xii).




     (vi) Investments in existing Subsidiaries (subject, in the case of
Non-Guarantor Subsidiaries, to the provisions of Section 8.5(vii)) and other
Investments in existence on the date hereof.




     (vii) Investments in (A) Non-Guarantor Subsidiaries or (B) other Persons
whose primary business is not a Related Business, in an amount (in the
aggregate for both clause (A) and clause (B)) outstanding at any one



65









 






time not to exceed 25% of Adjusted Consolidated Tangible Net Worth,
provided that retained earnings of such Non-Guarantor Subsidiaries and
Persons described in clause (B) shall not be deemed part of such Investment.




     (viii) The Acquisition of or Investment in a business or entity engaged
primarily in a Related Business, provided that (a) immediately upon the
consummation of any such Acquisition or Investment Borrower and each
Guarantor is in compliance with the terms, covenants and conditions of this
Agreement (including without limitation the Financial Covenant Tests and the
provisions of Section 8.5(vii)), and (b) Borrower shall deliver to
Administrative Agent a certificate, signed by an Authorized Officer,
certifying to the best knowledge of Borrower, that, on the date of, and
taking into account, the consummation of such Acquisition, and based on the
reasonable assumptions set forth in such Certificate, no Event of Default has
occurred and is continuing, and Borrower is in compliance with the Financial
Covenant Tests.




     (ix) The creation of new Subsidiaries engaged primarily in a Related
Business (or the purpose of which is principally to preserve the use of a
name in which such business is conducted), subject to the limitations
contained in Section 8.5(vii).




     (x) Stock, obligations or securities received in satisfaction of debts
owing to Borrower or any Guarantor in the ordinary course of business.




     (xi) Pledges or deposits in cash by Borrower or a Guarantor to support
surety bonds, performance bonds or guarantees of completion in the ordinary
course of business.




     (xii) Loans representing intercompany Indebtedness between Borrower, any
Guarantor and/or any Subsidiary, subject to the limitations contained in
Section 8.5(vii).




     (xiii) Investments pursuant to Borrower’s or a Guarantor’s employment
compensation plans or agreements.




     (xiv) Payments on account of the purchase, redemption or other
acquisition or retirement for value, or any payment in respect of any
amendment (in anticipation of or in connection with any such retirement,
acquisition or defeasance) in whole or in part, of any shares of capital
stock or other securities of Borrower, but only to the extent the same is
permitted under the Indenture.




     (xv) Investments, in addition to those enumerated in this Section 8.5,
in an aggregate amount outstanding at any time not to exceed $5,000,000.



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          8.6 Liens. Neither Borrower nor any Guarantor will create, incur, or suffer to
exist any Lien in, of or on the Property of Borrower or any Guarantor, except:





     (i) Permitted Liens.




     (ii) Liens for taxes, assessments or governmental charges or levies
which solely encumber property abandoned or in the process of being abandoned
and with respect to which there is no recourse to Borrower or any Guarantor
or any Subsidiary.




     (iii) Purchase-money Liens on any Property hereafter acquired or the
assumption of any Lien on Property existing at the time of such acquisition
(and not created in contemplation of such acquisition), or a Lien incurred in
connection with any conditional sale or other title retention or a
Capitalized Lease; provided that:




     (a) Any Property subject to any of the foregoing is
acquired by Borrower or any Guarantor in the ordinary course
of its respective business and the Lien on any such Property
attaches to such asset concurrently or within ninety (90)
days after the acquisition thereof;




     (b) The obligation secured by any Lien so created,
assumed, or existing shall not exceed ninety percent (90%)
of the cost the Property covered thereby by Borrower or any
Guarantor acquiring the same; and




     (c) Each Lien shall attach only to the Property so
acquired.




     (iv) Liens existing on the date hereof (and not otherwise permitted
under this Section 8.6) and described in Schedule 8.6 hereto and
Liens securing Refinancing Indebtedness with respect thereto, but only to the
extent such Liens encumber the same collateral in whole or in part as the
previous Liens securing the Indebtedness being refunded, refinanced or
extended.




     (v) Liens incurred in the ordinary course of business not otherwise
permitted by this covenant, provided that the aggregate amount of
Indebtedness secured by such Liens outstanding at any time shall not exceed
$60,000,000.




     (vi) Judgments and similar Liens arising in connection with court
proceedings; provided the execution or enforcement thereof is stayed and the
claim is being contested in good faith, with adequate reserves therefor being
maintained by Borrower or such Guarantor in accordance with GAAP.



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     (vii) Liens securing Non-Recourse Indebtedness of Borrower or any
Guarantor, where the amount of such Indebtedness is greater than fifty
percent (50%) of the fair market value of the Property encumbered by the
Liens.




     (viii) Liens existing with respect to Indebtedness of a Person acquired
in an Acquisition permitted by this Agreement.




     (ix) Liens arising out of pledges or deposits under worker’s
compensation laws, unemployment insurance, old age pensions, or other social
security or retirement benefits, or similar legislation.




     (x) Liens incurred or deposits made to secure the performance of
tenders, bids, leases, statutory obligations, surety and appeal bonds,
progress payments, government contracts, utility services and other
obligations of like nature in each case incurred in the ordinary course of
business.




     (xi) Leases or subleases granted to others not materially interfering
with the ordinary course of business of Borrower or any Guarantor.




     (xii) Any interest in or title of a lessor to property subject to any
Capitalized Lease Obligations.




     (xiii) Liens in favor of the trustee named therein arising under the
Indenture and liens for trustee’s fees and similar costs under any
Refinancing Indebtedness of the Senior Notes.




     (xiv) Any option, contract or other agreement to sell or purchase an
asset or participate in the income or revenue derived therefrom.




     (xv) Any legal right of, or right granted in good faith to, a lender or
lenders to which Borrower or a Guarantor may be indebted to offset against,
or appropriate and apply to the payment of, such Indebtedness any and all
balances, credits, deposits, accounts, or monies of Borrower or a Guarantor
with or held by such lender or lenders.




     (xvi) Any pledge or deposit of cash or property by Borrower or any
Guarantor in conjunction with obtaining surety and performance bonds and
letters of credit required to engage in constructing on-site and off-site
improvements or as otherwise required by political subdivisions or other
governmental authorities in the ordinary course of business.




     (xvii) Liens incurred in the ordinary course of business as security for
Borrower’s or any Guarantor’s obligations with respect to indemnification in
favor of title insurance providers.



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     (xviii) Letters of Credit, bonds or other assets pledged to secure
insurance in the ordinary course of business.




     (xix) Liens on assets securing warehouse lines of credit and other
credit facilities to finance the operations of Borrower’s mortgage lending
Subsidiaries and/or financial asset management Subsidiaries and Liens related
to issuances of CMOs and mortgage-related securities, so long as such assets
are owned by such mortgage lending Subsidiaries and financial asset
Subsidiaries.




     (xx) Liens described in Section 8.2(xvi) securing the Indebtedness
described therein, so long as (i) each such Lien attaches only to the real
property described in Section 8.2(xvi) and (ii) the obligation secured by
such Lien is limited to repayment of the Indebtedness permitted under Section
8.2(xvi).




     (xxi) From and after, but not prior to, the first to occur of (A) the
Term Out Date and (B) the day that is two years prior to the Facility
Maturity Date (as the same may be extended pursuant to this Agreement), Liens
incurred in the ordinary course of business not otherwise permitted by this
covenant, provided that (1) the Liens encumber real property owned by the
obligor of the applicable Indebtedness, provided that Borrower or any
Guarantor may be the obligor of such Indebtedness and Borrower or any
Guarantor may guarantee such Indebtedness, and (2) the obligations secured by
any Lien shall not exceed eighty percent (80%) of the fair market value of
the real property encumbered thereby (if the obligations do not relate to the
construction of improvements on, or development of, the real property) or
eighty percent (80%) of the value of the real property encumbered thereby as
if all improvements to be located thereon have been completed (if the
obligations relate to the construction of improvements on the real property),
as applicable.


Notwithstanding anything herein to the contrary, neither Borrower nor any Guarantor will, create,
incur, or suffer to exist any Lien in, of or on the capital stock of any Guarantor.




          8.7 Affiliates. Neither Borrower nor any Guarantor will enter into any transaction
(including, without limitation, the purchase or sale of any Property or service) with, or make any
payment or transfer to, any Affiliate (other than a Subsidiary) except (i) in the ordinary course
of business and pursuant to the reasonable requirements of Borrower’s or such Guarantor’s business
and upon fair and reasonable terms no less favorable to Borrower or such Guarantor than Borrower or
such Guarantor would obtain in a comparable arms-length transaction, (ii) Investments permitted
under Section 8.5, (iii) pursuant to employment compensation plans and agreements, and (iv) with
officers, directors and employees of Borrower or any Subsidiary so long as the same are duly
authorized pursuant to the articles of incorporation or bylaws (or procedures conducted in
accordance therewith) of Guarantor or Borrower.





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          8.8 Modifications to Certain Indebtedness. Neither Borrower nor any Guarantor will
make any amendment or modification to the subordination provisions of any indenture, note or other
agreement evidencing or governing (i) as to Borrower, any Subordinated Indebtedness, and (ii) as to
any Guarantor, Indebtedness that has been subordinated to Guarantor’s obligations under the
Guaranty.




          8.9 Amendments of Indenture or Senior Notes. Neither Borrower nor any Guarantor will
amend or modify the Indenture or the Senior Notes, except for amendments or modifications that do
not (i) impose upon Borrower or any Guarantor obligations not contained therein as of the date of
this Agreement (except as otherwise hereinafter provided), or (ii) otherwise adversely affect
Borrower or any Guarantor. Nothing contained in this Section 8.9 shall (a) prohibit issuance by
Borrower of additional Senior Notes pursuant to the Indenture, provided the same does not violate
any other provision of this Agreement or (b) prohibit any Guarantor from guarantying the
obligations of Borrower under the Senior Notes and Indenture.




          8.10 Negative Pledge. Neither Borrower nor any Guarantor will directly or indirectly
enter into any agreement (other than (A) this Agreement, (B) the Indenture and any indenture or
similar agreement executed in connection with any Refinancing Indebtedness of the Senior Notes and
(C) any indenture or similar agreement executed in connection with any Public Indebtedness
permitted under Section 8.2(xv)) with any Person that prohibits or restricts or limits the ability
of Borrower or Guarantors to create, incur, pledge or suffer to exist any Lien in favor of Lenders
granted pursuant to the terms of this Agreement upon any real property assets of Borrower or any
Guarantor; provided, however, that those agreements creating Liens permitted under Sections
8.6(iii), (iv), (vii), (viii), (xix), (xx) and (xxi) may prohibit, restrict or limit other Liens on
those assets encumbered by the Liens created by such agreements.




ARTICLE IX




FINANCIAL COVENANTS




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



          9.1 Consolidated Tangible Net Worth Test. Consolidated Tangible Net Worth shall not
be less than (i) $1,360,000,000 plus (ii) fifty percent (50%) of consolidated net income of
Borrower and the Guarantors earned after September 30, 2005 (excluding any quarter in which there
is a loss but applying consolidated net income of Borrower and the Guarantors thereafter first to
such loss before determining fifty percent (50%) of such amount for purposes of this calculation)
plus (iii) fifty percent (50%) of the net proceeds or other consideration received by
Borrower for capital stock issued by Borrower after September 30, 2005, minus (iv) the lesser of
(A) the aggregate amount paid by Borrower after September 30, 2005 to repurchase its common stock
and (B) $300,000,000, (the foregoing covenant, as adjusted as provided in the next succeeding
sentence, is herein referred to as the “Consolidated Tangible Net Worth Test”). Notwithstanding
the foregoing, in the event that Borrower shall at any time engage in an Acquisition for a purchase
price equaling or exceeding $100,000,000, Borrower may irrevocably elect, by notice to the
Administrative Agent given prior to the last day of the fiscal quarter in




70









 







which such Acquisition occurs, to adjust minimum Consolidated Tangible Net Worth for the
Consolidated Tangible Net Worth Test to the following amount: (i) 80% of the Consolidated Tangible
Net Worth immediately following the closing of such Acquisition, plus (ii) an amount equal to 50%
of the consolidated net income of Borrower and Guarantors earned after the closing of such
Acquisition (excluding any quarter in which there is a loss but applying net income thereafter
first to such loss before determining 50% of such amount for purposes of this calculation), plus
(iii) 50% of the net proceeds or other consideration received by Borrower for any capital stock
issued after the closing of such Acquisition, minus (iv) the lesser of (A) the aggregate amount
paid by Borrower after the closing of such Acquisition to repurchase its common stock and (B) the
amount (but not less than zero) obtained by subtracting from $300,000,000 the aggregate amount (if
any) paid by Borrower to repurchase its common stock after September 30, 2005 and prior to such
Acquisition. Borrower may make the election under the preceding sentence only if it makes the
corresponding election under Section 9.3 at the same time. Borrower’s compliance with the
Consolidated Tangible Net Worth Test shall be measured on a quarterly basis, based on the financial
statements delivered to Administrative Agent pursuant to Section 7.1. Borrower’s failure to
satisfy the Consolidated Tangible Net Worth Test shall not constitute an Event of Default or an
Unmatured Event of Default; provided, however, that if Borrower fails to satisfy the Consolidated
Tangible Net Worth Test at the end of any fiscal quarter, then the Term Out Period shall commence
on the first day following such fiscal quarter as provided in Section 2.22.




          9.2 Leverage Test; Interest Coverage Test.





     (a) Leverage Test. The Leverage Ratio shall not exceed the then applicable
Permitted Leverage Ratio (the “Leverage Test”).




     (b) Interest Coverage Test. If at any time Borrower shall fail to maintain,
for two (2) consecutive fiscal quarters, a ratio, determined as of the last day of each
fiscal quarter for the four-quarter period ending on such day, of (i) EBITDA for such period
to (ii) Consolidated Interest Incurred for such period, of at least 2.00 to 1.0 (the
“Interest Coverage Test”), then the Permitted Leverage Ratio for the same fiscal quarter
with respect to which Borrower shall have so failed the Interest Coverage Test (i.e., the
second of such two (2) consecutive fiscal quarters, which quarter is herein referred to as
the “Coverage Test Failure Quarter”), shall be decreased as follows: (i) if the Permitted
Leverage Ratio for the fiscal quarter preceding the Coverage Test Failure Quarter was 55%,
the Permitted Leverage Ratio shall be decreased by 5% to 50%; and (ii) if the Permitted
Leverage Ratio for the fiscal quarter preceding the Coverage Test Failure Quarter was less
than 55%, the Permitted Leverage Ratio shall be decreased by 2.5%.




     (c) Adjustment of Permitted Leverage Ratio. If at any time at which the
Permitted Leverage Ratio is less than 55%, Borrower shall satisfy the Interest Coverage Test
(which for purposes of this Section 9.2(c) shall be deemed satisfied only if, on the same
day on which Borrower satisfies the Interest Coverage Test, Borrower is also in compliance
with the Leverage Test), then the Permitted Leverage Ratio, effective as of the fiscal
quarter immediately following the fiscal quarter with respect to which Borrower shall have
so satisfied the Interest Coverage Test, shall be increased as follows: (i) upon
satisfaction of the Interest Coverage Test on a date on which the Permitted Leverage



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Ratio is 50%, the Permitted Leverage Ratio for the next fiscal quarter shall be
increased to 55%; and (ii) upon satisfaction of the Interest Coverage Test on a date on
which the Permitted Leverage Ratio is less than 50%, the Permitted Leverage Ratio for the
next fiscal quarter shall be increased by 2.5%. In no event shall the Permitted Leverage
Ratio exceed 55%.




     (d) Effectiveness of Change in Permitted Leverage Ratio. Any decrease of the
Permitted Leverage Ratio provided for in this Section 9.2 shall be effective as of the
Coverage Test Failure Quarter as provided in Section 9.2(b), and the Permitted Leverage
Ratio (as so decreased) shall remain in effect thereafter unless and until adjusted as
provided in Section 9.2(b) or (c). Any increase in the Permitted Leverage Ratio shall be
effective as of the fiscal quarter next succeeding the fiscal quarter in which Borrower
satisfies the Interest Coverage Test as provided in Section 9.2(c), and the Permitted
Leverage Ratio (as so increased) shall remain in effect thereafter unless and until adjusted
as provided in Section 9.2(b) or (c)




     (e) Measure of Compliance. Borrower’s satisfaction of the Interest Coverage
Test shall be measured on a quarterly basis, based on the financial statements delivered to
Administrative Agent pursuant to Section 7.1. A failure to satisfy the Leverage Test or the
Interest Coverage Test shall not constitute an Event of Default or an Unmatured Event of
Default; provided, however, if Borrower fails to satisfy the Leverage Test for two (2)
consecutive fiscal quarters (the first of which may be the Coverage Test Failure Quarter),
then the Term Out Period shall commence on the day following such fiscal quarter as provided
in Section 2.22.



          9.3 Consolidated Tangible Net Worth Floor. Consolidated Tangible Net Worth shall not
be less than (i) $850,000,000, plus (ii) an amount equal to 50% of the quarterly consolidated net
income of Borrower and Guarantors earned after September 30, 2005 (excluding any quarter in which
there is a loss but applying consolidated net income thereafter first to such loss before
determining 50% of such amount for purposes of this calculation), plus (iii) 50% of the net
proceeds or other consideration received by Borrower for any capital stock issued after September
30, 2005. Notwithstanding the foregoing, in the event that Borrower shall at any time engage in an
Acquisition for a purchase price equaling or exceeding $100,000,000, Borrower may irrevocably
elect, by notice to the Administrative Agent given prior to the last day of the fiscal quarter in
which such Acquisition occurs, to adjust the minimum Consolidated Tangible Net Worth for this
covenant to the following amount: (i) 50% of Consolidated Tangible Net Worth immediately following
the closing of such Acquisition, (ii) an amount equal to 50% of the consolidated net income of
Borrower and Guarantors earned after the closing of such Acquisition (excluding any quarter in
which there is a loss but applying net income thereafter first to such loss before determining 50%
of such amount for purposes of this calculation) and (iii) 50% of the net proceeds or other
consideration received by Borrower for any capital stock issued after the closing of such
Acquisition. Borrower may make the election under the preceding sentence only if it makes the
corresponding election under Section 9.1 at the same time. Borrower’s compliance with the
foregoing covenant shall be measured on a quarterly basis, based on the financial statements
delivered to Administrative Agent pursuant to Section 7.1.




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          9.4 Land-Owned Test. At any time that Borrower does not have an Investment Grade
Rating, Borrower will not permit the ratio of (i) the Adjusted Book Value of Land Owned to (ii)
Adjusted Consolidated Tangible Net Worth, to exceed 1.25 to 1.00 (the “Land-Owned Test”).
Borrower’s compliance with the Land-Owned Test shall be measured on a quarterly basis based on the
financial statements delivered to Administrative Agent pursuant to Section 7.1. Borrower’s failure
to comply with the Land-Owned Test shall not constitute an Event of Default or an Unmatured Event
of Default, but there shall be excluded from the Borrowing Base, as of the last day of the quarter
in which such non-compliance with the Land-Owned Test occurs, Land Under Development, Entitled Land
and/or Finished Lots (as selected by Borrower) having an aggregate book value equal to the amount
by which the Adjusted Book Value of Land Owned would be required to be reduced to bring Borrower
into compliance with the Land-Owned Test as of such day.




          9.5 Spec Unit Inventory Test. At any time that Borrower does not have an Investment
Grade Rating, Borrower will not permit the aggregate number of all Spec Units owned by Borrower or
any Guarantor to exceed the greater of (i) fifty percent (50%) of the number of Housing Unit
Closings during the preceding twelve (12) months, or (ii) the number of Housing Unit Closings
during the preceding six (6) months (the “Spec Unit Inventory Test”). Borrower’s compliance with
the Spec Unit Inventory Test shall be measured on a quarterly basis based on the financial
statements delivered to Administrative Agent pursuant to Section 7.1. Borrower’s failure to comply
with the Spec Unit Inventory Test shall not constitute an Event of Default or an Unmatured Event of
Default, but there shall be excluded from the Borrowing Base, as of the last day of the quarter in
which such non-compliance with the Spec Unit Inventory Test occurs, Spec Units (as selected by
Borrower) that would be sufficient in number to bring Borrower into compliance with the Spec Unit
Inventory Test as of such day.




ARTICLE X




EVENTS OF DEFAULT




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



          10.1 Representations and Warranties. Any representation or warranty made or deemed
made by or on behalf of Borrower or any Guarantor to Lenders, any Issuing Bank or Administrative
Agent under or in connection with this Agreement, any other Loan Document or any certificate or
information delivered in connection with this Agreement or any other Loan Document shall not be
true and correct in any material respect on the date as of which made, and, with respect to any
matter which is reasonably capable of being cured, Borrower or such Guarantor, as applicable, shall
have failed to cure the occurrence causing the representation or warranty to be materially untrue
or incorrect within thirty (30) days after notice thereof by Administrative Agent to Borrower.




          10.2 Non-payment. Nonpayment of principal of any Note when due (including without
limitation non-payment under clause (D) of Section 2.21(c)), or nonpayment of interest




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upon any Note or of any fees or other obligations under any of the Loan Documents within five
(5) days after billing therefor by Administrative Agent or Lenders.




          10.3 Other Defaults. The breach by Borrower (other than a breach which constitutes an
Event of Default under any other Section of this Article X) of any of the terms or provisions of
this Agreement which is not remedied within thirty (30) days after notice thereof to Borrower.




          10.4 Other Indebtedness.





     (a) Failure of Borrower or any Guarantor to pay when due (after any applicable grace
period and after notice from the holder thereof) any Indebtedness (other than Non-Recourse
Indebtedness) equal to or exceeding $10,000,000 (in the aggregate); or




     (b) The default (after any applicable grace period and after notice from the holder
thereof) by Borrower or any Guarantor in the performance of any term, provision or condition
contained in any agreement under which any Indebtedness (other than Non-Recourse
Indebtedness) equal to or exceeding $10,000,000 (in the aggregate) was created or is
governed; or




     (c) Any other event shall occur or condition exist (after any applicable grace period
and after notice from the holder thereof), the effect of which is to cause, or to permit the
holder or holders of any Indebtedness (other than Non-Recourse Indebtedness) of Borrower or
any Guarantor equal to or exceeding $10,000,000 to cause such Indebtedness to become due
prior to its stated maturity; or




     (d) Any Indebtedness (other than Non-Recourse Indebtedness) of Borrower or any
Guarantor equal to or exceeding $10,000,000 (in the aggregate) shall be declared to be due
and payable or required to be prepaid (other than by a regularly scheduled payment) prior to
the stated maturity thereof (after any applicable grace period and after notice from the
holder thereof); or




     (e) Borrower or any Guarantor shall not pay, or shall admit in writing its inability to
pay, its debts generally as they become due.



          10.5 Bankruptcy. Borrower or any Guarantor 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 the Property of Borrower and Guarantors;



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          (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, within the applicable time period for
the filing thereof, an answer or other pleading denying the material
allegations of any such proceeding filed against it; or




          (v) fail to contest in good faith any appointment or proceeding
described in Section 10.6.



          10.6 Receiver. A receiver, trustee, examiner, liquidator or similar official shall be
appointed for Borrower or any Guarantor or any Substantial Portion of the Property of Borrower and
Guarantors without the application, approval or consent of Borrower or any Guarantor, or a
proceeding described in Section 10.5(iv) shall be instituted against Borrower or any Guarantor and
such appointment continues undischarged or such proceeding continues undismissed or unstayed for a
period of sixty (60) consecutive days.




          10.7 Judgment. Borrower or any Guarantor shall fail within thirty (30) days to pay,
bond or otherwise discharge any judgment or order for the payment of money in excess of $10,000,000
which has not been stayed on appeal or is not otherwise being appropriately contested in good faith
and for which contested judgments adequate reserves are being maintained by Borrower or such
Guarantor in accordance with GAAP.




          10.8 Unfunded Liabilities. The Unfunded Liabilities of all Single Employer Plans
shall exceed in the aggregate $5,000,000 or any Reportable Event shall occur in connection with any
Plan, which Reportable Event has had or would reasonably be expected to have a Material Adverse
Effect.




          10.9 Withdrawal Liability. Borrower, any Guarantor or any member of the Controlled
Group shall have been notified by the sponsor of a Multiemployer Plan that it has incurred
withdrawal liability to such Multiemployer Plan in an amount which, when aggregated with all other
amounts required to be paid to Multiemployer Plans by Borrower or any Guarantor or any other member
of the Controlled Group as withdrawal liability (determined as of the date of such notification),
exceeds $5,000,000 or requires payments exceeding $2,000,000 per annum; provided, however, that
such event shall not constitute an Event of Default as long as Borrower, such Guarantor or the
Controlled Group member, as applicable, is contesting in good faith the imposition of withdrawal
liability.




          10.10 Increased Contributions. Borrower, any Guarantor, or any other member of the
Controlled Group shall have been notified by the sponsor of a Multiemployer Plan that such
Multiemployer Plan is in reorganization, if as a result of such reorganization the aggregate annual
contributions of Borrower, Guarantors and the other members of the Controlled Group (taken as a
whole) to all Multiemployer Plans which are then in reorganization have been or will be increased
over the amounts contributed to such Multiemployer Plans for the respective plan




75









 







years of each such Multiemployer Plan immediately preceding the plan year in which the
reorganization occurs by an amount exceeding $5,000,000.




          10.11 Change in Control. Any Change in Control shall occur.




          10.12 Dissolution. The dissolution or liquidation of Borrower or any Guarantor shall
occur, except as permitted under Section 8.3.




          10.13 Guaranty. The Guaranty shall fail to remain in full force or effect with
respect to any Guarantor or any action shall be taken by any Guarantor to discontinue or to assert
the invalidity or unenforceability of the Guaranty, or any Guarantor shall fail to comply with any
of the terms or provisions of the Guaranty, or any Guarantor denies that it has any further
liability under the Guaranty or gives notice to such effect.




          10.14 Consolidated Tangible Net Worth Covenant. The breach by Borrower of the
covenant contained in Section 9.3.




          10.15 No Defaults. The occurrence of any of the following events shall specifically
not be an Event of Default or an Unmatured Event of Default under this Agreement:





     (a) The breach of any Financial Covenant Test (except that the breach by Borrower of
the covenant in Section 9.3 shall constitute an Event of Default, notwithstanding that it
also constitutes a breach of a Financial Covenant Test).




     (b) The breach of the Land-Owned Test (except that the same shall result in the
exclusion of certain assets from the Borrowing Base to the extent provided for in Section
9.4).




     (c) The breach of the Spec Unit Inventory Test (except that the same shall result in
the exclusion of certain assets from the Borrowing Base to the extent provided for in
Section 9.5).




     (d) If any Guarantor shall apply for, seek, consent to, or acquiesce in, the
appointment of a receiver, custodian, trustee, examiner, liquidator or similar official for
it or for a Significant Amount of its Property, or if a receiver, custodian, trustee,
examiner, liquidator or similar official shall be appointed for any Guarantor without its
application, approval or consent for it or for a Significant Amount of its Property;
provided, however, that upon the occurrence and during the continuation of the foregoing,
all Property of such Guarantor shall be automatically excluded from the Borrowing Base; and
provided further, that upon any such appointment for any Property of any Guarantor that is
not a Significant Amount of its Property (which appointment shall not be an Event of Default
or Unmatured Event of Default under this Agreement), such Property shall be automatically
excluded from the Borrowing Base. “Significant Amount” means, with respect to the Property
of such Guarantor and its Subsidiaries, taken as a whole, Property which represents more
than 10% of the book value of the assets of such Guarantor as would be shown on the
financial statements of such Guarantor as of the beginning of the fiscal quarter in which
such determination is made, all as determined in accordance with Agreement Accounting
Principles.



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ARTICLE XI




ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES




          11.1 Acceleration; Remedies.





     (a) If any Event of Default described in Section 10.5 or 10.6 occurs with respect to
Borrower, the obligations of Lenders to make Loans and of any Issuing Bank to issue Facility
Letters of Credit hereunder shall automatically terminate and the Obligations shall
immediately become due and payable without any election or action on the part of
Administrative Agent or any Lender or Issuing Bank, Borrower will be and become thereby
unconditionally obligated, without any further notice, act or demand, to pay to
Administrative Agent an amount in immediately available funds, which funds shall be held in
the Facility LC Collateral Account, equal to the difference of (x) the amount of Facility LC
Obligations at such time, less (y) the amount on deposit in the Facility LC Collateral
Account at such time which is free and clear of all rights and claims of third parties and
has not been applied as provided in paragraph (c) below (such difference, the “Collateral
Shortfall Amount”). If any other Event of Default occurs, the Required Lenders may (or
Administrative Agent with the written consent of the Required Lenders shall) (i) terminate
or suspend the obligations of Lenders to make Loans and of each Issuing Bank to issue
Facility Letters of Credit hereunder, 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 Borrower hereby expressly
waives and (ii) upon notice to Borrower and in addition to the continuing right to demand
payment of all amounts payable under this Agreement, make demand on Borrower to pay, and
Borrower shall, forthwith upon such demand and without any further notice or act, pay to
Administrative Agent the Collateral Shortfall Amount, which funds shall be deposited in the
Facility LC Collateral Account.




     (b) If at any time while any Event of Default is continuing, Administrative Agent
determines that the Collateral Shortfall Amount at such time is greater than zero,
Administrative Agent may, and at the direction of the Required Lenders shall, make demand on
Borrower to pay, and Borrower shall, forthwith upon such demand and without any further
notice or act, pay to Administrative Agent the Collateral Shortfall Amount, which funds
shall be deposited in the Facility LC Collateral Account.




     (c) Administrative Agent may, at any time or from time to time after funds are
deposited in the Facility LC Collateral Account, apply such funds to the payment of the
Facility LC Obligations and any other amounts in respect of any Facility Letter of Credit or
Reimbursement Agreement as shall from time to time have become due and payable by Borrower
to any Lender or Issuing Bank under the Loan Documents.




     (d) At any time while any Event of Default is continuing, neither Borrower nor any
Person claiming on behalf of or through Borrower shall have any right to withdraw any of the
funds held in the Facility LC Collateral Account. After all of the Obligations have been
indefeasibly paid in full and the Aggregate Commitment has been terminated, any funds
remaining in the Facility LC Collateral Account shall be returned



77









 






by Administrative Agent to Borrower or paid to whomever may be legally entitled thereto
at such time.




     (e) If, within five (5) days after acceleration of the maturity of the Obligations or
termination of the obligations of Lenders to make Loans hereunder as a result of any Event
of Default (other than any Event of Default as described in Section 10.5 or 10.6 with
respect to 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, Administrative Agent shall, by notice to Borrower, rescind and annul such
acceleration and/or termination.




     (f) Upon the occurrence of any Event of Default and upon the directive of the Required
Lenders, Administrative Agent or (but only upon directive of the Required Lenders) any
Lender shall proceed to protect, exercise and enforce the rights and remedies of
Administrative Agent and Lenders under the Loan Documents against Borrower, any Guarantor
and any other party and such other rights and remedies as are provided by law or equity.




     (g) The order and manner in which Lenders’ rights and remedies are to be exercised
shall be determined by the Required Lenders in their sole discretion, and all payments
received by Administrative Agent and Lenders, or any of them, shall be applied first to the
costs and expenses (including attorneys’ fees and disbursements) of Administrative Agent and
of Lenders, and thereafter paid pro rata to each Lender in the same proportions that each
Lender’s Commitment bears to the Aggregate Commitment, without priority or preference among
Lenders. Regardless of how each Lender may treat payments for the purpose of its own
accounting, for the purpose of computing Borrower’s obligations hereunder and under the
Notes, payments shall be applied first, to the costs and expenses of Administrative
Agent and Lenders, as set forth above, second, to the payment of accrued and unpaid
interest due under any Loan Documents to and including the date of such application
(ratably, and without duplication, according to the accrued and unpaid interest due under
each of the Loan Documents), and third, to the payment of all other amounts
(including principal and fees) then owing to Administrative Agent or Lenders under the Loan
Documents. No application of payments will cure any Event of Default, or prevent
acceleration, or continued acceleration, of amounts payable under the Loan Documents, or
prevent the exercise, or continued exercise, of rights or remedies of Lenders hereunder or
thereunder or at law or in equity.



          11.2 Amendments. Subject to the provisions of this Article XI, the Required Lenders
(or Administrative Agent with the consent in writing of the Required Lenders) and Borrower (in the
case of the Loan Documents other than the Guaranty) or Guarantors (in the case of the Guaranty) may
enter into agreements supplemental hereto or thereto for the purpose of adding or modifying any
provisions to the Loan Documents or changing in any manner the rights of Lenders or Borrower (in
the case of the Loan Documents other than the Guaranty) or Guarantors (in the case of the Guaranty)
or waiving any Event of Default hereunder; provided, however, that (a) no such supplemental
agreement shall, without the consent of the Required Lenders, amend the definition of the term
“Borrowing Base” or the definition of any defined




78









 







term contained in the definition of the term “Borrowing Base” and (b) no such supplemental
agreement shall, without the consent of each Lender affected thereby:





          (i) Extend the maturity of any Loan or Note or forgive all or any
portion of the principal amount thereof, or reduce the rate of, or extend the
time of payment of, interest or fees thereon;




          (ii) Release any Guarantor from any of its obligations under the
Guaranty (except as provided in Section 8.4(b));




          (iii) Change the percentage specified in the definition of Required
Lenders;




          (iv) Increase the amount of the Commitment of any Lender hereunder
(except as may be agreed by such Lender pursuant to Section 2.5(d)) or permit
Borrower to assign its rights under this Agreement;




          (v) Amend the percentage set forth in Section 2.21(b); or




          (vi) Amend this Section 11.2, Section 12.7 or Section 14.1.


No amendment of any provision of this Agreement relating to Administrative Agent shall be effective
without the written consent of Administrative Agent. Administrative Agent may waive payment or
reduce the amount of the fees referred to in Section 13.9 or the fee required under Section
15.1(b)(ii)(C) without obtaining the consent of any other party to this Agreement. No amendment of
any provision of this Agreement relating to Facility Letters of Credit shall be effective without
the written consent of each Issuing Bank affected thereby. No amendment of any provision of this
Agreement relating to Swing Line Advances shall be effective without the written consent of the
Swing Line Lender.




          11.3 Preservation of Rights. No delay or omission of any Lender or Issuing Bank or
Administrative Agent to exercise any right under the Loan Documents shall impair such right or be
construed to be a waiver of any Event of Default or an acquiescence therein, and the making of a
Loan or the issuance, amendment or extension of a Facility Letter of Credit notwithstanding the
existence of an Event of Default or the inability of Borrower to satisfy the conditions precedent
to such Loan or Facility Letter of Credit 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 Lenders (and, if applicable, Administrative Agent) required pursuant to Section 11.2, 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 Administrative
Agent, the Issuing Banks and Lenders until the Obligations have been paid in full.




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ARTICLE XII




GENERAL PROVISIONS




          12.1 Survival of Representations. All representations and warranties of Borrower
contained in this Agreement shall survive delivery of the Notes and the making of the Loans and the
issuance, amendment or extension of any Facility Letter of Credit herein contemplated.




          12.2 Governmental Regulation. Anything contained in this Agreement to the contrary
notwithstanding, no Lender or Issuing Bank shall be obligated to extend credit to Borrower in
violation of any limitation or prohibition provided by any applicable statute or regulation
effective after the date of this Agreement.




          12.3 Taxes. Any recording, intangible, filing or stamp fees or taxes or other similar
assessments or charges made by any governmental or revenue authority in respect of the Loan
Documents shall be paid by Borrower, together with interest and penalties, if any.




          12.4 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.




          12.5 Entire Agreement. The Loan Documents and the letter agreement(s) referred to in
this Agreement embody the entire agreement and understanding among Borrower, Guarantors,
Administrative Agent and Lenders and supersede all prior agreements and understandings among
Borrower, Guarantors, Administrative Agent, and Lenders relating to the subject matter thereof.




          12.6 Nature of Obligations; Benefits of this Agreement.




          (a) The respective obligations of 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 Administrative 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.




          (b) 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.




          12.7 Expenses; Indemnification. Borrower shall reimburse Administrative Agent for any
reasonable outside attorneys’ fees and costs paid or incurred by Administrative Agent in connection
with the preparation, negotiation, execution, delivery, review, amendment, modification, and
administration of the Loan Documents. Borrower also agrees to reimburse Administrative Agent,
Lenders and each Issuing Bank for any reasonable costs and out-of-pocket expenses (including
reasonable outside attorneys’ fees and time charges of attorneys for Administrative Agent, Lenders
and such Issuing Bank) paid or incurred by Administrative Agent, any Lender or such Issuing Bank in
connection with the collection and enforcement of the Loan Documents. Borrower further agrees to
indemnify Administrative Agent and each Lender




80









 







and Issuing Bank, and their respective Affiliates, directors, officers and employees (the
“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 Administrative Agent or any Lender or Issuing Bank 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 thereby or the direct or indirect application or proposed
application of the proceeds of any Loan hereunder (except to the extent the same 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 the indemnified Person or the failure of the indemnified Person
to comply with regulatory requirements applicable to it). The obligations of Borrower under this
Section shall survive the termination of this Agreement.




          12.8 Numbers of Documents. All statements, notices, closing documents, and requests
hereunder shall be furnished to Administrative Agent with sufficient counterparts so that
Administrative Agent may furnish one to each of Lenders.




          12.9 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 applied on a basis consistent with the consolidated audited financial statements of
Borrower as of December 31, 1994 (“Agreement Accounting Principles”). If any change in GAAP from
the principles used in preparing such statements would have a material effect upon the results of
any calculation required by or compliance with any provision of this Agreement, then such
calculation shall be made or calculated and compliance with such provision shall be determined
using accounting principles used in preparing the consolidated audited financial statements of
Borrower as of December 31, 1994. For purposes of determining compliance by the Borrower with the
covenants in this Agreement, the application of Financial Accounting Standards Board Interpretation
Number 46 shall be disregarded with respect to a financial consolidation of any Person which is not
a Subsidiary of the Borrower.




          12.10 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.




          12.11 Nonliability of Lenders and Issuing Banks. The relationship between Borrower
and Lenders and Administrative Agent shall be solely that of borrower and lender. Neither
Administrative Agent nor any Lender or Issuing Bank shall have any fiduciary responsibilities to
Borrower. Neither Administrative Agent nor any Lender or Issuing Bank undertakes any
responsibility to Borrower to review or inform Borrower of any matter in connection with any phase
of Borrower’s business or operations.




          12.12 CHOICE OF LAW. THE LOAN DOCUMENTS SHALL BE CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF NEW YORK, BUT GIVING EFFECT TO FEDERAL
LAWS APPLICABLE TO NATIONAL BANKS.





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          12.13 Arbitration. Subject to the provisions of this Section 12.13, Borrower, Lenders
and Administrative Agent agree to submit to binding arbitration any and all claims, disputes and
controversies between or among them (and their respective employees, officers, directors,
attorneys, and other agents if permitted by law or a contract between them and such persons)
relating to this Agreement and the Loan Documents and the negotiation, execution,
collateralization, administration, repayment, modification, extension or collection thereof or
arising thereunder. Such arbitration shall proceed in New York, New York shall be governed by New
York law and shall be conducted in accordance with the Commercial Arbitration Rules of the American
Arbitration Association (the “AAA”), as modified in this Section 12.13. Judgment upon the award
rendered by each arbitrator(s) may be entered in any court having jurisdiction.





     (a) Nothing in the preceding paragraph, nor the exercise of any right to
arbitrate thereunder, shall limit the right of any party hereto (1) subject to
provisions of applicable law, to exercise self-help remedies such as setoff or
repossession or other self-help remedies provided in this Agreement or any other
Loan Document; or (2) to obtain provisional or ancillary remedies such as replevin,
injunctive relief, attachment, or appointment of a receiver from a court having
jurisdiction, before, during or after the pendency of any arbitration proceeding, or
(3) to defend or obtain injunctive or other equitable relief from a court of
competent jurisdiction against the foregoing or assert mandatory counterclaims, if
any, prior to and during the pendency of a determination in arbitration of issues of
performance, default, damages and other such claims and disputes.




     (b) Arbitration hereunder shall be before a three-person panel of neutral
arbitrators, consisting of one person from each of the following categories: (1) an
attorney who has practiced in the area of commercial real estate law for at least
ten (10) years; (2) a person with at least ten (10) years’ experience in real estate
lending; and (3) a person with at least ten (10) years’ experience in the
homebuilding industry. The AAA shall submit a list of persons meeting the criteria
outlined above for each category of arbitrator, and the parties shall select one
person from each category in the manner established by the AAA.




     (c) In any dispute between the parties that is arbitratable hereunder, where
the aggregate of all claims and the aggregate of all counterclaims is an amount less
than Fifty Thousand And No/100ths Dollars ($50,000), the arbitration shall be before
a single neutral arbitrator to be selected in accordance with the Commercial Rules
of the American Arbitration Association and shall proceed under the Expedited
Procedures of said Rules.




     (d) In any arbitration hereunder, the arbitrators shall decide (by documents
only or with a hearing, at the arbitrators’ discretion) any pre-hearing motions
which are substantially similar to pre-hearing motions to dismiss for failure to
state a claim or motions for summary adjudication.




     (e) In any arbitration hereunder, discovery shall be permitted in accordance
with the New York Code of Civil Procedure. Scheduling of such



82









 




discovery may be determined by the arbitrators, and any discovery disputes
shall be finally determined by the arbitrators.





     (f) The New York rules of evidence shall control the admission of evidence at
the hearing in any arbitration conducted hereunder; provided, however, no error by
the arbitrators in application of the rules of evidence shall be grounds, as such,
for vacating the arbitrators’ award.




     (g) Notwithstanding any AAA rule to the contrary, the arbitration award shall
be in writing and shall specify the factual and legal basis for the award, including
findings of fact and conclusions of law.




     (h) Each party shall each bear its own costs and expenses and an equal share of
the arbitrators’ costs and administrative fees of arbitration.



          12.14 Jurisdiction; Consent to Service of Process.





     (a) Borrower hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of the Supreme Court of the State of New
York sitting in New York County and of the United States District Court of the
Southern District of New York, and any appellate court from any thereof, in any
action or proceeding arising out of or relating to this Agreement, or for
recognition or enforcement of any judgment, and each of the parties hereto hereby
irrevocably and unconditionally agrees that all claims in respect of any such action
or proceeding may be heard and determined in such New York State or, to the extent
permitted by law, in such Federal court. Each of the parties hereto agrees that a
final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Agreement shall affect any right that
Administrative Agent or any Lender or Issuing Bank may otherwise have to bring any
action or proceeding relating to this Agreement against Borrower or its properties
in the courts of any jurisdiction.




     (b) Borrower hereby irrevocably and unconditionally waives, to the fullest
extent it may legally and effectively do so, any objection which it may now or
hereafter have to the laying of venue of any suit, action or proceeding arising out
of or relating to this Agreement in any court referred to in paragraph (a) of this
Section. Each of the parties hereto hereby irrevocably waives, to the fullest
extent permitted by law, the defense of an inconvenient forum to the maintenance of
such action or proceeding in any such court.




     (c) Each party to this Agreement irrevocably consents to service of process in
the manner provided for notices in Article XVI. Nothing in this Agreement will
affect the right of any party to this Agreement to serve process in any other manner
permitted by law.



          12.15 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY RIGHT




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IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT,
TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT
AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS,
THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.




          12.16 Confidentiality. Each Lender and Administrative Agent agree to use commercially
reasonable efforts to keep confidential any financial reports and other information from time to
time supplied to them by Borrower hereunder to the extent that such information is not and does not
become publicly available through or with the consent or acquiescence of Borrower, except for
disclosure (i) to Administrative Agent and the other Lenders or to a Transferee, (ii) to legal
counsel, accountants, and other professional advisors to a Lender, Administrative Agent or a
Transferee, (iii) to regulatory officials, (iv) to any Person as required by law, regulation, or
legal process, (v) to any Person in connection with any legal proceeding to which that Lender is a
party, and (vi) permitted by Section 15.2. Any Lender or Administrative Agent disclosing such
information shall use commercially reasonable efforts to advise the Person to whom such information
is disclosed of the foregoing confidentiality agreement and to direct such Person to comply
therewith.




          12.17 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 Borrower that, pursuant to the requirements of the Act, it is or may be required to
obtain, verify and record information that identifies Borrower, and Guarantors which information
includes the name and address of Borrower and Guarantors and other information that will allow such
Lender to identify Borrower or Guarantors in accordance with the Act.




ARTICLE XIII




ADMINISTRATIVE AGENT




          13.1 Appointment. Each of the Lenders and Issuing Banks hereby irrevocably appoints
Administrative Agent as its agent and authorizes the Administrative Agent to take such actions on
its behalf and to exercise such powers as are delegated to Administrative Agent by the terms
hereof, together with such actions and powers as are reasonably incidental thereto.




          13.2 Rights as a Lender. The bank serving as Administrative Agent hereunder shall
have the same rights and powers in its capacity as a Lender as any other Lender and may exercise
the same as though it were not Administrative Agent, and such bank and its Affiliates may accept
deposits from, lend money to and generally engage in any kind of business with the Borrower or any
Subsidiary or other Affiliate thereof as if it were not Administrative Agent hereunder.





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          13.3 Duties. Administrative Agent shall not have any duties or obligations
except those expressly set forth herein. Without limiting the generality of the foregoing, (a)
Administrative Agent shall not be subject to any fiduciary or other implied duties, regardless of
whether an Event Default or Unmatured Event of Default has occurred and is continuing, (b)
Administrative Agent shall not have any duty to take any discretionary action or exercise any
discretionary powers, except discretionary rights and powers expressly contemplated hereby that
Administrative Agent is required to exercise in writing as directed by the Required Lenders (or
such other number or percentage of the Lenders as shall be necessary under the circumstances as
provided in Section 11.2), and (c) except as expressly set forth herein, Administrative Agent shall
not have any duty to disclose, and shall not be liable for the failure to disclose, any information
relating to Borrower or any of its Subsidiaries that is communicated to or obtained by the bank
serving as Administrative Agent or any of its Affiliates in any capacity. Administrative Agent
shall not be liable for any action taken or not taken by it with the consent or at the request of
the Required Lenders (or such other number or percentage of the Lenders as shall be necessary under
the circumstances as provided in Section 11.2) or in the absence of its own gross negligence or
willful misconduct. Administrative Agent shall be deemed not to have knowledge of any Event of
Default or Unmatured Event of Default (other than an Event of Default under Section 10.2) unless
and until written notice thereof is given to the Administrative Agent by Borrower or a Lender, and
Administrative Agent shall not be responsible for or have any duty to ascertain or inquire into (i)
any statement, warranty or representation made in or in connection with this Agreement, (ii) the
contents of any certificate, report or other document delivered hereunder or in connection
herewith, (iii) the performance or observance of any of the covenants, agreements or other terms or
conditions set forth herein, (iv) the validity, enforceability, effectiveness or genuineness of
this Agreement or any other agreement, instrument or document, or (v) the satisfaction of any
condition set forth in Article V or elsewhere herein, other than to confirm receipt of items
expressly required to be delivered to Administrative Agent.




          13.4 Reliance by Administrative Agent. Administrative Agent shall be entitled to
rely upon, and shall not incur any liability for relying upon, any notice, request, certificate,
consent, statement, instrument, document or other writing believed by it to be genuine and to have
been signed or sent by the proper Person. Administrative Agent also may rely upon any statement
made to it orally or by telephone and believed by it to be made by the proper Person, and shall not
incur any liability for relying thereon. Administrative Agent may consult with legal counsel (who
may be counsel for Borrower), independent accountants and other experts selected by it, and shall
not be liable for any action taken or not taken by it in accordance with the advice of any such
counsel, accountants or experts.




          13.5 Sub-Agents. Administrative Agent may perform any and all of its duties and
exercise its rights and powers by or through any one or more sub-agents appointed by the
Administrative Agent. Administrative Agent and any such sub-agent may perform any and all of its
duties and exercise its rights and powers through their respective Related Parties. The
exculpatory provisions of the preceding paragraphs shall apply to any such sub-agent and to the
Related Parties of Administrative Agent and any such sub-agent, and shall apply to their respective
activities in connection with the
syndication of the credit facilities provided for herein as well as activities as
Administrative Agent.




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          13.6 Successor Agents. Subject to the appointment and acceptance of a successor
Administrative Agent as provided in this paragraph, Administrative Agent may resign at any time by
notifying the Lenders, the Issuing Banks and Borrower. Administrative Agent may be removed at any
time with or without cause by written notice received by Administrative 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 a successor. The
consent of Borrower shall be required to the removal of the Adminstrative Agent or appointment of a
successor; provided, however, that if an Event of Default has occurred and is continuing, the
consent of Borrower shall not be required. If no successor shall have been so appointed and shall
have accepted such appointment within 30 days after the retiring Administrative Agent gives notice
of its resignation, then the retiring Administrative Agent may, on behalf of the Lenders and
Issuing Banks, appoint a successor Administrative Agent which shall be a bank with an office in New
York, New York, or an Affiliate of any such bank. Upon the acceptance of its appointment as
Administrative Agent hereunder by a successor, such successor shall succeed to and become vested
with all the rights, powers, privileges and duties of the retiring Administrative Agent, and the
retiring or removed Administrative Agent shall be discharged from its duties and obligations
hereunder. The fees payable by the Borrower to a successor Administrative Agent shall be the same
as those payable to its predecessor unless otherwise agreed between the Borrower and such
successor. After the Administrative Agent’s resignation or removal hereunder, the provisions of
this Article and Section 12.7 shall continue in effect for the benefit of such retiring or removed
Administrative Agent, its sub-agents and their respective Related Parties in respect of any actions
taken or omitted to be taken by any of them while it was acting as Administrative Agent.




          13.7 No Reliance by Lenders. Each Lender acknowledges that it has, independently
and without reliance upon Administrative Agent or any other Lender and based on such documents and
information as it has deemed appropriate, made its own credit analysis and decision to enter into
this Agreement. Each Lender also acknowledges that it will, independently and without reliance
upon Administrative Agent or any other Lender and based on such documents and information as it
shall from time to time deem appropriate, continue to make its own decisions in taking or not
taking action under or based upon this Agreement, any related agreement or any document furnished
hereunder or thereunder.




          13.8 Agent’s Reimbursement and Indemnification. Lenders agree to reimburse and
indemnify Administrative Agent ratably in proportion to their respective Commitments (or, if the
Commitments have been terminated, in proportion to the then outstanding amount of the Loans held by
the Lenders) (and without relieving Borrower or Guarantors from any obligations) (i) for any
amounts not reimbursed by Borrower or any Guarantor for which Administrative Agent is entitled to
reimbursement by Borrower or any Guarantor under the Loan Documents, (ii) for any other expenses
incurred by
Administrative Agent on behalf of Lenders, in connection with the preparation, execution,
delivery, administration and enforcement of the Loan Documents (including, without limitation, for
any expenses incurred by Administrative Agent in connection with any dispute between Administrative
Agent and any Lender or between two or more Lenders) that is not reimbursed by Borrower 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 Administrative Agent in any way relating to or arising out of the Loan Documents
or any other document




86









 





delivered in connection therewith or the transactions contemplated thereby
(including, without limitation, for any such amounts incurred by or asserted against Administrative
Agent in connection with any dispute between Administrative Agent and any Lender or between two or
more Lenders), or the enforcement of any of the terms of the Loan Documents or of any such other
documents, provided that 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 Administrative Agent. The
obligations of Lenders under this Section 13.8 shall survive payment of the Obligations and
termination of this Agreement.



          13.9 Agent and Arranger Fees. Borrower agrees to pay to Administrative Agent and
Arranger, for their respective accounts, the fees agreed to by Borrower, Administrative Agent and
Arranger pursuant to that certain letter agreement dated February 3, 2006, or as otherwise agreed
from time to time.



          13.10 Co-Agents, Documentation Agents, Managing Agents, Senior Managing Agents,
Syndication Agent, etc. No Lender identified in this Agreement as a Co-Agent, Documentation
Agent, Managing Agent, Senior 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 Administrative Agent in
Section 13.7.



ARTICLE XIV




RATABLE PAYMENTS




          14.1 Ratable Payments. If any Lender (whether by setoff or otherwise) has payment
made to it upon its Loans (other than payments received pursuant to Sections 3.1, 3.2 or 3.3) in a
greater proportion than that received by any other Lender, such Lender agrees, promptly upon
demand, to purchase a portion of the Loans held by the other Lenders so that after such purchase
each Lender will hold its ratable proportion of Loans. If any Lender, whether in connection with
common law right of setoff or amounts which might be subject to common law right of 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
Loans. In case any such payment is prevented, restricted or otherwise impeded by legal process, or
otherwise, appropriate further adjustments shall be made.




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ARTICLE XV




BENEFIT OF AGREEMENT, ASSIGNMENTS; PARTICIPATIONS




          15.1 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 Issuing Bank that issues any Facility
Letter of Credit), except that (i) 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 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 Issuing Bank that issues any Facility Letter of Credit),
Participants (to the extent provided in paragraph (c) of this Section) and, to the extent expressly
contemplated hereby, the Related Parties of each of Administrative Agent, and the Lenders and
Issuing Bank) 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 an Event of
Default has occurred and is continuing, any other assignee; and




          (B) the Administrative Agent, provided that no
consent of the Administrative Agent shall be required for an
assignment of any Commitment to an assignee that is an Affiliate
of a Lender or that is a Lender immediately prior to giving
effect to such assignment.




            (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 the amount of the Commitment or Loans of the assigning
Lender subject to each such assignment (determined as of the date
the Assignment and Assumption with respect to such assignment is
delivered to Administrative Agent) shall not be less than
$2,000,000 unless each of Borrower and Administrative Agent



88









 







otherwise consent, provided that no such consent of
Borrower shall be required if an Event of 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;




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




          (D) the assignee, if it shall not be a Lender, shall deliver
to Administrative 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 3.1, 3.2, 3.3 and
12.7). Any assignment or transfer by a Lender of rights or obligations under this
Agreement that does not comply with this Section 15.1 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 paragraph (c) of this Section.




            (iv) Administrative 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 and Loans
owing to, each Lender pursuant to the terms hereof from time to time (the
“Register”). The entries in the Register shall be conclusive, and
Borrower,
Administrative Agent, Issuing Banks and 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 Borrower, any Lender
or Issuing Bank, 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 Administrative
Questionnaire (unless the assignee shall already be a Lender hereunder), the
processing and recordation fee referred to in paragraph (b)



89









 







of this Section and
any written consent to such assignment required by paragraph (b) of this Section,
Administrative 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(d), 4.6(b) or 13.8, Administrative
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.




     (c) (i) Any Lender may, without the consent of Borrower, Administrative
Agent, any Issuing Bank or any Swingline Lender, 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 (A) such
Lender’s obligations under this Agreement shall remain unchanged, (B) such Lender
shall remain solely responsible to the other parties hereto for the performance of
such obligations and (C) Borrower, Administrative Agent, Issuing Banks 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. Subject to paragraph (c)(ii) of this Section, the Borrower agrees
that each Participant shall be entitled to the benefits of Sections 3.1, 3.2 and
3.3 to the same extent as if it were a Lender and had acquired its interest by
assignment pursuant to paragraph (b) of this Section. To the extent permitted by
law, each Participant also shall be entitled to the benefits of Section 14.1 as
though it were a Lender, provided such Participant agrees to be subject to Section
14.1 as though it were a Lender.




          (ii) A Participant shall not be entitled to receive any greater payment under
Section 3.1 or 3.3 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 Foreign Lender if it were a Lender shall
not be entitled to the benefits of Section 3.3 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 3.3(e) as though it were a Lender.




     (d) 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



90









 






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.



          15.2 Dissemination of Information. Borrower authorizes each Lender to disclose to
any Participant or any Person acquiring an interest in the Loan Documents by operation of law (each
a “Transferee” and any prospective Transferee any and all non-public information in such Lender’s
possession concerning the creditworthiness of Borrower, Guarantors and their Subsidiaries;
provided, that each Transferee and prospective Transferee agrees to be bound by Section 12.16 of
this Agreement.




ARTICLE XVI




NOTICES




          16.1 Giving Notice. Except as otherwise permitted by Section 2.14 with respect to
borrowing notices, all notices and other communications provided to any party hereto under this
Agreement or any other Loan Document shall be in writing or by facsimile and addressed or delivered
to such party (a) in the case of Borrower and Administrative Agent at its address set forth below
its signature hereto (b), in the case of any other Lender, at its address set forth in the
Administrative Questionnaire furnished by such Lender to Administrative Agent, and (c) in any case
at such other address as may be designated by such party in a notice to the other parties. Any
notice, if mailed and properly addressed with postage prepaid, shall be deemed given when received;
any notice, if transmitted by facsimile, shall be deemed given when transmitted.




          16.2 Change of Address. Borrower, Administrative Agent and any Lender and Issuing
Bank may each change the address for service of notice upon it by a notice in writing to the other
parties hereto.




ARTICLE XVII




COUNTERPARTS




     This Agreement may be executed in any number of counterparts, all of which taken together
shall constitute one agreement, and any of the parties hereto may execute this Agreement by signing
any such counterpart. This Agreement shall be effective when it has been executed by Borrower,
Administrative Agent, and all Lenders.




91










 







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



	 	 	 	 	 	 	 
	 	 	BORROWER:	 	 
	 
	 	 	 	 	 	 
	 	 	M.D.C. HOLDINGS, INC.,

a Delaware corporation	 	 
	 
	 	 	 	 	 	 
	 

	 	By: /s/ John J. Heaney	 	 
	 

	 	 
	 	 
	 

	 	Name:  
	John J. Heaney, Senior Vice President and Treasurer	 	 
	 
	 	 	 	 	 	 
	 	 	4350 South Monaco Street — Suite 500	 	 
	 	 	Denver, Colorado 80237	 	 
	 	 	Attention: John J. Heaney	 	 






92









 







	 	 	 	 	 	 	 
	 	 	LENDERS:
	 
	 	 	 	 	 	 
	 	 	JPMORGAN CHASE BANK, N.A., Individually, as Administrative Agent and as Issuing
Bank
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Kent A. Kaiser
 

	 	 
	 	 	Name: Kent A. Kaiser
	 	 	Title: Vice President
	 
	 	 	 	 	 	 
	 	 	707 Travis, Floor 6
	 	 	Houston, TX 77002
	 	 	Attention: Kent A. Kaiser






 









 






SIGNATURE PAGE TO M.D.C. HOLDINGS, INC.

SECOND AMENDED AND RESTATED CREDIT AGREEMENT




	 	 	 	 	 	 	 
	 	 	WACHOVIA BANK, NATIONAL ASSOCIATION
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Timothy S. Blake
 

	 	 
	 	 	Name: Timothy S. Blake
	 	 	Title: Vice President






 









 






SIGNATURE PAGE TO M.D.C. HOLDINGS, INC.

SECOND AMENDED AND RESTATED CREDIT AGREEMENT




	 	 	 	 	 	 	 
	 	 	CITICORP NORTH AMERICA, INC.
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Malav Kakad
 

	 	 
	 	 	Name: Malav Kakad
	 	 	Title: Vice President






 









 






SIGNATURE PAGE TO M.D.C. HOLDINGS, INC.

SECOND AMENDED AND RESTATED CREDIT AGREEMENT




	 	 	 	 	 	 	 
	 	 	THE ROYAL BANK OF SCOTLAND plc
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ David Apps
 

	 	 
	 	 	Name: David Apps
	 	 	Title: Managing Director






 









 






SIGNATURE PAGE TO M.D.C. HOLDINGS, INC.

SECOND AMENDED AND RESTATED CREDIT AGREEMENT




	 	 	 	 	 	 	 
	 	 	SUNTRUST BANK
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ W. John Wendler
 

	 	 
	 	 	Name: W. John Wendler
	 	 	Title: Senior Vice President






 









 






SIGNATURE PAGE TO M.D.C. HOLDINGS, INC.

SECOND AMENDED AND RESTATED CREDIT AGREEMENT




	 	 	 	 	 	 	 
	 	 	U.S. BANK NATIONAL ASSOCIATION
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Christopher E. Erickson
 

	 	 
	 	 	Name: Christopher E. Erickson
	 	 	Title: Vice President






 









 






SIGNATURE PAGE TO M.D.C. HOLDINGS, INC.

SECOND AMENDED AND RESTATED CREDIT AGREEMENT




	 	 	 	 	 	 	 
	 	 	BANK OF AMERICA, N.A.
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Stephen B. Carlson
 

	 	 
	 	 	Name: Stephen B. Carlson
	 	 	Title: Vice President






 









 






SIGNATURE PAGE TO M.D.C. HOLDINGS, INC.

SECOND AMENDED AND RESTATED CREDIT AGREEMENT




	 	 	 	 	 	 	 
	 	 	GUARANTY BANK
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Mark W. Cundiff
 

	 	 
	 	 	Name: Mark W. Cundiff
	 	 	Title: Vice President







 










 







SIGNATURE PAGE TO M.D.C. HOLDINGS, INC.

SECOND AMENDED AND RESTATED CREDIT AGREEMENT




	 	 	 	 	 
	 	WASHINGTON MUTUAL BANK, FA

 	 
	 	By:  	/s/ Brad Johnson
 	 
	 	Name:  	Brad Johnson 	 
	 	Title:  	Vice President 	 



 









 







SIGNATURE PAGE TO M.D.C. HOLDINGS, INC.

SECOND AMENDED AND RESTATED CREDIT AGREEMENT




	 	 	 	 	 
	 	BNP PARIBAS

 	 
	 	By:  	/s/ Duane Helkowski
 	 
	 	Name:  	Duane Helkowski 	 
	 	Title:  	Managing Director 	 
	 
	 	 	 
	 	By:  	                            /s/ Simone Vinocour
 	 
	 	Name:  	Simone Vinocour 	 
	 	Title:  	Director 	 



 









 







SIGNATURE PAGE TO M.D.C. HOLDINGS, INC.

SECOND AMENDED AND RESTATED CREDIT AGREEMENT




	 	 	 	 	 
	 	CALIFORNIA BANK & TRUST

 	 
	 	By:  	/s/ Jeffrey M. Konieczny
 	 
	 	Name:  	Jeffrey M. Konieczny 	 
	 	Title:  	AVP 	 



 









 







SIGNATURE PAGE TO M.D.C. HOLDINGS, INC.

SECOND AMENDED AND RESTATED CREDIT AGREEMENT




	 	 	 	 	 
	 	COMERICA BANK

 	 
	 	By:  	/s/ Leslie Vogel
 	 
	 	Name:  	Leslie Vogel 	 
	 	Title:  	Vice President 	 



 









 







SIGNATURE PAGE TO M.D.C. HOLDINGS, INC.

SECOND AMENDED AND RESTATED CREDIT AGREEMENT




	 	 	 	 	 
	 	AMSOUTH BANK

 	 
	 	By:  	/s/ Ronny Hudspeth
 	 
	 	Name:  	Ronny Hudspeth 	 
	 	Title:  	Sr. Vice President 	 
	 




 









 







SIGNATURE PAGE TO M.D.C. HOLDINGS, INC.

SECOND AMENDED AND RESTATED CREDIT AGREEMENT




	 	 	 	 	 	 	 
	 	 	BANK OF THE WEST	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	/s/ Jan Manista
 

Jan Manista
	 	 
	 

	 	Title:
	 	Vice President	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Chuck Weerasooriya	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Chuck Weerasooriya, CFA	 	 
	 

	 	Title:
	 	Senior Vice President	 	 






 









 






SIGNATURE PAGE TO M.D.C. HOLDINGS, INC.

SECOND AMENDED AND RESTATED CREDIT AGREEMENT




	 	 	 	 	 	 	 
	 	 	CALYON NEW YORK BRANCH	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Samuel L. Hill
 

	 	 
	 

	 	Name:
	 	Samuel L. Hill	 	 
	 

	 	Title:
	 	Managing Director	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Robert Nelson	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Robert Nelson	 	 
	 

	 	Title:
	 	Managing Director	 	 






 









 






SIGNATURE PAGE TO M.D.C. HOLDINGS, INC.

SECOND AMENDED AND RESTATED CREDIT AGREEMENT




	 	 	 	 	 	 	 
	 	 	KEYBANK NATIONAL ASSOCIATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	/s/ Jeff V. Aycock
 

Jeff V. Aycock, CFA
	 	 
	 

	 	Title:
	 	Senior Banker	 	 






 









 






SIGNATURE PAGE TO M.D.C. HOLDINGS, INC.




SECOND AMENDED AND RESTATED CREDIT AGREEMENT




	 	 	 	 	 	 	 
	 	 	MIZUHO CORPORATE BANK, LTD.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Raymond Ventura
 

	 	 
	 

	 	Name:
	 	Raymond Ventura	 	 
	 

	 	Title:
	 	Deputy General Manager	 	 







 









 







SIGNATURE PAGE TO M.D.C. HOLDINGS, INC.

SECOND AMENDED AND RESTATED CREDIT AGREEMENT




	 	 	 	 	 
	 	 	NATEXIS BANQUE POPULAIRES
	 
	 	 	 	 
	 

	 	By:  /s/ Guillaume De Parscau
	 

	 	 

	 

	 	Name:  
	Guillaume De. Parscau
	 

	 	Title:
	Business Development – First Vice President
	 
	 	 	 	 
	 

	 	By:  /s/ Marie-Edith Dugeny
	 

	 	 

	 

	 	Name:  
	Marie-Edith Dugeny
	 

	 	Title:
	Real Estate Finance, VP and Group Manager






 









 






SIGNATURE PAGE TO M.D.C. HOLDINGS, INC.

SECOND AMENDED AND RESTATED CREDIT AGREEMENT




	 	 	 	 	 
	 	 	PNC BANK, NATIONAL ASSOCIATION
	 
	 	 	 	 
	 

	 	By:
  /s/ Douglas G. Paul
	 

	 	 

	 

	 	Name:  
	Douglas G. Paul
	 

	 	Title:
	Senior Vice President






 









 






SIGNATURE PAGE TO M.D.C. HOLDINGS, INC.

SECOND AMENDED AND RESTATED CREDIT AGREEMENT




	 	 	 	 	 
	 	 	RBC CENTURA BANK, a North Carolina
	 	 	banking corporation
	 
	 	 	 	 
	 

	 	By:
  /s/ Carolynn Alexander
	 

	 	 

	 

	 	Name:  
	Carolynn Alexander
	 

	 	Title:	 	 







 










 







SIGNATURE PAGE TO M.D.C. HOLDINGS, INC.

SECOND AMENDED AND RESTATED CREDIT AGREEMENT




	 	 	 	 	 	 	 
	 	 	CITY NATIONAL BANK	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Xavier Barrera	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Xavier Barrera	 	 
	 

	 	Title:
	 	 Vice President	 	 






 









 






SIGNATURE PAGE TO M.D.C. HOLDINGS, INC.

SECOND AMENDED AND RESTATED CREDIT AGREEMENT




	 	 	 	 	 	 	 
	 	 	COMPASS BANK	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Larry A. Olsen	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Larry A. Olsen	 	 
	 

	 	Title:
	 	 EVP	 	 






 









 






SIGNATURE PAGE TO M.D.C. HOLDINGS, INC.

SECOND AMENDED AND RESTATED CREDIT AGREEMENT




	 	 	 	 	 	 	 
	 	 	FIFTH THIRD BANK	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Andrew D. Jones	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Andrew D. Jones	 	 
	 

	 	Title:
	 	 Assistant Vice President	 	 






 









 





Bank One, Arizona, N.A. executes this Agreement solely for the purposes set forth in Section
4.4(f).




	 	 	 	 	 	 	 
	 	 	BANK ONE, ARIZONA, N.A.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Kent A. Kaiser	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Kent A. Kaiser	 	 
	 

	 	Title:
	 	 Vice President	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	707 Travis, Floor 6	 	 
	 

	 	 	 	Houston, TX 77002	 	 
	 

	 	 	 	Attention: Kent A. Kaiser	 	 







 










 







EXHIBIT A




SECOND AMENDED AND RESTATED GUARANTY





			
	TO:	 	JPMORGAN CHASE BANK, N.A. as Administrative Agent for Lenders that are parties to the Second
Amended and Restated Credit Agreement dated as of March 22, 2006 (as amended, supplemented or
otherwise modified from time to time, the “Credit Agreement”), among M.D.C. HOLDINGS, INC., a
Delaware corporation, Lenders, and Administrative Agent, and to Lenders. Capitalized terms
not otherwise defined herein shall have the meaning set forth in the Credit Agreement.





RECITALS




                A. Pursuant to the Prior Credit Agreement, M.D.C. LAND CORPORATION, a Colorado corporation,
RAH OF FLORIDA, INC., a Colorado corporation, RAH OF TEXAS, LP, a Colorado limited partnership, RAH
TEXAS HOLDINGS, LLC, a Colorado limited liability company, RICHMOND AMERICAN CONSTRUCTION, INC., a
Delaware corporation, RICHMOND AMERICAN HOMES OF ARIZONA, INC., a Delaware corporation, RICHMOND
AMERICAN HOMES OF CALIFORNIA, INC., a Colorado corporation, RICHMOND AMERICAN HOMES OF COLORADO,
INC., a Delaware corporation, RICHMOND AMERICAN HOMES OF DELAWARE, INC., a Colorado corporation,
RICHMOND AMERICAN HOMES OF FLORIDA, LP, a Colorado limited partnership, RICHMOND AMERICAN HOMES OF
ILLINOIS, INC., a Colorado corporation, RICHMOND AMERICAN HOMES OF MARYLAND, INC., a Maryland
corporation, RICHMOND AMERICAN HOMES OF NEVADA, INC., a Colorado corporation, RICHMOND AMERICAN
HOMES OF NEW JERSEY, INC., a Colorado corporation, RICHMOND AMERICAN HOMES OF PENNSYLVANIA, INC., a
Colorado corporation, RICHMOND AMERICAN HOMES OF TEXAS, INC., a Colorado corporation, RICHMOND
AMERICAN HOMES OF UTAH, INC., a Colorado corporation, RICHMOND AMERICAN HOMES OF VIRGINIA, INC., a
Virginia corporation, RICHMOND AMERICAN HOMES OF WEST VIRGINIA, INC., a Colorado corporation, and
(hereinafter collectively called “Guarantors” and individually a “Guarantor”), whose address is set
forth after their signatures below, have executed and delivered a certain Amended and Restated
Guaranty (the “Prior Guaranty”) dated January 28, 2005.




                B. It is a condition under the Credit Agreement that Guarantors shall execute and deliver this
Second Amended and Restated Guaranty (“Guaranty”) amending and restating the Prior Guaranty.




                NOW, THEREFORE, the Prior Guaranty is hereby amended and restated in its entirety as follows:




                FOR VALUABLE CONSIDERATION, Guarantors unconditionally, jointly and severally, guarantee and
promise to pay to Administrative Agent, for the benefit of Lenders and their respective successors,
endorsees, transferees and assigns, or order, within one (1) business day after demand, in lawful
money of the United States, (i) the Notes, principal and interest and





1









 







all other sums payable thereunder, or at the election of Administrative Agent any one or more
installments thereof, in the event that Borrower fails to punctually pay any one or more
installments of the Note (principal and/or interest), or any other sum payable thereunder at the
time and in the manner provided therein; and (ii) all other indebtedness of Borrower to
Administrative Agent or to any Lender arising under or in connection with the Notes, the Credit
Agreement or any Loan Documents (the indebtedness evidenced by the Notes together with all other
indebtedness specified above is hereinafter collectively called the “Indebtedness”).




     1. The obligations of Guarantors hereunder are separate and independent of the obligations of
Borrower and of any other guarantor, and a separate action or actions may be brought and prosecuted
against any one or more of Guarantors whether action is brought against Borrower or any other
guarantor or whether Borrower or any other guarantor is joined in any action or actions. The
obligations of Guarantors hereunder shall survive and continue in full force and effect until
payment in full of the Indebtedness is actually received by Administrative Agent for the benefit of
Lenders and the period of time has expired during which any payment made by Borrower or any
Guarantor to Administrative Agent for the benefit of Lenders may be determined to be a Preferential
Payment (defined below), notwithstanding any release or termination of Borrower’s or any other
guarantor’s liability by express or implied agreement with Administrative Agent or any Lender or by
operation of law and notwithstanding that the Indebtedness or any part thereof is deemed to have
been paid or discharged by operation of law or by some act or agreement of Administrative Agent or
Lenders. For purposes of this Guaranty, the Indebtedness shall be deemed to be paid only to the
extent that Administrative Agent, on behalf of Lenders, actually receives immediately available
funds.



     2. Guarantors agree that to the extent Borrower or any Guarantor makes any payment to
Administrative Agent or Lenders in connection with the Indebtedness, and all or any part of such
payment is subsequently invalidated, declared to be fraudulent or preferential, set aside or
required to be repaid by Administrative Agent or Lenders or paid over to a trustee, receiver or any
other entity, whether under any bankruptcy act or otherwise (any such payment is hereinafter
referred to as a “Preferential Payment”), then this Guaranty shall continue to be effective or
shall be reinstated, as the case may be, and, to the extent of such payment or repayment by
Administrative Agent or Lenders, the Indebtedness or part thereof intended to be satisfied by such
Preferential Payment shall be revived and continued in full force and effect as if said
Preferential Payment had not been made.



     3. Guarantors are providing this Guaranty at the instance and request of Borrower to induce
Administrative Agent and Lenders to extend or continue financial accommodations to Borrower.
Guarantors hereby represent and warrant that Guarantors are and will continue to be fully informed
about all aspects of the financial condition and business affairs of Borrower that Guarantors deem
relevant to the obligations of Guarantors hereunder and hereby waive and fully discharge
Administrative Agent and each Lender from any and all obligations to communicate to Guarantors any
information whatsoever regarding Borrower or Borrower’s financial condition or business affairs.
Guarantors acknowledge that Borrower owns, directly or indirectly, all of the issued and
outstanding shares of stock of each Guarantor, that Guarantors and Borrower are engaged in related
businesses, and that Guarantors will derive substantial direct and indirect benefit from the
extension of credit by Lenders evidenced by the Indebtedness.



2









 





     4. Guarantors authorize Administrative Agent and Lenders, without notice or demand and without
affecting Guarantors’ liability hereunder, from time to time, to: (a) renew, modify, compromise,
extend, accelerate or otherwise change the time for payment of, or otherwise change the terms of
the Indebtedness or any part thereof, including increasing or decreasing the rate of interest
thereon; (b) release, substitute or add any one or more endorsers, or other guarantors; (c) take
and hold security for the payment of this Guaranty or the Indebtedness, and enforce, exchange,
substitute, subordinate, waive or release any such security; (d) proceed against such security and
direct the order or manner of sale of such security as Administrative Agent in its discretion may
determine; and (e) apply any and all payments from Borrower, any Guarantor or any other guarantor,
or recoveries from such security, in such order or manner as Administrative Agent in its discretion
may determine.



     5. Guarantors waive and agree not to assert: (a) any right to require Administrative Agent or
Lenders to proceed against Borrower or any other guarantor, to proceed against or exhaust any
security for the Indebtedness, to pursue any other remedy available to Administrative Agent and
Lenders, or to pursue any remedy in any particular order or manner; (b) the benefit of any statute
of limitations affecting Guarantors’ liability hereunder or the enforcement hereof; (c) demand,
diligence, presentment for payment, protest and demand, and notice of extension, dishonor, protest,
demand, nonpayment and acceptance of this Guaranty; (d) notice of the existence, creation or
incurring of new or additional indebtedness of Borrower to Administrative Agent or any Lender; and
(e) any defense arising by reason of any disability or other defense of Borrower or by reason of
the cessation from any cause whatsoever (other than payment in full of all amounts demanded to be
paid by Guarantors under this Guaranty) of the liability of Borrower for the Indebtedness.
Guarantors hereby expressly consent to any impairment of collateral, including, but not limited to,
failure to perfect a security interest and release collateral and any such impairment or release
shall not affect Guarantors’ obligations hereunder. Until payment in full of the Indebtedness,
Guarantors shall have no right of subrogation and hereby waive any right to enforce any remedy
which Administrative Agent and Lenders now have, or may hereafter have, against Borrower, and waive
any benefit of, and any right to participate in, any security now or hereafter held by
Administrative Agent on behalf of Lenders.



     6. (a) If from time to time Borrower shall have liabilities or obligations to any Guarantor,
whether absolute or contingent, joint, several, or joint and several, such liabilities and
obligations (the “Subordinated Indebtedness”) and any and all assignments as security, grants in
trust, liens, mortgages, security interests, other encumbrances, and other interests and rights
securing such liabilities and obligations shall at all times be fully subordinate to payment and
performance in full of the Obligations. Guarantors agree that such liabilities and obligations of
Borrower to Guarantors shall not be secured by any assignment as security, grant in trust, lien,
mortgage, security interest, other encumbrance or other interest or right in any property,
interests in property, or rights to property of such Borrower. Guarantors and, by their acceptance
of this Guaranty, Administrative Agent and each Lender agree that (i) so long as no Event of
Default has occurred and is continuing, payments of principal and interest on the Subordinated
Indebtedness may be made by Borrower and accepted by Guarantors as such payments become due; and
(ii) after the occurrence and during the continuation of an Event of Default, Borrower shall not
make and Guarantor shall not accept any payments with respect to the Subordinated Indebtedness.
If, notwithstanding the foregoing, subsequent to an Event of Default, any



3









 




Guarantor receives any payment from Borrower, such payment shall be held in trust by such
Guarantor for the benefit of Administrative Agent and Lenders, shall be segregated from the other
funds of such Guarantor, and shall forthwith be paid by such Guarantor to Administrative Agent for
the benefit of Lenders and applied to payment of the Obligations whether or not then due.




          (b) In the event of any distribution, division, or application, partial or complete, voluntary
or involuntary, by operation of law or otherwise, of all or any part of the assets of Borrower, or
the proceeds thereof, to creditors of Borrower, by reason of the liquidation, dissolution, or other
winding up of Borrower’s business, or in the event of any receivership, insolvency or bankruptcy
proceedings by or against Borrower, or assignment for the benefit of creditors, or of any
proceedings by or against Borrower for any relief under any bankruptcy or insolvency laws, or
relating to the relief of debtors, readjustment of indebtedness, reorganizations, arrangements,
compositions or extensions, or of any other event whereby it becomes necessary or desirable to file
or present claims against Borrower for the purpose of receiving payment thereof, or on account
thereof, then and in any such event, any payment or distribution of any kind or character, either
in cash or other property, which shall be made or shall be payable with respect to any Subordinated
Indebtedness shall be paid over to Administrative Agent on behalf of Lenders for application to the
payment of the Obligations, whether due or not due, and no payments shall be made upon or in
respect of the Subordinated Indebtedness unless and until the Obligations shall have been paid and
satisfied in full. In any such event, all claims of Administrative Agent and Lenders and all
claims of Guarantors shall, at the option of Administrative Agent and Lenders, forthwith become due
and payable without demand or notice.




          (c) In the event of any distribution, division, or application, partial or complete, voluntary
or involuntary, by operation of law or otherwise, of all or any part of the assets of Borrower, or
the proceeds thereof, to creditors of Borrower, by reason of the liquidation, dissolution, or other
winding up of Borrower’s business, or in the event of any receivership, insolvency or bankruptcy
proceedings by or against Borrower, or assignment for the benefit of creditors, or of any
proceedings by or against Borrower for any relief under any bankruptcy or insolvency laws, or
relating to the relief of debtors, readjustment of indebtedness, reorganizations, arrangements,
compositions or extensions, or of any other event whereby it becomes necessary or desirable to file
or present claims against Borrower for the purpose of receiving payment thereof, or on account
thereof, each of the Guarantors irrevocably authorizes and empowers Administrative Agent, or any
person Administrative Agent may designate, to act as attorney for such Guarantor with full power
and authority in the name of such Guarantor, or otherwise, to make and present such claims or
proofs of claims against Borrower on account of the Subordinated Indebtedness as Administrative
Agent, or its appointee, may deem expedient and proper and, if necessary, to vote such claims in
any proceedings and to receive and collect for the benefit of Lenders any and all dividends or
other payments and disbursements made thereon in whatever form they may be paid or issued, and to
give acquittance therefor and to apply same to the Obligations, and Guarantors hereby agree, from
time to time and upon request, to make, execute and deliver to Administrative Agent such powers of
attorney, assignments, endorsements, proofs of claim, pleadings, verifications, affidavits,
consents, agreements or other instruments as may be requested by Administrative Agent in order to
enable Administrative Agent and Lenders to enforce any and all claims upon, or with respect to, the
Subordinated





4









 







Indebtedness, and to collect and receive any and all payments or distributions which may be
payable or deliverable at any time upon or with respect to the Subordinated Indebtedness.




          (d) Except as otherwise permitted herein, should any payment or distribution or security or
proceeds thereof be received by any Guarantor upon or with respect to the Subordinated Indebtedness
prior to the satisfaction of the Obligations, such Guarantor will forthwith deliver the same to
Administrative Agent on behalf of Lenders in precisely the form as received except for the
endorsement or assignment of such Guarantor where necessary for application on the Obligations,
whether due or not due, and until so delivered the same shall be held in trust by such Guarantor as
property of Administrative Agent on behalf of Lenders. In the event of the failure of any
Guarantor to make any such endorsement or assignment, Administrative Agent, or any of its officers
or employees, on behalf of Administrative Agent, is hereby irrevocably authorized to make the same.




          (e) Each Guarantor agrees to maintain in its records notations satisfactory to Administrative
Agent of the rights and priorities of Administrative Agent and Lenders hereunder, and from time to
time, upon request, to furnish Administrative Agent for the benefit of Lenders with sworn financial
statements. Lenders and Administrative Agent may inspect the books of account and any records of
Guarantors at any time during business hours. Each Guarantor agrees that any promissory note now
or hereafter evidencing the Subordinated Indebtedness shall be nonnegotiable and shall be marked
with a specific statement that the indebtedness thereby evidenced is subject to the provisions of
this Guaranty.




     7. (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 Guarantors, Administrative 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 Paragraph 7(a) with respect to the Maximum Liability of the
Guarantors is intended solely to preserve the rights of Administrative 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 Paragraph 7(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 Administrative Agent hereunder. Nothing in this Paragraph 7(b) shall be construed to
increase any Guarantor’s obligations hereunder beyond its Maximum Liability.



5









 





     (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 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 Borrower after the date hereof (whether by
loan, capital infusion or by other means). Nothing in this Paragraph 7(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 Paragraph
7(c) are for the benefit of both Administrative Agent and Guarantors and may be enforced by any
one, or more, or all of them in accordance with the terms hereof.



     8. It is not necessary for Administrative Agent or any Lender to inquire into the powers of
Borrower or the officers, directors, members, managers, partners, trustees or agents acting or
purporting to act on its behalf, and any of the Indebtedness made or created in reliance upon the
professed exercise of such powers shall be guaranteed hereunder.



     9. Each Guarantor agrees to deliver to Administrative Agent and Lenders financial statements
and other financial information relating to such Guarantor in form and level of detail, and
containing certifications, as required pursuant to Section 7.1 of the Credit Agreement. Each
Guarantor further agrees to comply all covenants, representations and warranties in the Credit
Agreement relating to Guarantor.



     10. Guarantors agree to pay all attorneys’ fees and all other costs and expenses which may be
incurred by Administrative Agent or any Lender in enforcing this Guaranty.



     11. This Guaranty sets forth the entire agreement of Guarantors, Administrative Agent and
Lenders with respect to the subject matter hereof and supersedes all prior oral and written
agreements and representations by Administrative Agent or any Lender to Guarantors. No
modification or waiver of any provision of this Guaranty or any right of Administrative Agent or
any Lender hereunder and no release of any Guarantor from any obligation hereunder shall be
effective unless in a writing executed by an authorized officer of Administrative Agent and each
Lender. There are no conditions, oral or otherwise, on the effectiveness of this Guaranty.



6









 





     12. This Guaranty shall inure to the benefit of Administrative Agent and each Lender and their
respective successors and assigns and shall be binding upon each Guarantor and its successors and
assigns. Administrative Agent and each Lender may assign this Guaranty in whole or in part without
notice.



     13. THIS GUARANTY SHALL BE CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (AND NOT THE LAW OF
CONFLICTS) OF THE STATE OF NEW YORK, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL
BANKS.



     14. Subject to the provisions of this Paragraph 14, each Guarantor agrees, and Lenders and
Administrative Agent by accepting this Guaranty agree, that they shall submit to binding
arbitration any and all claims, disputes and controversies between or among them (and their
respective employees, officers, directors, attorneys, and other agents if permitted by law or a
contract between them and such persons) relating to this Guaranty and the Loan Documents and the
negotiation, execution, collateralization, administration, repayment, modification, extension or
collection thereof or arising thereunder. Such arbitration shall proceed in New York, New York,
shall be governed by New York law and shall be conducted in accordance with the Commercial
Arbitration Rules of the American Arbitration Association (the “AAA”) as modified in this Paragraph
14. Judgment upon the award rendered by each arbitrator(s) may be entered in any court having
jurisdiction.



          (a) Nothing in the preceding paragraph, nor the exercise of any right to arbitrate thereunder,
shall limit the right of any party hereto (1) subject to provisions of applicable law, to exercise
self-help remedies such as setoff or repossession or other self-help remedies provided in the
Credit Agreement or any other Loan Document; or (2) to obtain provisional or ancillary remedies
such as replevin, injunctive relief, attachment, or appointment of a receiver from a court having
jurisdiction, before, during or after the pendency of any arbitration proceeding, or (3) to defend
or obtain injunctive or other equitable relief against the foregoing or assert mandatory
counterclaims, if any, prior to and during the pendency of a determination in arbitration of issues
of performance, default, damages and other such claims and disputes.




          (b) Arbitration hereunder shall be before a three-person panel of neutral arbitrators,
consisting of one person from each of the following categories: (1) an attorney who has practiced
in the area of commercial real estate law for at least ten (10) years; (2) a person with at least
ten (10) years’ experience in real estate lending; and (3) a person with at least ten (10) years’
experience in the homebuilding industry. The AAA shall submit a list of persons meeting the
criteria outlined above for each category of arbitrator, and the parties shall select one person
from each category in the manner established by the AAA.




          (c) In any dispute between the parties that is arbitratable hereunder, where the aggregate of
all claims and the aggregate of all counterclaims is an amount less than Fifty Thousand and
No/100ths Dollars ($50,000.00), the arbitration shall be before a single neutral arbitrator to be
selected in accordance with the Commercial Rules of the American Arbitration Association and shall
proceed under the Expedited Procedures of said Rules.




7









 








          (d) In any arbitration hereunder, the arbitrators shall decide (by documents only or with a
hearing, at the arbitrators’ discretion) any pre-hearing motions which are substantially similar to
pre-hearing motions to dismiss for failure to state a claim or motions for summary adjudication.




          (e) In any arbitration hereunder, discovery shall be permitted in accordance with the New York
Code of Civil Procedure. Scheduling of such discovery may be determined by the arbitrators, and
any discovery disputes shall be finally determined by the arbitrators.




          (f) The New York rules of evidence shall control the admission of evidence at the hearing in
any arbitration conducted hereunder, provided, however, no error by the arbitrators in application
of the Rules of Evidence shall be grounds, as such, for vacating the arbitrators’ award.




          (g) Notwithstanding any AAA rule to the contrary, the arbitration award shall be in writing
and shall specify the factual and legal basis for the award, including findings of fact and
conclusions of law.




          (h) Each party shall each bear its own costs and expenses and an equal share of the
arbitrators’ costs and administrative fees of arbitration.




     15. Jurisdiction; Consent to Service of Process.



          (a) Each Guarantor hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of the Supreme Court of the State of New York sitting in
New York County and of the United States District Court of the Southern District of New York, and
any appellate court from any thereof, in any action or proceeding arising out of or relating to
this Agreement, or for recognition or enforcement of any judgment, and each of the parties hereto
hereby irrevocably and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the extent permitted by law,
in such Federal court. Each of the parties hereto agrees that a final judgment in any such action
or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law. Nothing in this Agreement shall affect any right
that Administrative Agent or any Lender or Issuing Bank may otherwise have to bring any action or
proceeding relating to this Agreement against any Guarantor or its properties in the courts of any
jurisdiction.




          (b) Each Guarantor hereby irrevocably and unconditionally waives, to the fullest extent it may
legally and effectively do so, any objection which it may now or hereafter have to the laying of
venue of any suit, action or proceeding arising out of or relating to this Agreement in any court
referred to in paragraph (a) of this Section. Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such court.




          (c) Each party to this Guaranty irrevocably consents to service of process to the addresses
and in the manner provided for notices in Article XVI of the Credit Agreement. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process in any other manner
permitted by law.




8









 








     16. WAIVER OF JURY TRIAL. EACH OF THE GUARANTORS AND, BY THEIR ACCEPTANCE OF THIS
CURRENCY, EACH OF THE LENDERS AND ADMINISTRATIVE AGENT HEREBY (A) WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS GUARANTY OR THE TRANSACTIONS CONTEMPLATED
HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY), (B) HEREBY CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT
SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND
(C) HEREBY ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS
AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.



     17. Guarantors acknowledge that the rights and responsibilities of Administrative Agent under
this Guaranty with respect to any action taken by Administrative Agent or the exercise or
non-exercise by Administrative Agent of any option, right, request, judgment or other right or
remedy provided for herein or resulting or arising out of this Guaranty shall, as between
Administrative Agent and Lenders, be governed by the Credit Agreement and by such other agreements
with respect thereto as may exist from time to time among them, but, as between Administrative
Agent and Guarantors, Administrative Agent shall be conclusively presumed to be acting as agent for
Lenders with full and valid authority so to act or refrain from acting, and Guarantors shall not be
under any obligation or entitlement to make any inquiry respecting such authority.



     18. Pursuant to Section 7.11 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 Administrative 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 7.11 of the Credit Agreement.



     IN WITNESS WHEREOF these presents are executed as of March 22, 2006.



	 	 	 	 	 	 	 
	 	 	GUARANTORS:	 	 
	 
	 	 	 	 	 	 
	 	 	M.D.C. LAND CORPORATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	John Heaney	 	 
	 

	 	Title:
	 	Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	RAH OF FLORIDA, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	John Heaney	 	 
	 

	 	Title:
	 	Vice President	 	 







9










 







	 	 	 	 	 
	 	 	RAH OF TEXAS, LP
	 
	 	 	 	 
	 	 	By: Richmond American
Homes of Texas, Inc., its general partner
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:
	 	                     John Heaney
	 

	 	Title:
	 	                    Vice President
	 
	 	 	 	 
	 	 	RAH TEXAS HOLDINGS, LLC
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:
	 	                    John Heaney
	 

	 	Title:
	 	                    Vice President
	 
	 	 	 	 
	 	 	RICHMOND AMERICAN
CONSTRUCTION, INC.
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:
	 	                    John Heaney
	 

	 	Title:
	 	                    Vice President
	 
	 	 	 	 
	 	 	RICHMOND AMERICAN HOMES
OF ARIZONA, INC.
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:
	 	                    John Heaney
	 

	 	Title:
	 	                    Vice President
	 
	 	 	 	 
	 	 	RICHMOND AMERICAN HOMES
OF CALIFORNIA, INC.
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:
	 	                    John Heaney
	 

	 	Title:
	 	                    Vice President
	 
	 	 	 	 
	 	 	RICHMOND AMERICAN HOMES
OF COLORADO, INC.
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:
	 	                    John Heaney
	 

	 	Title:
	 	                    Vice President






10









 






	 	 	 	 	 
	 	 	RICHMOND AMERICAN HOMES
OF DELAWARE, INC.
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:
	 	                    John Heaney
	 

	 	Title:
	 	                    Vice President
	 
	 	 	 	 
	 	 	RICHMOND AMERICAN HOMES
OF FLORIDA, LP
	 
	 	 	 	 
	 

	 	By:
	 	RAH OF FLORIDA, INC, its general partner
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:
	 	                    John Heaney
	 

	 	Title:
	 	                    Vice President
	 
	 	 	 	 
	 	 	RICHMOND AMERICAN HOMES
OF ILLINOIS, INC.
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:
	 	                    John Heaney
	 

	 	Title:
	 	                    Vice President
	 
	 	 	 	 
	 	 	RICHMOND AMERICAN HOMES
OF MARYLAND, INC.
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:
	 	                    John Heaney
	 

	 	Title:
	 	                    Vice President
	 
	 	 	 	 
	 	 	RICHMOND AMERICAN HOMES
OF NEVADA, INC.
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:
	 	                    John Heaney
	 

	 	Title:
	 	                    Vice President
	 
	 	 	 	 
	 	 	RICHMOND AMERICAN HOMES
OF NEW JERSEY, INC.
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:
	 	                    John Heaney
	 

	 	Title:
	 	                    Vice President






11









 






	 	 	 	 	 
	 	 	RICHMOND AMERICAN HOMES
OF PENNSYLVANIA INC.
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:
	 	                    John Heaney
	 

	 	Title:
	 	                    Vice President
	 
	 	 	 	 
	 	 	RICHMOND AMERICAN HOMES
OF TEXAS, INC.
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:
	 	                    John Heaney
	 

	 	Title:
	 	                    Vice President
	 
	 	 	 	 
	 	 	RICHMOND AMERICAN HOMES
OF UTAH, INC.
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:
	 	                    John Heaney
	 

	 	Title:
	 	                    Vice President
	 
	 	 	 	 
	 	 	RICHMOND AMERICAN HOMES
OF VIRGINIA, INC.
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:
	 	                    John Heaney
	 

	 	Title:
	 	                    Vice President
	 
	 	 	 	 
	 	 	RICHMOND AMERICAN HOMES
OF WEST VIRGINIA, INC.
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:
	 	                    John Heaney
	 

	 	Title:
	 	                    Vice President







12










 







EXHIBIT A TO GUARANTY



FORM OF SUPPLEMENTAL GUARANTY



[Date]




JPMorgan Chase Bank, N.A., as Administrative Agent

for Lenders



Ladies and Gentlemen:




          Reference is hereby made to (i) that certain Second Amended and Restated Credit Agreement
dated as of March 22, 2006, among M.D.C. Holdings, Inc., the Lenders from time to time parties
thereto (“Lenders”), and JPMorgan Chase Bank, N.A., as Administrative Agent (“Administrative
Agent”) for Lenders (as amended, restated, supplemented or otherwise modified from time to time,
the “Credit Agreement”) and (ii) that certain Second Amended and Restated Guaranty, dated as of
March 22, 2006, executed and delivered by the Guarantors parties thereto in favor of Administrative
Agent, for the benefit of 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 7.11 of the Credit Agreement and Paragraph 18 of the Guaranty, the
undersigned, [GUARANTOR]                     , a corporation [limited partnership/limited liability
company] organized 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:	 	 	 	 






1









 





EXHIBIT B




PROMISSORY NOTE




			
	$
	 	                    ,
200     






     FOR VALUE RECEIVED, M.D.C. HOLDINGS, INC., a Delaware corporation (“Maker”), hereby promises
and agrees to pay to the order of                                          (“Payee”), the principal sum
of                                        DOLLARS ($                    ) in lawful money of the United
States of America, or, if less than such principal amount, the aggregate unpaid principal amount of
all Advances made to Maker by the Payee pursuant to the Credit Agreement hereinafter referenced.
Such payment shall be made on the Facility Termination Date, as defined in the Credit Agreement.



     Maker shall pay interest from the date hereof on the unpaid principal amount of this Note from
time to time outstanding during the period from the date hereof until such principal amount is paid
in full at the rates, determined in the manner, and on the dates or occurrences specified in the
Credit Agreement (as hereinafter defined).



     This promissory note is one of the Notes referred to in the Second Amended and Restated Credit
Agreement dated as of March 22, 2006, among Maker, JPMorgan Chase Bank, N.A., as Administrative
Agent, and Lenders that are parties thereto (as the same may be amended, modified, replaced, or
renewed from time to time, the “Credit Agreement”) and is entitled to the benefits of the Credit
Agreement and the Loan Documents. Capitalized terms used in this Note without definition shall have
the same meanings as are ascribed to such terms in the Credit Agreement.



     Both principal and interest are payable to Administrative Agent for the account of Payee
pursuant to the terms of the Credit Agreement. All Advances made by Payee pursuant to the Credit
Agreement and all payments of the principal amount of such Advances, shall be endorsed by the
holder of this Note on the schedule attached hereto. Failure to record such Advances or payment
shall not diminish any rights of Payee or relieve Makers of any liability hereunder or under the
Credit Agreement. This Note is subject to prepayment and its maturity is subject to acceleration,
in each case upon the terms provided in the Credit Agreement.



     This Note may not be modified or discharged orally, by course of dealing or otherwise, but
only by a writing duly executed by the holder hereof.



     In the event that any action, suit or proceeding is brought by the holder hereof to collect
this Note, Maker agrees to pay and shall be liable for all costs and expenses of collection,
including without limitation, reasonable attorneys’ fees and disbursements.



     Maker and all sureties, guarantors and/or endorsers hereof (or of any obligation hereunder)
and accommodation parties hereon (all of which, including Maker, are each hereinafter called a
“Surety”) each: (a) waive any homestead or exemption laws and right thereunder affecting the full
collection of this Note; (b) waive any and all formalities in



1









 




connection with this Note to the
maximum extent allowed by law, including (but not limited to)
demand, diligence, presentment for payment, protest and demand, and notice of extension,
dishonor, protest, demand and nonpayment of this Note; and (c) consent that Holder may extend the
time of payment or otherwise modify the terms of payment of any part or the whole of the debt
evidenced by this Note, at the request of any other person liable hereon, and such consent shall
not alter nor diminish the liability of any person hereon.




     In addition, each Surety waives and agrees not to assert: (a) any right to require the holder
hereof to proceed against any other Surety, to proceed against or exhaust any security for the
Note, to pursue any other remedy available to the holder hereof, or to pursue any remedy in any
particular order or manner; (b) the benefit of any statute of limitations affecting its liability
hereunder or the enforcement hereof; (c) the benefits of any legal or equitable doctrine or
principle of marshalling; (d) notice of the existence, creation or incurring of new or additional
indebtedness of Maker to the holder hereof; or (e) any defense arising by reason of any disability
or other defense of Maker or by reason of the cessation from any cause whatsoever (other than
payment in full) of the liability of Maker for payment of this Note. Until payment in full of this
Note and the holder hereof has no obligation to make any further advances of the proceeds hereof,
no Surety shall have any right of subrogation and each hereby waives any right to enforce any
remedy which the holder hereof now has, or may hereafter have, against Maker or any other Surety,
and waives any benefit of, and any right to participate in, any security now or hereafter held by
the holder hereof.



     Maker agrees that to the extent any Surety makes any payment to the holder hereof in
connection with the indebtedness evidenced by this Note, and all or any part of such payment is
subsequently invalidated, declared to be fraudulent or preferential, set aside or required to be
repaid by Holder or paid over to a trustee, receiver or any other entity, whether under any
bankruptcy act or otherwise (any such payment is hereinafter referred to as a “Preferential
Payment”), then the indebtedness of Maker under this Note shall continue or shall be reinstated, as
the case may be, and, to the extent of such payment or repayment by the holder hereof, the
indebtedness evidenced by this Note or part thereof intended to be satisfied by such Preferential
Payment shall be revived and continued in full force and effect as if said Preferential Payment had
not been made.



          This Note shall be enforced under and governed by the laws of the State of New York applicable
to contracts made and to be performed entirely within said state, without references to any choice
or conflicts of law principles.




	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 	 	M.D.C. HOLDINGS, INC., a Delaware
	 	 	Corporation
	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 	 	Name: John J. Heaney
	 	 	Title: Senior Vice President and Treasurer







2