<PAGE>   1
                                                                   EXHIBIT 10.20

                                   EXECUTION

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

                         2000 REVOLVING LOAN AGREEMENT

                          Dated as of October 3, 2000

                                     among

                       KAUFMAN AND BROAD HOME CORPORATION
                                  as Borrower

                             THE BANKS PARTY HERETO

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

                      CREDIT LYONNAIS LOS ANGELES BRANCH,
                              as Syndication Agent

                                 BANK ONE, NA,
                             as Documentation Agent

                                      and

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

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


<PAGE>   2


                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                  Page
                                                                                                  ----
<S>                                                                                                <C>
RECITALS ..................................................................................         1

Article 1
        DEFINITIONS AND ACCOUNTING TERMS ..................................................         1
        1.1 Defined Terms .................................................................         1
        1.2 Use of Defined Terms ..........................................................        25
        1.3 Accounting Terms ..............................................................        25
        1.4 Rounding ......................................................................        26
        1.5 Miscellaneous Terms ...........................................................        26
        1.6 Exhibits and Schedules ........................................................        26
        1.7 References to "Borrower and its Subsidiaries" .................................        26

Article 2
        LOANS AND LETTERS OF CREDIT .......................................................        27
        2.1 Loans-General .................................................................        27
        2.2 Prime Rate Loans ..............................................................        28
        2.3 LIBOR Loans ...................................................................        28
        2.4 Swing Line ....................................................................        28
        2.5 Letters of Credit .............................................................        30
        2.6 Reduction of Commitment/Extension of Maturity Date ............................        34
        2.7 Administrative Agent's Right to Assume Funds Available ........................        36
        2.8 Optional Increase to Commitment ...............................................        36

Article 3
        PAYMENTS AND FEES .................................................................        38
        3.1 Principal and Interest ........................................................        38
        3.2 Upfront Fee ...................................................................        39
        3.3 Commitment Fee ................................................................        39
        3.4 Agency Fee ....................................................................        40
        3.5 Arrangement Fee ...............................................................        40
        3.6 Capital Adequacy ..............................................................        40
        3.7 LIBOR Fees and Costs ..........................................................        41
        3.8 Late Payments/Default Interest ................................................        44
        3.9 Computation of Interest and Fees ..............................................        44
        3.10 Holidays .....................................................................        44
        3.11 Payment Free of Taxes ........................................................        44
        3.12 Funding Sources ..............................................................        45
        3.13 Failure to Charge or Making of Payment Not Subsequent Waiver .................        45
        3.14 Time and Place of Payments; Evidence of Payments; Application of Payments ....        45
        3.15 Administrative Agent's Right to Assume Payments Will be Made .................        46
        3.16 Survivability ................................................................        46
        3.17 Bank Calculation Certificate .................................................        46
        3.18 Transition ...................................................................        46
</TABLE>

                                      -i-

<PAGE>   3


<TABLE>
<S>                                                                                                <C>
Article 4
        REPRESENTATIONS AND WARRANTIES ....................................................        48
        4.1 Existence and Qualification; Power; Compliance with Law .......................        48
        4.2 Authority; Compliance with Other Instruments and Government Regulations .......        48
        4.3 No Governmental Approvals Required ............................................        49
        4.4 Subsidiaries ..................................................................        49
        4.5 Financial Statements ..........................................................        49
        4.6 No Other Liabilities; No Material Adverse Effect ..............................        50
        4.7 Title to Assets ...............................................................        50
        4.8 Intangible Assets .............................................................        50
        4.9 Existing Indebtedness and Contingent Guaranty Obligations .....................        50
        4.10 Governmental Regulation ......................................................        51
        4.11 Litigation ...................................................................        51
        4.12 Binding Obligations ..........................................................        51
        4.13 No Default ...................................................................        51
        4.14 Pension Plans ................................................................        51
        4.15 Tax Liability ................................................................        51
        4.16 Regulation U .................................................................        51
        4.17 Environmental Matters ........................................................        51
        4.18 Disclosure ...................................................................        52
        4.19 Projections ..................................................................        52

Article 5
        AFFIRMATIVE COVENANTS
        (OTHER THAN INFORMATION AND
        REPORTING REQUIREMENTS) ...........................................................        53
        5.1 Payment of Taxes and Other Potential Liens ....................................        53
        5.2 Preservation of Existence .....................................................        53
        5.3 Maintenance of Properties .....................................................        53
        5.4 Maintenance of Insurance ......................................................        53
        5.5 Compliance with Laws ..........................................................        53
        5.6 Inspection Rights .............................................................        54
        5.7 Keeping of Records and Books of Account .......................................        54
        5.8 Use of Proceeds ...............................................................        54
        5.9 Subsidiary Guaranty ...........................................................        54

Article 6
        NEGATIVE COVENANTS ................................................................        55
        6.1 Payment or Prepayment of Subordinated Obligations .............................        55
        6.2 [Intentionally Omitted] .......................................................        55
        6.3 Mergers and Sale of Assets ....................................................        55
        6.4 Investments and Acquisitions ..................................................        55
        6.5 ERISA Compliance ..............................................................        56
        6.6 Change in Business ............................................................        57
        6.7 Liens and Negative Pledges ....................................................        57
        6.8 Transactions with Affiliates ..................................................        58
        6.9 Consolidated Tangible Net Worth ...............................................        58
        6.10 Consolidated Leverage Ratio ..................................................        59
</TABLE>

                                      -ii-

<PAGE>   4

<TABLE>
<S>                                                                                                <C>
        6.11 Consolidated Interest Coverage Ratio .........................................        60
        6.12 Distributions ................................................................        60
        6.13 Amendments ...................................................................        60
        6.14 Hostile Tender Offers ........................................................        60
        6.15 Inventory ....................................................................        60
        6.16 Investment in Subsidiaries and Joint Ventures ................................        60
        6.17 Money Market Indebtedness ....................................................        60
        6.18 Domestic Standing Inventory ..................................................        60

Article 7
        INFORMATION AND REPORTING REQUIREMENTS ............................................        62
        7.1 Financial and Business Information of Borrower and Its Subsidiaries ...........        62
        7.2 Compliance Certificate ........................................................        64

Article 8
        CONDITIONS ........................................................................        65
        8.1 Initial Advances ..............................................................        65
        8.2 Any Advance ...................................................................        66
        8.3 Any Letter of Credit ..........................................................        66

Article 9
        EVENTS OF DEFAULT AND REMEDIES UPON EVENTS OF DEFAULT .............................        68
        9.1 Events of Default .............................................................        68
        9.2 Remedies Upon Event of Default ................................................        69

Article 10
        THE ADMINISTRATIVE AGENT ..........................................................        72
        10.1 Appointment and Authorization ................................................        72
        10.2 Administrative Agent and Affiliates ..........................................        72
        10.3 Banks' Credit Decisions ......................................................        72
        10.4 Action by Administrative Agent ...............................................        72
        10.5 Liability of Administrative Agent ............................................        73
        10.6 Indemnification ..............................................................        74
        10.7 Successor Administrative Agent ...............................................        74
        10.8 No Obligations of Borrower ...................................................        75
        10.9 Defaulting Banks .............................................................        75

Article 11
        MISCELLANEOUS .....................................................................        76
        11.1 Cumulative Remedies; No Waiver ...............................................        76
        11.2 Amendments; Consents .........................................................        76
        11.3 Costs, Expenses and Taxes ....................................................        76
        11.4 Nature of Banks' Obligations .................................................        77
        11.5 Representations and Warranties ...............................................        78
        11.6 Notices ......................................................................        78
        11.7 Execution in Counterparts ....................................................        78
        11.8 Binding Effect; Assignment ...................................................        78
        11.9 Sharing of Setoffs ...........................................................        80
</TABLE>

                                -iii-

<PAGE>   5

<TABLE>
<S>                                                                                                <C>
        11.10 Indemnity by Borrower .......................................................        81
        11.11 Nonliability of Banks .......................................................        82
        11.12 Confidentiality .............................................................        82
        11.13 No Third Parties Benefited ..................................................        82
        11.14 Other Dealings ..............................................................        83
        11.15 Right of Setoff - Deposit Accounts ..........................................        83
        11.16 Further Assurances ..........................................................        83
        11.17 Integration .................................................................        83
        11.18 Governing Law ...............................................................        83
        11.19 Severability of Provisions ..................................................        83
        11.20 Headings ....................................................................        83
        11.21 Conflict in Loan Documents ..................................................        83
        11.22 Waiver Of Jury Trial ........................................................        83
        11.23 Purported Oral Amendments ...................................................        84
        11.24 Hazardous Materials Indemnity ...............................................        85
</TABLE>

                                      -iv-


<PAGE>   6


Exhibits

A       - Commitment Assignment and Acceptance
B       - Compliance Certificate
C       - Note
D-1     - Opinion of Counsel
D-2     - Opinion of Counsel
E       - Subsidiary Guaranty
F       - Quarterly Report - Sales
G       - Quarterly Report - Inventory

Schedules

1.1     Pro Rata Shares
3.18    Outstanding Letters of Credit
4.4     Subsidiaries
4.7     Existing Liens and Rights of Others
4.9     Existing Indebtedness and Contingent Obligations
6.4     Investments

                                      -v-

<PAGE>   7

                         2000 REVOLVING LOAN AGREEMENT

                          Dated as of October 3, 2000

            This 2000 Revolving Loan Agreement ("Agreement") is entered into by
and among Kaufman and Broad Home Corporation, a Delaware corporation
("Borrower"), each bank set forth on the signature pages of this Agreement or
which from time to time becomes party hereto (collectively, the "Banks" and
individually, a "Bank") and Bank of America, N.A., as Administrative Agent,
Credit Lyonnais Los Angeles Branch, as Syndication Agent, Bank One, NA, as
Documentation Agent, and Banc of America Securities LLC as Lead Arranger and
Sole Book Manager.

                                    RECITALS

            This Agreement establishes a new credit facility replacing that
certain 1997 Revolving Loan Agreement dated as of April 21, 1997 by and among
Borrower, the banks named therein, Bank of America National Trust and Savings
Association, as Administrative Agent and various other banks in various agent
capacities, as amended (the "Prior Revolving Loan Agreement") and the 2000
Bridge Loan Agreement dated as of May 10, 2000 by and among Borrower, the banks
named therein, and Bank of America, as Administrative Agent and various other
banks in various agent capacities (the "Bridge Loan Agreement"). Subject to the
transition provisions of Section 3.18, and as contemplated by Sections
8.1(a)(viii) and (a)(x), the terms and provisions of this Agreement shall become
effective, and the Prior Revolving Loan Agreement and the Bridge Loan Agreement
shall terminate, as of the 2000 Closing Date.

            WHEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereto covenant and agree as follows:

                                   Article 1
                        DEFINITIONS AND ACCOUNTING TERMS

            1.1 Defined Terms. As used in this Agreement, the following terms
shall have the meanings set forth below:

               "2000 Closing Date" means the time and Banking Day on which the
        conditions set forth in Section 8.1 are satisfied or waived pursuant to
        Section 11.2, as evidenced by the return of one or more of the
        promissory notes under the Prior Loan Agreements by the Administrative
        Agent to Borrower.

               "2000 Term Loan Agreement" means the 2000 Term Loan Agreement
        dated as of October 3, 2000 among Borrower, Bank of America, as
        administrative agent, and the banks party thereto, and as the same may
        from time to time be amended, modified, refinanced or replaced.

               "Acquisition" means any transaction, or any series of related
        transactions, consummated after the 2000 Closing Date, by which Borrower
        and/or any of its Subsidiaries directly or indirectly (a) acquires any
        ongoing business or all or substantially all of the assets of any firm,
        corporation or division thereof, whether through purchase of assets,
        merger or


                                      -1-
<PAGE>   8

        otherwise, (b) acquires control of securities of a corporation
        representing 50% or more of the ordinary voting power for the election
        of directors or (c) acquires control of a 50% or more ownership interest
        in any partnership, joint venture or other business entity.

               "Administrative Agent" means Bank of America or any successor
        administrative agent.

               "Administrative Agent's Office" means Bank of America, N.A., 5
        Park Plaza, Suite 500, Irvine, California 92614, or such other office as
        the Administrative Agent may designate in writing to Borrower and the
        Banks.

               "Advance" means an advance made or to be made to Borrower by a
        Bank pursuant to Article 2.

               "Affiliate" means, with respect to any Person, any other Person
        which directly or indirectly controls, or is under common control with,
        or is controlled by, such Person. As used in this definition, "control"
        (including its correlative meanings, "controlled by" and "under common
        control with") shall mean possession, directly or indirectly, of power
        to direct or cause the direction of management or policies (whether
        through ownership of securities or partnership or other ownership
        interests, by contract or otherwise); provided that, in any event, any
        Person which owns directly or indirectly 10% or more of the securities
        having ordinary voting power for the election of directors or other
        governing body of a corporation that has more than 100 record holders of
        such securities or 10% or more of the partnership or other ownership
        interests of any other Person that has more than 100 record holders of
        such interests will be deemed to control such corporation or other
        Person.

               "Agents" mean the Administrative Agent, the Syndication Agent,
        the Documentation Agent, and the Lead Arranger and Sole Book Manager.

               "Agreement" means this 2000 Revolving Loan Agreement, either as
        originally executed or as it may from time to time be supplemented,
        modified, amended, renewed, extended or supplanted.

               "Applicable Commitment Fee Rate" means, as of any date of
        determination, the commitment fee rate set forth below opposite the
        Applicable Pricing Level as of such date:

<TABLE>
<CAPTION>
                                                     Applicable
                         Applicable                  Commitment
                        Pricing Level                 Fee Rate
                        -------------                ----------
<S>                                                  <C>
                            I                          0.175%
                            II                         0.225%
                            III                        0.250%
                            IV                         0.275%
                            V                          0.350%
</TABLE>

               "Applicable Federal Funds Rate" means, as of any date of
        determination, the rate per annum equal to the greater of (a) the
        Federal Funds Rate in effect on such date and (b) if funds are not
        reasonably available to the Swing Line Bank at the Federal Funds Rate to
        fund a Swing


                                      -2-
<PAGE>   9

        Line Loan, such rate as reasonably determined by the Swing Line Bank as
        representing its actual cost of funding the Swing Line Loan, without the
        addition of fees or markup of any kind.

               "Applicable Letter of Credit Fee " means, as of any date of
        determination, a letter of credit fee equal to the Applicable LIBOR
        Spread on that date.

               "Applicable LIBOR Spread" means, as of any date of determination,
        the interest rate spread set forth below opposite the Applicable Pricing
        Level as of such date:

<TABLE>
<CAPTION>
                     Applicable                 Applicable
                    Pricing Level              LIBOR Spread
                    -------------              ------------
<S>                                            <C>
                         I                        0.900%
                         II                       1.125%
                         III                      1.250%
                         IV                       1.450%
                         V                        1.700%
</TABLE>



               "Applicable Minimum Hold Requirement " means, in the case of any
        Bank, the amount of the Pro Rata Share of the Commitment held by that
        Bank plus the amount, if any, of the Pro Rata Share (as defined in the
        2000 Term Loan Agreement) of the Commitment (as defined in the 2000 Term
        Loan Agreement) held by that Bank, as reduced by (a) the amount of any
        assignment of a portion thereof made by that Bank to an Eligible
        Assignee that is not an Affiliate of that Bank and (b) the amount of any
        participation therein granted by that Bank to a participant that is not
        an Affiliate of that Bank, which net amount, after giving effect to
        clauses (a) and (b), shall not be less than $20,000,000 (unless approved
        in writing by the Administrative Agent or unless an Event of Default has
        occurred and is continuing), but subject to the provisions of Section
        11.8(b) and (e).

               "Applicable Pricing Level" means, Pricing Level "I" for any day
        on which Borrower holds an Investment Grade Credit Rating and, for any
        day during a Pricing Period on which Borrower does not hold an
        Investment Grade Credit Rating, means the following:

<TABLE>
<CAPTION>
                                   Consolidated Leverage Ratio
Applicable Pricing Level           Applicable to Pricing Period
------------------------           ----------------------------
<S>                                <C>
        II                         Consolidated Leverage Ratio of less than or
                                   equal to 1.25 to 1.00

        III                        Consolidated Leverage Ratio of greater than
                                   1.25 to 1.00, but less than or equal to 1.80
                                   to 1.00

        IV                         Consolidated Leverage Ratio of greater than
                                   1.80 to 1.00, but less than or equal to 2.25
                                   to 1.00

        V                          Consolidated Leverage Ratio of greater than
                                   2.25 to 1.00.
</TABLE>

                                      -3-
<PAGE>   10

        Borrower is responsible pursuant to Section 7.1(k) to provide the
        Administrative Agent with notice of each change in the Applicable
        Pricing Level that is due to the inception or cessation of an Investment
        Grade Credit Rating.

               "Applicable Prime Rate Spread" means, as of any date of
        determination, the interest rate spread set forth below opposite the
        Applicable Pricing Level as of such date:

<TABLE>
<CAPTION>
                                                         Applicable
                      Applicable                         Prime Rate
                    Pricing Level                          Spread
                    -------------                        ----------
<S>                                                       <C>
                         I                                  0.00%
                         II                                 0.00%
                         III                                0.00%
                         IV                                 0.00%
                         V                                  0.25%
</TABLE>

               "Associate" shall have the meaning ascribed to such term in Rule
        12b-2 of the General Rules and Regulations under the Exchange Act, as in
        effect on the date hereof.

               "Authorizations" has the meaning set forth for that term in
        Section 4.1.

               "Bank " means each bank whose name is set forth in the signature
        pages of this Agreement and each lender which may hereafter become a
        party to this Agreement pursuant to Section 11.8.

               "Bank of America " means Bank of America, N.A., formerly known as
        Bank of America National Trust and Savings Association.

               "Banking Day" means any Monday, Tuesday, Wednesday, Thursday or
        Friday other than a day on which banks are authorized or required to be
        closed in California or New York.

               "Bond Facility " means any bond facility pursuant to which a
        municipality, or a community facilities district formed by a
        municipality, has or will issue bonds to finance a portion of the costs
        of acquisition of and/or improvements to real property located in such
        municipality (or district) owned by Borrower, one of its Subsidiaries or
        by another Person acquired by Borrower or one of its Subsidiaries (or to
        pay development or "impact" fees in lieu thereof), and with respect to
        which Borrower or one of its Subsidiaries will provide a letter of
        credit or other reimbursement support. The real property that is the
        subject of any such bond facility will be subject to a Lien for special
        taxes to repay the Indebtedness evidenced by such bonds.

               "Borrower " means Kaufman and Broad Home Corporation, a Delaware
        corporation, and its successors and permitted assigns.

               "Bridge Loan Agreement" has the meaning set forth for that term
        in the Recitals hereto.


                                      -4-
<PAGE>   11

               "Capital Lease" means, with respect to any Person, a lease of any
        Property by that Person as lessee that is, or should be in accordance
        with Financial Accounting Standards Board Statement No. 13, recorded as
        a "capital lease" on a balance sheet of that Person prepared in
        accordance with Generally Accepted Accounting Principles.

               "Cash" means all monetary items (including currency, coin and
        bank demand deposits) that are treated as cash under Generally Accepted
        Accounting Principles.

               "Cash Equivalents" means, with respect to any Person, that
        Person's Investments in:

                   (a) Government Securities due within one year of the making
               of the Investment;

                   (b) readily marketable direct obligations of any State of the
               United States of America or any political subdivision of any such
               State or any public agency or instrumentality thereof given on
               the date of such Investment a credit rating of at least Aa3 by
               Moody's or AA- by S&P, in each case due within one year from the
               making of the Investment;

                   (c) certificates of deposit issued by, deposits in,
               eurodollar deposits through, bankers' acceptances of, and
               repurchase agreements covering Government Securities executed by,
               (i) any Bank or (ii) any bank and/or savings and loan association
               doing business in and incorporated under the Laws of the United
               States of America, any state thereof or the District of Columbia
               and having on the date of such Investment combined capital,
               surplus and undivided profits of at least $500,000,000 and which
               carries on the date of such Investment a credit rating of P-1 or
               higher by Moody's or A-1 or higher by S&P, in each case due
               within one year after the date of the making of the Investment;

                   (d) certificates of deposit issued by, bank deposits in,
               eurodollar deposits through, bankers' acceptances of, and
               repurchase agreements covering Government Securities executed by
               any branch or office located in the United States of America of a
               bank incorporated under the Laws of any jurisdiction outside the
               United States of America having on the date of such Investment
               combined capital, surplus and undivided profits of at least
               $500,000,000 and which carries on the date of such Investment a
               credit rating of P-1 or higher by Moody's or A-1 or higher by
               S&P, in each case due within one year after the date of the
               making of the Investment;

                   (e) readily marketable commercial paper or other debt
               securities of (i) any Bank that is a Bank as of the 2000 Closing
               Date, (ii) corporations, commercial banks or financial
               institutions doing business in and incorporated under the Laws of
               the United States of America or any state thereof or the District
               of Columbia or (iii) a holding company for a bank described in
               clause (c) or (d) above, given on the date of such Investment a
               credit rating of P-1 or higher by Moody's, of A-1 or higher by
               S&P, or F-1 or higher by Fitch, in each case due within one year
               of the making of the Investment;

                   (f) repurchase agreements covering Government Securities
               executed by a broker or dealer registered under Section 15(b) of
               the Exchange Act, having on the date


                                      -5-
<PAGE>   12

               of the Investment capital of at least $50,000,000, due within 90
               days after the date of the making of the Investment; provided,
               that the maker of the Investment receives written confirmation of
               the transfer to it of record ownership of the Government
               Securities on the books of a "primary dealer" in such government
               Securities or on the books of such registered broker or dealer,
               as soon as practicable after the making of the Investment;

                   (g) "money market preferred stock" issued by a corporation
               incorporated under the Laws of the United States of America or
               any State thereof (i) given on the date of such Investment a
               credit rating of at least Aa3 by Moody's and AA- by S&P, in each
               case having an investment period not exceeding 50 days or (ii) to
               the extent that investors therein have the benefit of a standby
               letter of credit issued by a Bank or a bank described in clauses
               (c) or (d) above; provided, that (y) the amount of all such
               Investments issued by the same issuer does not exceed $10,000,000
               and (z) the aggregate amount of all such Investments does not
               exceed $25,000,000;

                   (h) a readily redeemable "money market mutual fund" sponsored
               by a bank described in clause (c) or (d) hereof, or a registered
               broker or dealer described in clause (f) hereof, that has and
               maintains an investment policy limiting its investments primarily
               to instruments of the types described in clauses (a) through (g)
               hereof and given on the date of such Investment a credit rating
               of at least Aa3 by Moody's and AA- by S&P; and

                   (i) corporate notes or bonds having an original term to
               maturity of not more than one year issued by a corporation
               incorporated under the Laws of the United States of America or
               any state thereof, or a participation interest therein; provided,
               that (i) commercial paper issued by such corporation is given on
               the date of such Investment a credit rating of at least Aa3 by
               Moody's and AA- by S&P, (ii) the amount of all such Investments
               issued by the same issuer does not exceed $10,000,000 and (iii)
               the aggregate amount of all such Investments does not exceed
               $25,000,000.

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

                   (a) there shall be consummated any consolidation or merger of
               Borrower in which Borrower is not the continuing or surviving
               corporation or pursuant to which the Voting Stock would be
               converted into Cash, securities or other property, other than a
               merger or consolidation of Borrower where the Borrower is not the
               continuing or surviving corporation and in which the holders of
               Voting Stock immediately prior to the merger have 75% ownership,
               directly or indirectly, of the Voting Stock of the surviving
               corporation immediately after such merger or consolidation; or

                   (b) there is a report filed by any person, including its
               Affiliates and Associates, on Schedule 13D or 14D-1 (or any
               successor schedule, form or report) pursuant to the Exchange Act,
               disclosing that such person (for the purposes of the definition
               of Change in Control only, the term "person" is used as defined
               in Section 13(d)(3) or Section 14(d)(2) of the Exchange Act or
               any successor provision to either of the foregoing) has become
               the beneficial owner (as the term "beneficial owner" is defined
               under Rule 13d-3 or any successor rule or regulation promulgated
               under the



                                      -6-
<PAGE>   13

               Exchange Act) of 50% or more of the voting power of Borrower's
               Voting Stock then outstanding; provided, however, that a person
               shall not be deemed beneficial owner of, or to own beneficially
               (1) any Securities tendered pursuant to a tender or exchange
               offer made by or on behalf of such person or any of such person's
               Affiliates or Associates until such tendered Securities are
               accepted for purchase or exchange thereunder, or (2) any
               Securities if such beneficial ownership (a) arises solely as a
               result of a revocable proxy delivered in response to a proxy or
               consent solicitation made pursuant to, and in accordance with,
               the applicable rules and regulations under the Exchange Act, and
               (b) is not also then reportable on Schedule 13D (or any successor
               schedule) under the Exchange Act; or

                   (c) a "Change in Control" (or analogous term) as defined in
               one or more indentures or agreements governing any Subordinated
               Obligations occur and $25,000,000 of Subordinated Obligations
               thereupon become due and payable by Borrower or its Subsidiaries.

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

               "Code" means the Internal Revenue Code of 1986, as amended or
        replaced and as in effect from time to time.

               "Commission" means the Securities and Exchange Commission and
        any successor commission.

               "Commitment" means, subject to Sections 2.6 and 2.8,
        $564,050,000. The Pro Rata Shares of the Banks with respect to the
        Commitment are set forth in Schedule 1.1.

               "Commitment Assignment and Acceptance" means a commitment
        assignment and acceptance substantially in the form of Exhibit A.

               "Common Stock" means the $1.00 par value common stock and special
        common stock of Borrower.

               "Compliance Certificate" means a compliance certificate in the
        form of Exhibit B signed, on behalf of Borrower, by a Senior Officer of
        Borrower.

               "Consolidated Adjusted EBITDA" means, for any fiscal period,
        Consolidated EBITDA for that fiscal period plus (a) the amount of
        capitalized interest that was included in cost of sales in determining
        Consolidated Net Income for that fiscal period plus (b) all non-Cash Net
        Realizable Value Adjustments made during that fiscal period.

               "Consolidated EBITDA" means, for any fiscal period, the sum of
        (a) Consolidated Net Income for that period, plus (b) any extraordinary
        loss reflected in such Consolidated Net


                                      -7-
<PAGE>   14

        Income, minus (c) any extraordinary gain reflected in such Consolidated
        Net Income, plus (d) Consolidated Interest Expense for that period plus
        (e) the aggregate amount of federal and state taxes on or measured by
        income for that period (whether or not payable during that period), plus
        (f) depreciation, amortization and all other non-cash expenses for that
        period, in each case as determined in accordance with Generally Accepted
        Accounting Principles, in the case of items (d), (e) and (f), only to
        the extent deducted in the determination of Consolidated Net Income for
        that period.

               "Consolidated Interest Coverage Ratio" means, with respect to
        any Fiscal Quarter of Borrower and its Consolidated Subsidiaries, the
        ratio of (a) Consolidated Adjusted EBITDA for the twelve month period
        ending on the last day of such Fiscal Quarter to (b) the sum of (i)
        Consolidated Interest Expense (including any non-cash items included in
        Consolidated Interest Expense) plus (ii) to the extent not included in
        Consolidated Interest Expense, any charge to Consolidated Net Income
        which reflects the distribution paid or accrued to or for the holders of
        the Trust Preferred Capital Securities (including any such charge
        denominated "minority interest in net income of consolidated
        subsidiaries") plus (iii) all dividends (other than dividends paid in
        the same class of stock) paid on any preferred stock of Borrower, in
        each case for the twelve month period ending on the last day of such
        Fiscal Quarter.

               "Consolidated Interest Expense" means, with respect to any fiscal
        period of Borrower and its Consolidated Subsidiaries, the aggregate
        amount of interest, fees, charges and related expenses paid or payable
        to a lender in connection with borrowed money that is treated as
        interest (including accretion of original issue discount on long-term
        debt existing during such fiscal period) and the interest portion of any
        capitalized lease payment of Borrower and its Consolidated Subsidiaries
        (other than any such items properly attributable to Financial
        Subsidiaries).

               "Consolidated Joint Venture" means, as of any date of
        determination, a Joint Venture that is consolidated in the consolidated
        financial statements of Borrower and its Subsidiaries as of such date.

               "Consolidated Leverage Ratio" means, as of any date of
        determination, the ratio of (a) Consolidated Total Indebtedness on that
        date to (b) [Consolidated Tangible Net Worth on that date minus the
        amount, if any, by which the portion of Shareholders' Equity of Borrower
        and its Consolidated Subsidiaries attributable to Borrower's equity
        interest in the Shareholders' Equity of all Joint Ventures (other than
        any Consolidated Joint Venture) exceeds $30,000,000].

               "Consolidated Net Income" means, with respect to any fiscal
        period, the consolidated net income of Borrower and its Consolidated
        Subsidiaries for that period, determined in accordance with Generally
        Accepted Accounting Principles, consistently applied.

               "Consolidated Subsidiaries" means, with respect to Borrower, all
        of the Subsidiaries of Borrower whose financial statements are
        consolidated with the consolidated financial statements of Borrower
        under Generally Accepted Accounting Principles.

               "Consolidated Tangible Net Worth" means, as of any date of
        determination, the Shareholders' Equity of Borrower and its Consolidated
        Subsidiaries on a consolidated basis on that date plus, if that date is
        on or prior to the Settlement Date with respect to an issuance of
        securities treated as Trust Preferred Capital Securities, an amount
        equal to 100% of the


                                      -8-
<PAGE>   15

        aggregate book value of such Trust Preferred Capital Securities
        outstanding on that date minus the aggregate book value on that date of
        any Intangible Assets consisting of goodwill arising from Acquisitions
        completed after November 30, 1996, provided that any cumulative positive
        or negative adjustment to Consolidated Tangible Net Worth attributable
        to foreign currency translations shall be ignored.

               "Consolidated Total Indebtedness" means, as of any date of
        determination, all Indebtedness and Contingent Guaranty Obligations of
        Borrower and its Subsidiaries on that date (without duplication for any
        guaranty by Borrower of a Subsidiary's Indebtedness or any guaranty by a
        Subsidiary of either Borrower's or another Subsidiary's Indebtedness)
        plus (a) if that date is after the Settlement Date with respect to an
        issuance of securities treated as Trust Preferred Capital Securities, an
        amount equal to 100% of the aggregate book value of such Trust Preferred
        Capital Securities outstanding on that date, minus (b) all Indebtedness
        and Contingent Guaranty Obligations of the Financial Subsidiaries on
        that date, and minus (c) the amount, if any, by which the aggregate Cash
        and Cash Equivalents of Borrower and its Subsidiaries (other than the
        Financial Subsidiaries) on that date are in excess of $15,000,000.

               "Contingent Guaranty Obligation" means, as to any Person, any
        (a) direct or indirect guarantee of Indebtedness of, or other obligation
        performable by, any other Person (other than a performance obligation
        undertaken in the ordinary and usual course of business), including any
        endorsement (other than for collection or deposit in the ordinary course
        of business), co-making or sale with recourse of the obligations of any
        other Person or (b) assurance given to an obligee with respect to the
        performance of an obligation (other than a performance obligation
        undertaken in the ordinary and usual course of business) by, or the
        financial condition of, any other Person, whether direct, indirect or
        contingent, including any purchase or repurchase agreement covering such
        obligation or any collateral security therefor, any agreement to provide
        funds (by means of loans, capital contributions or otherwise) to such
        other Person, any agreement to support the solvency or level of any
        balance sheet item of such other Person, or any "keep-well",
        "take-or-pay", "through put" or other arrangement of whatever nature
        having the effect of assuring or holding harmless any obligee against
        loss with respect to any obligation of such other Person. The amount of
        any Contingent Guaranty Obligation shall be deemed to be an amount equal
        to the stated or determinable amount of the related primary obligation
        (unless the Contingent Guaranty Obligation is limited by its terms to a
        lesser amount, in which case to the extent of such amount) or, if not
        stated or determinable, the maximum reasonably anticipated liability in
        respect thereof as determined by the Person in good faith.

               "Contractual Obligation" means, as to any Person, any provision
        of any outstanding Securities issued by that Person or of any material
        agreement, instrument or undertaking to which that Person is a party or
        by which it or any of its Property is bound, other than, in the case of
        Borrower and its Subsidiaries, any of the Loan Documents.

               "Debtor Relief Laws" means the Bankruptcy Code of the United
        States of America, as amended from time to time, and all other
        applicable liquidation, conservatorship, insolvency, reorganization, or
        similar debtor relief Laws from time to time in effect affecting the
        rights of creditors generally.

               "Default" means any event that, with the giving of any notice or
        passage of time, or both, would be an Event of Default.



                                      -9-
<PAGE>   16

               "Default Rate" means the interest rate described in Section 3.8.

               "Designated Deposit Account" means a demand deposit account to
        be maintained by Borrower with Bank of America, as from time to time
        designated by Borrower by written notification to the Administrative
        Agent.

               "Distribution" means, with respect to any shares of capital stock
        or any warrant or right to acquire shares of capital stock or any other
        equity security issued by a Person, (a) the retirement, redemption,
        purchase, or other acquisition for value (other than for capital stock
        of the same type of such Person) by such Person of any such security,
        (b) the declaration or payment by such Person of any dividend in Cash or
        in Property (other than in capital stock of the same type of such
        Person) on or with respect to any such security, and (c) any Investment
        by such Person in any holder of 5% or more of the capital stock (or
        other equity securities) of such Person, if a purpose of such Investment
        is to avoid the characterization of the transaction between such Person
        and such holder as a Distribution under clause (a) or (b) above. In
        addition, to the extent any loan or advance by Borrower to one of its
        Subsidiaries is deemed to be an "Investment" for purposes of this
        Agreement, then any principal payment made by such Subsidiary in respect
        of such loan or advance shall be considered a Distribution for purposes
        of Section 6.16.

               "Documentation Agent" means Bank One, NA, so long as such bank is
        a Bank hereunder. The Documentation Agent shall have no duties under the
        Loan Documents beyond those of a Bank.

               "Dollars" means the national currency of the United States of
        America.

               "Domestic Lending Office" means, with respect to each Bank, its
        office, branch or affiliate identified on the signature pages hereof as
        its Domestic Lending Office or such other office, branch or affiliate as
        such Bank may hereafter designate as its Domestic Lending Office by
        notice to the Borrower and the Administrative Agent.

               "Domestic Standing Inventory" means, as of any date of
        determination, the number of items of unsold housing inventory (other
        than Model Homes) of Borrower and its Domestic Subsidiaries with respect
        to which either (a) 90% of the then reasonably anticipated direct
        construction costs have been incurred on such date or (b) at least 12
        months have elapsed from the date its construction was commenced through
        and including such date. Construction for purposes of this definition
        shall be deemed to have commenced upon the pouring of foundation
        concrete.

               "Domestic Subsidiary" means, with respect to any Person and as
        of any date of determination, a Subsidiary of such Person (a) that is
        organized under the Laws of the United States of America or any state
        thereof and (b) the majority of the assets of which (as reflected on a
        balance sheet of such Subsidiary prepared in accordance with Generally
        Accepted Accounting Principles) is located in the United States of
        America; provided that Kaufman and Broad International, Inc., a
        California corporation, shall in no event be considered a Domestic
        Subsidiary of Borrower.

               "Domestic Unimproved Land" means, as of any date of
        determination, real Property located in the United States of America
        that is: (a) owned by Borrower or any of its


                                      -10-
<PAGE>   17

        Subsidiaries if on that date there has been expended by Borrower and its
        Subsidiaries less than 50% of the physical construction costs reasonably
        estimated by Borrower (in accordance with its past practices as of the
        2000 Closing Date) to bring such real Property to "finished lot" status;
        or (b) owned by Persons other than Borrower or any of its Subsidiaries
        but which, if owned by Borrower or any of its Subsidiaries on that date,
        would have satisfied the requirement set forth in clause (a) and if on
        that date Borrower or any of its Domestic Subsidiaries holds an option
        to purchase such real Property for which it has paid an amount equal to
        33% or more of the purchase price provided for in such option to
        purchase, provided, that in the event an option to purchase land covers
        more than one parcel, phase or lot, any deposit paid by Borrower or any
        of its Subsidiaries shall be allocated to each parcel, phase or lot pro
        rata in accordance with the purchase price of the parcels, phases or
        lots. The "book value" with respect to Domestic Unimproved Land referred
        to in Section 6.15 shall be calculated as if the option to purchase had
        been exercised as of the date of determination, and otherwise in
        accordance with Generally Accepted Accounting Principles, consistently
        applied.

               "Eligible Assignee" means (a) another Bank, (b) any commercial
        bank, savings bank, savings and loan association or similar financial
        institution which, (i) has total assets of $5,000,000,000 or more, (ii)
        is "well capitalized" within the meaning of such term under the Federal
        Depository Institutions Control Act, (iii) is engaged in the business of
        lending money and extending credit under credit facilities substantially
        similar to those extended under this Agreement and (iv) is operationally
        and procedurally able to meet the obligations of a Bank hereunder to the
        same degree as a commercial bank, (c) any insurance company engaged in
        the business of writing insurance which (i) has total assets of
        $5,000,000,000 or more, (ii) is "best capitalized" under applicable
        regulations of the National Association of Insurance Commissioners, and
        (iii) meets the requirements set forth in subclauses (iii) and (iv) of
        clause (b) above and (d) any other financial institution having total
        assets of $5,000,000,000 or more (including a mutual fund or other fund
        under management of an investment manager having under its management
        total assets of $5,000,000,000 or more) which meets the requirements set
        forth in subclauses (iii) and (iv) of clause (b) above; provided that
        each Eligible Assignee must (A) be organized under the Laws of the
        United States of America, any state thereof or the District of Columbia
        or (B) if a commercial bank, be organized under the Laws set forth in
        clause (A) or under the Laws of the Cayman Islands or any country which
        is a member of the Organization for Economic Cooperation and
        Development, or a political subdivision of such a country, and (C) act
        under the Loan Documents through a branch, agency or funding office
        located in the United States of America and (D) be exempt from
        withholding of tax on interest and deliver the documents related thereto
        pursuant to the Code.

               "ERISA" means, at any date, the Employee Retirement Income
        Security Act of 1974 and the regulations thereunder, all as the same
        shall be in effect at such date.

               "ERISA Affiliate" means, with respect to any Person, any other
        Person (or any trade or business, whether or not incorporated) that is
        under common control with that Person within the meaning of Section 414
        of the Code.

               "Event of Default" has the meaning provided in Section 9.1.

               "Exchange Act" means the Securities Exchange Act of 1934, as
        amended.



                                      -11-
<PAGE>   18

               "Exposure" means for any Bank, as of any date of determination,
        the product obtained by multiplying that Bank's then effective Pro Rata
        Share by the then effective Commitment.

               "Federal Funds Rate" means, for any day, the rate set forth in
        the weekly statistical release designated as H.15(519), or any successor
        publication, published by the Federal Reserve Bank of New York
        (including any such successor, "H.15(519)") on the preceding Banking Day
        opposite the caption "Federal funds (effective)"; or, if for any
        relevant day such rate is not so published on any such preceding Banking
        Day, the rate for such day will be the arithmetic mean as determined by
        the Administrative Agent of the rates for the last transaction in
        overnight Federal funds arranged prior to 9:00 a.m. (New York City time)
        on that day by each of three leading brokers of Federal funds
        transactions in New York City selected by the Administrative Agent.

               "Financial Subsidiary" means (a) the Mortgage Company and its
        Subsidiaries, so long as such entities continue to engage in the
        mortgage banking business, (b) a Trust Issuer, so long as it engages in
        no activities other than those incident to the Trust Preferred Capital
        Securities, (c) any Subsidiary of Borrower that is organized and
        operates solely to issue (i) collateralized mortgage obligations or (ii)
        other similar asset-backed obligations, and (d) any other Subsidiary of
        Borrower that (i) is engaged primarily in the business of origination,
        marketing, and servicing of residential mortgage loans, the sale of
        servicing rights, or the financing of long term residential mortgage
        loans, (ii) holds not less than 95% of its total assets in the form of
        Cash, Cash Equivalents, notes and mortgages receivable, Cash held by a
        trustee for the benefit of such Subsidiary or other financial
        instruments and (iii) is the subject of an Officer's Certificate of
        Borrower delivered to the Administrative Agent stating that such
        Subsidiary is a Financial Subsidiary within the meaning hereof. As of
        the 2000 Closing Date, the Financial Subsidiaries are International
        Mortgage Acceptance Corporation, KBASW Mortgage Acceptance Corporation,
        KBI/Mortgage Acceptance Corporation, KBRAC IV Mortgage Acceptance
        Corporation, Kaufman and Broad Mortgage Company, rateOne Home Loans,
        LLC, Rate One Associates, Inc. and Rate One Holdings, Inc.

               "Fiscal Quarter" means each of the fiscal quarters of Borrower
        ending on each February 28 (or 29, if a leap year), May 31, August 31
        and November 30.

               "Fiscal Year" means each of the fiscal years of Borrower ending
        on each November 30 or as otherwise changed by the Borrower upon advance
        written notice to the Administrative Agent, but subject to the
        requirements of Section 1.3.

               "Fitch" means Fitch and its successors.

               "Foreign Subsidiary" means, with respect to any Person, a
        Subsidiary of that Person which is not a Domestic Subsidiary and with
        respect to Borrower, includes Kaufman and Broad International, Inc., a
        California corporation.

               "Generally Accepted Accounting Principles" means, as of any date
        of determination, accounting principles set forth as "generally
        accepted" in then currently effective Statements of the Auditing
        Standards Board of the American Institute of Certified Public
        Accountants, or, if such Statements are not then in effect, accounting
        principles that are then approved by a significant segment of the
        accounting profession in the United States of America. The term
        "consistently applied," as used in connection therewith, means that the
        accounting principles


                                      -12-
<PAGE>   19

        applied to financial statements of a Person as of any date or for any
        period are consistent in all material respects (subject to Section 1.3)
        to those applied to financial statements of that Person as of recent
        prior dates and for recent prior periods.

               "Government Securities" means (a) readily marketable direct full
        faith and credit obligations of the United States of America or
        obligations unconditionally guaranteed by the full faith and credit of
        the United States of America and (b) obligations of an agency or
        instrumentality of, or corporation owned, controlled or sponsored by,
        the United States of America that are generally considered in the
        securities industry to be implicit obligations of the United States of
        America.

               "Governmental Agency" means (a) any federal, state, county or
        municipal government, or political subdivision thereof, (b) any
        governmental or quasi-governmental agency, authority, board, bureau,
        commission, department, instrumentality, or public body, (c) any court
        or administrative tribunal, or (d) any arbitration tribunal or other
        non-governmental authority to whose jurisdiction a Person has consented,
        in each case whether of the United States of America or any other
        nation.

               "Guarantor Subsidiary" means (a) any Domestic Subsidiary which
        is a Significant Subsidiary, other than any Financial Subsidiary and (b)
        any other Domestic Subsidiary, other than any Financial Subsidiary, that
        is designated in writing by Borrower as a Guarantor Subsidiary.

               "Hazardous Materials" means substances defined as "hazardous
        substances" pursuant to the Comprehensive Environmental Response,
        Compensation and Liability Act of 1980, 42 U.S.C. Section 9601 et seq.,
        or as "hazardous", "toxic" or "pollutant" substances or as "solid waste"
        pursuant to the Hazardous Materials Transportation Act, 49 U.S.C.
        Section 1801, et seq., the Resource Conservation and Recovery Act, 42
        U.S.C. Section 6901, et seq., or as "friable asbestos" pursuant to the
        Toxic Substances Control Act, 15 U.S.C. Section 2601 et seq. or any
        other applicable Hazardous Materials Law, in each case as such Laws are
        amended from time to time.

               "Hazardous Materials Laws" means all Laws governing the
        treatment, transportation or disposal of Hazardous Materials applicable
        to any real Property of Borrower or its Subsidiaries.

               "Indebtedness" means, with respect to any Person, (a) all
        indebtedness of such Person for borrowed money, (b) that portion of the
        obligations of such Person under Capital Leases which should properly be
        recorded as a liability on a balance sheet of that Person prepared in
        accordance with Generally Accepted Accounting Principles, (c) any
        obligation of such Person that is evidenced by a promissory note or
        other instrument representing an extension of credit to such Person,
        whether or not for borrowed money, (d) any obligation of such Person for
        the deferred purchase price of Property or services (other than trade or
        other accounts payable in the ordinary course of business in accordance
        with customary industry terms), (e) any obligation of the types referred
        to in clauses (a) through (d) above that is secured by a Lien (other
        than a Permitted Encumbrance) on assets of such Person, whether or not
        that Person has assumed such obligation or whether or not such
        obligation is non-recourse to the credit of such Person, but only to the
        extent of the fair market value of the assets so subject to the Lien,
        (f) obligations of such Person arising under acceptance facilities or
        under facilities for the discount of accounts receivable of such Person
        and (g) any obligation of such Person under letters


                                      -13-
<PAGE>   20

        of credit issued for the account of such Person and that is not
        otherwise a Contingent Guaranty Obligation.

               "Intangible Assets" means assets that are considered intangible
        assets under Generally Accepted Accounting Principles, including (a)
        customer lists, goodwill, computer software, unamortized deferred
        charges, unamortized debt discount, capitalized research and development
        costs and other intangible assets and (b) any write-up in book value of
        any asset subsequent to its acquisition, but excluding any existing
        write-up in book value of any asset acquired by Borrower or any of its
        Subsidiaries prior to the 2000 Closing Date, as such write-up may
        decrease (but not increase) from time to time.

               "Interest Period" means, as to each LIBOR Loan, a period of one,
        two, three or six months, as designated by Borrower; provided that (a)
        the first day of each Interest Period must be a LIBOR Market Day, (b)
        any Interest Period that would otherwise end on a day that is not a
        LIBOR Market Day shall be extended to the next succeeding LIBOR Market
        Day, unless such LIBOR Market Day falls in the next calendar month, in
        which case the Interest Period shall end on the next preceding LIBOR
        Market Day, and (c) no Interest Period may extend beyond the Maturity
        Date.

               "Investment" means, with respect to any Person, any investment by
        that Person, whether by means of purchase or other acquisition of
        capital stock or other Securities of any other Person or by means of
        loan, advance, capital contribution, or other debt or equity
        participation or interest in any other Person, including any partnership
        or joint venture interest in any other Person; provided that an
        Investment of a Person shall not include any trade or account receivable
        arising in the ordinary course of the business of such Person, whether
        or not evidenced by a note or other writing. The amount of any
        Investment shall be the amount actually invested, less any return of
        capital, without adjustment for subsequent increases or decreases in the
        market value of such Investment.

               "Investment Grade Credit Rating" means, as of any date of
        determination, that at least two (2) Rating Agencies have as of that
        date issued credit ratings for Borrower's long-term senior unsecured
        debt of (a) at least BBB- in the case of S&P, (b) at least Baa3 in the
        case of Moody's and (c) at least BBB- in the case of Fitch.

               "Issuing Bank" means, subject to Section 2.5(h), Bank of America.

               "Joint Venture" means any Person, other than a Subsidiary, (a) in
        which Borrower or any Subsidiary of Borrower holds an equity Investment
        which entitles Borrower or such Subsidiary to more than 10% of (i) the
        ordinary voting power for the election of the board of directors or
        other governing body of such Person or (ii) the partnership, membership
        or other ownership interest in such Person, and (b) which has at least
        one holder of its equity interests that is not an Affiliate of Borrower
        or any Subsidiary of Borrower. Notwithstanding the foregoing, for the
        purposes of Section 6.16, the term "Joint Venture" will not include any
        equity Investment in any Person if the dollar amount of that investment
        is less than $1,000,000, computed in accordance with Generally Accepted
        Accounting Principles, but only to the extent that the aggregate dollar
        amount of such equity Investments is less than $25,000,000.


                                      -14-
<PAGE>   21

               "Laws" means, collectively, all foreign, federal, state and local
        statutes, treaties, codes, ordinances, rules, regulations and
        controlling precedents of any Governmental Agency.

               "Lead Arranger and Sole Book Manager" means Banc of America
        Securities LLC.

               "Letter of Credit Usage" means, as of any date of determination,
        the aggregate undrawn face amount of outstanding Letters of Credit plus
        the aggregate amount of unreimbursed draws under Letters of Credit.

               "Letters of Credit" means any of the standby or commercial
        letters of credit (including financial and performance letters of
        credit) issued by an Issuing Bank under the Commitment pursuant to
        Section 2.5, either as originally issued or as the same may be
        supplemented, modified, amended, renewed, extended or supplanted.

               "Lewis Homes Stock Repurchase" means the purchase of up to 4
        million shares of Borrower's common stock issued in connection with the
        acquisition of the Lewis Homes group of companies for $26.00 per share
        payable in cash or by promissory note.

               "LIBOR" means, for each LIBOR Loan, that rate per annum,
        determined solely by the Administrative Agent, pursuant to the following
        formula (with each component expressed as a decimal and rounded upward
        to the nearest 1/100 of 1%):

               London Interbank Offered Rate for that LIBOR Loan
               -------------------------------------------------
                           1.00 - Reserve Percentage

               "LIBOR Advance" means an Advance made by a Bank to fund its Pro
        Rata Share of a LIBOR Loan.

               "LIBOR Lending Office" means, with respect to each Bank, its
        office, branch or affiliate identified on the signature page hereof as
        its LIBOR Lending Office or such other office, branch or affiliate as
        such Bank may hereafter designate as its LIBOR Lending Office by notice
        to Borrower and the Administrative Agent.

               "LIBOR Loan" means a Loan made hereunder and designated or
        redesignated as a LIBOR Loan in accordance with Article 2.

               "LIBOR Market" means the London, England market established by
        and among banks for the solicitation, offer and acceptance of Dollar
        deposits in such banks.

               "LIBOR Market Day" means any Banking Day on which commercial
        banks are open for international business (including dealing in Dollar
        deposits) in London, England.

               "Lien" means any mortgage, deed of trust, pledge, hypothecation,
        assignment for security, security interest, encumbrance, lien or charge
        of any kind, whether voluntarily incurred or arising by operation of Law
        or otherwise, affecting any Property, including any agreement to grant
        any of the foregoing (other than an agreement which gives to a Person
        the right to become equally and ratably secured with any other Person to
        whom a Lien is granted on any item of Property) any conditional sale or
        other title retention agreement, any lease in the nature of a security
        interest, and/or the filing of or agreement to give any financing
        statement


                                      -15-
<PAGE>   22

        (other than a precautionary financing statement with respect to a lease
        that is not in the nature of a security interest) under the Uniform
        Commercial Code or comparable Law of any jurisdiction with respect to
        any Property.

               "Loan" means the aggregate of the Advances made at any one time
        by the Banks pursuant to Article 2.

               "Loan Documents" means, collectively, this Agreement, the Notes,
        the Letters of Credit, the Swing Line Documents, the Subsidiary
        Guaranty, any Request for Loan, any Request for Letter of Credit, any
        Compliance Certificate and any other instruments, documents or
        agreements of any type or nature hereafter executed and delivered by
        Borrower or any of its Subsidiaries or Affiliates to the Administrative
        Agent or any other Bank in any way relating to or in furtherance of this
        Agreement, in each case either as originally executed or as the same may
        from time to time be supplemented, modified, amended, restated, extended
        or supplanted.

               "London Interbank Offered Rate" means, for each LIBOR Loan, the
        per annum rate (rounded upward to the nearest 1/100 of 1%) determined by
        the Administrative Agent as the rate for deposits in Dollars for a
        period equal to the applicable Interest Period which appears on the
        Telerate Page 3750 as of 11:00 a.m., London time, on the date that is 2
        LIBOR Market Days prior to the commencement of such Interest Period. If
        such rate does not appear on the Telerate Page 3750, the rate for that
        Interest Period will be determined by the Administrative Agent and will
        be equal to the rate at which deposits in Dollars are offered by the
        Administrative Agent to prime banks in the LIBOR Market at or about
        11:00 a.m., London time, on the date that is 2 LIBOR Market Days prior
        to the commencement of such Interest Period in an aggregate amount
        approximately equal to the amount of the Advance to be made by the
        Administrative Agent (as a Bank) with respect to such LIBOR Loan and for
        a period of time comparable to the number of days in the applicable
        Interest Period.

               "Majority Banks" means (a) as of any date of determination if
        the Commitment is then in effect, Banks having in the aggregate in
        excess of 50% of the Commitment then in effect and (b) as of any date of
        determination if the Commitment has then been terminated or suspended
        and there is then any Indebtedness evidenced by the Notes, Banks holding
        in the aggregate in excess of 50% the aggregate Indebtedness then
        evidenced by the Notes and the Swing Line Documents.

               "Material Adverse Effect" means any circumstance or event, or
        any set of circumstances or events which, individually or when
        aggregated with any other circumstances or events, (a) has or is
        reasonably likely to have any material adverse effect upon the validity
        or enforceability of any Loan Document, (b) is or is reasonably likely
        to be material and adverse to the condition (financial or otherwise) or
        operations of Borrower and its Subsidiaries, taken as a whole, or (c)
        materially impairs or is reasonably likely to materially impair the
        ability of Borrower and its Subsidiaries, taken as a whole, to perform
        the Obligations.

               "Material Amount of Assets" means, as of any date of
        determination, more than 10% of the consolidated total assets (other
        than assets of Financial Subsidiaries) of Borrower and its Subsidiaries
        as of such date.

               "Maturity Date" means October 6, 2004, subject to extension as
        provided in Section 2.6.


                                      -16-
<PAGE>   23

               "Model Homes" means housing units which have been completed,
        furnished and landscaped and are used in the marketing efforts with
        respect to a residential home community, provided that the total number
        of units considered as Model Homes at any time shall not exceed an
        amount equal to (a) the number of domestic residential home communities
        open for sale at such time, times (b) four (4).

               "Money Market Facility" means any unsecured credit facility the
        advances under which have a maturity of not in excess of 180 days and
        which have been extended to Borrower from time to time other than under
        this Agreement, either by a Bank or by any other financial institution.

               "Money Market Outstandings" means, as of any date of
        determination, the aggregate principal amount outstanding under all
        Money Market Facilities.

               "Moody's" means Moody's Investor's Service, Inc. and its
        successors.

               "Mortgage Company" means Kaufman and Broad Mortgage Company, an
        Illinois corporation and a wholly owned Financial Subsidiary of
        Borrower.

               "Mortgage Warehousing Agreements" mean that certain Amended and
        Restated Mortgage Loan Warehousing Agreement dated as of February 18,
        2000 among Mortgage Company, rateOne, the banks party thereto and Bank
        of America, N.A., as administrative agent, and Bank One Texas, N.A., as
        managing agent, and that certain Master Loan and Security Agreement
        dated as of May 25, 1999 between Mortgage Company and Morgan Stanley
        Mortgage Capital, Inc., as lender, as amended by Amendment No. 1 to
        Master Loan and Security Agreement, dated as of May 19, 2000, among
        Mortgage Company, rateOne and Morgan Stanley Mortgage Capital, Inc., as
        the foregoing may from time to time be amended, modified, refinanced or
        replaced, and substantially similar loan or credit agreements or
        arrangements entered into from time to time by Mortgage Company for
        loans to be used for the purpose of funding the origination of
        residential mortgage loans, secured by a pledge of such mortgage loans.

               "Multiemployer Plan" means any employee benefit plan of a type
        described in Section 4001(a)(3) of ERISA.

               "Net Orders" means, as of any date of determination, the number
        of items of housing inventory that are in the process of being sold and
        with respect to which a purchase contract has been signed, as reported
        in Borrower's filings with the Commission.

               "Net Realizable Value Adjustment" means the adjustment required
        pursuant to Generally Accepted Accounting Principles (including FAS 121
        issued by the Financial Accounting Standards Board) to reflect a
        decrease in the book value of assets below their historical costs.

               "New Bank" has the meaning set forth in Section 2.8(a).

               "Non-Recourse Indebtedness" means Indebtedness incurred in
        connection with the purchase or improvement of Property (a) that is
        secured solely by the Property purchased or improved, (b) with respect
        to which the holder of such Indebtedness has recourse only to such


                                      -17-
<PAGE>   24

        Property, and (c) that is otherwise non-recourse (whether by contract or
        under applicable Law) to any Person.

               "Note" means each promissory note made by Borrower to a Bank
        evidencing the Advances under that Bank's Pro Rata Share of the
        Commitment, substantially in the form of Exhibit C, either as originally
        executed or as the same may from time to time be supplemented, modified,
        amended, renewed, extended or supplanted.

               "Obligations" means all present and future obligations of every
        kind or nature of Borrower or any Party at any time and from time to
        time owed to the Administrative Agent or the Banks or any one or more of
        them under any one or more of the Loan Documents, whether due or to
        become due, matured or unmatured, liquidated or unliquidated, or
        contingent or noncontingent, including obligations of performance as
        well as obligations of payment, and including interest that accrues to
        the extent permitted by applicable Law after the commencement of any
        proceeding under any Debtor Relief Law by or against Borrower.

               "Officer's Certificate" means, when used with reference to any
        Person, a certificate signed by a Senior Officer of such Person.

               "Operating Loss" means, for any Fiscal Quarter, that the sum of
        (a) Consolidated Net Income for that Fiscal Quarter plus (b) all taxes
        on or measured by income payable by Borrower with respect to such
        Consolidated Net Income plus (c) all non-Cash Net Realizable Value
        Adjustments made during that Fiscal Quarter is less than zero; provided
        that each amount described in clauses (a), (b) and (c) shall be
        adjusted to eliminate any portion thereof, or effect thereon,
        attributable to a Financial Subsidiary.

               "Opinions of Counsel" means the favorable written legal opinions
        of (a) Munger, Tolles & Olson LLP , special counsel to Borrower, and (b)
        Barton P. Pachino, Senior Vice President and General Counsel of Borrower
        substantially in the form of Exhibits D-1 and D-2, respectively,
        together with copies of all factual certificates and legal opinions upon
        which such counsel has relied.

               "Party" means any Person other than the Banks or the Agents
        which now or hereafter is a party to any of the Loan Documents.

               "PBGC" means the Pension Benefit Guaranty Corporation or any
        successor thereto established under ERISA.

               "Pension Plan" means any "employee pension benefit plan" (as
        such term is defined in ERISA) which is subject to Title IV of ERISA and
        which is maintained for employees of Borrower or any of its ERISA
        Affiliates.

               "Permitted Encumbrances" means:

               (a) inchoate Liens incident to construction or maintenance of
        real property; or Liens incident to construction or maintenance of real
        property now or hereafter filed of record for which adequate reserves
        have been set aside and which are being contested in good faith by
        appropriate proceedings and have not proceeded to judgment, provided
        that, by reason of


                                      -18-
<PAGE>   25

        nonpayment of the obligations secured by such Liens, no material
        property is subject to a material risk of loss or forfeiture;

               (b) Liens for taxes and assessments on real property which are
        not yet past due; or Liens for taxes and assessments on real property
        for which adequate reserves have been set aside and are being contested
        in good faith by appropriate proceedings and have not proceeded to
        judgment, provided that, by reason of nonpayment of the obligations
        secured by such Liens, no material property is subject to a material
        risk of loss or forfeiture;

               (c) minor defects and irregularities in title to any real
        property which in the aggregate do not materially impair the fair market
        value or use of the real property for the purposes for which it is or
        may reasonably be expected to be held;

               (d) easements, exceptions, reservations, or other agreements for
        the purpose of pipelines, conduits, cables, wire communication lines,
        power lines and substations, streets, trails, walkways, drainage,
        irrigation, water, utilities, and sewerage purposes, dikes, canals,
        ditches, the removal of oil, gas, coal, or other minerals, and other
        like purposes affecting real property, facilities, or equipment which in
        the aggregate do not materially burden or impair the fair market value
        or use of such property for the purposes for which it is or may
        reasonably be expected to be held;

               (e) easements, exceptions, reservations, or other agreements for
        the purpose of facilitating the joint or common use of property
        affecting real property which in the aggregate do not materially burden
        or impair the fair market value or use of such property for the purposes
        for which it is or may reasonably be expected to be held;

               (f) rights reserved to or vested in any Governmental Agency to
        control or regulate the use of any real property;

               (g) any obligations or duties affecting any real property to any
        Governmental Agency with respect to any right, power, franchise, grant,
        license, or permit;

               (h) present or future zoning laws and ordinances or other laws
        and ordinances restricting the occupancy, use, or enjoyment of real
        property;

               (i) statutory Liens, including warehouseman's liens, other than
        those described in clauses (a) or (b) above, arising in the ordinary
        course of business with respect to obligations which are not delinquent
        or are being contested in good faith, provided that, if delinquent,
        adequate reserves have been set aside with respect thereto and, by
        reason of nonpayment, no material property is subject to a material risk
        of loss or forfeiture;

               (j) covenants, conditions, and restrictions affecting the use of
        real property which in the aggregate do not materially impair the fair
        market value or use of the real property for the purposes for which it
        is or may reasonably be expected to be held;

               (k) rights of tenants under leases and rental agreements covering
        real property entered into in the ordinary course of business of the
        Person owning such real property;


                                      -19-
<PAGE>   26

               (l) Liens consisting of pledges or deposits to secure obligations
        under workers' compensation laws or similar legislation, including Liens
        of judgments thereunder which are not currently dischargeable;

               (m) Liens consisting of pledges or deposits of property to secure
        performance in connection with operating leases made in the ordinary
        course of business to which the Borrower or a Subsidiary is a party as
        lessee, provided the aggregate value of all such pledges and deposits in
        connection with any such lease does not at any time exceed 25% of the
        annual fixed rentals payable under such lease;

               (n) Liens consisting of deposits of property to secure statutory
        obligations of the Borrower or a Subsidiary of Borrower in the ordinary
        course of its business; and

               (o) Liens consisting of deposits of property to secure (or in
        lieu of) surety, appeal or customs bonds in proceedings to which
        Borrower or a Subsidiary of Borrower is a party in the ordinary course
        of its business.

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

               "Person" means an individual, trustee, corporation, general
        partnership, limited partnership, limited liability company, joint stock
        company, trust, estate, unincorporated organization, union, tribe,
        business association or firm, joint venture, Governmental Agency, or
        other entity.

               "Pricing Period" means the 3 calendar month periods of (a) May 1
        through July 31, (b) August 1 through October 31, (c) November 1 through
        January 31, and (d) February 1 through April 30, and the Consolidated
        Leverage Ratio applicable to any Pricing Period shall be the one that is
        calculated as of the Fiscal Quarter end that falls approximately 60 days
        prior to the beginning of such Pricing Period.

               "Prime Rate" means, on any day, the rate of interest per annum
        then most recently established by the Administrative Agent as its "prime
        rate." Any such rate is a general reference rate of interest, may not be
        related to any other rate, and may not be the lowest or best rate
        actually charged by the Administrative Agent to any customer or a
        favored rate and may not correspond with future increases or decreases
        in interest rates charged by other lenders or market rates in general,
        and that the Administrative Agent may make various business or other
        loans at rates of interest having no relationship to such rate. If the
        Administrative Agent ceases to exist or to establish or publish a prime
        rate from which the Prime Rate is then determined, the applicable
        variable rate from which the Prime Rate is determined thereafter shall
        be instead the prime rate reported in The Wall Street Journal (or the
        average prime rate if a high and a low prime rate are therein reported),
        and the Prime Rate shall change without notice with each change in such
        prime rate as of the date such change is reported. If The Wall Street
        Journal does not then or ceases to report such a prime rate, the Prime
        Rate shall thereafter be


                                      -20-
<PAGE>   27

        determined by such alternate method as may be reasonably selected by the
        Administrative Agent.

               "Prime Rate Advance" means an Advance made by a Bank to fund its
        Pro Rata Share of a Prime Rate Loan.

               "Prime Rate Loan" means a Loan made hereunder and designated or
        redesignated as a Prime Rate Loan in accordance with Article 2, or
        converted to a Prime Rate Loan in accordance with Article 3.

               "Prior Loan Agreements" means the Bridge Loan Agreement, the
        Prior Revolving Loan Agreement and the Prior Term Loan Agreement.

               "Prior Revolving Loan Agreement" has the meaning set forth for
        that term in the Recitals hereto.

               "Prior Term Loan Agreement" means the Term Loan Agreement dated
        as of January 7, 1999, as amended, by and among Borrower, the Banks
        named therein, and Bank of America, as Administrative Agent and various
        other Banks in various agent capacities.

               "Pro Rata Share" of a Bank, as pertains to the Commitment, means
        the applicable percentage set forth opposite the name of that Bank on
        Schedule 1.1 to this Agreement.

               "Projections" means the financial projections of Borrower
        delivered to the Banks and dated as of August 24, 2000.

               "Property" means any interest in any kind of property or asset,
        whether real, personal or mixed, or tangible or intangible.

               "Quarterly Payment Date" means December 31, 2000, and each March
        31, June 30, September 30 and December 31 thereafter through and
        including the Maturity Date.

               "rateOne" means rateOne Home Loan, LLC, a Delaware limited
        liability company and a Subsidiary of Mortgage Company.

               "Rating Agencies" means S&P, Moody's and Fitch.

               "Regulation D" means Regulation D, as at any time amended, of
        the Board of Governors of the Federal Reserve System or any other
        regulation in substance substituted therefor.

               "Regulatory Development" means (a) any change in the Laws, (b)
        change in the application of any existing Laws or the interpretation
        thereof by any Governmental Agency or central bank or comparable
        authority (whether or not having the force of Law), or (c) compliance by
        any Bank with any request or directive (whether or not having the force
        of Law) of any Governmental Agency or central bank or comparable
        authority.


                                      -21-
<PAGE>   28

               "Request for Letter of Credit" means a written request for the
        issuance of a Letter of Credit signed by a Responsible Official of
        Borrower, in a form reasonably designated from time to time by the
        Administrative Agent.

               "Request for Loan" means a request for a Loan signed by a
        Responsible Official of Borrower, in a form reasonably designated from
        time to time by the Administrative Agent.

               "Request for Redesignation" means a written request for
        redesignation of Loans signed by a Responsible Official of Borrower, in
        a form reasonably designated from time to time by the Administrative
        Agent.

               "Required Banks" means as of any date of determination, Banks
        having in the aggregate 80% or more of the Commitment then in effect.

               "Requirement of Law" means, as to any Person, any Law or any
        judgment, award, decree, writ or determination of, or any consent or
        similar agreement with, a Governmental Agency, in each case applicable
        to or binding upon such Person or any of its Property or to which such
        Person or any of its Property is subject.

               "Reserve Percentage" means, for each LIBOR Loan, the total of the
        maximum reserve percentages for determining the reserves to be
        maintained by member banks of the Federal Reserve System for
        Eurocurrency Liabilities, as defined in Regulation D. The Reserve
        Percentage shall be expressed in decimal form and rounded upward, if
        necessary, to the nearest 1/100th of one percent, and shall include
        marginal, emergency, supplemental, special and other reserve
        percentages. The Reserve Percentage shall be determined solely by the
        Administrative Agent, which determination shall be conclusive absent
        manifest error.

               "Responsible Official" means (a) when used with reference to a
        Person other than an individual, any corporate officer of such Person,
        general partner of such Person, corporate officer of a corporate general
        partner of such Person, or corporate officer of a corporate general
        partner of a partnership that is a general partner of such Person, or
        any other responsible official thereof duly acting on behalf thereof,
        and (b) when used with reference to a Person who is an individual, such
        Person. Any document or certificate hereunder that is signed or executed
        by a Responsible Official of a Person shall be conclusively presumed to
        have been authorized by all necessary corporate, partnership and/or
        other action on the part of that Person.

               "Right of Others" means, with respect to any Property in which a
        Person has an interest, (a) any legal or equitable claim or other
        interest (other than a Lien) in or with respect to that Property held by
        any other Person, and (b) any option or right held by any other Person
        to acquire any such claim or other interest (including a Lien).

               "S&P" means Standard & Poor's Rating Group (a division of
        McGraw-Hill, Inc.) and its successors.

               "Securities" means any capital stock, share, voting trust
        certificate, bonds, debentures, notes or other evidences of
        indebtedness, limited partnership interests, or any warrant, option or
        other right to purchase or acquire any of the foregoing.


                                      -22-
<PAGE>   29

               "Senior Officer" means the (a) chief executive officer, (b) chief
        operating officer, (c) chief financial officer, (d) vice president and
        controller, or (e) treasurer, in each case whatever the title
        nomenclature may be, of the Person designated.

               "Settlement Date" means the settlement date specified in the
        forward contract for the sale and purchase of Common Stock which is a
        component of any Trust Preferred Capital Securities. The Settlement Date
        for the Trust Preferred Capital Securities referred to in clause (a) of
        the definition thereof is August 16, 2001.

               "Shareholders' Equity" means, as of any date of determination,
        shareholders' equity as of that date determined in accordance with
        Generally Accepted Accounting Principles; provided that there shall be
        excluded from Shareholders' Equity any amount attributable to capital
        stock that is, directly or indirectly, required to be redeemed or
        repurchased by the issuer thereof prior to the date which is one year
        after the Maturity Date or upon the occurrence of specified events or at
        the election of the holder thereof.

               "Significant Subsidiary" means, as of May 31, 2000, those
        Subsidiaries of Borrower identified as such in Schedule 4.4 and, as of
        any other date of determination, any Subsidiary of Borrower (other than
        a Joint Venture) with respect to which any of the following conditions
        is met:

               (a) the aggregate book value of all Investments of Borrower and
        its Subsidiaries in such Subsidiary exceeds 5% of the consolidated total
        assets (other than assets of Financial Subsidiaries) of Borrower and its
        Subsidiaries as of such date; or

               (b) the proportionate share of Borrower and its Subsidiaries in
        the total assets of such Subsidiary (after intercompany eliminations)
        exceeds 5% of the consolidated total assets (other than assets of
        Financial Subsidiaries) of Borrower and its Subsidiaries as of such
        date; or

               (c) the equity of Borrower and its Subsidiaries in the net income
        of such Subsidiary (before income taxes, extraordinary items and
        cumulative effect of a change in accounting principles) as of the end of
        the most recently ended fiscal year of such Subsidiary exceeds the
        greater of (i) an amount equal to 5% of the consolidated net income of
        Borrower and its Subsidiaries (computed as aforesaid) as of the end of
        the most recent Fiscal Year ended prior to such date or (ii) $3,000,000.

               "Subordinated Obligations" means, collectively, all obligations
        of Borrower or any of its Subsidiaries that (a) do not provide for any
        payment of principal, any sinking fund payment or any scheduled
        redemption prior to the Maturity Date, (b) are expressly subordinated to
        the Obligations by a written instrument containing subordination and
        related provisions (including interest payment blockage, standstill and
        related provisions) not materially less favorable to the Banks in any
        respect whatsoever from those applicable to Borrower's 9-5/8% Senior
        Subordinated Notes due 2006 (the "Subordinated Notes") (or such other
        subordination and related provisions as may be approved in writing by
        the Majority Banks), (c) are subject to financial covenants not
        materially more burdensome to Borrower taken as a whole than those
        applicable to the Subordinated Notes, except such covenants as may be
        approved in writing by the Majority Banks and (d) are subject to other
        covenants (other than the covenant to pay interest) and events of
        default which in the aggregate are not materially more burdensome to


                                      -23-
<PAGE>   30

        Borrower than those applicable to the Subordinated Notes, except such
        covenants or events of default as may be approved in writing by the
        Majority Banks.

               "Subsidiary" means, with respect to any Person, any corporation,
        limited liability company, partnership or joint venture whether now
        existing or hereafter organized or acquired: (a) in the case of a
        corporation or limited liability company, of which securities having a
        majority of the ordinary voting power for the election of the board of
        directors (other than securities having such power only by reason of the
        happening of a contingency) are at the time owned by such Person and/or
        one or more Subsidiaries of such Person or (b) in the case of a
        partnership, joint venture or other business entity, in which such
        Person or a Subsidiary of such Person is a general partner.

               "Subsidiary Guaranty" means the guaranty of the Indebtedness of
        Borrower under this Agreement executed by each Guarantor Subsidiary of
        Borrower substantially in the form of Exhibit E, either as originally
        executed or as the same may from time to time be supplemented, modified,
        amended, renewed, extended or supplanted.

               "Swing Line" means the revolving line of credit established by
        the Swing Line Bank in favor of Borrower pursuant to Section 2.4.

               "Swing Line Bank" means Bank of America.

               "Swing Line Documents" means the promissory note and any other
        documents executed by Borrower in favor of the Swing Line Bank in
        connection with the Swing Line.

               "Swing Line Loans" means loans made by the Swing Line Bank to
        Borrower pursuant to Section 2.4.

               "Swing Line Maturity Date" shall mean the date 15 days following
        the date of disbursement of a Swing Line Loan or, if such day is not a
        Banking Day, the next Banking Day.

               "Swing Line Outstandings" means, as of any date of
        determination, the aggregate principal Indebtedness of Borrower on all
        Swing Line Loans then outstanding.

               "Syndication Agent" means Credit Lyonnais Los Angeles Branch, so
        long as such bank is a Bank hereunder. The Syndication Agent shall have
        no duties under the Loan Documents beyond those of a Bank.

               "Termination Event" means (a) a "reportable event" as defined in
        Section 4043 of ERISA (other than a "reportable event" that is not
        subject to the provision for 30 day notice to the PBGC), (b) the
        withdrawal of Borrower or any of its ERISA Affiliates from a Pension
        Plan during any plan year in which it was a "substantial employer" as
        defined in Section 4001(a)(2) of ERISA, (c) the filing of a notice of
        intent to terminate a Pension Plan or the treatment of an amendment to a
        Pension Plan as a termination thereof pursuant to Section 4041 of ERISA,
        other than pursuant to Section 4041(b) of ERISA, (d) the institution of
        proceedings to terminate a Pension Plan by the PBGC or (e) any other
        event or condition which might reasonably be expected to constitute
        grounds under ERISA for the termination of, or the appointment of a
        trustee to administer, any Pension Plan.


                                      -24-
<PAGE>   31

               "Term Loan Commitment Increases" means the aggregate of increases
        to the Commitment requested under Section 2.6 of the 2000 Term Loan
        Agreement.

               "to the best knowledge of" means, when modifying a
        representation, warranty or other statement of any Person, that such
        representation, warranty or statement is a representation, warranty or
        statement that (a) the Person making it has no actual knowledge of the
        inaccuracy of the matters therein stated and (b) assuming the exercise
        by the Person making it of reasonable due diligence under the
        circumstances (in accordance with the standard of what a reasonable
        Person would have done under similar circumstances), the Person making
        it would have no actual knowledge of the inaccuracy of the matters
        therein stated. Where the Person making the representation, warranty or
        statement is not a natural Person, the aforesaid actual or constructive
        knowledge shall be that of any Senior Officer of that Person.

               "Trust Issuer" means a business trust formed by Borrower as a
        special purpose grantor trust for the purpose of facilitating the
        issuance of Trust Preferred Capital Securities, and which engages in no
        activities other than those incident to the Trust Preferred Capital
        Securities.

               "Trust Preferred Capital Securities" means the securities issued
        by Borrower and a Trust Issuer (a) covered by Borrower's Prospectus
        dated June 30, 1998 filed with the Commission and (b) such other similar
        securities as may from time to time be issued by Borrower after being
        approved in writing by the Majority Banks in their sole and absolute
        discretion to be treated as Trust Preferred Capital Securities.

               "Voting Stock" means, with respect to any Person, the capital
        stock of such Person having general voting power under ordinary
        circumstances to elect at least a majority of the board of directors,
        managers or trustees of such Person (irrespective of whether or not at
        the time capital stock of any other class or classes shall have or might
        have voting power by reason of the happening of any contingency).

            1.2 Use of Defined Terms. Any defined term used in the plural
preceded by the definite article shall be taken to encompass all members of the
relevant class. Any defined term used in the singular preceded by "any" shall be
taken to indicate any number of the members of the relevant class.

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


                                      -25-
<PAGE>   32

Borrower changes its Fiscal Year during the term of this Agreement, Borrower and
the Banks agree to amend this Agreement and the other Loan Documents in such
respects as are necessary to conform the definitions, the financial covenants,
the reporting requirements and the other provisions thereof to fairly reflect
such change in the Borrower's Fiscal Year.

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

            1.5 Miscellaneous Terms. The term "or" is disjunctive; the term
"and" is conjunctive. The term "shall" is mandatory; the term "may" is
permissive. Masculine terms also apply to females; feminine terms also apply to
males. The term "including" is by way of example and not limitation.

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

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


                                      -26-
<PAGE>   33

                                   Article 2
                          LOANS AND LETTERS OF CREDIT

               2.1 Loans-General.

               (a) Subject to the terms and conditions set forth in this
        Agreement (including Section 8.2), at any time and from time to time
        from the 2000 Closing Date through the Banking Day immediately preceding
        the Maturity Date, each Bank shall, pro rata according to that Bank's
        Pro Rata Share of the Commitment then in effect, make Advances to
        Borrower under the Commitment in such amounts as Borrower may request;
        provided that after giving effect to such Advance, the aggregate
        outstanding principal evidenced by the Notes plus the Letter of Credit
        Usage plus the Money Market Outstandings plus Swing Line Outstandings
        shall not exceed the Commitment. Subject to the limitations set forth
        herein, Borrower may borrow, repay and reborrow under this Section
        2.1(a) without premium or penalty.

               (b) [Intentionally Omitted.]

               (c) Subject to the next sentence and to Sections 2.4(e) and
        2.5(d), each Loan shall be made pursuant to a Request for Loan which
        shall be in a form and shall contain information specified from time to
        time by the Administrative Agent and which shall in all events specify
        the requested (i) date of such Loan, (ii) type of Loan, (iii) amount of
        such Loan and (iv) in the case of a LIBOR Loan, Interest Period for such
        Loan. Unless the Administrative Agent, in its sole and absolute
        discretion, has notified Borrower to the contrary, each Loan may be
        requested by telephone (promptly confirmed in writing) or telecopier by
        a Responsible Official of Borrower, and Borrower shall confirm such
        request by promptly mailing a Request for Loan conforming to the
        preceding sentence to the Administrative Agent.

               (d) Promptly following receipt of a Request for Loan, the
        Administrative Agent shall notify each Bank by telephone, telecopier or
        telex of the date and type of the Loan, the applicable Interest Period
        in the case of a LIBOR Loan, and that Bank's Pro Rata Share of the Loan.
        Not later than 11:00 a.m., California time, on the date specified for
        any Loan, each Bank shall make its Pro Rata Share of the Loan in
        immediately available funds available to the Administrative Agent at the
        Administrative Agent's Office. Upon fulfillment of the applicable
        conditions set forth in Article 8, all Advances shall be credited in
        immediately available funds to the Designated Deposit Account.

               (e) The principal amount of each Loan shall be an integral
        multiple of $1,000,000 and shall be in an amount not less than (i)
        $1,000,000 if such Loan is a Prime Rate Loan and (ii) $5,000,000 if such
        Loan is a LIBOR Loan.

               (f) A Request for Loan shall be irrevocable upon the
        Administrative Agent's first notification thereof. The obligation of
        each Bank to make any Advance is several, and not joint or joint and
        several, and is not conditioned upon the performance by any other Bank
        of its obligation to make Advances. The failure by any Bank to perform
        its obligation to make any Advance will not increase the obligation of
        any other Bank to make Advances.

               (g) Borrower may redesignate a Prime Rate Loan as a LIBOR Loan,
        or a LIBOR Loan as a Prime Rate Loan or a LIBOR Loan with a new Interest
        Period, by delivering a Request for Redesignation to the Administrative
        Agent, within the time periods and pursuant to



                                      -27-
<PAGE>   34

        the conditions set forth in Section 2.1(c), 2.2 or 2.3, as applicable,
        and elsewhere in this Agreement. If no Request for Redesignation (or
        telephonic or other request referred to in the second sentence of
        Section 2.1(c) , if applicable) has been made prior to the last day of
        the Interest Period for an outstanding LIBOR Loan within the requisite
        notice periods set forth in Section 2.3, then Borrower shall be deemed
        to have requested that such LIBOR Loan be redesignated as a Prime Rate
        Loan.

               (h) The Advances made by each Bank under this Section 2.1 shall
        be evidenced by that Bank's Note.

            2.2 Prime Rate Loans. Each request by Borrower for a Prime Rate Loan
shall be made pursuant to a Request for Loan (or telephonic or other request for
loan referred to in the second sentence of Section 2.1(c), if applicable)
received by the Administrative Agent, at the Administrative Agent's Office, not
later than 9:00 a.m., California time, on the Banking Day on which the requested
Prime Rate Loan is to be made. The Administrative Agent shall notify each Bank
of a request for a Prime Rate Loan as soon as practicable after receipt of the
same. All Loans shall constitute Prime Rate Loans unless properly designated as
LIBOR Loans pursuant to Section 2.3.

            2.3 LIBOR Loans.

               (a) Each request by Borrower for a LIBOR Loan shall be made
        pursuant to a Request for Loan (or telephonic or other request for loan
        referred to in the second sentence of Section 2 .1(c) , if applicable)
        received by the Administrative Agent, at the Administrative Agent's
        Office, not later than 9:00 a.m., California time, at least 3 LIBOR
        Market Days before the first day of the applicable Interest Period,
        provided that such advance notice period may be reduced by the
        Administrative Agent in its discretion with respect to any LIBOR Loan
        made on the 2000 Closing Date. The Administrative Agent shall notify
        each Bank of a request for a LIBOR Loan as soon as practicable after
        receipt of the same.

               (b) At or about 10:00 a.m., California time, 2 LIBOR Market Days
        before the first day of the applicable Interest Period, the
        Administrative Agent shall determine the applicable LIBOR (which
        determination shall be conclusive in the absence of manifest error) and
        promptly shall give notice of the same to Borrower and the Banks by
        telephone, telecopier or, in the case of Banks, telex.

               (c) No more than 10 LIBOR Loans may be outstanding at any
        particular time.

               (d) Unless the Majority Banks otherwise consent, no LIBOR Loan
        may be requested during the continuance of an Event of Default.

               2.4 Swing Line.

               (a) The Swing Line Bank shall from time to time through the day
        prior to the Maturity Date make Swing Line Loans to Borrower in such
        amounts as Borrower may request, provided that (i) giving effect to such
        Swing Line Loan, the Swing Line Outstandings do not exceed $50,000,000,
        (ii) the conditions to an Advance specified in Article 8 have been
        satisfied, (iii) without the consent of all of the Banks, no Swing Line
        Loan may be made during the continuation of an Event of Default, (iv)
        the Swing Line Bank has not given at least 24 hours prior notice to
        Borrower that availability under the Swing Line is suspended or
        terminated and


                                      -28-
<PAGE>   35

        (v) after giving effect to such Swing Line Loan, the aggregate
        outstanding principal evidenced by the Notes plus the Letter of Credit
        Usage plus the Money Market Outstandings plus the Swing Line
        Outstandings shall not exceed the Commitment. Borrower may borrow, repay
        and reborrow under this Section 2.4 . Unless notified to the contrary by
        the Swing Line Bank, borrowings under the Swing Line may be made in
        amounts which are integral multiples of $100,000 upon telephonic
        request, and delivery of such written request and certification as the
        Swing Line Bank may designate from time to time, by a Responsible
        Official of Borrower made to the Swing Line Bank not later than 4:00
        p.m., Los Angeles time, on the Banking Day of the requested borrowing
        (in all events, any telephonic request shall be promptly confirmed in
        writing by telecopier). Unless notified to the contrary by the Swing
        Line Bank, each repayment of a Swing Line Loan shall be in an amount
        which is an integral multiple of $100,000. A Swing Line Loan may, at any
        time and from time to time, voluntarily be prepaid at the election of
        Borrower in whole or in part without premium or penalty. If after 2:00
        p.m., Los Angeles time, on a Banking Day, Borrower (a) instructs the
        Swing Line Bank to debit its demand deposit account at the Swing Line
        Bank in the amount of any payment with respect to a Swing Line Loan, or
        (b) the Swing Line Bank otherwise receives repayment, such payment shall
        be deemed received on the next Banking Day.

               (b) Swing Line Loans shall bear interest at a fluctuating rate
        per annum equal to the sum of the Applicable Federal Funds Rate plus the
        Applicable LIBOR Spread plus 0.15%, payable on the dates principal is
        due and in any event on the Maturity Date. The Swing Line Bank shall be
        responsible for invoicing Borrower for such interest. The interest
        payable on Swing Line Loans is solely for the account of the Swing Line
        Bank (or, if applicable, for the account of the Banks funding such Swing
        Line Loans pursuant to Section 2.4(d)).

               (c) Each Swing Line Loan shall be payable on the applicable Swing
        Line Maturity Date and in any event on the Maturity Date.

               (d) Upon the making of a Swing Line Loan, each Bank shall be
        deemed to have purchased from the Swing Line Bank a participation
        therein in an amount equal to that Bank's Pro Rata Share of the
        Commitment times the amount of the Swing Line Loan. Upon demand made by
        the Swing Line Bank, each Bank shall, according to its Pro Rata Share of
        the Commitment, promptly provide to the Swing Line Bank its purchase
        price therefor in an amount equal to its participation therein. The
        obligation of each Bank to so provide its purchase price to the Swing
        Line Bank shall be absolute and unconditional and shall not be affected
        by the occurrence of an Event of Default or any other occurrence or
        event.

               (e) In the event that any Swing Line Outstandings have not been
        repaid by the applicable Swing Line Maturity Date, then on the next
        Banking Day (unless Borrower has made other arrangements acceptable to
        the Swing Line Bank to repay the Swing Line Outstandings), Borrower
        shall request a Prime Rate Loan under the Commitment pursuant to Section
        2.2 in an amount complying with Section 2.1(e) and sufficient to repay
        the Swing Line Outstandings. The Administrative Agent shall
        automatically provide such amount to the Swing Line Bank (which the
        Swing Line Bank shall then apply to the Swing Line Outstandings) and
        credit any balance of the Loan in immediately available funds to the
        Designated Deposit Account. In the event that Borrower fails to request
        a Prime Rate Loan under the Commitment within the time specified by
        Section 2.2 on any such Swing Line Maturity Date, the Administrative
        Agent may, but is not required to, without notice to or the consent of
        Borrower, cause Prime Rate Advances to be made by the Banks under the
        Commitment in the amount necessary



                                      -29-
<PAGE>   36

        to comply with Section 2.1(e) and sufficient to repay the Swing Line
        Outstandings and, for this purpose, the conditions precedent set forth
        in Section 8.2 shall not apply. The proceeds of such Advances shall be
        paid to the Swing Line Bank for application to the Swing Line
        Outstandings.

               2.5 Letters of Credit.

               (a) Subject to the terms and conditions of this Agreement
        (including Section 8.3), Borrower may request from time to time during
        the period from the 2000 Closing Date through the day prior to the
        Maturity Date that the Issuing Bank issue Letters of Credit for the
        account of Borrower, and the Issuing Bank agrees to issue for the
        account of Borrower one or more Letters of Credit, provided that (i)
        Borrower shall not request that the Issuing Bank issue any Letter of
        Credit if, after giving effect to such issuance, the aggregate
        outstanding principal evidenced by the Notes plus the Letter of Credit
        Usage plus the Money Market Outstandings plus the Swing Line
        Outstandings exceeds the Commitment, (ii) Borrower shall not request
        that the Issuing Bank issue any Letter of Credit if Borrower would not
        be in compliance with Sections 6.10 and 6.11, (iii) in no event shall
        the Issuing Bank issue any Letter of Credit having an expiration date
        after the Maturity Date, (iv) the Borrower shall not request any Letter
        of Credit if, after giving effect to such issuance, the Letter of Credit
        Usage would exceed $100,000,000 or any limit established by Law after
        the 2000 Closing Date on the Issuing Bank's ability to issue the
        requested Letter of Credit at any time, and (v) prior to the issuance of
        any Letter of Credit the Issuing Bank shall request confirmation by
        telephone from the Administrative Agent that such Letter of Credit may
        be issued. Notwithstanding the foregoing, the Issuing Bank shall not be
        obligated to issue a Letter of Credit if, on or prior to the Banking Day
        immediately preceding the issuance thereof any Bank has notified the
        Issuing Bank in writing that the conditions set forth in Section 8.3
        have not been satisfied with respect to the issuance of such Letter of
        Credit.

               (b) Whenever Borrower requests that the Issuing Bank issue a
        Letter of Credit it shall deliver to the Issuing Bank (with a copy to
        the Administrative Agent) (i) an executed application for such Letter of
        Credit in the form customarily required by the Issuing Bank and a
        Request for Letter of Credit by 1:00 p.m., California time, at least
        three (3) Banking Days prior to the proposed date of issuance, provided
        that the Issuing Bank shall use its best efforts to issue the proposed
        Letter of Credit within two Banking Days after receipt of such request,
        and (ii) the form of the Letter of Credit requested, together with such
        other information or materials as the Issuing Bank may reasonably
        request with respect to such Letter of Credit. The Administrative Agent
        shall promptly thereafter notify each of the Banks of the contents of
        such Request for Letter of Credit and proposed form of Letter of Credit.
        Prior to the issuance of any Letter of Credit, the Issuing Bank shall
        confirm by telephone with the Administrative Agent that, giving effect
        to the issuance of such Letter of Credit, the limitations set forth in
        Section 2.5(a) have been satisfied.

               (c) The Issuing Bank shall notify the Administrative Agent and
        Borrower of each issuance or amendment of any Letter of Credit issued by
        it on the Banking Day upon which such issuance or amendment occurs. Upon
        the issuance of a Letter of Credit, each Bank (other than the Issuing
        Bank and any Bank that has notified the Issuing Bank pursuant to the
        last sentence of Section 2.5(a) with respect to such Letter of Credit)
        shall be deemed to have purchased a pro rata participation from the
        Issuing Bank in an amount equal to that Bank's Pro Rata Share of the
        Commitment, of the face amount of such Letter of Credit. Without
        limiting the scope and nature of each such Bank's participation in any
        Letter of Credit, to the extent that


                                      -30-
<PAGE>   37

        the Issuing Bank has not been reimbursed for any payment required to be
        made by the Issuing Bank under any Letter of Credit by the Banks through
        the making of a Prime Rate Loan in accordance with Section 2.5(d) or by
        the Borrower in accordance with Section 2.5(e), each such Bank shall,
        according to its Pro Rata Share of the Commitment, immediately reimburse
        the Issuing Bank upon demand for the amount of such payment. If any Bank
        fails to reimburse the Issuing Bank in the manner required by this
        Section on the same day upon which the related payment has been made by
        the Issuing Bank, that Bank shall also pay interest to the Issuing Bank
        on the amount of such reimbursement obligations at the Federal Funds
        Rate for the first two days after payment has been made by the Issuing
        Bank and at a rate equal to the sum of the Federal Funds Rate plus 2%
        from and after the third day after the date such payment was made (which
        interest shall not be for the account of or otherwise reimbursable by
        Borrower). The obligation of each such Bank to so reimburse the Issuing
        Bank shall be absolute and unconditional and shall not be affected by
        (i) the occurrence of an Event of Default or a Default, (ii) any
        set-off, counterclaim, defense or other right that such Bank or Borrower
        may have against the Issuing Bank, Borrower or any other Person, (iii)
        any adverse change in the condition (financial or otherwise) of Borrower
        or (iv) any other occurrence or event. Any such reimbursement shall not
        relieve or otherwise impair the obligation of Borrower to reimburse the
        Issuing Bank under any Letter of Credit together with interest as
        hereinafter provided.

               (d) The Issuing Bank shall provide notice to Borrower and the
        Administrative Agent of the amount of each demand for a draw under any
        Letter of Credit and, where practicable, such notice may be provided on
        the Banking Day immediately preceding the Banking Day of an expected
        payment. If all of the limitations and requirements set forth in this
        Agreement with respect to the making of a Prime Rate Loan under the
        Commitment (except the requirement that a Request for Loan be made as
        and when specified herein) have been satisfied then the Banks shall be
        obligated to make a Prime Rate Loan to Borrower (without notice to or
        the consent of the Borrower) under the Commitment in an aggregate amount
        equal to the amount paid by the Issuing Bank on the related Letter of
        Credit. The Administrative Agent shall thereupon promptly provide notice
        of such payment under the Letter of Credit to the Banks, and within one
        Banking Day after such notice from the Administrative Agent, each Bank
        shall make its Pro Rata Share of such Prime Rate Loan under the
        Commitment (plus interest at the Federal Funds Rate for the first two
        days after the date payment has been made by the Issuing Bank and at a
        rate equal to the sum of the Federal Funds Rate plus 2% from and after
        the third day after the date such payment has been made by the Issuing
        Bank, which interest shall not be for the account of or otherwise
        reimbursable by Borrower) available to the Administrative Agent for the
        account of the Issuing Bank in immediately available funds, and such
        funds shall collectively constitute the aforementioned Prime Rate Loan,
        the proceeds of which shall be paid to the Issuing Bank to reimburse it
        for the payment made by it under the Letter of Credit.

               (e) In the event that not all of the limitations and requirements
        set forth in this Agreement with respect to the making of a Prime Rate
        Loan under the Commitment (other than the requirement that a Request for
        Loan be made as and when specified herein) have been satisfied, then
        Borrower agrees to pay to the Issuing Bank an amount equal to the amount
        of the applicable demand for a draw under a Letter of Credit (i) on the
        same Banking Day any payment is made, if the Issuing Bank notifies
        Borrower of such payment prior to 12:00 p.m., California time, on the
        Banking Day immediately preceding the Banking Day upon which such
        payment is to be made or (ii) on the Banking Day immediately following
        the Banking Day of the payment, if later notice is given. The principal
        amount of any such payment made by



                                      -31-
<PAGE>   38

        Borrower to the Issuing Bank shall be used to reimburse the Issuing Bank
        for the payment made by it under the Letter of Credit. In the event that
        Borrower does not make such payment when due, Borrower shall also pay
        interest to the Administrative Agent for the account of the Banks on
        such amount from the date of any payment to, but not including, the date
        of payment by Borrower at the rate provided for in Section 3.8; provided
        that not less than one day's interest shall be due. Each Bank that has
        reimbursed the Issuing Bank pursuant to Section 2.5(c) in accordance
        with its Pro Rata Share of the Commitment of any payment made by the
        Issuing Bank under a Letter of Credit shall thereupon acquire a pro rata
        participation, to the extent of such reimbursement, in the claim of the
        Issuing Bank against Borrower under this Section 2.5(e).

               (f) Subject to Section 3.18, Borrower agrees to pay to the
        Administrative Agent (which shall promptly pay the same to the Banks or
        the Issuing Bank, as the case may be), (i) for the account of the Banks
        (other than a Bank that has notified the Issuing Bank pursuant to the
        last sentence of Section 2.5(a) with respect to such Letter of Credit)
        with respect to each Letter of Credit, a per annum letter of credit fee
        in an amount equal to the Applicable Letter of Credit Fee times the face
        amount of such Letter of Credit (including increases in the undrawn face
        amount thereof) for the term of such Letter of Credit, and (ii) for the
        account of the Issuing Bank with respect to each Letter of Credit, an
        issuance fee in an amount equal to the greater of $500 or one eighth
        percent (1/8%) per annum times the face amount of such Letter of Credit
        (including increases in the undrawn face amount thereof) for the term of
        such Letter of Credit, together with the Issuing Bank's standard charges
        and actual and reasonable out-of-pocket costs in connection with such
        issuance. The letter of credit fees described in clause (i) of the first
        sentence in this subsection (f) for all Letters of Credit outstanding at
        any time during the quarterly period ending on each Quarterly Payment
        Date are payable quarterly in arrears on each Quarterly Payment Date.
        The letter of credit issuance fees described in clause (ii) of the first
        sentence in this subsection (f) for each Letter of Credit are payable in
        advance for each six month period (or portion thereof) during the term
        of the applicable Letter of Credit, on the issuance date and on each six
        month anniversary thereof during the term the applicable Letter of
        Credit is outstanding. In the event a Letter of Credit is canceled or
        terminated prior to its original expiration date, one-half of such
        issuance fee shall be refundable by the Issuing Bank over the period
        such Letter of Credit will no longer be outstanding (and the balance
        will be non-refundable).

               (g) The obligation of Borrower to reimburse the Issuing Bank for
        drawings or payments made under each Letter of Credit shall be
        unconditional and irrevocable. Without limiting the foregoing, such
        obligation of Borrower shall not be affected by any of the following
        circumstances:

                   (i) any lack of validity or enforceability of the Letter of
               Credit, this Agreement, or any letter of credit application or
               other agreement or instrument relating thereto;

                   (ii) compliance by the Issuing Bank with any amendment or
               waiver of or any consent to departure from the Letter of Credit,
               this Agreement or any letter of credit application or other
               agreement or instrument relating thereto previously approved by
               Borrower pursuant to Section 2.5(b) (except as to such amendments
               that are set forth on the face of such Letter of Credit);



                                      -32-
<PAGE>   39

                   (iii) the existence of any claim, setoff, defense, or other
               rights which Borrower may have at any time against any Bank, any
               beneficiary of the Letter of Credit (or any Persons for whom any
               such beneficiary may be acting) or any other Person, whether in
               connection with the Letter of Credit, this Agreement, or any
               letter of credit application or other agreement or instrument
               relating thereto, or any unrelated transactions;

                   (iv) any demand, statement, or any other document presented
               under a Letter of Credit proving to be forged, fraudulent,
               invalid, or insufficient in any respect or any statement therein
               being untrue or inaccurate in any respect whatsoever so long as
               any such document appeared to comply with the terms of the Letter
               of Credit;

                   (v) the solvency or financial responsibility of any party
               issuing any documents in connection with a Letter of Credit;

                   (vi) any failure or delay in notice of shipments or arrival
               of any property;

                   (vii) any error in the transmission of any message relating
               to a Letter of Credit not caused by the Issuing Bank, or any
               delay or interruption in any such message;

                   (viii) any error, neglect or default of any correspondent of
               any Bank in connection with a Letter of Credit;

                   (ix) any consequence arising from acts of God, war,
               insurrection, disturbances, labor disputes, emergency conditions
               or other causes beyond the control of the Banks;

                   (x) the form, accuracy, genuineness or legal effect of any
               contract or document referred to in any document submitted to the
               Issuing Bank in connection with a Letter of Credit so long as the
               Issuing Bank in good faith determines that the draft or document
               appears to comply with the terms of the Letter of Credit; and

                   (xi) where the Issuing Bank has acted in good faith and
               without gross negligence and observed general banking usage, any
               other circumstance whatsoever. IN DETERMINING WHETHER TO PAY
               UNDER ANY LETTER OF CREDIT, THE ISSUING BANK SHALL BE RESPONSIBLE
               ONLY TO DETERMINE THAT THE DOCUMENTS AND CERTIFICATES REQUIRED TO
               BE DELIVERED UNDER THAT LETTER OF CREDIT HAVE BEEN DELIVERED AND
               THAT THEY COMPLY ON THEIR FACE WITH THE REQUIREMENTS OF THAT
               LETTER OF CREDIT AND THE ISSUING BANK SHALL OBTAIN THE CONSENT OF
               THE BORROWER PRIOR TO MAKING ANY PAYMENT WITH RESPECT TO ANY
               DOCUMENT OR CERTIFICATE WHICH DOES NOT SO COMPLY ON ITS FACE.

               (h) Borrower shall initially request all Letters of Credit under
        this Agreement from Bank of America, as Issuing Bank (provided that the
        foregoing shall not limit Borrower's ability to request letters of
        credit that are not Letters of Credit issued pursuant to the terms of
        this Agreement from any issuing bank). In the event that (i) a
        prospective beneficiary will not


                                      -33-
<PAGE>   40

        accept Bank of America as the Issuing Bank with respect to the requested
        Letter of Credit, or (ii) Bank of America is otherwise unable to issue a
        properly requested Letter of Credit to which Borrower is entitled
        hereunder or (iii) Bank of America is unwilling, after reasonable
        opportunity to do so, to issue a properly requested Letter of Credit to
        which Borrower is entitled hereunder in the form requested by Borrower,
        then, upon prior notice to the Administrative Agent, Borrower may select
        an additional "Issuing Bank" from among the Banks holding a portion of
        the Commitment (with such additional Issuing Bank's approval) to issue
        the requested Letter of Credit.

               (i) The Issuing Bank shall be entitled to the protections
        accorded to the Administrative Agent pursuant to Article 10 , as if set
        forth herein, naming Issuing Bank in lieu of Administrative Agent, where
        appropriate.

               2.6 Reduction of Commitment/Extension of Maturity Date

               (a) Borrower shall have the right, at any time and from time to
        time, without penalty or charge, upon at least 5 Banking Days prior
        written notice voluntarily to reduce or terminate permanently and
        irrevocably, in aggregate principal amounts in an integral multiple of
        $1,000,000 but not less than $5,000,000 (unless all of the unused
        Commitment is being terminated), all or a portion of the unused
        Commitment. Borrower shall pay to the Administrative Agent on the date
        of such termination all unpaid commitment fees which have accrued to
        such date in respect of the terminated portion of the Commitment.

               (b) From time to time, but no earlier than 120 days after the
        2000 Closing Date nor later than 60 days prior to the Maturity Date, and
        so long as no Default or Event of Default then exists hereunder,
        Borrower may make a written request to the Administrative Agent to
        extend the then existing Maturity Date (the "Prior Maturity Date") for a
        period of an additional one year. It is understood and agreed that the
        Maturity Date may be extended more than once and that there may be more
        than one Prior Maturity Date. If written consent to such extension
        request is given by the Required Banks to the Administrative Agent
        within 45 days of such request by Borrower at any agreed extension fee,
        then the Maturity Date shall be so extended subject to the payment by
        Borrower to the Administrative Agent, within 60 days before the Prior
        Maturity Date, of such extension fee to all consenting Banks. Each such
        extension fee shall be for the account of the consenting Banks, based
        upon their pro-rata shares of the continuing Commitment. If written
        consent is not so given by the Required Banks, no extension of the
        Maturity Date shall occur, but the request therefor can be renewed
        within the foregoing periods prior to the Maturity Date in accordance
        with the procedure set forth above. Only one extension may be granted by
        the Required Banks during any 12 month period pursuant to this Section
        2.6.

               (c) In the event that a request to extend a Maturity Date under
        clause (b), above, is approved by the Required Banks but less than all
        of the Banks, then, subject to clauses (d) and (e) below, the portion of
        the Commitment attributable to the Banks that did not grant consent to
        such extension (each, a "Non-Consenting Bank") shall terminate on the
        Prior Maturity Date.

               (d) In the event that a portion of the Commitment is to be
        terminated on a Prior Maturity Date pursuant to the terms of clause (c),
        above, Borrower may, at any time until six (6) months prior to the Prior
        Maturity Date, have the right to arrange for one or more Persons that
        are either existing Banks or Eligible Assignees (each, for these
        purposes, a "New Bank")



                                      -34-
<PAGE>   41

        and that (if not an existing Bank) are approved by the Administrative
        Agent (which approval shall not be unreasonably withheld) purchase all
        (but not part) of any Non-Consenting Bank's then outstanding Advances,
        its Note and its participation interest in outstanding Letters of
        Credit, and assume its Pro Rata Share of the Commitment and its
        obligations hereunder. Upon the agreement in writing by one or more New
        Banks, the Non-Consenting Bank shall be required to assign its Pro Rata
        Share of the Commitment, together with the Indebtedness then evidenced
        by its Notes and its participation interest in outstanding Letters of
        Credit, to the New Bank or New Banks in accordance with Section 11.8.
        On the date of any such assignment, the Non-Consenting Bank that is
        being so replaced shall cease to be a "Bank" for all purposes of this
        Agreement and shall receive (i) from the New Bank or New Banks the
        principal amount of its Advances then outstanding and (ii) from Borrower
        all interest and fees accrued and then unpaid with respect to such
        Advances, together with any other amounts then payable to such Bank by
        Borrower. In the event the Non-Consenting Bank is also the Issuing Bank,
        then the New Bank shall become the Issuing Bank for all purposes of this
        Agreement and shall either (at the Non-Consenting Bank's election,
        subject to the approval of Borrower, the Administrative Agent and the
        New Bank (which approvals shall not be unreasonably withheld) and, in
        the case of clause (A) below, the approval of the applicable Letter of
        Credit beneficiaries) (A) issue new letters of credit to replace the
        outstanding Letters of Credit issued by the Non-Consenting Bank, or (B)
        issue new letters of credit to the Non-Consenting Bank in support of the
        outstanding Letters of Credit issued by the Non-Consenting Bank,
        whereupon such outstanding Letters of Credit shall no longer be
        considered "Letters of Credit" under this Agreement, and such new
        letters of credit shall be considered Letters of Credit for all purposes
        of this Agreement (including the participation therein by the other
        Banks pursuant to Section 2.5). The NonConsenting Bank shall be
        obligated to reimburse to Borrower a portion of the issuance fees
        referred to in clause (ii) of the first sentence of Section 2.5(f) based
        on the period during which each new Letter of Credit issued by the New
        Bank will be outstanding in replacement or support of a Letter of Credit
        issued by the Non-Consenting Bank. Any such purchase by a New Bank
        pursuant to this clause (d) shall be further evidenced by a revised
        version of Schedule 1.1 hereto prepared by the Administrative Agent and
        delivered to Borrower and each of the Banks and replacement Notes
        delivered by Borrower to the Administrative Agent for distribution to
        the applicable Banks in exchange for the corresponding existing Notes.

               (e) In the event that a portion of the Commitment is to be
        terminated on a Prior Maturity Date pursuant to the terms of clause (c),
        above, Borrower may within 30 days of the effective date of an extension
        of the Maturity Date granted by the Required Banks, elect in writing to
        permanently and irrevocably terminate that portion of the Commitment
        equal to the entire Pro Rata Share of the Commitment of one or more
        Non-Consenting Banks, provided that no Default or Event of Default has
        occurred. To do this, Borrower must reduce the unused Commitment to an
        amount equal to or greater than the Pro Rata Shares of the Commitment of
        the Non-Consenting Bank(s) to be terminated. Borrower shall then pay to
        the Administrative Agent on the date of such termination all unpaid
        commitment fees which have accrued to such date in respect of the
        terminated portion of the Commitment. On the effective date of any such
        termination, which must occur within 30 days after Borrower's election
        to terminate, any NonConsenting Bank that is being so eliminated shall
        cease to be a "Bank" for all purposes of this Agreement and shall
        receive (i) from the Borrower the principal amount of its Advances then
        outstanding and (ii) from Borrower all interest and fees accrued and
        then unpaid with respect to such Advances, together with any other
        amounts then payable to such Bank by Borrower (including those fees set
        forth in Section 3.7(d) with respect to the Non-Consenting Bank's share
        of any then outstanding LIBOR Advances). Borrower may not eliminate
        pursuant to this


                                      -35-
<PAGE>   42

        clause (e) any Non-Consenting Bank that is the Issuing Bank. Any such
        termination and elimination pursuant to this clause (e) shall be further
        evidenced by a revised version of Schedule 1.1 hereto prepared by the
        Administrative Agent and delivered to Borrower and each of the remaining
        Banks, and the Non-Consenting Banks to be eliminated shall promptly
        deliver to the Administrative Agent for delivery to Borrower their
        original Notes.

            2.7 Administrative Agent's Right to Assume Funds Available. Unless
the Administrative Agent shall have been notified by any Bank at least two hours
prior to the funding by the Administrative Agent of any Loan that such Bank does
not intend to make available to the Administrative Agent such Bank's Pro Rata
Share of such Loan, the Administrative Agent may, in its discretion (but shall
not be so obligated), assume that such Bank has made such amount available to
the Administrative Agent on the date of the Loan and the Administrative Agent
may, in reliance upon such assumption, make available to Borrower a
corresponding amount. If such corresponding amount is not in fact made available
to the Administrative Agent by such Bank, the Administrative Agent shall be
entitled to recover such corresponding amount on demand from such Bank, which
demand shall be made in a reasonably prompt manner. If such Bank does not pay
such corresponding amount forthwith upon the Administrative Agent's demand
therefor, the Administrative Agent promptly shall notify Borrower and Borrower
shall pay such corresponding amount to the Administrative Agent. The
Administrative Agent shall also be entitled to recover from such Bank interest
on such corresponding amount in respect of each day from the date such
corresponding amount was made available by the Administrative Agent to Borrower
to the date such corresponding amount is recovered by the Administrative Agent,
at a rate per annum equal to the Federal Funds Rate as notified by the
Administrative Agent to such Bank or the Borrower, as the case may be. Nothing
herein shall be deemed to relieve any Bank from its obligation to fulfill its
Pro Rata Share of the Commitment hereunder or to prejudice any rights which the
Administrative Agent or Borrower may have against any Bank as a result of any
default by such Bank hereunder.

            2.8 Optional Increase to Commitment.

               (a) Subject to the limitations set forth in this Section, during
        the period beginning on the 2000 Closing Date and ending 6 months prior
        to the Maturity Date, if no Default or Event of Default then exists,
        Borrower may from time to time request in writing that the Commitment be
        increased to an aggregate amount that is not greater than $175,000,000
        less Term Loan Commitment Increases. Any such increase shall be
        accomplished by (i) the addition of new Banks who qualify as Eligible
        Assignees that are reasonably acceptable to the Administrative Agent
        (each, a "New Bank") or (ii) one or more of the existing Banks
        increasing its Exposure in accordance with the provisions of this
        Section. Each such increase shall be effective, if at all, not later
        than 6 months prior to the Maturity Date.

               (b) Any request under this Section shall be submitted by the
        Borrower to the Administrative Agent, shall specify the proposed
        effective date and amount of such increase and be accompanied by (i) a
        certificate signed by a Responsible Official of the Borrower, stating
        that no Default or Event of Default exists as of the date of the request
        or will result from the requested increase and (ii) a written consent to
        the increase in the amount of the Commitment executed by each Guarantor
        Subsidiary. No consent of the Banks shall be required for an increase in
        the amount of the Commitment pursuant to this Section. The
        Administrative Agent shall prepare and circulate to the Borrower and
        Banks a new Schedule 1.1 after each increase in the Commitment.


                                      -36-
<PAGE>   43

               (c) No Bank shall be obligated to increase the amount of its
        Exposure, nor shall any Bank have the right to do so unless designated
        by the Borrower.

               (d) Each New Bank designated by the Borrower and reasonably
        acceptable to the Administrative Agent shall become an additional party
        hereto as a New Bank concurrently with the effectiveness of the proposed
        increase in the Commitment upon its execution of an instrument of
        joinder to this Agreement which is in form and substance acceptable to
        the Administrative Agent and which, in any event, contains the
        representations, warranties, indemnities and other protections afforded
        to the Administrative Agent and the other Banks which would be granted
        or made by an Eligible Assignee by means of the execution of an
        Assignment and Acceptance.

               (e) Subject to the foregoing, any increase to the Commitment
        requested under this Section shall be effective as of the effective date
        proposed by the Borrower (but not later than 6 months prior to the
        Maturity Date) and shall be in the principal amount equal to (i) the
        amount that consenting Banks have agreed to assume as increases to the
        amount of their respective Exposures plus (ii) the amount that any New
        Banks have agreed to be the amount of their respective Exposures.

               (f) Concurrently with the effectiveness of any increase to the
        Commitment under this Section, (i) the participation interest of each
        Bank in each outstanding Letter of Credit shall be adjusted, and (ii)
        each New Bank and each existing Bank which has increased its Exposure
        shall make additional Advances available to the Administrative Agent
        (the proceeds of which shall be paid to the other Banks or used in part
        to refinance expiring LIBOR Loans) in the amount required to result in
        the aggregate outstanding Advances of each Bank being equal to its Pro
        Rata Share of the Commitment, as so increased.

               (g) The Borrower confirms (i) its obligation pursuant to Section
        3.7(d) to repay any breakage fees resulting from the prepayment of any
        LIBOR Loans resulting under this Section, and (ii) that unless the
        initial Loans being made by each New Bank and each Bank increasing its
        Exposure under this Section are LIBOR Loans being made by all of the
        Banks in accordance with their respective Pro Rata Shares, then the
        initial Loans by the New Banks and by each increasing Bank shall be
        Prime Rate Loans.

               (h) Notwithstanding any other provision of this Agreement or the
        2000 Term Loan Agreement, the Borrower agrees that it will not exercise
        its rights under this Section 2.8 unless and until the sum (such sum
        being referred to as "Collective Exposure") of Bank of America's
        Exposure and its "Exposure" (as defined in the 2000 Term Loan Agreement)
        is reduced to $200,000,000 or less. Thus, Bank of America must first
        assign or grant participations in at least $43,000,000 of its Collective
        Exposure before the Borrower may exercise its rights under this Section
        2.8. Bank of America agrees to waive any LIBOR breakage fees that may
        be owing to it (but not to any other Bank) with respect to any
        assignment or participation by it of the first $43,000,000 of its
        Collective Exposure. Bank of America may from time to time, in its sole
        and absolute discretion, waive the application of this Section 2.8(h)
        with respect to a particular increase in the Commitment pursuant to this
        Section 2.8, but any such waiver(s) shall not affect the continuing
        enforceability of this Section 2.8(h).



                                      -37-
<PAGE>   44

                                   Article 3
                               PAYMENTS AND FEES

               3.1 Principal and Interest

               (a) Interest shall be payable on the outstanding daily unpaid
        principal amount of each Advance from the date of such Advance until
        payment in full and shall accrue and be payable at the rates set forth
        herein, to the extent permitted by applicable Laws, before and after
        default, before and after maturity, before and after any judgment, and
        before and after the commencement of any proceeding under any Debtor
        Relief Law, with interest on overdue interest to bear interest at the
        Default Rate.

               (b) Interest accrued on each Prime Rate Loan shall be due and
        payable on the last day of each calendar month. Except as otherwise
        provided in Section 3.8, the unpaid principal amount of any Prime Rate
        Loan shall bear interest at a fluctuating rate per annum equal to the
        sum of the Prime Rate plus the Applicable Prime Rate Spread. Each change
        in the interest rate hereunder shall take effect simultaneously with the
        corresponding change in the Prime Rate. Each change in the Prime Rate
        shall be effective as of the Banking Day on which the change in the
        Prime Rate is announced, unless otherwise specified in such
        announcement, in which case the change shall be effective as so
        specified.

               (c) Interest accrued on each LIBOR Loan with an Interest Period
        of one month shall be due and payable on the last day of the related
        Interest Period. Interest accrued on each LIBOR Loan with an Interest
        Period in excess of one month shall be due and payable on the last day
        of each calendar month and on the last day of the related Interest
        Period. Except as otherwise provided in Section 3.8, the unpaid
        principal amount of any LIBOR Loan shall bear interest at a rate per
        annum equal to the sum of LIBOR for that LIBOR Loan plus the Applicable
        LIBOR Spread.

               (d) If not sooner paid, the principal Indebtedness evidenced by
        the Notes shall be payable as follows:

                   (i) the principal Indebtedness evidenced by the Notes shall
               be payable within one (1) Banking Day in Cash to the extent that
               the sum of (A) the aggregate principal Indebtedness evidenced by
               the Notes plus (B) the Letter of Credit Usage plus (C) the Money
               Market Outstandings plus (D) the Swing Line Outstandings exceeds
               at any time the Commitment as then in effect; and

                   (ii) the principal Indebtedness evidenced by the Notes shall
               in any event be immediately payable in Cash on the Maturity Date.

               (e) The Notes may, at any time and from time to time, voluntarily
        be prepaid at the election of Borrower in whole or in part without
        premium or penalty; provided that: (i) any partial prepayment shall be
        in integral multiples of $1,000,000, (ii) any partial prepayment shall
        be in an amount not less than $1,000,000 on a Prime Rate Loan, and not
        less than $5,000,000 on a LIBOR Loan, (iii) the Administrative Agent
        must have received written notice (or telephonic notice confirmed
        promptly in writing) of any prepayment at least three Banking Days
        before the date of prepayment in the case of a LIBOR Loan and by 10:00
        a.m., California time, on the date of prepayment in the case of a Prime
        Rate Loan, (iv) each prepayment of



                                      -38-
<PAGE>   45

        principal, except for partial prepayments on Prime Rate Loans, shall be
        accompanied by prepayment of interest accrued to the date of payment on
        the amount of principal paid and (v) in the case of any prepayment of
        any LIBOR Loan, Borrower shall promptly upon demand reimburse each Bank
        for any loss or cost directly or indirectly resulting from the
        prepayment, determined as set forth in Section 3.7.

               (f) Change in Control.

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

                   (ii) Within 15 Banking Days after the occurrence of a Change
               in Control, Borrower shall provide written notice of the Change
               in Control to the Administrative Agent and each Bank. The notice
               shall state:

                   (A) the events causing a Change in Control and the date of
                       such Change in Control;

                   (B) the date by which the Change in Control Payment Notice
                       (as defined in Section 3.1(f)(iii)) must be given; and

                   (C) the Change in Control Payment Date.

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

            3.2 Upfront Fee. In addition to the fees specified in the letters
referred in Sections 3.4 and 3.5, on the 2000 Closing Date, Borrower shall pay
to the Administrative Agent, for the account of each Bank, an upfront fee as set
forth in the letter agreement between the Borrower and the Administrative Agent.

            3.3 Commitment Fee. From the 2000 Closing Date until the Maturity
Date, Borrower shall pay to the Administrative Agent, for the account of each
Bank, pro rata according to that Bank's Pro Rata Share of the Commitment, a
commitment fee equal to the Applicable Commitment Fee Rate per annum in effect
from time to time times the average daily amount by which the


                                      -39-
<PAGE>   46

Commitment exceeds the aggregate outstanding principal of the Loans evidenced by
the Notes plus the Letter of Credit Usage plus the Swing Line Outstandings. This
commitment fee shall accrue daily and be payable in arrears with respect to each
calendar quarter on the Quarterly Payment Date falling at the end of such
calendar quarter. The Administrative Agent shall calculate the commitment fee
and the amount thereof allocable to each Bank according to that Bank's Pro Rata
Share of the Commitment and shall notify Borrower in writing of such amounts.

            3.4 Agency Fee. Borrower shall pay to the Administrative Agent an
agency fee in such amounts and at such times as heretofore agreed upon by letter
agreement between Borrower and the Administrative Agent.

            3.5 Arrangement Fee. On the 2000 Closing Date, the Borrower shall
pay to the Administrative Agent, for the sole account of Bank of America, an
arrangement fee in the amount heretofore agreed upon by letter agreement between
the Borrower and Bank of America.

            3.6 Capital Adequacy.

               (a) If any Bank (an "Affected Bank") determines that compliance
        with any Law or regulation or with any guideline or request from any
        central bank or other Governmental Agency (whether or not having the
        force of Law) enacted or issued after the 2000 Closing Date relating to
        the capital adequacy of banks or corporations in control of banks has or
        would have the effect of reducing the rate of return on the capital of
        such Affected Bank or any corporation controlling such Affected Bank as
        a consequence of, or with reference to, such Affected Bank's Pro Rata
        Share of the Commitment below the rate which the Bank or such other
        corporation could have achieved but for such compliance (taking into
        account the policies of such Bank or corporation with regard to capital
        adequacy), then Borrower shall from time to time, upon demand by such
        Affected Bank in accordance with this Section 3.6 (with a copy of such
        demand to the Administrative Agent), within 15 days after demand pay to
        such Affected Bank additional amounts sufficient to compensate such
        Affected Bank or other corporation for such reduction.

               (b) An Affected Bank may not seek compensation under Section
        3.6(a) unless the demand for such compensation is delivered to Borrower
        within six months following the date of enactment or issuance of the
        Law, regulation, guideline or request giving rise to such demand for
        compensation.

               (c) A certificate as to any amounts for which an Affected Bank is
        seeking compensation under Section 3.6(a), submitted to Borrower and
        the Administrative Agent by such Affected Bank, shall be conclusive and
        binding for all purposes, absent manifest error. Each Affected Bank
        shall calculate such amounts in a manner which is consistent with the
        manner in which it makes calculations for comparable claims with respect
        to similarly situated borrowers from such Affected Bank, will not
        allocate to Borrower a proportionately greater amount of such
        compensation than it allocates to each of its other commitments to lend
        or other loans with respect to which it is entitled to demand comparable
        compensation, and will not include amounts already factored into the
        rates of interest or fees already provided for herein. Each Bank agrees
        promptly to notify Borrower and the Administrative Agent of any
        circumstances that would cause Borrower to pay additional amounts
        pursuant to this Section, provided that the failure to give such notice
        shall not affect Borrower's obligation to pay such additional amounts
        hereunder.


                                      -40-
<PAGE>   47

               (d) Without limiting its obligation to reimburse an Affected Bank
        for compensation theretofore claimed by an Affected Bank pursuant to
        Section 3.6(a), Borrower may, within 60 days following any demand by an
        Affected Bank, request that one or more Persons that are Eligible
        Assignees and that are acceptable to Borrower and approved by the
        Administrative Agent (which approval shall not be unreasonably withheld)
        purchase all (but not part) of the Affected Bank's then outstanding
        Advances, its Note and its participation interest in outstanding Letters
        of Credit, and assume its Pro Rata Share of the Commitment and its
        obligations hereunder. If one or more such Banks or banks so agree in
        writing (each, an "Assuming Bank" and collectively, the "Assuming
        Banks"), the Affected Bank shall assign its Pro Rata Share of the
        Commitment, together with the Indebtedness then evidenced by its Note
        and its participation interest in outstanding Letters of Credit, to the
        Assuming Bank or Assuming Banks in accordance with Section 11.8. On the
        date of any such assignment, the Affected Bank which is being so
        replaced shall cease to be a "Bank" for all purposes of this Agreement
        and shall receive (x) from the Assuming Bank or Assuming Banks the
        principal amount of its Advances then outstanding and (y) from Borrower
        all interest and fees accrued and then unpaid with respect to such
        Advances, together with any other amounts then payable to such Bank by
        Borrower. In the event the Affected Bank is also an Issuing Bank, then
        the Assuming Bank shall become an Issuing Bank for all purposes of this
        Agreement and shall either (at the Affected Bank's election, subject to
        the approval of Borrower, the Administrative Agent and the Assuming Bank
        (which approvals shall not be unreasonably withheld) and, in the case of
        clause (i) below, the approval of the applicable Letter of Credit
        beneficiaries) (i) issue new letters of credit to replace the
        outstanding Letters of Credit issued by the Affected Bank, or (ii) issue
        new letters of credit to the Affected Bank in support of the outstanding
        Letters of Credit issued by the Affected Bank, whereupon such
        outstanding Letters of Credit shall no longer be considered "Letters of
        Credit" under this Agreement, and such new letters of credit shall be
        considered Letters of Credit for all purposes of this Agreement
        (including the participation therein by the other Banks pursuant to
        Section 2.5). The Affected Bank shall be obligated to reimburse to
        Borrower a portion of the issuance fees referred to in clause (ii) of
        the first sentence of Section 2.5(f) based on the period during which
        each new Letter of Credit issued by the Assuming Bank will be
        outstanding in replacement or support of a Letter of Credit issued by
        the Affected Bank.

               3.7 LIBOR Fees and Costs.

               (a) If the occurrence of any Regulatory Development after the
        2000 Closing Date:

                   (i) shall subject any Bank or its LIBOR Lending Office to any
               tax, duty or other charge or cost with respect to any LIBOR
               Advance or its obligation to make LIBOR Advances, or shall change
               the basis of taxation of payments to any Bank of the principal of
               or interest on any LIBOR Advance or any other amounts due under
               this Agreement in respect of any LIBOR Advance or its obligation
               to make LIBOR Advances (except for changes in any tax on the
               overall net income, gross income or gross receipts of such Bank
               or its LIBOR Lending Office);

                   (ii) shall impose, modify or deem applicable any reserve
               (including, without limitation, any reserve imposed by the Board
               of Governors of the Federal Reserve System), special deposit or
               similar requirements (excluding any such requirement included in
               any applicable Reserve Percentage) against assets of, deposits


                                      -41-
<PAGE>   48

               with or for the account of, or credit extended by, any Bank or
               its LIBOR Lending Office; or

                   (iii) shall impose on any Bank or its LIBOR Lending Office or
               the LIBOR Market any other condition affecting any LIBOR Advance
               or its obligation to make LIBOR Advances, or shall otherwise
               affect any of the same;

        and the result of any of the foregoing, as determined by such Bank,
        increases the cost to such Bank or its LIBOR Lending Office of making or
        maintaining any LIBOR Advance or in respect of any LIBOR Advance or its
        obligation to make LIBOR Advances or reduces the amount of any sum
        received or receivable by such Bank or its LIBOR Lending Office with
        respect to any LIBOR Advance or its obligation to make LIBOR Advances
        (assuming such Bank's LIBOR Lending Office had funded 100% of its LIBOR
        Advance in the LIBOR Market), then, within 15 days after demand by such
        Bank (with a copy to the Administrative Agent), Borrower shall pay to
        such Bank such additional amount or amounts as will compensate such Bank
        for such increased cost or reduction (determined as though such Bank's
        LIBOR Lending Office had funded 100% of its LIBOR Advance in the LIBOR
        Market); provided that Borrower shall not be liable to any Bank for any
        such increased cost or reduction pursuant to this Section in respect of
        any period which is more than six months prior to such Bank's demand for
        such compensation. A statement of any Bank claiming compensation under
        this subsection and setting forth the additional amount or amounts to be
        paid to it hereunder shall be conclusive in the absence of manifest
        error. Each Bank agrees to endeavor promptly to notify Borrower of any
        event of which it has actual knowledge which will entitle such Bank to
        compensation pursuant to this Section, and agrees to designate a
        different LIBOR Lending Office if such designation will avoid the need
        for or reduce the amount of such compensation and will not, in the
        judgment of such Bank, otherwise be disadvantageous to such Bank. If any
        Bank claims compensation under this Section, Borrower may at any time,
        upon at least four (4) LIBOR Market Days' prior notice to the
        Administrative Agent and such Bank and upon payment in full of the
        amounts provided for in this Section through the date of such payment
        plus any prepayment fee required by Section 3.7(d), pay in full the
        affected LIBOR Advances of such Bank or request that such LIBOR Advances
        be converted to Prime Rate Advances.

               (b) If after the 2000 Closing Date the occurrence of any
        Regulatory Development shall, in the opinion of any Bank, make it
        unlawful or impossible for such Bank or its LIBOR Lending Office to
        make, maintain or fund its portion of any LIBOR Loan, or to take
        deposits of, dollars in the LIBOR Market, or to determine or charge
        interest rates based upon the LIBOR, and such Bank shall so notify the
        Administrative Agent, then such Bank's obligation to make LIBOR Advances
        shall be suspended for the duration of such illegality or impossibility
        and the Administrative Agent forthwith shall give notice thereof to the
        other Banks and Borrower. Before giving any notice to the Administrative
        Agent pursuant to this Section, such Bank shall designate a different
        Lending Office if such designation will avoid the need for giving such
        notice and will not, in the judgment of such Bank, be otherwise
        disadvantageous to such Bank. Upon receipt of such notice, the
        outstanding principal amount of such Bank's LIBOR Advances, together
        with accrued interest thereon, automatically shall be converted to Prime
        Rate Advances with Interest Periods corresponding to the LIBOR Loans of
        which such LIBOR Advances were a part on either (1) the last day of the
        Interest Period(s) applicable to such LIBOR Advances if such Bank may
        lawfully continue to maintain and fund such LIBOR Advances to such
        day(s) or (2) immediately if such Bank may not lawfully continue to fund
        and maintain such LIBOR Advances to such day(s), provided that in such
        event the conversion shall


                                      -42-
<PAGE>   49

        not be subject to payment of a prepayment fee under Section 3.7(d). In
        the event that any Bank is unable, for the reasons set forth above, to
        make, maintain or fund its portion of any LIBOR Loan, such Bank shall
        fund such amount as a Prime Rate Advance for the same period of time,
        and such amount shall be treated in all respects as a Prime Rate
        Advance.

               (c) If, with respect to any proposed LIBOR Loan:

                   (i) the Administrative Agent reasonably determines that, by
               reason of circumstances affecting the LIBOR Market generally that
               are beyond the reasonable control of the Banks, deposits in
               dollars (in the applicable amounts) are not being offered to each
               of the Banks in the LIBOR Market for the applicable Interest
               Period; or

                   (ii) the Majority Banks advise the Administrative Agent that
               the LIBOR as determined by the Administrative Agent will not
               adequately and fairly reflect the cost to such Banks of making
               the applicable LIBOR Advances;

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

               (d) Upon payment or prepayment of any LIBOR Advance (other than
        as the result of a conversion required under Section 3.7(b)) on a day
        other than the last day in the applicable Interest Period (whether
        voluntarily, involuntarily, by reason of acceleration, or otherwise), or
        upon the failure of Borrower to borrow on the date or in the amount
        specified for a LIBOR Loan in any Request for Loan, Borrower shall pay
        to each Bank an amount equal to the sum of

                   (i) $250; plus

                   (ii) the amount, if any, by which (x) the additional interest
               that would have accrued (without any Applicable LIBOR Spread) on
               the principal amount prepaid on account of the LIBOR Advance had
               it remained outstanding until the last day of the applicable
               Interest Period, exceeds (y) the interest that Bank could recover
               by placing funds in the amount of the prepayment on deposit in
               the LIBOR Market selected by that Bank for a period beginning on
               the date of the prepayment and ending on the last day of the
               applicable Interest Period, or for a comparable period for which
               an appropriate rate quote may be obtained; plus

                   (iii) an amount equal to all costs and expenses which that
               Bank incurred or reasonably expects to incur in liquidating and
               reinvesting the prepayment.

        Each Bank's determination of the amount of any prepayment fee or failure
        to borrow fee payable under this Section 3.7(d) shall be conclusive in
        the absence of manifest error.

               (e) Any statement or certificate given by a Bank under this
        Section 3.7 shall satisfy the requirements set forth in Section 3.7(c)
        with respect to requests for reimbursement under Section 3.7(a).


                                      -43-
<PAGE>   50

               (f) Should any Bank demand payment under the provisions of
        Section 3.7(a) or should any Bank's LIBOR Advances be suspended under
        the provisions of Section 3.7(b), then without limiting its obligation
        to reimburse any Bank for compensation claimed by such Bank pursuant to
        this Section 3.7, Borrower may, within 60 days following such
        occurrence, treat that Bank as an "Affected Bank" under Section 3.6(d),
        and exercise the remedies set forth in such Section 3.6(d).

            3.8 Late Payments/Default Interest. If any installment of principal
or interest under the Notes or any other amount payable to the Banks under any
Loan Document is not paid when due, it shall thereafter bear interest at a
fluctuating interest rate per annum at all times equal to the sum of the Prime
Rate plus the Applicable Prime Rate Spread plus 2%, to the extent permitted by
applicable Law, until paid in full (whether before or after judgment). Upon and
during the continuance of any Event of Default, the Indebtedness evidenced by
the Notes shall, at the election of the Majority Banks and upon notice to
Borrower (and in lieu of interest provided for in the preceding sentence), bear
interest at a fluctuating interest rate per annum at all times equal to the sum
of the Prime Rate plus the Applicable Prime Rate Spread plus 2%, to the extent
permitted by applicable Law, until no Event of Default exists (whether before or
after judgment). Notwithstanding the preceding sentence, after the occurrence of
any Event of Default under Sections 6.7, 6.10 or 6.16, the Indebtedness
evidenced by the Notes may not bear interest at the increased rate provided for
in the preceding sentence until such Event of Default has continued for at least
15 days, in the case of Section 6.7, or 30 days, in the case of Sections 6.10 or
6.16.

            3.9 Computation of Interest and Fees. All computations of interest
and fees hereunder shall be calculated on the basis of a year of 360 days and
paid for the actual number of days elapsed (including the first day and
excluding the last day), which results in greater interest than if a year of 365
days were used. Any Loan that is repaid on the same day on which it is made
shall bear interest for one day.

            3.10 Holidays. If any principal payment to be made by Borrower on a
Prime Rate Loan shall come due on a day other than a Banking Day, payment shall
be made on the next succeeding Banking Day and the extension of time shall be
reflected in computing interest. If any principal payment to be made by Borrower
on a LIBOR Loan shall come due on a day other than a LIBOR Market Day, payment
shall be made on the next preceding or succeeding LIBOR Market Day as determined
by the Administrative Agent in accordance with the then current banking practice
in the LIBOR Market and the adjustment shall be reflected in computing interest.

            3.11 Payment Free of Taxes.

               (a) Any payments made by any Party under the Loan Documents shall
        be made free and clear of, and without reduction by reason of, any tax,
        assessment or other charge imposed by any Governmental Agency, central
        bank or comparable authority (other than taxes on income or gross
        receipts generally applicable to banks). To the extent that Borrower is
        obligated by applicable Laws to make any deduction or withholding on
        account of taxes, assessments or other charges imposed by any
        Governmental Agency from any amount payable to any Bank under this
        Agreement, Borrower shall (a) make such deduction or withholding and pay
        the same to the relevant Governmental Agency and (b) pay such additional
        amount to that Bank as is necessary to result in that Bank's receiving a
        net after-tax (or after-assessment or after-charge) amount equal to the
        amount to which that Bank would have been entitled under


                                      -44-
<PAGE>   51

        this Agreement absent such deduction or withholding. If and when receipt
        of such payment results in an excess payment or credit to that Bank on
        account of such taxes, assessments or other charges, that Bank shall
        refund such excess to Borrower. Each Bank that is incorporated under the
        Laws of a jurisdiction other than the United States of America or any
        state thereof shall deliver to Borrower, with a copy to the
        Administrative Agent, within twenty days after the 2000 Closing Date (or
        such later date on which such Bank becomes a "Bank" hereunder), a
        certificate signed by a Responsible Official of that Bank to the effect
        that such Bank is entitled to receive payments of interest and other
        amounts payable under this Agreement without deduction or withholding on
        account of United States of America federal income taxes, which
        certificate shall be accompanied by two copies of Internal Revenue
        Service Form 1001 or Form 4224, as applicable, also executed by a
        Responsible Official of that Bank. Each such Bank agrees (i) promptly to
        notify the Administrative Agent and Borrower if any fact set forth in
        such certificate ceases to be true and correct and (ii) to take such
        steps as may be reasonably necessary to avoid any requirement of
        applicable Laws that Borrower make any deduction or withholding for
        taxes from amounts payable to that Bank under this Agreement.

               (b) Without limiting its obligation to pay any additional amount
        to a Bank pursuant to Section 3.11(a), Borrower may, within 60 days
        following any such payment by that Bank, treat that Bank as an "Affected
        Bank" under Section 3.6(d), and exercise the remedies set forth in such
        Section 3.6(d).

            3.12 Funding Sources. Nothing in this Agreement shall be deemed to
obligate any Bank to obtain the funds for its share of any Loan in any
particular place or manner or to constitute a representation by any Bank that it
has obtained or will obtain the funds for its share of any Loan in any
particular place or manner.

            3.13 Failure to Charge or Making of Payment Not Subsequent Waiver.
Any decision by any Bank not to require payment of any fee or costs, or to
reduce the amount of the payment required for any fee or costs, or to calculate
any fee or any cost in any particular manner, shall not limit or be deemed a
waiver of any Bank's right to require full payment of any fee or costs, or to
calculate any fee or any costs in any other manner. Any decision by Borrower to
pay any fee or costs shall not limit or be deemed a waiver of any right of
Borrower to protest or dispute the payment amount of such fee or costs.

            3.14 Time and Place of Payments; Evidence of Payments; Application
of Payments. The amount of each payment hereunder, under the Notes or under any
Loan Document shall be made to the Administrative Agent at the Administrative
Agent's Office, for the account of each of the Banks or the Administrative
Agent, as the case may be, in lawful money of the United States of America
without deduction, offset or counterclaim and in immediately available funds on
the day of payment (which must be a Banking Day). All payments of principal
received after 10:00 a.m., California time, on any Banking Day, shall be deemed
received on the next succeeding Banking Day for purposes of calculating interest
thereon. The amount of all payments received by the Administrative Agent for the
account of a Bank shall be promptly paid by the Administrative Agent to that
Bank in immediately available funds. Each Bank shall keep a record of Advances
made by it and payments of principal with respect to each Note, and such record
shall be presumptive evidence of the principal amount owing under such Note;
provided that failure to keep such record shall in no way affect the Obligations
of Borrower hereunder. Prior to the Maturity Date or an acceleration of the
maturity of the Loans, payments under the Loan Documents shall be applied first
to amounts owing thereunder other than the outstanding principal balance under
the Notes and second to the outstanding principal balance under the Notes in a
manner


                                      -45-
<PAGE>   52

designated by Borrower or, if no such designation is made prior to payment or,
if an Event of Default shall have occurred and be continuing, as may be
designated by the Majority Banks. Following the Maturity Date or an acceleration
of the maturity of the Loans, payments and recoveries under the Loan Documents
shall be applied in a manner designated in Section 9.2(e).

            3.15 Administrative Agent's Right to Assume Payments Will be Made.
Unless the Administrative Agent shall have been notified by Borrower prior to
the date on which any payment to be made by Borrower hereunder is due that
Borrower does not intend to remit such payment, the Administrative Agent may, in
its discretion (but shall not be so obligated), assume that Borrower has
remitted such payment when so due and the Administrative Agent may, in its
discretion and in reliance upon such assumption, make available to each Bank on
such payment date an amount equal to such Bank's Pro Rata Share of such assumed
payment. If Borrower has not in fact remitted such payment to the Administrative
Agent, each Bank shall forthwith on demand repay to the Administrative Agent the
amount of such assumed payment made available to such Bank, together with
interest thereon in respect of each day from and including the date such amount
was made available by the Administrative Agent to such Bank to but excluding the
date such amount is repaid to the Administrative Agent at a rate per annum equal
to the actual cost to the Administrative Agent of funding such amount as
notified by the Administrative Agent to such Bank.

            3.16 Survivability. All of Borrower's obligations under this
Article 3 shall survive for 3 months following the date on which all Loans
hereunder are fully paid.

            3.17 Bank Calculation Certificate. Any request for compensation
pursuant to Section 3.6 or 3.7 shall be accompanied by a statement of an officer
of the Bank requesting such compensation and describing the methodology used by
such Bank in calculating the amount of such compensation, which methodology (i)
may consist of any reasonable averaging and attribution methods and (ii) in the
case of Section 3.6 hereof shall be consistent with the methodology used by such
Bank in making similar calculations in respect of loans or commitments to other
borrowers.

            3.18 Transition.

               (a) Borrower warrants and covenants that as of the 2000 Closing
        Date there will be no loans of any nature outstanding under the Prior
        Loan Agreements. The parties hereto agree that as of the 2000 Closing
        Date all commitments to extend credit under the Prior Loan Agreements
        shall terminate.

               (b) The letters of credit identified on Schedule 3.18 ("Existing
        Letters of Credit") were issued by Bank of America for the account of
        Borrower as "Line A Letters of Credit" pursuant to the terms of the
        Prior Revolving Loan Agreement and are expected to remain outstanding on
        the 2000 Closing Date. The parties hereto agree that the Existing
        Letters of Credit shall be deemed for all purposes to be Letters of
        Credit issued pursuant to the terms of Section 2.5; provided that fees
        with respect thereto shall be governed by Section 3.18(c).

               (c) A letter of credit fee and an issuance fee has most recently
        been paid by Borrower with respect to each Existing Letter of Credit
        (pursuant to Section 2.5(f) of the Prior Revolving Loan Agreement) as
        shown on Schedule 3.18. These fees are applicable to the 6 month period
        from and after their respective dates of payment. No further letter of
        credit or issuance fee shall be due with respect to any Existing Letter
        of Credit that expires or is drawn in full prior to the end of such
        applicable six-month period. From and after the end of each



                                      -46-
<PAGE>   53

        such applicable 6 month period, Borrower shall be responsible to pay
        letter of credit fees, issuance fees and other fees pursuant to Section
        2.5(f) of this Agreement for each Existing Letter of Credit that has not
        expired or been drawn in full before that date.

               (d) The Banks hereby agree to make appropriate adjustments among
        themselves (and any "Bank" under the Prior Revolving Loan Agreement who
        is not a party to this 2000 Loan Agreement) with respect to the letter
        of credit fees to be paid with respect to the Existing Letters of
        Credit. Such adjustments shall be as of the 2000 Closing Date and shall
        be based upon any change in the pro rata share held by each such Bank in
        the Commitment under this Agreement from the pro rata share held by each
        such Bank in the "Line A Commitment" under the Prior Revolving Loan
        Agreement. The Administrative Agent shall, on or prior to January 31,
        2001, send a settlement billing to each such Bank with respect to such
        adjustments, which settlement billing shall be conclusive in the absence
        of manifest error.



                                      -47-
<PAGE>   54

                                   Article 4
                         REPRESENTATIONS AND WARRANTIES

        Borrower represents and warrants to the Banks that:

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

            4.2 Authority; Compliance with Other Instruments and Government
Regulations. The execution, delivery, and performance by Borrower, and by each
Guarantor Subsidiary of Borrower, of the Loan Documents to which it is a Party,
have been duly authorized by all necessary corporate action, and do not:

               (a) require any consent or approval not heretofore obtained of
        any stockholder, partner, security holder, or creditor of such Party;

               (b) violate or conflict with any provision of such Party's
        charter, certificate or articles of incorporation, bylaws, certificate
        or articles of organization, operating agreement, partnership agreement
        or other organizational or governing documents of such Party;

               (c) result in or require the creation or imposition of any Lien
        or Right of Others upon or with respect to any Property now owned or
        leased or hereafter acquired by such Party;

               (d) constitute a "transfer of an interest" or an "obligation
        incurred" that is avoidable by a trustee under Section 548 of the
        Bankruptcy Code of 1978, as amended, or constitute a "fraudulent
        transfer" or "fraudulent obligation" within the meaning of the Uniform
        Fraudulent Transfer Act as enacted in any jurisdiction or any analogous
        Law;

               (e) violate any Requirement of Law applicable to such Party; or

               (f) result in a breach of or constitute a default under, or cause
        or permit the acceleration of any obligation owed under, any indenture
        or loan or credit agreement or any other Contractual Obligation to which
        such Party or any of its Property is bound or affected;



                                      -48-
<PAGE>   55

and neither Borrower nor any Subsidiary of Borrower is in violation of, or
default under, any Requirement of Law or Contractual Obligation, or any
indenture, loan or credit agreement described in Section 4.2(f) in any respect
that would constitute a Material Adverse Effect.

            4.3 No Governmental Approvals Required. Except such as have
heretofore been obtained, no authorization, consent, approval, order, license or
permit from, or filing, registration, or qualification with, or exemption from
any of the foregoing from, any Governmental Agency is or will be required to
authorize or permit the execution, delivery and performance by Borrower or any
Significant Subsidiary of Borrower of the Loan Documents to which it is a Party.

            4.4 Subsidiaries.

               (a) Schedule 4.4 correctly sets forth the names, the form of
        legal entity and jurisdictions of organization of all Subsidiaries of
        Borrower as of the 2000 Closing Date and identifies each such Subsidiary
        that is a Consolidated Subsidiary, a Significant Subsidiary, a Guarantor
        Subsidiary, a Foreign Subsidiary and a Financial Subsidiary. As of the
        2000 Closing Date, unless otherwise indicated in Schedule 4.4, all of
        the outstanding shares of capital stock, or all of the units of equity
        interest, as the case may be, of each Subsidiary indicated thereon are
        owned of record and beneficially by Borrower or one of such
        Subsidiaries, and all such shares or equity interests so owned were
        issued in compliance with all state and federal securities Laws and are
        duly authorized, validly issued, fully paid and non-assessable (other
        than with respect to required capital contributions to any joint venture
        in accordance with customary terms and provisions of the related joint
        venture agreement), except where the failure to so comply would not
        constitute a Material Adverse Effect, and are free and clear of all
        Liens and Rights of Others, except for Permitted Encumbrances and
        Permitted Rights of Others.

               (b) Each Significant Subsidiary is as of the date of this
        Agreement, and will be as of the 2000 Closing Date, a legal entity of
        the form described for that Subsidiary in Schedule 4.4, and is duly
        organized, validly existing and in good standing under the Laws of its
        jurisdiction of organization, is duly qualified to do business as a
        foreign organization and is in good standing as such in each
        jurisdiction in which the conduct of its business or the ownership or
        leasing of its Properties makes such qualification necessary (except
        where the failure to be so duly qualified and in good standing does not
        constitute a Material Adverse Effect) and has all requisite power and
        authority to conduct its business, to own and lease its Properties and
        to execute, deliver and perform the Loan Documents to which it is a
        Party.

               (c) Each Significant Subsidiary is in substantial compliance with
        all Laws and other requirements applicable to its business and has
        obtained all Authorizations from, and each such Significant Subsidiary
        has accomplished all filings, registrations, and qualifications with, or
        obtained exemptions from any of the foregoing from, any Governmental
        Agency that are necessary for the transaction of its business, except
        where the failure so to obtain Authorizations, comply, file, register,
        qualify or obtain exemptions does not constitute a Material Adverse
        Effect.

            4.5 Financial Statements. Borrower has furnished to each Bank the
following financial statements:


                                      -49-
<PAGE>   56

               (a) the audited consolidated financial statements of Borrower and
        its Consolidated Subsidiaries as at November 30, 1999 and for the Fiscal
        Year then ended; and

               (b) the unaudited consolidating financial statements of Borrower
        and its Consolidated Subsidiaries as at May 31, 2000 for the Fiscal
        Quarter then ended and for the portion of the Fiscal Year ended with
        such Fiscal Quarter.

The audited financial statements described in clause (a) are in accordance with
the books and records of Borrower and its Consolidated Subsidiaries, were
prepared in accordance with Generally Accepted Accounting Principles and fairly
present in accordance with Generally Accepted Accounting Principles consistently
applied the consolidated financial condition and results of operations of
Borrower and its Consolidated Subsidiaries as at the date and for the period
covered thereby. The unaudited financial statements described in clause (b),
are in accordance with the books and records of Borrower and its Consolidated
Subsidiaries, were prepared in accordance with Generally Accepted Accounting
Principles and fairly present in accordance with Generally Accepted Accounting
Principles consistently applied the consolidating financial condition and
results of operation of Borrower and its Consolidated Subsidiaries as at the
date and for the period covered thereby.

            4.6 No Other Liabilities; No Material Adverse Effect. Borrower and
its Consolidated Subsidiaries do not have any material liability or material
contingent liability not reflected or disclosed in the financial statements or
in the notes to the financial statements described in Section 4.5, other than
liabilities and contingent liabilities arising in the ordinary course of
business subsequent to November 30, 1999. Since November 30, 1999, no event or
circumstance has occurred that constitutes a Material Adverse Effect with
respect to Borrower and its Subsidiaries.

            4.7 Title to Assets. As of the 2000 Closing Date, Borrower and its
Consolidated Subsidiaries have good and valid title to all of the assets
reflected in the financial statements described in Section 4.5 owned by them or
any of them (other than assets disposed of in the ordinary course of business)
and all other assets owned on the date of this Agreement, free and clear of all
Liens and Rights of Others other than (a) those reflected or disclosed in the
notes to the financial statements described in Section 4.5, (b) immaterial Liens
or Rights of Others not required under Generally Accepted Accounting Principles
to be so reflected or disclosed, (c) Liens permitted pursuant to Section 6.7,
(d) Permitted Rights of Others, and (e) such existing Liens or Rights of Others
as are described on Schedule 4.7 hereto.

            4.8 Intangible Assets. Borrower and its Subsidiaries own, or possess
the unrestricted right to use, all trademarks, trade names, copyrights, patents,
patent rights, licenses and other intangible assets that are necessary in the
conduct of their businesses as operated, and no such intangible asset, to the
best knowledge of Borrower, conflicts with the valid trademark, trade name,
copyright, patent, patent right or intangible asset of any other Person to the
extent that such conflict would constitute a Material Adverse Effect.

            4.9 Existing Indebtedness and Contingent Guaranty Obligations. As
of the 2000 Closing Date, except as set forth in Schedule 4.9, neither Borrower
nor any of its Subsidiaries has (a) any Indebtedness owed to any Person or (b)
outstanding any Contingent Guaranty Obligation with respect to obligations of
another Person that is not a Subsidiary of Borrower.


                                      -50-
<PAGE>   57

            4.10 Governmental Regulation. Neither Borrower nor any of its
Subsidiaries is subject to regulation under the Public Utility Holding Company
Act of 1935, the Federal Power Act, the Interstate Commerce Act or the
Investment Company Act of 1940.

            4.11 Litigation. There are no actions, suits, or proceedings pending
or, to the best knowledge of Borrower, threatened against or affecting Borrower
or any of its Subsidiaries or any Property of any of them before any
Governmental Agency which would constitute a Material Adverse Effect.

            4.12 Binding Obligations. Each of the Loan Documents to which
Borrower or any Guarantor Subsidiary of Borrower is a Party will, when executed
and delivered by Borrower or the Guarantor Subsidiary, as the case may be,
constitute the legal, valid and binding obligation of Borrower or the Guarantor
Subsidiary, as the case may be, enforceable against Borrower or the Guarantor
Subsidiary, as the case may be, in accordance with its terms, except as
enforcement may be limited by Debtor Relief Laws or by equitable principles
relating to the granting of specific performance and other equitable remedies as
a matter of judicial discretion.

            4.13 No Default. No event has occurred and is continuing that is a
Default or an Event of Default.

            4.14 Pension Plans. As of the 2000 Closing Date, all contributions
required to be made under any Pension Plan maintained by Borrower or any of its
ERISA Affiliates (or to which Borrower or any ERISA Affiliate contributes or is
required to contribute) have been made or accrued in the balance sheet of
Borrower and its Consolidated Subsidiaries as at November 30, 1999. There is no
"accumulated funding deficiency" within the meaning of Section 302 of ERISA or
any liability to the PBGC (other than for premiums) with respect to any such
Pension Plan other than a Multiemployer Plan.

            4.15 Tax Liability. Borrower and its Subsidiaries have filed all
tax returns which are required to be filed, and have paid, or made provision for
the payment of, all taxes which have become due pursuant to said returns or
pursuant to any assessment received by Borrower or any Subsidiary, except (a)
such taxes, if any, as are being contested in good faith by appropriate
proceedings (and with respect to which Borrower or its Subsidiary has
established adequate reserves for the payment of the same), and (b) such taxes
the failure of which to pay will not constitute a Material Adverse Effect.

            4.16 Regulation U. Neither Borrower nor any of its Subsidiaries is
engaged principally, or as one of its important activities, in the business of
extending credit for the purpose of "purchasing" or "carrying" any "margin
stock" within the meanings of Regulation U of the Board of Governors of the
Federal Reserve System, and no Loan hereunder will be used to purchase or carry
any such margin stock in violation of Regulation U.

            4.17 Environmental Matters. To the best knowledge of Borrower,
Borrower and its Subsidiaries are in substantial compliance with all applicable
Laws relating to environmental protection where the failure to comply would
constitute a Material Adverse Effect. To Borrower's best knowledge, neither
Borrower nor any of its Subsidiaries has received any notice from any
Governmental Agency respecting the alleged violation by Borrower or any
Subsidiary of such Laws which would constitute a Material Adverse Effect and
which has not been or is not being corrected.



                                      -51-
<PAGE>   58

            4.18 Disclosure. The information provided by Borrower to the Banks
in connection with this Agreement or any Loan, taken as a whole, has not
contained any untrue statement of a material fact and has not omitted a material
fact necessary to make the statements contained therein, taken as a whole, not
misleading under the totality of the circumstances existing at the date such
information was provided and in the context in which it was provided.

            4.19 Projections. Except with respect to the effect of the Lewis
Homes Stock Repurchase, which is not reflected in the Projections, as of the
2000 Closing Date, the assumptions upon which the Projections are based are
reasonable and consistent with each other assumption and with all facts known to
Borrower and that the Projections are reasonably based on those assumptions.
Nothing in this Section 4.19 shall be construed as a representation or warranty
as of any date other than the 2000 Closing Date or that the Projections will in
fact be achieved by Borrower.



                                      -52-
<PAGE>   59

                                   Article 5
                             AFFIRMATIVE COVENANTS
                          (OTHER THAN INFORMATION AND
                            REPORTING REQUIREMENTS)

        As long as any Loan remains unpaid, or any other Obligation remains
unpaid, or any portion of the Commitment remains outstanding, Borrower shall,
and shall cause each of its Subsidiaries to, unless the Administrative Agent
(with the approval of the Majority Banks) otherwise consents in writing:

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

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

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

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

            5.5 Compliance with Laws. Comply with all Requirements of Laws
noncompliance with which would constitute a Material Adverse Effect, except that
Borrower and its Subsidiaries need not comply with a Requirement of Law then
being contested by any of them in good faith by appropriate procedures, so long
as such contest (or a bond or surety posted in connection



                                      -53-
<PAGE>   60

therewith) operates as a stay of enforcement of any penalty that would otherwise
apply as a result of such failure to comply.

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

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

            5.8 Use of Proceeds. Use the proceeds of all Loans solely for
working capital, Acquisitions permitted hereunder and other general corporate
purposes of Borrower and its Subsidiaries.

            5.9 Subsidiary Guaranty. Cause each of its Guarantor Subsidiaries
hereafter formed, acquired or qualifying as a Guarantor Subsidiary, to execute
and deliver a joinder of the Subsidiary Guaranty promptly following such
formation, acquisition or qualification.



                                      -54-
<PAGE>   61

                                   Article 6
                               NEGATIVE COVENANTS

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

            6.1 Payment or Prepayment of Subordinated Obligations. Make an
optional or unscheduled payment or prepayment of any principal (including an
optional or unscheduled sinking fund payment), interest or any other amount with
respect to any Subordinated Obligation, or make a purchase or redemption of any
Subordinated Obligation, or make any payment with respect to any Subordinated
Obligation in violation of the subordination provisions in the instruments
governing such Subordinated Obligation if a Default or Event of Default then
exists or would result therefrom. Notwithstanding the preceding sentence, if no
Default or Event of Default then exists or would result therefrom, Borrower may
refinance the entire outstanding amount of a Subordinated Obligation, provided
the new obligation constitutes a Subordinated Obligation with a maturity date no
earlier than and an interest rate no higher than those of the Subordinated
Obligation being refinanced.

            6.2 [Intentionally Omitted]

            6.3 Mergers and Sale of Assets. Merge or consolidate with or into
any Person, or sell a Material Amount of Assets to any Person, except, subject
to Section 6.6;

               (a) a merger of Borrower into a wholly-owned Subsidiary of
        Borrower that has nominal assets and liabilities, the primary purpose of
        which is to effect the reincorporation of Borrower in another state;

               (b) mergers or consolidations of a Subsidiary of Borrower into
        Borrower (with Borrower as the surviving corporation) or into any other
        Subsidiary of Borrower, provided that (i) the reduction in the
        proportionate share of Borrower and its Subsidiaries in the total assets
        of such resulting Subsidiary (after intercompany eliminations) does not
        constitute a Material Amount of Assets and (ii) immediately after giving
        effect to such transaction, no Default or Event of Default shall have
        occurred and be continuing;

               (c) mergers, consolidations, liquidations, or sales of all or
        substantially all of the assets of a Subsidiary; provided that (i) any
        such transaction does not involve a transfer by Borrower or its
        Subsidiaries of a Material Amount of Assets and (ii) immediately after
        giving effect to such transaction, no Default or Event of Default shall
        have occurred and be continuing; or

               (d) a merger or consolidation of Borrower with another Person if
        (i) no Change of Control results therefrom, (ii) Borrower does not
        transfer a Material Amount of Assets to one or more Persons in
        connection with the merger or consolidation and (iii) immediately after
        giving effect to such merger, no Default or Event of Default shall have
        occurred and be continuing.

            6.4 Investments and Acquisitions. Make any Acquisition, or enter
into an agreement to make any Acquisition, or make or suffer to exist any
Investment, other than:


                                      -55-
<PAGE>   62

               (a) Investments consisting of Cash or Cash Equivalents;

               (b) advances to officers, directors and employees of Borrower or
        its Subsidiaries for travel, entertainment, housing expenses,
        relocation, stock option plans, or otherwise in connection with their
        employment or the business of Borrower or any of its Subsidiaries;

               (c) Investments of Borrower in any of its wholly-owned
        Subsidiaries and Investments of any Subsidiary of Borrower in Borrower
        or any of Borrower's wholly-owned Subsidiaries;

               (d) Acquisitions of or Investments in Persons engaged in the same
        businesses as Borrower and its Subsidiaries, or in a business reasonably
        related to such businesses, including electronic commerce and similar
        activities related to real estate;

               (e) Acquisitions and Investments by the Mortgage Company
        permitted under the Mortgage Warehousing Agreements;

               (f) Acquisitions of or Investments in Persons engaged primarily
        in businesses in addition to those permitted by Sections 6.4(d),
        provided that the aggregate cost of all such Acquisitions and
        Investments made in any fiscal year does not exceed $25,000,000;

               (g) Investments in a Trust Issuer and Investments by a Trust
        Issuer in Borrower;

               (h) Investments in Subsidiaries in existence on the 2000 Closing
        Date or as otherwise disclosed on Schedule 6.4;

               (i) Investments received in connection with the settlement of a
        bona fide dispute with another Person;

               (j) Investments consisting of readily marketable securities
        actively traded on a public exchange, provided that the aggregate amount
        of any such Investments at any one time do not exceed $25,000,000; and

               (k) Investments consisting of the extension of credit to
        suppliers in the ordinary course of business and any Investments
        received in satisfaction or partial satisfaction thereof, provided that
        the aggregate amount of any such Investments at any one time do not
        exceed $25,000,000;

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

            6.5 ERISA Compliance. Permit any Pension Plan maintained by Borrower
or any of its ERISA Affiliates (or to which Borrower or any ERISA Affiliate
contributes or is required to contribute), other than a Multiemployer Plan, to
incur any material "accumulated funding deficiency," as such term is defined in
Section 302 of ERISA, unless waived, or permit any Pension Plan maintained by
any of them to suffer a Termination Event or incur withdrawal liability under
any Multiemployer Plan if any of such events would result in a liability of
Borrower or any ERISA affiliate exceeding in the aggregate $25,000,000.



                                      -56-
<PAGE>   63

            6.6 Change in Business. Engage in any business other than the
businesses as now conducted by Borrower or its Subsidiaries, and any business
the Board of Directors of Borrower determine in good faith is reasonably related
to such businesses, other than:

               (a) businesses in which Borrower and its Subsidiaries have
        invested no more than $25,000,000 in any Fiscal Year; and

               (b) as permitted pursuant to Section 6.4(f).

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

               (a) Liens and Contractual Obligations existing on the date hereof
        and described in Schedule 4.7, provided that the obligations secured by
        such Liens are not increased and that no such Lien extends to any
        Property of Borrower or any Subsidiary other than the Property subject
        to such Lien on the 2000 Closing Date;

               (b) Liens on Property of any Financial Subsidiary or Foreign
        Subsidiary securing Indebtedness of that Financial Subsidiary or Foreign
        Subsidiary;

               (c) Liens on Property securing Indebtedness of Borrower or any of
        its Subsidiaries provided that (i) aggregate Indebtedness secured by all
        such Liens shall at no time exceed $100,000,000 and (ii) the aggregate
        book value of the Property so encumbered shall at no time exceed 3 times
        the aggregate amount of Indebtedness so secured;

               (d) Liens that may exist from time to time under the Loan
        Documents;

               (e) Liens consisting of a Capital Lease covering personal
        Property;

               (f) Permitted Encumbrances;

               (g) attachment, judgment and other similar Liens arising in
        connection with court proceedings; provided that the execution or
        enforcement of such Lien is effectively stayed and the claims secured
        thereby do not in the aggregate exceed $25,000,000 and are being
        contested in good faith by appropriate proceedings timely commenced and
        diligently prosecuted;

               (h) Liens existing on any asset of any Person at the time such
        Person becomes a Subsidiary and not created in contemplation of such
        event;

               (i) Liens on any asset of any Person existing at the time such
        Person is merged or consolidated with or into Borrower or any of its
        Subsidiaries and not created in contemplation of such event;

               (j) Liens existing on any asset prior to the acquisition thereof
        by Borrower or any of its Subsidiaries and not created in contemplation
        of such acquisition;



                                      -57-
<PAGE>   64

               (k) Liens arising out of the refinancing, extension, renewal or
        refunding of any Indebtedness secured by any Lien permitted by any of
        the foregoing clauses of this Section, provided that such Indebtedness
        is not increased and is not secured by additional assets;

               (l) Liens arising in the ordinary course of business which (i) do
        not secure Indebtedness, (ii) do not secure any obligation in an amount
        exceeding $500,000 individually, or $2,000,000 in the aggregate, and
        (iii) do not in the aggregate materially detract from the value of the
        assets covered by such Liens or materially impair the use thereof in the
        operation of Borrower's business;

               (m) Liens not otherwise permitted by the foregoing clauses of
        this Section which secure Indebtedness not exceeding $2,000,000 in the
        aggregate;

               (n) Liens referred to in the last sentence of the definition of
        "Bond Facility" encumbering (i) real property owned by Borrower or one
        of its Subsidiaries on November 30, 1999 or (ii) other real property of
        Borrower or one of its Subsidiaries provided that the aggregate
        obligations secured by such Liens does not at any time exceed
        $25,000,000 plus the amount by which aggregate Indebtedness then secured
        by Liens described in Section 6.7(c) is less than $100,000,000;

               (o) a Contractual Obligation wherein Borrower or any of its
        Subsidiaries agrees not to a grant any Lien on any of their Properties,
        if such Contractual Obligation does not, by its terms, prohibit the
        grant of a Lien in favor of the Administrative Agent and the Banks with
        respect to the Obligations (and Borrower shall, as soon as reasonably
        possible, provide to the Banks a copy of such Contractual Obligation);
        and

               (p) Liens on Property of a Joint Venture.

            6.8 Transactions with Affiliates. Enter into any transaction of any
kind with any Affiliate of Borrower other than (a) a transaction that results in
Subordinated Obligations, (b) a transaction between or among Borrower and its
wholly-owned Subsidiaries, (c) a transaction that has been authorized by the
board of directors of Borrower with the favorable vote of a majority of the
directors who have no financial or other interest in the transaction or by the
vote of a majority of the outstanding shares of capital stock of Borrower, (d) a
transaction entered into on terms and under conditions not less favorable to
Borrower or any of its Subsidiaries than could be obtained from a Person that is
not an Affiliate of Borrower, (e) salary, bonus, employee stock options and
other compensation arrangements and indemnification arrangements with directors
or officers, (f) transactions permitted by Sections 6.4 or 6.16, or (g) the
Lewis Homes Stock Repurchase.

            6.9 Consolidated Tangible Net Worth. Permit Consolidated Tangible
Net Worth to be, at the end of any Fiscal Quarter, less than an amount equal to
(a) $575,000,000, plus (b) an amount equal to 50% of aggregate of Consolidated
Net Income for each Fiscal Quarter contained in the fiscal period commencing on
June 1, 2000 and ending as of the last day of such Fiscal Quarter (provided that
there shall be no reduction hereunder in the event of a consolidated net loss in
any such Fiscal Quarter), plus (c) an amount equal to 50% of the cumulative net
proceeds received by Borrower from the issuance of its capital stock subsequent
to the 2000 Closing Date, plus (d) an amount equal to 50% of the cumulative net
proceeds received by Borrower from the issuance of the Trust Preferred Capital
Securities subsequent to the 2000 Closing Date, minus (e) the cumulative cost to
Borrower for the repurchase, if any, of its capital stock (provided that such
deduction shall have an aggregate cap of


                                      -58-
<PAGE>   65

$70,000,000 for the measurement at the end of the Fiscal Quarter ending on
August 31, 2000, a cumulative aggregate $50,000,000 cap for the measurements at
the end of the Fiscal Quarters ending on November 30, 2000 and February 28,
2001, and an aggregate $20,000,000 cap for the measurement at the end of any
Fiscal Quarter thereafter).

            6.10 Consolidated Leverage Ratio. Permit the Consolidated Leverage
Ratio to be, at the end of any Fiscal Quarter, greater than 2.25 to 1.00;
provided that:

               (a) in the event $30,000,000 or more is used to finance an
        Acquisition by Borrower or its Subsidiaries, the foregoing maximum
        permitted ratio may, upon the request of Borrower to the Administrative
        Agent, be increased to 2.65 to 1.00 for up to 3 consecutive Fiscal
        Quarters next ending after such Acquisition is consummated, provided
        that: (i) an increase under this clause (a) has not been in effect with
        respect to any of the 4 Fiscal Quarters prior to the first Fiscal
        Quarter for which an adjustment is to be made; (ii) Borrower's request
        is accompanied by 12-month cash flow, balance sheet and income statement
        projections, reasonably acceptable to the Administrative Agent and for
        delivery to the Banks, demonstrating that, giving effect to the
        Acquisition and to Borrower's election under this Section, Borrower will
        be in compliance with Sections 6.9, 6.10 and 6.11 for at least the next
        ending 4 Fiscal Quarters; (iii) Borrower must remain in compliance with
        Section 6.11 (without giving effect to any adjustment permitted
        thereunder) during each Fiscal Quarter for which an adjustment is
        applicable under this Section 6.10(a); and (iv) Borrower must elect on
        or before 60 days after the end of the first, second and third of such
        Fiscal Quarters next ending after the consummation of an Acquisition
        whether the 2.65 to 1.00 maximum Consolidated Leverage Ratio is to be in
        effect for the Pricing Period related to that Fiscal Quarter, it being
        understood and agreed that (a) the Borrower may only make such an
        election for the second and third of such Fiscal Quarters if Borrower
        made a similar election for the prior Fiscal Quarter and (b) if Borrower
        makes such an election, Applicable Pricing Level V shall be in effect
        for the entire Pricing Period regardless of the actual Consolidated
        Leverage Ratio.

               (b) if an election under Section 6.10(a) is not then in effect,
        the foregoing ratio shall, if needed, be increased to 2.50 to 1.00 for a
        period of up to 2 consecutive Fiscal Quarters, provided that: (i) this
        clause (b) has not been in effect with respect to any of the 4 Fiscal
        Quarters prior to the first Fiscal Quarter for which an adjustment is
        needed; (ii) no other Default or Event of Default then exists; (iii)
        Borrower furnishes to the Administrative Agent no later than 60 days
        after the end of the first Fiscal Quarter for which such adjustment is
        needed, 12-month cash flow, balance sheet and income statement
        projections, reasonably acceptable to the Administrative Agent and for
        delivery to the Banks, demonstrating that Borrower will be in compliance
        with Sections 6.9, 6.10 and 6.11 for at least the next ending 2 Fiscal
        Quarters; (iv) as of the end of each Fiscal Quarter for which such
        adjustment is applicable, the Consolidated Interest Coverage Ratio is
        not less than 2.50 to 1.00; and (v) Borrower has not incurred Operating
        Losses for the first Fiscal Quarter for which such adjustment is needed
        and the immediately preceding Fiscal Quarter; and

               (c) notwithstanding Section 6.10(a) or 6.10(b), the foregoing
        ratio shall automatically be reduced to 1.75 to 1.00 as of the end of
        any Fiscal Quarter if Borrower has incurred an Operating Loss for that
        Fiscal Quarter and the immediately preceding Fiscal Quarter and shall
        remain at 1.75 to 1.00 until the first Fiscal Quarter thereafter for
        which there is no Operating Loss.



                                      -59-
<PAGE>   66

            6.11 Consolidated Interest Coverage Ratio. Permit the Consolidated
Interest Coverage Ratio to be, at the end of any Fiscal Quarter, less than 2.25
to 1.00; provided that the foregoing ratio shall, upon the request of Borrower
to the Administrative Agent, be decreased for a period of 2 Fiscal Quarters
provided that (a) an adjustment under this Section 6.11 has not been in effect
with respect to any of the 4 Fiscal Quarters prior to the first Fiscal Quarter
for which an adjustment is to be made, (b) no Default or Event of Default then
exists and (c) Borrower furnishes to the Administrative Agent 12-month cash
flow, balance sheet and income statement projections, reasonably acceptable to
the Administrative Agent, demonstrating that Borrower will be in compliance with
Sections 6.9, 6.10 and 6.11 for at least the next ending 4 Fiscal Quarters.
Subject to satisfaction of the foregoing conditions, the decrease in the ratio
for the first Fiscal Quarter shall be to 1.75 to 1.00 and the decrease for the
second Fiscal Quarter shall be to a level (in no event higher than 2.25:1.00)
that is 0.25 higher than the actual Consolidated Interest Coverage Ratio for
such first Fiscal Quarter (e.g., from 1.80 to 1.00 improving to at least 2.05 to
1.00).

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

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

            6.14 Hostile Tender Offers. Make any offer to the shareholders of a
publicly held corporation or business entity to purchase or acquire, or
consummate such a purchase or acquisition of, more than 5% of the shares of
capital stock or analogous ownership interests in such a corporation or business
entity if the board of directors or analogous body of such corporation or
business entity has notified Borrower that it opposes such offer or purchase,
except for consideration which consists solely of shares of capital stock or
other equity securities of Borrower or any of its Subsidiaries.

            6.15 Inventory. Permit, as of the end of any Fiscal Quarter, the
book value of Domestic Unimproved Land to exceed an amount equal to 100% of
Consolidated Tangible Net Worth.

            6.16 Investment in Subsidiaries and Joint Ventures. Permit, as of
the last day of any Fiscal Quarter, Borrower's equity interest, computed in
accordance with Generally Accepted Accounting Principles, in all Subsidiaries of
Borrower (other than Guarantor Subsidiaries), Financial Subsidiaries, Foreign
Subsidiaries, all Joint Ventures and all other entities with financial
statements not consolidated with those of Borrower under with Generally Accepted
Accounting Principles to exceed: (a) 35% of Consolidated Tangible Net Worth for
the Fiscal Quarter ending on November 30, 2000; (b) 25% of Consolidated Tangible
Net Worth for Fiscal Quarters ending after November 30, 2000 but on or before
November 30, 2002; and (c) 20% of Consolidated Tangible Net Worth for Fiscal
Quarters ending after November 30, 2002.

            6.17 Money Market Indebtedness. Permit, for any consecutive period
of more than one (1) Banking Day, at any time the sum of the aggregate
outstanding principal amount of the Loans plus the Letter of Credit Usage plus
the Money Market Outstandings plus the Swing Line Outstandings to exceed the
Commitment.

            6.18 Domestic Standing Inventory. Permit, as of the last day of any
Fiscal Quarter that immediately follows a Fiscal Quarter on the last day of
which the Consolidated Leverage Ratio was



                                      -60-
<PAGE>   67

in excess of 2.25:1.00, Domestic Standing Inventory to exceed an amount equal to
15% of Net Orders received during the four most recently ended Fiscal Quarters.


                                      -61-
<PAGE>   68

                                   Article 7
                     INFORMATION AND REPORTING REQUIREMENTS

            7.1 Financial and Business Information of Borrower and Its
Subsidiaries. As long as any Loan remains unpaid or any other Obligation remains
unpaid, or any portion of the Commitment remains outstanding, Borrower shall,
unless the Administrative Agent (with the approval of the Majority Banks)
otherwise consents in writing, deliver to the Administrative Agent and each of
the Banks (except as otherwise provided below) at its own expense:

               (a) As soon as reasonably possible, and in any event within 60
        days after the close of each Fiscal Quarter of Borrower (other than the
        fourth Fiscal Quarter), (i) the consolidated and consolidating balance
        sheet of Borrower and its Consolidated Subsidiaries as of the end of
        such Fiscal Quarter, setting forth in comparative form the corresponding
        figures for the corresponding Fiscal Quarter of the preceding Fiscal
        Year, if available, and (ii) the consolidated and consolidating
        statements of profit and loss and the consolidated statements of cash
        flows of Borrower and its Consolidated Subsidiaries for such Fiscal
        Quarter and for the portion of the Fiscal Year ended with such Fiscal
        Quarter, setting forth in comparative form the corresponding periods of
        the preceding Fiscal Year. Such consolidated and consolidating balance
        sheets and statements shall be prepared in reasonable detail in
        accordance with Generally Accepted Accounting Principles (other than
        those which require footnote disclosure of certain matters) consistently
        applied, and shall be certified by the principal financial officer of
        Borrower, subject to normal year-end accruals and audit adjustments;

               (b) As soon as reasonably possible, and in any event within 90
        days after the close of each Fiscal Year of Borrower, (i) the
        consolidated and consolidating (in accordance with past practices of
        Borrower) balance sheets of Borrower and its Consolidated Subsidiaries
        as at the end of such Fiscal Year, setting forth in comparative form the
        corresponding figures at the end of the preceding Fiscal Year and (ii)
        the consolidated and consolidating (in accordance with past practices of
        Borrower) statements of profit and loss and the consolidated statements
        of cash flows of Borrower and its Consolidated Subsidiaries for such
        Fiscal Year, setting forth in comparative form the corresponding figures
        for the previous Fiscal Year. Such consolidated and consolidating
        balance sheet and statements shall be prepared in reasonable detail in
        accordance with Generally Accepted Accounting Principles consistently
        applied. Such consolidated balance sheet and statements shall be
        accompanied by a report and opinion of Ernst & Young or other
        independent certified public accountants of recognized national standing
        selected by Borrower (i.e., a "big five" firm), which report and
        opinion shall state that the examination of such consolidated financial
        statements by such accountants was made in accordance with generally
        accepted auditing standards and that such consolidated financial
        statements fairly present the financial condition, results of operations
        and of cash flows of Borrower and its Subsidiaries subject to no
        exceptions as to scope of audit and subject to no other exceptions or
        qualifications (other than changes in accounting principles in which the
        auditors concur) unless such other exceptions or qualifications are
        approved by the Majority Banks in their reasonable discretion. Such
        accountants' report and opinion shall be accompanied by a certificate
        stating that, in conducting the audit examination of books and records
        necessary for the certification of such financial statements, such
        accountants have obtained no knowledge of any Default or Event of
        Default hereunder or, if in the opinion of such accountants, any such
        Default or Event of Default shall exist, stating the nature and status
        of such event, and setting forth the applicable calculations under
        Sections 6.9, 6.10, 6.11, 6.15 (without requiring any physical count of
        inventory) and 6.16, as of the date of the balance sheet.



                                      -62-
<PAGE>   69

        Such consolidating balance sheet and statements shall be certified by
        the principal financial officer of Borrower;

               (c) Promptly after the receipt thereof by Borrower, copies of any
        audit or management reports submitted to it by independent accountants
        in connection with any audit or interim audit submitted to the board of
        directors of Borrower or any of its Subsidiaries;

               (d) Promptly after the same are available, copies of each annual
        report, proxy or financial statement or other report or communication
        sent to its stockholders, and copies of all annual, regular, periodic
        and special reports and registration statements which Borrower may file
        or be required to file with the Commission or any similar or
        corresponding Governmental Agency or with any securities exchange;

               (e) Promptly upon a Senior Officer of Borrower becoming aware,
        and in any event within ten Banking Days after becoming aware, of the
        occurrence of any (i) "reportable event" (as such term is defined in
        Section 4043 of ERISA) other than any such event as to which the PBGC
        has by regulation waived the requirement of 30 days' notice or (ii)
        "prohibited transaction" (as such term is defined in Section 406 of
        ERISA or Section 4975 of the Code) in connection with any Pension Plan,
        other than a Multiemployer Plan, or any trust created thereunder, a
        written notice specifying the nature thereof, what action Borrower and
        any of its Subsidiaries is taking or proposes to take with respect
        thereto, and, when known, any action taken by the Internal Revenue
        Service with respect thereto;

               (f) Promptly upon a Senior Officer of Borrower becoming aware,
        and in any event within five Banking Days after becoming aware, of the
        existence of a Default or an Event of Default, a written notice
        specifying the nature and period of existence thereof and what action
        Borrower is taking or proposes to take with respect thereto;

               (g) Promptly upon a Senior Officer of Borrower becoming aware,
        and in any event within five Banking Days after becoming aware, that the
        holder of any evidence of Indebtedness (in a principal amount in excess
        of $15,000,000) of Borrower or any of its Subsidiaries has given notice
        or taken any other action with respect to a default or event of default,
        a written notice specifying the notice given or action taken by such
        holder and the nature of such default or event of default and what
        action Borrower or its Subsidiary is taking or proposes to take with
        respect thereto;

               (h) Promptly upon a Senior Officer of Borrower becoming aware,
        and in any event within five Banking Days after becoming aware, of the
        existence of any pending or threatened litigation or any investigation
        by any Governmental Agency that would constitute a Material Adverse
        Effect (provided, that no failure of a Senior Officer to provide notice
        of any such event shall be the sole basis for any Default or Event of
        Default hereunder);

               (i) As soon as possible, and in any event within 60 days after
        the close of each Fiscal Quarter of Borrower (except 90 days after the
        close of the Fiscal Year of Borrower), (i) a sales report by
        geographical region, in the form of Exhibit F hereto, certified by a
        Senior Officer of Borrower, setting forth the number of homes or other
        units sold and delivered during such period and in backlog at the end of
        such period, (ii) an inventory report for such Fiscal Quarter
        summarizing such inventory by type and geographical region, in the form
        of Exhibit G hereto and (iii) a report of any change, as of the last day
        of such Fiscal Quarter, in the listing of



                                      -63-
<PAGE>   70

        Subsidiaries set forth in Schedule 4.4 (as the same may have been
        revised by previous reports under this clause (i)(iii));

               (j) As soon as reasonably possible, and in any event prior to the
        date that is 60 days after the commencement of each Fiscal Year, deliver
        to the Administrative Agent the business plan of Borrower and its
        Subsidiaries for that Fiscal Year, together with projections (in
        substantially the same format as the Projections) covering the next 2
        Fiscal Years;

               (k) Promptly following obtaining knowledge thereof by a Senior
        Officer of Borrower, written notice to the Administrative Agent of the
        inception or cessation of the Investment Grade Credit Rating; and

               (l) Such other data and information as from time to time may be
        reasonably requested by any of the Banks.

            7.2 Compliance Certificate. Not later than 60 days after the close
of each Fiscal Quarter and 90 days after the close of each Fiscal Year, a
Compliance Certificate dated as of the last day of the Fiscal Quarter or Fiscal
Year, as the case may be, (a) setting forth computations showing, in detail
reasonably satisfactory to the Administrative Agent, whether Borrower and its
Subsidiaries were in compliance with their obligations to the Banks pursuant to
Sections 6.9, 6.10, 6.11, 6.15, 6.16, and 6.18, (b) setting forth a list of the
Guarantor Subsidiaries of Borrower, based upon the most current financial
statements then available, (c) either (i) stating that to the best knowledge of
the certifying officer as of the date of such certificate there is no Default or
Event of Default, or (ii) if there is a Default or Event of Default as of the
date of such certificate, specifying all such Defaults or Events of Default and
their nature and status and (d) stating, to the best knowledge of the certifying
officer, whether any event or circumstance constituting a Material Adverse
Effect (other than a Material Adverse Effect which is not particular to the
Borrower and which is generally known) has occurred since the date of the most
recent Compliance Certificate delivered under this Section and, if so,
describing such Material Adverse Effect in reasonable detail. No failure of the
certifying officer to describe the existence of an event or circumstance
constituting a Material Adverse Effect shall be the sole basis for any Default
or Event of Default hereunder.



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<PAGE>   71

                                   Article 8
                                   CONDITIONS

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

               (a) The Administrative Agent shall have received all of the
        following, each dated as of the 2000 Closing Date (unless otherwise
        specified or unless the Administrative Agent otherwise agrees) and all
        in form and substance satisfactory to the Administrative Agent and legal
        counsel for the Administrative Agent:

                   (i) executed counterparts of this Agreement, sufficient in
               number for distribution to the Banks and Borrower;

                   (ii) a Note executed by Borrower in favor of each Bank, each
               in a principal amount equal to that Bank's Pro Rata Share of the
               Commitment. Promptly following the 2000 Closing Date, the
               promissory notes delivered to the Banks pursuant to the Prior
               Loan Agreements shall be canceled and promptly returned to
               Borrower;

                   (iii) the Subsidiary Guaranty executed by each Subsidiary
               which is a Guarantor Subsidiary as of the 2000 Closing Date;

                   (iv) the Swing Line Documents, executed by Borrower;

                   (v) with respect to Borrower and each Subsidiary which is a
               Guarantor Subsidiary as of the 2000 Closing Date, such
               documentation as the Administrative Agent may reasonably require
               to establish the due organization, valid existence and good
               standing of Borrower and each such Subsidiary, its qualification
               to engage in business in each jurisdiction in which it is
               required to be so qualified, its authority to execute, deliver
               and perform any Loan Documents to which it is a Party, and the
               identity, authority and capacity of each Responsible Official
               thereof authorized to act on its behalf, including, without
               limitation, certified copies of articles of incorporation and
               amendments thereto, bylaws and amendments thereto, certificates
               of good standing and/or qualification to engage in business, tax
               clearance certificates, certificates of corporate resolutions,
               incumbency certificates, and the like;

                   (vi) the Opinions of Counsel;

                   (vii) an Officer's Certificate of Borrower affirming, to the
               best knowledge of the certifying Senior Officer, that the
               conditions set forth in Sections 8.1(c) and 8.1(d) have been
               satisfied;

                   (viii) a side letter executed by each "Bank" under the Prior
               Revolving Loan Agreement that is not a "Bank" hereunder
               acknowledging a termination of the "Commitments" under the Prior
               Revolving Loan Agreement without charge to Borrower (except for
               LIBOR breakage fees, if any) and agreeing to the other matters
               specified in Section 3.18;



                                      -65-
<PAGE>   72

                   (ix) a side letter executed by each "Bank" under the Prior
               Term Loan Agreement that is not a "Bank" hereunder acknowledging
               a termination of the "Commitment" under the Prior Term Loan
               Agreement without charge to Borrower (except for LIBOR breakage
               fees, if any) and agreeing to the other matters specified in
               Section 3.18;

                   (x) a side letter executed by each "Bank" under the Bridge
               Loan Agreement that is not a "Bank" hereunder acknowledging a
               termination of the "Commitment" under the Bridge Loan Agreement
               without charge to Borrower (except for LIBOR breakage fees, if
               any) and agreeing to the other matters specified in Section 3.18;
               and

                   (xi) such other assurances, certificates, documents, consents
               or opinions relevant hereto as the Administrative Agent may
               reasonably require.

               (b) The upfront fee payable pursuant to Section 3.2 shall have
        been paid and any fees then payable under the letter agreement referred
        to in Section 3.5 shall have been paid.

               (c) The representations and warranties of Borrower contained in
        Article 4 shall be true and correct in all material respects on and as
        of the 2000 Closing Date.

               (d) Borrower and its Subsidiaries and any other Parties shall be
        in compliance with all the terms and provisions of the Loan Documents,
        and after giving effect to the initial Advance, no Default or Event of
        Default shall have occurred and be continuing.

               (e) The Banks shall have received the written legal opinion of
        Sheppard, Mullin, Richter & Hampton LLP, legal counsel to the
        Administrative Agent, to the effect that the Opinions of Counsel are
        acceptable and such other matters relating to the Loan Documents as the
        Administrative Agent may request.

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

               (a) the Administrative Agent shall have received a Request for
        Loan;

               (b) the representations and warranties contained in Article 4
        (other than the representations and warranties contained in Sections
        4.4(a), 4.5, 4.6, 4.7, 4.9, 4.12, 4.14, 4.18 and 4.19) shall be true
        and correct in all material respects on and as of the date of the Loan
        as though made on and as of that date and no event or circumstance that
        constitutes a Material Adverse Effect shall have occurred since the 2000
        Closing Date; and

               (c) the Administrative Agent shall have received such other
        information relating to any matters which are the subject of Section
        8.2(b) or the compliance by Borrower with this Agreement as may
        reasonably be requested by the Administrative Agent on behalf of a Bank.

            8.3 Any Letter of Credit. The obligation of an Issuing Bank to issue
any Letter of Credit, and the obligation of the other Banks to participate
therein, are subject to the conditions precedent that (a) the conditions set
forth in Section 8.2 have been satisfied and (b) Borrower shall have



                                      -66-
<PAGE>   73

        certified that, giving effect to the issuance of the requested Letter of
        Credit, the Letter of Credit Usage shall not exceed any limitations set
        forth in this Agreement.



                                      -67-
<PAGE>   74

                                   Article 9
             EVENTS OF DEFAULT AND REMEDIES UPON EVENTS OF DEFAULT

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

               (a) failure to pay any installment of principal on any of the
        Notes or a Swing Line note on the date, or any payment in respect of a
        Letter of Credit pursuant to Section 2.5(e) , when due; or

               (b) failure to pay any installment of interest on any of the
        Notes, or to pay any fee or other amounts due the Administrative Agent
        or any Bank hereunder, within 5 Banking Days after the date when due; or

               (c) any failure to comply with Sections 6.1, 6.3, 6.4 (with
        respect to Acquisitions), 6.7, 6.10, 6.11, 6.14, 6.17 or 7.1(f); or

               (d) any failure to comply with Sections 5.8 , 5.9, 6.4 (with
        respect to Investments), 6.8, 6.9, 6.15, 6.16, or 6.18 that remains
        unremedied for a period of 15 calendar days after notice by the
        Administrative Agent of such Default or 20 calendar days after a Senior
        Officer becomes aware of such Default, whichever occurs first; or

               (e) Borrower or any other Party fails to perform or observe any
        other term, covenant, or agreement contained in any Loan Document on its
        part to be performed or observed within 30 calendar days after notice by
        the Administrative Agent of such Default; or

               (f) any representation or warranty in any Loan Document or in any
        certificate, agreement, instrument, or other document made or delivered,
        on or after the 2000 Closing Date, pursuant to or in connection with any
        Loan Document proves to have been incorrect when made in any respect
        material to the ability of Borrower to duly and punctually perform all
        of the Obligations; or

               (g) Any failure to pay any interest or principal when due
        (following any applicable cure period) under the Mortgage Warehousing
        Agreement to which Administrative Agent is a party or under any Money
        Market Facility; or

               (h) Borrower or any of its Significant Subsidiaries (i) fails to
        pay the principal, or any principal installment, of any present or
        future Indebtedness (other than Non-Recourse Indebtedness, and in the
        case of the Mortgage Company, arising under the Mortgage Warehousing
        Agreements), or any guaranty of present or future Indebtedness (other
        than Non-Recourse Indebtedness) on its part to be paid, when due (or
        within any stated grace period), whether at the stated maturity, upon
        acceleration, by reason of required prepayment or otherwise in excess of
        $25,000,000 individually or $50,000,000 in the aggregate or (ii) fails
        to perform or observe any other material term, covenant, or agreement on
        its part to be performed or observed, or suffers to exist any condition,
        in connection with any present or future Indebtedness (other than
        Non-Recourse Indebtedness, and in the case of the Mortgage Company,
        arising under the Mortgage Warehousing Agreements) or any guaranty of
        present or future Indebtedness (other than Non-Recourse Indebtedness),
        in excess of $25,000,000 individually or $50,000,000 in the aggregate,
        if as a result of such failure or such condition any


                                      -68-
<PAGE>   75

        holder or holders thereof (or an agent or trustee on its or their
        behalf) has the right to declare it due before the date on which it
        otherwise would become due; or

               (i) any Loan Document, at any time after its execution and
        delivery and for any reason other than the agreement of all the Banks or
        satisfaction in full of all the Obligations, ceases to be in full force
        and effect or is declared by a court of competent jurisdiction to be
        null and void, invalid, or unenforceable in any respect which is, in the
        reasonable opinion of the Majority Banks, materially adverse to the
        interest of the Banks; or

               (j) a final judgment (or judgments) against Borrower or any of
        its Significant Subsidiaries is entered for the payment of money in
        excess of $25,000,000 individually or $50,000,000 in the aggregate over
        the amount of any insurance proceeds reasonably expected to be received
        and remains unsatisfied without procurement of a stay of execution
        within thirty (30) calendar days after the issuance of any writ of
        execution or similar legal process or the date of entry of judgment,
        whichever is earlier, or in any event at least 5 calendar days prior to
        the sale of any assets pursuant to such legal process; or

               (k) Borrower or any Significant Subsidiary of Borrower institutes
        or consents to any proceeding under a Debtor Relief Law relating to it
        or to all or any part of its Property, or fails generally to pay its
        debts as they mature, or makes a general assignment for the benefit of
        creditors; or applies for or consents to the appointment of any
        receiver, trustee, custodian, conservator, liquidator, rehabilitator, or
        similar officer for it or for all or any part of its property; or any
        receiver, trustee, custodian, conservator, liquidator, rehabilitator, or
        similar officer is appointed without the application or consent of that
        Person and the appointment continues undischarged or unstayed for 60
        calendar days; or any proceeding under any Debtor Relief Law relating to
        any such Person or to all or any part of its Property is instituted
        without the consent of that Person, and continues undismissed or
        unstayed for 60 calendar days; or

               (l) the occurrence of a Termination Event with respect to any
        Pension Plan if the aggregate liability of Borrower and its ERISA
        Affiliates under ERISA as a result thereof exceeds $25,000,000; or the
        complete or partial withdrawal by Borrower or any of its ERISA
        Affiliates from any Multiemployer Plan if the aggregate liability of
        Borrower and its ERISA Affiliates as a result thereof exceeds
        $25,000,000; or

               (m) any determination is made by a court of competent
        jurisdiction that payment of principal or interest or both is due to the
        holder of any Subordinated Obligations which would not be permitted by
        Section 6.1 or that any Subordinated Obligation is not subordinated in
        accordance with its terms to the Obligations; or

               (n) the occurrence of an Event of Default (as defined in the 2000
        Term Loan Agreement), so long as any Advance (as defined in the 2000
        Term Loan Agreement) remains unpaid or any other Obligation (as defined
        in the 2000 Term Loan Agreement) remains unpaid, or any portion of the
        Commitment (as defined in the 2000 Term Loan Agreement) remains in
        force.

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



                                      -69-
<PAGE>   76

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

                   (i) all commitments to make Advances or issue Letters of
               Credit, and all other obligations of the Administrative Agent,
               any Issuing Bank or the Banks shall be suspended without notice
               to or demand upon Borrower, which are expressly waived by
               Borrower, except that the Majority Banks may waive the Event of
               Default or, without waiving, determine, upon terms and conditions
               satisfactory to the Majority Banks, to reinstate the Commitment
               and make further Advances or issue Letters of Credit, which
               waiver or determination shall apply equally to, and shall be
               binding upon, all the Banks; and

                   (ii) the Majority Banks may request the Administrative Agent
               to, and the Administrative Agent thereupon shall, declare the
               unpaid principal of all Obligations due to the Banks hereunder
               and under the Notes, an amount equal to the Letter of Credit
               Usage, all interest accrued and unpaid thereon, and all other
               amounts payable to the Banks under the Loan Documents to be
               forthwith due and payable, whereupon the same shall become and be
               forthwith due and payable, without protest, presentment, notice
               of dishonor, demand, or further notice of any kind, all of which
               are expressly waived by Borrower; provided that the
               Administrative Agent shall notify Borrower (by telecopy and, if
               practicable, by telephone) substantially concurrently with any
               such acceleration (but the failure of Borrower to receive such
               notice shall not affect such acceleration).

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

                   (i) all commitments to make Advances or issue Letters of
               Credit, and all other obligations of the Administrative Agent,
               any Issuing Bank or the Banks under the Loan Documents shall
               terminate without notice to or demand upon Borrower, which are
               expressly waived by Borrower, except that all the Banks may waive
               the Event of Default or, without waiving, determine, upon terms
               and conditions satisfactory to all the Banks, to reinstate the
               Commitment and make further Advances; and

                   (ii) the unpaid principal of all Obligations due to the Banks
               hereunder and under the Notes, an amount equal to the Letter of
               Credit Usage and all interest accrued and unpaid on such
               Obligations, and all other amounts payable under the Loan
               Documents shall be forthwith due and payable, without protest,
               presentment, notice of dishonor, demand, or further notice of any
               kind, all of which are expressly waived by Borrower.

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



                                      -70-
<PAGE>   77

        reimbursement of the Issuing Bank (or all of the Banks, as the case may
        be) for any drawings thereunder, and second to the payment of any
        outstanding Obligations of Borrower hereunder or under any other Loan
        Document.

               (d) Upon the occurrence of an Event of Default, the Banks and the
        Administrative Agent, or any of them, may proceed to protect, exercise,
        and enforce their rights and remedies under the Loan Documents against
        Borrower or any other Party and such other rights and remedies as are
        provided by Law or equity, without notice to or demand upon Borrower
        (which are expressly waived by Borrower) except to the extent required
        by applicable Laws. The order and manner in which the rights and
        remedies of the Banks under the Loan Documents and otherwise are
        exercised shall be determined by the Majority Banks; provided, however,
        that a Non-Consenting Bank (as defined in Section 2.6(c)) that is not
        paid on the Prior Maturity Date (as defined in Section 2.6(b))
        applicable to it may proceed to exercise its rights under this Section
        9.2(d) without the approval of Majority Banks.

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


                                      -71-
<PAGE>   78

                                   Article 10
                            THE ADMINISTRATIVE AGENT

            10.1 Appointment and Authorization. Subject to Section 10.7, each
Bank hereby irrevocably appoints and authorizes the Administrative Agent to take
such action as agent on its behalf and to exercise such powers under the Loan
Documents as are delegated to the Administrative Agent by the terms thereof or
are reasonably incidental, as determined by the Administrative Agent, thereto.
This appointment and authorization does not constitute appointment of the
Administrative Agent as trustee for any Bank and, except as specifically set
forth herein to the contrary, the Administrative Agent shall take such action
and exercise such powers only in an administrative and ministerial capacity.

            10.2 Administrative Agent and Affiliates. Bank of America (and each
successor Administrative Agent) has the same rights and powers under the Loan
Documents as any other Bank and may exercise the same as though it were not the
Administrative Agent; and the term "Bank" or "Banks" includes Bank of America in
its individual capacity. Bank of America (and each successor Administrative
Agent) and its respective Affiliates may accept deposits from, lend money to,
and generally engage in any kind of banking, trust or other business with
Borrower and any Affiliate of Borrower, as if it were not the Administrative
Agent and without any duty to account therefor to the Banks. Bank of America
(and each successor Administrative Agent) need not account to any other Bank for
any monies received by it for reimbursement of its costs and expenses as
Administrative Agent hereunder, or for any monies received by it in its capacity
as a Bank hereunder, except as otherwise provided herein.

            10.3 Banks' Credit Decisions. Each Bank agrees that it has,
independently and without reliance upon the Administrative Agent, any other
Bank, or the directors, officers, agents, or employees of the Administrative
Agent or of any other Bank, and instead in reliance upon information supplied to
it by or on behalf of Borrower and its Subsidiaries and upon such other
information as it has deemed appropriate, made its own independent credit
analysis and decision to enter into this Agreement. Each Bank also agrees that
it shall, independently and without reliance upon the Administrative Agent, any
other Bank, or the directors, officers, agents, or employees of the
Administrative Agent or of any other Bank, continue to make its own independent
credit analyses and decisions in acting or not acting under the Loan Documents.

            10.4 Action by Administrative Agent.

               (a) The Administrative Agent may assume that no Default or Event
        of Default has occurred and is continuing, unless the Administrative
        Agent has actual knowledge of the Default or Event of Default, has
        received notice from Borrower stating the nature of the Default or Event
        of Default, or has received notice from a Bank stating the nature of the
        Default or Event of Default and that Bank considers the Default or Event
        of Default to have occurred and to be continuing.

               (b) The Administrative Agent has only those obligations under the
        Loan Documents that are expressly set forth therein. Without limitation
        on the foregoing, the Administrative Agent shall have no duty to inspect
        any property of Borrower or any of its Subsidiaries, although the
        Administrative Agent may in its discretion periodically inspect any
        property from time to time.


                                      -72-
<PAGE>   79

               (c) Except for any obligation expressly set forth in the Loan
        Documents and as long as the Administrative Agent may assume that no
        Event of Default has occurred and is continuing, the Administrative
        Agent may, but shall not be required to, exercise its discretion to act
        or not act, except that the Administrative Agent shall be required to
        act or not act upon the instructions of the Majority Banks (or of all
        the Banks, to the extent required by Section 11.2) and those
        instructions shall be binding upon the Administrative Agent and all the
        Banks, provided that the Administrative Agent shall not be required to
        act or not act if to do so would, in the reasonable judgment of the
        Administrative Agent, expose the Administrative Agent to significant
        liability or would be contrary to any Loan Document or to applicable
        law.

               (d) If the Administrative Agent has received a notice specified
        in clause (a), the Administrative Agent shall give notice thereof to the
        Banks and shall act or not act upon the instructions of the Majority
        Banks (or of all the Banks, to the extent required by Section 11.2). If
        the Majority Banks fail for three (3) Banking Days after the receipt of
        notice from the Administrative Agent, to instruct the Administrative
        Agent, then the Administrative Agent, in its sole discretion, may act or
        not act as it deems advisable for the protection of the interests of the
        Banks.

               (e) The Administrative Agent shall have no liability to any Bank
        for acting, or not acting, as instructed by the Majority Banks (or all
        the Banks, if required under Section 11.2), notwithstanding any other
        provision hereof.

            10.5 Liability of Administrative Agent. Neither the Administrative
Agent, the Lead Arranger and Sole Book Manager or any of their Affiliates nor
any of its respective directors, officers, agents, or employees shall be liable
to any Bank for any action taken or not taken by them under or in connection
with the Loan Documents, except for their own gross negligence or willful
misconduct. Without limitation on the foregoing, the Administrative Agent and
its respective directors, officers, agents, and employees:

               (a) may treat the payee of any Note as the holder thereof until
        the Administrative Agent receives notice of the assignment or transfer
        thereof in form satisfactory to the Administrative Agent, signed by the
        payee and may treat each Bank as the owner of that Bank's interest in
        the obligations due to Banks for all purposes of this Agreement until
        the Administrative Agent receives notice of the assignment or transfer
        thereof, in form satisfactory to the Administrative Agent, signed by
        that Bank;

               (b) may consult with legal counsel, in-house legal counsel,
        independent public accountants, in-house accountants and other
        professionals, or other experts selected by it, or with legal counsel,
        independent public accountants, or other experts for Borrower, and shall
        not be liable to any Bank for any action taken or not taken by it or
        them in good faith in accordance with the advice of such legal counsel,
        independent public accountants, or experts;

               (c) will not be responsible to any Bank for any statement,
        warranty, or representation made in any of the Loan Documents or in any
        notice, certificate, report, request, or other statement (written or
        oral) in connection with any of the Loan Documents;

               (d) except to the extent expressly set forth in the Loan
        Documents, will have no duty to ascertain or inquire as to the
        performance or observance by Borrower or any other


                                      -73-
<PAGE>   80

        Person of any of the terms, conditions, or covenants of any of the Loan
        Documents or to inspect the property, books, or records of Borrower or
        any of its Subsidiaries or other Person;

               (e) will not be responsible to any Bank for the due execution,
        legality, validity, enforceability, genuineness, effectiveness,
        sufficiency, or value of any Loan Document, any other instrument or
        writing furnished pursuant thereto or in connection therewith;

               (f) will not incur any liability to any Bank by acting or not
        acting in reliance upon any Loan Document, notice, consent, certificate,
        statement, or other instrument or writing believed by it or them to be
        genuine and signed or sent by the proper party or parties; and

               (g) will not incur any liability for any arithmetical error in
        computing any amount payable to or receivable from any Bank hereunder,
        including without limitation payment of principal and interest on the
        Notes, payment of commitment fees, Loans, and other amounts; provided
        that promptly upon discovery of such an error in computation, the
        Administrative Agent, the Banks, and (to the extent applicable) Borrower
        shall make such adjustments as are necessary to correct such error and
        to restore the parties to the position that they would have occupied had
        the error not occurred.

            10.6 Indemnification. Each Bank shall, ratably in accordance with
its respective Pro Rata Share of the Commitment, indemnify and hold the
Administrative Agent, the Lead Arranger and Sole Book Manager and their
Affiliates and their respective directors, officers, agents, and employees
harmless against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses, or disbursements of any
kind or nature whatsoever (including, without limitation, attorney's fees and
disbursements) that may be imposed on, incurred by, or asserted against it or
them in any way relating to or arising out of this Agreement (other than losses
incurred by reason of the failure by Borrower to pay the obligations due to the
Administrative Agent under a Note) or any action taken or not taken by it as
Administrative Agent thereunder, except for the Administrative Agent's gross
negligence or willful misconduct. Without limitation on the foregoing, each Bank
shall reimburse the Administrative Agent upon demand for that Bank's ratable
share of any cost or expense incurred by the Administrative Agent in connection
with the negotiation, preparation, execution, delivery, administration,
amendment, waiver, refinancing, restructuring, reorganization (including a
bankruptcy reorganization), or enforcement of the Loan Documents, to the extent
that Borrower is required by Section 11.3 to pay that cost or expense but fails
to do so upon demand. Any such reimbursement shall not relieve Borrower of its
obligations under Section 11.3.

            10.7 Successor Administrative Agent. The Administrative Agent may
resign as such at any time by written notice to Borrower and the Banks, to be
effective upon a successor's acceptance of appointment as Administrative Agent.
The Majority Banks may at any time remove the Administrative Agent by written
notice to that effect to be effective on such date as the Majority Banks
designate. In either event, the Majority Banks shall appoint a successor
Administrative Agent or Agents, who must be from among the Banks and who shall
be subject to the prior approval of Borrower, which approval shall not be
unreasonably withheld or delayed, provided, that the Administrative Agent shall
be entitled to appoint a successor Administrative Agent from among the Banks,
subject to acceptance of appointment by that successor Administrative Agent, if
the Majority Banks have not appointed a successor Administrative Agent within
thirty (30) days after the date the Administrative Agent gave notice of
resignation or was removed. Upon a successor's acceptance of appointment as
Administrative Agent, the successor will thereupon succeed to and become vested
with all the rights, powers, privileges, and duties of the Administrative Agent
under the Loan Documents,



                                      -74-
<PAGE>   81

and the resigning or removed Administrative Agent will thereupon be discharged
from its duties and obligations thereafter arising under the Loan Documents.
After any retiring Administrative Agent's resignation or removal hereunder as
Administrative Agent, the provisions of this Article 10 and Sections 11.3 and
11.10 shall inure to its benefit as to any action taken or omitted to be taken
by it while it was Administrative Agent under this Agreement.

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

            10.9 Defaulting Banks. If for any reason any Bank wrongfully (in
violation of this Agreement) fails or refuses to timely make any Advance
required of it, or otherwise defaults on any of its material obligations under
this Agreement, and fails to cure its default within 5 Banking Days of receiving
notice of its failure to perform (such Bank being a "Defaulting Bank"), then in
addition to the rights and remedies that may be available to the Administrative
Agent and the Banks at law or in equity, the Defaulting Bank's right to
participate in the Loan and the Agreement will be suspended during the pendency
of the Defaulting Bank's uncured default, and (without limiting the foregoing)
the Administrative Agent may (or at the direction of the Majority Banks, shall)
withhold from the Defaulting Bank any interest payments, fees, principal
payments or other sums otherwise payable to such Defaulting Bank under the Loan
Documents until such default of such Defaulting Bank has been cured. Each
non-defaulting Bank will have the right, but not the obligation, in its sole
discretion, to acquire at par a proportionate share (based on the ratio of its
Pro Rata Share of the Commitment to the aggregate amount of the Pro Rata Shares
of the Commitments of all of the non-defaulting Banks that elect to acquire a
share of the Defaulting Bank's Pro Rata Share of the Commitment) of the
Defaulting Bank's Pro Rata Share of the Commitment, including without limitation
its proportionate share in the outstanding principal balance of the Loans. The
Defaulting Bank will pay and protect, defend and indemnify Administrative Agent
and each of the other Banks against, and hold Administrative Agent, and each of
the other Banks harmless from, all claims, actions, proceedings, liabilities,
damages, losses, and expenses (including without limitation attorneys' fees and
costs, and interest at the Prime Rate plus 2.0% per annum for the funds advanced
by Administrative Agent or any Banks on account of the Defaulting Bank) they may
sustain or incur by reason of or in consequence of the Defaulting Bank's failure
or refusal to perform its obligations under the Loan Documents. Administrative
Agent may set off against payments due to the Defaulting Bank for the claims of
Administrative Agent and the other Banks against the Defaulting Bank. The
exercise of these remedies will not reduce, diminish or liquidate the Defaulting
Bank's Pro Rata Share of the Commitment (except to the extent that part or all
of such Pro Rata Share of the Commitment is acquired by the other Banks as
specified above) or its obligations to share losses and reimbursement for costs,
liabilities and expenses under this Agreement. This indemnification will survive
the payment and satisfaction of all of the Borrower's obligations and
liabilities to the Banks. The foregoing provisions of this Section 10.9 are
solely for the benefit of the Administrative Agent and the Banks, and may not be
enforced or relied upon by the Borrower.



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                                   Article 11
                                 MISCELLANEOUS

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

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

               (a) to amend or modify the principal of, or the amount of
        principal or principal prepayments, payable on any Obligation or (except
        as provided in Section 2.6) the amount of the Commitment or to decrease
        the rate of any interest or fee payable to any Bank;

               (b) to postpone any date fixed for any payment of principal of,
        prepayment of principal of, or any installment of interest on, any
        Obligation or any installment of any fee or (except as provided in
        Section 2.6) to extend the term of the Commitment;

               (c) to amend or modify the provisions of the definitions in
        Section 1.1 of "Majority Banks" or "Required Banks" or of Sections 11.2,
        11.9, 11.10, or 11.11;

               (d) release any Guarantor Subsidiary from liability under the
        Subsidiary Guaranty (except as provided below); or

               (e) to amend or modify any provision of this Agreement or the
        Loan Documents that expressly requires the consent or approval of all
        the Banks.

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

            11.3 Costs, Expenses and Taxes. Borrower shall pay within 30 days
after demand (which demand shall be accompanied by an invoice in reasonable
detail) the reasonable actual out-of-pocket costs and expenses of the
Administrative Agent and Lead Arranger and Sole Book



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

            11.4 Nature of Banks' Obligations. Nothing contained in this
Agreement or any other Loan Document and no action taken by the Administrative
Agent or the Banks or any of them pursuant hereto or thereto may, or may be
deemed to, make the Banks a partnership, an association, a joint venture, or
other entity, either among themselves or with Borrower. Each Bank's obligation
to make any Advance pursuant hereto is several and not joint or joint and
several, and is not conditioned



                                      -77-
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upon the performance by any other Bank of its obligation to make Advances. A
default by any Bank will not increase the Pro Rata Share of the Commitment of
any other Bank. Any Bank not in default may, if it desires, assume in such
proportion as the nondefaulting Banks agree the obligations of any Bank in
default, but is not obligated to do so.

            11.5 Representations and Warranties. All representations and
warranties of Borrower and any other Party contained herein or in any other Loan
Document (including, for this purpose, all representations and warranties
contained in any certificate or other writing required to be delivered by or on
behalf of Borrower or such Party pursuant to any Loan Document) will survive the
making of the loans hereunder and the execution and delivery of the Notes, and,
in the absence of actual knowledge by the Administrative Agent or a Bank of the
untruth of any representation or warranty, have been or will be relied upon by
the Administrative Agent and that Bank, notwithstanding any investigation made
by the Administrative Agent or that Bank or on their behalf.

            11.6 Notices. Except as otherwise provided in any Loan Document, all
notices, requests, demands, directions, and other communications provided for
hereunder and under any other Loan Document must be in writing and must be
mailed (provided that communications related to any Default or Event of Default
or proposed action under Section 11.2 shall not be sent solely by mail),
telegraphed, delivered, or sent by telex, telecopier or cable to the appropriate
party at the address set forth on the signature pages of this Agreement or, as
to any Party, at any other address as may be designated by it in the applicable
Loan Document or in a written notice sent to the Administrative Agent and
Borrower in accordance with this Section. Except as otherwise provided in any
Loan Document if any notice, request, demand, direction, or other communication
is given by mail it will be effective on the earlier of actual receipt or the
third Banking Day after deposited in the United States mails with first class or
airmail postage prepaid; if given by telegraph or cable, when delivered to the
telegraph company with charges prepaid; if given by telecopier, when sent; if
given by telex, when confirmed by answerback; or if given by personal delivery,
when delivered. The Administrative Agent will endeavor to forward to Borrower a
list of the contact persons and addresses of each of the Banks on a quarterly
basis, but the Administrative Agent's failure to do so will not relieve Borrower
from any notice or other requirements set forth in this Agreement.

            11.7 Execution in Counterparts. This Agreement and any other Loan
Document to which Borrower is a Party may be executed in any number of
counterparts and any party hereto or thereto may execute any counterpart, each
of which when executed and delivered will be deemed to be an original and all of
which counterparts of this Agreement or any other Loan Document, as the case may
be, taken together will be deemed to be but one and the same instrument. Such
counterparts may be sent by telecopy, with the original counterparts to follow
by mail or courier. The execution of this Agreement or any other Loan Document
by any party hereto or thereto will not become effective until executed
counterparts hereof or thereof (or other evidence of execution satisfactory to
the Administrative Agent and Borrower) have been delivered to the Administrative
Agent and Borrower.

            11.8 Binding Effect; Assignment.

               (a) This Agreement and the other Loan Documents to which Borrower
        is a Party will be binding upon and inure to the benefit of Borrower,
        the Agents, each of the Banks, and their respective successors and
        assigns, except that except as permitted in Section 6.3, Borrower may
        not assign its rights hereunder or thereunder or any interest herein or
        therein without the prior written consent of all the Banks. Any Bank may
        at any time pledge its Notes or any other instrument evidencing its
        rights as a Bank hereunder to a Federal Reserve Bank,



                                      -78-
<PAGE>   85

        but no such pledge shall release that Bank from its obligations
        hereunder or grant to such Federal Reserve Bank the rights of a Bank
        hereunder absent foreclosure of such pledge.

               (b) From time to time following the 2000 Closing Date, each Bank
        may assign to one or more Eligible Assignee all or any portion of its
        Pro Rata Share of the Commitment; provided that (i) such Eligible
        Assignee, if not then a Bank, shall be approved by each of the
        Administrative Agent (which approval shall not be unreasonably withheld)
        and by Borrower (which approval shall not be unreasonably withheld and
        which approval shall not be necessary after an Event of Default has
        occurred and is continuing), (ii) such assignment shall be evidenced by
        a Commitment Assignment and Acceptance, a copy of which shall be
        furnished to the Administrative Agent as hereinbelow provided; (iii)
        except in the case of an assignment to an Affiliate of the assigning
        Bank, to another Bank or of the entire remaining Commitment of the
        assigning Bank, the assignment shall not assign a Pro Rata Share of the
        Commitment equivalent to less than $20,000,000 and that is not an
        integral multiple of $5,000,000 (which restrictions shall not apply
        while an Event of Default has occurred and is continuing), (iv) except
        in the case of an assignment of the entire remaining Commitment of the
        assigning Bank, giving effect to the assignment, the assigning Bank will
        not be in violation of its Applicable Minimum Hold Requirement (unless
        an Event of Default has occurred and is continuing) and (v) the
        effective date of any such assignment shall be as specified in the
        Commitment Assignment and Acceptance, but not earlier than the date
        which is 5 Banking Days after the date the Administrative Agent has
        received the Commitment Assignment and Acceptance. Upon the effective
        date of such Commitment Assignment and Acceptance, the Eligible Assignee
        named therein shall be a Bank for all purposes of this Agreement with
        the Pro Rata Shares of the Commitment therein set forth and, to the
        extent of such Pro Rata Shares, the assigning Bank shall be released
        from its further obligations under this Agreement. Borrower agrees that
        it shall execute and deliver (against delivery by the assigning Bank to
        Borrower of its Notes under this Agreement) to such assignee Bank, Notes
        evidencing that assignee Bank's Pro Rata Share, and to the assigning
        Bank, Notes evidencing the remaining balance Pro Rata Share retained by
        the assigning Bank.

               (c) By executing and delivering a Commitment Assignment and
        Acceptance, the Eligible Assignee thereunder acknowledges and agrees
        that: (i) other than the representation and warranty that it is the
        legal and beneficial owner of the Pro Rata Shares of the Commitment
        being assigned thereby free and clear of any adverse claim, the
        assigning Bank has made no representation or warranty and assumes no
        responsibility with respect to any statements, warranties or
        representations made in or in connection with this Agreement or the
        execution, legality, validity, enforceability, genuineness or
        sufficiency of this Agreement or any other Loan Document; (ii) the
        assigning Bank has made no representation or warranty and assumes no
        responsibility with respect to the financial condition of Borrower or
        the performance by Borrower of its obligations under this Agreement;
        (iii) it has received a copy of this Agreement, together with copies of
        the most recent financial statements delivered pursuant to this
        Agreement and such other documents and information as it has deemed
        appropriate to make its own credit analysis and decision to enter into
        such Commitment Assignment and Acceptance; (iv) it will, independently
        and without reliance upon the Administrative Agent, or any Bank and
        based on such documents and information as it shall deem appropriate at
        the time, continue to make its own credit decisions in taking or not
        taking action under this Agreement; (v) it appoints and authorizes the
        Administrative Agent to take such action and to exercise such powers as
        are delegated to the Administrative Agent by this Agreement; and (vi) it
        will perform



                                      -79-
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        in accordance with their terms all of the obligations which by the terms
        of this Agreement are required to be performed by it as a Bank.

               (d) After receipt of a completed Commitment Assignment and
        Acceptance executed by any Bank and an Eligible Assignee, and receipt of
        an assignment fee of $5,000 from such Eligible Assignee, the
        Administrative Agent shall, at least one Banking Day prior to the
        effective date thereof, provide to Borrower and the Banks a revised
        Schedule 1.1 giving effect thereto.

               (e) Each Bank may from time to time grant participations to one
        or more banks or other financial institutions (including another Bank)
        in its Pro Rata Share of the Commitment; provided, however, that (i)
        such participant, if not an Affiliate of the granting Bank, shall be
        approved by Borrower (which approval shall not be unreasonably withheld
        and which approval shall not be necessary after an Event of Default has
        occurred and is continuing), (ii) such Bank's obligations under this
        Agreement shall remain unchanged, (iii) such Bank shall remain solely
        responsible to the other parties hereto and thereto for the performance
        of such obligations, (iv) the participating bank or other financial
        institution shall not be a Bank hereunder for any purpose except, if
        the participation agreement so provides, for the purposes of recovery of
        eurodollar costs or capital adequacy expenses or indemnifications
        provided to the Banks under this Agreement but only to the extent that
        the cost of such benefits to Borrower does not exceed the cost which
        Borrower would have incurred in respect of such Bank absent the
        participation, (v) the participating bank or other financial institution
        shall be prohibited from transferring, encumbering or granting any
        sub-participation interest in the participation interest, (vi) Borrower,
        the Administrative Agent, and the other Banks shall continue to deal
        solely and directly with such Bank in connection with such Bank's rights
        and obligations under this Agreement, (vii) the participation interest
        granted shall not be with respect to a Pro Rata Share of the Commitment
        equivalent to less than $20,000,000 (which restriction shall not apply
        while an Event of Default has occurred and is continuing), (viii) giving
        effect to the participation, the granting Bank will not be in violation
        of its Applicable Minimum Hold Requirement (unless an Event of Default
        has occurred and is continuing), (ix) the consent of the holder of such
        participation interest shall not be required for amendments or waivers
        of provisions of the Loan Documents other than those which (A) extend
        the maturity dates or any other date upon which any payment of money is
        due to the Banks (other than pursuant to Section 2.6), (B) reduce the
        rate of interest, any fee or any other monetary amount payable to the
        Banks, (C) reduce the amount of any installment of principal due to the
        Banks thereunder, (D) release any Guarantor Subsidiary from its
        obligations under the Subsidiary Guaranty (except as provided in Section
        11.2), or (E) release any material portion of any collateral securing
        any of the obligations of Borrowers to the Banks and (x) to the extent
        that the holder of the participation interest is granted consent rights
        with respect to the matters described in clause (ix), such rights must
        be subject to a voting procedure whereby the holders of the entire Pro
        Rata Share of the Commitment held by the participating Bank shall act in
        such matters in accordance with the vote of a majority-in-interest of
        such Pro Rata Share of the Commitment.

            11.9 Sharing of Setoffs . Each Bank severally agrees that if it,
through the exercise of the right of setoff, banker's lien, or counterclaim
against Borrower or otherwise, receives payment of the Obligations due it
hereunder and under the Notes that is ratably more than that to which it is
entitled hereunder pursuant to Section 3.14 or 9.2(e), then: (a) the Bank
exercising the right of setoff, banker's lien, or counterclaim or otherwise
receiving such payment shall purchase, and shall be deemed to have
simultaneously purchased, from the other Bank a participation in the Obligations
held by the other Bank



                                      -80-
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and shall pay to the other Bank a purchase price in an amount so that the share
of the Obligations held by each Bank after the exercise of the right of setoff,
banker's lien, or counterclaim or receipt of payment shall be in the same
proportion that existed prior to the exercise of the right of setoff, banker's
lien, or counterclaim or receipt of payment, and (b) such other adjustments and
purchases of participations shall be made from time to time as shall be
equitable to ensure that all of the Banks share any payment obtained in respect
of the Obligations ratably in accordance with the provisions of Section 3.14 and
9.2(e), provided that, if all or any portion of a disproportionate payment
obtained as a result of the exercise of the right of setoff, banker's lien,
counterclaim or otherwise is thereafter recovered from the purchasing Bank by
Borrower or any Person claiming through or succeeding to the rights of Borrower,
the purchase of a participation shall be rescinded and the purchase price
thereof shall be restored to the extent of the recovery, but without interest.
Each Bank that purchases a participation in the Obligations pursuant to this
Section shall from and after the purchase have the right to give all notices,
requests, demands, directions and other communications under this Agreement with
respect to the portion of the Obligations purchased to the same extent as though
the purchasing Bank were the original owner of the Obligations purchased.
Borrower expressly consents to the foregoing arrangements and agrees that, to
the extent permitted by Law, any Bank holding a participation in an Obligation
so purchased may exercise any and all rights of setoff, banker's lien or
counterclaim with respect to the participation as fully as if the Bank were the
original owner of the Obligation purchased.

            11.10 Indemnity by Borrower. Borrower agrees to indemnify, save,
and hold harmless the Administrative Agent and Lead Arranger and Sole Book
Manager and each Bank and their directors, officers, agents, attorneys, and
employees (collectively, the "indemnitees") from and against: (i) any and all
claims, demands, actions or causes of action that are asserted against any
indemnitee (other than by Borrower or by any other indemnitee) if the claim,
demand, action or cause of action arises out of or relates to a Commitment, the
use of proceeds of any Loans, any transaction contemplated pursuant to this
Agreement, or any relationship or alleged relationship of any indemnitee to
Borrower related to this Agreement; (ii) any administrative or investigative
proceeding by any Governmental Agency arising out of or related to a claim,
demand, action or cause of action described in clause (i) above; and (iii) any
and all liabilities, losses, costs, or expenses (including reasonable attorneys'
fees and disbursements (including the allocated cost of in-house counsel)) that
any indemnitee suffers or incurs as a result of any of the foregoing; provided,
that Borrower shall have no obligation under this Section to any indemnitee with
respect to any of the foregoing arising out of the gross negligence or willful
misconduct of that indemnitee or the breach by the indemnitee of this Agreement
or from the transfer or disposition of any Note by any Bank. If any claim,
demand, action or cause of action is asserted against any indemnitee, such
indemnitee shall promptly notify Borrower, but the failure to so promptly notify
Borrower shall not affect Borrower's obligations under this Section unless such
failure materially prejudices Borrower's right to participate in the contest of
such claim, demand, action or cause of action, as hereinafter provided. If
requested by Borrower in writing and so long as no Default or Event of Default
shall have occurred and be continuing, such indemnitee shall in good faith
contest the validity, applicability and amount of such claim, demand, action or
cause of action, shall permit Borrower to participate in such contest and shall
cooperate with Borrower to the extent their interests are aligned. Any
indemnitee that proposes to settle or compromise any claim or proceeding for
which Borrower may be liable for payment of indemnity hereunder shall give
Borrower written notice of the terms of such proposed settlement or compromise
reasonably in advance of settling or compromising such claim or proceeding and
shall not so settle or compromise without Borrower's written approval thereof,
which approval may be withheld in Borrower's sole discretion. Any voluntary
settlement by an indemnitee of such a claim or proceeding without Borrower's
written approval shall relieve Borrower of its obligation to indemnify that
indemnitee with respect to such claim or proceeding. In any legal action
involving more than one indemnitee, all indemnitees shall be represented by a
single legal counsel unless



                                      -81-
<PAGE>   88

such legal counsel determines that a defense or counterclaim is available to an
indemnitee that is not available to all indemnitees and that to assert such a
defense or counterclaim would create a conflict of interest, or a potential
conflict of interest, in which case such indemnitee shall be entitled to
separate legal counsel. Any obligation or liability of Borrower to any
indemnitee under this Section shall survive the expiration or termination of
this Agreement and the repayment of all Loans and all other Obligations owed to
the Banks.

            11.11 Nonliability of Banks. The relationship between Borrower and
the Banks is, and shall at all times remain, solely that of borrower and
lenders, and the Banks and the Administrative Agent neither undertake nor assume
any responsibility or duty to Borrower to review, inspect, supervise, pass
judgment upon, or inform Borrower of any matter in connection with any phase of
Borrower's business, operations, or condition, financial or otherwise. Borrower
shall rely entirely upon its own judgment with respect to such matters, and any
review, inspection, supervision, exercise of judgment, or information supplied
to Borrower by any Bank or the Agents in connection with any such matter is for
the protection of the Banks and the Agents, and neither Borrower nor any third
party is entitled to rely thereon.

            11.12 Confidentiality. Each Bank agrees that it and its employees
shall use any confidential information that such Bank may receive, directly or
indirectly, from Borrower pursuant to this Agreement only for the purposes of
this Agreement and shall hold such confidential information in confidence,
except for disclosure: to Affiliates of the Bank (provided that any such
Affiliate who is a "person" described in Rule 100(b)(1) of Regulation FD of the
Commission expressly agrees to maintain the disclosed information in confidence
or otherwise falls within the exceptions to Rule 100(a) of Regulation FD set
forth in Rule 100(b)(2) of Regulation FD); to other Banks; to legal counsel,
accountants and other professional advisors to that Bank; to regulatory
officials having jurisdiction over that Bank; as required by Law or legal
process (provided that the Bank shall, to the extent possible give sufficient
notice to Borrower of such legal process to enable Borrower to oppose such legal
process, and in any event, give written notice to Borrower of such legal process
as soon as practicable) or in connection with any legal proceeding to which that
Bank and Borrower are adverse parties; and to another financial institution in
connection with a disposition or proposed disposition to that financial
institution of all or part of that Bank's interests hereunder or a participation
interest in its Notes (provided that such disclosure is made subject to an
appropriate confidentiality agreement by such institution on terms substantially
similar to this Section). For purposes of the foregoing, "confidential
information" shall mean any information respecting Borrower or its Subsidiaries
reasonably considered by Borrower to be confidential, other than (a) information
previously filed with any Governmental Agency and available to the public, (b)
information previously published in any public medium from a source other than,
directly or indirectly, the Agents or any Bank, and (c) information previously
disclosed by Borrower to any Person not associated with Borrower without any
reasonable expectation of confidentiality. Nothing in this Section shall be
construed to create or give rise to any fiduciary duty on the part of the Agents
or the Banks to Borrower.

            11.13 No Third Parties Benefited. This Agreement is made for the
purpose of defining and setting forth certain obligations, rights and duties of
Borrower, the Agents and the Banks in connection with the Commitment, and is
made for the sole benefit of Borrower, the Administrative Agent and the Banks,
and the Administrative Agent's and the Banks' successors and assigns. Except as
provided in Sections 11.8 and 11.10, no other Person shall have any rights of
any nature hereunder or by reason hereof.


                                      -82-
<PAGE>   89

            11.14 Other Dealings. Any Bank may, without liability to account to
the other Banks, accept deposits from, lend money or provide credit facilities
to and generally engage in any kind of banking or other business with Borrower
and its Subsidiaries.

            11.15 Right of Setoff - Deposit Accounts. Upon the occurrence of an
Event of Default and the acceleration of maturity of the principal indebtedness
under any of the Notes pursuant to Section 9.2, Borrower hereby specifically
authorizes each Bank in which Borrower maintains a deposit account (whether a
general or special deposit account, other than trust accounts) or a certificate
of deposit to setoff any Obligations owed to the Banks against such deposit
account or certificate of deposit without prior notice to Borrower (which notice
is hereby waived) whether or not such deposit account or certificate of deposit
has then matured. Nothing in this Section shall limit or restrict the exercise
by a Bank of any right to setoff or banker's lien under applicable Law, subject
to the approval of the Majority Banks.

            11.16 Further Assurances. Borrower shall, at its expense and without
expense to the Banks or the Administrative Agent, do, execute, and deliver such
further acts and documents as any Bank or the Administrative Agent from time to
time reasonably requires for the assuring and confirming unto the Banks or the
Administrative Agent the rights hereby created or intended now or hereafter so
to be, or for carrying out the intention or facilitating the performance of the
terms of any Loan Document; provided that this Section 11.16 is not intended to
create any affirmative obligation on the part of Borrower to provide collateral
security, additional guarantors or other credit enhancement with respect to the
Obligations.

            11.17 Integration. This Agreement, together with the other Loan
Documents, comprises the complete and integrated agreement of the parties on the
subject matter hereof and supersedes all prior agreements, written or oral, on
the subject matter hereof except as expressly provided herein to the contrary;
provided that the foregoing is subject to Section 4.18 hereof. The Loan
Documents were drafted with the joint participation of Borrower and the Banks
and shall be construed neither against nor in favor of either, but rather in
accordance with the fair meaning thereof.

            11.18 Governing Law. The Loan Documents shall be governed by, and
construed and enforced in accordance with, the Laws of California.

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

            11.20 Headings. Article and section headings in this Agreement and
the other Loan Documents are included for convenience of reference only and are
not part of this Agreement or the other Loan Documents for any other purpose.

            11.21 Conflict in Loan Documents. To the extent there is any actual
irreconcilable conflict between the provisions of this Agreement and any other
Loan Document, the provisions of this Agreement shall prevail.

            11.22 Waiver Of Jury Trial. EACH OF THE PARTIES HERETO HEREBY
EXPRESSLY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR



                                      -83-
<PAGE>   90

PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT, THE NOTES, ANY
OTHER LOAN DOCUMENT OR UNDER ANY AMENDMENT, INSTRUMENT OR DOCUMENT DELIVERED OR
WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR ARISING FROM ANY
BANKING OR OTHER RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT, THE
NOTES OR ANY OTHER LOAN DOCUMENT AND AGREES THAT ANY SUCH ACTION OR PROCEEDING
SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY. ANY PARTY TO THIS AGREEMENT
MAY FILE AN ORIGINAL COUNTERPART OR COPY OF THIS SECTION WITH ANY COURT AS
WRITTEN EVIDENCE OF THE CONSENT OF THE SIGNATORIES HERETO TO THE WAIVER OF THEIR
RIGHT TO TRIAL BY JURY.

            11.23 Purported Oral Amendments. BORROWER EXPRESSLY ACKNOWLEDGES
THAT THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS MAY ONLY BE AMENDED OR
MODIFIED, OR THE PROVISIONS HEREOF OR THEREOF WAIVED OR SUPPLEMENTED, BY AN
INSTRUMENT IN WRITING THAT COMPLIES WITH SECTION 11.2. BORROWER AGREES THAT IT
WILL NOT RELY ON ANY COURSE OF DEALING, COURSE OF PERFORMANCE, OR ORAL OR
WRITTEN STATEMENTS BY ANY REPRESENTATIVE OF ANY AGENT OR ANY BANK THAT DOES NOT
COMPLY WITH SECTION 11.2 TO EFFECT AN AMENDMENT, MODIFICATION, WAIVER OR
SUPPLEMENT TO THE AGREEMENT OR THE OTHER LOAN DOCUMENTS.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]



                                      -84-
<PAGE>   91

            11.24 Hazardous Materials Indemnity. Without limiting any other
indemnity provided for in the Loan Documents, Borrower agrees to indemnify the
Administrative Agent, the Lead Arranger and Sole Book Manager and each Bank and
their directors, officers, agents, attorneys, and employees (collectively, the
"indemnities") from any claim, liability, loss, cost or expense (including
reasonable attorneys' fees (including the allocated cost of in-house counsel))
directly or indirectly arising out of the use, generation, manufacture,
production, storage, release, threatened release, discharge, disposal or
presence of any Hazardous Materials if such Hazardous Materials are on, under,
about or relate to Borrower's Property or operations, so long as such claim,
liability, loss, cost or expense arises out of or relates to a Commitment, the
use of proceeds of any Loans, any transaction contemplated pursuant to this
Agreement, or any relationship or alleged relationship of any indemnitee to
Borrower related to this Agreement.

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

                         KAUFMAN AND BROAD HOME CORPORATION

                         By /s/ Bryan A. Binyon
                            --------------------------------------------
                                        Bryan A. Binyon
                                  Vice President and Treasurer

                         10990 Wilshire Boulevard
                         Los Angeles, California 90024

                         Attention:   Bryan A. Binyon
                                      Vice President and Treasurer

                         Telecopier:  310.231.4140
                         Telephone:   310.231.4025

<PAGE>   92

                         BANK OF AMERICA, N.A., as Administrative Agent and a
                         Bank

                         By: /s/ Kelly M. Allred
                            -------------------------------------------------
                                      Kelly M. Allred
                                         Principal

                         Domestic Lending Office

                         Bank of America, N.A.
                         5 Park Plaza, Suite 500
                         Irvine, California 92614

                         Attention:   Kelly M. Allred
                                      Principal

                         Telecopier:  949.260.5639
                         Telephone:   949.260.5654


                         LIBOR Lending Office

                         Bank of America, N.A.
                         5 Park Plaza, Suite 500
                         Irvine, California 92614

                         Attention:   Jean Ashley

                         Telecopier:  949.260.5637
                         Telephone:   949.260.5682


<PAGE>   93

                         CREDIT LYONNAIS LOS ANGELES BRANCH

                         By: /s/ DIANNE M. SCOTT
                            -----------------------------------------
                            DIANNE M. SCOTT
                            FIRST VICE PRESIDENT AND MANAGER
                                      Printed Name and Title

                         Address:

                         Credit Lyonnais Los Angeles Branch
                         515 South Flower Street, 22nd Floor
                         Suite 2200
                         Los Angeles, California 90071
                         Attn:        Frank Herrera
                                      Vice President

                         Telephone:   213.362.5957
                         Telecopier:  213.623.3437


<PAGE>   94

                         BANK ONE, NA

                         By: /s/ KENNETH S. NELSON
                            -----------------------------------------
                                      KENNETH S. NELSON
                                    SENIOR VICE PRESIDENT
                            -----------------------------------------
                                      Printed Name and Title

                         Address:

                         Bank One, NA
                         One Bank One Plaza
                         Chicago, Illinois 60670
                         Attn: F. Pat Schiewitz

                         Telephone:   312.732.1148
                         Telecopier:  312.732.1117


<PAGE>   95

                         BANK UNITED

                         By: /s/ THOMAS S. GRIFFIN
                            -----------------------------------------
                                      THOMAS S. GRIFFIN, SVP
                            -----------------------------------------
                                      Printed Name and Title

                         Address:

                         Bank United
                         3200 South West Fwy.
                         Houston, Texas 77027
                         Attn:        Tom Griffin
                                      Senior Vice President

                         Telephone:   760.804.8595
                         Telecopier:  760.804.8590


<PAGE>   96

                         PNC BANK, N.A.

                         By: /s/ DOUGLAS G. PAUL
                            -----------------------------------------
                                 DOUGLAS G. PAUL, SR. VICE PRESIDENT
                            -----------------------------------------
                                      Printed Name and Title

                         Address:

                         PNC Bank, N.A.
                         Two Tower Center, 18th Floor
                         East Brunswick, New Jersey 08816
                         Attn: Douglas G. Paul

                         Telephone:   732.220.3566
                         Telecopier:  732.220.3744


<PAGE>   97

                         COMERICA BANK

                         By: /s/ SAM MEEHAN
                            -----------------------------------------
                                      SAM MEEHAN - ASSISTANT V.P.
                            -----------------------------------------
                                      Printed Name and Title

                         Address:

                         Comerica Bank
                         One Detroit Center - MC3256
                         500 Woodward Avenue, 7th Floor
                         Detroit, Michigan 48226-3256
                         Attn: Sam Meehan

                         Telephone:   313.222.5461
                         Telecopier:  313.222.3295


<PAGE>   98

                         SUNTRUST BANK

                         By: /s/ DON GAUDETTE
                            -----------------------------------------
                                      DON GAUDETTE DIRECTOR
                            -----------------------------------------
                                      Printed Name and Title

                         Address:

                         SunTrust Bank
                         303 Peachtree Street MC1931
                         Atlanta, Georgia 30308
                         Attn: Don Gaudette

                         Telephone:   404.658.4925
                         Telecopier:  404.827.6270


<PAGE>   99

                         GUARANTY FEDERAL BANK, F.S.B.

                         By: /s/ JENNIFER E. RAY
                            -----------------------------------------
                                      JENNIFER E. RAY, VICE PRESIDENT
                            -----------------------------------------
                                      Printed Name and Title

                         Address:

                         Guaranty Federal Bank, F.S.B.
                         8333 Douglas Avenue
                         Dallas, Texas 75225
                         Attn: Jenny Ray

                         Telephone:   214.360.2837
                         Telecopier:  214.360.1661


<PAGE>   100

                         KBC BANK N.V.


                         By: /s/ ROBERT SNAUFFER
                            -----------------------------------------
                                      ROBERT SNAUFFER
                                      FIRST VICE PRESIDENT
                            -----------------------------------------
                                      Printed Name and Title


                         By: /s/ KENNETH D. CONNOR
                            -----------------------------------------
                                      KENNETH D. CONNOR
                                      VICE PRESIDENT
                                      REAL ESTATE
                            -----------------------------------------
                                      Printed Name and Title


                         Address:

                         KBC Bank N.V.
                         515 South Figueroa Street, Suite 1920
                         Los Angeles, California 90071
                         Attn: Kevin McKenna
                         Vice President

                         Telephone:   213.996.7529
                         Telecopier:  213.629.5801


<PAGE>   101

                         THE INDUSTRIAL BANK OF JAPAN, LIMITED

                         By: /s/ VICENTE L. TIMIRAOS
                            -----------------------------------------
                                      VICENTE L. TIMIRAOS
                                      JOINT GENERAL MANAGER
                            -----------------------------------------
                                      Printed Name and Title

                         Address:

                         The Industrial Bank of Japan, Limited
                         Los Angeles Agency
                         350 South Grand Avenue, Suite 1500
                         Los Angeles, California 90071
                         Attn: Mr. Takeshi Kubo
                         Vice President

                         Telephone:   213.893.6447
                         Telecopier:  213.488.9840


<PAGE>   102

                         CITICORP USA, INC.

                         By: /s/ JAMES M. BUCHANAN
                            -----------------------------------------
                                   James M. Buchanan, Vice President
                            -----------------------------------------
                                      Printed Name and Title

                         Address:

                         Citicorp USA, Inc.
                         c/o Salomon Smith Barney, Inc.
                         390 Greenwich Street
                         New York, New York 10013
                         Attn: Suzanne Crymes
                         Vice President

                         Telephone:   212.723.6532
                         Telecopier:  212.723.8547
<PAGE>   103
                                   EXHIBIT A

                      COMMITMENT ASSIGNMENT AND ACCEPTANCE

               THIS COMMITMENT ASSIGNMENT AND ACCEPTANCE ("Agreement") dated as
of ______________ is made with reference to that certain 2000 Revolving Loan
Agreement, dated as of October 3, 2000 (the "Loan Agreement") among KBHC, the
Banks party thereto, Credit Lyonnais Los Angeles Branch, as Syndication Agent,
Bank One, NA, as Documentation Agent, and Bank of America, N.A., as
Administrative Agent, and is entered into between the "Assignor" described
below, in its capacity as a Bank under the Loan Agreement, and the "Assignee"
described below. Assignor and Assignee hereby represent, warrant and agree as
follows:

        1. Definitions. Capitalized terms defined in the Loan Agreement are used
herein with the meanings set forth for such terms in the Loan Agreement. As used
in this Agreement, the following capitalized terms shall have the meanings set
forth below:

               "Assignee" means_________________________________________.

               "Assigned Pro Rata Share" means (a)______ % of the Commitment of
the Banks under the Loan Agreement, being equal to the following dollar amount:
$____________.

               "Assignor" means______________________________________.

               "Effective Date" means______________, the effective date of this
Agreement determined in accordance with Section 11.8 of the Loan Agreement.

               "KBHC" means Kaufman and Broad Home Corporation, a Delaware
corporation, and its successors.

        2. Representations and Warranties of the Assignor. The Assignor
represents and warrants, as of the date hereof, as follows:

               (a) The Pro Rata Share of the Assignor is _______% of the
Commitment (without giving effect to assignments thereof which have not yet
become effective). The Assignor is the legal and beneficial owner of the
Assigned Pro Rata Share and the Assigned Pro Rata Share is free and clear of any
adverse claim.

               (b) The outstanding principal balance of Advances made by
Assignor under the Commitment is $___________.

               (c) The Assignor has full power and authority, and has taken all
action necessary to execute and deliver this Agreement and any and all other
documents required or permitted to be executed or delivered by it in connection
with this Agreement and to fulfill its obligations under, and to consummate the
transactions contemplated by, this Agreement, and no governmental authorizations
or other authorizations are required in connection therewith.

               (d) This Agreement constitutes the legal, valid and binding
obligation of the Assignor.


                            (Exhibit A, Page 1 of 7)
<PAGE>   104
Assignor makes no representation or warranty and assumes no responsibility with
respect to the financial condition of KBHC or the performance by KBHC of its
obligations under the Loan Agreement, and assumes no responsibility with respect
to any statements, warranties or representations made or in connection with the
Loan Agreement or the execution, legality, validity, enforceability, genuineness
or sufficiency of the Loan Agreement or any Loan Document other than as
expressly set forth above.

        3. Representations and Warranties of the Assignee. The Assignee hereby
represents and warrants to the Assignor as follows:

               (a) The Assignee is an Eligible Assignee;

               (b) The Assignee has full power and authority, and has taken all
action necessary to execute and deliver this Agreement, and any and all other
documents required or permitted to be executed or delivered by it in connection
with this Agreement and to fulfill its obligations under, and to consummate the
transactions contemplated by, this Agreement, and no governmental authorizations
or other authorizations are required in connection therewith;

               (c) This Agreement constitutes the legal, valid and binding
obligation of the Assignee;

               (d) The Assignee has independently and without reliance upon the
Assignor and based on such information as the Assignee has deemed appropriate,
made its own credit analysis and decision to enter into this Agreement. Assignee
will, independently and without reliance upon the Administrative Agent or any
Bank, and based upon such documents and information as it shall deem appropriate
at the time, continue to make its own credit decisions in taking or not taking
action under the Loan Agreement;

               (e) The Assignee has received copies of the Loan Agreement and
such of the Loan Documents as it has requested, together with copies of the most
recent financial statements delivered pursuant to the Loan Agreement; and

               (f) If Assignee is organized under the Laws of a jurisdiction
outside the United States of America, attached hereto are the forms prescribed
by the Code and the Loan Agreement certifying Assignee's exemption from United
States withholding taxes with respect to all payments to be made to Assignee
under the Loan Agreement.

        4. Assignment. On the terms set forth herein, Assignor, as of the
Effective Date, hereby irrevocably sells, assigns and transfers to the Assignee
all of the rights and obligations of the Assignor under the Loan Agreement and
the other Loan Documents, in each case to the extent of the Assigned Pro Rata
Share, and the Assignee irrevocably accepts such assignment of rights and
assumes such obligations from the Assignor on such terms and as of the Effective
Date. As of the Effective Date, Assignee shall have the rights and obligations
of a "Bank" (as defined in the Loan Agreement) under the Loan Documents, except
to the extent of any arrangements with respect to payments referred to in
Section 5 hereof Assignee hereby appoints and authorizes the Administrative
Agent to take such action and to exercise such powers as are delegated to the
Administrative Agent by the Loan Agreement.

        5. Payment. On the Effective Date, Assignee shall pay to the Assignor,
in immediately available funds, an amount equal to the purchase price, as agreed
between the Assignor and the Assignee, of the Assigned Pro Rata Share. The
Assignor and the Assignee have entered into a letter


                            (Exhibit A, Page 2 of 7)
<PAGE>   105
agreement, of even date herewith, which sets forth their agreement with respect
to the amount of interest, fees, and other payments with respect to the Assigned
Pro Rata Share which are to be retained by the Assignor.

               The Assignor and the Assignee hereby agree that if either
receives any payment of interest, principal, fees or any other amount under the
Loan Agreement, their respective Notes and other Loan Documents which is for the
account of the other, it shall hold the same in trust for such party to the
extent of such party's interest therein and shall promptly pay the same to such
party.

        6. Principal, Interest, Fees, etc. Any principal that would be payable
and any interest, fees and other amounts that would accrue from and after the
Effective Date to or for the account of the Assignor pursuant to the Loan
Agreement and the Notes shall be payable to or for the account of the Assignor
and the Assignee, in accordance with their respective interests as adjusted
pursuant to this Agreement.

        7. Notes. The Assignor and Assignee shall make appropriate arrangements
with KBHC concurrently with the execution and delivery hereof so that a
replacement Note is issued to the Assignor, if necessary, and a new Note is
issued to the Assignee in principal amounts reflecting their Pro Rata Shares of
the Commitment or their outstanding Advances (as adjusted pursuant to this
Agreement). As of the Effective Date, the Pro Rata Shares of Assignor and
Assignee to be reflected on Schedule 1.1 to the Loan Agreement shall be:


                              Pro Rata Share of
                              Commitment
                              ----------------

               Assignor       __% ($________)


               Assignee       __% ($________)


        8. Further Assurances. Concurrently with the execution of this
Agreement, Assignor shall execute four counterpart original Requests for
Registration, in the form of Exhibit A to this Agreement, to be forwarded to the
Administrative Agent. The Assignor and the Assignee further agree to execute and
deliver such other instruments, and take such other action, as either party may
reasonably request in connection with the transactions contemplated by this
Agreement, and Assignor specifically agrees to cause the delivery of (i) four
original counterparts of this Agreement and (ii) the Requests for Registration,
to the Administrative Agent for the purpose of registration of Assignee as a
"Bank" pursuant to the Loan Agreement.

        9. GOVERNING LAW. THIS AGREEMENT SHALL BE DEEMED TO BE A CONTRACTUAL
OBLIGATION UNDER, AND SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA.

        10. Notices. All communications among the parties or notices in
connection herewith shall be in writing, hand delivered or sent by registered
airmail, postage prepaid, or by telex, telegram


                            (Exhibit A, Page 3 of 7)
<PAGE>   106
or cable, addressed to the appropriate party at its address set forth on the
signature pages hereof. All such communications and notices shall be effective
upon receipt.

        11. Binding Effect. This Agreement shall become effective upon the
execution of the Request for Registration in the form of Exhibit A to this
Agreement by KBHC and the execution of the Consent in the form of Exhibit B to
this Agreement by the Administrative Agent, and shall be binding upon and inure
to the benefit of the parties and their respective successors and assigns;
provided, however, that Assignee shall not assign its rights or obligations
without the prior written consent of the Assignor and any purported assignment,
absent such consent, shall be void.

        12. Interpretation. The headings of the various sections hereof are for
convenience of reference only and shall not affect the meaning or construction
of any provision hereof.

               IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their respective officials, officers or agents
thereunto duly authorized as of the date first above written.


                                        "Assignor"

                                        ____________________________________

                                        By:_________________________________

                                           _________________________________
                                               Printed Name and Title

                                        Address:____________________________
                                                ____________________________
                                                ____________________________
                                                Attn:_______________________


                                        "Assignee"

                                        ____________________________________

                                        By:_________________________________

                                           _________________________________
                                               Printed Name and Title

                                        Address:____________________________
                                                ____________________________
                                                ____________________________
                                                Attn:_______________________


                            (Exhibit A, Page 4 of 7)

<PAGE>   107

               Exhibit A to Commitment Assignment and Acceptance

                            REQUEST FOR REGISTRATION



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


               THIS REQUEST FOR REGISTRATION OF ASSIGNEE is made as of the date
of the enclosed Commitment Assignment and Acceptance with reference to that
certain 2000 Revolving Loan Agreement dated as of October 3, 2000 among KBHC,
the Banks who are parties thereto, Bank of America, N.A., as Administrative
Agent, Credit Lyonnais Los Angeles Branch, as Syndication Agent, and Bank One,
NA, as Documentation Agent.

               Assignor and Assignee hereby request that the Administrative
Agent approve of Assignee as a Bank, and that the Administrative Agent register
Assignee as a Bank pursuant to the Loan Agreement effective as of the Effective
Date described in the enclosed Commitment Assignment and Acceptance and, in
connection with this request certify to the Administrative Agent that the
enclosed Commitment Assignment and Acceptance sets forth the correct Commitment
and the Assigned Pro Rata Share of the Assignee.

               Enclosed with this Request are four counterpart originals of the
Commitment Assignment and Acceptance as well as the original Note issued to
Assignor.

               IN WITNESS WHEREOF, Assignor and Assignee have executed this
Request for Registration by their duly authorized officers as of______________.


                                        "Assignor"

                                        ____________________________________


                                        By:_________________________________

                                           _________________________________
                                               Printed Name and Title



                                    Exhibit A
                                   Page 1 of 2
                            (Exhibit A, Page 5 of 7)

<PAGE>   108
                                        "Assignee"

                                        ____________________________________


                                        By:_________________________________

                                           _________________________________
                                               Printed Name and Title


THE UNDERSIGNED HEREBY CONSENTS
TO THE ABOVE ASSIGNMENT:

KAUFMAN AND BROAD HOME CORPORATION,
a Delaware corporation


By:_________________________________

   _________________________________
        Printed Name and Title




                                    Exhibit A
                                   Page 2 of 2
                            (Exhibit A, Page 6 of 7)

<PAGE>   109

               Exhibit B to Commitment Assignment and Acceptance


                                    CONSENT


TO:     THE ASSIGNOR AND ASSIGNEE REFERRED TO IN THE ABOVE REQUEST FOR
        REGISTRATION


        When countersigned by the Administrative Agent below, this document
shall certify that:

        1. The Administrative Agent has consented, pursuant to the terms of the
Loan Documents, to the assignment by Assignor to Assignee of the Assigned Pro
Rata Share.

        2. The Administrative Agent has registered Assignee as a Bank under the
Loan Agreement, effective as of the Effective Date described above, with a Pro
Rata Share of the Commitment corresponding to the Assigned Pro Rata Share and
has adjusted the registered Pro Rata Share of the Commitment of Assignor to
reflect the assignment of the Assigned Pro Rata Share.

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


                                        By:________________________________

                                           ________________________________
                                               Printed Name and Title




                                   Exhibit B
                                  Page 1 Of 1
                            (Exhibit A, Page 7 of 7)

<PAGE>   110
                                                                       EXHIBIT B

           COMPLIANCE CERTIFICATE AS REQUIRED BY ARTICLE 7, SECTION 2

ARTICLE 6.9 - CONSOLIDATED TANGIBLE NET WORTH

<TABLE>
<CAPTION>

                             11/30/1999A  2/28/00A   5/31/00A  8/31/00E  11/30/00E  2/28/01E   5/31/01E   8/31/01E   11/30/01E
                             -----------  --------   --------  --------  ---------  --------   --------   -------    ---------
<S>                          <C>          <C>        <C>       <C>       <C>        <C>        <C>        <C>        <C>
                                $000         $000      $000      $000      $000       $000       $000       $000       $000

Consolidated Net Income
  (commencing 06/01/00)
50% cumulative Consolidated
  Net Income

6.9 MINIMUM CONSOLIDATED
  TANGIBLE NET WORTH

(a) Base Amount                  575          575       575       575       575        575        575        575        575
(b) Plus - 50% of cumulative
    Consolidated Net Income
(c) Plus - 50% cumulative
    proceeds from issuance
    of capital stock
(d) Plus - 50% of proceeds
    Feline Prides after 10/6/00
(e  <Less> Stock Repurchase
      Stepdown Stock Repurchase
      Cap Actual Stock
      Repurchase Stepdown                                         (70)      (50)       (50)       (20)       (20)       (20)
                                 ----        ----      ----       ----      ----       ----       ----       ----       ----
MINIMUM CONSOLIDATED
  TANGIBLE NET WORTH             575         575       575        575       575        575        575        575        575
                                ----        ----      ----       ----      ----       ----       ----       ----       ----


1.1 "CONSOLIDATED TANGIBLE
   NET WORTH"
   Consolidated Shareholder's
     Equity
   Plus - Feline Prides
   <Less>/Plus any cumulative
     foreign currency
     translation adjustment
                                ----        ----      ----       ----      ----       ----       ----       ----       ----
CONSOLIDATED TANGIBLE NET
  WORTH                            0           0         0          0         0          0          0          0          0
                                ----        ----      ----       ----      ----       ----       ----       ----       ----
CTNW <LESS> MIN CTNW            (575)       (575)     (575)      (575)     (575)      (575)      (575)      (575)      (575)
                                ====        ====      ====       ====      ====       ====       ====       ====       ====
</TABLE>

KAUFMAN & BROAD CONFIDENTIAL                                              Page 1


<PAGE>   111

                                    EXHIBIT C

                                      NOTE



$__________________                                            October____, 2000
                                                         Los Angeles, California



               FOR VALUE RECEIVED, the undersigned promises to pay to the order
of___________________________("the Bank") the principal amount of DOLLARS
($___________), or such lesser aggregate amount of Advances as may be made
pursuant to the Bank's Pro Rata Share of the Commitment under the Term Loan
Agreement hereinafter described, payable as hereinafter set forth. The
undersigned promises to pay interest on the principal amount of each Advance
made hereunder and remaining unpaid from time to time from the date of each
Advance until the date of payment in full, payable as hereinafter set forth.

               Reference is made to the 2000 Term Loan Agreement dated as of
October 3, 2000, among the undersigned, as Borrower, the Banks that are parties
thereto, Bank of America, N.A., as Administrative Agent, Credit Lyonnais Los
Angeles Branch, as Syndication Agent and Bank One, NA, as Documentation Agent
(as amended from time to time, the "Loan Agreement"). Terms defined in the Loan
Agreement and not otherwise defined herein are used herein with the meanings
defined for those terms in the Loan Agreement. This is one of the Notes referred
to in the Loan Agreement, and any holder hereof is entitled to all of the
rights, remedies, benefits and privileges provided for in the Loan Agreement as
originally executed or as it may from time to time be supplemented, modified,
amended, renewed, extended or supplanted. The Loan Agreement, among other
things, contains provisions for acceleration of the maturity hereof upon the
happening of certain stated events upon the terms and conditions therein
specified.

               The principal indebtedness evidenced by this Note shall be
payable as provided in the Loan Agreement and in any event on the Maturity Date.

               Interest shall be payable on the outstanding daily unpaid
principal amount of each Advance hereunder from the date thereof until payment
in full and shall accrue and be payable at the rates and on the dates set forth
in the Loan Agreement to the fullest extent permitted by applicable Law, before
and after default, before and after maturity, before and after any judgment, and
before and after the commencement of any proceeding under any Debtor Relief Law,
with interest on overdue interest to bear interest at the rate set forth in
Section 3-6 of the Loan Agreement.

               The amount of each payment hereunder shall be made to the
Administrative Agent at the Administrative Agent's Office, for the account of
the Bank, in lawful money of the United States of America, without deduction,
offset or counterclaim and in immediately available funds on the day of payment
(which must be a Banking Day). All payments of principal received after 10:00
a.m., Los Angeles time, on any Banking Day, shall be deemed received on the next
succeeding Banking Day for purposes of calculating interest thereon. The Bank
shall use its best efforts to keep a record of the


                            (Exhibit C, Page 1 of 4)
<PAGE>   112

Advances made by it and payments of principal with respect to this Note, and
such record shall be presumptive evidence of the principal amount owing under
this Note.

               The undersigned hereby promises to pay, within thirty (30) days
after demand, the reasonable costs and expenses of any holder hereof incurred in
collecting the undersigned's obligations hereunder or in enforcing or attempting
to enforce any of any holder's rights hereunder, including attorneys' fees and
disbursements, whether or not an action is filed in connection therewith, in
accordance with Section 11.3 of the Loan Agreement.

               The undersigned hereby waives presentment, demand for payment,
dishonor, notice of dishonor, protest, notice of protest and any other notice or
formality, to the fullest extent permitted by applicable Laws.

               This Note shall be delivered to and accepted by the Bank in the
State of California, and shall be governed by, and construed and enforced in
accordance with, the local Laws thereof.


                                        KAUFMAN AND BROAD HOME CORPORATION,
                                        a Delaware corporation


                                        By__________________________________
                                                 Bryan A. Binyon
                                           Vice President and Treasurer



                            (Exhibit C, Page 2 of 4)

<PAGE>   113

                       ADVANCES AND PAYMENTS OF PRINCIPAL
                               (Prime Rate Loans)
________________________________________________________________________________


         Amount of Loan or    Amount of Principal
         of Redesignation     Paid or Redesignated
         From Another Type    Into Another Type of   Unpaid Principal   Notation
Date     of Loan              Loan                   Balance            Made By

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________



                            (Exhibit C, Page 3 of 4)

<PAGE>   114

                       ADVANCES AND PAYMENTS OF PRINCIPAL
                                  (LIBOR Loans)

________________________________________________________________________________


         Amount of Loan or    Amount of Principal
         of Redesignation     Paid or Redesignated
         From Another Type    Into Another Type of   Unpaid Principal   Notation
Date     of Loan              Loan                   Balance            Made By

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________



                            (Exhibit C, Page 4 of 4)

<PAGE>   115

                                  EXHIBIT D-1

                              [KAUFMAN/BROAD LOGO]

                                October 6 , 2000

To:     Bank of America, N.A.,
               as Administrative Agent


        The Banks That Are Party to the Revolving Loan Agreement
               Referred to Below

               Re:     Kaufman and Broad Home Corporation

Ladies and Gentlemen:

               I am Senior Vice President and General Counsel of Kaufman and
Broad Home Corporation, a Delaware corporation ("Borrower"). I have acted as
such in connection with the 2000 Revolving Loan Agreement (the "Revolving Loan
Agreement") dated as of October 3, 2000, by and among Borrower; the Banks which
are parties thereto; Bank of America, N.A., as Administrative Agent; Credit
Lyonnais Los Angeles Branch, as Syndication Agent; Bank One, NA, as
Documentation Agent; and Bank of America Securities LLC as Lead Arranger and
Sole Book Manager (all such parties other than Borrower are collectively
referred to herein as "Bank Parties").

               This Opinion is furnished to you pursuant to Section 8.1(a)(vi)
of the Revolving Loan Agreement. Capitalized terms not otherwise defined herein
shall have the meanings ascribed to them in the Revolving Loan Agreement.

               For the purposes of this opinion, I have examined originals, or
copies identified to my satisfaction as being true copies, of the following
documents:

               (a) the Revolving Loan Agreement;



<PAGE>   116

Page 2


               (b) the Notes of even date herewith;

               (c) the Subsidiary Guaranty;

               (d) the promissory note of even date herewith executed by
Borrower in favor of the Swing Line Bank in connection with the Swing Line; and

               (e) the letters executed and delivered between the Administrative
Agent and Borrower, dated as of October 3, 2000, which concern agency fees,
upfront fees and arrangement fees.

               The documents described in (a) through (e) above are sometimes
referred to herein as the "Loan Documents".

               I have also made such investigations of fact and law, obtained
such certificates from public officials, Responsible Officials of Borrower and
certain of its Subsidiaries, reviewed incorporation and partnership
documentation, resolutions, secretary's certificates, good standing certificates
and other documents as appropriate of and for the Borrower and the Guarantor
Subsidiaries, as applicable, and done such other things as I have deemed
necessary for the purpose of this Opinion.

               I have assumed (i) that all natural persons have legal capacity,
(ii) the genuineness of all signatures of all parties other than Borrower and
its Guarantor Subsidiaries, (iii) the conformity to authentic original documents
of all documents submitted to me as copies and the authenticity of all documents
submitted to me as originals, (iv) as to all parties other than Borrower and its
Guarantor Subsidiaries, the due authorization, execution and delivery of the
Loan Documents, (v) that each of the Bank Parties has full power, authority and
legal right, under its charter and other governing documents and laws applicable
to it to perform its respective obligations thereunder, (vi) that all parties to
any Loan Document have filed all required franchise tax returns, if any, and
paid all required taxes, if any, under the California Revenue & Taxation Code
and under the laws of the State of Delaware and the respective states of
incorporation or formation of the Guarantor Subsidiaries, (vii) that each of the
Bank Parties has the requisite power and authority, has obtained all necessary
consents, licenses and permits, has taken all necessary action and has complied
with any and all applicable laws with which such Bank Party is required to
comply, in each case relating to or affecting the matters and actions
contemplated by the Loan Documents, (viii) that each of the Bank Parties (other
than Banc of America Securities LLC) is a national bank, state bank or similar
financial institution and is an exempt lender under Article XV of the California
Constitution or statutes enacted pursuant thereto and (ix) that the Loan
Documents have not been modified, amended, terminated or revoked in any respect,
and remain in full force and effect as of the date hereof.

               With respect to those opinions expressed below to be to
"knowledge" or "to the knowledge of the undersigned," or similar such wording, I
am referring solely to my individual, actual knowledge. Except as expressly set
forth herein, I did not undertake a review or examination of the activities or
business records of Borrower or any Subsidiaries specifically for the purpose of
rendering this opinion or to determine the existence or absence of such facts.
As



<PAGE>   117

Page 3


Senior Vice President and General Counsel of Borrower, however, material
information respecting the matters covered by such opinions is brought to my
attention on a regular basis as a matter of internal policy and I intend the
phrase "to the knowledge of the undersigned" to mean that, in reviewing such
information, nothing has come to my attention which caused or should have caused
me not to render such opinions.

               On the basis of the foregoing, and relying thereon, and with the
qualifications herein set forth, I am of the opinion that:

               1. Borrower is a corporation duly organized, validly existing and
in good standing under the Laws of the State of Delaware, and its certificate of
incorporation does not provide for the termination of its existence. Borrower is
duly qualified or registered to transact business and is in good standing as a
foreign corporation in the State of California and each other jurisdiction in
which the conduct of its business or the ownership of its Properties makes such
qualifications or registration necessary, except where the failure so to qualify
or register and to be in good standing would not constitute a Material Adverse
Effect.

               2. Borrower has all requisite corporate power and authority to
conduct its business, to own and lease its Properties and to execute, deliver
and perform all of its Obligations under the Loan Documents to which it is a
Party.

               3. To the knowledge of the undersigned, Borrower is in
substantial compliance with all Laws and other legal requirements applicable to
its business, has obtained all authorizations, consents, approvals, orders,
licenses and permits from, and has accomplished all filings, registrations and
qualifications with, or obtained exemptions from any of the foregoing from, any
Government Agency that are necessary for the transaction of its business, except
where the failure so to comply, file, register, qualify, or obtain exemptions
would not constitute a Material Adverse Effect.

               4. The execution, delivery and performance by Borrower and by
each Guarantor Subsidiary of each of the Loan Documents to which they are a
Party have been duly authorized by all necessary corporate action, and do not:

                      a. require under the charter documents of Borrower or any
               Guarantor Subsidiary any consent or approval not heretofore
               obtained of any partner, director, stockholder, security holder,
               or creditor of such Party;

                      b. violate or conflict with the Party's charter,
               certificate or articles of incorporation, or bylaws;

                      c. to the knowledge of the undersigned, result in or
               require the creation or imposition of any Lien or Right of Others
               (other than as provided under the Loan Documents) upon or with
               respect to any Property now owned or leased by such Party;



<PAGE>   118

Page 4


                      d. violate any Requirement of Law known to the undersigned
               to be applicable to such Party; or

                      e. result in a breach of or constitute a default under, or
               cause or permit the acceleration of any obligation owed under,
               any indenture or loan or credit agreement known to the
               undersigned or any other Contractual Obligation known to the
               undersigned to which such Party is a party or by which such Party
               or any of its Property is bound or affected;

and, to the knowledge of the undersigned, neither Borrower nor any Subsidiary of
Borrower is in violation of, or default under, any Requirement of Law or
contractual obligation, or any indenture, loan, or credit agreement described in
subparagraph (e) above in any respect that would constitute a Material Adverse
Effect.

               5. The Loan Documents to which either Borrower or any Guarantor
Subsidiary is Party have each been validly executed and delivered to the
Administrative Agent by Borrower or such Guarantor Subsidiary, as the case may
be, and constitute the legal, valid and binding obligation of Borrower or such
Guarantor Subsidiary, as the case may be, enforceable against such Borrower or
such Guarantor Subsidiary, as the case may be, in accordance with its terms.

               6. Except as have heretofore been obtained, no authorization,
consent, approval, order, license or permit from, or filing, registration or
qualification with, or exemption from any of the foregoing from, any
Governmental Agency under any Requirement of Law imposed on Borrower or any
Guarantor Subsidiary by the laws of the United States of America or the State of
California, in each case as the same exists on the date hereof, is or will be
required to authorize or permit the execution, delivery and performance by
Borrower or by any Significant Subsidiary of the Loan Documents to which it is a
Party.

               7. Each Significant Subsidiary which is a Domestic Subsidiary is
a legal entity of the form described for that Subsidiary in Schedule 4.4 to the
Agreement, duly organized, validly existing and in good standing under the Laws
of its jurisdiction of formation, is duly qualified or registered to do business
as a foreign organization (if applicable) and is in good standing as such in
each jurisdiction in which the conduct of its business or the ownership or
leasing of its Properties makes such qualifications or registration necessary
(except where the failure to be so qualified or registered and in good standing
does not constitute a Material Adverse Effect) and has all requisite power and
authority to conduct its business and to own and lease its Properties and to
execute, deliver and perform the obligations under the Loan Documents to which
it is a Party.

               8. To the knowledge of the undersigned, each Significant
Subsidiary is in substantial compliance with all Laws and other requirements
applicable to its business, has obtained all authorizations, consents,
approvals, orders, licenses and permits from and has accomplished all filings,
registrations and qualifications with, or obtained exemptions from any



<PAGE>   119

Page 5

of the foregoing from, any Governmental Agency that are necessary for the
transaction of its business, except where the failure so to comply, file,
register, qualify or obtain exemptions does not constitute a Material Adverse
Effect.

               9. Neither Borrower nor any of its Subsidiaries is subject to
regulation under the Public Utility Holding Company Act of 1935, the Federal
Power Act, the Interstate Commerce Act, or the Investment Company Act of 1940.

               10. To the knowledge of the undersigned, there are no actions,
suits or proceedings pending or threatened against or affecting Borrower or any
of its Subsidiaries or any Property of any of them in any court of Law or before
any Governmental Agency in which there is a reasonable probability of a decision
that would constitute a Material Adverse Effect.

               11. Neither Borrower nor any of its Subsidiaries is engaged
principally, or as one of its important activities, in the business of extending
credit for the purpose of "purchasing" or "carrying" any "margin stock" or
"margin security" within the meanings of Regulation U of the Board of Governors
of the Federal Reserve System, and no loan under the Agreement will be used to
purchase or carry any such margin stock in violation of Regulation U.

               12. To the knowledge of the undersigned, Borrower and its
Subsidiaries are in substantial compliance with all applicable Laws relating to
environmental protection where the failure to comply would constitute a Material
Adverse Effect and have not received any notice from any Governmental Agency
respecting the alleged violation by Borrower or any Subsidiary of such Laws
which would constitute a Material Adverse Effect which has not been or is not
being corrected.

               In addition to any assumptions, qualifications and other matters
set forth elsewhere herein, the opinions set forth above are subject to the
following:

               (a) My opinion with respect to the legality, validity, binding
effect and enforceability of any Loan Document, agreement, or provision is
subject to the effect of any applicable bankruptcy, insolvency, fraudulent
conveyance, fraudulent transfer and equitable subordination, reorganization,
moratorium, or similar law affecting creditors' rights generally and to the
effect of general principles of equity, including (without limitation) concepts
of materiality, reasonableness, estoppel, good faith and fair dealing
(regardless of whether considered in a proceeding in equity or at law). I
express no opinion as to the availability of equitable remedies. In applying
such equitable principles, a court, among other things, might not allow a
creditor to accelerate the maturity of a debt or enforce a guaranty thereof upon
the occurrence of a default deemed immaterial or for non-credit reasons or might
decline to order a debtor to perform covenants. Such principles applied by a
court might also include a requirement that a creditor act with reasonableness
and in good faith.

               (b) Certain rights, remedies and waivers of the Loan Documents
may be unenforceable in whole or in part, but the inclusion of such provisions
does not affect the validity of the Loan Documents taken as a whole and, except
as set forth in subparagraph (a) above, the


<PAGE>   120

Page 6

Loan Documents taken as a whole contain adequate provisions for enforcing
payment of the Obligations; however, the unenforceability of such provisions may
result in delays in or limitations on the enforcement of the parties' rights and
remedies under the Loan Documents (and I express no opinion as to the economic
consequences, if any, of such delays or limitations).

               (c) I call your attention to the following matters on which I
express no opinion:

                      (i) the agreements in the Loan Documents to indemnify the
        Bank Parties against costs or expenses or liability notwithstanding such
        parties' acts of negligence or willful misconduct;

                      (ii) provisions in the Loan Documents for payment or
        reimbursement of costs, fees and expenses or indemnification for claims,
        losses, or liabilities to the extent any such provision may be
        determined by a court or other tribunal to be in an unreasonable amount,
        to constitute a penalty, or to be contrary to public policy;

                      (iii) the agreements in the Loan Documents to the
        jurisdiction or venue of a particular court, to the waiver of the right
        to jury trial, or to be served with process by service upon a designated
        third party;

                      (iv) any of the waivers or remedies contained in the Loan
        Documents, whether or not any Loan Document deems any such waiver or
        remedy commercially reasonable, if such waivers or remedies are
        determined (1) not to be commercially reasonable under applicable law,
        (2) to conflict with mandatory provisions of applicable law, (3) to be
        taken in a manner determined to be unreasonable or not performed in good
        faith or with fair dealing or with honesty in fact, or (4) to be broadly
        or vaguely stated or not to describe the right or duty purportedly
        waived with reasonable specificity;

                      (v) provisions in the Loan Documents which may be
        construed as imposing penalties or forfeitures, late payment charges, or
        an increase in interest rate, upon delinquency in payment or the
        occurrence of a default;

                      (vi) any power of attorney granted under the Loan
        Documents;

                      (vii) provisions in the Loan Documents to the effect that
        rights or remedies are not exclusive, that every right or remedy is
        cumulative and may be exercised in addition to any other right or
        remedy, that the election of some particular remedy does not preclude
        recourse to one or more others, or that failure to exercise or a delay
        in exercising


<PAGE>   121

Page 7


        rights or remedies will not operate as a waiver of any such right or
        remedy;

                      (viii) provisions in the Loan Documents which expressly or
        by implication waive or limit the benefits of statutory, regulatory, or
        constitutional rights, unless and to the extent the statute, regulation,
        or constitution explicitly allow such waiver or other limitation;

                      (ix) the effect of Section 1698 of the California Civil
        Code which, among other matters, provides that a written contract may be
        modified by an oral agreement to the extent such agreement is performed
        by the parties;

                      (x) the effect of Section 1670.5 of the California Civil
        Code which provides that a court may not enforce or may limit the
        application of a contract or portions thereof which it finds as a matter
        of law to have been unconscionable at the time the contract was made;

                      (xi) the effect of any Bank Party's compliance or
        noncompliance with any state or federal laws or regulations applicable
        to it or applicable to the transactions contemplated by the Loan
        Documents due to the nature of such Bank Party's business;

                      (xii) the effect of (1) any modification or alteration of
        the Loan Documents or other agreements with Borrower affecting the
        obligations of Borrower, (2) an election of remedies by the Bank
        Parties, or (3) any other action by the Bank Parties that materially
        prejudices any Guarantor Subsidiary if such modification, election, or
        action occurs without notice to the Guarantor Subsidiaries and without
        giving the Guarantor Subsidiaries an opportunity to cure any default by
        Borrower;

                      (xiii) the enforceability of any provision in the Loan
        Documents which provide that such Loan Documents may only be modified in
        writing; and

                      (xiv) the validity and enforceability of covenants set
        forth in the Loan Documents which purport to survive the repayment of
        the indebtedness evidenced therein.

               My opinions expressed herein are limited to the laws of the State
of California, the General Corporation Law of the State of Delaware and the
federal laws of the United States of America, and I do not express any opinion
herein concerning any other law, including, but not limited to, ordinances,
regulations or practices of any county, city, or other government agency or body
within the State of California.


<PAGE>   122

Page 8



               This Opinion is being provided in connection with the transaction
referred to above and may not be relied upon (x) by any person other than the
Bank Parties, an Eligible Assignee, or any successor in interest of any Bank
Party or (y) by the Bank Parties, an Eligible Assignee, or any successor in
interest of any Bank Party in any other context. This Opinion is being provided
in connection with the transaction referred to above and may not be relied upon
by any person other than the Bank Parties or by the Bank Parties in any other
context. Copies hereof may be furnished (a) to your independent auditors and
attorneys, (b) to any governmental agency or authority having regulatory
jurisdiction over you, (c) pursuant to an order of legal process of any court or
of any governmental agency or authority, or (d) in connection with any legal
action to which you are a party arising out of the transaction referred to
above. This opinion is rendered as of the date hereof, and I hereby disclaim any
obligation to advise any person entitled to rely hereon of any change in the
matters stated herein.


                                       Very truly yours,


                                       /s/ BARTON P. PACHINO

                                       Barton P. Pachino
                                       Senior Vice President and General Counsel
                                       Kaufman and Broad Home Corporation



<PAGE>   123

                                  EXHIBIT D-2


                    [MUNGER, TOLLES & OLSON LLP LETTERHEAD]

                                 October 6, 2000




To:     Bank of America, N.A.,
               as Administrative Agent

        The Banks That Are Party to the Revolving Loan Agreement
               Referred to Below

               Re:     Kaufman and Broad Home Corporation

Ladies and Gentlemen:

               We have acted as counsel to Kaufman and Broad Home Corporation, a
Delaware corporation (the "Borrower"), in connection with the 2000 Revolving
Loan Agreement (the "Revolving Loan Agreement") dated as of October 3, 2000, by
and among Borrower; the Banks which are parties thereto; Bank of America, N.A.,
as Administrative Agent; Credit Lyonnais Los Angeles Branch, as Syndication
Agent; Bank One, NA, as Documentation Agent; and Banc of America Securities LLC,
as Lead Arranger and Sole Book Manager (all such parties other than Borrower are
collectively referred to herein as "Bank Parties").

               This Opinion is furnished to you pursuant to Section 8.1(a)(vi)
of the Revolving Loan Agreement. Capitalized terms not otherwise defined herein
shall have the meanings ascribed to them in the Revolving Loan Agreement.

               For the purposes of this opinion, we have examined originals, or
copies identified to our satisfaction as being true copies, of the following
documents:

               (a) the Revolving Loan Agreement;



<PAGE>   124

MUNGER, TOLLES & OLSON LLP

Bank of America, N.A.
October 6, 2000
Page 2

               (b) the Notes of even date herewith;

               (c) the Subsidiary Guaranty;

               (d) the promissory note of even date herewith executed by
Borrower in favor of the Swing Line Bank in connection with the Swing Line; and

               (e) the letters executed and delivered between the Administrative
Agent and Borrower, dated as of October 3, 2000, which concern agency fees,
upfront fees and arrangement fees.

               The documents described in (a) through (e) above are sometimes
referred to herein as the "Loan Documents".

               We have also examined such other corporate documents and records,
and other certificates, opinions and instruments and have conducted such
investigations as we have deemed necessary as a basis for the opinions expressed
below. As to factual matters relevant to our opinions expressed below, we have,
without independent investigation, relied upon certificates from public
officials and from Borrower's officers and upon public records, and have further
assumed and relied upon, without independent investigation, the truth and
accuracy of all factual representations and warranties of all parties to the
Loan Documents.

               We have assumed (i) that all natural persons have legal capacity,
(ii) the genuineness of all signatures of all parties other than Borrower, (iii)
the conformity to authentic original documents of all documents submitted to us
as copies and the authenticity of all documents submitted to us as originals,
(iv) that each of the Guarantor Subsidiaries is duly organized, validly existing
and in good standing under the laws of its jurisdiction of incorporation or
organization and in each other jurisdiction where the conduct of its business or
the ownership of its Properties makes qualification or registration to transact
business necessary, (v) as to all parties other than Borrower, the due
authorization, execution and delivery of the Loan Documents, (vi) the validity
and enforceability of the Loan Documents against all parties thereto other than
Borrower and the Guarantor Subsidiaries, (vii) that each of the Bank Parties has
the requisite power and authority, has obtained all necessary consents, licenses
and permits, has taken all necessary action and has complied with any and all
applicable laws with which such Bank Party is required to comply, in each case
relating to or affecting the matters and actions contemplated by the Loan
Documents, (viii) that each of the Bank Parties (other than Banc of America
Securities LLC) is a national bank, state bank or similar financial institution
and is an exempt lender under Article XV of the California Constitution or
statutes enacted pursuant thereto, (ix) that the Loan Documents have not been
modified, amended, terminated or revoked in any respect, and remain in full
force and effect as of the date hereof and (x) that the parties to the Loan
Documents are not subject to any special laws, regulations or restrictions that
are not generally applicable to parties participating in transactions of the
type contemplated by the Loan Documents and that would affect the validity,
binding effect or enforceability of the Loan Documents or the performance by
such parties of their obligations thereunder.


<PAGE>   125

MUNGER, TOLLES & OLSON LLP

Bank of America, N.A.
October 6, 2000
Page 3

               On the basis of the foregoing, and relying thereon, and with the
qualifications herein set forth, we are of the opinion that:

               1. Borrower is a corporation duly incorporated, validly existing
and in good standing under the General Corporation Law of the State of Delaware,
and its certificate of incorporation does not limit the term of its existence.

               2. Borrower has all requisite corporate power and authority to
conduct its business, to own and lease its Properties and to execute, deliver
and perform all of its obligations under the Loan Documents to which it is a
party.

               3. The execution, delivery and performance by Borrower of the
Loan Documents to which it is a party have been duly authorized by all necessary
corporate action.

               4. The execution, delivery and performance of the Loan Documents
by Borrower do not violate any provision of Borrower's certificate of
incorporation or bylaws, and the execution, delivery and performance by Borrower
and each Guarantor Subsidiary of the Loan Documents to which it is a party do
not violate any Requirement of Law applicable to Borrower or such Guarantor
Subsidiary imposed by the laws of the United States of America or the State of
California that, in our experience, is normally applicable to general business
entities in relation to transactions of the type contemplated by the Loan
Documents.

               5. Except as have heretofore been obtained, no authorization,
consent, approval, order, license, or permit from, or filing, registration, or
qualification with, or exemption from any of the foregoing from any Governmental
Agency under any Requirement of Law imposed on Borrower or any Guarantor
Subsidiary by the laws of the United States of America or the State of
California, in each case as such Requirements of Law exist on the date hereof,
is or will be required to authorize or permit the execution, delivery and
performance by Borrower or any Guarantor Subsidiary of the Loan Documents to
which it is a party.

               6. Each of the Loan Documents to which Borrower or any Guarantor
Subsidiary is a party will, when executed and delivered by Borrower or such
Guarantor Subsidiary, as the case may be, constitute the legal, valid and
binding obligation of Borrower or such Guarantor Subsidiary, as the case may be,
enforceable against Borrower or such Guarantor Subsidiary, as the case may be,
in accordance with its terms.

               In addition to any assumptions, qualifications and other matters
set forth elsewhere herein, the opinions set forth above are subject to the
following:

               (a) Our opinion with respect to the legality, validity, binding
effect and enforceability of any Loan Document, agreement, or provision is
subject to the effect of any applicable bankruptcy, insolvency, fraudulent
conveyance, fraudulent transfer and equitable subordination, reorganization,
moratorium, or similar law affecting creditors' rights generally and to the
effect of general principles of equity, including (without limitation) concepts
of materiality, reasonableness, estoppel, good faith and fair dealing
(regardless of whether


<PAGE>   126

MUNGER, TOLLES & OLSON LLP

Bank of America, N.A.
October 6, 2000
Page 4

considered in a proceeding in equity or at law). We express no opinion as to the
availability of equitable remedies. In applying such equitable principles, a
court, among other things, might not allow a creditor to accelerate the maturity
of a debt or enforce a guaranty thereof upon the occurrence of a default deemed
immaterial or for non-credit reasons or might decline to order a debtor to
perform covenants. Such principles applied by a court might also include a
requirement that a creditor act with reasonableness and in good faith.

               (b) Certain rights, remedies and waivers of the Loan Documents
may be unenforceable in whole or in part, but the inclusion of such provisions
does not affect the validity of the Loan Documents taken as a whole and, except
as set forth in subparagraph (a) above, the Loan Documents taken as a whole
contain adequate provisions for enforcing payment of the Obligations; however,
the unenforceability of such provisions may result in delays in or limitations
on the enforcement of the parties' rights and remedies under the Loan Documents
(and we express no opinion as to the economic consequences, if any, of such
delays or limitations).

               (c) We call your attention to the following matters on which we
express no opinion:

                      (i) the agreements in the Loan Documents to indemnify the
               Bank Parties against costs or expenses or liability
               notwithstanding such parties' acts of negligence or willful
               misconduct;

                      (ii) provisions in the Loan Documents for payment or
               reimbursement of costs, fees and expenses or indemnification for
               claims, losses, or liabilities to the extent any such provision
               may be determined by a court or other tribunal to be in an
               unreasonable amount, to constitute a penalty, or to be contrary
               to public policy;

                      (iii) the agreements in the Loan Documents to the
               jurisdiction or venue of a particular court, to the waiver of the
               right to jury trial, or to be served with process by service upon
               a designated third party;

                      (iv) any of the waivers or remedies contained in the Loan
               Documents, whether or not any Loan Document deems any such waiver
               or remedy commercially reasonable, if such waivers or remedies
               are determined (1) not to be commercially reasonable under
               applicable law, (2) to conflict with mandatory provisions of
               applicable law, (3) to be taken in a manner determined to be
               unreasonable or not performed in good faith or with fair dealing
               or with honesty in fact, or (4) to be broadly or vaguely stated
               or not to describe the right or duty purportedly waived with
               reasonable specificity;

                      (v) provisions in the Loan Documents which may be
               construed as imposing penalties or forfeitures, late payment
               charges, or an



<PAGE>   127

MUNGER, TOLLES & OLSON LLP

Bank of America, N.A.
October 6, 2000
Page 5

               increase in interest rate, upon delinquency in payment or the
               occurrence of a default;

                      (vi) any power of attorney granted under the Loan
               Documents;

                      (vii) provisions in the Loan Documents to the effect that
               rights or remedies are not exclusive, that every right or remedy
               is cumulative and may be exercised in addition to any other right
               or remedy, that the election of some particular remedy does not
               preclude recourse to one or more others, or that failure to
               exercise or a delay in exercising rights or remedies will not
               operate as a waiver of any such right or remedy;

                      (viii) provisions in the Loan Documents which expressly or
               by implication waive or limit the benefits of statutory,
               regulatory, or constitutional rights, unless and to the extent
               the statute, regulation, or constitution explicitly allow such
               waiver or other limitation;

                      (ix) the effect of Section 1698 of the California Civil
               Code which, among other matters, provides that a written contract
               may be modified by an oral agreement to the extent such agreement
               is performed by the parties;

                      (x) the effect of Section 1670.5 of the California Civil
               Code which provides that a court may not enforce or may limit the
               application of a contract or portions thereof which it finds as a
               matter of law to have been unconscionable at the time the
               contract was made;

                      (xi) the effect of any Bank Party's compliance or
               noncompliance with any state or federal laws or regulations
               applicable to it or applicable to the transactions contemplated
               by the Loan Documents due to the nature of such Bank Party's
               business;

                      (xii) the effect of (1) any modification or alteration of
               the Loan Documents or other agreements with Borrower affecting
               the obligations of Borrower, (2) an election of remedies by the
               Bank Parties, or (3) any other action by the Bank Parties that
               materially prejudices any Guarantor Subsidiary if such
               modification, election, or action occurs without notice to the
               Guarantor Subsidiaries and without giving the Guarantor
               Subsidiaries an opportunity to cure any default by Borrower;

                      (xiii) the enforceability of any provision in the Loan
               Documents which provide that such Loan Documents may only be
               modified in writing; and



<PAGE>   128

MUNGER, TOLLES & OLSON LLP

Bank of America, N.A.
October 6, 2000
Page 6

                      (xiv) the validity and enforceability of covenants set
               forth in the Loan Documents which purport to survive the
               repayment of the indebtedness evidenced therein.

               Our opinions expressed herein are limited to the laws of the
State of California, the General Corporation Law of the State of Delaware and
the federal laws of the United States of America, and we do not express any
opinion herein concerning any other law, including, but not limited to,
ordinances, regulations or practices of any county, city, or other government
agency or body within the State of California.

               This Opinion is being provided at the specific request of our
client, is rendered to you in connection with the transaction referred to above
and may not be relied upon (x) by any person other than the Bank Parties, an
Eligible Assignee, or any successor in interest of any Bank Party or (y) by the
Bank Parties, an Eligible Assignee, or any successor in interest of any Bank
Party in any other context. Copies hereof may be furnished (a) to your
independent auditors and attorneys, (b) to any governmental agency or authority
having regulatory jurisdiction over you, (c) pursuant to an order of legal
process of any court or of any governmental agency or authority, or (d) in
connection with any legal action to which you are a party arising out of the
transaction referred to above. This opinion is rendered as of the date hereof,
and we hereby disclaim any obligation to advise any person entitled to rely
hereon of any change in the matters stated herein.



                                        Very truly yours,

                                        /s/ MUNGER, TOLLES & OLSON LLP



<PAGE>   129

                                   EXHIBIT E

BORROWER: KAUFMAN AND BROAD HOME CORPORATION,
               a Delaware corporation

GUARANTORS:    See Schedule 1 hereto



TO:     BANK OF AMERICA, N.A., for itself and as Administrative Agent


                              SUBSIDIARY GUARANTY

               THIS SUBSIDIARY GUARANTY ("Guaranty") dated as of October 3,
2000, is made by each of the parties listed on Schedule 1 hereto, together with
each other person who may become a party hereto pursuant to Section 10 of this
Guaranty (each, a "Guarantor" and collectively, "Guarantors"), jointly and
severally, in favor of Bank of America, N.A., as Administrative Agent, the
Syndication Agent, the Documentation Agent and the Banks (as those terms are
defined in the below-referenced Loan Agreement), with reference to the following
facts:

                                    RECITALS

               A. Pursuant to the 2000 Revolving Loan Agreement of even date
herewith entered into by and among Kaufman and Broad Home Corporation, a
Delaware corporation ("Borrower"), the Banks signatory thereto, Bank of America,
N.A., as Administrative Agent, Credit Lyonnais Los Angeles Branch, as
Syndication Agent, and Bank One, NA, as Documentation Agent (as the same may be
amended from time to time, the "Loan Agreement"), the Banks are making a credit
facility available to Borrower.

               B. As a condition of the availability of such credit facility,
Guarantors are required to enter into this Guaranty.

               C. Guarantors expect to realize direct and indirect benefits as
the result of the availability of the aforementioned credit facility, and as the
result of the execution of this Guaranty.

                                   AGREEMENT

               NOW, THEREFORE, in order to induce the Banks to extend the
aforementioned credit facility, and for other good and valuable consideration,
the receipt and adequacy of which is hereby acknowledged, each Guarantor hereby
represents, warrants, covenants, agrees and guaranties as follows:

               (1) Terms used in this Guaranty but not defined herein shall have
the meanings defined for them in the Loan Agreement.

               (2) Guarantors unconditionally guarantee and promise to pay to
Bank of America, N.A., as the Administrative Agent for the Banks, on demand, in
lawful money of the United States, any and all Indebtedness of Borrower then due
to the Banks. The word "Indebtedness" means any and all


                            (Exhibit E, Page 1 of 9)

<PAGE>   130

advances, debts, obligations and liabilities of Borrower heretofore, now, or
hereafter made, incurred or created under the Loan Agreement and under the Loan
Documents, and whether Borrower may be liable individually or jointly with
others, or whether such Indebtedness may be or hereafter becomes otherwise
unenforceable.

               (3) This Guaranty is irrevocable in nature, is a guaranty of
prompt and punctual payment and performance of all Indebtedness of Borrower, and
is not merely a guaranty of collection. The Indebtedness guaranteed hereunder
includes that arising under successive transactions which shall either continue
the Indebtedness from time to time or renew it after it has been satisfied.
Anything in this Guaranty to the contrary notwithstanding, the maximum liability
of any Guarantor hereunder shall be limited to the extent required for the
obligation of such Guarantor to be valid, binding and enforceable and not
otherwise voidable or avoidable.

               (4) The obligations hereunder are joint and several, and
independent of the obligations of Borrower and any of its other Subsidiaries.
Separate action or actions may be brought and prosecuted against any Guarantor
whether action is brought against the Borrower or any of its other Subsidiaries,
including any other Guarantor, or whether Borrower or any of its other
Subsidiaries, including any other Guarantor, may be joined in any such action or
actions.

               (5) Each Guarantor authorizes the Banks, without notice or demand
and without affecting its liability hereunder, from time to time to (a) renew,
compromise, extend, accelerate or otherwise change the time for payment of, or
otherwise change the terms of the Indebtedness or any part thereof, including
increase or decrease of the rate of interest thereon; (b) take and hold security
for the payment of this Guaranty or the Indebtedness guaranteed, and exchange,
enforce, waive and release any such security; (c) apply such security and direct
the order or manner of sale thereof as the Administrative Agent or any Bank in
its discretion may determine; and (d) release or substitute any one or more of
the endorsers or guarantors.

               (6) Each Guarantor waives, to the fullest extent permitted by
applicable law, any right to require any Bank to (a) proceed against Borrower or
any of its other Subsidiaries, including any other Guarantor; (b) proceed
against or exhaust any security held from Borrower or any of its Subsidiaries;
or (c) pursue any other remedy in the Banks' power whatsoever. Each Guarantor
waives any defense arising by reason of any disability or other defense of
Borrower or by reason of the cessation from any cause whatsoever of the
liability of Borrower, other than payment in full of the Indebtedness. Until all
Indebtedness of Borrower to the Banks shall have been paid in full, each
Guarantor waives any right to enforce any remedy which the Banks now have or may
hereafter have against Borrower or any of its other Subsidiaries, and waives any
benefit of, and any right to participate in, any security now or hereafter held
by the Banks. Guarantors waive all rights and defenses arising out of an
election of remedies by the creditor, even though that election of remedies,
such as a nonjudicial foreclosure with respect to security for a guaranteed
obligation, has destroyed the guarantor's rights of subrogation and
reimbursement against the principal by the operation of Section 580d of the Code
of Civil Procedure or otherwise. Guarantors expressly waive to the fullest
extent permitted by applicable Law all other suretyship defenses they otherwise
might or would have under any Law. Each Guarantor waives any right of
subrogation that it may have in respect to the obligations of Borrower to the
Banks. Each Guarantor waives all presentments, demands for performance, notices
of nonperformance, protests, notices of protest, notices of dishonor, and
notices of acceptance of this Guaranty and of the existence, creation, or
incurring of new or additional Indebtedness.


                            (Exhibit E, Page 2 of 9)

<PAGE>   131

               (7) After demand upon the Guarantors for payment under this
Guaranty, each Guarantor hereby specifically authorizes each Bank (subject to
the approval of the Majority Banks) in which such Guarantor maintains a deposit
account (whether a general or special deposit account, other than trust
accounts) or a certificate of deposit to setoff any Obligations owed to the
Banks against such deposit account or certificate of deposit without prior
notice to any Guarantor (which notice is hereby waived) whether or not such
deposit account or certificate of deposit has then matured. Nothing in this
paragraph shall limit or restrict the exercise by a Bank of any right to setoff
or banker's lien under applicable Law, subject to the approval of the Majority
Banks.

               (8) Each Guarantor represents and warrants to the Banks that it
has established adequate means of obtaining from Borrower and its Subsidiaries,
on a continuing basis, financial and other information pertaining to the
businesses, operations and condition (financial and otherwise) of Borrower and
its Subsidiaries, and that Guarantor now is and hereafter will be completely
familiar with the businesses, operations and condition (financial and otherwise)
of Borrower and its Subsidiaries. Each Guarantor hereby expressly waives and
relinquishes any duty on the part of the Banks (should any such duty exist) to
disclose to any Guarantor any matter, fact or thing related to the businesses,
operations or condition (financial or otherwise) of Borrower or its
Subsidiaries, whether now known or hereafter known by the Banks during the life
of this Guaranty.

               (9) Guarantors agree to pay, within 30 days after demand, the
reasonable out-of-pocket costs and expenses of the Administrative Agent and each
of the Banks in connection with the enforcement of this Guaranty, including
without limitation the reasonable fees and out-of-pocket expenses of any legal
counsel retained by the Administrative Agent or any of the Banks.

               (10) Any other Person may become a Guarantor under, and become
bound by the terms and conditions of, this Guaranty by executing and delivering
to the Administrative Agent an Instrument of Joinder substantially in the form
attached hereto as Exhibit A.

               (11) This Guaranty shall be governed by and construed according
to the laws of the State of California, to the jurisdiction of which the parties
hereto submit.


                                        "GUARANTORS"

                                        KAUFMAN AND BROAD OF ARIZONA, INC., an
                                        Arizona corporation


                                        By:_________________________________
                                          William R. Hollinger
                                          Vice President and Assistant Secretary

                                        KAUFMAN AND BROAD - CENTRAL VALLEY,
                                        INC., a California corporation

                                        By:_________________________________
                                          William R. Hollinger
                                          Vice President and Assistant Secretary


                            (Exhibit E, Page 3 of 9)

<PAGE>   132

                                        KAUFMAN AND BROAD COASTAL, INC., a
                                        California corporation


                                        By:_________________________________
                                          William R. Hollinger
                                          Vice President and Assistant Secretary


                                        KAUFMAN AND BROAD OF NORTHERN
                                        CALIFORNIA, INC., a California
                                        corporation


                                        By:_________________________________
                                           William R. Hollinger, Assistant
                                           Secretary


                                        KAUFMAN AND BROAD OF SACRAMENTO, INC.,
                                        a California corporation


                                        By:_________________________________
                                           William R. Hollinger
                                           Vice President, Chief Financial
                                           Officer and Assistant Secretary


                                        KAUFMAN AND BROAD - SOUTH BAY,
                                        INC., a California corporation


                                        By:_________________________________
                                           William R. Hollinger, Assistant
                                           Secretary


                                        KAUFMAN AND BROAD OF SOUTHERN
                                        CALIFORNIA, INC., a California
                                        corporation


                                        By:_________________________________
                                           William R. Hollinger, Chief Financial
                                           Officer, Treasurer and Assistant
                                           Secretary


                            (Exhibit E, Page 4 of 9)

<PAGE>   133

                                        KB HOLDINGS ONE, INC., a California
                                        corporation


                                        By:_________________________________
                                           William R. Hollinger
                                           Vice President, Treasurer, Chief
                                           Financial Officer and Assistant
                                           Secretary


                                        KAUFMAN AND BROAD OF COLORADO, INC.,
                                        a Colorado corporation


                                        By:_________________________________
                                           William R. Hollinger,
                                           Vice President and Assistant
                                           Secretary


                                        KAUFMAN AND BROAD OF NEVADA, INC.,
                                        a Nevada corporation


                                        By:_________________________________
                                           William R. Hollinger
                                           Vice President, Treasurer and
                                           Assistant Secretary


                                        KAUFMAN AND BROAD OF TEXAS, LTD.,
                                        a Texas limited partnership


                                        By:  KBSA, Inc., a Texas corporation,
                                             Its general partner


                                        By:_________________________________
                                           William R. Hollinger,
                                           Treasurer and Assistant Secretary



                            (Exhibit E, Page 5 of 9)

<PAGE>   134

                                      KAUFMAN AND BROAD DEVELOPMENT OF TEXAS,
                                      L.P., a Texas limited partnership

                                      By:  KBSA, Inc., a Texas corporation,
                                           Its general partner


                                           By:_________________________________
                                              William R. Hollinger,
                                              Treasurer and Assistant Secretary


                                      KAUFMAN AND BROAD LONE STAR, L.P.,
                                      a Texas limited partnership

                                      By:  KBSA, Inc., a Texas corporation,
                                           Its general partner


                                           By:_________________________________
                                              William R. Hollinger,
                                              Treasurer and Assistant Secretary




                            (Exhibit E, Page 6 of 9)

<PAGE>   135

                                   SCHEDULE I
                                  TO GUARANTY



                               List of Guarantors



Kaufman and Broad of Arizona, Inc.

Kaufman and Broad - Central Valley, Inc.

Kaufman and Broad Coastal, Inc.

Kaufman and Broad of Northern California, Inc.

Kaufman and Broad of Sacramento, Inc.

Kaufman and Broad - South Bay, Inc.

Kaufman and Broad of Southern California, Inc.

KB Holdings One, Inc.

Kaufman and Broad of Colorado, Inc.

Kaufman and Broad of Nevada, Inc.

Kaufman and Broad of Texas, Ltd.

Kaufman and Broad Development of Texas, L.P.

Kaufman and Broad Lone Star, L.P.




                            (Exhibit E, Page 7 of 9)

<PAGE>   136

                             INSTRUMENT OF JOINDER

               THIS INSTRUMENT OF JOINDER ("Joinder") is executed as
of_____________________, by__________________________________,
a____________________ ("Joining Party"), and delivered to the Administrative
Agent pursuant to the Subsidiary Guaranty dated as of October 3, 2000 (the
"Guaranty"). Terms used but not defined in this Joinder shall have the meanings
defined for those terms in the Guaranty.


                                    RECITALS

               A. The Guaranty was made by the Guarantors in favor of the Banks
that are parties to that certain 2000 Revolving Loan Agreement, dated as of
October 3, 2000 (the "Loan Agreement") among Kaufman and Broad Home Corporation,
as Borrower, the Banks signatory thereto, Bank of America, N.A., as
Administrative Agent, Credit Lyonnais Los Angeles Branch, as Syndication Agent,
and Bank One, NA, as Documentation Agent.

               B. Joining Party has become a Significant Subsidiary (as defined
in the Loan Agreement) or has been designated by Borrower as a Guarantor
Subsidiary (as defined in the Loan Agreement), and as such is required pursuant
to Section 5.9 of the Loan Agreement to become a Guarantor.

               C. Joining Party expects to realize direct and indirect benefits
as a result of the availability to Borrower of a credit facility pursuant to the
Loan Agreement, and as a result of becoming a party to the Guaranty.

               NOW THEREFORE, Joining Party agrees as follows:

                                   AGREEMENT

               1. By this Joinder, Joining Party becomes a "Guarantor" under and
pursuant to Section 10 of the Guaranty. Joining Party agrees that, upon its
execution hereof, it will become a Guarantor under the Guaranty with respect to
all Indebtedness of Borrower heretofore or hereafter incurred under the Loan
Agreement, and will be bound by all terms, conditions, and duties applicable to
a Guarantor under the Guaranty.



                                  Page 1 of 2
                            (Exhibit E, Page 8 of 9)

<PAGE>   137

               2. The effective date of this Joinder is_______________________.

                                        "Joining Party"

                                        _____________________________________
                                        a____________________________________


                                        By:__________________________________

                                           __________________________________
                                               Printed Name and Title

ACKNOWLEDGED:


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


By:___________________________________

   ___________________________________
        Printed Name and Title



KAUFMAN AND BROAD HOME CORPORATION


By:___________________________________

   ___________________________________
        Printed Name and Title





                                  Page 2 of 2
                            (Exhibit E, Page 9 of 9)

<PAGE>   138

                                   EXHIBIT F

<TABLE>
<CAPTION>
                                               31-Aug-00                                             31-Aug-00
                           -------------------------------------------------     -------------------------------------------------
------------               Deliveries  Sales   Backlog   Avg Price   Backlog     Deliveries  Sales   Backlog   Avg Price   Backlog
  Division                  Quarter   Quarter   Units     (000's)     Value       Quarter   Quarter   Units     (000's)     Value
------------               ---------- -------  --------  ---------   -------     ---------- -------  -------   ---------   -------
<S>                        <C>        <C>      <C>       <C>         <C>         <C>        <C>       <C>      <C>         <C>
Greater LA.............          0         0        0         $0         $0            0         0        0         $0         $0
Orange County..........          0         0        0          0          0            0         0        0          0          0
San Diego..............          0         0        0          0          0            0         0        0          0          0
Northbay...............          0         0        0          0          0            0         0        0          0          0
Southbay...............          0         0        0          0          0            0         0        0          0          0
Monterey Bay...........          0         0        0          0          0            0         0        0          0          0
                           ---------- -------  --------  ---------   -------     ---------- -------  -------   ---------   -------
 Total California......          0         0        0          0          0            0         0        0          0          0
                           ---------- -------  --------  ---------   -------     ---------- -------  -------   ---------   -------

Las Vegas*.............          0         0        0          0          0            0         0        0          0          0
Reno...................          0         0        0          0          0            0         0        0          0          0
Phoenix................          0         0        0          0          0            0         0        0          0          0
Tuscon.................          0         0        0          0          0            0         0        0          0          0
New Mexico.............          0         0        0          0          0            0         0        0          0          0
Dallas.................          0         0        0          0          0            0         0        0          0          0
Houston................          0         0        0          0          0            0         0        0          0          0
San Antonio............          0         0        0          0          0            0         0        0          0          0
Austin.................          0         0        0          0          0            0         0        0          0          0
Colorado...............          0         0        0          0          0            0         0        0          0          0
Utah...................          0         0        0          0          0            0         0        0          0          0
                           ---------- -------  --------  ---------   -------     ---------- -------  -------   ---------   -------
 Total Other US........          0         0        0          0          0            0         0        0          0          0
                           ---------- -------  --------  ---------   -------     ---------- -------  -------   ---------   -------
 Total United States...          0         0        0          0          0            0         0        0          0          0

Maisons Individuelles..          0         0        0          0          0            0         0        0          0          0
KBD....................          0         0        0          0          0            0         0        0          0          0
                           ---------- -------  --------  ---------   -------     ---------- -------  -------   ---------   -------
 Total France..........          0         0        0          0          0            0         0        0          0          0

Mexico.................          0         0        0          0          0            0         0        0          0          0
                           ---------- -------  --------  ---------   -------     ---------- -------  -------   ---------   -------
 Total.................          0         0        0         $0         $0            0         0        0         $0         $0
                           ========== =======  ========  =========   =======     ========== =======  =======   =========   =======

*Includes
 unconsolidated Monaco
 joint venture.........          0         0        0         $0         $0            0         0        0         $0         $0
                           ========== =======  ========  =========   =======     ========== =======  =======   =========   =======

California.............          0%        0%       0%                    0%           0%       0%        0%                    0%
Other US...............          0%        0%       0%                    0%           0%       0%        0%                    0%
 Total United States...          0%        0%       0%                    0%           0%       0%        0%                    0%

France.................          0%        0%       0%                    0%           0%       0%        0%                    0%
Mexico.................          0%        0%       0%                    0%           0%       0%        0%                    0%

 Total.................          0%        0%       0%                    0%           0%       0%        0%                    0%
</TABLE>

<TABLE>
<CAPTION>
                                               Difference
                           -------------------------------------------------
------------               Deliveries  Sales   Backlog   Avg Price   Backlog
  Division                  Quarter   Quarter   Units     (000's)     Value
------------               ---------- -------  --------  ---------   -------
<S>                        <C>        <C>      <C>       <C>         <C>
Greater LA.............          0         0        0         $0         $0
Orange County..........          0         0        0          0          0
San Diego..............          0         0        0          0          0
Northbay...............          0         0        0          0          0
Southbay...............          0         0        0          0          0
Monterey Bay...........          0         0        0          0          0
                           ---------- -------  --------  ---------   -------
 Total California......          0         0        0          0          0
                           ---------- -------  --------  ---------   -------

Las Vegas*.............          0         0        0          0          0
Reno...................          0         0        0          0          0
Phoenix................          0         0        0          0          0
Tuscon.................          0         0        0          0          0
New Mexico.............          0         0        0          0          0
Dallas.................          0         0        0          0          0
Houston................          0         0        0          0          0
San Antonio............          0         0        0          0          0
Austin.................          0         0        0          0          0
Colorado...............          0         0        0          0          0
Utah...................          0         0        0          0          0
                           ---------- -------  --------  ---------   -------
 Total Other US........          0         0        0          0          0
                           ---------- -------  --------  ---------   -------
 Total United States...          0         0        0          0          0

Maisons Individuelles..          0         0        0          0          0
KBD....................          0         0        0          0          0
                           ---------- -------  --------  ---------   -------
 Total France..........          0         0        0          0          0

Mexico.................          0         0        0          0          0
                           ---------- -------  --------  ---------   -------
 Total.................          0         0        0         $0         $0
                           ========== =======  ========  =========   =======

*Includes
 unconsolidated Monaco
 joint venture.........          0         0        0         $0         $0
                           ========== =======  ========  =========   =======
</TABLE>
<PAGE>   139
                                                                       EXHIBIT G

                       KAUFMAN AND BROAD HOME CORPORATION
                              SUMMARY OF INVENTORY
                               AS OF MAY 31, 2000


<TABLE>
<CAPTION>
                        Inventory Book Value (Thousands)                        Size of Project (Lots/Acres)
                        ---------------------------------             -------------------------------------------------------------
                                 Homes/Lots   Land Under    Secured   Total   Total    Land in Production    Land Under Development
                        Total     in Prod     Development    Debt      Lots   Acres   W/Homes    WO/Homes       Lots        Acres
                        -----    ----------   -----------   -------   -----   -----   -------   ----------   ---------- -----------
<S>                     <C>      <C>          <C>           <C>       <C>     <C>     <C>      <C>           <C>        <C>
CALIFORNIA
 Greater LA
 Orange County
 San Diego
 Northbay
 Southbay
                        -----    ----------   -----------   -------   -----   -----   -------   ----------   ---------- -----------
  TOTAL CALIFORNIA         -             -             -         -       -       -         -            -            -           -
                        -----    ----------   -----------   -------   -----   -----   -------   ----------   ---------- -----------

OTHER US
 LAS VEGAS
 RENO
 PHOENIX
 TUCSON
 NEW MEXICO
 DALLAS
 HOUSTON
 SAN ANTONIO
 AUSTIN
 COLORADO
 UTAH
                        -----    ----------   -----------   -------   -----   -----   -------   ----------   ---------- -----------
  TOTAL OTHER US           -             -             -         -       -       -         -            -            -           -
                        -----    ----------   -----------   -------   -----   -----   -------   ----------   ---------- -----------
  TOTAL UNITED STATES      -             -             -         -       -       -         -            -            -           -


FRANCE
 Maisons Individuelles
 KBD
                        -----    ----------   -----------   -------   -----   -----   -------   ----------   ---------- -----------
  TOTAL FRANCE             -             -             -         -       -       -         -            -            -           -
                        -----    ----------   -----------   -------   -----   -----   -------   ----------   ---------- -----------
 MEXICO

 OTHER PROPERTIES                                                                                                 #REF!
                        -----    ----------   -----------   -------   -----   -----   -------   ----------   ---------- -----------
 TOTAL INVENTORY        $  -     $       -    $        -    $    -       -       -         -            -         #REF!          -
                        =====    ==========   ===========   =======   =====   =====   =======   ==========   ========== ===========

                                                                     --------------------------------------------------------------
                                                                       Key:
                                                                       SFD  Single Family Detached        OPT  Option
                                                                       SFA  Single Family Attached        OFF  Office Buildings
                                                                       APP  Apartments                    IND  Industrial
                                                                       MPC  Master Planned Community      COM  Commercial
                                                                       CON  Condominium                   REN  Renovation
                                                                     --------------------------------------------------------------
</TABLE>
<PAGE>   140
                                  SCHEDULE 1.1
                    KAUFMAN & BROAD HOME CORP. NEW 2000 TERM
                                  COMMITMENTS

<TABLE>
<CAPTION>
                                                     PRORATA SHARE AS OF
                                                     -------------------
                                PERCENT                    DOLLARS
BANK                          COMMITMENT                 COMMITMENTS
----                         -------------           -------------------
<S>                          <C>                     <C>
BANK OF AMERICA              33.519726623%             $ 53,950,000.00

CREDIT LYONNAIS              13.793103448%             $ 22,200,000.00

BANK ONE                     13.793103448%             $ 22,200,000.00

GUARANTY FEDERAL              6.896551724%             $ 11,100,000.00

BANK UNITED                   8.275862069%             $ 13,320,000.00

SUN TRUST                     6.896551724%             $ 11,100,000.00

IBJ                           2.758620690%             $  4,440,000.00

COMERICA                      4.137931034%             $  6,660,000.00

KBC                           1.652687170%             $  2,660,000.00

PNC BANK                      4.827586207%             $  7,770,000.00

CITICORP USA, INC.            3.448275862%             $  5,550,000.00

      TOTAL                        100.00%             $160,950,000.00
</TABLE>
<PAGE>   141
                                                                   SCHEDULE 3.18

STANDBY CENTERS OF CREDIT

                      KAUFMAN AND BROAD HOME CORPORATION


                           EXISTING LETTER OF CREDITS

                             AS OF OCTOBER 3, 2000


<TABLE>
<CAPTION>
                 ISSUE              AMEND                                                           FINANCIAL OR
SBLC No.          DATE              DATE                  ISSUED ON BEHALF OF:                      PERFORMANCE
--------         -----              -----                 --------------------                      ------------
<S>            <C>         <C>                      <C>                                             <C>
3004804        06/02/97            4/1/2000         Kaufman & Broad of San Diego                    Performance

3005229        07/01/97           5/10/2000         Kaufman & Broad Coastal Inc.                    Financial

3007535        11/10/97            5/25/00          Kaufman & Broad of Colorado, Inc.               Performance

3007536        11/10/97            5/28/00          Kaufman & Broad of Colorado, Inc.               Performance
                              (EFF. 5/28/2000)

3008153        12/23/97           10/22/99          Affordable Multi-Family, Inc.                   Financial

3008963        02/24/98            4/4/00           Kaufman & Broad of Southern Calif. Inc.         Financial
                            Notice per Exhibit C
3011985        09/15/98            9/11/00          Kaufman and Broad of Utah, Inc.                 Performance

3011986        09/15/98            9/11/00          Kaufman and Broad of Utah, Inc.                 Performance

3012004        09/16/98            9/11/00          Kaufman and Broad of Utah, Inc.                 Performance

3012005        09/16/98            9/11/00          Kaufman and Broad of Utah, Inc.                 Performance

3012521        10/13/98            9/20/99          Kaufman and Broad of Colorado, Inc.             Financial

3012542        10/13/98            9/20/99          Kaufman and Broad of Colorado, Inc.             Financial

3012617        11/05/98            5/12/00          Kaufman and Broad of Utah, Inc.                 Performance
                             (EFF. 5/12/2000)
3012828        11/05/98            5/25/00          Kaufman and Broad of Northern Calif. Inc.       Financial

3013665        12/22/98           12/22/99          Kaufman and Broad of San Diego, Inc.            Performance

3014319        01/27/99            5/24/00          Kaufman and Broad of Utah, Inc.                 Performance
                             (EFF. 5/24/2000)

3015041        03/09/99            3/8/00           Kaufman and Broad of San Diego, Inc.            Performance
                             (EFF. 3/8/2000)

3015165        03/16/99            9/15/00          Kaufmann and Broad of Utah, Inc.                Performance
                             (EFF. 9/15/2000)

3015184        03/17/99            3/9/00           Kaufman and Broad Multi-Housing Group, Inc.     Performance

3015835        04/22/99                             Kaufman and Broad of San Diego, Inc.            Performance

3016273        06/14/99            5/12/00          Kaufman and Broad of Arizona                    Financial
                             (EFF. 5/12/2000)

3016770        06/14/99            5/8/00           Kaufman and Broad Lone Star, L.P.               Financial

3016635        08/11/99            5/9/00           Kaufman and Broad of Sacramento, Inc.           Financial

</TABLE>



<TABLE>
<CAPTION>
                                                                                                              SBLC
                                                                                   SBLC                      AMOUNT
SBLC No.            BENEFICIARY                                                 EXPIRY DATE                   100%
--------            -----------                                                 -----------                  ------
<S>                 <C>                                                      <C>                        <C>
3004804             City of Oceanside                                            04/30/01                  15,431.00

3005229             Brea-Olinda Joint Venture & Bank One, Arizona, NA            04/30/01               1,859,914.00
                                                                             AUTO RENEWAL 6 MOS

3007535             Town of Superior &/or Superior Metro                         04/30/01                 305,277.00
                      District #2

3007536             Town of Superior &/or Superior Metro                         04/30/01                 698,223.00

                                                                                  Exlred
3008153             State Street Bank & Trust Co. of MO, NA                      12/31/00                 100,000.00

3008963             Union Bank of California, NA                                 02/01/01                 325,136.84
                                                                              Auto Extended

3011985             Ogden City Corporation Utah, a Utah Municipal Corporation    03/15/01                  42,282.00

3011986             Ogden City Corporation Utah, a Utah Municipal Corporation    03/15/01                  56,245.00

3012004             Ogden City Corporation Utah, a Utah Municipal Corporation    03/15/01                  48,059.40

3012005             Ogden City Corporation Utah, a Utah Municipal Corporation    03/15/01                 131,014.83

3012521             Board of County Commissioners of Arapahoe County             10/13/00                 574,993.00

3012542             Board of County Commissioners of Arapahoe County             10/13/00                  25,000.00

3012617             Lehi City Corporation                                        12/31/00                  38,215.00

3012828             City of Dublin                                               10/30/00                 336,500.00

3013665             City of Oceanside                                            12/22/00                  57,000.00

3014319             Lehi City Corporation                                        12/31/00                 102,155.00

3015041             Rainbow Municipal Water District                             03/09/01                 579,072.00

3015105             Woods Cross City a Municipal Corporation                     03/17/01                  77,811.83
                      of the State of Utah

3015184             Virginia Housing Development Authority                       03/17/01               2,500,000.00

3015835             City of Oceanside                                            04/22/01                  26,900.00

3016273             First American Title Company                                 11/14/00                 882,610.87

3016770             Mission Glenn South, L.T.D.                                  04/30/01                 200,000.00

3016635             City of Rocklin                                              04/30/01                 542,287.00

</TABLE>
<PAGE>   142
STANDBY LETTERS OF CREDIT     KAUFMAN AND BROAD HOME CORPORATION
<TABLE>
<CAPTION>
                                                                                                 FINANCIAL
                  ISSUE           AMEND                                                             OR
SBLC NO.          DATE             DATE           ISSUED ON BEHALF OF:                          PERFORMANCE
------------    --------    ------------------    ------------------------------------------    -----------
<C>             <C>         <C>                   <C>                                           <C>
  3018494       08/18/99                          Kaufman and Broad Multi-Housing Group Inc.    Performance

  3018551       08/30/99          7/7/00          Kaufman and Broad Home Corporation             Financial
                            Effective 7/6/2000
  3018745       09/03/99                          Kaufman and Broad Multi-Housing Group Inc.    Performance

  3018973       09/07/99                          Kaufman and Broad Multi-Housing Group Inc.    Performance

  3019204       10/08/99          9/6/00          Kaufman and Broad Home Corporation             Financial

  3020671       11/13/99                          Kaufman and Broad Multi-Housing Group Inc.     Financial

  3021899       12/28/99                          Kaufman and Broad of Southern Calif. Inc.      Financial

  3021233       12/30/99                          Kaufman and Broad of Northern California       Financial

  3021773       12/30/99                          Kaufman and Broad of Northern California       Financial

  3022124       01/06/00                          Kaufman and Broad of Tucson, Inc.              Financial

  3022137       01/07/00                          Kaufman and Broad Multi-Housing                Financial

  3022368       01/14/00                          Kaufman and Broad Multi-Housing                Financial

  3022482       01/19/00          8/1/00          Kaufman and Broad of Colorado, Inc.            Financial

  3022739       01/28/00                          Kaufman and Broad of Utah                     Performance

  3023152       02/11/00                          Kaufman and Broad of Southern Calif.          Performance

  3022941       02/17/00                          Kaufman and Broad - South Bay Inc.             Financial

  3023351       02/23/00                          Kaufman and Broad Multi-Housing                Financial

  3023350       02/23/00                          Kaufman and Broad Multi-Housing                Financial

  3023707       03/03/00                          Kaufman and Broad of Colorado, Inc.            Financial

  3024018       03/17/00                          Kaufman and Broad Lone Star, LP                Financial

  3024241       03/20/00                          Kaufman and Broad of Southern California       Financial

  3024742       04/06/00                          Kaufman and Broad Multi-Housing                Financial

  3028383       08/14/00                          Kaufman and Broad of Tucson, Inc.              Financial

  3028810       08/25/00                          Kaufman and Broad Lone Star LP                 Financial

  3029279       09/11/00                          Kaufman and Broad of San Diego               Performance

  3029552       10/03/00                          Kaufman and Broad of San Diego                Financial

TOTAL NUMBER       49
OF L/CS
</TABLE>

<TABLE>
<CAPTION>
                                                               SBLC                      SBLC
                                                              EXPIRY                    AMOUNT
SBLC NO.        BENEFICIARY                                    DATE                      100%
------------    -----------                                   ------                    ------
<C>             <C>                                       <C>                      <C>
  3018494       FNMA                                          04/09/01                     91,350.00

  3018551       SLF Hasley & Wells Fargo Bank                 04/30/01                  5,690,000.00
                                                                                   Effective 12/1/99
  3018745       FNMA                                          04/30/01                     53,460.00

  3018973       FNMA                                         4/30/2001                     68,000.00

  3019204       Bank One Arizona NA                           04/30/01                  1,088,000.00

  3020671       FNMA                                          04/15/01                     39,360.00

  3021899       Metropolitan Escrow Co.                       04/30/01                  2,170,500.00

  3021233       City of Patterson                             04/30/01                  4,975,000.00

  3021773       City of Patterson                             12/08/00                    853,855.00

  3022124       Vistoso Partners, LLC                         10/31/00                    480,000.00

  3022137       FNMA                                          04/30/01                     23,200.00

  3022368       FNMA                                          04/30/01                     43,920.00

  3022482       Board of Commissions of Arapaho County        01/31/01                     78,126.13

  3022730       Woods Cross City a Municipal Corp.            04/30/01                    622,654.20

  3023152       Coachella Valley Water District               04/30/01                     12,717.50

  3022841       City of San Jose                              01/31/01                    403,537.52

  3023351       FNMA                                          04/30/01                     18,600.00

  3023350       FNMA                                          04/30/01                     31,000.00

  3023707       Board of Commissions of Arapaho County        03/01/01                     90,539.10

  3024018       Lawyers Title Company                         03/15/01                    266,000.00

  3024241       Wells Fargo Bank                              04/15/01                    800,000.00

  3024742       FNMA                                          04/30/01                     88,000.00

  3028383       First American Title                          04/30/01                     75,000.00

  3028810       Hillwood Services LP                          04/30/01                    428,960.00

  3029270       City of Oceanside                             04/30/01                    207,349.00

  3029552       City of Chula Vista                           04/30/01                     35,840.00

TOTAL NUMBER                                              L/C OUTSTANDINGS             27,835,198.47
OF L/CS                                                   ALLOCATION AVAILABLE:        72,164,801.53
                                                          ALLOCATION AT 100%:         100,000,000.00

</TABLE>

<PAGE>   143

                                  SCHEDULE 4.4

                     KAUFMAN AND BROAD HOME CORPORATION AND
                           CONSOLIDATED SUBSIDIARIES


                                 KEY TO "TYPES"

                            S = SIGNIFICANT SUBSIDIARY
                            G = GUARANTOR SUBSIDIARY
                            Fo = FOREIGN SUBSIDIARY
                            Fi = FINANCIAL SUBSIDIARY
                            (NOTE: ALL GUARANTOR SUBSIDIARIES ARE
                                   ALSO SIGNIFICANT SUBSIDIARIES)


<TABLE>
<CAPTION>
ARIZONA CORPORATIONS                                        %           TYPE(S)
--------------------                                       ---          -------
<S>                                                        <C>          <C>
Kaufman and Broad of Arizona, Inc.                         100            S/G
Kaufman and Broad Home Sales of Arizona, Inc.              100
Kaufman and Broad of Tucson, Inc.                          100
Kaufman and Broad Home Sales of Tucson, Inc.               100

CALIFORNIA CORPORATIONS
-----------------------
BPP Holdings, Inc.                                         100
Branching Tree Corp.                                       100
Cable Associates, Inc.                                     100
Custom Decor, Inc.                                         100
First Northern Builders Servicing, Inc.                    100
KBASW Mortgage Acceptance Corporation                      100             Fi
KBI/Mortgage Acceptance Corporation                        100             Fi
KBRAC IV Mortgage Acceptance Corporation                   100             Fi
Kaufman and Broad Architecture, Inc.                       100
Kaufman and Broad - Central Valley, Inc.                   100             S/G
Kaufman and Broad Coastal, Inc.                            100             S/G
Kaufman and Broad Communities, Inc.                        100
Kaufman and Broad Development Group                        100
Kaufman and Broad Embarcadero, Inc.                        100
Kaufman and Broad Holdings, Inc.                           100
Kaufman and Broad Home Sales, Inc.                         100
Kaufman and Broad Home Sales of Northern California, Inc.  100
Kaufman and Broad Insurance Agency, Inc.                   100
Kaufman and Broad International, Inc.                      100
Kaufman and Broad Land Company                             100
Kaufman and Broad Land Development Venture, Inc.           100
Kaufman and Broad - Monterey Bay, Inc.                     100
Kaufman and Broad - Moreno/Perris Valleys, Inc.            100
Kaufman and Broad Multi-Family, Inc.                       100
Kaufman and Broad of Northern California, Inc.             100             S/G
Kaufman and Broad Patterson, Inc.                          100
Kaufman and Broad Properties                               100
</TABLE>


<PAGE>   144

<TABLE>
<S>                                                        <C>            <C>
Kaufman and Broad of Sacramento, Inc.                      100             S/G
Kaufman and Broad of San Diego, Inc.                       100
Kaufman and Broad - South Bay, Inc.                        100             S/G
Kaufman and Broad of Southern California, Inc.             100             S/G
Kaufman and Broad of Utah, Inc.                            100
KB Holdings One, Inc.                                      100             S/G
Kent Land Company                                          100
Kingsbay Escrow Company                                    100
Lewis Homes Management Corp.                               100
Mather Housing Company, LLC                                100


CANADIAN CORPORATIONS
---------------------

Margreen Investments, Inc.                                 100             Fo
3238865 Canada Inc.                                        100             Fo


COLORADO CORPORATION
--------------------

Kaufman and Broad of Colorado, Inc.                        100             S/G


DELAWARE CORPORATIONS/LLCs
--------------------------

Eden Land Development Corp.                                100
e.KB, Inc.                                                 100
Estes Homebuilding Co.                                                    100
General Homes Corporation                                  100
General Homes of Arizona                                   100
General Homes of Dallas                                    100
General Homes of Florida                                   100
General Homes of Houston                                   100
General Homes Development LLC                              100
GH Homebuilding Holdings, Inc.                             100
HomeSafe Escrow Company                                    100
KB City Ranch, Inc.                                        100
International Mortgage Acceptance Corporation              100             Fi
Kaufman and Broad Development Company                      100
Kaufman and Broad Limited                                  100
KBHC Financing I                                            3
LHE Arctic LLC                                             100
LHN Arctic LLC                                             100
LDC Arctic LLC                                             100
LP Arctic LLC                                              100
LHC Arctic LLC                                             100
rateOne Home Loans, LLC                                    100             Fi
Rate One Associates, Inc.                                  100             Fi
Rate One Holdings, Inc.                                    100             Fi
</TABLE>


<PAGE>   145

<TABLE>
<S>                                                        <C>            <C>
FRENCH CORPORATIONS
-------------------

Kaufman and Broad Developpement SA.                        57.47          Fo/S
Kaufman and Broad SA.                                      57.47          Fo/S
Kaufman and Broad Promotion Maisons Individuelles SA.      57.47          Fo
Kaufman and Broad Renovation S.A.R.L.                      57.47          Fo
SMCI Developpement. SA.                                    57.47          Fo
Gie KB                                                     57.47          Fo
Park SA                                                    57.46          Fo
Millet, S. A. R. L.                                        57.47          Fo
LMP Chancy S. A. R. L.                                     57.47          Fo


ILLINOIS CORPORATIONS
---------------------

Kaufman and Broad of Illinois, Inc.                        100
Kaufman and Broad Mortgage Company                         100            Fi/S


MASSACHUSETTS CORPORATION
-------------------------

Kaufman and Broad Homes, Inc.                              100


MEXICAN CORPORATIONS
--------------------
Kaufman y Broad de Mexico                                  100            Fo
Kaufman y Broad Asesoria Administrativa                    100            Fo
Operadora Los Robles                                       100            Fo
Desarrollos Los Robles                                     100            Fo


MICHIGAN CORPORATION
--------------------

Keywick, Inc.                                              100


MINNESOTA CORPORATION
---------------------

Kaufman and Broad Custom Homes, Inc.                       100


NEVADA CORPORATION
------------------

Desert Inn Development, LLC                                100
Kaufman and Broad Home Sales of Nevada, Inc.               100
Kaufman and Broad of Nevada, Inc.                          100            S/G
Kaufman and Broad Home Sales of Reno, Inc.                 100
Kaufman and Broad of Reno, Inc.                            100
Lewis Homes - Carlyle Venture L. L. C.                      50
</TABLE>



<PAGE>   146

<TABLE>
<S>                                                        <C>            <C>
NEW MEXICO CORPORATIONS
-----------------------

Kaufman and Broad Home Sales of New Mexico, Inc.           100
Kaufman and Broad of New Mexico, Inc.                      100


NEW YORK CORPORATION
--------------------

Kaufman and Broad Homes of Long Island, Inc.               100


TEXAS CORPORATIONS AND PARTNERSHIPS
-----------------------------------

Eden Corporation                                           100
Envirographic, Inc.                                        100
FGMC, Inc.                                                 100
Hallmark Residential Group, Inc.                           100
Kaufman and Broad of Texas, Ltd.                           100            S/G
Kaufman and Broad Development of Texas, L. P.              100            S/G
Kaufman and Broad Lone Star, LP                            100            S/G
KBSA Inc.                                                  100
Rayco Land Development, Inc.                               100
San Antonio Title Co.                                      100
SATEX Properties, Inc.                                     100
Quoin Investments, Inc.                                    100
</TABLE>



<PAGE>   147

                                  SCHEDULE 4.7

                       EXISTING LIENS OR RIGHTS OF OTHERS
                             AS OF AUGUST 31, 2000



                                      NONE





                          (Schedule 4.7 -Page 1 of 1)

<PAGE>   148

                                  SCHEDULE 4.9

           Existing Indebtedness and Contingent Guaranty Obligations
                             as of August 31, 2000


<TABLE>
<CAPTION>
                                                         Amount          Total
                                                       ---------       --------
                                                         $ (000)        $ (000)
<S>                                                    <C>             <C>
DEBT:

KBHC SECURED DEBT:
        California                                       12,007
        Other U.S.                                        6,671
        International                                     8,659
                                                                         27,337


KBMC SECURED DEBT:
        Commercial Paper                                305,895
        Mortgage Warehouse Facility                      31,245
                                                                        337,140


UNSECURED DEBT:
        Senior Debt 7-3/4%                              175,000
        Senior Sub Debt 9-3/8%                          174,491
        Senior Sub Debt 9-5/8%                          124,568
        Revolving Credit Line                           397,000
        Other Unsecured                                  94,848
                                                                        965,907
                                                                      ---------
TOTAL DEBT                                                            1,330,384
                                                                      =========

CONTINGENT GUARANTEE OBLIGATIONS:
       KBHC

        Letters of Credit                                                37,445
        Simpson Housing                                                  45,146

TOTAL CONTINGENT GUARANTEE OBLIGATIONS                                   82,591
                                                                      =========
TOTAL DEBT AND CONTINGENT
        CONTINGENT GUARANTEE OBLIGATIONS                              1,412,975
                                                                      =========
</TABLE>



<PAGE>   149
                                  SCHEDULE 6.4

                                       G
                 INVESTMENTS IN AND ADVANCES TO JOINT VENTURES
                              FYE 11-30-00 (000'S)

<TABLE>
<CAPTION>
                                          11-30-99     2-29-00     5-31-00     8-31-00     11-30-00
                                          ---------------------------------------------------------
<S>                                       <C>         <C>         <C>         <C>          <C>
CONSTRUCTION

GREATER LA

City Ranch                                 15,906      16,469      16,431      16,451         --
                                          ---------------------------------------------------------
      Total                                15,906      16,469      16,431      16,451         --
                                          ---------------------------------------------------------
LAS VEGAS

Carlyle                                       907       1,872       1,848       2,398         --
                                          ---------------------------------------------------------
      Total                                   907       1,872       1,848       2,398         --
                                          ---------------------------------------------------------
NEW MEXICO

Paradise Green                                  2           2           2           2         --
Las Ventanas                                  251         252         301         301         --
                                          ---------------------------------------------------------
      Total                                   253         254         303         303         --
                                          ---------------------------------------------------------
HOUSTON

Southwyck Management                           35          35          --          --         --
Performance Mortgage Partners, Ltd.            25          25          --          --         --
                                          ---------------------------------------------------------
      Total                                    60          60          --          --         --
                                          ---------------------------------------------------------
MAISONS INDIVIDUELLES

Villabe Les Heurts                             (8)         (8)        (10)         (9)        --
                                          ---------------------------------------------------------
      Total                                    (8)         (8)        (10)         (9)        --
                                          ---------------------------------------------------------
KBD

Issy Guynemer                                (104)         (1)         (1)         (1)        --
Des Pepinieres                                (26)          3           2           2         --
Emile Meunier                                  62          61          57          55         --
Haussmann                                   1,302       1,248       1,213       1,113         --
Hoche Monceau                                  24          11          11          10         --
Meudon Les Montalets                           (2)         (2)         (2)         (2)        --
Villa D'Auteuil                             2,409       2,306       2,240       2,121         --
Terrasse De Chatillon                        (134)       (127)        (94)       (118)        --
Domaine De Verneuil                           558         537         100          64         --
Park D'Alembert                              (102)        (25)          2           1         --
Sarl Samlou                                   185         503         550         737         --
Rouselle                                       --           1           2          14         --
Quai de la Marne                               --          87           4           4         --
Archeveche                                     --          --          (1)         (1)        --
Ave du Maine                                   --         376           4          39         --
Quadrilatere                                   --        (360)         (2)        (27)        --
Dohomey                                        --          (2)         --          --         --
Illot Paille                                   --         (82)        (19)        204         --
Briand                                         --          80         328          34         --
                                          ---------------------------------------------------------
      Total                                 4,172       4,614       4,395       4,249         --
                                          ---------------------------------------------------------
      Total                                21,290      23,261      22,967      23,392         --
                                          =========================================================
</TABLE>