$450,000,000 REVOLVING CREDIT FACILITY




              SECOND AMENDED AND RESTATED REVOLVING LOAN AGREEMENT



                                      among


                              DEL WEBB CORPORATION,


                             THE BANKS NAMED HEREIN,




                            BANK OF AMERICA NATIONAL
                    TRUST AND SAVINGS ASSOCIATION, as Agent,



                                       and




                       BANK ONE, ARIZONA, NA, as Co-Agent


                            Dated as of June 5, 1998
<PAGE>
                                TABLE OF CONTENTS
                                -----------------
                                                                           Page
                                                                           ----
Article 1     DEFINITIONS AND ACCOUNTING TERMS...............................1

              1.1    Defined Terms...........................................1
              1.2    Use of Defined Terms...................................28
              1.3    Accounting Terms.......................................28
              1.4    Rounding...............................................28
              1.5    Exhibits and Schedules.................................28
              1.6    References to "Borrower and its Subsidiaries"..........28
              1.7    Miscellaneous Terms....................................28

Article 2     LOANS.........................................................30

              2.1    Loans-General..........................................30
              2.2    Reference Rate Loans...................................31
              2.3    Eurodollar Rate Loans..................................32
              2.4    Voluntary Reduction of Commitments.....................32
              2.5    Extension of Maturity Date/Reduction of Commitments....32
              2.6    Optional Termination of Commitments....................34
              2.7    Automatic Termination of Commitments...................34
              2.8    Agent's Right to Assume Funds Available for Advances...34
              2.9    Adjusting Purchase Payments............................34
              2.10   Substitute Credit Facility.............................35
              2.11   Senior Debt............................................35
              2.12   Letters of Credit......................................35

Article 3     PAYMENTS AND FEES.............................................40

              3.1    Principal and Interest.................................40
              3.2    Arrangement, Agency and Co-Agency Fees.................41
              3.3    Underwriting Fee.......................................41
              3.4    Facility and Commitment Fees...........................41
              3.5    Increased Commitment Costs.............................42
              3.6    Eurodollar Costs and Related Matters...................43
              3.7    Late Payments..........................................46
              3.8    Computation of Interest and Fees.......................47
              3.9    Non-Banking Days.......................................47
              3.10   Manner and Treatment of Payments.......................47
              3.11   Funding Sources........................................48
              3.12   Failure to Charge Not Subsequent Waiver................48
              3.13   Agent's Right to Assume Payments Will be 
                      Made by Borrower......................................48
              3.14   Fee Determination Detail...............................49
                                        i
<PAGE>
              3.15    Survivability.........................................49
              3.16    Accruals Under Pre-Existing Loan Documents............49

Article 4     REPRESENTATIONS AND WARRANTIES................................50

              4.1    Existence and Qualification; Power; Compliance 
                      With Laws.............................................50
              4.2    Authority; Compliance With Other Agreements and 
                      Instruments and Government Regulations................50
              4.3    No Governmental Approvals Required.....................51
              4.4    Subsidiaries...........................................51
              4.5    Financial Statements...................................52
              4.6    No Other Liabilities; No Material Adverse Changes......52
              4.7    Title to Property......................................52
              4.8    Intangible Assets......................................52
              4.9    Public Utility Holding Company Act.....................53
              4.10   Litigation.............................................53
              4.11   Binding Obligations....................................53
              4.12   No Default.............................................53
              4.13   ERISA..................................................53
              4.14   Regulations G, T, U and X; Investment Company Act......54
              4.15   Disclosure.............................................54
              4.16   Tax Liability..........................................54
              4.17   Strategic Plan.........................................54
              4.18   Hazardous Materials. ..................................54
              4.19   Year 2000 Compliance...................................55

Article 5     AFFIRMATIVE COVENANTS (OTHER THAN INFORMATION AND
              REPORTING REQUIREMENTS).......................................56

              5.1    Payment of Taxes and Other Potential Liens.............56
              5.2    Preservation of Existence..............................56
              5.3    Maintenance of Properties..............................56
              5.4    Maintenance of Insurance...............................57
              5.5    Compliance With Laws...................................57
              5.6    Inspection Rights......................................57
              5.7    Keeping of Records and Books of Account................57
              5.8    Compliance With Agreements.............................57
              5.9    Use of Proceeds........................................57
              5.10   New Guarantor Subsidiaries; Release of Certain 
                      Guaranties............................................58
              5.11   Hazardous Materials Laws...............................58

Article 6     NEGATIVE COVENANTS............................................59

              6.1    Prepayment of Indebtedness.............................59
                                       ii
<PAGE>
              6.2    Payment of Subordinated Obligations....................59
              6.3    Mergers and Sale of Assets.............................60
              6.4    Hostile Tender Offers..................................60
              6.5    Distributions..........................................60
              6.6    ERISA..................................................61
              6.7    Change in Nature of Business...........................61
              6.8    Liens..................................................61
              6.9    Indebtedness...........................................63
              6.10   Transactions with Affiliates...........................64
              6.11   Tangible Net Worth.....................................64
              6.12   Consolidated Fixed Charge Coverage.....................64
              6.13   Debt to Net Worth......................................65
              6.14   Adjusted Senior Debt to Net Worth......................65
              6.15   Liquidity..............................................65
              6.16   Investments............................................66
              6.17   Unentitled Land........................................67
              6.18   Unsold Homes in Production.............................67
              6.19   Coventry Assets........................................68

Article 7     INFORMATION AND REPORTING REQUIREMENTS........................69

              7.1    Financial and Business Information.....................69
              7.2    Compliance Certificates................................71

Article 8     CONDITIONS....................................................73

              8.1    Initial Advances, Etc..................................73
              8.2    Any Increasing Advance.................................74
              8.3    Any Advance............................................75
              8.4    Return of Pre-Existing Notes...........................75

Article 9     EVENTS OF DEFAULT AND REMEDIES UPON EVENT OF DEFAULT..........76

              9.1    Events of Default......................................76
              9.2    Remedies Upon Event of Default.........................78

Article 10    THE AGENT.....................................................81

              10.1    Appointment and Authorization.........................81
              10.2    Agent and Affiliates..................................81
              10.3    Proportionate Interest in any Collateral..............81
              10.4    Banks' Credit Decisions...............................81
              10.5    Action by Agent.......................................82
              10.6    Liability of Agent....................................82
                                       iii
<PAGE>
              10.7    Indemnification.......................................83
              10.8    Successor Agent.......................................84
              10.9    No Obligations of Borrower............................84

Article 11    MISCELLANEOUS.................................................86

              11.1    Cumulative Remedies; No Waiver........................86
              11.2    Amendments; Consents..................................86
              11.3    Costs, Expenses and Taxes.............................87
              11.4    Nature of Banks' Obligations..........................87
              11.5    Survival of Representations and Warranties............88
              11.6    Notices...............................................88
              11.7    Execution of Loan Documents...........................88
              11.8    Binding Effect; Assignment............................89
              11.9    Sharing of Setoffs....................................90
              11.10   Indemnity by Borrower.................................91
              11.11   Nonliability of the Banks.............................92
              11.12   No Third Parties Benefited............................93
              11.13   Further Assurances....................................93
              11.14   Integration...........................................93
              11.15   Governing Law.........................................94
              11.16   Severability of Provisions............................94
              11.17   Headings..............................................94
              11.18   Time of the Essence...................................94
              11.19   Foreign Banks.........................................94
              11.20   Hazardous Material Indemnity..........................94
              11.21   Reference to Arbitration..............................95
              11.22   Confidentiality.......................................96
              11.23   Co-Agent..............................................97

Schedules

1.1       Bank Group Commitments
2.9       Adjusting Purchase Payments
3.3       Allocation of Underwriting Fee
4.3       Governmental Approvals
4.4       Subsidiaries
4.6       Outstanding Indebtedness
4.10      Litigation
6.8       Existing Liens
6.9       Certain Outstanding Credit Commitments
6.16      Existing Investments
                                       iv
<PAGE>
Exhibits

A     -  Commitment Assignment and Acceptance
B     -  Compliance Certificate
C     -  Line A Note
D     -  Line B Note
E     -  Loan Compliance Certificate
F-1   -  Opinion of Counsel (Inside)
F-2   -  Opinion of Counsel (Outside)
G     -  Request for Letter of Credit
H     -  Request for Loan
I     -  Subsidiary Guaranty
                                        v
<PAGE>
              SECOND AMENDED AND RESTATED REVOLVING LOAN AGREEMENT
              ----------------------------------------------------

                            Dated as of June 5, 1998


              This  SECOND   AMENDED  AND  RESTATED   REVOLVING  LOAN  AGREEMENT
("Agreement")  is  entered  into by and among Del Webb  Corporation,  a Delaware
corporation  ("Borrower"),  each bank whose  name is set forth on the  signature
pages of this  Agreement and each lender which may  hereafter  become a party to
this  Agreement  pursuant  to  Section  11.8  (collectively,   the  "Banks"  and
individually, a "Bank"), Bank of America National Trust and Savings Association,
a national banking  association,  as Agent (the "Agent") and Bank One,  Arizona,
NA, as Co-Agent (the "Co-Agent").

              This  Agreement is intended by the parties  hereto as an amendment
and  restatement of the First Amended Loan Agreement as of the effective date of
this Agreement.  Amounts  outstanding and committed under the First Amended Loan
Agreement and evidenced by the Pre-Existing  Notes shall, upon the effectiveness
of this  Agreement,  be deemed to be  outstanding  and  committed  hereunder and
evidenced by the Notes, subject,  however, to all terms and conditions hereunder
and under the other Loan Documents,  including without limitation the allocation
of the Commitments among the Banks as provided herein.

              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:

              "9-3/4% Senior  Subordinated Debt Due 2003" means the Indebtedness
       outstanding under Borrower's Indenture,  dated March 8, 1993 with respect
       to $100,000,000 of 9-3/4% Senior Subordinated Debentures due 2003.

              "9.00% Senior  Subordinated  Debt Due 2006" means the Indebtedness
       outstanding  under  Borrower's  Indenture,  dated  February 11, 1994 with
       respect to $100,000,000 of 9.00% Senior Subordinated Debentures due 2006.

              "9-3/4% Senior  Subordinated Debt Due 2008" means the Indebtedness
       outstanding  under  Borrower's  Indenture,  dated  January  21, 1997 with
       respect to  $150,000,000  of 9-3/4% Senior  Subordinated  Debentures  due
       2008.
                                       -1-
<PAGE>
              "9-3/8% Senior  Subordinated Debt Due 2009" means the Indebtedness
       outstanding  under  Borrower's  Indenture,  dated May 11, 1998, 1998 with
       respect to  $200,000,000  of 9-3/8% Senior  Subordinated  Debentures  due
       2009.

              "Adjusted  EBITDA"  means,  for any Fiscal  Year,  EBITDA for that
       Fiscal  Year plus net cash  proceeds  to  Borrower  from the  issuance of
       capital  stock of Borrower  (other than  Disqualified  Stock) during such
       Fiscal Year plus 50% of net cash proceeds to Borrower from new borrowings
       constituting  Subordinated  Obligations during such Fiscal Year minus any
       amount paid by Borrower  during such Fiscal Year for the  acquisition  or
       cancellation  of capital  stock of Borrower  and minus any amount paid by
       Borrower  during such  Fiscal  Year for the  repayment  or  otherwise  on
       account  of  the  principal  portion  of  any  Subordinated  Obligations,
       provided  that  the  dollar-for   -dollar   refinancing  of  Subordinated
       Obligations with new Subordinated Obligations during a single Fiscal Year
       shall not be treated as resulting in either net cash proceeds to Borrower
       nor a repayment  of  Subordinated  Obligations  for these  purposes.  For
       purposes  of  this   definition,   the  proceeds  of  the  9-3/8%  Senior
       Subordinated  Debt  due  2009  shall  be  treated  as  having  arisen  in
       Borrower's Fiscal Year ending June 30, 1999.

              "Adjusted  Senior  Debt" means,  as of any date of  determination,
       Senior Debt as of that date minus (to the extent included in Senior Debt,
       and without duplication) Non-Recourse Debt as of that date.

              "Adjusted   Total   Indebtedness"   means,   as  of  any  date  of
       determination,  Total  Indebtedness  as of that date minus the  aggregate
       outstanding  principal  balance  (but not in  excess of  $30,000,000)  of
       Non-Recourse Debt for which a corresponding Lien is permitted pursuant to
       Section 6.8(d).

              "Adjusting  Purchase  Payment(s)"  has the meaning  given that
       term in Section 2.9.

              "Advance"  means  any  advance  made or to be made by any  Bank to
       Borrower as  provided  in Article 2, and  includes  each  Reference  Rate
       Advance and Eurodollar Rate Advance.

              "Affiliate"  means,  as 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" (and
       the correlative  terms,  "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 that 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
                                       -2-
<PAGE>
       record  holders  of  such  interests,  will be  deemed  to  control  such
       corporation or other Person.

              "Agent"  means  Bank  of  America   National   Trust  and  Savings
       Association,  when  acting in its  capacity as the Agent under any of the
       Loan Documents, or any successor Agent.

              "Agent's  Office"  means the  Agent's  address as set forth on the
       signature  pages of this  Agreement,  or such other  address as the Agent
       hereafter may designate by written notice to Borrower and the Banks.

              "Aggregate   Effective   Amount"   means,   as  of  any   date  of
       determination,  the sum of (a) the aggregate  drawable face amount of all
       Letters of Credit then  outstanding plus (b) the aggregate amount paid by
       the Issuing Bank under Letters of Credit that has not yet been reimbursed
       to the Issuing Bank by Borrower  pursuant to Section 2.12(d) or by way of
       Advances made pursuant to Section 2.12(e).

              "Agreement" means this Second Amended and Restated  Revolving Loan
       Agreement,  either as originally  executed or as it may from time to time
       be supplemented, modified, amended, restated or extended.

              "Anniversary  Date" means any annual  anniversary date of the date
       of this  Agreement  that is at least eleven (11) months prior to the then
       existing Maturity Date.

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

                  Applicable
                Pricing Level                    Eurodollar Spread
                -------------                    -----------------
                       I                               1.30%
                      II                               1.45%
                      III                              1.60%
                      IV                               1.70%
                       V                               1.90%


                  "Applicable Pricing Level" means, for any day during a Pricing
         Period,  the pricing level set forth below  opposite the Leverage Ratio
         as of the last day of the Fiscal  Quarter most recently  ended prior to
         the commencement of that Pricing Period:
                                       -3-
<PAGE>
                                                  Leverage Ratio Applicable to
                                                  ----------------------------
              Applicable Pricing Level            Pricing Period
              ------------------------            --------------

                    I                              Leverage Ratio of less than 
                                                   or equal to 1.50 to 1.00

                    II                             Leverage Ratio of higher than
                                                   1.50 to 1.00, but less than 
                                                   or equal to 1.75 to 1.00

                    III                            Leverage Ratio of higher than
                                                   1.75 to 1.00, but less than 
                                                   or equal to 2.00 to 1.00

                    IV                             Leverage Ratio of higher than
                                                   2.00 to 1.00, but less  than 
                                                   or equal to 2.25 to 1.00

                    V                              Leverage Ratio of higher than
                                                   2.25 to 1.00.

         provided  that  (a) for the  period  from  the  effective  date of this
         Agreement  through August 31, 1998, the Applicable  Pricing Level shall
         be Pricing Level III and (b) if any Compliance Certificate delivered on
         or about August 31 is subsequently shown by the Compliance  Certificate
         delivered  on or about the  following  October  31 to be in error  with
         respect to its  calculation of the Leverage  Ratio,  then the resulting
         change in the Applicable  Pricing Level shall be made  retroactively to
         the beginning of the relevant Pricing Period.

                  "Bank of America"  means 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 Arizona, California,  Massachusetts, New York, Texas or
         North Carolina.

                  "Borrower" means Del Webb Corporation, a Delaware corporation,
         and its successors and permitted assigns.

                  "Capital Expenditure" means any expenditure that is considered
         a capital expenditure under Generally Accepted  Accounting  Principles,
         including  any  amount  which is  required  to be  treated  as an asset
         subject to a Capital Lease Obligation.

                  "Capital Lease Obligations" means all monetary  obligations of
         a Person under any leasing or similar  arrangement which, in accordance
         with  Generally  Accepted  Accounting  Principles,  is  classified as a
         capital lease.
                                       -4-
<PAGE>
                  "Cash"  means,  when used in connection  with any Person,  all
         monetary and  non-monetary  items owned by that Person that are treated
         as cash in accordance with Generally  Accepted  Accounting  Principles,
         consistently applied.

                  "Cash  Equivalents"  means,  when used in connection  with any
         Person, that Person's Investments in:

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

                    (b) readily  marketable  direct  obligations of any State of
               the United States of America given on the date of such Investment
               a credit rating of at least Aa by Moody's Investors Service, Inc.
               or AA by Standard & Poor's Ratings Group, in each case due within
               one year from the making of the Investment;

                    (c)  certificates  of deposit  issued by, bank  deposits in,
               Eurodollar  deposits  through,   bankers'   acceptances  of,  and
               repurchase agreements covering Government Securities executed by,
               any bank  incorporated  under  the Laws of the  United  States of
               America  or any  State  thereof  and  having  on the date of such
               Investment combined capital,  surplus and undivided profits of at
               least $250,000,000,  or total assets of at least  $5,000,000,000,
               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, or total assets of at least $15,000,000,000 in each
               case due  within  one year  after  the date of the  making of the
               Investment;

                    (e) repurchase  agreements  covering  Government  Securities
               executed by a broker or dealer  registered under Section 15(b) of
               the  Securities  Exchange Act of 1934, as amended,  having on the
               date of the  Investment  capital  of at least  $100,000,000,  due
               within 30 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
               Govern ment  Securities  on the books of a  registered  broker or
               dealer,   as  soon  as  practicable   after  the  making  of  the
               Investment;

                    (f)  readily  marketable  commercial  paper of  corporations
               doing business in and  incorporated  under the Laws of the United
               States of America or
                                       -5-
<PAGE>
               any  State  thereof  or of any  corporation  that is the  holding
               company for a bank described in clauses (c) or (d) above given on
               the date of such  Investment  a credit  rating of at least P-1 by
               Moody's  Investors  Service,  Inc.  or A-1 by  Standard  & Poor's
               Ratings Group,  in each case due within 90 days after the date of
               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  given on the date of such  Investment a credit
               rating of at least Aa by Moody's Investors  Service,  Inc. and AA
               by  Standard  & Poor's  Ratings  Group,  in each  case  having an
               investment  period not  exceeding 50 days;  provided that (i) the
               amount of all such Investments issued by the same issuer does not
               exceed  $5,000,000  and (ii)  the  aggregate  amount  of all such
               Investments does not exceed $15,000,000; and

                    (h)  a  readily   redeemable   "money  market  mutual  fund"
               sponsored by a bank described in clauses (c) or (d) hereof,  or a
               registered broker or dealer described in clause (e) 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  having on the date of such  Investment
               total assets of at least $1,000,000,000.

                  "Cash Land  Acquisition  Costs" means,  for any fiscal period,
         cash paid by Borrower and its Subsidiaries for land acquisitions during
         such fiscal period, calculated in a manner consistent with that used in
         the  calculation  of "Land  acquisitions"  as shown  under the  heading
         "Reconciliation  of  net  earnings  to  net  cash  used  for  operating
         activities"  in the  financial  statements  delivered  to Banks for the
         Fiscal Quarter ending September 30, 1993.

                  "Certificate  of a Responsible  Official"  means a certificate
         signed  by  a  Responsible   Official  of  the  Person   providing  the
         certificate.

                  "Change in Control" means any transaction or series of related
         transactions (a) in which any Unrelated Person or two or more Unrelated
         Persons  acting in concert  acquire  beneficial  ownership  (within the
         meaning of Rule 13d-3(a)(1) under the Securities  Exchange Act of 1934,
         as  amended),  directly  or  indirectly,  of 50% or more of the  Common
         Stock,  (b) in which any such  Unrelated  Person or  Unrelated  Persons
         acting in concert acquire the concurrent beneficial ownership of 20% or
         more of the Common Stock  subsequent to the Closing Date if, while they
         continue to hold such 20% ownership,  (i) at the first election for the
         board  of  directors  of  Borrower   subsequent  to  such  acquisition,
         individuals who prior to such election were directors of Borrower cease
         for any reason (other than death or  incapacity)  to constitute  50% or
         more of the board of  directors of Borrower or (ii) if the terms of all
         directors of Borrower do not expire at the date of such first election,
         then at the second election for
                                       -6-
<PAGE>
         the board of  directors  of Borrower  subsequent  to such  acquisition,
         individuals who prior to such first election were directors of Borrower
         cease for any reason (other than death or incapacity) to constitute 50%
         or more of the board of  directors  of Borrower or (c)  constituting  a
         "change in control" or other  similar  occurrence  under  documentation
         evidencing or governing any  Indebtedness of Borrower of $25,000,000 or
         more which results in an  obligation  of Borrower to prepay,  purchase,
         offer to purchase, redeem or defease such Indebtedness. For purposes of
         the foregoing,  the term "Unrelated Person" means any Person other than
         (a) a Subsidiary of Borrower or (b) an employee stock ownership plan or
         other employee  benefit plan covering the employees of Borrower and its
         Subsidiaries.

                  "Closing  Date"  means the time and  Banking  Day on which the
         conditions set forth in Section 8.1 are satisfied or waived.  The Agent
         shall  notify  Borrower  and the Banks of the date that is the  Closing
         Date.

                  "Co-Agent"  means Bank One,  Arizona,  NA,  when acting in its
         capacity  as the  Co-Agent  under  any of the  Loan  Documents,  or any
         successor Co-Agent.

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

                  "Commitments" means,  collectively,  the Line A Commitment and
         the Line B Commitment. The respective Pro Rata Shares of the Banks with
         respect to the Commitments 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  common  stock of  Borrower or  its 
         successor by merger.

                  "Compliance  Certificate"  means a certificate  in the form of
         Exhibit B (or such modified form as the Agent may reasonably  request),
         properly completed and signed by a Senior Officer of Borrower.

                  "Consolidated Fixed Charge Coverage Ratio" means, with respect
         to any date of determination,  the least of such value as calculated in
         the manner specified for such term in any of the Indentures. Should the
         manner  of any such  calculation  become  subject  to  dispute  between
         Borrower  and the  Banks due to  questions  of  interpretation  of such
         indenture and the  incorporation  of such terms herein,  the reasonable
         interpretation  of the manner of calculation made by the Banks shall be
         binding  on the  parties  with  respect to  Sections  8.2(c) and 8.2(d)
         unless and until the Agent shall have received  written advice from the
         then current independent auditors of Borrower, in
                                       -7-
<PAGE>
         form  reasonably  acceptable to the Agent,  stating their opinion as to
         the calculation of such amount.

                  "Consolidated   Total  Assets"  means,   as  of  any  date  of
         determination,  the amount of the consolidated total assets that should
         be reflected as such on a  consolidated  balance  sheet of Borrower and
         its  Subsidiaries  on that date,  prepared in accordance with Generally
         Accepted  Accounting  Principles,  plus any amount by which such assets
         may have theretofore been written down to reflect a perceived  decrease
         in market value other than customary depreciation or amortization.

                  "Contractual   Obligation"   means,  as  to  any  Person,  any
         provision of any  outstanding  security 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.

                  "Coventry Assets" means, as of any date of determination,  the
         amount of the total assets that should be  reflected on a  consolidated
         balance sheet  prepared  solely for the Coventry  Subsidiaries  on that
         date,   prepared  in  accordance  with  Generally  Accepted  Accounting
         Principles,  plus any amount by which such assets may have  theretofore
         been written down to reflect a perceived decrease in market value other
         than customary depreciation or amortization.

                  "Coventry   Homes   Projects"   means,   as  of  any  date  of
         determination,  all land  purchase  and home  building  projects of the
         Coventry Subsidiaries on that date.

                  "Coventry Land Assets" means, as of any date of determination,
         the  amount  of  the  Land  Assets  that  should  be   reflected  on  a
         consolidated   balance   sheet   prepared   solely  for  the   Coventry
         Subsidiaries  on that  date,  prepared  in  accordance  with  Generally
         Accepted  Accounting  Principles,  plus any amount by which such assets
         may have theretofore been written down to reflect a perceived  decrease
         in market value other than customary depreciation or amortization.

                  "Coventry Subsidiaries" means Del Webb's Coventry Homes, Inc.,
         Del Webb Homes,  Inc.  and  Coventry  of  California,  Inc.,  and their
         Subsidiaries  from time to time which,  on the date of this  Agreement,
         are Del Webb's  Coventry Homes  Construction  of Tucson Co., Del Webb's
         Coventry Homes of Tucson,  Inc., Del Webb's Coventry Homes Construction
         Co., Trovas Company and Trovas  Construction Co. Each Subsidiary of any
         Coventry Subsidiary from time to time shall be a Coventry Subsidiary.

                  "Current  Operating  Projects" means collectively (a) Del Webb
         Construction,  Inc.'s, Del E. Webb Development Co., L.P.'s and Del Webb
         Communities,  Inc.'s  approximately  6,575 acre  residential  community
         development  located near  Phoenix,  Arizona and commonly  known as Sun
         City West, (b) Del Webb Communities, Inc.'s
                                       -8-
<PAGE>
         approximately 1,000 acre residential community development located near
         Tucson,  Arizona and commonly  known as Sun City  Tucson,  (c) Del Webb
         Communities,  Inc.'s  approximately  1,892 acre  residential  community
         development  located near Las Vegas,  Nevada and commonly  known as Sun
         City Las Vegas,  (d) Del Webb California  Corp.'s  approximately  1,574
         acre  residential  community  development  located  near Palm  Springs,
         California  and  commonly  known  as Sun  City  Palm  Springs,  (e) the
         Coventry  Homes  Projects,  (f) Terravita  Corp.'s and Terravita  Homes
         Construction  Co.'s  approximately 803 acre master planned  residential
         land  development  located  in  Scottsdale,  Arizona,  (g) Del E.  Webb
         Foothill  Corp.'s  approximately  4,140 acre land  development  project
         located  in  Phoenix,   Arizona,   (h)  Del  Webb  California   Corp.'s
         approximately 1,200 acre residential  community  development located in
         Roseville, California and commonly known as Sun City Roseville, (i) Del
         Webb Home  Construction  Inc.'s  approximately  4,000  acre  (including
         interests  in  acres)  residential  community  development  located  in
         Surprise, Arizona and commonly known as Sun City Grand, (j) Del E. Webb
         Development Co., L.P.'s approximately 5,300 acre residential  community
         development  located near Austin,  Texas and commonly known as Sun City
         Georgetown,  (k) Del Webb  Communities,  Inc.'s  approximately 560 acre
         residential  community  development  located in  Henderson,  Nevada and
         commonly  known  as  Sun  City   MacDonald   Ranch  and  (l)  Del  Webb
         Communities,  Inc.'s  approximately  5,500 acre  residential  community
         development  located  near  Hilton  Head  Island,  South  Carolina  and
         commonly  known  as Sun  City  Hilton  Head.  Also,  Current  Operating
         Projects shall include a replacement for one of the foregoing  projects
         if such project is located within the same general metropolitan area as
         the replaced  project and if  construction of such project is commenced
         at a time that the replaced project has less than a three year expected
         sell-out term based upon its current absorption rate.

                  "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,   bankruptcy,   moratorium,
         rearrangement,  receivership,  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
         applicable notice or passage of time specified in Section 9.1, or both,
         would be an Event of Default.

                  "Default Rate" means the interest rate prescribed in Section 
         3.7.

                  "Designated  Deposit  Account"  means a deposit  account to be
         maintained  by  Borrower  with  Bank of  America,  as from time to time
         designated by Borrower by written notification to Bank of America.
                                       -9-
<PAGE>
                  "Designated  Eurodollar  Market"  means,  with  respect to any
         Eurodollar Rate Loan, (a) the London Eurodollar Market, or (b) if prime
         banks in the  London  Eurodollar  Market are at the  relevant  time not
         accepting deposits of Dollars,  the Cayman Islands Eurodollar Market or
         (c) if prime banks in the London and Cayman Islands  Eurodollar Markets
         are at the relevant time not accepting deposits of Dollars,  such other
         Eurodollar Market as may from time to time be selected by the Agent.

                  "Disposition"  means the sale,  transfer or other  disposition
         ("Transfer") of any asset of Borrower or any of its Subsidiaries  other
         than (a) a Transfer constituting an Investment or a Distribution, (b) a
         Transfer  of  inventory  or other  assets  in the  ordinary  course  of
         business of  Borrower  or a  Subsidiary  on terms  Borrower  reasonably
         believes are fair market terms,  (c) a Transfer of assets  constituting
         all or part of the Spring Creek Project or Glen Harbor Project,  (d) in
         the case of a  residential  community  development  being  developed by
         Borrower (i) a Transfer of, or the payment for,  common  amenities  and
         common areas made to or for the benefit of the community association of
         such  development  or (ii) a Transfer  of, or the payment  for,  roads,
         sewers,   utilities,   and   other  on-  and   off-site   improvements,
         infrastructure   items  and/or  other  assets   associated   with  such
         development  made to or for the  benefit  of a  governmental  entity or
         utility  in  connection  with such  development,  in  either  such case
         provided that such  disposition is reasonably  necessary or appropriate
         for the  development or betterment of such  development  and whether or
         not  Borrower  may  at  some  future  date  receive  total  or  partial
         reimbursement (with or without interest) of the cost (or value) of such
         Transfer  or  payment,  or (e) a  Transfer  of the  capital  stock of a
         Subsidiary  that holds solely the assets of the Spring Creek Project or
         the Glen Harbor Project.

                  "Disqualified  Stock"  means  any  capital  stock,   warrants,
         options or other rights to acquire  capital  stock (but  excluding  any
         debt  security  which is  convertible,  or  exchangeable,  for  capital
         stock), which, by its terms (or by the terms of any security into which
         it is  convertible  or for  which  it is  exchangeable),  or  upon  the
         happening of any event, matures or is mandatorily redeemable,  pursuant
         to a sinking fund  obligation or otherwise,  or is or may be redeemable
         at the option of the holder thereof, in whole or in part.

                  "Distribution"  means,  with  respect to any shares of capital
         stock or any warrant or option to purchase an equity  security or other
         equity  security issued by a Person,  (i) the  retirement,  redemption,
         purchase, or other acquisition for Cash or for Property (except capital
         stock  that is not  Disqualified  Stock)  by such  Person  of any  such
         security, (ii) the declaration or (without duplication) payment by such
         Person of any  dividend in Cash or in Property  (except  capital  stock
         that  is not  Disqualified  Stock)  on or  with  respect  to  any  such
         security,  (iii) any  Investment  by such Person in the holder of 5% or
         more of any such  security if a purpose of such  Investment is to avoid
         characterization  of the  transaction  as a  Distribution  and (iv) any
         other payment in
                                      -10-
<PAGE>
         Cash or Property (except capital stock that is not Disqualified  Stock)
         by such Person  constituting a distribution  under applicable Laws with
         respect to such security.

                  "Dollars" or "$" means United States dollars.

                  "EBITDA"  means,  for any  fiscal  period,  the sum of (a) Net
         Income for that period,  without taking into account any  extraordinary
         loss  reflected in such Net Income,  minus (b) any  extraordinary  gain
         reflected in such Net Income,  plus (c) depreciation,  amortization and
         all other non-cash  expenses of Borrower and its  Subsidiaries for that
         period,  plus  (d)  Interest  Expense  for  that  period,  plus (e) the
         aggregate amount of federal and state taxes on or measured by income of
         Borrower and its  Subsidiaries  for that period (whether or not payable
         during that period),  in each case as  determined  in  accordance  with
         Generally Accepted Accounting Principles and, in the case of items (c),
         (d) and (e), only to the extent  deducted in the  determination  of Net
         Income for that period.

                  "Eligible   Assignee"  means  any  commercial  bank  having  a
         combined  capital  and  surplus  of  $100,000,000  or more  that is (a)
         organized  under the Laws of the United  States of America or any State
         thereof or (b) organized under the Laws of any other country which is a
         member of the Organization for Economic Cooperation and Development, or
         a political subdivision of such a country,  provided that (i) such bank
         is acting  through a branch or agency  located in the United  States of
         America  and  (ii)  is  otherwise  exempt  from  withholding  of tax on
         interest and delivers  Form 1001 or Form 4224 pursuant to Section 11.19
         at the time of any assignment pursuant to Section 11.8.

                  "ERISA" means the Employee  Retirement  Income Security Act of
         1974,  and any  regulations  issued  pursuant  thereto,  as  amended or
         replaced and as in effect from time to time.

                  "Eurodollar  Banking  Day"  means  any  Banking  Day on  which
         dealings in Dollar  deposits  are  conducted  by and among banks in the
         Designated Eurodollar Market.

                  "Eurodollar  Base Rate" means,  with respect to any Eurodollar
         Rate Loan, the average of the interest rates per annum (rounded  upward
         to the nearest 1/100 of 1%) at which deposits in Dollars are offered by
         the  Eurodollar  Reference  Bank  to  prime  banks  in  the  Designated
         Eurodollar  Market at or about 11:00 a.m.,  local time in the locale of
         the  Designated  Eurodollar  Market,  two (2)  Eurodollar  Banking Days
         before  the  first  day  of  the  applicable  Eurodollar  Period  in an
         aggregate amount  approximately equal to the amount of the Advance made
         by the Eurodollar  Reference Bank with respect to such  Eurodollar Rate
         Loan and for a period of time  comparable  to the number of days in the
         applicable Eurodollar Period. The determination of the Euro dollar Base
         Rate by the Agent shall be conclusive in the absence of manifest error.
                                      -11-
<PAGE>
                  "Eurodollar Lending Office" means, as to each Bank, its office
         or branch so designated by written  notice to Borrower and the Agent as
         its  Eurodollar  Lending  Office.  If no Eurodollar  Lending  Office is
         designated by a Bank, its Eurodollar Lending Office shall be its office
         at its address for purposes of notices hereunder.

                  "Eurodollar Market" means a regular established market located
         outside  the  United  States  of  America  by and  among  banks for the
         solicitation, offer and acceptance of Dollar deposits in such banks.

                  "Eurodollar Obligations" means eurocurrency liabilities, as 
         defined in Regulation D.

                  "Eurodollar  Period" means,  as to each  Eurodollar Rate Loan,
         the period  commencing  on the date  specified by Borrower  pursuant to
         Section  2.1(b) and ending 1, 2, 3 or 6 months  (or,  with the  written
         consent of all of the Banks, any other period) thereafter, as specified
         by Borrower in the applicable Request for Loan; provided that:

                    (a)  The  first  day of any  Eurodollar  Period  shall  be a
               Eurodollar Banking Day;

                    (b) Any Eurodollar  Period that would otherwise end on a day
               that is not a  Eurodollar  Banking  Day shall be  extended to the
               next  succeeding  Eurodollar  Banking Day unless such  Eurodollar
               Banking Day falls in another  calendar  month, in which case such
               Eurodollar  Period  shall  end on the next  preceding  Eurodollar
               Banking Day;

                    (c) No  Eurodollar  Period with respect to a Loan  requested
               under the Line A Commitment or Line B Commitment,  as applicable,
               shall extend beyond the next date on which such  Commitment is to
               be reduced in  accordance  with Section 2.5 unless the  principal
               amount  of  the  corresponding  Eurodollar  Rate  Loan  plus  the
               principal  amount of all then  outstanding  Eurodollar Rate Loans
               under such  Commitment  having a Eurodollar  Period  ending after
               said  reduction  date is less  than  the  amount  to  which  such
               Commitment is expected to be reduced on said reduction date; and

                    (d) No  Eurodollar  Period shall extend  beyond the Maturity
               Date.

                  "Eurodollar  Rate" means,  with respect to any Eurodollar Rate
         Loan, an interest rate per annum  (rounded  upward to the nearest 1/100
         of one percent) determined pursuant to the following formula:

                           Eurodollar              Eurodollar Base Rate
                                Rate      =        --------------------
                                                   1.00 - Eurodollar Reserve
                                                             Percentage
                                      -12-
<PAGE>
                  "Eurodollar  Rate Advance" means an Advance made hereunder and
         specified to be a Eurodollar Rate Advance in accordance with Article 2.

                  "Eurodollar  Rate  Loan"  means  a  Loan  made  hereunder  and
         specified to be a Eurodollar Rate Loan in accordance with Article 2.

                  "Eurodollar Reference Bank" means Bank of America.

                  "Eurodollar  Reserve  Percentage"  means,  with respect to any
         Eurodollar  Rate Loan, the maximum reserve  percentage  (expressed as a
         decimal,  rounded upward to the nearest 1/100th of 1%) in effect on the
         date  the  Eurodollar  Base  Rate  for  that  Eurodollar  Rate  Loan is
         determined  (whether or not  applicable to any Bank) under  regulations
         issued from time to time by the Federal  Reserve Board for  determining
         the maximum reserve requirement (including any emergency,  supplemental
         or other marginal  reserve  requirement)  with respect to  eurocurrency
         funding (currently referred to as "eurocurrency  liabilities") having a
         term  comparable to the Interest  Period for such Eurodollar Rate Loan.
         The  determination  by the Agent of any applicable  Eurodollar  Reserve
         Percentage shall be conclusive in the absence of manifest error.

                  "Event of Default" shall have the meaning provided in Section 
         9.1.

                  "Federal Funds Rate" means,  as of any date of  determination,
         the rate set forth in the  weekly  statistical  release  designated  as
         H.15(519),  or any  successor  publication,  published  by the  Federal
         Reserve Board (including any such successor, "H.15(519)") for such date
         opposite the caption "Federal Funds  (Effective)".  If for any relevant
         date such rate is not yet  published  in  H.15(519),  the rate for such
         date  will be the  rate  set  forth in the  daily  statistical  release
         designated as the Composite 3:30 p.m.  Quotations  for U.S.  Government
         Securities,  or any  successor  publication,  published  by the Federal
         Reserve Bank of New York (including any such successor,  the "Composite
         3:30 p.m.  Quotations")  for such date under the caption "Federal Funds
         Effective  Rate". If on any relevant date the appropriate rate for such
         date is not yet  published in either  H.15(519) or the  Composite  3:30
         p.m. Quotations,  the rate for such date will be the arithmetic mean of
         the rates for the last transaction in overnight  Federal funds arranged
         prior to 9:00 a.m.  (New York City  time) on that date by each of three
         leading brokers of Federal funds transactions in New York City selected
         by the Agent. For purposes of this Agreement, any change in the Federal
         Funds Rate shall be  effective  as of the  opening of  business  on the
         effective date of such change.

                  "First Amended Loan Agreement"  means that certain Amended and
         Restated  Revolving Loan Agreement,  by and among Borrower,  certain of
         the Banks,  the Agent and the  Co-Agent,  dated as of June 27, 1995, as
         amended  by that  certain  First  Amendment  to  Amended  and  Restated
         Revolving Loan  Agreement,  dated as of December 15, 1995, that certain
         Second  Amendment to Amended and  Restated  Revolving  Loan  Agreement,
         dated as of July 22, 1996, that certain Third Amendment
                                      -13-
<PAGE>
         to Amended and Restated Revolving Loan Agreement, dated as of March 31,
         1997, that certain Fourth  Amendment to Amended and Restated  Revolving
         Loan  Agreement,  dated April 29, 1997, that certain Fifth Amendment to
         Amended and Restated  Revolving Loan Agreement,  dated October 1, 1997,
         that certain  Sixth  Amendment to Amended and Restated  Revolving  Loan
         Agreement,  dated as of  December  1, 1997,  and that  certain  Seventh
         Amendment to Amended and Restated Revolving Loan Agreement, dated as of
         January 15, 1998, pursuant to which certain of the Banks agreed to make
         revolving loans to Borrower in the original aggregate  principal amount
         of up to  $400,000,000,  as such First Amended Loan  Agreement  existed
         immediately prior to the effectiveness of this Agreement.

                  "Fiscal   Quarter"   means  the  fiscal  quarter  of  Borrower
         consisting of a three month fiscal period ending on each  September 30,
         December 31, March 31 and June 30.

                  "Fiscal Year" means the fiscal year of Borrower  consisting of
         a twelve month fiscal period ending on each June 30.

                  "Generally  Accepted  Accounting  Principles" means, as of any
         date of determination, accounting principles (a) set forth as generally
         accepted  in  then  currently  effective  Opinions  of  the  Accounting
         Principles  Board  of  the  American   Institute  of  Certified  Public
         Accountants,  (b) set forth as  generally  accepted  in then  currently
         effective Statements of the Financial Accounting Standards Board or (c)
         that are then  approved  by such other  entity as may be  approved by a
         significant  segment of the accounting  profession in the United States
         of America.  The term  "consistently  applied,"  as used in  connection
         therewith,  means that the accounting principles applied are consistent
         in all material  respects to those  applied at prior dates or for prior
         periods.

                 "Glen  Harbor  Project"  means  the  approximately  416  acre 
         industrial business  park located in Glendale,  Arizona held in joint 
         venture by Del E. Webb  Cactus  Development Corp. and Del E.  Webb Glen
         Harbor Development Corporation.

                  "Government  Securities"  means readily  marketable (a) direct
         full faith and credit  obligations  of the United  States of America or
         obligations  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  international,  foreign,
         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, or (c) any court or administrative tribunal.
                                      -14-
<PAGE>
                  "Guarantor Subsidiary" means, as of any date of determination,
         each  Subsidiary of Borrower (a) that had on the last day of the Fiscal
         Quarter then most recently ended total assets (determined in accordance
         with Generally Accepted  Accounting  Principles) of $2,000,000 or more;
         or (b) with respect to whose obligations any guaranty has been given by
         Borrower or any other 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. ss. 9601 et seq., or
         as hazardous,  toxic or pollutant  pursuant to the Hazardous  Materials
         Transportation   Act,  49  U.S.C.  ss.  1801,  et  seq.,  the  Resource
         Conservation  and  Recovery  Act,  42 U.S.C.  ss.  6901,  et seq.,  the
         Hazardous Waste Control Law, California Health & Safety Code ss. 25100,
         et seq., or in any other  applicable  Hazardous  Materials Law, in each
         case as such Laws are amended from time to time.

                  "Hazardous  Materials Laws" means all federal,  state or local
         laws,  ordinances,  rules or  regulations  governing  the  disposal  of
         Hazardous Materials applicable to any of the Real Property.

                  "Indebtedness"  means, as to any Person,  without duplication,
         (a)  indebtedness of such Person for borrowed money or for the deferred
         purchase  price of  Property  or  services  (excluding  trade and other
         accounts  payable  incurred in the  ordinary  course of business and in
         accordance  with Borrower's or the  Subsidiary's in question  customary
         trade  terms  and  further   excluding   obligations  with  respect  to
         home-buyer deposits and obligations for local governmental  assessments
         for local services based upon real property  ownership),  including any
         guaranty for any such indebtedness,  (b) indebtedness of such Person of
         the nature  described in clause (a) that is  non-recourse to the credit
         of such Person but is secured by assets of such  Person,  to the extent
         of the value of such  assets,  (c) Capital  Lease  Obligations  of such
         Person,  (d)  indebtedness  of such  Person  arising  under  acceptance
         facilities or under facilities for the discount of accounts  receivable
         of such Person but not  contingent  reimbursement  obligations  of such
         Person  associated  with surety bonds issued in the ordinary  course of
         such Person's business and (e) any direct or contingent  obligations of
         such  Person  under  letters of credit  issued for the  account of such
         Person.

                  "Indentures" means, collectively, the Indenture for the 9-3/4%
         Senior  Subordinated Debt Due 2003, the Indenture for the 9-3/4% Senior
         Subordinated  Debt  Due  2008,  the  Indenture  for  the  9.00%  Senior
         Subordinated  Debt Due 2006 and the  Indenture  for the  9-3/8%  Senior
         Subordinated Debt Due 2009.

                  "Intangible   Assets"   means   assets  that  are   considered
         intangible  assets  under  Generally  Accepted  Accounting  Principles,
         including  customer lists,  goodwill,  computer  software,  copyrights,
         trade names, trademarks and patents.
                                      -15-
<PAGE>
                  "Interest  Differential" means, with respect to any prepayment
         of a  Eurodollar  Rate  Loan on a day  other  than  the last day of the
         applicable  Interest Period and with respect to any failure to borrow a
         Eurodollar  Rate  Loan on the date or in the  amount  specified  in any
         Request for Loan, (a) the per annum  interest rate payable  pursuant to
         Section 3.1(c) with respect to the  Eurodollar  Rate Loan minus (b) the
         Eurodollar  Rate  on,  or as near  as  practicable  to the  date of the
         prepayment or failure to borrow for a Eurodollar  Rate Loan  commencing
         on such date and ending on the last day of the  Interest  Period of the
         Eurodollar  Rate Loan so prepaid or which  would have been  borrowed on
         such date.

                  "Interest  Expense" means,  with respect to any fiscal period,
         the sum of (a) all interest, fees, charges and related expenses paid or
         payable by Borrower and its Subsidiaries (without duplication) for that
         fiscal period to a lender or seller in connection  with borrowed  money
         or the deferred purchase price of assets that are considered  "interest
         expense" under Generally Accepted Accounting  Principles,  plus (b) the
         portion of rent paid or payable  (without  duplication) by Borrower and
         its Subsidiaries for that fiscal period under Capital Lease Obligations
         that  should be  treated  as  interest  in  accordance  with  Financial
         Accounting Standards Board Statement No. 13, in each case determined on
         a consolidated basis in accordance with Generally  Accepted  Accounting
         Principles, consistently applied.

                  "Interest  Period" means,  with respect to any Eurodollar Rate
         Loan, the related Eurodollar Period.

                  "Investment"  means,  when used in connection with any Person,
         any  investment  by or of that Person,  whether by means of purchase or
         other  acquisition of stock or other  securities of any other Person or
         by means of a loan,  advance  creating  a debt,  capital  contribution,
         guaranty or other debt or equity participation or interest in any other
         Person,  including any partnership and joint venture  interests of such
         Person. Unless otherwise specified,  the amount of any Investment shall
         be the  amount  actually  invested  (or fair  value  thereof),  without
         adjustment for  subsequent  increases or decreases in the value of such
         Investment.  Notwithstanding the foregoing,  the provision of credit to
         support a surety bond issued to secure the  performance  of real estate
         development   work  in  the  ordinary   course  of  Borrower's  or  its
         Subsidiaries'  business, for the benefit of any Subsidiary of Borrower,
         shall not be considered an Investment, although the payment by a Person
         providing  credit  on  such  a  surety  bond  shall  be  considered  an
         Investment,  nor  shall  any  transaction  which is  excluded  from the
         definition of Disposition by virtue of clause (d) thereof be considered
         an Investment.

                  "Issuing Bank" means Bank of America.

                  "Land   Assets"   means  assets  of  a  nature  as  have  been
         historically  included  by  Borrower  in the  line  items  "Unamortized
         improvement and amenity costs",
                                      -16-
<PAGE>
         "Unamortized  capitalized interest",  "Land held for housing" and "Land
         held for future  development or sale" in the notes to its  consolidated
         financial statements,  provided that in any measurement of Land Assets,
         only  75%  of  the  amount  of  assets  in  the  category  "Unamortized
         capitalized interest" shall be considered.

                  "Laws"  means,  collectively,   all  international,   foreign,
         federal,  state  and  local  statutes,  treaties,  rules,  regulations,
         ordinances, codes and administrative or judicial precedents.

                  "Letters of Credit" means the standby letters of credit issued
         by the  Issuing  Bank under the Line A  Commitment  pursuant to Section
         2.12  (including  letters of credit  outstanding  on the effective date
         hereof that were issued under  Section  2.12 of the First  Amended Loan
         Agreement)   either  as  originally  issued  or  as  the  same  may  be
         supplemented, modified, amended, renewed, extended or supplanted.

                  "Leverage  Ratio" means,  as of the end of any Fiscal Quarter,
         the ratio of (a) Adjusted Total Indebtedness to (b) [Tangible Net Worth
         plus the aggregate  principal  balance of all Subordinated  Obligations
         (but not in excess of the lesser of $100,000,000 or 25% of Tangible Net
         Worth)] in each case as of the last day of such Fiscal Quarter.

                  "Lien"   means   any   mortgage,   deed  of   trust,   pledge,
         hypothecation, assignment for security, security interest, encumbrance,
         claim, option, 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,  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  (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.

                  "Line A  Commitment"  means,  subject to Sections 2.4 and 2.5,
         $357,000,000.  The respective Pro Rata Shares of the Banks with respect
         to the Line A Commitment are set forth in Schedule 1.1.

                  "Line B  Commitment"  means,  subject to Sections 2.4 and 2.5,
         $93,000,000.  The  respective Pro Rata Shares of the Banks with respect
         to the Line B Commitment are set forth in Schedule 1.1.

                  "Line A Note"  means a  promissory  note made by Borrower to a
         Bank  evidencing  the Advances  under that Bank's Pro Rata Share of the
         Line A  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.

                                      -17-
<PAGE>
                  "Line B Note"  means a  promissory  note made by Borrower to a
         Bank  evidencing  the Advances  under that Bank's Pro Rata Share of the
         Line B  Commitment,  substantially  in the form of Exhibit D, either as
         originally   executed  or  as  the  same  may  from  time  to  time  be
         supplemented, modified, amended, renewed, extended or supplanted.

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

                  "Loan  Compliance  Certificate"  means  a  certification  by a
         Senior  Officer of  Borrower or by C.  Patrick  Dempsey,  as  Assistant
         Treasurer of Borrower,  in the form of Exhibit E, or such other form as
         may  reasonably  be  required  by the Agent from time to time,  that is
         delivered  in  connection  with a Request for Loan in  accordance  with
         Section 8.2(g).

                  "Loan  Documents"  means,  collectively,  this Agreement,  the
         Notes,  the Subsidiary  Guaranty,  any Request for Loan, any Compliance
         Certificate  and any other  agreements of any type or nature  hereafter
         executed  and  delivered  by  Borrower  or any of its  Subsidiaries  or
         Affiliates  to the  Agent or to any 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.

                  "Lot and  Amenity  Development  Costs"  means,  for any fiscal
         period,  cash paid by Borrower and its Subsidiaries for lot development
         and amenity  development  during such fiscal  period,  calculated  in a
         manner   consistent   with  that  used  in  the   calculation  of  "Lot
         development"  and  "Amenity  development"  as shown  under the  heading
         "Reconciliation  of  net  earnings  to  net  cash  used  for  operating
         activities"  in the  financial  statements  delivered  to Banks for the
         Fiscal Quarter ending September 30, 1993.

                  "Majority  Banks" means (a) as of any date of determination if
         a Commitment is then in effect,  Banks having in the aggregate  66-2/3%
         or more of the  Commitments  then in  effect  and (b) as of any date of
         determination  if the  Commitments  have  then been  terminated,  Banks
         holding  Notes  evidencing  in the  aggregate  66-2/3%  or  more of the
         aggregate Indebtedness then evidenced by the Notes.

                  "Margin Stock" means "margin stock" as such term is defined in
         Regulation G or U.

                  "Material  Adverse Effect" means any set of  circumstances  or
         events which (a) has or could reasonably be expected to have a material
         adverse effect upon the validity or enforceability of any material Loan
         Document,  (b) is or could  reasonably  be expected to be material  and
         adverse to the condition (financial or otherwise) or
                                      -18-
<PAGE>
         business operations of Borrower and its Subsidiaries, taken as a whole,
         or (c) materially impairs or could reasonably be expected to materially
         impair the ability of Borrower and its Guarantor Subsidiaries, taken as
         a whole, to perform the Obligations.

                  "Maturity  Date" means May 31,  2002,  subject to extension as
         provided in Section 2.5.

                  "Monthly Interest Period" means the first calendar day of each
         month to the first calendar day of each  succeeding  month,  calculated
         from, and  including,  the first calendar day of each month to, but not
         including, first calendar day of each succeeding month.

                  "Monthly  Payment  Date"  means the fifth  Banking Day of each
         calendar month.

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

                  "Negative Pledge" means a Contractual Obligation that contains
         a  covenant  binding  on  Borrower  or  any of  its  Subsidiaries  that
         prohibits  Liens on any of its or their  Property,  other  than (a) any
         such  covenant  contained in a Contractual  Obligation  granting a Lien
         permitted under Section 6.8 which affects only the Property that is the
         subject of such  permitted Lien and (b) any such covenant that does not
         apply to Liens securing the Obligations.

                  "Net  Change  in  Housing  Inventory"  means,  for any  fiscal
         period,  the net  change in homes in  production  of  Borrower  and its
         Subsidiaries  during  such  fiscal  period,   calculated  in  a  manner
         consistent with that used in the calculation of "Net change in homes in
         production" as shown under the heading  "Reconciliation of net earnings
         to net cash used for operating  activities" in the financial statements
         delivered to Banks for the Fiscal Quarter ending September 30, 1993.

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

                  "Non-Recourse  Debt"  means,  as of any date of  determination
         (without  duplication),  any  Indebtedness  of  Borrower  or any of its
         Subsidiaries  on that date that is secured by a Lien on Property to the
         extent the liability for such  Indebtedness,  and interest thereon,  is
         limited to the security of such Property,  without the liability of any
         Person for any such deficiency.

                  "Note" means any of the Line A Notes or Line B Notes.
                                      -19-
<PAGE>
                  "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  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 after the
         commencement  of any  proceeding  under  any  Debtor  Relief  Law by or
         against Borrower or any Subsidiary or Affiliate of Borrower.

                  "Opinions  of  Counsel"  means  the  favorable  written  legal
         opinions of (a)  Robertson  C. Jones and (b)  Gibson,  Dunn & Crutcher,
         counsel to Borrower and its Guarantor  Subsidiaries,  substantially  in
         the form of Exhibits F-1 and F-2, respectively, together with copies of
         all factual certificates and legal opinions upon which such counsel has
         relied.

                  "Pre-Existing  Loan  Documents"  mean the First  Amended  Loan
         Agreement  and  the  Pre-Existing  Notes  and the  Subsidiary  Guaranty
         delivered   thereunder,   as   existing   immediately   prior   to  the
         effectiveness of this Agreement.

                  "Pre-Existing  Notes"  means those  certain  promissory  notes
         delivered  under  the  First  Amended  Loan   Agreement,   as  existing
         immediately prior to the effectiveness of this Agreement.

                  "Party"  means any Person  other than the Agent,  the Co-Agent
         and the  Banks,  which now or  hereafter  is a party to any of the Loan
         Documents.

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

                  "Pension Plan" means any "employee  pension  benefit plan" (as
         such  term  is  defined  in  Section  3(2)  of  ERISA),  other  than  a
         Multiemployer  Plan,  which is  subject  to  Title  IV of ERISA  and is
         maintained by Borrower or any of its  Subsidiaries or to which Borrower
         or  any of  its  Subsidiaries  contributes  or  has  an  obligation  to
         contribute.

                  "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 (or deposits  made  pursuant to
         applicable  Law)  and  which  are  being  contested  in good  faith  by
         appropriate  proceedings  and have not proceeded to judgment,  provided
         that no such Real  Property  is subject  to a material  risk of loss or
         forfeiture;
                                      -20-
<PAGE>
                           (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 no such Real 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 of any nature that are  reasonable and  appropriate  for the
         development  of the Real Property of Borrower or a Subsidiary  which in
         the aggregate do not materially  burden or impair the fair market value
         or use of such Real  Property  (or the  project to which it is related)
         for the  purposes for which it is or may  reasonably  be expected to be
         held;

                           (e) easements,  dedications,  assessment  district or
         similar liens in connection with municipal  financing and other similar
         encumbrances  or  charges,   in  each  case  reasonably   necessary  or
         appropriate  for the  development  of Real  Property  of  Borrower or a
         Subsidiary,  and  which  are  granted  in the  ordinary  course  of the
         business of such Borrower or Subsidiary,  and which in the aggregate do
         not  materially  burden or impair the fair market  value or use of such
         Real  Property (or the project to which it is related) for the purposes
         for which it is or may reasonably be expected to be held;

                           (f)  easements,  exceptions,  reservations,  or other
         agreements for the purpose of  facilitating  the joint or common use of
         property in or adjacent to a commercial Real Property project 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;

                           (g) rights reserved to or vested in any  Governmental
         Agency  to  control  or  regulate,  or  obligations  or  duties  to any
         Governmental Agency with respect to, the use of any Real Property;

                           (h) rights reserved to or vested in any  Governmental
         Agency  to  control  or  regulate,  or  obligations  or  duties  to any
         Governmental  Agency  with  respect  to, any right,  power,  franchise,
         grant, license, or permit;

                           (i) present or future  zoning laws and  ordinances or
         other laws and ordinances restricting the occupancy,  use, or enjoyment
         of Real Property;

                           (j) statutory  Liens,  other than those  described in
         clauses (a) or (b) above,  arising in the  ordinary  course of business
         with respect to obligations which are
                                      -21-
<PAGE>
         not delinquent or are being contested in good faith,  provided that, if
         delinquent,  appropriate  reserves  have  been set aside  with  respect
         thereto  and no  property  is  subject  to a  material  risk of loss or
         forfeiture;

                           (k) 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;

                           (l)  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;

                           (m) 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;

                           (n)  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 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
         20% of the annual fixed rentals payable under such lease;

                           (o) Liens  consisting  of  deposits  of  property  to
         secure bids made with respect to, or performance of,  contracts  (other
         than  contracts  creating or evidenc ing an  extension of credit to the
         depositor) in the ordinary course of business;

                           (p)  Liens  consisting  of any  right of  offset,  or
         statutory  bankers'  lien, on bank deposit  accounts  maintained in the
         ordinary  course of business so long as such bank deposit  accounts are
         not  established  or maintained for the purpose of providing such right
         of offset or bankers' lien;

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

                           (r) Liens,  other than Liens for which the underlying
         obligation calls for the payment of money,  that were in existence with
         respect  to a  parcel  of Real  Property  prior to its  acquisition  by
         Borrower or one of its Subsidiaries  and that do not materially  impair
         the intended use of such Real Property;

                           (s) Liens created by or resulting from any litigation
         or legal proceeding  involving  Borrower or a Subsidiary of Borrower in
         the ordinary  course of its business which is currently being contested
         in good faith by appropriate
                                      -22-
<PAGE>
         proceedings, provided that adequate reserves have been set aside and no
         material property is subject to a material risk of loss or forfeiture;

                           (t)  other   non-consensual  Liens  incurred  in  the
         ordinary  course of business but not in connection with an extension of
         credit,  which do not in the  aggregate,  when taken  together with all
         other  Liens,  materially  impair the value or use of the  Property  of
         Borrower and its Subsidiaries, taken as a whole; and

                           (u) an  interest,  including  an  option,  held  by a
         Person under a contract to purchase Real Property, the sale of which is
         not prohibited under this Agreement.

                  "Person" means an individual or any entity,  whether  trustee,
         corporation,  general  partnership,  limited  partnership,  joint stock
         company,   trust,  estate,   unincorpo  rated  organization,   business
         association, firm, joint venture, Governmental Agency, or otherwise.

                  "Plant  Expenditures"  means, for any fiscal period,  Borrower
         and its  Subsidiaries'  aggregate  cash  expenditures  made during such
         fiscal period for the acquisition of furniture, fixtures and equipment.

                  "Pricing  Period"  means the three month periods of (a) June 1
         through August 31, (b) September 1 through  November 30, (c) December 1
         through the last day of  February,  and (d) March 1 through May 31, and
         the Leverage  Ratio  applicable to any Pricing  Period shall be the one
         that  is   calculated   as  of  the  Fiscal   Quarter  end  that  falls
         approximately 61 days prior to the beginning of such Pricing Period.

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

                  "Pro  Rata  Share"  means,  with  respect  to each  Bank,  the
         percentage of the  Commitments set forth opposite the name of that Bank
         on Schedule 1.1.

                  "Quarterly Payment Date" means the fifth Banking Day of each
         January, April, July and October.

                  "Quarterly  Period" means a period from the Closing Date until
         the  earlier of the next  following  June 30 or  September  30 and each
         subsequent three (3) month period  commencing on the first calendar day
         of each April, July, October and January thereafter.

                  "Real Property"  means, as of any date of  determination,  all
         real property then or theretofore owned, leased or occupied by Borrower
         or any of its Subsidiaries.
                                      -23-
<PAGE>
                  "Reference Rate" means the rate of interest publicly announced
         from time to time by Bank of America as its  "reference  rate." It is a
         rate set by Bank of America based upon various  factors  including Bank
         of America's costs and desired return,  general economic conditions and
         other factors, and is used as a reference point for pricing some loans,
         which may be priced at, above, or below such announced rate. Any change
         in the Reference Rate announced by Bank of America shall take effect at
         the opening of business on the day specified in the public announcement
         of such change.

                  "Reference  Rate Advance"  means an Advance made hereunder and
         specified to be a Reference Rate Advance in accordance with Article 2.

                  "Reference   Rate  Loan"  means  a  Loan  made  hereunder  and
         specified to be a Reference Rate Loan in accordance with Article 2.

                  "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.

                  "Regulations  G, T, U and X" means  Regulations G, T, U and X,
         as at any time  amended,  of the  Board  of  Governors  of the  Federal
         Reserve  System,  or any other  regulations  in  substance  substituted
         therefor.

                  "Request  for  Letter  of  Credit"  means a  Request  for Loan
         accompanied by a written  request for a Letter of Credit  substantially
         in the form of Exhibit G, signed by a Responsible Official of Borrower,
         on  behalf  of  Borrower,   and  properly   completed  to  provide  all
         information required to be included therein.

                  "Request  for  Loan"  means  a  written  request  for  a  Loan
         substantially  in the  form  of  Exhibit  H,  signed  by a  Responsible
         Official of Borrower, on behalf of Borrower,  and properly completed to
         provide all information required to be included therein.

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

                  "Requirement of Law" means, as to any Person,  the articles or
         certificate of  incorporation  and by-laws or other  organizational  or
         governing  documents of such Person,  and any Law, or judgment,  award,
         decree,  writ or determination of a Governmental  Agency,  in each case
         applicable  to or binding upon such Person or any of its Property or to
         which such Person or any of its Property is subject.

                  "Responsible Official" means (a) when used with reference to a
         Person other than an individual,  any corporate officer of such Person,
         general partner of such
                                      -24-
<PAGE>
         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 another Person shall be conclusively  presumed
         to have been authorized by all necessary corporate,  partnership and/or
         other action on the part of such other Person.

                  "Senior Debt" means,  as of any date of  determination,  Total
         Indebtedness as of that date, other than Subordinated Obligations.

                  "Senior Officer" means Borrower's (a) chief executive officer,
         (b) president,  (c) chief financial officer,  (d) treasurer or (e) vice
         president and controller.

                  "Special Eurodollar  Circumstance"  means the adoption,  on or
         after the date of this Agreement, of any Law or interpretation,  or any
         change  therein  or  thereof,  or any change in the  interpretation  or
         administration  thereof by any  Governmental  Agency,  central  bank or
         comparable  authority charged with the interpretation or administration
         thereof,  or compliance by any Bank or its  Eurodollar  Lending  Office
         with any request or directive  (whether or not having the force of Law)
         of any such Governmental Agency,  central bank or comparable authority,
         or  the  existence  or  occurrence  of   circumstances   affecting  the
         Designated  Eurodollar  Market generally that are beyond the reasonable
         control of the Banks.

                  "Specified  Charges"  means,  as of  the  end  of  any  Fiscal
         Quarter,  the sum of (a)  Plant  Expenditures  for the four (4)  Fiscal
         Quarters then ending plus (b) Total Development Expenditures as of such
         date plus (c) Interest  Expense for the four (4) Fiscal  Quarters  then
         ending plus (d) the  aggregate  amount of federal and state taxes on or
         measured by income of Borrower and its Subsidiaries paid in Cash during
         the four (4) Fiscal Quarters then ending.

                  "Spring Creek Project" means the approximately 473 acre mixed 
         use/industrial park in Colorado Springs,  Colorado held by Del E. Webb
         Spring Creek Corporation.

                  "Stockholders'  Equity" means, as of any date of determination
         and with respect to any Person, the consolidated  stockholders'  equity
         of the Person as of that date  determined in accordance  with Generally
         Accepted Accounting  Principles;  provided that there shall be excluded
         from  Stockholders'  Equity any  amount  attributable  to  Disqualified
         Stock.

                  "Strategic   Plan"  means   Borrower's  1995  Strategic  Plan,
         delivered to the Agent by Borrower under letter dated March 8, 1995.
                                      -25-
<PAGE>
                  "Subordinated   Obligations"   means,   as  of  any   date  of
         determination (without duplication), (a) the 9-3/4% Senior Subordinated
         Debt  Due  2003  outstanding  as of such  date,  (b) the  9.00%  Senior
         Subordinated  Debt Due 2006 outstanding as of such date, (c) the 9-3/4%
         Senior  Subordinated Debt Due 2008 outstanding as of such date, (d) the
         9-3/8% Senior  Subordinated  Debt Due 2009 outstanding as of such date,
         and (e) any other  Indebtedness of Borrower or any of its  Subsidiaries
         on that date  which has been  subordinated  in right of  payment to the
         Obligations in a manner  reasonably  satisfactory to the Banks and does
         not require any  principal  repayment  thereunder  (other than  through
         acceleration)  on a date prior to the Maturity  Date and contains  such
         other  protective  terms with  respect to senior  debt (such as payment
         blockage) as the Banks may reasonably require. Subordination provisions
         and  protective  terms with  respect to senior debt under  Indebtedness
         issued publicly or pursuant to Securities and Exchange  Commission Rule
         144A shall be deemed to be  acceptable to the Banks if they include all
         of those protections given to "Designated Senior Debt", as that term is
         used in the Indentures for the 9-3/4% Senior Subordinated Debt Due 2003
         and the 9.00% Senior Subordinated Debt Due 2006.

                  "Subsidiary" of a Person means any  corporation,  association,
         partnership, limited liability company, joint venture or other business
         entity of which more than 50% of the voting stock, membership interests
         or  other  equity   interests  (in  the  case  of  Persons  other  than
         corporations or limited  liability  companies),  is owned or controlled
         directly  or  indirectly  by  the  Person,   or  one  or  more  of  the
         Subsidiaries of the Person, or a combination thereof.

                  "Subsidiary  Guaranty"  means the  continuing  guaranty of the
         Obligations to be executed and delivered by the Guarantor  Subsidiaries
         pursuant  to Section  8.1(a)(3),  in the form of  Exhibit I,  either as
         originally  executed  or as it may from  time to time be  supplemented,
         modified, amended, extended or supplemented.

                  "Substituted  Credit  Facilities"  means (a) the Senior Credit
         Agreement between Borrower and the Valley National Bank of Arizona,  as
         agent for certain lenders, dated July 17, 1989, as amended, and (b) the
         Revolving Loan Agreement  between Del Webb  Communities  Inc. and First
         Interstate Bank of Nevada, as agent for certain lenders, dated June 23,
         1988, as amended.

                  "Tangible Net Worth" means,  as of any date of  determination,
         the Stockholders'  Equity of Borrower and its Subsidiaries on that date
         minus the aggregate  Intangible  Assets (not including the value of any
         intangible   deferred  tax  assets  that  have  been  included  in  the
         calculation of Intangible  Assets for this purpose) of Borrower and its
         Subsidiaries on that date.

                  "Total Development  Expenditures" means, as of the last day of
         any four (4) Fiscal  Quarter  period,  Net Change in Housing  Inventory
         plus Lot and Amenity
                                      -26-
<PAGE>
         Development  Costs plus Cash Land  Acquisition  Costs for such four (4)
         Fiscal Quarter period, but in no event less than zero.

                  "Total  Indebtedness"  means, as of any date of  determination
         (without  duplication),  all  Indebtedness  of  Borrower  or any of its
         Subsidiaries on that date.

                  "to  the  best   knowledge   of"  means,   when   modifying  a
         representation,  warranty or other  statement  of any Person,  that the
         fact or situation  described therein is known by the Person (or, in the
         case of a Person other than a natural  Person,  known by a  Responsible
         Official of that Person) making the  representation,  warranty or other
         statement,  or with the exercise of reasonable due diligence  under the
         circumstances  (in  accordance  with the  standard of what a reasonable
         Person in similar circumstances would have done) should have been known
         by the Person (or, in the case of a Person other than a natural Person,
         should have been known by a Responsible Official of that Person).

                  "type",  when used with respect to any Loan or Advance,  means
         the  designation  of whether  such Loan or Advance is a Reference  Rate
         Loan or Advance, or a Eurodollar Rate Loan or Advance.

                  "Unentitled   Land"  means  Real  Property  (other  than  Real
         Property used and  reasonably  necessary for the general  corporate and
         administrative purposes of Borrower and its Subsidiaries) that does not
         meet  all  of  the  following  conditions:  (a)  its  intended  use  is
         permissible under the applicable  General Plan, (b) its intended use is
         permissible under the applicable Specific Plan,  development  agreement
         or by applicable  zoning,  (c) the environmental  impact report for the
         intended  use,  if  required,  has  been  certified  by the  applicable
         Governmental  Agency,  (d)  the  time  to  file  any  challenge  to the
         environmental impact report under the California  Environmental Quality
         Act has passed without such a lawsuit being filed or such a lawsuit has
         been  finally  resolved  successfully,  and (e) in  states  other  than
         California, a status comparable to each of the foregoing, to the extent
         required, has been met under applicable local Laws.

                  "Unsold  Home"  means a housing  unit owned by  Borrower  or a
         Guarantor  Subsidiary  with  respect  to which  construction  has begun
         (measured by the laying of a foundation  for such housing unit) and for
         which a sales  contract  has not been  entered  into  with,  and a cash
         deposit received from, a consumer purchaser of such housing unit.

                  1.2 Use of Defined Terms.  Any defined term used in the plural
shall refer to all members of the relevant  class,  and any defined term used in
the  singular  shall  refer to any one or more of the  members  of the  relevant
class.
                                      -27-
<PAGE>
                  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  applied  on  a
consistent basis,  except as otherwise  specifically  prescribed  herein. In the
event that Generally  Accepted  Accounting  Principles change during the term of
this Agreement  such that the covenants  contained in Sections 6.11 through 6.15
would then be calculated in a different manner or with different components, (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  covenants  contained  in the
aforesaid  Sections  during  the 90 day  period  following  any 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.

                  1.4 Rounding.  Any financial  ratios required to be maintained
or achieved  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 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 this reference. A
matter disclosed on any Schedule shall be deemed disclosed on all Schedules.

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

                  1.7  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.  Unless
otherwise  specified,  reference to any  document or  agreement  shall mean such
document or agreement as it may be amended or restated from time to time.
                                      -28-
<PAGE>
                                    Article 2
                                      LOANS
                                      -----

                  2.1 Loans-General.

                           (a) Subject to the terms and  conditions set forth in
         this Agreement, at any time and from time to time from the Closing Date
         through and including the Banking Day prior to the Maturity Date,  each
         Bank  shall,  pro rata  according  to that Bank's Pro Rata Share of the
         then applicable Commitments,  make Advances to Borrower in such amounts
         as Borrower may request that do not exceed in the  aggregate at any one
         time  outstanding  the  amount  of that  Bank's  Pro Rata  Share of the
         Commitments;  provided  that,  giving  effect to the Loan of which such
         Advance  is a part,  (i) the then  outstanding  principal  indebtedness
         evidenced by the Line A Notes plus the Aggregate Effective Amount shall
         not  exceed  the  Line A  Commitment  and  (ii)  the  then  outstanding
         principal  indebtedness  evidenced by the Line B Notes shall not exceed
         the Line B  Commitment.  Subject to the  limitations  set forth herein,
         Borrower may borrow,  repay and reborrow under the Commitments  without
         premium or penalty.

                           (b) Subject to the next sentence,  each Loan shall be
         made  pursuant to a Request for Loan which shall  specify the requested
         (i) date of such Loan,  (ii) type of Loan,  (iii)  amount of such Loan,
         (iv) in the case of a Eurodollar  Rate Loan,  the  Interest  Period for
         such Loan and (v)  whether  such Loan is to be made under the Line A or
         Line B  Commitment.  Unless  the  Agent has  notified,  in its sole and
         absolute discretion,  Borrower to the contrary, a Loan may be requested
         by  telephone  by a  Responsible  Official of  Borrower,  in which case
         Borrower  shall  confirm such request by promptly  delivering a Request
         for  Loan  in  person  or by  telecopier  conforming  to the  preceding
         sentence  to the  Agent.  Borrower  and  the  Agent  may  enter  into a
         memorandum of understanding  setting forth specific procedures for such
         telephonic requests;  if the Agent complies with such procedures (or if
         no such  memorandum  is entered  into),  Agent shall incur no liability
         whatsoever  hereunder  in acting upon any  telephonic  request for loan
         purportedly  made by a Responsible  Official of Borrower,  which hereby
         agrees to indemnify the Agent from any loss, cost, expense or liability
         as a result of so acting.

                           (c) Promptly following receipt of a Request for Loan,
         the Agent shall notify each Bank by telephone or telecopier  (and if by
         telephone,  promptly  confirmed by  telecopier) of the date and type of
         the Loan, the applicable  Interest Period,  the applicable  Commitment,
         and that Bank's Pro Rata Share of the Loan.  Not later than 11:00 a.m.,
         San Francisco time, on the date specified for any Loan (which must be a
         Banking  Day),  each Bank  shall make its Pro Rata Share of the Loan in
         immediately  available  funds  available  to the  Agent at the  Agent's
         Office.  Upon  satisfaction or waiver of the applicable  conditions set
         forth in Article 8, all Advances
                                      -29-
<PAGE>
         shall be credited on that date in  immediately  available  funds to the
         Designated Deposit Account.

                           (d) Unless the Majority Banks otherwise consent, each
         Reference  Rate Loan shall be an integral  multiple of  $1,000,000  and
         shall be not less than  $1,000,000 and each Eurodollar Loan shall be an
         integral multiple of $1,000,000 and shall be not less than $10,000,000.

                           (e) The Advances made by each Bank shall be evidenced
         by that Bank's Line A Note or Line B Note, as applicable.

                           (f) A Request for Loan shall be irrevocable  upon the
         Agent's first notification thereof.

                           (g) If no Request for Loan (or telephonic request for
         loan  referred  to  in  the  second  sentence  of  Section  2.1(b),  if
         applicable) has been made within the requisite notice periods set forth
         in Sections  2.2 or 2.3 in  connection  with a Loan which,  if made and
         giving effect to the  application  of the proceeds  thereof,  would not
         increase the outstanding principal Indebtedness evidenced by the Line A
         Notes or Line B Notes, as applicable,  then Borrower shall be deemed to
         have requested,  as of the date upon which the related then outstanding
         Loan is due pursuant to Sec tion 3.1(e)(i), a Reference Rate Loan under
         the Line A Commitment or Line B Commitment, as applicable, in an amount
         equal to the  amount  necessary  to  cause  the  outstanding  principal
         Indebtedness  evidenced  by the Notes to remain  the same and the Banks
         shall make the  Advances  necessary  to make such Loan  notwithstanding
         Sections 2.1(b) and 2.2.

                           (h) If a Loan  is to be made on the  same  date  that
         another Loan is due and payable, Borrower or the Banks, as the case may
         be,  shall make  available  to the Agent the net amount of funds giving
         effect to both such Loans and the effect for purposes of this Agreement
         shall be the same as if separate  transfers of funds had been made with
         respect to each such Loan,  provided  that no such  netting of payments
         shall  be  made of a Loan  under  the  Line A  Commitment  against  the
         repayment of a Loan under the Line B Commitment.

                  2.2  Reference  Rate Loans.  Each  request by  Borrower  for a
Reference  Rate  Loan  shall be made  pursuant  to a Request  for  Loan,  with a
concurrent telephone notification,  received by the Agent, at the Agent's Office
(and such additional office of the Agent as it may designate from time to time),
not later than 1:00 p.m. San Francisco time, at least one (1) Banking Day before
the date of the  requested  Reference  Rate  Loan.  All Loans  shall  constitute
Reference Rate Loans unless properly  designated or redesignated as a Eurodollar
Rate Loan pursuant to Section 2.3. -30-
<PAGE>
                  2.3 Eurodollar Rate Loans.

                           (a) Each request by Borrower  for a  Eurodollar  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(b),  if  applicable)  received by the Agent,  at the Agent's Office
         (and such additional  office of the Agent as it may designate from time
         to time),  not later than 9:00 a.m., San Francisco time, at least three
         (3)  Eurodollar  Banking  Days  before the first day of the  applicable
         Eurodollar Period.

                           (b) On the date which is two (2)  Eurodollar  Banking
         Days  before the first day of the  applicable  Eurodollar  Period,  the
         Agent shall confirm its determination of the applicable Eurodollar Rate
         (which  determination  shall be  conclusive  in the absence of manifest
         error) and  promptly  shall give notice of the same to Borrower and the
         Banks  by  telephone  or  telecopier  (and  if by  telephone,  promptly
         confirmed by telecopier).

                           (c) Unless the Agent and the Majority Banks otherwise
         consent,  no  more  than  four  (4)  Eurodollar  Rate  Loans  shall  be
         outstanding at any one time.

                           (d) Unless the Agent and the Majority Banks otherwise
         consent,  no Eurodollar Rate Loan may be requested during the existence
         of a Default or Event of Default.

                           (e) Nothing  contained  herein shall require any Bank
         to fund  any  Eurodollar  Rate  Advance  in the  Designated  Eurodollar
         Market.

                  2.4 Voluntary  Reduction of  Commitments.  Borrower shall have
the right, at any time and from time to time, without penalty or charge, upon at
least three (3) Banking Days prior written  notice by a Responsible  Official of
Borrower to the Agent,  voluntarily to reduce,  permanently and irrevocably,  in
aggregate  principal  amounts in an integral multiple of $1,000,000 but not less
than $5,000,000,  or to terminate,  all of the then  undisbursed  portion of the
Line A Commitment  or Line B  Commitment,  provided  that any such  reduction or
termination shall be accompanied by payment of all accrued and unpaid commitment
fees with respect to the portion of the Commitments being reduced or terminated.
The Agent shall promptly notify the Banks of any reduction of a Commitment under
this Section 2.4.

                  2.5 Extension of Maturity Date/Reduction of Commitments

                           (a) No  earlier  than 120 days nor later than 60 days
         prior to any  Anniversary  Date,  and so long as no Default or Event of
         Default then exists  hereunder,  Borrower may make a written request to
         the  Agent to  extend  the then  existing  Maturity  Date  (the  "Prior
         Maturity  Date") for a period of an additional one (1) year. If written
         consent to such extension request is given by the Required Banks to the
         Agent  within 45 days of such  request by  Borrower,  then the Maturity
         Date shall be
                                      -31-
<PAGE>
         so extended subject to the payment by Borrower to the Agent,  within 10
         days following notice of such consent to Borrower,  of an extension fee
         as may be determined by such consenting  Banks. Each such extension fee
         shall be for the  account  of the  consenting  Banks,  based upon their
         pro-rata shares of the Commitments.  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 at any future Anniversary Date.

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

                           (c) In the event  that a portion  of the  Commitments
         are to be terminated on a Prior  Maturity Date pursuant to the terms of
         clause (b), 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") and that (if not an existing  Bank) are
         approved  by the  Agent  (which  approval  shall  not  be  unreasonably
         withheld) purchase all (but not part) of any Non-Consenting Bank's then
         outstanding  Advances,  its Notes  and its  participation  interest  in
         outstanding  Letters  of  Credit,  and assume its Pro Rata Share of the
         Commitments  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 Commitments, 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 which 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 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 2.12). Any such purchase
                                      -32-
<PAGE>
         by a New Bank pursuant to this clause (c) shall be further evidenced by
         a revised  version of  Schedule  1.1 hereto  prepared  by the Agent and
         delivered  to  Borrower  and each of the  Banks and  replacement  Notes
         delivered by Borrower to the Agent for  distribution  to the applicable
         Banks in exchange for the corresponding existing Notes.

                  2.6  Optional   Termination  of  Commitments.   Following  the
occurrence  of a Change in  Control,  the  Majority  Banks may in their sole and
absolute  discretion  elect,  at any time  until  sixty  (60)  days  immediately
subsequent  to the later of (a) such  occurrence  and (b) receipt of  Borrower's
written notice to the Agent of such occurrence, to terminate the Commitments, in
which case the Commitments  shall be terminated and reduced to zero effective on
the date of such election.

                  2.7 Automatic  Termination  of  Commitments.  The  Commitments
shall  automatically  terminate and be reduced to zero upon the  occurrence of a
Disposition  consisting  of (a)  all or  substantially  all  of  the  assets  of
Borrower,  or (b) all or substantially all of the capital stock of any Guarantor
Subsidiary (except a Guarantor  Subsidiary holding solely the assets of the Glen
Harbor Project or the Spring Creek Project),  or (c) all or substantially all of
the assets of any Guarantor  Subsidiary (not including those assets constituting
the Glen Harbor Project or Spring Creek Project).

                  2.8 Agent's  Right to Assume  Funds  Available  for  Advances.
Unless the Agent shall have been  notified by any Bank no later than the Banking
Day or Eurodollar Banking Day, as applicable,  prior to the funding by the Agent
of any Loan that such Bank does not intend to make  available  to the Agent such
Bank's  portion of the total amount of such Loan, the Agent may assume that such
Bank has made such amount available to the Agent on the date of the Loan and the
Agent may,  in  reliance  upon such  assumption,  make  available  to Borrower a
corresponding amount. If the Agent has made funds available to Borrower based on
such assumption and such  corresponding  amount is not in fact made available to
the  Agent  by  such  Bank,   the  Agent  shall  be  entitled  to  recover  such
corresponding  amount on demand  from such Bank.  If such Bank does not pay such
corresponding  amount  forthwith  upon the Agent's  demand  therefor,  the Agent
promptly shall notify Borrower and Borrower shall pay such corresponding  amount
to the  Agent.  The Agent  also  shall 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 Agent to  Borrower to the date
such corres ponding amount is recovered by the Agent,  at a rate per annum equal
to the daily Federal Funds Rate.  Nothing  herein shall be deemed to relieve any
Bank from its obligation to fulfill its share of the Commitments or to prejudice
any rights  which the Agent or Borrower may have against any Bank as a result of
any default by such Bank hereunder.

                  2.9 Adjusting Purchase Payments. Principal amounts outstanding
under the Line A Commitment  or the Line B Commitment  of the First Amended Loan
Agreement on the effective  date of this  Agreement  (the  "Carryover  Principal
Balance") remain  outstanding  under the Line A Commitment or Line B Commitment,
as applicable,  hereunder. Concurrently with the effectiveness of this Agreement
and the making of the initial Loan as
                                      -33-
<PAGE>
provided  in  Section  8.1,  the  Banks  agree to  purchase  and sell  undivided
interests in the Carryover  Principal  Balance by making or receiving  Adjusting
Purchase  Payments  as  specified  in  Schedule  2.9  (the  "Adjusting  Purchase
Payment(s)") so that the Carryover  Principal Balance will be properly allocated
and owing to the Banks under the Notes in  accordance  with the Pro-Rata  Shares
specified in Schedule 1.1. Each Bank making an Adjusting  Purchase Payment shall
deliver it to the Agent  together with its funding of its initial  Advance,  and
the Agent shall forward such Adjusting  Purchase  Payments to the Banks entitled
thereto  promptly after receipt in accordance with the allocations  specified in
Schedule 2.9. On the effective date of this Agreement,  in addition to any other
Advances  that may be made,  each Bank shall be deemed as having made an Advance
in the amount of its Pro-Rata  Share of the  Carryover  Principal  Balance.  The
Aggregate  Effective  Amount  with  respect  to  Letters  of Credit  outstanding
hereunder as of the  effective  date hereof is  $9,013,765.  As of the effective
date hereof,  the Banks shall hold  participations  in such Letters of Credit as
provided in Section 2.12 in  accordance  with their Pro Rata Shares as specified
in Schedule 1.1 hereof.

                  2.10 Substitute Credit Facility. Borrower hereby requests, and
the parties hereto agree,  that the Line B Commitment  constitutes a restatement
of the Line B Commitment under the First Amended Loan Agreement.

                  2.11  Senior  Debt.   Without   limitation,   all  outstanding
principal and interest under the Notes  constitutes  "Senior Debt", as that term
is defined in each or any of the Indentures.

                  2.12 Letters of Credit.

                           (a) Subject to the terms and  conditions  hereof,  at
         any time and  from  time to time  from the  Closing  Date  through  the
         Maturity  Date,  the Issuing  Bank shall  issue such  Letters of Credit
         under the Line A  Commitment  as Borrower  may request by a Request for
         Letter of Credit;  provided  that (i) giving effect to all such Letters
         of Credit,  the sum of (A) the aggregate  principal amount  outstanding
         under the Line A Notes plus (B) the Aggregate Effective Amount does not
         exceed the then  applicable  Line A Commitment  and (ii) the  Aggregate
         Effective  Amount shall not exceed  $20,000,000.  Each Letter of Credit
         shall be in a form  acceptable to the Issuing Bank.  The expiry date of
         any Letter of Credit shall not extend more than one (1) year beyond its
         issuance date (unless otherwise agreed by the Issuing Bank) nor, in any
         event,  beyond the Maturity  Date. A Request for Letter of Credit shall
         be irrevocable absent the consent of the Issuing Bank.

                           (b)  Each  Request  for  Letter  of  Credit  shall be
         submitted to the Issuing Bank,  with a copy to the Agent, at least five
         (5)  Banking  Days prior to the date upon which the  related  Letter of
         Credit is proposed to be issued.  The Agent shall  promptly  notify the
         Issuing  Bank  whether  such  Request  for  Letter of  Credit,  and the
         issuance  of a Letter  of  Credit  pursuant  thereto,  conforms  to the
         requirements of this
                                      -34-
<PAGE>
         Agreement.  Upon  receipt  of  favorable  notice  from the  Agent,  and
         promptly  after  issuing each Letter of Credit,  the Issuing Bank shall
         promptly  notify the Agent,  and the Agent  shall  promptly  notify the
         Banks, of the amount and terms thereof.

                           (c) Upon the  issuance  of a Letter of  Credit,  each
         Bank shall be deemed to have purchased a  participation  in such Letter
         of Credit from the Issuing Bank in a  proportion  of the total equal to
         that Bank's Pro Rata Share.  Without  limiting  the scope and nature of
         each Bank's  participation in any Letter of Credit,  to the extent that
         the Issuing  Bank has not been  reimbursed  by Borrower for any payment
         required  to be made by the  Issuing  Bank  under any Letter of Credit,
         each Bank shall,  pro rata  according to its Pro Rata Share,  reimburse
         the Issuing Bank through the Agent  promptly upon demand for the amount
         of such  payment.  The  obligation  of each  Bank to so  reimburse  the
         Issuing  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.  Any such  reimbursement  shall not  relieve  or
         otherwise  impair the  obligation  of Borrower to reimburse the Issuing
         Bank for the amount of any payment  made by the Issuing  Bank under any
         Letter of Credit together with interest as hereinafter  provided.  Each
         Bank that has  reimbursed  the Issuing  Bank  pursuant to this  Section
         2.12(c) for its Pro-Rata  Share 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 Section 2.12(d) and shall share, in
         accordance  with that  pro-rata  participation,  in any payment made by
         Borrower with respect to such claim.

                           (d)  Borrower  agrees  to  pay to  the  Issuing  Bank
         through the Agent an amount  equal to any  payment  made by the Issuing
         Bank with  respect  to each  Letter  of  Credit  no later  than one (1)
         Banking Day after  demand made by the Issuing Bank  therefor,  together
         with  interest on such amount from the date of any payment  made by the
         Issuing  Bank.  Interest on such amount shall  accrue at the  Reference
         Rate until the second  Banking Day  following  the payment  made by the
         Issuing Bank with  respect to the Letter of Credit,  and at the Default
         Rate  thereafter.  The principal amount of any such payment by Borrower
         shall be used to reimburse the Issuing Bank for the pay ment made by it
         under the Letter of Credit.  Should  Borrower  request a Loan under the
         Line A  Commitment  for the  purpose of making  such  payment  and make
         written  request to the Agent to pay the proceeds of the Loan  directly
         to the  Issuing  Bank,  then the amount to be so paid shall be deducted
         from the Aggregate  Effective  Amount for purposes of Section 2.1(a) in
         connection with such Request for Loan.

                           (e) If Borrower fails to make the payment required by
         Section  2.12(d) within the time period  therein set forth,  in lieu of
         the reimbursement to the Issuing Bank under Section 2.12(c) the Issuing
         Bank may (but is not required to),  without notice to or the consent of
         Borrower,  instruct the Agent to cause Advances to be made by the Banks
         under the Line A Commitment in an aggregate  amount equal to the amount
         paid by the Issuing Bank with respect to that Letter of Credit and, for
         this
                                      -35-
<PAGE>
         purpose,  the conditions  precedent set forth in Articles 2 and 8 shall
         not apply.  The proceeds of such Advances  shall be paid to the Issuing
         Bank to  reimburse  it for the  payment  made by it under the Letter of
         Credit.

                           (f) The  issuance  of any  supplement,  modification,
         amendment, renewal, or extension to or of any Letter of Credit shall be
         subject to such preconditions as the Issuing Bank may establish.

                           (g) The  obligation of Borrower to pay to the Issuing
         Bank the  amount of any  payment  made by the  Issuing  Bank  under any
         Letter of Credit shall be  absolute,  unconditional,  and  irrevocable,
         subject only to performance  by the Issuing Bank of its  obligations to
         Borrower under California Uniform Commercial Code Section 5109. Without
         limiting the foregoing,  subject to California  Uniform Commercial Code
         Section 5109,  Borrower's  obligations  shall not be affected by any of
         the following circumstances:

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

                                    (2)  any  amendment  or  waiver  of  or  any
                  consent  to  departure   from  the  Letter  of  Credit,   this
                  Agreement,  or any  other  agreement  or  instrument  relating
                  thereto, with the consent of Borrower;

                                    (3)  the  existence  of any  claim,  setoff,
                  defense,  or other rights which  Borrower may have at any time
                  against the Issuing Bank, the Agent, the Co-Agent or any Bank,
                  any  beneficiary  of the Letter of Credit  (or any  persons or
                  entities for whom any such  beneficiary  may be acting) or any
                  other Person, whether in connection with the Letter of Credit,
                  this Agreement,  or any other agreement or instrument relating
                  thereto, or any unrelated transactions;

                                    (4)  any  demand,  statement,  or any  other
                  document  presented  under the 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;

                                    (5)  payment  by the  Issuing  Bank  in good
                  faith  under the Letter of Credit  against  presentation  of a
                  draft or any  accompanying  document  which does not  strictly
                  comply with the terms of the Letter of Credit;

                                    (6)  the  existence,   character,   quality,
                  quantity,   condition,  packing,  value  or  delivery  of  any
                  property purported to be represented by documents presented in
                  connection with any Letter of Credit or for any
                                      -36-
<PAGE>
                  difference  between  any  such  property  and  the  character,
                  quality,  quantity,  condition,  or value of such  property as
                  described in such documents;

                                    (7)  the  time,  place,   manner,  order  or
                  contents of shipments or  deliveries  of property as described
                  in documents presented in connection with any Letter of Credit
                  or the existence,  nature and extent of any insurance relative
                  thereto;

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

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

                                    (10) 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;

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

                                    (12) any  consequence  arising  from acts of
                  God,  war,  insurrection,  civil unrest,  disturbances,  labor
                  disputes,  emergency  conditions  or other  causes  beyond the
                  control of the Issuing Bank;

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

                                    (14)  where  the  Issuing  Bank has acted in
                  good  faith and  observed  general  banking  usage,  any other
                  circumstances whatsoever.

                           (h)  The  Issuing  Bank  shall  be  entitled  to  the
         protection accorded to the Agent pursuant to Section 10.7.

                           (i) The  Uniform  Code of  Practice  for  Documentary
         Credits,  as published in its most current version by the International
         Chamber of  Commerce,  shall be deemed a part of this Section and shall
         apply to all  Letters  of Credit to the extent  not  inconsistent  with
         applicable Law.

                           (j) Concurrently  with the issuance of each Letter of
         Credit,  Borrower shall pay a letter of credit  origination  fee to the
         Issuing Bank, for the sole
                                      -37-
<PAGE>
         account of the Issuing Bank, in an amount established from time to time
         by the  Issuing  Bank.  Borrower  shall  also pay to the  Agent for the
         ratable  account of the Banks in accordance with their Pro Rata Shares,
         a standby  letter of credit  fee in an amount  equal to 1.25% per annum
         times the face  amount of such  Letter  of  Credit,  which fee shall be
         payable  quarterly in arrears on each Quarterly  Payment Date after the
         issuance of the Letter of Credit and on the  termination  or expiration
         of such Letter of Credit.  The Agent shall  promptly make  available to
         the Banks in immediately  available funds,  pro-rata according to their
         Pro Rata  Shares,  the standby  letter of credit fees which are for the
         account of the Banks.  Borrower  shall also pay  transfer  fees,  check
         fees,  foreign currency exchange fees and costs, and such other fees as
         the Issuing Bank normally charges in connection with standby letters of
         credit and activity  pursuant  thereto,  which fees shall be solely for
         the account of the Issuing Bank.

                           (k) To the extent of any  inconsistency  between  the
         provisions of this Agreement  regarding  Letters of Credit and those of
         Exhibit G, the provisions of this Agreement shall govern, provided that
         the grant of additional (though not contrary) rights or remedies to the
         Issuing Bank under  Exhibit G shall not be  construed  as  inconsistent
         with the provisions of this Agreement.
                                      -38-
<PAGE>
                                    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 thereof
         until  payment  in full is made and shall  accrue and be payable at the
         rates set forth or provided for herein before and after default, before
         and after maturity, before and after 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 to
         the fullest extent permitted by applicable Laws.

                           (b)  Unless  previously  paid  as  provided  in  this
         Agreement, interest accrued during each Monthly Interest Period on each
         Reference  Rate Loan shall be due and  payable  on the next  succeeding
         Monthly  Payment  Date and on the  Maturity  Date.  Except as otherwise
         provided in Section 3.7, the unpaid  principal  amount of any Reference
         Rate Loan shall bear interest at a fluctuating  rate per annum equal to
         the Reference Rate. Each change in the interest rate under this Section
         3.1(b)  due to a  change  in  the  Reference  Rate  shall  take  effect
         simultaneously with the corresponding change in the Reference Rate.

                           (c)  Unless  previously  paid  as  provided  in  this
         Agreement, interest accrued during each Monthly Interest Period on each
         Eurodollar  Rate Loan shall be due and  payable on the next  succeeding
         Monthly  Payment  Date and on the  Maturity  Date.  Except as otherwise
         provided in Sections 3.1(d) and 3.7, the unpaid principal amount of any
         Eurodollar  Rate Loan shall bear  interest at a rate per annum equal to
         the Eurodollar  Rate for that  Eurodollar Rate Loan plus the Applicable
         Eurodollar Spread.

                           (d)  During  the  existence  of a Default or Event of
         Default,  the  Majority  Banks  may  determine  that  any or  all  then
         outstanding  Eurodollar Rate Loans shall be converted to Reference Rate
         Loans.  Such conversion shall be effective upon notice to Borrower from
         the Majority Banks (or from the Agent on behalf of the Majority  Banks)
         and  shall  continue  so long as  such  Default  or  Event  of  Default
         continues to exist.

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

                                    (i) the principal  amount of each Eurodollar
                  Rate Loan  shall be  payable  on the last day of the  Interest
                  Period for such Loan;
                                      -39-
<PAGE>
                                   (ii) the  amount,  if any,  by which  (A) the
                  outstanding  principal  Indebtedness  evidenced  by the Line A
                  Notes plus the Aggregate  Effective Amount at any time exceeds
                  the  Line  A  Commitment  or  (B)  the  outstanding  principal
                  Indebtedness evidenced by the Line B Notes at any time exceeds
                  the Line B Commitment, shall be payable immediately, and shall
                  be  applied to the  applicable  Notes or, if no amount is then
                  outstanding under the applicable  Notes,  shall be applied and
                  held in a manner specified in Section 9.2(a)(2); and

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

                           (f) The principal  Indebtedness  under the Notes may,
         at any time and from time to time,  voluntarily  be paid or  prepaid in
         whole or in part without  premium or penalty,  except that with respect
         to any voluntary  prepayment under this Section 3.1(f), (i) any partial
         prepayment  shall be in an integral  multiple of  $1,000,000,  (ii) the
         Agent shall have received written notice of any prepayment by 9:00 a.m.
         San  Francisco  time on a Banking Day on the date of  prepayment in the
         case of a Reference  Rate Loan, and three (3) Banking Days, in the case
         of a Eurodollar Rate Loan, before the date of prepayment,  which notice
         shall  identify the date and amount of the  prepayment  and the Loan(s)
         being  prepaid,  and (iii) any payment or prepayment of all or any part
         of any  Eurodollar  Rate Loan on a day  other  than the last day of the
         applicable Interest Period shall be subject to Section 3.6(d).

                  3.2 Arrangement, Agency and Co-Agency Fees. Borrower shall pay
to Bank of America arrangement and agency fees in amounts heretofore agreed upon
in one or more letter agreements between Borrower and Bank of America. Such fees
are  solely  for the  account  of Bank of  America  and  are  fully  earned  and
nonrefundable upon the applicable due dates.  Borrower shall pay to the Co-Agent
co-agency fees in amounts  heretofore  agreed upon by letter  agreement  between
Borrower and the Co-Agent.  Such fees are solely for the account of the Co-Agent
and are fully earned and nonrefundable upon the applicable due dates.

                  3.3 Underwriting Fee. On the Closing Date,  Borrower shall pay
to the Agent,  for the account of the Banks,  allocated as indicated on Schedule
3.3 hereof,  an underwriting fee equal to $190,000.00.  This underwriting fee is
fully earned on the Closing Date and is nonrefundable.

                  3.4  Facility and Commitment Fees.

                           (a) Facility  Fee.  From and after the Closing  Date,
         Borrower  shall pay to the Agent,  for the  respective  accounts of the
         Banks,  pro rata according to their Pro Rata Shares of the Commitments,
         a facility fee equal to the percentage  shown below,  per annum,  times
         the average daily amount of the Commitments. The facility
                                      -40-
<PAGE>
         fee shall be payable  quarterly  in arrears on each  Quarterly  Payment
         Date and on the Maturity Date.

                   Applicable Pricing Level On Applicable Date

                    I        II        III       IV        V
                    -        --        ---       --        -
                  0.10%    0.125%     0.15%     0.15%    0.20%

                           (b) Commitment Fees. From and after the Closing Date,
         Borrower  shall pay to the Agent,  for the  respective  accounts of the
         Banks,  pro rata according to their Pro Rata Shares of the Commitments,
         a commitment fee equal to the following indicated  percentage per annum
         times the average daily amount by which the Commitments  exceed the sum
         of the aggregate principal Indebtedness evidenced by the Notes plus the
         Aggregate  Effective  Amount.  The  commitment  fee  shall  be pay able
         quarterly in arrears on each Quarterly Payment Date and on the Maturity
         Date.
<TABLE>
<CAPTION>
                                             Applicable Pricing Level on Applicable Date
<S>                                         <C>     <C>       <C>       <C>        <C>
                                              I       II        III       IV         V
For such days that the aggregate              -       --        ---       --         -
principal indebtedness evidenced by         0.10%   0.125%    0.125%    0.1875%    0.1875%
the Notes plus the Aggregate
Effective Amount exceeds 66% of
the Commitments.

For such days that the aggregate            0.15    0.2125    0.2125     0.25        0.25
principal  indebtedness  evidenced  by 
the Notes  plus the  Aggregate  Effective
Amount is less than or equal to 66% but 
greater than 33% of the Commitments.

For such days that the aggregate            0.20    0.30      0.30      0.325       0.325
principal  indebtedness  evidenced  by the 
Notes  plus the  Aggregate  Effective
Amount is equal to or less than 33% of the
Commitments.
</TABLE>
                  3.5 Increased  Commitment  Costs.  If any Bank shall determine
that the  introduction  after the  Closing  Date of any  applicable  law,  rule,
regulation or guideline regarding capital adequacy, or any change therein or any
change in the  interpretation or  administration  thereof by any central bank or
other  Governmental  Agency charged with the  interpretation  or  administration
thereof, or compliance by such Bank (or its Eurodollar
                                      -41-
<PAGE>
Lending  Office) or any  corporation  controlling  the Bank,  with any  request,
guidelines or directive  regarding  capital adequacy  (whether or not having the
force of law) of any such  central  bank or other  authority,  affects  or would
affect the amount of capital  required or expected to be maintained by such Bank
or any corporation  controlling  such Bank and (taking into  consideration  such
Bank's or such corporation's  policies with respect to capital adequacy and such
Bank's desired return on capital)  determines that the amount of such capital is
increased,  or the rate of return on capital is reduced, as a consequence of its
obligations  under this  Agreement,  then,  within five (5)  Banking  Days after
demand  of such  Bank,  Borrower  shall pay to such  Bank,  from time to time as
specified by such Bank, additional amounts sufficient to compensate such Bank in
light  of  such  circumstances,  to the  extent  reasonably  allocable  to  such
obligations  under this  Agreement.  Each Bank  agrees to  endeavor  promptly to
notify Borrower of any event of which it has actual  knowledge,  occurring after
the Closing Date, which will cause it to make a demand hereunder.

                  3.6    Eurodollar Costs and Related Matters.

                           (a) If,  after  the date  hereof,  the  existence  or
         occurrence of any Special Eurodollar Circumstance:

                                    (1) shall subject any Bank or its Eurodollar
                  Lending  Office to any tax,  duty or other charge or cost with
                  respect  to any  Eurodollar  Rate  Advance,  any of its  Notes
                  evidencing  Eurodollar  Rate Loans or its  obligation  to make
                  Eurodollar  Rate  Advances,  or  shall  change  the  basis  of
                  taxation  of  payments  to any  Bank  of the  principal  of or
                  interest on any  Eurodollar  Rate Advance or any other amounts
                  due under this  Agreement  in respect of any  Eurodollar  Rate
                  Advance, any of its Notes evidencing  Eurodollar Rate Loans or
                  its obligation to make Eurodollar Rate Advances, excluding, in
                  the case of each Bank, the Agent, and each Eligible  Assignee,
                  and any Affiliate or Eurodollar  Lending Office  thereof,  (i)
                  taxes  imposed  on or  measured  in  whole  or in  part by its
                  overall net income,  gross income or gross receipts or capital
                  and franchise taxes imposed on it, by (A) any jurisdiction (or
                  political  subdivision  thereof) in which it is  organized  or
                  maintains its principal office or Eurodollar Lending Office or
                  (B) any  jurisdiction  (or political  subdivision  thereof) in
                  which it is  "doing  business"  (unless  it would not be doing
                  business  in  such  jurisdiction  (or  political   subdivision
                  thereof) absent the transactions  contemplated  hereby),  (ii)
                  any  withholding  taxes or other taxes  based on gross  income
                  imposed  by  the  United   States  of  America   (other   than
                  withholding  taxes and taxes based on gross  income  resulting
                  from  or  attributable  to any  change  in any  law,  rule  or
                  regulation   or   any   change   in  the   interpretation   or
                  administration   of  any  law,   rule  or  regulation  by  any
                  Governmental Agency after the date of this Agreement) or (iii)
                  any  withholding  taxes or other taxes  based on gross  income
                  imposed by the United  States of America  for any period  with
                  respect to which it has failed to  provide  Borrower  with the
                  appropriate form or forms
                                      -42-
<PAGE>
                  required by Section 11.19, to the extent such forms are then
                  required by applicable Laws;

                                    (2) shall impose,  modify or deem applicable
                  any reserve not  applicable  or deemed  applicable on the date
                  hereof (including,  without limitation, any reserve imposed by
                  the Board of  Governors  of the Federal  Reserve  System,  but
                  excluding the Eurodollar Reserve Percentage taken into account
                  in calculating the Eurodollar Rate), special deposit,  capital
                  or similar  requirements  against assets of,  deposits with or
                  for the  account  of, or credit  extended  by, any Bank or its
                  Eurodollar Lending Office; or

                                    (3)   shall   impose  on  any  Bank  or  its
                  Eurodollar Lending Office or the Designated  Eurodollar Market
                  any other condition affecting any Eurodollar Rate Advance, any
                  of its Notes evidencing  Eurodollar Rate Loans, its obligation
                  to make Eurodollar  Rate Advances or this Agreement,  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  Eurodollar  Lending  Office of
         making or maintaining  any Eurodollar Rate Advance or in respect of any
         Eurodollar Rate Advance,  any of its Notes  evidencing  Eurodollar Rate
         Loans or its obligation to make Eurodollar Rate Advances or reduces the
         amount of any sum received or receivable by such Bank or its Eurodollar
         Lending Office with respect to any Eurodollar Rate Advance,  any of its
         Notes  evidencing  Eurodollar  Rate  Loans  or its  obligation  to make
         Eurodollar  Rate  Advances  (assuming  such Bank's  Eurodollar  Lending
         Office had funded 100% of its Eurodollar Rate Advance in the Designated
         Eurodollar Market),  then, within five (5) Banking Days after demand by
         such Bank (with a copy to the 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
         Eurodollar  Lending  Office  had  funded  100% of its  Eurodollar  Rate
         Advance  in  the  Designated   Eurodollar   Market).   Borrower  hereby
         indemnifies  each Bank  against,  and agrees to hold each Bank harmless
         from and reimburse  such Bank within five (5) Banking Days after demand
         for  (without  duplication)  all costs,  expenses,  claims,  penalties,
         liabilities,  losses,  legal fees and damages  incurred or sustained by
         each Bank in  connection  with this  Agreement,  or any of the  rights,
         obligations or transactions  provided for or contemplated  herein, as a
         result  of  the  existence  or  occurrence  of any  Special  Eurodollar
         Circumstance.  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,  occurring  after the  Closing
         Date,  which will  entitle such Bank to  compensation  pursuant to this
         Section,  and agrees to designate a different Eurodollar 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 materially disadvantageous
                                      -43-
<PAGE>
         to such Bank.  If any Bank  claims  compensation  under  this  Section,
         Borrower  may at any time,  upon at least four (4)  Eurodollar  Banking
         Days' prior  notice to the 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 3.6(d), pay in full
         the affected Eurodollar Rate Advances of such Bank or request that such
         Eurodollar Rate Advances be converted to Reference Rate Advances.

                           (b) If,  after  the date  hereof,  the  existence  or
         occurrence of any Special Eurodollar Circumstance shall, in the opinion
         of any Bank,  make it unlawful,  impossible or  impracticable  for such
         Bank or its  Eurodollar  Lending  Office to make,  maintain or fund its
         portion  of any  Eurodollar  Rate  Loan,  or  materially  restrict  the
         authority  of such Bank to purchase or sell,  or to take  deposits  of,
         Dollars in the Designated  Eurodollar Market, or to determine or charge
         interest rates based upon the  Eurodollar  Rate, and such Bank shall so
         notify the Agent,  then such Bank's  obligation to make Eurodollar Rate
         Advances  shall  be  suspended  for the  duration  of such  illegality,
         impossibility  or  impracticability  and the Agent forthwith shall give
         notice  thereof to the other Banks and  Borrower.  Upon receipt of such
         notice, the outstanding principal amount of such Bank's Eurodollar Rate
         Advances,  together with accrued interest thereon,  automatically shall
         be  converted  to  Reference   Rate  Advances  with  Interest   Periods
         corresponding  to the Eurodollar  Loans of which such  Eurodollar  Rate
         Advances  were a part on  either  (1) the  last  day of the  Eurodollar
         Period(s)  applicable to such Eurodollar Rate Advances if such Bank may
         lawfully continue to maintain and fund such Eurodollar Rate Advances to
         such day(s) or (2)  immediately if such Bank may not lawfully  continue
         to fund and  maintain  such  Eurodollar  Rate  Advances to such day(s),
         provided  that in such  event the  conversion  shall not be  subject to
         payment of a prepayment fee under Section  3.6(d).  Each Bank agrees to
         endeavor  promptly  to  notify  Borrower  of any  event of which it has
         actual  knowledge,  occurring after the Closing Date,  which will cause
         that Bank to notify the Agent under this Section 3.6(b),  and agrees to
         designate a different  Eurodollar  Lending  Office if such  designation
         will avoid the need for such  notice and will not,  in the  judgment of
         such Bank, otherwise be disadvantageous to such Bank. In the event that
         any Bank is unable, for the reasons set forth above, to make,  maintain
         or fund its portion of any Eurodollar  Rate Loan,  such Bank shall fund
         such  amount as a Reference  Rate  Advance for the same period of time,
         and such amount  shall be treated in all  respects as a Reference  Rate
         Advance. Any Bank whose obligation to make Eurodollar Rate Advances has
         been  suspended  under this Section  3.6(b) shall  promptly  notify the
         Agent  and  Borrower  of  the  cessation  of  the  Special   Eurodollar
         Circumstance which gave rise to such suspension.

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

                                    (1) the Agent reasonably determines that, by
                  reason of  circumstances  affecting the Designated  Eurodollar
                  Market generally that are beyond the reasonable control of the
                  Banks, deposits in Dollars (in the
                                      -44-
<PAGE>
                  applicable amounts) are not being offered to any Bank in the
                  Designated Eurodollar Market for the applicable Eurodollar
                  Period; or

                                    (2) the Majority Banks advise the Agent that
                  the  Eurodollar  Rate as  determined by the Agent (i) does not
                  represent the effective  pricing to such Banks for deposits in
                  Dollars in the  Designated  Eurodollar  Market in the relevant
                  amount for the applicable  Eurodollar Period, or (ii) will not
                  adequately and fairly reflect the cost to such Banks of making
                  the applicable Eurodollar Rate Advances;

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

                           (d) Upon payment or prepayment of any Eurodollar Rate
         Advance,  (other  than as the  result of a  conversion  required  under
         Section  3.6(b)),  on a day other  than the last day in the  applicable
         Eurodollar  Period (whether  voluntarily,  involuntarily,  by reason of
         acceleration,  or  otherwise),  or upon the failure of Borrower  (for a
         reason  other than the  failure of a Bank to make an Advance) to borrow
         on the date or in the amount  specified  for a Eurodollar  Rate Loan in
         any Request for Loan, Borrower shall pay to the appropriate Bank within
         five (5)  Banking  Days  after  demand a  prepayment  fee or failure to
         borrow  fee,  as the case may be,  (determined  as  though  100% of the
         Eurodollar  Rate Advance had been funded in the  Designated  Eurodollar
         Market) equal to the sum of:

                                    (1) principal  amount of the Eurodollar Rate
                  Advance  prepaid or not  borrowed,  as the case may be,  times
                  [number of days between the date of  prepayment  or failure to
                  borrow,  as  applicable,  and the last  day in the  applicable
                  Eurodollar  Period],  divided  by 360,  times  the  applicable
                  Interest  Differential  (provided  that  the  product  of  the
                  foregoing formula must be a positive number); plus

                                    (2) all  out-of-pocket  expenses incurred by
                  the Bank reasonably  attributable to such payment,  prepayment
                  or failure to borrow.

         Each Bank's  determination  of the amount of any prepayment fee payable
         under  this  Section  3.6(d)  shall be  conclusive  in the  absence  of
         manifest error.

                  3.7 Late Payments. If any installment of principal or interest
or any fee or cost or other amount  payable under any Loan Document to the Agent
or any  Bank is not paid  when  due,  it shall  thereafter  bear  interest  at a
fluctuating interest rate per annum at all times
                                      -45-
<PAGE>
equal to the sum of the Reference Rate plus 3%, to the fullest extent  permitted
by applicable Laws. Accrued and unpaid interest on past due amounts  (including,
without limitation,  interest on past due interest) shall be compounded monthly,
on the last day of each  calendar  month,  to the fullest  extent  permitted  by
applicable Laws.

                  3.8 Computation of Interest and Fees.  Computation of interest
on Eurodollar Rate Loans, Reference Rate Loans and all fees under this Agreement
shall be  calculated on the basis of a year of 360 days and the actual number of
days elapsed.  Borrower  acknowledges that such latter  calculation  method will
result in a higher  yield to the Banks  than a method  based on a year of 365 or
366 days.  Interest  shall  accrue on each Loan for the day on which the Loan is
made.  Interest shall not accrue on a Loan, or any portion thereof,  for the day
on which the Loan or such  portion is paid,  except that any Loan that is repaid
on the same day on which it is made shall bear interest for one day.

                  3.9 Non-Banking Days. If any payment to be made by Borrower or
any other  Party  under any Loan  Document  shall come due on a day other than a
Banking Day,  payment  shall instead be  considered  due on the next  succeeding
Banking Day and the  extension of time shall be reflected in computing  interest
and fees.

                  3.10 Manner and Treatment of Payments.

                           (a) Each payment  hereunder (except payments pursuant
         to Sections 3.5, 3.6,  11.3,  11.10 and 11.20) or on the Notes or under
         any other  Loan  Document  shall be made to the Agent,  at the  Agent's
         Office,  for the account of each of the Banks or the Agent, as the case
         may be, in immediately available funds (for which evidence may be given
         by notification  of a Fed Funds reference  number) not later than 11:00
         a.m.,  San  Francisco  time,  on the day of  payment  (which  must be a
         Banking Day).  All payments  received  after 11:00 a.m.,  San Francisco
         time,  on any  Banking  Day,  shall  be  deemed  received  on the  next
         succeeding  Banking  Day.  The amount of all  payments  received by the
         Agent for the  account  of each Bank shall be  immediately  paid by the
         Agent to the  applicable  Bank in immediately  available  funds and, if
         such  payment was  received by the Agent by 11:00 a.m.,  San  Francisco
         time,  on a Banking Day and not so made  available  to the account of a
         Bank on that Banking Day, the Agent shall  reimburse  that Bank for the
         cost to such Bank of funding the amount of such  payment at the Federal
         Funds Rate.  All  payments  shall be made in lawful money of the United
         States of America.

                           (b) Each payment or prepayment on account of any Loan
         shall be applied pro rata according to the outstanding Advances made by
         each Bank comprising such Loan.

                           (c) Each payment of any amount payable by Borrower or
         any other Party under this  Agreement or any other Loan Document  shall
         be made free and clear of,  and  without  reduction  by reason  of, any
         taxes, assessments or other charges
                                      -46-
<PAGE>
         imposed  by  any  Governmental  Agency,   central  bank  or  comparable
         authority, excluding, in the case of each Bank, the Agent, the Co-Agent
         and each Eligible  Assignee,  and any  Affiliate or Eurodollar  Lending
         Office thereof, (i) taxes imposed on or measured in whole or in part by
         its overall net income,  gross income or gross  receipts or capital and
         franchise  taxes imposed on it, by (A) any  jurisdiction  (or political
         subdivision  thereof)  in  which  it  is  organized  or  maintains  its
         principal  office or Eurodollar  Lending Office or (B) any jurisdiction
         (or  political  subdivision  thereof)  in which it is "doing  business"
         (unless  it  would  not be  doing  business  in such  jurisdiction  (or
         political  subdivision  thereof) absent the  transactions  contemplated
         hereby),  (ii) any  withholding  taxes or  other  taxes  based on gross
         income imposed by the United States of America (other than  withholding
         taxes and taxes based on gross income resulting from or attributable to
         any  change  in any  law,  rule  or  regulation  or any  change  in the
         interpretation  or administration of any law, rule or regulation by any
         Governmental  Agency  after  the date of this  Agreement)  or (iii) any
         withholding  taxes or other taxes based on gross income  imposed by the
         United  States of America for any period  with  respect to which it has
         failed to provide  Borrower with the appropriate form or forms required
         by  Section  11.19,  to the  extent  such  forms are then  required  by
         applicable  Laws, (all such  non-excluded  taxes,  assessments or other
         charges being hereinafter  referred to as "Taxes").  To the extent that
         Borrower is  obligated  by  applicable  Laws to make any  deduction  or
         withholding  on account  of Taxes  from any amount  payable to any Bank
         under  this  Agreement,  Borrower  shall  (i) make  such  deduction  or
         withholding  and pay the same to the relevant  Governmental  Agency and
         (ii) pay such additional  amount to that Bank as is necessary to result
         in that Bank's  receiving a net after-Tax amount equal to the amount to
         which that Bank would have been entitled  under 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, that Bank shall promptly refund such excess to Borrower.

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

                  3.12 Failure to Charge Not Subsequent  Waiver. Any decision by
the Agent or any Bank not to require payment of any interest (including interest
arising  under Section  3.7),  fee, cost or other amount  payable under any Loan
Document,  or to calculate  any amount  payable by a particular  method,  on any
occasion  shall in no way  limit or be deemed a waiver  of the  Agent's  or such
Bank's right to require full payment of any interest (including interest arising
under Section 3.7),  fee, cost or other amount  payable under any Loan Document,
or to calculate  an amount  payable by another  method that is not  inconsistent
with this Agreement, on any other or subsequent occasion.

                  3.13  Agent's  Right  to  Assume  Payments  Will  be  Made  by
Borrower.  Unless the Agent shall have been  notified  by Borrower  prior to the
date on which any payment to be
                                      -47-
<PAGE>
made by Borrower  hereunder is due that  Borrower  does not intend to remit such
payment,  the Agent may, in its  discretion,  assume that  Borrower has remitted
such  payment when so due and the 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 share of such assumed payment.  If Borrower has not in fact
remitted such payment to the Agent, each Bank shall forthwith on demand repay to
the 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 Agent to such Bank to the date such
amount is repaid to the Agent at the Federal Funds Rate.

                  3.14 Fee Determination  Detail. The Agent, and any Bank, shall
provide  reasonable detail to Borrower  regarding the manner in which the amount
of any  payment to the Agent and the Banks,  or that Bank,  under  Article 3 has
been determined, concurrently with demand for such payment.

                  3.15  Survivability.   All  of  Borrower's  obligations  under
Sections 3.5 and 3.6 shall  survive for ninety (90) days  following  the date on
which the  Commitments  are terminated  and all Loans  hereunder are fully paid.
Following such  termination and repayment,  and the expiration of any bankruptcy
preference  or similar  period,  each Bank shall  cancel and return its Notes to
Borrower.

                  3.16 Accruals Under  Pre-Existing Loan Documents.  The accrual
of interest and fees payable by Borrower under the  Pre-Existing  Loan Documents
shall be  calculated  as provided  therein  through the  effective  date of this
Agreement.  Such fees include,  without limitation,  those specified in Sections
3.2, 3.3 and 3.4 of the First Amended Loan Agreement.  All such accrued interest
and fees through the effective date of this Agreement shall, notwithstanding any
provision of the  Pre-Existing  Loan Documents or hereunder to the contrary,  be
due on the effective  date of this  Agreement  and shall be payable  immediately
upon submission of an invoice therefor to Borrower by the Agent. Upon receipt by
the  Agent,  all such  amounts  shall be  promptly  distributed  by the Agent in
accordance with the terms of the Pre-Existing Loan Documents.
                                      -48-
<PAGE>
                                    Article 4
                         REPRESENTATIONS AND WARRANTIES
                         ------------------------------

                  Borrower  represents and warrants to the Banks, as of the date
hereof and as of the Closing Date, that:

                  4.1 Existence and Qualification;  Power; Compliance With Laws.
Borrower is a  corporation  duly formed,  validly  existing and in good standing
under the Laws of Delaware. Borrower is duly qualified or registered to transact
business  and is in good  stand  ing in each  other  jurisdiction  in which  the
conduct of its business or the ownership or leasing of its Properties makes such
qualification 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.  Borrower has all requisite corporate power and authority to conduct its
business,  to own and lease its  Properties and to execute and deliver each Loan
Document to which it is a Party and to perform its Obligations.  All outstanding
shares of capital stock of Borrower are duly authorized,  validly issued,  fully
paid,  non-assessable  and no  holder  thereof  has  any  enforceable  right  of
rescission under any applicable state or federal securities Laws. Borrower is in
compliance  with all Laws and other legal  requirements  applicable  to its busi
ness, 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  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.

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

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

                           (b) Violate or conflict  with any  provision  of such
         Party's charter, articles of incorporation or bylaws, as applicable;

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

                           (d) Violate any Requirement of Law applicable to such
         Party,  subject to obtaining the authorizations  from, or filings with,
         the Governmental Agencies described in Schedule 4.3;
                                      -49-
<PAGE>
                           (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  or  any  other
         Contractual  Obligation to which such Party is a party or by which such
         Party or any of its Property is bound or affected;

and none of Borrower or any Guarantor  Subsidiary 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(e), in any respect that constitutes
a Material Adverse Effect.

                  4.3 No Governmental Approvals Required. Except as set forth in
Schedule  4.3  or  previously  obtained  or  made,  no  authorization,  consent,
approval,   order,   license  or  permit  from,  or  filing,   registration   or
qualification  with, any Governmental Agency is or will be required to authorize
or permit under  applicable  Laws the  execution,  delivery and  performance  by
Borrower and the Guarantor  Subsidiaries  of the Loan Documents to which it is a
Party.  All  authorizations  from,  or filings  with,  any  Governmental  Agency
described  in Schedule 4.3 will be  accomplished  as of the Closing Date or such
other date as is specified in Schedule 4.3.

                  4.4 Subsidiaries.

                           (a)  Schedule  4.4  hereto  correctly  sets forth the
         names,  form of legal entity,  number of shares of capital stock issued
         and  outstanding,  number of shares  owned by Borrower or a  Subsidiary
         (specifying  such  owner)  and  jurisdictions  of  organization  of all
         Subsidiaries  and specifies which thereof,  as of the Closing Date, are
         Guarantor  Subsidiaries.  Except as described in Schedule 4.4, Borrower
         does not own any capital stock,  equity interest or debt security which
         is convertible, or exchangeable,  for capital stock or equity interests
         in any Person.  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  are owned of record
         and  beneficially  by  Borrower,  there  are  no  outstanding  options,
         warrants  or  other  rights  to  purchase  capital  stock  of any  such
         Subsidiary,  and all such shares or equity  interests so owned are duly
         authorized, validly issued, fully paid, non-assessable, and were issued
         in compliance  with all  applicable  state and federal  securities  and
         other Laws,  and are free and clear of all Liens,  except for Permitted
         Encumbrances.

                           (b)  Each  Subsidiary  is a  corporation  or  limited
         partnership  duly formed,  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 and to own and lease its Properties.
                                      -50-
<PAGE>
                           (c) Each  Subsidiary is in  compliance  with all Laws
         and other requirements  applicable to its business and has obtained all
         authorizations,  consents,  approvals,  orders,  licenses,  and permits
         from,  and  each  such   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 to be in such
         compliance,  obtain such authorizations,  consents,  approvals, orders,
         licenses,  and permits,  accomplish  such filings,  registrations,  and
         qualifications,  or  obtain  such  exemptions,  does not con  stitute a
         Material Adverse Effect.

                  4.5 Financial Statements.  Borrower has furnished to the Banks
(a)  the  audited   consolidated   financial  statements  of  Borrower  and  its
Subsidiaries  for the  Fiscal  Year ended  June 30,  1997 and (b) the  unaudited
consolidated  financial  statements  of Borrower  and its  Subsidiaries  for the
Fiscal  Quarter  ended March 31, 1998.  The financial  statements  des cribed in
clauses  (a) and (b)  fairly  present in all  material  respects  the  financial
condition,  results of operations and changes in financial  position of Borrower
and its  Subsidiaries as of such dates and for such periods,  in conformity with
Generally Accepted Accounting Principles, consistently applied.

                  4.6  No  Other  Liabilities;   No  Material  Adverse  Changes.
Borrower and its  Subsidiaries  do not have any  material  liability or material
contingent  liability  not  reflected or disclosed in the  financial  statements
described in Section 4.5(b),  other than liabilities and contingent  liabilities
arising in the  ordinary  course of  business  since the date of such  financial
statements.  Neither Borrower nor any of its Subsidiaries has, as of the Closing
Date,  any  Indebtedness  other than under the Loan Documents or as described on
Schedule 4.6. As of the Closing Date, no circumstance or event has occurred that
constitutes a Material  Adverse  Effect since June 30, 1997,  or, as of any date
subsequent to the Closing Date, since the Closing Date.

                  4.7 Title to  Property.  Borrower  and its  Subsidiaries  have
valid title to the Property reflected in the financial  statements  described in
Section  4.5(b),   other  than   immaterial   items  of  Property  and  Property
subsequently  sold or disposed of in the ordinary  course of business,  free and
clear of all Liens,  other than Liens  described  in Schedule  6.8 or  otherwise
permitted by Section 6.8. Schedule 6.8 identifies, without limitation, all Liens
on Property of Borrower or any of its Subsidiaries securing an obligation to pay
money.

                  4.8 Intangible Assets. Borrower and its Guarantor Subsidiaries
own, or possess  the right to use to the extent  necessary  in their  respective
businesses,  all material trademarks,  trade names, copyrights,  patents, patent
rights, computer software, licenses and other Intangible Assets that are used in
the conduct of their businesses as now 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 constitutes a Material Adverse Effect.
                                      -51-
<PAGE>
                  4.9 Public Utility Holding Company Act.  Neither  Borrower nor
any Subsidiary is a "holding company",  or a "subsidiary  company" of a "holding
company",  or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company", within the meaning of the Public Utility Holding Company
Act of 1935, as amended.

                  4.10 Litigation. Except for (a) any matter fully covered as to
subject matter and amount (subject to applicable  deductibles and retentions) by
insurance  for which the  insurance  carrier  has not  asserted  lack of subject
matter  coverage  or reserved  its right to do so, (b) any matter,  or series of
related  matters,  involving a claim against Borrower or any of its Subsidiaries
of less than $1,000,000, (c) matters of an administrative nature not involving a
claim or charge against  Borrower or any of its Subsidiaries and (d) matters set
forth  in  Sched  ule  4.10,  there  are  no  actions,  suits,   proceedings  or
investigations pending as to which Borrower or any of its Subsidiaries have been
served or have received notice 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.

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

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

                  4.13 ERISA.

                           (a) With respect to each Pension Plan:

                                    (i)  such  Pension  Plan   complies  in  all
                  material  respects with ERISA and any other applicable Laws to
                  the extent that noncompliance  could reasonably be expected to
                  have a Material Adverse Effect;

                                   (ii) such  Pension  Plan has not incurred any
                  "accumulated funding deficiency" (as defined in Section 302 of
                  ERISA)  that could  reasonably  be expected to have a Material
                  Adverse Effect;

                                  (iii) no  "reportable  event"  (as  defined in
                  Section 4043 of ERISA) has occurred  that could  reasonably be
                  expected to have a Material Adverse Effect; and
                                      -52-
<PAGE>
                                   (iv)   neither   Borrower   nor  any  of  its
                  Subsidiaries   has  engaged  in  any  non-exempt   "prohibited
                  transaction"  (as  defined in  Section  4975 of the Code) that
                  could  reasonably  be  expected  to  have a  Material  Adverse
                  Effect.

                           (b) Neither  Borrower nor any of its Subsidiaries has
         incurred  or  expects  to  incur  any   withdrawal   liability  to  any
         Multiemployer Plan that could reasonably be expected to have a Material
         Adverse Effect.

                  4.14  Regulations  G, T, U and X;  Investment  Company Act. No
part of the proceeds of any Loan hereunder will be used to purchase or carry, or
to extend credit to others for the purpose of purchasing or carrying, any Margin
Stock in violation of Regulations G, T, U and X. Neither Borrower nor any of its
Subsidiaries is or is required to be registered as an "investment company" under
the Investment Company Act of 1940.

                  4.15 Disclosure. No written statement made by a Senior Officer
to the Agent or any Bank in  connection  with this  Agreement,  or in connection
with any Loan,  as of the date  thereof  contained  any  untrue  statement  of a
material  fact or omitted a material fact  necessary to make the statement  made
not  misleading  in  light  of all the  circumstances  existing  at the date the
statement was made.

                  4.16 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  with  respect  to the  periods,  Property  or
transactions  covered by said returns, or pursuant to any assessment received by
Borrower or any of its Subsidiaries, except (a) such taxes, if any, as are being
contested  in good faith by  appropriate  proceedings  and as to which  adequate
reserves have been  established and maintained and (b) immaterial  taxes so long
as no  material  item  or  portion  of  Property  of  Borrower  or  any  of  its
Subsidiaries is in jeopardy of being seized, levied upon or forfeited.

                  4.17  Strategic  Plan.  The  Strategic  Plan was  prepared  in
accordance with Borrower's customary procedures therefor and, in the case of the
first year's budget,  was approved by Borrower's  board of directors and, in the
case of subsequent  years,  represents the final version  thereof for such years
that was reviewed by Borrower's board of directors.

                  4.18 Hazardous  Materials.  To the best knowledge of Borrower,
no condition exists that violates any Hazardous  Material Law affecting any Real
Property  except  for such  violations  that  would not  individually  or in the
aggregate have a Material Adverse Effect. No Real Property now owned by Borrower
or any of its Subsidiaries,  or any portion thereof,  is or has been utilized by
Borrower  or any of  its  Subsidiaries  as a site  for  the  manufacture  of any
Hazardous  Materials.  To the  extent  that any  Hazardous  Materials  are used,
generated or stored by Borrower or any of its Subsidiaries on any Real Property,
or  transported  to or  from  such  Real  Property  by  Borrower  or  any of its
Subsidiaries, such use, generation, storage and transportation are in compliance
in all material respects with all Hazardous Materials Laws.
                                      -53-
<PAGE>
                  4.19 Year 2000  Compliance.  Borrower  has adopted a plan (the
"Year 2000 Plan") which, in the judgment of senior management of Borrower,  will
adequately address the operational and financial issues (the "Year 2000 Issues")
arising from data in Borrower's  computer-based  data processing and information
systems  respecting  dates  subsequent  to December 31, 1999 (and, to the extent
relevant,  arising from such data in the data processing systems of its material
customers and vendors).  The Year 2000 Plan is in the process of implementation.
Borrower  believes  that it will be  implemented  in all  material  respects  by
December  31,  1999  and,  as a  result  thereof,  in the  judgement  of  senior
management  of  Borrower,  Year  2000  Issues  are not  expected  to result in a
Material Adverse Effect.
                                      -54-
<PAGE>
                                    Article 5
                              AFFIRMATIVE COVENANTS
                              ---------------------
                           (OTHER THAN INFORMATION AND
                           ---------------------------
                             REPORTING REQUIREMENTS)
                             -----------------------

                  So long as any Advance remains unpaid, or any other Obligation
remains unpaid or unperformed,  or any portion of a Commitment remains in force,
Borrower shall,  and shall cause each of its  Subsidiaries  to, unless the Agent
(with the written approval of the Majority Banks) otherwise consents:

                  5.1  Payment  of Taxes  and  Other  Potential  Liens.  Pay and
discharge  promptly all taxes,  assessments and  governmental  charges or levies
imposed upon any of them, upon their respective Property or any part thereof and
upon  their  respective  income or  profits  or any part  thereof,  except  that
Borrower and its  Subsidiaries  shall not be required to pay or cause to be paid
(a) any tax,  assessment,  charge or levy that is not yet past due,  or is being
contested  in good  faith by  appropriate  proceedings  so long as the  relevant
entity has  established and maintains  adequate  reserves for the payment of the
same or (b) any immaterial tax, assessment,  governmental charge or levy so long
as (i) no  material  item or  portion of  Property  of  Borrower  and any of its
Subsidiaries,  taken as a whole, is in jeopardy of being seized,  levied upon or
forfeited  and (ii) the  failure to make such  payment  would not  constitute  a
Material Adverse Effect.

                  5.2  Preservation  of Existence.  Preserve and maintain  their
respective  existences in the  jurisdiction  of their formation and all material
authorizations,  rights, franchises,  privileges,  consents,  approvals, orders,
licenses,  permits,  or  registrations  from any  Governmental  Agency  that are
necessary for the transaction of their respective  business  ("Authorizations"),
except  where the failure to so  preserve  and  maintain  the  existence  of any
Subsidiary  and such  Authorizations  would not  constitute  a Material  Adverse
Effect and except that a merger  permitted by Section 6.3 shall not constitute a
violation  of this  covenant;  and  qualify  and remain  qualified  to  transact
business in each  jurisdiction in which such qual ification is necessary in view
of their  respective  business or the  ownership or leasing of their  respective
Properties  except where the failure to so qualify or remain qualified would not
constitute a Material Adverse Effect.

                  5.3 Maintenance of Properties.  Maintain, preserve and protect
all of their  then owned  respective  depreciable  Properties  in good order and
condition,  subject to wear and tear in the ordinary course of business, and not
permit any waste of their  respective  Properties,  except  that the  failure to
maintain, preserve and protect a particular item of depreciable Property that is
not of significant value, either  intrinsically or to the operations of Borrower
and its Subsidiaries, taken as a whole, shall not constitute a violation of this
covenant.
                                      -55-
<PAGE>
                  5.4 Maintenance of Insurance. Maintain liability, casualty and
other  insurance   (subject  to  customary   deductibles  and  retentions)  with
responsible  insurance  companies  in such  amounts and against such risks as is
carried  by  responsible  companies  engaged in  similar  businesses  and owning
similar  assets in the  general  areas in which  Borrower  and its  Subsidiaries
operate.

                  5.5 Compliance With Laws.  Comply,  within the time period, if
any, given for such compliance by the relevant  Governmental  Agency or Agencies
with  enforcement  authority,  with all Requirements of Law  noncompliance  with
which  constitutes  a Material  Adverse  Effect,  except that  Borrower  and its
Subsidiaries  need not comply with a Require ment of Law then being contested by
any of them in good faith by appropriate proceedings.

                  5.6 Inspection  Rights.  Upon reasonable  notice,  at any time
during  regular  business  hours  and as  often as  requested  (but not so as to
materially  interfere with the business of Borrower or any of its Subsidiaries),
permit  the  Agent  or  any  Bank,  or  any   authorized   employee,   agent  or
representative thereof, 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,  key employees or
accountants  and, upon request,  furnish  promptly to the Agent or any Bank true
copies of all financial  information made available to the board of directors or
audit committee of the board of directors of Bor rower.

                  5.7  Keeping of Records and Books of  Account.  Keep  adequate
records and books of account reflecting all financial transactions in conformity
with Generally Accepted  Accounting  Principles,  consistently  applied,  and in
material conformity with all applicable  requirements of any Governmental Agency
having regulatory jurisdiction over Borrower or any of its Subsidiaries.

                  5.8 Compliance With Agreements. Promptly and fully comply with
all Contractual  Obligations under all material agreements,  indentures,  leases
and/or  instruments  to which any one or more of them is a party,  whether  such
material  agreements,  indentures,  leases  or  instruments  are  with a Bank or
another Person, except for any such Contractual  Obligations (a) the performance
of which  would  cause a Default or (b) then being  contested  by any of them in
good faith by  appropriate  proceedings  or if the  failure to comply  with such
agreements,  indentures,  leases or  instruments  does not constitute a Material
Adverse Effect.

                  5.9 Use of Proceeds.  Use the proceeds of Loans solely for (a)
retirement of outstanding  Indebtedness  under the Substituted Credit Facilities
and (b) general  working  capital  and  corporate  purposes of Borrower  and its
Subsidiaries,  provided  that in no event shall the proceeds of a Loan under the
Line A  Commitment  be used to  repay  an  outstanding  Loan  under  the  Line B
Commitment.
                                      -56-
<PAGE>
                  5.10  New   Guarantor   Subsidiaries;   Release   of   Certain
Guaranties.  Cause each of its Subsidiaries  which hereafter becomes a Guarantor
Subsidiary  to  immediately  execute and deliver to the Agent an  instrument  of
joinder of the  Subsidiary  Guaranty.  Should the stock of a Subsidiary  holding
only the  assets of the Glen  Harbor  Project  or the  Spring  Creek  Project be
transferred or such a Subsidiary be disposed of by merger in accordance herewith
to an entity that is not an Affiliate of Borrower,  then,  subject to receipt of
reaffirmations of other Guarantor  Subsidiaries and such other  documentation as
the Agent may reasonably  request,  the Banks will release such  Subsidiary from
the Subsidiary Guaranty.

                  5.11  Hazardous  Materials  Laws.  Keep and  maintain all Real
Property and each portion  thereof in compliance  in all material  respects with
all applicable Hazardous Materials Laws and promptly notify the Agent in writing
of (a) any and all material enforcement,  cleanup, removal or other governmental
or  regulatory  actions  instituted,  completed  or  threatened  in writing by a
Governmental Agency pursuant to any applicable Hazardous Materials Laws, (b) any
and all  material  claims made or  threatened  in writing by any Person  against
Borrower relating to damage, contribution, cost recovery,  compensation, loss or
injury  resulting  from any Hazardous  Materials and (c) discovery by any Senior
Officer of Borrower of any material occurrence or condition on any real property
adjoining  or in the vicinity of such Real  Property  that could  reasonably  be
expected to cause such Real  Property  or any part  thereof to be subject to any
restrictions on the ownership,  occupancy,  trans ferability or use of such Real
Property under any applicable Hazardous Materials Laws.
                                      -57-
<PAGE>
                                    Article 6
                               NEGATIVE COVENANTS
                               ------------------

                  So long as any Advance remains unpaid, or any other Obligation
remains unpaid or unperformed,  or any portion of a Commitment remains in force,
Borrower shall not, and shall not permit any of its  Subsidiaries to, unless the
Agent  (with the  written  approval  of the  Majority  Banks or, if  required by
Section 11.2, of all of the Banks) otherwise consents:

                  6.1 Prepayment of Indebtedness.  Pay any principal or interest
on  any  Indebtedness  of  Borrower  or  any of  its  Subsidiaries  (other  than
Indebtedness under the Notes) prior to the date when due, or make any payment or
deposit with any Person that has the effect of providing for the satisfaction of
any Indebtedness of Borrower or any of its  Subsidiaries  prior to the date when
due, in each case if an Event of Default then exists or would result therefrom.

                  6.2 Payment of Subordinated Obligations. Pay any (a) principal
(including  sinking fund  payments) or any other  amount  (other than  scheduled
interest  payments)  with  respect  to any  Subordinated  Obligation  except  as
expressly  permitted in the last  sentence of this Section 6.2, or (b) scheduled
interest on any  Subordinated  Obligation,  if an Event of Default  described in
Sections  9.1(a) or 9.1(b)  then  exists or would  result  therefrom;  provided,
however,  that this  Section 6.2 is in no way in  limitation  of any  additional
rights the Banks may have to block  payments  with  respect to any  Subordinated
Obligation.  The principal amount of Subordinated  Obligations may be prepaid or
redeemed  but only (A) if (i) an Event of Default  does not then exist and would
not result  therefrom and (ii) Borrower has not received written notice from the
Agent or a Bank that a Default has occurred and such  Default  remains  uncured;
and (B) to the extent of an amount equal to the sum of (x) the net cash proceeds
from the  issuance by Borrower  of its capital  stock (that is not  Disqualified
Stock)  after  January 1, 1994 plus (y) the  following  percentages  of new cash
Subordinated  Obligation  borrowings by Borrower after January 1, 1994, provided
that such  borrowings  have a maturity  no  earlier  than one (1) year after the
Maturity Date.

                                                   Principal Amount
               Percentage                          Borrowed in Cash
               ----------                          ----------------
                  -0-                              first $50,000,000

                  50%                              next $50,000,000

                 100%                              amounts over $100,000,000
                                      -58-
<PAGE>
                  6.3 Mergers and Sale of Assets.

                           (a)  Merge or  consolidate  with or into any  Person,
         except mergers and  consolidations  of a Subsidiary of Borrower  (other
         than a Coventry  Subsidiary)  into  Borrower or a Guarantor  Subsidiary
         (other than a Coventry Subsidiary) with, if applicable, Borrower as the
         surviving  entity,  provided that Borrower and each of its Subsidiaries
         has executed  such  amendments  to the Loan  Documents as the Agent may
         reasonably  determine are appropriate as a result of such merger.  This
         Section 6.3(a) shall not restrict a merger implemented solely to effect
         a   Disposition   specified  in  clause  (e)  of  the   definition   of
         "Disposition."

                           (b) Make any  Disposition  of its Property other than
         the  sale of  Property  for cash  and/or  other  Property  which in the
         aggregate  have  the  fair  equivalent  value  to  the  Property  sold;
         provided, however, that no Property shall be sold by way of Disposition
         (nor shall there be any related  sales of Property) if the value of the
         Property sold is in excess of $5,000,000.

                           (c) Notwithstanding the foregoing  provisions of this
         Section 6.3 or any other  provision of this  Agreement,  the  following
         Transfers of Property (including Cash) for reasonably  equivalent value
         are not restricted:

                         (i) by and among  Borrower and any of its  wholly-owned
                    Subsidiaries that are not Coventry Subsidiaries; or

                         (ii) by and among the Coventry Subsidiaries.

         Notwithstanding  the  foregoing  provisions  of this Section 6.3 or any
         other  provision of this  Agreement,  Transfers of Property  (including
         Cash) by any directly or indirectly wholly-owned Subsidiary of Borrower
         to its parent corporation(s) are not restricted.

                  6.4  Hostile  Tender  Offers.  Make any offer to  purchase  or
acquire,  or consummate a purchase or acquisition  of, 5% or more of the capital
stock of any  corporation or other business  entity if the board of directors or
management of such corporation or business entity has notified  Borrower that it
opposes  such  offer or  purchase  and such  notice  has not been  withdrawn  or
superseded.

                  6.5  Distributions.  As to Borrower  and any  Subsidiaries  of
Borrower  which  are  not  wholly-owned   Subsidiaries  of  Borrower,  make  any
Distribution,  whether from capital, income or otherwise, and whether in Cash or
other Property,  unless (a) such  Distribution  could have been made on the last
day of the most recently  ended Fiscal  Quarter  without  causing a violation of
Section 6.11 as of such last day of such Fiscal Quarter and (b) in the case of a
Distribution  by Borrower  (i) an Event of Default does not then exist and would
not result  therefrom and (ii)  Borrower has not  theretofore  received  written
notice from the Agent or a Bank that a Default  has  occurred  and such  Default
remains uncured, provided however
                                      -59-
<PAGE>
that a Distribution may be made if such  Distribution  constitutes a dividend on
capital stock of Borrower that was otherwise  permissible to be made at the time
it was declared  payable by  Borrower's  board of directors  and that is in fact
paid within 60 days after such declaration.

                  6.6 ERISA.

                           (a) At any time, permit any Pension Plan to:

                                   (i)  engage in  any  non-exempt  "prohibited
                     transaction" (as defined in Section 4975 of the Code);

                                   (ii) fail to comply  with  ERISA or any other
                  applicable  Laws  to  the  extent  that  noncompliance   could
                  reasonably be expected to have a Material Adverse Effect;

                                  (iii)  incur any material "accumulated funding
                  deficiency" (as defined in Section 302 of ERISA); or

                                   (iv)  terminate  in any manner,  which,  with
                  respect  to each  event  listed  above,  could  reasonably  be
                  expected to result in a Material Adverse Effect.

                           (b)  Withdraw,  completely  or  partially,  from  any
         Multiemployer  Plan if to do so could  reasonably be expected to result
         in a Material Adverse Effect.

                  6.7 Change in Nature of Business.  Make any material change in
the nature of the business of Borrower and its  Subsidiaries,  taken as a whole.
In addition,  Borrower shall not (except  through a Subsidiary)  engage,  in any
material respect,  in business activities other than acting as a holding company
for its Subsidiaries.  In addition,  no Coventry Subsidiary shall engage, in any
material respect, in business  activities other than conventional  single-family
residential   home   development   and  related   activities   (not  to  include
age-restricted planned community residential development).

                  6.8 Liens.  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, except:

                           (a)  Permitted Encumbrances;

                           (b) Liens  that may exist from time to time under the
         Loan Documents;
                                      -60-
<PAGE>
                           (c) existing Liens  disclosed in Schedule 6.8 and any
         renewals or extensions  thereof;  provided that the obligations secured
         or benefited thereby are not increased;

                           (d) Liens on Real Property  acquired  (whether before
         or after the Closing Date) by Borrower or any of its Subsidiaries  that
         both (i) secure  solely  Non-Recourse  Debt and (ii) (A) secure  solely
         purchase money  indebtedness  with respect to the Real Property  (which
         indebtedness,  within  the  limitations  set out below,  may  include a
         profit or a revenue sharing  component  arising from such Real Property
         for the benefit of the seller) or (B)  encumbered  the Real Property at
         the time of its  acquisition  by  Borrower  or its  Subsidiary  or were
         placed  thereon  to  refinance  or borrow an amount up to the  purchase
         price within 90 days after the acquisition (which indebtedness,  within
         the  limitations  set out  below,  may  include  a profit  or a revenue
         sharing  component  arising from such Real  Property for the benefit of
         the seller).  Profit or revenue  sharing rights in favor of a seller of
         Real Property shall be  permissible  hereunder only if the aggregate of
         Borrower's Real Property  purchase cost and direct  construction  costs
         for all Real  Property then subject to such rights does not, when added
         to any amount calculated under Sections 6.8(e),(g) and (h), at any time
         exceed 10% of Tangible Net Worth;

                           (e)  Liens  on   Administrative   Property  owned  by
         Borrower or any of its Subsidiaries that (i) secure solely Non-Recourse
         Debt,  (ii) each secure a loan of no more than 150% of the direct costs
         of construction of constructing non-residential improvements located on
         the applicable  Administrative  Property, which loan is procured within
         three (3) months following the issuance of the final occupancy  permits
         for such improvements, provided that any amounts secured by such Liens,
         together  with amounts  calculated  under the last  sentence of Section
         6.8(d),  under Section 6.8(g) and under Section 6.8(h),  do not, in the
         aggregate, exceed 10% of Tangible Net Worth at any time. Administrative
         Property shall mean a building or buildings (and a reasonable amount of
         Real  Property  under each such  building not to exceed ten (10) acres)
         used  primarily  for the  administrative  purposes of  Borrower  and it
         Subsidiaries in the ordinary course of the their business.

                           (f) [Intentionally Left Blank]

                           (g) Liens that may exist on  property  of Borrower or
         one of its  Subsidiaries  that has  been  used in the  construction  of
         improvements on real property that is not then owned by Borrower or one
         of its Subsidiaries,  or Liens on such real property, provided that (i)
         Borrower or a Guarantor Subsidiary holds a written contractual or other
         legal right to acquire  title to such real  property  (or to direct the
         acquisition  of such  title) and  intends to do so and (ii) the cost to
         Borrower or the Subsidiary of any and all such  improvements,  together
         with the amounts  calculated  under the last sentence of Section 6.8(d)
         and under Sections 6.8(e) and (h), do not, in the aggregate, exceed 10%
         of Tangible Net Worth at any time; and
                                      -61-
<PAGE>
                           (h) Liens otherwise  permissible under Section 6.8(d)
         with  respect  to  Real  Property  owned  by  Borrower  or  one  of its
         Subsidiaries on which Real Property  improvements have been constructed
         by Borrower or a  Subsidiary,  provided  that the cost to Borrower or a
         Subsidiary of such  improvements,  together with the amounts calculated
         under the last sentence of Section 6.8(d) and under Sections 6.8(e) and
         (g) do not, in the  aggregate,  exceed 10% of Tangible Net Worth at any
         time.

                  6.9  Indebtedness.  Create,  incur or assume any  Indebtedness
(other than accrual of interest)  except the  following but only if a Default or
Event of Default does not then exist and would not result therefrom:

                           (a)  Non-Recourse  Debt for which  the  corresponding
         Lien is otherwise  permissible  under  Section  6.8(d) (e), (g) or (h),
         provided that such  Indebtedness is in compliance with the requirements
         of such Section,

                           (b)  [Intentionally Left Blank],

                           (c) Indebtedness incurred pursuant to commitments and
         proposed  commitments  therefor  that are  identified  on Schedule  6.9
         (including  replacements of such commitments),  but only to the maximum
         amount available shown on such Schedule,

                           (d)  Indebtedness   that   constitutes   Subordinated
         Obligations so long as no principal repayment (or any nature of reserve
         therefor) is due until at least one (1) year after the Maturity Date,

                           (e)  Indebtedness outstanding under the Notes,

                           (f)  Indebtedness  constituting  a refinancing on not
         materially less favorable  terms of  Indebtedness  permitted under this
         Section 6.9,

                           (g)  Indebtedness    constituting     reimbursement
         obligations  incurred with respect to standby  letters of credit issued
         in the ordinary course of Borrower's and its  Subsidiaries  real estate
         development business,

                           (h)  Indebtedness  by  and  among  Borrower  and  its
         Subsidiaries,  so long as such Indebtedness is not otherwise restricted
         hereunder  (such as under  Section  6.16(d)  with  respect  to  certain
         Investments), and

                           (i) Unsecured  Indebtedness incurred by Borrower (and
         any guaranty of such  Indebtedness by a Subsidiary),  provided that any
         such unsecured  Indebtedness having an initial maturity of one (1) year
         or less and outstanding  under either a working  capital  facility or a
         bid line of credit shall be limited to an aggregate
                                      -62-
<PAGE>
         principal  amount  outstanding  at any  one  time of  $25,000,000  and,
         provided further, that a guaranty of any such unsecured Indebtedness by
         one or more  Subsidiaries  shall be permissible  only if such unsecured
         Indebtedness constitutes a loan of money (or a reimbursement obligation
         under a letter of credit) and only if the credit instrument  evidencing
         such  unsecured  Indebtedness  expressly  states that the funds  loaned
         thereunder are being made available to Borrower  solely for the general
         working   capital  and   corporate   purposes   of  Borrower   and  its
         Subsidiaries, without any portion thereof being required to be used for
         any particular purpose.

                  6.10 Transactions with Affiliates.  Enter into any transaction
of any kind  with any  Affiliate  of  Borrower  other  than (a)  salary,  bonus,
employee stock option and other  compensation  arrangements and  indemnification
arrangements with directors or officers in the ordinary course of business,  (b)
transactions  between or among  Borrower and its Guarantor  Subsidiaries  (other
than  Coventry  Subsidiaries),  (c)  Investments  in  Subsidiaries  specifically
permitted in Section  6.16(d)(ii) and (d) transactions on overall terms at least
as favorable to Borrower and its Guarantor  Subsidiaries as would be the case in
an arm's-length transaction between unrelated parties of equal bargaining power.

                  6.11 Tangible Net Worth.  Permit Tangible Net Worth, as of the
last day of any Fiscal  Quarter ending on or after December 31, 1997, to be less
than  the  sum of  (a)  $282,620,000  plus  (b) an  amount  equal  to 75% of the
cumulative  Net Income earned in all Fiscal  Quarters  ending after December 31,
1997 (with no deduction for a net loss in any such Fiscal Quarter),  plus (c) an
amount  equal to 50% of the  aggregate  cumulative  increases  in  Stockholders'
Equity  after  December  31, 1997 by reason of the  issuance and sale of capital
stock by Borrower  (including upon any conversion or exchange of debt securities
of Borrower into such capital stock).

                  6.12 Consolidated Fixed Charge Coverage.

                           (a) Permit the  Consolidated  Fixed  Charge  Coverage
         Ratio, as of the last day of any Fiscal Quarter ending on or after June
         30, 1995, to be less than 1.75:1.00, or

                           (b) Permit, as of the last day of any two consecutive
         Fiscal Quarters, both (i) the Leverage Ratio to be greater than 2.00 to
         1.00 and (ii) the  Consolidated  Fixed Charge Coverage Ratio to be less
         than 2.50 to 1.00, or

                           (c) Permit, as of the last day of any two consecutive
         Fiscal Quarters, both (i) the Leverage Ratio to be greater than 2.25 to
         1.00 and (ii) the  Consolidated  Fixed Charge Coverage Ratio to be less
         than 2.75 to 1.00.

                  6.13 Debt to Net Worth.  Permit the Leverage  Ratio, as of any
Fiscal  Quarter  ending on or after March 31, 1998, to be greater than the ratio
set forth below opposite the period during which such Fiscal Quarter ends:
                                      -63-
<PAGE>
                                                            Leverage
                    Period                                   Ratio
                    ------                                   -----
               Jan. 1, 1998 through                         2.50:1.00
               March 31, 1999

               April 1, 1999 through                        2.35:1.00
               March 31, 2000

               April 1, 2000 and thereafter                 2.15:1.00

                  6.14  Adjusted  Senior Debt to Net Worth.  Permit the ratio of
Adjusted Senior Debt to Tangible Net Worth, each as of any Fiscal Quarter ending
on or after  March 31,  1998,  to be  greater  than the  ratio  set forth  below
opposite the period during which such Fiscal Quarter ends:

                    Period                                   Ratio
                    ------                                   -----

               Jan. 1, 1998 through                         1.50:1.00
               March 31, 1999

               April 1, 1999 through                        1.40:1.00
               March 31, 2000

               April 1, 2000 and                            1.30:1.00
               thereafter

                  6.15 Liquidity. Permit, as of the last day of any Fiscal Year,
beginning  June 30, 1995,  the ratio of Adjusted  EBIDTA for such Fiscal Year to
Specified  Charges for such Fiscal  Year to be less than (a)  0.50:1.00  for the
Fiscal Year ending June 30, 1995, (b) 0.75:1.00 for the Fiscal Years ending June
30, 1996 and 1997,  (c)  0.65:1.00 for the Fiscal Years ending June 30, 1998 and
1999 or (d) 0.75:1.00  for the Fiscal Years ending June 30, 2000 or  thereafter,
provided  that any such failing  shall not  constitute an Event of Default under
Section 9.1(c) unless and until  Borrower shall also permit,  as of the last day
of the immediately  succeeding Fiscal Quarter,  the ratio of Adjusted EBIDTA for
the four (4) Fiscal  Quarter  period then ending to  Specified  Charges for such
four (4) Fiscal Quarter period to also be less than said specified ratio.

                  6.16  Investments.  Make or suffer  to exist  any  Investment,
other than:

                           (a)  Investments in existence on the Closing Date and
         disclosed on Schedule 6.16;
                                      -64-
<PAGE>
                           (b) Investments consisting of Cash and Cash 
         Equivalents;

                           (c)  Investments  consisting  of  or  evidencing  the
         extension of credit to customers  of Borrower and its  Subsidiaries  in
         the  ordinary  course  of  business  and any  Investments  received  in
         satisfaction or partial satisfaction thereof;

                           (d)   Investments   of   Borrower   in   any  of  its
         Subsidiaries  and  Investments of any Subsidiary in Borrower or another
         Subsidiary   provided  that  (i)  the  book  value  of  Investments  in
         Subsidiaries  that  engage in  activities  other than the  acquisition,
         development,  construction or financing of residential real estate as a
         material portion of their business  activities shall not exceed, in the
         aggregate at any date of  determination,  more than 10% of Tangible Net
         Worth as of the end of the then most recently  ended Fiscal Quarter and
         (ii)  the  book  value  of  Investments  in  Subsidiaries  that are not
         Guarantor  Subsidiaries  shall not exceed, in the aggregate at any date
         of  determination,  $5,000,000.  All  references  to  "Investments"  in
         clauses (i) and (ii) shall specifically include guaranties, as provided
         in the  definition of  "Investments".  The  termination  or release (in
         whole or in part) of any such guaranty that is treated as an Investment
         (in the  absence of payment  thereunder)  shall  thereupon  result in a
         corresponding reduction in the measured amount of such Investment;

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

                           (f) Investments  representing all or a portion of the
         sales price for Property sold to another Person.

                           (g) Investments (i) consisting of readily  marketable
         securities  actively  traded on a public  exchange  or (ii) in  Persons
         (other  than  Subsidiaries),  each of  which  Persons  does  not,  as a
         material portion of its business, engage in activities other than those
         related to the acquisition,  development,  construction or financing of
         residential real estate, provided that (A) the cumulative dollar amount
         of  Investments  under clause (i) (net of  cumulative  cash payments in
         respect of such Investments) shall at no time exceed $2,000,000 and (B)
         the cumulative  dollar amount of Investments under clauses (i) and (ii)
         (net of cumulative cash payments in respect of such Investments)  shall
         at no time exceed $10,000,000.

                  6.17 Unentitled Land.

                           (a) Permit  the total  amount of  Borrower's  and its
         Subsidiaries'  Cash  investment in Unentitled  Land that (i) is part of
         Current  Operating  Projects other than Coventry Homes Projects or (ii)
         is part of a Coventry  Homes  Project for which home sale closings have
         commenced  (including  in either  case,  without  limitation,  all Cash
         expenditures  reasonably  allocated  to the  acquisition,  development,
         maintenance and
                                      -65-
<PAGE>
         holding of such Unentitled Land) to exceed 25% of Tangible Net Worth at
         any time on or after June 30, 1995; or

                           (b) Permit  the total  amount of  Borrower's  and its
         Subsidiaries Cash investment in Unentitled Land that (i) is not part of
         Current Operating  Projects or (ii) is part of a Coventry Homes Project
         for which  home sale  closings  have not yet  commenced  (including  in
         either  case,  without  limitation,  all Cash  expenditures  reasonably
         allocated to the acquisition,  development,  maintenance and holding of
         such  Unentitled  Land) to exceed 10% of Tangible Net Worth at any time
         on or after June 30, 1995.

                  6.18 Unsold Homes in Production.  For any two (2)  consecutive
Fiscal Quarters, beginning with the Fiscal Quarter ending March 31, 1995:

                           (a) Permit the number of Unsold Homes (other than (i)
         Unsold Homes that are part of the Coventry Homes Projects,  (ii) Unsold
         Homes  included in development  projects with respect to which,  on the
         date of  determination,  12 months has not elapsed since the closing of
         the sale of the first  housing  unit and (iii)  Unsold Homes within any
         Current  Operating  Project that are then being used as sales models or
         as vacation apartments for marketing purposes (collectively,  "Excluded
         Unsold  Homes")),  as of the end of such Fiscal  Quarters to exceed the
         applicable  percentage  shown below of the number of housing  unit sale
         closings of Borrower and its  Guarantor  Subsidiaries  (other than sale
         closings of housing units that are Excluded Unsold Homes) that occurred
         in the twelve (12) months immediately prior to each such Fiscal Quarter
         end:

                                                  Applicable
               Any Fiscal Quarter Ending          Percentage
               -------------------------          ----------

                    September 30th                    35%

                    December 31st                     35%

                    March 31st                        30%

                    June 30th                         25%; or

                    (b) Permit  the number of Unsold  Homes that are part of the
       Coventry Homes  Projects as of the end of such Fiscal  Quarters to exceed
       25% of the number of housing  unit sale  closings in the  Coventry  Homes
       Projects  that  occurred in the twelve (12) months  immediately  prior to
       each such Fiscal Quarter end.

                  6.19 Coventry Assets. Permit, as of the last day of any Fiscal
Quarter,  beginning June 30, 1995, the ratio of Coventry  Assets to Consolidated
Total Assets to be
                                      -66-
<PAGE>
greater  than  0.20:1.00  or the ratio of Coventry  Land Assets to  Consolidated
Total Assets to be greater than 0.15:1.00.
                                      -67-
<PAGE>
                                    Article 7
                    INFORMATION AND REPORTING REQUIREMENTS
                    --------------------------------------

              7.1  Financial  and Business  Information.  So long as any Advance
remains unpaid,  or any other Obligation  remains unpaid or unperformed,  or any
portion of a Commitment remains in force, Borrower shall, unless the Agent (with
the written approval of the Majority Banks) otherwise  consents,  deliver to the
Agent and the Banks, at Borrower's sole expense:

                    (a) As soon as practicable,  and in any event within 60 days
       after  the end of each  Fiscal  Quarter  (other  than the  fourth  Fiscal
       Quarter  in any  Fiscal  Year),  (i) the  consolidated  balance  sheet of
       Borrower and its  Subsidiaries  as at the end of such Fiscal  Quarter and
       the consolidated statement of operations for each Fiscal Quarter, and its
       statement  of cash flows for the  portion  of the Fiscal  Year ended with
       such Fiscal Quarter and (ii) the  consolidating  (in accordance with past
       consolidating  practices of Borrower)  balance  sheets and  statements of
       operations  as at and for the  portion of the Fiscal Year ended with such
       Fiscal Quarter, all in reasonable detail. Such financial statements shall
       be certified  by a Senior  Officer of Borrower as fairly  presenting  the
       financial condition, results of operations and cash flows of Borrower and
       its  Subsidiaries  in  accordance  with  Generally  Accepted   Accounting
       Principles (other than footnote disclosures), consistently applied, as at
       such date and for such periods,  subject only to normal year-end accruals
       and audit adjustments;

                    (b) As soon as practicable, and in any event within 120 days
       after the end of each Fiscal Year  (including the Fiscal Year ending June
       30,  1995),  (i) the con  solidated  balance  sheet of  Borrower  and its
       Subsidiaries  as at the  end of such  Fiscal  Year  and the  consolidated
       statements of operations,  shareholders'  equity and cash flows,  in each
       case of  Borrower  and its  Subsidiaries  for such  Fiscal  Year and (ii)
       consolidating  (in  accordance  with  past  consolidating   practices  of
       Borrower) balance sheets and statements of operations, in each case as at
       and for the Fiscal Year, all in reasonable  detail. In the case of clause
       (i),  such  financial  statements  shall be prepared in  accordance  with
       Generally Accepted Accounting Principles,  consistently applied, and such
       consolidated   balance  sheet  and   consolidated   statements  shall  be
       accompanied  by a  report  and  opinion  of KPMG  Peat  Marwick  or other
       independent  public  accountants  of  recognized   standing  selected  by
       Borrower and reasonably  satisfactory to the Majority Banks, which report
       and opinion  shall be  prepared in  accordance  with  generally  accepted
       auditing  standards  as at such  date,  and shall not be  subject  to any
       qualifications  or  exceptions  as to the  scope of the  audit nor to any
       other  qualification or exception  reasonably  determined by the Majority
       Banks  in  their  good  faith  business  judgment  to be  adverse  to the
       interests of the Banks.  Such  accountants'  report and opinion  shall be
       accompanied  by a certificate  stating  that,  in making the  examination
       pursuant to gener ally  accepted  auditing  standards  necessary  for the
       certification  of  such  financial   statements  and  such  report,  such
       accountants have obtained no knowledge of any
                                      -68-
<PAGE>
       Default  or, if, in the  opinion of such  accountants,  any such  Default
       shall exist,  stating the nature and status of such Default,  and stating
       that such accountants have reviewed Borrower's financial  calculations as
       at the end of such Fiscal Year (which shall  accompany such  certificate)
       under Sections 6.11 through 6.15, have read such Sections  (including the
       definitions  of all defined terms used therein) and that nothing has come
       to the attention of such  accountants  in the course of such  examination
       that would  cause them to believe  that the same were not  calculated  by
       Borrower  in the  manner  prescribed  by this  Agreement.  In the case of
       clause (ii),  such  financial  statements  shall be certified by a Senior
       Officer of Borrower as fairly presenting the financial condition, results
       of  operations  and  cash  flows  of  Borrower  and its  Subsidiaries  in
       accordance  with Generally  Accepted  Accounting  Principles  (other than
       footnote disclosures), consistently applied, as at such date and for such
       periods;

                    (c) As soon as practicable,  and in any event within 60 days
       after the  commencement  of each Fiscal Year  (including  the Fiscal Year
       beginning  July 1, 1995), a budget by Fiscal Quarter for that Fiscal Year
       and a strategic plan by Fiscal Year for the three Fiscal Years  following
       the  budgeted  year,  including  for  the  Fiscal  Year  just  commenced,
       projected  consolidated  balance  sheets,  statements of  operations  and
       statements of cash flow and, for the next three succeeding  Fiscal Years,
       projected   consolidated  condensed  balance  sheets  and  statements  of
       operations  and cash  flow,  of  Borrower  and its  Subsidiaries,  all in
       reasonable detail;

                    (d) Promptly after request by the Agent or any Bank,  copies
       of any detailed  audit  reports,  management  letters or  recommendations
       submitted to the board of directors (or the audit  committee of the board
       of directors) of Borrower by independent  accountants in connection  with
       the  accounts  or books of Borrower  or any of its  Subsidiaries,  or any
       audit of any of them;

                    (e) Promptly  after the same are  available,  copies of each
       annual  report,   proxy  or  financial   statement  or  other  report  or
       communication  sent to the  shareholders  of Borrower,  and copies of all
       annual, regular, periodic and special reports and registration statements
       which  Borrower may file or be required to file with the  Securities  and
       Exchange Commission under Sections 13 or 15(d) of the Securities Exchange
       Act of 1934 and not  otherwise  required  to be  delivered  to the  Banks
       pursuant to other provisions of this Section 7.1;

                    (f) Except as prohibited by Law,  promptly  after request by
       the Agent or any Bank,  copies of any other report or other document that
       was filed by Borrower or any of its  Subsidiaries  with any  Governmental
       Agency;

                    (g) Promptly upon a Senior Officer  becoming  aware,  and in
       any event  within  five (5) Banking  Days after  becoming  aware,  of the
       occurrence  of any (i)  "report  able  event" (as such term is defined in
       Section 4043 of ERISA) or (ii) "prohibited  transaction" (as such term is
       defined in Section 406 of ERISA or Section 4975 of the
                                      -69-
<PAGE>
       Code)  in  connection   with  any  Pension  Plan  or  any  trust  created
       thereunder, telephonic notice specifying the nature thereof, and, no more
       than five (5) Banking Days after such telephonic  notice,  written notice
       again  specifying the nature thereof and specifying  what action Borrower
       or 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;

                    (h) As soon as  practicable,  and in any  event  within  two
       Banking Days after a Senior Officer becomes aware of the existence of any
       condition  or  event  which  constitutes  a  Default,  telephonic  notice
       specifying the nature and period of existence thereof,  and, no more than
       two Banking  Days after such  telephonic  notice,  written  notice  again
       specifying the nature and period of existence thereof and specifying what
       action Borrower or any of its  Subsidiaries are taking or propose to take
       with respect thereto;

                    (i) Promptly upon a Senior  Officer  becoming aware that (i)
       any Person  commenced a legal  proceeding with respect to a claim against
       Borrower or any of its Subsidiaries that is $500,000 or more in excess of
       the amount thereof that is fully covered by insurance,  (ii) any creditor
       or lessor under a written credit agreement or material lease has asserted
       a default  thereunder on the part of Borrower or any of its Subsidiaries,
       (iii) any Person  commenced a legal  proceeding  with  respect to a claim
       against Borrower or any of its Subsidiaries  under a contract that is not
       a credit  agreement  or  material  lease in excess of  $500,000  or which
       otherwise  may  reasonably  be expected  to result in a Material  Adverse
       Effect,  or (iv) any labor union has  notified  Borrower of its intent to
       strike  Borrower or any of its  Subsidiaries  on a date  certain and such
       strike  would  involve  more  than  100  employees  of  Borrower  and its
       Subsidiaries,  a written notice  describing the pertinent  facts relating
       thereto  and what  action  Borrower  or its  Subsidiaries  are  taking or
       propose to take with respect thereto;

                    (j) No  later  than 7 days  prior to its  creation,  written
       notice  of any Lien to be  created  pursuant  to  Section  6.8(e) or (f),
       together  with a  reasonably  detailed  description  of such Lien and the
       Indebtedness to be secured thereby; and

                    (k) Such other data and information as from time to time may
       be reasonably requested by the Agent, any Bank (through the Agent) or the
       Majority Banks.

              7.2  Compliance  Certificates.  So  long  as any  Advance  remains
unpaid, or any other Obligation remains unpaid or unperformed, or any portion of
a Commitment  remains  outstanding,  Borrower shall deliver to the Agent and the
Banks, at Borrower's  sole expense,  (a) a Compliance  Certificate  concurrently
with each financial  statement  required pursuant to Sections 7.1(a) and 7.1(b),
and (b) a  Compliance  Certificate  (limited to showing the  calculation  of the
Leverage  Ratio as of the previous  June 30) on or before each August 29. In the
case of the  Compliance  Certificates  delivered  on or before  each  August 29,
calculations
                                      -70-
<PAGE>
shall be based on the preliminary unaudited financial statements of Borrower and
its Subsidiaries for such Fiscal Quarter.
                                      -71-
<PAGE>
                                    Article 8
                                   CONDITIONS
                                   ----------


              8.1 Initial Advances, Etc.. The effectiveness of this Agreement as
an  amendment  and  restatement  of the First  Amended Loan  Agreement,  and the
effectiveness  of the other Loan Documents as amendments and restatements of the
other  Pre-Existing Loan Documents,  and the obligation of each Bank to make the
initial  Advance  to be made by it and,  if  applicable,  to make or  accept  an
Adjusting Purchase Payment,  and the obligation of the Issuing Bank to issue any
Letter of Credit are  subject to the  following  conditions  precedent,  each of
which must be  satisfied  unless all of the  Banks,  in their sole and  absolute
discretion, shall agree otherwise:

                    (a) The Agent shall have received all of the following, each
       of which shall be originals  unless  otherwise  specified,  each properly
       executed by a Responsible  Official of each party thereto,  each dated as
       of the Closing Date and each in form and  substance  satisfactory  to the
       Agent and its legal counsel (unless  otherwise  specified or, in the case
       of the date of any of the following, unless the Agent otherwise agrees or
       directs):

                             (1) at least one (1) executed  counterpart  of this
              Agreement,  together with  arrangements  satisfactory to the Agent
              for  additional  executed  counterparts,  sufficient in number for
              distribution to the Banks and Borrower;

                             (2) a  Line A Note  and a Line B Note  executed  by
              Borrower  in favor of each  Bank,  each such  Note in a  principal
              amount  equal  to that  Bank's  Pro Rata  Share of the  applicable
              Commitment;

                             (3)  the  Subsidiary   Guaranty  executed  by  each
              Guarantor Subsidiary;

                             (4) with  respect to  Borrower  and each  Guarantor
              Subsidiary, such documentation as may be required to establish the
              due  organization,  valid  existence and good standing of Borrower
              and each such Subsidiary,  its qualification to engage in business
              in each material  jurisdiction  in which it is engaged in business
              or required to be so qualified,  its authority to execute, deliver
              and  perform  any Loan  Documents  to  which  it is a  Party,  the
              identity,  authority  and  capacity of each  Responsible  Official
              thereof  authorized  to  act on its  behalf,  including  certified
              copies of articles of incorporation and amendments thereto, bylaws
              and  amendments  thereto,  certificates  of good  standing  and/or
              qualification to engage in business,  tax clearance  certificates,
              certificates of corporate  resolutions,  incumbency  certificates,
              Certificates of Responsible Officials, and the like;
                                      -72-
<PAGE>
                             (5) the Opinions of Counsel;

                             (6)  a  Certificate   of  a  Responsible   Official
              certifying that the copies of the Indentures  attached thereto are
              true, current and complete copies;

                             (7) a Certificate of a Responsible  Official signed
              by a Senior Officer  certifying  that the conditions  specified in
              Sections 8.1(a)(8), 8.1(d) and 8.1(e) have been satisfied; and

                             (8) such other assurances, certificates, documents,
              consents or opinions as the Agent reasonably may require.

                    (b) The fees payable  pursuant to Sections 3.2 and 3.3 shall
       have been paid and any accrued  interest and fees under the  Pre-Existing
       Loan Documents shall have been paid as specified in Section 3.16.

                    (c) The  reasonable  costs  and  expenses  of the  Agent  in
       connection with the preparation of the Loan Documents payable pursuant to
       Section 11.3, and invoiced to Borrower  prior to the Closing Date,  shall
       have been paid.

                    (d) The representations and warranties of Borrower contained
       in Article 4 shall be true and correct.

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

                    (f) The Consolidated Fixed Charge Coverage Ratio shall be no
       less than 3.00:1.00.

                    (g) The  applicable  Banks  shall  have  made the  Adjusting
       Purchase Payments as specified in Section 2.9 hereof.

              8.2 Any  Increasing  Advance.  The obligation of each Bank to make
any Advance which would  increase the  principal  amount  outstanding  under the
Notes and the  obligation  of the  Issuing  Bank to issue a Letter of Credit are
subject to the following condi tions precedent:

                    (a)  except (i) for  representations  and  warranties  which
       expressly speak as of a particular date or are no longer true and correct
       as a result of a change which is  permitted by this  Agreement or (ii) as
       disclosed by Borrower and approved in writing by the Majority Banks,  the
       representations  and  warranties  contained  in  Article  4  (other  than
       Sections  4.4(a),  4.6 (first  sentence),  and  4.10),  shall be true and
       complete  on and as of the date of the  Advance  as  though  made on that
       date;
                                      -73-
<PAGE>
                    (b) other than  matters  described  in Schedule  4.10 or not
       required as of the Closing Date to be therein described,  there shall not
       be  then  pending  or  threatened   any  action,   suit,   proceeding  or
       investigation against or affecting Borrower or any of its Subsidiaries or
       any  Property  of  any  of  them  before  any  Governmental  Agency  that
       constitutes a Material Adverse Effect;

                    (c) the Consolidated Fixed Charge Coverage Ratio shall be no
       less than 2.25:1.00;

                    (d) in the case of any Letter of Credit or any Advance  with
       respect to the Line A Commitment,  the Consolidated Fixed Charge Coverage
       Ratio shall be no less than 3.00:1.00;

                    (e) the Agent shall have timely  received a Request for Loan
       in  compliance  with Article 2 (or  telephonic  or other request for loan
       referred to in the second sentence of Section 2.1(b),  if applicable) and
       the Issuing Bank shall, in the case of a Letter of Credit,  have received
       a Request for Letter of Credit in compliance with Article 2;

                    (f) the Agent  shall have  received,  in form and  substance
       satisfactory to the Agent, such other assurances, certificates, documents
       or  consents  related  to the fore going as the Agent or  Majority  Banks
       reasonably may require; and

                    (g) the Agent  shall have  received,  concurrently  with the
       corresponding Request for Loan (or, if applicable,  the telephonic notice
       thereof,  under Section  2.1(b)),  a fully and accurately  completed Loan
       Compliance  Certificate,  dated the date the Loan is to be made,  and, on
       the  date  of  the  Loan,  Borrower  and  its  Subsidiaries  shall  be in
       compliance with all  requirements  specified  thereon with respect to the
       nature and amount of the requested Loan.

              8.3 Any Advance.  The  obligation of each Bank to make any Advance
is subject to the condition  precedent  that,  except as provided for in Section
2.1(g),  the Agent shall have timely  received a Request for Loan in  compliance
with  Article 2 (or  telephonic  or other  request  for loan  referred to in the
second sentence of Section 2.1(b), if applicable).

              8.4 Return of Pre-Existing  Notes.  Upon the effectiveness of this
Agreement,  including the delivery by Borrower of all documents  required  under
Section  8.1,  the Banks  holding the  Pre-Existing  Notes shall  return them to
Borrower, in each case marked "Canceled and Replaced."
                                      -74-
<PAGE>
                                    Article 9
              EVENTS OF DEFAULT AND REMEDIES UPON EVENT OF DEFAULT
              ----------------------------------------------------

              9.1 Events of Default.  The  existence or occurrence of any one or
more of the  following  events,  whatever  the  reason  therefor  and  under any
circumstances whatsoever, shall constitute an Event of Default:

                    (a) Borrower fails to pay any principal  Indebtedness on any
       Note on the date when due or fails to pay to the Issuing  Bank the amount
       drawn under any Letter of Credit as required under Section 2.12(d); or

                    (b) Borrower  fails to pay any interest on any Note,  or any
       fees under Sections 3.2, 3.3 or 3.4 or any portion  thereof,  within five
       (5)  Banking  Days after the date when due; or fails to pay any other fee
       or amount  payable to the Banks under any Loan  Document,  or any portion
       thereof,  within  five (5)  Banking  Days  after  written  notice of such
       failure; or

                    (c)  Borrower  fails to  comply  with  any of the  covenants
       contained in Sections 5.2, 5.9, 6.1, 6.2, 6.3, 6.4, 6.5, 6.7, 6.11, 6.12,
       6.13, 6.14,  6.15,  6.16,  6.18, or 7.1(h),  and, in the case of Sections
       6.4,  6.7 or 6.16 only,  ten (10) days have  elapsed  without  cure after
       either a Senior Officer of Borrower has actual  knowledge of such failing
       or the Agent shall have given Borrower notice of such failing; or

                    (d) Borrower, any of its Guarantor Subsidiaries or any other
       Party fails to perform or observe any other  covenant or  agreement  (not
       specified  in  clauses  (a),  (b) or (c)  above)  contained  in any  Loan
       Document on its part to be  performed  or  observed  within ten (10) days
       after the giving of notice by the Agent on behalf of the  Majority  Banks
       of such Default; or

                    (e) Any representation or warranty of Borrower or any of its
       Subsidiaries  made in any Loan Document,  or in any  certificate or other
       writing  delivered by Borrower  pursuant to any Loan Document,  proves to
       have been incorrect when made or reaffirmed in any material respect; or

                    (f) Borrower or any of its Guarantor  Subsidiaries (i) fails
       to pay the  principal,  or any principal  installment,  of any present or
       future  Indebtedness for borrowed money of $1,500,000 or more (other than
       Non-Recourse  Debt  specified  in Section  6.8(d)),  or any  guaranty  of
       present or future  Indebtedness for borrowed money of $1,500,000 or more,
       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  or (ii) fails to perform or observe  any other
       term,  covenant or agreement on its part to be performed or observed,  or
       suffers  any event to occur,  in  connection  with any  present or future
       indebtedness for borrowed money of $1,500,000
                                      -75-
<PAGE>
       or more (other than Non-Recourse Debt specified in Section 6.8(d)), or of
       any  guaranty of present or future  indebtedness  for  borrowed  money of
       $1,500,000  or more,  if as a result of such  failure or  sufferance  any
       holder or holders thereof (or an agent or trustee on its or their behalf)
       has the right to declare such  indebtedness  due before the date on which
       it otherwise would become due; or

                    (g) Any event  occurs  which  gives the holder or holders of
       any  Subordinated  Obligation  (or an  agent or  trustee  on its or their
       behalf)  the right to declare  such  indebtedness  due before the date on
       which it  otherwise  would become due, or the right to require the issuer
       thereof to redeem or purchase, or offer to redeem or purchase, all or any
       portion of any Subordinated Obligation; or

                    (h) Any Loan  Document,  at any time after its execution and
       delivery  and for any  reason  other than the  agreement  of 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,  in any such
       event in the  reasonable  opinion of the Majority  Banks,  is  materially
       adverse to the interests of the Banks;  or any Party thereto  denies that
       it has any or further liability or obligation under any Loan Document, or
       purports to revoke, terminate or rescind same; or

                    (i)  A  final  judgment  against  Borrower  or  any  of  its
       Guarantor  Subsidiaries  is entered for the payment of money in excess of
       $1,000,000 and, absent procurement of a stay of execution,  such judgment
       remains unsatisfied for thirty (30) calendar days after the date of entry
       of  judgment,  or in any event later than five (5) days prior to the date
       of any proposed sale thereunder;  or any writ or warrant of attachment or
       execution  or  similar  process  is issued or levied  against  all or any
       material  part of the  Property of any such  Person and is not  released,
       vacated or fully bonded  within thirty (30) calendar days after its issue
       or levy; or

                    (j)  Borrower or any of its  Guarantor  Subsidiaries  (other
       than a Guarantor Subsidiary that holds as its principal assets the Spring
       Creek Project or the Glen Harbor  Project)  institutes or consents to the
       institution of any proceeding under a Debtor Relief Law relating to it or
       to all or any part of its Property, or is unable or admits in writing its
       inability to pay its debts as they mature, or makes an 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 sixty
       (60) calendar days; or any proceeding  under a 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 sixty (60) calendar days; or
                                      -76-
<PAGE>
                    (k) The  occurrence  of an Event of Default (as such term is
       or may  hereafter  be  specifically  defined in any other Loan  Document)
       under any other Loan Document; or

                    (l)  Any  determination  is made  by a  court  of  competent
       jurisdiction  that the  9-3/4%  Senior  Subordinated  Debt Due 2003,  the
       9-3/4% Senior  Subordinated Debt Due 2008, the 9.00% Senior  Subordinated
       Debt Due 2006, the 9-3/8% Senior  Subordinated Debt Due 2009 or any other
       Subordinated  Obligation is not subordinated in accordance with its terms
       to the principal or interest under the Notes; or

                    (m) Any Pension  Plan  maintained  by Borrower or any of its
       Subsidiaries  is  determined  to  have a  material  "accumulated  funding
       deficiency"  as that  term is  defined  in  Section  302 of ERISA and the
       result is a Material Adverse Effect.

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

                    (a) Upon the occurrence, and during the continuance,  of any
       Event of  Default  other than an Event of  Default  described  in Section
       9.1(j):

                             (1) the  commitment  to make Advances and all other
              obligations  of the Agent or the Banks and all rights of  Borrower
              and any other Parties under the Loan Documents  shall be suspended
              without  notice to or demand upon  Borrower,  which are  expressly
              waived by  Borrower,  except that all of the Banks or the Majority
              Banks (as the case may be, in  accordance  with Section  11.2) may
              waive an Event of Default or,  without  waiving,  determine,  upon
              terms and conditions  satisfactory to the Banks or Majority Banks,
              as the case may be, to reinstate the  Commitments and make further
              Advances,  which waiver or  determination  shall apply equally to,
              and shall be binding upon, all the Banks;

                             (2) the Issuing Bank may,  with the approval of the
              Majority Banks,  demand immediate payment by Borrower of an amount
              equal  to  the   aggregate   drawable  face  amount  of  all  then
              outstanding Letters of Credit to be held by the Issuing Bank in an
              interest-bearing  cash collateral account as collateral hereunder,
              and Borrower hereby grants to the Agent, on behalf of the Banks, a
              security interest in such funds and any such account to secure the
              Obligations; and

                             (3) the  Majority  Banks may  request the Agent to,
              and the Agent thereupon  shall,  terminate the Commitments  and/or
              declare all or any part of the unpaid  principal of all Notes, all
              interest  accrued and unpaid thereon and all other amounts payable
              under  the  Loan  Documents  to  be  forthwith  due  and  payable,
              whereupon  the same shall become and be forthwith due and payable,
              without
                                      -77-
<PAGE>
              protest, presentment, notice of dishonor, demand or further notice
              of any kind, all of which are expressly waived by Borrower.

                    (b) Upon the occurrence of any Event of Default described in
       Section 9.1(j):

                             (1) the  commitment  to make Advances and all other
              obligations  of the Agent or the Banks and all rights of  Borrower
              and any other Parties  under the Loan  Documents  shall  terminate
              without  notice to or demand upon  Borrower,  which are  expressly
              waived by Borrower;

                             (2) an amount equal to the aggregate  drawable face
              amount  of  all  then  outstanding  Letters  of  Credit  shall  be
              immediately  due and payable to the Issuing Bank without notice to
              or demand upon Borrower,  which are expressly  waived by Borrower,
              to be  held  by  the  Issuing  Bank  in an  interest-bearing  cash
              collateral  account as collateral  hereunder,  and Borrower hereby
              grants to the Agent,  on behalf of the Banks, a security  interest
              in such funds and any such account to secure the Obligations; and

                             (3) the unpaid principal of all Notes, all interest
              accrued and unpaid thereon 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) Upon the  occurrence of any Event of Default,  the Agent
       or (but only upon  directive  of the  Majority  Banks)  any of the Banks,
       without notice to (except as expressly provided for in any Loan Document)
       or demand upon Borrower,  which are expressly  waived by Borrower (except
       as to notices expressly  provided for in any Loan Document),  may proceed
       to protect, exercise and enforce the rights and remedies of the Agent and
       the Banks under the Loan Documents  against  Borrower and any other Party
       and such other rights and remedies as are provided by Law or equity.

                    (d) The order and  manner in which  the  Banks'  rights  and
       remedies are to be exercised shall be determined by the Majority Banks in
       their sole  discretion,  and all  payments  received by the Agent and the
       Banks,  or any of them,  shall be applied first to the costs and expenses
       (including  attorneys' fees and  disbursements and the allocated costs of
       attorneys  employed  by the  Agent) of the Agent  and of the  Banks,  and
       thereafter  paid pro rata to the Banks in the same  proportions  that the
       aggregate  Obligations owed to each Bank under the Loan Documents bear to
       the aggregate Obligations owed under the Loan Documents to all the Banks,
       without  priority or preference  among the Banks.  Regardless of how each
       Bank may treat  payments for the purpose of its own  accounting,  for the
       purpose  of  computing  Borrower's  Obligations  hereunder  and under the
       Notes,  payments shall be applied first, to the costs and expenses of the
       Agent and the Banks, as
                                      -78-
<PAGE>
       set forth above,  second,  to the payment of accrued and unpaid  interest
       due  under  any  Loan  Documents  to  and  including  the  date  of  such
       application (ratably,  and without duplication,  according to the accrued
       and unpaid interest due under each of the Loan Documents),  and third, to
       the  payment of all other  amounts  (including  principal  and fees) then
       owing to the Agent or the Banks under the Loan Documents.  No application
       of payments will cure any Event of Default, or prevent  acceleration,  or
       continued accel eration, of amounts payable under the Loan Documents,  or
       prevent the exercise, or continued exercise, of rights or remedies of the
       Banks hereunder or thereunder or at Law or in equity.
                                      -79-
<PAGE>
                                   Article 10
                                    THE AGENT
                                    ---------

              10.1 Appointment and Authorization.  Subject to Section 10.8, each
Bank hereby irrevocably appoints and authorizes the Agent to take such action as
agent on its behalf and to exercise such powers under the Loan  Documents as are
delegated to the Agent by the terms  thereof or are  reasonably  incidental,  as
determined by the Agent, thereto. This appointment and authorization is intended
solely for the purpose of  facilitating  the servicing of the Loans and does not
constitute appointment of the Agent as trustee for any Bank or as representative
of any Bank for any other purpose and, except as  specifically  set forth in the
Loan  Documents to the  contrary,  the Agent shall take such action and exercise
such powers only in an administrative and ministerial capacity.

              10.2 Agent and  Affiliates.  Bank of America  (and each  successor
Agent) has the same rights and powers under the Loan Documents as any other Bank
and may exercise the same as though it was not the Agent, and the term "Bank" or
"Banks"  includes Bank of America in its  individual  capacity.  Bank of America
(and each successor  Agent) and its Affiliates  may accept  deposits from,  lend
money to and generally  engage in any kind of banking,  trust or other  business
with  Borrower,  any  Subsidiary  thereof,  or any  Affiliate of Borrower or any
Subsidiary  thereof,  as if it was not the Agent and without any duty to account
therefor  to the Banks.  Bank of America  (and each  successor  Agent)  need not
account to any other Bank for any monies received by it for reimbursement of its
costs  and  expenses  as Agent  hereunder,  or  (except  as  expressly  provided
elsewhere  herein)  for any  monies  received  by it in its  capacity  as a Bank
hereunder.  The Agent shall not be deemed to hold a fiduciary  relationship with
any  Bank  and  no  implied  covenants,  functions,  responsibilities,   duties,
obligations or liabilities  shall be read into this Agreement or otherwise exist
against the Agent.

              10.3  Proportionate  Interest  in any  Collateral.  The Agent,  on
behalf of all the Banks,  shall hold in accordance  with the Loan  Documents all
items of any  collateral  or inter ests  therein  received or held by the Agent.
Subject to the Agent's and the Banks'  rights to  reimbursement  for their costs
and expenses hereunder  (including  attorneys' fees and disburse ments and other
professional services and the allocated costs of attorneys employed by the Agent
or a Bank) and subject to the  application  of payments in  accordance  with Sec
tion  9.2(d),  each Bank shall have an  interest  in the Banks'  interest in any
collateral  or  interests  therein in the same  proportions  that the  aggregate
Obligations  owed  such  Bank  under the Loan  Documents  bear to the  aggregate
Obligations owed under the Loan Documents to all the Banks,  without priority or
preference among the Banks.

              10.4  Banks'  Credit  Decisions.  Each  Bank  agrees  that it has,
independently  and  without  reliance  upon the  Agent,  any  other  Bank or the
directors, officers, agents, employees or attorneys of the Agent or of any other
Bank, and instead in reliance upon information supplied to it by or on behalf of
Borrower and upon such other information as it has deemed
                                      -80-
<PAGE>
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 Agent,  any other Bank or the  directors,  officers,  agents,
employees or  attorneys of the 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.

                  10.5 Action by Agent.

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

                    (b) The  Agent  has only  those  obligations  under the Loan
       Documents as are expressly set forth therein.

                    (c) Both  before and after any  Default,  the Agent shall be
       required to act or not act upon the  instructions  of the Majority  Banks
       (or all of the Banks,  to the extent  required by Section 11.2) and those
       instructions shall be binding upon the Agent and all the Banks,  provided
       that the Agent  shall not be required to act or not act if to do so would
       be contrary to any Loan Document or to applicable Law or would result, in
       the  reasonable  judgment  of the Agent,  in a risk of  liability  to the
       Agent.  The Agent may,  without the consent of the Majority  Banks,  take
       such actions and exercise  such discre tion as is  specified  herein.  In
       addition,  should the Agent  propose a course of conduct  with respect to
       the  administration  of the Loan  Documents  in  writing to the Banks and
       should the Majority Banks (or any of the Banks, if unanimous  approval of
       such action is required  under Section  11.2) fail,  for five (5) Banking
       Days after the receipt of notice from the Agent of the proposed course of
       action,  to instruct the Agent to the  contrary,  then the Agent,  in its
       sole discretion, may act or not act as the Agent deems advisable pursuant
       to such course of conduct.

                    (d) The  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) or as permitted under clause (c),
       above, notwithstanding any other provision hereof.

              10.6  Liability  of  Agent.  Neither  the  Agent  nor  any  of its
directors,  officers,  agents,  employees or  attorneys  shall be liable 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 Agent and its  directors,  officers,  agents,
employees and attorneys:

                    (a) May treat the  payee of any Note as the  holder  thereof
       until the Agent receives notice of the assignment or transfer thereof, in
       form satisfactory to the Agent,
                                      -81-
<PAGE>
       signed by the payee,  and may treat each Bank as the owner of that Bank's
       interest in the  Obligations for all purposes of this Agreement until the
       Agent  receives  notice of the  assignment or transfer  thereof,  in form
       satisfactory to the Agent, signed by that Bank.

                    (b) May consult with legal counsel (including in-house legal
       counsel),   accountants   (including  in-house   accountants)  and  other
       professionals   or  experts  selected  by  it,  or  with  legal  counsel,
       accountants  or other  professionals  or experts for Borrower  and/or its
       Subsidiaries  or the Banks,  and shall not be liable for any action taken
       or not taken by it in good  faith in  accordance  with any advice of such
       legal counsel, accountants or other professionals or experts.

                    (c) Shall 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)
       given or made in connection with any of the Loan Documents.

                    (d)  Except to the  extent  expressly  set forth in the Loan
       Documents,  shall have no duty to ask or inquire as to the performance or
       observance  by  Borrower  or  its  Subsidiaries  of  any  of  the  terms,
       conditions  or covenants  of any of the Loan  Documents or to inspect any
       collateral  or  the  Property,  books  or  records  of  Borrower  or  its
       Subsidiaries.

                    (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, or any collateral.

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

                    (g) Will not incur any liability for any arithmetical  error
       in computing any amount paid or payable by Borrower or any  Subsidiary or
       Affiliate  thereof or paid or payable to or received or  receivable  from
       any  Bank  under  any  Loan  Document,   including,  without  limitation,
       principal,   interest,  commitment  fees,  Advances  and  other  amounts;
       provided that,  promptly upon discovery of such an error in  computation,
       the Agent, the Banks and (to the extent  applicable)  Borrower and/or its
       Subsidiaries or Affiliates  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.

              10.7 Indemnification.  Each Bank shall, ratably in accordance with
its Pro Rata  Share of the  Commitments,  indemnify  and hold the  Agent and its
directors,  officers,  agents,  employees and attorneys harmless against any and
all liabilities, obligations, losses, damages,
                                      -82-
<PAGE>
penalties,  actions,  judgments,  suits, costs, expenses or disbursements of any
kind or nature whatsoever  (including,  without limitation,  attorneys' fees and
disbursements  and allocated costs of attorneys  employed by the Agent) that may
be imposed on, incurred by or asserted against it or them in any way relating to
or arising out of the Loan  Documents  (other than losses  incurred by reason of
the failure of Borrower to pay the indebtedness represented by the Notes) or any
action taken or not taken by it as Agent thereunder,  except such as result from
its own gross  negligence  or  willful  misconduct.  Without  limitation  on the
foregoing,  each Bank shall  reimburse the Agent upon demand for that Bank's Pro
Rata  Share  of any  out-of-pocket  cost or  expense  incurred  by the  Agent in
connection with the negotiation,  preparation,  execution,  delivery, amendment,
waiver,  restructuring,  reorganization (including a bankruptcy reorganization),
enforcement or attempted  enforcement of the Loan Documents,  to the extent that
Borrower  or any other  Party is  required  by Section  11.3 to pay that cost or
expense  but fails to do so upon  demand.  If  payment  is made by  Borrower  or
another Party to the Agent for such cost or expense after  reimbursement  to the
Agent by a Bank, the Agent shall reimburse such Bank, as applicable.  Nothing in
this Section  10.7 shall  entitle the Agent to recover any amount from the Banks
if and to the  extent  that such  amount has  theretofore  been  recovered  from
Borrower or any of its Subsidiaries.

              10.8  Successor  Agent.  The Agent may,  and at the request of the
Majority Banks shall,  resign as Agent upon thirty (30) days notice to the Banks
and  Borrower.  If the Agent  shall  resign as Agent under this  Agreement,  the
Majority Banks shall appoint from among the Banks a successor managing agent for
the Banks,  which  successor  managing  agent shall be approved by Borrower (and
such approval  shall not be  unreasonably  withheld).  If no successor  managing
agent is appointed  prior to the effective date of the resignation of the Agent,
the Agent may appoint, after consulting with the Banks and Borrower, a successor
managing agent from among the Banks.  Upon the acceptance of its  appointment as
successor managing agent hereunder,  such successor managing agent shall succeed
to all the rights,  powers and duties of the retiring Agent and the term "Agent"
shall mean such successor  managing agent and the retiring Agent's  appointment,
powers and  duties as Agent  shall be  terminated.  After any  retiring  Agent's
resignation  hereunder as Agent, the provisions of this Article 10, and Sections
11.3,  11.10 and 11.20,  shall inure to its  benefit as to any actions  taken or
omitted to be taken by it while it was Agent under this Agreement.

              10.9 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 Agent of its obligations to the Banks under any
provision of this  Agreement,  and Borrower shall have no liability to the Agent
or any of the  Banks  in  respect  of any  failure  by the  Agent or any Bank to
perform any of its  obligations to the 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 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
Agent in the manner provided by this Agreement.
                                      -83-
<PAGE>
                                   Article 11
                                  MISCELLANEOUS
                                  -------------

              11.1  Cumulative   Remedies;   No  Waiver.  The  rights,   powers,
privileges  and  remedies of the Agent and the Banks  provided  herein or in any
Note or other Loan  Document  are  cumulative  and not  exclusive  of any right,
power, privilege or remedy provided by Law or equity. No failure or delay on the
part of the Agent or any Bank in  exercising  any  right,  power,  privilege  or
remedy may be, or may be deemed to be, a waiver  thereof;  nor may any single or
partial exercise of any right, power,  privilege or remedy preclude any other or
further exercise of the same or any other right, power, privilege or remedy. The
terms and  conditions  of Article 8 hereof are  inserted for the sole benefit of
the Agent  and the  Banks;  the same may be waived in whole or in part,  with or
without  terms or  conditions,  in respect of any Loan without  prejudicing  the
Agent's  or the Banks'  rights to assert  them in whole or in part in respect of
any other Loan.

              11.2 Amendments; Consents. No amendment, modification, supplement,
extension, termination or waiver of any provision of this Agreement or any other
Loan  Document,  no  approval  or  consent  thereunder,  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 Majority  Banks (and, in the case of
any  amendment,  modification  or supplement of or to any Loan Document to which
Borrower is a Party, signed by 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 (i) the  amount or  payment  terms of
       principal  or  interest  payable  on the  Notes,  (ii) the  amount of the
       Commitments, (iii) the amount or payment terms of any commitment or other
       fee or amount payable to the Banks generally under the Loan Documents;

                    (b) To extend  the term of the  Commitments  or to release a
       guarantor  under the Subsidiary  Guaranty  (except as provided in Section
       5.10);

                    (c) To amend the  provisions of the  definition of "Majority
       Banks", Section 9.2(d), 10.3, 11.2, 11.9 or 11.10; or

                    (d) To amend any provision of this  Agreement 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 Agent. The provisions of Article 10 and the provisions of the Loan
Documents dealing with the rights and  responsibilities  of the Agent may not be
amended without the consent of the Agent.
                                      -84-
<PAGE>
              11.3 Costs, Expenses and Taxes. Borrower shall pay within five (5)
Banking Days after demand,  accompanied by an invoice  therefor,  the reasonable
costs and expenses of the Agent in connection with the negotiation, preparation,
syndication,  execution  and delivery of the Loan  Documents  and any  amendment
thereto or waiver thereof. Borrower shall also pay on demand,  accompanied by an
invoice  therefor,  the reasonable costs and expenses of the Agent and the Banks
in connection with the refinancing,  restructuring,  reorganization (including a
bankruptcy  reorganization) and enforcement or attempted enforcement of the Loan
Documents,  and any matter  related  thereto.  The foregoing  costs and expenses
shall include filing fees, recording fees, title insurance fees, appraisal fees,
search  fees,  and other  out-of-pocket  expenses  and the  reasonable  fees and
out-of-pocket  expenses  of any legal  coun sel  (including  allocated  costs of
in-house legal counsel  employed by the Agent or any Bank),  independent  public
accountants and other outside experts retained by the Agent or any Bank, whether
or not such costs and expenses are incurred or suffered by the Agent or any Bank
in  connection  with or  during  the  course  of any  bankruptcy  or  insolvency
proceedings of Borrower or any Subsidiary thereof. Such costs and expenses shall
also  include,  in the case of any  amendment  or  waiver  of any Loan  Document
requested  by  Borrower,  the  administrative  costs  of  the  Agent  reasonably
attributable  thereto.  Borrower  shall  pay any and all  documentary  and other
taxes,  excluding,  in the case of each  Bank,  the  Agent,  and  each  Eligible
Assignee,  and any Affiliate or Eurodollar  Lending  Office  thereof,  (i) taxes
imposed on or measured  in whole or in part by its  overall  net  income,  gross
income or gross  receipts or capital and  franchise  taxes imposed on its by (A)
any jurisdiction (or political  subdivision thereof) in which it is organized or
maintains  its  principal  office  or  Eurodollar  Lending  Office  or  (B)  any
jurisdiction (or political  subdivision thereof) in which it is "doing business"
(unless  it would  not be doing  business  in such  jurisdiction  (or  political
subdivision  thereof) absent the  transactions  contemplated  hereby),  (ii) any
withholding  taxes or other  taxes based on gross  income  imposed by the United
States of America (other than withholding  taxes and taxes based on gross income
resulting from or  attributable  to any change in any law, rule or regulation or
any  change  in the  interpretation  or  administration  of  any  law,  rule  or
regulation  by any  governmental  authority) or (iii) any  withholding  taxes or
other taxes based on gross  income  imposed by the United  States of America for
any period  with  respect to which it has  failed to provide  Borrower  with the
appropriate  form or forms required by Section  11.19,  to the extent such forms
are then required by applicable Laws, and all costs, expenses,  fees and charges
payable or determined  to be payable in connection  with the filing or recording
of this Agreement, any other Loan Document or any other instrument or writing to
be delivered here under or  thereunder,  or in connection  with any  transaction
pursuant hereto or thereto, and shall reimburse, hold harmless and indemnify the
Agent and the Banks 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  any  Party  to  perform  any of its
Obligations. Any amount payable to the Agent or any Bank under this Section 11.3
shall bear  interest from the tenth day following the date of demand for payment
at the Default Rate.

              11.4 Nature of Banks'  Obligations.  The  obligations of the Banks
hereunder are several and not joint or joint and several.  Nothing  contained in
this Agreement or any other
                                      -85-
<PAGE>
Loan  Document  and no  action  taken by the  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 or any Affiliate of Borrower. Each Bank's obligation
to make any  Advance  pursuant  hereto  is  several  and not  joint or joint and
several.  A default  by any Bank  will not  increase  the Pro Rata  Share of the
Commitments  attributable  to 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. The Agent
agrees  that it will use its best  efforts  either to induce the other  Banks to
assume  the  obligations  of a  Bank  in  default  or to  obtain  another  Bank,
reasonably satisfactory to Borrower, to replace such a Bank in default.

              11.5   Survival   of   Representations    and   Warranties.    All
representations  and warranties  contained herein or in any other Loan Document,
or in any  certificate or other writing  delivered by or on behalf of any one or
more of the Parties to any Loan  Document,  will survive the making of the Loans
hereunder and the execution and delivery of the Notes,  and have been or will be
relied upon by the Agent and each Bank,  notwithstanding  any investigation made
by the Agent or any Bank or on their behalf.

              11.6 Notices.  Except as otherwise  expressly provided in the Loan
Documents, all notices, requests,  demands,  directions and other communications
provided for  hereunder or under any other Loan  Document must be in writing and
must be mailed, telegraphed, telecopied or delivered to the appropriate party at
the  address  set  forth  on the  signature  pages  of this  Agreement  or other
applicable Loan Document or, as to any party to any Loan Document,  at any other
address as may be designated by it in a written notice sent to all other parties
to such Loan Document in accordance with this Section 11.6.  Except as otherwise
expressly provided in any Loan Document, if any notice,  request,  demand, direc
tion or other communication  required or permitted by any Loan Document is given
by mail it will be effective on the earlier of receipt or the third calendar day
after  deposit in the United  States  mail 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; or if given by personal
delivery (including delivery by courier),  when delivered.  If a notice is being
given of the occurrence of a Default or Event of Default,  the Person giving the
notice shall use  reasonable  efforts to either give or  supplement  such notice
with a notice by telecopy.

              11.7  Execution  of Loan  Documents.  Unless  the Agent  otherwise
specifies  with respect to any Loan  Document,  (a) this Agreement and any other
Loan Document 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, when taken  together
will be deemed to be but one and the same  instrument  and (b)  execution of any
such counterpart may be evidenced by a telecopier  transmission of the signature
of such party. The execution of this Agreement or any other Loan Document by any
party hereto or thereto will not become effective until  counterparts  hereof or
thereof,  as the case may be, have been  executed  by all the parties  hereto or
thereto.
                                      -86-
<PAGE>
              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  Agent,  the  Co-Agent,  each  of  the  Banks,  and  their
       respective  successors  and assigns,  except that Borrower may not assign
       its rights or  responsibilities  hereunder or  thereunder or any interest
       herein or therein  without  the prior  written  consent of all the Banks.
       Each Bank represents that it is not acquiring its Note with a view to the
       distribution thereof within the meaning of the Securities Act of 1933, as
       amended (subject to any requirement that disposition of such Note must be
       within the  control of such  Bank).  Any Bank may at any time  pledge its
       Note or any other  instrument  evidencing its rights as a Bank under this
       Agreement to a Federal  Reserve  Bank,  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 Closing Date,  each Bank
       may assign to one or more  Eligible  Assignees  a portion of its Pro Rata
       Share  of the  Commitments;  provided  that  (i)  in no  event  shall  an
       assignment  be made that would reduce the remaining Pro Rata Share of the
       Commitment  held  by the  assigning  Bank  below  $10,000,000  (ii)  such
       Eligible  Assignee shall be subject to the prior  reasonable  approval of
       the Agent and  Borrower,  (iii) such  assignment  shall be evidenced by a
       Commitment Assignment and Acceptance,  a copy of which shall be furnished
       to the  Agent as  hereinbelow  provided,  (iv) the  assignment  shall not
       assign  a Pro Rata  Share  of the  Commitments  equivalent  to less  than
       $10,000,000,  (v) any such  assignment must be made pro-rata with respect
       to the Line A and Line B Commitments,  and (vi) 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 five (5) Banking Days
       after the date the Agent has received the Commitment Assignment and Accep
       tance.  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 Share of the  Commitments
       therein  set  forth  and,  to the  extent  of such  Pro Rata  Share,  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) to such assignee
       Bank,  Notes evidencing that assignee Bank's Pro Rata Share of the Line A
       and Line B Commitments,  and to the assigning Bank,  Notes evidencing the
       remaining  balance Pro Rata Share retained by the assigning  Bank.  Other
       than as  specifically  permitted  under  Sections  11.8(a),  11.8(b),  or
       11.8(e),  or as may be approved by the Majority  Banks,  no Bank shall be
       permitted to assign or otherwise  transfer  (including by  participation)
       its interest in the Commitments, any Loan or any of the Loan Documents.

                    (c) By executing and delivering a Commitment  Assignment and
       Acceptance,  the Eligible  Assignee  thereunder  acknowledges  and agrees
       that: (i) other
                                      -87-
<PAGE>
       than the  representation and warranty that it is the legal and beneficial
       owner of the Pro Rata Share of the  Commitments  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 the Obligations;  (iii) it has
       received  a copy of this  Agreement,  together  with  copies  of the most
       recent financial  statements  delivered  pursuant to Section 7.1 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
       Agent,  the  Co-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 Agent to take such action
       and to exercise such powers under this  Agreement as are delegated to the
       Agent by this  Agreement;  and (vi) it will  perform 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) The Agent shall maintain at the Agent's Office a copy of
       each Commitment  Assignment and Acceptance delivered to it. After receipt
       of a completed Commitment  Assignment and Acceptance executed by any Bank
       and an Eligible Assignee, and receipt of an assignment fee of $2,500 from
       such Eligible  Assignee,  Agent shall,  promptly  following 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
       a  commercial  bank  Affiliate  of such Bank in a portion of its Pro-Rata
       Share  of the  Commitments;  provided,  however,  that  (i)  such  Bank's
       obligations under this Agreement shall remain  unchanged,  (ii) such Bank
       shall  remain  solely  responsible  to the other  parties  hereto for the
       performance of such obligations,  (iii) the participating  banks or other
       financial  institutions  shall not be a Bank  hereunder  for any purposes
       except, if the participation  agreement so provides,  for the purposes of
       Sections  3.5, 3.6,  11.10 and 11.21,  (iv)  Borrower,  the Agent and the
       other Banks shall  continue to deal solely and directly with such Bank in
       connection  such Bank's rights and  obligations  under this Agreement and
       (v) the  holder of such  participation  shall not be  provided  under its
       participation  agreement with consent or approval  rights with respect to
       any matters  concerning  the Loan Documents or the Loans except for those
       matters  designated  as  requiring  the consent or approval of all of the
       Banks under Section 11.2.

              11.9 Sharing of Setoffs.  Each Bank  severally  agrees that if it,
through  the  exercise  of any right of setoff,  banker's  lien or  counterclaim
against Borrower,  or otherwise,  receives payment of the Obligations held by it
that is ratably more than any other Bank,
                                      -88-
<PAGE>
through  any means,  receives in payment of the  Obligations  held by that Bank,
then,  subject to applicable  Laws: (a) The Bank exercising the right of setoff,
banker's  lien  or  counterclaim  or  otherwise  receiving  such  payment  shall
purchase, and shall be deemed to have simultaneously  purchased,  from the other
Bank a participation  in the Obligations held by the other Bank and shall pay to
the  other  Bank a  purchase  price  in an  amount  so  that  the  share  of the
Obligations  held by each  Bank  after  the  exercise  of the  right of  setoff,
banker's  lien or  counterclaim  or  receipt  of  payment  shall  be in the same
proportion  that existed prior to the exercise of the right of setoff,  banker's
lien or counterclaim or receipt of payment;  and (b) Such other  adjustments and
purchases  of  participations  shall  be made  from  time to  time as  shall  be
equitable to ensure that all of the Banks share any payment  obtained in respect
of  the  Obligations  ratably  in  accordance  with  each  Bank's  share  of the
Obligations  immediately prior to, and without taking into account, the payment;
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 11.9 shall
from and  after  the  purchase  have the  right to give all  notices,  requests,
demands,  directions and other communications under this Agree ment 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.

              11.10 Indemnity by Borrower.  Borrower  agrees to indemnify,  save
and hold  harmless the Agent,  the  Co-Agent and each Bank and their  directors,
officers,  agents,  and  employees  (collectively  the  "Indemnitees")  from and
against: (a) Any and all claims, demands,  actions or causes of action (except a
claim,  demand,  action,  or cause of action  for any amount  excluded  from the
definition of "Taxes" in Section 3.10(c)) if the claim, demand,  action or cause
of action  arises out of or relates to any act or  omission  (or  alleged act or
omission) of  Borrower,  its  Affiliates  or any of its  officers,  directors or
shareholders  relating  to  the  Commitments,  the  use or  contemplated  use of
proceeds of any Loan, or the  relationship  of Borrower and the Banks under this
Agreement;   (b)  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 (a) above; and (c) Any and all liabilities,
losses, costs or expenses (including  attorneys' fees and the allocated costs of
attorneys  employed by any  Indemnitee and  disbursements  of such attorneys and
other  professional  services) that any Indemnitee suffers or incurs as a result
of the  assertion of any  foregoing  claim,  demand,  action or cause of action;
provided that no Indemnitee  shall be entitled to  indemnification  for any loss
caused  by its own  gross  negligence  or  willful  misconduct  or for any  loss
asserted against it by another Indemnitee. 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.  Such  Indemnitee may (and
shall, if requested by Borrower in writing) contest the validity,  applicability
and amount of such
                                      -89-
<PAGE>
claim,  demand,  action  or  cause  of  action  and  shall  permit  Borrower  to
participate  in  such  contest.  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 obtain Borrower's prior consent
(which  shall not be  unreasonably  withheld).  In  connection  with any  claim,
demand,  action or cause of action  covered by this Section  11.10  against more
than one Indemnitee, all such Indemnitees shall be represented by the same legal
counsel  (which  may be a law  firm  engaged  by the  Indemnitees  or  attorneys
employed by an  Indemnitee or a combination  of the  foregoing)  selected by the
Indemnitees and reasonably acceptable to Borrower;  provided, that if such legal
counsel determines in good faith that representing all such Indemnitees would or
could  result  in a  conflict  of  interest  under  Laws or  ethical  principles
applicable to such legal counsel or that a defense or  counterclaim is available
to an  Indemnitee  that is not  available to all such  Indemnitees,  then to the
extent  reasonably  necessary  to avoid such a conflict of interest or to permit
unqualified  assertion of such a defense or counterclaim,  each Indemnitee shall
be  entitled  to  separate  representation  by legal  counsel  selected  by that
Indemnitee  and reasonably  acceptable to Borrower,  with all such legal counsel
using reasonable  efforts to avoid unnecessary  duplication of effort by counsel
for all  Indemnitees;  and further  provided  that the Agent (as an  Indemnitee)
shall at all times be  entitled to  representation  by  separate  legal  counsel
(which may be a law firm or attorneys  employed by the Agent or a combination of
the foregoing).  Any obligation or liability of Borrower to any Indemnitee under
this Section 11.10 shall survive the expiration or termination of this Agreement
and the  repayment  of all Loans and the  payment and  performance  of all other
Obligations owed to the Banks.

              11.11 Nonliability of the Banks.  Borrower acknowledges and agrees
that:

                    (a) Any  inspections  of any Property of Borrower made by or
       through the Agent or the Banks are for purposes of  administration of the
       Loan only and Borrower is not entitled to rely upon the same  (whether or
       not such inspections are at the expense of Borrower);

                    (b)  By  accepting  or  approving  anything  required  to be
       observed,  performed,  fulfilled  or  given  to the  Agent  or the  Banks
       pursuant to the Loan Documents,  neither the Agent nor the Banks shall be
       deemed  to have  warranted  or  represented  the  sufficiency,  legality,
       effectiveness  or legal effect of the same, or of any term,  provision or
       condition  thereof,  and such  acceptance  or approval  thereof shall not
       constitute a warranty or representation to anyone with respect thereto by
       the Agent or the Banks;

                    (c) The relationship between Borrower,  on the one hand, and
       the Agent,  the Co-Agent and/or any of the Banks,  on the other,  is, and
       shall at all times remain, solely that of a borrower and lenders; neither
       the Agent,  the  Co-Agent nor the Banks shall under any  circumstance  be
       construed  to  be  partners  or  joint   venturers  of  Borrower  or  its
       Affiliates; neither the Agent, the Co-Agent nor the Banks shall under any
       circumstance be deemed to be in a relationship of confidence  (other than
       as specified in
                                      -90-
<PAGE>
       Section 11.22) or trust or a fiduciary  relationship with Borrower or its
       Affiliates,  or to owe any fiduciary duty to Borrower or its  Affiliates;
       neither the Agent,  the  Co-Agent  nor the Banks  undertake or assume any
       responsibility  or duty to Borrower or its Affiliates to select,  review,
       inspect,  supervise,  pass  judgment  upon  or  inform  Borrower  or  its
       Affiliates  of any  matter  in  connection  with  their  Property  or the
       operations  of Borrower or its  Affiliates;  Borrower and its  Affiliates
       shall rely entirely upon their own judgment with respect to such matters;
       and any review, inspection,  supervision,  exercise of judgment or supply
       of  information  undertaken or assumed by the Agent,  the Co-Agent or the
       Banks in connection with such matters is solely for the protection of the
       Agent,  the  Co-Agent  and the Banks and neither  Borrower  nor any other
       Person is entitled to rely thereon; and

                    (d) Neither the Agent,  the  Co-Agent nor the Banks shall be
       responsible  or liable to any Person for any loss,  damage,  liability or
       claim of any kind  relating  to injury or death to  Persons  or damage to
       Property caused by the actions, inaction or negligence of Borrower and/or
       its Affiliates and Borrower hereby  indemnifies and holds the Agent,  the
       Co-Agent and the Banks harmless from any such loss, damage,  liability or
       claim.

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

              11.13 Further Assurances.  Borrower and its Subsidiaries shall, at
their  expense and without  expense to the Banks or the Agent,  do,  execute and
deliver such  further  acts and  documents as any Bank or the Agent from time to
time  reasonably  requires for the assuring and confirming unto the Banks or the
Agent of 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.

              11.14  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.  In the event of any conflict  between the provisions
of this  Agreement and those of any other Loan Docu ment, the provisions of this
Agreement shall control and govern;  provided that the inclusion of supplemental
rights or remedies in favor of the Agent or the Banks in any other Loan Document
shall not be deemed a  conflict  with this  Agreement.  Each Loan  Document  was
drafted with the joint participation of the respective parties thereto and shall
be construed neither against nor in favor of any party, but rather in accordance
with the fair meaning thereof.
                                      -91-
<PAGE>
              11.15  Governing  Law.  Except to the  extent  otherwise  provided
therein,  each Loan Document shall be governed by, and construed and enforced in
accordance with, the local Laws of California.

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

              11.17 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.

              11.18  Time of the  Essence.  Time is of the  essence  of the Loan
Documents.

              11.19 Foreign Banks. 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 Agent),  within twenty days after
the Closing Date (or after  accepting an assignment  interest herein pursuant to
Section 11.8, if applicable) two duly completed copies,  signed by a Responsible
Official,  of either Form 1001  (relating  to such Person and  entitling it to a
complete exemption from withholding on all payments to be made to such Person by
Borrower  pursuant to this  Agreement) or Form 4224 (relating to all payments to
be made to such Person by Borrower  pursuant  to this  Agreement)  of the United
States Internal Revenue Service or such other evidence (including, if reasonably
necessary,  Form W-9) satisfactory to Borrower and the Agent that no withholding
under the  federal  income tax laws is  required  with  respect to such  Person.
Thereafter and from time to time,  each such Person shall (a) promptly submit to
Borrower (with a copy to the Agent),  such  additional duly completed and signed
copies of one of such forms (or such  successor  forms as shall be adopted  from
time to time by the relevant  United States taxing  authorities)  as may then be
available  under then current United States laws and  regulations  to avoid,  or
such  evidence as is  satisfactory  to Borrower  and the Agent of any  available
exemption from, United States withholding taxes in respect of all payments to be
made to such Person by Borrower  pursuant  to this  Agreement  and (b) take such
steps  as shall  not be  materially  disadvantageous  to it,  in the  reasonable
judgment  of  such  Bank,  and as may be  reasonably  necessary  (including  the
re-designation  of  its  Eurodollar   Lending  Office,  if  any)  to  avoid  any
requirement  of applicable  laws that Borrower make any deduction or withholding
for taxes from amounts payable to such Person.

              11.20  Hazardous  Material  Indemnity.  Borrower  hereby agrees to
indemnify,  hold harmless and defend (by counsel reasonably  satisfactory to the
Agent)  the  Agent,  the  Co-Agent  and each of the Banks  and their  respective
directors,  officers, employees, agents, successors and assigns from and against
any and all claims, losses, damages, liabilities, fines,
                                      -92-
<PAGE>
penalties,   charges,   administrative  and  judicial  proceedings  and  orders,
judgments,  remedial action  requirements,  enforcement actions of any kind, and
all costs and  expenses  incurred in  connection  therewith  (including  but not
limited to  reasonable  attorneys'  fees and the  allocated  costs of  attorneys
employed by the Agent, the Co-Agent or any Bank, and expenses to the extent that
the  defense of any such  action  has not been  assumed  by  Borrower),  arising
directly or indirectly, in whole or in part, out of (i) the presence on or under
any Real Property of any Hazardous  Materials,  or any releases or discharges of
any  Hazardous  Materials  on,  under  or from any  Real  Property  and (ii) any
activity carried on or undertaken on or off any Real Property by Borrower or any
of its  predecessors  in  title,  whether  prior to or  during  the term of this
Agreement, and whether by Borrower or any predecessor in title or any employees,
agents,  contractors or  subcontractors of Borrower or any predecessor in title,
or any third persons at any time occupying or present on any Real  Property,  in
connection  with the handling,  treatment,  removal,  storage,  decontamination,
clean-up,  transport or disposal of any Hazardous  Materials at any time located
or present on or under any Real Property.  The foregoing indemnity shall further
apply to any residual  contamination on or under any Real Property, or affecting
any  natural  resources,  and to any  contamination  of any  property or natural
resources  arising in connection with the generation,  use,  handling,  storage,
transport  or disposal of any such  Hazardous  Materials,  and  irrespective  of
whether any of such  activities  were or will be undertaken  in accordance  with
applicable  Laws,  but the  foregoing  indemnity  shall not  apply to  Hazardous
Materials on any Real  Property,  the presence of which is caused  solely by the
Agent, the Co-Agent or the Banks.  Borrower hereby acknowledges and agrees that,
notwithstanding  any other  provision of this Agreement or any of the other Loan
Documents to the contrary,  the obligations of Borrower under this Section shall
be unlimited personal corporate obligations of Borrower and shall not be secured
by any deed of trust on any Real Property.

                  11.21 Reference to Arbitration.

                    (a) Mandatory Arbitration.  Any controversy or claim between
       any  Party or group of  Parties,  on the one  hand,  and the  Agent,  the
       Co-Agent or any Bank, or any group thereof, on the other hand,  including
       but not limited to those arising out of or relating to this  Agreement or
       any agreements or instruments  relating hereto or delivered in connection
       herewith and any claim based on or arising from an alleged tort, shall at
       the request of any party be determined by  arbitration.  The  arbitration
       shall be conducted in accordance  with the United States  Arbitration Act
       (Title 9, U.S. Code), notwithstanding any choice of law provision in this
       Agreement,  and under the  Commercial  Rules of the American  Arbitration
       Association  ("AAA").  The  arbitrators  shall give effect to statutes of
       limitation in determining any claim. Any controversy  concerning  whether
       an issue is arbitrable shall be determined by the  arbitrators.  Judgment
       upon  the   arbitration   award  may  be  entered  in  any  court  having
       jurisdiction.  The  institution and maintenance of an action for judicial
       relief  or  pursuit  of a  provisional  or  ancillary  remedy  shall  not
       constitute a waiver of the right of any party,  including the  plaintiff,
       to submit the  controversy  or claim to  arbitration  if any other  party
       contests such action for judicial relief.
                                      -93-
<PAGE>
                    (b)  Real   Property   Collateral.   Should  real   property
       collateral  hereafter  be taken by the Banks to secure  the  Obligations,
       then,  notwithstanding the provisions of Section 11.21(a), no controversy
       or claim shall be  submitted  to  arbitration  without the consent of all
       parties if, at the time of the proposed  submission,  such controversy or
       claim  arises  from or  relates  to an  obligation  to the Bank  which is
       secured by such real property  collateral.  If all parties do not consent
       to  submission  of  such a  controversy  or  claim  to  arbitration,  the
       controversy or claim shall be determined as provided in Section 11.21(c).

                    (c) Judicial Reference.  A controversy or claim which is not
       submitted to arbitration as provided and limited in Sections 11.21(a) and
       (b) shall,  at the request of any party,  be determined by a reference in
       accordance with  California Code of Civil Procedure  Sections 638 et seq.
       If such an election is made,  the parties shall  designate to the court a
       referee or referees  selected  under the  auspices of the AAA in the same
       manner as  arbitrators  are selected in  AAA-sponsored  proceedings.  The
       presiding  referee  of the  panel,  or the  referee  if there is a single
       referee,  shall be an active attorney or retired judge. Judgment upon the
       award  rendered by such referee or referees shall be entered in the court
       in which such proceeding was commenced in accordance with California Code
       of Civil Procedure Sections 644 and 645.

                    (d)  Provisional  Remedies,  Self-Help and  Foreclosure.  No
       provision  of this  Section  11.21  shall limit the right of any party to
       this  Agreement  to  exercise  self-help  remedies  such  as  setoff,  to
       foreclose  against  collateral  or to  obtain  provisional  or  ancillary
       remedies from a court of competent  jurisdiction before, after, or during
       the pendency of any  arbitration or other  proceeding.  The exercise of a
       remedy does not waive the right of any party to resort to  arbitration or
       reference.  Should real  property  collateral  hereafter  be taken by the
       Banks to secure the Obligations,  then, at the Banks' option, foreclosure
       under  any  deed of trust  or  mortgage  may be  accomplished  either  by
       exercise  of power or sale  under  the  deed of trust or  mortgage  or by
       judicial foreclosure.

              11.22  Confidentiality.  Each Bank agrees to hold any confidential
information  that  it may  receive  from  Borrower  or  Agent  pursuant  to this
Agreement in confidence, except for disclosure: (a) To other Banks; (b) To legal
counsel and accountants or other professional  advisors to Borrower or any Bank,
provided  that  the  recipient  has  accepted  such  information  subject  to  a
confidentiality  agreement  substantially  similar to this Section 11.22; (c) To
regulatory  officials having jurisdiction over that Bank; (d) As required by Law
or legal process or in connection  with any legal  proceeding to which that Bank
is involved  and that relates in some manner to the Loan  Documents;  and (e) 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 one of its Notes,  provided
that the recipient has accepted such  information  subject to a  confidentiality
agreement  substantially  similar to this  Section  11.22.  For  purposes of the
foregoing,  "confidential  information"  shall  mean  the  Strategic  Plan,  the
information provided pursuant to
                                      -94-
<PAGE>
Section  7.1(c) and any other  written  information  respecting  Borrower or its
Subsidiaries  provided  to the  applicable  Bank and  designated  thereon  to be
confidential,  other than (i) information previously filed with any Governmental
Agency and available to the public, (ii) information previously published in any
public medium from a source other than,  directly or indirectly,  that Bank, and
(iii)  information  disclosed  by  Borrower  to any Person not  associated  with
Borrower  without a  confidentiality  agreement  substantially  similar  to this
Section 11.22. Nothing in this Section shall be construed to create or give rise
to any fiduciary duty on the part of the Agent or the Banks to Borrower.

              11.23 Co-Agent. Each Bank acknowledges that it has not relied, and
will not rely,  upon the Co-Agent in deciding to enter into this Agreement or in
taking or not taking any action  hereunder.  The  Co-Agent  shall have no right,
power, obligation, liability, responsibility or duty under this Agreement or the
other  Loan  Documents  other  than  those  applicable  to all  Banks and in its
capacity as such.

              11.24 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 THE AGENT OR ANY BANK THAT DOES NOT
COMPLY WITH SECTION 11.2 TO EFFECT AN
                                      -95-
<PAGE>
AMENDMENT, MODIFICATION, WAIVER OR SUPPLEMENT TO THIS AGREEMENT
OR THE OTHER LOAN DOCUMENTS.

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

DEL WEBB CORPORATION                    BANK OF AMERICA NATIONAL           
                                        TRUST AND SAVINGS ASSOCIATION,     
                                        as Agent                           
By: /s/ John A. Spencer                                                    
   -------------------------------                                         
          John A. Spencer               By: /s/ Kelly M. Allred
          Senior Vice President               --------------------------------- 
                                                Kelly M. Allred, Vice President
                                              --------------------------------- 
Address:                                        Printed Name and Title
                                                                           
Del Webb Corporation                    Address:                           
6001 North 24th Street                                                     
Phoenix, Arizona  85016                 Bank of America National Trust and 
Attn:  Treasurer                        Savings Association                
                                        CRESG-L.A. - Unit #1357            
Telephone:      (602) 808-8000          555 South Flower Street, 6th Floor 
Telecopier:     (602) 808-8097          Los Angeles, California  90071     
                                        Attn:   Mr. Kelly Allred           
With a copy to:                                  Vice President            
                                                                           
Del Webb Corporation                    Telephone:  (213) 228-4027         
6001 North 24th Street                  Telecopier:  (213) 228-3802        
Phoenix, Arizona 85016                  
Attn:  General Counsel

Telephone:      (602) 808-8000
Telecopier:     (602) 808-8097
                                      -96-
<PAGE>
BANK ONE, ARIZONA, NA, as the            BANK OF AMERICA NATIONAL           
Co-Agent                                 TRUST AND SAVINGS ASSOCIATION,     
                                         as a Bank                          
By:   /s/ Jennifer Pescatore Vice Pres.                                   
      ---------------------------------  By:   /s/ Kelly M. Allred, Vice Pres.
      Jennifer Pescatore Vice Pres.            --------------------------------
      ---------------------------------        Kelly M. Allred, Vice Pres.
        Printed Name and Title                 --------------------------------
                                                 Printed Name and Title     
Address:                                                                    
                                         Address:                           
Bank One, Arizona, NA                                                       
Bank One Center                          Bank of America National Trust and 
201 North Central Avenue, 19th Floor     Savings Association                
Mail Code A21-1321                       CRES Homebuilder-L.A. Unit #1357   
Phoenix, Arizona  85004-2267             555 South Flower Street, 6th Floor 
Attn:   Ms. Jennifer Pescatore           Los Angeles, California  90071     
         Vice President                  Attn:  Mr. Kelly Allred            
                                                   Vice President           
Telephone:      (602) 221-2402                                              
Telecopier:     (602) 221-4435           Telephone:  (213) 228-4027         
                                         Telecopier:  (213) 228-5390        
                                                                            
BANK ONE, ARIZONA, NA, as a Bank                                            
                                         GUARANTY FEDERAL BANK, F.S.B.      
                                                                             
By: /s/ Jennifer Pescatore Vice Pres.
    ----------------------------------   By:/s/ Randall S. Reid
      Jennifer Pescatore Vice Pres.         --------------------------------
       ---------------------------          Randall S. Reid/ Vice President
             Printed Name and Title         --------------------------------
                                                 Printed Name and Title    
Address:                                 
                                         Address:                             
Bank One, Arizona, NA                                                         
Bank One Center                          Guaranty Federal Bank, F.S.B.        
201 North Central Avenue, 19th Floor     Residential Real Estate Lending      
Mail Code A21-1321                       8333 Douglas Avenue, 10th Floor      
Phoenix, Arizona  85004-2267             Dallas, Texas  75225                 
Attn:   Ms. Jennifer Pescatore           Attn:  Randall S. Reid
         Vice President                            Vice President             
                                                                              
Telephone:      (602) 221-2402           Telephone:      (214) 360-2877       
Telecopier:     (602) 221-4435           Telecopier:     (214) 360-1661       
                                                                              
                                      -97-
<PAGE>
BANKBOSTON, N.A. (formerly known as      FIRST UNION NATIONAL BANK              
The First National Bank of Boston)       (formerly known as First Union National
                                         Bank of North Carolina)                
                                                                                
By:  /s/ Nicholas Whiting                                                       
     --------------------------          By:  /s/ R. Steven Hall                
     Nicholas Whiting Vice Pres.              ---------------------------       
     --------------------------               R. Steven Hall/Vice Pres.         
       Printed Name and Title                 ---------------------------       
                                                Printed Name and Title          
Address:                                                                        
                                         Address:                               
BankBoston, N.A.                                                                
Real Estate Development                  First Union National Bank              
115 Perimeter Center Place, NE Suite 500 One First Union Center                 
Atlanta, Georgia  30346                  301 South College Street, TW-6         
Attn:  Mr. Nicholas Whiting              Charlotte, North Carolina  28288-0166  
         Vice President                  Attn:  Mr. R. Steven Hall              
                                                  Vice President                
Telephone:  (770) 390-6580                                                      
Telecopier:  (770) 390-8434              Telephone:  (704) 374-4180             
                                         Telecopier:  (704) 383-8121            
                                                                                
CREDIT LYONNAIS                                                                 
LOS ANGELES BRANCH                       BANK OF HAWAII                         
                                                                                
                                                                                
By:  /s/ Dianne M. Scott                 By:  /s/ Brenda K. Testerman           
     ----------------------------             -------------------------------   
     Dianne M. Scott VP & Manager             Brenda K. Testerman, Vice Pres.   
     ----------------------------             -------------------------------   
       Printed Name and Title                   Printed Name and Title          
                                                                                
Address:                                 Address:                               
                                                                                
Credit Lyonnais Los Angeles Branch       Bank of Hawaii, Arizona                
515 South Flower Street, Suite 2200      c/o Pacific Century Bank               
Los Angeles, California  90071           1850 N. Central Avenue, Suite 400      
Attn:   Mr. Michael Jackson              Phoenix, Arizona  85004-4541           
                                         Attn:  Ms. Brenda K. Testerman         
Telephone:  (213) 362-5952                        Vice President                
Telecopier: (213) 623-3437                                                      
                                         Telephone:  (602) 257-2489             
                                         Telecopier:  (602) 257-2235            
                                      -98-
<PAGE>                                    
FLEET NATIONAL BANK                      M&I THUNDERBIRD BANK                   
                                                                                
                                                                                
By: /s/ Patrick T. Burns                 By:  /s/ Paul V. Brodt                 
    ----------------------------              ---------------------------       
    Patrick T. Burns, V.P.                    Paul V. Brodt                     
    ----------------------------              Executive Vice President          
      Printed Name and Title                  ---------------------------       
                                                Printed Name and Title          
Address:                                                                        
                                                                                
Fleet National Bank                      By:  /s/ Theodore H. Treat             
111 Westminister Street, Suite 800            ---------------------------       
Providence, Rhode Island 02903                Theodore H. Treat                 
Attn:  Mr. Patrick T. Burns                   Vice President                    
                                              ---------------------------       
Telephone:  (401) 278-5961                       Printed Name and Title         
Telecopier:  (401) 278-3674                                                     
                                         Address:                               
                                                                                
NATIONSBANK, N.A. (formerly known        M&I Thunderbird Bank                   
as NationsBank, N.A. (Carolinas))        One East Camelback Road                
                                         Phoenix, Arizona 85012                 
                                         Attn:   Mr. Ted Treat                  
By: /s/ Stephen G. Earle                            Vice President              
    -----------------------------                                               
    Stephen G. Earle, SVP                Telephone:  (602) 241-6588             
    -----------------------------        Telecopier:  (602) 241-6553            
      Printed Name and Title             

Address:

NationsBank, N.A.
6610 Rockledge Drive, 6th Floor
Bethesda, Maryland 20817
Attn:   Mr. Steve Earle
          Senior Vice President

Telephone:  (301) 493-7048
Telecopier:  (301) 493-2885
                                      -99-
<PAGE>
NORWEST BANK ARIZONA,
National Association


By:  /s/ Rick Williams                    COMERICA BANK                      
     ----------------------------                                            
     Rick Williams Vice President                                            
     ----------------------------         By:  /s/ Leslie A. Vogel
       Printed Name and Title                  ---------------------------------
Address:                                       Leslie A. Vogel, Acctount Officer
                                               ---------------------------------
Norwest Bank Arizona,                            Printed Name and Title  
National Association                      Address:                           
3300 North Central M.S. 9008                                                 
Phoenix, Arizona  85012                   Comerica Bank                      
Attn:  Mr. Rick Williams                  500 Woodward Avenue, 7th Floor     
         Vice President                   Detroit, Michigan 48226-3256       
                                          Attn:  Mr. David J. Campbell       
Telephone:  (602) 248-3654                                                   
Telecopier:  (602) 248-3661               Telephone: (313) 222-9306          
                                          Telecopier: (313) 222-9295         
                                          
PNC BANK, N.A.


By:  /s/ Andrew P. Siwulec
     ---------------------------
     Andrew P. Siwulec
     Senior Vice President
     ---------------------------
       Printed Name and Title

Address:

PNC Bank, N.A.
Two Tower Center
Real Estate Banking Group, 18th Floor
Suite J3-JTTC-18-6
East Brunswick, New Jersey  08816
Attn:  Mr. Douglas G. Paul

Telephone:  (732) 220-3566
Telecopier:  (732) 220-3744
                                      -100-