Document:

<PAGE>
                                                                    EXHIBIT 4.25

           OFFICERS' CERTIFICATE AND GUARANTORS' OFFICERS' CERTIFICATE
                PURSUANT TO SECTIONS 201 AND 301 OF THE INDENTURE

Dated: June 27, 2005

         Kimberly N. King, Vice President and Corporate Secretary, and Kelly
Masuda, the Senior Vice President, Capital Markets and Treasurer, of KB Home, a
Delaware corporation (the "Company"), and Kimberly N. King, the Secretary, and
Kelly M. Allred, the Vice President and Treasurer, of KB Home Phoenix Inc., an
Arizona corporation, KB Home Coastal Inc., a California corporation, KB Home
North Bay Inc., a California corporation, KB Home South Bay Inc., a California
corporation, KB Home Greater Los Angeles Inc., a California corporation, KB Home
Colorado Inc., a Colorado corporation, KB Home Nevada Inc., a Nevada
corporation, and KBSA, Inc., a Texas corporation (the "General Partner") and
general partner of KB Home Lone Star LP, a Texas limited partnership (the
"Partnership") (collectively and including, without limitation, the Partnership
but excluding the General Partner, the "Guarantors"), hereby certify as follows:

         The undersigned, having read the appropriate provisions of the
Indenture dated as of January 28, 2004 (the "Original Indenture"), as amended
and supplemented by the First Supplemental Indenture dated as of January 28,
2004 (the "First Supplemental Indenture") and the Second Supplemental Indenture
dated as of June 30, 2004 (the "Second Supplemental Indenture"; the Original
Indenture, as amended and supplemented by the First Supplemental Indenture and
the Second Supplemental Indenture, is hereinafter called the "Indenture"), each
among the Company, the Guarantors and SunTrust Bank, as trustee (the "Trustee"),
including Sections 103, 201, 301 and 303 thereof and the definitions in such
Indenture relating thereto, and certain other corporate and partnership
documents and records, and having made such examination and investigation as, in
the opinion of the undersigned, each considers necessary to enable the
undersigned to express an informed opinion as to whether or not the conditions
set forth in the Indenture relating to the establishment of the terms of an
additional $150,000,000 aggregate principal amount of the Company's 6 1/4%
Senior Notes due 2015 (the "Additional Notes") and the form of certificate
evidencing the Additional Notes have been complied with, and whether the
conditions in the Indenture relating to the authentication and delivery by the
Trustee of the Additional Notes have been complied with, certify that (1) the
terms of the Additional Notes were established by resolutions duly adopted by
unanimous written consent of the Executive Committee of the Board of Directors
of the Company (the "Executive Committee") on June 21, 2005 and by the
undersigned officers of the Company pursuant to authority delegated to them by
resolutions duly adopted by unanimous written consent of the Board of Directors
of the Company on November 8, 2004 and by unanimous written consent of the
members of the Executive Committee on June 21, 2005 (collectively, the "Company
Resolutions") and such terms are as set forth in the Annex A hereto, and the
issuance, form and terms of the Additional Notes were approved and the
guarantees of the Notes and all related Guaranteed Obligations (as defined in
the Indenture) by the Guarantors were approved and confirmed by resolutions duly
adopted by each Guarantor's Board of Directors (other than the Partnership) and
the General Partner on June 21, 2005 (collectively, the "Guarantors'
Resolutions") and by the undersigned officers of each Guarantor (other than the
Partnership) and of the General Partner, on behalf of themselves and the
Guarantors, pursuant to authority delegated to them by resolutions duly adopted
by unanimous written consent of the Board of Directors of each Guarantor (other
than the Partnership) and the General Partner on June 21, 2005, (2) the form of
certificate evidencing the Additional Notes was established and approved by the
undersigned pursuant to authority delegated to them by the Company Resolutions
and the Guarantors' Resolutions and shall be in substantially the form attached
as Annex C hereto, (3) a true, complete and correct copy of the Company
Resolutions and the Guarantors' Resolutions, which were duly adopted by the
Board of Directors of the Company and the Executive Committee or by each
Guarantor's Board of Directors (other than the Partnership) and the Board of
Directors of the General Partner, as the case may be, and are in full force and
effect on the date hereof, are attached as exhibits to the Certificate of the
Secretary of the

<PAGE>

Company of even date herewith, and (4) the form and terms of the Additional
Notes have been established pursuant to Sections 201 and 301 of the Indenture
and comply with the Indenture and, in the opinion of the undersigned, all
conditions provided for in the Indenture (including, without limitation, those
set forth in Sections 103, 201, 301 and 303 of the Indenture) relating to the
establishment of the terms of the Additional Notes and the form of certificate
evidencing the Additional Notes, and relating to the authentication and delivery
of the Additional Notes, have been complied with.

         This certificate may be executed by the parties hereto in counterparts,
each of which when so executed shall be deemed to be an original, with the same
effect as if the signatures thereto and hereto were on the same instrument, but
all such counterparts shall together constitute but one and the same instrument.

                            [SIGNATURE PAGE FOLLOWS]

                                       2
<PAGE>
         IN WITNESS WHEREOF, we have hereunto set our hands as of the date first
written above.

                                       By:  /s/ KIMBERLY N. KING
                                            ------------------------------------
                                            Kimberly N. King
                                            Vice President and Corporate
                                            Secretary of KB Home

By:  /s/ KELLY MASUDA
     ------------------------------------------
     Kelly Masuda
     Senior Vice President, Capital Markets and
     Treasurer of KB Home

                                       3
<PAGE>

                                       By:  /s/ KIMBERLY N. KING
                                            -----------------------------------
                                            Kimberly N. King
                                            Secretary of each of the Guarantors
                                            (other than the Partnership) and of
                                            the General Partner (as such terms
                                            are defined in the foregoing
                                            Officers' Certificate)

By:  /s/ KELLY M. ALLRED
     ---------------------------------------
     Kelly M. Allred
     Vice President and Treasurer of each of
     the Guarantors (other than the
     Partnership) and of the General Partner
     (as such terms are defined in the
     foregoing Officers' Certificate)

                                       4
<PAGE>
                                     ANNEX A

         Capitalized terms used in this Annex A and not otherwise defined herein
have the same definitions as in the Indenture referred to in the Officers'
Certificate and Guarantors' Officers' Certificate of which this Annex A
constitutes a part.

         (1) The Company has heretofore established a series of Securities known
and designated as the "6 1/4% Senior Notes due 2015", has heretofore issued
$300,000,000 aggregate principal amount of Securities of such series and hereby
"re-opens" such series for the issuance of $150,000,000 aggregate principal
amount of additional Securities of such series. The $300,000,000 aggregate
principal amount of Securities of such series that have been heretofore issued
are hereinafter sometimes called the "Prior Notes," the additional Securities of
such series to be issued hereby are sometimes hereinafter called the "Additional
Notes" and all of the Securities of such series are hereinafter sometimes called
the "Notes."

         (2) The aggregate principal amount of the Additional Notes which may be
authenticated and delivered under the Indenture shall be $150,000,000 and the
aggregate principal amount of the Notes which may be authenticated and delivered
under the Indenture is limited to $450,000,000 (of which $300,000,000 aggregate
principal amount of Notes have been previously issued and are outstanding),
except for Notes authenticated and delivered upon registration of transfer of,
or in exchange for, or in lieu of, other Notes pursuant to Sections 304, 305,
306, 905 or 1107 of the Indenture; provided, however, such series may be
re-opened by the Company for the issuance of additional Notes of such series, so
long as any such additional Notes have the same form and terms (other than date
of issuance and the date from which interest thereon shall begin to accrue), and
carry the same right to receive accrued and unpaid interest, as the Notes
theretofore issued; provided, however, that, notwithstanding the foregoing, such
series may not be reopened if the Company has effected defeasance or covenant
defeasance with respect to the Notes pursuant to Section 402(2) or 402(3),
respectively, of the Indenture or has effected satisfaction and discharge with
respect to the Notes pursuant to Section 401 of the Indenture; and provided,
further, that no additional Notes may be issued at a price that would cause such
additional Notes to have "original issue discount" within the meaning of Section
1273 of the Internal Revenue Code of 1986, as amended.

         (3) The Additional Notes are to be issuable only as Registered
Securities without Coupons. The Additional Notes shall be initially issued in
book-entry form and represented by one or more permanent global Notes deposited
with or on behalf of and registered in the name of the Depositary or its nominee
(the "Global Notes"). The initial depositary (the "Depositary") for the Global
Notes shall be The Depository Trust Company, the depositary arrangements shall
be those employed by whoever shall be the Depositary with respect to the Global
Notes from time to time, and the Trustee shall be entitled to make endorsements
on any Global Notes to reflect any increases or decreases in the principal
amount thereof. Notwithstanding the foregoing, certificated Additional Notes in
definitive form ("Certificated Notes") may be issued in exchange for Global
Notes under the circumstances contemplated by the seventh paragraph of Section
305 of the Original Indenture.

         (4) The Additional Notes shall be sold to the Underwriter at a price of
100.614% of the principal amount thereof plus accrued interest thereon in the
amount of $651,041.67 (representing accrued interest from June 2, 2005).

         (5) Except for the aggregate principal amount of the Additional Notes,
the price at which the Additional Notes shall be sold to the Underwriter and the
date on which the Additional Notes shall be originally issued (all of which are
as set forth in this Annex A), the Additional Notes shall have the same terms
and provisions as the Prior Notes, which terms and provisions are as set forth
in Annex I to the Officers' Certificate and Guarantors' Officers' Certificate
dated June 2, 2005 establishing the form and

<PAGE>

terms of the Prior Notes (the "Prior Certificate") (a copy of the Prior
Certificate being attached as Annex B to the Officers' Certificate and
Guarantors' Officers' Certificate of which this Annex A constitutes a part) and
in the form of Additional Note attached as Annex C to the Officers' Certificate
and Guarantors' Officers' Certificate of which this Annex A constitutes a part,
all of which terms and provisions are incorporated by reference in and made a
part of this Annex A as if set forth in full herein; provided, however, that,
anything in the Prior Certificate to the contrary notwithstanding, the aggregate
principal amount of Additional Notes, the price at which the Additional Notes
shall be sold to the Underwriter and the date on which the Additional Notes
shall be originally issued shall be as set forth in this Annex A and not as set
forth in the Prior Certificate. For the avoidance of doubt, it is hereby
confirmed that, except as provided in the immediately preceding sentence, all of
the terms and provisions set forth in the Prior Certificate shall apply, mutatis
mutandis, to the Additional Notes, including, without limitation, the provisions
set forth in Sections (10), (15), (16), (18) and (21) of the Prior Certificate.

         (6) The Notes shall have the benefit of the Guarantees and the
Guarantors hereby confirm that the principal of and premium, if any, and
interest on the Notes and all related Guaranteed Obligations shall be guaranteed
pursuant to the Guarantees and otherwise in accordance with and subject to the
limitations set forth in Article Sixteen of the Indenture.

         (7) The Notes shall rank senior in right of payment to the Company's
8-5/8% Senior Subordinated Notes due 2008, 7-3/4% Senior Subordinated Notes due
2010 and 9-1/2% Senior Subordinated Notes due 2011 (the "Senior Subordinated
Notes") and shall constitute "Senior Indebtedness" as defined in the Indenture
dated as of November 19, 1996, as amended and supplemented by the First
Supplemental Indenture thereto dated as of December 18, 2003 (as so amended and
supplemented, the "Senior Subordinated Indenture"), by and between the Company,
the guarantors party thereto and the Trustee, as successor trustee. Each
Guarantor's Guarantee of the Notes shall rank senior in right of payment to its
guarantee of the Senior Subordinated Notes and shall constitute "Guarantor
Senior Indebtedness" as defined in the Senior Subordinated Indenture.

         (8) The Additional Notes shall be issued on June 27, 2005.

<PAGE>
                                     ANNEX B

                                Prior Certificate

                             [Certificate follows.]

<PAGE>
          OFFICERS' CERTIFICATE AND GUARANTORS' OFFICERS' CERTIFICATES
                PURSUANT TO SECTIONS 201 AND 301 OF THE INDENTURE

Dated: June 2, 2005

         Kimberly N. King, Vice President and Corporate Secretary, and Kelly
Masuda, the Senior Vice President, Capital Markets and Treasurer, of KB Home, a
Delaware corporation (the "Company"), and Kimberly N. King, the Secretary, and
Kelly M. Allred, the Vice President and Treasurer, of KB Home Phoenix Inc., an
Arizona corporation, KB Home Coastal Inc., a California corporation, KB Home
North Bay Inc., a California corporation, KB Home South Bay Inc., a California
corporation, KB Home Greater Los Angeles Inc., a California corporation, KB Home
Colorado Inc., a Colorado corporation, KB Home Nevada Inc., a Nevada
corporation, and KBSA, Inc., a Texas corporation (the "General Partner") and
general partner of KB Home Lone Star LP, a Texas limited partnership (the
"Partnership") (collectively and including, without limitation, the Partnership
but excluding the General Partner, the "Guarantors"), hereby certify as follows:

         The undersigned, having read the appropriate provisions of the
Indenture dated as of January 28, 2004 (the "Original Indenture"), as amended
and supplemented by the First Supplemental Indenture dated as of January 28,
2004 (the "First Supplemental Indenture") and the Second Supplemental Indenture
dated as of June 30, 2004 (the "Second Supplemental Indenture"; the Original
Indenture, as amended and supplemented by the First Supplemental Indenture and
the Second Supplemental Indenture, is hereinafter called the "Indenture"), each
among the Company, the Guarantors and SunTrust Bank, as trustee (the "Trustee"),
including Sections 103, 201, 301 and 303 thereof and the definitions in such
Indenture relating thereto, and certain other corporate and partnership
documents and records, and having made such examination and investigation as, in
the opinion of the undersigned, each considers necessary to enable the
undersigned to express an informed opinion as to whether or not the conditions
set forth in the Indenture relating to the establishment of the terms of the
Company's 6 1/4% Senior Notes due 2015 (the "Notes") and the form of certificate
evidencing the Notes have been complied with, and whether the conditions in the
Indenture relating to the authentication and delivery by the Trustee of the
Notes have been complied with, certify that (1) the terms of the Notes were
established by resolutions duly adopted by unanimous written consent of the
Executive Committee of the Board of Directors of the Company (the "Executive
Committee") on May 25, 2005 and by the undersigned officers of the Company
pursuant to authority delegated to them by resolutions duly adopted by unanimous
written consent of the Board of Directors of the Company on November 8, 2004 and
by unanimous written consent of the members of the Executive Committee on May
25, 2005 (collectively, the "Company Resolutions") and such terms are as set
forth in the Annex I hereto, and the issuance, form and terms of the Notes were
approved and the guarantees of the Notes and all related Guaranteed Obligations
(as defined in the Indenture) by the Guarantors were approved and confirmed by
resolutions duly adopted by each Guarantor's Board of Directors (other than the
Partnership) and the General Partner on May 25, 2005 (collectively, the
"Guarantors' Resolutions") and by the undersigned officers of each Guarantor
(other than the Partnership) and of the General Partner, on behalf of themselves
and the Guarantors, pursuant to authority delegated to them by resolutions duly
adopted by unanimous written consent of the Board of Directors of each Guarantor
(other than the Partnership) and the General Partner on May 25, 2005, (2) the
form of certificate evidencing the Notes was established and approved by the
undersigned pursuant to authority delegated to them by the Company Resolutions
and the Guarantors' Resolutions and shall be in substantially the form attached
as Annex II hereto, (3) a true, complete and correct copy of the Company
Resolutions and the Guarantors' Resolutions, which were duly adopted by the
Board of Directors of the Company and the Executive Committee or by each
Guarantor's Board of Directors (other than the Partnership) and the Board of
Directors of the General Partner, as the case may be, and are in full force and
effect on the date hereof, are attached as exhibits to the Certificate of the
Secretary of the Company of

<PAGE>

even date herewith, and (4) the form and terms of the Notes have been
established pursuant to Sections 201 and 301 of the Indenture and comply with
the Indenture and, in the opinion of the undersigned, all conditions provided
for in the Indenture (including, without limitation, those set forth in Sections
103, 201, 301 and 303 of the Indenture) relating to the establishment of the
terms of the Notes and the form of certificate evidencing the Notes, and
relating to the authentication and delivery of the Notes, have been complied
with.

         This certificate may be executed by the parties hereto in counterparts,
each of which when so executed shall be deemed to be an original, with the same
effect as if the signatures thereto and hereto were on the same instrument, but
all such counterparts shall together constitute but one and the same instrument.

                            [SIGNATURE PAGE FOLLOWS]

<PAGE>
         IN WITNESS WHEREOF, we have hereunto set our hands as of the date first
written above.

                                       By: /s/ KIMBERLY N. KING
                                           -------------------------------------
                                           Kimberly N. King
                                           Vice President and Corporate
                                           Secretary of KB Home

By: /s/ KELLY MASUDA
    ------------------------------------------
    Kelly Masuda
    Senior Vice President, Capital Markets and
    Treasurer of KB Home

<PAGE>
                                       By:  /s/ KIMBERLY N. KING
                                            ------------------------------------
                                            Kimberly N. King Secretary of each
                                            of the Guarantors (other than the
                                            Partnership) and of the General
                                            Partner (as such terms are defined
                                            in the foregoing Officers'
                                            Certificate)

By: /s/ KELLY M. ALLRED
    ----------------------------------------
    Kelly M. Allred
    Vice President and Treasurer of each of
    the Guarantors (other than the
    Partnership) and of the General Partner
    (as such terms are defined in the
    foregoing Officers' Certificate)

<PAGE>
                                     ANNEX I

         Capitalized terms used in this Annex I and not otherwise defined herein
have the same definitions as in the Indenture referred to in the Officers'
Certificate and Guarantors' Officers' Certificate of which this Annex I
constitutes a part.

         (1) The Securities of the series established hereby shall be known and
designated as the 6 1/4% Senior Notes due 2015 and are sometimes hereinafter
called the "Notes."

         (2) The aggregate principal amount of the Notes which may be
authenticated and delivered under the Indenture is limited to $300,000,000,
except for Notes authenticated and delivered upon registration of transfer of,
or in exchange for, or in lieu of, other Notes pursuant to Sections 304, 305,
306, 905 or 1107 of the Indenture; provided, however, such series may be
re-opened by the Company for the issuance of additional Notes of such series, so
long as any such additional Notes have the same form and terms (other than date
of issuance and the date from which interest thereon shall begin to accrue), and
carry the same right to receive accrued and unpaid interest, as the Notes
theretofore issued; provided, however, that, notwithstanding the foregoing, such
series may not be reopened if the Company has effected defeasance or covenant
defeasance with respect to the Notes pursuant to Section 402(2) or 402(3),
respectively, of the Indenture or has effected satisfaction and discharge with
respect to the Notes pursuant to Section 401 of the Indenture; and provided,
further, that no additional Notes may be issued at a price that would cause such
additional Notes to have "original issue discount" within the meaning of Section
1273 of the Internal Revenue Code of 1986, as amended.

         (3) The Notes are to be issuable only as Registered Securities without
Coupons. The Notes shall be initially issued in book-entry form and represented
by one or more permanent global Notes deposited with or on behalf of and
registered in the name of the Depositary or its nominee (the "Global Notes").
The initial depositary (the "Depositary") for the Global Notes shall be The
Depository Trust Company, the depositary arrangements shall be those employed by
whoever shall be the Depositary with respect to the Global Notes from time to
time, and the Trustee shall be entitled to make endorsements on any Global Notes
to reflect any increases or decreases in the principal amount thereof.
Notwithstanding the foregoing, certificated Notes in definitive form
("Certificated Notes") may be issued in exchange for Global Notes under the
circumstances contemplated by the seventh paragraph of Section 305 of the
Original Indenture.

         (4) The Notes shall be sold to the Underwriter at a price of 99.533% of
the principal amount thereof.

         (5) The Stated Maturity of the Notes on which the principal thereof is
due and payable shall be June 15, 2015.

         (6) The principal of the Notes shall bear interest at the rate of 6
1/4% per annum from June 2, 2005 or from the most recent date to which interest
has been paid or duly provided for, payable semiannually in arrears on June 15
and December 15 (each, an "Interest Payment Date") of each year, commencing
December 15, 2005, to the Persons in whose names such Notes (or one or more
Predecessor Securities) are registered at the close of business on the June 1 or
December 1, respectively, immediately prior to such Interest Payment Dates
(each, a "Regular Record Date") regardless of whether such Regular Record Date
is a Business Day. Interest on the Notes will be computed on the basis of a
360-day year consisting of twelve 30-day months. No Additional Amounts shall be
payable on the Notes.

         (7) The Notes are redeemable, as a whole at any time or from time to
time in part, at the option of the Company on the terms and subject to the
conditions set forth in the Indenture and in the

<PAGE>

form of Note which appears as Annex II to the Officers' Certificate and
Guarantors' Officers' Certificate of which this Annex I constitutes a part.

         (8) The Notes shall not be repayable or redeemable at the option of the
Holders prior to the Stated Maturity of the principal thereof (except as
provided in Article Five of the Indenture) and shall not be subject to a sinking
fund or analogous provision.

         (9) The Borough of Manhattan, The City of New York is hereby designated
as a Place of Payment for the Notes.

         (10) The Company hereby appoints the Trustee, acting through the office
of the Trustee located at c/o SunTrust Robinson Humphrey Capital Markets, 125
Broad Street, 3rd Floor, New York, New York 10004, in the Borough of Manhattan,
The City of New York, as the Company's Office or Agency for the purposes
specified in Section 1002 of the Indenture; provided, however, subject to
Section 1002 of the Indenture, the Company may at any time remove the Trustee as
its Office or Agency in the Borough of Manhattan, The City of New York
designated for such purposes and may from time to time designate one or more
other Offices or Agencies for such purposes and may from time to time rescind
such designation, so long as the Company shall at all times maintain an Office
or Agency for such purposes in the Borough of Manhattan, The City of New York.

         (11) The Notes shall be issued in denominations of $1,000 and integral
multiples of $1,000 in excess thereof.

         (12) The principal of, premium, if any, and interest on the Notes shall
be payable in Dollars.

         (13) Sections 402(2) and 402(3) of the Indenture shall apply to the
Notes; provided that (i) the Company may effect defeasance and covenant
defeasance pursuant to Sections 402(2) and 402(3), respectively, only with
respect to all (and not less than all) of the Outstanding Notes, and (ii) the
only covenants that shall be subject to covenant defeasance shall be those
expressly referred to in Section 402(3) of the Indenture.

         (14) The Notes shall not be convertible into or exchangeable for other
securities.

         (15) Anything in the Indenture or the Notes to the contrary
notwithstanding, payments of the principal of and premium, if any, and interest
on the Global Notes shall be made by wire transfer.

         (16) To the extent that any provision of the Indenture or the Notes
provides for the payment of interest on overdue principal of, or premium, if
any, or interest on, the Notes, then, to the extent permitted by law, interest
on such overdue principal, premium, if any, and interest shall accrue at the
rate of interest borne by the Notes.

         (17) The Notes shall have such other terms and provisions as are set
forth in the form of Note attached as Annex II to the Officers' Certificate and
Guarantors' Officers' Certificate of which this Annex I constitutes a part, all
of which terms and provisions are incorporated by reference in and made a part
of this Annex I as if set forth in full herein.

         (18) As used in the Indenture with respect to the Notes and in the
certificates evidencing the Notes, all references to "premium" on the Notes
shall mean any amounts (other than accrued interest) payable upon the redemption
of any Notes in excess of 100% of the principal amount of such Notes.

<PAGE>

         (19) The Notes shall have the benefit of the Guarantees and the
Guarantors hereby confirm that the principal of and premium, if any, and
interest on the Notes and all related Guaranteed Obligations shall be guaranteed
pursuant to the Guarantees and otherwise in accordance with and subject to the
limitations set forth in Article Sixteen of the Indenture.

         (20) The Notes shall rank senior in right of payment to the Company's
8-5/8% Senior Subordinated Notes due 2008, 7-3/4% Senior Subordinated Notes due
2010 and 9-1/2% Senior Subordinated Notes due 2011 (the "Senior Subordinated
Notes") and shall constitute "Senior Indebtedness" as defined in the Indenture
dated as of November 19, 1996, as amended and supplemented by the First
Supplemental Indenture thereto dated as of December 18, 2003 (as so amended and
supplemented, the "Senior Subordinated Indenture"), by and between the Company,
the guarantors party thereto and the Trustee, as successor trustee. Each
Guarantor's Guarantee of the Notes shall rank senior in right of payment to its
guarantee of the Senior Subordinated Notes and shall constitute "Guarantor
Senior Indebtedness" as defined in the Senior Subordinated Indenture.

         (21) Section 101 of the Original Indenture is hereby amended, solely
insofar as relates to the Notes, by deleting the definition of "Subject Notes"
appearing in such Section 101 and replacing such definition with the following:

                  "'Subject Notes' means, with respect to any series of
         Securities issued under this Indenture, (1) Securities of any other
         series issued under this Indenture and (2) the Company's 8-5/8% Senior
         Subordinated Notes due 2008, 7-3/4% Senior Subordinated Notes due 2010
         and 9-1/2% Senior Subordinated Notes due 2011, or any of the
         foregoing."

<PAGE>
                                    ANNEX II

                    Form of Certificate Evidencing the Notes

              [Form of certificate evidencing the notes follows.]

<PAGE>
THIS NOTE IS A GLOBAL SECURITY REFERRED TO IN THE INDENTURE HEREINAFTER REFERRED
TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY OR A NOMINEE THEREOF. THIS NOTE
IS EXCHANGEABLE FOR NOTES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE
DEPOSITORY OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
INDENTURE AND, UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN
DEFINITIVE CERTIFICATED FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE
BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE
DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY OR BY THE
DEPOSITORY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR A NOMINEE OF SUCH
SUCCESSOR DEPOSITORY.

UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE COMPANY (AS DEFINED BELOW)
OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

No. R-01                                   Principal Amount:  $300,000,000
CUSIP No. 48666KAM1                        (or such other principal amount
ISIN No. US48666KAM18                      as is set forth on Schedule A hereto)

                                     KB Home

                          6 1/4% Senior Notes due 2015

         KB Home, a Delaware corporation (hereinafter called the "Company",
which term includes any successor corporation under the Indenture referred to
below), for value received, hereby promises to pay to Cede & Co., or registered
assigns, the principal sum of THREE HUNDRED MILLION DOLLARS ($300,000,000) or
such other principal amount as is set forth on Schedule A hereto on June 15,
2015, and to pay interest thereon from June 2, 2005, or from the most recent
date to which interest has been paid or duly provided for, semiannually in
arrears on June 15 and December 15 of each year (each, an "Interest Payment
Date"), commencing December 15, 2005, and at Maturity, at the rate of 6 1/4% per
annum, until the principal hereof is paid or duly made available for payment.
Interest on this Note shall be calculated on the basis of a 360-day year
consisting of twelve 30-day months. The interest so payable and punctually paid
or duly provided for on any Interest Payment Date will, as provided in such
Indenture, be paid to the Person in whose name this Note (or one or more
Predecessor Securities) is registered at the close of business on the Regular
Record Date for such interest, which shall be the June 1 or December 1 (whether
or not a Business Day), as the case may be, next preceding such Interest Payment
Date. Any such interest which is payable, but is not punctually paid or duly
provided for, on any Interest Payment Date shall forthwith cease to be payable
to the Person who was the Holder hereof on the relevant Regular Record Date by
virtue of having been such Holder, and may be paid to the Person in whose name
this Note (or one or more Predecessor Securities) is registered at the close of
business on a Special Record Date for the payment of such Defaulted Interest to
be fixed by the Trustee, notice whereof shall be given to the Holder of this
Note not less than 10 days prior to such Special Record Date, or may be paid at
any time in any other lawful manner not inconsistent with the requirements of
any securities exchange on which the Notes may be listed, and upon such notice
as may be required by such exchange, all as more fully provided in such
Indenture.

         Payment of the principal of and premium, if any, and interest on this
Note will be made at the Office or Agency of the Company maintained for that
purpose in the Borough of Manhattan, The City of New York, in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts; provided, however, that, at the
option of the Company, interest may be paid by check mailed to the

                                       2
<PAGE>

address of the Person entitled thereto as such address shall appear in the
Security Register or by transfer to an account maintained by the payee with a
bank located in the United States; and provided, further, that if this Note is a
global Note registered in the name of a Depository or its nominee, then,
anything in the Indenture or the Notes to the contrary notwithstanding, payments
of the principal of and premium, if any, and interest on this Note shall be made
by wire transfer.

         This Note is one of a duly authorized issue of Securities of the
Company (herein called the "Notes") issued and to be issued in one or more
series under an Indenture dated as of January 28, 2004 (the "Original
Indenture"), as amended and supplemented by the First Supplemental Indenture
dated as of January 28, 2004 (the "First Supplemental Indenture"), and by the
Second Supplemental Indenture dated as of June 30, 2004 (the "Second
Supplemental Indenture"; the Original Indenture, as amended and supplemented by
the First Supplemental Indenture and the Second Supplemental Indenture and all
other indentures supplemental thereto, is herein called the "Indenture"), each
among the Company, the Guarantors and SunTrust Bank, as trustee (herein called
the "Trustee", which term includes any successor trustee under the Indenture),
to which Indenture and all indentures supplemental thereto reference is hereby
made for a statement of the respective rights, limitations of rights, duties and
immunities thereunder of the Company, the Guarantors, the Trustee and the
Holders of the Notes, and the terms upon which the Notes are, and are to be,
authenticated and delivered. This Note is one of the series designated on the
face hereof, initially limited (subject to exceptions provided in the Indenture
and subject to the right of the Company to reopen such series for issuance of
additional Securities of such series upon the terms and subject to the
conditions specified in the Indenture) in aggregate principal amount to
$300,000,000.

         Payments of principal of and premium, if any, and interest on the Notes
are fully, irrevocably and unconditionally guaranteed, jointly and severally, by
the Guarantors on the terms and subject to the limitations set forth in the
Indenture. A Guarantor may be released from its obligations under the Indenture
and those obligations may be reinstated, all on the terms and subject to the
conditions set forth in the Indenture.

         The Notes may be redeemed, in whole or from time to time in part, at
the Company's option on any date (each, a "Redemption Date") at a Redemption
Price equal to the greater of: (a) 100% of the principal amount of the Notes to
be redeemed, and (b) the sum of the present values of the remaining scheduled
payments of principal and interest on the Notes to be redeemed (exclusive of
interest accrued to the applicable Redemption Date) discounted to such
Redemption Date on a semiannual basis, assuming a 360-day year consisting of
twelve 30-day months, at the Treasury Rate plus 35 basis points, plus, in the
case of both clause (a) and (b) above, accrued and unpaid interest on the
principal amount of the Notes being redeemed to such Redemption Date.
Notwithstanding the foregoing, installments of interest on Notes whose Stated
Maturity is on or prior to the relevant Redemption Date will be payable to the
Holders of such Notes (or one or more Predecessor Securities) registered as such
at the close of business on the relevant Regular Record Date according to their
terms and the provisions of the Indenture.

         As used in this Note, the following terms have the meanings set forth
below:

         "Treasury Rate" means, with respect to any Redemption Date for the
Notes:

         (a)  the yield, under the heading that represents the average for the
              immediately preceding week, appearing in the most recently
              published statistical release designated "H.15(519)" or any
              successor publication which is published weekly by the Board of
              Governors of the Federal Reserve System and which establishes
              yields on actively traded United States Treasury securities
              adjusted to constant maturity under the caption "Treasury Constant
              Maturities," for the maturity corresponding to the Comparable
              Treasury Issue (if no maturity is within three months before or
              after the Final Maturity Date for the Notes, yields for the two
              published maturities most closely corresponding to the Comparable
              Treasury Issue shall be determined and the Treasury Rate shall be
              interpolated or extrapolated from such yields on a straight-line
              basis, rounding to the nearest month); or

         (b)  if such release (or any successor release) is not published during
              the week preceding the calculation date or does not contain such
              yields, the rate per annum equal to the semiannual equivalent
              yield to maturity of the Comparable Treasury Issue, calculated
              using a price for the Comparable Treasury Issue (expressed as a
              percentage of its principal amount) equal to the Comparable
              Treasury Price for such Redemption Date.

                                       3
<PAGE>

The Treasury Rate shall be calculated on the third Business Day preceding the
applicable Redemption Date. As used in the immediately preceding sentence and in
the definition of "Reference Treasury Dealer Quotations" below, the term
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday which
is not a day on which banking institutions in The City of New York are
authorized or obligated by law, regulation or executive order to close.

         "Comparable Treasury Issue" means, with respect to any Redemption Date
for the Notes, the United States Treasury security selected by the Independent
Investment Banker as having a maturity comparable to the remaining term of the
Notes to be redeemed that would be utilized, at the time of selection and in
accordance with customary financial practice, in pricing new issues of corporate
debt securities of comparable maturity to the remaining term of the Notes to be
redeemed.

         "Independent Investment Banker" means, with respect to any Redemption
Date for the Notes, UBS Securities LLC and its successors or, if such firm or
any successor to such firm, as the case may be, is unwilling or unable to select
the Comparable Treasury Issue, an independent investment banking institution of
national standing appointed by the Trustee after consultation with the Company.

         "Comparable Treasury Price" means, with respect to any Redemption Date
for the Notes:

         (a)  the average of four Reference Treasury Dealer Quotations for such
              Redemption Date, after excluding the highest and lowest such
              Reference Treasury Dealer Quotations, or

         (b)  if the Trustee obtains fewer than four such Reference Treasury
              Dealer Quotations, the average of all such quotations.

         "Reference Treasury Dealer" means UBS Securities LLC and its successors
(provided, however, that if such firm or any such successor, as the case may be,
shall cease to be a primary U.S. Government securities dealer in New York City
(a "Primary Treasury Dealer"), the Trustee, after consultation with the Company,
will substitute therefor another Primary Treasury Dealer) and three other
Primary Treasury Dealers selected by the Trustee after consultation with the
Company.

         "Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any Redemption Date for the Notes, the average, as
determined by the Trustee, of the bid and asked prices for the Comparable
Treasury Issue (expressed in each case as a percentage of its principal amount)
quoted in writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m.,
New York City time, on the third Business Day preceding such Redemption Date.

         "Final Maturity Date" means June 15, 2015.

         Notice of any redemption by the Company will be mailed at least 30 days
but not more than 60 days before any Redemption Date to each Holder of Notes to
be redeemed. If less than all the Notes are to be redeemed at the option of the
Company, the Trustee will select, in such manner as it deems fair and
appropriate, the Notes (or portions thereof) to be redeemed. Unless the Company
defaults in payment of the Redemption Price (including, without limitation,
interest, if any, accrued to the applicable Redemption Date), on and after the
applicable Redemption Date interest will cease to accrue on the Notes or
portions thereof called for redemption on such Redemption Date.

         If an Event of Default with respect to the Notes shall occur and be
continuing, the principal of and accrued and unpaid interest on the Notes may be
declared due and payable in the manner and with the effect provided in the
Indenture.

         The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the Guarantors and the rights of the Holders of the Securities of
each series issued under the Indenture at any time by the Company, the
Guarantors and the Trustee with the consent of the Holders of not less than a
majority in aggregate principal amount of the Securities at the time

                                       4
<PAGE>

Outstanding of each series affected thereby. The Indenture also contains
provisions permitting the Holders of specified percentages in aggregate
principal amount of the Securities of any series at the time Outstanding, on
behalf of the Holders of all Securities of such series, to waive compliance by
the Company and the Guarantors with certain provisions of the Indenture and
certain past defaults under the Indenture and their consequences. Any such
consent or waiver by the Holder of this Note shall be conclusive and binding
upon such Holder and upon all future Holders of this Note and of any Notes
issued upon the registration of transfer hereof or in exchange herefor or in
lieu hereof, whether or not notation of such consent or waiver is made upon this
Note.

         No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and premium, if any, and
interest on this Note, at the time, place and rate, and in the coin or currency,
herein and in the Indenture prescribed.

         As provided in the Indenture and subject to certain limitations set
forth therein, the transfer of this Note may be registered on the Security
Register upon surrender of this Note for registration of transfer at the Office
or Agency of the Company maintained for the purpose in any place where the
principal of and interest on this Note are payable, duly endorsed, or
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Security Registrar duly executed by the Holder hereof or by his
attorney duly authorized in writing, and thereupon one or more new Notes, of
authorized denominations and for the same aggregate principal amount, will be
issued to the designated transferee or transferees.

         The Notes are issuable only in fully registered form without coupons in
the denominations of $1,000 and integral multiples of $1,000 in excess thereof.
As provided in the Indenture and subject to certain limitations set forth
therein, the Notes are exchangeable for a like aggregate principal amount of
Notes of authorized denominations as requested by the Holders surrendering the
same.

         No service charge shall be made for any such registration of transfer
or exchange, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith, other than
in certain cases provided in the Indenture.

         Prior to due presentment of this Note for registration of transfer, the
Company, the Guarantors, the Trustee and any agent of the Company, any Guarantor
or the Trustee may treat the Person in whose name this Note is registered as the
owner hereof for all purposes, whether or not this Note shall be overdue, and
none of the Company, the Guarantors or the Trustee nor any such agent shall be
affected by notice to the contrary.

         The Indenture contains provisions whereby (i) the Company and the
Guarantors may be discharged from their obligations with respect to the Notes
(subject to certain exceptions) or (ii) the Company may be released from its
obligations under specified covenants and agreements in the Indenture, in each
case if the Company irrevocably deposits with the Trustee money and/or
Government Obligations sufficient to pay and discharge the entire indebtedness
on all Notes, and satisfies certain other conditions, all as more fully provided
in the Indenture. In addition, the Indenture shall cease to be of further effect
(subject to certain exceptions) with respect to the Notes when (1) either (A)
all Notes previously authenticated and delivered have been delivered (subject to
certain exceptions) to the Trustee for cancellation, or (B) all Notes (i) have
become due and payable or (ii) will become due and payable at their Stated
Maturity within one year or (iii) are to be called for redemption within one
year and, in the case of (i), (ii) or (iii) above, the Company has irrevocably
deposited with the Trustee money in an amount sufficient to pay and discharge
the entire indebtedness on all such Notes not theretofore delivered to the
Trustee for cancellation in respect of principal, premium, if any, and interest
to the date of such deposit (if such Notes have become due and payable) or to
the Stated Maturity or Redemption Date thereof, as the case may be, and (2) the
Company satisfies certain other conditions, all as more fully provided in the
Indenture.

         This Note shall be governed by and construed in accordance with the
laws of the State of New York.

         All terms used in this Note which are defined in the Indenture and not
defined herein shall have the meanings assigned to them in the Indenture.

                                       5
<PAGE>

         Unless the certificate of authentication hereon has been executed by or
on behalf of the Trustee under the Indenture by the manual signature of one of
its authorized signatories, this Note shall not be entitled to any benefits
under the Indenture (including, without limitation, the Guarantees) or be valid
or obligatory for any purpose.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       6
<PAGE>
         IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed by the manual or facsimile signatures of its duly authorized officers.

Dated:  June 2, 2005

KB HOME

By:                                        By:
    ----------------------------------        ----------------------------------
    Name:  Kimberly N. King                   Name:  Kelly Masuda
    Title: Vice President and                 Title: Senior Vice President,
           Corporate Secretary                       Capital Markets and
                                                     Treasurer

TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
This is one of the Securities of the
series designated therein referred to
in the within-mentioned Indenture.

SUNTRUST BANK, as Trustee

By: ------------------------------------
          Authorized Signatory

                                       7
<PAGE>
                                  ABBREVIATIONS

         The following abbreviations, when used in the inscription on the face
of this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:

                           TEN COM--as tenants in common
                           TEN ENT--as tenants by the entireties
                           JT TEN--as joint tenants with right of survivorship
                           and not as tenants in common
                           UNIF GIFT MIN ACT-- _______Custodian_____________
                                               (Cust)             (Minor)

                                            under the Uniform Gift to Minors Act

                                            ------------------------------------
                                                          (State)

    Additional abbreviations may also be used though not in the above list.

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

FOR VALUE RECEIVED, the undersigned registered holder hereby sell(s), assign(s)
and transfer(s) unto

         PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE

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

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

--------------------------------------------------------------------------------
             PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE

--------------------------------------------------------------------------------
the within security and all rights thereunder, hereby irrevocably constituting
and appointing

______________________________________________________________________Attorney
to transfer said security on the books of the Company with full power
of substitution in the premises.

Dated:                                        Signed:
      -----------------------------------            ---------------------------

         Notice: The signature to this assignment must correspond with the name
as it appears upon the face of the within security in every particular, without
alteration or enlargement or any change whatever.

                                       8
<PAGE>
                                   SCHEDULE A

      The initial principal amount of this global Note is Three Hundred Million
Dollars ($300,000,000). The following increases or decreases in the principal
amount of this global Note have been made:

<TABLE>
<CAPTION>
                                                              Principal amount of
               Amount of increase     Amount of decrease in   this global Note       Signature of
               in principal amount    principal amount of     following such         authorized signatory
Date made      of this global Note    this global Note        decrease or increase   of Trustee
---------      -------------------    ----------------------  --------------------   --------------------
<S>            <C>                    <C>                     <C>                    <C>
---------------------------------------------------------------------------------------------------------

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

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

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

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

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

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

---------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>
                                     ANNEX C

                             Form of Additional Note

              [Form of certificate evidencing the notes follows.]

<PAGE>
THIS NOTE IS A GLOBAL SECURITY REFERRED TO IN THE INDENTURE HEREINAFTER REFERRED
TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY OR A NOMINEE THEREOF. THIS NOTE
IS EXCHANGEABLE FOR NOTES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE
DEPOSITORY OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
INDENTURE AND, UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN
DEFINITIVE CERTIFICATED FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE
BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE
DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY OR BY THE
DEPOSITORY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR A NOMINEE OF SUCH
SUCCESSOR DEPOSITORY.

UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE COMPANY (AS DEFINED BELOW)
OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

No. R-02                                   Principal Amount:  $150,000,000
CUSIP No. 48666KAM1                        (or such other principal amount
ISIN No. US48666KAM18                      as is set forth on Schedule A hereto)

                                     KB Home

                          6 1/4% Senior Notes due 2015

         KB Home, a Delaware corporation (hereinafter called the "Company",
which term includes any successor corporation under the Indenture referred to
below), for value received, hereby promises to pay to Cede & Co., or registered
assigns, the principal sum of ONE HUNDRED FIFTY MILLION DOLLARS ($150,000,000)
or such other principal amount as is set forth on Schedule A hereto on June 15,
2015, and to pay interest thereon from June 2, 2005, or from the most recent
date to which interest has been paid or duly provided for, semiannually in
arrears on June 15 and December 15 of each year (each, an "Interest Payment
Date"), commencing December 15, 2005, and at Maturity, at the rate of 6 1/4% per
annum, until the principal hereof is paid or duly made available for payment.
Interest on this Note shall be calculated on the basis of a 360-day year
consisting of twelve 30-day months. The interest so payable and punctually paid
or duly provided for on any Interest Payment Date will, as provided in such
Indenture, be paid to the Person in whose name this Note (or one or more
Predecessor Securities) is registered at the close of business on the Regular
Record Date for such interest, which shall be the June 1 or December 1 (whether
or not a Business Day), as the case may be, next preceding such Interest Payment
Date. Any such interest which is payable, but is not punctually paid or duly
provided for, on any Interest Payment Date shall forthwith cease to be payable
to the Person who was the Holder hereof on the relevant Regular Record Date by
virtue of having been such Holder, and may be paid to the Person in whose name
this Note (or one or more Predecessor Securities) is registered at the close of
business on a Special Record Date for the payment of such Defaulted Interest to
be fixed by the Trustee, notice whereof shall be given to the Holder of this
Note not less than 10 days prior to such Special Record Date, or may be paid at
any time in any other lawful manner not inconsistent with the requirements of
any securities exchange on which the Notes may be listed, and upon such notice
as may be required by such exchange, all as more fully provided in such
Indenture.

         Payment of the principal of and premium, if any, and interest on this
Note will be made at the Office or Agency of the Company maintained for that
purpose in the Borough of Manhattan, The City of New York, in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts; provided, however, that, at the
option of the Company, interest may be paid by check mailed to the

                                       2
<PAGE>

address of the Person entitled thereto as such address shall appear in the
Security Register or by transfer to an account maintained by the payee with a
bank located in the United States; and provided, further, that if this Note is a
global Note registered in the name of a Depository or its nominee, then,
anything in the Indenture or the Notes to the contrary notwithstanding, payments
of the principal of and premium, if any, and interest on this Note shall be made
by wire transfer.

         This Note is one of a duly authorized issue of Securities of the
Company (herein called the "Notes") issued and to be issued in one or more
series under an Indenture dated as of January 28, 2004 (the "Original
Indenture"), as amended and supplemented by the First Supplemental Indenture
dated as of January 28, 2004 (the "First Supplemental Indenture"), and by the
Second Supplemental Indenture dated as of June 30, 2004 (the "Second
Supplemental Indenture"; the Original Indenture, as amended and supplemented by
the First Supplemental Indenture and the Second Supplemental Indenture and all
other indentures supplemental thereto, is herein called the "Indenture"), each
among the Company, the Guarantors and SunTrust Bank, as trustee (herein called
the "Trustee", which term includes any successor trustee under the Indenture),
to which Indenture and all indentures supplemental thereto reference is hereby
made for a statement of the respective rights, limitations of rights, duties and
immunities thereunder of the Company, the Guarantors, the Trustee and the
Holders of the Notes, and the terms upon which the Notes are, and are to be,
authenticated and delivered. This Note is one of the series designated on the
face hereof, currently limited (subject to exceptions provided in the Indenture
and subject to the right of the Company to reopen such series for issuance of
additional Securities of such series upon the terms and subject to the
conditions specified in the Indenture) in aggregate principal amount to
$450,000,000.

         Payments of principal of and premium, if any, and interest on the Notes
are fully, irrevocably and unconditionally guaranteed, jointly and severally, by
the Guarantors on the terms and subject to the limitations set forth in the
Indenture. A Guarantor may be released from its obligations under the Indenture
and those obligations may be reinstated, all on the terms and subject to the
conditions set forth in the Indenture.

         The Notes may be redeemed, in whole or from time to time in part, at
the Company's option on any date (each, a "Redemption Date") at a Redemption
Price equal to the greater of: (a) 100% of the principal amount of the Notes to
be redeemed, and (b) the sum of the present values of the remaining scheduled
payments of principal and interest on the Notes to be redeemed (exclusive of
interest accrued to the applicable Redemption Date) discounted to such
Redemption Date on a semiannual basis, assuming a 360-day year consisting of
twelve 30-day months, at the Treasury Rate plus 35 basis points, plus, in the
case of both clause (a) and (b) above, accrued and unpaid interest on the
principal amount of the Notes being redeemed to such Redemption Date.
Notwithstanding the foregoing, installments of interest on Notes whose Stated
Maturity is on or prior to the relevant Redemption Date will be payable to the
Holders of such Notes (or one or more Predecessor Securities) registered as such
at the close of business on the relevant Regular Record Date according to their
terms and the provisions of the Indenture.

         As used in this Note, the following terms have the meanings set forth
below:

         "Treasury Rate" means, with respect to any Redemption Date for the
Notes:

         (a)  the yield, under the heading that represents the average for the
              immediately preceding week, appearing in the most recently
              published statistical release designated "H.15(519)" or any
              successor publication which is published weekly by the Board of
              Governors of the Federal Reserve System and which establishes
              yields on actively traded United States Treasury securities
              adjusted to constant maturity under the caption "Treasury Constant
              Maturities," for the maturity corresponding to the Comparable
              Treasury Issue (if no maturity is within three months before or
              after the Final Maturity Date for the Notes, yields for the two
              published maturities most closely corresponding to the Comparable
              Treasury Issue shall be determined and the Treasury Rate shall be
              interpolated or extrapolated from such yields on a straight-line
              basis, rounding to the nearest month); or

         (b)  if such release (or any successor release) is not published during
              the week preceding the calculation date or does not contain such
              yields, the rate per annum equal to the semiannual equivalent
              yield to maturity of the Comparable Treasury Issue, calculated
              using a price for the Comparable Treasury Issue (expressed as a
              percentage of its principal amount) equal to the Comparable
              Treasury Price for such Redemption Date.

                                       3
<PAGE>

The Treasury Rate shall be calculated on the third Business Day preceding the
applicable Redemption Date. As used in the immediately preceding sentence and in
the definition of "Reference Treasury Dealer Quotations" below, the term
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday which
is not a day on which banking institutions in The City of New York are
authorized or obligated by law, regulation or executive order to close.

         "Comparable Treasury Issue" means, with respect to any Redemption Date
for the Notes, the United States Treasury security selected by the Independent
Investment Banker as having a maturity comparable to the remaining term of the
Notes to be redeemed that would be utilized, at the time of selection and in
accordance with customary financial practice, in pricing new issues of corporate
debt securities of comparable maturity to the remaining term of the Notes to be
redeemed.

         "Independent Investment Banker" means, with respect to any Redemption
Date for the Notes, UBS Securities LLC and its successors or, if such firm or
any successor to such firm, as the case may be, is unwilling or unable to select
the Comparable Treasury Issue, an independent investment banking institution of
national standing appointed by the Trustee after consultation with the Company.

         "Comparable Treasury Price" means, with respect to any Redemption Date
for the Notes:

         (a)  the average of four Reference Treasury Dealer Quotations for such
              Redemption Date, after excluding the highest and lowest such
              Reference Treasury Dealer Quotations, or

         (b)  if the Trustee obtains fewer than four such Reference Treasury
              Dealer Quotations, the average of all such quotations.

         "Reference Treasury Dealer" means UBS Securities LLC and its successors
(provided, however, that if such firm or any such successor, as the case may be,
shall cease to be a primary U.S. Government securities dealer in New York City
(a "Primary Treasury Dealer"), the Trustee, after consultation with the Company,
will substitute therefor another Primary Treasury Dealer) and three other
Primary Treasury Dealers selected by the Trustee after consultation with the
Company.

         "Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any Redemption Date for the Notes, the average, as
determined by the Trustee, of the bid and asked prices for the Comparable
Treasury Issue (expressed in each case as a percentage of its principal amount)
quoted in writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m.,
New York City time, on the third Business Day preceding such Redemption Date.

         "Final Maturity Date" means June 15, 2015.

         Notice of any redemption by the Company will be mailed at least 30 days
but not more than 60 days before any Redemption Date to each Holder of Notes to
be redeemed. If less than all the Notes are to be redeemed at the option of the
Company, the Trustee will select, in such manner as it deems fair and
appropriate, the Notes (or portions thereof) to be redeemed. Unless the Company
defaults in payment of the Redemption Price (including, without limitation,
interest, if any, accrued to the applicable Redemption Date), on and after the
applicable Redemption Date interest will cease to accrue on the Notes or
portions thereof called for redemption on such Redemption Date.

         If an Event of Default with respect to the Notes shall occur and be
continuing, the principal of and accrued and unpaid interest on the Notes may be
declared due and payable in the manner and with the effect provided in the
Indenture.

         The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the Guarantors and the rights of the Holders of the Securities of
each series issued under the Indenture at any time by the Company, the
Guarantors and the Trustee with the consent of the Holders of not less than a
majority in aggregate principal amount of the Securities at the time

                                       4
<PAGE>

Outstanding of each series affected thereby. The Indenture also contains
provisions permitting the Holders of specified percentages in aggregate
principal amount of the Securities of any series at the time Outstanding, on
behalf of the Holders of all Securities of such series, to waive compliance by
the Company and the Guarantors with certain provisions of the Indenture and
certain past defaults under the Indenture and their consequences. Any such
consent or waiver by the Holder of this Note shall be conclusive and binding
upon such Holder and upon all future Holders of this Note and of any Notes
issued upon the registration of transfer hereof or in exchange herefor or in
lieu hereof, whether or not notation of such consent or waiver is made upon this
Note.

         No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and premium, if any, and
interest on this Note, at the time, place and rate, and in the coin or currency,
herein and in the Indenture prescribed.

         As provided in the Indenture and subject to certain limitations set
forth therein, the transfer of this Note may be registered on the Security
Register upon surrender of this Note for registration of transfer at the Office
or Agency of the Company maintained for the purpose in any place where the
principal of and interest on this Note are payable, duly endorsed, or
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Security Registrar duly executed by the Holder hereof or by his
attorney duly authorized in writing, and thereupon one or more new Notes, of
authorized denominations and for the same aggregate principal amount, will be
issued to the designated transferee or transferees.

         The Notes are issuable only in fully registered form without coupons in
the denominations of $1,000 and integral multiples of $1,000 in excess thereof.
As provided in the Indenture and subject to certain limitations set forth
therein, the Notes are exchangeable for a like aggregate principal amount of
Notes of authorized denominations as requested by the Holders surrendering the
same.

         No service charge shall be made for any such registration of transfer
or exchange, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith, other than
in certain cases provided in the Indenture.

         Prior to due presentment of this Note for registration of transfer, the
Company, the Guarantors, the Trustee and any agent of the Company, any Guarantor
or the Trustee may treat the Person in whose name this Note is registered as the
owner hereof for all purposes, whether or not this Note shall be overdue, and
none of the Company, the Guarantors or the Trustee nor any such agent shall be
affected by notice to the contrary.

         The Indenture contains provisions whereby (i) the Company and the
Guarantors may be discharged from their obligations with respect to the Notes
(subject to certain exceptions) or (ii) the Company may be released from its
obligations under specified covenants and agreements in the Indenture, in each
case if the Company irrevocably deposits with the Trustee money and/or
Government Obligations sufficient to pay and discharge the entire indebtedness
on all Notes, and satisfies certain other conditions, all as more fully provided
in the Indenture. In addition, the Indenture shall cease to be of further effect
(subject to certain exceptions) with respect to the Notes when (1) either (A)
all Notes previously authenticated and delivered have been delivered (subject to
certain exceptions) to the Trustee for cancellation, or (B) all Notes (i) have
become due and payable or (ii) will become due and payable at their Stated
Maturity within one year or (iii) are to be called for redemption within one
year and, in the case of (i), (ii) or (iii) above, the Company has irrevocably
deposited with the Trustee money in an amount sufficient to pay and discharge
the entire indebtedness on all such Notes not theretofore delivered to the
Trustee for cancellation in respect of principal, premium, if any, and interest
to the date of such deposit (if such Notes have become due and payable) or to
the Stated Maturity or Redemption Date thereof, as the case may be, and (2) the
Company satisfies certain other conditions, all as more fully provided in the
Indenture.

         This Note shall be governed by and construed in accordance with the
laws of the State of New York.

         All terms used in this Note which are defined in the Indenture and not
defined herein shall have the meanings assigned to them in the Indenture.

                                       5
<PAGE>

         Unless the certificate of authentication hereon has been executed by or
on behalf of the Trustee under the Indenture by the manual signature of one of
its authorized signatories, this Note shall not be entitled to any benefits
under the Indenture (including, without limitation, the Guarantees) or be valid
or obligatory for any purpose.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       6
<PAGE>
         IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed by the manual or facsimile signatures of its duly authorized officers.

Dated:  June 27, 2005

KB HOME

By:                                         By:
     ---------------------------               ---------------------------------
     Name:    Kimberly N. King                 Name:  Kelly Masuda
     Title:   Vice President and               Title: Senior Vice President,
              Corporate Secretary                     Capital Markets and
                                                      Treasurer

TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
This is one of the Securities of the
series designated therein referred to
in the within-mentioned Indenture.

SUNTRUST BANK, as Trustee

By:
    ------------------------------
        Authorized Signatory

                                       7
<PAGE>
                                  ABBREVIATIONS

         The following abbreviations, when used in the inscription on the face
of this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:

                           TEN COM--as tenants in common
                           TEN ENT--as tenants by the entireties
                           JT TEN--as joint tenants with right of survivorship
                           and not as tenants in common
                           UNIF GIFT MIN ACT-- ________Custodian_____________
                                                (Cust)             (Minor)

                                            under the Uniform Gift to Minors Act

                                            ------------------------------------
                                                         (State)

     Additional abbreviations may also be used though not in the above list.

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

FOR VALUE RECEIVED, the undersigned registered holder hereby sell(s), assign(s)
and transfer(s) unto

         PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE

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

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

--------------------------------------------------------------------------------
             PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE

--------------------------------------------------------------------------------
the within security and all rights thereunder, hereby irrevocably constituting
and appointing

_______________________________________________________________________Attorney
to transfer said security on the books of the Company with full power
of substitution in the premises.

Dated:                                   Signed:
      --------------------------                --------------------------------

         Notice: The signature to this assignment must correspond with the name
as it appears upon the face of the within security in every particular, without
alteration or enlargement or any change whatever.

                                       8
<PAGE>
                                   SCHEDULE A

      The initial principal amount of this global Note is One Hundred Fifty
Million Dollars ($150,000,000). The following increases or decreases in the
principal amount of this global Note have been made:

<TABLE>
<CAPTION>
                                                               Principal amount of
               Amount of increase     Amount of decrease in   this global Note       Signature of
               in principal amount    principal amount of     following such         authorized signatory
Date made      of this global Note    this global Note        decrease or increase   of Trustee
---------      -------------------    ---------------------   --------------------   --------------------
<S>            <C>                    <C>                     <C>                    <C>

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

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

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

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

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

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

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

---------------------------------------------------------------------------------------------------------
</TABLE>exv10w1

 

Exhibit 10.1

TAX SHARING AGREEMENT

     THIS TAX SHARING AGREEMENT (the “Agreement”) dated as of June 27, 2005 by and among Dean Foods
Company, a Delaware corporation (“Distributing”), TreeHouse Foods, Inc., a Delaware corporation and
a subsidiary of Distributing (“Controlled”), and each Controlled Affiliate (as defined below), is
entered into in connection with the Distribution (as defined below).

     WHEREAS, as of the date hereof, Distributing and its direct and indirect domestic subsidiaries
are members of an Affiliated Group (as defined below) of which Distributing is the common parent;

     WHEREAS, as set forth in the Distribution Agreement by and between Distributing and
Controlled, dated as of June 27, 2005 (the “Distribution Agreement”), and subject to the terms and
conditions thereof, Distributing will transfer and assign, or cause to be transferred and assigned,
to Controlled substantially all the business, operations, assets and liabilities related to the
Transferred Businesses (as defined below);

     WHEREAS, as set forth in the Distribution Agreement, and subject to the terms and conditions
thereof, Distributing will distribute on a pro rata basis to the holders of Distributing’s common
stock all of the outstanding shares of Controlled common stock then owned by Distributing (together
with the preferred share purchase rights associated therewith) (the “Distribution”);

     WHEREAS, the Distribution is intended to qualify as a tax-free distribution to Distributing
and its shareholders under section 355 of the Code (as defined below); and

     WHEREAS, in contemplation of the Distribution, pursuant to which Controlled (and its direct
and indirect subsidiaries) will cease to be members of Distributing’s Affiliated Group (as defined
below), the Parties hereto have determined to enter into this Agreement, setting forth their
agreement with respect to certain tax matters.

     NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, the
Parties hereto hereby agree as follows:

Section 1. Definitions.

     As used in this Agreement, capitalized terms shall have the following meanings (such meanings
to be equally applicable to both the singular and the plural forms of the terms defined):

     1.01 “Affiliated Group” means an affiliated group of corporations within the meaning of
section 1504(a)(1) of the Code that files a Consolidated Return.

     1.02 “After-Tax Amount” means any additional amount necessary to reflect the Income Tax
consequences of the receipt or accrual of any payment required to be made under

 

 

this Agreement (including upon the receipt of payments required to make the payment of an
After-Tax Amount), determined on a hypothetical basis by assuming that the applicable Party is
subject to the highest applicable statutory corporate Income Tax rate for the relevant jurisdiction
(or, in the case of an item that affects more than one jurisdiction, the highest applicable
statutory corporate Income Tax rates) for the relevant taxable period (or portion thereof), that
all state and local Income Taxes are deductible for U.S. federal income tax purposes, and that all
Income Taxes in the form of interest are deductible for income tax purposes.

     1.03 “Agreement” has the meaning set forth in the preamble hereto.

     1.04 “Bay Valley” means Bay Valley Foods, LLC, a Delaware limited liability company and a
Controlled Affiliate.

     1.05 “Code” means the Internal Revenue Code of 1986, as amended, and shall include
corresponding provisions of any subsequently enacted federal Tax law.

     1.06 “Combined Return” means any Tax Return, other than with respect to United States federal
Income Taxes, filed on a consolidated, combined (including nexus combination, worldwide
combination, domestic combination, line of business combination or any other form of combination)
or unitary basis wherein Controlled or one or more Controlled Affiliates are included in the filing
of such Tax Return for any taxable period or portion thereof with Distributing or one or more
Distributing Affiliates.

     1.07 “Consolidated Return” means any Tax Return with respect to United States federal Income
Taxes filed on a consolidated basis wherein Controlled or one or more Controlled Affiliates are
included in the filing of such Tax Return for any taxable period or portion thereof with
Distributing or one or more Distributing Affiliates.

     1.08 “Controlled” has the meaning set forth in the preamble hereto.

     1.09 “Controlled Affiliate” means any corporation or other entity directly or indirectly
“controlled” by Controlled at the time in question, where “control” means the ownership of 50
percent or more of the ownership interests of such corporation or other entity (by vote or value)
or the possession, directly or indirectly, of the power to direct or cause the direction of the
management or policies of such corporation or other entity.

     1.10 “Controlled Equity Interest” means (a) stock or any other equity interest in Controlled
or any Controlled Affiliate (including any instrument, obligation or other agreement or arrangement
that is treated as stock or as an equity interest for federal Income Tax purposes), or (b) any
option, warrant or other right to acquire any stock or other equity interest described in clause
(a).

     1.11 “Controlled Group” means the Affiliated Group, or similar group of entities as defined
under corresponding provisions of the laws of other jurisdictions, of which Controlled will be the
common parent corporation immediately after the Distribution, and including any corporation or
other entity which may become a member of such group from time to time.

     1.12 “Controlled Indemnified Parties” has the meaning set forth in Section 7.02.

2

 

     1.13 “Controlled Representation Letter” means the representation letter provided by Controlled
to Distributing’s outside tax counsel in connection with the Tax Opinion substantially in the form
attached hereto as Exhibit A.

     1.14 “Controlled Representative”
means (i) each of Sam K. Reed, David B. Vermylen, E. Nichol
McCully, Thomas E. O’Neill, Harry J. Walsh and Jo Osborn; (ii) each of the directors of
Controlled other than Gregg Engles; and (iii) any Person acting with the implicit or explicit
permission (within the meaning of section 1.355-7 of the Treasury Regulations) of any of the
individuals listed or referred to in clause (i) or clause (ii).

     1.15 “Controlled Taxes” has the meaning set forth in Section 7.01.

     1.16 “Deciding Firms” has the meaning set forth in Section 10.03.

     1.17 “DIPS LP” means Dips Limited Partner II, a Delaware statutory trust.

     1.18 “Distributing” has the meaning set forth in the preamble hereto.

     1.19 “Distributing Affiliate” means any corporation or other entity directly or indirectly
“controlled” by Distributing where “control” means the ownership of 50 percent or more of the
ownership interests of such corporation or other entity (by vote or value) or the possession,
directly or indirectly, of the power to direct or cause the direction of the management or policies
of such corporation or other entity, but at all times excluding Controlled and any Controlled
Affiliate.

     1.20 “Distributing Group” means the Affiliated Group, or similar group of entities as defined
under corresponding provisions of the laws of other jurisdictions, of which Distributing is the
common parent corporation, and any corporation or other entity which may be, may have been or may
become a member of such group from time to time, but excluding any member of the Controlled Group.

     1.21 “Distributing Indemnified Parties” has the meaning set forth in Section 7.01.

     1.22 “Distributing Representation Letter” means the representation letter provided by
Distributing to Distributing’s outside tax counsel in connection with the Tax Opinion substantially
in the form attached hereto as Exhibit B.

     1.23 “Distributing Representative” means (i) any current or former officer or director of
Distributing or any Distributing Affiliate; (ii) any controlling shareholder (within the meaning of
section 1.355-7(h)(3) of the Treasury Regulations) of Distributing; and (iii) any Person acting
with the implicit or explicit permission (within the meaning of section 1.355-7 of the Treasury
Regulations) of any of the foregoing; provided, that a Distributing Representative shall not
include (a) any Person who is treated as a Controlled Representative under the definition of
Controlled Representative, or (b) with respect to actions taken on or after June 24, 2005, any
Person who became an employee of Controlled or a Controlled Affiliate
following the
Restructuring Transactions that occurred on June 24, 2005 and who will serve as a director or
officer of Controlled or any Controlled Affiliate following the Distribution.

3

 

     1.24 “Distributing Tax Package” has the meaning set forth in Section 2.05.

     1.25 “Distributing Taxes” has the meaning set forth in Section 7.02.

     1.26 “Distribution” has the meaning set forth in the Recitals to this Agreement.

     1.27 “Distribution Agreement” has the meaning set forth in the Recitals to this Agreement.

     1.28 “Distribution Date” means the date on which the Distribution is effected.

     1.29 “Distribution Taxes” means any Taxes imposed on, or increase in Taxes incurred by,
Distributing or any Distributing Affiliate, and any Taxes of a Distributing shareholder that are
required to be paid or reimbursed by Distributing or any Distributing Affiliate (without regard to
whether such Taxes are offset or reduced by any Tax Asset, Tax Item, or otherwise) resulting from
or arising in connection with (i) the failure of the Distribution to qualify as a tax-free
distribution under section 355 of the Code or corresponding provisions of the laws of any other
jurisdictions, or (ii) the failure of any Restructuring Transaction that is intended to qualify as
a tax-free liquidation under section 332 of the Code, a transfer of property under section 351 of
the Code, a reorganization under section 368(a) of the Code and/or a tax-free distribution under
section 355 of the Code to so qualify, including in the case of each of clause (i) and (ii) any Tax
resulting from the application of section 355(d), section 355(e) or section 355(f) of the Code to
any Restructuring Transaction or the Distribution.

     1.30 “Expenses” means any and all expenses incurred in connection with investigating,
defending or asserting any claim, action, suit or proceeding incident to any matter indemnified
against hereunder (including court filing fees, court costs, arbitration fees or costs, witness
fees, and reasonable fees and disbursements of legal counsel, investigators, expert witnesses,
consultants, accountants and other professionals).

     1.31 “Filing Party” has the meaning set forth in Section 8.02.

     1.32 “Final Determination” means the final resolution of liability for any Tax for any taxable
period, by or as a result of the first to occur of (i) a decision, judgment, decree or other order
by any court of competent jurisdiction that is not subject to further judicial review (by appeal or
otherwise) and has become final; (ii) a final settlement with the IRS, a closing agreement or
accepted offer in compromise under Code sections 7121 or 7122, or a comparable agreement under the
laws of other jurisdictions, which resolves the entire Tax liability for any taxable period; or
(iii) any other final disposition, including by reason of the expiration of the applicable statute
of limitations or any other event that the Parties agree in writing is a final and irrevocable
determination of the liability at issue.

     1.33 “Form 10” means the Form 10 filed by TreeHouse Foods, Inc. with the Securities and
Exchange Commission on June 14, 2005.

     1.34 “Historic Business” means the Mocha Mix/Second Nature business.

4

 

     1.35 “Income Tax” means any income, franchise or similar Tax imposed on, measured by or
calculated with respect to net income or net profits.

     1.36 “Income Tax Return” means a Tax Return relating to or filed in connection with any Income
Tax.

     1.37 “Independent Firm” has the meaning set forth in Section 10.03.

     1.38 “Initial Ruling” means the private letter ruling dated April 29, 2005, issued by the IRS
with respect to the Restructuring Transactions and the Distribution.

     1.39 “Initial Ruling Documents” means the request for the Initial Ruling filed with the IRS on
or about February 11, 2005, together with all supplemental filings, additional information and
other materials subsequently submitted in connection therewith on behalf of Distributing, its
subsidiaries and its shareholders to the IRS, and all appendices and exhibits thereto. The Initial
Ruling Documents shall include the letter dated June 24, 2005 from Stephen Wegener of Deloitte Tax
LLP to Wayne Murray at the IRS regarding the Initial Ruling.

     1.40 “IRS” means the United States Internal Revenue Service or any successor thereto,
including its agents, representatives, and attorneys.

     1.41 “Losses” means any and all losses, costs, obligations, liabilities, settlement payments,
awards, judgments, fines, penalties, damages, fees, expenses, deficiencies, claims or other
charges, absolute or contingent, matured or unmatured, liquidated or unliquidated, accrued or
unaccrued, known or unknown (including, without limitation, the costs and expenses of any and all
Tax Proceedings, threatened Tax Proceedings, demands, assessments, judgments, settlements and
compromises relating thereto and attorneys’ fees and any and all expenses whatsoever reasonably
incurred in investigating, preparing or defending against any such matters).

     1.42 “LPS I” means Dean Specialty Intellectual Property Services, L.P., a Delaware limited
partnership and a Controlled Affiliate.

     1.43 “Non-Income Tax” means any Tax other than an Income Tax.

     1.44 “Non-Income Tax Return” means any Tax Return other than an Income Tax Return.

     1.45 “Owed Party” has the meaning set forth in Section 8.04.

     1.46 “Owing Party” has the meaning set forth in Section 8.04.

     1.47 “Party” means Distributing, Controlled or a Controlled Affiliate.

     1.48 “Payment Period” has the meaning set forth in Section 8.04(e).

5

 

     1.49 “Person” means any natural person, corporation, general partnership, limited partnership,
limited liability company, limited liability partnership, proprietorship, trust, association,
union, governmental authority or other entity, enterprise, authority or organization.

     1.50 “Pickle” means Dean Pickle and Specialty Products Company, a Wisconsin corporation.

     1.51 “Post-Distribution Period” means any taxable period (or the portion of any Straddle
Period) beginning after the Distribution Date.

     1.52 “Pre-Distribution Period” means any taxable period (or the portion of any Straddle
Period) ending on or before the Distribution Date.

     1.53 “Qualifying Compensatory Transfers” means issuances of Controlled stock to Persons in
connection with the performance of services that satisfy the requirements of Safe Harbor VIII set
forth in section 1.355-7(d)(8) of the Treasury Regulations and grants of stock options and other
forms of equity compensation under Controlled’s 2005 Long-Term Stock Incentive Plan that, if
exercised or vested, respectively, would result in issuances of Controlled stock that satisfy the
requirements of Safe Harbor VIII set forth in section 1.355-7(d)(8) of the Treasury Regulations

     1.54 “Restricted Actions” has the meaning set forth in Section 4.05(a).

     1.55 “Restructuring Transactions” means the transactions undertaken prior to and in connection
with the Distribution to transfer the assets and liabilities of the Transferred Businesses to
Controlled and its subsidiaries and to effect the Distribution, as described more fully in the
Initial Ruling and the Initial Ruling Documents.

     1.56 “Retained Assets” shall have the meaning set forth in the Distribution Agreement.

     1.57 “Retained Business” shall have the meaning set forth in the Distribution Agreement.

     1.58 “Ruling Documents” means the Initial Ruling Documents and any Supplemental Ruling
Documents.

     1.59 “Rulings” means the Initial Ruling and any Supplemental Rulings.

     1.60 “Sole Responsibility Item” means any Tax Item for which the non-Filing Party has the
entire economic liability under this Agreement.

     1.61 “Specialty Foods Holding” means Specialty Foods Holding Corp., a Delaware corporation and
a Controlled Affiliate.

     1.62 “Straddle Period” means any taxable period that begins before and ends after the
Distribution Date.

6

 

     1.63 “Supplemental Ruling” means (1) any ruling issued or to be issued by the IRS that relates
to the Distribution other than the Initial Ruling, and (2) any similar ruling issued by any other
Taxing Authority addressing the application of a provision of the Tax laws of another jurisdiction
to the Distribution.

     1.64 “Supplemental Ruling Documents” means (i) any request for a Supplemental Ruling and any
materials, appendices, exhibits or additional information submitted or filed in connection
therewith, and (2) any similar filings submitted to any other Taxing Authority in connection with
the Distribution.

     1.65 “Taxes” means all federal, state, local or foreign taxes, charges, fees, duties, levies,
imposts or other assessments, including, but not limited to, income, gross receipts, excise,
property, sales, use, license, capital stock, transfer, franchise, payroll, withholding, social
security, value added or other taxes, including any interest, penalties or additions to tax
attributable thereto, and a “Tax” shall mean any one of such Taxes.

     1.66 “Tax Asset” means any Tax Item that has accrued for Tax purposes, but has not been used
during the taxable period in which it has accrued, and that could reduce a Tax in another taxable
period, including a net operating loss, net capital loss, investment tax credit, foreign tax
credit, charitable deduction or credit related to alternative minimum tax or any other Tax credit.

     1.67 “Tax Benefit” means a reduction in the Tax liability (or increase in refund or credit)
realized or received by a taxpayer (or of the Affiliated Group of which it is a member) for any
taxable period. Except as otherwise provided in this Agreement, a Tax Benefit shall be deemed to
have been realized or received from a Tax Item in a taxable period only if and to the extent that
the Tax liability of the taxpayer (or of the Affiliated Group of which it is a member) for such
period, after taking into account the effect of the Tax Item on the Tax liability of such taxpayer
in the current period and all prior periods, is less than it would have been had such Tax liability
been determined without regard to such Tax Item.

     1.68 “Tax Detriment” means an increase in the Tax liability (or reduction in refund or credit)
realized or received by a taxpayer (or of the Affiliated Group of which it is a member) for any
taxable period. Except as otherwise provided in this Agreement, a Tax Detriment shall be deemed to
have been realized or received from a Tax Item in a taxable period only if and to the extent that
the Tax liability of the taxpayer (or of the Affiliated Group of which it is a member) for such
period, after taking into account the effect of the Tax Item on the Tax liability of such taxpayer
in the current period and all prior periods, is more than it would have been had such Tax liability
been determined without regard to such Tax Item.

     1.69 “Tax Item” means any item of income, gain, loss, deduction, expense or credit, or any
other attribute or amount that may have the effect of increasing or decreasing any Tax.

     1.70 “Tax Opinion” means the opinion rendered to Distributing and Controlled by Distributing’s
outside tax counsel with respect to the federal income tax consequences of the Distribution.

7

 

     1.71 “Tax Proceeding” means any audit, examination, investigation, action, suit, claim,
assessment or other administrative or judicial proceeding relating to Taxes.

     1.72 “Tax Return” means any return, report, certificate, form or similar statement or document
(including any related or supporting information or schedule attached thereto and any information
return, amended tax return, claim for refund or declaration of estimated Tax) required to be
supplied to, or filed with, a Taxing Authority in connection with the determination, assessment or
collection of any Tax or the administration of any laws, regulations or administrative requirements
relating to any Tax.

     1.73 “Taxing Authority” means any governmental authority or any subdivision, agency,
commission or authority thereof or any quasi-governmental or private body having jurisdiction over
the assessment, determination, collection or imposition of any Tax (including the IRS).

     1.74 “Transferred Assets” has the meaning assigned to such term in the Distribution Agreement.

     1.75 “Transferred Businesses” has the meaning assigned to such term in the Distribution
Agreement.

     1.76 “Transferred Business Records” has the meaning set forth in Section 10.02(b).

     1.77 “Unqualified Opinion” means an unqualified opinion (except for reliance on reasonable
assumptions and representations) of a law firm.

Section 2. Preparation and Filing of Tax Returns.

     2.01 Distributing’s Responsibility. Distributing shall have sole and exclusive
responsibility for the preparation and filing of:

               (a) all Consolidated Returns and Combined Returns;

               (b) all Tax Returns required to be filed by or with respect to Distributing and/or any
Distributing Affiliate for any period;

               (c) all Income Tax Returns of LPS I for any taxable period ending on or before the
Distribution Date (whether due on, before, or after the Distribution Date); and

               (d) all Tax Returns required to be filed by or with respect to Controlled and/or any
Controlled Affiliate that are due (taking into account any valid extensions of the due date) on or
before the Distribution Date.

     2.02 Controlled’s Responsibility. Controlled shall have sole and exclusive
responsibility for the preparation and filing of:

               (a) except as provided in Section 2.01(c), all Tax Returns due (taking into account any valid
extensions of the due date) after the Distribution Date which are required to be

8

 

filed by or with respect to, and which relate exclusively to Controlled, Specialty Foods
Holding and/or LPS I for any taxable period beginning before the Distribution Date; and

               (b) all Tax Returns required to be filed by or with respect to Controlled and/or any
Controlled Affiliate for any taxable period beginning after the Distribution Date.

     2.03 Agent. Subject to the other applicable provisions of this Agreement, Controlled
hereby irrevocably designates, and agrees to cause each Controlled Affiliate to so designate,
Distributing as its sole and exclusive agent and attorney-in-fact to take such actions (including
execution of documents) as Distributing, in its sole discretion, may deem appropriate in any and
all matters (including Tax Proceedings) relating to any Consolidated Return or Combined Return.
Without limiting the foregoing, Distributing, Controlled, the members of the Distributing Group and
the members of the Controlled Group shall file any and all consents, elections or other documents
and take any other actions necessary or appropriate to file any Consolidated Return or Combined
Return.

     2.04 Manner of Tax Return Preparation.

               (a) All Tax Returns shall be filed on a timely basis (taking into account applicable
extensions) by the Party responsible for filing such returns under this Agreement.

               (b) Tax Returns prepared by Distributing under Section 2.01 that relate to Taxes for which
Controlled or any Controlled Affiliate is liable under Section 3 shall be prepared in a manner
consistent with past practice, unless otherwise required by applicable law. Subject to the
requirements of the immediately preceding sentence and Section 4.02(c), Distributing shall have the
exclusive right with respect to any Tax Return for which it has filing responsibility under Section
2.01 to determine the manner in which such Tax Return shall be prepared and filed, including the
elections, method of accounting, positions, conventions and principles of taxation to be used and
the manner in which any Tax Item shall be reported. Distributing shall also have the exclusive
right with respect to any Tax Return for which it has filing responsibility under Section 2.01 to
determine (1) whether to retain outside firms to prepare or review such Tax Returns, (2) whether
any extensions shall be requested, (3) whether any amended Tax Returns shall be filed, (4) whether
any claims for refund shall be made, and (5) whether any refunds shall be paid by way of refund or
credited against any liability for Tax; provided, that upon the request of Controlled, Distributing
will use reasonable efforts to file for and obtain any material Tax refund to which Controlled is
entitled pursuant to this Agreement if (x) Distributing concludes, in its discretion, that filing
for such Tax refund will not adversely affect Distributing or any Distributing Affiliate, (y) the
refund claim relates solely to Taxes for which Controlled is responsible under this Agreement, and
(z) Controlled agrees to and does reimburse Distributing for all expenses incurred in connection
with the filing and prosecution of such Tax refund claim.

               (c) Distributing shall determine, in a manner consistent with past practice, whether to file
any Tax Return for any taxable period beginning before the Distribution Date on a consolidated,
combined or unitary basis if the filing of a consolidated, combined or unitary Tax Return for such
period is elective under applicable law. If there is no applicable past practice, Distributing
shall determine in its discretion whether to file such Tax Return on a consolidated, combined, or
unitary basis; provided, that Distributing shall not file such a Tax Return on a

9

 

consolidated, combined or unitary basis if the Tax Return relates exclusively to Controlled
and/or a Controlled Affiliate and the election to file on a consolidated, combined or unitary basis
would be binding on Controlled and/or a Controlled Affiliate or otherwise could adversely affect
Controlled or a Controlled Affiliate for taxable periods beginning after the Distribution Date
without the prior written consent of Controlled, which consent shall not be unreasonably withheld
or delayed.

               (d) Tax Returns prepared by Controlled under Section 2.02 that relate to Taxes for which
Distributing is liable under Section 3 shall be prepared in a manner consistent with past practice
and the reporting of Tax Items on Consolidated Returns or Combined Returns filed by Distributing,
unless otherwise required by applicable law. Neither Controlled nor any Controlled Affiliate shall
take any position on any Tax Return filed after the Distribution Date or in any Tax Proceeding (i)
that is inconsistent with a position taken on a Tax Return filed by Distributing or a Distributing
Affiliate with respect to any taxable period beginning before the Distribution Date, or (ii) that
could reasonably be expected to adversely affect Distributing or any Distributing Affiliate other
than a position that is consistent with a position taken on a Tax Return filed by Distributing or a
Distributing Affiliate with respect to a taxable period beginning before the Distribution Date or a
position that is required by applicable law.

               (e) Subject to the requirements of Section 2.04(d) and Section 4.02(b), Controlled shall have
the exclusive right with respect to any Tax Return for which it has filing responsibility under
Section 2.02 to determine the manner in which such Tax Return shall be prepared and filed,
including the elections, method of accounting, positions, conventions and principles of taxation to
be used and the manner in which any Tax Item shall be reported. Controlled shall also have the
exclusive right with respect to any Tax Return for which it has filing responsibility under Section
2.02 to determine (1) whether to retain outside firms to prepare or review such Tax Returns, (2)
whether any extensions shall be requested, (3) whether any amended Tax Returns shall be filed, (4)
whether any claims for refund shall be made, and (5) whether any refunds shall be paid by way of
refund or credited against any liability for Tax; provided, that upon the request of Distributing,
Controlled will use reasonable efforts to file for and obtain any material Tax refund to which
Distributing is entitled pursuant to this Agreement if (x) Controlled concludes, in its discretion,
that filing for such Tax refund will not adversely affect Controlled or any Controlled Affiliate,
(y) the refund claim relates solely to Taxes for which Distributing is responsible under this
Agreement, and (z) Distributing agrees to and does reimburse Controlled for all expenses incurred
in connection with the filing and prosecution of such Tax refund claim.

2.05 Preparation of Tax Package and Other Information.

               (a) Controlled shall provide to Distributing in a format determined by Distributing and
consistent with existing practices of Distributing’s Affiliated Group all information requested by
Distributing to prepare the Tax Returns required to be prepared by Distributing pursuant to Section
2.01 (the “Distributing Tax Package”). The Distributing Tax Package with respect to any taxable
year shall be provided by Controlled to Distributing on a basis consistent with current practices
of Distributing’s Affiliated Group no later than ninety (90) days following the end of such taxable
year. Controlled shall also timely provide to Distributing information required by Distributing to
determine estimated Tax payments, current federal

10

 

taxable income, current and deferred tax liabilities, tax reserve items, and any other
information reasonably requested by Distributing in a form reasonably requested by Distributing.

               (b) Distributing shall timely provide to Controlled all information reasonably requested by
Controlled to prepare Tax Returns required to be prepared by Controlled pursuant to Section 2.02 or
to comply with the requirements of Section 6.01 in a form reasonably requested by Controlled.

Section 3. Liability for Taxes.

     3.01 Controlled’s Liability for Taxes. Controlled and each Controlled Affiliate shall
be jointly and severally liable for the following Taxes:

               (a) all Non-Income Taxes of Controlled or any Controlled Affiliate, or that relate or are
attributable to the Transferred Businesses or the Transferred Assets, for any period; and

               (b) all Income Taxes of Controlled or any Controlled Affiliate, or that relate or are
attributable to the Transferred Businesses or the Transferred Assets, for any Post-Distribution
Period.

     3.02 Distributing’s Liability for Taxes. Except with respect to Taxes for which
Controlled and/or the Controlled Affiliates are liable pursuant to Section 3.01, Section 3.05,
Section 4 or otherwise under this Agreement, Distributing shall be liable for the following Taxes:

               (a) all Income Taxes reported or required to be reported on the Consolidated Returns and
Combined Returns;

               (b) all Income Taxes not described in Section 3.02(a) of Controlled or any Controlled
Affiliate, or that relate or are attributable to the Transferred Businesses or the Transferred
Assets, for any Pre-Distribution Period;

               (c) all Income Taxes not described in Section 3.02(a) of Distributing or any Distributing
Affiliate, or that relate or are attributable to the Retained Business or the Retained Assets, for
any Post-Distribution Period; and

               (d) all Non-Income Taxes of Distributing or any Distributing Affiliate that relate or are
attributable to the Retained Business or the Retained Assets for any period.

     3.03 Tax Refunds.

               (a) Controlled and the Controlled Affiliates shall be entitled to all refunds of Taxes for
which they are responsible under Section 3.01.

               (b) Distributing and the Distributing Affiliates shall be entitled to all refunds of Taxes for
which Distributing is responsible under Section 3.02.

     3.04 [Intentionally Omitted.]

11

 

     3.05 Transaction Taxes. Controlled and each Controlled Affiliate shall be jointly and
severally liable for, and shall indemnify and hold harmless Distributing and each Distributing
Affiliate from and against, any Taxes incurred as a result of (a) the distribution by DIPS LP as
part of the Restructuring Transactions of a 99.9 percent limited partnership interest in LPS I to
Pickle, (b) the distribution by DIPS LP as part of the Restructuring Transactions of a 0.1 percent
general partner interest in LPS I to Pickle and (c) the taking into account of “intercompany items”
resulting from the transactions described in clauses (a) and (b) pursuant to Section 1.1502-13 of
the Treasury Regulations because of and in connection with the Distribution; provided, that
Controlled’s liability under this Section 3.05 shall be limited to $20,000,000.

     3.06 Payment of Tax Liability. If one Party is liable or responsible for Taxes under
this Agreement with respect to Tax Returns which another Party is responsible for preparing and
filing, or with respect to Taxes that are paid by another Party, then the liable or responsible
Party shall pay the Taxes or reimburse the other Party for such Taxes pursuant to Section 8 of this
Agreement.

     3.07 Carrybacks. If a Tax Return of Controlled, a Controlled Affiliate or the
Controlled Group with respect to a taxable period beginning after the Distribution Date reflects a
Tax Asset, such Tax Asset may not be carried back to a Consolidated Return, Combined Return or any
other Income Tax Return of Distributing or any Distributing Affiliate.

     3.08 Allocation of Tax Items.

               (a) All determinations (whether for purposes of preparing Tax Returns or for purposes of
determining a Party’s responsibility for Taxes under this Agreement) regarding the allocation of
Tax Items to Pre-Distribution Periods and Post-Distribution Periods (including allocations between
the portion of a Straddle Period that is a Pre-Distribution Period and the portion of a Straddle
Period that is a Post-Distribution Period) shall be made pursuant to the principles of section
1.1502-76(b) of the Treasury Regulations or of a corresponding provision under the laws of other
jurisdictions; provided, that no election shall be made under section 1.1502-76(b)(2)(ii) of the
Treasury Regulations (relating to ratable allocations of a year’s items). Any such allocation of
Income Tax Items shall initially be made by Distributing. To the extent that Controlled disagrees
with such determination, the dispute shall be resolved pursuant to the provisions of Section 10.03.

               (b) For purposes of determining the Parties’ respective responsibilities for Non-Income Taxes
under this Agreement, the determination of whether and to what extent Non-Income Taxes relate or
are attributable to the Transferred Assets or the Transferred Businesses, or to the Retained Assets
or the Retained Business, shall initially be made by the Party preparing the relevant Non-Income
Tax Return. If the other Party disagrees with such determination, the disagreement shall be
resolved pursuant to the provisions of Section 10.03.

               (c) The allocation of earnings and profits between Distributing and Controlled shall be
determined pursuant to section 312(h) of the Code and the Treasury Regulations thereunder. Such
determination shall be initially made by Distributing on or before October 15, 2006, and timely
provided to Controlled (with any necessary supporting material). To the extent Controlled
disagrees with such determination, the dispute shall be resolved pursuant to the

12

 

provisions of Section 10.03. Other Tax attributes shall be allocated between Distributing and
Controlled in the manner provided by law.

               (d) Neither Controlled nor any Controlled Affiliate shall take any action on the Distribution
Date (or, if earlier, after receiving Transferred Assets) other than in the ordinary course of
business, except for actions undertaken in connection with the Restructuring Transactions and the
Distribution that are described in the Initial Ruling, the Initial Ruling Documents, the
Distribution Agreement and/or the Form 10.

Section 4. Distribution Taxes.

     4.01 Representations.

               (a) Except for matters described on Schedule 4.01, Controlled represents that none of
Controlled, the Controlled Affiliates, or the Controlled Representatives has entered into or is
aware of any agreement, understanding, arrangement, substantial negotiations or discussions within
two years before the Distribution Date with respect to (i) any issuance, redemption, or acquisition
of stock of Controlled or any Controlled Affiliate, other than as described in the Initial Ruling,
issuances of Controlled stock, stock options and restricted stock units to New Management and Gregg
Engles described in the Form 10, and Qualifying Compensatory Transfers; (ii) any merger or
consolidation of Controlled or any Controlled Affiliate with any Person other than as described in
the Initial Ruling; (iii) any acquisition by Controlled or any Controlled Affiliate of any Person
or of all or substantially all of the assets of any Person following the Distribution (other than
Bay Valley’s acquisition of assets from Controlled following the Distribution); (iv) the
acquisition of all or substantially all of the assets of Controlled or any Controlled Affiliate or
any of the Transferred Businesses by any Person (other than the acquisition of the Transferred
Businesses by Controlled and the Controlled Affiliates as part of the Restructuring Transactions
and Bay Valley’s acquisition of assets from Controlled following the Distribution); or (v) any
other transaction or event that could, alone or in combination with other transactions or events
that any of Controlled, the Controlled Affiliates or the Controlled Representatives has entered
into any agreement, understanding, negotiations or discussions with respect to (or of which any of
them is aware), cause section 355(e) of the Code to apply to the Distribution. Controlled
represents that Bay Valley is and will remain wholly-owned by Controlled and disregarded as an
entity separate from Controlled for federal tax purposes.

               (b) Except for matters described on Schedule 4.01, Distributing represents that none of
Distributing, the Distributing Affiliates or the Distributing Representatives has entered into or
is aware of any agreement, understanding, arrangement, substantial negotiations or discussions
within two years before the Distribution Date with respect to (i) the issuance, redemption, or
acquisition of stock of Controlled or any Controlled Affiliate, other than as described in the
Initial Ruling, issuances of Controlled stock, stock options and restricted stock units to New
Management and Gregg Engles described in the Form 10, and Qualifying Compensatory Transfers; (ii)
any merger of Controlled or any Controlled Affiliate with any Person other than as described in the
Initial Ruling; (iii) the acquisition by Controlled or any Controlled Affiliate of any Person or of
all or substantially all of the assets of any Person following the Distribution (other than Bay
Valley’s acquisition of assets from Controlled

13

 

following the Distribution); (iv) the acquisition of all or substantially all of the assets of
Controlled or any Controlled Affiliate or any of the Transferred Businesses by any Person (other
than the acquisition of the Transferred Businesses by Controlled and the Controlled Affiliates as
part of the Restructuring Transactions and Bay Valley’s acquisition of assets from Controlled
following the Distribution); or (v) any other transaction or event involving the stock or assets of
Controlled that could, alone or in combination with other transactions and events that
Distributing, any Distributing Affiliate or any Distributing Representative has entered into any
agreement, understanding, arrangement, negotiations or discussions with respect to (or of which any
of them is aware), cause section 355(e) of the Code to apply to the Distribution.

               (c) Distributing represents that none of Distributing, the Distributing Affiliates or the
Distributing Representatives has entered into an agreement, understanding, or arrangement with any
Person pursuant to substantial negotiations or discussions described in item 1 on Schedule 4.01
which will obligate Controlled, any Controlled Affiliate, or any Controlled shareholder to (i)
issue, redeem, or dispose of stock of Controlled or any Controlled Affiliate following the
Distribution; (ii) merge Controlled or any Controlled Affiliate with any other Person following the
Distribution; (iii) acquire another Person or all or substantially all of the assets of any other
Person following the Distribution (other than Bay Valley’s acquisition of assets from Controlled
following the Distribution); or (iv) sell or otherwise dispose of all or substantially all of the
assets of Controlled or any Controlled Affiliate or any of the Transferred Businesses following the
Distribution (other than transfers of assets from Controlled to Bay Valley following the
Distribution).

     4.02 Actions Inconsistent with Rulings or Tax Opinion.

               (a) Controlled represents that none of Controlled, the Controlled Affiliates or the Controlled
Representatives has taken any action that is inconsistent with the Initial Ruling, or any
information, covenant or representation contained in the Initial Ruling Documents. Distributing
represents that none of Distributing, the Distributing Affiliates or the Distributing
Representatives has taken any action that is inconsistent with the Initial Ruling, or any
information, covenant or representation contained in the Initial Ruling Documents.

               (b) Unless otherwise required by a Final Determination, Controlled agrees that it will not
take or fail to take, or cause or permit any Controlled Affiliate to take or fail to take, any
action, including a position on any Tax Return or in any Tax Proceeding, that would be inconsistent
with (1) any representation in this Agreement, (2) the Initial Ruling, or any information, covenant
or representation contained in the Initial Ruling Documents, (3) the Tax Opinion or any
representation made in the Controlled Representation Letter or (4) the tax treatment of the
Distribution as tax-free under section 355 of the Code.

               (c) Unless otherwise required by a Final Determination, Distributing agrees that it will not
take or fail to take, or cause or permit any Distributing Affiliate to take or fail to take, any
action, including a position on any Tax Return or in any Tax Proceeding, that would be inconsistent
with (1) any representation in this Agreement, (2) the Initial Ruling, or any information, covenant
or representation contained in the Initial Ruling Documents, (3) the Tax Opinion or any
representation made in the Distributing Representation Letter, or (4) the tax treatment of the
Distribution as tax-free under section 355 of the Code.

14

 

4.03 Liability.

               (a) Controlled and each Controlled Affiliate shall be jointly and severally liable for, and
shall pay and indemnify and hold harmless Distributing and each Distributing Affiliate from and
against, any Distribution Taxes to the extent that such Distribution Taxes are attributable to,
caused by or result from one or more of the following:

                    (i) any action or omission by Controlled or any Controlled Affiliate after the
Distribution;

                    (ii) any event or transaction after the Distribution that involves the stock,
assets and/or business of Controlled or any Controlled Affiliate, whether or not
such event or transaction is the result of direct action of, or within the control
of, Controlled or any Controlled Affiliate, including without limitation any
acquisition of any stock or assets of Controlled or any Controlled Affiliate by one
or more other Persons;

                    (iii) any breach or inaccuracy of any representation in the Controlled
Representation Letter;

                    (iv) any breach of any representation or covenant of Controlled set forth in,
or made pursuant to, this Agreement or the Distribution Agreement; or

                    (v) any action described in Section 4.04(a) below, regardless of whether such
action is permitted pursuant to Section 4.04(b) or Section 4.05 below.

               (b) Distributing shall be liable for, and shall pay and indemnify and hold harmless Controlled
and each Controlled Affiliate from and against, any Distribution Taxes to the extent such
Distribution Taxes are attributable to, caused by or result from one or more of the following:

                    (i) any action or omission by Distributing or any Distributing Affiliate after
the Distribution;

                    (ii) any event or transaction after the Distribution that involves the stock,
assets and/or business of Distributing or any Distributing Affiliate, whether or not
such event or transaction is the result of direct action of, or within the control
of, Distributing or any Distributing Affiliate, including without limitation any
acquisition of any stock or assets of Distributing or any Distributing Affiliate by
one or more other Persons;

                    (iii) any breach or inaccuracy of any representation in the Distributing
Representation Letter; provided, that in determining whether there is a breach or
inaccuracy of a representation in the Distributing Representation Letter for
purposes of this Section 4.03(b)(iii), the term “Distributing Representative” as
used in the Distributing Representation Letter shall not include (a) any Person
treated as a Controlled Representative hereunder pursuant to the definition of
Controlled Representative, or (b) with respect to actions taken on or after June 24,
2005, any Person who became an employee of Controlled or a Controlled
Affiliate following the Restructuring Transactions that occurred on June 24,

15

 

2005 and who will serve as a director or officer of Controlled or any
Controlled Affiliate following the Distribution;

                    (iv) any breach of any representation or covenant of Distributing set forth in,
or made pursuant to, this Agreement or the Distribution Agreement;

                    (v) any omission in the information provided by Distributing to the IRS in the
Initial Ruling Documents; or

                    (vi) any failure to execute Steps 1 through 31 of the Transactions (as such
term is defined in the Initial Ruling) in the manner described in the Initial
Ruling.

               (c) Notwithstanding the provisions of Section 4.03(a) and Section 4.03(b), but subject to
Section 4.03(d), Distributing shall be liable for 50 percent, and Controlled and each Controlled
Affiliate shall be jointly and severally liable for 50 percent, of any Distribution Taxes to the
extent such Distribution Taxes are attributable to, caused by or result from:

                    (i) any adoption, amendment or change of any law, rule or regulation after the
date of this Agreement, or any change in the interpretation or application of any
existing law, rule, or regulation as reflected in any judicial decision or any
ruling, notice or other administrative determination or announcement by a Taxing
Authority after the date of this Agreement; or

                    (ii) any breach of a representation that is included or incorporated by
reference in each of the Distributing Representation Letter and the Controlled
Representation Letter, or that is made by each of Distributing and Controlled under
the terms of this Agreement or the Distribution Agreement.

               (d) In determining the Parties’ liability for Distribution Taxes pursuant to this Section
4.03, the following rules shall apply:

                    (i) If Controlled and the Controlled Affiliates are liable for Distribution
Taxes pursuant to Section 4.03(a)(i), Section 4.03(a)(ii) or Section 4.03(a)(v),
Controlled and the Controlled Affiliates shall be exclusively liable for such
Distribution Taxes regardless of whether Distributing could be treated as liable for
all or a portion of those Distribution Taxes pursuant to Section 4.03(b)(iii),
Section 4.03(b)(iv), Section 4.03(b)(v) or Section 4.03(c)(ii); provided, that this
Section 4.03(d)(i) shall not apply to, and Distributing shall be exclusively
responsible for, Distribution Taxes that result from or are attributable to a breach
of the representation set forth in Section 4.01(c).

                    (ii) If Distributing is liable for Distribution Taxes pursuant to Section
4.03(b)(i) or Section 4.03(b)(ii), Distributing shall be exclusively liable for such
Distribution Taxes regardless of whether Controlled and the Controlled Affiliates
could be treated as liable for all or a portion of those Distribution Taxes pursuant
to Section 4.03(a)(iii), Section 4.03(a)(iv) or Section 4.03(c)(ii).

                    (iii) Distributing shall not be liable under Section 4.03(b)(iii), Section
4.03(b)(iv) or Section 4.03(c)(ii) for Distribution Taxes attributable to a breach
of any representation made “to the best knowledge of Distributing” or with a similar

16

 

qualification to the extent that (A) the representation relates to Controlled
or any Controlled Affiliate, or actions, plans or intentions of Controlled, any
Controlled Affiliate or any Controlled Representative, and (B) Controlled has made
the same or a substantially similar representation in this Agreement or the
Controlled Representation Letter without a “to the best knowledge of Controlled” or
similar qualification.

                    (iv) Controlled shall not be liable under Section 4.03(a)(iii), Section
4.03(a)(iv) or Section 4.03(c)(ii) for Distribution Taxes attributable to a breach
of a representation made “to the best knowledge of Controlled” or with a similar
qualification to the extent that the representation relates to Distributing, any
Distributing Affiliate, or any Distributing Representative or actions, plans or
intentions of Distributing, any Distributing Affiliate, or any Distributing
Representative.

                    (v) Controlled shall not be liable under Section 4.03(a)(iii) or Section
4.03(c)(ii) for Distribution Taxes attributable to a breach of representation 1 or
representation 3 in the Controlled Representation Letter; provided, that this
Section 4.03(d)(v) shall not affect Controlled’s liability for Distribution Taxes
with respect to a breach of any other representation in the Controlled
Representation Letter or otherwise under this Agreement.

                    (vi) Distributing shall not be liable under Section 4.03(b)(iii) or Section
4.03(c)(ii) for Distribution Taxes resulting from or attributable to a breach of
representation 2 in the Distributing Representation Letter unless the breach is of
an underlying representation in the Initial Ruling or the Initial Ruling Documents
that (A) is also included in the same or substantially similar form on Schedule A to
the Controlled Representation Letter, in which case the Parties’ liabilities for the
resulting Distribution Taxes shall be as described in Section 4.03(c); or (B)
relates solely to Distributing or a Distributing Affiliate (and not to Controlled or
any Controlled Affiliate, or to any actions, plans or intentions of Controlled or
any Controlled Affiliate).

     4.04 Covenants.

               (a) Controlled agrees that, until the day after the second anniversary of the Distribution,
Controlled will not and will cause each of the Controlled Affiliates not to:

                    (i) sell, exchange, distribute or otherwise transfer to any entity that does
not file a U.S. federal consolidated income tax return with Controlled any of the
assets of Controlled or any Controlled Affiliate (other than sales or transfers of
assets in the ordinary course of business), or any stock or other equity interest in
any Controlled Affiliate, if such transaction would result in the disposition
(individually or in the aggregate) of assets, stock or other equity interests having
an aggregate fair market value (as measured as of the date of the respective sale,
exchange, distribution or other transfer) of more than 40% of the fair market value
of the net assets of the Controlled Group;

                    (ii) liquidate Controlled or merge Controlled or any Controlled Affiliate with
any Person (without regard to which Party is the surviving entity);

17

 

provided, that this Section 4.04(a)(ii) shall not apply to (1) a merger
of any Controlled Affiliate into Controlled or another Controlled Affiliate in cases
in which the Controlled Affiliate(s) involved in the merger file a U.S. federal
consolidated income tax return with Controlled, (2) a merger of another Person into
Controlled or any Controlled Affiliate to effect the acquisition of all of the
assets of such other Person if none of the consideration provided by Controlled or
any Controlled Affiliate is a Controlled Equity Interest, and (3) a merger of a
subsidiary of Controlled with and into another Person to effect the acquisition by
Controlled of all of the stock or other equity interests of such other Person if
none of the consideration provided to owners of stock or other equity interests in
such other Person in connection with the merger is a Controlled Equity Interest;

                    (iii) discontinue the active conduct of the Historic Business or sell,
exchange, or transfer the Historic Business or the assets used therein to any
Person, other than (A) transfers of assets in the ordinary course of the Historic
Business and (B) transfers to Bay Valley;

                    (iv) redeem, purchase or otherwise acquire any of Controlled’s outstanding
stock other than through stock purchases meeting the requirements of section
4.05(1)(b) of Rev. Proc. 96-30 (as in effect prior to its modification by Rev. Proc.
2003-48) (and as may be modified or amended from time to time);

                    (v) issue any stock (including, without limitation, restricted stock) or other
equity interests (including, without limitation, stock options) in Controlled,
except (A) as described in the Initial Ruling and (B) for issuances of stock meeting
the requirements of Safe Harbor VIII as set forth in Treasury Regulations section
1.355-7(d)(8);

                    (vi) enter into any agreement for, facilitate or otherwise participate in the
sale or other disposition by any Person other than Controlled of Controlled stock or
any other equity interest in Controlled;

                    (vii) take or fail to take any action inconsistent with the information,
representations or covenants included in the Rulings or the Ruling Documents or the
representations made by Controlled in the Controlled Representation Letter;

                    (viii) enter into, or permit any of their directors, officers, controlling
shareholders (within the meaning of section 1.355-7(h)(3) of the Treasury
Regulations) or any Person with the implicit or explicit permission (within the
meaning of section 1.355-7 of the Treasury Regulations) of any of the foregoing to
enter into, any agreement, understanding, arrangement or negotiations concerning any
transaction involving any acquisition of the stock of Controlled or any Controlled
Affiliate, or any non-ordinary course acquisition of the assets of Controlled or any
Controlled Affiliate, in each case, by any Person identified in item 1 on Schedule
4.01 or any Person bearing a relationship to a Person so listed that could cause
such transaction to be treated as a “similar acquisition” within the meaning of
section 1.355-7(h)(12) of the Treasury Regulations; or

18

 

                    (ix) cause or permit Bay Valley to be treated as other than an entity that is
wholly-owned by Controlled and disregarded as an entity separate from Controlled for
federal tax purposes.

For purposes of Section 4.04(a)(i) and 4.04(a)(ii)(1), an entity that is and will remain
wholly-owned (for U.S. federal income tax purposes) by Controlled or a Controlled Affiliate that
files a U.S. federal consolidated income tax return with Controlled, and disregarded for U.S.
federal income tax purposes as an entity separate from Controlled or such a Controlled Affiliate,
will be treated as filing a U.S. federal consolidated income tax return with Controlled.

               (b) Notwithstanding Section 4.04(a), Controlled may take an action described in Section
4.04(a)(ii), (iv), (v) or (vi) if all of the following conditions are satisfied:

                    (i) Following the proposed action, one or more Persons will not have acquired
and will not have the right to acquire, directly or indirectly, more than 40 percent
(by vote or value) of the outstanding stock of Controlled (determined immediately
following such action) taking into account all issuances, redemptions or other
acquisitions of stock of Controlled and any asset acquisition treated as an
acquisition of stock of Controlled under section 355(e)(3)(B) (and any agreements
with respect to any such issuances, redemptions or acquisitions), and assuming the
exercise or conversion of all options, warrants or similar exercisable or
convertible securities and the closing of all relevant agreements, from the date two
years prior to the Distribution to the date immediately following the proposed
action and any other transaction which is part of a plan or series of related
transactions that includes the Distribution within the meaning of section 355(e) of
the Code;

                    (ii) If the proposed action is a merger involving Controlled, Controlled will
be the surviving entity; and

                    (iii) At least seven (7) days prior to entering into any agreement
contemplating an action that is intended to qualify under this Section 4.04(b),
Controlled provides to Distributing a description of the relevant facts and a
certification signed by an authorized officer of Controlled attesting that, after an
investigation of the facts and receiving advice concerning the applicable law,
Controlled finds and represents to Distributing that the requirements of clauses (i)
and (ii) are satisfied and will be satisfied as of the time the proposed action
occurs.

     4.05 Exceptions to Covenants.

               (a) Controlled and the Controlled Affiliates may take actions inconsistent with the covenants
contained in Section 4.04(a) (and not permitted under Section 4.04(b)) (“Restricted Actions”) if
prior to taking such actions:

                    (i) Distributing consents in writing to the Restricted Actions, such consent to
be determined by Distributing in its sole discretion taking into account solely the
preservation of the tax-free status of the Distribution and the tax treatment of the
Restructuring Transactions;

19

 

                    (ii) Distributing, at the request of Controlled, obtains a Supplemental Ruling
from the IRS in form and substance reasonably satisfactory to Distributing that the
Restricted Actions will not result in the Distribution being taxable to Distributing
or Distributing’s shareholders and will not adversely affect the Tax treatment of
the Restructuring Transactions; provided, that Distributing shall not be obligated
to request such a ruling if it determines in good faith that such request could have
an adverse effect on Distributing or any Distributing Affiliate or Distributing’s
shareholders; or

                    (iii) Controlled has delivered to Distributing an Unqualified Opinion in form
and substance reasonably satisfactory to Distributing from counsel selected by
Controlled and reasonably acceptable to Distributing that the Restricted Actions
will not result in the Distribution being taxable to Distributing or Distributing’s
shareholders and will not adversely affect the Tax treatment of the Restructuring
Transactions.

               (b) Controlled and the Controlled Affiliates will be jointly and severally liable for, and
shall indemnify and hold harmless Distributing and each of the Distributing Affiliates from and
against, any Taxes resulting from or attributable to any Restricted Action (even if such Restricted
Action is permitted pursuant to Section 4.04(b) or this Section 4.05); provided, that
notwithstanding Section 4.03(a)(v) and this Section 4.05(b), neither Controlled nor any Controlled
Affiliate shall be liable for Taxes resulting from a Restricted Action to the extent that such
Taxes result from a breach of any representation, warranty or covenant made by Distributing or any
Distributing Affiliate as part of obtaining a Supplemental Ruling or an Unqualified Opinion.

     4.06 Notice of Specified Transactions. Not less than seven (7) business days prior to
entering into any oral or written contract or agreement, and not more than five (5) days after it
first becomes aware of any negotiations, plans or intentions (regardless of whether it is a Party
to such negotiations, plans or intentions), regarding any of the transactions described in Section
4.04(a) of this Agreement, Controlled shall provide written notice to Distributing of its intent to
engage in such transaction or of the negotiations, plans or intentions of which it becomes aware,
as the case may be.

     4.07 Private Letter Rulings.

               (a) Distributing represents that it has provided Controlled with accurate and complete copies
of the Initial Ruling and all Initial Ruling Documents submitted on or prior to the date hereof.

               (b) If Controlled requests that Distributing seek a Supplemental Ruling under Section
4.05(a)(ii) or otherwise, Distributing shall cooperate with Controlled to seek to obtain, in a
timely manner, such a Supplemental Ruling (including by making representations reasonably requested
by Controlled or the relevant Taxing Authority regarding Distributing and Distributing Affiliates,
if such representations are true, correct and complete); provided, that Distributing shall not be
obligated to request such a ruling if it determines in good faith that such request could have an
adverse effect on Distributing or any Distributing Affiliate or Distributing’s shareholders. If
Controlled requests that Distributing seek a Supplemental Ruling under Section

20

 

4.05(a)(ii) or otherwise, Controlled shall reimburse Distributing for all reasonable
out-of-pocket costs and expenses incurred by Distributing or any Distributing Affiliate in
connection with seeking and/or obtaining a Supplemental Ruling.

               (c) Distributing shall have the right to seek a Supplemental Ruling in its sole and absolute
discretion. Controlled and the other Controlled Affiliates shall cooperate with Distributing and
take any and all actions reasonably requested by Distributing in connection with seeking and
obtaining such a Supplemental Ruling (including making representations reasonably requested by
Distributing or the relevant Taxing Authority regarding Controlled and the Controlled Affiliates,
if such representations are true, correct and complete); provided, that if Distributing seeks a
Supplemental Ruling that was not requested by Controlled (whether pursuant to Section 4.05(a)(ii)
or otherwise), Distributing shall reimburse Controlled for all reasonable out-of-pocket costs and
expenses that Controlled or any Controlled Affiliate incurs in connection with seeking and/or
obtaining such Supplemental Ruling.

               (d) If Distributing requests a Supplemental Ruling or other guidance after the date of this
Agreement, (1) Distributing shall keep Controlled informed in a timely manner of all material
actions taken or proposed to be taken by Distributing in connection therewith; and (2) Distributing
shall (A) reasonably in advance of the submission of any Supplemental Ruling Documents to the
Taxing Authority provide Controlled with a draft copy thereof, (B) consult in good faith with and
reasonably consider Controlled’s comments on such draft copy, and (C) provide Controlled with an
accurate and complete copy of the Supplemental Ruling and Supplemental Ruling Documents.

               (e) In no event shall Distributing be required to file any Supplemental Ruling Documents
unless Controlled represents in writing that (1) it has read the Supplemental Ruling Documents and
(2) all information, representations and covenants, if any, relating to Controlled (or any
Controlled Affiliate) contained in the Supplemental Ruling Documents are true, correct and
complete. With respect to any Supplemental Ruling Documents to be filed with a Taxing Authority by
Distributing after the date of this Agreement that include representations, covenants or
information regarding Controlled and/or any Controlled Affiliate, Controlled shall as promptly as
practicable, and in any event within five (5) business days of receipt of a draft of such
Supplemental Ruling Documents from Distributing, provide Distributing written notice which shall
either (i) state that Controlled agrees that the representations, covenants and information
regarding Controlled and the Controlled Affiliates contained in such Supplemental Ruling Documents
are true, correct and complete; (ii) state that certain representations, covenants or information
regarding Controlled and the Controlled Affiliates contained in such Supplemental Ruling Documents
are inaccurate and provide proposed revisions and/or corrected information that, if incorporated by
Distributing in the Supplemental Ruling Documents in the manner suggested by Controlled will cause
such representations, covenants or information to be true, correct and complete, and Controlled
will be deemed to have agreed to such representations, covenants or information as so revised; or
(iii) advise Distributing that, because of the complexity of the covenants, representations or
information regarding Controlled and the Controlled Affiliates, or the unavailability to Controlled
of certain information, Controlled in good faith reasonably requires an additional number of
business days to respond and that Controlled will respond in accordance with either clause (i) or
(ii) above within such additional business days. Notwithstanding clause (iii) of the immediately
preceding sentence, if

21

 

Distributing notifies Controlled that Distributing would like to provide the Supplemental
Ruling Documents to the IRS or other Taxing Authority more quickly than the time allotted in clause
(iii), then Controlled will use best efforts to perform actions to satisfy Distributing’s request
to expedite its response.

               (f) Neither Controlled nor any Controlled Affiliate shall seek any guidance (whether written
or oral) from the IRS or any other Taxing Authority concerning the Distribution except pursuant to
the provisions of this Agreement regarding Supplemental Rulings.

               (g) To the extent that Controlled elects to obtain an Unqualified Tax Opinion for purposes of
Section 4.05(a)(iii) regarding Restricted Actions, Distributing shall cooperate in good faith with
Controlled’s efforts to timely obtain such an opinion, including providing to Controlled any
information in Distributing or Distributing Affiliates’ control that is reasonably necessary to
issue such opinion and executing representation letters as to matters relating to Distributing and
the Distributing Affiliates if (i) such representation letters are in form and substance reasonably
acceptable to Distributing, and (ii) Distributing agrees that the information and representations
contained therein are true, correct and complete. Controlled shall reimburse Distributing for all
reasonable out-of-pocket costs and expenses incurred by Distributing or any Distributing Affiliate
in connection with an Unqualified Opinion sought or obtained by Controlled, including out-of-pocket
costs and expenses incurred by Distributing in connection with its review of the opinion and any
representations proposed to be made by Distributing.

               (h) To the extent that a Supplemental Ruling or Unqualified Tax Opinion is obtained in
accordance with this Section 4, Controlled and each Controlled Affiliate and Distributing shall not
take or fail to take (and Distributing shall not allow any Distributing Affiliate to take or fail
to take) any action (including in each case any position on any Tax Return) that is inconsistent
with the Supplemental Ruling or the Unqualified Tax Opinion or any information, representation, or
covenant provided by such Party in connection with the Supplemental Ruling Documents or in
connection with obtaining the Unqualified Tax Opinion, in each case, unless otherwise required by a
Final Determination.

Section 5. Stock Options. 

     5.01 Distributing shall be entitled to claim on its Tax Returns any Tax deduction attributable
to the exercise of an option to purchase Distributing stock, and neither Controlled nor any
Controlled Affiliate shall attempt to claim any such Tax deduction. Distributing shall withhold
applicable Taxes and satisfy applicable Tax reporting requirements with respect to the exercise of
options to purchase Distributing stock.

     5.02 Controlled shall be entitled to claim on its Tax Returns any Tax deduction attributable
to the exercise of an option to purchase Controlled stock, and neither Distributing nor any
Distributing Affiliate shall attempt to claim any such Tax deduction. Controlled shall withhold
applicable Taxes and satisfy applicable Tax reporting requirements with respect to the exercise of
options to purchase Controlled stock.

     5.03 To the extent that any Tax deduction claimed by Distributing attributable to the exercise
of any option to purchase Distributing stock is disallowed by any Taxing Authority, and

22

 

Controlled or any Controlled Affiliate is as a result entitled to such Tax deduction,
Distributing shall notify Controlled of the receipt of such determination, promptly after the
receipt thereof. Controlled shall pay to Distributing the lesser of the amount of the Tax Benefit
realized by Controlled or any Controlled Affiliate attributable to the Tax deduction and the amount
of Distributing’s corresponding Tax Detriment from the denial of such Tax deduction. To the extent
that any Tax deduction claimed by Controlled attributable to the exercise of any option to purchase
Controlled stock is disallowed by any Taxing Authority, and Distributing or any Distributing
Affiliate is as a result entitled to such Tax deduction, Controlled shall notify Distributing of
the receipt of such determination, promptly after the receipt thereof, and Distributing shall pay
to Controlled the lesser of the amount of Tax Benefit realized by Distributing or any Distributing
Affiliate attributable to the Tax deduction and the amount of Controlled’s corresponding Tax
Detriment from the denial of such Tax deduction.

Section 6. Successor Employer.

     6.01 Employee Wages. Controlled shall assume the Form W-2 and Form W-3 reporting
obligations (including the filing of all forms necessary to comply with magnetic media reporting
requirements) of Distributing with respect to any employee of the Transferred Businesses that
Controlled employs during the calendar year which includes the Distribution Date consistent with
the procedures set forth in section 5 of Rev. Proc. 2004-53, 2004-34 I.R.B. 320.

Section 7. Indemnification

     7.01 Indemnification by Controlled. Controlled and each Controlled Affiliate shall
jointly and severally indemnify, defend and hold harmless Distributing, each Distributing
Affiliate, and each of their directors, officers, employees, and agents, and each of the heirs,
executors, successors and assigns of any of the foregoing (collectively, the “Distributing
Indemnified Parties”), from and against any Taxes for which Controlled or any Controlled Affiliate
is liable under this Agreement (“Controlled Taxes”) and any and all Losses and Expenses incurred or
suffered by one or more of the Distributing Indemnified Parties in connection with, relating to,
arising out of or due to, directly or indirectly:

               (a) any Controlled Taxes or any Tax Proceeding relating thereto;

               (b) any inaccuracy or breach of any representation or covenant of Controlled and/or any
Controlled Affiliate set forth in this Agreement or in any document provided pursuant to the terms
hereof; provided, that neither Controlled nor any Controlled Affiliate shall have any liability
pursuant to this Section 7.01(b) for or with respect to any Distribution Taxes (or any Losses or
Expenses related thereto) if neither Controlled nor any Controlled Affiliate is liable for such
Distribution Taxes under Section 4; or

               (c) Controlled or any Controlled Affiliate supplying Distributing or any Distributing
Affiliate with inaccurate or incomplete information in connection with the preparation of any Tax
Return, any request for a Supplemental Ruling, or any Tax Proceeding.

     7.02 Indemnification by Distributing. Distributing shall indemnify, defend and hold
harmless Controlled, each Controlled Affiliate, and each of their directors, officers, employees,

23

 

and agents, and each of the heirs, executors, successors and assigns of any of the foregoing
(collectively, the “Controlled Indemnified Parties”), from and against any Taxes for which
Distributing is liable under this Agreement (“Distributing Taxes”) and any and all Losses and
Expenses incurred or suffered by one or more of the Controlled Indemnified Parties in connection
with, relating to, arising out of or due to, directly or indirectly:

               (a) any Distributing Taxes or any Tax Proceeding relating thereto;

               (b) any inaccuracy or breach of any representation or covenant of Distributing set forth in
this Agreement or in any document provided pursuant to the terms hereof; provided, that
Distributing shall not have any liability pursuant to this Section 7.02(b) for or with respect to
any Distribution Taxes (or any Losses or Expenses related thereto) if Distributing is not liable
for such Distribution Taxes under Section 4; or

               (c) Distributing supplying Controlled with inaccurate or incomplete information in connection
with the preparation of any Tax Return, any request for a Supplemental Ruling, or any Tax
Proceeding.

     7.03 No Indemnification for Tax Items. Nothing in this Agreement shall be construed
as a guarantee of the existence or amount of any loss, credit, carryforward, basis or other Tax
Item or Tax Asset, whether past, present or future, of Distributing, any Distributing Affiliate,
Controlled or any Controlled Affiliate. In addition, for the avoidance of doubt, nothing in this
Agreement shall be construed to require compensation by either Party hereto in respect of any
deferred tax assets or liabilities.

Section 8. Payments.

     8.01 Payments In Connection With Tax Return Filings.

               (a) If a Tax Return is filed by Distributing after the Distribution Date pursuant to Section
2.01 and Controlled or any Controlled Affiliate is liable under this Agreement for all or any
portion of the Taxes reported on such Tax Return, Distributing shall provide Controlled with a
written calculation in reasonable detail setting forth the amount of the Taxes shown as due on such
Tax Return for which Controlled and/or the Controlled Affiliate is liable. Controlled shall have
fifteen (15) days to object to the written calculation provided by Distributing. If by the end of
the fifteen (15) day period Controlled has either agreed or failed to object to Distributing’s
calculation, the calculation shall be deemed final and Controlled shall pay to Distributing the
amount set forth thereon within thirty (30) days of the date on which Distributing provided the
calculation to Controlled. If Controlled notifies Distributing within the fifteen (15) day period
that it disputes Distributing’s calculation, Controlled shall nevertheless pay to Distributing any
amount not in dispute within thirty (30) days of the date on which Distributing provided the
calculation to Controlled and the Parties shall resolve the dispute as to any remaining amounts
pursuant to Section 10.03.

               (b) If a Tax Return is filed by Controlled after the Distribution Date pursuant to Section
2.02(a) and Distributing is liable under this Agreement for all or any portion of the Taxes
reported on such Tax Return, Controlled shall provide Distributing with a written calculation in
reasonable detail setting forth the amount of the Taxes shown as due on such Tax

24

 

Return for which Distributing is liable. Distributing shall have fifteen (15) days to object
to the written calculation provided by Controlled. If by the end of the fifteen (15) day period,
Distributing has either agreed or failed to object to Controlled’s calculation, the calculation
shall be deemed final and Distributing shall pay to Controlled the amount set forth thereon within
thirty (30) days of the date on which Controlled provided the calculation to Distributing. If
Distributing notifies Controlled within the fifteen (15) day period that it disputes Controlled’s
calculation, Distributing shall nevertheless pay to Controlled any amount not in dispute within
thirty (30) days of the date on which Controlled provided the calculation to Distributing and the
Parties shall resolve the dispute as to any remaining amounts pursuant to Section 10.03.

     8.02 Redetermination Amounts. In the event of a redetermination or adjustment of the
amount of any Taxes reported on any Tax Return as a result of a refund of Taxes paid, the filing of
an amended Tax Return, a Final Determination, or any settlement or compromise with any Taxing
Authority, the Party responsible for preparing and filing the Tax Return under Section 2 (the
“Filing Party”) shall, if the redetermination or adjustment results in an increase in the amount of
Taxes for which another Party is liable hereunder, provide such other Party a written statement
setting forth in reasonable detail the effect of the redetermination or adjustment on the amount of
the Taxes for which such other Party is liable under this Agreement. The other Party shall have
fifteen (15) days to object to such written statement. If the other Party either agrees or fails
to object to the written statement within the fifteen (15) day period, the written statement shall
be deemed final and the other Party shall pay to the Filing Party the amount set forth thereon not
later than thirty (30) days after the written statement was provided. If the other Party notifies
the Filing Party within the fifteen (15) day period that it disputes the written statement, the
other Party shall nevertheless pay to the Filing Party any amount not in dispute within thirty (30)
days of the date on which the statement was initially provided and the Parties shall resolve the
dispute as to any remaining amounts pursuant to Section 10.03.

     8.03 Payments of Refunds and Credits. If one Party receives a refund (whether by
payment or credit) of any Tax to which the other Party is entitled pursuant to Section 3 of this
Agreement, the Party receiving such refund shall pay to the other Party the amount of such refund
within thirty (30) days of receipt of such refund and the amount (on an after-tax basis) of any
interest received from the applicable Taxing Authority.

     8.04 Payments Under This Agreement. In the event that one Party (the “Owing Party”)
is required to make a payment to another Party (the “Owed Party”) pursuant to this Agreement, then
such payments shall be made according to this Section 8.04.

               (a) In General. All payments shall be made to the Owed Party or to the appropriate
Taxing Authority as specified by the Owed Party within the time prescribed for payment in this
Agreement, or if no period is prescribed, within thirty (30) days after delivery of written notice
of payment owing together with a computation of the amounts due.

               (b) Treatment of Payments. Unless otherwise required by any Final Determination, the
Parties agree that any payments made by one Party to another Party (other than payments of interest
pursuant to Section 8.04(e) of this Agreement and payments of After-Tax Amounts pursuant to Section
8.04(d) of this Agreement) pursuant to this Agreement shall to the extent permissible under
applicable law be treated for all Tax and financial accounting

25

 

purposes as nontaxable payments made immediately prior to the Distribution and, accordingly,
as not includible in the taxable income of the recipient or as deductible by the payor.

               (c) Prompt Performance. All actions required to be taken (including payments) by any
Party under this Agreement shall be performed within the time prescribed for performance in this
Agreement, or if no period is prescribed, such actions shall be performed promptly.

               (d) After-Tax Amounts. If pursuant to a Final Determination it is determined that the
receipt or accrual of any payment made under this Agreement (other than payments of interest
pursuant to Section 8.04(e) of this Agreement) is subject to any Tax, the Party making such payment
shall be liable for (a) the After-Tax Amount with respect to such payment and (b) interest at the
rate described in Section 8.04(e) of this Agreement on the amount of such Tax from the date such
Tax accrues through the date of payment of such After-Tax Amount. A Party making a demand for a
payment pursuant to this Agreement and for a payment of an After-Tax Amount with respect to such
payment shall separately specify and compute such After-Tax Amount. However, a Party may choose not
to specify an After-Tax Amount in a demand for payment pursuant to this Agreement without thereby
being deemed to have waived its right subsequently to demand an After-Tax Amount with respect to
such payment.

               (e) Interest. Payments pursuant to this Agreement that are not made within the period
prescribed in this Agreement (the “Payment Period”) shall bear interest for the period from and
including the date immediately following the last date of the Payment Period through and including
the date of payment at a per annum rate equal to the prime rate as published in The Wall Street
Journal on the last day of such Payment Period, plus two percent (2%). Such interest will be
payable at the same time as the payment to which it relates and shall be calculated on the basis of
a year of 365 days and the actual number of days for which it is due.

Section 9. Tax Proceedings.

     9.01 Notice. Within twenty (20) days after a Party becomes aware of the existence of
an issue in a Tax Proceeding that may give rise to an indemnification obligation of another Party
under this Agreement, such Party shall give notice to the other Party of such issue (such notice
shall contain factual information, to the extent known, describing any asserted Tax liability in
reasonable detail), and shall promptly forward to the other Party copies of all notices and
material communications with any Taxing Authority relating to such issue. Notwithstanding any
provision of this Agreement to the contrary, if a Party to this Agreement fails to provide the
other Party notice as required by this Section 9.01, and the failure results in a detriment to the
other Party, then any amount which the other Party is otherwise required to pay pursuant to this
Agreement shall be reduced by the amount of such detriment.

     9.02 In General. Except as otherwise provided in Section 9.03 or 9.04, the Filing
Party with respect to a Tax Return shall have the exclusive right to control, contest, and
represent the interests of Distributing, any Distributing Affiliate, Controlled, and any Controlled
Affiliate in any Tax Proceeding relating to such Tax Return and to resolve, settle or agree to any
deficiency, claim or adjustment proposed, asserted or assessed in connection with or as a result of
any such Tax Proceeding. The Filing Party’s rights shall extend to any matter pertaining to the

26

 

management and control of the Tax Proceeding, including execution of waivers, choice of forum,
scheduling of conferences, the resolution of any Tax Item, and the determination of whether to pay
any disputed Taxes and sue for a refund in the forum of its choice. The non-Filing Party shall
assist and cooperate with the Filing Party during the course of any such Tax Proceeding. The
Filing Party shall use reasonable efforts to provide the non-Filing Party notice of and consult
with the non-Filing Party regarding the conduct of any such Tax Proceeding to the extent that such
Tax Proceeding relates to any Taxes for which the non-Filing Party may have indemnification
obligations under this Agreement. The Filing Party shall not settle any Tax Proceeding it controls
in a manner that would affect the indemnification obligations of the non-Filing Party hereunder
without obtaining the non-Filing Party’s consent, which consent shall not be unreasonably withheld.

     9.03 Sole Responsibility Items. Except as otherwise provided in Section 9.04, the
non-Filing Party shall have the exclusive right, at its expense, to control, contest, and represent
the interests of Distributing, any Distributing Affiliate, Controlled, and any Controlled Affiliate
in any Tax Proceeding relating exclusively to a Sole Responsibility Item if the non-Filing Party
acknowledges in writing that it has sole liability for any Taxes that might arise from such Tax
Proceeding and the resolution of such Tax Proceeding could not reasonably be expected to adversely
affect the Filing Party. If the non-Filing Party assumes control of a Tax Proceeding pursuant to
the preceding sentence, the Filing Party shall assist and cooperate with the non-Filing Party
during the course of any such Tax Proceeding. The non-Filing Party shall use reasonable efforts to
provide the Filing Party notice of and consult with the Filing Party regarding the conduct of any
such Tax Proceeding and shall not settle any such Tax Proceeding without the Filing Party’s
consent, which consent shall not be unreasonably withheld.

     9.04 Control of Distribution Tax Proceedings. Distributing shall have the exclusive
right, in its sole discretion, to control, contest, and represent the interests of Distributing,
any Distributing Affiliate, Controlled, and any Controlled Affiliate in any Tax Proceedings
relating to Distribution Taxes and to resolve, settle or agree to any deficiency, claim or
adjustment proposed, asserted or assessed in connection with or as a result of any such Tax
Proceeding; provided, that (i) Distributing shall not settle any such Tax Proceeding with respect
to any material Distribution Taxes for which Controlled or any Controlled Affiliate would
reasonably be expected to be liable hereunder without the prior consent of Controlled, which
consent shall not be unreasonably withheld or delayed, and (ii) to the extent that an issue is
raised in the Tax Proceeding with respect to the Distribution that if resolved against the taxpayer
could reasonably be expected to result in Controlled having any liability for any Distribution
Taxes hereunder, Distributing shall (A) provide Controlled with a reasonable opportunity to
participate in such Tax Proceeding at Controlled’s sole cost and expense; (B) take reasonable steps
to ensure Controlled is informed of any developments in the Tax Proceeding; and (C) provide
Controlled with copies of any written material prior to submission to the Taxing Authority
regarding the Distribution. Distributing’s rights shall extend to any matter pertaining to the
management and control of such Tax Proceeding, including execution of waivers, choice of forum, and
scheduling of conferences. Controlled may assume control of any Tax Proceeding relating to
Distribution Taxes if it acknowledges in writing that it has sole liability under this Agreement
for any Distribution Taxes that might arise in such Tax Proceeding and can demonstrate to the
satisfaction of Distributing that it can satisfy its liability for any such Distribution Taxes;
provided, that Controlled shall not have the right to assume control of any Tax Proceeding

27

 

relating to Distribution Taxes if Distributing reasonably determines that the outcome of such
Tax Proceeding could adversely affect Distributing other than by resulting in a liability for
Distribution Taxes; and provided further, that (i) Controlled shall not settle any such Tax
Proceeding without the prior consent of Distributing, which consent shall not be unreasonably
withheld or delayed, if the proposed settlement would reasonably be expected to adversely affect
Taxes of Distributing or any Distributing Affiliate for which Controlled would not be fully
responsible hereunder, and (ii) Controlled shall (A) provide Distributing with a reasonable
opportunity to participate in such Tax Proceeding at Distributing’s sole cost and expense; (B) take
reasonable steps to ensure Distributing is informed of any developments in the Tax Proceeding; and
(C) provide Distributing with copies of any written material prior to submission to the Taxing
Authority regarding the Distribution.

Section 10. Miscellaneous Provisions.

     10.01 Effectiveness. This Agreement shall become effective upon execution by the
Parties hereto.

     10.02 Cooperation and Exchange of Information.

               (a) Cooperation. Controlled and Distributing shall each cooperate fully (and each
shall cause its respective affiliates to cooperate fully) with all reasonable requests from another
Party for information and materials not otherwise available to the requesting Party in connection
with the preparation and filing of Tax Returns, claims for refund, and Tax Proceedings concerning
issues or other matters covered by this Agreement or in connection with the determination of a
liability for Taxes or a right to a refund of Taxes. Such cooperation shall include:

                    (i) the retention until the expiration of the applicable statute of
limitations, and the provision upon request, of copies of all Tax Returns, books,
records (including information regarding ownership and Tax basis of property),
documentation and other information relating to the Tax Returns, including
accompanying schedules, related work papers, and documents relating to rulings or
other determinations by Taxing Authorities;

                    (ii) the execution of any document that may be necessary or reasonably helpful
in connection with any Tax Proceeding, or the filing of a Tax Return or refund claim
by a member of the Distributing Group or the Controlled Group, including
certification, to the best of a Party’s knowledge, of the accuracy and completeness
of the information it has supplied;

                    (iii) the filing of any Tax Return in accordance with the terms of this
Agreement; and

                    (iv) the use of the Party’s reasonable best efforts to obtain any documentation
that may be necessary or reasonably helpful in connection with any of the foregoing.

Each Party shall make its employees and facilities available on a reasonable and mutually
convenient basis in connection with the foregoing matters.

28

 

               (b) Retention of Records. Any Party that is in possession of documentation of
Distributing (or any Distributing Affiliate) or Controlled (or any Controlled Affiliate) relating
to the Transferred Businesses, including without limitation, books, records, Tax Returns and all
supporting schedules and information relating thereto (the “Transferred Business Records”) shall
retain such Transferred Business Records for a period of five (5) years following the Distribution
Date or, if later, the expiration of the relevant statute of limitations. Thereafter, any Party
wishing to dispose of Transferred Business Records in its possession shall provide written notice
to the other Party describing the documentation proposed to be destroyed or disposed of sixty (60)
business days prior to taking such action. The other Party may arrange to take delivery of any or
all of the documentation described in the notice at its expense during the succeeding sixty (60)
day period. Any such documentation that the other Party does not arrange to take delivery of
during the sixty (60) day period may be destroyed or disposed of.

     10.03 Dispute Resolution. In the event that Distributing and Controlled disagree as
to the amount or calculation of any payment to be made under this Agreement, or the interpretation
or application of any provision under this Agreement, the Parties shall attempt in good faith to
resolve such dispute. If such dispute is not resolved within thirty (30) days following the
commencement of the dispute, Distributing and Controlled shall jointly retain a nationally
recognized law or accounting firm, which firm is independent of both Parties, to resolve the
dispute (the “Independent Firm”). If Distributing and Controlled are unable to agree on an
Independent Firm, each of Distributing and Controlled shall select an independent, nationally
recognized law or accounting firm (the “Deciding Firms”), which Deciding Firms together shall
select the Independent Firm. If the Deciding Firms are unable to agree on an Independent Firm, the
Independent Firm shall be selected by lot from a list prepared by the Deciding Firms. The
Independent Firm shall act as an arbitrator to resolve all points of disagreement and its decision
shall be final and binding upon all Parties involved. Following the decision of the Independent
Firm, Distributing and Controlled shall each take or cause to be taken any action necessary to
implement the decision of the Independent Firm. The fees and expenses relating to the Independent
Firm shall be borne equally by Distributing and Controlled, except that if the Independent Firm
determines that the position advanced by either Party is frivolous, has not been asserted in good
faith or is a position for which there is not substantial authority, 100% of the fees and expenses
of the Independent Firm shall be borne by such Party. Notwithstanding anything in this Agreement to
the contrary, the dispute resolution provisions set forth in this Section 10.03 shall not be
applicable to any disagreement between the Parties relating to Distribution Taxes and any such
dispute shall be settled in a court of law or as otherwise agreed to by the Parties.

     10.04 Notices. All notices and other communications required or permitted to be given
hereunder shall be in writing and shall be deemed given upon (a) a transmitter’s confirmation of a
receipt of a facsimile transmission (but only if followed by confirmed delivery of a standard
overnight courier the following business day or if delivered by hand the following business day),
(b) confirmed delivery of a standard overnight courier or when delivered by hand or (c) the
expiration of three business days after the date mailed by certified or registered mail (return
receipt requested), postage prepaid, to the Parties at the following addresses (or at such other
addresses for a Party as shall be specified by like notice):

29

 

If to Distributing, to the General Counsel of Distributing, with a copy to the Director of

Taxes of Distributing, at:

Dean Foods Company

2515 McKinney Avenue

Suite 1200

Dallas, TX 75201

Telephone: (214) 303-3413

Fax: (214) 303-3853

with a copy (which shall not constitute effective notice) to:

Wilmer Cutler Pickering Hale and Dorr LLP

2445 M Street, N.W.

Washington, DC 20037

Attn: Erika L. Robinson

Telephone: (202) 663-6000

Fax: (202) 663-6363

If to Controlled or any Controlled Affiliate, to the General Counsel of Controlled, at:

TreeHouse Foods, Inc.

857-897 School Place

P.O. Box 19057

Green Bay, Wisconsin 54307

Telephone: (920) 497-7131

Fax: (920) 497-4604

with a copy (which shall not constitute effective notice) to:

Winston & Strawn LLP

35 W. Wacker Drive

Chicago, IL 60601

Attn: Bruce A. Toth and Thomas P. Fitzgerald

Telephone: (312) 558-5600

Fax: (312) 558-5700

Either Party may, by written notice to the other Parties, change the address or the Party to which
any notice, request, instruction or other documents is to be delivered.

     10.05 Changes in Law.

               (a) Any reference to a provision of the Code or a law of another jurisdiction shall include a
reference to any applicable successor provision or law.

               (b) If, due to any change in applicable law or regulations or their interpretation by any
court of law or other governing body having jurisdiction subsequent to the date of this Agreement,
performance of any provision of this Agreement or any transaction

30

 

contemplated thereby shall become impracticable or impossible, the Parties hereto shall use
their commercially reasonable efforts to find and employ an alternative means to achieve the same
or substantially the same result as that contemplated by such provision.

     10.06 Confidentiality. Each Party shall hold and cause its directors, officers,
employees, advisors and consultants to hold in strict confidence, unless compelled to disclose by
judicial or administrative process or, in the opinion of its counsel, by other requirements of law,
all information (other than any such information relating solely to the business or affairs of such
Party) concerning the other Parties hereto furnished it by such other Party or its representatives
pursuant to this Agreement (except to the extent that such information can be shown to have been
(1) in the public domain through no fault of such Party or (2) later lawfully acquired from other
sources not under a duty of confidentiality by the Party to which it was furnished), and each Party
shall not release or disclose such information to any other person, except its directors, officers,
employees, auditors, attorneys, financial advisors, bankers and other consultants who shall be
advised of and agree to be bound by the provisions of this Section 10.06. Each Party shall be
deemed to have satisfied its obligation to hold confidential information concerning or supplied by
the other Party if it exercises the same care as it takes to preserve confidentiality for its own
similar information.

     10.07 Successors. This Agreement shall be binding on and inure to the benefit and
detriment of any successor, by merger, acquisition of assets or otherwise, to any of the Parties
hereto, to the same extent as if such successor had been an original Party.

     10.08 Affiliates. Distributing shall cause to be performed, and hereby guarantees the
performance of, all actions, agreements and obligations set forth herein to be performed by any
Distributing Affiliate, and Controlled shall cause to be performed, and hereby guarantees the
performance of, all actions, agreements and obligations set forth herein to be performed by any
Controlled Affiliate.

     10.09 Authorization, Etc. Each of the Parties hereto hereby represents and warrants
that it has the power and authority to execute, deliver and perform this Agreement, that this
Agreement has been duly authorized by all necessary corporate action on the part of such Party,
that this Agreement constitutes a legal, valid and binding obligation of each such Party and that
the execution, delivery and performance of this Agreement by such Party does not contravene or
conflict with any provision of law or of its charter or bylaws or any agreement, instrument or
order binding on such Party.

     10.10 Entire Agreement. This Agreement contains the entire agreement among the
Parties hereto with respect to the subject matter hereof and supersedes any prior Tax sharing
agreements between Distributing (or any Distributing Affiliate) and Controlled (or any Controlled
Affiliate) and such prior Tax sharing agreements shall have no further force and effect. If, and
to the extent, the provisions of this Agreement conflict with the Distribution Agreement or any
other agreement entered into in connection with the Distribution, the provisions of this Agreement
shall control.

     10.11 Applicable Law; Jurisdiction.

31

 

               (a) This agreement shall be governed by, and construed in accordance with, the domestic laws
of the State of Delaware, without giving effect to any choice of law or conflict of law provision
or rule (whether of the State of Delaware or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of Delaware.

               (b) EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY AND UNCONDITIONALLY (i) AGREES TO
BE SUBJECT TO, AND HEREBY CONSENTS AND SUBMITS TO, THE JURISDICTION OF THE COURTS OF THE STATE OF
DELAWARE AND OF THE FEDERAL COURTS SITTING IN THE STATE OF DELAWARE, (ii) TO THE EXTENT SUCH PARTY
IS NOT OTHERWISE SUBJECT TO SERVICE OF PROCESS IN THE STATE OF DELAWARE, HEREBY APPOINTS THE
CORPORATION TRUST COMPANY, AS SUCH PARTY’S AGENT IN THE STATE OF DELAWARE FOR ACCEPTANCE OF LEGAL
PROCESS AND (iii) AGREES THAT SERVICE MADE ON ANY SUCH AGENT SET FORTH IN (ii) ABOVE SHALL HAVE THE
SAME LEGAL FORCE AND EFFECT AS IF SERVED UPON SUCH PARTY PERSONALLY WITHIN THE STATE OF DELAWARE.

     10.12 Counterparts. This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original, but all of which together shall constitute one and the
same Agreement.

     10.13 Severability. If any term, provision, covenant, or restriction of this
Agreement is held by a court of competent jurisdiction (or an arbitrator or arbitration panel) to
be invalid, void, or unenforceable, the remainder of the terms, provisions, covenants, and
restrictions set forth herein shall remain in full force and effect, and shall in no way be
affected, impaired, or invalidated. In the event that any such term, provision, covenant or
restriction is held to be invalid, void or unenforceable, the Parties hereto shall use their best
efforts to find and employ an alternate means to achieve the same or substantially the same result
as that contemplated by such terms, provisions, covenant, or restriction.

     10.14 No Third Party Beneficiaries. This Agreement is solely for the benefit of (a)
Distributing, Controlled and the Controlled Affiliates, and (b) the Distributing Affiliates, which
are expressly intended to be third party beneficiaries hereunder. Except with respect to the third
party beneficiary rights of the Distributing Affiliates, this Agreement should not be deemed to
confer upon third parties any remedy, claim, liability, reimbursement, cause of action or other
rights in excess of those existing without this Agreement.

     10.15 Waivers, Etc. No failure or delay on the part of a Party in exercising any
power or right hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such
right or power, preclude any other or further exercise thereof or the exercise of any other right
or power. No modification or waiver of any provision of this Agreement nor consent to any departure
by the Parties therefrom shall in any event be effective unless the same shall be in writing, and
then such waiver or consent shall be effective only in the specific instance and for the purpose
for which given.

32

 

     10.16 Setoff. All payments to be made by any Party under this Agreement may be netted
against payments due to such Party under this Agreement, but otherwise shall be made without
setoff, counterclaim or withholding, all of which are hereby expressly waived.

     10.17 Other Remedies. Controlled recognizes that any failure by it or any Controlled
Affiliate to comply with its obligations under Section 4 of this Agreement could result in
Distribution Taxes that would cause irreparable harm to Distributing, the Distributing Affiliates,
and Distributing’s stockholders. Accordingly, Distributing shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically the terms and
provisions of this Agreement, this being in addition to any other remedy to which Distributing is
entitled at law or in equity.

     10.18 Amendment and Modification. This Agreement may be amended, modified or
supplemented only by a written agreement signed by all of the Parties hereto.

     10.19 Interpretation. In this Agreement, unless the context clearly indicates
otherwise:

               (a) words used in the singular include the plural and words used in the plural include the
singular;

               (b) reference to any Person includes such Person’s successors and assigns but, if applicable,
only if such successors and assigns are permitted by this Agreement;

               (c) reference to any gender includes the other gender;

               (d) the word “including” means “including but not limited to”;

               (e) reference to any Article, Section, Exhibit or Schedule means such Article or Section of,
or any Exhibit or Schedule to, this Agreement, as the case may be, and references in any Section or
definition to any clause means such clause of such Section or definition;

               (f) the words “herein,” “hereunder,” “hereof,” “hereto” and words of similar import shall be
deemed references to this Agreement as a whole and not to any particular Section or other provision
hereof;

               (g) reference to any agreement, instrument or other document means such agreement, instrument
or other document as amended, supplemented and modified from time to time to the extent permitted
by the provisions thereof and by this Agreement;

               (h) reference to any law (including statutes and ordinances) means such law (including all
rules and regulations promulgated thereunder) as amended, modified, codified or reenacted, in whole
or in part, and in effect at the time of determining compliance or applicability;

               (i) relative to the determination of any period of time, “from” means “from and including,”
“to” means “to but excluding” and “through” means “through and including”;

33

 

               (j) the titles to Articles and headings of Sections contained in this Agreement have been
inserted for convenience of reference only and shall not be deemed to be a part of or to affect the
meaning or interpretation of this Agreement; and

               (k) all references to dollar amounts herein shall be in respect of lawful currency of the
United States.

     10.20 Waiver of Jury Trial. Each of the Parties hereto irrevocably and
unconditionally waives all right to trial by jury in any litigation, claim, action, suit,
arbitration, inquiry, proceeding, investigation or counterclaim (whether based in contract, tort or
otherwise) arising out of or relating to this Agreement or the actions of the Parties hereto in the
negotiation, administration, performance and enforcement thereof.

[Remainder of page intentionally left blank.]

34

 

     IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed by their
authorized representatives as of the date first above written.

DEAN FOODS COMPANY

By: /s/ Edward F. Fugger

Name: Edward F. Fugger

Title: Vice President — Corporate Development

TREEHOUSE FOODS, INC.

on behalf of itself and the Controlled Affiliates

By: /s/ Thomas E. O’Neill

Name: Thomas E. O’Neill

Title: Senior Vice President

35

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00086-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00086-of-00352.parquet"}]]