Document:

exv10w1

 

Published CUSIP Number: ___________

Exhibit 10.1

REVOLVING CREDIT AGREEMENT

Dated as of December 16, 2005

among

D.R. HORTON, INC.,

Borrower

WACHOVIA BANK, NATIONAL ASSOCIATION,

Administrative Agent

LENDERS NAMED HEREIN,

Lenders

and

LETTER OF CREDIT ISSUERS DESCRIBED HEREIN,

$2,150,000,000

RBS SECURITIES CORPORATION

Joint Lead Arranger and Joint Bookrunner

WACHOVIA CAPITAL MARKETS, LLC

Joint Lead Arranger and Joint Bookrunner

BANC OF AMERICA SECURITIES, LLC

Joint Lead Arranger and Joint Bookrunner

THE ROYAL BANK OF SCOTLAND PLC

AND

BANK OF AMERICA, N.A.

Co-Syndication Agents

CALYON NEW YORK BRANCH,

JPMORGAN CHASE BANK, N.A.,

CITICORP, N.A.,

THE BANK OF NOVA SCOTIA,

UBS LOAN FINANCE LLC,

AND

BNP PARIBAS,

Co-Documentation Agents

 

 

TABLE OF CONTENTS

Page

	 	 	 	 	 
	ARTICLE 1 DEFINITIONS
	 	 	1	 
	 
	 	 	 	 
	1.1 Defined Terms
	 	 	1	 
	1.2 Other Interpretive Provisions
	 	 	19	 
	1.3 Accounting Terms
	 	 	20	 
	1.4 References to Agreements and Laws
	 	 	20	 
	1.5 Time References
	 	 	20	 
	1.6 Letter of Credit Amounts
	 	 	20	 
	 
	 	 	 	 
	ARTICLE 2 LOANS AND LETTERS OF CREDIT
	 	 	20	 
	 
	 	 	 	 
	2.1 Extension of Credit
	 	 	20	 
	2.2 Manner of Borrowing and Disbursement Under Loans
	 	 	21	 
	2.3 Interest on Loans
	 	 	23	 
	2.4 Issuance and Administration of Letters of Credit
	 	 	23	 
	2.5 Fees and Commissions on Loans and Letters of Credit
	 	 	30	 
	2.6 Notes, Loan and Letters of Credit Accounts
	 	 	31	 
	2.7 Repayment of Loans and Letters of Credit
	 	 	32	 
	2.8 Manner of Payment
	 	 	33	 
	2.9 Application of Payments
	 	 	34	 
	2.10 Lenders; Increase in Total Revolving Credit Commitment
	 	 	35	 
	2.11 Set-Off
	 	 	36	 
	2.12 Yield Protection
	 	 	37	 
	2.13 Maximum Rate
	 	 	39	 
	2.14 Termination or Reduction of Commitments
	 	 	40	 
	2.15 Conversion/Continuation Options
	 	 	40	 
	2.16 Swingline Loans
	 	 	40	 
	 
	 	 	 	 
	ARTICLE 3 INVENTORY AND FUNDING AVAILABILITY
	 	 	43	 
	 
	 	 	 	 
	3.1 Loan Funding Availability
	 	 	43	 
	 
	 	 	 	 
	ARTICLE 4 LOAN DISBURSEMENTS AND LETTERS OF CREDIT
	 	 	45	 
	 
	 	 	 	 
	4.1 Prior to the First Disbursement or Letter of Credit
	 	 	45	 
	4.2 All Disbursements and Letters of Credit
	 	 	46	 
	 
	 	 	 	 
	ARTICLE 5 REPRESENTATIONS AND WARRANTIES
	 	 	47	 
	 
	 	 	 	 
	5.1 Existence, Qualification and Power; Compliance with Laws
	 	 	47	 
	5.2 Authorization; No Contravention
	 	 	47	 
	5.3 Binding Effect
	 	 	47	 
	5.4 No Default
	 	 	47	 
	5.5 Taxes
	 	 	47	 
	5.6 Hazardous Materials
	 	 	48	 
	5.7 Litigation
	 	 	48	 
	5.8 Full Disclosure
	 	 	48	 
	5.9 Financial Statements
	 	 	48	 
	5.10 Insurance
	 	 	48	 
	5.11 Compliance with Laws
	 	 	48	 
	5.12 Regulation U
	 	 	48	 
	 
	 	 	 	 
	ARTICLE 6 AFFIRMATIVE COVENANTS
	 	 	49	 
	 
	 	 	 	 
	6.1 Payment
	 	 	49	 

ii

 

	 	 	 	 	 
	6.2 Performance
	 	 	49	 
	6.3 Additional Information
	 	 	49	 
	6.4 Quarterly Financial Statements and Other Information
	 	 	49	 
	6.5 Change in Debt Rating
	 	 	49	 
	6.6 Compliance Certificates
	 	 	49	 
	6.7 Annual Financial Statements and Information; Certificate of No Default
	 	 	49	 
	6.8 Financial and Inventory Covenants
	 	 	50	 
	6.9 Payment of Contractors
	 	 	50	 
	6.10 Inspection and Appraisal
	 	 	50	 
	6.11 Hazardous Materials
	 	 	51	 
	6.12 Insurance
	 	 	51	 
	6.13 Reportable Event
	 	 	51	 
	6.14 Notices
	 	 	51	 
	6.15 Preservation of Existence, Etc.
	 	 	51	 
	6.16 Compliance with Applicable Laws
	 	 	52	 
	 
	 	 	 	 
	ARTICLE 7 NEGATIVE COVENANTS
	 	 	52	 
	 
	 	 	 	 
	7.1 Hazardous Materials
	 	 	52	 
	7.2 Secured Indebtedness
	 	 	52	 
	7.3 Investments
	 	 	52	 
	7.4 Fundamental Changes
	 	 	53	 
	7.5 Distributions; Repurchase of Stock, Etc.
	 	 	53	 
	 
	 	 	 	 
	ARTICLE 8 DEFAULT AND REMEDIES
	 	 	53	 
	 
	 	 	 	 
	8.1 Defaults
	 	 	53	 
	8.2 Remedies
	 	 	56	 
	8.3 Waivers
	 	 	56	 
	8.4 Cross-Default
	 	 	57	 
	8.5 No Liability of Lenders
	 	 	57	 
	8.6 Indemnification
	 	 	57	 
	 
	 	 	 	 
	ARTICLE 9 ADMINISTRATIVE AGENT
	 	 	59	 
	 
	 	 	 	 
	9.1 Appointment and Authorization of Administrative Agent
	 	 	59	 
	9.2 Delegation of Duties
	 	 	60	 
	9.3 Liability of Administrative Agent
	 	 	60	 
	9.4 Reliance by Administrative Agent
	 	 	60	 
	9.5 Notice of Default
	 	 	60	 
	9.6 Credit Decision; Disclosure of Information by Administrative Agent
	 	 	61	 
	9.7 Indemnification of Administrative Agent
	 	 	61	 
	9.8 Administrative Agent in its Individual Capacity
	 	 	62	 
	9.9 Successor Administrative Agent
	 	 	62	 
	9.10 Other Agents; Lead Managers
	 	 	62	 
	9.11 Proofs of Claim
	 	 	63	 
	 
	 	 	 	 
	ARTICLE 10 GENERAL CONDITIONS
	 	 	63	 
	 
	 	 	 	 
	10.1 Benefit
	 	 	63	 
	10.2 Successors and Assigns; Assignments and Participations
	 	 	63	 
	10.3 Amendment and Waiver
	 	 	66	 
	10.4 Additional Obligations
	 	 	67	 
	10.5 Jurisdiction; Venue; Service of Process; Jury Trial
	 	 	67	 
	10.6 Publicity
	 	 	68	 
	10.7 Foreign Lenders
	 	 	68	 
	10.8 Invalidation of Provisions
	 	 	69	 

iii

 

	 	 	 	 	 
	10.9 Execution in Counterparts
	 	 	69	 
	10.10 Captions
	 	 	69	 
	10.11 Notices and other Communications; Facsimile Copies
	 	 	69	 
	10.12 Confidentiality
	 	 	70	 
	10.13 USA PATRIOT Act Notice
	 	 	71	 
	10.14 ENTIRE AGREEMENT
	 	 	71	 

EXHIBITS

	 	 	 	 	 
	Exhibit A

	 	-
	 	Form of Inventory Summary Report
	Exhibit B

	 	-
	 	Form of Request for Advance
	Exhibit C

	 	-
	 	Form of Request for Issuance of Letter of Credit
	Exhibit D

	 	-
	 	Form of Quarterly Compliance Certificate
	Exhibit E

	 	-
	 	Form of Assignment and Acceptance Agreement
	Exhibit F-1

	 	-
	 	Form of Revolving Credit Note
	Exhibit F-2

	 	 	 	Form of Swingline Note
	Exhibit G

	 	-
	 	Form of Guaranty
	Exhibit H

	 	-
	 	Form of Letter of Credit Application
	Exhibit I

	 	 	 	Form of Notice of Conversion/Continuation

SCHEDULES

	 	 	 
	Schedule 2.1

	-	    Revolving Credit Commitments, Commitment Ratios, and Addresses for Notice
	Schedule 2.4

	-	    Existing Letters of Credit
	Schedule 4.1

	-	   Initial Guarantors

iv

 

REVOLVING CREDIT AGREEMENT

     THIS REVOLVING CREDIT AGREEMENT (this “Agreement”) dated as of December 16, 2005, is entered
into by and among D.R. HORTON, INC., a Delaware corporation (“Borrower”), Lenders (hereinafter
defined), and WACHOVIA BANK, NATIONAL ASSOCIATION, a national banking association (“Wachovia
Bank”), as Administrative Agent (hereinafter defined), Swingline Lender (hereinafter defined) and a
Letter of Credit Issuer (hereinafter defined).

R E C I T A L S

     A. Borrower, Administrative Agent and Lenders wish to enter into an agreement, pursuant to
which Lenders will extend credit to Borrower in the form of a revolving credit facility with a
letter of credit sub-facility and a swingline sub-facility.

     B. Upon and subject to the terms and subject to the conditions of this Agreement, the parties
hereto are willing to establish a revolving credit facility with a letter of credit sub-facility
and a swingline sub-facility.

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

ARTICLE 1

DEFINITIONS

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

     “Acquisition” means, whether by purchase, lease, exchange, issuance of stock or other equity
or debt securities, merger, reorganization, or any other method, (a) any acquisition by Borrower or
any of its Restricted Subsidiaries of Inventory, (b) any acquisition by Borrower or any of its
Restricted Subsidiaries of any other Person, which Person shall then become a Subsidiary of
Borrower or any such Restricted Subsidiary, or (c) any acquisition by Borrower or any of its
Restricted Subsidiaries of all or any substantial part of the assets of any other Person.

     “Acquisition Cost” means, with respect to any Developed Lot or Land Parcel, (a) if such
Developed Lot or Land Parcel was purchased individually, the actual purchase price and closing
costs paid by Borrower or its Restricted Subsidiaries for the acquisition of such individual
Developed Lot or Land Parcel excluding Administrative Costs, together with all applicable
Development Costs, and (b) if such Developed Lot or Land Parcel was part of a larger group of
Developed Lots or Land Parcels, the pro rata portion of the overall actual purchase price and
closing costs paid by Borrower and its Restricted Subsidiaries for the acquisition of such larger
group of Developed Lots or Land Parcels allocable to the subject Developed Lot or Land Parcel
excluding Administrative Costs, together with a pro rata portion of all applicable Development
Costs.

     “Adjusted Tangible Net Worth” means, with respect to Borrower and its Restricted Subsidiaries
on a consolidated basis, as of any date, the sum of (a) Tangible Net Worth, plus (b) the least of
(i) fifty percent (50%) of the aggregate principal amount of all then outstanding Subordinated
Indebtedness of Borrower and its Restricted Subsidiaries having a maturity date later than one (1)
year following the Maturity Date, (ii) twenty percent (20%) of Tangible Net Worth, and (iii)
$200,000,000.

 

 

     “Administrative Agent” means Wachovia Bank and its permitted successors as “Administrative
Agent” for Lenders under this Agreement.

     “Administrative Costs” means costs and expenses incurred by Borrower or its Restricted
Subsidiaries in connection with (a) the marketing and selling of Inventory which is part of the
Loan Inventory, and (b) the administration, management, and operation of Borrower’s and its
Restricted Subsidiaries’ businesses (excluding, without limitation, Interest Expense and fees
payable hereunder).

     “Advance” or “Advances” means amounts advanced by Lenders to Borrower pursuant to Article 2 on
the occasion of any borrowing or in connection with draws under Letters of Credit.

     “Affiliate” means, with respect to any Person, another Person (other than a Person whose sole
relationship with such specified Person is as an employee) that directly, or indirectly through one
or more intermediaries, controls, is controlled by, or is under common control with, the Person
specified. For purposes of this definition, “control” when used with respect to any Person means
the direct or indirect beneficial ownership of more than twenty percent (20%) of the voting
securities or voting equity or partnership interests of such Person, or the power to direct or
cause the direction of the management and policies of such Person, whether by contract or
otherwise.

     “Agent-Related Persons” means Administrative Agent (including any successor administrative
agent), together with its Affiliates (including, in the case of Wachovia Bank in its capacity as
Administrative Agent, the Arranger), and the officers, directors, employees, agents and
attorneys-in-fact of such Persons and Affiliates.

     “Agreement” is defined in the preamble.

     “Agreement Date” means December 16, 2005.

     “Applicable Law” means, with respect to any Person, all laws and provisions of constitutions,
statutes, rules, regulations, and orders of governmental bodies or regulatory agencies applicable
to such Person, including, without limitation, all orders and decrees of all courts and arbitrators
in proceedings or actions to which the Person in question is a party or by which it is bound.

     “Applicable Margin” means, on any date of determination, the percentage per annum set forth in
the table below for a Loan, a Letter of Credit, or an Unused Commitment Fee (as the case may be)
that corresponds to the Leverage Ratio or the Debt Rating, as applicable, at such date of
determination, as calculated based on the quarterly compliance certificate of Borrower most
recently delivered pursuant to Section 6.6 or the notice delivered by Borrower pursuant to Section
6.14, as applicable (and in each case as further set forth in this definition):

2

 

Applicable Margin

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Eurodollar	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Senior	 	Rate or	 	 	 	 	 	 	 	 	 	Unused
	Pricing	 	Leverage	 	Unsecured	 	LIBOR	 	 	 	 	 	Letters of	 	Commitment
	Level	 	Ratio	 	Debt Rating	 	Rate	 	Base Rate	 	Credit	 	Fee
	 	1	 	 	Less than or equal
to 0.30 to 1

	 	BBB+/Baa1
	 	 	0.50	%	 	 	0.00	%	 	 	0.375	%	 	 	 	 
	 	2	 	 	Greater than 0.30
to 1 but less than
or equal to 0.40 to
1

	 	BBB/Baa2
	 	 	0.625	%	 	 	0.00	%	 	 	0.50	%	 	 	 	 
	 	3	 	 	Greater than 0.40
to 1 but less than
or equal to 0.50 to
1

	 	BBB-/Baa3
	 	 	0.75	%	 	 	0.00	%	 	 	0.625	%	 	 	 	 
	 	4	 	 	Greater than 0.50
to 1 but less than
or equal to 0.55 to
1

	 	BB+/Ba1
	 	 	1.00	%	 	 	0.00	%	 	 	0.875	%	 	 	 	 
	 	5	 	 	Greater than 0.55
to 1

	 	BB/Ba2
	 	 	1.375	%	 	 	0.00	%	 	 	1.25	%	 	 	 	 

Initially, the Applicable Margin shall be set at Level 3 and, subject to clause (g) of the
proviso below, shall continue at Level 3 until December 31, 2005. Thereafter, the Applicable
Margin shall be determined based upon the Debt Rating (with any adjustment in the Applicable Margin
resulting from a publicly announced change in a Debt Rating to take effect upon the earlier of (x)
the actual date of delivery by Borrower to Administrative Agent of notice thereof pursuant to
Section 6.5, and (y) the date on which Borrower is obligated to deliver notice thereof to
Administrative Agent pursuant to Section 6.5) and the Leverage Ratio (with the Leverage Ratio being
determined upon delivery of the compliance certificate pursuant to Section 6.6 after the end of
each fiscal quarter and any adjustment in the Applicable Margin resulting from the Leverage Ratio
reflected in such compliance certificate to take effect on the last day that such compliance
certificate was required to be delivered); provided that (a) if at least two of Moody’s, S&P and
Fitch are not providing a Debt Rating, no Debt Rating shall be deemed to exist, (b) in the event
that the Debt Ratings are not equivalent (where there are only two Debt Ratings), the Debt Rating
for purposes of determining the Applicable Margin shall be (1) the higher Debt Rating if such Debt
Ratings are one level apart and (2) one level lower than the higher Debt Rating if such Debt
Ratings are more than one level apart, (c) in the event that the Debt Ratings are not equivalent
(where there are three Debt Ratings), (1) if two of such three Debt Ratings are at the same level,
the third Debt Rating shall be disregarded, and (2) if all three Debt Ratings are at different
levels, the highest and lowest Debt Ratings shall be disregarded, (d) if the Leverage Ratio and the
Debt Rating (as determined pursuant to clause (b) or (c), as applicable, of this proviso) are at
different Levels and are only one Level apart, the higher Level shall be deemed to apply (with, for
purpose of clarification and by way of illustration, Level 1 being a higher Level than Level 2),
(e) if the Leverage Ratio and the Debt Rating (as determined pursuant to clause (b) or clause (c),
as applicable, of this proviso) are at different Levels and are more

3

 

than one Level apart, the Level that is one Level lower than the higher Level shall be deemed to
apply, (f) if Borrower fails to deliver a compliance certificate with respect to any fiscal quarter
within the period of time required by Section 6.6, then the Leverage Ratio shall be deemed to be
greater than 0.55 to 1 until Borrower delivers such compliance certificate with respect to such
fiscal quarter (or a compliance certificate with respect to a subsequent fiscal quarter), and (g)
at all times while an Event of Default exists, the Applicable Margin shall be set at Level 5.

     “Applicable Rate” means (a) with respect to any Eurodollar Rate Loan for any day, the sum of
(i) the Eurodollar Rate for such day and (ii) the Applicable Margin (provided that, if
Administrative Agent reasonably determines that no basis exists to determine the Eurodollar Rate,
then the Applicable Rate with respect to any Eurodollar Rate Loan shall be the sum of (i) the Base
Rate for such day and (ii) the Applicable Margin), (b) with respect to any LIBOR Rate Loan for an
Interest Period applicable thereto, the sum of (i) the LIBOR Rate for such Interest Period and (ii)
the Applicable Margin, and (c) with respect to any Swingline Loan for any day, the sum of (i) the
Eurodollar Rate for such day and (ii) the Applicable Margin for Eurodollar Rate Loans.

     “Arranger” means Wachovia Capital Markets, LLC, in its capacity as joint lead arranger and
joint bookrunner.

     “Assignment and Acceptance Agreement” means an Assignment and Acceptance Agreement
substantially in the form of Exhibit E.

     “Attorney Costs” means and includes all reasonable fees, expenses and disbursements of any law
firm or other external counsel.

     “Authority Documents” means, as to Borrower or any Restricted Subsidiary, the bylaws, the
limited liability company agreement, or the partnership agreement (as applicable) of such Person,
and all amendments thereto.

     “Authorized Signatory” means, with respect to Borrower or any Guarantor, such personnel of
Borrower or such Guarantor as set forth in an incumbency certificate of Borrower or such Guarantor
delivered to Administrative Agent on the Agreement Date (or any duly executed incumbency
certificate delivered after the Agreement Date) and certified therein as being duly authorized by
Borrower or such Guarantor to execute documents, agreements, and instruments on behalf of Borrower
or such Guarantor.

     “Available Loan Commitment” means, as of any date of determination, an amount equal to (a) if
Borrower has an Investment Grade Rating from any two (2) of Moody’s, S&P, and Fitch, then the Total
Revolving Credit Commitment, or (b) if Borrower does not have an Investment Grade Rating from any
two (2) of Moody’s, S&P, and Fitch, then the lesser of (i) the Total Revolving Credit Commitment,
and (ii) (A) the Loan Funding Availability less (B) the then-outstanding principal balances of all
Senior Unsecured Indebtedness (other than the Obligations).

     “Base Rate” means for any day the Prime Rate in effect for such day.

     “Base Rate Loan” means a Loan when and to the extent that the interest rate thereon is
determined by reference to the Base Rate.

     “Borrower” is defined in the preamble.

     “Business Day” means (a) any day other than a Saturday, Sunday, or other day on which
commercial banks are authorized to close under Applicable Laws of the State of North Carolina or
New

4

 

York or are in fact closed in Charlotte, North Carolina or New York, New York, and (b) with respect
to any borrowing, payment or rate selection of LIBOR Rate Loans on a day on which dealings in
United States Dollars are carried in the London interbank market.

     “Capital Lease” means any capital lease or sublease which should be capitalized on a balance
sheet in accordance with GAAP.

     “Cash Collateralize” means to pledge and deposit with or deliver to Administrative Agent, for
the ratable benefit of Letter of Credit Issuers and Lenders, as collateral for the Letter of Credit
Exposure, cash or deposit account balances pursuant to documentation in form and substance
satisfactory to Administrative Agent and Letter of Credit Issuers (which documents are hereby
consented to by Lenders). Borrower hereby grants Administrative Agent, for the ratable benefit of
the Letter of Credit Issuers and Lenders, a Lien on all such cash and deposit account balances.
Cash collateral shall be maintained in blocked, non-interest bearing deposit accounts at
Administrative Agent.

     “Change of Control” means either: (a) any sale, lease, or other transfer (in one transaction
or a series of transactions) of all or substantially all of the consolidated assets of Borrower and
its Restricted Subsidiaries to any Person (other than a Restricted Subsidiary of Borrower),
provided that a transaction where the holders of all classes of Common Equity of Borrower
immediately prior to such transaction own, directly or indirectly, fifty percent (50%) or more of
all classes of Common Equity of such Person immediately after such transaction shall not be a
Change of Control; (b) a “person” or “group” within the meaning of Section 13(d) of the Exchange
Act (other than Borrower or Donald R. Horton, his wife, children, or grandchildren, or Terrill J.
Horton, or any trust or other entity formed or controlled by Donald R. Horton, his wife, children,
or grandchildren, or Terrill J. Horton or a Plan of Borrower) becomes the “beneficial owner” (as
defined in Rule 13d-3 under the Exchange Act) of Common Equity of Borrower representing more than
fifty percent (50%) of the voting power of the Common Equity of Borrower, provided that a person or
group shall not be deemed to be a beneficial owner of, or to own beneficially: (x) any Common
Equity of Borrower tendered pursuant to a tender or exchange offer made by or on behalf of such
Person or any of such Person’s Affiliates until such tendered Common Equity is accepted for
purchase or exchange thereunder, or (y) any Common Equity if such beneficial ownership (i) arises
solely as a result of a revocable proxy delivered in response to a proxy or consent solicitation
made pursuant to, and in accordance with, the applicable rules and regulations under the Exchange
Act, and (ii) is not also then reportable on Schedule 13D (or any successor schedule) under the
Exchange Act; (c) Continuing Directors cease to constitute at least a majority of the Board of
Directors of Borrower; or (d) the stockholders of Borrower approve any plan or proposal for the
liquidation or dissolution of Borrower, provided that a liquidation or dissolution of Borrower
which is part of a transaction that does not constitute a Change of Control under the proviso
contained in clause (a) above shall not constitute a Change of Control.

     “Closed Sales” means, for any calculation period, sales of Developed Lots containing Dwellings
which have been closed by Borrower and all Restricted Subsidiaries (other than any sale, transfer,
or other such disposition between (x) Borrower and any Subsidiary or (y) any two or more
Subsidiaries). Closed Sales shall include Developed Lots containing Dwellings owned by any Person
which is or becomes a Restricted Subsidiary before or after the Agreement Date for which sales have
closed during the applicable calculation period. Closed Sales shall include closings attributable
to Acquisitions by Borrower and/or by its Restricted Subsidiaries or when substantially all assets
owned by any Person were acquired by Borrower and/or Restricted Subsidiaries before or after the
Agreement Date.

     “Code” means the Internal Revenue Code of 1986, as amended.

5

 

     “Commitment Ratios” means, for each Lender, on any date of determination, the proportion which
the portion of the aggregate amount of such Lender’s Revolving Credit Commitment then in effect
under this Agreement bears to the Total Revolving Credit Commitment then in effect.

     “Commitment Usage” means, as of any date of determination thereof and without duplication, the
sum of (a) the outstanding principal amount of all Revolving Credit Loans as of such date, plus (b)
the Letter of Credit Exposure as of such date plus (c) except for the purposes of the definition of
“Unused Commitment” and Section 2.5(b) only, whereby Swingline Loans will only be included as usage
with respect to the Revolving Credit Commitment of the Swingline Lender prior to a Mandatory
Swingline Participation, and thereafter will be included as usage with respect to the Revolving
Credit Commitments of all Lenders that have purchased a Mandatory Swingline Participation, the
outstanding principal amount of all Swingline Loans as of such date.

     “Common Equity” means, with respect to any Person, capital stock of such Person that is
generally entitled to (a) vote in the election of directors of such Person, or (b) if such Person
is not a corporation, vote or otherwise participate in the selection of the governing body,
partners, managers, or others that will control the management or policies of such Person.

     “Construction Costs” means, as of any date, all costs actually incurred by Borrower or its
Restricted Subsidiaries with respect to the construction of a Dwelling as of such date, excluding
(a) projected costs, (b) costs for materials or labor not yet delivered to, provided to, or
incorporated into such Dwelling, and (c) Administrative Costs.

     “Continuing Director” means a director who either was a member of the board of directors of
Borrower on the Agreement Date or who became a director of Borrower subsequent to such date and
whose election, or nomination for election by Borrower’s stockholders, was duly approved by a
majority of the Continuing Directors on the board of directors of Borrower at the time of such
approval, either by a specific vote or by approval of the proxy statement issued by Borrower on
behalf of the entire board of directors of Borrower in which such individual is named as nominee
for a director.

     “Current Financials” means, at the time of any determination thereof, the most recently
delivered to Administrative Agent of either (a) the financial statements for the fiscal year ended
September 30, 2004, calculated on a consolidated basis for Borrower and its Subsidiaries, or (b)
the financial statements required to be delivered under Sections 6.4 or 6.7, as the case may be.

     “Customary Recourse Exceptions” means, with respect to any Non-Recourse Indebtedness,
exclusions from the exculpation provisions with respect to such Non-Recourse Indebtedness for
fraud, misapplication of cash, environmental claims, and other circumstances customarily excluded
by institutional lenders from exculpation provisions and/or included in separate indemnification
agreements in non-recourse financings of real estate.

     “Debtor Relief Laws” means the Bankruptcy Code of the United States of America and all other
applicable liquidation, conservatorship, bankruptcy, moratorium, rearrangement, receivership,
insolvency, reorganization, fraudulent transfer or conveyance, suspension of payments, or similar
Applicable Laws from time to time in effect affecting the rights and remedies of creditors
generally.

     “Debt Rating” means, as of any date of determination, the rating as determined by S&P,
Moody’s, or Fitch (collectively, the “Debt Ratings”) of Borrower’s non-credit-enhanced, senior
unsecured long-term debt.

6

 

     “Default” means any event specified in Section 8.1 and any other event which with any passage
of time or giving of notice (or both) would constitute an Event of Default.

     “Defaulting Lender” means, as of any date, any Lender that has (a) failed to make a Loan
required to be made by it hereunder, or (b) given notice to Administrative Agent or Borrower that
it will not make, or that it has disaffirmed or repudiated any obligation to make, any Loan
hereunder (unless such notice is given by all Lenders).

     “Default Rate” means a simple per annum interest rate equal to the sum of (a) the Applicable
Rate, plus (b) two percent (2.00%).

     “Developed Lots” means subdivision lots wholly-owned by Borrower or its Restricted
Subsidiaries, subject to a recorded plat and which are in substantial compliance with all
Applicable Laws and are suitable for the construction thereon of foundations for a Dwelling, which
Borrower has designated to be included and are included as “Developed Lots” in the calculation of
the Loan Funding Availability (exclusive of any Dwelling Lot). An individual Developed Lot is
sometimes referred to herein as a “Developed Lot.”

     “Development Costs” means, as of any date, all costs actually incurred by Borrower and its
Restricted Subsidiaries with respect to the development of a Land Parcel into a Developed Lot or
Developed Lots as of such date, excluding (a) projected costs, (b) costs for materials or labor not
yet delivered to, provided to or incorporated into such parcel of land, and (c) Administrative
Costs.

     “Distribution” means the payment of any dividend or other distribution (whether in cash or
other tangible property) on any capital stock or other equity interest of Borrower or any
Restricted Subsidiary, to any Person or Persons other than the Borrower or any Restricted
Subsidiary.

     “Dwelling” means a house which Borrower or any Restricted Subsidiary has constructed or is
constructing on a Developed Lot which has been designated as a Dwelling Lot.

     “Dwelling Lots” means Developed Lots with Dwellings which Borrower or any Restricted
Subsidiary has designated to be included and are included as “Dwelling Lots” in the calculation of
the Loan Funding Availability. The term “Dwelling Lot” includes the Dwelling located thereon. An
individual Dwelling Lot is sometimes referred to herein as a “Dwelling Lot.”

     “EBITDA” means, for Borrower and its Restricted Subsidiaries for the twelve (12) month period
ending on any date of determination, an amount equal to (a) consolidated net income for such
period, plus (b) cash dividends from Unrestricted Subsidiaries paid to Borrower during such period,
minus (c) gains from extraordinary items for such period, to the extent included in the calculation
of consolidated net income for such period in accordance with GAAP, but without duplication, plus
(d) the sum of (i) any provision for income taxes for such period, (ii) Interest Expense deducted
in the calculation of consolidated net income for such period in accordance with GAAP (including,
without duplication, previously capitalized Interest Expense which would be included in “cost of
goods sold” and deducted from consolidated revenues in determining consolidated net income), (iii)
the amount of depreciation and amortization for such period, and (iv) the amount of any item of
extraordinary loss not paid in cash in such period, in each case to the extent included in the
calculation of consolidated net income for such period in accordance with GAAP, but without
duplication. In the case of any Subsidiary of Borrower that becomes a Restricted Subsidiary during
any period of calculation, EBITDA shall, for the purposes of the foregoing calculations, be
adjusted by increasing, if positive, or decreasing, if negative, EBITDA by the EBITDA of such
Subsidiary during such period of calculation occurring prior to the date such Subsidiary became a
Restricted Subsidiary.

7

 

     “Eligible Assignee” means: (a) a Lender; (b) an Affiliate of a Lender; and (c) any other
Person (other than a natural Person) approved by Administrative Agent, each Letter of Credit
Issuer, the Swingline Lender, and, unless an Event of Default has occurred and is continuing,
Borrower (each such approval not to be unreasonably withheld or delayed).

     “Encumbered Inventory” is defined in Section 7.2.

     “Environmental Law” means any Applicable Law relating to protection of the public health
and/or the environment, including any Applicable Law relating to: the generation, processing,
treatment, storage, transport, disposal, investigation, and remediation or other management of
Hazardous Materials; the storage, handling, use, and transport of chemicals and Hazardous
Materials; and protection of areas of particular environmental concern, including wetlands, areas
inhabited by endangered species, historic sites, and areas above protected aquifers.

     “ERISA” means the Employee Retirement Income Security Act of 1974, as in effect on the
Agreement Date and as such Act may be amended thereafter from time to time.

     “ERISA Affiliate” means (a) any corporation which is a member of the same controlled group of
corporations (within the meaning of Section 414(b) of the Code) as is Borrower, (b) any other trade
or business (whether or not incorporated) under common control (within the meaning of Section
414(c) of the Code) with Borrower, (c) any other corporation, partnership, or other organization
which is a member of an affiliated service group (within the meaning of Section 414(m) of the Code)
with Borrower, or (d) any other entity required to be aggregated with Borrower pursuant to
regulations under Section 414(o) of the Code.

     “Eurocurrency Reserve Requirements” means, for any day as applied to a LIBOR Rate Loan, the
aggregate (without duplication) of the rates (expressed as a decimal fraction) of reserve
requirements in effect on such day (including, without limitation, basic, supplemental, marginal
and emergency reserves under any regulations of the Board of Governors of the Federal Reserve
System or other Governmental Authority having jurisdiction with respect thereto) dealing with
reserve requirements prescribed for eurocurrency funding (currently referred to as “Eurocurrency
Liabilities” in Regulation D of the Board of Governors of the Federal Reserve System) maintained by
a member bank of the Federal Reserve System.

     “Eurodollar Rate” means, for any day:

     (a) the rate of interest per annum equal to the three (3) month London Interbank Offered Rate
for deposits in United States Dollars (rounded to two (2) decimal places), which interest rate is
set forth in the “Money Rates” section of The Wall Street Journal on the next Business Day
following such day; or

     (b) if Administrative Agent determines that the rate referenced in the preceding subsection
(a) is not available, then the rate per annum equal to the rate determined by Administrative Agent
on such date of determination to be the offered rate that appears on Telerate Page 3747 (or any
successor thereto) that displays an average British Bankers Association Interest Settlement Rate
for deposits in United States Dollars (for delivery on such day) with a term equivalent to three
(3) months; or

     (c) if Administrative Agent determines that the rates referenced in the preceding subsections
(a) or (b) cease to be available, then the rate per annum equal to the rate determined by
Administrative Agent on such day to be the offered rate on such other page or other service that
displays

8

 

an average British Bankers Association Interest Settlement Rate for deposits in United States
Dollars (for delivery on such date of determination) with a term equivalent to three (3) months.

     “Eurodollar Rate Loan” means any Loan when and to the extent that the interest rate thereon is
determined by reference to the Eurodollar Rate.

     “Event of Default” means any of the events specified in Section 8.1, provided that any
requirement of passage of time or giving of notice (or both) has been satisfied.

     “Evergreen Letter of Credit” is defined in Section 2.4(b).

     “Exchange Act” means the Securities Exchange Act of 1934, as amended.

     “Existing Agreement” means the Amended and Restated Revolving Credit Agreement dated as of
March 25, 2004, among the Borrower, the Lenders and Letter of Credit Issuers described therein and
Bank of America, N.A., as Administrative Agent, as amended and in effect on the Agreement Date.

     “Existing Letters of Credit” means the Letters of Credit listed on Schedule 2.4.

     “Extension Request” is defined in Section 2.7(e).

     “Federal Funds Rate” means, for any day, the rate per annum equal to the weighted average of
the rates on overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank of New York
on the Business Day next succeeding such day; provided that (a) if such day is not a Business Day,
the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding
Business Day as so published on the next succeeding Business Day, and (b) if no such rate is so
published on such next succeeding Business Day, the Federal Funds Rate for such day shall be the
average rate (rounded upward, if necessary, to a whole multiple of 1/100 of 1%) charged to Wachovia
Bank on such day on such transactions as determined by Administrative Agent.

     “Fee Letter” means the letter agreement dated October 26, 2005, executed by Borrower,
Administrative Agent, Arranger, The Royal Bank of Scotland plc, and RBS Securities Corporation, as
modified, amended, renewed, extended, and restated from time to time.

     “Financial Hedges” means (a) any and all rate swap transactions, basis swaps, credit
derivative transactions, forward rate transactions, commodity swaps, commodity options, forward
commodity contracts, equity or equity index swaps or options, bond or bond price or bond index
swaps or options or forward bond or forward bond price or forward bond index transactions, interest
rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar
transactions, currency swap transactions, cross-currency rate swap transactions, currency options,
spot contracts, or any other similar transactions or any combination of any of the foregoing
(including any options to enter into any of the foregoing), whether or not any such transaction is
governed by or subject to any master agreement, and (b) any and all transactions of any kind, and
the related confirmations, which are subject to the terms and conditions of, or governed by, any
form of master agreement published by the International Swaps and Derivatives Association, Inc.,
any International Foreign Exchange Master Agreement, or any other master agreement (any such master
agreement, together with any related schedules, a “Master Agreement”), including any such
obligations or liabilities under any Master Agreement.

     “Fitch” means Fitch IBCA, Duff & Phelps, a division of Fitch, Inc., or any successor thereto.

9

 

     “Force Majeure Delay” means a delay to the development of a Lot Under Development or a delay
to the construction of a Dwelling which is caused by fire, earthquake, or other Acts of God,
strike, lockout, acts of public enemy, riot, insurrection, or governmental regulation of the sale
or transportation of materials, supplies, or labor, provided that Borrower furnishes Administrative
Agent with written notice of any such delay within ten (10) days from the commencement of any such
delay and provided that the period of the Force Majeure Delay shall not exceed the period of delay
caused by such event.

     “Fronting Fee” means, with respect to any Letter of Credit, an amount equal to the greater of
(a) $200 per annum, and (b) an amount equal to 0.125% per annum times the daily applicable amount
of such Letter of Credit, as determined in accordance with Section 1.6.

     “Funding Period” means a period commencing on the day immediately following the date that the
Loan Funding Availability is established pursuant to Section 3.1(c) by Administrative Agent and
ending on the date that the Loan Funding Availability next is established pursuant to Section
3.1(c) by Administrative Agent.

     “GAAP” means generally accepted accounting principles of the Accounting Principles Board of
the American Institute of Certified Public Accountants and the Financial Accounting Standards Board
which (a) with respect to the covenants contained in Section 6.8 (and, to the extent used in or
relating to such covenants, any defined terms) are in effect on the date hereof, unless amended
pursuant to Section 1.3, and (b) for all other purposes hereunder, are applicable from time to
time.

     “Governmental Authority” means any nation or government, any state or other political
subdivision thereof, and any entity exercising executive, legislative, judicial, regulatory, or
administrative functions of or pertaining to government.

     “Guarantors” means, as of any date, each Restricted Subsidiary of Borrower that has executed
the Subsidiary Guaranty and that has not been released therefrom in accordance with Section 3.1(f).
As of the Agreement Date, the Restricted Subsidiaries listed on Schedule 4.1 are Guarantors that
have executed the Subsidiary Guaranty.

     “Hazardous Material” means “hazardous substance,” “pollutant or contaminant,” and “petroleum,”
and “natural gas liquids” as those terms are defined or used in Section 101 of CERCLA, and any
other substances regulated because of their effect or potential effect on public health and the
environment including PCBs, lead paint, asbestos, urea formaldehyde, radioactive materials,
putrescible materials, and infectious materials.

     “Honor Date” is defined in Section 2.4(c).

     “Indebtedness” means (without duplication), for any Person, the sum of the following: (a) all
liabilities, obligations, and indebtedness of such Person for money borrowed; (b) all liabilities,
obligations, and indebtedness of such Person which are evidenced by bonds, notes, debentures, or
other similar instruments, or by Capital Leases; (c) all obligations of such Person issued or
assumed as the deferred purchase price of property or services (but excluding trade accounts and
accruals payable arising in the ordinary course of business that are not past-due for more than
ninety (90) days); (d) the face amount of all letters of credit and bankers’ acceptances issued for
the account of such Person, and without duplication, all drafts drawn and unpaid thereunder; (e)
all capital stock of such Person subject to repurchase or redemption other than at the sole option
of such Person; (f) all net obligations under all Financial Hedges determined in accordance with
GAAP; (g) all other liabilities or obligations of such Person that would be classified as
“indebtedness” on the balance sheet of such Person determined in accordance with GAAP; and (h) all
obligations of the type referred to in clauses (a) through (g) preceding

10

 

of other Persons that are either (i) guaranteed in any manner by such Person or (ii) secured by any
Lien on any property or asset of such Person (but only to the extent of the value of such property
or asset if such obligations have not been assumed by such Person); provided that the amount of
Indebtedness as of any date shall exclude the face amount of all undrawn outstanding Performance
Letters of Credit.

     “Indemnified Liabilities” is defined in Section 8.6(b).

     “Indemnified Parties” is defined in Section 8.6(b).

     “Interest Expense” means, for any period, the interest expense of Borrower and its Restricted
Subsidiaries calculated on a consolidated basis for such period in accordance with GAAP.

     “Interest Incurred” means, for any period, the aggregate amount (without duplication and
determined in each case in accordance with GAAP) of interest incurred, whether such interest was
expensed or capitalized, paid, accrued, or scheduled to be paid or accrued by Borrower and its
Restricted Subsidiaries during such period, including (a) original issue discount and non-cash
interest payments or accruals on any Indebtedness, (b) the interest portion of all deferred payment
obligations, and (c) all commissions, discounts, and other fees and charges owed with respect to
bankers’ acceptances and letter of credit financings and Financial Hedges, in each case to the
extent attributable to such period. For purposes of this definition, (i) interest on any
obligations arising under Capital Leases shall be deemed to accrue at an interest rate reasonably
determined by Borrower to be the rate of interest implicit in such obligations in accordance with
GAAP, and (ii) interest expense attributable to any Indebtedness represented by the guaranty of an
obligation of another Person shall be deemed to be the interest expense attributable to the
Indebtedness guaranteed.

     “Interest Payment Date” means (a) with respect to Eurodollar Rate Loans, Base Rate Loans and
Swingline Loans, the eighteenth (18th) calendar day of each month, and (b) with respect
to any LIBOR Rate Loan, the last day of each Interest Period applicable thereto and, if such
Interest Period is of a duration greater than three (3) months, on the date that is three (3)
months after the first day of such Interest Period.

     “Interest Period” shall mean with respect to any LIBOR Rate Loan:

     (i) initially, the period commencing on the borrowing date or conversion date,
as the case may be, with respect to such LIBOR Rate Loan and ending one, two, three
or six months thereafter, as selected by Borrower in the applicable Request for
Advance or Notice of Conversion/Continuation; and

     (ii) thereafter, each period commencing on the last day of the next preceding
Interest Period applicable to such LIBOR Rate Loan and ending one, two, three or six
months thereafter, as selected by Borrower in the applicable Notice of
Conversion/Continuation;

     provided that all of the foregoing provisions relating to Interest Periods are subject to the
following:

          (1) if any Interest Period would otherwise end on a day that is not a Business Day,
such Interest Period shall be extended to the next succeeding Business Day unless the
result of such extension would be to carry such Interest Period into another calendar month
in which event such Interest Period shall end on the immediately preceding Business Day;

11

 

          (2) any Interest Period that begins on the last Business Day of a calendar month (or
on a day for which there is no numerically corresponding day in the calendar month at the
end of such Interest Period) shall end on the last Business Day of a calendar month; and

          (3) no Interest Period shall be for less than one month, and Borrower shall not select
an Interest Period for a LIBOR Rate Loan as a Revolving Credit Loan if the last day of such
Interest Period would be after the Maturity Date.

     “Inventory” means all Land Parcels, Lots Under Development, Developed Lots, and Dwelling Lots
and all real and personal property, improvements, and fixtures wholly-owned by Borrower or its
Restricted Subsidiaries related thereto (but excluding any of the foregoing that is not owned by
Borrower or a Restricted Subsidiary but is under a purchase option in favor of Borrower or a
Restricted Subsidiary).

     “Inventory Summary Report” means the written summary of the Loan Inventory, in substantially
the form of Exhibit A, to be prepared by Borrower and submitted to Administrative Agent in
accordance with Section 3.1(b).

     “Investment Grade Rating” means a Debt Rating of BBB-, Baa3, or BBB- (as applicable) (or, if
such Debt Ratings are no longer considered “investment grade” in United States securities markets,
then such other ratings at such time as Administrative Agent shall reasonably determine constitute
“investment grade”) from S&P, Moody’s, or Fitch, respectively.

     “Investments” means, with respect to any Person, such Person’s acquisition of capital stock,
evidences of indebtedness or other securities (including any option, warrant or other right to
acquire any of the foregoing) of, any loans or advances to, the guarantee of any obligations of, or
any other investment or any other interest in, any other Person, or the purchase or acquisition (in
one transaction or a series of transactions) of any assets of any other Person.

     “Land Parcels” means parcels of land wholly-owned by Borrower or its Restricted Subsidiaries
which are, as of the date of determination, not scheduled for commencement of development into
Developed Lots during the six (6) calendar months immediately following such date of determination
and which Borrower has designated as “Land Parcels.” An individual Land Parcel is sometimes
referred to as a “Land Parcel.”

     “Lender Reply Period” is defined in Section 10.3(f).

     “Lenders” means, on any date of determination, the financial institutions named on Schedule
2.1 (as the same may be amended from time to time by Administrative Agent to reflect the addition
of new Lenders pursuant to Section 2.10(b) and to reflect the assignments made in accordance with
Section 10.2), and their respective successors and permitted assigns.

     “Letters of Credit” means the letters of credit issued hereunder in the form agreed upon among
Borrower, the applicable Letter of Credit Issuer, and the beneficiary thereof at the time of
issuance thereof and participated in by Lenders pursuant to the terms and conditions of Section
2.4. An individual Letter of Credit is sometimes referred to as a “Letter of Credit.”

     “Letter of Credit Advance” means, with respect to each Lender, the funding of such Lender’s
participation in any Letter of Credit Borrowing in accordance with its Commitment Ratio.

12

 

     “Letter of Credit Application” means a letter of credit application and agreement in the form
of Exhibit H (or otherwise in form and substance satisfactory to Administrative Agent) submitted by
Borrower to a Letter of Credit Issuer for a Letter of Credit for its own account.

     “Letter of Credit Borrowing” means an extension of credit resulting from a drawing under any
Letter of Credit that has not been reimbursed on the date when made or refinanced by a Loan.

     “Letter of Credit Expiration Date” means the day that is seven (7) days prior to the Maturity
Date (or, if such day is not a Business Day, the next preceding Business Day).

     “Letter of Credit Exposure” means, at any time and without duplication, the sum of (a) the
aggregate undrawn portion of all uncancelled and unexpired Letters of Credit, plus (b) the
aggregate unpaid reimbursement obligations of Borrower in respect of drawings of drafts under all
Letters of Credit.

     “Letter of Credit Issuers” means Wachovia Bank and any additional Lenders approved in such
capacity by Borrower (such approval to be in its sole discretion) and Administrative Agent (such
approval not to be unreasonably withheld or delayed), provided that no Lender shall be required to
be a Letter of Credit Issuer without such Lender’s prior consent, in such Lender’s sole discretion,
in their respective capacities as issuers of Letters of Credit hereunder, and any permitted
successors as a “Letter of Credit Issuer” under this Agreement, and “Letter of Credit Issuer” means
any one of the Letter of Credit Issuers.

     “Letter of Credit Subfacility” means a subfacility for the issuance of Letters of Credit, as
described in and subject to the limitations of Section 2.4.

     “Letter of Credit Sublimit” means an amount equal to the lesser of (a) $1,000,000,000, and (b)
the Total Revolving Credit Commitment. The Letter of Credit Sublimit is part of, and not in
addition to, the Total Revolving Credit Commitment.

     “Leverage Ratio” means, as of the last day of each fiscal quarter of Borrower, the ratio of
(a) the Net Funded Notes Payable of Borrower and its Restricted Subsidiaries on a consolidated
basis on such date to (b) Total Capitalization of Borrower and its Restricted Subsidiaries on a
consolidated basis on such date.

     “LIBOR Base Rate” shall mean, with respect to each LIBOR Rate Loan for the relevant Interest
Period, the applicable British Bankers’ Association London interbank offered rate for deposits in
Dollars as reported by any generally recognized financial information service selected by
Administrative Agent as of 11:00 a.m. (London time) two Business Days prior to the first day of
such Interest Period and having a maturity equal to such Interest Period.

     “LIBOR Rate” shall mean, with respect to each day during each Interest Period pertaining to a
LIBOR Rate Loan, a rate per annum determined for such day in accordance with the following formula
(rounded upward to the nearest one hundredths of one percent (1/100th of 1%)):

LIBOR Base Rate

1.00 – Eurocurrency Reserve Requirements

     “LIBOR Rate Loans” shall mean any Revolving Credit Loan when and to the extent that the
interest rate thereon is determined by reference to the LIBOR Rate.

     “Lien” means, with respect to any property, any mortgage, lien, pledge, assignment, charge,
security interest, title retention agreement, levy, execution, seizure, attachment, garnishment, or
other

13

 

encumbrance of any kind in the nature of any of the foregoing in respect of such property, whether
or not choate, vested, or perfected.

     “Loan Documents” means this Agreement, the Notes, the Subsidiary Guaranty, and any and all
other documents evidencing the Notes or the Letters of Credit or executed in connection therewith
as the same may be amended, substituted, replaced, extended or renewed from time to time.

     “Loan Funding Availability” means the amount of Senior Unsecured Indebtedness which Borrower
may incur as established pursuant to Section 3.1, at any applicable time, by Administrative Agent
based on the Loan Inventory.

     “Loan Inventory” means Lots Under Development, Developed Lots, and Dwelling Lots which are not
encumbered by a Lien or Liens (other than any Permitted Encumbrance) and which have been designated
by Borrower as “Loan Inventory” to be utilized for the purpose of calculating the Loan Funding
Availability, but excluding any Encumbered Inventory.

     “Loans” means the Revolving Credit Loans and the Swingline Loans.

     “Lots Under Development” means Land Parcels which are, as of the date of determination, being
developed into Developed Lots or which are scheduled for the commencement of development into
Developed Lots within six (6) calendar months after the date of determination, and which Borrower
has designated to be included and are included as “Lots Under Development” in the calculation of
the Loan Funding Availability. An individual Lot Under Development is sometimes referred to as a
“Lot Under Development.”

     “Mandatory Borrowing” is defined in Section 2.16(d).

     “Mandatory Swingline Participation” is defined in Section 2.16(d).

     “Material Adverse Event” means any set of one or more circumstances or events which,
individually or collectively, would result in any (a) material impairment of the ability of
Borrower or any Guarantor to perform any of its payment or other material obligations under the
Loan Documents, (b) material and adverse effect on the business, properties, condition (financial
or otherwise), results of operations, or prospects of Borrower and its Restricted Subsidiaries,
taken as a whole, or (c) material and adverse effect on the validity or enforceability of any of
the Loan Documents or the rights and remedies of Administrative Agent, any Letter of Credit Issuer,
or any Lender thereunder.

     “Maturity Date” means December 16, 2010, or such earlier date on which payment of the Loans
and the Letter of Credit Exposure shall be due (whether by acceleration or otherwise), or such
later date as may be determined in accordance with Section 2.7(e).

     “Maximum Rate” means, for each Lender, the maximum non-usurious rate of interest which, under
all Applicable Laws, such Lender is permitted to contract for, charge, take, reserve, or receive on
the Obligations. If the Applicable Laws of the State of Texas are applicable for purposes of
determining the “Maximum Rate,” then such term means the “weekly ceiling” (from time to time in
effect under Texas Finance Code §303.001, as amended, as limited by Texas Finance Code § 303.009.
Borrower agrees that Chapter 346 of the Texas Finance Code, as amended (which regulates certain
revolving credit loan accounts and revolving tri-party accounts), does not apply to the
Obligations, as amended.

     “Maximum Swingline Amount” means the lesser of (a) One Hundred Million Dollars $100,000,000,
and (b) the Revolving Credit Commitment of the Swingline Lender.

14

 

     “Models” means a Dwelling Lot containing a dwelling unit which is designated by Borrower as a
model unit for use in marketing and promoting the sale of Dwelling Lots.

     “Moody’s” means Moody’s Investors Service, Inc. and any successor thereto.

     “Net Funded Notes Payable” means, for Borrower and its Restricted Subsidiaries as of any date,
(a) the aggregate amount of all Indebtedness (including the pro rata portion of Indebtedness of a
joint venture in which Borrower or a Restricted Subsidiary holds an equity interest, based on
Borrower’s or such Restricted Subsidiary’s equity interest in such joint venture) minus (b)
unrestricted cash and cash equivalents in excess of $50,000,000, provided that the adjustment for
unrestricted cash and cash equivalents shall not exceed $500,000,000 in the aggregate.

     “Non-Recourse Indebtedness” means, for any Person, any Indebtedness of such Person in which
the holder of such Indebtedness may not look to such Person personally for repayment, other than to
the extent of any security therefor or pursuant to Customary Recourse Exceptions.

     “Non-Renewal Notice Date” is defined in Section 2.4(b).

     “Notice of Conversion/Continuation” is defined in Section 2.15 and shall be substantially in
the form of Exhibit I.

     “Notes” means the Revolving Credit Notes and the Swingline Note.

     “Obligations” means (a) all payment and performance obligations of Borrower and all other
obligors to Lenders, Letter of Credit Issuers, and Administrative Agent, or any of them, under this
Agreement and the other Loan Documents, as they may be amended from time to time, or as a result of
making the Loans, and (b) the obligation to pay an amount equal to the amount of any and all
damages which Borrower is obligated to pay pursuant to the Loan Documents to, or on behalf of,
Lenders, Letter of Credit Issuers, Administrative Agent, or any of them, which they may suffer by
reason of a breach by any of Borrower or any other obligor of any obligation, covenant, or
undertaking with respect to this Agreement or any other Loan Document.

     “Organizational Documents” means, as to Borrower or any Restricted Subsidiary, the articles of
incorporation, certificate of incorporation, articles of organization, certificate of formation, or
certificate of limited partnership (as applicable) of such Person, and all amendments thereto.

     “Participant” is defined in Section 10.2(d).

     “Performance Letter of Credit” means any letter of credit issued: (a) on behalf of a Person in
favor of a Governmental Authority, including, without limitation, any utility, water, or sewer
authority, or other similar entity, for the purpose of assuring such Governmental Authority that
such Person or an Affiliate of such Person will properly and timely complete work it has agreed to
perform for the benefit of such Governmental Authority; (b) in lieu of cash deposits, including,
without limitation, to obtain a license, in place of a utility deposit, or for land option
contracts; or (c) in lieu of other contract performance, including, without limitation, bid and
performance bonds.

     “Permitted Encumbrances” means Liens, encumbrances, easements, and other matters which are (a)
in favor of Administrative Agent, Lenders, or Letter of Credit Issuers to secure the Obligations,
(b) on real estate for real estate taxes not yet delinquent, (c) for taxes, assessments, judgments,
governmental charges or levies or claims the non-payment of which is being diligently contested in
good faith by

15

 

appropriate proceedings and for which adequate reserves have been set aside on Borrower’s books in
accordance with GAAP (but only so long as no foreclosure, distraint sale, or similar proceedings
have been commenced with respect thereto and remain unstayed for a period of thirty (30) days after
their commencement), (d) in favor of carriers, warehousemen, mechanics, laborers, and materialmen
incurred in the ordinary course of business for sums not yet past due or being diligently contested
in good faith (if adequate reserves are being maintained by Borrower with respect thereto in
accordance with GAAP), (e) incurred in the ordinary course of business in connection with worker’s
compensation and unemployment insurance, (f) easements, rights-of-way, restrictions, or similar
encumbrances on the use of real property which does not interfere with the ordinary conduct of
business of Borrower or any of its Subsidiaries or materially detract from the value of such real
property, (g) Liens securing community development district bonds or similar bonds issued by any
Governmental Authority to accomplish similar purposes, (h) Liens on assets and properties of joint
ventures or limited partnerships that are not wholly-owned Subsidiaries of Borrower or any of its
Restricted Subsidiaries, (i) Liens securing Borrower’s and/or its Restricted Subsidiaries’
obligations to third parties, in connection with joint development agreements with such third
parties, to perform and/or pay for or reimburse the costs of construction and/or development
related to or benefiting Borrower’s or its Restricted Subsidiaries’ property and property belonging
to such third parties, so long as: (x) such obligations are not past due, and (y) the value of the
benefit to Borrower’s and its Restricted Subsidiaries’ property as a result of such construction
and/or development is equal to or greater than Borrower’s and its Restricted Subsidiaries’ share of
the costs of such construction and/or development secured by such Liens; and (j) Liens approved in
writing by Administrative Agent securing Indebtedness of Borrower which shall be approved so long
as such Liens secure such Indebtedness and the Obligations on a pari passu basis in a manner
reasonably acceptable to Administrative Agent.

     “Person” means an individual, corporation, partnership, limited liability company, trust, or
unincorporated organization, or a government or any agency or political subdivision thereof.

     “Plan” means an employee benefit plan within the meaning of Section 3(3) of ERISA maintained
by or contributed to by Borrower or any ERISA Affiliate.

     “Prime Rate” means that interest rate so denominated and set by Wachovia Bank from time to
time as an interest rate basis for borrowings. The Prime Rate is but one of several interest rate
bases used by Wachovia Bank. Wachovia Bank lends at rates above and below the Prime Rate. Any
change in such Prime Rate announced by Wachovia Bank shall take effect at the opening of business
on the date specified in the public announcement of such change.

     “Reconciliation Date” means two (2) Business Days after Borrower’s receipt of notice from
Administrative Agent pursuant to Section 3.1(d) that the outstanding principal balance of all
Senior Unsecured Indebtedness exceeds the Loan Funding Availability.

     “Recourse Indebtedness” means, for any Person, Indebtedness of such Person that is not
Non-Recourse Indebtedness.

     “Register” is defined in Section 10.2(c).

     “Regulation U” means Regulation U of the Board of Governors of the Federal Reserve System.

     “Regulation X” means Regulation X of the Board of Governors of the Federal Reserve System.

     “Rejecting Lender” is defined in Section 2.7(e).

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     “Rejecting Lender’s Facility Termination Date” is defined in Section 2.7(e).

     “Reportable Event” has the meaning set forth in Section 4043(b) of ERISA.

     “Request for Advance” means any certificate signed by an Authorized Signatory of Borrower
requesting an Advance hereunder which will increase the aggregate amount of the Loans outstanding,
which certificate shall be denominated a “Request for Advance,” and shall be in substantially the
form of Exhibit B. Each Request for Advance shall, among other things, (a) specify the date of the
Advance, which shall be a Business Day, (b) specify the amount of the Advance, (c) specify whether
such Advance is to consist of Eurodollar Rate Loans or LIBOR Rate Loans (a failure to so specify
shall be deemed to be a selection of Eurodollar Rate Loans), (d) if such Advance is to consist of
LIBOR Rate Loans, the duration of the Interest Period applicable thereto (a failure to so specify
shall be deemed to be a selection of an Interest Period of one month), (e) state that there shall
not exist, on the date of the requested Advance and after giving effect thereto, a Default or an
Event of Default, and (f) state that all conditions precedent to the making of the Advance have
been satisfied.

     “Request for Issuance of Letter of Credit” means any certificate signed by an Authorized
Signatory of Borrower requesting that a Letter of Credit Issuer issue a Letter of Credit hereunder,
which certificate shall be in substantially the form of Exhibit C. Each Request for Issuance of
Letter of Credit shall, among other things, (a) specify the stated amount of the Letter of Credit,
(b) specify the effective date for the issuance of the Letter of Credit (which shall be a Business
Day), (c) specify the date on which the Letter of Credit is to expire (which shall be a Business
Day), (d) specify the Person for whose benefit such Letter of Credit is to be issued, (e) specify
other relevant terms of such Letter of Credit, (f) be accompanied by a completed Letter of Credit
Application, (g) state that there shall not exist, on the date of issuance of the requested Letter
of Credit and after giving effect thereto, a Default or an Event of Default, and (h) state that all
conditions precedent to the issuance of such Letter of Credit have been satisfied.

     “Required Lenders” means (a) on any date of determination prior to termination of the Total
Revolving Credit Commitment, those Lenders (other than Defaulting Lenders) holding more than fifty
percent (50%) of the Total Revolving Credit Commitment (excluding the Revolving Credit Commitments
of any Defaulting Lenders), and (b) on any date of determination occurring after the termination of
the Total Revolving Credit Commitment, those Lenders (other than Defaulting Lenders) holding more
than fifty percent (50%) of the outstanding principal amount of all Loans and the Letter of Credit
Exposure (excluding the Loans and Letter of Credit Exposure of any Defaulting Lenders); provided
that in determining Required Lenders for the purposes of any amendment or modification (i) that
results in an increase in Loan Funding Availability as calculated under Section 3.1(a) or (ii) to
the definition of “Change of Control” or Section 8.1(j), the percentages in clauses (a) and (b)
above shall be sixty-six and two-thirds percent (66 2/3%).

     “Restricted Subsidiary” means any Subsidiary of Borrower which has been designated as a
Restricted Subsidiary by Borrower and from which Administrative Agent is required to receive a duly
executed Subsidiary Guaranty, including, without limitation, the Guarantors.

     “Revolving Credit Commitment” means, for any Lender as of any date of determination, the
amount stated beside such Lender’s name on Schedule 2.1 as its “Revolving Credit Commitment,” as
such amount may be increased or decreased in accordance with this Agreement.

     “Revolving Credit Loans” means, collectively, amounts advanced by Lenders to Borrower under
the Total Revolving Credit Commitment pursuant to the terms of this Agreement and evidenced by the
Revolving Credit Notes. An individual Loan is sometimes referred to as a “Revolving Credit Loan.”

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     “Revolving Credit Notes” means the promissory notes executed by Borrower in the form of
Exhibit F-1, one each in favor of each Lender evidencing such Lender’s pro rata share of the
Revolving Credit Loans, and in a principal amount equal to such Lender’s Revolving Credit
Commitment, as well as any promissory note or notes issued by Borrower in substitution,
replacement, extension, amendment, or renewal of any such promissory note or notes.

     “Senior Unsecured Indebtedness” means, as of any date, all Indebtedness (other than
Subordinated Indebtedness) of Borrower and its Restricted Subsidiaries which is not secured in
whole or in part by any Lien except Permitted Encumbrances (excluding any obligations arising under
Capital Leases, notes payable for insurance premiums, non-recourse promissory notes for seller
financing, and promissory notes issued as earnest money for contracts).

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

     “Speculative Lot” means any Dwelling Lots having a fully or partially constructed dwelling
unit thereon which Dwelling Lot is not subject to a bona fide contract for the sale of such
Dwelling Lot to a third party, excluding Developed Lots containing Dwellings used as Models.

     “Subordinated Indebtedness” means any Indebtedness of Borrower or any of its Restricted
Subsidiaries that is subordinated to the Obligations on terms and conditions reasonably acceptable
to Administrative Agent.

     “Subsidiary” means, as applied to any Person, (a) any corporation of which fifty percent (50%)
or more of the outstanding stock (other than directors’ qualifying shares) having ordinary voting
power to elect a majority of its board of directors, regardless of the existence at the time of a
right of the holders of any class or classes of securities of such corporation to exercise such
voting power by reason of the happening of any contingency, or any partnership of which fifty
percent (50%) or more of the outstanding partnership interests, is at the time owned by such
Person, or by one or more Subsidiaries of such Person, or by such Person and one or more
Subsidiaries of such Person, and (b) any other entity which is controlled or susceptible to being
controlled by such Person, or by one or more Subsidiaries of such Person, or by such Person and one
or more Subsidiaries of such Person. Unless the context otherwise requires, “Subsidiaries” as used
herein shall mean the Subsidiaries of Borrower.

     “Subsidiary Guaranty” means a guaranty agreement in the form of Exhibit G pursuant to which
each Restricted Subsidiary guarantees the full and faithful payment and performance of all of the
Obligations.

     “Swingline Expiry Date” shall mean the date which is five (5) Business Days prior to the
Maturity Date.

     “Swingline Lender” shall mean Wachovia Bank in its capacity as lender of Swingline Loans.

     “Swingline Loans” shall have the meaning set forth in Section 2.16.

“Swingline Note” means the promissory note executed by the Borrower in the form of

     Exhibit F-2, in favor of Swingline Lender evidencing the Swingline Loans, and in a principal
amount equal to the Maximum Swingline Amount, as well as any promissory note issued by Borrower in
substitution, replacement, extension, amendment or renewal of any such promissory note.

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     “Tangible Net Worth” means, with respect to Borrower and its Restricted Subsidiaries, the net
worth of Borrower and its Restricted Subsidiaries, as defined under GAAP, less all “intangible
assets”, but excluding any non-cash gain or loss resulting from any mark-to-market adjustments made
directly to the net worth of Borrower and its Restricted Subsidiaries on a consolidated basis as a
result of fluctuations in the value of financial instruments owned by Borrower or any such
Restricted Subsidiaries as mandated under SFAS 133.

     “Taxes” means, for any Person, taxes, assessments, duties, levies, imposts, deductions,
charges, or withholdings, or other governmental charges or levies imposed upon such Person, its
income, or any of its properties, franchises, or assets.

     “Total Capitalization” means the sum of (a) Net Funded Notes Payable and (b) stockholders
equity of Borrower and its Restricted Subsidiaries, as determined on a consolidated basis in
accordance with GAAP.

     “Total Liabilities” means all items required by GAAP to be set forth as “liabilities” on
Borrower’s and its Restricted Subsidiaries’ consolidated balance sheet.

     “Total Revolving Credit Commitment” means, as of any date of determination, the sum of all
Revolving Credit Commitments for all Lenders then in effect, which sum shall not exceed
$2,150,000,000 unless the Total Revolving Credit Commitment is increased pursuant to Section
2.10(b).

     “Unreimbursed Amount” is defined in Section 2.4(c).

     “Unrestricted Subsidiaries” means Subsidiaries of Borrower which are not Restricted
Subsidiaries.

     “Unused Commitment” means, as of any date, the amount by which (a) the Total Revolving Credit
Commitment on such date exceeds (b) the Commitment Usage as of such date.

     “Unused Commitment Fee” means those certain fees paid by Borrower to Lenders pursuant to
Section 2.5(b).

     1.2 Other Interpretive Provisions.

     (a) The meanings of defined terms are equally applicable to the singular and plural forms of
the defined terms.

     (b) (i) The words “herein”, “hereunder”, “hereto” and “hereof” and words of similar import
when used in any Loan Document shall refer to such Loan Document as a whole and not to any
particular provision thereof.

     (ii) Unless otherwise specified herein, Article, Section, Exhibit, and Schedule
references are to this Agreement.

     (iii) The term “including” is by way of example and not limitation.

     (iv) The term “documents” includes any and all instruments, documents, agreements,
certificates, notices, reports, financial statements, and other writings, however evidenced.

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     (c) In the computation of periods of time from a specified date to a later specified date, the
word “from” means “from and including;” the words “to” and “until” each mean “to but excluding;”
and “the word “through” means “to and including.”

     (d) Section headings herein and the other Loan Documents are included for convenience of
reference only and shall not affect the interpretation of this Agreement or any other Loan
Document.

     1.3 Accounting Terms. All accounting terms not specifically or completely defined herein
shall be construed in conformity with, and all financial data required to be submitted pursuant to
this Agreement shall be prepared in conformity with, GAAP applied on a consistent basis, except as
otherwise specifically prescribed herein. If at any time any change in GAAP would affect the
computation of any financial ratio or requirement set forth in any Loan Document, and either
Borrower or the Required Lenders shall so request, Administrative Agent, Lenders and Borrower shall
negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof
in light of such change in GAAP (subject to the approval of the Required Lenders); provided that,
until so amended, (x) such ratio or requirement shall continue to be computed in accordance with
GAAP prior to such change therein and (y) Borrower shall provide to Administrative Agent and
Lenders financial statements and other documents required under this Agreement or as reasonably
requested hereunder setting forth a reconciliation between calculations of such ratio or
requirement made before and after giving effect to such change in GAAP.

     1.4 References to Agreements and Laws. Unless otherwise expressly provided herein, (a)
references to agreements (including the Loan Documents) and other contractual instruments shall be
deemed to include all subsequent amendments, restatements, extensions, supplements, and other
modifications thereto, but only to the extent that such amendments, restatements, extensions,
supplements, and other modifications are not prohibited by any Loan Document; and (b) references to
any Applicable Law shall include all statutory and regulatory provisions consolidating, amending,
replacing, supplementing, or interpreting such Applicable Law.

     1.5 Time References. Unless otherwise specified in the Loan Documents time references are to
Eastern Standard Time or Eastern Daylight Time (as applicable).

     1.6 Letter of Credit Amounts. Unless otherwise specified, all references herein to the amount
of a Letter of Credit at any time shall be deemed to mean the maximum face amount of such Letter of
Credit after giving effect to all increases thereof contemplated by such Letter of Credit or any
documents related thereto, whether or not such maximum face amount is in effect at such time;
provided that, in the case of any permanent reduction of the amount available under any Letter of
Credit, references to the amount of such Letter of Credit shall be deemed to mean the amount
available thereunder after giving effect to any such permanent reduction.

ARTICLE 2

LOANS AND LETTERS OF CREDIT

     2.1 Extension of Credit. Subject to the terms and conditions of, and in reliance upon the
representations and warranties made in this Agreement and the other Loan Documents, Lenders agree,
severally in accordance with their respective Commitment Ratios, and not jointly, to extend credit
to Borrower in an aggregate principal amount not to exceed the Total Revolving Credit Commitment
and Letter of Credit Issuers agree to issue Letters of Credit on behalf of Borrower in an aggregate
face amount not to exceed the Letter of Credit Sublimit, all as provided below:

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     (a) The Revolving Credit Loans. Subject to the terms and conditions of this Agreement
and provided that no Default or Event of Default exists, Lenders agree, severally in accordance
with their Commitment Ratios, and not jointly, upon the terms and subject to the conditions of this
Agreement, to lend and re-lend to Borrower, prior to the Maturity Date, amounts which in the
aggregate do not exceed the Total Revolving Credit Commitment; provided that (i) the Commitment
Usage may not exceed the Total Revolving Credit Commitment, and (ii) the sum of the outstanding
principal amount of all Loans plus the aggregate unpaid reimbursement obligations in respect of
drawings under all Letters of Credit that are Performance Letters of Credit plus the Letter of
Credit Exposure with regard to all Letters of Credit that are not Performance Letters of Credit may
not exceed the Available Loan Commitment. Advances under the Total Revolving Credit Commitment may
be repaid and reborrowed from time to time on a revolving basis as set forth herein. Each Lender’s
obligation to lend to Borrower hereunder shall terminate on the Maturity Date (unless sooner
terminated hereunder).

     (b) The Letters of Credit. Subject to the terms and conditions of this Agreement and
provided that no Default or Event of Default exists, each Letter of Credit Issuer agrees to issue
Letters of Credit for the account of Borrower pursuant to Section 2.4 in an aggregate amount for
Borrower at any one time not to exceed the Letter of Credit Sublimit; provided that (i) the
Commitment Usage may not exceed the Total Revolving Credit Commitment, and (ii) the sum of the
outstanding principal amount of all Loans plus the aggregate unpaid reimbursement obligations in
respect of drawings under all Letters of Credit that are Performance Letters of Credit plus the
Letter of Credit Exposure with regard to all Letters of Credit that are not Performance Letters of
Credit may not exceed the Available Loan Commitment.

     (c) Use of Loan Proceeds. Administrative Agent, Lenders, and Borrower agree that the
proceeds of the Loans and the Letters of Credit issued under Section 2.4 shall be used for general
corporate purposes, including, without limitation, working capital support, home construction, lot
acquisition, lot development, land acquisition, asset acquisitions, and stock acquisitions.

     (d) Limitation on Advances When Swingline Loan Outstanding. No Advance shall be made
at any time that any Swingline Loan is outstanding, except for an Advance that is used, in whole or
in part, on the day on which made, to repay in full the outstanding principal balance of Swingline
Loans.

     2.2 Manner of Borrowing and Disbursement Under Loans.

     (a) Advances. Borrower shall give Administrative Agent irrevocable written notice for
Advances under the Revolving Credit Loans not later than (i) 11:00 a.m. on the date of the
requested Advance (if such Advance is to consist of Eurodollar Rate Loans) or (ii) 11:00 a.m. on a
day that is at least three (3) Business Days prior to the date of the requested Advance (if such
Advance is to consist of LIBOR Rate Loans), in the form of a Request for Advance, or notice by
telephone or telecopy followed immediately by a Request for Advance; provided, however, that the
failure by Borrower to confirm any notice by telephone or telecopy with a Request for Advance shall
not invalidate any notice so given. Each Advance hereunder shall be in principal amounts of not
less than $5,000,000 and in integral multiples of $1,000,000. Subsequent to the initial Advance of
the Revolving Credit Loans made on the Agreement Date, Borrower may not request, in the aggregate,
more than four (4) Advances in any calendar month.

     (b) Notification of Lenders. Upon receipt of a Request for Advance or notice by
telephone or telecopy, Administrative Agent shall promptly (and in any event, by the close of
business on the day such Request for Advance is received) notify each Lender by telephone or
telecopy of the requested Advance, the date on which the Advance is to be made, the amount of the
Advance, whether such Advance is to consist of Eurodollar Rate Loans or LIBOR Rate Loans (and if
LIBOR Rate Loans, the
duration of the Interest Period applicable thereto), and the amount of such Lender’s portion of the

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applicable Advance based upon such Lender’s Commitment Ratio. Each Lender shall, not later than
1:00 p.m. on the date specified in such notice, make available to Administrative Agent at
Administrative Agent’s office, or at such account as Administrative Agent shall designate, the
amount of its portion of the applicable Advance in immediately available funds.

     (c) Disbursement. Prior to 2:00 p.m. on the date of an Advance hereunder,
Administrative Agent shall, subject to the satisfaction of the conditions set forth in this
Agreement, disburse the amounts made available to Administrative Agent by Lenders in immediately
available funds by (i) transferring the amounts so made available by wire transfer pursuant to the
instructions of Borrower, or (ii) in the absence of such instructions, crediting the amounts so
made available to the account of Borrower maintained with Administrative Agent or an Affiliate of
Administrative Agent. Unless Administrative Agent shall have received notice from a Lender prior
to the date of any Advance that such Lender will not make available to Administrative Agent such
Lender’s ratable portion of such Advance, and so long as notice has been given as provided in
Section 2.2(b), Administrative Agent may assume that such Lender has made such portion available to
Administrative Agent on the date of such Advance and Administrative Agent may, in its sole
discretion and in reliance upon such assumption, without any obligation hereunder to do so, make
available to Borrower on such date a corresponding amount. If and to the extent such Lender shall
not have so made such ratable portion available to Administrative Agent, then such Lender agrees to
repay to Administrative Agent forthwith on demand such corresponding amount together with interest
thereon, for each day from the date such amount is made available to Borrower until the date such
amount is repaid to Administrative Agent for the first two (2) days that such amount is not repaid,
at the Federal Funds Rate, and, thereafter, at the Federal Funds Rate plus four percent (4%) per
annum. If such Lender shall repay to Administrative Agent such corresponding amount, then such
amount so repaid shall constitute such Lender’s portion of the applicable Advance for purposes of
this Agreement. If such Lender does not repay such corresponding amount immediately upon
Administrative Agent’s demand therefor, then Administrative Agent may notify Borrower, and Borrower
shall immediately pay such corresponding amount to Administrative Agent, together with all interest
accrued thereon and on the same terms and conditions that would have applied to such Advance had
such Lender funded its portion thereof. Any payments received by Administrative Agent following
such demand shall be applied in repayment of amounts owed to Administrative Agent hereunder prior
to any other application. The failure of any Lender to fund its portion of any Advance shall not
relieve any other Lender of its obligation, if any, hereunder to fund its respective portion of the
Advance on the date of such borrowing, but no Lender shall be responsible for any such failure of
any other Lender. In the event that, at any time when no Default or Event of Default exists, a
Lender for any reason fails or refuses to fund its portion of an Advance, then, until such time as
such Lender has funded its portion of such Advance, or all other Lenders have received payment in
full (whether by repayment or prepayment) of the principal and interest due in respect of such
Advance, such non-funding Lender shall (i) be automatically deemed to have transferred to the
Lender serving as Administrative Agent all of such non-funding Lender’s right to vote regarding any
issue on which voting is required or advisable under this Agreement or any other Loan Document, and
(ii) not be entitled to receive payments of principal, interest, or fees from Borrower in respect
of such Advances which such Lender failed to make.

     (d) Pricing of Loans. Each Advance consisting of Eurodollar Rate Loans or Base Rate
Loans shall continue as Eurodollar Rate Loans or Base Rate Loans unless and until such Eurodollar
Rate Loans or Base Rate Loans are converted into LIBOR Rate Loans pursuant to Section 2.15 or such
Advance is repaid in accordance with Section 2.7. Each Advance consisting of LIBOR Rate Loans
shall continue as LIBOR Rate Loans until the end of the then applicable Interest Period therefor,
at which time such LIBOR Rate Loans shall be automatically converted into Eurodollar Rate Loans
unless (x) such Advance is repaid in accordance with Section 2.7 or (y) such LIBOR Rate Loans are
continued as LIBOR Rate Loans in accordance with Section 2.15.

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     (e) Limitation on Number of Interest Periods. Notwithstanding anything to the
contrary in this Agreement, there shall be no more than twelve (12) Interest Periods outstanding at
any given time.

     2.3 Interest on Loans.

     (a) Prior to Default. Interest on Loans shall be computed on the basis of a
hypothetical year of 360 days for the actual number of days elapsed and shall be payable at a
simple interest rate equal to the Applicable Rate times the principal amounts of such Loans
outstanding from time to time for the number of days such principal amounts are outstanding.
Interest then outstanding shall be due and payable in arrears as provided in Section 2.7.

     (b) Upon Default. Upon the occurrence and during the continuance of an Event of
Default, the Required Lenders shall have the option (but shall not be required to give prior notice
thereof to Borrower to accelerate the maturity of the Loans or to exercise any other rights or
remedies hereunder in connection with the exercise of this right) to charge interest on the
outstanding principal balance of the Loans and any Unreimbursed Amounts (to the extent provided in
Section 2.4(c)(iii)) at the Default Rate from the date of such Event of Default. Such interest
shall be payable on the earliest of demand, the first (1st) Business Day of the next calendar month
or the Maturity Date and shall accrue until the earlier of (i) waiver or cure (to the satisfaction
of the Required Lenders) of such Event of Default, (ii) agreement by the Required Lenders to
rescind the charging of interest at the Default Rate, or (iii) payment in full of the Obligations.

     2.4 Issuance and Administration of Letters of Credit.

     (a) Agreement to Issue Letters of Credit.

     (i) Subject to the terms and conditions set forth herein: (A) each Letter of Credit
Issuer agrees, in reliance upon the agreements of the other Lenders set forth in this
Section 2.4, (1) from time to time on any Business Day during the period from the Agreement
Date until the Letter of Credit Expiration Date, to issue Letters of Credit (denominated in
Dollars) for the account of Borrower, and to amend or renew Letters of Credit previously
issued by it, in accordance with subsection (b) below, and (2) to honor drafts under the
Letters of Credit; and (B) Lenders severally agree to participate in Letters of Credit
issued for the account of Borrower; provided that no Letter of Credit Issuer shall be
obligated to issue, and no Lender shall be obligated to participate in, any Letter of Credit
if as of the date of issuance of such Letter of Credit, (x) the Commitment Usage would
exceed the Total Revolving Credit Commitment, (y) such Lender’s Commitment Ratio of the
principal amount of all Loans plus such Lender’s Commitment Ratio of the Letter of Credit
Exposure would exceed such Lender’s Revolving Credit Commitment, or (z) the Letter of Credit
Exposure would exceed the Letter of Credit Sublimit. Within the foregoing limits, and
subject to the terms and conditions hereof, Borrower’s ability to obtain Letters of Credit
shall be fully revolving, and accordingly Borrower may, during the foregoing period, obtain
Letters of Credit to replace Letters of Credit that have expired or that have been drawn
upon and reimbursed. All Existing Letters of Credit shall be deemed to have been issued
pursuant hereto, and from and after the Agreement Date shall be subject to and governed by
the terms and conditions hereof.

     (ii) No Letter of Credit Issuer shall be under any obligation to issue any Letter of
Credit if:

     (A) any order, judgment, or decree of any Governmental Authority shall by its
terms purport to enjoin or restrain such Letter of Credit Issuer from issuing such
Letter

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of Credit, or any Applicable Law applicable to such Letter of Credit Issuer
or any request or directive (whether or not having the force of law) from any
Governmental Authority with jurisdiction over such Letter of Credit Issuer shall
prohibit, or request that such Letter of Credit Issuer refrain from, the issuance of
Letters of Credit generally or such Letter of Credit in particular or shall impose
upon any Letter of Credit Issuer with respect to such Letter of Credit any
restriction, reserve, or capital requirement (for which such Letter of Credit Issuer
is not otherwise compensated hereunder) not in effect on the Agreement Date, or
shall impose upon such Letter of Credit Issuer any unreimbursed loss, cost, or
expense which was not applicable on the Agreement Date and which such Letter of
Credit Issuer in good faith deems material to it;

     (B) the issuance of such Letter of Credit would violate any Applicable Laws or
one or more policies of such Letter of Credit Issuer with respect to the issuance of
Letters of Credit generally;

     (C) subject to Section 2.4(b)(iii), the expiry date of such requested Letter of
Credit would occur more than twelve (12) months after the date of issuance or last
renewal, unless the Required Lenders have approved such expiry date;

     (D) the expiry date of such requested Letter of Credit would occur after the
Letter of Credit Expiration Date, unless all Lenders have approved such expiry date;

     (E) a default of any Lender’s obligations to fund under Section 2.4(c) exists
or any Lender is at such time a Defaulting Lender hereunder, unless (1) such Letter
of Credit Issuer has entered into satisfactory arrangements with Borrower or such
Lender to eliminate such Letter of Credit Issuer’s risk with respect to such Lender,
or (2) after giving effect to such Letter of Credit, the Commitment Usage does not
exceed the Total Revolving Commitments excluding the Revolving Credit Commitment of
such Defaulting Lender; or

     (F) such Letter of Credit is in a face amount less than $10,000.

     (iii) No Letter of Credit Issuer shall be under any obligation to amend any Letter of
Credit if (A) such Letter of Credit Issuer would have no obligation at such time to issue
such Letter of Credit in its amended form under the terms hereof, or (B) the beneficiary of
such Letter of Credit does not accept the proposed amendment to such Letter of Credit.

     (iv) No Letter of Credit Issuer shall issue any Letter of Credit having an expiry date
that would occur after the Letter of Credit Expiration Date without the consent of all
Lenders.

     (v) The Existing Letters of Credit shall be deemed to be Letters of Credit hereunder
for all purposes and shall be subject to and governed by the terms of this Agreement.

     (b) Procedures for Issuance and Amendment of Letters of Credit; Evergreen Letters of
Credit.

     (i) Each Letter of Credit shall be issued or amended, as the case may be, upon the
request of Borrower delivered to a Letter of Credit Issuer (with a copy to Administrative
Agent) in the form of a Letter of Credit Application, appropriately completed and signed by
an Authorized Signatory of Borrower. Such Letter of Credit Application must be received by
the
applicable Letter of Credit Issuer and Administrative Agent not later than 10:00 a.m., at
least five (5) Business Days (or such later date and time as the applicable Letter of Credit
Issuer may agree

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in a particular instance in its sole discretion) prior to the proposed
issuance date or date of amendment, as the case may be. In the case of a request for an
initial issuance of a Letter of Credit, such Letter of Credit Application shall specify in
form and detail satisfactory to the applicable Letter of Credit Issuer: (A) the proposed
issuance date of the requested Letter of Credit (which shall be a Business Day); (B) the
amount thereof; (C) the expiry date thereof; (D) the name and address of the beneficiary
thereof; (E) the documents to be presented by such beneficiary in case of any drawing
thereunder; (F) the full text of any certificate to be presented by such beneficiary in case
of any drawing thereunder; and (G) such other matters as such Letter of Credit Issuer may
require. In the case of a request for an amendment of any outstanding Letter of Credit,
such Letter of Credit Application shall specify in form and detail satisfactory to the
applicable Letter of Credit Issuer: (1) the Letter of Credit to be amended; (2) the proposed
date of amendment thereof (which shall be a Business Day); (3) the nature of the proposed
amendment; and (4) such other matters as such Letter of Credit Issuer may require.

     (ii) Promptly after receipt of any Letter of Credit Application, the applicable Letter
of Credit Issuer will confirm with Administrative Agent (by telephone or in writing) that
Administrative Agent has received a copy of such Letter of Credit Application from Borrower
and, if not, such Letter of Credit Issuer will provide Administrative Agent with a copy
thereof. Upon receipt by the applicable Letter of Credit Issuer of confirmation from
Administrative Agent that the requested issuance or amendment is permitted in accordance
with the terms hereof, then, subject to the terms and conditions hereof, such Letter of
Credit Issuer shall, on the requested date, issue a Letter of Credit for the account of
Borrower or enter into the applicable amendment or extension, as the case may be.
Immediately upon the issuance of each Letter of Credit, each Lender shall be deemed to, and
hereby irrevocably and unconditionally agrees to, purchase from such Letter of Credit Issuer
a participation in such Letter of Credit in an amount equal to the product of such Lender’s
Commitment Ratio times the amount of such Letter of Credit.

     (iii) If Borrower so requests in any applicable Letter of Credit Application, then a
Letter of Credit Issuer may, in it sole and absolute discretion, agree to issue a Letter of
Credit that has automatic renewal provisions (each, an “Evergreen Letter of Credit”);
provided that any such Evergreen Letter of Credit must permit such Letter of Credit Issuer
to prevent any such renewal at least once in each twelve (12) month period (commencing with
the date of issuance of such Letter of Credit) by giving prior notice to the beneficiary
thereof not later than a day (the “Nonrenewal Notice Date”) in each such twelve (12) month
period to be agreed upon at the time such Letter of Credit is issued. Unless otherwise
directed by the applicable Letter of Credit Issuer, Borrower shall not be required to make a
specific request to such Letter of Credit Issuer for any such renewal. Once an Evergreen
Letter of Credit has been issued, Lenders shall be deemed to have authorized (but may not
require) the applicable Letter of Credit Issuer to permit the renewal of such Letter of
Credit at any time to a date not later than the Letter of Credit Expiration Date; provided,
however, that such Letter of Credit Issuer shall not permit any such renewal if (A) Letter
of Credit Issuer would have no obligation at such time to issue such Letter of Credit in its
renewed form under the terms hereof, or (B) it has received notice (which may be by
telephone or in writing) on or before the Business Day immediately preceding the Nonrenewal
Notice Date from Administrative Agent, any Lender, or Borrower that one (1) or more of the
applicable conditions specified in Section 4.2 is not then satisfied. Notwithstanding
anything to the contrary contained herein, no Letter of Credit Issuer shall have any
obligation to permit the renewal of any Evergreen Letter of Credit at any time.

     (iv) Promptly after its delivery of any Letter of Credit or any amendment to a Letter
of Credit to an advising bank with respect thereto or to the beneficiary thereof, the
applicable

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Letter of Credit Issuer will also deliver to Borrower and Administrative Agent a
true and complete copy of such Letter of Credit or amendment.

     (c) Drawings and Reimbursements; Funding of Participations.

     (i) Each Letter of Credit Issuer agrees to exercise commercially reasonable efforts to
notify Borrower of its receipt of a request for a drawing under any Letter of Credit;
provided that the failure of any Letter of Credit Issuer to provide such notice in respect
of any Letter of Credit shall not: (x) affect the validity of such request for a drawing,
(y) give rise to any defense to Borrower’s obligations with respect to such Letter of
Credit, or (z) give rise to any liability on the part of such Letter of Credit Issuer. Upon
any drawing under any Letter of Credit, the applicable Letter of Credit Issuer shall notify
Borrower and Administrative Agent thereof. Not later than 11:00 a.m. on the next Business
Day following the date of notice of any payment by the applicable Letter of Credit Issuer
under a Letter of Credit (each such date, an “Honor Date”), Borrower shall reimburse such
Letter of Credit Issuer through Administrative Agent in an amount equal to the amount of
such drawing, together with interest on the amount of such drawing from the date of such
drawing until reimbursed at the rate per annum equal to the Applicable Rate (determined as
if such amount were an Advance consisting of Eurodollar Rate Loans). If Borrower fails to
so reimburse such Letter of Credit Issuer by such time, then Administrative Agent shall
promptly notify each Lender of the Honor Date, the amount of the unreimbursed drawing and
any interest thereon (the “Unreimbursed Amount”), and such Lender’s Commitment Ratio
thereof. In such event, Borrower shall be deemed to have requested an Advance consisting of
Eurodollar Rate Loans to be disbursed on the Honor Date in an amount equal to the
Unreimbursed Amount, without regard to the minimum and multiples specified in Section 2.2,
but subject to the conditions set forth in Section 4.2 (other than the delivery of a Request
for Advance). Any notice given by a Letter of Credit Issuer or Administrative Agent
pursuant to this Section 2.4(c)(i) may be given by telephone if immediately confirmed in
writing; provided that the lack of such an immediate confirmation shall not affect the
conclusiveness or binding effect of such notice.

     (ii) Each Lender (including the Lender acting as the applicable Letter of Credit
Issuer) shall upon any notice pursuant to Section 2.4(c)(i) make funds available to
Administrative Agent for the account of the applicable Letter of Credit Issuer at
Administrative Agent’s office in an amount equal to its Commitment Ratio of the Unreimbursed
Amount not later than 1:00 p.m. on the Business Day specified in such notice by
Administrative Agent, whereupon, subject to the provisions of Section 2.4(c)(iii), each
Lender that so makes funds available shall be deemed to have made an Advance consisting of
Eurodollar Rate Loans to Borrower in such amount. Administrative Agent shall remit the
funds so received to the applicable Letter of Credit Issuer.

     (iii) With respect to any Unreimbursed Amount that is not fully refinanced by an
Advance because the conditions set forth in Section 4.2 cannot be satisfied, Borrower shall
be deemed to have incurred from the applicable Letter of Credit Issuer a Letter of Credit
Borrowing in the amount of the Unreimbursed Amount that is not so refinanced, which Letter
of Credit Borrowing shall be due and payable on demand (together with interest) and shall
bear interest at the Default Rate (determined as if such Letter of Credit Borrowing
consisted of Eurodollar Rate Loans). In such event, each Lender’s payment to Administrative
Agent for the account of the applicable Letter of Credit Issuer pursuant to Section
2.4(c)(ii) shall be deemed payment in respect of its participation in such Letter of Credit
Borrowing and shall constitute a Letter of
Credit Advance from such Lender in satisfaction of its participation obligation under this
Section 2.4.

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     (iv) Until each Lender funds its Advance or Letter of Credit Advance pursuant to this
Section 2.4(c) to reimburse the applicable Letter of Credit Issuer for any amount drawn
under any Letter of Credit, interest in respect of such Lender’s Commitment Ratio of such
amount shall be solely for the account of the applicable Letter of Credit Issuer.

     (v) Each Lender’s obligation to make Advances or Letter of Credit Advances to reimburse
any Letter of Credit Issuer for amounts drawn under Letters of Credit, as contemplated by
this Section 2.4(c), shall be absolute and unconditional and shall not be affected by any
circumstance, including: (A) any set-off, counterclaim, recoupment, defense, or other right
which such Lender may have against such Letter of Credit Issuer, Borrower, or any other
Person for any reason whatsoever; (B) the occurrence or continuance of a Default or Event of
Default; or (C) any other occurrence, event, or condition, whether or not similar to any of
the foregoing. Any such reimbursement shall not relieve or otherwise impair the obligation
of Borrower to reimburse any Letter of Credit Issuer for the amount of any payment made by
such Letter of Credit Issuer under any Letter of Credit, together with interest as provided
herein.

     (vi) If any Lender fails to make available to Administrative Agent, for the account of
the applicable Letter of Credit Issuer, any amount required to be paid by such Lender
pursuant to the foregoing provisions of this Section 2.4(c) by the time specified in Section
2.4(c)(ii), then such Letter of Credit Issuer shall be entitled to recover from such Lender
(acting through Administrative Agent), on demand, such amount with interest thereon for the
period from the date such payment is required to the date on which such payment is
immediately available to such Letter of Credit Issuer for the first two (2) days that such
amount is not repaid, at the Federal Funds Rate, and, thereafter, at the Federal Funds Rate
plus four percent (4%) per annum. A certificate of the applicable Letter of Credit Issuer
submitted to any Lender (through Administrative Agent) with respect to any amounts owing
under this clause (vi) shall be conclusive absent manifest error.

     (vii) Borrower shall pay to the applicable Letter of Credit Issuer, promptly upon
demand, the amount of any fees (in addition to the fees described in Section 2.5) which such
Letter of Credit Issuer customarily charges to a Person similarly situated in the ordinary
course of its business for amending Letters of Credit and Letter of Credit Applications, for
honoring drafts, and taking similar action in connection with Letters of Credit, together
with all reasonable out-of-pocket expenses of such Letter of Credit Issuer incurred in
connection therewith.

     (viii) Administrative Agent and Letter of Credit Issuers shall provide to Lenders
periodic information, but not more often than quarterly, regarding outstanding Letters of
Credit (including issue date, expiry date, beneficiary, Evergreen Letters of Credit, and
amount), the Letter of Credit Exposure, and each Lender’s Commitment Ratio thereof.

     (d) Repayment of Participations.

     (i) At any time after a Letter of Credit Issuer has made a payment under any Letter of
Credit and has received from any Lender such Lender’s Letter of Credit Advance in respect of
such payment in accordance with Section 2.4(c), if Administrative Agent receives for the
account of such Letter of Credit Issuer any payment related to such Letter of Credit
(whether directly from Borrower or otherwise, including proceeds of cash collateral applied
thereto by Administrative Agent), or any payment of interest thereon, then Administrative
Agent will distribute to such
Lender its Commitment Ratio thereof in the same funds as those received by Administrative
Agent.

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     (ii) If any payment received by Administrative Agent from or on behalf of Borrower for
the account of a Letter of Credit Issuer pursuant to Section 2.4(c)(i) is required to be
returned, then each Lender shall pay to Administrative Agent, for the account of such Letter
of Credit Issuer, its Commitment Ratio thereof on demand of Administrative Agent, plus
interest thereon from the date of such demand to the date such amount is returned by such
Lender, for the first two (2) days that such amount is not repaid, at the Federal Funds
Rate, and, thereafter, at the Federal Funds Rate plus four percent (4%) per annum.

     (e) Obligations Absolute. The obligation of Borrower to reimburse each Letter of
Credit Issuer for each drawing under each Letter of Credit, and to repay each Letter of Credit
Borrowing and each drawing under a Letter of Credit that is refinanced by an Advance, shall be
absolute, unconditional, and irrevocable, and shall be paid strictly in accordance with the terms
of this Agreement under all circumstances, including the following: (i) any lack of validity or
enforceability of such Letter of Credit, this Agreement, or any other agreement or instrument
relating hereto or thereto; (ii) the existence of any claim, counterclaim, set-off, defense, or
other right that Borrower may have at any time against any beneficiary or any transferee of such
Letter of Credit (or any Person for whom any such beneficiary or any such transferee may be
acting), any Letter of Credit Issuer, or any other Person, whether in connection with this
Agreement, the transactions contemplated hereby or by such Letter of Credit or any agreement or
instrument relating hereto or thereto, or any unrelated transaction; (iii) any draft, demand,
certificate, or other document presented under such Letter of Credit proving to be forged,
fraudulent, invalid, or insufficient in any respect or any statement therein being untrue or
inaccurate in any respect, or any loss or delay in the transmission or otherwise of any document
required in order to make a drawing under such Letter of Credit; (iv) any payment by any Letter of
Credit Issuer under such Letter of Credit against presentation of a draft or certificate that does
not strictly comply with the terms of such Letter of Credit; or any payment made by any Letter of
Credit Issuer under such Letter of Credit to any Person purporting to be a trustee in bankruptcy,
debtor-in-possession, assignee for the benefit of creditors, liquidator, receiver, or other
representative of or successor to any beneficiary or any transferee of such Letter of Credit,
including any arising in connection with any proceeding under any Debtor Relief Law; or (v) any
other circumstance or happening whatsoever, whether or not similar to any of the foregoing,
including any other circumstance that might otherwise constitute a defense available to, or a
discharge of, Borrower. Borrower shall promptly examine a copy of each Letter of Credit and each
amendment thereto that is delivered to it and, in the event of any claim of noncompliance with
Borrower’s instructions or other irregularity, Borrower will as soon as practicable notify the
applicable Letter of Credit Issuer. Borrower shall be conclusively deemed to have waived any such
claim against the applicable Letter of Credit Issuer and its correspondents unless such notice is
given as aforesaid.

     (f) Role of Letter of Credit Issuer. Each Lender and Borrower agree that, in paying
any drawing under a Letter of Credit, no Letter of Credit Issuer shall have any responsibility to
obtain any document (other than any sight draft, certificates, and documents expressly required by
the Letter of Credit) or to ascertain or inquire as to the validity or accuracy of any such
document or the authority of the Person executing or delivering any such document. No
Agent-Related Person nor any of the respective correspondents, participants, or assignees of any
Letter of Credit Issuer shall be liable to any Lender for: (i) any action taken or omitted in
connection herewith at the request or with the approval of Lenders or Required Lenders, as
applicable; (ii) any action taken or omitted in the absence of gross negligence or willful
misconduct; or (iii) the due execution, effectiveness, validity, or enforceability of any document
or instrument related to any Letter of Credit or Letter of Credit Application. Borrower hereby
assumes all risks of the acts or omissions of any beneficiary or transferee with respect to its use
of any Letter of Credit; provided, however, that this assumption is not intended to, and shall not,
preclude
Borrower’s pursuing such rights and remedies as it may have against the beneficiary, transferee, or
any other party (other than Administrative Agent, the applicable Letter of Credit Issuer, or any
Lender) at law or under any other agreement. No Agent-Related Person, nor any of the respective
correspondents,

28

 

participants, or assignees of any Letter of Credit Issuer, shall be liable or
responsible for any of the matters described in clauses (i) through (v) of Section 2.4(e);
provided, however, that anything in such clauses to the contrary notwithstanding, Borrower may have
a claim against the applicable Letter of Credit Issuer, and such Letter of Credit Issuer may be
liable to Borrower, to the extent, but only to the extent, of any direct, as opposed to
consequential or exemplary, damages suffered by Borrower which were caused by such Letter of Credit
Issuer’s (x) willful misconduct or gross negligence, (y) willful failure to pay under any Letter of
Credit after the presentation to it by the beneficiary of a sight draft and certificate(s) strictly
complying with the terms and conditions of a Letter of Credit, or (z) payment of a Letter of Credit
against the presentation of any draft or certificate that does not strictly comply with the terms
of such Letter of Credit. In furtherance and not in limitation of the foregoing, each Letter of
Credit Issuer may accept documents that appear on their face to be in order, without responsibility
for further investigation, regardless of any notice or information to the contrary, and no Letter
of Credit Issuer shall be responsible for the validity or sufficiency of any instrument
transferring or assigning or purporting to transfer or assign a Letter of Credit or the rights or
benefits thereunder or proceeds thereof, in whole or in part, which, in spite of such appearance on
their face of being in order, may prove to be invalid or ineffective for any reason.

     (g) Cash Collateral. Upon the request of Administrative Agent, if (i) any Letter of
Credit Issuer has honored any full or partial drawing request under any Letter of Credit and such
drawing has resulted in a Letter of Credit Borrowing which has not been paid by an Advance
hereunder, or (ii) as of the Letter of Credit Expiration Date, any Letter of Credit may for any
reason remain outstanding and partially or wholly undrawn, then Borrower shall immediately Cash
Collateralize the Letter of Credit Exposure (in an amount equal to such Letter of Credit Exposure).

     (h) Applicability of ISP98. Unless otherwise expressly agreed by the applicable
Letter of Credit Issuer and Borrower when a Letter of Credit is issued (including any such
agreement applicable to an Existing Letter of Credit) (i), the rules of the International Standby
Practices 1998 published by the Institute of International Banking Law & Practice (or such later
version thereof as may be in effect at the time of issuance) shall apply to each standby Letter of
Credit; and (ii) the rules of the Uniform Customs and Practice for Documentary Credits, as most
recently published by the International Chamber of Commerce at the time of issuance, shall apply to
each commercial Letter of Credit.

     (i) Conflict with Letter of Credit Application. Although referenced in any Letter of
Credit, terms of any particular agreement or other obligation to the beneficiary are not in any
manner incorporated herein. The fees and other amounts payable with respect to each Letter of
Credit shall be as provided in this Agreement, drafts under any Letter of Credit shall be deemed
part of the Obligations, and in the event of any conflict between the terms of this Agreement and
any Letter of Credit Agreement, the terms of this Agreement shall be controlling.

     (j) Indemnification. In addition to amounts payable as elsewhere provided in this
Agreement, Borrower hereby agrees to protect, indemnify, pay, and save Administrative Agent, each
Letter of Credit Issuer, and each Lender harmless from and against any and all claims, demands,
liabilities, damages, or losses (other than loss of profits) of, or owed to third parties, and any
and all related costs, charges, and expenses (including reasonable Attorney Costs), which
Administrative Agent, each Letter of Credit Issuer, and each Lender may incur or be subject to as a
consequence, direct or indirect, of (A) the issuance of any Letter of Credit, or (B) the failure of
any Letter of Credit Issuer to honor a draft under such Letter of Credit 
as a result of any act or omission, whether rightful or wrongful, of any present or future
Governmental Authority; provided that Borrower shall have no liability to indemnify Administrative
Agent, any Letter of Credit Issuer, or any Lender in respect

29

 

of any liability arising out of the
gross negligence or willful misconduct of Administrative Agent, any Letter of Credit Issuer, and
each Lender or any officer, director, employee, agent, or attorney in fact of such Person or from
any such liability arising solely out of a controversy among Administrative Agent, any Letter of
Credit Issuer, and Lenders (or any of them). The provisions of and undertakings and
indemnifications set forth in this Section 2.4(j) shall survive the satisfaction and
payment of the Obligations and termination of this Agreement.

     (k) Schedule of Letters of Credit. Each Letter of Credit Issuer shall, no later than
the third (3rd) Business Day following the last day of each month, provide to Administrative Agent
and Borrower a schedule of the Letters of Credit issued by it, in form and substance reasonably
satisfactory to Administrative Agent, showing the date of issuance of each Letter of Credit, the
account party, the original face amount (if any), the expiration date, and the reference number of
any Letter of Credit outstanding at any time during such month. Administrative Agent shall deliver
to Lenders a copy of such schedule promptly upon receipt thereof.

     2.5 Fees and Commissions on Loans and Letters of Credit.

     (a) Fee Letter. Borrower agrees to pay to Administrative Agent the fees set forth in
the Fee Letter. Such fees shall be due and payable on the date specified in the Fee Letter, and
shall be fully earned when due and non-refundable when paid.

     (b) Unused Commitment Fee. Borrower agrees to pay to Administrative Agent for the
ratable benefit of Lenders, in accordance with their respective Commitment Ratios, an Unused
Commitment fee (the “Unused Commitment Fee”), payable: (i) in quarterly installments in arrears, on
the eighteenth (18th) day (or, if such day is not a Business Day, then the next preceding Business
Day) following the last day of each quarter ending March, June, September, and December, with such
payment commencing January 16, 2006; and (ii) on the Maturity Date. Each installment shall be in
an amount equal to the product of (a) the rate per annum equal to the Applicable Margin for Unused
Commitment Fees times (b) the daily Unused Commitment, in each case for the fiscal quarter
preceding the payment date for such quarter. For purposes of determining the Unused Commitment Fee
payable to the Swingline Lender, its Swingline Loans shall be treated as usage of its Revolving
Credit Commitment.

     (c) Letter of Credit Fees. Borrower agrees to pay to the applicable Letter of Credit
Issuer the applicable Fronting Fee (which Fronting Fee shall be due and payable in quarterly
installments in arrears in respect of the issuance of each Letter of Credit and each renewal
thereof) and the fees described in Section 2.4(c)(vii). Borrower agrees to pay to Administrative
Agent, for the ratable benefit of Letter of Credit Issuers and Lenders, a fee (the “Letter of
Credit Fees”), payable in quarterly installments in arrears, on the daily applicable amount of any
outstanding Letters of Credit, as determined in accordance with Section 1.6, from the date of
issuance of each such Letter of Credit through the expiration date thereof in an amount equal to
the Applicable Margin for Letters of Credit for each such Letter of Credit. Borrower shall pay the
Letter of Credit Fees: (i) in quarterly installments in arrears on the eighteenth (18th) day (or,
if such day is not a Business Day, then the next preceding Business Day) following the last day of
each quarter ending March, June, September, and December, with such payment commencing April 16,
2006; and (ii) on the Maturity Date.

     (d) Fees Generally. All fees (except for the Fronting Fee) shall be calculated on the
basis of a hypothetical year of 360 days for the actual number of days elapsed. The Fronting Fee
shall be calculated on the basis of a year of 365 or 366 days, as the case may be. Administrative
Agent shall, promptly after receipt of the Unused Commitment Fees and Letter of Credit Fees,
distribute such fees to Lenders in accordance with their respective Commitment Ratios.

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     2.6 Notes, Loan and Letters of Credit Accounts.

     (a) The Revolving Credit Loans shall be repayable in accordance with the terms and provisions
set forth herein, and shall be evidenced by the Revolving Credit Notes. Each Lender shall be
issued a Revolving Credit Note payable to the order of such Lender in accordance with the Revolving
Credit Commitment of such Lender. The Revolving Credit Notes shall be issued by Borrower to all
Lenders and shall be duly executed and delivered by Authorized Signatories.

     (b) The Swingline Loans shall be repayable in accordance with the terms and provisions set
forth herein, and shall be evidenced by the Swingline Note. The Swingline Lender shall be issued
the Swingline Note payable to the order of the Swingline Lender in the stated principal amount of
the Maximum Swingline Amount. The Swingline Note shall be issued by Borrower to Swingline Lender
and shall be duly executed and delivered by Authorized Signatories.

     (c) Each Lender, as the case may be, may open and maintain on its books in the name of
Borrower a loan account with respect to the Revolving Credit Loans and interest thereon and a
letter of credit account with respect to its obligations pursuant to Letters of Credit. Each
Lender which opens such accounts in respect of the Revolving Credit Loans shall debit the
applicable loan account for the principal amount of each Advance made by it and accrued interest
thereon, and shall credit such loan account for each payment on account of principal of or interest
on the Revolving Credit Loans. Each Lender which opens such accounts in respect of the Letters of
Credit shall debit the applicable account for the amount of each Advance made by it and accrued
interest thereon, and shall credit such account for each payment on account of principal and
interest of Letter of Credit Advances. The records of each Lender with respect to the accounts
maintained by it shall be prima facie evidence of the Revolving Credit Loans and Letter of Credit
Obligations and accrued interest thereon, and shall be conclusive and binding absent manifest
error, but the failure to maintain such records shall not impair the obligation of Borrower to
repay Indebtedness hereunder.

     (d) The Swingline Lender may open and maintain on its books in the name of Borrower a loan
account with respect to the Swingline Loans and interest thereon. The Swingline Lender shall debit
such loan account for each payment on account of principal of and interest on the Swingline Loans.
The records of the Swingline Lender maintained by it shall be prima facie evidence of the Swingline
Loans and accrued interest thereon, and shall be conclusive and binding absent manifest error, but
the failure to maintain such records shall not impair the obligation of Borrower to repay
Indebtedness hereunder.

     (e) Administrative Agent and each Letter of Credit Issuer may maintain in accordance with
their usual practice records of account evidencing the Indebtedness of Borrower resulting from
Advances under the Revolving Credit Loans and each drawing under a Letter of Credit. In any legal
action or proceeding in respect of this Agreement, the entries made in such record shall be prima
facie evidence, absent manifest error, of the existence and amounts of the obligations of Borrower
therein recorded. Failure of Administrative Agent or any Letter of Credit Issuer to maintain any
such record shall not excuse Borrower from the obligation to pay such Indebtedness. To the extent
that the records of Administrative Agent or any Letter of Credit Issuer conflict with the records
of Lenders maintained
pursuant to Section 2.6(b) above, absent manifest error, the records of Administrative Agent or
such Letter of Credit Issuer, as the case may be, shall control.

     (f) Each Advance from Lenders under this Agreement shall be made pro rata on the basis of
their respective applicable Commitment Ratios.

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     (g) Each Advance made on account of drawing under Letters of Credit shall be made pro rata by
Lenders on the basis of their respective Commitment Ratios.

     2.7 Repayment of Loans and Letters of Credit.

     (a) Interest. Borrower shall pay, on each applicable Interest Payment Date, all
interest on the Loans which has accrued during the period since the immediately preceding
applicable Interest Payment Date, commencing on the first Interest Payment Date to occur following
the Agreement Date.

     (b) Letters of Credit. Borrower shall repay all draws upon the Letters of Credit as
provided in Section 2.4.

     (c) Reconciliation of Loan Inventory. Borrower shall repay certain portions of the
outstanding principal of the Loans and accrued and unpaid interest thereon upon the reconciliation
of the Loan Funding Availability against the outstanding principal balance under the Notes and
other Senior Unsecured Indebtedness as provided in Section 3.1.

     (d) Maturity. In addition to the foregoing, a final payment of all Obligations then
outstanding shall be due and payable by Borrower on the Maturity Date.

     (e) Extension. Not more than once in any fiscal year of Borrower, Borrower
may request an extension of the Maturity Date to the first anniversary of the then scheduled
Maturity Date by submitting a request for an extension (the “Extension Request”) to Administrative
Agent not more than 120 days and not less than 60 days prior to the then applicable anniversary of
the Agreement Date. Promptly upon (but not later than five (5) Business Days after) Administrative
Agent’s receipt and approval of the Extension Request, Administrative Agent shall deliver to each
Lender a copy of, and shall request each Lender to approve, the Extension Request. Administrative
Agent shall also advise each Lender of the proposed extension fee. Each Lender approving the
Extension Request shall deliver its written approval no later than 60 days after such Lender’s
receipt of the Extension Request. If the written approval of the Extension Request by Lenders
whose Commitment Ratios equal or exceed 66-2/3% in the aggregate is received by the Administrative
Agent within such 60-day period and provided no Default or Event of Default exists on the effective
date of such extension, the Maturity Date shall be extended as specified in the Extension Request
but only with respect to Lenders that have given their written approval. Borrower shall pay to the
Lenders approving the extension an extension fee in an amount to be determined by Borrower and
Administrative Agent, payable on the effective date of such extension. Except to the extent that a
Lender that did not give its written approval to such Extension Request (“Rejecting Lender”) is
replaced at Borrower’s election in the manner provided in Section 10.2(h), the Loans and all
interest thereon, fees and other Obligations owed to such Rejecting Lender shall be paid in full on
the Maturity Date as determined prior to such Extension Request (the “Rejecting Lender’s Facility
Termination Date”).

     (f) Election to Terminate Rejecting Lenders. If Lenders whose Commitment Ratios equal
or exceed 66-2/3% in the aggregate approve the Extension Request, Borrower, upon notice to
Administrative Agent and any Rejecting Lender, may, subject to the provisions of the next to the
last
sentence of Section 2.7(g), terminate the Revolving Credit Commitment of such Rejecting Lender
(or such portion of such Revolving Credit Commitment that is not assigned to another Lender or
Eligible Assignee in accordance with Section 10.2(h), which termination shall occur as of a date
set forth in Borrower’s notice but in no event more than thirty (30) days following such notice.
The termination of a Lender’s Revolving Credit Commitment shall be effected in accordance with
Section 2.7 (g).

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     (g) Termination of Rejecting Lender. If Borrower elects to terminate a Revolving
Credit Commitment of a Rejecting Lender as provided in Section 2.7(f), Borrower shall pay to the
Rejecting Lender on the effective date of such termination all Obligations due and owing to it
hereunder or under any other Loan Document, including, without limitation, the aggregate
outstanding principal amount of the Loans owed to such Rejecting Lender, together with accrued
interest thereon through the date of such termination, amounts payable under Sections 2.12(a), (b)
and (e) and the Unused Commitment Fee and Letter of Credit Fee payable to such Rejecting Lender.
Upon request by Borrower or Administrative Agent, the Rejecting Lender will deliver to Borrower and
Administrative Agent a letter setting forth the amounts payable to such Rejecting Lender as set
forth above. Upon the termination of such Rejecting Lender’s Revolving Credit Commitment and
payment of the amounts provided for in the immediately preceding sentence, Borrower shall have no
further obligations to such Rejecting Lender under this Agreement and such Rejecting Lender shall
cease to be a Lender, provided, however, that such Rejecting Lender shall continue
to be entitled to the benefits of Sections 2.12(a), (b) and (e) and Section 8.6 (a) and (b), as
well as to any fees accrued for its account hereunder not yet paid, and shall continue to be
obligated under Section 9.7 with respect to obligations and liabilities accruing prior to the
termination of such Rejecting Lender’s Revolving Credit Commitment. If, as a result of the
termination of the Rejecting Lender’s Revolving Credit Commitment, any payment of a LIBOR Rate Loan
occurs on a day which is not the last day of the applicable Interest Period, Borrower shall pay to
Administrative Agent for the benefit of Lenders (including any Rejecting Lender) any loss or cost
incurred by Lenders (including any Rejecting Lender) resulting therefrom in accordance with Section
2.12(e). Upon the effective date of the termination of the Rejecting Lender’s Revolving Credit
Commitment, the total Revolving Credit Commitment shall be reduced by the amount of the terminated
Revolving Credit Commitment of the Rejecting Lender, and each other Lender shall be deemed to have
irrevocably and unconditionally purchased and received (subject to the provisions of the next to
the last sentence of this Section 2.7(g)), without recourse or warranty, from the Rejecting Lender,
an undivided interest and participation in any Letter of Credit then outstanding, ratably, such
that each Lender (excluding the Rejecting Lender but including any replacement Lender that acquires
an interest hereunder from such Rejecting Lender) holds a participation interest in each Letter of
Credit in proportion to the ratio that such Lender’s Revolving Credit Commitment (upon the
effective date of such termination of the Rejecting Lender’s Revolving Credit Commitment) bears to
the Total Revolving Credit Commitment (as reduced by the termination of such Rejecting Lender’s
Commitment or a part thereof). Notwithstanding the foregoing, if, upon the termination of the
Revolving Credit Commitment of such Rejecting Lender, the sum of the outstanding principal balance
of the Loans and the Letter of Credit Exposure would exceed the Total Revolving Credit Commitment
(as reduced), Borrower may not terminate such Rejecting Lender’s Revolving Credit Commitment unless
Borrower, on or prior to the effective date of such termination, either (x) prepays, in accordance
with the provisions of this Agreement, outstanding Loans or causes to be canceled, released and
returned to the applicable Letter of Credit Issuer outstanding Letters of Credit to eliminate such
excess or (y) Cash Collateralizes the amount of such excess.

     2.8 Manner of Payment.

     (a) Each payment (including any prepayment) by Borrower on account of the principal of or
interest on the Loans, fees, and any other amount owed to Lenders or Administrative Agent under
this Agreement, the Notes, or the other Loan Documents shall be made, without condition or
deduction for any counterclaim, defense, recoupment, or setoff, not later than 1:00 p.m. on the
date specified for
payment under this Agreement or such other Loan Document to Administrative Agent to an account
designated by Administrative Agent, for the account of Lenders, Letter of Credit Issuers or
Administrative Agent, as the case may be, in lawful money of the United States of America in
immediately available funds. Any payment received by Administrative Agent after 1:00 p.m. shall be
deemed received on the next Business Day for purposes of interest accrual. Any payment described
in this Section 2.8(a) received by Administrative Agent by 1:00 p.m. of the date specified for such
payment

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shall be disbursed to Lenders or the applicable Letter of Credit Issuer(s), as the case may
be, on such date; any payment received after 1:00 p.m. on such date shall be disbursed to Lenders
or the applicable Letter of Credit Issuer(s), as the case may be on the next following Business
Day. In the case of a payment for the account of a Lender or a Letter of Credit Issuer, then,
subject to the provisions of Section 2.9 of this Agreement, Administrative Agent will promptly
thereafter distribute the amount so received in like funds to such Lender or such Letter of Credit
Issuer. If Administrative Agent shall not have received any payment from Borrower as and when due,
Administrative Agent will promptly notify Lenders and, if appropriate, the applicable Letter of
Credit Issuer, accordingly, and Administrative Agent shall not be obligated to make any
distributions under this Section 2.8.

     (b) Unless Borrower has notified Administrative Agent prior to the date any payment is
required to be made by it to Administrative Agent hereunder that Borrower will not make such
payment, Administrative Agent may assume that Borrower has timely made such payment and may (but
shall not be so required to), in reliance thereon, make available a corresponding amount to the
Person entitled thereto. If and to the extent that such payment was not in fact made to
Administrative Agent in immediately available funds, then each Lender shall forthwith on demand
repay to Administrative Agent the portion of such assumed payment that was made available to such
Lender in immediately available funds, together with interest thereon in respect of each day from
and including the date such amount was made available by Administrative Agent to such Lender to the
date such amount is repaid to Administrative Agent in immediately available funds, at the Federal
Funds Rate from time to time in effect. A notice of Administrative Agent to any Lender with
respect to any amount owing under this subsection (b) shall be conclusive, absent manifest error.

     (c) If any payment under this Agreement or any of the Notes shall be specified to be made upon
a day which is not a Business Day, it shall be made on the next succeeding day which is a Business
Day, and such extension of time shall in such case be included in computing interest and fees, if
any, in connection with such payment.

     (d) Borrower may not make payments, in the aggregate, under this Agreement (excluding any
payments specifically required pursuant to the terms of this Agreement) more than (i) three (3)
times in any calendar month plus (ii) six (6) additional times in any twelve (12) calendar month
period. In any event, Borrower may not make, in the aggregate, more than forty (40) payments
(excluding any payments specifically required pursuant to the terms of this Agreement) under this
Agreement in any twelve (12) calendar month period.

     (e) Borrower agrees to pay principal, interest, fees, and all other amounts due hereunder or
under the Notes and Letter of Credit Obligations without set-off or counterclaim or any deduction
whatsoever.

     2.9 Application of Payments. Unless otherwise specifically provided in this Agreement or the
other Loan Documents, payments made to Administrative Agent, Letter of Credit Issuers, or Lenders,
or any of them, or otherwise received by Administrative Agent or Lenders, or any of them (from
realization on collateral for the Obligations or otherwise), shall be applied (subject to Section
2.4(c)) in the following order to the extent such Obligations are then due and payable hereunder:
First, to the costs and expenses, if any, incurred by Administrative Agent, Letter of
Credit Issuers, or Lenders, or any of them, in the collection of such amounts under this Agreement
or any of the other Loan Documents, including, without limitation, any reasonable costs incurred in
connection with the sale or disposition of any collateral for the Obligations and Attorney Costs;
Second, pro rata among Administrative Agent, Letter of Credit Issuers and Lenders based on the
total amount of fees then due and payable hereunder or under any other Loan Document and to any
other fees and commissions then due and payable by Borrower to Lenders, Letter of Credit Issuers
and Administrative Agent under this Agreement or any

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Loan Document; Third, to any due and unpaid
interest which may have accrued on the Loans, pro rata among Lenders based on the outstanding
principal amount of the Revolving Credit Loans outstanding immediately prior to such payment;
Fourth, to any amounts outstanding with respect to draws under Letters of Credit; Fifth, to any
unpaid principal of the Revolving Credit Loans, pro rata among Lenders based on the principal
amount of the Revolving Credit Loans outstanding immediately prior to such payment; Sixth, to the
extent any Letters of Credit are then outstanding, to Cash Collateralize the Letters of Credit in
an amount equal to the outstanding Letter of Credit Exposure; Seventh, to any other Obligations not
otherwise referred to in this Section 2.9 until all such Obligations are paid in full; Eighth, to
actual damages incurred by Administrative Agent, Letter of Credit Issuers or Lenders, or any of
them, by reason of any breach hereof or of any other Loan Documents by Borrower or a Restricted
Subsidiary; and Ninth, upon satisfaction in full of all Obligations, to Borrower or as otherwise
required by law. Notwithstanding the foregoing, after the occurrence and during the continuance of
a Default or an Event of Default, payments with respect to items Fourth, and Fifth in the
immediately preceding sentence shall be applied to such items based upon the ratio of the
Obligations under each of such items to the aggregate Obligations under all of such items. If any
Lender shall obtain any payment (whether involuntary or otherwise) on account of the Revolving
Credit Loans made by it in excess of its ratable share of the Revolving Credit Loans then
outstanding and such Lender’s share of any expenses, fees and other items due and payable to it
hereunder, such Lender shall forthwith purchase a participation in the Revolving Credit Loans from
the other Lenders as shall be necessary to cause such purchasing Lender to share the excess payment
ratably based on the applicable Commitment Ratios with each of them; provided, however, that if all
or any portion of such excess payment is thereafter recovered from such purchasing Lender, such
purchase from each Lender shall be rescinded and such Lender shall repay to the purchasing Lender
the purchase price to the extent of such recovery. Borrower agrees that any Lender so purchasing a
participation from another Lender pursuant to this Section 2.9 may, to the fullest extent permitted
by law, exercise all its rights of payment with respect to such participation as fully as if such
Lender were the direct creditor of Borrower in the amount of such participation so long as the
Obligations are not increased.

     2.10 Lenders; Increase in Total Revolving Credit Commitment.

     (a) Lenders on the Agreement Date shall be Lenders set forth on Schedule 2.1 on the Agreement
Date.

     (b) After the Agreement Date, Administrative Agent may, from time to time at the request of
Borrower, increase the Total Revolving Credit Commitment by (i) admitting additional Lenders
hereunder (each a “Subsequent Lender”), or (ii) increasing the Revolving Credit Commitment of any
Lender (each an “Increasing Lender”), subject to the following conditions:

     (A) each Subsequent Lender is an Eligible Assignee;

     (B) Borrower executes (I) a new Revolving Credit Note payable to the order of a
Subsequent Lender, or (II) a replacement Revolving Credit Note payable to the order of an
Increasing Lender;

     (C) each Subsequent Lender executes a signature page to this Agreement;

     (D) after giving effect to the admission of any Subsequent Lender or the increase in
the Revolving Credit Commitment of an Increasing Lender, the aggregate increase to the Total
Revolving Credit Commitment as a result of all increases made under this Section 2.10(b)
since the Agreement Date does not exceed $750,000,000;

35

 

     (E) each increase in the Total Revolving Credit Commitment shall be in the minimum
amount of $5,000,000 or a greater integral multiple of $1,000,000;

     (F) no admission of any Subsequent Lender shall increase the Revolving Credit
Commitment of any existing Lender without the consent of such existing Lender;

     (G) no Lender shall be an Increasing Lender without the consent of such Lender; and

     (H) no Default or Event of Default exists nor would occur after giving effect to such
increase.

After the admission of any Subsequent Lender or the increase in the Revolving Credit Commitment of
any Increasing Lender, Administrative Agent shall promptly provide to each Lender a new Schedule
2.1 to this Agreement. In the event that there are any Revolving Credit Loans outstanding after
giving effect to an increase in the Total Revolving Credit Commitment pursuant to this Section
2.10, upon notice from Administrative Agent to each Lender, the amount of such Revolving Credit
Loans owing to each Lender shall be appropriately adjusted to reflect the new Commitment Ratios of
Lenders. If, as a result of any such adjustment to the amount of Revolving Credit Loans owing to
any Lender, any payment of all or a portion of any LIBOR Rate Loan owing to any such Lender occurs
on a day which is not the last day of the applicable Interest Period, Borrower shall pay to
Administrative Agent for the benefit of the affected Lenders any loss or cost incurred by such
Lenders resulting therefrom in accordance with Section 2.12(e).

     2.11 Set-Off.

     (a) Set-Off. Upon the occurrence and during the continuance of any Event of Default,
each Lender (and each of its Affiliates) is hereby authorized at any time and from time to time, to
the fullest extent permitted by Applicable Law, to set off and apply any and all deposits (general
or special, time or demand, provisional or final) at any time held and other indebtedness at any
time owing by such Lender (or any of its Affiliates) to or for the credit or the account of
Borrower against any and all of the obligations of Borrower now or hereafter existing under this
Agreement, irrespective of whether such Lender shall have made any demand under this Agreement and
although such obligations may be unmatured. Each Lender agrees promptly to notify Borrower after
any such set-off and application made by such Lender; provided, however, that the failure to give
such notice shall not affect the validity of such set-off and application. The rights of each
Lender under this Section 2.11(a) are in addition to other rights and remedies (including, without
limitation, other rights of set-off) that such Lender may have.

     (b) Sharing of Payments. If any Lender (a “Benefitted Lender”) shall at any time
receive any payment of all or part of the Obligations owing to it, or interest thereon, or receive
any collateral in respect thereof (whether voluntarily or involuntarily, by set-off, or otherwise),
in a greater proportion than any such payment to or collateral received by any other Lender, if
any, in respect of such other Lender’s Obligations owing to it, or interest thereon, then such
Benefitted Lender shall purchase for cash from the other Lenders a participating interest in such
portion of each such other Lender’s Obligations owing to it, or shall provide such other Lenders
with the benefits of any such collateral, or the proceeds thereof, as shall be necessary to cause
such Benefitted Lender to share the excess payment or benefits of such
collateral or proceeds ratably with all Lenders; provided, however, that if all or any portion of
such excess payment or benefits is thereafter recovered from such Benefitted Lender, then such
purchase shall be rescinded, and the purchase price and benefits returned, to the extent of such
recovery, but without interest except to the extent that such Benefitted Lender is required to pay
interest on such recovery. Borrower agrees that any Lender so purchasing a participation from a
Lender pursuant to this Section 2.11(b) may, to the fullest extent permitted by Applicable Laws,
exercise all of its rights of payment (including the right of set-off) with respect to such
participation as fully as if such Person were

36

 

the direct creditor of Borrower in the amount of such
participation. Administrative Agent will keep records (which shall be conclusive and binding in
the absence of manifest error) of participations purchased under this Section 2.11(b) and will in
each case notify Lenders following any such purchases or repayments. Each Lender that purchases a
participation pursuant to this Section 2.11(b) shall from and after such purchase have the right to
give all notices, requests, demands, directions, and other communications under this Agreement with
respect to the portion of the Obligations purchased to the same extent as though the purchasing
Lender were the original owner of the Obligation purchased.

     2.12 Yield Protection.

     (a) Taxes.

          (i) Any and all payments by Borrower to or for the account of any Lender under any Loan
Document shall be made free and clear of and without deduction for any and all present or future
Taxes, excluding, in the case of each Lender, taxes imposed on or measured by its net income, and
franchise taxes imposed on it (in lieu of net income taxes and withholding related thereto), by the
jurisdiction (or any political subdivision thereof) under the Applicable Laws of which such Lender
is organized or maintains a lending office (such excluded income and franchise Taxes being
“Excluded Taxes”). If Borrower shall be required by any Applicable Law to deduct any Taxes (other
than Excluded Taxes) from or in respect of any sum payable under any Loan Document to any Lender,
then to the extent permitted under Applicable Law (A) the sum payable shall be increased as
necessary so that after making all required deductions (including deductions applicable to
additional sums payable under this Section 2.12(a)), such Lender receives an amount equal to the
sum it would have received had no such deductions been made, (B) Borrower shall make such
deductions, (C) Borrower shall pay the full amount deducted to the relevant taxation authority or
other authority in accordance with Applicable Laws, and (D) within thirty (30) days after the date
of such payment, Borrower shall furnish to Administrative Agent (which shall forward the same to
such Lender) the original or a certified copy of a receipt evidencing payment thereof.

          (ii) In addition, to the extent permitted under Applicable Law, Borrower agrees to pay any and
all present or future stamp, court, or documentary Taxes and any other excise or property Taxes or
charges or similar levies which arise from any payment made under any Loan Document or from the
execution, delivery, performance, enforcement, or registration of, or otherwise with respect to,
any Loan Document other than Excluded Taxes (hereinafter referred to as “Other Taxes”).

          (iii) If Borrower shall be required to deduct or pay any Taxes (other than Excluded Taxes) or
Other Taxes from or in respect of any sum payable under any Loan Document to any Lender, then to
the extent permitted under Applicable Law Borrower shall also pay to Administrative Agent (for the
account of such Lender) or to such Lender, at the time interest is paid, such additional amount
that such Lender reasonably determines and specifies as necessary to preserve the after-tax yield
(after factoring in all Taxes, including Taxes imposed on or measured by net income) such Lender
would have received if such Taxes or Other Taxes had not been imposed.

          (iv) To the extent permitted under Applicable Law, Borrower agrees to indemnify each Lender
for (A) the full amount of Taxes (other than Excluded Taxes) and Other Taxes (including any Taxes
or Other Taxes imposed or asserted by any jurisdiction on amounts payable under this Section
2.12(a)) paid by such Lender, (B) amounts payable under Section 2.12(a)(iii), and (C) any liability
(including penalties, interest, and expenses) arising therefrom or with respect thereto, in each
case whether or not such Taxes or Other Taxes were correctly or legally imposed or asserted by the
relevant Governmental Authority. Payment under this Section 2.12(a)(iv) shall be made within
thirty (30) days after the date any Lender makes a demand therefor. At the request of Borrower and
at

37

 

          Borrower’s sole cost and expense, each Lender agrees to take such steps as Borrower shall
reasonably request to recover such Taxes and Other Taxes including the filing of protests, requests
for refunds, and other similar actions.

     (b) Increased Cost and Reduced Return; Capital Adequacy.

     (i) If any Lender reasonably determines for the Loans and for other similar loans made
by such Lender to similar borrowers that as a result of the introduction of or any change in
or in the interpretation of any Applicable Law of the United States, or such Lender’s
compliance therewith, there shall be any increase in the cost to such Lender of agreeing to
make or making, funding, or maintaining Loans at the Eurodollar Rate or the LIBOR Rate
(other than any increase in costs reflected in the Eurocurrency Reserve Requirements) or (as
the case may be) issuing or participating in Letters of Credit, or a reduction in the amount
received or receivable by such Lender in connection with any of the foregoing (excluding for
purposes of this subsection (i) any such increased costs or reduction in amount resulting
from (i) Taxes or Other Taxes (as to which Section 2.12(a) shall govern), and (ii) changes
in the basis of taxation of overall net income or overall gross income by the United States
or any foreign jurisdiction or any political subdivision of either thereof under the
Applicable Laws of which such Lender is organized or has its lending office), then from time
to time upon demand of such Lender (with a copy of such demand to Administrative Agent),
Borrower shall pay to such Lender such additional amounts as will compensate such Lender for
such increased cost or reduction.

     (ii) If any Lender reasonably determines for the Loans and for other similar loans made
by such Lender to similar borrowers that the introduction of any Applicable Law of the
United States regarding reserves or capital adequacy or any change therein or in the
interpretation thereof, or compliance by such Lender (or its applicable lending office)
therewith, has the effect of reducing the rate of return on the capital of such Lender or
any Person controlling such Lender as a consequence of such Lender’s obligations hereunder
(taking into consideration its policies with respect to reserves or capital adequacy and
such Lender’s desired return on capital), then from time to time upon demand of such Lender
(with a copy of such demand to Administrative Agent), Borrower shall pay to such Lender such
additional amounts as will compensate such Lender for such reduction.

     (c) Inability to Determine Interest Rate. If prior to the first day of any Interest
Period, Administrative Agent or the Required Lenders shall have reasonably determined (which
determination shall be conclusive and binding upon Borrower) that, by reason of circumstances
affecting the relevant market, adequate and reasonable means do not exist for ascertaining the
LIBOR Rate for such Interest Period, the Administrative Agent shall give telecopy, telephonic or
written notice thereof to Borrower and the Lenders as soon as practicable thereafter. If such
notice is given (x) any LIBOR Rate Loans requested to be made on the first day of such Interest
Period shall be made as Eurodollar Rate Loans and (y) any Revolving Credit Loans that were to have
been converted on the first day of such Interest Period to or continued as LIBOR Rate Loans shall
be converted to or continued as Eurodollar Rate Loans. Until such notice has been withdrawn by the
Administrative Agent, no further LIBOR Rate Loans shall be made or
continued as such, nor shall Borrower have the right to convert Eurodollar Rate Loans to LIBOR
Rate Loans.

     (d) Availability of LIBOR Rate Loans. If any Lender reasonably determines that
maintenance of its LIBOR Rate Loans would violate any applicable law, rule, regulation, or
directive, whether or not having the force of law, or if the Required Lenders determine that
deposits of a type and maturity appropriate to match fund LIBOR Rate Loans are not available, then
Administrative Agent shall suspend the availability of LIBOR Rate Loans and require any affected
LIBOR Rate Loans to be repaid

38

 

or converted to Eurodollar Rate Loans at the end of the applicable
Interest Period

     (e) Break Funding Payments. Borrower agrees to indemnify each Lender and to hold each
Lender harmless from any loss or expense which such Lender sustains or incurs (other than through
such Lender’s gross negligence or willful misconduct) as a consequence of (a) default by Borrower
in making a borrowing of, conversion into or continuation of LIBOR Rate Loans after Borrower has
given Administrative Agent notice that Borrower selects such LIBOR Rate Loans in accordance with
Section 2.2 or Section 2.15, as appropriate, (b) default by Borrower in making any prepayment or
conversion of a LIBOR Rate Loan after Borrower has given a notice thereof in accordance with the
provisions of this Agreement or (c) the making of a prepayment of LIBOR Rate Loans on a day which
is not the last day of an Interest Period with respect thereto (whether by acceleration, demand,
required assignment or otherwise). Such indemnification may include, without limitation, an amount
equal to the excess, if any, of (i) the amount of interest which would have accrued on the amount
so prepaid, or converted, or not so borrowed, converted or continued, for the period from the date
of such prepayment or conversion or of such failure to borrow, convert or continue to the last day
of the applicable Interest Period (or, in the case of a failure to borrow, convert or continue, the
Interest Period that would have commenced on the date of such failure) in each case at the
applicable rate of interest for such LIBOR Rate Loans provided for herein over (ii) the amount of
interest (as reasonably determined by such Lender) which would have accrued to such Lender on such
amount by placing such amount on deposit for a comparable period with leading banks in the
interbank LIBOR market.

     (f) Matters Applicable to all Requests for Compensation. A certificate of
Administrative Agent or any Lender claiming compensation under this Section 2.12 and setting forth
the additional amount or amounts to be paid to it hereunder shall be conclusive in the absence of
manifest error. In determining such amount, Administrative Agent or such Lender may use any
reasonable averaging and attribution methods.

     (g) Removal of Lenders. Upon any Lender’s making a claim for compensation under
Section 2.12(a) or Section 2.12(b), Borrower may remove or replace such Lender in accordance with
Section 10.2(h).

     (h) Survival. All of Borrower’s obligations under this Section 2.12 shall survive
termination of the Total Revolving Credit Commitment and payment in full of all the other
Obligations.

     2.13 Maximum Rate. Regardless of any provision contained in any Loan Document, no Lender
shall ever be entitled to contract for, charge, take, reserve, receive, or apply, as interest on
the Obligations, or any part thereof, any amount in excess of the Maximum Rate, and if any Lender
ever does so, then such excess shall be deemed a partial prepayment of principal and treated
hereunder as such and any remaining excess shall be refunded to Borrower. In determining if the
interest paid or payable exceeds the Maximum Rate, Borrower and Lenders shall, to the maximum
extent permitted under Applicable Laws, (a) treat all Advances and Loans as a single extension of
credit (and Lenders and Borrower agree that such is the case and that provision herein for multiple
Advances and Loans is for convenience only), (b) characterize any non-principal payment as an
expense,
fee, or premium rather than as interest, (c) exclude voluntary prepayments and the effects thereof,
and (d) amortize, prorate, allocate, and spread the total amount of interest throughout the entire
contemplated term of the Obligations; provided that if the Obligations are paid and performed in
full prior to the end of the full contemplated term thereof, and if the interest received for the
actual period of existence thereof exceeds the Maximum Rate, then Lenders shall refund such excess
and, in such event, Lenders receiving such excess shall not, to the extent permitted by Applicable
Laws, be subject to any penalties provided by any Applicable Laws for contracting, charging,
taking, reserving, or receiving interest in excess of the Maximum Rate.

39

 

Borrower agrees that
Chapter 346 of the Texas Finance Code (which regulates certain revolving credit loan accounts and
revolving tri-party accounts) does not apply to the Obligations.

     2.14 Termination or Reduction of Commitments. Borrower may, upon written, irrevocable notice
to Administrative Agent, terminate the Total Revolving Credit Commitment, or from time to time
permanently reduce the Total Revolving Credit Commitment; provided that (a) any such notice shall
be received by Administrative Agent not later than 12:00 noon five (5) Business Days prior to the
date of termination or reduction, (b) any such partial reduction shall be in an aggregate amount of
$10,000,000 or any whole multiple of $1,000,000 in excess thereof, (c) Borrower shall not terminate
or reduce the Total Revolving Credit Commitment if, after giving effect thereto and to any
concurrent prepayments hereunder, the Commitment Usage would exceed the Total Revolving Credit
Commitment, (d) if, after giving effect to any reduction of the Total Revolving Credit Commitment,
the Letter of Credit Sublimit exceeds the amount of the Total Revolving Credit Commitment, such
Letter of Credit Sublimit shall be automatically reduced by the amount of such excess, and (e) if,
after giving effect to any reduction of the Total Revolving Credit Commitment, the Maximum
Swingline Amount exceeds the amount of the Total Revolving Credit Commitment, the Maximum Swingline
Amount shall be automatically reduced by the amount of such excess. Administrative Agent will
promptly notify Lenders of any such notice of termination or reduction of the Total Revolving
Credit Commitment. Any reduction of the Total Revolving Credit Commitment shall be applied to the
Revolving Credit Commitment of each Lender according to its Commitment Ratio. All fees accrued
until the effective date of any termination of the Total Revolving Credit Commitment shall be paid
on the effective date of such termination.

     2.15 Conversion/Continuation Options. Subject to the limitations on the availability of LIBOR
Rate Loans, Borrower may elect from time to time to convert outstanding Revolving Credit Loans from
Eurodollar Rate Loans to LIBOR Rate Loans or to continue any LIBOR Rate Loan as such upon the
expiration of the then current Interest Period thereof by giving Administrative Agent telephonic or
written notice (the “Notice of Conversion/Continuation”), which Notice of Conversion/Continuation
must be received prior to 11:00 a.m., at least three (3) Business Days prior to the requested date
for the conversion or continuation, which notice shall specify (i) the date for the conversion or
continuation (which shall be a Business Day); and (ii) the aggregate amount of Eurodollar Rate
Loans to be converted or LIBOR Rate Loans to be continued. Each conversion from Eurodollar Rate
Loans to LIBOR Rate Loans and each continuation of LIBOR Rate Loans shall be in the principal
amount of $5,000,000 or any larger amount which is an even multiple of $1,000,000. Administrative
Agent shall give prompt telephonic or written notice to each Lender of Borrower’s request for
conversion or continuation, specifying (i) the date for the conversion or continuation; (ii) the
aggregate amount of Eurodollar Rate Loans to be converted or LIBOR Rate Loans to be continued; and
(iii) for each such Eurodollar Rate Loan to be converted to a LIBOR Rate Loan and each continuation
of any LIBOR Rate Loan, the respective LIBOR Rate applicable thereto. All or any part of
outstanding Eurodollar Rate Loans may be converted or LIBOR Rate Loans continued as provided
herein, provided that (i) (unless the Required Lenders otherwise consent) no Eurodollar Rate Loan
may be converted into a LIBOR Rate Loan nor any LIBOR Rate Loan continued as a LIBOR Rate Loan upon
the expiration of the current Interest Period therefor when any Default or Event of Default has
occurred and is continuing.

     2.16 Swingline Loans .

     (a) Subject to the terms and conditions of this Agreement, Swingline Lender agrees to
make at any time and from time to time after the Agreement Date and prior to the Swingline Expiry
Date swingline loans to Borrower (“Swingline Loans”), which Swingline Loans (i) shall be
denominated in United States Dollars, (ii) may be repaid and reborrowed in accordance with the
provisions hereof, (iii) shall not exceed, in aggregate principal amount at any one time
outstanding, the lesser of (A) the Maximum Swingline Amount and (B) the amount by which Swingline
Lender’s Revolving Credit

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Commitment exceeds its Commitment Ratio of the sum of all Revolving
Credit Loans and the Letter of Credit Exposure, and (iv) shall be subject to (A) the limitations
set forth in clauses (i) and (ii) of the second proviso of Section 2.1(a) and (B) satisfaction of
the conditions set forth in Sections 4.2(a), (c), (d) and (e). Swingline Lender will not make a
Swingline Loan after it has received written notice from Borrower or the Required Lenders stating
that a Default or an Event of Default exists until such time as Swingline Lender shall have
received a written notice of (i) rescission of such notice from the party or parties originally
delivering the same or (ii) a waiver of such Default or Event of Default, as required by this
Agreement.

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     (b) Borrower shall give Swingline Lender irrevocable telephonic or written notice prior to
11:00 a.m. on the requested borrowing date specifying the amount of the requested Swingline Loan
which shall be in a minimum amount of $500,000 or whole multiples of $100,000 in excess thereof.
The Swingline Loans will then be made available to Borrower by Swingline Lender by crediting the
account of Borrower on the books of Swingline Lender.

     (c) The Swingline Loans shall be evidenced by the Swingline Note. The Swingline Loan shall
mature on the Swingline Expiry Date, and bear interest as provided in Section 2.3. Interest on
each Swingline Loan shall be payable as specified in Section 2.7(a).

     (d) Swingline Lender, at any time and in its sole and absolute discretion, may (and, not later
than four (4) Business Days after the making of a Swingline Loan, shall), on behalf of Borrower
(which hereby irrevocably directs Swingline Lender to act on Borrower’s behalf), request each
Lender, including Swingline Lender, to make a Revolving Credit Loan (each, a “Mandatory Borrowing”)
in an amount equal to such Lender’s Commitment Ratio of the amount of the Swingline Loans (provided
that each such request shall be deemed to have been automatically given upon the occurrence of a
Default or an Event of Default or upon the exercise of any of the remedies provided in Section 8.2,
in which case each Lender shall make the proceeds of its Revolving Credit Loan available to
Swingline Lender on the immediately succeeding Business Day in its Commitment Ratio thereof, and
the proceeds thereof shall be applied directly to repay Swingline Lender for such outstanding
Swingline Loans. Each Lender hereby irrevocably agrees to make Eurodollar Rate Loans upon one
Business Day’s notice pursuant to each Mandatory Borrowing in the amount and in the manner
specified in the preceding sentence and on the date specified by Swingline Lender notwithstanding
(i) that the amount of the Mandatory Borrowing may not comply with the minimum borrowing amount
otherwise required hereunder, (ii) whether any conditions specified in Article 4 hereof are then
satisfied, (iii) whether a Default or an Event of Default has occurred and is continuing, (iv) the
date of such Mandatory Borrowing, (v) any reduction in the Revolving Credit Commitments after any
such Swingline Loans were made, (vi) the absence of any Loan Funding Availability at any time it is
applicable, (vii) any set-off, counterclaim, recoupment, defense or other right which such Lender
may have against Swingline Lender, Borrower or any other Person for any reason whatsoever, or
(viii) any other circumstance, happening or event whatsoever, whether or not similar to any of the
foregoing. In the event that any Mandatory Borrowing cannot for any reason be made on the date
otherwise required above (including, without limitation, as a result of the
commencement of a proceeding described in Section 8.1(e) or (f) in respect of Borrower), each
Lender (other than Swingline Lender) hereby agrees that it shall forthwith purchase from Swingline
Lender (without recourse or warranty) a participation interest in such outstanding Swingline Loans
as shall be necessary to cause the Lenders to hold participation interests in such Swingline Loans
in the proportion of their respective Commitment Ratios thereof (each a “Mandatory Swingline
Participation”), provided that all interest payable on the Swingline Loans shall be for the account
of Swingline Lender until the date the Mandatory Borrowing is made, and, to the extent attributable
to the Mandatory Borrowing, shall be payable to the Lender making such Mandatory Borrowing from and
after the date such Mandatory Borrowing is made.

     (e) Whenever, at any time after Swingline Lender has received from any Lender such Lender’s
assigned interest in a Swingline Loan and Swingline Lender receives any payment on account thereof,
Swingline Lender will distribute to such Lender its assigned interest in such amount (appropriately
adjusted, in the case of interest payments, to reflect the period of time during which such
Lender’s assigned interest was outstanding and funded); provided, however, that in the event that
such payment received by Swingline Lender is required to be returned, such Lender will return to
Swingline Lender any portion thereof previously distributed by Swingline Lender to it.

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ARTICLE 3

INVENTORY AND FUNDING AVAILABILITY

     3.1 Loan Funding Availability. Unless Borrower has an Investment Grade Rating from any two
(2) of Moody’s, S&P, and Fitch, at the designated times set forth herein, Administrative Agent and
Borrower shall establish a Loan Funding Availability for the Loan Inventory and other Senior
Unsecured Indebtedness.

     (a) Calculation of Loan Funding Availability. The Loan Funding Availability shall be
equal to the sum, without duplication, of “A” plus “B” plus “C”, each as further described below
(and subject to the proviso at the end of this subsection (a)):

     A = sixty-five percent (65%) of the sum of all Acquisition Costs for all Lots Under
Development which are included in the Loan Inventory. If, after a Land Parcel is designated a Lot
Under Development, development of such parcel ceases for thirty (30) calendar days or more (other
than by reason of a Force Majeure Delay), at the discretion of Administrative Agent, the Loan
Funding Availability for such parcel may be reduced to an amount determined by Administrative Agent
(which amount can be zero) until development of such Lot Under Development is resumed to the
satisfaction of Administrative Agent;

     B = sixty-five percent (65%) of the sum of all Acquisition Costs for all Developed Lots
included in the Loan Inventory;

     C = eighty-five percent (85%) of the sum of all Acquisition Costs and Construction Costs for
all Dwelling Lots included in the Loan Inventory;

     provided that the sum of “A” and “B” may not exceed fifty percent (50%) of the amount of Loan
Funding Availability.

     (b) Designation of Land Parcels, Lots Under Development, Developed Lots and Dwelling
Lots. Borrower shall deliver to Administrative Agent an Inventory Summary Report in the form
of
Exhibit A and incorporated herein within fifteen (15) days after the last day of each quarter in
each fiscal year of Borrower; provided that Borrower may, in its discretion, deliver an Inventory
Summary Report within fifteen (15) days following the last day of any calendar month. The
Inventory Summary Report shall reflect Inventory that Borrower desires to have designated as Loan
Inventory. Upon Administrative Agent’s receipt of the Inventory Summary Report, Administrative
Agent may conduct inspections or reviews of the subject Inventory that Administrative Agent deems
appropriate, at the expense of Administrative Agent except as hereinafter expressly provided.
Based upon the information in the Inventory Summary Report and the other information compiled by
Administrative Agent, Administrative Agent shall determine, in its reasonable discretion, whether a
Lot Under Development, Developed Lot or Dwelling Lot not previously designated as part of the Loan
Inventory shall be designated part of the Loan Inventory and, if so, whether such Lot Under
Development, Developed Lot, or Dwelling Lot shall be designated a Lot Under Development, Developed
Lot, or Dwelling Lot.

     (c) Periodic Establishment of Loan Funding Availability. Within two (2) Business Days
of Administrative Agent’s receipt of an Inventory Summary Report, Administrative Agent shall
establish the Loan Funding Availability based on such Inventory Summary Report delivered to
Administrative Agent and information compiled by Administrative Agent. In the event Borrower does
not submit the Inventory Summary Report in the time and manner set forth above or furnish
sufficient information to Administrative Agent to enable Administrative Agent to establish a new
Loan Funding Availability,

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Administrative Agent will establish a Loan Funding Availability based on
some or all of the previous information submitted to Administrative Agent by Borrower in the
immediately preceding Inventory Summary Report and the information compiled by Administrative
Agent, as required hereunder, in connection therewith, as the case may be, or other information
available to Administrative Agent.

     (d) Reconciliation. In the event that the Loan Funding Availability for a particular
Funding Period is less than the then outstanding principal amount of all Senior Unsecured
Indebtedness, Administrative Agent shall promptly notify Borrower and Lenders thereof. On or
before the Reconciliation Date, Borrower shall (i) (A) pay to Administrative Agent a principal
payment to be applied to the Loans and any unpaid draws under Letters of Credit and/or (B) provide
to Administrative Agent evidence that the principal amount of other Senior Unsecured Indebtedness
has been reduced in an aggregate amount sufficient to eliminate the excess of the outstanding
principal amount of all Senior Unsecured Indebtedness over the Loan Funding Availability, together
with any accrued and unpaid interest on such excess or (ii) provide a revised Inventory Summary
Report designating sufficient additional Inventory (which shall be acceptable to Administrative
Agent, in its reasonable discretion) as Loan Inventory to cause the Loan Funding Availability to
equal or exceed the outstanding principal of all Senior Unsecured Indebtedness.

     (e) Removal/Disapproval of Inventory for Loan Funding Availability. If, at any time
Borrower does not have an Investment Grade Rating from any two (2) of Moody’s, S&P, and Fitch,
Administrative Agent determines, in its reasonable discretion, that any part of the Loan Inventory
is not acceptable for inclusion in the calculation of the Loan Funding Availability as a result of
an unforeseen material adverse change in the condition of such portion of the Loan Inventory or as
a result of the existence of Hazardous Materials in or on any Inventory which are in violation of
any warranty, representation, or covenant of the Loan Documents regarding such Hazardous Materials,
Administrative Agent may exclude such portion of the Loan Inventory from the calculation of the
Loan Funding Availability. If, after such exclusion, the then outstanding principal amount under
Senior Unsecured Indebtedness would exceed the Loan Funding Availability, Borrower shall pay to
Administrative Agent on the Reconciliation Date immediately following the exclusion of such Loan
Inventory, a principal payment on the Loans (or provide to Administrative Agent evidence
satisfactory to Administrative Agent that other Senior Unsecured Indebtedness has been reduced) or
unpaid draws under Letters of Credit in an amount sufficient to eliminate such excess of the
aggregate outstanding principal balance of the Senior
Unsecured Indebtedness over the Loan Funding Availability, together with accrued and unpaid
interest on such excess.

     (f) Release of Guaranties. Borrower may request the release of any Restricted
Subsidiary from the Subsidiary Guaranty and Administrative Agent shall release such Restricted
Subsidiary from the Subsidiary Guaranty subject to the following conditions precedent: (i) if
Borrower does not have an Investment Grade Rating from at least two (2) of Moody’s, S&P, and Fitch,
then (A) Borrower has delivered to Administrative Agent an Inventory Summary Report and (B) the
Loan Funding Availability established by Administrative Agent pursuant to Section 3.1(e), without
consideration of any Inventory owned by such Restricted Subsidiary, is equal to or greater than the
amount otherwise required pursuant to this Agreement; (ii) Borrower delivers a certificate to
Administrative Agent certifying that no Default or Event of Default exists before and after giving
effect to such release; and (iii) no Default or Event of Default exists before and after giving
effect to such release. Upon any such release, such Subsidiary shall no longer be deemed a
“Restricted Subsidiary.”

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ARTICLE 4

LOAN DISBURSEMENTS AND LETTERS OF CREDIT

     4.1 Prior to the First Disbursement or Letter of Credit. Prior to requesting the first
disbursement under the Loans or Letter of Credit hereunder, Borrower shall deliver all of the
following items to Administrative Agent, in form and substance reasonably satisfactory to
Administrative Agent. Administrative Agent and Lenders shall have no obligation to make the first
disbursement hereunder and no Letter of Credit Issuer shall have any obligation to issue the first
Letter of Credit hereunder until all of these items have been so executed and/or delivered to
Administrative Agent.

     (a) The Agreement. This Agreement (together with all schedules and exhibits hereto),
executed by Borrower, Administrative Agent, Letter of Credit Issuers, and Lenders.

     (b) Notes. A (i) Revolving Credit Note executed by Borrower and payable to the order
of each Lender, and (ii) Swingline Note executed by Borrower and payable to the order of the
Swingline Lender.

     (c) Subsidiary Guaranty. A Subsidiary Guaranty from Guarantors in favor of
Administrative Agent, Letter of Credit Issuers, and Lenders.

     (d) Taxpayer Identification Number. Borrower’s federal taxpayer identification
number.

     (e) Documents of Borrower.

     (i) Organizational Documents of Borrower certified by the office of the Secretary of
State in which Borrower is incorporated;

     (ii) Authority Documents of Borrower certified by an officer of Borrower;

     (iii) Certificate of Existence of Borrower issued by the state in which Borrower is
incorporated;

     (iv) Incumbency Certificate of Borrower reflecting the Authorized Signatories;

     (v) Corporate resolutions of Borrower certified by an officer of Borrower and
authorizing Borrower to enter into this Agreement and execute all related documents and Loan
Documents applicable to the Loans and the Letters of Credit; and

     (vi) Documentation evidencing Borrower’s qualification to do business for each state in
which any part of the Loan Inventory owned by Borrower is located certified by the office of
the Secretary of State of such state.

     (f) Documents of Guarantors.

     (i) Organizational Documents of each Guarantor certified by an officer of such
Guarantor;

     (ii) Authority Documents of each Guarantor certified by an officer of such Guarantor;

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     (iii) Incumbency Certificate of each Guarantor reflecting the Authorized Signatories;
and

     (iv) Resolutions of each Guarantor certified by an officer of such Guarantor and
authorizing such Guarantor to enter into the Subsidiary Guaranty and execute all related
documents and Loan Documents applicable to such Guarantor.

     (g) Compliance Certificate. A certificate signed by an Authorized Signatory of
Borrower in the form of Exhibit D showing compliance by Borrower with Section 6.8.

     (h) Attorney’s Opinions. The written opinions of counsel to (i) Administrative Agent
that this Agreement, the Notes and the Guaranty are enforceable against the Borrower and each
Guarantor (as applicable), and (ii) Borrower and Guarantors in form and content acceptable to
Administrative Agent and which address the following matters:

     (A) Existence, Due Authorization and Execution. Each of Borrower and each
Guarantor is duly organized and existing as a corporation, a limited liability company, or a
partnership (as the case may be) and is in good standing and qualified to do business under
the laws of Borrower’s or such Guarantor’s (as the case may be) state of organization and
that the Loan Documents evidencing the Loans and the Subsidiary Guaranty (as applicable)
have been properly executed and delivered by the persons authorized to do so; and

     (B) Miscellaneous. As to such other matters as Administrative Agent, counsel
to Administrative Agent or Lenders may reasonably request.

     (i) Other Documents. Other documents that Administrative Agent may reasonably
require.

     (j) Fees. Payment of all fees and expenses payable on the Agreement Date to Lenders,
Letter of Credit Issuers, and Administrative Agent.

     (k) Insurance. Certificate(s) of insurance required pursuant to Section 6.12.

     In addition, Administrative Agent and Lenders shall have no obligation to make the first
disbursement hereunder and no Letter of Credit Issuer shall have any obligation to issue the first
Letter of Credit hereunder if, as of such first disbursement or Letter of Credit, a Material
Adverse Event has occurred.

     4.2 All Disbursements and Letters of Credit. Administrative Agent and Lenders shall have no
obligation to make any disbursements and Letter of Credit Issuer shall have no obligation to issue
any Letters of Credit until all of the following conditions precedent are satisfied:

     (a) Inventory Summary Report. Borrower shall have executed and delivered to
Administrative Agent the Inventory Summary Report that Borrower is required to deliver pursuant to
Section 3.1(b).

     (b) Request for Advance. Borrower shall have executed and delivered to Administrative
Agent the Request for Advance that Borrower is required to deliver pursuant to Section 2.2 or the
Request for Issuance of Letter of Credit that Borrower is required to deliver pursuant to Section
2.4 in connection with any issuance of a Letter of Credit hereunder, as the case may be.

     (c) Representations and Warranties; Performance of Agreements. As of the date of the
requested disbursement or issuance of a Letter of Credit, as the case may be, the representations
and

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warranties in Loan Documents are true, correct, and complete in all material respects as if
made on and as of such date (unless they speak to a specific date or are based on facts which have
changed by transactions expressly contemplated or permitted by this Agreement).

     (d) No Default. No Default or Event of Default exists or would be caused by the
making of the requested disbursement or issuance of a Letter of Credit, as the case may be.

     (e) No Injunction or Restraining Order. No order, judgment, or decree of any
Governmental Authority shall purport to enjoin or restrain any Lender or any Letter of Credit
Issuer from making the requested disbursement or issuance of a Letter of Credit, as the case may
be.

ARTICLE 5

REPRESENTATIONS AND WARRANTIES

     Borrower makes the following representations and warranties with respect to the Loan Documents
and the obligations thereunder to Administrative Agent, Letter of Credit Issuers, and Lenders:

     5.1 Existence, Qualification and Power; Compliance with Laws. Each of Borrower and each
Guarantor (a) is a corporation, partnership, or limited liability company duly organized or formed,
validly existing, and in good standing under the Applicable Laws of the jurisdiction of its
incorporation or organization, (b) has all requisite power and authority and all governmental
licenses, authorizations, consents, and approvals to own its assets, carry on its business, and to
execute, deliver, and perform its obligations under the Loan Documents to which it is a party, (c)
is duly qualified and is licensed and in good standing under the Applicable Laws of each
jurisdiction where its ownership, lease, or operation of properties or the conduct of its business
requires such qualification or license, and (d) is in compliance with all Applicable Laws, except
in each case referred to in clause (c) or this clause (d), to the extent that failure to do so
would not individually or in the aggregate result in a Material Adverse Event.

     5.2 Authorization; No Contravention. The execution, delivery, and performance by each of
Borrower and each Guarantor of each Loan Document to which such Person is party have been duly
authorized by all necessary corporate or other organizational action, and do not and will not (a)
contravene the terms of any of such Person’s
Organizational Documents or Authority Documents; (b) conflict with or result in any breach or
contravention of, or the creation of any Lien under, any contractual obligation to which such
Person is a party or any order, injunction, writ, or decree of any Governmental Authority to which
such Person or its property is subject; or (c) violate any Applicable Law.

     5.3 Binding Effect. Each Loan Document has been duly executed and delivered by Borrower and
each Guarantor that is party thereto. Each Loan Document constitutes the legal, valid,
and binding obligation of Borrower and each Guarantor that is a party thereto, enforceable against
Borrower and each Guarantor in accordance with its terms, except as enforceability may be limited
by applicable Debtor Relief Laws and general principles of equity.

     5.4 No Default. Neither Borrower nor any Subsidiary is in default under or with respect to
any obligation which would result in a Material Adverse Event. No Default or Event of Default has
occurred and is continuing or would result from the consummation of the transactions contemplated
by this Agreement or any other Loan Document.

     5.5 Taxes. Borrower and its Subsidiaries have filed all Federal, state, and other material
Tax returns and reports required to be filed, and have paid all Federal, state, and other material
Taxes levied or

47

 

imposed upon them or their properties, income, or assets otherwise due and payable,
except those which are being contested in good faith by appropriate proceedings and for which
adequate reserves have been provided in accordance with GAAP. There is no proposed Tax assessment
against Borrower or any Subsidiary that would, if made, result in a Material Adverse Event.

     5.6 Hazardous Materials. To the best of Borrower’s knowledge and belief and based on
environmental assessments of the Inventory obtained by Borrower, except to the extent disclosed to
Administrative Agent in environmental assessments or other writings or to the extent that it would
not materially and adversely affect the use and marketability of any Inventory, (a) the Inventory
has not been and is not now being used in violation of any federal, state or local Environmental
Law, (b) no proceedings have been commenced, or notice(s) received, concerning any alleged
violation of any such Environmental Law, and (c) the Inventory is free of Hazardous Materials the
removal of which is required or the maintenance of which is restricted, prohibited, or penalized by
any federal, state, or local Governmental Authority except as set forth in the site assessments.

     5.7 Litigation. As of the Agreement Date, neither Borrower nor any Restricted Subsidiary is a
party to any litigation having a reasonable probability of being adversely determined against
Borrower or any Restricted Subsidiary which, if adversely determined, would result in a Material
Adverse Event.

     5.8 Full Disclosure. There is no material fact or condition relating to the Loan Documents or
the financial condition, business, or property of Borrower or any Restricted Subsidiary which would
be a Material Adverse Event and which has not been related, in writing, to Administrative Agent and
Lenders. All information heretofore furnished by or on behalf of Borrower or any Restricted
Subsidiary to any Lender or Administrative Agent in connection with the Loan Documents was, and all
such information hereafter furnished by Borrower or any Restricted Subsidiary to any Lender or
Administrative Agent will be, true and accurate in all material respects or, with respect to
projections, based on reasonable estimates on the date as of which such projections are stated or
certified.

     5.9 Financial Statements. The Current Financials were prepared in accordance with GAAP and
present fairly, in all material respects, the consolidated
financial condition, results of operations, and cash flows of Borrower and its Subsidiaries as of
and for the portion of the fiscal year ending on the date or dates thereof (subject only to normal
year-end audit adjustments). There were no material liabilities, direct or indirect, fixed or
contingent, of Borrower and its Subsidiaries as of the date or dates of the Current Financials
which are required under GAAP to be reflected therein or in the notes thereto, and are not so
reflected. Except for the transaction evidenced by the Loan Documents, there have been no changes
in the consolidated financial condition of Borrower and its Subsidiaries from that shown in the
Current Financials after the date or dates thereof which would be a Material Adverse Event.

     5.10
Insurance. Borrower and each Restricted Subsidiary maintains, with financially
sound, responsible, and reputable insurance companies or associations, insurance concerning its
properties and businesses against such casualties and contingencies and of such types and in such
amounts (and with co-insurance and deductibles) as is customary in the case of same or similar
businesses.

     5.11 Compliance with Laws. Neither Borrower nor any of its Restricted Subsidiaries is in
violation of any Applicable Laws (including ERISA), other than such violations which would not,
individually or collectively, be a Material Adverse Event. Neither Borrower nor any of its
Restricted Subsidiaries has received notice alleging any non-compliance with any Applicable Laws,
except for such non-compliance which no longer exists or which would not be a Material Adverse
Event.

     5.12 Regulation U. Neither Borrower nor any of its Subsidiaries is engaged principally, or as
one of its important activities, in the business of extending credit for the purpose of purchasing
or

48

 

carrying any “margin stock” within the meaning of Regulation U. No part of the proceeds of any
Loan or Letter of Credit will be used, directly or indirectly, for a purpose which violates any
Applicable Law, including the provisions of Regulation U or Regulation X. “Margin Stock” (as
defined in Regulation U) constitutes less than twenty-five percent (25%) of those assets of
Borrower and its Subsidiaries that are subject to any limitation on sale, pledge, or similar
restrictions hereunder.

ARTICLE 6

AFFIRMATIVE COVENANTS

     Borrower makes the following affirmative covenants with respect to the Loan Documents and the
obligations thereunder to Administrative Agent, Letter of Credit Issuers, and Lenders:

     6.1 Payment. Borrower shall pay when due all sums owing under this Agreement, the Notes, and
the other Loan Documents executed by Borrower.

     6.2 Performance. Borrower shall perform all Obligations under this Agreement, the Notes, and
the other Loan Documents executed by Borrower.

     6.3 Additional Information. On request of Administrative Agent and subject to Section 10.12,
Borrower shall deliver to Administrative Agent and/or Letter of Credit Issuers any reports prepared
in the ordinary course of business or provide other information with respect to the business,
assets (including the Inventory), and liabilities of Borrower and its Subsidiaries within the
possession or control of Borrower that Administrative Agent and/or Letter of Credit Issuers may
reasonably request including, without limitation, surveys, if available, and acquisition closing
documentation.

     6.4 Quarterly Financial Statements and Other Information. Within forty-five (45) days after
the last day of each quarter in each fiscal year of Borrower, except the last quarter in each such
fiscal year of Borrower, Borrower shall deliver to Administrative Agent the Form 10-Q of Borrower
as filed with the Securities and Exchange Commission. Within ten (10) days from the date of
filing, Borrower shall provide to Administrative Agent a copy of every other report filed by
Borrower with the Securities and Exchange Commission under the Exchange Act and a copy of each
registration statement filed by Borrower with the Securities and Exchange Commission pursuant to
the Securities Act of 1933.

     6.5 Change in Debt Rating. Borrower shall promptly (and, in any event, within two (2)
Business Days) notify Administrative Agent of any announcement by Fitch, Moody’s or S&P of any
change in a Debt Rating.

     6.6 Compliance Certificates. Borrower shall, within forty-five (45) days from the end of each
fiscal quarter of Borrower, provide to Administrative Agent a certificate signed by an Authorized
Signatory of Borrower in the form of Exhibit D setting forth such calculations required to
establish whether Borrower was in compliance with Section 6.8 and setting forth a list of all
Guarantors as of the last day of such fiscal quarter.

     6.7 Annual Financial Statements and Information; Certificate of No Default. Within one
hundred (100) days after the end of each fiscal year of Borrower, Borrower shall deliver to
Administrative Agent the Form 10-K of Borrower as filed with the Securities and Exchange
Commission, together with the audited consolidated financial statements of Borrower (which shall be
prepared by an independent accounting firm of recognized standing).

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     6.8 Financial and Inventory Covenants. Until the Obligations are repaid in full and the
expiration or termination of all Letters of Credit and the Total Revolving Credit Commitment,
Borrower shall adhere to the following financial covenants, all on a consolidated basis with the
Restricted Subsidiaries and determined as of the last day of each fiscal quarter of Borrower:

     (a) Borrower shall maintain at all times a Leverage Ratio of not more than 0.60 to 1;

     (b) Borrower shall at all times maintain a ratio of (i) EBITDA to (ii) Interest Incurred of
not less than 2.50 to 1.0;

     (c) Borrower shall maintain at all times Tangible Net Worth of not less than the sum of (i)
$3,718,000,000, plus (ii) fifty percent (50%) of annual net profits (with no deduction for any
annual net loss) for each fiscal year ending after September 30, 2005, plus (iii) fifty percent
(50%) of the aggregate increase in shareholders’ equity of Borrower after the date hereof by reason
of the issuance of capital stock of Borrower (including upon conversion of Indebtedness into such
capital stock but excluding (x) stock issued in connection with an employee stock ownership plan,
an employee stock option plan, or an employee stock purchase plan, and (y) any portion of such
increase in shareholders’ equity attributable to goodwill recognized in connection with an
Acquisition);

     (d) The total number of Speculative Lots owned by Borrower and its Restricted Subsidiaries at
any given time shall not exceed forty percent (40%) of all Closed Sales during the immediately
preceding twelve (12) calendar months. Models shall not be considered “Speculative Lots” for
purposes of this Section 6.8(d); and

     (e) The costs determined in accordance with GAAP of Developed Lots, Lots Under Development,
and Land Parcels owned by Borrower and its Restricted Subsidiaries as of the date of determination
shall not exceed one hundred fifty percent (150%) of the Adjusted Tangible Net Worth;

     provided, however, that the limitations set forth in the preceding subsections (d) and (e) shall
not be operative during any period in which Borrower maintains an Investment Grade Rating by at
least two (2) of Moody’s, S&P, and Fitch.

     6.9 Payment of Contractors. Borrower shall pay in a timely manner, and shall cause its
Restricted Subsidiaries to pay in a timely manner, any and all contractors and subcontractors who
conduct work in or on the Inventory, subject to the right of Borrower to contest any amount in
dispute, so long as the contesting of such amount is pursued diligently and in good faith.
Borrower will advise Administrative Agent in writing immediately if Borrower or any of its
Restricted Subsidiaries receives any written notice from any contractor(s), subcontractor(s) or
material furnisher(s) to the effect that said contractor(s), subcontractor(s) or material
furnisher(s) have not been paid for any labor or materials furnished to or in the Inventory and
such outstanding payment or payments are in an aggregate amount which could reasonably be expected
to result in a Material Adverse Event. Borrower will further make available to Administrative
Agent, for inspection and copying, on demand, any contracts, bills of sale, statements, receipted
vouchers, or agreements, under which Borrower or any Restricted Subsidiary claims title to any
materials, fixtures, or articles used in the development of the Loan Inventory or construction of
improvements on the Loan Inventory including, without limitation, the Dwellings.

     6.10 Inspection and Appraisal. Upon the reasonable request of Administrative Agent and
subject to Section 10.12, Borrower shall, and shall cause each of its Restricted Subsidiaries to,
upon reasonable notice, allow Administrative Agent and Lenders and their authorized agents to
inspect any of their properties, to review reports, files, and other records maintained in the
ordinary course of business, from time to time, during reasonable business hours; provided that
unless an Event of Default has

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occurred and is continuing, (a) there shall not be more than four
(4) such inspections in any calendar year, (b) each such inspection shall not exceed two (2)
Business Days in length, and (c) such inspections shall be at each Lender’s sole cost and expense.
Without limiting the foregoing, Borrower shall permit Administrative Agent and Lenders and their
authorized agents to enter upon the Inventory during normal working hours and as often as they
desire, for the purpose of inspecting or appraising the Loan Inventory or the construction of the
Dwellings.

     6.11 Hazardous Materials. Borrower shall promptly transmit to Administrative Agent and
Lenders copies of any citations, orders, notices, or other material governmental or other
communications received with respect to any Hazardous Materials affecting the Inventory which would
materially and adversely affect the use and marketability of such Inventory. Notwithstanding the
foregoing, there shall not be a default of this provision should Borrower store or use minimal
quantities of Hazardous Materials, provided that such substances are of a type and are held only in
a quantity normally used in connection with the construction, occupancy, or operation of comparable
buildings or residential developments (such as cleaning fluids and supplies normally used in the
day to day operation of residential developments), such substances are being held, stored, and used
in complete and strict compliance with all Environmental Laws, and the indemnity set forth below
shall always apply to such substances, and it shall continue to be the responsibility of Borrower
to take all remedial actions required under and in accordance with this Agreement in the event of
any unlawful release of any such substance.

     6.12 Insurance. Borrower shall keep the Inventory comprising the Loan Inventory insured by
responsible insurance companies in such amounts and against such risks as is customary for owners
of similar businesses and properties in the same general areas in which Borrower and its Restricted
Subsidiaries operate or, to the customary extent (and in a manner approved by Administrative Agent)
Borrower may be self insured. All insurance herein provided for shall be in form and with
companies reasonably approved by Administrative Agent. Borrower shall also maintain general
liability insurance, workman’s compensation insurance, automobile insurance for all vehicles owned
by them and any other insurance reasonably required by Administrative Agent, to the extent
commercially available at a reasonable cost. On the Agreement Date, Borrower shall deliver to
Administrative Agent a copy of a certificate of insurance evidencing the insurance required
hereunder. In addition, on the date of delivery of each report required by Section 3.1(b),
Borrower shall certify to Administrative Agent that all insurance policies required to be
maintained hereunder remain in full force and effect.

     6.13 Reportable Event. Promptly after Borrower receives notice or otherwise becomes aware
thereof, Borrower shall notify Administrative Agent of the occurrence of any Reportable Event with
respect to any Plan as to which the Pension Benefit Guaranty Corporation has not by regulation
waived the requirement of Section 4043(a) of ERISA that it be notified within thirty (30) days of
the occurrence of such event (provided that Borrower shall give Administrative Agent notice of any
failure to meet the minimum funding standards of Section 412 of the Code or Section 302 of ERISA,
regardless of the issuance of any waivers in accordance with Section 412(d) of the Code).

     6.14 Notices. Borrower shall promptly notify Administrative Agent and each Lender: (a) of the
occurrence of any unremedied Default or Event of Default of which Borrower has actual knowledge;
(b) of any litigation, investigation, or proceeding affecting Borrower or any Guarantor, which, if
adversely determined, would result in a Material Adverse Event; (c) of any material change in
accounting policies or financial reporting practices by Borrower or any of its Subsidiaries; and
(d) of any announcement by Moody’s, S&P, or Fitch (as the case may be) of any change or possible
change in a Debt Rating.

     6.15 Preservation of Existence, Etc. Borrower shall, and shall cause each of its Restricted
Subsidiaries to, preserve, renew, and maintain in full force and effect its legal existence and
good

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standing under the Applicable Laws of the jurisdiction of its organization; take all
reasonable action to maintain all rights, privileges, permits, licenses, and franchises necessary
or desirable in the normal conduct of its business, and preserve or renew all of its registered
patents, trademarks, trade names, and service marks, the non-preservation of which would result in
a Material Adverse Event.

     6.16 Compliance with Applicable Laws. Borrower shall, and shall cause each of its Restricted
Subsidiaries to, comply in all material respects with the requirements of all Applicable Laws
applicable to it or to its business or property, except where the failure to comply therewith would
not result in a Material Adverse Event.

ARTICLE 7

NEGATIVE COVENANTS

     Borrower makes the following negative covenants with respect to the Loan Documents and the
obligations thereunder to Administrative Agent, Letter of Credit Issuers, and Lenders:

     7.1 Hazardous Materials. Borrower shall neither permit any Hazardous Materials to be brought
on to the Inventory, nor shall it acquire real property to be added to the Loan Inventory upon
which any such Hazardous Materials exist, except to the extent disclosed to Administrative Agent in
environmental assessments or other writings or to the extent that it would not materially and
adversely affect the use and marketability of any Inventory; and if such Hazardous Materials are so
brought or found located thereon, such Hazardous Materials shall be immediately removed, with
proper disposal, to the extent required by applicable Environmental Laws, and all required
environmental cleanup procedures shall be diligently undertaken pursuant to all such Environmental
Laws.

     7.2 Secured Indebtedness. Borrower shall not, and shall not permit any of its Restricted
Subsidiaries to, incur or permit to exist any Indebtedness which (a) is secured in whole or in part
by any of the Inventory or any capital stock or other ownership interests in any of the Restricted
Subsidiaries (other than Permitted Encumbrances) or (b) except for provisions in documents
evidencing Indebtedness that prohibit the granting of Liens unless such Liens secure such
Indebtedness on a pari passu basis with the Obligations, contains any provision requiring Borrower
or any Restricted Subsidiary to grant to the lender thereunder any Lien (other than Permitted
Encumbrances and other than covenants to grant Liens to the issuers of surety, appeal or
performance bonds, so long as the right to request such Liens has not been exercised) at a future
date or upon the occurrence of any subsequent event; except that Borrower and its Restricted
Subsidiaries may incur (i) Indebtedness in favor of a seller of Inventory to Borrower which is
secured solely by the Inventory contemporaneously acquired from such seller, (ii) Indebtedness
secured solely by any office building owned by Borrower or any Restricted Subsidiary, (iii)
Indebtedness secured by any clubhouse located in any development of Borrower or any Restricted
Subsidiary, (iv) Indebtedness of a Person at the time such Person becomes a Restricted Subsidiary
or is merged with or into Borrower or a Restricted Subsidiary, provided that any Liens in respect
of such Indebtedness were in existence prior to the date of such acquisition, merger or
consolidation, were not incurred in anticipation thereof, and do not extend to any other assets,
and, in respect of all the foregoing, all renewals, extensions and refinancings thereof that do not
increase the outstanding amount thereof, and (v) Indebtedness (in addition to Indebtedness
described in clauses (i) through (iii) above) up to an amount equal to the lesser of (x)
$200,000,000 and (y) five percent (5%) of Tangible Net Worth, that is secured by Inventory (any
such Inventory, “Encumbered Inventory”).

     7.3 Investments. Borrower shall not permit the aggregate amount of its Investments (as
determined in accordance with GAAP) in Subsidiaries that are not Restricted Subsidiaries to exceed

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twenty percent (20%) of the assets (as determined in accordance with GAAP) of Borrower and its
Subsidiaries, on a consolidated basis.

     7.4 Fundamental Changes. Borrower shall not, and shall not permit any of its Restricted
Subsidiaries to, merge, consolidate with or into, or convey, transfer, lease, or otherwise dispose
of (whether in one transaction or in a series of transactions) all or substantially all of its
assets (whether now owned or hereafter acquired) to or in favor of any Person, except that, so long
as no Default or Event of Default exists at the time thereof or would result therefrom: (a)
Borrower may merge or consolidate with any other Person so long as Borrower is the continuing or
surviving Person and no Event of Default exists before or after giving effect to such merger or
consolidation; (b) any Restricted Subsidiary may merge with Borrower (provided that Borrower shall
be the continuing or surviving Person) or any one or more Restricted Subsidiaries; (c) any
Restricted Subsidiary may sell all or substantially all of its assets (upon voluntary liquidation
or otherwise), to Borrower or to another Restricted Subsidiary; and (d) any Restricted Subsidiary
may merge, consolidate with or into, or convey, transfer, lease, or otherwise dispose of (whether
in one transaction or in a series of transactions) all or substantially all of its assets (whether
now owned or hereafter acquired) to or in favor of any Person in the ordinary course of business.

     7.5 Distributions; Repurchase of Stock, Etc. Borrower shall not, and shall not permit any of
its Restricted Subsidiaries to, declare or make, directly or indirectly, any Distribution, or incur
any obligation (contingent or otherwise) to do so, except that, so long as no Default or Event of
Default shall have occurred and be continuing at the time of any Distribution or would result
therefrom, Borrower may make Distributions in an aggregate amount not to exceed fifty percent (50%)
of consolidated net income for Borrower and its Restricted Subsidiaries for the fiscal year most
recently ended prior to the date of such Distributions with respect to which audited consolidated
financial statements of Borrower and its Restricted Subsidiaries have been delivered to
Administrative Agent. Borrower shall not repurchase, redeem, retire, cancel, terminate or
otherwise acquire any of its capital stock or other equity interest in the Borrower (including,
without limitation, any instrument convertible into its capital stock or other equity interest) or
any option, warrant or other right to acquire any such capital stock or such other equity interest
(i) at any time an Event of Default under Section 8.1(b) shall have occurred and be continuing;
(ii) at any time the Borrower is not in compliance with the financial covenants contained in
subsections (a), (b) and (c) of Section 6.8; or (iii) if such repurchase, redemption, retirement,
cancellation, termination or other acquisition would cause the Borrower not to be in compliance
with the financial covenants referenced in clause (ii) above immediately after giving effect to
such repurchase, redemption, retirement, cancellation, termination or other acquisition.

ARTICLE 8

DEFAULT AND REMEDIES

     8.1 Defaults. Each of the following shall constitute an Event of Default, whatever the reason
for such event and whether it shall be voluntary or involuntary or be effected by operation of law
or pursuant to any judgment or order of any court or any order, rule, or regulation of any
governmental or non-governmental body:

     (a) Any representation or warranty made under this Agreement shall prove incorrect or
misleading in any material respect when made or deemed to have been made; or

     (b) Borrower shall default in the payment of any principal, interest or other monetary amounts
payable hereunder or under the Notes, or any of them, or under the other Loan Documents which
payment default (other than payment due on the Maturity Date) is not cured within five (5) calendar
days of Borrower’s receipt of notice from Administrative Agent; or

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     (c) Borrower shall default in the performance or observance of any other agreement or covenant
contained in this Agreement not specifically referred to elsewhere in this Section 8.1, and such
default shall not be cured to the Required Lenders’ satisfaction within a period of forty-five (45)
days from the date Borrower receives notice from Administrative Agent with respect thereto; or

     (d) There shall occur any default in the performance or observance of any agreement or
covenant or breach of any representation or warranty contained in any of the Loan Documents (other
than this Agreement or as otherwise provided in this Section 8.1 of this Agreement) or the
Subsidiary Guaranty, which shall not be cured to the Required Lenders’ satisfaction within the
applicable cure period, if any, provided for in such Loan Document or forty-five (45) days from the
date Borrower receives notice from Administrative Agent with respect thereto if no cure period is
provided in such Loan Document; or

     (e) There shall be entered a decree or order for relief in respect of Borrower or any of its
Restricted Subsidiaries under Title 11 of the United States Code, as now constituted or hereafter
amended, or any other applicable federal or state bankruptcy law or other similar law, or
appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator, or similar official
of Borrower or any of its Restricted Subsidiaries, or of any substantial part of their respective
properties, or ordering the winding-up or liquidation of the affairs of Borrower or any of its
Restricted Subsidiaries, or an involuntary petition shall be filed against Borrower or any of its
Restricted Subsidiaries, and a temporary stay entered, and (i) such petition and stay shall not be
diligently contested, or (ii) any such petition and stay shall continue undismissed for a period of
thirty (30) consecutive days; or

     (f) Borrower or any of its Restricted Subsidiaries shall file a petition, answer, or consent
seeking relief under Title 11 of the United States Code, as now constituted or hereafter amended,
or any other applicable federal or state bankruptcy law or other similar law, make an assignment
for the benefit of creditors, or Borrower or any of its Restricted Subsidiaries shall consent to
the institution of proceedings thereunder or to the filing of any such petition or to the
appointment or taking of possession of a receiver, liquidator, assignee, trustee, custodian,
sequestrator, or other similar official of Borrower or any of its Restricted Subsidiaries, or of
any substantial part of their respective properties, or Borrower or any of its Restricted
Subsidiaries shall fail generally to pay their respective debts as they become due, or Borrower or
any of its Restricted Subsidiaries shall take any corporate or partnership action to authorize any
such action; or

     (g) A final judgment shall be entered by any court against Borrower or any of its Restricted
Subsidiaries for the payment of money which exceeds $1,000,000, which judgment is not covered by
insurance or a warrant of attachment or execution or similar process shall be issued or levied
against property of Borrower or any of its Restricted Subsidiaries which, together with all other
such property of Borrower or any of its Restricted Subsidiaries subject to other such process,
exceeds in value $1,000,000 in the aggregate, and if, within thirty (30) days after the entry,
issue, or levy thereof, such judgment, warrant, or process shall not have been paid or discharged
or bonded or stayed pending appeal, or if, after the expiration of any such stay, such judgment,
warrant, or process shall not have been paid or discharged; or

     (h) (1) There shall be at any time any “accumulated funding deficiency,” as defined in ERISA
or in Section 412 of the Code, with respect to any Plan; or (2) a trustee shall be appointed by a
United States District Court to administer any Plan; or the Pension Benefit Guaranty Corporation
shall institute proceedings to terminate any Plan; or (3) any of Borrower and its ERISA Affiliates
shall incur any liability to the Pension Benefit Guaranty Corporation in connection with the
termination of any Plan; or (4) any Plan or trust created under any Plan of any of Borrower and its
ERISA Affiliates shall engage

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in a non-exempt “prohibited transaction” (as such term is defined in
Section 406 of ERISA or Section 4975 of the Code) which would subject Borrower or any ERISA
Affiliate to the tax or penalty on “prohibited transactions” imposed by Section 502 of ERISA or
Section 4975 of the Code; and by reason of any or all of the events described in clauses (1)
through (4), as applicable, Borrower or any of its Restricted Subsidiaries shall have incurred or
is likely to incur liability in excess of $2,000,000 in the aggregate; or

     (i) All or any portion of any Loan Document shall at any time and for any reason be declared
by a court of competent jurisdiction in a suit with respect to such Loan Document to be null and
void, or a proceeding shall be commenced by any Governmental Authority having jurisdiction over
Borrower or any of its Restricted Subsidiaries or by Borrower or any of its Restricted
Subsidiaries, seeking to establish the invalidity or unenforceability thereof (exclusive of
questions of interpretation of any provision thereof), or Borrower or any of its Restricted
Subsidiaries shall assert that any Loan
Document is null and void or deny or attempt to revoke any liability or obligation for the payment
of principal or interest purported to be created under any Loan Document; or

     (j) There shall occur any Change of Control; or

     (k) Except for conveyances of all or any part of the Loan Inventory between Borrower and the
Guarantors there occurs any sale, lease, conveyance, assignment, pledge, encumbrance, or transfer
of all or any part of the Loan Inventory or any interest therein, voluntarily or involuntarily,
whether by operation of law or otherwise, except (i) in accordance with the terms of this
Agreement, (ii) for execution of contracts with prospective purchasers, (iii) for Permitted
Encumbrances, or (iv) in the ordinary course of business; or

     (l) Except in the normal course of Borrower’s and its Restricted Subsidiaries’ development of
Inventory into Developed Lots and construction of Dwellings thereon or otherwise in Borrower’s or
its Restricted Subsidiaries’ ordinary course of business, without the prior written consent of
Administrative Agent, Borrower or any of its Restricted Subsidiaries grants any easement or
dedication, files any plat, condominium declaration, or restriction or otherwise encumbers all or
any portion of the Loan Inventory, or seeks or permits any zoning reclassification or variance,
unless such action is expressly permitted by the Loan Documents or does not affect any Inventory
which is part of the Loan Inventory; or

     (m) Borrower or any of its Restricted Subsidiaries fails to pay when due (after lapse of any
applicable grace periods) any Recourse Indebtedness of Borrower or such Restricted Subsidiary
(other than the Obligations) in excess (individually or collectively) of $20,000,000; or

     (n) The acceleration of any Recourse Indebtedness of Borrower or any of its Restricted
Subsidiaries in excess (individually or collectively) of $20,000,000 and such acceleration does not
cease to exist or such Recourse Indebtedness is not satisfied, in either case within five (5) days
after such acceleration occurred.

Notwithstanding anything contained herein to the contrary, the occurrence of any of the foregoing
shall not be a Default or an Event of Default hereunder if: (i) the occurrence pertains only to
specific parcel(s) within the Loan Inventory; and (ii) the affected parcel(s) is (are) removed from
the Loan Inventory on or before ten (10) days in the case of a monetary occurrence and thirty (30)
days in the case of a non-monetary occurrence after the occurrence or, if Borrower is entitled to
notice and cure, within the applicable notice and cure period. In the event that any such parcel
is a Lot Under Development, Developed Lot, or Dwelling Lot, then the Loan Funding Availability
shall be immediately calculated excluding such parcel. If, as the result of such removal, the
outstanding principal balance under all Senior Unsecured Indebtedness would exceed the Loan Funding
Availability, Borrower shall pay (X) to

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 Administrative Agent on the Reconciliation Date immediately
following the removal of such Inventory from the Loan Inventory, a principal payment on the Loans
in an amount sufficient to eliminate such excess of the aggregate outstanding principal balance of
all Senior Unsecured Indebtedness over the Loan Funding Availability, together with any due and
unpaid interest on such excess or (Y) add additional Inventory to the Loan Inventory (which is
acceptable to Administrative Agent) in an amount sufficient to cause the Loan Funding Availability
to equal or exceed all Senior Unsecured Indebtedness.

     8.2 Remedies. If an Event of Default shall have occurred and shall be continuing:

     (a) With the exception of an Event of Default specified in Sections 8.1(e) or (f),
Administrative Agent shall at the request, or may with the consent, of the Required Lenders, by
notice to Borrower (i) declare the Notes, all interest thereon, and all other amounts payable under
this Agreement
and the other Loan Documents to be forthwith due and payable, whereupon the Notes, all such
interest and all such amounts shall become and be forthwith due and payable, without presentment,
demand, protest, notice of intention to accelerate, notice of acceleration, or further notice of
any kind, all of which are hereby expressly waived by Borrower, (ii) terminate the Total Revolving
Credit Commitment, and (iii) require Borrower to, and Borrower shall thereupon, Cash Collateralize
the Letters of Credit in an amount equal to the outstanding Letter of Credit Exposure.

     (b) Upon the occurrence of an Event of Default under Sections 8.1(e) or (f), the Total
Revolving Credit Commitment shall automatically terminate and such principal, interest (including
without limitation, interest which would have accrued but for the commencement of a case or
proceeding under the federal, state, or other bankruptcy laws), Letter of Credit Exposure, and
other amounts payable under this Agreement or the Notes shall thereupon and concurrently therewith
become due and payable, all without any action by Administrative Agent, Letter of Credit Issuers,
or Lenders or the holders of the Notes, and Borrower shall thereupon Cash Collateralize the Letters
of Credit in an amount equal to the outstanding Letter of Credit Exposure, all without presentment,
demand, protest, notice of intention to accelerate, notice of acceleration, or other notice of any
kind, all of which are expressly waived, anything in this Agreement or in the Notes to the contrary
notwithstanding.

     (c) Administrative Agent, with the concurrence of the Required Lenders, shall exercise all of
the post-default rights granted to it and to them under the Loan Documents or under Applicable Law.

     (d) The rights and remedies of Administrative Agent, Letter of Credit Issuers, and Lenders
hereunder shall be cumulative, and not exclusive.

     8.3 Waivers. Neither a waiver of any Default or Event of Default by Borrower hereunder nor
any representation by a Lender or Lenders as to the nonoccurrence or nonexistence thereof shall be
implied from any delay or omission by any one or all of Lenders to notify Borrower thereof or to
take action on account of such Default or Event of Default, and no express waiver shall affect any
Default or Event of Default other than the matter specified in the waiver and it shall be operative
only for the time and to the extent therein stated. Waivers of any covenants, terms, or conditions
contained herein must be in writing and shall not be construed as a waiver of any subsequent breach
of the same covenant, term, or condition. Any one or all of Lenders’ consent or approval to or of
any act by Borrower requiring further consent or approval shall not be deemed to waive or render
unnecessary the consent or approval to or of any subsequent or similar act. Any one or all of
Lenders’ exercise of any right or remedy hereunder shall not in any way constitute a cure or waiver
of a Default or an Event of Default, or invalidate any act done pursuant to any notice of the
occurrence of a Default or an Event of Default, or prejudice Lenders in the exercise of any of
their rights or remedies hereunder or under the Notes or any other Loan Documents, unless, in the
exercise of such rights or remedies, Lenders realize all amounts owed to them under the Notes and
other Loan Documents.

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     8.4 Cross-Default. All of the Notes and other Loan Documents are “cross defaulted” such that
(a) the occurrence of an Event of Default under any one of the Loan Documents shall constitute an
Event of Default under this Agreement and all of the Loan Documents, and (b) the occurrence of a
Default under any one of the Loan Documents shall constitute a Default under this Agreement and all
of the other Loan Documents.

     8.5 No Liability of Lenders.

     (a) Construction and/or Development. None of Lenders, Administrative Agent, or Letter
of Credit Issuers shall be liable to any party for (i) the development of or construction upon any
of the Inventory, (ii) the failure to develop or construct or protect improvements on the
Inventory, (iii) the
payment of any expense incurred in connection with the development of or construction upon the
Inventory, (iv) the performance or nonperformance of any other obligation of Borrower or any
Restricted Subsidiary, or (v) Lenders’ or Administrative Agent’s exercise of any remedy available
to them. In addition, Lenders shall not be liable to Borrower or any third party for the failure
of Lenders or their authorized agents to discover or to reject materials or workmanship during the
course of Lenders’ inspections of the Inventory.

     (b) Dwelling Lots. In addition to Section 8.5(a) above, none of Lenders,
Administrative Agent, or Letter of Credit Issuers shall be liable to any party for (i) the
construction or completion of the Dwellings, (ii) the failure to construct, complete, or protect
the Dwellings, (iii) the payment of any expense incurred in connection with the construction of the
Dwellings, (iv) the performance or nonperformance of any other obligation of Borrower or any
Restricted Subsidiary, or (v) Lenders’ or Administrative Agent’s exercise of any remedy available
to them. In addition, Lenders shall not be liable to Borrower or any third party for the failure
of Lenders or their authorized agents to discover or to reject materials or workmanship during the
course of Lenders’ inspections of the Dwelling Lots.

     (c) Other Lenders. The obligations of each Lender under this Agreement are separate
and independent such that no action, inaction, or responsibility of one Lender shall be imputed to
the remaining Lenders. Borrower hereby waives any claim or demand against each Lender as to the
action, inaction, or responsibility of another.

     8.6 Indemnification.

     (a) Expenses. Borrower agrees (i) to pay or reimburse Administrative Agent for all
reasonable costs and expenses incurred in connection with the development, preparation, negotiation
and execution of this Agreement and the other Loan Documents and any amendment, waiver, consent or
other modification of the provisions hereof and thereof (whether or not the transactions
contemplated hereby or thereby are consummated), and the consummation and administration of the
transactions contemplated hereby and thereby, including all Attorney Costs, and (ii) to pay or
reimburse Administrative Agent and each Lender for all reasonable costs and expenses incurred in
connection with the enforcement, attempted enforcement, or preservation of any rights or remedies
under this Agreement or the other Loan Documents (including all such costs and expenses incurred
during any “workout” or restructuring in respect of the Obligations and during any legal
proceeding, including any proceeding under any Debtor Relief Law), including all Attorney Costs.
The foregoing costs and expenses shall include all search, filing, recording, title insurance and
appraisal charges and fees and taxes related thereto, and other out-of-pocket expenses incurred by
Administrative Agent and the cost of independent public accountants and other outside experts
retained by Administrative Agent or any Lender. All amounts due under this Section 8.6(a) shall be
payable upon demand therefor and, in any event, within ten (10) Business Days

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after such demand.
The agreements in this Section 8.6(a) shall survive the termination of the Total Revolving Credit
Commitments and repayment of all other Obligations.

     (b) Indemnity. Whether or not the transactions contemplated hereby are consummated,
Borrower agrees to indemnify, save, and hold harmless Administrative Agent, each Agent-Related
Person, Letter of Credit Issuers, and Lenders and their respective Affiliates,
representatives, officers, directors, employees, attorneys, attorneys-in-fact, and agents
(each, an “Indemnified Party” and collectively, the “Indemnified Parties”) from and against: (i)
any and all claims, demands, actions, or causes of action that are asserted against any Indemnified
Party as a result of the Loan Documents by any Person (other than an Indemnified Party) relating
directly or indirectly to a claim, demand, action, or cause of action that such Person asserts or
may assert against Borrower or any Guarantor, any Affiliate of Borrower or any Guarantor, or any of
their respective representatives, officers, directors, employees, attorneys, attorneys-in-fact, and
agents; (ii) any and all claims, demands, actions, or causes of action that
may at any time (including at any time following repayment of the Obligations and the resignation
or removal of Administrative Agent or the replacement of any Lender) be asserted or imposed against
any Indemnified Party, arising out of or relating to, the Loan Documents, any predecessor loan
documents, the Total Revolving Credit Commitment, the use or contemplated use of the proceeds of
any Loan or Letter of Credit, or the relationship of Borrower and Administrative Agent, each
Agent-Related Person, Letter of Credit Issuers, and Lenders under this Agreement or any other Loan
Document; (iii) any administrative or investigative proceeding by any Governmental Authority
arising out of or related to a claim, demand, action, or cause of action described in clause (i) or
(ii) above; and (iv) any and all liabilities (including liabilities under indemnities), losses,
costs, or expenses (including Attorney Costs and expenses) that any Indemnified Party suffers or
incurs as a result of the assertion of any foregoing claim, demand, action, cause of action, or
proceeding, or as a result of the preparation of any defense in connection with any foregoing
claim, demand, action, cause of action, or proceeding, in all cases, whether or not arising out
of the negligence of an Indemnified Party, and whether or not an Indemnified Party is a party
to such claim, demand, action, cause of action, or proceeding (all the foregoing, collectively, the
“Indemnified Liabilities”); provided that no Indemnified Party shall be entitled to indemnification
for any claim caused by its own gross negligence or willful misconduct or for any loss, demand,
action, cause of action or proceeding asserted against it by another Indemnified Party. Borrower
shall also indemnify, protect, and hold each Indemnified Party harmless from and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, claims,
proceedings, costs, expenses (including without limitation all Attorney Costs, whether or not suit
is brought), and disbursements of any kind or nature whatsoever which may at any time be imposed
on, incurred by, or asserted against such Indemnified Party, with respect to or as a direct or
indirect result of the violation or non-compliance by Borrower or any of its Subsidiaries of any
Environmental Law and arising as a result of such Indemnified Party’s being a party to any of the
Loan Documents; or with respect to or as a direct or indirect result of Borrower’s or any of its
Subsidiaries’ use, generation, manufacture, production, storage, release, threatened release,
discharge, disposal, or presence of a Hazardous material on, under, from, or about real property
owned by Borrower or any of its Subsidiaries.

     (c) Waiver. No Indemnified Party shall be liable for any error of judgment or act
done in good faith, or be otherwise liable or responsible under any circumstances whatsoever
(including such Person’s negligence), except to the extent found in a final, nonappealable
judgment by a court of competent jurisdiction to have resulted from such Person’s gross negligence
or willful misconduct. No Indemnified Party shall have any liability with respect to, and Borrower
hereby waives, releases, and agrees not to sue any of them upon, any claim for any special,
indirect, incidental, or consequential damage suffered or incurred by Borrower, any of its
Subsidiaries, or any of its Affiliates in connection with, arising out of, or in any way related to
this Agreement or any of the other Loan Documents, or any of the transactions contemplated by this
Agreement or any of the other Loan Documents.

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     (d) Punitive or Consequential Damages. Borrower hereby waives, releases, and agrees
not to sue any Indemnified Party for exemplary, punitive or consequential damages in respect of any
claim in connection with, arising out of, or in any way related to this Agreement or any of the
other Loan Documents, or any of the transactions contemplated by this Agreement or any of the other
Loan Documents. Each Indemnified Party hereby waives, releases, and agrees not to sue Borrower or
any Guarantor for exemplary, punitive or consequential damages in respect of any claim in
connection with, arising out of, or in any way related to this Agreement or any of the other Loan
Documents, or any of the transactions contemplated by this Agreement or any of the other Loan
Documents.

     (e) Survival. Without prejudice to the survival of any other agreement of Borrower
hereunder, the agreements and obligations of Borrower contained in this Section 8.6 shall survive
the payment in full of the Obligations.

ARTICLE 9

ADMINISTRATIVE AGENT

     9.1 Appointment and Authorization of Administrative Agent.

     (a) Each Lender hereby irrevocably (subject to Section 9.9) appoints designates, and
authorizes Administrative Agent to take such action on its behalf under the provisions of this
Agreement and each other Loan Document and to exercise such powers and perform such duties as are
expressly delegated to it by the terms of this Agreement or any other Loan Document, together with
such powers as are reasonably incidental thereto. Administrative Agent agrees to: (i) timely
distribute to each Lender all material information, requests, documents, and items received from
Borrower under the Loan Documents; (ii) promptly distribute to each Lender its ratable part of each
payment or prepayment (whether voluntary, as proceeds of collateral upon or after foreclosure, as
proceeds of insurance thereon, or otherwise) in accordance with the terms of the Loan Documents;
(iii) deliver to the appropriate Persons requests, demands, approvals, and consents received from
Lenders; (iv) make requests for additional information pursuant to Section 6.3; and (v) make
requests for inspections pursuant to Section 6.10; provided, however, Administrative Agent shall
not be required to take any action which exposes Administrative Agent to personal liability or
which is contrary to the Loan Documents or Applicable Law. Notwithstanding any provision to the
contrary contained elsewhere herein or in any other Loan Document, Administrative Agent shall not
have any duties or responsibilities, except those expressly set forth herein, nor shall
Administrative Agent have or be deemed to have any fiduciary relationship with any Lender or
Participant, and no implied covenants, functions, responsibilities, duties, obligations, or
liabilities shall be read into this Agreement or any other Loan Document or otherwise exist against
Administrative Agent. Without limiting the generality of the foregoing sentence, the use of the
term “agent” herein and in the other Loan Documents with reference to Administrative Agent is not
intended to connote any fiduciary or other implied (or express) obligations arising under agency
doctrine of any Applicable Law. Instead, such term is used merely as a matter of market custom,
and is intended to create or reflect only an administrative relationship between independent
contracting parties.

     (b) Each Letter of Credit Issuer shall act on behalf of Lenders with respect to any Letters of
Credit issued by it and the documents associated therewith and each Letter of Credit Issuer shall
have all of the benefits and immunities: (i) provided to Administrative Agent in this Section 9
with respect to any acts taken or omissions suffered by such Letter of Credit Issuer in connection
with Letters of Credit issued by it or proposed to be issued by it and the application and
agreements for letters of credit pertaining to the Letter of Credit as fully as if the term
“Administrative Agent” as used in this Section 9 included such Letter of Credit Issuer with respect
to such acts or omissions; and (ii) as additionally provided herein with respect to such Letter of
Credit Issuer.

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     9.2 Delegation of Duties. Administrative Agent may execute any of its duties under this
Agreement or any other Loan Document by or through agents, employees, or attorneys-in-fact and
shall be entitled to advice of counsel and other consultants or experts concerning all matters
pertaining to such duties. Administrative Agent shall not be responsible for the negligence or
misconduct of any agent or attorney-in-fact that it selects in the absence of gross negligence or
willful misconduct.

     9.3 Liability of Administrative Agent. No Agent-Related Person shall be (a) liable for any
action taken or omitted to be taken by any of them under or in connection with this Agreement or
any other Loan Document or the transactions contemplated hereby (including any action or
omission constituting ordinary negligence by an Agent-Related Person) (except for its own gross negligence or willful misconduct in
connection with its duties expressly set forth herein), or (b) responsible in any manner to any
Lender or Participant for any recital, statement, representation, or warranty made by Borrower, any
of its Subsidiaries, or any officer thereof, contained herein or in any other Loan Document, or in
any certificate, report, statement, or other document referred to or provided for in, or received
by Administrative Agent under or in connection with, this Agreement or any other Loan Document, or
the validity, effectiveness, genuineness, enforceability, or sufficiency of this Agreement or any
other Loan Document, or for any failure of Borrower, any Guarantor, or any other party to any Loan
Document to perform its obligations hereunder or thereunder. No Agent-Related Person shall be
under any obligation to any Lender or Participant to ascertain or to inquire as to the observance
or performance of any of the agreements contained in, or conditions of, this Agreement or any other
Loan Document, or to inspect the properties, books, or records of Borrower or any Affiliate
thereof.

     9.4 Reliance by Administrative Agent.

     (a) Administrative Agent shall be entitled to rely, and shall be fully protected in relying,
upon any writing, communication, signature, resolution, representation, notice, consent,
certificate, affidavit, letter, telegram, facsimile, telex, or telephone message, statement or
other document or conversation believed by it to be genuine and correct and to have been signed,
sent or made by the proper Person or Persons, and upon advice and statements of legal counsel
(including counsel to Borrower), independent accountants, and other experts selected by
Administrative Agent. Administrative Agent shall be fully justified in failing or refusing to take
any action under any Loan Document unless it shall first receive such advice or concurrence of the
Required Lenders as it deems appropriate and, if it so requests, it shall first be indemnified to
its satisfaction by Lenders against any and all liability and expense which may be incurred by it
by reason of taking or continuing to take any such action. Administrative Agent shall in all cases
be fully protected in acting, or in refraining from acting, under this Agreement or any other Loan
Document in accordance with a request or consent of the Required Lenders or all Lenders, if
required hereunder, and such request and any action taken or failure to act pursuant thereto shall
be binding upon all Lenders and Participants.

     (b) For purposes of determining compliance with the conditions specified in Section 4.1, each
Lender that has signed this Agreement shall be deemed to have consented to, approved, or accepted
or to be satisfied with, each document or other matter either sent by Administrative Agent to such
Lender for consent, approval, acceptance, or satisfaction, or required thereunder to be consented
to or approved by or acceptable or satisfactory to a Lender.

     9.5 Notice of Default. Administrative Agent shall not be deemed to have knowledge or notice
of the occurrence of any Default or Event of Default, except with respect to defaults in the
payment of principal, interest, and fees required to be paid to Administrative Agent for the
account of Lenders, unless Administrative Agent shall have received written notice from a Lender or
Borrower referring to this Agreement, describing such Default or Event of Default and stating that
such notice is a “notice of

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default.” Administrative Agent will notify Lenders of its receipt of
any such notice. Administrative Agent shall take such action with respect to such Default or Event
of Default as may be directed by the Required Lenders in accordance with Section 8; provided,
however, that unless and until Administrative Agent has received any such direction, Administrative
Agent may (but shall not be obligated to) take such action, or refrain from taking such action,
with respect to such Default or Event of Default as it shall deem advisable or in the best interest
of Lenders.

     9.6 Credit Decision; Disclosure of Information by Administrative Agent. Each Lender
acknowledges that no Agent-Related Person has made any representation or warranty to it, and that
no act
by Administrative Agent hereinafter taken, including any consent to and acceptance of any
assignment or review of the affairs of Borrower or any Affiliate thereof, shall be deemed to
constitute any representation or warranty by any Agent-Related Person to any Lender as to any
matter, including whether Agent-Related Persons have disclosed material information in their
possession. Each Lender represents to Administrative Agent that it has, independently and without
reliance upon any Agent-Related Person and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the business, prospects, operations,
property, financial, and other condition and creditworthiness of Borrower and its Affiliates, and
all Applicable Laws relating to the transactions contemplated hereby, and made its own decision to
enter into this Agreement and to extend credit to Borrower hereunder. Each Lender also represents
that it will, independently and without reliance upon any Agent-Related Person and based on such
documents and information as it shall deem appropriate at the time, continue to make its own credit
analysis, appraisals, and decisions in taking or not taking action under this Agreement and the
other Loan Documents, and to make such investigations as it deems necessary to inform itself as to
the business, prospects, operations, property, financial and other condition, and creditworthiness
of Borrower. Except for notices, reports, and other documents expressly required to be furnished
to Lenders by Administrative Agent herein, Administrative Agent shall not have any duty or
responsibility to provide any Lender with any credit or other information concerning the business,
prospects, operations, property, financial and other condition, or creditworthiness of Borrower or
any Affiliate thereof which may come into the possession of any Agent-Related Person.

     9.7 Indemnification of Administrative Agent. Whether or not the transactions contemplated
hereby are consummated, Lenders shall indemnify upon demand each Agent-Related Person (to the
extent not reimbursed by or on behalf of Borrower and without limiting the obligation of Borrower
to do so), pro rata, and hold harmless each Agent-Related Person from and against any and all
Indemnified Liabilities incurred by it; provided, however, that no Lender shall be liable for the
payment to any Agent-Related Person of any portion of such Indemnified Liabilities resulting from
such Person’s gross negligence or willful misconduct to the extent the same shall be determined in
a final, nonappealable judgment by a court of competent jurisdiction to have resulted from such
Agent-Related Person’s own gross negligence or willful misconduct in respect of such Indemnified
Liabilities; provided, however, that no action taken in accordance with the directions of the
Required Lenders shall be deemed to constitute gross negligence or willful misconduct for purposes
of this Section 9.7. Without limitation of the foregoing, each Lender shall reimburse
Administrative Agent upon demand for its ratable share of any costs or out-of-pocket expenses
(including Attorney Costs and expenses) incurred by Administrative Agent in connection with the
preparation, execution, delivery, administration, modification, amendment, or enforcement (whether
through negotiations, legal proceedings, or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement, any other Loan Document, or any document contemplated by or
referred to herein, to the extent that Administrative Agent is not reimbursed for such expenses by
or on behalf of Borrower. The undertaking in this Section 9.7 shall survive termination of the
Revolving Credit Commitments, the payment of all Obligations hereunder, and the resignation or
replacement of Administrative Agent.

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     9.8 Administrative Agent in its Individual Capacity. Wachovia Bank and its Affiliates may
make loans to, issue letters of credit for the account of, accept deposits from, acquire equity
interests in, and generally engage in any kind of banking, trust, financial advisory, underwriting,
or other business with Borrower or any Affiliate thereof as though Wachovia Bank were not
Administrative Agent or a Letter of Credit Issuer hereunder and without notice to or consent of any
other Lender. Lenders acknowledge that, pursuant to such activities, Wachovia Bank or its
Affiliates may receive information regarding Borrower or its Affiliates (including information that
may be subject to confidentiality obligations in favor of Borrower or such Affiliate) and
acknowledge that Administrative Agent shall be under no obligation to provide such information to
them.
With respect to its Loans, Wachovia Bank shall have the same rights and powers under this Agreement
as any other Lender and may exercise such rights as though it were not Administrative Agent or a
Letter of Credit Issuer, and the terms “Lender” and “Lenders” include Wachovia Bank in its
individual capacity.

     9.9 Successor Administrative Agent. Administrative Agent may and, at the request of either
Borrower or the Required Lenders (if Borrower or the Required Lenders reasonably determines that
Administrative Agent has failed and is continuing to fail to perform its obligations under this
Agreement) shall, resign as Administrative Agent upon thirty (30) days’ notice to Lenders. If
Administrative Agent resigns under this Agreement, then the Required Lenders shall appoint from
among Lenders a successor administrative agent for Lenders which successor administrative agent
shall be consented to by Borrower at all times other than during the existence of an Event of
Default (which consent of Borrower shall not be unreasonably withheld or delayed). If no successor
administrative agent is appointed prior to the effective date of the resignation of Administrative
Agent, then Administrative Agent may appoint, after consulting with Lenders and Borrower, a
successor administrative agent from among Lenders. Upon the acceptance of its appointment as
successor administrative agent hereunder, such successor administrative agent shall succeed to all
the rights, powers and duties of the retiring Administrative Agent, as Administrative Agent and as
a Letter of Credit Issuer, and the respective terms “Administrative Agent” and “Letter of Credit
Issuer” shall mean such successor administrative agent and such Letter of Credit issuer, and the
retiring Administrative Agent’s appointment, powers and duties as Administrative Agent and as
retiring Letter of Credit Issuer shall be terminated, without any other or further act or deed on
the part of such retiring Letter of Credit Issuer or any other Lender, other than the obligation of
the successor Letter of Credit Issuer to issue letters of credit in substitution for the Letters of
Credit issued by such retiring Letter of Credit Issuer, if any, outstanding at the time of such
succession or to make other arrangements satisfactory to the retiring Letter of Credit Issuer to
effectively assume the obligations of the retiring Letter of Credit Issuer with respect to such
Letters of Credit. After any retiring Administrative Agent’s resignation hereunder as
Administrative Agent, the provisions of this Section 9 and Section 8.6 shall inure to its benefit
as to any actions taken or omitted to be taken by it while it was Administrative Agent under this
Agreement. If no successor administrative agent has accepted appointment as Administrative Agent
by the date which is thirty (30) days following a retiring Administrative Agent’s notice of
resignation, then the retiring Administrative Agent’s resignation shall nevertheless thereupon
become effective and Lenders shall perform all of the duties of Administrative Agent hereunder
until such time, if any, as the Required Lenders appoint a successor agent as provided for above.

     9.10 Other Agents; Lead Managers. No Lender identified on the facing page or signature pages
of this Agreement as a “syndication agent,” “documentation agent, “co-agent,” “co-arranger,” “joint
lead arranger,” “joint bookrunner,” “lead manager” or similar title shall have any right, power,
obligation, liability, responsibility, or duty under this Agreement other than those applicable to
all Lenders as such. Without limiting the foregoing, no Lender so identified shall have or be
deemed to have any fiduciary relationship with any Lender. Each Lender acknowledges that it has
not relied, and will not rely, on any Lender so identified in deciding to enter into this Agreement
or in taking or not taking action hereunder.

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     9.11 Proofs of Claim. In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding
relative to Borrower or any Guarantor, Administrative Agent (irrespective of whether the principal
of any Loan or Letter of Credit Exposure shall then be due and payable as herein expressed or by
declaration or otherwise and irrespective of whether Administrative Agent shall have made any
demand on Borrower) shall be entitled and empowered, by intervention in such proceeding or
otherwise (a) to file and prove a claim for the whole amount of the principal and interest owing
and unpaid in respect of the Loans, Letter of Credit Exposure and all other Obligations that are
owing and
unpaid and to file such other documents as may be necessary or advisable in order to have the
claims of Lenders and Administrative Agent (including any claim for the reasonable compensation,
expenses, disbursements and advances of Lenders and Administrative Agent and their respective
agents and counsel and all other amounts then due Lenders and Administrative Agent) allowed in such
judicial proceeding; and (b) to collect and receive any monies or other property payable or
deliverable on any such claims and to distribute the same; and any custodian, receiver, assignee,
trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is
hereby authorized by each Lender to make such payments to Administrative Agent and, in the event
that Administrative Agent shall consent to the making of such payments directly to Lenders, to pay
to Administrative Agent any amount due for the reasonable compensation, expenses, disbursements and
advances of Administrative Agent and its agents and counsel, and any other amounts then due to
Administrative Agent. Nothing contained herein shall be deemed to authorize Administrative Agent
to authorize or consent to or accept or adopt on behalf of any Lender any plan of reorganization,
arrangement, adjustment or composition affecting the Obligations or the rights of any Lender or to
authorize Administrative Agent to vote in respect of the claim of any Lender in any such
proceeding.

ARTICLE 10

GENERAL CONDITIONS

     10.1 Benefit. This Agreement is made and entered into for the sole protection and benefit of
Administrative Agent, Letter of Credit Issuers, Lenders, and Borrower, and their respective
successors and permitted assigns, and no other person or persons other than Borrower shall have any
right of action hereon or rights to proceeds of the Loans at any time. None of Administrative
Agent, Letter of Credit Issuers or Lenders shall (a) owe any duty whatsoever to any claimant for
labor performed or material furnished in connection with the construction of any Dwelling or
improvement on any Inventory, or (b) owe any duty to apply any undisbursed portion of the Loans to
the payment of any claim, or (c) owe any duty to exercise any right or power of Lenders hereunder
or arising from any Default or Event of Default by Borrower.

10.2 Successors and Assigns; Assignments and Participations.

     (a) The provisions of this Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns permitted hereby, except that Borrower
may not assign or otherwise transfer any of its rights or obligations hereunder without the prior
written consent of each Lender (and any attempted assignment or transfer by Borrower without such
consent shall be null and void). Nothing in this Agreement, expressed or implied, shall be
construed to confer upon any Person (other than the parties hereto, their respective successors and
assigns permitted hereby, and, to the extent expressly contemplated hereby, Indemnified Parties)
any legal or equitable right, remedy, or claim under or by reason of this Agreement.

     (b) Any Lender may assign to one or more Eligible Assignees all or a portion of its rights
under this Agreement (including all or a portion of its Revolving Credit Commitment, Revolving
Credit Notes, and Revolving Credit Loans (including for purposes of this Section 10.2(b)
participations in the

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Letter of Credit Exposure) at the time owing to it); provided that (i) except
in the case of an assignment of the entire remaining amount of the assigning Lender’s Revolving
Credit Commitment, Revolving Credit Notes, and Revolving Credit Loans at the time owing to it or in
the case of an assignment to a Lender or an Affiliate of a Lender, the aggregate amount of the
Revolving Credit Commitment (which for this purpose includes Revolving Credit Loans outstanding
thereunder) subject to each such assignment, determined as of the date the Assignment and
Acceptance Agreement with respect to such assignment is
delivered to Administrative Agent, shall not be less than $5,000,000 or a greater integral multiple
of $1,000,000 unless each of Administrative Agent and, so long as no Event of Default has occurred
and is continuing, Borrower otherwise consents (each such consent not to be unreasonably withheld
or delayed), (ii) each partial assignment shall be made as an assignment of a proportionate part of
all the assigning Lender’s rights under this Agreement with respect to the Revolving Credit
Commitment, Revolving Credit Notes, and Revolving Credit Loans assigned, (iii) the parties to each
assignment shall execute and deliver to Administrative Agent an Assignment and Acceptance
Agreement, together with a processing and recordation fee of $3,500, and (iv) the assignee Lender,
if it is not a Lender prior to the effectiveness of such assignment, shall deliver an
administrative questionnaire to Administrative Agent. Subject to acceptance and recording thereof
by Administrative Agent pursuant to Section 10.2(c), from and after the effective date specified in
each Assignment and Acceptance Agreement, the Eligible Assignee thereunder shall be a party hereto
and, to the extent of the interest assigned by such Assignment and Acceptance Agreement, have the
rights of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent
of the interest assigned by such Assignment and Acceptance Agreement, be released from its
obligations under this Agreement (and, in the case of an Assignment and Acceptance Agreement
covering all of the assigning Lender’s rights under this Agreement, such Lender shall cease to be a
party hereto but shall continue to be entitled to the benefits of Section 2.12(a) and Section
2.12(b), but only to the extent pertaining to the period such party was a Lender, and Section 8.6).
Upon request, Borrower shall execute and deliver new or replacement Revolving Credit Notes to the
assigning Lender and the assignee Lender. Any assignment or transfer by a Lender of rights under
this Agreement that does not comply with this Section 10.2(b) shall be treated for purposes of this
Agreement as a sale by such Lender of a participation in such rights in accordance with Section
10.2(d).

     (c) Administrative Agent, acting solely for this purpose as an agent of Borrower, shall
maintain at Administrative Agent’s office a copy of each Assignment and Acceptance Agreement
delivered to it and a register for the recordation of the names and addresses of Lenders, and the
Revolving Credit Commitments of, and principal amount of the Revolving Credit Loans and Letter of
Credit Exposure owing to, each Lender pursuant to the terms hereof from time to time (the
“Register”). The entries in the Register shall be conclusive, absent manifest error, and Borrower,
Administrative Agent, Letter of Credit Issuers, and Lenders may treat each Person whose name is
recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of
this Agreement, notwithstanding notice to the contrary. The Register shall be available for
inspection by Borrower, Administrative Agent, Letter of Credit Issuers, and Lenders, at any
reasonable time and from time to time upon reasonable prior notice.

     (d) Any Lender may, without the consent of, or notice to, Borrower, any Lender, or
Administrative Agent, sell participations to one (1) or more banks or other entities (a
“Participant”) in all or a portion of such Lender’s rights under this Agreement (including all or a
portion of its Revolving Credit Commitment, Revolving Credit Notes, and Revolving Credit Loans
(including such Lender’s participations in the Letter of Credit Exposure) owing to it); provided
that (i) such Lender’s obligations under this Agreement shall remain unchanged, (ii) such Lender
shall remain solely responsible to the other parties hereto for the performance of such
obligations, and (iii) Borrower, Administrative Agent, Letter of Credit Issuers, and Lenders shall
continue to deal solely and directly with such Lender in connection with such Lender’s rights under
this Agreement. Any agreement or instrument pursuant to which a Lender sells such a participation
shall provide that such Lender shall retain the sole right to

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enforce this Agreement and to approve
any amendment, modification, or waiver of any provision of this Agreement; provided that such
agreement or instrument may provide that such Lender will not, without the consent of the
Participant, agree to any amendment, waiver, or other modification that would (A) postpone any date
upon which any payment of money is scheduled to be paid to such Participant, (B) reduce the
principal, interest, fees, or other amounts payable to such Participant, or (C) release any
guarantor, except as expressly provided herein. To the extent permitted by Applicable Law, each
Participant also shall be entitled to the benefits of Section 2.11(a) as though it were a Lender,
provided that such Participant agrees to be subject to Section 2.11(b) as though it were a Lender.

     (e) Any Lender may at any time pledge or assign a security interest in all or any portion of
its rights under this Agreement (including under its Revolving Credit Notes, if any) to secure
obligations of such Lender, including any pledge or assignment to secure obligations to a Federal
Reserve Bank; provided that no such pledge or assignment shall release a Lender from any of its
obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto,
provided that (i) such Lender’s obligations under this Agreement shall remain unchanged, (ii) such
Lender shall remain solely responsible to the other parties hereto for the performance of such
obligations, and (iii) Borrower, Administrative Agent, Letter of Credit Issuers, and Lenders shall
continue to deal solely and directly with such Lender in connection with such Lender’s rights under
this Agreement.

     (f) If the consent of Borrower to an assignment or to an Eligible Assignee is required
hereunder (including a consent to an assignment which does not meet the minimum assignment
threshold specified in clause (i) of the proviso to the first sentence of Section 10.2(b)),
Borrower shall be deemed to have given its consent five (5) Business Days after the date notice
thereof has been delivered by the assigning Lender (through Administrative Agent) unless such
consent is expressly refused by Borrower prior to such fifth (5th) Business Day.

     (g) Notwithstanding anything to the contrary contained herein, if at any time Wachovia Bank
assigns all of its Revolving Credit Commitment, Revolving Credit Notes, and Revolving Credit Loans
pursuant to Section 10.2(b), then Wachovia Bank may, upon thirty (30) days’ notice to Borrower and
Lenders, resign as a Letter of Credit Issuer and Swingline Lender. In the event of any such
resignation as a Letter of Credit Issuer and Swingline Lender, Borrower shall be entitled to
appoint from among Lenders a successor Letter of Credit Issuer and Swingline Lender hereunder;
provided, however, that no failure by Borrower to appoint any such successor shall affect the
resignation of Wachovia Bank as a Letter of Credit Issuer and Swingline Lender. Wachovia Bank
shall retain all the rights and obligations of a Letter of Credit Issuer and Swingline Lender
hereunder with respect to all Swingline Loans and Letters of Credit outstanding as of the
effective date of its resignation as Swingline Lender and Letter of Credit Issuer and all Letter of
Credit Exposure with respect thereto (including the right to require Lenders to make Advances or
fund participations in unreimbursed amounts pursuant to Section 2.4(c)).

     (h) Under any circumstances set forth herein providing that Borrower shall have the right to
remove or replace a Lender as a party to this Agreement, Borrower may, upon notice to such Lender
and Administrative Agent, (i) remove such Lender by terminating such Lender’s Revolving Credit
Commitment, or (ii) replace such Lender by causing such Lender to assign its Revolving Credit
Commitment (without payment of any assignment fee) pursuant to Section 10.2(b) to one or more other
Lenders or Eligible Assignees procured by Borrower; provided, however, that if Borrower elects to
exercise such right with respect to any Lender pursuant to Section 2.12(d), it shall be obligated
to remove or replace, as the case may be, all Lenders that have made similar requests for
compensation pursuant to Section 2.12(a) or Section 2.12(b). Borrower shall (A) pay in full all
principal, interest, fees, and other amounts owing to such Lender through the date of termination
or assignment (including with respect to its indemnification obligations hereunder), (B) provide
appropriate assurances and indemnities (which may include letters of credit) to each Letter of
Credit Issuer as each Letter of Credit Issuer may

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reasonably require with respect to any continuing
obligation to purchase participation interests in any Letter of Credit Exposure then outstanding,
and (C) release such Lender from its obligations under the Loan Documents. Any Lender being
replaced shall execute and deliver an Assignment and Acceptance Agreement with respect to such
Lender’s Revolving Credit Commitment and outstanding Revolving Credit Loans. Administrative Agent
shall distribute an amended Schedule 2.1, which shall be deemed incorporated into this Agreement,
to reflect changes in the identities of any Lenders and adjustments of
their respective Revolving Credit Commitments and/or Commitment Ratios resulting from any such
removal or replacement. In order to make all Lenders’ interests in any outstanding Revolving
Credit Loans ratable in accordance with any revised Commitment Ratio after giving effect to the
removal or replacement of a Lender, Borrower shall pay or prepay, if necessary, on the effective
date thereof, all outstanding Revolving Credit Loans of all Lenders. Borrower may then request
Advances from Lenders in accordance with their revised Commitment Ratios. Borrower may net any
payments required hereunder against any funds being provided by any Lender or Eligible Assignee
replacing a terminating Lender. The effect for purposes of this Agreement shall be the same as if
separate transfers of funds had been made with respect thereto.

     10.3 Amendment and Waiver.

     (a) Except as otherwise specifically provided, (i) this Agreement may only be amended,
modified or waived by an instrument in writing executed jointly by Borrower and the Required
Lenders, and, in the case of any matter affecting Administrative Agent, by Administrative Agent,
and may only be supplemented by documents delivered or to be delivered in accordance with the
express terms hereof, and (ii) the other Loan Documents may only be the subject of an amendment,
modification, or waiver if Borrower and the Required Lenders, and, in the case of any matter
affecting Administrative Agent, Administrative Agent, have approved same.

     (b) Any amendment to or consent or waiver under any Loan Document which purports to accomplish
any of the following must be approved by Borrower and by Administrative Agent, Letter of Credit
Issuers, and all Lenders: (i) extends, postpones, or delays any date fixed by the Loan Documents
for any payment of all or any part of the Obligations payable to such Lender (including, without
limitation, the Maturity Date); (ii) reduces the rate or decreases the amount of any payment of
principal, interest, fees, or other sums payable to Administrative Agent, Letter of Credit Issuers,
or any such Lender hereunder (except such reductions as are contemplated by this Agreement); (iii)
changes the definition of “Required Lenders” or amends or modifies this Section 10.3(b) or any
other provisions of the Loan Documents that require the unanimous consent of all Lenders; (iv)
except as otherwise permitted by any Loan Document, releases (A) any guaranty, (B) all or
substantially all of any collateral, or (C) Borrower; or (v) amends or modifies (A) Section 2.9 in
a manner that would alter the pro rata sharing of payments required thereby, or (B) any other term
or provision hereof that expressly provides for the ratable treatment of Lenders with respect
thereto. Without the consent of such Lender, no Lender’s “Revolving Credit Commitment” may be
increased.

     (c) Any amendment to or consent or waiver under any Loan Document which would affect the
rights, obligations, or duties of Administrative Agent must be approved by Administrative Agent.
Any amendment to or consent or waiver under any Loan Document which would affect the rights,
obligations, or duties of any Letter of Credit Issuer must be approved by such Letter of Credit
Issuer. Any amendment to or consent or waiver under any Loan Document which would affect the
rights, obligations or duties of the Swingline Lender must be approved by the Swingline Lender.

     (d) Any conflict or ambiguity between the terms and provisions herein and terms and provisions
in any other Loan Document shall be controlled by the terms and provisions herein.

66

 

     (e) No course of dealing or any failure or delay by Administrative Agent, any Letter of Credit
Issuer, or any Lender or any of their respective representatives, officers, directors, employees,
attorneys, attorneys-in-fact, and agents with respect to exercising , any right, remedy, power or
privilege of any Administrative Agent, any Letter of Credit Issuer, or any Lender hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power
or privilege hereunder preclude any other or further exercise thereof or the exercise of any other
right, remedy, power or
privilege. The rights, remedies, powers and privileges herein provided are cumulative and not
exclusive of any rights, remedies, powers and privileges provided by law. A waiver must be in
writing and signed by Administrative Agent and the Required Lenders (or the affected Lenders or by
all Lenders, if required hereunder) to be effective, and such waiver will be effective only in the
specific instance and for the specific purpose for which it is given.

     (f) All communications from Administrative Agent to Lenders requesting Lenders’ determination,
consent, approval, or disapproval (i) shall be given in the form of a written notice to each
Lender, (ii) shall be accompanied by a description of the matter or thing as to which such
determination, approval, consent, or disapproval is requested, or shall advise each Lender where
such matter or thing may be inspected, or shall otherwise describe the matter or issue to be
resolved, (iii) shall include, if reasonably requested by a Lender and to the extent not previously
provided to such Lender, written materials and a summary of all oral information provided to
Administrative Agent by Borrower in respect of the matter or issue to be resolved, and (iv) shall
include Administrative Agent’s recommended course of action or determination in respect thereof.
Each Lender shall reply promptly, but in any event within ten (10) Business Days after such
Lender’s actual receipt (as determined by Administrative Agent) of the request from Administrative
Agent (in either event, the “Lender Reply Period”). If the Lender Reply Period is conspicuously
set forth in a written notice from Administrative Agent to a Lender, then unless such Lender shall
give written notice to Administrative Agent that it objects to the recommendation or determination
of Administrative Agent within the Lender Reply Period, such Lender shall be deemed to have
approved of or consented to such recommendation or determination if such written notice from
Administrative Agent shall conspicuously state that such approval or consent shall be deemed given
unless a response is received within the Lender Reply Period.

     10.4 Additional Obligations. Lenders shall be under no obligation to extend any loans to
Borrower other than as specifically set forth in this Agreement.

     10.5 Jurisdiction; Venue; Service of Process; Jury Trial. This Agreement shall be
governed by, and construed in accordance with, the laws of the State of North carolina; provided
that Administrative Agent, Letter of Credit Issuers, and Lenders shall retain all rights arising
under Federal Law. each party hereto, in each case for itself, its successors and assigns, hereby
(A) irrevocably submits to the nonexclusive jurisdiction of any north carolina state court or
Federal court of the United States of America sitting in charlotte, north carolina, and any
appellate court of any of the foregoing, and agrees and consents that service of process may be
made upon it in any legal proceeding arising out of or in connection with the Loan Documents and
the Obligations by service of process as provided by Applicable Laws of the State of North
carolina, (B) irrevocably waives, to the fullest extent permitted by all Applicable Laws, any
objection which it may now or hereafter have to the laying of venue of any litigation arising out
of or in connection with the Loan Documents and the Obligations brought in any such court, (C)
irrevocably waives any claims that any litigation brought in any such court has been brought in an
inconvenient forum, (D) agrees (in the case of Borrower) to designate an agent for service of
process in north carolina in connection with any such litigation (and Borrower hereby designates
and irrevocably appoints such agent as its true and lawful attorney-in-fact in the name, place, and
stead of Borrower to accept service of all writs,

67

 

process, and summonses in any such litigation)
and to deliver to Administrative Agent evidence thereof, (E) irrevocably consents to the service of
process out of any of the aforementioned courts in any such litigation by the mailing of copies
thereof by certified mail, return receipt requested, postage prepaid, at its address set forth
herein, (F) irrevocably agrees that any legal proceeding against any party hereto arising out of
or in connection with the Loan Documents or the Obligations may be brought in one of the
aforementioned courts, and (G) EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM,
DEMAND, ACTION, OR CAUSE OF ACTION ARISING UNDER ANY LOAN DOCUMENT OR IN ANY WAY CONNECTED WITH OR
RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO ANY LOAN
DOCUMENT, OR THE TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
ARISING, AND WHETHER FOUNDED IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND
CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL
WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF
THIS SECTION 10.5 WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE SIGNATORIES HERETO TO
THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

     10.6 Publicity. Subject to Borrower’s approval, Administrative Agent shall have the right to
incorporate the names of Lenders into signage placed upon the Loan Inventory. Each Lender shall
have the right to secure printed publicity through newspaper and other media concerning the
Inventory and source of financing.

     10.7 Foreign Lenders. Each Lender that is a “foreign corporation, partnership, or trust”
within the meaning of the Code (a “Foreign Lender”) shall deliver to Administrative Agent, prior to
receipt of any payment subject to withholding under the Code (or after accepting an assignment of
an interest herein), two (2) duly signed completed copies of either IRS Form W-8BEN or any
successor thereto (relating to such Person and entitling it to an exemption from, or reduction of,
withholding Tax on all payments to be made to such Person by Borrower pursuant to this Agreement or
any other Loan Document) or IRS Form W-8ECI or any successor thereto (relating to all payments to
be made to such Person by Borrower pursuant to this Agreement or any other Loan Document) or such
other evidence satisfactory to Borrower and Administrative Agent that such Person is entitled to an
exemption from, or reduction of, United States withholding Tax. Thereafter and from time to time,
each such Person shall (a) promptly submit to Administrative Agent such additional duly completed
and signed copies of one of such forms (or such successor forms as shall be adopted from time to
time by the relevant United States taxing authorities) as may then be available under then current
United States laws and regulations to avoid, or such evidence as is satisfactory to Borrower and
Administrative Agent of any available exemption from or reduction of, United States withholding
Taxes in respect of all payments to be made to such Person by Borrower pursuant to this Agreement
or any other Loan Document, (b) promptly notify Administrative Agent of any change in circumstances
which would modify or render invalid any claimed exemption or reduction, and (c) take such steps as
shall not be materially disadvantageous to it, in the reasonable judgment of such Lender, and as
may be reasonably necessary (including the re-designation of its applicable lending office) to
avoid any requirement of Applicable Laws that Borrower make any deduction or withholding for Taxes
from amounts payable to such Person. If such Person fails to deliver the above forms or other
documentation, then Administrative Agent may withhold from any interest payment to such Person an
amount equivalent to the applicable withholding Tax imposed by Sections 1441 and 1442 of the Code,
without reduction. If any Governmental Authority asserts that Administrative Agent did not
properly withhold any Tax or other amount from payments made in respect of such Person as a result
of such Person’s failure to deliver the necessary forms or other documentation as set forth in this
Section 10.7, then such Person shall indemnify Administrative Agent therefor,

68

 

including all
penalties and interest, any Taxes imposed by any jurisdiction on the amounts payable to
Administrative Agent under this Section 10.7, and costs and expenses (including attorneys’ fees and
expenses) of Administrative Agent. Should a Lender, which is otherwise exempt from or subject to a
reduced withholding Tax which arises from any payment made under this Agreement or any other Loan
Document, become subject to Taxes because of its failure to deliver any
form, documentation, or notification required in this Section 10.7, Borrower and Administrative
Agent shall take such steps as such Lender shall reasonably request, at such Lender’s sole cost and
expense, to assist such Lender to recover such Taxes. The obligation of Lenders under this Section
10.7 shall survive the payment of all of the Obligations and the resignation or replacement of
Administrative Agent.

     10.8 Invalidation of Provisions. If any provision of this Agreement or the other Loan
Documents is held to be illegal, invalid or unenforceable, (a) the legality, validity and
enforceability of the remaining provisions of this Agreement and the other Loan Documents shall not
be affected or impaired thereby; and (b) the parties shall endeavor in good faith negotiations to
replace the illegal, invalid or unenforceable provisions with valid provisions the economic effect
of which comes as close as possible to that of the illegal, invalid or unenforceable provisions.
The invalidity of a provision in a particular jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

     10.9 Execution in Counterparts. This Agreement may be executed in multiple counterparts, each
of which shall be deemed to be an original, but all of which shall constitute one and the same
instrument.

     10.10 Captions. The captions herein are inserted only as a matter of convenience and for
reference and in no way define, limit or describe the scope of this Agreement or the intent of any
provision hereof.

10.11 Notices and other Communications; Facsimile Copies.

     (a) General. Unless otherwise expressly provided herein, all notices and other
communications provided for hereunder shall be in writing (including by facsimile transmission).
All such written notices shall be mailed certified or registered mail, faxed or delivered to the
applicable address, facsimile number or (subject to subsection (b) below) electronic mail address,
and all notices and other communications expressly permitted hereunder to be given by telephone
shall be made to the applicable telephone number, as follows:

     (i) if to Borrower, Administrative Agent or a Letter of Credit Issuer, to the address,
facsimile number, electronic mail address or telephone number specified for such Person on
Schedule 2.1 hereto or to such other address, facsimile number, electronic mail address or
telephone number as shall be designated by such party in a notice to the other parties; and

     (ii) if to any other Lender, to the address, facsimile number, electronic mail address
or telephone number specified in its Administrative Questionnaire or to such other address,
facsimile number, electronic mail address or telephone number as shall be designated by such
party in a notice to Borrower, Administrative Agent and the applicable Letter of Credit
Issuer. Notices sent by hand or overnight courier service, or mailed by certified or
registered mail, shall be deemed to have been given when received; notices sent by facsimile
shall be deemed to have been given when sent (except that, if not given during normal
business hours for the recipient, shall be deemed to have been given at the opening of
business on the next business day for the recipient). Notices delivered through electronic
communications to the extent provided in subsection (b) below, shall be effective as
provided in such subsection (b).

69

 

     (b) Electronic Communications. Notices and other communications to Lenders hereunder
may be delivered or furnished by electronic communication (including e mail and Internet or
intranet websites) pursuant to procedures approved by Administrative Agent, provided that the
foregoing shall not
apply to notices to any Lender pursuant to Article 2 if such Lender has notified Administrative
Agent that it is incapable of receiving notices under such Article by electronic communication.
Administrative Agent or Borrower may, in its discretion, agree to accept notices and other
communications to it hereunder by electronic communications pursuant to procedures approved by it,
provided that approval of such procedures may be limited to particular notices or communications.

     (c) Effectiveness of Facsimile Documents and Signatures. Loan Documents may be
transmitted and/or signed by facsimile. The effectiveness of any such documents and signatures
shall, subject to Applicable Law, have the same force and effect as manually-signed originals and
shall be binding on all Loan Parties, Administrative Agent and Lenders. Administrative Agent may
also require that any such documents and signatures be confirmed by a manually-signed original
thereof; provided, however, that the failure to request or deliver the same shall not limit the
effectiveness of any facsimile document or signature.

     (d) Reliance by Administrative Agent and Lenders. Administrative Agent and Lenders
shall be entitled to rely and act upon any notices (including telephonic Request for Advance)
purportedly given by or on behalf of Borrower even if (i) such notices were not made in a manner
specified herein, were incomplete or were not preceded or followed by any other form of notice
specified herein, or (ii) the terms thereof, as understood by the recipient, varied from any
confirmation thereof. Borrower shall indemnify each Agent-Related Person and each Lender from all
losses, costs, expenses and liabilities resulting from the reliance by such Person on each notice
purportedly given by or on behalf of Borrower. All telephonic notices to and other communications
with Administrative Agent may be recorded by Administrative Agent, and each of the parties hereto
hereby consents to such recording.

     10.12 Confidentiality. Each of Administrative Agent, Letter of Credit Issuers, and Lenders
agrees to maintain the confidentiality of the Information (as defined below), except that
Information may be disclosed (a) to its and its Affiliates’ directors, officers, employees,
representatives, and agents including accountants, legal counsel, and other advisers (it being
understood that the Persons to whom such disclosure is made will be informed of the confidential
nature of such Information and instructed and required to keep such Information confidential), (b)
to the extent requested by any Governmental Authority (including, without limitation, any bank
regulatory agency or representative thereof), (c) to the extent required by Applicable Laws or by
any subpoena or other similar legal process, (d) to any other party to this Agreement, (e) in
connection with the exercise of any remedies hereunder or any suit, action, or proceeding related
to this Agreement or the enforcement of rights hereunder, (f) subject to an agreement containing
provisions substantially the same as this Section 10.12, to (i) any actual or prospective Eligible
Assignee of or Participant in, any of its rights or obligations under, this Agreement, or (ii) any
direct or indirect counterparty or prospective counterparty (or its advisor) to any credit
derivative transaction, swap transaction or securitization relating to the obligations or rights of
the Borrower hereunder, (g) with the consent of Borrower, or (h) to the extent such Information (i)
becomes publicly available other than as a result of breach of this Section 10.12, or (ii) becomes
available to Administrative Agent, any Letter of Credit Issuer, or any Lender on a non-confidential
basis from a source other than Borrower. In connection with any proposed disclosure contemplated
in (b) or (c) above, Administrative Agent, Letter of Credit Issuers, and Lenders agree to exercise
their reasonable best efforts unless prohibited by Applicable Laws or legal process to provide
Borrower prompt notice of any such request or requirement in order to enable Borrower to seek an
appropriate protective order and to reasonably cooperate with Borrower at Borrower’s sole cost and
expense to obtain such order. For purposes of this Section 10.12, “Information” means all
confidential or proprietary information received from Borrower related to Borrower or its business,
assets, or liabilities, other than any such information

70

 

that is available to or known by
Administrative Agent, any Letter of Credit Issuer, or any Lender on a non-confidential basis prior
to disclosure by Borrower; provided that, in the case of information received from Borrower after
the date hereof, such information is
clearly identified in writing at the time of delivery as confidential. Any Person required to
maintain the confidentiality of Information as provided in this Section 10.12 shall be considered
to have complied with its obligation to do so if such Person has exercised the same degree of care
to maintain the confidentiality of such Information as such Person would accord its own
confidential information.

     10.13 USA PATRIOT Act Notice. Each Lender and Administrative Agent (for itself and not on
behalf of any Lender) hereby notifies Borrower that pursuant to the requirements of the USA Patriot
Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Act”), it is required to
obtain, verify and record information that identifies Borrower, which information includes the name
and address of Borrower and other information that will allow such Lender or Administrative Agent,
as applicable, to identify Borrower in accordance with the Act.

     10.14 ENTIRE AGREEMENT. THIS AGREEMENT (AS AMENDED IN WRITING FROM TIME TO TIME) AND THE
OTHER WRITTEN LOAN DOCUMENTS EXECUTED BY BORROWER AND/OR ANY OTHER PARTY HERETO (TOGETHER WITH ALL
COMMITMENT LETTERS AND FEE LETTERS AS THEY MAY RELATE TO THE PAYMENT OF FEES AFTER THE AGREEMENT
DATE) REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS AMONG THE PARTIES. THERE ARE NO UNWRITTEN
ORAL AGREEMENTS AMONG THE PARTIES.

[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK;

SIGNATURE PAGES FOLLOW.]

71

 

     IN WITNESS WHEREOF, the parties have executed this Revolving Credit Agreement as of the day
and year first written above.

	 	 	 	 	 	 	 
	 	 	BORROWER:	 	 
	 
	 	 	 	 	 	 
	 	 	D.R. HORTON, INC., a Delaware corporation	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Bill W. Wheat	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Bill W. Wheat	 	 
	 

	 	Title:
	 	 Chief Financial Officer	 	 
	 
	 	 	 	 	 	 
	 	 	WACHOVIA BANK, NATIONAL ASSOCIATION, as Administrative Agent	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ R. Scott Holtzapple	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	R. Scott Holtzapple	 	 
	 

	 	Title:
	 	 SVP	 	 
	 
	 	 	 	 	 	 
	 	 	WACHOVIA BANK, NATIONAL ASSOCIATION,

as a Lender, Swingline Lender and a Letter of Credit Issuer	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ R. Scott Holtzapple	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	R. Scott Holtzapple	 	 
	 

	 	Title:
	 	 SVP	 	 
	 
	 	 	 	 	 	 
	 	 	THE ROYAL BANK OF SCOTLAND PLC, as a Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Maria Amaral-LeBlanc	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Maria Amaral-LeBlanc	 	 
	 

	 	Title:
	 	 Senior Vice President	 	 

 

 

	 	 	 	 	 	 	 
	 	 	BANK OF AMERICA, N.A., as a Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Mark W. Lariviere
	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Mark W. Lariviere	 	 
	 

	 	Title:
	 	Senior Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	CALYON NEW YORK BRANCH, as a Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Samuel L. Hill	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Samuel L. Hill	 	 
	 

	 	 	 	Managing Director	 	 
	 

	 	By:
	 	/s/ David P. Cagle	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	David P. Cagle	 	 
	 

	 	 	 	Managing Director	 	 
	 
	 	 	 	 	 	 
	 	 	CITICORP, N.A., as a Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Marni McManus	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Marni McManus	 	 
	 

	 	Title:
	 	Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	JPMORGAN CHASE BANK, N.A., as a Lender	 	 
	 
	 	 	 	 	 	 
	 
	 	By:	 	/s/ Kent Kaiser	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Kent Kaiser	 	 
	 

	 	Title:
	 	Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	UBS LOAN FINANCE LLC, as a Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Irja R. Otsa	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Irja R. Otsa	 	 
	 

	 	Title:
	 	Associate Director Banking Products Services, US	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Marie A. Haddad	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Marie A. Haddad	 	 
	 

	 	Title:
	 	Associate Director Banking Products Services, US	 	 

 

 

	 	 	 	 	 	 	 
	 	 	BNP PARIBAS, as a Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Richard Pace
	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Richard Pace	 	 
	 

	 	Title:
	 	Managing Director	 	 
	 

	 	By:
	 	/s/ Angela B. Arnold	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Angela B. Arnold	 	 
	 

	 	Title:
	 	Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	SUNTRUST BANK, as a Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ W. John Wendler	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	W. John Wendler	 	 
	 

	 	Title:
	 	Senior Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	U.S. BANK NATIONAL ASSOCIATION, as a Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ John D. Kuykendall	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	John D. Kuykendall	 	 
	 

	 	Title:
	 	Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	WASHINGTON MUTUAL BANK, as a Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Cyndi Lopez	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Cyndi Lopez	 	 
	 

	 	Title:
	 	Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	AMSOUTH BANK, as a Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Ronny Hudspeth	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Ronny Hudspeth	 	 
	 

	 	Title:
	 	Sr. Vice President	 	 

 

 

	 	 	 	 	 	 	 
	 	 	THE BANK OF NOVA SCOTIA, as a Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ William E. Zarrett
	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	William E. Zarrett	 	 
	 

	 	Title:
	 	Managing Director	 	 
	 
	 	 	 	 	 	 
	 	 	SCOTIABANC INC., as a Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ William E. Zarrett	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	William E. Zarrett	 	 
	 

	 	Title:
	 	Managing Director	 	 
	 
	 	 	 	 	 	 
	 	 	BARCLAYS BANK PLC, as a Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Alison A. McGuigan	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Alison A. McGuigan	 	 
	 

	 	Title:
	 	Associate Director	 	 
	 
	 	 	 	 	 	 
	 	 	COMERICA BANK, as a Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Casey L. Ostrander	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Casey L. Ostrander	 	 
	 

	 	Title:
	 	Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	FANNIE MAE, as a Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Wayne R. Curtis	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Wayne R. Curtis	 	 
	 

	 	Title:
	 	Vice President	 	 

 

 

	 	 	 	 	 	 	 
	 	 	LLOYDS TSB BANK PLC, as a Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Windsor Davies	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Windsor Davies	 	 
	 

	 	Title:
	 	Director Corporate Banking USA	 	 
	 

	 	By:
	 	/s/ Andrew R. Roberts	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Andrew R. Roberts	 	 
	 

	 	Title:
	 	VP, Corporate Banking	 	 
	 
	 	 	 	 	 	 
	 	 	NATEXIS BANQUES POPULAIRES, as a Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Marie-Edith Dugeny / Guillaume de Parscau	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Marie-Edith Dugeny	 	 
	 

	 	Title:
	 	Real Estate Group Manager	 	 
	 

	 	By:
	 	/s/ Guillaume de Parscau	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Guillaume de Parscau	 	 
	 

	 	Title:
	 	FVP Head of Business Development	 	 
	 
	 	 	 	 	 	 
	 	 	GUARANTY BANK, as a Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Douglas A. Dixon	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Douglas A. Dixon	 	 
	 

	 	Title:
	 	Senior Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	EMIGRANT BANK, as a Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Patricia Goldstein	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Patricia Goldstein	 	 
	 

	 	Title:
	 	Senior EVP & Chief Credit Officer	 	 

 

 

	 	 	 	 	 	 	 
	 	 	PNC BANK, NA, as a Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Douglas G. Paul
	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Douglas G. Paul	 	 
	 

	 	Title:
	 	Senior Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	THE GOVERNOR AND COMPANY OF THE BANK OF IRELAND, as a Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ David Hickey	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	David Hickey	 	 
	 

	 	Title:
	 	Authorised Signatory	 	 
	 

	 	By:
	 	/s/ Frank Schmitt	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Frank Schmitt	 	 
	 

	 	Title:
	 	Authorised Signatory	 	 
	 
	 	 	 	 	 	 
	 	 	CALIFORNIA BANK & TRUST, a California banking corporation,
as a Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Robert E. Cooper, Jr.	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Robert E. Cooper, Jr.	 	 
	 

	 	Title:
	 	Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	CITY NATIONAL BANK, a national banking association, as a

Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Mary Bowman	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Mary Bowman	 	 
	 

	 	Title:
	 	SVP	 	 

 

 

	 	 	 	 	 	 	 
	 	 	FIFTH THIRD BANK, as a Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Mike Madenhall
	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Mike Madenhall	 	 
	 

	 	Title:
	 	Assistant Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	MIZUHO CORPORATE BANK, LTD., as a Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Raymond Ventura	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Raymond Ventura	 	 
	 

	 	Title:
	 	Deputy General Manager	 	 
	 
	 	 	 	 	 	 
	 	 	SOCIÉTÉ GÉNÉRALE, as a Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Kimberly Metzger	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Kimberly Metzger	 	 
	 

	 	Title:
	 	Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	UNION BANK OF CALIFORNIA N.A., as a Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Kevin Jordan	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	 Kevin Jordan	 	 
	 

	 	Title:
	 	 SVP	 	 
	 
	 	 	 	 	 	 
	 	 	CHEVY CHASE BANK, F.S.B., as a Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Michael A. Muñoz	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Michael A. Muñoz	 	 
	 

	 	Title:
	 	Vice President	 	 
	 
	 	 	 	 	 	 

 

 

	 	 	 	 	 	 	 
	 	 	COMPASS BANK, as a Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Helen L. Chase
	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Helen L. Chase	 	 
	 

	 	Title:
	 	Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	AMERICAN SAVINGS BANK FSB, as a Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Larry Ishii	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Larry Ishii	 	 
	 

	 	Title:
	 	Vice President	 	 
	 

	 	By:
	 	/s/ Darrell Yamagata	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Darrell Yamagata	 	 
	 

	 	Title:
	 	Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	BANK OF HAWAII, as a Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Brian H. Uemori	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Brian H. Uemori	 	 
	 

	 	Title:
	 	Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	FIRST COMMERCIAL BANK NEW YORK AGENCY, as a Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Bruce M.J. Ju	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Bruce M.J. Ju	 	 
	 

	 	Title:
	 	V.P. & General Manager	 	 
	 
	 	 	 	 	 	 
	 	 	FIRST HAWAIIAN BANK, as a Lender	 	 
	 

	 	By:
	 	/s/ Stephen M. Franklin	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Stephen M. Franklin	 	 
	 

	 	Title:
	 	Vice President	 	 
	 
	 	 	 	 	 	 

 

 

	 	 	 	 	 	 	 
	 	 	THE NORTHERN TRUST COMPANY, as a Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ John E. Burda	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	John E. Burda	 	 
	 

	 	Title:
	 	Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	CHANG HWA COMMERCIAL BANK, LTD., NEW YORK BRANCH, as
a Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Jim C.Y. Chen	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Jim C.Y. Chen	 	 
	 

	 	Title:
	 	VP & General Manager	 	 
	 
	 	 	 	 	 	 
	 	 	LEGACY TEXAS BANK, as a Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/Eric Sonneborn	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Eric Sonneborn	 	 
	 

	 	Title:
	 	Senior Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	THE INTERNATIONAL COMMERCIAL BANK OF CHINA, NEW YORK

AGENCY, as a Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Nae-Yee Lung	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Nae-Yee Lung	 	 
	 

	 	Title:
	 	EVP & General Manager	 	 
	 
	 	 	 	 	 	 

 

 

SCHEDULE 2.1

REVOLVING CREDIT COMMITMENTS, COMMITMENT RATIOS, AND

ADDRESSES FOR NOTICE

	 	 	 
	BORROWER:

	 	ADDRESS
	 
	 	 
	D.R. Horton, Inc.

	 	301 Commerce Street
	 

	 	Suite 500
	 

	 	Fort Worth, Texas 76102
	 

	 	Attn: Samuel R. Fuller
	 

	 	Bill W. Wheat
	 

	 	Stacey H. Dwyer
	 

	 	Tel: 817-390-8200
	 

	 	Fax: 817-390-1715 (Mr. Fuller)
	 

	 	Fax: 972-620-6813 (Mr. Wheat)
	 

	 	Fax: 817-390-1715 (Ms. Dwyer)
	 

	 	E-mail: sfuller@drhorton.com
	 

	 	             bwheat@drhorton.com
	 

	 	             sdwyer@drhorton.com
	 
	 	 
	 

	 	With a copy to:
	 
	 	 
	 

	 	301 Commerce Street
	 

	 	Suite 500
	 

	 	Fort Worth, Texas 76102
	 

	 	Attn: Ted I. Harbour, Esq.
	 

	 	Tel: 817-390-8200
	 

	 	Fax: 972-620-6863
	 

	 	E-mail: tharbour@drhorton.com
	 
	 	 
	ADMINISTRATIVE AGENT:

	 	ADDRESS
	 
	 	 
	Wachovia Bank, National

	 	401 S. Tryon St, NC1193
	Association

	 	Charlotte, NC 28288
	 

	 	Attn: R. Scott Holtzapple, Senior Vice
	 

	 	President, REFS Risk Management
	 

	 	Tel: 704-383-0474
	 

	 	Fax: 704-383-7146
	 

	 	E-mail: scott.holtzapple@wachovia.com
	 
	 	 
	 

	 	With a copy to:
	 
	 	 
	 

	 	One West Fourth St, NC6256
	 

	 	Winston-Salem, NC 27101
	 

	 	Attn: Kevin M. Cole I, Assistant Vice
	 

	 	President, REFS Risk Management
	 

	 	Tel: 336-747-9017
	 

	 	Fax: 336-747-8879
	 

	 	E-mail: kevin.cole@wachovia.com

81

 

	 	 	 
	LETTER OF CREDIT ISSUER(S):

	 	ADDRESS
	 
	 	 
	Wachovia Bank, National

	 	401 S. Tryon St, NC1193
	Association

	 	Charlotte, NC 28288
	 

	 	Attn: R. Scott Holtzapple, Senior
	 

	 	Vice President, REFS Risk Management
	 

	 	Tel: 704-383-0474
	 

	 	Fax: 704-383-7146
	 

	 	E-mail: scott.holtzapple@wachovia.com

	 	 	 	 	 	 	 	 	 	 	 
	LENDERS:

	 	 
	 	 	 	 
	 
	LENDER

	 	ADDRESS
	 	COMMITMENT

	 	COMMITMENT RATIO

	 
	 	 	 	 	 	 	 	 	 	 
	Wachovia Bank, National

	 	106 West Maple Street, GA8710	 	 	 	 	 	 	 	 
	Association

	 	Cumming, GA 30040	 	 	 	 	 	 	 	 
	 

	 	Attn: Jeff Hoza	 	 	 	 	 	 	 	 
	 

	 	Tel: 770-781-6430	 	 	 	 	 	 	 	 
	 

	 	Fax:   770-781-6461	 	 	 	 	 	 	 	 
	 

	 	E-mail: jeff.hoza@wachovia.com	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	The Royal Bank of Scotland PLC

	 	101 Park Avenue, 12th floor	 	 	 	 	 	 	 	 
	 

	 	New York, New York 10178	 	 	 	 	 	 	 	 
	 

	 	Attn: David Apps	 	 	 	 	 	 	 	 
	 

	 	Tel: 212-401-3745	 	 	 	 	 	 	 	 
	 

	 	Fax: 212-401-3456	 	 	 	 	 	 	 	 
	 

	 	E-mail: david.apps@rbos.com	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Bank of America, N.A.

	 	231 S. LaSalle Street, 10th floor	 	 	 	 	 	 	 	 
	 

	 	Chicago, IL 60604	 	 	 	 	 	 	 	 
	 

	 	Attn: Stephen Carlson	 	 	 	 	 	 	 	 
	 

	 	Tel: 312-828-6405	 	 	 	 	 	 	 	 
	 

	 	Fax: 312-974-4970	 	 	 	 	 	 	 	 
	 

	 	E-mail: stephen.carlson@bankofamerica.com	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Calyon New York Branch

	 	2200 Ross Avenue, Suite 4400 West	 	 	 	 	 	 	 	 
	 

	 	Dallas, TX 75201	 	 	 	 	 	 	 	 
	 

	 	Attn: Robert Nelson	 	 	 	 	 	 	 	 
	 

	 	Tel: 214-220-2333	 	 	 	 	 	 	 	 
	 

	 	Fax: 214-220-2323	 	 	 	 	 	 	 	 
	 

	 	E-mail: robert.nelson@us.calyon.com	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Citicorp, N.A.

	 	390 Greenwich Street	 	 	 	 	 	 	 	 
	 

	 	New York, NY 10013	 	 	 	 	 	 	 	 
	 

	 	Attn: Malav Kakad	 	 	 	 	 	 	 	 
	 

	 	Tel: 212-723-4693	 	 	 	 	 	 	 	 
	 

	 	Fax: 646-291-3638	 	 	 	 	 	 	 	 
	 

	 	E-mail: malav.kakad@citigroup.com	 	 	 	 	 	 	 	 

82

 

	 	 	 	 	 	 	 	 	 	 	 
	JPMorgan Chase Bank, N.A.

	 	707 Travis 6th Floor	 	 	 	 	 	 	 	 
	 

	 	Houston TX, 77002	 	 	 	 	 	 	 	 
	 

	 	Attn: Kent Kaiser

Tel: 713-216-8699	 	 	 	 	 	 	 	 
	 

	 	Fax: 713-216-6190	 	 	 	 	 	 	 	 
	 

	 	E-mail: Kent.kaiser@chase.com	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	UBS Loan Finance LLC

	 	UBS AG, Stamford Branch	 	 	 	 	 	 	 	 
	 

	 	677 Washington Boulevard	 	 	 	 	 	 	 	 
	 

	 	Stamford, CT 06901	 	 	 	 	 	 	 	 
	 

	 	6-South	 	 	 	 	 	 	 	 
	 

	 	Attn: Anthony Finocchi	 	 	 	 	 	 	 	 
	 

	 	Tel: 203-719-3377	 	 	 	 	 	 	 	 
	 

	 	Fax: 203-719-3888	 	 	 	 	 	 	 	 
	 

	 	E-mail: anthony.finocchi@ubs.com	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	BNP Paribas

	 	787 Seventh Avenue	 	 	 	 	 	 	 	 
	 

	 	New York, NY 10019	 	 	 	 	 	 	 	 
	 

	 	Attn: Duane Helkowski	 	 	 	 	 	 	 	 
	 

	 	Tel: 212-841-2940	 	 	 	 	 	 	 	 
	 

	 	Fax: 212-841-3830	 	 	 	 	 	 	 	 
	 

	 	E-mail: duane.helkowski@americas.bnpparibas.com	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	SunTrust Bank

	 	8330 Boone Blvd., 8th Floor	 	 	 	 	 	 	 	 
	 

	 	Vienna, VA 22182	 	 	 	 	 	 	 	 
	 

	 	Attn: W. John Wendler	 	 	 	 	 	 	 	 
	 

	 	Tel: 703-442-1563	 	 	 	 	 	 	 	 
	 

	 	Fax: 703-442-1570	 	 	 	 	 	 	 	 
	 

	 	E-mail: john.wendler@suntrust.com	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	U.S. Bank National Association

	 	14241 Dallas Parkway, Suite 490	 	 	 	 	 	 	 	 
	 

	 	Dallas, TX 75254	 	 	 	 	 	 	 	 
	 

	 	Attn: John D. Kuykendall	 	 	 	 	 	 	 	 
	 

	 	Tel: 972-458-4502	 	 	 	 	 	 	 	 
	 

	 	Fax: 972-386-8370	 	 	 	 	 	 	 	 
	 

	 	E-mail: John.kuykendall@usbank.com	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Washington Mutual Bank

	 	3929 W. John Carpenter Hwy.	 	 	 	 	 	 	 	 
	 

	 	Irving, TX 75063	 	 	 	 	 	 	 	 
	 

	 	Attn: Cyndi Lopez	 	 	 	 	 	 	 	 
	 

	 	Tel: 214-492-4371	 	 	 	 	 	 	 	 
	 

	 	Fax: 972-870-3603	 	 	 	 	 	 	 	 
	 

	 	E-mail: cyndi.r.lopez@wamu.net	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	AmSouth Bank

	 	1900 5th Avenue N., BAC 15	 	 	 	 	 	 	 	 
	 

	 	Birmingham, AL 35203	 	 	 	 	 	 	 	 
	 

	 	Attn: Ronny Hudspeth	 	 	 	 	 	 	 	 
	 

	 	Tel: 205-307-4227	 	 	 	 	 	 	 	 
	 

	 	Fax: 205-801-0138	 	 	 	 	 	 	 	 
	 

	 	E-mail: rhudspeth@amsouth.com	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	The Bank of Nova Scotia

	 	600 Peachtree St. N.E., Suite 2700	 	 	 	 	 	 	 	 
	 

	 	Atlanta, GA 30308	 	 	 	 	 	 	 	 

83

 

	 	 	 	 	 	 	 	 	 	 	 
	 

	 	Attn: Dana Maloney	 	 	 	 	 	 	 	 
	 

	 	Tel: 404-877-1524	 	 	 	 	 	 	 	 
	 

	 	Fax: 404-888-8998	 	 	 	 	 	 	 	 
	 

	 	E-mail: dana_maloney@scotiacapital.com	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Scotiabanc, Inc.

	 	600 Peachtree Street NE, Suite 2700	 	 	 	 	 	 	 	 
	 

	 	Atlanta, GA 30308	 	 	 	 	 	 	 	 
	 

	 	Attn: Chris Allen	 	 	 	 	 	 	 	 
	 

	 	Tel: 404-877-1501	 	 	 	 	 	 	 	 
	 

	 	Fax: 404-888-8998	 	 	 	 	 	 	 	 
	 

	 	E-mail: chris_allen@scotiacapital.com	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Barclays Bank PLC

	 	200 Park Avenue, 4th Floor	 	 	 	 	 	 	 	 
	 

	 	New York, NY 10166	 	 	 	 	 	 	 	 
	 

	 	Attn: Nicholas Bell	 	 	 	 	 	 	 	 
	 

	 	Tel: 212-412-4029	 	 	 	 	 	 	 	 
	 

	 	Fax: 212-412-7600	 	 	 	 	 	 	 	 
	 

	 	E-mail: nicholas.bell@barcap.com	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Comerica Bank

	 	500 Woodward Avenue	 	 	 	 	 	 	 	 
	 

	 	7th Floor; MC: 3256	 	 	 	 	 	 	 	 
	 

	 	Detroit, MI 48091	 	 	 	 	 	 	 	 
	 

	 	Attn: Casey L. Ostrander	 	 	 	 	 	 	 	 
	 

	 	Tel: 313-222-5286	 	 	 	 	 	 	 	 
	 

	 	Fax: 313-222-9295	 	 	 	 	 	 	 	 
	 

	 	E-mail: casey_ostrander@comerica.com	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Fannie Mae

	 	International Plaza II	 	 	 	 	 	 	 	 
	 

	 	14221 Dallas Parkway	 	 	 	 	 	 	 	 
	 

	 	Dallas, TX 75252	 	 	 	 	 	 	 	 
	 

	 	Attn: Joseph Kankam	 	 	 	 	 	 	 	 
	 

	 	Tel: 214-242-8188	 	 	 	 	 	 	 	 
	 

	 	Fax: 972-767-0222	 	 	 	 	 	 	 	 
	 

	 	E-mail: joseph_s_kankam@fanniemae.com	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Lloyd’s TSB Bank, PLC

	 	1251 Avenue of Americas, 39th floor	 	 	 	 	 	 	 	 
	 

	 	New York, NY 100200	 	 	 	 	 	 	 	 
	 

	 	Attn: Windsor Davies, Director, Global Corporate	 	 	 	 	 	 	 	 
	 

	 	Tel: 212-930-8909	 	 	 	 	 	 	 	 
	 

	 	Fax: 212-930-5098	 	 	 	 	 	 	 	 
	 

	 	E-mail: wdavies@loydstsb-usb.com	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Natexis Banques Populaires

	 	1251 Avenue of Americas, 34th floor	 	 	 	 	 	 	 	 
	 

	 	New York, NY 10020	 	 	 	 	 	 	 	 
	 

	 	Attn: Marie-Edith Dungeny	 	 	 	 	 	 	 	 
	 

	 	Tel: 212-872-5132	 	 	 	 	 	 	 	 
	 

	 	Fax: 212-354-9095	 	 	 	 	 	 	 	 
	 

	 	E-mail: marie-edith.dugeny@nyc.nxbo.com	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Guaranty Bank

	 	8333 Douglas Avenue	 	 	 	 	 	 	 	 
	 

	 	Dallas, TX 75225	 	 	 	 	 	 	 	 
	 

	 	Attn: Dustin Ortmann	 	 	 	 	 	 	 	 

84

 

	 	 	 	 	 	 	 	 	 	 	 
	 

	 	Tel: 214-360-2672	 	 	 	 	 	 	 	 
	 

	 	Fax: 214-360-4892	 	 	 	 	 	 	 	 
	 

	 	Email: dustin.ortmann@guarantygroup.com	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Emigrant Savings Bank a division

	 	400 Continental Blvd., Suite 600	 	 	 	 	 	 	 	 
	of New York Bank & Trust

	 	El Segundo, CA 90245	 	 	 	 	 	 	 	 
	 

	 	Attn: David J. Feingold	 	 	 	 	 	 	 	 
	 

	 	Tel: 310-426-2166	 	 	 	 	 	 	 	 
	 

	 	Fax: 212-850-3871	 	 	 	 	 	 	 	 
	 

	 	E-mail: feingoldd@emigrant.com	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	PNC Bank, NA

	 	Two Tower Center, 18th Floor	 	 	 	 	 	 	 	 
	 

	 	East Brunswick, NJ 08816	 	 	 	 	 	 	 	 
	 

	 	Attn: Douglas Paul	 	 	 	 	 	 	 	 
	 

	 	Tel: 732-220-3566	 	 	 	 	 	 	 	 
	 

	 	Fax: 732-220-3755	 	 	 	 	 	 	 	 
	 

	 	E-mail: douglas.paul@pnc.com	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	The Governor and Company of the

	 	Bank of Ireland Corporate	 	 	 	 	 	 	 	 
	Bank of Ireland

	 	B2, Head Office	 	 	 	 	 	 	 	 
	 

	 	Lowe Baggot St.	 	 	 	 	 	 	 	 
	 

	 	Dublin 2, Ireland	 	 	 	 	 	 	 	 
	 

	 	Attn: Ciaran Doyle	 	 	 	 	 	 	 	 
	 

	 	Tel: +353 1 604 4707	 	 	 	 	 	 	 	 
	 

	 	Fax: +353 1 604 4798	 	 	 	 	 	 	 	 
	 

	 	E-mail: ciarandoyle@boimail.com	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	California Bank & Trust, a

	 	2929 N. Central Avenue, Suite 1200	 	 	 	 	 	 	 	 
	California banking corporation

	 	Phoenix, AZ 85012	 	 	 	 	 	 	 	 
	 

	 	Attn: Robert Cooper, Vice President	 	 	 	 	 	 	 	 
	 

	 	Tel: 602-241-2205	 	 	 	 	 	 	 	 
	 

	 	Fax: 602-230-1345	 	 	 	 	 	 	 	 
	 

	 	E-mail: rcooper1@calbt.com	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	City National Bank, a national
	 	 	 	 	 	 	 	 	 	 
	banking association

	 	2001 N. Main St. #200	 	 	 	 	 	 	 	 
	 

	 	Walnut Creek, CA 94596	 	 	 	 	 	 	 	 
	 

	 	Attn: Xavier Barrera Gonzalez	 	 	 	 	 	 	 	 
	 

	 	Tel: 925-274-2783	 	 	 	 	 	 	 	 
	 

	 	Fax: 925-274-2758	 	 	 	 	 	 	 	 
	 

	 	E-mail: xavier.barreragonzalez@cnb.com	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Fifth Third Bank

	 	38 Fountain Square Plaza	 	 	 	 	 	 	 	 
	 

	 	Cincinnati, OH 45263	 	 	 	 	 	 	 	 
	 

	 	Attn: Mike Mendenhall	 	 	 	 	 	 	 	 
	 

	 	Tel: 513-534-6915	 	 	 	 	 	 	 	 
	 

	 	Fax: 513-534-5947	 	 	 	 	 	 	 	 
	 

	 	E-mail: mike.mendenhall@53.com	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Mizuho Corporate Bank, Ltd.

	 	1251 Avenue of the Americas	 	 	 	 	 	 	 	 
	 

	 	New York, N.Y. 10020-1104	 	 	 	 	 	 	 	 
	 

	 	Attn: Ricky Simmons — VP	 	 	 	 	 	 	 	 
	 

	 	Tel: 212-282-3541	 	 	 	 	 	 	 	 
	 

	 	Fax: 212-282-4488	 	 	 	 	 	 	 	 
	 

	 	E-mail: ricky.simmons@mizuhocbus.com	 	 	 	 	 	 	 	 

85

 

	 	 	 	 	 	 	 	 	 	 	 
	Societe Generale

	 	181 West Madison St.	 	 	 	 	 	 	 	 
	 

	 	Chicago, IL 60602	 	 	 	 	 	 	 	 
	 

	 	Attn: Milissa Goeden	 	 	 	 	 	 	 	 
	 

	 	Tel: 312-578-5156	 	 	 	 	 	 	 	 
	 

	 	Fax: 312-578-5099	 	 	 	 	 	 	 	 
	 

	 	E-mail: milissa.goeden@sgcib.com	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Union Bank of California

	 	500 N. Akard, #4200	 	 	 	 	 	 	 	 
	 

	 	Dallas, TX 7201	 	 	 	 	 	 	 	 
	 

	 	Attn: Kevil P. Mahoney	 	 	 	 	 	 	 	 
	 

	 	Tel: 214-922-4215	 	 	 	 	 	 	 	 
	 

	 	Fax: 214-922-4210	 	 	 	 	 	 	 	 
	 

	 	E-mail: kevin.mahoney@uboc.om	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Chevy Chase Bank, F.S.B.

	 	7501 Wisconsin Avenue, 12th Floor	 	 	 	 	 	 	 	 
	 

	 	Bethesda, MD 20814	 	 	 	 	 	 	 	 
	 

	 	Attn: Michael A. Muñoz	 	 	 	 	 	 	 	 
	 

	 	Tel: 240-497-7834	 	 	 	 	 	 	 	 
	 

	 	Fax: 240-497-7714	 	 	 	 	 	 	 	 
	 

	 	E-mail: mamunoz@chevychasebank.net	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Compass Bank

	 	15 South 20th Street, 15th Floor	 	 	 	 	 	 	 	 
	 

	 	Birmingham, AL 35233	 	 	 	 	 	 	 	 
	 

	 	Attn: Johanna Duke Paley	 	 	 	 	 	 	 	 
	 

	 	Tel: 205-297-3851	 	 	 	 	 	 	 	 
	 

	 	Fax: 205-297-7994	 	 	 	 	 	 	 	 
	 

	 	E-mail: mjd@compassbank.com	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	American Savings Bank FSB

	 	PO Box 2300	 	 	 	 	 	 	 	 
	 

	 	Honolulu, HI 96804-2300	 	 	 	 	 	 	 	 
	 

	 	Attn: Larry Ishii	 	 	 	 	 	 	 	 
	 

	 	Tel: 808-539-7870	 	 	 	 	 	 	 	 
	 

	 	Fax: 808-532-7370	 	 	 	 	 	 	 	 
	 

	 	E-mail: lishii@asbhawaii.com	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Bank of Hawaii

	 	130 Merchant Street, 17th Floor	 	 	 	 	 	 	 	 
	 

	 	P.O. Box 2900	 	 	 	 	 	 	 	 
	 

	 	Honolulu, HI 96813 (96846)	 	 	 	 	 	 	 	 
	 

	 	Attn: Dawn Hoffmann, Vice President	 	 	 	 	 	 	 	 
	 

	 	Tel: 808-537-8763	 	 	 	 	 	 	 	 
	 

	 	Fax: 808-538-4060	 	 	 	 	 	 	 	 
	 

	 	E-mail: dhofmann@boh.com	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	First Commercial Bank New York

	 	750 3rd Avenue	 	 	 	 	 	 	 	 
	Agency

	 	34th Floor	 	 	 	 	 	 	 	 
	 

	 	New York, NY 10017	 	 	 	 	 	 	 	 
	 

	 	Attn: Jocelin Ma	 	 	 	 	 	 	 	 
	 

	 	Tel: 212-599-6868 ext. 216	 	 	 	 	 	 	 	 
	 

	 	Fax: 212-599-6133	 	 	 	 	 	 	 	 
	 

	 	E-mail: fcbloan@aol.com	 	 	 	 	 	 	 	 

86

 

	 	 	 	 	 	 	 	 	 	 	 
	First Hawaiian Bank

	 	999 Bishop Street	 	 	 	 	 	 	 	 
	 

	 	Honolulu, HI 96813	 	 	 	 	 	 	 	 
	 

	 	Attn: Stephen M. Franklin	 	 	 	 	 	 	 	 
	 

	 	Tel: 808-525-5179	 	 	 	 	 	 	 	 
	 

	 	Fax: 808-525-8184	 	 	 	 	 	 	 	 
	 

	 	E-mail: sfranklin@fhwn.com	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	The Northern Trust Company

	 	50 S. LaSalle Street	 	 	 	 	 	 	 	 
	 

	 	Chicago, IL 60675	 	 	 	 	 	 	 	 
	 

	 	Attn: Paul Theiss	 	 	 	 	 	 	 	 
	 

	 	Tel: 312-557-1791	 	 	 	 	 	 	 	 
	 

	 	Fax: 312-444-7028	 	 	 	 	 	 	 	 
	 

	 	E-mail: PHT1@NTRS.COM	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Chang Hwa Commercial Bank, Ltd.

	 	685 Third Avenue, 29th Floor	 	 	 	 	 	 	 	 
	New York Branch

	 	New York, NY 10017	 	 	 	 	 	 	 	 
	 

	 	Attn: Melody Tsou	 	 	 	 	 	 	 	 
	 

	 	Tel: 212-651-9770 ext. 28	 	 	 	 	 	 	 	 
	 

	 	Fax: 212-651-9785	 	 	 	 	 	 	 	 
	 

	 	E-mail: b.changhwa@firstgate.net	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Legacy Texas Bank

	 	5000 Legacy Drive, Suite 220	 	 	 	 	 	 	 	 
	 

	 	Plano, TX 75024	 	 	 	 	 	 	 	 
	 

	 	Attn: Eric Sonneborn	 	 	 	 	 	 	 	 
	 

	 	Tel: 972-461-7044	 	 	 	 	 	 	 	 
	 

	 	Fax: 972-461-7200	 	 	 	 	 	 	 	 
	 

	 	E-mail: sonneborne@legacytexas.com	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	The International Commercial

	 	65 Liberty Street	 	 	 	 	 	 	 	 
	Bank of China, (NY Agency)

	 	New York, NY 10005	 	 	 	 	 	 	 	 
	 

	 	Attn: Louis Chang	 	 	 	 	 	 	 	 
	 

	 	Tel: 212-815-9168

Fax: 212-766-5006	 	 	 	 	 	 	 	 
	 

	 	E-mail: louiswlc@hotmail.com	 	 	 	 	 	 	 	 
	Total:

	 	 	 	$	2,150,000,000	 	 	 	100	%

87

 

SCHEDULE 4.1

INITIAL GUARANTORS

C. Richard Dobson Builders, Inc., a Virginia corporation

CH Investments of Texas, Inc., a Delaware corporation

CHI Construction Company, an Arizona corporation

CHTEX of Texas, Inc., a Delaware corporation

Continental Homes, Inc., a Delaware corporation

Continental Homes of Texas, L.P., a Texas limited partnership

Continental Residential, Inc., a California corporation

D.R. Horton — Emerald, Ltd., a Texas limited partnership

D.R. Horton, Inc. — Birmingham, an Alabama corporation

D.R. Horton, Inc. — Chicago, a Delaware corporation

D.R. Horton, Inc. — Denver, a Delaware corporation

D.R. Horton, Inc. — Dietz-Crane, a Delaware corporation

D.R. Horton, Inc. — Greensboro, a Delaware corporation

D.R. Horton, Inc. — Jacksonville, a Delaware corporation

D.R. Horton, Inc. — Louisville, a Delaware corporation

D.R. Horton, Inc. — Minnesota, a Delaware corporation

D.R. Horton, Inc. — New Jersey, a Delaware corporation

D.R. Horton, Inc. — Portland, a Delaware corporation

D.R. Horton, Inc. — Sacramento, a California corporation

D.R. Horton, Inc. — Torrey, a Delaware corporation

D.R. Horton Los Angeles Holding Company, Inc., a California corporation

D.R. Horton Management Company, Ltd., a Texas limited partnership

D.R. Horton San Diego Holding Company, Inc., a California corporation

D.R. Horton — Texas, Ltd., a Texas limited partnership

DRH Cambridge Homes, Inc., a California corporation

DRH Cambridge Homes, LLC, a Delaware limited liability company

DRH Construction, Inc., a Delaware corporation

The Club at Pradera, Inc., a Delaware corporation

D.R. Horton Materials, Inc., a Delaware corporation

D.R. Horton Inc. — Fresno (f/k/a DRH Regrem IV, Inc.), a Delaware corporation

D.R. Horton Inc. — Gulf Coast (f/k/a DRH Regrem V, Inc.), a Delaware corporation

DRH Regrem VII, LP, a Texas limited partnership

DRH Regrem VIII, LLC, a Delaware limited liability company

DRH Southwest Construction, Inc., California corporation

DRH Energy, Inc., a Colorado corporation

DRH Tucson Construction, Inc., a Delaware corporation

DRHI, Inc., a Delaware corporation

KDB Homes, Inc., a Delaware corporation

Meadows I, Ltd., a Delaware corporation

Meadows II, Ltd., a Delaware corporation

Meadows VIII, Ltd., a Delaware corporation

Meadows IX, Inc., a New Jersey corporation

Meadows X, Inc., a New Jersey corporation

SGS Communities at Grande Quay, LLC, a New Jersey limited liability company

D.R. Horton-Schuler Homes, LLC, a Delaware limited liability company

 

 

HPH Homebuilders 2000, L.P., a California limited partnership

Melody Homes, Inc., a Delaware corporation

Melmort Co., a Colorado corporation

Schuler Homes of Arizona LLC, a Delaware limited liability company

Schuler Homes of California, Inc., a California corporation

Schuler Homes of Oregon, Inc., a Oregon corporation

Schuler Homes of Washington, Inc., a Washington corporation

Schuler Mortgage, Inc., a Delaware corporation

Schuler Realty Hawaii, Inc., a Hawaii corporation

SHA Construction LLC, a Delaware limited liability company

SHLR of California, Inc., a California corporation

SHLR of Colorado, Inc., a Colorado corporation

SHLR of Nevada, Inc., a Nevada corporation

SHLR of Utah, Inc., a Utah corporation

SHLR of Washington, Inc., a Washington corporation

SRHI LLC, a Delaware limited liability company

SSHI LLC, a Delaware limited liability company

Vertical Construction Corporation, a Delaware corporation

Western Pacific Funding, Inc., a California corporation

Western Pacific Housing Co., a California limited partnership

Western Pacific Housing Management, Inc., a California corporation

Western Pacific Housing, Inc., a Delaware corporation

Western Pacific Housing-Antigua, LLC, a Delaware limited liability company

Western Pacific Housing-Aviara, L.P., a California limited partnership

Western Pacific Housing-Boardwalk, LLC, a Delaware limited liability company

Western Pacific Housing-Broadway, LLC, a Delaware limited liability company

Western Pacific Housing-Canyon Park, LLC, a Delaware limited liability company

Western Pacific Housing-Carmel, LLC, a Delaware limited liability company

Western Pacific Housing-Carrillo, LLC, a Delaware limited liability company

Western Pacific Housing-Communications Hill, LLC, a Delaware limited liability company

Western Pacific Housing-Cooper Canyon, LLC, a Delaware limited liability company

Western Pacific Housing-Creekside, LLC, a Delaware limited liability company

Western Pacific Housing-Culver City, L.P., a California limited partnership

Western Pacific Housing-Del Valle, LLC, a Delaware limited liability company

Western Pacific Housing-Lomas Verdes, LLC, a Delaware limited liability company

Western Pacific Housing-Lost Hills Park, LLC, a Delaware limited liability company

Western Pacific Housing-McGonigle Canyon, LLC, a Delaware limited liability company

Western Pacific Housing-Mountaingate, L.P. a California limited partnership

Western Pacific Housing-Norco Estates, LLC, a Delaware limited liability company

Western Pacific Housing-Oso, L.P., a California limited partnership

Western Pacific Housing-Pacific Park II, LLC, a Delaware limited liability company

Western Pacific Housing-Park Avenue East, LLC, a Delaware limited liability company

Western Pacific Housing-Park Avenue West, LLC, a Delaware limited liability company

Western Pacific Housing-Playa Vista, LLC, a Delaware limited liability company

Western Pacific Housing-Poinsettia, L.P., a California limited partnership

Western Pacific Housing-River Ridge, LLC, a Delaware limited liability company

Western Pacific Housing-Robinhood Ridge, LLC, a Delaware limited liability company

Western Pacific Housing-Santa Fe, LLC, a Delaware limited liability company

Western Pacific Housing-Scripps II, LLC, a Delaware limited liability company

 

 

Western Pacific Housing-Scripps, L.P., a California limited partnership

Western Pacific Housing-Seacove, L.P., a California limited partnership

Western Pacific Housing-Studio 528, LLC, a Delaware limited liability company

Western Pacific Housing-Terra Bay Duets, LLC, a Delaware limited liability company

Western Pacific Housing-Torrance, LLC, a Delaware limited liability company

Western Pacific Housing-Torrey Commercial, LLC, a Delaware limited liability company

Western Pacific Housing-Torrey Meadows, LLC, a Delaware limited liability company

Western Pacific Housing-Torrey Multi-Family, LLC, a Delaware limited liability company

Western Pacific Housing-Torrey Village Center, LLC, a Delaware limited liability company

Western Pacific Housing-Vineyard Terrace, LLC, a Delaware limited liability company

Western Pacific Housing-Windemere, LLC, a Delaware limited liability company

Western Pacific Housing-Windflower, L.P., a California limited partnership

WPH-Camino Ruiz, LLC, a Delaware limited liability company

DRH Regrem IX, Inc., a Delaware corporation

DRH Regrem X, Inc., a Delaware corporation

DRH Regrem XI, Inc. a Delaware corporation

DRH Regrem XII, LP, a Texas limited partnership

 

 

EXHIBIT A

FORM OF INVENTORY SUMMARY REPORT

FOR MONTH ENDED                                         ,

DATE:                      ,

	 	 	 
	ADMINISTRATIVE AGENT:

	 	Wachovia Bank, National Association, a national

banking association
	 
	 	 
	BORROWER:

	 	D. R. Horton, Inc., a Delaware corporation

 

This certificate is delivered under the Revolving Credit Agreement dated as of December ___, 2005
(as modified, amended, renewed, extended, supplemented, or restated from time to time, the “Credit
Agreement”), among Borrower, Administrative Agent, the Letter of Credit Issuers defined therein,
the Swingline Lender defined therein and the Lenders defined therein. Capitalized terms used
herein shall, unless otherwise indicated, have the respective meanings set forth in the Credit
Agreement.

     I certify to Lenders that:

     (a) I am an Authorized Signatory of Borrower in the position(s) set forth under my signature
below; and

     (b) the financial details set forth on the attached Annex I were prepared in accordance with
GAAP, and present accurately in all material respects the Loan Inventory for Borrower as of, and
for the month ended on,                     ,___.

	 	 	 	 	 	 	 	 	 
	 	 	D. R. HORTON, INC., a Delaware corporation	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:	 	 	 	 
	 

	 	 	 	Title:
	 	 

	 	 
	 

	 	 	 	 	 	 

	 	 

 

 

Annex I

to Inventory Summary Report

For Period Ended ___, ___

(Amounts in Millions)

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	Less	 	 	 	 	 	 
	 	 	Total	 	Encumbered	 	Unencumbered	 	Advance	 	 
	Cost Basis	 	Inventory	 	Inventory	 	Inventory	 	Rate	 	Amount
	(A) Lots Under

Development1

	 	                    
	 	                    
	 	                    
	 	 	65	%	 	                    
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	(B) Developed

Lots2

	 	                    
	 	                    
	 	                    
	 	 	65	%	 	                    
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	(C) Dwelling

Lots3

	 	                    
	 	                    
	 	                    
	 	 	85	%	 	                    

	 	 	 	 	 	 	 	 	 
	 

	 	 	 	(D)
	 	Loan Funding Availability	 	 
	 

	 	 	 	 	 	[ = (A)+(B)+(C)]
	 	                    
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	(E)
	 	Less: Borrowing Limitation
[Amount, if any, by which (A) plus
(B) exceeds (D) x (0.50)]
	 	                    
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	(F)
	 	Less: Senior Unsecured Indebtedness

(other than the Obligations

under this Facility)
	 	                    
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	(G)
	 	Subtotal of Loan Funding Availability
[ = (D) - (E) - (F)]
	 	                    
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	(H)
	 	Advances under this Facility
	 	                    
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	(I)
	 	Unreimbursed Draws under
Performance Letters of Credit
	 	                    
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	(J)
	 	Letter of Credit Exposure on
non-Performance Letters of Credit
	 	                    
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	(K)
	 	[ = (G) - (H) - (I) - (J)] Remaining
Borrowing Base Availability for
Additional Debt
	 	                    

1. “Lots under Development” means Land Parcels which are, as of the date hereof,
being developed into Developed Lots or which are scheduled for the commencement of development into
Developed Lots within six (6) calendar months from the date hereof, and which Borrower has
designated and are included as “Lots Under Development ” in the foregoing calculation on
the date hereof.

(continued on following page)

 

 

2. “Developed Lots” means subdivision lots wholly-owned by Borrower or its Restricted
Subsidiaries, subject to a recorded plat and which are in substantial compliance with all
Applicable Laws and are suitable for the construction thereon of foundations for a Dwelling, which
Borrower has designated and are included as “Developed Lots” in the foregoing calculation
on the date hereof (exclusive of any Dwelling Lot).

3. “Dwelling Lots” means Developed Lots with Dwellings which Borrower or any Restricted
Subsidiary has designated and are included as “Dwelling Lots” in the calculation of the
Loan Funding Availability. The term “Dwelling Lot” includes the Dwelling located
thereon.

4. Borrower certifies that all insurance coverage which is customary and usual for the industry and
which is required by Section 6.12 of the Credit Agreement is in full force and effect.

[FORM TO BE AGREED TO BY

ADMINISTRATIVE AGENT AND BORROWER]

	 	 	 	 	 
	 

	 	Page 2
	 	Annex I to Exhibit A

 

 

EXHIBIT B

FORM OF REQUEST FOR ADVANCE

(Dated: ___, ___)

Wachovia Bank, National Association, a national banking association

as Administrative Agent for the Lenders

as defined in the Credit Agreement

referred to below

	 	 	 	 	 	 	 	 	 
	Attn:

	 	David
	 	Stout,
	 	Agency
	 	Services
	201 S. College Street
	 	 	 	 	 	 	 	 
	CP8 mailcode NC5708
	 	 	 	 	 	 	 	 
	Charlotte, NC 28288
	 	 	 	 	 	 	 	 

Ladies and Gentlemen:

     Reference is made to the Revolving Credit Agreement dated as of December ___, 2005 (as
modified, amended, renewed, extended, supplemented, or restated from time to time, the “Credit
Agreement”), among Borrower, Wachovia Bank, National Association, a national banking association,
as Administrative Agent, the Letter of Credit Issuers defined therein, the Swingline Lender
defined therein and the Lenders defined therein. Capitalized terms used herein shall, unless
otherwise indicated, have the respective meanings set forth in the Credit Agreement. Borrower
hereby gives you notice pursuant to the Credit Agreement that it requests an Advance under the
Credit Agreement, and in that connection sets forth below the terms on which such Advance is
requested to be made:

     (1) Borrower requests an Advance consisting of [Eurodollar Rate Loans][Libor Rate Loans with
an Interest Period of                     ]1 in the amount2 of                     , to be made
and deposited on [DATE]3 (“Advance Date”) into account no.                     .

     (2) Borrower hereby certifies that the following statements are true and correct on the date
hereof, and will be true and correct on the Advance Date after giving effect to such Advance:

     (a) Either (i) Borrower has an Investment Grade Rating by at least two (2) of Moody’s,
S&P, and Fitch or (ii) the requested Advance will not cause the amount of Senior Unsecured
Indebtedness and unreimbursed draws under Letters of Credit to exceed the Loan Funding
Availability;

     (b) The requested Advance will not cause the Commitment Usage to exceed the Total
Revolving Credit Commitment;

     (c) All of the representations and warranties of Borrower and Guarantors set forth in
the Loan Documents are true and correct in all material respects (except to the extent that
the representations and warranties speak to a specific date or are based on facts which have
changed by transactions expressly contemplated or permitted by the Loan Documents);

     (d) No Default or Event of Default has occurred and is continuing or will arise after
giving effect to the requested Advance.

	 	 	 	 	 
	 

	 	 	 	Exhibit B

 

 

     (e) All conditions precedent to Borrower’s right to receive the requested Advance have
been met in accordance with the terms and conditions of the Credit Agreement.

	 	 	 	 	 	 	 	 	 
	 	 	Very truly yours,	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	D. R. HORTON, INC., a Delaware corporation	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:	 	 	 	 
	 

	 	 	 	Title:
	 	 

	 	 
	 

	 	 	 	 	 	 

	 	 

 

			
	1	 	Interest Period of one month, two months, three months or six months should be
specified.
	 
	2	 	Not less than $5,000,000 or a greater integral multiple of $1,000,000.
	 
	3	 	For any Advance, must be a Business Day occurring prior to the Maturity Date and, if
such Advance is to consist of LIBOR Rate Loans, must be at least three (3) Business Days
following receipt by Administrative Agent of this Request for Advance.

	 	 	 	 	 
	 

	 	 	 	Exhibit B

 

 

EXHIBIT C

FORM OF REQUEST FOR ISSUANCE OF LETTER OF CREDIT

                                                                                 ,                                         

	 	 	 
	Wachovia Bank, National Association, a national

	 	Proposed Date of Issuance1:                                                                             
	banking association, as Administrative Agent for

	 	Stated Amount of Letter of Credit2:                                                                 
	the Lenders as defined in the Credit Agreement

	 	Expiration Date3:                                                                                              
	referred to below

	 	Name/Address of Beneficiary:                                                                         
	401 S. Tryon St, NC1193
	 	 
	Charlotte, NC 28288
	 	 
	Attn: R. Scott Holtzapple, Senior Vice President,
	 	 
	REFS Risk Management

	 	Attn:                                                                                                                 

Ladies and Gentlemen:

     Reference is made to the Revolving Credit Agreement dated as of December ___, 2005 (as
modified, amended, renewed, extended, supplemented, or restated from time to time, the “Credit
Agreement”), among Borrower, Wachovia Bank, National Association, a national banking association,
as Administrative Agent, the Letter of Credit Issuers defined therein, the Swingline Lender defined
therein and the Lenders defined therein. Capitalized terms used herein shall, unless otherwise
indicated, have the respective meanings set forth in the Credit Agreement. Borrower hereby gives
you notice pursuant to the Credit Agreement that it requests the issuance of a Letter of Credit
under the Letter of Credit Subfacility.

     Accompanying this notice is a duly executed and properly completed Letter of Credit
Application in the form requested by Administrative Agent, together with the payment of any
fronting fee or other amount, if any, due and payable in respect of such Letter of Credit pursuant
to Section 2.5 of the Credit Agreement.

     Borrower hereby certifies that the following statements are true and correct on the date
hereof, and will be true and correct on the date specified herein for issuance of the Letter of
Credit, after giving effect to the issuance of such Letter of Credit:

     (a) The issuance of the requested Letter of Credit will not cause the Commitment Usage to
exceed the Total Revolving Credit Commitment;

     (b) The issuance of the requested Letter of Credit will not cause the Letter of Credit
Exposure to exceed $1,000,000,000;

     (c) All of the representations and warranties of Borrower and Guarantors set forth in the Loan
Documents are true and correct in all material respects (except to the extent that the
representations and warranties speak to a specific date or are based on facts which have changed by
transactions expressly contemplated or permitted by the Loan Documents); and

     (d) No Default or Event of Default has occurred and is continuing or will arise after giving
effect to the requested Letter of Credit.

Remainder of Page Intentionally Blank;

Signature Page Follows.

Exhibit C

 

 

	 	 	 	 	 	 	 
	 	 	Very truly yours,
	 
	 	 	 	 	 	 
	 	 	D. R. HORTON, INC., a Delaware corporation
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 	 	 	 	 
	 

	 	 	 	Name:	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Title:	 	 
	 

	 	 	 	 	 	 

	 	 	 	 	 	 	 
	Rate:

	 	 
	 	 
	 	 
	 	 	 	 	 
	Confirmed by:	 	 	 	 
	 

	 	 	 	 	 	 

 

			
	1	 	Must be a Business Day at least five (5) Business Days (or such later date as Letter
of Credit Issuer may agree) following receipt by Administrative Agent of this Letter of Credit
Request.
	 
	2	 	Amount of requested Letter of Credit plus the Letter of Credit Exposure shall not
exceed $1,000,000,000 (as the maximum amount of such Letter of Credit Subfacility may be
reduced or canceled in accordance with the Loan Documents).
	 
	3	 	Not later than the earlier of twelve (12) months from the date of issuance or 7 days
prior to the Maturity Date.

Exhibit C

 

 

EXHIBIT D

FORM OF QUARTERLY COMPLIANCE CERTIFICATE

FOR                      ENDED                                         

DATE:                                         

	 	 	 
	ADMINISTRATIVE AGENT:

	 	Wachovia Bank, National Association, a national banking association

	 	 	 	 	 
	BORROWER:

	 	 	 	D. R. Horton, Inc., a Delaware corporation

     This certificate is delivered under the Revolving Credit Agreement dated as of December ___,
2005 (as modified, amended, renewed, extended, supplemented, or restated from time to time, the
“Credit Agreement”), among Borrower, Administrative Agent, the Letter of Credit Issuers defined
therein, the Swingline Lender defined therein and the Lenders defined therein. Capitalized terms
used herein shall, unless otherwise indicated, have the respective meanings set forth in the Credit
Agreement.

     I certify to Administrative Agent and Lenders that:

     (a) I am an Authorized Signatory of Borrower and its Restricted Subsidiaries (for purposes
hereof “Companies”) in the position(s) set forth under my signature below;

     (b) the consolidated Current Financials of Borrower and its Subsidiaries delivered to
Administrative Agent concurrently with the delivery hereof were prepared in accordance with GAAP;
present fairly in all material respects the consolidated financial condition and results of
operations of Borrower and its Subsidiaries; and serve as the basis for the status of compliance by
Borrower with certain covenants in the Credit Agreement set forth on Annex I as of, and for the
(three, six, or nine months, or fiscal year) ended on,                                         ,                     (the “Subject Period”); and

     (c) the status of compliance by Borrower with Sections 6.8(a), (b), (c), (d) and (e) of the
Credit Agreement at the end of the Subject Period is as set forth on Annex I to this certificate;
provided that Sections 6.8(d) and (e) may be labeled “not applicable” so long as Borrower has, as
of the date hereof, an Investment Grade Rating by at least two (2) of Moody’s, S&P and Fitch.

	 	 	 	 	 	 	 
	 	 	D. R. HORTON, INC., a Delaware corporation
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 	 	 	 	 
	 

	 	 	 	Name:	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Title:	 	 
	 

	 	 	 	 	 	 

Exhibit D

 

 

ANNEX I TO QUARTERLY COMPLIANCE CERTIFICATE

Status of Compliance with

Sections 6.8(a), (b), (c), (d) and (e)

of the Credit Agreement

(Dollar Amounts in Millions)

[(Unless otherwise indicated, all calculations are made on a consolidated basis for

Borrower and its Restricted Subsidiaries at the date of determination

with respect to the most recently-ended fiscal quarter)]

	 	 	 	 	 	 	 	 	 
	 	 	 	 	Current	 	 	 	 
	Section	 	Limitation/Covenant	 	Covenant Amount	 	Status,                                         , 200                    	 	Notes *
	 
	6.8(a)

	 	Leverage Ratio – Net Funded Notes
Payable divided by Total
Capitalization (Net Funded Notes
Payable plus net shareholders
equity) of 0.60 to 1.0 or less
	 	 	 	Indebtedness
Less: Cash & cash equiv in excess of
$50,000,000 (adjustments not to exceed
$500,000,000)
Net Funded Notes Payable
Plus: Net shareholders equity
Total Capitalization
Leverage Ratio
	 	$
	 
	6.8(b)

	 	Ratio of EBITDA (generally income
before interest expense, provision
for income taxes, depreciation and
amortization, extraordinary
non-cash losses, etc.) to Interest
Incurred of at least 2.50 to 1.00
	 	 	 	EBITDA

Interest incurred

Coverage Ratio (times)
	 	$
	 
	6.8(c)

	 	Minimum Tangible Net Worth of at
least $3,718,000,000 plus
(generally) 50% of net income
subsequent to September 30, 2005
and 50% of additional future
equity offerings
___/___/___minimum (in millions)
	 	 	 	Total Net Worth
Less: Intangible Assets
Less: Non-cash gain or loss from
SFAS 133 Mark to Market Adjustments
Tangible Net Worth
	 	$
	 
	6.8(d)1

	 	Speculative Lots not to exceed 40%
of trailing twelve months’ unit
closings (excludes models)
	 	 	 	Speculative Lots

Trailing twelve months’ closings

Percentage	 	 
	 
	6.8(e)1

	 	Developed Lots, Lots Under
Development and Land Parcels not
to exceed 150% of Adjusted
Tangible Net Worth
	 	 	 	150% Adjusted Tangible Net Worth
	 	$
	 
	 

	 	 	 	 	 	Total Cost of Lots & Land1
	 	$
	 

	 	Applicable Margin (see grid below):
	 	 	 	Pricing Level
Applicable Margin (bps) – Cash borrowing
Applicable Margin (bps) – Letters of Credit
Unused Commitment Fee (bps)	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Senior Unsecured	 	Eurodollar	 	Base	 	Letters of	 	Unused
	Pricing Level	 	Leverage Ratio	 	Debt Rating	 	Rate (bps)	 	Rate	 	Credit	 	Commitment Fee
	1
	 	 	x = 0.30:1	 	 	BBB+/Baa1	 	 	0.50	%	 	 	0.00	%	 	 	0.375	%	 	 	0.125	%
	2
	 	 	0.30:1 < x £0.40:1	 	 	BBB/Baa2	 	 	0.625	%	 	 	0.00	%	 	 	0.50	%	 	 	0.15	%
	3
	 	 	0.40:1 < x £0.50:1	 	 	BBB-/Baa3	 	 	0.75	%	 	 	0.00	%	 	 	0.625	%	 	 	0.175	%
	4
	 	 	0.50:1 < x £0.55:1	 	 	BB+/Ba1	 	 	1.00	%	 	 	0.00	%	 	 	0.875	%	 	 	0.20	%
	5
	 	 	0.55:1 < x	 	 	BB/Ba2	 	 	1.375	%	 	 	0.00	%	 	 	1.25	%	 	 	0.225	%

Annex I to Exhibit D

 

 

 

			
	1.	 	Not applicable when Borrower has an Investment Grade Rating by at least two (2) of Moody’s,
S&P and Fitch.

* See attached Calculation Worksheets, which are incorporated herein by reference.

Annex I to Exhibit D

 

 

SUPPLEMENT TO ANNEX I

Calculation Worksheets

[TO BE ATTACHED BY BORROWER.]

Annex I to Exhibit D

 

 

EXHIBIT E

FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT

     Reference is made to the Revolving Credit Agreement dated as of December ___, 2005 (as
modified, amended, renewed, extended, supplemented, or restated from time to time, the “Credit
Agreement”), among D. R. Horton, Inc., as Borrower, Wachovia Bank, National Association, a national
banking association, as Administrative Agent, the Letter of Credit Issuers defined therein, the
Swingline Lender defined therein and the Lenders defined therein. Capitalized terms used herein
shall, unless otherwise indicated, have the respective meanings set forth in the Credit Agreement.

RECITALS

     A. “Assignor” and “Assignee” shall mean the parties referred to on the signature page hereof.

     B. Assignor’s Revolving Credit Commitment, which includes its obligation to fund its pro rata
share of Letters of Credit and Swingline Loans (the “Assignor Commitment”), is the amount specified
in Item 1 of Schedule 1 attached hereto. The aggregate principal amount of outstanding Revolving
Credit Loans made by Assignor to Borrower under the Assignor Commitment is specified in Item 2 of
Schedule 1 attached hereto (the “Assignor Loans”).

     C. Assignor wishes to sell and assign to Assignee, and Assignee wishes to purchase and assume
from Assignor, (i) the portion of the Assignor Commitment specified in Item 3 of Schedule 1
attached hereto, which is equivalent to the percentage of the Total Revolving Credit Commitment
specified in Item 4 of Schedule 1 attached hereto (the “Assigned Commitment”) and (ii) the portion
of the Assignor Loans under the Assignor Commitment specified in Item 5 of Schedule 1 attached
hereto (the “Assigned Loans”).

     The parties agree as follows:

     1. Assignment. Subject to the terms and conditions set forth herein and in the Credit
Agreement, Assignor hereby sells and assigns without recourse to Assignee, and Assignee purchases,
accepts, and assumes from Assignor on the date first set forth above (the “Assignment Date”), (a)
all right, title, and interest of Assignor to the Assigned Loans, and (b) all obligations of
Assignor under the Credit Agreement with respect to the Assigned Commitment. As full consideration
for the sale of the Assigned Loans and the Assigned Commitment, Assignee shall pay to Assignor on
the Assignment Date the principal amount of the Assigned Loans (the “Purchase Price”).

     2. Representations and Warranties. Each of Assignor and Assignee represents and
warrants to the other that: (a) it has full power and legal right to execute and deliver this
Agreement and to perform the provisions of this Agreement; (b) the execution, delivery, and
performance of this Agreement have been authorized by all necessary action, corporate or otherwise,
and do not violate any provisions of its charter or by-laws or any contractual obligations or
requirement of law binding on it; and (c) this Agreement constitutes its legal, valid, and binding
obligation, enforceable against it in accordance with its terms.

     3. Condition Precedent. The obligations of Assignor and Assignee hereunder shall be
subject to the fulfillment of the condition that Assignor shall have (a) received payment in full
of the

Exhibit E

 

 

Purchase Price, and (b) complied with other applicable provisions of Section 10.2 of the
Credit Agreement. Assignor and Assignee further agree, pursuant to Section 10.2 of the Credit
Agreement, to pay (as determined between themselves) to Administrative Agent for its account on the
Effective Date in federal funds a processing fee of $3,500.

     4. Notice of Assignment. Assignor hereby instructs Administrative Agent and Borrower
to make all payments with respect to the Assigned Loans and the Assigned Commitment directly to
Assignee at the offices specified in Item 6 on Schedule 1 attached hereto (which shall also be
Assignee’s address for notices pursuant to Section 10.11 of the Credit Agreement). From and after
the date (the “Effective Date”) on which Administrative Agent shall notify Borrower and Assignor
that all consents (if any) required shall have been given, Assignee shall be deemed to be a party
to the Credit Agreement and, to the extent that rights and obligations thereunder shall have been
assigned to Assignee as provided herein, shall have the rights and obligations of a Lender under
the Credit Agreement. After the Effective Date, and with respect to all such amounts accrued from
the Assignment Date, (i) all interest, principal, fees, and other amounts that would otherwise be
payable to Assignor in respect of the Assigned Loans and the Assigned Commitment shall be paid to
Assignee, and (ii) if Assignor receives any payment on account of the Assigned Loans or the
Assigned Commitment, then Assignor shall promptly deliver such payment to Assignee. Assignee
agrees to deliver to Borrower and Administrative Agent, on or prior to the Assignment Date, such
Internal Revenue Service forms as may be required to establish that Assignee is entitled to receive
payments under the Credit Agreement without deduction or withholding of tax.

     5. Independent Investigation. Assignee acknowledges that it is purchasing the
Assigned Loans and the Assigned Commitment from Assignor totally without recourse and, except as
provided in Section 2 hereof, without representation or warranty. Assignee further acknowledges
that it has made its own independent investigation and credit evaluation of Borrower in connection
with its purchase of the Assigned Loans and the Assigned Commitment. Except for the
representations or warranties set forth in Section 2, Assignee acknowledges that it is not relying
on any representation or warranty of Assignor, expressed or implied, including without limitation,
any representation or warranty relating to the legality, validity, genuineness, enforceability,
collectibility, interest rate, repayment schedule, or accrual status of the Assigned Loans or the
Assigned Commitment, the legality, validity, genuineness, or enforceability of the Credit
Agreement, the related Notes, or any other Loan Document referred to in or delivered pursuant to
the Credit Agreement, or the financial condition or creditworthiness of Borrower. Assignor has not
and will not be acting as either the representative, agent, or trustee of Assignee with respect to
matters arising out of or relating to the Credit Agreement or this Agreement. From and after the
Effective Date, Assignor shall have no rights or obligations with respect to the Assigned Loans or
the Assigned Commitment.

     6. Method of Payment. All payments to be made by either party hereunder shall be in
funds available at the place of payment on the same day and shall be made by wire transfer to the
account designated by the party to receive payment.

     7. Integration. This Agreement shall supersede any prior agreement or understanding
between the parties (other than the Credit Agreement) as to the subject matter hereof.

     8. Counterparts. This Agreement may be executed in any number of counterparts, each
of which shall be deemed to be an original and shall be binding upon both parties, their successors
and assigns.

Exhibit E

 

 

\

     9. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NORTH CAROLINA.

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

	 	 	 	 	 	 	 
	ASSIGNOR:	 	[ASSIGNOR]
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 	 	 	 	 
	 

	 	 	 	Name:	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Title:	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	ASSIGNEE:	 	[ASSIGNEE]
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 	 	 	 	 
	 

	 	 	 	Name:	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Title:	 	 
	 

	 	 	 	 	 	 

Acknowledged and Agreed to as of

this                    day of                                         ,                     .

WACHOVIA BANK, NATIONAL ASSOCIATION, a national banking association

as Administrative Agent, Letter of Credit Issuer and Swingline Lender

	 	 	 	 	 	 	 	 	 
	By:

	 	 	 	 	 	 
	 	 
	 	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 

[NAMES OF OTHER LETTER OF CREDIT ISSUERS]

	 	 	 	 	 	 	 	 	 
	By:

	 	 	 	 	 	 
	 	 
	 	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 

Exhibit E

 

 

SCHEDULE 1

TO

ASSIGNMENT AND ACCEPTANCE AGREEMENT

relating to

Revolving Credit Agreement

among D. R. Horton, Inc., a Delaware corporation, as Borrower,

Wachovia Bank, National Association, a national banking association, as Administrative Agent,

the Letter of Credit Issuer defined therein,

the Swingline Lender defined therein and

the Lenders defined therein

dated as of                                                                                  , 20                    

	 	 	 	 	 
	(1) Assignor Commitment:1
	 	$	                    	 
	(2) Assignor Loans: 2
	 	$	                    	 
	(3) Amount of Assigned Commitment:3
	 	$	                    	 
	(4) Percentage of Total Revolving Credit Commitment Assigned:4
	 	 	                    	%
	(5) Amount of Assigned Loans:5
	 	$	                    	 
	(6) Applicable
Lending Office of Assignee and Address for Notices under the Credit
Agreement6

                                                                                

                                                                                

                                                                                

                                                                                

 

			
	1.	 	Insert the dollar amount of the Assignor Commitment prior to assignment.

	 
	2.	 	Insert the total amount of outstanding Revolving Credit Loans of Assignor.
	 
	3.	 	Insert the dollar amount of the Assignor Commitment, including outstanding Revolving Credit
Loans, being assigned.
	 
	4.	 	Assigned Commitment, as a percentage of the Total Revolving Credit Commitment.
	 
	5.	 	Insert the total amount of outstanding Revolving Credit Loans of Assignor being assigned to Assignee.
	 
	6.	 	Insert the name and address of the applicable lending office of Assignee.

Exhibit E

 

 

EXHIBIT F-1

FORM OF REVOLVING CREDIT NOTE

REVOLVING CREDIT NOTE

 

					
	$                     
	 	Charlotte, North Carolina
	 	As of                     , 20                    _

     1. FOR VALUE RECEIVED, D. R. HORTON, INC., a Delaware corporation (“Maker”), hereby
unconditionally promises to pay to the order of                      (“Payee”), at the address of
Administrative Agent (defined below) set forth in the Credit Agreement defined below, the sum of                    
Dollars ($                    ) (or, if less, so much thereof as may be advanced), in lawful money of the United
States of America. Capitalized terms used herein shall, unless otherwise indicated, have the
respective meanings set forth in the Credit Agreement.

     2. The unpaid principal amount of, and accrued unpaid interest on, this Revolving Credit Note
is payable in accordance with the Credit Agreement.

     3. The unpaid principal balance advanced and outstanding hereunder shall bear interest from
the date of advance until maturity at the rate per annum provided in the Credit Agreement. The
interest rate specified in this section is subject to adjustment under the circumstances described
in the Credit Agreement. Interest shall be computed in the manner provided in the Credit
Agreement.

     4. Notwithstanding any provision contained in this Revolving Credit Note or any other document
executed or delivered in connection with this Revolving Credit Note or in connection with the
Credit Agreement, Payee shall never be deemed to have contracted for or be entitled to receive,
collect, or apply as interest on this Revolving Credit Note, any amount in excess of the maximum
rate of interest permitted to be charged by applicable law, and, if Payee ever receives, collects,
or applies as interest any such excess, then the amount that would be excessive interest shall be
applied to reduce the unpaid principal balance of this Revolving Credit Note, and, if the principal
balance of this Revolving Credit Note is paid in full by that application, then any remaining
excess shall promptly be paid to Maker. In determining whether the interest paid or payable under
any specific contingency exceeds the highest lawful rate, Maker and Payee shall, to the maximum
extent permitted under applicable law, (a) characterize any non-principal payment (other than
payments expressly designated as interest payments hereunder) as an expense or fee rather than as
interest, (b) exclude voluntary prepayments and the effect thereof, and (c) spread the total amount
of interest throughout the entire contemplated term of this Revolving Credit Note so that the
interest rate is uniform throughout that term.

     5. This Revolving Credit Note has been executed and delivered pursuant to that certain
Revolving Credit Agreement (as amended, modified, or restated from time to time, the “Credit
Agreement”) dated as of December                     , 2005, executed by and between Maker, Wachovia Bank, National
Association, a national banking association, as Administrative Agent (“Administrative Agent”), the
Letter of Credit Issuers defined therein, the Swingline Lender defined therein and the Lenders
defined therein, and is one of the “Revolving Credit Notes” referred to therein, and the holder of
this Revolving Credit Note is entitled to the benefits provided in the Credit Agreement. Reference
is hereby made to the Credit Agreement for a statement of (a) the obligation of Payee to advance
funds hereunder, (b) the

Exhibit F-1

 

 

prepayment rights and obligations of Maker, and (c) the events upon which the maturity of this
Revolving Credit Note may be accelerated.

     6. If the principal of, or any installment of interest on, this Revolving Credit Note becomes
due and payable on a day other than a Business Day, then the maturity thereof shall be extended to
the next succeeding Business Day. If this Revolving Credit Note, or any installment or payment due
hereunder, is not paid when due, whether at maturity or by acceleration, or if it is collected
through a bankruptcy, probate, or other court, whether before or after maturity, then Maker shall
pay all costs of collection, including, but not limited to, reasonable attorneys’ fees incurred by
the holder of this Revolving Credit Note. All past due principal of, and to the extent permitted
by applicable law, interest on this Revolving Credit Note shall bear interest until paid at the
rate provided in the Credit Agreement.

     7. Maker and all sureties, endorsers, guarantors, and other parties ever liable for payment of
any sums payable pursuant to the terms of this Revolving Credit Note, jointly and severally waive
demand, presentment for payment, protest, notice of protest, notice of acceleration, notice of
intent to accelerate, diligence in collection, the bringing of any suit against any party, and any
notice of or defense on account of any extensions, renewals, partial payments, or changes in any
manner of or in this Revolving Credit Note or in any of its terms, provisions, and covenants, or
any releases or substitutions of any security, or any delay, indulgence, or other act of any
trustee or any holder hereof, whether before or after maturity.

     8. All Revolving Credit Loans made by Payee and all repayments of the principal thereof may be
recorded by Payee and, before any transfer hereof, endorsed by Payee on a schedule attached hereto,
or on a continuation of such schedule, provided that the failure of Payee to record any endorsement
shall not affect the obligation of Maker hereunder or under the Credit Agreement.

     9. THIS REVOLVING CREDIT NOTE IS BEING EXECUTED AND DELIVERED, AND IS INTENDED TO BE
PERFORMED, IN THE STATE OF NORTH CAROLINA. EXCEPT TO THE EXTENT THAT THE LAWS OF THE UNITED STATES
MAY APPLY TO THE TERMS HEREOF, THE SUBSTANTIVE LAWS OF THE STATE OF NORTH CAROLINA SHALL GOVERN THE
VALIDITY, CONSTRUCTION, ENFORCEMENT, AND INTERPRETATION OF THIS REVOLVING CREDIT NOTE.

	 	 	 	 	 	 	 
	 	 	D. R. HORTON, INC., a Delaware corporation
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 	 	 	 	 
	 

	 	 	 	Name:	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Title:	 	 
	 

	 	 	 	 	 	 

Exhibit F-1

 

 

EXHIBIT F-2

FORM OF SWINGLINE NOTE

SWINGLINE NOTE

 

					
	$                     
	 	Charlotte, North Carolina
	 	As of                     , 2005

     1. FOR VALUE RECEIVED, D. R. HORTON, INC., a Delaware corporation (“Maker”), hereby
unconditionally promises to pay to the order of WACHOVIA BANK, NATIONAL ASSOCIATION (“Payee”), at
the address of Administrative Agent (defined below) set forth in the Credit Agreement defined
below, the sum of One Hundred Million Dollars ($100,000,000) (or, if less, so much thereof as may
be advanced as Swingline Loans under the Credit Agreement), in lawful money of the United States of
America. Capitalized terms used herein shall, unless otherwise indicated, have the respective
meanings set forth in the Credit Agreement.

     2. The unpaid principal amount of, and accrued unpaid interest on, this Swingline Note is
payable in accordance with the Credit Agreement.

     3. The unpaid principal balance advanced and outstanding hereunder shall bear interest from
the date of advance until maturity at the rate per annum provided in the Credit Agreement. The
interest rate specified in this section is subject to adjustment under the circumstances described
in the Credit Agreement. Interest shall be computed in the manner provided in the Credit
Agreement.

     4. Notwithstanding any provision contained in this Swingline Note or any other document
executed or delivered in connection with this Swingline Note or in connection with the Credit
Agreement, Payee shall never be deemed to have contracted for or be entitled to receive, collect,
or apply as interest on this Swingline Note, any amount in excess of the maximum rate of interest
permitted to be charged by applicable law, and, if Payee ever receives, collects, or applies as
interest any such excess, then the amount that would be excessive interest shall be applied to
reduce the unpaid principal balance of this Swingline Note, and, if the principal balance of this
Swingline Note is paid in full by that application, then any remaining excess shall promptly be
paid to Maker. In determining whether the interest paid or payable under any specific contingency
exceeds the highest lawful rate, Maker and Payee shall, to the maximum extent permitted under
applicable law, (a) characterize any non-principal payment (other than payments expressly
designated as interest payments hereunder) as an expense or fee rather than as interest, (b)
exclude voluntary prepayments and the effect thereof, and (c) spread the total amount of interest
throughout the entire contemplated term of this Swingline Note so that the interest rate is uniform
throughout that term.

     5. This Swingline Note has been executed and delivered pursuant to that certain Revolving
Credit Agreement (as amended, modified, or restated from time to time, the “Credit Agreement”)
dated as of December                     , 2005, executed by and between Maker, Wachovia Bank, National Association,
a national banking association, as Administrative Agent (“Administrative Agent”), the Letter of
Credit Issuers defined therein, the Swingline Lender defined therein and the Lenders defined
therein, and is the “Swingline Note” referred to therein, and the holder of this Swingline Note is
entitled to the benefits provided in the Credit Agreement. Reference is hereby made to the Credit
Agreement for a statement of

Exhibit F-2

 

 

(a) the obligation of Payee to advance funds hereunder, (b) the prepayment rights and
obligations of Maker, and (c) the events upon which the maturity of this Swingline Note may be
accelerated.

     6. If the principal of, or any installment of interest on, this Swingline Note becomes due and
payable on a day other than a Business Day, then the maturity thereof shall be extended to the next
succeeding Business Day. If this Swingline Note, or any installment or payment due hereunder, is
not paid when due, whether at maturity or by acceleration, or if it is collected through a
bankruptcy, probate, or other court, whether before or after maturity, then Maker shall pay all
costs of collection, including, but not limited to, reasonable attorneys’ fees incurred by the
holder of this Swingline Note. All past due principal of, and to the extent permitted by
applicable law, interest on this Swingline Note shall bear interest until paid at the rate provided
in the Credit Agreement.

     7. Maker and all sureties, endorsers, guarantors, and other parties ever liable for payment of
any sums payable pursuant to the terms of this Swingline Note, jointly and severally waive demand,
presentment for payment, protest, notice of protest, notice of acceleration, notice of intent to
accelerate, diligence in collection, the bringing of any suit against any party, and any notice of
or defense on account of any extensions, renewals, partial payments, or changes in any manner of or
in this Swingline Note or in any of its terms, provisions, and covenants, or any releases or
substitutions of any security, or any delay, indulgence, or other act of any trustee or any holder
hereof, whether before or after maturity.

     8. All Swingline Loans made by Payee and all repayments of the principal thereof may be
recorded by Payee and, before any transfer hereof, endorsed by Payee on a schedule attached hereto,
or on a continuation of such schedule, provided that the failure of Payee to record any endorsement
shall not affect the obligation of Maker hereunder or under the Credit Agreement.

     9. THIS SWINGLINE NOTE IS BEING EXECUTED AND DELIVERED, AND IS INTENDED TO BE PERFORMED, IN
THE STATE OF NORTH CAROLINA. EXCEPT TO THE EXTENT THAT THE LAWS OF THE UNITED STATES MAY APPLY TO
THE TERMS HEREOF, THE SUBSTANTIVE LAWS OF THE STATE OF NORTH CAROLINA SHALL GOVERN THE VALIDITY,
CONSTRUCTION, ENFORCEMENT, AND INTERPRETATION OF THIS SWINGLINE NOTE.

	 	 	 	 	 	 	 
	 	 	D. R. HORTON, INC., a Delaware corporation
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 	 	 	 	 
	 

	 	 	 	Name:	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Title:	 	 
	 

	 	 	 	 	 	 

Exhibit F-2

 

EXHIBIT G

FORM OF GUARANTY AGREEMENT

     THIS GUARANTY AGREEMENT (this “Guaranty Agreement”) is executed as of December ___, 2005, by
EACH OF THE SUBSIDIARIES OF D. R. HORTON, INC., a Delaware corporation (“Borrower”), LISTED ON
SCHEDULE 1 ATTACHED HERETO or who become a party hereto pursuant to Section 5.11 below (each a
“Guarantor” and collectively, “Guarantors”) for the benefit of the Credit Parties defined below.

R E C I T A L S:

     1. Borrower may from time to time be indebted to the Credit Parties pursuant to that certain
Revolving Credit Agreement dated as of December ___, 2005 (as modified, amended, renewed, extended,
supplemented, or restated from time to time, the “Credit Agreement”), by and among Borrower,
Wachovia Bank, National Association, as Administrative Agent (in such capacity, “Administrative
Agent”), the Letter of Credit Issuers defined therein, the Swingline Lender defined therein and the
Lenders defined therein (Administrative Agent, Letter of Credit Issuer, Swingline Lender and the
Lenders, together with their respective successors and assigns, being herein called the “Credit
Parties”).

     2. Capitalized terms used herein shall, unless otherwise indicated, have the respective
meanings set forth in the Credit Agreement.

     3. The Credit Parties are not willing to make loans under the Credit Agreement or otherwise
extend credit to Borrower unless Guarantors unconditionally guarantee payment of all present and
future indebtedness and obligations of Borrower to the Credit Parties under the Credit Agreement
and the Loan Documents pursuant to this Guaranty Agreement.

     4. Each Guarantor will, directly or indirectly, benefit from the Credit Parties’ extension of
credit to Borrower.

     NOW, THEREFORE, as an inducement to the Credit Parties to enter into the Credit Agreement and
to make loans to Borrower thereunder, and to extend such credit to Borrower as the Credit Parties
may from time to time agree to extend, and for other good and valuable consideration, the receipt
and legal sufficiency of which are hereby acknowledged, Guarantors hereby jointly and severally
guarantee payment of the Guaranteed Debt (hereinafter defined) as more specifically described
hereinbelow in Section 1.3 and hereby agree as follows:

SECTION 1

NATURE AND SCOPE OF GUARANTY

     1.1 Definition of Guaranteed Debt. As used herein, the term “Guaranteed Debt” means:

     (a) All principal, interest, fees, reasonable attorneys’ fees, commitment fees, liabilities
for costs and expenses, and other indebtedness, obligations, and liabilities of Borrower to the
Credit Parties at

 Exhibit G

 

 

any time created or arising in connection with the Credit Agreement including, but not limited
to, all indebtedness, obligations and liabilities of Borrower to the Credit Parties arising under
the Notes and the other Loan Documents; and

     (b) All costs, expenses, and fees including, but not limited to, court costs and reasonable
attorneys’ fees, arising in connection with the collection of any or all amounts, indebtedness,
obligations, and liabilities of Borrower to the Credit Parties described in item (a) of this
Section 1.1.

     1.2 Guaranteed Debt Not Reduced by Offset. The indebtedness, liabilities, obligations, and
other Guaranteed Debt guaranteed hereby, and the liabilities and obligations of Guarantors to the
Credit Parties hereunder, shall not be reduced, discharged, or released because or by reason of any
existing or future offset, claim, or defense of Borrower, or any other party, against any Credit
Party or against payment of the Guaranteed Debt, whether such offset, claim or defense arises in
connection with the Guaranteed Debt (or the transactions creating the Guaranteed Debt) or
otherwise. Without limiting the foregoing or Guarantors’ liability hereunder, to the extent that
any Credit Party advances funds or extends credit to Borrower, and does not receive payments or
benefits thereon in the amounts and at the times required or provided by applicable agreements or
laws, Guarantors are absolutely liable, jointly and severally, to make such payments to (and confer
such benefits on) such Credit Party, on a timely basis.

     1.3 Guaranty of Obligation. Guarantors hereby irrevocably and unconditionally guarantee,
jointly and severally, to the Credit Parties (a) the due and punctual payment of the Guaranteed
Debt, and (b) the timely performance of all other obligations now or hereafter owed by Borrower to
the Credit Parties under the Credit Agreement. Each Guarantor hereby irrevocably and
unconditionally covenants and agrees that it is liable for the Guaranteed Debt as primary obligor.

     1.4 Nature of Guaranty. This Guaranty Agreement is intended to be an irrevocable, absolute,
continuing guaranty of payment and is not a guaranty of collection. This Guaranty Agreement may
not be revoked by any Guarantor; provided, however, if, according to applicable law, it shall ever
be determined or held that a guarantor under a continuing guaranty such as this Guaranty Agreement
shall have the absolute right, notwithstanding the express agreement of such a guarantor otherwise,
to revoke such guaranty as to Guaranteed Debt which has then not yet arisen, then any Guarantor may
deliver to Administrative Agent written notice, in addition to giving such notice as provided in
Section 5.2 hereof, that such Guarantor will not be liable hereunder for any Guaranteed Debt
created, incurred, or arising after the giving of such notice, and such notice will be effective as
to such Guarantor from and after (but not before) such times as said written notice is actually
delivered to, in addition to giving such notice as provided in Section 5.2 hereof, and received by
and receipted for in writing by Administrative Agent (unless such notice is refused by
Administrative Agent in which case such notice shall be effective when delivered to, and rejected
by, Administrative Agent); provided that such notice shall not in anywise affect, impair, or limit
the liability and responsibility of any other person or entity with respect to any Guaranteed Debt
theretofore existing or thereafter existing, arising, renewed, extended, or modified; provided,
further, that such notice shall not affect, impair, or release the liability and responsibility of
such Guarantor with respect to Guaranteed Debt created, incurred, or arising (or in respect of any
Guaranteed Debt agreed or contemplated, in any respect, to be created, whether advanced or not and
whether committed to by the Credit Parties or not, including, without limitation, any discretionary
advances or extensions of credit which may be made by any Credit Party at its option in the future
under any type of loan or credit agreement, arrangement or undertaking) prior to the receipt of
such notice by Administrative Agent as aforesaid, or in respect of any renewals, extensions, or
modifications of such Guaranteed Debt, or in respect of interest or costs of collection thereafter
accruing on or with respect to

 Exhibit G

2

 

such Guaranteed Debt, or with respect to attorneys’ fees thereafter becoming payable hereunder
with respect to such Guaranteed Debt, and shall continue to be effective with respect to any
Guaranteed Debt arising or created after any attempted revocation by any Guarantor. The fact that
at any time or from time to time the Guaranteed Debt may be increased, reduced, or paid in full
shall not release, discharge, or reduce the obligation of Guarantors with respect to indebtedness
or obligations of Borrower to the Credit Parties thereafter incurred (or other Guaranteed Debt
thereafter arising) under the Credit Agreement, the Notes, or otherwise. This Guaranty Agreement
may be enforced by the Credit Parties and any subsequent holder of the Guaranteed Debt and shall
not be discharged by the assignment or negotiation of all or part of the Guaranteed Debt.

     1.5 Payment by Guarantors. If all or any part of the Guaranteed Debt shall not be punctually
paid when due, whether at maturity or earlier by acceleration or otherwise, then Guarantors shall,
immediately upon demand by Administrative Agent, and without presentment, protest, notice of
protest, notice of nonpayment, notice of intention to accelerate or acceleration, or any other
notice whatsoever, pay in lawful money of the United States of America, the amount due on the
Guaranteed Debt to Administrative Agent, for the benefit of the Credit Parties, at Administrative
Agent’s office set forth in the Credit Agreement. Such demand(s) may be made at any time
coincident with or after the time for payment of all or part of the Guaranteed Debt, and may be
made from time to time with respect to the same or different items of Guaranteed Debt. Such demand
shall be deemed made, given, and received in accordance with Section 5.2 hereof.

     1.6 Payment of Expenses. In the event that any Guarantor should breach or fail to timely
perform any provisions of this Guaranty Agreement, then Guarantors shall, immediately upon demand
by Administrative Agent, pay to Administrative Agent, for the benefit of the Credit Parties, all
reasonable costs and expenses (including court costs and reasonable attorneys’ fees) incurred by
the Credit Parties in the enforcement hereof or the preservation of the Credit Parties’ rights
hereunder. The covenant contained in this Section 1.6 shall survive the payment of the Guaranteed
Debt.

     1.7 No Duty to Pursue Others. It shall not be necessary for any Credit Party (and Guarantors
hereby waive any rights which Guarantors may have to require any Credit Party), in order to enforce
such payment by any Guarantor, first to (a) institute suit or exhaust its remedies against Borrower
or others liable on the Guaranteed Debt or any other person, (b) enforce the Credit Parties’ rights
against any security which shall ever have been given to secure the Guaranteed Debt, (c) enforce
the Credit Parties’ rights against any other Guarantor or any other guarantors of the Guaranteed
Debt, (d) join Borrower, any other Guarantor, or any others liable on the Guaranteed Debt in any
action seeking to enforce this Guaranty Agreement, (e) exhaust any remedies available to the Credit
Parties against any security which shall ever have been given to secure the Guaranteed Debt, or (f)
resort to any other means of obtaining payment of the Guaranteed Debt. The Credit Parties shall
not be required to mitigate damages or take any other action to reduce, collect, or enforce the
Guaranteed Debt. Further, each Guarantor expressly waives each and every right to which any
Guarantor may be entitled by virtue of the suretyship law of the State of North Carolina, including
without limitation, any rights pursuant to N.C.G.S. §§ 26-7, 8 and 9, or any similar applicable law
in any other jurisdiction.

     1.8 Waiver of Notices, etc. Each Guarantor agrees to the provisions of the Credit Agreement,
the Notes, and the other Loan Documents, and hereby waives notice of (a) any loans or advances made
by any Credit Party to Borrower, (b) acceptance of this Guaranty Agreement, (c) any amendment,
waiver, supplement, or extension of the Credit Agreement, the Notes, the other Loan Documents, or
any other instrument or document pertaining to all or any part of the Guaranteed Debt,

 Exhibit G

3

 

(d) the execution and delivery by Borrower and any Credit Party of any other loan or credit
agreement or of Borrower’s execution and delivery of any promissory notes or other documents in
connection therewith, (e) the occurrence of any Default or Event of Default, (f) any Credit Party’s
transfer or disposition of the Guaranteed Debt, or any part thereof, (g) sale or foreclosure (or
posting or advertising for sale or foreclosure) of any collateral for the Guaranteed Debt, (h)
protest, proof of nonpayment, or default by Borrower, (i) the release of any other Guarantor, or
(j) any other action at any time taken or omitted by any Credit Party, and, generally, all demands
and notices of every kind in connection with this Guaranty Agreement, the Credit Agreement, the
Notes, the other Loan Documents, and any documents or agreements evidencing, securing, or relating
to any of the Guaranteed Debt and the obligations hereby guaranteed.

     1.9 Effect of Bankruptcy, Other Matters. In the event that, pursuant to any insolvency,
bankruptcy, reorganization, receivership, or other debtor relief law, or any judgment, order, or
decision thereunder, or for any other reason, (a) any Credit Party must rescind or restore any
payment, or any part thereof, received by such Credit Party in satisfaction of the Guaranteed Debt,
as set forth herein, any prior release or discharge from the terms of this Guaranty Agreement given
to any Guarantor by such Credit Party shall be without effect, and this Guaranty Agreement shall
remain in full force and effect, or (b) Borrower shall cease to be liable to the Credit Parties for
any of the Guaranteed Debt (other than by reason of the indefeasible payment in full thereof by
Borrower), then the obligations of each Guarantor under this Guaranty Agreement shall remain in
full force and effect. It is the intention of the Credit Parties and Guarantors that Guarantors’
obligations hereunder shall not be discharged except by Guarantor’s performance of such obligations
and then only to the extent of such performance. Without limiting the generality of the foregoing,
it is the intention of the Credit Parties and Guarantors that the filing of any bankruptcy or
similar proceeding by or against Borrower or any other person or party obligated on any portion of
the Guaranteed Debt shall not affect the obligations of Guarantors under this Guaranty Agreement or
the rights of the Credit Parties under this Guaranty Agreement, including, without limitation, the
right or ability of the Credit Parties to pursue or institute suit against any Guarantor for the
entire Guaranteed Debt.

     1.10 Limitation. It is the intention of Guarantors and the Credit Parties that the amount of
the Guaranteed Debt shall be in, but not in excess of, the maximum amount permitted by fraudulent
conveyance, fraudulent transfer, or other similar laws applicable to Guarantors. Accordingly,
notwithstanding anything to the contrary contained in this Guaranty Agreement or any other
agreement or instrument executed in connection with the payment of any of the Guaranteed Debt, the
amount of the Guaranteed Debt shall be limited to that amount which after giving effect thereto
would not (a) render any Guarantor insolvent, (b) result in the fair saleable value of the assets
of any Guarantor being less than the amount required to pay its debts and other liabilities
(including contingent liabilities) as they mature, or (c) leave any Guarantor with unreasonably
small capital to carry out its business as now conducted and as proposed to be conducted, including
its capital needs, as such concepts described in (a), (b), and (c) herein are determined under
applicable law, if the obligations of such Guarantor hereunder would otherwise be set aside,
terminated, annulled, or avoided for such reason by a court of competent jurisdiction in a
proceeding actually pending before such court.

     1.11 Set-Off. Upon the occurrence and during the continuance of any Event of Default, each
Credit Party (and each of its Affiliates) is hereby authorized at any time and from time to time,
to the fullest extent permitted by Applicable Laws, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held and other indebtedness
at any time owing by such Credit Party (or any of its Affiliates) to or for the credit or the
account of any Guarantor against any and

 Exhibit G

4

 

all of the obligations of any Guarantor now or hereafter existing under this Guaranty
Agreement, irrespective of whether such Credit Party shall have made any demand under this Guaranty
Agreement and although such obligations may be unmatured.

SECTION 2

ADDITIONAL EVENTS AND CIRCUMSTANCES NOT REDUCING

OR DISCHARGING GUARANTORS’ OBLIGATIONS

     Guarantors hereby consent and agree to each of the following, and agree that Guarantors’
obligations under this Guaranty Agreement shall not be released, diminished, impaired, reduced, or
adversely affected by any of the following, and waives any common law, equitable, statutory, or
other rights (including without limitation rights to notice) which Guarantors might otherwise have
as a result of or in connection with any of the following:

     2.1 Modifications, etc. Any renewal, extension, increase, modification, waiver, alteration,
or rearrangement of all or any part of the Guaranteed Debt, or of the Credit Agreement, the Notes,
or any other Loan Document and, without limiting the foregoing, each Guarantor expressly agrees to
any extension or increase effected pursuant to the terms of Section 2.7(e) or Section 2.10(b) of
the Credit Agreement;

     2.2 Adjustment, etc. Any adjustment, indulgence, forbearance, waiver, or compromise that
might be granted or given by any Credit Party to Borrower or any Guarantor;

     2.3 Condition, Composition or Structure of Borrower or Guarantors. The insolvency,
bankruptcy, arrangement, adjustment, composition, structure, liquidation, disability, dissolution,
or lack of power of Borrower, any Guarantor, or any other party at any time liable for the payment
of all or part of the Guaranteed Debt; or any dissolution of Borrower or any Guarantor, or any
sale, lease, or transfer of any or all of the assets of Borrower or any Guarantor, or any changes
in name, business, location, composition, structure, or changes in the shareholders, partners, or
members (whether by accession, secession, cessation, death, dissolution, transfer of assets, or
other matter) of Borrower or any Guarantor; or any reorganization of Borrower or any Guarantor;

     2.4 Invalidity of Guaranteed Debt. The invalidity, illegality, or unenforceability of all or
any part of the Guaranteed Debt, or any document or agreement executed in connection with the
Guaranteed Debt, for any reason whatsoever, including without limitation the fact that (a) the
Guaranteed Debt, or any part thereof, exceeds the amount permitted by law, (b) the act of creating
the Guaranteed Debt or any part thereof is ultra vires, (c) the officers or representatives
executing the Credit Agreement, the Notes, the other Loan Documents, or other documents or
otherwise creating the Guaranteed Debt acted in excess of their authority, (d) the Guaranteed Debt
violates applicable usury laws, (e) Borrower has valid defenses, claims, or offsets (whether at
law, in equity, or by agreement) which render the Guaranteed Debt wholly or partially uncollectible
from Borrower, (f) the creation, performance, or repayment of the Guaranteed Debt (or the
execution, delivery, and performance of any document or instrument representing part of the
Guaranteed Debt or executed in connection with the Guaranteed Debt, or given to secure the
repayment of the Guaranteed Debt) is illegal, uncollectible, or unenforceable, or (g) the Credit
Agreement, the Notes, the other Loan Documents, or other documents or instruments pertaining to the
Guaranteed Debt have been forged or otherwise are irregular or not genuine or authentic.

 Exhibit G

5

 

     2.5 Release of Obligors. Any full or partial release of the liability of Borrower on the
Guaranteed Debt or any part thereof, or of any co-guarantors, or any other person or entity now or
hereafter liable, whether directly or indirectly, jointly, severally, or jointly and severally, to
pay, perform, guarantee, or assure the payment of the Guaranteed Debt or any part thereof, it being
recognized, acknowledged and agreed by Guarantors that Guarantors may be required to pay the
Guaranteed Debt in full without assistance or support of any other party, and Guarantors have not
been induced to enter into this Guaranty Agreement on the basis of a contemplation, belief,
understanding, or agreement that other parties will be liable to perform the Guaranteed Debt, or
that the Credit Parties will look to other parties to perform the Guaranteed Debt; notwithstanding
the foregoing, Guarantors do not hereby waive or release (expressly or impliedly) any rights of
subrogation, reimbursement, or contribution which they may have, after payment in full of the
Guaranteed Debt, against others liable on the Guaranteed Debt; Guarantors’ rights of subrogation
and reimbursement are, however, subordinate to the rights and claims of the Credit Parties;

     2.6 Other Security. The taking or accepting of any other security, collateral, or guaranty, or
other assurance of payment, for all or any part of the Guaranteed Debt;

     2.7 Release of Collateral, etc. Any release, surrender, exchange, subordination,
deterioration, waste, loss, or impairment (including without limitation negligent, willful,
unreasonable, or unjustifiable impairment) of any collateral, property, or security, at any time
existing in connection with, or assuring or securing payment of, all or any part of the Guaranteed
Debt;

     2.8 Care and Diligence. The failure of any Credit Party or any other party to exercise
diligence or reasonable care or act, fail to act, or comply with any duty in the administration,
preservation, protection, enforcement, sale application, disposal, or other handling or treatment
of all or any part of the Guaranteed Debt or any collateral, property, or security at any time
securing any portion thereof, including, without limiting the generality of the foregoing, the
failure to conduct any foreclosure or other remedy fairly, in a commercially reasonable manner, or
in such a way so as to obtain the best possible price or a favorable price or otherwise act or fail
to act;

     2.9 Status of Liens. The fact that any collateral, security, security interest, or lien
contemplated or intended to be given, created, or granted as security for the repayment of the
Guaranteed Debt shall not be properly perfected or created, or shall prove to be unenforceable or
subordinate to any other security interest or lien, it being recognized and agreed by Guarantors
that Guarantors are not entering into this Guaranty Agreement in reliance on, or in contemplation
of the benefits of, the validity, enforceability, collectibility, or value of any of the collateral
for the Guaranteed Debt; notwithstanding the foregoing, Guarantors do not hereby waive or release
(expressly or impliedly) any right to be subrogated to the rights of the Credit Parties in any
collateral or security for the Guaranteed Debt after payment in full of the Guaranteed Debt;
Guarantors’ rights of subrogation are, however, subordinate to the rights, claims, liens, and
security interests of the Credit Parties;

     2.10 Offset. Any existing or future right of offset, claim, or defense of Borrower against
the Credit Parties, or any other party, or against payment of the Guaranteed Debt, whether such
right of offset, claim, or defense arises in connection with the Guaranteed Debt (or the
transactions creating the Guaranteed Debt) or otherwise;

     2.11 Merger. The reorganization, merger, or consolidation of Borrower or any Guarantor into
or with any other corporation or entity;

 Exhibit G

6

 

     2.12 Preference. Any payment by Borrower to any Credit Party is held to constitute a
preference under bankruptcy laws, or for any reason any Credit Party is required to refund such
payment or pay such amount to Borrower or someone else; or

     2.13 Other Actions Taken or Omitted. Any other action taken or omitted to be taken with
respect to the Credit Agreement, the Guaranteed Debt, or the security and collateral therefor,
whether or not such action or omission prejudices Guarantors or increases the likelihood or risk
that Guarantors will be required to pay the Guaranteed Debt pursuant to the terms hereof; it is the
unambiguous and unequivocal intention of Guarantors that Guarantors shall be obligated to pay the
Guaranteed Debt when due, notwithstanding any occurrence, circumstance, event, action, or omission
whatsoever, whether contemplated or uncontemplated, and whether or not otherwise or particularly
described herein, except for the full and final payment and satisfaction of the Guaranteed Debt.

SECTION 3

REPRESENTATIONS AND WARRANTIES

     To induce the Credit Parties to enter into the Credit Agreement and extend credit to Borrower,
each Guarantor represents and warrants to the Credit Parties that:

     3.1 Benefit. Each Guarantor has received, or will receive, direct or indirect benefit from
the making of this Guaranty and the Guaranteed Debt;

     3.2 Familiarity and Reliance. Each Guarantor is familiar with, and has independently reviewed
books and records regarding, the financial condition of Borrower and is familiar with the value of
any and all collateral intended to be created as security for the payment of the Guaranteed Debt;
however, no Guarantor is relying on such financial condition or the collateral as an inducement to
enter into this Guaranty Agreement;

     3.3 No Representation by the Credit Parties. No Credit Party or any other party has made any
representation, warranty, or statement to any Guarantor in order to induce any Guarantor to execute
this Guaranty Agreement;

     3.4 Guarantors’ Financial Condition. As of the date hereof, and after giving effect to this
Guaranty Agreement and the contingent obligation evidenced hereby, each Guarantor is, and will be,
solvent;

     3.5. Determination of Benefit. The Board of Directors, partners, members, or other managers
or owners of each Guarantor, acting pursuant to a duly called and constituted meeting, after proper
notice, or pursuant to a valid unanimous consent, has determined that this Guaranty directly or
indirectly benefits such Guarantor and is in the best interests of such Guarantor;

     3.6 Legality. The execution, delivery, and performance by each Guarantor of this Guaranty
Agreement and the consummation of the transactions contemplated hereunder (a) have been duly
authorized by all necessary action of each Guarantor, and (b) do not, and will not, contravene or
conflict with any law, statute, or regulation whatsoever to which any Guarantor is subject or
constitute a default (or an event which with notice or lapse of time or both would constitute a
default) under, or result in the

 Exhibit G

7

 

breach of, any indenture, mortgage, deed of trust, charge, lien, or any contract, agreement,
or other instrument to which any Guarantor is a party or which may be applicable to any Guarantor
or any of its assets, or violate any provisions of its Constituent Documents; this Guaranty
Agreement is a legal and binding obligation of each Guarantor and is enforceable in accordance with
its terms, except as limited by bankruptcy, insolvency or other laws of general application
relating to the enforcement of creditors’ rights;

     3.7 Credit Agreement. The representations and warranties in the Credit Agreement with respect
to each Guarantor are true and correct; and

     3.8 Survival. All representations and warranties made by Guarantors herein shall survive the
execution hereof.

SECTION 4

SUBORDINATION OF CERTAIN INDEBTEDNESS

     4.1 Subordination of Guarantor Claims. As used herein, the term “Guarantor Claims” shall mean
all debts and liabilities of Borrower to any Guarantor, whether such debts and liabilities now
exist or are hereafter incurred or arise, or whether the obligations of Borrower thereon be direct,
contingent, primary, secondary, several, joint and several, or otherwise, and irrespective of
whether such debts or liabilities be evidenced by note, contract, open account, or otherwise, and
irrespective of the person or persons in whose favor such debts or liabilities may, at their
inception, have been, or may hereafter be created, or the manner in which they have been or may
hereafter be acquired by any Guarantor. The Guarantor Claims shall include without limitation all
rights and claims of each Guarantor against Borrower (arising as a result of subrogation or
otherwise) as a result of any Guarantor’s payment of all or a portion of the Guaranteed Debt.
Until the Guaranteed Debt shall be indefeasibly paid and satisfied in full, the termination or
expiration of all Letters of Credit and the Total Revolving Credit Commitment, and Guarantors shall
have performed all of their obligations hereunder, if a Default or Event of Default exists, then
Guarantors shall not receive or collect , directly or indirectly, from Borrower or any other party
any amount upon the Guarantor Claims (other than payments in the ordinary course of business).

     4.2 Claims in Bankruptcy. In the event of receivership, bankruptcy, reorganization,
arrangement, debtor’s relief, or other insolvency proceedings involving Borrower as debtor, the
Credit Parties shall have the right to prove its claim in any such proceeding so as to establish
its rights hereunder and receive directly from the receiver, trustee, or other court custodian
dividends and payments which would otherwise be payable upon Guarantor Claims. Each Guarantor
hereby assigns such dividends and payments to the Credit Parties. Should any Credit Party receive,
for application upon the Guaranteed Debt, any such dividend or payment which is otherwise payable
to any Guarantor, and which, as between Borrower and such Guarantor, shall constitute a credit upon
the Guarantor Claims, then upon indefeasible payment to the Credit Parties in full of the
Guaranteed Debt, and the termination or expiration of all Letters of Credit and the Total Revolving
Credit Commitment, such Guarantor shall become subrogated to the rights of the Credit Parties to
the extent that such payments to the Credit Parties on the Guarantor Claims have contributed toward
the liquidation of the Guaranteed Debt, and such subrogation shall be with respect to that
proportion of the Guaranteed Debt which would have been unpaid if the Credit Parties had not
received dividends or payments upon the Guarantor Claims.

 Exhibit G

8

 

     4.3 Payments Held in Trust. In the event that, notwithstanding Sections 4.1 and 4.2 above,
any Guarantor should receive any funds, payment, claim or distribution which is prohibited by such
Sections, such Guarantor agrees to hold in trust for the Credit Parties, in kind, all funds,
payments, claims, or distributions so received, and agrees that it shall have absolutely no
dominion over such funds, payments, claims, or distributions so received except to pay them
promptly to Administrative Agent, for the benefit of the Credit Parties, and such Guarantor
covenants promptly to pay the same to Administrative Agent, for the benefit of the Credit Parties.

     4.4 Liens Subordinate. Each Guarantor agrees that any liens, security interests, judgment
liens, charges, or other encumbrances upon Borrower’s assets securing payment of the Guarantor
Claims shall be and remain inferior and subordinate to any liens, security interests, judgment
liens, charges, or other encumbrances upon Borrower’s assets securing payment of the Guaranteed
Debt, regardless of whether such encumbrances in favor of such Guarantor or the Credit Parties
presently exist or are hereafter created or attached. Without the prior written consent of
Administrative Agent, no Guarantor shall (a) exercise or enforce any creditor’s right it may have
against Borrower, or (b) foreclose, repossess, sequester, or otherwise take steps or institute any
action or proceedings (judicial or otherwise, including, without limitation, the commencement of,
or joinder in, any liquidation, bankruptcy, rearrangement, debtor’s relief, or insolvency
proceeding) to enforce any liens, mortgages, deeds of trust, security interest, collateral rights,
judgments, or other encumbrances on assets of Borrower held by any Guarantor.

SECTION 5

MISCELLANEOUS

     5.1 Waiver. No failure to exercise, and no delay in exercising, on the part of any Credit
Party, any right hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise of any other right.
The rights of the Credit Parties hereunder shall be in addition to all other rights provided by
law. No modification or waiver of any provision of this Guaranty Agreement, nor consent to
departure therefrom, shall be effective unless in writing and no such consent or waiver shall
extend beyond the particular case and purpose involved. No notice or demand given in any case
shall constitute a waiver of the right to take other action in the same, similar, or other
instances without such notice or demand.

     5.2 Notices. Any notices or other communications required or permitted to be given by this
Guaranty Agreement must be (a) given in writing and personally delivered or mailed by prepaid
certified or registered mail, return receipt requested, or (b) made by tested telex delivered or
transmitted, to the party to whom such notice or communication is directed, to the address of such
party as follows:

 Exhibit G

9

 

	 	 	 
	Guarantor:
	 
	 	 
	c/o D. R. Horton, Inc.
	301 Commerce Street
	Suite 500
	Fort Worth, TX 76102
	Attention:

	 	Samuel R. Fuller
	 

	 	Bill W. Wheat
	 

	 	Stacey H. Dwyer
	Fax:

	 	817-390-1715 (Mr. Fuller)
	Fax:

	 	972-620-6813 (Mr. Wheat)
	Fax:

	 	817-390-1715 (Ms. Dwyer)
	Phone:

	 	817-390-8200
	 
	 	 
	with a copy to:
	 
	 	 
	Ted I. Harbour, Esq.
	301 Commerce Street
	Suite 500
	Fort Worth, TX 76102
	Fax:

	 	972-620-6863
	Phone:

	 	817-390-8200
	 
	 	 
	Credit Parties:
	 
	 	 
	Wachovia Bank, National Association, as Administrative Agent
	401 S. Tryon St, NC1193
	Charlotte, NC 28288
	Attn:

	 	R. Scott Holtzapple, Senior Vice President,
	 

	 	REFS Risk Management
	Fax:

	 	704-383-7146
	Phone:

	 	704-383-0474

Any such notice or other communication shall be deemed to have been given (whether actually
received or not) on the day it is personally delivered as aforesaid or, if mailed, on the day it is
mailed as aforesaid, or, if transmitted by telex, on the day that such notice is transmitted as
aforesaid. Any party may change its address for purposes of this Guaranty Agreement by giving
notice of such change to the other party pursuant to this Section 5.2.

     5.3 Governing Law. This Guaranty Agreement has been prepared, and is intended to be
performed in the State of North Carolina, and the substantive laws of such state shall govern the
validity, construction, enforcement, and interpretation of this Guaranty Agreement. For purposes
of this Guaranty Agreement and the resolution of disputes hereunder, each Guarantor hereby
irrevocably submits and consents to, and waives any objection to, the non-exclusive jurisdiction of
the courts 

 Exhibit G

10

 

of the State of North Carolina located in Charlotte, North Carolina and of the federal
court located in the Western District of North Carolina.

     5.4 Invalid Provisions. If any provision of this Guaranty Agreement is held to be illegal,
invalid, or unenforceable under present or future laws effective during the term of this Guaranty
Agreement, such provision shall be fully severable and this Guaranty Agreement shall be construed
and enforced as if such illegal, invalid, or unenforceable provision had never comprised a part of
this Guaranty Agreement, and the remaining provisions of this Guaranty Agreement shall remain in
full force and effect and shall not be affected by the illegal, invalid, or unenforceable provision
or by its severance from this Guaranty Agreement, unless such continued effectiveness of this
Guaranty Agreement, as modified, would be contrary to the basic understandings and intentions of
the parties as expressed herein.

     5.5 Entirety and Amendments. This Guaranty Agreement embodies the entire agreement between
the parties and supersedes all prior agreements and understandings, if any, relating to the subject
matter hereof, and this Guaranty Agreement may be amended only by an instrument in writing executed
by an authorized officer of the party against whom such amendment is sought to be enforced.

     5.6 Parties Bound; Assignment. This Guaranty Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors, assigns, and legal representatives;
provided, however, that no Guarantor may, without the prior written consent of Administrative
Agent, assign any of its rights, powers, duties, or obligations hereunder.

     5.7 Headings. Section headings are for convenience of reference only and shall in no way
affect the interpretation of this Guaranty Agreement.

     5.8 Multiple Counterparts. This Guaranty Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same agreement, and any of
the parties hereto may execute this Guaranty Agreement by signing any such counterpart.

     5.9 Rights and Remedies. If any Guarantor becomes liable for any indebtedness owing by
Borrower to the Credit Parties, by endorsement or otherwise, other than under this Guaranty
Agreement, then such liability shall not be in any manner impaired or affected hereby and the
rights of the Credit Parties hereunder shall be cumulative of any and all other rights that the
Credit Parties (or any of them) may ever have against such Guarantor. The exercise by the Credit
Parties of any right or remedy hereunder or under any other instrument, or at law or in equity,
shall not preclude the concurrent or subsequent exercise of any other right or remedy.

     5.10 Waiver of Trial by Jury. Each Guarantor hereby waives its respective rights
to a trial by jury of any claim or cause of action based upon or arising out of this Guaranty
Agreement. This waiver is irrevocable and shall apply to any subsequent amendments, modifications,
renewals, extensions, or supplements to this Guaranty Agreement. In the event of litigation, this
Guaranty Agreement may be filed as a written consent to trial by the court.

     5.11 Additional Guarantors. The initial Guarantors hereunder shall be each of the
Subsidiaries of Borrower that are signatories hereto and that are listed on Schedule 1 attached
hereto. From time to time subsequent to the time hereof, additional Subsidiaries of Borrower may
become parties hereto as additional Guarantors (each an “Additional Guarantor”) by executing a
counterpart of this

 Exhibit G

11

 

Guaranty Agreement in the form of Exhibit A attached hereto. Upon delivery of any such
counterpart to Administrative Agent, notice of which is hereby waived by Guarantors, each such
Additional Guarantor shall be a Guarantor and shall be a party hereto as if such Additional
Guarantor were an original signatory hereof. Each Guarantor expressly agrees that its obligations
arising hereunder shall not be affected or diminished by the addition or release of any other
Guarantor hereunder, or by any election by Administrative Agent not to cause any Subsidiary of
Borrower to become an Additional Guarantor hereunder. This Guaranty Agreement shall be fully
effective as to any Guarantor that is or becomes a party hereto regardless of whether any such
person becomes or fails to become or ceases to be a Guarantor hereunder.

     5.12 Release of Guarantors. Pursuant to Section 3.1(f) of the Credit Agreement, any Guarantor
may be released from its obligations under this Guaranty Agreement by Administrative Agent’s
execution of a Release of Guaranty in the form of Exhibit B attached hereto. Each Guarantor
expressly agrees that its obligations arising hereunder shall not be affected or diminished by the
release of any other Guarantor hereunder.

Remainder of Page Intentionally Blank;

Signature Page Follows.

 Exhibit G

12

 

     EXECUTED as of the day and year first above written.

GUARANTORS:

Signature Page to

Guaranty

 

 

SCHEDULE 1 [to Form of Subsidiary Guaranty]

INITIAL GUARANTORS

C. Richard Dobson Builders, Inc., a Virginia corporation

CH Investments of Texas, Inc., a Delaware corporation

CHI Construction Company, an Arizona corporation

CHTEX of Texas, Inc., a Delaware corporation

Continental Homes, Inc., a Delaware corporation

Continental Homes of Texas, L.P., a Texas limited partnership

Continental Residential, Inc., a California corporation

D.R. Horton — Emerald, Ltd., a Texas limited partnership

D.R. Horton, Inc. — Birmingham, an Alabama corporation

D.R. Horton, Inc. — Chicago, a Delaware corporation

D.R. Horton, Inc. — Denver, a Delaware corporation

D.R. Horton, Inc. — Dietz-Crane, a Delaware corporation

D.R. Horton, Inc. — Greensboro, a Delaware corporation

D.R. Horton, Inc. — Jacksonville, a Delaware corporation

D.R. Horton, Inc. — Louisville, a Delaware corporation

D.R. Horton, Inc. — Minnesota, a Delaware corporation

D.R. Horton, Inc. — New Jersey, a Delaware corporation

D.R. Horton, Inc. — Portland, a Delaware corporation

D.R. Horton, Inc. — Sacramento, a California corporation

D.R. Horton, Inc. — Torrey, a Delaware corporation

D.R. Horton Los Angeles Holding Company, Inc., a California corporation

D.R. Horton Management Company, Ltd., a Texas limited partnership

D.R. Horton San Diego Holding Company, Inc., a California corporation

D.R. Horton — Texas, Ltd., a Texas limited partnership

DRH Cambridge Homes, Inc., a California corporation

DRH Cambridge Homes, LLC, a Delaware limited liability company

DRH Construction, Inc., a Delaware corporation

The Club at Pradera, Inc., a Delaware corporation

D.R. Horton Materials, Inc., a Delaware corporation

D.R. Horton Inc. — Fresno (f/k/a DRH Regrem IV, Inc.), a Delaware corporation

D.R. Horton Inc. — Gulf Coast (f/k/a DRH Regrem V, Inc.), a Delaware corporation

DRH Regrem VII, LP, a Texas limited partnership

DRH Regrem VIII, LLC, a Delaware limited liability company

DRH Southwest Construction, Inc., California corporation

DRH Energy, Inc., a Colorado corporation

DRH Tucson Construction, Inc., a Delaware corporation

DRHI, Inc., a Delaware corporation

KDB Homes, Inc., a Delaware corporation

Meadows I, Ltd., a Delaware corporation

Meadows II, Ltd., a Delaware corporation

Meadows VIII, Ltd., a Delaware corporation

Meadows IX, Inc., a New Jersey corporation

Meadows X, Inc., a New Jersey corporation

SGS Communities at Grande Quay, LLC, a New Jersey limited liability company

 Exhibit G

 

 

D.R. Horton-Schuler Homes, LLC, a Delaware limited liability company

HPH Homebuilders 2000, L.P., a California limited partnership

Melody Homes, Inc., a Delaware corporation

Melmort Co., a Colorado corporation

Schuler Homes of Arizona LLC, a Delaware limited liability company

Schuler Homes of California, Inc., a California corporation

Schuler Homes of Oregon, Inc., a Oregon corporation

Schuler Homes of Washington, Inc., a Washington corporation

Schuler Mortgage, Inc., a Delaware corporation

Schuler Realty Hawaii, Inc., a Hawaii corporation

SHA Construction LLC, a Delaware limited liability company

SHLR of California, Inc., a California corporation

SHLR of Colorado, Inc., a Colorado corporation

SHLR of Nevada, Inc., a Nevada corporation

SHLR of Utah, Inc., a Utah corporation

SHLR of Washington, Inc., a Washington corporation

SRHI LLC, a Delaware limited liability company

SSHI LLC, a Delaware limited liability company

Vertical Construction Corporation, a Delaware corporation

Western Pacific Funding, Inc., a California corporation

Western Pacific Housing Co., a California limited partnership

Western Pacific Housing Management, Inc., a California corporation

Western Pacific Housing, Inc., a Delaware corporation

Western Pacific Housing-Antigua, LLC, a Delaware limited liability company

Western Pacific Housing-Aviara, L.P., a California limited partnership

Western Pacific Housing-Boardwalk, LLC, a Delaware limited liability company

Western Pacific Housing-Broadway, LLC, a Delaware limited liability company

Western Pacific Housing-Canyon Park, LLC, a Delaware limited liability company

Western Pacific Housing-Carmel, LLC, a Delaware limited liability company

Western Pacific Housing-Carrillo, LLC, a Delaware limited liability company

Western Pacific Housing-Communications Hill, LLC, a Delaware limited liability company

Western Pacific Housing-Cooper Canyon, LLC, a Delaware limited liability company

Western Pacific Housing-Creekside, LLC, a Delaware limited liability company

Western Pacific Housing-Culver City, L.P., a California limited partnership

Western Pacific Housing-Del Valle, LLC, a Delaware limited liability company

Western Pacific Housing-Lomas Verdes, LLC, a Delaware limited liability company

Western Pacific Housing-Lost Hills Park, LLC, a Delaware limited liability company

Western Pacific Housing-McGonigle Canyon, LLC, a Delaware limited liability company

Western Pacific Housing-Mountaingate, L.P. a California limited partnership

Western Pacific Housing-Norco Estates, LLC, a Delaware limited liability company

Western Pacific Housing-Oso, L.P., a California limited partnership

Western Pacific Housing-Pacific Park II, LLC, a Delaware limited liability company

Western Pacific Housing-Park Avenue East, LLC, a Delaware limited liability company

Western Pacific Housing-Park Avenue West, LLC, a Delaware limited liability company

Western Pacific Housing-Playa Vista, LLC, a Delaware limited liability company

Western Pacific Housing-Poinsettia, L.P., a California limited partnership

Western Pacific Housing-River Ridge, LLC, a Delaware limited liability company

Western Pacific Housing-Robinhood Ridge, LLC, a Delaware limited liability company

 Exhibit G

 

 

Western Pacific Housing-Santa Fe, LLC, a Delaware limited liability company

Western Pacific Housing-Scripps II, LLC, a Delaware limited liability company

Western Pacific Housing-Scripps, L.P., a California limited partnership

Western Pacific Housing-Seacove, L.P., a California limited partnership

Western Pacific Housing-Studio 528, LLC, a Delaware limited liability company

Western Pacific Housing-Terra Bay Duets, LLC, a Delaware limited liability company

Western Pacific Housing-Torrance, LLC, a Delaware limited liability company

Western Pacific Housing-Torrey Commercial, LLC, a Delaware limited liability company

Western Pacific Housing-Torrey Meadows, LLC, a Delaware limited liability company

Western Pacific Housing-Torrey Multi-Family, LLC, a Delaware limited liability company

Western Pacific Housing-Torrey Village Center, LLC, a Delaware limited liability company

Western Pacific Housing-Vineyard Terrace, LLC, a Delaware limited liability company

Western Pacific Housing-Windemere, LLC, a Delaware limited liability company

Western Pacific Housing-Windflower, L.P., a California limited partnership

WPH-Camino Ruiz, LLC, a Delaware limited liability company

DRH Regrem IX, Inc., a Delaware corporation

DRH Regrem X, Inc., a Delaware corporation

DRH Regrem XI, Inc. a Delaware corporation

DRH Regrem XII, LP, a Texas limited partnership

 Exhibit G

 

 

EXHIBIT A [to Form of Subsidiary Guaranty]

COUNTERPART TO SUBSIDIARY GUARANTY

     In witness whereof, the undersigned Additional Guarantor has caused this Guaranty Agreement to
be executed and delivered by its officer thereunto duly authorized as of                     , 20 ___.

	 	 	 
	 	 	 
	 

	 	[NAME OF ADDITIONAL GUARANTOR]

	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 	 	 	 	 
	 

	 	 	 	Name:	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Title:	 	 
	 	 	 	 	 	 	 

 Exhibit G

 

 

EXHIBIT B [to Form of Subsidiary Guaranty]

FORM OF RELEASE OF GUARANTOR

     In witness whereof, the undersigned Administrative Agent, for itself and on behalf of each of
the Credit Parties (defined below), hereby releases and discharges                      from any and all obligations and liabilities of                      to
the Credit Parties under that certain Guaranty Agreement dated as of December ___, 2005, executed
by the Subsidiaries of D. R. Horton, Inc., a Delaware corporation, described therein in favor of
the Credit Parties defined therein.

	 	 	 	 	 	 	 
	 	 	WACHOVIA BANK, NATIONAL ASSOCIATION, a national banking
	 	 	association,
	 	 	as Administrative Agent
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 	 	 	 	 
	 

	 	 	 	Name:	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Title:	 	 
	 	 	 	 	 	 	 

 Exhibit G

 

 

EXHIBIT H

FORM OF LETTER OF CREDIT APPLICATION

See Attached

 Exhibit H

 

 

EXHIBIT I

FORM OF NOTICE CONVERSION/CONTINUATION

_______________ ___, 20__

To: Agent and each Lender

Ladies and Gentlemen:

Reference is made to that certain Revolving Credit Agreement dated as of December ___, 2005, among
D.R. HORTON, INC., a Delaware corporation (“Borrower”), the Lenders party thereto and WACHOVIA
BANK, NATIONAL ASSOCIATION, a national banking association having its main office in Charlotte,
North Carolina, as Administrative Agent, the Letter of Credit Issuers defined therein, the
Swingline Lender defined therein and the Lenders defined therein (as the same may be amended,
restated or modified from time to time, the “Credit Agreement”). Capitalized terms used but not
defined herein have the meanings given to such terms in the Credit Agreement.

This Notice of Conversion/Continuation is delivered to you pursuant to Section 2.15 of the Credit
Agreement.

The Borrower hereby requests, on behalf of itself, with respect to the existing outstanding
[Eurodollar Rate Loans] [LIBOR Rate Loans] in the original principal amount of $                    ,

	 	 	 	 	 
	 

	 	o
	 	A conversion of outstanding Revolving Credit Loans from Eurodollar
Rate Loans to LIBOR Rate Loans
	 

	 	o
	 	A continuation of LIBOR Rate Loans

	 	1.	 	On                                         . (This Notice of Conversion/Continuation is given prior
to 11:00 a.m., Eastern Standard Time or Eastern Daylight Time, as applicable, at least 3
Business Days prior to the requested date for the conversion or continuation (which shall
be a Business Day).)
	 
	 	2.	 	In the amount of                                         . (Each conversion from Eurodollar Rate
Loans to LIBOR Rate Loans and each continuation of LIBOR Rate Loans shall be in the
principal amount of $5,000,000 or any larger amount which is an even multiple of
$1,000,000.)

The conversion or continuation requested herein complies with Section 2.15 of the Credit Agreement.

	 	 	 	 	 
	 	 	D. R. HORTON, INC., a Delaware corporation
	 
	 	 	 	 
	 

	 	By:	 	 
	 	 	 	 	 
	 

	 	Name:	 	 
	 	 	 	 	 
	 

	 	Title:	 	 
	 	 	 	 	 

 Exhibit Hexv10w1

 

EXHIBIT 10.1

PIER 1

UMBRELLA TRUST

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	PAGE	 
	PREAMBLE	 	 	2	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 
	ARTICLE I Effective Date; Duration	 	 	4	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 
	 	 	 	 	 	1.01	 	 	Effective Date and Trust Year
	 	 	4	 
	 	 	 	 	 	1.02	 	 	Duration
	 	 	4	 
	 	 	 	 	 	1.03	 	 	Irrevocability
	 	 	5	 
	 	 	 	 	 	1.04	 	 	Special Circumstance
	 	 	6	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 
	ARTICLE II Trust Fund and Funding Policy	 	 	8	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 
	 	 	 	 	 	2.01	 	 	Contributions
	 	 	8	 
	 	 	 	 	 	2.02	 	 	Investments and Valuation
	 	 	12	 
	 	 	 	 	 	2.03	 	 	Subtrusts
	 	 	17	 
	 	 	 	 	 	2.04	 	 	Recapture of Excess Assets
	 	 	17	 
	 	 	 	 	 	2.05	 	 	Substitution of Other Property
	 	 	18	 
	 	 	 	 	 	2.06	 	 	Administrative Powers of Trustee
	 	 	19	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 
	ARTICLE III Administration	 	 	22	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 
	 	 	 	 	 	3.01	 	 	Committee; Company Representatives
	 	 	22	 
	 	 	 	 	 	3.02	 	 	Payment of Benefits
	 	 	23	 
	 	 	 	 	 	3.03	 	 	Disputed Claims
	 	 	25	 
	 	 	 	 	 	3.04	 	 	Records
	 	 	25	 
	 	 	 	 	 	3.05	 	 	Accountings
	 	 	25	 
	 	 	 	 	 	3.06	 	 	Expenses and Fees
	 	 	26	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 
	ARTICLE IV Liability	 	 	26	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 
	 	 	 	 	 	4.01	 	 	Indemnity
	 	 	26	 
	 	 	 	 	 	4.02	 	 	Bonding
	 	 	27	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 
	ARTICLE V Insolvency	 	 	27	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 
	 	 	 	 	 	5.01	 	 	Determination of Insolvency
	 	 	27	 
	 	 	 	 	 	5.02	 	 	Rights of Creditors
	 	 	27	 
	 	 	 	 	 	5.03	 	 	Effect of Insolvency
	 	 	28	 
	 	 	 	 	 	5.04	 	 	Termination of Insolvency Status
	 	 	28	 
	 	 	 	 	 	5.05	 	 	Creditors’ Claims During Solvency
	 	 	28	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 
	ARTICLE VI Successor Trustees	 	 	29	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 
	 	 	 	 	 	6.01	 	 	Resignation and Removal
	 	 	29	 
	 	 	 	 	 	6.02	 	 	Appointment of Successor
	 	 	29	 
	 	 	 	 	 	6.03	 	 	Accountings; Continuity
	 	 	30	 

i

 

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	PAGE	 
	ARTICLE VII General Provisions	 	 	30	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 
	 	 	 	 	 	7.01	 	 	Interests Not Assignable
	 	 	30	 
	 	 	 	 	 	7.02	 	 	Amendment
	 	 	31	 
	 	 	 	 	 	7.03	 	 	Applicable Law
	 	 	31	 
	 	 	 	 	 	7.04	 	 	Agreement Binding on All Parties
	 	 	31	 
	 	 	 	 	 	7.05	 	 	Notices and Directions
	 	 	31	 
	 	 	 	 	 	7.06	 	 	No Implied Duties
	 	 	32	 
	 	 	 	 	 	7.07	 	 	Gender. Singular and Plural
	 	 	32	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 
	ARTICLE VIII INSURER	 	 	32	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 
	 	 	 	 	 	8.01	 	 	Insurer Not a Party
	 	 	32	 
	 	 	 	 	 	8.02	 	 	Authority of Trustee
	 	 	32	 
	 	 	 	 	 	8.03	 	 	Contract Ownership
	 	 	32	 
	 	 	 	 	 	8.04	 	 	Limitation of Liability:
	 	 	33	 
	 	 	 	 	 	8.05	 	 	Change of Trustee
	 	 	33	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 
	APPENDIX A	 	Assumptions and Methodology for Calculations
Required Under 2.01 and 2.04	 	 	 	 

ii

 

INDEX OF TERMS

	 	 	 	 	 	 	 
	TERM	 	SECTION	 	PAGE	 
	 
	Act
	 	1.04-3(a)	 	 	7	 
	 
	 		 	 		 
	Board

	 	1.03-2	 	 	5	 
	 
	Change in Control	 	 	 	 
	 
	 	1.04-3	 	 	7	 
	Company
	 	 	 	 	 	 
	 
	 	Heading	 	 	2	 
	Contracts
	 	 	 	 	 	 
	 
	 	2.02-1	 	 	12	 
	Default
	 	 	 	 	 	 
	 
	 	1.04-5	 	 	7	 
	ERISA
	 	 	 	 	 	 
	 
	 	Preamble	 	 	4	 
	Excess Assets
	 	 	 	 	 	 
	 
	 	2.04-2	 	 	18	 
	Insurer
	 	 	 	 	 	 
	 
	 	2.02-1	 	 	12	 
	Investment Manager
	 	 	 	 	 	 
	 
	 	2.02-4	 	 	14	 
	Participants
	 	 	 	 	 	 
	 
	 	Preamble	 	 	2	 
	Payment Schedule
	 	 	 	 	 	 
	 
	 	2.01-5	 	 	10	 
	Pier 1
	 	 	 	 	 	 
	 
	 	Heading	 	 	1	 
	Pier 1 (U.S.)
	 	 	 	 	 	 
	 
	 	Heading	 	 	1	 
	Plans
	 	 	 	 	 	 
	 
	 	Preamble	 	 	2	 
	Potential Change in Control	 	 	 	 
	 
	 	2.01-7	 	 	11	 
	Segregated Fund
	 	 	 	 	 	 
	 
	 	2.02-4	 	 	14	 

iii

 

	 	 	 	 	 	 	 
	TERM	 	SECTION	 	PAGE	 
	 
	SERP
	 	 	 	 	 	 
	 
	 	Preamble	 	 	2	 
	Solvency
	 	 	 	 	 	 
	 
	 	5.05-2	 	 	29	 
	Special Circumstance	 	 	 	 
	 
	 	1.04-2	 	 	6	 
	Subtrust
	 	 	 	 	 	 
	 
	 	2.03-1	 	 	17	 
	Tax Funding
	 	 	 	 	 	 
	 
	 	1.03-3	 	 	6	 
	Trust Agreement
	 	 	 	 	 	 
	 
	 	Heading	 	 	1	 
	Trustee
	 	 	 	 	 	 
	 
	 	Heading	 	 	1	 
	Written Consent of Participants	 	 	 	 
	 
	 	1.03-4	 	 	6	 

iv

 

PIER 1

UMBRELLA TRUST

December 21, 2005

     This Trust Agreement (herein so called) is made and entered into by and between Pier 1
Imports, Inc., a Delaware corporation (“Pier 1”); Pier 1 Imports (U.S.), Inc., a Delaware
corporation (“Pier 1 (U.S.)”); and Pier 1 Services Company (“Pier 1 Services”) on the one hand, and
Wachovia Bank National Association (the “Trustee”), on the other hand. This Trust Agreement is a
restatement of the trust agreement dated February 12, 1992 between Pier 1 and Pier 1 (U.S.) and
Security Pacific Bank Oregon, the predecessor in interest to the Trustee (the “Prior Trust
Agreement”).

     The term “Company,” when used herein, means Pier 1 (U.S.), Pier 1 Services and any parent,
subsidiary or affiliate of Pier 1 participating in the Plan. For purposes of this trust, Pier 1
(U.S.), Pier 1 Services and each participating parent, subsidiary or affiliate shall be considered
separate Companies and each separate corporation shall be treated as the Company only with respect
to its own employees and its own contributions to the trust.

     The Company hereby establishes with the Trustee a trust to hold all monies and other property,
together with the income thereon, as shall be paid or transferred to it hereunder in accordance
with the terms and conditions of this Trust Agreement. The Trustee hereby accepts the trust
established under this Trust Agreement and agrees to hold, IN TRUST, all monies and other property
transferred to it hereunder for the uses and purposes and upon the terms and conditions set forth
herein, and the Trustee further agrees to discharge and perform fully and faithfully all of the
duties and obligations imposed upon it under this Trust Agreement. If there is more than one trust
with separate Trustees, each Trustee shall have liability only for the trust for which it is
Trustee, and the Trustees shall not be deemed to be co-Trustees.

1

 

PREAMBLE

     The Company
has adopted the following plans (each a “Plan” and
collectively the “Plans”), which shall be subject to this
trust:

	 	•	 	Pier 1 Imports, Inc. Supplemental Executive Retirement Plan (the “SERP”)
	 
	 	•	 	Pier 1 Imports, Inc. Supplemental Retirement Plan (the “SRP”)
	 
	 	•	 	Pier 1 Benefit Restoration Plan I (the “BRP I”)
	 
	 	•	 	Pier 1 Benefit Restoration Plan II (the “BRP II”)

     References in this Trust Agreement to the “Committee” which relate to a particular Plan shall
refer to the administrative person or body which administers that Plan and, if the reference does
not relate to a particular Plan, shall refer to all of such Committees. If, however, the Company
appoints a separate administrative person or body to administer this Trust Agreement, references in
this Trust Agreement to the Committee shall refer to such administrative person or body which is
appointed to administer this Trust Agreement, unless the context clearly indicates otherwise.

     The participants who are covered by this Trust Agreement (“Participants”) shall be all persons
who are participants in one or more of the Plans prior to a Special Circumstance, unless the
Company specifically designates only specified individuals or groups as Participants covered by
this Trust Agreement. After a person becomes a Participant covered by this Trust Agreement, such
person will continue to be a Participant at all times thereafter (including after retirement or
other termination of service) until all benefits payable to such Participant under all Plans in
which he is a participant have been paid, the Participant ceases to be entitled to benefits from
any of the Plans, or the Participant’s death, whichever occurs first. The term “Participants”
shall not include any beneficiaries of Participants.

     At any time prior to a Special Circumstance, the Company may, by written notice to and consent
of the Trustee, cause additional plans to become Plans subject to this Trust Agreement or

2

 

cause
additional participants in one or more of the Plans to become Participants covered by this Trust
Agreement. Upon and after a Special Circumstance, the Company may not add any additional plans or
participants to this Trust Agreement.

     The Company shall provide the Trustee with certified copies of the following items: (i) the
documents for all Plans; (ii) all amendments to all Plans promptly upon their adoption; and (iii)
lists and specimen signatures of the members of the Committee(s) which administer the Plans and
this Trust Agreement and any other Company representatives authorized to take action in regard to
the administration of the Plans and this trust, including any changes in the members of such
Committee(s) and of such other representatives promptly following any such change. The Company
shall also provide the Trustee at least annually with a list of all Participants in each of the
Plans who are covered by this Trust Agreement.

     The purpose of this trust is to give Participants greater security by placing assets in trust
for use only to pay benefits under the Plans to Participants or, if the Company becomes insolvent,
to pay creditors. The Company shall continue to be liable to Participants to make all payments
required under the terms of the Plans to the extent such payments are not made from this trust.
Distributions made from this trust to Participants or their beneficiaries shall, to the extent of
such distributions, satisfy the Company’s obligations to pay benefits to Participants and their
beneficiaries under the Plans. The Trustee shall have no responsibility for the tax effects of the
establishment, maintenance or operation of this trust or for filing any tax returns or reports
(other than Form 1041 and Schedule K-l for the trust).

     The Trust is intended to be a grantor trust, of which the Company is the grantor (within the
meaning of subpart E, part I, subchapter J, chapter 1, subtitle A of the Internal Revenue Code of
1986, as amended, (the “Code”)) and shall be construed accordingly. The Company hereby agrees to
report all items of income, deductions and credits of the trust on its own income tax returns; and
the Company shall have no right to any distributions from the trust or any claim against the trust
for funds necessary to pay any income taxes which the Company is required to pay on account of
reporting the income of the trust on its income tax returns. No contribution to
or income of the trust is intended to be taxable to Participants until benefits are
distributed to them.

3

 

     The principal of the Trust, and any earnings thereon, shall be held separate and apart from
other funds of the Company and shall be used exclusively for the uses and purposes of Plan
participants and general creditors as herein set forth. Participants of the Plans and their
beneficiaries shall have no preferred claim on, or any beneficial ownership interest in, any assets
of the Trust. Any rights created under the Plans and this Trust Agreement shall be mere unsecured
contractual rights of participants of the Plans and their beneficiaries against the Company. Any
assets held by the Trust will be subject to the claims of the Company’s general creditors under
federal and state law in the event of Insolvency, as defined in Section 5.01 herein.

     The Plans are intended to be “unfunded” and maintained “primarily for the purpose of providing
deferred compensation for a select group of management or highly compensated employees” for
purposes of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) and as such
are intended not to be covered by Parts 2 through 4 of Subtitle B of Title I of ERISA (relating to
participation and vesting, funding and fiduciary responsibility). The existence of this trust is
not intended to alter this characterization of the Plans.

ARTICLE I  

Effective Date; Duration

     1.01 Effective Date and Trust Year

          This restatement of the Prior Trust Agreement shall become effective as of the date set forth
on page 1 above. For tax purposes the trust year shall coincide with the Company’s tax year. For
financial reporting purposes the trust year shall coincide with the Company’s fiscal year. The
Company shall report any change in its fiscal year to the Trustee.

     1.02 Duration

          This trust shall continue in effect until all assets of the trust fund are exhausted through
distribution of benefits to Participants, payment to creditors in the event of insolvency, payment
of fees and expenses of the Trustee, and return of remaining funds to the Company pursuant to
1.03-1. Notwithstanding the foregoing, this trust shall terminate on the day before

4

 

twenty-one
years after the death of the last survivor of all present or future Participants who are now living
and those persons now living who are designated as beneficiaries of any such Participants in
accordance with the terms of any of the Plans.

     1.03 Irrevocability

          1.03-1 Except as otherwise provided in this 1.03, the trust shall be irrevocable until all
benefits payable under the Plans to Participants who are covered by this Trust Agreement are paid.
The Trustee shall then return to the Company any assets remaining in the trust.

          1.03-2 If the existence of this trust or any Subtrust (as such term is hereinafter defined) is
held to be ERISA Funding or Tax Funding by a federal court and appeals from that holding are no
longer timely or have been exhausted, this trust or such Subtrust shall terminate. The board of
directors of Pier 1 (the “Board”) may also terminate this trust or any Subtrust if it determines,
based on an opinion of legal counsel which is satisfactory to the Trustee, that either (i) judicial
authority or the opinion of the U.S. Department of Labor, Treasury Department or Internal Revenue
Service (as expressed in proposed or final regulations, advisory opinions or rulings, or similar
administrative announcements) creates a significant risk that the trust or any Subtrust will be
held to be ERISA Funding or Tax Funding or (ii) ERISA, the Code or any other applicable law or
regulation requires the trust or any Subtrust to be amended in a way that creates a significant
risk that the trust or such Subtrust will be held to be ERISA Funding or Tax Funding, and failure
to so amend the trust or such Subtrust could subject the Company to material penalties. Upon any
such termination provided for in this Section 1.03-2, the assets of each terminated Subtrust
remaining after payment of the Trustee’s fees and expenses shall be distributed as follows:

     (a) Such assets shall be transferred directly by the Trustee to a new trust
established by the Company which is not deemed to be ERISA Funding or
Tax Funding, but which is similar in all other respects to this trust, if the
Company determines that it is possible to establish such a trust.

     (b) If the Company determines that it is not possible to establish the trust in
(a) above, then the assets shall be distributed to the Company.

5

 

          Notwithstanding the foregoing, the Trustee shall distribute benefits under the Plans to a
Participant to the extent that a federal court has held that the interest of the Participant in
this trust causes such benefits to be includible for federal income tax purposes in the gross
income of the Participant prior to actual payment of such benefits to the Participant and appeals
from that holding are no longer timely or have been exhausted. The provisions of this paragraph
shall also apply to any beneficiary of a Participant.

          1.03-3 This trust is “Tax Funding” if it causes the interest of a Participant in this trust to
be includible for federal income tax purposes in the gross income of the Participant prior to
actual payment of benefits under the Plans to the Participant.

          This trust is “ERISA Funding” if it prevents any of the Plans from meeting the “unfunded”
criterion of the exceptions to application of the provisions of Parts 2 through 4 of Subtitle B of
Title I of ERISA for plans that are unfunded and maintained primarily for the purpose of providing
deferred compensation for a select group of management or highly compensated employees.

          1.03-4 “Written Consent of Participants” means, for the purposes of this Trust Agreement,
consent in writing, obtained by the Committee, of Participants who (i) are a majority in number and
(ii) have more than fifty percent (50%) in value of the accrued and vested benefits, of the
Participants in each Subtrust under this Trust Agreement on the date of such consent.

     1.04 Special Circumstance

          1.04-1 Upon the occurrence of a Special Circumstance described in 1.04-2, the trust assets
shall be held for Participants who had accrued benefits under the Plans before the
Special Circumstance occurred, including benefits accrued for such Participants after the
Special Circumstance. However, the occurrence of a Special Circumstance shall not alter in any
manner the timing or form of benefit payments under the Plans.

          1.04-2 A “Special Circumstance” shall mean a Change in Control (as defined in 1.04-3) or a
Default (as defined in 1.04-5).

6

 

          1.04-3 A “Change in Control” shall be deemed to occur if:

     (a) any “person” (as defined in Section 3(a)(9) and 13(d)(3) of the Securities
Exchange Act of 1934 (the “Act”)) becomes the “beneficial owner” (as defined in
Rules 13(d)-3 and 13(d)-5 under the Act) of securities of Pier 1, or of a
corporation directly or indirectly holding securities of the Company, in either case
representing 35% or more of the voting power of the outstanding securities of Pier 1
having the right under ordinary circumstances to vote at an election of the Board;
or

     (b) there shall occur a change in the composition of a majority of the Board
within a two-year period which change shall not have been affirmatively approved by
a majority of such Board as constituted immediately prior to the commencement of
such period; or

     (c) at any meeting of the stockholders of Employer called for the purpose of
electing directors, a majority of persons nominated by the Board for election as
directors shall fail to be elected.

          Notwithstanding the foregoing, a Change in Control shall not be deemed to occur as a result of
any occurrence described in (a) above, if directors who were a majority of the members of the Board
prior to such occurrence determine that the occurrence shall not constitute a Change in Control
within one year after the transaction and furnish written notice to the Trustee of such
determination.

          1.04-4 For purposes of this Trust Agreement, a Change in Control shall also
be deemed to have occurred when the Trustee makes a reasonable determination to that effect on
its own initiative or upon receipt by the Trustee of written notice to that effect from the
Company. The Chief Executive Officer of the Company or the Board shall furnish written notice to
the Trustee when a Change in Control occurs under 1.04-3.

          1.04-5 A “Default” shall mean a failure by the Company to contribute, within 30 days of
receipt of written notice from the Trustee, any of the following amounts:

7

 

     (a) The full amount of any insufficiency in assets of any Subtrust that is
required to pay any premiums or loan interest payments on insurance contracts which
are held in the Subtrust; or

     (b) The full amount of any insufficiency in assets of any Subtrust that is
required to pay any Plan benefit that is payable upon a direction from the Committee
pursuant to 3.02-3 or upon resolution of a disputed claim pursuant to 3.03-2 and
that is not paid directly by the Company.

If, after the occurrence of a Default, the Company at any time cures such Default by contributing
to the trust all amounts which are then required under subparagraphs (a) and (b) above, it shall
then cease to be deemed that a Default has occurred or that a Special Circumstance has occurred by
reason of such Default.

ARTICLE II  

Trust Fund and Funding Policy

2.01 Contributions

          2.01-1 In its discretion and notwithstanding any other provision hereof, the Company may at
any time contribute to the trust such amounts or assets as the Committee may reasonably decide are
necessary to provide security for all benefits under all Plans which are payable to Participants
covered by this trust and to provide for future administration and operation expenses of the trust,
including, but not limited to, the contributions specifically permitted at 2.01-3.

          2.01-2 Whenever the Company makes a contribution to the trust, the Company shall designate
which of the Plans and which Subtrust(s) to which such contribution (or designated portions
thereof) shall be allocated. The Company may also make contributions to a special reserve for
payment of future fees and expenses of the Trustee and future trust fees and expenses for legal and
administrative proceedings. The Company shall designate a separate Subtrust to receive such
contributions, which shall be distinct from the other Subtrusts established for the Plans.

8

 

          2.01-3 The Company may, upon the occurrence of a Special Circumstance (as defined in 1.04-2)
or a Potential Change in Control (as defined in 2.01-7), contribute to the trust all or a portion
of the sum of the following:

     (a) The present value of the remaining premiums and the interest on any policy
loans on insurance contracts held in the trust.

     (b) The amount by which the present value of all benefits (vested and unvested)
payable under the Plans on a pre-tax basis to Participants covered by this trust
exceeds the value of all trust assets. Each Participant’s benefit under any of the
Plans for purposes of calculating present value shall be the highest benefit the
Participant would have accrued under the Plan within the 24 months following such
event, assuming that the Participant’s service continues for 24 months at the same
rate of compensation, that the Participant continues to make future deferrals under
deferred compensation plans in accordance with his prior elections, and that the
Participant is terminated at a time when he is entitled to receive any benefit
enhancement provided by the Plan upon a Change in Control. Any benefit enhancement
or right with respect to the Plans, which is provided under employment or severance
agreements of Participants, shall be taken into account in making the foregoing
calculation.

     (c) The present value of a reasonable estimate provided by the Trustee of its
fees and expenses due over the remaining duration of the trust. Such amount may be
presumed to be equal to 1% of the present value of all accrued benefits (vested and
unvested) payable under the Plans on a pre-tax basis to
Participants covered by this trust.

     (d) The present value of a reasonable estimate provided by the Trustee of the
anticipated fees and expenses for the purpose of commencing or defending lawsuits or
legal or administrative proceedings over the remaining duration of the trust. Such
amount may be presumed to be equal to 2% of the present value of all accrued
benefits (vested and unvested) payable under the Plans on a pre-tax basis to
Participants covered by this trust.

9

 

          2.01-4 The calculations under 2.01-3 shall be based on the terms of the Plans and the
actuarial assumptions and methodology set forth in Appendix A attached hereto. Before a Special
Circumstance, Appendix A may be revised by the Committee from time to time. After a Special
Circumstance, Appendix A may be revised only with the Written Consent of Participants.

          2.01-5 Whenever the Company makes a contribution to the trust pursuant to 2.01-3, it shall
furnish the Trustee with a written statement setting forth the computation of any and all amounts
contributed under subparagraphs (a), (b), (c) and (d) of 2.01-3.

          Whenever a Special Circumstance occurs or the Company makes a contribution pursuant to 2.01-3,
the Company shall deliver to the Trustee, contemporaneously with or immediately prior to such
event, a schedule (the “Payment Schedule”) indicating the amounts payable under each of the Plans
in respect of each Participant, the form in which such amounts are to be paid (as provided for or
available under the Plans) and the time of commencement for payment of such amounts. The Payment
Schedule shall include any other necessary instructions with respect to benefits (including legal
expenses) payable under the Plans and any conditions with respect to any Participant’s entitlement
to, and the Company’s obligation to provide, such benefits, and such instructions may be revised
from time to time to the extent so provided under the Plans or this Trust Agreement.

          A modified Payment Schedule shall be delivered by the Company to the Trustee at each time that
(i) additional amounts are paid by the Company to the Trustee pursuant to 2.01-3, (ii) Excess
Assets are returned to the Company pursuant to 2.04, and (iii) any event occurs that
requires a modification of the Payment Schedule. The Company shall also furnish a Payment
Schedule or modified Payment Schedule for any or all Plan(s) upon request by the Trustee at any
other time. Whenever the Company is required to deliver to the Trustee a Payment Schedule or a
modified Payment Schedule, the Company shall also deliver at the same time to each Participant the
respective portion of the Payment Schedule or modified Payment Schedule that sets forth the amount
payable to that Participant.

          2.01-6 Any contribution to the trust which is made by the Company under 2.01-3 on account of a
Potential Change in Control shall be returned to the Company following

10

 

one year after delivery of
such contribution to the Trustee unless a Change in Control shall have occurred during such
one-year period, if the Company requests such return within 60 days after such one-year period. If
no such request is made within this 60-day period, the contribution shall become a permanent part
of the trust fund. The one-year period shall recommence in the event of and upon the date of any
subsequent Potential Change in Control.

          2.01-7 “Potential Change in Control” shall be deemed to occur if:

     (a) Any person, other than a trustee or other fiduciary holding securities
under an employee benefit plan of the Company, as defined in Section 13(d)(3) of the
Act, delivers to the Company a statement containing the information required by
Schedule 13-D under the Act, or any amendment to any such statement, that shows that
such person has acquired, directly or indirectly, the beneficial ownership of (i)
more than 10% of any class of equity security of the Company entitled to vote as
single class in the election or removal from office of directors, or (ii) more than
10% of the voting power of any group of classes of equity securities of the Company
entitled to vote as a single class in the election or removal from office of
directors;

     (b) The Company becomes aware that preliminary or definitive copies of a proxy
statement and information statement or other information have been filed with the
Securities and Exchange Commission pursuant to Rule 14a-6, Rule 14c-5, or Rule 14f-l
under the Act relating to a Potential Change in Control of the
Company;

     (c) Any person delivers to the Company pursuant to Rule 14d-3 under the Act a
Tender Offer Statement relating to Voting Securities of the Company;

     (d) Any person (other than the Company) publicly announces an intention to take
actions which if consummated would constitute a Change in Control;

     (e) The Company enters into an agreement or arrangement, the consummation of
which would result in the occurrence of a Change in Control;

11

 

     (f) The Board approves a proposal, or the Company enters into an agreement,
which if consummated would constitute a Change in Control; or

     (g) The Board adopts a resolution to the effect that, for purposes of this
Trust Agreement, a Potential Change in Control has occurred.

Notwithstanding the foregoing, a Potential Change in Control shall not be deemed to occur as a
result of any event described in (a) through (f) above, if directors who were a majority of the
members of the Board prior to such event determine that the event shall not constitute a Potential
Change in Control and furnish written notice to the Trustee of such determination.

          2.01-8 The Trustee shall accept the contributions made by the Company and hold them as a trust
fund for the payment of benefits under the Plans. The Trustee shall not be responsible for
determining the required amount of contributions or for collecting any contribution not voluntarily
paid, nor shall the Trustee be responsible for the adequacy of the trust fund to meet and discharge
all liabilities under the Plans. Contributions may be in cash or in other assets acceptable to the
Trustee specified in 2.02.

     2.02 Investments and Valuation

          2.02-1 The trust fund may be invested in insurance contracts (“Contracts”). Such Contracts
may be purchased by the Company and transferred to the Trustee as in-kind contributions or may be
purchased by the Trustee with the proceeds of cash
contributions (or may be purchased upon direction by the Committee pursuant to 2.02-2 or an
Investment Manager pursuant to 2.02-4). The Trustee shall have the power to exercise all rights,
privileges, options and elections granted by or permitted under any Contract or under the rules of
the insurance company issuing the Contract (“Insurer”), including the right to obtain policy loans
against the cash value of the Contract. Prior to a Special Circumstance, the exercise by the
Trustee of any incidents of ownership under any Contract shall be subject to the direction of the
Committee. The Committee may from time to time direct the Trustee in writing as to the designation
of the beneficiary of a Participant under a Contract for any part of the death benefits payable to
such beneficiary thereunder, and the Trustee shall promptly file such designation with the Insurer.

12

 

          Notwithstanding anything contained herein to the contrary, neither the Company nor the Trustee
shall be liable for the refusal of any Insurer to issue or change any Contract or Contracts or to
take any other action requested by the Trustee; nor for the form, genuineness, validity,
sufficiency or effect of any Contract or Contracts held in the trust; nor for the act of any person
or persons that may render any such Contract or Contracts null and void; nor for failure of any
Insurer to pay the proceeds of any such Contract or Contracts as and when the same shall become due
and payable; nor for any delay in payment resulting from any provision contained in any such
Contract or Contracts; nor for the fact that for any reason whatsoever (other than its own
negligence or willful-misconduct) any Contracts shall lapse or otherwise become uncollectible.

          2.02-2 Prior to a Special Circumstance, the Trustee shall invest the trust fund in accordance
with written directions by the Committee, including directions for exercising rights, privileges,
options and elections pertaining to Contracts and for borrowing from Contracts or other borrowing
by the Trustee. The Trustee shall act only as an administrative agent in carrying out directed
investment transactions and shall not be responsible for the investment decision. If a directed
investment transaction violates any duty to diversify, to maintain liquidity or to meet any other
investment standard under this trust or applicable law, the entire responsibility shall rest upon
the Company. The Trustee shall be fully protected in acting upon or complying with any investment
objectives, guidelines, restrictions or directions provided in accordance with this paragraph.

          After a Special Circumstance the Committee shall no longer be entitled to direct the Trustee
with respect to the investment of the trust fund, unless the Written Consent of Participants is
obtained for the Committee to continue to have this right pursuant to 2.02-2. If such Written
Consent of Participants is not obtained, the trust fund shall be invested by the Trustee pursuant
to 2.02-3 or by an Investment Manager appointed by the Company pursuant to 2.02-4.

          The Committee may not direct the Trustee to make any investments, and the Company may not make
any contributions to the trust fund, which are not permissible investments under 2.02-2 and 2.02-3.

13

 

          Notwithstanding the foregoing, no investments shall be made at any time in any securities,
instruments, accounts or real property of the Company or its affiliates, and the Trustee may not
loan trust fund assets to the Company or its affiliates, or permit the Company or its affiliates to
pledge trust fund assets as collateral for loans to the Company.

          2.02-3 If the Committee so directs in writing, or at the Trustee’s discretion following a
Special Circumstance, the Trustee shall invest and reinvest the assets of the trust fund as the
Trustee, in its sole discretion, may deem appropriate, in accordance with applicable law. The
permissible investments shall be limited to the following:

     (a) Insurance or annuity contracts; or

     (b) Preferred or common stocks, bonds, notes, debentures, commercial paper,
certificates of deposit, money market funds, obligations of governmental bodies, or
other securities; or

     (c) Interest-bearing savings or deposit accounts with any federally-insured
bank or savings and loan association (including the Trustee or an affiliate of the
Trustee); or

     (d) Shares in, or certificates of participation issued by investment companies,
investment trusts, mutual funds, or common or pooled investment funds (including any
common or pooled investment fund now or hereafter
maintained by the Trustee or any affiliate of the Trustee).

          2.02-4 Prior to a Special Circumstance the Company may appoint one or more investment managers
(“Investment Manager”) subject to the following provisions:

     (a) The Company may appoint one or more Investment Managers to manage
(including the power to acquire and dispose of) a specified portion of the assets of
the trust (hereinafter referred to as that Investment Manager’s “Segregated Fund”).
Any Investment Manager so appointed must be either (A) an investment adviser
registered as such under the Investment Advisers Act of 1940, (B) a bank, as defined
in that Act, or (C) an insurance company qualified to

14

 

perform services in the
management, acquisition or disposition of the assets of trusts under the laws of
more than one state; and any Investment Manager so appointed must acknowledge in
writing to the Company and to the Trustee that it is a fiduciary with respect to the
Plans. The Trustee, until notified in writing to the contrary, shall be fully
protected in relying upon any written notice of the appointment of an Investment
Manager furnished to it by the Company. In the event of any vacancy in the office of
Investment Manager, the Trustee shall be deemed to be the Investment Manager of that
Investment Manager’s Segregated Fund until an Investment Manager thereof shall have
been duly appointed; and in such event, until an Investment Manager shall have been
so appointed and qualified, references herein to the Trustee’s acting in respect of
that Segregated Fund pursuant to direction from the Investment Manager shall be
deemed to authorize the Trustee to act in its own discretion in managing and
controlling the assets of that Segregated Fund, and subparagraphs, (b) and (c) below
shall have no effect with respect thereto and shall be disregarded.

     (b) Each Investment Manager appointed pursuant to subparagraph (a) above shall
have exclusive authority and discretion to manage and control the assets of its
Segregated Fund and may invest and reinvest the assets of the Segregated Fund in any
investments in which the Trustee is authorized to invest
under 2.02-3, subject to the terms and limitations of any written instruments
pertaining to its appointment as Investment Manager. Copies of any such written
instruments shall be furnished to the Trustee. In addition, each Investment Manager
from time to time and at any time may delegate to the Trustee (or in the event of
any vacancy in the office of Investment Manager, the Trustee may exercise in respect
of that Investment Manager’s Segregated Fund) discretionary authority to invest and
reinvest otherwise uninvested cash held in its Segregated Fund temporarily in bonds,
notes or other evidences of indebtedness issued or fully guaranteed by the United
States of America or any agency or instrumentality thereof, or in other obligations
of a short-term nature, including prime commercial obligations or part interests
therein or in units of any common trust fund maintained by the Trustee or its
affiliates which are invested primarily in cash equivalents.

15

 

     (c) Unless the Trustee knowingly participates in, or knowingly undertakes to
conceal, an act or omission of an Investment Manager, knowing such act or omission
to be a breach of the fiduciary responsibility of the Investment Manager with
respect to the Plans, the Trustee shall not be liable for any act or omission of any
Investment Manager and shall not be under any obligation to invest or otherwise
manage the assets of the Plans that are subject to the management of any Investment
Manager. Without limiting the generality of the foregoing, the Trustee shall not be
liable by reason of its taking or refraining from taking at the direction of an
Investment Manager any action in respect of that Investment Manager’s Segregated
Fund. The Trustee shall be under no duty to question or to make inquiries as to any
direction or order or failure to give direction or order by any Investment Manager;
and the Trustee shall be under no duty to make any review of investments acquired
for the trust at the direction or order of any Investment Manager and shall be under
no duty at any time to make any recommendation with respect to disposing of or
continuing to retain any such investment.

          2.02-5 The values of all assets in the trust fund shall be reasonably
determined by the Trustee at such times as reasonably directed in writing by the Committee. At
any time before or after a Special Circumstance, the Trustee shall have the right, when and if
reasonably necessary for purposes of carrying out the purposes of this Trust Agreement, to secure
confirmation of value by a qualified independent party for all property of the trust fund,
including any property to be substituted for other property of the trust fund pursuant to 2.05, but
excluding insurance or annuity contracts and publicly-traded property for which market quotations
are readily available. Before a Special Circumstance the Company may designate such qualified
independent party or parties to determine the fair market value of the assets in the trust fund.

          Any insurance or annuity contracts held in the trust fund shall be valued at their cash
surrender values, except for purposes of substituting other property for such Contracts

16

 

pursuant to
2.05-2. All assets of the trust fund shall be valued at their fair market values net of all
liabilities to which the assets are subject.

     2.03 Subtrusts

          2.03-1 Upon direction from the Company, the Trustee shall establish a separate subtrust
(“Subtrust”) for each of the Plans to which it shall credit contributions it receives which are
earmarked for that Plan and Subtrust. The Trustee shall also establish a separate Subtrust to
which it shall credit any contributions it receives which are earmarked to the special reserve for
payment of future fees and expenses of the Trustee and future trust fees and expenses for legal and
administrative proceedings. Each Subtrust shall reflect an undivided interest in assets of the
trust fund and shall not require any segregation of particular assets, except that an insurance or
annuity contract covering benefits of a particular Plan shall be held in the Subtrust for the Plan.
All contributions shall be designated by the Company for a particular Subtrust.

          2.03-2 The Trustee shall allocate investment earnings and losses and expenses of the trust
fund among the Subtrusts in proportion to their balances, except that changes in the value of an
insurance contract (including premiums and interest on loans on an insurance contract) shall be
allocated to the Subtrust for which it is held. Payments to creditors during Insolvency
Administration under 5.02 shall be charged against the Subtrusts in proportion to
their balances, except that payment of Plan benefits to a Participant as a general creditor
shall be charged against the Subtrust for that Plan.

          2.03-3 Assets allocated to a Subtrust for one Plan may not be utilized to provide benefits
under any other Plans until all benefits under such Plan have been paid in full, except that Excess
Assets of a Subtrust may be transferred to other Subtrusts pursuant to 2.04-5.

     2.04 Recapture of Excess Assets

          2.04-1 In the event one or more Subtrusts shall hold Excess Assets, the Committee, at its
option, may direct the Trustee to return part or all of such Excess Assets to the Company or
Companies for which the Subtrust or Subtrusts are maintained.

17

 

          2.04-2 “Excess Assets” are assets of a Subtrust exceeding one hundred ten percent (110%) of
the amounts described in subparagraphs; (a), (b), (c) and (d) of 2.01-3 determined by the Committee
with respect to such Subtrust.

          2.04-3 The calculation required by 2.04-2 shall be based on the terms of the Plans and the
actuarial assumptions and methodology set forth in Appendix A. Before a Special Circumstance, the
calculation shall be made by the Company or a qualified actuary or consultant selected by the
Committee. After a Special Circumstance, the calculation shall be made by a qualified actuary or
consultant selected by the Committee with the Written Consent of Participants.

          2.04-4 Excess Assets shall be returned to the Company in any order of priority directed by the
Committee.

          2.04-5 If any Subtrust holds Excess Assets, the Committee may direct the Trustee to transfer
such Excess Assets to other Subtrusts, either ratably in proportion to the unfunded liabilities to
Participants for Plan benefits of all other Subtrusts or first to the other Subtrust(s) with the
largest percentage of such unfunded liabilities.

          In determining Excess Assets for a Subtrust each Subtrust for a Plan shall bear its allocable
share of the amounts described in subparagraphs (a) and (b) of 2.01-3, which relate to
that Plan.

     2.05
Substitution of Other Property

          2.05-1 The Company shall have the power to reacquire part or all of the assets or collateral
held in the trust fund at any time, by simultaneously substituting for it other readily marketable
property of equivalent value, net of any costs of disposition; provided that, if the trust holds
Excess Assets, the property which is substituted shall not be required to be of equivalent value,
but only of sufficient value so that the trust will retain Excess Assets of not less than $10,000
after such substitution. The property which is substituted must be among the types of investments
authorized under 2.02 and may not be less liquid or marketable or less well secured than the
property for which it is substituted, as determined by the Trustee. Such power is exercisable in a
nonfiduciary capacity and may be exercised without the approval or consent of Participants or any
other person.

18

 

          2.05-2 Except for insurance contracts, the value of any assets reacquired under 2.05-1 shall
be determined as provided in 2.02-5. The value of any insurance contract reacquired under 2.05-1
shall be the present value of future projected cash flow or benefits payable under the Contract,
but not less than the cash surrender value. The projection shall include death benefits based on
reasonable mortality assumptions, including known facts specifically relating to the health of the
insured and the terms of the Contract to be reacquired. The Trustee may rely on any values
provided by the insurer and shall have no duty to review or investigate the values so provided.

          2.05-3 The Company shall pay all costs incurred in valuing the assets of the trust fund
pursuant to the Trust Agreement, including any assets to be substituted for other assets of the
trust fund pursuant to 2.02-5 and 2.05. If not so paid, these costs shall be paid from the trust
fund.

     2.06 Administrative Powers of Trustee

          2.06-1 Subject in all respects to applicable provisions of all applicable law and this Trust
Agreement, including but not limited to provisions relating to the investment of the trust fund,
the Trustee shall have the rights, powers and privileges of an absolute owner when
dealing with property of the trust, including (without limiting the generality of the
foregoing) the powers listed below:

     (a) To sell, convey, transfer, exchange, partition, lease, and otherwise
dispose of any of the assets of the trust at any time held by the Trustee under this
Trust Agreement;

     (b) To exercise any option, conversion privilege or subscription right given
the Trustee as the owner of any security held in the trust; to vote any corporate
stock either in person or by proxy, with or without power of substitution; to
consent to or oppose any reorganization, consolidation, merger, readjustment of
financial structure, sale, lease or other disposition of the assets of any
corporation or other organization, the securities of which may be an asset of

19

 

the
trust; and to take any action in connection therewith and receive and retain any
securities resulting therefrom;

     (c) To deposit any security with any protective or reorganization committee,
and to delegate to such committee such power and authority with respect thereto as
the Trustee may deem proper, and to agree to pay out of the trust such portion of
the expenses and compensation of such committee as the Trustee, in its discretion,
shall deem appropriate;

     (d) To cause any property of the trust to be issued, held or registered in the
name of the Trustee as trustee, or in the name of one or more of its nominees, or
one or more nominees of any system for the central handling of securities, or in
such form that title will pass by delivery, provided that the records .of the
Trustee shall in all events indicate the true ownership of such property, or to
deposit any securities held in the trust with a securities depository;

     (e) To renew or extend the time of payment of any obligation due or to become
due;

     (f) To commence or defend lawsuits or legal or administrative proceedings; to
compromise, arbitrate or settle claims, debts or damages in favor
of or against the trust, to deliver or accept, in either total or partial
satisfaction of any indebtedness or other obligation, any property; to continue to
hold for such period of time as the Trustee may deem appropriate any property so
received; and to pay all costs and reasonable attorneys’ fees in connection
therewith out of the assets of the trust;

     (g) To foreclose any obligation by judicial proceeding or otherwise;

     (h) To manage any real property in the trust in the same manner as if the
Trustee were the absolute owner thereof, including the power to lease the same for
such term or terms within or beyond the existence of the trust and upon such
conditions as the Trustee may deem proper; and to grant options to purchase or
acquire options to purchase any real property;

20

 

     (i) To appoint one or more persons or entities as ancillary trustee or
sub-trustee for the purpose of investing in and holding title to real or personal
property or any interest therein; provided that any such ancillary trustee or
sub-trustee shall act with such power, authority, discretion, duties, and functions
of the Trustee as shall be specified in the instrument establishing such ancillary
trust or sub-trust, including (without limitation) the power, to receive, hold and
manage property, real or personal, or undivided interests therein; and the Trustee
may pay the reasonable expenses and compensation of such ancillary trustees or sub-
trustees out of the trust;

     (j) To hold such part of the assets of the trust uninvested for such limited
periods of time as may be necessary for purposes of orderly trust administration or
pending required directions, without liability for payment of interest;

     (k) To determine how all receipts and disbursements shall be credited, charged
or apportioned as between income and principal, and the decision of the Trustee
shall be final and not subject to question by any Participant or beneficiary of the
trust; and

     (l) Generally to do all acts, whether or not expressly authorized, which the
Trustee may deem necessary or desirable for the orderly administration or protection
of the trust fund; provided, however, that the Trustee shall not be authorized to
operate or conduct a trade or business using assets of the trust fund.

          2.06-2 The Company shall from time to time pay taxes (references in this Trust Agreement to
the payment of taxes shall include interest and applicable penalties) of any and all kinds
whatsoever which at any time are lawfully levied or assessed upon or become payable in respect of
the trust fund, the income or any property forming a part thereof, or any security transaction
pertaining thereto. To the extent that any taxes levied or assessed upon the trust fund are not
paid by the Company or contested by the Company pursuant to the last sentence of this paragraph,
the Trustee shall pay such taxes out of the trust fund. If requested by the Company, the Trustee
shall, at the Company’s expense, contest the validity of such taxes in

21

 

any manner deemed
appropriate by the Company or its counsel, but only if it has received an indemnity bond or other
security satisfactory to it to pay any expenses of such contest. Alternatively, the Company may
itself contest the validity of any such taxes.

          2.06-3 Notwithstanding any provisions in the Plans or this Trust Agreement to the contrary,
the Company may direct the Trustee to withhold any benefits payable to a beneficiary as a result of
the death of the Participant or any other beneficiary until such time as (a) the Company is able to
determine whether a generation-skipping transfer tax, as defined in Chapter 13 of the Code, or any
substitute provision therefor, is or may become payable by the Company or Trustee as a result of
benefit payments to the beneficiary; and (b) the Company has determined the amount of
generation-skipping transfer tax that is or may become due, including interest thereon. If any
such tax is or may become payable, the Trustee at the direction of the Company shall reduce the
benefits otherwise payable hereunder to such beneficiary by such amounts as the Company or Trustee
reasonably believes are necessary to pay any generation-skipping transfer tax and interest thereon
which is or may become due.

          Any excess amounts so withheld from a beneficiary, which are not used to pay
generation-skipping transfer tax and interest thereon, shall be payable to the beneficiary as soon
as there is a final determination of the applicable generation-skipping transfer tax and interest
thereon. Whenever any amounts which were withheld are paid to any beneficiary, interest shall be
payable by the Company or, upon direction of the Company, from the trust to such beneficiary for
the period of time between the date when such amounts would otherwise have been paid to the
beneficiary and the date when such amounts are actually paid to the beneficiary after the
aforementioned generation-skipping transfer tax determinations are made and the amount of benefits
payable to the beneficiary is finally determined. Interest shall be payable at the same rate as
provided under 5.03-2.

ARTICLE III

Administration 

     3.01 Committee; Company Representatives

          3.01-1 The Committee is the plan administrator for the Plans and has general responsibility to
interpret the Plans and determine the rights of Participants and beneficiaries.

22

 

          3.01-2 The Trustee shall be given the names and specimen signatures of the members of the
Committee and any other Company representatives authorized to take action in regard to the
administration of the Plans and this trust. The Trustee shall accept and rely upon the names and
signatures until notified of any change. Instructions to the Trustee shall be signed for the
Committee, by the Chairman or such other person as the Committee may designate and for the Company
by any officer or such other representative as the Company may designate.

     3.02 Payment of Benefits

          3.02-1 Subject to the other provisions of this trust, including but not limited to 3.02-3
hereof, the Trustee shall pay benefits to Participants and beneficiaries on behalf of the Company
in satisfaction of its obligations under the Plans. The Trustee shall advise the Company whenever
the assets of the trust or Subtrust, other than insurance contracts or amounts needed to pay future
premiums or loan interest payments on insurance contracts, are insufficient to make payments of
benefits under the Plans to Participants when due. Benefit payments from a Subtrust shall be made
in full until the assets of the Subtrust are exhausted. Payments due on the date the Subtrust is
exhausted shall be covered pro rata. The Company’s obligation shall not be limited to the trust
fund, and a Participant or beneficiary shall have a claim against the Company
for any payment not made by the Trustee.

          The Company shall pay benefits directly to Participants and beneficiaries in satisfaction of
its obligations under a Plan whenever either (i) the assets of the Subtrust are not then sufficient
to satisfy any then applicable contribution or funding requirements imposed under 2.01, or (ii)
there are no assets in the Subtrust other than insurance or annuity contracts earmarked for other
Participants or beneficiaries. If the Company fails to make any such required payments when due,
after 60 days written notice to the Company to permit the Company to make any such payments, the
Trustee shall pay benefits to Participants and beneficiaries under any Plan from the assets of the
Subtrust for that Plan, if any.

          3.02-2 A Participant’s entitlement to benefits under the Plans shall be determined by the
Committee. Any benefit enhancement or right with respect to the Plans, which is provided under
employment or severance agreements of Participants, shall be taken into account in making the
foregoing determination. Any claim for such benefits shall be considered

23

 

and reviewed under the
claims procedures established for the Plans.

          3.02-3 The Trustee shall make payments in accordance with written directions from the
Committee or agent designated by the Committee, except as provided in 3.03. The Trustee may request
such directions from the Committee or consultant designated by the Committee. If the Committee or
consultant designated by the Committee fails to furnish written directions to the Trustee, within
15 days after receiving a written request for directions from the Trustee, the Trustee shall make
payments in accordance with the most recent Payment Schedule furnished to it by the Company or
withhold payment until it receives written direction from the Committee.

          The Committee or a third party record-keeper designated by the Committee shall make any
required income tax withholding and shall pay amounts withheld to taxing authorities on the
Company’s behalf or determine that such amounts have been paid by the Company.

          3.02-4 The Trustee shall use the assets of the trust or any Subtrust to make benefit payments
or other payments in the following order of priority:

     (a) Cash contributions from the Company which are specifically
designated to enable the Trustee to make such benefit payments or other
payments when due;

     (b) Cash and cash equivalents of the trust or Subtrust;

     (c) All taxable investments of the trust or Subtrust (other than cash and cash
equivalents and Contracts with Insurers), in such order as the Trustee may
determine;

     (d) All non-taxable investments of the trust or Subtrust (other than cash and
cash equivalents and Contracts with Insurers), in such order as the Trustee may
determine; and

     (e) Contracts with Insurers held in the trust or Subtrust, in such order and
manner (for example, making tax-free withdrawals prior to any taxable withdrawals
from Contracts) as the Committee may determine. As directed by

24

 

the Committee, the
Trustee shall make tax-free withdrawals prior to any taxable withdrawals from
Contracts; shall make withdrawals from Contracts to the premium vanish point before
surrendering any Contracts; and shall surrender Contracts, only if necessary,
proceeding, in order of Contracts on insureds from the youngest to the oldest ages
based on the insured’s age on the date of surrender of the Contract. Notwithstanding
the foregoing, the Trustee may use the assets of the trust or any Subtrust in any
other order of priority directed by the Committee with the Written Consent of
Participants affected thereby.

     3.03 Disputed Claims

          3.03-1 A Participant covered by this Trust whose claim has been denied by the Committee, or
who has received no response to the claim within 30 days after submission, may submit the claim to
the Trustee. The Trustee shall give written notice of the claim to the Committee. If the Trustee
receives no written response from the Committee within 30 days after the date the Committee is
given written notice of the claim, the Trustee shall pay the Participant the amount claimed.

     3.04 Records

          3.04-1 The Trustee shall keep complete records on the trust fund open to inspection by the
Company, Committee and Participants at all reasonable times. In addition to accountings required
below, the Trustee shall furnish to the Company, Committee and Participants any information
reasonably requested about the trust fund.

     3.05 Accountings

          3.05-1 The Trustee shall furnish the Company with a complete statement of accounts annually
within 60 days after the end of the trust year showing assets and liabilities and income and
expense for the year of the trust and each Subtrust. The Trustee shall also furnish the Company
with accounting statements at such other times as the Company may reasonably request. The form and
content of the statement of accounts shall be sufficient for the Company to include in computing
its taxable income and credits the income, deductions and credits against tax that are attributable
to the trust fund.

25

 

          3.05-2 The Company may object to an accounting within 180 days after it is furnished and
require that it be settled by audit by a qualified, independent certified public accountant. The
auditor shall be chosen by the Trustee from a list of at least five such accountants furnished by
the Company at the time the audit is requested. Either the Company or the Trustee may require that
the account be settled by a court of competent jurisdiction, in lieu of or in conjunction with the
audit. All expenses of any audit or court proceedings, including reasonable attorneys’ fees, shall
be allowed as administrative expenses of the trust.

          3.05-3 If the Company does not object to an accounting within the time provided, the account
shall be settled for the period covered by it.

          3.05-4 When an account is settled, it shall be final and binding on all parties, including all
Participants and persons claiming through them.

     3.06 Expenses and Fees

          3.06-1 The Trustee shall be reimbursed for all reasonable expenses and shall be paid a
reasonable fee fixed by agreement with the Company from time to time. No increase in the fee shall
be effective before 60 days after the Trustee gives written notice to the Company of
the increase. The Trustee shall notify the Company periodically of expenses and fees.

          3.06-2 The Company shall pay trustee and other administrative and valuation fees and expenses
incurred pursuant to this Trust Agreement, including reasonable fees for legal counsel in the event
the Trustee deems it necessary or proper to obtain the advice of counsel. If not so paid, these
fees and expenses shall be paid from the trust fund. The cost of any litigation relating to this
trust shall be an administrative expense.

ARTICLE IV

Liability

     4.01 Indemnity

          4.01-1 Subject to such limitations as may be imposed by applicable law, the Company shall
indemnify and hold harmless the Trustee from any claim, loss, liability or expense arising from any
action or inaction in administration of this trust based on direction or

26

 

information received from
the Company, Committee or any Investment Manager; provided, however, that the foregoing indemnity
shall not apply to any such claims, losses, liabilities or expenses arising from willful misconduct
or bad faith of the Trustee.

     4.02 Bonding

          4.02-1 The Trustee need not give any bond or other security for performance of its duties
under this trust.

ARTICLE V  

Insolvency 

     5.01 Determination of Insolvency

          The Trustee shall cease payment of benefits to Plan participants and their beneficiaries if
the Company is Insolvent. The Company shall be considered “Insolvent” for purposes of this Trust
Agreement if (1) the Company is unable to pay its debts as they become due, or (2) the Company is
subject to a pending proceeding as a debtor under the United States Bankruptcy Code.

     5.02 Rights of Creditors

          At all times during the continuance of this Trust, as provided in Section 1.02 hereof, the
principal and income of the Trust shall be subject to claims of general creditors of the Company
under federal and state law as set forth below.

          5.02-1 The Board of Directors and the Chief Executive Officer of the Company shall have the
duty to inform the Trustee in writing of the Company’s Insolvency. If a person claiming to be a
creditor of the Company alleges in writing to the Trustee that the Company has become Insolvent,
the Trustee shall determine whether the Company is Insolvent and, pending such determination, the
Trustee shall discontinue payment of benefits to Plan participants or their beneficiaries.

          5.02-2 Unless the Trustee has actual knowledge of the Company’s Insolvency, or has received
notice from the Company or a person claiming to be a creditor alleging that the Company is
Insolvent, the Trustee shall have no duty to inquire whether the

27

 

Company is Insolvent. The Trustee
may in all events rely on such evidence concerning the Company’s solvency as may be furnished to
the Trustee and that provides the Trustee with a reasonable basis for making a determination
concerning the Company’s solvency.

     5.03 Effect of Insolvency

          If at any time the Trustee has determined that the Company is Insolvent, the Trustee shall
discontinue payments to Participants or their beneficiaries and shall hold the assets of the Trust
for the benefit of the Company’s general creditors. Nothing in this Trust Agreement shall in any
way diminish any rights of Participants under the Plans or their beneficiaries to pursue their
rights as general creditors of the Company with respect to benefits due under the Plans or
otherwise.

     5.04 Termination of Insolvency Status

          The Trustee shall resume the payment of benefits to Participants under the Plans or their
beneficiaries in accordance with Section 2 of this Trust Agreement only after the Trustee has
determined that the Company is not Insolvent (or is no longer Insolvent). Provided that there are
sufficient assets, if the Trustee discontinues the payment of benefits from the Trust pursuant
to Section 5.03 hereof and subsequently resumes such payments, the first payment following
such discontinuance shall include the aggregate amount of all payments due to Participants or their
beneficiaries under the terms of the Plans for the period of such discontinuance, less the
aggregate amount of any payments made to Participants or their beneficiaries by the Company in lieu
of the payments provided for hereunder during any such period of discontinuance.

     5.05 Creditors’ Claims During Solvency

          5.05-1 During periods of Solvency the Trustee shall hold the trust fund exclusively to pay
Plan benefits and fees and expenses of the trust until all benefits under all Plans have been paid.
Creditors of the Company shall not be paid during Solvency from the trust fund, which may not be
seized by or subjected to the claims of such creditors in any way.

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     5.05-2 A period of Solvency is any period not covered by 5.02.

ARTICLE VI

Successor Trustees 

     6.01 Resignation and Removal

          6.01-1 The Trustee may resign at any time by notice to the Company, which shall be effective
60 days after such notice is given, unless the Company and the Trustee agree otherwise.

          6.01-2 The Trustee may be removed by the Company on 60 days written notice or such shorter
notice as may be accepted by the Trustee. However, after a Special Circumstance the Trustee may be
removed only with the Written Consent of Participants.

          6.01-3 When resignation or removal is effective, the Trustee shall begin transfer of assets to
the successor Trustee immediately. The transfer shall be completed within 60
days, unless the Company extends the time limit.

          6.01-4 If the Trustee resigns or is removed, the Company shall appoint a successor by the
effective date of resignation or removal under 6.01-1 or 6.01-2. After a Special Circumstance a
successor Trustee may be appointed only with the Written Consent of Participants. If no such
appointment has been made, the Trustee may apply to a court of competent jurisdiction for
appointment of a successor or for instructions. All expenses of the Trustee in connection with such
court proceeding shall be allowed as administrative expenses of the trust.

     6.02 Appointment of Successor

          6.02-1 The Company may appoint any national or state bank or trust company that is unrelated
to the Company as a successor to replace the Trustee upon resignation or removal. The appointment
shall be effective when accepted in writing by the new Trustee, which shall have all of the rights
and powers of the former Trustee, including ownership rights in the trust assets. The former
Trustee shall execute any instruments necessary or reasonably requested by the Company or the
successor Trustee to evidence the transfer. After a Special Circumstance

29

 

a successor Trustee may be
appointed only with the Written Consent of Participants.

          6.02-2 The successor Trustee need not examine the records and acts of any prior Trustee and
may retain or dispose of existing trust assets, subject to the other provisions of this Trust
Agreement. The successor Trustee shall not be responsible for, and the Company shall indemnify and
hold harmless the successor Trustee from any claim or liability because of, any action or inaction
of any prior Trustee or any other past event, any existing condition or any existing assets.

     6.03 Accountings; Continuity

          6.03-1 A Trustee who resigns or is removed shall submit a final accounting to the Company as
soon as practicable. The accounting shall be received and settled as provided in 3.05 for regular
accountings.

          6.03-2 No resignation or removal of the Trustee or change in identity of the Trustee for any
reason shall cause a termination of the Plans or this trust.

ARTICLE VII

General Provisions

     7.01 Interests Not Assignable

          7.01-1 The interest of a Participant in the trust fund may not be assigned, pledged or
otherwise encumbered, seized by legal process, transferred or subjected to the claims of the
Participant’s creditors in any way.

          7.01-2 The Company may not create a security interest in the trust fund in favor of any of its
creditors. The Trustee shall not make payments from the trust fund of any amounts to creditors of
the Company other than Participants, except as provided in 5.02.

          7.01-3 The Participants shall have no interest in the assets of the trust fund beyond the
right to receive payment of Plan benefits and reimbursement of expenses from such assets subject to
the instructions during Insolvency referred to in 5.02. During Insolvency Administration the
Participants’ rights to trust assets shall not be superior to those of any other general creditors
of the Company.

30

 

     7.02 Amendment

          7.02-1 The Company and the Trustee may amend this Trust Agreement at any time, except to make
it revocable, after it has become irrevocable, by a written instrument executed by both parties.
Except as provided below, any such amendment after a Special Circumstance or more than two years
after February 12, 1992 may be made only with the Written Consent of Participants. Notwithstanding
the foregoing, any such amendment may be made by written agreement of the Company and the Trustee
without the Written Consent of Participants if such amendment will not have a material adverse
effect on the rights of any Participant hereunder or, prior to a Special Circumstance, is necessary
to comply with any laws, regulations or other legal requirements.

     7.03 Applicable Law

          7.03-1 THIS TRUST SHALL BE GOVERNED, CONSTRUED AND ADMINISTERED ACCORDING TO THE LAWS OF THE
STATE OF TEXAS, EXCEPT AS PREEMPTED BY ERISA.

     7.04 Agreement Binding on All Parties

          7.04-1 This Trust Agreement shall be binding upon the heirs, personal representatives,
successors and assigns of any and all present and future parties.

     7.05 Notices and Directions

          7.05-1 Any notice or direction under this Trust Agreement shall be in writing and shall be
deemed given when actually delivered or, if mailed, when deposited postpaid as first-class mail.
Mail to a party shall be directed to the address stated below or to such other address as either
party may specify by notice to the other party. Notices to the Committee shall be sent to the
address of the Company. Notices to Participants who have submitted claims under 3.03 shall be
mailed to the address shown in the claim submission. Until notice is given to the contrary, notices
to the Company and the Trustee shall be addressed as follows:

	 	 	 
	Company:

	 	Pier 1 Imports, Inc.
	 

	 	100 Pier 1 Place
	 

	 	Fort Worth, Texas 76102
	 

	 	Attention: General Counsel

31

 

	 	 	 
	Trustee:

	 	Wachovia Bank National Association
	 

	 	Executive Benefits Group
	 

	 	One West Fourth Street NC 6251
	 

	 	Winston – Salem, North Carolina 27101
	 

	 	Attention: Account Officer for Pier 1 Imports

     7.06 No Implied Duties

          7.06-1 The duties of the Trustee shall be those stated in this trust, and no other duties
shall be implied.

     7.07 Gender. Singular and Plural

          7.07-1 All pronouns and any variations thereof shall be deemed to refer to the masculine or
feminine, as the identity of the person or persons may require. As the context may require, the
singular may be read as the plural and the plural as the singular.

ARTICLE VIII  

INSURER

     8.01 Insurer Not a Party

          8.01-1 The Insurer shall not be deemed to be a party to this Trust Agreement, and its
obligations shall be measured and determined solely by the terms of its Contracts and other
agreements executed by it.

     8.02 Authority of Trustee

          8.02-1 The Insurer shall accept the signature of the Trustee on any documents or papers
executed in connection with such Contracts. Such signature shall be conclusive proof to the Insurer
that the person on whose life an application is being made is eligible to have such Contract issued
on his life and is eligible for a Contract of the type and amount requested.

     8.03 Contract Ownership

          8.03-1 The Insurer shall deal with the Trustee as the sole and absolute owner of the trust’s
interests in such Contracts and shall have no obligation to inquire whether any action or failure
to act on the part of the Trustee is in accordance with or authorized by the terms
 

32

 

of the Plans or
this Trust Agreement.

     8.04 Limitation of Liability:

          8.04-1 The Insurer shall be fully discharged from any and all liability for any action taken
or any amount paid in accordance with the direction of the Trustee and shall have no obligation to
see to the proper application of the amounts so paid. The Insurer shall have no liability for the
operation of this Trust Agreement or the Plans, whether or not in accordance with their terms and
provisions.

     8.05 Change of Trustee

          8.05-1 The Insurer shall be fully discharged from any and all liability for dealing with a
party or parties indicated on its records to be the Trustee until such time as it shall receive at
its home office written notice of the appointment and qualification of a successor Trustee.

          IN WITNESS WHEREOF, the Company and the Trustee have caused this Trust Agreement to be
executed by their respective duly authorized officers as of the date
set forth on page 1 above.

	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	PIER 1 IMPORTS (U.S.), INC.,	 	PIER 1 IMPORTS, INC.,
	a Delaware corporation	 	a Delaware corporation
	 
	 	 	 	 	 	 
	By

	 	 	 	By	 	 
	 

	 	 
	 	 	 	 
	Its

	 	 	 	Its	 	 
	 

	 	 
	 	 	 	 
	 
	 	 	 	 	TRUSTEE:
	PIER 1 SERVICES COMPANY	 	WACHOVIA BANK NATIONAL
	 	 	 	 	ASSOCIATION
	 
	 	 	 	 	 	 
	By Pier 1 Holdings, Inc.	 	 	 	 
	Its Managing Trustee	 	 	 	 
	 
	 	 	 	 	 	 
	By

	 	 	 	By	 	 
	 

	 	 
	 	 	 	 
	Its

	 	 	 	Its	 	 
	 

	 	 
	 	 	 	 

33

 

APPENDIX A

Assumptions and Methodology for

Calculations Required Under 2.01 and 2.04

	1.	 	The liability for benefits under each Plan will be calculated using the following two
different assumptions as to when Participants terminate service:

	 	(a)	 	As of the applicable date under 2.01-3 or 2.04.
	 
	 	(b)	 	24 months after the applicable date, assuming future compensation continues at
current levels, and future deferrals under deferred compensation plans continue
pursuant to prior elections.

	 	 	The liability for accrued benefits under each Plan will be the greater of the liabilities
calculated in accordance with (a) and (b) above.

	2.	 	Calculations will be based upon the most valuable optional form of payment available to the
Participant.

	3.	 	The liability for benefits under deferred compensation or defined contribution Plans shall be
equal to the deferral or other account balances (vested and unvested) of Participants as of
the applicable date, plus projected deferrals expected to be made within 24 months after the
applicable date pursuant to prior elections. Account balances of Participants
under a Plan shall be calculated based on crediting the highest rate of interest which may
become payable to Participants under the Plan.

	4.	 	The liability for benefits under other Plans shall be equal to the present value of accrued
benefits (vested and unvested) of Participants as of the relevant dates under l (a) or (b)
above, discounted to the applicable date at a percentage per annum equal to that percentage
used by the Pension Benefit Guaranty Corporation in determining the present value of accrued
benefits in connection with the termination of defined benefit plans (referred to in this
Appendix A as the “PBGC Rate”).

	5.	 	The liability for benefits under all Plans shall also include the present value (discounted
to the applicable date at 5% per annum) of any survivor benefits which exceed the account
balances or other accrued benefits of Participants and are not covered by death benefits
payable under insurance contracts held in the trust.

	6.	 	No mortality is assumed prior to the commencement of benefits, except for purposes of
calculating any additional accrued liability under 5 above. Future mortality is assumed to
occur in accordance with the 1983 Group Annuity Table Male Rates after the commencement of
benefits.

	7.	 	The present value of amounts under subparagraphs (a), (c) and (d) of 2.01-3 shall be
determined using the PBGC Rate.

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	8.	 	Where left undefined above, calculations will be performed in accordance with generally
accepted actuarial principles.

35

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