Document:

exv10w12

 

Execution Copy

AMENDMENT NO. 4, WAIVER AND CONSENT TO CREDIT AGREEMENT

     THIS AMENDMENT NO. 4, WAIVER AND CONSENT dated as of November 10,2004 (this
“Amendment No. 4”), among HLI OPERATING COMPANY, INC., a Delaware corporation (the “Borrower”),
HAYES LEMMERZ INTERNATIONAL, INC., a Delaware corporation (the “Holdings”), and CITICORP NORTH
AMERICA, INC. (“CNAI”), as Administrative Agent (as defined below) on behalf of each Lender
executing a Lender Consent (as defined below) amends certain provisions of the Credit Agreement,
dated as of June 3, 2003 (as the same may be amended, restated, supplemented or otherwise modified
from time to time, the “Credit Agreement”), among the Borrower, Holdings, the Lenders and Issuers
(in each case as defined therein) party thereto, CNAI, as administrative agent for the Lenders and
the Issuers (in such capacity, and as agent for the Secured Parties under the other Loan Documents,
the “Administrative Agent”), LEHMAN COMMERCIAL PAPER INC., as Syndication Agent for the Lenders and
the Issuers, and GENERAL ELECTRIC CAPITAL CORPORATION, as Documentation Agent for the lenders and
issuers, CITIGROUP GLOBAL MARKETS INC. and LEHMAN BROTHERS INC., as Joint Book-Running Lead
Managers and Joint Lead Arrangers.

WITNESSETH:

     WHEREAS, the Borrower has requested that the Lenders agree to amend certain provisions
of the Credit Agreement;

     WHEREAS, the Borrower and the Administrative Agent wish to enter into this
Amendment for the purpose of giving effect to such modifications in each case as more particularly
set forth herein;

     WHEREAS, pursuant to Section 11.1 (a) of the Credit Agreement, the consent of the Requisite
Lenders is required to effect the amendments set forth herein;

     NOW, THEREFORE, in consideration of the above premises, the Borrower and the
Administrative Agent, at the direction of the Lenders constituting the Requisite Lenders,
agree as follows:

ARTICLE I
DEFINITIONS

     Unless otherwise defined herein, capitalized terms used herein shall have the meanings
ascribed to such terms in the Credit Agreement.

ARTICLE II

AMENDMENT TO ARTICLE II
(DEFINED TERMS)

     Section 2.1 New Definitions. The following defined terms shall be
inserted in the correct alphabetical order in Section 1.1 (Defined Terms):

       “Amendment No. 4” means Amendment No. 4 to the Agreement dated as of November 10, 2004
among the Borrower, Holdings and the Administrative Agent on behalf of the Lenders.

       “Amendment No. 4 Effective Date” means November 10, 2004.

 

 

       “Receivables Assets” means all of the following property and following interests
in property, including any undivided interest in any pool of any such property or interests,
whether now existing or existing in the future or hereafter arising or acquired: (i)
accounts, (ii) accounts receivable, general intangibles, instruments, contract rights,
documents and chattel paper, in each case, solely to the extent created by or arising from
sales of goods, leases of goods, or the rendition of services, no matter how evidenced,
whether or not earned by performance, and including all rights to payment thereunder, (iii)
all unpaid seller’s or lessor’s rights (including, without limitation, rescission, replevin,
reclamation and stoppage in transit) relating to any of the foregoing or arising therefrom,
(iv) all rights to any goods or merchandise represented by any of the foregoing (including,
without limitation, returned or repossessed goods), (v) all reserves and credit balances
with respect to any such accounts receivable or account debtors, (vi) all letters of credit,
security or Guaranty Obligations with respect to any of the foregoing, (vii) all insurance
policies proceeds, premium refunds or reports relating to any of the foregoing, (viii) all
collection or deposit accounts relating to any of the foregoing, (ix) all books and records
relating to any of the foregoing, (x) all instruments, contract rights, chattel paper,
documents and general intangibles relating to any of the foregoing, (xi) rights against a
seller or other transferor in respect of the repurchase of accounts receivable arising as a
result of a breach of a representation or warranty; and (xii) all proceeds of any of the
foregoing.

       “Securitization Program” means, with respect to any Person, an agreement or other
arrangement or program providing for the sale, transfer or conveyance to a Securitization
SPV of Receivables Assets in exchange for the advance of funds to such Person and/or one or
more of its Subsidiaries pursuant to documentation (including customary performance
guaranties) reasonably acceptable to the Administrative Agent (including, without
limitation, an intercreditor agreement).

       “Securitization SPV” means a trust, bankruptcy remote entity or other special purpose
entity which is a Subsidiary (or, if not a Subsidiary, the common equity of which is wholly
owned, directly or indirectly, by the Borrower) and which is formed for the purpose of, and
engages in no material business other than, acting as an issuer or a depositor under a
Securitization Program or as an intermediate transferee and transferor under a
Securitization Program (and, in connection therewith, in either case, owning Receivables
Assets and pledging or transferring any interests therein).

     Section 2.2 The following defined terms listed in Section 1.1 (Defined
Terms) of the Credit Agreement are amended as follows:

     (a) Indebtedness. The definition of “Indebtedness” shall be amended by (i) adding
the phrase “(other than pursuant to a Securitization Program)” at the end of each of clause
(a) and
clause (b) thereof, and (ii) replacing the word “and” immediately before clause (j) with a
comma,
renaming clause (j) as clause (k) and inserting a new clause (j) immediately after clause (i)
thereof to
read in its entirety as follows:

       “(j) all aggregate principal amounts advanced to such Person by Persons not affiliated
with such Person and outstanding under any Securitization Program; and”

     (b) Net Cash Proceeds. The definition of “Net Cash Proceeds” shall be amended
by (i) replacing in its entirety the phrase “Section 8.4(a), (b), (c), (e), (f), (g) or (h)
(Sale of
Assets)” in
the third line thereof with the following phrase “Section 8.4(a), (b), (c), (e), (f), (g), (h)
or (k) (Sale of

2

 

Assets)” and (ii) inserting the following parenthetical immediately after the words
“Property Loss Event” in clause (b) thereof to read in its entirety as follows:

       “(other than a Property Loss Event arising solely from any loss of or damage to
property owned by a Securitization SPV)”.

     (c) Subsidiary Guarantor. The definition of “Subsidiary Guarantor” shall be
amended by replacing in its entirety the phrase “and other than a “Non Emerging Subsidiary” in the
second line thereof with the following phrase to read in its entirety as follows:

       “, any Subsidiary that is a Securitization SPV, and any Non Emerging
Subsidiary”

ARTICLE III

AMENDMENT TO ARTICLE VI
 (REPORTING COVENANTS)

     Section 3.1 Business Plan. Clause (f) of Section 6.1 shall be amended
by inserting at the end thereof the following sentence:

       “Notwithstanding anything in this clause (f) to the contrary, solely with respect to
the forecasts covering the five Fiscal Year period beginning with the Fiscal Year ending
January 31, 2005, the Borrower shall not be required to furnish forecasts prepared by
management of the Borrower until January 15, 2005.”

ARTICLE IV

AMENDMENT TO ARTICLE VII

(AFFIRMATIVE COVENANTS)

     Section 4.1 Maintenance of Insurance. Section 7.5 (Maintenance of
Insurance) of the Credit Agreement is hereby amended by inserting the following parenthetical
immediately before the words “which is material”:

       “(other than insurance maintained by and for any Subsidiary that is a
Securitization SPV)”

     Section 4.2 Additional Collateral and Guaranties.

     (a) Section 7.1l(c) (Additional Collateral and Guaranties) of the Credit Agreement is
hereby amended by inserting the words “, any Subsidiary that is a Securitization SPV” immediately
after the words “U.S. LLC” in the second line thereof.

3

 

ARTICLE V

AMENDMENT TO ARTICLE VIII

(NEGATIVE COVENANTS)

     Section 5.1 Indebtedness.

     (a) Section 8.1 (Indebtedness) of the Credit Agreement shall be amended by renaming
clause (o) as clause (p) and inserting a new clause (o) immediately after clause (n) thereof to
read in its entirety as follows:

       “(o) Indebtedness (i) under any Securitization Program; provided, that the
aggregate outstanding principal amount of all such Indebtedness shall not exceed
$100,000,000 (regardless of the amount of accounts receivable securitized or collateralized
thereunder), (ii) arising from intercompany loans from the Borrower or any of its
Subsidiaries that sells Receivables Assets to a Securitization SPV and (iii) consisting of
renewals, extensions, refinancings, replacements and refundings of Indebtedness permitted by
this clause (o); provided, however, that any such renewal, extension, refinancing,
replacement or refunding is on market terms and is in an aggregate outstanding principal
amount not to exceed the amount set forth in the preceding subclause (i) of this Section
8.1(o).”

     Section 5.2 Liens, Etc.

     (a) Section 8.2 (Liens, Etc.) of the Credit Agreement shall be amended by deleting the
period at the end of clause (i) thereto and replacing it with the word “; and” and inserting a new
clause (j) immediately after clause (i) thereof to read in it its entirety as follows:

       “(j) Liens arising pursuant to, or assignments in connection with, any
Securitization Program solely with respect to Receivables Assets securitized
thereunder;”

     Section 5.3 Investments.

     (a) Section 8.3 (Investments) of the Credit Agreement shall be amended by
renaming clause (n) as clause (o) and inserting a new clause (n) immediately after clause (m)
thereof to read in its entirety as follows:

       “(n) Investments by the Borrower and its Subsidiaries in a Securitization SPV
pursuant to a permitted Securitization Program consisting of Receivables Assets,
intercompany loans permitted under Section 8.1(o) and cash solely to the extent such cash
Investment is permitted by clause (o) below; and”

     Section 5.4 Sale of Assets.

     (a) Section 8.4 (Sale of Assets) of the Credit Agreement shall be amended by deleting
the word “; and” at the end of clause (i), renaming clause (j) as clause (k) and inserting a new
clause (j) immediately after clause (i) thereof to read in its entirety as follows:

       “(j) sales, leases, subleases or the transfer of Receivables Assets (or
interests therein) pursuant to a Securitization Program to the extent permitted by the
terms of this Agreement; and”

4

 

     Section 5.5 Prepayment and Cancellation of Indebtedness.

     (a) Section 8.6 (Prepayment and Cancellation of Indebtedness) of the Credit
Agreement shall be amended by (i) deleting the parenthetical “(a)” immediately before the word
“prepay” in the second line thereof, (ii) deleting the word “and,” immediately before clause
(ix) of
Section 8.6(b) and (iii) inserting the following new clause (x) and clause (xi) immediately
after clause
(ix) in Section 8.6(b) to read in its entirety as follows:

       “(x) solely from proceeds of Receivables Assets, prepay any Indebtedness incurred
pursuant to a Securitization Program in the ordinary course or upon the acceleration of such
Indebtedness; and

       (xi) solely in connection with a permitted renewal, extension, refinancing, replacement
or refunding permitted by Section 8.1(o), otherwise prepay any Indebtedness incurred
pursuant to a Securitization Program with the proceeds from such renewal, extension,
refinancing, replacement or refunding.”

     (b) Section 8.6 (Prepayment and Cancellation of Indebtedness) of the Credit
Agreement shall be amended by inserting a new Section 8.6(c) immediately after Section 8.6(b)
thereof
to read in its entirety as follows:

       “(c) Notwithstanding anything in this Section 8.6 to the contrary, any
Securitization Program may be terminated or reduced in accordance with its terms by Holdings,
the Borrower or any of their respective Subsidiaries.”

     Section 5.6 Transactions with Affiliates.

     (a) Section 8.9 (Transactions with Affiliates) of the Credit Agreement shall be amended
by inserting the following proviso at the end thereof immediately after the words “with current
compensation levels” to read in its entirety as follows:

       “; provided, however, that the foregoing shall not prohibit transactions with any
Securitization SPV in connection with a Securitization Program, to the extent not
prohibited by the terms of this Agreement”

     Section 5.7 Limitation on Restrictions on Subsidiary Distributions; No
New Negative Pledge.

     (a) Section 8.10 (Limitation on Restrictions on Subsidiary Distributions; No New
Negative Pledge) of the Credit Agreement shall be amended by inserting the phrase “, any agreements
entered into in connection with a permitted Securitization Program,” immediately after the words
“Loan Documents” in the first line thereof.

5

 

ARTICLE VI

AMENDMENT TO SECTION 9.1
(EVENTS OF DEFAULT)

     Section 6.1 Events of Default.

       (a) Section 9.1 (Events of Default) of the Credit Agreement shall be amended by
adding the word “or” at the end of clause (m) thereof and inserting the following new clause
(n) immediately after clause (m) to read in its entirety as follows:

       ”(n) an event of termination or event of default in connection with any Securitization
Program including, without limitation, under any of the related documentation entered into
in connection therewith shall have occurred and be continuing without waiver or cure
thereof.”

ARTICLE VII

WAIVER TO SECTION 5.3

(MINIMUM FIXED CHARGE COVERAGE RATIO)

     Section 7.1 The provisions of Section 5.3 (Minimum Fixed Charge Coverage Ratio)
shall have no force and effect solely to the extent that Borrower fails to maintain the minimum
Fixed Charge Coverage Ratio required pursuant to such Section 5.3 as of the last day of each of the
following Fiscal Quarters: (i) Fiscal Quarter ending January 31, 2005, (ii) Fiscal Quarter ending
April 30, 2005, (iii) Fiscal Quarter ending July 31, 2005, (iv) Fiscal Quarter ending October 31,
2005 and (v) Fiscal Quarter ending January 31, 2006.

ARTICLE VIII

CONSENT TO RELEASE OF LIENS

     Section 8.1 Consent, (a) In accordance with Section 10.8(b)(iii) of the
Credit Agreement, as of the Amendment Effective Date (as defined herein), the Lenders party hereto
hereby consent to the release of any Lien held by the Administrative Agent for the benefit of the
Lenders and the Issuers solely against the Receivables Assets (as defined in Section 2.1 of this
Amendment No. 4 above) in connection with a Securitization Program (as defined in Section 2.1 of
this Amendment No. 4 above).

     (b) With respect to any Securitization Program permitted by the terms of the Credit
Agreement (as amended hereby), the Lenders party hereto hereby consent to and direct the
Administrative Agent to execute and deliver an intercreditor agreement, in form and substance
satisfactory to the Administrative Agent, among the Administrative Agent, the Borrower, the
relevant
Securitization SPV, and the agent under the related Securitization Program and any other
parties party
thereto.

6

 

ARTICLE IX

CONDITIONS PRECEDENT TO THE EFFECTIVENESS
OF THIS AMENDMENT NO. 4.

     Section 9.1 Effectiveness. This Amendment No. 4 shall become effective,
on the date each of the following conditions precedent is satisfied or duly waived by the Requisite
Lenders (the “Amendment Effective Date”):

     (a) Documentation. The Administrative Agent shall have received on or prior to
the Amendment Effective Date each of the following, each dated the Amendment Effective Date
unless
otherwise indicated or agreed to by the Administrative Agent, in form and substance
satisfactory to the
Administrative Agent:

       (i) this Amendment No. 4 executed by the Borrower and Holdings;

       (ii) the Consent and Agreement in the form attached hereto as Exhibit A,
executed by each of the Guarantors;

       (iii) Acknowledgment and Consents, in the form set forth hereto as Exhibit B
(each, a “Lender Consent”), executed by the Lenders constituting the Requisite Lenders; and

       (iv) such additional documentation as the Administrative Agent may
reasonably require.

     (b) Fees and Expenses. The Borrower shall have paid:

       (i) to the Administrative Agent for the account of each Lender that has
executed a Lender Consent and delivered evidence thereof satisfactory to the Administrative
Agent at or before 5:00 p.m. New York City time on November 9, 2004, an amendment fee equal
to 0.10% of the aggregate amount of the outstanding Term Loans and Revolving Credit
Commitments of each such Lender as of such date; and

       (ii) unless otherwise agreed by the Administrative Agent, all outstanding fees,
costs and expenses owing to the Administrative Agent, including the reasonable fees,
expenses and disbursements of all legal counsel for the Administrative Agent.

ARTICLE X

MISCELLANEOUS

     Section 10.1 Subsidiary Guarantors. The Borrower hereby represents and
warrants to the Administrative Agent and the Lenders that as of the date hereof the Consent and
Agreement in the form attached hereto as Exhibit A sets forth the true and correct name of each
Subsidiary Guarantor.

     Section 10.2 Reference to and Effect on the Loan Documents.

     (a) On and after the Amendment Effective Date, each reference in the Credit
Agreement to “this Agreement,” “hereunder,”
“hereof,” “herein,” or words of like import, and
each
reference in the other Loan Documents to the Credit Agreement, shall mean and be a reference
to the
Credit Agreement as amended hereby, and this Amendment No. 4 and the Credit Agreement shall be
read together and construed as a single instrument. The table of contents, signature pages and
list of
Exhibits and Schedules of the Credit Agreement shall be modified as necessary to reflect the
changes
made in this Amendment No. 4 as of the Amendment Effective Date.

     (b) Except as specifically amended or waived above, all of the terms of the Credit
Agreement and all other Loan Documents shall remain unchanged and in full force and effect and
all
obligations and liabilities of the Loan Parties thereunder shall remain in full force and
effect and each of
which is hereby reaffirmed.

7

 

     (c) The execution, delivery and effectiveness of this Amendment No. 4 shall not,
except as expressly provided herein, operate as an amendment or waiver of any right, power or
remedy
of any Lender, any Issuer, or the Administrative Agent under the Credit Agreement or any Loan
Document nor constitute an amendment or waiver of any provision of the Credit Agreement or any
Loan Document.

     (d) This Amendment No. 4 is a Loan Document.

     Section 10.3 Costs and Expenses. The Borrower agrees to pay on demand in
accordance with the terms of Section 11.3 of the Credit Agreement all costs and expenses of the
Administrative Agent in connection with the preparation, reproduction, execution and delivery of
this Amendment No. 4, and all other Loan Documents entered into in connection herewith, including
the reasonable fees, expenses and disbursements of Weil, Gotshal & Manges LLP and other counsel for
the Administrative Agent with respect thereto.

     Section 10.4 Titles. The Section titles contained in this Amendment No. 4
are and shall be without substantive meaning or content of any kind whatsoever and are not a part
of the agreement between the parties hereto.

     Section 10.5 Execution in Counterparts. This Amendment No. 4 may be
executed and delivered in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed an original and all of
which taken together shall constitute one and the same original agreement.

     Section 10.6 Notices. All communications and notices to the
Administrative Agent hereunder shall be given as provided in the Credit Agreement.

     Section 10.7  Severability. If any term or provision set forth in this
Amendment No. 4 shall be invalid or unenforceable, the remainder of this Amendment No. 4, or the
application of such terms or provisions to persons or circumstances, other than those to which it
is held unenforceable, shall not in any way be affected or impaired thereby.

     Section 10.8 Successors. The terms of this Amendment No. 4 shall be
binding upon, and shall inure to the benefit of, the parties hereto and their respective successors
or assigns.

     Section 10.9 Governing Law. This Amendment No. 4 shall be interpreted, and
the rights and liabilities of the parties determined, in accordance with the internal law of the
State of New York.

[SIGNATURE PAGES FOLLOW]

8

 

     IN WITNESS WHEREOF, this Amendment No. 4 has been duly executed on
the date set forth above,

	 	 	 
	

	 	HLI OPERATING COMPANY INC.,
	

	 	as Borrower
	

	 	 
	

	 	By: /s/ GARY J. FINDLING
	

	 	   Name: Gary J. Findling
	

	 	   Title: Treasurer
	

	 	 
	

	 	HAYES LEMMERZ INTERNATIONAL, INC.,
	

	 	as Holdings
	

	 	 
	

	 	By: /s/ GARY J. FINDLING
	

	 	   Name: Gary J. Findling
	

	 	   Title: Treasurer
	

	 	 
	

	 	CITICORP NORTH AMERICA INC.,
	

	 	as Administrative Agent
	

	 	 
	

	 	By: /s/ KEITH R. GERDING
	

	 	   Name: Keith R. Gerding
	

	 	   Title: Vice President

SIGNATURE PAGE TO AMENDMENT NO. 4

 

 

EXHIBIT A

CONSENT, AGREEMENT AND AFFIRMATION OF GUARANTY.

Each of the undersigned Guarantors hereby consents to the terms of the
foregoing Amendment No. 4 and agrees that the terms of this Amendment No. 4
shall not affect in any way its obligations and liabilities under any Loan
Document, all of which obligations and liabilities shall remain in full force
and effect and each of which is hereby reaffirmed,

	 	 	 
	

	 	HLI PARENT COMPANY, INC.
	

	 	HAYES LEMMERZ INTERNATIONAL — BOWLING GREEN, INC.
	

	 	HAYES LEMMERZ INTERNATIONAL — BRISTOL, INC.
	

	 	HAYES LEMMERZ INTERNATIONAL — CADILLAC, INC.
	

	 	HAYES LEMMERZ INTERNATIONAL — CALIFORNIA, INC.
	

	 	HAYES LEMMERZ INTERNATIONAL — COMMERCIAL HIGHWAY, INC.
	

	 	HAYES LEMMERZ INTERNATIONAL — EQUIPMENT & ENGINEERING, INC.
	

	 	HAYES LEMMERZ INTERNATIONAL — GEORGIA, INC.
	

	 	HAYES LEMMERZ INTERNATIONAL — HOMER, INC.
	

	 	HAYES LEMMERZ INTERNATIONAL — HOWELL, INC.
	

	 	HAYES LEMMERZ INTERNATIONAL — HUNTINGTON, INC.
	

	 	HAYES LEMMERZ INTERNATIONAL — KENTUCKY, INC.
	

	 	HAYES LEMMERZ INTERNATIONAL — LAREDO, INC.
	

	 	HAYES LEMMERZ INTERNATIONAL — MEXICO, INC.
	

	 	HAYES LEMMERZ INTERNATIONAL — MONTAGUE, INC.
	

	 	HAYES LEMMERZ INTERNATIONAL — PCA, INC.
	

	 	HAYES LEMMERZ INTERNATIONAL — PETERSBURG, INC.
	

	 	HAYES LEMMERZ INTERNATIONAL — SEDALIA, INC.
	

	 	HAYES LEMMERZ INTERNATIONAL — SOUTHFIELD, INC.
	

	 	HAYES LEMMERZ INTERNATIONAL — TECHNICAL CENTER, INC.
	

	 	HAYES LEMMERZ INTERNATIONAL — TEXAS, INC.
	

	 	HAYES LEMMERZ INTERNATIONAL — TRANSPORTATION, INC.
	

	 	HAYES LEMMERZ INTERNATIONAL — WABASH, INC.
	

	 	HLI BRAKES HOLDING COMPANY, INC.
	

	 	HLI COMMERCIAL HIGHWAY HOLDING COMPANY, INC.
	

	 	HLI POWER TRAIN HOLDING COMPANY, INC.
	

	 	HLI SUSPENSION HOLDING COMPANY, INC. (FORMERLY HAYES
LEMMERZ INTERNATIONAL — CM1, INC.)
	

	 	HLI REALTY, INC.
	

	 	HLI SERVICES HOLDING COMPANY, INC.
	

	 	HLI WHEELS HOLDING COMPANY, INC.
	

	 	HLI — SUMMERFIELD REALTY CORP.
	

	 	[HAYES LEMMERZ INTERNATIONAL IMPORT, INC.]
	

	 	[HLI NETHERLANDS HOLDINGS, INC.]
	

	 	 
	

	 	 
	

	 	By: /s/ GARY J. FINDLING
	

	 	Name: Gary J. Findling
	

	 	Title: Treasurer

GUARANTORS’ CONSENT TO AMENDMENT NO. 4

 

 

EXHIBIT B

ACKNOWLEDGEMENT AND CONSENT

	To:	 	Citicorp North America, Inc.

388 Greenwich Street

New York, New York 10013

Attention: Mr. Shapleigh Smith

Re: HLI Operating Company, Inc.

     Reference is made to the Credit Agreement, dated as of June 3, 2003 (as the same may be
amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”),
among HLI Operating Company, Inc., a Delaware corporation, as Borrower, Hayes Lemmerz
International, Inc., a Delaware corporation, as Holdings, the Lenders (as defined therein), the
Issuers (as defined therein), Citicorp North America, Inc., as administrative agent for the Lenders
and the Issuers (in such capacity, and as agent for the Secured Parties under the other Loan
Documents, the “Administrative Agent”), Lehman Commercial Paper, Inc., as syndication agent for the
Lenders and the Issuers, and General Electric Capital Corporation as documentation agent for the
Lenders and Issuers. Capitalized terms used herein and not otherwise defined herein are used herein
as defined in the Credit Agreement.

     The Borrower has requested that the Lenders consent to an amendment, waiver and consent to the
Credit Agreement on the terms described in Amendment No. 4, Waiver and Consent to the Credit
Agreement (“Amendment No. 4”), the form of which is attached hereto.

     Pursuant to Section 11.1(a) of the Credit Agreement, the undersigned Lender hereby consents
to the terms of Amendment No. 4 and authorizes the Administrative Agent to execute and deliver
Amendment No. 4 on its behalf.

	 	 	 
	

	 	Very truly yours,
	

	 	 
	

	 	
 
	

	 	(NAME OF LENDER)
	

	 	 
	

	 	By:
	

	 	
 
	

	 	Name:
	

	 	Title:

Dated as of November   , 2004

ACKNOWLEDGEMENT AND CONSENT<PAGE>
                                                                    EXHIBIT 4.24

                                  FORM OF NOTE

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

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

No. R-01                               Principal Amount:  $300,000,000
CUSIP No. 48666KAL3                    (or such other principal amount
ISIN No. US48666KAL35                  as is set forth on Schedule A hereto)

                                     KB Home

                          5-7/8% Senior Notes due 2015

         KB Home, a Delaware corporation (hereinafter called the "Company",
which term includes any successor corporation under the Indenture referred to
below), for value received, hereby promises to pay to Cede & Co., or registered
assigns, the principal sum of THREE HUNDRED MILLION DOLLARS ($300,000,000) or
such other principal amount as is set forth on Schedule A hereto on January 15,
2015, and to pay interest thereon from December 15, 2004, or from the most
recent date to which interest has been paid or duly provided for, semiannually
in arrears on January 15 and July 15 of each year (each, an "Interest Payment
Date"), commencing July 15, 2005, and at Maturity, at the rate of 5-7/8% per
annum, until the principal hereof is paid or duly made available for payment.
Interest on this Note shall be calculated on the basis of a 360-day year
consisting of twelve 30-day months. The interest so payable and punctually paid
or duly provided for on any Interest Payment Date will, as provided in such
Indenture, be paid to the Person in whose name this Note (or one or more
Predecessor Securities) is registered at the close of business on the Regular
Record Date for such interest, which shall be the January 1 or July 1 (whether
or not a Business Day), as the case may be, next preceding such Interest Payment
Date. Any such interest which is payable, but is not punctually paid or duly
provided for, on any Interest Payment Date shall forthwith cease to be payable
to the Person who was the Holder hereof on the relevant Regular Record Date by
virtue of having been such Holder, and may be paid to the Person in whose name
this Note (or one or more Predecessor Securities) is registered at the close of
business on a Special Record Date for the payment of such Defaulted Interest to
be fixed by the Trustee, notice whereof shall be given to the Holder of this
Note not less than 10 days prior to such Special Record Date, or may be paid at
any time in any other lawful manner not inconsistent with the requirements of
any securities exchange on which the Notes may be listed, and upon such notice
as may be required by such exchange, all as more fully provided in such
Indenture.

         Payment of the principal of and premium, if any, and interest on this
Note will be made at the office or agency of the Company maintained for that
purpose in the Borough of Manhattan, The City of New York, in such

<PAGE>
coin or currency of the United States of America as at the time of payment is
legal tender for payment of public and private debts; provided, however, that,
at the option of the Company, interest may be paid by check mailed to the
address of the Person entitled thereto as such address shall appear in the
Security Register or by transfer to an account maintained by the payee with a
bank located in the United States; and provided, further, that if this Note is a
global Note registered in the name of a Depository or its nominee, then,
anything in the Indenture or the Notes to the contrary notwithstanding, payments
of the principal of and premium, if any, and interest on this Note shall be made
by wire transfer.

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

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

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

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

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

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

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

                                       2
<PAGE>
               (expressed as a percentage of its principal amount) equal to the
               Comparable Treasury Price for such Redemption Date.

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

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

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

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

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

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

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

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

         "Final Maturity Date" means January 15, 2015.

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

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

         The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the Guarantors and the rights of the Holders of the

                                       3
<PAGE>
Securities of each series issued under the Indenture at any time by the Company,
the Guarantors and the Trustee with the consent of the Holders of not less than
a majority in aggregate principal amount of the Securities at the time
Outstanding of each series affected thereby. The Indenture also contains
provisions permitting the Holders of specified percentages in aggregate
principal amount of the Securities of any series at the time Outstanding, on
behalf of the Holders of all Securities of such series, to waive compliance by
the Company and the Guarantors with certain provisions of the Indenture and
certain past defaults under the Indenture and their consequences. Any such
consent or waiver by the Holder of this Note shall be conclusive and binding
upon such Holder and upon all future Holders of this Note and of any Notes
issued upon the registration of transfer hereof or in exchange herefor or in
lieu hereof, whether or not notation of such consent or waiver is made upon this
Note.

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

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

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

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

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

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

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

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

                                       4
<PAGE>
         Unless the certificate of authentication hereon has been executed by or
on behalf of the Trustee under the Indenture by the manual signature of one of
its authorized signatories, this Note shall not be entitled to any benefits
under the Indenture (including, without limitation, the Guarantees) or be valid
or obligatory for any purpose.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       5
<PAGE>
         IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed and its corporate seal to be duly attested by the manual or facsimile
signatures of its duly authorized officers and has caused its corporate seal (or
a facsimile thereof) to be affixed or imprinted hereon.

Dated:  December 15, 2004

<TABLE>
<CAPTION>
[Seal]                                                      KB HOME
<S>      <C>                                                <C>    <C>

Attest:  SPECIMEN                                           By:    SPECIMEN
         ----------------------------------------------            -------------------------------------------
         Name:    Kimberly N. King                                 Name:      Kelly Masuda
         Title:   Vice President, Associate General                Title:     Vice President, Capital Markets
                  Counsel and Corporate Secretary                             and Treasurer
</TABLE>

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

SUNTRUST BANK, as Trustee

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

                                       6
<PAGE>
                                  ABBREVIATIONS

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

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

                      under the Uniform Gift to Minors Act

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

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

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

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

      PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE

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

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

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

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

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

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

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

                                       7
<PAGE>

                                   SCHEDULE A

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

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

</TABLE>

                                       8

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