Document:

THE RYLAND GROUP, INC. EXHIBIT 10.9

 

EXHIBIT 10.9

2002 REVOLVING CREDIT AGREEMENT

Dated as of

August 22, 2002

among

THE RYLAND GROUP, INC.,

as the Company,

THE LENDERS NAMED HEREIN

BANK OF AMERICA, N.A.,

as Administrative Agent,

BANK ONE, NA,

as Syndication Agent,

WACHOVIA BANK, NATIONAL ASSOCIATION,

as Syndication Agent,

GUARANTY BANK,

as Documentation Agent,

and

SUNTRUST BANK,

as Managing Agent

BANC OF AMERICA SECURITIES LLC

Sole Lead Arranger and Sole Book Manager

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page
	 	 	 	 	 	 	

	ARTICLE I DEFINITIONS AND ACCOUNTING TERMS	 	 	1	 
	 	1.1	 	 	Defined Terms
	 	 	1	 
	 	1.2	 	 	Other Interpretive Provisions
	 	 	24	 
	 	1.3	 	 	Accounting Terms
	 	 	25	 
	 	1.4	 	 	Rounding
	 	 	25	 
	 	1.5	 	 	References to Agreements and Laws
	 	 	25	 
	 	1.6	 	 	Exhibits, Schedules and Annexes
	 	 	25	 
	 	1.7	 	 	Letter of Credit Amounts
	 	 	26	 
	ARTICLE II BORROWING PROCEDURES AND LETTER OF CREDIT SUBLIMIT	 	 	27	 
	 	2.1	 	 	Disbursement of Loan Proceeds
	 	 	27	 
	 	2.2	 	 	Base Rate Loans
	 	 	29	 
	 	2.3	 	 	LIBOR Loans
	 	 	29	 
	 	2.4	 	 	Redesignation of Borrowings and Continuation of LIBOR Loans
	 	 	29	 
	 	2.5	 	 	Calculation of Borrowing Base
	 	 	31	 
	 	2.6	 	 	Borrowing Base
	 	 	33	 
	 	2.7	 	 	Payments by the Lenders to the Administrative Agent
	 	 	33	 
	 	2.8	 	 	Sharing of Payments, Etc.
	 	 	34	 
	 	2.9	 	 	Letters of Credit
	 	 	34	 
	 	2.10	 	 	Increase of Commitments
	 	 	42	 
	 	2.11	 	 	Voluntary Termination or Reduction of Commitments
	 	 	44	 
	ARTICLE III PAYMENTS AND FEES	 	 	45	 
	 	3.1	 	 	Principal and Interest
	 	 	45	 
	 	3.2	 	 	Non-use Fee
	 	 	47	 
	 	3.3	 	 	Facility Fee
	 	 	47	 
	 	3.4	 	 	Up-front Fees
	 	 	47	 
	 	3.5	 	 	Other Fees
	 	 	47	 
	 	3.6	 	 	Late Payments
	 	 	47	 
	 	3.7	 	 	Taxes
	 	 	47	 
	 	3.8	 	 	Illegality
	 	 	48	 
	 	3.9	 	 	Increased Costs and Reduction of Return
	 	 	48	 
	 	3.10	 	 	Funding Indemnification
	 	 	49	 
	 	3.11	 	 	Inability to Determine Rates
	 	 	50	 
	 	3.12	 	 	Certificate of Lenders
	 	 	50	 
	 	3.13	 	 	Substitution of Lenders
	 	 	50	 
	 	3.14	 	 	Survival
	 	 	51	 
	 	3.15	 	 	Manner and Treatment of Payments
	 	 	51	 
	 	3.16	 	 	Mandatory Prepayment
	 	 	51	 
	 	3.17	 	 	Maturity Date Extension Option
	 	 	52	 
	 	3.18	 	 	Limitation on Additional Amounts, Etc.
	 	 	53	 
	 	3.19	 	 	Payments Generally
	 	 	53	 

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	 	 	 	 	 	 	Page
	 	 	 	 	 	 	

	ARTICLE IV CONDITIONS	 	 	56	 
	 	4.1	 	 	Conditions to First Extension of Credit
	 	 	56	 
	 	4.2	 	 	Conditions for Subsequent Extensions of Credit
	 	 	57	 
	ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE COMPANY	 	 	58	 
	 	5.1	 	 	Incorporation, Qualification, Powers and Capital Stock
	 	 	58	 
	 	5.2	 	 	Execution, Delivery and Performance of Loan Documents
	 	 	58	 
	 	5.3	 	 	Compliance with Laws and Other Requirements
	 	 	59	 
	 	5.4	 	 	Subsidiaries
	 	 	59	 
	 	5.5	 	 	Financial Statements of the Company and its Consolidated Subsidiaries
	 	 	60	 
	 	5.6	 	 	No Material Adverse Change
	 	 	60	 
	 	5.7	 	 	Tax Liability
	 	 	61	 
	 	5.8	 	 	Litigation
	 	 	61	 
	 	5.9	 	 	ERISA
	 	 	61	 
	 	5.10	 	 	Regulations U and X; Investment Company Act
	 	 	61	 
	 	5.11	 	 	No Default or Event of Default
	 	 	62	 
	 	5.12	 	 	Ownership of Property; Liens
	 	 	62	 
	 	5.13	 	 	Environmental Matters
	 	 	62	 
	 	5.14	 	 	Borrowing Base
	 	 	63	 
	 	5.15	 	 	Borrowing Base Components
	 	 	63	 
	 	5.16	 	 	Purpose of Loans
	 	 	63	 
	ARTICLE VI AFFIRMATIVE COVENANTS OF THE COMPANY	 	 	64	 
	 	6.1	 	 	Financial Statements
	 	 	64	 
	 	6.2	 	 	Certificates; Other Information
	 	 	64	 
	 	6.3	 	 	Payment of Obligations
	 	 	65	 
	 	6.4	 	 	Conduct of Business and Maintenance of Existence
	 	 	66	 
	 	6.5	 	 	Maintenance of Property; Insurance
	 	 	66	 
	 	6.6	 	 	Inspection of Property; Books and Records; Discussions
	 	 	66	 
	 	6.7	 	 	Notices
	 	 	67	 
	 	6.8	 	 	Environmental Laws
	 	 	68	 
	 	6.9	 	 	Guarantees from Future Subsidiaries
	 	 	68	 
	ARTICLE VII NEGATIVE COVENANTS OF THE COMPANY	 	 	70	 
	 	7.1	 	 	Consolidated Tangible Net Worth
	 	 	70	 
	 	7.2	 	 	Leverage Ratio
	 	 	70	 
	 	7.3	 	 	Minimum Fixed Charge Coverage
	 	 	70	 
	 	7.4	 	 	Senior Permitted Debt Not to Exceed Borrowing Base
	 	 	70	 
	 	7.5	 	 	Limitation on Land Inventory
	 	 	70	 
	 	7.6	 	 	Limitation on Housing Inventory
	 	 	71	 
	 	7.7	 	 	Limitation on Indebtedness
	 	 	71	 
	 	7.8	 	 	Limitation on Liens
	 	 	73	 
	 	7.9	 	 	Limitation on Guarantee Obligations
	 	 	74	 
	 	7.10	 	 	Limitations of Fundamental Changes
	 	 	75	 
	 	7.11	 	 	Limitation on Sales of Assets
	 	 	75	 
	 	7.12	 	 	Limitation on Dividends
	 	 	76	 
	 	7.13	 	 	Limitation on Investments
	 	 	76	 
	 	7.14	 	 	Limitation on Optional Payments and Modification of Debt Instruments
	 	 	78	 
	 	7.15	 	 	Transactions with Affiliates
	 	 	79	 

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	 	 	 	 	 	 	Page
	 	 	 	 	 	 	

	 	7.16	 	 	Fiscal Year
	 	 	79	 
	 	7.17	 	 	Compliance with ERISA
	 	 	79	 
	 	7.18	 	 	Preferred Stock
	 	 	79	 
	ARTICLE VIII EVENTS OF DEFAULT AND REMEDIES UPON DEFAULT	 	 	80	 
	 	8.1	 	 	Events of Default
	 	 	80	 
	 	8.2	 	 	Remedies
	 	 	82	 
	 	8.3	 	 	Rights Not Exclusive
	 	 	83	 
	ARTICLE IX THE ADMINISTRATIVE AGENT	 	 	84	 
	 	9.1	 	 	Appointment and Authorization of Administrative Agent
	 	 	84	 
	 	9.2	 	 	Delegation of Duties
	 	 	84	 
	 	9.3	 	 	Liability of Administrative Agent
	 	 	84	 
	 	9.4	 	 	Reliance by Administrative Agent
	 	 	85	 
	 	9.5	 	 	Notice of Default
	 	 	85	 
	 	9.6	 	 	Credit Decision; Disclosure of Information by Administrative Agent
	 	 	86	 
	 	9.7	 	 	Indemnification of Administrative Agent
	 	 	86	 
	 	9.8	 	 	Agent in Individual Capacity
	 	 	87	 
	 	9.9	 	 	Successor Administrative Agent; Resignation as Swing Line Lender
	 	 	87	 
	 	9.10	 	 	Administrative Agent May File Proofs of Claim
	 	 	88	 
	 	9.11	 	 	Other Agents, Arrangers and Managers
	 	 	88	 
	 	9.12	 	 	Performance by the Administrative Agent
	 	 	88	 
	 	9.13	 	 	Actions
	 	 	89	 
	ARTICLE X MISCELLANEOUS	 	 	90	 
	 	10.1	 	 	Amendments and Waivers
	 	 	90	 
	 	10.2	 	 	Notices and Other Communications; Facsimile Copies
	 	 	91	 
	 	10.3	 	 	No Waiver; Cumulative Remedies
	 	 	92	 
	 	10.4	 	 	Attorney Costs, Expenses and Taxes
	 	 	92	 
	 	10.5	 	 	Indemnification by the Company
	 	 	93	 
	 	10.6	 	 	Payments Set Aside
	 	 	94	 
	 	10.7	 	 	Successors and Assigns
	 	 	94	 
	 	10.8	 	 	Assignments, Participations, Etc.
	 	 	94	 
	 	10.9	 	 	Confidentiality
	 	 	98	 
	 	10.10	 	 	Set-off
	 	 	99	 
	 	10.11	 	 	Integration
	 	 	99	 
	 	10.12	 	 	Survival of Representations and Warranties
	 	 	99	 
	 	10.13	 	 	Severability
	 	 	99	 
	 	10.14	 	 	Tax Forms
	 	 	100	 
	 	10.15	 	 	Counterparts
	 	 	102	 
	 	10.16	 	 	No Third Parties Benefited
	 	 	102	 
	 	10.17	 	 	Section Headings
	 	 	102	 
	 	10.18	 	 	Further Acts by the Company
	 	 	102	 
	 	10.19	 	 	Time of the Essence
	 	 	102	 
	 	10.20	 	 	GOVERNING LAW
	 	 	102	 
	 	10.21	 	 	Submission to Jurisdiction
	 	 	102	 
	 	10.22	 	 	WAIVER OF JURY TRIAL
	 	 	103	 

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LIST OF ANNEXES

	 	 	 
	Annex I	 	
Commitments of the Lenders
	 
	Annex II	 	
Guarantors
	 
	LIST OF EXHIBITS

	 
	Exhibit “A”	 	
Assignment and Assumption
	 
	Exhibit “B”	 	
Borrowing Base Certificate
	 
	Exhibit “C”	 	
Compliance Certificate
	 
	Exhibit “D”	 	
Continuing Guaranty
	 
	Exhibit “E”	 	
Note
	 
	Exhibit “F-1”	 	
Form of Legal Opinion of Timothy J. Geckle for the Company and Guarantors
	 
	Exhibit “F-2”	 	
Form of Legal Opinion of Piper Rudnick LLP for the Company and the Guarantors
	 
	Exhibit “G”	 	
Request for Borrowing/Continuation/Redesignation/Letter of Credit
	 
	LIST OF SCHEDULES

	 
	Schedule 1.1(a)	 	
Existing Investments
	 
	Schedule 1.1(b)	 	
Existing Letters of Credit
	 
	Schedule 5.4	 	
Subsidiaries and Homebuilding Joint Ventures
	 
	Schedule 6.2(g)	 	
Financial Information
	 
	Schedule 10.2	 	
Administrative Agent’s Office, Certain Addresses for Notices

-iv-

 

2002 REVOLVING CREDIT AGREEMENT

This 2002 Revolving Credit Agreement (“Agreement”) is dated as of August 22,
2002, by and among THE RYLAND GROUP, INC., a Maryland corporation (the
“Company”), the several financial institutions from time to time party to this
Agreement (collectively, the “Lenders” and individually, a “Lender”), BANK OF
AMERICA, N.A., as administrative agent for the Lenders (in such capacity, the
“Administrative Agent”), BANK ONE, NA and WACHOVIA BANK, NATIONAL ASSOCIATION,
as syndication agents (each, in such capacity, a “Syndication Agent”), GUARANTY
BANK, as documentation agent (in such capacity, the “Documentation Agent”), and
SUNTRUST BANK, as managing agent (in such capacity, the “Managing Agent”), and
is made with reference to the facts set forth below.

RECITALS

	A.	  	The Company is primarily engaged in the homebuilding business and
developing residential single-family housing projects.
	 
	B.	  	The Company has requested the Lenders to make certain extensions of
credit to finance or refinance the acquisition of land and the development
and construction of various single-family housing projects, and for
general corporate purposes (including the refinancing of all obligations
under the Existing Credit Agreement).
	 
	C.	  	The Lenders are willing to make such extensions of credit to the Company
on the terms and conditions set forth in this Agreement and in the other
Loan Documents.

AGREEMENT

NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company, the Lenders and the
Administrative Agent hereby agree as follows:

ARTICLE I

DEFINITIONS AND ACCOUNTING TERMS

	1.1	  	Defined Terms. As used in this Agreement the following terms shall have
the meaning set forth respectively after each:
	 
	 	  	“Adjusted Consolidated Tangible Net Worth” means, with respect to the
Company at any date, the Company’s Consolidated Tangible Net Worth at
such date less the Company’s Investments in the Financial Services
Segment, determined in accordance with GAAP.
	 
	 	  	“Administrative Agent” means Bank of America when acting in its capacity
as the Administrative Agent under any of the Loan Documents, or any
successor administrative agent.
	 
	 	  	“Administrative Questionnaire” means an Administrative Questionnaire in a
form supplied by the Administrative Agent.
	 
	 	  	“Affected Lender” has the meaning set forth in Section 3.13.

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	 	  	“Affiliate” means, with respect to any Person, another Person that
directly, or indirectly through one or more intermediaries, Controls or
is Controlled by or is under common Control with the Person specified.
“Control” means the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a Person,
whether through the ability to exercise voting power, by contract or
otherwise. “Controlling” and “Controlled” have meanings correlative
thereto. Without limiting the generality of the foregoing, a Person
shall be deemed to be Controlled by another Person if such other Person
possesses, directly or indirectly, power to vote 25% or more of the
securities having ordinary voting power for the election of directors,
managing general partners or the equivalent.
	 
	 	  	“Agent-Related Persons” means the Administrative Agent, together with its
Affiliates (including, in the case of Bank of America in its capacity as
the Administrative Agent, the Arranger), and the officers, directors,
employees, agents and attorneys-in-fact of such Persons and Affiliates.
	 
	 	  	“Aggregate Commitment” means the aggregate combined Commitments of the
Lenders. As of the date of this Agreement, the Aggregate Commitment
currently equals $300,000,000, and may decrease as provided in Section
2.11 or increase as provided in Section 2.10.
	 
	 	  	“Agreement” means this 2002 Revolving Credit Agreement, either as
originally executed or as it may from time to time be supplemented,
modified or amended.
	 
	 	  	“Applicable Rates” means the following percentages per annum, based upon
the Leverage Ratio as set forth in the most recent Compliance Certificate
received by the Administrative Agent pursuant to Section 6.2(b):

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	LIBOR Margin
	 	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	 	L/C Fee Rate
	 	 	 	 	 	 	 	 	 	 	

	Pricing Level	 	Leverage Ratio	 	Facility Fee Rate	 	Swing Line Rate Spread
	
	 	
	 	
	 	

	I
	 	< 1.25:1	 	 	0.125	%	 	 	1.300	%
	II
	 	> 1.25:1 but < 1.50:1	 	 	0.125	%	 	 	1.500	%
	III
	 	> 1.50:1 but < 1.75:1	 	 	0.150	%	 	 	1.700	%
	IV
	 	> 1.75:1 but < 2.00:1	 	 	0.200	%	 	 	1.875	%
	V
	 	> 2.00:1	 	 	0.200	%	 	 	2.150	%

	 	  	The Applicable Rates will be adjusted as of the first Banking Day
immediately following the date a Compliance Certificate is delivered
pursuant to Section 6.2(b); provided, however, that if a Compliance
Certificate is not delivered when due in accordance with Section 6.2(b),
then Pricing Level V shall apply as of the first Banking Day after the
date on which such Compliance Certificate was required to have been
delivered. For the period beginning on the Closing Date until the first
Compliance Certificate is delivered hereunder (provided such

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	 	  	Compliance Certificate is delivered when due in accordance with Section
6.2(b)), the Applicable Rates shall be determined based upon Pricing
Level I.
	 
	 	  	“Approved Fund” means any Fund that is administered or managed by:

	     	(a)	  	a Lender;
	 
	     	(b)	  	an Affiliate of a Lender; or
	 
	     	(c)	  	an entity or an Affiliate of an entity that administers or
manages a Lender.

	 	  	“Arranger” means Banc of America Securities LLC, in its capacity as sole
lead arranger and sole book manager.
	 
	 	  	“Assignment and Assumption” means an Assignment and Assumption
substantially in the form of Exhibit “A”.
	 
	 	  	“Attorney Costs” means and includes all reasonable fees, expenses and
disbursements of any law firm or other external counsel and, without
duplication, the allocated cost of internal legal services and all
expenses and disbursements of internal counsel.
	 
	 	  	“Audited Financial Statements” means the audited consolidated balance
sheet of the Company and its Subsidiaries for the fiscal year ended
December 31, 2001, and the related consolidated statements of income or
operations, shareholders’ equity and cash flows for such fiscal year of
the Company and its Subsidiaries, including the notes thereto.
	 
	 	  	“Authorized Official” means Responsible Official or other person
designated in writing by a Responsible Official.
	 
	 	  	“Bank of America” means Bank of America, N.A. and its successors.
	 
	 	  	“Banking Day” means any day other than a Saturday, Sunday or other day on
which commercial banks are authorized to close under the Laws of, or are
in fact closed in, the state of Illinois.
	 
	 	  	“Base Rate” means for any day a fluctuating rate per annum equal to the
higher of:

	     	(a)	  	the Federal Funds Rate plus 0.5%; and
	 
	     	(b)	  	the Prime Rate.

	 	  	“Base Rate Loan” means any Loan or portion thereof which is designated as
a Base Rate Loan or which is not designated or redesignated by the
Company as a LIBOR Loan pursuant to Sections 2.3 or 2.4 and which is not
a Swing Line Advance.
	 
	 	  	“Borrowing” means each of the Loans to be made by the Lenders to the
Company as provided in Article II.
	 
	 	  	“Borrowing Base” has the meaning set forth in Section 2.5(b).
	 
	 	  	“Borrowing Base Certificate” means a written calculation of the Borrowing
Base, substantially in the form of Exhibit “B” attached hereto and made a
part hereof, signed by a Responsible

-3-

 

	 	  	Official of the Company and properly completed to provide all information
required to be included thereon.
	 
	 	  	“Business” has the meaning set forth in Section 5.13(b).
	 
	 	  	“Capital Adequacy Regulation” means any guideline, request or directive
of any central bank or other Governmental Authority, or any other law,
rule or regulation, whether or not having the force of law, in each case,
regarding capital adequacy of any bank or of any corporation controlling
a bank.
	 
	 	  	“Cash Equivalents” means:

	     	(a)	  	securities issued or directly and fully guaranteed or insured
by the United States Government or any agency or instrumentality
thereof having maturities of not more than 90 days from the date of
acquisition;
	 
	     	(b)	  	time deposits and certificates of deposit of any of the
Lenders, or of any domestic or foreign commercial bank which has
capital and surplus in excess of $500,000,000 or which has a
commercial paper rating meeting the requirements specified in clause
(d) below, having maturities of not more than 90 days from the date
of acquisition;
	 
	     	(c)	  	repurchase obligations with a term of not more than 30 days
for underlying securities of the types described in clauses (a) and
(b) above entered into with any bank meeting the qualifications
specified in clause (b) above; and
	 
	     	(d)	  	commercial paper of any Person rated at least A-2 or the
equivalent thereof by S&P or P-2 or the equivalent thereof by
Moody’s and in either case maturing within 90 days after the date of
acquisition.

	 	  	“Closing Date” means the date on which the conditions precedent in
Article IV are satisfied in full.
	 
	 	  	“Code” means the Internal Revenue Code of 1986, as amended, reformed or
otherwise modified from time to time.
	 
	 	  	“Combined Debt” means, with respect to a Person or segment at a
particular date, without duplication, the sum of

	     	(a)	  	all Funded Debt plus
	 
	     	(b)	  	all obligations, contingent or otherwise, in respect of
Financial L/Cs plus
	 
	     	(c)	  	all Guarantee Obligations guaranteeing or in effect
guaranteeing Funded Debt of another party plus
	 
	     	(d)	  	all Guarantee Obligations guaranteeing or in effect
guaranteeing obligations, contingent or otherwise, in respect of
Financial L/Cs,

	 	  	in each case of such Person and its Subsidiaries or such segment, in each
case together with their respective Consolidated Joint Ventures, as at
such date, determined on a combined basis in accordance with GAAP.

-4-

 

	 	  	“Combined Net Income” means, with respect to a Person or segment for any
period, the combined net income (or loss) of such Person and its
Subsidiaries or such segment, in each case together with their respective
Consolidated Joint Ventures, for such period (taken as a cumulative
whole), determined on a combined basis in accordance with GAAP.
	 
	 	  	“Commitment” means, as to each Lender, its obligation to

	     	(a)	  	make Loans to the Company pursuant to Article II,
	 
	     	(b)	  	purchase participations in L/C Obligations, and
	 
	     	(c)	  	purchase participations in Swing Line Advances,

	 	  	in an aggregate principal amount at any one time outstanding not to
exceed the amount set forth opposite such Lender’s name on Annex I hereto
or in the Assignment and Assumption pursuant to which such Lender becomes
a party hereto, as applicable, as such amount may be adjusted from time
to time in accordance with this Agreement.
	 
	 	  	“Common Stock” means the Company’s common stock, par value $1.00 per
share, as the same exists on the date hereof or any other class of stock
of the Company the right of which to share in distributions of earnings
or assets of the Company is without limit as to amount or percentage.
	 
	 	  	“Commonly Controlled Entity” means an entity, whether or not
incorporated, which is under common control with the Company within the
meaning of Section 4001 of ERISA or is part of a group which includes the
Company and which is treated as a single employer under Section 414 of
the Code.
	 
	 	  	“Company” means The Ryland Group, Inc., a Maryland corporation, and its
successors and assigns.
	 
	 	  	“Completed Unit” means a Unit as to which either (or both) of the
following has occurred:

	     	(a)	  	a notice of completion has been filed or recorded in the
appropriate real estate records, or
	 
	     	(b)	  	all necessary construction has been completed in order to
obtain a certificate of occupancy (whether or not such certificate
of occupancy has actually been obtained).

	 	  	“Compliance Certificate” means a certificate substantially in the form of
Exhibit “C”.
	 
	 	  	“Consolidated Intangibles” means, with respect to any Person at any date,
all amounts, determined in accordance with GAAP, included in the
Consolidated Net Worth of such Person and attributable to intangibles
including

	     	(a)	  	goodwill, including any amounts (however designated on the
balance sheet) representing the cost of acquisitions of Subsidiaries
in excess of underlying tangible assets or
	 
	     	(b)	  	patents, trademarks and copyrights.

-5-

 

	 	  	“Consolidated Joint Ventures” means, at any time, real estate joint
ventures in which the Company or any of its Subsidiaries has an
investment at such time and which are being consolidated in the Company’s
consolidated financial statements.
	 
	 	  	“Consolidated Net Income” means, with respect to a Person for any period,
the consolidated net income (or loss) of such Person and its Subsidiaries
and Consolidated Joint Ventures for such period (taken as a cumulative
whole), determined in accordance with GAAP.
	 
	 	  	“Consolidated Net Worth” means, with respect to any Person at any date,
all amounts which would, in accordance with GAAP, be included under
shareholders’ equity on a consolidated balance sheet of such Person and
its consolidated Subsidiaries and Consolidated Joint Ventures at such
date.
	 
	 	  	“Consolidated Tangible Net Worth” means, with respect to any Person at
any date, such Person’s Consolidated Net Worth at such date less such
Person’s Consolidated Intangibles at such date.
	 
	 	  	“Construction in Progress” means Finished Lots:

	     	(a)	  	for which a final subdivision map has been recorded; and
	 
	     	(b)	  	upon which construction has commenced, as evidenced by the
commencement of excavation for foundations, but has not been
completed.

	 	  	“Contractual Obligation” means, with respect to any Person, any provision
of any security issued by such Person or of any agreement, instrument or
other undertaking to which such Person is a party or by which it or any
of its property is bound.
	 
	 	  	“Countrywide “ means Countrywide Home Loans, Inc.
	 
	 	  	“Countrywide Loan Purchase Agreement” means the Loan Purchase Agreement
by and between Ryland Mortgage Company and Countrywide dated as of June
26, 1995, as supplemented, modified, amended, restated or extended from
time to time.
	 
	 	  	“Credit Advance” means any advance, loan or extension of credit to any
Person or the purchase of any bonds, notes, debentures or other debt
securities of any Person.
	 
	 	  	“Credit Extension” means each of the following:

	     	(a)	  	a Borrowing; and
	 
	     	(b)	  	an L/C Credit Extension.

	 	  	“Daily Usage” means the sum of

	     	(a)	  	the aggregate principal balance of the Loans plus
	 
	     	(b)	  	the aggregate L/C Obligations

	 	  	outstanding on any day.

-6-

 

	 	  	“Debtor Relief Laws” means the Bankruptcy Code of the United States, and
all other liquidation, conservatorship, bankruptcy, assignment for the
benefit of creditors, moratorium, rearrangement, receivership,
insolvency, reorganization, or similar debtor relief Laws of the United
States or other applicable jurisdictions from time to time in effect and
affecting the rights of creditors generally.
	 
	 	  	“Default” means any of the events specified in Section 8.1, whether or
not any requirement for the giving of notice, the lapse of time, or both,
or any other condition, has been satisfied.
	 
	 	  	“Defaulting Lender” means any Lender that:

	     	(a)	  	has failed to fund any portion of the Loans, participations
in L/C Obligations or participations in Swing Line Advances required
to be funded by it hereunder within one Banking Day of the date
required to be funded by it hereunder,
	 
	     	(b)	  	has otherwise failed to pay over to the Administrative Agent
or any other Lender any other amount required to be paid by it
hereunder within two Banking Days of the date when due, unless the
subject of a good faith dispute; or
	 
	     	(c)	  	has been deemed insolvent or become the subject of a
bankruptcy or insolvency proceeding.

	 	  	“Designated Event” means the occurrence of any of the following events:

	     	(a)	  	there shall be consummated any consolidation, share exchange
or merger of the Company in which the Company is not the continuing
or surviving corporation or pursuant to which the Company’s Voting
Stock would be converted into cash, securities or other property,
other than, in any case, a merger of the Company in which the
holders of Voting Stock immediately prior to the merger have 70% or
more of the ownership, directly or indirectly, of the Voting Stock
of the surviving corporation immediately after the merger;
	 
	     	(b)	  	there is a report filed by any Person, including Affiliates
of the Company (other than the Company, its Subsidiaries, employee
stock ownership plans or employee benefit plans of the Company or
its Subsidiaries) on Schedule 13D or l4D-l (or any successor
schedule, form or report under the Securities Exchange Act of 1934
(the “Exchange Act”)) disclosing that such Person (for the purpose
of this definition of “Designated Event” only, the term “Person”
shall include a “person” within the meaning of Section 13(d)(3) and
Section 14(d)(2) of the Exchange Act or any successor provision to
either of the foregoing) has become the beneficial owner (as the
term “beneficial owner” is defined under Rule 13d-3, Rule 13d-5 or
any successor rule or regulation promulgated under the Exchange Act)
of 30% or more of the Company’s Voting Stock; provided, however,
that a Person shall not be deemed the beneficial owner of, or to own
beneficially

	            	(1)	  	any securities tendered pursuant to a tender or
exchange offer made on behalf of such Person or any of such
Person’s Affiliates until such tendered securities are
accepted for purchase or exchange thereunder or
	 
	     	(2)	  	any securities if such beneficial ownership

-7-

 

	                    	(A)	  	arises solely as a result of a
revocable proxy delivered in response to a proxy or
consent solicitation made pursuant to, and in
accordance with, the applicable rules and regulations
under the Exchange Act, and
	 
	     	(B)	  	is not also then reportable on
Schedule 13D (or any successor schedule, form or
report) under the Exchange Act; or

	     	(c)	  	during any period of 2 consecutive calendar years,
individuals who, at the beginning of such period constituted the
board of directors of the Company cease for any reason to constitute
a majority of the directors of the Company then in office unless
such new directors were elected by the directors of the Company who
constituted the board of directors of the Company at the beginning
of such period.

	 	  	“Dollars” or “$” means lawful money of the United States.
	 
	 	  	“EBITDA” means, for any period, without duplication, the sum of the
following amounts attributable to such period:

	     	(a)	  	the Combined Net Income of the Homebuilding Segment;
	 
	     	(b)	  	cash distributions received by the Company from the Financial
Services Segment, determined in accordance with GAAP;
	 
	     	(c)	  	federal, state and local income and franchise taxes deducted
from combined revenues in determining such Combined Net Income;
	 
	     	(d)	  	depreciation and amortization deducted from combined revenues
in determining such Combined Net Income;
	 
	     	(e)	  	interest expense deducted from combined revenues in
determining such Combined Net Income (including, without
duplication, previously capitalized interest expense which would be
included in “Cost of Goods Sold” and deducted from combined revenues
in determining such Combined Net Income on a combined income
statement of the Homebuilding Segment in accordance with GAAP);
	 
	     	(f)	  	other non-recurring non-cash charges and expenses (including
net realizable value write-down charges) deducted from combined
revenues in determining such Combined Net Income;
	 
	     	 	  	less

	            	(1)	  	any non-recurring non-cash credits included in
combined revenues in determining such Combined Net Income; and
	 
	     	(2)	  	any non-cash equity interest in earnings received
by the Company from the Financial Services Segment which was
included in combined revenues in determining such Combined Net
Income.

	 	  	“Eligible Assignee” means:

-8-

 

	     	(a)	  	a Lender;
	 
	     	(b)	  	an Affiliate of a Lender;
	 
	     	(c)	  	an Approved Fund; and
	 
	     	(d)	  	any other Person (other than a natural person) approved by

	            	(1)	  	the Administrative Agent (such approval not to be
unreasonably withheld or delayed), and
	 
	     	(2)	  	unless an Event of Default has occurred and is
continuing, the Company (such approval not to be unreasonably
withheld or delayed);

	 	  	provided that notwithstanding the foregoing, “Eligible Assignee” shall
not include the Company or any of the Company’s Affiliates or
Subsidiaries.
	 
	 	  	“Entitled Land” means:

	     	(a)	  	land where all requisite zoning requirements and land use
requirements have been satisfied, and all requisite approvals have
been obtained (on a final and unconditional basis) from all
applicable Governmental Authorities (other than approvals which are
simply ministerial and non-discretionary in nature), in order to
develop the land as a residential housing project and construct
Units thereon; and
	 
	     	(b)	  	as to land located in California, land which satisfies the
requirements of clause (a) immediately above, and which is subject
to a currently effective vesting, tentative map (unless a county or
city where the land is located does not grant vesting tentative
maps) which has received all necessary approvals (on a final and
unconditional basis) by all applicable Governmental Authorities.

	 	  	“Environmental Laws” means any and all foreign, Federal, state, local or
municipal laws, rules, orders, regulations, statutes, ordinances, codes,
decrees, requirements of any Governmental Authority or other Requirements
of Law (including common law) regulating, relating to or imposing
liability or standards of conduct concerning pollution or protection of
the environment, as now or may at any time hereafter be in effect.
	 
	 	  	“Environmental Liability” means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation,
fines, penalties or indemnities), of the Company, any other Loan Party or
any of their respective Subsidiaries directly or indirectly resulting
from or based upon

	     	(a)	  	violation of any Environmental Law,
	 
	     	(b)	  	the generation, use, handling, transportation, storage,
treatment or disposal of any Materials of Environmental Concern,
	 
	     	(c)	  	exposure to any Materials of Environmental Concern,
	 
	     	(d)	  	the release or threatened release of any Materials of
Environmental Concern into the environment or

-9-

 

	     	(e)	  	any contract, agreement or other consensual arrangement
pursuant to which liability is assumed or imposed with respect to
any of the foregoing.

	 	  	“ERISA” means the Employee Retirement Income Security Act of 1974, and
any regulations issued pursuant thereto, as now or from time to time
hereafter in effect.
	 
	 	  	“Event of Default” means any of the events specified in Section 8.1,
provided that any requirement for the giving of notice, the lapse of
time, or both, or any other condition, has been satisfied.
	 
	 	  	“Existing Credit Agreement” means that certain Revolving Credit Agreement
dated as of October 19, 1999, as supplemented and amended, by the
Company, Bank of America, as administrative agent, and a syndicate of
lenders.
	 
	 	  	“Existing Letters of Credit” means those Letters of Credit issued by Bank
of America under the Existing Credit Agreement or issued by another
Lender, all of which are identified in Schedule 1.1(b).
	 
	 	  	“Extension Notice Date” has the meaning set forth in Section 3.17.
	 
	 	  	“Facility Fee” has the meaning set forth in Section 3.3.
	 
	 	  	“Facility Fee Rate” means the applicable per annum percentage set forth
in the definition of Applicable Rate.
	 
	 	  	“FDIC” means the Federal Deposit Insurance Corporation, and any
Governmental Authority succeeding to any of its principal functions.
	 
	 	  	“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 on the
Banking Day next succeeding such day; provided that

	     	(a)	  	if such day is not a Banking Day, the Federal Funds Rate for
such day shall be such rate on such transactions on the next
preceding Banking Day as so published on the next succeeding Banking
Day, and
	 
	     	(b)	  	if no such rate is so published on such next succeeding
Banking 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 Bank of America on such day on such
transactions as determined by the Administrative Agent.

	 	  	“Financial L/C” means any letter of credit (other than a Performance L/C)
that represents an irrevocable obligation on the part of the issuer:

	     	(a)	  	to repay money borrowed by or advanced to or for the account
of the Company or a Subsidiary; or
	 
	     	(b)	  	to make payment on account of any indebtedness undertaken by
the Company or a Subsidiary, in the event that the Company or
Subsidiary fails to fulfill its obligation to the beneficiary.

-10-

 

	 	  	“Financial Services Segment” means the business segment of the Company
and its Subsidiaries engaged in mortgage banking (including the title and
escrow businesses), homeowners’ insurance, mortgage servicing, securities
issuance, bond administration and management services and related
activities, which segment on the date of this Agreement consists
principally of the activities of Ryland Mortgage Company and its
Subsidiaries but excludes the Limited-Purpose Subsidiaries.
	 
	 	  	“Financing Lease” means any lease of property, real or personal, the
obligations of the lessee in respect of which are required in accordance
with GAAP to be capitalized on a balance sheet of the lessee.
	 
	 	  	“Finished Lots” means lots of Entitled Land as to which:

	     	(a)	  	a final subdivision map has been recorded;
	 
	     	(b)	  	all major offsite construction and infrastructure has been
completed to local government requirements;
	 
	     	(c)	  	utilities have been installed to local government
requirements; and
	 
	     	(d)	  	building permits may be pulled and construction commenced
without the satisfaction of any further material conditions.

	 	  	“Fixed Charges” means, for any period, without duplication, the sum of
the following amounts:

	     	(a)	  	interest expense of the Homebuilding Segment for such period
(including such interest expense constituting capitalized interest
for such period), determined in accordance with GAAP;
	 
	     	(b)	  	principal payments (excluding balloon payments) on long-term
Indebtedness scheduled to be made by the Homebuilding Segment during
such period;
	 
	     	(c)	  	the principal portion of payments in respect of Financing
Leases scheduled to be made by the Homebuilding Segment during such
period; and
	 
	     	(d)	  	dividends on any of the Company’s preferred stock paid or
payable during such period.

	 	  	“Foreign Lender” has the meaning set forth in Section 10.14(a).
	 
	 	  	“FRB” means the Board of Governors of the Federal Reserve System, and any
Governmental Authority succeeding to any of its principal functions.
	 
	 	  	“Fund” means any Person (other than a natural person) that is (or will
be) engaged in making, purchasing, holding or otherwise investing in
commercial loans and similar extensions of credit in the ordinary course
of its business.
	 
	 	  	“Funded Debt” of any Person means, at any date, all Indebtedness of such
Person of the nature referred to in clauses (a), (b), (c), (d), (e) and
(g) of the definition of “Indebtedness” at such date.

-11-

 

	 	  	“GAAP” means generally accepted accounting principles in the United
States set forth in the opinions and pronouncements of the Accounting
Principles Board and the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting
Standards Board or such other principles as may be approved by a
significant segment of the accounting profession in the United States,
that are applicable to the circumstances as of the date of determination,
consistently applied.
	 
	 	  	“GAAP Value” means, with respect to each property or asset constituting
part of the Real Estate Inventory, the book value for such property or
asset determined in accordance with GAAP.
	 
	 	  	“Governmental Authority” means any nation or government, any state or
other political subdivision thereof, any central bank (or similar
monetary or regulatory authority) thereof, any entity exercising
executive, legislative, judicial, regulatory or administrative functions
of or pertaining to government, and any corporation or other entity owned
or controlled, through stock or capital ownership or otherwise, by any of
the foregoing.
	 
	 	  	“Guarantee Obligation” means, as to any Person (the “guaranteeing
person”), any obligation of:

	     	(a)	  	the guaranteeing person; or
	 
	     	(b)	  	another Person (including any bank under any letter of
credit) to induce the creation of which the guaranteeing person has
issued a reimbursement, counterindemnity or similar obligation, in
either case guaranteeing or in effect guaranteeing any indebtedness,
leases, dividends or other obligations (the “primary obligations”)
of any third Person (the “primary obligor”) in any manner, whether
directly or indirectly, including any obligation of the guaranteeing
person, whether or not contingent,

	            	(1)	  	to purchase any such primary obligation or any
property constituting direct or indirect security therefor,
	 
	     	(2)	  	to advance or supply funds

	                    	(A)	  	for the purchase or payment of any
such primary obligation or
	 
	            	(B)	  	to maintain working capital or
equity capital of the primary obligor or otherwise to
maintain the net worth or solvency of the primary
obligor,
	 
	     	(C)	  	to purchase property, securities or
services primarily for the purpose of assuring the
owner of such primary obligation of the ability of the
primary obligor to make payment of such primary
obligation or
	 
	     	(D)	  	otherwise to assure or hold
harmless the owner of any such primary obligation
against loss in respect thereof;

	            	 	  	provided, however, that the term Guarantee Obligation shall not
include endorsements of instruments for deposit or collection in
the ordinary course of business. The amount of any Guarantee
Obligation of any guaranteeing person shall be deemed to be the
maximum stated amount of the primary obligation relating to such
Guarantee

-12-

 

	            	 	  	Obligation (or, if less, the maximum stated liability set forth in
the instrument embodying such Guarantee Obligation), provided,
however, that in the absence of any such stated amount or stated
liability, the amount of such Guarantee Obligation shall be such
guaranteeing person’s maximum reasonably anticipated liability in
respect thereof as reasonably determined by the Company in good
faith.

	 	  	“Guarantors” means, collectively, the Subsidiaries listed on Annex II
hereto, and each other Person that from time to time executes a Guaranty
in favor of the Lenders with respect to the Loans and the other
Obligations, and their successors and assigns.
	 
	 	  	“Guaranty” means a continuing guaranty, substantially in the form of
Exhibit “D”, either as originally executed or as it may from time to time
be supplemented, modified, amended, restated or extended, to be executed
and delivered by the Guarantors to the Administrative Agent for the
benefit of the Lenders.
	 
	 	  	“Hedge Agreement” means, as to any Person, any swap, cap, collar or
similar arrangement entered into by such Person providing for protection
against fluctuations in interest rates or currency exchange rates or the
exchange of nominal interest obligations, either generally or under
specific contingencies.
	 
	 	  	“Hedge Agreement Termination Value” means, in respect of any one or more
Hedge Agreements, after taking into account the effect of any legally
enforceable netting agreement relating to such Hedge Agreements,

	     	(a)	  	for any date on or after the date such Hedge Agreements have
been closed out and termination value(s) determined in accordance
therewith, such termination value(s), and
	 
	     	(b)	  	for any date prior to the date referenced in clause (a), the
amount(s) determined as the mark-to-market value(s) for such Hedge
Agreements, as determined based upon one or more mid-market or other
readily available quotations provided by any recognized dealer in
such Hedge Agreements (which may include a Lender or any Affiliate
of a Lender).

	 	  	“Home Proceeds Receivable” means, with respect to the Company or a
wholly-owned Subsidiary in the Homebuilding Segment, funds due to the
Company or such wholly-owned Subsidiary held at an escrow or title
company following the sale and conveyance of title of a Unit to a buyer
(including an escrow or title company which is a Subsidiary of the
Company).
	 
	 	  	“Homebuilding Segment” means the business segment of the Company and its
Subsidiaries and their respective Consolidated Joint Ventures engaged in
the construction and sale of single family attached and unattached
dwellings and related activities, including all activities of the Company
outside the Financial Services Segment but excluding the Limited Purpose
Subsidiaries.
	 
	 	  	“Improvements” means on and off-site development work, including but not
limited to filling to grade, main water distribution and sewer collection
systems and drainage system installation, paving, and other improvements
necessary for the use of residential dwelling units and as required
pursuant to development agreements which may have been entered into with
Governmental Authorities.

-13-

 

	 	  	“Indebtedness” of any Person means, at any date, without duplication, all
of the following, whether or not included as indebtedness or liabilities
in accordance with GAAP:

	     	(a)	  	all indebtedness of such Person for borrowed money;
	 
	     	(b)	  	all indebtedness of such Person for the deferred purchase
price of property or services (other than trade liabilities due 90
days or less from invoice and accrued expenses incurred in the
ordinary course of business and payable in accordance with customary
practices);
	 
	     	(c)	  	all net obligations of such Person under any Hedge Agreement;
	 
	     	(d)	  	any other indebtedness of such Person which is evidenced by a
note, bond, debenture or similar instrument;
	 
	     	(e)	  	all obligations of such Person under Financing Leases;
	 
	     	(f)	  	all obligations, contingent or otherwise, of such Person in
respect of letters of credit, whether or not drawn, and acceptances
issued or created for the account of such Person; and
	 
	     	(g)	  	all liabilities secured by any Lien on any property owned by
such Person even though such Person has not assumed or otherwise
become liable for the payment thereof.

	 	  	For all purposes hereof, the Indebtedness of any Person shall include the
Indebtedness of any partnership or joint venture (other than a joint
venture that is itself a corporation or limited liability company) in
which such Person is a general partner or a joint venturer, except to the
extent such Indebtedness is non-recourse to such Person. The amount of
any net obligation under any Hedge Agreement on any date shall be deemed
to be the Hedge Agreement Termination Value thereof as of such date.
	 
	 	  	“Indemnified Liabilities” has the meaning set forth in Section 10.5.
	 
	 	  	“Indemnitees” has the meaning set forth in Section 10.5.
	 
	 	  	“Insolvency” or “Insolvent” means, with respect to any Multiemployer
Plan, the condition that such Plan is insolvent within the meaning of
Section 4245 of ERISA.
	 
	 	  	“Interest Payment Date” means:

	     	(a)	  	as to any Base Rate Loan or Swing Line Advance, the first day
of each January, April, July and October to occur while such Loan is
outstanding,
	 
	     	(b)	  	as to any LIBOR Loan having a LIBOR Period of 3 months or
less, the last day of such LIBOR Period, and
	 
	     	(c)	  	as to any LIBOR Loan having an LIBOR Period longer than 3
months, the day which is 3 months after the first day of such LIBOR
Period and the last day of such LIBOR Period.

	 	  	“Investment” means any Credit Advance to, or any contribution to or
purchase of stock or other equity securities of, or any purchase of
assets constituting a business unit of, any Person,

-14-

 

	 	  	excluding investments in stock or other equity securities existing on the
date of this Agreement and listed on the attached Schedule 1.1(a), and
including any investment representing any interest of the Company or any
Subsidiary in the retained or undistributed earnings of any Person.
	 
	 	  	“Issuance Fees” means the fees described in Section 2.9(j).
	 
	 	  	“Land Under Development” means Entitled Land upon which a final
subdivision map has been recorded and upon which construction of
Improvements has commenced and is being diligently pursued but has not
been completed.
	 
	 	  	“Laws” means, collectively, all international, foreign, federal, state
and local statutes, treaties, rules, regulations, ordinances, codes and
administrative or judicial precedents.
	 
	 	  	“L/C Advance” means, with respect to each Lender, such Lender’s funding
of its participation in any L/C Borrowing in accordance with its Pro Rata
Share.
	 
	 	  	“L/C Application” means an application and agreement for the issuance or
amendment of a Letter of Credit in the form from time to time in use by
the L/C Issuer.
	 
	 	  	“L/C Borrowing” means an extension of credit resulting from a drawing
under any Letter of Credit which has not been reimbursed on the date when
made or refinanced as a Borrowing.
	 
	 	  	“L/C Credit Extension” means, with respect to any Letter of Credit, the
issuance thereof or extension of the expiry date thereof, or the renewal
or increase of the amount thereof.
	 
	 	  	“L/C Expiration Date” means the day that is 7 days prior to the Maturity
Date then in effect (or, if such day is not a Banking Day, the next
preceding Banking Day).
	 
	 	  	“L/C Fee Rate” means the applicable per annum percentage set forth in the
definition of Applicable Rate.
	 
	 	  	“L/C Fronting Fee” means, with respect to any Letter of Credit, the
greater of:

	     	(a)	  	0.125% of the face amount of the Letter of Credit; and
	 
	     	(b)	  	$250.

	 	  	“L/C Issuer” means:

	     	(a)	  	Bank of America or other Lender with respect to the Existing
Letters of Credit; and
	 
	     	(b)	  	Bank of America or any Lender in its capacity as issuer of
Letters of Credit hereunder;

	 	  	provided that at any one time there are not more than 4 L/C Issuers with
respect to outstanding Letters of Credit.
	 
	 	  	“L/C Obligations” means, as at any date of determination, the aggregate
undrawn amount of all outstanding Letters of Credit plus the aggregate of
all Unreimbursed Amounts, including all L/C Borrowings.

-15-

 

	 	  	“Lender” has the meaning specified in the introductory paragraph hereto
and, as the context requires, includes the L/C Issuer and the Swing Line
Lender.
	 
	 	  	“Lending Office” means, as to each Lender, the office or offices of such
Lender described as such in such Lender’s Administrative Questionnaire,
or such other office as a Lender from time to time may notify the Company
and the Administrative Agent.
	 
	 	  	“Letter of Credit” means any letter of credit issued by a L/C Issuer
hereunder and includes Existing Letters of Credit. A Letter of Credit
may be a Financial L/C or a Performance L/C.
	 
	 	  	“Letter of Credit Fees” means the fees described in Section 2.9(i).
	 
	 	  	“Letter of Credit Sublimit” means an amount equal to $150,000,000. The
Letter of Credit Sublimit is part of, and not in addition to, the
Aggregate Commitment.
	 
	 	  	“Leverage Ratio” means the ratio of

	     	(a)	  	Combined Debt of the Homebuilding Segment, to
	 
	     	(b)	  	Adjusted Consolidated Tangible Net Worth.

	 	  	“LIBOR Banking Day” means any Banking Day on which banks are open for
business in London, England and New York, New York and Bank of America is
open for business in Chicago, Illinois.
	 
	 	  	“LIBOR Base Rate” means, with respect to a LIBOR Loan for the relevant
LIBOR Period, the rate per annum equal to:

	     	(a)	  	the rate determined by the Administrative Agent to be the
offered rate that appears on the page of the Telerate screen (or any
successor thereto) that displays an average British Bankers
Association Interest Settlement Rate for deposits in Dollars (for
delivery on the first day of such LIBOR Period) with a term
equivalent to such LIBOR Period, determined as of approximately
11:00 a.m., London time, 2 Banking Days prior to the first day of
such LIBOR Period, or
	 
	     	(b)	  	if the rate referenced in the preceding clause (a) does not
appear on such page or service or such page or service shall not be
available, the rate per annum equal to the rate determined by the
Administrative Agent to be the offered rate on such other page or
other service that displays an average British Bankers Association
Interest Settlement Rate for deposits in Dollars (for delivery on
the first day of such LIBOR Period) with a term equivalent to such
LIBOR Period, determined as of approximately 11:00 a.m., London
time, 2 Banking Days prior to the first day of such LIBOR Period, or
	 
	     	(c)	  	if the rates referenced in the preceding clauses (a) and (b)
are not available, the rate per annum determined by the
Administrative Agent as the rate of interest at which deposits in
Dollars for delivery on the first day of such LIBOR Period in same
day funds in the approximate amount of the LIBOR Loan being made,
continued or converted by Bank of America and with a term equivalent
to such LIBOR Period would be offered by Bank of America’s London
Branch to major banks in the London

-16-

 

	         	 	  	interbank eurodollar market at their request at approximately 4:00
p.m., London time, 2 Banking Days prior to the first day of such
LIBOR Period.

	 	  	“LIBOR Lending Office” means the office or branch of each Lender so
designated on such Lender’s Administrative Questionnaire, or such other
office or branch of each Lender as it may hereafter designate, by written
notice to the Company and the Administrative Agent, as its LIBOR Lending
Office.
	 
	 	  	“LIBOR Loan” means any Loan or portion thereof designated, redesignated
or continued by the Company as a LIBOR Loan pursuant to Section 2.3 or
2.4.
	 
	 	  	“LIBOR Margin” means the applicable per annum percentage set forth in the
definition of Applicable Rate.
	 
	 	  	“LIBOR Period” means, as to each LIBOR Loan, the period commencing on the
date specified in the applicable Request for Borrowing, Request for
Redesignation or Request for Continuation by the Company pursuant to
Section 2.3 or 2.4 and ending 1 month, 2 months, 3 months or 6 months
thereafter, as designated by the Company in the applicable Request for
Borrowing, Request for Redesignation or Request for Continuation,
provided, in each case, that:

	     	(a)	  	the first day in any LIBOR Period shall be a LIBOR Banking
Day;
	 
	     	(b)	  	any LIBOR Period that would otherwise end on a day that is
not a LIBOR Banking Day shall be extended to the next succeeding
LIBOR Banking Day unless such LIBOR Banking Day falls in another
calendar month, in which case such LIBOR Period shall end on the
next preceding LIBOR Banking Day; and
	 
	     	(c)	  	No LIBOR Period shall extend beyond the Maturity Date.

	 	  	“LIBOR Rate” means, for any LIBOR Period for any LIBOR Loan, the rate
(rounded upward, if necessary, to the next 1/100 of 1%) obtained by
dividing:

	     	(a)	  	the LIBOR Base Rate for such LIBOR Period; by
	 
	     	(b)	  	a percentage equal to 100% minus the Reserve Requirement for
such LIBOR Period.

	 	  	“Lien” means any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), or preference,
priority or other security agreement or preferential arrangement of any
kind or nature whatsoever, including any conditional sale or other title
retention agreement, any Financing Lease having substantially the same
economic effect as any of the foregoing, and the filing of any financing
statement under the Uniform Commercial Code (other than precautionary
notification of operating leases) or comparable law of any jurisdiction
in respect of any of the foregoing.
	 
	 	  	“Limited-Purpose Subsidiaries” means Subsidiaries included within the
Limited-Purpose Subsidiaries Segment.
	 
	 	  	“Limited-Purpose Subsidiaries Segment” means the business segment of the
Company and its Subsidiaries which facilitates, through special-purpose
entities created or existing solely for

-17-

 

	 	  	such purpose, the financing of mortgage loans and mortgage backed
securities and the securitization of mortgage loans and other related
activities.
	 
	 	  	“Loan” or “Loans” means each of the loans under this Agreement, including
the Swing Line Advances.
	 
	 	  	“Loan Documents” means, collectively, this Agreement, the Notes, the
Swing Line Documents, the Guaranty, each Request for Borrowing, Request
for Redesignation or Request for Continuation, each L/C Application, each
Compliance Certificate and any other agreements of any type or nature
hereafter executed and delivered by the Company or any of its
Subsidiaries to the Administrative Agent or to any Lender in any way
relating to or in furtherance of this Agreement, in each case either as
originally executed or as the same may from time to time be supplemented,
modified, amended, restated, extended or supplanted.
	 
	 	  	“Loan Party” means, collectively, the Company and each Guarantor.
	 
	 	  	“Material Adverse Effect” means a material adverse effect on

	     	(a)	  	the business or financial condition of the Company and its
Restricted Subsidiaries taken as a whole,
	 
	     	(b)	  	the ability of the Company to perform its obligations under
this Agreement and the other Loan Documents to which the Company is
a party or
	 
	     	(c)	  	the validity or enforceability of this Agreement or any of
the other Loan Documents or the rights or remedies of the
Administrative Agent or the Lenders hereunder or thereunder.

	 	  	“Materials of Environmental Concern” means any gasoline or petroleum
(including crude oil or any fraction thereof) or petroleum products or
any hazardous or toxic substances. materials or wastes, defined or
regulated as such in or under any Environmental Law, including asbestos,
polychlorinated biphenyls and urea-formaldehyde insulation.
	 
	 	  	“Maturity Date” means August 22, 2005, subject to a one-time extension
pursuant to the terms of Section 3.17.
	 
	 	  	“Model Unit” means a Completed Unit to be used as a model home in
connection with the sale of Units in a residential housing project.
	 
	 	  	“Moody’s” means Moody’s Investors Service, Inc. and any successor
thereto.
	 
	 	  	“Multiemployer Plan” means a Plan which is a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.
	 
	 	  	“Non-use Fee” has the meaning set forth in Section 3.2.
	 
	 	  	“Non-use Fee Rate” means

	     	(a)	  	0.30% per annum, if Daily Usage is less than 35% of the
Aggregate Commitment for the day in question; or

-18-

 

	     	(b)	  	0.15% per annum, if Daily Usage is equal to or exceeds 35% of
the Aggregate Commitment for the day in question,

	 	  	in each case calculated on the basis of a year of 365 or 366 days.
	 
	 	  	“Note” means each of the promissory notes, substantially in the form of
Exhibit “E” attached hereto, executed by the Company in favor of the
Lenders, as originally executed or as the same may from time to time be
supplemented, modified, amended, renewed, extended or refinanced (and any
promissory note that may be issued in substitution or exchange therefor).
	 
	 	  	“Obligations” means all advances to, and debts, liabilities, obligations,
covenants and duties of, any Loan Party arising under any Loan Document
or otherwise with respect to any Loan or Letter of Credit, whether direct
or indirect (including those acquired by assumption), absolute or
contingent, due or to become due, now existing or hereafter arising and
including interest and fees that accrue after the commencement by or
against any Loan Party or any Affiliate thereof of any proceeding under
any Debtor Relief Laws naming such Person as the debtor in such
proceeding, regardless of whether such interest and fees are allowed
claims in such proceeding.
	 
	 	  	“Opinion of Counsel” means the favorable written legal opinions of
Timothy J. Geckle, Esq., general counsel to the Company and Piper Rudnick
LLP, as counsel to the Company and the Subsidiaries with respect to this
Agreement, substantially in the form of Exhibits “F-l” and “F-2” attached
hereto, together with copies of all factual certificates upon which such
counsel has relied.
	 
	 	  	“Organization Documents” means:

	     	(a)	  	with respect to any corporation, the certificate or articles
of incorporation and the bylaws (or equivalent or comparable
constitutive documents with respect to any non-U.S. jurisdiction);
	 
	     	(b)	  	with respect to any limited liability company, the
certificate or articles of formation or organization and operating
agreement; and
	 
	     	(c)	  	with respect to any partnership, joint venture, trust or
other form of business entity, the partnership, joint venture or
other applicable agreement of formation or organization and any
agreement, instrument, filing or notice with respect thereto filed
in connection with its formation or organization with the applicable
Governmental Authority in the jurisdiction of its formation or
organization and, if applicable, any certificate or articles of
formation or organization of such entity.

	 	  	“Other Taxes” means any present or future stamp or documentary taxes or
any other excise or property taxes, charges or similar levies which arise
from any payment made hereunder or from the execution, delivery or
registration of, or otherwise with respect to, this Agreement or any
other Loan Documents.
	 
	 	  	“Outstanding Amount” means:

	     	(a)	  	with respect to Loans and Swing Line Advances on any date,
the aggregate outstanding principal amount thereof after giving
effect to any borrowings and

-19-

 

	     	 	  	prepayments or repayments of Loans and Swing Line Advances, as the
case may be, occurring on such date; and
	 
	     	(b)	  	with respect to any L/C Obligations on any date, the amount
of such L/C Obligations on such date after giving effect to any L/C
Credit Extension occurring on such date and any other changes in the
aggregate amount of the L/C Obligations as of such date, including
as a result of any reimbursements of outstanding unpaid drawings
under any Letters of Credit or any reductions in the maximum amount
available for drawing under Letters of Credit taking effect on such
date.

	 	  	“Participant” has the meaning set forth in Section 10.8.
	 
	 	  	“PBGC” means the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA.
	 
	 	  	“Performance L/C” means a letter of credit issued by a Lender or other
party for the account of the Company or a Subsidiary to a party, as
beneficiary, to which the Company, or such Subsidiary owes certain
performance obligations in connection with its ordinary course of
business real estate development and homebuilding activity (for example,
to a municipality, as beneficiary, to support the Company’s or a
Subsidiary’s obligation to widen public streets in connection with a
residential development project). A direct pay letter of credit to
support community improvement bonds associated with the Company’s
residential development operations is a Financial L/C and not a
Performance L/C.
	 
	 	  	“Permitted Debt” means, with respect to a Person or segment at a
particular date, all Combined Debt of such Person and its Subsidiaries or
such segment as at such date, determined on a combined basis in
accordance with GAAP, less

	     	(a)	  	any portion of such Combined Debt that is secured by any
asset that would have been included in the Borrowing Base as at such
date if such asset were not subject to or encumbered by a Lien and
	 
	     	(b)	  	any portion of such Combined Debt consisting of Guarantee
Obligations guaranteeing or in effect guaranteeing Funded Debt of
unconsolidated Affiliates of the Company.

	 	  	“Person” means any entity, whether an individual, trustee, corporation,
general partnership, limited partnership, limited liability company,
joint stock company, trust, unincorporated organization, bank, business
association, firm, joint venture, Governmental Authority or otherwise.
	 
	 	  	“Plan” means, at a particular time, any employee benefit plan which is
covered by ERISA and in respect of which the Company or a Commonly
Controlled Entity is (or, if such plan were terminated at such time,
would under Section 4069 of ERISA be deemed to be) an “employer” as
defined in Section 3(5) of ERISA.
	 
	 	  	“Prime Rate” means for any day a fluctuating rate per annum equal to the
rate of interest in effect for such day as publicly announced from time
to time by Bank of America as its “prime rate.” The “prime rate” is a
rate set by Bank of America based upon various factors including Bank of
America’s costs and desired return, general economic conditions and other
factors, and is used as a reference point for pricing some loans, which
may be priced at, above, or below such announced rate. Any change in
such rate announced by Bank of America shall

-20-

 

	 	  	take effect at the opening of business on the day specified in the public
announcement of such change.
	 
	 	  	“Properties” has the meaning set forth in Section 5.13(a).
	 
	 	  	“Pro Rata Share” means, as to any Lender at any time, the percentage
equivalent (expressed as a decimal, rounded to the ninth decimal place as
determined by the Administrative Agent) at such time of such Lender’s
Commitment divided by the Aggregate Commitment.
	 
	 	  	“Raw Land” means Raw Land — Entitled and Raw Land — Unentitled.
	 
	 	  	“Raw Land — Entitled” means land not under development which is Entitled
Land.
	 
	 	  	“Raw Land — Unentitled” means land not under development which is not
Entitled Land but which the Company in its reasonable commercial judgment
believes it will be able to develop as residential property for its own
use and not to be held speculatively.
	 
	 	  	“Real Estate Inventory” means Construction in Progress, Completed Units
(including Model Units), Finished Lots, Land Under Development, Raw Land
- Entitled, and Raw Land — Unentitled.
	 
	 	  	“Regulation D” means Regulation D of the FRB as now or from time to time
hereafter in effect and any other regulation issued in substitution
therefor.
	 
	 	  	“Reorganization” means, with respect to any Multiemployer Plan, the
condition that such Plan is in reorganization within the meaning of
Section 241 of ERISA.
	 
	 	  	“Replacement Lender” has the meaning set forth in Section 3.13.
	 
	 	  	“Reportable Event” means any of the events set forth in Section 4043(b)
of ERISA, other than events for which the 30 day notice period has been
waived.
	 
	 	  	“Request for Borrowing” means a certificate substantially in the form of
Exhibit “G”.
	 
	 	  	“Request for Continuation” means a certificate substantially in the form
of Exhibit “G”.
	 
	 	  	“Request for Redesignation” means a certificate substantially in the form
of Exhibit “G”.
	 
	 	  	“Required Lenders” means, at any time, Lenders then having in excess of
66-2/3% of the Aggregate Commitment or, if the Commitments have been
terminated, Lenders then holding in excess of 66-2/3% of the then
aggregate unpaid principal amount of the Loans (or participation
interests in the Swing Line Advances) and interests (or participation
interests) in the reimbursement obligations of the Company with respect
to Letters of Credit; provided that the Commitment of, and the portion of
the Total Outstandings held or deemed held by, any Defaulting Lender
shall be excluded for purposes of making a determination of Required
Lenders.
	 
	 	  	“Requirement of Law” means, as to any Person, any law (statutory or
common), treaty, rule or regulation or determination of an arbitrator or
of a Governmental Authority, in each case applicable to or binding upon
such Person or any of its property or to which such Person or any of its
property is subject.

-21-

 

	 	  	“Reserve Requirement” means, with respect to a LIBOR Period, the maximum
aggregate reserve requirement (including all basic, supplemental,
marginal and other reserves) which is imposed under Regulation D on
Eurocurrency liabilities.
	 
	 	  	“Responsible Official” means any of the chief executive officer or the
president of the Company or, with respect to financial matters, the chief
financial officer, the chief accounting officer or the treasurer of the
Company. With respect to a Guarantor, Responsible Official means any of
the chief executive officer, the president or the treasurer of such
Guarantor.
	 
	 	  	“Restricted Payments” has the meaning set forth in Section 7.12.
	 
	 	  	“Restricted Subsidiary” means any Subsidiary of the Company other than:

	     	(a)	  	Limited-Purpose Subsidiaries; and
	 
	     	(b)	  	any Subsidiary that the Required Lenders agree in writing is
not to be deemed a Restricted Subsidiary.

	 	  	“Ryland Financial Division” means all subsidiaries and operations of the
Company and its Subsidiaries other than the Homebuilding Segment.
	 
	 	  	“Ryland Mortgage Company” means Ryland Mortgage Company, an Ohio
corporation.
	 
	 	  	“S&P” means Standard & Poor’s Ratings Services, a division of The
McGraw-Hill Companies, Inc. and any successor thereto.
	 
	 	  	“Senior Permitted Debt” means, at any time of determination thereof, the
Loans, the L/C Obligations and all Permitted Debt senior to or ranking in
equal priority to the Obligations other than Indebtedness which is
non-recourse to the Company and its Subsidiaries and, with respect to
purchase money Indebtedness, such Indebtedness for which recourse is
limited solely to the assets financed with the proceeds of such
Indebtedness.
	 
	 	  	“Single Employer Plan” means any Plan which is covered by Title IV of
ERISA, but which is not a Multiemployer Plan.
	 
	 	  	“Sold” means, with respect to any item of Real Estate Inventory, that:

	     	(a)	  	a third party purchase contract has been executed for such
item of Real Estate Inventory;
	 
	     	(b)	  	the third party purchaser of such item of Real Estate
Inventory has made a cash deposit for such item (except that up to
1% of Real Estate Inventory at any time may be deemed “Sold” even if
such deposit has not been made); and
	 
	     	(c)	  	such third party purchaser’s obligation to purchase such item
of Real Estate Inventory pursuant to such third party purchase
contract is not subject to any contingencies other than the
contingency that it shall have obtained mortgage financing or that
it shall have sold other identified property.

	 	  	“Specified Debt” means the Company’s Senior Debt Securities issued
pursuant to the Company’s Registration Statements on Form S-3
(Registration Nos. 33-50933, 333-03791,

-22-

 

	 	  	333-31034 and 333-58208) or any successor registration statement and
outstanding on the date of this Agreement.
	 
	 	  	“Subordinated Debt” means:

	     	(a)	  	Indebtedness of the Company outstanding on the date hereof
issued pursuant to the Subordinated Debt Indentures; and
	 
	     	(b)	  	any other unsecured Indebtedness of the Company that is
contractually subordinated in right of payment and otherwise to the
Indebtedness hereunder upon terms and conditions consistent with
those set forth in the Subordinated Debt Indentures or upon other
terms and conditions reasonably satisfactory to the Required
Lenders.

	 	  	“Subordinated Debt Indentures” means the Indenture, dated as of July 15,
1992, between the Company and First Union National Bank, successor to
Security Trust Company, N.A., as trustee, pursuant to which the Company’s
8-1/4% Senior Subordinated Notes due April, 2008 were issued, and the
Indenture, dated as of June 12, 2001, between the Company and SunTrust
Bank, as trustee, pursuant to which the Company’s 9-1/8% Senior
Subordinated Notes due June, 2011 were issued.
	 
	 	  	“Subsidiary” means:

	     	(a)	  	any corporation of which at least a majority of the
outstanding securities of any class or classes (however designated)
having ordinary voting power to elect directors of the corporation
is owned by the Company or by one or more than one other Subsidiary;
and
	 
	     	(b)	  	any partnership, joint venture or limited liability company
in which the Company or any Subsidiary owns at least a majority
interest.

	 	  	Unless otherwise qualified, all references to a “Subsidiary” or to
“Subsidiaries” in this Agreement shall refer to a Subsidiary or
Subsidiaries of the Company and shall exclude any Consolidated Joint
Venture.
	 
	 	  	“Swing Line Advances” means Borrowings initially funded by Bank of
America in the manner provided in Section 2.1(h).
	 
	 	  	“Swing Line Documents” means the promissory note and any other documents
executed by the Company in favor of the Swing Line Lender in connection
with the Swing Line Advances, either as originally executed or as it may
from time to time be supplemented, modified, amended, restated or
extended.
	 
	 	  	“Swing Line Lender” means Bank of America in its capacity as provider of
Swing Line Advances, or any successor swing line lender hereunder.
	 
	 	  	“Swing Line Rate” means, with respect to any Swing Line Advance for any
day, a rate per annum (rounded upwards, if necessary to the next 1/100 of
1%) equal to the higher of:

	     	(a)	  	the Prime Rate in effect on such day; and
	 
	     	(b)	  	the Federal Funds Rate on such day plus the applicable Swing
Line Rate Spread.

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	 	  	“Swing Line Rate Spread” means the applicable per annum percentage set
forth in the definition of Applicable Rate.
	 
	 	  	“Taxes” means any and all present or future taxes, duties, levies,
imposts, deductions, assessments, fees, withholdings or similar charges,
and all liabilities with respect thereto, excluding, in the case of each
Lender and the Administrative Agent, such taxes (including income taxes
or franchise taxes) as are imposed on or measured by each Lender’s net
income.
	 
	 	  	“Third Party L/C” means a letter of credit issued for the account of the
Company or a Subsidiary (other than a Letter of Credit issued hereunder).
A Third Party L/C may be either a Financial L/C or a Performance L/C.
	 
	 	  	“Total Outstandings” means the aggregate Outstanding Amount of all Loans
and all L/C Obligations.
	 
	 	  	“Unencumbered Real Estate Inventory” means Real Estate Inventory which is
not subject to or encumbered by any deed of trust, mortgage, judgment
Lien, attachment Lien or any other Lien (other than Liens which have been
bonded around so as to remove such Liens as encumbrances against the Real
Estate Inventory or Liens which are permitted under clauses (a), (b) or
(e) of Section 7.8).
	 
	 	  	“Unit” means a single family residential housing unit available for sale.
	 
	 	  	“Unreimbursed Amount” has the meaning set forth in Section 2.9(c)(1).
	 
	 	  	“Unsold” means, with respect to any item of Real Estate Inventory, that
such item of Real Estate Inventory is not Sold.
	 
	 	  	“Unsold Housing Inventory” means, collectively, Unsold Construction in
Progress, Unsold Completed Units and Unsold Model Units.
	 
	 	  	“Voting Stock” means shares of stock of the Company entitling the holder
thereof to vote generally for the election of directors of the Company.
	 
	1.2	  	Other Interpretive Provisions. With reference to this Agreement and each
other Loan Document, unless otherwise specified herein or in such other
Loan Document:

	       	(a)	  	The meanings of defined terms are equally applicable to the
singular and plural forms of the defined terms.
	 
	     	(b)	  	The words “herein,” “hereto,” “hereof” and “hereunder” 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.
	 
	     	(c)	  	Article, Section, Exhibit and Schedule references are to the
Loan Document in which such reference appears.
	 
	     	(d)	  	The term “including” is by way of example and not limitation.
	 
	     	(e)	  	The term “or” is disjunctive.
	 
	     	(f)	  	The term “and” is conjunctive.

-24-

 

	       	(g)	  	The term “documents” includes any and all instruments,
documents, agreements, certificates, notices, reports, financial
statements and other writings, however evidenced, whether in
physical or electronic form.
	 
	     	(h)	  	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.”

	1.3	  	Accounting Terms.

	       	(a)	  	All accounting terms not specifically or completely defined
herein shall be construed in conformity with, and all financial data
(including financial ratios and other financial calculations)
required to be submitted pursuant to this Agreement shall be
prepared in conformity with, GAAP applied on a consistent basis, as
in effect from time to time, applied in a manner consistent with
that used in preparing the Audited Financial Statements, except as
otherwise specifically prescribed herein.
	 
	     	(b)	  	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 the Company or the Required Lenders shall
so request, the Administrative Agent, the Lenders and the Company
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, (1) such ratio or requirement shall continue to be
computed in accordance with GAAP prior to such change therein and
(2) the Company shall provide to the Administrative Agent and the
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	  	Rounding. Any financial ratios required to be maintained by the Company
pursuant to this Agreement shall be calculated by dividing the appropriate
component by the other component, carrying the result to one place more
than the number of places by which such ratio is expressed herein and
rounding the result up or down to the nearest number (with a rounding-up
if there is no nearest number).
	 
	1.5	  	References to Agreements and Laws. Unless otherwise expressly provided
herein:

	       	(a)	  	references to Organization Documents, 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 Law shall include all statutory and
regulatory provisions and rulings consolidating, amending,
replacing, supplementing or interpreting such Law.

	1.6	  	Exhibits, Schedules and Annexes. All Exhibits, Schedules and Annexes to
this Agreement, either as originally existing or as the same may from time
to time be supplemented, modified, or amended, are incorporated herein by
reference.

-25-

 

	1.7	  	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 the L/C
Application therefor, whether or not such maximum face amount is in effect
at such time.

-26-

 

ARTICLE II

BORROWING PROCEDURES AND LETTER OF CREDIT SUBLIMIT

	2.1	  	Disbursement of Loan Proceeds.

	       	(a)	  	Subject to the terms and conditions set forth in this
Agreement, at any time and from time to time from the Closing Date
through the Banking Day immediately preceding the Maturity Date,
each Lender severally agrees, according to its Pro Rata Share, to
make Loans to the Company in such amounts as the Company may request
that do not exceed in the aggregate at any one time outstanding, the
Commitment of such Lender (less the Pro Rata Share of such Lender’s
L/C Obligations, if any, and Swing Line Advances, if any). Subject
to the limitations set forth herein, the Company may borrow, repay
and reborrow under each Lender’s Commitment without premium or
penalty. In no event shall the Lenders be obligated to make Loans
to the Company at any time if, after giving effect to such Loans,
the provisions of Section 2.6 would be violated.
	 
	     	(b)	  	Unless the Administrative Agent otherwise consents, the
aggregate amount of each Borrowing (whether a LIBOR Loan or a Base
Rate Loan or Swing Line Advance) shall be in an integral multiple of
$100,000, but not less than $1,000,000.
	 
	     	(c)	  	The Loans made by the Lenders pursuant to this Agreement
shall be evidenced by each Note.
	 
	     	(d)	  	A Request for Borrowing shall be irrevocable upon receipt by
the Administrative Agent. The Administrative Agent shall not be
bound by any preliminary information that it may give the Company
concerning a particular LIBOR Rate before it delivers the binding
LIBOR Rate notice in accordance with Section 2.3(b) below.
	 
	     	(e)	  	No more than 6 LIBOR Loans in the aggregate shall be
outstanding at any one time.
	 
	     	(f)	  	The Administrative Agent will notify each Lender of its
receipt of a Request for Borrowing by the Company and of the amount
of such Lender’s Pro Rata Share of that Borrowing promptly, in time
to reasonably enable each Lender to meet its obligations hereunder,
upon receipt of such Request for Borrowing.
	 
	     	(g)	  	Each Lender will make the amount of its Pro Rata Share of
each Borrowing available to the Administrative Agent for the account
of the Company at such location as is specified by the
Administrative Agent by 1:00 p.m., Chicago time, on the date of such
Borrowing requested by the Company in funds immediately available to
the Administrative Agent. Subject to the provisions of Section 2.7,
the proceeds of all such Loans will then be made available to the
Company by the Administrative Agent by wire transfer in accordance
with written instructions provided to the Administrative Agent by
the Company of like funds as received by the Administrative Agent.
	 
	     	(h)	  	The following procedures shall apply to Swing Line Advances:

	               	(1)	  	Not later than 1:30 p.m., Chicago time, on the
Banking Day on which a proposed Swing Line Advance is to be
made, Bank of America must have received a Request for
Borrowing requesting that a Swing Line Advance be

-27-

 

	               	 	  	made on that Banking Day, stating that such Borrowing shall
be a Swing Line Advance, and specifying the amount of the
requested Swing Line Advance. Each Swing Line Advance shall
mature on the date which is 5 Banking Days after the date
such Swing Line Advance is made, and in any event on the
Maturity Date.
	 
	     	(2)	  	Upon fulfillment of each of the applicable
conditions in Article IV and the condition that the aggregate
amount of outstanding Swing Line Advances at no time exceeds
the amounts specified in Section 2.1(h)(4), Bank of America
shall then make available to the Company by wire transfer in
accordance with written instructions provided to Bank of
America by the Company, from Bank of America’s funds, the
amount of the requested Swing Line Advance.
	 
	     	(3)	  	Upon the occurrence of any Event of Default, Bank
of America shall have the option, which shall be exercisable
by Bank of America in its sole discretion, to sell and
transfer to each Lender, pursuant to the terms and conditions
set forth herein, an undivided interest and participation, to
the extent of such Lender’s Pro Rata Share, in all outstanding
Swing Line Advances. Forthwith upon notice from Bank of
America to the Lenders that Bank of America has elected to
exercise the option set forth in the immediately preceding
sentence, Bank of America shall be deemed irrevocably and
unconditionally to have sold and transferred to each Lender
without recourse and, each Lender shall have deemed to have
irrevocably and unconditionally purchased and received, an
undivided interest and participation, to the extent of such
Lender’s Pro Rata Share, in all outstanding Swing Line
Advances. Each Lender shall promptly (and in any event within
2 Banking Days) pay to the Administrative Agent (for the
benefit of Bank of America) in immediately available funds an
amount equal to such Lender’s Pro Rata Share of the
outstanding principal amount of such Swing Line Advances. The
Administrative Agent shall pay all amounts received to Bank of
America, which shall apply such amounts to the purchase price
of such participations in such Swing Line Advances. Any
amount payable to the Administrative Agent (for the benefit of
Bank of America) pursuant to this Section 2.l(h)(3) and not
paid within 2 Banking Days of the day on which notice of such
payment received from the Administrative Agent shall bear
interest, payable by such Defaulting Lender, until paid at the
Federal Funds Rate. If the Lenders make any payment in
respect of Swing Line Advances as contemplated by this Section
2.1(h)(3) and thereafter the Administrative Agent or Bank of
America receives a payment on account of any such Swing Line
Advance, the Administrative Agent or Bank of America, as
appropriate, shall promptly pay to each Lender which funded
its participation therein an amount equal to such Lender’s Pro
Rata Share thereof. The obligation of each Lender to make
payments under this Section 2.1(h)(3) shall be unconditional
and irrevocable and shall be made under all circumstances. If
any payment received on account of any Swing Line Advance and
distributed to a Lender as a participant under this Section
2.1(h)(3) is thereafter recovered from the Administrative
Agent or Bank of America in connection with any bankruptcy or
insolvency proceeding relating to the Company or otherwise,
each Lender which received such distribution shall, upon
demand by the Administrative Agent, repay to the
Administrative Agent or Bank of America, as applicable, such
Lender’s Pro Rata Share of the amount so recovered together
with an amount equal to such

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	               	 	  	Lender’s Pro Rata Share (according to the proportion of (A)
the total of such Lender’s required repayment to (B) the
total amount so recovered) of any interest or other amount
paid or payable by the Administrative Agent or Bank of
America in respect of the total amount so recovered.
	 
	     	(4)	  	Bank of America shall not make any Swing Line
Advance pursuant to this Section 2.1(h) if the making of such
Swing Line Advance would result in an aggregate amount of
Swing Line Advances which are outstanding in excess of
$50,000,000.

	            	 	  	Swing Line Advances shall be considered Borrowings for all purposes
hereunder (including conditions to disbursement but excluding the
notice requirement of Section 2.2) subject only to the special
reimbursement obligations of the Lenders pursuant to this Section
2.1(h). If Bank of America is excused from its obligation to make
a requested Swing Line Advance by this Section 2.1(h)(4), the
Company shall still be entitled to obtain the requested Borrowing
pursuant to the other provisions of Article II, subject to the
conditions applicable to such Borrowings.

	2.2	  	Base Rate Loans. All Loans shall at all times constitute Base Rate Loans
unless properly designated or redesignated as LIBOR Loans pursuant to
Sections 2.3 or 2.4 or as a Swing Line Advance pursuant to Section 2.1(h).
Each request by the Company for a new Base Rate Loan (except for Swing
Line Advances) shall be made pursuant to a Request for Borrowing received
by the Administrative Agent, at the Administrative Agent’s office, not
later than 10:30 a.m., Chicago time, on the date the proposed Base Rate
Loan is to be funded to the Company. The Administrative Agent will
promptly notify each Lender of its receipt of a Request for Borrowing in
accordance with Section 2.1(f).
	 
	2.3	  	LIBOR Loans.

	       	(a)	  	Each request by the Company for a LIBOR Loan shall be made
pursuant to a Request for Borrowing received by the Administrative
Agent, at the Administrative Agent’s office, not later than 12:00
noon, Chicago time, at least 3 LIBOR Banking Days before the first
day of the applicable LIBOR Period. The Administrative Agent will
promptly notify each Lender of its receipt of a Request for
Borrowing in accordance with Section 2.1(f).
	 
	     	(b)	  	At or about 12:00 noon, Chicago time, one LIBOR Banking Day
after the LIBOR Banking Day on which the Administrative Agent
receives the Company’s Request for Borrowing, the Administrative
Agent shall determine the applicable LIBOR Rate (which determination
shall be conclusive in the absence of manifest error) and shall
promptly give notice of the same to the Company and the Lenders by
telephone or telecopier.
	 
	     	(c)	  	Upon fulfillment of the applicable conditions set forth in
Article IV, a LIBOR Loan shall become effective on the first day of
the applicable LIBOR Period.

	2.4	  	Redesignation of Borrowings and Continuation of LIBOR Loans.

	       	(a)	  	If any LIBOR Loan is not repaid on the last day of the
applicable LIBOR Period or continued on such date into a subsequent
LIBOR Period, such Borrowing automatically shall be redesignated as
a Base Rate Loan on such date.

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	     	(b)	  	Subject to the terms and conditions set forth in this
Agreement, at any time and from time to time from the Closing Date
until one month preceding the Maturity Date, the Company may request
that all or a portion of outstanding Base Rate Loans be redesignated
as a LIBOR Loan or that any outstanding LIBOR Loan be continued from
the current LIBOR Period for such LIBOR Loan into a subsequent LIBOR
Period to begin on the last day of such current LIBOR Period,
provided that, in the case of either a redesignation of Base Rate
Loans as a LIBOR Loan or a continuation of a LIBOR Loan, the LIBOR
Period for such LIBOR Loan shall end on or before the Maturity Date.
	 
	     	(c)	  	Each redesignation of all or a portion of outstanding Base
Rate Loans as a LIBOR Loan shall be made pursuant to a written
Request for Redesignation. Not later than 12:00 noon, Chicago time,
at least 3 LIBOR Banking Days prior to the first day of the
applicable LIBOR Period, the Administrative Agent shall have
received, at the Administrative Agent’s office, a properly completed
Request for Redesignation specifying

	            	(1)	  	the requested date of redesignation,
	 
	     	(2)	  	the requested amount of Base Rate Loans to be
redesignated as a LIBOR Loan, and
	 
	     	(3)	  	the requested LIBOR Period.

	     	 	  	The Administrative Agent may, in its sole and absolute discretion,
permit a Request for Redesignation to be made by telephone (with
confirmation sent promptly by telecopier) by the Company.
	 
	     	(d)	  	Each continuation of an outstanding LIBOR Loan from the
current LIBOR Period for such LIBOR Loan into a subsequent LIBOR
Period to begin on the last day of such current LIBOR Period shall
be made pursuant to a written Request for Continuation. Not later
than 12:00 noon, Chicago time, at least 3 LIBOR Banking Days prior
to the last day of the current LIBOR Period, the Administrative
Agent shall have received, at the Administrative Agent’s office, a
properly completed Request for Continuation specifying:

	            	(1)	  	the LIBOR Loan to be continued; and
	 
	     	(2)	  	the subsequent LIBOR Period requested.

	     	 	  	The Administrative Agent may, in its sole and absolute discretion,
permit a Request for Continuation to be made by telephone (with
confirmation sent promptly by telecopier) by the Company.
	 
	     	(e)	  	The Administrative Agent will promptly notify each Lender of
its receipt of a Request for Redesignation or a Request for
Continuation on the date of timely receipt of a Request for
Redesignation or Request for Continuation from the Company. All
redesignations shall be made ratably according to the respective
outstanding principal amount of the Loans with respect to which the
Request for Redesignation was given then held by each Lender.

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	     	(f)	  	Unless all of the Lenders otherwise agree, during the
existence of an Event of Default, the Company may not elect to have
a Loan continued as or converted into a LIBOR Loan.
	 
	     	(g)	  	The amount of Base Rate Loans to be redesignated as a LIBOR
Loan, and the amount of any outstanding LIBOR Loan to be continued
into a subsequent LIBOR Period, shall be an integral multiple of
$100,000, but not less than $1,000,000.
	 
	     	(h)	  	With respect to any redesignation of a Base Rate Loan as a
LIBOR Loan or any continuation of an outstanding LIBOR Loan into a
subsequent LIBOR Period, no later than 12:00 noon, Chicago time, one
LIBOR Banking Day after the LIBOR Banking Day on which the
Administrative Agent receives the Company’s Request for
Redesignation or Request for Continuation, as the case may be, the
Administrative Agent shall determine the applicable LIBOR Rate
(which determination shall be conclusive in the absence of manifest
error) and shall promptly give notice of the same to the Company and
the Lenders by telephone or telecopier.
	 
	     	(i)	  	Upon fulfillment of the applicable conditions set forth in
this Agreement, the redesignation of all or a portion of outstanding
Base Rate Loans as a LIBOR Loan shall become effective on the first
day of the applicable LIBOR Period and the continuation of an
outstanding LIBOR Loan into a subsequent LIBOR Period shall become
effective on the last day of the current LIBOR Period for such LIBOR
Loan.
	 
	       	(j)	  	A Request for Redesignation or a Request for Continuation
shall be irrevocable upon receipt by the Administrative Agent.

	2.5	  	Calculation of Borrowing Base.

	       	(a)	  	Within 45 days after the end of each calendar quarter, and at
such other times as the Required Lenders may reasonably require or
as the Company may determine (but in each case no more often than
monthly), the Company shall provide the Administrative Agent with a
Borrowing Base Certificate in a form satisfactory to the
Administrative Agent showing the Company’s calculations of the
components of the Borrowing Base and such data supporting such
calculations per Exhibit B or in another form as the Required
Lenders may reasonably require. Any change in the Borrowing Base
shall be effective upon receipt of a Borrowing Base Certificate.
The Required Lenders shall then have a period of 30 days following
receipt of a Borrowing Base Certificate to notify the Company of the
determination that the Borrowing Base Certificate, as calculated in
accordance with the provisions hereof, is incorrect in the Required
Lenders’ reasonable judgment. If the Required Lenders fail to so
notify the Company within such 30 day period, the Borrowing Base
Certificate shall be deemed to be correct. If the Required Lenders
so determine, the Borrowing Base shall be recalculated as determined
by the Required Lenders as of the date of such determination based
upon the reasonable judgment of the Required Lenders.
	 
	     	(b)	  	Amount of Borrowing Base. As used in this Agreement, the
term “Borrowing Base” has the meaning set forth in this Section
2.5(b):

	              	(1)	  	Except as set forth in Sections 2.5(b)(2) and (3)
below, the Borrowing Base shall consist of the Dollar amount
equal to the sum of the following Unencumbered Real Estate
Inventory owned by the Company or any wholly-

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	                 	 	  	owned Subsidiary in the Homebuilding Segment and Home
Proceeds Receivable owned by the Company or any wholly-owned
Subsidiary in the Homebuilding Segment:

	                      	(A)	  	Home Proceeds Receivable. 90% of
the amount of Home Proceeds Receivable; plus
	 
	     	(B)	  	Sold Construction in Progress and
Sold Completed Units. 90% of the aggregate GAAP Value
of Sold Construction in Progress and Sold Completed
Units; plus
	 
	     	(C)	  	Unsold Construction in Progress and
Completed Units.

	                                	(i)	  	75% of the
aggregate GAAP Value of Unsold Construction in
Progress and Unsold Completed Units which have
been in an Unsold status for less than 180
days; plus
	 
	     	(ii)	  	50% of the
aggregate GAAP Value of Unsold Construction in
Progress and Unsold Completed Units which have
been in an Unsold status for 180 days or more
but not more than 270 days (for purposes of the
Borrowing Base, no value (i.e., a 0% advance
rate) shall be attributed to Unsold
Construction in Progress and Unsold Completed
Units which have been in an Unsold status for
more than 270 days); plus

	                      	(D)	  	Finished Lots. 70% of the GAAP
Value of Finished Lots; plus
	 
	     	(E)	  	Land Under Development. 50% of the
GAAP Value of the Land Under Development; plus
	 
	     	(F)	  	Raw Land — Entitled. 25% of the
GAAP Value of Raw Land — Entitled;

	                   	 	  	provided, however, that the amount set forth in clause (F)
shall not exceed 10% of the Borrowing Base; and provided
further that the sum of

	                                	(i)	  	70% of Finished
Lots,
	 
	     	(ii)	  	50% of Land Under
Development and
	 
	     	(iii)	  	25% of Raw Land
Entitled

	                	 	  	shall not exceed 40% of the Borrowing Base.
	 
	     	(2)	  	In calculating the GAAP Value of the classes of
Unencumbered Real Estate Inventory listed in Section 2.5(b)(1)
above, all of the Unencumbered Real Estate Inventory of the
Company or any wholly-owned Subsidiary in the Homebuilding
Segment qualifies for inclusion in the Borrowing Base but
shall specifically exclude the cost of or investment in any
land upon which the Company or such wholly-owned Subsidiary
holds a purchase option until

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	                	 	  	such time as the Company or such wholly-owned Subsidiary
exercises the option and takes title to such land.
	 
	     	(3)	  	Only Real Estate Inventory which is Unencumbered
Real Estate Inventory may be added to the Borrowing Base. Any
Real Estate Inventory that is not Unencumbered Real Estate
Inventory shall have no value for purposes of the Borrowing
Base (i.e., a 0% advance rate). Furthermore, land in the Real
Estate Inventory which is not Entitled Land shall have no
value for purposes of the Borrowing Base (i.e., a 0% advance
rate). Once Units or any other Real Estate Inventory are sold
and conveyed to a buyer, or otherwise cease to be owned by the
Company or any wholly-owned Subsidiary that is in the
Homebuilding Segment, the applicable advance rate for such
asset shall decrease to 0%, and the Company shall not be
entitled to have any value for such assets attributed to the
Borrowing Base.

	2.6	  	Borrowing Base. The Total Outstandings shall not at any time exceed the
lesser of:

	       	(a)	  	the Aggregate Commitment; or
	 
	     	(b)	  	the Borrowing Base less the aggregate principal amount of
outstanding Senior Permitted Debt of the Homebuilding Segment at
such time (exclusive of the outstanding amount of the Total
Outstandings).

	2.7	  	Payments by the Lenders to the Administrative Agent.

	       	(a)	  	Unless the Administrative Agent receives notice from a Lender
on or prior to the Closing Date or, with respect to any Borrowing
after the Closing Date, at least one Banking Day prior to the date
of such Borrowing or in the case of a Base Rate Loan upon notice to
such Lender of such Base Rate Loan, that such Lender will not make
available as and when required hereunder to the Administrative Agent
for the account of the Company the amount of that Lender’s Pro Rata
Share of the Borrowing, the Administrative Agent may assume that
each Lender has made such amount available to the Administrative
Agent in immediately available funds on the date of Borrowing and
the Administrative Agent may (but shall not be so required), in
reliance upon such assumption, make available to the Company on such
date a corresponding amount. If and to the extent any Lender shall
not have made its full amount available to the Administrative Agent
in immediately available funds and the Administrative Agent in such
circumstances has made available to the Company such amount, that
Lender shall on the Banking Day following such date of Borrowing
make such amount available to the Administrative Agent, together
with interest at the Federal Funds Rate for each day during such
period. A notice of the Administrative Agent submitted to any
Lender with respect to amounts owing under this clause (a) shall be
conclusive, absent manifest error. If such amount is so made
available, such payment to the Administrative Agent shall constitute
such Lender’s Loan on the date of Borrowing for all purposes of this
Agreement. If such amount is not made available to the
Administrative Agent on the Banking Day following the date of
Borrowing, the Administrative Agent will notify the Company of such
failure to fund and, upon demand by the Administrative Agent, the
Company shall pay such amount to the Administrative Agent for the
Administrative Agent’s account, together with accrued interest
thereon for each day elapsed since the date of such Borrowing, at a
rate per annum equal to the interest rate applicable at the time to
the Loans comprising such

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	       	 	  	Borrowing. Nothing herein shall prejudice the rights of the
Company against such non-funding Lender.
	 
	     	(b)	  	The failure of any Lender to make any Loan on any date of
Borrowing shall not relieve any other Lender of any obligation
hereunder to make a Loan on such date of Borrowing, but no Lender
shall be responsible for the failure of any other Lender to make the
Loan to be made by such other Lender on any date of Borrowing.

	2.8	  	Sharing of Payments, Etc. If, other than as expressly provided elsewhere
herein, any Lender shall obtain on account of the Loans made by it any
payment (whether voluntary, involuntary, through the exercise of any right
of set-off, or otherwise) in excess of its Pro Rata Share, such Lender
shall immediately

	       	(a)	  	notify the Administrative Agent of such fact, and
	 
	     	(b)	  	purchase from the other Lenders such participations in the
Loans made by them as shall be necessary to cause such purchasing
Lender to share the excess payment pro rata with each of them;

	 	  	provided, however, that if all or any portion of such excess payment is
thereafter recovered from the purchasing Lender, such purchase shall to
that extent be rescinded and each other Lender shall repay to the
purchasing Lender the purchase price paid therefor, together with an
amount equal to such paying Lender’s ratable share (according to the
proportion of (1) the amount of such paying Lender’s required repayment
to (2) the total amount so recovered from the purchasing Lender) of any
interest or other amount paid or payable by the purchasing Lender in
respect of the total amount so recovered. The Company agrees that any
Lender so purchasing a participation from another Lender may, to the
fullest extent permitted by law, exercise all its rights of payment
(including the right of set-off, but subject to Section 10.6) with
respect to such participation as fully as if such Lender were the direct
creditor of the Company in the amount of such participation. The
Administrative Agent will keep records (which shall be conclusive and
binding in the absence of manifest error) of participations purchased
under this Section and will in each case notify the Lenders following any
such purchases or repayments.
	 
	2.9	  	Letters of Credit.

	       	(a)	  	The Letter of Credit Commitment.

	              	(1)	  	Subject to the terms and conditions set forth
herein,

	                      	(A)	  	the L/C Issuer agrees, in reliance
upon the agreements of the other Lenders set forth in
this Section 2.9,

	                              	(i)	  	from time to time
on any Banking Day during the period from the
Closing Date until the L/C Expiration Date, to
issue Letters of Credit for the account of the
Company or a Guarantor, and to amend or renew
Letters of Credit previously issued by it, in
accordance with clause (b) below, and
	 
	     	(ii)	  	to honor drafts
under the Letters of Credit; and

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	                      	(B)	  	the Lenders severally agree to
participate in Letters of Credit issued for the account
of the Company or a Guarantor; provided that the L/C
Issuer shall not be obligated to make any L/C Credit
Extension with respect to any Letter of Credit, and no
Lender shall be obligated to participate in any Letter
of Credit if as of the date of such L/C Credit
Extension,

	                              	(i)	  	the Total
Outstandings would exceed the Aggregate
Commitment,
	 
	     	(ii)	  	the aggregate
Outstanding Amount of the Loans of any Lender,
plus such Lender’s Pro Rata Share of the
Outstanding Amount of all L/C Obligations, plus
such Lender’s Pro Rata Share of the Outstanding
Amount of all Swing Line Advances would exceed
such Lender’s Commitment, or
	 
	     	(iii)	  	the Outstanding
Amount of the L/C Obligations would exceed the
Letter of Credit Sublimit.

	     	 	  	In no event shall any L/C Issuer be obligated to make any
L/C Credit Extension at any time if, after giving effect to
such L/C Credit Extension, the provisions of Section 2.6
would be violated. Within the foregoing limits, and subject
to the terms and conditions hereof, the Company’s and the
Guarantors’ ability to obtain Letters of Credit shall be
fully revolving, and accordingly the Company and the
Guarantors 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 Closing Date shall
be subject to and governed by the terms and conditions
hereof.
	 
	              	(2)	  	The L/C Issuer shall be under no obligation to
issue any Letter of Credit if:

	                      	(A)	  	any order, judgment or decree of
any Governmental Authority or arbitrator shall by its
terms purport to enjoin or restrain the L/C Issuer from
issuing such Letter of Credit, or any Law applicable to
the L/C Issuer or any request or directive (whether or
not having the force of law) from any Governmental
Authority with jurisdiction over the L/C Issuer shall
prohibit, or request that the L/C Issuer refrain from,
the issuance of letters of credit generally or such
Letter of Credit in particular or shall impose upon the
L/C Issuer with respect to such Letter of Credit any
restriction, reserve or capital requirement (for which
the L/C Issuer is not otherwise compensated hereunder)
not in effect on the Closing Date, or shall impose upon
the L/C Issuer any unreimbursed loss, cost or expense
which was not applicable on the Closing Date and which
the L/C Issuer in good faith deems material to it;
	 
	     	(B)	  	[intentionally omitted];

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	                      	(C)	  	the expiry date of such requested
Letter of Credit would occur after the L/C Expiration
Date, unless all the Lenders have approved such expiry
date;
	 
	     	(D)	  	the issuance of such Letter of
Credit would violate one or more policies of the L/C
Issuer; or
	 
	     	(E)	  	such Letter of Credit is to be
denominated in a currency other than Dollars.

	              	(3)	  	The L/C Issuer shall be under no obligation to
amend any Letter of Credit if

	                      	(A)	  	The L/C 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.

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

	              	(1)	  	Each Letter of Credit shall be issued or amended,
as the case may be, upon the request of the Company or a
Guarantor delivered to the L/C Issuer selected by the Company
(with a copy to the Administrative Agent) in the form of a L/C
Application, appropriately completed and signed by an
Authorized Official of the Company and, in the case of a
Letter of Credit issued for the account of a Guarantor, also
by an Authorized Official of such Guarantor. Such L/C
Application must be received by the L/C Issuer and the
Administrative Agent not later than 4:00 p.m., Chicago time,
at least 3 Banking Days (or such later date and time as the
L/C Issuer and the Administrative Agent each may agree in a
particular instance in their sole discretion) prior to the
proposed issuance date or date of amendment, as the case may
be. The Company shall be primarily and directly liable for
any and all obligations and other liabilities arising in
connection with each Letter of Credit issued for the account
of a Guarantor. In the case of a request for an initial
issuance of a Letter of Credit, such L/C Application shall
specify in form and detail satisfactory to the L/C Issuer:

	                      	(A)	  	the proposed issuance date of the
requested Letter of Credit (which shall be a Banking
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

-36-

 

	                      	(G)	  	such other matters as the L/C
Issuer may require.

	                   	 	  	In the case of a request for an amendment of any outstanding
Letter of Credit, such L/C Application shall specify in form
and detail satisfactory to the L/C Issuer:

	                      	(A)	  	the Letter of Credit to be amended;
	 
	     	(B)	  	the proposed date of amendment
thereof (which shall be a Banking Day);
	 
	     	(C)	  	the nature of the proposed
amendment; and
	 
	     	(D)	  	such other matters as the L/C
Issuer may require.

	              	(2)	  	Promptly after receipt of any L/C Application,
the L/C Issuer will confirm with the Administrative Agent (by
telephone or in writing) that the Administrative Agent has
received a copy of such L/C Application from the Company or a
Guarantor and, if not, the L/C Issuer will provide the
Administrative Agent with a copy thereof. Upon receipt by the
L/C Issuer of confirmation from the Administrative Agent that
the requested issuance or amendment is permitted in accordance
with the terms hereof, which confirmation may be relied upon
for a period of up to 3 Banking Days following delivery by the
Administrative Agent to the L/C Issuer, then, subject to the
terms and conditions hereof, the L/C Issuer shall, on or prior
to the requested date, issue a Letter of Credit for the
account of the Company or a Guarantor or enter into the
applicable amendment, as the case may be, in each case in
accordance with the L/C Issuer’s usual and customary business
practices. Immediately upon the issuance of each Letter of
Credit, each Lender shall be deemed to, and hereby irrevocably
and unconditionally agrees to, purchase from the L/C Issuer a
risk participation in such Letter of Credit in an amount equal
to:

	                      	(A)	  	the product of such Lender’s Pro
Rata Share times
	 
	     	(B)	  	the amount of such Letter of
Credit.

	              	(3)	  	[Intentionally omitted.]
	 
	     	(4)	  	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
L/C Issuer will also deliver to the Company and the Guarantor
applying for the Letter of Credit, as applicable, and the
Administrative Agent a true and complete copy of such Letter
of Credit or amendment.

	     	(c)	  	Drawings and Reimbursements; Funding of Participations.

	              	(1)	  	Upon receipt from the beneficiary of any Letter
of Credit of any notice of a drawing under such Letter of
Credit, the L/C Issuer shall notify the Company and the
Administrative Agent thereof. Not later than 12:00 noon.,
Chicago time, on the date of any payment by the L/C Issuer
under a Letter of Credit

-37-

 

	     	 	  	(each such date, an “Honor Date”), the Company shall
reimburse the L/C Issuer through the Administrative Agent in
an amount equal to the amount of such drawing. If the
Company fails to so reimburse the L/C Issuer by such time,
the Administrative Agent shall promptly notify each Lender
of the Honor Date, the amount of the unreimbursed drawing
(the “Unreimbursed Amount”), and the amount of such Lender’s
Pro Rata Share thereof. In such event, the Company shall be
deemed to have requested a Base Rate Loan 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 2.1 for the principal amount of Base
Rate Loans, but subject to the amount of the unutilized
portion of the Aggregate Commitment and the conditions set
forth in Section 4.2 (other than the delivery by the Company
of a Request for Borrowing, a Request for Redesignation or
Request for Continuation). If the conditions set forth in
the preceding sentence are satisfied by the Company, each
Lender severally agrees, according to its Pro Rata Share, to
make a Loan to the Company in the amount of the Unreimbursed
Amount. Any notice given by the L/C Issuer or the
Administrative Agent pursuant to this Section 2.9(c)(1)
shall be in writing.
	 
	     	(2)	  	Each Lender (including the Lender acting as L/C
Issuer) shall upon any notice pursuant to Section 2.9(c)(1)
make funds available to the Administrative Agent for the
account of the L/C Issuer at the Administrative Agent’s office
in an amount equal to its Pro Rata Share of the Unreimbursed
Amount not later than 1:00 p.m., Chicago time, on the Banking
Day specified in such notice by the Administrative Agent,
whereupon, subject to the provisions of Section 2.9(c)(3),
each Lender that so makes funds available shall be deemed to
have made a Base Rate Loan to the Company in such amount. The
Administrative Agent shall remit the funds so received to the
L/C Issuer.
	 
	     	(3)	  	With respect to any Unreimbursed Amount that is
not fully refinanced by a Base Rate Loan because the
conditions set forth in Section 4.2 cannot be satisfied or for
any other reason, the Company shall be deemed to have incurred
from the L/C Issuer an L/C Borrowing in the amount of the
Unreimbursed Amount that is not so refinanced, which L/C
Borrowing shall be due and payable on demand (together with
interest) and shall bear interest at the Base Rate plus 3% per
annum. In such event, each Lender’s payment to the
Administrative Agent for the account of the L/C Issuer
pursuant to Section 2.9(c)(2) shall be deemed payment in
respect of its participation in such L/C Borrowing and shall
constitute an L/C Advance from such Lender in satisfaction of
its participation obligation under this Section 2.9.
	 
	     	(4)	  	Until each Lender funds its Loan or L/C Advance
pursuant to this Section 2.9(c) to reimburse the L/C Issuer
for any amount drawn under any Letter of Credit, interest in
respect of such Lender’s Pro Rata Share of such amount shall
be solely for the account of the L/C Issuer.
	 
	     	(5)	  	Each Lender’s obligation to make Loans or L/C
Advances to reimburse the L/C Issuer for amounts drawn under
Letters of Credit, as contemplated by this Section 2.9(c),
shall be absolute and unconditional and shall not be affected
by any circumstance, including:

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	                      	(A)	  	any set-off, counterclaim,
recoupment, defense or other right which such Lender
may have against the L/C Issuer, the Company or any
other Person for any reason whatsoever;
	 
	     	(B)	  	the occurrence or continuance of a
Default, or
	 
	     	(C)	  	any other occurrence, event or
condition, whether or not similar to any of the
foregoing;

	              	 	  	provided, however, that each Lender’s obligation to make
Base Rate Loans pursuant to this Section 2.9(c) is subject
to the conditions set forth in Section 4.2 (other than
delivery by the Company of a Request for Borrowing, a
Request for Redesignation or Request for Continuation). No
such making of an L/C Advance shall relieve or otherwise
impair the obligation of the Company to reimburse the L/C
Issuer for the amount of any payment made by the L/C Issuer
under any Letter of Credit, together with interest as
provided herein.
	 
	     	(6)	  	If any Lender fails to make available to the
Administrative Agent for the account of the L/C Issuer any
amount required to be paid by such Lender pursuant to the
foregoing provisions of this Section 2.9(c) by the time
specified in Section 2.9(c)(2), the L/C Issuer shall be
entitled to recover from such Lender (acting through the
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
the L/C Issuer at a rate per annum equal to the Federal Funds
Rate from time to time in effect. A certificate of the L/C
Issuer submitted to any Lender (through the Administrative
Agent) with respect to any amounts owing under this clause (6)
shall be conclusive absent manifest error.

	     	(d)	  	Repayment of Participations.

	              	(1)	  	At any time after the L/C Issuer has made a
payment under any Letter of Credit and has received from any
Lender such Lender’s L/C Advance in respect of such payment in
accordance with Section 2.9(c), if the Administrative Agent
receives for the account of the L/C Issuer any payment in
respect of the related Unreimbursed Amount or interest thereon
(whether directly from the Company or otherwise, including
proceeds of cash collateral applied thereto by the
Administrative Agent), the Administrative Agent will
distribute to such Lender its Pro Rata Share thereof
(appropriately adjusted, in the case of interest payments, to
reflect the period of time during which such Lender’s L/C
Advance was outstanding) in the same funds as those received
by the Administrative Agent.
	 
	     	(2)	  	If any payment received by the Administrative
Agent for the account of the L/C Issuer pursuant to Section
2.9(c)(1) is required to be returned under any of the
circumstances described in Section 10.6 (including pursuant to
any settlement entered into by the L/C Issuer in its
discretion), each Lender shall pay to the Administrative Agent
for the account of the L/C Issuer its Pro Rata Share thereof
on demand of the Administrative Agent, plus interest thereon
from the date of such demand to the date such amount is
returned by such

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	                   	 	  	Lender, at a rate per annum equal to the Federal Funds Rate
from time to time in effect.

	       	(e)	  	Obligations Absolute. The obligation of the Company to
reimburse the L/C Issuer for each drawing under each Letter of
Credit and to repay each L/C Borrowing 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:

	              	(1)	  	any lack of validity or enforceability of such
Letter of Credit, this Agreement, or any other agreement or
instrument relating thereto;
	 
	     	(2)	  	the existence of any claim, counterclaim,
set-off, defense or other right that the Company 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), the L/C 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 thereto, or any
unrelated transaction;
	 
	     	(3)	  	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;
	 
	     	(4)	  	any payment by the L/C 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 the L/C 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
	 
	     	(5)	  	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, the Company.

	       	 	  	The Company 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 the Company’s instructions
or other irregularity, the Company will immediately notify the L/C
Issuer. The Company shall be conclusively deemed to have waived
any claim against the L/C Issuer and its correspondents for such
noncompliance or irregularity unless such notice is given as
aforesaid.
	 
	     	(f)	  	Role of L/C Issuer. Each Lender and the Company agree that,
in paying any drawing under a Letter of Credit, the L/C Issuer shall
not 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. None of the L/C Issuer,
any Agent-Related Person nor any of the

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	          	 	  	respective correspondents, participants or assignees of the L/C
Issuer shall be liable to any Lender for:

	              	(1)	  	any action taken or omitted in connection
herewith at the request or with the approval of the Lenders or
the Required Lenders, as applicable;
	 
	     	(2)	  	any action taken or omitted in the absence of
gross negligence or willful misconduct; or
	 
	     	(3)	  	the due execution, effectiveness, validity or
enforceability of any document or instrument related to any
Letter of Credit or L/C Application.

	       	 	  	The Company 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 the Company’s pursuing such rights and
remedies as it may have against the beneficiary or transferee at
law or under any other agreement. None of the L/C Issuer, any
Agent-Related Person, nor any of the respective correspondents,
participants or assignees of the L/C Issuer, shall be liable or
responsible for any of the matters described in clauses (1) through
(5) of Section 2.9(e); provided, however, that anything in such
clauses to the contrary notwithstanding, the Company may have a
claim against the L/C Issuer, and the L/C Issuer may be liable to
the Company, to the extent, but only to the extent, of any direct,
as opposed to consequential or exemplary, damages suffered by the
Company which were caused by the L/C Issuer’s willful misconduct or
gross negligence or the L/C Issuer’s 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. In
furtherance and not in limitation of the foregoing, the L/C 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 the L/C Issuer shall not
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 may prove to be invalid or
ineffective for any reason.
	 
	     	(g)	  	[Intentionally omitted.]
	 
	     	(h)	  	Applicability of ISP98. Unless otherwise expressly agreed by
the L/C Issuer and the Company when a Letter of Credit is issued
(including any such agreement applicable to an Existing Letter of
Credit), 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.
	 
	     	(i)	  	Letter of Credit Fees. The Company agrees to pay to the
Administrative Agent, for the account of each Lender in accordance
with its Pro Rata Share, a fee (the “Letter of Credit Fee”) computed
at the applicable L/C Fee Rate on the average daily face amount of
all Letters of Credit outstanding hereunder from time to time. The
Letter of Credit Fee shall commence to accrue on the date of this
Agreement and shall be payable in arrears on the first day of
January, April, July and October of each year, beginning with the
first of such dates to occur after the date of this Agreement, on
the Maturity Date and upon payment in full of the Obligations. If
there is any change in

-41-

 

	         	 	  	the L/C Fee Rate during any quarter, the daily maximum amount of
each Letter of Credit shall be computed and multiplied by the L/C
Fee Rate separately for each period during such quarter that such
L/C Fee Rate was in effect.
	 
	     	(j)	  	Fronting Fee and Documentary and Processing Charges Payable
to L/C Issuer. The Company shall pay directly to the Administrative
Agent for the account of each L/C Issuer a fronting fee with respect
to each Letter of Credit issued by such L/C Issuer in an amount
equal to the L/C Fronting Fee. No L/C Fronting Fee shall be payable
for the Existing Letters of Credit. In addition, the Company shall
pay directly to the Administrative Agent for the account of each L/C
Issuer the customary issuance, presentation, amendment and other
processing fees, and other standard costs and charges, of the L/C
Issuer relating to letters of credit as from time to time in effect.
The Company shall pay all fees described in this clause (j) to the
Administrative Agent in arrears on the first day of January, April,
July and October of each year, beginning with the first of such
dates to occur after the date of this Agreement, on the Maturity
Date and upon payment in full of the Obligations. All such fees
shall be deemed fully earned by the L/C Issuer upon issuance of the
relevant Letter of Credit and are nonrefundable.
	 
	     	(k)	  	Conflict with L/C Application. In the event of any conflict
between the terms hereof and the terms of any L/C Application, the
terms hereof shall control.
	 
	     	(l)	  	Number of L/C Issuers; Reports to Administrative Agent.

	                  	(1)	  	In addition to the Administrative Agent, at any
one time there may be up to 3 additional L/C Issuers, each of
whom must be Lenders.
	 
	     	(2)	  	Each Lender who acts as a L/C Issuer during any
fiscal quarter of the Company must send a report to the
Administrative Agent detailing all Letters of Credit issued by
such Lender (as L/C Issuer) during that fiscal quarter,
together with such other information relating to such Letters
of Credit as the Administrative Agent may reasonably request
(including bills for all fees, costs and charges described in
clause (j) above). Such reports and bills are due by the 2nd
day of each month following the end of each fiscal quarter of
the Company, commencing on October 2, 2002.

	         	(m)	  	Letters of Credit Issued by Each L/C Issuer. A L/C Issuer
(other than the Administrative Agent) may refuse to issue a Letter
of Credit otherwise permitted under this Agreement if, by issuing
such Letter of Credit, the aggregate undrawn amount of Letters of
Credit issued by such L/C Issuer would exceed 35% of the Letter of
Credit Sublimit.

	2.10	  	Increase of Commitments.

	         	(a)	  	Provided there exists no Default, upon notice to the
Administrative Agent (which shall promptly notify the Lenders), the
Company may from time to time request an increase in the Aggregate
Commitments by an amount (for all such requests) that will not
result in the Aggregate Commitment under this Agreement exceeding
$400,000,000 less the aggregate amount of reductions to the
Commitments made pursuant to Section 2.11. The Company may (in
consultation with the Administrative Agent) accomplish such an
increase by doing either or both of the following:

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	              	(1)	  	inviting one or more Eligible Assignees to become
Lenders pursuant to a joinder agreement in form and substance
satisfactory to the Administrative Agent and its counsel; or
	 
	     	(2)	  	requesting the Lenders to increase the amount of
the Aggregate Commitments in accordance with the procedure set
forth in clause (b).

	     	(b)	  	If the Company (in consultation with the Administrative
Agent) requests that the Lenders increase the amount of the
Aggregate Commitments, the Company (in consultation with the
Administrative Agent) shall specify the time period within which
each Lender is requested to respond (which shall in no event be less
than 10 Banking Days from the date of delivery of such notice to the
Lenders). Each Lender shall notify the Administrative Agent within
such time period whether or not it agrees to increase its Commitment
and, if so, whether by an amount equal to, greater than, or less
than its Pro Rata Share of such requested increase. Any Lender not
responding within such time period shall be deemed to have declined
to increase its Commitment. The Administrative Agent shall notify
the Company and each Lender of the Lender’s responses to each
request made hereunder.
	 
	     	(c)	  	If the Aggregate Commitment is increased in accordance with
this Section, the Administrative Agent and the Company shall
determine the effective date (the “Increase Effective Date”) and the
final allocation of such increase. The Administrative Agent shall
promptly notify the Company and the Lenders of the final allocation
of such increase and the Increase Effective Date. As a condition
precedent to such increase, the Company shall deliver to the
Administrative Agent a certificate of each Loan Party dated as of
the Increase Effective Date (in sufficient copies for each Lender)
signed by an Authorized Official of such Loan Party

	              	(1)	  	certifying and attaching the resolutions adopted
by such Loan Party approving or consenting to such increase,
and
	 
	     	(2)	  	in the case of the Company, certifying that,
before and after giving effect to such increase,

	                      	(A)	  	the representations and warranties
contained in Article V and the other Loan Documents are
true and correct on and as of the Increase Effective
Date, except to the extent that such representations
and warranties specifically refer to an earlier date,
in which case they are true and correct as of such
earlier date, and except that for purposes of this
Section, the representations and warranties contained
in Section 5.5 shall be deemed to refer to the most
recent statements furnished pursuant to Section 6.1(a)
and (b), and
	 
	     	(B)	  	no Default exists.

	     	 	  	The Company shall prepay any Loans outstanding on the Increase
Effective Date (and pay any additional amounts required pursuant to
Section 3.10) to the extent necessary to keep the outstanding Loans
ratable with any revised Pro Rata Shares arising from any
nonratable increase in the Commitments under this Section.
	 
	     	(d)	  	This Section supercedes any provisions in Sections 2.8 and
10.1 to the contrary.

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	2.11	  	Voluntary Termination or Reduction of Commitments. The Company may, upon
not less than 5 Banking Days’ prior notice to the Administrative Agent,
terminate the Commitments, or permanently reduce the Commitments by an
aggregate minimum amount of $10,000,000 or any multiple of $1,000,000 in
excess thereof; unless, after giving effect thereto and to any prepayments
of Loans made on the effective date thereof, the then-outstanding amount
of the Loans plus the L/C Obligations would exceed the amount of the
combined Commitments then in effect. Once reduced in accordance with this
Section 2.11, the Commitments may not be increased, except pursuant to
Section 2.10. Any reduction of the Commitments shall be applied to each
Lender according to its Pro Rata Share. All accrued fees (including
Non-use Fees and Facility Fees) to, but not including the effective date
of any reduction or termination of Commitments, shall be paid on the
effective date of such reduction or termination.

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ARTICLE III

PAYMENTS AND FEES

	3.1	  	Principal and Interest.

	       	(a)	  	Interest shall be payable on the outstanding daily unpaid
principal amount of each Borrowing from the date thereof until
payment in full is made and shall accrue and be payable at the rates
set forth herein both before and after default and before and after
maturity and judgment. Upon any partial prepayment or redesignation
of outstanding Base Rate Loans, interest accrued to but not
including the date of such prepayment or redesignation shall be
payable on the next following Interest Payment Date. Upon any
partial prepayment or payment in full or redesignation or conversion
of any LIBOR Loan, or upon any payment or redesignation in full of
all outstanding Base Rate Loans, interest accrued to but not
including the date of such prepayment, payment, redesignation or
conversion shall be payable on the next following Interest Payment
Date.
	 
	       	(b)	  	Interest on each Base Rate Loan shall be computed on the
basis of a year of 365 or 366 days and the actual number of days
elapsed, at the Base Rate times the total principal balance
outstanding under each Note. Interest accrued on each Base Rate
Loan shall be payable on each Interest Payment Date, commencing with
the first such date to occur after the Closing Date. The
Administrative Agent shall use its best efforts to notify the
Company of the amount of interest due on each Interest Payment Date,
but failure of the Administrative Agent to do so shall not excuse
payment of such interest when payable. Except as otherwise provided
in Section 3.6, the unpaid principal amount of any Base Rate Loan
shall bear interest at a fluctuating rate per annum equal to the
Base Rate. Each change in the interest rate shall take effect
simultaneously with the corresponding change in the Base Rate.
	 
	       	(c)	  	Interest on each LIBOR Loan shall be computed on the basis of
a year of 360 days and the actual number of days elapsed. Interest
accrued on each LIBOR Loan shall be payable on each Interest Payment
Date. The Administrative Agent shall use its best efforts to notify
the Company of the amount of interest so payable prior to each such
date, but failure of the Administrative Agent to do so shall not
excuse payment of such interest when payable. The unpaid principal
amount of any LIBOR Loan shall bear interest at a rate per annum
equal to the LIBOR Rate for that LIBOR Loan plus the applicable
LIBOR Margin.
	 
	       	(d)	  	Interest on each Swing Line Advance shall be computed on the
basis of a year of 365 or 366 days and the actual number of days
elapsed. Interest accrued on each Swing Line Advance shall be
payable on each Interest Payment Date. The Administrative Agent
shall use its best efforts to notify the Company of the amount of
interest so payable prior to each such date, but failure of the
Administrative Agent to do so shall not excuse payment of such
interest when payable. The unpaid principal amount of any Swing
Line Advance shall bear interest at a rate per annum equal to the
Swing Line Rate for that Swing Line Advance.
	 
	       	(e)	  	If not sooner paid, the principal indebtedness evidenced by
each Note shall be payable as follows:

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	              	(1)	  	subject to the applicable provisions of Section
2.4 of this Agreement providing for automatic redesignation of
Borrowings and the continuation of LIBOR Loans into a
subsequent LIBOR Period upon compliance with Section 2.4, the
principal amount of each LIBOR Loan shall be payable on the
last day of the LIBOR Period for such LIBOR Loan if such LIBOR
Loan is not redesignated or continued pursuant to Section 2.4;
	 
	     	(2)	  	the amount, if any, by which the principal
indebtedness evidenced by each Note at any time exceeds the
applicable Lender’s Commitment shall be payable immediately;
	 
	     	(3)	  	the amount of each payment required pursuant to
Section 3.16 shall be payable immediately, except that if no
Default or Event of Default has occurred and is continuing,
such payment may be held as cash collateral, at the request of
the Company, and applied to the Loans at the end of any LIBOR
Period with respect thereto;
	 
	     	(4)	  	all outstanding Loans shall be payable on the
Maturity Date; and
	 
	     	(5)	  	the principal amount of each Swing Line Advance
shall be payable on the fifth Banking Day after the date such
Swing Line Advance was made, and in any event on the Maturity
Date. In the event that any Swing Line Advance is not repaid
by the Company (including a repayment made with the proceeds
of a Base Rate Loan or a LIBOR Loan obtained by the Company
under the terms of this Agreement) in immediately available
funds prior to 12:00 noon, Chicago time, on such fifth Banking
Day, the Administrative Agent shall, on behalf of the Company
(which hereby irrevocably directs the Administrative Agent to
act on its behalf), promptly request the Lenders to make a
Base Rate Loan on the such Banking Day in an amount equal to
the unpaid principal amount of such Swing Line Advance.
Unless any Event of Default shall have occurred (in which case
the provisions of Section 2.1(h)(3) shall apply), each Lender
shall make the amount of its Pro Rata Share of such Base Rate
Loan available to the Administrative Agent for the account of
Bank of America at the office of the Administrative Agent set
forth below its signature hereto by 2:00 p.m., Chicago time,
on such Banking Day in funds immediately available to the
Administrative Agent. The proceeds of such Base Rate Loan
shall be immediately applied to the payment of such Swing Line
Advance.

	       	(f)	  	Each Note may, at any time and from time to time, be paid or
prepaid in whole or in part, provided that:

	              	(1)	  	any partial prepayment shall be an integral
multiple of $100,000;
	 
	     	(2)	  	any partial prepayment shall be in an amount not
less than $1,000,000; and
	 
	     	(3)	  	any payment or prepayment of all or any part of
any LIBOR Loan on a day other than the last day of the
applicable LIBOR Period shall be made on a LIBOR Banking Day,
shall be preceded by at least 5 LIBOR Banking Days written
notice to the Administrative Agent of the date and amount of
such payment or payments, and shall be subject to the
indemnification requirements of Section 3.10.

-46-

 

	          	 	  	In addition, if at any time the amount of any LIBOR Loan is reduced
(by payment, prepayment or conversion of a part thereof) to an
amount less than $1,000,000, such LIBOR Loan shall automatically
convert into a Base Rate Loan, and on and after such date the right
of the Company to continue such Borrowing as a LIBOR Loan shall
terminate.

	3.2	  	Non-use Fee. For the period commencing on the date of this Agreement and
ending on the earlier of (i) the termination of the Commitments or (ii)
the Maturity Date, the Company shall pay to the Administrative Agent for
the account of each Lender in accordance with its Pro Rata Share a non-use
fee (the “Non-use Fee”), computed daily at the rate of

	       	(a)	  	the applicable Non-use Fee Rate times
	 
	     	(b)	  	the difference between

	              	(1)	  	the Aggregate Commitment in effect on such day,
and
	 
	     	(2)	  	the Daily Usage for such day.

	 	  	The Non-use Fee shall be calculated on a daily basis but payable in
arrears on the first day of each July, October, January and April,
respectively, except that upon payment of each Note in full, the Non-use
Fee accrued to the date of payment shall be payable on the date of
payment.
	 
	3.3	  	Facility Fee. For the period commencing on the date of this Agreement
and ending on the earlier of (i) the termination of the Commitments and
payment of all outstanding Obligations in full or (ii) the Maturity Date,
the Company shall pay to the Administrative Agent for the account of each
Lender a facility fee (the “Facility Fee”), computed on the basis of a
year of 360 days and the actual number of days, payable at the Facility
Fee Rate times the amount of the Commitment (whether used or unused) of
such Lender. The Facility Fee owing to each Lender under this Section 3.3
shall be payable quarterly in arrears on the first day of each January,
April, July and October of each year.
	 
	3.4	  	Up-front Fees. The Company shall pay to the Administrative Agent for the
account of each Lender an up-front fee in the amount set forth in letter
agreements between each Lender and the Arranger and advised by the
Arranger to the Company. Such up-front fees are payable in full on the
Closing Date and are fully earned and nonrefundable.
	 
	3.5	  	Other Fees. The Company shall pay to the Arranger and the Administrative
Agent for their own respective accounts fees in the amounts and at the
times specified as heretofore agreed upon by letter agreement between the
Company, the Administrative Agent and the Arranger, as well as the other
fees provided for herein. Such fees shall be fully earned when paid and
nonrefundable.
	 
	3.6	  	Late Payments. Should any amount of principal or other amount payable
under any Loan Document to the Lenders not be paid when due, it shall
thereafter bear interest at a fluctuating interest rate per annum at all
times equal to the sum of the Base Rate plus 3% per annum, to the fullest
extent permitted by applicable Law.
	 
	3.7	  	Taxes. All payments payable to the Lenders hereunder or with respect to
the Loan Documents shall be made to the Lenders without deductions for any
Taxes or Other Taxes except to the extent the Company is required by any
Law or Governmental Authority to withhold and

-47-

 

except in accordance with Section 10.14 to the extent, if any, that
such amounts are required to be withheld by the Administrative
Agent under the laws of the United States of America or any other
applicable taxing authority. In the event of any such withholding
then the Company will pay such amount as shall cause the Lenders
to receive an amount which they would have received except for such
withholding (and an amount equal to any tax due on such additional
amount).

	3.8	  	Illegality.

	       	(a)	  	If any Lender determines that the introduction after the date
hereof of any Requirement of Law, or any change after the date
hereof in any Requirement of Law or in the interpretation or
administration of any Requirement of Law, has made it unlawful, or
that any central bank or other Governmental Authority has asserted
that it is unlawful, for any Lender or its applicable Lending Office
to make LIBOR Loans, then, on notice thereof by the Lender to the
Company through the Administrative Agent, any obligation of that
Lender to make LIBOR Loans shall be suspended until the Lender
notifies the Administrative Agent and the Company that the
circumstances giving rise to such determination no longer exist.
	 
	     	(b)	  	If a Lender determines that it is unlawful to maintain any
LIBOR Loan, the Company shall, upon its receipt of notice of such
fact and demand from such Lender (with a copy to the Administrative
Agent), prepay in full such LIBOR Loans of that Lender then
outstanding, together with interest accrued thereon and amounts
required under Section 3.10, either on the last day of the LIBOR
Period thereof, if the Lender may lawfully continue to maintain such
LIBOR Loans to such day, or immediately, if the Lender may not
lawfully continue to maintain such LIBOR Loan. If the Company is
required to so prepay any LIBOR Loan, then concurrently with such
prepayment, the Company may, at its option, borrow from the affected
Lender, in the amount of such repayment, a Base Rate Loan.
	 
	       	(c)	  	If the obligation of any Lender to make or maintain LIBOR
Loans has been so terminated or suspended, the Company may elect, by
giving notice to the Lender through the Administrative Agent, that
all Loans which would otherwise be made by the Lender as LIBOR Loans
shall be instead Base Rate Loans.
	 
	       	(d)	  	Before giving any notice to the Administrative Agent under
this Section, the affected Lender shall designate a different
Lending Office with respect to its LIBOR Loans if such designation
will avoid the need for giving such notice or making such demand and
will not, in the judgment of the Lender, be illegal or otherwise
disadvantageous to the Lender.

	3.9	  	Increased Costs and Reduction of Return.

	       	(a)	  	If any Lender determines that, due to either

	              	(1)	  	the introduction after the date hereof of or any
change (other than any change by way of imposition of or
increase in reserve requirements included in the calculation
of the LIBOR Rate or in respect of the assessment rate payable
by any Lender to the FDIC for insuring U.S. deposits) in or in
the interpretation after the date hereof of any law or
regulation or

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	              	(2)	  	the compliance by that Lender with any guideline
imposed or request made by any central bank or other
Governmental Authority after the date hereof (whether or not
having the force of law),

	       	 	  	there shall be any increase in the cost to such Lender of agreeing
to make or making, funding or maintaining any LIBOR Loans, then the
Company shall be liable for, and shall from time to time, upon
demand (with a copy of such demand to be sent to the Administrative
Agent), pay to the Administrative Agent for the account of such
Lender, additional amounts as are sufficient to compensate such
Lender for such increased costs.
	 
	       	(b)	  	If any Lender shall have determined that

	              	(1)	  	the introduction after the date hereof of any
Capital Adequacy Regulation,
	 
	     	(2)	  	any change after the date hereof in any Capital
Adequacy Regulation,
	 
	     	(3)	  	any change after the date hereof in the
interpretation or administration of any Capital Adequacy
Regulation by any central bank or other Governmental Authority
charged with the interpretation or administration thereof, or
	 
	     	(4)	  	compliance by the Lender (or its Lending Office)
or any corporation controlling the Lender with any Capital
Adequacy Regulation described in clauses (1) through (3)
above,

	           	 	  	affects or would affect the amount of capital required or expected
to be maintained by the Lender or any corporation controlling the
Lender and (taking into consideration such Lender’s or such
corporation’s policies with respect to capital adequacy and such
Lender’s desired return on capital) determines that the amount of
such capital is increased as a consequence of its Commitment,
Loans, credits or obligations under this Agreement, then, upon
demand of such Lender to the Company through the Administrative
Agent, the Company shall pay to the Lender, from time to time as
specified by the Lender, additional amounts sufficient to
compensate the Lender for such increase.

	3.10	  	Funding Indemnification. If any payment of a LIBOR Loan occurs on a date
which is not the last day of the LIBOR Period, whether because of
acceleration, prepayment or otherwise, or if, for any reason other than
default by one or more of the Lenders, a LIBOR Loan is requested and
subsequently cancelled or is otherwise not made or continued as a LIBOR
Loan, or a Base Rate Loan is not redesignated as a LIBOR Loan on the date
specified by the Company, the Company will indemnify and hold harmless
each Lender from and against any loss, damage, expense or cost incurred by
such Lender resulting therefrom, including any loss of anticipated profits
and any loss or expense arising from the liquidation or reemployment of
funds obtained by it to maintain such Loan or from fees payable to
terminate the deposits from which such funds were obtained (collectively,
“Funding Indemnification Costs”). In addition to the Funding
Indemnification Costs described in the preceding sentence, if the Company
gives notice that it intends to prepay a LIBOR Loan on a date which is not
the last day of a LIBOR Period, the Company will indemnify and hold
harmless each Lender from Funding Indemnification Costs resulting from any
failure by the Company to prepay on the date set forth in such notice.
The Company shall also pay any customary administrative fees charged by
such Lender in connection with the foregoing. The Company shall pay to
the

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	 	  	Administrative Agent for the account of each Lender the amount required
to indemnify such Lender within 15 days after written certification by
such Lender of such loss, damage, expense or cost (which certification
shall be delivered by such Lender to the Administrative Agent for
delivery to the Company). Determination of amounts payable under this
Section in connection with a LIBOR Loan shall be calculated as though
each Lender funded its LIBOR Loan through the purchase of a deposit of
the type and maturity corresponding to the deposit used as a reference in
determining the LIBOR Rate applicable to such LIBOR Loan, whether in fact
that is the case or not.
	 
	3.11	  	Inability to Determine Rates. If the Administrative Agent determines
that for any reason adequate and reasonable means do not exist for
determining the LIBOR Rate for any requested LIBOR Period with respect to
a proposed LIBOR Loan, or that the LIBOR Rate applicable pursuant to
Section 3.1(c) for any requested LIBOR Period with respect to a proposed
LIBOR Loan does not adequately and fairly reflect the cost to the Lenders
of funding such Borrowing, the Administrative Agent will promptly so
notify the Company and each Lender. Thereafter, the obligation of the
Lenders to make or maintain LIBOR Loans, as the case may be, hereunder
shall be suspended until the Administrative Agent revokes such notice in
writing. Upon receipt of such notice, the Company may revoke any Request
for Borrowing or Request for Redesignation of Borrowing then submitted by
it. If the Company does not revoke such a request, the Lenders shall
make, convert or continue the Loans, as proposed by the Company, in the
amount specified in the applicable notice submitted by the Company, but
such Loans shall be made, converted or continued as Base Rate Loans
instead of LIBOR Loans. As of the date of this Agreement, no Lender has
made the determination or is aware of the conditions referenced in the
first sentence of this Section 3.11.
	 
	3.12	  	Certificate of Lenders. Any Lender claiming reimbursement or
compensation under this Article III shall deliver to the Company (with a
copy to the Administrative Agent) a certificate setting forth in
reasonable detail the amount payable to the Lender hereunder and the basis
for such calculation and claim, and such certificate shall be conclusive
and binding on the Company in the absence of manifest error.
	 
	3.13	  	Substitution of Lenders. Upon the receipt by the Company from any Lender
(an “Affected Lender”) of a claim for compensation under Section 3.9 or,
to the extent such problem affects less than the Required Lenders, notice
of a Lender’s inability to fund LIBOR Loans under Section 3.8 or determine
LIBOR rates under Section 3.11, the Company may:

	         	(a)	  	request the Administrative Agent to use its best efforts to
obtain a replacement bank or financial institution satisfactory to
the Company to acquire and assume all or a ratable part of all of
such Affected Lender’s Loans and Commitment (a “Replacement
Lender”); or
	 
	       	(b)	  	request one or more of the other Lenders to acquire and
assume all or part of such Affected Lender’s Loans and Commitment;
or
	 
	       	(c)	  	designate a Replacement Lender.

	      	  	Any such designation of a Replacement Lender under clause (a) or (c)
shall be subject to the prior written consent of the Administrative Agent
(which consent shall not be unreasonably withheld or delayed) and shall
provide that the Affected Lender will receive payment in immediately
available funds on the date of replacement of an amount equal to 100% of
the outstanding principal amount of that portion of such Affected
Lender’s Loans being acquired

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	 	  	or assumed, together with all interest accrued thereon to the date of
replacement, and all amounts, if any, due at the date of replacement to
such Affected Lender under Section 3.9.
	 
	3.14	  	Survival. The agreements and obligations of the Company in this Article
III shall survive the payment in full of all Obligations and the
termination of this Agreement.
	 
	3.15	  	Manner and Treatment of Payments. The amount of each payment hereunder
or on each Note shall be made to the Administrative Agent for the account
of each applicable Lender in immediately available funds on the day of
payment (which must be a Banking Day). Any payment received after 2:00
p.m., Chicago time, on any Banking Day, shall be deemed received on the
next succeeding Banking Day. The amount of all payments received by the
Administrative Agent for the account of each Lender shall be promptly paid
by the Administrative Agent to the applicable Lender(s) in immediately
available funds (and any such payment not remitted on the same Banking Day
that it is deemed received by the Administrative Agent shall thereafter be
payable by the Administrative Agent to the applicable Lender(s) together
with interest at the overnight Federal Funds Rate, as such rate is
reasonably determined by the Administrative Agent). Whenever any payment
to be made hereunder or on each Note is due on a day that is not a Banking
Day, payment shall be made on the next succeeding Banking Day, provided
that the extension shall be included in the computation of interest owing
on the next following Interest Payment Date. Any payment of the principal
of any LIBOR Loan shall be made on a LIBOR Banking Day, as applicable.
	 
	3.16	  	Mandatory Prepayment.

	       	(a)	  	In the event that the Total Outstandings at any time exceed
the limitations specified in Section 2.6 (whether because of the
outstanding amount of the Total Outstandings or because of other
outstanding Senior Permitted Debt not arising under this Agreement),
the Company shall immediately make a prepayment of the Loans in such
amount as is necessary to cause the Total Outstandings to comply
with the limitations of Section 2.6.
	 
	         	(b)	  	In the event that the L/C Obligations at any time exceed

	                	(1)	  	the Borrowing Base less
	 
	       	(2)	  	the aggregate principal amount of outstanding
Senior Permitted Debt of the Homebuilding Segment (including
the aggregate principal amount of outstanding Loans, but
exclusive of the L/C Obligations),

	         	 	  	the Company shall immediately upon demand by the Administrative
Agent deposit with the Administrative Agent, for the benefit of the
Lenders, an amount in cash equal to such excess. Such cash shall
be deposited in an interest bearing account with the Administrative
Agent as to which the Company shall have no right of withdrawal
except as provided below.
	 
	       	(c)	  	At such time as

	                	(1)	  	the Borrowing Base less

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	                	(2)	  	the aggregate principal amount of outstanding
Senior Permitted Debt of the Homebuilding Segment (including
the aggregate principal amount of outstanding Loans, but
exclusive of the L/C Obligations)

	       	 	  	once again equals or exceeds the outstanding L/C Obligations, and
provided no other Event of Default has occurred and is continuing
and the Company is otherwise in compliance with this Agreement, the
amount so deposited by the Company in such restricted account with
the Administrative Agent, together with any interest accrued
thereon, shall be immediately remitted to the Company.

	3.17	  	Maturity Date Extension Option.

	         	(a)	  	Not earlier than 120 days prior to, nor later than 60 days
prior to the Maturity Date, the Company may, upon written notice to
the Administrative Agent (which shall promptly notify the Lenders),
request a one-year extension of the Maturity Date (the date such
written notice is received by the Administrative Agent being the
“Extension Notice Date”). Such notice, once given to the
Administrative Agent, is irrevocable by the Company. Subject to the
Company’s compliance with each of the conditions set forth in this
Section 3.17, each Lender agrees to so extend the Maturity Date.
	 
	       	(b)	  	This is a one-time option permitting only one extension of
the Maturity Date.
	 
	       	(c)	  	As a condition precedent to such extension, the Company shall
deliver to the Administrative Agent a certificate of each Loan Party
(an “Extension Certificate”) dated as of the Extension Notice Date
signed by an Authorized Official of such Loan Party

	                	(1)	  	certifying and attaching the resolutions adopted
by such Loan Party approving or consenting to such extension
and
	 
	       	(2)	  	in the case of the Company, certifying that,
before and after giving effect to such extension,

	                      	(A)	  	the representations and warranties
contained in Article V and the other Loan Documents are
true and correct on and as of the Extension Notice
Date, except to the extent that such representations
and warranties specifically refer to an earlier date,
in which case they are true and correct as of such
earlier date, and except that for purposes of this
Section, the representations and warranties contained
in Section 5.5 shall be deemed to refer to the most
recent statements furnished pursuant to Section 6.1(a)
and (b), and
	 
	       	(B)	  	no Default or Event of Default
exists.

	         	(d)	  	As a further condition precedent to such extension, the
Company shall deliver to the Administrative Agent an Extension
Certificate dated as of the Maturity Date (before extension) signed
by an Authorized Official of each Loan Party.
	 
	       	(e)	  	In connection with such extension of the Maturity Date, the
Company shall pay to the Administrative Agent for the account of
each Lender, on the Maturity Date, an

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	         	 	  	extension fee in an amount equal to 0.25% of the Aggregate
Commitment in effect on the Maturity Date.
	 
	       	(f)	  	This Section supercedes any provisions in Section 10.1 to the
contrary.

	3.18	  	Limitation on Additional Amounts, Etc. Notwithstanding anything to the
contrary contained in Section 3.7 or 3.9, unless a Lender gives notice to
the Company that the Company is obligated to pay an amount under any such
Section within 180 days after the later of

	         	(a)	  	the date such Lender incurs the respective increased costs,
Taxes, loss, expense or liability, reduction in amounts received or
receivable or reduction in return on capital or
	 
	       	(b)	  	the date such Lender has actual knowledge of its incurrence
of the respective increased costs, Taxes, loss, expense, or
liability, reductions in amounts received or receivable or reduction
in return on capital,

	      	  	then such Lender shall only be entitled to be compensated for such amount
by the Company pursuant to said Section 3.7 or 3.9, as the case may be,
to the extent the costs, Taxes, loss, expense or liability, reduction in
amounts received or receivable or reduction in return on capital are
incurred or suffered on or after the date which occurs 180 days prior to
such Lender giving notice to the Company that the Company is obligated to
pay the respective amounts pursuant to Section 3.7 or 3.9, as the case
may be.
	 
	3.19	  	Payments Generally.

	         	(a)	  	All payments to be made by the Company shall be made without
condition or deduction for any counterclaim, defense, recoupment or
setoff. Except as otherwise expressly provided herein, all
payments by the Company hereunder shall be made to the
Administrative Agent, for the account of the respective Lenders to
which such payment is owed, at the Administrative Agent’s office in
Dollars and in immediately available funds not later than 1:00 p.m.,
Chicago time, on the date specified herein. The Administrative
Agent will promptly distribute to each Lender its Pro Rata Share (or
other applicable share as provided herein) of such payment in like
funds as received by wire transfer to such Lender’s Lending Office.
All payments received by the Administrative Agent after 1:00 p.m.,
Chicago time, shall be deemed received on the next succeeding
Banking Day and any applicable interest or fee shall continue to
accrue.
	 
	       	(b)	  	If any payment to be made by the Company shall come due on a
day other than a Banking Day, payment shall be made on the next
following Banking Day, and such extension of time shall be reflected
in computing interest or fees, as the case may be.
	 
	       	(c)	  	Unless the Company or any Lender has notified the
Administrative Agent, prior to the date any payment is required to
be made by it to the Administrative Agent hereunder, that the
Company or such Lender, as the case may be, will not make such
payment, the Administrative Agent may assume that the Company or
such Lender, as the case may be, 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 the
Administrative Agent in immediately available funds, then:

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	              	(1)	  	if the Company failed to make such payment, each
Lender shall forthwith on demand repay to the 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 the
Administrative Agent to such Lender to the date such amount is
repaid to the Administrative Agent in immediately available
funds at a rate per annum equal to the Federal Funds Rate from
time to time in effect; and
	 
	       	(2)	  	if any Lender failed to make such payment, such
Lender shall forthwith on demand pay to the Administrative
Agent the amount thereof in immediately available funds,
together with interest thereon for the period from the date
such amount was made available by the Administrative Agent to
the Company to the date such amount is recovered by the
Administrative Agent (the “Compensation Period”) at a rate per
annum equal to the Federal Funds Rate from time to time in
effect. If such Lender pays such amount to the Administrative
Agent, then such amount shall constitute such Lender’s Loan
included in the applicable Borrowing. If such Lender does not
pay such amount forthwith upon the Administrative Agent’s
demand therefor, the Administrative Agent may make a demand
therefor upon the Company, and the Company shall pay such
amount to the Administrative Agent, together with interest
thereon for the Compensation Period at a rate per annum equal
to the rate of interest applicable to the applicable
Borrowing. Nothing herein shall be deemed to relieve any
Lender from its obligation to fulfill its Commitment or to
prejudice any rights which the Administrative Agent or the
Company may have against any Lender as a result of any default
by such Lender hereunder.

	       	 	  	A notice of the Administrative Agent to any Lender or the Company
with respect to any amount owing under this clause (c) shall be
conclusive, absent manifest error.
	 
	       	(d)	  	If any Lender makes available to the Administrative Agent
funds for any Loan to be made by such Lender as provided in the
foregoing provisions of this Article II, and such funds are not made
available to the Company by the Administrative Agent because the
conditions to the applicable Credit Extension set forth in Article
IV are not satisfied or waived in accordance with the terms hereof,
the Administrative Agent shall return such funds (in like funds as
received from such Lender) to such Lender, without interest.
	 
	       	(e)	  	The obligations of the Lenders hereunder to make Base Rate
Loans and LIBOR Loans and to fund participations in Letters of
Credit and Swing Line Advances are several and not joint. The
failure of any Lender to make any Base Rate Loan or LIBOR Loan or to
fund any such participation on any date required hereunder shall not
relieve any other Lender of its corresponding obligation to do so on
such date, and no Lender shall be responsible for the failure of any
other Lender to so make its Base Rate Loan or LIBOR Loan or purchase
its participation.
	 
	       	(f)	  	Nothing herein shall be deemed to obligate any Lender to
obtain the funds for any Loan in any particular place or manner or
to constitute a representation by any Lender that it has obtained or
will obtain the funds for any Loan in any particular place or
manner.

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	       	(g)	  	All fees arising under or in connection with this Agreement
which have not previously been paid and which were due and payable
on or prior to the Maturity Date or the date on which the
Commitments were terminated shall be payable on the earlier of the
Maturity Date or the termination of the Commitments.

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ARTICLE IV

CONDITIONS

	4.1	  	Conditions to First Extension of Credit. The obligation of the Lenders
to make the first extension of credit hereunder, whether in the form of a
Borrowing or the issuance of a Letter of Credit by the L/C Issuer, is
subject to the following conditions precedent (any one or more of which
the Lenders may waive in their sole discretion):

	       	(a)	  	The Administrative Agent shall have received the following
original executed documents (in form and substance satisfactory to
the Administrative Agent and legal counsel for the Administrative
Agent in sufficient number for the Administrative Agent and each
Lender):

	              	(1)	  	this Agreement;
	 
	       	(2)	  	each Note;
	 
	       	(3)	  	the Guaranty;
	 
	       	(4)	  	the Opinion of Counsel;
	 
	       	(5)	  	a certified copy of resolutions of the board of
directors of the Company authorizing the execution of the Loan
Documents, together with an incumbency certificate executed by
the corporate secretary of the Company;
	 
	       	(6)	  	a certified copy of resolutions of the board of
directors of each Guarantor authorizing the execution of the
Guaranty, together with an incumbency certificate executed by
the corporate secretary of each Guarantor;
	 
	       	(7)	  	a Borrowing Base Certificate calculated as of
June 30, 2002, showing the Company to be in compliance with
Sections 2.6 and 7.4; and
	 
	       	(8)	  	such other agreements, instruments and documents
as any Lender shall reasonably request.

	       	(b)	  	The Administrative Agent shall have received evidence
satisfactory to the Administrative Agent and legal counsel to the
Administrative Agent that the Company has been duly incorporated,
validly exists and is in good standing under the laws of the State
of Maryland, is duly qualified to do business as, and is in good
standing as, a foreign corporation in each jurisdiction in which the
conduct of its business or the ownership or leasing of its
properties makes such qualification necessary, and has all requisite
power and authority to conduct its business and to own and lease its
properties.
	 
	       	(c)	  	The Administrative Agent shall have received evidence
satisfactory to the Administrative Agent that all Indebtedness
(other than the Existing Letters of Credit) under the Existing
Credit Agreement shall have been simultaneously paid in full and
such agreement shall have been terminated.
	 
	       	(d)	  	The Company shall have paid all fees due hereunder which have
been invoiced.

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	4.2	  	Conditions for Subsequent Extensions of Credit. The obligation of the
Lenders to make any extension of credit hereunder (including the first and
any subsequent extension of credit but excluding any redesignation or
continuation of any Loan that does not increase the amount of such Loan
and also excluding any L/C Borrowing with respect to a Letter of Credit),
whether in the form of a Borrowing or the issuance of a Letter of Credit
by a L/C Issuer, is subject to the following conditions precedent:

	       	(a)	  	the representations and warranties contained in Sections 5.1
through 5.16, inclusive, as of the latest reporting required under
this Agreement, shall be correct in all material respects on and as
of the date of the Borrowing, or the issuance of the Letter of
Credit, as the case may be, as though made on and as of that date
(except with respect to representations and warranties which
expressly relate to an earlier date); and
	 
	       	(b)	  	no Default or Event of Default shall have occurred and be continuing.

	 	     	In the case of a Borrowing, or redesignation or continuation thereof, the
Company shall, at its sole expense, deliver or cause to be delivered to
the Administrative Agent, in form and substance satisfactory to the
Administrative Agent, a Request for Borrowing, a Request for
Redesignation or a Request for Continuation, as applicable.

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ARTICLE V

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company represents and warrants to each Lender that:

	5.1	  	Incorporation, Qualification, Powers and Capital Stock. The Company is a
corporation duly incorporated, validly existing and in good standing under
the laws of the State of Maryland. The Company is duly qualified to do
business as, and is in good standing as, a foreign corporation in each
jurisdiction in which the conduct of its business or the ownership or
leasing of its properties makes such qualification necessary except where
the failure to do so would not reasonably be expected to have a Material
Adverse Effect. The Company has all requisite power and authority to
conduct its business and to own and lease its properties.
	 
	5.2	  	Execution, Delivery and Performance of Loan Documents.

	       	(a)	  	The Company has all requisite power and authority to execute
and deliver, and to perform all of its obligations under, the Loan
Documents.
	 
	       	(b)	  	Each Guarantor has all requisite power and authority to
execute and deliver, and to perform all of its obligations under,
the Guaranty.
	 
	       	(c)	  	The execution and delivery by the Company of, and the
performance by the Company of each of its obligations under, each
Loan Document to which it is a party and the execution and delivery
by each Guarantor of, and the performance by each Guarantor of each
of its obligations under, the Guaranty, have been duly authorized by
all necessary action and do not and will not:

	              	(1)	  	require any consent or approval not heretofore
obtained of any stockholder, security holder or creditor of
the Company, any Subsidiary or any Guarantor;
	 
	       	(2)	  	violate any provision of the certificate of
incorporation or bylaws of the Company or any Guarantor or any
provision of the articles or certificate of incorporation,
bylaws or partnership agreement of any Subsidiary;
	 
	       	(3)	  	result in or require the creation or imposition
of any Lien, claim or encumbrance (except to the extent that
any Lien is created under this Agreement) upon or with respect
to any property now owned or leased or hereafter acquired by
the Company, any Subsidiary or any Guarantor;
	 
	       	(4)	  	violate any provision of any Law, order, writ,
judgment, injunction, decree, determination or award presently
in effect having applicability to the Company, any Subsidiary
or any Guarantor; or
	 
	       	(5)	  	result in a breach of or constitute a default
under, or cause or permit the acceleration of any obligation
owed under, any indenture or loan or credit agreement or any
other material Contractual Obligation of the Company, any
Subsidiary or any Guarantor.

	       	(d)	  	The Company, each Subsidiary and each Guarantor is not in
default under any Law, order, writ, judgment, injunction, decree,
determination, award, indenture, agreement,

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	       	 	  	lease or instrument described in Section 5.2(c)(4) or 5.2(c)(5)
above, in any respect that is materially adverse to the interests
of any Lender, or that could materially impair the ability of the
Company, its Subsidiaries and each Guarantor taken as a whole to
perform its obligation under the Loan Documents, as applicable, or
that has a Material Adverse Effect.
	 
	       	(e)	  	No authorization, consent, approval, order, license, permit
or exemption from, or filing, registration or qualification with,
any Governmental Authority not heretofore obtained is or will be
required under applicable Law to authorize or permit the execution
and delivery by the Company or any Guarantor of, and the performance
by the Company or any Guarantor of all of its obligations under, the
Loan Documents.
	 
	       	(f)	  	Each of the Loan Documents to which the Company is a party,
when executed and delivered, will constitute the legal, valid and
binding obligations of the Company, and the Guaranty, when executed
and delivered, will constitute the legal, valid and binding
obligations of each Guarantor, enforceable against it in accordance
with its terms, except as enforcement may be limited by bankruptcy,
insolvency, reorganization, arrangement, moratorium or other similar
laws relating to or affecting creditors’ rights generally or
equitable principles relating to the granting of specific
performance or other equitable remedies as a matter of judicial
discretion.

	5.3	  	Compliance with Laws and Other Requirements. The Company is in
compliance in all material respects with all Laws and other requirements
applicable to its business and has obtained all material authorizations,
consents, approvals, orders, licenses, permits and exemptions from, and
has accomplished all material filings, registrations or qualifications
with, any Governmental Authority that is necessary for the transaction of
its business except where such noncompliance would not reasonably be
expected to have a Material Adverse Effect.
	 
	5.4	  	Subsidiaries.

	       	(a)	  	Schedule 5.4 hereto correctly sets forth the names and
jurisdictions of incorporation or formation of all Subsidiaries and
real estate joint ventures in which the Company or any of its
Subsidiaries has an investment as of the date of this Agreement, and
the Subsidiaries that, as of the date of this Agreement, are
Restricted Subsidiaries are designated as such on Schedule 5.4.
Except as described in Schedule 5.4, the Company does not own any
capital stock or ownership interest in any Person other than the
Subsidiaries and real estate joint ventures (including limited
liability companies and partnerships) in which the Company or any
Subsidiary within the Homebuilding Segment participates. All
outstanding shares of capital stock or ownership interests, as the
case may be, of each Subsidiary and each such real estate joint
venture that are owned by the Company or any Subsidiary are

	              	(1)	  	owned of record and beneficially by the Company
or by one or more Subsidiaries, free and clear of all Liens,
claims, encumbrances and rights of others, and are
	 
	       	(2)	  	duly authorized, validly issued, fully paid,
nonassessable (except for capital calls or contribution
requirements in connection with ownership interests in such
real estate joint ventures), and issued in compliance with all
applicable state and federal securities and other Laws.

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	       	 	  	The Company may update Schedule 5.4 from time to time by sending
written notice to the Administrative Agent.
	 
	       	(b)	  	Each Restricted Subsidiary is a corporation, partnership or
limited liability company duly incorporated or formed, validly
existing and in good standing under the laws of its respective
jurisdiction of incorporation or formation. Each Restricted
Subsidiary is duly qualified to do business as, and is in good
standing as, a foreign corporation, partnership or limited liability
company in each jurisdiction in which the conduct of its business or
the ownership or leasing of its properties makes such qualification
necessary, except where the failure to do so would not reasonably be
expected to result in a Material Adverse Effect. Each Restricted
Subsidiary has all requisite power and authority to conduct its
business and to own and lease its properties
	 
	       	(c)	  	Each Restricted Subsidiary is in compliance in all material
respects with all Laws and other requirements applicable to its
business and has obtained all material authorizations, consents,
approvals, orders, licenses, permits and exemptions from, and has
accomplished all material filings, registrations or qualifications
with, any Governmental Authority that are necessary for the
transaction of its business, except where the failure to do so would
not reasonably be expected to result in a Material Adverse Effect.

	5.5	  	Financial Statements of the Company and its Consolidated Subsidiaries.
The consolidated balance sheets of the Company and its consolidated
Subsidiaries as at December 31, 2001 and the related consolidated
statements of income and cash flows for the fiscal year ended on such
date, reported on by Ernst & Young LLP, copies of which have heretofore
been furnished to each Lender, present fairly the consolidated financial
condition of the Company and its consolidated Subsidiaries as at such
date, and the consolidated results of their operations and changes in cash
flows for the fiscal year then ended. The unaudited consolidated balance
sheet of the Company and its consolidated Subsidiaries as at March 31,
2002 and the related unaudited consolidated statements of income and of
cash flows for the three-month period ended on such date, certified by a
Responsible Official, copies of which have heretofore been furnished to
each Lender, present fairly the consolidated financial condition of the
Company and its consolidated Subsidiaries as at such date, and the
consolidated results of their operations and changes in cash flows for the
three-month period then ended (subject to normal year-end audit
adjustments). All such financial statements, including the related
schedules and notes thereto, have been prepared in accordance with GAAP
throughout the periods involved (except as approved by such accountants or
Responsible Official, as the case may be, and as disclosed therein and
except the quarterly statements are unaudited and do not include footnotes
as would be required for audited financial statements).
	 
	5.6	  	No Material Adverse Change. There has been no material adverse change in
the condition, financial or otherwise, of the Company and the
Subsidiaries, taken as a whole, from the financial condition of the
Company and the Subsidiaries, taken as a whole, since December 31, 2001
which would reasonably be expected to have a Material Adverse Effect, and
the Company and the Subsidiaries, taken as a whole, do not have any
material liability incurred outside of the ordinary course of business or,
to the best knowledge of the Company, material contingent liability not
reflected or disclosed in the financial statements or notes thereto
described in Section 5.5 (or, to the extent that financial statements have
been delivered pursuant to Section 6.1, in the most recently delivered
financial statements), or otherwise disclosed to the Administrative Agent
in writing.

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	5.7	  	Tax Liability. The Company and each Subsidiary have filed all tax
returns (federal, state and local) required to be filed by them and have
paid all material taxes shown thereon to be due and all property taxes
due, including interest and penalties, if any. To the best knowledge of
the Company, there does not exist any substantial likelihood that any
Governmental Authority will successfully assert a tax deficiency against
the Company or any Subsidiary that is material to the Company and the
Subsidiaries, taken as a whole, that has not been adequately reserved
against in the financial statements described in Section 5.5 (or, to the
extent that financial statements have been delivered pursuant to Section
6.1, in the most recently delivered financial statements). The Company
and each Subsidiary have established and is maintaining adequate reserves
for tax liabilities, if any, sufficient to comply with GAAP.
	 
	5.8	  	Litigation. There are no actions, suits or proceedings pending or, to
the best knowledge of the Company, threatened against or affecting the
Company or any Restricted Subsidiary, or any property of the Company or
any Restricted Subsidiary, before any Governmental Authority in which
there is a reasonable possibility of a decision adverse to the Company or
a Restricted Subsidiary and which, if determined adversely to the Company
or the Restricted Subsidiary, could reasonably be expected to have a
Material Adverse Effect.
	 
	5.9	  	ERISA. Neither a Reportable Event nor an “accumulated funding
deficiency” (within the meaning of Section 412 of the Code or Section 302
of ERISA) has occurred during the five-year period prior to the date on
which this representation is made or deemed made with respect to any Plan,
and each Plan has complied in all material respects with the applicable
provisions of ERISA and the Code. No termination of a Single Employer
Plan has occurred, and no Lien in favor of the PBGC or a Plan has arisen,
during such five-year period. The present value of all accrued benefits
under each Single Employer Plan (based on those assumptions used to fund
such Plans) did not, as of the last annual valuation date prior to the
date on which this representation is made or deemed made, exceed the value
of the assets of such Plan allocable to such accrued benefits to an extent
which could reasonably be expected to have a Material Adverse Effect.
Neither the Company nor any Commonly Controlled Entity has had a complete
or partial withdrawal from any Multiemployer Plan which could reasonably
be expected to have a Material Adverse Effect, and neither the Company nor
any Commonly Controlled Entity would become subject to any liability under
ERISA in an amount which could reasonably be expected to have a Material
Adverse Effect if the Company or any such Commonly Controlled Entity were
to withdraw completely from all Multiemployer Plans as of the valuation
date most closely preceding the date on which this representation is made
or deemed made. To the knowledge of the Company or any Commonly
Controlled Entity, no such Multiemployer Plan for which the Company or any
Subsidiary could reasonably be expected to have a material liability is in
Reorganization or Insolvent. The present value (determined using
actuarial and other assumptions which are reasonable in respect of the
benefits provided and the employees participating) of the liability of the
Company and each Commonly Controlled Entity for post retirement benefits
to be provided to their current and former employees under Plans which are
welfare benefit plans (as defined in Section 3(1) of ERISA) does not, in
the aggregate, exceed the assets under all such Plans allocable to such
benefits by an amount in excess of $5,000,000.
	 
	5.10	  	Regulations U and X; Investment Company Act. Neither the Company nor any
Subsidiary is engaged principally, or as one of its important activities,
in the business of extending credit for the purpose of “purchasing” or
“carrying” any “margin stock” within the meanings of Regulation U of the
FRB. No part of the Loans or the Letters of Credit will be used to
purchase or carry any margin stock, or to extend credit to others for that
purpose, or for any purpose that violates the provisions of Regulations U
or X of the FRB. Neither the Company

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	 	  	nor any Subsidiary is or is required to be registered under the
Investment Company Act of 1940.
	 
	5.11	  	No Default or Event of Default. No Default or Event of Default has
occurred and is continuing.
	 
	5.12	  	Ownership of Property; Liens. Each of the Company and its Restricted
Subsidiaries has good record and marketable title in fee simple to, or a
valid leasehold interest in, all its real property, and good title to all
its other property, except for defects in title that do not interfere in
any material respect with its ability to conduct its business as currently
conducted or to utilize such properties for their intended purposes, and
none of such property is subject to any Lien except as permitted by
Section 7.8. Each of the Company and its Restricted Subsidiaries has good
record and marketable title in fee simple to all Real Estate Inventory
included in the Borrowing Base, except for defects in title that do not
interfere in any material respect with its ability to conduct its business
as currently conducted or to utilize such properties for their intended
purposes.
	 
	5.13	  	Environmental Matters. Except to the extent that all of the following,
in the aggregate, would not reasonably be expected to have a Material
Adverse Effect:

	         	(a)	  	To the knowledge of the Company, the facilities and
properties owned, leased or operated by the Company or any of its
Subsidiaries (the “Properties”) do not contain, and have not
previously contained, any Materials of Environmental Concern in
amounts or concentrations which

	                	(1)	  	constitute or constituted a violation of, or
	 
	       	(2)	  	could reasonably be expected to give rise to
liability under, any Environmental Law.

	         	(b)	  	To the knowledge of the Company, the Properties and all
operations at the Properties are in compliance, and, to the extent
of the Company’s and its Subsidiaries’ involvement with the
Properties, have in the last five years been in compliance, in all
material respects with all applicable Environmental Laws, and there
is no contamination at, under or about the Properties or violation
of any Environmental Law with respect to the Properties or the
business operated by the Company or any of its Subsidiaries (the
“Business”).
	 
	       	(c)	  	Neither the Company nor any of its Subsidiaries has received
any notice of violation, alleged violation, non-compliance,
liability or potential liability regarding environmental matters or
compliance with Environmental Laws with regard to any of the
Properties or the Business, nor does the Company have knowledge or
reason to believe that any such notice will be received or is being
threatened.
	 
	       	(d)	  	To the knowledge of the Company, Materials of Environmental
Concern have not been transported or disposed of from the Properties
while owned or operated by the Company or any of its Subsidiaries in
violation of, or in a manner or to a location which could reasonably
be expected to give rise to liability under, any Environmental Law,
nor have any Materials of Environmental Concern been generated,
treated, stored or disposed of at, on or under any of the Properties
in violation of, or in a

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	       	 	  	manner that could reasonably be expected to give rise to liability
under, any applicable Environmental Law.
	 
	         	(e)	  	No judicial proceeding or governmental or administrative
action is pending or, to the knowledge of the Company, threatened,
under any Environmental Law to which the Company or any Subsidiary
is or will be named as a party with respect to the Properties or the
Business, nor are there any consent decrees or other decrees,
consent orders, administrative orders or other orders, or other
administrative or judicial requirements outstanding under any
Environmental Law with respect to the Properties or the Business.
	 
	       	(f)	  	To the knowledge of the Company, there has been no release or
threat of release of Materials of Environmental Concern at or from
the Properties, or arising from or related to the operations of the
Company or any Subsidiary in connection with the Properties or
otherwise in connection with the Business, in violation of, or in
amounts or in a manner that could reasonably give rise to liability
under, Environmental Laws.

	5.14	  	Borrowing Base. The aggregate principal amount of outstanding Senior
Permitted Debt of the Homebuilding Segment does not exceed the Borrowing
Base.
	 
	5.15	  	Borrowing Base Components. At any time of determination thereof, the
value of any component of Real Estate Inventory used to calculate the
Borrowing Base does not exceed the GAAP Value of such component of Real
Estate Inventory.
	 
	5.16	  	Purpose of Loans. The proceeds of the Loans shall be used by the Company
for working capital purposes, to make purchases and investments permitted
hereunder and to repay indebtedness under the Existing Credit Agreement.

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ARTICLE VI

AFFIRMATIVE COVENANTS OF THE COMPANY

     As long as any Note remains unpaid or any other Obligation remains
outstanding or any Commitment or any Letter of Credit remains in effect, unless
the Required Lenders otherwise consent in writing:

	6.1	  	Financial Statements. The Company shall cause to be delivered to the
Administrative Agent, in form and detail satisfactory to the
Administrative Agent (for prompt distribution by the Administrative Agent
to the Lenders):

	       	(a)	  	as soon as available, but in any event within 90 days after
the end of each fiscal year of the Company, copies of the
consolidated balance sheets of the Company and its consolidated
Subsidiaries as at the end of such year and the related consolidated
statements of income and retained earnings and changes in cash flows
for such year, setting forth in each case in comparative form the
figures for the previous year, reported on without a “going concern”
or like qualification or exception, or qualification arising out of
the scope of the audit (other than qualifications related to the
incorporation of reports by other independent certified public
accountants), by Ernst & Young LLP or other independent certified
public accountants of nationally recognized standing reasonably
acceptable to the Required Lenders; and
	 
	       	(b)	  	as soon as available, but in any event not later than 45 days
after the end of each of the first three quarterly periods of each
fiscal year of the Company, the unaudited consolidated balance
sheets of the Company and its consolidated Subsidiaries as at the
end of such quarter and the related unaudited consolidated
statements of income and retained earnings and changes in cash flows
of the Company and its consolidated Subsidiaries for such quarter
and the portion of the fiscal year through the end of such quarter,
setting forth in each case in comparative form the figures for the
previous year, certified by a Responsible Official as being fairly
stated in all material respects when considered in relation to the
consolidated financial position of the Company and its consolidated
Subsidiaries (subject to normal year-end audit adjustments);

	 	  	all such financial statements to be prepared in accordance with GAAP
throughout the periods reflected therein and with prior periods (except
as approved by such accountants or officer, as the case may be, and
disclosed therein).
	 
	6.2	  	Certificates; Other Information. The Company shall cause to be delivered
to the Administrative Agent, in form and detail satisfactory to the
Administrative Agent (for prompt distribution by the Administrative Agent
to the Lenders):

	       	(a)	  	concurrently with the delivery of the financial statements
referred to in Section 6.1(a), a certificate of the independent
certified public accountants reporting on such financial statements
stating that in making the examination necessary therefor no
knowledge was obtained of any Default or Event of Default, except as
specified in such certificate;
	 
	       	(b)	  	concurrently with the delivery of the financial statements
referred to in Sections 6.1(a) and 6.1(b), a Compliance Certificate
executed by a Responsible Official, stating that, to the best of
such officer’s knowledge, the Company during such period has
observed

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	       	 	  	or performed all of its covenants and other agreements, and
satisfied every condition, contained in this Agreement and in the
Notes to be observed, performed or satisfied by it (and containing
calculations demonstrating compliance with Sections 7.1 through 7.6
and such other financial information as requested by the
Administrative Agent), and that such officer has obtained no
knowledge of any Default or Event of Default except as specified in
such certificate;
	 
	       	(c)	  	not later than 90 days after the end of each fiscal year of
the Company, a copy of the projections by the Company of the
operating budget and cash flow budget of the Company and its
Subsidiaries for the succeeding two fiscal years and the projected
consolidated balance sheet of the Company and its Subsidiaries as at
the end of such succeeding fiscal years, such projections to be
accompanied by a certificate of a Responsible Official to the effect
that while such officer has no reason to believe such projections
are incorrect or misleading in any material respect, such
projections are based upon assumptions that may not materialize or
may change adversely due to factors related to the Company’s
business or industry, and unanticipated events and circumstances may
occur subsequent to the date of such projections, such that the
actual results achieved may vary from such projections, and such
variations may be material, and that the Company is under no
obligation to update such projections;
	 
	       	(d)	  	promptly upon their becoming available, but in any event no
later than 10 days after the same are sent, copies of all financial
statements, reports, notices and proxy statements sent or made
available generally by the Company to its stockholders, or by any
Restricted Subsidiary of the Company to its stockholders (other than
the Company or any Subsidiary of the Company), of all regular and
periodic reports and all registration statements (excluding exhibits
thereto and Registration Statements on Form S-8) and prospectuses,
if any, filed by the Company or any of its Restricted Subsidiaries
with any securities exchange or with the Securities and Exchange
Commission or any successor or analogous Governmental Authority; and
all press releases and other statements made available generally by
the Company or any of its Restricted Subsidiaries to the public
concerning material developments in the business of the Company and
any of its Restricted Subsidiaries;
	 
	       	(e)	  	promptly, such additional financial and other information as
any Lender may from time to time reasonably request;
	 
	       	(f)	  	as soon as practicable, but in no event later than 45 days
after the end of each fiscal quarter, a Borrowing Base Certificate
certifying in reasonable detail the Borrowing Base as of the last
day of such fiscal quarter, which certificate shall be complete and
correct as of the date thereof; and
	 
	       	(g)	  	concurrently with the delivery of the financial statements
referred to in Sections 6.1(a) and 6.1(b), the financial information
set forth on Schedule 6.2(g) hereto.

	6.3	  	Payment of Obligations. The Company and each Restricted Subsidiary will
pay, discharge or otherwise satisfy at or before maturity or before they
become delinquent, as the case may be, all obligations of whatever nature
which if not so paid could reasonably be expected to have a Material
Adverse Effect, except where the amount or validity thereof is currently
being contested in good faith by appropriate proceedings and reserves in
conformity with GAAP with respect thereto have been provided on the books
of the Company or its Subsidiaries, as the case maybe.

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	6.4	  	Conduct of Business and Maintenance of Existence. The Company and the
Restricted Subsidiaries, taken as a whole, will at all times remain
principally engaged in the business currently being conducted by the
Company and the Restricted Subsidiaries, and in all respects material to
the business of the Company and the Restricted Subsidiaries taken as a
whole, the Company shall, and will cause each of the Restricted
Subsidiaries to, preserve, renew and keep in full force and effect its
corporate existence and take all reasonable action to maintain all rights,
privileges and franchises required for the normal conduct of such
business, except

	       	(a)	  	as otherwise permitted pursuant to Section 7.10 and
	 
	       	(b)	  	the Company shall not be required to preserve any such right,
privilege or franchise if the Company shall determine that the
preservation thereof is no longer desirable in the conduct of the
business of the Company or any Subsidiary and that the loss thereof
could not reasonably be expected to have a Material Adverse Effect.

	 	  	The Company shall, and will cause each Restricted Subsidiary to, comply
with all Contractual Obligations and Requirements of Law except to the
extent that failure to comply therewith could not reasonably be expected
to have a Material Adverse Effect.
	 
	6.5	  	Maintenance of Property; Insurance.

	       	(a)	  	The Company and each Restricted Subsidiary will keep in all
material respects all property useful and necessary in its business
in good working order and condition (provided, however, that nothing
in this Section 6.5 shall prevent the Company from discontinuing the
operation or maintenance, or both the operation and maintenance, of
any of such properties if such discontinuance is, in the judgment of
the Company, desirable in the conduct of its business or the
business of any Subsidiary and could not reasonably be expected to
have a Material Adverse Effect).
	 
	       	(b)	  	The Company and each Restricted Subsidiary will maintain
insurance for their respective properties assets and businesses,

	              	(1)	  	with financially sound and reputable insurance
companies or associations, and
	 
	       	(2)	  	of such types (including insurance against theft
and fraud and against loss or damage by fire, flood, explosion
or hazard of or to property and general public liability
insurance),

	           	 	  	in such amounts and with such deductibles, covering such casualties
and contingencies and otherwise on such terms as those usually
carried by companies of established reputations engaged in similar
businesses and owning similar properties and assets in the same
general areas in which the Company or its applicable Subsidiary
operates or as may otherwise be required by applicable Requirements
of Law. The Company shall furnish to each Lender, upon written
request, reasonable information as to the insurance carried.

	6.6	  	Inspection of Property; Books and Records; Discussions. The Company and
each Restricted Subsidiary will in all material respects keep proper books
of records and account in which full, true and correct entries in
conformity with GAAP and all Requirements of Law shall be made of all
dealings and transactions in relation to its business and activities; and
permit representatives of any Lender, at such Lender’s expense, to visit
and inspect as reasonably

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	 	  	requested any of its properties and the properties of the real estate
joint ventures in which the Company or any Subsidiary within the
Homebuilding Segment participates or manages and examine and make
abstracts from any of its books and records at any reasonable time and as
often as may reasonably be desired and to discuss the business,
operations, properties and financial and other condition of the Company
and its Subsidiaries and such real estate joint ventures in which the
Company or any Subsidiary within the Homebuilding Segment participates or
manages, as reasonably requested with officers and employees of the
Company and its Subsidiaries and with its independent certified public
accountants.
	 
	6.7	  	Notices. The Company will promptly give notice to the Administrative
Agent and each Lender of:

	       	(a)	  	the occurrence of any Default or Event of Default;
	 
	       	(b)	  	any

	              	(1)	  	default or event of default under any Contractual
Obligation of the Company or any of its Restricted
Subsidiaries or
	 
	       	(2)	  	litigation, investigation or, proceeding which
may exist at any time between the Company or any of its
Restricted Subsidiaries and any Governmental Authority,

	       	 	  	which, in either case, reasonably could be expected to have a
Material Adverse Effect;
	 
	       	(c)	  	any litigation or proceeding affecting the Company or any of
its Restricted Subsidiaries

	              	(1)	  	in which the amount involved and not covered by
insurance is $10,000,000 or more or
	 
	       	(2)	  	in which injunctive or similar relief is sought

	       	 	  	which reasonably could be expected to have a Material Adverse
Effect;
	 
	       	(d)	  	the following events, as soon as possible and in any event
within 30 days after the Company knows or has reason to know
thereof:

	              	(1)	  	the occurrence of any Reportable Event with
respect to any Plan which must be reported to the applicable
governmental authorities, or any withdrawal from, or the
termination, Reorganization or Insolvency of any Multiemployer
Plan; or
	 
	       	(2)	  	the institution of proceedings or the taking of
any other action by the PBGC or the Company or any Commonly
Controlled Entity or any Multiemployer Plan with respect to
the withdrawal from, or the terminating, Reorganization or
Insolvency of, any Plan; and

	       	(e)	  	any event or occurrence which has a Material Adverse Effect.

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	 	  	Each notice pursuant to this Section shall be accompanied by a statement
of a Responsible Official setting forth details of the occurrence
referred to therein and stating what action the Company proposes to take
with respect thereto.
	 
	6.8	  	Environmental Laws.

	       	(a)	  	The Company, each Restricted Subsidiary and each joint
venture in which the Company or any Restricted Subsidiary
participates or manages will comply and insure compliance by all
tenants and subtenants, if any, with all Environmental Laws and
obtain and comply in all material respects with and maintain, and
insure that all tenants and subtenants obtain and comply with and
maintain, any and all licenses, approvals, registrations or permits
required by Environmental Laws, except in each case to the extent
that failure to do so could not reasonably be expected to have a
Material Adverse Effect.
	 
	       	(b)	  	The Company, each Restricted Subsidiary and each such joint
venture will conduct and complete all investigations, studies,
sampling and testing, and all remedial, removal and other actions
required under Environmental Laws and promptly comply in all
material respects with all lawful orders and directives of all
Governmental Authorities respecting Environmental Laws, except to
the extent that the same are being contested in good faith by
appropriate proceedings and the pendency of such proceedings could
not reasonably be expected to have a Material Adverse Effect.
	 
	       	(c)	  	The Company will defend, indemnify and hold harmless the
Administrative Agent and the Lenders, and their respective
employees, agents, officers and directors, from and against any
claims, demands, penalties, fines, liabilities, settlements,
damages, costs and expenses of whatever kind or nature known or
unknown, contingent or otherwise, arising out of, or in any way
relating to the violation of or noncompliance with, any
Environmental Laws, or any orders, requirements or demand of
Governmental Authorities related thereto, including reasonable
attorney and consultant fees, investigation and laboratory fees,
court costs and litigation expenses, except to the extent that any
of the foregoing arise out of the gross negligence or willful
misconduct of the party seeking indemnification therefor. The
agreements contained in this clause (c) shall survive the
termination of this Agreement and the payment of the Notes and all
other amounts payable hereunder or under any other Loan Document.

	6.9	  	Guarantees from Future Subsidiaries. The Company will promptly secure
the execution and delivery of the Guaranty to the Administrative Agent on
behalf of the Lenders from each Subsidiary, whether now existing or formed
and organized after the date hereof, if such Subsidiary

	       	(a)	  	is included in the Homebuilding Segment and
	 
	       	(b)	  	either

	              	(1)	  	has assets with an aggregate book value equal to
or greater than $10,000,000, or
	 
	       	(2)	  	has assets with an aggregate book value of less
than $10,000,000 and the aggregate book value of the assets of
all Subsidiaries of the Company in the

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	       	 	  	Homebuilding Segment which individually have assets with an
aggregate book value of less than $10,000,000 each and which
has not provided a Guaranty then exceeds $15,000,000.

	 	  	Each such Subsidiary which hereafter meets the criteria set forth in the
preceding sentence shall execute and deliver a counterpart of the
Guaranty within 30 days after it meets such criteria. Concurrently with
the execution and delivery by such a Subsidiary of a counterpart of the
Guaranty, the Company will deliver to the Administrative Agent such legal
opinions and evidence of corporate action and authority in respect
thereof as shall be reasonably requested by the Administrative Agent.

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ARTICLE VII

NEGATIVE COVENANTS OF THE COMPANY

     As long as any Note remains unpaid or any other Obligation remains
outstanding or any Commitment or any Letter of Credit remains in effect, unless
the Required Lenders otherwise consent in writing:

	7.1	  	Consolidated Tangible Net Worth. The Company shall not permit its
Consolidated Tangible Net Worth at any time to be less than the sum of

	       	(a)	  	$435,742,000, plus
	 
	       	(b)	  	50% of the Consolidated Net Income (without deduction for
losses sustained during any fiscal quarter) of the Company for each
fiscal quarter subsequent to the fiscal quarter ended December 31,
2001, plus
	 
	       	(c)	  	90% of the net proceeds from any equity offerings of the
Company from and after December 31, 2001.

	7.2	  	Leverage Ratio. The Company shall not permit the Leverage Ratio at
any time to exceed 2.50:1.
	 
	7.3	  	Minimum Fixed Charge Coverage. The Company shall not permit the ratio of

	       	(a)	  	EBITDA to
	 
	       	(b)	  	Fixed Charges,

	 	  	for any period consisting of the preceding 4 fiscal quarters, to be less
than 1.75:1 at any time.
	 
	7.4	  	Senior Permitted Debt Not to Exceed Borrowing Base. The Company shall
not permit the Senior Permitted Debt of the Homebuilding Segment to at any
time exceed the Borrowing Base.
	 
	7.5	  	Limitation on Land Inventory. The Company shall not permit:

	       	(a)	  	the ratio of

	              	(1)	  	the sum of the GAAP Value of

	                      	(A)	  	Unsold Finished Lots,
	 
	       	(B)	  	Unsold Land Under Development, and
	 
	       	(C)	  	Unsold Raw Land of the Homebuilding
Segment on a combined basis to

	              	(2)	  	Adjusted Consolidated Tangible Net Worth

	           	 	  	at any time to exceed 1.50:1; or

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	       	(b)	  	the ratio of

	              	(1)	  	the book value of Unsold Raw Land of the
Homebuilding Segment on a combined basis to
	 
	       	(2)	  	Adjusted Consolidated Tangible Net Worth

	       	 	  	at any time to exceed 0.20:1.

	7.6	  	Limitation on Housing Inventory. The Company shall not permit the
aggregate unit number of Unsold Housing Inventory of the Homebuilding
Segment on a combined basis at any time to exceed the greater of:

	       	(a)	  	50% of homes delivered by the Homebuilding Segment during the
immediately preceding 12 months; or
	 
	       	(b)	  	70% of the homes delivered by the Homebuilding Segment during
the immediately preceding 6 months.

	7.7	  	Limitation on Indebtedness. Neither the Company nor any Restricted
Subsidiary will create, incur, assume or suffer to exist any Indebtedness,
except:

	       	(a)	  	Indebtedness in respect of the Loans, the Notes, and the
other Obligations;
	 
	       	(b)	  	Indebtedness of the Company to any Subsidiary and of any
Subsidiary to the Company or any other Subsidiary, provided, in each
case, that such Indebtedness be permitted as an Investment pursuant
to Section 7.13;
	 
	       	(c)	  	Indebtedness of the Company or any of its Subsidiaries in
respect of purchase money mortgage financing for Real Estate
Inventory (including financing for the construction and development
of Real Estate Inventory), provided that the holder of such
Indebtedness shall have no recourse against the Company or any
Subsidiary in respect of such Indebtedness, such recourse being
limited solely to the assets financed with the proceeds of such
Indebtedness;
	 
	       	(d)	  	Subordinated Debt;
	 
	       	(e)	  	Indebtedness constituting, or constituting the primary
obligations guaranteed by, the Guarantee Obligations permitted
pursuant to clauses (a), (b) or (c) of Section 7.9;
	 
	       	(f)	  	Indebtedness of the Company or any other entity in the
Homebuilding Segment in the form of reimbursement obligations in
respect of Third Party L/Cs, provided that:

	              	(1)	  	the aggregate maximum face amount of all such
Third Party L/Cs outstanding at any one time may not exceed
$40,000,000; and
	 
	       	(2)	  	all such Third Party L/Cs are Performance L/Cs or
Financial L/Cs.

	       	(g)	  	Indebtedness of a corporation which becomes a Subsidiary or
which is merged into the Company or any Subsidiary after the date
hereof, provided that

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	              	(1)	  	such Indebtedness existed at the time such
corporation became a Subsidiary or was so merged and was not
created in anticipation thereof and
	 
	       	(2)	  	immediately after giving effect to the
acquisition of such corporation by the Company no Default or
Event of Default shall have occurred and be continuing;

	       	(h)	  	refinancing of existing Indebtedness of the Company or any
Restricted Subsidiary or other Indebtedness permitted under this
Section 7.7 on terms and conditions not resulting in an Event of
Default or Default hereunder, provided that the provisions of the
applicable clause (other than this clause (h)) of this Section 7.7
under which such Indebtedness is permitted are satisfied after
giving effect thereto, and provided further, that if such
Indebtedness is permitted under clause (n) of this Section 7.7, the
new terms and conditions of such Indebtedness (other than the
interest rate) are no less favorable to the Company than those of
the Indebtedness being refinanced;
	 
	       	(i)	  	additional Indebtedness of the Company or any of its
Subsidiaries in the Homebuilding Segment (other than the
Indebtedness described in the clauses of this Section 7.7 other than
this clause (i))

	              	(1)	  	having restrictive covenants no more restrictive
or less favorable to the Company than the terms and provisions
hereof, or, if such restrictive covenants are more restrictive
or less favorable to the Company (such covenants, the “More
Restrictive Covenants”) than the terms and provisions hereof,
then the Lenders shall be entitled to the benefit of the More
Restrictive Covenants pursuant to an amendment to this
Agreement,
	 
	       	(2)	  	having a final maturity of greater than one year
from the date of incurrence of such Indebtedness, and
	 
	       	(3)	  	having no revolving credit or other provisions
for short-term repayment and reborrowing, provided that no
more than an aggregate of $50,000,000 in principal of such
Indebtedness matures prior to the Maturity Date;

	       	(j)	  	Indebtedness of any entity within the Ryland Financial
Division so long as there is no recourse in respect thereof to the
Company or any entity in the Homebuilding Segment or so long as any
such recourse to the Company or any entity within the Homebuilding
Segment is permitted pursuant to Section 7.9;
	 
	       	(k)	  	Indebtedness of the Company and any of its Subsidiaries
incurred to finance the acquisition or construction of fixed or
capital assets (whether pursuant to a loan, a Financing Lease or
otherwise), provided that such Indebtedness shall be secured solely
by the assets financed with the proceeds of such Indebtedness;
	 
	       	(l)	  	Indebtedness of the Company or any other entity in the
Homebuilding Segment in the form of reimbursement obligations in
respect of completion bonds issued for the account of the Company or
such other entity in the ordinary course of business of the
Homebuilding Segment in respect of construction projects undertaken
by it;
	 
	       	(m)	  	Indebtedness of the Company or any other entity in the
Homebuilding Segment in the form of reimbursement obligations in
respect of letters of credit issued for the account

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	       	 	  	of the Company or such other entity for the benefit of employee
benefit or employee insurance programs of the Company or any of its
Subsidiaries;
	 
	       	(n)	  	Specified Debt; and
	 
	       	(o)	  	obligations (contingent or otherwise) of the Company or any
Subsidiary existing or arising under any Hedge Agreement, provided
that:

	              	(1)	  	such obligations are (or were) entered into by
such Person in the ordinary course of business for the purpose
of directly mitigating risks associated with liabilities,
commitments, investments, assets, or property held or
reasonably anticipated by such Person, or changes in the value
of securities issued by such Person, and not for purposes of
speculation or taking a “market view;” and
	 
	       	(2)	  	such Hedge Agreement does not contain any
provision exonerating the non-defaulting party (unless the
non-defaulting party is the Company or a Subsidiary) from its
obligation to make payments on outstanding transactions to the
defaulting party.

	7.8	  	Limitation on Liens. Neither the Company nor any Restricted Subsidiary
will create, incur, assume or suffer to exist any Lien of any nature upon
any of its property, assets or revenues, whether now owned or hereafter
acquired, except for:

	       	(a)	  	Liens for taxes not yet due or which are being contested in
good faith by appropriate proceedings, provided that adequate
reserves with respect thereto are maintained on the books of the
Company or its Subsidiaries, as the case may be, in conformity with
GAAP;
	 
	       	(b)	  	carriers’, warehousemen’s, mechanics’, materialmen’s,
repairmen’s or other like Liens arising in the ordinary course of
business which are not overdue for a period of more than 60 days or
which are being contested in good faith by appropriate proceedings;
	 
	       	(c)	  	pledges or deposits in connection with workers’ compensation,
unemployment insurance and other social security legislation and
deposits securing liability to insurance carriers under insurance or
self-insurance arrangements;
	 
	       	(d)	  	deposits to secure the performance of bids, trade contracts
(other than for borrowed money), leases, statutory obligations,
surety and appeal bonds, performance bonds and other obligations of
a like nature incurred in the ordinary course of business;
	 
	       	(e)	  	easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business which, in
the aggregate, are not substantial in amount and which do not in any
case materially detract from the value of the property subject
thereto or materially interfere with the ordinary conduct of the
business of the Company or such Subsidiary;
	 
	       	(f)	  	Liens securing Indebtedness of the Company and its
Subsidiaries permitted by Section 7.7(c) or 7.7(k) incurred to
finance the acquisition, construction or development of Real Estate
Inventory or the construction or acquisition of fixed or capital
assets or a refinancing thereof, provided that

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	              	(1)	  	such Liens shall be created within 180 days after

	                      	(A)	  	the acquisition of such Real Estate
Inventory or
	 
	       	(B)	  	the acquisition or completion of
construction of fixed or capital assets

	              	 	  	(or, in the case of a refinancing pursuant to Section
7.7(h), such Liens shall be renewals or replacements of
Liens created within such 180 day time period) and
	 
	       	(2)	  	such Liens do not at any time encumber any
property other than the property financed by such
Indebtedness;

	       	(g)	  	Liens on the property or assets of a corporation which
becomes a Subsidiary or which is merged into the Company or a
Subsidiary after the date hereof securing Indebtedness permitted by
Section 7.7(g) (or Section 7.7(h) in respect of such Indebtedness),
provided that

	              	(1)	  	such Liens existed at the time such corporation
became a Subsidiary or was so merged and were not created in
anticipation thereof,
	 
	       	(2)	  	any such Lien is not spread to cover any
additional property or assets of such corporation after the
time such corporation becomes a Subsidiary or is so merged,
and
	 
	       	(3)	  	the amount of Indebtedness secured thereby is not
increased;

	       	(h)	  	Liens on assets of the Financial Services Segment securing
Indebtedness of the Financial Services Segment permitted by Section
7.7(e) or 7.7(j); and
	 
	       	(i)	  	judgment and other similar Liens arising in connection with
court proceedings, provided that

	              	(1)	  	the execution or other enforcement thereof is
effectively stayed and the claims secured thereby are being
actively contested in good faith by appropriate proceedings
and
	 
	       	(2)	  	no Default or Event of Default shall have
occurred and be continuing.

	7.9	  	Limitation on Guarantee Obligations. Neither the Company nor any
Restricted Subsidiary will create, incur, assume or suffer to exist any
Guarantee Obligation except:

	       	(a)	  	the Company and other entities within the Homebuilding
Segment may incur Guarantee Obligations for the benefit of the
Ryland Financial Division;
	 
	       	(b)	  	the entities within the Financial Services Segment may incur
other Guarantee Obligations;
	 
	       	(c)	  	the Company and other entities within the Homebuilding
Segment may incur Guarantee Obligations in respect of letters of
credit and completion bonds permitted pursuant to clauses (l) or (m)
of Section 7.7;

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	         	(d)	  	Subsidiaries of the Company may incur Guarantee Obligations
in respect of the Specified Debt, provided that simultaneously with
the execution and delivery of any guaranty in respect thereof by any
Subsidiary, such Subsidiary shall execute and deliver a
substantially identical guaranty in respect of all obligations of
the Company under this Agreement and the other Loan Documents; and
	 
	       	(e)	  	the Company may incur Guarantee Obligations for the benefit
of Subsidiaries, Consolidated Joint Ventures and other joint
ventures in each case in the Homebuilding Segment.

	7.10	  	Limitations of Fundamental Changes. Neither the Company nor any
Restricted Subsidiary will enter into any merger, consolidation or
amalgamation, or liquidate, wind up or dissolve itself (or suffer any
liquidation or dissolution), or convey, sell, lease, assign, transfer or
otherwise dispose of, all or substantially all of its property, business
or assets, except:

	         	(a)	  	any Restricted Subsidiary of the Company may be merged or
consolidated with or into the Company, provided that the Company
shall be the continuing or surviving corporation, or with or into
any one or more wholly-owned Restricted Subsidiaries of the Company,
provided that the wholly owned Restricted Subsidiary or Subsidiaries
shall be the continuing or surviving corporation;
	 
	       	(b)	  	any wholly-owned Restricted Subsidiary may sell, lease,
transfer or otherwise dispose of any or all of its assets (upon
voluntary liquidation or otherwise) to the Company or any other
wholly-owned Restricted Subsidiary of the Company;
	 
	       	(c)	  	the Company or any Restricted Subsidiary may sell, lease,
transfer or otherwise dispose of any or all of its assets to the
Company or any Restricted Subsidiary of the Company, whether
existing on or created after the date of this Agreement, provided
that if the transferor is the Company or a Guarantor, the transferee
shall be the Company or a Guarantor; and
	 
	       	(d)	  	sales, conveyances, leases, assignments, transfers or other
dispositions of property, business or assets permitted under Section
7.11.

	7.11	  	Limitation on Sales of Assets. Neither the Company nor any Restricted
Subsidiary will convey, sell, lease, assign, transfer or otherwise dispose
of any of its property, business or assets (including stock of
Subsidiaries, receivables and leasehold interests and, with respect to the
Financial Services Segment, its loan servicing portfolios), whether now
owned or hereafter acquired, except:

	         	(a)	  	obsolete or worn out property disposed of in the ordinary
course of business;
	 
	       	(b)	  	the sale of inventory in the ordinary course of business,
including sale-leasebacks of model homes;
	 
	       	(c)	  	the sale or discount of accounts receivable arising in the
ordinary course of business in connection with the compromise or
collection thereof;
	 
	       	(d)	  	the sale or discount without recourse of mortgage loan
receivables;

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	         	(e)	  	the sale by the Financial Services Segment of its rights
under loan servicing portfolios;
	 
	       	(f)	  	as permitted by Section 7.10 (other than pursuant to clause
(d) thereof);
	 
	       	(g)	  	the sale of mortgages and mortgage-backed or other securities
by the Financial Services Segment;
	 
	       	(h)	  	the sale, transfer or other disposition of any stock,
property or assets of the Limited-Purpose Subsidiaries;
	 
	       	(i)	  	the sale, transfer or other disposition of Cash Equivalents;
and
	 
	       	(j)	  	any other sale or disposition of property or assets
(including stock or assets of Subsidiaries), provided that the
aggregate book value of all assets so sold or disposed of pursuant
to this clause (j) in any period of 12 consecutive months shall not
exceed 10% of the book value of the consolidated total assets of the
Company (excluding the assets of the Limited Purpose Subsidiaries)
as at the beginning of such 12 month period.

	7.12	  	Limitation on Dividends. The Company will not declare or pay any
dividend (other than dividends payable solely in Common Stock of the
Company) on, or make any payment on account of, or set apart assets for a
sinking or other analogous fund for, the purchase, redemption, defeasance,
retirement or other acquisition of, any shares of any class of stock of
the Company or any warrants or options to purchase any such stock, whether
now or hereafter outstanding, or make any other distribution in respect
thereof, either directly or indirectly, whether in cash or property or in
obligations of the Company or any Subsidiary (such declarations, payments,
setting apart, purchases, redemptions, defeasances, retirements,
acquisitions and distributions being herein called “Restricted Payments”),
except that the Company may make any Restricted Payment so long as, after
giving effect thereto, no Default or Event of Default will be in
existence.
	 
	7.13	  	Limitation on Investments. Neither the Company nor any Restricted
Subsidiary will make any Investments, except:

	         	(a)	  	extensions of trade credit and other payables in the ordinary
course of business and extensions of non-material advances for
Improvements to property not then owned by the Company in the
ordinary course of business provided that the Company shall give
notice to the Lenders of any such non-material advances aggregating
in excess of $20,000,000 in any fiscal quarter;
	 
	       	(b)	  	Investments in Cash Equivalents;
	 
	       	(c)	  	acquisitions by the Company or any of its Restricted
Subsidiaries within the Homebuilding Segment of assets constituting
a business unit or the capital stock of any Person, provided that
such business unit or Person is engaged in the same general type of
business as conducted by the Company or one of its Restricted
Subsidiaries and provided, further, that before any such acquisition
and after giving effect thereto, no Default or Event of Default
shall be in existence and the Company shall, at its sole expense,
have delivered to the Administrative Agent not less than 10 days
prior to the

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	       	 	  	date of such acquisition a certificate to such effect, in form and
substance satisfactory to the Administrative Agent, signed by a
Responsible Official;
	 
	       	(d)	  	acquisitions by the Company or any of its Restricted
Subsidiaries other than acquisitions permitted under clauses (c) or
(h) of this Section 7.13 of, or investments in, assets constituting
a business unit or the capital stock of any Person; provided, that
the aggregate amount of consideration paid by the Company and its
Restricted Subsidiaries for all such acquisitions of assets or
capital stock (including as a part of such consideration any
Indebtedness assumed as a part thereof) does not exceed an aggregate
amount equal to $25,000,000; and provided, further, that after
giving effect thereto, no Default or Event of Default shall be in
existence;
	 
	       	(e)	  	Investments by the Company or any of its Subsidiaries within
the Homebuilding Segment in joint ventures in an aggregate amount
for all such Investments not exceeding at any date an amount equal
to the greater of

	              	(1)	  	20% of the Company’s Consolidated Tangible Net
Worth less the aggregate amount of Investments (if any) by the
Company or any of its Subsidiaries within the Homebuilding
Segment in joint ventures which are in default in the payment
of principal of or interest on non-recourse Indebtedness or in
the observance or performance of any other agreement or
condition relating to such non-recourse Indebtedness or
contained in any instrument or agreement evidencing, securing
or relating thereto, the effect of which default in observance
or performance is to cause, or permit the holder or holders of
such non-recourse Indebtedness to cause, with the giving of
notice if required, such non-recourse Indebtedness to become
due prior to its stated maturity, or
	 
	       	(2)	  	$75,000,000;

	       	(f)	  	Investments by the Company in any Subsidiary within the
Homebuilding Segment or by any Subsidiary within the Homebuilding
Segment in the Company or in any other Subsidiary within the
Homebuilding Segment;
	 
	       	(g)	  	Investments by the Company or any other entity within the
Homebuilding Segment in the Financial Services Segment, so long as
the aggregate amount of such Investments shall not at any time
exceed the greater of:

	              	(1)	  	$50,000,000; or
	 
	       	(2)	  	10% of Consolidated Tangible Net Worth;

	           	 	  	provided, that the limits set forth above will not apply following
termination of the Countrywide Loan Purchase Agreement (or any
successor agreement thereto) until the first to occur of:

	                      	(A)	  	90 days following the date such
termination becomes effective; or
	 
	       	(B)	  	the date upon which Ryland Mortgage
Company enters into a successor agreement;

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	       	(h)	  	Investments by entities within the Financial Services Segment
in any Person and acquisitions of assets constituting a business
unit or the capital stock of any Person by entities within the
Financial Services Segment;
	 
	       	(i)	  	loans and advances to employees of the Company or its
Subsidiaries for travel, entertainment and relocation expenses in
the ordinary course of business; and
	 
	         	(j)	  	other loans and advances to employees of the Company in
connection with incentive or stock purchase plans or arrangements in
an aggregate amount not to exceed $3,000,000 at any time
outstanding.

	7.14	  	Limitation on Optional Payments and Modification of Debt Instruments.

	         	(a)	  	Neither the Company nor any Restricted Subsidiary will

	                	(1)	  	make any optional payment or prepayment on or
redemption of any Subordinated Debt or
	 
	       	(2)	  	amend, modify or change, or consent or agree to
any amendment, modification or change to, any of the terms
(including the subordination terms) of any Subordinated Debt
(other than any such amendment, modification or change in form
reasonably satisfactory to the Required Lenders),

	             	 	  	provided that so long as no Default is in existence or would result
therefrom, the Company may prepay Subordinated Debt

	                       	(A)	  	to the extent that the aggregate
face amount of the Subordinated Debt so prepaid after
the date of this Agreement does not exceed $25,000,000,
or
	 
	       	(B)	  	with the proceeds of other
Subordinated Debt.

	         	(b)	  	No Restricted Subsidiary within the Financial Services
Segment will amend, modify or change, or consent or agree to any
amendment, modification or change to, any of the terms of any debt
instrument to which it is a party the effect of which would be to:

	                	(1)	  	impose restrictions on the payment of dividends,
directly or indirectly, to or for the benefit of the Company
which would limit such dividends to an aggregate amount for
all Restricted Subsidiaries in the Financial Services Segment
in any fiscal year which is less than the Combined Net Income
of the Financial Services Segment for the current fiscal year;
or
	 
	       	(2)	  	impose restrictions on the making by such
Restricted Subsidiaries of Credit Advances, directly or
indirectly, to or for the benefit of the Company which would
limit such Credit Advances to an aggregate amount for all
Restricted Subsidiaries in the Financial Services Segment
which is less than $25,000,000 at any time outstanding,

	            	 	  	provided that provisions which by their terms would impose such
restrictions only in the event of a default under such debt
instrument and solely as a result of such default

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	            	 	  	shall not be deemed to be included in the restrictions described in
the foregoing clauses (1) or (2).

	7.15	  	Transactions with Affiliates. Neither the Company nor any Restricted
Subsidiary will enter into any transaction, including any purchase, sale,
lease or exchange of property or the rendering of any service, with any
Affiliate unless such transaction is otherwise permitted under this
Agreement, or is upon fair and reasonable terms no less favorable to the
Company or such Subsidiary, as the case may be, than it would obtain in a
comparable arm’s-length transaction with a Person not an Affiliate.
	 
	7.16	  	Fiscal Year. The Company will not permit the fiscal year of the Company
to end on a day other than December 31.
	 
	7.17	  	Compliance with ERISA. Neither the Company nor any Restricted Subsidiary
will:

	         	(a)	  	terminate any Plan so as to result in any material liability
to the PBGC;
	 
	       	(b)	  	engage in any “prohibited transaction” (as defined in Section
4975 of the Code or Section 406 of ERISA) involving any Plan which
would result in a material liability for an excise tax or civil
penalty in connection therewith;
	 
	       	(c)	  	incur or suffer to exist any material “accumulated funding
deficiency” (as defined in Section 302 of ERISA), whether or not
waived, involving any Plan; or
	 
	       	(d)	  	allow or suffer to exist any event or condition which
presents a material risk of incurring a material liability to the
PBGC by reason of termination of any such Plan.

	7.18	  	Preferred Stock. The Company will not permit any Restricted Subsidiary
within the Homebuilding Segment to issue preferred stock to any Person
other than the Company.

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ARTICLE VIII

EVENTS OF DEFAULT AND REMEDIES UPON DEFAULT

	 	  	  	  	  	  	  	  	 
	8.1 	 	Events of Default. The occurrence of any one or more of the following
events shall constitute an Event of Default hereunder:

	       	(a)	  	The Company shall fail to pay any principal of any Note when
due in accordance with the terms thereof or hereof; or the Company
shall fail to pay any interest on any Note, or any other amount
payable hereunder, within 2 days (or 15 days in the case of the
Letter of Credit Fees or the Issuance Fees or 5 days in the case of
any other fee) after any such interest or other amount becomes due
in accordance with the terms thereof or hereof; or
	 
	       	(b)	  	Any representation or warranty made or deemed made by the
Company or any Guarantor herein or in any other Loan Document or
which is contained in any certificate or document furnished at any
time under or in connection with this Agreement shall prove to have
been incorrect in any material respect on or as of the date made or
deemed made; or
	 
	       	(c)	  	The Company shall default in the observance or performance of
any agreement contained in Article VII (other than the Sections 7.5
and 7.6); or
	 
	       	(d)	  	The Company shall default in the observance or performance of
any other agreement contained in this Agreement (other than as
provided in paragraphs (a) through (c) of this Section 8.1), and
such default shall continue unremedied:

	              	(1)	  	for a period of 90 days in the case of Section
7.5 or 7.6, or
	 
	       	(2)	  	for a period of 30 days in the case of any other
provision; or

	       	(e)	  	The Company or any of its Restricted Subsidiaries shall:

	              	(1)	  	default in any payment of principal of or
interest on any Indebtedness having an aggregate principal
balance of $10,000,000 or more (other than the Notes) or in
the payment of any Guarantee Obligation of $10,000,000 or more
in the aggregate, beyond the period of grace (not to exceed 15
days), if any, provided in the instrument or agreement under
which such Indebtedness or Guarantee Obligation was created;
or
	 
	       	(2)	  	default in the observance or performance of any
other agreement or condition relating to any such Indebtedness
or Guarantee Obligation or contained in any instrument or
agreement evidencing, securing or relating thereto, or any
other event shall occur or condition exist, the effect of
which default or other event or condition is to cause, or to
permit the holder or holders of such Indebtedness or
beneficiary or beneficiaries of such Guarantee Obligation (or
a trustee or agent on behalf of such holder or holders or
beneficiary or beneficiaries) to cause, with the giving of
notice if required, such Indebtedness to become due or to be
repurchased, prepaid, defeased or redeemed (automatically or
otherwise), or an offer to repurchase, prepay, defease or
redeem such Indebtedness to be made, prior to its stated
maturity

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	                  	 	  	or such Guarantee Obligation to become payable, provided
that the failure by Ryland Mortgage Company or any of its
Subsidiaries to pay any such Indebtedness or Guarantee
Obligation in the form of reimbursement obligations in
respect of letters of credit issued for the account of
Ryland Mortgage Company or any of its Subsidiaries backing
obligations under master servicing agreements shall not
constitute an Event of Default under this clause (e) until
the date which is 90 days after the date on which such
reimbursement obligations become due and payable; or

	 	  	  	  	  	  	  	  	 
	  	 	(f)	 	Any one or more of the following occurs:
	 
	  	 	 	 	(1)	 	the Company or any of its Restricted Subsidiaries
shall commence any case, proceeding or other action
	 
	  	 	 	 	 	 	(A)	 	under any existing or future law of
any jurisdiction, domestic or foreign, relating to
bankruptcy, insolvency, reorganization or relief of
debtors, seeking to have an order for relief entered
with respect to it, or seeking to adjudicate it a
bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, winding-up, liquidation,
dissolution, composition or other relief with respect
to it or its debts, or
	 
	  	 	 	 	 	 	(B)	  	seeking appointment of a receiver,
trustee, custodian, conservator or other similar
official for it or for all or any substantial part of
its assets, or the Company or any of its Restricted
Subsidiaries shall make a general assignment for the
benefit of its creditors; or
	 
	  	 	 	 	(2)	  	there shall be commenced against the Company or
any of its Restricted Subsidiaries any case, proceeding or
other action of a nature referred to in clause (1) above which
	 
	  	 	 	 	 	 	(A)	  	results in the entry of an order
for relief or any such adjudication or appointment or
	 
	  	 	 	 	 	 	(B)	 	remains undismissed, undischarged
or unbonded for a period of 60 days; or
	 
	  	 	 	 	(3)	  	there shall be commenced against the Company or
any of its Restricted Subsidiaries any case, proceeding or
other action seeking issuance of a warrant of attachment,
execution, distraint or similar process against all or any
substantial part of its assets which results in the entry of
an order for any such relief which shall not have been
vacated, discharged, or stayed or bonded pending appeal within
60 days from the entry thereof; or
	 
	  	 	 	 	(4)	  	the Company or any of its Restricted Subsidiaries
shall take any action in furtherance of, or indicating its
consent to, approval of, or acquiescence in, any of the acts
set forth in clause (1), (2), or (3) above; or
	 
	  	 	 	 	(5)	 	the Company or any of its Restricted Subsidiaries
shall generally not, or shall be unable to, or shall admit in
writing its inability to, pay its debts as they become due; or

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	 	 	(g)	 	Any one or more of the following occurs:
	 
	 	 	 	 	(1)	 	Any Person shall engage in any “prohibited
transaction” (as defined in Section 406 of ERISA or Section
4975 of the Code) involving any Plan; or
	 
	 	 	 	 	(2)	  	any “accumulated funding deficiency” (as defined
in Section 302 of ERISA), whether or not waived, shall exist
with respect to any Plan or any Lien in favor of the PBGC or a
Plan shall arise on the assets of the Company or any Commonly
Controlled Entity; or
	 
	 	 	 	 	(3)	  	a Reportable Event shall occur with respect to,
or proceedings shall commence to have a trustee appointed, or
a trustee shall be appointed, to administer or to terminate,
any Single Employer Plan, which Reportable Event or
commencement of proceedings or appointment of a trustee is, in
the reasonable opinion of the Required Lenders, likely to
result in the termination of such Plan for purposes of Title
IV of ERISA; or
	 
	 	 	 	 	(4)	  	any Single Employer Plan shall terminate for
purposes of Title IV of ERISA; or
	 
	 	 	 	 	(5)	  	the Company or any Commonly Controlled Entity
shall, or in the reasonable opinion of the Required Lenders is
likely to, incur any liability in connection with a withdrawal
from, or the Insolvency or Reorganization of, a Multiemployer
Plan; or
	 
	 	 	 	 	(6)	  	any other event or condition shall occur or exist
with respect to a Plan;
	 
	 	 	 	 	and in each case in clauses (1) through (6) above, such event or
condition, together with all other such events or conditions, if
any, could reasonably be expected to have a Material Adverse
Effect; or
	 
	 	 	(h)	 	One or more judgments or decrees shall be entered against the
Company or any of its Restricted Subsidiaries involving in the
aggregate a liability (not paid or fully covered by insurance) of
$10,000,000 or more and all such judgments or decrees shall not have
been vacated, discharged, stayed or bonded pending appeal within 60
days from the entry thereof; or
	 
	 	 	(i)	  	A Designated Event shall occur; or
	 
	 	 	(j)	  	The Company shall cease to own, directly or indirectly and
free and clear of any Lien, 100% of the issued and outstanding
capital stock of Ryland Homes of California, Inc. and Ryland
Mortgage Company; or
	 
	 	 	(k)	  	The Guaranty shall cease, for any reason, to be in full force
and effect, or the Company or any Guarantor shall so assert in
writing.
	 
	8.2	  	Remedies. If any Event of Default occurs, the Administrative Agent
shall, at the request of, or may, with the consent of, the Required
Lenders,

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	 	 	(a)	 	declare the obligation of each Lender to make Loans and the
obligation of the L/C Issuers to issue Letters of Credit to be
terminated, whereupon such obligations shall be terminated;
	 
	 	 	(b)	  	declare the unpaid principal amount of all outstanding Loans,
all interest accrued and unpaid thereon and all other amounts
payable under the Loan Documents to be due and payable forthwith,
whereupon the same shall become immediately due and payable without
presentment, demand, protest or other notice of any kind, all of
which are hereby expressly waived by the Company; and
	 
	 	 	(c)	  	exercise on behalf of itself and the Lenders all rights and
remedies available to it and the Lenders under the Loan Documents or
applicable law;
	 
	 	 	provided, however, that upon the occurrence of any event specified in
clause (1) or (2) of Section 8.1(f), the obligation of each Lender to
make Loans and the obligation of the L/C Issuer to issue Letters of
Credit shall automatically terminate and the unpaid principal amount of
all outstanding Loans and all interest and other amounts as aforesaid
shall automatically become due and payable without further act of the
Administrative Agent or any Lender. Upon the occurrence of any Event of
Default, the Company shall immediately pay to the Administrative Agent,
for the benefit of the Lenders, an amount (the “L/C Obligations Amount”)
equal to the aggregate outstanding L/C Obligations; and upon receipt of
the payment of the L/C Obligations Amount, the Administrative Agent shall
deposit such funds in an interest-bearing cash account (the “Cash
Account”) in the name of the Company maintained with the Administrative
Agent as to which the Company shall have no right of withdrawal except as
provided below. The Company hereby grants to the Administrative Agent,
for the benefit of the Lenders, a security interest in the Cash Account
and all balances therein and all proceeds thereof. The Company hereby
irrevocably authorizes and directs the Administrative Agent to apply
amounts on deposit in the Cash Account against draws on the outstanding
Letters of Credit as such draws are made. Upon expiration of all Letters
of Credit and payment in full of all draws thereunder and all outstanding
Loans and other Obligations, the amounts then on deposit in the Cash
Account and any interest accrued thereon shall then be returned to the
Company (to the extent any funds remain in the Cash Account after
application of such funds as provided above.)
	 
	8.3	  	Rights Not Exclusive. The rights and remedies of the Administrative
Agent and Lenders provided for in this Agreement and the other Loan
Documents are cumulative and are not exclusive of any other rights,
powers, privileges or remedies provided by law or in equity, or under any
other instrument, document or agreement now existing or hereafter arising.

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ARTICLE IX

THE ADMINISTRATIVE AGENT

	 	  	  	  	  	  	  	  	 
	9.1	  	Appointment and Authorization of Administrative Agent.
	 
	 	 	(a)	  	Each Lender hereby irrevocably appoints, designates and
authorizes the 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. Notwithstanding any provision to the contrary
contained elsewhere herein or in any other Loan Document, the
Administrative Agent shall not have any duties or responsibilities,
except those expressly set forth herein, nor shall the
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 the 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 the 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)	  	The L/C Issuer shall act on behalf of the Lenders with
respect to any Letters of Credit issued by it and the documents
associated therewith, and the L/C Issuer shall have all of the
benefits and immunities
	 
	 	 	 	 	(1)	  	provided to the Administrative Agent in this
Article IX with respect to any acts taken or omissions
suffered by the L/C Issuer in connection with Letters of
Credit issued by it or proposed to be issued by it and the
applications and agreements for letters of credit pertaining
to such Letters of Credit as fully as if the term
“Administrative Agent” as used in this Article IX and in the
definition of “Agent-Related Person” included the L/C Issuer
with respect to such acts or omissions, and
	 
	 	 	 	 	(2)	  	as additionally provided herein with respect to
the L/C Issuer.
	 
	9.2	  	Delegation of Duties. The 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. The 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:
	 
	 	 	(a)	  	be 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

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	 	 	 	 	contemplated hereby (except for its own gross negligence or willful
misconduct in connection with its duties expressly set forth
herein), or
	 
	 	 	(b)	  	be responsible in any manner to any Lender or participant for
any recital, statement, representation or warranty made by any Loan
Party 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 the 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 any Loan Party 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 any Loan Party or any
Affiliate thereof.
	 
	 	 	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 any Loan Party or any Affiliate thereof.
	 
	9.4	  	Reliance by Administrative Agent.
	 
	 	 	(a)	 	The 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,
electronic mail 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 any Loan Party),
independent accountants and other experts selected by the
Administrative Agent. The 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 the 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. The
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 such greater number of Lenders as may be
expressly required hereby in any instance) and such request and any
action taken or failure to act pursuant thereto shall be binding
upon all the Lenders.
	 
	 	 	(b)	  	For purposes of determining compliance with the conditions
specified in Article IV, 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 required thereunder to
be consented to or approved by or acceptable or satisfactory to a
Lender unless the Administrative Agent shall have received notice
from such Lender prior to the proposed Closing Date specifying its
objection thereto.
	 
	9.5	 	Notice of Default. The Administrative Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default, except with respect
to defaults in the payment of

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	 	  	principal, interest and fees required to be paid to the Administrative
Agent for the account of the Lenders, unless the Administrative Agent
shall have received written notice from a Lender or the Company referring
to this Agreement, describing such Default and stating that such notice
is a “notice of default.” The Administrative Agent will notify the
Lenders of its receipt of any such notice. The Administrative Agent
shall take such action with respect to such Default as may be directed by
the Required Lenders in accordance with Article VIII; provided, however,
that unless and until the Administrative Agent has received any such
direction, the Administrative Agent may (but shall not be obligated to)
take such action, or refrain from taking such action, with respect to
such Default as it shall deem advisable or in the best interest of the
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 the Administrative
Agent hereafter taken, including any consent to and acceptance of any
assignment or review of the affairs of any Loan Party 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 the 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 the Loan Parties and their respective Subsidiaries, and all applicable
bank or other regulatory Laws relating to the transactions contemplated
hereby, and made its own decision to enter into this Agreement and to
extend credit to the Company 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 the
Company and the other Loan Parties. Except for notices, reports and other
documents expressly required to be furnished to the Lenders by the
Administrative Agent herein, the 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 any of the Loan
Parties or any of their respective Affiliates 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, the Lenders shall indemnify upon
demand each Agent-Related Person (to the extent not reimbursed by or on
behalf of any Loan Party and without limiting the obligation of any Loan
Party 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 to the
extent resulting from such Agent-Related Person’s own gross negligence or
willful misconduct; provided, further, 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.
Without limitation of the foregoing, each Lender shall reimburse the
Administrative Agent upon demand for its ratable share of any costs or
out-of-pocket expenses (including Attorney Costs) incurred by the
Administrative Agent in connection with the preparation, execution,
delivery, administration, modification, amendment or enforcement (whether
through negotiations, legal proceedings or otherwise) of,

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	 	  	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 the Administrative Agent is not
reimbursed for such expenses by or on behalf of the Company. The
undertaking in this Section shall survive termination of the Aggregate
Commitment, the payment of all other Obligations and the resignation of
the Administrative Agent.
	 
	9.8	  	Agent in Individual Capacity. Bank of America 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
each of the Loan Parties and their respective Affiliates as though Bank of
America were not the Administrative Agent hereunder and without notice to
or consent of the Lenders. Each Lender acknowledges that, pursuant to
such activities, Bank of America or its Affiliates may receive information
regarding any Loan Party or its Affiliates (including information that may
be subject to confidentiality obligations in favor of such Loan Party or
such Affiliate) and acknowledges that the Administrative Agent shall be
under no obligation to provide such information to it. With respect to
its Loans, Bank of America shall have the same rights and powers under
this Agreement as any other Lender and may exercise the same as though it
were not the Administrative Agent or the L/C Issuer, and the terms
“Lender” and “Lenders” include Bank of America in its individual capacity.
	 
	9.9	  	Successor Administrative Agent; Resignation as Swing Line Lender. The
Administrative Agent may resign as Administrative Agent upon 30 days’
notice to the Lenders; provided that any such resignation by Bank of
America shall also constitute its resignation as L/C Issuer and Swing Line
Lender. If Bank of America resigns as Swing Line Lender, such resignation
shall also constitute its resignation as Administrative Agent. If the
Administrative Agent resigns under this Agreement, the Required Lenders
shall appoint from among the Lenders a successor administrative agent for
the Lenders, which successor administrative agent shall be consented to by
the Company at all times other than during the existence of an Event of
Default (which consent of the Company shall not be unreasonably withheld
or delayed). If no successor administrative agent is appointed prior to
the effective date of the resignation of the Administrative Agent, the
Administrative Agent may appoint, after consulting with the Lenders and
the Company, a successor administrative agent from among the Lenders.
Upon the acceptance of its appointment as successor administrative agent
hereunder, the Person acting as such successor administrative agent shall
succeed to all the rights, powers and duties of the retiring
Administrative Agent, L/C Issuer and Swing Line Lender and the respective
terms “Administrative Agent,” “L/C Issuer” and “Swing Line Lender” shall
mean such successor administrative agent, Letter of Credit issuer and
swing line bank, and the retiring Administrative Agent’s appointment,
powers and duties as Administrative Agent shall be terminated and the
retiring L/C Issuer’s and Swing Line Lender’s rights, powers and duties as
such shall be terminated, without any other or further act or deed on the
part of such retiring L/C Issuer or Swing Line Lender or any other Lender,
other than the obligation of the successor L/C Issuer to issue letters of
credit in substitution for the Letters of Credit, if any, outstanding at
the time of such succession or to make other arrangements satisfactory to
the retiring L/C Issuer to effectively assume the obligations of the
retiring L/C Issuer with respect to such Letters of Credit. After any
retiring Administrative Agent’s resignation hereunder as Administrative
Agent, the provisions of this Article IX and Sections 10.4 and 10.5 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 30 days following a retiring Administrative Agent’s
notice of resignation, the retiring Administrative Agent’s resignation
shall nevertheless thereupon become effective and the Lenders shall
perform all of the duties of the

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	 	  	Administrative Agent hereunder until such time, if any, as the Required
Lenders appoint a successor agent as provided for above.
	 
	9.10	  	Administrative Agent May File Proofs of Claim. In case of the pendency
of any receivership, insolvency, liquidation, bankruptcy, reorganization,
arrangement, adjustment, composition or other judicial proceeding relative
to any Loan Party, the Administrative Agent (irrespective of whether the
principal of any Loan or L/C Obligation shall then be due and payable as
herein expressed or by declaration or otherwise and irrespective of
whether the Administrative Agent shall have made any demand on the
Company) 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, L/C
Obligations 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 the Lenders and the Administrative Agent
(including any claim for the reasonable compensation, expenses,
disbursements and advances of the Lenders and the Administrative
Agent and their respective agents and counsel and all other amounts
due the Lenders and the Administrative Agent under Section 2.9,
Article III and Sections 10.4 and 10.5) 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 the Administrative
Agent and, in the event that the Administrative Agent shall consent to
the making of such payments directly to the Lenders, to pay to the
Administrative Agent any amount due for the reasonable compensation,
expenses, disbursements and advances of the Administrative Agent and its
agents and counsel, and any other amounts due the Administrative Agent
under Section 2.9, Article III and Sections 10.4 and 10.5.
	 
	9.11	  	Other Agents, Arrangers and Managers. None of the Lenders or other
Persons identified on the face page, the first page or signature pages of
this Agreement as a “syndication agent,” “documentation agent,” “managing
agent,” “sole book manager” or “sole lead arranger” shall have any right,
power, obligation, liability, responsibility or duty under this Agreement
other than, in the case of such Lenders, those applicable to all Lenders
as such. Notwithstanding anything contained herein which may be
construed to the contrary, none of such Lenders or other Persons shall
exercise any of the rights or have any of the responsibilities of the
Administrative Agent hereunder, or any other rights or responsibilities
other than their respective rights and responsibilities as Lenders
hereunder. Without limiting the foregoing, none of the Lenders or other
Persons 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 of the Lenders or other Persons so
identified in deciding to enter into this Agreement or in taking or not
taking action hereunder.
	 
	9.12	  	Performance by the Administrative Agent. In the event that the Company
shall default in or fail to perform any of its obligations under the Loan
Documents, which default is not cured within any applicable cure period,
the Administrative Agent shall have the right, but not the duty, without
limitation upon any of the Administrative Agent’s or the Lenders rights
pursuant thereto, to perform the same, and the Company agrees to pay to
the Administrative Agent within 5 Banking Days after demand, all
reasonable costs and expenses incurred by the

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	 	  	Administrative Agent in connection therewith, including reasonable
Attorney Costs, together with interest thereon from the date which is 5
Banking Days after demand until paid at a rate per annum equal to the
Base Rate plus 2%.
	 
	9.13	  	Actions. The Administrative Agent shall have the right to commence,
appear in, and defend any action or proceeding purporting to affect the
rights or duties of the Lenders hereunder or the payment of any funds, and
in connection therewith the Administrative Agent may pay necessary
expenses, employ counsel, and pay Attorney Costs. The Company agrees to
pay to the Administrative Agent, within 5 Banking Days after demand, all
reasonable costs and expenses incurred by the Administrative Agent in
connection therewith, including reasonable Attorney Costs, together with
interest thereon from the date which is 5 Banking Days after demand until
paid at a rate per annum equal to the Base Rate plus 2%.

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ARTICLE X

MISCELLANEOUS

	 	  	  	  	  	  	  	  	 
	10.1	  	Amendments and Waivers. No amendment or waiver of any provision of this
Agreement or any other Loan Document, and no consent with respect to any
departure by the Company therefrom, shall be effective unless the same
shall be in writing and signed by the Required Lenders (or by the
Administrative Agent at the written request of the Required Lenders) and
the Company and acknowledged by the Administrative Agent, and then any
such waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given; provided, however, that no
such waiver, amendment, or consent shall, unless in writing and signed by
all the Lenders and the Company and acknowledged by the Administrative
Agent, do any of the following:
	 
	 	 	(a)	 	increase or extend the Commitment of any Lender, unless such
Lender has consented thereto in writing;
	 
	 	 	(b)	  	postpone or delay any date fixed by this Agreement or any
other Loan Document for any payment of principal, interest, fees or
other amounts due to the Lenders (or any of them) hereunder or under
any other Loan Document;
	 
	 	 	(c)	  	reduce the principal of, or the rate of interest specified
herein on, any Loan, the amount of the L/C Obligations, or any fees
or other amounts payable hereunder or under any other Loan Document;
	 
	 	 	(d)	  	change the percentage of the Commitments or of the aggregate
unpaid principal amount of the Loans which is required for the
Lenders or any of them to take any action hereunder;
	 
	 	 	(e)	  	amend the percentages set forth in Section 2.5(b) used in the
calculation of the Borrowing Base;
	 
	 	 	(f)	  	amend the provisions of Section 2.8;
	 
	 	 	(g)	  	amend the definition of Required Lenders;
	 
	 	 	(h)	  	amend this Section or any provision herein providing for
consent or other action by all Lenders;
	 
	 	 	(i)	  	discharge any Guarantor; or
	 
	 	 	(j)	  	amend, or perform any act pursuant to, any provision herein
expressly requiring the consent of each Lender;
	 
	 	  	provided, further, that no amendment, waiver or consent shall, unless in
writing and signed by the Administrative Agent in addition to the
Required Lenders or all the Lenders, as the case may be, affect the
rights or duties of the Administrative Agent under this Agreement or any
other Loan Document; and provided, further, that no amendment or waiver
with respect to a Letter of Credit shall be effected without the consent
of the relevant L/C Issuer. Each Lender shall bear its Pro Rata Share of
all costs and expenses incurred in any amendment, waiver or consent
pursuant to this Agreement not reimbursed by the Company.
Notwithstanding

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	 	  	anything to the contrary herein, no Defaulting Lender shall have any
right to approve or disapprove any amendment, waiver or consent
hereunder, except that the Commitment of such Lender may not be increased
or extended without the consent of such Lender.
	 
	10.2	  	Notices and Other Communications; Facsimile Copies.
	 
	 	 	(a)	 	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, faxed or delivered to the applicable address,
facsimile number or (subject to clause (e) 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:
	 
	 	 	 	 	(1)	 	if to the Company, the Administrative Agent or
the Swing Line Lender, to the address, facsimile number,
electronic mail address or telephone number specified for such
Person on Schedule 10.2 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
	 
	 	 	 	 	(2)	  	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 the
Company and the Administrative Agent.
	 
	 	 	(b)	  	All such notices and other communications shall be deemed to
be given or made upon the earlier to occur of :
	 
	 	 	 	 	(1)	  	actual receipt by the relevant party hereto; and
	 
	 	 	 	 	(2)	  	as applicable:
	 
	 	 	 	 	 	 	(A)	 	if delivered by hand or by courier,
when signed for by or on behalf of the relevant party
hereto;
	 
	 	 	 	 	 	 	(B)	  	if delivered by mail, 4 Banking
Days after deposit in the mails, postage prepaid;
	 
	 	 	 	 	 	 	(C)	  	if delivered by facsimile, when
sent and receipt has been confirmed by telephone; and
	 
	 	 	 	 	 	 	(D)	  	if delivered by electronic mail
(which form of delivery is subject to the provisions of
clause (e) below), when delivered; provided, however,
that notices and other communications to the
Administrative Agent, the L/C Issuer and the Swing Line
Lender pursuant to Article II shall not be effective
until actually received by such Person.
	 
	 	 	(c)	  	In no event shall a voicemail message be effective as a
notice, communication or confirmation hereunder.

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	 	 	(d)	  	Loan Documents may be transmitted 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,
the Administrative Agent and the Lenders. The 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.
	 
	 	 	(e)	  	Electronic mail and Internet and intranet websites may be
used only to distribute routine communications, such as financial
statements and other information as provided in Sections 6.1 and
6.2, and to distribute Loan Documents for execution by the parties
thereto, and may not be used for any other purpose.
	 
	 	 	(f)	  	The Administrative Agent and the Lenders shall be entitled to
rely and act upon any notices (including telephonic Loan requests
and Swing Line Advance requests) purportedly given by or on behalf
of the Company even if
	 
	 	 	 	 	(1)	  	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
	 
	 	 	 	 	(2)	  	the terms thereof, as understood by the
recipient, varied from any confirmation thereof.
	 
	 	 	 	 	The Company 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 the Company. All telephonic notices to and
other communications with the Administrative Agent may be recorded
by the Administrative Agent, and each of the parties hereto hereby
consents to such recording.
	 
	10.3	  	No Waiver; Cumulative Remedies. No failure by any Lender or the
Administrative Agent to exercise, and no delay by any such Person in
exercising, any right, remedy, power or privilege 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.
	 
	10.4	  	Attorney Costs, Expenses and Taxes. The Company agrees:
	 
	 	 	(a)	 	to pay or reimburse the 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;
	 
	 	 	(b)	  	to pay or reimburse each Lender for all reasonable costs and
expenses incurred in connection with any future amendment or waiver,
provided that with respect to

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	 	 	 	  	assignments or participations, the only amount payable by the
Company will be the processing fee owing pursuant to Section 10.8;
and
	 
	 	 	(c)	  	to pay or reimburse the 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 the
Administrative Agent and the cost of independent public accountants and
other outside experts retained by the Administrative Agent or any Lender.
All amounts due under this Section 10.4 shall be payable within 10
Banking Days after demand therefor. Any amount payable to the
Administrative Agent and the Lenders under this Section 10.4 shall, from
the date of demand for payment, and any other amount payable to the
Administrative Agent under the Loan Documents which is not paid when due
or within any applicable grace period shall, thereafter, bear interest at
the rate in effect under each Note with respect to Base Rate Loans. The
agreements in this Section shall survive the termination of the Aggregate
Commitments and repayment of all other Obligations.
	 
	10.5	  	Indemnification by the Company. Whether or not the transactions
contemplated hereby are consummated, the Company shall indemnify and hold
harmless each Agent-Related Person, each Lender and their respective
Affiliates, directors, officers, employees, counsel, agents and
attorneys-in-fact (collectively the “Indemnitees”) from and against any
and all liabilities, obligations, losses, damages, penalties, claims,
demands, actions, judgments, suits, costs, expenses and disbursements
(including Attorney Costs) of any kind or nature whatsoever which may at
any time be imposed on, incurred by or asserted against any such
Indemnitee in any way relating to or arising out of or in connection with
	 
	 	 	(a)	 	the execution, delivery, enforcement, performance or
administration of any Loan Document or any other agreement, letter
or instrument delivered in connection with the transactions
contemplated thereby or the consummation of the transactions
contemplated thereby,
	 
	 	 	(b)	  	any Commitment, Loan or Letter of Credit or the use or
proposed use of the proceeds therefrom (including any refusal by the
L/C Issuer to honor a demand for payment under a Letter of Credit if
the documents presented in connection with such demand do not
strictly comply with the terms of such Letter of Credit),
	 
	 	 	(c)	  	any actual or alleged presence or release of Materials of
Environmental Concern on or from any property currently or formerly
owned or operated by the Company, any Subsidiary or any other Loan
Party, or any Environmental Liability related in any way to the
Company, any Subsidiary or any other Loan Party, or
	 
	 	 	(d)	  	any actual or prospective claim, litigation, investigation or
proceeding relating to any of the foregoing, whether based on
contract, tort or any other theory (including any investigation of,
preparation for, or defense of any pending or threatened claim,
investigation, litigation or proceeding) and regardless of whether
any Indemnitee is a party thereto (all the foregoing, collectively,
the “Indemnified Liabilities”), in all

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	 	 	 	  	cases, whether or not caused by or arising, in whole or in part,
out of the negligence of the Indemnitee;
	 
	 	  	provided that such indemnity shall not, as to any Indemnitee, be
available to the extent that such liabilities, obligations, losses,
damages, penalties, claims, demands, actions, judgments, suits, costs,
expenses or disbursements have resulted from the gross negligence or
willful misconduct of such Indemnitee. No Indemnitee shall be liable for
any damages arising from the use by others of any information or other
materials obtained through IntraLinks or other similar information
transmission systems in connection with this Agreement, nor shall any
Indemnitee have any liability for any indirect or consequential damages
relating to this Agreement or any other Loan Document or arising out of
its activities in connection herewith or therewith (whether before or
after the Closing Date). All amounts due under this Section 10.5 shall
be payable within 10 Banking Days after demand therefor. The agreements
in this Section shall survive the resignation of the Administrative
Agent, the replacement of any Lender, the termination of the Aggregate
Commitment and the repayment, satisfaction or discharge of all the other
Obligations.
	 
	10.6	  	Payments Set Aside. To the extent that any payment by or on behalf of
the Company is made to the Administrative Agent or any Lender, or the
Administrative Agent or any Lender exercises its right of set-off, and
such payment or the proceeds of such set-off or any part thereof is
subsequently invalidated, declared to be fraudulent or preferential, set
aside or required (including pursuant to any settlement entered into by
the Administrative Agent or such Lender in its discretion) to be repaid to
a trustee, receiver or any other party, in connection with any proceeding
under any Debtor Relief Law or otherwise, then
	 
	 	 	(a)	  	to the extent of such recovery, the obligation or part
thereof originally intended to be satisfied shall be revived and
continued in full force and effect as if such payment had not been
made or such set-off had not occurred, and
	 
	 	 	(b)	  	each Lender severally agrees to pay to the Administrative
Agent upon demand its applicable share of any amount so recovered
from or repaid by the Administrative Agent, plus interest thereon
from the date of such demand to the date such payment is made at a
rate per annum equal to the Federal Funds Rate from time to time in
effect.
	 
	10.7	  	Successors and Assigns. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, except that the Company may not assign
or transfer any of its rights or obligations under this Agreement without
the prior written consent of the Administrative Agent and each Lender, and
no Lender may assign or transfer any of its rights or obligations under
this Agreement except in accordance with Section 10.8. 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, Participants to the extent provided in Section
10.8(d) and, to the extent expressly contemplated hereby, the Indemnitees)
any legal or equitable right, remedy or claim under or by reason of this
Agreement.
	 
	10.8	  	Assignments, Participations, Etc.
	 
	 	 	(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 the Company may
not assign or otherwise transfer any of its rights or obligations

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	      	 	 	  	hereunder without the prior written consent of each Lender and no
Lender may assign or otherwise transfer any of its rights or
obligations hereunder except
	 
	 	 	 	 	(1)	 	to an Eligible Assignee in accordance with the
provisions of subsection (b) of this Section,
	 
	 	 	 	 	(2)	  	by way of participation in accordance with the
provisions of subsection (d) of this Section, or
	 
	 	 	 	 	(3)	  	by way of pledge or assignment of a security
interest subject to the restrictions of clause (f) of this
Section.
	 
	 	 	 	 	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, Participants to
the extent provided in clause (d) of this Section and, to the
extent expressly contemplated hereby, the Indemnitees) any legal or
equitable right, remedy or claim under or by reason of this
Agreement.
	 
	 	 	(b)	  	Any Lender may at any time assign to one or more Eligible
Assignees all or a portion of its rights and obligations under this
Agreement (including all or a portion of its Commitment and the
Loans (including for purposes of this clause (b), participations in
L/C Obligations and in Swing Line Advances) at the time owing to
it); provided that:
	 
	 	 	 	 	(1)	  	each Lender (including each Eligible Assignee)
must retain a Commitment of not less than $5,000,000 after
giving effect to such assignment unless its Commitment has
been reduced to zero by such assignment;
	 
	 	 	 	 	(2)	  	except in the case of an assignment of the entire
remaining amount of the assigning Lender’s Commitment and the
Loans at the time owing to it or in the case of an assignment
to a Lender or an Affiliate of a Lender or an Approved Fund
with respect to a Lender, the aggregate amount of the
Commitment (which for this purpose includes Loans outstanding
thereunder) subject to each such assignment, determined as of
the date the Assignment and Assumption with respect to such
assignment is delivered to the Administrative Agent or, if the
“Trade Date” is specified in the Assignment and Assumption, as
of the Trade Date, shall not be less than $1,000,000 unless
each of the Administrative Agent and, so long as no Event of
Default has occurred and is continuing, the Company otherwise
consents;
	 
	 	 	 	 	(3)	  	each partial assignment shall be made as an
assignment of a proportionate part of all the assigning
Lender’s rights and obligations under this Agreement with
respect to the Loans or the Commitment assigned, except that
this clause (3) shall not apply to rights in respect of Swing
Line Advances in the case of an assignment by a Lender that is
also the Swing Line Lender;
	 
	 	 	 	 	(4)	  	any assignment of a Commitment must be approved
by the Administrative Agent unless the Person that is the
proposed assignee is itself a Lender (whether or not the
proposed assignee would otherwise qualify as an Eligible
Assignee); and

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	      	 	 	 	(5)	  	the parties to each assignment shall execute and
deliver to the Administrative Agent an Assignment and
Assumption, together with a processing and recordation fee of
$3,500.
	 
	 	 	 	 	Subject to acceptance and recording thereof by the Administrative
Agent pursuant to clause (c) of this Section, from and after the
effective date specified in each Assignment and Assumption, the
Eligible Assignee thereunder shall be a party to this Agreement
and, to the extent of the interest assigned by such Assignment and
Assumption, have the rights and obligations of a Lender under this
Agreement, and the assigning Lender thereunder shall, to the extent
of the interest assigned by such Assignment and Assumption, be
released from its obligations under this Agreement (and, in the
case of an Assignment and Assumption covering all of the assigning
Lender’s rights and obligations under this Agreement, such Lender
shall cease to be a party hereto but shall continue to be entitled
to the benefits of Sections 3.7, 3.9, 3.10, 10.4 and 10.5 with
respect to facts and circumstances occurring prior to the effective
date of such assignment). Upon request, the Company (at its
expense) shall execute and deliver a Note to the assignee Lender.
Any assignment or transfer by a Lender of rights or obligations
under this Agreement that does not comply with this subsection
shall be treated for purposes of this Agreement as a sale by such
Lender of a participation in such rights and obligations in
accordance with clause (d) of this Section.
	 
	 	 	(c)	  	The Administrative Agent, acting solely for this purpose as
an agent of the Company, shall maintain at the Administrative
Agent’s office a copy of each Assignment and Assumption delivered
to it and a register for the recordation of the names and addresses
of the Lenders, and the Commitments of, and principal amounts of the
Loans and L/C Obligations owing to, each Lender pursuant to the
terms hereof from time to time (the “Register”). The entries in the
Register shall be conclusive, and the Company, the Administrative
Agent and the 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 the
Company and any Lender, at any reasonable time and from time to time
upon reasonable prior notice.
	 
	 	 	(d)	  	Any Lender may at any time, without the consent of, or notice
to, the Company or the Administrative Agent, sell participations to
any Person (other than a natural person or the Company or any of the
Company’s Affiliates or Subsidiaries ) (each, a “Participant”) in
all or a portion of such Lender’s rights or obligations under this
Agreement (including all or a portion of its Commitment or the Loans
(including such Lender’s participations in L/C Obligations or Swing
Line Advances) owing to it); provided that:
	 
	 	 	 	 	(1)	  	such Lender’s obligations under this Agreement
shall remain unchanged;
	 
	 	 	 	 	(2)	  	such Lender shall remain solely responsible to
the other parties hereto for the performance of such
obligations; and
	 
	 	 	 	 	(3)	  	the Company, the Administrative Agent and the
other Lenders shall continue to deal solely and directly with
such Lender in connection with such Lender’s rights and
obligations under this Agreement.

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	      	 	 	  	Any agreement or instrument pursuant to which a Lender sells such a
participation shall provide that such Lender shall retain the sole
right to 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 described in clauses
(a), (b) or (c) of the first proviso to Section 10.1 that directly
affects such Participant. Subject to clause (e) of this Section,
the Company agrees that each Participant shall be entitled to the
benefits of Sections 3.7, 3.9 and 3.10 to the same extent as if it
were a Lender and had acquired its interest by assignment pursuant
to clause (b) of this Section. To the extent permitted by law,
each Participant also shall be entitled to the benefits of Section
10.10 as though it were a Lender, provided such Participant agrees
to be subject to Section 2.8 as though it were a Lender.
	 
	 	 	(e)	  	A Participant shall not be entitled to receive any greater
payment under Sections 3.7 or 3.9 than the applicable Lender would
have been entitled to receive with respect to the participation sold
to such Participant, unless the sale of the participation to such
Participant is made with the Company’s prior written consent. A
Participant that would be a Foreign Lender if it were a Lender shall
not be entitled to the benefits of Section 3.7 unless the Company is
notified of the participation sold to such Participant and such
Participant agrees, for the benefit of the Company, to comply with
Section 10.14 as though it were a Lender.
	 
	 	 	(f)	  	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 Note, 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 such Lender from any of its obligations hereunder or
substitute any such pledgee or assignee for such Lender as a party
hereto.
	 
	 	 	(g)	  	Notwithstanding anything to the contrary contained herein, if
at any time Bank of America assigns all of its Commitment and Loans
pursuant to clause (b) of this Section, Bank of America may do one
or both of the following:
	 
	 	 	 	 	(1)	  	upon 30 days’ notice to the Company and the
Lenders, resign as L/C Issuer; or
	 
	 	 	 	 	(2)	  	upon 30 days’ notice to the Company, resign as
Swing Line Lender.
	 
	 	 	 	 	In the event of any such resignation as L/C Issuer or Swing Line
Lender, the Company may appoint from among the Lenders a successor
L/C Issuer or Swing Line Lender hereunder; provided, however, that
no failure by the Company to appoint any such successor shall
affect the resignation of Bank of America as L/C Issuer or Swing
Line Lender, as the case may be. If Bank of America resigns as L/C
Issuer, it shall retain all the rights and obligations of the L/C
Issuer hereunder with respect to all Letters of Credit outstanding
as of the effective date of its resignation as L/C Issuer and all
L/C Obligations with respect thereto (including the right to
require the Lenders to make Base Rate Loans or fund risk
participations in Unreimbursed Amounts pursuant to Section 2.9(c)).
If Bank of America resigns as Swing Line Lender, it shall retain
all the rights of the Swing Line Lender provided for hereunder with
respect to Swing Line Advances made by it and outstanding as of the
effective date of such

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	 	 	 	 	resignation, including the right to require the Lenders to fund
risk participations in outstanding Swing Line Advances pursuant to
Section 2.1(h)(3).
	 
	10.9	  	Confidentiality. Each of the Administrative Agent and the 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 and
agents, including accountants, legal counsel and other advisors (it
being understood that the Persons to whom such disclosure is made
will be informed of the confidential nature of such Information and
instructed to keep such Information confidential);
	 
	 	 	(b)	  	to the extent requested by any regulatory authority;
	 
	 	 	(c)	  	to the extent required by applicable laws or regulations or
by any subpoena or 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 relating to this Agreement or the
enforcement of rights hereunder;
	 
	 	 	(f)	  	subject to an agreement containing provisions substantially
the same as those of this Section, to
	 
	 	 	 	  	(1)	  	any Eligible Assignee of or Participant in, or
any prospective Eligible Assignee of or Participant in, any of
its rights or obligations under this Agreement or
	 
	 	 	 	  	(2)	  	any direct or indirect contractual counterparty
or prospective counterparty (or such contractual
counterparty’s or prospective counterparty’s professional
advisor) to any credit derivative transaction relating to
obligations of the Loan Parties;
	 
	 	 	(g)	  	with the consent of the Company;
	 
	 	 	(h)	  	to the extent such Information
	 
	 	 	 	  	(1)	  	becomes publicly available other than as a result
of a breach of this Section or
	 
	 	 	 	  	(2)	  	becomes available to the Administrative Agent or
any Lender on a nonconfidential basis from a source other than
the Company; or
	 
	 	 	(i)	  	to the National Association of Insurance Commissioners or any
other similar organization.
	 
	 	 	In addition, the Administrative Agent and the Lenders may disclose the
existence of this Agreement and information about this Agreement to
market data collectors, similar service providers to the lending
industry, and service providers to the Administrative Agent and the
Lenders in connection with the administration and management of this
Agreement, the other Loan Documents, the Commitments, and the Loans. For
the purposes of this Section,

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	 	 	“Information” means all information received from any Loan Party relating
to any Loan Party or its business, other than any such information that
is available to the Administrative Agent or any Lender on a
nonconfidential basis prior to disclosure by any Loan Party; provided
that in the case of information received from a Loan Party 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 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 to its own confidential
information.
	 
	10.10	  	Set-off. In addition to any rights and remedies of the Lenders provided
by Law, if an Event of Default exists or the Loans have been accelerated,
each Lender is authorized at any time and from time to time, without prior
notice to the Company, any such notice being waived by the Company to the
fullest extent permitted by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final excluding the
Company’s customer trust accounts) at any time held by, and other
indebtedness at any time owing by, such Lender to or for the credit or the
account of the Company against any and all Obligations owing to the
Lenders, now or hereafter existing, irrespective of whether or not the
Administrative Agent or such Lender shall have made demand under this
Agreement or any Loan Document and although such Obligations may be
contingent or unmatured. Each Lender agrees promptly to notify the
Company and the Administrative Agent 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.
	 
	10.11	  	Integration. This Agreement, together with the other Loan Documents,
comprises the complete and integrated agreement of the parties on the
subject matter hereof and thereof and supersedes all prior agreements,
written or oral, on such subject matter. In the event of any conflict
between the provisions of this Agreement and those of any other Loan
Document, the provisions of this Agreement shall control; provided that
the inclusion of supplemental rights or remedies in favor of the
Administrative Agent or the Lenders in any other Loan Document shall not
be deemed a conflict with this Agreement. Each Loan Document was drafted
with the joint participation of the respective parties thereto and shall
be construed neither against nor in favor of any party, but rather in
accordance with the fair meaning thereof.
	 
	10.12	  	Survival of Representations and Warranties. All representations and
warranties made hereunder and in any other Loan Document or other document
delivered pursuant hereto or thereto or in connection herewith or
therewith shall survive the execution and delivery hereof and thereof.
Such representations and warranties have been or will be relied upon by
the Administrative Agent and each Lender, regardless of any investigation
made by the Administrative Agent or any Lender or on their behalf and
notwithstanding that the Administrative Agent or any Lender may have had
notice or knowledge of any Default at the time of any Loan or issuance of
any Letter of Credit, and shall continue in full force and effect as long
as any Loan or any other Obligation hereunder shall remain unpaid or
unsatisfied or any Letter of Credit shall remain outstanding.
	 
	10.13	  	Severability. 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

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	 	 	(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.
	 
	10.14	  	Tax Forms.
	 
	 	 	(a)	  	Each Lender that is not a “United States person” within the
meaning of Section 7701(a)(30) of the Code (a “Foreign Lender”)
shall deliver to the Administrative Agent, prior to receipt of any
payment subject to withholding under the Code (or upon accepting an
assignment of an interest herein), two duly signed completed copies
of either IRS Form W-8BEN or any successor thereto (relating to such
Foreign Lender and entitling it to an exemption from, or reduction
of, withholding tax on all payments to be made to such Foreign
Lender by the Company pursuant to this Agreement) or IRS Form W-8ECI
or any successor thereto (relating to all payments to be made to
such Foreign Lender by the Company pursuant to this Agreement) or
such other evidence satisfactory to the Company and the
Administrative Agent that such Foreign Lender is entitled to an
exemption from, or reduction of, U.S. withholding tax, including any
exemption pursuant to Section 881(c) of the Code. Thereafter and
from time to time, each such Foreign Lender shall:
	 
	 	 		 	(1)	  	promptly submit to the 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 the Company and the Administrative Agent of any available
exemption from or reduction of, United States withholding
taxes in respect of all payments to be made to such Foreign
Lender by the Company pursuant to this Agreement;
	 
	 	 		 	(2)	  	promptly notify the Administrative Agent of any
change in circumstances which would modify or render invalid
any claimed exemption or reduction; and
	 
	 	 	 	 	(3)	  	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 Lending Office) to avoid any requirement
of applicable Laws that the Company make any deduction or
withholding for taxes from amounts payable to such Foreign
Lender.
	 
	 	 	(b)	  	Each Foreign Lender, to the extent it does not act or ceases
to act for its own account with respect to any portion of any sums
paid or payable to such Lender under any of the Loan Documents (for
example, in the case of a typical participation by such Lender),
shall deliver to the Administrative Agent on the date when such
Foreign Lender ceases to act for its own account with respect to any
portion of any such sums paid or payable, and at such other times as
may be necessary in the determination of the Administrative Agent
(in the reasonable exercise of its discretion):

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	       	 	 	 	(1)	  	two duly signed completed copies of the forms or
statements required to be provided by such Lender as set forth
above, to establish the portion of any such sums paid or
payable with respect to which such Lender acts for its own
account that is not subject to U.S. withholding tax; and
	 
	 	 	 	 	(2)	  	two duly signed completed copies of IRS Form
W-8IMY (or any successor thereto), together with any
information such Lender chooses to transmit with such form,
and any other certificate or statement of exemption required
under the Code, to establish that such Lender is not acting
for its own account with respect to a portion of any such sums
payable to such Lender.
	 
	 	 	(c)	  	The Company shall not be required to pay any additional
amount to any Foreign Lender under Section 3.7:
	 
	 	 	 	 	(1)	  	with respect to any Taxes required to be deducted
or withheld on the basis of the information, certificates or
statements of exemption such Lender transmits with an IRS Form
W-8IMY pursuant to this Section 10.14; or
	 
	 	 	 	 	(2)	  	if such Lender shall have failed to satisfy the
foregoing provisions of this Section 10.14;
	 
	 	 	 	 	provided that if such Lender shall have satisfied the requirement
of this Section 10.14 on the date such Lender became a Lender or
ceased to act for its own account with respect to any payment under
any of the Loan Documents, nothing in this Section 10.14 shall
relieve the Company of its obligation to pay any amounts pursuant
to Section 3.7 in the event that, as a result of any change in any
applicable law, treaty or governmental rule, regulation or order,
or any change in the interpretation, administration or application
thereof, such Lender is no longer properly entitled to deliver
forms, certificates or other evidence at a subsequent date
establishing the fact that such Lender or other Person for the
account of which such Lender receives any sums payable under any of
the Loan Documents is not subject to withholding or is subject to
withholding at a reduced rate.
	 
	 	 	(d)	  	The Administrative Agent may, without reduction, withhold any
Taxes required to be deducted and withheld from any payment under
any of the Loan Documents with respect to which the Company is not
required to pay additional amounts under this Section 10.14.
	 
	 	 	(e)	  	Upon the request of the Administrative Agent, each Lender
that is a “United States person” within the meaning of Section
7701(a)(30) of the Code shall deliver to the Administrative Agent
two duly signed completed copies of IRS Form W-9. If such Lender
fails to deliver such forms, then the Administrative Agent may
withhold from any interest payment to such Lender an amount
equivalent to the applicable back-up withholding tax imposed by the
Code, without reduction.
	 
	 	 	(f)	  	If any Governmental Authority asserts that the Administrative
Agent did not properly withhold or backup withhold, as the case may
be, any tax or other amount from payments made to or for the account
of any Lender, such Lender shall indemnify the Administrative Agent
therefor, including all penalties and interest, any taxes imposed by
any jurisdiction on the amounts payable to the Administrative Agent
under this Section, and costs and expenses (including Attorney
Costs) of the Administrative

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	 	 	 	 	Agent. The obligation of the Lenders under this Section shall
survive the termination of the Aggregate Commitments, repayment of
all other Obligations hereunder and the resignation of the
Administrative Agent.
	 
	10.15	  	Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
	 
	10.16	  	No Third Parties Benefited. This Agreement is made and entered into for
the sole protection and legal benefit of the Company, the Lenders, the
Administrative Agent and the Agent-Related Persons, and their permitted
successors and assigns, and no other Person shall be a direct or indirect
legal beneficiary of, or have any direct or indirect cause of action or
claim in connection with, this Agreement or any of the other Loan
Documents.
	 
	10.17	  	Section Headings. Section headings in this Agreement and in 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.
	 
	10.18	  	Further Acts by the Company. The Company agrees, at its own expense, to
do such acts and execute and deliver such documents as any Lender, acting
through the Administrative Agent, from time to time reasonably requires
for the purpose of carrying out the intention or facilitating the
performance of the terms hereof.
	 
	10.19	  	Time of the Essence. Time is of the essence of the Loan Documents.
	 
	10.20	  	GOVERNING LAW. THE LOAN DOCUMENTS SHALL BE GOVERNED BY, AND CONSTRUED
AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
ILLINOIS WITHOUT REGARD TO THE CONFLICT OF LAW PROVISIONS THEREOF.
	 
	10.21	  	Submission to Jurisdiction. The Company hereby irrevocably and
unconditionally:
	 
	 	 	(a)	  	submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan Documents
to which it is a party, or for the recognition and enforcement of
any judgment in respect thereof, to the non-exclusive general
jurisdiction of the courts of the State of Illinois, the courts of
the United States of America for the Northern District of Illinois,
and appellate courts therefrom;
	 
	 	 	(b)	  	consents that any such action or proceeding may be brought in
such courts and waives any objection that it may now or hereafter
have to the venue of any such action or proceeding in any such court
or that such action or proceeding was brought in an inconvenient
court and agrees not to plead or claim the same;
	 
	 	 	(c)	  	agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered
or certified mail (or any substantially similar form of mail),
postage prepaid, to the Company at its address set forth on Schedule
10.2 of this Agreement or at such other address as may be designated
by it in a written notice to the Administrative Agent in accordance
with Section 10.2(a); and
	 
	 	 	(d)	  	agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall
limit the right to sue in any other jurisdiction.

-102-

 

	  	  	  	  	  	  	  	  	 
	10.22	  	WAIVER OF JURY TRIAL. EACH PARTY TO THIS AGREEMENT HEREBY 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 WITH
ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE SIGNATORIES HERETO TO
THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

[Signature pages follow]

-103-

 

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

	 	 	 	 	 
	 	 	The Company:
	 	 	 	 	 
		 	THE RYLAND GROUP, INC., a Maryland

corporation
	 	 	 	 	 
	 
	 
	 	 	
By:
	 	/s/ Cathey S. Lowe
	 	 	 	 	

	 	 	 	 	Cathey S. Lowe, Vice President and Treasurer
	 	 	 	 	

	 	 	 	 	[Printed Name and Title]

 

 

	 	 	 	 	 
	 	 	The Lenders:
	 	 	 	 	 
	 	 	BANK OF AMERICA, N.A., as Administrative

Agent and as a Lender
	 	 	 	 	 
	 
	 
	 	 	
By:
	 	/s/ Kelley Prentiss
	 	 	 	 	

	 	 	 	 	Kelley Prentiss, Principal
	 	 	 	 	

	 	 	 	 	[Printed Name and Title]

 

 

	 	 	 	 	 
	 	 	BANK ONE, NA, as Syndication Agent and as
a Lender
	 	 	 	 	 
	 	 
	 	 	
By:
	 	/s/ Mark Kramer
	 	 	 	 	

	 	 	 	 	Mark Kramer, Director
	 	 	 	 	

	 	 	 	 	[Printed Name and Title]

 

 

	 	 	 	 	 
	 	 	WACHOVIA BANK, NATIONAL ASSOCIATION,

as Syndication Agent and as a Lender
	 	 	 	 	 
	 	 
	 	 	
By:
	 	/s/ Brian A. Phillips
	 	 	 	 	

	 	 	 	 	Brian A. Phillips, Bank Officer
	 	 	 	 	

	 	 	 	 	[Printed Name and Title]

 

 

	 	 	 	 	 
	 	 	GUARANTY BANK, as Documentation Agent and
as a Lender
	 	 	 	 	 
	 	 
	 	 	
By:
	 	/s/ Amy W. Satsky
	 	 	 	 	

	 	 	 	 	Amy W. Satsky, Vice-President
	 	 	 	 	

	 	 	 	 	[Printed Name and Title]

 

 

	 	 	 	 	 
	 	 	SUNTRUST BANK, as Managing Agent and as a
Lender
	 	 	 	 	 
	 	 
	 	 	
By:
	 	/s/ W. John Wendler
	 	 	 	 	

	 	 	 	 	W. John Wendler, Director
	 	 	 	 	

	 	 	 	 	[Printed Name and Title]

 

 

	 	 	 	 	 
	 	 	ALLFIRST BANK, as a Lender
	 	 	 	 	 
	 	 
	 	 	
By:
	 	/s/ Jennifer G. Erickson
	 	 	 	 	

	 	 	 	 	Jennifer G. Erickson, Vice President
	 	 	 	 	

	 	 	 	 	[Printed Name and Title]

 

 

	 	 	 	 	 
	 	 	AMSOUTH BANK, as a Lender
	 	 	 	 	 
	 	 
	 	 	
By:
	 	/s/ Ronny Hudspeth
	 	 	 	 	

	 	 	 	 	Ronny Hudspeth, Sr. VP
	 	 	 	 	

	 	 	 	 	[Printed Name and Title]

 

 

	 	 	 	 	 
	 	 	COMERICA BANK, as a Lender
	 	 	 	 	 
	 	 
	 	 	
By:
	 	/s/ Sam F. Meehan
	 	 	 	 	

	 	 	 	 	Sam F. Meehan, Assistant Vice President
	 	 	 	 	

	 	 	 	 	[Printed Name and Title]

 

 

	 	 	 	 	 
	 	 	FIFTH THIRD BANK, as a Lender
	 	 	 	 	 
	 	 
	 	 	
By:
	 	/s/ Jeffrey Assenmacher
	 	 	 	 	

	 	 	 	 	Jeffrey Assenmacher, Large Corp. Officer
	 	 	 	 	

	 	 	 	 	[Printed Name and Title]

 

 

	 	 	 	 	 
	 	 	PNC BANK, NATIONAL ASSOCIATION, as a
Lender
	 	 	 	 	 
	 	 
	 	 	
By:
	 	/s/ Douglas G. Paul
	 	 	 	 	

	 	 	 	 	Douglas G. Paul, Senior Vice President
	 	 	 	 	

	 	 	 	 	[Printed Name and Title]

 

 

	 	 	 	 	 
	 	 	WASHINGTON MUTUAL BANK, FA as a Lender
	 	 	 	 	 
	 	 
	 	 	
By:
	 	/s/ Kris W. Klinger, V.P
	 	 	 	 	

	 	 	 	 	Kris W. Klinger, V.P.
	 	 	 	 	

	 	 	 	 	[Printed Name and Title]

 

 

FIRST AMENDMENT AGREEMENT

This First Amendment Agreement dated as of September 29, 2002 (“Amendment”) is
entered into with reference to the 2002 Revolving Credit Agreement dated as of
August 22, 2002 (the “Credit Agreement”) by and among THE RYLAND GROUP, INC., a
Maryland corporation (“Company”), the Lenders party thereto, and Bank of
America, N.A., as Administrative Agent. Company and Administrative Agent,
acting on behalf of the Lenders under the Credit Agreement, hereby agree to
amend the Credit Agreement as follows:

	1.	  	Definitions. Capitalized terms used herein but not defined are used with
the meanings set forth for those terms in the Credit Agreement.
	 
	2.	  	Changes to Defined Terms. Section 1.1 of the Credit Agreement is hereby
amended to delete definition of “L/C Fronting Fee” and replace it to read
in full as follows and to add a definition of “L/C Fronting Fee Rate” to
read in full as follows:

	      	 	  	“L/C Fronting Fee” has the meaning set forth in Section 2.9(j).
	 
	      	 	  	“L/C Fronting Fee Rate” means 0.125% per annum computed on the
average daily face amount of each Letter of Credit; provided,
however, that a minimum fronting fee of $250 per annum is payable
on each Letter of Credit.

	3.	  	Amendment to Section 2.9(i) of the Credit Agreement. Section 2.9(i) of
the Credit Agreement is hereby amended to read in full as follows:

	      	 	  	Letter of Credit Fees. The Company agrees to pay to the
Administrative Agent, for the account of each Lender in accordance
with its Pro Rata Share, a fee (the “Letter of Credit Fee”)
computed at the applicable L/C Fee Rate (calculated on the basis of
a year of 360 days) on the average daily face amount of all Letters
of Credit outstanding hereunder from time to time. The Letter of
Credit Fee shall commence to accrue on the date of this Agreement
and shall be payable in arrears on the first day of January, April,
July and October of each year, beginning with the first of such
dates to occur after the date of this Agreement, on the Maturity
Date and upon payment in full of the Obligations. If there is any
change in the L/C Fee Rate during any quarter, the daily maximum
amount of each Letter of Credit shall be computed and multiplied by
the L/C Fee Rate separately for each period during such quarter
that such L/C Fee Rate was in effect.

	4.	  	Amendment to Section 2.9(j) of the Credit Agreement. Section 2.9(j) of
the Credit Agreement is hereby amended to read in full as follows:

	      	 	  	Fronting Fee and Documentary and Processing Charges Payable to L/C
Issuer. The Company shall pay directly to the Administrative Agent
for the account of each L/C Issuer fronting fees computed at the
L/C Fronting Fee Rate (calculated on the basis of a year of 360
days) on the average daily face amount of all Letters of Credit
outstanding hereunder from time to time (the “L/C Fronting Fee”).
The L/C Fronting Fee shall commence to accrue on the date of this
Agreement (i.e., August 22, 2002). In addition, the Company shall
pay directly to the Administrative Agent for the

-1-

 

	      	 	  	account of each L/C Issuer the customary issuance, presentation,
amendment and other processing fees, and other standard costs and
charges, of the L/C Issuer relating to letters of credit as from
time to time in effect, and all such fees shall be deemed fully
earned by the L/C Issuer upon issuance of the relevant Letter of
Credit and are nonrefundable. The Company shall pay all fees
described in this clause (j) to the Administrative Agent in arrears
on the first day of January, April, July and October of each year,
beginning with the first of such dates to occur after the date of
this Agreement, on the Maturity Date and upon payment in full of
the Obligations.

	5.	  	Conditions Precedent. The effectiveness of this Amendment shall be
conditioned upon the receipt by Administrative Agent of written consents
to the execution, delivery and performance hereof from all the Lenders
under the Credit Agreement.
	 
	6.	  	Representation and Warranty. Company represents and warrants to
Administrative Agent and the Lenders that no Default or Event of Default
has occurred and remains continuing, and that each of the representations
and warranties of Company set forth in the Credit Agreement (as updated
from time to time in accordance with the terms of the Credit Agreement) is
true and correct as of the date hereof (other than those which relate by
their terms solely to another date).
	 
	7.	  	Confirmation. In all other respects, the terms of the Credit Agreement
and the other Loan Documents are hereby confirmed.
	 
	8.	  	Acknowledgement. Upon receiving a fully executed counterpart of this
Amendment, together with a fully executed Consent of Lender in the form
attached hereto from each of the Lenders, Administrative Agent shall
acknowledge receipt by delivering copies thereof to Company and each of
the Lenders.

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

	 	 	 
	 	THE RYLAND GROUP, INC., a Maryland corporation
	 
 
	 	By: 	/s/ Cathey S. Lowe
	 	

	 	Its:	
Vice President and Treasurer
	 	

	 	 	 
	 	BANK OF AMERICA, N.A., as Administrative Agent
	 
 
	 	By: 	/s/ Kelley Prentiss
	 	

	 	Its: 	
 Principal
	 	

-2-

 

CONSENT OF GUARANTORS

Reference is hereby made to the First Amendment Agreement (“Amendment”) dated
as of September 29, 2002 and entered into with reference to that certain 2002
Revolving Credit Agreement dated as of August 22, 2002 (the “Credit Agreement”)
by and among THE RYLAND GROUP, INC., a Maryland corporation (“Company”), the
Lenders parties thereto, and Bank of America, N.A., as Administrative Agent.
Capitalized terms used but not defined in this Consent of Guarantors have the
meanings given to them in the Credit Agreement.

Reference is also hereby made to the Continuing Guaranty dated as of August 22,
2002 and executed by the Guarantors party thereto (the “Guaranty”).

Each of the undersigned hereby consents to changes to the Credit Agreement
contemplated by the Amendment. Each of the undersigned agrees that the
execution of this Consent of Guarantors is not necessary for the continued
validity and enforceability of the Guaranty, but is executed to induce
Administrative Agent and the Lenders to agree to the Amendment.

Each of the undersigned represents and warrants to Administrative Agent and the
Lenders that the Guaranty remains in full force and effect in accordance with
its terms.

This Consent of Guarantors is dated as of the date of the Amendment.

	 	 	 
	 	THE RYLAND CORPORATION, a California

corporation
	 
 
	 	By: 	/s/ Cathey S. Lowe
	 	

	 	
Cathey S. Lowe, Vice President and
Treasurer

	 	[Printed Name and Title]

	 	 	 
	 	RYLAND HOMES OF CALIFORNIA, INC., a
Delaware corporation
	 
 
	 	By: 	/s/ Cathey S. Lowe
	 	

	 	
Cathey S. Lowe, Vice President and
Treasurer

	 	[Printed Name and Title]

[signatures continued on following page]

-3-

 

	 	 	 
	 	RYLAND COMMUNITIES, INC., a Florida
corporation
	 
 
	 	By: 	/s/ Cathey S. Lowe
	 	

	 	
Cathey S. Lowe, Vice President and Treasurer

	 	[Printed Name and Title]

	 	 	 
	 	RH INVESTMENT OF INDIANA, INC., an
Indiana corporation
	 
 
	 	By: 	/s/ Cathey S. Lowe
	 	

	 	
Cathey S. Lowe, Vice President and Treasurer

	 	[Printed Name and Title]

	 	 	 
	 	RYLAND HOMES INVESTMENT — TEXAS,

INC., a Maryland corporation
	 
 
	 	By: 	/s/ Cathey S. Lowe
	 	

	 	
Cathey S. Lowe, Vice President and Treasurer

	 	[Printed Name and Title]

	 	 	 
	 	RYLAND VENTURES III, INC., a Maryland corporation
	 
 
	 	By: 	/s/ Cathey S. Lowe
	 	

	 	
Cathey S. Lowe, Vice President and Treasurer

	 	[Printed Name and Title]

-4-

 

CONSENT OF LENDER

This Consent of Lender is delivered with reference to the 2002 Revolving Credit
Agreement dated as of August 22, 2002 (the “Credit Agreement”) by and among THE
RYLAND GROUP, INC., a Maryland corporation (“Company”), the Lenders party
thereto, and Bank of America, N.A., as Administrative Agent.

The undersigned Lender hereby consents to and approves of the execution,
delivery and performance of the proposed First Amendment Agreement (the
“Amendment”) to the Credit Agreement by Administrative Agent on behalf of the
Lenders, in the form attached to this Consent of Lender. This Consent of
Lender, when executed by the undersigned Lender, constitutes the undersigned
Lender’s signature to the Amendment, as required by Section 10.1 of the Credit
Agreement.

			
	 	Bank of America, N.A.	 
	
[Typed/Printed Name of Lender]	 
	 
	By:	/s/ Kelley Prentiss
	 
	 
	Title:  	Principal
	 
	 
	Date:	10/22/02
	 

-5-

 

CONSENT OF LENDER

This Consent of Lender is delivered with reference to the 2002 Revolving Credit
Agreement dated as of August 22, 2002 (the “Credit Agreement”) by and among THE
RYLAND GROUP, INC., a Maryland corporation (“Company”), the Lenders party
thereto, and Bank of America, N.A., as Administrative Agent.

The undersigned Lender hereby consents to and approves of the execution,
delivery and performance of the proposed First Amendment Agreement (the
“Amendment”) to the Credit Agreement by Administrative Agent on behalf of the
Lenders, in the form attached to this Consent of Lender. This Consent of
Lender, when executed by the undersigned Lender, constitutes the undersigned
Lender’s signature to the Amendment, as required by Section 10.1 of the Credit
Agreement.

			
	 	Bank One, N.A.	 
	
[Typed/Printed Name of Lender]	 
	 
	By:	/s/ Mark Kramer
	 
	 
	Title:  	Director
	 
	 
	Date:	10/18/02
	 

-6-

 

CONSENT OF LENDER

This Consent of Lender is delivered with reference to the 2002 Revolving Credit
Agreement dated as of August 22, 2002 (the “Credit Agreement”) by and among THE
RYLAND GROUP, INC., a Maryland corporation (“Company”), the Lenders party
thereto, and Bank of America, N.A., as Administrative Agent.

The undersigned Lender hereby consents to and approves of the execution,
delivery and performance of the proposed First Amendment Agreement (the
“Amendment”) to the Credit Agreement by Administrative Agent on behalf of the
Lenders, in the form attached to this Consent of Lender. This Consent of
Lender, when executed by the undersigned Lender, constitutes the undersigned
Lender’s signature to the Amendment, as required by Section 10.1 of the Credit
Agreement.

			
	 	Wachovia Bank, N.A.	 
	
[Typed/Printed Name of Lender]	 
	 
	By:	/s/ Brian A. Phillips
	 
	 
	Title:  	Bank Officer
	 
	 
	Date:	October 23, 2002
	 

-7-

 

CONSENT OF LENDER

This Consent of Lender is delivered with reference to the 2002 Revolving Credit
Agreement dated as of August 22, 2002 (the “Credit Agreement”) by and among THE
RYLAND GROUP, INC., a Maryland corporation (“Company”), the Lenders party
thereto, and Bank of America, N.A., as Administrative Agent.

The undersigned Lender hereby consents to and approves of the execution,
delivery and performance of the proposed First Amendment Agreement (the
“Amendment”) to the Credit Agreement by Administrative Agent on behalf of the
Lenders, in the form attached to this Consent of Lender. This Consent of
Lender, when executed by the undersigned Lender, constitutes the undersigned
Lender’s signature to the Amendment, as required by Section 10.1 of the Credit
Agreement.

			
	 	Guaranty Bank	 
	
[Typed/Printed Name of Lender]	 
	 
	By:	/s/ Amy Satsky
	 
	 
	Title:  	Vice President
	 
	 
	Date:	10-21-02
	 

-8-

 

CONSENT OF LENDER

This Consent of Lender is delivered with reference to the 2002 Revolving Credit
Agreement dated as of August 22, 2002 (the “Credit Agreement”) by and among THE
RYLAND GROUP, INC., a Maryland corporation (“Company”), the Lenders party
thereto, and Bank of America, N.A., as Administrative Agent.

The undersigned Lender hereby consents to and approves of the execution,
delivery and performance of the proposed First Amendment Agreement (the
“Amendment”) to the Credit Agreement by Administrative Agent on behalf of the
Lenders, in the form attached to this Consent of Lender. This Consent of
Lender, when executed by the undersigned Lender, constitutes the undersigned
Lender’s signature to the Amendment, as required by Section 10.1 of the Credit
Agreement.

			
	 	SunTrust Bank	 
	
[Typed/Printed Name of Lender]	 
	 
	By:	/s/ W. John Wendler
	 
	 
	Title:  	Director
	 
	 
	Date:	October 21, 2002
	 

-9-

 

CONSENT OF LENDER

This Consent of Lender is delivered with reference to the 2002 Revolving Credit
Agreement dated as of August 22, 2002 (the “Credit Agreement”) by and among THE
RYLAND GROUP, INC., a Maryland corporation (“Company”), the Lenders party
thereto, and Bank of America, N.A., as Administrative Agent.

The undersigned Lender hereby consents to and approves of the execution,
delivery and performance of the proposed First Amendment Agreement (the
“Amendment”) to the Credit Agreement by Administrative Agent on behalf of the
Lenders, in the form attached to this Consent of Lender. This Consent of
Lender, when executed by the undersigned Lender, constitutes the undersigned
Lender’s signature to the Amendment, as required by Section 10.1 of the Credit
Agreement.

			
	 	Allfirst Bank	 
	
[Typed/Printed Name of Lender]	 
	 
	By:	/s/ Jennifer G. Erickson
	 
	 
	Title:  	Vice President
	 
	 
	Date:	October 18, 2002
	 

-10-

 

CONSENT OF LENDER

This Consent of Lender is delivered with reference to the 2002 Revolving Credit
Agreement dated as of August 22, 2002 (the “Credit Agreement”) by and among THE
RYLAND GROUP, INC., a Maryland corporation (“Company”), the Lenders party
thereto, and Bank of America, N.A., as Administrative Agent.

The undersigned Lender hereby consents to and approves of the execution,
delivery and performance of the proposed First Amendment Agreement (the
“Amendment”) to the Credit Agreement by Administrative Agent on behalf of the
Lenders, in the form attached to this Consent of Lender. This Consent of
Lender, when executed by the undersigned Lender, constitutes the undersigned
Lender’s signature to the Amendment, as required by Section 10.1 of the Credit
Agreement.

			
	 	Amsouth Bank	 
	
[Typed/Printed Name of Lender]	 
	 
	By:	/s/ Ronny Hudspeth
	 
	 
	Title:  	Sr. VP
	 
	 
	Date:	10-18-02
	 

-11-

 

CONSENT OF LENDER

This Consent of Lender is delivered with reference to the 2002 Revolving Credit
Agreement dated as of August 22, 2002 (the “Credit Agreement”) by and among THE
RYLAND GROUP, INC., a Maryland corporation (“Company”), the Lenders party
thereto, and Bank of America, N.A., as Administrative Agent.

The undersigned Lender hereby consents to and approves of the execution,
delivery and performance of the proposed First Amendment Agreement (the
“Amendment”) to the Credit Agreement by Administrative Agent on behalf of the
Lenders, in the form attached to this Consent of Lender. This Consent of
Lender, when executed by the undersigned Lender, constitutes the undersigned
Lender’s signature to the Amendment, as required by Section 10.1 of the Credit
Agreement.

			
	 	Comerica Bank	 
	
[Typed/Printed Name of Lender]	 
	 
	By:	/s/ Sam F. Meehan
	 
	 
	Title:  	Vice President
	 
	 
	Date:	10/31/02
	 

-12-

 

CONSENT OF LENDER

This Consent of Lender is delivered with reference to the 2002 Revolving Credit
Agreement dated as of August 22, 2002 (the “Credit Agreement”) by and among THE
RYLAND GROUP, INC., a Maryland corporation (“Company”), the Lenders party
thereto, and Bank of America, N.A., as Administrative Agent.

The undersigned Lender hereby consents to and approves of the execution,
delivery and performance of the proposed First Amendment Agreement (the
“Amendment”) to the Credit Agreement by Administrative Agent on behalf of the
Lenders, in the form attached to this Consent of Lender. This Consent of
Lender, when executed by the undersigned Lender, constitutes the undersigned
Lender’s signature to the Amendment, as required by Section 10.1 of the Credit
Agreement.

			
	 	Fifth Third Bank	 
	
[Typed/Printed Name of Lender]	 
	 
	By:	/s/ Jeffrey Assenmacher
	 
	 
	Title:  	Large Corporate Officer
	 
	 
	Date:	10/22/02
	 

-13-

 

CONSENT OF LENDER

This Consent of Lender is delivered with reference to the 2002 Revolving Credit
Agreement dated as of August 22, 2002 (the “Credit Agreement”) by and among THE
RYLAND GROUP, INC., a Maryland corporation (“Company”), the Lenders party
thereto, and Bank of America, N.A., as Administrative Agent.

The undersigned Lender hereby consents to and approves of the execution,
delivery and performance of the proposed First Amendment Agreement (the
“Amendment”) to the Credit Agreement by Administrative Agent on behalf of the
Lenders, in the form attached to this Consent of Lender. This Consent of
Lender, when executed by the undersigned Lender, constitutes the undersigned
Lender’s signature to the Amendment, as required by Section 10.1 of the Credit
Agreement.

			
	 	PNC Bank NA	 
	
[Typed/Printed Name of Lender]	 
	 
	By:	/s/ Douglas G. Paul
	 
	 
	Title:  	Senior Vice President
	 
	 
	Date:	10/25/02
	 

-14-

 

CONSENT OF LENDER

This Consent of Lender is delivered with reference to the 2002 Revolving Credit
Agreement dated as of August 22, 2002 (the “Credit Agreement”) by and among THE
RYLAND GROUP, INC., a Maryland corporation (“Company”), the Lenders party
thereto, and Bank of America, N.A., as Administrative Agent.

The undersigned Lender hereby consents to and approves of the execution,
delivery and performance of the proposed First Amendment Agreement (the
“Amendment”) to the Credit Agreement by Administrative Agent on behalf of the
Lenders, in the form attached to this Consent of Lender. This Consent of
Lender, when executed by the undersigned Lender, constitutes the undersigned
Lender’s signature to the Amendment, as required by Section 10.1 of the Credit
Agreement.

			
	 	Washington Mutual Bank, FA	 
	
[Typed/Printed Name of Lender]	 
	 
	By:	/s/ Kris W. Klinger
	 
	 
	Title:  	Vice President
	 
	 
	Date:	October 18, 2002
	 

-15-<PAGE>

                                                                   EXHIBIT 10.1

                                                                 EXECUTION COPY

[MELLON LOGO]

     MELLON INVESTOR SERVICES

     A Mellon Financial Company(SM)

                            EXCHANGE AGENT AGREEMENT

                                       1

<PAGE>

         THIS EXCHANGE AGENT AGREEMENT (this "Agreement") between Instinet
Group Incorporated, a Delaware corporation (the "Company") and Mellon Investor
Services LLC., a New Jersey limited liability company ("Mellon"), is dated as
of August 27, 2002.

1.       APPOINTMENT.

         (a)      The Company hereby appoints Mellon to act as exchange agent
with respect to the surrender of certificates for shares of Class L Common
Stock, $0.001 par value per share and Class A Common Stock $0.001 par value per
share (the "Old Shares"), of Island Holding Company, Inc., a Delaware
corporation (the "Target"), in exchange for approximately 85 million shares of
Common Stock of the Company, $0.01 par value per share (the "New Shares") and
checks, each in an amount equal to the cash that the holder of Old Shares has
the right to receive in lieu of fractional New Shares, if any (the "Checks"),
as set forth in the Agreement and Plan of Merger (as amended the "Merger
Agreement"), dated as of June 9, 2002 by and among the Company, Instinet Merger
Corporation, a Delaware corporation and a wholly-owned subsidiary of the
Company ("Merger Sub"), and the Target, providing for the merger of Merger Sub
with and into the Target (the "Merger"). Mellon hereby accepts such appointment
in accordance with and subject to the terms and conditions set forth in this
Agreement.

         (b)      The Merger is currently expected to become effective shortly
after the Special Meeting of Stockholders of the Target to be held on September
10, 2002 for the purpose of approving the Merger and an amendment to the
Target's certificate of incorporation. The time at which the Merger becomes
effective is referred to in the Merger Agreement and in this Agreement as the
"Effective Time". The Company shall inform Mellon of the Effective Time, at
least three business days prior thereto.

         (c)      The Company has furnished Mellon, or will furnish Mellon
prior to the Effective Time, with copies of the following documents:

         (i)      (a) a letter of the Company to holders of record of Old
         Shares as of August 7, 2002 and (b) a letter of the Company, to
         holders of the Old Shares, announcing the effectiveness of the Merger;

         (ii)     (a) a Letter of Transmittal to accompany pre-Effective Time
         surrenders of Old Shares (the "Pre-Closing LT") and (b) a Letter of
         Transmittal to accompany certificates for Old Shares when surrendered
         after the Effective Time for exchange, in each case together with W9
         Guidelines for Certification of Taxpayer Identification Number on
         Substitute Form W-9;

         (iii)    The Target's Proxy Statement dated August 8, 2002 relating to
         the Merger and (as an Exhibit thereto) the Merger Agreement; and

         (iv)     A certificate of the Secretary of the Target stating that the
         transfer books for the Old Shares will be closed at the Effective Time
         and (ii) if the Company should authorize the Secretary retroactively
         to reopen the transfer books for a special transaction, he will

                                       2

<PAGE>

         send a copy of the transaction journal covering that transaction to
         Mellon as exchange agent; and

         (v)      a list of holders of record of Old Shares as of August 7,
         2002.

Mellon will, as promptly as practicable, mail or cause to be mailed to each
holder of record of Old Shares as of August 7, 2002 the documents described in
clauses (i)(a) and (ii)(a) above, together with a return envelope. Mellon will
mail or cause to be mailed each of the documents described in clauses (i)(b)
and (ii)(b) above, together with a return envelope to holders of record of Old
Shares set forth on the list provided pursuant to Section 1(d) of this
Agreement within two business days after the file containing such list is
loaded to the Mellon Investor Services system following the Effective Time in
accordance with Section 2.9(b) of the Merger Agreement. If and to the extent
such list is updated following the mailing of such documents after the
Effective Time, Mellon will promptly mail or cause to be mailed such documents
to any additional holders of Record of Old Shares as may be appropriate to take
into account such updates.

         (d)      Prior to the Effective Time, the Company will cause Target to
furnish Mellon with (i) a listing, in a format agreeable to Mellon, of the
names, addresses, Social Security Numbers, share amounts and certificate detail
of anticipated holders of record of Old Shares at the Effective Time, (the
"Record Stockholders List") and (ii) certified totals of outstanding shares and
shareholders. The Company will cause Target to promptly update such list for
any changes in the information contained therein between the time such list is
delivered to Mellon and the Effective Time.

         (e)      In its capacity as exchange agent, Mellon shall receive
certificates representing Old Shares surrendered in exchange for certificates
for the New Shares and the Checks. Subject to the terms and conditions of this
Agreement, Mellon is authorized to accept such certificates for Old Shares and
to exchange them for certificates for New Shares and Checks in accordance with
the Letter of Transmittal.

         (f)      If and to the extent a holder of record of Old Shares
surrendered to Mellon prior to the Effective Time seeks to withdraw such Old
Shares and follows the instructions for doing so contained in the Pre-Closing
LT, Mellon shall return such Old Shares to such record holder (at Mellon's
option by either first class mail under a blanket surety bond or insurance
protecting Mellon, the Target and the Company from losses or liabilities
arising out of the non-receipt or non-delivery of Old Shares by registered mail
insured separately for the value of such Old Shares).

2.       PROCEDURE FOR DISCREPANCIES. Mellon shall follow its regular
procedures to attempt to reconcile any discrepancies between the number of Old
Shares that any Letter of Transmittal may indicate are owned by a surrendering
stockholder and the number that the Record Stockholders List indicates such
stockholder owned of record as of the Effective Time. In any instance where
Mellon cannot reconcile such discrepancies by following such procedures, Mellon
will consult with the Company for instructions as to the number of Old Shares,
if any, Mellon is authorized to accept for exchange. In the absence of such
instructions, Mellon is authorized not to accept any such Old Shares for
exchange and will return to the surrendering

                                       3

<PAGE>

stockholder (at Mellon's option by either first class mail under a blanket
surety bond or insurance protecting Mellon, the Target and the Company from
losses or liabilities arising out of the non-receipt or non-delivery of Old
Shares or by registered mail insured separately for the value of such Old
Shares) to such stockholder's address as set forth in the Letter of Transmittal
any certificates for Old Shares surrendered in connection therewith, the
related Letters of Transmittal and any other documents received with such Old
Shares.

3.       TREASURY SHARES. The Company shall cause the Target, at or prior to
the Effective Time, to provide to Mellon a written list of all outstanding
treasury shares to be cancelled in accordance with the Merger Agreement,
indicating whether such treasury shares are physical or book-entry. The Company
shall cause the Target to promptly deliver all physical certificates
representing any such treasury shares to Mellon for proper cancellation. The
Company hereby authorizes and instructs Mellon to cancel all such treasury
shares delivered to Mellon hereunder or maintained by Mellon in book-entry.

4.       ISSUANCE OF BALANCE ACCOUNT SHARES. At or prior to the Effective Time,
the Company will instruct Mellon to create a balance account for the number of
New Shares and Checks to be issued for exchange of the Old shares outstanding
at the Effective Time, in accordance with the terms of the Merger Agreement.
Mellon will issue these shares and Checks in an account registered to Mellon
Investor Services for the benefit of unexchanged holders. Subject to the terms
and conditions of this Agreement, Mellon will issue certificates evidencing the
appropriate number of New Shares (together with any Checks) as required from
time to time in order to make the exchange.

5.       AGGRETATION; FRACTIONAL SHARES. Subject to the remainder of this
Section 5, Mellon will aggregate all Old Shares delivered by or on behalf of
each holder of record of Old Shares in determining the number of New Shares to
be delivered to each holder of record of Old Shares as set forth in the Record
Stockholders List. No fractional shares of the New Shares will be issued in the
Merger. In lieu thereof, any holder of Old Shares who would otherwise have been
entitled to receive a fraction of a New Share will be paid an amount based on
the formula provided in the Merger Agreement.

6.       LOST CERTIFICATES. If any holder of Old Shares as of the Effective
Time reports to Mellon that his or her failure to surrender a certificate
representing any Old Shares registered in his or her name at the Effective Time
according to the Record Stockholders List is due to the theft, loss or
destruction of such certificate, upon receipt from such stockholder of an
affidavit of such theft, loss or destruction and a bond of indemnity, both in
form and substance satisfactory to Mellon, and compliance with any other
applicable requirements, Mellon will effect issuance of certificates for New
Shares (and a Check, if applicable) to the former stockholder as though the
certificate for Old Shares had been surrendered.

7.       TREATMENT OF RESTRICTED LEGENDS. Other then set forth in Exhibit A
hereto, all certificates representing New Shares issued in exchange for Old
Shares may be issued without restrictive legend(s); provided that if any
certificates are to be issued with restrictive legend(s), the Company shall
provide the appropriate legend(s) and a list identifying the shareholders and
certificate numbers of Old Shares.

                                       4

<PAGE>

8.       PROCEDURE FOR DEFICIENT ITEMS.

         (a)      Mellon shall examine the Letter of Transmittal and
certificates for the Old Shares received by it as Exchange Agent to ascertain
whether they appear to have been completed and executed in accordance with the
instructions set forth in the Letter of Transmittal. In the event Mellon
determines that any Letter of Transmittal does not appear to have been properly
completed or executed, or where the certificates representing Old Shares do not
appear to be in proper form for surrender, or any other deficiency in
connection with the surrender appears to exist, Mellon will follow, where
possible, its regular procedures to attempt to cause such deficiency to be
corrected. Mellon is not authorized to waive any deficiency in connection with
the surrender, unless the Company provides written authorization to waive the
deficiency.

         (b)      If an exchange of Old Shares is required to be made to a
person other than the person in whose name a surrendered certificate is
registered, Mellon will issue no certificate for New Shares or any Check until
the certificate for Old Shares so surrendered has been properly endorsed (or
otherwise put in proper form for transfer) and the person requesting such
exchange has paid any transfer or other taxes or governmental charges required
by reason of such exchange in a name other than that of the registered holder
of the certificate surrendered or has established to Mellon's satisfaction that
such tax or charge either has been paid or is not payable. Any tax information
with respect to such payment which Mellon is required to report pursuant to
Section 12 of this Agreement shall list the registered holder of the
certificate as the payee.

         (c)      If any such deficiency is neither corrected nor waived,
Mellon shall return to the surrendering stockholder (at Mellon's option by
either first class mail under a blanket surety bond or insurance protecting
Mellon, the Target and the Company from losses or liabilities arising out of
the non-receipt or non-delivery of Old Shares or by registered mail insured
separately for the value of such Old Shares) to such stockholder's address as
set forth in the Letter of Transmittal any certificates for Old Shares
surrendered in connection therewith, the related Letters of Transmittal and any
other documents received with such Old Shares.

         (d)      Each document received by Mellon relating to Mellon's duties
hereunder shall be dated and time stamped when received.

9.       CANCELLATION OF OLD SHARES. As of the Effective Time, Mellon will
become the sole recordkeeping agent for the Old Shares, and shall maintain such
records in accordance with its standard practices. Upon the exchange of Old
Shares, the certificates representing such Old Shares will be physically
canceled by Mellon, posted to the records Mellon maintains, and the merger
consideration will be issued to the appropriate holder(s). Mellon will keep and
maintain complete and accurate ledgers showing all the Old Shares exchanged by
Mellon and the New Shares and Checks issued by Mellon. Mellon is authorized to
cooperate with and furnish information to any organization or its legal
representatives designated from time to time by the Company in any manner
reasonably requested by the Company. All certificates for Old Shares
surrendered to you shall be retained by you until such time as this Agreement
is terminated

                                       5

<PAGE>

whereupon you shall deliver them to the Company or make other disposition
thereof as requested by the Company.

10.      DIVIDENDS AND DISTRIBUTIONS ON UNEXCHANGED OLD SHARES. No dividends or
other distributions that are declared after the Effective Time on New Shares
and payable to holders of record thereof after the Effective Time will be paid
to persons entitled by reason of the Merger to receive New Shares until such
persons surrender their certificates formerly representing Old Shares. Upon
such surrender, Mellon shall pay to the person in whose name the New Shares are
issued any dividends or other distributions having a record date after the
Effective Time and payable with respect to such New Shares between the
Effective Time and the surrender. In no event shall any interest on such
dividends or other distributions be payable by Mellon. The Company shall
deposit, or cause to be deposited with Mellon, federal or other immediately
available funds, sufficient to pay for dividends and distributions on all
unexchanged certificates formerly representing Old Shares and Mellon will hold
such funds for payment or distribution to the holders of such unexchanged
certificates.

11.      REPORT OF EXCHANGE ACTIVITY. Mellon will, every two weeks, forward to
the Company a report of the number of Old Shares represented by certificates
surrendered during the exchange and the number of New Shares and amount of
Checks issued in exchange therefor.

12.      TAX REPORTING.

         (a)      On or before January 31st of the year following the year the
"cash-in-lieu" payment is made, Mellon shall prepare and mail to each
stockholder who received cash in lieu of fractional of New Shares, other than
stockholders who demonstrate their status as nonresident aliens ("Foreign
Stockholders") in accordance with United States Treasury Regulations ("Treasury
Regulations"), a Form 1099-B reporting the amount of such cash, in accordance
with Treasury Regulations. Mellon shall prepare and file copies of such Forms
1099-B by magnetic tape with the Internal Revenue Service on or before February
28th of the year following the year of the payment, in accordance with Treasury
Regulations.

         (b)      On or before January 31st of the year following the year a
dividend payment is made, Mellon shall prepare and mail to each stockholder who
received any dividends held pending exchange of the Old Shares, other than
stockholders who demonstrate their status as Foreign Stockholders, a Form
1099-DIV reporting the amount of such cash, in accordance with Treasury
Regulations. Mellon shall also prepare and file copies of such Forms 1099-DIV
by magnetic tape with the Internal Revenue Service on or before February 28th
of the year following the year of the payment, in accordance with Treasury
Regulations.

         (c)      If Mellon has not received notice from the surrendering
stockholder of that stockholder's TIN, or if such TIN has not been certified as
correct and relates to a post-1983 account, Mellon shall deduct and withhold
applicable backup withholding tax from any payment made to such stockholder
(other than a Foreign Stockholder) pursuant to the Internal Revenue Code.

                                       6

<PAGE>

         (d)      Should any issue arise regarding federal income tax reporting
or withholding, Mellon shall take such action as the Company may reasonably
request in writing. Such action may be subject to additional fees.

13.      UNEXCHANGED STOCKHOLDERS. No later than three months after the
Effective Time, Mellon shall mail a follow-up letter to all stockholders who
did not surrender their Old Share certificates for exchange or supply an
affidavit and bond of indemnity pursuant to Section 8(c) of this Agreement. The
follow-up letter will be mailed with a Letter of Transmittal, return envelope,
and W-9 Guidelines. No later than one year after the Effective Time, Mellon
shall perform an electronic search for stockholders who did not surrender their
certificates for Old Shares. After such electronic search is completed, Mellon
will mail or cause to be mailed a follow-up letter to all stockholders who did
not surrender their certificates for Old Shares, or supply an affidavit and
bond of indemnity pursuant to Section 8(c) of this Agreement, for exchange. The
follow-up letter will be mailed with a Letter of Transmittal, return envelope,
and W-9 Guidelines. After the one-year anniversary of the Effective Time, for
the purpose of locating lost holders and encouraging their participation in the
exchange, Mellon may use the services of a stockholder locating service
provider whose fees are paid by the located stockholders, provided that the
maximum fee charged to the located stockholder does not exceed the lesser of
15% of the total value of such stockholder's merger consideration or the
maximum statutory fee permitted by the applicable state jurisdiction.

14.      ESCHEATMENT. Mellon shall identify, report and deliver all
unexchanged securities and related unclaimed property to all states and
jurisdictions for the Company in accordance with the applicable abandoned
property law.

15.      AUTHORIZATIONS AND PROTECTION. As agent for the Company hereunder
Mellon:

         (a)      may rely on and shall be fully authorized and protected in
acting or failing to act upon any certificate, instrument, opinion, notice,
letter, telegram, telex, facsimile transmission or other document or security
delivered to Mellon by any authorized representative of the Company and
believed by Mellon to be genuine and to have been signed by the proper party or
parties;

         (b)      may rely on and shall be fully authorized and protected in
acting or failing to act upon the written, telephonic and oral instructions of
any authorized representative of the Company with respect to any matter
relating to Mellon acting as exchange agent pursuant to this Agreement;

         (c)      may perform any of its duties hereunder either directly or by
or through agents or attorneys; and may consult with counsel satisfactory to
Mellon (including internal counsel), and the advice of such counsel shall be
full and complete authorization and protection in respect of any action taken,
suffered, or omitted by Mellon hereunder in good faith and in accordance with
the advice of such counsel;

         (d)      shall be regarded as making no representations and having no
responsibilities as to the validity, sufficiency, value, or genuineness of any
certificates or the Old Shares represented thereby surrendered hereunder or New
Shares issued in exchange therefor, and will

                                       7

<PAGE>

not be required to or be responsible for and will make no representations as
to, the validity, sufficiency, value or genuineness of the Merger;

         (e)      shall not be liable or responsible for any recital or
statement contained in the Merger Agreement or any other documents relating
thereto;

         (f)      shall not be liable or responsible for any failure on the
part of the Company or any other party to comply with any of its covenants and
obligations relating to the Merger, including without limitation obligations
under applicable securities laws;

         (g)      shall have no obligation to make any exchange unless the
Company shall have provided a sufficient number of certificates for New Shares,
or to make any payment for fractional shares unless the Company shall have
provided the necessary federal or immediately available funds to pay in full
amounts due and payable with respect thereto;

         (h)      shall not be liable to a holder of Old Shares for any New
Shares or dividends thereon or, if applicable, cash in lieu of fractional
interests, delivered to a public official pursuant to applicable abandoned
property law;

         (i)      shall not be obligated to take any legal action hereunder;
if, however, Mellon determines to take any legal action hereunder, and where
the taking of such action might, in Mellon's judgment, subject or expose it to
any expense or liability, Mellon shall not be required to act unless it shall
have been furnished with an indemnity reasonably satisfactory to it;

         (j)      shall have no duties or obligations other than those
specifically set forth herein or as may subsequently be agreed to in writing by
Mellon and the Company;

         (k)      shall not be authorized, and shall have no obligation, to pay
any brokers, dealers, or soliciting fees to any person.

16.      INDEMNIFICATION. The Company covenants to indemnify Mellon for, and
hold Mellon harmless from and against, any loss, liability, claim or expense
("Loss") arising out of or in connection with its duties under this Agreement
or this appointment, including the costs and expenses of defending itself
against any Loss or enforcing this Agreement, provided that Mellon shall not be
indemnified and held harmless with respect to any such Loss incurred or
suffered by Mellon as a result of, or arising out of, Mellon's gross
negligence, bad faith, or willful misconduct in the performance of its
obligations hereunder. Anything in this Agreement to the contrary
notwithstanding, in no event shall the Company be liable for special, indirect,
incidental or consequential loss or damage of any kind whatsoever (including
but not limited to lost profits), even if Mellon has been advised of the
likelihood of such damages and regardless of the form of action.

17.      LIMITATION OF LIABILITY.

         (a)      Anything in this agreement to the contrary notwithstanding,
in no event shall Mellon be liable for special, indirect, incidental or
consequential loss or damage of any kind

                                       8

<PAGE>

whatsoever (including but not limited to lost profits), even if Mellon has been
advised of the possibility of such damages and regardless of the form of
action. Any liability of Mellon will be limited to the amount of fees paid by
the Company to Mellon hereunder.

         (b)      In the event any question or dispute arises with respect to
the proper interpretation of the Merger Agreement, this Agreement or Mellon's
duties hereunder or the rights of the Company or of any stockholders
surrendering certificates for Old Shares in the exchange pursuant to the Merger
Agreement, Mellon shall not be required to act and shall not be held liable or
responsible for refusing to act until the question or dispute has been
judicially settled (and Mellon may, if it deems it advisable, but shall not be
obligated to, file a suit in interpleader or for a declaratory judgment for
such purpose) by final judgment rendered by a court of competent jurisdiction,
binding on all stockholders and parties interested in the matter which is no
longer subject to review or appeal, or settled by a written document in form
and substance satisfactory to Mellon and executed by the Company and each such
stockholder and party. In addition, Mellon may require for such purpose, but
shall not be obligated to require, the execution of such written settlement by
all the stockholders and all other parties that may have an interest in the
settlement.

18.      REPRESENTATIONS, WARRANTIES AND COVENANTS. The Company represents,
warrants and covenants that (a) it is duly incorporated, validly existing and,
to the extent applicable, in good standing under the laws of its' jurisdiction
of incorporation, (b) the making and consummation of the Merger Agreement and
the execution, delivery and performance of all transactions contemplated
thereby (including without limitation this Agreement) have been duly authorized
by all necessary corporate action and will not result in a breach of or
constitute a default under the certificate of incorporation or bylaws of the
Company or any material indenture, agreement or instrument to which it is a
party or is bound, (c) this Agreement has been duly executed and delivered by
the Company and constitutes the legal, valid, binding and enforceable
obligation of it, (d) the Merger will comply in all material respects with all
applicable requirements of law and (e) to the best of its knowledge, there is
no material litigation pending or threatened as of the date hereof in
connection with the Merger.

19.      NOTICES. All notices, demands and other communications given pursuant
to the terms and provisions hereof shall be in writing, shall be deemed
effective on the date of receipt, and may be sent by facsimile, overnight
delivery services, or by certified or registered mail, return receipt requested
to:

         If to the Company:                 with an additional copy to:

Instinet Group Incorporated                 Cleary, Gottlieb, Steen & Hamilton
3 Times Square                              One Liberty Plaza
New York, NY 10036                          New York, NY 10006
Attn:  Paul A. Merolla, Esq.                Attn: Yvette P. Teofan, Esq.
Tel: 212-310-7548                           Tel: 212-225-2636
Fax: 646-223-9017                           Fax: 212-225-3999

If to Mellon:                               with an additional copy to:

                                       9

<PAGE>

Mellon Investor Services LLC                Mellon Investor Services LLC
Overpeck Centre                             Overpeck Centre
85 Challenger Road                          85 Challenger Road
Ridgefield Park, NJ 07660                   Ridgefield Park, NJ 07660
Attn: Relationship Administrator            Attn: Legal Department
Tel:                                        Tel: 201-373-7155
Fax:                                        Fax: 201-373-7166

20.      SPECIMEN SIGNATURES. Set forth in Exhibit B hereto is a list of the
names, titles and specimen signatures of the persons authorized to act for the
Company under this Agreement. The Secretary of the Company shall, from time to
time, certify to Mellon the names, titles and signatures of any other persons
authorized to act for the Company under this Agreement.

21.      FEES. The Company shall pay to Mellon compensation in accordance with
the fee schedule (Exhibit C & Appendix B of the Letter of Intent) hereto,
together with reimbursement for out-of-pocket expenses, including reasonable
fees and disbursements of counsel, regardless of whether any Old Shares are
surrendered to Mellon, for Mellon's services as exchange agent hereunder.

22.      TERMINATION. The Company may terminate this Agreement at any time by
so notifying Mellon in writing. Mellon may terminate this Agreement upon 30
days' prior written notice to the Company. Upon any such termination, Mellon
shall be relieved and discharged of any further responsibilities with respect
to its duties hereunder. Subject to payment of all outstanding fees and
expenses due to Mellon hereunder, Mellon will forward to the Company or its
designee promptly any certificate for Old Shares, Letter Of Transmittal or
other document that Mellon may receive after its appointment has so terminated.
Unless terminated, this Agreement shall continue in effect until all Old Shares
have been received and exchanged.

23.      MISCELLANEOUS.

         (a)      This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, applicable to contracts made
and to be performed entirely in such State.

         (b)      No provision of this Agreement may be amended, modified or
waived, except in a written document signed by both parties.

         (c)      In the event that any claim of inconsistency between this
Agreement and the terms of the Merger Agreement arise, as they may from time to
time be amended, the terms of the Merger Agreement shall control, except with
respect to the duties, liabilities and rights, including compensation and
indemnification of Mellon as exchange agent, which shall be controlled by the
terms of this Agreement.

         (d)      If any provision of this Agreement shall be held illegal,
invalid, or unenforceable by any court, this Agreement shall be construed and
enforced as if such provision had not been

                                       10

<PAGE>

contained herein and shall be deemed binding and enforceable to the full extent
permitted by applicable law.

         (e)      This Agreement shall be binding upon, inure to the benefit
of, and be enforceable by, the respective successors and assigns of the parties
hereto.

         (f)      This Agreement may not be assigned by either party without
prior written consent of both parties.

         (g)      Mellon shall not be liable for any failure or delay arising
out of conditions beyond its reasonable control including, but not limited to,
work stoppages, fires, civil disobedience, riots, rebellions, storms,
electrical, mechanical, computer or communications facilities failures, acts of
God or similar occurrences.

         (h)      Sections 15, 16, 17, 19 and 21 hereof shall survive
termination of this Agreement.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement by their
duly authorized officers as of the day and year above written.

INSTINET GROUP INCORPORATED

By:      /s/ Paul A. Merolla
         ------------------------------------------
Name:    Paul A. Merolla
Title:   Executive Vice President and General Counsel

MELLON INVESTOR SERVICES LLC

By:      /s/ Jennifer A. Colucci
         ------------------------------------------
Name:    Jennifer A. Colucci
Title:   Event Manager

Exhibit A      List of Affiliates
Exhibit B      List of Authorized Representatives
Exhibit C      Schedule of Fees

                                       11

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