<PAGE> 1
EXHIBIT 10.1
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$125,000,000 BRIDGE REVOLVING CREDIT FACILITY
KAUFMAN AND BROAD HOME CORPORATION
as Borrower
BANK OF AMERICA, N.A.
as Administrative Agent
and
BANC OF AMERICA SECURITIES LLC
as Lead Arranger
and Sole Book Manager
May 10, 2000
Prepared by
Sheppard, Mullin, Richter & Hampton LLP
333 South Hope Street, 48th Floor
Los Angeles, California 90071
Telephone: (213) 620-1780
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EXECUTION
2000 BRIDGE LOAN AGREEMENT
Dated as of May 10, 2000
among
KAUFMAN AND BROAD HOME CORPORATION
as Borrower
THE BANKS PARTY HERETO
BANK OF AMERICA, N.A., as Administrative Agent
and
BANC OF AMERICA SECURITIES LLC, as
Lead Arranger and Sole Book Manager
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TABLE OF CONTENTS
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<TABLE>
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Page
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<S> <C> <C>
Article 1
DEFINITIONS AND ACCOUNTING TERMS ............................................. 1
1.1 Defined Terms ................................................................... 1
1.2 Other Definitional Provisions ................................................... 7
Article 2
LOANS ........................................................................ 8
2.1 Loans-General ................................................................... 8
2.2 Alternate Base Rate Loans ....................................................... 9
2.3 LIBOR Loans ..................................................................... 9
2.4 Intentionally Omitted ........................................................... 9
2.5 Intentionally Omitted ........................................................... 9
2.6 Voluntary Reduction of Commitment ............................................... 9
2.7 Administrative Agent's Right to Assume Funds Available .......................... 10
Article 3
PAYMENTS AND FEES ............................................................ 11
3.1 Principal and Interest .......................................................... 11
3.2 Upfront Fee ..................................................................... 14
3.3 Commitment Fees ................................................................. 14
3.4 Utilization Fee ................................................................. 14
3.5 Underwriting Fee ................................................................ 14
3.6 Other Payment Provisions ........................................................ 14
Article 4
REPRESENTATIONS AND WARRANTIES ............................................... 15
Article 5
AFFIRMATIVE COVENANTS (OTHER THAN INFORMATION AND REPORTING REQUIREMENTS) .... 16
Article 6
NEGATIVE COVENANTS ........................................................... 17
Article 7
INFORMATION AND REPORTING REQUIREMENTS ....................................... 18
Article 8
CONDITIONS ................................................................... 19
8.1 Initial Advances, Etc ........................................................... 19
8.2 Any Advance ..................................................................... 20
</TABLE>
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<TABLE>
<CAPTION>
Page
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Article 9
EVENTS OF DEFAULT AND REMEDIES UPON EVENT OF DEFAULT ......................... 21
9.1 Events of Default ............................................................... 21
9.2 Remedies Upon Event of Default .................................................. 23
Article 10
THE ADMINISTRATIVE AGENT ..................................................... 25
Article 11
MISCELLANEOUS ................................................................ 26
Article 12
ADDITIONAL MODIFICATIONS ..................................................... 27
12.1 Amendments to Primary Loan Agreement ........................................... 27
12.2 Incorporation by Reference ..................................................... 27
12.3 Exhibits and Schedules ......................................................... 27
12.4 Relationship to Primary Loan Agreement ......................................... 27
</TABLE>
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<TABLE>
<CAPTION>
Exhibits
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<S> <C> <C>
A - Commitment Assignment and Acceptance
B - Note
C-1 - Opinion of Counsel - Munger, Tolles & Olson LLP
C-2 - Opinion of Counsel - Barton P. Pachino
D - Subsidiary Guaranty
</TABLE>
<TABLE>
<CAPTION>
Schedules
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<S> <C>
1.1 Bank Commitments
4.4 Significant Subsidiaries
4.7 Existing Liens and Rights of Others
4.9 Existing Indebtedness and Contingent Obligations
6.4 Investments
</TABLE>
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2000 BRIDGE LOAN AGREEMENT
Dated as of May 10, 2000
This 2000 BRIDGE LOAN AGREEMENT ("Agreement") is entered into by
and among Kaufman and Broad Home Corporation, a Delaware corporation
("Borrower"), each bank whose name is set forth on the signature pages of this
Agreement and each lender which may hereafter become a party to this Agreement
pursuant to Section 11.8 (collectively, the "Banks" and individually, a "Bank"),
and Bank of America, N.A. ("Bank of America"), formerly known as Bank of America
National Trust and Savings Association, as Administrative Agent, and Banc of
America Securities LLC, as Lead Arranger and Sole Book Manager.
R E C I T A L S
A. Borrower, the banks whose names are set forth on the signature
pages thereof (collectively, the "Primary Loan Agreement Bank Group"), Bank of
America, as Administrative Agent and Co-Syndication Agent, NationsBank of Texas,
N.A., as Syndication Agent, Credit Lyonnais, as Documentation Agent, and
Guaranty Federal Bank F.S.B., Societe Generale and Union Bank of California,
N.A., as Co-Agents, are parties to that certain 1997 Revolving Loan Agreement
dated as of April 21, 1997 (as amended through the date hereof, the "Primary
Loan Agreement"), pursuant to which the Primary Loan Agreement Bank Group
provided the Borrower with certain revolving loan and letter of credit
facilities.
B. The Borrower has requested that one or more banks provide the
Borrower with an additional, supplemental $125,000,000 bridge revolving credit
facility and the Banks and the Administrative Agent are willing to provide the
Borrower with, and administer, such additional facility on the terms and
conditions hereinafter set forth.
In consideration of the mutual covenants and agreements herein
contained, the parties hereto covenant and agree as follows:
Article 1.
DEFINITIONS AND ACCOUNTING TERMS
1.1 Defined Terms. As used in this Agreement, the following terms
shall have the meanings set forth below:
"Acquisition" means any transaction, or any series of related
transactions, consummated after the Closing Date, by which Borrower
and/or any of its Subsidiaries directly or indirectly (a) acquires any
ongoing business or all or substantially all of the assets of any firm,
corporation or division thereof, whether through purchase of assets,
merger or otherwise, (b) acquires control of securities of a corporation
representing 50% or more of the ordinary voting power for the election of
directors or (c) acquires control of a 50% or more ownership interest in
any partnership, joint venture or other business entity.
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"Administrative Agent's Office" means Bank of America, N.A., 5
Park Plaza, Suite 500, Irvine, California 92614, or such other office as
the Administrative Agent may designate in writing to Borrower and the
Banks.
"Advance" means any advance made or to be made by any Bank to
Borrower as provided in Article 2.
"Agreement" means this 2000 Bridge Loan Agreement, either as
originally executed or as it may from time to time be supplemented,
modified, amended, restated or extended.
"Alternate Base Rate Advance" means an Advance made by a Bank to
fund its Pro Rata Share of an Alternate Base Rate Loan.
"Alternate Base Rate Loan" means a Loan made hereunder and
designated or redesignated as an Alternate Base Rate Loan in accordance
with Article 2, or converted to an Alternate Base Rate Loan in accordance
with Article 3.
"Applicable Alternate Base Rate Spread" means, as of any date of
determination, the interest rate spread set forth below opposite the
Applicable Pricing Level as of such date:
<TABLE>
<CAPTION>
Applicable Alternate Base Rate
Pricing Level Spread
------------- -------------------
<S> <C> <C>
I 0.00%
II 0.00%
III 0.00%
IV 0.00%
V 0.25%
</TABLE>
"Applicable Commitment Fee Rate" means, as of any date of
determination, the commitment fee rate set forth below opposite the
Applicable Pricing Level as of such date:
<TABLE>
<CAPTION>
Applicable
Applicable Commitment
Pricing Level Fee Rate
------------- ----------
<S> <C> <C>
I 0.15%
II 0.20%
III 0.20%
IV 0.25%
V 0.35%
</TABLE>
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"Applicable LIBOR Spread" means, as of any date of determination,
the interest rate spread set forth below opposite the Applicable Pricing
Level as of such date:
<TABLE>
<CAPTION>
Applicable Applicable
Pricing Level LIBOR Spread
------------- ------------
<S> <C> <C>
I 0.90%
II 0.975%
III 1.05%
IV 1.25%
V 1.60%
</TABLE>
"Applicable Minimum Hold Requirement" means, in the case of any
Bank, the amount of the Pro Rata Share of the Commitment held by that
Bank as reduced by (a) the amount of any assignment of a portion thereof
made by that Bank to an Eligible Assignee that is not an Affiliate of
that Bank and (b) the amount of any participation therein granted by that
Bank to a participant that is not an Affiliate of that Bank, which net
amount, after giving effect to clauses (a) and (b), shall not be less
than $10,000,000.
"Bank" means each bank whose name is set forth in the signature
pages of this Agreement and each lender which may hereafter become a
party to this Agreement pursuant to Section 11.8 of the Primary Loan
Agreement (as incorporated herein).
"Bank of America" means Bank of America, N.A., formerly known as
Bank of America National Trust and Savings Association.
"Cash Equivalents" means, with respect to any Person, that
Person's Investments in:
(a) Government Securities due within one year of the making
of the Investment;
(b) certificates of deposit issued by, deposits in,
bankers' acceptances of, and repurchase agreements covering
Government Securities executed by, (i) any Bank or (ii) any bank
and/or savings and loan association doing business in and
incorporated under the Laws of the United States of America or any
state thereof and having on the date of such Investment combined
capital, surplus and undivided profits of at least $500,000,000
and which carries on the date of such Investment a credit rating
of P-1 or higher by Moody's Investors Service, Inc. (or a
successor rating agency) or A-1 or higher by Standard & Poor's
Rating Group (a division of McGraw-Hill, Inc.) (or a successor
rating agency), in each case due within one year after the date of
the making of the Investment; and
(c) readily marketable commercial paper of (i) any Bank
that is a Bank as of the Closing Date or (ii) corporations doing
business in and incorporated under the Laws of the United States
of America or any state thereof given on the date of such
Investment a credit rating of P-1 or higher by Moody's Investors
Service, Inc. (or a successor rating agency), of A-1 or higher by
Standard & Poor's Rating Group (a
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division of McGraw-Hill, Inc.) (or a successor rating agency), or
F-1 or higher by Fitch Investor Services, Inc. (or a successor
rating agency), in each case due within one year of the making of
the Investment.
"Closing Date" means the time and Banking Day on which the
conditions set forth in Section 8.1 are satisfied or waived pursuant to
Section 11.2 of the Primary Loan Agreement (as incorporated herein).
"Commitment" means, subject to Section 2.6, $125,000,000. The
respective Pro Rata Shares of the Banks with respect to the Commitment
are set forth in Schedule 1.1.
"Commitment Assignment and Acceptance" means a commitment
assignment and acceptance substantially in the form of Exhibit A.
"Default" means any event that, with the giving of any applicable
notice or passage of time specified in Section 9.1, or both, would be an
Event of Default.
"Domestic Unimproved Land" means, as of any date of determination,
real Property located in the United States of America (a) owned by
Borrower or any of its Subsidiaries if on that date there has been
expended by Borrower and its Subsidiaries less than 50% of the physical
construction costs reasonably estimated by Borrower (in accordance with
its past practices as of the Closing Date) to bring such real Property to
"finished lot" status and (b) owned by other Persons but which, if owned
by Borrower or any of its Subsidiaries on that date, would have satisfied
the requirement set forth in clause (a), if on that date Borrower or any
of its Domestic Subsidiaries holds an option to purchase such real
Property for which it has paid an amount equal to 20% or more of the
purchase price provided for in such option to purchase. The "book value"
with respect to Domestic Unimproved Land referred to in Section 6.15 of
the Primary Loan Agreement (as incorporated herein) shall be calculated
as if the option to purchase had been exercised as of the date of
determination, and otherwise in accordance with Generally Accepted
Accounting Principles, consistently applied.
"Event of Default" shall have the meaning provided in Section 9.1.
"Intangible Assets" means assets that are considered intangible
assets under Generally Accepted Accounting Principles, including (a)
customer lists, goodwill, computer software, unamortized deferred
charges, unamortized debt discount, capitalized research and development
costs and other intangible assets and (b) any write-up in book value of
any asset subsequent to its acquisition, but excluding any existing
write-up in book value of any asset acquired by Borrower or any of its
Subsidiaries prior to the Closing Date, as such write-up may decrease
(but not increase) from time to time.
"Interest Period" means, as to each LIBOR Loan, a period of one,
two, three or six months, as designated by Borrower; provided that (a)
the first day of each Interest Period must be a LIBOR Market Day, (b) any
Interest Period that would otherwise end on a day that is not a LIBOR
Market Day shall be extended to the next succeeding LIBOR Market Day,
unless such LIBOR Market Day falls in the next calendar month, in which
case the Interest Period
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shall end on the next preceding LIBOR Market Day, and (c) no Interest
Period may extend beyond the Maturity Date.
"Lead Arranger and Sole Book Manager" means Banc of America
Securities LLC.
"LIBOR Advance" means an Advance made by a Bank to fund its Pro
Rata Share of a LIBOR Loan.
"LIBOR Lending Office" means, with respect to each Bank, its
office, branch or affiliate identified on the signature page hereof as
its LIBOR Lending Office or such other office, branch or affiliate as
such Bank may hereafter designate as its LIBOR Lending Office by notice
to Borrower and the Administrative Agent.
"LIBOR Loan" means a Loan made hereunder and designated or
redesignated as a LIBOR Loan in accordance with Article 2.
"Loan" means the aggregate of the Advances made at any one time by
the Banks pursuant to Article 2.
"Loan Documents" means, collectively, this Agreement, the Notes,
the Subsidiary Guaranty and any other agreement or instrument that may
hereafter be executed and delivered by Borrower or a Subsidiary of
Borrower in favor of the Banks relating to or in furtherance of this
Agreement.
"Majority Banks" means (a) as of any date of determination if the
Commitment is then in effect, Banks having in the aggregate 66 2/3% or
more of the Commitment then in effect and (b) as of any date of
determination if the Commitment has then been terminated and there is
then any Indebtedness evidenced by the Notes, Banks holding Notes
evidencing in the aggregate 66 2/3% or more of the aggregate Indebtedness
then evidenced by the Notes.
"Maturity Date" means April 30, 2001.
"Note" means the promissory note made by Borrower to a Bank
evidencing the Advances under that Bank's Pro Rata Share of the
Commitment, substantially in the form of Exhibit B, either as originally
executed or as the same may from time to time be supplemented, modified,
amended, renewed, extended or supplanted.
"Obligations" means all present and future obligations of every
kind or nature of Borrower or any Party at any time and from time to time
owed to the Administrative Agent or the Banks or any one or more of them
under any one or more of the Loan Documents, whether due or to become
due, matured or unmatured, liquidated or unliquidated, or contingent or
noncontingent, including obligations of performance as well as
obligations of payment, and including interest that accrues to the extent
permitted by applicable Law after the commencement of any proceeding
under any Debtor Relief Law by or against Borrower.
"Opinions of Counsel" means the favorable written legal opinion of
(a) Munger, Tolles & Olson LLP, special counsel to Borrower, and (b)
Barton P. Pachino, General Counsel of
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Borrower, substantially in the form of Exhibit C-1 and C-2, respectively,
together with copies of all factual certificates and legal opinions upon
which such counsel has relied.
"Party" means any Person other than the Banks, the Administrative
Agent or the Lead Arranger and Sole Book Manager which now or hereafter
is a party to any of the Loan Documents.
"Primary Loan Agreement" has the meaning set forth in the recitals
to this Agreement and includes any amendments thereto which are the
subject of a corresponding amendment hereto made pursuant to Section
12.1.
"Primary Loan Agreement Bank Group" has the meaning set forth in
the recitals to this Agreement.
"Projections" mean the financial projections of Borrower delivered
to the Banks and dated as of April 24, 2000.
"Pro Rata Share" means, with respect to each Bank, the percentage
of the Commitment set forth opposite the name of that Bank on Schedule
1.1.
"Quarterly Payment Date" means June 30, 2000 and each September
30, December 31, March 31 and June 30 thereafter through and including
the Maturity Date.
"Request for Loan" means a written request for a Loan signed by a
Responsible Official of Borrower, in a form reasonably designated from
time to time by the Administrative Agent.
"Significant Subsidiary" means, as of the Closing Date, those
Subsidiaries of Borrower identified as such in Schedule 4.4 and, as of
any other date of determination, any Subsidiary of Borrower (other than a
Joint Venture) with respect to which any of the following conditions is
met:
(a) the aggregate book value of all Investments of Borrower and
its Subsidiaries in such Subsidiary exceeds 5% of the consolidated total
assets (other than assets of Financial Subsidiaries) of Borrower and its
Subsidiaries as of such date; or
(b) the proportionate share of Borrower and its Subsidiaries in
the total assets of such Subsidiary (after intercompany eliminations)
exceeds 5% of the consolidated total assets (other than assets of
Financial Subsidiaries) of Borrower and its Subsidiaries as of such date;
or
(c) the equity of Borrower and its Subsidiaries in the net income
of such Subsidiary (before income taxes, extraordinary items and
cumulative effect of a change in accounting principles) as of the end of
the most recently ended fiscal year or years of such Subsidiary exceeds
the greater of (i) an amount equal to 5% of the consolidated net income
of Borrower and its Subsidiaries (computed as aforesaid) as of the end of
the most recent Fiscal Year ended prior to such date or (ii) $3,000,000.
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"Subsidiary Guaranty" means the guaranty of the Indebtedness of
Borrower under this Agreement executed by each Guarantor Subsidiary of
Borrower substantially in the form of Exhibit D, either as originally
executed or as the same may from time to time be supplemented, modified,
amended, renewed, extended or supplanted.
Any and all defined terms used in this Agreement without definition in
this Section 1.1 shall have the respective meanings assigned thereto in the
Primary Loan Agreement, except for the following terms (which are not
incorporated into this Agreement):
Applicable Advance Fee Rate
Applicable Letter of Credit Fee
Applicable Line A Commitment Fee Rate
Applicable Line B commitment Fee Rate
Co-Agents
Co-Syndication Agent
Documentation Agent
Issuing Bank
Letters of Credit
Letter of Credit Usage
Line A Commitment
Line A Note
Line B Commitment
Line B Maturity Date
Line B Note
Managing Agents
Swing Line
Swing Line Bank
Swing Line Documents
Swing Line Loans
Swing Line Outstandings
Syndication Agent
1.2 Other Definitional Provisions. Sections 1.2, 1.3, 1.4, 1.5,
1.6 and 1.7 of the Primary Loan Agreement are incorporated herein and made a
part hereof by this reference.
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Article 2.
LOANS
2.1 Loans-General.
(a) Subject to the terms and conditions set forth in this
Agreement (including Section 8.2), at any time and from time to time from
the Closing Date through the Banking Day immediately preceding the
Maturity Date, each Bank shall, pro rata according to that Bank's Pro
Rata Share of the Commitment then in effect, make Advances to Borrower in
such amounts as Borrower may request; provided that after giving effect
to such Advance, the aggregate outstanding principal evidenced by the
Notes shall not exceed the Commitment. Subject to the limitations set
forth herein, Borrower may borrow, repay and reborrow under this Section
2.1(a) without premium or penalty.
(b) Subject to the next sentence, each Loan shall be made
pursuant to a Request for Loan which shall be in a form and shall contain
information specified from time to time by the Administrative Agent and
which shall in all events specify the requested (i) date of such Loan,
(ii) type of Loan, (iii) amount of such Loan and (iv) in the case of a
LIBOR Loan, Interest Period for such Loan. Unless the Administrative
Agent, in its sole and absolute discretion, has notified Borrower to the
contrary, each Loan may be requested by telephone (promptly confirmed in
writing) or telecopier by a Responsible Official of Borrower, and
Borrower shall confirm such request by promptly mailing a Request for
Loan conforming to the preceding sentence to the Administrative Agent.
(c) Promptly following receipt of a Request for Loan, the
Administrative Agent shall notify each Bank by telephone, telecopier or
telex of the date and type of the Loan, the applicable Interest Period in
the case of an LIBOR Loan, and that Bank's Pro Rata Share of the Loan.
Not later than 11:00 a.m., California time, on the date specified for any
Loan, each Bank shall make its Pro Rata Share of the Loan in immediately
available funds available to the Administrative Agent at the
Administrative Agent's Office. Upon fulfillment of the applicable
conditions set forth in Article 8, all Advances shall be credited in
immediately available funds to the Designated Deposit Account.
(d) The principal amount of each Loan shall be an integral
multiple of $1,000,000 and shall be in an amount not less than (i)
$1,000,000 if such Loan is an Alternate Base Rate Loan and (ii)
$5,000,000 if such Loan is a LIBOR Loan.
(e) A Request for Loan shall be irrevocable upon the
Administrative Agent's first notification thereof. The obligation of each
Bank to make any Advance is several, and not joint or joint and several,
and is not conditioned upon the performance by any other Bank of its
obligation to make Advances. The failure by any Bank to perform its
obligation to make any Advance will not increase the obligation of any
other Bank to make Advances.
(f) Borrower may redesignate an Alternate Base Rate Loan as
a LIBOR Loan, or a LIBOR Loan as an Alternate Base Rate Loan or a LIBOR
Loan with a new Interest Period, by delivering a Request for
Redesignation to the Administrative Agent, within the time periods and
pursuant to the conditions set forth in Section 2.1(b), 2.2 or 2.3, as
applicable, and
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elsewhere in this Agreement. If no Request for Redesignation (or
telephonic or other request referred to in the second sentence of Section
2.1(b), if applicable) has been made prior to the last day of the
Interest Period for an outstanding LIBOR Loan within the requisite notice
periods set forth in Section 2.3, then Borrower shall be deemed to have
requested that such LIBOR Loan be redesignated as an Alternate Base Rate
Loan.
(g) The Advances made by each Bank under this Section 2.1
shall be evidenced by that Bank's Note.
2.2 Alternate Base Rate Loans. Each request by Borrower for an
Alternate Base Rate Loan shall be made pursuant to a Request for Loan (or
telephonic or other request for loan referred to in the second sentence of
Section 2.1(b), if applicable) received by the Administrative Agent, at the
Administrative Agent's Office, not later than 9:00 a.m., California time, on the
Banking Day on which the requested Alternate Base Rate Loan is to be made. The
Administrative Agent shall notify each Bank of a request for an Alternate Base
Rate Loan as soon as practicable after receipt of the same. All Loans shall
constitute Alternate Base Rate Loans unless properly designated as LIBOR Loans
pursuant to Section 2.3.
2.3 LIBOR Loans.
(a) Each request by Borrower for a LIBOR Loan shall be made
pursuant to a Request for Loan (or telephonic or other request for loan
referred to in the second sentence of Section 2.1(b), if applicable)
received by the Administrative Agent, at the Administrative Agent's
Office, not later than 9:00 a.m., California time, at least three (3)
LIBOR Market Days before the first day of the applicable Interest Period.
The Administrative Agent shall notify each Bank of a request for a LIBOR
Loan as soon as practicable after receipt of the same.
(b) At or about 10:00 a.m., California time, two (2) LIBOR
Market Days before the first day of the applicable Interest Period, the
Administrative Agent shall determine the applicable LIBOR (which
determination shall be conclusive in the absence of manifest error) and
promptly shall give notice of the same to Borrower and the Banks by
telephone, telecopier or, in the case of the Banks, telex.
(c) No more than three (3) LIBOR Loans may be outstanding
at any particular time.
(d) Unless the Majority Banks otherwise consent, no LIBOR
Loan may be requested during the continuance of an Event of Default.
2.4 Intentionally Omitted.
2.5 Intentionally Omitted.
2.6 Voluntary Reduction of Commitment. Borrower shall have the
right, at any time and from time to time, without penalty or charge, upon at
least (5) Banking Days prior written notice voluntarily to reduce or terminate
permanently and irrevocably, in aggregate principal amounts in an integral
multiple of $1,000,000 but not less than $5,000,000 (unless all of the unused
Commitment is being terminated), all or a portion of the unused Commitment.
Borrower shall pay to the Administrative
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Agent on the date of such termination all unpaid commitment fees which have
accrued to such date in respect of the terminated portion of the Commitment.
2.7 Administrative Agent's Right to Assume Funds Available. Unless
the Administrative Agent shall have been notified by any Bank at least two hours
prior to the funding by the Administrative Agent of any Loan that such Bank does
not intend to make available to the Administrative Agent such Bank's Pro Rata
Share of such Loan, the Administrative Agent may, in its discretion (but shall
not be so obligated), assume that such Bank has made such amount available to
the Administrative Agent on the date of the Loan and the Administrative Agent
may, in reliance upon such assumption, make available to Borrower a
corresponding amount. If such corresponding amount is not in fact made available
to the Administrative Agent by such Bank, the Administrative Agent shall be
entitled to recover such corresponding amount on demand from such Bank, which
demand shall be made in a reasonably prompt manner. If such Bank does not pay
such corresponding amount forthwith upon the Administrative Agent's demand
therefor, the Administrative Agent promptly shall notify Borrower and Borrower
shall pay such corresponding amount to the Administrative Agent. The
Administrative Agent shall also be entitled to recover from such Bank interest
on such corresponding amount in respect of each day from the date such
corresponding amount was made available by the Administrative Agent to Borrower
to the date such corresponding amount is recovered by the Administrative Agent,
at a rate per annum equal to the Federal Funds Rate as notified by the
Administrative Agent to such Bank or the Borrower, as the case may be. Nothing
herein shall be deemed to relieve any Bank from its obligation to fulfill its
Pro Rata Share of the Commitment hereunder or to prejudice any rights which the
Administrative Agent or Borrower may have against any Bank as a result of any
default by such Bank hereunder.
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Article 3.
PAYMENTS AND FEES
3.1 Principal and Interest.
(a) Interest shall be payable on the outstanding daily
unpaid principal amount of each Advance from the date of such Advance
until payment in full and shall accrue and be payable at the rates set
forth herein, to the extent permitted by applicable Laws, before and
after default, before and after maturity, before and after any judgment,
and before and after the commencement of any proceeding under any Debtor
Relief Law, with interest on overdue interest to bear interest at the
Default Rate.
(b) Interest accrued on each Alternate Base Rate Loan shall
be due and payable on the last day of each calendar month. Except as
otherwise provided in Section 3.8 of the Primary Loan Agreement (as
incorporated herein), the unpaid principal amount of any Alternate Base
Rate Loan shall bear interest at a fluctuating rate per annum equal to
the sum of the Alternate Base Rate plus the Applicable Alternate Base
Rate Spread. Each change in the interest rate hereunder shall take effect
simultaneously with the corresponding change in the Alternate Base Rate.
Each change in the Alternate Base Rate shall be effective as of the
Banking Day on which the change in the Alternate Base Rate is announced,
unless otherwise specified in such announcement, in which case the change
shall be effective as so specified.
(c) Interest accrued on each LIBOR Loan shall be due and
payable on the date which is one month after the date such LIBOR Loan was
made, every month thereafter and on last day of the related Interest
Period. Except as otherwise provided in Section 3.8 of the Primary Loan
Agreement (as incorporated herein), the unpaid principal amount of any
LIBOR Loan shall bear interest at a rate per annum equal to the sum of
LIBOR for that LIBOR Loan plus the Applicable LIBOR Spread.
(d) If not sooner paid, the principal Indebtedness
evidenced by the Notes shall be payable as follows:
(i) the principal Indebtedness evidenced by the
Notes shall be payable within one (1) Banking Day in Cash to the
extent that the aggregate principal Indebtedness evidenced by the
Notes exceeds at any time the Commitment as then in effect;
(ii)the principal Indebtedness evidenced by the
Notes shall in any event be immediately payable in Cash on the
Maturity Date.
(e) The Notes may, at any time and from time to time,
voluntarily be prepaid at the election of Borrower in whole or in part
without premium or penalty; provided that: (i) any partial prepayment
shall be in integral multiples of $1,000,000, (ii) any partial prepayment
shall be in an amount not less than $1,000,000 on an Alternate Base Rate
Loan, and not less than $5,000,000 on a LIBOR Loan, (iii) the
Administrative Agent must have received written notice (or telecopied
notice confirmed promptly in writing) of any prepayment
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<PAGE> 17
at least three Banking Days before the date of prepayment in the case of
a LIBOR Loan and by 10:00 a.m., California time, on the date of
prepayment in the case of an Alternate Base Rate Loan, (iv) each
prepayment of principal, except for partial prepayments on Alternate Base
Rate Loans, shall be accompanied by prepayment of interest accrued to the
date of payment on the amount of principal paid and (v) in the case of
any prepayment of any LIBOR Loan, Borrower shall promptly upon demand
reimburse each Bank for any loss or cost directly or indirectly resulting
from the prepayment, determined as set forth in Section 3.7 of the
Primary Loan Agreement (as incorporated herein).
(f) Change in Control.
(i)If a Change in Control (as defined below) shall
have occurred, at the option of the Majority Banks, Borrower shall
repay in Cash the entire principal Indebtedness evidenced by the
Notes, together with interest thereon and all other amounts due in
connection with the Notes and this Agreement (the "Change in
Control Repayment"), on the date that is 27 Banking Days after the
occurrence of the Change of Control (the "Change of Control
Payment Date"), subject to receipt by Borrower of a Change in
Control Payment Notice as set forth in Section 3.1(f)(iii). On the
Change in Control Payment Date, the Commitment shall automatically
terminate.
A "Change in Control" shall be deemed to have
occurred at such time as any of the following events shall occur:
(A) There shall be consummated any consolidation or
merger of Borrower in which Borrower is not the
continuing or surviving corporation or pursuant to
which the Voting Stock (as defined below) would be
converted into Cash, securities or other property,
other than a merger of Borrower in which the holders
of Voting Stock immediately prior to the merger have
the same or greater proportionate ownership,
directly or indirectly, of the Voting Stock of the
surviving corporation immediately after such merger
as they had of the Voting Stock immediately prior to
such merger; or
(B) There is a report filed by any person, including its
Affiliates and Associates, on Schedule 13D or 14D-1
(or any successor schedule, form or report) pursuant
to the Securities Exchange Act of 1934 (the
"Exchange Act"), disclosing that such person (for
the purposes of this Section 3.1(f) only, the term
"person" is used as defined in Section 13(d)(3) or
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 or any successor
rule or regulation promulgated under the Exchange
Act) of 50% or more of the voting power of
Borrower's Voting Stock then outstanding; provided,
however, that a person shall not be deemed
beneficial owner of, or to own beneficially (1) any
Securities tendered pursuant to a tender or exchange
offer made by or on behalf of such person or any of
such person's Affiliates or
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<PAGE> 18
Associates (as defined below) until such tendered
Securities are accepted for purchase or exchange
thereunder, or (2) any Securities if such beneficial
ownership (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) under the Exchange Act; or
(C) A "Change in Control" (or analogous term) as defined
in an indenture or agreement governing any
Subordinated Obligation occurs.
Notwithstanding the foregoing provisions of this Section
3.1(f), a Change in Control shall not be deemed to have occurred
if at any time Borrower, any Subsidiary of Borrower, any employee
stock ownership plan or any other employee benefit plan, including
any Pension Plan of Borrower or any Subsidiary of Borrower, or any
person holding Voting Stock for or pursuant to the terms of such
employee benefit plan, files or becomes obligated to file a report
under or in response to Schedule 13D or Schedule 14D-1 (or any
successor schedule, form or report) under the Exchange Act
disclosing beneficial ownership by it of shares of Voting Stock,
whether in excess of 50% or otherwise.
"Voting Stock" means, with respect to any Person, the
capital stock of such Person having general voting power under
ordinary circumstances to elect at least a majority of the board
of directors, managers or trustees of such Person (irrespective of
whether or not at the time capital stock of any other class or
classes shall have or might have voting power by reason of the
happening of any contingency).
"Associate" shall have the meaning ascribed to such term in
Rule 12b-2 of the General Rules and Regulations under the Exchange
Act, as in effect on the date hereof.
(ii) Within 15 Banking Days after the occurrence of
a Change in Control, Borrower shall provide written notice of
the Change in Control to the Administrative Agent and each
Bank. The notice shall state:
(A) the events causing a Change in Control and the date
of such Change in Control;
(B) the date by which the Change in Control Payment
Notice (as defined in Section 3.1(f)(iii)) must be
given; and
(C) the Change in Control Payment Date.
(iii) At the direction of the Majority Banks, the
Administrative Agent shall, on behalf of the Banks, exercise the
rights specified in Section 3.1(f)(i) by delivery of a written
notice (a "Change in Control Payment Notice") to Borrower at any
time prior to or on the Change in Control Payment Date, stating
that the Notes shall be
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<PAGE> 19
prepaid on the Change in Control Payment Date. On the Change in
Control Payment Date, Borrower shall make the Change in Control
Repayment to the Administrative Agent for the benefit of the
Banks, and the Commitment shall terminate.
3.2 Upfront Fee. In addition to the fees specified in the letter
referred to in Section 3.5, on the Closing Date, Borrower shall pay to the
Administrative Agent, for the account of each Bank pro rata according to that
Bank's Pro Rata Share of the Commitment, an upfront fee of 0.15% (15 basis
points) of the Commitment.
3.3 Commitment Fees. From the Closing Date until the Maturity
Date, Borrower shall pay to the Administrative Agent, for the account of each
Bank, pro rata according to that Bank's Pro Rata Share of the Commitment, a
commitment fee equal to the Applicable Commitment Fee Rate per annum in effect
from time to time times the average daily amount by which the Commitment exceeds
the aggregate outstanding principal of the Loans evidenced by the Notes. This
commitment fee shall accrue daily and be payable in arrears with respect to each
calendar quarter on the Quarterly Payment Date falling at the end of such
calendar quarter. The Administrative Agent shall calculate the commitment fee
and the amount thereof allocable to each Bank according to that Bank's Pro Rata
Share of the Commitment and shall notify Borrower in writing of such amounts.
3.4 Utilization Fee. From the Closing Date until the Maturity
Date, Borrower shall pay to the Administrative Agent, for the account of each
Bank, pro rata according to that Bank's Pro Rata Share of the Commitment, a
utilization fee equal to 0.10% (10 basis points) times the average daily amount
by which the aggregate outstanding principal of the Loans evidenced by the Notes
exceeds 50.0% of the Commitment. This utilization fee shall accrue daily and be
payable in arrears with respect to each calendar quarter on the Quarterly
Payment Date falling at the end of such calendar quarter. The Administrative
Agent shall calculate the commitment fee and the amount thereof allocable to
each Bank according to that Bank's Pro Rata Share of the Commitment and shall
notify Borrower in writing of such amounts.
3.5 Underwriting Fee. Borrower shall pay to the Administrative
Agent, for the account solely of such Administrative Agent, such underwriting
fees as are set forth in a separate letter agreement.
3.6 Other Payment Provisions. Sections 3.6, 3.7, 3.8, 3.9, 3.10,
3.11, 3,12, 3.13, 3.14, 3.15, 3.16 and 3.17 of the Primary Loan Agreement are
incorporated herein and made a part hereof by this reference; provided, however,
that "Closing Date" shall be substituted in each place where "1997 Closing Date"
appears.
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<PAGE> 20
Article 4.
REPRESENTATIONS AND WARRANTIES
Article 4 of the Primary Loan Agreement is incorporated herein and
made a part hereof by this reference; provided, however, that (1) "Closing Date"
shall be substituted in each place where "1997 Closing Date" appears, (2)
"November 30, 1999" shall be substituted in each place where "November 30, 1996"
appears in Sections 4.5 and 4.6, (3) "November 30, 1998" shall be substituted
where "November 30, 1995" appears in Section 4.14 and (4) Section 4.20 shall be
removed in its entirety.
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<PAGE> 21
Article 5.
AFFIRMATIVE COVENANTS
(OTHER THAN INFORMATION AND
REPORTING REQUIREMENTS)
Article 5 of the Primary Loan Agreement is incorporated herein and
made a part hereof by this reference.
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<PAGE> 22
Article 6.
NEGATIVE COVENANTS
Article 6 of the Primary Loan Agreement is incorporated herein and
made a part hereof by this reference; provided, however, that (1) "Closing Date"
shall be substituted in each place where "1997 Closing Date" appears (except in
Section 6.19), (2) "November 30, 1999" shall be substituted where "November 30,
1996" appears in Section 6.7(m) and (3) Section 6.17 shall be amended to read in
its entirety as follows:
6.17 Money Market Indebtedness. Permit, for any
consecutive period of more than one (1) Banking Day, at any time
the sum of the aggregate outstanding principal amount of the Loans
(as defined in the Primary Loan Agreement) plus the Letter of
Credit Usage (as defined in the Primary Loan Agreement) plus the
Money Market Outstandings (as defined in the Primary Loan
Agreement) plus the Swing Line Outstandings (as defined in the
Primary Loan Agreement) to exceed the Commitments (as defined in
the Primary Loan Agreement).
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<PAGE> 23
Article 7.
INFORMATION AND REPORTING REQUIREMENTS
Article 7 of the Primary Loan Agreement is incorporated herein and
made a part hereof by this reference. Borrower agrees that any document
delivered to a Bank under the Primary Loan Agreement may be relied upon by any
Bank under this Agreement, even though the Bank is not a Bank under the Primary
Loan Agreement.
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<PAGE> 24
Article 8.
CONDITIONS
8.1 Initial Advances, Etc. The obligation of each Bank to make the
initial Advance to be made by it is subject to the following conditions
precedent, each of which shall be satisfied prior to the making of the initial
Advances (unless all of the Banks, in their sole and absolute discretion, shall
agree otherwise):
(a) The Administrative Agent shall have received all of the
following, each dated as of the Closing Date (unless otherwise specified
or unless the Administrative Agent otherwise agrees) and all in form and
substance satisfactory to the Administrative Agent and legal counsel for
the Administrative Agent:
(i) executed counterparts of this Agreement,
sufficient in number for distribution to the Banks and Borrower;
(ii) A Note executed by Borrower in favor of each
Bank, each in a principal amount equal to that Bank's Pro Rata
Share of the Commitment;
(iii) the Subsidiary Guaranty executed by each
Subsidiary which is a Guarantor Subsidiary as of the Closing Date;
(iv) with respect to Borrower and each Subsidiary
which is a Guarantor Subsidiary as of the Closing Date, such
documentation as the Administrative Agent may reasonably require
to establish the due organization, valid existence and good
standing of Borrower and each such Subsidiary, its qualification
to engage in business in each jurisdiction in which it is required
to be so qualified, its authority to execute, deliver and perform
any Loan Documents to which it is a Party, and the identity,
authority and capacity of each Responsible Official thereof
authorized to act on its behalf, including, without limitation,
certified copies of articles of incorporation and amendments
thereto, bylaws and amendments thereto, certificates of good
standing and/or qualification to engage in business, tax clearance
certificates, certificates of corporate resolutions, incumbency
certificates, and the like;
(v) the Opinions of Counsel;
(vi) an Officer's Certificate of Borrower affirming,
to the best knowledge of the certifying Senior Officer, that the
conditions set forth in Sections 8.1(c) and 8.1(d) have been
satisfied; and
(vii) such other assurances, certificates,
documents, consents or opinions relevant hereto as the
Administrative Agent may reasonably require.
(b) The upfront fee payable pursuant to Section 3.2 shall
have been paid and any fees then payable under the letter agreement
referred to in Section 3.5 shall have been paid.
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<PAGE> 25
(c) The representations and warranties of Borrower
contained in Article 4 shall be true and correct in all material respects
on and as of the Closing Date.
(d) Borrower and its Subsidiaries and any other Parties
shall be in compliance with all the terms and provisions of the Loan
Documents.
(e) Borrower and any other Parties shall be in compliance
with all the terms and provisions of the Loan Documents, and after giving
effect to the initial Advance, no Default or Event of Default shall have
occurred and be continuing.
(f) The Banks shall have received the written legal opinion
of Sheppard, Mullin, Richter & Hampton LLP, legal counsel to the
Administrative Agent, to the effect that the Opinions of Counsel are
acceptable and such other matters relating to the Loan Documents as the
Administrative Agent may request.
8.2 Any Advance. The obligations of the Banks to make any Advance
are subject to the following conditions precedent:
(a) the Administrative Agent shall have received a Request
for Loan;
(b) the representations and warranties contained in Article
4 (other than the representations and warranties contained in Sections
4.4(a), 4.5, 4.6, 4.7, 4.9, 4.12, 4.14, 4.18 and 4.19 of the Primary Loan
Agreement (as incorporated herein)) shall be true and correct in all
material respects on and as of the date of the Loan as though made on and
as of that date and no event or circumstance that constitutes a Material
Adverse Effect shall have occurred since the Closing Date;
(c) The sum of the aggregate outstanding principal amount
of the Loans (as defined in the Primary Loan Agreement) plus the Letter
of Credit Usage (as defined in the Primary Loan Agreement) plus the Swing
Line Outstandings (as defined in the Primary Loan Agreement) shall equal
or exceed $450,000,000; and
(d) the Administrative Agent shall have received such other
information relating to any matters which are the subject of Section
8.2(b) or the compliance by Borrower with this Agreement as may
reasonably be requested by the Administrative Agent on behalf of a Bank.
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<PAGE> 26
Article 9.
EVENTS OF DEFAULT AND REMEDIES UPON EVENT OF DEFAULT
9.1 Events of Default. There will be a default hereunder if any
one or more of the following events ("Events of Default") occurs and is
continuing, whatever the reason therefor:
(a) failure to pay any installment of principal on any of
the Notes when due; or
(b) failure to pay any installment of interest on any of
the Notes, or to pay any fee or other amounts due the Administrative
Agent or any Bank hereunder, within five Banking Days after the date when
due; or
(c) any failure to comply with Sections 5.8, 5.9, 6.1, 6.2,
6.3, 6.4, 6.7, 6.9, 6.10, 6.11, 6.15, 6.16, 6.17, 6.18 or 7.1(f) of the
Primary Loan Agreement (as incorporated herein); or
(d) any failure to comply with Section 6.8 of the Primary
Loan Agreement (as incorporated herein) which shall remain unremedied for
a period of three Banking Days after notice by the Administrative Agent
of such Default; or
(e) Borrower or any other Party fails to perform or observe
any other term, covenant, or agreement contained in any Loan Document on
its part to be performed or observed within thirty (30) calendar days
after notice by the Administrative Agent of such Default; or
(f) any representation or warranty in any Loan Document or
in any certificate, agreement, instrument, or other document made or
delivered, on or after the Closing Date, pursuant to or in connection
with any Loan Document proves to have been incorrect when made in any
respect material to the ability of Borrower to duly and punctually
perform all of the Obligations; or
(g) Any failure to pay any interest or principal when due
(following any applicable cure period) under the Mortgage Warehousing
Agreement or under any Money Market Facility; or
(h) Borrower or any of its Significant Subsidiaries (i)
fails to pay the principal, or any principal installment, of any present
or future Indebtedness (other than Non-Recourse Indebtedness, and in the
case of the Mortgage Company, arising under the Mortgage Warehousing
Agreement), or any guaranty of present or future Indebtedness (other than
Non-Recourse Indebtedness) on its part to be paid, when due (or within
any stated grace period), whether at the stated maturity, upon
acceleration, by reason of required prepayment or otherwise in excess of
$10,000,000 individually or $25,000,000 in the aggregate or (ii) fails to
perform or observe any other material term, covenant, or agreement on its
part to be performed or observed, or suffers to exist any condition, in
connection with any present or future Indebtedness (other than
Non-Recourse Indebtedness, and in the case of the Mortgage
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<PAGE> 27
Company, arising under the Mortgage Warehousing Agreement) or any
guaranty of present or future Indebtedness (other than Non-Recourse
Indebtedness), in excess of $10,000,000 individually or $25,000,000 in
the aggregate, if as a result of such failure or such condition any
holder or holders thereof (or an agent or trustee on its or their behalf)
has the right to declare it due before the date on which it otherwise
would become due; or
(i) any Loan Document, at any time after its execution and
delivery and for any reason other than the agreement of all the Banks or
satisfaction in full of all the Obligations, ceases to be in full force
and effect or is declared by a court of competent jurisdiction to be null
and void, invalid, or unenforceable in any respect which is, in the
reasonable opinion of the Majority Banks, materially adverse to the
interest of the Banks; or
(j) a final judgment (or judgments) against Borrower or any
of its Significant Subsidiaries is entered for the payment of money in
excess of $10,000,000 individually or $25,000,000 in the aggregate, and
remains unsatisfied without procurement of a stay of execution within
thirty (30) calendar days after the issuance of any writ of execution or
similar legal process or the date of entry of judgment, whichever is
earlier, or in any event at least five (5) calendar days prior to the
sale of any assets pursuant to such legal process; or
(k) Borrower or any Significant Subsidiary of Borrower
institutes or consents to any proceeding under a Debtor Relief Law
relating to it or to all or any part of its Property, or fails generally
to pay its debts as they mature, or makes a general assignment for the
benefit of creditors; or applies for or consents to the appointment of
any receiver, trustee, custodian, conservator, liquidator, rehabilitator,
or similar officer for it or for all or any part of its property; or any
receiver, trustee, custodian, conservator, liquidator, rehabilitator, or
similar officer is appointed without the application or consent of that
Person and the appointment continues undischarged or unstayed for sixty
(60) calendar days; or any proceeding under any Debtor Relief Law
relating to any such Person or to all or any part of its Property is
instituted without the consent of that Person, and continues undismissed
or unstayed for sixty (60) calendar days; or
(l) the occurrence of a Termination Event with respect to
any Pension Plan if the aggregate liability of Borrower and its ERISA
Affiliates under ERISA as a result thereof exceeds $10,000,000; or the
complete or partial withdrawal by Borrower or any of its ERISA Affiliates
from any Multiemployer Plan if the aggregate liability of Borrower and
its ERISA Affiliates as a result thereof exceeds $10,000,000; or
(m) any determination is made by a court of competent
jurisdiction that payment of principal or interest or both is due to the
holder of any Subordinated Obligations which would not be permitted by
Section 6.1 of the Primary Loan Agreement (as incorporated herein) or
that any Subordinated Obligation is not subordinated in accordance with
its terms to the Obligations; or
(n) the occurrence of an Event of Default (as such term is
defined in that certain Term Loan Agreement dated as of January 7, 1999
among Borrower, Bank of America, as Administrative Agent, and the banks
party thereto) under such Term Loan Agreement; or
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<PAGE> 28
(o) The occurrence of an Event of Default under the Primary
Loan Agreement.
9.2 Remedies Upon Event of Default. Without limiting any other
rights or remedies of the Administrative Agent or the Banks provided for
elsewhere in this Agreement or the Loan Documents, or by applicable Law or in
equity, or otherwise:
(a) Upon the occurrence of any Event of Default, and so
long as any such Event of Default shall be continuing (other than an
Event of Default described in Section 9.1(k) with respect to Borrower or
a Guarantor Subsidiary):
(i) all commitments to make Advances and all other
obligations of the Administrative Agent or the Banks shall
be suspended without notice to or demand upon Borrower,
which are expressly waived by Borrower, except that the
Majority Banks may waive the Event of Default or, without
waiving, determine, upon terms and conditions satisfactory
to the Majority Banks, to reinstate the Commitments and
make further Advances, which waiver or determination shall
apply equally to, and shall be binding upon, all the Banks;
and
(ii) the Majority Banks may request the
Administrative Agent to, and the Administrative Agent
thereupon shall, declare the unpaid principal of all
Obligations due to the Banks hereunder and under the Notes,
all interest accrued and unpaid thereon, and all other
amounts payable to the Banks under the Loan Documents to be
forthwith due and payable, whereupon the same shall become
and be forthwith due and payable, without protest,
presentment, notice of dishonor, demand, or further notice
of any kind, all of which are expressly waived by Borrower;
provided that the Administrative Agent shall notify
Borrower (by telecopy and, if practicable, by telephone)
substantially concurrently with any such acceleration (but
the failure of Borrower to receive such notice shall not
affect such acceleration).
(b) Upon the occurrence of any Event of Default described
in Section 9.1(k) with respect to Borrower or a Guarantor Subsidiary:
(i) all commitments to make Advances and all other
obligations of the Administrative Agent or the Banks under
the Loan Documents shall terminate without notice to or
demand upon Borrower, which are expressly waived by
Borrower, except that all the Banks may waive the Event of
Default or, without waiving, determine, upon terms and
conditions satisfactory to all the Banks, to reinstate the
Commitments and make further Advances; and
(ii) the unpaid principal of all Obligations due to
the Banks hereunder and under the Notes and all interest
accrued and unpaid on such Obligations, and all other
amounts payable under the Loan Documents shall be forthwith
due and payable, without protest, presentment, notice of
dishonor, demand, or further notice of any kind, all of
which are expressly waived by Borrower.
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<PAGE> 29
(c) [reserved]
(d) Upon the occurrence of an Event of Default, the Banks
and the Administrative Agent, or any of them, may proceed to protect,
exercise, and enforce their rights and remedies under the Loan Documents
against Borrower or any other Party and such other rights and remedies as
are provided by Law or equity, without notice to or demand upon Borrower
(which are expressly waived by Borrower) except to the extent required by
applicable Laws. The order and manner in which the rights and remedies of
the Banks under the Loan Documents and otherwise are exercised shall be
determined by the Majority Banks.
(e) All payments received by the Administrative Agent and
the Banks, or any of them, after the acceleration of the maturity of the
Loans shall be applied first to the costs and expenses (including
attorneys' fees and disbursements) of the Administrative Agent, acting as
Administrative Agent, and of the Banks and thereafter paid pro rata to
the Banks in the same proportion that the aggregate of the unpaid
principal amount owing on the Obligations of Borrower to each Bank, plus
accrued and unpaid interest thereon, bears to the aggregate of the unpaid
principal amount owing on all the Obligations, plus accrued and unpaid
interest thereon. Regardless of how each Bank may treat the payments for
the purpose of its own accounting, for the purpose of computing
Borrower's Obligations, the payments shall be applied first, to the costs
and expenses of the Administrative Agent, acting as Administrative Agent,
and the Banks as set forth above, second, to the payment of accrued and
unpaid fees hereunder and interest on all Obligations to the Banks, to
and including the date of such application (ratably according to the
accrued and unpaid interest on the Loans), third, to the ratable payment
of the unpaid principal of all Obligations to the Banks, and fourth, to
the payment of all other amounts then owing to the Administrative Agent
or the Banks under the Loan Documents. Subject to Section 9.2(a)(i), no
application of the payments will cure any Event of Default or prevent
acceleration, or continued acceleration, of amounts payable under the
Loan Documents or prevent the exercise, or continued exercise, of rights
or remedies of the Banks hereunder or under applicable Law unless all
amounts then due (whether by acceleration or otherwise) have been paid in
full.
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<PAGE> 30
Article 10.
THE ADMINISTRATIVE AGENT
Article 10 of the Primary Loan Agreement is incorporated herein
and made a part hereof by this reference; provided, however, that (1) the
reference to "the Administrative Agent nor any of its respective" in the first
sentence of Section 10.5 shall be amended to read "the Administrative Agent, the
Lead Arranger and Sole Book Manager or any of their Affiliates nor any of their
respective" and (2) the reference to "the Administrative Agent and its
directors" in the first sentence of Section 10.6 shall be amended to read "the
Administrative Agent, the Lead Arranger and Sole Book Manager and their
Affiliates and their respective directors".
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<PAGE> 31
Article 11.
MISCELLANEOUS
Article 11 of the Primary Loan Agreement is incorporated herein
and made a part hereof by this reference; provided, however, that (1)
"Obligation" shall be substituted where "Line A or Line B Obligation" appears in
Section 11.2(b), (2) the sentence immediately following Section 11.2(e) is
deleted in its entirety, (3) "Administrative Agent and Lead Arranger and Sole
Book Manager" shall be substituted in each place where "Administrative Agent"
appears in Section 11.3, (4) "$10,000,000" shall be substituted in each place
where "$15,000,000" appears in Sections 11.8(b) and 11.8(e)(vii) and (5)
"Administrative Agent and Lead Arranger and Sole Book Manager" shall be
substituted in each place where "Administrative Agent" appears in Section 11.10.
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<PAGE> 32
Article 12.
ADDITIONAL MODIFICATIONS
12.1 Amendments to Primary Loan Agreement. In the event of any
amendment, modification, restatement or other alteration of the Primary Loan
Agreement or any of the Loan Documents referred to therein, Borrower shall (and
shall cause its Affiliates to) concurrently amend this Agreement or the
appropriate Loan Document hereunder in the same manner, mutatis mutandis, if
requested by the Majority Banks, all at the sole expense of Borrower.
12.2 Incorporation by Reference. Any provision of the Primary Loan
Agreement that is incorporated by reference into this Agreement shall be deemed
to be amended in such minor respects as are necessary to make such provision
appropriate in the context of this Agreement rather than the context of the
Primary Loan Agreement. Any defined terms used in such a provision which is
defined in Section 1.1 of this Agreement shall be incorporated herein using the
defined term in this Agreement, and not the defined term in the Primary Loan
Agreement.
12.3 Exhibits and Schedules. All Exhibits and Schedules to this
Agreement, either as originally existing or as the same may from time to time be
supplemented, modified or amended, are incorporated herein by this reference. A
matter disclosed on any Schedule shall be deemed disclosed on all Schedules.
12.4 Relationship to Primary Loan Agreement. This Agreement and
the Primary Loan Agreement provide for separate credit facilities.
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<PAGE> 33
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed as of the date first above written.
KAUFMAN AND BROAD HOME CORPORATION
By /s/WILLIAM R. HOLLINGER
----------------------------------------------
William R. Hollinger
Vice President and Controller
10990 Wilshire Boulevard
Los Angeles, California 90024
Attn: William R. Hollinger,
Vice President and Controller
Phone: 310.231.4000
Fax: 310.231.4295
[SIGNATURES CONTINUED ON FOLLOWING PAGE]
<PAGE> 34
BANK OF AMERICA, N.A. (formerly known as Bank of
America National Trust and Savings Association),
as Administrative Agent and a Bank
By: /s/ KELLY M. ALLRED
---------------------------------------------
Kelly M. Allred
Principal
Domestic Lending Office
Bank of America, N.A.
5 Park Plaza, Suite 500
Irvine, California 92614
Attention: Kelly M. Allred
Principal
Telecopier: 949.260.5639
Telephone: 949.260.5654
LIBOR Lending Office
Bank of America, N.A.
5 Park Plaza, Suite 500
Irvine, California 92614
Attention: Jean Ashley
Telecopier: 949.260.5637
Telephone: 949.260.5682
<PAGE> 35
EXHIBIT A
COMMITMENT ASSIGNMENT AND ACCEPTANCE AGREEMENT
THIS COMMITMENT ASSIGNMENT AND ACCEPTANCE AGREEMENT ("Agreement")
dated as of ____________ is made with reference to that certain 2000 Bridge Loan
Agreement, dated as of May 10, 2000 (the "Loan Agreement") among KBHC, the Banks
that are parties thereto, Bank of America, N.A., formerly known as Bank of
America National Trust and Savings Association, as Administrative Agent, and
Banc of America Securities LLC, as Lead Arranger and Sole Book Manager, and is
entered into between the "Assignor" described below, in its capacity as a Bank
under the Loan Agreement, and the "Assignee" described below. Assignor and
Assignee hereby represent, warrant and agree as follows:
1. Definitions. Capitalized terms defined in the Loan Agreement are
used herein with the meanings set forth for such terms in the Loan Agreement. As
used in this Agreement, the following capitalized terms shall have the meanings
set forth below:
"Assignee" means __________________________________.
"Assigned Pro Rata Share" means (a) _____% of the Commitment of
the Banks under the Loan Agreement, being equal to the following dollar amount:
$____________.
"Assignor" means __________________________________.
"Effective Date" means ______________, the effective date of this
Agreement determined in accordance with Section 11.8 of the Loan Agreement.
"KBHC" means Kaufman and Broad Home Corporation, a Delaware
corporation, and its successors.
2. Representations and Warranties of the Assignor. The Assignor
represents and warrants, as of the date hereof, as follows:
(a) The Pro Rata Share of the Assignor is _____% of the Commitment
(without giving effect to assignments thereof which have not yet become
effective). The Assignor is the legal and beneficial owner of the Assigned Pro
Rata Share and the Assigned Pro Rata Share is free and clear of any adverse
claim.
(b) The outstanding principal balance of Advances made by Assignor
under the Commitment is $__________.
(c) The Assignor has full power and authority, and has taken all
action necessary to execute and deliver this Agreement and any and all other
documents required or permitted to be executed or delivered by it in connection
with this Agreement and to fulfill its obligations under, and to consummate the
transactions contemplated by, this Agreement, and no governmental authorizations
or other authorizations are required in connection therewith.
(Exhibit A, Page 1 of 8)
<PAGE> 36
(d) This Agreement constitutes the legal, valid and binding
obligation of the Assignor.
Assignor makes no representation or warranty and assumes no responsibility with
respect to the financial condition of KBHC or the performance by KBHC of its
obligations under the Loan Agreement, and assumes no responsibility with respect
to any statements, warranties or representations made or in connection with the
Loan Agreement or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Loan Agreement or any Loan Document
other than as expressly set forth above.
3. Representations and Warranties of the Assignee. The Assignee
hereby represents and warrants to the Assignor as follows:
(a) The Assignee is an Eligible Assignee;
(b) The Assignee has full power and authority, and has taken all
action necessary to execute and deliver this Agreement, and any and all other
documents required or permitted to be executed or delivered by it in connection
with this Agreement and to fulfill its obligations under, and to consummate the
transactions contemplated by, this Agreement, and no governmental authorizations
or other authorizations are required in connection therewith;
(c) This Agreement constitutes the legal, valid and binding
obligation of the Assignee;
(d) The Assignee has independently and without reliance upon the
Assignor and based on such information as the Assignee has deemed appropriate,
made its own credit analysis and decision to enter into this Agreement. Assignee
will, independently and without reliance upon the Administrative Agent or any
Bank, and based upon such documents and information as it shall deem appropriate
at the time, continue to make its own credit decisions in taking or not taking
action under the Loan Agreement;
(e) The Assignee has received copies of the Loan Agreement and
such of the Loan Documents as it has requested, together with copies of the most
recent financial statements delivered pursuant to the Loan Agreement; and
(f) If Assignee is organized under the Laws of a jurisdiction
outside the United States of America, attached hereto are the forms prescribed
by the Code and the Loan Agreement certifying Assignee's exemption from United
States withholding taxes with respect to all payments to be made to Assignee
under the Loan Agreement.
4. Assignment. On the terms set forth herein, Assignor, as of the
Effective Date, hereby irrevocably sells, assigns and transfers to the Assignee
all of the rights and obligations of the Assignor under the Loan Agreement and
the other Loan Documents, in each case to the extent of the Assigned Pro Rata
Share, and the Assignee irrevocably accepts such assignment of rights and
assumes such obligations from the Assignor on such terms and as of the Effective
Date. As of the Effective Date, Assignee shall have the rights and obligations
of a "Bank" (as defined in the Loan Agreement) under the Loan Documents, except
to the extent of any
(Exhibit A, Page 2 of 8)
<PAGE> 37
arrangements with respect to payments referred to in Section 5 hereof. Assignee
hereby appoints and authorizes the Administrative Agent to take such action and
to exercise such powers as are delegated to the Administrative Agent by the Loan
Agreement.
5. Payment. On the Effective Date, Assignee shall pay to the
Assignor, in immediately available funds, an amount equal to the purchase price,
as agreed between the Assignor and the Assignee, of the Assigned Pro Rata Share.
The Assignor and the Assignee have entered into a letter agreement, of even date
herewith, which sets forth their agreement with respect to the amount of
interest, fees, and other payments with respect to the Assigned Pro Rata Share
which are to be retained by the Assignor.
The Assignor and the Assignee hereby agree that if either receives
any payment of interest, principal, fees or any other amount under the Loan
Agreement, their respective Notes and other Loan Documents which is for the
account of the other, it shall hold the same in trust for such party to the
extent of such party's interest therein and shall promptly pay the same to such
party.
6. Principal, Interest, Fees, etc.. Any principal that would be
payable and any interest, fees and other amounts that would accrue from and
after the Effective Date to or for the account of the Assignor pursuant to the
Loan Agreement and the Notes shall be payable to or for the account of the
Assignor and the Assignee, in accordance with their respective interests as
adjusted pursuant to this Agreement.
7. Notes. The Assignor and Assignee shall make appropriate
arrangements with KBHC concurrently with the execution and delivery hereof so
that a replacement Note is issued to the Assignor, if necessary, and a new Note
is issued to the Assignee in principal amounts reflecting their Pro Rata Shares
of the Commitments or their outstanding Advances (as adjusted pursuant to this
Agreement). As of the Effective Date, the Pro Rata Shares of Assignor and
Assignee to be reflected on Schedule 1.1 to the Loan Agreement shall be:
<TABLE>
<CAPTION>
Pro Rata Share of
Commitment
----------
<S> <C>
Assignor __% ($_________)
Assignee __% ($_________)
</TABLE>
8. Further Assurances. Concurrently with the execution of this
Agreement, Assignor shall execute four counterpart original Requests for
Registration, in the form of Exhibit A to this Agreement, to be forwarded to the
Administrative Agent. The Assignor and the Assignee further agree to execute and
deliver such other instruments, and take such other action, as either party may
reasonably request in connection with the transactions contemplated by this
Agreement, and Assignor specifically agrees to cause the delivery of (i) four
original
(Exhibit A, Page 3 of 8)
<PAGE> 38
counterparts of this Agreement and (ii) the Requests for Registration, to the
Administrative Agent for the purpose of registration of Assignee as a "Bank"
pursuant to the Loan Agreement.
9. GOVERNING LAW. THIS AGREEMENT SHALL BE DEEMED TO BE A CONTRACTUAL
OBLIGATION UNDER, AND SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA.
10. Notices. All communications among the parties or notices in
connection herewith shall be in writing, hand delivered or sent by registered
airmail, postage prepaid, or by telex, telegram or cable, addressed to the
appropriate party at its address set forth on the signature pages hereof. All
such communications and notices shall be effective upon receipt.
11. Binding Effect. This Agreement shall become effective upon the
execution of the Request for Registration in the form of Exhibit A to this
Agreement by KBHC and the execution of the Consent in the form of Exhibit B to
this Agreement by the Administrative Agent, and shall be binding upon and inure
to the benefit of the parties and their respective successors and assigns;
provided, however, that Assignee shall not assign its rights or obligations
without the prior written consent of the Assignor and any purported assignment,
absent such consent, shall be void.
12. Interpretation. The headings of the various sections hereof are
for convenience of reference only and shall not affect the meaning or
construction of any provision hereof.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their respective officials, officers or agents
thereunto duly authorized as of the date first above written.
"Assignor"
---------------------------------------------
By:
------------------------------------------
------------------------------------------
Printed Name and Title
Address:
-------------------------------------
-------------------------------------
-------------------------------------
Attn:
--------------------------------
(Exhibit A, Page 4 of 8)
<PAGE> 39
"Assignee"
---------------------------------------------
By:
------------------------------------------
Printed Name and Title
Address:
-------------------------------------
-------------------------------------
-------------------------------------
Attn:
--------------------------------
(Exhibit A, Page 5 of 8)
<PAGE> 40
Exhibit A to Commitment Assignment and Acceptance Agreement
REQUEST FOR REGISTRATION
TO: BANK OF AMERICA, N.A., as Administrative Agent
THIS REQUEST FOR REGISTRATION OF ASSIGNEE is made as of the date
of the enclosed Commitment Assignment and Acceptance Agreement with reference to
that certain 2000 Bridge Loan Agreement dated as of May ___, 2000 among KBHC,
the Banks who are parties thereto, Bank of America, N.A., formerly known as Bank
of America National Trust and Savings Association, as Administrative Agent, and
Banc of America Securities LLC, as Lead Arranger and Sole Book Manager.
Assignor and Assignee hereby request that the Administrative Agent
approve of Assignee as a Bank, and that the Administrative Agent register
Assignee as a Bank pursuant to the Loan Agreement effective as of the Effective
Date described in the enclosed Commitment Assignment and Acceptance and, in
connection with this request certify to the Administrative Agent that the
enclosed Commitment Assignment and Acceptance Agreement sets forth the correct
Commitments and the Assigned Pro Rata Share of the Assignee.
Enclosed with this Request are four counterpart originals of the
Commitment Assignment and Acceptance as well as the original Notes issued to
Assignor.
IN WITNESS WHEREOF, Assignor and Assignee have executed this
Request for Registration by their duly authorized officers as of
"Assignor"
---------------------------------------------
By:
------------------------------------------
------------------------------------------
Printed Name and Title
Exhibit A
Page 1 of 2
(Exhibit A, Page 6 of 8)
<PAGE> 41
"Assignee"
---------------------------------------------
By:
------------------------------------------
---------------------------------------------
Printed Name and Title
THE UNDERSIGNED HEREBY CONSENTS
TO THE ABOVE ASSIGNMENT:
KAUFMAN AND BROAD HOME CORPORATION,
a Delaware corporation
By:
--------------------------------
--------------------------------
Printed Name and Title
Exhibit A
Page 2 of 2
(Exhibit A, Page 7 of 8)
<PAGE> 42
Exhibit B to Commitment Assignment and Acceptance Agreement
CONSENT
TO: THE ASSIGNOR AND ASSIGNEE REFERRED TO IN THE ABOVE REQUEST FOR REGISTRATION
When countersigned by the Administrative Agent below, this document shall
certify that:
1. The Administrative Agent has consented, pursuant to the terms of
the Loan Documents, to the assignment by Assignor to Assignee of the Assigned
Pro Rata Share.
2. The Administrative Agent has registered Assignee as a Bank under
the Loan Agreement, effective as of the Effective Date described above, with Pro
Rata Shares of the Commitments corresponding to the Assigned Pro Rata Share and
has adjusted the registered Pro Rata Shares of the Commitments of Assignor to
reflect the assignment of the Assigned Pro Rata Share.
BANK OF AMERICA, N.A., (formerly known as Bank
of America National Trust and Savings
Association), as Administrative Agent
By:
-------------------------------------------
-------------------------------------------
Printed Name and Title
Exhibit A
Page 1 of 1
(Exhibit A, Page 8 of 8)
<PAGE> 43
EXHIBIT B
NOTE
$________________ May 10, 2000
Los Angeles, California
FOR VALUE RECEIVED, the undersigned promises to pay to the order
of ______________________________ ("the Bank") the principal amount of
__________________________________ DOLLARS ($___________), or such lesser
aggregate amount of Advances as may be made pursuant to the Bank's Pro Rata
Share of the Commitment under the 2000 Bridge Loan Agreement hereinafter
described, payable as hereinafter set forth. The undersigned promises to pay
interest on the principal amount of each Advance made hereunder and remaining
unpaid from time to time from the date of each such Advance until the date of
payment in full, payable as hereinafter set forth.
Reference is made to the 2000 Bridge Loan Agreement dated as of
May 10, 2000 among the undersigned, as Borrower, the Banks that are parties
thereto, Bank of America, N.A., formerly known as Bank of America National Trust
and Savings Association, as Administrative Agent, and Banc of America Securities
LLC, as Lead Arranger and Sole Book Manager (as amended from time to time, the
"Loan Agreement"). Terms defined in the Loan Agreement and not otherwise defined
herein are used herein with the meanings defined for those terms in the Loan
Agreement. This is one of the Notes referred to in the Loan Agreement, and any
holder hereof is entitled to all of the rights, remedies, benefits and
privileges provided for in the Loan Agreement as originally executed or as it
may from time to time be supplemented, modified, amended, renewed, extended or
supplanted. The Loan Agreement, among other things, contains provisions for
acceleration of the maturity hereof upon the happening of certain stated events
upon the terms and conditions therein specified.
The principal indebtedness evidenced by this Note shall be payable
as provided in the Loan Agreement and in any event on the Maturity Date.
Interest shall be payable on the outstanding daily unpaid
principal amount of each Advance hereunder from the date thereof until payment
in full and shall accrue and be payable at the rates and on the dates set forth
in the Loan Agreement to the fullest extent permitted by applicable Law, both
before and after default and before and after maturity and judgment, with
interest on overdue interest to bear interest at the rate set forth in Section
3.8 of the Loan Agreement.
(Exhibit B, Page 1 of 4)
<PAGE> 44
The amount of each payment hereunder shall be made to the
Administrative Agent at the Administrative Agent's Office, for the account of
the Bank, in lawful money of the United States of America and in immediately
available funds on the day of payment (which must be a Banking Day). All
payments of principal received after 10:00 a.m., Los Angeles time, on any
Banking Day, shall be deemed received on the next succeeding Banking Day for
purposes of calculating interest thereon. The Bank shall use its best efforts to
keep a record of Advances made by it and payments of principal with respect to
this Note, and such record shall be presumptive evidence of the principal amount
owing under this Note.
The undersigned hereby promises to pay, within thirty (30) days
after demand, the reasonable costs and expenses of any holder hereof incurred in
collecting the undersigned's obligations hereunder or in enforcing or attempting
to enforce any of any holder's rights hereunder, including attorneys' fees and
disbursements, whether or not an action is filed in connection therewith, in
accordance with Section 11.3 of the Loan Agreement.
The undersigned hereby waives presentment, demand for payment,
dishonor, notice of dishonor, protest, notice of protest and any other notice or
formality, to the fullest extent permitted by applicable Laws.
This Note shall be delivered to and accepted by the Bank in the
State of California, and shall be governed by, and construed and enforced in
accordance with, the local Laws thereof.
KAUFMAN AND BROAD HOME CORPORATION,
a Delaware corporation
By
-------------------------------------------
William R. Hollinger
Vice President and Controller
(Exhibit B, Page 2 of 4)
<PAGE> 45
ADVANCES AND PAYMENTS OF PRINCIPAL
(Alternate Base Rate Loans)
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
Amount of
Amount of Loan or Principal Paid or
of Redesignation Redesignated Into Unpaid
From Another Another Type of Principal Notation
Date Type of Loan Loan Balance Made By
<S> <C> <C> <C> <C>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
</TABLE>
(Exhibit B, Page 3 of 4)
<PAGE> 46
ADVANCES AND PAYMENTS OF PRINCIPAL
(LIBOR Loans)
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
Amount of
Amount of Loan or Principal Paid or
of Redesignation Redesignated Into Unpaid
From Another Another Type of Principal Notation
Date Type of Loan Loan Balance Made By
<S> <C> <C> <C> <C>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
</TABLE>
(Exhibit B, Page 4 of 4)
<PAGE> 47
EXHIBIT C-1
FORM OF MUNGER, TOLLES & OLSON LLP OPINION
May 10, 2000
Bank of America, N.A.
as Administrative Agent
The Banks Party to the Loan Agreement
Referred to Below
Re: Kaufman and Broad Home Corporation
Ladies and Gentlemen:
We have acted as counsel to Kaufman and Broad Home Corporation, a
Delaware corporation ("Borrower"), in connection with the 2000 Bridge Loan
Agreement (the "Loan Agreement") dated as of May 10, 2000, by and among
Borrower; the Banks which are parties thereto; Bank of America, N.A., as
Administrative Agent; Banc of America Securities LLC as Lead Arranger and Sole
Book Manager (the "Arranger") (all such parties other than the Borrower are
collectively referred to herein as "Bank Parties").
This opinion is furnished to you pursuant to Section 8.1(a)(v) of
the Loan Agreement. Terms not otherwise defined herein shall have the meanings
defined for such terms in the Loan Agreement.
For the purposes of this opinion, we have examined originals, or
copies identified to our satisfaction as being true copies, of the following
documents:
(a) The Loan Agreement;
(Exhibit C-1, Page 1 of 6)
<PAGE> 48
(b) The Notes of even date herewith; and
(c) The Subsidiary Guaranty.
The documents described in (a) through (c) above are sometimes
referred to herein as the "Loan Documents".
We have also examined such other corporate documents and records,
and other certificates, opinions and instruments and have conducted such
investigations as we have deemed necessary as a basis for the opinions expressed
below. As to factual matters relevant to our opinions expressed below, we have,
without independent investigation, relied upon certificates of public officials
and upon public records, and have further assumed and relied upon, without
independent investigation, the truth and accuracy of all factual representations
and warranties of all parties to the Loan Documents.
We have assumed (i) all natural persons have legal capacity, (ii)
the genuineness of all signatures of all parties other than Borrower, (iii) the
conformity to authentic original documents of all documents submitted to us as
copies and the authenticity of all documents submitted to us as originals, (iv)
that each of the Guarantor Subsidiaries listed in Schedule 4.4 to the Loan
Agreement (the "Guarantor Subsidiaries") is duly organized, validly existing and
in good standing under the laws of its jurisdiction of incorporation or
organization and in each other jurisdiction where the conduct of its business or
the ownership of its Properties makes qualification or registration to transact
business necessary, (v) as to all parties other than the Borrower, the due
authorization, execution and delivery of the Loan Documents, (vi) the validity
and enforceability of the Loan Documents against all parties thereto other than
Borrower and the Guarantor Subsidiaries, (vii) that each of the Bank Parties has
the requisite power and authority, has obtained all necessary consents, licenses
and permits, has taken all necessary action and has complied with any and all
applicable laws with which such Bank Party is required to comply, in each case
relating to or affecting the matters and actions contemplated by the Loan
Documents, (viii) that each of the Bank Parties (other than the Arranger) is a
national bank, state bank or similar financial institution and is an exempt
lender under Article XV of the California Constitution or statutes enacted
pursuant thereto and (ix) that the Loan Documents have not been modified,
amended, terminated or revoked in any respect, and remain in full force and
effect as of the date hereof.
(Exhibit C-1, Page 2 of 6)
<PAGE> 49
On the basis of the foregoing, and relying thereon, and with the
qualifications herein set forth, we are of the opinion that:
1. Borrower is a corporation duly incorporated, validly existing
and in good standing under the General Corporation Law of the State of Delaware,
and its certificate of incorporation does not limit the term of its existence.
2. Borrower has all requisite corporate power and authority to
conduct its business, to own and lease its Properties and to execute, deliver
and perform all of its obligations under the Loan Documents to which it is a
party.
3. The execution, delivery, and performance by Borrower of the
Loan Documents to which it is a party have been duly authorized by all necessary
corporate action.
4. The execution, delivery, and performance of the Loan Documents
by Borrower do not violate any provision of Borrower's certificate of
incorporation or bylaws, and the execution, delivery, and performance by
Borrower and each Guarantor Subsidiary of the Loan Documents to which it is a
party do not violate any Requirement of Law applicable to Borrower or such
Guarantor Subsidiary imposed by the laws of the United States of America or the
State of California that, in our experience, is normally applicable to general
business entities in relation to transactions of the type contemplated by the
Loan Documents.
5. Except as have heretofore been obtained, no authorization,
consent, approval, order, license or permit from, or filing, registration, or
qualification with, or exemption from any of the foregoing from, any
Governmental Agency under any Requirement of Law imposed on Borrower or any
Guarantor Subsidiary by the laws of the United States of America or the State of
California, in each case as such Requirements of Law exist on the date hereof,
is or will be required to authorize or permit the execution, delivery and
performance by Borrower or any Guarantor Subsidiary of the Loan Documents to
which it is a party.
6. Each of the Loan Documents to which Borrower or any Guarantor
Subsidiary is a party will, when executed and delivered by Borrower or such
Guarantor Subsidiary, as the case may be, constitute the legal, valid and
binding obligation of Borrower or such Guarantor Subsidiary, as the case may be,
enforceable against Borrower or such Guarantor Subsidiary, as the case may be,
in accordance with its terms.
(Exhibit C-1, Page 3 of 6)
<PAGE> 50
In addition to any assumptions, qualifications and other matters
set forth elsewhere herein, the opinions set forth above are subject to the
following:
(a) Our opinion with respect to the legality, validity, binding
effect and enforceability of any Loan Document, agreement or provision is
subject to the effect of any applicable bankruptcy, insolvency, fraudulent
conveyance, fraudulent transfer and equitable subordination, reorganization,
moratorium or similar law affecting creditors' rights generally and to the
effect of general principles of equity, including (without limitation) concepts
of materiality, reasonableness, estoppel, good faith and fair dealing
(regardless of whether considered in a proceeding in equity or at law). We
express no opinion as to the availability of equitable remedies. In applying
such equitable principles, a court, among other things, might not allow a
creditor to accelerate the maturity of a debt or enforce a guaranty thereof upon
the occurrence of a default deemed immaterial or for non-credit reasons or might
decline to order a debtor to perform covenants. Such principles applied by a
court might also include a requirement that a creditor act with reasonableness
and in good faith.
(b) Certain rights, remedies and waivers of the Loan Documents may
be unenforceable in whole or in part, but the inclusion of such provisions does
not affect the validity of the Loan Documents taken as a whole and, except as
set forth in subparagraph (a) above, the Loan Documents taken as a whole contain
adequate provisions for enforcing payment of the Obligations; however, the
unenforceability of such provisions may result in delays in or limitations on
the enforcement of the parties' rights and remedies under the Loan Documents
(and we express no opinion as to the economic consequences, if any, of such
delays or limitations).
(c) We call your attention to the following matters as to which we
express no opinion:
(i) the agreements in the Loan Documents to indemnify the
Bank Parties against costs or expenses or liability notwithstanding such
parties' acts of negligence or willful misconduct;
(ii) provisions in the Loan Documents for payment or
reimbursement of costs, fees and expenses or indemnification for claims,
losses or liabilities to the extent any such provision may be determined
by a court or other tribunal to be in an unreasonable amount, to
constitute a penalty or to be contrary to public policy;
(Exhibit C-1, Page 4 of 6)
<PAGE> 51
(iii) the agreements in the Loan Documents to the
jurisdiction or venue of a particular court, to the waiver of the right
to jury trial or to be served with process by service upon a designated
third party;
(iv) any of the waivers or remedies contained in the Loan
Documents, whether or not any Loan Document deems any such waiver or
remedy commercially reasonable, if such waivers or remedies are
determined (1) not to be commercially reasonable under applicable law,
(2) to conflict with mandatory provisions of applicable law, (3) to be
taken in a manner determined to be unreasonable or not performed in good
faith or with fair dealing or with honesty in fact or (4) to be broadly
or vaguely stated or not to describe the right or duty purportedly waived
with reasonable specificity;
(v) provisions in the Loan Documents which may be construed
as imposing penalties or forfeitures, late payment charges or an increase
in interest rate, upon delinquency in payment or the occurrence of a
default;
(vi) any power of attorney granted under the Loan
Documents;
(vii) provisions in the Loan Documents to the effect that
rights or remedies are not exclusive, that every right or remedy is
cumulative and may be exercised in addition to any other right or remedy,
that the election of some particular remedy does not preclude recourse to
one or more others or that failure to exercise or delay in exercising
rights or remedies will not operate as a waiver of any such right or
remedy;
(viii) provisions in the Loan Documents which expressly or
by implication waive or limit the benefits of statutory, regulatory or
constitutional rights, unless and to the extent the statute, regulation
or constitution explicitly allow such waiver or other limitation;
(ix) the effect of Section 1698 of the California Civil
Code which, among other matters, provides that a written contract may be
modified by an oral agreement to the extent such agreement is performed
by the parties;
(x) the effect of Section 1670.5 of the California Civil
Code which provides that a court may not enforce or may limit the
application of a
(Exhibit C-1, Page 5 of 6)
<PAGE> 52
contract or portions thereof which it finds as a matter of law to have
been unconscionable at the time the contract was made; and
(xi) the effect of (1) any modification or alteration of
the Loan Documents or other agreements with Borrower affecting the
obligations of Borrower, (2) an election of remedies by the Bank
Parties, or (3) any other action by the Bank Parties that materially
prejudices any Guarantor Subsidiary if such modification, election or
action occurs without notice to the Guarantor Subsidiaries and without
giving the Guarantor Subsidiaries an opportunity to cure any default by
Borrower.
Our opinions expressed herein are limited to the laws of the State
of California, the General Corporation Law of the State of Delaware and the
federal laws of the United States, and we do not express any opinion herein
concerning any other law, including, but not limited to, ordinances, regulations
or practices of any county, city or other government agency or body within the
State of California.
This opinion is being provided for your benefit at the specific
request of our clients, is rendered to you in connection with the transaction
referred to above and may not be relied upon by any person (other than the Bank
Parties, an Eligible Assignee or any successor in interest of any Bank Party) or
by you or the other Bank Parties in any other context. Copies hereof may be
furnished (a) to your independent auditors and attorneys, (b) to any
governmental agency or authority having regulatory jurisdiction over you, (c)
pursuant to an order of legal process of any court or of any governmental agency
or authority, or (d) in connection with any legal action to which you are a
party arising out of the transaction referred to above. This opinion is rendered
as of the date hereof and we hereby disclaim any obligation to advise any person
entitled to rely hereon of any change in the matters stated herein.
Very truly yours,
(Exhibit C-1, Page 6 of 6)
<PAGE> 53
EXHIBIT C-2
FORM OF BARTON P. PACHINO OPINION
May 10, 2000
To: Bank of America, N.A.,
as Administrative Agent
5 Park Plaza, Suite 500
Irvine, California 92614
The Banks Party to the Loan Agreement Referred to Below
Ladies and Gentlemen:
I am the Senior Vice President and General Counsel of Kaufman and
Broad Home Corporation, a Delaware corporation ("KBHC"). KBHC shall also be
referred to herein as the "Borrower". I have acted as such in connection with
the 2000 Bridge Loan Agreement dated as of May 10, 2000 (the "Agreement"), by
and among the Borrower, the Banks which are the parties thereto, Bank of
America, N.A., as Administrative Agent, and Banc of America Securities LLC, as
Lead Arranger and Sole Book Manager.
This opinion is furnished to you pursuant to Section 8.1(a)(v) of
the Agreement. Terms not otherwise defined herein shall have the meanings
defined for such terms in the Agreement. The term "Loan Documents", as used
herein, means those Loan Documents (as defined in the Agreement) in existence as
of the Closing Date, including without limitation those referenced in paragraphs
(a) through (c) below.
This opinion is rendered to you as a supplement to the legal
opinion of Munger, Tolles & Olson LLP of even date herewith in connection with
the Agreement but expressly does not incorporate the terms of said opinion.
For purposes of this opinion, I have examined originals, or copies
identified to my satisfaction as being true copies, of the following documents:
(Exhibit C-2, Page 1 of 8)
<PAGE> 54
a. The Agreement;
b. The Notes under the Agreement; and
c. The Subsidiary Guaranty.
I have also made such investigations of fact and law, obtained
such certificates of Responsible Officials of Borrower and certain of its
Subsidiaries and of public officials, reviewed incorporation and partnership
documentation, resolutions, secretary's certificates, good standing certificates
and other documents as appropriate of and for the Borrower and the Guarantor
Subsidiaries, as applicable, and done such other things as I have deemed
necessary for the purpose of this opinion.
I have assumed (i) all natural persons have legal capacity, (ii)
the genuineness of all signatures of all parties other than Borrower and the
Guarantor Subsidiaries listed in Schedule 4.4 to the Agreement, (iii) the
conformity to authentic original documents of all documents submitted to me as
copies and the authenticity of all documents submitted to me as originals, (iv)
as to all parties other than Borrower and the Guarantor Subsidiaries, the due
authorization, execution and delivery of all documents and the validity and
enforceability thereof against all parties thereto other than Borrower and the
Guarantor Subsidiaries, (v) that each Person (other than Borrower and the
Guarantor Subsidiaries) which is a party to the Loan Documents has full power,
authority and legal right, under its charter and other governing documents and
laws applicable to it to perform its respective obligations thereunder, (vi) all
parties to any Loan Documents have filed all required franchise tax returns, if
any, and paid all required taxes, if any, under the California Revenue &
Taxation Code and under the laws of the State of Delaware and the respective
states of incorporation or formation of the Guarantor Subsidiaries, (vii) that
each of the Banks has the requisite power and authority, has obtained all
necessary consents, licenses and permits, has taken all necessary action and has
complied with any and all applicable laws with which such Bank is required to
comply, in each case relating to or affecting the matters and actions
contemplated by the Loan Documents, (viii) that each of the Banks is a national
bank, state bank or similar financial institution and is an exempt lender under
Article XV of the California Constitution or statutes enacted pursuant thereto
and (ix) that the Loan Documents have not been modified, amended, terminated or
revoked in any respect, and remain in full force and effect as of the date
hereof.
With respect to those opinions expressed below to be to
"knowledge" or "to the knowledge of the undersigned," or similar such wording, I
am referring solely to my individual, actual knowledge. Except as expressly set
forth herein, I did not undertake a review or examination of the activities or
business records of Borrower or any Subsidiaries specifically for the purpose of
rendering this opinion or to determine the existence or absence of such facts.
As Senior Vice President and General Counsel of KBHC, however, material
information respecting the matters covered by such opinions is brought to my
attention on a regular basis as a matter of internal policy and
(Exhibit C-2, Page 2 of 8)
<PAGE> 55
I intend the phrase "to the knowledge of the undersigned" to mean that, in
reviewing such information, nothing has come to my attention which caused or
should have caused me not to render such opinions.
Based upon the foregoing and in reliance thereon, I am of the
opinion that:
1. KBHC is a corporation duly organized, validly existing and in
good standing under the Laws of the State of Delaware, and its certificate of
incorporation does not provide for the termination of its existence. KBHC is
duly qualified or registered to transact business and is in good standing as a
foreign corporation in the State of California and each other jurisdiction in
which the conduct of its business or the ownership of its Properties makes such
qualifications or registration necessary, except where the failure so to qualify
or register and to be in good standing would not constitute a Material Adverse
Effect.
2. Borrower has all requisite corporate power and authority to
conduct its business, to own and lease its Properties and to execute, deliver
and perform all of its Obligations under the Loan Documents to which it is a
Party.
3. To the knowledge of the undersigned, Borrower is in substantial
compliance with all Laws and other legal requirements applicable to its
business, has obtained all authorizations, consents, approvals, orders, licenses
and permits from, and has accomplished all filings, registrations and
qualifications with, or obtained exemptions from any of the foregoing from, any
Government Agency that are necessary for the transaction of its business, except
where the failure so to comply, file, register, qualify or obtain exemptions
would not constitute a Material Adverse Effect.
4. The execution, delivery and performance by Borrower and by each
Guarantor Subsidiary of each of the Loan Documents to which it is a Party have
been duly authorized by all necessary corporate action, and do not:
a. require under the charter documents of Borrower or any
Guarantor Subsidiary any consent or approval not heretofore
obtained of any partner, director, stockholder, security holder or
creditor of such Party;
b. violate or conflict with the Party's charter,
certificate or articles of incorporation or bylaws;
c. to the knowledge of the undersigned, result in or
require the creation or imposition of any Lien or Right of Others
(other than as
(Exhibit C-2, Page 3 of 8)
<PAGE> 56
provided under the Loan Documents) upon or with respect to any
Property now owned or leased by such Party;
d. violate any Requirement of Law known to the undersigned
to be applicable to such Party; or
e. result in a breach of or constitute a default under, or
cause or permit the acceleration of any obligation owed under, any
indenture or loan or credit agreement known to the undersigned or
any other Contractual Obligation known to the undersigned to which
such Party is a party or by which such Party or any of its
Property is bound or affected;
and, to the knowledge of the undersigned, neither Borrower nor any Subsidiary of
Borrower is in violation of, or default under, any Requirement of Law or
contractual obligation, or any indenture, loan or credit agreement described in
subparagraph (e) above in any respect that would constitute a Material Adverse
Effect.
5. Each of the Loan Documents to which either Borrower or any
Guarantor Subsidiary is a Party will, when executed and delivered by Borrower or
such Guarantor Subsidiary, as the case may be, constitute the legal, valid and
binding obligation of Borrower or such Guarantor Subsidiary, as the case may be,
enforceable against such Borrower or such Guarantor Subsidiary, as the case may
be, in accordance with its terms.
6. Except as have heretofore been obtained, no authorization,
consent, approval, order, license or permit from, or filing, registration or
qualification with, or exemption from any of the foregoing from, any
Governmental Agency under any Requirement of Law imposed on Borrower or any
Guarantor Subsidiary by the laws of the United States of America or the State of
California, in each case as the same exists on the date hereof, is or will be
required to authorize or permit the execution, delivery and performance by
Borrower or by any Significant Subsidiary of the Loan Documents to which it is a
Party.
7. Each Significant Subsidiary which is a Domestic Subsidiary is a
legal entity of the form described for that Subsidiary in Schedule 4.4 to the
Agreement, duly organized, validly existing and in good standing under the Laws
of its jurisdiction of formation, is duly qualified or registered to do business
as a foreign organization (if applicable) and is in good standing as such in
each jurisdiction in which the conduct of its business or the ownership or
leasing of its Properties makes such qualifications or registration necessary
(except where the failure to be so qualified or registered and in good standing
does not constitute a Material Adverse Effect) and has all requisite power and
authority to conduct its business and to own and lease its Properties and to
(Exhibit C-2, Page 4 of 8)
<PAGE> 57
execute, deliver and perform the obligations under the Loan Documents to which
it is a Party.
8. To the knowledge of the undersigned, each Significant
Subsidiary is in substantial compliance with all Laws and other requirements
applicable to its business, has obtained all authorizations, consents,
approvals, orders, licenses and permits from, and has accomplished all filings,
registrations and qualifications with, or obtained exemptions from any of the
foregoing from, any Governmental Agency that are necessary for the transaction
of its business, except where the failure so to comply, file, register, qualify
or obtain exemptions does not constitute a Material Adverse Effect.
9. Neither Borrower nor any of its Subsidiaries is subject to
regulation under the Public Utility Holding Company Act of 1935, the Federal
Power Act, the Interstate Commerce Act or the Investment Company Act of 1940.
10. To the knowledge of the undersigned, there are no actions,
suits or proceedings pending or threatened against or affecting Borrower or any
of its Subsidiaries or any Property of any of them in any court of Law or before
any Governmental Agency in which there is a reasonable probability of a decision
which would constitute a Material Adverse Effect.
11. Neither Borrower nor any of its Subsidiaries is engaged
principally, or as one of its important activities, in the business of extending
credit for the purpose of "purchasing" or "carrying" any "margin stock" or
"margin security" within the meanings of Regulation U of the Board of Governors
of the Federal Reserve System and no loan under the Agreement will be used to
purchase or carry any such margin stock in violation of Regulation U.
12. To the knowledge of the undersigned, Borrower and its
Subsidiaries are in substantial compliance with all applicable Laws relating to
environmental protection where the failure to comply would constitute a Material
Adverse Effect, and have not received any notice from any Governmental Agency
respecting the alleged violation by Borrower or any Subsidiary of such Laws
which would constitute a Material Adverse Effect which has not been or is not
being corrected.
In addition to any assumptions, qualifications and other matters
set forth elsewhere herein, the opinions set forth above are subject to the
following:
a. My opinion with respect to the legality, validity,
binding effect and enforceability of any Loan Document, agreement
or provision is subject to the effect of any applicable
bankruptcy, insolvency,
(Exhibit C-2, Page 5 of 8)
<PAGE> 58
fraudulent conveyance, fraudulent transfer and equitable
subordination, reorganization, moratorium or similar law affecting
creditors' rights generally and to the effect of general
principles of equity, including (without limitation) concepts of
materiality, reasonableness, estoppel, good faith and fair dealing
(regardless of whether considered in a proceeding in equity or at
law). I express no opinion as to the availability of equitable
remedies. In applying such equitable principles, a court, among
other things, might not allow a creditor to accelerate the
maturity of a debt or enforce a guaranty thereof upon the
occurrence of a default deemed immaterial or for non-credit
reasons or might decline to order a debtor to perform covenants.
Such principles applied by a court might also include a
requirement that a creditor act with reasonableness and in good
faith.
b. Certain rights, remedies and waivers of the Loan
Documents may be unenforceable in whole or in part, but the
inclusion of such provisions does not affect the validity of the
Loan Documents taken as a whole and, except as set forth in
subparagraph (a) above, the Loan Documents taken as a whole
contain adequate provisions for enforcing payment of the
"Obligations" (as defined in the Agreement); however, the
unenforceability of such provisions may result in delays in or
limitations on the enforcement of the parties' rights and remedies
under the Loan Documents and I express no opinion as to the
economic consequences, if any, of such delays or limitations.
c. I call your attention to the following matters as to
which I express no opinion:
(i) the agreements in the Loan Documents to
indemnify you against costs or expenses or liability
notwithstanding your acts of negligence or willful misconduct;
(ii) provisions in the Loan Documents for payment or
reimbursement of costs, fees and expenses or indemnification for
claims, losses or liabilities to the extent any such provision may
be determined by a court or other tribunal to be in an
unreasonable amount, to constitute a penalty or to be contrary to
public policy;
(iii) the agreements in the Loan Documents to the
jurisdiction or venue of a particular court, to the waiver of the
right to jury trial or to be served with process by service upon a
designated third party;
(Exhibit C-2, Page 6 of 8)
<PAGE> 59
(iv) any of the waivers or remedies contained in the
Loan Documents, whether or not any Loan Document deems any such
waiver or remedy commercially reasonable, if such waivers or
remedies are determined (1) not to be commercially reasonable
under applicable law, (2) to conflict with mandatory provisions of
applicable law, (3) to be taken in a manner determined to be
unreasonable or not performed in good faith or with fair dealing
or with honesty in fact or (4) to be broadly or vaguely stated or
not to describe the right or duty purportedly waived with
reasonable specificity;
(v) provisions in the Loan Documents which may be
construed as imposing penalties or forfeitures, late payment
charges or an increase in interest rate, upon delinquency in
payment or the occurrence of a default;
(vi) any power of attorney granted under the Loan
Documents;
(vii) provisions in the Loan Documents to the effect
that rights or remedies are not exclusive, that every right or
remedy is cumulative and may be exercised in addition to any other
right or remedy, that the election of some particular remedy does
not preclude recourse to one or more others or that failure to
exercise or delay in exercising rights or remedies will not
operate as a waiver of any such right or remedy;
(viii) provisions in the Loan Documents which
expressly or by implication waive or limit the benefits of
statutory, regulatory or constitutional rights, unless and to the
extent the statute, regulation or constitution explicitly allow
such waiver or other limitation;{ and}
(ix) the effect of Section 1698 of the California
Civil Code which, among other matters, provides that a written
contract may be modified by an oral agreement to the extent such
agreement is performed by the parties;
(x) effect of Section 1670.5 of the California Civil
Code which provides that a court may not enforce or may limit the
application of a contract or portions thereof which it finds as a
matter of law to have been unconscionable at the time the contract
was made; and
(xi) the effect of (1) any modification or
alteration of the Loan Documents or other agreements with Borrower
affecting the
(Exhibit C-2, Page 7 of 8)
<PAGE> 60
obligations of Borrower, (2) an election of remedies by the Bank
Parties, or (3) any other action by the Bank Parties that
materially prejudices any Guarantor Subsidiary if such
modification, election or action occurs without notice to the
Guarantor Subsidiaries and without giving the Guarantor
Subsidiaries an opportunity to cure any default by Borrower.
My opinion expressed herein is limited to the laws of the State of
California, the General Corporation Law of the State of Delaware and the federal
laws of the United States, and I do not express any opinion herein concerning
any other law, including, but not limited to, ordinances, regulations, or
practices of any county, city or other government agency or body within the
State of California.
This opinion is being rendered to you in connection with the
transaction referred to above and may not be relied upon by any person (other
than the Banks, an Eligible Assignee or any successor in interest of any Bank)
or by you or the other Banks in any other context. Copies hereof may be
furnished (a) to your independent auditors and attorneys, (b) to any
governmental agency or authority having regulatory jurisdiction over you, (c)
pursuant to order of legal process of any court or of any governmental agency or
authority or (d) in connection with any legal action to which you are a party
arising out of the transaction referred to above. This opinion is rendered as of
the date hereof and I hereby disclaim any obligation to advise any person
entitled to rely hereon of any change in the matters stated herein.
Very truly yours,
Barton P. Pachino
Senior Vice President and General Counsel
(Exhibit C-2, Page 8 of 8)
<PAGE> 61
EXHIBIT D
BORROWER: KAUFMAN AND BROAD HOME CORPORATION,
a Delaware corporation
GUARANTORS: See Schedule 1 hereto
TO: BANK OF AMERICA, N.A., for itself and as Administrative Agent
SUBSIDIARY GUARANTY
THIS GUARANTY ("Guaranty") dated as of May 10, 2000, is made by
each of the parties listed on Schedule 1 hereto, together with each other person
who may become a party hereto pursuant to Section 10 of this Guaranty (each, a
Guarantor and collectively, "Guarantors"), jointly and severally, in favor of
Bank of America, N.A., formerly known as Bank of America National Trust and
Savings Association, and the Banks (as those terms are defined in the
below-referenced Loan Agreement), with reference to the following facts:
RECITALS
A. Pursuant to the 2000 Bridge Loan Agreement of even date
herewith entered into by and among Kaufman and Broad Home Corporation, a
Delaware corporation ("Borrower"), the Banks signatory thereto, Bank of America,
N.A., formerly known as Bank of America National Trust and Savings Association,
as Administrative Agent and Banc of America Securities LLC, as Lead Arranger and
Sole Book Manager (as the same may be amended from time to time, the "Loan
Agreement"), the Banks are making a credit facility available to Borrower.
B. As a condition of the availability of such credit facility,
Guarantors are required to enter into this Guaranty.
C. Guarantors expect to realize direct and indirect benefits as
the result of the availability of the aforementioned credit facility, and as the
result of the execution of this Guaranty.
AGREEMENT
NOW, THEREFORE, in order to induce the Banks to extend the
aforementioned credit facility, and for other good and valuable consideration,
the receipt and adequacy of which is hereby acknowledged, each Guarantor hereby
represents, warrants, covenants, agrees and guaranties as follows:
-1-
<PAGE> 62
(1) Terms used in this Guaranty but not defined herein shall have
the meanings defined for them in the Loan Agreement.
(2) Guarantors unconditionally guarantee and promise to pay to
Bank of America, N.A., formerly known as Bank of America National Trust and
Savings Association, as the Administrative Agent for the Banks, on demand, in
lawful money of the United States, any and all Indebtedness of Borrower then due
to the Banks. The word "Indebtedness" means any and all advances, debts,
obligations and liabilities of Borrower heretofore, now, or hereafter made,
incurred or created under the Loan Agreement and under the Loan Documents, and
whether Borrower may be liable individually or jointly with others, or whether
such Indebtedness may be or hereafter becomes otherwise unenforceable.
(3) This Guaranty is irrevocable in nature, is a guaranty of
prompt and punctual payment and performance of all Indebtedness of Borrower, and
is not merely a guaranty of collection. The Indebtedness guaranteed hereunder
includes that arising under successive transactions which shall either continue
the Indebtedness from time to time or renew it after it has been satisfied.
Anything in this Guaranty to the contrary notwithstanding, the maximum liability
of any Guarantor hereunder shall be limited to the extent required for the
obligation of such Guarantor to be valid, binding and enforceable and not
otherwise voidable or avoidable.
(4) The obligations hereunder are joint and several, and
independent of the obligations of Borrower and or any of its other Subsidiaries.
Separate action or actions may be brought and prosecuted against any Guarantor
whether action is brought against any Borrower or any of its other Subsidiaries,
including any other Guarantor, or whether Borrower or any of its other
Subsidiaries, including any other Guarantor, may be joined in any such action or
actions.
(5) Each Guarantor authorizes the Banks, without notice or demand
and without affecting its liability hereunder, from time to time to (a) renew,
compromise, extend, accelerate or otherwise change the time for payment of, or
otherwise change the terms of the Indebtedness or any part thereof, including
increase or decrease of the rate of interest thereon; (b) take and hold security
for the payment of this Guaranty or the Indebtedness guaranteed, and exchange,
enforce, waive and release any such security; (c) apply such security and direct
the order or manner of sale thereof as the Administrative Agent or any Bank in
its discretion may determine; and (d) release or substitute any one or more of
the endorsers or guarantors.
(6) Each Guarantor waives, to the fullest extent permitted by
applicable law, any right to require any Bank to (a) proceed against Borrower or
any of its other Subsidiaries, including any other Guarantor; (b) proceed
against or exhaust any security held from Borrower or any of its Subsidiaries;
or (c) pursue any other remedy in the Banks' power whatsoever. Each Guarantor
waives any defense arising by reason of any disability or other defense of
Borrower or by reason of the cessation from any cause whatsoever of the
liability of Borrower, other than payment in full of the Indebtedness. Until all
Indebtedness of Borrower to the Banks shall have been paid in full, each
Guarantor waives any right to enforce any
-2-
<PAGE> 63
remedy which the Banks now have or may hereafter have against Borrower or any of
its other Subsidiaries, and waives any benefit of, and any right to participate
in, any security now or hereafter held by the Banks. Guarantors waive all rights
and defenses arising out of an election of remedies by the creditor, even though
that election of remedies, such as a nonjudicial foreclosure with respect to
security for a guaranteed obligation, has destroyed the guarantor's rights of
subrogation and reimbursement against the principal by the operation of Section
580d of the Code of Civil Procedure or otherwise. Guarantors expressly waive to
the fullest extent permitted by applicable Law all other suretyship defenses
they otherwise might or would have under any Law. Each Guarantor waives any
right of subrogation that it may have in respect to the obligations of Borrower
to the Banks. Each Guarantor waives all presentments, demands for performance,
notices of nonperformance, protests, notices of protest, notices of dishonor,
and notices of acceptance of this Guaranty and of the existence, creation, or
incurring of new or additional Indebtedness.
(7) After demand upon the Guarantors for payment under this
Guaranty, each Guarantor hereby specifically authorizes each Bank (subject to
the approval of the Majority Banks) in which such Guarantor maintains a deposit
account (whether a general or special deposit account, other than trust
accounts) or a certificate of deposit to setoff any Obligations owed to the
Banks against such deposit account or certificate of deposit without prior
notice to any Guarantor (which notice is hereby waived) whether or not such
deposit account or certificate of deposit has then matured. Nothing in this
paragraph shall limit or restrict the exercise by a Bank of any right to setoff
or banker's lien under applicable Law, subject to the approval of the Majority
Banks.
(8) Each Guarantor represents and warrants to the Banks that it
has established adequate means of obtaining from Borrower and its Subsidiaries,
on a continuing basis, financial and other information pertaining to the
businesses, operations and condition (financial and otherwise) of Borrower and
its Subsidiaries, and that Guarantor now is and hereafter will be completely
familiar with the businesses, operations and condition (financial and otherwise)
of Borrower and its Subsidiaries. Each Guarantor hereby expressly waives and
relinquishes any duty on the part of the Banks (should any such duty exist) to
disclose to any Guarantor any matter, fact or thing related to the businesses,
operations or condition (financial or otherwise) of Borrower or its
Subsidiaries, whether now known or hereafter known by the Banks during the life
of this Guaranty.
(9) Guarantors agree to pay, within thirty (30) days after demand,
the reasonable out-of-pocket costs and expenses of the Administrative Agent and
each of the Banks in connection with the enforcement of this Guaranty, including
without limitation the reasonable fees and out-of-pocket expenses of any legal
counsel retained by the Administrative Agent or any of the Banks.
(10) Any other Person may become a Guarantor under, and become
bound by the terms and conditions of, this Guaranty by executing and delivering
to the Administrative Agent an Instrument of Joinder substantially in the form
attached hereto as Exhibit A.
-3-
<PAGE> 64
(11) This Guaranty shall be governed by and construed according to
the laws of the State of California, to the jurisdiction of which the parties
hereto submit.
"GUARANTORS"
KAUFMAN AND BROAD OF ARIZONA, INC.,
an Arizona corporation
By:
------------------------------------------
William R. Hollinger
Vice President and Assistant Secretary
KAUFMAN AND BROAD - CENTRAL VALLEY, INC., a
California corporation
By:
------------------------------------------
William R. Hollinger
Vice President and Assistant Secretary
KAUFMAN AND BROAD COASTAL, INC., a
California corporation
By:
------------------------------------------
William R. Hollinger
Vice President and Assistant Secretary
KAUFMAN AND BROAD MULTI-HOUSING
GROUP, INC., a California corporation
By:
------------------------------------------
William R. Hollinger, Assistant Secretary
-4-
<PAGE> 65
KAUFMAN AND BROAD OF NORTHERN
CALIFORNIA, INC., a California corporation
By:
------------------------------------------
William R. Hollinger, Assistant Secretary
KAUFMAN AND BROAD OF SACRAMENTO, INC.,
a California corporation
By:
------------------------------------------
William R. Hollinger
Vice President, Treasurer
and Assistant Secretary
KAUFMAN AND BROAD OF SAN DIEGO, INC.,
a California corporation
By:
------------------------------------------
William R. Hollinger
Vice President and Assistant Secretary
KAUFMAN AND BROAD - SOUTH BAY, INC.,
a California corporation
By:
------------------------------------------
William R. Hollinger, Assistant Secretary
KAUFMAN AND BROAD OF SOUTHERN CALIFORNIA,
INC., a California corporation
By:
------------------------------------------
William R. Hollinger, Chief Financial
Officer, Treasurer and Assistant Secretary
-5-
<PAGE> 66
KB HOLDINGS ONE, INC., a California
corporation
By:
------------------------------------------
William R. Hollinger
Vice President, Treasurer
and Assistant Secretary
KAUFMAN AND BROAD OF COLORADO, INC.,
a Colorado corporation
By:
------------------------------------------
William R. Hollinger,
Assistant Secretary
KAUFMAN AND BROAD OF NEVADA, INC.,
a Nevada corporation
By:
------------------------------------------
William R. Hollinger
Vice President, Treasurer
and Assistant Secretary
KAUFMAN AND BROAD OF RENO, INC.,
a Nevada corporation
By:
------------------------------------------
William R. Hollinger
Vice President, Treasurer
and Assistant Secretary
KAUFMAN AND BROAD OF TEXAS, LTD.,
a Texas limited partnership
By: KBSA, Inc., a Texas corporation,
Its general partner
By:
------------------------------------------
William R. Hollinger, Assistant Secretary
-6-
<PAGE> 67
KAUFMAN AND BROAD DEVELOPMENT OF TEXAS, L.P.,
a Texas limited partnership
By: KBSA, Inc., a Texas corporation,
Its general partner
By:
------------------------------------------
William R. Hollinger, Assistant Secretary
KAUFMAN AND BROAD LONE STAR, L.P.,
a Texas limited partnership
By: KBSA, Inc., a Texas corporation,
Its general partner
By:
------------------------------------------
William R. Hollinger, Assistant Secretary
-7-
<PAGE> 68
SCHEDULE 1
TO GUARANTY
List of Guarantors
Kaufman and Broad of Arizona, Inc.
Kaufman and Broad - Central Valley, Inc.
Kaufman and Broad Coastal, Inc.
Kaufman and Broad Multi-Housing Group, Inc.
Kaufman and Broad of Northern California, Inc.
Kaufman and Broad of Sacramento, Inc.
Kaufman and Broad of San Diego, Inc.
Kaufman and Broad - South Bay, Inc.
Kaufman and Broad of Southern California, Inc.
KB Holdings One, Inc.
Kaufman and Broad of Colorado, Inc.
Kaufman and Broad of Nevada, Inc.
Kaufman and Broad of Reno, Inc.
Kaufman and Broad of Texas, Ltd.
Kaufman and Broad Development of Texas, L.P.
Kaufman and Broad Lone Star, L.P.
-8-
<PAGE> 69
INSTRUMENT OF JOINDER
THIS INSTRUMENT OF JOINDER ("Joinder") is executed as of
________________, by _______________________________________________________, a
____________________ ("Joining Party"), and delivered to the Administrative
Agent pursuant to the Guaranty dated as of May 10, 2000 (the "Guaranty"). Terms
used but not defined in this Joinder shall have the meanings defined for those
terms in the Guaranty.
RECITALS
A. The Guaranty was made by the Guarantors in favor of the Banks
that are parties to that certain 2000 Bridge Loan Agreement, dated as of May 10,
2000 (the "Loan Agreement") among Kaufman and Broad Home Corporation, as
Borrower, the Banks signatory thereto, Bank of America, N.A., formerly known as
Bank of America National Trust and Savings Association, as Administrative Agent,
and Banc of America Securities LLC, as Lead Arranger and Sole Book Manager.
B. Joining Party has become a Significant Subsidiary (as defined
in the Loan Agreement) or has been designated by Borrower as a Guarantor
Subsidiary (as defined in the Loan Agreement), and as such is required pursuant
to Section 5.9 of the Loan Agreement to become a Guarantor.
C. Joining Party expects to realize direct and indirect benefits
as a result of the availability to Borrower of a credit facility pursuant to the
Loan Agreement, and as a result of becoming a party to the Guaranty.
NOW THEREFORE, Joining Party agrees as follows:
AGREEMENT
1. By this Joinder, Joining Party becomes a "Guarantor" under and
pursuant to Section 10 of the Guaranty. Joining Party agrees that, upon its
execution hereof, it will become a Guarantor under the Guaranty with respect to
all Indebtedness of Borrower heretofore or hereafter incurred under the Loan
Agreement, and will be bound by all terms, conditions, and duties applicable to
a Guarantor under the Guaranty.
-1-
<PAGE> 70
2. The effective date of this Joinder is _______________.
"Joining Party"
---------------------------------------------
a
--------------------------------------------
By:
------------------------------------------
------------------------------------------
Printed Name and Title
ACKNOWLEDGED:
BANK OF AMERICA, N.A. (formerly known
as Bank of America National Trust and
Savings Association), as Administrative Agent
By:
------------------------------------------
Printed Name and Title
KAUFMAN AND BROAD HOME CORPORATION
By:
------------------------------------------
------------------------------------------
Printed Name and Title
-2-
<PAGE> 71
SCHEDULE 1.1
COMMITMENTS
<TABLE>
<CAPTION>
Pro Rata Share of Dollar Amount of
----------------- ----------------
Bank Commitment Commitment
---- ---------- ----------
<S> <C> <C>
Bank of America, N.A. 100% $ 125,000,000.00
</TABLE>
(Schedule 1.1, Page 1 of 1)
<PAGE> 72
SCHEDULE 4.4
Kaufman and Broad Home Corporation and
Consolidated Subsidiaries
Key to "Types"
S = Significant Subsidiary
G = Guarantor Subsidiary
Fo = Foreign Subsidiary
Fi = Financial Subsidiary
(Note: All Guarantor Subsidiaries are
also Significant Subsidiaries)
<TABLE>
<CAPTION>
ARIZONA CORPORATIONS % TYPE(s)
-------------------- -- -------
<S> <C> <C>
Kaufman and Broad of Arizona, Inc. 100 S/G
Kaufman and Broad Home Sales of Arizona, Inc. 100
Kaufman and Broad of Tucson, Inc. 100
Kaufman and Broad Home Sales of Tucson, Inc. 100
CALIFORNIA CORPORATIONS
-----------------------
Affordable Multi-Family, Inc. 100
Branching Tree Corp. 100
Cable Associates, Inc. 100
Custom Decor, Inc. 100
First Northern Builders Servicing, Inc. 100
Fullerton Affordable Housing, Inc. 100
Gateway Town Center Investors, Inc. 100
KBASW Mortgage Acceptance Corporation 100 Fi
KBI/Mortgage Acceptance Corporation 100 Fi
KBMH Construction, Inc. 100
KBMH Capital, Inc. 100
KBMH Property Management, Inc. 100
KBRAC IV Mortgage Acceptance Corporation 100 Fi
Kaufman and Broad Architecture, Inc. 100
Kaufman and Broad - Central Valley, Inc. 100 S/G
Kaufman and Broad Coastal, Inc. 100 S/G
Kaufman and Broad Communities, Inc. 100
Kaufman and Broad Development Group 100
Kaufman and Broad Embarcadero, Inc. 100
Kaufman and Broad Holdings, Inc. 100
Kaufman and Broad Home Sales, Inc. 100
Kaufman and Broad Home Sales of Northern California, Inc. 100
Kaufman and Broad Insurance Agency, Inc. 100
Kaufman and Broad International, Inc. 100
Kaufman and Broad Land Company 100
Kaufman and Broad Land Development Venture, Inc. 100
Kaufman and Broad - Monterey Bay, Inc. 100
</TABLE>
(Schedule 4.4, Page 1 of 4)
<PAGE> 73
<TABLE>
<CAPTION>
CALIFORNIA CORPORATIONS TYPE(s)
----------------------- -------
<S> <C> <C>
Kaufman and Broad - Moreno/Perris Valleys, Inc. 100
Kaufman and Broad Multi-Family, Inc. 100
Kaufman and Broad Multi-Housing Group, Inc. 100 S/G
Kaufman and Broad of Northern California, Inc. 100 S/G
Kaufman and Broad North Stockton, Inc. 100
Kaufman and Broad Patterson, Inc. 100
Kaufman and Broad Properties 100
Kaufman and Broad of Sacramento, Inc. 100 S/G
Kaufman and Broad of San Diego, Inc. 100 S/G
Kaufman and Broad - South Bay, Inc. 100 S/G
Kaufman and Broad of Southern California, Inc. 100 S/G
Kaufman and Broad of Utah, Inc. 100
KB Holdings One, Inc. 100 S/G
Kent Land Company 100
Kingsbay Escrow Company 100
Lewis Homes Management Corp. 100
Mather Housing Company, LLC 100
Multi-Housing G.P. VI, Inc. 100
Multi-Housing G.P. VIII, Inc. 100
Multi-Housing G.P. X, Inc. 100
Multi-Housing G.P. XII, Inc. 100
Multi-Housing G.P. XIV, Inc. 100
Multi-Housing G.P. XVIII, Inc. 100
Multi-Housing G.P. XX, Inc. 100
Multi-Housing G.P. XXII, Inc. 100
Multi-Housing G.P. XXIV, Inc. 100
Multi-Housing Investments, Inc. 100
Simi Affordable Housing, Inc. 100
CANADIAN CORPORATIONS
---------------------
Margreen Investments, Inc. 100 Fo
3238865 Canada Inc. 100 Fo
COLORADO CORPORATION
--------------------
Kaufman and Broad of Colorado, Inc. 100 S/G
DELAWARE CORPORATIONS/LLCS
--------------------------
Eden Land Development Corp. 100
e.KB, Inc. 100
Estes Homebuilding Co. 100
General Homes Corporation 100
General Homes of Arizona 100
General Homes of Dallas 100
General Homes of Florida 100
General Homes of Houston 100
General Homes Development LLC 100
GH Homebuilding Holdings, Inc. 100
HomeSafe Escrow Company 100
International Mortgage Acceptance Corporation 100
Kaufman and Broad Development Company 100
</TABLE>
(Schedule 4.4, Page 2 of 4)
<PAGE> 74
<TABLE>
<CAPTION>
DELAWARE CORPORATIONS/LLCS TYPE(s)
-------------------------- -------
<S> <C> <C>
Kaufman and Broad Limited 100
KBHC Financing I 3
LHE Arctic LLC 100
LHN Arctic LLC 100
LDC Arctic LLC 100
LP Arctic LLC 100
LHC Arctic LLC 100
rateOne Home Loans, LLC 100
Rate One Associates, Inc. 100
Rate One Holdings, Inc. 100
FRENCH CORPORATIONS
-------------------
Kaufman and Broad Developpement SA. 100 Fo/S
Kaufman and Broad SA. 100 Fo/S
Kaufman and Broad Promotion Maisons Individuelles SA. 100 Fo/S
Kaufman and Broad Renovation S.A.R.L. 100 Fo
SMCI Developpement. SA. 100 Fo
Gie KB 100 Fo
Park SA 99.99 Fo
Millet, S.A.R.L. 100 Fo
LMP Chancy S.A.R.L. 100 Fo
ILLINOIS CORPORATIONS
---------------------
Kaufman and Broad of Illinois, Inc. 100
Kaufman and Broad Mortgage Company 100 Fi
MASSACHUSETTS CORPORATION
-------------------------
Kaufman and Broad Homes, Inc. 100
MEXICAN CORPORATIONS
--------------------
Kaufman y Broad de Mexico 100 Fo
Kaufman y Broad Asesoria Administrativa 100 Fo
Operadora Los Robles 100 Fo
Desarrollos Los Robles 100 Fo
MICHIGAN CORPORATION
--------------------
Keywick, Inc. 100
MINNESOTA CORPORATION
---------------------
Kaufman and Broad Custom Homes, Inc. 100
NEVADA CORPORATION
------------------
</TABLE>
(Schedule 4.4, Page 3 of 4)
<PAGE> 75
<TABLE>
<CAPTION>
NEVADA CORPORATION TYPE(s)
------------------ -------
<S> <C> <C>
Desert Inn Development, LLC 100
Kaufman and Broad Home Sales of Nevada, Inc. 100
Kaufman and Broad of Nevada, Inc. 100 S/G
Kaufman and Broad Home Sales of Reno, Inc. 100
Kaufman and Broad of Reno, Inc. 100 S/G
KB Spring Mountain, Inc. 100
Lewis Homes - Carlyle Venture L.L.C. 50
NEW MEXICO CORPORATIONS
-----------------------
Kaufman and Broad Home Sales of New Mexico, Inc. 100
Kaufman and Broad of New Mexico, Inc. 100
NEW YORK CORPORATION
--------------------
Kaufman and Broad Homes of Long Island, Inc. 100
TEXAS CORPORATIONS AND PARTNERSHIPS
-----------------------------------
Eden Corporation 100
Envirographic, Inc. 100
FGMC, Inc. 100
Hallmark Residential Group, Inc. 100
Kaufman and Broad Insurance Agency of Texas Holdings, Inc. 100
Kaufman and Broad of Texas, Ltd. 100 S/G
Kaufman and Broad Development of Texas, L.P. 100 S/G
Kaufman and Broad Lone Star, L.P. 100 S/G
KBSA Inc. 100
Rayco Land Development, Inc. 100
San Antonio Title Co. 100
SATEX Properties, Inc. 100
Quoin Investments, Inc. 100
</TABLE>
(Schedule 4.4, Page 4 of 4)
<PAGE> 76
SCHEDULE 4.7
Existing Liens or Rights of Others
as of February 29, 2000
NONE
(Schedule 4.7 - Page 1 of 1)
<PAGE> 77
SCHEDULE 4.9
Existing Indebtedness and Contingent Guaranty Obligations
as of February 29, 2000
<TABLE>
<CAPTION>
Amount Total
-------------- --------------
$(000) $(000)
<S> <C> <C>
DEBT:
KBHC SECURED DEBT:
California 14,057
Other US 11,413
International 11,457
36,927
KBMC SECURED DEBT:
Commercial Paper 251,844
Mortgage Warehouse Facility 34,544
286,388
UNSECURED DEBT:
Senior Debt 7-3/4% 175,000
Snr Sub Debt 9-3/8% 174,409
Snr Sub Debt 9-5/8% 124,543
Revolving Credit Line 396,800
Other Unsecured 57,535
928,287
-----------
TOTAL DEBT 1,251,602
===========
CONTINGENT GUARANTEE OBLIGATIONS:
KBHC
Multihousing 43,523
Financial Letters of Credit 22,850
TOTAL CONTINGENT GUARANTEE OBLIGATIONS 66,373
===========
TOTAL DEBT AND CONTINGENT
CONTINGENT GUARANTEE OBLIGATIONS
-----------
1,317,975
-----------
</TABLE>
(Schedule 4.9, Page 1 of 1)
<PAGE> 78
SCHEDULE 6.4
Investments
as of the Closing Date
See Attached
(Schedule 6.4, Page 1 of 2)
<PAGE> 79
INVESTMENTS IN AND ADVANCES TO JOINT VENTURES
FYE 11-30-00 (000'S)
<TABLE>
<CAPTION>
11-30-99 2-29-00 5-31-00 8-31-00 11-30-00
---------- --------- --------- --------- ----------
<S> <C> <C> <C> <C> <C>
Construction
GREATER LA
City Ranch 15,906 16,469 - - -
---------- --------- --------- --------- ----------
Total 15,906 16,469 - - -
---------- --------- --------- --------- ----------
LAS VEGAS
Carlyle 907 1,872 - - -
---------- --------- --------- --------- ----------
Total 907 1,872 - - -
---------- --------- --------- --------- ----------
NEW MEXICO
Paradise Green 2 2 - - -
Las Ventanas 251 252 - - -
---------- --------- --------- --------- ----------
Total 253 254 - - -
---------- --------- --------- --------- ----------
HOUSTON
Southwyck Management 35 35 - - -
Housing Software - - - - -
Performance Mortgage
Partners, Ltd. 25 25 - - -
---------- --------- --------- --------- ----------
Total 60 60 - - -
---------- --------- --------- --------- ----------
MAISONS INDIVIDUELLES
Villabe Les Heurts (8) (8) - - -
---------- --------- --------- --------- ----------
Total (8) (8) - - -
---------- --------- --------- --------- ----------
KBD
Issy Guynemer (104) (1) - - -
Des Pepinieres (26) 3 - - -
Emile Meunier 62 61 - - -
Haussmann 1,302 1,248 - - -
Iloche Monceau 24 11 - - -
Meudon Les Montalcts (2) (2) - - -
Villa D'Auteuil 2,409 2,306 - - -
Terrasse De Chatillon (134) (127) - - -
Domaine De Verneuil 558 537 - - -
Park D'Alembert (102) (25) - - -
Sarl Samlou 185 503 - - -
Rouselle - 1 - - -
Quai de la Marne - 87 - - -
Ave du Maine - 376 - - -
Quadrilaterc - (360) - - -
Dohnmey - (2) - - -
Illot Paille - (82) - - -
Briand - 80 - - -
---------- --------- --------- --------- ----------
Total 4,172 4,614 - - -
---------- --------- --------- --------- ----------
TOTAL 21,290 23,261 - - -
========== ========= ========= ========= ==========
</TABLE>
(Schedule 6.4, Page 2 of 2)
<PAGE> 80
EXECUTION
NOTE
$125,000,000 May 10, 2000
Los Angeles, California
FOR VALUE RECEIVED, the undersigned promises to pay to the order
of BANK OF AMERICA, N.A. ("the Bank") the principal amount of ONE HUNDRED
TWENTY-FIVE MILLION DOLLARS ($125,000,000), or such lesser aggregate amount of
Advances as may be made pursuant to the Bank's Pro Rata Share of the Commitment
under the 2000 Bridge Loan Agreement hereinafter described, payable as
hereinafter set forth. The undersigned promises to pay interest on the principal
amount of each Advance made hereunder and remaining unpaid from time to time
from the date of each such Advance until the date of payment in full, payable as
hereinafter set forth.
Reference is made to the 2000 Bridge Loan Agreement dated as of
May 10, 2000 among the undersigned, as Borrower, the Banks that are parties
thereto, Bank of America, N.A., formerly known as Bank of America National Trust
and Savings Association, as Administrative Agent, and Banc of America Securities
LLC, as Lead Arranger and Sole Book Manager (as amended from time to time, the
"Loan Agreement"). Terms defined in the Loan Agreement and not otherwise defined
herein are used herein with the meanings defined for those terms in the Loan
Agreement. This is one of the Notes referred to in the Loan Agreement, and any
holder hereof is entitled to all of the rights, remedies, benefits and
privileges provided for in the Loan Agreement as originally executed or as it
may from time to time be supplemented, modified, amended, renewed, extended or
supplanted. The Loan Agreement, among other things, contains provisions for
acceleration of the maturity hereof upon the happening of certain stated events
upon the terms and conditions therein specified.
The principal indebtedness evidenced by this Note shall be
payable as provided in the Loan Agreement and in any event on the Maturity Date.
Interest shall be payable on the outstanding daily unpaid
principal amount of each Advance hereunder from the date thereof until payment
in full and shall accrue and be payable at the rates and on the dates set forth
in the Loan Agreement to the fullest extent permitted by applicable Law, both
before and after default and before and after maturity and judgment, with
interest on overdue interest to bear interest at the rate set forth in Section
3.8 of the Loan Agreement.
-1-
<PAGE> 81
The amount of each payment hereunder shall be made to the
Administrative Agent at the Administrative Agent's Office, for the account of
the Bank, in lawful money of the United States of America and in immediately
available funds on the day of payment (which must be a Banking Day). All
payments of principal received after 10:00 a.m., Los Angeles time, on any
Banking Day, shall be deemed received on the next succeeding Banking Day for
purposes of calculating interest thereon. The Bank shall use its best efforts to
keep a record of Advances made by it and payments of principal with respect to
this Note, and such record shall be presumptive evidence of the principal amount
owing under this Note.
The undersigned hereby promises to pay, within thirty (30) days
after demand, the reasonable costs and expenses of any holder hereof incurred in
collecting the undersigned's obligations hereunder or in enforcing or attempting
to enforce any of any holder's rights hereunder, including attorneys' fees and
disbursements, whether or not an action is filed in connection therewith, in
accordance with Section 11.3 of the Loan Agreement.
The undersigned hereby waives presentment, demand for payment,
dishonor, notice of dishonor, protest, notice of protest and any other notice or
formality, to the fullest extent permitted by applicable Laws.
This Note shall be delivered to and accepted by the Bank in the
State of California, and shall be governed by, and construed and enforced in
accordance with, the local Laws thereof.
KAUFMAN AND BROAD HOME CORPORATION,
a Delaware corporation
By /s/ WILLIAM R. HOLLINGER
---------------------------------
William R. Hollinger
Vice President and Controller
-2-
<PAGE> 82
ADVANCES AND PAYMENTS OF PRINCIPAL
(Alternate Base Rate Loans)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Amount of
Amount of Loan or Principal Paid or
of Redesignation Redesignated Into Unpaid
From Another Another Type of Principal Notation
Date Type of Loan Loan Balance Made By
<S> <C> <C> <C> <C>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
</TABLE>
-3-
<PAGE> 83
ADVANCES AND PAYMENTS OF PRINCIPAL
(LIBOR Loans)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Amount of
Amount of Loan or Principal Paid or
of Redesignation Redesignated Into Unpaid
From Another Another Type of Principal Notation
Date Type of Loan Loan Balance Made By
<S> <C> <C> <C> <C>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
</TABLE>
-4-
<PAGE> 84
EXECUTION
BORROWER: KAUFMAN AND BROAD HOME CORPORATION,
a Delaware corporation
GUARANTORS: See Schedule 1 hereto
TO: BANK OF AMERICA, N.A., for itself and as Administrative Agent
SUBSIDIARY GUARANTY
THIS GUARANTY ("Guaranty") dated as of May 10, 2000, is made by
each of the parties listed on Schedule 1 hereto, together with each other person
who may become a party hereto pursuant to Section 10 of this Guaranty (each, a
Guarantor and collectively, "Guarantors"), jointly and severally, in favor of
Bank of America, N.A., formerly known as Bank of America National Trust and
Savings Association, and the Banks (as those terms are defined in the
below-referenced Loan Agreement), with reference to the following facts:
RECITALS
A. Pursuant to the 2000 Bridge Loan Agreement of even date
herewith entered into by and among Kaufman and Broad Home Corporation, a
Delaware corporation ("Borrower"), the Banks signatory thereto, Bank of America,
N.A., formerly known as Bank of America National Trust and Savings Association,
as Administrative Agent and Banc of America Securities LLC, as Lead Arranger and
Sole Book Manager (as the same may be amended from time to time, the "Loan
Agreement"), the Banks are making a credit facility available to Borrower.
B. As a condition of the availability of such credit facility,
Guarantors are required to enter into this Guaranty.
C. Guarantors expect to realize direct and indirect benefits as
the result of the availability of the aforementioned credit facility, and as the
result of the execution of this Guaranty.
AGREEMENT
NOW, THEREFORE, in order to induce the Banks to extend the
aforementioned credit facility, and for other good and valuable consideration,
the receipt and adequacy of which is hereby acknowledged, each Guarantor hereby
represents, warrants, covenants, agrees and guaranties as follows:
-1-
<PAGE> 85
(1) Terms used in this Guaranty but not defined herein shall have
the meanings defined for them in the Loan Agreement.
(2) Guarantors unconditionally guarantee and promise to pay to
Bank of America, N.A., formerly known as Bank of America National Trust and
Savings Association, as the Administrative Agent for the Banks, on demand, in
lawful money of the United States, any and all Indebtedness of Borrower then due
to the Banks. The word "Indebtedness" means any and all advances, debts,
obligations and liabilities of Borrower heretofore, now, or hereafter made,
incurred or created under the Loan Agreement and under the Loan Documents, and
whether Borrower may be liable individually or jointly with others, or whether
such Indebtedness may be or hereafter becomes otherwise unenforceable.
(3) This Guaranty is irrevocable in nature, is a guaranty of
prompt and punctual payment and performance of all Indebtedness of Borrower, and
is not merely a guaranty of collection. The Indebtedness guaranteed hereunder
includes that arising under successive transactions which shall either continue
the Indebtedness from time to time or renew it after it has been satisfied.
Anything in this Guaranty to the contrary notwithstanding, the maximum liability
of any Guarantor hereunder shall be limited to the extent required for the
obligation of such Guarantor to be valid, binding and enforceable and not
otherwise voidable or avoidable.
(4) The obligations hereunder are joint and several, and
independent of the obligations of Borrower and or any of its other Subsidiaries.
Separate action or actions may be brought and prosecuted against any Guarantor
whether action is brought against any Borrower or any of its other Subsidiaries,
including any other Guarantor, or whether Borrower or any of its other
Subsidiaries, including any other Guarantor, may be joined in any such action or
actions.
(5) Each Guarantor authorizes the Banks, without notice or demand
and without affecting its liability hereunder, from time to time to (a) renew,
compromise, extend, accelerate or otherwise change the time for payment of, or
otherwise change the terms of the Indebtedness or any part thereof, including
increase or decrease of the rate of interest thereon; (b) take and hold security
for the payment of this Guaranty or the Indebtedness guaranteed, and exchange,
enforce, waive and release any such security; (c) apply such security and direct
the order or manner of sale thereof as the Administrative Agent or any Bank in
its discretion may determine; and (d) release or substitute any one or more of
the endorsers or guarantors.
(6) Each Guarantor waives, to the fullest extent permitted by
applicable law, any right to require any Bank to (a) proceed against Borrower or
any of its other Subsidiaries, including any other Guarantor; (b) proceed
against or exhaust any security held from Borrower or any of its Subsidiaries;
or (c) pursue any other remedy in the Banks' power whatsoever. Each Guarantor
waives any defense arising by reason of any disability or other defense of
Borrower or by reason of the cessation from any cause whatsoever of the
liability of Borrower, other than payment in full of the Indebtedness. Until all
Indebtedness of Borrower to the Banks shall have been paid in full, each
Guarantor waives any right to enforce any
-2-
<PAGE> 86
remedy which the Banks now have or may hereafter have against Borrower or any
of its other Subsidiaries, and waives any benefit of, and any right to
participate in, any security now or hereafter held by the Banks. Guarantors
waive all rights and defenses arising out of an election of remedies by the
creditor, even though that election of remedies, such as a nonjudicial
foreclosure with respect to security for a guaranteed obligation, has destroyed
the guarantor's rights of subrogation and reimbursement against the principal by
the operation of Section 580d of the Code of Civil Procedure or otherwise.
Guarantors expressly waive to the fullest extent permitted by applicable Law all
other suretyship defenses they otherwise might or would have under any Law. Each
Guarantor waives any right of subrogation that it may have in respect to the
obligations of Borrower to the Banks. Each Guarantor waives all presentments,
demands for performance, notices of nonperformance, protests, notices of
protest, notices of dishonor, and notices of acceptance of this Guaranty and of
the existence, creation, or incurring of new or additional Indebtedness.
(7) After demand upon the Guarantors for payment under this
Guaranty, each Guarantor hereby specifically authorizes each Bank (subject to
the approval of the Majority Banks) in which such Guarantor maintains a deposit
account (whether a general or special deposit account, other than trust
accounts) or a certificate of deposit to setoff any Obligations owed to the
Banks against such deposit account or certificate of deposit without prior
notice to any Guarantor (which notice is hereby waived) whether or not such
deposit account or certificate of deposit has then matured. Nothing in this
paragraph shall limit or restrict the exercise by a Bank of any right to setoff
or banker's lien under applicable Law, subject to the approval of the Majority
Banks.
(8) Each Guarantor represents and warrants to the Banks that it
has established adequate means of obtaining from Borrower and its Subsidiaries,
on a continuing basis, financial and other information pertaining to the
businesses, operations and condition (financial and otherwise) of Borrower and
its Subsidiaries, and that Guarantor now is and hereafter will be completely
familiar with the businesses, operations and condition (financial and otherwise)
of Borrower and its Subsidiaries. Each Guarantor hereby expressly waives and
relinquishes any duty on the part of the Banks (should any such duty exist) to
disclose to any Guarantor any matter, fact or thing related to the businesses,
operations or condition (financial or otherwise) of Borrower or its
Subsidiaries, whether now known or hereafter known by the Banks during the life
of this Guaranty.
(9) Guarantors agree to pay, within thirty (30) days after
demand, the reasonable out-of-pocket costs and expenses of the Administrative
Agent and each of the Banks in connection with the enforcement of this Guaranty,
including without limitation the reasonable fees and out-of-pocket expenses of
any legal counsel retained by the Administrative Agent or any of the Banks.
(10) Any other Person may become a Guarantor under, and become
bound by the terms and conditions of, this Guaranty by executing and delivering
to the Administrative Agent an Instrument of Joinder substantially in the form
attached hereto as Exhibit A.
-3-
<PAGE> 87
(11) This Guaranty shall be governed by and construed according
to the laws of the State of California, to the jurisdiction of which the parties
hereto submit.
"GUARANTORS"
KAUFMAN AND BROAD OF ARIZONA, INC., an Arizona
corporation
By: /s/ WILLIAM R. HOLLINGER
-----------------------------------------
William R. Hollinger
Vice President and Assistant Secretary
KAUFMAN AND BROAD - CENTRAL VALLEY, INC., a
California corporation
By: /s/ WILLIAM R. HOLLINGER
-----------------------------------------
William R. Hollinger
Vice President and Assistant Secretary
KAUFMAN AND BROAD COASTAL, INC., a California
corporation
By: /s/ WILLIAM R. HOLLINGER
-----------------------------------------
William R. Hollinger
Vice President and Assistant Secretary
KAUFMAN AND BROAD MULTI-HOUSING GROUP, INC.,
a California corporation
By: /s/ WILLIAM R. HOLLINGER
-----------------------------------------
William R. Hollinger, Assistant Secretary
-4-
<PAGE> 88
KAUFMAN AND BROAD OF NORTHERN CALIFORNIA,
INC., a California corporation
By: /s/ WILLIAM R. HOLLINGER
-----------------------------------------
William R. Hollinger, Assistant Secretary
KAUFMAN AND BROAD OF SACRAMENTO, INC.,
a California corporation
By: /s/ WILLIAM R. HOLLINGER
-----------------------------------------
William R. Hollinger
Vice President, Treasurer and
Assistant Secretary
KAUFMAN AND BROAD OF SAN DIEGO, INC.,
a California corporation
By: /s/ WILLIAM R. HOLLINGER
-----------------------------------------
William R. Hollinger
Vice President and Assistant Secretary
KAUFMAN AND BROAD - SOUTH BAY, INC.,
a California corporation
By: /s/ WILLIAM R. HOLLINGER
-----------------------------------------
William R. Hollinger, Assistant Secretary
KAUFMAN AND BROAD OF SOUTHERN CALIFORNIA,
INC., a California corporation
By: /s/ WILLIAM R. HOLLINGER
-----------------------------------------
William R. Hollinger, Chief Financial
Officer, Treasurer and Assistant Secretary
-5-
<PAGE> 89
KB HOLDINGS ONE, INC., a California
corporation
By: /s/ WILLIAM R. HOLLINGER
-----------------------------------------
William R. Hollinger
Vice President, Treasurer and Assistant
Secretary
KAUFMAN AND BROAD OF COLORADO, INC.,
a Colorado corporation
By: /s/ WILLIAM R. HOLLINGER
-----------------------------------------
William R. Hollinger, Assistant Secretary
KAUFMAN AND BROAD OF NEVADA, INC.,
a Nevada corporation
By: /s/ WILLIAM R. HOLLINGER
-----------------------------------------
William R. Hollinger
Vice President, Treasurer and Assistant
Secretary
KAUFMAN AND BROAD OF RENO, INC., a
Nevada corporation
By: /s/ WILLIAM R. HOLLINGER
-----------------------------------------
William R. Hollinger
Vice President, Treasurer and
Assistant Secretary
KAUFMAN AND BROAD OF TEXAS, LTD., a Texas
limited partnership
By: KBSA, Inc., a Texas corporation,
Its general partner
By: /s/ WILLIAM R. HOLLINGER
-----------------------------------------
William R. Hollinger, Assistant Secretary
-6-
<PAGE> 90
KAUFMAN AND BROAD DEVELOPMENT OF TEXAS, L.P.,
a Texas limited partnership
By: KBSA, Inc., a Texas corporation,
Its general partner
By: /s/ WILLIAM R. HOLLINGER
-----------------------------------------
William R. Hollinger, Assistant Secretary
KAUFMAN AND BROAD LONE STAR, L.P., a Texas
limited partnership
By: KBSA, Inc., a Texas corporation,
Its general partner
By: /s/ WILLIAM R. HOLLINGER
-----------------------------------------
William R. Hollinger, Assistant Secretary
-7-
<PAGE> 91
SCHEDULE 1
TO GUARANTY
List of Guarantors
Kaufman and Broad of Arizona, Inc.
Kaufman and Broad - Central Valley, Inc.
Kaufman and Broad Coastal, Inc.
Kaufman and Broad Multi-Housing Group, Inc.
Kaufman and Broad of Northern California, Inc.
Kaufman and Broad of Sacramento, Inc.
Kaufman and Broad of San Diego, Inc.
Kaufman and Broad - South Bay, Inc.
Kaufman and Broad of Southern California, Inc.
KB Holdings One, Inc.
Kaufman and Broad of Colorado, Inc.
Kaufman and Broad of Nevada, Inc.
Kaufman and Broad of Reno, Inc.
Kaufman and Broad of Texas, Ltd.
Kaufman and Broad Development of Texas, L.P.
Kaufman and Broad Lone Star, L.P.
-8-
<PAGE> 92
INSTRUMENT OF JOINDER
THIS INSTRUMENT OF JOINDER ("Joinder") is executed as of
________________, by_______________________________________________________, a
____________________ ("Joining Party"), and delivered to the Administrative
Agent pursuant to the Guaranty dated as of May 10, 2000 (the "Guaranty"). Terms
used but not defined in this Joinder shall have the meanings defined for those
terms in the Guaranty.
RECITALS
A. The Guaranty was made by the Guarantors in favor of the Banks
that are parties to that certain 2000 Bridge Loan Agreement, dated as of May 10,
2000 (the "Loan Agreement") among Kaufman and Broad Home Corporation, as
Borrower, the Banks signatory thereto, Bank of America, N.A., formerly known as
Bank of America National Trust and Savings Association, as Administrative Agent,
and Banc of America Securities LLC, as Lead Arranger and Sole Book Manager.
B. Joining Party has become a Significant Subsidiary (as defined
in the Loan Agreement) or has been designated by Borrower as a Guarantor
Subsidiary (as defined in the Loan Agreement), and as such is required pursuant
to Section 5.9 of the Loan Agreement to become a Guarantor.
C. Joining Party expects to realize direct and indirect benefits
as a result of the availability to Borrower of a credit facility pursuant to the
Loan Agreement, and as a result of becoming a party to the Guaranty.
NOW THEREFORE, Joining Party agrees as follows:
AGREEMENT
1. By this Joinder, Joining Party becomes a "Guarantor" under and
pursuant to Section 10 of the Guaranty. Joining Party agrees that, upon its
execution hereof, it will become a Guarantor under the Guaranty with respect to
all Indebtedness of Borrower heretofore or hereafter incurred under the Loan
Agreement, and will be bound by all terms, conditions, and duties applicable to
a Guarantor under the Guaranty.
-1-
<PAGE> 93
2. The effective date of this Joinder is _______________.
"Joining Party"
--------------------------------------------
a
-------------------------------------------
By:
-----------------------------------------
-----------------------------------------
Printed Name and Title
ACKNOWLEDGED:
BANK OF AMERICA, N.A. (formerly known
as Bank of America National Trust and
Savings Association), as Administrative Agent
By:
------------------------------------------
------------------------------------------
Printed Name and Title
KAUFMAN AND BROAD HOME CORPORATION
By:
------------------------------------------
------------------------------------------
Printed Name and Title
-2-
<PAGE> 94
[KAUFMAN AND BROAD LETTERHEAD]
May 10, 2000
To: Bank of America, N.A.,
as Administrative Agent
5 Park Plaza, Suite 500
Irvine, California 92614
The Banks Party to the Loan Agreement Referred to Below
Ladies and Gentlemen:
I am the Senior Vice President and General Counsel of Kaufman and
Broad Home Corporation, a Delaware corporation ("KBHC"). KBHC shall also be
referred to herein as the "Borrower". I have acted as such in connection with
the 2000 Bridge Loan Agreement dated as of May 10, 2000 (the "Agreement"), by
and among the Borrower, the Banks which are the parties thereto, Bank of
America, N.A., as Administrative Agent, and Banc of America Securities LLC, as
Lead Arranger and Sole Book Manager.
This opinion is furnished to you pursuant to Section 8.1(a)(v) of the
Agreement. Terms not otherwise defined herein shall have the meanings defined
for such terms in the Agreement. The term "Loan Documents", as used herein,
means Loan Documents (as defined in the Agreement) in existence as of the
Closing Date, including without limitation those referenced in paragraphs (a)
through (c) below.
This opinion is rendered to you as a supplement to the legal opinion
of Munger, Tolles & Olson LLP of even date herewith in connection with the
Agreement but expressly does not incorporate the terms of said opinion.
For purposes of this opinion, I have examined originals, or copies
identified to my satisfaction as being true copies, of the following documents:
a. The Agreement;
b. The Notes under the Agreement; and
c. The Subsidiary Guaranty.
<PAGE> 95
Bank of America, N.A.
May 10, 2000
Page 2
I have also made such investigations of fact and law, obtained such
certificates of Responsible Officials of Borrower and certain of its
Subsidiaries and of public officials, reviewed incorporation and partnership
documentation, resolutions, secretary's certificates, good standing
certificates and other documents as appropriate of and for the Borrower and the
Guarantor Subsidiaries, as applicable, and done such other things as I have
deemed necessary for the purpose of this opinion.
I have assumed (i) all natural persons have legal capacity, (ii) the
genuineness of all signatures of all parties other than Borrower and the
Guarantor Subsidiaries listed in Schedule 4.4 to the Agreement, (iii) the
conformity to authentic original documents of all documents submitted to me as
copies and the authenticity of all documents submitted to me as originals,
(iv) as to all parties other than Borrower and the Guarantor Subsidiaries, the
due authorization, execution and delivery of all documents and the validity and
enforceability thereof against all parties thereto other than Borrower and the
Guarantor Subsidiaries, (v) that each Person (other than Borrower and the
Guarantor Subsidiaries) which is a party to the Loan Documents has full power,
authority and legal right, under its charter and other governing documents and
laws applicable to it to perform its respective obligations thereunder,
(vi) all parties to any Loan Documents have filed all required franchise tax
returns, if any, and paid all required taxes, if any, under the California
Revenue & Taxation Code and under the laws of the State of Delaware and the
respective states of incorporation or formation of the Guarantor Subsidiaries,
(vii) that each of the Banks has the requisite power and authority, has
obtained all necessary consents, licenses and permits, has taken all necessary
action and has complied with any and all applicable laws with which such Bank
is required to comply, in each case relating to or affecting the matters and
actions contemplated by the Loan Documents, (viii) that each of the Banks is a
national bank, state bank or similar financial institution and is an exempt
lender under Article XV of the California Constitution or statutes enacted
pursuant thereto, and (ix) that the Loan Documents have not been modified,
amended, terminated or revoked in any respect, and remain in full force and
effect as of the date hereof.
With respect to those opinions expressed below to be to "knowledge"
or "to the knowledge of the undersigned," or similar such wording, I am
referring solely to my individual, actual knowledge. Except as expressly set
forth herein, I did not undertake a review or examination of the activities or
business records of Borrower or any Subsidiaries specifically for the purpose
of rendering this opinion or to determine the existence or absence of such
facts. As Senior Vice President and General Counsel of KBHC, however, material
information respecting the matters covered by such opinions is brought to my
attention on a regular basis as a matter of internal policy and I intend the
phrase "to the knowledge of the undersigned" to mean that, in reviewing such
information, nothing has come to my attention which caused or should have
caused me not to render such opinions.
Based upon the foregoing and in reliance thereon, I am of the opinion
that:
1. KBHC is a corporation duly organized, validly existing and in
good standing under the Laws of the State of Delaware, and its certificate of
incorporation does not provide for the termination of its existence. KBHC is
duly qualified or registered to transact business and is in good standing as a
foreign corporation in the State of California and each other
<PAGE> 96
Bank of America, N.A.
May 10, 2000
Page 3
jurisdiction in which the conduct of its business or the ownership of its
Properties makes such qualifications or registration necessary, except where
the failure so to qualify or register and to be in good standing would not
constitute a Material Adverse Effect.
2. Borrower has all requisite corporate power and authority to
conduct its business, to own and lease its Properties and to execute, deliver
and perform all of its Obligations under the Loan Documents to which it is a
Party.
3. To the knowledge of the undersigned, Borrower is in substantial
compliance with all Laws and other legal requirements applicable to its
business, has obtained all authorizations, consents, approvals, orders,
licenses and permits from, and has accomplished all filings, registrations and
qualifications with, or obtained exemptions from any of the foregoing from, any
Government Agency that are necessary for the transaction of its business,
except where the failure so to comply, file, register, qualify or obtain
exemptions would not constitute a Material Adverse Effect.
4. The execution, delivery and performance by Borrower and by each
Guarantor Subsidiary of each of the Loan Documents to which it is a Party have
been duly authorized by all necessary corporate action, and do no:
a. require under the charter documents of Borrower or any
Guarantor Subsidiary any consent or approval not heretofore obtained
of any partner, director, stockholder, security holder or creditor
of such Party;
b. violate or conflict with the Party's charter, certificate or
articles of incorporation or bylaws;
c. to the knowledge of the undersigned, result in or require
the creation or imposition of any Lien or Right of Others (other
than as provided under the Loan Documents) upon or with respect to
any Property now owned or leased by such Party;
d. violate any Requirements of Law known to the undersigned
to be applicable to such Party; or
e. result in a breach of or constitute a default under, or
cause or permit the acceleration of any obligation owed under, any
indenture or loan or credit agreement known to the undersigned or
any other Contractual Obligation known to the undersigned to which
such Party is a party or by which such Party or any of its Property
is bound or affected;
and, to the knowledge of the undersigned, neither Borrower nor any Subsidiary
of Borrower is in violation of, or default under, any Requirement of Law or
contractual obligation, or any indenture, loan or credit agreement described in
subparagraph (e) above in any respect that would constitute a Material Adverse
Effect.
<PAGE> 97
Bank of America
May 10, 2000
Page 4
5. Each of the Loan Documents to which either Borrower or any
Guarantor Subsidiary is a Party will, when executed and delivered by Borrower
or such Guarantor Subsidiary, as the case may be, constitute the legal, valid
and binding obligation of Borrower or such Guarantor Subsidiary, as the case
may be, enforceable against such Borrower or such Guarantor Subsidiary, as the
case may be, in accordance with its terms.
6. Except as have heretofore been obtained, no authorization,
consent, approval, order, license or permit from, or filing, registration or
qualification with, or exemption from any of the foregoing from, any
Governmental Agency under any Requirement of Law imposed on Borrower or any
Guarantor Subsidiary by the laws of the United States of America or the State
of California, in each case as the same exists on the date hereof, is or will
be required to authorize or permit the execution, delivery and performance by
Borrower or by any Significant Subsidiary of the Loan Documents to which it is
a Party.
7. Each Significant Subsidiary which is a Domestic Subsidiary is a
legal entity of the form described for that Subsidiary in Schedule 4.4 to the
Agreement, duly organized, validly existing and in good standing under the Laws
of its jurisdiction of formation, is duly qualified or registered to do
business as a foreign organization (if applicable) and is in good standing as
such in each jurisdiction in which the conduct of its business or the ownership
or leasing of its Properties makes such qualifications or registration
necessary (except where the failure to be so qualified or registered and in
good standing does not constitute a Material Adverse Effect) and has all
requisite power and authority to conduct its business and to own and lease its
Properties and to execute, deliver and perform the obligations under the Loan
Documents to which it is a Party.
8. To the knowledge of the undersigned, each Significant Subsidiary
is in substantial compliance with all Laws and other requirements applicable to
its business, has obtained all authorizations, consents, approvals, orders,
licenses and permits from, and has accomplished all filings, registrations and
qualifications with, or obtained exemptions from any of the foregoing from, any
Governmental Agency that are necessary for the transactions of its business,
except where the failure so to comply, file, register, qualify or obtain
exemptions does not constitute a Material Adverse Effect.
9. Neither Borrower nor any of its Subsidiaries is subject to
regulation under the Public Utility Holding Company Act of 1935, the Federal
Power Act, the Interstate Commerce Act or the Investment Company Act of 1940.
10. To the knowledge of the undersigned, there are no actions, suits
or proceedings pending or threatened against or affecting Borrower or any of
its Subsidiaries or any Property of any of them in any court of Law or before
any Governmental Agency in which there is a reasonable probability of a
decision which would constitute a Material Adverse Effect.
11. Neither Borrower nor any of its Subsidiaries is engaged
principally, or as one of its important activities, in the business of
extending credit for the purpose of "purchasing" or "carrying" any "margin
stock" or "margin security" within the meanings of Regulation U of
<PAGE> 98
Bank of America, N.A.
May 10, 2000
Page 5
the Board of Governors of the Federal Reserve System and no loan under the
Agreement will be used to purchase or carry any such margin stock in violation
of Regulation U.
12. To the knowledge of the undersigned, Borrower and its
Subsidiaries are in substantial compliance with all applicable Laws relating to
environmental protection where the failure to comply would constitute a
Material Adverse Effect, and have not received any notice from any Governmental
Agency respecting the alleged violation by Borrower or any Subsidiary of such
Laws which would constitute a Material Adverse Effect which has not been or is
not being corrected.
In addition to any assumptions, qualifications and other matters set
forth elsewhere herein, the opinions set forth above are subject to the
following:
a. My opinion with respect to the legality, validity, binding
effect and enforceability of any Loan Document, agreement or provision
is subject to the effect of any applicable bankruptcy, insolvency,
fraudulent conveyance, fraudulent transfer and equitable
subordination, reorganization, moratorium or similar law affecting
creditors' rights generally and to the effect of general principles of
equity, including (without limitation) concepts of materiality,
reasonableness, estoppel, good faith and fair dealing (regardless of
whether considered in a proceeding in equity or at law). I express no
opinion as to the availability of equitable remedies. In applying such
equitable principles, a court, among other things, might not allow a
creditor to accelerate the maturity of a debt or enforce a guaranty
thereof upon the occurrence of a default deemed immaterial or for
non-credit reasons or might decline to order a debtor to perform
covenants. Such principles applied by a court might also include a
requirements that a creditor act with reasonableness and in good
faith.
b. Certain rights, remedies and waivers of the Loan Documents
may be unenforceable in whole or in part, but the inclusion of such
provisions does not affect the validity of the Loan Documents taken as
a whole and, except as set forth in subparagraph (a) above, the Loan
Documents taken as a whole contain adequate provisions for enforcing
payment of the "Obligations" (as defined in the Agreement); however,
the unenforceability of such provisions may result in delays in or
limitations on the enforcement of the parties' rights and remedies
under the Loan Documents and I express no opinion as to the economic
consequences, if any, of such delays or limitations.
c. I call your attention to the following matters as to which
I express no opinion:
(i) the agreements in the Loan Documents to indemnify you
against costs or expenses or liability notwithstanding your acts of
negligence or willful misconduct;
<PAGE> 99
Bank of America, N.A.
May 10, 2000
Page 6
(ii) provisions in the Loan Documents for payment or
reimbursement of costs, fees and expenses or indemnification for
claims, losses or liabilities to the extent any such provision may be
determined by a court or other tribunal to be in an unreasonable
amount, to constitute a penalty or to be contrary to public policy;
(iii) the agreements in the Loan Documents to the
jurisdiction or venue of a particular court, to the waiver of the
right to jury trial or to be served with process by service upon a
designated third party;
(iv) any of the waivers or remedies contained in the
Loan Documents, whether or not any Loan Document deems any such waiver
or remedy commercially reasonable, if such waivers or remedies are
determined (1) not to be commercially reasonable under applicable law,
(2) to conflict with mandatory provisions of applicable law, (3) to be
taken in a manner determined to be unreasonable or not performed in
good faith or with fair dealing or with honesty in fact or (4) to be
broadly or vaguely stated or not to describe the right or duty
purportedly waived with reasonable specificity;
(v) provisions in the Loan Documents which may be
construed as imposing penalties or forfeitures, late payment charges
or an increase in interest rate, upon delinquency in payment or the
occurrence of a default;
(vi) any power of attorney granted under the Loan
Documents;
(vii) provisions in the Loan Documents to the effect that
rights or remedies are not exclusive, that every right or remedy is
cumulative and may be exercised in addition to any other right or
remedy, that the election of some particular remedy does not preclude
recourse to one or more others or that failure to exercise or delay in
exercising rights or remedies will not operate as a waiver of any such
right or remedy;
(viii) provisions in the Loan Documents which expressly or
by implication waive or limit the benefits of statutory, regulatory or
constitutional rights, unless and to the extent the statute,
regulation or constitution explicitly allow such waiver or other
limitation;
(ix) the effect of Section 1698 of the California Civil
Code which, among other matters, provides that a written contract may
be modified by an oral agreement to the extent such agreement is
performed by the parties;
(x) effect of Section 1670.5 of the California Civil
Code which provides that a court may not enforce or may limit the
application of a contract or portions thereof which it finds as a
matter of law to have been unconscionable at the time the contract was
made; and
<PAGE> 100
Bank of America, N.A.
May 10, 2000
Page 7
(xi) the effect of (1) any modification or alteration of
the Loan Documents or other agreements with Borrower affecting the
obligations of Borrower, (2) an election of remedies by the Bank
Parties, or (3) any other action by the Bank Parties that materially
prejudices any Guarantor Subsidiary if such modification, election or
action occurs without notice to the Guarantor Subsidiaries and without
giving the Guarantor Subsidiaries an opportunity to cure any default
by Borrower.
My opinion expressed herein is limited to the laws of the State of
California, the General Corporation Law of the State of Delaware and the
federal laws of the United States, and I do not express any opinion herein
concerning any other law, including, but not limited to, ordinances,
regulations, or practices of any county, city or other government agency or
body within the State of California.
This opinion is being rendered to you in connection with the
transaction referred to above and may not be relied upon by any person (other
than the Banks, an Eligible Assignee or any successor in interest of any Bank)
or by you or the other Banks in any other context. Copies hereof may be
furnished (a) to your independent auditors and attorneys, (b) to any
governmental agency or authority having regulatory jurisdiction over you, (c)
pursuant to order of legal process of any court or of any governmental agency
or authority or (d) in connection with any legal action to which you are a
party arising out of the transaction referred to above. This opinion is
rendered as of the date hereof and I hereby disclaim any obligation to advise
any person entitled to rely hereon of any change in the matters stated herein.
Very truly yours,
/s/ BARTON P. PACHINO
Barton P. Pachino
Senior Vice President and General Counsel
<PAGE> 101
[MUNGER, TOLLES & OLSON LLP OPINION LETTERHEAD]
May 10, 2000
To: Bank of America, N.A.
as Administrative Agent
The Banks Party to the Loan Agreement
Referred to Below
Re: Kaufman and Broad Home Corporation
-----------------------------------------
Ladies and Gentlemen:
We have acted as counsel to Kaufman and Broad Home Corporation, a
Delaware corporation ("Borrower"), in connection with the 2000 Bridge Loan
Agreement (the "Loan Agreement") dated as of May 10, 2000, by and among
Borrower; the Banks which are parties thereto; Bank of America, N.A., as
Administrative Agent; Banc of America Securities LLC as Lead Arranger and Sole
Book Manager (the "Arranger") (all such parties other than the Borrower are
collectively referred to herein as "Bank Parties").
This opinion is furnished to you pursuant to Section 8.1(a)(v) of
the Loan Agreement. Terms not otherwise defined herein shall have the meanings
defined for such terms in the Loan Agreement.
For the purposes of this opinion, we have examined originals, or
copies identified to our satisfaction as being true copies, of the following
documents:
(a) The Loan Agreement;
(b) The Notes of even date herewith; and
<PAGE> 102
Bank of America, N.A.
May 10, 2000
Page 2
(c) The Subsidiary Guaranty.
The documents described in (a) through (c) above are sometimes
referred to herein as the "Loan Documents".
We have also examined such other corporate documents and records,
and other certificates, opinions and instruments and have conducted such
investigations as we have deemed necessary as a basis for the opinions expressed
below. As to factual matters relevant to our opinions expressed below, we have,
without independent investigation, relied upon certificates of public officials
and upon public records, and have further assumed and relied upon, without
independent investigation, the truth and accuracy of all factual representations
and warranties of all parties to the Loan Documents.
We have assumed (i) all natural persons have legal capacity, (ii)
the genuineness of all signatures of all parties other than Borrower, (iii) the
conformity to authentic original documents of all documents submitted to us as
copies and the authenticity of all documents submitted to us as originals, (iv)
that each of the Guarantor Subsidiaries listed in Schedule 4.4 to the Loan
Agreement (the "Guarantor Subsidiaries") is duly organized, validly existing and
in good standing under the laws of its jurisdiction of incorporation or
organization and in each other jurisdiction where the conduct of its business or
the ownership of its Properties makes qualification or registration to transact
business necessary, (v) as to all parties other than the Borrower, the due
authorization, execution and delivery of the Loan Documents, (vi) the validity
and enforceability of the Loan Documents against all parties thereto other than
Borrower and the Guarantor Subsidiaries, (vii) that each of the Bank Parties has
the requisite power and authority, has obtained all necessary consents, licenses
and permits, has taken all necessary action and has complied with any and all
applicable laws with which such Bank Party is required to comply, in each case
relating to or affecting the matters and actions contemplated by the Loan
Documents, (viii) that each of the Bank Parties (other than the Arranger) is a
national bank, state bank or similar financial institution and is an exempt
lender under Article XV of the California Constitution or statutes enacted
pursuant thereto and (ix) that the Loan Documents have not been modified,
amended, terminated or revoked in any respect, and remain in full force and
effect as of the date hereof.
On the basis of the foregoing, and relying thereon, and with the
qualifications herein set forth, we are of the opinion that:
1. Borrower is a corporation duly incorporated, validly existing
and in good standing under the General Corporation Law of the State of Delaware,
and its certificate of incorporation does not limit the term of its existence.
2. Borrower has all requisite corporate power and authority to
conduct its business, to own and lease its Properties and to execute, deliver
and perform all of its obligations under the Loan Documents to which it is a
party.
<PAGE> 103
Bank of America, N.A.
May 10, 2000
Page 3
3. The execution, delivery, and performance by Borrower of the
Loan Documents to which it is a party have been duly authorized by all necessary
corporate action.
4. The execution, delivery, and performance of the Loan Documents
by Borrower do not violate any provision of Borrower's certificate of
incorporation or bylaws, and the execution, delivery, and performance by
Borrower and each Guarantor Subsidiary of the Loan Documents to which it is a
party do not violate any Requirement of Law applicable to Borrower or such
Guarantor Subsidiary imposed by the laws of the United States of America or the
State of California that, in our experience, is normally applicable to general
business entities in relation to transactions of the type contemplated by the
Loan Documents.
5. Except as have heretofore been obtained, no authorization,
consent, approval, order, license or permit from, or filing, registration, or
qualification with, or exemption from any of the foregoing from, any
Governmental Agency under any Requirement of Law imposed on Borrower or any
Guarantor Subsidiary by the laws of the United States of America or the State of
California, in each case as such Requirements of Law exist on the date hereof,
is or will be required to authorize or permit the execution, delivery and
performance by Borrower or any Guarantor Subsidiary of the Loan Documents to
which it is a party.
6. Each of the Loan Documents to which Borrower or any Guarantor
Subsidiary is a party will, when executed and delivered by Borrower or such
Guarantor Subsidiary, as the case may be, constitute the legal, valid and
binding obligation of Borrower or such Guarantor Subsidiary, as the case may be,
enforceable against Borrower or such Guarantor Subsidiary, as the case may be,
in accordance with its terms.
In addition to any assumptions, qualifications and other matters
set forth elsewhere herein, the opinions set forth above are subject to the
following:
(a) Our opinion with respect to the legality, validity, binding
effect and enforceability of any Loan Document, agreement or provision is
subject to the effect of any applicable bankruptcy, insolvency, fraudulent
conveyance, fraudulent transfer and equitable subordination, reorganization,
moratorium or similar law affecting creditors' rights generally and to the
effect of general principles of equity, including (without limitation) concepts
of materiality, reasonableness, estoppel, good faith and fair dealing
(regardless of whether considered in a proceeding in equity or at law). We
express no opinion as to the availability of equitable remedies. In applying
such equitable principles, a court, among other things, might not allow a
creditor to accelerate the maturity of a debt or enforce a guaranty thereof upon
the occurrence of a default deemed immaterial or for non-credit reasons or might
decline to order a debtor to perform covenants. Such principles applied by a
court might also include a requirement that a creditor act with reasonableness
and in good faith.
(b) Certain rights, remedies and waivers of the Loan Documents
may be unenforceable in whole or in part, but the inclusion of such provisions
does not affect the validity of the Loan Documents taken as a whole and, except
as set forth in subparagraph (a) above, the
<PAGE> 104
Bank of America, N.A.
May 10, 2000
Page 4
Loan Documents taken as a whole contain adequate provisions for enforcing
payment of the Obligations; however, the unenforceability of such provisions may
result in delays in or limitations on the enforcement of the parties' rights and
remedies under the Loan Documents (and we express no opinion as to the economic
consequences, if any, of such delays or limitations).
(c) We call your attention to the following matters as to which
we express no opinion:
(i) the agreements in the Loan Documents to indemnify the
Bank Parties against costs or expenses or liability notwithstanding such
parties' acts of negligence or willful misconduct;
(ii) provisions in the Loan Documents for payment or
reimbursement of costs, fees and expenses or indemnification for claims, losses
or liabilities to the extent any such provision may be determined by a court or
other tribunal to be in an unreasonable amount, to constitute a penalty or to be
contrary to public policy;
(iii) the agreements in the Loan Documents to the
jurisdiction or venue of a particular court, to the waiver of the right to jury
trial or to be served with process by service upon a designated third party;
(iv) any of the waivers or remedies contained in the Loan
Documents, whether or not any Loan Document deems any such waiver or remedy
commercially reasonable, if such waivers or remedies are determined (1) not to
be commercially reasonable under applicable law, (2) to conflict with mandatory
provisions of applicable law, (3) to be taken in a manner determined to be
unreasonable or not performed in good faith or with fair dealing or with honesty
in fact or (4) to be broadly or vaguely stated or not to describe the right or
duty purportedly waived with reasonable specificity;
(v) provisions in the Loan Documents which may be
construed as imposing penalties or forfeitures, late payment charges or an
increase in interest rate, upon delinquency in payment or the occurrence of a
default;
(vi) any power of attorney granted under the Loan
Documents;
(vii) provisions in the Loan Documents to the effect that
rights or remedies are not exclusive, that every right or remedy is cumulative
and may be exercised in addition to any other right or remedy, that the election
of some particular remedy does not preclude recourse to one or more others or
that failure to exercise or delay in exercising rights or remedies will not
operate as a waiver of any such right or remedy;
(viii) provisions in the Loan Documents which expressly or
by implication waive or limit the benefits of statutory, regulatory or
constitutional rights, unless and
<PAGE> 105
Bank of America, N.A.
May 10, 2000
Page 5
to the extent the statute, regulation or constitution explicitly allow such
waiver or other limitation;
(ix) the effect of Section 1698 of the California Civil
Code which, among other matters, provides that a written contract may be
modified by an oral agreement to the extent such agreement is performed by the
parties;
(x) the effect of Section 1670.5 of the California Civil
Code which provides that a court may not enforce or may limit the application of
a contract or portions thereof which it finds as a matter of law to have been
unconscionable at the time the contract was made; and
(xi) the effect of (1) any modification or alteration of
the Loan Documents or other agreements with Borrower affecting the obligations
of Borrower, (2) an election of remedies by the Bank Parties, or (3) any other
action by the Bank Parties that materially prejudices any Guarantor Subsidiary
if such modification, election or action occurs without notice to the Guarantor
Subsidiaries and without giving the Guarantor Subsidiaries an opportunity to
cure any default by Borrower.
Our opinions expressed herein are limited to the laws of the
State of California, the General Corporation Law of the State of Delaware and
the federal laws of the United States, and we do not express any opinion herein
concerning any other law, including, but not limited to, ordinances, regulations
or practices of any county, city or other government agency or body within the
State of California.
This opinion is being provided for your benefit at the specific
request of our clients, is rendered to you in connection with the transaction
referred to above and may not be relied upon by any person (other than the Bank
Parties, an Eligible Assignee or any successor in interest of any Bank Party) or
by you or the other Bank Parties in any other context. Copies hereof may be
furnished (a) to your independent auditors and attorneys, (b) to any
governmental agency or authority having regulatory jurisdiction over you, (c)
pursuant to an order of legal process of any court or of any governmental agency
or authority, or (d) in connection with any legal action to which you are a
party arising out of the transaction referred to above. This opinion is rendered
as of the date hereof and we hereby disclaim any obligation to advise any person
entitled to rely hereon of any change in the matters stated herein.
Very truly yours,
/S/ MUNGER, TOLLES & OLSON LLP
<PAGE> 106
[SHEPPARD, MULLIN, RICHTER & HAMPTON LETTERHEAD]
BN1-73848
May 11, 2000
Bank of America, N.A., as Administrative Agent
5 Park Plaza, Suite 500
Irvine, California 92614
The Banks Party to the Loan Agreement
Referred to Below
Re: KAUFMAN AND BROAD HOME CORPORATION
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Ladies and Gentlemen:
We have acted as special counsel to Bank of America, N.A.,
Administrative Agent, in connection with the 2000 Bridge Loan Agreement (the
"Loan Agreement") dated as of May 10, 2000, by and among Kaufman and Broad Home
Corporation, Bank of America, N.A., as Administrative Agent, Banc of America
Securities LLC, as Lead Arranger and Sole Book Manager, and the Banks party
thereto. This opinion is delivered to you pursuant to Section 8.1(f) of the
Loan Agreement. Capitalized terms used herein without definition are used with
the same meanings set forth in the Loan Agreement.
We have reviewed the closing documents delivered to the Administrative
Agent on the Closing Date pursuant to Section 8.1(a) of the Loan Agreement. In
our opinion, such documents are in acceptable form and conform in substance to
the requirements of Section 8.1(a). In particular, we have reviewed the
Opinions of Counsel referred to in Section 8.1(a)(v) of the Loan Agreement and,
while we have not performed any investigation
<PAGE> 107
Bank of America, N.A.
May 11, 2000
Page 2
into the matters covered thereby and accordingly express no opinion with respect
to such matters, in our opinion the Opinions of Counsel are in acceptable form.
Very truly yours,
/s/ Sheppard, Mullin, Richter & Hampton LLP
SHEPPARD, MULLIN, RICHTER & HAMPTON LLP
<PAGE> 108
CERTIFICATE OF SENIOR OFFICER
OF
KAUFMAN AND BROAD HOME CORPORATION
Reference is hereby made to Section 8.1(a)(vi) of the 2000 Bridge
Loan Agreement dated as of May 10, 2000 (the "Loan Agreement") by and among
Kaufman and Broad Home Corporation, a Delaware corporation (the "Borrower"), the
Banks that are parties thereto, Bank of America, N.A., formerly known as Bank of
America National Trust and Savings Association, as Administrative Agent, and
Banc of America Securities LLC, as Lead Arranger and Sole Book Manager.
Capitalized terms used and not otherwise defined herein shall have the meanings
given to them in the Loan Agreement.
The undersigned, as Vice President and Controller of the
Borrower, does hereby certify, to the best of my knowledge, that:
1. The representations and warranties of the Borrower contained
in Article 4 of the Loan Agreement are true and correct in all material respects
on and as of the date hereof.
2. The Borrower and its Subsidiaries are in compliance with all
the terms and provisions of the Loan Documents and no Default or Event of
Default exists.
Dated: May 10, 2000
/s/ WILLIAM R. HOLLINGER
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William R. Hollinger
Vice President and Controller
