UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15 (d) of The
Securities Exchange Act of 1934
Date of Report: August 17, 2007
(Date of earliest event reported)
KB HOME
(Exact name of registrant as specified in charter)
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Delaware
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1-9195
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95-3666267
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(State or other jurisdiction of
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(Commission File Number)
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(IRS Employer Identification No.)
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incorporation)
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10990 Wilshire Boulevard, Los Angeles, California 90024
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: (310) 231-4000
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the
filing obligation of the registrant under any of the following provisions:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
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TABLE OF CONTENTS
Item 1.01 Entry into a Material Definitive Agreement
On August 17, 2007, KB Home (the “Company”) entered into the third amendment (the “Revolver
Amendment”) to the Revolving Loan Agreement dated as of November 22, 2005 among the Company, the
lenders party thereto, and Bank of America, N.A., as Administrative Agent, as amended (the
“Revolving Loan Agreement”). The Revolver Amendment allows for a reduction of the ratio (the
“Ratio”) of the Company’s consolidated earnings to consolidated interest expense (as each is
determined under the Revolving Loan Agreement) below that otherwise required under Section 6.11 of
the Revolving Loan Agreement (the “Required Ratio”) for a period of up to 9 consecutive quarters
(the “Reduction Period”). During the Reduction Period, the interest rates applied to borrowings and
the unused line fee under the Revolving Loan Agreement and the required minimum ratio of the
Company’s consolidated total indebtedness to consolidated net worth are subject to adjustment based
on the level of the Ratio. The Revolver Amendment also permits the Company to be free from any
minimum Ratio requirement during the Reduction Period for a period of up to four consecutive
quarters (the “Elimination Period”) if during the Elimination Period the Company maintains a
certain minimum ratio of consolidated total indebtedness to consolidated net worth (each as
determined under the Revolving Loan Agreement) and deposits certain funds in an interest-bearing
reserve account with the Administrative Agent; provided that the Company may withdraw funds from
the account to the extent it achieves and maintains a Ratio during the Elimination Period above
that required under the terms of the Revolver Amendment. Each of the Reduction Period and the
Elimination Period will commence if and when the Company provides notice thereof to the
Administrative Agent. The Revolver Amendment also makes certain permanent amendments to certain
provisions of the Revolving Loan Agreement. Consenting lenders party to the Revolver Amendment
received a fee in connection therewith.
The above description is a summary and is qualified in its entirety by the terms of the
Revolver Amendment, which is filed as Exhibit 10.39 to this Current Report.
Item 8.01 Other Events
On June 28, 2007, KB HOME Lone Star LP, a Texas limited partnership (“Lone Star LP”), an
indirect wholly-owned subsidiary of the Company and a Guarantor Subsidiary under the Revolving
Loan Agreement and a Guarantor under the Company’s Senior Indenture (as that term is defined below)
and Senior Subordinated Indenture (as that term is defined below), merged with and into KB HOME
Lone Star Inc., a Texas corporation (the “Subsidiary Guarantor”), an indirect wholly-owned
subsidiary of the Company, as part of a reorganization of Lone Star LP into a Texas corporation.
The Subsidiary Guarantor was the surviving entity in the merger.
On August 17, 2007, the Subsidiary Guarantor agreed:
1. Pursuant to an Instrument of Joinder, to be a “Guarantor Subsidiary” under the terms of the
Subsidiary Guaranty entered into by certain subsidiaries of the Company in connection with the
Revolving Loan Agreement;
2. Pursuant to a Fifth Supplemental Indenture, dated August 17, 2007, by and between the
Company, the Guarantors named therein (the “Guarantors”), the Subsidiary Guarantor and U.S. Bank
National Association (successor to SunTrust Bank), as trustee (the “Trustee”), to be a “Guarantor”
under the terms of the Indenture, dated as of January 28, 2004 (the “Base Senior Indenture”), as
amended and supplemented by the First Supplemental Indenture thereto, dated as of January 28, 2004,
by the Second Supplemental Indenture thereto, dated as of June 30, 2004, by the Third Supplemental
Indenture thereto, dated as of May 1, 2006, and by the Fourth Supplemental Indenture thereto, dated
as of November 9, 2006, in each case by and between the Company, the guarantors party thereto and
the Trustee (the Base Senior Indenture, as amended and supplemented by the foregoing supplemental
indentures, is hereinafter called the “Senior Indenture”), and to guarantee on a senior basis the
prompt payment when due of the principal of and premium, if any, and interest on debt securities
issued by the Company pursuant to the Senior Indenture, including the Company’s 5-3/4% Senior Notes
due 2014, 6-3/8% Senior Notes due 2011, 5-7/8% Senior Notes due 2015, 6-1/4% Senior Notes due 2015
and 7-1/4% Senior Notes due 2018; and
3. Pursuant to a Third Supplemental Indenture, dated August 17, 2007, by and between the
Company, the Guarantors, the Subsidiary Guarantor and the Trustee, and the Guaranties, each dated
August 17, 2007, of the Senior Subordinated Notes described below, to be a “Guarantor” under the
terms of the Senior Subordinated Debt Indenture, dated as of November 19, 1996 (the “Base Senior
Subordinated Indenture”), as amended and supplemented by the First Supplemental Indenture thereto,
dated as of December 18, 2003, and by the Second Supplemental Indenture thereto, dated as of May 1,
2006, in each case by and between the Company, the guarantors party thereto and the Trustee (the
Base Senior Subordinated Indenture, as amended and supplemented by the foregoing supplemental
indentures, is hereinafter called the “Senior Subordinated Indenture”), and to guarantee on a
senior subordinated basis the prompt payment when due of the principal of and premium, if any, and
interest on the Company’s 7-3/4% Senior
Subordinated Notes due 2010 and 8-5/8% Senior Subordinated Notes due 2008 (collectively, the
“Senior Subordinated Notes”) issued pursuant to the Senior Subordinated Indenture.
The above description is a summary and is qualified in its entirety by the terms of the
respective agreements referenced above, each of which is filed with, or incorporated by reference
into, this Current Report.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits
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10.24
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Revolving Loan Agreement, dated as of November 22, 2005, between the Company, as
Borrower, the banks party thereto, and Bank of America, N.A., as Administrative Agent,
including the Subsidiary Guarantee thereunder and the form of Instrument of Joinder thereto
(incorporated by reference to Exhibit 10.24 of the Company’s Current Report on Form 8-K
dated November 23, 2005).
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10.39
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Third Amendment Agreement, dated August 17, 2007, to Revolving Loan Agreement, dated
as of November 22, 2005, between the Company, as Borrower, the banks party thereto, and
Bank of America, N.A., as Administrative Agent.
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10.40
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Fifth Supplemental Indenture, dated August 17, 2007, by and between the Company, the
Guarantors, and the Trustee.
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10.41
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Third Supplemental Indenture, dated August 17, 2007, by and between the Company, the
Guarantors, and the Trustee, and the Guaranties, each dated August 17, 2007, of the Senior
Subordinated Notes.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused
this report
to be signed on its behalf by the undersigned hereunto duly authorized.
Date: August 22, 2007
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KB Home
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By:
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/s/ Domenico Cecere
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Domenico Cecere
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Executive Vice President and Chief Financial Officer
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EXHIBIT INDEX
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Exhibit No.
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Description
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10.24
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Revolving Loan Agreement, dated as of November 22, 2005, between the Company, as
Borrower, the banks party thereto, and Bank of America, N.A., as Administrative Agent,
including the Subsidiary Guarantee thereunder and the form of Instrument of Joinder thereto
(incorporated by reference to Exhibit 10.24 of the Company’s Current Report on Form 8-K
dated November 23, 2005).
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10.39
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Third Amendment Agreement, dated August 17, 2007, to Revolving Loan Agreement, dated
as of November 22, 2005, between the Company, as Borrower, the banks party thereto, and
Bank of America, N.A., as Administrative Agent.
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10.40
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Fifth Supplemental Indenture, dated August 17, 2007, by and between the Company, the
Guarantors, and the Trustee.
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10.41
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Third Supplemental Indenture, dated August 17, 2007, by and between the Company, the
Guarantors, and the Trustee, and the Guaranties, each dated August 17, 2007, of the Senior
Subordinated Notes.
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Exhibit 10.39
THIRD AMENDMENT AGREEMENT
This Third Amendment Agreement dated as of August 17, 2007 (“Amendment”) is entered into with
reference to the Revolving Loan Agreement dated as of November 22, 2005, as amended (the “Loan
Agreement”), among KB HOME, a Delaware corporation (“Borrower”), the Banks party thereto, and Bank
of America, N.A., as Administrative Agent. Borrower and the Administrative Agent, acting on behalf
of the Required Banks under the Loan Agreement, agree to amend the Loan Agreement as follows:
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1.
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Definitions
. Capitalized terms used but not defined herein have the meanings set
forth in the Loan Agreement.
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2.
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Consent to Reduced Consolidated Interest Coverage Ratio
. Administrative Agent and
Required Banks consent and agree, on a one time basis, as follows:
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(a)
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Notwithstanding the provisions of Section 6.11 of the Loan Agreement, with
respect to the Reduction Period (as defined below):
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(1)
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Subject to Section 2(h) of this Amendment, Borrower shall not
permit the Consolidated Interest Coverage Ratio, at the end of each of the
first 8 consecutive Fiscal Quarters included within such period, to be less
than 1.00 to 1.00.
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(2)
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Subject to Section 2(h) of this Amendment, Borrower shall not
permit the Consolidated Interest Coverage Ratio, at the end of the
9
th
Fiscal Quarter included within such period, to be less than 1.50
to 1.00.
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(3)
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Following the date of this Amendment and during the Reduction
Period, Borrower shall not and shall not permit any of its Consolidated
Subsidiaries to (notwithstanding the provisions of Sections 6.4(e) and 6.12 of
the Loan Agreement), retire, redeem, purchase or otherwise acquire for value
any shares of capital stock or any warrant or right to acquire shares of
capital stock or any other equity security issued by Borrower, unless both of
the following conditions have been met:
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(A)
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the Consolidated Leverage Ratio at the end of
the preceding Fiscal Quarter for which a Compliance Certificate has
been delivered pursuant to Section 7.2 of the Loan Agreement is not
greater than 0.90 to 1.00; and
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(B)
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no Default or Event of Default has occurred and
is continuing or would result therefrom.
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(b)
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If the Consolidated Interest Coverage Ratio at the end of any Fiscal Quarter
included within the Reduction Period is less than 2.00 to 1.00 but greater than or
equal to 1.50 to 1.00, Applicable Rates as of any date of determination during the
Reduction Period shall mean the following percentages per annum, based upon the
Applicable Pricing Level on that date, subject to the provisions of Articles II and III
of the Loan Agreement:
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Applicable Letter of
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Applicable
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Applicable
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Credit Fee
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Pricing
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Applicable Base
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Commitment Fee
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Applicable Eurodollar
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Level
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Rate Spread
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Rate
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Rate Spread
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0.000
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%
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0.200
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%
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0.750
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II
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0.000
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%
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0.225
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0.875
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III
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0.000
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%
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0.250
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1.000
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IV
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0.000
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0.275
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1.250
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0.000
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0.300
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%
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1.625
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%
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If the Consolidated Interest Coverage Ratio at the end of any Fiscal Quarter
included within the Reduction Period is less than 1.50 to 1.00 but greater than or
equal to 1.25 to 1.00, Applicable Rates as of any date of determination during the
Reduction Period shall mean the following percentages per annum, based upon the
Applicable Pricing Level on that date, subject to the provisions of Articles II and
III of the Loan Agreement:
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Applicable Letter of
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Applicable
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Applicable
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Credit Fee
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Pricing
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Applicable Base
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Commitment Fee
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Applicable Eurodollar
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Level
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Rate Spread
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Rate
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Rate Spread
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0.000
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%
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0.225
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%
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0.875
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%
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II
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0.000
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%
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0.250
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%
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1.000
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III
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0.000
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%
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0.275
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1.125
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IV
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0.000
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%
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0.300
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%
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1.375
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V
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0.000
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%
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0.325
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%
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1.750
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%
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If the Consolidated Interest Coverage Ratio at the end of any Fiscal Quarter
included within the Reduction Period is less than 1.25 to 1.00 but greater than or
equal to 1.00 to 1.00, Applicable Rates as of any date of determination during the
Reduction Period shall mean the following percentages per annum, based upon the
Applicable Pricing Level on that date, subject to the provisions of Articles II and
III of the Loan Agreement:
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Applicable Letter of
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Applicable
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Applicable
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Credit Fee
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Pricing
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Applicable Base
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Commitment Fee
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Applicable Eurodollar
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Level
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Rate Spread
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Rate
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Rate Spread
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0.000
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%
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0.250
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%
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1.000
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II
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0.000
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%
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0.275
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%
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1.125
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%
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III
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0.000
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%
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0.300
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%
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1.250
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IV
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0.000
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%
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0.325
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1.500
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V
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0.000
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%
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0.350
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%
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1.875
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%
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If the Consolidated Interest Coverage Ratio at the end of any Fiscal Quarter
included within the Reduction Period is less than 1.00 to 1.00, Applicable Rates as
of any date of determination during the Reduction Period shall mean the following
percentages per annum, based upon the Applicable Pricing Level on that date, subject
to the provisions of Articles II and III of the Loan Agreement:
-2-
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Applicable Letter of
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Applicable
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Applicable
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Credit Fee
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Pricing
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Applicable Base
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Commitment Fee
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Applicable Eurodollar
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Level
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Rate Spread
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Rate
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Rate Spread
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0.000
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%
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0.300
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%
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1.125
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%
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II
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0.000
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%
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0.325
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%
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1.250
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%
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III
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0.000
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%
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0.350
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%
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1.375
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%
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IV
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0.000
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%
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0.375
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%
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1.625
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%
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V
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0.000
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%
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0.400
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%
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2.000
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%
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With respect to any Fiscal Quarter included within the Reduction Period, any change
in the Applicable Rate resulting from a change in the Consolidated Interest Coverage
Ratio or Consolidated Leverage Ratio shall be effective as of the first Business Day
immediately following the date a Compliance Certificate for such Fiscal Quarter is
delivered pursuant to Section 7.2 of the Loan Agreement;
provided
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however
, that if a Compliance Certificate is not delivered on or prior to a
date required by Section 7.2 of the Loan Agreement, and if the Compliance
Certificate indicates that the Applicable Rate of Borrower will increase
(
i.e.
, becomes less favorable to Borrower), the date of increase in the
Applicable Rate will be deemed to be the date upon which such Compliance Certificate
was due under Section 7.2 of the Loan Agreement, not the date upon which such
Compliance Certificate was delivered.
The Applicable Rates applicable with respect to the last Fiscal Quarter of the
Reduction Period shall continue to be effective until the first Business Day
following receipt by Administrative Agent of a Compliance Certificate delivered
pursuant to Section 7.2 of the Loan Agreement showing the Consolidated Interest
Coverage Ratio to be greater than or equal to 2.00 to 1.00.
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(c)
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“Reduction Period” means the one time period of 9 consecutive Fiscal Quarters
commencing with the beginning of the Fiscal Quarter chosen by Borrower. Borrower shall
designate the Reduction Period concurrently with its delivery to the Administrative
Agent of a Compliance Certificate for the first Fiscal Quarter of such period by
delivering its notice of designation (the “Reduction Designation”) to Administrative
Agent. The Reduction Designation is irrevocable upon the Administrative Agent’s
receipt thereof. For the avoidance of doubt, the Reduction Period includes the
Elimination Period.
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(d)
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Any failure to comply with Section 2(a) of this Amendment during the Reduction
Period shall constitute a failure to comply with Section 6.11 of the Loan Agreement for
purposes of Section 9.1 thereof.
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(e)
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Notwithstanding the provisions of Sections 2(a), 2(b) and 2(c) of this
Amendment, if the Consolidated Interest Coverage Ratio for any Fiscal Quarter included
within the Reduction Period as set forth in a Compliance Certificate delivered pursuant
to Section 7.2 of the Loan Agreement is equal to or greater than 2.00 to 1.00, the
provisions set forth in Sections 2(a) and 2(b) of this Amendment shall cease to apply
as of the date of delivery of such Compliance Certificate. If a subsequent Compliance
Certificate delivered pursuant to Section 7.2 of the Loan Agreement for a Fiscal
Quarter included within the Reduction Period shows a Consolidated Interest Coverage
Ratio less than 2.00 to 1.00 as of the end of the Fiscal Quarter covered by such
Compliance Certificate, the
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provisions set forth in Sections 2(a) and 2(b) of this Amendment shall again begin
to apply as of the date of delivery of such Compliance Certificate.
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(f)
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During the Reduction Period, Section 6.10 of the Loan Agreement shall be
amended to read in its entirety as follows:
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6.10
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Consolidated Leverage Ratio
. Permit
the Consolidated Leverage Ratio to be, at the end of any Fiscal
Quarter, greater than:
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(a)
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2.00 to 1.00 (if the Consolidated
Interest Coverage Ratio at the end of that Fiscal Quarter is
greater than or equal to 1.50 to 1.00);
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(b)
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1.50 to 1.00 (if the Consolidated
Interest Coverage Ratio at the end of that Fiscal Quarter is
less than 1.50 to 1.00 but greater than or equal to 1.25 to
1.00); or
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(c)
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1.25 to 1.00 (if the Consolidated
Interest Coverage Ratio at the end of that Fiscal Quarter is
less than 1.25 to 1.00).
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(g)
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“Elimination Period” means the one time period of up to 4 consecutive Fiscal
Quarters (all of which must occur within the Reduction Period) commencing with the
beginning of a Fiscal Quarter contained within the Reduction Period chosen by Borrower.
Borrower shall designate the Elimination Period concurrently with its delivery to the
Administrative Agent of a Compliance Certificate for the first Fiscal Quarter of such
period by delivering its notice of designation (the “Elimination Designation”) to
Administrative Agent. The Elimination Designation is irrevocable upon the
Administrative Agent’s receipt thereof.
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(h)
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Notwithstanding any other provisions of this Amendment or the Loan Agreement:
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(1)
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During the Elimination Period, Borrower shall not be subject to
the provisions of Sections 2(a)(1) and 2(a)(2) of this Amendment and Section
6.11 of the Loan Agreement;
provided
,
however
, that a
Compliance Certificate delivered pursuant to Section 7.2 of the Loan Agreement
shall include a calculation of the Consolidated Interest Coverage Ratio at the
end of each Fiscal Quarter included within the Elimination Period.
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(2)
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During the Elimination Period, Borrower shall not permit the
Consolidated Leverage Ratio to be greater than 1.10 to 1.00.
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(3)
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Upon delivery of the Elimination Designation, Borrower shall
establish an interest-bearing interest reserve account with Administrative
Agent (the “Reserve Account”) and shall maintain at all times (except as
otherwise provided below) in such interest reserve account cash deposits in an
amount (the “Minimum Reserve Amount”) equal to the Consolidated Interest
Expense for the then most recently completed Fiscal Quarter, as shown in the
Compliance Certificate for such Fiscal Quarter delivered pursuant to Section
7.2 of the Loan Agreement,
times
4.
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Any deficiency in the Minimum Reserve Amount or redeposit of the Minimum
Reserve Amount, as required per the terms set forth below, shall be funded
into
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the Reserve Account within one Business Day immediately following the
date a Compliance Certificate is delivered pursuant to Section 7.2 of the
Loan Agreement, subject to the following:
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(A)
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if a Compliance Certificate is not delivered on
or prior to a date required by Section 7.2 of the Loan Agreement, an
amount equal to 10% of the then effective Minimum Reserve Amount shall
be additionally funded into the Reserve Account within 3 Business Days
immediately following the date upon which such Compliance Certificate
was due under Section 7.2 of the Loan Agreement; and
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(B)
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if, as a result of any restatement of or other
adjustment to the financial statements of Borrower or a calculation
error, Borrower or Administrative Agent determines that (i) the
Consolidated Interest Expense as calculated by Borrower as of any
applicable date was inaccurate and (ii) a proper calculation of the
Consolidated Interest Expense would have resulted in an increase in the
Minimum Reserve Amount, an amount equal to such increase shall be
additionally funded into the Reserve Account within 3 Business Days
immediately following the date of such determination by Borrower or
Administrative Agent.
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Borrower may withdraw all amounts deposited in the Reserve Account on the
first Business Day following receipt by the Administrative Agent of
Compliance Certificate(s) delivered pursuant to Section 7.2 of the Loan
Agreement with respect to a Fiscal Quarter of the Elimination Period (other
than the first Fiscal Quarter of the Elimination Period) showing that:
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(C)
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the Consolidated Interest Coverage Ratio is
greater than or equal to 1.00 to 1.00; and
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(D)
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no Default or Event of Default has then
occurred and is continuing at the time of withdrawal (and Borrower
delivers a certificate of a Senior Officer to this effect).
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But, if at the end of any Fiscal Quarter of the Elimination Period following
when such release of the Minimum Reserve Amount was previously permitted
pursuant to the terms above the Borrower submits a Compliance Certificate
required by Section 7.2 of the Loan Agreement showing that the Consolidated
Interest Coverage Ratio is less than 1.00 to 1.00, then Borrower shall
redeposit and maintain the Minimum Reserve Amount in the Reserve Account
until such time as:
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(E)
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the Borrower submits a Compliance Certificate
required by Section 7.2 of the Loan Agreement establishing that the
Consolidated Interest Coverage Ratio is:
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(i)
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greater than or equal to 1.00 to
1.00 during the Elimination Period;
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(ii)
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greater than or equal to the then
applicable Consolidated Interest Coverage Ratio requirement that
would be imposed by Sections 2(a)(1) or 2(a)(2) of this
Amendment during the Reduction Period (other than the
Elimination Period); or
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(iii)
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in compliance with Section 6.11
of the Loan Agreement (without giving effect to this Amendment)
at the end of any Fiscal Quarter ending after the Reduction
Period; and
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(F)
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no Default or Event of Default has then
occurred and is continuing.
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Notwithstanding the foregoing, Borrower may withdraw any amounts from the
Reserve Account that exceed the amount of Consolidated Interest Expense for
the then most recently completed Fiscal Quarter, as shown in the Compliance
Certificate for such Fiscal Quarter delivered pursuant to Section 7.2 of the
Loan Agreement, times 4,
provided
, that no Default or Event of
Default has then occurred and is continuing at the time of withdrawal (and
Borrower delivers a certificate of a Senior Officer to this effect).
Borrower’s failure to comply with the provisions of any of Sections 2(h)(2) or
2(h)(3) of this Amendment shall constitute an Event of Default.
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(i)
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For the avoidance of doubt, during the Elimination Period, the definition of
“Unrestricted Cash” set forth in Section 1.1 of the Loan Agreement shall exclude all
amounts deposited in the Reserve Account.
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3.
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Permanent Amendments to Loan Agreement
.
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(a)
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The definition of “Applicable Pricing Level” set forth in Section 1.1 of the
Loan Agreement shall be amended by adding the following paragraph at the end of the
definition:
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If, as a result of any restatement of or other adjustment to the financial
statements of Borrower or a calculation error, Borrower or Administrative
Agent determines that (i) the Consolidated Leverage Ratio or Consolidated
Interest Coverage Ratio as calculated by Borrower as of any applicable date
was inaccurate and (ii) a proper calculation of the Consolidated Leverage
Ratio or Consolidated Interest Coverage Ratio would have resulted in higher
pricing for such period, Borrower shall immediately and retroactively be
obligated to pay to Administrative Agent, for the account of the applicable
Bank, promptly on demand by Administrative Agent (or, after the occurrence
of an actual or deemed entry of an order for relief with respect to Borrower
under the Bankruptcy Code of the United States of America, automatically and
without further action by Administrative Agent, any Bank, or any Issuing
Bank), an amount equal to the excess of the amount of interest and fees that
should have been paid for such period over the amount of interest and fees
actually paid for such period. This paragraph shall not limit the rights of
Administrative Agent, any Bank, or any Issuing Bank, as the case may be,
under Section 2.5(c)(iii), Section 2.5(j) or Section 3.7 or under Article
IX. Borrower’s obligations under this paragraph shall survive the
termination of the Commitments and the repayment of all other Obligations
hereunder.
-6-
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(b)
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The definition of “Consolidated EBITDA” set forth in Section 1.1 of the Loan
Agreement shall be amended to read in its entirety as follows:
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“
Consolidated EBITDA
” means, for any period, the
sum
of
(a) Consolidated Net Income for such period,
minus
(b)
interest income to the extent included in calculating Consolidated Net
Income for such period,
plus
(c) any extraordinary loss reflected in
such Consolidated Net Income,
minus
(d) any extraordinary gain
reflected in such Consolidated Net Income,
plus
(e) Consolidated
Interest Expense for such period,
plus
(f) the aggregate amount of
federal, state and foreign income taxes payable by Borrower and its
Consolidated Subsidiaries for such period,
plus
(g) depreciation,
amortization and all other non-cash expenses of Borrower and its
Consolidated Subsidiaries for such period, in each case as determined in
accordance with Generally Accepted Accounting Principles consistently
applied,
plus
(h) any Distributions made in Cash by KB France to
Borrower during such period, and in the case of items (e), (f) and (g), only
to the extent deducted in the determination of Consolidated Net Income for
such period.
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(c)
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The definition of “
Consolidated Interest Expense
” set forth in Section
1.1 of the Loan Agreement shall be amended to read in its entirety as follows:
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“
Consolidated Interest Expense
” means, for any period, the aggregate
amount of interest, fees, charges and related expenses (but excluding
premiums and non-cash amounts arising as a result of prepayment or
extinguishment of Indebtedness) paid or payable to a lender by Borrower and
its Consolidated Subsidiaries on a consolidated basis in connection with
borrowed money (including any capitalized interest and accretion of original
issue discount on long-term debt) and the interest portion of any
capitalized lease payments
less
interest income of Borrower and its
Consolidated Subsidiaries on a consolidated basis.
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(d)
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The definition of “Consolidated Total Indebtedness” set forth in Section 1.1 of
the Loan Agreement shall be amended to read in its entirety as follows:
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“
Consolidated Total Indebtedness
” means, as of any date of
determination, all Indebtedness and Contingent Guaranty Obligations of
Borrower and its Consolidated Subsidiaries on a consolidated basis on that
date (without duplication for any guaranty by Borrower of a Consolidated
Subsidiary’s Indebtedness or any guaranty by a Consolidated Subsidiary of
either Borrower’s or another Consolidated Subsidiary’s Indebtedness or
otherwise)
minus
(a) all Indebtedness and Contingent Guaranty
Obligations of Financial Subsidiaries on a consolidated basis (but only to
the extent that such Financial Subsidiaries are also Consolidated
Subsidiaries and there is no recourse to Borrower or any other Consolidated
Subsidiary) on that date
minus
(b) all Indebtedness and Contingent
Guaranty Obligations of Foreign Subsidiaries of the Borrower on a
consolidated basis (but only to the extent that such Foreign Subsidiaries of
the Borrower are also Consolidated Subsidiaries and there is no recourse to
Borrower or any other Consolidated Subsidiary or any of their respective
Property) on that date
minus
(c) the amount, if any, by which the
aggregate Cash and Cash Equivalents (exclusive of any amount maintained in
any interest reserve account required by this Agreement) of Borrower and its
Consolidated Subsidiaries (
other
than
the
-7-
Financial Subsidiaries and Foreign Subsidiaries) on a consolidated basis on
that date are in excess of $15,000,000.
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(e)
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Section 6.9 of the Loan Agreement shall be amended to read in its entirety as
follows:
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6.9
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Consolidated Tangible Net Worth
.
Permit Consolidated Tangible Net Worth to be, at the end of any Fiscal
Quarter, less than an amount equal to (a) $2,000,000,000,
plus
(b) an amount equal to 50% of aggregate of the cumulative Consolidated
Net Income for each Fiscal Quarter contained in the fiscal period
commencing on September 1, 2007 and ending as of the last day of such
Fiscal Quarter (
provided
that there shall be no reduction
hereunder in the event of a consolidated net loss in any such Fiscal
Quarter),
plus
(c) an amount equal to 50% of the cumulative net
proceeds received by Borrower from the issuance of its capital stock
subsequent to August 31, 2007.
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4.
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Consent Fee
. Borrower agrees to pay to the Administrative Agent, for the account
of each “Consenting Bank” (as defined in Annex I), a fee equal to 0.200% of the Pro Rata
Share of the Commitment held by such Consenting Bank (the “Consent Fee”). The Consent Fee
shall be payable to the Consenting Banks only if Consenting Banks constitute Required Banks
and shall be paid by Borrower promptly after receipt of consents from Required Banks. Upon
payment by Borrower, the Consent Fee received by each Consenting Bank shall be fully earned
and nonrefundable.
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5.
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Conditions Precedent
. The effectiveness of this Amendment is conditioned upon the
receipt by the Administrative Agent of:
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(a)
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a projected income statement, projected balance sheet and projections of
Borrower’s Consolidated Interest Coverage Ratio, Consolidated Leverage Ratio and
Consolidated Tangible Net Worth (collectively, the “Projections”);
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(b)
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written consents to the execution, delivery and performance hereof from the
Required Banks under the Loan Agreement;
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(c)
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the Consent Fee from the Borrower in the amount payable to each Consenting
Bank; and
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(d)
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such other fees and expenses in such amounts and at such times as heretofore
set forth in a letter agreement between Borrower and the Administrative Agent and as
otherwise required under the Loan Agreement.
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6.
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Representations and Warranties
. Borrower represents and warrants to the
Administrative Agent and the Banks that:
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(a)
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No Default or Event of Default has occurred and remains continuing and that
each of the representations and warranties of Borrower (
other
than
the
representations and warranties contained in
Sections
4.4(a)
,
4.6
,
4.9
,
4.18
and
4.19
of the Loan Agreement)
contained in
Article IV
of the Loan Agreement (each as updated from time to
time in accordance with the terms of the Loan Agreement, and except that the financial
statements referred to in
Section 4.7(a)
of the Loan Agreement shall be deemed
to refer to the most recent financial statements delivered pursuant to
Section 7.1(a)
of the Loan
Agreement and the Borrowing Base Certificate referred to in
Section 4.7(b)
of the Loan Agreement shall be
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-8-
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deemed to refer to the most recent Borrowing Base
Certificate delivered pursuant to
Section 2.8
of the Loan Agreement) is true
and correct in all material respects as of the date hereof (other than those which
relate by their terms solely to another date).
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(b)
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As of the date hereof, the assumptions upon which each of the Projections are
based are believed by management of Borrower to be reasonable and consistent with other
assumptions and facts known to Borrower as of the date hereof. Nothing in this Section
6(b) shall be construed as a representation or warranty as of any date other than the
date hereof or that any of the Projections will in fact be achieved by Borrower.
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(c)
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Without expanding the scope of the representations and warranties set forth in
Section 6(b), the information provided by Borrower to the Banks in connection with this
Amendment, taken as a whole, has not contained any untrue statement of a material fact
and has not omitted a material fact necessary to make the statements contained therein,
taken as a whole, not misleading under the totality of the circumstances existing at
the date such information was provided and in the context in which it was provided.
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7.
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Updated Projections
. Borrower shall, upon the reasonable request of Administrative
Agent, provide updates to the Projections during the Reduction Period. Each update shall be
based upon the Projections then most recently formulated by Borrower.
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8.
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Effect of One Time Consent; Confirmation
. Except to the limited extent expressly
set forth in this Amendment, no consent or waiver, express or implied, by the Administrative
Agent or any Bank to or for any breach of or deviation from any covenant, condition or duty
by any Loan Party may be deemed a consent or waiver to or of any other breach of the same or
any other covenant, condition or duty. In all other respects, the terms of the Loan
Agreement and the other Loan Documents are confirmed.
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[signatures continued on following page]
-9-
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed as of the
date first written above.
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KB HOME, a Delaware corporation
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By:
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/s/ Kelly K. Masuda
Kelly K. Masuda
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Its:
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Senior Vice President, Treasurer
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BANK OF AMERICA, N.A., as Administrative Agent and as a Bank
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By:
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/s/ Mark Mokelke
Mark Mokelke
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Its:
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Vice President
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Exhibit 10.40
KB HOME,
Company,
THE EXISTING GUARANTORS PARTY HERETO,
Guarantors,
KB HOME LONE STAR INC.,
Additional Guarantor,
and
U.S. BANK NATIONAL ASSOCIATION,
Trustee
FIFTH SUPPLEMENTAL INDENTURE
Dated as of August 17, 2007
THIS FIFTH SUPPLEMENTAL INDENTURE (this “
Fifth Supplemental Indenture
”) is dated as of
August 17, 2007 and executed by and between KB HOME, a Delaware corporation (the
“
Company
”), the Existing Guarantors (as defined below), KB HOME LONE STAR INC., a Texas
corporation and an indirect wholly-owned subsidiary of the Company (the “
Additional
Guarantor
”), and U.S. Bank National Association, a national banking association duly organized
and existing under the laws of the United States of America (successor in interest to SunTrust
Bank), as Trustee (the “
Trustee
”).
RECITALS:
WHEREAS, the Company, the Existing Guarantors (other than KB Home Orlando LLC, a Delaware
limited liability company (“
KB Orlando
”)), KB HOME Lone Star LP, a Texas limited
partnership (“
Lone Star LP
”), and the Trustee have heretofore executed and delivered an
Indenture dated as of January 28, 2004 (the “
Original Indenture
”), providing for the
issuance by the Company from time to time of its Securities (as defined in the Original Indenture),
a First Supplemental Indenture dated as of January 28, 2004 (the “
First Supplemental
Indenture
”) and a Second Supplemental Indenture dated as of June 30, 2004 (the “
Second
Supplemental Indenture
”);
WHEREAS, the Company, the Existing Guarantors, Lone Star LP and the Trustee have heretofore
executed and delivered a Third Supplemental Indenture dated as of May 1, 2006 (the “
Third
Supplemental Indenture
”) and a Fourth Supplemental Indenture dated as of November 9, 2006 (the
“
Fourth Supplemental Indenture
”; the Original Indenture, as amended and supplemented by the
First Supplemental Indenture, the Second Supplemental Indenture, the Third Supplemental Indenture,
the Fourth Supplemental Indenture, and this Fifth Supplemental Indenture, is hereinafter called the
“
Indenture
”, which term shall include the terms and provisions of each series of Securities
established from time to time pursuant to Section 301 of the Original Indenture);
WHEREAS, pursuant to Articles Two and Three of the Original Indenture, the Company has
established (i) by the First Supplemental Indenture, the form and terms of a series of the
Company’s Securities designated the “5
3
/
4
% Senior Notes due 2014” (the “
2014 Notes
”), (ii) by
the Second Supplemental Indenture, the form and terms of a series of the Company’s Securities
designated the “6-3/8% Senior Notes due 2011” (the “
2011 Notes
”), (iii) by an Officers’
Certificate and Guarantors’ Officers’ Certificate, dated as of December 15, 2004, the form and
terms of a series of the Company’s Securities designated the “5-7/8% Senior Notes due 2015” (the
“
2015 Notes
”), (iv) by Officers’ Certificates and Guarantors’ Officers’ Certificates, dated
as of June 2, 2005 and June 27, 2005, the form and terms of a series of the Company’s Securities
designated the “6-1/4% Senior Notes due 2015” (the “
Second 2015 Notes
”), and (v) by an
Officers’ Certificate and Guarantors’ Officers’ Certificate, dated as of April 3, 2006, the form
and terms of a series of the Company’s Securities designated the “7-1/4% Senior Notes due 2018”
(the “
2018 Notes
,” and together with the 2014 Notes, the 2011 Notes, the 2015 Notes and the
Second 2015 Notes, the “
Senior Notes
”) (the Officers’ Certificates and
Guarantors’ Officers’ Certificates referred to in clauses (iii), (iv) and (v) of this paragraph are
hereinafter called, together, the “
Existing Certificates
”);
- 1 -
WHEREAS, Lone Star LP, a Guarantor (as defined in the Original Indenture), merged with and
into the Additional Guarantor, with the Additional Guarantor as the surviving entity;
WHEREAS, concurrently with the execution and delivery of this Fifth Supplemental Indenture,
the Additional Guarantor is becoming a party to, and is guaranteeing the obligations of the Company
under that certain Revolving Loan Agreement, dated as of November 22, 2005, as amended on October
10, 2006 and December 12, 2006, between the Company, the banks party thereto, Bank of America, N.A.
as Administrative Agent, Citicorp North America, Inc. and JPMorgan Chase Bank, N.A. as
Co-Syndication Agents, Calyon New York Branch, Wachovia Bank, N.A., Barclays Bank plc and The Royal
Bank of Scotland plc as Co-Documentation Agents and Banc of America Securities LLC and Citigroup
Global Markets Inc. as Joint Lead Arrangers and Joint Book Managers;
WHEREAS, pursuant to Section 1614 of the Original Indenture, the Company, the Existing
Guarantors and the Additional Guarantor wish to amend and supplement the Indenture to provide for
the Additional Guarantor to become a Guarantor under the Indenture and to guarantee the obligations
of the Company under the Indenture and the Securities (including, without limitation, the Senior
Notes) issued thereunder from time to time and any Coupons appertaining thereto, and otherwise to
modify the Indenture on the terms set forth in this Fifth Supplemental Indenture; and
WHEREAS, the Company has instructed the Trustee to execute and deliver this Fifth
Supplemental Indenture pursuant to Sections 901(1) and 901(10) of the Original Indenture, and all
requirements necessary to make this Fifth Supplemental Indenture a valid instrument in accordance
with its terms have been performed and the execution and delivery of this Fifth Supplemental
Indenture have been duly authorized in all respects by the Company, each of the Existing Guarantors
and the Additional Guarantor.
NOW, THEREFORE, for and in consideration of the premises and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the Company, the
Existing Guarantors, the Additional Guarantor and the Trustee mutually covenant and agree for the
equal and proportionate benefit of the Holders (as defined in the Original Indenture) of the
Securities or any series thereof and any Coupons, as follows:
SECTION 1.
Definitions
.
(a) Terms used herein and not defined herein have the meanings ascribed to such terms in the
Original Indenture.
(b) As used in this Fifth Supplemental Indenture, the terms “2011 Notes,” “2014 Notes,” “2015
Notes,” “Second 2015 Notes,” “2018 Notes,” “Additional Guarantor,” “Existing Certificates,” “First
Supplemental Indenture,” “Original Indenture,” “Second Supplemental Indenture,” “Third Supplemental
Indenture,” “Fourth Supplemental Indenture,” “Senior Notes,” “Fifth Supplemental Indenture” and
“Lone Star LP” have the meanings specified in the recitals hereto and in the paragraph preceding
such recitals; and the term “Existing Guarantors” means KB HOME Coastal Inc., KB HOME Sacramento
Inc., KB HOME South Bay
- 2 -
Inc. and KB HOME Greater Los Angeles Inc., each a California corporation, KB HOME Phoenix
Inc., an Arizona corporation, KB HOME Nevada Inc., a Nevada corporation, KB HOME Colorado Inc., a
Colorado corporation, and KB Orlando.
SECTION 2.
Guarantee
. The parties hereto covenant and agree that, from and after the
date of this Fifth Supplemental Indenture:
(a) the Additional Guarantor shall be a Guarantor under the Original Indenture, the First
Supplemental Indenture, Second Supplemental Indenture, Third Supplemental Indenture and Fourth
Supplemental Indenture as if the Additional Guarantor were an original signatory to each such
document and an original Guarantor named therein;
(b) without limitation to the other provisions of this Section 2, the Additional Guarantor
shall be a Guarantor under the Indenture with respect to all of the Securities issued and
outstanding thereunder from time to time (including, without limitation, the Senior Notes) and any
Coupons appertaining thereto on and subject to the terms and provisions of the Indenture
(including, without limitation, the terms and provisions of the Existing Certificates);
(c) without limitation to the other provisions of this Section 2, the Additional Guarantor
agrees that each of the Original Indenture, the First Supplemental Indenture, the Second
Supplemental Indenture, the Third Supplemental Indenture and the Fourth Supplemental Indenture
constitutes a valid and binding obligation of the Additional Guarantor, enforceable against the
Additional Guarantor in accordance with its terms; and
(d) without limitation to the other provisions of this Section 2, the Additional Guarantor
agrees to perform and to comply with all of the covenants and agreements of a Guarantor in the
Original Indenture, the First Supplemental Indenture, the Second Supplemental Indenture, the Third
Supplemental Indenture, the Fourth Supplemental Indenture and each of the Existing Certificates, in
each case as if the Additional Guarantor were an original signatory thereto and an original
Guarantor named therein.
(e) without limitation to the other provisions of this Section 2, Lone Star LP hereby assumes
the due and punctual performance and observation of every obligation in the Indenture (including,
without limitation, the terms of the Existing Certificates), including without limitation its
Guarantee, on the part of the Additional Guarantor to be performed or observed.
(f) without limitation to the other provisions of this Section 2, the Existing Guarantors
hereby affirm their Guarantees and obligations under the Indenture.
SECTION 3.
Governing Law; Fifth Supplemental Indenture
. This Fifth Supplemental
Indenture shall be governed by and construed in accordance with the laws of the State of New York
applicable to agreements made or instruments entered into and, in each case, performed in said
State. The terms and conditions of this Fifth Supplemental Indenture shall be, and be deemed to
be, part of the terms and conditions of the Indenture for any and all purposes. Other than as
amended and supplemented by this Fifth Supplemental Indenture, the Original Indenture, as amended
and supplemented by the First Supplemental Indenture, the Second Supplemental
- 3 -
Indenture, the Third Supplemental Indenture and the Fourth Supplemental Indenture is in all
respects ratified and confirmed.
SECTION 4.
Acceptance by Trustee
. Subject to Section 7 hereof, the Trustee hereby
accepts this Fifth Supplemental Indenture and agrees to perform the same upon the terms and
conditions set forth in the Original Indenture, as amended and supplemented by the First
Supplemental Indenture, the Second Supplemental Indenture, the Third Supplemental Indenture and the
Fourth Supplemental Indenture.
SECTION 5.
Counterparts
. This Fifth Supplemental Indenture may be executed in two or
more counterparts, each of which shall constitute an original, but all of which when taken together
shall constitute but one instrument.
SECTION 6.
Headings
. The headings of this Fifth Supplemental Indenture are for
reference only and shall not limit or otherwise affect the meaning hereof.
SECTION 7.
Trustee Not Responsible for Recitals
. The recitals herein contained are
made by the Company, the Existing Guarantors and the Additional Guarantor and not by the Trustee,
and the Trustee assumes no responsibility for the correctness thereof. The Trustee shall not be
responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Fifth
Supplemental Indenture, except as to its validity with respect to the Trustee.
SECTION 8.
Separability
. In case any one or more of the provisions contained in this
Fifth Supplemental Indenture shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions hereof shall not, to the fullest extent permitted by
law, in any way be affected or impaired thereby.
[Signature Page Follows.]
- 4 -
IN WITNESS WHEREOF, the parties hereto have caused this Fifth Supplemental Indenture to be
duly executed, and their respective seals to be hereunto affixed, all as of the day and year first
above written.
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“Company”:
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KB HOME
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By:
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/s/ Kelly Masuda
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Kelly Masuda
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Senior Vice President, Treasurer
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[SEAL]
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Attest:
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/s/ Tony Richelieu
Tony Richelieu
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Assistant Corporate Secretary
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“Existing Guarantors”:
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KB HOME PHOENIX INC., an Arizona corporation
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By:
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/s/ William R. Hollinger
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William R. Hollinger
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Vice President
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[SEAL]
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Attest:
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/s/ Tony Richelieu
Tony Richelieu
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Secretary
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KB HOME COASTAL INC., a California corporation
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By:
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/s/ William R. Hollinger
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William R. Hollinger
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Vice President
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[SEAL]
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Attest:
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/s/ Tony Richelieu
Tony Richelieu
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Secretary
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KB HOME SOUTH BAY INC., a California corporation
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By:
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/s/ William R. Hollinger
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William R. Hollinger
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Vice President
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[SEAL]
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Attest:
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/s/ Tony Richelieu
Tony Richelieu
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Secretary
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KB HOME GREATER LOS ANGELES INC., a California
corporation
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By:
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/s/ William R. Hollinger
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William R. Hollinger
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Vice President
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[SEAL]
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Attest:
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/s/ Tony Richelieu
Tony Richelieu
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Secretary
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KB HOME COLORADO INC., a Colorado corporation
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By:
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/s/ William R. Hollinger
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William R. Hollinger
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Vice President
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[SEAL]
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Attest:
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/s/ Tony Richelieu
Tony Richelieu
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Secretary
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KB HOME NEVADA INC., a Nevada corporation
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By:
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/s/ William R. Hollinger
William R. Hollinger
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Vice President
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[SEAL]
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Attest:
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/s/ Tony Richelieu
Tony Richelieu
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Secretary
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KB HOME ORLANDO LLC, a Delaware limited liability
company
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By:
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KB HOME FLORIDA LLC, a Delaware limited
liability company,
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Its sole member
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By:
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/s/ William R. Hollinger
William R. Hollinger
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Vice President
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[SEAL]
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Attest:
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/s/ Tony Richelieu
Tony Richelieu
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Secretary
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KB HOME SACRAMENTO INC., a California corporation
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By:
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/s/ William R. Hollinger
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William R. Hollinger
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Vice President
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[SEAL]
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Attest:
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/s/ Tony Richelieu
Tony Richelieu
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Secretary
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“Additional Guarantor”:
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KB HOME LONE STAR INC., a Texas corporation
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By:
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/s/ William R. Hollinger
William R. Hollinger
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Vice President, Chief Financial Officer and
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Assistant Secretary
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[SEAL]
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Attest:
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/s/ Tony Richelieu
Tony Richelieu
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Secretary
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“Trustee”:
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U.S. BANK NATIONAL ASSOCIATION,
as Trustee
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By:
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/s/ Muriel Shaw
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Name: Muriel Shaw
Title: Assistant Vice President
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[SEAL]
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Attest:
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/s/ Felicia H. Powell
Name: Felicia H. Powell
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Title: Assistant Vice President
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Exhibit 10.41
THIRD SUPPLEMENTAL INDENTURE
(Senior Subordinated Debt Indenture)
This THIRD SUPPLEMENTAL INDENTURE (this “
Third Supplemental Indenture
”) is dated as of
August 17, 2007 and executed by and between KB HOME, a Delaware corporation (the “
Issuer
”),
U.S. BANK NATIONAL ASSOCIATION, a national banking association duly organized and existing under
the laws of the United States of America (successor in interest to SunTrust Bank), as trustee under
the Indenture referred to below (the “
Trustee
”), each of the Existing Guarantors (as
defined below) and KB HOME LONE STAR INC., a Texas corporation and an indirect wholly-owned
subsidiary of the Issuer (the “
Additional Guarantor
”).
W I T N E S S E T H:
WHEREAS
, the Issuer and the Trustee have heretofore executed and delivered a Senior
Subordinated Debt Indenture, dated as of November 19, 1996 (the “
Original Indenture
”),
providing for the issuance from time to time of the Issuer’s Securities (as defined in the Original
Indenture);
WHEREAS
, the Issuer, the Existing Guarantors (other than KB HOME Orlando LLC, a Delaware
limited liability company), KB HOME Lone Star LP, a Texas limited partnership (“
Lone Star
LP
”), and the Trustee have heretofore executed and delivered a First Supplemental Indenture,
dated as of December 18, 2003 (the “
First Supplemental Indenture
”);
WHEREAS
, the Issuer, the Existing Guarantors, Lone Star LP and the Trustee have heretofore
executed and delivered a Second Supplemental Indenture, dated as of May 1, 2006 (the “
Second
Supplemental Indenture
”; the Original Indenture, as amended and supplemented by the First
Supplemental Indenture, the Second Supplemental Indenture and this Third Supplemental Indenture is
hereinafter called the “
Indenture
”, which term shall include the form and terms of each
series of Securities established from time to time pursuant to Sections 2.1 and 2.3 of the Original
Indenture);
WHEREAS
, pursuant to Article Two of the Original Indenture, the Issuer has established the
form and terms of the 2008 Notes and 2010 Notes (as such terms are defined in the Indenture; the
2008 Notes and 2010 Notes are hereinafter called, collectively, the “
Senior Subordinated
Notes
”) pursuant to the Officers’ Certificates (as defined in Section 14.1 of the Indenture);
WHEREAS
, Lone Star LP, a Guarantor (as defined in the Indenture), merged with and into the
Additional Guarantor, with the Additional Guarantor as the surviving entity;
WHEREAS
, concurrently with the execution and delivery of this Third Supplemental Indenture,
the Additional Guarantor is becoming a party to, and guaranteeing the obligations of the Issuer
under, that certain Revolving Loan Agreement, dated as of November 22, 2005, as amended on October
10, 2006 and December 12, 2006, between the Issuer, the banks party
thereto, Bank of America, N.A. as Administrative Agent, Citicorp North America, Inc. and
JPMorgan Chase Bank, N.A. as Co-Syndication Agents, Calyon New York Branch, Wachovia
Bank, N.A., Barclays Bank plc and The Royal Bank of Scotland plc as Co-Documentation Agents and Banc of America
Securities LLC and Citigroup Global Markets Inc. as Joint Lead Arrangers and Joint Book Managers;
WHEREAS
, pursuant to Section 14.16 of the Indenture, the Issuer, the Existing Guarantors and
the Additional Guarantor wish to amend and supplement the Indenture to provide for the Additional
Guarantor to become a Guarantor under the Indenture and to guaranty the obligations of the Issuer
under the Senior Subordinated Notes and under the Indenture, and otherwise to modify the Indenture
on the terms set forth in this Third Supplemental Indenture; and
WHEREAS
, the Issuer has instructed the Trustee to execute and deliver this Third Supplemental
Indenture pursuant to Section 8.1 of the Indenture, and all requirements necessary to make this
Third Supplemental Indenture a valid instrument in accordance with its terms have been performed
and the execution and delivery of this Third Supplemental Indenture have been duly authorized in
all respects by the Issuer, each of the Existing Guarantors and the Additional Guarantor.
NOW, THEREFORE
, for and in consideration of the premises and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the Issuer, the
Existing Guarantors, the Additional Guarantor and the Trustee mutually covenant and agree for the
equal and proportionate benefit of the Holders (as defined in the Indenture) from time to time of
the Senior Subordinated Notes as follows:
ARTICLE ONE
DEFINITIONS
SECTION 1.1
Definitions
.
(a) Terms used herein and not defined herein have the respective meanings ascribed to such
terms in the Indenture.
(b) As used in this Third Supplemental Indenture, the terms “Additional Guarantor,” “First
Supplemental Indenture,” “Second Supplemental Indenture,” “Original Indenture,” “Third Supplemental
Indenture” and “Lone Star LP” have the meanings specified in the recitals hereto and in the
paragraph preceding such recitals; and the term “Existing Guarantors” means the Guarantors (other
than Lone Star LP) which signed the First Supplemental Indenture or the Second Supplemental
Indenture, as applicable.
ARTICLE TWO
GUARANTY AND RELATED PROVISIONS
SECTION 2.1
Guaranty
. The Additional Guarantor and the Existing Guarantors shall
execute and deliver to the Trustee a Guaranty in the form specified in Section 14.14 of the
Indenture for each series of Senior Subordinated Notes outstanding, each such Guaranty to be
- 2 -
held by the Trustee on behalf of the Holders of each respective series of Senior Subordinated
Notes.
SECTION 2.2
Effect of Guaranties
. The parties hereto covenant and agree that, from
and after the date of this Third Supplemental Indenture:
(a) the Additional Guarantor shall be a Guarantor under the First Supplemental Indenture and
the Second Supplemental Indenture as if the Additional Guarantor were an original signatory to each
such document and an original Guarantor named therein;
(b) without limitation to the other provisions of this Section 2.2, the Additional Guarantor
shall be a Guarantor under the Indenture with respect to all of the Senior Subordinated Notes on
and subject to the terms and provisions of the Indenture (including, without limitation, the terms
and provisions of the Officers’ Certificates);
(c) without limitation to the other provisions of this Section 2.2, the Additional Guarantor
agrees that each of the First Supplemental Indenture and the Second Supplemental Indenture
constitutes a valid and binding obligation of the Additional Guarantor, enforceable against the
Additional Guarantor in accordance with its terms; and
(d) without limitation to the other provisions of this Section 2.2, the Additional Guarantor
agrees to perform and to comply with all of the covenants and agreements of a Guarantor in the
First Supplemental Indenture and the Second Supplemental Indenture as if the Additional Guarantor
were an original signatory thereto and an original Guarantor named therein.
ARTICLE THREE
MISCELLANEOUS
SECTION 3.1
Ratification of Indenture; Third Supplemental Indenture Part of Indenture
.
Except as expressly amended and supplemented hereby, the Original Indenture, as amended and
supplemented by the First Supplemental Indenture and the Second Supplemental Indenture is in all
respects ratified and confirmed and all the terms, conditions and provisions thereof shall remain
in full force and effect. This Third Supplemental Indenture shall form a part of the Indenture for
all purposes.
SECTION 3.2
Acceptance by Trustee
. Subject to Section 3.3 hereof, the Trustee hereby
accepts this Third Supplemental Indenture and agrees to perform the same upon the terms and
conditions set forth in the Original Indenture, as amended and supplemented by the First
Supplemental Indenture and the Second Supplemental Indenture.
SECTION 3.3
Concerning the Trustee
. The rights and duties of the Trustee shall be
determined by the express provisions of the Indenture and except as expressly set forth in this
Third Supplemental Indenture, nothing in this Third Supplemental Indenture shall in any way modify
or otherwise affect the Trustee’s rights and duties thereunder. The Trustee makes no
representation or warranty as to the validity or sufficiency of this Third Supplemental
Indenture,
- 3 -
except insofar as relates to the validity hereof with respect to the Trustee, and shall
not be liable in connection therewith.
SECTION 3.4
New York Law to Govern
. This Third Supplemental Indenture shall be
deemed to be a contract under the laws of the State of New York, and for all purposes shall be
governed by and construed in accordance with the laws of such State.
SECTION 3.5
Separability
. In case any one or more of the provisions contained in
this Third Supplemental Indenture shall for any reason be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any
other provisions of this Third Supplemental Indenture, but this Third Supplemental Indenture shall
be construed as if such invalid, illegal or unenforceable provision had never been contained
herein.
SECTION 3.6
Counterparts
. This Third Supplemental Indenture may be executed in any
number of counterparts each of which shall be an original; but such counterparts shall together
constitute but one and the same instrument.
SECTION 3.7
Effect of Headings
. The Article and Section headings herein are for
convenience only and shall not affect the construction hereof.
[Signature Page Follows]
- 4 -
IN WITNESS WHEREOF, the parties hereto have caused this Third Supplemental Indenture to be
duly executed, and their respective seals to be hereunto affixed, all as of the day and year first
above written.
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|
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“Issuer”:
|
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KB HOME
|
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|
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By:
|
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/s/ Kelly Masuda
Kelly Masuda
|
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|
|
|
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|
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Senior Vice President, Treasurer
|
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[SEAL]
|
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Attest:
|
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|
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/s/ Tony Richelieu
Tony Richelieu
|
|
|
|
|
|
|
|
Assistant Corporate Secretary
|
|
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|
|
|
|
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|
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|
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|
|
“Existing Guarantors”:
|
|
KB HOME PHOENIX INC., an Arizona corporation
|
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|
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By:
|
|
/s/ William R. Hollinger
William R. Hollinger
|
|
|
|
|
|
|
|
Vice President
|
|
|
|
|
|
|
|
|
|
|
|
[SEAL]
|
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|
|
|
|
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|
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|
|
Attest:
|
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|
|
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|
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/s/ Tony Richelieu
Tony Richelieu
|
|
|
|
|
|
|
|
Secretary
|
|
|
|
|
|
|
|
|
|
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|
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KB HOME COASTAL INC., a California corporation
|
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|
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|
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By:
|
|
/s/ William R. Hollinger
William R. Hollinger
|
|
|
|
|
|
|
|
Vice President
|
|
|
|
|
|
|
|
|
|
|
|
[SEAL]
|
|
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|
|
Attest:
|
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|
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/s/ Tony Richelieu
Tony Richelieu
|
|
|
|
|
|
|
|
Secretary
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
KB HOME SOUTH BAY INC., a California corporation
|
|
|
|
|
|
|
|
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|
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By:
|
|
/s/ William R. Hollinger
William R. Hollinger
|
|
|
|
|
|
|
|
Vice President
|
|
|
|
|
|
|
|
|
|
|
|
[SEAL]
|
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|
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|
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|
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|
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Attest:
|
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|
|
|
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|
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|
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/s/ Tony Richelieu
Tony Richelieu
|
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|
|
|
|
|
|
Secretary
|
|
|
|
|
|
|
|
|
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|
|
KB HOME GREATER LOS ANGELES INC., a California
corporation
|
|
|
|
|
|
|
|
|
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|
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By:
|
|
/s/ William R. Hollinger
William R. Hollinger
|
|
|
|
|
|
|
|
Vice President
|
|
|
|
|
|
|
|
|
|
|
|
[SEAL]
|
|
|
|
|
|
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|
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|
|
Attest:
|
|
|
|
|
|
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|
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|
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/s/ Tony Richelieu
Tony Richelieu
|
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|
|
|
|
|
|
Secretary
|
|
|
|
|
|
|
|
|
|
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|
|
KB HOME COLORADO INC., a Colorado corporation
|
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|
|
|
|
|
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|
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By:
|
|
/s/ William R. Hollinger
William R. Hollinger
|
|
|
|
|
|
|
|
Vice President
|
|
|
|
|
|
|
|
|
|
|
|
[SEAL]
|
|
|
|
|
|
|
|
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Attest:
|
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|
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/s/ Tony Richelieu
Tony Richelieu
|
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|
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|
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|
|
Secretary
|
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|
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KB HOME NEVADA INC., a Nevada corporation
|
|
|
|
|
|
|
|
|
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|
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By:
|
|
/s/ William R. Hollinger
William R. Hollinger
|
|
|
|
|
|
|
|
Vice President
|
|
|
|
|
|
|
|
|
|
|
|
[SEAL]
|
|
|
|
|
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|
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|
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Attest:
|
|
|
|
|
|
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|
|
|
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|
|
|
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/s/ Tony Richelieu
Tony Richelieu
|
|
|
|
|
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|
|
Secretary
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
KB HOME ORLANDO LLC, a Delaware limited liability
company
|
|
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
KB HOME FLORIDA LLC, a Delaware limited
liability company,
|
|
|
|
|
|
|
|
Its sole member
|
|
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
/s/ William R. Hollinger
William R. Hollinger
|
|
|
|
|
|
|
|
Vice President
|
|
|
|
|
|
|
|
|
|
|
|
[SEAL]
|
|
|
|
|
|
|
|
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|
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Attest:
|
|
|
|
|
|
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|
|
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|
|
/s/ Tony Richelieu
Tony Richelieu
|
|
|
|
|
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|
|
Secretary
|
|
|
|
|
|
|
|
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|
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KB HOME SACRAMENTO INC., a California corporation
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By:
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/s/ William R. Hollinger
William R. Hollinger
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Vice President
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[SEAL]
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Attest:
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/s/ Tony Richelieu
Tony Richelieu
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Secretary
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“Additional Guarantor”:
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KB HOME LONE STAR INC., a Texas corporation
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By:
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/s/ William R. Hollinger
William R. Hollinger
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Vice President, Chief Financial Officer and
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Assistant Secretary
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[SEAL]
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Attest:
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/s/ Tony Richelieu
Tony Richelieu
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Secretary
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“Trustee”:
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U.S. BANK NATIONAL ASSOCIATION,
as Trustee
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By:
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/s/ Muriel Shaw
Name: Muriel Shaw
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Title: Assistant Vice President
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[SEAL]
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Attest:
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/s/ Felicia H. Powell
Name: Felicia H. Powell
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Title: Assistant Vice President
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August 17, 2007
GUARANTY
For value received, each of the undersigned (the “
Guarantors
”) hereby absolutely and
unconditionally guaranties, jointly and severally, to each Holder of
any of the Issuer’s
8
5
/
8
% Senior
Subordinated Notes due 2008 (the “
Subject Notes
”) and to the Trustee on behalf of each such
Holder prompt payment when due, whether at stated maturity, upon acceleration, upon repurchase at
the option of the Holder, upon redemption at the option of the Issuer or otherwise, and at all
times thereafter, of the principal of and premium, if any, and interest on any of the Subject Notes
and of any and all other existing and future indebtedness and liabilities of every kind, nature and
character, direct or indirect, absolute or contingent, liquidated or unliquidated, voluntary or
involuntary, of the Issuer to the Holders of the Subject Notes arising under the Senior
Subordinated Debt Indenture dated as of November 19, 1996, as amended and supplemented by the First
Supplemental Indenture dated as of December 18, 2003, by the Second Supplemental Indenture dated as
of May 1, 2006, and by the Third Supplemental Indenture dated as of the date hereof, between the
Issuer, U.S. Bank National Association, as successor trustee, and the guarantors party thereto
(such Indenture, as so amended and supplemented and as the same may be further amended or
supplemented from time to time, the “
Indenture
”) or the Subject Notes (collectively, the
“
Guarantied Obligations
”) in accordance with, and subject to, the terms set forth in
Article Fourteen of the Indenture. All capitalized terms used in this Guaranty which are defined
in the Indenture shall have the meaning assigned to them in the Indenture.
Each Guarantor and, by its acceptance and ownership of a Subject Note and by its acceptance of
any benefits under this Guaranty, each Holder of a Subject Note hereby confirms that it is the
intention of all parties that the obligations of the Guarantors under their Guaranties shall not
constitute a fraudulent conveyance or fraudulent transfer under any applicable fraudulent
conveyance, fraudulent transfer, bankruptcy, insolvency or other similar law of any applicable
jurisdiction. To effectuate the foregoing, each Holder of Subject Notes, by its acceptance and
ownership of Subject Notes and by its acceptance of any benefits under this Guaranty, and each
Guarantor hereby agrees that the obligations of such Guarantor under its Guaranty are limited to
the maximum amount as will, after giving effect to all other contingent and fixed liabilities of
such Guarantor, result in the obligations of such Guarantor under its Guaranty not constituting a
fraudulent conveyance or fraudulent transfer under applicable law. Subject to the preceding
limitation, the obligations of each Guarantor under its Guaranty constitute a guaranty of payment
in full when due and not merely a guaranty of collectability.
The obligations of each Guarantor to the Holders of Subject Notes and to the Trustee pursuant
to its Guaranty and the Indenture are expressly set forth in Article Fourteen of the Indenture, and
reference is hereby made to such Indenture for the precise terms thereof.
This instrument shall be governed by and construed in accordance with the laws of the State of
New York.
[Signature Page Follows.]
IN WITNESS WHEREOF, the undersigned have caused this instrument to be executed by their
respective duly authorized signatories.
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KB HOME Lone Star Inc., a Texas corporation
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By:
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/s/ William R. Hollinger
William R. Hollinger
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Vice President, Chief Financial
Officer and Assistant Secretary
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KB HOME ORLANDO LLC, a Delaware limited liability
company
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By:
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KB HOME FLORIDA LLC, a Delaware limited liability company,
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Its sole member
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By:
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/s/ William R. Hollinger
William R. Hollinger
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Vice President
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KB HOME PHOENIX INC., an Arizona corporation
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By:
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/s/ William R. Hollinger
William R. Hollinger
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Vice President
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KB HOME COASTAL INC., a California corporation
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By:
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/s/ William R. Hollinger
William R. Hollinger
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Vice President
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KB HOME SACRAMENTO INC., a California corporation
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By:
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/s/ William R. Hollinger
William R. Hollinger
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Vice President
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KB HOME SOUTH BAY INC., a California corporation
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By:
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/s/ William R. Hollinger
William R. Hollinger
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Vice President
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KB HOME GREATER LOS ANGELES INC., a California
corporation
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By:
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/s/ William R. Hollinger
William R. Hollinger
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Vice President
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KB HOME COLORADO INC., a Colorado corporation
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By:
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/s/ William R. Hollinger
William R. Hollinger
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Vice President
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KB HOME NEVADA INC., a Nevada corporation
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By:
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/s/ William R. Hollinger
William R. Hollinger
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Vice President
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August 17, 2007
GUARANTY
For value received, each of the undersigned (the “
Guarantors
”) hereby absolutely and
unconditionally guaranties, jointly and severally, to each Holder of any of the Issuer’s 7
3
/
4
% Senior
Subordinated Notes due 2010 (the “
Subject Notes
”) and to the Trustee on behalf of each such
Holder prompt payment when due, whether at stated maturity, upon acceleration, upon repurchase at
the option of the Holder, upon redemption at the option of the Issuer or otherwise, and at all
times thereafter, of the principal of and premium, if any, and interest on any of the Subject Notes
and of any and all other existing and future indebtedness and liabilities of every kind, nature and
character, direct or indirect, absolute or contingent, liquidated or unliquidated, voluntary or
involuntary, of the Issuer to the Holders of the Subject Notes arising under the Senior
Subordinated Debt Indenture dated as of November 19, 1996, as amended and supplemented by the First
Supplemental Indenture dated as of December 18, 2003, by the Second Supplemental Indenture dated as
of May 1, 2006, and by the Third Supplemental Indenture dated as of the date hereof, between the
Issuer, U.S. Bank National Association, as successor trustee, and the guarantors party thereto
(such Indenture, as so amended and supplemented and as the same may be further amended or
supplemented from time to time, the “
Indenture
”) or the Subject Notes (collectively, the
“
Guarantied Obligations
”) in accordance with, and subject to, the terms set forth in
Article Fourteen of the Indenture. All capitalized terms used in this Guaranty which are defined
in the Indenture shall have the meaning assigned to them in the Indenture.
Each Guarantor and, by its acceptance and ownership of a Subject Note and by its acceptance of
any benefits under this Guaranty, each Holder of a Subject Note hereby confirms that it is the
intention of all parties that the obligations of the Guarantors under their Guaranties shall not
constitute a fraudulent conveyance or fraudulent transfer under any applicable fraudulent
conveyance, fraudulent transfer, bankruptcy, insolvency or other similar law of any applicable
jurisdiction. To effectuate the foregoing, each Holder of Subject Notes, by its acceptance and
ownership of Subject Notes and by its acceptance of any benefits under this Guaranty, and each
Guarantor hereby agrees that the obligations of such Guarantor under its Guaranty are limited to
the maximum amount as will, after giving effect to all other contingent and fixed liabilities of
such Guarantor, result in the obligations of such Guarantor under its Guaranty not constituting a
fraudulent conveyance or fraudulent transfer under applicable law. Subject to the preceding
limitation, the obligations of each Guarantor under its Guaranty constitute a guaranty of payment
in full when due and not merely a guaranty of collectability.
The obligations of each Guarantor to the Holders of Subject Notes and to the Trustee pursuant
to its Guaranty and the Indenture are expressly set forth in Article Fourteen of the Indenture, and
reference is hereby made to such Indenture for the precise terms thereof.
This instrument shall be governed by and construed in accordance with the laws of the State of
New York.
[Signature Page Follows.]
IN WITNESS WHEREOF, the undersigned have caused this instrument to be executed by their respective
duly authorized signatories.
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KB HOME Lone Star Inc., a Texas corporation
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By:
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/s/ William R. Hollinger
William R. Hollinger
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Vice President, Chief Financial Officer and
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Assistant Secretary
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KB HOME ORLANDO LLC, a Delaware limited liability company
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By:
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KB HOME FLORIDA LLC, a Delaware limited liability company,
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Its sole member
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By:
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/s/ William R. Hollinger
William R. Hollinger
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Vice President
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KB HOME PHOENIX INC., an Arizona corporation
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By:
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/s/ William R. Hollinger
William R. Hollinger
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Vice President
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KB HOME COASTAL INC., a California corporation
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By:
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/s/ William R. Hollinger
William R. Hollinger
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Vice President
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KB HOME SACRAMENTO INC., a California corporation
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By:
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/s/ William R. Hollinger
William R. Hollinger
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Vice President
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KB HOME SOUTH BAY INC., a California corporation
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By:
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/s/ William R. Hollinger
William R. Hollinger
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Vice President
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KB HOME GREATER LOS ANGELES INC., a California
corporation
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By:
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/s/ William R. Hollinger
William R. Hollinger
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Vice President
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KB HOME COLORADO INC., a Colorado corporation
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By:
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/s/ William R. Hollinger
William R. Hollinger
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Vice President
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KB HOME NEVADA INC., a Nevada corporation
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By:
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/s/ William R. Hollinger
William R. Hollinger
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Vice President
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